John Merline writing for AOL News has a contrarian take on the possible GOP takeover of Congress and suggests there could be positives for President Obama if the November election puts R’s in charge of the House and/or Senate. Read his column here.
Most interesting to me is his comment about the private sector sitting on a mountain of money. I heard the same thing from a business beat reporter on ABC’s nightly news the other night. It reminded me of a comment made by our friend and occasional contributor here, Prof. Bob. He used the term “capital strike” in a conversation with me about the way the economy is stuck, the brutal “jobless recovery” that persists despite the stock market topping 11,000 this week. The ABC reporter said businesses are waiting for the election results before hiring again. Another commentator referred to “business” being reluctant to spend or hire more until “business” is convinced that “confidence” has returned. It’s all about the psychology, which is being affected by the joblessness and uncertainty about when the business cycle is going to turn back up. Couple the vast amount of money that groups like the national Chamber of Commerce are spending to defeat Democrats and the apparent financial sit-down strike by the corporate sector, and the average citizen has to wonder how many men, women, and children have been suffering for many extra months because of a titanic political struggle over who is going to pay what taxes.
Here’s the quote from Merline’s piece:
4) A boost to the economy. Don’t laugh. Psychology matters, and right now businesses are hoarding a huge pile of cash — about $1.8 trillion worth — in part out of concern about Washington. Putting a business-friendly GOP in charge of Congress could be all that’s needed to unleash a corporate spending and hiring spree. That’s pretty much what happened after November 1994. The Consumer Confidence Index shot up into the 100s — it had been languishing around the 70s during Clinton’s first two years. The Dow Jones Industrial Average rocketed ahead. And unemployment fell to an average 5.5 percent in 1995-96 from 6.5 percent in 1993-94.