The Republicans’ long slog: next battle, Florida

Originally published in Aspenia Online, Aspen Institute Italia

The primary in South Carolina, on January 21, was supposed to be the moment when Mitt Romney, possibly the least beloved Republican presidential candidate in modern history, clinched the GOP nomination far earlier in the process than anyone before. The former governor of Massachusetts would finally be vindicated, proving every pundit and Tea Party group that doubts his ability to speak to the party base wrong.
Instead, voters in the Palmetto State chose to press the reset button, erasing at once Romney’s perceived front-runner status, propelling Newt Gingrich (who won a whopping 40.4% of the votes against Romney’s 27.8%) to the front of the pack, both in terms of momentum and delegate count, and blowing wide open a race that many thought was a foregone conclusion from the get-go.

It was a veritable rebellion on the part of Republican primary voters in South Carolina. With their ballots, they signaled that they were not about to rubberstamp a decision by the GOP establishment, which had been slowly coalescing around Romney. The returns from the Palmetto State confirm what many have long suspected, that at least a slice of the party base strongly opposes the nomination of a ‘Massachusetts moderate’ and, instead, is still looking for a ‘true conservative,’ someone who can build on the mission of dismantling the federal government in Washington started by the Tea Party-friendly House of Representative in 2011.

The race for the Republican nomination now moves to Florida, one of the most complex and expensive states to campaign in. Three suddenly competitive candidates (in South Carolina, Rick Santorum didn’t capitalize as much as he had hoped to on a week that had been full of good news, but he seems intent on staying in and fighting on) face what could turn out to be a long, drawn-out slog for every last delegate until the national convention this summer.
Romney’s deep pockets and unparalleled on-the-ground organization make him a natural favorite in the Sunshine State, where he must win if he wants to regain the upper hand.
Gingrich’s momentum coming out of South Carolina will ensure that he gets a lot of free media attention, which could help make up for his relative lack of resources (he has barely campaigned in the state so far). To his advantage, the former House Speaker doesn’t necessarily need to carry Florida, unlike Romney. He just needs to offer a convincing performance.
Santorum finds himself in the most vulnerable position, a clear third after South Carolina. He will be under intense pressure from the conservative wing of the GOP to drop out of the race and let the hard right rally behind Gingrich. Therefore, he needs to turn the tables around once again and retake the former House Speaker if he wants to survive past Florida.
What is certain is that, with the stakes growing, the campaign for the Republican nomination is about to turn nastier.

In the hours leading up to the vote in South Carolina, it became clear that Romney, who had been leading all polls for the state until very recently, was in bigger troubles that anybody had predicted.
Saturday’s primary came on the tail of a couple of unconvincing debate performances by the former Massachusetts governor, caught off-guard on the issue of his tax returns, which he has long been opposed to releasing. Seizing the opportunity, his rivals began pummeling him for it, claiming he was cheating Republican voters by keeping crucial pieces of information from them.
An aggressive campaign launched by the other contenders for the GOP nomination attacking him for his past work at the private equity firm Bain Capital (Romney was accused of being a “job destructor,” not a “job creator) started paying off.
Finally, the news that he had not won the Iowa caucuses as first reported, but instead had come second after Santorum, made it suddenly and painfully obvious that Romney was going through a rough patch.
Yet, even in a time of crisis, the former Massachusetts governor stuck to his highly scripted, nothing-left-to-chance campaign, appearing aloof and tone-deaf in the eyes of Republican voters that are desperately longing for a real street fighter.

Odds were that Rick Santorum would pick up the votes of disgruntled conservatives.  He was emerging from his best week yet, with his belated Iowa victory, the endorsement of a network of Evangelical Christian groups that had met in Texas the previous weekend, and strong debate appearances. But the former senator from Pennsylvania ended up third, receiving only 17% of support.
For today’s very angry GOP voters, who don’t simply want to beat President Barack Obama in November, but would very much like to vanquish him, Santorum might just be an all-too-decent campaigner, both in the way he relates to his Republican rivals and in how he pushes back against the much-hated Obama Administration.

South Carolina, therefore, became Gingrich’s to take, his campaign once again resurrected after it had been left for dead for the umpteenth time this election season. The former House Speaker won all sorts of demographic groups. According to exit polls, he received the support of women, men, the rich, the poor, Republicans, Independents, voters who think the economy should be the next president’s first priority as well as social conservatives. He even grabbed 44% of the votes of self-described Evangelical Christians (so much for Santorum’s Texas endorsement.) He beat Romney in terms of ‘electability’ (the candidate voters think is most likely to defeat Obama) and appears to have carried all but two counties in the state.

What is interesting is that the week leading up to South Carolina had been a mixed bag for Gingrich.  On the one hand, Texas Governor Rick Perry dropped out of the race and endorsed him.  On the other hand, shadows from his personal past resurfaced, when Marianne Gingrich, the second of his three wives, went on the record saying that the former House Speaker had asked her for an ‘open marriage’ arrangement in order to keep seeing his then lover, now spouse, Callista.
But Gingrich did not bow to the accusations. Instead, he doubled down, unleashing an assault on the “elite media,” a favorite target of his, which, he claimed, have been unjustly attacking Republicans for years in order to defend President Obama.
Gingrich doesn’t refrain from calling the president “incompetent,” “radical,” and “dangerous.” His well-known temper, aggressive attitude — some say intolerant – and visionary outlook — some say self-aggrandizing – have also been in full display in his dogfight with the other Republicans, in which he has been leading the charge against Romney.
Just like the Republican base, Gingrich is furious with anything that smacks of elitism and is not afraid to show it.

Basking in his South Carolina victory, Gingrich headed to Florida Sunday as confident as ever. But the Sunshine State is a very different beast. It is a much larger state with a much more complicated demographic and economic make-up. It is home to an important Hispanic constituency, has suffered acutely from the collapse of the real estate market, and has an unemployment rate of 10% (up to 14% in some Republican-dominated areas.) A traditionally key swing state in primary as well as general elections, Florida also has a history of power-politics, not so much based on retail contact with voters, but rather on expensive media buys and aggressive ad campaigns (it costs approximately $2 million a week to simultaneously advertise in the state’s ten most important media markets).

