Election Watch: It Just Keeps Getting Better (For Obama)

Mitt RomneyThe GOP nomination contest has entered its most critical two-week period yet, with primaries in Michigan and Arizona on February 28; the Washington caucuses on March 3, and then the eleven-state extravaganza of Super Tuesday, March 6.

With Rick Santorum now holding a steady lead over Mitt Romney in national polls of Republicans, it is crucial for Romney that he win his native state of Michigan to regain momentum, reassure party elites, and replenish his diminished financial coffers.

Romney and his Super-PAC are reportedly outspending Santorum’s forces in Michigan by about a 3-1 margin, and are fielding a mix of positive and negative ads. An early PPP poll showing Santorum sprinting out to a 15-point lead in Michigan now looks to be an outlier; PPP’s latest survey in the state shows Santorum only up by three points, and at least one other poll shows Romney regaining a small lead. Everyone agrees the contest is very close, with support patterns indicating Santorum holding his customary leads among evangelicals and “very conservative” voters, and Romney doing well with “moderates” and Tea Party skeptics. Polling of Arizona (where Romney benefits from a sizable LDS vote) is also becoming available, uniformly giving Romney a single-digit lead. A wild-card in Arizona is that Newt Gingrich is doing relatively well there (unlike Michigan, where he’s running fourth behind Ron Paul); one theory is that his supporters could break to Santorum on primary day.

All of these dynamics make tonight’s CNN candidate debate in Arizona very important. It could, in fact, be the last televised debate of the entire contest. One possibility is that both panelists and the other candidates could gang up on Santorum, who’s been under attack as a “fiscal liberal” by his rivals, and as an erratic religious extremist by many news media observers. (In a potentially significant, and certainly unprecedented development, two conservative opinion-leaders considered supportive of Romney, Matt Drudge and Washington Post blogger Jennifer Rubin, have suddenly begun attacking Santorum’s religion-based views on cultural issues). Santorum, who’s been a relatively strong debater, could try to duplicate Gingrich’s successful tactic of turning attacks on his tormenters. And of course Gingrich himself, not to mention Ron Paul (who’s shown recent interest in going after Santorum) will be factors as well. It would be a particularly poor moment for any candidate to commit a gaffe.

If February 28 produces anything less than a dual Romney win in Michigan and Arizona, Super Tuesday could become dicey for Mitt (it is generally assumed Santorum is likely to win the March 3 caucuses in Washington). He’s beginning to experience money troubles thanks to his heavy spending and his lack of an ideologically-driven small donor base. Romney does have some Super Tuesday advantages: his home state of Massachusetts votes then, and he and Ron Paul are the only candidates on the ballot in Virginia.

The most alarming threat to Romney would be a divide-and-conquer strategy where Santorum concentrates on the biggest prize, Ohio, while Gingrich’s Super-PAC spends the fresh $10 million it has reportedly received from casino mogul, Sheldon Adelson, to focus on Georgia, Tennessee and perhaps Oklahoma. Additionally, Paul is expected to concentrate on small-state caucuses where he could do additional damage to Romney’s delegate count.

There are also new rumblings of discontent from elite Republican circles where a Santorum (or Gingrich) nomination is considered potentially catastrophic, while Romney’s perpetual inability to win over conservative voters or show much appeal to independents is perpetually troubling. One “prominent Republican senator” informed a reporter last week that if Romney loses Michigan, he will go public with a call for a draft of Jeb Bush. While there’s zero evidence Republican voters are interested in a late entry or a “brokered convention,” or that any particular “white knight” could avoid the pitfalls that have snared the actual candidates, it is obvious Romney would suffer from major defections of elite party support, if only among his funding sources.

All in all, it would be very prudent for Romney to win Arizona and Michigan next Tuesday. If he loses both, the craziness will really intensify and almost anything could happen. Alas, it just keeps getting better and better for President Obama.

Photo Credit: Yahoo Politics

Election Watch: No love for Romney?

RomneyThe Republican presidential nominating contest continues to produce endless surprises.

A week ago, the key question was whether victories in two low-turnout caucuses and a “beauty contest” primary would vault Rick Santorum past Newt Gingrich as the latest aspirant to the conservative-alternative-to-Romney mantle. Now, cascading evidence from polls suggest Santorum has become a serious threat to Romney’s status as front-runner, and is a couple more primary wins away from becoming what might be called an existential threat to Mitt’s candidacy.

National polls are now consistently showing Santorum leading, or essentially tied with, Romney among Republican voters. More alarmingly for Romney, the three latest polls taken in Michigan—whose primary will be held on February 28—show Santorum leading there, too, despite a longstanding assumption that Mitt would romp to an easy win in his native state.

While there has been no recent public polling in Arizona, which also holds its primary on February 28, the Santorum Surge has clearly spread to the Super Tuesday (March 6) states. A Quinnipiac poll, for instance, now shows him leading in that day’s biggest state, Ohio, and another survey indicates he’s threatening Newt Gingrich in his own home state of Georgia. An especially dangerous development for Romney is that Santorum is now running ahead of Mitt in at least one major general election poll, calling his longstanding “electability” advantage into question.

All the polls indicate that a key ingredient of the Santorum Surge is relatively high favorable/unfavorable ratios, reflecting his ability to escape significant questioning while Romney and Gingrich (and their super PACs) have pounded each other with negative ads. That is very likely to change, even though conservative opinion-leaders are far more protective of Santorum than of either Romney or Gingrich, and most will not join the fun the way they so often have with the other candidates.

Just today, reports have come out suggesting that Team Romney might execute a multi-state air war against Santorum, attacking him from the Right for votes in the Senate favoring No Child Left Behind and Medicare Rx Drugs. Despite the fact that both were Bush administration initiatives, supported by many Republicans at the time, these programs have now become symbols of big-spending heresy. That line of attack, however, is not all that’s on the horizon. There’s also at least one report that Gingrich’s main super PAC donor, casino mogul Sheldon Adelson, is on the brink of reopening his check book to finance attacks on Santorum, apparently in part because Adelson wouldn’t mind helping Mitt as well as Newt.

All this warlike activity on the GOP side is clearly good news to Democrats. It also comes at an opportune time, just as better economic news and a sharper Obama message has emerged to lift the incumbent’s re-election prospects notably. Obama has led Romney in eight consecutive major general election polls by at least five points. Even more significantly, according to an analysis yesterday by Ron Brownstein based on the latest Pew survey, Obama is now matching his 2008 performance very closely among nearly every key demographic category.

Obama’s stretch of good luck is also extending into individual controversies with the GOP. So far, at least, he seems to have regained an advantage in the battle with Republican politicians and the U.S. Conference of Catholic Bishops over a proposed employer insurance mandate for contraception coverage. A relatively small modification of the original mandate to require insurers rather than religiously-affiliated institutional employers won the administration praise from an array of Catholic hospital, social-services, and higher-education leaders, frustrating the efforts of the Bishops to speak for Catholic institutions in demanding a complete repeal of the mandate.

And while polling on the subject has varied significantly according to the timing and wording of surveys, it’s reasonably clear Catholic voters’ attitudes on the subject closely track public opinion generally. Meanwhile, as the controversy beings to focus less on broad claims of endangered “religious liberty” and more on attitudes towards the more specific issues of health insurance coverage, Republicans are running the risk of identifying themselves too closely with the Catholic hierarchy’s very unpopular views on contraception.

The current prominence of a presidential candidate, Rick Santorum, who has not been shy about proclaiming his own hostility to contraception, probably does not help – well, at least not the Republicans.

