Monday, January 05, 2015

Your New Improved 2015 Divided Government

Your New Improved 2015 Divided Government

It's been a while since the midterms and the Dividist's last post. Never did quite get around to posting the 2014 election recap. No matter. It's 2015! This week the 114th United States Congress will be sworn in.  Our New and Improved 2015-16 Divided Government has arrived!

Of course, our divided government is not new. We've had divided government for the last four years and six of the last eight. By the time our next President is sworn into office in January 2017, we'll have lived under divided government for eight of the prior ten years. That's a pretty good run. But not all divided governments are the same.  There are divided governments and then there are divided governments.

The Golden Age of Divided Government 
In fact, there are eight possible configurations of partisan legislative / executive mixtures in the United States federal government (assuming a two party duopoly). David Mayhew outlined all eight in the 2005 updated preface to his seminal book Divided We Govern:
"This book, like most treatments of the subject, addresses party control as a yes-or-no matter. That makes good sense. It must be the case that either a) one party simultaneously control all three national elective institutions, or b) one party controls two of them and the other party controls the third. For most analytic purposes, a yes-or-no coding is the way to to go. Yet it is also true that eight possible conditions, not just the conventional two arise if we take into account which party controls which institutions. If the presidency, House and Senate are arrayed in order, the possibilities are respectively DDD, DDR, DRD, RDD, RRD, RDR, DRR, and RRR. How many of those eight patterns have appeared since 1980? The answer is now six, which shows the surprising versatility of the regime that has unfolded in recent decades. The only exceptions DDR (the Republicans have not controlled just the Senate since 1185-89) and DRD (the Republicans have not controlled just the House since 1859-61)."
Divided government has proven even more versatile since Professor Mayhew wrote those words. From 2011-2014 we experienced the rare configuration of Republicans controlling only the House.

In a March, 2012 post I listed all eight possible configurations stack ranked by the most probable outcome of that presidential election year.  The most probable outcome (DRR) did not win despite an election year stacked heavily in favor of Republicans taking the Senate majority. A variety of Republican clown candidates enabled the GOP to snatch defeat from the jaws of victory.  It's a good time to update that chart, but this time we'll rank the configurations in order of my personal preference.

All Possible U.S. Executive and Legislative Branch Partisan Configurations
Stack Ranked from Best to Worst by Dividist Preference*

Dividist RankPresidentSenateHouseNotes

1DRRClinton 95-00, Obama 15-16

2RDDBush41 89-92,Reagan 87-88, Nixon Ford 69-76

3DDRObama 11-14,

4RDRBush43 01-02, 


6RRDBush43 07-08, Reagan 81-86

7RRRBush43 03-06,

8DDDObama 09-10,Clinton 93-94,Carter 77-80

*Your mileage may vary

Not only is this the Dividist's favorite configuration, but many economists suggest the data indicates this is a preferred configuration of divided government.  For the next two years we'll see a divided government configuration that we have not seen since the Golden Age of Divided Governments - the Bill Clinton administration.

Paul Krugman Is Still Wrong
Paul Krugman, however, is not counted among the economists who are fans of divided government.  A recent screed from his  NYT soapbox rewrites history about his own incorrect predictions and indulges in gratuitous Nobel Prize winning name calling:
"Do those who were blaming Mr. Obama for all our economic ills now look like knaves and fools? Yes, they do. And that’s because they are." - Paul Krugman
Fellow prog traveller and liberal economist Jeffrey Sachs calls bullshit and deconstructs Krugman's self serving polemic:
"So much for Krugman’s predictions. Not one of his New York Times commentaries in the first half of 2013, when “austerian” deficit cutting was taking effect, forecast a major reduction in unemployment or that economic growth would recover to brisk rates. On the contrary, “the disastrous turn toward austerity has destroyed millions of jobs and ruined many lives,” he argued, with the US Congress exposing Americans to “the imminent threat of severe economic damage from short-term spending cuts.” As a result, “Full recovery still looks a very long way off,” he warned. “And I’m beginning to worry that it may never happen.” I raise all of this because Krugman took a victory lap in his end-of-2014 column on “The Obama Recovery.” The recovery, according to Krugman, has come not despite the austerity he railed against for years, but because we “seem to have stopped tightening the screws: Public spending isn’t surging, but at least it has stopped falling. And the economy is doing much better as a result.”
Krugman is either shameless or delusional or both. Recall also Krugman's hysterical "Divided We Fail" rant when it became obvious that the Republicans would take the House and divide the government in 2010
"Right now we very much need active policies on the part of the federal government to get us out of our economic trap... So if the elections go as expected next week, here’s my advice: Be afraid. Be very afraid." - Paul Krugman 10/28/2010
Krugman is wrong. Again. And again. And again.

As it turns out, we have nothing to fear but Paul Krugman prognostications.  The resulting gridlock and sequester fostered by Obama and Boehner's mutual intransigence slammed the brakes on spending, shrunk the deficit, and as a consequence, the economy has recovered nicely.

The Best Divided Government
Forget the economists. Perhaps it is more useful to review the opinion of stock market analysts who risk their own money and careers on future predictions. What do they think about this particular configuration of divided government?

