GRIDLOCK IN WASHINGTON: IS IT REAL AND GOOD FOR BUSINESS? By Omar Nashashibi, The Franklin Partnership, LLC
n August 1986, President Ronald Reagan said, “The nine most Igovernment, terrifying words in the English language are, ‘I’m from the and I’m here to help.’” There is no question government plays a role in the daily lives of every American and in each transaction for every business. The federal government is your not-so-silent partner, and who is in charge of Washington means the difference between opportunity and obstacles.
The 2020 election results delivered to the country a divided Washington, with a Democrat in the White House, a Republicancontrolled Senate and a Democratic Speaker of the House – the first such combination in over a century. What does this mix of BidenMcConnell-Pelosi mean for American mold, tooling and die makers in 2021 and beyond? And is gridlock real and, in fact, good? The soaring hopes many Democrats had for advancing an expansion of health care, infrastructure legislation, the Green New Deal and a massive stimulus bill with tax increases quickly fell to reality after the November 3 election. A divided Washington does not mean complete inaction on major Democratic priorities, but a Republicancontrolled Senate creates a significant obstacle to their agenda – or a balance, depending on your perspective. Despite prospects of legislative stalemate in 2021, manufacturers across the country still report a need for additional support during the COVID-19 recovery. A September survey of AMBA members showed that 79% of association members accepted a Small Business Administration Paycheck Protection Program (PPP) loan – an example of the government actually being “here to help.” A divided Washington is different than one gripped by gridlock and, if history is doomed to repeat itself, we likely will see more activist state and local governments as Washington struggles to move major legislation in 2021. However, this legislative gridlock is what drove up the stock market in the days when President-elect Biden’s victory became apparent and the congressional results remained clear. Wall Street, high-wealth individuals and the healthcare and technology industries all see this scenario as good for business, with the prospects of increased corporate tax rates unlikely due to the Senate being under Republican control. A system of checks and balances devised centuries earlier could defend them and other targets placed in the crosshairs by Biden and Harris on the campaign trail.
But, during a pandemic, is gridlock really what the American people and businesses need? The election outcome all but guarantees President-elect Biden will not secure the major economic stimulus bill he had hoped to pass through a Democratic-led Congress by March. Early rumors among overly optimistic Democrats ahead of the election predicted an economic stimulus measure upwards of $3 trillion. Many of us who lobbied the Obama administration in its earliest days recall then-Vice President Biden serving as the lead negotiator and implementor of the 2009 economic stimulus bill. He oversaw much of the dispersal of funds, and those close to the President-elect indicate he was eager to build on those experiences and inject the economy with significant government aid had Democrats also won the Senate. Not only do few in Washington envision such a large stimulus measure moving in 2021, hope quickly is fading for an infrastructure bill long sought by the likes of Caterpillar, its supply base and countless equipment leasing companies slated to benefit from construction page 12
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