Onward, Jon Huntsman!

[Crossposted at Margin of Σrror]

Just a few moments ago, Jon Huntsman announced that he had secured the Boston Globe’s endorsement. Given that Huntsman has tried to turn New Hampshire into his firewall for the nomination, he must have a new spring in his step tonight. How have his chances changed, though? Probably not much.

Huntsman is trending in the wrong direction. In the past few days, Huntsman’s poll numbers have been dropping, not rising as one would expect as the race tightens. Consider the following graph from Charles Franklin at Polls and Votes:

Could the Boston Globe endorsement change the Huntsman momentum in the positive direction? Sure. The Globe endorsed John McCain in 2008 at a time when Mitt Romney dominated the polls. After the endorsement, however, McCain rises precipitously in surveys and eventually wins the primary.

We must be cautious, however, in drawing too close a comparison. Consider, first, that the Globe endorsement came much earlier in the race, giving McCain three weeks to overtake Romney. Second, McCain had a history with New Hampshire, having won the primary in 2000. Third, McCain was already trending upward at the time of the endorsement. Fourth, Romney had spent a lot of time and money in Iowa, and was greatly weakened when he lost to Mike Huckabee.

Huntsman faces a much more daunting challenge. The former Utah governor needs to turn his polls around quickly and with little cash on hand. He also needs to break through the media narrative of Santorum’s surge and Romney’s intractable strength. While the Globe’s endorsement doesn’t hurt Huntsman’s chances, I can’t see a scenario where it helps him enough to make much of a difference.

What would a bump look like, if it comes? Given similarities in the profiles of Romney and Huntsman, a bump in Huntsman’s numbers would probably need to come at Romney’s expense, which seems unlikely. My colleague Harry Enten pointed out earlier today that Romney voters are not fickle. As Harry argued, Romney leads the field “with 59% of the vote among those in the latest Suffolk Poll who said they were unlikely to change their mind or were sure about their voting choice.”

Perhaps Huntsman can build a coalition amongst undecided voters. The latest Suffolk Poll shows that 17 percent of respondents are undecided, and 57 percent of those are liberal-to-moderate. If Huntsman wins over all of those voters, with the help of the Globe’s endorsement, Huntsman could add almost 10 percent to his current showing of about 7 percent. In that rosy scenario, Huntsman would still only pull about 17 percent of the vote, still possibly insufficient to top Ron Paul (FiveThirtyEight projects Paul to take 24 percent), much less Romney (43 percent). And that ignores the fact that Huntsman is really in a second-tier tussle with Santorum and Gingrich; if one of these guys manages to come close to Huntsman, it dampens the upside of Huntsman beating expectations.

Even if Huntsman bounces up to second place, it’s hard to see how he translates that into momentum beyond the Granite State. Huntsman will not play well in South Carolina and probably not in Florida, meaning that a still-weak Huntsman would need to hold out until early February and hope for a big showing in Nevada and Maine.

It’s not impossible that Huntsman could still make a sizable impact on the nominating process. But if anything is going to stop Romney, it seems like it will be a conservative alternative, not a moderate Romney look-a-like who, in the best scenario, will take second in New Hampshire.

Are Caucus-Goers Different?

[Crossposted at Margin of Σrror]

John Sides posts over at The Monkey Cage some recent insight on the average Iowa caucus-goer. According to Eitan Hersh, a political scientist at Yale University, caucus-goers are not more extreme or partisan than primary voters. They are, however, more likely to be civically-engaged. This is because caucuses are civic events, not push-a-button vote-casting obligations. As such, we cannot think of the benefits of participation as simply performing a civic duty, but also the excitement of engaging with the community. As Hersh writes:

Caucuses, remember, take place mostly in rural states in the dead of winter; they provide a rare opportunity in the calendar for neighbors to gather and reconnect. And there’s also a potential social cost for abstaining – if your neighbor is an activist who asks you to attend, and you’re a no-show, you’ll have to answer for it in the morning.

I think Hersh makes a good case. Part of the reason caucus-goers might be branded as more extreme is two-fold. First, social conservatives and evangelicals tend to push similarly minded candidates into the spotlight in Republican contests (à la Pat Robertson (1988), Mike Huckabee (2008) and most likely Rick Santorum (2012)). The caucuses can also give lesser-known (and often less mainstream) candidates a shot at the spotlight. As a result, many journalists conclude that caucus-goers must be more dedicated, partisan and extreme than primary voters, ceteris paribus.

