By now, most every political analyst in town is telling their money manager clients that Obama is a lock to win on Tuesday.
Far less attention is being paid to the Senate. That will soon change, because the difference between a big win and a total landslide will be measured in Senate control.
60 is the magic number, sort of. We'll get to the "sort of," later, but for now, it's important to know that 60 votes allows the majority party to cut off debate in the Senate and move legislation forward.
Democrats haven't had a 60-vote margin in the Senate since 1977. It took a 67-vote margin to pass Medicare. Roosevelt had 69 when he passed Social Security.
The point here is that sweeping legislation (health care reform comes to mind) requires a large working majority. But it's not that simple.
Remember, even if Democrats get to 60, they are not likely to march in lock step. Sen. Ben Nelson of Nebraska voted for the Bush tax cuts. Will he now oppose them?
Sen. Joe Lieberman, an independent, and reportedly McCain's favorite pick for VP, may not caucus with Democrats at all.
Also, a 60-vote landslide would bring down many of the Senate moderates that Democrats usually reach out to on big pieces of legislation.
It's expected that Democrats will pick up 6 seats, bringing their total to 55. A great night brings them to 58. An astounding election night bumps that up to 60.
Whatever happens, the legislative action will continue to be in the Senate. That's where the legislative balance of power rests as the next president implements his agenda.
Comments
Presidential party affiliation is a rather simplistic approach to potential financial decisions millions will be making in the future. Might as well rely on the superbowl indicator. Personally I prefer to watch the hemline indicator.
I doubt a president and congress are able to materially affect the markets or economy within one term. Most results are seen later. Take the AMT for example. Any such study would also have to look at where in the economic cycle one is and the preceeding as well as the number of consecutive terms.
One thing I confidently predict. The next president we elect will claim credit for the coming economic recovery.
SteveG,
You're just wrong when you talk about NBR's assumptions.
I am sure there are other instances where we point out Democratic presidents are good for stocks, but I offer this one from Tom Gallagher when he was on our show on 9/8/04:
I am sure we've made this point in other stories.
However, I don't find this kind of analysis very helpful. As we should have learned by now, past history is a lousy indicator of future performance!
Reuters has an article, "History Shows Democratic Sweep Would Be Better For Stocks".
The money quote in that article is:
"In the seven periods when Democrats had complete control of U.S. political power, the S&P 500 .SPX rose 14.7 percent on average while in the eight times a Republican was president and Democrats controlled Congress, the benchmark index rose 7.4 percent, according to data compiled by research firm Bespoke Investment Group, in Harrison, N.Y."
This flies in the face of all NBR's assumptions, and almost everybody you interview. Why is that?
If you and your guests want to give us financial advice, shouldn't it be based on reality instead of fantasy. Can you report what is rather than what you want to believe?