It Cain't be, Cain it?

I've spent a lot of time in this space talking about polls lately and today I'm going to continue that theme.  In the past week we've had yet another sparsely watched GOP debate, a slew of new polls, a few high ranking endorsements, and much more news about the Boston Red Sox than we ever need to know!  For you Sox fans, you know what I mean. 

The Republican Debate Tuesday at Dartmouth College in New Hampshire was interesting if only for the format itself.  The 'perceived' eight genuine candidates were seated around a conference table facing three moderators asking questions.  The group was led by Charlie Rose, who did a good job overall.  The questions centered on the economy and economic policy, which really played to Mitt Romney's strength.  It also led to lots of opportunities for Herman Cain to say 'nine-nine-nine.'  So many, in fact, that he is now leading the GOP field in several national polls.  Huh?  Whazzat, you say?  Exactly. 

Who is Herman Cain?  Where did he come from?  Are his polling numbers for real?  Slow down, Betsy, we'll get there.  For now I'll just say 'Who knows, Who cares, and Nope.'  The question everyone ought to be asking is not who is he or where did he come from but why is he doing so well in the polls? The answer to that one, dear reader, is actually pretty easy.  I'll get there soon enough as well. 

First off, who is Herman Cain?  Nearly everybody knows he is the former CEO of Godfather's Pizza (a truly awful pizza, in my humble opinion).  Less well known is that he served in various capacities on the Federal Reserve Bank of Kansas City in the early 1990's.  He's also a Baptist minister and has run for the GOP nomination for senator from Georgia (lost in the primaries).  By all accounts he has been remarkably successful in both the private and public sectors. 

Where did he come from?  Proverbially speaking, out of the blue!  He's been a candidate longer than anyone in the field except Mitt Romney, who's been running since 2007 pretty much non-stop.  Cain announced his exploratory committee in January 2011...beating now President Barack Obama's 2007 announcement by more than a month.  He officially entered the race in May and struggled to make headway until the Florida GOP debates, after which time he took off in the polls. 

So, are his numbers for real?  I don't think so.  That's not to say he can't win a few states and give some members of the GOP establishment heartburn (and present southern conservatives with an interesting choice between an African-American conservative and a Mormon pseudo-conservative).  Just as Mike Huckabee did in 2008 when he won the Iowa Caucuses, so, too, could Cain.  But that would likely be the end of his amazing rise.  One thing is for sure though, win or lose, Cain will come out of this race better off than he went in. 

On to the main question...why has Cain suddenly taken off in the polls?  The quick and dirty answer is that 'he ain't Mitt Romney.'  The conservative base, led by the demagoguery of Rush Limbaugh and Sean Hannity, despises Mitt Romney, largely because he represents a wing of the Republican Party they've been trying to kill off for more than a decade.  Romney is a centrist, pragmatic, northeastern moderate with a center-right philosophy of governing.  He is, in other words, a part of the GOP establishment.  He's not a fanatical 'true believer' in rolling back the New Deal, shrinking government so it 'can be drowned in the bathtub', as Grover Norquist has intoned.  Mitt Romney understands that doing those things would bring America to her knees and make all of us worse off, not better.  And that's why Cain has risen so rapidly.  The previous GOP savior and true believer, Texas Governor Rick Perry, turned out to be all too human.  Gasp!  He...compromised?  He cared about the children of illegal immigrants and whether they would become productive members of the Texas economy?  Heaven forbid!  He tried to do something that might save thousands of women from dying of cancer needlessly?  Off with his head, they cried!

Before the rise of Herman Cain it was Michelle Bachmann, winner of the Iowa Straw Poll.  Darling of the right wing media and the Tea Party.  An empty suit with an empty head who confused where Lexington and Concord are (MA, not NH) and where the Revolutionary War began, failed to distinguish between the birthplace of notorious serial killer John Wayne Gacy and American screen legend John Wayne.  A woman who claimed to have adopted 23 children...until someone discovered that she actually was a foster care provider (a good thing, IMHO) and that some of the children were only in her care for a month.  Her fall from grace was as precipitous as Governor Perry's and may be unrivaled by anything in history other than Lucifer's fall from heaven.

