Aug. 08



New Senate: DEM 49             GOP 51

New polls:  
Dem pickups: (None)
GOP pickups: (None)

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Overall, a Solid Night for the Democrats

Four states held primaries on Tuesday, and a fifth held a closely-watched special election. Here are the major results and storylines:

• Democrats Probably Came Up Short in OH-12: Both sides mobilized for a contest that has little practical importance (a 3-month term in Congress) but a great deal of symbolic importance. It's close enough that a winner won't be called until the provisional and absentee ballots are counted (followed, very likely, by a recount) but Republican Troy Balderson's 1,754-vote lead (101,574 to 99,820) is probably insurmountable.
  
  Publicly, the GOP will celebrate this as a major victory, and as validation for their November strategy (run on the tax bill). Privately, the pooh-bahs are going to be scared witless. The Republicans just bled something like 10 points over their result from 2016. While it is true that both sides brought out the cavalry, the Republicans did so more aggressively, and will not be able to do that in 50 or 100 districts come November.
  
  Meanwhile, 1,127 people cast their ballots for the Green party candidate. Depending on what happens, that could prove decisive. There are times when it's apropos to cast a protest ballot, but given the environmental record of the Trump administration, that time is not right now. One wonders what it will take for people to learn that a vote for the "ideal" third party candidate is, in effect, a vote for the least ideal major party candidate. Of course, it would be possible to fix the system so people could protest and also not throw the election to their least-preferred candidate, namely by adopting IRV (Instant Runoff Voting) everywhere, so voters could mark their first, second, and third choices.
  
  
• Drama in Kansas: The big race here was for the governor's mansion. On the Democratic side, State Sen. Laura Kelly cruised to an easy victory, crushing her nearest opponent by 30 points. On the Republican side, by contrast, it really is too close to call. Currently, Trump loyalist Kris Kobach has a slender 533-vote lead over Gov. Jeff Colyer (118,591 to 118,058). Absentee and provisional ballots (and the likely recount) could absolutely swing this one in either direction.
  
  There were also two congressional races of note in the Sunflower State. In KS-02, the Democrats already had their candidate in the person of former state house minority leader Paul Davis. He will face a strong opponent in Steve Watkins, who won a comfortable victory over Caryn Tyson. Watkins is a political neophyte, but will be well-served by his boy-next-door good looks and his service as an army ranger.
  
  In KS-03, meanwhile, we have another race that's too close to call. Populist labor lawyer Brent Welder currently holds a very slim 113-vote over Sharice Davids, a Native American and lesbian who put her mixed martial arts career on hold to run for office. Whatever happens, the blue team is going to end up with a candidate who seems an odd fit for Kansas. Still, that person may manage to unseat Rep. Kevin Yoder (R), who isn't terribly popular in his R+4 district.
  
  
• The Night of the Woman: In a strong year for women candidates, it was a strong night for women candidates. At least 29 women advanced to the next round on Tuesday, a number that could grow as large as 33 once all the close races are called.
  
  Particularly noticeable was the success of women candidates in Michigan. There, the Democrats will run a woman for governor (Gretchen Whitmer), for the U.S. Senate (Debbie Stabenow), and for at least seven (and possibly as many as nine) of the state's 14 house districts. Whitmer, Stabenow, and four of the female congressional candidates are heavily favored to win. That includes Rashida Tlaib, who will surely claim the D+32 district (MI-13) that John Conyers had to vacate due to sex scandal, and who will thus become the first Muslim woman elected to Congress. She probably shouldn't expect to be added to the White House Christmas card list.
  
  Women candidates also did well in Washington. There, the Senate race will be between two women: Democrat Maria Cantwell (who is going to win) and Republican Susan Hutchison (who isn't). The blue team will also run women in at least 5 (and maybe 6) of the Washington's 10 House districts (and the red team will do so in 2). Still up in the air is WA-08, where Kim Schrier holds a narrow 1,261-vote lead over Jason Rittereiser (18,938 to 17,677). Whoever prevails there will get lots of support from the DCCC, as the even-PVI district is high up on the Democratic target list.
  
  
• Progressive Coattails?: Alexandria Ocasio-Cortez and Bernie Sanders are potentially a pretty lethal 1-2 punch, as they are both avowedly leftist, but they cover a wide range of demographics (young/not so young, Latina/white, female/male, lives in urban New York/lives in rural Vermont, and so forth). Thus far, however, their coattails have been pretty short. They may, or may not, have helped Welder to victory in Kansas with their campaigning for him. Meanwhile, the gubernatorial candidate they stumped for in Michigan—Abdul El-Sayed—got crushed by 21 points, losing to the more moderate Whitmer.
  
  
• Trump's Coattails?: Trump is already claiming credit for what happened in OH-12, making the utterly unfounded assertion that he moved the needle by 28 points:
  
  

  When I decided to go to Ohio for Troy Balderson, he was down in early voting 64 to 36. That was not good. After my speech on Saturday night, there was a big turn for the better. Now Troy wins a great victory during a very tough time of the year for voting. He will win BIG in Nov.

