Monday, October 20, 2014

Divided Government With Unified GOP Congress -
The Good. The Bad. The Ugly.

The Good Bad and Ugly of Divided Government

Nate Cohn's enthusiasm for this election notwithstanding, the big decision to come out of the midterms is a foregone conclusion. After four consecutive and six of the last eight years, the midterms will lock and load at least two more years of divided government.  The Republican hand will be strengthened in both the House and Senate, but there is still some drama in determining whether the GOP will take over majority control of the Senate.  Most pollsters are giving it to them...

Will GOP take the Senate

... but the Dividist never underestimates the Republican's capacity to snatch defeat from the jaws of victory. Our best bet is that the Senate will finish close to 50-50, and the GOP will flip a couple of Independents to take control. If the Republicans do take narrow majority control of the Senate in 2014, the recommended Dividist vote for 2016 will be to elect the Democratic candidate for President, as it is unlikely the GOP will lose control of both the House and Senate in 2016.

 With divided government a fait accompli through 2016, both new and main stream media are weighing in on what we can expect from our divided leadership over the next two years. For your reading enjoyment the Dividist has assembled recent wit and wisdom of the punditocracy on the subject of divided government. To bring some semblance of order to this compilation, we've divided our selections into a Sergio Leone taxonomy - The good, bad, and the ugly.

The Good

Gridlock gets a bad rap, but some see the silver lining...

Information Station asks the question "Is the Do-Nothing Congress a Bad Thing?" and after due consideration, determines it's not so bad:
"But a divided government that sometimes stalls over legislation can sometimes be a good thing, especially if you value fiscal restraint. A number of analyses show that when government has a hard time agreeing on new initiatives, it spends less of our hard earned tax dollars. For example, the two biggest periods of fiscal restraint in the post-WWII period, under the Eisenhower and Clinton administrations, came under divided governments. This usually means less corresponding deficit and debt accumulation that eventually must be financed through our taxes. We have also seen this type of fiscal restraint during our current divided government – federal spending has actually stayed relatively flat over the last four years."
Even President Obama is bragging about deficit reduction, even though the decrease is entirely due to fiscal discipline imposed on his administration by the GOP House and divided government.

Thank you divided government, gridlock, and GOP House of Representatives
Vote For Gridlock makes a similar "Case for Divided Government", but at the state level in Michigan. In this case, offering a conservative perspective to vote Democratic for governor and Republican for the state legislature:
"What is a conservative to do? The answer is to place our trust in divided government. This year that means voting Republican for your State Representative and State Senator, and not voting Republican in the Governor’s race. With divided government our Republican legislators wouldn’t be pressured to support a nominally Republican governor. With divided government, our Republican legislators would have the freedom to oppose liberal policies advanced by a Democrat governor."
Seems logical, but as the Dividist does not vote in Michigan, he'll leave that assessment for the good people of Michigan.

Ken Fisher of Fisher Investments is only interested in the potential impact on the stock market from the midterm election, and concludes "Voting for Gridlock" is the best outcome:
Regardless of the exact balance of power on November 5, however, we’re near-guaranteed gridlock. If Congress stays split, gridlock stays (duh). Even if one party nabs both houses, they won’t have unstoppable control—regardless of which it is. Democrats wouldn’t have enough seats to end a filibuster. Republicans wouldn’t have enough to override Obama’s veto. On one hand, this might be annoying, because gridlock often means squabbling, and squabbling is irritating. But gridlock is great for stocks. Gridlocked Congresses can’t rewrite laws, redraw property rights or reallocate resources or capital—stocks love this stability. This is why stocks are overwhelmingly positive in midterms’ aftermath."
The Dividist has always been intrigued but dubious about the supposed connection between presidential party affiliation (whether in a divided or united government) with stock market performance. We lean toward putting the entire premise in the same "correlation isn't causation" category as the Hemline Index or the Super Bowl Indicator. But if the investor class believe that divided government produces strong stock market performance, it can be a self-fulfilling prophecy in the short term. We're good with it.

Jerry Seib of the Wall Street Journal even thinks that President Obama will benefit from Republican control of the Senate and a more balanced share of power explaining "Why Loss of Senate Would Carry Silver Linings for Obama":
"The Senate is the big prize in this fall’s voting, of course, and losing the chamber to Republicans, giving them full control of Congress, would represent a terrible outcome for the Democratic Party. Oddly, though, it might not be such a bad outcome for one particular Democrat: President Barack Obama. How can that be? A look back shows that eras of evenly divided power—Congress fully controlled by one party, the presidency by the other—have turned out to be among the most productive. And if you are a president yearning for elusive legislative achievements in the final two years of your term, anything that makes Washington more productive would be welcome, even if attaining some of that productivity required trimming your ideological sails... substantive achievement can and does emerge from tension. To see how, merely look at the presidency of Bill Clinton, which Democrats remember fondly. Some of Mr. Clinton’s most notable achievements—a balanced budget, a welfare overhaul, badly needed changes to telecommunications law, a revamping of tax rates—took place when the Senate was in Republican hands."
Hey... if this Democratic president cannot find a way to work with the Republican Congress like Bill Clinton did in the nineties, perhaps another Clinton in the White House in 2016 can.

The Bad

Not everyone is so sanguine about the prospects of two more years of divided government. Particularly, you know, Democrats...

