How the Framing of the Story Changed, Newt - Get Out!, Looking Ahead to the General

The Inevitable Story Gains Legs
One of Mitt Romney's selling points to the GOP for the past couple of months has been that Romney inevitably would become the GOP nominee and had the best shot of beating President Obama in November and that the party should therefore line up behind him as continuing the primary fight only served to help the President's re-election prospects.

It was not a particularly sexy story - if you are a Republican, you'd much rather your nominee seek your vote because his views align with yours, his vision of the country is compelling, he has proven strong leadership, etc. versus "pick me, because you have no choice", but the story was more or less born out by the facts.  Romney wasn't and still isn't completely inevitable, but the math for anyone else to win is extremely difficult, as detailed in my last post.

The media - both the right (Fox News), the left (MSNBC) and the center (CNN) largely reported on but poo-pooed the assertion of the Romney campaign.  The reason is obvious - a competitive primary season that drags on generates more news coverage and ratings than an inevitable candidate just going through the motions.

The right wing of the Republican party largely rejected the narrative as well.  Romney wasn't conservative enough, was only winning pluralities, just COULDN'T be the choice of the home of the tea party if you were on the right.  So this odd marriage between the mainstream media and the right wing of the party kept the story of a competitive primary alive.

But a funny thing happened after Romney's victory in Illinois.  The GOP finally started circling the wagons.  Jeb Bush gave a belated endorsement to Romney.  Conservative king-maker Jim DeMint stopped just short of a formal endorsement, but made his support very clear.  The media started asking if the thing was over.

The odd thing is, the past week has gone exactly how anybody would have predicted it would have gone.  Romney won a large, urban state outside the south (Illinois) decisively, Santorum won a medium-sized deep south state decisively (Louisiana.)  It doesn't seem like the arc of the campaign has changed at all and yet the discussion has shifted entirely.

Maybe people are just finally realizing the math, maybe the election night coverage ratings are dwindling, maybe Republicans are starting to realize that losing to President Obama in November is quickly moving from a possibility to a probability, I don't know. 

At any rate, the race takes a little bit of lull this week with no contests going on (but surely lots of waving of Etch-a-Sketches), but confronts three winner-take-all contests worth a total of 98 delegates a week from Tuesday in Maryland, DC and Wisconsin.  Romney is leading all of those races and could pad his current delegate lead, which I estimate stands as follows (with some delegates yet to be decided in the last two races, pending final results):
Romney - 538 (53%)
Santorum - 254
Gingrich - 149
Paul - 67
Perry - 3
Huntsman - 2

Drop Out Gingrich - And You Too Ron Paul
I have long enjoyed the romantic story of Don Quixote, the Man of La Mancha, a man convinced he was a knight taking on giants (which were actually windmills.)  The term quixotic has entered our vocabulary as a romantically-inspired quest for a near-impossible goal.

But there comes a time to turn the sword in.  Newt Gingrich's time is here.

Newt Gingrich's power base has always been the deep South.  After having lost both the Alabama and Mississippi primaries, coming in a distant third in Louisiana clearly demonstrates that even his base has abandoned him.  If he can't do better than third in Louisiana, what states will he even be remotely competitive in?

Gingrich clearly cannot win the nomination.  He may be hanging around hoping that nobody gets to the magic number and he is a second ballot nominee.  But only an insane GOP would put him through on the second ballot.  In the unlikely event that Romney doesn't get to his magic number, he'd probably be able to build a coalition to get there.  Even if he couldn't, the GOP would be far more likely to broker a deal for a better candidate such as Jeb Bush or Chris Christie than to give the nomination to the third-place also-ran with more baggage than the cargo area of a 747.

Newt's funding has to be drying up - even rich Super-PAC donors want to know that they aren't just burning the money.  I actually expect that he will finally see the light and drop out soon.  He does like the spotlight, but the media has started ignoring him more and more.  It can't be much fun anymore.

And while we are on the topic of people who should drop out, let's talk about Ron Paul.  In the past 16 nominating contests, the man who has said over an over again that "it's all about winning delegates" has won a grand total of 11 of them out of 557 that were available in those contests.  Not only does Paul not have a shot at the nomination, his delegate total isn't gaining, so he isn't even winning any influence at the convention.

Paul, unlike Gingrich, will be able to keep raising funds for as long as he desires to continue.  But it is wrong for him to do so.  It's a free country and people are giving to Paul freely, but telling the devoted libertarians that give small donations to him that they are doing so because Paul has a real shot at the nomination (something that they are still utterly convinced of if you reading the comments section on any story on Paul) is disingenuous.  Paul had a good run, made some great points and had an unblemished legacy of supporting liberty and freedom in Congress and as a Presidential candidate.  It's time for him to stand aside.

General Election Catch-Up
Part of Romney's urgency to get the nomination locked up is so that he can get on to taking on President Obama, who has been quietly building a sizable lead while the Republicans fight for their nomination.

