POST SCRIPTS

Citigroup Inc., the biggest U.S. bank by assets, will receive a $7.5 billion cash infusion from Abu Dhabi to replenish capital after record mortgage losses wiped out almost half its market value.

Citigroup rose 2.6 percent in New York trading today following acting Chief Executive Officer Win Bischoff's statement late yesterday that funds from the state-owned Abu Dhabi Investment Authority will help ``strengthen our capital base.''

Abu Dhabi will buy securities that convert to stock and yield 11 percent a year, almost double the interest Citigroup offers bond investors,

Posted by Post Scripts at 08:13 AM | Comments (0)

November 26, 2007

Hillary in Trouble?

by Dick Morris

Has Hillary’s candidacy just hit a bump in the road or is she seriously decomposing? It’s still too early to tell, but there’s definitely something big going on.

She’s lost her lead in Iowa.

According to The Washington Post/ABC poll, she’s down 4 points, with Obama in first place. (It’s Obama 30%, Hillary 26%, Edwards 21%).

And in New Hampshire, CNN reports that she has lost the commanding 23 point lead she had in September and has crashed down to an 11 point lead today.

This is not good news for Hillary.

And there are signs that her slippage has seeped through to her base. While national polls show that she still leads among women by twenty points, in Iowa, she is actually only tied with Obama among female Democrats!

This is a big change.

What happened? How could her debate performance cause such unraveling?

To grasp what is happening to her, one needs to explore the various levels of reaction to her bad debate three weeks ago and her tepid performance last week.

Level One: She Won’t Answer Questions

The first and most obvious reaction of voters to Hillary’s dodging and weaving in the debates is that she is trying to take both sides of various key issues. Like Bill Clinton during the early years of his presidency, she is trying to have it both ways.

She’s tapping into a collective memory of just how unattractive and ‘clever’ the Clintons can be.

She has a specific plan for saving Social Security…but she won’t discuss it until we achieve “fiscal responsibility.”

She understands why governors are moving to give illegal immigrants drivers licenses – and thinks it’s a good idea. It makes sense -- but she’s against it.

We need to pull troops out of Iraq, she says, but still need to leave them there to stop Iranian infiltration, hunt al Qaeda, and provide support to the Iraq Army.

And so forth…

Caught in the brazen contradictions of her own positions, she has floundered during the debates.

In the debate on October 30th, Obama, Edwards, Dodd and questioner Tim Russert were alert to her dodges and had no hesitation in pouncing on her doublespeak. “I believe Mrs. Clinton just gave too two different positions in the space of about two minutes,” Edwards jabbed. “You just said you were for it,” Dodd noted as Hillary was trying to worm out of endorsing drivers licenses for illegals.

CNN’s Wolf Blitzer was much kinder to her in the Nevada debate last week, but it appears not to have done her much good.

A lot of voters, particularly recent converts to Hillary, were shocked by her equivocations and double talk.

But many Democrats didn’t mind her dance around the issues because they are so determined to defeat the GOP that they don’t want their candidate to be pinned down to commitments which would make her easier to beat in the general election. For these voters, victory is the goal at any cost and a good dancer is a good candidate.

Is She Too Weak to be the Democratic Candidate?

Then Hillary compounded the problems raised by her debate flaws by implying that the men were ganging up on her. She flew to her old college, Wellesley, and complained that the all-male club of debaters and journalists had treated her harshly, drawing a contrast to the environment that had prevailed at the all-woman school she had attended.

Then she brought in her husband to fight for her. Bill Clinton openly attacked Russert for biased questioning and said Hillary’s rivals had “swift-boated” her during the debate. After much criticism, Clinton later claimed he was talking about the largely silent Republicans.

All his self-defense and self-pity roused concerns about Hillary’s strength as a president, but, more important to Democrats, as a candidate. For months, Hillary has been basing her campaign on her ability to defeat “the vast right wing conspiracy” and the “Republican attack machine.” She said she would “deck them.” While posturing about her White House experience, it was really her campaign experience that she was touting. The woman who had helped lead the battle to win in 1992, win in 1996, prevail in the impeachment battle, and win the Senate seat in New York, was the experienced warrior the Party needed.

But now, as she ran for cover, hiding behind her gender and her husband, she did not look so tough or formidable.

For the Democrats, the primary is a play within a play – a contest between potential presidents to be sure but also a mock election to see who would do best at the real thing come November of next year.

Hillary’s excuses for her debate weakness looked, themselves, weak and further eroded her support.

Obama and Edwards are Empowered

After one of the early Democratic debates, pollster Frank Luntz, monitoring his focus group’s reactions to the contest, said that Ronald Reagan’s Eleventh Commandment (“Thou Shalt Not Speak Ill of a Fellow Republican”) was now applying to the Democratic contest. This Party, reputed to form firing squads in circles, was suddenly so focused on defeating the Republicans, that they reacted badly to attacks by one Democratic candidate on another, particularly against any criticism of the likely nominee—Hillary.