So far, Romney is the only one who has been actively campaigning here, spending just less than $4 million between TV and mail-in ads. This effort could translate into a partial lead, since Florida allows for early and absentee voting, with over 200,000 ballots (about 10% of the projected overall turnout) already cast. But two televised debates scheduled Monday and Thursday could play to the advantage of Gingrich, who is known to be a particularly effective debater.
Romney, who announced he would finally release some of his tax returns, has already started testing new lines of attack, criticizing Gingrich as an ‘insider’ who spent forty years in Washington and trying to shine new light on the former House Speaker’s eight-year, $1.6 million consulting role for mortgage giant Freddie Mac before the real estate crisis hit (Republican voters blame government-affiliated Freddie Mac, alongside its sister-organization Fannie Mae, for the bubble and subsequent bust.)
Gingrich, who claims he only offered his advice as a “historian,” is likely to continue his all-out assault on Romney, focusing on the former governor’s perceived lack of conservative credentials, his private equity work and history of flip-flopping on a variety of issues.
Santorum will have to make space for himself or get out of the way (Ron Paul, after his fourth-place finish in South Carolina, has also pledged to continue campaigning, but he is thought to have reached his libertarian-based ceiling of support).

Since Ronald Reagan in 1980, every Republican candidate that won South Carolina has gone on to win the nomination. But it has never happened in the history of GOP primaries that three different candidates each won Iowa, New Hampshire and South Carolina. As the race for the nomination moves to Florida, it is anybody’s guess who is going to take the next big step, whether it will be Romney.

 

Romney a Step Closer

Originally published in Aspenia Online of the Aspen Institute Italia

The New Hampshire night went according to script and it was a good one for Mitt Romney.

The former governor of Massachusetts easily won in New Hampshire, with nearly 40% of the votes, and is now headed to South Carolina as the sure favorite for the GOP nomination. After coming under heavy fire in recent days for his past work at Bain Capital, he must have breathed a sigh of relief: his Republican opponents have taken to suggest that, in his role as a venture capitalist, Romney prioritized profits above all and destroyed jobs rather than creating them, an accusation that threatens to undermine the core of his message as a candidate with private-sector experience and a job creator.

In the meantime, the fight for second place and the title of true anti-Romney is still on. The longer it takes for the conservative wing of the GOP, which remains skeptical of former Massachusetts governor’s credentials, to rally behind another candidate, the less likely it becomes that it ever will. With time, endorsements and money are flowing the way of Romney, clearing his path toward the nomination.

Texas Congressman Ron Paul, who came third in the Iowa caucuses, took second place in the Granite State, with around 23% of the votes. Jon Huntsman, who was hoping for a result that could salvage a thus far disappointing campaign, was third, at nearly 17%. Rick Santorum (a very close second in Iowa) ended up in a neck and neck with Newt Gingrich for position number four, while Texas governor Rick Perry trailed everybody else by a big margin (he racked up less than 1% of the votes).

Paul’s high-flying campaign is a blessing for Romney. With his out-of-the-mainstream libertarian views on issues from the Federal Reserve (which he wants to abolish) to foreign policy (he wants the US to withdraw almost entirely from the rest of the world) he is unlikely to grab the GOP nomination, yet, in the process, he is taking votes away from others, such as Santorum and Gingrich, who could, at least in theory, be more dangerous to the former Massachusetts governor.

With his latest win, Romney becomes the first Republican to capture both Iowa and New Hampshire since 1976. In modern history, every single candidate that won both competitions ended up pocketing his party nomination. Not surprisingly, in his victory speech, Romney sounded very much like he was already running for the general elections. He criticized President Barack Obama’s “politics of envy” and offered himself as an obvious alternative for the White House. “This president takes his inspirations from the capitals of Europe,” Romney said, attacking Obama as being anti-free market. “This President puts his faith in government. We put our faith in the American people.”

But it is still too early to call it. All candidates have pledged to stay in the race until at least South Carolina (Texas Governor Perry didn’t even campaign in New Hampshire,) where many observers believe the real fight will take place.

This is already the case as far as the battle of campaign ads. Until now, South Carolina voters have had to sit through at least 5,500 primary-related commercials, while New Hampshire voters only saw 2,800. This week alone, Restore our Future, a powerful super PAC that supports Mitt Romney, bought $2.3 million worth of ads, while a similar pro-Gingrich group (Winning our Future), planned to spend $3.4 million in negative ads attacking the former Massachusetts governor.

South Carolina (the Palmetto State) is believed to be still up for grabs because its politics are more traditionally conservative than New Hampshire’s, where voters tend to be more moderate (in exit polls, 47% of Granite State’s primary voters described themselves as independent and 48% as Republican.) For example, evangelical Christians, who look skeptically at Romney, a Mormon from liberal Massachusetts, tend to wield more influence in South Carolina. Several candidates, Santorum, Gingrich and Perry, will all vie for the religious vote. And since this might very well be their last stand, the campaign is likely to turn increasingly nasty, something of a tradition in the Palmetto State (it was here that a barrage of attacks against John McCain in 2000 effectively handed the nomination to George W. Bush.)

As of now, polls have Romney in the lead in South Carolina as well. The latest numbers from Public Policy Polling put him at 27%, ahead of Gingrich (23%,) Santorum (18%,) Paul (8%,) and Perry (7%.) His resounding victory in New Hampshire is only bound to add more momentum to his campaign. But in order to be crowned the GOP candidate for the presidency at the party national convention in August, Romney has to collect more than half of all delegates. As long as his opponents vow to continue fighting, he cannot afford to take the nomination for granted.

The Republican Pack Toward New Hampshire

Originally published in Aspenia Online of the Aspen Institute Italia

After the Iowa caucuses unexpectedly ended in a virtual tie between Mitt Romney and Rick Santorum, with only eight votes separating them (some breaking reports Thursday night even suggested that Santorum might actually have won, a typo having unfairly attributed the lead to Romney,) and after Minnesota Congresswoman Michele Bachmann, who finished a disappointing sixth in Iowa, decided to drop out of the race, a smaller but just as determined field of GOP candidates now descends onto New Hampshire, where Republican primary voters will go to the polls next Tuesday.