My average of averages has him up by 4.1% nationally in a heads up match with Romney, short of his 2008 victory, but a sizable lead that would surely deliver an electoral college victory.

In the key battleground states, here is the state of things:
Previously Lean Romney States:
Missouri - remains a Lean Romney - Romney +9% in recent polling
Indiana - remains a Lean Romney - no recent polling, but Obama needed a 7.2% national win to eek out a win in Indiana, so he would presume to trail by about 3% here
Florida - FLIPS TO LEAN OBAMA - Obama +3% in recent polling
North Carolina - FLIPS TO LEAN OBAMA - Obama +3% in recent polling
Ohio - stays with Romney...for now - the 2 most recent polls tell opposite stories, with one having Romney up by 6%, the other with Obama up a whopping 12%.  Based on the national margin, I'll leave it with Romney for now, but will keep an eye on it.
Virginia - FLIPS TO LEAN OBAMA - three recent polls all have Obama leading by margins of 9, 8 and 17% respectively.

Previously Lean Obama States:
New Hampshire - stays a Lean Obama - up 10% in the most recent polling
Colorado - no recent polling - stays a Lean Obama based on the national polling
Michigan - now a Likely Obama - up by 18% in recent polling
Pennsylvania - remains a Lean Obama - up 6% in recent polling

Other key states I am watching:
Arizona - remains a Likely Romney for now, but definitely one to watch - the two most recent polls have him leading by 5% and 11% respectively
Iowa - moves down to Lean Obama - Romney is leading in one of two recent polls (by 2%, Obama leads by 5% in the other poll)
Oregon - remains a Likely Obama for now, but his lead is 8 to 11% in recent polls, could be competitive if the race tightens
Wisconsin - another one that remains a Likely Obama but is one to watch, with Obama's lead at 5 to 14% in recent polling.
New Mexico - no sign of let-up for Obama, he is up by 19%.  Remains a Likely Obama and probably will not be competitive in November.
Minnesota - Obama up by 10 to 13% in recent polling.  Remains a Likely Obama.
Maine - Obama now up by 23% in recent polling.  Move from Likely Obama to Strong Obama.

So with all of that, we get the following map (assuming neither Nebraska nor Maine split their congressional districts):

Note: Map created with the help of 270towin.com

Clearly at 329-209, Mitt Romney has work to do in the general election.  He needs to take back Virginia, North Carolina and Florida plus one additional state from the Lean Obama column (either New Hampshire, Colorado or Iowa.)

And keep in mind, his war chest is oversized relative to the GOP field, but not relative to the President, who will surely be a fund-raising juggernaut again this year.

Of course, it is way early.  Michael Dukakis looked pretty good against George H.W. Bush at this stage in the race.  The economy, public perceptions, the foreign policy arena, it could all change a lot between now and November.

But what is clear is that Romney has an uphill battle.  Which is why he wants to wrap up the nomination now.

If you like this site, tell your friends.

Romney Rolls On in Puerto Rico - What Would Puerto Rican Statehood Mean?, What a Mess in Missouri

The Romney Train is On the Rails
Some advise to Rick Santorum - if you are going to invest scarce primary campaign resources in campaigning in US territory, you might try to find a better sales pitch than "all of you need to learn better English."

Mitt Romney delivered a thumping to Santorum in Puerto Rico, scoring over 80% of the vote.  Now, even the most devoted Santorum supporter knew that Right-Wing Rick had no shot on the liberal island, but as recently as a week ago, the Santorum campaign had hoped to hold Romney to under 50% of the vote, allowing Santorum to score at least a few of the 20 delegates at stake.

It was not to be.

Romney appears poised to win Illinois decisively on Tuesday, with Santorum favored to score a similarly strong victory in Louisiana on Saturday.

And thus continues the perfect geographic pattern that we have seen in this election - Romney dominating the Northeast, more liberal mid-west and Mormon-dominated western states with Santorum taking the deep south and the center of the country.

This pattern would all but assure a Romney victory but would drag the campaign out until June when Romney is likely to vault over the 1,144 delegate finish line with winner-take-all victories in California and New Jersey on June 5th.

As of today (excluding RNC delegates who are unbound), my tally is as follows:
Romney - 466 (51%)
Santorum - 227
Gingrich - 150
Paul - 67
Perry - 3
Huntsman - 2

Romney remains over the 50% mark, which is critical for a first-ballot victory.  And the landscape gets more friendly to him from here.

Illinois next Tuesday has 69 delegates that should go disproportionately to Romney
Santorum certainly figures to fare well in the proportional primary in Louisiana and its 46 delegates

The next round after that moves to Winner-Take-All events in Wisconsin (42 delegates), Maryland (37 delegates) and DC (19 delegates) on April 3rd.  Of those 3, Santorum only really has a shot in Wisconsin and could well lose all three.