Hersh gives good reason to question this conclusion. Hersh only looks at the 2008 election, which could be anomalous. Further examination would likely find, however, that Hersh’s conclusions are pretty spot-on.

Behind the Numbers: Hodes Faces Grim Odds

Back in December, I wrote a piece discussing the New Hampshire senate race between Paul Hodes (D) and Kelley Ayotte (R), Ovide Lamontagne (R) or Bill Binnie (R). “Considering the awful assessment of the economy,” I wrote, “and that Governor Lynch’s net approval rating is -3 percent, despite the fact that he won reelection with more than 70 percent of the vote, I’m surprised that Hodes’ numbers aren’t worse.”

That was true then, but now it’s a different story.

Rasmussen released a poll (see the frequency questionnaire) two days ago. In it, Hodes trails all three potential Republican challengers.

	April 7, 2010	March 8, 2010	February 10, 2010
Kelly Ayotte (R)	50%	47%	46%
Paul Hodes (D)	35%	37%	39%
Some other candidate	4%	4%	3%
Not sure	11%	12%	13%

aaa

	April 7, 2010	March 8, 2010	February 10, 2010
Ovide Lamontagne (R)	44%	38%	38%
Paul Hodes (D)	39%	42%	44%
Some other candidate	7%	5%	4%
Not sure	11%	15%	13%

aaa

	April 7, 2010	March 8, 2010	February 10, 2010
Bill Binnie (R)	49%	46%	42%
Paul Hodes (D)	37%	36%	41%
Some other candidate	4%	4%	3%
Not sure	10%	14%	13%

Note that Hodes is losing ground across the board – he’s down 4 points against Ayotte, down 5 points against Lamontagne and down four points against Binnie since February. Granted, these numbers are within the 4-point margin of error; but the fact that they are so consistent across these three head-to-head matchups tells me that Hodes really is losing ground.

But it gets worse for Hodes. Lynch’s numbers are back to a respectable range, with 59 percent approving and 39 percent disapproving (netting +20 percent). (President Obama fares worse with 47 percent approve, 50 percent disapprove.) Hodes, on the other hand, is moving in the wrong direction.

And to top it off, the intensity factor strongly favors the Republicans. On favorability, 46 percent of respondents have a favorable impression of Hodes and 46 percent have an unfavorable impression of him. But 19 percent say “very favorable” whilst 34 percent say “very unfavorable.”

If you care to look further for bad news for Hodes, here are two more nuggets: 38 percent of respondents oppose a plan to repeal the health care reform legislation (for which Hodes voted); 58 percent favor its repeal. (On intensity, 47 percent “strongly favor” repeal and 32 percent “strongly oppose”).  And almost half of respondents (49 percent) see themselves as ideologically closer to the average Tea Partier than to President Obama.

The election is still far off, and there’s a lot to be said for that. But since December, Hodes has failed to make any positive movements. With health care likely being the only thing many New Hampshire voters will know about him, the picture is grim for Hodes’s chances in November.

Behind the numbers: Hodes trails Ayotte

Democratic operatives are worried at the moment. After a brutal summer of being flogged at tea parties and town halls, the untouchable party of the 2006 and 2008 watershed elections is bleeding. Political scientists and electoral junkies expect the Democrats to lose seats – and have all along. In fact, only twice in the past century has the party of the president not lost seats in its first midterm election. (The most recent example was 2002, just more than a year after the 9/11 attacks.) But the Democrats are worried that they’re more vulnerable than the historical average. And they’re probably right.

Across the board, President Obama and the Democrats possess a declining brand. Per usual, the Republicans are out-maneuvering their rivals. The Democrats are calling foul – and let’s not forget that they have a point. The ridiculousness of death panels, deep Medicare cuts and universal coverage of illegal immigrants is beyond basic conceptions of ethical play. But who cares? Politics is rough-and-tumble, and when you have to explain away myths, you’re losing the PR war. The Republicans know that and use it to their advantage.

Here in New Hampshire, we have a unique opportunity to observe a highly competitive race for U.S. Senate live and in person. Paul Hodes ‘72, the twice-elected Congressman from New Hampshire’s second district, threw his hat into the ring to replace Senator Judd Gregg, a Republican retiring at the end of his term in 2010. Kelly Ayotte, the state’s Attorney General until July when she retired, is presumed to be Hodes’ Republican challenger next November.

