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What are the odds of an upset in Texas or Florida?

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“I’VE BEEN saying this for months now and a lot of people haven’t listened, but now they are: the stars are aligning in both Texas and Florida,” says Jaime Harrison, the chair of the Democratic National Committee. Aboard a swanky campaign bus in Jacksonville, Florida’s largest city, Mr Harrison’s tone shifts to distress as he explains that his party needs “multiple pathways to get the Senate majority”. In the final weeks of the campaign the map has become more daunting for Democrats. To their dismay, holding the upper chamber may now depend on flipping seats in America’s two biggest Republican-controlled states, where Donald Trump is expected to win comfortably.

New polls have Democrats like Mr Harrison feeling optimistic. Last week one in Texas showed Colin Allred, a linebacker-turned-congressman, in a dead heat with Ted Cruz, the Republican incumbent. In Florida Debbie Mucarsel-Powell, an Ecuadorean immigrant and one-term congresswoman, is trailing behind Rick Scott by as few as two or three points in her best polls. But The Economist’s forecast model, which accounts for other factors like candidate experience and the state’s voting history, shows a less rosy picture. By our reckoning, in each race Democrats have only a one-in-five chance of victory.

The Democratic Party is nonetheless hanging its hopes on these two races in part because the Republican incumbents are both deeply disliked. Mr Cruz, who has represented Texas since 2013, is a hardliner known for picking fights and not being a team player. “If you killed Ted Cruz on the floor of the Senate, and the trial was in the Senate, nobody would convict you,” Lindsey Graham, his colleague from South Carolina, teased in 2016. In 2021 Mr Cruz’s approval rating in Texas dropped when he jetted off to Cancún as his constituents suffered through a winter storm that left millions without power. On policy, his indelible support for Texas’s near-total abortion ban, one of America’s harshest, has done nothing to endear him to the plurality of Texans who support fewer restrictions.

Unpopularity contests

Mr Scott, in Florida, may be the rare politician with even fewer friends than Mr Cruz. He entered politics after the hospital chain he founded and ran had to pay out in America’s biggest Medicare fraud. After serving two terms as governor he won a Senate race in 2018 and was put in charge of the party’s campaign arm for the 2022 midterms. He presented a hard-right plan to remake the Republican Party, which included a proposal to sunset entitlement programmes that went over as poorly nationally as it did in Florida, a state where one in five residents is a pensioner. When Republicans did badly, they blamed him.

Mr Scott responded by challenging Mitch McConnell for the job of Senate majority leader. “Now I’m seeking to become the least popular man in Washington and I’m happy to report I’m making great progress,” he quipped in a speech at the Conservative Political Action Conference last year. At home his inability to curb Florida’s property-insurance crisis throughout his political career has left many locals reeling as hurricanes batter the coast and bankrupt families.

Democrats wanted both Republicans to have to confront these liabilities. Yet it was not until late September that the Democratic Senatorial Campaign Committee, responsible for getting Democrats elected, went on the offensive in Texas and Florida with a pair of multimillion-dollar ad-buys. Ms Mucarsel-Powell, Mr Scott’s opponent who says her initials stand for “Don’t Mess with my People”, reckons the money was too little, too late. In other battleground states, “you’re seeing investment and of course then you see shifts,” she says, but without that kind of cashflow to help the campaign talk to voters “nothing is going to happen.” Mr Scott, who in the past has written himself big cheques when he senses his rival in striking distance, has not spent even half of what he did in 2018, when he won by less than one point. Democrats hope that Florida’s ballot initiatives to legalise marijuana and codify abortion rights will give Ms Mucarsel-Powell a last-minute boost.

Plateauing poll numbers in Florida have national Democrats turning to Texas, where there seems to be better mojo after Mr Allred faced off with Mr Cruz in a debate two weeks ago. On October 25th Kamala Harris appeared at a rally with Mr Allred in Houston. It was the first time in decades that a Democratic presidential candidate has visited the state so close to election day. But on such conservative terrain any down-ballot Democrat is bound to struggle in a presidential cycle. This year “a vote against Ted Cruz is a vote against Donald Trump,” says Jason Sabo, a Democratic lobbyist in Austin.

Those paying attention to the campaigns could be forgiven for feeling a sense of déjà vu. Democrats have perennially promised that an increasingly diverse electorate would flip both states in their favour, only to suffer repeated losses. This time around some admit that they are playing the long game. In Texas a band of Democratic leaders launched the Agave PAC to build party infrastructure and “move past the boom-and-bust cycle of excitement”. And in Florida Nikki Fried, the state’s new Democratic Party chair, talks soberly about this year’s prospects. For the first time since the state flipped Republican the party is running state legislative candidates in every district, knowing they will lose in races big and small. “We’ve got to start somewhere,” she says.

