Democrats lost the expectations game on Mueller report

The Mueller report will teach Democrats what investors already know: Expectations are everything. In contrast to Democrats’ belief, what matters most will not be the report’s actual content, but its impact relative to voters’ expectations. Ironically, this reality indicts Democrats: By elevating Russia so much, they have raised the report’s bar impossibly high. The winner appears to be President TrumpDonald John TrumpO'Rourke: Trump driving global, U.S. economy into recession Manchin: Trump has 'golden opportunity' on gun reforms Objections to Trump's new immigration rule wildly exaggerated MORE

For over two years, Democrats have stoked speculation on Trump’s collusion with Russia, while awaiting the report with bated breath. Their expectation has been that the report’s very issuance will equate to evidence against Trump. In this, they confuse the broader public’s expectations with their own.

ADVERTISEMENT

A politician may miss it, but an investor would recognize Democrats’ pitfall. 

In the stock market, casual observers routinely wonder why a company reporting positive earnings, sees its stock fall; while another’s earnings fall, but its stock rises. To the savvy investor, these counterintuitive outcomes share a single explanation: Earnings contradicted expectations. They understand outcome alone does not determine results. The true benchmark is always expectations.

Democrats would do well to memorize this following the Mueller report’s transmission, otherwise, they are likely in for a shock. The public’s reaction will be determined by their relative expectations. And those who matter most — nonpartisan voters — will likely not see this report from Democrats’ perspective.

Without even seeing the actual report, you already know the outcome for roughly 70 percent of Americans. Democrats will still see evidence of the collusion conspiracy they have proclaimed since before Trump took office. Republicans will see its absence of a smoking gun — in an episode that has not even demonstrated a shot was ever fired — as proof that the exercise was politically motivated. 

These groups’ prejudices — i.e., their expectations — will be confirmed. The pivotal group will be unaligned voters and their expectations. Here Democrats will prove to have been their own worst enemy.

Democrats have kept up a steady drumbeat about Russia collusion since their 2016 upset. It served the dual purpose of absolving their failure and delegitimizing Trump. The establishment media have been more than willing to pick up the story and keep it in front of America. By this point, no one could have missed this story.

And there is no way that this has not had an effect. Whether conscious or subconscious, it has had a negative impact — creating the feeling “there must be something there.” The impact can be seen in Trump’s approval ratings. 

The problem for Democrats is that the full Mueller report is very unlikely to meet these expectations. Based on the Attorney General’s letter to Congress summarizing the investigation, the report does not contain a smoking gun. If true, the report’s victims will be Democrats who overbilled the production.

If there is no “there” there, then the report is likely to elicit nonaligned voters’ “so what?” The effect could be pronounced for Trump and Democrats alike — effectively serving as vindication for him and repudiation for them.

The impact of Trump beating expectations could be significant. Despite accomplishments, peace and America’s best economy in years, his numbers remain mired below what they seemingly otherwise should be — with most showing his approval only in the mid-40s.

A Mueller report that fails to meet the collusion expectations raised by Democrats could unfetter Trump’s ratings. A resulting rise might not even appear dramatic. Democrats’ strong opposition to Trump will not change regardless of the full report’s findings; it will meet their expectations — just as it will meet Republicans’ opposite ones. However, even a small shift in the middle would be significant where it matters most: Those who will decide the 2020 election.

Another danger for Democrats is the secondary impact this could have on their left. Although the report itself may not disappoint Democrat expectations, such a reaction to it could do so dramatically. Disappointment can lead to frustration, and frustration leads to bad decisions. 

ADVERTISEMENT

The most obvious example of this would be the left demanding that the Democrat-controlled House make up for the public impact the Mueller report lacked. Such a demand could set off a confrontation between their moderates and activist left that Democratic leaders have desperately tried to avoid. 

Democrats need to begin preparing for the real possibility that swing voters’ reaction to the Mueller report may be closer to Trump’s than theirs. Most importantly, for Trump to benefit from the report, such voters do not have to see it from his perspective — they just need to see nothing particular in it. 

While it is too late for Democrats to reset the public’s expectations on Russia collusion, it is time to start lowering their own regarding the Mueller report’s impact. In investors’ vernacular: They need to begin hedging their bets on the report. 

J.T. Young served under President George W. Bush as the director of communications in the Office of Management and Budget and as deputy assistant secretary in legislative affairs for tax and budget at the Treasury Department. He served as a congressional staffer from 1987-2000.