In this second day after the U.S. presidential elections, the fog is clearing and the likely outcome of the vote is becoming apparent: in the coming hours or couple of days at most Biden will reach the figure of 270 or more electors needed to declare victory and Donald Trump’s legal team will pursue challenges in the courts hoping to overturn the results. If the scenario plays out this way, it is nearly certain the Joe Biden will be installed as president in January 2021.
It is interesting and revealing that yesterday the U.S. stock market reacted with great enthusiasm or, as they say, with ‘animal spirits’ to the prospect of a Biden victory whereby the Republicans hold control over the Senate, the second prospect emerging from the vote tallies.
The Financial Times this morning highlighted in one article the meaning of the sharp rise in share values in yesterday’s session: “Air comes out of the reflation trade. Prospect of a divided Congress and more modest economic stimulus has had a big effect on markets.” Authors Colby Smith and Joe Rennison noted that the markets were pleased to see gridlock in the nation’s capital emerging from the voting on Tuesday. The result is that the projected package of economic relief to compensate for the impact of Covid-19 will be perhaps one half or less than the one trillion dollars that it would have been should Biden have enjoyed the landslide victory that seemed within his grasp on the day before elections and had the Democrats taken full control of Congress.
It seems to me that this analysis of investors’ response to the likely outcome of the election is correct but fails to consider all the other business-relevant implications of the electoral results as they now are firming up.
What I see is Trumpism without Trump, by which I mean that all of the business friendly measures and legislation that the Trump administration has put in place over the past four years now cannot be undone by an incoming Biden administration because they will fail in Congress, where partisanship will be as vicious and uncompromising as we have seen over the past four years. After all, Republicans will continue to hold the whip in the Senate. In particular, the higher taxes that Biden seeks to impose on businesses and on wealthy individuals in order to finance his ‘green infrastructure’ spend will not go through.
Moving beyond the material interests of U.S. business, the forthcoming gridlock on Capitol Hill means that one of Trump’s greatest achievements on behalf of his core supporters, the creation of a strong six-to-three conservative majority on the Supreme Court, cannot be undone in a Biden presidency, or at least in the first two years of his mandate pending any changes to the balance in the Senate during midterm elections.
The gridlock that market investors are cheering also puts in a new focus the role of the presumed incoming Vice President Kamala Harris. From the moment of her designation as Biden’s running mate, Harris has been behaving as the force behind the throne, the likely successor to her boss as he moves into dotage. At one point, she even let slip the term “Harris Administration.” What we have in Harris is yet another bait-and-switch tactic implemented by the Democratic Party administrators to woo liberal to leftist voters, as well as women and Blacks. This is what the Obama candidacy and administration was all about. At the same time, Harris is no party regular who will accept the condescending embrace of its puppet-masters the way that Barack Obama did. Harris is as smug and persuaded of her entitlement to the highest office as Hillary Clinton ever was.
The results of this election tell us that Harris will be stymied in her initiatives along with all the domestic legislative programs that will likely be entrusted to her. The only dynamic aspect of an incoming Biden administration will be in the realm of foreign affairs, which was and surely will remain the key area of expertise of Joe Biden.
The U.S. foreign policy community, which is nearly 100% behind Liberal Internationalist policies, will rejoice at the prospect of a Biden presidency. The ruptures with our NATO allies will be repaired. The United States will surely rejoin the Paris agreement on climate change. Transactional relations will be replaced by traditional stress on shared values and alliances.
However, it is unlikely that Europeans will easily forgive and forget the damage done to relations by the policies of naked self-interest that Donald Trump unleashed. Moreover, behind the mellow words of Biden the outlines of America First will remain. This was crystal clear in his promise of a “Buy American” policy during the second presidential debate.
Biden may give some relief to anxious Europeans by negotiating and concluding new arms limitation agreements with the Russians. But otherwise he will likely pursue the Cold War policies that are deeply embedded in his thinking going back to his days in the Senate Foreign Relations Committee, including as its chairman, and to his service as Vice President when he stoked the confrontation with Russia by his encouragement to Ukraine and Georgia to pursue NATO membership.
Though Biden is likely to continue the policy of economic disengagement from China and military rivalry with the Middle Kingdom, it is also likely he will restore Russia to its place as the top arch-enemy. The new anti-Russian sanctions that his administration will bring to Congress may go well beyond the taps on the wrist we have seen so far and may threaten full economic warfare, with all the risks of miscalculation and unleashing of kinetic warfare that it entails.
In the big order of things, the unhealthy divisions in American politics, where gridlock is perceived as a great blessing, are likely to accentuate the country’s retreat from global leadership and to pave the way for the continued rise of China as a dominant force in the 21st century.
©Gilbert Doctorow, 2020
[If you found value in this article, you should be interested to read my latest collection of essays entitled A Belgian Perspective on International Affairs, published in November 2019 and available in e-book, paperback and hardbound formats from amazon, barnes & noble, bol.com, fnac, Waterstones and other online retailers. Use the “View Inside” tab on the book’s webpages to browse.]