capitol hill shifts to the republicans. >> it's more than likely than not the republicans are going to le take -- retake the senate and retire harry reid as the minority leader. >> health care is the top issue. while president barack obama is not on the ballot, his policies are. >> the republicans in congress have blocked or voted down every serious idea to strengthen the middle class. >> this hour, a look at who is behind the money and issues in the election. >> god bless america. >> for marijuana, the minimum wage to energy, the initiatives to shake the country's youth. >> welcome to bloomberg's special coverage of the 2014 midterm elections. i'm pimm fox in new york. over the next hour, the business of the ballot and how money changes everything. a report from wall street and the executive suite as the nation votes. one country, many elections, and at least two views of the economy. glenn hubbard served george w.

bush as chief economist and is dean of the columbia business school and johnson goolsby is an economic professor at the university of chicago. let's begin with you, austin. let's pretend for just a moment, we wake up tomorrow and the senate is controlled by the republicans, what happens next? >> well, the senate won't be controlled by the republicans until they get sworn in. i think what will happen next is a mad dash to get as many things done with the democratic majority still in the senate as they go into the lame duck session. i don't know what glenn thinks but i don't think they'll get a whole lot done. and then it sets the stage for this battle of wills. there's one group of people in the democrats, and you saw joe biden repeating this view, that if republicans take the senate, then the pressure will be on them to get something done so there will be more compromise

and the other view, which i say i more believe in it would be more like 2010, if the republicans win, they'll say we just won, you do as we say, so there will be even more gridlock than there was before. >> glenn hubbard, compromise or a gridlock if the republicans take the senate? >> i think you're going to see compromise. i think it's three parts, process, action and preview. on process, getting rid of harry reid as majority leader and having a new majority leader and speaker work together on actual order to get bills on the president's desk is a big deal, action, immigration, some of the trade policy, corporate tax reform i definitely think is possible and a preview of things like entitlement reform or broader tax reform that aren't going to happen quickly, not before the 2016 election but getting them on the desk of the american people. i think all those are possible. >> austan goolsbee, comment on the economy, the stock market this year, han 8.5%

why aren't the democrats running so strongly on the economy? >> well, i think for two reasons, the first is whenever you're coming out of a recession, unless you're really growing gangbusters, nobody wants to say look how good things are because what if the next quarter you get some variability and it slows back down and then i think the second is the voters of the midterm, you know, the voting populous in the midterm elections is so much different than in a presidential election, i think just going out and looking how low the unemployment rate is would probably not work. it would invite the statement, but what about the people who dropped out of the labor force and what about the long-term unemployed and what about those states it hasn't been as good and why i don't think you didn't see more of that. >> glenn hubbard? >> a lot of it has to do with long-term unemployed and people who left the labor force. there's a lot policy could do

to help those people but it just hasn't. there's a lot of frustration there. likewise, many business leaders wonder, is growth sustainable? until we can answer those two questions, the voters won't be happy. >> the results of this election whether the republicans take the senate or not will include ballot initiatives as well as a variety of other issues on the agenda. what's the most important issue for you? >> well, it's not that big of an issue to me personally but here in illinois, we do have this advisory ballot initiative about should there be a millionaire sur tax and it will be interesting to see what happens with that as well as who's going to win our governor's race because it's been very close. >> glenn hubbard? >> i would agree watching the millionaire sur tax is interesting but maybe a different reason than austan. i think it's silly. the notion the country or the

state of illinois will get out of their problems by raising taxes on the rich won't solve the issue. the sooner we can get to a real discussion the better. there are other ballot issues, mage is -- minimum wage is something to watched and taking the discussion away from the earned income tax credit we could be having. there's a lot of fluff. >> what's the most important issue for the economy, glenn hubbard? >> it is to persuade business leaders that real growth is continuing to be possible, that means trade reform, tax reform, things that really provide a jolt to the economy to accompany what the fed is doing. get the government off its hands. >> austan goolsbee trade reform and immigration, and also tax reform, where do you see any process progress? >> i don't see any progress. when they asked six months ago, what's the chance of bipartisan legislation passing before the election? i said 0%. then they asked me how would that change if the republicans

