President Romney, VP Biden - It Could Happen
FORECASTS & TRENDS E-LETTER
IN THIS ISSUE:
1. Is a Romney-Biden Administration Possible?
2. Economy Sprouting Some Green Shoots
3. Don’t Forget About the “Fiscal Cliff”
4. What Happens if the Electoral College is Tied?
5. Examples of Ties in the Electoral College
6. Obama vs. Romney Down to the Wire
7. LATE BREAKING: Military Officers Endorse Romney
On this important Election Day, I wonder if my readers are fully aware of what would happen if the presidential election were to end up tonight in an Electoral College (EC) tie. While it’s a remote possibility, there is a scenario where the Obama/Romney battle could come down to a 269/269 tie. It takes a minimum of 270 EC votes to be declared the president.
In the case of a tie, the US House of Representatives, under authority of the 12th Amendment, decides who is the winner. With the House under Republican control, there’s no question that they would award the victory to Governor Romney.
But under the same authority, the Senate gets to pick the vice president. With the Senate controlled by the Democrats, it’s a no-brainer that they would pick Joe Biden. That’s how we could see a Romney-Biden administration. Wouldn’t that be crazy!? While this outcome is unlikely, it is not unprecedented, as I will discuss below on this Election Day.
Next, did you hear that 500 retired Generals and Admirals from the US Armed Forces ran a full-page ad in the Washington Times yesterday endorsing Governor Romney? I have links to the ad and the story behind it at the end today.
Before we get to all of that, let’s take a look at some of the recent economic numbers. For the first time in a good while, there is some encouraging news out there.
Economy Sprouting Some Green Shoots
Last Friday’s unemployment report for October had the headline rate rising from 7.8% to 7.9%, in line with expectations. However, the pleasant surprise was that the economy created 171,000 new jobs last month, well above the pre-report consensus of 125,000 and above the average monthly increase of 157,000 jobs this year. That’s the good news.
The bad news is that even though the economy has produced about 4.5 million new jobs since the bottom in February 2010, there are still nearly 4.3 million fewer private sector jobs than at the job market’s peak in January 2008. (Think about that, especially the next time you hear President Obama claim that he has created over five million jobs since he took office.)
And here’s another employment number that has received a lot of attention lately. Governor Romney has been claiming that there are 23 million Americans who are unemployed. Technically, that is not true. But here’s how Romney gets to the number 23 million. According to the Labor Department, there are 12.1 million people who are “officially unemployed.” Then there are another 2.5 million people who have stopped looking for work. Total 14.6 million.
But Romney goes a step further and adds in the 8.6 million people who are “under-employed,” those who do have jobs but are working part-time because they can’t find full-time jobs. If you add these folks, the total is actually 23.2 million. We can argue as to whether this is an accurate depiction of the jobs market, but it is true that 14.6 million Americans are out of work, and another 8.6 million wish they could find a full-time job.
Other data in the jobs report noted that hourly wages have risen only 1.6% over the last 12 months, not nearly enough to keep up with inflation. The employment-to-population ratio, a measure of how many people are working, 58.8% in October, means that millions of people have given up looking for work or have retired before they wanted to or should have.
In perhaps the most surprising report of late, the US Consumer Confidence Index rose to the highest level in more than four years in October. The Conference Board reported that its index of consumer attitudes rose to 72.2 in October from 68.4 in September. The internals of the report were also quite positive.
In another report last week, consumer spending in the US climbed more than forecast in September, a sign the biggest part of the economy was picking up as the quarter drew to a close. Household purchases, which account for about 70% of GDP, rose 0.8%, the most since February, after advancing 0.5% in August. Incomes climbed 0.4%, the most since March.
On the housing front there was also some very encouraging data. Pending home sales rose 15% over year-ago levels in September. Existing home sales (those actually closed) rose 11% in September over year-ago levels. Housing starts surged 15% in September compared to year-ago levels, the best level since 2008.
A separate report showed that US construction spending rose in September by the most in three months as stronger spending on homes made up for drops in business and government projects. Construction spending climbed 0.6% to an annual rate of $851.6 billion, the Commerce Department said on Thursday. That was in line with analysts’ forecasts.
Of course all of this good news must be kept in the context that the economy is still very weak overall. The advance estimate of 3Q GDP came in at only 2% in October. While that is certainly better than the 1.3% rate in the 2Q, it still means that the economy is struggling.