Photo credit: Mark Taylor

A Thumb on the Scales: Outside Spending in 2010 Senate Races

In 2010, the Supreme Court’s landmark decision in Citizens United v. Federal Election Commission forever changed the landscape of political spending.

The Court’s ruling to allow virtually unlimited contributions to outside political groups1 unleashed a record $290 million in outside spending in 2010 (not counting spending by party committees).2 According to the Center for Responsive Politics, total outside spending in 2010 on congressional races was more than four times the total outside spending in the last mid-term elections in 2006. And as the torrents of super PAC spending in the GOP presidential primaries attest, outside spending in 2012 is on track to break all records.

But does outside spending really “work” to put a favored candidate in power? With the jury still out on 2012, this memo looks to the Senate races in 2010 for some clues.

The answer? Maybe.

Because 2010 was a “wave” election that rode on Tea Party rage, it’s almost impossible to disaggregate the impact of outside spending from prevailing electoral trends. In addition, many other factors—such as the strength of a particular candidate’s appeal and organization—cloud the picture.

Nevertheless, in some campaigns, a big unmatched advantage in outside spending seemed to help tip the balance in a candidate’s favor. In 2010, this worked to the advantage of Republicans—conservative outside groups spent about twice as much on Senate races as liberal groups. Even though conservative groups spent millions of dollars more on losing races than on winning ones (e.g., in Nevada and Colorado), the sheer volume of conservative outside spending meant that their overall “batting average” was nearly twice that of liberal outside groups.

Given this mixed record, there’s only one real certainty about the impact of outside money on Senate races in 2010: Running for Senate is a lot more expensive than it used to be.

 

Election Watch: It’s Not Over Yet

Santorum

Four contests in the last week have done little to resolve the Republican presidential nominating contest.

As long expected, Mitt Romney followed up his Florida victory by comfortably winning the Nevada caucuses, registering (if narrowly) his first majority showing. Turnout was low, the process was marred by errors, and Romney’s margin was undoubtedly padded by the unusually large level of participation by Mitt’s fellow Mormons (about a fourth of the caucus turnout, giving Romney near-unanimous support). But it gave Romney the right to boast of victory in three very different states (New Hampshire, Florida and Nevada), and continued the bad news for Newt Gingrich, who couldn’t even hold onto an apparent Donald Trump endorsement for a few hours.

But then came the three February 7 events: a non-binding (and arguably meaningless) primary in Missouri, and caucuses in Minnesota and Colorado. And all three were won by Rick Santorum, who had all but been forgotten by national media during the Romney-Gingrich slugfest in Florida and Nevada. The sting to Romney was enhanced by comparisons to his performance in 2008, when he won the Minnesota and Colorado caucuses decisively. Gingrich was not on the ballot in Missouri, and finished a poor third in Colorado and a poor fourth (behind Santorum, Romney, and second-place finisher Ron Paul) in Minnesota.

The Santorum Sweep was a product of other candidates ignoring Missouri, and then an effective grassroots campaign in the other two states. Low turnout also helped accentuate Santorum’s bedrock support among social conservatives (the same constituency that gained him his Iowa win). For all the hype about his big night, his candidacy remains a largely Midwestern phenomenon, and he’s yet to show strength in the southern states where he’s suspected of being a Big Government Conservative, and Gingrich has served as the anti-Romney conservative threat.

The contest now hits a lull until February 28, when Michigan and Arizona hold primaries. Michigan is Romney’s native state, and Arizona has a relatively large LDS population, so he is favored in both despite yesterday’s setbacks. Then comes Super Tuesday (March 6), with its assortment of relatively expensive primaries (Ohio, Virginia, Georgia, Massachusetts) and a bunch of widely scattered caucuses (where Ron Paul is expected to make a strong appearance). Everything about this landscape favors the vastly better-financed Romney, unless his opponents manage to split up the states and beat him piecemeal.

More to the immediate point, the lull will provide Santorum’s opponents with a fine opportunity to take him down several notches with negative ads focusing on his Washington “insider” background and the occasional heresies in his record that trouble conservatives. Meanwhile, Santorum’s status as an international symbol of right-wing bigotry (mostly based on the vast Google-based campaign to taunt him for anti-gay sentiments, but also extending to his very extreme positions on abortion and contraception) will hound him in the broader media environment. It’s not clear he will be able to emulate Gingrich’s success in converting “persecution” by the “liberal media” into primary votes, but the inevitable mockery he will receive is very likely to drive down his general-election trial heat numbers.

Democrats, of course, are richly enjoying Romney’s difficulty in nailing down the nomination, particularly now that it is beginning to affect his own general-election numbers. As it happens, Mitt’s problems are coinciding with a modest increase in the president’s job approval ratings and gradually improved economic indicators. Last week’s surprisingly positive jobs report drew a lot of attention across the political spectrum.

But Obama’s general election standing remains questionable. During the last week, there was a major brouhaha over the Catholic Bishops’ intense reaction to an administration decision to require contraceptive services coverage for employee health plans sponsored by religiously affiliated hospitals and charities (direct church employees were exempted via a “conscience” exception). Several prominent Catholic Democrats expressed fears the decision would be disastrous politically, but then polling showed Catholic voters largely unmoved or supportive of Obama, even as the administration signaled it wanted to compromise.

In what appears likely to be a very close general election, the variables remain unstable. It’s clear Obama needs to win back moderate voters estranged by factors ranging from the general condition of the economy to conservative-media-fed narratives of his alleged hyper-liberalism. How to do that, while setting out realistic goals for a second term and exploiting a Republican nominating contest being constantly driven to the Right, is the obvious challenge for Team Obama.

Photo Credit: Dmblue444

Obstacle Course: Obama and the 2012 Electoral Landscape

As the 2012 election gets underway, President Obama is still waiting to see who his opponent will be. Candidates and campaigns matter hugely, of course, but we should also pay attention to the field on which the match will be played—and at first glance, the lay of the political land doesn’t look so favorable to Obama and his party.

The lingering economic slump has demoralized voters and tilted the electorate rightward. With idle workers, underwater homeowners, exploding deficits and debts, growing inequality, and a bitter, broken political system, objective reality isn’t exactly working in incumbents’ favor. Upon closer inspection, however, the electoral landscape may not be as forbidding for progressives as it first appears.

For one thing, the recovery finally seems to be gaining momentum, complicating Republican attempts to cast Obama as a “failed president” who doesn’t have a clue about how the economy works. For another, Republicans are incumbents too, and their intransigence and obstructionism throughout 2011 will make many swing voters reluctant to entrust them with undivided control of the federal government. Finally, the fractious battle for the GOP nomination reveals a party at war with itself, while conservatives’ venomous attacks on Obama push Democrats toward unity.

But no matter whom the Republicans pick as their standard bearer, the tricky political terrain confronts Obama with three strategic imperatives: 1) roll up a big majority of moderate voters; 2) win back a good chunk of the in-dependents who deserted his party in 2010; and 3) fashion a stronger economic message that combines jobs and fiscal responsibility.

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Election Watch: Florida and the Road Ahead

As the recent events in Florida demonstrate, a week is still a lifetime in politics.

Coming out of the South Carolina primary, Mitt Romney’s campaign was in significant disarray; Newt Gingrich seemed to have emerged as the long-awaited “conservative alternative to Romney,” with a path to the nomination, a positive and negative message that seemed to be resonating with Tea Party activists, and the Super-PAC money to compete in an expensive state like Florida. “Establishment” Republicans, including some key conservative opinion-leaders, were beginning to panic.

