Redistricting & the Economy: Keys to the ‘22 Election
by Max Cook, MBA President and CEO
I’m sure many of you are scratching your heads wondering why I’m focusing my attention on the 2022 midterm elections in this column. Believe it or not, the phones are ringing off the hook with requests for campaign contributions, for both state and federal races. What makes this especially interesting is that the redistricting process is about to unfold once the 2020 census data is released. Throw in the fact that our economy is in the early stages of recovery from a year of COVID shutdown, and you have the makings for an interesting lead-up to the November 2022 midterm elections.
Let’s look at the congressional redistricting process first. Nationwide, Republicans will dictate much of the process by controlling the mapping in 22 states with 186 U.S. House districts while Democrats will be able to draw the map in nine states with 76 districts. Independent commissions will draw maps in 12 states with 126 districts. Just seven states with 47 districts have split control. With twice as many districts to remap, the Republicans would seem to have the advantage. Maps drawn by independent commissions also can be overturned by state legislatures in many cases, so the Republican grip appears to only get tighter. Republicans have control in places like Texas, Georgia, Florida and North Carolina, and they need to flip only five seats to recapture the House, something they could possibly attain through favorable maps in those states alone.
In Missouri, Republicans
control the redistricting
process. In some quarters,
there is speculation the GOP
may pick up a seat. How
does that happen? It’s easier
than ever for Democratic
areas to be divided up and
scattered among more rural
Republican-leaning areas.
When you look at the
process nationwide, it is easy
to see how the GOP could
pick up three to four seats
in the U.S. House simply
through the redistricting
process. Add to that the fact
that since the end of the
Civil War, the party holding
the White House has lost
House seats in 36 of the 39
midterm elections, and you
have your answer.
Let’s look at the economy
and the impact it will have
on the midterms.
The one thing that almost
everyone is focused on is
the growing federal debt.
Just in the one year running
from first quarter 2020 to
first quarter 2021, the U.S.
national debt load has gone
from $23.2 trillion to $28.1
trillion. These numbers don’t include all the stimulus money that has been injected into the economy, nor does it include any of the more than $3 trillion being proposed for infrastructure and other programs.
The issue with the debt
really centers around the
debt as a percentage of our
gross domestic product.
For the longest time, most
economists have said that
anything more than 100% of
GDP is unsustainable. Well,
we hit 100% sometime mid-year 2012 and have reached
127.3% as of first quarter
2021. Need I say more?
In addition, supply chain
issues are creating shortages
and price inflation on almost
everything we buy and
consume. Federal Reserve
Chairman Jerome Powell
stated recently that he
believes this is temporary and
as our economy opens more
and more people get back to
work, supplies will increase and prices will stabilize or
even come down. That may
be true, but will it occur
fast enough to influence the
voters in 2022?
I think the biggest question
here surrounds the labor
force. Everyone is looking
to hire, but applicants
aren’t to be found. We
need to get back to work
manufacturing, importing,
exporting, transporting,
warehousing and selling
goods and services that we
all need and use every day.
With an unemployment rate
hovering around 6%, you
would think there would be
ample numbers of people
available to ramp back up.
Interestingly though, our
labor participation rate is
1.7% lower than it was in
February 2020, now sitting
at 61.6%. Between 1948 and
2021, the range has been a
high of 67.3% to a low of
58.1%. Unfortunately, we
currently sit in the lower
one-third of that range. To
entice people back to work,
employers are increasing
wages, putting more pressure
on prices.
There is much more with
respect to the economy,
but the important thing
regarding the midterm
elections is that people will
vote their pocketbooks!
If inflation and scarcity
persist, voters will likely
rebel, and that will work
to the advantage of the
Republicans.
It will be interesting to see
if my crystal ball is accurate.
My guess is that it is because
history tends to repeat itself,
and we’ve seen this scenario
before. Hang on … it’s going
to be an interesting year!
###
July/August 2022