The United States is incorrigibly bipolar. The two nations that inhabit the land are engaged in a decades-long class war over American culture and values — one that looks more and more like the deadlock of trench warfare on the Western Front. As I argued in the previous note, what 2020 has revealed is the rigidity of the class-partisan confrontation. Put simply, the class war, usually misconstrued as merely a culture war, is not going anywhere — not as long as the left refuses to court the working class in earnest and without the Boasian scold. The depressing upshot was that all the Packerian hopes pinned on a transformative multi-term Harris-Biden administration were largely misplaced.
Parenthetically, you may be wondering why I keep using “Harris-Biden administration”? I like the phrase not only because Harris is more lucid, more capable and sharper than the senior. But also because the Senator from Silicon Valley represents the stronger party in the alignment of forces now coming to power. No force in America is more powerful today — think Wall Street circa 2006, except even more powerful.
And no one is a bigger winner from divided government than Big Tech. As the FT reported yesterday:
The prospect of a divided government has investors betting that tax cuts signed by President Donald Trump will remain in place. It has also reduced, but not quashed, the risk of heavy-handed new tech regulation.“Big US tech stocks emerge as US election winners.” Financial Times, Nov 9, 2020.
It has long been clear that GOP control of the Senate rules out an ambitious legislative agenda. Beltway realism suggests that McConnell is set to deliver “the Mother of All Stonewalls,” as a Post columnist put it the day after election day. That would essentially cripple the administration, in a repeat of what happened to the Obama presidency. After the electoral disappointment, the Biden team has gone back to the drawing board. Appointments that would’ve been a shoo-in are no longer thought plausible, so all 1200 positions that need Senate confirmation have to be reconsidered. On the other hand, there is still a slim chance that Democrats could flip the Senate in the Georgia runoffs scheduled for January. So should they draw up two lists of appointees? one for the divided control scenario and one for the undivided?
Such are the conundrums of the transition of power in the world’s oldest democracy. But whatever the strategy, it is simply assumed that President-Elect Biden and Democrats in general would prefer undivided control. How could it be otherwise?
But is this assumption quite right? Does Biden really want Democrats to control the Senate? Or is divided government a blessing in disguise from the point of view of the unity of interests?
One reason divided government may be a blessing is that it gives the Biden White House considerable leverage against ascendant progressive forces within the party. Bobby Jindal, the Indian-American governor of Louisiana, spelled it on the pages of the Journal yesterday:
Strange as it sounds, Mr. Biden needs a Republican Senate majority to serve as a foil. It will give him someone to blame when he proves unable to deliver on left-wing environmental, tax and health-care policies. He can’t say this publicly, but he should be rooting for the Republicans to win the Georgia Senate runoffs. … The Senate confirmation process gives him an excuse to keep Elizabeth Warren away from Treasury, Bernie Sanders away from the Labor Department, and a laundry list of other radicals away from executive power.Bobby Jindal, “GOP Senate is a Blessing for Biden.” WSJ, Nov 9, 2020.
Even though I have supported Warren from the beginning of the primaries, her replacement is an even more attractive pick to lead the Treasury. As I noted on Facebook earlier today (you can send me a friend request), Lael Brainard has been for some years the sharpest knife in the Fed’s drawer. For many years, she was the only American central banker who understood that the Phillips curve is broken and that the Fed should not be hiking in anticipation of inflation when the labor market tightens. Instead, it should wait until it sees, as Krugman put it many years ago, the whites of inflation’s eyes. “The Fed’s model error,” I argued as early as 2016, “is a significant risk for the economy and markets.”
More than anyone else on the FOMC, she’s responsible for the Fed finally coming to see the light. It was no coincidence that Powell invited her to join the Fed’s inner circle — a group traditionally confined to the Fed chair, vice chair and New York Fed president — at the same time as the policy reset; which I anticipated. Powell has proven to be pragmatic and open-minded, even more so than his predecessors. Moreover, he enjoys Bipartisan support and the confidence of market participants. It is quite unlikely that the Biden people will want to replace him. So we’re potentially looking at a Powell Fed and a Brainard Treasury, a very promising combination to shepherd the US economy and global markets in the years ahead.
The unity of interests behind Harris-Biden are, of course, loath to appoint Bernie Sanders. Even if Democrats gain control of the Senate in January, a Sanders cabinet appointment is likely to be scuttled one way or another. But there is no doubt whatsoever that divided government can serve as a fig leaf for the move, and more generally, for containing the left flank of the party.
