After Democrats and Republicans came together late Wednesday for a brief display of bipartisanship to avert a U.S. debt default, financial advisers all but turned their backs on Washington in frustration.
“My opinion of Washington can't get any lower at this point because it is zero, exactly zero,” said Paul Schatz, president of Heritage Capital LLC.
Mr. Schatz, who described last year's fiscal cliff drama as the “biggest hoax since Y2K,” called the bitter political fight over the debt ceiling and partial government shutdown, which was resolved the day before the Treasury was set to hit its current $16.7 trillion debt limit, as “an even bigger joke.”
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Regardless, he thinks the Dow Jones Industrial Average will gain another 675 points by January, and he uses any short-term market pullbacks to buy more stocks.
“[President Barack] Obama is an idiot, and [House Speaker John] Boehner is a moron,” Mr. Schatz said. “As an investment adviser, you ignore those idiots and follow your process and do what's best for your clients.”
Across the financial advice industry, disgust for Washington's political bickering might be considered an understatement.
“Nothing they did over the past few weeks changes my opinion of Washington because I was disappointed in them before, during and after the shutdown and debt deal,” said Joseph Witthohn, vice president of product development at Emerald Asset Management.
In terms of where the political debate is headed, with the debt-ceiling confrontation now pushed out until Feb. 7, Mr. Witthohn he thinks that the fight will just drag on and possibly even get nastier.
“I'm afraid some factions are just sharpening their swords and trying to re-evaluate ways of getting some things done,” he said. “I don't know if this fighting will calm down over the next few months, but I do think we're headed toward another fight over the debt limit.”
Sam Jones, president of All Season Financial Advisors Inc., is expecting the political battles to roll on, with nothing much changing between now and the next debt-limit deadline.
“I think the debate will just remain alive from now until February, although it might be a milder version of what we saw these past few weeks,” he said.
Looking ahead to the midterm elections in November next year, there is a good chance that some Republicans in Congress could lose their jobs because of the stances they embraced in the debt limit and government shutdown battles, Mr. Jones said.
“My perception is that Congress is bought and paid for, and I continue to believe that we're just seeing the full impact of that,” he said. “This is exactly as it has been over the past five years, and it is indicative of a democracy that at this very late stage is continuing to vote for people who give out the most gifts from the Treasury.”
As if enough attention wasn't already being paid to November 2014 — an election that is clearly driving partisan decisions — all eyes will now be on the Republicans' ability to hold on to the majority in the House, Mr. Schatz said.
“If the Republicans lose the House in November, then you lose all the checks and balances in D.C., and that will cause a pretty significant drop in the markets,” he said.
Theodore Feight, owner of Creative Financial Design, said that he was hoping for a longer-term agreement on the debt limit, which he believes would have provided a stronger boost to the equity markets.
But the short-term agreement does take some of the pressure off the markets, for now, he said.
“I still think it's time to be cautious about investing but not as cautious as over the last three months,” Mr. Feight said.
Regarding his opinion of Washington politicians, Mr. Feight said that House Speaker John Boehner gave up too much power to the fiscally conservative Tea Party members in Congress.
“I think Congress will be able to pass something the next time around because the non-Tea Party Republicans will pass it through,” Mr. Feight said.
The frustration drove him to write letters to members of both political parties, expressing his distaste for the political gamesmanship.
“This whole thing lowered my opinion of Washington a lot more,” he said. “I told them in my letters that they needed to get this done; they're costing my people money.”
Mr. Schatz echoed that sentiment in paraphrasing recent comments from Mr. Boehner and Mr. Obama.
“What really infuriates me is the Obama administration says they're winning, and Boehner said they fought a good fight,” he said. “Well, this is not a game, and it's not supposed to be a war.”
