With market in flux, Congress can help business

The political drama in Washington has created the kind of instability that makes Wall Street nervous. Investors crave nothing more than stability, so when the market is aflutter, money is lost and bad things happen. Normally, government is the source of the problem. It now needs to be the solution. With the Executive Branch intransigent, Congress must step up to revive a slowing economy and restore investor confidence in the capital markets.

As the 116th Congress gets underway, activist liberals will supplant laissez-faire conservatives in House leadership roles. Democrats may be tempted to avenge the wrongs of recent years by swinging the policy pendulum 180 degrees. Big business is an easy and attractive target. Under Trump there has been scant business regulation, but to settle the score, Democrats are likely to take it out on business for no good reason. This would be a misread of their November mandate and a mistake of Olympic proportions. Nor is it what our nation needs now.

The Herculean task for Congress will be to reassure global markets that the ship of state is secure. 

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More than the Mueller investigation, investors want to know that a trade war will not go beyond words and the Fed will not bow to West Wing pressure. They want assurances that a simmering government shut-down will not boil over onto key economic decisions. And they want to know that the next two years will not be a policy pogrom on key business priorities.

Legitimate concerns to be sure because the danger of Congressional over-reach is real. Setting the markets aright will require a case-by-case regimen of regulatory restraint. After all, it would not be prudent to balance the political ledger on the backs of business. The Democratic Party sorely needs to mend its relationship with business if it is to lay claim to good governance, let alone leadership in 2020 or beyond. Myopia should not be part of their equation.

Broad-brush regulation of banking, communications, finance, media, and mergers, for example, should give way to reasonable oversight and focused policy decisions that will guide, not gouge, business. Americans seem to like the fact that government stays clear of the day-to-day affairs of business but sets up guardrails when it is headed off-track.  

Congress rightfully should examine egregious business practices that offend societal norms. It is okay to castigate companies for gender discrimination, lack of diversity, privacy breaches and negligence in national security. Shining the spotlight on bad corporate actors makes us a better nation and industry associations should embrace change in that context. But bashing business as fidelity to Democratic dogma should be eschewed out of hand. Democrats need not become the anti-business brigade.

Let’s face facts. The business of America is business. From online entrepreneurs to global technology giants, the U.S. economy impacts international markets in an unparalleled way. As the world’s third largest economy, the U.S. generated $19.4 trillion, behind China ($23.1 trillion) and the EU ($19.9 trillion). With a growth rate of 3.4 percent, however, the U.S. economy is slowing down, with a foreseeable recession.

With tech stocks dragging NASDAQ down and a sagging Dow, the latter-day turbulence of 2018 has found footing in 2019. The last thing investors need is a two-year internecine battle between Congress and the President when economic stabilization should be the order of the day.

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Smart corporations should understand the shift underway. This has none of the hallmarks of a do-nothing Congress. Pelosi and Schumer have shown they can coordinate on big policy issues and a resolve to move full steam ahead. In so doing, they must be careful to balance the popular with the pragmatic, especially on the corporate agenda. The market needs stability and Congressional Democrats need to grow beyond their beef with big business. Companies, too, need to embrace the new rules of corporate responsibility, which have been overlooked by Facebook, Google, Wells Fargo and several others.

It may sound good to denounce big banks, big mergers, big media and big tech, for example, but scale has great value in the global economy. Without scale, U.S. companies cannot compete globally for the next generation of services, products and technologies for which American consumers clamor. Without scale, investment seeks safe harbor and innovation remains provincial. And without scale, America’s access to emerging markets stops at the border.

With a recession looming, the new Congress should embrace its Commerce Clause role and responsibility. 

It should rise to reassure investors of America’s market stability and temper the reflex to over-tax and over-regulate business for no good reason. Even with the ongoing Executive – Congressional tension, Congress has the power to save the day for American investors and it should use it.

Adonis Hoffman is chairman of Business in the Public Interest, Inc. He is a former chief of staff and senior legal advisor at the FCC and served in legal and policy positions in the U.S. House of Representatives. He has also served as an adjunct professor at Georgetown University. Follow him on Twitter @AdonisHoffman.