Monday, October 31, 2016

The Haunting Specter of Divided Government

Divided Government Headless Horseman
It happens every election year. As the Halloween electoral landscape comes into focus, Republicans and Democrats stake out their positions on the prospect for a divided federal government. The usual partisan hypocrisy abides. Partisans who see an opportunity for Unified One Party Rule will decry the evils of divided government. Partisans who fear their party being shut out of power will extol the virtues of checks, balances, and the restraint on power found in a politically divided government. Neither party exhibits any shame when flip-flopping their feelings about divided government from one cycle to the next.

This year there is less partisan clarity about the prospects of either party regaining One Party Rule than is usually apparent this late in the election cycle. Some of this is fueled by delusions of grandeur on the part of Democrats indulging in Nancy Pelosi's bi-annual fantasy of retaking the House majority (see 2014, 2012 & 2010 prognostications of the Once And Never Again Speaker).

The Dividist staked out a position on the 2016 election in a pre-election post shortly before the 2014 midterms ...
"In 2016 Democrats will enjoy many of the structural advantages that favor Republicans in 2014. There is a high probability that a Republican majority in the Senate will not last beyond the 2016 election. If we go into that election with Republicans in majority control of both legislative branches, it makes the divided government vote easy to determine. There will be a greater risk of Single Party Republican Rule, so the 2016 Dividist vote will be for the Democratic candidate for president. A strong Republican presidential candidate could have the coattails to retain the Senate and usher in another era of One Party Republican rule. Even with a strong Democratic presidential candidate in 2016, the Republicans will be likely to retain the House and we get divided government for another 2 to 4 years. QED ... And yes, under those circumstances, the Dividist will gladly support and vote for Hillary Clinton for her third term as President."
 ... and never looked back. Two years later, nothing significant has changed. The Republican House majority is a lock, the Senate is a coin flip, and Hillary Clinton is poised to begin her 3rd term as President of the United States.

Under these circumstances, we would normally expect Democrats to be waxing eloquently on the virtues of divided government. We would expect Republicans to be fear-mongering the prospect of gridlocked government unable to deal with the dire threats posed to the American way of life by the Democratic Party. To some extent, this is exactly what is happening. But, like in so many aspects of this election cycle, Donald Trump changes the game. So instead, we now see principled Republicans and libertarians arguing against voting for Trump, preferring a vote for a Clinton presidency shackled by a divided government.  And we see some deluded Democrats arguing for an implausible return to One Party Democratic Rule hoping that Trump blowback will nationalize the House elections in their favor. In this case, it is the principled Republicans who are grounded in electoral reality.

Sunday, October 30, 2016

Investors Love Divided Government
- Algo Enhanced 2016 Edition -

UPDATED: 02-Nov-2016 
High Frequency Traders Love Divided Government
 Algos For Hillary 
So this happened. Last week the stock market was percolating along with moderate gains on the back of positive economic news and earnings results. Then, on Friday (28-Oct-2016) FBI director James Comey released a letter to Congress indicating FBI investigators found additional Clinton private server e-mails. The new e-mails may or may not have any relevance to his prior testimony but, in an abundance of caution, Comey informed Congress. The DJ Industrial average immediately dropped almost 200 points. 
Stocks love divided government

This NPR story was typical of business media coverage: "The Stock Market Stumbles After Friday's Clinton Email News."
"Around the time that the email news broke, the Dow Jones industrial average plummeted from a peak of 18,255 to a trough of 18,097. That's not quite 1 percent, but the sharp drop, albeit small, is a sign of a broader storyline that has persisted through this election: that investors are scared of a Trump presidency."
Partisan bluster aside, after it became apparent that breathless mainstream and social media reporting was less than meets the eye or that can be supported from the actual content of Comey's letter, the market recovered most of the midday losses.
CNBC Kelly Evans - Markets move on Clinton Probe
 CNBC "Closing Bell" wraps it up:

Tuesday, October 04, 2016

Stunning Gallup Poll Finds Voter Preference For Divided Government Slipping vs. Council Of Elrond

Gallup runs this poll every election cycle and every time the Dividist must explain why there is far less than meets the eye in any conclusion based on this poll. The headline conclusion in the 2016 edition of this Gallup Poll is "In U.S., Preference for Divided Government Lowest in 15 Years":
  • 20% of Americans say they want divided government
  • Fewer Republicans want divided government now than four years ago
  • Fewer Democrats want the same party to control Congress than four years ago
WASHINGTON, D.C. -- One in five Americans believe it is best for the president to be from one political party and for Congress to be controlled by another, the lowest level of public support for divided government in Gallup's 15-year trend. The remainder are evenly divided between those who favor one party controlling both the presidency and Congress (36%) and those saying it makes no difference how political power is allocated (36%)."
I am sympathetic to their plight. Gallup's clear intent is to use the same poll question year after year in order to divine trends over many election cycles. To do that, they must ask the identical question every time. The problem is that the question they've asked every year since 2002 is deeply flawed as it has absolutely nothing to do with the actual choice American voters make when they go to the polls.