- The precarious state of the economy has eclipsed the presidential election as the principal topic of conversation among politicians in Washington. The shaky condition of Fannie Mae and Freddie Mac (see below) shows how far the subprime crisis goes with the danger of more banking failures threatening the whole economic structure.
- With Sen. Barack Obama moving ahead of Sen. John McCain in our latest Electoral College rundown, the private Republican view is that the focus must be on Obama in the coming campaign for McCain to win. A positive campaign will lose, and the spotlight on Obama must be harsher for McCain to have a chance.
- Former Sen. Phil Gramm is still McCain’s close friend and adviser despite having told too much of the truth in public by saying we are a nation of whiners. Gramm has apologized to McCain, and McCain told him to forget it.
- The irritation by the Congressional Black Caucus over Obama’s pivot to the right is genuine but not significant. Congressional blacks are truly irritated that Obama is not buying into their left-wing agenda, but they have no place to go. Jesse Jackson’s unintended outburst is reflective of CBC irritation and probably a net political gain for Obama. Contrast with Jackson helps Obama with white voters.
- Obama has made a rare political mistake in seeming to say it is more important for the population to learn Spanish than for immigrants to learn English. The English language issue is an important one, especially with white middle-income voters, which is Obama’s potentially fatal weak spot.
Electoral College: The Electoral College swings to a slight Obama advantage as New Mexico now appears to be in the Obama column.
- While state-by-state polls show a large Obama advantage, most of them overstate Obama’s chances and understate the vote McCain is likely to get.
- Still, McCain has good reason to worry—indeed, more worrisome than his slight deficit in the Electoral College is the closeness in traditional Red States such as Montana, North Dakota, and Virginia. If he is at a cash disadvantage, he can’t afford to play defense in so many states.
- The major X-factor in this contest is Obama’s race, combined with his age—as well as the lack of exposure of his liberalism. Those question marks means he cannot be confident in any state where he is currently polling significantly below 50%, however low McCain is.
- Former Rep. Bob Barr (Libertarian) is currently registering near 10% in many states. If history is a guide, this will drop quite a bit by Election Day, to below 1% in many states. Protest voters on both sides will diminish in numbers as the prospect of a President Obama or President McCain becomes more realistic.
- The battlegrounds remain Lake Erie and the Mountain West, but Obama could succeed in putting in play the northern Plains and the Southeast (from Virginia through Georgia).
- Below, our updated analysis on states that have shown movement since our last count.
Obama 273, McCain 265.
McCain Base: (18 States, 142 Electoral Votes) This is shrinking far more rapidly than McCain’s overall Electoral College total. That makes his fundraising disadvantage even that much more worrisome.
Obama Base: (14 States, 187 Electoral Votes) McCain’s only hope for these states rests on the X-factor: how will old white Democrats respond to a liberal, young, black candidate?
Colorado (9): Obama still hasn’t gotten close to 50% in most Colorado polls, which is bad news for him. The good news for Obama is that the GOP brand here is very unpopular, as exemplified by the U.S. Senate race, which could become a Democratic blow-out. Add in the rock-concert-like convention in Denver, and this state tilts towards Obama. Leaning Obama.
Georgia (15): Many Republicans are worried that Obama could win Georgia: Barr could gather a good chunk of the vote, black turnout is expected to be high, and evangelical enthusiasm for McCain could be low. McCain may have to work to hold onto the Peach State, but Obama’s chances are generally overstated—Barr’s early poll showings are far higher than he will realistically get, and higher black turnout will be offset by even more conservative white Democrats moving into the R column. Leaning McCain.
Louisiana (9): Early on, Obama had some hopes for Louisiana, but those were illusionary. McCain leads significantly in all polls, and Obama has not made inroads into the white vote. Strong McCain.
Maine (4): Early on, it seemed possible Obama might have to work to win this state. Right now, it looks like an Obama blowout. Strong Obama.
Missouri (11): Zogby shows Obama ahead here while Rasmussen shows McCain leading. No poll shows Obama very close to 50%. Missouri could very well be the bellwether of an Obama landslide, but right now it stays in McCain’s column. Leaning McCain.
Montana (3): It sounds strange at first, but Montana is in play. Obama leads in the polls, and Democrats there are generally doing much better than Republicans. The Republicans’ loss of their limited-government reputation hurts McCain, while Obama’s reputation as a pragmatic reformer helps. If the GOP can paint Obama as a liberal, Obama’s support will dry up (except in liberal Bozeman), and McCain should win. But if McCain has to travel this state to hold onto it, that’s bad news. Leaning McCain.
Nevada (5): Nevada is looking stronger for McCain now than it was six weeks back. Zogby and Rasmussen surveys both show Obama down near 40%—and this is after he already fought hard to win the caucus there. McCain has much more upside here. Leaning McCain.
