How projected congressional gridlock could hurt your wallet
PROVIDENCE, R.I. (WLNE)– As midterm elections hint at congressional gridlock between Republicans and Democrats, this could directly hurt the wallets of New Englanders.
Victor Matheson, an economics professor at College of the Holy Cross, predicted the financial consequences.
“Congress and the president are unlikely to agree to large tax cuts or large tax increases,” Matheson explained. “We’re unlikely to see major changes in spending programs, any type of public service program, or any type of big public work.”
Matheson credits the uncertainty of the continued election count for the market being down.
He added, “Looking at your investments on a daily basis is a good way to give yourself heartburn without actually being able to do anything about. Seeing the markets swing wildly is nothing unusual. It’s something we see all the time.”
He warned Rhode Islanders and New Englanders of two red flags in the future. The first would be congress hitting the debt ceiling– a set cap on the budget Mathesons says we will surely hit in 2023.
“Congress has to agree to raise that cap, or congress has to agree to drastically and wildly cut all of our expenditures,” said Matheson. “Large number of government employees furloughed, potential delays in people receiving social security checks, and large drops in the stock markets.”
Matheson’s second red flag is if parties put politics over compromise amidst a potential recession.
He finished, “Republicans have shown in the past that they are willing to let the economy tank if they think the economy tanking will give them a political advantage.”