Will the Elections Make a Difference in Manufacturing?

posted on 11.19.14

Need to Know . . .

The election results may reflect public frustration with political gridlock rather than with the party in power, this Congress accomplished less than any other in modern history

Policymakers should build public trust by demonstrating leadership

Many commentators suggest that the national election of 2014 was an angry referendum about ongoing sluggish conditions in the American economy, now five years out from the Great Recession.

Business leaders believe that the Republican takeover of Congress represents the best hope of bringing about new policies that will lead to a higher rate of continuous economic growth. Their excitement the day after the election was palpable.

NAM’s Ned Monroe observed, “We’re optimistic that [the Republican] kind of voting record is going to be able to lead to a pro-growth policy.” National Federation of Independent Business CEO Dan Danner remarked, “A change of leadership in the Senate was crucial.”

We’ll find out soon enough if that’s true. The first few months of the 114th Congress should tell us whether the next two years will lead to real progress or simply more stalemate. After all, if little is achieved in 2015, less can be expected the following year, when the presidential campaign will likely bring out renewed levels of partisanship.

My take: November’s election, including the GOP’s recapture of the Senate, reflected public frustration—not so much about the party in power as about political gridlock. Wild pendulum swings every two years (the election of Barack Obama and a Democratic Congress in 2008, the Tea Party revolution in 2010, the re-election of the president and a gain of Senate seats for Democrats in 2012, a Republican Congress in 2014) suggest that elections are not a testament of new-found public support for the opposition party. Rather, they’re an indication of indignation over Washington’s dearth of political leadership.

This lack of leadership has led to an increasingly impotent legislative process. As a result of the hyperpartisan climate in Washington, this Congress accomplished less than any other in modern history. The 113th Congress will enact fewer than 170 public bills, and 20 of those were to rename government or postal facilities. That compares with 283 bills in the last Congress and more than 900 in the famous 80th “Do Nothing” Congress in the late 1940s.

Some groups might applaud this lack of action, under the principle that an inactive government isn’t creating new economic burdens, but there are too many broken policies weighing the economy down, like an overly burdensome tax code and an outdated immigration policy, and too many clear opportunities for growth, like the Keystone XL pipeline and Trade Promotion Authority for the Trans-Pacific Partnership.

As a result, critical fiscal and economic challenges are piling up. Manufacturers, more than any other segment of society, understand the real risk in letting yet another two years slip by without addressing the biggest drags on investment and growth. With Europe on the verge of slipping into its third recession in six years, Japan struggling to remain on its feet, and a sluggish Chinese economy, the United States is the best bet right now to prevent another capsizing of the entire global economy.

U.S. policymakers can be heroes here. All they have to do is build some public trust by demonstrating long overdue political leadership and taking baby steps to manage the country’s long-term fiscal challenges, including those facing Social Security and Medicare, and by enacting pro-growth legislation.

Will the election results that business groups are applauding cure the paralytic condition afflicting Washington? The day after the election, President Obama stated, “The American people . . . want us to get the job done. All of us in both parties have a responsibility to address that sentiment.” In his last two years in office, the president has a tremendous opportunity to abide by this nod to shared responsibility. Will he take a larger leadership role on tax reform, immigration, and energy policies? Or will he attempt to lay the foundation for a Democratic resurgence in 2016 by opposing all Republican-led measures?

On the other side of the aisle, will the Republican leadership start the 114th Congress by moving major legislation forward that has bipartisan support? Or will Senator McConnell and House Speaker Boehner lose control of the Tea Party wing and spend the majority of their time fighting fires within their own house?

In the end, leadership is the key. The same political leaders of the past six years (with a couple of role switches) who were incapable of demonstrating the necessary qualities to enact critical legislation will still be in power over the next two years. The first few months of 2015 will speak volumes about whether they have learned anything from the November elections.

Article written by Stephen Gold, CEO of the Manufacturers Alliance for Productivity and Innovation.