Evans-Novak Political Report

Week of August 23, 2006

August 23, 2006
Washington, DC
Vol. 41, No. 17b

To: Our Readers

Outlook

  1. The bipartisan consensus is that Democrats will win control of the House (see below) but fall short of capturing the Senate. That is the conventional wisdom, which often has proved incorrect in past years. As has been our practice since 1966, we will continue to analyze every race — House and Senate — over the coming weeks.
  2. With the tide clearly running against them, Republicans — in the administration and Congress alike — will try to emphasize national security issues between now and the election. Senate GOP leaders say the relatively brief pre-election session (September 5-29) will stress national security. President George W. Bush‘s current rally in the polls is based on security concerns.
  3. Fears that Senate Minority Leader Harry Reid (D-Nev.) would use the unfinished business of the Defense appropriations bill as a vehicle for all kinds of Democratic unfinished business appear to be unfounded. Reid says he intends to finish the Defense bill in two days.
  4. The Senate Democratic caucus is split over whether Sen. Joseph Lieberman (D-Conn.) should keep his Democratic committee slots in the Senate if he defeats Democratic nominee Ned Lamont as an Independent candidate. However, Reid supports Lieberman’s keeping his committee seniority, and that should be decisive.
  5. House Democrats have prudently put on hold until after the elections the question of who will get committee chairmanships if they win control of the House, but a battle looms for the Intelligence Committee top spot. House Minority Leader Nancy Pelosi (D- Calif.) wants to dump highly regarded Rep. Jane Harman (D-Calif.) for being too soft on the Iraq war and replace her with Rep. Alcee Hastings (D-Fla.), one of the most radical members of the Congressional Black Caucus. Republicans will use Hastings, an impeached federal judge, as a national congressional campaign issue.
  6. Sen. George Allen (R-Va.) has edged into the endangered species category for re-election, thanks partly to a campaign blunder (see below). Allen is still favored to win, but his Virginia seat is now considered more vulnerable than the Tennessee seat being given up by Sen. Bill Frist (R-Tenn.)

Federal Reserve

Soft Landing: Rookie Federal Reserve Chairman Ben Bernanke appears to be doing something his legendary predecessor, Alan Greenspan, was able to do only one out of three times. He has survived his first major test with a soft economic landing. Bernanke has received little credit for his successful maiden flight, but he has produced very good news for the economy.

  1. Bernanke’s decision to pause on August 8 and not increase interest rates for the first time in 18 meetings of the Federal Open Market Committee drew widespread complaints that he was a slacker in the war against inflation. But the nay-sayers were put to shame when the Labor Department’s core inflation figures last week showed the biggest drop in three years.
  2. The financial markets, a much more sensitive gauge than the opinions of economic savants, gave Bernanke their important vote of confidence. Bond yields slumped and stocks rallied on the news. Market approval of Bernanke’s performance constitutes early success in achieving a most daunting task for any central banker: to slow a rapidly growing economy enough to control inflation without crashing and burning in a recession — that is, a soft landing.
  3. Greenspan, by contrast, crashed twice in three attempted landings during his long tenure at the Fed. This early success by Bernanke constitutes a rare victory for President Bush, whose selection of Bernanke to replace Greenspan February 1 did not win plaudits from the financial community and many conservatives.
  4. The popular choice to head the Fed was not Bernanke, but Martin Feldstein, a 68-year-old Harvard professor. As chairman of the Council of Economic Advisors for President Ronald Reagan 23 years ago, he was the nemesis of supply-siders, known as "Dr. Gloom" for his public demand for higher taxes and higher interest rates. Feldstein famously wrote that low inflation and sustained economic growth may be incompatible. Following Feldstein’s line, critics took Bernanke to task for not daring to tighten "too much" for the sake of low inflation. They would have been in full cry had the August 15 inflation numbers been high and the market reaction negative.
  5. It may be too difficult for Greenspan-worshippers to credit Bernanke’s early success, because that would question Greenspan’s legendary status. Hardly anybody wants to acknowledge that Greenspan helped produce a bubble economy by bringing interest rates down to 1 percent and then overshot the mark in raising them. The dollars-and-cents reason for Bernanke’s unpopularity among financial sharks is that high-ticket, speculative investors prey on central-bank-created chaos, which leaves an atmosphere in which short-sellers can prosper.
  6. While President Bush keeps his hands off Fed policy, he and his economic team are delighted that Ben Bernanke did not follow Marty Feldstein’s formula of daring to possibly tighten too much. Europe’s economy is lagging today and faces a regimen of higher taxes and higher interest that will suppress growth. If American tax cuts and a pause in higher interest rates do not generate inflation, prophets of gloom will be proved wrong.

House 2006

Republican-Held Seats: The overall House picture for Republicans is bleak, although not hopeless. The British apprehension of the sky-bombing plotters has at least briefly helped Republicans catch up with Democrats in the generic ballot survey. But aside from that spike, if the election were held today, the GOP would probably lose 26 seats and their congressional majority.

