UNH/WMUR New Hampshire 2012 Presidential Survey

Republican Primary

• Mitt Romney 40% (41%)
• Rudy Giuliani 10% (11%)
• Tim Pawlenty 7% (3%)
• Mike Huckabee 7% (9%)
• Newt Gingrich 6% (5%)
• Sarah Palin 6% (12%)
• Ron Paul 5%
• Donald Trump 3%
• Rick Santorum 1% (2%)
• Haley Barbour 1%

General Election

• Mitt Romney 49%
• Barack Obama 41%

• Barack Obama 44%
• Tim Pawlenty 37%

• Barack Obama 57%
• Sarah Palin 34%

Survey of 757 New Hampshire adults, including a subsample of 357 likely Republican primary voters, was conducted January 28 – February 7, 2011.  The margin of error is +/-  3.5 percentage points among all adults; +/- 5.2 percentage points among GOP primary voters.  Results from the poll conducted April 18-28, 2010 are in parentheses. ?

-Data compilation and analysis courtesy of The Argo Journal.

PPP has released the results of their weekend polling of New Mexico:

Sarah Palin beat Mike Huckbee by four and Mitt Romney by six.  Newt Gingrich came in fourth with 15% of the vote — seven points down from Palin.

If there is one thing that folks in politics, regardless of their ideology, simultaneously love and hate, it’s polls. Every time a poll comes out, we pour over every aspect of it. The size of the poll, the dates of the poll, where the poll took place, and who took the poll are all subject to heavy scrutiny. Then the inevitable happens. If the numbers support the candidate/cause we like, the poll is proclaimed as the Fifth Gospel. If they don’t support our candidate/cause, then they are a fake, a fluke, or some kind of conspiracy.

Now, I’m just as guilty of the poll obsession as everyone else, but I think a few things need to be said about them. Polling, by its very nature is not an exact science. No matter what a pollster does, they are never going to find the exact formula to get each poll right. The best pollsters will get some wrong and the worst pollsters will get one or two right. That’s just the nature of the business.

Secondly, when a poll comes out with results someone doesn’t like, they will inevitably point to past examples of wrong polling; the most famous example is of course “Dewey Beats Truman”, but there are other recent examples too. The “too-close-to-call” race between Ronald Reagan and Jimmy Carter, in Britain, the Labour “lead” over John Major’s Tories in 1992, Barack Obama’s “big win” over Hillary Clinton in the 2008 New Hampshire Primary, Sharron Angle’s “lead” over Harry Reid, and others. Pointing these out does ignore something important; these failures stand out because they are relatively unique. Think about how many races are polled every election year. Probably hundreds. Yet there are only a few each cycle that standout where the polls had it wrong. That means that there are dozens and even hundreds of races that were called rightly. Because those results are expected, they don’t get much coverage. If is only when the results defy what the polls expected is the polling itself called into question.

Also, ignoring every single poll because you don’t like the results is doing yourself a disservice. As I stated above, yes they can be wrong, but they aren’t always or even most of the time. If a candidate is in 5^th place in every single poll, they probably aren’t going to win. We all, myself included, practice willful blindness when it’s our favorite candidate who isn’t winning. It’s easy to ignore the polls when you’ve got an emotional investment in one of the candidate.

The final point I’d like to address is the charge of “conspiracy’ that are often attached to pollsters when they have a result that angers someone. “So-and-so is in the tank for…” we’ve all heard it. I think that this ignores a critical aspect of polling. First and foremost, a polling company is just that, a company. All of them: Gallup, Rasmussen, PPP, Quinnipiac, Zogby, etc. are in business to make money. The best way for a pollster to make money is to have the most accurate prediction possible. Remember what happened when the Daily Kos found out that Research 2000 was lying to them about their poll results? Kos fired them. Like all businesses, pollsters are selfish; they want to make as good a profit as they possibly can. Giving bad numbers or erroneous results will diminish the pollster’s reputation, which is how they get business and make money. Is this always going to be the case? Probably not, but charging the pollster with conspiracy both diminishes further, more valid arguments and gives the accuser a safety blanket to cling to when there are more results they don’t want.

Polls aren’t perfect, and they will probably never be. However, if all of us keep some of these thoughts in mind, we can all be better analysts of the steady stream of numbers that will be flooding the political landscape in the coming months. It’s not bad to read and analyze polls, but they aren’t the be all end all, nor are they completely fake. I suggest we treat polls with a grain of salt, but still consider them worthy of analysis.

In evaluating a potential Mitt Romney 2012 presidential candidacy, the focus of discussion almost always seems transfixed on his role in developing a health care reform plan in Massachusetts, while he was Governor. Health care will no doubt be a major issue in 2012, but there is so much more to Romney’s record and life experience, which also needs to be examined.

Last week Romney appeared on The Late Show with David Letterman, to deliver the Daily Top Ten list. It was a mildly amusing affair, allowing Romney the opportunity to poke fun at his buttoned down image, despite the decidedly weak comic material he was provided by Letterman’s writers. However, the Top Ten format seems like a good way to provide some background information about Romney, to his supporters, detractors and those unfamiliar with him.

So here is a list of some perhaps unknown events, facts and trivia, designed to provide insight and prompt discussions about Mitt Romney. And in no particular order we start:

#10 Mitt Romney was born on March 12, 1947. That makes his zodiac sign a Pieces and a Pig in Chinese astrology. It is said of Pig people – “Pigs are models of sincerity, purity, tolerance, and honor. When you first meet them, Pigs seem too good to be true. They are careful and caring, obliging and chivalrous. Put your trust in him, he won’t let you down and he will never try to. The Pigs simply want to do everything right.”

#9 Mitt Romney once suffered broken ribs, a fractured arm, a concussion, facial injuries and accidently declared dead, after being in a head on auto collision in France. In June 1968, while driving fellow missionaries, a Mercedes passing a truck, missed a curve and swerved into the opposite lane, slamming the car Romney was driving, head-on. Trapped between the steering wheel and door, the Romney had to be pried from the car. Later a French police officer mistakenly wrote Il est mort (dead) in his passport. The wife of the mission president was killed and other passengers were seriously injured as well. Back home in America, fearing his son was dead, George Romney relied on his friend, Sargent Shriver, then US Ambassador to France, to go to the hospital for details. Shriver discovered Mitt had indeed survived and would later fully recover without needing surgery.

#8 Mitt and Ann Romney are a devoted couple who will be celebrating their 42^nd wedding anniversary this coming March 21, with their 5 sons, 5 daughters-in-law and are you ready for this – 16 grandchildren. The love story of Mitt and Ann Romney started when they were teens. “Saying they have never had a serious argument in the long lasting traditional marriage, Mitt still refers to Ann as his sweetheart.”

#7 Romney enjoys spending time with his family – especially grandchildren, running, reading, skiing and horseback riding with his wife, waterskiing, and watching movies.

#6 Upon entering office as MA Governor, Romney faced an immediate $650 million budget shortfall and a projected $3 billion deficit for the next year. Unexpected revenue of $1.0–1.3 billion from a previously enacted capital gains tax increase and $500 million in federal grants cut the deficit to $1.2–1.5 billion. By enacting further spending cuts, increasing fees, and removing corporate tax loopholes, Romney reversed the situation and by 2006, the state enjoyed a $600–700 million surplus.

#5 In Romney’s original Health Care proposal, he wanted individuals who wanted to self insure, the right to do so, by posting a bond, proving they had this ability. This proposal was removed over his veto by the Democrat Legislature.

#4 Romney lists the following musical artists among his favorites: Roy Orbison, The Beatles, The Eagles, The Kingston Trio, Alan Jackson, Toby Keith, Brooks & Dunn, George Strait, Clint Black, and Garth Brooks.

#3 Romney is known to eat and maintain a healthy diet, including lots of chicken, fish, his wife Ann’s home made Granola (we need to get that recipe) and a good PB &J when he’s out buying his own shirts. Romney also enjoys a Hires Burger whenever he gets the chance. When at his new home in La Jolla, CA (a future Western WH?) Glen Johnson reports, Romney likes the turkey burger at the Burger Lounge. Another favorite is the Marketplace Grille, where he orders the chicken bowl – chicken served with tabbouleh, a choice of white or herbed rice, and lavash bread. It is served on paper plates with plastic utensils.  “He comes in with his grandchildren,” said Mehran Izadi, the restaurant’s co-owner. “He’s very down to earth. You don’t expect that from a politician.”

#2 Romney’s first name is Willard. He was named after his father George’s great friend and fellow Mormon, J. Willard Marriott, of hotel fame. Mitt is his middle name, which was his dad’s cousin Milton’s nickname. Milton was a Quarterback for the Chicago Bears, playing from 1925 -1929. Mitt Romney served on the Marriott board of directors from 1993 to 2002, and again from Jan. 2009 to Jan 2011.

#1 In July 1996, when a fellow executive at Romney’s company Bain Capital , 16year old daughter went missing in NYC, he shut down the company and took a team of 30 to NYC to find her. It’s a great story and can be read in full here. It offers a glimpse into the understated determination, dedication and inspired leadership Romney is know to provide.

As the article detailing Romney’s recues efforts notes:

”It is often during a crisis that we gain insight into a person’s real character. Romney’s action demonstrated leadership, loyalty, and selflessness – attributes that Americans just might like to see in a president of the United States.

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-Doug NYC blogs at RightSpeak.net

While other big name competitors for the GOP presidential nomination pretend not to know whether or not they’re running, there may be one potential candidate who truly is undecided: South Dakota Senator John Thune.

Thune has been amazingly coy about telegraphing any sort of intentions for the 2012 race. He has not visited Iowa, New Hampshire, or South Carolina yet, turning down invitations to appear at events in all three states. And he has not been in contact with any major donors or big-name folks in the GOP.

