WEBVTT - It's the Economy, Stupid... or is it? 0:00:03.760 --> 0:00:07.040 Welcome to Bloomberg Opinion. I'm Vonnie Quinn. This week, even 0:00:07.040 --> 0:00:09.320 though it's sort of a dead heat in terms of 0:00:09.320 --> 0:00:12.520 what the polls say, we still could have fifty three Republicans. 0:00:12.520 --> 0:00:15.760 We could still have fifty two Democrats, three Democrats even. 0:00:15.960 --> 0:00:18.840 Jonathan Bernstein on the mid terms in the final furlong, 0:00:19.079 --> 0:00:22.479 and later Stephen Wim on what political sciantists have discovered 0:00:22.520 --> 0:00:26.120 about the correlation between mid term voting patterns and economic conditions. 0:00:26.520 --> 0:00:29.200 But first, we still have some ways to go, and 0:00:29.400 --> 0:00:32.920 incoming data since our last meeting suggests that the ultimate 0:00:33.000 --> 0:00:36.040 level of interest rates will be higher than previously expected. 0:00:36.120 --> 0:00:38.960 The Fed chaired your own Powell There Bloomberg Opinions. Jonathan 0:00:39.000 --> 0:00:43.239 Levin joins to discuss a possible Fed tilts this week. Jonathan, 0:00:43.280 --> 0:00:45.519 two of the statements that jumped out to most analysts 0:00:45.560 --> 0:00:47.239 were the fact that the chair sinks the path to 0:00:47.240 --> 0:00:50.720 a soft landing is narrowing, and that the terminal rate 0:00:50.720 --> 0:00:52.639 may be higher than we previously thought. Well, I think 0:00:52.640 --> 0:00:55.040 it's an undeal. It will be higher than we previously thought. 0:00:55.400 --> 0:00:57.920 I think palace task here was to thread the needle. 0:00:58.200 --> 0:01:01.200 He needed to prepare markets of the fact that he 0:01:01.280 --> 0:01:04.440 was going to slow the pace of rate increases, potentially 0:01:04.480 --> 0:01:07.160 at the next meeting in December, but almost certainly by 0:01:07.200 --> 0:01:10.399 the time the first meeting rolls around in three without 0:01:10.480 --> 0:01:14.160 letting the financial conditions loosen. And so the key to 0:01:14.240 --> 0:01:17.800 all of that was a stroke of communications genius. He 0:01:17.840 --> 0:01:20.200 did that at the same time that he said that 0:01:20.240 --> 0:01:24.000 we are probably taking the terminal rate higher. Maybe we're 0:01:24.000 --> 0:01:27.440 talking about five five and a quarter percent instead of 0:01:27.480 --> 0:01:31.520 four seventy five. But as a tool for communicating, I 0:01:31.600 --> 0:01:34.200 really thought that it was a stroke of genius pairing 0:01:34.280 --> 0:01:38.520 the higher end point with the ratcheting down of the pace. Well, 0:01:38.560 --> 0:01:41.640 it's redundant to point this out, but we'll have November, December, 0:01:41.680 --> 0:01:45.479 and January data before the January three first meeting. Will 0:01:45.520 --> 0:01:48.000 that data be enough to show activity reacting to the 0:01:48.040 --> 0:01:52.040 FEDS increases? Possibly? So I think the FEDS reaction function 0:01:52.200 --> 0:01:55.320 at this point becomes a combination of things. They have 0:01:55.760 --> 0:01:58.800 left some room in the language where they say we 0:01:58.840 --> 0:02:01.440 are conscious of the long and variable legs, but we 0:02:01.480 --> 0:02:04.200 are also reacting to the data as it comes in. 0:02:04.560 --> 0:02:08.960 So that allows them to say a higher inflation print, 0:02:09.080 --> 0:02:12.800 for instance, does not automatically lock in seventy five basis 0:02:12.800 --> 0:02:16.360 points and vice versa. A lower inflation print should not 0:02:16.480 --> 0:02:19.839 lead the market to interpret this idea that maybe they're 0:02:19.840 --> 0:02:22.440 going to do nothing or they'll immediately switch to five 0:02:22.520 --> 0:02:25.240 basis points. So what would happen in that scenario if 0:02:25.280 --> 0:02:27.560 the NBER came out somewhere in all of this and 0:02:27.560 --> 0:02:29.840 said the economy is in recession. It seems like J. 0:02:29.960 --> 0:02:32.520 Powe is preparing us for this idea that they're going 0:02:32.639 --> 0:02:35.720 to keep pushing ahead. I thought it was interesting. He 0:02:35.800 --> 0:02:39.560 talked again about how they think about risk management, and 0:02:39.880 --> 0:02:43.639 he sounded much more concerned about this idea that they 0:02:43.680 --> 0:02:46.920 may take their foot off the breaks of the economy 0:02:47.040 --> 0:02:50.359 here and then inflation shoots back up, and then you're 0:02:50.440 --> 0:02:54.040 in a bad position. The inflation expectations may have become 0:02:54.120 --> 0:02:56.639 unanchored at that point, and it becomes a lot more 0:02:56.800 --> 0:02:59.400 difficult to get inflation back where it needs to be. 0:02:59.800 --> 0:03:03.320 All the other hand, he said, we have the tools 0:03:03.360 --> 0:03:06.360 to address a market downturn if we go there. He 0:03:06.440 --> 0:03:09.480 seems to be suggesting that his tools work a lot 0:03:09.520 --> 0:03:12.799 better for an overshoot on the upside with the policy 0:03:12.880 --> 0:03:16.600 rate than an undershoot that is doing too little well. 0:03:16.600 --> 0:03:18.600 He acknowledged the FED could be done with hikes before 0:03:18.600 --> 0:03:21.760 inflation hits two percent? What data points do you think 0:03:21.760 --> 0:03:23.960 would allow them the leeway to be done? And I 0:03:24.000 --> 0:03:26.200 think the key thing Nick Timorrose over at the Wall 0:03:26.200 --> 0:03:28.800 Street Journal brought this up. A very simple way to 0:03:28.840 --> 0:03:32.640 think about Taylor rules is just is the policy rate 0:03:32.880 --> 0:03:38.640 above some forward looking measure of inflation expectations. So when 0:03:38.640 --> 0:03:42.640 you see the policy rates sort of comfortably above where 0:03:42.680 --> 0:03:46.560 we think inflation is heading, then that will probably think 0:03:46.680 --> 0:03:49.720 that it has the dial set just right. How concerning 0:03:49.840 --> 0:03:52.080 was that the FED chair thinks the path to a 0:03:52.120 --> 0:03:55.480 soft landing is narrowing? Yeah, I mean you've got to 0:03:55.480 --> 0:03:59.040 think that that's just an acknowledgement of reality. Right, So 0:03:59.160 --> 0:04:03.600 the median expectation among economists survey by Bloomberger is that 0:04:03.640 --> 0:04:06.920 there's something like a sixty percent chance that the economy 0:04:06.960 --> 0:04:09.920 goes into a recession in the next twelve months. I 0:04:09.960 --> 0:04:14.040 think that economists generally get flak for their misrate and 0:04:14.120 --> 0:04:18.320 predicting recessions, but I'd like to remind people they're usually wrong. 0:04:18.680 --> 0:04:22.320 Insofar as they fail to predict recessions. They very very 0:04:22.440 --> 0:04:26.839 rarely call a recession that does not occur, Chilling, Jonathan 0:04:26.920 --> 0:04:31.240 Chilling sufficiently restrictive. Are we definitely talking about something with 0:04:31.240 --> 0:04:34.440 a five handle? Now? Yeah, I think that's clearly the case. 0:04:34.480 --> 0:04:36.920 And I think that that's pretty consistent with the framework 0:04:37.000 --> 0:04:40.159 that we talked about earlier, whereby, in a very basic 0:04:40.480 --> 0:04:43.880 understanding of how Taylor rules work, you want to see 0:04:44.040 --> 0:04:47.960 the policy rate above inflation. I think a slightly more 0:04:48.000 --> 0:04:52.040 elegant way of thinking about the same thing is to say, again, 0:04:52.680 --> 0:04:56.479 not where is inflation right now, but where is inflation heading? 0:04:56.680 --> 0:04:59.400 And are you going to see that policy rate cross 0:04:59.520 --> 0:05:03.920 that path of inflation at some point? That's obviously moving target, 0:05:04.000 --> 0:05:06.520 but the Fed is hoping to hit it. It was 0:05:06.560 --> 0:05:09.120 interesting to see the market reaction because clearly not everything 0:05:09.120 --> 0:05:11.120 the Fed chair said was priced in. We did see 0:05:11.120 --> 0:05:14.080 a sell off inequities. We also saw yields on the 0:05:14.120 --> 0:05:16.520 two year rising. What have the market not priced in 0:05:16.920 --> 0:05:20.919 for the two years? It's fairly understandable, right, we're now 0:05:21.040 --> 0:05:24.599 pricing in something perhaps a lot closer to five percent, 0:05:24.720 --> 0:05:26.960 maybe five and a quarter, maybe even a little higher 0:05:26.960 --> 0:05:30.240 than there. But it's not a huge change in expectations. Right. 