Bachmann gone. Perry (soon) gone. What does that leave us?

Michelle Bachmann announced that she is leaving the race. Rick Perry announced that he is returning to Texas to assess his candidacy. Translation: he’s out. And then there were five.
Mitt Romney, the winner of the Iowa caucuses, is not the not-Romney, although he has every advantage right now: support, organization, money, and a win in Iowa.

Ron Paul is not the not-Romney because his beliefs in foreign policy frighten everyone except for his 19-year-old supporters and retired anarchists. It is almost impossible for him to get the nomination.

Rick Santorum is the second-place finisher in Iowa by only eight votes, the closest finish ever. He is the new not-Romney. But for how long?

Newt Gingrich did poorly in Iowa, and I suspect he will not do well in New Hampshire or South Carolina. His momentum is gone, and good.

Jon Huntsman, who of all the candidates would make the best president and the most formidable opponent against Obama, never campaigned in Iowa. He put all of his eggs in the New Hampshire basket, but has only a 10.8% support there according to the Real Clear Politics average as of this morning, compared to Romney’s 41%. If he loses there, his race is done.

So is Romney the inevitable candidate? To answer that we need to know what will happen to Perry and Bachmann’s supporters. Also, as Gingrich fades, where will his supporters go? Romney has the support to win in New Hampshire, but watch South Carolina. Gingrich is dropping, and Bachmann and Perry both had 6 or 7% support in polls. With Romney at 21%, those number matter a lot. The only way Romney can lose the nomination at this point is if (A) Gingrich drops, and his supporters join all Bachmann and Perry supporters (much of the evangelical vote) behind Santorum; and (B) Santorum develops a support organization at record speed. The former is impossible if Romney is seen as the inevitable nominee. The latter is just plain difficult.
Besides, Iowa and NH? Not bad. Ron Fournier writes this morning in National Journal.

If Romney wins New Hampshire, he would be the first non-incumbent Republican to sweep Iowa and the Granite State since the modern caucuses were formed. There is a reason why that’s never been done: Republican coalitions in Iowa and New Hampshire are mirror images of one another and, taken together, reflect the broad GOP electorate. In other words, a candidate who can win older, more conservative GOP voters in Iowa as well as white-collar, independent-minded Republicans in New Hampshire should be able to win everywhere.

Therefore, it remains: Mitt Romney will be the Republican nominee.

Romney acts like an adult

Thomas Edsall, a professor of journalism at Columbia, in a critique of Romney’s campaign strategy, quotes the candidate:

Once we thought ‘entitlement’ meant that Americans were entitled to the privilege of trying to succeed in the greatest country in the world. Americans fought and died to earn and protect that entitlement. But today the new entitlement battle is over the size of the check you get from Washington.

But after reading Edsall’s summary, “The Anti-Entitlement Strategy,” I look upon Romney’s position more favorably. Why? First, I disagree with the very definition of the world entitlement. Second, ponder this little nugget of data from the recent Government Accountability Office’s fiscal 2011 financial statements, as noted by Bryan R. Lawrence, founder of Oakcliff Capital, writing in today’s WaPo:

In fiscal 2011, the cost of the promises grew from $30.9 trillion to $33.8 trillion. To put that in context, consider that the total value of companies traded on U.S. stock markets is $13.1 trillion, based on the Wilshire 5000 index, and the value of the equity in U.S. taxpayers’ homes, according to Freddie Mac, is $6.2 trillion. Said another way, there is not enough wealth in America to meet those promises.

Two points. First, I doubt that Romney would, if able, gut all of the entitlement programs. (He will not be able.) When asked during a debate which federal departments he would abolish, he gave a serious answer – that each department did some things worthwhile, and that we must not throw the baby out with the bath water. Thus, the valuable programs currently performed by a department must first be identified and then assumed by another department, agency or office, before the department could responsibly be abolished. I assume the same sobriety would apply to Romney’s position on entitlement spending.

Second, not all entitlement programs are transfers to “parasitic” “sloths.” He may have to trim down the rhetoric. Even so, he will be the adult in the room when debating Obama, who has responded to both the current depression and the forthcoming entitlement-fueled default by giving speeches and proposing to tax private jets.

