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Wonkbook: Santorum proves money isn't everything

at 07:58 AM ET, 02/08/2012

At this point, Rick Santorum has won four primaries or caucuses, and Mitt Romney has won three. Santorum continues to trail Romney in the delegate count, but in terms of actually winning contests, he's ahead of the putative frontrunner.


Republican presidential candidate former Pennsylvania Sen. Rick Santorum speaks during a primary night watch party on Feb. 7 in St. Charles, Mo. (Jeff Roberson - AP)
One lesson to draw from that: Money ain't everything. Because Mitt Romney has money. Mitt Romney has lots of money. Between the resources of the Romney campaign and the Romney-allied SuperPACs, Santorum isn't even competitive. And since Romney also gets more free media, Santorum, by this point, should pretty much be out of the game. But he's not. And that's because money -- and even media -- ain't everything.

Efforts to rigorously assess the role of money in campaigns have been largely foiled by a particularly difficult correlation/causation problem: Do good candidates raise lots of money, or do candidates who raise lots of money end up looking like good candidates? The answer political scientists have come too is, well, that it's a bit of both. "Candidates who raise a lot of money tend to do better, and it’s more likely than not that at least part of this relationship is due to money paying for things like ads and canvassers," writes Andrew Therriault in a review of the literature on this topic. But "in most cases, a much-despised incumbent with a lot of money is in a worse position than a much-liked incumbent with very little money."

In other words, all else being equal, it's better to have lots of money than not enough money. But in politics, all else is rarely equal. And the "all else" can sometimes matter more. It's clear, for instance, that there are a large number of Republican voters who just don't really want to vote for Romney. Indeed, his money might even be proving a little counterproductive. It's so well known that he's backed by massive superPACs, and it's so widely reported that the superPACs are going aggressively negative, that it's led to some bad media coverage for the Romney campaign. It's likely part of why voters say, by a 2-to-1 margin, that the more they hear about Romney, the less they like him.

On Tuesday, there was a lot of talk about President Obama's decision to embrace the need for Democratic superPACs. The decision was born out of necessity, and even so, it may fail to solve Obama's money problem. Wall Street, which aggressively funded Obama in 2008, has turned on him. Hollywood, which is reliably Democratic, is nevertheless furious that the White House helped kill the anti-internet piracy bills SOPA and PIPA. There are still trial lawyers, and unions, and assorted other wealthy folks and interests, but there's a real question as to whether a Democrat who wants to tax rich people and regulate big industries can match the financial firepower that's backing Romney's campaign.

But as last night's elections showed, there's also a real question as to whether they'll need to. The gap between Obama and Romney -- and yes, I would still choose Romney as the favorite to win the nomination -- will never be as large as the gap between Romney and Santorum, or Romney and Gingrich. Both candidates will have more than enough money to blanket the airwaves come November. Obama is likely to have more money than any campaign in history, and Romney will perhaps have even a bit more money than that. They won't be equal, but the odds are good that they will be equal enough. And that's when the "all else" will take over. And as voters proved last night, the "all else" can matter quite a lot.

Top stories

1) Rick Santorum scored an unexpected sweep in Tuesday's primaries, report Philip Rucker and Nia-Malika Henderson: "Rick Santorum had a breakthrough night Tuesday, winning GOP presidential contests in Missouri, Minnesota and Colorado, all of which is expected to breathe life into his struggling campaign and slow Mitt Romney’s march to the Republican presidential nomination. The Santorum triumphs promise to, at least temporarily, alter the face of the campaign going into the crucial 'Super Tuesday' contests, as the caustic tone of the primaries is expected to continue and intensify. Romney and his allies have signaled that they will use their financial advantage to launch stepped-up attacks on Santorum and on former House speaker Newt Gingrich, the other main challenger. Santorum solidly defeated Romney in Minnesota and Missouri, and he narrowly edged the former Massachusetts governor in Colorado, according to state GOP officials."

@philipaklein: Colorado should have been a lock for Romney, we may have to rethink assumption he'll be nominee.

@charliepolitico: More than 250 counties voted Tuesday; Gingrich won exactly 1 of them: Bent County, CO, in Eastern Plains

@morningmoneyben: I once thought the Euro debt crisis was a far more difficult story to master than the GOP campaign. I am rethinking that assumption.