0:05:30.400 --> 0:05:32.400 On the other hand, I think it's really hard to 0:05:32.440 --> 0:05:36.320 make the argument that stocks were well priced heading into this, 0:05:36.440 --> 0:05:37.880 I think a lot of people could have made a 0:05:37.920 --> 0:05:42.560 reasonable argument that bonds were maybe not cheap, but fairly priced. Box. 0:05:42.640 --> 0:05:45.279 On the other hand, I mean, man, you've really seen 0:05:45.320 --> 0:05:48.760 equity risk premiums come in quite a bit in this 0:05:48.960 --> 0:05:54.000 little rally recently, and as we get past earning season, 0:05:54.120 --> 0:05:57.560 which you know, in sort of a strange way, has 0:05:57.680 --> 0:06:00.640 been a little bit of a tailwind for equity, is 0:06:00.880 --> 0:06:02.520 it really seems like you're going to see some of 0:06:02.560 --> 0:06:04.960 that deflate again. You've actually written about the past with 0:06:05.000 --> 0:06:06.960 off landing running through earnings, so I guess you have 0:06:07.040 --> 0:06:11.039 that to look forward to. Yes, yes, indeed. So the 0:06:11.080 --> 0:06:14.520 point of my recent column is that C suite executives 0:06:14.560 --> 0:06:18.440 seem to be doing a rather elegant job, not unlike J. 0:06:18.600 --> 0:06:24.719 Pal himself, in slowly, slowly guiding expectations down into a 0:06:24.760 --> 0:06:28.120 sort of recessionary mind frame. And in a sense, if 0:06:28.160 --> 0:06:30.760 you're J. Pale, that's exactly what you want to see. 0:06:31.000 --> 0:06:34.839 You're really really trying to avoid this cascade of negative 0:06:34.880 --> 0:06:39.320 sentiment that could itself catalyze a recession. In this environment, 0:06:39.680 --> 0:06:42.920 you want to see as at prices slowly come down, 0:06:43.200 --> 0:06:46.520 but you really want to avoid that financial accident. Um Opinions, 0:06:46.640 --> 0:06:50.520 Jonathan live In More Next on Lumber Opinion, I'm Vonny Quinn. Well, 0:06:50.600 --> 0:06:53.680 the mid terms are finally upon us. Can't love your 0:06:53.720 --> 0:06:59.159 country only when you win. Democracy is on the ballot 0:06:59.240 --> 0:07:02.120 this year. I sup with Bloomberg Opinions Jonathan Bernstein to 0:07:02.160 --> 0:07:04.880 get the state of play just a few days out. Jonathan, 0:07:05.040 --> 0:07:08.200 let's start with the Senate. Obviously, polls changing by the day, 0:07:08.279 --> 0:07:10.720 by the hour, but it looks a lot closer than 0:07:10.760 --> 0:07:12.880 it did just a couple of weeks ago. Well, it's 0:07:12.880 --> 0:07:15.440 look close the whole time. It was sort of close 0:07:15.520 --> 0:07:18.400 with a little tilt of the the Democrats six weeks ago. 0:07:18.800 --> 0:07:20.880 Six weeks before that, it was close with little tilts 0:07:20.880 --> 0:07:24.320 of the Republicans. Now it looks like we just don't know. 0:07:24.480 --> 0:07:26.880 And it's seat by seat. There's several seats that could 0:07:26.920 --> 0:07:29.480 go either way, and so we can't even say, ah, well, 0:07:29.520 --> 0:07:32.600 if Pennsylvania goes to the Republicans, then we don't know 0:07:32.640 --> 0:07:35.800 the answer. There's about five or so seats that are 0:07:35.840 --> 0:07:38.320 still up for grabs, which means that even though it's 0:07:38.360 --> 0:07:40.200 sort of a dead heat in terms of what the 0:07:40.240 --> 0:07:42.600 polls say about who will have the majority. We still 0:07:42.640 --> 0:07:45.440 could have fifty three Republicans. We could still have fifty 0:07:45.480 --> 0:07:49.400 two Democrats, three Democrats. Even there's a lot of uncertainty. 0:07:49.640 --> 0:07:52.280 We just have to wait. Now. Do we know yet 0:07:52.360 --> 0:07:55.400 what voters are going to vote upon? Oh? I think 0:07:55.440 --> 0:07:58.320 that it looks more or less like what we thought 0:07:58.360 --> 0:07:59.920 from the beginning, which is that it's going to be 0:07:59.920 --> 0:08:02.680 a good year for Republicans because there's a Democrat in 0:08:02.720 --> 0:08:06.080 the White House. In mid terms, the normal reaction is 0:08:06.120 --> 0:08:09.400 to vote against the party that has the presidency, and 0:08:09.560 --> 0:08:13.600 in particular, if the president is unpopular, which Biden remains, 