2010 Ramblings

Polls can be highly unreliable indicators of future results and the most suspect, those polls commissioned by news organizations, are often used to establish a false premise on which an opinion piece is served up as a news story. However, there are two polls that I’m watching closely now in the aftermath of last week’s elections in Virginia and New Jersey. Gallup reported today that the Republicans are ahead in the generic ballot for 2010 by a 48%-44% margin. Generic ballots are often misleading because voters have a habit of disliking all congressmen except their own. That said, in the Gallup data released today there was this interesting information:

PRINCETON, NJ — Republicans have moved ahead of Democrats by 48% to 44% among registered voters in the latest update on Gallup’s generic congressional ballot for the 2010 House elections, after trailing by six points in July and two points last month.
The Nov. 5-8 update comes just after Republican victories in the New Jersey and Virginia gubernatorial elections, which saw Republicans, replace Democrats as governors of those states.

As was the case in last Tuesday’s gubernatorial elections, independents are helping the Republicans’ cause. In the latest poll, independent registered voters favor the Republican candidate by 52% to 30%. Both parties maintain similar loyalty from their bases, with 91% of Democratic registered voters preferring the Democratic candidate and 93% of Republican voters preferring the Republican.

Since Gallup regularly began using the generic ballot to measure registered voters’ preferences for the House of Representatives in 1950, it has been rare for Republicans to have an advantage over Democrats. This is likely because more Americans usually identify as Democrats than as Republicans, but Republicans can offset this typical Democratic advantage in preferences with greater turnout on Election Day. Most of the prior Republican registered-voter leads on the generic ballot in Gallup polling occurred in 1994 and 2002, two strong years for the GOP.

As has been noted before on this blog, voters are keen to the differences between Candidate Obama and President Obama. Whatever suspicions there might have been last spring that Candidate Obama would rule as a moderate have long since been replaced by a deep resentment among an electorate that has learned that Candidate Obama was a poseur on a list of issues. Which brings me to the second poll I watch closely, a highly unscientific process I conduct my self. I’m a corporate finance consultant and one of the many enjoyable elements of my work (when I have work) is that I get to ask lots of different people lots of different questions.

In a nutshell, when I poll people I interact with daily, here is what they are talking about:

  • If someone has a job, they are worried they will lose it.
  • If someone doesn’t have a job, they are worried they will not find one for a long time.
  • Personal spending has been cut dramatically. Those cuts will increase.
  • Small business owners have slashed jobs and expenses at record rates. And they are not finished cutting.
  • Small business owners can’t get loans renewed at banks they have done business with for decades.
  • Bankers are worried about their own jobs and careers for the first time in a generation.
  • Small businesses are very slow to pay vendors and suppliers; on the other hand, they can’t collect money from their customers. There is no liquidity in small business (and remember, small business is by definition any company with $500 million in revenues or less)
  • Commercial real estate is a disaster for which there is no cure. Thousands (not hundreds) of banks will fail.

In short, there is enormous frustration with “Washington”; President Obama and Congress are the object of this growing level of bipartisan anger and despair. Ironically, a jobless recovery will create more political volatility than no recovery at all because it will underline the inimical issue of winners versus losers. In an era of rapidly expanding government employment I can’t envision a heavily taxed, more regulated private sector (that creates the wealth that pays for those government jobs) remaining civil as they see themselves as the losers in this political equation.

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