The others in the field have never really been able to gain any traction but I wouldn't be surprised if between now and the Iowa Caucuses on January 3rd to see another of the candidates rise spectacularly to the top.  If I had to bet on one of them, it would be Newt Gingrich.  But it would be a bet I would not be too confident about.  I also think Ron Paul could make a daring move to the top before imploding.  Make no mistake, the rise of Herman Cain has everything to do with anti-Romney sentiment and nothing to do with Herman Cain.  Just as it did with Perry and Bachmann before him, the tide will turn, and Cain, too, will not be able to knock Mitt Romney off his perch.  And that is just as it ought to be. 

President Obama's 'Jobs' Bill & The CNN/Tea-Party Debate

President Obama unveiled his more than $450 billion 'jobs' bill yesterday and asked Congress to pass it immediately.  While it would no doubt spur some temporary economic growth and add to the nation's GDP it is likely to have very little lasting impact, particularly if paid for by increased spending cuts elsewhere.  The big winners if the package were to pass would be construction workers, states and local governments that are currently laying off workers, and taxpayers making less than $106,000 a year as they would not see the payroll tax return to 6.2% next year.  Businesses would also realize a 33% savings in their payroll tax bill for a year.  While the president thinks that would spur hiring, I think he's wrong.  Businesses have been insanely profitable since the crash in 2008 but they aren't hiring new workers very quickly.  Republicans argue that the health care reform passed in 2010 is responsible.  They may have a point for some very small businesses hovering right around the 50 employee mark.  But these businesses are far from the majority of businesses in America. 

No, the real problem for economic growth has been weak demand, both at home and abroad for more than three years.  Demand at home has been weak since 2008 due to the bursting of the housing bubble and the reluctance/inability of many Americans to buy on credit.  Add to that the decline in real wages for the median worker and you have a double edged sword driven deep into the heart of the American economy.  Consider the lack of demand for American products overseas and you have a dagger stuck in America's back.  Democrats have no answer to solving this problem other than turning to Keynesian style stimulus, which is exactly what the president has proposed.  Keynesian stimulus has been vindicated time and time again during normal economic downturns, Republican lies not withstanding.  But this downturn is different because it resulted from a huge decline in demand when the housing bubble burst, overextended households, stagnant wages, and irresponsible greed on the part of the banking and mortgage industry.  Until we deal with all four of those issues any stimulus package is likely to have a very limited and temporary effect.  For what we ought to do I urge you to read Freefall by Noble Prize winning economist Joseph Stiglitz. 

Which brings me to the CNN/Tea-Party debate.

Let me start by saying I hate these dog and pony shows.  CNN introduced the Republican candidates as though they were entering a boxing ring.  My favorite by far had to be when Herman Cain was announced as 'The Businessman.'  After all the candidates were on stage and had waved to the audience, the national anthem was performed.  Only Rick Santorum and Mitt Romney sang along so I wonder whether the others even knew the words.  LOL. 

Once the theatrics ended and the debate began in earnest, Governor Perry was attacked furiously from all sides.  He defended himself well during the first half hour but lost it after that.  Not that it will matter because he was in the midst of a friendly crowd.  Bachmann and Santorum scored some points by attacking Perry on his executive order forcing 12 year old girls to receive the HPV vaccine, while Ron Paul attacked Perry for raising taxes, and Romney went after Perry's categorization of Social Security as a 'ponzi scheme.'  When the smoke cleared Perry was still standing, though he lost some points when he spoke truthfully about the futility of trying to build a 2000 mile long fence or wall along the U.S. border with Mexico. 

All told, I think Perry had a better night than in his first debate.  Romney and Huntsman still looked and sounded like the only true presidential candidates out there while the others pandered for support.  In the end, however, it won't really matter, because nobody was watching this dog and pony show except the political junkies like me, and the GOP party activists.  None of the candidates offered real, workable solutions to the economic crisis at hand, preferring instead to fall back on supply side arguments about tax cuts and job creators that have been thoroughly refuted by empirical research time and time again.  By all accounts it seems the race is a two man contest.  Romney and Perry, Perry and Romney.  The lead will likely change hands a few times before these horses reach the finish line in Tampa, FL next summer.

