Wednesday, December 31, 2014

End of 2014

Baylor
I hope all of you have had a great 2014 and will have a terrific new year! Politically, this year was no doubt a Republican year as the party won huge majorities in all election levels from local to statewide. Scott Walker won his deserved second term here in Wisconsin. In 2015 we will see who is going to run for president. Is Mitt Romney going to be back? Will Wisconsin be divided between Walker and Paul Ryan if they both run? Will the libertarian movement capture the nomination with Rand Paul? Will the GOP primaries be as divided as they currently appear? Is Hillary Clinton the inevitable Democratic nominee or will other Democrats like Elizabeth Warren or Bernie Sanders upset her? Is it possible that Clinton may not run at all? These questions will be answered in the next year. Whatever happens, 2015 will no doubt be an exciting year in politics.

Friday, December 26, 2014

Major Cyber Attacks on PSN and Xbox Live

The Playstation 4 - Amazon
First off, I hope everyone had a good Christmas and enjoyed time with family. I had a great time with my own and we had a nice party. However, before relatives came to the party we obviously opened gifts under the Christmas tree. Among the things me and my brother opened was a new PlayStation 4. We set it up in his room and went to sign in to our PlayStation Network accounts. There was a big problem. My brother signed into his account, but I could not and soon we couldn't go online altogether. We looked up if PSN posted anything and it turned out that both the PlayStation Network and Xbox Live were cyber attacked by a group called Lizard Squad.

There are 110 million people who use PSN and another 46 million people use Xbox Live. Millions of gamers were obviously angry. Sony has run into some trouble lately after their comedy movie The Interview was pulled from movie theaters until just recently. The movie, which focuses on a comical assassination plot on North Korean dictator Kim Jong-un, was attacked by hackers who have been linked to North Korea. This second attack may or may not be related to the movie. Lizard Squad has previously attacked Sony and other online servers. Xbox Live is back, but PSN is not and Sony will have to continue to fix the problem.

Today, it was reported that they attacked PSN and Xbox Live for "incompetence." They argue that PSN and Xbox Live haven't done things correctly and that they can do it better. Other tweets complain that large companies take advantage of the tax code and hide their money in shelters, but if Lizard Squad wanted to be a kind of Robin Hood, they would have gladly given money or some kind of benefit to the millions of people who can't go online. It's sad that people who invest money into gaming now can't play or interact with others on consoles because Lizard Squad believes PSN and Xbox Live do things wrong.

The important impact here is the rise of hacker groups that have been able to infiltrate large corporations. These groups might be able to go further than just getting gamers angry. What about the stock market? Trading today relies heavily on computers and online services. What about the government? Communications between policymakers and the military are critical to keeping the nation safe. We all live in a new era and this era offers new challenges. New challenges are typical in any era, but what's important is how people respond to it.

Finally, while I sympathize with fellow gamers on the hackings, I also can't understand why so many people wanted to play on their consoles on Christmas. I was more interested in mingling with relatives and friends rather than playing Grand Theft Auto V or The Last of Us. I'm shocked that others seemed to prefer playing video games, at least when looking at comments on website articles about the cyber attacks. I hope everyone had a great Christmas and will have a swell time on New Year's Eve.

Tuesday, December 23, 2014

Jeb Bush Moves Closer to Running for President

Former Governor Jeb Bush - RedState
Jeb Bush, former Republican governor of Florida, has announced that he is forming a PAC (political action committee) and exploring a run for president in order to see if he would have a viable candidacy. Bush is obviously also known for being the brother of President George W. Bush and son of President George H.W. Bush. He is part of a powerful political family that could help him get donors to back his campaign. By creating a PAC, Bush is looking at a White House bid unconventionally. Most candidates would be interested in forming an exploratory committee. This leadership PAC gives him the opportunity to receive more money from donors than an exploratory committee would because there are stricter Federal Election Commission regulations on exploratory committees than PACs.

What chances does Bush have in becoming the Republican nominee? Right now he has a bump from media attention. A look at the RCP average on the night of December 23, 2014, shows Bush with 15.2 percent, Paul Ryan with 10.8 percent, and Chris Christie with 10.4 percent. All the other candidates don't have their poll numbers in double digits. The latest poll from ABC News and the Washington Post shows him at 14 percent, Ryan at 11 percent, and Rand Paul at 10 percent. Bush obviously has a lot do to become the Republican nominee. There is currently no front-runner and the small bump doesn't give Bush that status.

Bush will likely have a difficult time running for president in a similar way the 2012 GOP nominee Mitt Romney did. Romney (who might run again) was clearly part of the moderate side of the Republican Party and was a favorite of the establishment after the party leaders looked at all the other candidates. Romney was continuously attacked by conservative candidates (or candidates who appeared more conservative) who were favorites of the Tea Party. He won after hard campaigning, debating, and fundraising. Bush's position actually seems worse because he appears even more moderate than Romney. It is the case of trying to avoid being a RINO (Republican in name only).

Journalist John Feehery of the Christian Science Monitor wrote why Jeb Bush would be a good candidate, but also writes, "We live in a populist moment and there is perhaps nobody less populist than Jeb Bush." The former Florida governor is not someone who can get a crowd excited. Erick Erickson of RedState gave three questions Bush needs to answer in order to help him win some members of the Tea Party. These are why he is the most qualified, does he consider himself conservative and how he defines that ideology, and where is he least conservative. The final question concerns the fact that both his father and brother broke with the conservative base of the GOP, but they nevertheless were willing to support them. His father raised taxes after promising not to and his brother expanded the federal government's social programs with Medicare Part-D and No Child Left Behind.

These questions and his lack of popularity show the problems with Bush. The liberal website Mother Jones posted a stinging article earlier this year giving 23 reasons Bush should "reconsider." Some of these are family issues like his daughter being a drug addict, others are his work in the private sector such as being a financial adviser under Lehman Brothers when the bank went under, and there are some political problems such as his change of opinion on immigration policy. Bush is wise to prepare now for what will be a long campaign and it is clear that he will have a lot of problems to overcome if he wants to be the GOP nominee and the president of the United States.

Thursday, December 18, 2014

The Success of Supply-Side Economics


Arthur Laffer (seated), Dick Cheney (left), and Donald Rumsfeld (right) - Bloomberg Businessweek
"It's not Republican, it's not Democratic, it's not conservative, it's not liberal, it's not left-wing, it's not right-wing, it's economics." - Arthur B. Laffer

This year marked the fortieth anniversary of the birth of the supply-side revolution in the United States. On September 13, 1974, Dick Cheney, who was assistant to President Gerald R. Ford at the time and Donald Rumsfeld, Ford's chief of staff, met with economist Arthur B. Laffer and journalist Jude Wanniski at the Two Continents restaurant in the Hotel Washington. The three living members of that lunch meeting pictured above reunited on November 10. Their discussion back in '74 was over the state of the U.S. economy. In December 1974, the unemployment rate stood at 7.2 percent. Real GDP from 1969 to 1974 during Richard M. Nixon's presidency had averaged at 2.75 percent. From 1969 to 1975, the Dow Jones industrial average had declined by 6.46 percent. It was clear why members of the Ford administration were seeking economic advice on how to get the recovery going. 

