If you read this space frequently, you know that I firmly believe in the provable theorem that polling more than a year out from a Presidential race is not fairly predictive of the outcome of the actual race. From the unbeatable George Herbert Walker Bush to the clear one-terms Ronald Reagan and Bill Clinton, political comebacks and political disasters abound. Recency is everything in politics.
So it is with the 2012 race. President Obama could enjoy a reviving economy and go on to win decisively. He could continue the long popularity slide of his Presidency to date and wind up with 1980-style whipping. Whether you like or dislike the President, it's hard to deny that none of us, with any kind of reasonable certainty, can know his fate.
Having said that, I'm all about looking at races and understanding where they stand. So, let's look at the latest, post-Pawlenty, post-Perry announcement polling and see where the 2012 race might wind up. Gallup has just released a series of heads up match-ups for the Presidency and they look as follows:
Obama vs. Romney - Romney +2%
Obama vs. Perry - EVEN
Obama vs. Bachmann - Obama +4%
So, let's talk about the map where Obama enjoys something between a 4 point edge and a 2 point deficit.
First, let's safely assume that any state John McCain won will be a safe GOP state in a close race (Obama won by more than 7 points nationally in 2008):
This gives, to the prospective GOP nominee:
Wyoming, Oklahoma, Utah, Idaho, Alaska, Alabama, Arkansas, Louisiana, Kentucky, Tennessee, Kansas, Nebraska, West Virginia, Mississippi, Texas, South Carolina, North Dakota, Arizona, South Dakota, Georgia, Montana and Missouri
This gives the GOP nominee 181 electoral votes with the new census counts.
On the flip side, let's assume that any state that Obama won by 15 points or more is a relatively safe Democratic state (the worst-case scenario in this polling is less than a 10 point national swing from the 2008 vote.)
To Obama, this therefore gives:
District of Columbia, Hawaii, Vermont, Rhode Island, New York, Massachusetts, Maryland, Illinois, Delaware, California, Connecticut, Maine, Washington, Oregon, Michigan, New Jersey and New Mexico
This gives Obama 208 electoral votes by the new count.
On the GOP side, let's assume that the two really close states in 2008, which were exceptional outliers on the Democratic side, do not repeat. Namely, let's put North Carolina and Indiana in the GOP count.
This adds 26 to the GOP side and takes the GOP total to 207.
So we are building off a base of 208 for the GOP and 207 for the Democrats, with 270 votes needed for victory.
The states in play are:
Wisconsin, Nevada, Pennsylvania, Minnesota, New Hampshire, Iowa, Colorado, Virginia, Ohio and Florida
So what are some of the strategies that a GOP candidate looking to unseat Obama could use to get to 270?
(1) Take the closest states from 2008
If the GOP candidate simply went in rank order of the next-closest states, they could target:
Florida, Ohio, Virginia and Colorado. Between these 4 states lie 68 electoral votes, vaulting a prospective GOP nominee to 276 and winning the election.
(2) Go Big or Go Home
A variant of John McCain's strategy in 2008, simply target the big prizes. Aim for Florida, Ohio (which no Republican has EVER won without taking) and Pennsylvania. Between the 3, they hold 66 electoral votes, giving 274 to a GOP nominee who sweeps them.
(3) Go Hispanic
Put Rubio on the VP ticket and target pushing the GOP share of the Hispanic vote up from the 25% or so that John McCain enjoyed to a more respectable 35% or 40% and take the heavily Hispanic states. This means fighting for Florida, Colorado and Nevada, which would yield 43 electoral votes, pushing the count up to 250. The problem with this strategy is that you still need Ohio and even that is not quite enough, as it only raises the total to 268. You still need one more outlier state, possibly Iowa or Virginia to complete the sweep.
(4) Go for the Rust
Target economically depressed states. Ohio has been swamped by the recession, as have Florida, Nevada and Wisconsin. Those 4 get you to 269, which is enough to prevent a victory, although a GOP candidate would still need 1 more state to complete the sweep.
(5) The Southern / Flyover Strategy
The Northeast and Mid-West are Obama's wheelhouse, so why fight him there? Focus on taking back the South, namely Florida and Virginia and fight for flyover Iowa. This gets you to 250. Still some work to do, so go hard for Iowa as well, which gets you to 268...pick up one more state and you are there.
Strategies 1 and 2 seem by FAR the most feasible to me. The key issue with strategy #1 is that Virginia continues to trend blue, as does Colorado. Ohio and Florida certainly seem winnable to a GOP candidate. Strategy #2's greatest risk is Pennsylvania, which hasn't gone red in quite some time (24 years by 1988, to be precise.) Strategies 3, 4 and 5 just require too many resources in too many states with no room for error.
Interestingly, if you look back to 2008, I wrote extensively about the importance of Colorado in deciding Presidential races. Much of the attention in races is rightly focused on the biggest swing states of Florida, Ohio and Pennsylvania.
