Catching Up with the President's Numbers, Budget Malaise Continues, The Stimulus Winds Down, A US War in Libya?

The President's Numbers and the 2012 Race
As I've often said, the single most determining factor in a Presidential re-election is the incumbent President's approval. Therefore, while it's fun to watch the slow-motion race to the Republican nomination, it's probably far more relevant to look and see how the American public is judging President Obama's term in office.

Of course, that good old American public is fickle. Famously, President George Herbert-Walker Bush had a 91% approval (that was actually just in one poll, his average was something close to 80%, but you get the point) a year before one of the worst re-election showings in history, receiving a mere 38% of the popular vote. The thing that turns these numbers on a dime is the economy, and more specifically the 1.5% income growth rule...that is that President's that have the good fortune to see 1.5% income growth in the election year are generally re-elected, while those that see less are not.

Still, you have to know where you are before you can project where you are going.

So, let's look at the last 2 months of poll data. There is some noise along the way, but here is how I would generally explain the trend:
(1) The President CLEARLY got a real bump from his end of year legislative victories, including the ratification of the START treaty, the passage of the 9/11 first responders bill and the repeal of Don't Ask, Don't Tell (a policy change still mired in the pentagon maze, but that's another story for another day.) At the beginning of January (before the range on the chart), the President was average around -4%. By the end of January he was at around +7%, an 11% upswing - huge in the world of electoral politics.

(2) The bounce didn't last at those levels. As is often the case with big bumps like that, memories fade as time goes by. By the end of February, the President's averages were down to about +2.5%, still 6.5% better than where he was at the end of the year, but a 4.5% downgrade from his end of January numbers.

(3) He settled in at this higher level so far in March. So while the President has not maintained all of his bounce, he has certainly maintained at a higher level than he ended last year. This, in my opinion, is in large measure due to improving economic conditions.




Looking at his monthly numbers over his Presidency, we can February was the President's best numbers month since the first year of his Presidency, when there was a halo effect over his historic victory. The last 3 months have marked 3 months in a row in the black, following 6 straight months in the red.



So, what does all this mean for 2012? The President is back at an approval level where he could win, but it is far from a slam dunk. At number of +2.5%, he's right in the range where we could be in for a very competitive 2012 race. Of course, this could all change in either direction in a hurry.

Is This the Last CR?
It's amazing that the new Congress has been in session for nearly 3 months and with the exception of a few symbolic votes (the House voting to repeal Obamacare, for instance) and some non-controversial business, basically all it has done is to pass short-term extensions to the budget - 2 of them so far, but the 5th and 6th ones of a budget year that began October 1st and is almost half over. The latest, which extends government funding for 3 weeks, with $6B in domestic discretionary cuts, passed fairly easily with bi-partisan support, with opposition mostly coming from liberals who felt it went too far with the cuts and conservatives who felt it didn't go far enough with the cuts.

Both sides are saying this is the last one and the bi-partisan "gang of 6" is working towards a compromise, but it is very unclear still how exactly what the compromise they are driving towards will look like. Basically, with the 2 continuing resolutions passed so far, $10B of the $64B that the GOP sought to cut from the discretionary budget has already been passed. So the debate comes down to how much of the remaining $54B will be agreed to. I imagine that the final figure will be somewhere in the $30B range of additional cuts, but again, we are dealing with chump change, relative to the other aspects of the budget.

I continue to hold out hope that congress and the President will dispose of the domestic discretionary question relatively soon and have a real adult debate about entitlement spending, taxes and defense spending, the three levers that really matter when it comes to deficit reduction.

The Winding Down of the American Recovery and Reinvestment Act
Remember the stimulus? That $787B package of tax cuts, infrastructure investments and short-term entitlement enhancements that was more or less the first order of business when the President took office?

As I said at the time, it was really more a 3-year package of economic policy than a short-term shot in the arm to the economy. And, after over 2 years, it is reaching the end of its implementation. And while the GOP has talked tough about repealing its elements, it has more or less run according to its original plan. The latest numbers show the following dispersement of stimulus funds:

Tax Cuts: $260B out of $288B spent (90% spent)
Spending: $368B out of $499B spent (74% spent)
Overall: $628B out of $787B spent (80% spent)

The stimulus was really one of several pieces of key economic policy over the past 2+ years. Let's review all of them and their effectiveness:
(1) The Troubled Asset Relief Program
The $700B package of funding that was used to recapitalize banks, fund the transformation and bankruptcy of GM and Chrysler, bail out AIG and manage the massive losses at Fannie Mae and Freddie Mac was originally passed in the final days of the George W. Bush administration, but largely implemented during the Obama administration. Despite lots of, frankly very fair, criticism at the time, about the lack of limits on executive pay and the lack of help for the borrowers while lenders were being bailed out, the program has, in essence, been a pretty unqualified success.

The bank bailouts will turn a healthy profit and the auto bailout will likely yield only a small loss. With more substantial losses surrounding AIG and Fannie and Freddie, the total net tab for TARP is now estimated at $25B...a pittance to save our financial system.

Of course, neither TARP nor the Dodd-Frank financial reform bill that followed truly addressed the problem of banks getting too big to fail so the systematic risk still exists, but as a stabilization program, TARP worked exactly excellently.

(2) The American Recovery and Reinvestment Act
As discussed above, the stimulus dealt both a series of tax breaks and credits (think Cash for Clunkers and Energy Efficient Home Tax Credits), short-term expansions to unemployment and social welfare programs and infrastructure investments.

The success of the program is obviously the subject of a lot of debate and it is very hard to parse apart the impact of this program relative to other things happening in the macro-economy.

What I will say is that aspects of the program definitely contributed to the recovery. Cash for Clunkers provided a spike in auto sales that stabilized the auto industry and made the non-bankruptcy survival of Ford and the successful emergence from bankruptcy of GM possible. The energy efficient home tax credits have led to a boom in investments in windows, doors and insulation -- if you don't believe me, ask a contractor.

The bill was sold as preventing unemployment from exceeding 8%. It clearly did not do that. But, on balance, the country is better off with it than without it, in my opinion.

(3) The Obama Tax Cuts
Lost in all the debate over extending the Bush Tax Cuts (which I think we can now safely drop the Bush moniker from) was the fact that it's cost, over the next two years, actually exceeds the cost of the stimulus. The economic impact of extending the rate reductions passed during the Bush administration, along with the newly minted short-term reductions in Social Security taxes is yet to be determined. The deficit impact is obvious.

(4) The Federal Reserve
The role of the Federal Reserve in fiscal policy cannot be understated. In many ways, it's policy decisions have more significant impacts on the economy than any stimulus or tax package passed by our elected officials. The fed's policy over the past several years has been to maintain short-term interest rates near zero, indeed the short-term rate has been in the range of 0 to 0.25% since December of 2008.

The Federal Reserve has also embarked upon two rounds of what it has termed "Quantitative Easing". The program works pretty simply, the Federal Reserve buys US Treasuries, effectively printing money and using Treasuries as a mechanism to inject liquidity into the monetary system. The effect of these buys is to artificially suppress interest rates on treasuries and put more money into the system.

Both moves are basically designed with the same purpose...increase economic activity by making money cheap. It also has the side-effect of amping up inflation and reducing the relative value of the US Dollar.

Up to this point, overall inflation has been very tame during the recession, with the economy showing tons of available capacity in the labor market that might help to avert big inflation. But the dollar has been dropping and core commodities such as oil and grains have been spiking, yielding a concern that inflation may soon rise. The short-term impact of the Fed's actions have been positive to the economy - the long-term is a lot more questionable. I would hope the Fed will back off any further QE and consider raising rates in the not-to-distant future.

