Follow Paul Donovan

The other gridlock

| Posted by: Paul Donovan | Tags: Paul Donovan

  • The US mid-term election result was as markets expected. A divided government will limit legislation. This is a relief for bond markets. One deficit financed tax cut would seem to be more than enough for bond buyers.
  • Gridlock between the US White House and Capitol Hill is generally understood. Indeed, it is almost normal for modern America. However, other policies may also be affected by the election.
  • A Democrat-controlled House seems likely to start more investigations of the Trump administration. The House can force people to testify, and insist that documents are shared. That has two effects on policy-making in the executive branch.
  • If people are speaking to Congress, they are not governing. The Trump administration already has an unusually high number of vacancies. Staff time is stretched. More investigations may take up more of the limited amount of time available.
  • Anecdotal evidence also suggests that members of any administration will be less inclined to collaborate with one another if there are congressional investigations. Investigations introduce lawyers, and lawyers tend to insist on caution from their clients. This may create some gridlock within the White House. Executive action may be affected, as well as legislation.