But, as I mentioned above, Pennsylvania is a long-shot for any GOP candidate in a close race. And Ohio and Florida are close to must-haves for a GOP candidate, but are, in and of themselves, insufficient to win.
Colorado didn't wind up getting a lot of press in 2008 because the race simply wasn't close enough and the election was basically decided before the polls even closed there -- once Obama took Ohio it was more or less curtains for McCain. But if you start with the most Democratic states in 2008 and go down the list until you get to 270, you get to 263 without Colorado and 272 with it. Doing the same thing on the Republican side, you get to 266 without Colorado and 275 with it. So if the 2008 pattern holds, Colorado will be THE swing state.
Broaden out to the three states closest to that inflection point and you see they are Iowa, Colorado and Virginia.
Obama has 257 without them, so he wins if he takes Virginia (+13 takes him to 270 EV's) or with both Iowa AND Colorado (+15 takes him to 272). Conversely, a GOP candidate would have to take Virginia AND either Iowa or Colorado.
Colorado and/or Virginia could be the key to the whole thing. Obama certainly needs 1 of the 2 in most feasible scenarios and the GOP may well need both. Here's to shifting political power in the US.
Of course, if it's a 10 point rout in one direction, this discussion is all academic. But it's been a long-time since we had a 10 point rout (28 years on election day.)
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Monday, August 22, 2011
Sunday, August 21, 2011
Is Rick Perry Ready for Primetime?, Where Will the Jobs Come From?
Federal Reserve Treason?
Texas Governor Rick Perry's entry into the 2012 Presidential race has turned the contest on its head. Perry, hardly a well-known national figure before this year, instantly became the national man to beat, surging to the front of polls of Republicans. Well Romney still holds a comfortable lead in New Hampshire and Michelle Bachmann will undoubtedly be competitive with Perry in the Iowa Caucuses (Romney is more or less conceding Iowa), Perry has jumped to first in the betting odds overnight (his odds of receiving the nomination are 37%, Romney's are 30%, according to Intrade.)
But Perry has stumbled out of the gate, stopping just sort of calling Federal Reserve Chairman Ben Bernake (who has originally appointed by President George W. Bush) a traitor and implying he would get roughed up if he came to Texas. He has Karl Rove calling him a lightweight and major GOP figures questioning his intellect.
The George W. Bush comparisons are flying fast and furious, and for obvious reasons. Perry followed Bush as Governor of Texas, both have stepped on their words at times and questions about the intellectual horsepower of both persist. And both have that signature Texas twang.
I look at Rick Perry and see a different parallel. In 2008, a conservative, experienced, southern politician was more or less begged by conservatives in the establishment to get into a race that was being fought between a moderate establishment candidate and a series of conservatives who couldn't win a general election. When this candidate finally got in the race late, he instantly vaulted into the top 2 in polling, but quickly flamed out as he ran a horrible campaign that failed to live up to the pre-candidacy expectations. That man was former Tennessee Senator and former star of Die Hard and Law and Order, Fred Dalton Thompson. I think Perry is this year's Thompson. Conservatives liked the idea of his candidacy but will soon sour on the reality. Assuming Perry shows up for the debate September 7th, we'll get the first glimpse of if I'm right.
Where Will the Working Class Work?
A stable democracy demands an economy where the working and middle classes exist and can work in jobs that support a decent standard of living. Throughout history, different structures have emerged that support growing economies in ways that support broad employment. Agrarian economies had the population working in fields, planting and harvesting crops. After the industrial revolution, the working class moved to higher value work in factories as farming became more automated. The 1990s saw the dawn in the US of the service economy, with more people working in call centers, retail stores and financial services and fewer in factories as manufacturing started to move abroad.
So, with 9% unemployment now, where will the jobs come from? Apple, the crown jewel of American innovation and the most value company in the world doesn't even crack the top 50 employers in the US. The top 5? Wal-Mart, McDonald's, UPS, Sears and Home Depot. Three retailers, a fast food restaurant and a parcel delivery service. It hardly feels like the 21st century economy.
The risk, of course, if broad swaths of the population either remain unemployed or work for peanuts (or Big Macs) at McDonald's and economic wealth continues to concentrate amongst the gifted few that land the big dollars in capital markets or as an executive at Apple, is that the majority of Americans will no longer feel the system works or that they have a stake in the economy. The lack of a stable middle class is extremely destabilizing, as is evident in much of the third world.
So how do we solve this? We should have an industrial policy that focuses on the industries that generate middle class jobs, as Germany has done with high-end manufacturing. Our problem is, we have no political will to create such a coordinated policy and the deficit taints the possibility of serious reinvestment in the economy.
Until that changes, expect the wealth gap to continue to grow.
If you like this site, tell your friends.
