The death of Ruth Bader Ginsburg (may she rest in peace) has sent shockwaves not just through Washington, but across the country since late Friday. Even the markets appeared unnerved yesterday, with the Dow off nearly 1,000 points at the lows.
The market jitters you could largely chalk up to Covid; most D.C. types are saying you can throw the chances for the political compromise needed to pass the next relief bill out the window now that the parties will be at each others' throats over filling Ginsburg's seat. Indeed, the "reopening" stocks were the worst performers yesterday, including cruise lines, airlines, casinos, and banks.
In the absence of more relief coming, the incoming economic data now take on extra significance for the market. And it puts the onus even more on the Fed--which has been trying to put the onus back on Congress--to do more as needed to support the recovery. We'll be hearing a lot from Fed Chair Jay Powell this week with no less than three appearances on Capitol Hill; today he and the Treasury Secretary are testifying about precisely this issue, their Covid response efforts.
But as big a challenge as the pandemic is for this country, Ginsburg's death has implications even bigger than that. It's "a contender for the most impactful political event of the first half of the 21st century, based on what it's likely to do to the future of the American political system," said FiscalNote's Stefanie Miller, who was on our show yesterday.
How impactful? If the Democrats win the White House and Senate, owing in part to GOP efforts to fill Ginsburg's seat, their changes to the political system could include abolishing the filibuster; meaning just 51 votes needed in the Senate to pass any major legislation, "a pathway for massive, material policy swings as frequently as every 2-4 years," as Miller notes. Think of it as Obamacare one cycle, repealing Obamacare the next, over and over again. There's a reason the filibuster exists; as Sen. Cruz has observed, "gridlock in Washington is a feature of our political system, not a flaw." (It's why the old saying on Wall Street also goes that 'markets love gridlock.' Put differently, it means 'markets want broad consensus.')
But that's not all; Democrats have also floated adding seats to the Supreme Court to offset the conservative majority, and granting statehood to D.C. and Puerto Rico, adding to their party's heft in Congress.
Republicans are gambling that voters don't want this and would prefer Ginsburg's seat to be filled, as is the tradition when the Senate is of the same party as the president in an election year vacancy. This is not a rare occurrence; it's happened 19 times before, according to Dan McLaughlin, including when John Adams appointed Chief Justice John Marshall even after he had lost his reelection bid to Jefferson. In 2016, when Merrick Garland's appointment was not advanced, the presidency and Senate were controlled by different parties.
It's also worth noting that Republicans kept control of the Senate after supporting Brett Kavanaugh throughout his difficult nomination process in 2018, and even credited the "Kavanaugh Effect" as a reason for their win in especially tough states. Little wonder we've seen both Corey Gardner and Chuck Grassley say in the past 24 hours that they will support a vote on Ginsburg's replacement, effectively locking in the GOP's ability to move forward.
Wouldn't it be nice to live in a world where the SCOTUS replacement is relatively uneventful; Congress compromises to pass a Covid relief bill before the election; and we actually know the election results the night of November 3rd. Instead, we face potentially cataclysmic changes to our political system, sinister warnings about election-outcome riots and five million new gun-owning Americans this year braced for whatever, exactly, is coming.
See you at 1 p.m...