In this episode, Chris Krueger, Macro, Trade, Fiscal & Tax Policy Analyst discusses the three major races – White House, Senate, and House – and explains the geography, math, and timeframe along with three potential wild cards.
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Good morning. Welcome back to TD Cowen Street Cred. I am Chris Krueger with TD Cowen’s Washington Research Group, and we’ll attempt to translate K Street to Wall Street faster than a speeding Acela, and even faster if you juice up the playback. This month, we will attempt to level set where we are with the 2024 elections just in time for the holidays and the airing of grievances with friends and family. We’re going to try to do this in just three parts.
So there are really three elections taking place next November. You’ve got the White House, the House, and the Senate. We’re going to tackle the White House first. What is more likely than not at this point is the first presidential rematch since 1956. That means the 81-year-old incumbent President Joe Biden against the 77-year-old Donald Trump. In terms of the presidential election, we broke this into four phases. That’s largely due to the timestamps associated with the race. We have now ended phase one, we call this the preseason. More Republican candidates have dropped out than are still standing, with the dominant front-runner refusing to participate in any of the debates.
On the Democratic side, Biden has avoided any tier one challengers. We call this the preseason because if you want to run for office in the US, there are a number of filing deadlines. Most of these filing deadlines have passed, certainly all of the early states. California’s filing deadline was last Friday. So these are the candidates that we have locked in place. Entering into phase two, this is really the primaries. The Iowa caucuses are just about five weeks away on January 15 for the Republicans. By the end of March, two-thirds of Republican delegates will have been awarded. If you think about phase two, it’s basically January to the end of March.
Coming now into phase three, this is pre-convention. In our estimation, this is really the timeframe to watch as the nominations will likely be over by early March. If there’s a candidate change, and that’s a massive “if”, it would have to be between the end of March and the July-August conventions. Keep in mind, in American politics, you’re not the actual nominee until the delegates at the convention vote for you. So the Republican Convention is in July in Milwaukee, the Democratic Convention is in August in Chicago. You have two of the oldest candidates, literally the two oldest candidates in American history. We’re not suggesting that there would be a change, but if there is going to be a change, it’s got to be before those conventions.
Phase four, pencils down. This is after the conventions conclude. The tickets are locked. Keep in mind that early voting starts in some places in September. Yes, the election is November 5th, but that’s when voting ends. By November 5th, it’s very likely that at least 50% of all the ballots will have been cast. So that’s the timeframe for the presidential election. Let’s get into the margin and the geography. Keep in mind, the last two elections, both 2020 and 2022, were historically tight.
This is just a very regionalized country. The 2020 presidential election was decided by fewer than 43,000 combined votes in Arizona, Georgia, and Wisconsin. The margin was even closer in the 2022 midterms that decided the House, fewer than 12,000 combined votes among five districts in Arizona, California, Colorado, and New York ended up flipping the House. In terms of the geography, it’s really the same five states it was in 2016 and in 2020. This is Arizona, Georgia, and then the so-called former Blue Wall in the Upper Midwest, Wisconsin, Michigan and Pennsylvania. So it’s three sort of wild cards to watch in all of this on the presidential side, which is really going to dictate some of these House and Senate races.
But the first one to watch, third-party bids. We could well see as many as four or five third-party candidates, whether that’s Robert Kennedy Jr., Cornel West, Jill Stein, a no-labels candidacy or a player to be named later. By and large, these third-party bids we see as a real problem for the Biden campaign. That’s mainly because the Trump vote, in terms of enthusiasm, much higher than the Biden campaign in our estimation. Right? If you think about Trump’s voting block, sort of the highest floor, lowest ceiling. If you’re voting for Trump, it’s because by and large, not only are you a supporter of Trump, you’re a supporter of his policies.
Whereas with Biden, a sizable chunk of that Biden vote is largely an anti-Trump vote, right? Trump very much remains the zeitgeist of American politics. Keep an eye also on the Cornel West candidacy in Michigan, where again, one of the top five states, Biden has a real perceived weakness with that crucial 18 to 24-year-old demographic, Michigan home to not only a lot of college kids, but also two of the largest Arab American population centers in the US, both Detroit and in Dearborn. Cornel West has been highly critical of the Biden White House’s policies around Israel. So that’s really something to keep an eye on.
The second big wild card here is the Trump legal situation. All four of the Trump criminal trials will begin in phase three, sort of that pre-convention timeframe between March and the convention. So 91 criminal indictments across four separate trials. The Georgia trial, per Georgia state law, will be televised, so buckle up on that. And then that third and final sort of wild card to keep an eye on is abortion rights. Since the Supreme Court overturned Roe v. Wade in the early summer of 2022, Democrats have largely won every bellwether race. So whether this continues to have a real electoral tailwind for Democrats remains to be seen, but it sure feels like those wins will continue to blow, given that Democrats just had another out-performance with the off-cycle races in Virginia and in other places last month.
All right, shifting to sort of the undercard, the Senate, and then we’ll do the House. Both the Senate and the House are in very different geographies. The Senate right now is 51/49 Democratic controlled. The House could be as low as a two-seat margin come the spring, given the vacancies in both Kevin McCarthy’s district and in the George Santos district. But again, unbelievably narrow margins, which reflect an incredibly divided American political electorate.
In terms of the geography for the Senate, it’s really rough for the Democrats. The math is also quite rough. Just in terms of the math, about a third of the Senate is up every two years. Every state has two senators. They have six-year terms. The idea is you roll off about a third every two years. So there are 33 seats up. Democrats are defending 22, Republicans only defending 11, and on those 11 that the Republicans are defending, not a single state was won by Joe Biden. Texas is probably the best pickup opportunity for Democrats to go on offense, and if you’re a Democrat with Texas as sort of your best pickup opportunity, not a great look.
In terms of the 22 seats Democrats are defending, three of them are in heavily Trump states, West Virginia, Montana, and Ohio. With Joe Manchin announcing he’s not running for reelection in West Virginia, you can essentially take that seat off the table. So Democrats now have to defend pretty much every seat across the board, Montana and Ohio being the big ones. But then a number of the key electoral college states also in play, Wisconsin, Michigan, Pennsylvania, Arizona, Nevada. That is a real rough map for Senate Democrats. Now, flipping to the House, completely different narrative. The Democrats have what should be a pretty positive geography and math within those seats. 435 members of the House. There are currently 18 House Republicans in districts Biden won in 2020. There are only five House Democrats in districts that Trump won in 2020.
That shows you that there are just very few swing seats left in the US, right? These are typically either hard-right districts or hard-left districts. Of those 18 House Republican districts, a lot of them are in California and New York. If Trump is the nominee, which we expect he will be, Trump not the most popular Republican in New York and California. So base case, the Senate should flip to the Republicans, the House should flip to the Democrats. For the first time in American history, the House and Senate could flip to opposite parties in a single election. Very on-brand for 2024.
All right, that’s a wrap. This has been Chris Krueger with TD Cowen’s Washington Research Group for Street Cred. Have a great week and a great holiday season.
Thanks for joining us. Stay tuned for the next episode of TD Cowen Insights.
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