Saturday, December 24, 2011

Boehner's Cheap Suit, The State of the States

How to Do Absolutely Everything Wrong
Extending the payroll tax holiday is a poor idea.  I absolutely believe it, just as much as I believe that extending the Bush tax cuts are a mistake.  And for the same reason.  With a treasury leaking close to a trillion dollars this year, we can scarcely afford to be giving away revenues, especially since we lack any sort of coherent plan to get our budget back in balance.

The payroll tax holiday is an example of why "temporary" tax cuts are so insidious.  We saw it with the Bush cuts and we see it again.  The narrative goes something like this - someone (President Obama in this case) argues for a "temporary" tax cut, holiday, relief, you pick the name, based on the idea that returning this money to the economy will spur needed economic growth.  The supporters of this "temporary" tax cut say we should ignore the negative impact on deficits because, after all, this cut is temporary, so it won't effect our structural imbalance of revenues and spending.

So we pass the "temporary" tax cut, time rolls on, it gets close to the date of expiry, and lo and behold, suddenly those who were arguing for it want to extend it because "we can't raise taxes at a time like this".  Never mind that it was sold in as temporary - it's now "in the base".  And the beat goes on.  And so do the trillion dollar deficits.

Having gotten all that off my chest as to the policy associated with the payroll tax cut, the POLITICS of the matter are another thing.  And on this count, the GOP, specifically the House GOP have managed to do absolutely everything wrong in this debate.

First, they didn't communicate their wishes to their Senate colleagues.  As a matter of fact, a few weeks ago, it was John Boehner that refused to negotiate a compromise on the payroll tax cut, demanding instead that the Senate work it out.  Well, they did.  The agreement was a 2 month extension of the cut, paid for by increased fees associated with Fannie Mae and Freddie Mac.  Essentially, higher fees on mortgages to pay for payroll tax relief.

Then, after the Senate deal had passed with massive bipartisan majorities (the Senate vote for the plan of 88-10 reflected the support of 80% of the GOP caucus), the House GOP balked.  I don't think it was Boehner himself who wanted to raise a stink (as a matter of fact, I think he would have been happy to leave town), but regardless, the House was suddenly making it an issue that the tax cut didn't cover a long enough period of time (somehow 2 months creates uncertainty, but 12 months magically creates certainty) and they wanted the Senate to come back to negotiate a full year deal with them.

So, Boehner and the House GOP handed the keys to the Democrats.  They managed to simultaneously portray themselves as holding up tax relief for working Americans while making the Democrats look like the defenders of lower taxes.  And all for a battle that they could not possibly win.  And they did not.  They caved within 72 hours as Harry Reid outright refused to call the Senate back for more discussions until the House passed the plan.  And pass it they did.  Oh, sure, they got token concessions which change nothing about the underlying legislation in an attempt to save face.

But at the end of the day:
(1) The Democrats looked liked the heroes of lower tax rates for working and middle class Americans
(2) The Republicans looked like shills for the rich, defending the Bush tax cuts for upper income Americans at all costs but balking at more modest relief for the lower brackets
(3) The strengthened President Obama's standing in the polls by as much as 5%
(4) They got no substantive policy changes in return

That's a rare perfecta indeed.  I wrote earlier on how the GOP should have some concerns about the House due to its historically low popularity and the best Democratic performance in generic congressional polling since 2006 and apparently they are hell bent on making my writings come true.  John Boehner better get that caucus under control or he might have to try back out the "minority leader" title.

What State is the Best?
While the candidates in Iowa are certainly not taking a break for the holidays, the debates are done until after Iowa and the polling won't really resume until after Christmas, so I thought I'd take a little detour and talk about a subject I've been meaning to write about for some time. 

In this Presidential campaign on the Republican side, the principle of federalism has been raised repeatedly by the GOP candidates.  It is a unique aspect of our form of government that so much of the governing is left to individual states to decide.  Federalism at its best is 50 state laboratories trying out different policy approaches to see what measures up best.

But the 50 laboratories only matter if somebody is measuring the results.  So, I'm pleased to present my ranking of the most and least successful states in the US.

