The nicest thing you can say about Washington's new economic bipartisanship is that it's a work in progress.
President Obama's $787 billion fiscal stimulus package, signed by the president today, could have contained fewer pet programs, but at the same time Republicans in the House and Senate could have shown some support for the president's efforts.
President Obama compromised and included several tax cuts in the bill that Republicans favored, but the Republicans did not respond in kind: exactly zero House Republicans voted for the legislation, and in the Senate only three Republicans did.
The Republicans apparently wanted a bill 100% in their interest. In Washington, that's not how it works, especially for the minority party.
Who won the stimulus debate?
Essentially, Republicans saw no political gain in voting for the bill, so they opposed it, almost universally. Still, without question, the Democrats' tactic to add $100 billion in pet programs to the bill was a mistake -- they belong in an appropriations bill -- but the above does not mean that the Republicans won the fiscal stimulus debate, as many Congressional Republican leaders claim. Nothing could be further from the truth.
Republicans railing against the budget deficit (which they doubled to more than $8 trillion during President Bush's administration) and the economy (which they helped push into a ditch) are not resonating with the public: the Republicans don't have moral standing on either economic issue. Further, the American people, as evidenced by the 2008 presidential election, want economic change, and they're willing to give this president, who personifies economic change, time to accomplish it.
But do the American people want economic change as big as the New Deal? It's too soon to tell, but if the Republicans believe obstructing Obama and voicing slogans that appeal to right wing talk radio's audience (but not the electorate at large) will lead to increased seats in the U.S. Congress in 2011, they're mistaken. During the first four years of the New Deal during President Roosevelt's first administration -- another period characterized by massive Republican obstructionism -- Republican minority party membership of the House fell from 313-117 in 1933 to 333-89 in 1937; in the Senate it fell from 59-36 in 1933 to an infinitesimal 75-17 in 1937!
Hence, apparently, according to the 'logic' and 'argument' forwarded by today's Congressional Republicans, the American people in 1937 wanted more of the New Deal that 'didn't work' from 1933-1936.
Further, graft a 75-17 Democratic senate majority on to today's environment. Can one imagine the economic changes President Obama and Congressional Democrats would propose and successfully implement with that kind of a power?
So from an investor standpoint, where does the completed fiscal stimulus issue leave economic bipartisanship? As noted, it's a work in progress. Some will scrutinize the initial weeks of the Obama-Republican dance and note with detail each minute win and loss. The reality is, in Washington now it's 'do the legislation' and forget about the fight and settling scores: there are too many problems facing the nation and too many issues to tackle up ahead to waste energy on score keeping and attempts to get even. In other words, there's no time to 'have issues' with an issue; each issue 'is a new day' is the stance President Obama is likely to maintain in the months ahead -- although he may become more cautious regarding potential compromises with the Republicans, moving forward.
Full plate of issues
And in case investors have lost sight of the problems the nation faces, here's what's ahead: in additional to the fiscal 2010 budget, there's: 1) U.S. Treasury's bank bailout and a potential request from Congress for additional TARP rescue money, 2) home mortgage foreclosure prevention, 3) financial services reform, 4) health care reform, 5) energy policy, 6) education initiatives, 7) trade policy, and any other crisis that may arise. Add to the above foreign policy matters in Iraq, Afghanistan and the Middle East.
And, of course, don't forget about a second potential fiscal stimulus package -- call it 'fiscal stimulus II' or 'Fiscal Stimulus, The Sequel.' Simply, if the first stimulus proves to be too small Congress will have to pass a second package -- probably in the $400-600 billion range -- to provide more fuel for economic growth.
Hence, when you review the scope and sweep of economic and related problems facing the nation you see why it's quite rational to forget past grievances or who-voted-against-what and focus on the current legislation and the coalition -- i.e. the votes -- needed to pass the bill and solve the problem.
The view from here argues that's the stance President Obama will take, which is a major reason investors can expect continued progress on the many economic problems facing the greatest civilization the world has ever known in the months and quarters ahead.
Financial Editor Joseph Lazzaro is writing a book on the U.S. Presidency and the U.S. economy.
Economic bipartisanship is a work in progress