Capitalism versus Democracy: The Free Market and the 2012 Elections

A spectre is haunting American capitalism–the spectre of democracy and the 2012 elections.

As the 2012 campaign season unfolds what has become so fascinating is the degree to which it is becoming a referendum on capitalism both in the United States and across the world. Yet this is not an election where the most forceful criticism is coming from the socialist left demanding a revolution, but at least in the United States it is being driven from the right by the TEA Party and the likes of Newt Gingrich criticizing Mitt Romney and venture capitalism. All of this highlights the tension or unease there is in reconciling democracy and free markets, populism and capitalism.

Historically many argue that there is an interconnection between the rise of capitalism, religion, and democracy. Both emerged roughly at the same time in Europe during the sixteenth and seventeenth centuries. Scholars asserted that the concept of economic liberty and being free to act as the pejorative economic man in the market place reinforced and gave impetus to the individual liberty and the right to make choices in the political marketplace. Limited government protected both economic and political liberty.

Milton Friedman, in his classic Capitalism and Freedom emphasized this connection, seeing not only historical connections between free markets and individual freedom, but such a connection remained critical to the present. When the gates of communism came crashing down in the 1990s many argued that a prerequisite to building democracy in these former totalitarian states was first privatization of state enterprises and the establishment of market economies. To a large extent, the evolution of western capitalism and democracy have been inextricably connected. To many, it is no coincidence that the American Declaration of Independence and Adam Smith’s Wealth of Nations were both penned in the same year.

Yet capitalism and democracy or free markets and limited government are not always reinforcing but can be in tension. Chile under Allende was the epitome of free market capitalism and totalitarianism. Similarly China has perhaps the most successful capitalist system in the world right now under the direction of an oppressive state with limited political freedom. But in the United States, we supposedly have blended the right combination of capitalism and democracy. But in 2012, that blend is on the ballot this November.

Now of course one immediately thinks that the questioning is coming from the left. The Occupy Wall Street “We are the other 99%” is a serious critique of the growing mal-distributions of wealth in America since the 1970s that come to equal that of the early 20th century. Repeated reports document a country where the rich have vastly increased their incomes and share of the wealth at the expense of others. It is a country where social mobility and the belief of anyone can emerge from poverty and become rich is tempered by the reality that the US has the lowest social mobility of any major western country. We are a country torn by high degrees of economic and racial segregation in schools and neighborhoods. One would think this would be the referendum on capitalism slated for this November.

Or perhaps it is Obama-socialism, at least as described by those on the right that is what is driving the critique. One might think that Obama’s tepid embrace of Occupy Wall Street, his push for universal health care, his bailouts of banks and the auto industry, and his flaccid regulatory reforms would be the cause of placing capitalism on the ballot. But it is not. Instead it comes from the right.

Internationally, the European debt crisis that started in Greece and spread to Italy has been driven the critique not against capitalism but democracy. With clear political majorities in these countries rejecting the type of financial restructuring and cuts in government services demanded by the European Central Bank, the IMF, and the World Bank, Greece and Italy were forced to remove their leaders and replace them with technocrats more supportive of what the financial institutions wanted.

In the US, the most forceful criticism has come from the TEA and Republican Parties. The Tea Party is a populist group critical of what it perceives to be the creeping socialism of Obama and the Democrats. Michele Bachmann repeatedly excoriated Obama as a socialist. But she did the same in her attacks on fellow Republicans.

But now there is Romney. Romney is the Gordon Gecko of 2012. His work as a venture capitalist at Bain led to the take over and destruction of many companies and jobs and, fair enough, the creation of many other news jobs. But Gingrich and Perry have attacked him, making venture capitalism as dirty word as socialism. Their critiques about Romney destroying jobs, companies, and communities and creating new ones overseas or at wages far inferior to the old ones lost are devastating. Gingrich right now is offering the most powerful critique of capitalism there is. But so is Ron Paul in demanding return to the gold standard and in attacking the Federal Reserve. Both are playing on the anxiety of an electorate rightly worried that capitalism has abandoned them.

The Republican nomination process thus is surprisingly turning into a referendum on capitalism. Romney is the mainstream candidate who is the pro-business-cut-the-taxes type of candidate. He is opposed by Gingrich, Paul, and Perry, who are seeking to rally popular support against this type of capitalism. Never mind that they may be hypocrites or that their solutions are perhaps more capitalism and less democracy or government regulation of business and economic redistribution to solve the problems of capitalism.

These attacks on Romney scare too many Republicans as hitting too close to home and now the chickens are coming home to roost. Demands from many Republicans to knock off the on swipes at venture capitalism are illuminating the popular anxiety many have that perhaps free markets do not always serve the people, and capitalists themselves may not always be supportive of democracy.

The Iowa Caucus Results: And the winner is...

Not Romney. Not Bachmann. The winners are Obama, big money, and the massive divide in the Republican Party as the primaries head to New Hampshire and South Carolina.

A first look at the results suggests clear winners and losers. Romney, Santorum, and Paul are the clear winners. Romney wins a state only a few weeks ago he conceded. Santorum comes out of nowhere to almost win, and Paul does well enough to stay near the top. In fact Paul is the most consistent of all the Republicans. He came in second in the August, 2011 straw poll and now finishes a close third.

But look deeper and the fortunes of these candidates look very different.

Romney's Win
Yes, Romney wins Iowa and he will no doubt win New Hampshire. Many candidates are bypassing that state and are aiming for South Carolina on January 21. Romney leads in polls in all the early states, he has the money, and he has the organization to succeed. Yet he lacks a passionate base, and so Iowa was not a great victory for him. Recall that in 2008 Romney came in second in Iowa with 25%–this is exactly where he is today. It is not that Romney is a stronger candidate today than a month ago (let alone four years ago). Instead, the GOP base–especially the social conservatives–are more divided today than in 08. Romney tremendously benefited on Tuesday from a fractured conservative base.

Think back to 08. Huckabee wins Iowa with 34%. Add his percent to Fred Thompson’s 13% and the social conservatives have 47% of the vote. Now shift to 2012. Romney has 24.6%. Compare that to Santorum (24.5), Perry (10.3), and Bachmann (5.0) and that totals 39.8%. Yes the clear social conservatives have a lower percentage, but they are more divided, especially if one concedes that some of Gingrich’s votes too might come from the social-conservatives.

But think also about how Paul went from 10% in 2008 to 21.4% in 2012. He more that doubles his vote. One message from Iowa is how with Romney stuck at 255 in two caucuses, he has failed to win over the more conservative wings of his party. He is in no better shape than before, he just looks better because of a more divided party.

But Romney’s win came also with big money. Super Pacs were the big winner in Iowa spending more than $16 in ads. Romney benefitted from this spending and lethal attack ads on Gingrich. Thus, were it not for big money and a divided conservative field, Romney would look no better today than four years ago.

Romney has failed to close the gap with the majority of the GOP base. He has been stuck at 25% in Iowa and across the country for months. He still faces a distrust problem among conservatives and there is still little passion for him. As I said before, he is Mr. Inevitable but that hardly is the basis for a party rallying around you. Going forward he needs to win over the conservatives and that may not happen easily. Look to see rumors or calls for others to enter the race and with the GOP now running primaries on a proportional and not a winner-take-all basis, candidates such as Paul have every incentive to stay in the race, pickup delegates, and prevent a sealing of the deal for Romney.

Santorum's Close Second
Santorum wins but this is a short-lived one, perhaps. He is the latest beneficiary from the “Anybody but Romney” vote. Unlike others such as Bachmann and Perry who rose and there was time for media vetting and scrutiny, this did not happen with Santorum. He benefitted from the implosion of other conservatives, the Anti-Romney feeling, conservative endorsements, and luck of timing. He will face more scrutiny now and Romney and Super Pacs will turn on him. Santorum has little organization and money going forward and he challenge will be to capitalize on Iowa.

Given all this division, Obama must be thrilled. The GOP are divided and will spend resources fighting one another. This is good news, especially to hope that the social conservatives do not quickly rally around Romney or someone else. However, Obama should not rejoice yet. The potentially long GOP primaries may mean that Republican candidates spend a lot of time and get a lot of air time criticizing him and it may also mean that the candidate who survives is a better campaigner as a result of the long primary fight.