The Granite State’s primary represents an important test for Romney. Anything less than a strong finish here would undermine the campaign of the former governor of Massachusetts, proving once again that, no matter how hard he tries, the Republican right is unwilling to support him. This, of course, is the outcome that former Pennsylvania Senator Santorum is wishing for, as he aims to become the candidate whom religious and fiscal conservatives unite behind. In New Hampshire, however, it could be Jon Huntsman’s turn to surprise everybody. Although trailing badly in the polls, the former governor of Utah and former US Ambassador to China has spent a great deal of time and money campaigning in the state and is hoping that a convincing performance here might help propel his campaign forward.

The outcome of the Iowa caucuses Tuesday did little to clarify where the race for the GOP nomination stands. Rather than settling things once and for all, the Hawkeye State’s caucus-goers chose to add a new level of uncertainty by elevating Santorum’s status. He became the latest in a series of second-tier contenders to surge against Romney, like Michele Bachmann, Rick Perry, Herman Cain, Newt Gingrich and Ron Paul before him. This points to a still divided Republican electorate, unwilling to rally behind the default front-runner Romney, but also unable to find a credible alternative for the long run.

New Hampshire could be the place where Romney finally seals the deal, turning the rest of the nomination process in a one-man show. As a former governor of neighboring Massachusetts, which shares Boston’s large media market with the Granite State, Romney is already well known. He has built by far the strongest on-the-ground organization and has bet his entire presidential bid on a win here.  This state’s more moderate ideological make-up is a better fit for Romney than Iowa. In addition, independent voters in New Hampshire can take part in either party’s primary. It is no surprise than all polls have him leading the pack of GOP hopefuls here. In the most recent Suffolk University/7News poll, he tops the chart with 43% of support. In the end, high expectations could turn out to be Romney’s biggest challenge in New Hampshire, since anything short of a landslide victory would be interpreted as failure.

On the contrary, the low expectations set for Santorum could turn out to be his strongest suit. Unlike Romney, he doesn’t need to win. Any better-than-thought showing would fuel his campaign in preparation for the crucial battlegrounds of South Carolina and Florida. Already, Santorum is enjoying an Iowa bounce, both in terms of polling (according to a new Rasmussen Reports national survey, Santorum is second only to Romney, at 29%, with 21% of support) and in terms of fund-raising. In the days since coming dangerously close to winning Iowa, his campaign has brought in $2 million, more than the entire sum he raised in the third quarter of 2011, which was less than $1 million.

His long-stalled campaign suddenly energized, Santorum is now trying to build an organization on the fly in New Hampshire, a state to which he has dedicated decidedly fewer resources than Iowa. Pushing an economically populist, blue-collar message, the former senator from Pennsylvania is hoping to win the support of the Granite State’s conservatives, making up for the fact that Evangelical Christians, more akin to Santorum’s political views, are less influential here than in Iowa.

Among the other contenders, both Ron Paul and Newt Gingrich are campaigning hard in New Hampshire. For Gingrich, who had risen to the top of the polls in December before being drowned in a barrage of negative advertisements in Iowa, particularly by the pro-Romney super-pac Restore Our Future, the Granite State’s primary will be a make or break moment. If the former House Speaker fails to find new momentum here, he might be the next GOP candidate to leave the race. Angry at the attacks launched against him by his rivals, Gingrich played the survivor card at a recent rally in New Hampshire. “In this campaign so far, I’ve been dead once, resurrected, limping along, the front-runner, drowned in a tidal wave of Romney and Ron Paul negative ads, recovered and survived,” he said.

Paul, who came a close third in Iowa, is expected to soldier on with his campaign and to continue receiving a steady level of support, guaranteed by the hard-core base of activists he has built through the years. But he remains an unlikely candidate for the GOP nomination. Some of his positions, in particular his isolationism in foreign policy, are so outside of the Republican mainstream as to make it nearly impossible for him to win a majority of the party’s delegates.

Texas Governor Rick Perry, who many thought would leave the race after his fifth place finish in Iowa, has instead pledged to keep going. He will, however, skip New Hampshire altogether, and prepare for a new push in the upcoming South Carolina and Florida primaries, where he might end up dueling Santorum for the support of religious conservatives, to the obvious benefit of Romney.

In the end, it could be Jon Huntsman to upend things in New Hampshire. At a recent event in the state, the former governor of Utah went for the underdog pitch, claiming that Santorum’s unexpected success in Iowa“suggested, more than anything else, that if you’re willing to get in a car and put in the hours that Rick Santorum is putting in, and working hard at the grass-roots level, you’ll have something to show for it.” On Thursday, the Boston Globe endorsed Huntsman over Romney, a disappointing turn of events for the former governor of Massachusetts, who was also snubbed by his home newspaper in 2007.

As for Romney, following his slim victory in Iowa, the former Massachusetts governor won the endorsement of once bitter rival McCain, while he had already put that of the Union Leader, New Hampshire’s most influential newspaper, in the bank several weeks ago.

Romney might carry New Hampshire in a landslide. Otherwise, the Granite State too, just like Iowa, could end in a late-night photo finish. In any case, since everybody already expects a Romney victory here anyway, things are unlikely to change fundamentally until at least South Carolina.

Rajoy Hopes To Reassure Investors In Spain

Originally published in Global Finance

Like Greece and Italy, Spain too has a new government, tasked with bringing the country back from the brink.

Rajoy heads new government

Unlike Greece’s Lucas Papademos and Italy’s Mario Monti, Spain’s prime minister Mariano Rajoy is not a technocrat but a lifelong politician. With his center-right Popular Party (PP), he won a resounding victory in the November 20 elections with a mandate to carry out reforms, reassure investors and promote growth, while keeping Spain in the eurozone.

 

A 56-year-old lawyer, Rajoy is not known for his charisma, speaks less-than-fluent English and is thought by some to be either ambiguous or boring. Supporters believe that his pragmatic approach is well suited to a time when Spain needs to make difficult decisions.

 

“The first priority is to reestablish confidence, so that the sudden stop in foreign financing comes to a halt,” says Professor Fernando Fernández of Madrid’s IE Business School. “This means addressing solvency issues with credible fiscal adjustment and bank recapitalization, and growth concerns with a reform of the labor market.”

