On the Senate side, the contract is still a 70 percent bet the Republicans will hold the upper chamber. This points to a congressional split, meaning Washington will “do no harm” on pro-growth measures, especially tax policy. But it is still possible that a phony pay-go revenue deal could surface with a coalition of House Democrats, liberal Republican Senators, and Senate Democrats.
Just as troubling is an anti-growth surge toward protectionist trade activity. The Democrats are against free trade almost uniformly, with 30 to 40 percent of Republicans considered unreliable on the subject. A Wall Street Journal story this week reveals a strong push for textile protectionism against China, Vietnam, Africa, Haiti, and South America. The supply-side growth model stresses a steady dollar, low tax rates, and free trade to promote growth. Hence, should protectionist legislation trudge forth, it would be an anti-growth lose-lose situation for the U.S. and its trading partners.
All this said, the roaring stock market remains very much in favor of a divided Congress. Republican polls are going down, and stocks are going up? Is this the Pelosi bull market? Perhaps so.
But if both chambers shift Democrat, taxes, trade, and spending may all go the wrong way. In the New York Times this week, Robert Pear details Democratic plans to control drug prices and attack health insurers and pharmaceutical companies. It’s Hillarycare all over again; a takeover of 15 percent of our economy.
President Bush’s economic approval rating has risen 5 points to 44 percent in a new Wall Street Journal/NBC News poll. Republicans should follow the president’s lead and flog away on the economy, the benefits of lower tax rates, and dropping gas prices. They also should loudly trumpet the splendid stock market rally. Indeed, across the next 18 days, this is the GOP’s best chance to generate an enthusiastic vote turnout from the investor class.
Pollster Scott Rasmussen shows that entrepreneurs (49%) and investors (46%) are the two groups most appreciative of the job the president is doing. Message to the GOP: Talk up the low-tax, Goldilocks stock market economy and get these folks to the polls.
It’s your last chance boys and girls.