What If Ron Paul Wins the Iowa Caucus?

Paul

For nearly the entire primary season, Ron Paul has hovered around 10% in most national primary polls and early state polls. In the last few days, Paul has moved up to first place in some Iowa Caucus polls. The shift is sudden and dramatic, as Paul has not been a contender anywhere until now. From the beginning, Elephant Watcher has rated Paul to be the weakest of the Republican field. Ron Paul's odds of winning the nomination have never risen above 0%. Why are Paul's numbers rising in Iowa now, and what happens if Paul wins there?

Paul, like Mitt Romney, ran for president in 2008. Paul was largely ignored then, and he failed to win even a single state. Paul was considered a "kook" and was savagely attacked for blaming the 9/11 attacks on American foreign policy. However, Paul managed to raise a lot of money thanks to his enthusiastic libertarian base. Paul's views on American foreign policy also likely made him attractive to foreign contributors, though accepting such contributions would be illegal under U.S. law.

This time around, Paul's foreign policy views have not hurt him as much. Many Republican voters view the wars in Iraq and Afghanistan as either concluded, irrelevant, or unwise. Not only do they consider the economy to be more important, they are more receptive to candidates who wish to avoid future wars. A sizable contingent would rather take a pass on the issue of Iranian nukes.

As for Paul's rise in Iowa, it follows a familiar pattern. Paul is another Anti-Romney, has not been vetted, and is one of only three candidates to be able to spend a lot of money in the state (Romney and Rick Perry being the other two). One might object to the characterization of Paul as an "unvetted" candidate given the fact that he already ran in 2008 and has been used as a punching bag in both primary seasons. However, Paul is unique in that he has only been attacked on his foreign policy views. Paul's long history of unconventional, racist, and bizarre statements and beliefs has been entirely unexplored by the media and the other candidates, because no one thought he could win anything.

If Paul were to win Iowa, the beneficiary would be Mitt Romney. The Republican primary voters would panic, fearing the strange and unelectable Paul would guarantee Barack Obama's reelection. They would rally behind Romney in New Hampshire. Newt Gingrich and the other Iowa candidates would be crushed by losing both Iowa and New Hampshire, but one of them might still win South Carolina, where Paul remains weak. The Anti-Romney would not be in nearly as strong a position as he would have been, had he won in both Iowa and South Carolina.

The biggest loser would the Iowa Caucus. The Republican establishment was already perturbed by Michele Bachmann's strong numbers in the state during the summer. The establishment has suggested that Iowa may lose its privileged status as the first voting state if Iowa allows a fringe candidate to win. In reality, the perception of Iowa as an unruly state is unfair: As we saw in our review of the past winners of the Iowa Caucus, fringe candidates have not won there. Since the modern primary system began in 1980, the winners of Iowa have been Bush 41, Bob Dole (twice), Bush 43, and Mike Huckabee.

Paul's inherent weaknesses make a Paul win in Iowa unlikely, regardless of the current poll numbers. Should Paul manage to win in Iowa, however, it would be a black mark from which the state's reputation would not easily recover.

Why Do Candidates Keep Crashing?

The 2012 Republican presidential primary season has been a rollercoaster, with seemingly each month bringing a new candidate to the top of the polls--only to crash a few weeks later. First, in April, it was Donald Trump. During the summer, Michele Bachmann experienced a brief moment in the sun (though only in Iowa). Rick Perry topped the polls in August and found his way back down by the end of September. Herman Cain rose in his place, but by the end of November he was a spent force. In the meantime, Newt Gingrich rose to heights not even reached by Perry, only to find his lead rapidly diminishing in mid-December.

Presidential primaries often feature ups and downs, and comeback stories are not infrequent. But the phenomenon is unusually pronounced this season. What's the reason? There are two basic factors at work: The field's lack of an "acceptable" nominee, and the way voters react to new candidates.

First we will consider the way Republican primary voters tend to greet candidates with whom they are not very familiar. Voters seem to make positive assumptions about their candidates. Simply by virtue of a candidate's presence on the stage, voters assume that the candidate--barring evidence to the contrary--is a "legitimate" one. A proper Republican candidate is both conservative and electable, and voters presume that anyone on the stage possesses both qualities.

