Monday, April 30, 2012

Intrade Predicts a 62% Chance of Continued Divided Government

The question about divided government, as we go into the 2012 election, is simply this: What is wrong with the status quo? If you like divided government, where neither political party can advance legislation without support from the other and have to either work together or do without, these are the best of times.

The Republicans have a majority in the House of Representatives. The Democrats have a slim majority in the Senate, but not the 60 vote supermajority needed to advance non-budget measures without some Republican acquiescence. President Obama stands by with his pen, ready to either sign or veto.

Barack Obama has had to exercise his veto only twice, December 30, 2009 and October 7, 2010, during the Pelosi-Reid Congress. That Congress was a nightmare for divided government fans, as the Democrats had the Presidency, majorities in both House and Senate, and, for a brief while, 60 filibuster-proof votes in the Senate.

Even George W. Bush did not have that. Following his reelection in 2004, he had only 55 Republican votes in the Senate. Bill Clinton had 57 Senate votes after his 1992 election. Jimmy Carter had 61 Senate seats after his 1976 election, but that dropped to 58 after the 1978 election. And in those days, as in the 1960s, there were enough conservative Southern Democrats in the Senate to stop their liberal colleagues if they could get Republican support for that.

The filibuster-proof advantage Democrats held for about 200 days from July 2009 when Al Franken’s Senate election was confirmed by the Minnesota Supreme Court until January 2010 when Scott Brown won the special election in Massachusetts was really unprecedented in the post-Word-War II period. Let’s hope we don’t see that again anytime soon.

So what are the chances of getting a continuation of the status quo? If you go over to the Intrade website, they’ll quote you odds.

Odds President Senate House
27.00% Obama Democratic Republican
23.00% Romney Republican Republican
17.50% Obama Republican Republican
15.00% Obama Democratic Democratic
8.90% Romney Democratic Republican
7.90% Obama Republican Democratic
3.90% Romney Republican Democratic
2.70% Romney Democratic Democratic
1.50% Other? Other? Other?

The odds of a Republican sweep are 23% and a Democratic sweep only 15%. That leaves a 62% chance of divided government. The most likely of nine scenarios would see Obama retain the White House, Democrats retain the Senate, and Republicans retain the House - the odds of that are quoted at 27%.

How good are these predictions? Intrade claims they are pretty good, but there has to be at least 7.4% fluff because the odds of all outcomes add up to 107.4%. And as they say, if you are willing to play for a long shot, anything could still happen.

Let's list a few potential game changers:

  • Peace between Israel and a new Palestinian State
  • War between Israel and Iran
  • Joe Biden dumped in favor of Hillary Clinton for VP
  • Supreme Court decisions on Obamacare and Arizona's illegal alien law
  • A return of Occupy Wall Street encampments or street protests
  • Race riots following a George Zimmerman acquittal or plea bargain
  • Major changes to unemployment rates or gas prices
  • European financial crisis
  • Terrorist attack on the U.S.
  • Major disaster, such as hurricane, earthquake, or tsunami

It does seem, however, that independent voters here in Massachusetts who do not want to put their trust fully in one party or the other have several voting strategies:

(1) Vote Republican in House races where the Republican Party fields a credible candidate, as a return of Nancy Pelosi to the House Speakership can't be risked.

(2) Vote for Scott Brown against the ultra-partisan Democrat Elizabeth Warren who has shown no aptitude for compromise or bipartisanship and very little for constituent service.

(3) Vote for Barack Obama if it appears Republicans will hold the House and take the Senate unless Mitt Romney convinces that he can down the crazy right-wing of his party.

(4) Vote for Mitt Romney if it appears Democrats will hold the Senate and retake the House unless Barack Obama can convince he can lead rather than be dictated to by his crazy left-wing.

Independents who favor national health care reform face a tough choice, especially if parts of Obamacare are declared unconstitutional. Do you vote for Mitt Romney, who might be able to salvage something out of the mess Congress made in 2010? Or do you vote for Barack Obama, who doesn't seem to have any policy yet on what to do next, other than to hold the line on Obamacare?

Independents who favor a balance of spending cuts and tax increases to bring the runaway deficits under control also face a tough choice. Will Democrats let the Bush tax cuts expire at the end of the year, even though they have had two previous occasions to do that and blinked? Will Republicans, assuming they retain at least one House, agree to any tax increases if Barack Obama is reelected? Or do we need Mitt Romney to broker the grand bargain on spending and taxes that Barack Obama has so far been unable to get?

Finally, who has got the best jobs plan? That's the big issue and both sides have a lot to prove.

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