There is still time left, but the buzz on the Hill is that many Republican staffers — including those working for safe members — are seeking employment elsewhere, dreading the miserable possibility of life in the congressional minority.

The Democrats’ chances at the House are very real right now. Republicans are hobbled by the fact that they have so many shaky seats to defend and so few that they can legitimately target. If they are to tighten the gap — and a USA Today poll released Tuesday indicates that they may now be doing so on the generic ballot — they must give voters a reason to come to the polls for them. They will probably lose any election that merely pits them as the status quo against Democrats who could be even worse — who could, for example, impeach President Bush. Republicans must also offer something positive to voters, but their lack of legislative accomplishments in this Congress makes it difficult.

The big X-factor is the Republicans’ vaunted micro-targeting turnout program, which is light-years ahead of anything the almost non-existent Democratic National Committee will be able to put together this year. The GOP turnout program produced a minor miracle in 2004, as new Republican voters showed up in droves. How many of those new voters will show up again this year? Republicans are honing the 2004 model and will experiment with new methods, as they typically do in off-year elections. Given the historically low turnout in mid-terms, how much this could soften the blow of 2006 is unknown.

Republican-Held House Seats In Play

Likely Republican Retention

Tossup

Likely Democratic Takeover

Leans GOP

Leans Dem

AZ-1 (Renzi)

AZ-5 (Hayworth)

CT-4 (Shays)

AZ-8 (Open)

CO-4 (Musgrave)

CO-7 (Open)

IA-1 (Open)

IN-9 (Sodrel)

CT-5 (Johnson)

CT-2 (Simmons)

IN-8 (Hostettler)

KY-4 (Davis)

FL-13 (Open)

FL-22 (Shaw)

NC-11 (Taylor)

TX-22 (Open)

FL-8 (Keller)

IL-6 (Open)

OH-1 (Chabot)

 

IL-11 (Weller)

IN-2 (Chocola)

PA-6 (Gerlach)

 

KY-3 (Northup)

MN-6 (Open)

WI-8 (Open)

 

NH-2 (Bass)

NM-1 (Wilson)

 

 

NV-3 (Porter)

NY-24 (Open)

 

 

NY-20 (Sweeney)

OH-15 (Pryce)

 

 

TX-23 (Bonilla)

OH-18 (Open)

 

 

WA-8 (Reichert)

PA-7 (Weldon)

 

 

WY-AL (Cubin)

PA-8 (Fitzpatrick)

 

 

 

PA-10 (Sherwood)

 

 

 

VA-2 (Drake)

 

 

The above chart shows 39 House seats in Republican-held districts that we believe are now legitimately "in play." This does not mean that all of these seats will be won by, or even that they are actually winnable for, Democrats. It does mean that the Republicans in these districts have to work hard this year for re-election and will absorb significant party resources. Moving from left to right, each category (column) represents an increased likelihood of Democratic takeover on Election Day.

As matters currently stand, Democrats should take over at least four seats without trouble — including the seat of former Rep. Tom DeLay (R-Tex.) (see below). These Democrat takeovers would include political comebacks by two former congressmen — Baron Hill (D-Ind.) and Ken Lucas (D-Ky.) — and the loss of Rep. Jim Kolbe‘s (R-Ariz.) seat, whose primary is not yet settled.

Seven more seats are in the "lean" category for Democrats. This chart suggests a Democratic gain of 11 seats. Note that this is our best guess of what will happen on Election Day based on what we know now — it is not our view of how the election would turn out if held today.

Democrats will work over the next two months to move as many of the seats as possible toward the right side of the chart. The more they can force Republicans to play defense, the more money they can pull from their own incumbents and put into races in the middle columns.

Next week, we will look at the same, much smaller chart for Democratic-held seats.

Florida-13: Businessman Tramm Hudson (R), after making a late surge in the GOP primary, made an embarrassing comment about blacks’ inability to swim that has thrown him off-message. Millionaire auto dealer Vern Buchanan (R), who has generally led the crowded field in most surveys, must be considered the favorite for September 5. The other candidates are liberal state legislators Donna Clarke (R) and Nancy Detert (R), and a latecomer, former state Rep. Mark Flanagan (R). Leaning Buchanan.

Oklahoma-5: As we predicted, Lt. Gov. Mary Fallin (R) easily won the primary to replace Rep. Ernest Istook (R), who is running for governor. She will easily win this fall. Strong Republican Retention.

Texas-22: One could say that Republicans dodged a bullet when they succeeded in rallying around a single write-in candidate for the seat formerly held by Rep. Tom DeLay (R). Although Sugar Land Mayor David Wallace (R) had threatened to run, he retreated after local Republicans backed Shelley Sekula-Gibbs (R). The choice of someone with a hyphenated name is particularly unfortunate — it’s one thing for Charlie Wilson (D-Ohio) to win as a write in, but Sekula-Gibbs will have a much harder time if people have to write out her whole name. She also begins with a huge financial disadvantage against former Rep. Nick Lampson (D). She needs a miracle — there is also a libertarian on the ballot who will help split the vote and give victory to Lampson. Likely Democratic Takeover.

