Thursday, August 31, 2006

Foreign thoughts on the mid-terms

Sometimes there is simply no alternative; sometimes I just get railroaded into the US media for information.

In this case my curiosity has been driven by a series of posts and responses over on reality-based educator. What are the predictors for a close US mid-term campaign? Is it the economy? The war on terror?

I had hoped to find some academic papers discussing the issue, but they tend to focus on presidential elections rather than the Congressional end.

One thing I did find in a Time article, discussing gas prices (we'll come back to it) back in April, was the comment: Until now, Republicans consoled themselves in this worsening political environment with the belief that congressional elections are local popularity contests.

That explains something to me, in a general sense, but obviously this campaign is going to be different from the norm.

On the economics, the indicator I am really interested in, the same article cites: Federal Reserve chief Ben Bernanke estimated that the economy grew nearly 5% in the first quarter, while unemployment has fallen to 4.7%, the lowest since 2001.

But finishes that para with: But gas prices are hurting consumers because real wage growth has declined over the past four years.

As reality-based educator recently canvassed, the housing market is in trouble and that is another issue which hurts at the base.

But the article goes on: ...the price of gas isn't a mere macroeconomic figure. It's a pocketbook item that consumers feel every week.

There was another interesting insight in that article:

It's not every day that Karl Rove gets a lesson in politics. But the President's ace strategist was brought up sharply at a recent White House meeting with a group of Republican congressional-staff chiefs when he suggested that the best approach to soaring gasoline prices was this: wait. There's no immediate fix available, so let the market work its magic, Rove said. The stratospheric pricing will reduce demand soon enough, and $3-per-gal. gas will be a memory by summer. It's basic economics.

And from elsewhere:

Voters everywhere are mad about high gas prices. Typically, more than six in 10 of them tell pollsters that recent gas price increases have caused moderate to severe financial hardships in their households. And more than half say they trust Democrats more than Republicans to do something about gas and oil prices.

Independent pollster John Zogby said gas prices have help sour voters on the direction the country is headed in but the negative numbers are "mainly about Iraq and anxiety about health benefits, pensions and downward mobility."

So if a repentant Rove does decide something needs to be done about gas prices where can he go? He can lean on the Industry I guess, to pass some of the windfall profits back into the consumers. But even they can't control the traders or their reaction to such a move.

Even so, just supposing Rove was the gas magician, has he got time now to take the pain away before November? I know voters have short memories, but it seems the gas issue is just one more economic hit for most. It is hard to see how easing one will negate the rest.

Watching from the sidelines, the Democrats don't seem to be setting the world alight, but then they probably don't need to for a mid-term race. The more important factor is that the Republicans simply aren't getting traction. Perhaps Iraq and other non-economic issues simply add to a growing negativity. Rove's April comment on gas suggests he hasn't been particularly engaged with the congressional race, which is fair enough. It just seems odd that the White House would so easily squander their power in Congress.

Given the predictions of a close race my gut feeling is that the Democrats will carry the numbers, for better or worse. The worse being that they in turn squander the opportunity to set up the agenda for 2008.

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