Wonkbook: What if Republicans lose with Romney?
BREAKING: The GOP primary is turning out as everyone has known it would for months now.
Mitt Romney won Florida last night. He won it big, in fact. He won in every income group. He won among every age group. He won among every education level. He won among whites and Latinos. He won among catholics and protestants. He won among voters worried about foreclosures and voters who were not so worried about foreclosures. About the only group he lost were those who consider themselves "very conservative." (Full exit polls here.)
And, barring a truly extraordinary turn of events, he is going to win the primary. That will make 2012 the second presidential primary in a row in which Republicans rallied around someone they didn't totally trust, and perhaps didn't even totally like, in order to win the general election. In 2008, Sen. John McCain went from conservative pariah to GOP standard-bearer, and this year, the guy McCain attacked as too wishy-washy on core Republican principles will carry the flag. For all the upsets in individual primaries in 2010, Republican voters are, on net, vastly more pragmatic, at least when it comes to candidate choice, than they are typically given credit for.
But perhaps that's not such a good thing. So argues the New Yorker's George Packer, anyway. Substantively, the Republican Party has moved far to the right over the last decade. Compare Romney's platform to that of George W. Bush, for instance. The question, for many, has been whether electoral losses will force them back to the center.
So far, no. And if Romney wins, the answer is probably still no. The Republican Party keeps choosing politicians who they don't, in their heart of hearts, truly believe to be conservative. That's the story conservatives tell about Bush's eventual fall from grace (actually, about both Bushs' falls from grace), and it's part of the story they tell about McCain's loss in 2008, and it will be the story they tell if Romney loses in 2012. You can write the post-mortem now: 'Of course America wasn't going to vote for a liberal Republican from Massachusetts who had passed the country's first individual mandate, been on both sides of Roe, and was a leveraged buyout specialist in an age of job insecurity. Next time, we absolutely have to nominate a real conservative! Next time, we''ll give Americans a real choice.'
Packer compares this to the Democrats' 1972, when they did what they really wanted and nominated George McGovern. "McGovern’s debacle forced the Democratic Party to find its way back from the ideological wilderness—from being the party of delegate quotas and 'acid, amnesty, and abortion.' Every successful Democrat after 1972, from Carter to Clinton to Obama, has had at least one foot in the party’s center. A Gingrich rout in November might have the same effect on Republicans—it might drive their party back toward the center, and toward mental health, in 2016. But if Romney wins the nomination and loses the election, the party will continue down into the same dark hole where Palin, Bachmann, Perry, Cain, Santorum, and now Gingrich all lurk."
1) Mitt Romney scored a decisive win in Florida, reports Dan Balz: "Bolstered by superior resources and a relentlessly aggressive style, Mitt Romney won a decisive victory in the Florida primary Tuesday night, dealing a major setback to principal rival Newt Gingrich while putting himself back into a commanding position in the race for the Republican presidential nomination. Romney’s win came after a bitter and almost wholly negative campaign by both leading candidates. The victory, his second of the year to go along with two defeats, gives the former Massachusetts governor much-needed momentum as the GOP contest moves west for Saturday’s Nevada caucuses. Romney is strongly favored to repeat his 2008 victory there...Television networks called Romney’s victory almost immediately after the final polls closed Tuesday night. Romney led Gingrich by double digits."
@EricKleefeld: Exit poll shows Romney won among key demographic, the people who voted.
2) His victory was driven by economic concerns, reports Majorie Connelly: "The economy, not social issues, mattered most to the Republican voters in Florida. A nominee who can win in November, not necessarily a 'true conservative,' is the candidate they want...Florida has the fifth-highest foreclosure rate in the country, and voters see evidence of it in their own neighborhoods. Half the primary voters described the foreclosure situation in their communities as a major problem. About 40 percent of those voters backed Mr. Romney, who campaigned heavily on the issue, and a third voted for Mr. Gingrich. But Mr. Romney was the choice of almost half of those who considered foreclosures a minor problem or not a problem at all. In addition, Florida’s unemployment rate, which is higher than the national average, may be weighing on voters’ minds. The economy was the top issue for 6 in 10 voters, and most of them voted for Mr. Romney."