Those things lead FOXNews’ Carl Cameron to believe Thune is not running.

There is another explanation: Thune may be honestly undecided about a run. In this interview with the Des Moines Register, he certainly sounds like it (and sounds a lot more sincere than other candidates who say they haven’t made a decision yet):

South Dakota Sen. John Thune said Friday he has deliberately stayed away from Iowa to discourage speculation that he had decided to run for president, and that he would have catching up to do in his neighboring state should he decide to seek the 2012 Republican nomination.

But this rising leader in the Senate GOP, famous for taking down former Majority Leader Tom Daschle, also said there are important policy fights ahead to keep him busy, should he decide not to run.

Thune said he expects to decide before the end of February whether to run in 2012. But some recent developments send mixed signals.

“We’ve had invitations to go into Iowa, New Hampshire and South Carolina,” Thune said in a Des Moines Register interview in his Capitol Hill office. “But I didn’t want to get into the early states until I meant business. And we have not ventured there until we come to a conclusion about whether or not I will be in this race.”

“If we decide to do this, we’re going to be spending a lot of time in Iowa,” he said.

In the end, it may be the indecision that kills Thune’s shot at the big seat, but he does seem to be getting quite a bit of attention as a potential #2:

“I think it’s less than 50-50 that he runs. But I do think he makes a great vice presidential candidate.” –Ann Trimble-Ray, Sac County IA GOP vice chairwoman

“He just turned 50 in January, an age that’s perfect for a running mate and still leaves plenty of time to run again in the future.” – Carl Cameron, FOXNews

There has been speculation about the future of the Tea party. Will it die out? Is it here to stay? The opinions are many.

In this post, I am going to argue that the only thing that can ensure that the Tea Party survives over the forseeable future is if Romney is the Republican nominee in 2012.

First, we should be clear about one thing: If Republicans win the next presidential election, it is over for the Tea Party, no matter who does it. Being insurgents against a democratic president, that’s one thing. But few people are actually willing to go against the establishment in the party if they happen to control the white house – that is why there was no Tea party back in the Bush era. The Tea Party won’t be able to muster the strength it needs to affect anything if a Republican is president.

Now, let’s look at the other scenarios and how they would play out for the Tea Party:

1) If Palin is the nominee and loses, then that is it. The Tea Party will have been officially defeated by Obama and his ilk. It will die, and MSNBC will be dancing on its grave.

2) If Huckabee is the nominee and loses, that will be it too, since he still (according to polls) have a lot of favor with Tea Partiers and is a Republican outsider. The outsiders will have a hard time staging a comeback after a Huckaloss. It will probably mean the end for the FairTax as well I’m afraid (which would be sad for me as a supporter of the FairTax system).

3) If Gingrich is the nominee and loses, they will probably die too. Gingrich, while by many seen as a part of the establishment, is one of the authors of the Contract with America, and his 1994 revolution could be seen as a predecessor to what happened in 2010. That makes him enouh associated with the Tea Party so that a loss for him could be blamed on the movement.

4) Romney on the other hand, is as establishment as it gets. Some of his supporters may say that this portrayal is unfair, but it is none the less there. If Romney were to be nominated, but go on to lose against Obama, the Tea Party would certainly surge since this would prove that “establishment republicans can’t get elected (either)”, “we need more candidates from Sams’ club, not the country club” and “Had it not been for the fact that we nominated a Rino, we would have won” (this is the way they would spin it, anyway). Palin would then have a shot at the nomination in 2016. It would be kind of like when Goldwater was nominated in 1964 after (the much more moderate) Nixon’s loss in 1960.

Of course, if Palin/Huckabee/Romney were indeed elected president, there might not be a need for the Tea Party anymore. The movement will still cease to exist, for a “good” reason (because they have reached their goal) or for a “bad” reason (their candidate has been rejected by the people).

These are my thoughts on the issue. What do you others think about this?

Deseret News/KSL 2012 Utah GOP Primary Survey

For which of the candidates would you vote for U.S. president if the primary election were between Mitt Romney and Jon Huntsman Jr.?

• Mitt Romney 56%
• Jon Huntsman Jr. 26%
• Neither 9%
• Undecided 9%

If it were a three-way race between Mitt Romney, Jon Huntsman Jr. and Sarah Palin, for whom would you vote?

• Mitt Romney 54%
• Jon Huntsman Jr. 26%
• Sarah Palin 7%
• None of the above 5%
• Undecided 8%

If it were a three-way race between Mitt Romney, Jon Huntsman Jr. and Mike Huckabee, for whom would you vote?

• Mitt Romney 55%
• Jon Huntsman Jr. 26%
• Mike Huckabee 4%
• None of the above 5%
• Undecided 9%

Survey of 496 Utah residents was conducted February 8-10, 2011, by Dan Jones & Associates. The margin of error is +/- 4.4 percentage points.

-Data compilation and analysis courtesy of The Argo Journal.

This is that horrifying time of year, after the Super Bowl and before Opening Day. On the TV, there’s nothing but basketball and golf — which is a long way to say there’s nothing on. I’m luckier than many Americans in that I’m a soccer fan and it’s the height of the season in the EPL. But today’s only game is Bolton-Everton, not exactly  a classic match-up.

So, on to politics, with a few odds and ends that have come up this week.

Foreign Affairs

Having had such a stellar record thus far in international affairs, the Obama Administration is planning to try to increase US involvement in and support of the United Nations.

Susan Rice, the U.S. ambassador to the United Nations, will argue in a major address Friday evening that the nation should “strengthen” — not “starve” — the world body.

Presumably Ambassador Rice thinks we should not put too much weight on those child sex abuse scandals in unpleasant places like Bosnia, East Timor, Somalia, Cambodia, Congo, Sierra Leone, Liberia, Guinea, Haiti, and Sudan; and we should concentrate more on the long series of UN successes, such as Oil for Food, and the stellar work of the UN Human Rights Council.

The Hot Issues: The Economy and Health Care

Rasmussen’s survey today says that, not surprisingly, the economy remains the number one issue with voters, with 83% ranking it Very Important:

The number of voters who sees the economy as being Very Important in terms of how they vote has not dipped below 80% since September 2008.

Gallup reports that unemployment is now 10.3%, with underemployment at 19.7%. As long as we continue seeing numbers even close to that, the issue will remain dominant. Another Rasmussen survey says that 62% of consumers say we’re still in a recession, with 21% saying the recession is over. Regardless of what economists say, those numbers won’t change much until unemployment drops a lot.

A close second among the most important issues is health care (72%)

Those who view health care as Very Important have ranged from 66% to 79% since the law’s passage last March.

In regard to health care, 62% of voters say that reducing costs is more important than achieving universal coverage (29% say universal coverage is more important).

Yet while strong majorities of Republicans (78%) and voters not affiliated with either major political party (74%) say cost reduction is the more important health care reform issue, most Democrats (51%) disagree and view universal coverage that way.

We will probably see these two approaches to health care debated strongly in the Republican primaries.

Immigration

There have been some recent interesting developments on the immigration front. Arizona is countersuing the US government for the feds’ failure to protect the Arizona border, and its failure to reimburse Arizona for the costs of that failure (the state says it is owed $760 million in costs of jailing illegals convicted of crimes).

For those who say that strong enforcement of immigration laws won’t work in driving out illegals, Arizona State University’s business school released a report noting that the recent census found that there were hundreds of thousands fewer people in the state than estimated. In fact, Arizona’s estimate was farther off than any other state.

After discussing such possible causes as the real estate bust, the recession, and a general drop in immigration, the report concludes:

Each of these factors may have contributed to Arizona’s lower-than-estimated census count. However, each of these factors is equally applicable in Nevada, which also experienced an unprecedented housing boom in the mid-2000s followed by a recession far more severe than the national average. Thus, these factors do not explain why Arizona’s census count is so much lower than the estimate relative to Nevada and other neighboring states or why Arizona’s differential between the census count and the estimate is the largest in the nation.

One factor does distinguish Arizona from Nevada and other neighboring states: Arizona’s legislation intended to deter undocumented immigrants from living in the state. Arizona passed the nation’s first statewide employer sanctions law, effective at the beginning of 2008. It appears to have caused many undocumented immigrants to leave Arizona, based on the subsequent sharp and disproportionate decrease in the number of births to Hispanics reported by the Arizona Department of Health Services. More recently, Senate Bill 1070—whose purpose is “to discourage and deter the unlawful entry and presence of aliens and economic activity by persons unlawfully present in the United States”—was passed. This legislation received considerable publicity prior to the April 1, 2010 census date and became law shortly thereafter—before the Census Bureau began decennial census follow-up activities.

Perhaps other states are paying attention. The new Republican governor of New Mexico, Susana Martinez, has rescinded Bill Richardson’s sanctuary rules, and took steps to toughen enforcement of immigration in her state, authorizing by executive order state police to investigate the immigration status of people arrested for crimes, similar to Arizona’s law:

“This order takes the handcuffs off of New Mexico’s law enforcement officers in their  mission to keep our communities safe,” said Governor Martinez. “The criminal justice system should have the authority to determine the immigration status of all criminals, regardless of race or ethnicity, and report illegal immigrants who commit crimes to federal authorities. Meanwhile, it is important that we safeguard the ability of victims and witnesses to report crimes to law enforcement officers without fear of repercussion.”

Meanwhile, both houses of the Mississippi legislature have passed bills similar to Arizona’s SB 1070 and employer sanctions law. The two bills differ and will need to be reconciled before being sent to the governor.

Similar bills have been introduced in Georgia, and appear to have good support.

If you want to know how much interest there is in an Arizona-style illegal immigration law in Georgia, you should have been at Friday’s meeting of the State House Judiciary Committee.