0:08:14.040 --> 0:08:17.040 then that puts the Democrats even farther behind the eight ball. 0:08:17.200 --> 0:08:19.720 Part of that has to do with the economy. People 0:08:19.920 --> 0:08:23.120 have a perception the economy is terrible. If you look 0:08:23.160 --> 0:08:25.920 sort of at the formula for what's supposed to happen, 0:08:26.000 --> 0:08:29.600 if we have a president at around approval, you would 0:08:29.600 --> 0:08:32.480 expect the Republicans to win a large number of House 0:08:32.480 --> 0:08:35.800 seats and certainly take at least the one seat they 0:08:35.800 --> 0:08:38.840 need to get the Senate majority. It looks right now 0:08:39.240 --> 0:08:42.040 possible that Republicans will get the sort of forty to 0:08:42.120 --> 0:08:45.400 forty five seats that the fundamentals would predict, but more 0:08:45.480 --> 0:08:47.080 likely they're going to fall short of that, and they 0:08:47.080 --> 0:08:49.240 could fall quite a bit short of it. So why 0:08:49.360 --> 0:08:52.920 is that happening? I think it still seems likely that 0:08:53.120 --> 0:08:57.040 abortion is the thing that's driving Democrats to have only 0:08:57.040 --> 0:08:59.280 a bad year instead of a terrible year. We have 0:08:59.360 --> 0:09:02.000 to wait and see just how many young people and 0:09:02.040 --> 0:09:04.240 suburban women come out and vote as well. We don't 0:09:04.240 --> 0:09:09.240 know what those are exactly. Pennsylvania, it's an interesting Senate race. 0:09:09.480 --> 0:09:12.320 Probably at this point it's just a question of you know, 0:09:12.400 --> 0:09:15.120 they all have their turnout machines working their best to 0:09:15.240 --> 0:09:17.160 get voters to the polls in the last minute, and 0:09:17.200 --> 0:09:20.240 they'll do their best at that. You know, every candidate 0:09:20.280 --> 0:09:23.480 who has a decent chance is advertising now, whether it's 0:09:23.520 --> 0:09:26.160 directly or through support from one of the party committees 0:09:26.240 --> 0:09:28.600 or from a superpack or something like that. So that 0:09:28.880 --> 0:09:31.679 tends to sort of cancel each other out. And yet 0:09:31.679 --> 0:09:34.440 President Biden is dumping their old day Saturday along with 0:09:34.520 --> 0:09:43.319 Barack Obama. Don't fall from that, okay, dope, And Donald 0:09:43.320 --> 0:09:45.400 Trump is also going to be in the state. They're 0:09:45.440 --> 0:09:48.319 obviously putting a lot of time and effort into Pennsylvania. 0:09:48.920 --> 0:09:51.040 Will it be a disaster for the party that doesn't win. 0:09:51.600 --> 0:09:55.160 Pennsylvania matters a lot because it has both a very 0:09:55.160 --> 0:09:58.840 contested Senate seat and also has very contested gatorial seat. 0:09:59.320 --> 0:10:01.840 It's true, on the one hand, we don't expect the 0:10:01.920 --> 0:10:04.560 last minute campaigning to shift vote very much, but that's 0:10:04.559 --> 0:10:08.040 because both parties do the last minute campaigning. If only 0:10:08.120 --> 0:10:11.760 Republicans campaigned in Pennsylvania over the last forty eight hours, 0:10:12.200 --> 0:10:14.640 then perhaps that would help them a lot. But it's 0:10:14.679 --> 0:10:17.240 sort of a zero sum game because both parties go 0:10:17.320 --> 0:10:19.240 full out, and they both go full out in all 0:10:19.440 --> 0:10:22.720 of the relevant districts, whether it's seats that originally leaned 0:10:22.720 --> 0:10:24.680 one way or the other. At this point they know 0:10:24.760 --> 0:10:26.960 which close races are and all of those are going 0:10:27.000 --> 0:10:30.079 to be fully funded and have surrogates and have all 0:10:30.120 --> 0:10:32.520 the other resources that a party can put into it. 0:10:32.720 --> 0:10:35.320 And that's why the last minute stuff sort of canceled 0:10:35.320 --> 0:10:37.320 each other out because there's so much of it on 0:10:37.360 --> 0:10:40.440 both sides. Michigan is a fascinating I mean, there's so 0:10:40.480 --> 0:10:43.800 many fascinating ones, but Michigan is particularly fascinating guests because 0:10:43.920 --> 0:10:46.160 a it's so close and be yours enough of Liz 0:10:46.200 --> 0:10:50.040 Cheney endorsing Elisa's Latin. Does that make a difference? You