took the senate? i said i thought it would be cut in half. and i basically stand by that. >> glenn hubbard, the individual races that are going to be tight, we're going to be watching them all night. the races in places like iowa, georgia, louisiana, how important is the economy for the outcome of those races? >> i think the economy is important in every race but it's not just the national economy, it's how people feel in their state, along with state-specific issues. the whole national issue of what happens with the senate and possible policy i think weighs on every voter's mind. >> i want you both to hang on or a moment, glenn hubbard and austan goolsbee. i want to talk about mitch mcconnell, who is the most riding on today's election? he's a republican senator from kentucky. if mitch mcconnell wins his slugfest in kentucky and the g.o.p. romps home to victory, he'll be the leader of the republican majority. peter cook went to mcconnell's hometown of louisville,

kentucky, for a look at the man who might be king. >> where is his plan? >> to democrats, mitch mcconnell is gridlock personified, the lawmaker single-handedly standing in the way of the obama agenda. >> the top political policy should be to deny president obama a second term. >> to some conservatives, mcconnell is a sellout, a established republican still too willing to cut deals with democrats. >> we're certainly not going to send a signal to the markets and to the american people that default is an option. >> but even mcconnell's critics concede he's a master political strategist, a survivor, now poised to become majority leader if republicans can gain a net of six seats in the senate and if he can overcome a spirited challenge from a democrat less than half his age. >> he's a senator that's out of touch, out of ideas, and with the help of west kentucky, will be out of time on november 4. >> helped by bill and hillary

clinton, allison gunderson grimes has taken aim at mcconnell for months. >> mitch, that's not how you hold a gun. >> blaming him for d.c.'s dysfunction. >> senator mcconnell's 30-year record is gridlock, discussion, extreme partisanship that's cost this nation. >> a weekend poll put mcconnell up nine points though 49% of likely voters view him unfavorably. the good news for obama, mcconnell is less popular. kentuckians will benefit from his promotion. >> the majority leader gets to set the agenda not only for the country but look out for kentucky's interests. so one of the basic questions here is who can do the most for kentucky over the next six years? >> peter cook is at mitch mcconnell's campaign headquarters in louisville. what's the mood there like? >> well, mitch mcconnell himself said yesterday that victory was in the air and it's pretty clear from talking to some of the folks within mcconnell's inner circle here,

that he is feeling confident about his chances of victory, not only his sixth term in the u.s. senate but more importantly, rising to the role of majority leader, the job he's coveted most in washington. pimm, we'll find out shortly because polls are closing soon in eastern kentucky but as you move west, polls not closing until 7:00. one thing to watch on the grimes side of things, big turnouts in jefferson and fayette county where there are lot of democrats and one reason for optimism for the democrats that this race will be closer than the polls suggest. >> in addition for a race for the senate in kentucky, when what are some other races that people at mcconnell headquarters are looking to to give them guidance about the senate results? >> new hampshire and north carolina. the view is it the republicans do well, if scott brown prevails in new hampshire, if thom tillis presides in north carolina, two close races will be a bellwether for the rest of the nation and how the

republicans do tonight. if they win those two states, they feel very good of their chances of holding on to the u.s. senate. >> do the campaign people you speak to believe this is a referendum on president obama in kentucky? >> that's how mcconnell has portrayed it. if you vote for allison grimes, you're voting for the president and his policies. on the other hand, she's tried to distance herself from barack obama and says she disagrees with him, over coal, for example, she wouldn't confirm she voted for president obama in 2012 or 2008. that distance has helped her run her campaign here and helped her compete against mitch mcconnell and in the end we'll find out if there's been enough. there's been a lot of money spent here as well, close to $80 million in all if you count some of the outside money, one of the most expensive races in the nation. >> peter cook, stay with us for a moment because i want to bring in phil mattingly, the president, and administration,

