Intrade Odds: Newt Gingrich Narrows the Gap

It has been barely a week since we last looked at the Intrade market on the 2012 Republican nomination, but much has changed. The influence of the recent poll numbers with Newt Gingrich in the lead can be seen clearly now. Mitt Romney is still leading on the Intrade market, but it's much closer than before.

Romney has 46.0%, while Gingrich is at 31.1%. No other candidate is in the double-digits, making this effectively a two-man race--just as we saw with Rick Perry and Romney back in September. The gap between Romney and Gingrich shrank dramatically in the last week. When we last checked, Romney was ahead by 36 points. Now he's ahead by just 15 points. Over half of the lead was lost. This is the first time Romney has dipped below 50% since he began dominating Perry at the end of September.

Of the minor candidates, Ron Paul is at 6.4% and Jon Huntsman is at 8.0%. No other candidate has broken the 5% mark. Huntsman's odds presumably rose as a result of a perceived improvement in his last debate, but is otherwise inexplicable: Huntsman currently fails to get even third place in a single poll--even in New Hampshire, the only state where he's running.

The Intrade markets for individual state contests has also changed markedly. Gingrich is now the clear favorite in Iowa, with 58.3% to Romney's 14.6%. Exuberant Paul investors have given him 21.0%, which puts him in second. In New Hampshire, Romney continues to dominate at 70%. Similarly, Gingrich now dominates in South Carolina at 68% to Romney's 22%.

There's been a shift in the Florida market, where Gingrich now leads Romney 60% to 35%. But if one were to take the state markets at face value, Gingrich should be the overall frontrunner to win, rather than Romney. On the other hand, Intrade investors may foresee a drawn-out campaign where Romney's superior infrastructure trumps Gingrich's wins in the early states.

Herman Cain Quits the Race

Cain

Herman Cain announced today that he has decided to quit the race. As Elephant Watcher predicted several days ago, the most recent allegations against Cain doomed his campaign once and for all. It's one thing to deny an accusation, or even two accusations. But at some point, it becomes a case of "everyone is lying except me." Even Cain's supporters could no longer continue, and Cain's family likely encouraged him to withdraw from the race.

Though many have declined to run, Cain is only the second candidate to quit the Republican primary (the other being Tim Pawlenty, who inexplicably dropped out in August after finishing third in the Iowa straw poll). The Campaign Status page has been updated accordingly. The field has now been narrowed to seven candidates.

Newt Gingrich is the chief beneficiary of Cain's withdrawal. Although Cain's decline in the polls already helped Gingrich, who received most of Cain's former supporters, actually dropping out has an impact of its own. Even a candidate who's dead in the water can still receive 5-10% of the vote. With Cain's departure, even those votes will need to go elsewhere. It's also possible that Rick Santorum could benefit from the most hardcore Tea Partiers--those who see Gingrich as too much of a RINO.

When put into historical perspective, the destruction of Cain will be regarded as a victory for the primary process. Cain was given ample opportunity to display his best qualities, but his weaknesses were also vetted. Voters had the ability to learn about Cain and discover why he should never be a general election candidate. It's always best to learn that before a candidate becomes a nominee, rather than afterward.

2012 Republican Primary in Review: November 2011

Each month, Elephant Watcher recaps the activity that occurred in the Republican primary during the previous month. Follow these links to read earlier recaps: May, June, July, August, September, October.

The month of November saw the decline of Herman Cain, the rise of Newt Gingrich to the lead in the polls, and the annihilation of Rick Perry.

As the month began, the story dominating the political headlines was the Cain sexual harassment scandal. Though Republican voters were highly resistant to believing that Cain was guilty, Cain became vulnerable, and some of his supporters began switching over to the Gingrich camp. At the same time, Cain proved incapable of discussing foreign policy issues. To make matters worse, two of the three debates (on November 12th and 22nd) were focused entirely on foreign policy. Cain's numbers eroded.

Perry was already weak when November began. Cain had taken over the Tea Party segment of the Republican Party. But Perry absolutely finished himself off at the November 9th Republican debate, where he made an extraordinary gaffe by forgetting his own three-point list. Perry didn't quit the race, but he may as well have.

