The Bethlehem Project: Voters feel anxious and uncertain as US midterms near

0:00This episode is brought to you by Hard Lessons, a Morgan Stanley podcast.

0:04Sonja Hutson: Iconic investors like Stan Druckenmiller, John Gray, and Rick Reeder break down calls that worked. I knew that this stock would go up for at least two or three years and go up a lot. Ones that didn't. I quite frankly thought the company could have reversed course. They didn't. And what they learned in between. When you buy everything and it goes up, it doesn't train you to be a great investor. It's these hard lessons that make all the difference. Listen to Hard Lessons wherever you get your podcasts.

0:40Sonja Hutson: It was a Tuesday night a few weeks before Election Day in Bethlehem, Pennsylvania. A group of 14 locals from across the political spectrum convened for a focus group at a historic hotel downtown. They sat in a conference room at a long table, eating dinner together and talking about who they were going to vote for on November 3rd. Screwing around there and I ran and it's... No party, no president is ever going to be perfect. And this is the first time that I've really, really become afraid for us, for our country, for our democracy. Bethlehem is a critical piece in the battle for control of Congress.

1:21Sonja Hutson: It sits in one of the country's most important swing districts, and whoever wins will say a lot about what voters think of U.S. President Donald Trump. So how exactly do these 14 people feel about the state of the country, and how will that shape who comes out on top in the midterms? The answer might surprise you. I'm Sonia Hudson and this is The Bethlehem Project, the series where we look at U.S. economic and political issues through the lens of one city.

1:57In two miles, take the Pennsylvania 378 south exit toward Bethlehem.

2:01Sonja Hutson: Bethlehem. Bethlehem. Bethlehem. Bethlehem. Bethlehem. I'm from Bethlehem. Growing up, I thought Bethlehem was just like your average small town. Recently, though, I've realized we're really in the center of a lot of things. In this episode, we're going to explore some of the nuances of how voters are approaching this election, from Democratic socialists to staunch Republicans. And joining me to do that is the FT's Washington Bureau Chief, James Politi. He was in Bethlehem watching this focus group. So I mentioned that Bethlehem is in a critical swing district that the Republicans and Democrats are fighting pretty fiercely for.

2:42Sonja Hutson: Can you give us some more details about the race and why exactly it's so important? Absolutely. So this is the 7th congressional district in Pennsylvania. Before the 2024 election, it was held by a Democrat. Then Ryan McKenzie, the Republican, won the election in 2024 when Trump swept into power for his second term. So a very swingy district. It is very swingy. Until a while ago, this was considered a toss-up district. So it looked like there were even chances of it flipping back to the Democrats or staying Republican. And now the Cook Political Report, which is nonpartisan and analyzes all these races, says that it is now leaning towards the Democrats.

3:26And this district is especially important because it's a bellwether for the rest of the country. Which way Pennsylvania's 7th district goes usually goes the nation. And if the Democrats pick up enough districts like Pennsylvania's 7th, they're probably going to win control of the House of Representatives.

3:46Sonja Hutson: Okay, so like you mentioned, voters in Bethlehem and the rest of the district elected a Republican in 2024. The county that Bethlehem sits in went for Trump that year as well, but just barely won by like less than 2%. But now it seems like some of these voters who were at the roundtable that supported Republican candidates just two years ago have a little bit of buyer's remorse. Yeah, there's some disappointment with Trump's performance in office, especially on the cost of living and the economy and the tariffs, but also on the war in Iran and its impact on prices, especially energy prices and gas prices.

4:28Jim was a, he's a Republican. I sell construction equipment, any construction equipment, and I would say a majority of people are really supporting Trump supporters. I would say it has dwindled a little bit. This whole gas situation right now definitely has guys unsettled, unsure. They're wondering why diesel prices are as high as they are. And Jim said he doesn't know why Trump is screwing around there. And I ran and it's just created more nor X and it's what's going to happen. And there's just so many questions.

5:03Sonja Hutson: And that's particularly important for people that use construction equipment because a lot of these pieces of equipment use diesel, right? Yes, and they've already been hit by tariffs. So there's a combination of economic factors at play at the moment, which has been sort of a bit of a perfect storm for a lot of small businesses, big businesses around the country. Another Republican was Robin. She's a Trump supporter. I think most recently, I feel a little disappointed in this performance. She said her own personal financial situation had gotten better, but she acknowledged that things were costing Americans quite a bit more.

