Will the Congressional Reconciliation Process Bypass Political Gridlock? Ken Fisher Answers

Some investors worry that a US legislative process known as reconciliation might threaten the potential market-calming effects of political gridlock by allowing new tax and spending bills to pass Congress with only a simple majority of votes. In his latest video, Fisher Investments’ founder and Co-Chief Investment Officer Ken Fisher explains why the Congressional reconciliation process isn’t likely to completely bypass political gridlock.
The reconciliation process was created by the Congressional Budget Act of 1974—the same law that created the Congressional Budget Office. Reconciliation allows for speedier consideration of certain tax, spending and debt-limit legislation. Importantly, Senate rules only allow reconciliation to pass laws that change the level of spending, revenues or the debt limit. That means that reconciliation bills have some limits on scope.
Ken explains that the margins in Congress are so thin that passing new legislation through the reconciliation process isn’t a certainty. With such tight margins, enacting controversial legislation will be difficult. That difficulty, Ken says, adds valuable time to the legislative process. This gives markets time to digest developments and pre-price potential outcomes long before the legislation happens.
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