 

Righting the banking sector is the first big challenge. Nonperforming loans to construction and real estate businesses continue to endanger private banks, some of which might be taken over by the Bank of Spain. Ongoing sovereign debt market volatility may also make it costlier to honor the country’s obligations. Spain has to pay 120 billion euros in debt redemptions in 2012.

 

Rajoy has asked trade unions and employers to reach an agreement on contracts and wages by January 6, or the government will impose its own solution. The government is “expected to implement another layer of austerity to protect the key budget deficit reduction targets from an economy sliding into recession,” says Raj Badiani, an analyst at IHS Global Insight. Rajoy has promised to bring the deficit down to 4.4% of GDP next year.

 

Badiani adds: “Spain needs to remain part of the eurozone and the region’s umbrella of a stable currency and low interest rates.”
Read more: http://www.gfmag.com/archives/146-january-2012/11534-rajoy-hopes-to-reassure-investors-in-spain.html#ixzz1if0Y6Bei

Iowa: Down to the Wire

Originally published in Aspenia Online of the Aspen Institute Italia

In sub-zero temperatures, Iowa Republicans will gather on January 3rd to choose their candidate for president. With only days to go, the field remains wide-open – a reflection of the lack of enthusiasm felt by the GOP base toward this year’s candidates.

Because Iowa is the first state in the nation to enter a months-long nomination process, hard-core party activists here tend to wield a disproportionate amount of influence, despite comprising a tiny percentage of the American electorate. The seven GOP candidates currently in the race have spent time and money trying to court Iowan votes and to win the endorsements of local power players; they are now traveling across the state in a last-minute effort to clinch the support of undecided caucus-goers.

All things considered, former Governor of Massachusetts Mitt Romney and former Speaker of the House Newt Gingrich are seen as the most likely winners, but neither wholly fulfills the expectations of conservative Iowans. Their showings in the polls have been unsteady and often unconvincing. Instead, the outcome of this race might very well depend on the performance of second-tier candidates. Texas Congressman Ron Paul and Texas Governor Rick Perry, in particular, have the ability to appeal to Iowa’s two strongest conservative constituencies: small government libertarians (a recent Washington Post/ABC poll found that more than three quarters of Iowa caucus-goers are supportive of the Tea Party) and evangelical Christians.

Paul, in particular, looks increasingly close to causing an upset and taking Iowa, while Perry, though unlikely to win, could still throw the plans of front-runners Gingrich and Romney off balance.

According to a recent Rasmussen Reports poll, Romney is in the lead in Iowa, with 23% of caucus-goers saying they support him. Not far behind are Gingrich at 20% and Paul at 18%. The last five Rasmussen polls have each showed a different front-runner, an indication of how unsettled things continue to be in Iowa. Before choosing to step out of the race, former CEO of Godfather’s Pizza Herman Cain had been leading the polls, succeeded more recently by Gingrich. But for Nate Silver of the New York Times, Gingrich’s momentum “has stopped – and has probably reversed itself.” In Silver’s forecast model, Gingrich now has a 38% chance of winning in Iowa and is continuing to drop.

In Iowa, Gingrich faces the same challenges as Romney. The GOP base here doubts their conservative credentials. Both candidates are known for having taken more moderate positions in the past, on healthcare reform, gay rights, and abortion. Additionally, their personal backgrounds (Romney a Mormon from liberal Massachusetts and Gingrich a converted Catholic and known adulterer, on his third wife) are far from ideal for the state’s Christian right.

In fact, after enthusiastically embracing former Arkansas Governor and Baptist pastor Mike Huckabee in 2008, Iowa’s evangelical Christians have yet to endorse a candidate for 2012.

Given the weakness of the two favorites, analysts believe there is still space for a wild card to upend things, and everybody is betting on Ron Paul. In the most recent Public Policy Polling, he even comes first, with 23% of support, ahead of Romney (20%) and Gingrich (14%). With a more reliable grassroots organization than Gingrich and with more ardent support than Romney’s, Paul could surprise everyone and eke out a victory.

Even if Paul fails to win Iowa, he could still heavily influence the outcome of the vote. During recent debates and public appearances he has gone after Gingrich, in a series of attacks that could unwittingly aid his chief rival Romney.

Rick Perry could end up playing a similar role. With a very controversial TV ad that focused on religious values and criticized the repeal of Don’t Ask Don’t Tell (which now allows gays to serve openly in the military), Perry launched a full-fledged campaign for the votes of Iowa’s evangelicals. He is now on a ten-day bus tour across the state, and his bus is painted in the colors of the American flag and bears the slogan: “Faith, Jobs, and Freedom”.  “Faith” is displayed a prominent first. He could erode Gingrich’s support among the religious right and unintentionally deliver Iowa to Romney.

In the face of general discontent over the plethora of candidates on display, the key to the Iowa primary will be whether state Republicans decide to go for the person who best represents their conservative values (which could mean Perry, but also Michele Bachmann or Rick Santorum, although these two are lagging far behind) or, given the lack of a clear favorite, the person they deem better suited for a general elections fight against President Barack Obama.

In a recent New York Times/CBS poll, only Gingrich and Romney were given passable grades in terms of electability; 31% and 29% of Iowa caucus-goers said that these two candidates had, respectively, the best chance of defeating Obama. All the other contenders came a distant second. But asked to pick the candidate that best represented their values, respondents chose Michele Bachmann and Ron Paul.

With the Iowa holiday season kicking into full gear, it is still anybody’s guess about which candidate can win the hearts and minds of this state’s conservative voters.

The Virginia Battleground in National Politics

Originally published in Aspenia Online of the Aspen Institute Italia

It was the first permanent English colony in the New World, established in 1607.

The state is often called the “Mother of Presidents,” as eight of them – a record – were born here (including George Washington, Thomas Jefferson, James Madison and Woodrow Wilson.) In 2008, it reclaimed its spot at the center of US national politics when Barack Obama became the first democratic candidate to carry it in 44 years. And in the run-up to the 2012 presidential elections, Virginia is gearing up to be one of the most critical states in the country – a crucial battleground in the race for the White House and the stage of one of the highest-profile Senate races of the year. It is also home to one of America’s most ambitious politicians of his generation: Attorney General Ken Cuccinelli, a man who, in many ways, holds the key to this vital swing state’s politics.