Next event:  The Fox News GOP debate Thursday Sept. 22.  Softball question time.

The (premature) Death of the Roosevelt Consensus

Michael Gerson penned a column for the Washington Post yesterday asking a very important question:  Has mainstream American thinking about entitlement programs and government spending changed in the past few years?  The answer he gives is more or less a big perhaps.  Gerson is an unabashed conservative who served as a speechwriter and advisor to President George W. Bush so it should not be surprising he would write such a column trumpeting Gov. Perry's opposition to the New Deal and its legacy program, Social Security.  Eradicating Social Security has always been a goal of staunch conservatives, primarily because it is an example of liberal government successfully addressing a major societal problem (senior poverty).  Most rational conservatives understand that Social Security has lifted the standard of living for many seniors and disabled people in America, thus making the whole of society better off.  These rational conservatives, such as Mitt Romney and Jon Huntsman, follow in the footsteps of Ronald Reagan (who ensured the solvency of the program through 2035 with reforms in the 1980's) and Dwight Eisenhower who cautioned his fellow Republicans that any attack on Social Security will doom the party to minority status permanently.  Yet, there are still those who cling to the notion that it is a 'ponzi' scheme and an unjust transfer of wealth from workers to retirees (really now...do YOU know anybody who is getting rich on Social Security?).  It seems Rick Perry has forgotten Eisenhower's warning.

Gerson goes on to quote Perry as follows:

“that the Progressive movement was the beginning of the deterioration of our Constitution from the standpoint of it being abused and misused to do things that Congress wanted to do, and/or the Supreme Court wanted to implement. The New Deal was the launching pad for the Washington largesse as we know it today.”

 

The Progressive movement that brought about things like the end of legalized segregation, discrimination on the basis of race, guaranteed the right to vote for African-Americans, protected defendants from overwhelming state power in criminal trials, reduced the poverty rate, improved educational standards for all Americans, electrified much of the rural south, and guaranteed access to medical care for our senior citizens is now responsible for 'the deterioration of our constitution' according to Mr. Perry.  Does he really want to return to pre-New Deal America?  An America where two classes of people existed, the very rich and the very poor.  There was no 'middle class' to speak of in 1933.  It, too, was created largely by the 'Progressive movement' Governor Perry disdains so much.  And the creation of that middle class, not the rugged individualism Perry touts, is what created the 'American Century' and led the United States to become the most powerful nation on earth.  

Gerson then states three possible outcomes of Perry's rhetorical attack on the New Deal:

• Republican primary voters will question his electability and turn towards Romney
• Republicans will embrace the message and alienate enough voters to reelect Obama
• Perry and the Republicans have tapped into an ideological sea change and will lead the nation out of the 70 long years of darkness imposed by radical liberalism

From Gerson's analysis of the possibilities it is clear he thinks the third is the more likely, though he makes his case using selective information, none of which he is specific about.  Instead he asks, "Will America need to break decisively from the European social model to avoid Europe’s economic fate?" without providing even the slightest detail about what the phrase 'Europe's economic fate' means.  The savvy reader will understand he speaks of Greece, Ireland, Portugal, and perhaps the U.K. and the budget woes those countries have had in recent years.  He implies that those woes are a direct result of European social democracy, i.e., the welfare state, neglecting the fact that the whole world has been in the midst of an economic slowdown for nearly four years that was brought about by bad decisions by lenders, consumers, and the collapse of the housing market.  In the midst of this global recession many European nations have managed quite well, even running budget surpluses while still providing all the social welfare benefits promised.  See the chart here for more information.  Many will return to surpluses once the economy has fully recovered, if it is able to do so.  

In the end, it is a fallacious argument to attribute America (and the world's) debt problems to social programs.  Medicare and Social Security have both run a surplus for decades.  Due to uncontrolled inflation in health care costs the surplus for Medicare will likely run out by 2021, if not sooner.  Social Security currently has around $2.4 trillion in surplus and is expected to remain fully solvent through 2035, though reductions in the payroll tax designed to stimulate the economy may decrease that by a year or so.  Reforms are necessary.  Everyone agrees, liberals as well as rational conservatives.  