  — Donald J. Trump (@realDonaldTrump) August 8, 2018

  
  Undoubtedly, if Kris Kobach prevails, Trump will similarly claim credit. But while that might impress the base, party pros are learning the lesson that the President has very short coattails, if he has any at all. There's no exit polling data that tells us if Trump swung a point or two toward Balderson/Kobach with his endorsements, or cost them a point or two, or had no impact at all. Given what the polls said before the President's involvement, the latter is the likeliest of the three. In any event, as with his rallies, and his fundraising (see below), it is clear that Trump is very good at getting Donald Trump elected, but not much of a force when it comes to electing others.

So there it is, a few hours after polls closed. Undoubtedly, there will be takeaways aplenty today, and perhaps some interesting trends will be noted in municipal-level elections. On Saturday, Hawaiians will go to the polls to choose which Democrats they want to trounce the sacrificial lambs put up by the GOP. And then, next Tuesday is a pretty big day, as another four states (Minnesota, Wisconsin, Connecticut, and Vermont) hold primaries. Since two of that list are key swing states, it should be very interesting. (Z)

Gates Continues to Dish on Manafort

Another day in federal court, another bad day for Paul Manafort. His former-associate-turned-stool-pigeon, Rick Gates, was once again the star witness, and was once again devastating. Gates clearly took very good notes while working for his former boss, and then reviewed them before his testimony, because he appeared to know every detail of...well, everything. Particularly brutal for the defense was the introduction of a number of e-mails from Manafort to Gates about various shady activities, like wiring money to secret offshore accounts or doctoring Manafort's books. If the defense is going to stick to its position that Gates was 100% responsible for what happened, and Manafort was in the dark, they are going to have a hard time explaining away those e-mails. Maybe they can claim Manafort was sleep-emailing.

In the afternoon, the defense began its cross examination of Gates, but witnesses generally agree they didn't get far. They tried to use Gates' extramarital affairs, and his other sleazy (and illegal) behaviors against him, but he already frankly admitted to all of that on Monday, and was happy to admit to it again on Tuesday. So, it's not exactly the "gotcha!" moment that counsel was hoping for. Meanwhile, Gates was either coached by Team Mueller, or else has experience with this kind of thing, because he made a point of answering the hostile questions in a flat, dispassionate voice, and of calling his former boss "Paul" instead of "Mr. Manafort." Thus far, the defense has made no effort to support its assertion that Gates acted alone. On Wednesday, they will have to make a decision whether to stick with that narrative, or to go in another direction.

The other tidbit from Tuesday is that Donald Trump's name came up in court for the first time. This happened during questioning about Stephen Calk, a banker Manafort wanted Gates' help in getting connected with Trump's campaign. It's also possible that some of the evidence tentatively introduced on Tuesday, like Yankee tickets that were distributed to friends and associates, could be Trump-linked, but thus far the prosecution is keeping details close to the vest. Overall, the President is not expected to play too much of a role in this particular trial, due to a pre-trial agreement to largely avoid discussing Manafort's political activities.

In any case, today may be "make or break" for the defendant (unless we assume he's already broken). If the defense can't significantly undermine Gates' testimony, in one way or another, it is hard to see how Manafort can come out of this thing without a guilty verdict (or 10). As a reminder, if he is convicted on all counts, and is given the maximum sentence for each, he would face 305 years in prison. Even if he gets just 10% of that, it would effectively be a life sentence for the 68-year-old. (Z)

Next Round of Tariffs on Chinese Goods Revealed

The Trump administration has unveiled several lists of goods that are likely to be targeted with tariffs. What really matters, however, is when an actual decision is made. The first set of tariffs, which imposed a 25% duty on $34 billion in Chinese goods, took effect in July. On Tuesday, the administration announced the second wave of tariffs, which also impose a 25% duty. This time, approximately $16 billion in goods are affected, and the effective date is August 23.

Some of the goods targeted are fairly commonplace items, including motorcycles, electric motors, microprocessors, tractors, and antennas. Others are a little more obscure. For example, anyone who was planning to stock up on Chinese propylene copolymers better do it quickly. The office of the U.S. Trade Representative has offered relatively little comment on how products are chosen for the lists, but hopefully there is some rhyme or reason to it. In any event, the Chinese have already threatened retaliation. Given that round two of this squabble will be waged just eight weeks before the midterms, it means that Team Trump is clearly OK going into the midterms with ownership of an emerging trade war. But then again, Trump believes trade wars are good and easy to win. Now all he has to do is convince the rest of the Republican Party, which hates them. (Z)

Cohen Is Under Investigation for Tax Fraud

The Wall Street Journal is reporting that Donald Trump's former fixer, Michael Cohen, is under investigation for multiple kinds of financial fraud. Cohen owns a large number of taxi medallions, which are leased out to taxi drivers. The taxi business used to be an all-cash business, making it easy to hide income. Cohen is accused of not reporting all his income to IRS—that is, he's accused of tax evasion. The amount of tax he didn't pay is reported to be hundreds of thousands of dollars, which puts him well into "felony" territory.