Airstrikes in Libya
Backed by French support and a UN resolution, the US is participating in Tomahawk launches and air patrols to enforce a no fly zone over Libya and offer support to rebel fighters. This action is in stark contrast to our actions in Iraq, where we went in alone and sent ground forces. This intervention is more akin to our actions in the former Yugoslavia during the 1990s, where we were able to support political and human rights interests with no American casualties by using our superior technology and air strength.

This is exactly the sort of military intervention that we should be leading - one where the free world is united and where our involvement can yield a large reward at a relatively lower cost.

Meanwhile, we are still trying to wind down Iraq and Afghanistan remains a massive cost both in financial and human terms, with no clear long term strategy in the region.

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The Obama Surge, The Budget Reality

President Obama - Popular Once More?
The last month has been the single best month in the entire Obama administration in terms of the change in his polling data. From his low point at the beginning of the year, the President's approve minus disapprove rating has surged approximately 9 points. Nearly every non-partisan poll now shows his approval rate exceeding his disapproval rate, the first time that has been the case since June of last year.

In terms of the implication on politics, there are many. The GOP can take solace in the fact that the President's approval was near its floor when the elections occurred in November, which helped to facilitate the large gains in the House of Representatives that the GOP was able to achieve, vaulting John Boehner into the leadership of a comfortably-sized GOP majority in the House.

In terms of the look forward, the poll numbers around this time are significant relative to the 2012 field. Right now is the critical time period when GOP A-listers will make key decisions about whether to run in 2012. If the President looks weak, the A listers will get in the game, if the President looks stronger, they will sit this one out.

Of course, we will have to see if this trend continues or is simply a short-term result of some better economic views and news coverage of legislative victories at the end of the year. A +5% or +6% rating would probably not be enough to discourage the TIm Pawlentys of the world from running, but if the trend continues into the double digits, it could significantly cut down the caliber of the GOP field.

Also, bear in mind that polls this time of year are not terribly predictive of ultimate election outcomes. The poster child for how quickly things can change is George Herbert Walker Bush, who had such strong poll numbers at this stage of the game that Democratic a-listers such as Mario Cuomo sat out the Democratic nomination process, allowing a little-known Governor from Arkansas to grab the Democratic nomination. You know the rest of that story.



In the monthly numbers, the surge is just starting to show up. The President's January average has turned positive for the first time in over 6 months, but still significantly trails his current daily averages, which implies a strong likelihood that these numbers will trend up in the coming couple of weeks.



How the Federal Government Spend Its Money and Why Current GOP Proposals Fail the Laugh Test
By 2020, 92% of our federal tax revenue will be consumed by entitlements and interest on the national debt. If we maintain current revenue levels and entitlements as they exist today, we would have to cut defense spending by 75% and all other government programs by 100% in order to balance the budget. That means no FBI, no USDA, no SEC and no federal highways. A defense infrastructure that is a shadow of its former self.

Simply put, the GOP deficit reduction plan as it has been expressed is a mathematical impossibility. You CANNOT:
(A) Not raise taxes
(B) Maintain defense spending
(C) Maintain entitlements
and
(D) Balance the budget

The GOP has put forward proposals to scale back domestic discretionary spending. These proposals are meaningful debates that are worthy of discussion. But they are wholly insufficient.

Without a comprehensive discussion on tax reform, entitlement reform and defense reform, we WILL fail to balance our budget.

In fact, the only perspectives in the modern world that we have had that led to balanced budgets are very instructive:
(a) The 40s and 50s
Massive cuts to our defense budget post-World War 2, massive tax increases, including a top marginal tax rate of over 90% and unprecedented economic growth led to a balanced budget

(b) The 90s
Two rounds of major tax hikes, one signed by George Herbert Walker Bush and one signed by Bill Clinton, combined with massive defense cuts (remember "the peace dividend"?) and major reductions in discretionary spending (welfare reform, the end of the "era of big government") led to a budgetary surplus.

This time around, we have the added burden of massive coming entitlement obligations as the baby boomers retire.

We will need a full court press not just on domestic discretionary spending, but on taxes, defense spending and entitlements if we are going to get our fiscal house in order.

How about some leadership from the party of the balanced budget amendment?

A Real Discussion About the Economy, Obama the Comeback Kid?

Note: While much media attention has been paid to the aftermath of the shootings in Tucson over the past week, I do not intend to devote further digital ink to the topic unless issues of policy warrant further discussion. I do not consider the shootings or their aftermath a political issue and condemn unequivocally those on both sides of the aisle who have attempted to make it one. My thoughts are with the victims of the shooting and may Jared Loughner rot in hell.

Our Long Term Economic Future? Look to Our Infrastructure, Science and Education
In the sound-bite world of politics, serious economic discussion rarely takes place. Democrats speak of the need for government intervention to stabilize the economy and get Americans back to work. Republicans talk of the need to reduce government intrusion into private industry and let capitalism drive growth. Both sides largely miss the point most of the time.

Truth be told government intervention is neither inherently bad nor inherently good for an economy. It all depends on the nature of the investment.

Let's start by understanding what drives long-term economic growth. The size of an economy is determined by its Gross Domestic Product, the value of goods and service produced by that country. This is the all-important figure. It determines the value of goods and services that can be divided up amongst the citizens of the country. It is the measure of the wealth of a nation.

So what generates GDP? The simple way that I like to break down the equation is as follows:
GDP = Productivity * # of Workers * # of Hours Worked per Worker

Productivity is the value of what the average worker produces in one hour of work.

But GDP itself is not terribly instructive. The GDP of China exceeds the GDP of both Japan and Germany at this point. But no sane person that has visited all 3 places would call the average Chinese person more wealthy than the average person in Japan or Germany...it isn't even close. The reason China's GDP is so much larger is simply because it has so many more people, simply from the equation above, there are more workers even though the workers are less productive.

So to estimate how the average American is doing, or the average Chinese person or wherever, we usually use a term called Per Capita GDP, which is simply total GDP divided by the size of the population. This gives a good proxy for the average wealth of a citizen within each country. This changes our equation slightly:
Per Capita GDP = Productivity * Workforce Participation Rate * # of Hours Worked per Worker

So how wealthy the average person in country is can be described by three factors, how productive the workforce is, what proportion of the population works and how many hours each worker works.

So let's talk about how we "grow the pie" and increase Per Capita GDP.

In a typical recession, the last two terms of the equation shrink significantly...that is, you have a lot less people participating in the workforce and a lot less hours worked because you have a lot of unemployed and underemployed individuals. This can hurt. Workforce participation has dropped by over 5% in this recession and hours worked by at least 2%. This leaves a 7% hole in our wealth from where we started.

This is why, in times of recession, politicians spend a lot of time talking about getting people back to work. But the truth is, while this is an important short-term issue, simply employing more people will not spur long-term per capita GDP growth.

The reason is simple -- we hit the practical maximum pretty quickly. The unemployment rate in the US is presently 9.4%. Employing every single unemployed person (a feat that is not practical as unemployment rarely goes below 5% and never falls below 2%) would grow the economy only 10%.

Similarly, increasing hours hits a practical maximum pretty quickly. Hours could increase some now as people who have been forced into part-time work resume full-time work. But returning to pre-recession levels would only increase hours by 2%. Beyond that, who wants to start working 80 or 90 hour weeks routinely? That might spur economic growth, but we'd never be off work to enjoy our wealth. If anything, the social trend is in the opposite direction, with the generation presently coming of age preferring less work at lower pay rather than more work at higher pay.

