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Opinion polls underestimated Donald Trump again

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FOR THE third presidential election in a row Donald Trump has stumped America’s pollsters. As results came in on election night it became clear that polls had again underestimated enthusiasm for Mr Trump in many states. In Iowa, days before the election a well-regarded poll by Ann Selzer had caused a stir by showing Kamala Harris ahead by three percentage points. In the end, Mr Trump won the state by 13 points.

Overall, the polling miss was far smaller. Polls accurately captured a close contest in the national popular vote and correctly forecast tight races in each of the battleground states. National polls erred by less than they did in 2020, and state polls improved on their dismal performances in 2020 and 2016. Yet this will be little comfort to pollsters who have been grappling with Mr Trump’s elusive supporters for years.

The Economist’s nationwide polling average found Kamala Harris leading by 1.5 percentage points, overestimating her advantage by around three points (many votes have yet to be counted), compared with an average error of 2.7 points in past cycles. State polling averages from FiveThirtyEight, a data-journalism outfit, had an average error of 3.0, smaller than the average of 4.2 points since 1976.

Chart: The Economist

But in contrast to 2016, when pollsters’ misses were concentrated in certain states, those in this cycle were nearly uniform across state and national polls. In the seven key states, polling averages underestimated Mr Trump’s margin by between 1.5 and 3.5 points (see chart). Pollsters may claim that their surveys captured the “story” of the election. But the awkward question remains: why did they underestimate Mr Trump for the third cycle in a row?

In past election cycles, pollsters have tweaked survey “weights” to make their samples of voters more representative. Although polls aim to sample the population randomly, in practice they often systematically miss certain groups. Weights are used to increase the influence of under-represented respondents. This has been especially true in recent years as response rates have plummeted.

After the 2016 election, when surveys systematically missed voters without college degrees and therefore underestimated support for Mr Trump, pollsters began accounting for respondents’ education levels. And after 2020, in an effort to ensure that Republican voters were represented, more pollsters began weighting their samples by respondents’ party registration and self-reported voting history. This caused the range of poll outcomes to narrow (weighting reduces the variance of survey results), with many pollsters finding similar results in key states and nationwide.

If there is a lesson from this year’s election, it could be that there is a limit to what weighting can solve. Although pollsters may artificially make a sample “representative” on the surface, if they do not address the root causes of differential response rates, they will not solve the underlying problem. They also introduce many subjective decisions, which can be worth almost eight points of margin in any given poll.

A pollster which gets those decisions right appears to be prophetic. But with limited transparency before the election, it is hard to know which set of assumptions each has made, and whether they are the correct ones. To their credit, the pollsters get together to conduct comprehensive post-election reviews. This year’s may be revealing. Still, without a breakthrough technology that can boost the representativeness of survey samples, weighting alone is unlikely to solve pollsters’ difficulty in getting a reliable read on what Trump voters are thinking.

Economics

BOI Reporting and the impact of the recent Federal Injunction

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The Corporate Transparency Act (CTA) is a legislative measure designed to enhance financial transparency

The Corporate Transparency Act (CTA) is a legislative measure designed to enhance financial transparency and mitigate risks such as money laundering, terrorist financing, and other illicit financial activities. The CTA aims to close loopholes and create a fairer business environment by requiring certain entities to disclose their beneficial ownership information. However, recent legal developments have temporarily impacted compliance requirements, bringing attention to the act’s ongoing litigation and implementation.

Federal Court Decision and Its Implications

On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a preliminary injunction in the case of Texas Top Cop Shop, Inc., et al. v. Garland, et al. (No. 4:24-cv-00478). This injunction temporarily halts the enforcement of the CTA, specifically its beneficial ownership reporting requirements. Additionally, the court order stays all deadlines for compliance.

As a result, reporting companies are currently not obligated to submit beneficial ownership information (BOI) reports to the Financial Crimes Enforcement Network (FinCEN). During the injunction, these entities are also shielded from liability for non-compliance with CTA mandates.

Despite this pause, FinCEN has clarified that companies may still voluntarily submit their BOI reports. This voluntary reporting option remains available for businesses that wish to align with the CTA’s transparency goals.

Overview of the Corporate Transparency Act

The CTA mandates that certain entities provide information about their beneficial owners—individuals who own or control a business. The act is intended to increase transparency, enhance national security, and reduce the anonymity that can facilitate financial crimes.

While the CTA has garnered support for its objectives, it has also faced legal challenges questioning its constitutionality. Courts in different jurisdictions have issued varying rulings, with some upholding the law and others granting temporary injunctions. For example, district courts in Virginia and Oregon have ruled in favor of the Department of the Treasury, asserting the CTA’s alignment with constitutional principles.

Compliance During the Injunction

Currently, the federal injunction exempts businesses from mandatory BOI filing requirements nationwide. This temporary halt will remain in place until further developments, such as a decision by an appellate court or a reversal of the injunction.

In response to the ruling, the Department of Justice, representing the Department of the Treasury, has filed an appeal. While the case proceeds through the legal system, FinCEN has confirmed its compliance with the court order.

Looking Ahead

The legal proceedings surrounding the CTA highlight the evolving nature of financial regulation. As courts continue to deliberate, businesses should monitor updates to remain informed about their obligations. By staying informed and prepared, businesses can effectively manage their compliance responsibilities and contribute to efforts that promote financial integrity and transparency.

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Economics

After a chaotic scramble, Congress strikes a budget deal

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Donald Trump is the most powerful Republican politician in a generation, but the president-elect is still no match for the most nihilistic members of his own party. The budget chaos that unfolded on Capitol Hill as the Christmas break approached is only a preview of the difficult realities Mr Trump will face when he starts to govern next month.

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Economics

Why Congress is so dysfunctional

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Budgetary chaos is a sign that governing will be harder than Donald Trump might assume

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