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Election Day - Can The Republicans Hold On?

FORECASTS & TRENDS E-LETTER
By Gary D. Halbert
November 6, 2006

IN THIS ISSUE:

1.  Election Day At Last!

2.  Huge Response To “All They’ll Need To Know”

3.  Too Little, Too Late For The Republicans?

4.  The Latest Polls & Key Races To Watch

5.  What Happens If Both Houses Go To The Dems?

6.  Media Bias Definitely Favors The Democrats

7.  2008 Presidential Election Starts Wednesday

Introduction - Election Day At Last!

I’m sending this E-Letter on Monday afternoon, since tomorrow is Election Day.  I hope everyone reading this will be sure to vote tomorrow if you haven’t already.  This is one of the most important midterm elections in years as majority control of both houses of Congress hangs in the balance.  Will Nancy Pelosi, one of the most liberal and angry politicians in Washington, become the Speaker of the House?  Will Harlem Democrat Charlie Rangel become chairman of the powerful House Ways & Means Committee and cut off funding for our troops in Iraq as he has threatened?  Will Jack Murtha who wants an immediate withdrawal from Iraq be the new chairman of the House Defense Appropriations Committee?  I hope not, but the polls look that way the day before the election.

Just a month ago, as I wrote in my October 10 E-Letter, the polls decidedly indicated that the Democrats would easily win the 15 seats needed to regain the majority in the House.  Some polls had the Dems taking 30-50 seats in the House.  Likewise, most polls a month ago put the Senate very much in play, with some polls showing the Dems would gain at least the six seats needed to win control, and maybe more.

But the race has tightened in the last 2-3 weeks.  Republicans focused on “national security” as the #1 issue, and several GOP candidates have moved up in the polls.  It remains to be seen if the GOP can hang on to the House, which is doubtful, and the Senate.  I will be watching the races closely throughout the day and tomorrow evening, and hoping for the best, as I’m sure many of you will.

As I will discuss below, we may not know the results of the election by the time we go to bed tomorrow tonight.  Many of the races look to be so close that it’s almost certain we will see some contested elections, vote recounts, etc.

In the pages that follow, we’ll talk about the election, the aftermath of the election, the next election – the 2008 presidential election, which begins Wednesday, by the way – and more.  I will also share with you the results of a new a study which confirms that the mainstream media is definitely biased toward the Democrats.  But first, I need to revisit last week’s E-Letter.

Huge Response To “ALL THEY’LL NEED TO KNOW”

In last week’s E-Letter, I wrote at some length about the importance of planning for your own death and, in particular, how critical it is that you have all of your financial and investment information recorded in one convenient place for your heirs.  In an effort to help with that, we negotiated the rights to print a very useful booklet entitled All They’ll Need To Know, and I offered it FREE of charge to all clients and readers of this E-Letter.

I am happy to report that we have been inundated with requests for All They’ll Need To Know over the last week, and requests are still streaming in.  We initially printed 3,000 copies of the booklet, thinking that would be ample to handle all the requests.  No way!  We have had a huge response from readers, and had to order an additional 2,000 copies for a total of 5,000.

I must tell you that this is by far the largest response we have ever received for anything I have offered in this E-Letter.  We’re amazed!  And we got more comments from readers than ever before.  I am overwhelmed with the number of readers who took the time to thank me for writing this weekly E-Letter and tell me how much they enjoy it.  When you work so hard week in and week out on something like this E-Letter, it is very gratifying to hear from so many readers with such positive comments.  Likewise, I am very pleased that so many of you took advantage of this offer.

If you did not request your free copy of All They’ll Need To Know, you can still do so by calling us at 800-348-3601 or you can request it by using our online registration form.  If you have loved ones that you feel may need one, you can also request extra copies as long as supplies last.

Too Little, Too Late For The Republicans?

As noted above, a number of House and Senate races have tightened over the last 2-3 weeks with several Republican candidates becoming more competitive as the election drew closer.  But can the Republicans manage to hold on to majority control of both houses of Congress?  The polls on the last day before the election don’t look good for the GOP, despite the following.

Senator John Kerry made the political mistake of the decade last week when he insulted our troops in Iraq, and after intense pressure to do so, he subsequently apologized (sort of) for it.  Kerry’s gaffe stunned the Democratic field of candidates, many of whom rushed to criticize Kerry publicly, and it simultaneously inflamed many GOP voters.  It remains to be seen if Kerry’s blunder will energize Republican voters who planned to sit this election out.