First, let's talk about my methodology.  There are many things that people would like about a state that are subjective.  Measuring a state's cultural achievement or the quality of its food would make for interesting debates on message boards, but would be entirely subjective.  Do you prefer blues music in Mississippi or grunge in Seattle?  Do you like the lobster in Maine or the soft shell crab in Maryland?  Is Texas football better than New York hockey?  These questions are fun, but ultimately can't be measured.

So, I stuck to 4 very clear objective measures:
(1) Median Income
Standard of living is determined, in large measure, by how much money the average person makes.  Median income demonstrates the strength of a state's economy probably better than any single metric.

(2) Educational Attainment
The percentage of adults who are college graduates is an easily accessible "end state" metric on education that allows for easy comparison.  You could argue that this measure under weights the impact of primary and secondary education in a state, but I would argue that the primary purpose of primary and secondary education is to prepare students for college.  Besides, rating metrics for those things get increasingly subjective.

(3) Crime
We all want to live in safe neighborhoods and crime is a clear indicator of a social problem.  Violent crimes per 100 residents normalizes for population and shows how safe states are.

(4) Population Growth

An excellent measure of the quality of a state is whether people are coming there or leaving there.  Granted, this metric biases positively to those states that see a lot of illegal immigration, but over time, even illegals will go to where the opportunity is, so I used 10-year population growth as the metric.

For each metric, the state with the BEST score (highest income, highest education attainment, lowest crime, highest population growth) received 50 points, the second best 49 points and so on.  The total of all 4 scores were added together to give a state its total score.

Using this methodology, an AVERAGE score would be 102 points.

The states ranked as follows:
1. Utah - 162 points
2. Virginia - 161 points
3. Colorado - 159 points
4. New Hampshire - 158 points
5. Vermont - 143 points
6 (tie). Washington - 142 points
6 (tie). Massachusetts - 142 points
8 (tie). California - 141 points
8 (tie). Connecticut - 141 points
10. Hawaii - 138 points
11. Maryland - 133 points
12. Wyoming - 132 points
13. Arizona - 129 points
14. Oregon - 128 points
15. New Jersey - 125 points
16. Alaska - 123 points
17. Minnesota - 120 points
18. South Dakota - 119 points
19 (tie). Georgia - 118 points
19 (tie). North Dakota - 118 points
21. Rhode Island - 114 points
22. Delaware - 109 points
23. Idaho - 106 points
24. Texas - 105 points
25. Pennsylvania - 104 points
26 (tie). Maine - 103 points
26 (tie). New York - 103 points
28. Wisconsin - 101 points
29 (tie). Nebraska - 100 points
29 (tie). Kansas -100 points
31. Illinois - 97 points
32. Nevada - 91 points
33. Montana - 90 points
34. North Carolina - 85 points
35. Iowa - 79 points
36. New Mexico - 77 points
37. Ohio - 76 points
38 (tie). South Carolina - 72 points
38 (tie). Missouri - 72 points
40. Florida - 68 points
41 (tie). Kentucky - 66 points
41 (tie). Oklahoma - 66 points
43. Indiana - 63 points
44. Alabama - 58 points
45. Tennessee - 55 points
46. Arkansas - 45 points
47. West Virginia - 44 points
48. Michigan - 43 points
49. Mississippi - 40 points
50. Louisiana - 36 points

Let's examine the top and the bottom five in a little more detail.  First, the top 5.

Utah doesn't lead the pack in any single category, but is solid in them all.  It is 6th best in crime, 11th best in educational attainment and population growth and 14th best in income.  Utah has been a real boom town as Salt Lake City has grown and diversified.  Far from being the stereotype of shows about plural marriages and backward ways, it is a thriving state with a broad economic base.  Maybe Jon Huntsman was on to something.

Virginia is similarly strong across the board, ranking 8th in income and education attainment, 10th in population growth and 17th in crime.  Once a tale of two states, with poor Richmond at one end and the DC suburbs at the other, both completely dependent on the government (Richmond for welfare, Northern Virginia for government jobs), Virginia has diversified greatly into high tech industries and boasts arguably the best university system in the country (UVA, Virginia Tech, James Madison and George Mason are all Virginia states schools and all top flight.)

Colorado is the 2nd most educated state in the union and the 4th fastest growing, but lags somewhat in the other categories, coming in at 13th in income and a middling 26th in crime.  Colorado's strength are the core of large media and communication companies centered in Denver.  It is also a regional transit hub and supports a lot of smaller manufacturing industry.  Similar to many fast-growing states in the Southwest, the source of some of its population growth is also a drag on its crime and income scores - high levels of illegal immigration.