As the month wore on, the Tea Party segment of the Party and the Anti-Romney contingent increasingly gravitated toward Gingrich. They did not take a closer look at any of the other candidates; they all failed to gain traction. Mitt Romney retained his stronghold in New Hampshire, according to the polls. But as soon as Cain fell in Iowa and South Carolina, Gingrich picked up the slack in those states. The debates assisted Gingrich, who was as comfortable discussing foreign policy as Cain was uncomfortable. Gingrich's rise occurred even more rapidly than Cain's had during October.

At the close of the month, new allegations surfaced about Cain having a long-term affair with a woman who was willing to speak publicly about it. Cain did not drop out of the race, but admitted he was considering it. Cain's supporters--already buckling--then broke. Cain's numbers appeared ready to collapse as precipitously as Perry's had. All indications were that Cain's supporters would flock to Gingrich as the last remaining alternative to Romney.

But as November came to a close, the situation was not as bright for Gingrich or as dire for Romney as the polls made it appear. Gingrich remained completely unvetted, having not been attacked by his competitors or examined by the media. A month remained before the Iowa Caucus for Gingrich to fall under the weight of his personal and political baggage. Romney, having already been vetted (multiple times), remained secure in New Hampshire and the favorite to win the nomination. Elephant Watcher calculates that Romney's odds of winning the Republican nomination are currently 70%.

New Allegations Doom Herman Cain

Cain

A month after the original allegations of sexual harassment surfaced, Herman Cain appeared to be surviving, if not weathering the storm. His support was on a gradual decline--a decline which may have been more a result of Cain's foreign policy gaffes than his scandals. Though some of Cain's support was shifting to Newt Gingrich, Cain still polled at substantial numbers, particularly in Iowa and South Carolina. He might not have been able to win those states, but he could at least split some of the potential support for Gingrich and play a role as an Anti-Romney.

Now it appears Cain's campaign is in ruins. A woman came forward claiming a 13-year affair with Cain. She was able to produce some evidence of a personal connection to Cain, which Cain did not deny. Cain did deny that the affair took place. Unfortunately for Cain, this was one denial too many. Only the most fanatic Cain supporters will continue to believe that he is a serviceable general election candidate.

Early reporting suggests that Cain is considering whether or not to drop out of the race. Even if he does not quit, the fact that he considered it will also be counted against him. Herman Cain's odds of winning the nomination are now 0%, according to Elephant Watcher's most recent recalculation. Though Cain was at one point leading all of the national polls (and Iowa and South Carolina polls), Elephant Watcher never gave Cain more than a 5% chance of winning the nomination. Cain was weighed down too heavily by his inherent weaknesses as a candidate. Now those weaknesses have doomed his campaign.

Ironically, the person likely to benefit most from Cain's demise is Gingrich, who admitted to having affairs during both his first and second marriages: The Cain supporters who already left Cain largely went to Gingrich, and Mitt Romney obviously prefers to split his opponents' vote as many ways as possible. Cain's further drop is critical because it will push his numbers below the threshold at which his support will disappear entirely. Voters tend to abandon a candidate if his vote is not above, say, 10%, so that they may coalesce around their second choice.

Gingrich continues to be weighted down by issues of his own. Though he has inherited Cain's lead in the polls, and while he is better suited to win New Hampshire votes than Cain was, Gingrich is completely unvetted. No candidate has yet attacked Gingrich. For Gingrich's odds to rise with his poll numbers, he must first demonstrate that he is capable of surviving the same level of scrutiny that destroyed Cain.

Newt Gingrich Continues Rise on Intrade; Romney Falls

A few weeks ago, we took a look at the Intrade market on the 2012 Republican nomination. Since then, another debate was held and much buzz about Newt Gingrich's candidacy has buzzed. How has this affected the Intrade investors' perceptions of the race?

It's clear: Newt Gingrich's odds have risen at the expense of Mitt Romney's. Romney has finally fallen from his peak at about 70% and now stands at 57.0%. This is the first time Romney's odds have moved downward since the rise of Rick Perry in August. The Intrade investors never bought into the Herman Cain mania that swept the primary for about a month. But they're taking Gingrich more seriously.

