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Midterm Elections: What’s at Stake in the House?

The policy analysis provided by the Charles Schwab & Co., Inc., does not constitute and should not be interpreted as an endorsement of any political party.

With the midterm elections now less than three weeks away, it’s time to look at the battle for control of the House of Representatives. Republicans currently hold a 236-193 majority, with a half-dozen seats vacant. Will they hold on? Or will Democrats seize control for the first time since 2011?

Republicans go into the contest with a few disadvantages. First, history isn’t on their side. In 35 of the last 38 midterm elections, the president’s party has lost seats in the House. (History is also a challenge in the Senate. For more, see Midterm Elections: What’s at Stake in the Senate?)

Meanwhile, voters generally seem to favor Democrats—at least according to “generic ballot” polling, in which voters are asked whether they would prefer Republican or Democratic representation in Congress. According to Real Clear Politics, which averages major polls, the generic Democrat has led the Republican by about seven percentage points in recent weeks.

Of course, the generic ballot can be misleading: People don’t vote generically. They choose between individual candidates.

But such data can signal which way the wind is blowing.

Turnout and enthusiasm

The key to House races is usually voter turnout, which can be hard to predict. For much of the last few months, Democratic-leaning voters seemed more energized and more likely to go to the polls on Nov. 6.

That appears to have changed in the wake of the highly charged confirmation hearings for Supreme Court Justice Brett Kavanaugh. Though Democrats still have an edge, polls show that the “enthusiasm gap” has narrowed and Republican-leaning voters are now more fired up than they were a few weeks ago.

Women voters are particularly energized—and leaning toward the Democrats. A recent poll by the Washington Post and George Mason University’s Schar School of Policy and Government examined 69 “battleground” Congressional districts—that is, competitive districts where neither party has a strong advantage. The poll found that women in those districts preferred the Democratic candidate by a 54-40 margin. Men, on the other hand, favored the Republican candidate by 51-46.

Women are also running for office in record numbers: 237 female candidates are on the ballot for Congress this fall, 183 of whom are Democrats. It is likely that when the 116th Congress convenes in January, it will have more women than any previous Congress.

Republicans on the defensive

Drilling down into the individual districts reveals other ominous signs for Republicans.  

The respected political analyst Charlie Cook, author of The Cook Political Report, publishes a weekly report in which he ranks all 435 House districts according to their partisan preferences. Using the demographics of the voters in each district, voting history, polling numbers and other data, Cook places each district on a spectrum running from solidly Republican to solidly Democratic. At the moment, Cook ranks 182 seats as “Solid Democratic” and 145 seats as “Solid Republican.” Thirty-nine others aren’t considered competitive because they heavily favor one party.

In the middle are those 69 battleground races. Sixty-five of those seats are currently held by a Republican. Just four are held by a Democrat. That doesn’t bode well for Republicans. 

Key races

Key states to watch include Pennsylvania, where the state supreme court determined that the state’s gerrymandered Congressional map was unconstitutional, meaning new districts had to be drawn up. Voters will be casting ballots for representatives in those new districts this November. The changes have produced a very competitive environment, with fully half of Pennsylvania’s Congressional seats (nine of 18) considered too close to call.

California is another state to watch. It has the largest Congressional delegation in the nation, with 53 seats in the House. Currently, 39 of them are held by Democrats and just 14 by Republicans, but at least seven of those Republican-held seats are in danger of flipping.

Democrats are also targeting the last remaining House Republican from the five New England states: Rep. Bruce Poliquin of Maine. His race for re-election is rated as a toss-up today.

Individual races for about five dozen seats in places like Florida, Iowa, Minnesota, Texas, and Utah will also help determine who takes the House.

Policy implications if Democrats win a House majority

So what kind of policy agenda might a Democratic House pursue? Repealing the tax cuts passed at the end of 2017, raising the federal minimum wage, passing campaign finance reform, new gun control measures, and expanding access to health care and debt-free higher education are a few of the items under discussion.

Whether such policies will become law is another question. Republicans are favored to retain a narrow majority in the Senate and, of course, President Donald Trump will still have the power to veto. That means Democrats will likely have to scale back their ambitions and find areas for potential compromise. An infrastructure spending plan, for example, is one possible area for bipartisanship.

Another thing to watch for is the potential for Democratic infighting over the role of Speaker of the House. Minority Leader Rep. Nancy Pelosi (D-Cal.), who served as Speaker from 2007-2011, is favored to return to the position in the event of a Democratic win. However, more than 60 Democratic candidates for Congress have publicly said they will not support her bid for a return to that role.

One concern is the age of the Democratic leadership in the House: Pelosi is 78; House Minority Whip Steny Hoyer (D-Md.) is 79; and the third-ranking House Democrat, Rep. James Clyburn, (D-S.C.) is 78. Many Democrats are pushing for a younger generation of leaders to be given an opportunity. That said, it remains unclear who might be in a position to challenge Pelosi should the Democrats win.

Market reaction likely muted

Markets seem to be anticipating a divided government after the election, so their reaction may be muted if there is a changing of the guard. Other factors, including the Federal Reserve’s interest-rate policy, corporate earnings and the ongoing trade dispute with China, are more likely to influence the markets than the election outcome.

What You Can Do Next

  • If you’ve built a solid financial plan and a well-diversified portfolio, it’s best to ignore the political noise and focus on your long-term goals. Want to talk about your portfolio? Call our investment professionals at 800-355-2162.
  • Watch Schwab experts discuss other market and economic topics in the Stock Market Report.
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Important Disclosures

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. 

All expressions of opinion are subject to change without notice in reaction to shifting market or economic conditions. Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed. Supporting documentation for any claims or statistical information is available upon request.

 

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