3) The Congressional Budget Office released its new budget outlook, reports Lori Montgomery: "The federal deficit will approach $1.1 trillion this year, congressional budget analysts said Tuesday, down substantially from the worst days of the Great Recession. The nonpartisan Congressional Budget Office said the gap between government spending and tax collections would narrow even more dramatically in 2013 unless lawmakers head off controversial changes in tax policy and government spending that are now on the books. These changes, slated to take effect in January, would increase taxes for virtually every American and make deep cuts at the Pentagon and other federal agencies. The policies, however, are hugely unpopular in both parties. Although they would improve the government’s financial status, the CBO said the nation could pay a steep economic price. Unemployment, which has drifted down to 8.5 percent, could rise to 8.9 percent by this fall and jump back up to 9.2 percent by the end of next year, the CBO said."
@petersuderman: C-B-Oh yeah!
@BetseyStevenson: CBO reminds us that our deficit problem reflects what Congress is likely to do, not what they have already done
@davidmwessel: CBO: If sequester hits, tax cuts expire, jobless rate will be 9.2% in 2013. If opposite occurs, jobless rate will be slight above 8%.
4) The European Central Bank may be key for a Greek debt deal, report Stephen Castle and Jack Ewing: "The European Central Bank may forgo future profits on its Greek bonds as efforts remain under way to fill a financial hole that has been obstructing a second bailout for Greece. Talks among senior European officials in Brussels ended Tuesday without any commitment from the central bank but with hopes still alive that the bank would agree to the deal. Because the European Central Bank bought Greek bonds, with an estimated face value of 50 billion euros, ($65 billion) at a discount to their market price, it could enter into a deal that would cause it to give up future gains without taking a loss, said a European official, requesting anonymity because of the sensitivity of the issue."
5) Average home prices dropped again, reports Motoko Rich: "The American market for single-family homes continued to wobble, with prices declining again in November, nearly six years after they began to fall, a private report showed on Tuesday. Single-family house prices in a group of 20 metropolitan areas tracked by the Standard & Poor’s Case-Shiller composite index fell by close to 0.7 percent from October, and were down by 3.7 percent from November 2010, worse than the 3.4 percent annual decline seen in October. Average home prices were back down to levels last seen in mid-2003, the index showed. Housing has played a dominant role in the country’s economic sluggishness, as homeowners have struggled with foreclosures or mortgage burdens that far exceed the values of their homes."
1) A Romney loss in the general election would not be healthy for the Republican Party, writes George Packer: "To be a sane Republican today is to hope that Romney can hang on in Florida and beyond. Not simply because he’s the most “electable” candidate—parties make a mistake when they choose based on assumptions about what other people think (remember the Democrats in 2004). A sane Republican has to want Romney as nominee in order to rule out any possibility of having Gingrich as President. But what if Romney wins the nomination and loses the election? This scenario is still the odds-on favorite. To deduce the consequences among Republican activists, let’s imagine a counter-factual from 1972: pit Nixon against Humphrey or Muskie or Jackson, a candidate imposed on the liberal Democratic base much as conservative Republicans feel Romney is being imposed on them. A Nixon win would have convinced the liberal base that the party had not been true to its core. The theology would have hardened a little more. Next time, they’d nominate a real liberal, a candidate of the grassroots. It’s easy to picture hard-core Republicans coming to the same conclusion: Romney and the party élite betrayed the party’s principles (again, after McCain) and gave the country four more years of the hated Obama. Never again! Next time, a real conservative!"