Recently, Cuccinelli announced that he would enter Virginia’s gubernatorial race (which will take place in 2013), upending already established GOP plans and putting himself front and center in the state and national debate.

Forty-three years old, Cuccinelli, a staunch conservative and Tea Party-darling who was elected attorney general (the top lawyer in the state) in 2009, has aggressively dug into the most controversial issues of his time, and has built an unusually prominent national profile on the basis of his opposition to the Patient Protection and Affordable Care Act, President Barack Obama’s signature health care reform. He was the first of many attorneys general to take “Obamacare” to court, claiming that it violated Virginia state law.

“As an attorney general here in Virginia, Cuccinelli has not been afraid to pick fights,” says Kyle Kondik, Director of Communications at University of Virginia’s Center for Politics.

He is known as a climate change-skeptic, having started a long, headline-grabbing battle with the University of Virginia, trying to subpoena the documents of Michael Mann, a former researcher at UVA and, now, a well-known climate scientist at Pennsylvania State University. Mann was involved in the so-called “climategate” and Cuccinelli accused him of falsifying evidence in order to obtain state research grants (Mann has been cleared of all wrongdoing by separate independent investigations).

The attorney general has also made enemies in the pro-LGBT (Lesbian, Gay, Bisexual, Transgender) rights movement, with a letter he issued in 2010 to Virginia’s public colleges and universities in which he argued that they were not authorized to implement anti-discrimination policies on the bases of ‘sexual orientation,’ ‘gender identity’ and ‘gender expression.’ Finally, he has antagonized the pro-choice movement, issuing legal opinions in support of restricting abortion rights in the state.

An observant catholic with seven children, it is no surprise that Cuccinelli quickly became a poster boy for grassroots conservatives and the Tea Party in Virginia and across the country. “He is what you call a constitutional conservative,” says Jim Nolan, staff writer for the Richmond Times Dispatch. “He has a very strict interpretation of the Constitution and he believes the federal government has over-reached in the assertion of its powers in how the country is run, to the extent that it has infringed upon the states and their rights.”

A frequent guest on cable networks, Cuccinelli was recently invited by former Arkansas governor and 2008 Republican candidate Mike Huckabee (now a host on Fox News) to participate in a discussion with two other state attorney generals. On Huckabee’s show, they questioned the crop of GOP presidential hopefuls on their interpretation of the Constitution.

Critics have accused him of injecting his personal views in how he runs his attorney general office. Upon further examination, however, Cuccinelli emerges a more complex personality than he appears at first glance and, therefore, a potentially more formidable candidate.  “The Tea Party represents the most conservative wing of the Republican Party and Cuccinelli, I think, comes from that wing,” says UVA’s Kondik. “But Cuccinelli has also shown himself capable of winning in places that weren’t all that conservative.”

Before becoming Virginia’s attorney general, he was twice elected state Senator for Fairfax County – a suburb of Washington DC and a rather moderate district. He has shown an ability to build relationships across party lines, taking up issues that are dear to Democrats as well, such as veteran affairs, violence against women and care for the elderly. He has even proved less-than-enthusiastic about the death penalty.

Overall, observers of Virginia politics of all stripes, divided as they are on the things Cuccinelli stands for, seem to agree that with him “what you see is what you get.” He appears genuinely to believe in the things he says, has so far been unwilling to flip-flop on issues for electoral purposes, and is not afraid to challenge the status quo within the GOP.

When he decided last week to officially throw his hat into the gubernatorial race, Cuccinelli did so despite an agreement between sitting GOP Governor Bob McDonnell and his Lieutenant Governor Bill Bolling (term-limited McDonnell promised to support Bolling in 2013.) The party will now be forced into an unwelcome primary fight, which many fear might end up dividing the party to the advantage of the Democrats.

Although the gubernatorial campaign in Virginia won’t start until a few months after the conclusion of next year’s presidential race, the effects of Cuccinelli’s decision will begin to play out much earlier. They could well influence the outcome of Virginia’s 2012 elections.

Next year, Virginia is expected to be crucial for President Obama, whose path to re-election runs through the state. Virginia will also be home to a key Senate race, upon which the balance of power in Washington might hinge. In all likelihood, former Democratic governor Tim Kaine will be up against former Republican Senator George Allen. In the GOP primary, Allen is considered the clear front-runner against a variety of grassroots conservative opponents. But Tea Party activists have mounted an all-out campaign against him: they consider him a Bush-era, high-spending conservative and a “RINO” (a Republican in Name Only).

In the presidential race, Lt. Governor Bolling, who will battle Cuccinelli for the governor’s seat, has endorsed Mitt Romney (Bolling is, in fact, the Virginia chair of the Romney campaign). And Governor McDonnell, chairman of the National Governor Association, who is often talked about as a candidate for the vice-presidential spot and who has already said he will support Bolling in 2013, is likely to endorse Mitt Romney soon as well.

Ken Cuccinelli has yet to endorse candidates for the White House and Senate. Whether and how he chooses to go about it, as he weaves the necessary alliances in light of his own 2013 gubernatorial run, could make or break GOP fortunes. He is the man that can deliver Tea Party support to mainstream Republican candidates. But if he chooses to “rebel”, he could put his weight behind outsider Tea Party candidates, derailing GOP plans.

Finally, the Supreme Court will hear arguments over the constitutionality of President Obama’s health care law (albeit not Cuccinelli’s original lawsuit) and decide on it in early summer, as the presidential campaign kicks into full gear. Cuccinelli’s well-known opposition to “Obamacare” will probably put him in the national spotlight again.

In many ways, it is too early to say whether Cuccinelli’s personal ambitions will go beyond Virginia. Certainly, an eventual victory in the 2013 race for governor would be an important stepping-stone toward a national-level political career.

What matters now, says Richmond Times Dispatch’s Jim Nolan, is that “Virginia, for the last four years, has been ground zero in national politics.” This is not about to change anytime soon. From his attorney general’s pulpit, and now as a candidate for governor, Cuccinelli is sure to be a potent force in this crucial swing state.

Daunting Tasks for Papademos

Originally published in Global Finance

Greece’s interim prime minister Lucas Papademos was appointed in November, after much squabbling between the country’s two main political parties.

