[US Midterm Elections] Despite Economic Judgment Theory... Biden Says "Nothing Changes"

[Image source=AP Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] In the US midterm elections held on November 8, where the so-called ‘economic judgment’ was a hot topic, the ruling Democratic Party made a surprising strong showing. On the 9th (local time), President Joe Biden confirmed his intention to continue the existing policy direction, stating that the anticipated ‘Red Wave’ (Republican landslide victory) did not occur. While expressing readiness to "work together" with the Republicans, who are likely to become the majority in the House, he also indicated his willingness to veto any attempts to overturn laws related to inflation, abortion rights, and the climate crisis.

At a White House press conference that afternoon, President Biden said, "I believe Americans have made it clear that they expect Republicans to be ready to work with me" in this midterm election. As the vote counting continues, the Republicans are expected to secure control of the House by a margin of about 10 seats, while the Senate remains extremely close, with the final outcome likely to be decided in a December runoff election in Georgia. Effectively, a ‘Senate Democrat-House Republican’ scenario is highly probable.

Encouraged by the election results, when asked what he would do for the majority of voters who said in exit polls that the country is heading in the wrong direction, Biden responded with "nothing," emphasizing that he would not change course from his current policies. He noted that the predicted Red Wave by experts and the media did not materialize and described the day as "a good day for democracy and for America."

President Biden expressed willingness to cooperate, stating, "If it is reasonable to compromise with the Republicans on various issues, I am ready to do so." However, he hopes for continued bipartisan support in foreign policy, especially in supporting Ukraine, which was invaded by Russia. He also emphasized, "I have the pen to veto," adding, "I will not support Republican proposals that worsen inflation, nor will I back down from historic commitments to address the climate crisis."

If congressional power is divided, the partisan battles over major policies and legislation are expected to intensify. Kevin McCarthy, the Republican House Majority Leader and a likely candidate for the next Speaker of the House, is known as a ‘hardliner’ and ‘pro-Trump’ figure who has hinted at pursuing impeachment against President Biden. This has led to expectations of clear political checks on the Biden administration by Congress over the remaining two years. McCarthy’s first proposed bill is expected to be a border security bill. Regarding support for Ukraine, he has signaled policy changes by stating, "No more blank checks."

The global financial market is paying attention to the fact that this election took place amid high inflation, aggressive tightening by central banks worldwide, and recession concerns. Typically, markets prefer a divided Congress with each party controlling one chamber. However, this situation makes it harder to pass various bills, including fiscal spending, increasing uncertainty. Conflicts over federal government debt limits and taxation on oil companies, which have been points of contention between the parties, are also anticipated. CNN predicted, "In the worst case, this could have negative repercussions on the market."

Some speculate that the Federal Reserve’s monetary policy shift could accelerate. Ed Mills, an analyst at investment firm Raymond James, said, "Given the prominence of economic judgment, there is a high probability that the Democrats will blame the Fed for election losses and challenge its monetary policy." Brian Gardner, a strategist at Stifel, mentioned, "If the parties split control of the House and Senate, it will affect the Fed’s inflation response during a recession," explaining that political pressure on the Fed could increase due to recession concerns.

However, experts have drawn a line, stating that the midterm election results will not have an immediate direct impact on the Fed’s monetary policy. Instead, the key will be the Consumer Price Index (CPI) for October, to be released on the 10th. The October CPI is expected to show a 7.9% increase compared to a year ago, indicating a slowdown in the rate of increase.

This content was produced with the assistance of AI translation services.