The encouraging sharp market advance today appears to be directly related to the announcement by Governor George W. Bush that he wants the 106th Congress to successfully conclude the 2001 spending bills in the lame-duck session and not seek a continuing resolution that would carry them into next year. This would mean there is a good chance of getting the tax bill passed as part of the package. There are Republicans who have wanted to postpone the legislation, which would not be good for the tax cuts. When Congress returns next Tuesday, it will probably pass a 10-day CR to enable them to get this work done. This still means there has to be some sort of bipartisan mood ready to get this done. If it falls apart in ugly recriminations, the Democrats may oppose a CR that lasts beyond the first of the year, which would give them time to organize the Senate. There are 20 days before the Inauguration, which means Sen. Lieberman would not have to resign his Senate seat in that period, giving them the Democrats enough votes to organize.
Sen. Orrin Hatch says the Democrats would not be so nasty, but who knows? My guess, though, is that there are so many things in the appropriation bills that both parties want to deliver that they will find a way to get them done. Bush's statement was a good thing for him to do. Bush said, "That's going to be up for them [Speaker J. Dennis Hastert and Senate Majority Leader Trent Lott.] I think that Leader Lott and the Speaker are plenty capable themselves of figuring out how to end this legislative session. And should [Dick Cheney] and I become the vice president and the president, we will have a strategy to deal with the Congress -- the next Congress." The Associated Press reports Hastert and Lott "are going to Texas this weekend to discuss the congressional agenda with George W. Bush in a session that will underscore their position that he is the legitimate president-elect."
I continue to resist the idea that the pushing and shoving between Bush and Gore, including today's Supreme Court hearing, are responsible for the market movements. The market indices were about the same after the hearing as before.
P.S. My weekend SSU lesson at our website will be of interest to most of you. It should be posted shortly. I've done a "case study" of the 1987 market crash, putting together a reasonable explanation of what was going on back then to cause the one-day 22% sell-off. I was motivated to do this after reading Bob Woodward's new book, Maestro, which celebrated Alan Greenspan's wizardry as Fed chairman from 1987 on. Those of you who would like the back-up papers I have, give a holler and we will get them out to you.