So many people showed up that the committee room quickly filled to overflowing, well beyond the 60 person fire limit.

Extra security was on hand as the crowd spilled over into two other committee rooms to watch the testimony on large computer screens.

And a Los Angeles County Supervisor claims that a study of California welfare records indicates that the cost to that one county of welfare benefits to children of illegal immigrants was $600 million in 2010 (up from $570 million the previous year).

Antonovich arrived at the estimate by factoring in the cost of food stamps and welfare-style benefits through a state program known as CalWORKS. Combined with public safety costs and health care costs, the official claimed the “total cost for illegal immigrants to county taxpayers” was more than $1.6 billion in 2010.  “Not including the hundreds of millions of dollars for education,” he said in a statement.

Immigration advocates disputed the figures.

Update: One other topic I meant to include is that Janet Napolitano is reportedly considering a run for Jon Kyl’s senate seat. She might as well — she probably will get booted out at Homeland Security eventually (though that may be giving Obama too much credit), and she can probably get the nomination unless Giffords is able to run and chooses to do so. As for the general, maybe she’d get lucky and face J.D. Hayworth if all the Republicans in the state simultaneously lose their minds. John Shadegg, by the way, has said he will not run.

Most conservatives are now willing to acknowledge that if federal spending is to be brought under control that defense and military spending must be on the table.  Congress, the president, the Secretary of Defense, and the military leadership must work together and critically assess present and future defense strategy, operations, and the most affordable and effective means for meeting our national security requirements.  Conservative columnist George Will has an excellent column on this subject in today’s Washington Post entitled  The GOP’s Defense Budget Mystery.

Tall, affable Buck McKeon sits, gavel in hand, at the turbulent intersection of two conflicting Republican tendencies. The chairman of the House Armed Services Committee embodies the party’s support for a “strong” defense, which is sometimes measured simply by the size of the Pentagon’s budget. But the 35 Republicans on his 62-member committee include 13 first-term legislators, some of whom embody the Tea Party’s zeal for cutting government spending.

The United States spends almost as much on military capabilities as the rest of the world spends, and at least six times more than the second-biggest spending nation (China). But McKeon says, “A defense budget in decline portends an America in decline.” And: “I’ve been around a long time, and I’ve seen us cut defense investments over the years after wars. . . . But I’ve never before seen us make cuts during a war. Cuts to defense investment in the midst of two wars is unacceptable.” Asked, however, about the immediate future of the defense budget, he says, after a long pause: “It’s probably going to be smaller.”

One war, in Iraq, will, the president promises, end this year with the withdrawal of U.S. forces. The other, in Afghanistan, probably will not become more expensive because the number of troops there probably will not be increased. Furthermore, since fiscal 2001, what is called the military’s “baseline budget” has increased 80 percent, to $534 billion. That number is, however, much less than what is actually being spent, and not just because it doesn’t include much of the spending on the two wars.

The Obama administration wants to cut $78 billion over five years, in addition to cuts already planned. McKeon and others are resisting, starting with Defense Secretary Robert Gates’ decision to halt work on a $14.4 billion Marine program for a new Expeditionary Fighting Vehicle, a 39-ton landing craft and tank that can deliver 17 Marines in an amphibious assault.

Although the Marines’ last opposed landing was in 1950 in Korea at Inchon, some legislators think ending the EFV program strikes at the Marines’ core mission. McKeon wonders: What if the next “denied space” the Marines must enter is along the Strait of Hormuz? The Inchon landing craft, which traveled only 6 mph, had to leave from ships close to shore – too close for today’s shores perhaps bristling with anti-ship missiles. The EFV travels 20 knots from 25 miles offshore – and sprints 45 mph on shore.

The average age of America’s amphibious assault vehicles is 38 years, more than that of strategic bombers (34 years) but less than that of tanker aircraft (46 years). Gates favors finding a more affordable ship-to-shore vehicle. Lt. Gen. George Flynn, the Marines’ deputy commandant for combat development and integration, says the EFV program “was unaffordable.” Was. Past tense.

Such statements are in the subjunctive mood until Congress speaks. But some congressional voices are impatiently insisting that no one can say how much is being spent on defense, or how.

After listening to recent Defense Department testimony, Randy Forbes, a six-term Virginia Republican on McKeon’s committee, was exasperated. He said that for four years the department, whose $708 billion budget – his number – is the size of the world’s 22nd-largest economy (the Netherlands), has not complied with the law requiring auditable financial statements. And he charged that “none” of the budget is “even in a position to be audited.” He said that the department is not “qualified” to talk about efficiencies if it “does not know where our defense dollars are going” and that it cannot comply with the law if it “does not even have mechanisms in place to perform the audits.”

Sen. Tom Coburn (R-Okla.), writing to Adm. Gary Roughead, chief of naval operations, said that “the Pentagon is one of the few agencies in the federal government that cannot produce auditable financial statements in accordance with the law.” So “I will continue to push for a budget freeze of all base budget non-military personnel accounts at the Defense Department until it complies with the law regarding auditable financial statements.”

To govern is to choose, always on the basis of imperfect information. If, however, the strong language of Forbes and Coburn is apposite, Congress cannot make adequately informed choices about the uniquely important matters that come to McKeon’s committee. This fact will fuel the fires of controversy that will rage within the ranks of Republicans as they come to terms with the fact that current defense spending cannot be defended until it is understood.

The sentiments expressed by HASC Chairman Buck McKeon symbolize a paradigm that haunts the “old order” of Conservatism and the GOP and one that stands squarely in the way getting spending under control:  1) that the size of the defense budget is a barometer of America’s rise or fall; and, 2) that the quantitative size per se of the defense budget is a measure of American military effectiveness.   Much of the reflexive attitude toward the defense budget and military spending by Conservatism’s “old order” stems from the controversy over the Vietnam War some 40 years ago and the lingering liberal vs. conservative “culture war” that continues just under the surface within those of McKeon’s generation down through the older Baby Boomers.  Yet, as the demographics of the political leadership change, this previous “pro-defense” vs. “anti-defense” reflexive culture war of the Vietnam and Cold War eras appears to be ending.  Democrats are not as reflexively anti-defense/anti-military as was the case three decades ago, and the new breed of Republicans recognize that the national security requirements of the 21st Century are going to be different from those of the 1970′s and 1980′s, that an effective American military for today and for the future is going to look a lot different in terms of structure, technology and concept of operation.  Hopefully, both Democrats and Republicans will trend away from viewing the defense budget as a federal employment program and as pork for the local district/state (I do have high hopes, don’t I, lol).  The actions of the new GOP House along with those of the Senate GOP caucus will test this premise.  Stay tuned.

Is the deficit choking the stock market? The answer is Yes. In this article, I’ll explain how a deficit helps to reduce investment in the stock market and also reduce long-term growth.

First, we need to understand that the government is competing for the same money as the private sector. When the government runs a deficit, it must find people who are willing to buy the country’s bonds. The money that was spent on those bonds could have been invested in the private sector, where it would most likely have been used better. This is how the government can crowd out private investment.

The consequences, however, doesn’t stop there.

The interest rate on government bonds is called the risk-free rate. This si the rate of return which you can get without taking on any risk, since governments, in particular in western countries, do not default (lately we’ve seen a few examples of countries which may default, but so far they haven’t).

Shares have to give a better return than government bonds, simply because they are risky. Investors are, as we say, risk-averse – if they have to choose between 10 % certain return and 10 % risky return, they choose the certain return. Why wouldn’t they?

A high-risk share has to give a higher return than a low-risk share. If you have a 50 % risk of losing all your money (which is what happens when a company goes bankrupt), you would certainly demand a really high return, while if you only have a 5 % risk of losing all your money, the return you demand would be a lot lower.

There is a model called CAPM, which predicts how much return every share must give based on how risky is it. The risk associated with a share is called Beta. Beta means how well a share follows the market. If a share has a beta of 1.0, that means that every time the stock market goes up 1 %, this share goes up 1 %. If it has a beta of -1.0, that means that every time the stock market goes up 1 %, it falls 1 % (and vice versa of course). If it has a beta of 2.0, that means that every time the stock market goes up 1 %, the share goes up 2 % (that’s a risky share).

A share with a high beta is more volatile – it has bigger swings than the average share – and so it must give a higher return, or no-one will invest in it. Let’s say the average stock market return is 10 %, and the return from government bonds is 4 %. Then, the “risk premium” is 6 % – this is the extra return that you get from taking on risk (which you do if you invest in the stock market).

If a share has a beta of 2.0, it must then give 4 + 6×2 = 16 % return. Since it is twice as risky, it must provide twice the risk premium (which we already established was 6 %, the difference between stock market and bond return). Similarly, a share with a beta of 0.5 would only have to provide 4 + 6×0.5 = 7 % return, since a low beta indicates smoother movements in the share price and so a lower risk.

Now let’s imagine the return on government bonds double. As the government keeps borrowing money each year, investors demand a higher and higher return, so this is bound to happen. Suddenly, investors will demand 8 + 6 = 14 % from the stock market (assuming the risk premium is the same, and there is no reason why it would change).

This means that companies must provide higher returns, which equals higher dividends, than before (the stock price depends largely on the size and growth rate of the dividends). This means that the company has to plow back less money than before – if it used to pay 30 % of its earnings in dividends, now it may have to pay 40 %.

This ensures that the company cannot grow as fast in the long run. The worst thing is that it has to spend less money on Research and Development (R&D). If all companies has to do this, that means that there will be less research, and less development. Technological progress slows down as companies cannot afford to invest in it, having to pay more and more money to their shareholders. Many investments which used to provide a good enough return won’t do so anymore; the rate of return required will be higher.

Technological progress is the only thing that can lead to growth in the long term. Increasing savings, or printing money, can both cause short-term growth, but in the long run, you must get more and more efficient if you want to grow. If companies cannot get more efficient, the economy won’t get more efficient and so it cannot grow.