Perry and Bachmann
Now the clearest losers are Perry and Bachmann. Perry has money to go on but he is so damaged that he is returning to Texas to reassess his campaign. Wise move.

The bigger story if Bachmann’s fall from first in the Iowa straw poll to essentially last in the caucus. Her fall from grace is told in City Pages.

Her errors are numerous and she never grew as a candidate. In fact, her presidential campaign simply magnified her flaws from her congressional campaigns where her easy victories were more a consequence of good district lines and weak opponents. But Bachmann was a one trick pony–She never tired in repeating a line–“I will not rest until Obamacare is repealed”–but she had nothing beyond that. She lacked a real narrative or vision for her presidency and it showed.

What will Bachmann do next? She will go onto SC but she lacks money, staff, and a media presence after today. She is a zombie–walking dead–or a piece of toast.

Bachmann is no shoe-in to get re-elected for Congress in MN for a couple of reasons.

First, Minnesota's have soured on her and that too may be within her district. Statewide I have seen polls putting her negatives in the upper 50% range. Whether the same is true for her district is a good question. However, many were upset that she began her presidential campaign or at least announcement that she was considering a run for the White House on the day she was to be sworn in for Congress back in January 2011. They look at that, her rhetoric in Iowa confessing her roots there and love for the state to be a turning of her back on MN. She will have to explain all this rhetoric and abandoning her district should she decide to return home to run again.

Second, the bigger problem is redistricting. We will not know until February 22 what her district lines will look like. Her district is way over in population and needs to be apportioned with other congressional ones to achieve one-person, one vote. Currently she has benefited from one of the most solidly pro-GOP districts in the state. No guarantee that will happen again. Moreover, at least one plan for redistricting--puts her home of Stillwater, MN in Democrat Representative Betty McCollum's district. McCollum's district is a solidly Democrat one that includes mostly St. Paul. It make a lot of sense to redraw McCollum's district to extend out to the Wisconsin border. If that happens, Bachmann would have to decide to run against McCollum in a district that favors a Democrat. Other possible districting scenarios are also possible and we will not know until the MN courts finish their work in February.

Under MN law, Bachmann does not have to declare her candidacy for Congress again until June. However, the MN caucuses are on February 7, and if she decides to run she may want to declare sooner to prepare. Right now, uncertainly about redistricting and whether she will run again have depressed other GOP candidates from being able to gain traction or declare. One rumor is that Tom Emmer--former GOP gubernatorial candidate in 2010--wants to run.

My guess for Bachmann? If she runs and wins it is a prologue to her then challenging Franken for the US Senate in 2014. If she does not run, she tries for a political commentator job on CNN or Fox. CNN needs her more. However, her poor performance in Iowa and bad book sales have hurt her value. Maybe she goes on the speaking circuit. But to do any of this she needs to do better in SC to raise her value. That is perhaps why she goes on: to salvage something.

Countdown to Iowa

The Iowa caucuses are just a few days away. As it approaches it appears that the state is up for grabs with varying polls placing Romney and Paul in the lead. A few quick observations and thoughts.

Bachmann’s collapse.
This is one of the interesting stories to tell, tracing her victory in the August straw poll to what is certain to be poor finish on Tuesday. She is hoping that the 45% undecided break and that she is the recipient. No chance. The numbers do not suggest it. As Gingrich has faded his support has gone in three directions–Paul, Santorum, and Romney. Moreover, she has little chance to recapture the momentum after her manager defected. Bachmann is already a political zombie–walking dead–before Tuesday and really cannot not do much next Wednesday baring a miracle. Even then, she has no infrastructure to go beyond Iowa.

Paul’s day in the sun.
Paul will do well and still may beat Romney. He has a loyal following of young much like Obama 08 and one issue will be whether with school out that helps or hurts him. Paul’s GOTV is terrific and it may carry the day. He has taken a hit with his 1990s newsletter but it is not clear what impact that will have. Paul will have legs beyond Iowa and he may be a gnat to Romney as the latter seeks to consolidate.

Gingrich as Mr. Nice Guy.
Who would have ever thought of Gingrich as Mr. Nice Guy? The attack ads worked on him and he did not respond. He failed to remember the rule–define or be defined. He let his past define him and has lost momentum in the polls.

Santorum’s surge?
One poll has Santorum in third. He has benefitted from the other conservatives collapse (including Bachmann) but does he have the organization actually to deliver bodies on Tuesday?

Romney’s resurgence?
Iowa was a loser for Mitt but now he has a chance to win it and then New Hampshire the next week. He benefits from the mistakes of others and by being the consistent second choice of everyone else. In a field where there is some disarray perhaps simply holding on to 25% is enough.

Perry's Irrelevance.
What is left to say? He has put his foot in his mouth so many times his breath must smell like shoe polish. He has no momentum and appears to be spending all his money here with hopes like Bachmann that something breaks for him.

Are the GOP in trouble?
One dumb headline this past week said that there was a crisis with the GOP because going into Iowa there was no clear frontrunner or choice. Is it not the purpose of the primary and caucus system to select the nominee? It used to be that the conventions selected nominees and the crisis was if there were no clear favorite then. Then the fear was that going into the convention there was no clear favorite. Now it seems that there is a crisis if there is no favorite going into the caucuses and primaries. This is jumping the gun. Think of Iowa as the start of a decision-making process that is supposed to produce a nominee. The nominee is not supposed to be decided before the process starts.

Yet the GOP still face problems in terms of a message, perhaps nominating another Goldwater like candidate, and also via lack of support among Hispanics, Blacks, and other key constituencies in some swing states.

Obama’s problem.
Remember once a Democratic candidate running for reelection with high unemployment, slow growth, a large deficit, and rising gas prices? This was Carter in 80. We all know the economy is not a great issue for Obama but gas prices may also hurt him, too. Reports this week suggest $4 gallon gas this summer. Spikes in gas prices will not help him. Look to see another potential tapping of the Strategic Oil Reserve this summer.

Obama’s Christmas Present

Christmas came early for Barack Obama as Republican prospects to pick up the presidency took a major hit this week. A series of events again demonstrated that Obama cannot win but the Republicans certainly can also lose the presidency.

Miscalculating the Payroll Tax
The most glaring event of the week was the misplaying of the House GOP vote on the extension of the payroll tax. In principle they may have been correct that a one year deal is preferable to a two month extension but they needed to act but did not. Perhaps they thought Obama would again capitulate like he did in August with the debt deal but the politics was very different then as opposed to now. In August failure to reach agreement meant a government shutdown, making Obama look hapless. This time no deal meant tax increases on the middle class and that would have stuck to the Republicans. Moreover, even the Senate Republicans–including Mitch McConnell and John McCain–pressured the House to assent to the deal. The House GOP here simply overplayed their hand and lost.

Obama the Economist Populist
Contributing to the miscalculation is the traction Obama has received in running as an economic populist. He has given two major speeches in the last few months describing himself as a man for the people. The first was his $450 billion jobs speech a few months ago and the other was his recent Osawatomie, Kansas speech. In both he talked of the need to help the middle class. Both were fine speeches, but talk is cheap.

Obama rightly so should be criticized as the Democrat who abandoned the middle class and the poor. He continued the Bush policy of bailing out the banks and he has put more emphasis on stabilizing the financial sector than he did in helping home owners and the working class. While his original stimulus bill did help, I argued after the 2010 elections that his failure has been to appear to side more with the banks than the people. Given how much he took from Wall Street in 2008 to finance his campaign, no surprise here.

But Obama has been lucky. Occupy Wall Street and the “We are the other 99%” campaign have helped him. Both shifted focus to the Republicans in Congress and running for president that there is a clear class divide in America. Previous blogs of mine have attested to this fact and the growing economic divide in America over the last 30 years. Congressional refusal to raise taxes, a Republican presidential debate revealing no candidate willing to raise one dollar in taxes for every ten dollars in spending cuts, and the failure of Congress to enact Obama paltry $450 billion jobs bill all make it clear that they do not care about the American people (had they enacted the bill they could have disarmed the president and still pointed to how they supported the president on all his major economic programs but they still failed).