Texas Governor Rick Perry's entry into the 2012 Presidential race has turned the contest on its head. Perry, hardly a well-known national figure before this year, instantly became the national man to beat, surging to the front of polls of Republicans. Well Romney still holds a comfortable lead in New Hampshire and Michelle Bachmann will undoubtedly be competitive with Perry in the Iowa Caucuses (Romney is more or less conceding Iowa), Perry has jumped to first in the betting odds overnight (his odds of receiving the nomination are 37%, Romney's are 30%, according to Intrade.)
But Perry has stumbled out of the gate, stopping just sort of calling Federal Reserve Chairman Ben Bernake (who has originally appointed by President George W. Bush) a traitor and implying he would get roughed up if he came to Texas. He has Karl Rove calling him a lightweight and major GOP figures questioning his intellect.
The George W. Bush comparisons are flying fast and furious, and for obvious reasons. Perry followed Bush as Governor of Texas, both have stepped on their words at times and questions about the intellectual horsepower of both persist. And both have that signature Texas twang.
I look at Rick Perry and see a different parallel. In 2008, a conservative, experienced, southern politician was more or less begged by conservatives in the establishment to get into a race that was being fought between a moderate establishment candidate and a series of conservatives who couldn't win a general election. When this candidate finally got in the race late, he instantly vaulted into the top 2 in polling, but quickly flamed out as he ran a horrible campaign that failed to live up to the pre-candidacy expectations. That man was former Tennessee Senator and former star of Die Hard and Law and Order, Fred Dalton Thompson. I think Perry is this year's Thompson. Conservatives liked the idea of his candidacy but will soon sour on the reality. Assuming Perry shows up for the debate September 7th, we'll get the first glimpse of if I'm right.
Where Will the Working Class Work?
A stable democracy demands an economy where the working and middle classes exist and can work in jobs that support a decent standard of living. Throughout history, different structures have emerged that support growing economies in ways that support broad employment. Agrarian economies had the population working in fields, planting and harvesting crops. After the industrial revolution, the working class moved to higher value work in factories as farming became more automated. The 1990s saw the dawn in the US of the service economy, with more people working in call centers, retail stores and financial services and fewer in factories as manufacturing started to move abroad.
So, with 9% unemployment now, where will the jobs come from? Apple, the crown jewel of American innovation and the most value company in the world doesn't even crack the top 50 employers in the US. The top 5? Wal-Mart, McDonald's, UPS, Sears and Home Depot. Three retailers, a fast food restaurant and a parcel delivery service. It hardly feels like the 21st century economy.
The risk, of course, if broad swaths of the population either remain unemployed or work for peanuts (or Big Macs) at McDonald's and economic wealth continues to concentrate amongst the gifted few that land the big dollars in capital markets or as an executive at Apple, is that the majority of Americans will no longer feel the system works or that they have a stake in the economy. The lack of a stable middle class is extremely destabilizing, as is evident in much of the third world.
So how do we solve this? We should have an industrial policy that focuses on the industries that generate middle class jobs, as Germany has done with high-end manufacturing. Our problem is, we have no political will to create such a coordinated policy and the deficit taints the possibility of serious reinvestment in the economy.
Until that changes, expect the wealth gap to continue to grow.
If you like this site, tell your friends.
Sunday, August 14, 2011
Bachmann Wins Straw Poll, Perry In, Pawlenty Out
Bachmann Beats Back the Ron Paul Machine
Ron Paul has a knack for good showings in straw polls, a fact evidenced many times over his previous attempts at running for President. His support base is obviously a minority of the Republican party, but they are highly enthusiastic, show up and Paul is always well funded. So it is not insignificant that Michelle Bachmann was able to show up as a Presidential newbie and beat Paul in the Ames Iowa Straw Poll, the first official test of GOP Presidential candidates in Iowa.
Front-runner Mitt Romney had basically not decided to participate, probably a savvy move since he was not going to win either the straw poll or the Iowa caucuses, which cater to the more conservative wing of the party. His strategy is to dominate the more moderate New Hampshire primary and ride that win to national victory.
Jon Huntsman was also not in the game, as an even more moderate candidate than Romney. His strategy is...well...I'm honestly not really sure. He has no shot that I can see against Romney in New Hampshire and will get swamped by the right wing in conservative states like Iowa and South Carolina. But I digress.
The results of the straw poll were as follows:
Michelle Bachmann -- 29%
Ron Paul -- 28%
Tim Pawlenty -- 14%
Rick Santorum -- 10%
Herman Cain -- 9%
Rick Perry (Write-In) -- 4%
Mitt Romney -- 3%
Newt Gingrich -- 2%
Various Others -- 1% (Jon Huntsman - 0.4%, Thaddeus McCotter 0.2%, etc.)
These results solidify Bachmann's standing as the Tea Party alternative to the more mainstream Romney, but she has to look over her shoulder at Rick Perry, a Tea Party darling who has actually governed.
So, in my book the winners are:
Bachmann -- solidified as a legitimate candidate.
Paul -- encouraging enough to him to keep running (although he has no shot at actually getting the nomination.)
Santorum -- 10% means that the underfunded Santorum will keep getting invited to debates although I give him zero chance of getting the nod.
