Implications of the Blue Wave

[mattee2264]

My understanding of US politics is quite limited. As I understand Dems control the senate 51-50 thanks to the VP tiebreaker. Is there a whip system to force people to vote on party lines or does the very slim majority mean that moderate Democrats will probably dictate which policies get implemented?

 

The consensus view seems to be that a Blue Wave means a fiscal tsunami that includes in addition to the $2,000 stimulus checks extended unemployment benefits, more support for small businesses, a Green New Deal and a lot more state aid. But also later down the lines higher taxes and more regulation.

 

Are these measures broadly supported within the Democrat party or will moderates place a cap on the extent of any further fiscal stimulus and tax increases and regulation?

[Castanza]

The basic 50/50 split means you only need a few sane individuals with common sense to prevent ridiculous bills from being passed. It gives more power to individual congressmen and women since their vote counts "more" in a sense. I hope the slim margin for victory produces more bi-partisan discourse. At least, that's me trying to look on the bright side.

 

 

 

 

[Read the Footnotes]

My understanding of US politics is quite limited. As I understand Dems control the senate 51-50 thanks to the VP tiebreaker. Is there a whip system to force people to vote on party lines or does the very slim majority mean that moderate Democrats will probably dictate which policies get implemented?

 

The consensus view seems to be that a Blue Wave means a fiscal tsunami that includes in addition to the $2,000 stimulus checks extended unemployment benefits, more support for small businesses, a Green New Deal and a lot more state aid. But also later down the lines higher taxes and more regulation.

 

Are these measures broadly supported within the Democrat party or will moderates place a cap on the extent of any further fiscal stimulus and tax increases and regulation?

 

Q: Is there a whip system to force people to vote on party lines or does the very slim majority mean that moderate Democrats will probably dictate which policies get implemented?

A: Yes, there is a whip system. I am not sure what your point of reference is, but the whip system is weaker in the US compared to say the U.K. For a quick trip down a comparative politics rabbit hole, even wikipedia can oblige (https://en.wikipedia.org/wiki/Whip_%28politics%29)

 

Q: Blue Wave means a fiscal tsunami that includes in addition to the $2,000 stimulus checks extended unemployment benefits,

A: Not exactly clear in part because there are limits to what we can expect the virus to do, but there is an anticipation that the virus will be better managed. It is important to remember that there are very cost effective measures that have not been implemented in the US.

 

 

Q: more support for small businesses,

A: Yes, very likely

 

Q: a Green New Deal

A: This is a republican talking point, not Biden's platform. The actual platform is closer to the Obama administration that the nutty proposal of the Green New Deal.

 

Q: But also later down the lines higher taxes and more regulation.

A: Yes, some more regulation is promised, mainly in the form of rolling back some rather harmful deregulation by the Trump administration.

Biden's agenda does not involve the promise of higher taxes, though that was a frequent campaign rallying cry among Republicans. The truth regarding future taxation is uncertain. No matter what Biden says, we will need to pay to rebuild a capital, the pandemic has been very costly and poorly managed, and the tax cuts may have been unsustainable in the best of times, and these have not been the best of times. Given the high debt load the country now faces from the incredibly un-conservative wildly deficit spending Trump administration, the future regarding taxation is uncertain. Bush promised "no new taxes" and we all see how that turned out.

 

I think what you can really expect to see is a growing strength and coalition among moderates of both sides. It will be difficult to make this happen because social media makes it so easy for radicals to incite, enrage and gain attention. On the other hand Biden has done a terrific job of silencing the radical elements within his own party for several months. Whether he can maintain that discipline in the long run is unclear.

 

A positive outcome of the last couple of days is that it may further strengthen the shift toward moderates and civility. Those who thought they could play with fire by trying to manage trump and manage radical elements may have a greater appreciation of the dangerous game they were playing. I have a feeling that cowering in the capital for several hours may result in Congress having a new sense of purpose, and not the purpose that Trump was hoping they would.

 

Those who were hoping for divided unproductive government may be surprised by what the coming years hold. Generally business likes stability and prefers stability, which means that divided government is a desirable outcome, but a productive legislature where moderates hold the power is also potentially a very good outcome for business.

 

My belief is that businesses hate the chaos of the Trump administration, and that they much prefer the promise of a stable hand, and better management of the pandemic and that helps to explain the rising market in spite of Trump staging a failed insurrection. The failure of his coup attempt will just serve to further empower the moderates on both sides of the aisles.

[Dalal.Holdings]

The Dems don’t fall in line as well as the R’s do (thanks to Mitch). All you need is one Joe Manchin to ditch the Dems.

 

As I’ve said, the Dems have proven themselves largely ineffectual even with larger majorities. Now they have razor thin margins in both houses. Their leadership is not as skilled as Mitch in strategic maneuvering and getting people in line. And Mitch will have an inordinate amount of power even as minority leader.

[Read the Footnotes]

The Dems don’t fall in line as well as the R’s do (thanks to Mitch). All you need is one Joe Manchin to ditch the Dems.

