Against All Odds: Why the Election is (still) a 50-50 Chance

 

 Against All Odds: Why the Election is (still) a 50-50 Chance

D.R. Scott

DuLac Advisory

The election analytic firms are estimating a Biden electoral college win with  80-90% probability. From a macro point of view, it is not too surprising given the economic backdrop: the single likely predictor for the winner of the presidency is the state of the economy. In 1980, 1992, and 2000, the United States experienced recessions or just emerging from contractions. Each election experienced a flip in parties within the executive office. What is the economic backdrop for 2020?  Against all odds given expectations this past summer, a couple of green shoots have emerged in 2020 that are providing a floor to the economic question:

·         Record GDP that nearly places America back at flush for the year,

·         Record number of jobs created since the economy bottomed out in July (approx. 11MM), there are over 10 million Americans that are out of work due to covid-19.

·         Stock market strength— the U.S. equity market is one of the top three in the world thanks to the rapid action of the Federal Reserve and the bi-partisan stimulus plan passed in March.

However, the record job growth and economic output may be in jeopardy if states do not get this second wave of covid-19 under control: industrial production sharply fell in September, for example. November may produce more net new cases than what America (and much of the Western world) experienced in April— a shame given the tremendous efforts to subdue the virus after the initial outbreak in the spring. The second covid-spike, and the lack of a well-implemented case tracing nationwide, could reduce economic output and delay the speed that the remaining 10 million Americans laid off during the pandemic from getting their jobs back.

It is not surprising that every national poll, most electoral college scenarios, and the financial markets are largely pricing in a strong Biden victory. However, those that are sanguine about the prospects of a Biden Administration may be underestimating the levers of power that President Trump and an energized “MAGA-publican” Party can employ to quickly narrow the electoral college gap over the next few days.  There are three categories that should make a reasonable person consider the prospects that this election is closer to a 50-50 electoral college outcome rather than 90-10.

 

1. Trump’s Enthusiastic Base:  

In 2016, polls underestimated the Trump's support in states such as Pennsylvania and Michigan due to suboptimal sample sets of likely voters. There was a significant gap between his enthusiastic crowds at his rallies and that cohort of people being represented in the polls. This divergence led to overconfidence in Democrat supporters of Secretary Clinton. In 2020, we may be observing a repeat of this under-sampling of Trump’s main voter base: non-college educated blue and “grey collar” white voters. In 2020, we may be observing a repeat of this sub-optimal polling sample set issue.

President Trump has proven an uncanny ability to host massive rallies in battleground states. This not only could be an indicator of a "silent majority" sympathy for the President's vision of keeping business as usual, but it also could indicate significant enthusiasm advantage for the President. His rallies are boisterous and his words are taken as gospel: his mix of business braggadocio, gospel of wealth, antagonistic words towards China, and culture war comments that frame an "us vs. them" subtext in people's mind may be quite effective for voter turnout.  Much of the media derides his rallies for the observed lack of CDC covid compliance and downplay their significance— such editorializing is fair but it misses the forest from the trees.

NBC's reporter, Katy Tur, covered Trump’s 2016 campaign from the improbable beginning on 5^th Avenue in 2015 to the surprising election night. Her book, Unbelievable, chronicled the link between his rally's enthusiasm and the possibility of unmeasured support for his unconventional candidacy. She notes how his frequent trips to the Midwest did not translate to an explicit advantage in the public polls— especially once the Access Hollywood video surfaced.

Nonetheless, the rallies seem to have generated a positive beta factor on election day by winning over likely voters: 80,000 people in union heavy Ohio, Michigan, and Wisconsin propelled the reality TV star to the highest office in the land. The 20-45,000 people often drive 20-90 minutes to the airport to see President Trump's 90 minute speech. His “Spartan” supporters are generally unafraid of catching Covid— they seem to view catching and surviving covid as a badge of biological strength with fist bumps to “immunity”.  They participate in his version of call and response, they laugh, and they seem thoroughly happy. Given all these factors, Pres. Trump’s supporters seem very probable to vote in person on election day. The question is, are the polls under-sampling these likely voters?

 

2. State Voting Logistics:

Battleground states such as North Carolina, Iowa, Michigan, and Ohio are all confirming the trend of much higher absentee ballot voting rates than 2016 election. Surveys show that Democrats by and large will be voting by absentee ballots at a much higher rate than Republicans. Given the tabulation speed difference between in person voting vs. absentee votes, Republicans may end up with a significant “optics advantage” over Democrats on actual election night. The battle royale experienced in Florida 2000 will seem like a polite Sunday School discussion compared to the number of states whose tallies will be in dispute a week from now.   

