New School Politics

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Obama was predicted to win South Carolina by about 12 points; He won by 28 points, more than doubling Hillary Clinton’s votes 55%-27%.

Many of the Obama romantics who would be quick to name this a “historic victory,” but not only doubt that there is anything exceptional about it, but I doubt that it will deter the Clinton machine from trucking on through Super Tuesday and to the nomination.

Long lauded as the campaign that transcends race, the Obama candidacy has difficulty claiming that title after SC. According to exit polls, the Senator won black voters, who are 55% of the electorate, 78%-19%. Among white voters however he did not fair well. At all. As a matter of fact he lost white vote to both Edwards and Clinton 40%-36%-24%, respectively. Voter turnout grew from about 300,000 in 2004 to 500,000 in ‘08, while black voter turnout more than doubled from 100,000 to over 200,00 in that time.

Of course, if that breakdown were to stand for the remainder of the primary, Obama would be crushed on Super Tuesday. And while there is no evidence that the same breakdown will be maintained across the country, it is still an indicative breakdown of race in the party.

The same pattern was not as apparent in Iowa and New Hampshire, those states may have been different. And South Carolina may have changed things. It was a very bitter race; it had certain racial undertones; and it featured a large black faction. All three of those “politics as usual” factors have their way of marginalizing lofty and idealistic fundament of Obama’s campaign. If Obama becomes the “black candidate” or this race becomes a dogfight, his transcendent status will become a transient victim of the Clinton dynasty. To some extent, this has already come true (as Dick Morris predicted).

Earlier today, the former President played off Obama’s win in South Carolina (video here) before it was even won, mentioning that “Jesse Jackson won SC in 1984 and ‘88…” the obvious implication being that Obama only made a showing in the state because he is black, further implying that his overall campaign is not very serious.

The Clintons know what they are doing. Better than anyone else. They are running a hard campaign against Obama; their basic goal is to frame his candidacy as impractical and not serious. Hence they are inclined to play petty political hardball, because hardball is a game the Clintons always win. And while they played it in South Carolina and lost, it was a small price to pay for the results it will return on February 5th.

Popularity: 24% [?]

In a three sentence statement, Former Senator Thompson withdraws from the Republican presidential primary.

This comes after his third place finish in South Carolina where he garnered just 16%. He did not mention whether he would endorse anyone as of now (I’m not sure if he will endorse anyone, but if he does I predict that it would be his Senate colleague and friend, John McCain). It is also not apparent which candidate his withdrawal will help.

Addendum: to elaborate, I believe Thompson will endorse McCain because he endorsed and campaigned for him in 2000. Additionally he has a friendly relationship with him as John and Cindy McCain spent time with Fred and Jeri Thompson on the latter couple’s honeymoon.

Popularity: 20% [?]

Here’s what I am expecting for tonights results:

Clinton and Romney win Nevada’s caucuses

Huckabee erks one out over McCain in South Carolina’s primary

If this happens, things will simply be looking a little better for Clinton (who is still the overall frontrunner) going into next weeks Dem SC primary which should be tight (and probably favors Obama as of now).

On the GOP side, however, my scenario would make that race even more confusing, and reassert Florida as a toss-up primary and possibly a big swing state for the Republican nomination. It would also bring Rudy Giuliani into the thick of things in Florida.

If McCain can manage to pull it off in South Carolina, however, he can probably claim frontrunner status again, as he is already slightly ahead in Florida and National polls.

Romney’s decision to concentrate on Nevada is a safe, and probably wise, call. He is definitely still a prominant contender, and he appears to have support among much of the party faithful as he has been doing consistantly well among conservative Republicans in the early primaries and seems to be gaining favor among notable conservatives on the radio, such as Rush Limbaugh.

Stay tuned, tonight should be interesting.

Popularity: 23% [?]

With less than 10% of the precincts reporting, the Michigan primary was called for Mitt Romney. As of now it looks like McCain will finish second, followed by Huckabee, and Ron Paul in fourth.

With many viewing McCain as the frontrunner coming into MI, this is evidence that Republicans remain uncommitted to any candidate. This being said, I am not at all surprised by the outcome in Michigan.

This race is a complete crap shoot. I would look for Huckabee to win South Carolina. I don’t know what will happen in Nevada, although I doubt it matters. Florida is really a total tossup at this point, which is why the eventual winner there may be a good indicator of who will be the nominee.

Then again, I could be wrong…

Popularity: 23% [?]

Unfortunately, most politicians don’t have much of an economic pedigree, but some at least think more like economists than others. My inclination is that Obama fits the bill among Democrats, although all the talk of “taking on the drug companies,” “predatory lending,” the illusions to protectionism, etc. is enough to conclude that the Democrats are not really to be trusted on big economic issues in general.

Many of the Republicans leave a lot to be desired also, but some do make sense from time to time. The South Carolina debate on Thursday night demonstrates this.

I think among Republicans, Ron Paul and John McCain tend to distinguish themselves. Ron Paul, I believe, has consistently established himself as the most economically-minded of candidates although he is out of the mainstream. Perhaps I am partial to him because he is reads von Mises, Rothbard, and Hayek, however any politician who actually takes the time to read treatises on economics by such thinkers deserves credit.

