Economists: Congress Gets A Hat Tip (Barely) For Its Efforts
As the latest Congress draws to a close, economists are looking back — and seeing little.
Lawmakers passed no measures addressing tax reform, trade, immigration or even the minimum wage.
But judged by the very low standards of recent years, the 113th Congress did manage to win at least light applause from economists who are watching as the curtain goes down.
Sure, Congress allowed a disruptive government shutdown in 2013 — but it avoided repeating that drama in 2014.
"The biggest positive was that at least this year, there wasn't any debt-ceiling or budget crisis," said John Silvia, chief economist for Wells Fargo Securities. "Not having a government shutdown is something," he noted.
Not much, of course. But something.
Both the House and Senate have approved a bipartisan budget package to finance most government operations through the remainder of the fiscal year ending Sept. 30, 2015. That legislation, passed in recent days, has removed the specter of a closed government, at least for a while.
Congress had another non-accomplishment of note: It did not get in the way of the federal budget deficit's shrinkage.
During the worst of the Great Recession in 2009, the annual budget shortfall ballooned to nearly 10 percent of the size of the entire economy, as measured by GDP. Since then, the deficit has been melting away, and it is on track to drop to just 2.6 percent of GDP in fiscal 2015.
At that level, "the deficit can easily be financed," Silvia said.
Congress might have derailed such fiscal progress by significantly increasing spending or cutting tax revenues. By standing pat, lawmakers allowed the upbeat business cycle to go forward in 2014, which generated new revenues.
Congress did manage to take one step that pleased many people in the agriculture sector. It approved a five-year legislative package that provided growers and ranchers with more certainty about farm and nutrition programs.
At the time of the bill signing earlier this year, Tom Stenzel, who heads the United Fresh Produce Association, said in a statement that the legislation was "nothing less than a solid win" for providers of fruits and vegetables.
But while lawmakers boosted farmers with that bill, they allowed other business causes to drag on.
For example, the Senate waited until nearly the bitter end of the 113th to renew dozens of temporary tax breaks, known as the "extenders," including big ones for business research, wind power, college tuition and more. By a vote of 76-16 on Tuesday night, the Senate extended the breaks — but only through the end of this year.
"Gridlock was the defining characteristic of this Congress," said Sean Snaith, director of the University of Central Florida's Institute for Economic Competitiveness.
Not only were new measures not passed, but older ones did not get the fine-tuning needed to make them more effective, he said. Specifically, the Affordable Care Act and the Dodd-Frank Act were each so sweeping in their changes to health care and financial services, respectively, that they needed tightening, he said.
"There's a fog of uncertainty about the impact of these laws," Snaith said. While the government spending bill included a provision that weakened the Dodd-Frank Act's restrictions on banks' derivative trading, those two huge legislative efforts from 2010 have still "left businesses with unanswered questions," and subsequent gridlock has made a legislative response impossible, he said.
On their wish lists for the incoming Congress, mainstream economists are virtually unanimous in naming five issues: trade promotion; immigration; tax reform; infrastructure and entitlement-program reform.
No matter what the 114th Congress does, it has almost nowhere to go but up in terms of public opinion. A Gallup poll showed that when Congress allowed the government to shut down in October 2013, its job approval rating plunged to an all-time monthly low of 9 percent.
A new poll, released Monday, showed that Americans' job approval rating for Congress averaged 15 percent for this year. That is, after all, progress.
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