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Presidential Nominees Will Be Decided This Year

FORECASTS & TRENDS E-LETTER
By Gary D. Halbert
March 13, 2007

IN THIS ISSUE:

1.  States Moving Their Primaries Up To February  

2.  Only The Deepest Pockets Can Stay In The Race  

3.  Single Women Voters Hold The Key To 2008

4.  Hillary Loses Round One With Obama

5.  Will The Clintons Be Able To Destroy Obama?

6.  The Dream Team – A Hillary/Obama Ticket

7.  A Look At The GOP Wannabes – Can Rudy Win It?

8.  Possible Surprises That Could Shake Things Up

9.  Conclusions – The Most Interesting Presidential Race Ever

Introduction

We are going to go all-political this week as there are a number of significant developments in the 2008 presidential race that you need to be aware of, even if you don’t follow politics closely.  For example, when you read on to page 3, you will learn why women, and in particular single women, are likely to determine who is our next president (can you say Hillary?).  The 2008 presidential race is going to be the most interesting in history in my opinion!   Also, in light of what is happening with most of the state presidential primaries, the 2008 nominees for both the Republican and Democratic parties will be decided in 2007, not 2008, barring some big surprise.  In the last few weeks, it has become clear that over half of the state presidential primaries are likely to be moved up the calendar to February 5, 2008, rather than stringing out over the year.  If so, February 5 will be a “coronation” of the two presidential nominees.  I want you to know why this is happening and who stands to benefit from it.   

After that discussion, we’ll delve into the political races and ponder such questions as… Does Hillary have a lock on the Democratic nomination, or will she shoot herself in the foot, and where does Bill Clinton fit in?  Does Barack Obama really have a shot, or is he just building for a future run and might be willing to be Hillary’s VP running mate?

And on the GOP side, where Rudy Guliani has broken open a big lead... Will the Republicans really nominate a candidate as moderate on social issues as Rudy?  Does he have a chance of winning against Hillary or Obama?  Is McCain down and out, and will any real conservatives like Newt Gingrich or Fred Thompson or someone else get in the race?

Whatever happens, I think this will be one of the most interesting presidential races ever.  Read on and I will tell you why.

States Moving Their Primaries Up To February

There are currently 19 states that have either moved or are in the process of moving their presidential primaries to February 5 next year, along with Arizona which was already scheduled for that date.   Taken in total, that represents well over one-half the voting population of the United States and far more than enough convention delegates to lock-up the respective party nominations.

This is happening because larger electoral states such as CA, TX, FL, NY and MI want to have a larger – and earlier - say in the primary process and remove the seemingly inflated influence of the electorally small New England states, specifically New Hampshire. This wholesale front-loading of the primaries will, in effect, put an end to retail politics and a primary schedule that has worked well with little modification for decades. This is bad for the American political process, bad for the voters, bad for the political parties and bad for the country.  Let’s examine why.

A shortened primary season has a number of negative effects.  First of all, with so many primaries on one day, only those candidates with enough money to campaign all across the country simultaneously will be able to effectively stay in the race.  We won’t get much of a chance to see the second-tier candidates that often make the race interesting and sometimes cause the frontrunners to stumble.  They just won’t have the money to mount a challenging run in all the states that will hold primaries on February 5.

Along this line, by frontloading the primaries to February 5, the campaigns have to concentrate almost entirely on raising money, and that leaves less time to spend pressing the flesh with voters. As voters, selecting the president is the most important thing we do.  A longer primary season gives us more information on the candidates and better insight into their character and positions on key issues, which usually is revealed in numerous debates.  But how much debate can there possibly be between the Iowa Caucuses on January 14 and “Giga-Tuesday” on February 5?  Not much!

Next, with potentially 20 primaries on February 5, it might as well be a coronation of the Republican and Democratic nominees who come out the winners.  And as noted above, only the most heavily funded candidates are likely to see success on February 5.  Let’s also not forget that the remaining primaries after February 5 will be largely diminished. 