are they ready for majority leader mcconnell? >> they won't admit that publicly, pimm, but they've been preparing for contingencies like a republican majority in the senate going forward. look, there's work to do on both sides in terms of relationship between the two and something the president underscored in the annual white house correspondents dinner, kind of a laughing affair when he took a shot at mitch mcconnell. take a listen. >> some folks still don't think i spend enough time with congress. why don't you get a drink with mitch mcconnell, they ask? really? [laughter] >> why don't you get a drink with mitch mcconnell. applause plus [applause] >> mcconnell's staff got a big kick out of that and the campaign tweeted a picture a day later of senator mcconnell at a bar with a beer to @barack obama. something to keep in mind, mitch mcconnell is a dealmaker and understands the process and

understands washington better than anybody else on capitol hill. if there are areas there is an agreement, mitch mcconnell is the likely republican leader to find them and unlikely they'll get to the table to start those talks, pimm. >> peter cook, i want you to comment on something phil mattingly said, if mitch mcconnell becomes the majority leader, the white house will have to figure out a way to communicate with republicans in the senate and in the house. from your reporting, are they prepared for that? >> as phil said, mitch mcconnell is a master strategist and master legislator. he knows and sees the field better than anyone else in washington. i heard that in the past couple days from democrats that have done battle with them. this is someone who will have to find out how to satisfy conservatives in the house as well as conservatives in his own senate caucus if he wants to get anything done with this white house and i've heard the same thing, if there are areas where they will be able to reach an agreement, i heard from a democrat today, congressman john yarmouth, he's

done battle with mcconnell in the past and he told me what stood out, he said, i know mitch mcconnell and i think he will force compromises because he doesn't want to get to this top job, senate majority leader and not have a legacy and won't want more gridlock and obstruction going forward and leaves open the possibility of compromise in some areas, not bigger ticket items but smaller fish like trade or infrastructure. >> phil mattingly, trade, infrastructure, immigration, where do they seek compromise at the white house? >> definitely trade, definitely infrastructure, maybe some lower level issues on the tax side of things, not a broad, comprehensive reform idea you've seen floated. it's a big talking point for both parties, nobody sees that coming to fruition. immigration is pretty much off the table now. another thing to keep an eye on, actually, and seems minor but is a big deal, criminal sentencing reform, it's got republicans on it on capitol hill and democrats as well. a key relationship to watch, pimm, on whatever the issue is, if the white house wants to get something done, mitch mcconnell

and vice president joe biden has worked together on major deals in the past and have a good relationship and their staffs talk regularly. there's a level of trust there the republican conference on capitol hill in both chambers doesn't have with anybody else in the white house. joe biden might just be the key to whether or not mitch mcconnell as majority leader, if he gets that job, can communicate with the white house going forward. >> i want to thank you both going forward, phil mattingly joining us from the white house in washington. also, our thanks to chief washington correspondent peter cook, in louisville, kentucky, the site of the mitch mcconnell campaign headquarters. coming up, it's not just 36 senate seats and all the house up for re-election, voters are casting ballots on tax increases, the minimum wage increase and of course marijuana. next up, the big ballot initiatives, and for hour bihour election news and the five counties you need to watch, go to bloombergpolitics.com pofment

>> bloomberg election coverage is brought to you by coke industries. learn more at cokecareers.com.

>> this is bloomberg's special coverage of election 2014. i'm pimm fox. a live shot of the u.s. capitol with a bit of scaffolding. the fight for power for control of that capitol hill building for congress is not the only issue voters are facing. voters in 42 states are going to decide about 150 ballot measures, everything from bear baiting in maine to minimum wage increases in states of alaska, arkansas, nebraska, illinois, and south dakota. all right. let's find out what our economic experts, glenn hubbard, former chief economist for george w. bush joining they in new york and austan goolsbee, he held the same post under president obama. let's see what they say, $7.25 as the minimum wage. what do you think will happen with these ballot initiatives increasing the minimum wage? >> well, first, let's go back to baiting bear with donuts.

