Complete Latest Senate Rundown, The Jobs Deficit and John Edward's 2 Americas, Closing in on 1 Year

2010 -- Plenty of Reasons for the DEMs to Be Getting More Scared
The Pro-GOP or at the very least, anti-Democratic trend appears to continue to build. President Obama's numbers are stable, at least for now, around the +3% to +5% range...this is better than being negative, but puts him in a similar position to where President Clinton was leading into the year that saw Newt Gingrich's revolution that led to a GOP-controlled House and Senate. It isn't that bad yet, so let's take a look at where the races are tracking, with our new updates from this week:

Safe DEM Hold (6)
Maryland, New York (Schumer), Oregon, Vermont, Washington, Connecticut

Likely DEM Hold (5)
California, Indiana, Wisconsin, Hawaii, Massachusetts*

* Special Election January 19th

Lean Democratic Hold (2)
New York (Gillebrand), Illinois

Lean Democratic Pick-Up (1)
Missouri

Toss-up -- DEM Controlled (2)
Pennsylvania, Delaware

Lean GOP Pick-up (4)
Colorado, Nevada, North Dakota, Arkansas

Lean GOP Hold (5)
New Hampshire, Kentucky, Ohio, North Carolina, Arizona

Likely GOP Hold (5)
Georgia, Alaska, Kansas, Louisiana, Florida

Safe GOP Hold (7)
Iowa, South Dakota, Alabama, Idaho, Oklahoma, South Carolina, Utah

Total Projection: GOP Pick-up of 3 to 5 Seats


Best Case GOP (all leaners go to GOP): GOP +8 Seats

Best Case DEM (all leaners go to DEM): DEM +6 Seats

It certainly seems, given the national mood, that the Best Case GOP scenario is a heck of a lot more plausible than the Best Case DEM scenario at this point. This is because of all the states that fall in the "lean" category currently, the GOP is winning all but 3 of them. It does show, however, the vast impact a 5 point swing in the national mood can have on how races shape up.

The other things worth noting are that we do not have particularly recent polling in Missouri and Pennsylvania. One could surmise from the trend in other swing states that there is a reasonable probability that they will tip red when we do get such polling. This would push the GOP closer to their "best case" scenario.

Having said all this, I don't see a path to 51 for the GOP. In addition to picking up Missouri and Pennsylvania, they would have to win Illinois to get to +8, which is certainly possible, but probably no better than 50/50. On TOP of that, they would have to beat Gillebrand in New York (possible only if Pataki runs against her, and no sure thing even then), AND win at least 2 out of 5 in California (where they have a good candidate but are trailing), Indiana (where they don't even have a candidate yet against a well-liked moderate in Evan Bayh), Wisconsin (against Russ Feingold, seems like a no-hope race), Hawaii (when was the last time Hawaii sent a GOPer to the Senate?) and Massachusetts (closing fast at -9%, but still a long shot.)

So, the most realistic scenario to get there for the GOP would be to pull off the upset in Massachusetts, then win all the ones they are leading. Win the two toss-ups -- Delaware with Mike Castle and Pennsylvania with Pat Toomey. Win Missouri with Rep. Roy Blunt, New York's 2nd seat via convincing George Pataki to run. Finally, pull off the big upset with Carly Fiorna in California (hey -- they love tech celebrities there.) And you have 51 seats.

A long, long, shot, for sure. But for the first time I can actually construct a scenario where it could happen. First key, of course, is the Massachusetts special election a week from Tuesday, which I expect them to lose. But if they win that one, all bets are off.

In the House,
Democrats could be in huge trouble. Now, it's hard to tell, because we continue to be plagued by drastically different polls numbers (Rasmussen has it at GOP +9%, Gallup has it at DEM +3%), driven largely not by the fact that pollsters are asking the questions somehow differently, but more by the fact that they are making dramatically different modeling assumptions about who is actually going to vote in the mid-term. And the quagmire is real...after a massive turnout in 2008, clearly we all expect it to fall off for the mid-terms, but will it revert back to the normal for an off-year election? Will any of the newly registered voters in 2008 show up to vote for congress in 2010? We don't really know.

At any rate, my philosophy has always been that by building a larger sample poll, as well as looking at means and medians, we can mitigate the sample or weighting errors of any one given pollster. An our methodology produces a current projection of GOP +3.6%.

This leads to a House projection of: GOP +43 Seats

So, for the second projection in a row, I'm projecting a GOP takeover of the House. The margin is still slim, although it is 2 seats wider than it was last week. It could change obviously, with circumstances. But for now, the House Republicans are looking pretty darn strong. I doubt we'll see anything like Health Care reform moving through that chamber come 2011.

