Sunday, February 5, 2012

Why Romney Will Win the Nomination and Why It May Not Matter

Mitt Romney is surging.  With a decisive, although completely expected, win in the Nevada caucuses, Romney has 2 in a row.  Rick Santorum has clearly faded from serious contention, finishing a distant 4th in the race with a projected 11% of the vote (all votes were not in and counted as of this writing, so it could shift still.)  Ron Paul, as he always does, continues to outperform in caucus states, taking 18% of the vote in Nevada, but there is no conceivable map to him securing the nomination, although he will continue to make noise and try to pick off delegates where he can to support his cause of libertarian freedom.

And then there is Newt.  Defiant to the last, Newt held a press conference last night in lieu of a rally and continued to talk smack about Romney, essentially saying that there is no real choice in November if Romney is the nominee.  He has pledged to stay in the race until the end, regardless of the outcome.

The rest of the calendar for the month is somewhat quiet until the end.  We will see caucuses in Colorado and Minnesota on Tuesday, as well as a primary in Missouri which doesn't count (delegates are awarded in a March caucus - I'm not even sure all the candidates are on the ballot.)  Then Maine next week, then over a two week break until the bigger paydays of Arizona and Michigan.

After a Washington Caucus March 3rd, then, the real big prize, Super Tuesday, takes place on March 6th, with Alaska, Georgia, Idaho, Massachusetts, North Dakota, Ohio, Oklahoma, Tennessee, Vermont and Virginia all holding events on the same day. 

The conventional wisdom is that Newt Gingrich will try to survive until Super Tuesday, since he seems very unlikely, given the demographics, to win any of the races in between.  But even on Super Tuesday, while he seems sure to take Georgia and will have a good shot in Oklahoma, Tennessee and Virginia, it seems extremely hard for him to construct a map that gives him a lead coming out of Super Tuesday.

But the nature of delegate awards works to Gingrich's advantage to stay around and make hay, even if he ultimately loses. 

You see, it takes 1,144 delegates to win a majority of the 2,286 that will attend the Republican convention in Tampa including 168 party leaders and 2,118 that are awarded in the 50 primaries and caucuses over the winding primary season.

To date, because of a series of penalties to almost all of the early states except Iowa for violating party rules around the timing of their contests, only 140 have been awarded - and of those 140, Mitt Romney has only won 72 (this number will probably increase by a few when the final count is in from Nevada.)

Between now and Super Tuesday, the intervening contests will award another 202.  Then, on Super Tuesday, an additional 437 will be awarded. 

So, while the next few weeks will award more delegates than the first 5 contests to dates and Super Tuesday will award more delegates than all contests prior to it, at the end of the night on March 6th, there will still have only been 779 awarded, a mere 37% of the ones to be awarded in primaries and caucuses and far fewer than needed to lock up a nomination.

So Mitt Romney will have to solider on...and hopefully develop some better talking points than not being concerned about the poor.

If the Economy Soars, It's 1996 All Over Again
Since his first two years in office, the question on the table of political pundits has been which other Presidency the Presidency of Barack Obama will resemble at re-election: Jimmy Carter or Bill Clinton.

Both Carter and Clinton were swept into office as outsiders at a time when the economy was sputtering and people were looking for change.  Both made significant policy changes versus their Republican predecessors.  And both faced public backlash for changing too much too fast, losing many seats in the mid-term elections - in 1978 for Carter and in 1994 for Clinton.

Obviously, despite the parallels in their first two years, Carter and Clinton's arc diverged widely by re-election night.  In 1980, Carter was destroyed, receiving less than 45% of the two-party vote and only 41% of the vote overall (Independent John Anderson explains the difference) and lost 44 states.

In 1996, Bill Clinton was resoundingly re-elected, with the least competitive Republican showing since Barry Goldwater, garnering almost 55% of the two-party vote (50% of the vote overall, due to Ross Perot's second independent run) and winning 379 electoral votes in 30 states.

The difference between Carter and Clinton was the arc of the economy headed into the election.  The Carter era economy was still stagnant, with inflation still destroying savings and a high degree of national pessimism.  The economy was booming under Clinton, with the effects of the 1990/91 recession, caused by the savings & loan busts, long gone, the budget on its way to balance and unemployment falling fast.

Obama will not be at either extreme.  The economy will not be as bad as in 1980, nor as good as in 1996.  But how the economy does between now and November will have a profound impact on the President's re-election chances.

And on that front there is good news.  On Friday, the Bureau of Labor Statistics reported far better jobs news than expected, with official unemployment falling to 8.3%, it's lowest level in over 2 years and job creation was a net positive 243,000, the best result in 3 years and made even better by the fact that private sector job growth was actually 257,000, with a 14,000 reduction in government employment offsetting this to produce the total number.

It's one month, but it's a data point that confirms a trend - the economy is healing.  Job growth has been positive for almost two years now and has been accelerating.  Unemployment peaked at 10.0% in October of 2009 and has been falling since.

Lots of macroeconomic events could reverse the trend - the European debt crisis could torpedo the world economy.  Political conflict in the Middle East could cause a big spike in oil and therefore other commodities.  So an improved economy in November is not a lock, but now appears highly likely.

In addition to the economy always being the most important issue in a Presidential election, it is doubly true this time as the GOP really has precious little else to run against Obama on.

Foreign policy?  Would you want to make this the issue against the guy who got Bin Laden, killed a dozen top Al Qaeda leaders, got Qaddafi, exited an unpopular war in Iraq with dignity and is drawing down from an unpopular war in Afghanistan?  Good luck.

Social policy?  Obama is to the right of the American people on many social issues.  A narrow majority of Americans now favor legalizing gay marriage and legalizing marijuana (views to the left of the President) and a large majority continues to favor legal abortion.  Social issues may play well in a Republican primary, but running to the right of a President is a loser in a general election.

Health care?  If someone other than Mitt Romney were the nominee, this might play, as a majority still opposes Obamacare.  But Romney doesn't have a leg to stand on in this debate as he continues to do the tap-dance that his plan in Massachusetts, which, despite the protestations from Ann Coulter, obviously is nearly identical to Obamacare (and the model for it in many ways), was great for Massachusetts, but horrible for the rest of the country, he is just engaged in a debate he can't win.

That leaves the economy.  If it continues to improve, Obama is a lock for a second term.  If it falters, it might give Mitt an opening.

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