by Greg Valliere, AGF Management Ltd.
Insights and Market Perspectives
Author: 8
November 6, 2020
LET’S MAKE A DEAL: We understand that many Democrats can’t stand Mitch McConnell’s re-shaping of the judiciary, and many Republicans think Joe Biden will get pushed to the left. But there’s a glimmer of hope that these two Senate pros will have a cordial — and productive — relationship.
BOTH OF THEM are known as master deal-makers, with extraordinary institutional knowledge of the Senate; Biden turns 78 later this month, McConnell turns 79 in February — but they know how to get things done. Biden was elected to the Senate in 1972, McConnell in 1984; the Senate is in their blood. By contrast, neither Barack Obama nor Donald Trump were comfortable dealing with the Senate.
AN ARTICLE IN THIS MORNING’S POLITICO describes the dealmaking between Biden and McConnell; in this politically toxic city, they have a fairly cordial relationship. McConnell was the only Republican Senator to attend Beau Biden’s funeral.
[AN IMPORTANT CAVEAT: We’re assuming that when the dust settles next week, the GOP will be looking at a 52-48 Senate majority. But Georgia is headed for at least one runoff on Jan. 5, maybe two. If the Democrats win both of those seats (unlikely but not impossible) the Senate would be 50-50, with Kamala Harris breaking all ties.]NEVERTHELESS, BIDEN AND McCONNELL will have to cooperate because the Democrats have at least a couple of moderates they won’t be able to always count on — Joe Manchin of West Virginia and Jon Tester of Montana.
AN EARLY TEST OF THE BIDEN-McCONNELL RELATIONSHIP will be Senate confirmation of Biden Cabinet secretaries. This is bad news for Elizabeth Warren, who would like to be Treasury Secretary but would encounter fierce resistance from McConnell and most Republicans. Fed Gov. Lael Brainard probably would be acceptable.
IN ORDER TO GET MUCH DONE, both Biden and McConnell may have to tilt toward the center. There’s a decent chance for things like a stimulus bill or infrastructure spending. A move to the center would enrage Progressives, but they had a bad night on Tuesday and have lost clout.
SO — WILL THERE BE NOTHING BUT GRIDLOCK, as the financial markets are hoping? Maybe not. There may be surprising deal-making between these two old adversaries, who surely realize that they may have to move to the center if they want to get anything done.
* * * * * *
IS TODAY THE DAY? After the stunning 5 a.m. report that Biden now leads in Georgia, the next shoe to drop will be later this morning in Pennsylvania, where Donald Trump’s long-shot bid to win the election may come to an end.
BY THIS WEEKEND, the issue won’t be whether Biden gets 270 electoral votes — the issue will be whether Trump will persist with legal challenges and claims of fraud. This could drag on for several days, potentially leading to protests and unrest, but the outcome is increasingly clear: Joe Biden will be the president-elect within days.
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