Large Republican gains in the midterms will lead to Congressional chaos and a weaker economy:
Divided We Fail, by Paul Krugman, Commentary, NY Times: Barring a huge upset, Republicans will take control of at least one house of Congress next week. How worried should we be by that prospect? ...
This is going to be terrible. In fact, future historians will probably look back at the 2010 election as a catastrophe for America, one that condemned the nation to years of political chaos and economic weakness.
Start with the politics. In the late-1990s, Republicans and Democrats were able to work together on some issues. President Obama seems to believe that the same thing can happen again today. ... Good luck with that.
After all, that era of partial cooperation in the 1990s came only after Republicans had tried all-out confrontation, actually shutting down the federal government in an effort to force President Bill Clinton to give in to their demands for big cuts in Medicare.
Now, the government shutdown ended up hurting Republicans politically... But the lesson current Republicans seem to have drawn from 1995 isn’t that they were too confrontational, it’s that they weren’t confrontational enough. ... Mitch McConnell, the Senate minority leader, has received a lot of attention thanks to a headline-grabbing quote: “The single most important thing we want to achieve is for President Obama to be a one-term president.” ...
Mr. McConnell was saying ... that, in 1995, Republicans erred by focusing too much on their policy agenda and not enough on destroying the president... So this time around, he implied, they’ll stay focused on bringing down Mr. Obama.
True, Mr. McConnell did say that he might be willing to work with Mr. Obama in certain circumstances — namely, if he’s willing to do a “Clintonian back flip,” taking positions that would find more support among Republicans than in his own party. Of course, this would actually hurt Mr. Obama’s chances of re-election — but that’s the point.
We might add that should any Republicans in Congress find themselves considering the possibility of acting in a statesmanlike, bipartisan manner, they’ll surely reconsider after looking over their shoulder at the Tea Party-types, who will jump on them if they show any signs of being reasonable. The ... Tea Party is one reason smart observers expect another government shutdown...
Beyond the politics, the crucial difference between the 1990s and now is the state of the economy.
When Republicans took control of Congress in 1994, the U.S. economy had strong fundamentals... In this favorable environment, economic management was mainly a matter of putting the brakes on the boom ... and head off potential inflation. And this was a job the Federal Reserve could do on its own by raising interest rates, without any help from Congress.
Today’s situation is completely different. The economy, weighed down by the debt that households ran up during the Bush-era bubble, is in dire straits; deflation, not inflation, is the clear and present danger. And it’s not at all clear that the Fed has the tools to head off this danger. Right now we very much need active policies on the part of the federal government to get us out of our economic trap.
But we won’t get those policies if Republicans control the House. In fact, if they get their way, we’ll get the worst of both worlds: They’ll refuse to do anything to boost the economy now, claiming to be worried about the deficit, while simultaneously increasing long-run deficits with irresponsible tax cuts — cuts they have already announced won’t have to be offset with spending cuts.
So if the elections go as expected next week, here’s my advice: Be afraid. Be very afraid.