So taking the last two terms of the Per Capita GDP equation to their practical maximum might yield 10% or even 12% growth if you really stretch it. That is about 2 to 3 years worth of growth in a healthy economy. Then what?

The answer lies in the first term of the equation - productivity. Unemployment and hours trend up and down with financial cycles, but productivity growth is the engine of long-term wealth generation.

So what influences productivity? A lot of things obviously influence how productive various workers in various industries are, but I believe that almost all of those factors can be distilled down to three basic categories:
Infrastructure, Education and Science

Think about what makes you productive in a job. If you are a truck driver, having efficient roads and bridges do. If you are an office worker, productivity tools such as the internet do. Your knowledge and skills, gained through education, most certainly do.

Also think about the game-changers of the past century in the economy and in society. The television. The internet. The microwave oven. Modern plastics. The GPS. You know what these things have in common? They were all technological game-changers that remade the economy and society. And they were all commercializations of basic scientific research carried out by the federal government.

Think about where the country would be without the Eisenhower Interstate System. How about without airports in major metropolitan centers? How about without a universal power grid? All infrastructure investments by the federal government (sometimes in cooperation with state governments.)

Now...think where our economy would be if there were no public schools. I imagine our workers wouldn't be the most productive in the world, as they are now.

Now, think about the major scientific, infrastructure and educational investments the government is making today and how they will spur the growth of tomorrow? NASA? Cut way back. Basic research investment? Its lowest level in decades. Infrastructure spending? Our power grid, air traffic control system and interstate were built in the 1950s. And China has better mass transit infrastructure than we do, to say nothing of Europe.

Education? Subsidies to public universities are falling across the country. Primary and secondary schools are getting squeezed as states and localities face budget shortfalls.

The real debate that we need to be having about the economy is how we can free up funds to invest in infrastructure, science and education. It isn't about the size of government, it's about WHAT it does. The federal government did a world of good in the 1940s and 1950s to set-up 6 decades of prosperity, despite facing down a massive debt following the end of World War 2. I would hope our politicians would look for ways to do the same.

Obama - On the Comeback Trail?
I will publish a full update next week, but President Obama's numbers have moved back to being solidly positive (that is, his approval minus disapproval is significantly greater than 0) for the first time in several months. The spin in the media is that this is due to the lame duck Congress and its productivity.

While I'd like to believe that the American public is rewarding bi-partisanship and is happy about the end of Don't Ask, Don't Tell and a nuclear arms treaty with Russia, as I said before, I find it hard to believe that they a. have been paying close attention and b. care much how many warheads Russia is going to reduce over the next decade.

A far more plausible scenario, in my mind, is that, as it usually is, this is all about the economy. Unemployment is finally starting to fall, the economy has been growing for some time, those who stuck with their investments through the crash are close to being back to even (those who sold at the bottom out of fear have no one to blame but themselves) and fear and panic have been replaced by some combination of hope and greed. In other words, the economy is in full recovery. An economic recoveries lead to popular Presidents.

The link below shows the study I've been promising to link to that demonstrates just how strongly economic conditions dictate results. The incumbent party does well when incomes are growing, poorly when they are not.

The Washington Post article highlighting this study is located here.

All told, if income growth in the election year is 1.5% or greater, the incumbent party generally wins, otherwise they generally lose. You can see that the predictive powers aren't perfect: an incredibly popular former General named Dwight Eisenhower caused the GOP to outperform in 1952 and seize the Presidency from Truman's Dems. The incredible unpopularity of the Vietnam War sank the Democrats in 1968, despite economic conditions at the time (it was so bad, LBJ didn't even bother running for re-election.) A charismatic Bill Clinton dramatically outperformed in 1996 against a lackluster Bob Dole. 2000, while technically correct (Gore indisputably won the popular vote), was a bit of an outlier in terms of the electoral outcome.

But most races are pretty tight to the line. Barry Goldwater's awful campaign in 1964? Turns out he finished right about where he should have, given the economic prosperity. The Reagan Democrat coalition in 1980 and 1984 that supposedly changed the political equation? Turns out he finished right about where he should have both years. John Kerry's 2004 disaster? Right on the line. Obama's Hope and Change in 2008? Right where it should be.

The point is that much as we like to think every election cycle is unique, the odds are that 2012 will play out somewhere close to the line as well. Which means that if incomes grow 1.5% or more in 2012, Barack Obama will likely win a second term. If they don't increase by that much, he will likely lose. If I'm the President, given the track of the recovery, I feel pretty good about that line.

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The Latest Obama Numbers, Where 2012 Stands, Son of Stimulus?

President Obama Stuck in a Channel
On Wall Street, when a stock stays within a narrow range for an extended period of time, traders often referred to the condition as being "stuck in a channel". This seems an apt description for the President's numbers. The daily numbers below show that over the course of the past month and a half, the President's approve minus disapprove have been stuck in a range of approximately -3.5% to +0.5%. Basically, slightly more people disapprove of the President than approve and those numbers aren't shifting much.



Looking at the monthly numbers, which filter out a lot of the noise of variations in polling techniques and short-term mood swings of the public, the numbers look even more stable. Using the monthly technique, going all the way back to July, President Obama has been in a range of -0.7% to -3.5%, a tight 2.8% range for almost 6 months that always showed the Presidents disapproval higher than his approval, but always by a narrow margin.



So, we have a President who is mildly unpopular at this point in his Presidency, a public perception that has been held for about 6 months, which seems like a lifetime in American politics. What does it mean for 2012?

The 2012 Race
Let's triangulate this a few ways. It is VERY early in the race...right now was about the point in 1991 when Saturday Night Live was running a bit "1992 - The Race Not to Be the Guy Who Loses to Bush" mockingly playing Democratic hopefuls trying to convince voters not to vote for them because the nominee was sure to be slaughtered by the mighty 91% approval President George Herbert-Walker Bush. Yes, the same guy who got a whopping 38% of the vote in November 1992. So let's caveat all of this by saying things can and will change, a lot, before November 2012. In which direction is the question.

So, let's look at a few angles.

I. Present Approval Rating
The President's current numbers would represent a very close race as they stand today. As I've written previously, it would likely throw the race into critical toss-ups like Colorado and Virginia, with the former being the exact dividing point to get to a winning electoral count for either party. The President is probably encouraged that the Democratic party held on in a Senate race there this past year, but that is hardly a definitive word. Translated narrowly, it says that a Democratic incumbent can narrowly beat a tea-party Republican in Colorado in the current environment, but a more moderate candidate on the GOP side might have yielded a different result. So, clearly, Republican candidate choice matters in 2012.

II. Public Prognostication
A recent poll had only 26% of the American public believing that President Obama will be re-elected. That is an interesting result, given that it significantly lags his approval rating, which has been tracking in the mid-to-high 40s. It speaks to the fact that quite a number of people who actually like the President and intend to vote for him don't believe that he can win. That's interesting, but not terribly significant. It reflects media coverage of a President under siege, and public reaction to the dramatic gains the GOP made in the House in 2008. It is far more important how people plan to vote than how they think the election will turn out, a topic on which the average voter is not particularly well researched.

III. The Gamblers Edge
I've often looked at intrade odds, as people who bet their own money tend to do their research into what is going to happen. As of right now, the intrade odds of President Obama's re-election are pegged at 55% -- actually to be more precise, the Democratic Party's odds of winning are betting at 55%, President Obama's odds are trading slightly below that.

Obviously, the collective wisdom of the markets doesn't publish its rationale, but some obvious reasons for their greater optimism for the President's chances are the potential for an improving economy between now and November 2012, the lack of a compelling national GOP candidate at this point and the demonstrated prowess of Team Obama at running a Presidential campaign.