i love it in maine they put that on the ballot. most of the minimum wage increases at the state level have tended to be pretty popular. i don't doubt that a lot of those will pass. the impact of raising the minimum wage, the impact is modest no matter how you look at it. for those who think it costs jobs, the impact is quite modest. for those who think will have a big impact on the income distribution, i believe it's also modest. >> alaska, arkansas, illinois, nebraska, and south dakota, what do you think of the initiatives? >> about the minimum wage? >> yes. >> i agree with austan. but i think it's the wrong conversation. we need to talk about how to support the incomes of low income americans and that's the low income earned tax credit. why should we say people who are customers or suppliers of

firms that have minimum wage, those are the only that will pay for this. austan is right that reasonable people can disagree the impacts of minimum wage. but no reasonable person can think it's the best way to solve the problems. i think the only reasonable idea would to increase the earned income credit. >> how do you do that, with the earned income credit, any chance this will pass? >> i definitely do. if it's wrapped with a package of things both parties want. the issues, increasing the earned income credit for single workers, a program that started out as a work program morphed into being a family support program and a work program needs to go back to its roots, increase support for single workers and think there are republicans and democrats for that. the president says he's for it. austan goolsbee, let's talk about it? >> the president proposed it but let's be clear, the president has proposed many times expanding or making available the earned income tax credit for families that have more kids and historically the republicans have not been for that precisely because the

president has been for it. >> let's talk about taxes. that's on the ballot in a number of states, whether it is nonbinding illinois ballot initiative to tax wealthy individuals or the tax businesses in nevada. what's your take on taxes this election season? >> unlike minimum wage, tax ballot initiatives are not very popular so it will be interesting to see what happens. in illinois, as you mentioned, it's purely advisory and whether the next governor will even want to heed that advice depends a lot who is elected the governor. it's a close race. i think that one is more in the meaningless category but it will be interesting to see the take in a pretty angry electorate. if you look at the polls, people are not in a good mood, even in states where the economies have been growing pretty decently, and so we'll see how that -- they're certainly taking it out on

incumbents but we'll also see how they're taking it out on the budget making in their states. >> glenn, you have anything to add on taxes because i want to talk about a potential tax on soda, on sugary beverages in san francisco. >> one thing about taxes is the need to not raise taxes on job creation at a time the voters are telling us economy is number one, is the issue they care about. the soda tax i don't think is a very good idea at all. there are plenty of other ways to encourage good health. i think taxing soda, i don't see it of >> austan, two cents per ounce tax in san francisco and one cent in berkeley on sugary drinks. >> it's not exactly my area. i think two things. one, we do know things that have spillover negatives on the rest of the country, we might want to -- if you have to raise taxes, raise it on things that are bad and some of the issues of obesity are costing the rest of america a lot of money paying for the medical care of

those people. >> why not on m&m's? >> that said, the more narrowly targeted these taxes are, if they're just at the city level or just for big box stores, sometimes people add tax like that, things like that tend not to work because people can shop outside of the small area. >> glenn, you said what about m&m's, not being able to tax m&m's? >> where do you draw the line. >> with m&m's, you know what's in m&m's. there's a ballot initiative in oregon to label food that has any kind of g.m.o., genetically modified organism in it, you think that's going to be an issue people will look at and say this is was the first time the state was able to make this stick? >> i think what it says is there is public concern about food safety and what's in food. i think better information is always a good thing. >> austan, something else people ingest, we know they do it in colorado and washington. marijuana, of course, on the ballot and in washington, d.c.

for recreational purposes as well as in oregon. what's your take on how voters are going to turn to that issue? >> well, you know, it's interesting. just like with gay marriage, there's a major age divide. the younger people are, the more they say look, what's the big deal? and i think a lot of the fate of these initiatives will depend on how many people 40 and younger are voting compared with older voters. i think the one thing i would point out that we've seen in colorado is there was a group of people saying if you legalize marijuana and they have to pay taxes on it, this is going to be the greatest deficit solution ever. and the economic impact of marijuana either legalization or decriminalization, loosening the rules, has not been nearly as large of what its advocates do. >> what about the marijuana on the ballot but not only for recreational purposes but on