5:46Sonja Hutson: And how has someone survived, you know, in this economy? I think we're all thinking that. And she was a little disappointed with what she had seen. James, it's so fascinating to me that everything is about Trump, even when he's not actually on the ballot. Did Jim and Robin say, though, whether their dissatisfaction with Trump would actually change the way they vote next month? So Robin said she would still vote Republican. Jim said he was undecided. So he may vote for a Democrat. He said that was a possibility. We need good people. I think we just need some good people that are willing to work for us and listen and not fight.

6:32Or perhaps he'll stay at home or he may decide to still support the Republicans. So he's wavering and he said he would decide in the final week.

6:42Sonja Hutson: So there's some Republicans like Robin who, you know, maybe aren't super happy with how Trump has performed in office, but are going to kind of hold their nose and, you know, this is their guy. But then you also have people like Jim who are kind of a toss up and, you know, may not want to vote for Democrats if they're a lifelong Republican. But even staying home could basically give a vote to the Democrats. Exactly. And one of the dynamics that's most interesting is to what extent do Republican voters associate their member of Congress with Donald Trump? Donald Trump has completely dominated the party and in many ways has kind of captured so many Republican members of Congress.

7:22And they have bought into his agenda very strongly. But it's possible that voters don't necessarily totally associate their own member of Congress with a presidency that they're increasingly unhappy with. And that could translate into better performance than expected from the Republicans.

7:42Sonja Hutson: Okay, so we've been talking a lot about how Republicans are viewing Trump in the election this fall. But what did the more centrist and left-leaning voters have to say about Trump's performance? I think there's a lot of, especially on the left, there's a lot of anger, fear. One of the participants in the focus group was Roberta. And this is the first time that I've really, really become afraid for us, for our country, for our democracy. She said that all of the checks and balances that existed in the past, that Americans had relied on, had been thrown by the wayside. That is very frightening for me because I feel very threatened by that.

8:26And I think that refers to Trump's attacks on the media, the way he's in so many ways politicized the Justice Department, the approach taken by Pete Tegseth at the Pentagon firing a number of generals who had been there in the past and who didn't necessarily share his views. and Trump's attempt to kind of seize executive power and wield it as powerfully as he has, I think does show up in especially how Democrats view his presidency.

9:02Sonja Hutson: Something that I always think about when this topic comes up is whether all of those examples that you just mentioned matter so much to people that are not staunch Democrats. Do Republicans care about those things? Republicans and independents who mostly talk about cost of living issues, but some actually do bring it up. We had Kate. She's a classic presidential swing voter. I'm a very conservative person, economically, financially, socially, every which way. I never really bought into Trump the person, but I preferred a conservative direction of our government. — She voted for Trump in 2016, Biden in 2020, Trump again in 2024.

9:50She's now said that she's done with Trump. — I'm disgusted. — And one of the reasons is that she believes that he's thrown out the playbook of kind of democratic institutions. institutions.

10:09Sonja Hutson: To the point where I think like everybody, most likely everybody at this table or almost everybody feels that nobody's playing by any rules to the point of just like open corruption. And she mentioned the open corruption that was being fostered while he's in office. For example, Trump and his family have made a lot of money from business deals throughout his second presidency that have raised a lot of criticism. Trump and his family say that it's perfectly legitimate for them to have these business activities and to make money while they're in office. And they deny any allegation of wrongdoing.

10:53Sonja Hutson: James, we talk about the sort of mythical swing voter, especially in a place like Pennsylvania. And something that I hear from a lot of people on the left and the right is like, how are there swing voters in this incredibly polarized political environment that we're in. Did you get a sense of how these people think and why they switch back and forth every election? Well, it's very difficult to find swing voters in this day and age. So that's why the focus group is especially valuable because we get to see them up close. And even within the focus group, there were only a couple who were true swing voters.

11:30And I think that they are usually people who are kind of open-minded. They're not fixated on a certain ideology. They vote not just on their, on the basis of their own kind of financial situation, but also on their impression of what they would like to see from their political leader. Like Kate is a prime example of that.