Now, the day after Florida, Romney is back in charge of the race, and while Gingrich, Santorum and Paul are all still campaigning avidly, it’s difficult to see a clear path to victory for any of them.

Romney, who fell immediately and badly behind in Florida polls after the South Carolina results were in, recovered last week and won the state by a 46-32 margin over Gingrich (Santorum, who won 13 percent, and Paul, who took 7 percent, conceded the state and spent little time there).

There were four main factors in the Florida turn-around: money, debates, opinion-leaders, and demographics.

On the money front, Romney and his Super-PAC outspent Gingrich and his Super-PAC by nearly a 5-1 margin – precisely, $15.7 million to $3.3. million, contradicting initial reports that Newt’s Super-PAC would buy $6 million in Florida media. Additionally, Romney began running ads before South Carolina, which enabled him to “bank” a significant lead among early voters (about 30% of total votes). Romney’s ads were heavily negative, and focused particularly on Gingrich’s Freddie Mac consulting contract, a powerful issue in a state hit very hard by the collapse of the housing market.

The two candidate debates were Gingrich’s big opportunity to establish momentum and excite conservatives, as he did so effectively in South Carolina. Yet Newt basically bombed, particularly in the final 1/26 event, where he let Romney get to his right on immigration policy and seemed defensive and nervous.

Opinion-leaders, in Florida and nationally, took a major toll on Gingrich and undermined his ideological bona fides. In-state, he was sharply criticized by the state’s most popular Republican, Sen. Marco Rubio, for ads calling Romney “anti-immigrant.” Even more importantly, key leaders in Miami’s Cuban-American community, most notably the Diaz-Balart brothers and Rep. Ileana Ros-Lehtinen, endorsed Romney and worked hard for him. Meanwhile, national Republicans, including credible conservatives like the editors of National Review, labeled Gingrich erratic and unelectable, and flatly denied his claims of being an important contributor to the Reagan legacy.

And finally, Florida was a much better state for Romney demographically than South Carolina: less “southern” culturally, with more relative moderates, fewer evangelicals, and a sizable Hispanic population dominated by Cuban-Americans and Puerto Ricans, who were unmoved by Gingrich’s efforts to attack Romney as hostile to immigrants. In the end, Gingrich won several of the same demographic categories he won in South Carolina —evangelicals, “very” conservative voters, and strong Tea Party supporters—but they simply represented a much smaller percentage of the electorate.

By election eve, Gingrich was clearly flailing. He resorted to very harsh attacks on Romney as a tool of the “Republican Establishment,” over-the-top appeals to Christian Right audiences, and such strange tactics as a robocall targeting Jews (only 1% of the Republican electorate in Florida) with claims that Romney had cut off funding for kosher food at Massachusetts nursing homes.

On primary day, Gingrich even pledged to keep the competition with Romney going for “six or eight months”. This was a rather interesting remark as it would extend his candidacy well past the Republican Convention. In the end, though, the main thrust of his concession speech was to demand that Rick Santorum get out of the race. Santorum, in turn, reciprocated by saying Gingrich had lost his “shot”.

The most important question for Gingrich now is whether he can convince his main Super-PAC donor, Las Vegas casino mogul Sheldon Adelson, to keep sending checks. The next contest is a caucus in Nevada which Romney has long been favored to win. Next Tuesday, Missouri also holds a non-binding primary in which Gingrich is not even on the ballot, along with caucuses, in Colorado, where Santorum is hoping to make a splash. After that comes Minnesota, another state where Romney is favored.

To make matters worse for Gingrich, Romney will remain difficult to beat as February comes to a close. On February 28th, Romney is heavily favored in his native state of Michigan, and will also be able to count on a sizable Mormon vote in Arizona. The road ahead is thus difficult and expensive for Gingrich until Super Tuesday, March 6, when the Speaker will have the chance to compete in his home state of Georgia . That being said, however, Gingrich will surely lose Massachusetts to Romney. He is also unlikely to win Ohio, and once again is not even on the ballot in Virginia.

All in all, while the wild gyrations of this nomination contest so far make it difficult to say it’s over, Romney has the money, momentum, and the strategy to win fairly easily if he does not make mistakes. If Adelson cuts off Gingrich’s money, it could happen sooner rather than later. The longer it goes on, of course, the more permanent damage Romney could sustain to his favorability among the non-Republicans, those who are watching him bob and weave and try to outflank his opponents to the right.

Photo credit: boris.rasin

Election Watch: Unpleasant Surprises for GOP

Mitt RomneyLast Saturday’s South Carolina primary sent the Republican presidential nominating contest into strange and possibly uncharted territory. Front-runner and “Establishment” favorite, Mitt Romney, turned in a dismal performance, while twice-left-for-dead Newt Gingrich not only swept the state but quickly seized the lead in both national GOP polls and in Florida, where voters go to the polls on January 31.

Newt’s Florida “bump” was especially impressive, since the Sunshine State was supposedly Romney’s “firewall” that would maintain his momentum even if disaster struck in South Carolina. Moreover, Gingrich took the lead there even though Romney had enjoyed virtually uncontested control of the airwaves, having spent (via his own campaign and his Super-PAC) over $5 million in ads, mostly attacking the former Speaker on his Freddie Mac “historian” gig. Thanks to another $5 million check from Sheldon Adelson’s family, Newt’s fighting back with his Super-PAC recently buying $6 million in Florida air time.

Gingrich’s ace-in-the-hole throughout the campaign, namely his ability to rally conservatives to his side by attacking the news media, didn’t work as well for him in the first of two pre-primary debates in Tampa on January 23. Instead, Newt was largely on the defensive against attacks from Romney. The debate, however, ended more or less as a draw, with Mitt once again struggling over questions about his tax returns. For this reason, the final debate in Jacksonville tomorrow could prove decisive.

In terms of the second-tier candidates, Ron Paul is not seriously contesting Florida, preferring to focus on upcoming caucus states. But one real imponderable here is the trajectory of the struggling campaign of Rick Santorum; his collapse or withdrawal could give a crucial boost to Gingrich, given the strong evidence that Newt is his supporters’ overwhelming second choice. That being said, it remains unclear how much Gingrich’s South Carolina win was attributable to the late withdrawal of and endorsement from Rick Perry, since the Texan’s support-levels there were low and vanishing. Regardless, there are generally strong signs in national polling that Gingrich has now become the Tea Party’s adopted candidate, with Romney depending to a dangerous degree on self-identified moderates.

One fascinating aspect of the contest at present is the vast gulf between elite and rank-and-file views about the two leading candidates’ “electability.” The prevailing elite view is that Gingrich would likely be a disastrous general-election candidate, as is already suggested in general election polls, particularly given the low odds that he could continue to avoid scrutiny of his marital and financial background in the long slog to November. Contrary to such skepticism, however, exit polls in South Carolina showed Newt soundly defeating Mitt among voters most concerned about “electability”. It seems Gingrich’s claim that he can end-run media “protection” for the incumbent in debates clearly sounds compelling to a lot of conservatives who don’t spend much time perusing polls and probably don’t trust them anyway.

Of course, if Romney manages to win in Florida, the road ahead will likely become much easier for him. With a slew of caucuses that will reward his financial and Establishment advantages, followed by a February 28 primary in his native state of Michigan, Mitt would likely enter Super Tuesday (March 6) poised for victory. Gingrich’s failure to get on the ballot in Virginia would merely be icing on the cake.