April 24th will be even uglier for Santorum with events in New York (95 delegates), Pennsylvania (72 delegates), Connecticut (28 delegates), Rhode Island (19 delegates) and Delaware (17 delegates).  Santorum should win Pennsylvania, but will likely lose all the rest.  Delaware is winner-take-all and the remainder are proportional.

Assuming the best case for Santorum - that he wins Louisiana, Wisconsin and Pennsylvania and loses the rest of the races and assuming a 50%/30%/20% delegate split in a three way race for proportional races, on April 24th, the count would look something like this:
Romney - 680 Delegates
Santorum - 391 Delegates
All Others - 288 Delegates
Note: My numbers exclude Missouri - which is a complete mess, more on that later.

Again, Romney with a big lead and slightly more than half the total, but still a long way from 1,144. 

Romney would then have to plow through a very uncomfortable May that involves contests in North Carolina, Indiana, West Virginia, Nebraska, Oregon, Kentucky, Arkansas and Texas.  Of those, only Oregon looks friendly to Romney, although he might have a shot in some of the more diverse states like North Carolina and Texas.

Assuming he wins only 30% of the delegates in the month of May (all of the May contests are proportional), on top of my April projection, he would win an additional 129 delegates and be at 809.

Romney would then enter his June firewall which includes contests in California, New Jersey, South Dakota, Montana, New Mexico and Utah with CA, NJ and UT being winner-take-all.  Even assuming Santorum found a way to win in Montana and South Dakota (which is by no means a lock), if Romney takes 30% of the delegates in those contests, 50% of the delegates in New Mexico and wins the three winner-take-all states, that yields him 290 additional delegates, putting his total at 1,099.

Romney would then need only 45 of the 168 or so RNC delegates to put him over the top.  He has 25 that have at least tacitly committed to him.

So, it still appears highly likely that Romney will get the nod, but you can see the challenge in a mostly proportional system in a multi-way race of getting to 1 vote more than 50%.


One for Puerto Rican Statehood
Since it became a U.S. Territory in 1917, every U.S. President has backed "self-determination" - the right of the territory to decide whether it would like to leave the United States, remain a territory or become a state.

Puerto Rico has voted several times on this issue, always choosing to remain a territory.  But each time a vote is held, it gets a little closer to picking statehood.

Statehood would mean that Puerto Rico would have to pay federal income taxes from which it is currently excluded but would also give it 2 Senators, likely 5 Congressmen and 7 Electoral Votes.  It is highly likely that most of these votes would go Democratic.

The statehood question is back on the ballot in Puerto Rico in November and many believe, as a new generation of voters comes of age there, that Puerto Rico will finally choose statehood.

Now, despite the stated policy of past and present U.S. Presidents, passage of the ballot initiative does not necessarily guarantee Puerto Rican statehood.  An act of Congress, signed by the President would still be required.

Even though it would be to their short-term detriment, Republicans would be wise to embrace Puerto Rican statehood if voters there approve it.  Denying Democracy to a generation of Hispanic American citizens would be poor politics indeed.

The Missouri Train Wreck
What a convoluted mess Missouri is.  First, they had a "beauty contest" primary, which didn't count for anything other than show (and spent a bunch of tax payer money.)  Next, they had caucuses last Saturday, but did not conduct a straw poll and didn't even select delegates to the national convention.  Instead, they selected delegates to the state convention, who in turn will select delegates to the national convention next month.

Confused yet?  I know I am.

And nobody has any clue where those national delegates will eventually go, although one presumes that Rick Santorum will do pretty well, based on the primary results.

Updated Delegate Totals

After analyzing the "final" results from the Super Tuesday primaries, here are my latest estimates of the delegate totals for each Republican candidate, excluding RNC delegates, who are not obligated to any particular candidate:

Mitt Romney - 385 Delegates (53% of total awarded to date)
Rick Santorum - 154 Delegates
Newt Gingrich - 124 Delegates
Ron Paul - 63 Delegates
Rick Perry - 3 Delegates
Jon Huntsman - 2 Delegates

Latest polling for the next week's contests:
Alabama - looking like a three-way dog fight.  2 recent polls.  Unified average methodology: Gingrich 26%, Romney 24%, Santorum 24%
Mississippi - Romney is leading in the only poll available (Rasmussen): Romney 35%, Santorum 27%, Gingrich 27%
Kansas - no recent polling available

Romney May Be Winning Ugly, But He Is Winning

The media narrative over the past couple of weeks has consistently been about how Mitt Romney is struggling to close the deal with Republican primary voters.  The argument is not completely without merit.  He is running against a crew of retreads and discards that includes a former House Speaker who resigned his office after his own party forced him out of the Speaker's seat and who has managed to secure no allies among his former colleagues, a Senator who was bounced from office by voter in Pennsylvania by a large double-digit margin, and a 76 year old libertarian who wants to abolish social security.