The companies which cannot provide this new, higher rate of return will lose their investors and go bankrupt, or at least suffer severe cuts in their stock prices. Needless to say, this is not good and causes the stock market to fall, making the average american poorer.

If the US were to pass a balanced budget amendment, more companies would spring to life, and more companies would go public (why go public if you’re not sure what rate of return you’ll have to provide?). It would significantly lower the return the government had to pay on american bonds – US government bonds are already being described as the next bubble – and so lower the risk-free rate. Why hasn’t this been done already?

Thanks for reading. Please leave a comment

Piggybacking on some of the Haley Barbour talk we’ve had from Bob Hovic and others today, I wanted to pass along a revealing article about some of the Governor’s recent activities:

In a few weeks one of Washington’s political grande dames, Julie Finley, will host a fundraiser for Haley Barbour, who boasts a Midas-like rolodex of his own.

On March 2, the two-term Mississippi governor and prospective presidential candidate expects to raise big bucks for Haley’s PAC with lots of help from former K Street colleagues who have signed up to haul in $10,000 each.

“Haley has a terrific capacity to raise a lot of money, probably the broadest base of any Republican in the running,” Finley, a former ambassador, told the Center. The fundraiser will be held at Finley’s home in northwest Washington.

…Over the last few months, a small group of Washington insiders and lobbyists have been laboring quietly to lay the groundwork for a potential Barbour campaign. They include: lobbyist Scott Reed, who ran Bob Dole’s 1996 presidential campaign and was executive director of the RNC under Barbour; former RNC chairman Ed Gillespie; Don Fierce and Kirk Blalock of the GOP lobbying shop Fierce Isakowitz and Blalock; Ed Rogers, his former lobbying partner at Barbour Griffith & Rogers (now known as BGR Group); and pollster Ed Goeas.

While I remain steadfastly dubious about Barbour’s chances in a general election against Obama, we cannot overlook him. Suppose he does as Bob and Dave Gaultier have speculated and serves as the de facto stalking horse for Mitch Daniels, eventually throwing his public support behind him and becoming his running mate or Chief of Staff? That laundry list of donors and legendary political skills would then fall squarely to Mitch’s benefit. And if Barbour takes the VP route, Mitch could not hope for a better one to have at his side after taking the Oval Office. After all, as Dave has eloquently explained, in our past two presidencies, the Vice Presidency has evolved into navigator-in-chief of the president’s legislative agenda.

Having Mitch in charge of defining and championing the administration’s (and the country’s) priorities and Haley dedicated to making things happen? Sounds almost like a dream team to me.

2011 CPAC Straw Poll results are in:

1. Ron Paul 30%
2. Mitt Romney 23%
3. Gary Johnson 6%
4. Chris Christie 6%
5. Newt Gingrich 5%
6. Tim Pawlenty 4%
7. Michelle Bachmann 4%
8. Mitch Daniels 4%
9. Sarah Palin 3%
10. Herman Cain 2%
11. Mike Huckabee 2%
12. Rick Santorum 2%
13. John Thune 2%
14. Jon Huntsman, Jr. 1%
15. Haley Barbour 1%
16. Donald Trump >1% (write-in)

Click here to see the full results.

First the entrails:

In his CPAC speech, Haley Barbour praised Daniels and Christie, and promoted the idea of governors as candidates generally:

“Governors deal with problems,” said Barbour, praising Daniels for achieving a balanced budget while cutting taxes. The Mississippi governor also praised Gov. Chris Christie (N.J.) and the mere mention of his name elicited one of loudest cheers from the crowd during the entirety of Barbour’s speech.

But his omissions were also interesting:

In his praise of GOP governors, Barbour didn’t mention either former Govs. Mitt Romney or Tim Pawlenty, both of whom are likely 2012 contenders who spoke yesterday at CPAC.

Since Christie is pretty clearly not a candidate, Barbour effectively singled out one contender. His friendship with Daniels is well known, so its not surprising that Barbour spoke well of him, though it seems a little unusual for one possible candidate to single out another for praise in what amounts to an opening campaign speech.

I’ve heard some comment that Barbour could also favor Pawlenty if he doesn’t run himself, since the two served together at RGA. So that omission is particularly interesting.

Not noted in The Hill’s article is that he also omitted the names of two other former governors, Palin and Huckabee. But those are more understandable. Given the mention of tax-cutting, Huckabee’s name would have been out of place, and Palin is not generally identified with fiscal issues.

And, to close, the totally unfounded speculation:

I’m still not convinced both Barbour and Daniels will run, and Daniels looks like the more likely at present. But I have wondered if they might be looking at a tag-team approach. It would certainly be different and innovative, but they are that type of thinkers. I could imagine them thinking that Daniels can take out (or at least severely hamper) Romney while Barbour cripples Huckabee in his southern base. With the two leading contenders brought down, the race would be wide open (even more so than now), at which point one of them would  withdraw and endorse the other.

Not much happened this week with the vs. Obama numbers other than the numbers from California drove all of our hopefuls underwater.  Beyond that, little changed in the relative positioning of the big four.

Here is the change from last week in graphical form:

As mentioned, our hopefuls are now all underwater, but their relative position with each other didn’t change that much from last week.  Huckabee, Gingrich, and Romney each dropped six points.  Palin dropped seven.

The Horse Race data is far more interesting:

And here is the weekly change for the top four people in graphical form:

Huckabee dropped the most (nearly three points).  Romney rose the the most (about a point and a half).  Palin dropped about point.  Gingrich rose less than a quarter of a point.

In her first really concrete move towards running for President, Sarah Palin has hired a Chief-of-staff for her PAC.  As CNN reports:

Washington (CNN) – Sarah Palin has added a veteran Republican strategist to serve as chief-of-staff for her political action committee, Sarah PAC, CNN has learned.

Michael Glassner, an attorney and longtime adviser to former Kansas senator and presidential candidate Bob Dole, has signed on to steer the former Alaska governor’s political operation as she considers a possible 2012 presidential bid.

During the 2008 presidential campaign, Glassner managed vice presidential operations during John McCain’s unsuccessful White House bid.

There is little need for a COS if Sarah was only interested in being a GOP celebrity.  This news is a major signal that she is serious about exploring a run.

Amendable?

Media Matters and PajamaPundit are running a video clip of an interview with Mike Huckabee by Judge Napolitano with the following portion of the transcript highlighted:

Napolitano says, “Why should the state be involved [deciding who may, and may not get married]?”, to which Huckabee responds:

Well I think that it is an acknowledgement of the higher law that even the state operates under Judge. Which I believe is an important part of a civil society that states not only have civil law, but they acknowledge that they themselves are subject to the higher law of the natural, law of God.

Many in the Democratic Party, and some in the Republican Party love to label their opponents.  Mike Huckabee has been accused of being a theocrat on more than one occasion, and this clip is already being used to do it again.   Much of the pundit-world became apoplectic when Huckabee during the 2008 presidential campaign season dared suggest four facts, none of which would have been denied by Christians or most conservative pundits when taken separately, but are apparently a sign that Huckabee is a Jihadist when put together as he did (see below):

[Some of my opponents] do not want to change the Constitution, but I believe it’s a lot easier to change the constitution than it would be to change the word of the living God, and that’s what we need to do is to amend the Constitution so it’s in God’s standards rather than try to change God’s standards,” Huckabee said, referring to the need for a constitutional human life amendment and an amendment defining marriage as between a man and a woman.

The four facts:

1. The Constitution Can Be Amended (Gasp!)

2. The Bible Cannot Be Amended (Another Gasp!)

3. The Bible affirms the pro-life, anti-abortion position, and the truth that marriage can only be between a man and a woman.

4. The best way to defend these issues is to amend the Constitution*.

I believe Governor Huckabee at some time admitted the wording of his statement could have been better, but only a few have come to his defense.   But the recent flap over his comments to Judge Napolitano show that no amount of clarifying will help people bent on twisting his words and meaning.      Here is Martin Luther King, Jr’s  on Natural Law in his Letter from Birmingham Jail:

How does one determine whether a law is just or unjust? A just law is a man-made code that squares with the moral law or the law of God. An unjust law is a code that is out of harmony with the moral law. To put it in the terms of St. Thomas Aquinas: An unjust law is a human law that is not rooted in eternal law and natural law….And I have watched many churches commit themselves to a completely other worldly religion which makes a strange, unBiblical distinction between body and soul, between the sacred and the secular….Whenever the early Christians entered a town, the people in power became disturbed and immediately sought to convict the Christians for being “disturbers of the peace” and “outside agitators”‘, but the Christians pressed on, in the conviction that they were “a colony of heaven,” called to obey God rather than man. Small in number, they were big in commitment. They were too God-intoxicated to be “astronomically intimidated.” By their effort and example they brought an end to such ancient evils as infanticide. and gladiatorial contests.

Would any of Huckabee’s critics on the right or left on this issue suggest that Martin Luther King, Jr. was a theocrat?

_________________________________________________________________________________________

*One could perhaps disagree on whether that is the best strategic approach to these issues but it would not change the argument that Huckabee was making about the legitimacy of changing the Constitution.

Floyd and Mary Beth Brown founded Citizens United in their kitchen back in 1988. You may have heard of that organization because it was the victorious party in the case that rolled back the dreadful McCain-Feingold campaign finance laws in the Supreme Court Decision, Citizens United v. The Federal Election Commission .  Floyd is now the chairman of the Western Center for Journalism, which was started by Joseph Farah. His wife, Mary Beth, authored the book, Hand of Providence: The Strong and Quiet Faith of Ronald Reagan”.