At the time, Ford prepared a policy called Whip Inflation Now or WIN. Part of this was a 5 percent surcharge. At the dinner, Laffer argued that the 5 percent surcharge would not give 5 percent additional revenue to the federal government. It would be less or even negative meaning that it would decrease revenue. Cheney and Rumsfeld didn't believe it, but Wanniski and Laffer argued for it. To simplify what he was saying, Laffer took out a sharpie from his pocket and drew an economic concept now known as the Laffer curve on his table napkin. Cheney and Rumsfeld were stuck by its simplicity. The laws of the curve were simple: a 0 percent tax rate means no revenue, but so does a 100 percent tax rate because no one would work if all their income was taken. Laffer argued that lower tax rates would actually generate more revenue because there would be more incentive to work. Rich people, who are often criticized for putting their capital in tax shelters to avoid taxes, would bring it out with a lower rate because they would be losing less money, but at the same time paying more in taxes because they aren't hiding as much. With more investments and activity the economy would grow. Here's a graph to show the Laffer curve:

The Laffer Curve - Forbes
The Laffer curve is the center argument of supply-side economics, which is the economic theory that less taxes, less deductions, and less government intervention in the economy will hasten an economic recovery and increase revenue. Conservatives embrace this economic theory. The counterargument made by liberals, such as economist John Maynard Keynes, advocates for demand-side economics, which they believe will raise revenue through higher taxes on the rich with larger deductions and more government intervention in the economy to stimulate demand to bring a quick economy recovery. However, supply-side economics has been proven to contain superior policies that bring back struggling economies. Ford, a Republican, went on with his WIN policy and lost the 1976 election to Democrat Jimmy Carter, but Carter's presidency bombed so badly that the Republicans won back the White House with former California Governor Ronald Reagan in 1980 by a landslide. During that time Jude Wanniski was promoting supply-side economics in The Wall Street Journal from Art Laffer's information. When Reagan was elected, he picked Laffer as his chief economic adviser. Supply-side economic policies were implemented and there was a huge economic boom.

Historically, supply-side economics did exist before Laffer, Wanniski, and Reagan. In addition to the Reagan years there have been two other major eras of supply-side economics. Let's examine all three and see if they all worked. I am going to be using real GDP, DJIA, and the unemployment rate to see economic results. The first two variables can be found by work from Samuel H. Williamson while the last one can be found from work by Stanley Lebergott and the Bureau of Labor Statistics. All these and any other sources will be linked in the bibliography.

Warren G. Harding and Calvin Coolidge Tax Cuts (1921, 1924, 1926, 1928)

Harding (left) and Coolidge (right) - Kai's Coolidge Blog
The income tax was created in 1913 under President Woodrow Wilson. The Democrats favored this plan because the old system supported by Republicans, tariffs on foreign goods, was proving not to work. The income tax started out as a good idea. Originally, it started at a top rate of 7 percent, but as a result of World War I the top income tax rate was raised to 77 percent and was cut a bit to 73 percent by the end of his presidency. This high tax rate was a disaster for the United States and the economy went into a recession by the end of his presidency. In the 1920 election, the Republicans won a landslide and Warren G. Harding became president. Two influential secretaries gave him advice: Commerce Secretary Herbert Hoover believed the government had to intervene to support labor and business, but Treasury Secretary Andrew Mellon preferred to reduce tax rates and intervene very little in the economy. Harding picked the latter's advice,

The Revenue Act of 1921 cut the top income tax rate from 73 percent to 58 percent. The tax relief worked, but sadly Harding died in office. Vice President Calvin Coolidge became president and he was even more conservative than Harding. Three tax bills were signed by Coolidge, all cutting taxes dramatically. The top income tax rate went to 25 percent by the end of his presidency, the lowest top income tax rate for any president at the end of their tenure. Did the plan work? Unemployment statistics calculated by economist Stanley Lebergott (there were no government unemployment numbers at the time) found the unemployment rate, by percent of the civilian labor force, at 11.9 percent in 1921. By 1929 that rate was at 3.2 percent. Millions of jobs had been created. Real GDP growth during all of Wilson's presidency was an incredibly slow 1.43 percent. During Harding/Coolidge that growth was at 4.8 percent, a huge economic boom that many presidents have been unable to reach. The Dow Jones industrial average had grown by 3.04 percent under Wilson, but during Harding/Coolidge it grew by 19.57 percent. Coolidge currently holds the record for DIJA growth. Government revenue? Every year during Harding's and Coolidge's presidencies, the federal government ran a surplus:


I use percentage of GDP (and will continue to use it for government statistics) because it is better than using simple dollars. $10 billion can mean something different in Zimbabwe than in the U.S. and that is why it is important to use real GDP for a perspective of how significant something is in relation to the economy. Fiscal year 1929 wasn't really under Coolidge, but actually Hoover when he became president. Nevertheless I felt it was right to put it in to show the next incumbent was left with a good start. We know Harding wasn't because a recession threatened the meager surplus Wilson made after World War I. There was also $28 billion in debt. Despite these problems, Harding and Coolidge were very successful in bringing back the economy and reducing the national debt.

John F. Kennedy Tax Cut (1964)


Kennedy addressing the nation on his tax cuts. - National Public Radio
President Hoover was not from the same faction of the GOP that Harding, Coolidge, and Mellon were. When the Great Depression struck as a result of monetary mismanagement of the Federal Reserve and the passage of the huge Smoot-Hawley tariff by a Senate committee, he raised taxes to a top rate of 63 percent. This ruined the economy, but Democrat Franklin Roosevelt rose it to a high of 91 percent. This rate was kept under Harry Truman and Dwight Eisenhower, but a recession struck in 1958 as a result of slowing economic growth. Eisenhower and the Republicans should be credited for restraint, but could have done more by lowering taxes. Instead, Democrat John F. Kennedy won a close election and advocated a tax cut.

Kennedy wasn't a conservative economically, but he wasn't liberal either. He was more of a moderate, who advocated both supply-side economics and demand-side economics. However, the tax cut he worked to pass in 1964 were his crowning economic legacy because it was very successful. Kennedy believed they were needed in order to bring back the economy from its stagnant position when he took office. Passed after his assassination, it had huge benefits for the economy. Known typically as the Kennedy tax cut, the bill lowered the top income tax rate from 91 percent to 70 percent. Unfortunately, JFK didn't live to see the results. We now had government unemployment statistics and here's how the rate turned out before and after the tax cuts:

Effects of tax cuts before and after. - The Manhattan Institute
As we can see, there was a huge reduction in the unemployment rate after the tax cuts that improved the slow economic recovery. Real GDP had recovered quickly after the recession at 4.69 percent, but grew even more after the tax cut at 5.17 percent. The DJIA grew by 3.04 percent from 1960 to 1963. From 1964 to 1968 it grew by 4.43 percent. This was another period of rapid economic growth. Here's the deficit:


The deficit was lower after 1964 until 1967 when JFK's successor Lyndon B. Johnson spent high sums of money on both military spending for the Vietnam War and domestic spending for his War on Poverty. The result was a disaster that slowed the economy for the next decade. A better look at revenue growth has been done by Laffer. Tax revenue grew by 2.1 percent before the tax cut to 8.6 percent after. What we can see though is that 1965 when the tax cuts were fully in place was the year of the lowest deficit during Kennedy/Johnson. 