 

The real problem, which radical conservatives are loathe to admit, is that they (and many Democrats) have pursued unwise fiscal policy since 2001, enacted huge tax cuts while fighting two wars, created a Medicare prescription drug benefit without paying for it, and expanded the defense budget.  New spending coupled with tax cuts has created the problem, not the Progressive movement.  Get it right Governor.

Why Hello Mr. Perry...Welcome to the Rest of America

Five whole days have passed since Texas Governor Rick Perry announced his entry into the battle royal to become the next Republican nominee for president.  The media has been engaged in an all out effort to figure out just who he is and what his entry into the race means, as seen here, here, and here.  Perry is, it seems, the political flavor of the week.  The media's new toy is a giant plushy in the shape of Governor Perry. 

But the real question is, just who is Rick Perry?  What do we know about him?  How conservative is he?  Does he still think Texas ought to consider seceding from the union?  The governor has certainly been busy tossing red meat out to movement conservatives to bolster his credentials, as seen by claiming that 'a substantial number' of climate scientists have manipulated their data to ensure government funding, or by holding a prayer rally in Houston (is he governor or a pastor?), or backtracking on his remark that New York's legalization of gay marriage is "fine with me."  Pavlov's dogs are salivating. 

Some are asking whether Governor Perry is electable while the first national poll shows him with a comfortable lead of second place contender, former Massachusetts Governor Mitt Romney.  I can't vouch for the polls methodology but Rasmussen is usually semi-reliable.  Of course, at this time four years ago Rudy Giuliani was leading in all the national polls and he never quite made it out of his Florida rocking chair.  What has Perry done to deserve all this attention?  Is he really the savior of the GOP?  Let's take a look.

First, Rick Perry was launched into national stature by the election of George W. Bush as president in 2000.  Perry was Bush's Lieutenant Governor beginning in 1999.  Prior to that Perry served in the Texas House and as Agricultural Commissioner.  Perry is rather unique among modern politicians in that he has never lost an election.  In his first run for governor in 2002 Perry received nearly 58% of the vote in cruising to an easy victory.  Four years later, however, when facing three challengers, Perry's share  of the vote dropped to just over 39% as he received over 1 million fewer votes than in 2002.  In 2010, he easily vanquished a gubernatorial primary challenge by Senator Kay Bailey Hutchison, though combined his GOP challengers managed to pick up 48.9% of the primary vote.  He sailed to victory in November over Houston Mayor Bill White by a 54% to 42% margin.  The sad fact, however, is that fewer than 1 in 3 eligible voters in Texas even bothered to cast a ballot meaning that Perry was elected to a 3rd term by about 1/6th of Texas voting eligible population (Texas has the lowest voter turnout rate in the US).

Second, Mr. Perry has made his case that he ought to be the Republican nominee for president (and the next president) based upon his so-called 'Texas Miracle', a reference to the fact that nearly 40% of the new jobs created in the United States since the beginning of the Great Recession have been created in Texas.  Perry attributes this to his pro-growth policies such as low taxes and less regulation of business.  What Perry doesn't say is that much of that growth has occurred because Texas population has been growing faster than almost every other state as Americans migrate from chilly northern climates to the sun belt in record numbers, as evidence by the results of the 2010 census.  He also doesn't talk about the fact that Texas unemployment rate is 8.2%, currently 25th worst in the nation, and trails such anti-growth states such as Vermont, Massachusetts, and New York.  Governor Perry also doesn't want to talk about the fact that 1/3 of all the new jobs in Texas are government jobs, or that he balanced his state's budget the last four years largely because of $17 billion in 'failed' stimulus funds provided by President Obama.  He doesn't want to talk about the fact that Texas is tied with Mississippi for the highest percentage of the work force earning minimum wage or that Texas just balanced its budget by cutting $4 billion from education in a state that trails the nation in education quality already.  This has prompted some, such as Nobel Laureate Paul Krugman, to proclaim Rick perry's Texas as an 'unmiracle.'