Gingrich has risen to 21.1%, up from about 14% two weeks ago. A few weeks before that, Gingrich was in the low single-digits. It's worth noting that despite Gingrich's lead in the national polls, the Intrade market still has Gingrich a nearly 3:1 underdog in the race. Thus, they're following the polls, but they're taking them with a grain of salt. But unlike Cain, they think Gingrich has a real chance to win.

Meanwhile, the rest of the field is in the low single-digits. Ron Paul and Jon Huntsman each rose from 3-something percent to about 5.5%, apparently reflecting what investors perceived as good debate performances. No other candidate has climbed beyond 3%.

Where is Gingrich getting his strength in the early states? The Intrade market on the Iowa Caucus has Gingrich ahead of Romney, 35% to 25%. New Hampshire is still overwhelmingly Romney territory with 77%; Gingrich is at 12%. South Carolina has Gingrich and Romney nearly tied at 35%, but Florida has Romney the favorite at 50% to 24%.

Overall, the investors believe Iowa is a close race, with the edge going to Gingrich. New Hampshire is Romney's firewall, making him the only candidate guaranteed to win one of the early primaries. They have South Carolina at a push, perhaps hedging because there's been little polling there. Florida, which is sort of a tie-breaker, leans toward Romney as the overall odds for the nomination do.

Is Mitt Romney Electable?

Romney

For quite some time, Mitt Romney has generally been perceived as the most electable candidate in the Republican field. Although there were several potential candidates who were perceived as electable (e.g. Tim Pawlenty, Mitch Daniels, Chris Christie), they left the race or chose not to enter. Of the remaining candidates, only Jon Huntsman joins Romney in the "highly electable" category. But since Huntsman is in Romney's shadow in New Hampshire, Romney is essentially in a category all his own.

But is this analysis correct? Or has the conventional wisdom overestimated Romney's electability?

Earlier this month, we considered whether Newt Gingrich is electable. In the match-up polls conducted so far, Gingrich trailed Barack Obama badly. Of all the candidates, Romney has done the best in the match-up polls, and he is the only one to get close to Obama.

The following are all of the Romney vs. Obama match-up polls conducted during November:

Romney vs. Obama
11/22 Romney 38, Obama 44 (-06) -- Rasmussen
11/20 Romney 44, Obama 45 (-01) -- Quinnipiac
11/15 Romney 44, Obama 42 (+02) -- Fox News
11/14 Romney 47, Obama 49 (-02) -- Pew Research
11/13 Romney 51, Obama 47 (+04) -- CNN
11/10 Romney 42, Obama 43 (-01) -- Rasmussen
11/10 Romney 44, Obama 48 (-04) -- McClatchy/Marist
11/09 Romney 43, Obama 49 (-06) -- Politico/GWU
11/05 Romney 43, Obama 49 (-06) -- NBC/WSJ
11/03 Romney 47, Obama 46 (+01) -- ABC/Wash Post
11/03 Romney 44, Obama 43 (+01) -- Reuters/Ipsos
11/02 Romney 41, Obama 42 (-01) -- Rasmussen

While Gingrich had averaged about ten points behind Obama, Romney averages about a point and a half behind Obama. Since the general election will not take place for nearly a year, it's also worth looking at the previous months for more data. Consider the following summary how the match-up polls fared since June of this year, when both Gingrich and Romney were in the race. Romney was polled more frequently than Gingrich and did much better against Obama:

In 18 match-up polls, Gingrich was tied or won in 0 of them (00%). Gingrich pulled within 5 points of Obama in 2 of the polls (11%). In 59 match-up polls, Romney was tied or won in 21 of them (36%). Romney pulled within 5 points of Obama in 48 of the polls (81%).

As a further illustration, consider the polling done in New Hampshire by the University of New Hampshire about a week ago. For the state of New Hampshire only, Romney beat Obama by 3 points. In the same poll, Gingrich lost to Obama by 12 points.

