The Economy Didn’t Save Republicans After All

Posted November 9, 2018 4:08 p.m. EST

Unemployment is abnormally low. Growth has sped up. A $1.5 trillion tax cut, signed by President Donald Trump last year, is fueling consumer spending. Faced with strong Democratic enthusiasm and fundraising, and hindered by an unpopular president, Republicans were counting on that economic strength to lift them at the polls, or at least limit the damage.

It didn’t. Republicans lost in House districts with low unemployment rates. They lost in districts that have gained manufacturing jobs. They lost in districts that got big tax cuts. And they lost overwhelmingly in the kind of affluent, educated suburbs that have experienced the strongest overall recovery — and that were once among the most reliable Republican districts.

Republicans had lost 30 net seats in the House as of Friday afternoon, and will probably lose a few more once all the votes are counted. It is possible, of course, that Republican losses might have been even larger were it not for the strong economy. But there was little sign of that in district-level results: Many of the Democrats’ pickups came in places where the economy, at least by standard measures, is strong.

All told, there was no apparent relationship between Republicans candidates’ performance in Tuesday’s House races and the strength of the economy in those districts, an analysis of economic and electoral data shows.

Republicans fared better in the Senate, but there is no sign the economy was a major factor in those races, either. Kevin Cramer, a Republican, unseated Sen. Heidi Heitkamp in North Dakota, which has the nation’s lowest unemployment rate, 2.7 percent. But in neighboring Minnesota, where the rate is just a tenth of a percentage point higher, the Democratic incumbent, Amy Klobuchar, cruised to a 24-point victory.

Analyzing the role of the economy in elections is particularly difficult in the Senate because there are fewer races and senators represent entire states, in which economic conditions can vary by area. But Tuesday’s results do not appear to align with measures of state economic health.

In Hot Labor Markets, Republicans Fell Short

If the economy was going to save Republicans anywhere, it should have been in Minnesota’s 2nd Congressional District, where the unemployment rate was 2.5 percent in the third quarter of the year — down a percentage point in the past two years — and where the typical household earned more than $80,000 a year in 2017.

Yet the Republican incumbent, Jason Lewis, lost by more than 5 points to a local businesswoman, Angie Craig, whom he had beaten in a tight election two years earlier.

Craig wasn’t the only Democrat who found success in a part of the country where the economy is exceptionally strong. Republican incumbents were defending eight seats that are among the 25 districts where unemployment is lowest. They lost five, including two districts each in Minnesota and Iowa, where the local unemployment rate is below 3 percent.

In fact, Republican incumbents fared better on average in districts with higher unemployment rates. And while that partly reflects baked-in partisan dynamics — Republicans tend to do well in rural areas, where unemployment tends to be higher — the party’s candidates also did better relative to past elections in districts where the jobless rate was higher than the national average.

Of the 25 congressional districts with the highest unemployment rates heading into Election Day, 10 had Republican incumbents. At least nine of those incumbents won, by an average of more than 30 points; the 10th race, in California, has not yet produced a result.

The unemployment rate, of course, is far from the only measure of economic strength. And Democrats may have had success in part because many voters — particularly women — weren’t convinced that the economy was booming.

But Democrats also did well in parts of the country that are thriving under broader measures of economic health. Of the 33 districts Democrats have picked up so far (several races remain too close to call), 20 are considered “prosperous” according to ratings by the Economic Innovation Group, a think tank that focuses on policies to help economically distressed regions of the country. Three other districts are “comfortable,” the next level down in the group’s rankings, which are based on job growth, household income, business openings and other variables. Only 10 districts fall into the bottom three categories on the five-tier scale.

Democrats dominated prosperous districts, winning at least 57 of 87, by an average of nearly 25 points.

For Some Candidates, the Tax Law Was an Impediment

When Republicans passed a $1.5 trillion tax cut late last year, they envisioned it as a centerpiece of their sales pitch for the midterms. But they may have miscalculated how potent an electoral weapon the tax law would become — against them.

Despite giving at least a modest tax cut to most households, the tax law has struggled to win majority support from voters. Several of its biggest champions lost their seats Tuesday. They included four members of the House Ways and Means Committee, which wrote the law, most notably Peter Roskam, R-Ill., chairman of the tax policy subcommittee, and Erik Paulsen, R-Minn., chairman of the Joint Economic Committee.

On average, Republican candidates did no better in districts where residents got larger tax cuts, as measured by estimates from the Tax Foundation, a conservative research group.

The law appears to have hurt Republicans in some high-income, high-tax districts, where many residents were angry about the law’s $10,000 cap on the deduction for state and local taxes. In Virginia’s 10th Congressional District — where the largest share of residents took the so-called SALT deduction in 2016, according to an analysis of IRS data — the Republican incumbent, Barbara Comstock, lost her seat. Her Democratic challenger, Jennifer Wexton, called the law the “Comstock-Trump tax scam.”

More broadly, Republican incumbents fared modestly worse than expected, relative to past elections, in districts where a large share of residents take that deduction. Republicans Shouldn’t Have Been Surprised

Republicans expressed hope before the election that the economy would help them in tight races. Days before the vote, Rep. John Culberson, R-Texas, said the strength of the economy in his district was “absolutely” resonating with voters. “It’s something we’re very proud of in West Houston,” he said.

Culberson praised tax cuts and drew sharp contrasts with his Democratic opponent, Lizzie Pannill Fletcher, on economic issues. He said in an interview that voters “understand there is a profound philosophical difference between a free-market fiscal conservative like John Culberson, with a record of doing the right things for the right reason, and a liberal Democrat like my opponent.”

Yet Fletcher won the district by nearly 5 percentage points.

History suggested that Republicans were being overly optimistic about the effect of the economy. In past midterm elections, economic conditions have mattered far less than presidential approval. The president’s party has lost large numbers of House seats even with low unemployment several times, including in 1966 and 2006 during the administrations of Lyndon B. Johnson and George W. Bush.

Of course, things could have been worse for Republicans on election night if the economy was weak. That would have been particularly likely if, say, a recession had depressed Trump’s approval rating.

Some Republicans have pushed this case. “I think this booming U.S. economy helped save a number of Republican seats,” Rep. Kevin Brady, R-Texas, chairman of the Ways and Means Committee, told The Wall Street Journal this week.