So the question becomes one of who's right?  Is Texas the unbridled economic miracle that Governor Perry claims or is it the disaster that his critics contend it is?  Will 'President Perry' do for America what he has done for Texas?  Do we even want him to try?  Time will tell. 

And Then There Were Three (or four)

Somewhere between 17 and 18 thousand Iowa Republicans showed up in Ames, Iowa on Saturday for a day long political carnival featuring rousing speeches by several of the GOP candidates hoping to receive their party's nomination for president next year.  Following the speeches, the faithful took part in the traditional Iowa straw poll, an indicator of preferences among the partisan base.  The poll also acts as a bellwether of organizational strength.  Former Minnesota Governor Tim Pawlenty invested more than a million dollars in Iowa hoping for a strong showing in the poll.  He finished third in the balloting with 14% of the vote, about half the total received by the top two finishers, Rep. Michele Bachmann and Rep. Ron Paul.  Governor Pawlenty then announced on Sunday that he was ending his campaign for the presidency.

The media narrative now has the field for the GOP narrowed down to three (Bachmann, Romney, and Perry), two of whom did not even compete in Iowa, while all but ignoring the strong showing of Texas Rep. Ron Paul.  While I think it will be difficult for Paul to win the party nomination I don't think it will necessarily be any more difficult than Bachmann winning it.  Neither of them has any executive experience to speak of, both have a fervent band of supporters, and both play to the libertarian/Tea-party wing of the Republican Party.  Financially, Paul might have an edge and he definitely has the experience to run a national campaign while Bachmann has had some notable struggles raising money at times.  Paul has become famous for his 'money bombs' when he attempts to raise millions of dollars in a day.  Bachmann does have the support of the 'tea-vangelicals' (a term I despise) going for her but it remains to be seen what kind of force they will be in the caucuses next January.  Finishing in the top three in the Iowa Caucuses next year will be crucial to both candidates campaigns.  Only one of them will manage that.  If it is Paul, his campaign will be buoyed and sustained (though he likely continues to campaign in futility if he doesn't make the top three).  If Bachmann fails to make the top three her campaign will be effectively dead.

That leaves current Texas Governor Rick Perry, who will have to neglect the needs of his state in order to wage a full time campaign for the presidency, and former Massachusetts Governor Mitt Romney, a moderate Mormon who isn't trusted by much of the GOP base.  Perry has a natural appeal to social conservatives, many of whom are southerners, while Romney appeals more to the classical pro-business wing of the GOP.  Both have their strengths and weaknesses entering the campaign.  Perry has a solid, if somewhat ambiguous, record of accomplishment as governor of Texas.  He has presided over a state that has boomed in terms of job growth in the last decade, though critics point out that 1/3 of the growth has been government jobs while much of the rest has been in low wage service industries.  Romney, on the other hand, was elected governor of one of the most liberal states in America, largely based on his reputation for 'saving' the 2002 Salt Lake City Olympic Games.  Critics point out that job growth in Massachusetts during his tenure was below average and that he signed the nation's first universal health care law featuring the exact type of government mandate he opposes at the federal level.  Financially, Romney will have a huge advantage over the rest of the field.  His personal net worth is around $250 million and his fundraising ability is second to none.  Perry remains untested at raising funds on a national scale, though he has been quite successful in Texas.

So given these three, or four, who will eventually secure the Republican nomination and the right to face off against President Obama 15 months from now? The smart money is on Romney right now but with four candidates appealing to disparate interests within the Republican Party, coupled with the rule changes regarding the allocation of delegates from the primaries and caucuses, the stage could be set for the first contested convention since 1976, when Gerald Ford bested Ronald Reagan for the nomination.  Bachmann and Perry will compete for the evangelical vote, Romney for the financial sector and moderate Republicans, and Paul for the Libertarian wing of the party.  In the final analysis, I think the GOP will go towards electability rather than ideological purity because it may be better to win with someone you don't fully trust than to lose with someone you do.  That means Romney gets the nod with the VP slot going to Perry or Bachmann.  I can't wait for January!