Cain -- similarly, a 9% showing makes him a legitimate alternative, but again, with no chance of the ultimate prize
The big losers:
Pawlenty -- staked his campaign on a win in Iowa (more on that in a second.)
Gingrich -- it is obvious at this point that the conservative establishment Republican delights neither conservatives nor the establishment. He should probably drop out, but I think he is enjoying the stage.
McCotter -- okay, he wasn't getting invited to debates anyway. But betting your whole campaign on Ames and getting 0.2% is pretty pathetic for the a guy who actually holds elected office.
Perry Gets In
Rick Perry will be THE subject of the next Republican Presidential debate on September 7th. And he is instantly in the top 2 candidates. He brings to the race an unblemished economic and social conservative and a great economic story in Texas. His liabilities will be that he is far less polished and likely not to be as strong a debate performer as front-runner Mitt Romney and that he has expressed some views in the past that would be huge liabilities in the general election, including expressing potential support for Texas succession (although if you read the actual quote, it is less extreme than it is usually represented, but still bad) and a very absolutist view on social and religious issues.
His candidacy clearly hurts Michelle Bachmann as he is a more polished and accomplished representative of the same basic points of view. Bachmann inspired early and is still in the game with the Ames win, but it gets harder and harder for her, with the race looking a lot like a mainstream New England moderate pitted against a southern conservative, a classic GOP civil war.
Pawlenty Out
Recognizing the reality on the ground, Tim Pawlenty is exiting stage left. It's a shame, in a way. Pawlenty had a great record as a moderate governor of a purple state. He was smart and accomplished. But Pawlenty never established a core constituency, moderates were already aligned to Romney and conservatives far preferred Bachmann or Perry. Pawlenty bet the farm on the Ames poll, and after not being able to crack the top 2, exiting stage left this morning.
This is a three-way race between Romney, Perry and Bachmann at this point. The others will make a little noise, Paul with libertarians, Santorum with social conservatives and Cain with the populist talk-radio crowd, but none can win the nod.
Lots more debates and lots of time to come. Heck, Sarah Palin could even get in (although I'd advise against it, I think she'd get rolled against this field.)
Let the games continue.
Ron Paul has a knack for good showings in straw polls, a fact evidenced many times over his previous attempts at running for President. His support base is obviously a minority of the Republican party, but they are highly enthusiastic, show up and Paul is always well funded. So it is not insignificant that Michelle Bachmann was able to show up as a Presidential newbie and beat Paul in the Ames Iowa Straw Poll, the first official test of GOP Presidential candidates in Iowa.
Front-runner Mitt Romney had basically not decided to participate, probably a savvy move since he was not going to win either the straw poll or the Iowa caucuses, which cater to the more conservative wing of the party. His strategy is to dominate the more moderate New Hampshire primary and ride that win to national victory.
Jon Huntsman was also not in the game, as an even more moderate candidate than Romney. His strategy is...well...I'm honestly not really sure. He has no shot that I can see against Romney in New Hampshire and will get swamped by the right wing in conservative states like Iowa and South Carolina. But I digress.
The results of the straw poll were as follows:
Michelle Bachmann -- 29%
Ron Paul -- 28%
Tim Pawlenty -- 14%
Rick Santorum -- 10%
Herman Cain -- 9%
Rick Perry (Write-In) -- 4%
Mitt Romney -- 3%
Newt Gingrich -- 2%
Various Others -- 1% (Jon Huntsman - 0.4%, Thaddeus McCotter 0.2%, etc.)
These results solidify Bachmann's standing as the Tea Party alternative to the more mainstream Romney, but she has to look over her shoulder at Rick Perry, a Tea Party darling who has actually governed.
So, in my book the winners are:
Bachmann -- solidified as a legitimate candidate.
Paul -- encouraging enough to him to keep running (although he has no shot at actually getting the nomination.)
Santorum -- 10% means that the underfunded Santorum will keep getting invited to debates although I give him zero chance of getting the nod.
Cain -- similarly, a 9% showing makes him a legitimate alternative, but again, with no chance of the ultimate prize
The big losers:
Pawlenty -- staked his campaign on a win in Iowa (more on that in a second.)
Gingrich -- it is obvious at this point that the conservative establishment Republican delights neither conservatives nor the establishment. He should probably drop out, but I think he is enjoying the stage.
McCotter -- okay, he wasn't getting invited to debates anyway. But betting your whole campaign on Ames and getting 0.2% is pretty pathetic for the a guy who actually holds elected office.
Perry Gets In
Rick Perry will be THE subject of the next Republican Presidential debate on September 7th. And he is instantly in the top 2 candidates. He brings to the race an unblemished economic and social conservative and a great economic story in Texas. His liabilities will be that he is far less polished and likely not to be as strong a debate performer as front-runner Mitt Romney and that he has expressed some views in the past that would be huge liabilities in the general election, including expressing potential support for Texas succession (although if you read the actual quote, it is less extreme than it is usually represented, but still bad) and a very absolutist view on social and religious issues.