[There is an excellent editorial on the John Kerry flap in SPECIAL ARTICLES below, written by the father of a slain American soldier in Iraq – see “Shame On Him” - John Kerry below.]

Even though several of the races have tightened in favor of the GOP, the question remains, is it too little, too late for the Republicans?  Most of the polls suggest the answer is yes, at least for the House of Representatives.  There has been a shift among the electorate toward the Democrats, largely due to discontent with the Bush administration, the war in Iraq, etc.  Polls show that “independent voters” are breaking two-to-one in favor of the Democrats this year.

For the last couple of months, I have been thinking that when it comes time to go in the voting booth, many Americans who say they will vote Democratic won’t actually do so.  Considering the liberals in the House who will take over the leadership positions (Pelosi, Rangel, Murtha, Conyers, et al), I thought many voters would reconsider voting to put these people in control.  But the polls still suggest this may be wishful thinking on my part.

By the way, regardless what happens at the polls tomorrow, there is a good chance we won’t know which party controls the House or the Senate by the time we go to bed tomorrow night.  Many of the races are likely to be won or lost by razor thin margins; others are almost certainly going to be contested and recounted; and some may be decided in the courts.  Thus, it’s possible it could be several days or even weeks before we know the final outcome.

This may be especially true if the Republicans somehow manage to retain majority control of the House of Representatives.  The media will scream “foul play” and demand recounts.  Speaking of the media, a brand new study from the Center For Media & Public Affairs revealed an astounding liberal bias by the major news networks (ABC, CBS & NBC) over the last couple of months leading up to the election.  I’ll give you the surprising numbers below.

The Latest Polls & Key Races To Watch

Some new polls released over the weekend show that the Republicans are gaining ground but are still behind, especially in the House.  A Pew poll released on Sunday showed that likely voters still favor Democrats by 47 to 43 for the GOP, down from an 11 point spread two weeks ago.  A USA Today/Gallup poll released on Sunday showed the race had narrowed to only a seven-point advantage for the Dems, down from 13 points two weeks ago. 

The latest ABC/Washington Post poll has the generic spread down to only +6 for the Dems.  RealClearPolitics.com reports this morning that the generic ballot has narrowed to only +9.6 in favor of the Democrats.  So, the race is narrowing, but as noted above, it may be too little, too late for the Republicans.  Electionprojection.com forecasts the Democrats will win a net 17 seats in the House.

While the races are narrowing, most of the major polling groups still predict that the Democrats will win 15-20 seats and gain the majority in the House, but predictions of a landslide (40-50 seats) have mostly evaporated in the last 2-3 weeks.  National elections have a history of tightening in the final days, and this one appears to be no exception.  Let’s look at some numbers and the key races to watch.

Considering the latest polls, it looks like the Democrats have a “lock” on 13-14 net House seats, with another 6-8 seats that could go either way.  Assuming the Democrats win several of the 6-8 toss-up seats, they will take majority control of the House, but probably by only a slim margin of a few seats. 

As for the Senate, most polling groups now believe the GOP will hold on to a very slim majority, or at least a tie which can be broken by Vice President Dick Cheney.  The Democrats must win a net six seats to gain control of the Senate.  There are five Republican Senate seats that are likely to go to the Democrats; and there are two Democrat seats that are likely to go to the Republicans – a net three to the Dems.  Plus, there are three other Senate races that are toss-ups.

As of yesterday’s latest polls, here are the five Republican Senate seats that are expected to go to the Democrats: MN (open seat); OH (Dewine); PA (Santorum); RI (Chafee); and WA (Cantwell).  The two Senate races expected to go to the Republicans are: AZ (Kyl); and TN (open seat).  In TN, Republican Bob Corker has opened a beyond-the-margin lead on challenger Harold Ford.  If these races go as expected by the polls, that is a net pick up of three by the Democrats. 

That leaves three other Senate races that are still too close to call – Missouri, Montana, and Virginia - that we need to watch the closest.  As of yesterday’s latest polls, Missouri Republican Senator Jim Talent was in a dead-heat with Democrat challenger Claire McCaskill – this one could go either way.  Surprisingly, Virginia Republican Senator George Allen is now in a dead-heat with Democrat challenger James Webb – this one could also go either way.  In Montana, Republican Senator Conrad Burns has trailed Democrat challenger Jon Tester for months, but as of the weekend, Burns had moved up to within the margin of error.  These are the key Senate races to watch tomorrow night.