Edsall again:

Romney’s adoption of an anti-entitlement strategy comes at a time when he appears to be looking up from the primaries toward Election Day, which suggests that his hard-line stance will be central to his campaign against Obama and not just a temporary maneuver.

Let’s hope that this is not only an election strategy, but a blueprint for governance.

A serious look at Jon Huntsman?

Many candidates have had their moment in the spotlight and found inadequate: Bachman, Perry, Cain. Politicos and activists are waiting for Gingrich to implode and be the next former not-Romney frontrunner. But Jon Huntsman has not yet had his moment, and he should. He has both the qualifications and demeanor to be president, is likable to the political center, and has conservative credentials that display both his reasonableness and his consistency, something Romney lacks. Will he get that look? Let us hope so.

George Will discusses Huntsman’s conservative credentials.

Jon Huntsman inexplicably chose to debut as the Republican for people who rather dislike Republicans, but his program is the most conservative. He endorses Paul Ryan’s budget and entitlement reforms. (Gingrich denounced Ryan’s Medicare reform as “right-wing social engineering.”) Huntsman would privatize Fannie Mae and Freddie Mac (Gingrich’s benefactor). Huntsman would end double taxation on investment by eliminating taxes on capital gains and dividends. (Romney would eliminate them only for people earning less than $200,000, who currently pay just 9.3 percent of them.) Huntsman’s thorough opposition to corporate welfare includes farm subsidies. (Romney has justified them as national security measures — food security, somehow threatened. Gingrich says opponents of ethanol subsidies are “big-city” people hostile to farmers.) Huntsman considers No Child Left Behind, the semi-nationalization of primary and secondary education, “an unmitigated disaster.” (Romney and Gingrich support it. Gingrich has endorsed a national curriculum.) Between Ron Paul’s isolationism and the faintly variant bellicosities of the other six candidates stands Huntsman’s conservative foreign policy, skeptically nuanced about America’s need or ability to control many distant developments.

Time for Rick Perry to Leave the Race

After a disastrous debate performance, Rick Perry decided to go on Letterman and laugh it off.

Perry can be given a bit of slack for drawing a blank on stage. Public speakers of all varieties frequently lose their trains of thought, and in such a high profile debate there is a lot on the line. He felt the pressure, and his mind drew a blank. Oops.

Unfortunately for Perry, an “oops” moment such as that is not tolerable, especially since it was yet another dismal debate performance. His ability to laugh it off, then and last night on Letterman, shows a softer but less serious side of the Texas governor. But America needs a leader who is mature and serious, and who shows up on the debate stage prepared.

Intrade, a prediction market, now lists his chance of winning the Republican nomination at 4.3%. The chart below shows Perry’s chances for the last year.

Perry enjoyed a fast rise as the then latest not-Romney, and earned himself an equally fast demise due to his lack of preparation and un-presidential tone.

What is left for Perry? He won’t win the nomination, and I doubt his fundraising will continue for much longer. What he can do is continue to attack Mitt Romney as a RINO. Nothing will come of it but a weakened opponent for President Obama in 2012. Is that what Perry wants?

It is time for Rick Perry to drop out of the race. The voters deserve better than oopses and top ten lists.

One Year From Tonight…

I will be watching the results of the US presidential election. And what an exciting election it is looking to be!  A lot is on the line, and two very different ideas of the direction America should take will collide.

One year out from the 2012 election, President Obama faces the most difficult reelection environment of any White House incumbent in two decades, with economic woes at the center of the public’s concerns, an electorate that is deeply pessimistic and sharply polarized, and growing questions about the president’s capacity to lead.

Those factors alone portend the possibility that Obama could become the first one-term president since George H.W. Bush, who was defeated by Bill Clinton in 1992 at a time of economic problems and similar anger with the political establishment in Washington. To win a second term, Obama probably will have to overcome the highest rate of unemployment in an election year of any president in the post-World War II era.

Last year’s midterm election victories have made Republicans eager for 2012. But public disaffection with the party and a muddled battle for the GOP nomination leave open the possibility that Republicans will not be able to capitalize on the conditions that have put the president on the defensive. Failure could produce the kind of disappointment that would trigger recriminations and an examination of the party’s priorities, tactics and leadership. Former Massachusetts governor Mitt Romney remains the candidate to beat, but so far he has not been able to consolidate support or generate enthusiasm in a party that is more conservative than he is.