His candidacy clearly hurts Michelle Bachmann as he is a more polished and accomplished representative of the same basic points of view. Bachmann inspired early and is still in the game with the Ames win, but it gets harder and harder for her, with the race looking a lot like a mainstream New England moderate pitted against a southern conservative, a classic GOP civil war.
Pawlenty Out
Recognizing the reality on the ground, Tim Pawlenty is exiting stage left. It's a shame, in a way. Pawlenty had a great record as a moderate governor of a purple state. He was smart and accomplished. But Pawlenty never established a core constituency, moderates were already aligned to Romney and conservatives far preferred Bachmann or Perry. Pawlenty bet the farm on the Ames poll, and after not being able to crack the top 2, exiting stage left this morning.
This is a three-way race between Romney, Perry and Bachmann at this point. The others will make a little noise, Paul with libertarians, Santorum with social conservatives and Cain with the populist talk-radio crowd, but none can win the nod.
Lots more debates and lots of time to come. Heck, Sarah Palin could even get in (although I'd advise against it, I think she'd get rolled against this field.)
Let the games continue.
Friday, August 12, 2011
A Feisty Debate
They Came to Play
Here is my quick review of debate performances from last night from the GOP candidates for President:
Mitt Romney -- on point, on message, side-stepped questions about his moderate record and venture capital past deftly. Lacked the passion to inspire the right, who didn't like him anyway, but continued to solidify his status as the mainstream front runner, a status he will need when Rick Perry gets in this weekend.
Michelle Bachmann -- a sub-par performance versus her coming out party at the last debate. Engaged in pointless squabbling with Tim Pawlenty which helps neither of them. Pawlenty is at about 3% in the polls...why is Bachmann wasting her venom on him when Romney is the real opponent?
Ron Paul -- debates just aren't his specialty. I have a soft spot for Paul and his credible and consistent commitment to libertarian values. But he is far too professorial and not nearly engaging enough at these forums. He wins points for being out front on auditing the Fed, a step the entire field has jumped on now but that Paul has been advocating for years.
Jon Huntsman -- utterly uninspiring. I give him points for sticking to his guns on his moderate positions, although that won't likely help him with the GOP primary and caucus crowd, except in open states, but Huntsman had very little in the way of original ideas or inspiration.
Newt Gingrich -- one of his best performances. For the first time, looked and sounded like a credible candidate, put forward real ideas and took on the moderators. Probably too little, too late for Newt, but fun to watch.
Tim Pawlenty -- didn't miss his second chance to go after Romney. Did a much better job of exposing his record than last time and had much more concise, coherent answers. Still a bit of a bore.
Herman Cain -- the fact that Romney was praising him shows you all you need to know -- Cain is a side show with no real chance.
Rick Santorum -- unexpectedly strong performance from the conservative firebrand. But he is in dead last in the polls, having failed to bring in even his conservative base. May not even get invites to future debates.
Winners?
Romney and Gingrich
Losers?
Bachmann (how fast is her star fading?), Huntsman
In my view, the door is still wide open for Rick Perry. I don't think any of the rest of the field can take down Romney.
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Here is my quick review of debate performances from last night from the GOP candidates for President:
Mitt Romney -- on point, on message, side-stepped questions about his moderate record and venture capital past deftly. Lacked the passion to inspire the right, who didn't like him anyway, but continued to solidify his status as the mainstream front runner, a status he will need when Rick Perry gets in this weekend.
Michelle Bachmann -- a sub-par performance versus her coming out party at the last debate. Engaged in pointless squabbling with Tim Pawlenty which helps neither of them. Pawlenty is at about 3% in the polls...why is Bachmann wasting her venom on him when Romney is the real opponent?
Ron Paul -- debates just aren't his specialty. I have a soft spot for Paul and his credible and consistent commitment to libertarian values. But he is far too professorial and not nearly engaging enough at these forums. He wins points for being out front on auditing the Fed, a step the entire field has jumped on now but that Paul has been advocating for years.
Jon Huntsman -- utterly uninspiring. I give him points for sticking to his guns on his moderate positions, although that won't likely help him with the GOP primary and caucus crowd, except in open states, but Huntsman had very little in the way of original ideas or inspiration.
Newt Gingrich -- one of his best performances. For the first time, looked and sounded like a credible candidate, put forward real ideas and took on the moderators. Probably too little, too late for Newt, but fun to watch.
Tim Pawlenty -- didn't miss his second chance to go after Romney. Did a much better job of exposing his record than last time and had much more concise, coherent answers. Still a bit of a bore.
Herman Cain -- the fact that Romney was praising him shows you all you need to know -- Cain is a side show with no real chance.
Rick Santorum -- unexpectedly strong performance from the conservative firebrand. But he is in dead last in the polls, having failed to bring in even his conservative base. May not even get invites to future debates.
Winners?