New Hampshire
New Hampshire would be number 1 if I'd stopped at 3 categories - it ranks 3rd in educational attainment, 4th in crime and 7th in income.  But New Hampshire, like much of the Northeast, isn't growing much - it ranks a weak 32nd in population growth.  New Hampshire's libertarianism makes it a shopping haven for New Englanders as well as a bedroom community for many commuters into Boston.  It also sports a strong tourism industry...especially around this time in an election cycle.

Rounding out our top 5 is New Hampshire's much more liberal brother Vermont which, similar to New Hampshire, ranks 3rd in crime and 7th in education but a somewhat weaker 20th in income and 31st in population growth.  A popular tourist spot and organic farming hotbed, Vermont has continued to foster a stable economy, despite conservative protestations about its very liberal economic policies.

On the bottom end:
Hurricane Katrina could get some of the blame, but Louisiana has been in decline for a very long time, with one of the worst permanent underclasses in America.  It's best ranking is in population growth, at 37th.  It ranks 41st in income, 44th in educational attainment and 46th in crime.  Louisiana, like many states in the deep south, lacks much of a middle class and has a very large underclass, which is mostly black.  Systemically bad schools and poor social institutions carry this problem from generation to generation.

Mississippi scores surprisingly well on crime, 20th best in the country, which keeps it out of the basement of the ratings, but other than that, the news is abysmal.  46th in population growth, 48th in education and 50th in income.  A poor, uneducated population that is leaving.  I lived in Mississippi and can personally attest that there is poverty in the Delta in a way I never would have thought possible in the United States.  My apologies to Haley Barbour, but this is a state failing on virtually all fronts.

The dismal state of Detroit and the contraction of the auto industry over the past decade have not been kind to Michigan.  It is 34th in income, 36th in educational attainment, 41st in crime and 50th in population growth.  In other words, people are leaving in mass and the ones leaving are largely the educated ones.  And who can blame them?  Have you seen Detroit lately?  Interestingly, it is a world away from Mississippi, but the fundamental problem is the same - lower skilled jobs (in Mississippi in agriculture, in Michigan in manufacturing) that have either moved elsewhere or gone away and a working class ill-equipped to do something else.

West Virginia
Appalachia has long been a location of heart-wrenching poverty.  Only a relatively low crime rate in this low population-density state keeps it out of the cellar - it's crime rate is 12th best in the nation.  Other than that, things are horrible - 49th in income, 49th in population growth and 50th in educational attainment.  It's a vicious cycle - lack of education keeps industry away and lack of jobs keeps people in disbelief that an education will benefit them.  The permanent underclass here is white and rural, rather than black and urban, but the problem is the same.

You could argue that Arkansas at least "wins the region" by ranking ahead of Mississippi and Louisiana, but things are still not great.  It is 22nd in population growth, buoyed by the continued strong growth around Wal-Mart in Bentonville and industrial growth in places like Fort Smith, but 40th in crime, 48th in income and 49th in education.  Bentonville is like a metropolis - Little Rock looks worse than Detroit.

So what can we learn about policy from all of this?
Using the imprecise metric of a "red" state being a state John McCain won in 2008, a "blue" state being a state Barack Obama won by more than his national average and a "purple" state being a state that Obama won but by less than his national average,

Of the 10 best states, 8 are blue, 1 is purple and 1 is red, but the red 1 is in the top spot.
Of the 10 worst states, 8 are red, 1 is purple and 1 is blue

The average ranking for a BLUE state is 17th
The average ranking of a RED state is 31st
The average ranking of a PURPLE state is 32nd

While there are certainly inherent socioeconomic differences from state to state, in my mind, this fairly well disproves the notion that conservative states are more business-friendly and drive greater growth.  By and large, liberal states are better places to live by the objective metrics.  Perhaps we should be paying more attention to what Mitt Romney did in Massachusetts rather than poo-pooing that experience.  And maybe, just maybe, Haley Barbour should stop lecturing Governors in New England and start listening to what they are doing.

The other thing interesting is to look at the exceptions.  Michigan is a rare underperforming blue state.  Why?  It made itself into a banana republic in the 70s by tethering its entire fate to the auto industry - an industry that has become more automated (requiring less workers), more diversified (foreign manufacturers and new entrants locating outside Michigan) and more cyclical (car sales crashed in the late 2000s.)

