The budget compromise (when was the last time you heard those words in the same sentence?) reached in the House of Representatives last week was a refreshing example of legislators doing their primary job – drafting policy – instead of concentrating on the politics of grandstanding and brinksmanship more typical of recent budgetary periods. Coming off the heels of the politically disastrous government shutdown of early October, House leadership chose to avoid another toxic and unnecessary stalemate. The Senate still needs to ratify the proposed budget, but that is all but guaranteed. 

So why is this encouraging? Because political uncertainty – particularly as it pertains to economic policy – is a primary drag on the economic recovery. This recent compromise could indicate that the more extreme factions of each party may be losing influence, suggesting a return to a more rational legislative process. This would allow America’s businesses to make investments with increased confidence.

Of course, there are other factors limiting the rate of growth, particularly increased levels of regulation, global economic weakness, and, looking ahead, the probable wind-down of asset purchases by the Fed. But returning the domestic political process to some degree of rationality would be a big step forward.