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Path to White House: Which “Must Win” States Pave the Way?

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RANDY FREDERICK: With 33 days until the first presidential debate, and only 76 days until the election, the campaign rhetoric is really heating up. Mike Townsend, Schwab’s vice president of legislative and regulatory affairs, joins me for the August 24 Schwab Market Snapshot to discuss the Electoral College and the latest news on the race to control the senate.

Welcome back, Mike.

MIKE TOWNSEND: Great to be with you, Randy.

RANDY: So, Mike, can you give us an update on the presidential race? I keep hearing about these so-called Clinton Republicans, and it seems like they’ve helped Hillary open up a pretty sizeable lead over Donald Trump in the national polls. But as you’ve reminded us many times in the past, it’s really not the polls that matter, but the Electoral College. So what are the key battleground states that we should be keeping an eye on that might impact the outcome on Election Day?

MIKE: Well, at this point in the race, Hillary Clinton has a four- to six-point lead in the national polls. But as you point out it’s really the Electoral College that we need to be paying attention to. And any discussion of the Electoral College in the battleground states has to start with Florida. Florida’s the most important state in the Electoral College. That’s because over the last six presidential elections, 18 states, plus the District of Columbia, have voted for the Democrat six times—and those 18 states have 242 electoral votes. So if Hillary Clinton wins those 18 states, plus DC, and takes the 29 electoral votes available in Florida, that makes 271—and the race is over, because you need 270 to be president.

So Donald Trump is going to be looking at trying to find a way to win Florida. And the only way he can win the presidency if he doesn’t win Florida is if he flips some of those blue states that have been traditionally for the Democrats. He’s looked at states like Michigan, Minnesota, Wisconsin, but he’s trailing in the polls there, and that’s going to be very, very difficult. So the Electoral College is going to be a challenge.

RANDY: OK, so let’s assume for a moment that Trump wins Florida or he flips one of those blue states, and that leaves Hillary a few votes short of an electoral victory. Which states would become the focus in that situation?

MIKE: Well, I would have to start with states like Iowa and North Carolina, which are the closest right now in the polls. Each of those shows one candidate or the other ahead by just a point or two—well within the margin of error. I’d also look at Nevada, which has proven to be very close. That’s a state that President Obama has won twice in his campaigns. So that’s an important one for Hillary Clinton.

Missouri is an interesting state. Missouri, just in a recent poll, showed Trump with just a one-point lead. Now that’s a state that Mitt Romney won by 10 points in 2012. And if Missouri is going to become a battleground state, that probably doesn’t bode well for Mr. Trump.

Other states that I’d pay attention to: Ohio, which has 18 electoral votes available. That should be very close. Hillary Clinton’s about four or five points up in the polls right now, with plenty of time for that to come back. But the problem Mr. Trump faces is that traditional purple states, like New Hampshire, Colorado, Virginia, Pennsylvania, all these states he trails pretty significantly to Hillary Clinton. So it’s going to be difficult to find a way for him to get the right combination of states to get there, if he’s not able to turn around some of those states that he’s trailing right now.

RANDY: Well, now, the last time we spoke you mentioned that investors should also be keeping an eye on the battle to control the senate, and I think most people probably know already that the Republicans currently have a small majority. But there are far more Republican seats up for grabs this time than Democrat seats. So if Hillary Clinton wins by as much as the polls are currently indicating, is there a chance that we’ll see a power shift here?

MIKE: Yeah, and I think that’s a real possibility. Right now Republicans have a 54 to 46 majority. But as you point out, there are 24 Republican seats up for re-election and just 10 Democrat seats. And of those 10 Democrat seats really only one is a true toss-up. That’s in Nevada—where the Senate Minority Leader Harry Reid is retiring—and that’s an open race now between the Republican Congressman Joe Heck and the former State Attorney General, a Democrat, Catherine Cortez Masto. That’s shaping up to be a very close race.

In terms of the seats currently held by Republicans, Illinois and Wisconsin are the two states I think are most likely to flip from Republican to Democrat. In both those states the Republican incumbent is trailing by a pretty significant margin, so those look likely to be pickups for the Democrats.

Florida is a state controlled by Republicans right now that I think bears watching. And that’s the state where Marco Rubio decided he wasn’t going to run for re-election, now he is running for re-election. He’s got a slight lead, and I think he’s probably a slight favorite in that race.

New Hampshire—another battleground state that has a really interesting Senate race. This is a race between two well-known women, Kelly Ayotte, the Republican senator incumbent, and Governor Maggie Hassan, the Democrat, running against each other in a race where virtually everyone in the state knows who they are and they have pretty good favorability ratings.

I’d also watch states like Ohio and Pennsylvania, where Republicans are defending their seats. And an interesting race is shaping up in North Carolina. Richard Burr, the Republican senator, is running for a third term there—he won this seat by about 12 points six years ago—but recent polling has him with just a one- or two-point advantage over his Democratic rival. So there’s a number of seats where Republicans are really kind of playing defense and trying to hold on to the majority.

RANDY: So it sounds like the Democrats are almost sure to pick up at least some seats and could very well end up with a majority. My question is, is there any chance that they could end up with a 60-seat super majority?

MIKE: Well, I think that’s right that Democrats feel like they have a very good shot at taking over the majority. But I think even the most optimistic scenario has them falling short of that super majority, the 60 votes you need to break a filibuster and really control the agenda.

Interestingly, in 2018, the tables really turn on the Democrats, because Democrats will have 25 seats up for re-election in 2018, and Republicans will have just eight. So I think the bottom line is that, even if the Democrats take the majority this time, they’ll have a narrow majority and they’ll be hard-pressed to keep it in 2018. So the Senate will probably continue in this kind of gridlock that we’ve seen in the past and that will act as a break on the aspirations of whoever wins the White House.

RANDY: Thanks for all the great details, Mike. Well, we’re out of time. Listen, if you have questions about how this might impact your account, please call and talk to a Schwab financial professional. You can read more of Mike’s Washington insights on Schwab.com. You can also follow me on Twitter @RandyAFrederick. We’ll be back again. Until next time, invest wisely, own your tomorrow.

Important Disclosures

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. Please note that this content was created as of the specific date indicated and reflects the author’s views as of that date. It will be kept solely for historical purposes, and the author’s opinions may change, without notice, in reaction to shifting economic, business, and other conditions.

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The election analysis provided by The Charles Schwab Corporation does not constitute and should not be interpreted as an endorsement of any candidate or political party.

Charles Schwab & Co. Inc. is a subsidiary of The Charles Schwab Corporation.

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