We’re just going to keep hammering away at this “gridlock is good for the market” rubbish that we continue to here — most recently from NYSE floor guy Steve Grasso on CNBC, who said that the stock market may be looking at echoes of 1994, when Clinton vs. Newt was great for stocks.
Now it’s one thing if the GOP only pushes for meaningful, long-term adjustments to the US fiscal situation, then that’s fine. We applaud that.
But if the GOP comes in, guns-a-blazing, with dreams of balanced budgets, then watch out, because this is going to create a kind of gridlock like you won’t believe, perhaps even threatening the ability to raise the debt ceiling.
And as Benjamin Sarlin at The Daily Beast points out, this is a real possibility, since the deficit is the #1 issue of the Tea Party, and the GOP will have to bend over backwards to the tea party if it wants to maintain the coalition. Rand Paul promises to filibuster any non-balanced budget, and we’re pretty sure there are plenty of other insurgent candidates that feel the same way.
And we hope we shouldn’t have to answer the question of why a balanced budget would be a disaster. Maybe it’d be good in the same way chemotherapy is good — as in a blunt-force weapon that sometimes kills you to deal with a long-term cancer — but it’s toxic and it makes you sick, and in the short and medium term, it’d be a huge hit to GDP.
So again, if you’re bullish on gridlock, at least consider the possibility of uber-gridlock and what that would mean.
Don’t miss: 14 mindblowing facts about the deficit >
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