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My SmartMoney.com column for today:It looks now like the Republican Party will lose majority control of the House of Representatives in the November election — and perhaps its control of the Senate, too. Should investors care? Will Democratic control of Congress move the market?

So how will the GOP losing control of Congress affect the economy and the markets? For a while it looked like the good feelings arising from falling gasoline prices would be enough to change the national mood in favor of GOP incumbents. But the Mark Foley scandal seems to have ended all that.

The chart below shows the prices of the futures contracts on House control traded online at Tradesports.com. Their prices reflect the percentage probability that the GOP will retain its majority. I've plotted the futures against the average price of regular gasoline, on an upside-down scale. All year, when the gas price was low, the GOP's probability of victory was high. When the gas price rose, the GOP's chances fell in tandem.

Over the last couple of weeks the gasoline price has fallen sharply. For a while the GOP's chances moved up, to well over 50%. But then the Foley scandal struck — and suddenly the price of gas didn't matter. It looks to me like it's all over for the GOP. The futures contracts are trading now at just 40%. Historically, with the election this close, 40% has been a sure indicator of failure.

I don't think it will make much difference one way or the other. And from me, that's quite a statement — my firm specializes in advising investors on how political events will affect markets and the economy.

Don't get me wrong. Politics is still the most important factor in determining economic growth. Government decisions about monetary policy, taxes, regulation and trade can cause booms, busts and everything in between.

And before we go any further, let me lay my own political cards on the table. I'm not a member of either major party, nor a donor to them. If you must know, I'm a registered Libertarian. When it comes to economic policy, Republicans tend to come a lot closer to my views about what makes growth and prosperity possible. (Social policies? Don't get me started!)

So why am I not worried that the pro-growth Republican party will probably lose control of Congress?

First and foremost, because with one important exception, the Republican Congress hasn't actually delivered much pro-growth legislation. Yes, there was the 2003 tax cut on dividends, capital gains, and wage income, and the extension of those cuts through 2010, enacted earlier this year. Bravo. But what else has there been?

Let me see.... Social Security privatization? Nope. Trade liberalization? Nyet. Estate tax repeal? Non. Malpractice and tort reform? Nada. Government spending restraint? Surely you jest!

So will we suffer from the lack of pro-growth legislation under a Democratic Congress? Maybe. But we're already suffering from the same thing now, under a Republican Congress.

But what about the opposite? Am I not concerned that a Democratic congress will enact outright anti-growth legislation?

Well, let's see. They might push through new regulations that impose horrific new costs on small public companies. No, wait — the Republicans already did that with Sarbanes-Oxley. Or the Democrats might enact sweeping new welfare-state legislation that will bust the budget for generations to come. Sorry, the GOP already did that with the Medicare prescription-drug benefit.

But as a general matter, I'm satisfied that a GOP minority will do its best to block just about anything the Democratic majority wants to do — just for the sake of blocking, growth or no growth. And when it comes to really important stuff like preserving the 2003 tax cuts, I just can't bring myself to believe that the GOP would go along with Democratic efforts to repeal them, and surely President Bush would veto any legislation that did.

In fact, there's a chance that being cast out of congressional control will re-focus the Republican Party on its growth agenda. If the GOP loses control, in large part it will be because it so terribly disappointed people just like me — people who are fundamentally apolitical, but very interested in growth and prosperity. Perhaps a humbled GOP will figure out what it has to do to win me back.

Are there any election outcomes that could possibly move the market? Yes, I think there are two.

There could be a vast Democratic sweep — one of such scope that an antigrowth agenda would actually manage to get enacted by steamrolling over a smaller-than-expected Republican minority.

Or there could be a GOP upset. If the GOP manages to hang on to control, despite the perfect storm the party faces today, then perhaps some Democrats would realize that there must really be something to this growth thing. Maybe the pro-growth Democrats who voted against GOP initiatives such as estate-tax repeal will vote their conscience next time, instead of lining up behind party unity.

But those outcomes are unlikely. The likely outcome is that the GOP loses the House by a small margin, and hangs onto the Senate by a couple of seats. For the markets, it will be a nonevent.

But maybe, longer term, if the GOP can learn from its mistakes, the chances for pro-growth legislation will actually improve.

Hey — I can always hope!

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