In a very recent article in Townhall Magazine (online), the Browns tell of their trip to Israel with Governor Mike Huckabee. They came away from the trip believing that he should be the next president of the United States.  They cited his compassion, warmth of character and demeanor, and described him as unflappable.  This is an important and early endorsement for the former Governor of Arkansas, should he decide to run.

Here is a short snippet of the article:

We have spent years of our lives observing politicians, seeing many attempt to treat those around them respect and equality, yet few reaching the ideal. Mike Huckabee achieved this feat with such natural grace it was truly a sight to behold. He chatted with equal energy and concern with the bus drivers and tour guides as he did with top government officials.  With Mike Huckabee, what you see is what you get. There are no hidden agendas and none of the arrogance that usually accompanies political success.

Cross posted at Caffeinated Thoughts

Adult conversations are rare in contemporary American political discourse. In a world in which the cerebral simplicity of “Firing Line” has been replaced by the increasingly erratic and transparent carnival sideshows of Rush, Hannity, Beck, Matthews, Maddow, and Olbermann, political junkies have come to accept the cartoonish nature of our national politicians. Those who don’t fit the mold generally do their best to transform themselves into a cowboy donning a “red” or “blue” hat. Such is the legacy of the Baby Boomers, an immodest generation that has little patience for modesty in politics.

In that sense, it is fitting, I suppose, that the one prospective candidate for president in 2012 who has the will, courage, and smarts to clean up the mess that the Boomers have wrought is, himself, a Boomer. I am referring, of course, to Mitch Daniels, whose keynote address at CPAC proves once again that there is indeed a grown-up in a presidential field full of children, and that the president himself would be no match for Mr. Daniels, the true “Anti-Obama” in both tone and substance.

About two decades ago, a quirky Texas billionaire launched one of the most successful third party bids for the presidency in American history by alerting Americans to the cataclysmic fiscal situation that faced the nation. Still in its early stages, the fiscal tsunami that would eventually befall the nation could have been stopped with modest, yet serious, vegetable-eating on the part of the American public. Ultimately though, Mr. Perot, while prescient, proved himself to be a bit mad, and Mr. Clinton rose to power as the first Baby Boomer president, the fitting leader of Generation Narcissist that would kick the can down the road until the road was no more. Mr. Perot turned out to be the wrong man at the wrong time. But as the debt crisis becomes virtually impossible to ignore, Mr. Daniels may turn out to be the right man, arriving at exactly the right time.

Introduced at CPAC by George Will, a fellow Midwesterner with an apparent disdain for the carny barker politics of the modern era, Gov. Daniels delivered an eloquent speech, complete with a muted sense of urgency that conveyed authenticity, and with a touch of deadpan humor that alerted the listener that Daniels is “in on the joke” with regard to his dearth of charisma, which, in a sense, becomes its own sort of charisma. Daniels did not mince words when the subject of entitlements came up, promising to bring the nation together to re-design Social Security and Medicare into something that makes sense for the world of 2011. The governor did not dodge the hard choices. Social Security would kick in later in the lives of younger workers, he told us. And Medicare would require those who could afford to do so to contribute more of their own resources towards their medical expenses. This is not the “waste, fraud, and abuse” message of Republican establishment types, a message that Daniels expressly rejected during his speech. Nor was it the pie-in-the-sky optimism of Republican mathematicians whose numbers just don’t quite add up, and who claim that ever-decreasing taxes and ever-increasing spending can somehow yield Morning in America. Instead, with Mitch Daniels, the buck stops here.

Gov. Daniels went on to challenge his audience, and to slaughter a few more sacred cows. Military spending would have to go on the chopping block as well, said Mr. Daniels. As for the tax code, Mr. Daniels stressed that simplification was key, and that a flat tax would be best. Infrastructure? The private sector can do that, and do it without any taxes or additional spending. Education? Competition and choice would solve the problem. Health care? ObamaCare is rubbish; instead, follow Indiana’s lead on programs like HIP. Energy? Everything has to be on the table, including more drilling.

Mr. Daniels cited government’s depth and breadth as the primary reason for the sluggish economy, particularly in the area of regulatory policy that prevents Americans from doing business. The governor proposed massive de-regulation and slammed the EPA as being the “Employment Prevention Agency.” While President Obama wants to spend, invest, and direct the economy into a new period of growth, Mr. Daniels prefers to unleash free persons and free markets to yield the innovation that will come about naturally as regulations are curbed, capital is freed, and Americans are allowed to do business.

Mr. Daniels did not revisit his “truce” on social issues in this forum in a direct manner, but did suggest that the national debt requires all Americans to come together, despite disagreements on other issues, and do what is necessary to prevent the nation from meeting its demise. To the extent social and cultural issues came up at all, it was in the form of Gov. Daniels’ commentary on the decline of family-formation, something that Will alluded to in his introduction as well. I would argue that this sort of tack is exactly the one that Daniels should take on social issues, as it is in line with his persona as the straight-talking Midwesterner who tells Americans the things that they don’t want to hear, and who challenges Americans to act like grown-ups. After all, any GOP hopeful could go to CPAC and talk about gay marriage. That would be a “safe” subject for a Republican candidate to bring up. But only a grown-up like Daniels can speak to a nation filled with thrice-divorced middle-aged Americans and hint that perhaps they’re part of the problem.

Perhaps my favorite line from the governor’s speech was when he told the audience that our nation faced a new “red scare,” i.e., that our nation is “in the red,” so to speak, in terms of our deficit and our debt. I enjoyed this portion of the speech immensely, as it serves as a notable contrast between a reality-based Republican like Mr. Daniels, and the carny barker crowd, which seems to think that the greatest threat to our nation is that a revived Soviet Union, “Red China,” and an Islamic superstate will all band together, similar to the “Legion of Doom” in the old “Super Friends” series, and attempt to invade the United States, at which point Sean Hannity will appear dressed entirely in spandex and save us all. I don’t care one whit about the number of talk radio listeners who prefer such drivel to reality. What I do care about is having a party leader, and a president, who will speak truth to power, and who will not treat politics and government as if it is a sideshow.

In sum, I found Gov. Daniels’ speech to be reflective of the serious, sober, talented, competent, and courageous public official that he has proven himself to be, and I anxiously await the opportunity to support his potential bid for President of the United States. I believe that the contrast between President Obama and Gov. Daniels in a general election would be clear, and that Americans would select quiet competence over flashy, failed policies and proposals. Were Mr. Daniels to become president, the last of the Baby Boomer presidents he would probably be. That would give a President Daniels the opportunity to lead the nation out of the mess that so much of his generation took such joy in creating.

I think that all of us who write here, and probably most visitors as well, are aware of the negative effects of the stimulus package passed by Obama.

In this post, I would like to bring to attention a largely forgotten aspect of the stimulus: The chicken race that follows

Let’s start with some basic economics: Countries trade with one another. Therefore, money that is spent in an american shop does not necessarily end up in America. If you buy a cell phone from Nokia, furniture from IKEA or maybe just a random pair of jeans, some of the money will end up outside America’s shores. Of course, this goes the other way around too.

So what is a chicken race? Many of you, especially fans of James Dean, may have heard of it. It is a game that was actually quite popular 50-60 years ago.

Two drivers drive their cars ttowards one another. If you swerve (in order not to crash), you are a chicken and you lose. If you both swerve, you are both chickens – the game ends in a tie and you are both humiliated (but at least you’re still alive). If you don’t swerve both your opponent does, you win. If none of you swerve, you will crash and probably die – this is the worst outcome (wikipedia has a more detailed description: http://en.wikipedia.org/wiki/Chicken_race)

You would think that swerving would be the most logical option, since the loss of swerwing (the humiliation of being a chicken) is much less than the loss associated with staying the course (death). However, if you assume your opponent is rational, then you know that he is going to swerve (since that’s the rational thing to do). And then, given that, it is in your interest to stay the course so that you actually win (why swerve and tie when you can stay the course and win?). And you opponent, unfortunately, thinks the same about you: He thinks that you are not so stupid that you would stay the course, and so he stays the course thinking he’ll win. And then, you both crash.

One of the revolutionary things about game theory is that it proves that the market isn’t always efficient and doesn’t always lead to the best outcome for society as a whole – Adam Smith had said (and I’m simplifying a bit now) that if everyone just does what’s good for themselves, we’ll all be better off. While that is correct in a lot of situations, John Nash showed that it’s far from true all the time. In a chicken race (if you have seen Rebel without a cause, you know what I mean), both drivers are better of swerving, but even if they agreed to swerve, they would both be too tempted to break this agreement because that would be better for themselves, given that the other player stuck to it.

So what does this have to do with stimulus? You see, this time around, this was largely avoided. But the next financial crisis may see this game theory dilemma develop: Everyone has to, or assume they have to, stimulate their economy but no-one wants to be the first (this is partly because stimulus/bailouts are unpopular)

A simple example: Imagine there are two countries which trade with each other. For simplicity, we’ll assume they got no other trading partners. Let’s call them country A and country B. Country A and B both gets into a financial crisis, and they both need to stimulate their economies (for the record, I’m against stimulus, but this would likely happen anyway). However, there is a problem: Stimulus tends to leak! This means that if Country A spends 100 billion on stimulus, 25 billion may very well end up in Country B. Supposing Country B is a lot smaller than A, they may only need 25 billion in stimulus. So instead of stimulating their economy themselves, they just wait for Country A to stimulate their economy, knowing that the stimulus will leak.

This isnt’ really fair though, is it? One country will see their problems fixed without having to increase their budget deficit or anything. With companies being multinational, this is a big problem: You may agree that a company needs a bailout, but you can’t agree on who should pay. Should Sweden be responsible for bailing out SAAB, or should the US be responsible (since SAAB was owned by GM which is an American company)? The Swedish government made a big deal about how they were not going to save SAAB, that they were fiscal conservatives and that they had not been elected to be car manufacturers, but to govern. But in secret, they were lobbying the American government to bail out SAAB instead so they wouldn’t have to. Their message was “No, we’re not elected to be car manufacturers… but we figured you are?”.

