The biggest risk to your investments now isn't Wall Street - it's Washington. Here's how to fight back.

MW The biggest risk to your investments now isn't Wall Street - it's Washington. Here's how to fight back.

By Charlie Garcia

Do-nothing representatives are playing havoc with your investments - passing the buck on decisions and sowing market uncertainty

For decades, Congress has chosen retreat over responsibility. It last passed a budget on time when Bill Clinton was president.

If you're trying to make long-term investment decisions about U.S. stock and bond markets, here's the hard truth: The greatest threat to your portfolio may not be inflation, interest rates or global conflict - it's the U.S. Congress.

Markets can price risk. But they can't price paralysis. And Congress now governs like a substitute teacher who gave up halfway through the semester.

Congress hasn't passed all 12 appropriations bills on time since September 1996, when then-President Bill Clinton signed the fiscal 1997 budget.

Since then, lawmakers have relied on continuing resolutions, fiscal cliffs, and last-minute omnibus bills that often exceed 5,000 pages - like the 5,593-page Consolidated Appropriations Act of 2021. And trillion-dollar "emergency" packages now arrive with the same frequency as flu shots.

This dysfunction hits home. Higher U.S. deficits push interest rates higher. Rising rates hammer equities and housing. The bond market recoils from uncertainty. And Congress acts like the yield curve is a moody cousin who will settle down.

The president doesn't need to seize power. He just picks it up off the floor.

This isn't just mismanagement. It's constitutional erosion. Americans keep watching the White House, fearing the next president will overreach. They're looking in the wrong direction. The danger isn't a presidency that's too strong - it's a Congress that's gone missing.

Presidential power isn't expanding through force. It's expanding like mold- steadily, opportunistically - because no one scrubs it back. For decades, Congress has chosen retreat over responsibility. Press releases instead of laws. Cable-television hits instead of bills. Grandstanding while federal agencies do the actual governing. The branch that once called itself "first" now behaves like it wants to be last.

The Founders designed a system of federal government where ambition checks ambition. What we've got now is performance checking out.

This didn't happen overnight. Congress didn't implode - it atrophied. Slowly. Voluntarily. Lawmaking has become radioactive. Politicians avoid it to preserve their careers.

So they duck. They punt. They stall. And they pray for presidential executive orders they can then pretend to oppose.

We've seen this on the budget: unread omnibus bills, continuing resolutions, and crisis packages like clockwork. The only thing regular about regular order is how regularly Congress abandons it.

Markets are forward-looking, but they're not clairvoyant. Retail investors are asked to make long-term decisions in a policy environment that shifts on a whim. You don't need a Bloomberg terminal to feel the instability. Deficits rise. Rates climb. Equities sink. Congress shrugs.

The president doesn't need to seize power. He just picks it up off the floor.

Intent requires clarity. Clarity requires courage. Congress has little of either.

When Congress punts, U.S. government agencies take over. Rule by regulation becomes the norm. The SEC redefines securities. The EPA redefines emissions. The Education Department redefines student loans. Laws don't change - interpretations do. Sometimes weekly.

It's not tyranny. It's improvisation. But it's bad jazz - off-key and playing over people's lives. Each time a president governs this way, Congress acts surprised. Lawmakers post outraged tweets. They say, "This isn't what we intended."

That's true - because most of the time, they didn't intend anything at all. Intent requires clarity. Clarity requires courage. Congress has little of either.

And this isn't just about spending. Since 2001, America has operated under open-ended Authorizations for Use of Military Force. Congress hasn't updated or repealed them. Military operations in Syria, Somalia and elsewhere rely on legal scaffolding built for another era. Congress doesn't lead those missions. It holds hearings after the fact.

Jack Goldsmith, Harvard Law professor and former head of the U.S. Justice Department's Office of Legal Counsel under President George W. Bush, recently explained how modern presidents quietly maneuver around the law. In a recent interview on The American Compass podcast, Goldsmith detailed their methods: internal memos, backdoor waivers and selective enforcement. No fingerprints, no headlines and no oversight.

This isn't the imperial presidency; it's the 'Houdini presidency.'

It's all perfectly legal - and perfectly terrifying. Modern presidents aren't exactly criminals - they're magicians. Who needs a break-in when you already have the keys?