Ronald Reagan Tax Cuts (1981, 1986)


Reagan addresses the nation on his 1981 tax cut. - Wikimedia
Federal spending rose during the Johnson, Nixon, Ford, and Carter years. The economy started to strain and demand-side economic policies did little to help the situation. The tax cut from JFK may have given the economy a boost, but presidents after him slowed growth extensively through policies that weren't friendly to the free market. In 1980, Reagan was elected by a landslide. With Laffer as his head economic adviser, Reagan cut the top income tax rate from 70 percent to 50 percent in 1981 and from 50 percent to 28 percent in 1986. After JFK, Reagan had one of the longest periods of economic growth. Starting at an unemployment rate of 7.5 percent, the recession hit just as he entered office and unemployment peaked at 10.8 percent in November 1982. By then, his tax cuts started to go into effect and unemployment fell rapidly. By the end of his presidency it was at 5.4 percent.

Unlike the two previous presidents, Reagan was stuck in the middle of a war with the Soviet Union. The Cold War was not a conventional war, but was nevertheless a war as two sides competed against each other. In order to defeat the Soviet Union, Reagan built up the military (as required during other times of crisis). The deficit grew because of this military spending:


By 1989, the Cold War was over and in the last three years of Reagan's presidency the deficit went down. The deficit was at the same level of GDP in 1989 as it was 1981 when Reagan became president. Tax cuts did not primarily cause the deficit to go up, it was actually military spending. Domestic spending was limited. Economist Daniel J. Mitchell notes:
Critics charge that the tax cuts caused higher deficits, but they misread the evidence. The Reagan tax cut, though approved in 1981, was phased in over several years. As a result, bracket creep (indexing was not implemented until 1985) and payroll tax increases swamped Reagan's 1.25 percent tax cut in 1981 and effectively canceled out the portion of the tax cut which went into effect in 1982. The economy received an unambiguous tax cut only as of January 1983. Thereafter, personal income tax revenues climbed dramatically, increasing by more than 54 percent by 1989 (28 percent after adjusting inflation).
 It's important to note Reagan's second tax cut and major reform of the tax code was in 1986 as the deficit continued to go down. As for real GDP, from 1981 to 1989 it was 3.61 percent. During Carter's four years it grew at 2.75 percent. The Dow Jones industrial average grew by 11.28 percent under Reagan's presidency while under Carter it decreased by 0.22 percent.

Conclusion

From these three cases of supply-side economics, it is clear that this economic system works as a way to quickly bring back an economy in recession. If we reduce tax rates, end some deductions and loopholes, and reduce the size and power of economic intervention from federal government (or at least limit it) then greater business activity will be encouraged through incentives and the U.S. economy will be back on track. Just remember that while people by political ideology disagree on if it works or not, what matters is the economics and the economics prove that supply-side policies work.

Saturday, December 13, 2014

A Look at Right-to-Work Laws

National Right to Work Committee
Here in Wisconsin, Republicans and Governor Scott Walker are considering a right-to-work law after winning greater majorities in both houses of the state legislature and a second term at the state executive level. As this debate begins between Republicans and Democrats, it is important to look at how right-to-work laws have affected other states to see if they are beneficial or not and that's what I am examining today. If anyone is curious, a right-to-work law (which I will sometimes abbreviate as RTW) blocks employers and unions from making agreements that would force workers to join and pay obligations to unions. Supporters of right-to-work legislation argue that no worker should be forced into a union if he or she doesn't want to be part of one while supporters of organized labor term workers who receive union benefits but do not contribute to the unions "free riders" who must be part of a union and pay parts of the costs in negotiating a contract.

The most important thing is how right-to-work laws affect growth for the states and the people. According a report published by the National Institute for Labor Relations, states with right-to-work laws have greatly benefited from them as wages and job growth have gone up decisively in comparison to states that don't have such laws. States with right-to-work laws have seen non-farm total private sector employment grow by over 16 percent in this fall of 2014 report. There are twenty-four states that have right-to-work laws. In the other states, unions have entrenched themselves and can easily do so with simple majority votes despite the fact that only 8 percent of union workers have actually voted in their own unions. By doing so, not only are current workers who didn't vote and don't want to be a part of a union affected, but future workers are as well. The law that allows this, the National Labor Relations Act of 1935 passed under President Franklin Delano Roosevelt, gives unions monopoly bargaining and forced agency fees. States are able and have been challenging the latter through right-to-work. 

Recent work published by economists Arthur B. Laffer, Stephen Moore, Rex A. Sinquefield, and Travis H. Brown titled An Inquiry into the Nature and Causes of the Wealth of States: How Taxes, Energy, and Worker Freedom Change Everything, has found that right-to-work laws have been great for states that have passed them. Their statistics follow performance metrics of 23 (there is now 24, but Michigan did it too recently in March 2013 to consider it an RTW state) right-to-work states against forced-union states over a ten-year period from 2002 to 2012 (except for tax revenue growth which is 2001 to 2011). They write:
The growth differential in personal income over the past 10 years between right-to-work and forced-union states was an enormous 12.8 percentage points in favor of right-to-work states, with RTW states' personal income growth averaging 58.0 percent to the forced-union states' 45.2 percent. For gross state product growth, the story is much the same, with the RTW states (59.1 percent) outperforming the forced-union states (45.4 percent) by a 10-year growth differential of 13.7 percentage points . The final catergory, state and local tax revenue growth, showed the average of the 23 RTW states slightly outperforming the forced-union states' average, 57.8 percent versus 55.4 percent.
In addition, more research conducted by these economists has shown that these 23 states grew faster in terms of population growth. The RTW states grew their populations, on average, by 12.6 percent compared to states that don't have right-to-work with 6.5 percent. That isn't all because net domestic in-migration for the 23 RTW states was 3.0 percent while the 27 forced-union states saw -0.9 percent. In other words, people living in states that don't have right-to-work are moving to states that do because of the benefits from them. North Carolina, the state with the least unionized workforce (2.93 percent) saw net domestic in-migration of 6.9 percent. Coming in second was Arkansas with a unionized workforce of 3.17 percent and 2.8 percent net domestic in-migration. In third was South Carolina with a unionized workforce of 3.29 percent and 7.1 percent net domestic in-migration. In comparison the state with the highest unionized workforce was California at 23.15 percent and -8.0 percent in net domestic in-migration. Alaska is second with a unionized workforce of 22.38 percent and has -1.2 net domestic in-migration followed by Hawaii with 21.68 percent of its workforce unionized and net domestic in-migration growth of -2.0 percent.

Based on this research, it is undoubtedly clear that states with right-to-work legislation are superior in economic growth, personal income growth, tax revenue growth, and population growth. These four variables combined create an economic paradise for the states that have RTW laws as well as low taxes and a minimum wage kept at the federal level. It is clear that Scott Walker should support right-to-work legislation in Wisconsin to continue moving forward.