The point is that Obama can look like an economic populist because of the failures of Congress and the GOP to offer a credible alternative and to play politics in a way that makes them look like they care for anyone besides the top 1%. Obama is winning because of the implosion of the Republicans.

The Dismal Presidential Choices
Obama is also benefitting from a Republican presidential field that is not a varsity or junior varsity but the freshman team. It is a team running increasingly further and further to the right. A team that is further to the right than the Reagan Party–it is the Palin Party still as I wrote about several times t his year. It is a party that has flirted with several conservatives–Bachmann, Perry Cain, Gingrich, and now maybe Paul as the preferred choice over the more moderate but lackluster and passionless Romney. They seem out of touch with America in their talk of tax cuts, privatization, and return to the gold standard.

Now with little more than a week before Iowa, the race is definitely up in the air. Recent polls confirm what I asserted in an interview last week that Paul, Gingrich, and Romney will be the order in Iowa come January 3. But even if Paul does not win, his ascendency is a problem for the Republicans. If he does well in Iowa is libertarianism will play even better in New Hampshire and Romney needs to worry about a relative poor showing there on his part. This year with the Republican primaries and caucuses allocating delegates not by winner-take-all but proportionally, unless there is a quick kill by one candidate in January, look to a long primary and a potential brokered convention.

So What Does All this Mean for Obama?
Obama is now in much better shape in the polls for reelection than he was a few weeks ago. Polls have his approval rating up to 49% and it now exceeds is disapproval rating. He has a 7 point lead over Romney and much larger leads over the other Republican candidates. Congress’s approval is under 10% and public approval of the Tea Party has weakened. There are small signs of economic improvement but certainly no indication of real growth or significant decreases in unemployment in 2012. The economic news and prospects should doom him and the Electoral College road to reelection is complicated, but Obama now has a clear lead in Florida.

But compared to the Republicans running for president and those in Congress, he looks good. Obama can run for reelection on a slogan of “No matter how bad I am look at the alternative.”

Merry Christmas President Obama! Your present came wrapped with Republicans in a box they are building themselves in.

The Republican Choice: Why Gingrich?

Is Newt for real? This is the question increasingly asked as polls indicate that former House Speaker Newt Gingrich has taken the lead among the Republican presidential contenders. The simple answer may be yes, boding badly the for campaign of Mitt Romney who has struggled for months to be the inevitable last choice candidate once all the others have faded. But Newt’s rebirth and Romney’s campaign strategy are linked, pitting inevitability against reliability.

Don’t Hate Me Because I’m Mitt

Mitt Romney has had an identity problem from the get go. Best summed with the label “Multiple Choice Mitt,” Romney faces an initial problem that no one knows where he really stands on the issues. He is a former moderate Massachusetts governor who supported reproductive rights, gay rights, and he signed into law a health care bill essentially identical to Obamacare. Romney is a skilled businessperson and politician who saved the 2002 Olympics. He knows how to get things done. This should be his political narrative for his presidential campaign. But it’s not.

In 2008 Mitt ran away from this narrative. He pandered to the conservative base of the party, renouncing his moderate positions. Yet given the global economic collapse and John McCain’s avowal that he did not understand economics, had Romney stressed his business experience then he might have won the nomination. Now in 2012 as the Republican Party has moved further to the right Romney has abandoned even more of this narrative, seeking to out-duel the other presidential contenders in terms of xenophobia against immigrants, bashing gays, abortion rights, and taxes, or in renouncing health care reform. Mitt both wants to be the can do governor and businessman and the right wing extremist. No one really trusts him anymore–especially the Tea Party base–thus the moniker Multiple Choice Mitt.

But Mitt also suffers from another flaw–he is a pretty boy. Pantene shampoo famously featured a 1990 commercial with Kelly LeBrock who cooed “Don’t hate me because I am beautiful.” Mitt may be hated for that reason. He is rich, handsome, has perfect hair, and a trophy wife. All reasons to hate him because he has it all. Few can identify with him because of that. Voters bonding with presidential candidates is important. In 2004 voters preferred Bush over Kerry because the latter came across as an aloof prig.

Mitt also has another identify problem–no charisma. He is wonkish and more of a technocrat. He is reminiscent of another former Massachusetts governor–Michael Dukakis–who was similarly skilled but also boring. Politics is about passion and no one can really get passionate over Mitt.

Romney, though, has labored to make a virtue out of all of this. Be the viable second choice who outlasts everyone else in the race. Manage the best campaign, raise the most money, site the most offices, and script the best choreographed speeches. Romney’s strategy is to be the “steady Eddy”; be the one true love or candidate who is there for you after the quick romances and one night stands for the others pass by. Romney’s strategy–Mr. Inevitable.

But why Newt?

He’s not Romney. That is only part of the appeal. The other part of the appeal is that he is the last candidate standing. Gingrich appeared to flame out early before it became fashionable for the other Republican contenders to do so. Stories of infidelity, million dollar credit lines at Tiffanys, growling at the media, and a campaign staff quitting en masse; Newt was just ahead of his time. Since then we have see the other flavors of the month, as the media calls them, rise and fall. Trump. Bachmann. Perry. Cain. Each had an Andy Warhol 15 minutes but each faded as the presidential debates and vetting process grinded on. But eventually each undid themselves. Who was the last one standing? Not Romney, but Gingrich.

Most importantly, Gingrich is actually Mr. Reliable. Unlike Romney where no one knows where he really stands, everyone knows Gingrich and his views. His reliability is a political virtue compared to claims of inevitability. Gingrich was there with the Contract for America in 1994. He led the impeachment against Clinton in 1998. He carries the mantle of the Reagan brand. He is a known and dependable conservative. Yes he is full of warts, but unlike Cain and others, he admits them and says it’s time to move on. Americans hate denial or lying but can accept sinners and that is what Gingrich understands.

Conservative Republicans distrustful of Romney and not liking the other choices finally came back to Gingrich. He is more than the flavor of the month. But even if he is, it is good to be the flavor when it is your month and with it being T-minus less than a month to the Iowa caucuses. The timing is great. Gingrich leads in Iowa, South Carolina, and Florida, three of the first four contests. He is behind in New Hampshire but picked up the critical Union Leader newspaper endorsement. Romney was expected to win big in New Hampshire. He may still win but unless it is a blowout he will look vulnerable.

What is happening now with Gingrich is different than what transpired with Bachmann, Perry, and Cain. What is now occurring is the coalescing of the party around him. Cain’s endorsement is a sign, look to see others also endorse him as they leave the race early in January (except for Ron Paul who will potentially run again as the third party Libertarian candidate and complicate GOP strategy). By the end of that month look to see a race between Gingrich and Romney. Beyond January, the task will be organization, money, and momentum. Right now Romney has the first two but not the third. Gingrich has the third but not the first two. His challenge is taking his momentum and the passion around him to create the organization and money he needs to win the nomination. If he can do that, Romney is done.

Defining Obama: Presidential Image and Narrative in the 2012 Elections

In so many ways it may already be too late for President Obama. It may be too late for him to construct an alternative narrative about his successes and accomplishments that he can use on the campaign trail to support his re-election. For many Americans, the narratives have already stuck that his presidency and policies are a failure.

Two rules that every successful presidential candidate remembers are that “politics is like selling beer” and that “define or be defined.” The first rule refers to the power of political narratives, the second to the constructing your own image–creating an image–or having someone else do it for you. Both of these are rules about constructively using the media–generally in an aggressive and proactive way to do messaging.

This blog has repeatedly discussed the power of political narratives. Candidates need a compelling narrative that describes who they are, their vision for the future, and what they want their presidency to look like. The narrative is their reason for running for office (“I am running for president because...”) and the direction they want to take their presidency and the American public. George W. Bush was chided for lacking that “vision thing” and rightly so, but he still won in 1988 for other reasons (see below).

The way of persuasion is about having a narrative. We tell stories about ourselves when job hunting (the cover letter and resume), we tell stories to do fund raising (“Send money to feed the homeless”), and businesses sell products by telling stories (“Drink this soda and you too will be cool.”). It is less reason and facts that move people than it is narratives, with the best being about the future, messages that are optimistic, and those which inspire passion.

