What Do The Markets Say About Trump's SCOTUS Nominee?

Posted: Sep 21, 2020 12:31 PM
What Do The Markets Say About Trump's SCOTUS Nominee?

Source: Robert Franklin /South Bend Tribune via AP

In the wake of Supreme Court Justice Ruth Bader Ginsburg’s death, our political situation, already intensely volatile, has been completely upended – but perhaps not in the way that you think. The sudden opening of a spot on the Supreme Court has dramatically changed the stakes of the election, but there is little evidence that it has changed the fundamentals of this election. Nevertheless, this might be one of those rare instances in which the perennial politician’s refrain that “this is the most important election of our lifetime” might actually be accurate.

But will President Trump be able to fill the vacancy? The underlying political calculus here is difficult to predict: on the one hand, it might very well be in Trump’s best interest to delay a vote until after the election to drive voter turn-out, as opinion polling shows that a majority of Americans want the winner of the election to choose the next Supreme Court Justice. Trump’s interests and Majority Leader McConnell’s interests are not perfectly aligned on this matter – McConnell would suffer a massive backlash from his base if he let an opportunity to secure a conservative majority on the court for decades slip through his hands. But given how slim the margins of this election may be, Trump could be ensuring his own defeat by insisting on appointing a new Justice before the election.

As for who that Justice may be, PredictIt puts potential Trump nominees Amy Coney Barrett and Barbara Lagoa at roughly 57% and 38% respectively of being nominated – keeping in mind that these probabilities add up to slightly over 100% due to the profit margin maintained by the book-maker.

Prediction markets are far from perfect, and given how tumultuous our political system is, it is far from inconceivable that the underlying data will change. Still, as of the morning of September 21st, the people with money on the line are close to certain that the nominee will either be Judge Barret or Judge Lagoa.

What follows is far less certain. If Trump confirms a new Supreme Court Justice before the inauguration, and Democrats take the presidency and the Senate, there will be tremendous pressure on them to pack the court (despite Ginsburg having decried that idea in the past). Senate Democrats Schumer and Blumenthal have both stated that “nothing is off the table.” Democratic Representative Jerry Nadler has called for an expansion of the Court if Republicans push through a nominee. If the Democrats win, it is far from certain that the Supreme Court will stay at nine seats. That is still a big if, however, as Justice Ginsburg’s death has actually shifted the odds of Democrats winning the Senate and Presidency very little.

Before Justice Ginsburg’s death, the political prediction market PredictIt gave Biden an implied 58% chance of winning, and Trump an implied 45% chance of winning. As of this writing, it's at 58% for Biden and 46% for Trump. The implied chance of the Democrats winning the Senate and the House was 54% before Justice Ginsburg’s death, and is 55% as of this writing. The new Supreme Court opening has not yet changed the underlying data about who will win and who will lose this November.

But Justice Ginsburg’s death is nonetheless a momentous political event. Let’s say, for the sake of argument, that Republicans are not successful in filling Justice Ginsburg’s vacant seat. That leaves the Supreme Court at 5-3 in favor of Republican appointees, though Chief Justice John Roberts is far from a reliable conservative.

Given that this election will almost certainly be contested, and quite possibly contested at the Supreme Court, the lack of a full court would have implications that are difficult to fathom. And even if the prediction market’s assumptions are correct and Republicans do appoint a new Justice, the Democrats will call any ruling in Trump’s favor illegitimate and refuse to accept the results. What happens after that is anyone’s guess.