Sunday, December 7, 2014

Bill Cassidy Defeats Landrieu by a Landslide

Representative Bill Cassidy - The Huffington Post
Democratic incumbent Mary Landrieu, symbolically being called "the last southern Democrat" in the Senate, has lost by a landslide to Republican Representative Bill Cassidy. The Louisiana runoff was the final election for the 2014 midterms after no candidate in that election received over 50 percent of the vote needed for an outright win in November. This is the ninth Republican gain in the Senate for this election cycle and it is a huge victory for the GOP. In 2015, there will be 54 Republican senators against 46 Democrats and caucusing independents. Here's the results from Politico:

Bill Cassidy (Republican) - 55.9%
Mary Landrieu (Democrat) - 44.1%

It might seem hard to believe, but less than 65 years ago in 1952, Republican Dwight Eisenhower won the presidency with only four of the eleven states from the former Confederacy:

Wikimedia
The election map shows the fundamental change of both parties as they became centered to one ideology. Over the decades, Democrats embraced liberalism which flourishes in the northeast and west coast while Republicans bonded with conservatism and found core supporters in the south and center-west of the nation. Landrieu tried to attack Cassidy as a man who would just bring more partisanship to the Senate, but in a state where Obama's disapproval numbers are over 70 percent there was no way she was going to win. Louisiana actually wants to embrace one party anyway since on the national level it has been clear that the Democratic Party has made little effort to keep their constituents in the south. It was the Republican Party that worked harder to get to areas where it has been traditionally weak in recent years. We this through governors winning in states like Illinois and Maryland as well as new representatives in New England.

Landrieu's last attempt to get the Keystone XL pipeline passed did not work. It was clear to everyone that this was rushed for political purposes, but outgoing Senate Majority Leader Harry Reid did not seem interested. Her attempts to make herself appear as a centrist did not resonate with the voters. All in all, there was no way Mary Landrieu was not going to win because of how unpopular President Obama has been. In the runoff, major Democratic donors decided not to waste their money on a candidate who was bound to lose. That was the problem with Mary Landrieu and all Democrats who lost this year.

Thursday, December 4, 2014

The Fall of Mary Landrieu

Senator Mary Landrieu - RedState 
December 6, 2014 is the date for the runoff election in Louisiana. Last month, neither of the three major candidates won a majority of the votes. Here's the results:

Mary Landrieu (D) - 42.1%
Bill Cassidy (R) - 41.0%
Rob Maness (R) - 13.8%

The obvious reason why the election went into a runoff is because there was divisions in the Louisiana Republican Party between the moderates who favored Cassidy and the Tea Party who favored Maness. Why is Landrieu in so much trouble? The reason is the political changes since she was elected in 1996. Back then, she could ride on the coattails of fellow southerner President Bill Clinton. Clinton's political skills were great and he was able to tap into some southern states for the Democrats at both the presidential and congressional levels. In 2002, the Republicans had less interest in the election when it went to a runoff because control of the Senate was already certain. In 2008, there were concerns for the Democrats because the state shifted even more to the right on the presidential level. As a result of Hurricane Katrina, Democrats were worried that she would lose because of the African-American population dispersing. This demographic group plays a key role for Democrats in Louisiana elections. However, this time she was saved by Barack Obama and a surge in black turnout while getting just enough white voters to back her.

Her situation in 2014 is different in that for the first time in her senatorial career the Democratic Party has an unpopular incumbent. Louisiana has continued to move right and in every past election her margins of winning were always slim. The main reasons Landrieu won those three elections were because of a popular incumbent, an uninterested opposition, and the Obama wave. In this election Obama is a curse rather than a benefit. It doesn't help recently that Democratic Senator Chuck Schumer of New York attacked President Obama for doing the wrong thing in early 2009 by focusing the majority of his political capital on healthcare reform rather than the economy. He argued that there should have been more programs and spending needed than just the stimulus bill. We can debate about how bad or good the American Recovery and Reinvestment Act of 2009 was, but that drags away from the point: a popular Democrat in the president's own party is attacking him on his most signature legislation.

After the midterm elections, Obama said the new Congress wasn't elected as a referendum against him, but instead the American people elected the new Congress to work with him to "get things done." Unfortunately, Obama seems to have decided that the best way to get things done is pick one of the more divisive issues in American politics. His decision to focus on an executive order to grant five million illegal immigrants amnesty has worsened the situation instead of improving it. Midterm elections have always been based on the president's job approval. Right now, the president's approval rating is still very low at 42.3 percent today based on the RealClearPolitics average. This reflects Landrieu's situation, which shows that her poll numbers are a disaster. The map of the results of the jungle primary show that her position is precarious.

I believe Bill Cassidy will win this election. Landrieu has little that can redeem herself. Politicians and activists of both parties have flooded into Louisiana. However, as have seen in the case of Mary Burke in Wisconsin, it does not matter how many big names you bring into an election. This goes for both Cassidy and Landrieu. What will matter is the political situation in Louisiana. Landrieu might try to save herself through the failed vote on the Keystone XL pipeline, but her chances are still slim.

Tuesday, December 2, 2014

My Political Ideology

If anyone was curious about what my political ideology is, here you go from the Political Compass:


I am economically to the right by 6.00 points and socially more authoritarian by 0.67 points. Generally, this makes me a conservative by ideology because conservatives are economically on the right in favor of a free market and are more authoritarian on several social topics.

Monday, December 1, 2014

Has the Presidential Election Already Begun?

Former Senator Jim Webb - NewsBusters
Who is Jim Webb you may ask? A former Democratic senator from Virginia who recently announced that he was forming an exploratory committee to run for president. While he isn't among one of the favorites for president in the Democratic Party, Webb is the first man who is taking a serious step towards the nomination. Webb served as a senator from 2007 to 2013, but before that he was actually a Republican in the Reagan administration. Webb served under Reagan as the assistant secretary of defense for reserve affairs from 1984 to 1987 and then as secretary of the navy from 1987 to 1988. While there is a general thought of Reagan as a hawk who sought to defeat the Soviet Union through a massive build-up of arms, Reagan actually fired Webb in 1988 for wanting to increase the size of the U.S. Navy to over 600 ships. Reagan was cutting military spending during the last three years of his presidency as the Cold War came to an end and there was increased cooperation between the Americans and Soviets. Webb was fiercely against this, but eventually resigned.

This is an important point because it makes Webb a perceived independent who has worked in both parties. However, right now he is seen as a long shot. He has little resources and the RealClearPolitics average as of today still shows a strong lead for Hillary Clinton. While he was for a massive navy, he was also a critic of the Iraq War because of the lack of a consistent strategy involved. Like Elizabeth Warren, the populist Democratic senator from Massachusetts, Webb is strongly against Wall Street and puts a lot of attention on the issue of wealth inequality. These are two things that Hillary Clinton, the front-runner in the Democratic Party, has not focused on despite a strong anti-Wall Street group in the Democratic Party. If he runs for president, he could pose major problems for Clinton's candidacy and in this way he is actually more left than Clinton is.