But a Romney loss in Florida could cause a real crisis of confidence in him in the very Establishment circles he is counting on. There are already some signs of panic, with renewed talk (not terribly realistic, given the rapid passage of filing deadlines for primaries) of last-minute candidacies by an assortment of pols who chose not to run earlier in the cycle. Indeed, last night’s credible SOTU response by Gov. Mitch Daniels is certain to encourage some Republican pundits to cast goo-goo eyes in his direction.

Meanwhile, Democrats have been greatly encouraged by the rude interruption of Romney’s cakewalk to the nomination; by the weaknesses in his background Gingrich has exposed; and of course, by the tantalizing prospect that Republicans might actually nominate the man who became a useful punching bag for Bill Clinton when they shared power in the 1990s. Obama’s combative SOTU address indicated the incumbent has fully shifted into re-election mode. And his slowly improving approval ratings, along with fragile but encouraging economic news, provide a decent foundation for a strong campaign against an opposition party that continues to surprise virtually everyone including itself, however unpleasantly.

Photo credit: skooksie

Underwater: Home Values in 2012 Battleground States

As the 2012 election approaches, the nation’s unemployment rate will continue to drive the political debate and, in turn, the fortunes of President Obama and his GOP rivals.

Despite the central focus on unemployment, however, another number deserves equal attention as a barometer of the nation’s overall economic health: housing values.

As catastrophic as it is to lose a job, the percentage of Americans who are unemployed is actually exceeded by the percentage of Americans who have either lost significant wealth from their homes or are currently “underwater”—owing more on their mortgages than their homes are worth. Since 2006, Americans have lost a total of $7 trillion in housing wealth—a figure that, according to the Federal Reserve, is more than half of the nation’s aggregate home equity.

In recent days, the Obama Administration has telegraphed its intention to devote more energy to housing—and with a focus on foreclosures and defaults. While this is laudable, the Administration should not neglect a second front: the tremendous loss of housing wealth.

In this report, we make our case by analyzing home values in the 16 battleground states that will serve as the proving ground for 2012. In 15 of these states, home values have fallen by an average of 16% since October 2008. We also offer up suggestions for tackling this issue.

No doubt, every contender for the White House will have a jobs plan. But no economic plan can be complete without an equally robust plan to rebuild housing—and in particular, to rebuild housing wealth. Policies that address this loss of wealth, even for those not at immediate risk of losing their homes, makes sense both politically and economically

Negative equity: A new crisis in middle-class wealth

In a reversal of the optimism that is typical of Americans, 41% of people in a January 2012 poll—including a majority of seniors—said they feel less financially secure than last year, while just 14% said they feel more secure.

The loss of wealth—and housing wealth in particular—might help explain why.

According to the Federal Reserve’s Survey of Consumer Finances, 62.5% of families suffered a loss of wealth from 2007 to 2009. Moreover, says the Fed, “declines in home equity were an important driver of decreases in wealth.”

  • Homes made up 47.6% of the total non-financial assets held by Americans in 2009. Between 2007 and 2009, American homeowners saw their equity drop by a median of 11.8% (or $18,700).
  • From its peak in 2006, the Case-Shiller housing index (the “Dow” of home values) has fallen 32.93%, including an 11.33% decline from October 2008. Median home prices have fallen from $196,600 to $164,100.
  • As many as 12 million Americans are now “underwater” with mortgages that are more than their homes are worth.

 

The loss of home equity has broad implications for the nation’s economy beyond mere sentiments of economic confidence. For example, underwater homeowners can’t qualify to refinance their homes, which means they can’t take advantage of one of the Administration’s most successful monetary policies: low interest rates. A 1% lower interest rate on a $200,000 mortgage can mean $168 less in interest payments per month—money that could be spent in the broader economy on other things.

Underwater borrowers are also stuck in their homes, unable to trade up or move out (a problem that also limits job mobility). Negative equity also means no nest egg for homeowners nearing retirement, and fewer resources to draw on for households seeking to finance a new business, help a child through college or weather out a spell of unemployment or ill health.

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Election Watch: Gingrich and Romney Battle for South Carolina

With the South Carolina primary on tap this Saturday, Mitt Romney is breathtakingly close to a victory that would likely all but clinch the presidential nomination. He’s been ahead in every public poll taken in South Carolina since his win in New Hampshire. His conservative opposition remains divided. And the one candidate who did drop out after New Hampshire, Jon Huntsman, promptly endorsed Romney after months of badmouthing him.

But a strong debate performance by Newt Gingrich on Monday, and the $3.4 million his Super-PAC invested in attack ads on Romney that have generated a lot of even more powerful “earned media,” have placed the outcome in South Carolina in some doubt. A final debate on Thursday, along with the decision—or indecision—of conservative opinion-leaders to consolidate support behind a single candidate, could make a difference.

Romney and his own Super-PAC have clearly concluded Gingrich is the main, and perhaps the only, real threat, and have resumed the intense fire on the former Speaker (heavily utilizing former House colleagues) that cut him down to size in the run-up to the Iowa Caucuses.

Meanwhile, the candidate who came out of Iowa with a strong claim to have finally become the “true conservative alternative” to Romney, Rick Santorum, is struggling a bit, though still, along with Ron Paul, showing up in the mid-teens in South Carolina polls. Santorum appeared to have obtained a real breakthrough last Saturday, when a sizable group of conservative religious leaders convened in Texas by Christian Right warhorse Tony Perkins announced it had reached a “consensus” to back the Pennsylvanian. But almost immediately, backers of Newt Gingrich who attended Perkins’ conclave contested this interpretation of events, and suggested the group was evenly divided between Gingrich and Santorum, with the vote to endorse Santorum only occurring after a big percentage of attendees had already left. In Monday’s debate, Santorum didn’t exactly shine, and found himself on the defensive for voting against a national “right-to-work” bill in the Senate (not a popular position among union-hating South Carolina Republicans).

Lost in the shuffle has been Texas governor Rick Perry, who hasn’t registered double-digit support in Palmetto State in any poll since October. Though he’s campaigning heavily around the state, the main publicity coming out of his campaign this week was the request made by one of his earliest and most prominent South Carolina supporters, state senator Larry Grooms, that he withdraw from the race and enable someone else to beat Romney. South Carolina looks to be Perry’s last stand, and it isn’t going well.

If Gingrich does somehow catch up with Romney, or perhaps even if Romney narrowly wins but Perry and Santorum do poorly enough that they are forced to drop out (no one expects Ron Paul to withdraw until the Convention itself), the next question will be whether Gingrich’s latest rise from the political grave will inspire a national renaissance of his campaign, or at least make him competitive in Florida, which votes on January 31. Until today, polls in Florida and nationally were showing Romney building huge leads over the field. But a Rasmussen survey released today, the first taken since Monday’s debate, shows Gingrich suddenly within three points of Romney nationally.

One note of encouragement for Gingrich might have gained a lot more attention earlier in the year: Sarah Palin told Fox viewers that were she voting in South Carolina, she’d vote for Newt. This was, however, the most indirect endorsement yet from Palin, famous for sometimes phoning in endorsements: she said she wishes Newt well so that the campaign can continue, and the winner can receive a more thorough vetting. Well, there’s no question she is an expert on the need for candidate vetting.