know, 0:10:50.120 --> 0:10:53.360 I think that there's very few endorsements that make a 0:10:53.400 --> 0:10:56.640 big difference in the end. Liz Cheney also endorsed the 0:10:56.800 --> 0:11:00.120 Democrat in the Ohio Senate race. The only endorsed that 0:11:00.200 --> 0:11:03.040 I've seen that might move a few votes because it 0:11:03.080 --> 0:11:06.520 was so unexpected is in Oklahoma, where there's a surprisingly 0:11:06.559 --> 0:11:10.839 competitive race. Former Republican and Sooner football star J. C. 0:11:10.960 --> 0:11:14.120 Watts has endorsed the Democratic candidate for governor in what's 0:11:14.120 --> 0:11:17.800 expected to be a surprisingly close race. So maybe because 0:11:17.840 --> 0:11:20.280 that was sort of unexpected and you know, it would 0:11:20.320 --> 0:11:22.679 make some difference. But the truth is in a Michigan 0:11:22.720 --> 0:11:26.120 House race, in Ohio Senate race, people who would be 0:11:26.200 --> 0:11:28.800 listening to Liz Cheney have already made up their minds 0:11:28.840 --> 0:11:33.080 long ago. Yeah, that's such a good point. Georgia, does 0:11:33.080 --> 0:11:36.920 it go to a runoff? My bet and I don't 0:11:36.920 --> 0:11:42.280 bet on politics and bet on horses. Um, I would 0:11:42.280 --> 0:11:45.880 guess that Georgia certainly seems like it's headed for a runoff. 0:11:46.000 --> 0:11:49.320 And that's very interesting because just as we had two 0:11:49.400 --> 0:11:53.080 years ago, it's very possible that control of the Senate 0:11:53.080 --> 0:11:55.520 could come down to a runoff in Georgia, and even 0:11:55.559 --> 0:11:59.400 if it doesn't, one would suspect that, you know, it 0:11:59.400 --> 0:12:02.000 could change the race in all kinds of different ways 0:12:02.120 --> 0:12:04.880 to have it coming once the rest of the Senate 0:12:04.960 --> 0:12:07.280 is already set, assuming that it is, it could take 0:12:07.320 --> 0:12:10.240 weeks to decide some of these races. Well, that's the 0:12:10.240 --> 0:12:13.199 other question. I mean, Nevada is also both candidates polling 0:12:13.240 --> 0:12:16.959 identically now, so whoever comes into the runoff with the 0:12:17.040 --> 0:12:20.560 lead traditionally has having advantage, especially if it's a challenger. 0:12:21.160 --> 0:12:24.360 But whether that's true in a situation where you know, 0:12:24.440 --> 0:12:26.480 all of a sudden, the race would be even more 0:12:26.600 --> 0:12:30.280 nationalized than it is, especially if we know the control 0:12:30.320 --> 0:12:32.560 of the Senate is at stake. What are your thoughts, 0:12:32.640 --> 0:12:35.600 Jonathan on whether the polls button is hit after Tuesday 0:12:35.679 --> 0:12:37.839 night and we have to wait many days, many weeks 0:12:37.840 --> 0:12:41.040 for many of the outcomes. Yeah, I think that's how 0:12:41.280 --> 0:12:43.240 the system is set up, and we should all be 0:12:43.400 --> 0:12:45.560 very aware of it, depending on which state it is. 0:12:45.600 --> 0:12:47.920 Even sometimes within the state it takes longer to do 0:12:47.960 --> 0:12:50.680 the votes for sometimes for very good reasons. You know, 0:12:50.760 --> 0:12:54.440 in some states they accept ballots that are postmarked by 0:12:54.480 --> 0:12:58.240 election day well, that takes some time. In Pennsylvania. Notoriously, 0:12:58.280 --> 0:13:02.560 the Republican legislature is not allowed pre opening and pre 0:13:02.720 --> 0:13:05.640 preparing ballots that come in. The absolutely ballots to be 0:13:06.440 --> 0:13:09.079 ready to be counted in advance, and so that means 0:13:09.160 --> 0:13:11.200 that they have to start sorting them in all that, 0:13:11.200 --> 0:13:14.160 which takes time, not until after the polls closed, which 0:13:14.200 --> 0:13:16.760 means we won't find out about Pennsylvania right away. And 0:13:16.840 --> 0:13:19.520 this is in the normal proceedings. Do you imagine that 0:13:19.520 --> 0:13:22.800 there will be people contesting results and that there might 0:13:22.840 --> 0:13:24.800 be you know, sort of election denial going on again, 0:13:24.960 --> 0:13:28.480 it seems likely. I think Bloomberg comes something like two 0:13:28.880 --> 0:13:34.400 sixty five Republican candidates who are supporting the false idea 0:13:34.480 --> 0:13:38.360 that election was decided by fraud. Presumably some of them 0:13:38.360 --> 0:13:40.840 are going to yell fraud if they lose, even if 0:13:40.840 --> 0:13:42.600 they lose by quite a bit. We saw that the primaries. 