Bad Economy, Democrats Gain in Congress

The Dow is below 10,000 for the first time in four years. My FOX INDEX, which measures the distance to a healthy market (12,000 Dow, 1,300 S&P, 2,500 NASDAQ), dropped to -2,925, its new low (index only two months old—we run the FOX INDEX whenever it hits new lows or less likely highs). Of course, bad news for the economy is good news for Democrats, who are now set for significant gains in Congress.

Stu Rothenberg, in his “Political Report," has Democrats picking up 12 House seats. That’s in line with the “Real Clear Politics” average of the generic Congressional votes, which shows Democrats at +10.3%, roughly 2% better than the generic vote on the eve of the 2006 election, and suggesting a Democratic gain beyond their current 36 vote majority.

Most significantly, Democrats seem on the verge of major Senate gains, a concern addressed earlier here. The “Real Clear Politics” average of state polls indicates the Democrats are favored to pick up 7 Senate seats—Virginia, New Mexico, Alaska, Colorado, New Hampshire, and now, even North Carolina and Oregon [Sen. Gordon Smith, pictured]. Rothenberg makes the same call. With 58 seats, Democrats would likely be able to find two Republicans (try Snowe and Collins of Maine, Specter of Pennsylvania) to cut off filibusters and push through their liberal agenda and activist court appointments. Wow.