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The U.S. Chamber of Commerce had spent $35 million on the midterm elections as of Nov. 2, according to the Center for Responsive Politics. American Crossroads, a so-called independent organization, spent $22 million. The Club for Growth, $8 million. The National Association of Realtors, $6 million. Political action committees associated with commercial banks, $6 million.
Although in this election, as in most recent ones, Democratic candidates got their share of corporate donations (and more than their share of union election funds), most of the money from business lobbying groups and organizations such as American Crossroads went to Republican candidates.
And all those organizations got for their money was enough Republican victories to take the House and make a mockery of Democratic control of the Senate?
Doesn't seem like much of a return on investment. Did they really intend to spend all that money on politicians who would just sit in the House and Senate and talk past each other?
Hopes of repealing financial reform? Dead. Legislation to reverse health care reform, the Democrats' key achievement of the first two years of the Obama administration? Dead.
Jim Jubak
We're looking at two years of solid-as-concrete legislative deadlock, where no action will be the only action.
Think the groups that spent all that money will be disappointed?
Ha! Guess you don't understand how what we call American democracy really works.
And any investor who hopes to stand a chance at making a buck from this election had better take a crash course in how things get done (or don't get done) inside the Beltway.
Legislative gridlock is only one flavor of the many varieties of gridlock in Washington. There's also regulatory gridlock. And while legislative gridlock by and large does mean that nothing gets done in the halls of Congress, regulatory gridlock can be hugely effective at advancing or killing agendas. (For an example of how the details of regulation can change profits in an industry, see my post "What a surprise! Basel III bank regulations aren't as strict as feared, and bank stocks rally.")
What's not gridlocked
Before we jump over to legislative gridlock, however, let's look at the ways it may not be as solid as it seems.
The Republicans now control the House of Representatives with a huge margin. The Democrats cling to control of the Senate. And the Democrats control the White House. Yet divided as power now is, I expect more to get done legislatively in the near future than the term "gridlock" suggests:
First, because the Democrats are in shock. Yes, everyone had expected this drubbing, but expecting it and living with it are two different things. Having been blamed for everything from the economic slowdown to the Black Death, Democrats (for a little while, at least, and perhaps a long while) will shy away from giving Republicans another stick to beat them with. So, look for Democrats to fold on extending all the Bush tax cuts.
Second, because the Democratic Senate majority is even feebler than it seems. There's a good chance the Republicans can pick off independent Connecticut Sen. Joe Lieberman, who caucuses with the Democrats in the current Congress. Democratic Sen. Ben Nelson of Nebraska might be persuaded to switch parties. Even if he doesn't, a Democratic majority in the Senate that includes Nelson and newly elected Joe Manchin, D-W.Va., isn't exactly a dependable voting bloc behind Majority Leader Harry Reid, D-Nev.