This isn't the imperial presidency. It's the "Houdini presidency." The country's chief executive slips chains of accountability while Congress watches from the cheap seats, popcorn in hand. The system isn't failing because the president breaks laws, but because he outmaneuvers them.

Even judges now make market-moving decisions from the bench. Federal district judges, traditionally responsible for significant but localized federal cases, have lately taken on the role of nationwide referees, issuing sweeping injunctions to police the presidency coast-to-coast. The result is another layer of uncertainty for investors trying to navigate an already chaotic regulatory landscape.

In a 2019 speech, former U.S. Attorney General William Barr pointed out that federal courts issued only 27 nationwide injunctions during the entire 20th century. According to a Congressional Research Service report, there were six nationwide injunctions under George W. Bush, 12 under Barack Obama and 86 during Donald Trump's first term. Joe Biden faced 28. Now Trump is back, and judges haven't paused to catch their breath - 25 more identified nationwide injunctions have landed on him in just the first 100 days of his second term.

The U.S. Supreme Court has finally noticed, dissecting this judicial overreach in cases such as Trump v. CASA. It's like the Supreme Court is deciding to referee a food fight in a high school cafeteria: necessary, perhaps, but a sad spectacle all the same.

Congress doesn't need more power. It needs more nerve.

Congress, meanwhile, maintains its own impressive record of absenteeism, refusing to legislate while judges improvise. The judicial branch, previously content to call balls and strikes, is now batting cleanup, making policies from the bench. This isn't just government dysfunction - it's improvisational theater at the highest level, starring unelected judges.

In short, we don't just have law being circumvented anymore - we have it rewritten nightly, like bad comedy skits improvised from the bench. And if there's one thing worse than a presidency gone rogue, it's a government run by judicial improvisation.

And the result? A shadow system, where rules shift depending on who's in the Oval Office and the political weather. Courts can't check power they can't see.

And still, Congress sleeps - or worse, campaigns.

Why isn't Congress legislating? Because legislating means picking sides. Writing a law means taking a vote. Taking a vote means owning consequences. And nothing terrifies today's politicians more than being held accountable for something they did on purpose.

It's easier to let the president take the wheel. Let the agencies write the rules. Complain about executive overreach - then pass the buck.

This isn't just dysfunction. It's a business model. What's remarkable isn't that presidents act. It's how few in Congress seem to care, as long as the cameras are rolling and the polling looks good.

America's competitive edge has never relied solely on GDP. It's relied on trust - courts that follow laws, contracts that mean something and a Congress that governs.

We're losing the last one.

Markets can't price chaos. And chaos is what Washington is giving them. Politicians treat shutdowns like seasons. They normalize trillion-dollar deficits. They pass laws so broad they should come with a disclaimer: "Results may vary depending on the political weather."

If you're a retail investor watching Washington, you're not seeing a well-oiled machine. You're watching two clowns on a seesaw, while the guy in the middle lifts your wallet.

The tragedy? This is reversible. Congress doesn't need more power. It needs more nerve. Write clear laws. Reform the budget process. Take back war powers. Reclaim legislative authority from the regulatory state. Hold hearings that end in legislation - not monologues. Stop outsourcing governing to whoever has the fastest Wi-Fi and a West Wing badge.

Rules for your money

Companies that master regulatory uncertainty will be the winners.

What should an investor do when the referee has left the game? Three things:

First, factor congressional cowardice into every long-term position. That "risk-free" Treasury? It's only as stable as the next debt-ceiling fight.

Second, watch federal agency rulemaking like you scour company earnings reports. The real legislation happens in regulatory footnotes now.

Third, and here's the contrarian play: companies that master regulatory uncertainty will be the winners.

Find the firms with the best government affairs teams - they have the widest moats. Look at Microsoft $(MSFT)$. While Meta Platforms $(META)$ and Alphabet $(GOOGL)$ $(GOOG)$ fought antitrust battles, Microsoft built relationships in D.C. and became the U.S. government's preferred AI partner. That's not luck. That's a regulatory strategy - and it has helped boost the tech giant's market value.

America's founders gave us checks and balances. We turned it into a game of hot potato. And guess who's holding it when the music stops?