In fact, it seems that voters are very optimistic in their assumptions. While virtually all Republican officeholders have taken a few positions that aren't conservative, voters have an "innocent until proven guilty" approach: The candidate has never strayed from conservatism. It's up to the media and the other candidates to prove otherwise. Similarly, a candidate is presumed electable.

The reality is far different. Trump was neither conservative nor electable, Bachmann was unelectable, Perry had holes in his conservatism and proved more incapable in debates than anyone could have imagined, Cain was so unelectable that he had to quit, and Gingrich is vulnerable on both attributes. Once each of these candidates got high enough in the polls, the media and other candidates illuminated the voters.

By contrast, Mitt Romney's numbers have been remarkably steady over the course of the primary. That's because voters already got to know him during the 2008 primary. If there's something you don't like about Romney, you probably knew about it before the 2012 primary began--you didn't hear about it for the first time this year in a negative ad.

The second factor has to do with the current crop of candidates. As Elephant Watcher observed at the beginning of the primary season, there is a void in the field: No single candidate is capable of both exciting the Tea Party wing and pleasing the establishment wing of the Republican Party. Chris Christie was capable of doing both, but he declined to run. Mitch Daniels and Tim Pawlenty were capable of at least being acceptable to both wings of the Party, but Daniels declined to run and Pawlenty quit prematurely.

The result is that there is no "acceptable" candidate in the field. This means each time a frontrunner came under attack, the voters could learn something that made the candidate unacceptable, and the candidate's poll numbers took a nosedive. If there was a broadly acceptable candidate, he would have survived the vetting process and remained in the lead. This season, that couldn't occur.

Once a candidate wins enough state contests and clinches the nomination, Republicans are likely to put aside their doubts and rally around the candidate. But that won't happen while it's still time for the voters to shop.

Newt Gingrich's Intrade Odds Crash

Only a few days ago, we are able to report that Newt Gingrich had nearly tied Mitt Romney on the Intrade market on the 2012 Republican nomination. At that time, Gingrich was less than eight points behind. Gingrich's Intrade odds have now crashed, and he is currently 50 points behind Romney, a staggering reversal. Romney leads Gingrich 62.7% to 12.6%. That's the biggest lead Romney has held over Gingrich since Gingrich's rise in mid-November.

Why such a huge shift, and why was it so sudden? It was not the result of Gingrich's performance at the December 15th primary debate; most reviews of Gingrich's performance were positive. The majority of the crash actually took place a day or two before the debate. Nor was it the result of a steep drop in the polls: Gingrich is still leading in every recent national poll, every South Carolina poll, every Florida poll, and virtually every Iowa poll.

However, the extent of Gingrich's average lead in the polls has declined. Intrade investors are skittish, having seen Rick Perry and Herman Cain rapidly rise and fall in the polls. Perhaps the investors understand that Gingrich's poll numbers are built on a flawed candidate, and they were looking for signs that the Gingrich bubble was past its peak.

Was there ample evidence that Gingrich is past his prime? Intrade investors apparently placed a lot of faith in just two Iowa polls. An Iowa poll from Public Policy Polling (D) this week had Gingrich only one point ahead of Ron Paul. The next day, a Rasmussen poll of Iowa had Romney in the lead over Gingrich, 23-20. Drudge Report prominently displayed the results of both polls, and the Intrade market had a big reaction. If subsequent polling doesn't reinforce those two (which are currently outliers; the rest of the recent Iowa polls have Gingrich ahead by 10-15 points), the market may shift back to a lesser degree.

Among the minor candidates, only Paul and Jon Huntsman post numbers above 5%: They are at 7.8% and 7.1%, respectively. It seems that Paul and Huntsman's numbers are unaffected by the sudden increase in Romney's chance to win; the markets apparently serve as places for fans of Paul and Huntsman to lose some money.

