Political Models Update - September 24th

Sorry I haven't updated in a while - been busy! We'll only do the pulse model today. For a complete explanation, click here.

It's comeback time for the Dems since their convention:

You can see that this is the first really sustained and deep period of progress they have made in the polls. Romney winning is no longer a layup. He has his work cut out for him and it will likely be close. I say "likely" because we are still 100 years from election day, and polls swing enormously in just the last week, and they typically swing to the challenger. Jay Cost has an excellent piece on this here. (Cost is one of the better analysts out there, by the way.)

Anyway, the Republicans remain ahead, overall, since I started the metric in April:

You can see, though, that Democrats have successfully erased about two months of Republican gains, and they finally broke the consistent uptrend that had been in place.

It will be very interesting to see what happens next. The Dems' convention bounce is still in place, but fading. Can they maintain it. Stay tuned. Promise another update in a few days.

The GOP: A Thousand Ways to Die (well, two)

A few months back, I wrote about how a Romney victory could be the last presidential win for the GOP, ever. (See Mitt Romney, the Last Republican President?) The thesis was that we are at a crossroads, and that fixes, for say, things like entitlement reform, are politically difficult. Should Mitt turn out to be an incrementalist in the style of a George H.W. Bush, the Tea Party will split from the GOP. End of GOP.

Here's another scenario, perhaps one even more obvious: Romney loses. Conservatives and tea partiers in the GOP will say, that's it, we're done. We held our noses and nominated a moderate, and we couldn't even beat a president with the weakest hand in a century. Look for the rise of the "Constitutional Party."

Mind you, I hold no personal affection for the GOP. They have proved to feckless time and again. But splitting the GOP into two would give the left a clear field, and this would be a disaster felt for generations (and we certainly wouldn't recover in MY lifetime).

So, to avoid any of this, Mitt will need some serious backbone. Does he have it?

A few months ago, I would have said no. Then, the selection of Paul Ryan, to me, signaled that Mitt knows what needs to be done, and he's up for the fight. But lately, the campaign is suddenly not punching very hard, likely hoping a softer image will win over some stray independents. What is this business about liking "some parts" of Obamacare? Holy crap.

To Mitt, I say: no no no no no no NO! Not only does this bode poorly for how you will govern, but it makes it less likely you will have the chance. You must hammer the fraud in the oval office, and you must start adding specificity to your campaign.

If you treat voters like idiots, they will act like idiots. More precisely, they will vote like idiots.

Political Models Update

As Naked Dollar readers know, we have two proprietary political models that we follow. From here out we will update both each time. Interestingly, the models are saying two very different things right now. More on that in a moment.

Our first model, the Naked Dollar National Pulse Index, follows all polls for House and Senate seats as well as the presidency. It aggregates poll-over-poll changes, counting them for either the Republicans or Democrats, depending on the direction. The idea is to look for short and medium term trends in the national political news. (For a more complete understanding, click here.)

Here is the update:

An upward trend means Republicans are gaining ground, and vice verse. Since the presidential polls have changed very little, what you see above is a major trend favoring all the Republicans running for House and Senate seats. This is a story that not a single news outlet has reported. It means the gound is shifting under the presidential race, only people haven't realized it yet. (One caveat: this does not reflect any bounce for Democrats in the wake of their convention.)

Here's what the numbers look like on a non-cumulative basis:

Lines pointing up are good for Republicans, pointing down good for Democrats. You can observe longer and deeper upswings for Republicans.

Our other model is The Naked Dollar Electoral Model. This one focuses entirely on the presidential race and the only thing that really matters, the electoral college. This is the third presidential election cycle in which we have deployed this model, and it has been very accurate. The brief explanation is that we take the odds of each candidate winning a given state, as observed in the political futures markets on intrade.com, and we multiply the odds times the electoral votes available in that state, awarding a proportional amount to each candidate. (For a more complete understanding of this, click here.)

Here's what the electoral model looks like right now:

It has Obama winning a very close election, 288 votes to 250. The last election was 365 to 173.

As you know, I actually think Romney is going to win with surprising ease. I've made this case for a number of months, and Pulse Index is part of my reasoning. But I also believe in the "wisdom of crowds" approach inherent in the electoral model, all of which puts me in a position of some cognitive dissonance. These models, not to mention my own reasoning, are saying two different things.

So, what to believe? I will stick by my prediction of an easy Romney win. The prediction markets are useful, but the further away from an election they are, the less accurate they are. Sometimes, they get it wrong in August or September, but then nail it in November. This was the case in 2004, for instance:

The last reading taken in 2004 got the electoral count exactly right, but you can also see there were times when the model had Kerry winning.