Ron Insana on CNBC:
"If you listen to the folks at Ned Davis Research who have tracked this back to 1850, a Democratic President and Republican Congress yields the best stock market returns of any possible governmental combination. If you look at the presidents with the biggest gains in the 20th and 21st centuries, it has been Franklin Delano Roosevelt, Bill Clinton, Barack Obama."
Jeffrey Dorfman at Forbes:
"Within this more recent time span, the best performance is Democrat president-Republican Congress with an average economic growth rate of 3.9 percent, followed by Republican president-Republican Congress by an average of 3.2 percent. Democrat president-Democrat Congress is now in third place at 2.8 percent, presidents with a split Congress finish fourth at 2.4 percent, and Republican president-Democrat Congress are last at only 2.0 percent average economic growth. Based on this shorter timeframe, the data suggest that we are now looking at the most favorable national political configuration for GDP growth. In the shorter time period, this is completely due to performance during the final six years of the Clinton presidency as those are the only six years in that grouping. Thus, we should only expect strong economic growth for the next two years if President Obama follows President Clinton’s example of working with the Republicans on issues."
Ken Fisher of Fisher Investments:
"...the outcome is the same either way—gridlock, which stocks love. In fact, we got even more delicious gridlock than we expected... Some confusingly ponder whether this new Congress will incite the necessary bipartisanship to bring “economic renewal” to the country—odd, considering America’s hugely competitive private sector economy has churned higher for years amid gridlock and inaction. Besides, the aforementioned 1990s weren’t exactly a time politicians held hands and sang Kumbaya, as illustrated by the Republican Revolution, long-lasting gridlock, government shutdowns and Bill Clinton’s impeachment. All the while, the economy roared and stocks soared. Let the media do the post-mortem on the midterms. Let the pundits speculate about elections two full years away. For now, we would recommend investors simply appreciate the gridlock they’ve got."
Ken Fisher's opinion of political pundits notwithstanding, let's see what else the punditocracy thinks we have in store for our 114th Congress...

Divided Government and the 114th Congress - The Pundits Speak

Meet The Press host Chuck Todd kicked off the new year promoting a show promising to focus what we can expect out of our new improved divided government. 
"Welcome to the first Sunday of 2015. The battle lines have been drawn. On one side, you have a newly-invigorated President Obama. In fact, he's going to hit the road this week not just to sell his agenda, but to try to get some credit for this economy recovery and acquire new political capital. Yes, he lost the midterms, but the White House believes they won the lame duck. On the other side, you have a more powerful Republican Party. They hold both houses of Congress and they're ready to fight over an aggressive agenda of their own. Keystone, taxes and trade, immigration, education, and of course, the health care battle. But now, just as the Republicans were ready to take on the president, they have to deal with an internal problem. A potential scandal, involving one of their leaders, Steve Scalise, and a white supremacist group."
The actual interview featuring Senators Amy Klobuchar (D) and John Barrasso (R) was underwhelming. Instead of using the MTP platform to provide insight into what we can expect with this executive / legislative dynamic, Todd spends 15 minutes discussing why one idiotic Republican Rep chose to a accept a speaking engagement with a white supremacist organization 12 years ago.

Eventually, when Todd got around to asking the Senators about our new Congress, we learned that the Republicans will pass Keystone Pipeline legislation, and the Democrats think Republicans should rubber stamp Obama's appointments.  I think we already knew that. Perhaps Chuck Todd is not the right guy for this job. And exactly what does it mean for the White House to "win the lame duck" anyway? Is that really a good thing? 

Unlike Chuck Todd, Fred Barnes provides some actual insight into what we might expect in "The Obama - McConnell Dance Begins"
"Mr. McConnell believes that voters choose divided government, as they did in the midterm election, when “they want us to look for areas of agreement.” President Clinton “didn’t have the House or the Senate for six of his eight years,” Mr. McConnell noted at a postelection news conference. Yet welfare reform and three balanced budgets were achieved during the Clinton administration.  Mr. Obama is less kindly disposed to divided government. Dealing with Republicans is not his strength. Nonetheless, his aides have said he plans to spend more time courting members of Congress and less on executive actions. The White House touted this approach before, in 2013. At the time, after several meetings, Sen. Bob Corker (R., Tenn.) told reporters that the president’s overtures were not “ever in earnest, it was optics.” The most noteworthy feature of earlier negotiations was the president’s reluctance to make concessions. And now the left-wing base of the Democratic Party is pressing him to resist Republicans rather than compromise."
Similarly, Jonathan Bydlak of the Coalition to Reduce Spending explains in this Cato Podcast a core libertarianish argument for divided government - It helps to contain the growth of federal spending:
Finally, from the left, WaPo columnist Greg Sargent offers a snark infused compilation of punditocracy outlining things to look for in our sparkling new 2015 model divided government:
"Good times ahead! It is going to be a rollicking year, with Republicans set to take power with 54 Senate seats and the largest House majority they have enjoyed in many decades... A number of Republican Senators are up for reelection in 2016 in states Obama has carried — some of which are also key presidential swing states. Will they really want multiple Obamacare repeal votes and more reckless brinksmanship defined largely around opposition to Obama? Conservatives will claim the 2014 elections gave Republicans a mandate for scorched earth tactics against the president’s agenda. But we’re playing on a 2016 map now, and the conduct of GOP Senators up in 2016 will offer clues to the real state of public opinion on that map... how long until the notion that the recovery is all due to increased confidence stemming from the GOP takeover of Congress becomes an article of faith inside the Conservative Entertainment Complex?"
Greg appears to still be working through the Kubler-Ross Five Stages of Grief over the midterm results. Apparently he is hoping for another Ted Cruz driven GOP meltdown, or a reawakening of the dormant prog gene in the American electorate, or... something. He concludes by invoking Paul Krugman's explanation of why all his failed predictions about the economy came true. Fret not Greg!  If Paul Krugman can be that wrong about divided government, so might you. Accept the will of the electorate. The next two years might just be every bit as good as the halcyon Clinton/Gingrich/Dole years.

But this time, we'll have more than "The man from HOPE".

Divided and Balanced.
Now that is fair.

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