Is Washington gridlock good for America?

A "divided Washington is what the U.S. economy needs," Kevin Hassett, of the conservative American Enterprise Institute, wrote in a column for Bloomberg L.P. as voters went to the polls Tuesday.

He was cheering gridlock - the prospect Obama will have to cope with a Republican House of Representatives and a reduced Senate majority in the next Congress.

Last time that happened, says Hassett, the 1990s showdown between Democratic President Bill Clinton and Republican Speaker of the House Newt Gingrich produced spending limits and a more-balanced budget (though he ignores the fact the same combination produced boneheaded financial deregulation that led to the current slump.)

But those were relatively prosperous times. Maybe we may need more from our government, at a time when one in 10 American workers (or one in six, if one counts the underemployed) needs a job. "Gridlock surely promotes the status quo [and] that is not great in a time when action is needed," Jan Loeys, head of asset allocation at JPMorgan Chase & Co., wrote in a report to clients.

If a gridlocked Congress can't decide what to do, the Federal Reserve will likely continue its bold attempt to boost the money supply and spark controlled price inflation, to promote business lending and help work America out of debt.

Or maybe the economy is actually recovering despite Washington. "Seems to me that the economy is performing remarkably well despite all the clueless people running this country from Washington," economist Ed Yardeni wrote in his daily newsletter Tuesday.

Third-quarter profits were up 50 percent over last year at 350 big companies that have reported so far, Yardeni reports. You can boost profits by cutting costs. But sales at the same companies were up 7 percent, which Yardeni takes as a sign of actual growth: "The people who really run our economy are the ones managing businesses, and they are managing to produce surprisingly strong profits despite Washington's meddling," he wrote.

So, when will they start hiring?  (From my column in today's Philadelphia Inquirer)