Terry Connelly is dean of the Ageno School of Business at Golden Gate University and is frequently quoted on business, financial, and economic issues by Bay Area local, as well as national, news media.
Here are my thoughts;
1) I agree this election is historically significant already: but in part because its context is really like no other in recent memory given the economic debacle we have been living with since mid-2008: the “breakthrough” election of Obama and the resultant Tea Party backlash (although this aspects is reminiscent of the emergence of the George Wallace movement after the Johnson Civil Rights victories); and the much broader engagement of the electorate in business and economic issues that in past times would have been viewed as arcane or “inside baseball” stuff (recall the level of sophistication back in the Ford White House “Whip Inflation Now” buttons in the 1978 Congressional campaign).
2) Whatever the size of the anticipated swing to the republicans, they will as a Party be “implicated” in the course of the economy for the first time since 2008 — they will be a partner in Government even if they fall just short of House or Senate control — which means “Just Say No” pure obstruction won’t work as a strategy focused towards 2012. The Party has already anticipated that outcome with it’s somewhat half-formed “Pledge to America” that in effect creates a luttle daylight between them and the Tea Party.
3) The Democrats in Congress and especially the White House will have every excuse to put their strident anti-business posture behind them, not only because of electoral losses but even more because we have about “run out of spit” in terms of both fiscal and Federal Reserve ‘stimulus” (although the Fed may give one more shot at stimulating some real inflation) and we will need business leaders to make bold decisions on investment and hiring to drive a real economic recovery.
4) Accordingly, I do NOT foresee, as so many do, two years of utter gridlock in DC on economic issues but rather a situation where deals can get done. Specifically, I believe an informal but strong “centrist caucus” will emerge in both the House and Senate particularly around a pro-business agenda, and that the White House will reach out to them in tis own self-interest. This will be good for investors and middle-class IRA’s and consumer sentiment generally.
5) The Report of the Deficit Commission in December, just a month after the election, will not be just “‘put on the shelf” like so many commissions before but will rather serve as a “safe harbor” for politicians (especially the “centrist caucus” I mentioned above) to open dialog about formerly ‘third rail” budgetary issues — this also will hold true for the President, although in reality it will imply that we will raise some taxes in some way on the middle class or at least begin to chip away at some sacred cows they hold dear like mortgage interest deductions up to $1 million. While I expect no ‘grand bargain’ before 2012, I do believe there will be more pro-business actions emerging from the Administration and Congress in 2011. For example, a deal on repatriation of over $1 trillion in corporate overseas earnings in exchange fora minimal tax payment and commitments on hiring and investment, and some sort of regulatory check and balance process..
6) There may even be progress on skilled immigration, as business knows the dirty secret that by the middle of the next decade, our national problem will be too few workers for the jobs we need filled, not the present high unemployment that effectively masks this long term competitiveness problem. Politicians may begin to gingerly concede that China is eating our lunch in terms of driving its economy purposefully and effectively (Howard Dean tried to suggest this in 2004 but was shouted down even in his own Party — by late 2011, it will be a mantra a many Presidential aspirants — the ‘missile gap” of 2012!
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