But after scorching her in the debate, Edwards and Obama both saw their poll numbers rise. Some polls had Edwards moving up by about three points and Obama by five. Their gains, which rewarded rather than punished their aggressive debate strategy, brought with them an impunity which is letting them continue the attacks on Hillary.

Can Hillary Win?

With victory in the general election the only goal of most Democratic primary voters, Hillary’s sag in the polls is creating its own question: Is she really a winner? Willing to overlook a host of faults in order to choose someone to take the Republicans down, they are not willing to forgive the one cardinal sin: losing.

So with each drop in the polls, Hillary’s reputation as a winner, vital to her standing in the Party, has gotten weaker and her hold on the voters loosened.

And the questions her debate performance raised are, themselves, raising new questions, particularly as John Edwards – the more aggressive of Hillary’s two main rivals – zeroes in on her contradictory statements about Iraq. Pressing her to say how many troops she’d leave there and what they’d do and how long they’d be there, Edwards is backing Hillary into a corner. And her old dodge – I won’t negotiate against myself – holds less and less credence as the chances of her winning decline.

What About Iowa?

All these developments are being played out on the stage of a tiny state – Iowa – whose caucuses on January 3rd are the first real forum for the contest. The importance of the Iowa race is heightened by the fact that the Democratic and Republican nominees are likely to be chosen by February 5th, just thirty-three days later.

While Hillary has a big financial advantage over Edwards and a bit of a lead over Obama, Iowa is too small for money to be a decisive advantage. A heavy week of advertising costs only about $200,000 there. Spending on field organization can rack up the cost, but no candidate is too poor to run in Iowa.

Also, the very format of a caucus, where voters must attend meetings rather than just nip around the corner to their polling place, encourages only the committed to vote. Rather than just ducking into the voting booth and pulling a lever, voters must spend hours at a meeting, often casting tactical votes to help their candidate.

So the marginal primary voters don’t show up. And the most committed element of the Democratic Party is, of course, its left wing, now increasingly disenchanted with Hillary’s squishy and inconsistent position on the war.

Indeed, the Washington Post/ABC poll showed that only half of Hillary’s voters have attended caucuses previously in Iowa. By contrast, 57% of Obama’s have and 76% of Edwards’ supporters have been to a caucus in earlier years. If we assume that only those who have already attended a caucus will show up this time, Hillary plunges to third place with Obama and Edwards tied for first.

If Hillary can pull out a victory in Iowa, it will so reinforce the view of her inevitability that voters in the remaining primaries that follow Iowa will be reluctant to weaken their future nominee by voting against her. The perception will harden that Hillary is the winner, both adding to her vote share, and cutting into support for her opponents.

But, what if she loses?

What If Hillary Loses Iowa?

If Hillary fails in Iowa, does she have the hardened support the next contest -- in New Hampshire – to prevail in the face of an Iowa upset? Already, with her bad debate performance, Hillary has lost half of her lead in New Hampshire.

It is not so much that Hillary would falter after an Iowa defeat, but that Obama would surge after a victory. Suddenly, the potential of a black president, which has seemed to fade as Hillary’s lead continued to grow, will galvanize the nation and capture its imagination. Obama, attractive and compelling, will develop huge momentum from an Iowa win and probably will carry New Hampshire as well.

And What then?

Hillary’s national strength is such that she can’t be knocked out by one or two caucus or primary loses. To defeat her, a candidate must battle in all fifty states, taking her on delegate by delegate, winning in the big states. Symbolic defeats in Iowa or New Hampshire with only a handful of delegates at stake won’t derail Hillary. But they will make it harder.

But Obama does have the financial resources to fight a fifty state battle with Hillary, and, with his Internet based fund raising, has the ability to reload his coffers rapidly after a victory.

If Hillary loses Iowa and New Hampshire, the nominating contest could go either way. Obama’s chances at winning would rise, but only to 50-50. Suddenly, women would grow concerned about having the presidency snatched from their grasp and loyal Democrats would wonder if they can win a general election behind an African-American candidate. The Party establishment would not let go of Hillary easily and her IOUs from Democratic office holders and party officials – for whom she has raised boatloads of money – would hold many of her super-delegate votes in place.

But if Hillary loses in Iowa and then loses New Hampshire too it would become a contest.

REPUBLICANS: THE BATTLES WITHIN

On the Republican side of the fence, the Iowa battle is even more interesting. After leading for seven months, Romney suddenly has a problem on his hands. It’s not the problem he thought he’d have – Giuliani or Thompson. It’s Mike Huckabee. From nowhere, Huckabee is now hot on Romney’s tail. The average of the past five polls (always available on www.realclearpolitics.com) shows Romney at 28%, Huckabee at 20%, Giuliani languishing behind at 14%, Thompson crashing at 11%, and McCain at 7%.