What about the effects of a general election campaign? Were Romney to win the Republican nomination, his approval would improve dramatically. After the primary, the winner always enjoys a "rally around the candidate" effect. Romney would also be able to introduce himself to the American public at large; so far he's only campaigned heavily in New Hampshire. Judging by his performance this time around (which is considerably better than his run four years ago), Romney's numbers would improve further. This would put Romney comfortably ahead of Obama.

Romney would also lose support as a result of negative campaigning against him. Unlike Gingrich, however, most of Romney's "negatives" are already priced in, as voters are familiar with the "flip-flopper" attack against him. What are not priced in yet are the attacks against his tenure at Bain Capital, where Obama will claim Romney fired people; unknown is the effect of Obama's allies playing "the Mormon card."

Where does that leave us? The net effect would still leave Romney ahead. Unlike Gingrich, Romney would have one final trump card to play: Marco Rubio is almost certainly going to be Romney's VP nominee. For reasons which will be explored when the primary is over, Rubio would uniquely boost the numbers of the presidential ticket.

Thus, the conventional wisdom proves to be correct in this case: Romney would be by far the most formidable challenge to Obama in the general election. If Romney wins the nomination, it will be in large measure because voters recognize this fact.

Newt Gingrich Takes the Lead in National Primary Polls

Although national primary polls do not reflect the actual state of the race like early state primary polls do (the outcomes of early contests influence later ones, candidates are not campaigning in the later states, voters in the later states are not paying close attention yet, etc.), they can be useful to look at occasionally. Candidates do pay attention to the national primary polls and sometimes develop their strategies based upon them. For instance, if they see a frontrunner developing in the national polls, they may begin to attack him. The media also like to look at national polls and may create narratives based on them.

For an example of the latter, note that the "Herman Cain is falling" narrative reflects the national polls much more than the polls in Iowa, South Carolina, and Florida, where Cain has still shown strength of late. Granted, there has not been sufficient polling in South Carolina and Florida over the past few weeks, so any new developments may be caught in the national polls first.

The following are the most recent polls taken nationally for the Republican primary:

National Primary Polls
11/20 Gingrich 24, Romney 20, Cain 17, Perry 11 (CNN)
11/20 Gingrich 26, Romney 22, Cain 14, Perry 06 (Quinnipiac)
11/17 Gingrich 22, Romney 21, Cain 16, Paul 09 (Gallup/USA Today)
11/15 Gingrich 23, Romney 22, Cain 15, Paul 08 (Fox News)
11/14 Romney 23, Cain 22, Gingrich 16, Perry 08 (Pew Research)
11/13 Romney 24, Gingrich 22, Cain 14, Perry 12 (CNN)
11/13 Gingrich 28, Cain 25, Romney 18, Perry 06 (PPP (D))

The first thing that the reader should notice is that Newt Gingrich has taken the lead. The second thing he should notice is that Gingrich is only slightly ahead of Mitt Romney. Romney is within the margin of error in some of the polls, and indeed is in first place in some of the polls taken a week ago.

Next, the polls clearly show Cain in third place, several points behind Romney and Gingrich. This leaves the impression that Cain is a spent force, doomed to decline. But Cain's strength is frontloaded in Iowa and South Carolina. Unless or until Cain falls even further, Cain remains a factor. Specifically, he's splitting the Anti-Romney vote with Gingrich.

Over the next few weeks, Elephant Watcher will be paying close attention to whether Cain falls into oblivion. If not, it could represent the Tea Party purists finding fault with Gingrich. Like Romney, Gingrich's conservatism may be called into question. The voters who don't care about electability may hold onto Cain. Those who simply want an Anti-Romney will show less resistance and will jump easily from Cain to Gingrich.

It should be noted that Gingrich's strength is overestimated in the national primary polls because he has not been attacked or vetted yet. Once he comes under the scrutiny of the media and the other candidates, his numbers are likely to fall. In mid-October, we explained some of Newt Gingrich's vulnerabilities. Voters have not taken these into account yet. By contrast, voters have already taken Cain and Romney's weaknesses into account. When a candidate reaches proper frontrunner status (as Romney, Perry, and Cain did earlier this year), all of his opponents will attack him during the debates. Only Romney managed to survive the vetting process, and now it will be Gingrich's turn.