His exploratory committee brings a major question: Has the presidential election already started? It is possible, but it is better to look at presidential election as a series of cycles than as one election. Specifically, there are four cycles in the primary process that both the Democrats and Republicans will witness. The cycle we are in now is something I will call the preparation process. It might be hard to believe, but most candidates have decided months (or even years) ago that they will run for president or not. However, these candidates still have the possibility to change their minds at the last minute and there are still a few who are genuinely undecided. Most people think Hillary Clinton is going to run for president and is positioning herself to do so. This has made her recent actions of collecting large sums of money from speeches and publishing a book (just about every other person who is running for president does that) notorious because it seems so obvious to most political observers that she will run for president. Either way, Clinton is not the only person who has likely made her decision (and keep in mind political observers can be wrong).

The GOP has its own candidate with an exploratory committee. This is businessman and film maker Dennis M. Lynch, who like Webb has a steep climb to win the nomination. In contrast to the race for the Democratic nomination, the RealClearPolitics average shows a free-for-all in the Republican primaries. No candidate has over 20 percent in the polls and every group of the Republican Party (militarists, libertarians, Christian conservatives, free market capitalists, etc.) are all supporting a different candidate. Currently, candidates from both parties are making political positions, building assets, preparing a campaign, and collecting data to do so. This is exactly what the preparatory phase of the presidential primaries is. Most candidates will declare their runs for president in the late spring or summer. Right now they are just waiting and preparing for when they declare that they really are running.

Why now? Because midterm elections are critical to candidates' decisions over running for president or not. It is clear now that in the last two years of Obama's presidency there will be a Republican Congress. PolitiFact has researched that over 95 percent of incumbents were re-elected despite only a 14 percent approval rating. In a previous post, I put up a video that was uploaded onto Youtube by political scientist Dick Morris. In that video, he was correct in saying that midterm elections are strong predictors before a presidential election two years later. Combining this with the knowledge we have on incumbents, the 2016 election looks good for the Republicans. It is these conditions that will primarily make candidates from both parties run for president or not. Will some Democrats not run because they don't want to be stuck with a Republican Congress or will they attempt to capture the White House anyway? Does this encourage more Republicans to seek their party's nomination for president? These are questions that many candidates will have to consider.

Here's some Democrats to watch:

Hillary Clinton, former secretary of state
Elizabeth Warren, senator from Massachusetts
Joe Biden, U.S. vice president
Jim Webb, former senator from Virginia
Martin O'Malley, governor of Maryland
Howard Dean, former governor of Vermont
Brian Schweitzer, former governor of Montana
Bernie Sanders, independent senator from Vermont
Jerry Brown, governor of California
Joe Manchin, senator from West Virginia

Here's Republicans to watch too:

Jeb Bush, former governor of Florida
Paul Ryan, representative from Wisconsin
Scott Walker, governor of Wisconsin
Chris Christie, governor of New Jersey
Rand Paul, senator from Kentucky
Ben Carson, former director of pediatric neurosurgery at John Hopkins Hospital
Dennis M. Lynch, founder and CEO of TV360Media
Donald J. Trump, chairman and president of the Trump Organization
Rick Perry, governor of Texas
Rick Santorum, former senator from Pennsylvania

Keep in mind, that there are plenty of other potential candidates from both parties that aren't listed here. These are just the candidates I'm looking at.

Friday, November 28, 2014

The Economics of Black Friday 2014

Forbes
It might be fair to call this Black Thursday-Friday, but I'll just stick with calling it Black Friday (I probably won't in the next few years depending how early they want to go). This year several stores decided to move up their openings earlier on Thanksgiving again. Macy's opened at 6 pm, Best Buy opened at 5 pm, and Old Navy at 4 pm. Many other stores followed suit to open in the afternoon, but if you think that's bad Gander Mountain, Dollar General, and Kmart take the cake by opening at 8 am, 7 am, and 6 am respectively. Black Friday is clearly moving up and it might be possible that the day could be moved up before Thanksgiving (which wouldn't be bad if it meant workers had the day off for Thanksgiving, but could cause trouble between shopping for presents and shopping for food). Meanwhile, retail stores including Costco, Nordstrom, and GameStop decided that they would proudly not be opening on Thanksgiving.

However, the concept of just one day might be dying out over giving a variety of sales throughout the month. The sign of how much of a profit Black Friday gives to retail companies is clear on the Dow Jones industrial average, which showed just how weak the day was because it only increased by 0.49 of a point and closed at 17,828.24. This is a result of retailers offering deals earlier in the month to make-up for lost sales during the year. Black Friday is slowly fading away as a day. Maybe it's better to call it "Black November." Many stores offered deals on Thursday night in order to get consumers faster, which brings an important point to our great semi-free market economy, which is always changing with new innovations. 

If consumers don't find what they want at retail stores, the internet is always the second option (and is starting to slowly become the first). Cyber Monday has been dying quickly in its own right because people are starting to realize that deals are year-round at times and don't just focus on one day. If Best Buy didn't get me into the store to buy a 64GB flash drive, then I would just get it on Amazon.com. If Target didn't get me into the store to buy Killing Patton by Bill O'Reilly, then I would also go to Amazon for that. Early November deals and the internet are the primary reason crowds during Black Friday are getting smaller

Online sales were up by 6.4 percent this year. Amazon was found to have the best discounts and deals. For example, Amazon offered a Samsung 55-inch 4K flat-screen TV for $899 and the website Dealnews.com (a website that specializes in tracking online deals) declared that Amazon's price was the cheapest for a name-brand 4K television it had ever seen. Nevertheless, the National Retail Federation predicts that sales will be up by 4.1 percent this year compared to 3.1 percent last year. Electronics were clearly the favorites this year as laptops and TVs far sold out against children's clothes where business was weak. We will all just have to see how well retailers will really do this year in the next coming weeks before Christmas and the other holidays.

Thursday, November 27, 2014

Why Police Should be allowed to have Military Equipment

Police in Ferguson, Missouri. - New York Times
Yesterday, police officer Darren Wilson was not indicted by a grand jury for any crimes related to the death of Michael Brown in August. In response, a riot broke out in the town of Ferguson, Missouri where Brown was killed. Protesters in favor of indicting Wilson decided to carry out their own form of "justice" by lighting the town ablaze. Several places were looted and some buildings were torched. More than eighty people were arrested. Whatever your opinion is about the shooting and if Wilson should have been indicted, it should be absolutely clear that this should not be tolerated:

Getty Images from BBC Article
Not this either:

Reuters from BBC Article
It is from these images that we must understand why a major police presence was needed as well as the military equipment to support them. Many people have complained that the police should not be allowed to carry this kind of equipment with them. Organizations that don't support the militarization of police like ACLU invest in reports and money to push to prevent this distribution. However, chances are the police would have more problems had they not shown up with such heavy equipment. Yes, mistakes can happen and innocent people can get mistakenly arrested and attacked by cops. The only reason we see articles come out about people getting arrested by mistake is because it is interesting. It is not typical of police to arrest innocent citizens, so it is unusual and often gains media attention. The debate over if police are overreaching their constitutional grounds is not relevant here, because I am simply focusing on the military equipment police have. It is completely legal for police to have this kind of equipment as shown by what happened in Ferguson.