Utah, on the other hand, leads all states but is the only red state in the Top 10.  What are they doing right?  They've done tourism right, with winter sports growing in the United States and Utah being a very affordable location.  They've grown the options for nightlife well beyond anything imaginable 20 years ago.  And they've mined their inherent natural resources at a time when commodities are rising.

I'm a big believer that data rather than dogma tells you interesting things.  Have a different take?  I welcome your thoughts. 

Merry Christmas and Happy Holidays, everyone.

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Tuesday, December 20, 2011

A Brokered Convention? Only In Our Dreams, Endorsing Mitt Romney

The Fantasies of Political Wonks
In what can only be described as an unstable race for the Republican nomination this year, we have seen our share of twists and turns.  New leaders seem to emerge every week as the "anybody but Romney" crowd, a collection of social conservatives mad at has prior flip-flops and Tea Party activists, who are livid that a man whose health care plan was the model for Obamacare would even be considered, gyrate from candidate to candidate, looking for their perfect match.

All this unrest has caused a growing number of political observers to questions whether the GOP may be headed for a brokered convention, that is a convention that would start with no candidate having the majority of the delegates.  New rules requiring early primary states to award delegates proportionally rather than winner take all contribute to this theory.  George Will, long an advocate for alternative choices to the existing field has written a full column proclaiming the possibility.

It is an admittedly tantalizing thought for a political observer - the notion of a political convention that is not a carefully put together piece of public relations, as all of them have been for almost 50 years, but rather a true meeting of party members to figure out what the heck they are going to do.  And the unpredictability would be fascinating - a winner could emerge out of the current field or an entirely new face could ultimately get the nod.

The only problem is that it simply isn't going to happen.  In order for a brokered convention to take place, you need at least three strong candidates that last most of the primary race.  If you have two, somebody wins a majority and gets the nomination - if you need proof of this, look no further than 2008 where two strong candidates for the Democratic nomination battled to the bitter end but did not produce a brokered convention.

Who would those 3 candidates be?  Clearly Mitt Romney will be one of them.  Newt Gingrich might be a candidate, but only if he wins Iowa, a situation that looks increasingly unlikely.  His supporters are likely to abandon en mass if he has a poor showing in the first two states.  Rick Perry?  It's possible if he pulls off a miracle in Iowa.  He's the best funded of the "not Mitt's" and well organized.  But he and Gingrich would be able to survive if they are both in the race, they will have to consolidate to one.   Jon Huntsman?  Can't break out of single digits.  Michelle Bachmann?  Been there, tried that, back down to 10% or so.  Rick Santorum?  Has never been above 6%.  Ron Paul?  He can raise money and fight to the end, but will he be a credible candidate garnering a lot of delegates?  Maybe, but I have to imagine that other than his core supporters, sooner or later the GOP crowd will realize how much of a disaster he'd be as the actual nominee and shy away.

So it appears likely to be Romney vs. somebody, that somebody being whoever can consolidate most of the opposition.  A three-way race coming out of the first 4 races that could lead to a brokered convention seems highly unlikely. 

Mitt Romney for the GOP Nomination
For whatever it's worth, I have decided to support Mitt Romney for the GOP nomination.  He is not the ideal Presidential candidate.  The criticisms of his flip-flops are utterly fair, as he has been all over the map on a whole host of social and economic issues.  But when I consider the alternatives, I think he is by far the best candidate, by virtue of his public and private sector experience, his strong leadership in a divided Massachusetts and the relatively low risk he would pose on foreign affairs.  Consider the alternatives:

Newt Gingrich - a good idea guy but a horrible leader.  Heck, nobody in Congress when Newt was leading it wants him and he was run out of town.  Also a caustic, arrogant man would make a horrible GOP candidate in the general.

Rick Perry - sorry, your IQ has to be higher to ride the ride.  Nice story in Texas, but he has been an utter disaster as a candidate.  Pass.

Michelle Bachmann - aside from her highly radical views, she has demonstrated zero leadership capability in the house and I'd be scared to death if she made it to the White House.