 

As I’ve said, the Dems have proven themselves largely ineffectual even with larger majorities. Now they have razor thin margins in both houses. Their leadership is not as skilled as Mitch in strategic maneuvering and getting people in line. And Mitch will have an inordinate amount of power even as minority leader.

Yes, Dalal makes a good point. The power and effectiveness of individual leaders has varied over time in the US and, and Mitch has been unusually good at maintaining discipline.

 

We also should not underestimate the idea that Romney or someone else could leave the Republican party, if the coup is not handled to their satisfaction.

[LC]

Falling in line is a useful quality for the religious, slave labor, and front line soldiers. It is not useful to running a democracy.

 

I prefer a gridlocked party versus a party that does whatever the leader says.

[Read the Footnotes]

I prefer individuals who think for themselves.

[Gregmal]

I would be fairly certain that should Manchin or Romney get too liberal they will not make it past their next reelections. Similar to what we saw in Alabama.

[Mephistopheles]

I kind of like the 51-50 majority. It ensures that one man (and his lemmings) won't hold up important executive branch and judicial appointments, but also ensures we won't get something radical like insane tax hikes.

 

To the OP's question, blue wave likely means nothing, because the Democrats as others have stated are largely ineffective and useless even when they have the majority.

 

When the Dems won the House in 2018, they passed a bill to limit gun violence and voter suppression. Of course the Grim Reaper didn't even bring it to the floor. Now there will be no excuse not to bring it to the floor, debate it, and get a deal done. Will that actually happen? Not giving it great odds for Schumer, Pelosi and Biden to get anything done. They'll spend their time arguing gender pronouns and made up racial issues for 2 years until the GOP takes back both houses and we are at square one. lol

[Gregmal]

Exactly. Everyones dreaming and delusionally thinking Trump destroyed the Republican Party....yea right. You'll see. The party that is now perfectly setup to be destroyed is the one that on paper has "complete control". The one internally at each others throats about whether moderates or radicals get their way. Ultimately I see the moderates prevailing, which will severely alienate the far left. Its why you see ANTIFA/BLM and radical groups "peacefully protesting" in the big liberal cities and still screaming "Fuck Biden"...I would bet big that the mail in voting severely masked the overall figures. The working class vote is trending away from the democrats.

[mattee2264]

Are there any fiscally conservative segments of the Democrat Party? It seems like one thing they can all seem to be able to get behind is more bail-outs and hand-outs.

 

Aside from the $2,000 checks I've read speculations of a further stimulus early this year anywhere between $600B & $2-3TR.

 

I kinda feel Mitch has a point and it is ridiculous giving checks to middle class people/yuppies who have kept their jobs and have nothing to do with the money besides betting on the stock market or bitcoin and a smaller more targeted package makes more sense.

[JRM]

I wonder about student loan forgiveness.  It disproportionately helps middle to upper class educated folks, not so much the people that actually need help.  There hasn't been much talk about it lately.

[Read the Footnotes]

I wonder about student loan forgiveness.  It disproportionately helps middle to upper class educated folks, not so much the people that actually need help.  There hasn't been much talk about it lately.

 

There has been some limited mention of small efforts, but the really nutty crazy stuff seems to be off the table. Biden and those closest to him have never really advocated for it, so there's no reason it should be on the radar.

 

They do however have some equally crazy sounding plan which they say is that everyone should be able to go to a state school for free. That would be a huge change with a huge price tag and I suspect the truth is very different from the headline soundbite. I would assume that the fine print on who qualifies will be quite long.

 

It's actually kind of a dumb idea in some ways, especially if there aren't serious limitations and selection criteria such as similar programs that already exist at the state level. If it was possible, more effective k-12 education would be a better way to spend tax payer dollars and student time in my opinion. The disrupting affects on higher education would also be very large. I would argue that at some point, there are diminishing marginal returns to education and that removing a market force such as a financial cost to education eliminates risk sharing and increases the number of intersectional basket weaving majors.

[Dalal.Holdings]

Something to help the conservatives sleep at night:

 

[Democratic Senator] Manchin shoots down proposed round of $2K checks: 'Absolutely not'

 

https://thehill.com/homenews/senate/533355-manchin-shoots-down-proposed-round-of-2k-checks-absolutely-not

[mattee2264]

 

  Manchin clarified his comments. All he meant was the #1 priority should be the vaccine distribution not the checks but he didnt rule them out although he did hint his preference was for more targeted support e.g. additional unemployment benefits. Besides quite a few Republicans are in favour of the checks. So they will probably pass.

 

Then Biden comes along and promises trillions of dollars of immediate fiscal relief with details to follow next Thursday. Scariest thing is he claimed the higher figure was a result of advice from economic experts. Whether he can actually achieve that level of stimulus is another matter but probably kills off any probability of a near term market correction.

 

Interesting to see the moves in the 10 Year Treasury yield rising above 1% for the first time since March. I wonder if this could escalate into a massive bond sell off and if so whether that would spook markets? Everything these days seems to get carried too far and along with the V shaped recovery low interest rates are a key justification for elevated valuations.