Lots of people on the left and right have reasons to be a little happy or downright miserable about the US presidential election. But there is one group unreservedly happy—even ecstatic—about the results: Those who lean libertarian. They got almost everything they wanted. On the one hand, Joe Biden has a friendlier record on trade and immigration, and on the other, they avoided the burst of spending that inevitably comes with unified control of the federal government.
In essence, the very divide is what really seems like an effective arrangement for controlling spending: A Democratic president with Republicans in charge of at least one body of Congress. During the first four years of the Barack Obama and Bill Clinton administrations, both of which included a split control of government, spending was more restrained or even reduced. Under Clinton, spending inched up only 3 percent. In Obama’s first term, total spending actually went down by 10 percent.
Also, there are ways beyond the budget that a Biden presidency can be a boon to libertarians. Trump was a disaster when it came to free trade, kicking off a huge trade war with China and “renegotiating” NAFTA, so that it contained more protectionist, anti-free-market measures like wage controls.
In contrast, Biden will cut a more pro-trade profile. Congressional Republicans and Democrats were reluctant to give Trump trade negotiating authority, but they are more likely to give Biden that authority than they are to withhold it (that is despite some pressure from the party’s progressives like Bernie Sanders or Alexandria Ocasio-Cortez).
Biden is likely to pursue pro-immigration reforms and policies and Libertarians, we know, view legal immigration, and especially of high-skilled workers, as an economic boon to the country and they also strongly believe that free trade keeps prices down for American consumers while extending opportunities to the domestic producers to be sell abroad.
Biden as a vice president, helped resolve spending stalemates and government shutdowns by using the ultimate tool of significant and pre-agreed spending-slashing, which incidentally both Democrats and Republicans despised, but libertarians loved: sequestration, or automatic spending caps.
Again, as a Senator, he worked hard to keep the deficit and debt under control. To quote a few examples, in the mid-1990s, he voted for the constitutional amendment that would require the federal government to balance its budget—a position that put him at odds with a majority of the Democratic caucus.
In 1997, he voted yes on a Republican budget that cut both taxes and spending. Meaning, that going by his record, the libertarians in the US today get the best possible outlook on spending, debt and deficits, and the other important policy areas—while also perhaps preventing far-left nominees for important executive roles and dodging the spectre of court packing.
The US elections may have unleashed or visibly brought to surface a lot of polarisation in the country’s voters or the population per se, still for most thinking economists, it represents a win for economic reasoning and prudence—a silver lining out of the country’s presently deep political divisions.
Next week—will try to analyse and connect the dots on whether or not or how Janet L Yellen, President Biden’s choice for his Treasury Secretary, is living up to the expectations from her in effectively and timely delivering this course correction for the US economy. Until then.