These odds are not far off from where I would peg the race...I believe it is close to a pick 'em race, with a slight edge to the President because of the probability that things will get better over the next 22 months.

IV. The Early Match-Ups
There have been two major national 2012 polls conducted in December, each that matched the President up against a variety of potential GOP hopefuls. As I said before, take these with a hefty helping of salt, but they are instructive at least of where the public's heads are today.

NBC News / WSJ
Obama vs. Romney: Obama +7%
Obama vs. Palin: Obama +22%
Obama vs. Thune: Obama +20%

McClatchy / Marist
Obama vs. Romney: Romney +2%
Obama vs. Huckabee: Obama +4%
Obama vs. Palin: Obama +12%

Clearly Mitt Romney fares the best of the potential GOP candidates (although these polls exclude a number of potential GOP hopefuls such as Rick Perry, Bobby Jindal, John Boehner, etc.), as he looks to be close to a toss-up with the President. Mike Huckabee polls next closest, with Sarah Palin and John Thune far behind. These numbers should be far more concerning to Palin than to Thune. Thune is not well known outside of Washington, so his numbers could potentially improve significantly if the American public actually gets to know him. In the case of Palin, she is heavily exposed to the public, some would say overexposed, and it appears that the public doesn't like what it sees. Think about it -- the President has a 45% approval rating and is beating Palin by 12 to 22 points? It doesn't look pretty for the Thrilla from Wasilla.

V. It's the Economy, Stupid
There have been significant studies (I keep promising to publish an analysis, a piece of work that I still owe you, dear reader) that have shown a very strong correlation between election-year income growth and the ultimate vote result. Note that in these studies, only the election year numbers matter, as the American public has long forgotten the first 3 years by the time election day rolls around. By this measure, there is some reason for optimism for President Obama as the economy appears to have turned a corner and may be in a significant upswing by 2012.

A Stimulus By Any Other Name
A stimulus bill containing a mixture of tax cuts and spending increases that costs over $750B all financed through the deficit in the hope of creating growth in a fragile economy. The American Recovery and Reinvestment Act of 2009? No, the tax cut deal of 2010.

It's amazing to me that after all the Republican potshots at the original stimulus package when the economy was cratering, that they have now supported an even larger stimulus package at a time when deficits are larger and the economy has been stabilized. But that's what happened.

The final votes on the stimulus/tax cut deal were pretty resoundingly bi-partisan, with, if anything, far more opposition from the left than from the right:
In the House, the final vote of 277-148 reflected 55% Democratic support and 79% Republican support
In the Senate, the final vote of 81-19 reflected 77% Democratic, 88% Republican support and 50% Independent support

A pretty bi-partisan deficit-fest.

How about that original stimulus? It still has a little juice left, but has nearly run its course. Most of the tax cuts were slated to expire at the end of this year (although some were continued in some form or fashion in the recent tax deal) and a good chunk of the spending has taken place. Here are the latest numbers:

Tax Cuts: $243B spent out of $288B (84% paid out)
Spending: $340B spent out of $499B (68% paid out)

It will be interesting to see if the new GOP House tries to cancel the remaining $159B in spending when it takes over in a month. Almost all of the money has already been awarded, so it might be difficult to do so.

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Obama Approval: More of the Same, Is Alaska In Play?

Obama Continues to Slide
Absent one month where his numbers were flat month on month (September 2009) and one month where he posted an approval increase (May 2010), it has been a slow, steady decline in President Obama's numbers, and the past month has been no different. His decline is interesting, as it does not appear to be driven by finite events (such as a scandal or particular issue), but more a slow decline as people increasingly become disappointed with the government response to the recession, it's treatment of the deficit, the tone in Washington, or whatever else is on people's minds this year.

His numbers for September show him as modestly unpopular, not as bad as in the media, but far more concerning than the absolute numbers is the continued trend. His numbers show no signs of upward movement and continued decline makes his bully pulpit smaller and smaller.





Democrat in Alaska?
Could Democrats actually win in Alaska? With Tea Partier Joe Miller as their nominee and Lisa Murkowski running as a write-in, it's certainly possible...

Why President Obama is a Liability AND an Asset in November, The Fake Ground Zero Issue

President Obama -- Popular Except Where He Is Popular
The national numbers on President Obama's approval are ugly. There is no other way to put it. Not George W. Bush in 2008 ugly. Not George H.W. Bush in 1992 ugly. But Bill Clinton in 1994 ugly, for sure.

The aggregate of the last month of polling is below. You see the President in a narrow range from about -2% to about -4% in his approve minus disapprove. This is indicative of a President who will have negative coattails with the general population come November.



The monthly numbers show a continued, slow decline. The President was negative for the first time in July, finishing at a negative 0.7% average, a 2.3% decline from June. With two thirds of August completed, he is on track for his worst numbers yet, at an aveage of -2.3%, a further 1.6% decline.



So is the President a liability for Democrats? With the general population, absolutely. In the GOP-leaning districts that Democrats won in 2006 and 2008, his national unpopularity certainly puts those seats in play. In swing states like Pennsylvania and New Hampshire, the national mood certainly hurts Democrats.

But President Obama is hugely popular with the Democratic base. He can still raise huge dollars...in fact, despite all the negative polling and national press, the DNC is still destroying the RNC in terms of fundraising, in part due to President Obama's ability to secure big donor checks and in part because of Republican disgust with Michael Steele and his frequently off-message remarks.

President Obama can also rally voters that don't typically turn out in large numbers in mid-terms, most specifically, African-American voters. The President still holds a greater than 80% approval rating with black voters and getting them to turn out in close races could tip the vast number of very close Senate and House races.

So what's the net of all this? Democrats are going to lose significant seats in both bodies in November, that is a certainty in my mind. There isn't time enough to turn the national mood around. But the post-Labor Day period where campaigns really kick off and how the Democrats best leverage the President will determine whether the result is a modest erosion or a blow out. Still way to early to call control of either body.

The "Mosque" Non-Issue
It must be a slow news month. Sure, Congress is in recess, but do we really want to spend more than a month debating the location of an Islamic cultural center in New York City?

Sure, passions run strong after 9/11 and rightly so. And there is no question that radical Islamic Jihadists were responsible for the attacks and that religion was at the very least, a strong contributing factor in motivating the attacks.

But let me run through the reasons why this is a ridiculous issue.

(1) There is no legal question to be decided
The group seeking to build the cultural center has a right to do so. Period. Even the most extreme voices on the right don't dispute this fact. There is nothing for the rest of us to decide.

(2) Islam isn't radical Islam any more than Catholicism is child molestation
Just because you have a religion that shares the same name and prophet as a group of radicals, doesn't make you a radical. There is absolutely zero tie between the builders of the community center and the attackers from 9/11.

(3) It's New York City, not Ground Zero
The proposed community center is two blocks from Ground Zero. How many churches, temples, etc. are located within that radius? A bunch.

(4) Nobody Cared Until They Did
This story has been around until December. Up until a month ago, nobody objected, including voices on the right.

Let me criticize the left a little on this issue...you don't have to be a racist or Islamophobe to a have a certain degree of inherent discomfort with "Mosques" after all we have learned about the trappings of radical Islam since 9/11. But the facts simply do not support this issue warranting any debate. It is an invented story, plain and simple.

Incidentally, President Obama was foolish to inject himself in the debate...and spineless for walking back his 100% correct remarks once he did.

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The Shrinking Obama Presidency, Extending Tax Cuts -- Really???

