1. Democrats retain Senate.
2. Democrats erode Republican advantage in the House by more than 5.
Typically the president's party loses seats in the second term midterm; all things being equal that is what we should expect in 2014. Under a closer analysis the Democrats have more seats at risk in both the House and Senate races in 2014, so Democrats losing seats in the House and losing control of the Senate should be a safe bet.
I think that ignores the bigger picture. The great inversion, where the Republican party moved south and the Democratic party moved north, completed a few cycles ago. The Republican party is now tearing itself apart as the contradictions in its new coalition of business and southern whites manifest. As the Republican party doubled down on a white male coalition it alienated potential hispanic, black, asian and female supporters. The Republicans have passed the point of diminishing returns and yet they continue to focus on expanding their white male vote.
The Republicans over-reached when they shut down the government in 2013, that did severe damage to their support. Obama bungled implementation of the ACA, that damaged Obama and reduced Democrats chances in 2014. But the ACA systems are working now, and many more people will have health insurance and better coverage in 2014. Those people, their families and friends, will be looking for candidates in 2014 who will support and improve policies like the ACA. The one group seeing higher premiums under the ACA, older, healthy, wealthy self-employed people, are unlikely to change political opinions because of it. The Republican party continues to identify itself as the party that is willing to shutdown the government to repeal the ACA.
Although the political damage from the shutdown did not change the Republican's course on the ACA, it did chasten the party. We can see the results this week as House leaders shouted down Tea Party opposition and overwhelmingly passed a budget that raises spending in 2014. Given a slowly improving economy any increase in Federal spending will have a significant positive economic impact. A more rapidly improving economy gives the party in power a boost in the midterms, as supporters are more enthusiastic and opponents open their minds to the party's arguments.
