The Momentum favors Romney

| SATURDAY, NOVEMBER 3, 2012
The Momentum Favors Romney

By JIM MCTAGUE

Several polls paint a discouraging picture for the Democrats, who continue to be hurt by Obama's weak showing in the first debate. Why the president is rooting for the Redskins.

Early in this election cycle, President Obama's campaign team gambled that he would run fast on a sloppy track; so it engaged in relentless mud-slinging. Obama did run well for the first few furlongs, but his momentum slowed when he turned into the final stretch. Challenger Mitt Romney, who is no stranger to mud-slinging himself, has been coming on strong. He's got the "Big Mo"—momentum. As the contenders sprint to the wire, Romney looks closer to the finish line by a nose.

Romney has been hitting his stride ever since his triumph in the first presidential debate on Oct. 3, in which Obama came across as snide and unprepared. Romney's "Cinderella Man" dominance of that exchange was a shocker: Pundits had predicted that he'd be trampled by Obama, a debating thoroughbred.

Romney's performance impressed many all-important independent voters who'd had no positive impression of him. A focus group of 45 "swing voters" convened in Denver by Democratic pollster Stanley Greenberg to watch that debate found that Romney came across as a strong, likable leader. In the two subsequent debates, Obama was more aggressive, better prepared and more negative, yet he never fully recovered from his thrashing by Romney in the dramatic first round. As of Oct. 30, both have roughly the same favorable ratings, as computed by the Website www.RealClearPolitics.com: 49.7% for the president, 49.9% for the challenger.

On Oct. 3, the day of the first debate, Obama's favorability was 6.6 points higher than Romney's, reports Larry Sabato, head of the University of Virginia's political science department and originator of Larry J. Sabato's Crystal Ball Website (www.centerforpolitics.org/crystalball/).

Scott Eells/Bloomberg News
A Harvard poll finds that voters aged 18-29—a core Obama constituency—are so turned off by Washington that 15% fewer may vote this year than did in 2008.
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Polls contain other ominous portents for Obama. Romney is in the lead in "toss up" states like Virginia (13 electoral votes) and Florida (29), and is within striking distance of Obama in perceived Democratic strongholds like Pennsylvania (20 electoral votes), Minnesota (10), and Michigan (16).

A poll released Oct. 28 by the Minneapolis Star Tribune showed Obama with support from 47% of likely voters in Minnesota; Romney, 44%; the survey's margin of error is plus or minus 3.5 percentage points. In September, Obama had an eight-point lead in the poll. "That's the Catholics coming around to the GOP," says retired GOP demographer John Morgan Sr.

Catholic clergy accuse the president of violating their religious freedom and beliefs by making Catholic hospitals and charities offer contraceptives in employee health-care plans. If Morgan is correct, this bodes ill for Obama in Wisconsin and Iowa, which also have lots of Catholics.

Many voters believe that Obama has failed to fix economic problems left over from the Bush era. The weak economy has checked Obama's charisma.

Morgan's view is that Romney has 249 electoral votes sewed up, versus 154 for the president. There are 538 electoral votes, and a candidate needs 270 to win.

In Ohio, considered an Obama stronghold, a University of Cincinnati poll of 1,141 likely voters shows that the president is favored, 48% to 46%. But factor in the poll's 2% margin-of-error and the race could be a dead heat. Ohio has 18 electoral votes.

ESPECIALLY ALARMING FOR THE DEMOCRATS, a poll released by Harvard's Institute of Politics on Oct. 17 found that an increasing number of 18-29-year-olds—a core Obama constituency—is so turned off by Washington that 15% fewer intend to vote this year than did in 2008. Nonetheless, Jim Messina, who is managing the president's campaign, claimed Wednesday that Obama is ahead or tied in every crucial battleground state—Ohio, Iowa, Nevada, Florida, Colorado, Virginia, Wisconsin, North Carolina, and New Hampshire—based on early balloting and other factors. He also predicted that turnout by Democrats in 2012 will exceed 2008's 51.7% of all eligible voters.

As the conflicting predictions indicate, one thing that this election certainly will do is provide a better idea of which polls and pundits are the most reliable soothsayers.

In Barron'sJuly 23 D.C. Current column, asset manager Reid Holloway predicted an Obama victory, with the president receiving 325 electoral votes versus 213 for Romney. Holloway's formula is based on one he developed to predict market volatility among the S&P 500's market segments. He says he accurately forecast the electoral college outcome for the 2000, 2004, and 2008 presidential elections. His thesis is that because voters have become so closed-minded, Romney can't carry any state that went for Democrat John Kerry in 2004, and Obama can't win in any that went for Republican John McCain in 2008. He also says that individuals and corporations are so hooked on government largesse that Romney's message of "self-reliance" is a non-starter.


Morgan, in our Oct. 15 issue, countered that the U.S. is more Republican than Democratic, as evidenced by the GOP's major victories in both congressional and in statehouse races in the 2010 mid-term election. Morgan predicts that the GOP will pick up at least 10 house seats. Why? Because the party controls more governorships and state legislatures than do the Democrats, and so following the 2010 census was able to draw more new congressional maps.

Democratic demographer Morley Winograd, in the same article, predicted an Obama wave of support propelled by women, young voters, and Hispanics—similar to what the president enjoyed in 2008. Furthermore, he predicted that the same constituency would keep Democrats in power for the next 40 years.

A final predictor: the Washington Redskins, who have a 3-5 record. When they've won the last home game before a general election, the incumbent party usually has held on to power. This Sunday, the Redskins play the hapless 1-6 Carolina Panthers at home—the only really good omen for Obama.

The economic takes are pretty clear: A second term for Barack Obama is unlikely to bring change in any of his policies, many which are anti-business. A first term for Mitt Romney would reverse course and improve conditions for business and investment and, consequently, stocks.
We already know what we'll get from Obama: higher taxes for the so-called wealthy individuals, higher taxes on oil companies, tax breaks for "clean" energy, and new taxes on companies harboring profits overseas. Obama and his advisors don't buy into the theory that lower tax rates result in increased spending and investment and higher revenues. The policy would shrink the deficit, but at a cost to growth—bad for stocks, but good for bonds.

Amazingly, during Obama's first term, the stock market's major indexes rose more than 60%. Then again, the market was fast approaching an 11-year low when he took office.

The Fed's easy money had more to do with stocks' mighty bounce than did Obama.

Conversely, a President Romney would close tax loopholes, which economists say distort economic decisions, and lower tax rates for individuals and corporations. He'd also deal honestly with the country's massive entitlement mess, shrink the size of government, and spike business-killing regulations. That would boost corporate profits, a boost for stocks and bonds.

-- J.M.
Barrons.com 11/3/2012















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