The great narratives of our time were Ronald Reagan’s “It’s morning in America” and Bill Clinton’s appropriation of Fleetwood Mack’s Don’t Stop Thinking About Tomorrow. Both were brilliant narratives about hope and the future. They were narratives that promised a better tomorrow; they appealed to America’s sense of progress, optimism, and that the future will be better than the past. Perhaps one of the most famous lines in movie history–Scarlet O’Hara’s “Tomorrow is another day” from Gone with the Wind captures the compelling nature of this American belief in a better future.

The 2008 presidential race witnessed dueling narratives of John McCain and Barack Obama. McCain’s narrative spoke of the world being a dangerous place and that we should not trust enemies. He touted his military experience to keep us safe and he sought to get America to forget that he was a Republican wanting to the keep the White House in his party’s hands after a failed eight years under George Bush. McCain’s narrative sought to channel the Reagan brand one more time but it failed. It failed to an Obama narrative of change. A narrative of hope for the future, of an appeal to a new generation wanting their turn at power. Obama simply had a great narrative. He also had the fortune of a collapsing economy that worked to his favor, and a Republican vice-presidential candidate in Sarah Palin who few thought was qualified to be president in the event of McCain’s death.

But beyond the narrative, Obama also understood the power of define or be defined. In politics, you need to define who you and your opponents are before they do that to you. Remember the famous 1990 Andre Agassi Canon commercial–“Image is Everything”–that captures the point.

Image construction is important to politics, especially if you can do it to your opponents. On Labor Day 1988 Michael Dukakis had a 18 point lead over George Bush. Bush used Willie Horton, references to the ACLU, and stories about the Massachusetts’ governor not wanting to kill someone who hypothetically raped his wife to cast him as a pinko who was soft on crime. Bush went to win the presidency by three points.

In 1992, when allegations of marital infidelity nearly wrecked Bill Clinton’s campaign, his staff used the latest technology of the day–the fax machine–to proactively counter stories. Finally, in 2004, the Bush campaign brilliantly defined John Kerry as an elitist coward who purposively injured himself three times to get out of Vietnam early. The genius in transforming a three-time Purple Heart winner into a coward was amazing; thus the power of narratives.

Again in 2008 Obama understood the charm of definition. He defined himself as the candidate of hope and change, of McCain the candidate of the old an stodgy, and he also successfully declared Ronald Reagan and his narrative to be dead. Obama brought narrative and definition together to create an amazing campaign story about himself and his opponents.

But the brilliance of 2008 rapidly faded. All that was done so well in 2008 failed Obama and the Democrats in 2010. They lost the narrative and definition. Palin mocked Obama by asking how we liked the “hopey-changey stuff?” The Republicans tied TARP to Obama and not Bush. They decried that the stimulus bill was a failure (even though it did work but was insufficient to address the real depth of recession the economy was in), and they questioned his competence and leadership. All of this has stuck. In part it stuck because there was some truth to many of the accusations, but still the Republicans were lethal after being trounced in 2008. They went on the attack from January 20, 2009 and redefined Obama as a failure.

Now think about where Obama is as 2012 is about to begin. Obama’s successes are defined as failures. The stimulus did help, TARP made money (Yes, it was a Bush program), and he did deliver on many other promises. Health care reform is decried as Obamacare and bank regulation as killing the economy. Obama’s narrative of change has degenerated into “It could have been worse” as described so many times in this blog. Obama still lacks a narrative and worse, he is defined as a failure and as unable to rescue the economy. Again, there is much evidence that this is accurate, but even if not, Obama has been defined by a narrative that he cannot escape. Obama needs to escape the economy and run against a do-nothing unpopular Congress. He needs to cast himself as an economist populist that fights for the other 99%. In short, Obama needs a complete makeover.

It will be hard to do this now that he has already been defined by the Republicans for the last four years. But even if not for the last four years, clearly in the last few months the Republican presidential debates have been influential in doing that. While Obama does his presidential thing, the GOP candidates debate and get press. They get air time attacking the president and he does not respond. The candidates collectively have succeeded in crafting an image of Obama that has stuck. While four years ago content analysis of media coverage of Obama demonstrated overwhelming positive images, were a similar study done today the hypotheses today would be of just the opposite–overwhelming images. Obama has been defined–his narrative for him written by his opponents.

Obama at least has one advantage–the image and narrative for his Republican opponents is being written and it is a negative one. Palin never had a chance to run for the presidency with over 60% of the public thinking her too dumb or unqualified to be president. Now think about the other Republican contenders–Romney as a boring multiple choice Mick–Bachmann as a religious zealot–Perry as a lightweight cowboy–Cain as a lightweight sexual predator–and Gingrich as a cranky, adulterer, arrogant, hypocrite. These are largely self-defined images reenforced by the media. Hardly the images that are winning presidential formulae.

As the Iowa caucuses loom it will be telling to see how Obama tries to remake his image and narrative. Again, it may be too late to do that but with the narratives and images of his opponents equally dismal Obama might be able to pull off a second term with a slogan reminiscent of we chanted when Richard Nixon was running for a second term: “Don’t change dicks in the middle of a screw, vote for Nixon in 72.” Better the devil we know than the one we do not. That may be Obama’s best hope for a narrative.

Bonus quiz and word association time: When I mention Obama or any of his GOP rivals, what words or images come to your mind? Let me know your suggestions.

The Clock Ticks: History, Unemployment, and Presidential Elections

Less than one year to the 2012 elections. Less than 60 days to the New Hampshire primary. Barely 50 days to the Iowa caucuses. The official presidential race is upon us. But as the clock ticks, time is running out for Obama and history is against him.

The basic problem is the economy. Only 80,000 jobs were added in October, placing the unemployment rate at 9.0%. The Federal Reserve Board projects slow economic growth next year–2-2.5%–with the unemployment rate settling in at about 8.5% by election time. Of course these numbers are bad for all those looking for jobs or businesses hoping to grow, yet for Obama it is a real problem.

Since 1932 only two presidents have ever won re-election when the unemployment rate was above 6%. In 1936 and 1940 Franklin Roosevelt won reelection with unemployment rates of 17% and 14.6%, but both of these elections should be treated as outliers or oddities. In 1936 the unemployment rate had dropped from nearly 24% to 17% and the economy was growing at an annual rate of 14%. In 1940 World War II was upon America and with patriotism high, support for Roosevelt was strong. More importantly, the economy was growing at 10% but the perception was that the president had the country going in the right direction.

In 1984 Ronald Reagan won re-election with an unemployment rate of 7.5%. Yet his victory occurred when the economy was growing at more than 11% and gas prices were tumbling from then record highs. Reagan definitely benefited from the perception that it truly was morning in America, especially after the unemployment rate tumbled from around 10% in 1982 and 1983.

But FDR and Reagan aside, high unemployment–six percent or more–is the death knell for a presidential re-election bid. In 1976 Gerald Ford ran for re-election when the unemployment rate was 7.7%–he lost to Jimmy Carter. Four years later the unemployment rate was 7.1% when Carter ran for a second term against Reagan. He lost to the tune of Reagan asking Americans if they were better off now than they were four years ago. In 1992 George Bush sought a second term with an unemployment rate of 7.5%–he lost to a Bill Clinton reminding the voters that it was “the economy stupid.” Conversely, Nixon won with an unemployment rate of 5.6% in 1972, Clinton 5.4% in 1996, Bush in 2004 with 5.5%, Eisenhower 4.1% in 1956, and Truman in 1948 with 3.8%.

Key to a presidential re-election is the actual unemployment rate. But economic, and the reality or perception that it is moving in the right direction, is also important. If there are not significant declines in unemployment along with economic growth and a perception that the economy is moving in the right direction, presidents are not given a second term.

Obama faces an economy where the best projection is of high unemployment and low economic growth. But there is more. Home values remain about 25% or more below what they were in 2008, consumer and now student debt is high, and many people have already blown through their unemployment benefits and face an uncertain future. Consumer confidence remains near historic lows, suggesting little chance that retail sales and spending for the coming holidays and into next year will revive the economy. The public just does not believe the country is headed in the right direction and few think we are better off now than four years ago.

