STEVE PAVLICK: In Many Ways Washington Is Returning To Its Most Natural State

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The 2022 midterms signaled a sea change in Washington, breaking Democrats’ control over the House of Representatives. With the ushering in of the 118th Congress, which has been nothing short of rocky, one thing is clear — we are returning to a period of divided government.

Divided government is typically viewed as a good thing from a market perspective because it provides more certainty by removing the possibility of significant policy changes becoming law.

This means there is little chance of additional fiscal stimulus should the U.S. economy enter a recession since a Republican controlled House would be less likely to support more government spending after linking it with 40-year-high inflation.

Fiscal cliffs will force lawmakers to pass legislation. Since fewer legislative trains will leave the station this Congress, there will be greater pressure to attach unrelated bills to the few “must-pass” legislative packages.

The first fiscal cliff will be a vote to raise the debt limit that is expected to arrive in the third quarter of this year but could come earlier if the Fed continues to raise interest rates, the Supreme Court upholds President Joe Biden’s student loan forgiveness proposal and the federal government is forced to spend more on assistance programs due to a recession during the first half of the year.

The second fiscal cliff will be when government funding expires at the end of the fiscal year at the end of September. History suggests that there will be another end-of-the-year omnibus spending package, though several fiscally conservative House Republicans have said they will oppose a similar effort this year.

Republican divisions in the House indicate that they do not have the 218 votes needed to move the twelve appropriations bills through regular order. Even if House Republicans did do that, the bills would be dead on arrival in a Democrat-controlled Senate. A government shutdown is possible, as well as the possibility that the government could operate under a continuing resolution into 2024.

One of the only remaining “must pass” bills outside of these two fiscal cliffs, is the National Defense Authorization Act (NDAA), the annual defense policy. Republicans pride themselves on boosting defense spending, so it seems unlikely that they would not pass the defense policy bill that authorizes how those dollars are spent.

This will present another opportunity for unrelated legislation to hitch a ride on the next NDAA.

Don’t Hate The Players

A divided Congress means lawmakers will not be spending their time passing bills. This raises the question of what lawmakers will spend their time doing. One thing that can be assured is that lawmakers from both political parties will spend most of their time raising money.

Outside of that, a Republican-controlled House will spend its time conducting oversight investigations into the Biden administration. Recall that Democrats used their House majority to do the same in the Trump administration.

The expression, “Don’t hate the players; hate the game” applies in that this is how politics is played. The party out of power also hopes to uncover unflattering information about the party in power at the White House to hurt their re-election chances. If Biden decides not to run again, it remains to be seen whether House Republican investigations into his son Hunter’s business dealings will resonate as much.

The Democrat-controlled Senate will spend most of its time confirming Biden nominees to vacant positions to carry out executive actions. Because executive actions are easier to challenge than laws passed by Congress, much of the Democrat controlled Senate’s focus will also be on confirming partisan judges to uphold progressive policy proposals.

Recall that former President Donald Trump and Senate Republicans did the same thing.

FiveThirtyEight reported that as of Dec. 23rd, 2022, 94 of Biden’s nominees had been confirmed to district and appellate courts — compared to 83 at this point in Trump’s presidency.

Currently, there are 79 open seats on the federal bench and 30 upcoming vacancies. If Biden and Senate Democrats manage to fill all those seats, there will be 203 Biden judicial nominee confirmations, compared to the 228 appointments Trump and Senate Republicans got through.

Biden is expected to rely more on executive actions through various agencies and departments to deliver on campaign promises ahead of the 2024 presidential campaign. Legal challenges are expected to delay the implementation of many controversial proposals and the ultimate arbiter remains the conservative majority Supreme Court.

In sum, this is a political show Americans have seen time and again throughout history. In many ways Washington is returning to its most natural state — total gridlock.

Steve Pavlick is a Partner & Head of Policy at Renaissance Macro and a former Treasury official.

The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.

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