Pollsters and pundits predicted that the November election would be a landslide for Democrats. They were highly favored not just to take the presidency but to expand their House majority and retake control of the Senate.
Once again, the political class got it all wrong.
Joe Biden is projected to win the presidency, pending official vote certifications and recounts, but the race was far, far closer than expected. And Republicans actually picked up seats in the House, shrinking the Democratic majority to single digits. The GOP exceeded expectations in Senate races as well, with the current balance of power set at 48 Democrats, 50 Republicans.
There are two races headed to a runoff—both in Georgia. If Democrats win both, they will have a razor-thin majority, as the presumptive vice-president elect Kamala Harris will be the tie-breaking vote.
This means that, essentially, a prospective Biden administration’s ability to pass a sweeping policy agenda hinges on the outcome of the two runoffs. If Republicans win one or both seats and retain a majority, much of the Biden agenda is dead-on-arrival. However, if Democrats secure that razor-thin majority they could pass major policy initiatives such as a bloated, budget-busting stimulus bill, a $15 minimum wage, tax hikes, and government healthcare.
President-elect Joe Biden’s transition team is preparing multiple sets of policy proposals, including the ambitious agenda Mr. Biden laid out in his winning campaign, while acknowledging it may have to be pared back in recognition of divided government https://t.co/9J4mjpVTcM— NYT Politics (@nytpolitics) November 12, 2020
It’s possible that defection from moderates could still sink these proposals in a Democratic-majority Senate. But the possibility of implementing the Biden agenda is clearly up for grabs—and even he knows it.
“President-elect Joseph R. Biden Jr.’s transition team is preparing multiple sets of policy proposals for the economy, health care, climate change and other domestic issues, including the ambitious agenda Mr. Biden laid out in his winning campaign, while acknowledging it may have to be pared back in recognition of divided government,” the New York Times reports.
“Where the incoming administration lands depends heavily on two Senate runoffs in Georgia in early January,” the report continues.
So, it’s certainly worth considering the potential benefits of divided government. Here are four radical policy proposals that GOP control of the Senate would take off the table.
1. Another $2+ Trillion, Bloated Stimulus Bill
Congress’s first round of stimulus efforts exploded the federal budget and led to record levels of debt. Moreover, the CARES Act’s major programs have also proven rife with waste, fraud, dysfunction, and abuse. They’ve also been ineffective in many instances.
Yet Biden and congressional Democrats want to pass another behemoth package similar to the CARES Act. Senate Republicans, for their part, want to pass a relatively modest $500 billion package. (Only in Washington, D.C., is half a trillion in spending the “conservative” position).
Some form of a stimulus bill might still get passed if the GOP takes the Senate, but there’s no doubt it would be far less expensive and sweeping. This outcome would be far better for the American taxpayer.
2. A $15 Minimum Wage
Biden wants to pass a federal $15 minimum wage, and has even made it part of his “transition agenda.” It’s reasonable to predict that he could attempt to include such a national wage mandate in a COVID-19 stimulus package, infrastructure bill, or must-pass budget deal. This might sound like a good thing for workers at first glance, but it’s not.
Small businesses are struggling throughout the country under the weight of the COVID-19 crisis and government lockdowns. Many have already gone out of businesses and millions more are barely staying afloat. Minimum wage increases always destroy jobs. Even under normal conditions, the nonpartisan Congressional Budget Office projects a federal $15 minimum wage would destroy up to 3.7 million jobs.
But now more than ever, a $15 minimum wage would lead to mass layoffs and job losses.
3. Corporate Tax Hikes
Biden campaigned on partially reversing the GOP 2017 tax reform, even though it clearly helped boost incomes and the economy after its passage. One key change the Democrat wants to pass is an increase in the corporate tax rate up to 28 percent.
This is a bad idea for many reasons, but most importantly, the burden of this tax hike would not fall on “Big Business”—it would be borne mostly by American workers.
Research has consistently shown that corporate taxes, sold as making corporate big wigs pay their “fair share,” are actually passed onto workers through lower wages and reduced investment and job creation. According to the Tax Foundation, “studies appear to show that labor bears between 50 percent and 100 percent of the burden of the corporate income tax, with 70 percent or higher the most likely outcome.”
Workers will fare better if divided government consigns corporate tax hikes to the dustbin.
4. A ‘Public Option’ That Leads to Socialized Healthcare
Similarly, the fate of Biden’s proposal to expand government-controlled healthcare also likely rests on the Georgia runoff outcome. The Democrat wants to expand the federal government’s currently vast role in the healthcare market by having it provide a “public option” via Medicare to the public.
Supposedly, this government-run healthcare option would “compete” with the private sector, rather than abolish it outright like other proposals. However, because the government can both subsidize itself and mandate that healthcare providers accept lower compensation rates, it will inevitably drive private insurers out of business and leave us all dependent on the government for healthcare.
If Republicans keep the Senate, this proposal won’t go anywhere. If not, it is very much on the table.
The Takeaway: Divided Government and Gridlock are Bulwarks Against Extremism
Americans often gripe about Washington, D.C.’s inability to get anything done. There’s validity to this sentiment.
It often feels like our well-paid elected representatives do little to actually advance the people’s interests and instead just showboat for TV cameras. However, there’s clearly an upside to divided government and gridlock: It blocks extreme, radical policies that would limit our freedoms and leave us all worse off.
It’s statistically proven that the growth of government and federal spending are slower under divided government. And it’s no coincidence that after the election results came in, the business sector reacted very favorably to the prospect of a gridlocked Congress unable to pass any more interventionist policies. After all, a Stanford study found that the Biden tax and regulatory agenda, if implemented, would kill 4.9 million jobs and decrease average household income by $6,500.
So, yes, divided government might be frustrating sometimes. But this time around, it would be great news for the economy and the American people.