11:53Sonja Hutson: To the point of just like open corruption. I'm disgusted. And so I think that it's a variety of American voter who's engaged but open-minded and not kind of captured by either one of the sides. Well, James, I'm glad you were finally able to pin down some of these mythical swing voters. We're going to take a quick break now. And when we come back, we're going to dive into how foreign policy, immigration and tariffs are playing with all these voters.

12:35Sonja Hutson: James, we talked earlier about how this election is basically a referendum on the first half of Trump's term. Even though he's not on the ballot, people are just voting for their representatives in Congress. So I want to talk about some of Trump's signature policies and how they've been with voters. We talked a little bit about foreign policy in that it has fueled inflation, made things more expensive for voters. That's really top of mind for a lot of people. You know, Jim was talking about specifically how the war in Iran has made gas more expensive, has made diesel more expensive. What did voters have to say about Trump's approach to foreign policy?

13:12I think by and large, it was a negative assessment, especially on the war with Iran. Um, the impact on prices was a big subject, and people didn't understand what the endgame was. Justin, who's in his 30s,

13:31Sonja Hutson: The price of gas, I mean, I drive to New Jersey three days a week. Which is a neighboring state, Pennsylvania. You know, you did this in Iran, well, it's having an impact on me. Now, that's not, that's a self-taught thing. He said, you know, Trump's belief that he can just apply the model from the U.S. raid on Venezuela at the beginning of the year to Iran. And look at where we're at. I mean, it's just stupidity, you know. And was hitting his wallet and he was very unhappy. And that's kind of this idea that, you know, you can go in and have a regime change in another country very quickly like they did in Venezuela.

14:12Sonja Hutson: that obviously is not what has played out in Iran and has led to higher gas prices. True. And the war, which was initially supposed to last a few weeks, has now dragged on for months and months. But we also had Barry, a Republican in his 60s, who thought Trump was right to take on Iran. Iran has been there problematic since 1980. And most of the presidents have kind of just pushed it aside, et cetera. And his criticism came from a different point of view. maybe a traditionally Republican, neoconservative point of view. And he faulted Trump for not going far enough with Iran. Then all of a sudden, he's just kind of gotten, you know, wishy-washy.

14:55And so the process was there. He was moving forward. He had alignment and all like that. And all of a sudden, he just kind of let it slide away. And so, I mean, I think he had started off well, but then he got cold feet. and he needed to take more aggressive action on top of the regime.

15:15Sonja Hutson: I know we paid more and we're all harping about the price of gasoline. People are dying and people are being oppressed and all like that. If you can actually get to the point where you can get what I feel would be necessary as a regime change in Iran, it would definitely be well worth it because in the long run, I think the world would be in a much better place. So you're, you're, you're. It's so interesting that Barry brought this up because I feel like at the beginning of the war, we were talking a lot about regime change and the protests that had been going on in Iran. But for months now, all we've been able to talk about is gas prices.

15:48Sonja Hutson: So it's interesting that's still top of mind for Barry. But I want to switch gears slightly here and talk about another cornerstone of Trump's presidency so far, which is his tariff policy. It's part of his push to bring manufacturing back to the U.S. What did the voters have to say about that? Well, we had Mike, who's an engineer and an independent voter in his 50s. The goal of the tariffs was kind of a positive goal. He thought it was a good idea to have reshoring and manufacturing jobs. That's quite uncontroversial, especially in an area like Bethlehem, which in the heart of industrial America or post-industrial America.

16:33Sonja Hutson: Yeah, this is an area that was really hurt by the loss of American manufacturing. Yes, and steel jobs in particular. And so he says the goal of the tariffs was positive, but they were applied too quickly and too aggressively. The trouble is you can't go from zero to a million miles an hour in like a week, right? Like you put all these tariffs on things. The idea is to encourage people to build stuff in the United States. Which is a good you like the goal. Yeah, I like the goal. How many freaking years does it take to build a steel plant and get all the permits and all that kind of stuff? And so he thought it was unpractical, really.

17:21Sonja Hutson: Yeah, it's interesting. The Trump administration has really responded to criticism by kind of saying exactly what Mike, the engineer, was saying that, you know, it might be a little chaotic right now, but it does it takes time to actually build these factories. Like you're not going to see the results of the tariffs right away. Trump's immigration policies have also been very controversial. They've caused a huge outcry on the left. And, you know, I've also talked to some Republican voters who say that his administration has just taken it too far. How did the Bethlehem voters feel? Well, immigration has been a huge issue for the second Trump administration.

