What does last night’s New Hampshire primary tell us about the developing 2020 presidential race? Here are my top three takeaways:

  • The chances of a brokered (i.e., contested) convention have never been higher
  • Trump demonstrated record turnout for an incumbent, suggesting a core of enthusiasm which has expanded since 2016
  • Warren’s campaign is toast: does she position for a Sanders running-mate nod?

I also think we’re underestimating the relatively high likelihood of some kind of “black swan” event between now and November 2020. What kind of event? I touch on a few possibilities below. While I don’t know which one might happen, the number of possible disruptive events seems quite large between now and Election Day. And while each event has a low probability, they’re independent and thus the possibility of at least ONE of them happening is the sum of those small percentages.

Projecting forward, though we’re a long way away from the general election, I’d say Trump’s re-election seems put in greatest jeopardy by his health, not by the current state of the Democratic competition.

1. The Chances of a Brokered Convention Have Never Been Higher

On Monday, July 13th, Democratic Party delegates from across the country will convene in Milwaukee, Wisconsin. It is quite possible that by that time, no candidate will possess the required 1,991 delegates to earn the nomination.

As I write this (February 12, 2020), these four candidates all have substantial “gas in the tank,” i.e., a combination of momentum and funding sources:

  • Sanders
  • Buttigieg
  • Bloomberg, and, to a lesser degree:
  • Klobuchar

Making matters worse for these candidates, Tom Steyer, though clearly not viable, is still spending gobs of money, making it more expensive for any one candidate to rise above via advertising. Each of the four above will almost certainly last through “Super Tuesday” on March 3rd, which is bigger than ever. At that point, odds are that Klobuchar might perhaps realize she’s not viable and drop out. (Does she throw her support to Buttigieg at that point? Unclear.)

At this writing, Biden is polling #1 in Nevada and South Carolina. So it’s hard to count him fully out. What will it do to have not just four but five potential double-digit candidates?

Putting Biden aside, I don’t really see how Sanders, Buttigieg and Bloomberg really call it quits until at the earliest, early May, under any scenario. And when the first of those candidates does, the other two will surely continue on through a couple more elections.

All Democratic primary/caucus delegates are proportionally allocated. This increases the chances that each of the strongest four will continue to accumulate delegates. Further, some state primaries are Open, meaning voters may vote in either party primary. If Republican voters organized in larger numbers, they could increase the chances of a contested convention, by boosting the vote of the lowest-polling “strong 4.” (I don’t think this will happen in large numbers, but it’s interesting to think about from a game theory perspective.)

As for Super Tuesday, the big prize of course is California. Due to the rules of California, if no candidate gets over 50% of the vote, they don’t get the extra “super boosting” delegates that the 50%+ majority threshold awards them. It seems very unlikely that with 3-4 “top” candidates, none of whom are from California, that any one candidate will earn 50%+ of the California vote. In fact, none of the “top” candidates represent states west of the Mississippi River, nor south of South Bend. Assuming Super Tuesday’s votes emerge with moderately strong votes for these top three candidates, what does that mean about the next milestone?

There are 775 unpledged delegates (i.e., “superdelegates”) in 2020, few of whom will be backing a Sanders candidacy.

Here’s the NYT’s visualization of when on the calendar these delegates are decided. Notice the pacing — there are really three (or perhaps four) big phases:

Image result for delegate count 2020 presidential primary schedule
2020 delegate count by month; source: New York Times
source: 270towin.com

While Super Tuesday (the blue states above) have relatively wide geographic distribution, particularly in the west and south, the northeastern states (NY, PA, CT, DE, RI) have a big determination to play in the April traunch of delegates. That is, Bloomberg’s geographically strongest areas may appear late. While the western and southern states might present Bloomberg with a challenge, he is organizing and spending like crazy in California (more than all other of his opponents combined.) And the northeastern states seem like potentially significant Bloomberg states, as they are very familiar with his relative success as mayor in NYC, where he remains generally quite popular.

A brokered convention is when the nominee of the party isn’t determined by the time of the party convention. Then, the delegates themselves do the wheeling and dealing to figure it out. The last brokered convention we had was in 1952, when the Democrats nominated Adlai Stevenson, who did not win the presidential election.

While still less than 50/50 odds, the chances of a brokered Democratic convention moved closer to a coin-flip from where we sit here in February 2020. Prediction market PredictIt put the odds around 40-50%; at a high-level, especially glancing at the pacing above and without running a full model, this feels about right to me.

Should this happen, it heavily favors the Democratic “Establishment” (i.e., the Clinton/Biden/Emmanuel/Podesta/Neera-Tandens), given the dominance of the Podesta and anti-Sanders crowd in the governing committees.