The legislation behind giving police military surplus equipment is the 1990-1991 National Defense Authorization Act as a way to combat drug trafficking. There are other reasons for police to have them besides the War on Drugs though. Domestic terrorist attacks such as the bombings of the Boston Marathon in 2013 give good reason for military equipment. The 1033 program handles requests from police forces to acquire military equipment from the Pentagon. Such equipment could have been used in the Watts Riots of 1965. There's a good reason this military equipment is being given to others, especially our police forces. There is really nothing else the military can do with this older military equipment and it might as well be used for something rather than destroyed or put in some warehouse. Another option would be to send this equipment as military aid, but in unstable countries in the Middle East and Africa that equipment could end up in bad hands.

The Defense Logistics Agency manages these transfers and has to approve what is sent to police forces. Despite how notorious it might look to see police with armored vehicles and military weapons, only five percent of what is sent to the police is weapons. Another 1 percent is those tactical vehicles. Overwhelmingly, most equipment sent is simple items like blankets and computers. No, the police don't get tanks and large missiles. This equipment can be linked to the massive decline in crime that has occurred over the last twenty years. The New York Times has observed that crime fell especially rapidly in the early 1990s by half. It is around that same time the National Defense Authorization Act gave local police the ability to have military equipment. Everyone has a right to be protected and this military equipment given to help the police guarantees that right by giving stronger abilities and resources to stop crime. Just remember, the police are meant to protect American citizens from mostly other American citizens who are causing crime. They represent law and order so statements like this don't carry the day:

Sunday, November 23, 2014

Did Reagan and Bush 41 do the Same Thing as Obama?

President Ronald Reagan and then-Vice President George H.W. Bush at the 1984 Republican Convention in Dallas, Texas. - Wikimedia
President Barack Obama has decided to take executive action on immigration policy. He has decided to lift the risk of deportation on several illegal immigrants in the United States. Numbers indicate that up to four million immigration who have no documentation and have lived here for five years will be protected from deportation as long as they don't have a criminal record. Another one million could also be possibly protected by the president's plan. There has been much controversy over this plan and it has been opening many legal battles. It is possible that there are grounds for impeachment of President Obama over his actions.

Those who defend the president say he is launching a similar policy to that of Presidents Ronald Reagan (1981-1989) and George Herbert Walker Bush (1989-1993), both happen to be Republicans. Is President Obama doing the same thing as Reagan and Bush? It's time to examine what both men did when they were in office. I want to be clear that in terms of numbers of immigrants the scale is similar between Bush and Obama, but the more important issue is how both men as well as Reagan proceeded with their actions on immigration. Before showing what Reagan and Bush did, I would like to note that Obama's opinion on if he has authority to do this policy has changed. Previously, Obama said he had no legal basis, according to FactCheck.org, but now he says he does. It seems odd to me that a "constitutional law professor" has had to quickly change his views on immigration policy.

When Ronald Reagan was president, he did not sign an executive order, but actually did his presidential duty as the country's executive officer by signing the Immigration Reform and Control Act of 1986 and making it the law. Arguments made by most liberals on the issue are already defeated here. Reagan and the Department of Justice were supposed grant amnesty to some illegal immigrants. In addition to that, others got to stay "to assure family unity." This was interpreted by the Department of Justice as the members of a "family group" which includes a spouse and children who are unmarried, under the age of 18, and who are not members of some other household. As attorney Paul Mirengoff of the American political publication Power Line and the Claremont Institute points out: "This regulation was not an exercise of prosecutorial discretion or the assertion of a generalized right to suspend 'oppressive' immigration laws. Rather, the administration made it clear it was carrying out the direction of Congress."

When Reagan's presidency was coming to an end, Vice President George H.W. Bush ran for president to replace him. He was elected in the 1988 election over Democratic Governor Michael Dukakis of Massachusetts. While Bush's actions for helping illegal immigrants are relatively on the same scale as President Obama in terms of numbers, Bush has set no legal precedent either for the current president. Like Reagan, Bush followed the Immigration Reform and Control Act. The only difference is that the DOJ at this time reinterpreted "family unity" to include all spouses and children, but they were still following the same act Reagan was. Obama, on the other hand, is not following any congressional mandate to interpret a new statute. Therefore, Obama's actions will be highly unlawful, which is why there are possible grounds of impeachment.

On amnesty for illegal immigrants as a policy, it is actually questionable whether or not this plan really reforms immigration. While Obama is planning on legalizing immigrants at a scale a little bigger than the elder Bush, the actual policy Bush implemented was not all that successful according to editor David Frum of the The Atlantic. As much as I love both Reagan and Bush, these policies were more for compromises than anything else and they didn't even work. Statistics from the federal government and the Center for Immigration Studies have found that while Bush was looking to legalize some 1.5 million illegal immigrants, only 50,000 actually got citizenship because of the slow, bloated, and unproductive government bureaucracy.

What Obama is doing isn't just unlawful, but it is actually more of a "kick the can" strategy that past presidents have done due to little time left to actually deal with immigration policy. Obama doesn't have much time left to pass an immigration law (nor is he likely to with a Republican Congress on the way), so he has decided to pretend to and has passed the issue to the next president. When both Reagan and Bush tried it, the amnesty policies for illegal immigrants didn't work and the situation has just been getting worse. Even if Obama's policy is held up as legal, it will not work.

Thursday, November 20, 2014

What can the Republican Congress do?

US News
Now that the Republicans won, it is time to see what they can achieve in legislation once they are in Congress in January 2015. Obviously with majorities in both houses, it is easier for them to pass bills now than it was with just the House of Representatives. Recently, future Senate Majority Leader Mitch McConnell and Speaker of the House John Boehner have outlined several goals for the new 114th Congress:
  • Pass the Keystone Pipeline
  • Repeal the Patient Protection and Affordable Care Act (Obamacare)
  • Boost veteran employment in the economy
  • Pass more international trade agreements
  • Pass tax reform, specifically corporate taxes
  • Stop potential executive action on immigration, instead find common ground in Congress
  • Expand American energy by reining in regulations of the Environmental Protection Agency (EPA)
  • Support "innovative charter schools around the county."
This is the agenda for the new Congress once all members are in their offices next year, but in reality how much of this is likely to pass? A few of these might, some of them may just fade away, and others will no doubt be vetoed by President Obama (with no probability of an override). What are the easiest bills Congress can get through? I think there's three. 

Tax reform has been argued about by both parties. Generally there seems to be a consensus to lower the corporate tax rate and cut some deductions, which will overall give the federal government more tax revenue and expand economic growth. When pundit Eric Bolling said on Fox News that the U.S. has the highest corporate tax rate in the free world, Politifact found his statement as mostly true. In addition to having the highest corporate tax rate (which has caused global businesses in the United States to move elsewhere), companies that are here can get away with a variety of tax shelters. In other words, because of the high corporate tax rate the United States has at 39.1 percent, corporations hide their revenue or move to avoid pay for lower taxes thus lowering economic and government revenue growth in the United States. A list of corporate tax rates created by the Tax Foundation backs up this statement.

