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Huge Stagflation Risk In Play on the Midterm Election Results

The outcome of the midterm election puts in play a huge stagflation risk if Democrats hold the House.
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538 Senate Odds annotations by Mish

538 Senate Odds annotations by Mish

It is increasingly likely that Democrats hold the Senate thanks to very poor candidate selection by the Republicans. 

Republicans are a solid favorite to lose Pennsylvania. If nothing else changes that would be 51-49 negating Joe Manchin.

In yellow highlights, Walker, Laxalt, Masters, and Oz are all extremely weak candidates. Trump had a hand in every one of them.

 His only criteria was whether or not they were willing to run on loyalty to Trump and "stop the steal" nonsense. 

What Happened in Pennsylvania?

In Pennsylvania, Trump backed Mehmet Oz, a very weak "stop the steal" no-name candidate with Turkish citizenship and service in the Turkish military.

This guy is highly likely to go down in flames by double digits.

What Happened in Arizona?

Thanks to Trump, Republicans fielded another exceptionally weak Senate Candidate.

Blake Masters, backed by former President Donald Trump and venture capitalist Peter Thiel, won the Arizona Republican Party's nomination.

Governor Doug Ducey wanted to run for Senate and would have been a very strong candidate. However, Trump vowed to defeat Mr. Ducey because the Governor refused to help overturn Trump's 2020 loss in the state.

What Happened in Nevada?

Laxalt is a weak stop the steal Trump-backed candidate.

What About Georgia?

Trump backed former NFL running back Herschel Walker.

Curiously, Walker says he is Mad at Trump for Taking Credit

Distancing from Trump is a smart move and increases his chances of winning.

Assessing Republican Odds

The Republican's best chance for a Senate pickup is in Georgia. Assuming Republicans hold Wisconsin and win Georgia, the outcome of the Senate rests on Laxalt winning Nevada. 

There is no room for error for the Republicans. Democrats will retain the Senate if they flip Wisconsin or hold either Georgia or Nevada.

What About the House?

The Wall Street Journal notes Support for Legalized Abortion Grows Since Dobbs Ruling, WSJ Poll Shows

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Voters have grown more supportive of legalizing abortion following the Supreme Court overturning Roe v. Wade, with a clear majority opposing restrictions, like bans at a certain point of pregnancy or barring women from traveling to get a legal abortion, according to a new Wall Street Journal poll that underscores the importance of the issue in the midterm elections.

The court’s decision to end federal constitutional protections for the procedure has injected new Democratic energy into a midterm election that Republicans expected to be dominated by economic issues. About a dozen states have banned many or most abortions since the Supreme Court’s ruling in Dobbs v. Jackson Women’s Health Organization.

A total of 41% of independents said they trust Democrats most to handle abortion policy, compared with 18% who said Republicans were best.

Asked broadly about their top issue for the midterms, voters cited the economy and inflation first, followed by abortion. But when offered a choice of five issues and asked which made them most likely to vote, they put the Supreme Court ruling overturning Roe v. Wade ahead of inflation.

Abortion has been a motivating issue in some key ballot tests ahead of the midterms. Kansas voters rejected a measure that would have amended the state’s constitution to explicitly say it doesn’t protect abortion. And abortion was seen as a key issue for Democrat Pat Ryan, who won a special election to fill an open U.S. House seat in New York’s Hudson Valley.

“The truth of the matter is even among Republicans there isn’t a clear consensus. They want restrictions, the question is what restrictions and how far should they go,” said Mr. Fabrizio, the GOP pollster.

Abortion a Fringe Issue?

I often hear that abortion is a fringe issue and will never decide an election.

That view is wrong. Abortion may easily decide the Senate and the House is not out of the question.

Midterm Elections to Decide Fate of Biden’s Tax Agenda

The economically  important point in this discussion is not politics or abortion. Rather, Midterm Elections to Decide Fate of Biden’s Tax Agenda

“It’s just very clear that if you have one of the chambers in Republicans’ control, that the majority of the Biden tax plan as we’ve known for several years is simply off the table,” said John Gimigliano, a former House GOP aide now at KPMG LLP.

Joe Biden Holds a Trump Rally

Finally, please consider the WSJ view Joe Biden Holds a Trump Rally

It’s been obvious for years that while Democrats claim to fear and loathe Donald Trump, they really can’t live without him. They need him around, they want him around, because they think he’s their ticket to remain in power.

Any doubt about that proposition vanished with President Biden’s Thursday night speech that had a single political purpose: Elevating Mr. Trump to the center of the fall campaign. Forget all the high-minded talk about saving democracy, which is hardly in danger in a midterm election in which Mr. Trump isn’t even on the ballot. Democrats want to pretend the former President is on the ballot to campaign against as the great Democratic foil.

That’s why Mr. Biden has so pointedly goaded Mr. Trump and his followers with the “MAGA Republican” label. His escalating rhetoric is intended to smear the GOP as under Mr. Trump’s sway and “semi-fascist.”

All of this is deeply cynical and divisive. It contradicts Mr. Biden’s pledge, during the 2020 campaign and in his inaugural address, that he would unite the country. He repeated that claim of “unity” on Thursday but by now it is a throwaway line.

His strategy is to out-Trump Trump by polarizing the electorate around the former President because he thinks a majority will come his way. Even as we write this, his own party is running ads in New Hampshire to support the most MAGA Republican in the GOP Senate primary. A group allied with Senate GOP leader Mitch McConnell is supporting the other main GOP candidate.

Mr. Biden has become his foe’s polarizing mirror image. It is exactly what he promised as a candidate he wouldn’t do.

Huge Stagflation Risk In Play 

Republicans are likely to take the House, but it is not impossible for Democrats to hold. 

Stranger things have happened. 

If Democrats pick up one more Senate seat then hold the House (unlikely but not impossible), expect a massive outbreak of fiscal nonsense.

Biden would pass in entirety Build Back Better coupled with personal tax hikes, a minimum corporate tax hike, inane environmental polices, free education, and the entire wish list of Progressive clean energy madness.

Regardless, Trump single-handedly likely killed what should have been a Red Wave. 

Now we are left hoping for a last second swing in the Senate and modest gains in the House.

This post originated at MishTalk.Com.

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