The Democrats need to run the table and win all of these three tight races – MO, MT and VA – in order to win a majority in the Senate.  I expect the Dems will win one or two but will not win all three, in which case the Senate will remain in Republican majority, or at least a 50-50 tie which can be broken by Vice President Cheney.  That remains to be seen, of course.

In summary, if we are to believe the latest polls, the House will go to a slim Democrat majority, and the Senate will remain in a very slim Republican majority, or a tie, following today’s elections.  I hope this summary of the last-minute close races is helpful as you watch the election results tomorrow evening, and possibly over the days ahead in case several races are contested.

What Happens If Both Houses Go To The Dems?

There has been a great deal of speculation as to what will happen if the Democrats regain control of the House of Representatives and possibly the Senate.  The good news is, it appears the Democrats will have only a narrow majority in the House.  But as discussed earlier, even with a slim majority, the Dems will control the chairmanships of all the committees, and thus the agenda.

There is the real possibility, as discussed above, that the House could cut off funding for the war in Iraq, although I would not expect that to happen immediately.  If the Democrats pull our troops out of Iraq, Iran will fill the vacuum (ie – take over) and terrorists around the world will be emboldened.

If the Democrats are in control, President Bush’s tax cuts will not be made permanent and could even be repealed or scaled back.  This will not be good for the stock markets in my opinion.  The Democrats want to bring back the death tax as well.  The Democrats will not allow increased domestic drilling for oil, nor any progress on school choice.  The list goes on.

Perhaps most importantly, President Bush will not be able to appoint conservative judges to the Supreme Court.  It was hard enough to get Justices Roberts and Alito confirmed even with a Republican majority.  But do most voters even care anymore?

Then there’s the issue of impeachment.  Nancy Pelosi said recently that if she is the Speaker, the House will not pursue impeachment of President Bush for the war in Iraq.  But I’m not one to believe Rep. Pelosi.  Rep. John Conyers of Michigan would become the chairman of the House Judiciary Committee if the Democrats take over, and he has said that he will push to impeach the president.  At the least, he says he will push for censure of President Bush.

If the Democrats win the House and elect to pursue such investigations and go for censure or impeachment, that virtually guarantees that nothing much else will get done in the next two years.

I have included in SPECIAL ARTICLES below an excellent editorial from a leading liberal who will NOT be voting for Democrats in the election tomorrow, and his reasons why.  It’s a bit long but well worth the read.  See “A leading liberal speaks out against the Democrats…” below.

Media Bias Definitely Favors The Democrats

If the Democrats do win control of one or both houses of Congress, they will have the mainstream media to thank for it.  I have written on many occasions in the past about mainstream media bias.  Whenever I write about this issue, I get letters and e-mails from readers that not only disagree but also argue that there is too much conservative bias in the media.  As always, I hasten to disagree.

Now we have a new study from the Center For Media & Public Affairs (CMPA), a non-partisan group, that confirms what I have told you for years.  CMPA conducted an audit of the “Big Three” TV networks – ABC, NBC & CBS – for the six week period from September 5 through October 22.  During this period, there were a total of 167 stories on the midterm election, candidates, issues, trends, etc. 

And the result: 77% of Big Three election stories favored the Democrats, while only 12% favored the Republicans.

Robert Lichter, director of the CMPA, said: "The numbers are pretty striking. The coverage has become a referendum on Republican leadership.  Now, we've known for many years that reporters, editors and news executives are overwhelmingly liberal or Democrat. There really isn't much point debating that anymore. But what's changed here — this time around — is the willingness to come out of the closet. Instead of just tilting left in the story while pretending to be objective, the mask is now off. The mainstream media, typified by the ‘Big Three,’ is rooting for the Dems to win, and slant coverage to make it happen.”

The Media Research Center (www.mediareseasrch.com) is another of my favorite media watchdogs.  MRC’s president Brent Bozell issued the following statements last week:

“The liberal bias at ABC is abundant and obvious. They are doing all they can to sour conservatives against voting next week and to spread disillusionment among Republicans. Good Morning America supposedly found five voters of different stripes, not a one of whom supports the President or the GOP.

“The bias is obvious. ABC is painting a highly selective picture of the American electorate. This is on par with similar ‘news’ stories coming out of CBS and NBC, as well as CNN and MSNBC. It’s electoral water torture: a drip, drip, drip of bad news. No good news anywhere for Republicans is reported. It’s all geared to help Democrats get elected.”