What can be said at this point is that, after three years of pitched battles between Obama and congressional Republicans, the country is heading toward a high-stakes contest. Election 2012 will be a contest not just between two candidates but also between two starkly different views of the role of government that underscore the enormous differences between Republicans and Democrats.

Given the public mood and the president’s standing, the 2012 election will bring a dramatic shift from the hope-and-change enthusiasm generated by Obama’s first run for the White House. The race will be not only more competitive but also far more negative.

Source.

My prediction: Mitt Romney will win the Republican nomination. During the primaries, as his victory looks more likely, the Republicans will coalesce behind him. During the general election, with unemployment above 9%, gridlock in government, and Obama reverting to more speeches instead of action, independents will as well. They will be responding to the “dark mood” in America. Whether or not Obama deserves the blame is a fair question, but I think he will receive more than his fair share of blame for the electorate. He won’t win in a landslide, but I predict Romney will be our next president.

Of course, anything can happen, and I am the first to dismiss predictions, especially, as Yogi Berra would say, about the future.

What is your prediction? Feel free to post in the comments, and encourage your friends to as well.

(Update: this post was originally entitled “Two Years From Tonight…” instead of, obviously, “One Year From Tonight…” Thank you to a reader for pointing it out. In my defense, I’ve been drinking some excellent Argentine wine.)

Romney Offers More Details

Mitt Romney, in a speech before a conservative group here on Friday, offered his most detailed plan yet to cut government spending and lower the federal debt, including an overhaul of Medicare and significant changes to Social Security.

Speaking at theAmericans for Prosperity Foundation’s annual meeting, Mr. Romney said his plan would cap spending at 20 percent of gross domestic product by 2016, and would require $500 billion a year in spending cuts. To accomplish this, Mr. Romney explained, he would eliminate all nonessential government programs, including Amtrak, return federal programs like Medicaid entirely to the states and improve the productivity and efficiency of the federal government. He would also immediately cut all nonsecurity discretionary spending by 5 percent across the board.

Mr. Romney’s proposal for Medicare is similar to the hotly debated plan that Representative Paul Ryan of Wisconsin, the chairman of the House Budget Committee, introduced in April. Mr. Ryan’s plan would replace Medicare and offer payments to older Americans to buy coverage from the private market.

Mr. Romney’s proposal would give beneficiaries the option of enrolling in private health care plans, using what he, like Mr. Ryan, called a “premium support system.” But unlike the Ryan plan, Mr. Romney’s would allow older people to keep traditional Medicare as an option. However, if the existing government program proved more expensive and charged higher premiums, the participants would be responsible for paying the difference.

This is certainly a good start, and appears to be correcting for some of the difficulties Ryan found in proposing his plan.

He presented his plan as offering more choice — though younger Americans would need to be prepared to possibly pay more, for instance, depending on which plan they selected.

“Younger Americans today, when they turn 65, should have a choice between traditional Medicare and other private health care plans that provide at least the same level of benefits,” he said. “Competition will lower costs and increase the quality of health care.”

He concluded, “The future of Medicare should be marked by competition, by choice, and by innovation, rather than by bureaucracy, stagnation and bankruptcy.”

His plans for Social Security did not include any privatization plans, which some of his Republican presidential rivals support. Instead, “for the next generation of retirees, we should slowly raise the retirement age,” he said. “And finally for the next generation of retirees, we should slow the growth of benefits for those that have higher incomes.”

We will have to see how this is scored by the CBO to see if it is sufficient to curb Medicare costs to a less ominous level, but that he’s speaking about it is a good first step. This problem will not age well.

Source.

Romney Hints at Fiscal Plan

Here in New Hampshire, where Romney enjoys a big lead in the polls, he presented his prescription for the country’s growing debt. He said he would cut federal spending by about $500 billion during his first term by eliminating programs and services he doesn’t like (he cited President Obama’s health-care overhaul) and those he does like but doesn’t think the country can afford (he cited Amtrak).

Romney also pledged to turn responsibility for costly entitlement programs like Medicaid over to state governments, to “let states draft programs in a way they think best to care for their own poor.” He plans to reveal more details of his fiscal policy agenda during a speech Friday in Washington.