The Iowa intrade market shifted accordingly. Romney leads at 33%, with Paul at 31.2% and Gingrich at 20.1%. The near tie for Romney and Paul reflects investors' lack of certainty over whether the PPP or Rasmussen poll was more accurate. Either way, they clearly discount the rest of the Iowa polls.

In New Hampshire, Romney is still at 75%. In South Carolina, where Gingrich was a big favorite just days ago, Romney leads 38% to 30%. This is interesting because polling has Gingrich an average of twenty(!) points ahead of Romney, though the polls are not as recent. Presumably Intrade investors think Romney has a good chance of sewing up the nomination with wins in Iowa and New Hampshire.

In the Florida market, Romney leads Gingrich 50% to 30%. As with South Carolina, polls have Gingrich ahead an average of about 18 points, but the polls are about two weeks old. Overall, it's plain to see that the effect of establishment attacks and TV ads against Gingrich have had a big impact on the way people view the race, most polls notwithstanding.

Who Won the Republican Debate on December 15th?

Tonight's debate had no especially memorable soundbites or gaffes. The candidates largely avoided attacking each other, with the exception of some extended duels between Michele Bachmann and Newt Gingrich, and when various candidates criticized Ron Paul's foreign policy. Gingrich did well on many occasions, but he took heat from Bachmann on the millions Gingrich made from Freddie Mac.

Mitt Romney changed his strategy for the debate: He chose not to go on the offensive against Gingrich. Instead, Romney directed his energy toward bolstering his economic credentials and attacking Barack Obama. Apparently Romney is pleased by the effect his negative ads have had against Gingrich, so rather than taking on Gingrich during debates (where Gingrich is strong), Romney focused on building himself up.

Rick Perry, Rick Santorum, and Jon Huntsman were irrelevant during the debate. Surprisingly, Perry didn't attack Romney or Gingrich. Bachmann, on the other hand, was on the attack constantly. She gained plenty of airtime by going one-on-one against Gingrich on both Freddie Mac and partial-birth abortion. Gingrich didn't bleed when he was bitten, but his answers on Freddie Mac were unconvincing. Bachmann probably scored more points by attacking Paul after Paul emphasized his lack of concern over Iranian nuclear weapons.

What was the result? Gingrich and Romney both did well; Gingrich had some difficulty handling Bachmann's attacks but also threw plenty of red meat to the base. There was no clear winner. However, the bigger picture is that the debates have been Gingrich's turf, while Romney's advantage has been with TV ads, campaign infrastructure, and establishment support, all of which have hurt Gingrich. Therefore, one might say that Gingrich needs to be a clear winner in the debates in order to keep up with Romney--especially if Romney is not hurt during a debate. As for the minor candidates, Paul's remarks on foreign policy may hurt him, and Bachmann might siphon a few votes from Gingrich.

Final Pre-Iowa Debate Tomorrow on Fox News

Fox News will host a Republican presidential primary debate Thursday at 9:00pm Eastern. This is the last primary debate scheduled prior to the Iowa Caucus. Although the minor candidates no longer have sufficient time to change their fates, the debate could have a big impact on the two-man race between Mitt Romney and Newt Gingrich.

As Gingrich demonstrated during the debate on December 10th, he is much more skilled at deflecting attacks than previous poll-frontrunners like Rick Perry and Herman Cain. Romney, who was the target of attacks through the summer (and even September/October, when he wasn't leading the polls), is the only other candidate who has shown equal skill in the debates.

Consequently, Gingrich is much less likely to be hurt in the debate than the season's earlier Anti-Romneys. On the other hand, even a skilled and disciplined debater can stumble, as did Romney with his memorable $10,000 bet gaffe earlier this month. If enough candidates throw enough attacks at Gingrich, it's possible that he could make a mistake. If he does, the media narrative will be that Gingrich is finally falling back to earth. This would go hand-in-hand with some more recent polling showing Gingrich's numbers declining slightly. That's what Romney will have to hope for tomorrow. But he must take care to avoid making any gaffes of his own.

