It’s hard to watch a news program that doesn’t have talking heads prattling on about the upcoming presidential election. There is another important story that is virtually being ignored. The Senate is definitely up for grabs.
The best way to look forward is to look backward six years. The big story in 2014 was the large number of Democrats that were swept in with Barack Obama in 2008. You may recall the huge Republican win in 2010. That means there are a lot more Republicans up for reelection. Seats are held by the GOP in blue or purple seats include Florida, Iowa, Illinois, Missouri, New Hampshire, Ohio, Pennsylvania and Wisconsin. They have a chance to pick up seats Colorado and Nevada. It is way too early to make any projections but there is a real chance Republicans could win the White House but lose the Senate.
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Thought I’d try some humor today. After listening to the news, I thought of some magazine articles I’d like to see.
“The Hassle-free Way to Set up Your Own Server” by Hillary Clinton “Canada, My Homeland” by Ted Cruz “A Complete Makeover” by Caitlyn Jenner “Al Capone Wasn’t So Bad” by Sean Penn “How to Get Fabulously Rich with No Discernable Talent” by the Kardashians “What to Do When You Can’t Make it the Business World” by Carly Fiorina “Effective Public Speaking” by Joe Biden “Perils of Being in the Family Business” by Jeb Bush “Thank God I’m Retired” by John Boehner “Iran, Our Peace-loving Friend” by Barack Obama “Being Nasty for Fun and Profit” by Donald Trump “How to Totally Destroy Your Public Image” by Bill Cosby Hope you enjoyed it. Back in 1787 our best and brightest gathered in Philadelphia to devise a new form of government. There was strong disagreement over how that government should be structured. They worked through a hot summer and wrote the Constitution. It created a government with three independent branches having checks and balances on each other. It has survived innumerable crises. Keeping our style of government functioning is far more important than any political issue. Unfortunately, far too many only care about seeing their issues advance. Frankly, I think there are some on both sides who wouldn’t mind a dictatorship provided it reflect their beliefs.
The history of the Affordable Care Act (Obamacare) is a perfect example of this trend. It was initially passed with all kinds of shenanigans including the famous Cornhusker Kickback. Then the Democrats lost their filibuster-proof majority in the Senate and Harry Reid virtually shut it down. It didn’t even pass any budgets. Meanwhile, the Republican House voted over and over again to repeal the legislation without ever putting up an alternative. President Obama became a one-man legislature and basically did whatever he wanted regardless of what was in the law. Nobody was doing the job the Constitution assigned them. Once the Republicans assumed control of the Senate, there was some increase in inter-party cooperation. Real change started to occur when Paul Ryan became Speaker. He was interested in legislating, not just throwing raw meat to the base. The Republicans have finally put together an alternative to Obamacare. It has passed both houses and been sent to the President. He will certainly veto it but that’s not the point. Finally, all parties are acting the way the Constitution says they should. No matter our political views, we should all cheer this return to constitutional government. It’s about time we pay attention to the means not just the ends. In a few weeks everyone will be focused on the state of Iowa when they hold their presidential caucus. It gets so much attention because it’s the first actual voting for a presidential nominee.
The stock market was down sharply for the second time this week. In both cases the primary reason was a knee-jerk reaction to declines in the Chinese stock market. It is feared that this may be an indicator that their economy might be slowing down.