History suggests Obama will lose. This assumes the Republicans put up a viable candidate with a compelling narrative. Yet so far that task seems elusive. Bachmann has come and gone. Perry has gaffed himself to death. Cain’s numbers place him in the GOP lead, but his negatives are escalating as it becomes more apparent that he is a misogynist who treats every woman in a demeaning fashion. Romney is boring and the Republican base does not really know where “multiple choice Mitt” stands on the issues. Gingrich is too acerbic. Congressional approval is less than 10%, with the public placing more blame on the Republicans than Obama for the gridlock in Washington. In short, the Republicans have the Democrats' disease—they are poised to snatch defeat from the jaws of victory. Obama can still win—he has money, the bully pulpit, and demographics that place perhaps as many as 200 or more electoral votes in easily into his presidential win column without too much effort. Now all he needs is the narrative for his re-election.

Obama hopes for a rerun of the 1948 Truman surprise victory over Dewey, campaigning hard as an economist populist against a hapless elitist. Yet the 1948 campaign featured an economy far better than 2012 so the parallels here might not be good.

Obama is also running on the fear factor—Hope that the American public will be afraid of an extremist Republican president presiding over a Republican Congress. Fear came be a powerful too, but 1980 demonstrated with Carter was up for re-election, fear of a crazy Reagan who would blow up the world was pushed aside by the desire for change and disgust with the status quo. Obama knows the public wants change—as he promised in 2008—but it is hard to run on that narrative when you an incumbent seeking re-election. He needs to navigate a message that promises change while staying the course with him. It’s a hard task—made only more difficult by the unemployment numbers—but Reagan and FDR did it, and now Obama needs to figure out how to channel their magic to do the same.

The Hype on Taxes: They Don’t Matter Much

Taxes impede economic growth. This is the belief among the Republican presidential contenders as they offer plans to cut taxes as a panacea to stimulate the economy. Herman Cain’s “9-9-9” assumes lower income tax rates for corporations and individuals will stimulate the economy. Newt Gingrich wants to cap top rates at 15% and Rick Perry has called for a national flat tax of 20%. Mitt Romney has a 59 point plan that includes tax cuts. Ron Paul wants a constitutional amendment to eliminate income and estate taxes. Michele Bachmann wants a return to the Reagan era tax cuts. All want to make the Bush era tax cuts permanent.

Yet do high taxes really hurt the economy as much as they believe, and will lowering them have much of an impact on stimulating it? The economic literature is clear — tax breaks to encourage economic relocation or investment decisions are inefficient and wasteful. Hundreds of studies reach this conclusion. When businesses are surveyed regarding factors important to their investment decisions, taxes often come in behind proximity to markets, suppliers, and the quality of the labor force. These other factors occupy a larger percentage of a business's budget than do taxes, and all of them are far more critical to long-term success than are taxes. Businesses occasionally admit this. Nearly 62 percent of those interviewed in a California study on hiring tax credits indicated that they had never or rarely affected their decision to employ individuals. Speaking at a recent chamber of commerce event, I asked business leaders whether the Obama tax cuts would encourage them to hire. Unanimously the response was no—they were unwilling to hire until such time that consumers were willing to buy their products and services.

Anecdotal stories and illustrations also confirm the tax fallacy. High tax states such as Minnesota have generally fared better in terms of economic growth, unemployment, median family incomes, and location of Fortune 500 companies, than low tax ones such as Mississippi and Alabama. In many situations high taxes, and with that, government expenditures on education, workforce training, and infrastructure, correlate positively with income, low unemployment, and business retention. One needs to look not just a one side of the equation—taxes—but the other side too—what taxes buy—to see what value businesses get out of them in terms of educated workforces and infrastructure investments. Most debates fail to do this.

Bureau of Economic Analysis statistics demonstrate how economic growth is related to tax rates. One can compare annual economic growth as measured by the percent change in the gross domestic product (GDP) percent based on current dollars to the highest federal individual tax rate and the top corporate tax rate since 1930. If taxes are a factor affecting economic growth, one should see an inverse relationship between growth of the U.S. economy and higher tax rates. The GDP should grow more quickly when top individual and corporate tax rates are lower. If taxes are a major factor deterring economic growth, lines on a graph should go in opposite directions: As tax rates go up the GDP should go down.

No such pattern emerges between high taxes and GDP growth over 80 years. During the Depression of the 1930s corporate and individual taxes rates increased, but in 1934 through 1937 the GDP grew by 17%, 11%, and 14% annually. Top corporate tax rates climbed to over 50% through the 1960s, again with no discernable pattern associated with decreased economic growth. The same is true with top tax rates on the richest which were 91% into the 1960s. Conversely, since the 1980s after Kemp-Roth and then after 2001 with the Bush era tax cuts, there is no evidence that the economy grew more rapidly than in eras with significantly higher tax rates on the wealthy and corporations. Looking at time periods when tax rates were at their highest, GDP often grew more robustly than when taxes were cut. Visually, the attached graph simply fails to demonstrate that tax rates negatively impact economic growth. (Click on the graph to get a better view of it).

Pictures are worth a thousand words, but statistics are priceless. Statistically, if a tax hurts economic growth, the correction with it is -1. If they positively facilitate growth the relationship is 1, and if they have no impact the relationship is 0. The correlation between GDP and top individual taxes is 0.29, between GDP and top corporate taxes is 0.32, and among the three it is 0.14. Statistically, there is a slight positive impact on either top individual or corporate taxes or economic growth, but overall almost no connection between tax rates on the wealthy and corporations and economic growth in the United States.

But what about taxes as job killers? Again running similar statistical tests, there is little connection. Using Bureau of Labor Statistics data on unemployment rates since 1940, the correlation among top individual and corporate taxes and the annual unemployment rate is -0.02—essentially no connection at all.

The simple claim of Perry, Cain, and others that high tax rates on the wealthy and corporations hurt economic growth and job production is false. The evidence is simply not there to support assertions that high taxes alone hurt the economy or that cutting them will have the stimulus effect asserted.

A plea for fact-based policymaking in an era of political myths

Comedian George Carlin quipped that "business ethics" was an oxymoron. The same can now be said about reasonable politics. Politics and the making of policy seems less to rest upon reasoned debate, social-science evidence, and facts than upon hope and belief. Rep. Michele Bachmann panders to ignorance when decrying vaccines as causing retardation. She, along with Herman Cain, Gov. Rick Perry, and most of the other Republican presidential hopefuls deny global warning, evolution, and a host of other well-established facts, preferring to base their candidacies and appeals on propositions lacking rational or empirical support.

Ronald Reagan famously misspoke: "Facts are stupid things." He seems to have gotten it right when it comes to political debate, pointing to how truth takes a backseat to myth or worse — lies. Two of Reagan's myths — welfare queens exploding the federal budget deficit, and supply side economics as trickling down to benefit us all – both failed truth tests. But that did not matter then or now; people bought them as simple answers to complex problems.

Today, untested or worse, crackpot or refuted ideas dominate political debate. Nationally, we hear rants about how illegal aliens are a drain on the economy and that they take jobs from Americans, when in fact the evidence suggests otherwise and that they are net contributors to our country. Taxes are assailed as job killers when evidence suggests that they are a marginal factor behind workforce quality, access to supplies and consumers, and transportation costs as more important factors affecting business location and expansion decisions. Conversely, little evidence supports the idea that tax holidays to repatriate corporate savings back to the United States will yield job production. Herman Cain more or less admits that his "9-9-9" was conceived as a bold political idea that was not based on any real evidence of its impact.

A bevy of other stupid public policies and political myths dominate the American political landscape. Wrongly we believe that welfare migration is a major problem in the country. Some contend that teaching sex education to teenagers encourages promiscuity, that we can pray away homosexuality, or that same-sex marriage hurts traditional matrimony. Never mind what the best research and facts state.

Both parties indulge

Myth-based politics does not seem confined to one party. Gov. Mark Dayton is determined to secure funding for a new Vikings stadium even though the economic evidence is overwhelming that public subsidies for this purpose are one of the worst uses of tax dollars there is as a tool for economic development. Conversely, the Minnesota Majority continues to beat the drum of voter fraud as stealing elections when the absolute best research suggests that in-person election fraud is negligible, that there is no evidence that it has affected the outcome of any recent election, and that voter-identification laws will not prevent this fraud and instead will disenfranchise many individuals.