But there is more. When the value of the taxi medallions took a nosedive due to Uber and Lyft, Cohen needed money so he applied for bank loans. On the loan forms, rather than under-reporting his income, he may have over-reported it. Lying on a bank application is bank fraud, another felony. And there may be more than hasn't leaked out yet.

The investigation is being done by federal prosecutors in New York who are not connected to special prosecutor Robert Mueller. Nevertheless, if Cohen were to spill the beans to Mueller, buckets and buckets of beans, Mueller might be willing to put in a good word for him with the New York prosecutors. So at least indirectly, the pressure on Cohen has been ramped up again. (V)

Trump Has Raised $135 Million, Much of it for His Reelection

Incumbent president always go to fundraisers while in office. It comes with the territory. Donald Trump has done it, too, holding 29 fundraisers since in office. But most presidents raise money during their first two years for their party's midterm coffers. For Trump, by contrast, almost half of his fundraisers so far have been for his reelection campaign, not for the RNC or other Republican committees, or for Republican candidates. Since he has held the smallest number of fundraisers since Jimmy Carter—and almost half were for him—he hasn't actually been a powerful money machine for the Republican Party. Here is how the number of personal vs. party fundraisers have been for the past six presidents.

As you can see, not only has Trump held fewer fundraisers total than other presidents, but he is the only one to raise money for himself before the midterms. With other presidents, the motto was "party first." With Trump, it is not "America first," or even "Republicans first," but "Me first." (V)

Corporations Have Discovered the Democrats

If there is one concept that corporate executives understand as no other, it is return on investment. And that applies to political investments as well as business ones. In particular, donating money to a losing candidate is like putting money into a subsidiary and having it go bankrupt. The money is gone forever and the return is zero (unless, of course, it is a casino and you are Donald Trump). For this reason, corporations like to back winners, since winners can do favors after being elected. Welcome to the swamp.

In this light, it is noteworthy that corporate PAC contributions to Democrats, especially House Democrats who are in line to chair powerful committees, are way up this year. This means that the executives are coming to believe that the Democrats may capture the House, so they want to get into the good graces of the new leaders. The distribution of the cash seems to follow a pattern: The more important you are, the more you get. Rep. Richard Neal (D-MA), who will become chairman of the House Ways and Means Committee (which writes the nation's tax laws) if the Democrats take the house, got $736,000. Rep. Peter DeFazio (D-OR), who will head the Transportation Committee in a Democratic House, got $255,000. Poor Rep. Eddie Bernice Johnson (D-TX), the ranking member of the Science Committee, got a mere $65,000.

While the recipients may be initially happy with "free money," it may come back to bite them later. The Democrats are having an internal war over whether or not to accept the corporate donations. For most members, the temptation to take money from the corporate PACs is enormous because small donors only give to congressional candidates who are celebrities in one way or another, the poster child being Jon Ossoff, who lost a high-profile race in Georgia last year despite raising $16 million from small donors. Contrast that with Rep. Jerrold Nadler (D-NY), a 13-term congressman who is generally under the radar but who will be in charge of the Judiciary Committee (and thus impeachment proceedings) if the Democrats elect 218 or more members. He has raised just $8,500 in small donations this cycle, so the $162,000 he got from corporate PACs is real money to him. All that notwithstanding, 170 Democrats have decided not to accept money from corporate PACs. Of course, it is easier to take that position if your views are such that no corporate PAC would ever give you a penny. The Democrats are going to be wrestling with this dilemma for a long time unless small donors begin writing a lot more checks to ordinary representatives who are not in the news a lot. (V)

Nearly Half of Republicans Want the President to Be Able to Ban News Outlets

A new Ipsos poll shows that 43% of Republicans think the president should have the authority to shut down news outlets engaged in bad behavior. Given that 48% of Republicans see the news media as the "enemy of the American people," this is not surprising. Only 12% of Democrats believe that. In addition, 72% of all Americans think it should be easier to sue reporters who publish false information.

What the pollster didn't do, and what might have been interesting, was ask Republicans who are for granting the president such power whether they understood that such authority meant that the next Democratic president could simply close down Fox News by decree (Democrats could have been asked if they were OK with Trump closing down the New York Times). What Americans don't appear to understand at all is that when the president is of your party and is granted sweeping powers, that may seem peachy keen, but if the next one is from the other party, you may not like the result. Politicians tend to understand this better than voters. This is why Senate Majority Leader Mitch McConnell won't abolish the filibuster. He knows that some day he (or maybe his successor) will be minority leader and will regret having thrown away a tool he wishes he had. (V)

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