Another reason the Biden administration may prefer divided government is that it gives them leverage against foreign powers. I live-tweeted the first of Brookings discussion on Biden’s foreign policy yesterday. It was great fun.
One of the things that came through clearly in the discussion is that divided government gives the Biden administration leverage against Iran. There was no disagreement over the idea that the US-Iran deal ought to be renegotiated. The issue is that, as Tamara Wittes, a former Obama-era State official, noted, in response to Trump’s extremely hawkish policy, Iran has escalated confrontation across what I called the zone of weakness. (I was paraphrasing Gregory Gause III, who had called the destabilized countries of the Middle East the arc of weakness. It may also be called the zone of Iranian influence.)
The point of renegotiating the US-Iran agreement, then, is to go beyond enrichment and missiles, and towards something closer to a regional modus vivendi. But that requires arm-twisting the Saudis to the table. On that front, divided government is no help, of course.
Apparently, and this is what made live-tweeting the event so much fun, was that Wittes was following my live coverage. I suspected so when I saw her nodding to something on her screen just as I tweeted a précis of her points. My suspicion was later confirmed when she chimed in to defend herself against my criticism that Dems should resist witch hunts in America’s “apolitical” institutions currently being urged on by the zealots.
The larger story that emerged from the BrookingFP discussion is that the Blob is back. And it what it wants is not a return to Obama foreign policy. No sir. What it wants can best be described as an Obama-Trump synthesis: a return to closer ties with Western allies, together with moves towards the containment of China and Russia, if indeed, not Iran as well. As Eric Edleman noted, ‘the world has changed,’ and Biden’s new national security strategy will reflect the new geopolitical realities.
On containment of near-peers too, divided government will be a source of leverage for the Biden White House. Although, it must be said that, as Wittes noted in an early comment, containment of China may not be consistent with the pursuit of common objectives: The pandemic most immediately — but not for long since a very effective vaccine has arrived. But above all, global heating. As Albert Pinto and I argued on these pages, over the next couple of decades, ya can’t have a cold war with China and get off the hockey-stick of doom at the same time.
Russia is a different can of worms, as I explained at the Johns Hopkins GND conference last year. As a petrostate, it is nearly guaranteed to be an adversary for any green coalition. And as a great power, it can, unless it is outmaneuvered, shield an entire anti-Green World Order coalition under its nuclear umbrella. Like other stranded nations, containing Russian influence will be high up on the agenda during the energy transition.
Russian influence has increased enormously over the past decade. Indeed, what has obtained across the region on its southern periphery, is what I have called the Sochi Consensus. The Iranians, the Israelis and the Turks have repeatedly made the trek to Sochi to resolve regional confrontations. Russia has emerged as the improbable arbiter of affairs in the region. The latest evidence of the Sochi Consensus is the ceasefire in the Azerbaijan-Armenia conflict over Nagorno-Karabakh. Russian troops are to occupy much of the contested zone for the foreseeable future.
These developments are not necessarily inconsistent with the American interest. Letting Russia deal with the Syrian conflict allowed the Obama administration to indirectly back Assad without tempering the otherwise hostile liberal-democratic discourse of Western self-congratulation. Less obviously, letting the Russians handle Turkey over northern Syria, allowed the Trump administration to avoid getting sucked into a nasty conflict as a result of Turkish shenanigans. The same may be said over the Nagorno-Karabakh conflict. The Turks back Azerbaijan against the people they tried to exterminate a hundred years ago; the Russians back the Armenians. What American interest is to be served by intervening on either side or even as a neutral arbiter? None that can be discerned, if one is being honest. Best to let the Turks deal with the Russians on their own strength.
It is not clear that the Blob gets this. We should not be surprised to find them trying to again micro-manage every conflict on the face of the earth. Victoria “Fuck the EU” Nuland seemed to be taking just such a line. The indispensable nation syndrome dies hard.
So the story is much more complicated. It seems that not only Silicon Valley and Wall Street but the Blob and the Biden people themselves are rapidly warming up to the prospect of a divided government. It is not clear, and probably unlikely, that they would try to sabotage Democratic chances in the state. But who knows? Anything is possible during the transition of power — when the clock in Washington ticks much faster than usual.