The Outsider Perspective Issue 314 | The Beltway Outsiders

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Good Friday Morning! Especially to the Tennessee Volunteers football team, who bested the Alabama Crimson Tide 52-49 in what many are calling the game of the year. The highlights are amazing. The game-winning field goal wasn’t pretty, but it was beautiful. If Tennessee and Georgia can stay unbeaten, that could set up a #1 vs. #2 matchup in Athens, Georgia, in a few weeks. Maybe the Vols will get another ESPN Gameday show.

One note on the Braves losing to the Phillies. A good series for the Phillies, congrats to them. But remember this from The Morning Brew:

Over the past 100 years, the surest sign of an oncoming financial crisis has been a Philadelphia based baseball team winning the World Series:

1929 – Athletics (Won WS)
1980 – Phillies (Won WS)
2008 – Phillies (Won WS)
2022 – Phillies (80-67, TBD)

I’ve got two columns on an incoming recession for the Conservative Institute this week. The Friday column is worth noting because the Washington Post reports that the White House is now looking at policy options to deal with a recession. That’s a pretty big admission from one of the most prominent pro-administration outlets. In this issue, I’m digging into the latest numbers on the midterms and what to expect in November. Links to follow.

Where you can find me this week

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[10/17/2022] Economists say recession is coming – Conservative Institute

[10/21/2022] The most obvious, policy-induced recession in history – Conservative Institute

Two weeks out: 2022 midterms update.

It’s time to shift into midterms mode full-time. Early voting has started in many places (including here in Tennessee), and November 8, 2022, looms on the calendar. We’re a little over two weeks away from the election, and there are still many unknowns.

Three dates to remember:

November 8: Election Day for the entire country.
December 6: Runoff dates for Georgia (if a winning candidate does not hit 50%, a runoff gets automatically triggered between the top two vote receivers).
December 10: Runoff dates for Louisiana.

For the record: I hate Georgia’s runoff rule. Also, I’m not too fond of all the wonky rules you can find in primaries. My preferred system is simple: line everyone up according to party, and the person with the most votes wins. Tennessee does this for primaries and the general election, and I don’t get why you’d do anything different.

Back to the midterm elections.

On September 23, I told you the polls were wrong because of RV screens getting overused. A week later, I showed you how that theory was proven right as LV polls started showing up, depicting a Republican advantage. When I wrote that, on September 22, Democrats held a +1.1 point lead in the generic ballot — 45.2% vs. 44.1% — in the RealClearPolitics average of polls.

As of Thursday evening, October 20, Republicans have gained a sizable advantage. Republicans currently sit at 48.1% to Democrats at 44.8% in the generic ballot. That’s a four-point swing toward Republicans in less than a month. Joe Biden’s approval rating sits at 42.7%, with disapproval at 54.3%.

Polling is still very weird this cycle. Sean Trende tweeted, “I’m genuinely shocked at the absence of house polling this cycle.” He’s right! Most of the prognostications on the House are based on national-level polls. The only House-level polling I’ve seen has come out of Nevada — and the results of those polls are good for Republicans.

Also, we’ve seen fewer quality polls and more garbage. One of the pollsters tilting FiveThirtyEight’s averages and models for the Senate is Center Street PAC. Here’s an example: In Pennsylvania, this Democratic-funded SuperPAC is publishing polls showing Fetterman beating Oz by +16 and +19 points. All other polls, public and private, show a much closer race. There are other states where they’re publishing similar things.

You could talk me into Oz losing that race. That would be easy. If you told me your theory as Oz would lose by +19 points, I would bet all my money against that. I know I’d win, and it’d be free money. These are garbage polls that only have two purposes: 1) to throw off polling averages (RealClearPolitics does not include Center Street in their averages, for what it’s worth), and 2) to ask left-leaning donors for more money.

The other problem is that there are still pollsters running RV polls. Not as many when I pointed out this issue, but they’re still out there. Here’s why that’s a problem. Fox News ran one poll and got results on LV and RV for this election. Here are the results:

Generic Ballot Registered Voters (RV): Democrats 44% / Republicans 41%.
- Democrats lead by +3 points with 10-11% undecided.
Generic Ballot Likely Voters (LV): Democrats 46% / Republicans 47%
- Republicans lead by +1 with 6-7% undecided.

