[The Soup Nazi]

(2/2):

Matters were very different during the next extended period of divided government, under President Barack Obama, and not just because Republicans had become more extreme. The economy also needed more help — help that wasn’t forthcoming, because the G.O.P. wouldn’t allow it.

If you look back at the chart showing unemployment and inflation over time, you can see that recovery from the 2008 financial crisis took a very long time. Total employment didn’t regain its December 2007 level until April 2014, and unemployment didn’t get below 5 percent until late 2015. Given that the U.S. economy was clearly capable of sustaining an unemployment rate below 4 percent without excessive inflation, the sluggish recovery under Obama represented a huge waste of economic and human potential.

The Fed was aware of this problem, but it didn’t have the tools to fix it. Look back at the chart on interest rates, which were approximately zero over this whole period, leaving the Fed with no room to cut further. While Ben Bernanke and colleagues did engage in “quantitative easing” — purchases of longer-term bonds in an attempt to gain some traction — this was a poor substitute.

What the economy needed was fiscal stimulus — government spending to boost demand. This stimulus could and should have mostly taken the form of investment, both in infrastructure and in children, via education. Borrowing to pay for this investment would have made a lot of sense given extremely low interest rates.

But the Republicans who controlled the House after 2010 wouldn’t allow that. In fact, they used the threat of refusing to raise the debt limit — which would have created a financial crisis — to force Obama into fiscal austerity, with federal spending falling steadily as a share of gross domestic product. Divided government was extremely costly during the Obama years, even if the costs may not have been obvious to casual observers.

So where are we now? Republicans are more extreme than ever; today’s G.O.P. makes the Tea Party look like a well-mannered debate society. And there’s a very good chance that if Republicans take Congress, they’ll again threaten to create a financial crisis over the debt limit.

The good news is that the current state of the economy doesn’t demand immediate federal action. Unemployment is low; inflation is a big problem, but it’s a problem the Fed can tackle on its own by raising interest rates, which it has been doing.

The bad news is that there are many important things the federal government should be doing other than short-term macroeconomic management, from enacting sensible climate policy to supporting Ukraine’s fight against Russian aggression. And Republicans, if they gain control of one or both houses of Congress, are all too likely to undermine these efforts.

So, no, divided government isn’t a good thing. Extrapolating from the Clinton years, when partial government paralysis did relatively little harm, is a really bad idea.

Quick Hits

Polarization and the Southern switch.

Neutrality — monetary, not political.

The Biden administration is taking a tough line on China.

Speaking of China, it has big problems.