2) Greece missed another bail-out deadline, report Kerin Hope and Peter Spiegel: "Greece missed another deadline to approve conditions for a second €130bn bail-out on Tuesday night, after a meeting with political leaders was postponed until Wednesday because of last-minute haggling with international lenders over emergency spending cuts. A government official said Lucas Papademos, the technocrat prime minister, would hold the talks on Wednesday morning and expected a deal to be presented for approval at a meeting of eurozone finance ministers later in the week. But the delay over agreeing €3bn of extra spending cuts fuelled anxieties that Athens may be forced into a messy default next month. It also triggered concern over whether Greece remains committed to fiscal and structural reform after two years of failing to implement measures agreed in return for billions of euros in financial support."

3) But the ECB made a key concession to ease the way to a deal, report Stephen Fidler, Matthew Dalton and Alkman Granitsas: "The ECB has agreed to exchange the government bonds it purchased in the secondary market last year at a price below face value, provided the debt-restructuring talks have a successful outcome...Greece's official creditors have been under pressure to make concessions because the expected deal with private bondholders, which will shave some €100 billion from the government's debt to private creditors, won't reduce Greece's debt sufficiently to satisfy the IMF. The ECB concession could reduce Greece's debt by as much as €11 billion, officials said."

4) Americans' borrowing surged at the end of 2011, reports Josh Mitchell: "In another sign that the credit freeze is thawing, the Federal Reserve said Americans ramped up their borrowing at the end of 2011. Household borrowing through credit cards, car loans, student loans and other installment debt--which excludes mortgages--rose at a seasonally adjusted 9.3% annual rate in December, following a 9.9% rise in November, the Fed said Tuesday. That was the biggest two-month surge since late 2001, when auto makers rolled out zero-percent financing after the Sept. 11 terrorist attacks. The most recent gains largely reflect more student loans, which at least one economist said could be a sign of financial strain. But auto loans and, to a lesser extent, credit-card use also rose. That marks a rebound in consumers' ability and willingness to borrow, which fell sharply after the 2008 crisis amid tighter credit, heavy household debt and rising unemployment."

@fivethirtyeight: Obviously big risks from Europe and oil shocks, but the recovery story has become pretty coherent based on US data.

5) Romney's jobs record in Massachusetts was underwhelming, reports Jia Lynn Yang: "An overheated industry has gone bust. A tepid economy is not producing enough jobs. And a successful businessman promises he can use his private-sector experience to jump-start the economy. This is presidential candidate Mitt Romney now, but it was also Romney nearly a decade ago when he ran for governor of Massachusetts, a state that was still reeling from the tech bubble’s burst. A core argument of Romney’s presidential campaign is that he knows how to create jobs based on his career in finance. As governor, Romney faced his first test in applying his business background to a slow-growing economy -- and data show that the results were unremarkable."

Top op-eds

1) Santorum is now the most serious alternative to Romney, writes John Cassidy: "As recently as a few days ago, most pundits were predicting that Romney would sweep the three states that voted Tuesday. His performance in Minnesota was bad enough. In the 2008 Republican primary, he won the state with forty-one per cent of the vote. This time, he failed to get even halfway to that figure, raising anew the question of whether he can rally Republican conservatives in the heartland. Santorum will use the burst of media attention he will receive to argue that Romney can’t do it. In his speech last night, he hailed the results as a victory for 'our party--conservatives and Tea Party people,' and, citing a variety of issues, such as the environment and healthcare, he said 'Mitt Romney has the same positions as Barack Obama,' adding, 'He would not be the best voice to fight for freedoms in America.' A bit later, speaking to Fox News, Santorum referred to Romney as 'Obama-lite.'"

2) The GOP primary may be headed for a prolonged battle, writes Nate Silver: "Whatever your perspective on how likely Mitt Romney was to lose the Republican nomination race prior to Tuesday evening, it should be acknowledged that he had about the worst results conceivable...What’s more, the victor in all three states was Mr. Santorum, who is probably much more dangerous to Mr. Romney than Newt Gingrich. Mr. Gingrich had an awful evening, finishing a distant third in Colorado and last in Minnesota. But that may only work against Mr. Romney in the end...After Florida, I proposed five paths forward for the Republican nomination. Most of these paths resulted in Mr. Romney’s nomination. But some implied a much longer and more difficult race, and some put him at a tangible risk of defeat. The evidence from Tuesday night was much more consistent with those scenarios, and much less so with those in which Mr. Romney wraps up the nomination easily."

3) Fiscal policy should rely more on automatic stabilizers, writes Peter Orszag: "According to early forecasts, the U.S. economy should already have recovered from the financial crisis. Despite some recent encouraging news, though, we still don’t know when things will be back to normal. What have we learned from this delay? That in devising public policy to respond to the recession, it would have been smart to minimize the guesswork by relying more on automatic economic stabilizers. This lesson is immediately applicable: Rather than simply extend the payroll-tax holiday for the rest of the year, Congress should link it to the unemployment rate...Automatic stabilizers allow for strong action in the face of two realities: that it’s difficult to predict what economic growth will be, and that Congress is slow to respond to economic fluctuations, especially as political polarization increases."

