Senior players on this team know that if a recession sets in during their watch, whether its roots stretch back to the Clinton term or not, the Republicans will get the blame. They know from bitter experience exactly how much a recession could cost them at the polls in 2002 when control of the Congress will be up for grabs. The first Bush administration felt that it was burned by a central bank that didn't move fast enough, so the new Bush administration will probably feel pressure to push for an aggressive series of interest rate cuts. Yet one or two modest moves are probably the most the Fed governors can feel comfortable with at the moment. If the two sides decide to play chicken with the national economy, it won't really matter which one wins.
Investors are likely to walk away with at least bumps and bruises from any such showdown.
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