A U.S. economist said a Republican victory in the upcoming midterm elections would divide Congress, which could hamper President Joe Biden’s soft infrastructure — health care and child care — agenda.
“The House of Representatives is very red, and the Senate race has definitely narrowed in recent weeks. So Washington will be deadlocked, which tends not to be so bad for the market because it means the status quo, no major moves,” said BNP Paribas chief US economist Carl Riccadonna told The Epoch Times.
“Blue waves are the least likely scenario.”
Riccadonna shared his views this week at the bank’s press conference in New York.
Republicans, who currently hold 50 U.S. Senate seats, only need one more seat to secure a majority. Thirty-four of the 100 seats are contested, and the winner’s term is six years.
“What’s at stake is the likelihood of version 2.0 of the Democratic agenda that we’ve seen in the first two years of President Biden’s presidency, rather than the more likely scenario of legislative impasse over the next two years,” Ricardona said.
When asked to elaborate, he said Version 2.0 of the Democratic agenda would include continued investment in infrastructure, health care and child care.
Last year, Congress approved the $550 billion Infrastructure Investment and Jobs Act, and the expanded federal child tax credit provides families with up to $350 per child between July 2021 and December 2021.
Riccadonna added: “In a blue wave scenario, you’re going to see more fiscal support for these kinds of initiatives, which will mean more borrowing and more Treasury issuance.”
The only risk scenario for a red wave associated with Riccadonna is an unexpected shock, such as a new COVID variant that could pose a significant threat.
“Unless things are really, really serious, a divided Congress is going to be a lot slower at the rescue, and that’s the consequence,” he said.