Assuming Romney survives South Carolina and other early tests to become the nominee, it’s worth wondering how much general-election damage he’s suffered from attacks on him by Gingrich and others. Aside from the Bain Capital issues raised so visibly by Gingrich’s Super-PAC (complicated most recently by allegations that one Bain beneficiary was a company that disposed of “biomedical wastes” from abortion clinics), his reluctance to release his tax records is turning heads, and each day he has to spend precious general election capital reassuring conservatives that he’ll be sufficiently loyal to their priorities in office. And in general, the nomination campaign continues to shine light on the gap between GOP “base” preoccupations and more mainstream sentiments, as illustrated by Monday’s debate. Democrats couldn’t have been happier with the spectacle of wealthy Republican candidates spending the Martin Luther King holiday lecturing poor and unemployed people on how to develop a work ethic while the audience howled for blood like Romans.

Photo credit: DonkeyHotey

Election Watch: Romney Marches On

After a campaign often described as “boring,” a New Hampshire Republican electorate showing no great signs of excitement performed its expected duty on January 10, giving Mitt Romney a solid win and making it increasingly difficult to see a path to the nomination for anyone else.

Romney’s 39 percent of the vote in New Hampshire was about what the polls had long predicted, but some last-minute turbulence in surveys and speculation that Paul or even Huntsman could pull an upset reset expectations nicely for Mitt, making his comfortable win look formidable. Paul’s 23 percent of the vote was also pretty predictable, and now that his two best states are behind him, we can expect his campaign to focus on small caucus states where it’s easy to pack rooms. Huntsman, having staked his entire campaign on a New Hampshire breakthrough, campaigning virtually nowhere else, may talk bravely of his third-place (17 percent) finish as giving him a “Ticket to Ride” to later states, but it’s hard to see much of a constituency for his defy-the-Tea-Party campaign in more conservative parts of the country. But like everyone else persisting in this strange nomination contest, Huntsman can help prevent other candidates from consolidating the non-Romney vote, at least until the money runs out.

If there was any surprise in New Hampshire, it’s probably how poorly the “true conservative” candidates performed. Newt Gingrich, who had the coveted endorsement of the New Hampshire Union-Leader, narrowly finished fourth (with 10 percent) ahead of Iowa co-winner Rick Santorum (9 percent), who clearly did not get much of a “bounce.” Rick Perry made no pretense of campaigning in New Hampshire, but still, it’s a bit shocking to see this one-time bully-boy of the field finishing just ahead of Buddy Roemer, with less than one percent of the vote.

Now the campaign will quickly move to its crucial southern phase, with primaries in South Carolina on Saturday, January 21 and in Florida on January 31. Victories by Mitt Romney in both would pretty much wrap up the nomination for him, and the latest polls from South Carolina and Florida have shown him likely to do just that.

Indeed, at the moment the biggest threat to Romney’s candidacy isn’t so much a rival, but a line of attack by rivals that could easily carry over into the general election. A Super PAC (Winning the Future) supporting Newt Gingrich, and brandishing a $5 million contribution from casino magnate Sheldon Adelson has produced a series of ads viscerally attacking Romney’s firm, Bain Capital, for killing jobs and companies in South Carolina. Somewhat more subtly, the ads also associate Romney with Wall Street malefactors, not the most popular people in the country right now. And there’s hardly a millisecond in the ad copy released so far that could not be used against Romney by pro-Obama forces later.

Given the destruction of Newt Gingrich’s front-running candidacy in Iowa by negative ads run by a pro-Romney Super PAC, this development is not terribly surprising, though the lack of inhibition with which both Gingrich and Rick Perry are pursuing the Bain attack line is interesting coming from conservatives who systematically oppose regulation of Wall Street. But the immediate question is whether Winning the Future will have a significant impact in South Carolina, where they have already bought $1.6 million in pre-primary TV ads and could buy more than double that figure.

The Palmetto State is clearly Rick Perry’s Last Hurrah, and right-wing opinion-leader Erick Erickson (at whose RedState annual meeting in South Carolina the Texan announced his candidacy back in August) reports that Perry’s South Carolina effort looks impressive. If so, it hasn’t shown up in the polls, where Perry is running consistently in the mid-single digits in the state. Hard-core anti-Romney conservatives in South Carolina seem evenly split between Gingrich and Santorum, and only if they begin to coalesce around a single candidate could the destructive work of Winning the Future bear fruit, other than in declining favorability ratings for Romney. The poohbah who could easily resolve the indecision among South Carolina conservatives, Sen. Jim DeMint, has said he does not intend to endorse anyone this cycle, and, moreover, has predicted Romney will win his state. There’s no reason at present to doubt he is right.

But without question, the assault on Bain Capital will be watched closely by Democrats, not just because it might hurt Mitt Romney, but because it will test the latent hostility of the voting public (even its most conservative segment) to some of those “wealth creators” Republicans are forever lionizing.

Photo credit: DonkeyHotey

Romney on a Roll

Mitt Romney’s campaign for the Republican nomination is unfolding like a well-crafted business plan. He hit his numbers in New Hampshire last night, saw his most dangerous rivals tumble, and reinforced the aura of inevitability that surrounds his candidacy.

Everything seemed to fall Romney’s way. After his dizzying ascent in Iowa, Rick Santorum fell back to earth with a fifth-place finish. Newt Gingrich, who went snarling across New Hampshire like a wounded beast, flamed out. Ron Paul came in second, which suits Romney just fine. Paul’s libertarian purism inspires cult-like fervor among his young followers, but it will never command majorities in GOP primaries.

Yes, it was a good night for John Huntsman, but probably the best he’ll have this year. He did well among independents, moderates and voters who don’t like the Tea Party, a not-so-representative sample of the GOP electorate. He has nowhere to go, and it seems unlikely Romney would put another Mormon on his ticket.

Now it’s on to South Carolina, where Romney already leads, and where Paul’s useful presence will inhibit last-ditch attempts by conservatives to form an “anybody but Mitt” coalition. If he wins in the South, the race is effectively over.

What are the implications for progressives of Romney’s emergence as President Obama’s likely opponent in November? Let me offer four:

First, don’t underestimate Romney. It’s hard not to be impressed by Romney’s methodical, disciplined march to the nomination, even if, like me, you are appalled by his willingness to change positions that get in his way.

On the other hand, Romney has a big structural advantage that is usually decisive in Republican nominating battles. No, it’s not money, it’s the fact that he’s the establishment candidate. Romney ran second to John McCain in 2008, paying his dues and learning lessons that have helped him avoid mistakes this time around. Now he’s the GOP heirarchy’s presumptive choice, even if most conservatives don’t much like or trust him.

Romney may have tepid support from the GOP base, he may be pathetically unable to connect with ordinary Americans, but he is a competent, calculating machine who knows how to map and adapt to challenging political terrain, whether it’s very liberal Massachusetts or the radically conservative Iowa caucuses.

Second, electability is trumping ideology. Nearly 60 percent of New Hampshire voters said their top priority was a candidate who could defeat President Obama. Only 14 percent said they were looking for a “true conservative.”

This of course is bad news for President Obama, who would have loved to face a Tea Party favorite like Michele Bachman, Rick Perry, or even Newt Gingrich. Then the fall campaign would have been about GOP extremism rather than the economy. That the Tea Party’s least favorite candidate appears headed toward nomination is a tacit admission that the party has veered dangerously from the political mainstream.

Third, an Obama-Romney match-up will be a fight for the political center. Newt Gingrich is right: Romney began his career as a “Massachusetts moderate.” That means he will have more “crossover appeal” to swing voters than his GOP rivals, which he’ll need to offset minimal enthusiasm from conservatives. Given his now legendary “flexibility,” it shouldn’t be hard for Romney to pivot back to the center. He might even warm to Romneycare again, to demonstrate his pragmatic acceptance of government’s role in health care, and of his willingness to work across the aisle to get things done.

