Thought of the Week:
I know it’s a little more than 9 months out, but where are you on your New Year’s resolutions? Did you already meet them, stick with them; do you even remember them? To be honest, I started mine—to get in better shape—late; made some really good progress early; but have since plateaued. Sure, I’ve still got about three months left, and who’s really counting, right? Maybe I was still a bit groggy from the cold medicine I took the night before to help me sleep, but when I stepped on the scale this morning and looked down, the notion of how my New Year’s resolution is like our Electoral College system came together in my mind. We all know today that it’s the Electoral College, not the national popular vote, that determines the outcome of a presidential election. And while a New Year’s resolution is a promise you make to yourself, electors promise to cast their vote for the candidate who wins the popular vote in their state (or in two cases—Maine and Nebraska—district). While each of us have every intention of meeting our resolutions and electors have every intention of meeting their voting obligations, just as there is no hard requirement to meet one’s resolution, Article II, Section 1 of the Constitution specifies no details of how electors are to be certified and counted. In fact, the possibility exists that a so-called “faithless” elector could defy the will of the people and cast their vote for a candidate who did not win the most votes in their state. Although never changing the outcome of a presidential contest so far, this has happened 90 times in our nation’s history, most recently in 2016, which saw a total of seven faithless electors. This year, with the nation split evenly, there is a greater than zero chance that a single faithless elector could throw the outcome of the election into complete disarray. Consider that the Cook Political Report currently shows 226 electoral votes in the solid to lean Democrat column, 219 electoral votes in the solid to lean Republican column, and 93 electoral votes across seven swing states in the “toss-up” category (270 electoral votes are required to win the presidency). If former president Trump were to win Arizona (11), Georgia (16), Nevada (6), and North Carolina (16), this would leave him two votes shy at 268 electoral votes. At the same time, if Vice President Harris carried the other swing states—Michigan (15), Pennsylvania (19), and Wisconsin (10)—this would give her exactly 270 electoral votes, the bare minimum to win the election. But what would happen if an elector from a state Harris carried decided that they could not in good conscience vote for the vice president and cast their ballot for someone else, leaving Harris one vote short of the needed majority? Although each state has its own law to deal with faithless electors, in 19 states, including Pennsylvania and 10 other states President Biden won in 2020, that vote would count, and the election would be thrown to the U.S. House of Representatives to sort out. While so many of our resolutions are made with a New Year’s Day hangover, imagine the national hangover that would occur if on the first Monday after the second Wednesday of December one or more faithless electors acted to upend the results of the election.
Thought Leadership from our Consultants, Think Tanks, and Trade Associations
Eurasia Group Calls Vance the Narrow Winner of a Cordial Debate that Will Not Matter for the Election…The two vice-presidential candidates, Republican Senator Vance and Democratic Minnesota Governor Walz, met for what will likely be the last debate of this presidential cycle. The debate was characterized by a remarkable degree of cordiality between the two candidates, in contrast to the acrimonious debate between Vice President Harris and former president Trump. Polling following the debate indicated that both candidates’ favorability ratings increased, but the vast majority of debate watchers said the debate will have no impact on their vote choice. Vance arguably had the better night. He came off as articulate and well-versed on policy. He avoided making any damaging soundbites that would harm the Trump campaign and succeeded in making a populist GOP policy agenda sound palatable to moderate voters. He effectively handled issues of political weakness like abortion, and he made an effective populist appeal with an attack on experts cited by the Democratic nominee. Walz seemed nervous early in the debate and had a serious fumble on a question regarding the timeline of his travels in China in the 1980s. However, he seemed more comfortable as the debate went on and did nothing to alienate swingable voters. The outcome of the debate is very unlikely to shift the race in either candidate’s direction. VP debates have historically mattered very little to the eventual outcome, and in the current election cycle, Trump and Harris—not their running mates—are the dominant personalities. The debate will likely be largely forgotten over the remainder of the campaign as it is subsumed by future news cycles.
… but sets him up for a bright future in the GOP. Vance’s strong performance will be a major boost to his prospects in a post-Trump GOP, should Trump lose in November. Carrying with him the imprimatur of Trump himself, Vance is almost uniquely positioned in the party to craft Trumpism into a coherent ideological framework. His debate performance indicates that he can do so in a style at least facially appealing to moderate voters. A Vance-led GOP would be populist, anti-corporate, and oriented toward what it sees as the interests of the working class. It would seek to make substantial inroads with Black and Hispanic voters that Republicans see as gettable based on their economic status and cultural values. While firmly conservative in orientation—particularly on cultural and social issues and on immigration—it would borrow some key aspects of left-wing thinking. Vance has praised FTC chair and antitrust czar Khan, a darling of the progressive left, and supports a significantly expanded Child Tax Credit. If Vance and ideologically aligned Republicans—such as Senators Hawley (R-MO), Lee (R-UT), and Rubio (R-FL)—occupy the upper hand in a post-Trump GOP, it would likely complete the long, tortured dissolution of the Reaganite alliance between the GOP and corporate America. This would amount to a major realignment in American politics that leaves corporations somewhat in the lurch, with today’s Democratic Party also not a natural fit. If Trump wins in November, Vance as sitting vice president would be the early favorite for the party’s presidential nomination in 2028.
