Washington - With the US economy facing a heightened risk of
sliding back into recession, the country's elected representatives may be
pushing it closer to the brink.
Democrats and Republicans say job creation is a top priority
as they return to work this week, but there is a growing body of evidence that
Congress is actually hurting the economy.
A protracted budget stalemate in the first half of the year
caused nervous federal agencies to sit on billions of dollars that should have
been circulating through the economy.
A vitriolic debate over raising the debt ceiling this summer
spooked consumers, caused turmoil in financial markets and led to a first-ever
downgrade of the United States' credit rating by Standard & Poor's.
A spat over subsidies for rural air services in late July
idled airport construction projects across the country and threw thousands
temporarily out of work for several weeks.
Businesses that had to suspend their airport construction
projects are still trying to recover from the disruption.
In Wilkes-Barre, Pennsylvania, the Daniel J Keating Co has
had to rebuild a partially built access road that washed away when they were
forced to suspend work. The company is also trying to reschedule product
deliveries and safety inspections and round up subcontractors who had moved on
to other projects, said company treasurer Joe Maloney.
"I don't think they have any appreciation about what's
going on out in the public," Maloney said of Congress. "They seem to
be totally ignorant of how this economy is driven by employment.
Maloney's disgust is widely shared. Congress' public
approval rating tied its record low of 13% in a Gallup poll in August, while
those surveyed by the Pew Research Center used words like "ridiculous"
and "childish" to describe the wrangling over the debt ceiling at its
height in late July.
"I cannot recall an instance where voters were so
demoralised," said Greg Valliere, chief political strategist at Potomac
Research Group. "The debacle in late July seemed to reinforce a sense of
resignation, not anger, that everyone in Washington is incompetent and
recklessly partisan."
Politics infecting the economy
Those bad feelings aren't just confined to cable TV news
talk shows and internet message boards.
Standard & Poor's cited the political environment as a
primary reason for its decision to downgrade the country's credit rating.
Stocks plunged after the downgrade, battering consumers' retirement holdings.
US consumer confidence fell in August to its lowest level
since the 2007-2009 recession. Some economists, businesses and pollsters say
the debt ceiling debate was a major factor.
"This collapse of economic confidence is not an
independent event driven only by economic reality," Republican pollster
Bill McInturff wrote in a blog post. "This sharp a drop in consumer
confidence is a direct consequence of the lack of confidence in our political
system and its leaders."
With consumers inclined to hold off on big purchases, that
could spell trouble for manufacturers of durable goods like automobiles and
refrigerators - raising the risk of a double-dip recession.
Don't count on Congress to do much to help.
President Barack Obama is expected to unveil a job-creation
package on Thursday, but analysts say the Republican-controlled House of
Representatives is likely to torpedo many of its most ambitious elements.
Republican ideas for boosting the economy, centred on
scaling back regulations, aren't expected to get anywhere in the
Democratic-controlled senate.
Government layoffs at the state and local level have
undercut private sector gains in recent months. Budget cuts attached to the
debt ceiling deal could force the federal government to retrench workers in the
coming months as well.
Given the ideological chasm between the two chambers,
Congress has had trouble passing even routine legislation that keeps existing
projects moving forward.
The airport funding lapsed last month due to a squabble over
$13m in subsidies for rural air services.
That led to $400m in lost ticket tax revenue and as-yet
untallied disruption for contractors. Many are planning to bill the government
for their expenses.
Those funds could expire again if Congress does not act by
September 16. Highway and mass transit construction projects could also face
disruption if Congress does not renew them by the end of the month.
Doubts about Congress' ability to keep the money flowing
might lead contractors to charge more for their services even at a time when
work is hard to come by, one industry official said.
"If the certainty of being paid goes away, I think
contractors are either going to start raising their bids to protect themselves
against that uncertainty or they're just going to drop out of bidding,"
said Ken Simonson, chief economist for the Associated General Contractors of
America.
"They're extremely frustrated."