2) Obama hasn't added as much to the debt as it it may appear, writes Ezra Klein: "The campaign trail can be a lonely place, so Mitt Romney frequently invites friends to accompany him. New Jersey Gov. Chris Christie is an occasional companion. So is Virginia Gov. Bob McDonnell. But more often, Romney brings a large clock. Romney’s people made it themselves. It has two giant flat-screen televisions pushed side by side. It’s surrounded by a green foam sign. And it’s hooked to two computers feeding it a live count of America’s rising debt burden, which stands well above $15 trillion. The clock represents President Obama’s economic failures. It’s there so Romney can point to it and tell the crowd that if he’s elected, he’ll 'do a better job slowing down that clock.' But if you’re a deficit-obsessed voter, the clock doesn’t answer the key question: How much has Obama added to the debt, anyway? There are two answers: more than $4 trillion, or about $983 billion. The first answer is simple and wrong. The second answer is more complicated but a lot closer to being right."
3) Private equity is a force for good, writes Reihan Salam: "Just months before Romney’s career at Bain Capital became controversial, Americans mourned the death of Apple CEO Steve Jobs. And yet when Jobs returned to Apple in 1997, he returned as an angel of destruction. He fired over 3,000 employees, a move that helped swing Apple from a $1.05 billion annual loss to a $309 million profit. He shut down Apple’s manufacturing facilities and outsourced almost every aspect of production. He swung the axe pitilessly, since he was convinced that survival requires leanness. And in the 14 years after Jobs returned, employment levels at Apple soared. Apple’s manufacturing work force was eventually replaced by engineers, support staff, and -- in a move that would have surprised many in 1997 -- a vast army of retail employees. The destruction was a prerequisite for the creation, and for the transformation of a wounded technology firm into one of the world’s most valuable public companies."
@jbarro: The main political factor blocking a higher medium-term federal tax burden is President Obama's pledge to raise almost nobody's taxes.
4) There's good news on school lunches, writes Mark Bittman: "Thirty-two million kids — 10 percent of the American population, and the future of the country — are about to start eating better. That’s the bottom line of the new Department of Agriculture (U.S.D.A.) guidelines for government-subsidized school meals, announced last week. The new rules are the first changes to the program in 15 years, and come as part of the Healthy Hunger-Free Kids Act. The guidelines are imperfect (what isn’t?) but worth celebrating: this is the single most significant improvement the Obama administration has made in the realm of food."
5) American health care is already socialized, writes Darshak Sanghavi: "The furor over Berwick reflects a broader, fundamental disagreement over the nature of health insurance. Should it be “social” insurance, with which financial risk is leveled between those who are ill and healthy, so the carefree twentysomething and diabetic elderly man pay equally into the system? Or would it be better structured as “actuarial” insurance, where those expected to consume more shell out more, just as those who drive flashy, expensive cars or rack up speeding tickets pay higher auto insurance rates?...But Americans made their choice clear long before Barack Obama ever signed the law—and they picked social insurance. The issue today isn’t whether we should redistribute health care dollars. We do, arguably to the same degree that every other country does. Systems with national health insurance systems explicitly redistribute money before patients get in car accidents, discover cancer, or develop heart disease. Here we do it in secret after illness occurs. We create the illusion of actuarial insurance, when the truth is that all major American health care institutions have been socialized for decades."
Instrumental hip-hop interlude: Pete Rock's "Hop, Skip & Jump."
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Still to come: Obama rolled out an effort to boost small business; ACOs will take time to expand; the House pushes for a tougher insider trading bill; new risks may force reactors to close; and a dog watches over a baby.
Obama detailed a package designed to boost small business growth, reports David Nakamura: "President Obama offered Congress a $48 billion legislative package Tuesday to accelerate small-business growth that includes ideas previously offered by Republican lawmakers, an effort to garner bipartisan support in an election year. Obama’s proposals, which build on the Startup America initiative the administration launched last year, include eliminating taxes on capital gains from investments in small businesses, providing a 10 percent tax credit for companies that create jobs or increase wages this year and ending country-specific immigration caps in order to attract highly skilled workers...Also this month, Obama asked Congress to give him the authority to restructure government agencies to streamline regulatory requirements for small businesses, and he elevated the director of the Small Business Administration to Cabinet level to emphasize his commitment."