Yes, if Mitt Romney were a better candidate, he would have sealed this deal a long time ago.  But he is who he is.  And it is important to understand that while Romney may have underperformed what some expected of him against this field, he is methodically winning.

Should Romney have had to resort to scorched Earth politics to win Florida?  Maybe not, but he won Florida and all its delegates.  Should he have won bigger in his birth state of Michigan?  Probably, but the fact is that he won the primary, even if it was ugly.  Should Ohio have been such a close battle?  Probably not, but Mitt walked away with a small popular vote victory and a large delegate victory, thanks to Rick Santorum's inexplicable inability to even register a full delegate slate.

Different web sites have different delegate counts, thanks in large measure to the complex, multi-step processes that some of the caucus states use to allocate delegates, but I've done my own math.  I also exclude RNC delegates from my count, which are the Republican equivalent of Super Delegates, party leaders from each state that have automatic votes at the convention, since their pledge or endorsement from a candidate is not a firm commitment and can change at any time.

As of today, in the contests conducted to date, there are 34 delegates that I need more information and final counts to allocate.  Excluding those delegates, the counts to date, through the first 21 contests are as follows:
Mitt Romney - 368
Rick Santorum - 149
Newt Gingrich - 116
Ron Paul - 63
Rick Perry - 3
Jon Huntsman - 2

Of note, Mitt Romney is now across the 50% threshold of the delegates awarded to date, thanks to his overwhelming victory in his home state of Massachusetts and his big win in Virginia, where Santorum and Gingrich failed to make the ballot.

Of course, you need 1,144 delegates to secure the nomination.  While I can't see any conceivable math to get any of the other candidates to 1,144, their best collective hope would be to keep Mitt from 1,144.

But even this seems highly unlikely.  In theory, the next couple of weeks could be tough for Romney with Kansas, Alabama, Hawaii, Mississippi and Missouri on tap next.  But Romney is ahead in Alabama in a recent pole and if he wins Alabama and Hawaii (where he will presumably do extremely well) in addition to picking up delegates from the territories in Guam, Puerto Rico, American Samoa and the Northern Marinas (yes, the get delegates and their events are also in the next two weeks), he will maintain a large lead.

And the map gets a lot more favorable from there.  Illinois is a big delegate prize on March 20th that should break strongly for Romney.  And he has an April firewall of Connecticut, Delaware, Maryland, New York and Rhode Island, with Santorum only having a real shot in Pennsylvania and Wisconsin.

And if it goes deep, Romney has the ultimate firewall in June, winner-take-all contests in California and New Jersey, which award a whopping 222 delegates between them, plus a last-in-the-nation contest in Utah that seems sure to award him all 40 of its delegates.

So it appears highly likely that Romney will get to 1,144 by the convention.  The math and all the proportional contests make it difficult to do so anytime soon, which will probably keep at least Santorum alive and running until then (presumably Gingrich will finally bow out if/when he fails to win any of the deep south contests in the next week), just as Hillary was able to keep running against Obama until the bitter end, despite the fact that Obama held a delegate lead the entire course of the 2008 primary season.

It will keep being an entertaining race, but for all the twists and turns, it certainly looks to end the way I always believed it would, with Mitt Romney as the Republican nominee.

If you like this site, tell your friends.

Weak Debate Performance and Romney's Money Overwhelms Santorum, Why $5 Gas is Good and Bad

Santorum Fading Fast in Arizona and Michigan
Rick Santorum missed a golden opportunity at this week's debate with probably his weakest performance to date.  No candidate hit a home run at what could be the final GOP debate of the year (there are none scheduled as of this writing), but Mitt Romney did what he came to do - dislodge the narrative that Rick Santorum is a principled conservative versus the more opportune Romney.

Santorum's defense of earmarks, No Child Left Behind and other votes in the Senate that are less than appealing to an increasingly conservative GOP primary and caucus base was strained to say the least.  I have often said that Senators in general make less appealing Presidential candidates than Governors for the simple reason that Senators cast votes for people to parse apart whereas Governors accomplish things.  Santorum's voting record clearly compromised his voice as an economic conservative and he did a poor job preparing to defend that record.

Aside from the structural differences of being a Senator, the fact is, Rick Santorum is not a purist economic conservative.  He has always voted and spoken of the need for government to intervene in things - he just wants the government to intervene in a different way than Democrats do.

And let's not forget Mitt Romney's flooding of the airwaves, the same tactic he used to wrestle the Florida primary away from Newt Gingrich.  The money matters, especially in a race where the electorate is so fluid and especially in primary states where people outside of the hardcore base of the GOP votes - people who do not follow every position and twist and turn of the race.

So, a week after he was trailing in Michigan and basically breakeven in Arizona, Mitt Romney appears reasonably comfortably poised to win both.  The latest polls have him up by 10% or more in the winner-take-all Arizona primary and up by an average of about 4% in the proportionally-awarded state of Michigan.