What a Bad Trend Line Looks Like
What do tanking poll numbers look like? Check out the averages below. For the first time in his Presidency, Barack Obama faces some sustained negative numbers...his disapproval rating is now clearly higher than his approval rating. The trend in the past month is unmistakable, a 6 point deterioration in his numbers over the course of the past month, the worst fall of his Presidency since his first couple of months (where a big drop-off is normal.) Shirley Sharrod, continued unemployment woes and lingering concerns over the administrations handling of the deficit and the BP oil spill are all dragging on his numbers.



The monthly numbers show a similar, but less dramatic trend. After one good month in May, the President had a sharp decline in June and now has a negative average for July.



So can he turn it around?

Of course. Lots of Presidents who have been unpopular two years into office have gone on to resounding re-election victories, most notably in recent history, Ronald Reagan and Bill Clinton. In fact, popularity two years in has very little predictive power in terms of ultimate re-election chances.

But these numbers definitely show that the President is struggling. And it will hurt his party in November, undoubtedly. It puts races that shouldn't be competitive, like California, Wisconsin and Washington into place. It makes made-to-order toss-ups like Pennsylvania, Ohio and Missouri lean Republican. It makes a Rand Paul or a Sharron Angle candidacy even possible (they'd be jokes in most years, and may still be this year.)

The Democrats are going to have to hope for some quick turnaround in poll numbers or for a few of the Pauls and Angles to crazy it up enough to keep them in power. But it's going to be a tough road to hoe in November for the Dems.

More Tax Cuts for the Rich?
Sen. Kent Conrad (D-ND) and Sen. Evan Bayh (D-IN) have come out in support of extending all of the Bush tax cuts for at least 18 to 24 more months. Conrad is not up for re-election this year and Bayh is retiring. All of which causes me to go say: huh?

Democrats have spent the better part of the last decade explaining why we a. couldn't afford the Bush tax cuts, b. they were bad anyway since they disproportionately favored the well-to-do and c. that they would repeal them at their first chance. Now, in the critical hour when the cuts are set to expire, two Democrats who aren't even at risk of losing anything are suddenly in favor of tax cuts that they never voted for? I just don't get it. Do they really think that having a top marginal rate of 39.6% versus 35.0% will sink the nascent recovery? Did they sleep through the 90s? Did they stop worrying about the deficit?

I don't favor extending ANY of the Bush tax cuts, but I accept that the President has committed to extending them for the middle class (a nice giveaway that we certainly can't afford at the moment.) I certainly hope that he has the courage to veto any bill that goes further and that he makes those intentions clear.

Incidentally, does anybody understand the GOP position that we can't afford unemployment benefits but we CAN afford to extend tax cuts for those making over $250K? My next post will address myths about supply side economics and the famous Laffer Curve, including some wisdom from Laffer himself.

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Obama Takes a Hit in the Gulf, The Insubordination of Stanley McChrystal, Weak Wall St Reform, Kagan Hearings Monday, Rock Star Haley

I have been somewhat derelict in my duties (such as they are) as a blogger the past couple of weeks. I've had a lot going on in my real life, having transitioned to a new job that has been consuming a large percentage of my time. To make up for my lack of coverage recently, this will be a long post to try to get caught up on the recent news. And there has been a lot.

Presidential Approval: Heading Into the Deep Sea
Gains that the President had made last month have been completely erased and he is at or near all-time lows in his Presidency. The past month has seen some interesting trending. The big one-day dip on June 14th likely has more to do with the timing of poll releases than with anything substantial (as his numbers recovered the next day), but the overall trend for the month is unmistakably down. Anger over the spill in the gulf, the White House's seeming slow response and the continued malaise in the U.S. economy is likely to blame.



After posting his first substantial monthly gain in his entire Presidency in May, President Obama is on pace to hit an all-time low in June, with an approve minus disapprove of +1.5%. One positive note for the President is that his numbers are still positive, a considerable feat given all the hits he has taken. Internals of the polls show that Democrats largely still approve of him (80% in the latest Gallup poll) and he is still holding on to about 4 in 10 Independents, while Republicans (85% in Gallup) almost universally disapprove. Obviously the Independents tend to be the ones that drive poll trends, given that the Democratic and Republican numbers seem fairly entrenched.



Good Riddance, General McChrystal
President Obama made the right call this week when he fired General Stanley McChrystal over a Rolling Stone interview where the General and his staffers mocked the Vice President, implied that the President didn't know what he was doing and mocked other civilian authority figures. The General's actions are an utter disgrace.

Let me be clear...I have no issue with criticism of the administration. Anybody who has read this space the past year and a half know that I'm not shy at criticizing President Obama and other Democrats when they are out of line, just as I took shots at President Bush and the Republicans when they were in power. I am a civilian. I am not in the government. In our great, free country, I'm free to say whatever I want about these politicians.

The military is different. Our constitution was designed with civilian leadership of the military for a very important reason: the preservation of Democracy demands that our elected, civilian officials control the machine of war, not un-elected military leaders. As such, we have created a clear divide...civilian leaders are elected to make the strategy calls, military leaders are there to execute the strategy. General McChrystal is entitled to his opinions. But he has two choices: keep his opinions to himself or leave the military and become a civilian commentator. He has no right to sit from a military office and take shots at his civilian bosses. And he did, unambiguously. He had to go.

President Obama clearly made a poor decision putting McChrystal in charge of the effort in Afghanistan. Lost in all the coverage was that McChrystal was the President's hand-picked leader. The President and Defense Secretary Gates should have done a far better job betting the General to ensure alignment, loyalty and judgement.

Kudos to Senators Lindsey Graham (R-SC) and John McCain (R-AZ) for immediately and clearly speaking out against McChrystal and in support of the President's authority. Support from the minority for the established chain of command is important and the bi-partisan support for this constitutional principle was crucial in establishing the credibility of McChrystal's firing. Their statements were principled and correct. Nice to see that for a change.

Financial Reform That Does Something, But Not Enough
I feel like a broken record. Every time a reform bill passes recently, I have the same view: there are some good things in it, but it does not go far enough. This pattern repeats with the conference report on financial reform that was released this week and will head to the House and the Senate for final votes in the coming weeks.

It places limit on banks owning hedge funds (limiting ownership to 3% of assets), establishes processes for orderly management of crises such as the financial meltdown of 2008 and establishes a consumer protection agency.

What it doesn't do is force the break-up of institutions that are "too big to fail". This situation reinforces backward incentives around risk-taking. It also does not separate commercial from investment banking, meaning that your banks deposits can still be invested in risky assets. It does not solve the implicit government backing of almost all mortgages through Fannie Mae and Freddie Mac and, in fact, leaves in place those sinkholes more or less as is.

Feels to me like we will be back to the table discussing this issue again the next time that there is a financial crisis. And there will be another. Asset bubbles happen and most recessions deal with their popping....Savings and Loans in the 90s, Technology in 2000 and Housing in 2008...we seem to have an asset bubble every 10 years or so. And since the reforms of the 30s and 40s we haven't made much progress in stopping them.

Let's hope this is a first step and not the final solution.

Kagan Confirmation Hearings to Begin Monday
The Senate Judiciary Committee hearings for nominee Elena Kagan begin on Monday. Kagan has been recently vetted by the Senate, and, barring any unforeseen new revelations, I expect relatively smooth sailing for Kagan. The days of Supreme Court nominees receiving 90+ votes in the Senate are long gone, to be sure....judicial ideology seems to be the primary source of votes these days versus qualification (this trend was started by Democrats in the 1990s and has no permeated both parties), but Kagan should easily get 65 votes or so on her final vote in the Senate. And no Republicans thus far have talked of even mounting a filibuster, although if new revelations put her ability to get 60 votes in doubt, there would undoubtedly be one.