I can understand why large states like CA, TX, FL, NY and MI would want to have a larger impact on the candidate selection process, and would consider moving their primaries to an earlier date.  But concentrating so many primaries on a single day will have the effect of minimizing all of them.  Simply due to logistics, it will mean that the candidates will spend less time campaigning on the ground in all the states that hold their primaries on February 5.

If this is so easy to understand, what then is driving 19 states to move their primaries up by weeks or months?   Quite frankly, I don’t know.  Maybe it’s simply because numerous states have not considered the fact that their primaries will be minimized in importance by holding them on the same day as 19 other states.  But the following thought crosses my mind.

If I’m running Hillary’s campaign, I want her coronated as the Democratic nominee as early as possible.  As we will discuss below, Hillary has already proven that she is not the best campaigner, although she has been wildly successful in raising money.  She doesn’t speak particularly well and is prone to mistakes.  Despite that she is still ahead in the polls.  So if her campaign manager is smart, he would be pushing for earlier primaries.  Her campaign manager is very smart, by the way – he’s Bill Clinton!

Only The Deepest Pockets Can Stay In The Race

Even before many states decided to move their presidential primaries months forward to February of next year, I stated the following in my January 23 E-Letter:

The 2008 presidential race is going to be very interesting, and probably unprecedented, for several reasons.  First and foremost, we are going to see more money spent on the 2008 presidential race than ever before, and by a longshot!  The Center For Responsive Politics estimated that at least $1.2 billion was spent by presidential candidates alone in the 2004 election.  Keep in mind that in 2004, there was only President Bush running on the GOP side.

This time around, I estimate that we will see a record $2 billion or more spent on the 2008 presidential election from beginning (and it’s already started) to end. 

Second, along this line, the serious contenders in the 2008 presidential race will have to forego federal matching funds because that’s not nearly enough money to win the nomination, much less the actual election.  Most of the serious candidates will have to raise in the neighborhood of $100 million in order to be competitive.  That is sad as it means many of the candidates will have no chance.

Now that most of the key primaries are going to be moved up to February of next year, this means that the candidates will have to campaign aggressively, and simultaneously, in all these states much earlier than ever before.  That means they will have to raise more money much earlier than ever before.

Today’s political process, which is driven by 24-hour cable news, non-stop talk radio, and Internet bloggers, is so fast-paced that the nomination race cannot wait for states like Iowa, Nevada, New Hampshire, South Carolina and others to get around to holding their primaries in early 2008. Well before these primaries are held, the nominee for both parties will have long since been decided by the national media coverage during 2007.

The bottom line is, only one or two frontrunners in each party will be effectively alive by February 5 of next year, and I will argue that the nomination races could well be over by the end of this summer.  What I said in January (see above) may now have been advanced forward even more. 

What this means is that only the most well-funded candidates could still be alive come this fall.  The wannabe candidates will have no chance because they simply will not have enough money for a campaign of the magnitude that will be required.  So who does that leave?  At this point, probably only Giuliani, Hillary and perhaps Obama.

Single Women Voters Hold The Key To 2008

A month ago when I first began to think about writing this article, I was beginning to resign myself to the idea that Hillary Clinton will be the next president of the United States.  She had a huge lead in the polls over her Democratic challengers and the GOP wannabes; she has a huge war chest and the ability to raise much more cash for her campaign; and of course, she has Bill Clinton who is still beloved by millions of Americans.

But most importantly, she is a woman.  We’ve all heard the term “gender gap” which generally means that more men prefer a male Republican president, and more women prefer a female Democratic president.  Now that Hillary is running for president, and is a viable candidate, American women finally have a female to vote for.

Here are some numbers to keep in mind.  Women make up 52% of the US population; women make up 54% of registered voters; and actual voter turnout in presidential elections has typically been 55-56% women in recent years.  So women indeed can, and have, influenced presidential elections.  Remember it was the so-called “soccer moms” who were credited with helping re-elect Bill Clinton in 1996. 

