By SUSAN ESTRICH

You can let go of your wallets.

Don’t listen to those talk show alarmists claiming that a new era of high taxes is about to begin.

Paralysis and stalemate are more likely.

Truth be told, the question is whether the Democratic victory is likely to have a very large impact on business, or anyone else for that matter, other than as observers and occasional participants in the reality show aspect of Congress.

Of course, there will be all new leadership throughout Capitol Hill, new chairs of every committee, new staffs moving into new offices, eager to prove themselves, armed with subpoena power to do it. And the Democrats, confident as victors, will act with new aggressiveness. This is a very exciting time, if you happen to be on Capitol Hill. Everything changes. Democrats come alive. We’ve begun to see that already.

The first target, so to speak, will be Iraq.

Every committee with jurisdiction over anything remotely related to the war in Iraq will plan to hold a hearing about it. C-Span will be deluged with fascinating programming. The military, and businesses that supply the military, will appear regularly, to the point, in the case of the military, that you’ll begin to wonder who is running the war. Committees with members running for president will hold an especially large number of hearings for reasons that we are expected to believe have nothing to do with the fact that their members are eager to appear on any form of television.

But while calling attention to things can be valuable, ultimately Democrats can’t stop the war in Iraq by holding hearings about it, any more than they can stop global warming by holding hearings, or reform health care by holding hearings, or cut drug prices by holding hearings.

It takes legislation, and the president’s signature, to do most things, and of course, therein lies the rub.

Nancy Pelosi has a narrow majority; Harry Reid, the Senate majority leader, has an even narrower one. The good news for Democrats was that candidates of every stripe won on Election Day: conservative as well as liberal. The bad news was that you need them to agree. Not to mention the fact that you’re dealing with people with egos the size of a house, half of whom are running for president and the other half think they should be.

Preparing for 2008

The 2008 presidential campaign has begun. Ultimately, the press prefers covering presidential politics to covering Congress. In a world of no glamour, it’s considered sexier. At a time when the need for money requires candidates to start earlier and earlier, John McCain’s early announcement of a committee is one which other candidates are likely to follow. The earlier the 2008 race starts, the earlier paralysis sets in on Capitol Hill. This is the first time in over 50 years that neither party has an incumbent president or vice president running.

In the meantime, the only way the leadership can ever expect to hold their party together is by governing from the center; move too far left, and you lose your majority. The same rule holds for moving too far to the right, as a certain governor from our own state discovered when he did, and was lucky enough and smart enough to learn his lesson, turn around and come back, and win. Discipline is certainly not enough; just ask John Murtha, who lost his race for the No. 2 spot in the House leadership, notwithstanding Pelosi’s support.

So the fact is that anything the Democrats pass has to be “moderate” to appeal to the range of Democrats within the narrow majority, and the few moderate Republicans left, who you may need to give you a margin of victory if anyone is out that day.

And then the president has to sign it. Which he may or may not do. Most likely may not. Depending on whether he’s playing to the base or to the middle. You can be sure if it even remotely looks like higher taxes, his father’s undoing, the answer will be no. So what are the talk show hosts getting all worked up about?

All in all, it’s a recipe for watching the 2008 race unfold.

Susan Estrich is the Robert Kingsley Professor of Law and Political Science at USC and a political and legal analyst for Fox News. Her most recent book is “Soulless.”