How the US elections will end

Good morning dear readers,

Today is election day in the USA. If you would like to know what the so-called “midterms” are about, our Washington correspondent Annette Meiritz has summarized the most important things.

In this briefing we deal with highly condensed statistics, more precisely: with the four scenarios for the outcome of the US parliamentary electionsthe Congress with its two chambers Senate and House of Representatives. You can read the status quo from the graphic. The US statistics portal Fivethirtyeight, which has proven to be reliable in past elections, assigned probabilities to all four scenarios:

• Scenario one – probability 15 percent: The Democrats hold the majority in both chambers. That would be an unexpected triumph for Joe Biden, who could hardly be denied a renewed candidacy in the 2024 presidential election. For Donald Trump, who was heavily involved in the midterm election campaign, it would put a damper on the road to a new Republican presidential candidacy.
• Scenario two – probability less than one percent: Republicans win in the Senate, Democrats in the House of Representatives. Should this unlikely event occur, the political consequences would be similar to scenario three.
• Scenario three – probability 30 percent: The Republicans win in the House of Representatives, the Democrats defend their majority in the Senate: President Biden would be severely weakened. The President needs a majority in the House of Representatives, especially when it comes to budget issues. The Republicans have already announced that they want to question the aid packages for Ukraine, for example. The result would also be a disappointment for Trump. He would probably declare his candidacy for 2024 in November, but would have to reckon with strong opponents from his own party.
• Scenario four – probability 54 percent: Republicans win majority in both Houses. A triumph for Trump, who would then certainly run for president again. Joe Biden would have to put up with questions from his own party as to whether he is still the right man for 2024. The Republicans would allegedly initiate impeachment proceedings against Biden and members of his leadership team. However, that had no chance of success. Because impeachment would require a two-thirds majority in the Senate, and that’s not on the horizon.

So tomorrow the question is whether or not the USA will have a lame duck as President in the next two years – and from 2025 possibly a Donald Trump in the White House again. From a European point of view, both scenarios are unpleasant, comments Handelsblatt opinion leader Jens Münchrath. Results are not expected before Wednesday morning German time. In some states, the counting of votes can take several days.

How important it is for the world that the USA is strong and able to act is shown not only in the Ukraine war, but also in climate policy. The United States is working on a plan for the world’s largest companies to help finance the transition from fossil fuels to renewable energy in developing countries. The concept apparently envisages that companies can improve their own climate balance in return for green investments in developing countries.

First, the “Financial Times” reported on the new offensive by US President Joe Biden and his climate commissioner John Kerry. Accordingly, the US government wants to present the idea this week at the world climate summit in Egypt. The system should initially be voluntary and falls behind the binding trade in CO2 certificates in the EU – the reactions on this side of the Atlantic are correspondingly critical. But the greatest weakness of European carbon trading is precisely that it is European. This form of climate protection has so far ended at the EU’s external borders.

Who knows: the US advance may offer an opportunity to link both concepts at some point. “The clean sky is the limit” – something like that is said in America, isn’t it?

The former chief economist of the International Monetary Fund (IMF), Olivier Blanchard, sees a good chance that inflation in the USA and Europe will fall again significantly. In an interview with the Handelsblatt he says: “I hope that in 2024 we will be talking about other topics than inflation and recession.”

Blanchard was one of the economists who issued early warnings about high inflation. He now assumes that the peak in the euro area will be reached in the spring at the latest. After that, he expects the price surge to weaken significantly. According to Blanchard, however, inflation will probably remain higher afterwards than before the pandemic: “If inflation has fallen to 3%, for example, there will probably be a discussion about whether it makes sense to push it down to 2% and risk another economic downturn to do so .”

And then there’s Argentine soccer referee Facundo Tello, who took the football phrase “humorless referee” to a whole new dimension. In the Argentine Supercup final between local rivals from Buenos Aires, Boca Juniors and Racing Club, Tello imposed ten red cards – eight red cards and two yellow-red cards. The game had to be stopped when Racing was 2-1 in extra time because Boca were down to five players. Most of the dismissals were due to assault and insults. Tello is also expected to referee at the upcoming World Cup in Qatar. A certain nimbus should be there for sure from the first minute of the game.

I wish you good luck for the day ahead.

Best regards

Her

Christian Rickens

Editor-in-Chief Handelsblatt

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