In any case, neither candidate can rely on a mobilizing their base to win election. That means Obama will have to work harder to win back independent and moderate voters who deserted his party in 2010.

Fourth, the economy is the issue. Much of Romney’s “electability” stems from his cred as a successful businessman and manager who knows how the real economy works. As he made clear in his victory remarks last night, Romney intends to make the 2012 election another referendum on Obama’s economic performance.

Democrats hope to turn Romney’s success as a corporate turnaround artist against him, echoing Gingrich’s claims Bain Capital “looted” firms and cost workers their jobs. But Obama should be leery of hitting the “vulture capitalism” theme too hard.

The swing voters who will decide the election want action to fix the economy, not scapegoating. Rather than allow himself to be lured into a debate over what’s he done to fix it, Obama needs to frame the race prospectively, as a choice between competing paths to economic renewal. His top priority must be to develop a bolder, more compelling plan for reviving jobs, spurring economic innovation, and restoring U.S. competitiveness.

Photo credit: WEBN-TV

Why Obama Needs to Cut and Invest

This article is part of a a series of international responses to Policy Network‘s discussion paper In the black Labour: Why fiscal conservatism and social justice go hand-in-hand.

To most Americans, fiscal responsibility is a question of political morality. If Democrats allow the debate to be framed as a choice between more deficit spending and debt reduction, they lose

Much to the perplexity of US liberals, the politics of debt reduction dominated Washington in 2010, despite a faltering economic recovery.

No one was more incensed by the seeming illogic of this than Paul Krugman. The influential New York Times columnist railed often against “premature austerity” and urged President Obama instead to open the spigots of federal spending. It was the standard Keynesian prescription, but it betrayed a political tin ear. To a public alarmed by large-scale public borrowing and spending, it sounded like throwing good money after bad.

After 2007, US budget deficits ballooned as the Bush and Obama administrations spent heavily to bail out the big banks (plus insurance and auto companies) and counter the worst recession since the 1930s. The federal deficit, $469 billion in 2008, zoomed to an eye-popping $1.3 trillion in 2011. Coming on top of the Bush tax cuts and two costly wars, this emergency spending pushed the US national debt over 70% of GDP.

Had this torrent of spending – reinforced by generous doses of monetary “easing” – unlocked business investment and cut the jobless rate, all might have been forgiven. But it didn’t, and public apprehension about exploding debts amid a jobless recovery rose steadily, reaching a crescendo in the 2010 elections. Republicans swept House races and, lashed on by the Tea Party, stormed into Washington determined to cut government down to size.

Thus 2011 became a year of fiscal brinkmanship. First the government was almost shut down last spring when budget talks broke down. Then came the summer showdown over raising the debt ceiling, which ended when Obama blinked and agreed to GOP demands for spending cuts rather than let America default on its debts for the first time ever. In the fall, a bipartisan “supercommittee” that was granted extraordinary powers to rein in deficits failed to reach agreement, triggering automatic domestic spending cuts in 2013.

Despite such nips and tucks, US leaders thrice failed to come to grips with the structural causes of America’s debt crisis: tax revenues well below historic norms, and the rapid growth of public health and pension costs as the baby boomers throng into retirement. This ensures that the debate over how to control the national debt – $15 trillion and growing – will be front and centre in the 2012 presidential election.

The public’s top priorities are jobs and reviving US competitiveness. But fiscal discipline also matters to most voters, especially the moderates and independents who hold the balance in close races. Only by embracing both goals can progressives forge an electoral majority in 2012. If Obama and the Democrats allow the fiscal debate to be framed as a choice between more deficit spending or debt reduction, they lose. If instead they champion fiscal restraint and focus the debate on the fairest and most growth-friendly way to achieve it, they can win.

That’s because Republicans have painted themselves in a corner by refusing to raise any new tax revenue to help solve the debt crisis. Americans don’t relish paying higher taxes, but they do want their elected leaders to work together to solve the country’s problems. House Republicans have repeatedly put their anti-tax dogma before their responsibility to govern, and have seen their public approval ratings tumble as a result.

In contrast, Obama appears eminently reasonable in calling for “shared sacrifice”, which in practice means reducing the debt with a mix of spending cuts and tax revenues. He has also put Republicans on the defensive for opposing tax hikes on the rich, even to pay for tax relief for working families.

But Obama can’t let his own party off the hook, either. If Republicans are in denial about the need for higher revenues, Democrats have yet to get serious about the other side of the fiscal equation – slowing the unsustainable cost growth of the big “entitlement” programmes: Medicare, Medicaid and Social Security. Washington has promised more to future retirees than it can afford to pay; the government recently put the funding gap at $34 trillion, many times larger than the entire US economy.

There’s nothing “progressive” about denying hard fiscal facts, yet many liberals cling to the habit of opposing any cuts in future benefits – even for wealthy Americans – as a breach of faith, if not a plot to kill social insurance in America. Not only is this stance blind to demographic and budget realities, it’s morally dubious as well.

If benefits for the elderly are deemed untouchable, then Congress will have to either raise taxes on everyone, including working families, or cut domestic spending to the bone, or both. Domestic spending (including defence) has already borne the brunt of the spending cuts agreed to last year. It is only 12% of the budget, but it includes all the key public investments progressives should be for – in infrastructure, education and workforce skills, science and technology – not to mention public health and safety and measures to alleviate poverty. To shield entitlements from cuts is, in effect, to give priority to retirees’ consumption over strategic investments in a more prosperous and equitable society.

There is little mystery over what it will take to solve America’s debt crisis. President Obama’s own Fiscal Commission says $4 trillion in debt reduction over the next decade is necessary to stabilise the national debt at around 60% of GDP. Hitting that ambitious target will require a political “grand bargain” in which Republicans accept increased tax revenues, and Democrats agree to trim benefits for affluent retirees in the future. Unfortunately, Obama’s reluctance to endorse his Commission’s blueprint has left his own party as well as the public in doubt about the depth of his commitment to fiscal stabilisation.

As the presidential race begins in earnest, Obama will come under growing pressure to offer bigger and more specific ideas for spurring economic growth and shrinking the national debt. He needs a concrete plan for restoring fiscal responsibility gradually, through a combination of tax and entitlement reform, while also boosting public investment. Properly sequenced, a “cut and invest” approach can attenuate the dilemma Krugman and others point to – the collision between the stimulative effect of public spending (and tax cuts) and the contractionary impact of fiscal retrenchment.

Adopting a 10-year framework for debt reduction will reassure nervous investors that Washington is determined to get its borrowing under control and protect the nation’s credit. By cutting debt service payments, it will redirect public spending from consumption to productive investment. It will reduce America’s dependence on foreign lenders (especially China) and rebuild the nation’s “fiscal reserve” so that it can borrow to meet future emergencies or downturns without plunging into Greek-style levels of debt.

The economic case for providing certainty about debt reduction is compelling. But most Americans don’t wear green eyeshades; for them, fiscal responsibility is a question of political morality. They see the nation’s runaway debt as emblematic of a corrupt political class that doles out slices of the public weal to privileged interests and rent-seekers in return for campaign contributions. The image of a bloated state that lives beyond its means powerfully buttresses the anti-government populism that resonates not only with Tea Partiers but also with the independent voters that progressives need to win back this year.