Romney and Gingrich
Losers?
Bachmann (how fast is her star fading?), Huntsman
In my view, the door is still wide open for Rick Perry. I don't think any of the rest of the field can take down Romney.
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Saturday, August 6, 2011
Osama Bin Who?, What to Make of the State of the Economy, Debate #3 Prepping
President Obama - At the Low Point
I remember when Osama Bin Laden was killed by a daring raid on his compound in Pakistan just a few months ago. Political pundits, both wishful Democrats and mainstream commentators were speaking of how this would seal the deal to re-elect President Barack Obama to a second term. I got a good laugh at the time. It isn't that President Obama didn't get a bounce in the polls as a result of the Bin Laden raid - he clearly did. For a fleeting second, we were just a bit more unified as Americans. It is just that I know how short the American attention span is. President George Herbert Walker Bush was flying at 89% approval in the spring of 1991, coming fresh off victory in the Persian Gulf. By November of 1992, his approval was 34% and he got a mere 38% of the vote in his attempt at re-election.
Whether President Obama is re-elected in November 2012 remains to be seen. As I just noticed, a lot can happen fast in American politics. What is clear is that the approval benefit that the President got from the killing of Osama Bin Laden has faded and then some. The last few weeks of debt-ceiling wrangling has taken its toll on his numbers, as evidenced below.
His monthly numbers put him at the low point of his Presidency. Being clearly into the negative numbers is perilous for a guy hoping to be re-elected. The gamblers on Intrade still think an Obama re-election is more likely than not (it is currently priced at a 54% probability), but less likely than at any previous point in his Presidency. Simply, unless the Republicans commit suicide with a candidate like Bachmann, the President will need to at least hold and probably improve his current job approval numbers to get four more years in the White House.
Correcting Stock Markets, Austerity and Debt Downgrades, Oh My!
The investment world took a collective gasp this week. It wasn't one event. In fact, in a lot of ways, the fundamentals were looking better. The debt ceiling was raised. The European central bank is looking into buying the debt of Italy and Spain, providing an under-pinning of support for the fragile Euro. Corporate profits are at record levels. But people are very nervous. And there are causes to be nervous.
1. Austerity
The debt deal will clearly lead to lower government spending, across the board, which has an anti-stimulative effect on an economy, at least in the near-term. $666B of the $787B in stimulus funds (85%), the keystone economic program of the Obama administration to date have already been spent. The "stimulus by another name" payroll tax credit expires at the end of the year. Extended unemployment benefits are also set to expire at the end of the year.
President Obama has called for extension of unemployment benefits, an extension of the payroll tax cut and increased spending on infrastructure, all of which sounds like stimulus without the President actually calling it stimulus. But is it realistic to spend more and tax less at the same time that the Congressional panel must find another $1.5 trillion in cuts or tax hikes over the next 10 years? It's hard to do deficit reduction and stimulus at the same time.
2. The Stubborn Jobs Picture
Hiring actually picked up a little in June, but progresses at an anemic pace. The 117,000 jobs created last month are scarcely enough to keep pace with population growth. The official unemployment rate remains a stubbornly high 9.1%. If you include those who have given up looking for work, it's an even-more depressing 10.9%. Include those working part-time who are trying to work full-time and you get the "underemployment" rate, a whopping 16.4%.
People who aren't working aren't generating economic output, paying taxes or spending money. Not a great place to be.
3. The Debt Downgrade
Standard and Poors downgraded the quality of U.S. Government Bonds from the highest rating of AAA, a rating U.S. debt has held for all of modern history, to its second-highest rating of AA+. This has received a lot of press, but is probably overblown. Treasury yields are near the lowest levels in modern history as the massive sums of cash not being used to grow the economy are finding their way to the "safe haven" of governmental debt. There simply is no other debt market that can hold that much cash and so it is highly likely that Treasury Yields will remain low of the near-term and the government will not have an issue finding a home for its debts.
Besides, let's be real...S&P doesn't exactly have a stellar track record. Those Collatoralized Debt Obligations that imploded the economy in 2008? AAA rated by S&P. AIG's debt in 2007? AAA rated by S&P. Is S&P really saying that governmental debt now is more risky than AIG or CDO's were then? Or perhaps they are just admitting that they aren't very good at projecting risk.
At any rate, the economy continues to limp along. Whether it will take a turn towards higher growth or slide back into a second recession is difficult to predict. But it will have a huge impact on the election.
Time for Another GOP Debate - What to Watch
Next Thursday at 9 PM ET, Fox News will host the third official GOP Presidential primary debate. I say third official, because the first debate was before the major players got in and therefore excluded key contenders like Mitt Romney and was not broadly watched. This debate should feature all the key players, except for the still-undecided Texas Governor Rick Perry, who really is the guy everyone wants to see.
What we should be watching is how hard the other candidates come after Romney, who is the clear front-runner at this point. Romney has been on lock-down during the debt ceiling discussion, stating no point-of-view. Are the other candidates going to call him on it? Go after him for Romney-care? Try to sell themselves as the more plausible alternative?