the ballot for medical purposes as well? >> i have to leave it up for medical practitioners to make the call there, but i think there are real health issues. the difference between marijuana use and other social issue is there are health concerns. the question really is more for health professionals than economists. >> also on the ballot, issues related to gaming and guns. background checks on oregon when it comes to guns. what do you think is going to happen? >> i think you'll see a lot of variation across states but where you've seen those on the ballots, i think you will see states have strong interests. >> expansion of gaming, austan goolsbee. that's on the ballot and a repeal in massachusetts. what's your take? >> my take is it's kind of funny, some of the states saying they want to legalize and some of the states that have legalizing, let's get rid of legalization. i think a lot of times the drive for gaming is coming from a desire for economic development and like with the case of marijuana, i think a

lot of the proposed benefits, economic development benefits of gaming do not materialize in anything like the magnitude that its proponents say. >> i want to thank you both very much, austan goolsbee, professor of economics at the university of chicago and my thanks, also, to glenn hubbard, the head of the columbia university business school. coming up, look, it's a bird, it's a plane, no, it's a super-pac. i mean super-pacs that can raise and spend unlimited amounts of money and here are the top super-pacs, ranked by independent expenditures, and yes, those are millions of dollars. >> bloomberg television is brought to you by goldman saks. progress is everyone's business. ♪

>> this is bloomberg's special coverage of election 2014. i'm pimm fox. how much money does it take to win an election in the united states? the answer, a lot. the 2014 midterm elections will

be the most expensive midterms in our history. the center for responsive politics says more than $3.5 billion will be spent on today's election. here to tell us where all that money comes from and where it goes, from washington, d.c., sheila crumbholz joining me from new york and nina dunn, former telecommunications director and manager at s.d.k. knickerbocker and senator john sununu, former republican senator from the granite state of new hampshire. sheila, just describe how much money is being spent on this election? >> $3.7 billion will be spent when all is said and done. slightly higher than 2010. and surprised it's not a lot higher. but there wasn't a competition

we had in 2010 and the senate seats that are up are not from such big states are or big ticket races we've had the last two senate section cycles. >> can you describe the many ways in which money flows into the political campaigns? i've looked at your website and there are a lot of different contributors and come in a lot of different guys. >> there are, indeed, and we're cut out for trying to follow all the money trails that are proliferating, actually, in the cycle. and one thing we can say that's kind of uniformly true is that the money comes from a extremely elite, tiny fraction of americans, less than one half of 1% of american adults deliver the vast majority of money in political campaigns on an average year, and this cycle, because of recent changes due to the mccutchen vs. f.d.c. decision in the spring means wealthy donors can

give far in excess of what they were able to give even last march. so we've already had 490 donors blow past the aggregate caps that were in place in the spring and of course we know steier, ors like tom michael bloomberg, bob mercer, paul singer, really wealthy donors who have given over many years that are giving in this season millions or tens of millions of dollars to outside groups, super pacs and 501 c-4's and other politically nonprofits. >> john sununu, i won't ask you to go into the details of every giving that's gone on, but what is your impression how the money flows into the campaigns, what are the results based on the money? >> first of all, money isn't decisive. it's certainly important as a candidate you have enough to get your message out, but i won campaigns where i was outspent significantly. i think in my last campaign that i lost in 2008, i actually

spent more in the aggregate than my opponent. so it's not decisive. >> in new hampshire it was jeanne shaheen who is currently running tonight? >> and i spent less in 2002 and won and outspent in my early house races. what's important here, though, is the accountability. it's worth noting the candidates' money, the money that a candidate raises and spends is the most accountable money, the most disclosure the candidate is personally responsible for the ads that they run and they're responsive to what voters think of the negative attack ads, etc. it's the third parties that are least accountable. i think one of the approaches that makes sense is make it a little easier for the candidates to raise and spend money because they're the most accountable and responsive. >> anita, do you agree with what john sununu is saying? >> i certainly agree with john that money is not determinative in every single race. in large states, money can be far more influential than in smaller states where people

really have an opportunity to get to know the candidates. and sometimes the amount of money that gets spent in small states can actually have an affect where people feel like too much is being spent. it's hard to get to that point in florida or california off new york or texas, you know. it's very hard to get to the too much money point. i think the other point john raised is a really important one which is what we've seen over the last two election cycles is candidates are actually spending a smaller percentage of the money spent in their races than outside groups. and with that, candidates actually end up being accountable for messages they didn't put on the air. and that is a hard thing for a campaign. >> as a candidate, you're happy with an outside group comes in and puts up an ad you think is good, it's effective. but at least as often as not, an outside group will come in and put up an ad you're just not comfortable with or it's not consistent with your message, you don't like. and you really can't coordinate with those outside groups.

