Thought Leadership Series: “Perspectives on the Mid-Term Election and What the Outcome Could Mean for the Affluent Investor” with John Zogby

October 14th, 2014

With just a few weeks to go before the 2014 mid-term elections, clients and friends of First Long Island Investors gathered at the Garden City Hotel, on October 14, 2014, to hear John Zogby, political analyst and pollster, provide his of-the-minute perspective on the election and how it could impact the affluent investor and the landscape in Washington.

Robert D. Rosenthal and John Zogby

Robert D. Rosenthal, Chairman & CEO of First Long Island Investors LLC (left), and John Zogby, Political Analyst and Pollster (right).

John Zogby

John Zogby shares his perspective on how Millennials will impact on this election.

John Zogby started by cautioning the crowd that many of the elections may be decided by as little as 1-3 points and that factors are changing daily. Here are some of his insights, as of October 14, 2014.

The U.S. Senate

The US Senate majority is currently held by the Democrats (and independents caucusing with the Democrats) with 55 seats to 45 seats held by the Republicans. In order for Republicans to take control of the Senate, they need to gain a net of 6 seats. If elections were held today (10/14), the GOP would win the 6 seats and take control of the Senate with the following results:

  • Assumed GOP wins are: West Virginia, South Dakota, and Montana
  • Competitive seats that the GOP could win include: North Carolina, Arkansas, Louisiana, Colorado, Alaska, and Iowa
  • Competitive seats the GOP could lose include: Kentucky, Georgia, and Kansas

Based on the number of competitive races the GOP likely must win more than 6 races to win the Senate because of the likelihood of losing at least 1 current seat.

GOP Advantages

  • Obama: The Anti-Obama message is serving as a unifying factor. The GOP is trying to use Obama’s low approval rating to their advantage. Zogby did remind the group that while low, President Obama’s approval rating is not historically low for a 2nd term president.
  • Independents are leaning towards the GOP:
    • ½ of Independents describe themselves as “conservative”
    • ½ of Independents are not sure who they will vote for and attack ads may be effective in keeping them from going to the polls. Low voter turnout helps the GOP
  • GOP recruited a better level of candidate than in 2010: The 2014 class of Republicans are young and accomplished which should bode well for the GOP both in this race and in the future.

GOP Disadvantages

  • Brand: The GOP brand has been badly damaged and while it is recovering, it is not yet fully restored. They are seen as the “Party of Old, White, Men” and voting Republican is “not on the radar” for the increasingly important 18 – 34 year old demographic.
  • Latino Voters: Latino voters are a growing demographic within the voter base. Latinos made up 4% of voters in 1996, 10% of voters in 2012, and the trajectory is continuing. President Obama’s approval rating among Latino voters is 74%.
  • “What’s the alternative?” It is not enough to campaign on the fact that you are not Obama. Voters are consistently asking all candidates, including the GOP, “what have you done for me lately and what are you going to do next?”
  • Tea Party: The Tea Party is driving the GOP message and that message does not resonate with Independents. They are putting the party in a Catch 22 Position:
    • They came into Congress with the attitude of no compromise
    • Their failure to compromise means they cannot accomplish anything
    • It is difficult to be reelected without accomplishments
    • Yet, if they had accomplishments then they compromised on principles

Democrat Advantages

  • The Economy: The United States has come out of a recession, the stock market is doing well, the unemployment rate has gone from 10.1% to 5.9% and job increases are at a better pace (approx. 225 – 250K per month).
  • Obamacare: There are more people insured than ever and there is a possibility that we will see a higher turnout of voters who are now insured.
  • Barack Obama: President Obama is the only one who has shown he can energize young, Latino, and African American voters. Looking back to 2012, young women voted for Obama and against the GOP. As the registration deadline nears, Obama has used media outlet Republicans “…have never heard of.” (i.e., Twitter, Facebook, and other social avenues.)

Mr. Zogby rounded out his presentation with a discussion of key demographic trends that will pay a role in this and future elections.

