Election Day 2012: Why A Split Decision Could Be Good News

As Election Day dawned this morning, millions of voters hoped that the day’s results would bring an end to partisan paralysis in Washington. That’s definitely possible, but the latest polls suggest that Republicans will hold the House and Democrats will hold the Senate, so we may be headed for two more years of divided government no matter who takes the White House. Conventional wisdom says that would be a bad thing, but I’m not so sure. Here are three reasons why a split decision might actually be good news.

First, a continuation of divided government would make it harder to repeal legislation mandating big tax hikes and across-the board spending cuts. According to the Congressional Budget Office, if all the fiscal provisions currently in law were actually to go into effect, the budget deficit would nearly be cut in half in a single year — from $1.1 trillion in 2012 to $600 billion in 2013. And if the provisions remained in effect for four years thereafter, CBO estimates annual deficits would fall below $200 billion by the end of the next administration. The cumulative effect of implementing all those laws would be to restore federal revenues to their average share of GDP over the past several decades, while reducing federal outlays to about one percentage point above their historic share of GDP. This salutary result would arise not because the political system finally dealt decisively with the deficit, but because it couldn’t.

Second, in a system of checks and balances such as that created by the U.S. Constitution, divided government tends to temper the extremes of factions. “Faction” is the term that founders like James Madison used to describe political parties representing particular economic or social interests. Madison argued in The Federalist No. 10 that the causes of faction are “sown in human nature,” and so the U.S. needed a system of government that would control their ill effects. The ideological intransigence of the two major parties today would have come as no surprise to Madison, and the Constitution he helped fashion provides a clear answer: if evenly balanced factions can’t learn to compromise, then they can’t get even part of what they want. Divided government thus tends to reduce the tendency of both parties to ideological extremism.

Third, a split decision would paradoxically remove much of the uncertainty from the political landscape that currently discourages companies and constituencies from committing to a course of action. If one or the other party made major gains in the election, that would raise the possibility of big shifts in government behavior — leading key players to take a wait-and-see attitude rather than making decisions. But if neither party emerges from the election with its bargaining power measurably changed, then the lay of the land will have been clarified for the next two years and decisions can proceed. A continuation of partisan paralysis in Washington may not be the ideal outcome, but it sure beats pervasive uncertainty about what the government will do next when you’re trying to recover from the worst recession in living memory.