0:13:42.640 --> 0:13:46.280 We saw some Republican candidates lose Republican primaries in Republican 0:13:46.360 --> 0:13:50.280 states and still refused to conceive. And it used to 0:13:50.280 --> 0:13:53.560 be you needed something, some kind of irregularity, something that 0:13:53.640 --> 0:13:55.960 looked funny at least, And now that's not true. They 0:13:56.160 --> 0:13:58.920 are ready to say then because Donald Trump pioneered this, 0:13:59.280 --> 0:14:03.240 that normal regular accounting procedures must have been fraudulent if 0:14:03.280 --> 0:14:06.640 you lose. And we also should be careful because we're 0:14:06.640 --> 0:14:10.240 also going to see from both sides legitimate election challenges 0:14:10.280 --> 0:14:12.800 because that happens also not because of terrible fraud or 0:14:12.840 --> 0:14:15.520 anything like that, but because sometimes there are things that 0:14:15.600 --> 0:14:18.319 the parties can legitimately claim went wrong and they can 0:14:18.480 --> 0:14:21.040 go to court and try to determine it. And one 0:14:21.040 --> 0:14:23.280 of the things for us as observers to do is 0:14:23.320 --> 0:14:26.360 to make sure we can say, oh, yes, that's normal, 0:14:26.800 --> 0:14:29.120 going to court the way you do it normally, But 0:14:29.240 --> 0:14:32.120 then others are, wow, this is something that is really 0:14:32.160 --> 0:14:35.920 a threat to democracy. What happens, Jonathan, If Republicans have 0:14:35.960 --> 0:14:37.760 their best case scenario, what do they get to do 0:14:37.840 --> 0:14:40.680 for the next two years? You know, it's a great question. 0:14:41.000 --> 0:14:45.400 Republicans are post policy party. They have been running, for example, 0:14:45.440 --> 0:14:48.720 on inflation. They don't have a policy agenda on inflation. 0:14:49.160 --> 0:14:51.640 They've been running on crime, which is mostly a state 0:14:51.640 --> 0:14:53.760 and local issue anyway, but a lot of federal candidates 0:14:53.760 --> 0:14:55.800 have been running a crime They don't have an agenda 0:14:55.840 --> 0:14:58.440 on crime. Their main agenda on crime appears to be 0:14:58.480 --> 0:15:00.960 if you look at their commercials and their rhetoric that 0:15:01.080 --> 0:15:05.400 they are against defunding the police forces. But Democrats, except 0:15:05.440 --> 0:15:08.760 for a handful of them, aren't for defundings. In fact, 0:15:08.760 --> 0:15:11.880 Democrats at the congressional level have sent tons of money 0:15:11.920 --> 0:15:14.600 to local police forces in the last two years. So 0:15:14.880 --> 0:15:17.680 you know, exactly what Republicans would do differently is very 0:15:17.680 --> 0:15:19.880 hard to tell. The main things we have to worry 0:15:19.880 --> 0:15:25.760 about are that Republicans would take anti democratic measures and 0:15:25.840 --> 0:15:28.280 would promote chaos. So you know, we have to worry 0:15:28.320 --> 0:15:31.840 about the possibility of a government default over the debt limit. 0:15:31.920 --> 0:15:34.840 We have to worry about a shutdown once it's time 0:15:34.880 --> 0:15:38.000 to pass new appropriations bills, so that kind of thing 0:15:38.360 --> 0:15:40.160 we have to worry about. We have to worry about 0:15:40.320 --> 0:15:43.640 the possibility they're going to start impeaching the president, the 0:15:43.720 --> 0:15:48.560 vice president, cabinet members over nothing, So that's a concern. 