On the RV side, you get a Democratic lead. But once you switch to likely voters, the Republican advantage appears. This happens every electoral cycle. RV polls tend to give an advantage to the party in office, while LV screens identify voters looking to push incumbents out.

I’m just one of many noticing these issues with polling. The industry is so bad this cycle that RealClearPolitics is starting a “Polling Transparency Initiative.” Here’s what they said:

There have been many news stories over the last several months questioning whether polling is broken in the United States. While there are certainly challenges in the polling industry, it is not entirely accurate to suggest polling is broken. There are many quality pollsters and media outlets that are doing excellent work in a constantly changing technological and political environment. However, there are also pollsters and news organizations that are doing less-than-stellar work and, unfortunately, many of the polls from these organizations receive a disproportionate amount of attention.

To help address this problem, in the coming weeks RealClearPolitics will be rolling out a beta version ranking polling organizations. RCP will rank pollsters by their performance in recent elections, and will of course evaluate their performance in the 2022 mid-term election in just under a month. RCP’s goal here is simple. Accuracy is the foundational bedrock of public trust. To that end we will be evaluating pollsters almost exclusively on one metric – accuracy in reflecting the actual results.

I’m looking forward to that effort. FiveThirtyEight attempts something similar, but they also “adjust for house effects.” FiveThirtyEight uses a scoring algorithm that will adjust results from pollsters to “make them more accurate.” I’m not too fond of this formula because pollsters can change methods. I’d rather take the data straight up like RCP suggests and score people on their accuracy, hopefully encouraging pollsters to improve practices if they get dinged.

If you’ve read me for any time, you know I’m very big on “where are we right now?” That’s the question I want to explore next. Here are the hard numbers:

Joe Biden’s job approval: 42.7% approve / 54.3% disapprove (-11.6 points)
Generic ballot: Republicans 48.1% / 44.8% (GOP +3.3)
Country’s direction: Right direction 25.8% / Wrong direction 66.3% (-40.5 points)
RCP Models:
- Senate: Republicans 53 / Democrats 47. GOP wins Georgia, Pennsylvania, Nevada, and Arizona. Democrats hold Colorado.
- House (needed for a majority – 218): Republicans 221 / Democrats 176 / Tossups 35. GOP projected to take the house easily. The question will be how big the margin ends up becoming.
- Governorships: Republicans 30 / Democrats 20. GOP called to pick up Wisconsin, Oregon, Kansas, and Nevada. GOP holds in Georgia. Democrats get pickups in Maryland and Massachusetts.
FiveThirtyEight Models:
- Senate: Democrats have a 60% chance of maintaining their majority.
- House: Republicans have an 80% chance to take the majority.
- Governorships. No prediction, but they have the map.
Economic data:
- Inflation: October 8.2%
- Wages: Inflation has meant that real wages are down 3.8% year over year (Sep 2021 – Sep 2022).
- Unemployment: October report showed U3 unemployment at 3.5%.
- GDP: Q1 GDP was -1.6%; Q2 GDP was -0.6%; and Q3 GDP is projected to be +2.9% growth.

I have issues with FiveThirtyEight’s models going back to 2020. I dislike Nate Silver’s attempts to correct polls. And in this cycle, they include garbage polls for no reason. The combination of their house shifts in polling plus bad polling, in general, is screwing with their model. But I provide them here as a counterbalance. I’d prefer FiveThirtyEight to switch to an accuracy-weighted model instead of trying to shift the numbers on poll results.

On another note, I only use RCP and FiveThirtyEight. I don’t care for many other models out there. I’m monitoring Decision Desk HQ’s model; they’re the new kids on the block. We’ll see how accurate they are; some of their current prognosis leaves much to be desired.

Back to the projections: I have a hot take and an even hotter take.

