- The Washington Times - Wednesday, November 8, 2000

As this is written, the election is too close to call. Not only could the presidential race go either way,

but control of both houses of Congress is also in doubt. There is a chance either the Democrats or Republicans could find themselves controlling the White House, Senate and House of Representatives on Wednesday morning. However, the odds favor a continuation of divided government. Whichever party wins the presidency, the chances are very good that the opposite party will control at least one house of Congress.

Pundits frequently put down this state of affairs, calling it "gridlock." They think it would be better if the party occupying the White House also had control of Congress. This, they think, would put an end to partisan bickering, allow presidents to get action on their programs, and create accountability. No longer would presidents have the excuse that they failed to deliver on their promises because the other party sabotaged them on Capitol Hill.

Political scientists are split on the question of gridlock. John Coleman of the University of Wisconsin, writing in the American Political Science Review (December 1999), believes unified government is much more conducive to the passage of "significant" legislation. Sarah Binder of the Brookings Institution, writing in the Brookings Review (winter 2000), on the other hand, finds divided government is not an insurmountable barrier to passage of major legislation, and that unified government offers no assurance that critical national priorities will be addressed.

Financial markets are less ambiguous on the question of gridlock. In general, investors appear to like divided government, believing it is better for the economy for one party to have "veto power" over the other's potential excesses. A recent poll by Merrill Lynch, for example, asked 26 money managers controlling $2.2 trillion what their preferred electoral outcome would be. A majority favored a Democratic White House and continued Republican control of at least one house of Congress.

This result could simply be interpreted as continuation of the status quo. It is well known that markets hate uncertainty above all things. They also hate radical changes in policy, even in a direction generally viewed as positive for investment. That is because a skilled money manager can make money regardless of which way the market moves, by going "long" when the market rises and "short" when the market falls. Thus money managers are less concerned with the direction of the market than they are about being blindsided from the other direction once they have taken a position.

There is evidence that divided government is better for a rising Dow Jones Industrial Average. As columnist Daniel Kadlec writes in Time magazine, "The Dow has fared best when one party has controlled has controlled the White House and the other has controlled Congress, the optimum formula being a Democratic president and a Republican-controlled Congress."

A study by the Wall Street Journal found that since 1896, the highest two-year returns for the stock market occurred under a Democratic president and Republican control of at least one house of Congress 18.3 percent. However, the second highest return 17.4 percent came when Congress and the White House were all under Republican control. Complete Democratic control was third, yielding a 15.7 percent return. Worst for the market was a Republican president with Democrats controlling at least one house, which saw an average gain of just 10.5 percent over two years.

Quite apart from their propensity to split tickets, voters have long expressed satisfaction with divided government. Since 1986, the Hart-Teeter Poll has asked Americans whether they prefer unified or divided government. Over time, a fairly consistent three-fifths of people have supported the latter, with about a third favoring the former. One reason for this result may be found in a 1994 Wall Street Journal/ NBC Poll, which found that 73 percent of Americans saw gridlock even with one party in complete control of government.

Recent political history supports the view of most Americans. Democrat Jimmy Carter had a Democratic Congress for all four years of his presidency, yet had little success pursuing his agenda. Republican Ronald Reagan always had a Democratic house to contend with, yet was successful in getting tax cuts and tax reform enacted, as well as much other major legislation. And Democrat Bill Clinton had less legislative success during his first two years, when he had a Democratic Congress, than in the last six, when Republicans had control.

One reason for these results may be that presidents must work harder to build public support for their initiatives when they must contend with a Congress under the other party's control. Presidents have a tendency to take for granted support for their program in Congress when their party is in control, and thus are more likely to be blindsided when encountering opposition there. This was certainly the case for Mr. Carter and his energy program in 1977 and Hillary Clinton's health care proposal in 1993.

Finally, even should George W. Bush or Al Gore find their party with a majority in both the House and Senate, the minority party will not be without resources. The majority in both houses likely will be extremely thin regardless of how the election goes, and in the Senate the filibuster will remain a powerful tool for the minority party.

Whether gridlock is good or bad is largely an irrelevant question. It is virtually inevitable in our system of government, with power divided among three branches of government and 50 states as well. Rather than lament the fact, it is better for presidents to learn to live with it.

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