As a professor who has taught public policy for nearly 25 years and a former government administrator and planner who worked in the world of facts, evidence and research, I find all this frustrating, especially when called upon to testify before the Legislature. Seldom have I seen facts — and not ideology or prejudice — move elected officials.

My students are not given the liberty simply to assert opinions unless they can support them with evidence. We should ask no less of our politicians and government officials. Reporters do not press candidates to substantiate their claims, and the public often gives them a free pass, letting emotion, anger or frustration guide decision-making. What results are bad laws and foolish policies that do not work, waste taxpayer money, and often make the problems worse than before.

Evidence dismissed

Recently I gave a talk to a local Rotary Club about the 2012 elections. When I finished, a minister came up to me and asked where I stood on voter-ID laws. I told him that I had researched and written on the subject extensively and that the evidence of fraud was negligible. He dismissed my statement, declaring: "I am from Milwaukee, I know about voter fraud. They bring busloads of those folks up from Chicago all the time to vote in our elections."

I shook my head in disbelief. "Those people?" He might as well as said blacks, because that is what he meant. I am not sure what disappointed me more — the racism, the dismissal of the facts or that he was a minister. Why he asked my opinion I do not know — except to confirm his prejudices. It was clear his mind was made up and no amount of facts would change it. He embodied all that is wrong with contemporary politics — one not of evidence-based policy making but one dominated by blind ideology, ignorance or willful disregard of the facts

Today's blog appeared in the Friday, October, 28, 2011 Minnpost.

Michele Bachmann's Meltdown

The Iowa presidential caucuses of January 3, 2012 are less than 75 days away and their outcome are more in doubt today than ever. What once looked like a certain victory for Michele Bachmann now looks less and less likely, and talk of her presidential prospects sounds more like a deathwatch especially in light of the resignation of her New Hampshire staff.

August 13, 2011 seems so distant now. Barely nine weeks ago Bachmann surprised many by winning the Ames straw poll. She was on top of the world, leading the GOP pack as the darling of the Tea Party. But then came the collapse. Rick Perry entered the race eating at her conservative base. Bachmann was unable to move to the center given her rhetoric and positions, and she disavowed any intention to do so. Media attention and scrutiny mounted, missteps and statements about HPV and retardation damaged her, and the cycle of decline began.

In the last few weeks numerous problems have mounted. Declining poll numbers followed with dismal debate performances that revealed no more than canned vacuous answers. All this was followed by poor third quarter fund raising and campaign debt and now her New Hampshire staff has stepped out.

Is Bachmann done?

Essentially, yes. As noted in several of my blogs, her campaign rested upon an Iowa strategy that is faltering even now. The belief before was that a victory in Iowa would be the springboard to success in other states such as New Hampshire and South Carolina. But she never did much to campaign there and her presence and infrastructure there was always weak. But now with Nevada and Florida moving up their delegate selection, Bachmann’s campaign was damaged even more because she did not have staff there to help her. The point here is that the Iowa strategy presupposed that she had money and structure in place in other states to take advantage of the Iowa victory. But she did not have this and thus, even if Iowa does still become a victory for her, she will be unable to take advantage of it. (Here are similar comments of mine in a story about Bachmann).

But now she is losing even in Iowa. Evidence is seen in the polls and in other candidates now returning to it to campaign with the belief they can win the state. She is falling back in the pack. She increasingly looks more like Rick Santorium than a leader in Iowa. She gives speeches to a few faithful but continues to slip in the polls. She has little new to say and the buzz she once had is gone. She has been unable to take advantage of Perry’s drop and instead Cain has benefitted. While potentially she can recover to win Iowa, the new January 3 date gives her less time to do that. Thus, an earlier Iowa date gives Bachmann too little time to recover and her dismal fund raising and failure to plan beyond Iowa make it unlikely she can go much further beyond Iowa.

Lessons Learned

What we learn from Bachmann’s collapse in part is that her great congressional campaign machine was unable to transition to a presidential level. You cannot win the presidency with a $40 average campaign contribution and an unwillingness to grow and expand a base, especially when others are also competing for that base. Bachmann took for granted that she owned the Tea Party–never do that.

In addition, her electoral skills were always vastly over-rated. She had a plus-6 GOP district in Minnesota–a district tailored to her. Her victories were over weak opponents or took place in the banner Republican year of 2010. In many ways, she looked stronger than she really was and perhaps she believed she was the star that the media had declared. While I always thought she had a chance to do well as an Iowa candidate and perhaps beyond, what is most striking is how amateurish she turned out to be as a candidate. That is the product of never facing a serious primary for Congress nor a serious contest in the general election.

Bachmann’s Clouded Future

So what next for Bachmann? Does her December book even have value now? Hard to say and it is unlikely it will save her campaign. Do we see her move on to CNN or another network with her own show? Her increasingly collapsing campaign makes that even less of an option.

Does Bachmann return to run for her congressional seat again? Maybe, she has until June to decide. But redistricting uncertainty and the prospects of a less friendly set of lines for the sixth district pose challenges. Moreover, the worse her presidential campaign looks the more it makes her potentially vulnerable to a primary challenge. Bachmann has never attracted big donors and if she were to run for Congress again her small donors may be tapped out or unwilling to give. She is in a bad situation right now and her options are ticking away along with the clock to Iowa.

Presidential Politics: It’s about the money

The third quarter presidential financial reports are in and this is a good time to string together some thoughts about the candidates.

“Money is the mother’s milk of politics,” said former California Assembly Speaker Jesse Unruh.

Money is what it is all about in campaigns, especially presidential politics, as they have evolved into hundreds-of-million dollar businesses, replete with fundraisers, media consultants, travel consultants, pollsters, and a host of other specialists. The days of candidate door-knocking and Lincoln-Douglas debates are part of a quaint Norman Rockwell past. Modern presidential campaigns are won or lost with money.

Third quarter reports are in and we can learn a lot about candidate prospects by examining their fund-raising balance sheets. Of most interest, Michelle Bachmann’s along with those of Obama, Romney, and Cain.

Bachmann

Bachmann is dead financially and it confirms her descent in the polls. In the third quarter she raised $4.2 million, suggesting that her congressional money machine was not equipped to make the presidential leap. Yet her second quarter produced barely $4 million, and she spent nearly $6 M. This is embarrassing and bad news for her.

Embarrassing–She rails against government deficits and need to live within our means yet she cannot do that with her own campaign. She has proved to be a bad steward of her own money–how can we trust her with the public treasury? Her credibility on the budget is gone.

Bad News–Bachmann’s financial woes confirm her poll problems and fall from grace. Think about it–the 3Q should have been a slot machine for her. In August she was at the top of the polls and had won the Iowa straw poll. She had a massive donor list and money should have poured in. Yet it did not. Perry clearly hurt her as did her bad debate performances and gaffes. She failed to capitalize on her opportunities.

But that is not the end of it. Bachmann has not been to New Hampshire since June. She has little or no organization outside of Iowa where she continues to camp out. Her poll numbers are bad and hurt fund-raising, and now this news about the 3Q only makes it harder to generate cash.

Even if Bachmann wins Iowa in January it will not be enough to save her. Everyone expects her to do well there so she will not get much of a bounce even my winning. But assume she wins, what then? With no organization in other states she will not be able to capitalize on the win there to help her move forward. Her financial number reveal a candidate who will meet her Waterloo one way or the other in Iowa. She lacks an infrastructure in other battle ground states and thus she may be a one-state candidate.

How long will Bachmann last? I think she makes it through Iowa at most. At the least she stays in the campaign through December because she has a book coming out then. Is she counting on the book bolstering her campaign? No–Bachmann is now in it for herself. She is using her presidential campaign and her supporters for the personal benefit if herself. An active campaign makes for books sales and for money in her own pocket.

Call me cynical but it is now clear Bachmann does not care about the presidency or her supporters. She is in it for the money. Watch her make a few million on her book, leave her creditors on the hook, and she walks away from politics rich and her supporters used.

Obama and Romney

Obama raised a ton of 3Q money, dwarfing all of the GOP. Good for him–he will need it if he wants to win reelection. Money, the power of incumbency, an unpopular Congress, and the penchant of the Republicans to want to nominate a candidate so conservative that no swing voter will support them (Think Goldwater and 1964) may overshadow the 9% unemployment rate. Obama still lacks a narrative for reelection and GOP will run on the mantra of “change” against him.

