The Power Of Swing Voters

The Power Of Swing Voters

The indictment of Donald Trump yesterday has fueled greater political polarization. However, institutional managers must focus their attention not on political poles but rather on swing voters and voter turnout, which will determine the result of the 2024 election. Both parties will urge their unlikely voters to participate and lobby the few swing voters left to reconsider their position on Trump.

The Democrats’ Response

Democrats are likely to argue to unlikely voters and swing voters that Trump is deemed unfit for office due to January 6, Trump’s impeachments, and now Trump’s indictment. If Trump is exonerated prior to election season, the distaste of the indictment may fade, though he will still face legal threats in Georgia and elsewhere.

The Republicans’ Response

Pro-Trump Republicans are likely to argue that Trump is a victim of a political machine that has targeted him with campaign spying, an unwarranted Muller investigation, two unwarranted impeachments, and now a politically-motivated indictment. They will claim the indictment lacks substance and comes from a NY prosecutor who is soft on other crimes. Lastly, they will point to Hillary Clinton’s quiet settlement of her 2016 campaign finance violation regarding the Steele Dossier.

Relevance

Control of the executive branch is critical because all US businesses are subject to rules created and enforced by the administrative state. If their party loses the next election, both parties are likely to construe it as the end of democracy. This is a practice that is likely to raise the political temperature. Regardless, more indictments of politicians are likely to come.

Likely Candidates

Barring new health issues, Biden is likely to run for a second term unopposed due to his strong performance in the 2022 midterm elections.

For Republicans, Trump has a huge advantage due to the winner-take-all approach of most states. If the field is split between many candidates, his advantage increases further. He has likely gained support from undecided voters based on sympathy. Hence, there likely will be another Biden/Trump general election.

Possible (and Likely) Outcome

Our view is that Biden has the advantage as an incumbent. Further, the election is unlikely to be a referendum on Biden when Trump is part of the picture. One might argue that Biden’s mental agility has declined. However, John Fetterman won a previously Republican Senate seat from Pennsylvania despite his stroke.

Upshot

Republican control of the House has blunted some new Democratic policies, but the power of the legislative branch has declined as it has chosen to cede more power in the executive branch.

In preparation for the upcoming elections, Fed funds rates might decline or be moderated.

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