On the election and the economy:
This election is not about the economy. It’s about Iraq, first of all. It’s about Congressional scandals, second of all. And then it’s about a host of local issues. On the other hand, there’s something very unnerving about the fact that you have what looks to be this huge anti-incumbent tidal wave at a time when the economy is so good. We’re talking about unemployment at 4.6 percent, inflation under 3. The two bugaboos at the beginning of the year, rising oil prices and interest rates, have both calmed down. So it’s an ideal economic situation….

The economy doesn’t matter as much in midterm elections. The 1994 election that brought in Republican control of Congress was a pretty decent economy as well, but not as good as now. Still, there’s something very unnerving about the fact the economy is doing so well and people’s attitudes about the economy are so poor. There are a number of reasons for that. It has to do with this unease people feel about the economy right now. The fact that the benefits of that economy don’t seem to go very deep. The median income has not been rising very rapidly, while CEO pay and hedge funds and private equity managers have been doing very well. People are concerned about health-care costs; they’re concerned about losing their retirement; there’s a sense that you work a long career and don’t get a gold watch – you get fired at the end of the day. All that unease is part of what’s going on and it’s not the issue in this election but it could be the issue in the next election, the big one, the presidential election.

On the importance of the 2006 elections from a business standpoint:
I don’t think the 2006 election means much for the next two years. If it’s a tidal wave, it could mean some things. Then there could be some landmark pieces of legislation. (Raising the) minimum wage certainly would be one. We could have the government negotiating drug prices directly. If the Democrats win the House but don’t win the Senate, then we’re looking at just a mess. A bigger mess than now. The Democrats would use their power in the House to convene investigations, but not much else happens. It’s hard not to look at this as the run up to a really big one in 2008 – and that’s where you would have a profound shift in the approach to economic policy….

I don’t think the problem is Democratic Party leaders. Democratic leaders are pretty moderate. The problem is Democratic voters. If what we’re seeing here are substantial numbers of people believing, “I don’t like the way the economy is working. A rising tide doesn’t lift all boats anymore. I’m getting a raw deal. I don’t want trade with China, I don’t want immigrants coming over the border.” If that bubbles up from voters, then you could see a very different (kind of) politics.

On what 2006 election outcome might be best for probable Democratic presidential candidates:
(They) would be better off if Congress stayed in Republican hands. I hope this is an election that sensible people stand up and say, “Boy, we need to elect candidates who seek middle-ground solutions.” But economic dissatisfaction will lead to something very different. There’s a real opportunity here for a candidate who can tap into this middle-class angst in a demagogic way. A Lou Dobbs (the CNN anchor). Perhaps a John Edwards. Someone who figures out how to tap into that energy and dissatisfaction out there and runs with it. That, to me, is the real dangerous outcome, maybe likely not the real outcome, where you get a real populist, antitrade, anti-business.