2014 Midterms: Republicans Are Betting Scandal Will Help Them Win, But It's the Economy, Stupid

Referendum elections compare the incumbent party to the Almighty. Choice elections compare the party in power to the alternative. Think of referendum elections as those days as a kid when you brought home your report card to show your parents. It may have been decent, but they disappointingly ask you why you got a B in math instead of an A. Think of choice elections as when your brother comes home with a C in math and makes you look good in comparison.

A big reason Democrats miscalculated the national mood and lost so badly in the 2010 midterms is they mistook a referendum election for a choice election, and a big reason Republicans miscalculated the national mood and lost so badly in 2012 is they mistook a choice election for a referendum election. While every election is multi-dimensional and there are a number of factors ranging from minor issues to campaign organization and candidate quality that determine the final outcome, generally midterms are referendum elections and presidential elections are more choice elections than not. And in terms of referendum elections, it is important to keep in mind that the attention span of the American voter is very short.

That is why all the hype over the IRS, DOJ and Benghazi will ultimately not matter in 2014. That's also why the unfortunate economic conditions of the country Obama inherited upon taking office ultimately did not matter in 2010. These referendum elections are hinged primarily on one factor: the condition of the economy on Election Day, or rather, the perceived direction of the economy.

The fuss over Benghazi, the IRS, and the DOJ will only matter in the minds of the already-rabid anti-Obama partisans come 2014. Reason being: despite the recent wake of scandals, Obama's approval ratings have remained relatively stable in aggregate polling. My theory on this is our electorate is divided up into three steady categories. You have the roughly one-third of voters who are the foaming at the mouth, anti-Obama partisans I just described, who probably would not vote for Obama even if he personally saved them from a burning building Cory Booker-style. These are the people who disapproved of his job performance on the day he got sworn into office. Then you have the roughly one-third of voters who are rain-or-shine supporters, who provide Obama's base and would still vote for him even if he decided one day to start acting like Will Ferrell's character in The Campaign. This is why throughout his entire presidency Obama has enjoyed a solid floor of approval and has never seen his ratings fall much below the low 40s. The third category are the voters in the middle, who are not necessarily truly independent voters, but don't have such a strong emotional attachment either way and see the bread and butter issues as what matters to them the most. A large percentage of these voters generally vote Democrat, a large percentage generally vote Republican; there are very few truly independent swing voters, but these people will generally give Obama credit and blame where it is due, and under certain circumstances would be willing to jump ship or hop aboard.

Handicapping 2014 is somewhat difficult given that there are two opposing factors, one favoring each side. The first factor is the historical norms, the "six year itch" two-term presidents have historically faced where their party typically loses seats in the Midterm election of the president's second term, largely due to voter fatigue of the party in power. Since Reconstruction, this has happened in 1874 (Grant), 1894 (Cleveland), 1918 (Wilson), 1938 (FDR), 1950 (Truman), 1958 (Eisenhower), 1974 (Nixon/Ford), 1986 (Reagan), and 2006 (Bush). Since World War II, the incumbent party has lost an average of 26 seats in the second midterm of a presidency. The anomaly is in 1998, where Democrats actually gained five seats in the House and netted no aggregate losses in the Senate despite it being Bill Clinton's sixth year in office. The marginal 1998 gains were credited to good economic conditions at the time, which gets to the factor advantaging Democrats in 2014 — an improving economy.

The latest figures paint an encouraging picture of an improving economy and a declining deficit. The CBO now projects this year's deficit will shrink to $642 billion. To put that in perspective, the budget deficit of Obama's first year in office was $1.4 trillion. Consumer confidence is at a five-year high due to increasing housing prices and a rallying stock market, and the economy is continuing to generate private sector job growth. Most importantly, economists are saying these improving economic conditions will actually be felt by the American people come 2014, which is obviously very good news for Democrats. This has prompted Republicans to shift their strategy from one solely hinged on voter dissatisfaction of the economy to an intense focus on cooking up scandals that undermine confidence in the competency of government and banking on problems stemming from the implementation of the Affordable Care Act leading to voter dissatisfaction.

The bad news for Democrats is they face a tough uphill climb to retake the House. They need to net 17 seats in a landscape that is comprised of decreasingly-competitive gerrymandered districts. It's very possible Democrats might net a few seats, but easy to be skeptical they'll get enough to put them over the top. After all, with this map in a high-turnout presidential election year where House Democrats won the aggregate popular vote by 1.4 million votes and President Obama was comfortably reelected, House Democrats only netted 8 aggregate seats. The reason for that is Republicans won where it mattered in 2010 — namely, key governors races and control of state legislatures, so they controlled much of the redistricting process after the 2010 Census. And when it comes to the borders of House districts, voters do not choose their representatives, representatives choose their voters.

In any case, the key difference between 2010 and the 2014 midterms is this time around Democrats might actually be somewhat enthusiastic about the election being a referendum on the economy.