 

Papademos most qualified candidate for the job

Papademos faces the daunting tasks of winning approval for the new 130 billion euro bailout package, passing the 2012 budget and securing the latest 8 billion euro installment of last year’s rescue package. Each of which is essential for the country to avoid debt default by year-end.

 

“Papademos is probably the most qualified candidate for the job,” says Raoul Ruparel, an analyst at Open Europe, a London think tank. With his bipartisan appeal, high international profile and credibility with the financial markets, “Papademos ticks all the boxes,” he says.

 

Until his appointment, Papademos, 64, was visiting professor of public policy at the Kennedy School of Government at Harvard University. He has had a long international career. Between 2002 and 2010 he served as vice president of the European Central Bank.

 

He was previously governor of the Bank of Greece, starting in 1994, where he oversaw the country’s bid to join the eurozone. Comments he has made in the past suggest that Papademos supports the ECB‘s position that Greece should tackle existing issues internally, rather than relying on external support.

 

But he is not a permanent solution, according to Fredrik Erixon, director of the European Centre for International Political Economy in Brussels: “What Greece needs are political leaders that command authority and persuade voters politically about why they need to accept years of tough economic and fiscal reforms.”

 

Greece faces an uphill battle. The country’s statistical service Elstat reported a jump in unemployment from 16.5% in July to 18.4% in August, during the peak of the tourist season. And its debt-to-GDP ratio is predicted to fall no further than to 120% by 2020, suggesting that it might need “a larger and more comprehensive debt write-down,” said Ruparel.
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After the failure of the “Super Committee”: prospects for US finances

Originally published in Aspenia Online of the Aspen Institute Italia

Members of the bipartisan Joint Committee on Deficit Reduction, or “Super Committee”, announced on November 21 that they had failed to reach an agreement on how to trim $1.2 trillion from future deficits over the next ten years. They were, therefore, throwing in the towel. Immediately, both Republicans and Democrats tried to pin the blame on each other.

Representative Jeb Hensarling, the Republican co-chair of the committee, wrote in the Wall Street Journal that the Democrats had been “unwilling to agree to anything less than $1 trillion in tax hikes—and unwilling to offer any structural reforms to put our health-care entitlements on a permanently sustainable basis.”

In a USA Today op-ed, Democratic Senate Majority Leader Harry Reid complained, instead, that, “Republicans never found the courage to ignore Tea Party extremists and millionaire lobbyists such as Grover Norquist [the author of an anti-tax pledge that most Republicans in Congress have signed].”

Some commentators on the right blamed President Barack Obama for his refusal to get involved in the committee negotiations. Writing in the Washington Post, Michael Gerson said that, “budget deals get done because presidents prod, plead, cajole, demand and threaten […] The Super Committee failed primarily because President Obama gave a shrug.”

But the President, who intentionally chose to remain on the sidelines after being deeply involved in the debt ceiling talks earlier this summer, wanted none of that. In response, he has recently begun stepping up his rhetoric against the GOP in anticipation of the upcoming election season. “There are still too many Republicans in Congress who have refused to listen to the voices of reason and compromise that are coming from outside of Washington,” he said during a press conference.  “They continue to insist on protecting $100 billion worth of tax cuts for the wealthiest 2 percent of Americans at any cost.”

Irrespective of where the responsibility for the Super Committee’s failure may lie, widespread Republican opposition to raising taxes on anybody, including the wealthiest Americans, made the panel’s effort to reduce future deficits doomed from the start. Back in September, Republican House Speaker John Boehner had already said that, “tax increases, I think, are off the table.”

Now that this bipartisan, congressional attempt to find a compromise is behind us, it begs the question of what lies ahead for the United States’ finances. Truth be told, even in the best-case scenario, whatever recommendations the Super Committee might have come up with would have had to be approved by Congress and, in any case, would not have gone into effect until 2013.

This means that there is no immediate economic consequence to the negotiations’ collapse.

But the twelve-member panel’s inability to agree on anything raises questions over Washington’s readiness to tackle the next big challenge.

By the end of the year, both the payroll tax cut (which temporarily reduces the tax rate directly withdrawn from workers’ paychecks and is calculated to have saved the average American household about $1,000 in taxes this year) and the expansion of the unemployment insurance (which now covers the jobless for up to 99 weeks that they are out of work), are set to expire. Many economists believe that, if they were allowed to run out on schedule, this would have far greater and swifter consequences on the US economy than the failure of the Super Committee.  In August, a Goldman Sachs report ranked a non-extension of the payroll tax cut and of the benefits for the unemployed as two of their top three concerns for the economic future of the country, alongside Europe’s debt crisis (estimates on how this would actually impact GDP vary).

Speaking in New Hampshire, President Obama pledged to stop the payroll tax cut from expiring. “If we allow that to happen, if Congress refuses to act, then middle-class families are going to get hit with a tax increase at the worst possible time,” he said. “We can’t let that happen, not right now.” But he will need the votes of the GOP-controlled House to get an extension passed. Republicans appear to be, at least in theory, open to the idea, but only if related costs were offset by equivalent budget cuts elsewhere, and not by raising taxes.

The lack of an agreement by the deficit reduction committee also pushes to next year, and to what is gearing up to be a heated presidential campaign, the issues of the Bush-era tax cuts and of the so-called “sequester,” automatic spending cuts that are supposed to be triggered by the panel’s failure. These cuts amount to the equivalent of the Super Committee’s original target of $1.2 trillion, and will be split equally between defense and non-defense spending.

The GOP wants the tax cuts passed during the presidency of George W. Bush, expiring at the end of 2012, to be made permanent for everybody, at an estimated cost of $3.7 trillion over the next ten years. Democrats and President Obama want to renew only those that affect the middle class, while allowing the rest to run out (this would have a cost of around $3 trillion).

As for the “sequester,” Republicans fret over how it would harm the US armed forces, while Democrats are concerned, although less so, about the effects it would have on non-defense spending.

Some Republican members of Congress are already hard at work to undo the trigger. Senators John McCain and Lindsey Graham released a statement saying that, “as every military and civilian defense official has stated, these cuts represent a threat to the national security interests of the United States and cannot be allowed to occur.” President Obama promises to hold his ground. “I will veto any effort to get rid of those automatic spending cuts to domestic and defense spending,” he said. “There will be no easy off ramps on this one.”