It is actually even worst. Let’s go back to our example, but now assume that Country B needs 50 billion of stimulus. What will they then do? They will of course only stimulate their economy by 25 billion, thinking the rest of it will be covered. Let’s say that Country B builds a financial model based on this, they only save 25 billion during the boom, thinking they won’t need more for the recession.

But what happens then if Country A refuses to bail out at all? What if they take a strict, fiscal conservative line? That will then hurt Country B as well. When the government increases the budget deficit, that increases the trade deficit as well. Here’s how it works: The government spends more. Some of the money will inevitably be spent on foreign goods. But just because the government spends on foreign goods (imports increase), doesn’t necessarily mean that foreigners will buy more goods from the country (so exports are likely to remain the same, at least for a long time). And so, the trade deficit goes up.

Country B will now have insufficient savings to bail out their industries, and will have to borrow money at an interest. If they hadn’t saved any money at all, they will now have to borrow more than they otherwise would have, and interest rates will be higher.They could make a mutual agreement to both stimulate their economy by a certain amount of money in the event of a stock market crash of course, but can they trust one another? Everyone would have something to win from breaking the agreement, and so it wouldn’t be a so called “nash equilibrium”.

What if no-one stimulates their economy? That will lead to a “crash” (as its called in a chicken race when no-one swerves) as the market falls much deeper than it would have if they would have both stimulated. Notice that this is in the short run, in the long run stimulus has some really nasty side-effects which is the reason why I don’t support it.

But if one country were to break the agreement and refuse to stimulate their economy, couldn’t the other country retaliate the next time the stock market crashes? The problem is that if they do that, they will be even worst off. If no-one stimulates their economy, that is a chicken race “crash”, the worst scenario that can happen. So you’d be better off keeping on swerwing (stimulating) even if the other player/country doesn’t.

This could also be described as a freerider’s dilemma, where smaller countries “freeride” on bigger countries stimulus.

So what will happen? Enter the EU into the equation. The EU, for those who don’t know this, has the ability to make laws that override the constitutions of its member countries. So technically, the EU could definitely make a law stating that small countries have to contribute to a stimulus package as well so that they cannot, like Sweden, try to freeride on the other countries’ efforts. But how do you decide how much each country should contribute to such an EU-wide stimulus package? The fact of the matter is that the big countries control the EU, and so I would imagine that smaller countries (think, Ireland, Sweden, Denmark) would be forced to pay an unproportionate amount of money. It wouldn’t be the first time the big countries ignore the plight of the small.

What will the next financial crisis look like? If things turn out this way, it will look just like a typical chicken race: The drivers (countries) will avoid swerving for as long as possible and try make the impression that they would rather crash than swerve (they will avoid a bailout/stimulus package for as long as possible, creating the impression they will never do one). In the end, it could go either way. An EU-wide stimulus seems to be the most likely option for Europe. A crash is not completely unlikely however.

A breakdown of various free trade agreements are also likely. In times of crisis, outsourcing becomes a lucrative option for companies looking to cut costs and gain the trust of investors. Free trade is good – there are no serious economists who would dispute that – but when a crisis strikes, and stimulus money meant to revive the economy flows overseas, protectionism is bound become more popular (remember the “Buy American” clause?) because of shortsightedness.

How can you prevent a chicken race? A great example would be doing something that stops you from swerving – if one player, just prior to the game, disabled the steering wheel in his car (so that he couldn’t swerve even if he wanted to), the other player would know that he had to swerve or their would be a crash, since his opponent couldn’t swerve.

What would the equivalent be in economic terms? I say a balanced budget agreement is the soution. That would make future bailouts and stimulus virtually impossible, since you always borrow money to finance these. You would “disable the wheel”, the possibility to “swerve”. And everyone could take that into account when making financial decisions – banks, other countries etc. Right now, the consensus seem to be that the stimulus of 2008-2009 where one-time events that should never be repeated. But frankly, no-one trusts the United States anymore in these matters. Your word is not good enough; it’s easy to say you’re not going to swerve before the race has begun, but it’s harder to stick to that when a crash is imminent.

Summary:

Every country has a short term gain in bailing out companies and stimulating their economies, however, they cannot keep their stimulus money to themselves because of trade with other countries, and would therefore rather not stimulate until they see what other countries are doing (that way, they can somewhat figure out how much stimulus their own economy will need). Everyone would gain from everyone stimulating, but no-one wants to be the first (everyone gains from both swerving in a chicken race, but the one who does it first loses). This is also because stimulus packages are impopular and can be dangerous for a politician’s career. Therefore, a crash may occur, even if it doesn’t maximize the outcome of the group ( a crash meaning no-one stimulates their economy, waiting for the other countries’ decisions, or no-one does it enough).

Note that I in no way support stimulus, but politicians take the fact that stimulus helps the economy as a given, and so f we want to figure out what they are going to do, we might just as well act as if that was really the case.

Please leave a comment and ask questions if anything is unclear. I’m a student of game theory (and finance/economics in general) as you may have figured out.

Thanks for reading

John Gustavsson

Fox News 2012 Presidential Survey

• Barack Obama 48%
• Mitt Romney 41%

• Barack Obama 49%
• Mike Huckabee 41%

• Barack Obama 54%
• Jeb Bush 34%

• Barack Obama 55%
• Newt Gingrich 35%

• Barack Obama 56%
• Sarah Palin 35%

(more…)

Romney spoke to an enthusiastic crowd at CPAC this morning. The auditorium was filled to overflowing with a long line of people who wanted to get in but couldn’t. They cheered, applauded, whistled, and stamped their feet throughout his presentation.  They even laughed at his jokes.

Here is a transcript of his prepared remarks.
Some excerpts:

The other night, from opposite coasts of the country, Ann and I watched President Obama’s State of the Union address. Ann figured out pretty fast what was going on. She sent me an email saying that it sounded like he was reading my CPAC speech from last year.

What we were hearing was not just a new and improved Barack Obama; it was an entirely different Barack Obama.

Saul Alinsky was out; Jeffrey Immelt was in.

The President went from “Change you can believe in” to “Can you believe this change?”

He sounded like he was going to dig up the First Lady’s organic garden to put in a Bob’s Big Boy.

But as the speech went on, it was clear that this was just the appearance of change: His answer for Americans out of work was more government spending and $50 billion for high speed rail.

He replaced his Chicago politician chief of staff with a fresh face from Chicago, named Daley.

Make no mistake: What we are watching is not Brave New World; what we’re watching is Groundhog Day!

An uncertain world has been made more dangerous by the lack of clear direction from a weak President. The President who touted his personal experience as giving him special insight into foreign affairs was caught unprepared when Iranian citizens rose up against oppression. His proposed policy of engagement with Iran and North Korea won him the Nobel Peace Prize. How’s that worked out? Iran armed Hezbollah and Hamas and is rushing toward nuclear weapons. North Korea fired missiles, tested nukes, sunk a South Korean ship and shelled a South Korean island. And his “reset program” with Russia? That consisted of our President abandoning our missile defense in Poland and signing a one-sided nuclear treaty. The cause of liberty cannot endure much more of his “they get, we give” diplomacy!

The world – and our valiant troops – watched in confusion as the President announced that he intended to win the war in Afghanistan….as long as it didn’t go much beyond August of 2011. And while the Taliban may not have an air force or sophisticated drones, it’s safe to say… they do have calendars.

He guaranteed that unemployment wouldn’t go beyond 8%. As he watched millions and millions of Americans lose their jobs, lose their homes and lose their hope, his response was this: It could be worse.

It could be worse? This is the leader of the Free World’s answer to the greatest job loss since the Great Depression? What’s next? Let them eat cake?  Oh, excuse me. Organic cake.

Unemployment is not just a statistic. Fifteen million unemployed is not just a number. Unemployment means kids can’t go to college; that marriages break up under the financial strain; that young people can’t find work and start their lives; and men and women in their 50s, in the prime of their lives, fear they will never find a job again. Liberals should be ashamed that they and their policies have failed these good and decent Americans!  The President is trying to show that he finally gets it—that he really isn’t a liberal after all. But his idea of conservative economic policy is to invite some corporate CEO’s to the White House for an evening of table-talk.

I’m sorry Mr. President, but that’s not a policy, it’s a dinner party.

I refuse to believe that America is just another place on the map with a flag. I believe that America is an exceptional nation, of freedom and opportunity and hope. The America I believe in has goodness and a greatness that creates a unique American genius. That genius has blessed the world, led the world and yes, even saved the world from unimaginable darkness.

We didn’t originate the concept of liberty but our Founding Fathers redefined it and shared it with the world. From the brilliant sands of Omaha beach to the dark valleys of the Hindu Kush, we have fought with an unmatched courage and determination, not to conquer territory, but to give others the chance to experience the liberty that is humanity’s destiny.

Given all that America has done to lift others from poverty, given the millions of afflicted we have helped to heal and comfort, and given the hundreds of thousands of lives of America’s sons and daughters that have been, and are today, sacrificed to defend freedom, I will not apologize for America!

It’s a very good speech. I highly recommend it.

As Andy Warhol once said, “That’s not fake. It’s real plastic.” Warhol’s immortal words came to mind as I learned about Willard Mitt Romney’s latest flip flop. The 2011 paperback version of his book No Apology is at war with last year’s hardback edition. The fairly accommodating Romney who said nice things about President Obama has been hauled off and replaced with an angrier, more combative Romney — perfect for the GOP presidential primary season, which will heat up as Romney addresses the Conservative Political Action Conference in Washington this morning at 10:30.