A recent poll by the American Research Group puts Ayotte ahead of Hodes by seven points, 41 percent to 34 percent, marginally outside of the poll’s MoE of 4.1 percent. Rasmussen shows similar results, with Ayotte besting Hodes 46 percent to 38 percent.

Looks bad for Hodes (and the Democrats), right? Sort of.

First, the bad news. Hodes, who as a sitting Congressman comfortably won reelection in 2008 ,should be seeing higher numbers – if we control for the current climate, at least. Rasmussen’s internals show Hodes’ net favorability ratings in the gutter, at -4 percent (19 percent very favorable minus 23 percent very unfavorable). Ayotte fares much better at +16 (22 percent very favorable, 6 percent very unfavorable). According to ARG, Ayotte also enjoys a 17-point lead over Hodes among “Independent” voters. Not a great position for Hodes.

But not so fast. Looking closer, we would also see that almost half of independent voters in the ARG survey are still undecided. And in a recent poll by the UNH Survey Center, only 6 percent of respondents had definitely decided for whom they would vote.

Curiously – (sarcasm) – the approval numbers for Hodes closely follow trends in public opinion on the economy. As in the 2008 elections, voters are, perhaps more so now than at any other point in recent memory, voting almost exclusively on macroeconomic perceptions. Only 4 percent of New Hampshire residents think the economy is strong, while 47 percent say it’s “poor. “ And New Hampshire voters are marginally pessimistic about the ability of the government to appropriately respond to the crisis; 51 percent fear the government will go too far in trying to fix the economy.

Across the board, the Democrats are suffering from sociotropic views of the economy. ARG shows that 37 percent of residents disapprove of Governor Lynch’s (D) job performance – the same number who disagree with his handling of the economy. Obama faces a similar fate.

Considering the awful assessment of the economy, and that Governor Lynch’s net approval rating is -3 percent, despite the fact that he won reelection with more than 70 percent of the vote, I’m surprised that Hodes’ numbers aren’t worse.

Granted, optimism because the awful news isn’t as bad as it could be seems a bit feeble. But it’s too early to be too nervous about these polls.

Most voters don’t know for whom they’ll eventually cast a ballot. Neither Hodes nor Ayotte enjoys particularly wide name recognition across the state. Ultimately, I see this race following broader economic trends. If Democrats generally can exonerate their brand and induce some semblance of economic recovery, Hodes will get to play junior Senator. If the economy stays depressed and health care reform gets choked in Congress, Ayotte’s Republican-cum-libertarian message will play well here.

Following Hodes’ campaign should give us a general idea of how worried Democratic operatives should really be about their 2010 chances. I’m hesitantly optimistic.

Current prediction: Probability of Hodes winning at 55 percent. (TOSSUP)

An Over-the-Counter Solution to Derivatives

Good news, Barack: remember how you told Senator McCain during the campaign that a president should be able to multitask? Well, let’s see how well you can multitask: health care debate or no, it’s time to tackle financial regulation.

Of course, overhauling how we regulate capital markets and business-as-usual on Wall Street is a big pill to swallow. So let’s do this one dose at a time. First up should be derivatives.

The derivatives market has seen some PR setbacks recently. Apparently the market tools once praised as integral to the booming American economy from 2002 through 2006 are now viewed more like financial weapons of mass destruction. (At least President Bush managed to find some, right? But I digress).

We need to understand that it’s not derivatives themselves that cause the problems; it’s the ways in which they’re traded. The notional amount (that’s to say, the market value) of outstanding derivatives is about $1,000 trillion, but about 59 percent of that is traded in Over the Counter (OTC) trades – meaning traded by private negotiation instead of in exchanges, like the Chicago Mercantile Exchange. There’s remarkably little transparency in these exchanges, and virtually no regulation of how they should work. And it’s time to change that.

As is stands, dealers aren’t required to disclose the sale price on a derivative, which makes it hard for the market to value the assets. Likewise, there is no public disclosure to show how concentrated risk is in parts of the market, which limits market actors’ access to information, likewise limiting their ability to make good decisions.

And finally, the firms are undercapitalized. When Bear Stearns and Lehmen Brothers struggled, counterparties to their risk flew to other firms. As the hardships emanated through the system, firms’ credit ratings fell – increasing their collateral requirements for credit – and their capital stores dried up. Bad combination.

By increasing transparency and increasing capital reserve requirements, we can avoid a crisis like the one that plagues us now. President Obama, you’re already playing doctor with the health insurance system. There’s another patient waiting for you in the next room.