Don’t Forget About the “Fiscal Cliff”
While we have seen a fair amount of encouraging news over the last month, there is still the unsettled issue of the fiscal cliff that kicks in January 1st if something has not been done to reverse it. And there is precious little time to get something done after the election.
The CBO estimates that the combination of mandatory spending cuts (“sequestration”) and the elimination of the Bush tax cuts for everyone would result in an apprx. $600 billion hit to the economy. The CBO also warns that this could very well send the economy into a new recession next year if nothing material is done.
Everyone is worried that the current Congress is so seriously divided and partisan that a deal won’t get done in time. For most of the summer, there was some optimism that at the least Congress could extend the current spending and taxing levels for a month or two into next year so that the new Congress can deal with it.
But here’s the problem. President Obama does not want to see the deal extended into next year, when he may or may not still be in office. Making matters even worse, Obama threatened in September that he would veto ANY proposal that did not include the elimination of the Bush tax cuts for individuals making over $200,000 and families making over $250,000 a year. I believe he will do it.
What Happens if the Electoral College is Tied?
We all know that the Electoral College (EC) determines the outcome of presidential elections, not the popular vote. We all saw that in the 2000 presidential race when Al Gore won the popular vote but George W. Bush narrowly won the EC. Today it takes a minimum of 270 EC votes to clinch the presidency. But is it possible for the EC to wind up tied at 269-269? The answer is YES, but probably not in this election.
As you know, each state is awarded a specific number of Electoral College votes based on the size of their population. The number of EC votes per state changes periodically based on the Census. The current total of EC votes is 538.
The only way the Electoral College could end up tied is if a certain combination of specific states lined up for each candidate. Today, the odds of those two combinations of states lining up for Obama and Romney, and the EC ending in a tie, are unlikely, but it could happen. The latest state-by-state polls do not suggest a 269-269 tie, assuming most of the states vote as expected. But while the odds are low, that doesn’t mean it can’t happen in a close race like this one.
Here is a link to a very good analysis on how the Electoral College could end-up tied: CLICK HERE
The fact is, the Electoral College has ended in a tie in the past and it was up to the Congress to select the president and vice president. That happened three times, in 1800, 1824 and 1876. With this being Election Day, I thought it might be interesting to revisit those examples briefly, especially since all three occurred during bizarre circumstances.
1800: Thomas Jefferson vs. Aaron Burr
In the early days of the Republic, electors each cast not one, but two electoral votes for president. Keep this in mind as we go along. Adding to the confusion, there was no such thing as “Election Day” as we know it now. States voted whenever they felt like it over a period running from April to October. It was a long, drawn-out, and often confusing process.
The Republic was just 24 years old when Thomas Jefferson and Aaron Burr squared off against President John Adams and Charles Pinckney, all four seeking the presidency. Yet electors gave both Jefferson and Burr – who were on the same ticket – 73 electoral votes apiece. Adams got 65 and Pinckney 64.
So what do you do in the event of a tie? The Constitution said the House of Representatives would decide. Voting went on for days, with ballot after ballot in the house. Finally, after 36 ballots, the tie was broken and Thomas Jefferson was declared the president-elect. Aaron Burr was declared vice president.
1824: John Quincy Adams vs. Andrew Jackson
Jackson crushed John Quincy Adams, the son of our second president, John Adams, in both the popular vote (41% to 31%) and in the Electoral College (99 to 84). Yet Adams won. How could Jackson win both the popular vote and Electoral College yet not win the White House?
Unfortunately for “Old Hickory,” as Jackson was known, there were two other men on the presidential ballot in 1824 – William Crawford of Georgia, who received 41 electoral votes, and Henry Clay of Kentucky, who got 37. Because the four men received a combined 271 electoral votes, Jackson had a plurality but not a majority. He needed 136, but had only 99.
Once again, it was up to the House. Because the 12th amendment to the Constitution said that only the top three presidential candidates could be considered, Clay was out. He threw his support to Adams, and on Feb. 9, 1825, the House gave Adams 138 electoral votes. John Quincy Adams – loser of both the popular vote and, at first, the Electoral College – became the sixth president of the United States.
1876: Samuel Tilden vs. Rutherford Hayes
It happened again: A candidate lost after getting the most popular votes and the most electoral votes on Election Day. In addition to snagging 51% of the popular vote, New York Gov. Samuel Tilden (D) won 184 electoral votes – one short of winning the White House. His rival, Ohio Gov. Rutherford B. Hayes (R), won just 48% of the vote and 165 electoral votes. Here’s what happened. Twenty other electoral votes in several states were disputed and went uncounted. The states were Florida, Louisiana, South Carolina and Oregon.