As the Boston Phoenix’s David S. Bernstein wrote yesterday, “Times change, and so does Mitt.”

Bernstein cited two key passages in Romney’s text. The earlier version of No Apology included a dispassionate analysis of President Obama’s 2009 stimulus package. Seemingly more in sorrow than in anger, Hardback Romney predicted that the $814 billion measure “will accelerate the timing of the start of the recovery, but not as much as it could have.”

Paperback Romney is far less charitable. He calls the stimulus “a failure,” and denounces Obama’s “economic missteps.” He adds: “This is the first time government has declared war on free enterprise.”

In an inverse relationship with the cover of his book, Romney also morphs from soft to tough on health care. According to Bernstein, Hardback Romney offered cautious comparisons between the president’s health-care reform plan and RomneyCare, the former Massachusetts governor’s own big-government legislation that the Wall Street Journal called “the dress rehearsal for ObamaCare.”

Once again, Paperback Romney is far more fiery and partisan, now that the February 6, 2012, Iowa Caucuses are less than a year away. “ObamaCare will not work and should be repealed,” Paperback Romney roars. “ObamaCare is an unconstitutional federal incursion into the rights of states.”

In addition to the fresh and disturbing evidence that Romney remains a constant work in progress, one wonders how dumb he thinks Americans are. In an age when a casually shared shirtless photograph can trigger a media brushfire and an instant resignation from Congress, did Romney really think he could get away with this auto-revisionism without observers noticing it, and the commentariat sharing the news with GOP primary voters from coast to coast?

This little episode proves that Romney is less tethered than a soccer ball at the World Cup. He bounces around, not thanks to his own compass, but in reaction to forces that encircle him — first and foremost what he thinks the next election’s voters want to hear.

Rep. Henry Waxman (D., Calif.) is 10,000 percent more deserving of respect than is Romney. Waxman is wrong on everything except, maybe, today’s temperature. Given his cap-and-tax bill, on second thought, maybe he is wrong on that, too. But at least Waxman sticks to his guns — I mean slingshots — and fights — er, labors— to make America conform to his political philosophy, as destructive as it is.

In contrast — from abortion to spending to taxes to guns — Romney keeps shifting, just like the political pressures that toss him this way and that.

Compared to Willard Mitt Romney, I have seen mannequins in less empty suits.

_____________________________________________________________________________

— Deroy Murdock is a nationally syndicated columnist with the Scripps Howard News Service, a media fellow with the Hoover Institution on War, Revolution and Peace at Stanford University, and a contributing editor to the National Review.

Earlier this week, American Spectator’s Quin Hillyer wrote two excellent blog posts about budget-cutting. He explained that Congressman Paul Ryan (R-WI) is in fact not avoiding fiscal responsibility with his seemingly-pitiful budget cut proposal, but is instead conducting a brilliant strategy to build public support for larger cuts later. While I disagree with his argument— I want Republicans to tell the President there will be no debt ceiling hike $500 billion is cut now and the budget is balanced by the end of FY2012— I encourage all fiscal hawks to read them both.

Possibly the second-best argument Hillyer makes is that when one compares the budget cuts now to the budget cuts by Republicans after the 1994 elections, they are fairly similar in size. Related, he points out the following in his first post:

“For comparison, when the House GOP rescinded $16 billion (or about $8 billion net after paying for disaster aid and some military stuff) in 1995, it was seen as an astonishingly bold move. As a percentage of the relevant parts of the budget now, that’s about $36 billion. It was done carefully. No little old ladies froze in the street. No toddlers starved in the gutters. No matter how the MSM tried, nobody could really find any horror stories. The GOP entered that fall’s budget battles riding high, with a real head of steam, because we had shown that we could cut both deeply AND carefully. (Dumb tactical mistakes then cost the GOP in the “shutdown” battle, but that’s another story. The fact is we — I was GOP at the time, not media, so I can say “we” — absolutely had emerged from the rescissions fight in great poltical [sic] shape.)”

The best point Hillyer makes is in his second post:

“But the way to do it is to avoid repeating the mistakes of 1995. Those mistakes are still misunderstood today. The “shutdown” was lost not because of substance but because of tone, because of [sic] lack of a “phase two” strategy, and because the GOP idiotically put a Medicare provision into the mix at the wrong time, while misguidedly choosing how we proposed to deal with Medicare. In other words, we didn’t plan it well enough and we tried to do too many things at once.”

Hillyer is exactly, 100% right with his larger point. Republicans need to be strategic. They need to not let the media and Democrats accuse them of hurting Grandma or wanting to hurt people with cancer. But they also can’t let that scare them into near-submission, and this is where I take issue with Hillyer. We can’t wait two more years to start making big cuts. Furthermore, to go into political strategy hoping we’ll even have a Republican President and a Republican Senate is to assume the current political climate won’t be reversed by some series of political mishaps or adjustments— similar to what happened between Election 2004 and Election 2006, or what happened between Election 2008 and Election 2010. We just don’t have the time to hope for that kind of change.

Hillyer is obviously sincere, and I will take him at his word that his fiscal conservative bona fides are legitimate. Here’s the thing: I’m just a young guy who has a lot of opinions, but even I’ve found well over two hundred billion to cut between now and the end of the fiscal year. Republicans could do the majority of those cuts without much, if any, political risk. They might even get bipartisan support when it comes to eliminating the Transportation Security Administration (TSA) and eliminating waste and fraud in Medicare and ending non-competitive contracts in the Pentagon. It can, and must, be done.

I’ll end my rant by correcting a quote from Hillyer:

“When the U.S. entered World War II, we didn’t try a landing in France in 1942. We waited until 1944, after Hitler was weakened, after we were trained, after our intelligence and counter-intelligence were highly developed, after we meticulously planned our assault with devastating force. And it was still a fairly close-run thing in Normandy. MEanwhile, we hadn’t just been twiddling our thumbs. We had retaken North Africa, retaken Sicily and parts of Italy. (We had also made great progress in the Pacific.)

The old proverb is right: Haste makes waste.”

Again, Hillyer is mostly right, but his analogy is backwards. Eliminating inefficiencies in government; getting rid of fraud and waste and enacting tort reform and other non-controversial (and potentially bi-partisan and necessary) legislation is not attacking Normandy, and Republicans need to make that clear. Eliminating entitlements would be attacking Normandy. Doing what I just described, or used for examples of budget cuts several paragraphs ago, is attacking Africa, Italy and the Pacific. What Hillyer and Paul Ryan are doing is like sending a few hot air balloons and a slingshot to Britain and saying “Good luck” during the bombing of London. I mean, I’m sure it would help, but we’d never notice the difference.

P.S. Hillyer had a clarification of his first two posts last evening. In it he says he was just talking about non-defense discretionary spending in his posts. While I will again take him at his word, his overall message of “cut slow, cut little” is still not the medicine we need to balance the budget and eliminate the national debt. As the Republican leadership has shown, give them an inch and they’ll take a foot. We have to hold them accountable as leaders of a major political party and leaders who were brought to power on the promise of fiscal responsibility.

Yes, Mr. Deace, I See Huckabee Fading Into The Background...

Max Twain of Race42012 knows. Steve Deace of WHO Radio in Des Moines knows.  Craig Robinson of the Iowa Republican knows.  Erik Erikson of Red State (who is also a talk show host at Radio WSB in Atlanta) knows.   The Des Moines Register used to know. What do they know that Governor Mike Huckabee doesn’t know?   That he isn’t running for president in 2012.

Every one of the above has run polls or made predictions about how each of a number of candidates will fare during the upcoming Presidential primary/caucus season.  Each has left out Governor Huckabee, even though he continues to lead when polled for favorability, and when in national or many state horse races.  Do they do this because he has announced he is not running?  No, they don’t.  The only announcement made was that he wouldn’t make a decision until summer’s approach.  How do they know, then?  These soothsayers use eight kinds of divination….

Halomancy – Divination using salt

Some pundits know, based on his diet, Huckabee isn’t running.   Seriously, they think he isn’t running because he has put on a few pounds?   Tell that to Chris Christie in New Jersey.

Uranomancy – Divination by consulting the heavens

Some of these folks are certain the stars have not aligned for Huckabee.  They are able to take any poll and make the worst of it.  For example, for the longest time Huckabee was leading polls only in conservative, “red” states, mostly in the south.  This was proof he can’t reach out to the moderates and independents and therefore he won’t run.  Recent polls show he has done well in California and New Jersey.  This is proof now he isn’t running because he is too moderate to win the GOP nomination.

Capnomancy – Divination by smoke

Some people can’t understand or control Mike Huckabee.  If he doesn’t do things the way they think he ought, it is obvious he has no presidential ambitions. Take for example, the claim by some that if the Governor really wanted to win in 2012, he would participate in this week’s CPAC convention.  Never mind that he has already given principled reasons why he isn’t going to participate.  Even some former supporters are getting antsy.  Mike Huckabee is a fun guy to have in Iowa; reporters love him.  They hope they can goad him into coming to Iowa or their state more frequently.  Six Stops in February in Iowa isn’t enough.

Keraunoscopia – Divination using thunder

Mike Huckabee isn’t running because his wife won’t let him.  And bad decisions on pardons will continue to haunt him.   The talk show hosts are against him.  He has a bad reputation with fiscal conservatives.  He is too religious and wants to turn the whole country into Taliban II.  Besides the slander that most of this involves, it is mostly wishful thinking.  It is hearing what his opponents want to hear.

Ailuromancy – Divination by studying a cat’s jump

Apparently there was some miscommunication between Governor Huckabee and Bob Vander Plaats, who announced last week that Governor Huckabee would be the speaker in the FAMiLY Matters lecture series in June.  Others are certain his cruise to Alaska is proof he won’t run.   His book tour in Iowa and South Carolina only means he can sell books there, not that he is reaching out to potential voters.