Consumer confidence declined in January, reports Kathleen Madigan: "U.S. consumer confidence in January gave back some of the huge gains posted in the previous two months, according to a report released Tuesday. Views on labor markets darkened. The Conference Board, a private research group, said its index of consumer confidence retreated to 61.1 this month from a revised 64.8 in December, first reported as 64.5. The January index was far less than the 68.0 expected by economists surveyed by Dow Jones Newswires. The fallback was concentrated in consumers’ view of the current economy. The present situation index, a gauge of consumers’ assessment of current economic conditions, dropped to 38.4 in January from a revised 46.5, originally reported as 46.7. Consumer expectations for economic activity over the next six months slipped only slightly, to 76.2 in January from a revised 77.0, first reported as 76.4."
Federal prosecutors are planning a major bond fraud case, report Susan Pulliam, Jean Eaglesham and Michael Siconolfi: "Federal prosecutors are preparing to file criminal charges against former Wall Street traders alleging they misstated the value of mortgage bonds, an issue central to the 2008 financial crisis, according to people familiar with the matter. The Manhattan U.S. Attorney's office is planning to allege in a criminal complaint that several former traders at Credit Suisse Group AG, a major global investment bank, misled the bank's investors by booking inflated prices of mortgage bonds to boost their bonuses, despite knowing the values of those securities had dropped, according to the people familiar with the matter. The charges, if they are filed, could raise the stakes for Wall Street amid multiple probes examining whether financial firms deliberately misvalued, or 'mismarked,' holdings of mortgage securities. They would follow three years of investigations by criminal and civil authorities."
Stocks were largely calm in January, reports Christine Hauser: "Living up to its reputation, January was a relatively stable month on Wall Street. Volatility eased as investors appeared to take in stride the latest developments in the European debt crisis and persistent worries about economic growth. At the same time, stocks motored through the month with slow but steady advances, logging in their biggest January gain since 1997. Amid the calm, some analysts said there were signs that the market was poised for a pullback with choppy trading in the coming weeks...Although concerns over Europe, bank and market liquidity, and the economy are still in play, traders said there was a sense that the crisis in Europe was being addressed. The European Central Bank has infused banks with hundreds of billions in funding, and spiking Italian bond yields have settled."
Data is painting an ugly picture of the the euro-zone economy, reports Ilona Billington: "New economic data brought more signs that the euro-zone economy contracted at the end of last year, with December consumer spending in the currency area's two largest economies dropping sharply and unemployment staying elevated throughout the region. Retail sales in the last month of 2011 fell unexpectedly in Germany and France, the two economies expected to support weaker countries along the region's southern fringe. Italy's downturn, meanwhile, showed no sign of letting up, with unemployment reaching its highest level in more than a decade. The reports suggest euro-zone gross domestic product fell 1% to 1.5% in the fourth quarter, at an annualized rate, economists said. Those figures are due on Feb. 15. Data for January suggest some improvement in the first quarter."
Instructions interlude: How to draw a horse in five steps.
Accountable Care Organizations will take time to grow, reports Sarah Kliff: "Health-care providers are indeed moving towards Accountable Care Organizations, which are health-care delivery systems that pay providers a flat fee for covering a given patient or condition rather than operating under a traditional fee-for-service model. These cost-sharing models have begun springing up across the country, as you can see in the above map that America’s Health Insurance Plans drew up. Some of the growth is likely due to the Affordable Care Act, which now has 32 health systems testing out an ACO model within Medicare...So Accountable Care Organizations are indeed gaining steam, but there have also been bumps along the way in implementation. A separate Health Affairs study was meant to look at a handful of health-care systems’ experience piloting a shared-savings model. But, after three years, none of the three systems the researchers focused on were able to get the new payment model off the ground."