In all three southern states, it looked like Tilden won the popular vote. But there were allegations of fraud and voter intimidation. Chaos ensued. In Florida, for example, the Republicans said they won by 922 votes; the Democrats said they won by 94 votes.
All four states submitted two sets of electoral vote counts each to Congress, all with different results. To untangle the mess, Congress set up an Electoral Commission with five members of the House, five members of the Senate, and five Supreme Court Justices.
By the way, there’s absolutely nothing in the Constitution saying this is how an election standoff was to be resolved. After much maneuvering, the Commission voted along party lines 8-7 to award the disputed electoral votes, and the presidency, to Hayes.
In comparison, Bush-Gore was a cakewalk...
Obama vs. Romney Down to the Wire
The election is so close and it remains to be seen if we’ll know the results this evening, or if it will be tomorrow. Obama held a comfortable lead all year until the first debate. That debate launched Romney into the lead. But in the last month or so, Obama has pulled back to neck-and-neck in the RealClearPolitics national average.
As of yesterday, RCP average had the president at 47.8. If he wins, it will be the first time in history that a president has been re-elected with an average below 50% in the national polls.
Going into today, Obama held narrow, within-the-margin-of-error leads in the closest battleground states of OH, CO, NV and NH. Romney was ahead in NC and FL. VA is historically a GOP state but voted for Obama in 2008, and at the moment it is tied.
In this election, several states not normally considered to be swing states could go either way. These include PA, IA and WI (and some would argue a couple of others). Obama holds a 2-4 point lead in all three of these states.
Even though Romney is behind in several swing states, his campaign is confident of victory because polls have continued to show that GOP voters are much more enthusiastic about voting than are the Democrats, and presumably will turn out in higher numbers.
Team Romney is also confident because Republicans make up a larger percent of the electorate than Democrats. Rasmussen released its final poll on “party affiliation” yesterday and the numbers are: Republican 39.1% to Democrat 33.3%. This is the highest reading for Republicans in history, according to Rasmussen.
Next, the Romney camp is confident because they know that many, if not most, of this year’s polls have been skewed toward the Democrats. That is, the pollsters have sampled more Democrats than Republicans in their surveys, which results in skewed results.
As you might expect, liberal commentators believe Obama will win by a narrow margin. Conservatives believe that Romney will prevail, of course. Several respected conservative commentators believe Romney will win with over 300 electoral votes. We’ll see.
Finally, I have had a lingering question all year about this election. With the polls so close, I wonder how many people there are that voted for Obama in 2008 but are voting for Romney this time… but are not telling anyone, including the pollsters. I have heard no one else raise this as a possible reason why the polls could be wrong.
Hopefully, we’ll know tonight.
LATE BREAKING: Military Officers Endorse Romney
A group of 500 retired Generals and Admirals from the US Armed Forces ran a full-page ad in the Washington Times yesterday endorsing Governor Romney: CLICK HERE
That, my friends, is the ultimate endorsement! Sure would have been nice if it came out sooner.
Here’s a link to the accompanying article explaining why the Generals and Admirals felt it so important to speak out: CLICK HERE
The WASHINGTON REDSKINS RULE: Finally, to end on a positive note, the Washington Redskins lost at home on Sunday to the Carolina Panthers. Why does that matter? If the Redskins win their last home game before the election, the incumbent president is almost always re-elected. If the Redskins lose their last home game before the election, the challenger has been elected in 19 of 20 times, going back to 1936. Check it out. Let’s hope it goes to 20 of 21!
Best Election Day regards,
Gary D. Halbert
Forecasts & Trends E-Letter is published by ProFutures, Inc. Gary D. Halbert is the president and CEO of ProFutures, Inc. and is the editor of this publication. Information contained herein is taken from sources believed to be reliable but cannot be guaranteed as to its accuracy. Opinions and recommendations herein generally reflect the judgement of Gary D. Halbert (or another named author) and may change at any time without written notice. Market opinions contained herein are intended as general observations and are not intended as specific investment advice. Readers are urged to check with their investment counselors before making any investment decisions. This electronic newsletter does not constitute an offer of sale of any securities. Gary D. Halbert, ProFutures, Inc., and its affiliated companies, its officers, directors and/or employees may or may not have investments in markets or programs mentioned herein. Past results are not necessarily indicative of future results. Reprinting for family or friends is allowed with proper credit. However, republishing (written or electronically) in its entirety or through the use of extensive quotes is prohibited without prior written consent.