Such an event — a brokered convention — would be one that most of us have not yet seen in our lifetime. It definitely wouldn’t seem to bode well for Democrat Party unification if it happened. It would also leave the ultimate Democrat nominee with very little funding, a coalition needing unification, harsh feelings among the vanquished and little planning time for the November general. How does one reconcile a sweeping social agenda (say, on Medicare for All) with a much more moderate one, while maintaining the enthusiasm of young voters that Sanders, especially, has been able to excite?

PredictIt’s Chances of a Brokered 2020 Democratic Convention, 90 Day View

While a brokered convention is still on balance unlikely, there are several factors that contribute to this possibility:

  1. Sanders has momentum, but he has both a high floor of support (24%) AND a low ceiling (30%). He wins pluralities, but not majorities. Yes, the field is large today, and he did carry 62% of the vote in the 2016 New Hampshire Primary against Hillary Clinton. As the field thins, it will be interesting to see how Sanders support changes, particularly as Clinton herself (and James Carville, Rahm Emmanuel and many from the Clinton/Obama years) seem to be dumping on him. Yet Sanders has a lot of money and a core base of unwavering supporters. There is relatively low odds that moderates will vote for Sanders in droves, yet also virtually no chance Sanders supporters will vote for, say, billionaire Mike Bloomberg.
  2. Bloomberg hasn’t yet “fully” entered the race, but now joins the stage and the airwaves with a ton of cash. He didn’t campaign in either New Hampshire or Iowa. Yet he’s got a war-chest that dwarfs every other candidate. At some point, he will have to take on socialism and Sanders’ message, and that will likely not go well for Sanders.
  3. Buttigieg is off to a strong, though not dominant start; a key test of his appeal beyond white voters is coming up in the next 3 weeks. He currently has dismal polling numbers in the black and Latino communities. If he cannot expand these numbers, it will be hard to convince the Democrat electorate that he has a good chance.

Unpledged delegates, better known as “superdelegates,” make up about 16% of Democrat Party delegates in 2020. These are generally party insiders. While the Democrats have moved to a few rule changes after the tremendous friction of the 2016 election, it is quite possible that the ultimate nominee is again in their hands.

We will have a lot more clarity on each of these after Super Tuesday: March 3rd, 2020.

Joe Biden’s Campaign Is On Life Support

Joe Biden, though polling nationally high throughout the summer, had a disastrous fifth place showing in New Hampshire.

If your main selling point as a candidate is your electability, what does it tell voters that you’ve never won a single state primary in a presidential election in your 40+ year career in politics, and haven’t even come in second or third place in the first two states of 2020? Biden continues his halting, odd style, which is unlikely to draw new voters. “Vote for Joe because all the polls say he’s our best chance to beat Trump” message suffered a gut-punch in New Hampshire.

He is currently polling as the leader in February’s remaining contests (both Nevada and South Carolina), and these will be crucial tests to see how well he holds up. If he doesn’t finish first in South Carolina. things are looking very grim indeed for his candidacy. The PredictIt market for the 2020 Democratic nominee tells a sad story for Joe Biden’s candidacy. Beginning about January 17th, most betters turned sharply negative on his chances.

PredictIt Betting Market
RealClearPolitics National Averages. Note again Biden’s tremendous plunge and Bloomberg and Buttigieg’s rise

2. Trump Demonstrates Record Turnout for an Incumbent

Trump demonstrated a record New Hampshire primary turnout for an incumbent, more than doubling the past high water mark (George W. Bush in 2004.)

This continues after Iowa showed similar findings: Republican primary turnout in an incumbent year was a record there, too.

This is not to say that overall party turnout was a record. On the contrary, the overall record was set by Democrats in NH last night, certainly suggesting some enthusiasm by many in voting him out, but also attributable to the relatively large field (and population growth of New Hampshire.)

If you limit to “incumbent” years (i.e., when the nominee of one party is certain), voter enthusiasm for Trump’s showed record numbers. Compare his incumbent primary with that of the Republican Primary of 2004, when George W. Bush was the incumbent, and the Democratic Primary of 2012, when Barack Obama was the incumbent.

I went back and charted the total votes cast in the NH primaries. Note also that the 2020 race is as of 92% reporting, so the the degree to which he outperformed past incumbents is under-reperesented in chart below. Compare the red bar in 2020 with the blue bar in 2012; it should be clear that Trump’s turnout is quite strong.

Compare incumbent turnout in the gold-arrow years
New Hampshire Primary Turnout by Year (2020: as of 92% reporting)
Boldface indicates “incumbent” years, non-bold indicates “Open” years.
Names are there to remind you who was running but are of course not the complete list of candidates.

