Barron's thinks Republicans will retain their majority in the House:
Our analysis -- based on a race-by-race examination of campaign-finance data -- suggests that the GOP will hang on to both chambers, at least nominally.
We studied every single race -- all 435 House seats and 33 in the Senate -- and based our predictions about the outcome in almost every race on which candidate had the largest campaign war chest, a sign of superior grass-roots support. We ignore the polls.
This methodology is good only for fertilizer. The assumption that the size of a warchest correlates with grassroots support is invalid.
Here's a simple example. Nancy Boyda has raised $428,761 according to the Center for Responsive Politics. Jim Ryun has raised $883,156. Her polling (including, I'm told, one poll not yet released) shows the race statistically tied, as does a polly by the state party.
Clearly, the grassroots support for Ryun can't be twice the size of Nancy's. And we can figure out why by looking at who contributes. Jim Ryun raised $409,792 from individual donors, while Nancy Boyda raised $348,040 from individual donors. They are polling nearly identically because their grassroots support is nearly tied. And that's also why they are getting almost the same amount of money from individual donors. Jim Ryun is just raking in the cash from the Republican money machine.
That illustrates why Barron's found that "the candidate with the most money has won about 93% of the time." Incumbents win about 93% of the time, and incumbents can tap into sources of financial support that insurgent challengers can't. But that money does not translate to anything about the grassroots.
Indeed someone polling well while spending less money indicates someone whose message doesn't need a lot of money to win people over. And in a climate where people consistently report dissatisfaction with Congress, with the country's direction, and with their own representatives, it will cost a lot more to sell voters on their corrupt incumbents.
Barron's, to their credit, acknowledges those criticisms, but responds to them in a way that's even weaker. They agree that 1994 and 1974 both showed that angry voters can upset their financial model of elections, but:
We just don't agree that the outrage has reached the level of those earlier times. The reason is that the economy in 2006 is healthier. And the economy is the only other factor that figures in our analysis.
For most of what Barron's does, that attitude makes sense. But it doesn't cut it today, especially in an economy where a rising tide has scuttled a lot of boats.
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I recall the author of a book called Freakonomics doing a study of elections where there were rematches, to eliminate the effect of incumbancy, and he found very little relationship between amount of money spent and probability of victory.
Anecdotally, it is worth noting that three of the biggest spenders in recent years, Forbes, Perot and Soros, all failed. While it seems obvious there is a bare minimum needed to compete (no one is going to win spending nothing), it seems reasonable to conclude that its the message and the messenger, far more than money spent, that matters.
It'd be interesting to look at spending only in races where incumbents lose. I expect that you'd find approximate parity in spending on those elections, with the edge still going to the incumbent's spending.