The financial titan JPMorgan Chase is betting on the next congressional session to be historic in its lack of productivity, according to a leaked internal document.
On Tuesday, the money-in-politics research group Center for Responsive Politics published a document from JPMorgan's government affairs office that gives some interesting hints as to how Wall Street views the fallout of last week's elections.
The viewpoint is bleak. "[T]he 112th Congress could be remembered as a gridlocked one without any landmark legislation," the document's author writes.
In the House, Republicans will likely hail their wave of support as a mandate from voters to reject the comprehensive reform measures that passed over the past two years. House Republicans will look to pass a series of spending cuts, tax cuts and repeal measures -- to create a distinct alternative in the mind of the electorate from the administration and reinforce their image as the party of fiscal restraint.
The Senate will likely be gridlocked on nearly every substantive policy issue, unable to move legislation under the rules of the body that require 60 votes to move forward procedurally on controversial issues. The tense partisan battle will ensure a series of cloture votes and procedural motions meant to make the opposing party take difficult political votes.
On the specific items, JPMorgan seems ready for nasty partisan fights, though in several instances they foresee areas of agreement between the two parties. On the issue of extending the Bush tax cuts, for instance, the firm predicts a "one-year extension... for all filers" to pass during the lame-duck session, though the author goes on to note that the lawmaker responsible for corralling the votes in the Senate -- Sen. Max Baucus (D-Mont.) -- will have a difficult task owing to Sen. Orrin Hatch's (B-Utah) growing concern over a primary challenge in 2012.
The firm also expects the Republicans to attempt to de-fund health care reform (not a surprise) as well as financial regulatory reform (more of a surprise). The latter will be done, the author predicts, by using "the appropriations process to slow implementation of Dodd-Frank by underfunding the new federal agency staff needed to get those programs off the ground."
The entire document is worth a read if, for nothing else, because it offers a rare insight into how the financial community views the drama unfolding in our nation's capital. It's impossible to know whether the sentiments expressed by JPMorgan's government affairs arm are based on simple observation or insider knowledge. Mostly, they are fairly obvious and carefully worded takes on the major policy debates. But what's telling is that for all of the talk about Wall Street wanting certainty in Washington, at least one major firm seems resigned to a legislative process that's even more difficult to predict as it moves forward.