Yevgeniy Feyman, a fellow at the Manhattan Institute for Policy Research, wrote on Forbes recently that one big problem that is scaring away corporations to countries like the United Kingdom is that the United States taxes all global income on corporations. In Britain however, the story is much different because the British government only taxes British income. Twenty-two companies have moved from the United States since 2011 in order to expand their business from the American tax rate that has slowed growth. President Obama has responded by calling these actions "unpatriotic" and shows that they are against economic nationalism. This rhetoric plainly reminds me of when Presidents Herbert Hoover and Benjamin Harrison tried to invoke economic nationalism by "protecting" the American economy with tariffs which ended in both men losing when they ran for second terms as a result of economic depression. In this globalized world, we don't rely on economic nationalism anymore, what we need to do is embrace the free market and compete with other countries.

Supporting employment for veterans is a no-brainer too. With Obamacare being so expensive, Congress is considering exempting veterans from the system. The Hire More Heroes Act of 2014 has been proposed by Republican Representative Rodney Davis of Illinois and his decision to exempt veterans from healthcare requirements is likely to boost employment among businesses who want less healthcare costs. Allen Smith of the Society for Human Resource Management has noted that while swift enactment is unlikely, it does have nearly unanimous support in the House of Representatives. After all, who doesn't like supporting veterans?

The final issue that I find easy to pass is the authorization of the Keystone Pipeline. I actually think Obama would veto it, but Congress would overrule. Remember that as of now, there are going to be 53 Republicans in the new Senate and 244 in the House. Passing the House will be easy and in the Senate eleven Democrats have written a letter saying that they would so at the start of the year. Some of these senators signed because they were up for election and three of them lost (with a fourth still in jeopardy). If the fourth senator (Mary Landrieu) wins anyway, then there will be 53 Republicans and 8 Democrats who want it passed. That's 61 votes. Just recently, Landrieu tried to pass the bill to save her skin, but it only got 59 votes.

This issue has torn the Democrats apart. Democratic Governor Brian Schweitzer of Montana has called those against the Keystone Pipeline "jackasses." Schweitzer himself is actually considering a run for president. According to the State Department, the Keystone Pipeline will support 47,000 more jobs for the American economy, which somehow has led Landrieu to round it up to "millions." It would also not be as damaging to the environment as some liberals like to think. Right now oil is transported down via train or truck, which is far more dangerous than through pipe. An argument against the pipeline that it is simply some big benefit for the Koch brothers (the two random rich guys that liberals like to use as a punching bag) is completely not true. Also, 60 percent of Americans support the Keystone Pipeline according to a USA Today poll. Obama hasn't made a major decision on the pipeline yet, but under pressure from both the American people and Congress he might be compelled to say yes. At the same time, even if he did veto it would not be that difficult for the Republicans to negotiate with Democrats to get six extra votes to override.

These three I think are easiest to pass, but they will all take time (especially the pipeline). No Congress has been truly able to pass everything it wants, issues on things like education and international trade are simply going to be dropped over more important issues (or passed with little media acknowledgement). Immigration and repealing Obamacare are just going to be a big mess that won't get sorted out. For these issues, there is no hope for anything to get resolved. I just hope Congress and the president work on more productive issues like the three I listed above rather than the issues that will easily create deadlock.

Monday, November 17, 2014

Republican Dominance: A Historical Look at Midterm Elections

David Horsey
This political cartoon is obviously meant to be humorous in showing the extremes of both parties, but idea is very real by demographics. It is a fact that Republicans had their people coming out and the Democrats did not. In the midterm elections, where only 36.3 percent of Americans turned out to vote this year, Republicans got their Tea Party conservative base energized while the Democrats could simply not bring their far-left liberals to the polls. The turnout is the lowest in 72 years, but voting turnouts in midterm elections is nothing new. It has always been low primarily because some states are left off these elections and voters are not simply as interested in comparison to the more dominant presidential elections for candidates who run for the nation's highest office. Yes, it is a referendum on President Obama and a Republican mandate based on those who voted. If you didn't vote, tough luck. As someone interested in politics, I communicated with my friends to urge them vote, but some of them obviously didn't. All my friends are young and likely in college, which has the worst demographic for people voting in any election. Here's exit polling data from NBC showing the demographics:

Gender
Men (49%): 57% Republican, 41% Democrat - Republican +16
Women (51%): 51% Democrat, 47% Republican - Democrat +4

Age
18-29 (13%): 54% Democrat, 43% Republican - Democrat +11
30-44 (22%): 50% Democrat, 48% Republican - Democrat +2
45-64 (43%): 53% Republican. 45% Democrat - Republican +8
65 or over (22%): 57% Republican, 41% Democrat - Republican +16

Race
White (75%): 60% Republican, 38% Democrat - Republican +22
Black (12%): 89% Democrat, 10% Republican - Democrat +79
Hispanic/Latino (8%): 62% Democrat, 36% Republican - Democrat +26
Asian (3%): 50% Republican, 49% Democrat - Republican +1
American Indian (1%): 52% Republican, 43% Democrat - Republican +9
Other (2%): 52% Democrat, 44% Republican - Democrat +8

Ideology
Liberal (23%): 87% Democrat, 11% Republican - Democrat +76
Moderate (40%): 53% Democrat, 45% Republican - Democrat +7
Conservative (37%): 85% Republican, 13% Democrat - Republican +72

Income
Under $30,000 (16%): 59% Democrat, 39% Republican - Democrat +20
$30,000-$49,999 (20%): 51% Democrat, 47% Republican - Democrat +4
$50,000-$99,999 (34%): 55% Republican, 44% Democrat - Republican +11
$100,000-$199,999 (23%): 57% Republican, 41% Democrat - Republican +16
$200,000 or more (7%): 57% Republican, 42% Democrat - Republican +15

For comparison purposes, I'm going to use the 2012 presidential election statistics from the Roper Center at the University of Connecticut. To start with my age group first, most young people are liberal but it is clear this advantage for Democrats can only be counted on in presidential elections. Democrats still won this group, but there was clearly more interest among young Republicans. Obama won 60 percent of young voters in 2012 and was up by 23 points (their part of a percentage of the electorate in 2012 was greater too at 19 percent). In this election the Democrats did not get out as many young people as needed as they won them by 54 percent. Young people represented 13 percent of the electorate. 

At UW-Waukesha, me and other members of the College Republicans decided to conduct a survey. Of the 69 people who were interested, 69 percent were going to back Scott Walker and the Republicans while 24 percent were going to back Mary Burke and the Democrats. This is the sign of a clearly Republican student body in the heart of a very Republican county. 

Among the electorate by race, Republicans are always able to get white voters on their side by comfortable margins. This advantage won't go away anytime soon. It works very well in midterm elections, but while it may help the GOP at the presidential level it does not guarantee victory. Democrats have always done strongly with blacks, especially in the case of sociological voting with the first African-American president. Republicans have always had low poll numbers among blacks, but it is always more important to look at how many blacks vote for Republicans. In 2012, 6 percent voted for Mitt Romney and in 2008 4 percent went for John McCain. Before Obama, we see where blacks traditionally voted for the GOP at 11 percent in 2004 and 9 percent in 2000. This is more in-line of where they voted in these midterm elections for Republicans at 10 percent. Political analysts have rightly credited Obama for his coalition of blacks, Hispanics, young people, and single white women. In the two presidential elections, he has been able to hold strong majorities in both groups and get them out in droves. The question is if this coalition will stick once he has left office. 