Botanomancy – Divination using plants

The former governor has moved to Florida.  And he is building a big 2-3 million dollar house and obviously he can’t pay that off and run for president.   But who know what other arrangements he has made to pay it off.   The talk show hosts don’t know.   But they have read the tea leaves.  Others are sure that he won’t run because every single campaign aide that could possibly help him in Iowa has already committed to other candidates.  (The truth is that very few movers and shakers have publicly committed to other candidates, none of whom have announced).

Enoptromancy – Divination using a mirror

These are the folks who can’t imagine they would ever give up a lucrative TV deal and all the money that goes with it. And that is doubly true for the the Hick from Arkansas, who can’t resist the filthy lucre.  They don’t see his character, however; they only see their own.

Extispicy – Divination using entrails

This is the dissecting that goes on, and the gut feeling they get, as if they knew what was going on inside the belly of Governor Huckabee.   They read recently that he paid off a few small lingering debts and closed his 2008 Huckabee for President organization and now they know he is not running.

Some of these things may be legitimate reasons to speculate he may not be running. And it is certainly fine to make guesses or predictions.   But to say you know for sure?   I won’t play the game and say I know he is going to run for president.  I don’t know one way or the other. Maybe he doesn’t know yet.   And you don’t need salt, a telescope, smoke, thunder, plants, mirrors, cats, or entrails to see that is a possibility.

Or, “Red Rover, Red Rover, send 51 Republican Senators right over…”

According to Karl Rove, the magic number for Republicans in 2012 is the number “4.” That’s the net gain that Republicans need in the Senate in order to grab the majority and repeal the bulk of ObamaCare, which can be done, according to Rove’s policy shop sources, via the magic of reconciliation:

The Budget Act of 1974 established the reconciliation process. The House and Senate Budget Committees can direct other committees to make changes in mandatory spending (like ObamaCare’s Medicaid expansion and insurance subsidies) and the tax code (such as ObamaCare’s levies on insurance policies, hospitals and drug companies) to make spending and revenue conform with the goals set by the annual budget resolution.

For example, under reconciliation the Senate Budget Committee could instruct the Senate Finance Committee to reduce mandatory spending on insurance subsidies and Medicaid expansion. These two items make up more than 90% of spending in ObamaCare. All the changes from all the committees are then bundled into one measure and voted upon. Because reconciliation is protected by the rules of the budget process, it doesn’t take 60 votes to bring it up and it requires only a simple majority to pass.

Will this 51-vote strategy work? One long-time GOP budget whiz, embarrassed he hadn’t thought of this, told me it would. Another Republican veteran of the budget wars agreed, though she had some concerns that certain elements of ObamaCare, such as some insurance provisions, might be beyond the reach of reconciliation. For example, would reconciliation allow Republicans to kill the requirement that younger, healthier workers pay higher premiums than they rightly should to keep premiums for older workers lower?

Mr. Hennessey believes that these are “strategically unimportant” items. He says the goal should be to repeal ObamaCare’s big-cost drivers, and reconciliation provides the tool to do it.

The specifics are vague, but it seems that what Rove is saying is that the components of ObamaCare that will lead to an explosion in government-run insurance, including the largely-unfunded Medicaid expansion and the subsidies for individuals purchasing plans in the exchanges, can be repealed via reconciliation. The big question that I have for Mr. Rove’s band of conservative policy wonks is whether the government-run exchanges themselves can be repealed via reconciliation as well. If the exchanges, the subsidies, and the Medicaid expansion can all be repealed with only a bare majority in both houses of Congress, that will give Republicans a very real chance of preventing the “Trojan Horse” aspects of ObamaCare, those that will eventually lead to a government-run health insurance system for all, from ever coming into being.

As Rove notes, some components of the bill, such as the new insurance regulations and the individual mandate, will probably fall outside of the purview of the reconciliation process. But the mandate is already ridiculously unpopular, and will be politically unsustainable once the subsidies, exchanges, and Medicaid expansion are repealed, forcing the working poor to choose between paying their mortgage and purchasing health insurance. At the same time, insurers will cry foul over any repeal of the mandate that leaves guaranteed issue in place. The end-result will depend upon the policy smarts of the next GOP president, who will have the opportunity to scrap the whole scheme at that point in favor of a piece of legislation that actually makes sense. But either way, it seems that the most egregious parts of ObamaCare can be repealed via a majority vote in both the House and the Senate.

All of this means that fielding top-notch candidates in key Senate races will be more important than ever in 2012, with Virginia, Missouri, Nebraska, West Virginia, and Montana as prime opportunities for GOP pick-ups. In each of these cases, Republicans should avoid celebrity candidates, and should also steer clear of philosopher-kings and queens plucked from obscurity by out-of-state entities such as the Tea Party Express. While these sorts of candidates tend to nationalize races, increase donations to the NRSC from the grassroots base, and give the talk radio crowd something to bark about, they also tend to lose elections that Republicans would otherwise win by running boring, home-grown candidates with a proven ability to win public office in the state in question. So while Sharron Angle, Ken Buck, and of course, Christine O’Donnell make the base feel all warm and fuzzy inside, it will be George Allen, Rob Simmons, and Shelley Moore Capito who actually get a chance to cast the votes to repeal ObamaCare.

Students for Mitch Daniels, who did an ad for Daniels a few weeks ago in Iowa, as the first ad of the 2012 campaign, have enlisted Jimmy McMillan for their second spot, to run in DC this weekend in conjunction with CPAC.

Mitch is sounding more like a candidate every day, telling Politico that he would have lots of money and support if he runs:

Indiana Gov. Mitch Daniels boasts that he would turn heads with his fundraising firepower and roster of big-name GOP supporters if he jumps into the 2012 presidential race.

“If I were to decide to do this, we would have an unbelievable letterhead,” Daniels predicted in a POLITICO interview Wednesday, lighting up as the hour-long conversation turned to why he could win.

More importantly, he sounds enthused about running the sort of campaign that is needed — one that tells Americans the truth:

Daniels said he would carry a message many people might not want to hear.

Sitting next to the fireplace in his spacious Capitol office and looking fit for an L.L. Bean catalog in corduroys and a fleece vest over a flannel shirt, the governor talked at length with no staff present about what ails the country and his solutions for its problems.

Asked what worries him about his own party, Daniels turns to what for him is the central issue facing the country: “That we might continue procrastinating for fear of, you know, presenting a bold case to the American people for the kind of changes that will … restore us to fiscal and economic health.

“I’ve said that, you know, it wouldn’t avail us much to simply displace President Obama,” he continued. “We’re going to have to do some fundamental things. We’re going to have to make some fundamental change.”

“I’m not saying this is likely, but it is not impossible that the debt problem manifests itself as a long, slow erosion,” he explained. “There could be an inflection point in there, and a lot of people have pointed to this, you know, that loss of confidence, people start selling off our bonds. Things could go very bad very fast. So that’s one reason not to wait. Let’s don’t take that chance.”

That sounds familiar — lots of politicians want to get serious about fiscal issues.

But where Daniels goes his own way — and where he courts anger within his own party and among the broader electorate — is with the details.

On Social Security, he proposes for workers not currently in the system or nearing it a higher retirement age, means-testing and benefits that aren’t as “overprotected” for inflation as it is today.

Daniels would also means-test Medicare and make it a defined contribution system while doing away with what he called “the command-and-control” distribution of benefits.

And he wouldn’t spare the Pentagon, saying flatly that he’d make cuts there.

“I think you have to start by reviewing the missions that we’ve committed to,” he said. “Is every one of them essential?”

Such talk is often heard from the likes of House Budget Chairman Paul Ryan (R-Wisc.) but it goes significantly further than many Republican leaders are comfortable with for fearing of handing Democrats ready-made attack fodder.

“We have to do a lot of things that all the political wise guys said were impossible, grab these third rails and so forth,” he argued. “I’m an optimist that people, that the American people will support doing what is necessary, once they understand the facts.

According to Politico, “those who have spoken to him indicate Daniels doesn’t see anyone in the current GOP field focused on the fiscal issues that motivate him.”

And, here’s the drug arrest story, for those inclined to be fascinated with such things.

Here is the data from the latest PPP California 2012 Hopefuls Race:

This illustrates well why I seldom pay much attention to the Favorable/Unfavorable metric.  People vote for the people they think will do the job, not necessarily whom they like the most.  Certainly there is a correlation, but it is an indirect one at best.

National Journal has the scoop.

[Update] According to Chris Cillizza, the top candidates to replace Kyl include former Rep. John Shadegg and Rep. Jeff Flake, as well as former state party chairman Jim Pederson and former state Attorney General Terry Goddard for the Democrats.

Craig Robinson, editor of the hugely influential Iowa political site The Iowa Republican, has released his preliminary rankings of the GOP contenders for the 2012 Iowa Caucuses. Who was given the #1 spot? None other than former Speaker Newt Gingrich:

Anyone who underestimates Gingrich does so at his or her own peril.  Gingrich seems to be built for the type of campaigning that the caucuses require.  His knowledge of issues and the endless policy proposals that he has developed over years make him better prepared to do the one-on-one campaigning in Iowa than any of his likely opponents.  These traits will also benefit him in the numerous presidential debates that will take place between now and the caucuses.

The others candidates who achieved a top 10 ranking are:

2. Michele Bachman
3. Tim Pawlenty
4. Mitt Romney
5. Rick Santorum
6. Ron Paul
7. Haley Barbour
8. Mitch Daniels
9. John Thune
10. Herman Cain

Of course, Sarah Palin and Mike Huckabee’s omission from this list is quite jarring. But it would appear from his rankings that Robinson is fairly certain that they will not run.