>> that would be against the law. >> exactly. now you can sort of independently disavow the ad or say i wish you'd take it down but sometimes that draws more attention to it. you're put in a tough situation as a candidate if the third parties are really out of control. sununu a krumholz, john mentioned from money from outside, comment on the money that comes from out of state to the state campaign and state issues. what kind of influence does that indicate? >> you know, i think that is a credit:-- critical element here, the money going into these campaigns, already we're seeing $81 million as of tonight going into the north carolina senate race, foips, from outside super pacs and nonprofits. it does not represent by and large the people -- the folks if north carolina. it represents interests coast to coast. and for that matter, i might add, we don't really know where the politically active money is

coming from. we've had political scandals in the past where foreign sources of money have been involved and could be the case here, too, bark money and secrecy. >> that's an important distinction. there shouldn't be foreign money influencing any election in the united states, in my opinion. but if you're talking about u.s. citizens getting together, putting together a super pac or any pac to advocate for ideas they think are important to the country, whether it's a senate race or house race, those individuals have a national responsibility as well as a constituent service responsibility. so you know, i'm always very reluctant to tell someone they can't step up and spend their money advocating for ideas they think will make america better. >> anita, are we going to spend more and more ., is there nothing stopping this? >> three things happened, in 2002, the mccain-feingold law was passed and made it difficult for a political party to spend the money they'd been spending in the past to support

their candidates and that's very disclosed and accountable money. the second thing that happened was the supreme court and citizens united opened the spigots for this super-pac spending shiell and her group does a good job of tracking and trying to disclose. it's hard to track, as sheila would be the first to tell you. the third thing that happened was the supreme court then has a mccutchen decision which basically took an aggregate cap, it used to be an individual donor could only donate so much in the aggregate to federal candidates. that's now gone so individual donors can donate to as many candidates as they want until basically they run out of candidates. those three things have all combined to really escalate the amount of money. again, it's not necessarily a bad thing if you have more communication and more interest in these races. what is important, and i think sheila's group does a good job trying to do this is the people know, where is that money coming from and who are the interests that are spending

that money and what are they trying to influence? that's actually the important piece here, disclosure. >> one of the effects of what anita described, though, is to make it tougher for the national parties to raise money because restrictions on their fundraising have remained in place, so they've become a less important part of the debate or dialogue or process. the third parties -- and to a less extent, the candidates, have become more important. >> we've got to leave it there. thank you former senator from new hampshire, john sununu, a bloomberg contributor, my thanks also to sheila krumholz, joining for us the center for open politics and my thanks to anita dunn, joining us from s.d.k. knickerbocker, thank you. the business and the ballot, .52?d you live on $7 people around the country are saying no. there are several states with

minimum wage increase on the ballot. what do business leaders say? we'll find out next. ♪

>> this is bloomberg's special coverage of election 2014. i'm pimm fox. so what are business leaders and corporate executives watching for in tonight's results? joining me from houston is the chief executive of waste management, david steiner and joining us from arkansas, former skype, former wal-mart chief executive bill simon. i want to begin with you, bill, and get your minimum wage initiatives. >> it's hard to say. some have momentum. minimum wage as a starting point is something that needs to be looked at but is more of a political solution to an economic problem. the problem is growth. and as part of a comprehensive solution, minimum wage can be looked at but we need to focus on restoring growth and

allowing work force development for these folks who come in in entry level jobs the opportunity to advance. >> david steiner, what's the most important issue for you in this midterm election? >> well, you know, let's talk about the minimum wage. because for us, it's not about workers earning the minimum wage. it's about workers having minimum skill level, right? so in the transportation industry, you've got 30,000 to 50,000 jobs that will go unfilled this year. by 2020, they're saying that will be about 300,000 to 400,000 jobs. we've got a lot of jobs for drivers and mechanics in the transportation industry that pay five to 10 times the minimum wage. so let's talk about training our workers to have a skill set to get those better paying jobs. and i think you can do a lot to alleviate income disparate. >> from waste management's point of view -- >> go ahead. i beg your pardon. >> from waste management's point of view, we're a sustainable company and