Neither of these losses will be utterly lethal to Santorum's campaign, as Super Tuesday, with a far more favorable map to him, is coming just a week behind.  But momentum matters.  It matters in terms of where the "Not Romney" voters go in places like Georgia and Oklahoma - do they all break for Santorum or do some go to Gingrich?  Where does the money, so crucial to compete in that many contests on the same day, flow?

Romney is, just like every other writing, the favorite to win.  A dual-win next Tuesday helps that case.  The key number to watch is the percentage of delegates that Romney has after Super Tuesday.  He will almost certainly be in the lead, but whether he crosses the 50% threshold of delegates awarded is the key to winning the nomination outright.

Of the likely delegates awarded in the 8 nominating contests to date, Mitt Romney has won 45% of the delegates - by far the most (Santorum and Gingrich each have 19% with Paul at 15% and the now-exited Perry and Huntsman carrying a combined 2%) but not an outright majority.  Arizona's winner-take-all delegates will help that.

But we will have to take stock in 9 days of where things stand.

Rising Oil Prices is a Mixed Blessing and Curse
2011 saw the highest average gas prices at the pump in history, even in inflation-adjusted terms, just edging out the 1981 gas crisis price (which, on an inflation adjusted basis averaged $3.31/gal) at $3.51/gal.   2012 is on pace thus far to break that record.

Higher gas prices are bad for the economy in many ways.  Petroleum represents 38% of all United States energy consumption and rises in gas prices permeate through costs to consumers in a number of ways including both the direct costs that they pay at the pump and in prices of all kinds of consumer goods, whose transportation is directly impacted by diesel prices.

Additionally, high gas prices (more specifically higher crude oil prices which drive gas prices) means more money going to exporters in unfriendly places like the Middle East and Venezuela which means a growing US trade imbalance and money flowing to governments that could use it to fund terrorism at worst and fund anti-American principles at best.

But high gas prices also drive economic incentives - mainly the economic incentive to reduce our dependency on oil altogether.

Virtually all of our other sources of energy are preferable to oil in most ways.  Let's examine the 5 major sources of energy in this country.

Oil
As I said above, oil leads the way with 38% of our energy consumption.  It has many problems.  60% of our oil need is sourced from foreign sources.  Proven US oil reserves would cover less than 3 years of national energy needs if foreign supply where cut off.  Oil is one of the highest carbon-producing forms of energy as well, second only to coal in greenhouse gas emissions.  In virtually every way except one, oil is an unappealing energy source.  That one reason is the reason it is still 38% of our energy consumption - it is very easy to build equipment that converts it to energy on a small scale.

70% of all oil consumption is used in transportation - primarily passenger automobiles and trucking.  There has simply been no cheaper design for portable transportation than the internal combustion engine and no cheaper engine design than one that runs on gasoline.

Natural Gas
Natural Gas is now 24% of our nation's energy consumption and that number is growing.  Natural gas is used in many ways - from home heating to industrial use (think big natural gas boilers and HVAC systems) to electrical generation.  It's advantages are that it is very cheap, thanks to shale extraction and rising proven reserves in the US.  It is easily burned to produce energy and natural gas power plants are far cheaper to build than any other kind.  It is more environmentally friendly than oil, giving off less carbon emissions per BTU.  And, as a net exporter of natural gas, it is an energy source that is entirely domestically sourced.  And we have enough proven reserves of natural gas to cover 100 years of energy consumption.

Natural gas has some barriers as well though.  While it is very cheap to supply and convert in stationary locations like homes, power plants and industrial uses, it is far more difficult to use as a fuel source in mobile vehicles like cars.  While the technology exists on a fairly economical scale to compress natural gas, those engines and systems are still more expensive than gasoline engines and the infrastructure to refuel is limited at this point.  In fact, natural gas only represents 2% of the energy for transportation and that is primarily where large municipalities have consciously put in the infrastructure, such as city buses or intra-airport transportation at hubs.

Finally, while the burning of natural gas is clearly less bad for the environment than gasoline, the extraction process that has enabled the natural gas boom - shale extraction - has questionable environmental consequences where it is extracted.

Coal
Coal now represents 22% of national energy use, a number that has been declining for a number of years.  Coal is abundant and cheap (with over 250 years of proven reserves), but has a number of drawbacks.  It is impractical for residential or transportation use (outside of trains) and poses environmental problems that not only including high carbon emissions per BTU but also lots of nasty particulate and sulfur emissions that lead to acid rain, lung cancer and a whole bunch of other unpleasant things.

Coal plants have been so heavily regulated since George Herbert Walker Bush signed the Clear Air Act in 1991.  Essentially, existing coal plants were "grandfathered" in and allowed to continue to operate, but new plants had to comply with emission controls so costly that no one has attempted to build a coal plant since.