The good news for Obama is that the demands of economic growth and fiscal rectitude point in the same direction – away from America’s old economic model of debt-fueled consumption, towards a new progressive growth strategy based on higher levels of investment, faster innovation and expanded production.

Photo credit: Andrew.Speight

Election Watch–After Iowa: Is the Right Ready to “Settle” for Mitt?”

So voters finally got into the act in the Republican presidential nominating contest, and the results from Iowa were about what anyone reading the late polls might have expected. With Ron Paul apparently taking a bit of a hit from bad publicity about his extremist past and attacks on his current foreign policy views by other candidates, he fell just short of Romney and Santorum, who almost literally tied. In many respects, the caucuses were a re-run of 2008: turnout was very much the same despite all the talk about a super-psyched GOP base; the composition of caucus-goers was very similar; and Mitt Romney got about the same number of votes. The main difference is that Romney spent much less time in Iowa than in 2008, and more crucially, the non-Romney vote was more divided. It’s also significant as a sign of politics to come that Mitt didn’t have to spend nearly as much of his own money in 2012, because a “Super PAC” supporting him did the dirty work of destroying Newt Gingrich’s credibility with Iowa conservatives (with some help from Ron Paul’s campaign).

The free-falling Gingrich campaign did have enough energy left to beat Rick Perry in Iowa (Newt got 13 percent of the vote, Perry 10 percent), dealing a huge blow to the candidate still generally thought to be the only enduring threat to a Romney nomination (Perry considered dropping out of the race Tuesday night, but reconsidered, probably after taking a good long look at the poor positioning of the rest of the field in South Carolina and Florida). Michele Bachmann, the winner of the Iowa GOP straw poll back in August, which croaked Tim Pawlenty’s candidacy, had the wheels fall off in the final week before the caucuses and finished a poor sixth, subsequently folding what was left of her campaign.

So technically, at least, Rick Santorum, who benefitted mightily from a last-minute consolidation of social conservative support, is the unlikely winner of the conservative-alternative-to-Romney sweepstakes that Iowa hosted for so many months. I qualify his victory because there are many doubts about his post-Iowa viability, and aside from Paul, who will be in the race to the bitter end, there remains a slim possibility that Perry or Gingrich can rise from the dead to attempt one more comeback when the calendar turns to the South after New Hampshire. Indeed, one of the grand ironies of this entire contest is that perceptions of Romney’s weakness have kept candidates in the field who are mainly keeping each other from consolidating non-Romney support.

Santorum has spent little time outside Iowa, and does not have deep pockets. More importantly, he’s a career politician with a domestic policy record that troubles some conservatives (notably pundit Erick Erickson, who has taken to attacking Santorum regularly and savagely). As a conservative Catholic, he has ties to evangelical activists via the anti-abortion movement (in which he is heavily involved, taking positions that won’t wear well with more moderate voters), but does not have the kind of natural connections to southern political culture that 2008 winner Mike Huckabee enjoyed.

Given Romney’s big lead in New Hampshire, it’s unlikely Santorum will take the time and money to seriously challenge him there, though Newt Gingrich is promising to launch a vengeful attack on Mitt in the Granite State. But the next critical (and perhaps final) phase of the campaign could well be played out behind the scenes, as conservative opinion-leaders decide whether or not to get behind Romney and end the contest before it gets truly ugly and expensive. South Carolina’s Jim DeMint, for example, could send a very big signal that the battle to deny Romney the nomination has become too dangerous for the conservative movement to sustain. A Romney win in the Palmetto State would pretty much wrap things up unless Mitt does or says something uncharacteristically stupid, though rivals (obviously Paul, probably Gingrich, and perhaps even Huntsman if he chooses to spend his family fortune) may stick around in case that happens.

It bears repeating at this point that there are few signs of a general-election “conservative revolt” against a Romney-led ticket, beyond a smattering of evangelicals who really don’t like Mormons. The best way to describe the wingnut mood about this contest is that a Romney nomination would deny them their ideal aspiration of a Goldwater-style candidacy (one, of course, that won this time) aimed at repealing the entire Great Society/New Deal legacy. But that would be considered a tactical setback other than an intolerable defeat, simply delaying the great-gittin’-up-morning they are convinced is on the horizon once those vote-buying socialists in the Democratic Party are driven from power. An early Romney nomination victory, on the other hand, might save the candidate a lot of heartburn by giving conservative activists time to heal their wounds and get used to him as the nominee, while limiting the gestures he will have to make to earn their enthusiastic support, if not their trust or affection.

Wingnut Watch: Ideology Versus Electability

Up until now, the right-wing conquest of the Republican Party that reached critical mass immediately after Barack Obama’s election in 2008 has not involved a lot of soul-searching questions about the relative value of ideology and “electability.” Indeed, it’s been an article of faith on the right—for some dating all the way back to Phyllis Schlafly’s 1964 book A Choice Not An Echo—that insufficient ideological rigor was precisely the reason for the GOP’s electoral problems. And nothing much has happened since the beginning of 2009, when the GOP made the unusual decision to move away from the political center after two straight electoral debacles, to disabuse them of the idea that they would be rewarded at the ballot box for fully indulging their ideological appetites and thrilling the conservative activist base.

That may be about to change. The House Republicans’ rejection of a two-month stopgap agreement to preserve a payroll tax cut and extend unemployment benefits has finally earned the Tea Party Movement full blame for gridlock and dysfunction in Congress (an institution whose approval rating dropped to 11 percent last week according to Gallup). Opinion surveys indicate that the deeply satisfying sabotage game (i.e., deliberately screwing up the operations of the federal government and then benefitting from public disgruntlement with the competence of said federal government) conservatives have been playing may be coming to an end as Republicans become more firmly identified with unpopular positions on spending, taxes, and the willingness to cooperate across party lines. Even the president’s approval ratings are looking better by comparison.

In other words, Republicans are at long last having to choose between ideology and popularity—or to put it another way, between the “base” and the general electorate—and the current behavior of House Republicans indicates it’s no real contest: ideology comes first.

Many non-conservative political observers think the same choice is at the heart of the turbulent presidential nominating contest, and wonder if and when Republicans will finally “settle” on Mitt Romney as the obvious candidate with the best chance of winning in November. But polling on “electability” indicates that most actual rank-and-file Republicans think whatever candidate they happen to prefer is also the most electable (conservative opinion-leader Erick Erickson is hardly alone in arguing that regardless of the polls, Romney is actually the least electable of the viable candidates), and a steady majority appear to consider electability less important than ideology, values or “character.”

Yet less than two weeks before the Iowa caucuses, Romney’s prospects are indeed on the rise, but for reasons distinct from the ideology/electability choice. To put it simply, the long conservative search for a clear alternative to Romney seems to be terminally failing.

It’s now well-documented that the latest non-Romney to enjoy a surge in the polls, Newt Gingrich, is in deep trouble in Iowa. This is not necessarily a function of a national decline in support for the former Speaker—he continues to run ahead of or even with Romney among Republicans nationally–or (to cite one common CW theory) of some decision by the “Republican Establishment” to deep-six Gingrich on electability grounds. More prosaically, Newt is being savaged in Iowa by heavy negative advertising by Ron Paul and by a “super-PAC” supporting Romney, and he has neither the money nor the organization in the state to fight back. And far from focusing on electability, the anti-Gingrich ads aim at Gingrich’s conservative support by depicting him as an unprincipled flip-flopper and conventional Washington pol.