3. Warren’s Toast – VP Ticket Hopes?

Elizabeth Warren, the Senator from neighboring Massachusetts, did very poorly, placing a distant fourth behind Sanders, Buttigieg, and Amy Klobuchar. With her “progressive leftist with huge spending plans but not quite as socialist as Sanders” message, it is hard to see how she can appeal to the hard left flank of the party.

And to the right, she’s flanked by Klobuchar and Buttigieg. Klobuchar finishing ahead of Warren was the big “story” of the night for many pundits, and this will not help Warren.

What, precisely, is her positioning from here? In business school, I learned that brand differentiation answers the key questions: (a) WHAT are you, (b) to WHOM, (c) COMPARED TO WHAT ELSE.

I have a very hard time answering those questions for Warren. This “stuck in the middle” role, plus some serious past flubs in claiming Native American status for years, have cost her. I don’t see anything which could reverse this trend for her candidacy, short of another major health scare by Sanders.

Compounding matters, her poor showing will not help her fundraise — already, large donors are starting to express concerns like “she’s done.” This cannot help, as Bloomberg, Sanders and Buttigieg will each have large coffers going into Super Tuesday. She’s polling 3rd or 4th in the next key states.

She has a key decision to make now as to just how aggressively to challenge Sanders. Because Sanders is currently the favorite for the nomination, and if he’s the nominee, he’ll need a running mate. Sanders has previously said he’d prefer a female as his running mate, and she’s probably the most ideologically aligned candidate with Sanders who could win an election, with perhaps Stacy Abrams being the other one (though she’s never held elected office.) Note that while Alexandria Occasio-Cortez might seem a logical choice in many ways, she’s too young to be on the ticket.

We are Underestimating the Odds of a Major “Black Swan” Event

“Black Swan” events are unpredictable events that are beyond what is normally expected which carry potentially severe ramifications. I suppose by definition, “black swan” events are always underestimated, but I have this feeling in my gut that by November, we’ll have high odds (20-40%?) of some kind of serious shock. That’s because the number of likely major disruptors is quite high, though each individually has relatively low odds. But I think we are in a period of overestimation that November will look like a straight line from February.

Chief among these: our mental models of how 2020 will play out have seem to assume relative health of the candidates and the economy — i.e., they make a roughly straight-line projection from where we sit in February 2020. But there are nine months until Election Day. And it seems quite possible that one (or more) of the following rare events will happen:

  1. The straight-line projection from today is Sanders v. Trump. Or potentially it’s Bloomberg v. Trump. Regardless, odds are high that two aging septuagenarians (two in not very good health) will face off against each other. We’ve not had a presidential contest like that before.

    Risks: Actuarial tables indicate that the average lifespan of a 78 year old American is another 6 years, but these odds go down quite a bit if the 78 year old has had a major heart attack. What happens if one of the nominees (D or R) has a serious health scare, and/or needs to withdraw?
  2. A brokered Democrat Party Convention is a distinct possibility. This hasn’t happened before in my lifetime.

    Risks: What might happen if a brokered convention leads to fractioning of the Democrat party? Where does mainstream liberal/progressivism go next, should Trump earn re-election? Who are the most likely “unifying” candidates among Bloomberg, Buttigieg and Klobuchar, and if it’s Sanders, do we really think he can unify the 65+% of Democrat voters who are currently voting for some other candidate?

    If there’s a brokered convention, would Hillary Clinton be a candidate? While unlikely, it’s not so far fetched.

Additional shakeup events between now and Election Day that I don’t think we’ve fully factored into how 2020 might play out include: another Supreme Court vacancy, a downturn in the markets and economy, a spreading coronavirus, the emergence of a global debt crisis, or Iranian/North Korean hostile action or instability.

Potential surge in Black/Latino Support for Trump?

And, while not an entirely unexpected event, I think it’s quite possible that Trump may well earn far more support from people of color — notably black and Latino voters — than he did in 2016. It was clear from Trump’s State of the Union that he’s making black and minority votes a significant part of his campaign.

Between 1968 and 2004, Republican candidates averaged just 12% of the black vote.

In 2016, Trump earned just 8% of the black vote, yet still won. With historically low unemployment numbers and rising wages among black voters, it’s quite possible that Trump’s support rises. If Trump earned just 16% of the black vote, that’s double what he earned in 2016, which could make a very large difference.

And some fairly recent polls (November 2019) indicate his “favorables” among black voters could be as high as 34%, which would more than quadruple his 2016 support:

While I don’t think his electoral support will be quite that high, it’s certainly possible that it could reach into the 20% range, which would be more than double his 2016 support. Of course, many details are still unknown at this stage, chief among them, who the ultimate tickets are.

Put all these factors together, add in a substantial fundraising coffer for the president and longer time to organize than his competition, and I think the odds of his re-election (assuming no major health events — which is a pretty big assumption) seem rather high.

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