Henry’s Call

Forget Nate Silver, the golden boy of election forecasting (though his “73 percent odds” that the GOP will take the Senate looks pretty solid). Go instead with Henry Olsen’s forecast up this morning at National Review Online. His election calls over the last few cycles rival Silver’s for accuracy. If Henry says the GOP will pick up a net seven Senate seats, you can take it to the bank. The curious thing are the races he thinks the GOP will lose: New Hampshire, North Carolina, and Kansas. I still think the GOP will win two out of three of these, so I’ll go with a nine-seat pick up. (Henry also calls some House and governors’ races.)

More important in this long piece (very much worth reading the whole thing) is what it means for 2016. Here Henry’s analysis is longer than his by-the-numbers look at Senate seats. There’s some good cautionary advice here that deserves careful thought. An excerpt:

Many observers on both sides of the aisle will be tempted to read wide-ranging meaning into Tuesday’s results. I think that is wrong. The most striking feature of Tuesday’s results will be how similar they are to the 2012 results, which in turn were similar to the 2008 returns, which in turns bear striking similarities to the 2004 and 2000 races. America is, and has been for almost 15 years, roughly divided between two camps fighting for the country’s soul. The balance between these camps will turn very slightly to the GOP after Tuesday, but this by no means presages some sort of establishment or tea-party wave that will inevitably carry the party back to the White House. 2016 victory will instead rely on the GOP breaking the mold that has made America a political house divided. The midterm results, carefully analyzed, give us clues as to what this renewed conservatism might look like. . .

Comprehensive tax reform — lower rates, primarily for the top bracket, paid for by broadening the base — is an establishment priority. However, the two GOP candidates who actually passed state versions of this policy, North Carolina house speaker Thom Tillis and Kansas governor Sam Brownback, will have lost their races in red states or at best won with much more difficulty than they should have had. In each case, limiting the growth (or in Kansas, causing a significant drop) in tax revenues meant that spending on popular programs like K–12 education had to be restrained or cut. Even in red states, voters like spending on universal programs that they believe work well for them.

This fact runs into the second problem with establishment economic policy, the priority accorded to reforming entitlements. Social Security and Medicare need to be reformed, but they are the epitome of the universal program that people think works for them. Potential establishment candidates like Ohio senator Rob Portman and former Florida governor Jeb Bush are already calling for tax and entitlement reform as the twin pillars of their growth strategy. This ignores what the successful governors who ran for reelection in swing states actually did.

To a person, these governors endorsed Medicaid expansion or, in the case of Scott Walker, increased the number of people receiving government-subsidized health insurance by using a combination of the state Medicaid program and the federal exchange. New Mexico governor Susanna Martinez, often thought of as a potential vice-presidential nominee, set up her own state exchange and expanded Medicaid without any objections. Michigan governor Rick Snyder signed a bill increasing the state’s minimum wage, and Scott Walker has been campaigning on a pledge to freeze tuition at Wisconsin universities, a pledge that will require increased state spending to keep the universities going. Governors Walker, Snyder, and Kasich all cut taxes, but they did so in the classic Reaganesque way: by lowering taxes on everyone through the use of increased tax credits or special exemptions in addition to rate cuts so that the benefits would be widely spread and not concentrated at the top. They all eschewed the “broaden the base/lower the rates” approach advocated by establishment types in Washington.

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