I have argued that there has been a growing liberal slant in the mainstream media for years.  As I wrote back then, by the time Bush won re-election in 2004, the mainstream media had lost all objectivity, and it’s gotten even worse in the months leading up to this election.  For those who might disagree, I invite you to read the daily MediaResearchCenter analysis for a week or so.  They point it out every day on their website.  And now, the latest Center For Media & Public Affairs study proves liberal bias in the media is even worse than we thought!

2008 Presidential Election Starts Wednesday

Many Americans will be glad to see Election Day come and go.  While most midterm elections are rather blah, this one has been the nastiest ever.  So most people, I suspect, will be happy when November 7 is over.  However, let me remind you that the 2008 presidential election will begin on Wednesday.  So don’t expect much peace and quiet on the political front.

Depending on which estimate you believe, candidates spent $1 billion to $1.2 billion on this midterm election, a record amount of money by a longshot.  This does not include another $1.5 billion or so spent by the parties, “PACs” and advocacy groups.  Political analysts are already projecting what it will cost candidates to run in the 2008 presidential primaries and the election itself, should they win their party’s nomination.

I’ve already seen estimates that it will cost a presidential candidate $100 million or more just to run in the 2008 primaries.  Likewise, I’ve seen estimates that the two candidates that win the nominations will have to spend as much as $400 million each in their respective races.  And these numbers could be low.

The shear cost of the 2008 campaign means that candidates will have to declare early and begin aggressive fundraising activities.  Some already are, of course.  But because of the cost and the need to raise enormous amounts of money, we will see the candidates announcing their intentions much earlier than in previous elections.

So, rather than being over, the political season is just getting started.  Sorry.  

Closing Thoughts

After watching the news, seeing the latest polls out yesterday and today, and listening to various party officials today, it does appear that the House and Senate races are tightening, mostly in favor of the Republicans.  GOP bosses say their “internal” polls over the weekend show a greater shift toward the Republicans than do the major public polls.  That may be true, but what else are the Republicans going to say?

Yet even in the face of the numbers tightening over the last few days, the public polls still suggest that the Dems will gain at least the 15 seats needed to retake the House, but most likely only by a slim margin.  The Senate will be close.  In addition to Missouri, Montana and Virginia, where the Democrats need to run the table to retake the Senate, keep an eye on Maryland where Republican Michael Steele is gaining ground on Democrat Ben Cardin who is ahead by three points as of today.

It is still my hope that there are a lot of voters who say they’re going to vote for the Democrats tomorrow, but won’t actually do it.  I hope the Republican internal polls are accurate.  And I hope the GOP’s “get-out-the-vote” machine is successful.  But historically, the polls are pretty accurate within 24-48 hours of the election.  So we’ll see.

I know one thing.  If by some chance the Democrats do not win control of at least the House tomorrow, the Party will be devastated.  Howard Dean will be sent packing, and Hillary will get to pick the next DNC chairman, most likely Rahm Emanuel.

That’s all for this edition.  Be sure to get out and vote tomorrow!

Very best regards,

Gary D. Halbert

SPECIAL ARTICLES

“D” [Democrat] Stands For “Defeat”
http://www.realclearpolitics.com/articles/2006/11/d_stands_for_defeat.html

A leading liberal speaks out against the Democrats,
for Bush, and why we can’t lose the War On Terror.
http://www.realclearpolitics.com/articles/2006/11/the_only_issue_this_election_d.html

Let The Recounts Begin
http://nationaljournal.com/about/njweekly/stories/2006/1103nj1.htm

“Shame On Him” - John Kerry (a must read).
http://www.opinionjournal.com/extra/?id=110009186


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Forecasts & Trends E-Letter is published by ProFutures, Inc. Gary D. Halbert is the president and CEO of ProFutures, Inc. and is the editor of this publication. Information contained herein is taken from sources believed to be reliable but cannot be guaranteed as to its accuracy. Opinions and recommendations herein generally reflect the judgement of Gary D. Halbert (or another named author) and may change at any time without written notice. Market opinions contained herein are intended as general observations and are not intended as specific investment advice. Readers are urged to check with their investment counselors before making any investment decisions. This electronic newsletter does not constitute an offer of sale of any securities. Gary D. Halbert, ProFutures, Inc., and its affiliated companies, its officers, directors and/or employees may or may not have investments in markets or programs mentioned herein. Past results are not necessarily indicative of future results. Reprinting for family or friends is allowed with proper credit. However, republishing (written or electronically) in its entirety or through the use of extensive quotes is prohibited without prior written consent.

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