N Korea Blusters and Threatens; The CIA or FBI Spies on Trump Campaign; China-US Trade “Consensus”

THE TUCHFARBER REPORT

Accurate Facts, Analysis, and Forecasts

In-Brief

  1. No surprise! N Korea returns to threats, posturing, and bluster.
  2. The CIA and/or FBI was spying on the Trump campaign before he was even nominated.
  3. A China-US trade “consensus” is announced that appears very favorable to the US.
  4. Primaries in PA. NE, OR, and ID provided more evidence that a Democratic Establishment versus Progressives civil war is underway.
  5. PREDICTION: The Democrats will gain 5 to 15 US House seats this fall.
  6. PREDICTION: The Republicans will gain 4 to 7 US Senate seats.

In-Depth

Elections

What are the Primaries Telling Us?

We have had primaries in 10 states so far—IL and TX in March; IN, NC, OH, and WV two Tuesdays ago; and four more last Tuesday—PA, NE, OR, and ID. That includes five of the 10 most-populated states.  Collectively and individually across the states, no evidence of a Democratic Blue Wave has emerged. The pundits keep predicting one, but they predicted a Clinton landslide in 2016.

Major breakthroughs were predicted for the Ds in Texas, but those did not occur. Ohio, a traditional battleground state, should have produced Democratic successes if a Blue Wave was developing. But it produced numbers more like 2010 and 2014, when Republicans swept the elections, rather than like 2006, when the Democrats did.

In the four states voting last week, Republicans nominated no sure losers in a major race where they had a notably stronger candidate. Such was not true for the Democrats, as “progressives” out-polled more likely fall winners in several important races.

In two House seats in PA and one in NE, progressives defeated “establishment” Ds. All three districts are quite competitive. “Progressive” Democrats argue the country is ready for Bernie Sanders type socialism. Perhaps it is, perhaps it is not. Establishment Ds are worried winnable House seats will be lost. The voters will decide.

Let’s watch the rest of the primaries play out…

Watch Texas

Tomorrow, TX [runoffs], GA, KY, and AR vote. We’ll learn more from those primaries, especially from the runoffs in TX where the D civil war is playing out in some races.

Polls and Media

Gallup—US Satisfaction at 13-Year High

A Gallup Report released last week showed satisfaction with how things are going in the US at 37%, the highest level since 2005. The economy was good in 2005, and the Iraq war had not yet become enormously unpopular, as it did by late 2006.

The story’s author attributes the relatively good current rating to low unemployment… record lows for many group… and hope for peace in Korea.

Note how that matches the point I make each week in this newsletter – that jobs and war-peace are the main drivers of public opinion.

37% sounds like a low level of satisfaction but it is about what the Gallup measure has averaged since its inception in 1979. We Americans have high standards and expect much.

I prefer to use the “Right Direction-Wrong Track” measure as an election predictor as more pollsters regularly report it, but the Gallup measure is also a good predictor. Since the metric’s inception, the party in power has suffered major election defeats in 1980, 1982, 1992, 1994, 2006, 2008, 2010, and 2014. Gallup’s average measure of satisfaction immediately before those elections was about 23%.

We’ll watch this measure as the November elections near. If it gets well below 30% the Rs are in trouble. If it stays above 30%, the Ds will likely make modest, but not large gains.

Don’t forget the Tuchfarber 30 Day test — when you get upset about something in the news, ask if it is likely to be IMPORTANT in 30 days or so. Only seldom will it be relevant then. So, ignore it and lower your blood pressure.

Trump and the White House

CIA and/or FBI spying on Trump Campaign before Nomination

At least one CIA or FBI operative appears to have been interacting with and spying on the Trump campaign before Mr. Trump was even nominated. Many sources have identified the informant as Stefan Halper, an American academic and expert on foreign affairs. He served in several previous Republican administrations. He also frequently “informed” and spied for the CIA.

In 1974, President Richard Nixon was forced to resign from office because of a bungled burglary at the Democratic National Committee offices in the Watergate complex. He also used government resources and officials to cover up the crime.

In 2016 we had Obama administration minions spying on the Trump campaign and PERHAPS entrapping it into actions that later were used to justify the FBI investigation. That FBI probe also led to the naming of special counsel Robert Mueller.

“Oh, what a tangled web we weave.”

Let’s not get too far out in front of the facts, but things look very nefarious. Various congressional committees are demanding the facts and documents. Those will surface in coming months.

A few of the questions that should be answered are:

  1. What Obama officials authorized this spying?
  2. Was anybody in the Clinton campaign informed of any of the information gathered or of the existence of the plant?
  3. Was this all a “set-up” to justify a charge of Trump-Russia collusion?
  4. Was Halper a Republican “Never-Trumper?”
  5. Who all in the Obama administration, intelligence community, DOJ, and FBI were involved?

