Partisan gridlock is hurting the economic recovery, says economist

The U.S. economy will remain sluggish as long as the federal government continues to send mixed signals to the business community, according to a leading Southern California economist.

Chris Thornberg, a founding partner with Beacon Economics LLC in Los Angeles, said neither political party is addressing the nation’s long-term economic problems and that the economy won’t recover until that changes.

“[Congress] just agreed to raise the debt ceiling until next February so we won’t default on our debts,” said Thornberg, who spoke at the annual Lee & Associates’ Brokers Summit, held earlier this month in Las Vegas. “Well, that doesn’t solve the problem. All that means is that we’ll have to go through this again in a few months.”

Prodded by the Tea Party, the GOP has adopted a policy of opposing anything proposed by President Obama, regardless of its possible merits, Thornberg said.

“We need to spend a lot more to repair the country’s infrastructure, which President Obama wanted to do,” Thornberg said. “That would put a lot of people back to work, but the Republicans didn’t want any part of it. I have no idea why.”

At the same time, Democrats are not facing up to the long-term problems in Social Security and Medicare, two of the party’s prized safety net programs.

“The fact is that both of those programs are going to go broke if something isn’t done to fix them,” Thornberg said. “The federal government has to start sending clear signals to the business community, which would start investing capital if it knew what to expect from Washington, D.C.  They’ve taken a decent recovery and turned it into a slow one.”

Thornberg has a solid track record in his assessments of the economy. He was one of the first to predict the subprime mortgage crash that started in 2007 and the subsequent global recession, though the last few years he’s been more optimistic.

“I’ve been a little more bullish in the past few years, mostly because the fundamentals of our economy are still solid,” Thornberg said. “I don’t think we’re about to go off a cliff.”