Barring a major surprise, the Republicans will take the House on Tuesday night – our prediction is a gain of 55 net seats, far more than the 39-seat magic number – while falling just short of the 10 seats needed to take the Senate.
This likely outcome is fully priced into the markets, so perhaps it’s not premature to look at the seven biggest themes that are likely to dominate the post-election analyses.
Theme One: The New Austerity will become even more dominant. It’s already a huge story in states such as Chris Christie’s New Jersey, and it’s what the voters want. Of course, this is the worst time imaginable for austerity; the economy needs more stimulus, not less.
But there’s a new sheriff in town – Rep. Paul Ryan (R-Wis.), the conservative intellectual who will become the new House Budget Committee Chairman. Ryan knows the GOP can’t overturn any of President Obama’s new laws; Obama’s veto will be good. But Ryan can “starve the beast,” and it’s quite likely that he will prevail over a de facto spending freeze for the next two years.