Economy & Politics

US Election: Rule or not: Georgia will decide the start of the Biden era

A Democrat supporter at a Georgia drive-through campaign rallyimago images / ZUMA Wire

Joe Biden can rely on a majority of his party in the House of Representatives after the election result in early November. If, however, the opposing Republicans get the upper hand in the second chamber of Congress, the imbalance will prevent any governance. The Republicans have won 50 Senate seats and 48 the Democrats. If they can secure both seats in the runoff election in Georgia, the result would still be a stalemate. However, the vote of Vice President Kamala Harris could then make the difference in favor of the Democrats.

Would a “divided government” be something unusual?

When the Republicans defend their majority in the Senate and make life difficult for the opposing President in the White House, one speaks of a divided government or a divided Congress. This constellation is not unusual in the American party system. For several decades now, the times of pronounced party political majorities in both chambers of the Congress have passed. Democrats and Republicans twice faced a stalemate in the Senate at the beginning of a government term in the 1960s. According to an analysis by the Pew Research Institute, the lead of the two popular parties in Congress has noticeably decreased since then.

Can the opposing majority then block everything?

Since the entire House of Representatives and a third of the Senate are re-elected every two years in a four-year term of government, many presidents in the past saw their business being impaired by trials of strength – but not completely blocked. Under the Republicans Richard Nixon and Henry Ford, and later under George Bush Senior, both chambers were in Democratic hands, Ronald Reagan had a Democratic House of Representatives against him at times, and Bill Clinton was only able to have his own party majority in both chambers for the first two of his eight years in office rule. Then the Republicans won a majority in both chambers. Barack Obama had a Republican house against him for three quarters of his time in the White House, and the Senate for the past two years.

What makes the crucial difference?

It’s about abundance of power. In Biden’s case, a Republican-dominated Senate would most likely prevent the new president from implementing key elements of his election promises – and thereby weaken him considerably. From his agenda, Biden would probably have to take the most ambitious or the most distant from the political center. At stake is whether the new president will succeed politically in the climate crisis, the energy transition, a police reform or the corona crisis package, for example, or whether he will have to compromise in arduous negotiations.

Where should Biden and the Democratic House fall back?

Political expert Darrell M. West from the Brookings Institute expects “dramatic consequences” from a divided majority in Congress: both in terms of Biden’s personnel sheet and in the political leeway that remains for fundamental reforms. The priority would be, for example, democratic demands for the economy that want to drive the technology giants and internet platforms into parade, overtake outdated competition rules and remove the dust from antitrust law. Even ambitious data protection plans, projects against the price dictates of the pharmaceutical companies or changes in the health system would hardly take the hurdle of a Republican Senate. The same applies to the plans outlined in the election manifesto to raise corporate taxes to 28 percent – or an imminent new edition of the $ 892 billion corona aid package that Biden has called a “down payment”.

How could Biden circumvent the blockade?

To stay with the market power of the technology companies: The White House and a democratic Justice Department could presumably make life more difficult for them with new regulations and lawsuits, but they could not rewrite the rules of the game. Just like Barack Obama and Donald Trump before him, Biden can use regulations to shape politics in a variety of ways. Authorities can set far-reaching rules and ministries can prioritize their budgets as they see fit. “This means that the future President Biden has many arrows in his quiver that make him a strong and powerful decision maker,” writes Brookings expert West. He could reverse many of his predecessor’s decisions, for example in digitization, migration or energy policy, and thus achieve even more impact than through laws that he would have to get through a divided congress.

Where could compromises be made?

What Democrats and Republicans could get together in the Senate seems to be a package of laws to renew the ailing infrastructure in many places. For this, Biden has stated spending requests of $ 2 billion. Non-partisan, this goal is likely to remain an illusion, but the Republicans are unlikely to block themselves to more modest programs for highways, bridges, dams and faster internet for underserved cities and communities. A common line, it is expected in Washington, should also be found in relation to China. Both parties strive to stand up to Beijing on trade rules, security and human rights.

Which option do the markets prefer?

Historically, according to analysts, Wall Street has benefited from divided governments. Ahead of the current runoff in Georgia, a Republican victory was expected to see a surge in the stock market. In the absence of far-reaching reforms, investors would have less reason to rearrange their portfolios. New democratic regulations for banks, tech companies or the energy sector, on the other hand, could have a negative impact on prices. The outlook for a more moderate fiscal policy would also keep the bond market in check. And according to many analysts, the dollar would be under more pressure if both chambers in Congress were colored blue in the color of the Democrats.


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