August Outlook For Divided Government

Earlier I explained why I’m not afraid of the fiscal cliff, which means I’m also not afraid of a gridlocked, partisan government making it happen. It actually looks like we have a good chance of getting the trifecta of divided government this November. There’s no guarantees that Obama will be re-elected and that Republicans will keep the House and reclaim the Senate, but it’s increasingly looking like the default and most likely option.

On the Intrade markets for the 2012 election, betters (investors?) currently give Obama a 56% chance of re-election and the Republicans a 53% chance of taking the Senate and an 89% of keeping the House.

These bets are probably supported by polling which has been indicating similar things. Polling is hard, and there is no shortage of critics and skeptics, but even if you don’t believe that polls by different groups are an accurate reflection of the voters of an overall state, you can still discern interesting trends.

For instance, I find it really interesting when the same poll shows one party winning the Presidential vote but a different party winning the Senate. Even if you don’t like the sample size or the demographic weighting or whatever, it’s still evidence of specific people voting for divided government.

This has been happening a lot in just the last week:

State Poll Obama GOP Senate
Massachusetts PPP +16 +5 (Brown)
Wisconsin Marquette +3 +9 (Thompson)
Connecticut Rasmussen +8 +3 (McMahon)
Nevada LVRJ +2 +5 (Heller)
Wisconsin Quinnipac +2 +6 (Thompson)
Connecticut Quinnipac +7 +3 (McMahon)

Of course, it’s not happening everywhere. Obama and the Democratic candidate are both up in all of the Florida polls, and Romney and the Republican candidates are both up in Montana and North Dakota (though polling has been light). States like Michigan and Ohio have had close polls pointing in all directions and could go either way for either race.

Still, Republican, Democratic, and local polling results are all indicating the same thing in multiple states. If Obama and the Senate Republicans all win the states in the table as well as their respective undivided states mentioned above, Obama will win four more years but the GOP will keep MA and pick up CT, WI, and NV, which would push them to 50 seats even as MO has become less viable without even counting the more likely pickups in MT and ND.

And as I’ve written before, I’m much more optimistic about the potential for a fully divided government of these colors a la Clinton and the GOP in the late 90’s as opposed to the opposite colors of Bush and the Democrats in the mid-2000’s. When a Republican is in the White House and Democrats are in Congress, they all expand the government, but when a Democrat is in the White House, the GOP remembers that they oppose big government, and they gridlock. The last time this happened our deficit turned into a surplus; maybe they’ll at least all “agree” to stop extending all these inefficient subsidies and “temporary” budget gimmicks.

It’s still largely a speculator’s game, like it always is. I’m not even saying I’m strongly convinced this would be the best thing for the country; it’s plausible that Romney, Inc. would contain some truly conservative elements that would be good. I’m just saying that for now it’s looking like it’s Divided Government’s race to lose, and I think that might not be so bad.