Promise of "clean coal" technology has been out there for years, but no one has yet been able to figure out an economically viable way to convert coal into energy in a way that is environmentally friendly.

Nuclear
Nuclear power represents 8% of our national energy use.  It has many advantages - since it requires only atoms as an input, we have an essentially infinite supply of nuclear power.  But nuclear power is incredibly costly, which is one of the reasons that no new nuclear plants have been built in decades.  A new nuclear plant costs upwards of $1 billion to build and will therefore never be built without significant government subsidy.  Southern Company plans to build a new one, but only because of significant government loan guarantees.

Environmentally, nuclear produces zero carbon emissions, a welcome thing to those who dislike greenhouse gases.  The main drawback is that radioactive waste, that we have yet to establish a national strategy for disposal of, leaving nuclear power plants to continually store more and more waste on site, with no place to send it.

Renewables
Renewables as a whole represent 7% of our national energy use and cover a broad range of technologies, from hydroelectric dams such as the Hoover Dam that convert water flow to electricity to wind turbines in the Northeast and rural California to solar panels across the sunny parts of the country.

Renewables possess all the advantages environmentally - zero emissions and unlimited supply.  They also possess the same key drawback as nuclear, on a capital cost basis they are not economically viable without government subsidies.  Costs, especially for wind and solar are coming down as scale builds, but at this stage, no one would invest on a large scale without tax credits or other subsidies.

So why are higher gas prices good for all of this?  As you can see, oil is the one source of energy that we cannot source our needs domestically and higher prices push the economics in favor of alternate energy technologies, which can be sourced domestically and are largely cleaner environmentally.  The free market is starting to take care of what the government has not solved.

So what could the government be doing?  There are a surprising number of things that we could do from a national energy policy standpoint that wouldn't cost much.  If you've read this space for a while, you've seen a number of these before:

(1) The Revenue-Neutral Gas Tax
An originally Republican idea, I simply can't understand why this great idea hasn't gained traction.  The concept is simple - you raise per gallon taxes on gasoline and reduce payroll taxes by an offsetting amount.  The net cost to the government is zero, but it creates an incentive that rewards consumers that reduce gas consumption and punishes ones who do not.

(2) Tax Imports, Seed Local Infrastructure
You could tax imported sources of energy and use the money to subsidize building the infrastructure to support alternatives - the building of natural gas filling stations, electrical plug-in stations for vehicles, etc.  This could be done at a net zero impact on the deficit.

(3) Set Renewable Targets for Electricity
Require an ever-increasing percentage of electrical generation come from renewable sources.  This leaves the market-place decisions about technology to the free market and forces power companies to examine the best strategy to push us to more renewable and ultimately builds scale that makes those technologies more economically viable.  California is blazing that trail, but we need to get on board nationally.

Energy policy is important both environmentally and from a national security standpoint.  You'd think that would be something that left-wing environmentalists and right-wing national security conservatives could find some common ground on.  I mean, does anybody WANT to be importing oil from Libya?

If you like this site, tell your friends.

Employer-Provided Health Care: The Worst Imaginable Model, Why Santorum Would Lose to Obama by 20 Points

The Real Reason Obamacare Is All Wrong
The flap with the Catholic Church over contraception coverage for women has been quite an interesting ride.  First of all, who thought we would be debating condoms and birth control pills in 2012?  Second, the clear exposed divide between the Catholic church's (I believe honestly held) moral principles and its membership's beliefs was on full display.  Third, Rick Santorum's very socially conservative views being put on full display is a preview of things to come if he continues to be a serious candidate for the GOP nomination.

First, to the relevant controversy.  The notion that religious freedom extends to whether or not you have to obey legal regulations is patently absurd.  Bear in mind that we are not talking about Catholic churches themselves, simply the hospitals and schools that they own.  If you believe that religious freedom should exclude them from having to provide contraceptive coverage as a matter of moral belief, where would you stop?

Should Muslim-owned businesses be allowed not to pay taxes because they don't want to pay money to support wars against Muslims?

Should a mining company owned by Christian Scientists by allowed to ignore regulations requiring Doctors on site to treat workers in dangerous situations because they don't believe in modern medicine?

Should an Orthodox Jewish owned business be allowed to refuse to serve women because it has a belief about the role of women in society?

Religious freedom, as protected by the first amendment, is something that we should revere.  But it is not the only value in our society.  In fact, the constitutional protection itself was intentionally drawn narrowly.  All the First Amendment requires is that the Federal Government does not establish a state religion, not that it allows businesses owned by religious people to do whatever-the-hell they choose.

Birth control is broadly accepted in science, medicine and society.  It is safe, effective, legal, economical and prevents unwanted pregnancies and abortions.  There is zero reason not to include it in health care plans because a very small percentage of the population objects.

But the controversy reveals the broader problem with Obamacare in particular and our healthcare system in general.  The issue with Obamacare is that it reinforces the system that we have, once that exists primarily as an employer-provided health care model.