Who Won the Republican Debate on November 22nd?

Tonight's debate was a split decision: Newt Gingrich decisively won the first half, and Mitt Romney just as decisively won the second half.

The debate focused on national security and foreign policy. That's favorable turf for candidates like Romney and (especially) Gingrich, and unfavorable turf for Herman Cain. Cain did not make any big gaffes, but he often seemed on the verge of doing so. By contrast, Gingrich was right at home, particularly during the first half of the debate. Gingrich opened the debate by blasting Ron Paul, who said that terrorism should be treated as a criminal matter because it worked in the case of Timothy McVeigh. To great applause, Gingrich countered that McVeigh's terrorist attack succeeded, and that he would rather stop the attacks from occurring in the first place.

Rick Perry, Michele Bachmann, and Rick Santorum all avoided major gaffes as well. But they seemed to be increasingly irrelevant to the conversation. Months ago, Perry would have been lucky to have delivered an unremarkable performance, because at least it wouldn't have been a bad one. But now, so deep in the hole he made for himself, such a performance won't do. Perry is lost.

During the first half of the debate, Romney couldn't match Gingrich. At one point, Romney and Jon Huntsman argued about the level of troops in Afghanistan. It was a draw, but arguing with a low-polling candidate is only useful if you obliterate him. By engaging with Huntsman, Romney only raised Huntsman's profile. Overall, Huntsman did well, but his long-awaited improvement in debate has come too late. Huntsman just doesn't have enough time left to build up steam.

During the second half of the debate, the dynamic seemed to shift. Romney gave stronger answers, and Gingrich, though he still did well, began to show signs of vulnerability. When asked about illegal immigration, Gingrich gave an answer that suggested making illegal immigrants "legal" under certain circumstances, such as if they had lived in America for a long time, were members of a church, or had ties to their local community. Bachmann seemed perplexed by Gingrich's apparently (and suddenly) soft stance on illegal immigration.

At that point, Romney jumped into the fray. He emphasized his support for legal immigration, particularly for highly-skilled and highly-educated immigrants, such as those who earn advanced engineering degrees in the United States. Romney then suggested that it was important to halt illegal immigration by not creating "magnets" for it. When the moderator asked if that was what Gingrich was doing, Romney avoided addressing the specifics of Gingrich's plan and said that any widescale plan to make illegal immigrants "legal" would amount to amnesty, and it would be a step in the wrong direction. Gingrich did not appear to know how to defend himself.

It was the only time in the debate in which Gingrich and Romney tangled. It was not a heated exchange by any means, but it has the potential to harm Gingrich. Time will tell whether Bachmann, Romney, and other candidates call Gingrich's stance on illegal immigration into question. Recall that Perry's perceived softness on illegal immigration helped doom his candidacy.

Aside from that issue, Gingrich performed well, and he is likely to further bleed support from Cain. The question is whether the Tea Party will accept Gingrich after taking a closer look at his platform.

Republican Primary Debate on CNN Tuesday

The debates keep on coming. CNN will host a debate tomorrow at 8:00pm Eastern. The debate is being advertised as focused on "foreign policy and national security," which is interesting because the previous debate was solely about foreign policy. Judging by that last debate, most of the candidates differ little on foreign policy. On the other hand, the "national security" hook may bring in the subject of illegal immigration, a topic that ignited sparks during the September debates.

The key change that has taken place since the last debate is the shift in perceptions of Herman Cain and Newt Gingrich. The media narrative is that of an ascendant Gingrich and a declining Cain. Unfortunately for Cain, if the debate does focus on national security and foreign policy, it will not be a great opportunity for him. Cain has tended to make gaffes on foreign policy that reveal his lack of basic knowledge about the topic. Meanwhile, Gingrich can speak intelligently on any subject.

Since the candidates disagree so little on foreign policy and national security, and since the candidates' vulnerabilities are on other matters, it will be tricky for low-polling candidates to go on the attack. Last time, they really didn't do it at all. For people like Michele Bachmann, Rick Santorum, and Rick Perry, it's necessary to do damage to the frontrunners to shake things up. Otherwise, they'll simply drift peaceably toward failure.