New Mexico (5): We swing New Mexico from the McCain column to the Obama column this week, which would be enough to swing the election. McCain has represented Arizona, next door, for two decades, but that apparently hasn’t endeared him to the denizens of the Land of Enchantment. Obama leads big, as in many states, but here he is posting scores near 50%.
This reflects a few important factors. Most importantly, the GOP hope to win the Hispanic vote—considering McCain’s pro-amnesty stance and the traditional difficulty black politicians have with Hispanics—looks like fantasy. Even in New Mexico, where the Hispanic vote may be more conservative, Democrats appear to be dominating on this score.
More importantly, the GOP is truly suffering out West, not only on the Pacific Coast, but from North Dakota to Colorado to Arizona, including New Mexico. This is the consequence of the GOP abandonment of the limited government talk of 1994.
Rep. Tom Udall (D) is the heavy favorite in the Senate race, in part because of the GOP decline here.
If McCain makes a hard play for the Hispanic vote, he is probably asking for trouble. As it stands now, he should probably look for a way to win that doesn’t include New Mexico. Leaning Obama.
North Carolina (15): As with Georgia, the hype is that McCain needs to worry about North Carolina. Obama won this state huge in the Democratic primary, and McCain is not the natural fit for Southern Republicans. Like Georgia, North Carolina isn’t a gimme for McCain, but if he’s fighting to defend it, the cause in deep trouble. Leaning McCain.
North Dakota (3): As with Montana, North Dakota is surprisingly in play. Obama’s lead in the polls is partly the result of his having campaigned here while McCain has not. It is also partly the result of the GOP problems here broadly and the Democratic success.
McCain is still the favorite, because of Obama’s liberalism will hurt him when policy positions become more pertinent. For now, this state is unnervingly close. Leaning McCain.
Ohio (20): No matter what, Ohio can’t escape its role as battleground. This year, however, McCain seems to be slightly stronger here than Bush was in 2000 and 2004. Central to McCain’s success is Obama’s reputation among "bitter" gun owners and religious voters—Hillary’s Democrats. Much of Obama’s campaign will be an outreach to bitter Ohio Democrats, but for now, the Buckeye State tilts Republican. Leaning McCain.
Virginia: Virginia is possibly the most talked-about Red state to be making a pilgrimage to Blue. Given the Democratic takeover of the governorship, a Senate seat, and probably the other Senate seat, it seems fitting that Obama should have a strong play for Virginia’s 13 electoral votes.
But given the Southern nature of much of this state, and the high portion of undecideds, McCain should still feel confident about the commonwealth. Leaning McCain.
Financial: The collapse of Freddie Mac and Fannie Mae stocks last week spurred Washington into action this week.
- The Treasury Department’s bold push for a bailout of government-sponsored mortgage entities reflects a few noteworthy political realities: President Bush has relinquished some control over economic policy to Treasury Secretary Henry Paulson; and Republicans are more grounded in big business than in limited government.
- The idea of broad reform of Fannie Mae and Freddie Mac was behind the scenes dismissed by Paulson as "too political," while some sort of bailout—not explicitly articulated as of Wednesday morning—was considered pragmatic by the administration. The Republican leadership on Capitol Hill ascribed to this viewpoint.
- For the rare conservative dissenter—such as Sen. Jim Bunning (R-Ky.), who objected to expanding the authority of the Federal Reserve, or Sen. Jim DeMint (R-S.C.), who objected more broadly to bailing out the government-sponsored entities—there was mostly derision from both sides of the aisle.
- Republicans, for the most part, fear the label of "doing nothing" in the face of a crisis—mortgages. Democrats, meanwhile, appear fearless in the face of apparent corruption—the fact that Bank of America and Credit Suisse wrote the mortgage bailout bill, and the patronage machine of Fannie Mae.
Energy: Democrats are beginning to retreat on energy policy after preaching energy conservation, subsidies for alternative energy, and tax-hikes on oil companies as the solution to high gas prices.
- After failing to win hearts and minds at the pump with their green rhetoric, the leadership has turned their sights to regulating oil speculators and releasing oil from the strategic reserves. While "Oil Speculators" sound like a worthy bad guy, it’s not politically strong enough among voters angry about high gas prices.
- In contrast, the Republicans’ three pronged energy solution is this: drill, drill, drill. While this solution is popular in the polls and among GOP constituents, it does not offer short term relief. The Democratic leadership will thwart GOP drilling votes as long as they can to avoid recorded votes on such legislation. Prior to the Independence Day recess, Appropriations Chairman David Obey (D-Wis.) shut down the appropriating process to save Democrats from having to vote on GOP offshore drilling amendments.
- GOP leaders are comfortable pounding away on energy, but success is unlikely, considering they couldn’t expand drilling while in the majority.
- On the Senate side, conservatives express displeasure that the party leadership is not pounding the drilling issue as hard as the House side is. From a distance, GOP faith in drilling as a defining issue resembles Democratic hopes in 2002 pinned on anger towards corporate malfeasance: is it really enough to nationalize a race and swing congressional races?