What's my case for why the markets are mispriced right now? First, I don't think anyone is noticing the incredible trending that's going on in all the other races, a trend that will absolutely have an effect on the presidential race. Second, the presidential polling remains, essentially, a tie. However, the samples being used by most pollsters resemble the electorate in 2008, and there's no way that's going to look like the electorate in 2012. It's possible this is the sort of poll-geek minutia that participants in the Intrade markets don't analyze.

I predict that Intrade will start reflecting these realities over the next 2-3 weeks. Better yet, I'd bet on it.

Natural Rights and American Exceptionalism

The doctrine of "natural rights" may more be more critical than any other to the notion of American exceptionalism, and yet most Americans would be hard pressed to describe either concept.

The two concepts are inextricably linked, and the fact is, they are both under assault.

What does it mean, when we say we are "exceptional?" Barack Obama was once asked this. He said, sure, he thought America was exceptional but other countries like Greece probably thought they were exceptional too. 

He completely, utterly, misunderstands the concept. Exceptional doesn't mean that we think we're just awesome, it means that in the long course of human history, a history littered with the misery of state tyranny, we are a glorious exception. We were the first country to constitutionally limit the power of government to control our lives.  

Central to this is our embrace of natural rights. Natural rights are simply the acknowledgement that as human beings we are born with certain rights that cannot be taken away from us. But rights, by their very definition, must be conferred from somewhere. Our founders decreed that they are conferred by a higher power, God. The reason this is critically important is because it means they can't be taken away by anyone, i.e. the state. 

Our forefathers came here to escape the tyranny of states. They knew from experience that if rights are not conferred by God, all that's left is the state, and if states can confer rights, they can take them away just as easily.  Throughout history, states have been far more comfortable with the "taking away" part.

Were you taught any of this in school? I know I wasn't, and today our kids' curricula are far more concerned with sustainability or Native American repression than they are with constitutional history.

Which brings us to why natural rights are under assault. Leftist ideologies have always hated religion. In communist countries, it has always been banned outright. Why? Because otherwise citizens might get the idea that they had rights the state couldn't control. Such notions don't sit well with the commissars. The state can be the only religion.

It is no coincidence that the word God has appeared less and less in every Democrat platform, until this year disappearing altogether. It is simply another quiet step on the road to statism.

National Pulse Index Update - August 27th

To understand what this is, read this.

No big swings in the last week for either party:

But the big story is the trend chart:

Remember, since the presidential polls haven't changed much, this essentially represents poll-over-poll changes in all the other races (Senate and House). This has been a relentless trend since The Naked Dollar started posting Pulse Index numbers in April. One wonders how long this can go unnoticed. Because it is, unnoticed.

The obvious point is that Senate and House races are trending very well for Republicans. The less obvious point is that there's plenty of upside for Romney. Lots of people have been switching their intentions towards local candidates, but those same people seem reluctant to do the same with Romney. It is reasonable to speculate that the Romney hagiography over the next few days of the convention will convert many of these voters.

(Yet) Another Way of Looking at the Election

The Naked Dollar has speculated that there is no one in America who voted Republican four years ago who will be switching their vote to Obama this time. I've asked over 100 people if they know of such a person, and the answer is always no. If you DO know anyone like this, by all means leave a comment, and describe their motivation as best you can.

Of course, we all know lots of people going the other way. Obama's approval numbers are down substantially with every one of his major support constituencies.

Obama won by 6 1/2 points. This means that if 3 1/2 voters out of 100 change their vote, Romney wins. Hard to imagine that won't happen, but leave that for a moment.

For fun, let's assume no one changes their vote. Obama wins by 6 1/2, right?

No. This assumes the makeup of the electorate is static, and it never is. Simply, the demographics of every election are different. So, here's a statistical experiment: how will the election turn out if no one changes their vote, but the people who show up, as broken down by party affiliation, are the same as 2010, not 2008.

It took a while to find the data I needed, but eventually I dug it up. The results of our hypothetical election: Obama 51.7%, Romney 48.3%. Margin: 3.4%. Now were down to fewer than 2 people who need to switch their votes.

The problem for Obama is that lots of people are likely to switch their votes. Just look what happened to the independent vote in '10. Obama won independents 56-44, but in 2010 the outcome flipped to 44-56 (for Republicans). If there's a result close to this in 2012, Romney wins with relative ease. Current polling suggests that independents will go for Romney, and, further, Republicans are far more fired up than Dems to vote.

Note: this analysis is only of the popular vote, which, of course, is not what counts. Interestingly, it looks like Romney may have a slightly tougher time with the Electoral College than with the popular vote. It's not beyond imagination that he wins one and loses the other.

Why Can’t Mitt Say These Things?