GOP Debate, Iowa, and Governor Perry

Several Republican wannabe's gathered for a debate sponsored by The Examiner and moderated by the friendly folks at Fox News on Thursday night.  Many of the questions were like 'red meat' tossed to a pack of vicious dogs and hungrily gobbled up by the candidates trying to prove their conservative credentials to the activist base of the party.  One example that illustrates just how out of touch with America the GOP has become was asked by Fox News Special Report anchor Brett Baird.  When asked if any of the prospective nominees would accept a budget deal that cut spending by $10 for every $1 in revenue increases, all of them said they would reject such a deal.  Even Baird was not sure he heard them right and had to repeat himself.  Now, maybe it is simply that the candidates felt they had to play to the base of the party.  If not, however, it shows how ideology has been elevated above resolving the nation's fiscal problems.  They'd be crazy not to accept a deal that reduced the deficit by $10 trillion just because it contained a $1 trillion revenue increase.

The highlight of the evening had to be the when Chris Wallace began questioning former Minnesota Governor Tim 'T-Paw' Pawlenty about some comments he had made about Representative Michele Bachmann's experience and ability to be president.  The two candidates sniped back and forth at each other in a clear violation of Reagan's first maxim of politics: speak no evil of another Republican.  In what is being called the 'Minnesota Melee' T-Paw had the best line when responding to Bachmann's claim of having led the fight against the stimulus package, against Obamacare, and against raising the debt ceiling (all of which passed Congress) when he said, "If that's your example of leadership, please, stop, you're killing us!"  Of course, all this really avoids the bigger question about her experience.  Republicans (and Hillary Clinton) harped on President Obama's lack of executive experience in 2008, claiming it made him unqualified to be president.  Why isn't the same true of Rep. Bachmann?  A double standard?  Perhaps.

Much of the debate has no real meaning except that today in Ames, Iowa, 20,000 or more Republicans will participate in a straw poll indicating their preference for the GOP nominee to face President Obama in 2012.  It is an exercise with very little predictive power.  In 2007, Mitt Romney won the straw poll, Mike Huckabee won the caucuses a few months later, and, of course, John McCain won the GOP nomination.  The straw poll, like the Iowa caucuses, serve to winnow the field of candidates.  A candidate who does well in the straw poll will likely make it to the caucuses, where the top three usually continue on to NH and a few other primaries.  A poor showing at the straw poll probably means a candidate has limited appeal and his/her viability is in question.  Some candidates may even drop out of the race after the straw poll.  Mitt Romney, recognizing the limited value of the poll and combined with his huge financial advantage over the other Republicans, has decided not to participate.  This leaves Michele Bachmann and Ron Paul as the likely favorites.  Which leads us to Governor Rick Perry.

Perry is poised to enter the race for the presidency today with a speech in Charleston, South Carolina.  Whether his speech is designed to downplay the news that comes from Iowa (he won't win because he isn't on the ballot) or just coincidence, it injects a new element into the race.  It also substantially reduces the likelihood of Michele Bachmann winning the GOP nomination, regardless of the outcome in Iowa, largely because they are both seeking support from many of the same Republicans, evangelical Christians.  Given Perry's record of more than a decade of executive experience and evangelicals comprising an above average percentage of southern Republicans, Perry will likely do well among this group.  Bachmann, on the other hand, has some questionable Christian credentials and ties to dominion theology.  She also derives a large amount of support from the tea-party and serves as their pro-forma leader in the House. 

What remains to be seen is how Perry will handle the demands of national campaign when everything in his record will be scrutinized, checked, and rescrutinized.  While no stranger to the politics of personal destruction, he has never been subjected to them at the level that he soon will be.  Nor has Bachmann.  Mitt Romney, on the other hand, has been through it before.  That experience, and his cash advantage, may be the difference in the race.  Perry will do well among southerners and Christians, while  Romney, a traditional Republican and Mormon, likely caries the northeast and mid-Atlantic.  It should be an interesting primary season.  I can't wait for the cold of January!