National Association of Manufacturers (NAM) Spotlights First-Ever U.S. Nuclear Reactor Restart. According to NAM, the U.S. will restart a shuttered nuclear energy facility for the first time ever, thanks to a federal loan announced this week. What’s going on: The Energy Department announced a $1.52 billion loan guarantee to Holtec International to return to service the plant that closed two years ago in Covert, Michigan. The Department of Agriculture committed another $1.3 billion to cut electricity costs for rural electric cooperatives that will buy power from the plant. The 51-year-old, 800-megawatt plant will be the first nuclear reactor in the U.S. to be reopened after closure. Holtec expects to get the plant back online by the end of 2025. What it could mean: The reopening may be part of a new nationwide trend: the revival of shuttered nuclear plants. Last month, Microsoft agreed to buy power from a partially reopened Three Mile Island, tentatively set for a 2028 restart by owner Constellation Energy. And there’s talk of restarting the Duane Arnold Energy Center, Iowa’s only nuclear plant, which closed in 2020. Why it’s important: The already strained U.S. electrical grid is likely to come under more pressure as energy demand goes up in the next few years due to increased electrification, data center growth, and greater use of artificial intelligence. In fact, the net demand increase is expected to be 15% in the next few years. In related news: Fourteen of the world’s largest banks have pledged to increase financial support for nuclear energy. NAM’s take: Nuclear is an essential source of clean power that will help realize a clean energy future. In order to maintain grid reliability, we need to continue to invest in traditional nuclear facilities as well as support the development of exciting technologies such as small module nuclear reactors and fusion energy.
“Inside Baseball”
The ‘Three Johns’ Campaign Season Plan. The race for the Senate Republican Conference’s top job is revving up with leadership elections just six weeks away. The top contenders are spending October on the campaign trail to burnish their fundraising chops and try to win over the GOP candidates who, if they win their races, would be able to vote in the leadership elections. The current focus is on the “Three Johns”—Senate Minority Whip John Thune (R-SD), Sen. John Cornyn (R-Texas), and Senate GOP Conference Chair John Barrasso (R-WY). Thune and Cornyn are running to succeed Senate Minority Leader McConnell (R-KY), while Barrasso is running unopposed for GOP whip, the No. 2 job. The Senate adjourned last week until after the Nov. 5 elections, and all three have already hit the campaign trail to boost GOP candidates and incumbents as the party sets its sights on the Senate majority.
In Other Words
“I try to do the best I can, but I’m not perfect. I’m a knucklehead at times,” Minnesota Governor and Vice Presidential candidate Tim Walz (D) discussing how he’s misspoken in the past.
Did You Know
Campaign-finance reports reveal that Republicans overwhelmingly outspend Democrats at every major steakhouse in Washington, D.C., including Charlie Palmer Steak; Joe’s Seafood, Prime Steak & Stone Crab; Rare Steakhouse; the Palm; and Bobby Van’s. At the Capital Grille, Republicans have outspent Democrats nearly 13 to 1 so far this election cycle, with bills totaling more than $762,000.
Graph of the Week
The Fed’s Quandary—Core Inflation, Incomes, and Spending Continue Rising. The Bureau of Economic Analysis revealed that total Personal Consumption Expenditure (PCE) inflation slowed in August, but core and super core inflation ticked up year-over-year. At the same time, household income growth was revised up and continues to grow, and consumers remain content to spend. Ongoing moderation in total inflation towards the Fed’s 2% target supports further interest rate cuts; however, the stalling of inflation’s progress toward stabilization, strong real GDP growth, and/or continued health in the labor market, might warrant more measured interest rate cuts ahead. Although markets are pricing in another 50bp of cuts in November, and some Fed officials are expressing support for going big once again, others, including The Conference Board, believe that just as there are downside risks to the outlook, there are upside risks to the data that may render a 25bp cut, or even a pause, more appropriate. For now, we expect calls for 25bp cuts at each the November and December 2024 meetings. Conditions that would change the call to 50bp in November include material deterioration in the labor market, weaker-than-expected demand, and/or faster cooling in consumer inflation. Conditions that would prompt a November pause would include upside surprises in labor and GDP data and the stalling or reversal of progress on inflation.