Because in the original negotiations over the Super Committee’s framework, Democrats had succeeded in taking Social Security, Medicare and Medicaid, off the table, some left-leaning commentators believe that, at the end of the day, no deal was a better outcome that some deal. “The automatic cuts will be painful, but they don’t touch entitlements,” wrote columnist Eugene Robinson in the Washington Post. “Instead, the Pentagon bears the brunt of the sword-of-Damocles cuts.” They think that the threat the “sequester” poses to defense spending could turn out to be a great bargaining chip in the Democrats’ hands, to get Republicans to finally agree to raising taxes.

At this point, given a highly divided Congress, much will be decided by the result of next year’s elections.

In any case, for those actually worried about the US deficit and debt, there could be a silver lining. James Horney of the Center on Budget and Policy Priorities did some calculations for the Washington Post and found that the so-called “do-nothing plan” – whereby Congress simply continues to fail to legislate and takes absolutely no action – would reduce future deficits by $7.1 trillion over the next decade, far more than any proposals currently debated would achieve.

The “Super Committee” on the US deficit: the tax conundrum

Originally published in Aspenia Online of the Aspen Institute Italia

With only a few days to spare before the November 23 deadline for the Joint Select Committee on Deficit Reduction, hopes for an agreement are getting slimmer by the hour. Also known as the “Super Committee”, this is a bipartisan group of twelve members of Congress tasked with shaving at least $1.2 trillion from future budget deficits over the next decade. If the panel can reach any compromise at all, experts say, it might be partial, which would only postpone the toughest decisions on the deficit to a later date.

Taxes continue to be the biggest sticking point in the negotiations. Democrats want to pair budget cuts with tax increases for the wealthiest Americans while Republicans focus almost exclusively on reducing public spending.

“The simple fact is that Republicans on the panel are unwilling to consider modest tax increases on high-income households,” says Michael Linden, director for tax and budget policy at the Center for American Progress, a liberal-leaning think tank in Washington DC. “This is the biggest obstacle, by far.”

Last week, in a short-lived sign of progress, Republicans appeared suddenly willing to consider $250bln in tax increases as part of a final agreement. But for Democrats, this remains too modest an offer, especially if one takes into account the fact that the GOP demands that the Bush-era tax cuts be made permanent for everyone, at a cost of $3.7 trillion over the next ten years.

“We have gone as far as we feel we can go,” said Super Committee’s Republican co-chair Jeb Hensarling speaking of the Republicans’ newest proposal on revenue.

“I think the odds are against a full agreement,” says Edwin Truman, a senior fellow at the Peterson Institute for International Economics. “But it is more likely there will be a partial agreement on less than the $1.2 trillion.”

One recent prediction has it that the members of the committee will agree that Congress needs to take up tax reform and revisit the amount of revenue that current fiscal policy brings into the government’s coffers – but only in theory. This would then leave the hardest part of the job – figuring out the details of such plan – to the House Ways and Means Committee and to the Senate Finance Committee. Indeed, these latter two would have been responsible for such decisions in the first place, had the Super Committee not been created.

A failure on the part of the 12-member panel to reach an agreement should automatically set off deep cuts, equally split between defense and non-defense spending. When the committee was first launched on August 2, the so-called “sequestration trigger” was designed as an incentive for both Democratic and Republican members to work together toward a compromise, to avoid seeing the programs dearest to each party slashed at random.

Almost everyone agrees, for different reasons, that the automatic cuts are bound to have potentially negative effects on the overall state of things (Republicans think the US armed forces will be harmed, while Democrats worry about the effects on Medicare and other non-defense programs).

However, the trigger is not set to go into effect for another year. And even before the Super Committee’s deadline, some members of Congress are already at work to find loopholes that will undo, or at least weaken, the sequester, jeopardizing the whole concept underlying the panel’s work.

Should that come to pass, it would probably undermine any future such attempt at bipartisan negotiations, since nobody would ever again consider it credible. “All the suspicions about Washington would be confirmed,” worries Michael Franc, “that nobody really wants to get the government under control.”

For a less divided Congress, the Super Committee’s work would probably not have been so impossible a challenge. “This is a simple problem, intellectually,” says Edwin Truman. It boils down to a basic calculation of “what expenses should be cut and what revenues should be raised, in what timeframe.” The Peterson Institute fellow believes that any agreement should also include the potential for more stimulus in the short term, to kick start what appears to be a stalled economy.

While compromise is possible, at least in theory, the political reality of Washington makes it highly unlikely today.

“We’re in a national discussion about whether to deal with our deficit through tax increases or spending reductions,” said Republican Senator from Alabama Jeff Sessions speaking of the Super Committee. “I think the American people demonstrated in the last election they were prepared to take spending reductions.”

Senator Patty Murray of Washington, one of the panel’s six Democratic members, said that her contingent would not  “accept a plan that gives a tax break to the wealthiest Americans and balances all of this incredible challenge we have on the backs of middle class families.”

The only thing everybody seems to agree on is that a bipartisan agreement becomes impossible the moment either side starts taking one program or another off the table. In the case of the Super Committee, this was true from the get-go. Pressure on the twelve members has been enormous, with all sorts of interest groups in Washington coming out and lobbying to defend whichever government program they favor.

Apart from recently making phone calls to the Democratic and Republican co-chairs of the Super Committee, President Barack Obama has largely remained on the sidelines. His presence tends to inject additional levels of partisanship into any legislative undertaking, so he has hoped that, by keeping away, the panel’s twelve members might indeed succeed in finding a compromise.

In the meantime, the clock is ticking. The federal debt of the United States topped the symbolic $15 trillion mark on November 16, unemployment is stuck at approximately 9%, and the economy is growing at a slower pace than needed to address either of these challenges.