Watching the WH Press Briefings, one can already see that Republicans tend to be alarmed at possible problems in authenticity and veracity of the wide-scale use of the absentee ballot system: the term "voting fraud" has become more used than "equal protection."  The prospects of long lines, anachronistic partisan poll watchers, and fear of catching covid-19 may lead many metro and rural voters that lean Democrat to simply stay at home to vote. Potentially significant number of votes will be challenged by the election workers and purged due to signature differences, name differences, and incorrect "enveloping."

On top of taking days, if not weeks to count every vote in the battleground states (think Florida 2K meets Frankenstein), there will also be many legal challenges to many of those absentee votes. In most Battleground states, it is now too late to mail in an absentee ballot to be received by November 3^rd.  This is not a conspiracy theory, the President himself said such on September 23, 2020 and at the first debate. 

 

 

Republicans tend to have a much higher degree of fear of metro, "big city machine" voting fraud that hearkens more recently back to JFK vs Nixon in 1962 with the infamous Texas and Illinois votes. Modern day accusations have been largely refuted by actual research. However, facts, research and truth are increasingly being viewed through political lens. Therefore, it is not unreasonable to assume that absentee ballots, especially when cast in battleground states, will not only face de facto challenges, but also rigorous de jure challenges.

 

3. State Power Trumps Populace Power in Electoral College:

Biden has consistently led the incumbent in the national polls since winning the nomination. His national popularity seems to be correlated with the rate of spread of the virus. However, the constitution states that the state legislatures possess the right to select the slate of Electoral College that then votes for the president. Historically the state legislatures choose a slate of Elector College delegates based on the party that won the state’s popular vote. Thus, if a Whig won the state of Vermont’s “popular” vote (white male property owners), then the state legislature would select Whig delegates for the Electoral College— not Federalist party affiliated delegates.

The 12^th Amendment calls for the states to select the electors that then vote for the President. This detail matters. Typically, the state legislatures select a delegation of Electors based on the party affiliation of the President that won the state’s popular votes. However, one can already see that the popular vote in states such as Pennsylvania will be challenged— especially the absentee ballot votes.

“The Electors shall meet in their respective states, and vote by ballot for President and Vice-President, one of whom, at least, shall not be an inhabitant of the same state with themselves; they shall name in their ballots the person voted for as President.”

Pivotal Midwest states of Pennsylvania, Ohio, and Michigan are loaded with absentee ballot votes which lean Democrat, but also have a strong cohort of “Reagan Democrats” that Trump successfully flipped in 2016. Biden leads by 4-9% in each of those states which contributes to the media’s perception that change is going to come this November. However, all three “rust-belt” states have Republican led State Legislatures.  Imagine a scenario where the final vote tally is delayed a few days.

If this situation emerges, it could be plausible for at least one of those Republican controlled State Legislatures to simply implement an electoral “shot clock” strategy” in order to finalize the vote tally by the December 8, 2020 deadline to select the slate of Electorates.  This would effectively stop the vote count as is at the state level, front-running much anticipated Supreme Court adjudication. Thus, even though Biden is up by 4-9% in each of those states, this scenario could be accelerated by lower than expected day-of voting turnout by Democrats.

So, how would such a “Midwest split” outcome impact the electoral college?

 

                Source: https://www.270towin.com/

Assuming Trump keeps the South, Biden wins by only 2 electoral votes. In a scenario where President Trump wins Ohio and Michigan— he is re-elected.

Bottom Line

Some may say the above scenario is far-fetched. However, was not Bush vs. Gore in 2000 rather far-fetched? Recall the Bush campaign sued the state of Florida to essentially stop counting votes from selective (democratic leaning counties) based on the premise that it violated the entire Florida electorate population’s constitutional rights under the 14^th Amendment. Given America’s 18^th century era way of electing Presidents, with much of the power vested at the State level, the potential for under-counting Trump voters in the Midwest, and the prospect of state legislature/Supreme Court intervention, Trump-Biden is much closer than what is currently being estimated.  Remember the 2016 election was decided by the amount of people that can fit into The Big House on a crisp fall afternoon. After all, it was the "predictive analytics" that advised Tampa Bay Rays manager to switch a no-hitter pitcher in Game 6 of the World Series, thus enabling Mookie Betts to turn it around for the Dodgers. This is a strange year, so experts, nor the American voter, should not rule out the prospects of a "coin-toss" election.