Why PredictIt Odds Suddenly Favor Republican Control of Congress

PredictIt’s prices have swung dramatically in favor of Republican control of Congress. 

On October 16, the price of a Republican Congress was only five cents higher than a Republican House with a Democratic Senate. On October 25, the price of a Republican Congress was 42 cents higher. The Republican sweep rose from 47 cents to 69 cents. A Republican House and Democratic Senate dropped from 42 cents to 27 cents.   

The midterm price spikes followed news that the economy was voters’ top issue. The focus on economic issues is why independents and women veered toward Republicans in October polls.   

This is part of a long-running historical pattern: the party in the White House loses Congressional seats in the midterms. The voters who turn out in the midterms include the voters who oppose the party in the White House. They also include voters who perceive the first two years of progress as slow or otherwise unsatisfactory. 

However, voters respond strongly to the economy, and the Democrats inherited difficult economic challenges. Supply chain shortages, pandemic-era stimulus checks, and the invasion of Ukraine all contributed to high rates of inflation. (8% is high for the United States, but Turkey’s was just under 55% in the first quarter of 2022.) 

Combatting inflation has been contentious, too. As the Fed raised interest rates, loans for homes, schools, and cars became more expensive, too. Since voters disproportionately credit the president and his party for economic performance, the economy’s turn shortly before the midterms all but guarantees a Republican gain in both chambers of Congress. 

Foreign Policy and Republican Control of Congress

Joe Biden was dealt an additional economic blow with an October Surprise from Saudi Arabia. In early October, Saudi Arabia raised oil prices for the United States. Higher oil prices, compounded with Saudi Arabia’s oil supply cut, will increase US transportation and manufacturing costs. Everything that has to be transported will be a little more expensive to cover the higher oil cost. It’s a way for Saudi Arabia to twist Biden’s arm going into the midterms. 

This isn’t the first time that a foreign leader has manipulated the president leading up to an election. The Iran hostage crisis ended after a 444-day standoff with the Carter administration. Iran deliberately drew negotiations with the Carter administration out to harm him domestically. Less than an hour after Ronald Reagan’s inauguration, Iran released the hostages in a final defiant move against Carter.     

The kind of manipulation that OPEC countries can introduce into US election cycles is one argument for alternative energies. Energy independence would prevent another country from purposefully affecting the US economy—or any other geopolitical rival.  

Since voters are ignorant about economic nuance, Democrats’ chances of holding the House and Senate are slim.

Why Economic Issues Usually Dominate Elections   

In July, a New York Times/Sienna College poll found that abortion ranked among the most important issues to voters. By October, the economy was back in the lead. 

Despite the massive change to healthcare that occurred in Roe v. Wade’s overturning, abortion doesn’t impact everyday voters as often as expensive consumer goods. Many women will face healthcare risks from miscarriages that can’t be operated on under strict abortion restrictions. More women will die because of uncertainty about when such lifesaving procedures can be performed. It will take time for the voting public to grasp the consequences beyond abortions at Planned Parenthood. 

But voters from all backgrounds feel the impact of strained budgets and expensive loans every day. The midterms are no longer a referendum on conservative policy victories. The 2022 midterms are a judgment based on misunderstandings about where the blame for a challenging economy lies.