The Jobs Deficit -- John Edwards Was Right
I wrote about this some months ago, but I was struck recently by a personal experience. The company that I work for, which is a Fortune 500 company, was in the process of hiring entry-level engineers for a number of our factories, a process that I was involved in. We were recruiting principally for those who graduate this spring and conducted interviews over November and December, made offers in mid-December to 5 candidates and....were rejected 4 out of 5 times. Every single one of the 5 young engineers we were trying to recruit had multiple offers from multiple great companies. These are kids who are extremely intelligent, but let's face it, haven't actually DONE anything yet. And this punctuated my point -- the economy looks a lot different if you are a high school dropout who has been working at a factory in Michigan than it does if you are an Electrical Engineer from the University of Michigan.

The latest employment report, released yesterday, showed the unemployment rate remained flat at 10.0%, just a tick below the peak of 10.1% from two months ago. But the important numbers were even wore than that, with actually jobs declining by 85,000 and the unemployment rate only holding constant by virtue of people giving up on looking for work and dropping out of the work force, with this number rising to 929,000, it's largest level since 1985. So, with "normal" unemployment being in the 5% range, we have a gap of 7.6 million jobs, 8.5 million adding in the discouraged workers.

How does this relate to my story? Let's look at the unemployment rate by educational attainment one more time:
High School Dropout -- 15.3%
High School Graduate -- 10.5%
Some College or Trade School Graduate -- 9.0%
College Graduate with Bachelor's Degree or Higher -- 5.0%

The economy IS normal if you are a college graduate. Sure it isn't the heady days of the late 90s or the mid-00s when you could name your price, your location and your work hours. But you CAN find work if you have a degree and skills that are in demand. If you are a factory worker, however, your prospects are dim.

Which brings me to my point...we have focused so much on just creating jobs that we have neglected the other half of the equation...how do we raise the skill level of the unemployed to make them more productive and more attractive to potential employers? College tuitions continue to surge and achievement gaps between rich and poor school districts have sustained. How do we give the kid from Compton, rural Tennessee, Detroit or Mississippi a shot at being in the tier of people who are in demand? We have had zero political discussion in the past year about higher education and lifetime learning. And that's a crime.

In terms of what we have been discussing politically, we have the stimulus bill and we have the "jobs" bill creeping it's way through congress. The bill, which has been blasted by the GOP as "Son of Stimulus", would largely do more of the same that the American Recovery and Reinvestment Act did...that is the threefold approach of transfer payments to states to stabilize state governments (to "save" jobs), infrastructure projects (to "create" jobs) and temporary extensions / expansions of various social programs to provide money for the unemployed and needy (to generate consumer demand.)

The approach has its merits as a short-term buffer to an economy still dealing with the aftershocks of a massive financial crisis. My criticism is that the way the original stimulus was laid out, we haven't really had a chance to see how that program, which was designed as a 3-year reshaping of the economy, will really play out.

Here are the latest stats on the first stimulus bill:
Tax Cuts -- $92.8 billion out of $288 billion paid out (32.2%)
Spending -- $164.2 billion out of $499 billion paid out (32.9%)
Total -- $257.0 billion out of $787 billion paid out (32.7%)

With more than two thirds of the first stimulus bill left to spend, why craft another measure?

The answer simply is political reality. Congressional Democrats want people to see they are doing SOMETHING, even if the best course might be to simply let the tools that are already out there work. Liberal economist Paul Krugman, who never believed the first bill was nearly large enough, has been leading the charge for a second stimulus for some time. And it appears likely that SOME sort of jobs bills will pass in the new congress.

But the reality is that we will all have to wait and see whether what they did the first run around will actually work.

Almost 1 Year of Obama
The President of the United States will cross the 1 year in office threshold, 25% of his term, right as voters in Massachusetts are picking a Senator that will potentially represent the 60th vote in the Senate for final passage of health care legislation. It's almost time to break out the red pens and grade the President's year. Given the amazingly high bar he set for himself with his early speech to congress, I suspect when I sit down to write his review, he will have some significant short-comings. The President's inner-circle is fond of talking about him taking the "long view". But you do have to produce results at some point.

So, next up, our 1 year report card on President Obama. We'll look at my assessment of grades against his key initiatives. We'll look at his public opinion polls and the American people's grades of his performance. And we'll tap our old friends at Politifact to look at how well he is keeping his promises. Stay tuned.

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