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The election and the markets

Marketplace Staff Oct 20, 2006

TEXT OF INTERVIEW

KAI RYSSDAL: This is a pretty stressful time for politicians all over the country, but come November 7, some might be in a full-blown panic. This year’s elections are shaping up to be incredibly contentious. They could create a huge shakeup on Capitol Hill and if there’s a change in Congress, it might signal some changes for us. Zanny Minton Beddoes is with The Economist magazine in Washington. Zanny, let me ask you, if the Democrats win at least one house, what are they going to try to get done?

ZANNY MINTON BEDDOES: Well they are going to talk about getting a lot of stuff done. I’m not sure actually how much they will get done. I think they are very quickly going to try to push through a couple of high-profile economic issues, the most important one I think for them is raising minimum wage. Nancy Pelosi has said that within 100 hours of being speaker she’s going to get that through. Beyond that, there’s been a lot of talk about shifting away from the Bush policies of favoring the rich with tax cuts and doing more for middle class families. And there’s also been some talk of restoring fiscal discipline to Washington. Those two are sort of slightly contradictory because if you are actually committed to fiscal discipline then the room for your own version of middle class tax cuts is somewhat limited and it’s just going to be very hard for them in the way of repealing Bush’s tax cuts because he still is in the White House and he still has a veto pen, and if there’s anything he’s going to use it on it’s going to be tax cuts.

RYSSDAL: Might the Democrats sort of look in the foreign affairs side of the house a little bit and think about trade and the President’s trade authority there?

BEDDOES: The interesting question there is clearly the Democrats have become much more skeptical about trade and many of the new people coming into the House are really deeply skeptical about trade and at the same time the Democrats, particularly speaker Pelosi, as she would be known, would be very reluctant to hand the President any big victory, so one thing that has to be very much in the balance is any extension to fast track, and fast track as you know is the authority that Congress gives the President to negotiate trade deals and that runs out in June of next year and I don’t see why it’s in the Democrats’ interest to really hand the President that kind of a victory. And more broadly on trade I think there will be more harrumphing about leveling the playing field, about making sure trade helps American workers. I don’t really foresee see a really big step backwards. I think that there isn’t that much of a risk of kind of serious protectionism unless the economy really, really slows or falls into recession in which case all bets are off as to what kind of crazy trade policies people come up with. But I think that the most likely outcome is just no more progress forward.

RYSSDAL: Alright, but we have to sort of be upfront here don’t you think Zanny and admit that what this all really is about in ’06 and everything going forward is about ’08 and the Presidency?

BEDDOES: Absolutely, it’s all about ’08 and for the Democrats in particular, even if the take both houses of Congress, they are not going to be able to push a dramatic agenda of their own. Big issues like health care reform, like entitlement reform even frankly tax policy reform, they are all issues that is going to come up in the run-up to ’08, and they’re going to be something that the next President has to deal with and they’re all things that will have to be dealt with then but I can’t see that there is the momentum to do anything significant on that, even if the Democrats have control over both chambers of Congress they can’t do it with the President in the White House unless they find some kind of bipartisan compromise on these things and I see little room for that now.

RYSSDAL: Alright, Zanny thanks.

BEDDOES: My pleasure.

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