An Election, a Fiscal Cliff, and the Cost of Borrowing

 With the election less than two weeks away, the question of which candidate will better serve the interests of the commercial real estate industry is foremost on people’s minds. If elected officials’ choices while in office were consonant with their positions and proposals on the campaign trail, the question might have an easy answer. In practice, presidents revert to the mean. The general fragmentation of authority in Washington means that the most extreme proposals – for better or worse – are more easily propounded than passed into law.

Congress’ failure to address the imminent fiscal cliff until the lame duck session speaks to the basic disconnect between American business and Capitol Hill.  For many industries, a wait-and-see approach to investment and hiring is the order of the day.  The costs of waiting until after the election and a decision on taxes can seem small as compared to the potential cost of making the wrong bet today.