Months ago, during one of the long, mundane Groundhog Day days, someone once told me that I see the world through finance lenses. Today’s piece proves that point. Since early 2020, there have been three concerns on my mind regarding a shift in political power. First, will the Senate remain in Mitch McConnell’s control? Second, will the Supreme Court have at least Chief Justice John Roberts as the court’s swing vote? Third, who will the be tasked with leading the Department of the Treasury? Let’s focus on one and two before heading into the Treasury.
Mitch appears primed to keep control of our nation’s upper house. Yes, if the Democrats win both Georgia runoffs it would amount to a 50-50 tie and VP Harris would break it for President Biden. This scenario seems incredibly unlikely. First, America has shown time and time again that the majority of the electorate prefers checks and balances as opposed to sweeping majorities. Also, despite Georgia barely going blue in 2020, it would be all but a cataclysmic shock for the Republicans if they were to lose both Senate seats. The likely result is both seats go red, or they split, albeit by small margins. Nonetheless, expect Republican control in the legislature.
Second, due to the sudden and tragic passing of Bader Ginsburg, the conservatives actually have staunch control in the Supreme Court. What was previously a court slightly in favor of the conservatives with Roberts being the swing vote, has become a strong majority for the right-wingers. Alito and Thomas, combined with the three Trump appointees make the Supreme Court a likely perennial thorn in Biden’s side.
This means Biden is quite restricted in his future governing powers. At least the first two years. He will have an incredibly slim majority in the House, a narrow defeat in the Senate, and a strong conservative court. It leaves him minimal room to actually affect the lives of everyday Americans through new laws, and executive order. That leaves the area of the US Government that has grown immensely in power since the Great Depression. And, this area has only seen its strength expand through the Great Recession and now the pandemic. That is the US Treasury, along with the Federal Reserve.
Here, the nation’s monetary and interest rate policy is decided. Tax law is brokered, budget deals are compromised, and financial regulations are added to the books. It’s the crown jewel of governing agencies that can immediately impact one’s life. It’ll be decisions here that alter your rates on mortgages, loans, and credit cards. These choices will move the stock market and subsequently grow or lessen the value of your 401(k), and other brokerage assets. It’s these choices that have a huge impact on the US housing market. The list goes on. Essentially anything that runs through your wallet goes through this group of power brokers. Well, Joe Biden made his pick, and the pick is one that all Americans should cheer for. In comes former Fed Secretary, and monetary ‘dove’ Janet Yellen.
First, let’s discuss how this choice will play out among the left, and then we’ll ask what it says about Biden. For the Democrats that align more with the progressive wing of the party, or the far-left, this is almost the worst possible choice. She has zero regard to ‘reign in Wall St.’ through regulation. She will not implement, or even try to go down the road of any far-left progressive monetary policies. She is, and always will be a moderate. She has shown she governs on behalf of all Americans, and has few partisan affiliations. She is about as far away from the progressive choice, Elizabeth Warren, as possible. And, that’s a wonderful thing for America.
This means all Wall St. banks will be able to conduct business as usual. They can expect few, if any, changes to their regulatory arms. It means the companies in charge of keeping the flow of cash strong in our country will be able to do just that. Because, there will be minimal fear of new policies impacting future profits. The clarity the big banks get is tremendous. Especially because Trump was such a wild card, and now they have Yellen who they’ve worked with for quite some time. It’s a slam dunk.
This also means that American consumers, and businesses, likely see minimal interruption in their financial situations. Again, the lack of disruption is tremendous, as this will allow for consumers and businesses alike to move forward without having to worry that government will get in the way.
What does this say about Joe? It says everything. It says the campaign ads and stump speeches may have been rooted in reality as opposed to what we’ve grown accustomed to with politicians. He may have meant he will govern for all Americans, and he might just be honest when he says he’s willing to reach across the aisle and work with the other side. This was practically Joe’s most important cabinet pick, and he wasted no time. He went out and made something crystal clear. He is not in power to represent the far-left progressives. This was a major sign to sound the alarm for the far-left and their ‘voice’ in his administration. Also, he is not in power to stonewall Republicans. This was an olive branch for the right. It appears he is in power to broker agreements among all sects of the political universe to benefit all Americans with his policy.
I’ll conclude with one line Biden made clear during the campaign. Debate one, while most were focused on Trump and his interrupting, Joe had a strong answer to a question from Chris Wallace early in the night. Joe was asked if he would be aligning himself with Bernie’s wing of the party, and Joe strongly replied with a ‘no,’ and went on to say, ‘I am the Democrat Party.’ The word ‘I’ was nearly the biggest display of energy he showed during the entire 90 minutes. It was telling. It showed that Joe wants this, intends to remain in control, and plans on doing it his way. This is contrary to the public opinion we heard from far-left and Trump blowhards. The progressives said he would be governing for them, and adhering to their platform. The platform Bernie and Warren put forth. This move makes that far from a reality. The Trump confidants said he would be a Trojan Horse, Kamala would be in charge, and Obama would get his cronies back in power. We can’t be certain of that with this one move, but this one move surely makes it seem like most of the pundits were wrong, and maybe, just maybe, the voters in the swing states got this right.
I am optimistic, and I hope you are too. We’re all Americans. It would be nice to have a Democrat President in power who decides to govern on behalf of all of us again.