Stay tuned… These questions and many others are almost sure to be answered in coming months.

US-China Trade “Consensus”

An important agreement has been reached between the Trump administration and President Xi’s Chinese representatives. It appears to be very favorable for the US, but I’ll let you judge, based on reporting by major British and Chinese news outlets.

The left-leaning Guardian of Britain reports, “China and US reach ‘consensus’ on reducing trade gap.”

Xinhua, the Chinese news agency, reports…

“WASHINGTON, May 19 (Xinhua) – China and the United States issued a joint statement on Saturday on economic and trade consultations, vowing not to launch a trade war against each other.

Based on the directions of Chinese President Xi and U.S. President Donald Trump, the Chinese and U.S. delegations constructed consultations on trade issues on Thursday and Friday, the statement said.

The two sides agreed to take effective measures to substantially decrease the U.S. trade deficit in goods with China.

China will significantly increase its purchase of goods and service to meet the consumption needs of the Chinese people and propel the high-quality economic development of China, which also helps support U.S. economic development and employment, according to the statement.

The two nations agreed to meaningfully increase the export of U.S. agriculture and energy products. The U.S. side will send a delegation to China for further consultations.

The two sides talked about the expansion of trade on manufactured goods and service, and have reached consensuses to create favorable conditions to increase trade in those areas.

The statement said that the two sides highly valued intellectual property protection and agreed to promote cooperation in this regard.

China will promote revision of related laws and regulations including the Patent Law, according to the statement.

The two sides also agreed to encourage the two-way investment and committed to creating a business environment for fair competition.

The two nations agreed to maintain high-level contacts in this regard and actively seek to resolve their economic and trade concerns.”

That is the reporting from the Chinese side.

The direct implications from this agreement are notable, BUT THE DEVIL IS IN THE DETAILS AND THE IMPLEMENTATION.

There are enormous indirect ramifications for numerous other countries and companies that I’ll discuss in future blogs.

No specific trade deficit-cut goals were reached. They were strongly resisted by the Chinese and unlikely to be achievable in any case. The US goal of a $200B deficit reduction was never realistic.

The ZTE case is still to be settled, separately. The form of its resolution will be very important as well.

Tidbits, Follow-Ups, Nuggets, and Reminders

This section is devoted to short, interesting items, and brief follow-ups to stories from previous issues.

Democrats in Search of a Message that Will Work

Democrats continue to search for a political message for the fall elections beyond “Resist Trump.” That message gets less and less viable as Trump’s approval rating nears 50%.

“Resist Trump” is effective in getting out some of the Democratic base, but not all. More importantly, it is unlikely to pull many independent, swing voters their way.

“Impeach Trump” has been abandoned by Democratic leaders because it energizes the Republican base. As the D leaders know, Bill Clinton INCREASED his popularity when the Republicans were impeaching him.

Over the last two weeks, Ds have attacked the Rs or Trump over “net neutrality,” Israel killing Hamas members attacking them, and Trump calling MS-13 thugs “animals.” See any political winners there?

Can you explain “net neutrality?” The experts can’t. How does the average voter relate to a concept they are clueless about?

I apologize for repeatedly coming back to this topic, but I am a campaign strategist. You can’t win a competitive race without an understandable, compelling message. The absence of one in 2016 is, in part, why Hillary and other Democrats lost.

The Rs have record numbers of jobs, a healthy economy, tax cuts, and conservative judicial selections to run on.

What are the Ds going to talk about that moves voters for whom Trump hatred is not all-consuming?

Predictive Political & Economic Measures

2018 election prediction summary

Below are several election and policy predictions that I present each week and change if my indicators change. Speaking only to the 2018 election predictions, my current evaluation is:

  1. The Republicans will lose 5 to 15 net US House seats but maintain a small majority.
  2. The Democrats will lose 4 to 7 US Senate seats with the Republicans adding to their current razor-thin 51-49 majority.

POLITICAL MEASURES

  1. Right Direction-Wrong Track— This measure is widely used by pollsters, asking if things are going well or badly in the US. It has proven to be a good indicator if the party “in-power” was going to do well or badly. If the “wrong-track” reading is 62% or higher, it bodes ill for them. If 58% or lower, they do well. THIS IS MY MOST-PREFERRED ELECTION PREDICTION MEASURE. I use many quantitative and qualitative indicators, but this one seems to strip out a lot of extraneous noise. “Wrong-Track” is now at 52%, unchanged from last week.
  2. Generic Congressional Ballot—Also used by many pollsters, this indicator measures the current preferences of voters for which party they prefer in US House races. The polls I’m averaging are at 42% D and 38% R, the D lead unchanged from last week. More important is that the Democratic lead has fallen from about 13% at the beginning of 2018 to 4% now. Historically, Ds need a solid lead on this measure to win a House majority.
  3. Presidential Approval—Trump’s approval rating, using my measure, is now 47%, up 1% over the week and a significant jump of 4% from three weeks ago. We’ll see if this increase persists and look to see why, if it continues. His approval rating is up from 40% at the start of the year. It’s nearing or at the average level for recent Presidents. But because of his unique and often disruptive style, the Gallup organization and others, including me, believe this measure underestimates his real approval ratings by 5% or more. I will report his approval rating, but will use it for trend analysis, not election predictions.

