Election Results Signal Less Stimulus, More Gridlock

By Yuval Rosenberg

Election Results Signal Less Stimulus, More Gridlock

Although the final numbers aren’t in yet, it looks like the 2020
election will deliver a divided Congress to whichever party claims
the White House.

Democratic hopes for a “blue wave” fell by the wayside pretty
quickly Tuesday night, and it now seems likely that Democrats will
keep control of the House while Republicans will maintain their
majority in Senate following big wins for a handful of GOP
incumbents in some closely watched races, including Susan Collins
in Maine, Thom Tillis in North Carolina and Lindsey Graham in South
Carolina.

And while former vice president Joe Biden now appears to have an
easier path to 270 Electoral College votes than President Donald
Trump, without unified control of the government, either man will
have a tough time advancing his agenda.

The most likely outcome in numerous important policy areas is a
continuation of the status quo, with little room for major changes.
“[F]or now, the main takeaway appears to be that whoever wins the
presidency probably faces continued gridlock in Congress,” Jonas
Goltermann of Capital Economics wrote Wednesday.

Here’s how a divided government could play out on some key
issues.

Smaller coronavirus stimulus: Democrats have been seeking
a coronavirus package worth at least $2 trillion, and a blue wave
could have produced legislation totaling even more. But with the
Senate in Republican hands, the stimulus will likely be much
smaller.

Senate Majority Leader Mitch McConnell (R-KY) — who cruised to
reelection and is expected to return as leader, assuming
Republicans maintain control — said Wednesday that an aid package
would be a top priority, even before the next administration is
sworn in, and that he was open to including aid for state and local
governments, a key point of disagreement in previous
negotiations.

“We need another rescue package,” McConnell
said. “The Senate goes back into session next
Monday. Hopefully the partisan passions that prevented us from
doing another rescue package will subside with the election. And I
think we need to do it and I think we need to do it before the end
of the year.”

Whether Trump would be interested in signing such a bill remains
an open question, especially if he loses. But regardless of whether
a stimulus package is sent to a Trump or Biden White House, it will
almost certainly be smaller than it would have been had Democrats
managed to pull off a clean sweep.

“With Republicans still in charge in the Senate, we’d be
surprised to see a stimulus bill early next year much in excess of
$500 billion, far less than the $2 trillion we expected if
Democrats had won,” Ian Shepherdson, chief economist at Pantheon
Macroeconomics,
said Wednesday.

The markets sent signals Wednesday that traders were adjusting
to the prospect of a smaller stimulus. “The yield of 10-year US
Treasuries has fallen by about 10bp since the results started
coming out overnight ... and the yields of other high-grade
government bonds have fallen too,” Goltermann of Capital Economics
said. “The expectations of a big post-election fiscal deal had been
a key factor pushing US bond yields higher over the past few
weeks.”

No big changes for tax policy: Joe Biden wants to
increase taxes on businesses and the wealthy in order to pay for
some of his ambitious agenda, which includes huge spending
increases on health care, education and green energy. But a Senate
controlled by McConnell is very unlikely to approve such changes,
which include reversing some of the tax cuts Republicans passed in
2017.

Similarly, a Trump administration would have a difficult time
passing more tax cuts with Nancy Pelosi (D-CA) in control of the
House.

Smaller tweaks for health care: Biden has proposed
expanding the Affordable Care Act, but a divided Congress probably
eliminates that possibility.

“If Republicans keep their majority in the Senate, Biden's more
expansive plans for addressing health care affordability by
expanding ACA subsidies and adding a public option seem dead in the
water,” Larry Levitt of the Kaiser Family Foundation
said.

Biden could still make numerous tweaks to the health care system
through executive actions, just as Trump has done. Levitt
listed a few of those potential changes: “Put scientists
front and center, Extend ACA open enrollment, Reinstate ACA
outreach funding, Limit short-term plans that don’t cover
pre-existing conditions, Undo family planning funding
restrictions.”

Biden would not be able to eliminate the threat to the
Affordable Care Act posed by a lawsuit seeking to invalidate the
law.

Covid vs. the Economy: What Mattered to Voters

It’s the pandemic, stupid.

That play on James Carville’s famous “It’s the economy, stupid”
mantra from Bill Clinton’s 1992 presidential campaign was
occasionally repeated in
media coverage of the presidential election and
may have been accepted as conventional wisdom among
some political strategists — and not just
Democratic ones.

The reality was far more complicated, if exit poll results are
to be believed. Of course, given the
big problems with this year’s polls
and
polling-based forecasts, you probably want to take
those exit poll results with a spoonful of salt. Still, the data
suggest that voters were deeply divided about what mattered most to
them, and that Carville’s old mantra about the economy still held
true for many, especially Trump supporters.

Early results from exit polls conducted by Edison Research for
the National Election Pool show that just over a third of voters
said the economy was the most important issue in determining their
vote. Racial inequality was the top issue for 21% of those
surveyed, while fewer than one in five voters said the Covid-19
pandemic mattered most to them. (By contrast, the Associated Press

VoteCast, a survey of the electorate conducted
over several days, found that 41% said that the coronavirus
pandemic was the most important issue facing the country, while 28%
cited the economy and jobs.) About 10% of voters said health care
policy was their top issue, a sharp drop from recent election
cycles.

In the exit poll, voters who backed Trump were more likely to
cite the economy and crime and safety as top issues, while Biden
backers were more likely to point to racial injustice and the
pandemic. (Voters were also about three times as likely to say that
the candidates’ position on the issues, rather than their “personal
qualities,” mattered most to them.) Voters who pointed to the
economy broke overwhelmingly (82%) for Trump, while those who cited
the pandemic went overwhelmingly (also 82%) for Biden.

While 51% of voters in the exit poll said it was more
important to contain the virus now, even if it hurts the economy,
Republicans were far more likely to prioritize rebuilding the
economy, even if it hinders efforts to combat the
pandemic.

“In short, voters seemingly saw a dichotomy
between the economy and the public health response to the
virus, and where they stood on that divide fell along deeply
partisan lines,” Vox’s Julia Belluz
writes. “Republican voters overwhelmingly wanted
the economy to restart — something Trump has long been advocating
for — more than they wanted to see the virus controlled. They also
viewed the economy as a key issue, more so than the pandemic, when
deciding whom to support.”

Belluz notes that Trump won in states with the greatest density
of new Covid-19 infections —Utah, Montana, Wyoming, North Dakota,
South Dakota, Nebraska, Indiana. Those are all solidly red states
that were expected to vote for the president, but the ravages of
the virus apparently did not do much to change voter preferences in
those hard-hit states.

The bottom line: While public health experts and others,
including Biden, have emphasized that controlling the virus is key
to reopening the economy, Trump supporters embraced the president’s
position that the virus is at least somewhat under control and his
emphasis on revitalizing the economy despite rising Covid case
counts.

Read more at
The New York Times.

Number of the Day: 70,873,269+

While he hasn’t yet secured the 270 Electoral College
votes needed to win, former vice president Joe Biden has already
collected a
record total in the popular vote, topping the
69,498,516 Barack Obama received in 2008, when Biden was his
running mate. (Yes, the population of the country has grown by some
25 million since then.) President Trump is reportedly also on track
to surpass Obama’s 2008 vote count, becoming the second-highest
vote total in U.S. history.

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