whatever we can do to improve sustainability or recycling rates is what we're talking about. folks don't realize with the decrease in commodity prices we saw, according to e.p.a. statistics, we saw the first decrease in recycling rates in the last 40 years in the last two years. we've seen recycling rates go down because of a decreased commodity price. we need to have a conversation about what do we need to do to spur recycling and make the country more sustainable and what can the government do to help us do that. >> talking about being more sustainable, doesn't it lead to a conversation about energy policy? i'm wondering, bill simon, what your thought is on what can be accomplished in the next congress if indeed the republicans take the senate. >> well, on energy right now in the u.s., energy costs are a competitive advantage and we need to find ways and policies that allow american business the opportunities to take advantage of those relatively lower energy costs that i think we're going to be seeing for the next several years.

there's a real opportunity for us to revitalize and reshape in a new way with new technology, a new american manufacturing cycle and really, really drive some of those jobs. we talk about it's really a very good point that he made, there's a lot of discussion on entry pay and starting wages but the real issue work force development and finding people that are capable and qualified to do the jobs that pay far more than minimum wage and draining our work force and i think energy policy, particularly incentives to invest in infrastructure and manufacturing based on those low energy costs will be very, very helpful in the coming sessions. >> david steiner, of course the senate race in iowa could have an effect for keystone x.l. pipeline. what's your take on what's going to happen there? >> you know, look, i think everybody would acknowledge that the keystone pipeline is a good thing for america. not only does it create a lot of jobs, but you've seen a lot

of different safety issues around transportation of oil by rail. and so you know, we've got to look at every solution we can to create jobs, whether it's drivers and mechanics at waste management or folks in the energy service business. there are jobs out there to be had. we need to make sure to get people trained and get them to the location where the jobs are. nobody should want for a job in the united states. nobody should want for a living wage in the united states. the best way to do that is to train our workers to get the jobs that are going to be the bs of the 21st century and bill said a lot of those aren't entry level jobs and get the folks trained to take the jobs that pay way beyond the entry level. >> bill simon, i want your thoughts on the possibility of a trade agreement and trade liberalization even if the senate does become controlled by the republicans. phil mattingly earlier said it's an area the white house could compromise on. what's your take on trade agreements? >> i think that's one of the areas where there's got to be

some common ground. you know, if we have a new leadership in the senate but we still have no progress, we might as well not have had a leadership change. what we really need is new leaders to move things forward. and i think that's one of the areas where both sides have some -- at least broad agreement on the ability to move forward. so hopefully that will be one of the areas that they move. >> david steiner, what is business's take now on the potential for immigration reform. that seems to be off the table in washington. >> yeah, and you know, look, we saw it at the end of the bumgarner, right? in the last two -- in the bush administration, right? in the last two years president bush came forward with an immigration policy we weren't able to get passed. it's time to stop blaming one side or the other and time to sit down and get a comprehensive immigration package everybody in the united states is behind. when i talk to our employees around the country, they don't

understand why there's a logjam in immigration reform in washington. whether you're talking to our front line workers or the c.e.o.'s of companies, none of us can't understand why we can't reach an agreement on something so fundamental to the united states. >> i want to thank you gentlemen very much, waste management chief executive david steiner from houston and former wal-mart u.s. chief executive bill simons from rogers, arkansas. today's election results means some people will gain power and others will go home to feed it. but as an investors, you can't sit out the results. the performance of your portfolio after the count. that's next. ♪ >> bloomberg television is brought to you by b.p.