The Susan G. Komen Foundation cut funding for Planned Parenthood, reports Pam Belluck: "In a decision that is inflaming passions on both sides of the abortion debate, the world’s largest breast cancer organization, Susan G. Komen for the Cure, is cutting off its financing of breast cancer screening and education programs run by Planned Parenthood affiliates. The move will halt financing to 19 of Planned Parenthood’s 83 affiliates, which received nearly $700,000 from the Komen foundation last year and have been receiving similar grants since at least 2005. Planned Parenthood contends that the Komen foundation is yielding to longstanding pressure from anti-abortion groups, which Komen denies."
@ezraklein: Be great if Congress would get serious about campaign finance reform rather than conducting this charade over stock trading.
The House is pushing for a stricter bill curbing insider trading, reports Seung Min Kim: "House Majority Leader Eric Cantor (R-Va.) said Tuesday the Senate’s version of the STOCK Act didn’t go far enough and that he’ll push through a stricter version in the House if the Senate doesn’t 'strengthen' the bill...Cantor, who controls legislation that comes onto the House floor, has come under Democratic accusations that he was holding up progress on the lower chamber’s version of the STOCK Act after he privately pressured a committee chairman to delay a mark-up on the bill. Though Cantor has been generally supportive of the STOCK Act, he has said he wants the legislation broadened so it includes land deals and other types of transactions and not just stock trades. He also wants disclosure requirements outlined in the bill to apply to executive branch employees."
The Obama administration is making a new push to cap contractor pay, reports Ed O'Keefe and Marjorie Censer: "The Obama administration is renewing its push to cap the pay of government contracting executives as the House prepares to vote on a bill that would freeze federal and congressional salaries. Certain federal government contracts permit government contracting firms to bill federal agencies up to $693,951 annually for incurred costs, including employee salaries, meaning many contractor executives and some highly-skilled contractors earn more than top-earning federal employees and President Obama. Since 1995, Congress has tied the contractor pay cap to compensation levels for the nation’s top-earning business executives -- a figure that has ballooned in the last two decades. In December, lawmakers voted to expand the cap at most agencies to cover all government contractors, including highly-skilled engineers and scientists that also earn top pay. But the changes don’t go far enough for Obama."
Interspecies friendship interlude: A dog watches over a baby.
House Republicans unveiled a transportation overhaul, reports Adam Snider: "House Republicans on Tuesday introduced a giant new surface transportation bill loaded with goodies for the GOP base. No earmarks, drilling in the Arctic National Wildlife Refuge, cutting Amtrak’s budget, forcing approval of the Keystone XL pipeline and ending mandatory spending on bicycle and pedestrian paths -- what’s a diehard Republican not to like? House Transportation and Infrastructure Committee Chairman John Mica (R-Fla.) and more than a dozen GOP committee members held a Tuesday press conference to sell the bill...The Natural Resources Committee will mark up the drilling sections of the bill Wednesday; the Transportation and Infrastructure panel has a markup set for Thursday. Mica said that session could last so long that he suggested reporters plan ahead."
New risks may force some nuclear reactors to close, reports Rebecca Smith: "Nuclear reactors in the central and eastern U.S. face previously unrecognized threats from big earthquakes, the Nuclear Regulatory Commission said Tuesday. Experts said upgrading the plants to withstand more substantial earth movements would be costly and could force some to close. The NRC said it would require nuclear-plant operators to conduct new seismic studies for all 96 reactors in eastern and central states to determine if the plants could withstand the shaking predicted by the government's new seismic model...The NRC plans to give nuclear-plant operators four years to re-evaluate risks by running complex calculations for all structures, systems and components. By law, nuclear plants must be able to withstand earthquakes 'without functional impairment of those features necessary to shut down the reactor, maintain the station in safe condition and prevent undue risk to the health and safety of the public.'"
Wonkbook is compiled and produced with help from Karl Singer and Michelle Williams.