“There’s some who say when you talk about fiscal responsibility and cutting a program, you’re showing that you’re heartless,” Romney added. “We have to say, ‘No, no, no, you have to understand. We have a moral responsibility not to spend more than we take in.’ . . . It is a moral responsibility to believe in fiscal responsibility. We do and I do.”

I’ll be waiting for the details, specifically, what he plans to do with Medicare.

Source.

Brooks on a Grand Bargain Strategy

Obama, who sounded so fresh in 2008, now sometimes sounds a bit like Al Gore and Nancy Pelosi. Obama, who inspired the country, now threatens to run a campaign that is viciously negative. Obama, who is still widely admired because he is reasonable and calm, is in danger of squandering his best asset by pretending to be someone he is not. Obama, a natural unifier and conciliator, seems on the verge of running as a divisive populist while accusing Mitt Romney, his possible opponent, of being inauthentic.

It’s misguided. It raises the ideological temperature and arouses the Big Government/Small Government debate. It repels independents, who don’t like the finance majors who went to Wall Street but trust the history majors who went to Washington even less.

Obama would be wiser to champion a Grand Bargain strategy. Use the Congressional deficit supercommittee to embrace the sort of new social contract we’ve been circling around for the past few years: simpler taxes, reformed entitlements, more money for human capital, growth and innovation.

Don’t just whisper Grand Bargain in back rooms with John Boehner. Make it explicit. Take it to the country. Lower the ideological atmosphere and get everybody thinking concretely about the real choices facing the nation.

If you don’t trust voters to be serious, they won’t trust you.

Read the rest of David Brooks’ op-ed here.

They Should Know Better

I wish there were a class called China 101 that every member of Congress had to attend. This would be the first lesson: If you really want the Chinese to do something, never pressure them about it in public. Loss of face is anathema in the Middle Kingdom. Which is why when the U.S. Senate passed a bill hinting at tariffs on Chinese goods if Beijing doesn’t let the value of its currency rise, the People’s Bank of China promptly and defiantly responded by pushing the value of the renminbi lower.

It’s ironic, because Beijing had been doing just the opposite until politicians like Chuck Schumer decided to start posturing and make China’s currency a proxy for a highly politicized discussion about globalization and unemployment in the U.S. The idea is that if Chinese money were worth more, American firms wouldn’t export so many jobs to China (because labor there would be more expensive) and the Chinese would be able to buy more U.S. goods and services, thus cutting trade imbalances between the two nations and helping put the global economy back on track.

It is a good diplomatic lesson to be remembered during future dealings with China: praise in public, reprimand in private. But it’s also unfortunate in that the lesson need not have been learned. China had already allowed the value of its currency to rise.

Many of the changes the Schumer bill argues for are already in the works. The Chinese, who know they desperately need to rebalance their economy in order to maintain longer-term growth, have already let their currency appreciate 30% against the dollar since 2005 and a full 10% last year. Wages are rising; in fact, that’s the reason there’s a nascent trickle of higher-level manufacturing jobs back to the U.S., as Chinese pay hikes (coupled with higher energy and transport costs) make it less profitable to do business in China relative to the U.S. What’s more, American exports to China are actually increasing. Andy Rothman, a China expert at CLSA investment bank in Shanghai, recently pointed out to me that despite all the rhetoric about currency, U.S. exports to China rose 468% in the past decade. The next fastest growth rate to a major market was 64%, to Germany.

Which of the presidential candidates know this? Probably only Huntsman. Which are willing to say it? Probably only Huntsman. Romney may know it, but he’s gone the opposite direction by confronting China and campaigning to wage a trade war. Obama has been too soft, he argues. Does Obama know this? I assume he does, but also assume he’ll ignore the reality. His campaign will be based on two arguments. (It can’t be based on his record.) First, that things would have been much worse without him. Yes, there is 9% unemployment, but had we done nothing like the Republicans wanted we would now be looking at 13 or 14% unemployment. Second, he needs to spread more of the blame. He’s already blamed Bush, the Tea Party and Republicans in Congress, the EU, the Japanese tsunami, the Arab Spring… Blaming China is easy, especially since neither Romney, Perry, or Cain would care to challenge him on this. They will only up the blame placed on China and escape discussing our own faults for our ailing economy.