Yet within the female voting block, there is the subset of single women voters, which is growing very rapidly.  Based on Gallup (and other) polls, women who are either divorced, widowed or never married voted Democratic by a two-to-one margin in 2004 and 2006.

In 2000, an estimated 19 million single women voted; in 2004, 27 million single women turned out; and if that rate of growth continues into 2008, there could be a whopping 38 million single women voters.  If single women merely vote in proportion to their share of the national population in 2008, that would mean 32 million single women voters next year – in addition to all the other non-single women voters.

Following on, if single women have voted two-to-one for Democrats in the past two presidential elections, with no woman running, imagine what the numbers could be if a woman is the Democratic nominee!  This will be a huge advantage for Hillary if she is the nominee.  Hillary could be unstoppable if she wins the party nomination.

The same could be said of Barack Obama.  Women in general are much more likely to vote for a black candidate than are men.  Remember, women make up 55-56% of the vote.

Hillary Loses Round One With Obama

As noted above, when I first read these numbers late last year, I began resigning myself to the likelihood that Hillary Clinton will be our next president.  But then, Illinois Senator Barack Hussein Obama (yes, his middle name is Hussein) burst onto the stage with his announcement of a bid for the Democratic nomination on February 10.

As you have no doubt noticed, the media has fallen in love with Obama over the last couple of months, despite his lack of credentials and limited experience.  He has only been a US senator for two years.  Yet because he is black, openly liberal, and wants to end the war in Iraq immediately, he has become a media “darling” virtually overnight.

Now back to Hillary – she has a problem in the form of Obama who is rising rapidly in the polls.  As recently as January, Hillary had a lock on the Democratic nomination.  Now she’s in a fight. So what does she do?  So far, her plan for dealing with Obama has been an utter failure.

One of the first places Obama went after announcing his candidacy was to Hollywood to raise money.  The Clintons have been the darlings of Hollywood for years, but Obama found a warm welcome there to the surprise of Hillary and Bill.  Obama quickly won favor with Hollywood film producer and billionaire money-raiser, David Geffen, who once was a big supporter of Bill Clinton. 

On February 21, in an interview with Mauren Dowd of the New York Times, Geffen described Bill and Hillary in very unflattering terms.  Geffen said,  “Everybody in politics lies, but they [Clintons] do it with such ease, it’s troubling.”  He said that Hillary Clinton was “incredbly polarizing” and described Bill Clinton as “reckless” and cast doubt on those who say he has become a different person since leaving office.

The Clintons reportedly were outraged by Geffen’s remarks in the NY Times.  Hillary’s spokesman, Howard Wolfson, bitterly attacked Geffen for the remarks, criticized Obama for possibly encouraging Geffen, and demanded that Obama make a public apology.  Obama gracefully said publicly that he felt no apology was in order since he did not make the remarks.  Once again, Hillary looked shrill and mean-spirited.

Why Attacking Obama Was A Bad Move

The attack on Obama had two significant effects, aside from making Hillary look bad.  Both Hillary and Obama have been actively courting the black vote.  Prior to the Hillary attack, Obama’s polling numbers among blacks were slipping badly; according to a Washington Post/ABC poll, Hillary was leading in the black vote by a whopping margin of 60-20.

But seeing Hillary attack a black candidate for president immediately turned off African-American voters.  The subsequent Washington Post/ABC poll showed Obama racing ahead among black voters to lead Hillary by 44-33!  So, Hillary’s attack on Obama and Geffen solved Obama’s sagging approval rating among blacks. 

The other result of Hillary’s attack on Obama has been that it seems to have opened the door for Clinton critics to dredge-up all the scandals from their past.  Until now, it has been assumed that the American people did not want to rehash all the dirt on the Clintons, and that Hillary would not have to deal with all that in her campaign.  The media cartainly wouldn’t bring it up.

