We Still Do Not Know What Is Coming

By W. David Montgomery

Donald Trump’s apparent loss to Joe Biden would be far less troubling had Biden not chosen a left-wing extremist for his running mate.  Then again, it would have been far more troubling if Republicans had failed to keep control of the Senate.  The one hopeful sign about the resilience of American institutions is that the preference of the electorate for divided government seems to remain strong.  Since Franklin Roosevelt’s time, only Kennedy and Johnson had and kept control of both houses for more than two Congresses.  The rapidity with which Clinton, Obama and Trump lost that control of Congress seems to be a warning that there is still a middle that rejects partisan attempts at radical change.  That may be due to the different geographic makeup of the House and Senate more than the continued viability of the center, but it remains a brilliant achievement of the Founders.

Markets are already celebrating a return to divided government:   Bloomberg news stated on November 9 that “A GOP-led Senate with a Democratic president is “one of the better scenarios” for stocks, JPMorgan said, as it would limit market-negative policies but lessen trade uncertainty. The firm expects a rotation to value and said once there’s full election clarity, bond yields may grind higher. Goldman Sachs cut its 10-year Treasury yield forecast on prospects for a divided Congress.”

If Republicans do keep control of the Senate, some of the deepest fears of conservatives are likely to be unfounded. Even if Kamala Harris were to succeed to the Presidency on January 23, 2021, an aggressive Senate can keep spending and taxes in check, prevent packing of the Supreme Court, block nominations of unacceptable Federal judges, keep the number of states at 50 and generally defang the Progressive wing of the Democrat Party.  Some even see this as a scenario in which Pelosi would either be removed as Speaker or reinvented as a normal politician willing to compromise. 

But it remains a near thing, and we will not know for sure until votes in the Georgia runoffs on January 5 are counted.  Even so, the new administration has ample scope to pursue a progressive agenda.

Progressives are already lamenting that they did not get enough out of the election.  One writer for New York Magazine expects even less from the new administration than I can bring myself to hope for:

“If Democrats fail to pull off an improbable triumph in the Peach State, then the Biden presidency will be doomed to failure before it starts. With Mitch McConnell in control of the Senate, Biden will not be allowed to appoint a Supreme Court justice, or appoint liberals to major cabinet positions, or sign his name to a major piece of progressive legislation; and that may very well mean that the U.S. government will not pass any significant climate legislation, or expansion of public health insurance, or immigration reform, or gun safety law [sic] this decade.

“With Biden in the White House, there is a good chance that Republicans will grow their majority in 2022, as the GOP will enjoy the turnout advantage that almost always accrues to the president’s opposition in midterms. Two years later, Democrats are more likely than not to lose their aforementioned red-state incumbents. Extrapolate from current demographic trends, and Democrats don’t take the Senate again until 2028 or later.”

I fear this is too good to be true.  Even with divided government, the President controls of the Executive Branch and the administrative state is likely to be unleashed again by either Biden or Harris.  The Congressional Review Act only empowers Congress to overrule regulations if both houses agree, and that will not happen during the upcoming Congress.  The Departments of Health and Human Services (HHS), Education, Justice, and Treasury (in particular the IRS) will still have great discretion to move forward with the Progressive agenda.  They will certainly be unwilling to lean against the soft totalitarianism of some businesses and states that we have written about in recent issues.

There is little to stop a President from ruling by decree except the courts.  Federal judges were exceptionally deferential to Obama’s overreach, but one could be found to rule against Trump at every turn.  It will be interesting to see if Trump’s appointment of 170 federal judges was sufficient to offset that party line judicial preference. Thus I expect renewed persecution of the Little Sisters of the Poor by HHS, efforts to strip funding from religious adoption and social services for a variety of reasons,  pressure by the Civil Rights Division for speech codes, reinstatement of indoctrination of federal employees in critical race theory, support for or mandates of similar curricula by the Department of Education, and a return to non-enforcement of  immigration laws.

The Supreme Court will be a lasting legacy of Donald Trump, and it could be kept very busy with appeals of administrative actions that attack constitutionally protected rights. But it is much less likely to step in on matters of economic regulation and policy.  Trump’s executive orders to restrain and roll back regulation were likely the most important factor driving the remarkable period of wage and employment growth that continued from his election until the country was locked down in response to the coronavirus.  These executive orders, as Biden has promised, can be rescinded on his first day in office.  With a divided Congress, Biden’s promised repeal of Trump’s tax policy is unlikely, but the most important incentives for economic growth in the Tax Cuts and Jobs Act have sunset provisions that will effectively nullify it during Biden’s term.

Views on Biden’s competence and his likely policy preferences cover just about every logical possibility.  Many commentators are convinced – especially after his November 8 speech — that Biden will be a moderating force (and even more remarkably, they believe that despite his somnolent campaign, Biden will take charge sufficiently to pull that off).  This hope for centrist policies and unifying rhetoric appears to be shared across the political spectrum, from Republicans who could not stomach Trump’s personality to liberal Democrats.  The media are with him. The stock market likes him, at least with a divided Congress. 

Outside this centrist group, there are doubts.  Concerns about the signs of dementia he exhibited throughout the campaign, his apparent lack of grasp of facts and issues beyond repeating slogans, and his ambitious and radical Vice President seem now to have been forgotten except among serious conservatives. 

Those further to the left are fuming that Biden promised them court-packing, new states, and an end to the filibuster so that real progressive legislation could be passed, and then even before the election he backed off from those positions.  Those in the center appear to believe Biden’s reversal was permanent, and that there would be little to fear even if Democrats do flip the Senate.  I line up with those on the right who believe the earlier promises and make the obvious inferences from Biden’s choice of Kamala Harris.  On that basis, I expect executive authority to be stretched to the limit in promoting the progressive agenda and foresee the end of representative government if the Senate falls.  Announcements of moderate Democrats and even Republicans for cabinet positions would support the centrist interpretation, while adding Warren, Sanders or one of the Squad would confirm my suspicions.

Still, the Democrats’ reign will not last long if they lack the means to convert us to a one-party state. Harris and Biden will not last more than 4 years, and the more they give into the progressive agenda — which I am confident they will to the extent the Senate and Supreme Court allow — the more likely there will be another congressional landslide to the right in two years.