I think this is an overreaction. In the first place, the Chinese stock market is notoriously volatile. Do we really want to take our lead from a market in a communist dictatorship? The fear that a slowing of their economy would have a substantial on ours doesn’t make sense. Exports make up about 10% of our GDP. China accounts for about 15% of our exports. There is no way they can seriously damage our economy. However, I would be wary of companies with a substantial presence in China. They have a number of serious long term issues. Many have long claimed that the stock market is rational. They say it is made up of millions of smart people making rational decisions. As we have seen in the tech and housing booms, rational people are capable of making totally irrational decisions. A good investor makes their decisions independent of the crowd. This was put best by Benjamin Graham. He was a famous professor who was the mentor of Warren Buffett. He used the analogy of a business partner named Mr. Market. Every day Mr. Market would show up and offer to either sell his interest or buy out his partner at a given price. Mr. Market is a very emotional guy and his offers fluctuate wildly. The partner pays no attention to Mr. Market unless he offers to sell at a low price or buy at a high price. Whether we are buying stocks, mutual funds or investing through 401ks, there is one important thing to remember. We are not gambling over pieces of paper. We are buying shares in companies that sell goods or services. Their true value changes far less than is indicated by Mr. Market. President Obama spoke to the nation yesterday and announced the steps he is taking on gun control. I applaud him mentioning mental health. That is the only chance, albeit a slim one, that we can stop some of these deranged people. I also applaud him for mentioning gang violence.
The real story was his executive order regarding the definition of a gun dealer. Although I’m no expert, it sounds like this will have very little impact. The attorney general said people selling only one or two guns might qualify as a dealer. My guess is that all this will accomplish little or nothing to reduce gun violence but instead hassle law-abiding citizens. Some are wildly applauding this new policy and others are strongly denouncing it. I think both sides are missing the mark. This is less a policy and more a political stunt. If President Obama truly wanted gun control, he could have pushed it through when the Democrats controlled Congress. It is a nice issued to use against the Republicans whenever there is a mass shooting. I think it was done now to change the subject away from ISIS. I understand some may not be happy with what I have to say today. I promise, that if you keep reading, you can cheer when I go after the other side. Last time I speculated that if the GOP nominated someone other than Marco Rubio (or another main stream candidate), Hillary Clinton would win the election. A Clinton-Rubio match would be very interesting. Usually it’s the Democrats that have the younger, more exciting candidate.
So can Rubio win? Let’s look at the numbers. It takes 270 electoral votes to win. In 2012 Romney picked up 206 so the Republicans need to find 64 votes. The first place to look is Florida with 29 votes. Obama won it by less than 1%. If he is running, Rubio will certainly win the state. That leaves 35 votes. Romney lost Virginia and its 13 votes by 4%. I think Rubio stands a good chance there. Colorado, Iowa and New Hampshire showed losses of 5-6%. Winning all three (a questionable proposition) adds 19 votes, still three votes short. Enter Ohio and Pennsylvania with 18 and 20 votes respectively. Romney lost the states by 3 and 5%. On election night we need to watch these two states closely. Republicans MUST win one of these states. If not, White House closets will be full of pants suits. I hope this doesn’t come off as professorial. I really enjoy playing the election numbers game. Next time I will likely be ranting and raving about something that upsets me. The election is just over ten months away. Obviously there will be a lot of twists and turns between now and then. Even so, I decided to look ahead at the most likely scenarios.
As we all remember from high school, we don’t actually vote for the president. Instead we vote for an anonymous slate of electors pledged to vote for their party’s candidate. That means it is possible for a candidate to win the popular vote and lose the election. It last happened to Al Gore in 2000. Right now most states consistently vote for one party leaving a few “swing” states to decide things. The Democrats have a considerable advantage in these consistent states. They also have a huge disadvantage in having a bad candidate. Hillary Clinton is a terrible campaigner, has loads of baggage and is an old timer in an era when voters are demanding fresh faces. The Republicans also have disadvantages besides the lopsided initial electoral count. A thundering herd is running and many candidates are attacking each other. Even worse, some of the leading candidates have strong appeal to the base but will turn off other voters. Right now the biggest variable in the election is who the GOP nominates. Trump would be a disaster. Cruz can’t even get along with his own party. I believe that if either gets the nod, we will have our first female president and a very interesting “First Gentleman”. Of the remaining candidates, Marco Rubio has by the far the best chance. If he (or another mainstream candidate) is nominated, it should be a very interesting race. More on that next time. I created a post and published it but something went wrong. I'm not very tech savvy but will get it figured out.
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