Divided Government Will Doom the Economy

As Washington dithers, the country will suffer.

An illustration of a red and blue Capitol divided.

Congress has failed since the spring to pass much-needed additional economic stimulus. The ousted Trump administration has lost interest in pushing for a new bill. With just a few working weeks left in their lame-duck session, House Democrats want a $2 trillion to $3 trillion measure, while Senate Republicans are recommending a skinnier $500 billion to $650 billion measure. The two sides might fail to come to an agreement, and once President-elect Joe Biden is inaugurated, obstructionist Republicans will have even less incentive to get a deal done.

As Washington dithers, the country will suffer. The novel coronavirus, fueled by indoor transfer over the winter holidays, will continue to maim and kill. States and cities will buckle under their budget gaps, and slash more jobs and social services. Millions of Americans will lose work. And the country’s unemployment-insurance expansion, student-loan-deferral program, and eviction moratoriums will expire, leaving the poor families bearing the brunt of this recession even more vulnerable. A double dip is possible, given that the recovery is already slowing down.

None of this might come to pass, of course. House Speaker Nancy Pelosi and Senate Majority Leader Mitch McConnell might work out a middle-of-the-road stimulus measure, helping to speed the recovery. Democrats might take both of the Georgia seats in the January runoff, thus clinching control of the Senate. Biden—a congressional veteran who is legitimately liked on both sides of the aisle and has a history of bipartisan dealmaking—might break the logjam. The economy might recover faster than expected without additional support from Washington, as businesses adjust and reopen.

But the 2020 electoral outcome—Democratic White House, Republican Senate—was the worst one in terms of getting anything done in the Capitol, and is thus a pending disaster for the country’s sick, unemployed, and poor. A Trump win likely would have eased the passage of a small but important stimulus. A Biden blowout would have allowed Democrats to pass something huge. Instead, Washington has that old 2011 feeling again.

A decade ago, the world learned what a Democratic White House and a Congress under partial Republican control could do together: nothing, or very close to it. At the time, the economy was slouching out of the worst recession since the Great Depression. The $800 billion American Recovery and Reinvestment Act, passed in the early days of the Obama administration, had shored up state and local finances, expanded unemployment insurance, and aided failing businesses. But it was too small by roughly half, economists estimate. With Republicans in control of the House as of 2010 and with a filibustering minority in the Senate until they won it outright in 2014, they crushed every attempt to rectify the problem.

No American Jobs Act. No cloture on even noncontroversial bills. The point was to damage the Democrats’ electoral chances, more than anything else. And the tactic worked, arguably. But it also slowed the recovery down. The United States took 10 long years to return the unemployment rate back to its prerecession low.

Similar dynamics are now at play: The economy needs more. Roughly 10 million fewer Americans are working now than were in February, wages are down sharply, and more than 1 million people are losing their jobs each month, even as the unemployment rate drops. The large, successful stimulus programs created by Congress in the spring are ending, and the cash Uncle Sam distributed is drying up. The slowing recovery might slow further, and households might become far more strained—even as the pandemic reaches deadly new heights.

Yet the real state of the economy does not seem to matter much to partisans on the Hill. On Friday, McConnell described the October jobs report—a very good one, but not one that signals an economy even close to healed—as a “stunning indication of a dramatic comeback” and justification for a smaller stimulus.

As happened a decade ago, Republicans are newly interested in tackling deficits and the debt instead of spending to boost the economy. Having spent four years not paying for anything, including giant tax cuts for rich people and corporations, they have suddenly, predictably rediscovered their concern for the supposed fiscal burdens the old are placing on the young. Senator Lindsey Graham, for instance, said that you would see him “trying to find common ground that would benefit all of us, and a good place to start, I think, would be the debt,” as well as infrastructure and immigration. Soon enough, some prominent politician will suggest a bipartisan, blue-ribbon commission to figure out the tough math, and start talking about trading pennies of short-term spending boosts for dollars of long-term debt reduction.

The only capable body left standing? The Federal Reserve, which has already cut interest rates to zero, set up new programs to help calm the financial system, and purchased trillions of dollars of government debt. Yet, as a decade ago, it cannot do what Congress can, and put money directly in American families’ pockets. “It’s for Congress to decide the timing, size, and components of further fiscal support for the economy,” Fed Chair Jerome Powell said at a press conference this month. “I do think it’s likely that further support is likely to be needed.” A divided government is a hobbled government, and one that will hobble the recovery.

Four years of Trump have surely changed the Democratic Party, which has become less concerned about debt and become more concerned about the structure of Congress preventing legislation from passing. Statehood for Washington, D.C., and Puerto Rico; the elimination of the filibuster; expanding the Supreme Court; ending gerrymandering; stopping voter suppression: These are much more pressing concerns for liberals. But have four years of Trump changed the Republican Party? If so, it has become only more antidemocratic and obstructionist. The way back for Republicans means denying President Biden any victories at all, and particularly bipartisan ones. The country’s workers, as always, will be the biggest losers.