At the same time, Iowa conservatives appear incapable of uniting around any other candidate. Rick Perry is investing heavily in Iowa in time and money, but is showing relatively little movement in the polls. Both Michele Bachmann and Rick Santorum are moving up a bit in Iowa polls, but are aiming at largely the same evangelical conservative constituency. Two of the most prominent Iowa Christian Right leaders, Bob Vander Plaats and Chuck Hurley, have just endorsed Santorum, but could not convince the board of their own organization, FAMiLY Leader, to make an endorsement, reflecting deep ambivalence in their ranks.

At the moment, the odds are probably better than even that either Romney or Ron Paul will win Iowa. With Romney maintaining a big lead in New Hampshire polls, and also beginning to break the apparent 25 percent cap on his national support, an Iowa win, particularly if Paul finishes second and no other candidate appears to be consolidating conservative support, could give him unstoppable momentum. A Paul victory with Romney second could be nearly as good for Mitt, given Paul’s unpopularity with both rank-and-file conservatives and elites and the vast ammunition his record and radical utterances will provide for future negative ads.

A rebound by Gingrich in Iowa, or a last-minute surge by Perry or Santorum, could upset this scenario, but the fact that all three of these candidates have some grounds for optimism illustrates the problem facing conservatives determined to stop Romney.

If Romney wins, in other words, it won’t be because conservatives worried about November have chosen to elevate electability over ideology, but because the large field of candidates available to them has serially imploded, and time has run out for anything other than a desperate anybody-but-Romney rearguard action. At the same time, Romney himself has made just enough concessions to the rightward drift of his party to remain acceptable to all but bitter-enders and Mormon-haters.

Crazy things have been known to happen in Iowa in the last days before the caucuses, although the intercession of the Christmas holidays makes big changes in support levels unlikely. In any event, the invisible primary is finally coming to an end, and with it will expire the hopes of all but a very few candidates.

Photo Credit: Austen Hufford

The Credit Gap: Easing the Squeeze on the Smallest Businesses

Among the many casualties of the 2007-2008 financial meltdown were small businesses. As the financial system virtually shut down, millions of small business owners across America found themselves unable to get the credit they desperately needed to run their businesses, let alone expand. As a result, thousands of otherwise flourishing firms were forced into bankruptcy or closure, with thousands of American jobs lost.

While this credit freeze has begun to thaw, one critical group of small businesses—firms with fewer than 50 workers—are still at risk of being left behind. These smallest of small businesses provide as much as 30 percent of all private-sector employment. Yet because of their small size, they are much less likely to benefit from government small business loan programs, and they are less likely to win loans from big commercial banks. For this group, the credit crunch is a serious impediment to their success. Many of these businesses relied on personal assets, such as home equity, for financing. But with the crash in home prices, those resources have evaporated. Instead, many smaller businesses rely almost exclusively on risky and expensive credit cards to finance their firms, if they can get credit at all.

Smaller businesses clearly need more options for getting credit, and credit unions, which already help many small borrowers finance their self-employment and small business ventures with personal loans, lines of credit, and limited business loans, could be an ideal source of credit for these underserved entrepreneurs. However, credit unions are blocked from offering as much help as they could because of an arbitrary and outdated cap on the amount of small business lending that credit unions can do. Bipartisan proposals to increase this limit—such as the ones offered by Sens. Mark Udall and Susan Collins and Reps. Ed Royce and Carolyn McCarthy—would help credit unions fill the “credit gap” that these smaller businesses face. It would also be a sensible and cost-effective way to jumpstart the job creation our country urgently needs.

Read the entire brief:12.2011-Martin_The-Credit-Gap_Easing-the-Squeeze-on-the-Small-Businesses

 

Wingnut Watch: The Race to Iowa

Newt GingrichCongress is mired this week in a complex struggle over an omnibus appropriations bill (with the total amount dictated by the earlier deficit reduction agreement) linked to a continuation of unemployment benefits and payroll tax relief. It’s almost entirely a matter of partisan Kabuki theater at this point, and neither a collapse of negotiations (followed, presumably, by another short-term continuing resolution on appropriations) nor an agreement (within the current parameters of the fight) would produce a major wingnut meltdown. Republicans generally are trying to secure a measure forcing the administration, among other indignities, to build the controversial Keystone KL pipeline, but again, this is more of a partisan that a purely ideological concern.

But conservative activists are reaching a failsafe point in the presidential nomination contest, with less than three weeks to go (or less in actual campaign time, given the limitations in attention-span and tolerance for “comparative” messages imposed by Christmas) before the Iowa caucuses.

With Herman Cain having finally suspended his campaign, conservatives in Iowa and elsewhere are struggling to decide whether to get behind the current frontrunner, Newt Gingrich, as an alternative to the chronically disfavored Mitt Romney, or to find some way to unite behind other, previously failed candidacies like those of Perry or Bachmann (while very much a viable candidate in Iowa, Ron Paul is generally considered unacceptable as an actual nominee because of his foreign policy views, and Rick Santorum would need an Iowa miracle to become viable). Perry and Paul are spending extensively on campaign ads in Iowa, and Paul, in particular, has been pounding Gingrich for his many flip-flops, his ideological heresies, and his Washington ties. Iowa polls all show Gingrich in the lead at present, though at least one, from PPP, shows Gingrich losing ground with steadily eroding favorable/unfavorable ratios.

There’s one more Iowa debate on tap (tomorrow, sponsored by Fox), and some key endorsements still likely to come (notably from wingnut leaders Bob Vander Plaats of the Iowa FAMiLY Leader and Rep. Steve King; both could go for about anyone other than Romney). It’s anybody’s guess what will happen; Gingrich, Paul and Romney are all in a decent position to win a close split decision, though the bulk of polls still favor Gingrich, who is particularly strong among self-identified Republicans. Meanwhile, Gingrich has been gaining on Romney in New Hampshire, and has built huge leads in South Carolina and Florida. A Gingrich win in Iowa would probably mean the end for Perry, Bachmann and Santorum, and put Romney on the ropes; a Paul win would be nearly as good for Romney as a win himself, particularly if Gingrich fades notably, which could indicate that the other candidates’ attacks are having and will continue to have an effect.

At this point it’s worth noting that the nomination schedule features both an early January blitz, and then something of a lull, meaning that unless someone scores the early knockout with wins in all or nearly all the January states, then money, organization, and sheer endurance could become very large factors and the contest could extend at least to Super Tuesday in March, and perhaps into the post-April 1 period when states can award delegates on a statewide winner-take-all basis if they so choose. There’s already talk that if Gingrich wins big in January, Republican Establishment figures (alarmed by Gingrich’s very poor standing in the general electorate) could either mount a major push to force conservatives to accept Romney, or even get behind a very late candidacy for someone more acceptable than either Romney or Gingrich among Tea Party supporters, but who has less glaring weaknesses than those in the existing field.

With all these variables in play, the overriding reality is that going on three years after the outbreak of the Tea Party Movement, conservatives can’t agree on much in the GOP presidential campaign other than a general disdain for Mitt Romney. Reading major conservative opinion outlets like National Review you can find both warm reassessments of and vicious attacks on Gingrich, who is far and away the current national front-runner among conservative voters at the moment. There’s a lot of regret about how poorly Rick Perry has performed, amidst very occasional expressions of hope that the Texan’s campaign could be resurrected by a late surge in Iowa. It’s all, frankly, a mess, and the possibility of an outcome that will please Wingnut World from either an ideological or an electability point of view continues to decline as actual voting grows near.

Photo credit: Chase McAlpine