First, the hot take. If you take the RealClearPolitics map seriously, a GOP 53/47 map, then that’s likely not it for the night. If you recall, Republicans won two races where they never led a poll, or led very few polls in 2020. The two states were Iowa and Maine. Suppose Republicans take the Senate in Pennsylvania, Georgia, Arizona, and Nevada. In that case, we’re in the middle of a very good night for the GOP. If the GOP is winning a state like PA or AZ, they’re likely to take the other toss-ups too.

That brings me to my lava-hot hotter take. If the Senate map opens up to that degree, there’s more on the table than just the toss-ups. Suppose the GOP makes a clean sweep of PA, GA, AZ, and NV. In that case, I’d expect them to also win one out of the following four states: Washington, Oregon, Colorado, or New Hampshire.

Oregon is interesting because the gubernatorial race has recently shifted in favor of the GOP. One month ago, Drazen was considered a long shot to win for Republicans, but she’s taken a slim lead in the averages. On the Senate side, there’s been one poll run. We have no data.

Most Republicans I talk to see Washington state as a better target. The polling there is slim, too, but it does exist. Democrats lead there in the polling we have. If you like Tralfagar, they have it as a two-point race. Others have a wider margin. Again, more polling is needed to know for sure. We’re unlikely to get much, so we have to make suppositions off of national data and extrapolate from there.

New Hampshire and Colorado are the other two races. The case for them is simple: they would be this cycle’s version of Maine. Another race to watch: Michigan’s governor race. Tudor Dixon has a similar case she could win, despite leading no polls.

Again, these are not evidence-based prognostications. It’s a simple wave theory: if Republicans are winning hard toss-ups in places like PA, GA, and AZ, other races are in play too. The only question is how big the wave ends up.

My last point is simple: If Biden’s approval sits at 43% and the generic ballot is at 45%, Democrats will struggle to get north of those numbers. Those are ceilings; if individual battleground states are below those figures, it will be a rough night for Democrats. The generic ballot suggests that the average Democrat only outperforms Biden’s approval number by around two points. Anything above that is candidate quality.

Pennsylvania features two weak candidates — but Oz has momentum on his side. Fetterman is a floundering campaign. Warnock in Georgia is dealing with a similar dynamic, he’s a stronger candidate, but the environment is lowering his ceiling. Walker had a strong debate and should go into Election Day with momentum. The real question in GA is whether or not the Senate race goes to a run-off. If the GOP avoids a run-off, they’re having a great night (Kemp will avoid a run-off on the governor’s side — Stacy Abrams is a lousy candidate. Can Kemp pull Walker over the run-off line?).

When we get closer to Election Day, I’ll do a post with baseline expectations and such. Momentum is swinging towards Republicans. And the undecided voters are turning in the same direction. The summer polls and narratives are wrong. November is nearing, and Republicans are approaching a tremendous electoral environment. We’ll find out how friendly it is soon enough.

Links of the week

As recession fears rise, Washington begins to weigh how to respond: White House and Federal Reserve officials remain focused on inflation and confident in the economy’s trajectory – Jeff Stein, The Washington Post

WSJ Economists: Recession in next 12 months rises to 63% – WSJ

Bloomberg Economists: Recession odds in the next 12 months 100% – Bloomberg

The growing warning signs for Democrats in 2022 – Aaron Blake, The Washington Post

REMINDER: No, Really — Don’t Pay Attention to Early Voting Data – Sean Trende, RealClearPolitics

It’s been two years since 51 intelligence agents interfered with an election — they still won’t apologize – Miranda Devine, NYPost

Elon Musk Plans to Lay Off Nearly 75% of Twitter Employees, or 5,500 Staffers (Report) – Variety

US Weighs Security Reviews for Musk Deals, Including Twitter Buy – Bloomberg

A global house-price slump is coming: It won’t blow up the financial system, but it will be scary – The Economist

U.S.-Based Pensions Rush to Assess Interest-Rate Risk: Lower leverage likely shields the plans from the big cash calls that hammered U.K. markets – WSJ

$200 Diesel Puts Biden in an Ugly Corner: American stockpiles of distillate fuel are exceptionally low, which could mean higher costs for everything from trucking to farming to construction. – Bloomberg