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Why the GOP Might Just Squeak Out the 2016 Election — Unless the Nominee is Terrible
Goldman Sachs is out with a note about its political forecasting model, and how the economy might affect the 2016 White House race. According to the Goldman model, the fundamental factors that matter most are real GDP, real consumption, and real personal income. With the 2012 election added to the sample, the change in non-farm payrolls also seems to have acquired more predictive power. And the stock market? Not so much.
Timing matters, too. Goldman: “It is only around the current stage of the presidential cycle (i.e., late in the year before the election) that economic variables tend to become useful in predicting the outcome, and not until Q2 of the election year that many indicators reach their maximum predictive value.” The bank also includes whether the incumbent party has held office for at least two terms, kind of a “fatigue” factor I suppose.
So here is what the model churned out:
Regarding the more important fundamental indicators, our current economic forecast implies a close race. However, the outcome depends heavily on the model chosen. Considered in isolation (i.e., in a bi-variate regression), our forecasts for three indicators with the greatest predictive value—real GDP growth, real per capita personal income growth, and the change in non-farm payrolls—all suggest that the Democratic candidate should win just over 50% of the popular vote. However, adding the incumbent party dummy variable described above shifts the results by an average of 3 percentage points, transforming a narrow win for the incumbent party into a loss with around 47% of the two-party vote.
Several caveats are in order. First, we do not know who the candidates are, and early polling—which is itself not of much use—shows a wide dispersion of voter preferences depending on the individual candidates. Second, it is early enough in the campaign that the actual economic data—itself subject to revision—don’t give us much of an idea about the eventual winner. Instead, we must rely on our own forecasts of those variables, which are apt to change as events unfold. Third, it is the electoral college, not the popular vote, that determines the election outcome. There is normally a small “bias” toward one party in the electoral college, so that one party could lose some of its popular vote without actually losing any electoral votes. In a close election, this bias is typically worth less than one percentage point of the popular vote, but has occasionally been enough to swing the result (in 2000 and 1888, for example). Recent research suggests that the current concentrations of partisan support going into the 2016 election could favor the Democratic candidate by one to two percentage points. If the pattern holds, this would imply a closer contest than the figures above suggest. The upshot is that, if our economic forecast proves correct, the economic data should make for a fairly even playing field.
So if you buy the Goldman model and the economic forecast that feeds into it, Republicans should be considered the slight favorite — candidate quality and economic revisions aside. And here is that Goldman econ forecast, by the way: “Based on developments in financial markets as well as some of our recent analytical work, we think another modest downward adjustment to our GDP forecasts is now warranted. Specifically, we are reducing our GDP growth forecasts for the next three quarters by 0.25pp each, taking the numbers to 2.5% for Q4 2015 and 2.25% for Q1 and Q2 of 2016.” So a same-old, same old, new normal forecast is good news for the GOP’s political prospects. So choose wisely, Republicans!
Published in Economics
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The GOP would wisely choose to avoid 2 people who will lose them the race. Bush and Trump are those 2. The thing is, Jeb is the poster boy for all these grand financial corporations because he will do their bidding, especially during the next collapse, which will be during the next presidency. There’s not a thing that Goldman could say that should not be interpreted firstly as propaganda.
I’ve said this is our election to lose, and we’re doing everything possible to lose it.
Back when W was president, made some nice gains owning GS .. Goldman is the arch-uber of all crony capitalists. I personally give zero credibility to any political forecast originating with GS.
It’s totally understandable that Goldman Sachs, the top heavyweight investor in Washington, would put together a horserace projection that gives the GOP a slight edge in a presidential race where Hillary will have at least double the amount of resources than the poor GOP soul who survives the primary gauntlet, (… much of which was donated to Hillary by Goldman & their affiliates.)
A quick review of past presidential elections shows that Republicans cannot win a money race against the Democrats… And if the GOP chooses a moderate, that nominee cannot draw a clear enough contrast between themselves and the more popular Democratic candidate… so people tend to vote for the real thing instead of a weird tasting diet version.
Everyone in Washington and at Goldman Sachs knows that Republicans cannot win national landslides unless the conservative base is mobilized… And everyone knows that the GOP primary race is where Washington and its supporters work overtime to get flimsy moderates nominated.
But what Goldman forgets to include in their projection, is the possibility that a strong Reagan conservative could jump in the race and lead the 2nd Republican Revolution to beat the Clintons again in a landslide larger than his ’94 earthshaker.
If voters sour on the reality tv celebrity or a third Bush (both Clinton friends)… and if they’re not thrilled with the umpteen non-Jebs… then there is a planet-sized opening for an accomplished reformer & landslide engineer to lead another national movement against both parties in Washington.
This is all fine and well. But,
1. Search Engines and Social Media can skew voter attitudes – and they do. Google and Facebook must be neutralized by the GOP candidate. That dictates a more pluralistic, Silicon Valley issues sensitive candidate. Conservative philosophy and lighter regulation can work.
2. Democrats have much better digital campaigning tools for voter turnout in critical states than the GOP. Much has been done to turn this advantage around, its not enough.
3. There are more Democrats, and more Democrats who are wedded to voting for any Democrat who wins their nomination than Republicans and Republicans who will actually vote.
4. Republican demographics include social or economic conservatives, but the social conservatives are often against the economic conservative agenda (entitlement reform) because they fear it will affect them. So, unless enthused, they stay home. That killed us in 2012 in Ohio, Fla, and Va.
The GOP has to have bad weather on voting day, a solar flare that disrupts phone banks calling those Democrats without transport to get them to the polls and a great top ticket.
The test I apply – and not because I believe those who can pass this test will be completely effective – is whether they could win Pennsylvania. If the candidate has a shot of winning Pa., then we are likely to secure Ohio and Florida. If we can do that, then we might hold some tight Senate races and position for 60 Senate seats in 2018.
Definitely doable if we focus.
I don’t discount the basic idea of how this all shakes out, but will keep pointing out the obvious: in 2014, the Republicans ran an incredible field nationwide. The depth of talent, of young, smart people of integrity, was jaw-dropping.
And it was no small matter: after the 2012 elections, we had something like a 2% chance of retaking the Senate in 2014. Not only did we retake it, we hit 54 seats.
A field full of candidates like Mia Love, Elise Stefanik, Lee Zedlin, Marilinda Garcia, and not a Todd Akin or a Bush to be seen. Without bad candidates to hang around the neck of every Republican (or depress down-ticket voting), the Democrats got shellacked. They had to outspend Garcia 5-1 to defeat her, and when they couldn’t pull that off in every district nationwide… welcome to Election Day 2014, aka Republican Christmas.
Don’t run Trump. Don’t run Bush. Don’t compromise on character. There are plenty of great candidates whom Americans can like, relate to, and admire. Let the Dems run either a potential jailbird with a homebrew server or a septuagenarian socialist. Let’s run some combo of Walker, Cruz, Jindal, Fiorina, Carson, Paul, Rubio, Martinez (etc) and wipe the floor with the lefties.
“The bank also includes whether the incumbent party has held office for at least two terms, kind of a “fatigue” factor I suppose.”
The “fatigue factor” is the most important thing: in the last eighteen presidential elections (from FDR’s last election on), with the exception of Carter and Reagan, the parties have traded off holding the office for two terms. Even with respect to Reagan (and Bush) and Carter, the same trade-off was made, but the Dems lost one term and the Republicans picked one up. I suppose it is possible for the Republicans to snatch defeat from the jaws of victory, but it is their turn and theirs to lose. The most important thing is to select someone who, upon winning, will do the job that needs to be done.