The US and Pakistan: Between a Rock and a Hard Place

Originally published in Aspenia Online of the Aspen Institute Italia

The already strained US-Pakistan relationship has hit new lows in recent weeks, caught in a crossfire of accusations and denials about Islamabad’s alleged links to terrorists in Afghanistan. And while Kabul turns to Pakistan’s archrival (India) for help, Washington’s policy towards the region appears to be increasingly indecisive. The White House is evidently torn between frustration with Islamabad’s posturing and the knowledge that it has very limited tools to turn the relationship around. Republican presidential candidates have so far failed to add much to the debate, signaling that the US is, overall, at a dead end when it comes to Pakistan, and that no major policy change is on the horizon.

The latest round of diplomatic bickering was triggered when Admiral Mike Mullen, in his last testimony to Congress in his role as the Chairman of the Joint Chiefs of Staff (Mullen stepped down at the end of September to be succeeded by Army General Martin Dempsey), aired concerns that have been bubbling under the surface for some time but which White House officials have so far kept under wraps. Specifically, Mullen accused the Haqqani network of being the “veritable arm” of Pakistan’s Inter-Services Intelligence (ISI).

“[W]e believe the Haqqani network – which has long enjoyed the support and protection of the Pakistani government and is, in many ways, a strategic arm of Pakistan’s Inter-Services Intelligence Agency – is responsible for the September 13th attacks against the US Embassy in Kabul,” said Mullen. According to the Admiral, ample evidence also points to a Pakistani hand in the attacks against the Inter-Continental Hotel in Kabul on June 28th and the truck bomb that, on September 10th, killed five Afghans and injured 77 US soldiers in the eastern part of the country.

Even though Pakistani officials categorically denied the accusations, Mullen stood by his words. “I phrased it the way I wanted it to be phrased,” he said in a follow up interview with NPR. The administration, instead, was quick to take a step back. Jay Carney, the White House spokesman, said: “It’s not language I would use.”

Such inconsistencies signal either a conflict within the White House on how to address the Pakistan question or a concerted effort to adopt a “good cop, bad cop” script, using certain channels to dispense ‘tough love’ to Islamabad while officially reaffirming the current strategy of engagement.

In either case, it is a fact that the US-Pakistan relationship, which has been rocky for years, began to turn bitter with the Raymond Davis incident (a CIA contractor who shot and killed two Pakistani civilians in Lahore in the spring) and, then, with the US raid that killed Osama bin Laden in May, which was launched from Afghanistan without any advance warning to the Pakistani government.

These episodes reminded everyone that what is seen from Washington as Pakistan’s double play, is for Islamabad simply a matter of pursuing its own foreign policy priorities.

Specifically, Islamabad’s number one goal in Afghanistan is to prevent neighboring India from acquiring too much sway, which, it fears, Delhi could use against Pakistan once the US withdraws. Analysts say that Pakistani authorities consider militant groups such as the Haqqani network as strategic assets, a counterweight to India.

Pakistan’s fear of encirclement by an Afghan-Indian alliance is turning out to be a self-fulfilling prophecy, prompting precisely what it does not want, a closer relationship between Kabul and Delhi.

After years of keeping India at a distance out of the need to assuage Pakistan’s suspicions, President Karzai just concluded a trip to Delhi (which is said to have been in the making for some time), where he signed a strategic partnership in the areas of economics, education, security and politics. The agreement is believed to include increased commitment by India to train Afghan security forces. “The agreement will heighten Pakistan’s insecurities,” Pakistani political analyst and former General Talat Masood told ABC News.

Against this intractable backdrop, the United States appears to have little room to maneuver. Mired in a seemingly never-ending economic crisis, its armed forces overstretched after ten continuous years of military engagement in Afghanistan and Iraq, and preparing for what is gearing up to be a long and highly competitive presidential campaign, the country appears disinterested in foreign affairs, with many people wishing the US would start to disentangle from this difficult region. This is particularly true of President Obama’s own political base and of liberal Democrats in Congress, who are weary of the administration’s progressive shift of political, economic and military resources from Afghanistan to Pakistan.

The US State Department is now considering whether to include the Haqqani network in its list of designated terrorist organizations (as of now only its top leaders are listed). Congress is ever-tweaking its military and economic aid to Pakistan so as to link it more closely to Islamabad’s ability to reign in homegrown terrorism. This, however, is an approach that the US has been pursuing for years and it is unlikely to yield sudden new outcomes. American forces have already been scaling up unmanned drone attacks on Pakistani territory, and could continue to do so, but this is a step that no doubt will only strengthen the anti-American feelings of the Pakistani people. The same is true for CIA-led covert operations. Pakistan has said that it will allow no US boots on the ground.

Officially, the administration plans to stick to the status quo for the time being, while stepping up the rhetoric against Pakistan at the same time. Speaking to reporters in Washington, President Obama said that the White House would “constantly evaluate” the relationship with Pakistan and warned that Islamabad should be “mindful of our interests as well.”

The one issue that many still consider central to the resolution of the Pakistani question, the dispute with India over the fate of Kashmir, has been deadlocked for decades. “I think unlocking Kashmir, which is a very difficult issue on the Pak-Indian border, is one that opens it all up,” said Admiral Mullen in his interview with NPR. But India has no intention of relenting and the US wasted the opportunity it had to sway Delhi in the direction it wants when it signed the US-India Civil Nuclear Cooperation agreement without asking for anything in exchange. As for Pakistan, whichever lever the US might pull will be at least in part countered by Islamabad’s increased reliance on its relationship with China.

For the Obama administration, it looks like whatever successes it scored against al Qaeda, namely the raids that killed Osama bin Laden first and Anwar al Awlaki more recently, are somewhat tempered by the continuously worsening situation in Pakistan, which leaves the White House in a bind. If it wants to leave Afghanistan as planned by 2014, Washington needs to reach a peace agreement with the Taliban. And for that, it needs Pakistan’s help.

Despite all incentives to do so in order to gain control of the foreign policy narrative in anticipation of next year’s elections, the crop of GOP presidential hopefuls has yet to put any new idea on the table in terms of the US-Pakistan relationship. So far the two front-runners, Mitt Romney and Rick Perry, have either pledged a tougher stance on Pakistan without going into any detail (the former), or grossly stumbled when asked about it in one of the recent televised debates of the campaign (the latter).

As things stand, it looks as if there is no political figure of consequence in the US who has anything to gain from raising the Pakistan (or Af-Pak) issue: the stakes are indeed very high for American interests, but policy – and politics – are lagging behind.