Ron Paul - I respect the consistency of his conservative philosophy, but once you get over enjoying the things he's been right about (The Fed, Iraq, etc.) you realize that he is quite a radical.  He would completely remove us from the world stage and cut even the most basic government programs. 

Rick Santorum - the champion of right-wing social engineering is on my list of least-favorites.  He has shown well in the debates, but his views would take us back 30 years of social progress.

Jon Huntsman - I thought very seriously about throwing my support behind Huntsman, but he is too far gone to have a chance.  If I got to individual pick the nominee, the former Utah Governor, former Ambassador to China and politically moderate Huntsman would be my guy.  But he can't win.  And in the choice between Romney and the other viable alternatives, I pick Romney every time.

Only a couple of weeks until the actual votes start getting cast!

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Thursday, December 15, 2011

Can Mitt Romney Deliver the One-Two Punch?

In a nomination fight that thus far has been appropriately centered around the debates, tonight's debate is the highest-stakes contest yet, for a number of reasons.  First, it is the last time that all of the candidates will be on stage together before the first-in-the-nation caucuses in Iowa on January 3rd (there are two additional debates between the Iowa Caucuses and the New Hampshire primary.)  Second, being a weekday evening debate on Fox News, it is highly likely to get amongst the highest viewership of any of the recent debates.  Third, support is still very soft among the Republican electorate for all of the candidates and so significant shifts in the polling are still not only possible but highly probable.  The question is in what direction.

Mitt Romney has been quietly making headway over the course of the past week.  He hasn't scored any big knockdowns against Newt Gingrich, but Gingrich's support has slowly started to soften as potential voters begin to evaluate him on his own merits rather than as simply the latest "not Romney" choice.  Also, both Romney and Rick Perry have considerably stronger ground organizations and greater financial resources and are spending like crazy to unseat Newt.

We could see an epic moment that moves the polls.  But if we don't, what will happen over the course of the next couple of weeks?

First, let's understand that while history doesn't indicate that either Iowa or New Hampshire individually is particularly predictive of outcomes, it is almost impossible to win the nomination without winning one of the two.  Looking back at competitive GOP nomination fights starting in 1972 (when Iowa's caucus moved up to its current position), here is how the eventual nominees fared in the contests (I've excluded re-election campaigns where there wasn't meaningful competition - in those cases, the nominees obviously won both contests.)

1976 - Gerald Ford - won Iowa and New Hampshire
1980 - Ronald Reagan - lost Iowa, won New Hampshire
1984 - Not Competitive
1988 - George H.W. Bush - lost Iowa, won New Hampshire
1992 - George H.W. Bush - won Iowa and New Hampshire
1996 - Bob Dole - won Iowa, lost New Hampshire
2000 - George W. Bush - won Iowa, lost New Hampshire
2004 - Not Competitive
2008 - John McCain - lost Iowa, won New Hampshire

So of the 7 nominees in competitive races, 2 won both races and the other 5 won at least one of the two.  4 of the 7 won Iowa and 5 of the 7 won New Hampshire.

Clearly, you can afford to lose one of the two and still get the nod, but winning without at least one of the two hasn't been done in recent history.

Mitt Romney, for all of his soft support, is still a huge favorite to win in New Hampshire.  He has a geographical advantage, being Governor of a neighboring state, he is popular with moderates and independents that have a huge influence on the primary race in New Hampshire's open primary system and he has an average of about a 10 point lead in the polls there.

So Mitt can clear his long-uncertain path to the nomination if he finds a way to land a knock-out punch in Iowa.  But Iowa is very unpredictable at this point.  Newt Gingrich still leads on paper in 2 out of the 3 polls published this week, although Romney leads the third.  But Newt's ground game being week could be very damaging in notoriously hard-to-poll-for caucuses, given that getting a caucus vote involves getting someone to a meeting place and having them stay for hours at a time to be publicly counted, not simply getting them to show up to a poll to vote.  And Ron Paul, darling of the Tea Party and libertarians everywhere, is lurking in the wings with his rabid supporters, consistently only a few points out of the lead.  And rest assured, his supporters WILL show up.  Mitt Romney, though his supporters are soft, has a fantastic ground organization to turn out the would-be supporters.

