Federal lawmakers running for re-election this year received a small bit of solace in the latest polls.
The congressional approval rating jumped to 17% in a new Gallup survey. Americans are sick of watching politicians squabble in a capital riven along partisan lines – a sentiment that is reflected by investment advisers.
The vast majority of my coverage focuses on legislation and regulations affecting advisers. Almost every time that I interview one of them, I get a blast of anti-Washington comments.
My latest experience came when I reported a story this week for the April 23 print edition about the pressure that retirement savings tax incentives are under as Congress moves toward comprehensive tax reform and deficit reduction.
Advisers expressed alarm that Congress would consider doing away with or limiting tax-deferrals for contributions to 401(k) plans and individual retirement accounts. Underscoring their worries was a deep distrust of Washington.
“I don't believe there are any adults there,” said Frank Armstrong III, president and founder of Investor Solutions Inc. “I don't believe there are any patriots there. I don't believe there are any thinkers there. I can't tell you how disappointed I am in the whole system.”
Other advisers hold the same low expectations of Congress, even if the indictment isn't as harsh. They don't think elected leaders have the capacity to deal with the big problems facing the country.
“It's all short-term: ‘I have to get re-elected,” Harry Armon, president of Arcap Partners LLC, said of the attitude in Washington. “It what's going to get more votes next November.”
When it comes to the retirement-savings issue, lawmakers are working together in some respects to protect the tax-deferrals for contributions to 401(k)s and IRAs. A resolution of support sponsored by Reps. Jim Gerlach, R-Pa., and Richard Neal, D-Mass., has garnered 115 bipartisan cosponsors.
But a separate bill introduced by Mr. Neal that would allow an automatic payroll deduction for IRA contributions for employees at companies that don't offer retirement plans only has 12 Democratic co-sponsors.
“I haven't been able to get one Republican on board,” Mr. Neal said at an April 17 House Ways and Means Committee hearing.
One of the reasons, according to observers, is because Republicans are reluctant to sign onto a measure that can be perceived as a mandate on small business – especially when they castigate the health care reform law for placing too great a burden on small business.
This is the primary problem in Washington. Politics are so polarized that standing with your party often trumps policy. In previous Congresses, an auto-IRA bill garnered Republican support.
Democrats utilize the same circle-the-wagons tactic. They hang together on a bill – especially in the face of defeat in the Republican-controlled House – in order to have a campaign talking point this fall.
Another election-year dynamic that's annoying advisers is putting off tough decisions until after the election. For instance, all the expiring Bush administration tax cuts will have to be addressed sometime between mid-November and their expiration on Dec. 31.
But the lame-duck negotiations could produce an ugly outcome.
“I'm worried that there's going to be a lot of inertia, and things will happen at the last minute, if at all,” said James Holtzman, an adviser at Legend Financial Advisors Inc. That deadline rush could be “haphazard.”
My view of lawmakers is more sympathetic than that of advisers. I've worked in Washington and lived across the Potomac River in Arlington, Va., for 20 years – nearly my entire adult life. I moved here originally to work on Capitol Hill.
I'm convinced there's a 90/90 rule – 90% of legislators are doing what they think is best for the country 90% of the time. More than half of their colleagues will probably strongly disagree with that direction more than half the time.
What Washington needs is more leaders willing to reach across the aisle and break the partisan vice grip that strangles most of the work in this town.