Romney hangs tough with $14 million, but GOP polls continue to place him at about 25%–a spot that has not changed for months. He seems stuck, unable to gain more support as the different flavors of the month–Trump, Bachmann, Perry, and now Cain–seem to come and go. Romney may have the best shot of all to beat Obama but he generates little excitement. His problem is that he is like the guy who reminds a woman of her first husband. He has the same problem with the Republicans. He generates little excitement and affection. His boringness is why other candidates look good to the Republicans–they are searching for something more exciting and for someone who will fulfill their fantasies. Romney is out of place with the current version of the Republican Party. If he does get the nomination he will generate little excitement among the Tea Party folks. Remember, Rod Stewart is right–it is about passion–especially in politics–and Romney lacks it.

Wall Street, Obama, and Romney

If you want loyalty and a friend, get a dog. This is what Obama must be thinking about Wall Street. They were his friends in 08 when they needed him and they gave to his campaign. Now Romney is out-pacing him when it comes to Wall Street money. Why?

Wall street got what it wanted from Obama–the bailouts–and they do not need him anymore. Obama was played like a violin–he bailed them out before getting anything from them and now that they are fat with cash again they cast him aside for someone else. No surprise.

Cain and Final Thoughts

Cain might be the flavor of the month but it is good to be the flavor when it is close to the real start of the primary season, which is just a few weeks from now. His poll numbers are great but his fund-raising is lackluster at less than $3 million (which includes a ton of his own money). In the last few days the media has poured scrutiny on him–look to see more of that in the coming weeks.

His 9-9-9 will come under huge analysis. Cain admits that 9-9-9 was conceived of as a bold idea. Bold it is, smart it is not. It is not based on any real economics but instead it captures the attention of those who want quick simple solutions.

Wait to people begin to think about the 9% federal sales tax. I am sure consumers and businesses will love it. Plus 9-9-9 will force massive budget cuts and fail to generate the revenue needed to address the debt. Look to see 9-9-9 lampooned soon.

“Don’t be Cruel”: The Limits of Republican Compassion

Since when have cruelty and greed have become politically and ethically acceptable in America? From the looks of the base of the Republican Party, both seem to be selling in 2011.

Just look at Republican presidential contenders and the debates so far. Rick Perry gets applause from the audience when he stated that he presided over more than 200 executions in his state. Conversely he gets attacked for using the word compassion when advocating some route for illegal aliens to get citizenship in America. States such as Arizona pass laws to randomly stop and question individuals who look illegal; Alabama adopts a law punishing the children of illegal aliens. Republican candidates jockey for position to show who is tougher on immigration. They talk of building fences and deploying troops to barricade the Mexican border, and proposals to amendment the Fourteenth Amendment to limit citizenship receive applause.

An openly gay solder Stephen Hill asks a question at the Orlando, Florida Republican debate and he is booed by the audience and then literally denounced by the candidates. No one thanks him for his service, for placing his life on the line. Michele Bachmann, Rick Santorum, and the rest of the candidates acted as if he did not exist, denouncing homosexuality as wrong and gay marriage as evil.

But there is more cruelty and greed. Unemployment is 9% and underemployed near 16%. The delinquency rate for homes (homes foreclosed or facing foreclosure) is above 8%–nearly one out of twelve owners are in danger of losing their homes. In 2010, 15.1%, of the population, representing a record 46 million, are in poverty. Record numbers of women, children, and people of color are in poverty. Nearly 50,000,000 are without health insurance. Better girls get cervical cancer than receiver the HPV. Better that children get aids or sexually-transmitted diseases than talk of birth control. Better women give birth to unwanted babies the product of rape than allow for the sale of RU 486. Children go hungry to underfunded schools.

But the GOP fiddles while America burns. They say we need to slash government spending, cut back on social services, preserve tax cuts for millionaires, and punish people who come to America seeking a better life. Cut back on disaster relieve and FEMA funding to extract budget cuts. Somehow the free market will save us all. Yes, the same free market that brought us the market crash, the mortgage crisis and the subprime problems, tainted meat and cantaloupes,

At one time America was the embodiment of the inscription of the Statue of Liberty--“Give me your tired, your poor, your huddled masses yearning to breathe free.” But no more. How did this all happen?

Perhaps it began with Ronald Reagan asking in 1980 “Are you better off now than you were four years ago?” Such a question made greed acceptable. Maybe it was Rick Santelli’s 2009 rant on CNBC against government bailouts to help owners that spurred the emergence of the Tea party. Who knows! The issue is that the anger expressed this year in the Republican presidential debates is so un-American and unpatriotic. And an unchristian.

Social conservatives talk of America as a Christian nation. I thought compassion and charity were the essence of Christianity. At least this is the version I learned growing up. But somehow the social conservatives seem inured to social compassion. They fail to practice what their faith preaches. This is not my Christianity, my America, my vision of socially responsible capitalism. Adam Smith, author of the economic classic Wealth of Nations, also wrote the Theory of Moral Sentiments and of the virtues of social compassion. America’s legacy is one of open arms to help others. Christianity of a religion embracing the golden rule.

America is not a suicide pack. We are in it together–we are supposed to be one nation-indivisible. We should be helping one another–with the thought that on another day they will help us. This is the America I grew up in.

My question to the Republican presidential candidates and members–“Have you no sense of decency?”

It's About Jobs--Obama's Failing Quest for Reelection

President Obama gave a jobs speech about a week ago and it was clear that the job he is most worried about is his. Offering an anemic job proposal that neither the Republicans nor the Democrats in Congress find appealing, Obama is in political trouble, with a 60/40 chance that he will not get reelected. Why such dismal prospects?

Obama was a brilliant campaigner. He understood the basic rule of politics for how to get elected, yet as president and now in seeking reelection, he just does not seem to get it. What are these rules of politics? For our purposes, four rules are critical.

The first is that politics is like selling beer. By that, politics and political success are contingent upon developing a powerful narrative. Narratives are stories–they are stories that explain who you are as a candidate, what you hope to accomplish as president, what your view of the world is. Narratives are rhetorical and persuasive tools to convince voters to support you. Moreover, good narratives are positive and look to the future. Great example of past narratives are Reagan’s “Morning in America,” Clinton morphing Fleetwood Mac’s “Don’t Stop Thinking about Tomorrow” into a campaign mantra, and even Obama’s 2008 “Change we can believe in.” All were inspirational.

But where is Obama’s narrative now? The problem is he has no narrative. In 2010, the Democrats went down to defeat because either they had no narrative or at best, their narrative was “It could have been worse.” The latter, in reference to claims that had Obama not acted with the stimulus and Dodd-Frank the economy could have been worse. Such a narrative was neither inspirational not compelling. It died in the face of the a brilliant Republican narrative stolen from Obama in 2008–change.

The narrative again in 2012 for the Republicans will be change. Obama still lacks a narrative. His speech on jobs last week was an effort to cast himself with a narrative that it is “the economy stupid” and that he cares more about it than the Republicans. So far, that new narrative is not working.

The second rule of politics is mobilize your base. It is imperative to nail down your political base if running for office. You need to get them behind you, excited, and mobilized. Politics begins with dueling bases. If your base stays home and the other shows up, you are in trouble. As Woody Allen correctly stated: “Ninety percent of life is showing up.”

Obama’s base is eroding. Recent NY Times polls show that the unions, white working class, the young, and the liberals in his party are discouraged, and disappointed with Obama. It is for good reason–he blew them off too many times. He continuously gives into the Republicans instead of fighting for what his base wants. Somehow Obama the law professor believes that everyone will be reasonable and willing to compromise. It takes two to tango and only one side is dancing. Moreover, Obama consistently blew off supporters–stating that they had to wait on don’t ask don’t tell, gay marriage, changing rule son unionization, or dealing with the environment. He has told his supporters he has bigger fish to fry and that they must wait. Bad moves. The best way to disappoint supporters is to raise their expectations and then dash them.

