Monday, November 3, 2008

How to Watch the Election

Ever since the Florida fiasco of 2000, every Tom, Dick and Hanging Chad is eager to point out that it is the Electoral College, not the popular vote, that determines the winner of the U.S. presidential election. These budding federalists often fail to note that unless the popular vote differential between the candidates is less than one percent, that total will reveal the victor, but they raise an important point.

Apart from the profound Constitutional significance of the Electoral College – to wit, each state is allotted votes equal to its number of Senators and Congressmen, plus 3 for D.C., for a total of 538, requiring 270 to win – it is extremely handy for those of us watching the election on television.

Since we cannot know the popular vote total until all ballots are counted nationwide, the state-by-state results, assuming proper restraint is used in projecting the winner (Tom Brokaw, call your office), can give us an early indication of who will be the next President of the United States. This year, we can divide states into three major categories.

First, there are “Go To Bed” states. That is, if Democratic Sen. Barack Obama wins any one of these, you can say goodnight to your loved ones (and perhaps to the North American Free Trade Agreement, but that’s another story) and get some sleep. This category includes Ohio, with 20 Electoral College votes, and Florida, with 27. These are points that Republican Sen. John McCain likely cannot make up elsewhere on his path to 270, so the loss of either state would signal the end of the election.

Also worthy of “GTB” status is Missouri. Although the Show-Me State has only 11 Electoral College votes, it is a bellwether, having backed the winner of every presidential election for the past 100 years, with the exception of 1956. And, not for nothing, if McCain cannot capture this mostly conservative state in the center of the country, it means he is having a really bad night.

Conversely, if McCain wins Pennsylvania, make popcorn – we might be up for awhile. With 21 Electoral College votes, this Democratic stronghold has been inching toward the GOP this season, aided by unkind remarks about its citizens from Obama and Rep. John Murtha. Another “Make Popcorn” state is Iowa, with 7 Electoral College votes. The Hawkeye State was supposed to be safe for Obama, but he has felt the need to campaign there in the closing days. The unexpected pick-up of either of these states would buffer McCain against losses elsewhere in the country.

Finally, there are “Put On Your Pyjamas” states (if people wear pyjamas anymore). If McCain loses one of these, things look grim, but hang in for a bit. These include Virginia (13 EC votes), Georgia (15), and North Carolina (15) in the South. Out west, as later polls come in, look at Colorado (9). As for Nevada (5), if McCain loses there, put on your pyjamas and drink some warm milk. But by that time, we will likely know what happened in Ohio, Pennsylvania and Florida, so we will either be snacking or snoring.

If the above analysis seems too tidy to be true, try this twist: Suppose McCain pulls an upset in Pennsylvania but loses Ohio? In that case, when you say your prayers before bed, thank the Good Lord that democracy can be so exciting.

Theo Caldwell, President of Caldwell Asset Management, Inc., is an investment advisor in the United States and Canada.