Tim Pawlenty was widely criticized for playing it very safe in the second official (but first broadly participated) debate and failing to go after Romney. His campaign is languishing, so don't expect that this time. Expect Bachmann to be full of fire, as she always is. And expect the others to attempt to do something to break themselves out of the pack. I'm just not convinced that any of the present field can beat Romney or that anybody other than Romney can beat Obama. But, like I said, Rick Perry isn't in the game yet.
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I remember when Osama Bin Laden was killed by a daring raid on his compound in Pakistan just a few months ago. Political pundits, both wishful Democrats and mainstream commentators were speaking of how this would seal the deal to re-elect President Barack Obama to a second term. I got a good laugh at the time. It isn't that President Obama didn't get a bounce in the polls as a result of the Bin Laden raid - he clearly did. For a fleeting second, we were just a bit more unified as Americans. It is just that I know how short the American attention span is. President George Herbert Walker Bush was flying at 89% approval in the spring of 1991, coming fresh off victory in the Persian Gulf. By November of 1992, his approval was 34% and he got a mere 38% of the vote in his attempt at re-election.
Whether President Obama is re-elected in November 2012 remains to be seen. As I just noticed, a lot can happen fast in American politics. What is clear is that the approval benefit that the President got from the killing of Osama Bin Laden has faded and then some. The last few weeks of debt-ceiling wrangling has taken its toll on his numbers, as evidenced below.
His monthly numbers put him at the low point of his Presidency. Being clearly into the negative numbers is perilous for a guy hoping to be re-elected. The gamblers on Intrade still think an Obama re-election is more likely than not (it is currently priced at a 54% probability), but less likely than at any previous point in his Presidency. Simply, unless the Republicans commit suicide with a candidate like Bachmann, the President will need to at least hold and probably improve his current job approval numbers to get four more years in the White House.
Correcting Stock Markets, Austerity and Debt Downgrades, Oh My!
The investment world took a collective gasp this week. It wasn't one event. In fact, in a lot of ways, the fundamentals were looking better. The debt ceiling was raised. The European central bank is looking into buying the debt of Italy and Spain, providing an under-pinning of support for the fragile Euro. Corporate profits are at record levels. But people are very nervous. And there are causes to be nervous.
1. Austerity
The debt deal will clearly lead to lower government spending, across the board, which has an anti-stimulative effect on an economy, at least in the near-term. $666B of the $787B in stimulus funds (85%), the keystone economic program of the Obama administration to date have already been spent. The "stimulus by another name" payroll tax credit expires at the end of the year. Extended unemployment benefits are also set to expire at the end of the year.
President Obama has called for extension of unemployment benefits, an extension of the payroll tax cut and increased spending on infrastructure, all of which sounds like stimulus without the President actually calling it stimulus. But is it realistic to spend more and tax less at the same time that the Congressional panel must find another $1.5 trillion in cuts or tax hikes over the next 10 years? It's hard to do deficit reduction and stimulus at the same time.
2. The Stubborn Jobs Picture
Hiring actually picked up a little in June, but progresses at an anemic pace. The 117,000 jobs created last month are scarcely enough to keep pace with population growth. The official unemployment rate remains a stubbornly high 9.1%. If you include those who have given up looking for work, it's an even-more depressing 10.9%. Include those working part-time who are trying to work full-time and you get the "underemployment" rate, a whopping 16.4%.
People who aren't working aren't generating economic output, paying taxes or spending money. Not a great place to be.
3. The Debt Downgrade
Standard and Poors downgraded the quality of U.S. Government Bonds from the highest rating of AAA, a rating U.S. debt has held for all of modern history, to its second-highest rating of AA+. This has received a lot of press, but is probably overblown. Treasury yields are near the lowest levels in modern history as the massive sums of cash not being used to grow the economy are finding their way to the "safe haven" of governmental debt. There simply is no other debt market that can hold that much cash and so it is highly likely that Treasury Yields will remain low of the near-term and the government will not have an issue finding a home for its debts.
Besides, let's be real...S&P doesn't exactly have a stellar track record. Those Collatoralized Debt Obligations that imploded the economy in 2008? AAA rated by S&P. AIG's debt in 2007? AAA rated by S&P. Is S&P really saying that governmental debt now is more risky than AIG or CDO's were then? Or perhaps they are just admitting that they aren't very good at projecting risk.
At any rate, the economy continues to limp along. Whether it will take a turn towards higher growth or slide back into a second recession is difficult to predict. But it will have a huge impact on the election.
Time for Another GOP Debate - What to Watch
Next Thursday at 9 PM ET, Fox News will host the third official GOP Presidential primary debate. I say third official, because the first debate was before the major players got in and therefore excluded key contenders like Mitt Romney and was not broadly watched. This debate should feature all the key players, except for the still-undecided Texas Governor Rick Perry, who really is the guy everyone wants to see.