Nikki Haley in 2012? 2016?
She came out of nowhere. A few months ago she was fourth in the polls, now she is the probable next Governor of South Carolina. Nikki Haley this week easily won the run-off for the Republican nomination for Governor in South Carolina, clearing a path for what should be a relatively easy general election victory in the heavily Republican state.

Haley's victory marks several firsts. She would be the first female governor of South Carolina. She would be the first Indian governor in the state (she is half Indian). And she is a potential rock star in the GOP.

She is female. She is attractive. She is well spoken. And she is an ethnic minority in a party that is short on minority stars (Louisiana Governor Bobby Jindal is the only other one that I can even name.)

She faced all kinds of opposition from the good old boy network in South Carolina. She faced ugly racism from within the party. She faced ugly accusations of infidelity (none proven, many clearly motivated by opposition to her candidacy and frankly, totally irrelevant to her qualifications as Governor.) She handled the heat with class.

There are already those talking about her as a potential national candidate in 2012 or 2016. While it is VERY early to make such predictions....she hasn't even won the election yet and we have no idea how effective she will be in governing, she quickly has joined a short list of potential new GOP stars that includes New Jersey Governor Chris Christie (who has stated he is not interested in national office), Florida Senate Candidate Mark Rubio (who may well lose to now-Independent Charlie Crist) and ex-Alaska Governor Sarah Palin.

Keep an eye on this gal....she may just be the real deal.

The Obama Bump - It Held But May Be Ending, Update On The Site

The President's Best Month Since January, But the Rise Has Ended
By the polling data, President had his best month in May (note: there will be one more day of data included in the final numbers, but I don't anticipate them changing by more than a tenth of a point to what is published here) since January in terms of absolute approval numbers, with an approve minus disapprove of 3.6%. In terms of trend, it was his best month ever, with a 1.9% improvement over the April numbers, his first statistically significant improvement of his Presidency (his only other increase was from August to September of 2009 but it was less than 0.1%.)

A somewhat more positive jobs picture and the fading of some of the passion of the opposition to health care reform contributed to the President's bump for the month.



But more near-in polling indicates that the party may be over, at least for now. In a technical sense, the President's current number dipped below his monthly average on May 23rd and basically stayed there (with one point even with his average in between), indicating a lower start to his averages for the month of June. In a political sense, the continued (if somewhat overblown) controversy surrounding Joe Sestak and public disapproval of the government's handling of the gulf oil spill appear to be weighing on the President's numbers. His trend the past couple of weeks are below.



The President faces what I would call an empathy gap at the moment. President Bill Clinton was renowned for his ability to connect with people on an emotional level. In fact, perhaps his most famous words were "I feel your pain". President Bush, too, seemed able to connect with people in a crisis. I still remember his words at Ground Zero when he shouted into a bullhorn, after hearing that some of the workers gathered there couldn't hear him, "well, I can hear you...and the people who did this will be hearing from all of us soon." President Obama, in spite of his famously sweeping and inspiring speeches, seems as of yet unable to connect with people emotionally as a President. During both the Gulf Crisis and the ugly recession he has, at times seemed aloof, professorial and not particularly emotional.

Whether these things SHOULD matter or not is academic...they DO matter. Leadership is as much about inspiration as it is doing the technically correct things. And the President clearly has a gap in the inspiration department at the moment.

How The Site Is Doing
I haven't published a traffic history for this site in a while, so I thought I'd let you know how we are doing. Below is the monthly visits to the site every month since February 2009 (the first month for which I installed a counter and began keeping records.)

February 2009 - 235 Visits
March 2009 - 257 Visits
April 2009 - 221 Visits
May 2009 - 210 Visits
June 2009 - 366 Visits (Note: Ad posted on electoral-vote.com)
July 2009 - 216 Visits
August 2009 - 171 Visits
September 2009 - 140 Visits
October 2009 - 191 Visits
November 2009 - 353 Visits (Note: Election for NJ & VA Governor)
December 2009 - 127 Visits
January 2010 - 253 Visits (Note: MA Senate special election)
February 2010 - 121 Visits
March 2010 - 339 visits (Note: Final votes on health care reform)
April 2010 - 171 Visits
May 2010 (through May 30th) - 174 Visits

Total Visits Since Feb 2009: 3,545
Total Visits Last 12 Months: 2,662

What I glean from these numbers is that the typical range for our site during non-political season is between 150 and 225 visits but we clearly see significant increases in site traffic during major elections and other political events. The current all-time high for site visits is 154 on March 21st, the date of passage of health care reform in the House of Representatives, but I suspect that will be surpassed on election night 2010. I also suspect that although I did not have the counter up in 2008, our true all-time high was probably on that election night.

Thank you for reading and for your support. Hopefully I can continue to provide insight and analysis that you find interesting, valuable and provocative.

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After 16 Months of Rain, a Cloud Break?

I was looking through the latest polling of President Obama's approval today and I found something surprising...an upward trend. Not a huge trend. Not a November 2008 kind of trend. But a trend none the less. A real, obvious trend upward in Obama's numbers. And after 16 straight months with steady declines, a trend upward is big news.

In the last 3 weeks, the President's approve minus disapprove has gone from +1.4% to +5.2%. A 3.8% rise is real and statistically significant. The trend line is below.



May isn't yet half over, but the President, unless the polling falls flat on its face in the second half of the month, is poised to post his first gain in approval since he took office. Monthly numbers below.



So is this the beginning of an upward trend? I've speculated about this many times before, only to see the President resume his downward slide. But this time feels different. Employers are hiring again. Consumers are spending. Sure, there is a Greek financial crisis that could ruin the EU and by extension, the US recovery. But, for now, people are slowly starting to regain faith that maybe the President made the right calls in an economic disaster.

But, let's not get ahead of ourselves. He is still polling significantly below his vote margin in November 2008 (+7.2%). That is the significant threshold that he must break through to demonstrate a real recovery in his popularity. Right now, he is convincing wavering Democrats. He needs to convince upset Independents.

Watch these poll numbers very closely over the next few months. If the President is below 7.2%, the Democrats will suffer the kind of big losses in the mid-terms that I have been projecting based on current poling. If the President breaks back through, the whole game could change. Washington and California would be out of sight for the GOP. Illinois and Pennsylvania would swing back to Democrat holds. Suddenly Ohio and Missouri would look like real Democratic pick-ups. The DEMs could be looking at 57, 58, 59 seats going into the next Senate, not 50 or 51. They could be looking at a comfortable majority in the House, versus a razor-thin win or loss.

But that's all IF the President continues his recovery. And that's a big IF. There are still sharks in the water of the economy and sharks in the water in Washington and on the campaign trail. But it is funny how quickly things always change in politics.

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Can Obama Ever Stop This Slide?, Some Historical Perspective

It seems almost independent of events on the ground. Whether health care reform was stalled in committee or being signed into law, whether the news of the day was troops in Afghanistan or fines against Goldman Sachs, there seems to have been one common thread in the political landscape for the past year and half. President Obama's poll numbers have always headed down. He's had flat and near-flat months and months of big declines, but the trend is about as visually obvious as it gets when you look month to month.

The past couple of weeks have not contained a lot of new news in this regard. The President saw a very small bump, possibly tied to the news of civil prosecution of Goldman Sachs, followed by a decline back to his prior levels. And the bump was pretty tiny to begin with, so it could have just been noise.



Looking at the monthly trends, the President is on track to lose 0.4% in his approve minus disapprove this month, which would mark yet another month of declines. He has definitely been losing ground more slowly since February, but still, each month manages to come in lower than the last.