A couple of weeks back, The Naked Dollar begged the Romney campaign to start getting specific. You don’t get a mandate to do big, important things unless you tell the country first, “elect me, and this is what I will do.”

Allow me the fantasy that someone was listening. The piece ran as an op-ed in the New York Post, so who knows? Congressman Ryan has brought wonderful clarity to the race, and he has specifically said you need talk about the big things before you get elected, not after. The bland campaign is no more.

Now I’m going to push my luck and try again. Ever want to scream at the television, “Come on, say it, just say it!” For conservatives, this has long been so, points you just couldn’t understand why your guy wasn’t pounding into the table.

So, here are my two, and both involve taxes. The first concerns Hauser’s Law. Ever hear of it? Didn’t think so. I doubt many politicians have, either. It is the most important fact almost no one knows. (Notice I said “fact,” because it is based on empirical evidence, not fuzzy theory of the sort the Nobel committee is so enamored.)

Hauser’s Law points out that ever since World War II, the average amount that the government collects as a percentage of GDP has averaged 19%, with incredibly little variation:

But here’s the thing, the top marginal rate has varied between 28% and 92%. In case that’s not sinking in, let me put it this way: no matter what the top rates are, tax revenues are about the same as a percentage of the economy. Incredible, if you think about it. High rates discourage economic activity, so they never produce the outcome desired by their political authors. Low rates have the opposite effect.

So, logic would dictate lowering rates until Hauser’s Law no longer held. This would maximize both government revenue and personal liberty, which should please both liberals and conservatives alike, except that if you feed a liberal a Chardonnay or two they will usually tell you the tax code isn’t just to raise money, it’s an instrument of  “social justice.” They need to be called out on that.

My other point concerns capital gains. They are taxed at 15%. This rate is lower than most income tax rates, but that’s for very good reasons. First, this is investment, or “risk,” capital. We want people to risk money on things because this is where jobs come from. Stuffing your cash in a mattress creates no jobs. Bet on a start-up, and your investment probably goes right to someone’s salary. My own start-up, I’m proud to say, has created 40 jobs, but we had to do a hell of a job convincing people it was worth the risk. If their investment in us was being taxed at a much higher rate, it might have been impossible.

Second, money used to make investments was already taxed when the investor first made it as income. It didn’t appear out of nowhere, right? Mitt Romney has been paying capital gains rates because he hasn’t had a job in a while, but all that money was already taxed at higher rates.

These are simple things. Why are they so hard to say?

Go Sustainables!

New York City has a high school named the Rockaway HS for Environmental Sustainability. Have you ever heard of such a dumb ass thing?

And since when do high schools take a "position?" Is the "High School for Barack Obama" next? what if I'm not for sustainability? What if I'm pro-trash? Will I be discriminated against?

It looks, though, like the teachers are even less motivated than the students, because they don't seem to actually be showing up:

http://www.nypost.com/p/news/local/queens/truant_teachers_61nIyo8YjCo1Tdq8zNkEwN

National Pulse Index Update - August 16

To understand what this is, click here.

Not a lot of drama, poll-wise, over the last week, with a slightly favorable showing for Republicans:

 
The basic story, though, is intact, which is that we have an unbroken trend-line since the beginning favoring Republican candidates:

(Note that very little of these data come from after the Ryan announcement.)


Here's what's interesting, though. As you know, this metric looks at all polls, whether for president or the 3rd District in Ohio. The presidential polls really haven't moved very much, so what's driving the upward trend for Republicans is all the other races. This disparity can't continue; either the GOP house and Senate numbers will snap back, or Obama's numbers will erode.

What is likely happening is that as GOP House and Senate members have been getting their message out and it's selling. Perhaps people were more entrenched in their presidential views, so those polls remain stickier. But should these trends persist, it is likely that they will eventually be reflected in the presidential race numbers. Obama is skating on thin ice, as it were.

Check in next week to see if there's a "Ryan effect."

Slightly Better Week for Democrats, but...

To understand what this is, click here.

I fully expected to see a huge swing back to Democrats over the last week, what, with Obama seemingly bubbling up in most polls. the data say otherwise, though, because while there was a nice move by Dems, it was very brief, and by yesterday the momentum had shifted slightly back to Republicans:

Further, you can see from the following graph, that the basic trend is unbroken:

Again, this is cumulative, poll-over-poll changes, nationwide. Up is good for Republicans, down good for Democrats. If you were a Wall Street trader, and this was a stock, you would be "long" Republican. This remarkably consistent trend is something that seems completely unnoticed, or at a minimum, unreported.

And remember, despite the fact that the Naked Dollar believes it is vital to our nation's future to remove Democrats from power, this model is impartial. It's just a new way of looking at polling trends.