What we should be watching is how hard the other candidates come after Romney, who is the clear front-runner at this point. Romney has been on lock-down during the debt ceiling discussion, stating no point-of-view. Are the other candidates going to call him on it? Go after him for Romney-care? Try to sell themselves as the more plausible alternative?
Tim Pawlenty was widely criticized for playing it very safe in the second official (but first broadly participated) debate and failing to go after Romney. His campaign is languishing, so don't expect that this time. Expect Bachmann to be full of fire, as she always is. And expect the others to attempt to do something to break themselves out of the pack. I'm just not convinced that any of the present field can beat Romney or that anybody other than Romney can beat Obama. But, like I said, Rick Perry isn't in the game yet.
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Monday, August 1, 2011
A Good Bargain for America
I know that the compromise struck between President Obama and Congressional Republicans will make a number of people unhappy. Tea Party members will be livid that the cuts aren't deeper and faster and that tax cuts will be on the table for the joint select committee. Liberals are livid that there are no revenue increases in day 1. But, make no mistake about it, this is a very good deal for the country.
The details of the deal are as follows:
* $917B of defined cuts over the course of the next 10 years. Basically these cuts are the cuts agreed to early on in the Biden deficit discussion and impact both Defense and Domestic Discretionary spending.
* $1.2T in cuts to be identified by a bi-partisan select committee comprised of 6 Democrats and 6 Republicans. The committee must report back recommendations by Thanksgiving and Congress must act by December or draconian across-the-board spending cuts will be imposed across the budget, including both entitlements and defense.
Would I have liked to see an upfront end to the Bush Tax Cuts? Absolutely.
Do I think we could have gone deeper, faster with cuts in Defense and wasteful spending such as agricultural subsidies? Sure.
Do I wish that we'd just passed Erskine-Bowles instead of appointing YET ANOTHER committee to find out what we already know we need to do? Of course.
But this ensures a significant reduction in the deficit and provides the ammunition to force a real compromise that addresses both entitlements and tax reform. And, most importantly, it ensures default. Everything is on the table as it should be. I am the most optimistic that I've been that we will address the deficit in a responsible way that I have been in over a decade.
Let's hope the thing passes.
The Senate should not be an issue as there is broad support for the deal. The House is a slight question mark with the progressive caucus and the tea party caucus both in firm opposition for precisely opposite reasons, the progressives because the cuts are too deep for their liking and there is no immediate tax changes and tea party members because they don't feel the cuts go deep enough and don't touch entitlements immediately.
This is the best possible deal given the circumstances. President Obama, Senator Minority Leader Mitch McConnell and House Speaker John Boehner deserve credit for finding common ground, even though it took way too long.
House voting begins in about 30-40 minutes. I predict passage. I don't believe Speaker Boehner would be holding the vote if he didn't think he could get to 216. I would guesstimate that the bill will get in the neighborhood of 240 votes, with bi-partisan support, although with more GOP support than Democratic support. It should sail through the Senate with 70+ votes.
I'll keep you posted.
The details of the deal are as follows:
* $917B of defined cuts over the course of the next 10 years. Basically these cuts are the cuts agreed to early on in the Biden deficit discussion and impact both Defense and Domestic Discretionary spending.
* $1.2T in cuts to be identified by a bi-partisan select committee comprised of 6 Democrats and 6 Republicans. The committee must report back recommendations by Thanksgiving and Congress must act by December or draconian across-the-board spending cuts will be imposed across the budget, including both entitlements and defense.
Would I have liked to see an upfront end to the Bush Tax Cuts? Absolutely.
Do I think we could have gone deeper, faster with cuts in Defense and wasteful spending such as agricultural subsidies? Sure.
Do I wish that we'd just passed Erskine-Bowles instead of appointing YET ANOTHER committee to find out what we already know we need to do? Of course.
But this ensures a significant reduction in the deficit and provides the ammunition to force a real compromise that addresses both entitlements and tax reform. And, most importantly, it ensures default. Everything is on the table as it should be. I am the most optimistic that I've been that we will address the deficit in a responsible way that I have been in over a decade.
Let's hope the thing passes.
The Senate should not be an issue as there is broad support for the deal. The House is a slight question mark with the progressive caucus and the tea party caucus both in firm opposition for precisely opposite reasons, the progressives because the cuts are too deep for their liking and there is no immediate tax changes and tea party members because they don't feel the cuts go deep enough and don't touch entitlements immediately.
This is the best possible deal given the circumstances. President Obama, Senator Minority Leader Mitch McConnell and House Speaker John Boehner deserve credit for finding common ground, even though it took way too long.
House voting begins in about 30-40 minutes. I predict passage. I don't believe Speaker Boehner would be holding the vote if he didn't think he could get to 216. I would guesstimate that the bill will get in the neighborhood of 240 votes, with bi-partisan support, although with more GOP support than Democratic support. It should sail through the Senate with 70+ votes.
I'll keep you posted.
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