Fisher Investments Editorial Staff
US Economy, Media Hype/Myths

Change Ain’t Easy in DC

By, 10/15/2009

Story Highlights:

  • There's been talk about extending the current US economic stimulus package.
  • But more spending could be a political hard sell.
  • Remember, less than half of the current stimulus has been spent, and yet, global and US economies appear to be rebounding nicely. 


Our favorite DC denizens are at it again—proposing, posing, and bickering, particularly about the current US economic stimulus package—this time, that it's not enough. Some Democrats, fretting the black eye of continued high unemployment on their reelection campaigns, want to expand the current stimulus. Though proposed tax cuts have some support, further stimulus spending will likely meet a stiff headwind. The likelihood anything happens before the self-imposed deadline of December? Pretty low.

Whether another round of stimulus is needed is beside the point (not the least because the current round is not even halfway disbursed.) More spending could be a political hard sell right now: The Obama administration is struggling with a 56% approval rating—a big drop from the 70% approval at the beginning of the term—and may be hesitant to champion yet another major legislative push. With the size of the federal debt currently front and center in media headlines and mid-term congressional elections fast approaching, those up for re-election don't want to turn off valuable independent voters.

Further, even assuming wide party support and legislative majorities, it's just not that easy to get things done in DC—hotly debated health care reform is case in point. Simultaneously, various versions of bills are routed through numerous congressional committees. Next, each committee's version must be reconciled with all the others before the Senate or House votes on it. (After months of back and forth, health care legislation has only just reached this step.) Finished? Not quite. Once passed, the House and Senate must reconcile their bills. Only then is a final bill prepared—and voted on again by the Senate and House. Throughout the whole process, powerful interests influence the discussion—both parties have major lobby groups that filter the many millions in campaign contributions. Politicians know not to bite, at least not too hard, the hand that feeds—and checking in with the constituents and contributors also slows the process. The first Senate hearing on health care reform was in May 2009, but the debate's still raging. Congressional writing, routing, rewriting, and rerouting of new laws is painfully slow.

With the immediacy of last year's financial panic largely passed, it's unlikely any sweeping new stimulus measures get approved anytime soon—not against the backdrop of Congress's already packed legislative agenda. And that's just fine. Global economies seem back on the road to growth, and US and global stocks are up sharply since March, even with America's tepid pace of stimulus deployment. The unspent stimulus could continue providing a tailwind for years.

*The content contained in this article represents only the opinions and viewpoints of the Fisher Investments editorial staff.

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*The content contained in this article represents only the opinions and viewpoints of the Fisher Investments editorial staff.


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