The minor candidates have mostly concentrated on attacking Gingrich, as the poll numbers dictate they should. The exception is Perry, who remains almost as fixated on attacking Romney as he was back in September, when it still made sense. The debate is a good opportunity for Tea Party candidates to criticize Gingrich for not being conservative enough. Gingrich's success thus far has been based on voters assuming Gingrich has perfect conservative credentials. Perry was in a similar situation in September, before the debates made people more familiar with Perry's immigration policy and the HPV vaccine issue.

The wildcard is Gingrich's own strategy. Gingrich had promised to be "relentlessly positive," but he has shown a tendency toward going negative whenever Romney offends him. If and when Romney attacks Gingrich, it could trigger an extended exchange of insults. Or, if Gingrich fears being booed, he might return to his positive approach.

Romney and Gingrich Almost Tied on Intrade

In the wake of the December 10th Republican primary debate, Newt Gingrich has almost tied Mitt Romney on the Intrade market on the 2012 Republican nomination. Gingrich has been slowly but steadily gaining, all at the expense of Romney, who has been just as slowly shedding points.

The current Intrade odds have Romney leading Gingrich by 43.5% to 36.0%. That 7.5% gap is only half as big as Romney's lead was the last time we checked, just over a week ago. About two weeks ago, Romney was leading by 36 points. Clearly, Intrade investors are becoming more willing to believe Gingrich's poll numbers are real (unlike Herman Cain's). The most recent drop also reflects the media narrative of the December 10th debate: Romney made a memorable gaffe with his $10,000 bet and Gingrich emerged unscathed. The narrative was essentially what Elephant Watcher predicted in the debate recap.

Nevertheless, despite all of the polls, Romney remains in the lead on Intrade. If Romney is unable to do any damage to Gingrich during the final pre-Iowa debate this week, we can expect that to change--Gingrich would likely tie Romney or surpass him if he does well.

Meanwhile, only two minor candidates register 3% or higher on the Intrade market: Jon Huntsman and Ron Paul. Huntsman, who was not invited to the December debates and who is inexplicably favored by Intrade investors (perhaps reflecting the establishment bias often found on Intrade), is still at 6.0%. Ron Paul, whose enthusiastic internet fans are willing to put down money for the cause, is at 7.6%.

In the Iowa Caucus Intrade market, Gingrich is well ahead of Romney, 55% to 11%. Paul has been climbing there as well, up to 24.8%. This is interesting because Paul's recent poll numbers in Iowa, though improved from his usual 10%, are equal or lesser to Romney's. Why such a difference in their Intrade odds, then? It's likely a result of the prevailing wisdom that the Iowa Caucus rewards candidates with enthusiasm on their side.

In New Hampshire, Romney remains a big favorite at 70%. Gingrich is similarly favored in South Carolina, at 70%. In the Florida market, Gingrich's edge has shrunk to 49% over Romney's 35%. The investors may believe that by the time Florida rolls around, something could arise that derails Gingrich's campaign.

More Candidates Drop to Zero

For a minor candidate--one who is not close to leading in any state--time is the most precious resource. A minor candidate needs time in order to try something, anything, to change the dynamic of the race. The Iowa Caucus is only a few weeks away. Time has almost run out. As a result, the game is now over for most of the minor candidates.

Though many of the candidates will stick around--some, like Ron Paul, all the way until the convention--the field has been winnowed down to Mitt Romney and Newt Gingrich. After last night's debate, the odds of each Republican's winning the nomination have been recalculated. Two more candidates, Rick Perry and Jon Huntsman, have fallen to zero percent. Here are the recent changes:

Huntsman -2% -- As Huntsman learned at last night's debate, the barrier to entry for the debates goes up as voting day draws closer. Huntsman's numbers were not high enough to give him access to the debate, and you can't win without appearing at debates. Huntsman was focused on taking down Romney to create an opening in New Hampshire, but he's out of time.

Perry -2% -- The debates have not been kind to Rick Perry. He was already on life support after the first several took their toll, and he has done nothing to revive himself. With many Tea Partiers flocking to Gingrich and the rest either skeptical of Perry's conservatism or electability, Perry has been squeezed out. He lost his two-front war on both fronts.