>> this is bloomberg special coverage of election 2014. i'm pimm fox. the candidates beat each other

silly for votes but it's funny how money can bring everyone together. now, to learn how to bring you closer to some money, i've got m stovall, the u.s. equity strat best at s&p capital i.q. in analyzing the results for the midterm elections, what happens to investors' money, let's say the s&p, what happens six months down the road? >> the results are very positive. going back to world war ii, the average gain has been 15.3%, and i also like to look at batting averages, like pavlov's dog, i want to get fed frequently, up 16-17 times so a strong batting average at 94%. >> and the 15.3% increase, this 15% increase in the s&p six months out t it doesn't matter who takes the house or senate or who wins anything, it's about the election. >> it starts on a low note, if you will, uncertainty heading into the midterm elections and

as we start to enter year three, that's the year typically the president wants to introduce legislation that might stimulate the economy and make voters happy to re-elect him or his party in year four. >> we want to look further over the horizon. that's six months. what about 12 months? >> 12 months the average gain is only 200 basis points higher at 17.5%. the interesting thing is, it's and one of times those observations included the great crash of 1987. though we were still able to east coast out a 4% gain even with that kind of decline. >> i know you did some work where you said all right, what happens if you have a unified congress and a president from another party which may be what we wake up to tomorrow. give us some of the permanent stations you put together. >> i found if you have a totally unified government, president and both houses of congress, same party, that's the best in general.

second best is when the president has to compromise with a unified congress of the different party and the worst on average is when you have a split congress because congress ends up impeding rather than leading. within that, i found the best average performance since world war ii was a democratic president with a unified republican congress. though maybe we'll actually get some legislation work its way through congress because the president realizes let me introduce something that will make both sides look good and it gets pushed through. >> let's look at some specific sectors and how they performed. sectors that beat the s&p 500, what, 50% or more? >> right. what i found was just as you want to be defensive from may to october, you equally want to be cyclical from november to april. the best sectors had been consumer discretionary, industrials and information technology. and interestingly enough, if

you had a 25% exposure to each one of those sectors, you would have beaten the market about 75% of the time during all years and 100% of the time following midterm elections. >> so it's possible if you just divide up the portfolio, 25% a quarter in each of these sectors, you say this is better than doing anything else? >> that's right. history is a wonderful guide. it's not a guarantee. but when you have a pretty high batting average, i think really what investors should take away from this is it you have an awful lot of cash on the sidelines, much more than their real allocation indicates, maybe this is an indication to get back to neutral and not be too afraid of the next big one coming around the corner. >> that's what i wanted to find out is are people already investing with anticipation for the surge in stock prices? >> well, i think because we got back to break even in about a 1/3 of the time it historically does, investors said yes, it's 7% plus decline in the s&p 500

and was a buying opportunity but history says it probably will be advancing about 8% after getting back to break even over the coming three-month period before facing another decline possibly of 5% or more. so good times over the next several months. >> is there any way to factor in interest rates in this because it's not as if we had a lot of midterm election rates this low. >> everyone says history is nice but what about the fundamentals, do they support that? if you look to estimates, what you're pointing to is $129 a share to the end of 2015. add to that the low inflation rate, right now it's 1.7% and maybe 2% next year and could ply we could be above 2300 over the s&p 500 and the only head wind i see is a rising interest rate environment in the second half of next year.

so maybe we don't end up with as stellar a performance as a gain of 17% on average as we saw since world war ii but maybe something in the high single digits. >> the s&p 500 is up more than 8.5% this year so maybe we have a little bit more to go. >> absolutely. november and december are typically the best two after midterm elections. >> want to thank you very much. sam stovall of s&p capital i.q. that does it for this hour of bloomberg's special coverage of the midterm elections. mark pal rin and tom heilemann will shepard you through the night and their guests include r.n.c. chairman, debbie wassermann schultz, texas republican ted cruz and paul ryan. ♪

rex good evening and welcome. i am mark halperin. >> this is our election all nighter. polls are closing. >> they are three of my favorite states. georgia, kentucky, and virginia. there are no reports of voter irregularities. there efforts to keep some open for longer hours. we will be focusing on one thing and one number more than anything else. that is the number six. the magic number of seats republicans need to net if they will take control of the senate. >> the polls are closed and a handful of states. we should say at the top the indications are from our sources across the country that this looks like it will be a good night for republicans. a little bit better than good. >> it is