The economy will do well with government control divided between Democrats and Republicans. I didn’t always believe this, but a decade ago I was persuaded by the late economist William A. Niskanen. “Our federal government may work better (well, less badly) when at least one house of Congress is controlled by the opposing party,” he wrote. “Divided government is, curiously, less divisive. It’s also cheaper. The basic reason for this is simple: When one party proposes drastic or foolish measures, the other party can obstruct them. The United States prospers most when excesses are curbed, and, if the numbers from the past 50 years are any indication, divided government is what curbs them.”
Excesses have been evident since the election of Donald Trump, not only from the president’s Twitter account but also from his opponents. We’ve seen huge deficits from the party that used to be tight-fisted. We’ve seen draconian immigration actions. Global trade relations are in turmoil. Maybe some gridlock will be good for us.
Niskanen, writing in 2006, found only two eras of fiscal restraint since World War II: the last six years of Eisenhower’s administration, and the last six years of the Clinton administration. In both eras, the opposition party controlled Congress.
War also seems to be absent from periods of divided government. Niskanen also wrote: “In 200 years of U.S. history, every one of our conflicts involving more than a week of ground combat has been initiated by a unified government. Each of the four major American wars during the 20th century, for example—World War I, World War II, the Korean War, and the Vietnam War—was initiated by a Democratic president with the support of a Democratic Congress. The current war in Iraq, initiated by a Republican president and backed by a Republican Congress, is consistent with this pattern.”
Major government changes are likely to be stable when they are developed by divided government, Niskanen also argued. He cited Reagan tax cuts, approved by a Democrat-controlled House of Representatives. A more modern example is Obamacare, passed during one-party control, which the other party vowed to repeal as soon as possible. Although that repeal didn’t happen, the country continues to suffer from uncertainty about health care policy.