Santorum -1% -- Santorum needs to hope that eventually the conservative Evangelicals in Iowa lose faith in Gingrich. If they do, they only have one more candidate to try out: Santorum. Gingrich's fall will need to happen quickly.

Romney -2% -- Romney's inherent attributes as a candidate make him stronger than Gingrich and more likely to win a protracted war. Unlike Gingrich, Romney's "negatives" are already priced in: Voters already know what they don't like about Romney, so he's unlikely to fall. But the burden is on Romney to take Gingrich down before voters go to the polls. Each day that passes without a successful attack on Gingrich is a day Romney can't afford to waste.

Gingrich +7% -- Gingrich's situation is the opposite of Romney's. As the leader in the polls, Gingrich wants time to fly as quickly as possible. So far he has not been damaged, and he can see Iowa on the horizon.

Who Won the Republican Debate on December 10th?

If Newt Gingrich's rivals hoped to crush him during tonight's debate, they did not succeed. Gingrich was finally criticized and challenged during this debate, and he repelled the attacks ably. In some one-on-one exchanges, Mitt Romney had the edge over Gingrich. If the race becomes an extended two-man fight between the two, Romney may have the advantage in one-on-one debates. For now, however, the debates are clearly not going to destroy Gingrich's momentum.

Michele Bachmann likely benefited from extra air time, as she always seemed to be in the middle of an attack against another candidate. Bachmann took over Herman Cain's role as the representative of the Tea Party.

The biggest loser of the night was Jon Huntsman, who was not even invited to the debate. Earlier this year, we answered the question of how they decide who gets invited to debates. The invitations are based on poll numbers, and Huntsman didn't meet the new threshold. After all these months, Huntsman has not been able to get his poll numbers high enough to remain on stage--even Rick Santorum is polling better. It's impossible for a candidate to compete under those conditions, so Huntsman is finished.

As for specifics, one moment that will probably get some media attention was when Rick Perry challenged Romney on the issue of Romneycare. Although one might expect all the candidates to team up against Gingrich--who is heavily favored in the polls--Perry acted as though it were the middle of September, attacking Romney. During a dispute about what Romney wrote about the individual mandate in his book, Romney challenged Perry by asking if he would bet $10,000 on it. Perry hesitated, and Romney claimed victory. Since one of Romney's vulnerabilities is being seen as too wealthy and out of touch with regular Americans, it was a definite gaffe.

Romney performed better in his exchanges with Gingrich; Romney managed to criticize Gingrich and some of Gingrich's odd ideas (like a lunar base) without appearing negative. In response, Gingrich went negative against Romney and was booed by the audience. Perhaps the best illustration of the contrast between the two men was the issue of Gingrich's controversial remark about the Palestinians being "an invented people." Romney emphasized that he was the more sober candidate, while Gingrich claimed to be someone who would tell the truth even if it "caused some confusion."

The debate moderators decided to ask each of the candidates about marital fidelity. Obviously this was aimed at Gingrich's multiple affairs and failed marriages. The other candidates emphasized the importance of faithfulness. Gingrich's turn came last, and he gave a good answer about finding redemption for his past mistakes.

The media's conclusion is likely to be that Gingrich's rivals failed to deliver a "knock-out punch" against Gingrich. Clearly, Gingrich's opponents will need to find another way to tear his candidacy down if they intend to defeat him.

Primary Debate Tomorrow on ABC

ABC will host December's first primary debate tomorrow at 9:00pm Eastern. After tomorrow's debate, there is only one more scheduled prior to the Iowa Caucus on January 3rd. That means the stakes are high for the candidates who still have a chance of winning the nomination, namely Mitt Romney and Newt Gingrich.

It has been a few weeks since the last primary debate, and the field has changed considerably. Herman Cain dropped out of the race, and Gingrich has rocketed to the top of every poll outside of New Hampshire. The pressure is on Romney to do something to stop Gingrich. As for the minor candidates, they will be hoping to capitalize on Gingrich's fall in Iowa, should it occur.

