Washington got something done. Wow.
This shouldn’t qualify as news, except, as everybody knows, Washington doesn’t get much done any more. So with Congress poised to pass a full federal budget for the first time in four years, the obvious question seems to be: Why now?
Since 2009, Congress has funded the government mostly through short-term resolutions. Funding, of course, ran out last October, when the government shut down for 16 days. In retrospect, that shutdown seems to have marked a pivot point for Republican budgetary tactics and perhaps a high-water mark for the Tea Party’s influence on Republican leaders, as Lauren and I discuss in the video above.
Two things have changed since then. First, business-backed groups such as the powerful U.S. Chamber of Commerce signaled they were finally prepared to push back against the scorched-earth tactics of Tea Party activists who favored shutting down the government. And second, the shutdown--along with the second serious threat to default on U.S. debt in three years--turned out to be so unpopular with the public that it could have caused major reversals for Republicans in the 2014 midterm elections.
The result, to most people’s surprise, is a bipartisan—bipartisan!—budget bill that has passed the House and seems likely to pass the Senate by the weekend. No dueling press conferences. No inane procedural holdups. No surreal filibusters featuring Dr. Seuss.
If the budget passes, it will mean no government shutdown this year, and a predictable stream of funding for most government agencies. That is precisely what business leaders have been pleading for when they complain that uncertainty in Washington is kneecapping the economy and preventing them from investing more.
There’s one other variable to watch: The U.S. borrowing limit will need to be extended once again by late March or so, a tedious political ritual that might be the last chance before the midterms for Tea Partiers to make demands for sharp spending cuts, or else. But the same logic that applies to the budget applies to the debt limit: Holding the economy hostage to one group’s demands remains intensely unpopular and a political loser for Republicans, which they seem to have figured out. So there’s reason to hope the debt limit will get extended without a disruptive showdown.
For the business community, there are now fewer excuses for sitting on piles of cash and playing it safe. Sure, there are still plenty of things that could go wrong, but you could say that in just about any economy. If Washington really stops doing damage, businesses ought to start hiring and spending more. It might just be a stimulus plan by another name.
Rick Newman’s latest book is Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman
- Banking & Budgeting
- Personal Finance - Career & Education