17:58He has certainly dramatically reduced border crossings throughout his second term. And there have been a series of raids by ICE, the Immigration and Customs Enforcement across the country. That has created a lot, you know, pretty severe backlash in many communities and has actually turned out to be very controversial. And federal agents also shot two U.S. citizens during protests against ICE raids in Minnesota in January, which created a level of outrage that crossed party lines as well and really contributed to the sense that the administration had gone too far in its enforcement. When asked in the focus group, you know, what did the Trump administration do well, Mike, who's a Republican middle school teacher, said the crackdown on the border was good.

18:57Sonja Hutson: I think most Republicans want an election, like at some point. We want it done legally. You know, so the initial, you know, four months, five months, six months, I think we got that right now. But he said that the administration might have gone a little over the top in the raids across the country and the pendulum had swung back too far. You know, we've been talking a lot about how people are viewing Republicans. Did these voters have anything to say about whether they thought the Democrats were going to approach these issues in a better way? These midterms have been dominated so much by the policies of the Republicans and the disappointment with the Trump administration.

19:43The Democrats haven't had to put up many of their own solutions, and that shone through in the focus group. There wasn't a lot of attention paid to Democratic policies or Democratic ideas. There are clearly a range of economic and foreign policy moves that Democrats could do. But in a way, they've had the luxury to not really have to stick their necks out too much.

20:09Sonja Hutson: So they basically just have to be the not Republican Party. For now. You know, while we're talking about Democrats throughout the primary election season, And something that I was watching really closely, and I think you were as well, was this rise in progressive, sometimes Democratic socialist candidates that were winning these elections. And that has created a kind of schism within the Democratic Party. Were there any intra-party divisions that you picked up on on the left in Bethlehem? Well, interestingly, you know, Ellen, a Democratic voter, said that being Jewish, I'd put her in a very difficult spot politically.

20:45Sonja Hutson: I'm a registered Democrat, but I do not like a lot of what's happening in the Democratic Party and a lot of positions of the Democratic Socialists and, you know, all of the anti -Semitism that's happening in this country. I think between 2024 and 2024. Israel's war with Gaza has obviously opened up a huge rift within the party. And, you know, more left-wing figures have criticized Washington's support for Israel, both during Joe Biden's administration, but also under Trump. She did say that, you know, rising anti-Semitism had not been addressed within the party, and that troubled her. And there was a Democratic Socialist in this focus group, right?

21:31There was, yes. There was Tommy, who said that he would support Democrats as a form of harm reduction. But, of course, he is, you know, supports the more left wing faction within the party.

21:48Sonja Hutson: What does that mean? That means it's better than the alternative. But he still doesn't like it. Right. James, overall, you know, you listen to these folks talk for about two hours. What did you learn about voter behavior from this? I would say it's advantaged Democrats heading into the election because Democrats and people who are broadly on the left seem determined to vote for the Democrats. And even some centrists seem to be tilting towards the Democrats. On the Republican side, it seems like quite a few are sticking with the Republican candidate, but they are definitely on the defensive. They are struggling to come up with arguments for why they're happy with the White House.

22:33And they're potentially going to flip. And I think that will be the story of this election.

22:47Sonja Hutson: This was The Bethlehem Project, the series where we explore U.S. economic and political issues through the lens of one city. Our show was edited by Mark Filipino, and it was mixed by Sam Giovinco. Topher Forges is our executive producer, and Flo Phillips is the FT's global head of audio. I'm Sonia Hudson. Thanks for going to Bethlehem with me.

23:25Sonja Hutson: VantageScore uses 400 % more credit report and alternative data than legacy models, bringing more people into the credit economy, like 5 million more mortgage-eligible people. Banks win and francs win. Lenders win and so do Lindas. When you build credit scores the right way, everybody wins. Get started at VantageScore.com. Decisions made in Washington can affect your portfolio every day. But what policy changes should investors be watching? Washington Wise is an original podcast from Charles Schwab that unpacks the stories making news in Washington right now and how they may affect your finances and portfolio.

24:03Sonja Hutson: Listen at schwab.com slash Washington wise.