Employer-provided coverage is about the worst imaginable model for a number of reasons.  It leaves, all too often, the decisions around what health care you get up to your employer or to government regulation, which sparks the kind of controversies that we saw over the past two weeks.  Secondly, it makes your access to health care dependent on your job.  Get laid off?  No health care.  Change jobs?  Your health care might change.  Thirdly, it places a huge burden on employers.  Employers that provide good health care coverage can pay upwards of 15% of their payroll towards health insurance, a burden not borne in competing economies where the coverage is either government provided or non-existent.  Finally, it provides incentives that drive up cost, namely largely removing the patient from economic decisions related to health care.

Our backwards system is a product of our tax code.  Employer-provided health care is both income and payroll tax-exempt.  That means that if an employer and employee wanted to have an employee-purchased model, the employee would wind up paying far more in real dollars.

The simple solution, employed in the first-rate health care systems in Australia and France, is to have a basic level of coverage provided by the government and a secondary tier that is available to individuals to purchase out of pocket.  In other words, everyone has access to preventative and catastrophic care, care which is both cost-effective and morally essential to a first-world society.  Industry competitiveness and innovation is preserved through profit motive because of the second-tier of coverage, which is for more advanced coverage.

Obamacare's benefit is that it provides more access to the health care system to more people.  But it largely perpetuates what is broken about the system.

Would Santorum Be the Worst GOP Candidate Ever?
With Rick Santorum's wins so far in Iowa, Colorado, Minnesota and Missouri, his shocking lead in the polls in Michigan, his competitive polling in Arizona and his huge lead in Ohio, I guess we have to actually take the possibility of a Santorum nomination seriously (I'm still not betting on it, but to say I'm still as sure as I have been about Mitt Romney's prospects would be a lie.)

So what would a Romney candidacy mean?

Let's review - Santorum has likened homosexuality to sex with farm animals, has said contraception is morally wrong, is opposed to women in combat because of "emotions".  I actually have more respect than most for Santorum's economic message, which appears among GOP candidates to be uniquely courageous in discussing the needs of working-class Americans, but he certainly has the least distinction to draw versus Barack Obama because of his past support for government spending projects, unions and entitlement expansion. 

With an improving economy and more mainstream views, Barack Obama would utterly trounce Romney.  As we sit here today, Barack Obama is up 6 to 8 points head to head against Santorum, but that is before most of the general electorate really learns about Santorum.  I could easily see Santorum losing by 20 points nationally.  He would lose women massively, possibly by 30 or 35 points.  He would lose Reagan Democrats.  He would lose Northeastern Republicans.  Heck, Santorum lost his Senate re-election bid in Pennsylvania by 16 points.

He'd lose every single state Obama won in 2008.  He'd probably also lose Arizona, Missouri and Montana.  I could actually see him losing some classically solid Republican states such as Texas, the Dakotas, maybe even South Carolina and Georgia.  It would be a wipe-out.

The worst GOP wipe-out in history was Barry Goldwater's 1964 whomping, where he lost by 22 points, lost 44 states and won a mere 52 electoral votes.  My bet is that a Santorum candidacy might do even worse.

If you like this site, tell your friends.

How Fates Can Rise and Fall in a Week, Can Congress Do Anything?

The Long March to the GOP Nod
Mitt Romney's nothing short of awful finishes in Minnesota, Colorado and Missouri (which didn't really count except for building on the image of a candidate suddenly in trouble, were capped by his (also symbolic, but meaningful from a perception standpoint) win of the straw poll at the hugely influential CPAC convention and his narrow win over Ron Paul in the Maine caucuses.

It seems that every week in this Republican nomination battle has a different storyline and more surprises.  But one thing that hasn't changed in a long time is my belief that Mitt Romney is the strong favorite to take the nomination.  His organization, money, experience and mainstream appeal (granted, this last piece hasn't been doing as well these days) make him the most likely candidate to win.  And he's still the "next guy in line" and I've written extensively on the advantage that provides in Republican nominating contests.

So where are we in the process?  We are now 8 states into the 50 state battles, plus the various territories (Washington DC, Guam, Puerto Rico, the Virgin Islands) that hold nominating contests or 15% of the contests have taken place.  2,118 delegates are awarded through nominating contests (168 are party leaders) and of those, 231 have essentially been awarded to date or 11%.  I say essentially because in most caucus states, the caucuses are technically "non-binding", meaning that actual delegate selection won't take place until the state conventions, but similar to the electoral college, the outcome is all but assured.

Delegate counts through the Maine contest are as follows:
Mitt Romney - 105
Rick Santorum - 43
Newt Gingrich - 42
Ron Paul - 36
Rick Perry (withdrawn) - 3
Jon Huntsman (withdrawn) - 2

Note: As always, my delegate counts will differ from the counts published by major news outlets, as they generally try to include how they believe the 168 party leaders will vote.  Since those endorsements are soft and can change, I don't consider them until very late in the process, when they could make the difference.

