By Dan Gonzalez (Washington DC Metro)
With the U.S. Presidential election
right around the corner, I thought I’d share “what if” predictions regarding
the election and effects on the economy made by the Principal Global Economic Committee. The group highlighted three election
eventualities and the impact on various economic issues (including the much
discussed “fiscal cliff ): 1) Romney
wins and Republicans retain control of the House of Representatives; 2) Obama
wins and the House goes Democrat; and 3) Obama wins and the House stays
Republican.
Romney wins and the House stays
Republican:
The group says, “We would expect taxes
to be reduced and entitlement spending cut...and the Bush Tax Cuts
extended. With a resolution to the
uncertainty that is hindering economic growth, we would expect to see a
resumption of growth in the second half of 2013.”
Obama wins and the House goes
Democrat:
“In this scenario,” the group says, “we
expect taxes to go up and entitlement spending would either increase or at
least be maintained at current levels.
The Bush tax cuts would probably be maintained. Even though this path looks different than
the scenario above, we would again expect the reduced uncertainty would mean
growth in the second half of 2013.”
Obama wins and House stays
Republican:
The group notes that “this option brings
the highest chance for a downside scenario...with a continuation of the current
dysfunctional dynamic. Any solution (to
avoid the Fiscal Cliff) would require concessions from both sides and would
likely only be short term “punts,”..and another temporary fix may not engender
much confidence.” Their absolute worst
case is that the economy slides back into recession in 2013.
We will know soon enough --- November 6 ---
which scenario will occur. We certainly
live in interesting times.