But that has changed dramatically.  New York Times columnist Bob Herbert referred to the Clintons as “connivers” and described Hillary as the “powerful front-runner at the controls of a ruthless political machine.” The Boston Globe, another liberal newspaper, ran an article that reminded readers of all those questionable “pardons” Bill Clinton granted just before he left office (Marc Rich, et al).  Another Globe article compared Obama to JFK, and the new term “Obamalot” was born.  Newt Gingrich called Hillary a “nasty woman who runs an endlessly ruthless campaign machine.”

Political columnist and advisor Dick Morris summed it up as follows: “It was as if everybody suddenly remembered why they disliked the Clintons.  Just what Hillary needed!”  Remember the term “Clinton Fatigue”?  It may be coming back.

Morris went on to analyze just how badly he thinks things have gone for Hillary over the last month or so: Following Obama Around Like A Puppy  He announces his candidacy months before it was traditional to do so…she follows and announces hers.  He stars at a Hollywood fund raiser…she runs out there to plan one of her own.  He visits Selma, Alabama to celebrate the 42nd anniversary of the famous March…she trudges along after him and brings Bill too.   

Clearly, Obama has the initiative in the battle for first place in the Democratic field.  Hillary looks reactive, almost panicky.  Obama, for his part, looks serene, composed, and assured.  It’s hard to tell who is the rookie and who is the supposed veteran.”

Morris and his wife, Eileen McGann go on to say:  “The Clinton campaign acts as if Hillary’s coronation as the Democratic Party nominee is a done deal, but it turns out that even her own party insiders are not strongly supporting Hillary. More than ten percent of the delegates to the Democratic Convention have already been selected – Democratic Senators, Governors, Congresspeople, and National Committeepeople. 

Hillary has long been assumed to have a commanding lead among them.  But a poll this week by the Los Angeles Times shows that its not so.  Hillary got the backing of only 20% of the Democratic national committeemen and women. Twenty percent? It was more than anyone else, but far from the kind of overwhelming support she would have expected.  Edwards got 15%, Obama 11%, Gore 10%, and New Mexico Governor Bill Richardson 9%.  This weakness at the top could be a problem for Hillary.”

[By the way, Dick Morris and his wife are thinking of publishing a weekly “Play-by-Play” analysis of the 2008 election.  According to their latest report, there will be a subscription fee for this service.  I will let you know when I have more details.  In the meantime, you can read Dick and Eileen’s columns at www.dickmorris.com.  I enjoy reading their analysis.]

Will The Clintons Be Able To Destroy Obama?

While Hillary’s star has been tarnished a bit of late, she and the Clinton organization are still very, very strong and overflowing with cash.  If Obama continues to gain ground on Hillary, and if there is any hint that he might overtake her and win the nomination, the Clinton machine will attempt to discredit and destroy him.  Make no mistake about it.  But they have to be careful since he is a very popular African-American. They saw in the last few weeks how attacking him can backfire.  I am not at all sure just how the Clintons could go about it. 

It is not clear how much dirt there is on Obama other than what he has already made public.  In one of his books, Obama has admitted he used drugs, including cocaine, when he was a teenager, but that hasn’t held him back.  There is also the story that Obama was reportedly able to buy his sizable Chicago home at a substantially below-market price, allegedly because a supporter paid the full asking price for the lot next door.  Compare that to Whitewater and cattle futures!  Of late, there are questions about a couple of stocks that were purchased in his blind trust back in 2005; it turns out that some of Obama’s donors also owned those stock; but I doubt this issue will come to much.  That seems to be all the dirt on Obama so far.  Other than that, he seems thin-skinned and doesn’t take criticism well (just like Hillary).  Oh yes, and he’s trying to quit smoking.

So it remains to be seen how much dirt the Clintons dig up against Obama unless there are more revelations to come.  But they will come after him if he threatens Hillary.  Bill and his cronies will do the dirty work so that Hillary stays above the fray – if she can contain herself, which remains to be seen.  This assumes, of course, that Bill really wants her to win, which I have questioned for a long time.  Why would Bill want to give up his freedoms in New York and his rockstar-like lifestyle to go back to Washington and be under the microscope daily?  But he accompanied Hillary to Selma, Alabama last weekend, so I guess he’s onboard for now.

