The upcoming Presidential/Congressional elections will be important in determining the balance of power in Washington for the next two years and will certainly impact legislative and budgeting priorities. You are interested in a particular appropriations bill that deals with money for border security and port security. There are two proposals that have been offered one by Democrats and one by Republicans. The Democratic proposal focuses more money on Port Security (105 billion) and less money for Border Security (40 billion), while the Republican proposal focuses less on Port Security (85 billion) and more on Border Security (60 billion). There are several possible outcomes of the elections: Republicans gain control of both Houses (House and Senate), the two Houses are split (one under Republican control and one under Democratic control), or both Houses remain with the Democrats. It is expected that if Congressional control is split then a compromise bill would fund Port and Border Security at the mid-point between the two proposals. Current polls indicate that there is a .2 probability that the Republicans will gain control of the Senate, but a .75 probability that they will maintain control of the House. Assume the two probabilities are independent. (I know, I know, but assume it anyway. We are assuming all politics are local, ala Tip O’Neil.) What is the probability that the Democratic proposal will be accepted next year? What about the Republican proposal? What about a compromise bill?