0:15:48.880 --> 0:15:51.560 Other than that, you know, the parties have proved time 0:15:51.600 --> 0:15:55.800 and again that they are capable sometimes of getting a 0:15:55.840 --> 0:15:59.200 lot done during divided government, but this Republican Party, I'm 0:15:59.200 --> 0:16:01.440 not so sure, doesn't seem very likely. Do we need 0:16:01.480 --> 0:16:05.040 to be worried about violence at all? Jonathan, you know, 0:16:05.160 --> 0:16:08.880 you hope not. You also hope that police forces, that 0:16:08.960 --> 0:16:11.520 the FBI are working on it. There was a warning 0:16:11.960 --> 0:16:15.240 earlier about the possibility domestic terrorism. You know, we had 0:16:15.320 --> 0:16:19.040 the attack on Nanti Closi's house. Just recently, We've had 0:16:19.120 --> 0:16:22.760 other situations and we've seen, you know, some very inflammatory 0:16:22.840 --> 0:16:26.840 rhetoric coming almost not I wouldn't say exclusively from Republicans, 0:16:26.880 --> 0:16:29.240 but mainly from Republicans, and you know, we do have 0:16:29.280 --> 0:16:31.640 to worry about that, certainly after what we went through 0:16:31.880 --> 0:16:34.880 in the last General Action. Yeah, Jonathan, So that the 0:16:34.960 --> 0:16:37.720 day comes and the results start rolling in, or at 0:16:37.800 --> 0:16:41.520 least the early returns. What states are you watching most closely? 0:16:41.520 --> 0:16:43.400 Obviously you're watching all of them, I know that, But 0:16:43.440 --> 0:16:46.440 what once a you're mosting forward to watching. Well, I 0:16:46.880 --> 0:16:49.760 guess the thing that that I'll try to keep an 0:16:49.760 --> 0:16:52.960 eye on. In particular, in addition to majorities in Congress 0:16:52.960 --> 0:16:55.800 and the governor's is some of these lower profile races 0:16:55.840 --> 0:16:58.080 that could be very important, including the secretary of state 0:16:58.160 --> 0:17:02.760 races in states where we have some you know, election 0:17:02.840 --> 0:17:07.520 deniers um who have made some very extreme comments may 0:17:07.920 --> 0:17:10.760 have been nominated by Republicans and it's just not clear 0:17:10.800 --> 0:17:13.800 if we could guarantee free and fer elections going forward. 0:17:13.840 --> 0:17:16.359 So that's something that obviously is a little bit is 0:17:16.440 --> 0:17:18.760 quite a bit scary, I would say, and I'll be 0:17:18.800 --> 0:17:21.600 watching that in particular, Jonathan, when the history books are 0:17:21.600 --> 0:17:24.359 written eventually, do we look back at this period as 0:17:24.400 --> 0:17:27.080 a turning point? Do these mid terms change anything about 0:17:27.080 --> 0:17:29.119 the nature of politics and how it's conducted in the 0:17:29.160 --> 0:17:32.520 United States? You know, I think that we have to wait. 0:17:33.040 --> 0:17:35.159 You know, I've been listening a bunch of things that 0:17:35.240 --> 0:17:39.040 are quite frightening, and they are legitimately frightening. It's also 0:17:39.119 --> 0:17:42.719 possible that candidates can back off. It's possible that some 0:17:42.760 --> 0:17:45.000 of the candidates who have been saying the most extreme 0:17:45.080 --> 0:17:48.399 things once they're in office, um, may calm down and 0:17:48.400 --> 0:17:52.399 basically behave themselves as normal conservative politicians. Nothing wrong with 0:17:52.440 --> 0:17:55.880 conservative politicians, not a threat to democracy. It's the radicalism 0:17:55.920 --> 0:17:59.120 that is. And we don't know yet to what extent 0:17:59.320 --> 0:18:03.119 we could be fighting against radicalism at multiple state and 0:18:03.160 --> 0:18:06.320 local and federal levels, and to what extent that we'll 0:18:06.359 --> 0:18:10.879 just get republican policy, which you know, was normal, regular 0:18:10.920 --> 0:18:13.119 parts in politics again as opposed to sort of crazy 0:18:13.119 --> 0:18:15.399 parts in politics. But I guess it's it goes in 0:18:15.480 --> 0:18:17.800 psychos right, other than I We've had this throughout history 0:18:17.920 --> 0:18:20.359 where things get whipped up and suddenly there's a period 0:18:20.359 --> 0:18:23.640 of normalcy or quote unquote normalcy, and then suddenly there's 0:18:23.640 --> 0:18:26.400 a period of insanity again. It just it happens a lot. Well, 0:18:26.400 --> 0:18:27.720 if you look at the history of it, you know, 0:18:27.840 --> 0:18:30.240 violence in American policies is nothing new. You know, we 0:18:30.320 --> 0:18:33.800 had up through the Civil War slavery who was inherently violent. 