The one big event that every political observer would like to see is a proper debate between frontrunners Gingrich and Mitt Romney. Gingrich has always avoided tangling with his opponents. No one has ever had reason to attack him before, since he was nowhere in the polls. With the exception of the Perry boom in early September, Romney has never felt threatened enough to go on the offensive. After watching so many candidates self-destruct, Romney is probably even less inclined to attack anyone. Thus, we might have an odd dynamic where Romney and Gingrich are spliting the electorate but remaining passive. That's basically what we saw with Romney and Cain: Romney waited Cain out.

For candidates eager to score some easy points, Ron Paul is an ever-ready punching bag. Paul's opponents may have a contest to see who can show the most righteous indignation when Paul blames America for its foreign policy woes.

Is Newt Gingrich Electable?

In the Elephant Watcher profiles of the Republican candidates, each candidate's perceived electability has been ranked on a scale of 1 to 3. Those rated with a "1" are considered by most voters to be unelectable--virtually incapable of winning a general election. Michele Bachmann, Herman Cain, and Ron Paul are in that category. Those rated a "3" are generally considered electable, with a decent chance of winning a general election. Several candidates in that category either declined to run or withdrew, leaving only Jon Huntsman and Mitt Romney. Finally, there are the candidates who fall somewhere in between.

Newt Gingrich is not a totally implausible candidate, having been a Speaker of the U.S. House of Representatives; he also possess rhetorical skill and policy knowledge. But he also possesses considerable political and personal baggage, and few outside the Republican Party actually have a favorable opinion of the man.

Then there are the poll numbers. The following are the last two months' worth of match-up polls pitting Gingrich against Barack Obama. It's not pretty:

Gingrich vs. Obama
11/15 Gingrich 41, Obama 46 (-05) -- Fox News
11/13 Gingrich 45, Obama 53 (-08) -- CNN
11/14 Gingrich 42, Obama 54 (-12) -- Pew Research
11/13 Gingrich 43, Obama 49 (-06) -- PPP (D)
11/12 Gingrich 38, Obama 50 (-12) -- Rasmussen
11/10 Gingrich 45, Obama 47 (-02) -- McClatchy/Marist
11/04 Gingrich 38, Obama 44 (-06) -- Rasmussen
10/31 Gingrich 37, Obama 52 (-15) -- Quinnipiac
10/13 Gingrich 34, Obama 49 (-15) -- Rasmussen
10/10 Gingrich 39, Obama 50 (-11) -- PPP (D)

In all ten polls, Gingrich trails Obama. In half of these, he trails Obama by more than ten points. In only one does Gingrich manage to get less than 5 points behind Obama. In half the polls, Obama reaches the critical 50% level; Gingrich fails to even break 40% in half. On average, Gingrich is about 10 points behind.

Do these polls mean anything? There are a few things to consider. First, like any national poll, they suffer from the fact that only a slice of the electorate is paying any attention to the Republican primary. Gingrich's numbers have improved where he has campaigned. His debate performances have improved viewers' opinions of him. Thus, by the time election day 2012 rolls around, Gingrich's numbers would improve considerably. Moreover, when a candidate actually wins the nomination of his party, his numbers increase. Being a winner and having your party coalesce around you will add several points.

But there is also bad news. Although it's true that Gingrich's "positives" are not all priced into those numbers, there are also a lot of "negatives" that haven't been priced in yet. Gingrich has not been vetted either by his opponents in the primary or his opponents on the left. Once Gingrich has absorbed all the damage from the Republican primary and the general election, his numbers will go down.

Where does that leave us, with Gingrich's numbers likely to go both up and down? There would probably be a net benefit, which is to say that Gingrich is unlikely to lose to Obama by 10 points. One might estimate that Gingrich would start from behind by, say, 5 points. He would need to use every ounce of his skill to defeat Obama. In other words, Gingrich could win or he could lose. In a future post, we will examine the electability of Romney, who has the highest perceived electability of any of the candidates. If Gingrich is to win the nomination, he must show the voters that he has something valuable enough that they're willing to risk a greater chance of Obama's reelection, to see Gingrich--rather than Romney--in the White House.