It's actually close to a pick 'em race in Iowa given all these factors.  A Romney win in Iowa would probably come close to ending the race after New Hampshire, since his one-two punch would be almost impossible to overcome, even if he lost South Carolina.  A Ron Paul win would make for an entertaining showdown between Romney and Paul down the road, as Paul is almost certainly in it for the distance, but few take Paul's chances at winning the actual nomination seriously, and it would likely be a complete disaster for the GOP if it happened.  A Newt win in Iowa sets up a pick 'em horse race for the nod.  So the outcome of Iowa is critical to the whole thing.

Can Romney deliver the one-two punch and sew up the nomination?  Tonight may be our first indicator.

Wednesday, December 7, 2011

When You Can't Beat Mr. Generic

Is Newt Gingrich the front-runner in the GOP race?  It's a close call.  Gingrich has healthy leads in the early caucus and primary states, with the exception of New Hampshire and leads nationally.  The latest polling averages, which are somewhat in flux following Herman Cain's exit, but are trending towards Gingrich as a result of that line-up change are as follows:
Iowa: Gingrich +14%
New Hampshire: Romney +12%
South Carolina: Gingrich +21%
Florida: Gingrich +24%
Nationally: Gingrich +13%

If the primaries were all held today, I have no doubt that Gingrich would be the nominees.  But, as a friend of mine is fond of saying, if the election were held today, we'd all be a bit confused, because we thought it was scheduled for later.

Romney still leads in the betting money, although the gap has narrowed.  He is now 46% to win the nod on Intrade, with Gingrich up to 35%, Jon Huntsman at 8% and Ron Paul at 7%.  4% belongs to the collection of "all other" that includes Bachmann, Perry, Santorum and whatever other also rans you want to throw in the mix.

So, it's a 4-way race, but really a 3-way race if you exclude the crazy money behind Ron Paul (not going to happen...I'll give you those 15:1 odds all day long, just send your checks in), maybe a 2-way race if you don't think Jon Huntsman has a shot (I'm not ready to totally write him off, but I would consider those odds optimistic, to say the least.)

So, is Gingrich the front-runner?  Not clearly yet, but he's trending that way.  You can forgive the betting public for not being full believers yet - they've seen a lot of people lead the polls briefly and fade fast.  Gingrich seems a little more sticky than Trump, Bachmann, Perry and Cain and he is certainly better known.

But let's play along for a second.  Let's say Newt gets the nomination.  He has a big problem in the general.  People like him a whole lot less than a "generic" Republican.

The polls bear out the huge headwind.  President Obama is at the low point of his popularity, with his approve minus disapprove floating around the -10% range.  In other words, if the election were today and it were an up or down vote on Barack Obama, the President would lose by 10 points.

If you pit the President against an unnamed Republican, he fares pretty close to that 10 point margin.  The latest Rasmussen tracking poll (the only recent poll pitting Obama against an unnamed Republican) shows the President trailing "Mr. Generic" by 8%.

But the President won't be running against Mr. Generic.  If he runs against a different Mr. G, Mr. Newt Gingrich, he fares a whole lot better.  Against Newt, the President leads by an average of 5% nationally in recent polls.  He leads comfortably in the critical swing state of Colorado.  He leads by healthy margins in Iowa and New Hampshire.  He is ahead in Florida.  He's even in John McCain's Arizona.

If this is what Newt Gingrich looks like against Obama when Obama's approval rating is this bad, how ugly would this map look for Gingrich if the economy recovers or Obama's popularity recovers?

What the heck is the GOP thinking?

Saturday, December 3, 2011

Romney Needs Some Offense, Cain Exits Stage Left, A Republican President and Democratic Congress?

Defense Doesn't Work When You Are Behind
Playing it safe in a Presidential primary is a great strategy when you are sitting on a big lead and simply waiting out the clock until the actual voting begins.  Mitt Romney has been doing it basically since the start of the primaries.  Sure, he took on Rick Perry during Perry's momentary surge on immigration.  He definitely fired away at Herman Cain's 9-9-9 plan when it briefly looked like Cain might be a contender.  But he never really got down and dirty, stretching Reagan's 11th Commandment to Republicans (to not attack other members of your party), because, well, up until now he didn't have to.

From the very early contenders, one-by-one, anyone approaching being able to challenge Romney has done a good job of disqualifying himself or herself.  Trump didn't run.  Bachmann flubbed very basic facts.  Perry talked and acted downright stupidly.  Herman Cain...well, more on that later, but let's just say he made a few errors.  But the wily old former Speaker of the House Newt Gingrich?  He's made virtually no errors so far.