Shortly after Obama announced that he was running, Hillary held a commanding 30+ point lead over him.  However, the latest RealClearPolitics.com average of several polls finds that Hillary’s lead has shrunk to only 35.6% to Obama’s 24.6%, with Edwards trailing far behind at 12.3% and Gore at 8.4%.  It will be very interesting to see what happens!

The Dream Team – A Hillary/Obama Ticket

By all indications, Barack Obama is intent on winning the Democratic nomination for president in 2008.  By storming into Clinton strongholds like Hollywood and New York, he seems to believe he can beat Hillary.  And maybe he can.  Yet I have wondered since he first got in the race if it might be that he would settle for the VP spot on the Democratic ticket.  After all, he’s only been a senator for two years and has no foreign policy experience.

Obama would not be the obvious choice for Hillary to pick as her running mate.  Obama is from Illinois, which is a state Hillary would likely win without him.  Most likely, Hillary would need someone from the South.  So if Hillary were to be the nominee, which looked like a lock just a few months ago, Obama would not be a consideration for VP.  But that could change.

Obviously, it remains to be seen if Obama can actually overtake Hillary and win the nomination.  I wouldn’t rule it out, especially if voters grow tired of Hillary (ie – “Clinton Fatigue”).  Or consider what happens if Hillary holds on to win, but narrowly.  In that scenario, I could easily see her deferring to the voters and picking Obama as her running mate.

That would be the Dream Team – a woman and an African-American on the Democratic ticket!  That combination might just be unstoppable.  Stranger things have happened.

A Look At The GOP Wannabes – Can Rudy Win It?

Former New York mayor Rudy Giuliani seems for now to be running away with the GOP nomination.  The latest RealClearPolitics.com average of several polls has Rudy at 38%, McCain at 21%, Gingrich (who isn’t even running, for now) at 10.3% and Mitt Romney at only 7.3%.

Many conservatives are surprised (some are alarmed) that Rudy has vaulted to the top of the unexciting GOP pack, especially given some of his social views.  He is pro-choice, pro-gay rights, pro-gun control, a Catholic and has been married three times.  These are not the typical makings of a GOP presidential nominee.

Yet Rudy is clearly the front-runner at least for now.  There are numerous theories and possible reasons for this.  Clearly, Rudy proved himself to be a strong leader following the terrorist attacks on New York City on 9/11.  This is what the general public knows him for.  He was also a relentless prosecutor who led the fight to clean up crime in New York City for years leading up to his two terms as mayor. 

There is a general feeling among many Republican voters that, based on his record in New York City post-9/11, Rudy would be a strong wartime president, irrespective of his positions on social issues.  In the absence of any other outstanding candidates for the GOP, Rudy is getting the nod at least for now.  I have argued for several years that the GOP bench is very weak, so we should not be surprised that a candidate like Rudy could rise up and fill the void.

We conservatives have to wonder if we could vote for a social moderate like Rudy.  But the fact is, unless something surprising happens, Rudy may be our only choice, unless we could reduce ourselves to voting for Hillary or Obama.  That is not an option for most of us. 

John McCain, who has never been a favorite of conservatives, seems to be fading fast.  George Allen, a conservative favorite, lost his senatorial race and is out.  Mitt Romney has never caught on.  Some conservatives hope that Newt Gingrich will get into the race, but Newt has his baggage as well, especially having admitted publicly last week that he was having an affair with his now third wife, at the same time he criticized Bill Clinton for his affair with Monica Lewinsky.  In any event, Newt probably has waited too long to get in and may be too polarizing a figure to have a chance.

So, unless some surprises happen, it’s probably Rudy versus Hillary or Obama.

Possible Surprises That Could Shake Things Up

In the wake of the Scooter Libby conviction, and with the recent discovery of a blood clot in his leg, it is rumored that Dick Cheney may resign as vice-president.  It is also rumored that President Bush is considering replacing Cheney with Codoleezza Rice.  Rumor also has it that, as vice-president, Condi would be a viable candidate for president in ’08.  That’s a lot of rumors!