So what happens if Rudy loses Iowa?

It depends on four questions:

1. By how much does he lose?
2. To whom does he lose?
3. How does Hillary do in Iowa?
4. And how does he do vis-à-vis McCain?

If Rudy is wiped out in Iowa, as the polls currently suggest, he is in for a long hard battle to get the nomination. His consistent lead in the national polls means that if he won in Iowa, he could end the contest right there (just as Hillary could).

But if Rudy is humiliated in Iowa, it opens the door to the argument that the base just won’t buy his social liberalism and may lead for many to hunt around for an alternative.

Which raises the second question: Who does he lose to? If he loses to Romney, it is a disaster. Romney has a built in advantage in the next two states on the calendar – New Hampshire and Michigan.

As governor of Massachusetts, Romney was on Boston television virtually every night and 2/3 of New Hampshire voters watch Boston TV. New Hampshire television reaches only about 1/3 of the state. So New Hampshire is virtually Romney’s home state. The average of the last five polls has him ahead there by a lot. Its Romney 33%, Giuliani 18%, McCain 16%, Huckabee 7%, Thompson 5%.

And in Michigan, Mitt’s father George was the Governor (he ran for president against Nixon in 1968 but was wiped out when he said he was “brainwashed” in Vietnam). A Detroit News poll from earlier this month has Romney at 28%, Giuliani at 25%, Thompson at 13%, McCain at 12% and Huckabee at 9%.

Rudy could overcome Romney’s lead in both New Hampshire and Michigan, but not if Romney wins in Iowa. The momentum he would get from the first caucuses would be so huge that he would likely win both states.

And, in South Carolina, a conservative bastion, it would be wishful thinking to believe that Giuliani could come back if Romney built up a head of steam. Realclearpolitics.com has Romney and Rudy tied at 21 there.

So, if Romney wins Iowa, he’ll likely do a sweep, winning New Hampshire, Michigan and South Carolina. Then, the question will be whether Rudy can stage a comeback in Florida where he now enjoys a solid lead. It will be tough but it is possible.

But the silver lining for Rudy is that Huckabee, who has surged in Iowa, could beat Romney. Mike has gone from invisibility to second place through dogged, one-on-one campaigning in Iowa and now has enough money to do some paid television advertising.

Can Huckabee beat Romney in Iowa? Maybe yes. After all, most of Romney’s support is really fear of Rudy and his social liberalism. If you are going to vote for a social conservative, why not vote for the real thing rather than a recent convert?

If Huckabee beats Romney, it sets up a three way race in New Hampshire and Rudy’s chances may depend on the third question: How did Hillary do in Iowa?

If Hillary wins in Iowa, the Democratic race is functionally over. That will free independents to enter the Republican primary and will give Rudy or McCain a big boost.

But if Hillary loses in Iowa, you can bet that Independents will stay in the Democratic primary, turning the GOP contest in New Hampshire into a confrere of the party faithful who will support Romney or Huckabee.

Remember that in 2000, it was Independents entering the Republican primary that boosted McCain to victory over Bush. And note also that in the current polling, 80% of the independents are voting in the Democratic primary – to elect or defeat Hillary. But if she is not in play by New Hampshire, having won Iowa and the nomination, then they may enter the Republican primary and deliver it to Rudy.

If Rudy is the moderate at that point. And that leads to the fourth question: How will McCain do?

Rudy appeared to have knocked McCain out of the race when he entered the Republican contest in January of 2007. Before that, McCain was trailing Rudy only slightly, but when Giuliani entered the race, he immediately racked up a big lead over McCain. And when the immigration debate heated up, McCain paid a heavy price for his support of the Bush reform plan which conservatives attacked as amnesty.

But lately, McCain has been doing well. Nationally, he is sluggish. The realclearpolitics.com average has him at 13% in fourth place behind Rudy (28%), Thompson (15%), and Romney (13%). But in New Hampshire, McCain is hot on Rudy’s trail. Romney leads at 33% but Rudy is in second at 18% and McCain third at 16%.

It depends on Iowa. Right now, Rudy is at 14% in Iowa and McCain is down at 7%. But if McCain could come up – and he is working Iowa very hard – passing Rudy there, combined with a strong base in New Hampshire left over from his 2000 triumph there, could give McCain an edge over Giuliani reversing the pattern of the past year.

So….on the right, its either Romney or Huckabee. Our bet is that Huckabee wins in Iowa and sets up a tough three way fight in New Hampshire.

And…on the left, its Giuliani or McCain, more likely Rudy. But how damaged with Rudy be after Iowa. He better hope that either he does better or that Huckabee wins.

Posted by Post Scripts at 11:12 AM | Comments (1)

Black Friday