Sure, he consulted for Fannie Mae.  Yes, he's been twice divorced, at least once under very ugly circumstances.  But he's been teflon so far.  Conservatives like Romney because he is one of them, his views on immigration notwithstanding.  Party elites are starting to take him seriously, because he's played the game in Washington before and presumably knows how to run a campaign.  And Newt stayed above the fray in all the debates, refusing to say a negative thing about the other contenders, largely because they allowed him to get away with that and never challenged him directly.  The debates, which have been probably more critical this year than in any prior election cycle, are his home field.

Romney is still the betting favorite.  Intrade odds peg Romney's chances at the nomination at 49%, Newt's at 35% (Huntsman and Paul are at 6%, Perry at just under 3%.)  This is largely because Romney has been a steady-Eddie, always near the top of the polls, while other candidates rise and fall.  And he's been my favorite for the nomination from the get-go.

Not anymore.  For the first time, I have serious doubts about Romney's ability to win the nomination.  Before you think I'm one of those commentators that jump their predictions based on the latest polls, go back and read my writing when Bachmann, Perry and Cain had their surges.  In all 3 cases, I stated that I strongly believed that they would fade quickly and that Romney would be back on top.  But Newt is different.

First of all, we've had two debates since he surged to the lead in the national polls and, rather than start to fade, as the other short-lived leaders of the race did, Newt is actually strengthening.

Secondly,  Newt is strong in all the key early states except New Hampshire (Romney still comfortable owns that one) and could very well sweep Iowa, South Carolina and Florida by decisive margins, which would make overcoming his momentum extremely difficult.  At this writing, his poll averages in the 4 early states are +14% in Iowa, -18% in New Hampshire, +23% in South Carolina and +24% in Florida.

Third, time isn't on Romney's side this time.  We are 31 days from the Iowa Caucuses.

Romney has to do SOMETHING to go on offense and change the trajectory of the race.  And right now, he's doing all the wrong things.  He turned down a chance to debate Gingrich one-on-one this month, allowing Huntsman to steal the thunder of an event that will now undoubtedly erode Romney's support, regardless of the outcome (if Gingrich performs well, he will solidify his support, if Huntsman outperforms him, he will steal moderate votes from Romney.)  He was an absolute train wreck this past week in a one-on-one interview with Fox News anchor Bret Baier, one of the few he has given.

There is a full-field debate tonight and Romney really needs to push hard on offense to change the trajectory of the race.  If Iowa were today, Romney would be on a path to lose.

Herman Cain, We Hardly Knew You
Comedy writers everywhere shed a tear today when it was learned that Cain would likely announce today in Atlanta that he was dropping out of the Presidential race.

It will soon be forgotten that for a brief period, Cain actually led in the national polls for the nomination.

The guy who gave us 9-9-9, comically uninformed answers to questions about foreign policy and a sordid set of allegations around his dealings with women will likely soon be gone from the race, a month before the voting even started.

As I said a few weeks ago, is there any doubt left that Tim Pawlenty is kicking himself for dropping out of this race?

Throw Out All Them Bums
President Obama's approval has dropped into the low 40s and we appear to be set up for a very competitive race for President only because of an exceptionally weak GOP field.  He has some hope in the form of a slightly improving economy and the likelihood that he will face either a polarizing figure (Newt Gingrich) or a wish-washy flip-flopper (Mitt Romney) in the general.  And he will have lots of money.  He's still a very slight betting favorite to win re-election, but at this point the outcome of the Presidential race is anyone's guess.

The story that isn't making any headlines, but could loom large in the 2012 races is the anti-incumbent and therefore largely pro-Democratic sentiment with regards to House races.  Generic polling favors Democrats (by a point or two) for the first time since 2008.  The GOP has tough turf to defend, holding virtually all the swing districts.  I'm not ready to say that the Democrats have a good chance to take back the House - redistricting puts them at a disadvantage, as does the large majority the GOP currently holds, but the possibility for significant gains by the Dems next November is looking like a real possibility for the first time. 

The Senate still looks bleak for the Democrats, with a very tough map to defend.  If they could eek out holding onto a narrow majority, it would be a huge victory for them, but that would basically mean winning almost all of the swing races.

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