This is all about the unemployment rate, in my mind. The reason that the trend is so seemingly unlinked to news events is that people don't really care about anything else when the economy is sour. And while the stock market has recovered and GDP is growing at a healthy rate again, as is typically in recessions, the jobs have lagged. Until the unemployment rate starts falling a lot faster, expect Obama's numbers to keep getting chipped away.

So, how does Obama fare at this stage with other Post-World War 2 Presidents? Typically the shine is off the rose at this point, but the President is still in the lower tier by historical standards. Here are the Gallup approval numbers of President Obama versus other Post-WW2 Presidents in April of their second year:

(1) W. Bush - 77%
(2) Kennedy - 74%
(3) Johnson - 68%
(4) H. W. Bush - 65%
(5) Eisenhower - 60%
(6) Nixon - 57%
(7) Obama - 49%
(8) Clinton - 48%
(9) Reagan - 43%
(10) Carter - 41%
(11) Ford - 41%
(12) Truman -33%

Average of all: 55%
Average of those winning next election (W. Bush, Eisenhower, Nixon, Clinton, Reagan, Truman): 53%
Average of those losing next election (H.W. Bush, Carter, Ford): 49%
Did Not Seek Re-Election: Johnson
Not Living at Time of Next Election: Kennedy

So, you can see, we are at a point in the Presidency where an approval rating is starting to have meaning on re-election, but where there are still a lot of paths that the Obama arc can follow.

Of the top half -- numbers 1-6, 3 were re-elected (W. Bush, Eisenhower, Nixon) with 2 of the 3 (Eisenhower and Nixon) re-elected by very strong margins and 1 (W. Bush) re-elected by a close margin. 1 was killed before he could run (Kennedy), 1 chose not to run, although he surely would have been defeated had he run (Johnson) and 1 lost re-election (H.W. Bush).

Of the bottom half, 3 were re-elected by strong margins (Reagan, Clinton and Truman) and 2 lost, one fairly badly (Carter), one by a close margin (Ford).

Looked at another way, the top percentage vote-getters for re-election are numbers 5, 6, 9 and 12, hardly a strong correlation between that result and these poll numbers.

What is a lot more indicative at this point are mid-term results. The party of those in the bottom half took whippings in the mid-terms and I would wager that that trend will continue this year -- it will be a bad year for Democrats at the polls.

Next time....a look at the correlation between unemployment rates and Presidential elections.

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On the President's Poll Numbers, The Catholic Church, The RNC Chairman and The Supreme Court

Presidential Approval -- DId Health Care Matter?
The statistical evidence to date would indicate that in the short-term at least, the passage and signing of health care legislation did not have a significant impact on the President's numbers either way. Democrats were hoping for a poll bounce, the GOP was hoping that their cries for "repeal and replace" would unify Independents wary of big government against the President. Neither appears to have happened.

The President's short-term polling appears to be more or less a flat line, as illustrated below in our aggregation of all non-partisan polling for the past few weeks.



The President's monthly numbers continue to show the same trend of him being just above the zero line, that is having just slightly more voters in the country that approve of his performance than disapprove. The trend, which has to be worrisome for the administration and the DEMs in general, of him losing ground slowly but surely every month, also appears to be continuing as he finished the month of March off 0.4% versus February and appears on pace to lose another 0.4% in March. These are not huge swings, but it is a statistical fact that if you never have a positive month, you are going to be in big trouble long-term.



The one thing the DEMs can take heart in is that the pace of the President's decline has been arrested somewhat. Looking back on his Presidency to date in terms of 3-month periods, his 3-month loss in approve minus disapprove spread for the first 5 quarters of his administration is as follows:
January 2009 - March 2009: -17.5%
April 2009 - June 2009: -10.9%
July 2009 - Sept 2009: -8.3%
Oct 2009 - Dec 2009: -7.3%
Jan 2009 - Mar 2009: -2.4%

All negative, but getting progressively less negative.

So can the President finally post a positive month? We'll see.

Catholic Disgrace
I have generally refrained from commenting on scandals within the Catholic Church, but as someone who was raised in the Church, I feel compelled to speak out about recent events involving the sex abuse scandal that has implicated Pope Benedict in his complicity.

Full disclosure first: I am a lapsed Catholic. I was brought up in a religious Catholic family, was an altar boy for several years and was active in church youth groups and activities up until about the age of 15 or 16, when I started to stray from the Church. My departure had a lot to do with my political and moral views becoming more progressive. The Catholic Church's views on homosexuality disturbed me greatly as did its rigid position on contraception. The Catholic Church and I have now long parted ways, but there were things that I always continued to respect about the Church.

One thing that always impressed me about the Church in the past was its willingness to hold consistent moral stands, regardless of the politics. The Church would infuriate the left with its views on abortion and gays. But the Church was not a vehicle of the right either. It supported universal health care. It opposed the Iraq war. In short, it had a very cohesive philosophy that was derived from traditional moral pillars and the value of human life above all else.

But that respect has been full-scale flung out the window. The sex scandal in the Catholic Church would be an utterly immoral disgrace for any institution, but even more pronounced for an institution which purports to be a beacon of unwavering moral certitude in changing times. The sexual abuse of young boys in one of the most disgusting crimes that I can imagine. That the church, throughout the globe, was aware of systematic abuse by Priests and not only did nothing to actively weed and prosecute those responsible, but, in fact, actively participated in a cover-up and maintained these heartless thugs in their positions of authority, undermines any claim to virtue that the Church has. You cannot condemn with certainty acts of consensual homosexuality while your leaders are practicing non-consensual homosexuality on the most vulnerable without consequence.

In short, I'm disgusted. The Catholic Church is bitterly in need of reform. But reform appears it will be slow. Pope Benedict should resign, as would be demanded of the leader of any other institution in a similar circumstance. But I did very much that he will. Which means the Church will be led by the same flawed principles, possibly for decades.

What a shame. The world still needs moral guidance. And the billion plus faithful in the Church deserve better than a gang of pedophiles, rapists and their enablers running the show.

Michael Steele, Embattled and Fighting for His Life
I was encouraged when Michael Steele was elected RNC chairman early last year. Steele has a record of being a moderate-conservative, represents a new generation and was an active symbol of the GOP's recognition of its need to be more diverse and to have new voices speak for it.

Steele further encouraged me in his early days when he took on Rush Limbaugh and the other voices that John McCain (before he disavowed everything he used to believe in) once called "agents of intolerance". Alas, Steele quickly apologized to Limbaugh and started giving interviews that were all about Michael Steele and had very little to do with helping the GOP succeed.

The revelation that the RNC paid for a trip to a lesbian bondage strip club that total almost $2,000 is certainly embarrassing to a party that tends to oppose both lesbians and strip clubs. In and of itself, it would not be a career ender for Steele, particularly being that it appeared he was not present and may have had no prior knowledge of the expenditure. But combined with Steele's seeming self-obsession that has put him at increasing odds with the GOP establishment, this may well signal the end of his reign at the RNC.

Let's hope that the GOP finds some other new voices in their ranks that can speak to new ideas. And make sure that they are the right voices that can speak to an inclusive, unifying message. In short, they need a lot more Lindsey Graham and a lot less Bob McDonnell.

The GOP will undoubtedly do well in the mid-terms in November. But the long-term health of the GOP and the two-party system in America depends on the GOP's ability to evolve as a credible governing alternative and not just a party of opposition to President Obama.

Supreme Cout Fight, Take 2
Justice John Paul Stevens, 89, has announced his intention to retire at the end of the current term has created the opportunity for President Obama to fill a second seat in his still-young Presidency. But, as with the appointment of Sonia Sotomayor last year, this pick is unlikely to significantly change the make-up of the court, as Stevens was the most-liberal member of the current court.

