Market Correction
Market Correction
The road from “Safe Republican” to “Toss Up” is shorter than you think.
On Thursday, Cook Political Report moved two race ratings from “Lean Republican” to the “Toss Up” column.
The changing political forecasts in the districts — CA-41 and CO-03, WelcomePAC’s inaugural House targets — tell us a lot about the political marketplace: it is still broken, but there is a clear playbook to fixing it.
CA-41 and CO-03 have a lot in common:
At the start of the 2022 cycle, both were considered “Safe Republican” seats by the parties and independent ratings agencies… but they shouldn’t have been. Both were included on WelcomePAC’s quarterly “Conceding Democracy” reports as ignored-but-winnable because of incumbent weaknesses and potentially volatile electorates.
During the 2022 cycle, they got $0 from the national parties but ran aggressive independent-themed campaigns targeting voters in the middle (and were the only two House-specific WelcomePAC investments).
After the 2022 election, they were rated as top-three overperforming challengers relative to how Democrats were expected to fare.
After declaring for re-election in 2023, they raised more money than any other challengers in the country.
So is the Democratic market working efficiently, or are Democrats still “The Worst Investors” as we claimed last cycle?
Why Democratic Donors Are The Worst Investors
In March 2022, we compared Lauren Boebert and Marjorie Taylor Greene’s districts as an ideal case study showcasing how terribly inefficient the Democratic donor marketplace can be.
At the time, none of Boebert’s challengers in CO-03 had even $100,000 in the bank while MTG’s was raking in millions. This funding disparity was the total opposite of the likelihood of winning — in 2020, Trump won MTG’s district with more than 68% of the vote compared to less than 53% in Boebert’s.
We sounded the alarm in our quarterly “Conceding Democracy” research and highlighted the problem in The Washington Post, CNN, and The Bulwark. We called on Flowers to “take his multimillion dollar stockpile to challenge Boebert.”
Predictably, MTG beat Flowers by more than 30 points. Meanwhile, Boebert’s race went to a recount — because her Democratic challenger Adam Frisch knew the marketplace was wrong.
For more on Frisch’s stunning overperformance, check out our “Win The Middle” case study on his campaign:
The Political Market is Predictably Bonkers
As we wrote shortly before Election Day, sometimes the political marketplace is predictably bonkers in how it allocates resources.
Candidates in promising districts are starved of precious resources that could make the difference between a Kevin McCarthy or Hakeem Jeffries speakership while longshots like Flowers are showered with cash that takes them… nowhere.
The causes of the political marketplace’s trademark inefficiency are multiple, and we’ve covered them here in detail:
Rage Donating: The internet has given rise to a new type of politician who trafficks in attention (and the troves of “clicks and cash” that come from dominating the public conversation). These politicians, including MTG, AOC, and their opponents (such as Marcus Flowers), use their outsized influence to distort the marketplace and divert resources away from where they’re most needed.
Interrupting the Rage Cycle (June 5th, 2022): Converting political outrage into profit is a big business that allocates our scarce resources without regard for what it takes to win. Let's stop rewarding “attention politicians” with clicks and cash.
The Worst Investors (March 6th, 2022): Following the money to its sad conclusion: Democratic donors have no clue what they’re doing.
Rating Agencies: Political rating agencies like FiveThirtyEight and Cook Political Report are not oracles, but their prognostications have an undue influence on the decisions of key resource allocators within the parties. In 2022, national party committees invested little to no money in supporting Democrats in WA-3 and CO-3 (rated as likely Republican by the agencies), yet compelling challengers in these seats flipped one and sent the other to a recount.
Democrats Aren’t As Screwed As You Think (July 2022): The media rewards outrage and despair — and the ratings agencies feed it. But don’t buy it: there's too little focus on potential upsides for Democrats this fall.
FiveThirtyEight Does a Victory Lap (February 2023): While FiveThirtyEight was generally correct in predicting winners and losers across the board, their forecasts missed the mark in a number of critical races.
Polarization Porn: The media’s insatiable appetite for negativity has amplified the narrative that the red are getting redder, the blue are getting bluer, and the middle is shrinking. Our inundation with this one-sided “polarization porn” makes voters appear more polarized (and less movable) than they actually are and creates the mistaken impression that competition is impossible, resulting in a doom loop that discourages risk-taking in potentially flippable seats.
What the Polarization Hawks Aren’t Saying (February 2022): Growing polarization makes volatility among voters in the middle the most important story of modern politics.
Enough With the Polarization Porn (April 2023): Polarization doomsaying can obscure the fact that it's still possible to save our democracy by practicing democracy.
“The Democrats” Fallacy: There’s no such thing as “The Democratic Party, Inc.” with a board of directors capable of making strategic resource allocation decisions. In reality, there are a bunch of loosely-connected committees, candidates, activists, and donors all acting and investing quasi-independently — and sometimes in contradiction with each other.
But don’t “The Democrats” do that? (January 2022): As we head into 2022, we cannot forget that “The Democrats” are whoever steps up and does the work of organizing and investing.
Time for Democrats to Stand Up for “The Democrats” (June 2022): Someone needs to tell Gavin Newsom that there's no such thing as “The Democratic Party” when it comes to messaging and organizing — just individuals and groups with a responsibility to actually do it.
Luckily, Market Corrections Are Predictable Too
DailyKos’ new House fundraising roundup shows Adam Frisch (CO-3) and Will Rollins (CA-41) raised the most money out of all Democratic challengers. The financial market has corrected — and so have the ratings agencies.
American politics is plagued by many problems. Polarization is bad, and our system of electing candidates is imperfect. But cynicism and electoral reform are not the only paths. We are simply Conceding Democracy in more than a dozen potentially winnable congressional districts at a time when control of the House is decided by less than half that margin.
There are more CO-03s and CA-41s out there.
The road connecting “Safe Republican” to “Toss-Up” is shorter than you think. And it’s the best path to saving our democracy.