Is a Divided Government Good for Business?

Restraint in federal spending is a top priority for many businesses. History suggests that the government is less likely to go on a spending spree when the White House and Congress are not controlled by the same party.

Copyright © 2007 NPR. For personal, noncommercial use only. See Terms of Use. For other uses, prior permission required.

STEVE INSKEEP, host:

It's MORNING EDITION from NPR News. I'm Steve Inskeep.

RENEE MONTAGNE, host:

And I'm Renee Montagne. Good morning.

All this week NPR has been running a series called Crossing the Divide.

Unidentified Man #1: The interrelatedness of all communities.

Mr. ELI WEISEL (Author): The other is not my enemy.

Unidentified Man #3: Stop dividing ourselves like this.

MONTAGNE: We've heard a lot about ways Democrats and Republicans might overcome their disagreements and get along. But we didn't want to forget that some Americans out there aren't necessarily looking for bipartisanship. Many of them are in the business world, and they feel that it if Congress doesn't get much done, that's just fine.

Here's NPR's David Greene.

DAVID GREENE: When President Bush gave his State of the Union Address the other night, he said Republicans and Democrats may spend time duking it out but they'll still be able to accomplish a lot.

President GEORGE W. BUSH: We're not the first to come here with a government divided and uncertain in the air. Like many before us, we can work through our differences and we can achieve big things for the American people.

GREENE: But here's someone who'd prefer they avoid achieving big things.

Mr. STEPHEN SLIVINSKI (Director of Budget Studies, Cato Institute): I think I'm a fan of gridlock.

GREENE: That's Stephen Slivinski. He's director of budget studies at he Cato Institute, a libertarian think tank. Slivinski isn't a fan of big spending, and he's seen a lot of it recently. In fact, he just wrote a book, "Buck Wild: How Republicans Broke the Bank and Became the Party of Big Government." Now, the day after the Democrats won the recent midterm elections and took control of Congress, Slivinski woke up a happy man. Here's why.

Mr. SLIVINSKI: If you look from Lyndon Johnson all the way until now, the periods where you had a divided government you tended to see government spending that was half of what you saw under united government.

GREENE: For much of this last six years, Slivinski says, Republicans have been pretty united in losing their identity as a frugal party. He says their feeling was: why not keep funding the government since we're in charge of it.

Mr. SLIVINSKI: There was less of an interest in being critical of the White House programs, because the White House was being controlled by one of their guys.

GREENE: On the other hand, a divided government, he says, acts like an extra layer of checks and balances. Look at 1995, Republicans were at loggerheads with President Bill Clinton. Things got so bad the government had to be shut down. House Speaker Newt Gingrich had some choice words for Mr. Clinton.

Representative NEWT GINGRICH (Republican, Georgia): He apparently went and took the government - the course on political science about winning the office, and then skipped the course of about being president. And he's missing all the parts about negotiating with the Congress, trying to get the legislative process to work. You know, there's another part of the Constitution other than having a White House.

GREENE: Sadly for Gingrich, many Americans blamed his stubbornness for the whole affair. Still, in all the fighting, Republicans were pleased to hear this promise form President Clinton.

President BILL CLINTON: The era of big government is over.

(Soundbite of applause)

GREENE: In fact, within a couple of years, the federal government was projecting a balanced budget. And some believe that was no accident. Republican lawmakers and a Democratic White House never let the other spend too much. So today's divided government has Stephen Slivinski happy.

Many in the business world are feeling pretty good these days too. Gerry Kiem's a management professor at the W.P. Carey School of Business at Arizona state, he consults for businesses on how to lobby Washington. And he says that when Republicans and Democrats both have clout there are more lawmakers worth calling.

Professor GERRY KEIM (Management, W.P. Carey School of Business): With both parties involved in the process, it basically expands the number of potential suppliers of public policy.

GREEN: Now the perception out there is that Democrats are unfriendly to the business world. Is that a perception that you face when you're talking to businesses?

Prof. KEIM: No. And I don't think many business people have that perception either. We've got a long history in this country of people who perhaps are labeled liberal who have been very responsive to business interests in their particular district.

GREENE: That's assuming, of course, that a business actually wants something from Washington. Ron Kiddoo is chief investment officer for Cozad Asset Management. In general, he says, businesses fear an overactive Congress because it may mean new regulations or mandates. So, Kiddoo says, gridlock can be the best thing for them.

Mr. RON KIDDOO (Chief Investment Officer, Cozad Asset Management): The perception is if you've got a divided House or Congress, or divided Congress versus the executive branch, it is more difficult to get legislation passed. Many times legislation is negative to business. And if they don't do anything, then business will be able to proceed as usual.

GREENE: So yes, there's been some lofty rhetoric in Washington recently.

President BUSH: We enter the year 2007 with large endeavors underway, and others that are ours to begin. In all of this, much is asked of us.

GREENE: But as we've heard, there are some who aren't asking for much at all.

David Greene, NPR News, Washington.

Copyright © 2007 NPR. All rights reserved. No quotes from the materials contained herein may be used in any media without attribution to NPR. This transcript is provided for personal, noncommercial use only, pursuant to our Terms of Use. Any other use requires NPR's prior permission. Visit our permissions page for further information.

NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR's programming is the audio.

Comments

 

Please keep your community civil. All comments must follow the NPR.org Community rules and terms of use, and will be moderated prior to posting. NPR reserves the right to use the comments we receive, in whole or in part, and to use the commenter's name and location, in any medium. See also the Terms of Use, Privacy Policy and Community FAQ.