ECONOMIC MEASURES

  1. U-3 official unemployment rate—The current level is 3.9%, a 17-year low. Low or falling levels of this measure are a positive for the “in” party. It is low and falling now, down from 4.8% a year ago. GOVERNMENT SURVEYS NOW SHOW THE US HAS MORE JOB OPENINGS THAN IT HAS JOBLESS FOLKS ACTIVELY SEEKING WORK.
  2. U-6 unemployment rate [broadest measure, including under-employment]—The current level is 7.8%. This is a very low level and fell from 9.4% a year ago.
  3. GDP GROWTH—Growth last quarter was 2.3% which is significantly higher than the average growth over the last eight years.

WAR

  1. The jobs issue and war issue are the 500-pound gorillas of American public opinion. If the economy is bad or there is a major unpopular war, the party in power is in trouble. Unpopular wars, like Vietnam and Iraq, shatter their support. Small wars, like Afghanistan and Syria are nearly always underway and usually do not have major effect unless they grow substantially in the cost in US lives.

WEEKLY ANALYSIS

Last Week’s Important Events Were:

  1. N Korea reverted to its typical bombast and rhetoric. It threatened to cancel the June 12 summit between Trump and Kim. Many, including myself, believe this is just posturing before critical negotiations that will forever change N Korea for the better or worse. One way or another N Korea will be denuclearized.
  2. China and the US reached “consensus” on a historic trade deal designed to substantially increase US exports to China as well as protect each country’s intellectual property. This is a major victory for President Trump.
  3. It appears the CIA had an informant/spy investigating and possibly “setting up” the Trump campaign before Trump was nominated. It may well be that the set-up led to the FBI investigation and the Mueller special counsel inquiry.
  4. Tuesday primaries in four states—PA, NE, OR, and ID—went mostly as expected. The Democrats nominated three US House candidates from their “progressive” wing that more establishment types don’t believe have as good a chance of winning as did other primary opponents.
  5. A Gallup Report shows satisfaction with how things are going in the US at the highest level since 2005.
  6. The political metrics I use to judge political trends continue to move in favor of the Republicans. The economic indicators continue to be strongly positive for them as well.

It is still six months to the key November mid-term elections, but momentum just now is clearly with the Republicans. Watch the upcoming primaries for evidence the Ds are regaining momentum.

Predictions

Election Predictions

  • 80-90%: the probability the Rs will lose seats in the 2018 House elections
  • 10-20%: the probability that the Rs will lose control of the House in 2018
  • 90-95%: the probability that the Rs will still control the Senate in 2019
  • 90-95%: the chance that the Ds will lose seats in the 2018 Senate elections
  • 50%: the chance the Republicans will gain five or more Senate seats in the 2018 elections
  • 90-95%: the chance that Donald Trump will be the 2020 Republican nominee unless he decides not to run
  • 80-85%: the chance that Trump will be re-elected in 2020

Policy & Legislative Predictions

  • The odds that the 2nd amendment will be repealed or changed are less than 1%. It takes three-quarters of all the states to make such a change. That is essentially a political impossibility.
  • There is more than a 70% chance that pressure on the DACA – “Dreamer” – issue will force the Democrats to negotiate a deal with President Trump on the border wall and other immigration issues this year.
  • The chance that Donald Trump will be impeached and removed from office by the Congress in the next three years is less than 1%. *
  • The chance that Trump will be removed from office by the Congress in the next seven years is less than 5%.

*NOTE: Remember that after being impeached by a Republican controlled House in 1998, not one Democratic Senator voted to remove Bill Clinton from office. It takes 67 votes and is more of a political process than a legal one. NO President has ever been impeached and removed. Richard Nixon resigned before the House and Senate could impeach and remove him from office.

Until next week…
Al Tuchfarber
Professor Emeritus of Political Science, University of Cincinnati

Al.Tuchfarber@gmail.com
Tuchfarber Political-Economics LLC, Inc.

Dr. Tuchfarber founded the Ohio Poll, one of the nation’s most accurate, while directing the social science Institute for Policy Research from 1975 to 2004. He also founded and directed the Institute for Health Policy from 1996 to 2004. He is an engaging and dynamic speaker and has published over 100 articles and papers about politics, society, and research methods.