Don’t sleep on the economy when it comes to 2014… An improving economy could benefit a lot of incumbents, Democratic or Republican… But has the economy really turned a corner? We’ve been down this road before… The top political story for later this week: the possible budget deal… The Obamas (and Bushes and Clintons) head to South Africa… Over the weekend, Obama talked Iran and nukes… The 2014 establishment vs. Tea Party GOP primaries… And watching the potential indie candidates.
*** Don’t sleep on the economy: Republicans are convinced next year's midterm elections will be fought over President Obama's health-care law. Democrats counter the midterms will be about the GOP's brand and obstruction, especially after the government shutdown. But Friday's solid job numbers were a reminder that there's another issue could play a more powerful force in 2014 -- a healing economy. In the past 12 months alone, the economy has added a combined 2.3 million jobs and the unemployment rate has declined nearly a point to 7.0% (the lowest level in five years), despite the sequester and government shutdown. Make no mistake: That's not close to full employment, and long-term unemployment has been a persistent problem. Yet the evidence available suggests that sour attitudes about the economy (perhaps due to the shutdown) might be lagging current economic performance. “The headwinds are fading and the tailwinds are gaining strength,” a Bank of America Merrill Lynch economist told the New York Times. And six months from now, say, vulnerable Democratic senators and vulnerable GOP governors COULD have a positive message to tell next year to constituents that’s backed up by the facts: "The economy is getting better and better each month."
*** An improving economy could benefit a lot of incumbents, Democratic and Republican: How could an improving economy help vulnerable Democrats? Consider that stronger attitudes about the economy and nation’s direction could raise the president’s job-approval rating five, six, or seven points. Democrats’ chances next year are much better if Obama’s approval is in the high 40s than the low 40s. (It’s striking that Obama right now is experiencing his lowest approval ratings at a time of the lowest unemployment rate in his presidency. Has the public really decoupled the economy from the presidency?) Then there are the vulnerable GOP governors in states like Florida (where the unemployment rate is 6.5%), Maine (6.7%), Ohio (7.5%), Pennsylvania (7.5%), and Wisconsin (6.5%). The unemployment rate dropping another full point in these states would represent quite the talking point for these governors. Ditto vulnerable Democratic governors in Colorado (6.8%), Connecticut (7.9%), and Illinois (8.9%).
*** But we’ve also been down this road before: That the economy might be a sleeper issue in the coming midterms should be jarring for everyone who covered the 2012 presidential election, when every jobs report -- every piece of economic data -- launched a thousand political stories. But come Nov. 2014, there's the real possibility that the national unemployment rate could be close to 6.0%, and the economy could be adding 200,000 jobs per month. And if that's the case, all we're saying is the midterm environment could be MUCH different -- for Democrats, for Republican governors -- than the conventional wisdom suggests. Then again, every time it seems like the economy has taken two steps forward, we get a later reminder that it's taken a step back. For instance, the robust third quarter GDP number was filled with a lot of companies doing “inventory replacement,” big purchases that likely won’t be replicated for another few quarters. That means we could be back to a mediocre 2% growth again. Point is: We’ve been down this road before…
*** Let’s make a (budget) deal: The top political story for later this week, however, is the possible budget deal that Democrats and Republicans are trying to strike. As the Washington Post puts it, the deal would more represent a ceasefire than a true budget breakthrough. “Senior aides familiar with the talks say the emerging agreement aims to partially repeal the sequester and raise agency spending to roughly $1.015 trillion in fiscal 2014 and 2015. That would bring agency budgets up to the target already in place for fiscal 2016. To cover the cost, Ryan and Murray are haggling over roughly $65 billion in alternative policies, including cuts to federal worker pensions and higher security fees for the nation’s airline passengers.” Don’t miss this line in the Washington Post piece: “The campaign to control the debt is ending ‘with a whimper, not a bang,’ said Robert Bixby, executive director of the bipartisan Concord Coalition, which advocates debt reduction. ‘That this can be declared a victory is an indicator of how low the process has sunk. They haven’t really done anything except avoid another crisis.’” Of course, avoiding another crisis is a major accomplishment in today’s political climate, right? And it paves the way for stronger attitudes about the economy, as we mentioned above. If government budget showdowns are in the rearview mirror for a year or two, then it’s possible that adds to the positive economic news.
*** Obama heads to South Africa: President Obama and the first lady (along with the Bushes and Clintons) today head to South Africa to attend the memorial services for the late Nelson Mandela on Tuesday. Obama is expected to return to the United States on Wednesday. NBC’s Brian Williams is anchoring “Nightly News” live from South Africa. Meanwhile, for its daily health-care push, the Obama administration will highlighting the millions of lower-income Americans who will get health insurance through Medicaid expansion -- as well as the millions who won’t (due to their states deciding not to expand it).
*** Obama talks Iran, nuclear weapons: Over the weekend, President Obama talked Iran and the Middle East at the Saban Forum in DC. Perhaps the biggest news at the event was Obama saying there’s only a 50%-50% chance -- at best -- to get a long-term deal with Iran on its nuclear weapons. “If you asked me what is the likelihood that we’re able to arrive at the end state that I was just describing earlier, I wouldn’t say that it’s more than 50-50,” he said. Interestingly, Obama’s remarks were carried live in Israel; it was a BIG story there. In addition, The Hill reports that the president is sending two top diplomats to stop new sanctions on Iran, which could scuttle any deal. “Secretary of State John Kerry and his lead Iran negotiator, Under Secretary Wendy Sherman, will testify in public before House and Senate panels about the preliminary deal reached last month in Geneva. Their goal: Convince skeptical lawmakers that levying new punishments on Iran could derail the sensitive nuclear negotiations.”
*** Establishment vs. the Tea Party (and old vs. young): With Friday’s news that Sen. Thad Cochran (R-MS) will seek re-election, setting up a competitive race against Tea Party challenger Chris McDaniel, one of us wrote that there will be at least half a dozen Senate GOP primaries next year essentially pitting the Republican establishment against the Tea Party. Our list:
-- Cochran vs. McDaniel in Mississippi;
-- Senate Minority Leader Mitch McConnell vs. Matt Bevin in Kentucky;
-- Sen. Lindsey Graham vs. a crowded field in South Carolina;
-- Sen. Pat Roberts vs. Milton Wolf in Kansas;
-- Sen. Lamar Alexander vs. Joe Carr in Tennessee;
-- Sen. Mike Enzi vs. Liz Cheney in Wyoming;
-- and the crowded field in Georgia vying to replace retiring Sen. Saxby Chambliss (R-GA)
Yet there's also something going on in these races beyond ideology or the establishment vs. the Tea Party. It's age -- or longevity in the Senate. Cochran was first elected to the Senate in 1978; Enzi in 1996; Roberts in 1996; and Alexander and Graham in 2002. As the Club for Growth put it in its statement opposing Cochran and supporting McDaniel, “Throughout his over 40 years in Washington..."
*** Watching the indie candidates in 2014: And in other 2014 news, South Carolina’s State newspaper reports that former Lt. Gov. Andre Bauer (R) might run for governor next year -- as an independent. “I’m hearing more and more people say they are fed up with the two-party system,” Bauer said. “And they have asked me about running.” Bauer is a VERY flawed candidate, but we’re believers that his message (“people are fed up with the two-party system) is a potentially powerful one for folks in 2014. Just something to keep an eye on…
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