Republicans were able to get more Hispanics than in 2012. Romney won 27 percent in 2012 and 36 percent in the midterm elections. Back in 2004, George W. Bush won 44 percent of Hispanics. The Republicans have been aiming to get back to that number and the 2014 elections have laid the groundwork for 2016. While Asians are not as significant, the Republicans made a major improvement in comparison to both 2012 and 2004. Republicans lost Asians in both those elections. In these elections they won them narrowly. Obviously there is some differences here as this is a midterm election with a lower turnout than recent decades, so we can't say all these conditions among ethnic groups will remain the same in 2016.

Income hasn't changed, except by how much of the middle class voters the GOP can get on their side. The poor will always back Democrats because Democrats back welfare and demand-side economic policies. The rich will always back Republicans for their supply-side tax cuts and efforts to reduce economic regulations. The middle class have generally backed Republicans, but it's always important to look at how much the GOP has an advantage. The middle class of the America finds taxes and economics as the most important issues. They obviously favor low taxes, but can tolerate some cases of tax increases. This election wasn't one of them. These elections were a clear revolt over taxes, especially new taxes from Obamacare. 

This goes into the historical aspect of the recent midterm elections: Ronald Reagan. The white middle class blue-collar electorate of the United States is what we would have called the "Reagan Democrats" in the 1980s. Ronald Reagan's conservative agenda of across-the-board tax cuts and limited spending resonated with these people. Once, John F. Kennedy and the Democrats had passed major tax cuts. Now it was Reagan and the Republicans. By the time he left office in 1989, most of the middle class in southern, western, and midwestern states had been converted into Republicans. In this election, tax hikes concerned many middle class voters again.

To take a look at how important this is, let's look at every election year for Congress in the last twenty years (not all of these elections were resolved or occurred on the same day, some midterm elections may have happened as early as a year before the date, for example in the 1996 Senate midterms the Republican gained two seats on that date, but there had been a Senate election earlier which gave them another gain and that is considered part of the midterms):

1994
Senate: 52 Republicans (Bob Dole), 48 Democrats (Tom Daschle) - Republican +8
House: 230 Republicans (Newt Gingrich), 204 Democrats (Tom Foley) - Republican +54

1996
Senate: 55 Republicans (Trent Lott), 45 Democrats (Tom Daschle) - Republican +3
House: 227 Republicans (Newt Gingrich), 206 Democrats (Dick Gephardt) - Democrat +2

1998
Senate: 55 Republicans (Trent Lott), 45 Democrats (Tom Daschle) - No Change
House: 223 Republicans (Newt Gingrich), 211 Democrats (Dick Gephardt) - Democrat +5

2000
Senate: 50 Democrats (Tom Daschle), 50 Republicans (Trent Lott) - Democrat +5
House: 221 Republicans (Dennis Hastert), 212 Democrats (Dick Gephardt) - Democrat +1
Note: for the Senate in this election, the Democrats technically got the majority because Vice President Al Gore acted as a tie-breaker. They lost the majority later when Gore left and Republicans got Vice President Dick Cheney to be their tie-breaker.

2002
Senate: 51 Republicans (Trent Lott), 48 Democrats (Tom Daschle), 1 Independent - Republican +2
House: 229 Republicans (Dennis Hastert), 204 Democrats (Dick Gephardt) - Republican +8

2004
Senate: 55 Republicans (Bill Frist), 44 Democrats (Tom Daschle), 1 Independent - Republican +4
House: 232 Republicans (Dennis Hastert), 202 Democrats (Nancy Pelosi) - Republican +3

2006
Senate: 49 Democrats (Harry Reid), 49 Republicans (Mitch McConnell), 2 Independents - Democrat +5
House: 233 Democrats (Nancy Pelosi), 202 Republicans (Dennis Hastert) - Democrat +31

2008
Senate: 57 Democrats (Harry Reid), 41 Republicans (Mitch McConnell), 2 Independents - Democrat +8 
House: 257 Democrats (Nancy Pelosi), 178 Republicans (John Boehner) - Democrat +24

2010
Senate: 51 Democrats (Harry Reid), 47 Republicans (Mitch McConnell), 2 Independents - Republican +6
House: 242 Republicans (John Boehner), 193 Democrats (Nancy Pelosi) - Republican +64

2012
Senate: 53 Democrats (Harry Reid), 45 Republicans (Mitch McConnell), 2 Independents - Democrat +2
House: 234 Republicans (John Boehner), 201 Democrats (Nancy Pelosi) - Democrat +8

2014
Senate: 53 Republicans (Mitch McConnell), 45 Democrats (Harry Reid), 2 Independents - Republican +8 
House: 244 Republicans (John Boehner), 186 Democrats (Nancy Pelosi) - Republican +12
Note: One Senate election is still in play. Louisiana has the run-off, which by the poll numbers as of now looks like another Republican pick-up.

Too understand just how big these midterm elections were in 2014, take note that this is the GOP's biggest majority in the House of Representatives since 1928. As for the Senate, Republican gains are currently tied with the 1994 midterms twenty years before. However, if they win the last Senate election in Louisiana their gains will tally it to nine, their fourth biggest gains in the party's history tied with 1942.

The political geography from 1980 is quite different though. That was the year many Democrats who consider themselves moderates or conservatives dumped the more liberal President Jimmy Carter for former California Governor Ronald Reagan's conservative campaign. Let's say you were a career politician from Tennessee who was a Democrat and first elected in 1964 along with Lyndon Johnson's landslide. You generally consider yourself a conservative on social issues like abortion and gay marriage, but you are center in terms of economics. You generally support Johnson and enjoy advantages through compromises with Richard Nixon and Gerald Ford. However, Carter's liberalism alienates you and you find you can get a lot more done with Reagan, who has made many traditional Democrats look to the Republicans. By the time you retire in 1994, your district has became so Republican that the only reason you stayed in power so long was because you were highly respected and could make deals. A Republican easily wins your district in 1994.

This is the dilemma of the Democratic Party. When calculating the average gains made by Republicans in midterm elections, they have won an average of three Senate races and seventeen for the House. The GOP simply has a better base now than they have before because they are so reliable to come in midterm elections. As for the presidential level, Democrats have on average made a gain of 1-2 seats in the Senate and six gains in the House. Yes, their voters can come out in presidential elections, but they can't get the same gains in midterms with a group a conservative group as energized and organized to get votes out like the Tea Party. So far, this Republican advantage has repeated and shows no signs of stopping. This midterm election is significant, but it also continues the six-year curse. Every six years a party holds the White House, it losses in the midterms (but not necessarily enough for them to lose their majorities. To look at this, here is a video from former Bill Clinton campaign manager Dick Morris: