Personal Wealth Management / Expert Commentary

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.

Transcript

0:02
so
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a lot of my firm's
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more conservative clients have been very
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concerned
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this year by the congressional use of
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reconciliation
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as a process to
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put things through the senate that
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otherwise would require 60 votes
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and there's this fear that
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i hear pretty often about will the use
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of reconciliation
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be broad big
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and bad well let me just
0:41
stop you if you're not of that
0:43
conservative perspective
0:44
you probably believe that the use of
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reconciliation
0:48
that the conservative might think is big
0:50
bad and
0:53
broad up would actually be great
0:57
a goal and generous
1:00
but let's step back from all that
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because that's all
1:04
partisan politics and i don't really do
1:06
partisan politics
1:08
i do markets and i stick to markets and
1:12
when we think about this the process is
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fairly rigid
1:17
using reconciliation only applies to
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certain kind of things
1:21
uh it doesn't allow for an
1:24
awful lot of what would be the agenda
1:27
that many people would hope for and
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other people would fear
1:34
the fact is as we saw in the 1.9
1:38
trillion dollar
1:39
spending bill they couldn't throw in
1:42
an increase in minimum wage but doesn't
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qualify for reconciliation on an awful
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lot of the things that relate to
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regulatory changes of law otherwise you
1:50
can't throw into a reconciliation bill
1:53
they will get knocked out they will not
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be honored
1:56
and as we move forward from here
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what i believe as i've said in other
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places and recently
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is that the margins in congress
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are so thin that getting
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reconciliation through even which allows
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for
2:13
passage instead of at 60 in the senate
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at 50
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is hairlessly tough to do
2:20
moving forward will there be some of
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that yes i'm sure there will
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but what it will require is enough
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agreement
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that the democrats in the senate
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who otherwise are thought of as those
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further
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to the democratic right or in
2:39
seats that might be more imperil
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potentially in 2022
2:45
that they have to be prepared to sign on
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because they've got to be able to get to
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they've got to
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keep every single one of those to put a
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reconciliation bill through at 50
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or convert a couple of republicans
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which isn't easy to do since things are
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so long or jammed ideologically and
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there's so much bitterness on both sides
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going both ways which is
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actually pretty unfortunate but be that
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as it may that
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both sides are so hostile to each other
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that this is a very tight needle
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to put a thread through and therefore
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will there be some of it yeah there'll
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be some
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will there be a lot of it i don't think
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there will and then
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i'll make the point that because that
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thread has to go through that very tiny
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needle
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in that process of trying to make that
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work
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it takes longer and as it takes longer
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there's more time for markets to
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pre-price potential outcomes
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digest it and move on long before the
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legislation happens which i believe is
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happening as we speak and therefore
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these features aren't as big or as bad
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as some people fear other people hope
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and you will see that as this year
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progresses
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as we move through what's basically the
4:02
infrastructure bill and can i be wrong
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about this
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sure because there can be unexpected
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events that come up and
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swing people over into a position they
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wouldn't have otherwise had as we speak
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today
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but for the most part it's going to be
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really tough
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to get big bills through and as every
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month goes by that's going to get
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tougher
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so thank you for listening to this but
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no i don't really believe
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that there's a runaway issue of benefit
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or risk from the reconciliation process
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in the senate thank you very much
4:37
subscribe to the fisher investment
4:39
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4:41
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4:41
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4:43
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