Can GOP deliver on economy?

After years of chasing Senate control, Republicans now are under pressure to deliver economic relief to voters who rewarded them with full power on Capitol Hill.

Voters punished President Obama and Democrats at the polls Tuesday, sour over the economy and seeing minimal growth in their paychecks, despite consistent gains in both the job market and the economy at-large.

{mosads}Big winners on Tuesday, the GOP is well aware they have little time to prove that they can do better.

For starters, Republican leaders have vowed to push their bills aimed at boosting jobs that stalled in the Democratic-controlled Senate.

“January will bring the opportunity to start making a real difference in the lives of struggling families,” said Speaker John Boehner (R-Ohio) Friday. “It is up to President Obama to start listening, and work with the new Congress to get things done.”

But that approach also underscores the challenges that incoming Senate majority leader, Mitch McConnell (R-Ky.) and the GOP face, now that they have more control over what Washington does to help, or hurt, the recovery.

Economists question whether the measures Republicans can get Obama to sign will be broad enough to have a significant impact.

Boehner and McConnell have said approving the Keystone XL pipeline, giving businesses incentives to hire veterans and making targeted changes to the healthcare law will be the among early priorities next year.

Lawmakers, congressional aides and political analysts also wonder whether Congress can come together on larger policy changes — like an overhaul of the tax or immigration system — that could have a more profound economic impact.

“There are things that they could do to help the economy, and things they’d be willing to do,” said William Gale of the Brookings Institution. “The intersection of those two is pretty small.”

And Republicans have to struggle with the reality that, just as Obama took the lion’s share of the blame for voters’ economic worries this November, Democrats might get the credit ahead of the 2016 presidential election if Americans start feeling better about the economy.

Almost eight in 10 of Tuesday’s voters said they had worries about the direction of the economy over the next year, according to national exit polls.

Some economists argue that while Republican initiatives might not target wages directly, their broader economic impact could still be felt. Even showing progress on some initiatives, they insist, could boost confidence among the public and businesses that Washington dysfunction is on the wane.

“There’s a whole menu of tax reform, regulatory reform, trade pacts, those kind of things that you should do,” said Douglas Holtz-Eakin, former head of the Congressional Budget Office and head of the conservative American Action Forum. “At this point, even small improvements would be noticeable.

“If you talk to the business community, what they would love to see Washington do over the next two years is play less of a role in the economy,” Holtz-Eakin added.

Of course, there’s also the distinct possibility that Americans will eventually feel economic perks even if Washington doesn’t do much at all.

“The business cycle kind of marches to the beat of its own drummer,” said Michael Feroli, chief U.S. economist at JPMorgan Chase. “Some of the political noise which maybe in Washington seems all-important… doesn’t really matter all that much.”

The economic recovery is now five years old, and job growth has entered a remarkably steady, if unexceptional phase.

On Friday, the Labor Department reported that the economy added 214,000 jobs in October, the ninth straight month of gains in excess of 200,000. The new jobless rate of 5.8 percent is the lowest since July 2008, and economists say that wage growth has to follow at some point.

“I would be very surprised if in two years’ time we don’t see wage growth,” said Feroli.

That means that Republicans could reap some of the benefits of a renewed optimism among voters even if the GOP fails to enact broad economic fixes.

But Washington’s limited control over the economy can also be a double-edged sword. Many of the economic prescriptions being discussed, including tax reform and pushing through trade deals, offer little by way of immediate economic benefits.

Gale, who worked for President George H.W. Bush’s Council of Economic Advisers, argued that Washington needed to concentrate on even longer-term projects — like improving the U.S. education system — to truly battle the rise in income inequality over the last 35 years.

If voters keep the GOP on a short leash through 2016 and the economy stalls, Republicans could have little to show by way of achievement even if they get their plan in place.

“A lot of those things generally are felt over several years,” said Feroli. “In terms of any one to two year horizon, it’s really what the Fed’s going to do.”

With all those factors at play, one former House GOP leadership aide argued that Republicans need to get some bills to the president’s desk ahead of 2016, even though Democrats would likely get the bigger boost if voters gained confidence in the economy.

At the same time, the aide said, the GOP needs to start laying out its priorities for broader changes like tax reform.

“Ultimately, for better or worse, the president is going to get the credit or the blame for the state of the economy,” the former staffer said. “Now, if Republicans put themselves in a situation where they become viewed as an obstacle to an economic recovery, then that could be potentially damaging for them.”

For their part, Boehner and McConnell appear to understand the challenges they face, both in restoring voters’ confidence in the economy and reaping the credit or shielding themselves from the blame.

“Will these bills single-handedly turn around the economy? No,” the two leaders wrote about their economic priorities in a Wall Street Journal op-ed last week. “But taking up bipartisan bills aimed at helping the economy that have already passed the House is a sensible and obvious first step.”