A Republican Senate wouldn't be the worst thing for Joe Biden: Fmr. Mitt Romney Policy Adviser

Lanhee Chen, Hoover Institution Fellow and Former Policy Director Former Mitt Romney 2012 Policy Adviser joins the Yahoo Finance Live panel to discuss what to expect with a Biden presidency.

Video Transcript

ZACK GUZMAN: And, Lanhee, it's good to be chatting with you again. Obviously, that's going to be a key here, because if Democrats can sweep those runoff elections in Georgia, that would be enough to give them control. So talk to me about that. Because how big does it loom for some of the policies Joe Biden might want to get through here?

LANHEE CHEN: Well, it's going to make a significant difference, right? If Republicans are able to win one of those two seats, they will hold the majority. If Democrats can sweep them both, the Democrats will hold the majority.

You know, I have a little bit of a contrarian view on this in the sense that I think a Republican Senate would not be the worst thing in the world for Joe Biden, certainly for investors. It wouldn't be the worst thing in the world. It would give a bulwark against more aggressively progressive policies, whether the Green New Deal or Medicare For All. You know, it gives Joe Biden a convenient excuse, quite frankly. It allows him to say, look, you know, I'd love to be more progressive. I'd love to do more progressive things. But I've got to deal with these Republicans.

And I think it could create a lane for a sort of centrist coalition to come together and get some things done on health care, on infrastructure. You know, you have someone like Susan Collins, who was re-elected, Lisa Murkowski, the aforementioned Mitt Romney. I think all those folks could get together and form a centrist coalition that will work with Joe Biden at least in the first 100 or 200 days of his presidency. So, you know, it's something to watch out for, but I think, in some ways, the better outcome for system stability is to have a Republican Senate in place.

AKIKO FUJITA: Yeah, and, Lanhee, to that point, we did see the markets rally on the back of this expectation of a split government because of exactly what you mentioned. When you look at what's happening in Georgia-- I mean, you said this last week-- that is the state to watch. Huge record turnout that led to sort of the presidential race turning blue. What are the chances of a similar turnout when we look to these runoffs in the Senate race in January?

LANHEE CHEN: Well, it's a lot harder to expect presidential-level turnout in an off-cycle or special election. I mean, certainly, we're going to see turnout, I would imagine, come down. I think the question is where that turnout is going to come down.

The other issue is, what we saw in a number of these suburban Atlanta counties and suburban Atlanta communities is, you had voters that were voting against the president. So they voted for Biden at the top of the ticket, and then, lower down, they were splitting their tickets, potentially voting for Republicans, for some of the reasons we've talked about. So it'll be interesting to see, when the Senate campaign is the only campaign on the ballot, how is that environment going to change who ends up getting out of these two runoff elections.

The other issue is, you're going to have a ton of money going into Georgia over the next 30 days. There's going to be a ton of money, a ton of resource, a ton of airpower in terms of TV advertising. So we're going to have to see how that changes the dynamic. I mean, going into it, handicapping it, you'd have to think Republicans have a good shot at taking at least one, if not both of those races. But it's very difficult to tell because we've got so much money, and, as we saw, there's a lot of enthusiasm in the Democratic donor community. So we could see a lot of money coming in for those Democrats. How will that impact the race? I think that'll be the question.

ZACK GUZMAN: Yeah, on the issue of funding, I mean, we saw that play out in South Carolina as well in Lindsey Graham's battle to keep his seat. His Democratic contender there raised more money than he did, but he maintained his seat in that race. When we think about how much money could flood into Georgia, I mean, is that going to be more important you think than the fact that Trump's not going to be there on the ballot as well in these runoff races? Because that seems to be one of those big questions there and which base is going to be more energized.

LANHEE CHEN: Well, one thing we learned in the election this year is message trumps money. So you can have as much money as, for example, Jaime Harrison did in that race you mentioned against Lindsey Graham. It wasn't enough, the fact that he had a ton of money. Same thing with what we saw in Kentucky in terms of how much money was poured into that race against Mitch McConnell. Mitch McConnell still won easily. Message is going to matter a lot more.

Now, in a special election, it's going to be much more difficult now that Trump is gone for that election to be a referendum on Trump. It is going to be, I think, a referendum on the question of, do you want to allow Joe Biden potentially to move all the way to the left, or do you want him constrained? And I think if that's the dynamic, if that's the setup, I have a very difficult time seeing Georgia voters going for two Democrats in those races. One, I can see it. Two, I just don't see.

So I think the question is, do you define it in terms of the dynamic I talked about, or is there some way that Democrats can continue to gin up anti-Trump enthusiasm to let them carry that into the special elections? I just don't see that happening. So, ultimately, it is going to be about, how do you want Joe Biden to have to do business going forward?

AKIKO FUJITA: And, to that point, Lanhee, you talked about a potential centrist coalition forming in the absence of Democrats retaking the majority in the Senate. What are the key legislative issues, those priorities that Biden laid out, that you think that Republicans are willing to come to the table on?

LANHEE CHEN: Well, certainly, another COVID relief package. That is in the offing. It's just a question of how much, not whether it gets done or not. You know, I think north of $2 trillion is not out of the realm of expectation just given the fact that Republicans are not going to be in the mood to stop it, and Democrats are going to want to load it up as much as they can. I think there could be cooperation on prescription drug pricing, surprise billing, which are two big health care issues where there have been some bipartisan consensuses. And then, certainly, on infrastructure, that's an area where Republicans and Democrats have talked about getting together before.

So there is a coalition potentially that could come together on those issues. I think the big question will be how long that goodwill for Joe Biden lasts. We know the first 100 days of the presidential term, the president's power tends to be at its apex. After that first 100 days, the opposition begins to set in. So we'll have to see. But as much as Biden can get done in that first 100 to 200 days I think is critical.