Romney has a sizable lead, primarily thanks to his win in Florida.  Florida is the only contest to date that was set up as Winner-Take-All and almost half of Romney's delegates (50 in fact) came from his Florida win.  The size of his campaign wallet and organization really paid off in that important contest (although made half as important as it could be by the RNC penalty for holding its contest early.

But Romney's sizable lead does have one major chink in the armor - he holds less than half the delegates and you need 50% + 1 to win a first a ballot nomination.  His 105 delegates represents 45% of those awarded to date.  If Romney's opponents could keep him below 50% all the way to the convention, they could broker the convention (deadlock it, in layman's terms) and force multiple voting ballots, during which anything could happen relative to the nomination.  Or one of them could cut a deal for their delegates for a VP or cabinet seat, although Romney's three remaining opponents that will continue to accumulate delegates, frankly don't seem to like him very much.

From here, the race takes a bit of a break this week.  After a long break from the debates (is anyone else starting to really miss those events?) there is CNN debate in Arizona on February 22nd.  The next actual nominating contests are primaries in Arizona and Michigan on February 28th.  Romney should win both of them handily.  Michigan is essentially Romney's second home state, where he was born and where his father was Governor.  Arizona has a heavy Mormon population and is far away from the rust belt appeal of Rick Santorum and the Southern appeal of Newt Gingrich.  Arizona's 29 delegates are winner-take-all and Michigan's 30 are proportional, unless Romney gets 50% or more of the vote (which is possible but not a lock), in which case it would become winner-take-all.

So Romney could potentially add significantly to his lead in the next 2 contests.  On March 3rd, Washington's caucuses take place, which have a significant prize, 43 delegates (awarded proportionally.)  Washington could be an interesting bell weather.  It is a moderate state, well outside of Santorum and Gingrich's areas of strength, but it is a caucus state, which have not been good to Romney (his win this weekend in Maine was actually his first caucus win of this cycle.)  Despite its sizable delegate prize, it is not likely to see a ton of campaign, except from Ron Paul, who could do quite well there, primarily because it is so close to Super Tuesday, on March 6th.

Handicapping the Super Tuesday states, it would appear likely that if the race were held today, we'd see a split decision:
Gingrich should do quite well in Georgia, Tennessee, Oklahoma and Virginia.
Santorum will make his mark in Ohio and should fare well in the caucus states of Alaska, Idaho and North Dakota as well as competing strongly in the Gingrich states above.
Paul will likely focus his fire on the 3 caucus states above, which may get less attention from the other candidates.
Romney should do extremely well in Vermont and Massachusetts and will likely focus his fight on trying to beat Santorum in Ohio and try to show up well, if not win, in Virginia.

The big questions between now and the results of Super Tuesday are:
(1) Will Romney emerge from Super Tuesday with more than half of the delegates won?
(2) Will either Gingrich or Santorum be damaged enough after Super Tuesday to drop out (I can't see them dropping out before then)?  I assume Paul will be in it for the long haul.

As the field emerges from Super Tuesday, we look ahead to nominating contests every week in March, and often multiple contests per week.  The big prizes the rest of the month of March are Illinois (69 delegates), Missouri (52 delegates), Alabama (50 delegates), Louisiana (46 delegates), Kansas (40 delegates) and Mississippi (40 delegates).  This looks like awful territory for Romney, so he needs a strong showing through Super Tuesday to carry him in these tougher contests.

This is the most fun Republican race I can remember in some time.


It's February 12th and I Have No Clue What Social Security Tax Will Be on March 1st
What a sorry state of affairs.  I have made no bones about the fact that I am not a fan of the payroll tax cut that was passed for 2011 as part of the deal to extend the Bush Tax cuts and I was not in favor of extending it into 2012.  Reducing Social Security taxes by 2% when there are already serious issues with funding future benefits is imprudent.

But putting aside the policy discussions, we have serious dysfunction with implementation of anything in Washington these days.  Both sides of the political aisle agree that the payroll tax cuts should be extended.  But we went all the way into the December recess before a last-second deal extended the cuts for January and February.

It is now February 12th and there is no deal in sight for the rest of the year.  At issue is how the cut will be paid for.  Democrats wanted to originally pay for it with a tax on millionaires, which was obviously a non-starter with the GOP.  The GOP wants to pay for it with cuts to discretionary spending.  Also at issue is how, if at all, to extend unemployment benefits.

What is so damaging in all of this is the uncertainty it creates.  Companies don't know what to put in their payroll software for tax withholding.  Individuals don't know how much money will be in the March 1st checks.

It's all so sad and embarrassing.  I'm sure the tax cuts will get extended...but we are probably lucky it is a leap year with an extra day between now and March 1st.

If you like this site, tell your friends.