4) Stock holders should pay taxes on their holdings, writes David Miller: "Mr. Zuckerberg will have a tax bill of more than $2 billion, quite possibly making him the largest taxpayer in history. He is expected to sell enough stock to pay his tax. But how much income tax will Mr. Zuckerberg pay on the rest of his stock that he won’t immediately sell? He need not pay any. Instead, he can simply use his stock as collateral to borrow against his tremendous wealth and avoid all tax...Our tax system is based on the concept of 'realization.' Individuals are not taxed until they actually sell property and realize their gains. But this system makes less sense for the publicly traded stocks of the superwealthy. A drastic change is necessary to fix this fundamental flaw in our tax system and finally require people like Warren E. Buffett, Mr. Ellison and others to pay at least a little income tax on their unsold shares. The fix is called mark-to-market taxation."

80s rock interlude: The Pixies play "Gigantic" live on Firma Onrust.

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Still to come: The foreclosure settlement takes a blow; too few Americans are quitting their jobs; Obama looks for a birth control compromise; the insider trading bill faces the House; oil and gas boom; and the President sends a marshmallow flying across the room.

Economy

Payroll tax extension talks are deadlocked over offsets, report Jennifer Steinhauer and Jonathan Weisman: "Any hope for a fast and quiet resolution to the Congressional battle over a payroll tax cut seemed to dim Tuesday as members of a bipartisan negotiating committee clashed over how to pay for the extension, and Senate Democrats suggested that they would come up with their own bill to get the matter resolved. Republicans became increasingly frustrated as Democrats shooed away one Republican proposal after the next, like a bride-to-be dismissing a long line of potential wedding gowns as too ugly. Democratic negotiators rejected $70 billion worth of spending cuts the House wanted to use to offset the cost of the package, including a one-year pay freeze for federal workers, a measure to raise Medicare premiums on some people and a proposal that would allow the government to claw back some subsidies for the purchase of health insurance under the new health care law."

Not enough Americans are quitting their jobs, reports Ben Casselman: "The U.S. job market is finally growing stronger by almost every key measure, except one: Not enough people are quitting. A humming economy usually means a high rate of 'churn' in the work force: employees voluntarily leaving one job for another in search of higher pay and new challenges. One worker's exit from a job opens the way for someone else to jump on to the ladder. But through the recent recession and recovery, that churning process has slowed and shows little sign of picking up. New data released Tuesday showed fewer than two million Americans quit their jobs in December, compared with about three million a month, on average, before the recession."

The proposed foreclosure settlement was dealt a setback, reports Brady Dennis: "New York Attorney General Eric Schneiderman abruptly called off a news conference at which he could have provided a crucial endorsement of a proposed settlement with some of the nation’s biggest banks over shoddy foreclosure practices. Schneiderman’s unexplained last-minute postponement cast another cloud of uncertainty over the ongoing negotiations, which have dragged on for more than 16 months. State and federal officials have been intent on finalizing the deal by the end of the week. Had Schneiderman backed the deal Tuesday, as several informed observers expected he would, it could have increased the likelihood that remaining holdouts such as California, Delaware and Nevada -- which have shared Schneiderman’s long-standing concerns that the settlement might let banks off the legal hook too easily -- would also sign on."

Manufacturers are boosting their investment in the U.S., report Kate Linebaugh and James Hagerty: "U.S. companies, facing slowing markets and rising costs around the world, are taking a new look at their home market. With growth slowing in China and a slump gripping much of Europe, companies are adding capacity in the U.S., replacing aging equipment and even moving overseas production back from low-cost labor markets, a sign that corporate America could be poised to take a bigger role in the economic recovery. The pace of earnings growth at companies slowed in the fourth quarter, and there are signs that profitability is falling. That is prompting companies ranging from beverage maker Coca-Cola Co. to industrial supplier Emerson Electric Co. to disclose cost cuts. But after keeping a tight lid on costs for the past few years, many other companies are expanding capacity to meet rising demand."

Big U.S. firms have so far largely avoided damage from the Eurozone crisis, reports Scott Thurm: "Big U.S. companies have largely skirted major damage from the European financial crisis, but they are likely to face more trouble in the region, which is a key market for many of them. Revenue from Europe rose 11.4% in the fourth quarter, compared with the same quarter a year earlier, for 39 members of the Standard & Poor's 500-stock index that have reported sales to the region, according to a Wall Street Journal analysis of corporate financial results. That is slower than the growth in Europe earlier in 2011 and slower than the overall 13.1% increase in revenue for the same companies in the fourth quarter. But the increase suggests that government cutbacks, debt downgrades and uncertainty over the euro didn't paralyze trans-Atlantic commerce. Sales to Europe accounted for 24.8% of global revenue for the 39 companies, down only slightly from 25.2% in the fourth quarter of 2010."

Time lapse interlude: The aurora borealis, as seen from Norway..

Health Care

@BCAppelbaum: Bernanke: Finding ways to control health care costs is "absolutely essential" not just for the federal budget but for the broader economy.

Obama is looking for a compromise on birth control, report Carol Lee and Louise Radnofsky: "The White House is looking for a way to address the concerns of religious leaders upset by President Barack Obama's decision to require religious employers to cover contraceptives in employee health plans, according to people familiar with the discussions. The decision sparked a backlash from Catholic leaders, and the White House is trying to tamp down the dispute as it provides campaign fodder for Republican presidential contenders. Aides to Mr. Obama met with women's groups Tuesday at the White House to shore up support for the initial decision. At the same time, the administration is looking to move more quickly on a potential compromise aimed at satisfying religious groups that say the requirement violates their religious principles, these people said."

@DanaGoldstein: re: bishops/birth control: fundamental problem is fact that health care is tied to employer. why does my boss get a say over my sex life?

Domestic Policy

@petersuderman: “Proposition 8 served no purpose, and had no effect, other than to lessen the status and human dignity of gays and lesbians in California."

California's gay marriage ban was ruled unconstitutional, reports Robert Barnes: "A federal appeals panel in San Francisco ruled Tuesday that California’s Proposition 8, which bans same-sex marriage, is unconstitutional, a decision that could lead to the Supreme Court’s consideration of the controversial social issue. By a vote of 2 to 1, the panel overturned the measure, which in 2008 amended the state’s Constitution to limit marriage to a man and a woman...The panel took a narrow route in knocking down California’s prohibition and did not address whether same-sex couples have a federal constitutional right to marry. Such unions are unlikely to resume in the nation’s most populous state until the appeals process is completed."

The insider trading bill faces changes in the House, report Robert Pear: "Lobbyists were in a tizzy on Tuesday over provisions of a Senate-passed ethics bill that tighten regulation of lobbying and require secretive 'political intelligence' firms to register in the same way as lobbyists. House Republicans and their floor leader, Representative Eric Cantor of Virginia, said they would amend the bill, going to the House floor this week, to strengthen it. But Representative Louise M. Slaughter, Democrat of New York, said, 'I think ‘strengthening’ here is a euphemism for ‘weakening.’' And Representative Tim Walz, Democrat of Minnesota, said the bill, to ban insider trading by members of Congress, was being rewritten behind closed doors by House Republican leaders."

Obama renewed his bid to boost math and science teachers, reports Roger Runningen: "President Barack Obama said he’ll request $80 million in education funding for training math and science teachers to help the U.S. stay competitive in world commerce, reviving a budget request last year. The president made the announcement in conjunction with an event honoring winners of the second annual White House science fair. More than 100 students from more than 45 states engaged in projects in science, technology, engineering and math, according to the White House...Obama said he’ll request $80 million for teacher training as part of his fiscal 2013 budget, which will be sent to Congress on Feb. 13. Another $22 million would come from pledges by philanthropic and private sector organizations including Carnegie Corporation of New York, Google Inc., and Bill and Melinda Gates, among others, bringing total potential funding to $102 million."

Science fair interlude: President Obama tries out a marshmallow air cannon.

Energy

A boom in oil and gas is lifting the economy, reports Russell Gold: "An energy boom is revving up the U.S. economy. The use of new drilling techniques to tap oil and gas in shale rocks far underground helped add about 158,500 new oil and gas jobs over the past five years, and economists think it has created even more jobs in companies supplying the energy industry and in the broader service industry. U.S. oil production is rising for the first time in decades. Natural gas has become so plentiful that prices recently plunged to a 10-year low. The economic benefits of rising energy production are spreading far beyond the traditional oil patch, to Ohio and Pennsylvania, Nebraska and New York, North Carolina and Idaho. Truck drivers from pretty much anywhere can find work related to the surging energy business. Private-equity firms completed $24.8 billion of energy deals of all types last year, up from $8.5 billion in 2010, according to data tracker Preqin."

Wonkbook is compiled and produced with help from Karl Singer and Michelle Williams.

 
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