Economics

Donald Trump sacks America’s top military brass

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THE FIRST shot against America’s senior military leaders was fired within hours of Donald Trump’s inauguration on January 20th: General Mark Milley’s portrait was removed from the wall on the E-ring, where it had hung with paintings of other former chairmen of the joint chiefs of staff. A day later the commandant of the coast guard, Admiral Linda Fagan, was thrown overboard. On February 21st it was the most senior serving officer, General Charles “CQ” Brown, a former F-16 pilot, who was ejected from the Pentagon. At least he was spared a Trumpian farewell insult. “He is a fine gentleman and an outstanding leader,” Mr Trump declared.

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Checks and Balance newsletter: The journalist’s dilemma of covering Trump

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Checks and Balance newsletter: The journalist’s dilemma of covering Trump

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Germany’s election will usher in new leadership — but might not change its economy

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Production at the VW plant in Emden.

Sina Schuldt | Picture Alliance | Getty Images

The struggling German economy has been a major talking point among critics of Chancellor Olaf Scholz’ government during the latest election campaign — but analysts warn a new leadership might not turn these tides.

As voters prepare to head to the polls, it is now all but certain that Germany will soon have a new chancellor. The Christian Democratic Union’s Friedrich Merz is the firm favorite.

Merz has not shied away from blasting Scholz’s economic policies and from linking them to the lackluster state of Europe’s largest economy. He argues that a government under his leadership would give the economy the boost it needs.

Experts speaking to CNBC were less sure.

“There is a high risk that Germany will get a refurbished economic model after the elections, but not a brand new model that makes the competition jealous,” Carsten Brzeski, global head of macro at ING, told CNBC.

The CDU/CSU economic agenda

The CDU, which on a federal level ties up with regional sister party the Christian Social Union, is running on a “typical economic conservative program,” Brzeski said.

It includes income and corporate tax cuts, fewer subsidies and less bureaucracy, changes to social benefits, deregulation, support for innovation, start-ups and artificial intelligence and boosting investment among other policies, according to CDU/CSU campaigners.

“The weak parts of the positions are that the CDU/CSU is not very precise on how it wants to increase investments in infrastructure, digitalization and education. The intention is there, but the details are not,” Brzeski said, noting that the union appears to be aiming to revive Germany’s economic model without fully overhauling it.

“It is still a reform program which pretends that change can happen without pain,” he said.

Geraldine Dany-Knedlik, head of forecasting at research institute DIW Berlin, noted that the CDU is also looking to reach gross domestic product growth of around 2% again through its fiscal and economic program called “Agenda 2030.”

But reaching such levels of economic expansion in Germany “seems unrealistic,” not just temporarily, but also in the long run, she told CNBC.

Germany’s GDP declined in both 2023 and 2024. Recent quarterly growth readings have also been teetering on the verge of a technical recession, which has so far been narrowly avoided. The German economy shrank by 0.2% in the fourth quarter, compared with the previous three-month stretch, according to the latest reading.

Europe’s largest economy faces pressure in key industries like the auto sector, issues with infrastructure like the country’s rail network and a housebuilding crisis.

Dany-Knedlik also flagged the so-called debt brake, a long-standing fiscal rule that is enshrined in Germany’s constitution, which limits the size of the structural budget deficit and how much debt the government can take on.

Whether or not the clause should be overhauled has been a big part of the fiscal debate ahead of the election. While the CDU ideally does not want to change the debt brake, Merz has said that he may be open to some reform.

“To increase growth prospects substantially without increasing debt also seems rather unlikely,” DIW’s Dany-Knedlik said, adding that, if public investments were to rise within the limits of the debt brake, significant tax increases would be unavoidable.

“Taking into account that a 2 Percent growth target is to be reached within a 4 year legislation period, the Agenda 2030 in combination with conservatives attitude towards the debt break to me reads more of a wish list than a straight forward economic growth program,” she said.

Change in German government will deliver economic success, says CEO of German employers association

Franziska Palmas, senior Europe economist at Capital Economics, sees some benefits to the plans of the CDU-CSU union, saying they would likely “be positive” for the economy, but warning that the resulting boost would be small.

“Tax cuts would support consumer spending and private investment, but weak sentiment means consumers may save a significant share of their additional after-tax income and firms may be reluctant to invest,” she told CNBC.  

Palmas nevertheless pointed out that not everyone would come away a winner from the new policies. Income tax cuts would benefit middle- and higher-income households more than those with a lower income, who would also be affected by potential reductions of social benefits.

Coalition talks ahead

Following the Sunday election, the CDU/CSU will almost certainly be left to find a coalition partner to form a majority government, with the Social Democratic Party or the Green party emerging as the likeliest candidates.

The parties will need to broker a coalition agreement outlining their joint goals, including on the economy — which could prove to be a difficult undertaking, Capital Economics’ Palmas said.

“The CDU and the SPD and Greens have significantly different economic policy positions,” she said, pointing to discrepancies over taxes and regulation. While the CDU/CSU want to reduce both items, the SPD and Greens seek to raise taxes and oppose deregulation in at least some areas, Palmas explained.

The group is nevertheless likely to hold the power in any potential negotiations as it will likely have their choice between partnering with the SPD or Greens.

“Accordingly, we suspect that the coalition agreement will include most of the CDU’s main economic proposals,” she said.

Germany is 'lacking ambition,' investor says

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