The third rule is that politics is a bar fight. Fights in bars are won or lost by the ability to capture the audience to your side. In politics, this means the battle is for the swings. Even if each side mobilizes its political base, that does not guarantee victory because neither the Democrats not Republicans represent 50% +1 of the voters. Neither party has majority status. The battle is thus to capture the swing voters and states. Among voters, the suburban moms and moderates are the swings.

Obama’s new strategy is to refine himself as the moderate centrist, seeking to show he is reasonable and the Republicans are not. Obama’s job speech, his efforts to compromise on the debt deal, and so much more recently have been efforts to do this. Yet the efforts to create this new narrative have failed. He has failed to capture the swings, but luckily for him, the same is true for the Republicans.

Obama has failed to capture the swings because of his inability to propose economic plans deep and broad enough to really stimulate the economy and produce jobs. He has failed to address the mortgage crisis that continues to depress real estate prices, sales, and personal wealth. And he has done nothing to reinvigorate consumer demand. His jobs proposal was anemic and failed because it did not offer solutions to these problems. As so aptly stated by several small business owners at a talk to the Twin Cities West Chamber of Commerce: “Tax cuts will not encourage me to hire anyone. So long as no one wants to buy my products I have no reason to hire anyone and tax cuts are not going to change that.”

Finally, Obama has forgotten a fourth rule of politics–Rod Stewart is right--It’s about passion (in reference to a song he wrote many years ago). Passionate people are motivated and will vote and give money vote. They will show up. Obama seems to assume a dispirited base has nowhere to go but back to him. He banks on this and tries to appeal to swings (and a miserable Republican candidate) to pave his way to victory in 2012. However, a lethargic base and an inability to capture swing voters with an uninspiring narrative is certainly not a winning formula. Combine all this with 9% unemployment and a probable double-dip recession and that result is one more ex-president out of work.

In all fairness, the one thing Obama has going for him is that the Republican field is equally horrible. Perry and Bachmann are unappealing to swing voters and they lack any real plan for the economy and the nation. Romney is bland and boring and his narrative has failed to captivate, and Congress’ approval rating is 12%. The choices are bad, making it not much of a surprise that a third of the voters want a viable third party and many want to see other candidates run for president.

Contrary to conventional wisdom, the Democrats need a challenger to Obama. They need an alternative to force the president to fight for his base and galvanize them. Obama needs to work for his party vote, he needs to define himself, he needs to learn how to fight. He has failed to do all of that so far, questioning both whether he deserves his party nomination and whether he can win reelection.

(Cartoon courtesy of the New Yorker Magazine.)

And the loser is....Michelle Bachmann: Thoughts on the GOP Presidential Debate

It may not be clear who won the Wednesday night Republican presidential debate at the Reagan Library, but it is clear who lost and it was Michelle Bachmann. It may not be over for her yet, but she left the debate badly wounded and spiraling downward, ready to follow the path already forged by Tim Pawlenty a few weeks ago.

The Rise of Bachmann

Bachmann has had an amazing ride the last few months. Declaring her official candidacy the night of the New Hampshire presidential debate, she won it in part by being the new kid on the block, giving short quick answers, and simply holding her own compared to the other candidates. Her success, culminating in the Iowa Straw Poll victory a few weeks ago, was the product of several factors.

First, unlike the other candidates, she had a clear narrative that appealed to the Tea Party wing of the GOP. Without Palin in the race, the Republican Party remade in the ideology and image of her was lacking a candidate that captured the excitement of the Tea Partiers. Neither Romney, Pawlenty, nor the other contenders captured that excitement and appealed to them. Bachmann did. Thus, with the Tea Party bloc representing about one-quarter to one-third of the party, and with these individuals being highly motivated and likely to attend to show up for a straw vote or a grass roots activity (much like they did in August, 2009 to oppose Obamacare), Bachmann had an advantage for the start in appealing to and motivating this crowd.

Second, Bachmann had a clear Iowa strategy, drawing upon her birth in Waterloo. It was this strategy that knocked Pawlenty out of the race because he tool had an Iowa game plan, but it failed. Bachmann’s social and economic conservatism also appealed uniquely to an Iowa crowd too.

Thus, put together these factors–a remade Republican Party, no Palin or other Tea Party candidate, Bachmann’s message, the Iowa strategy, and her ability to appeal to a large bloc of voters–and you get a straw poll victory.

However, Bachmann peaked in Iowa.

Bachmann's Fall

The roots of her demise were obvious even before Wednesday night. Look at the debate in Iowa before the straw poll. She tangled with Pawlenty and managed to look petty in it. She did not rise above the crowd as she did in the New Hampshire debate. Moreover, she failed to say anything new or significant, simply repeating one-lines she always had–railing against Obamacare and seeking to defend her pithy legislative record against charges by Pawlenty that her accomplishments were insubstantial. Pawlenty was right and when Bachmann stated that her record included introducing the Consumer Lightbulb Freedom of Choice Act it was clear that no lightbulb over her head had gone on. It was beginning to flicker off.

Bachmann’s weaknesses have always been there but magnified in the last couple of weeks, coming into full view last night. Bachmann did not have much of a record of accomplishment. Moreover, she has zero qualifications when it comes to jobs and the economy and with unemployment at 9% plus, her inexperience was a liability waiting to happen. Moreover, Bachmann appealed to a bloc but needed to expand that appeal beyond a core group of supporters. She never did that. In fact, she could not do that. Her rhetoric was always clear in how it appealed to one group of people. There was no way she could redo her message to appeal to a broader constituency. New Hampshirites are fiscally but not socially conservative. Her rhetoric would not fly there.

Moreover, her rhetoric in the last few weeks doomed her too. Comments about earthquakes and floods on D.C. representing the wrath of God did not play well. Moreover, her naivety and lack of gravity and depth on issues was apparent. Other candidates rolled out jobs programs and developed ideas on foreign policy, Bachmann simply repeated her same old lines. Staff increasingly had to manage and apologize for her. She was being handled because who she was, was not working.

Moreover, the new kid on the block status was wearing thin. Remember when Trump, Cain, and Giuliani had risen to the top of the polls, only to fade soon? Bachmann suffered the same fate. Simply, she became boring–the worst fate for a candidate–and she lost the buzz.

But had no other Tea party candidates emerged should could have run a long way with a bloc of 30% of the party. But something happened–Rick Perry.

The Perry Factor

Perry immediately cut into Bachmann’s bloc support. She was unable in the last weeks to stem the hemorrhage, and the same was true last night. So think about how Bachmann got squeezed. She failed to hold on to Tea Party bloc and at the same time failed to expand her base. She was doomed.

Wednesday’s night debate revealed how far she had fallen. She was marginalized. She had few questions directed to her, little camera time, and no one really attacked her directly. When she did speak she repeated the banal one-liners she had used for weeks, revealing little growth or thought. She had no plan for the economy. Her responses were often incoherent and at least twice the moderators pointed out she had failed to answer the question and gave her another chance to answer. She failed on the second attempt too.

This was a big debate for Bachmann. She fell to third in the polls, she lost Ed Rollins and her campaign manager, and she needed to take on Perry and recapture momentum. She did nothing to reverse her decline. Now it is too soon to say it is over for her. The Iowa caucuses are months away. However, she is damaged now and may be in the downward swirl of money and support that Pawlenty faced a few weeks ago. She may not be toast yet but they're getting the butter out now.

Final Thoughts: Perry, Romney, Huntsman, Gingrich, and Palin

Perry is the front runner and may run the course of the ups and downs of the new kid on the bloc syndrome. The most disturbing part of the debate for him was the discussion of the death penalty. In 2000 George Bush looked almost gleeful in describing his record of execution in Texas. Perry came close to this too. Worse, the crowd applauded when he stated how many he had killed. This issue may appeal to a Texas and conservative base but not to a broad swing voter in an America much less supportive of execution than in 2000. Bush talked of compassionate conservativism–there was no compassion in Perry’s eyes or words last night.

Romney and Huntsman were the voices of reason last night. Romney defended Social Security and talked of jobs. Huntsman admonished the GOP not to be the party opposing science–it cannot reject climate science and evolution.

Gingrich? Where was he. He had almost no camera time even though he had important things to say.

Finally, if I were Sarah Palin watching the debate last night I would conclude that it is time to run for president. She too could cut into the Perry base and pull the Tea Partiers over to her. She has an opening.