In 2020, Joe Biden broke former President Barack Obama’s record for the most votes cast in a U.S. presidential election.
But defeated President Donald Trump did, too.
Biden won the presidency with 81.3 million votes. But Trump, despite mishandling the pandemic, his impeachment, his norm-breaking and telling thousands of lies, received 74.2. million. (In 2008, Obama’s total was 69.5 million).
Because the presidency isn’t decided by the popular vote, Biden actually prevailed in a squeaker. According to the Cook Political Report, Trump came within 69,000 votes of winning the Electoral College.
Outside the deepest hue of red or blue, similar tight races are more common, most recently in the Georgia U.S. Senate races. The divide is not merely partisan but over deeply held ideological principles.
How can sustained and effective economic policies be maintained in such a divided nation?
It’s not an idle question. From public investments to trade, regulation and appointments to such key decision-making bodies as the Federal Reserve, the president and congressional majorities play an enormous role in the economy. Even those who espouse laissez-faire economic “freedom” must win elections to make it happen.
And it’s a critical issue when the nation is struggling with the consequences of the pandemic, and its aftermath could mean “a lost decade” for the global economy, according to the World Bank.
The importance of politics to the economy dates to the birth of the republic.
Alexander Hamilton, the first treasury secretary, put the new nation on a sound footing by having the federal government assume state debts, creating a national bank and encouraging manufacturing.
In the late 19th century, majorities chafed at the abuses of the Gilded Age. This led to such reforms as the Interstate Commerce Act regulating railroads (1887), the Sherman Antitrust Act (1890) and the Pure Food and Drug Act (1906).
The Progressive era crossed party lines, most notably in the presidencies of Theodore Roosevelt and Woodrow Wilson.
After the tight regulations of World War I and Wilson’s overreaching in such areas as stifling dissent, voters swung in the other direction. Republican Presidents Warren Harding and Calvin Coolidge favored lower taxes and very limited regulation, the economy overseen by Treasury Secretary Andrew Mellon.
“Trickle down” economic theory was espoused by Mellon, who argued that tax breaks to large corporations would benefit average Americans in the form of jobs. (Mellon also famously quipped, “Gentlemen prefer bonds.”) And the Roaring Twenties appeared to validate his doctrine.
Then came the reckoning with the 1929 stock crash and Great Depression, which ushered in the New Deal and a raft of regulation and federal investments. The balanced economy that emerged, with important roles for both the private sector and government, became a bipartisan consensus.
When Dwight Eisenhower in 1952 became the first Republican elected president in 24 years, he considered repealing Social Security or eliminating the Securities and Exchange Commission to be crazy.
These less ideological years produced surprises, though. Democratic President John F. Kennedy lowered tax rates. Republican Richard Nixon signed landmark environmental protections opposed by many industries. Democrat Jimmy Carter led deregulation of the airlines and railroads.
Things changed after the Reagan Revolution in 1980, tacking back toward laissez-faire. But only over the past two decades or so have partisan lines hardened, making compromise impossible. Thus, the landmark economic achievement of Obama, the Affordable Care Act, was passed without a single Republican vote. The GOP has spent years trying to repeal it.
Now President-elect Joe Biden will have a Democratic-controlled Senate and House, a trifecta not seen in a decade.
This gives him a stronger chance to implement his “Build Back Better” agenda, including investing in infrastructure and clean energy, rebuilding the U.S. industrial base, assisting small businesses and state and local governments, and advancing racial equity.
Getting the pandemic under control will be of prime importance.
But more stimulus is critical, despite newfound Republican fears of debt. The red-ink concerns extend to some in Biden’s party, too. West Virginia Democratic Sen. Joe Manchin bridled against a $2,000 aid payment on Friday.
“I think we can’t afford not to do something big for the economy right now,” Harvard’s Jason Furman said on a Brookings Institution podcast. “And that, I think, is a broad consensus of economists.”
He continued, “Where interest rates are zero, where the economy is operating below its capacity, if you expand debt you can actually lower your debt to GDP ratio. The reason is that the debt goes up, but your GDP goes up by even more. As a result, you are reducing the indebtedness of your economy.”
Not only that, but you are creating jobs, incentivizing advanced industries and lowering inequality.
Yet all this could change in 2022, particularly if Biden remains saddled with a recession that wasn’t of his making.
If Republicans retake one or more chamber of Congress, we’d see a repeat of the last six years of the Obama administration: A ruinous policy of austerity, forced by the Republican-controlled House, slowed recovery from the Great Recession and needlessly hurt millions of Americans.
As the pendulum swings back and forth, America remains stuck in place with only marginal gains or none.
And that prognosis may be too backward looking.
The attempt by some Republicans to overturn the presidential election — including a mob storming the U.S. Capitol as Congress was tallying the electoral count — shows this is a different GOP.
It’s no longer the party of Lincoln, or Theodore Roosevelt, or even Nixon or Reagan. It’s the party of Trump, or at least a significant portion of Trumpism is driving the agenda.
The Democrats have their own schisms, with the centrists and old-time liberals facing an impatient younger cohort of farther-left ideologues. Like their adversaries on the far right, many lack basic economic knowledge, grasp of history or willingness to compromise and make deals.
Whether the result is one party becoming the Whigs, or both splintering and leaving the United States with three or four factions competing for power, this is unprecedented dark territory. The health of the economy won’t be the only casualty.