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Sunday, September 12, 2010


Debacle for Dems Coming - Here's How We Know

R.T. Firefly's comment at the end of our last post is recommended for your reading. I would say that I have two areas of disagreement with both Ms. Dowd and Mr. Firefly. The first is that actual conservatives/Republicans would surely cringe at the very thought of our current Vice President, not smile, and they sure weren't anxious to see health care legislation pass. Second is that in fact, the victory I expect for the Republicans this fall, I believe is virtually assured, and it may be getting more one-sided each week. The reason is that in off-year elections, enthusiasm matters more than in Presidential years when it also matters, but not as much.

This might surprise regular readers of this blog because as I have occasionally pointed out, no matter how hard you press the lever, or how dark you fill in the circle, your vote only counts once (at most). But the point is turnout. In Presidential years, reasonable turnout is always assured. Yes, enthusiasm matters, and in 2008, some conservatives did choose to sit it out, and some of those who are RINO's, such as the subject of Ms. Dowd's column actually crossed over. But mainly, people who vote voted, and Obama won fairly easily because new young voters were motivated to turn out and because he won the independent vote.

In off-year elections, lots of people sit it out. What drives people to the polls usually would be a hot race for Governor, Senator, or some local contest. Otherwise, it is rare that people go to the polls to change the leaders in Congress. However, in 1994, and 2006, there was enthusiasm for one party or the other, the GOP in 94 and the Dems in 06.

What is shaping up for this November is that wild horses won't keep true Republicans and conservatives from the polls this time and they are on a mission. If you don't believe me, just listen to the callers on Rush's program or to Mark Lavin some night. Some people say that the GOP hasn't raised enough money to get people to the polls, or that their positive poll ratings are even lower than Dems. Don't worry. The money differential is getting tighter (see below). The conservative talk show hosts will get their listeners to the polls, and when turnout is under 50%, low positives don't mean much. The number to watch is the likely voter generic preference for which party controls Congress. Republicans have never led by the margin the polls show now, not even in 94. And think about this. Where Dems win, places like NY, New England, Maryland, Southern California, Michigan, they win huge. Those races skew the overall generic poll. If the GOP is even, it means they are winning the close races. When the GOP is ahead, school's out.

Surely, local races and candidates will play some factor in the overall result. In places like Florida, where a three way race has developed for senate, and perhaps Alaska if Murkowski stubbornly fights on, the applecart can be upset when GOP votes get split. There won't be many races like that. Net net, the Tea Party will help, not hurt GOP prospects.

There has been a lot written and discussed about money and politics, with McCain Feingold rules a subject of Conservative ire, and the courts stepping in to rule out some of those rules. One fact of political life that I find somewhat concerning is Political Action Committees, even though PAC money funds some of my lobbying activity (that's full disclosure) and even though I contribute to a PAC.

In a corporate PAC, employees of a certain rank or higher contribute a limited amount voluntarily, and the Corporation normally sets up a Committee to determine to whom the contributions will be made. PAC's became necessary when McCain Feingold all but eliminated direct corporate funding of campaigns. There are limits that prevent much money from going to any single candidate from any single PAC . The stories that you hear about PAC abuse are grossly exaggerated, since no one PAC can make the slightest difference in any race. But a lot of PAC'S taken together do make a difference.

It is commonly stated that PAC money helps provide access, but does not change minds or positions about issues. There is a tendency for PAC's to flock to the same candidates even without discussing it. They want to support incumbents and people who will be re-elected. It is very rare for a PAC to contribute to a challenger, (and that has some employee PAC contributors annoyed this cycle). So one should not be surprised that until 2006, Republicans received the lion's share of PAC money and since then, Dems do. That has something to do with the perceived and real campaign financing gap that Republicans have suffered from.

However, now that the perception is that Republicans will take one or both houses, PAC money is coming back to their side and the gap is closing rapidly. The other factor is the recent court decision allowing corporations to spend money on politics again in a limited way. The playing field is not yet leveled with the unions, but again the gap is closing.

So the stars are aligning. Early voting begins in a matter of weeks in some states, and west of the Appalachians, early voting has become an important factor. Once it starts, it will really be too late for Dems to do much about what is likely to be a miserable election night for them. Quite a few races where Republicans had no prospects at all 6 months ago are now considered toss-ups. People are learning about the higher taxes they will be paying on income, dividends, capital gains, medicaid contributions,the restored haircuts to their deductions, and the restored 55% estate tax. They are learning how much their health care premium costs will be going up because pre-existing condition underwriting is ending. They are learning that the health insurance they have now will be changed and not grandfathered. They ain't happy. If they are conservatives or libertarians, or even just independents worried about the economy and the deficit, they understand they have to take action this fall.

So after, what happens? Whether the GOP wins the House and/or the Senate or not, the Dems' ability to blast controversial legislation through will be over. The 60 vote Senate majority will be long gone, and while Pelosi may continue to set the House agenda (doubtful, in my opinion), she will not be able to offer passes to Blue Dog Dems and still pass anything. The Dems are likely to try to get some things done on the tax side during a lame duck session but these will be things that just have to be done, like the AMT fix, restoration of some or all of the Bush era tax cuts, and so on. The next Congress will likely to be very contentious, with the parties looking ahead to 2012 and posturing from the very beginning. Whether part of that posturing might include some actual compromise so we can start toward fiscal responsibility is doubtful, maybe a 15% chance. If the GOP is in charge, they will be trying to find a way to "fix" the health bill, and there is really a lot that everyone now agrees needs fixing (though they probably don't agree on what the fixes are).

There should be lots to blog, argue, and debate about. People think this continuous battling is new. Students of American history know that it began in 1787 and it has been ever thus.

Alert readers of this blog may have noticed that our "hit meter" now registers over 4,000, for which I thank all of you and continue to be amazed that people are interested enough to make a weekly visit. Of course, it has occurred to me that we may have a few visitors who don't actually read the posts but just enjoy watching the hit meter go up. In fact, some have theorized that I might be visiting my own blog for that reason. Not true. I have plenty of other blogs to visit where I can impact their hit meter.

I am really looking forward to getting to the jazz clubs this month, and I might post a schedule of some of the better gigs later this week. But in the meantime, we've got the Jets tomorrow night, and the NY primary results Tuesday night. It's all about priorities.

On Sept. 7, we bought 400 shares of Books a Million (BAMM) at 5.66, a value buy. Hopefully, this company is not going the way of Barnes and Noble. Those who know BAMM though realize its business model depends on more specialty books, especially religious ones, and that they have concentrated in the southeast. Kindle technology should not have quite the same impact on this chain. On Friday, we bought 50 shares of Ecolab (ECL), a long time favorite, at 40.30. This is a "zero buy" because of its high price to book ratio.

Time for the periodic disclaimer. Redwavemusings is not an investment advisor and neither is its author. The securities mentioned here are not recommendations and may not be suitable for anyone, even for me.

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