Nick Bauman of Commonweal says we should "Get Used to Gridlock", by which he means we should get used to the continuing failure to enact a liberal Democratic agenda which, by his estimation, will inevitably lead to the collapse of the country. Or something like that:
"With Congress gridlocked, power will naturally accrue to other parts of the government—especially the courts and the executive branch. Unelected judges will continue to make huge changes in national policy, and Congress will be unable to respond. Executive action to deal with pressing national problems will become increasingly normalized, strengthening the national-security state and getting both parties used to the idea of rule by executive fiat. The few interest groups—mainly corporate ones—that manage to win bipartisan support will gain even more influence in Washington. America’s political system was not designed for the fierce ideological divisions that underlie the modern party system, and that’s the kind of structural flaw that can end up destroying a country. If Americans don’t want to go the way of the ancient Romans, we’ll have to find a solution."
Nancy Pelosi  -  the Once and Never Again Speaker of the House - could not agree more, telling Bill Mahr that "Civilization As We Know It Would Be In Jeopardy If Republicans Win The Senate":

Tony Distefano, writing in the Aiken Standard, succinctly encapsulates the frustrations a classic "spend, tax and borrow" big government Democrat finds with divided government in "Gridlock or Good Government":
"Members of Congress sharply attack the Obama administration’s policies on Iraq and Syria, yet they refuse to take a recorded vote on the issue of war or peace. Most climate scientists believe that melting polar ice caps will cause sea levels to rise 10-13 feet, flooding coastal areas, but carbon emissions continue to increase. Too many Americans are unemployed or underemployed while U.S. jobs are being exported, the minimum wage still is only $7.25 per hour, many young people can no longer afford a college education, the wealth gap between the super-rich and the rest of us is widening, our roads, bridges and sewers are crumbling, and the Social Security system is in jeopardy. An anti-tax, anti-government ideology and political gridlock are not in the best interest of most Americans."
Because, according to DiStefano, what is in the best interest of most Americans is higher taxes, bigger government, and unencumbered liberal Democratic party policies. Who would have guessed?

We could go on... but why? The Democratic party faithful desperately need to rationalize their continued losses. They need to explain how they managed to lose complete control of Congress since our "center-left country" elected Democrats riding an irresistible "demographic wave" to an "emerging Democratic majority" and Democratic One Party Rule in 2008. Particularly after many Democrats confidently predicted impending GOP suicide after the government shutdown drove GOP unpopularity to record levels only one year ago.

The rationalization currently in favor with aggrieved Democrats is that Republican "fear mongering" is responsible for the continuing losses. Democrats, of course, would never stoop to such levels, choosing instead to beat a dead horse with time-tested campaign arguments of: Republican War on Women!; War on Working Families!; War on the Poor!; War on Blacks!; War on Hispanics!; War on Science!; War on Voters!; Culture Wars! How could Democrats lose with such creative, innovative, dispassionate, well reasoned arguments spelling out why they should be in power? I guess demonizing the opposition is more comforting than taking a hard look at the unpopular policies they promote and the unfulfilled commitments they make.

The Ugly

Divided Government outduels One Party Rule

It's inevitable. Whether it's Karl Rove's "permanent majority" or David Axelrod's "demographic destiny", divided government will always outduel the arrogance of one party rule whenever the party in power starts believing their own bullshit.

The Economist offers an even-handed analysis "If the Republicans win the Senate..."
"Most polls suggest that Republicans will capture a narrow majority in the Senate in November’s mid-term elections, while holding on to the House of Representatives. So America faces two more years of divided government, but with a shift in the balance of power... The result may be political paralysis, accelerating the greying of the president’s hair and alarming allies worldwide. Or it may be that the two sides find common ground and pass some sensible measures."
The pessimistic scenario plays out like this...
"Some urge their party to ignore its own pragmatic wing and channel the voters’ rage instead. Michael Needham, the chief executive of Heritage Action, a conservative campaign outfit, denies that the 2013 shutdown hurt Republicans, insisting that it sparked a valuable debate about Obamacare. Heritage Action would like to see Republicans provide a “bold contrast” to Mr Obama, and show they care about ordinary Americans and their stagnating incomes, rather than “the lobbying class in Washington, and the Chamber of Commerce”. The “no compromise” camp will grow louder as the next presidential race nears. Putative White House contenders such as Senator Ted Cruz of Texas will vie to come up with fresh attacks on Mr Obama. Some will assume that the best chance of a Republican victory in 2016 lies in proving that divided government does not work and in seeing Mr Obama hooted from office."
Impeachment talk can only benefit Democrats with independents, moderates and centrists. Although I've not heard anything about impeachment from a responsible elected official in recent months, statements like this from Senator James Inhofe last March give fuel to those who fear a Republican majority in the Senate, and helps stoke Democratic fund raising efforts.

The Dividist is betting on the pragmatists in the GOP. And on the wisdom of the American electorate. I do not expect American voters to give the Republicans the opportunity to become as arrogant as the Democrats when they took single party control of the government in 2008 or the Republicans when they took single party control in 2002.  The bad memories of one party rule are still too fresh. The best way to do avoid this will be to either elect a Democratic president in 2016, return the Senate to Democratic control in 2016, or both. But in the meantime, a unified Republican Congress in a divided government  with a Democratic President should serve our country well for the next two years. Get used to it.

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