0:18:34.440 --> 0:18:36.880 In the full century after the Civil War, we had 0:18:37.080 --> 0:18:40.879 a violent white supremacy aligned with a political party, the 0:18:40.920 --> 0:18:45.160 Southern Democrats, with the agreement from other Democrats and from 0:18:45.240 --> 0:18:47.960 Republicans in most cases to look the other way. And 0:18:48.280 --> 0:18:53.520 historians and political scientists looking at America through nineteen often say, 0:18:53.640 --> 0:18:55.639 we think of it as a democracy, but really was it, 0:18:56.200 --> 0:18:58.760 especially in parts of the country. Maybe somewhat in some 0:18:58.800 --> 0:19:01.440 parts and some whatnot in others. And we'll say, well, 0:19:01.480 --> 0:19:04.560 you know, American doxy really only dates back to the sixties. 0:19:04.920 --> 0:19:07.560 And then we had a wave of left wing violence 0:19:07.600 --> 0:19:11.000 in the late sixties and early seventies which was very destructive, 0:19:11.080 --> 0:19:14.480 a lot of people killed um and that did not 0:19:14.560 --> 0:19:16.560 have the sport of political party now this wave of 0:19:16.640 --> 0:19:19.240 violence very well may be alive with a political party, 0:19:19.240 --> 0:19:21.960 and that seems to be what the January System Commission 0:19:22.000 --> 0:19:24.520 is telling us about what happened on January six. We 0:19:24.640 --> 0:19:27.000 don't know yet how close the ties were, but ties 0:19:27.040 --> 0:19:31.200 between the Republican Party, the White House, Donald Trump, and 0:19:31.400 --> 0:19:35.359 some of these paramilitary groups and so you know, yeah, 0:19:35.400 --> 0:19:37.440 that's very scary, and we don't know how it would 0:19:37.440 --> 0:19:40.400 turn out. It's tempting to think, well, it's cyclical, we'll 0:19:40.440 --> 0:19:42.320 go through a bad phase and the end again like 0:19:42.400 --> 0:19:44.520 Captain in the early seventies. But we don't know that 0:19:44.640 --> 0:19:48.760 it could get worse. Numer opinions Jonathan Bernstein more next 0:19:48.760 --> 0:19:52.639 on Lumberg opinion. I'm Vonnie Quinn. Conventional wisdom would have 0:19:52.720 --> 0:19:55.520 it that voters or swayed at the ballot box, typically 0:19:55.520 --> 0:19:59.639 by economic issues more than anything else. Political science, however, 0:19:59.680 --> 0:20:03.520 says hold that thought research on past elections suggests that, 0:20:03.760 --> 0:20:06.480 at least when it comes to mid term elections, local 0:20:06.520 --> 0:20:10.800 issues and individual candidates have a bigger influence. Bloomberg Opinions. 0:20:10.880 --> 0:20:14.280 Stephen Mim, history professor at the University of Georgia, looked 0:20:14.320 --> 0:20:18.160 at the data. So Stephen received wisdom is that voters 0:20:18.320 --> 0:20:20.440 often vote their pocketbook. At this time, there is a 0:20:20.520 --> 0:20:23.280 question mark over how much role is going to impact turnout, 0:20:23.400 --> 0:20:25.720 and it seems to be changing by the day. But 0:20:25.760 --> 0:20:27.920 tell us a little bit about pocketbook issues and how 0:20:28.000 --> 0:20:33.240 much they actually impact mid terms. So pocketbook issues obviously 0:20:33.400 --> 0:20:36.800 play a huge role in presidential election, but in the 0:20:36.840 --> 0:20:39.800 mid terms their role has always been a bit more 0:20:39.840 --> 0:20:43.000 ambiguous in a long time ago, and by that I mean, 0:20:43.200 --> 0:20:46.120 you know, over a hundred years ago, if you had 0:20:46.160 --> 0:20:49.560 looked at mid terms and the economy and tried to 0:20:49.560 --> 0:20:52.480 figure out if there was a relationship between the president 0:20:52.600 --> 0:20:55.440 and party and his or hurt while it would have 0:20:55.480 --> 0:20:58.399 been his members in Congress, and whether they suffered in 0:20:58.440 --> 0:21:00.719 the mid terms, you would have seen a really clear 0:21:00.840 --> 0:21:04.560 connection at that time. And that has a lot to 0:21:04.600 --> 0:21:07.400 do with how Congress actually, at a hundred plus years 0:21:07.440 --> 0:21:11.080 ago played a much more instrumental and central role in 0:21:11.440 --> 0:21:15.320 formulating economic policy, to the point where the president actually 0:21:15.359 --> 0:21:18.560 did very little when it came to economics. And by 0:21:18.640 --> 0:21:21.520 the twentieth century you began to see something quite different evolve, 0:21:21.640 --> 0:21:25.000