  • The National vote is trending non-white:
    • 81% of Baby-boomers were white
    • 60% of Millennials are white
    • 48% of the next generation is white
  • Millennial generation (those born in ’79 – ’96) is almost as big as Baby-boomers:
    • Millennials are 1/3 of workforce
    • Will be 1/3 of the electorate in 2020

Question and Answer Session

How will the low approval ratings of the President and Congress affect the Elections?

The President’s current approval rating is 42-43%, which is better than Nixon, Bush, Truman, and Carter and not near record lows. History has shown that the base can still turn out with these ratings.

Congress currently has an approval rating of 13% and as low as that is, the GOP receives even lower ratings. 37% of people trust the President to tell the truth; 17% of people trust Congress to tell the truth; and 37% don’t trust either. Generally speaking, a low turnout favors the GOP.

Is the younger generation aware of the global issues?

Young people are aware of what is going on globally. They were and are growing up in a “non-superpower world” where they have seen the limits of power. They see the US as an “empire in decline” and have lost faith in government changing things for the better.

This generation has a different perspective and comes at situations from a very different point of view than previous generations. They are users of global petition campaigns, crowd-sourced ideas and crowd-funded initiatives. They have a strong desire to work in teams and to be involved, but have no strong desire to vote or run for office. There are now “Libertarians” and “Communitarians”, no more “Liberals and Conservatives”. They are believers that the government should be efficient and not create as much debt.

How does the electorate tell Washington that the Middle Class is being squeezed? Are both parties becoming more extreme?

The message of the Middle Class has been delivered and acknowledged by politicians in private. The reality is that it is hard for politicians to empathize with the Middle Class because they are coddled in Washington. Politicians who “buck the political trend” are hard to deal with in Congress so it is difficult for them to break out.

Zogby went on to say that it would have been helpful if Obama had run something in his life prior to becoming president. However it is difficult when the strategy of the other-side is to “destroy” you.

Serious issues must be dealt with prior to 2016 election. Will there be cooperation?

Zogby shared that he does not feel the parties will come together. He does not see a healthy relationship between Republicans and Democrats today, and went so far as to say that Mitch McConnell (US Senate Republican Leader) and President Obama “hate each other”. Boehner (Speaker of the House) and Obama have a better relationship – they want to get something done. Much of their ability to do so depends on how the midterm elections go. Zogby expects that the President will announce an aggressive agenda at the State of the Union Address which will be all about his legacy and nothing more. There is worry of another government shutdown.

How does the situation of Illegal Immigrants with children in the United States impact the election?

In the years of Pataki and Giuliani and George H. W. Bush the relationship between the GOP and the Latin Community had been revived – George W. Bush carried 40% of Latino vote in 2004 and in 2006 Republicans carried 20% of the Latino vote. The GOP never recovered with the Latino Community and are in an “anti-Latino” direction. Anti-illegal is seen as anti-immigration which is seen as anti-Latino.

How will Ebola Crisis affect elections?

The current Ebola crisis does not play to the Democrats’ favor. It isn’t possible to say how it will effect turnout – Ebola may turn people off from voting but may not turn them on enough to vote.

What is the impact of events like Super Storm Sandy on elections?

The President looked presidential after Sandy. The images of him and Chris Christie walking through Atlantic City was a “powerful image” that resonated with many. That election was extremely close just prior to Election Day and ultimately Obama won 11 of 12 battleground states. Going into the election, many were not sure about the young voters and ultimately young women came out strong for Obama because the GOP “scared them” on social issues.

Likelihood of a Clinton vs. Bush 2016 Election?

Zogby explained that there is a dynamic in the US which naturally opposes dynasties. He does not see traction for Jeb Bush nor does he believe Hillary will get the nomination. Zogby’s feeling is that Hillary’s biggest problem is running against herself and that America likes Bill Clinton except when he is campaigning for Hillary. He opined that John Kerry may be a surprise for the nomination.

For the GOP, he feels Mitt Romney is still a likely candidate. He has a few things going in his favor – he is still the next republican in line, wants to run, possesses the “I told you so” factor, and does not currently have much competition.