Senate 2006

Connecticut: Surprising about this race is the absolute lack of support for the Republican nominee, Alan Schlesinger — he does not even have the backing of President Bush, and his unfavorables are nine times his favorables.

Because of this, Sen. Lieberman has a lease on life in his independent bid against the Democratic nominee, Ned Lamont. Lieberman’s narrow defeat in the Democratic primary — instead of the drubbing most had expected — has made him strong enough to begin with a lead in some polls, although he and Lamont are tied in the most recent one. He draws heavily from Republican voters for his support.

Lieberman is an experienced hand at campaigning, not only on the congressional level but also during his campaign for Vice President in 2000. Lamont, by contrast, is a rookie who can speak smoothly at times, but clearly lacks polish at others. Just one example: During an appearance on Larry Kudlow‘s CNBC television program, "Kudlow & Company," Lamont looked like a deer in the headlights when asked about "Section 404" of the Sarbanes-Oxley law, even after saying a few other intelligent things about the law.

But Lamont spent $6 million for the Democratic nomination — he will not hesitate to spend even more to win a Senate seat.

In one sense, this race has no significance. Lieberman is a liberal whose association with Republican policies is strictly limited to the Iraq issue. This seat remains in Democratic hands whether Lieberman or Lamont wins.

Outside of Connecticut, the race does have significance for two kinds of voters and donors. The first is a sizable bloc of independent voters for whom national security is the most important issue. They may be frightened to see that there is no room in the Democratic Party for someone like Lieberman, who toes the left-wing line on nearly every issue except national security. The second group particularly interested in this race is Jews. Many of them will be turned off by the left-wing rhetoric about Lieberman’s "divided loyalties," and upset to see that Lieberman’s support of Israel is so unacceptable to Democrats that they would dump an otherwise liberal senator for a newbie liberal candidate.

Lamont’s name is already being used against scores of unrelated candidates in other states. A typical example: Sen. Santorum is attacking his opponent in Pennsylvania for endorsing Lamont over Lieberman. Certain Democratic Retention.

Florida: Rep. Katherine Harris (R) continues to hemorrhage campaign staff and behave erratically. The real surprise is that she may still win the GOP primary.

Republicans’ only hope for defeating incumbent Sen. Bill Nelson (D) (and even then, there is only the slimmest long-shot chance) is for Harris to be upset in the September 5 primary. She has polled consistently in the 30s among Republicans, with her second-rate opponents — former Admiral LeRoy Collins, attorney Will McBride and developer Peter Monroe — in the single digits, and about 30 percent undecided. Harris will win unless Republicans unite around one of the other candidates. Of the three, McBride is the most likely to carry the conservative mantle, but time is running out.

Nelson is almost a lock for re-election in any case. Leaning Harris.

Virginia: Sen. Allen is looking less and less like a presidential contender as his re-election campaign struggles. His recent gaffe in chiding a staffer from opponent Jim Webb‘s (D) campaign capped off a long streak of unimpressive speaking performances. A recent public poll by Survey USA has the gap closing to three points, but Allen has plenty of time and money to right the ship. Leaning Republican Retention.

Governor 2006

Alaska: As of this writing, conservative former Wasilla Mayor Sarah Palin (R) appears to have taken more than 50 percent of the primary vote, stomping the life out of Gov. Frank Murkowski‘s (R) political career. The incumbent, who angered voters by appointing his daughter to a Senate seat and proceeded to anger them in several other ways, came in third. This is as we predicted. Palin is already favored over former Gov. Tony Knowles (D), the best candidate Democrats could have fielded for the general election. Leaning Republican Retention.

Florida: Atty. Gen. Charlie Crist (R) has consistently led in the polls, and is strongly favored to defeat Florida Chief Financial Officer Tom Gallagher (R) in the Republican primary. He is running a devastating ad that reminds voters that Gallagher, in an earlier run for governor, compared popular Republican Gov. Jeb Bush to Cuban Communist dictator Fidel Castro. Likely Crist.

On the Democratic side, the race is much closer. Rep. Jim Davis (D) leads state Sen. Rod Smith (D) in every survey, but the most reliable survey of likely voters suggests a close race with Smith coming up behind. As he attacks Davis for his poor congressional attendance record, Smith could surge at the end. But early voting has already begun, and it could prove too late. Moreover, Smith has nearly run out of money in the home stretch, and a group aligned with the sugar industry is basically financing him at this point.

Republicans in the state generally agree that Smith would be a tougher general election candidate to beat. Leaning Davis.

Sincerely,
Robert D. Novak

 


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