If the President picks a moderate-liberal, he is likely to win easy confirmation without much of a filibuster threat. After all, the Democrats still control 59 seats in the Senate and there are several GOP members who still hold the commendable position that Supreme Court picks should not be filibustered expect in extreme cases (don't expect sell-out John McCain to be among them anymore, but you'll likely see Voinovich, Snowe, Collins and Graham take that stand.)

If the President picks a farther left liberal, he could see a bigger fight. But it seems unlikely to me that that is a fight he will want to pick right now.

In my view, Michigan Governor Jennifer Granholm would be the ideal pick: a smart, moderate-liberal pragmatist who is retiring from office. I believe she would be the first Canadian-born pick if she were selected. The other finalists from last time such as Diane Wood and Elena Kagan will also surely be on the short-list.

This also fairly well puts a nail in the coffin of doing any other truly ground-breaking legislation this year. A supreme court nominee, a nuclear arms reduction treaty and a set of appropriations bills in 5 months in an election year is probably all the Senate can manage.

Next up: my regular 2010 update

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Obama's First Decisively Positive Month? Not in the Polls....

The Slow Slide Continues
So how is my thesis from a couple of weeks ago that President Obama might finally be turning a corner in polling looking now? Not so great.

The President's polling averages for the past two weeks have hung near the zero line, briefly dipping negative before turning back to mildly positive. In total, not a whole lot to get excited about. Most of this polling took place prior to the signing of the health care bill, although there is no immediate evidence of movement in either direction following the signing.

They aren't a disaster, mind you, but there is a continued trend...and it isn't an improving one.



When you filter out the noise and look at the monthly numbers, you see the trend clearly...President Obama has lost ground in the polls every month of his presidency, except for one, which was flat (it was technically a mathematical increase, but of less than 0.1%.)



What Would This Mean for an Election?
Since re-election campaigns tend to largely be votes about the incumbent more than a comparative vote between two contenders, approval ratings are a reasonable proxy for vote totals. So if an election were held today, how would President Obama fare?

It would be close, to be sure...

He won 365 electoral votes in 2008.

Let's immediately subtract the one vote he won in Nebraska.
Florida is gone: minus 27 electoral votes
So are North Carolina and Indiana: minus 26 more
Ohio is probably a loser too, although a closer one: minus 20 more

This leaves the President with a base of 291 electoral votes and some toss-ups to defend. But, wait, the 2010 census will be done, let's see what that does:
New York losses 2 votes
Massachusetts, Illinois, Pennsylvania and Iowa each lose 1
California and Nevada gain 1
(there are other changes, but they are in GOP states and we are tracking potential Obama votes)

So the President's new base reflects a loss of 6 and a gain of 2 electoral votes or a net loss of 4, leaving him with 287 electoral votes.

Now for those pesky toss-ups....the President has to defend the battleground states of:
Virginia (13 votes)
Colorado (9 votes)
Iowa (now 6 votes)
New Mexico (5 votes)
Nevada (now 6 votes)

He still needs 270 to win, so he could lose Iowa, New Mexico and Nevada if he holds the other two. Or he could lose Virginia and run the rest of the board and still win. If he losses Colorado, he could lose on of Iowa, New Mexico or Nevada and still win. So there are plenty of winning combinations, but he does need to defend and Virginia is the most critical state.

So what does this exercise tell us? In a close election in 2012, Virginia and Colorado are likely to be VERY important. Expect lots of mile high and Hampton Roads visits in 2012. It also shows the importance of Ohio -- while the Democrats can construct a win without it, the GOP has no reasonable path to victory without that state.

Enough of this 2012 stuff when we have a perfectly good election coming up this November. My projection updates next post.

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Obama Approval: Turning Point, Bottoming Out or Still Declining?, Health Care Vote Next Weekend?

Has the President Turned a Corner, Jumped Off a Cliff or Opened a Parachute?
The President's latest approval numbers are intriguing, to say the least. In the past two weeks, his daily numbers have bounced around but in the last few days are sitting below both his averages for every month this year and for the month-to-date in March. However, his numbers from earlier in March were somewhat higher than any of his averages from the prior two months.



Looking at the monthly data, a little less than half way through the month of March, the President is on track to post his first monthly approval gain of his Presidency, with a monthly approve minus disapprove of +3.8% versus +2.3% in February.



These are small moves, to be sure. The President has essentially been in a range of 0% to +5% since the start of the new year, reflecting an electorate closely divided. So, with such small movements, it is extremely difficult to tell what is trend and what is polling noise.

I see three plausible scenarios here:
(1) The President has turned a corner
The noted tone changes in the President's approach: getting more aggressive on health care, attacking the insurance industry and becoming much more involved in getting legislation passed is resonating with the public. His bi-partisan health care summit revealed to voters that he is willing to work with the GOP, but that they are not playing ball.

Future prognosis under this scenario: His numbers continue to slowly rise, at least to the level of his 2008 election victory.

(2) The President has stabilized
The more conservative half of the country dislikes his left-of-center policies. The more liberal half of the country likes them. People have chosen sides.

Prognosis: A lot more time around the zero line

(3) This is just noise -- he'll be down by the time March ends
He had a few good days thanks to some poll-sampling noise and will be looking at a continued slide.

Prognosis: Another 1 to 2% loss in March, then negative territory in April.

Which one is true? Depends on how you read the poll numbers. I tend to believe the center scenario (#2), although what happens with health care reform and unemployment over the next two months could swing he scenario either way.

Health Care Showdown Next Weekend?
The President has delayed his trip to Indonesia, cancelled plans to take his family and Nancy Pelosi says the House vote could very well take place a week from today.

Let's break down all the dynamics:

First, let's look at the math. It is pretty clear that the bill will get zero votes from the House GOP. With current vacancies, the DEMs need 216 votes in the House for passage. They control 254 seats. So, the easiest way to count votes is to look at Democrats who might oppose the bill and see if it totals 39.

(1) The CBO Report
Leader Pelosi has promised members one week to review the legislation after the CBO report comes out. That would require the report to come out today for the vote to take place a week from today. If the report comes out Monday, will members let her get away with 5 days? I do know that would become GOP talking point #1 if she backtracks on that promise.

(2) The Stupak Democrats
This wing of pro-life Dems is dissatisfied with the Senate language. It is hard to know the exact number of Democrats who would vote against a bill because of the Senate abortion language, but my best estimate is that there are approximately 27 pro-life Democrats who voted for the bill the first time around.

(3) The Blue Dogs
There are many within this fiscally conservative group of Democrats who voted "no" the first time around. There are 37 who voted no the first time who are still Democrats and still in the House.

(4) Assorted Liberals
There are those mad at Senate language around immigration (illegal immigrants can't buy into the system), the lack of a public option, etc. Clearly MANY Democrats in the House would like to see a more liberal bill. How many would torpedo the present effort as worse than the status quo is unclear. Rep. Luis Guiterrez (D-IL) is the only Representative that I am aware of who has publicly declared his opposition based on the bill being too conservative, in his case because of the anti-illegal provisions.

In total, there are 21 Democrats who are on record as being committed "no" votes, although 6 have said their position is negotiable based on the final provisions in the reconciliation "fix". But, there are at least, based on this count, 44 others who may vote "no" and the Democrats need to hold on to at least 27 of them to win....and many of these fall into the Blue Dog bucket, meaning that the DEMs will likely have to persuade at least a few who voted "no" the first time around.

I'll try to keep up with the count and the vote schedule and keep you posted.

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