For the past few months, there has been a strange dynamic in the race, because there was no clear frontrunner. Normally one candidate is in the lead, with everyone else attacking him. But because Rick Perry fell in September, and because no one quite believed Cain's lead in the polls was real, the candidates weren't focused on attacking one person. That's changed. Gingrich is ahead in the polls by a big margin. That means it's time for everyone else to try and bring him down.

Romney's campaign began attacking Gingrich this week, and the debate moderator will probably ask Romney if he's willing to do it in person. Recall that during the summer, Tim Pawlenty had criticized Romney in some interviews but was unwilling to repeat the insults during a debate. Pawlenty appeared weak. Now Romney will face the same challenge. He must prepare himself to engage Gingrich during the debate without appearing too hostile or mean-spirited.

Unfortunately for Romney, he's in a poor position to do the attacking. It's important to undermine Gingrich's conservative credentials, but Romney's own conservative credentials are in question. It's much easier for Perry, Michele Bachmann, Rick Santorum, or even Ron Paul to do the job. If they hope to win Iowa, they will cooperate. But the only person Romney can rely on is himself, and he will be prompted to do some of the dirty work personally.

The other difficulty is that Romney's main argument is about electability. It's not possible for any candidate to make that argument convincingly, because saying "I'm electable" will always sound too self-serving to be believed. Instead, a candidate must present himself as electable and demonstrate why the other candidate is not electable. Again, doing so without appearing hostile or mean-spirited is not an easy task, especially if the audience likes Gingrich.

As for Gingrich, his best bet is to answer any substatantive attacks made against him while gently chastening his attacker for being negative. Gingrich publicly said that his strategy for dealing with Romney's criticism is to "kill him with kindness." That's not a bad idea if you're the frontrunner. With Gingrich's lead in the polls, he can afford to be magnanimous, and he will be rewarded for it.

Who Will Win the South Carolina Primary?

About five months ago, during the July doldrums of the primary season, we considered different scenarios to answer the question who will win the South Carolina primary. Since then, the race changed with the departure of Chris Christie and Tim Pawlenty. The absence of these candidates eliminates the "united party" scenario and the "electable Tea Partier" scenario. More recently, the collapse of Rick Perry and Herman Cain (and the collapse of Michele Bachmann in Iowa) also make the "unelectable Anti-Romney" scenario much less likely.

This leaves two scenarios, reflecting the two-man race we now see in the polls: Either Mitt Romney secures his frontrunner status with wins in Iowa and New Hampshire and goes on to win South Carolina, or a "moderately electable" Newt Gingrich wins Iowa and goes to South Carolina to break the tie (after Romney wins New Hampshire).

The following is the race as it stands in the most recent South Carolina polls:

South Carolina Primary
12/04 Winthrop -- Gingrich 38, Romney 22, Perry 9, Cain 7
11/28 ARG -- Gingrich 33, Romney 22, Cain 10, Paul 8
11/28 Insider Adv -- Gingrich 38, Romney 15, Cain 13, Paul 7
11/21 Polling Co. (R) -- Gingrich 31, Cain 17, Romney 16

Unfortunately, unlike Iowa and New Hampshire, there has been little polling in South Carolina. Even more unfortunately, there have been no polls taken there since Cain dropped out of the race. We can assume that Gingrich will get a chunk of the departing Cain votes, but it's also possible that a Tea Partier could pick up some of the votes.

None of the pollsters listed above has a sterling reputation. But it's clear that Gingrich enjoys a substantial starting advantage over Romney. Gingrich is--for now--perceived as more conservative than Romney, and Gingrich hails from the South. More importantly, South Carolina is influenced by the winners of Iowa and New Hampshire. For the moment, Gingrich is doing better than Romney in Iowa. For Romney to win South Carolina, there must either be a tremendous crash in Gingrich's campaign, or Romney must win Iowa.

Gingrich's campaign is untested, and it could crash. One should never assume such a crash unless the candidate is perceived as highly unelectable (like Cain or Bachmann). Unless or until the race changes dramatically, it's likely that Gingrich will prevail in South Carolina.