by John Carney
Breitbart.com
A GOP Sweep Won’t Lead to Higher Inflation
The conventional wisdom on Wall Street has long been that a sweep by Republicans in the election would be inflationary. That’s probably wrong.
The basic idea behind the claim that a unified Republican government would be more inflationary than a divided government is that GOP control would lead to a great fiscal expansion in the form of tax cuts fueling higher deficits. More generally, many analysts believe that without an opposition empowered to rein in ambitious economic plans, parties tend to become fiscally irresponsible.
Historically, however, this is not the rule. While on average inflation is a bit higher during periods of unified government, it has also often been lower. Going all the way back to the Truman administration, inflation was much higher during the periods of divided government than unified government. The same pattern applies to the Eisenhower administration: lower inflation during the period of unified Republican control, higher when Democrats gained control of Capitol Hill.