He also deserves credit for putting the immigration issue into an economic context which none of the other candidates seem think of–ever. Here was his response to an immigration question:

I think this whole thing should be thought of more in economic terms. Maybe I think about economics too much. But there is something said in economics that, if you subsidize something, you get more of it.

And this is what we do. We encourage it by giving free medical care, and free education, and the promise of amnesty. And no wonder more will come.

We have a weakening economy and now immigrants, especially the illegals, are seen as a threat because they come and they undermine our tax system. And some of our hospitals are being closed and some of our people won’t work because of the welfare state.

You can’t solve this problem if you don’t deal with the terms of welfarism. And, besides, you know, some of our border guards are over in Iraq. I think they would be better off on our borders, you know, protecting our borders, not in Iraq.

Immigration is one of the issues on which I disagree to a certain extent with Rep. Paul–I think that immigration laws should be very lax–but he is right with regard to the welfare aspect of it, which must be curtailed. Most of all, he deserves pops for observing that immigration is fundamentally an economic phenomenon, and to analyze any economic phenomenon you must look at incentives.

Zach may be right that Ron Paul sounds about as confusing to the average voter as Sean Paul sounds to–well–me, but at least he speaks in a more rational and candid manner–something which I would rarely accuse the other candidates of doing.

John McCain also made some sense in the debate with regard for the potential recession (especially with regard to the loss of manufacturing jobs in Michigan, which has the next primary):

Well, the first thing we need to do is stop the out-of- control spending. Out-of-control spending is what caused the interest rates to rise. It causes people to be less able to afford to own their own homes.

We need to stop the spending. And that way we can get our budget under control and we can have a — basically a strong, fundamental fiscal underpinnings.

The second thing that we need to do, of course, is stop spending $400 billion a year overseas to oil-producing countries that come right out of our economy immediately. Some of that money goes, unfortunately, to fund terrorist organizations.

We’ve got to — and we can use Detroit for this, where there’s tremendous technology in the state of Michigan, and tremendous abilities to develop technologies to reduce this dependency on foreign oil, and eventually eliminate it, and stop this outflow of some $400 billion a year. Education and training is obviously important, but stop the spending. As president, I know how to do it. I’ll wield that veto pen, and I won’t let another pork-barrel earmark spending bill cross my desk without vetoing it. And I’ll make the authors of it famous.

It was generally a good statement because its theme was that spending more than you have is bad for the economy. Hence, hes giving an economic–not a political (i.e. “deficit” sounds bad, so lets stop it)–reason to tighten fiscal policy, and eliminate the deficit. He also deserves high marks for alluding to the price system and how more spending means less savings and higher interest rates.

His comment on foreign oil was not so good, however. His claim about the $400 billion spent on foreign oil does not compute. Even if we stopped spending that money on foreign oil altogether, we would still have an unfulfilled $400 billion dollar demand for energy. Where would we get it? Its not like “alternative” energies can provide us with nearly the same energy for the same cost.

Additionally, if we stop spending on Middle Eastern oil it wont really hurt those producer–at least, not nearly as much as it will hurt us economically. The oil market is a global market, and if we remove our demand from the marketplace, the price will immediately go down, but that will cause demand from elsewhere to rise and the price to rise, although not quite as high as original levels. The US on the other hand will be spending its energy dollars elsewhere, which will make non-MidEastern energy more expensive and, again, shift spending from the rest of the world back to Middle Eastern oil to off-set the imbalance.

Among the other candidates, there wasn’t much to write home about. Thompson and Giuliani, who have both proposed similar tax cuts, which they insisted would also raise revenue. This is not necessarily true as it is difficult to tell where we are on the Laffer Curve and how much it applies. Additionally, their saying that spending need not be cut reminds me of the Bush deficits.

Mitt Romney kind of surprises me. I see him posturing for public opinion on economic issues more than I hear him making sense–for instance, he was making an obvious appeal to MI voters on the recession question when he talked about how he “created jobs” as Governor. I expect more from such a successful executive and investor.

I have little evidence that Mike Huckabee speaks economics.

Lastly, the Wall Street Journal recently conducted a survey of economists regarding everything from the future of the economy to the presidential race.

when asked their personal preference, the economists favored Republicans. Sen. McCain led the field with 39% of the forecasters’ votes, compared with 11% for Mr. Giuliani and 7% for former Massachusetts Gov. Mitt Romney. Among Democrats, Sen. Obama edged Sen. Clinton, 14% to 11%, while former North Carolina Sen. John Edwards took 4%.

“People are looking for change,” said Susan Sterne of Economic Analysis.

Some 56% of the economists disapproved of President Bush’s stewardship of the economy, while 44% approved. That is especially startling considering 59% of the economists said the stock market performs better under Republican presidents, compared with 28% who said it favored Democrats. Most economists who disapproved of Mr. Bush cited an increase in government spending. Many praised the president’s tax cuts.

The economists polled, as I understand, were generally mainstream ones which is probably one reason why they tended towards mainstream candidates, especially moderate conservatives. McCain led the field by a lot, which suggests that he does sound good on economic issues as I suggested. Ron Paul apparently doesn’t register, which isn’t a surprise because he is so radical, but is disappointing nevertheless.

Popularity: 56% [?]