I have included a lengthy article about Dick Cheney and his powerful role in the Bush administration in Special Articles below.  It does not, however, allude to any of the rumors about Cheney retiring or being replaced, but it does make clear that Cheney’s power is being diminished, and that Condi is definitely on the rise.  However, Condi has steadfastly maintained that she is not interested in running for or being president.  Still, it would be very interesting to watch a race between Condi and either Hillary or Obama!  I do not expect it to happen.

Then there is the news from last week that former senator Fred Thompson (R-TN) is considering getting into the race.  Thompson retired from the Senate in 2002 to resume his acting career and is best known today for his role on “Law & Order.”  Former senator Howard Baker is leading the charge to garner support for Thompson as a presidential candidate.  Thompson admitted publicly last week that he is considering running.

This would be very interesting.  Thompson was considered to be a serious conservative politician during his time in the Senate, and he is a highly visible guy due to his acting career.  Thus, it is quite likely that Thompson would cut into Rudy’s current support, if he chooses to run. Thompson would likely be very popular among conservatives and the right wing of the GOP.  With Howard Baker behind him, it’s a cinch he’ll raise some money. But if Thompson hopes to raise the kind of money it will take to win the nomination, he had better get started now.

Conclusions – The Most Interesting Race Ever

With this presidential election cycle in full swing earlier than ever before, I think it is very likely that nominees for both parties will be decided this year, perhaps as early as this fall, certainly by year-end.  They will be decided in the media.  Thus, the plethora of primaries in January and on February 5 will likely be nothing more than a coronation.

I find it troubling that 19 states have decided to move their primaries up to February 5.  Why not give the voters more time to see the candidates campaign and debate?  Why force out many of the candidates just because they don’t have the money it will take to campaign in all the February 5 primary states in the last few months of this year?  But that is what is going to happen.  Sadly, only the deepest of pockets will be able to stay in the race.

In the 2008 election, it is widely expected that the female vote will be the largest in history.  In particular, the number of single women voters is expected to swell dramatically.  If the female vote in 2000 and 2004 was 55-56% of all votes cast, it could approach 58% or even more in the 2008 election when it is likely that they will have either Hillary or Obama to vote for.  This is not good news for the Republicans, especially given that some GOP voters will not vote for Giuliani in light of his positions on social issues.

Given the cast of characters, the array of scandals swirling around them, and high emotions for and against most of the candidates, this should be one of the most interesting presidential races ever.  The battle between Hillary and Obama should be a hoot!  And there is still plenty of time for some surprises as well.  Yes, I figure we’ll all be sick to death of it 20 months from now when we actually cast our votes.  And there will be a lot of time for “buyers remorse” after the nominees are coronated on February 5. 

That’s it for now.  Stay tuned!  

Very best regards,

Gary D. Halbert

SPECIAL ARTICLES

Obama, Clinton Sparring Early
http://www.washingtonpost.com/wp-dyn/content/article/2007/03/11/AR2007031101690.html

Ghost of Hillary Past
http://www.indystar.com/apps/pbcs.dll/article?AID=/20070309/OPINION/703090390/1002/OPINION

What Has Happened to Dick Cheney?
http://www.washingtonpost.com/wp-dyn/content/article/2007/03/07/AR2007030702044.html

Senator/Actor Fred Thompson considers a run.
http://www.politico.com/news/stories/0307/3074.html

Berger & Libby: A Tale of Two Crimes
http://www.realclearpolitics.com/articles/2007/03/berger_libby_a_tale_of_two_cri.html


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Forecasts & Trends E-Letter is published by Halbert Wealth Management, Inc. Gary D. Halbert is the president and CEO of Halbert Wealth Management, Inc. and is the editor of this publication. Information contained herein is taken from sources believed to be reliable but cannot be guaranteed as to its accuracy. Opinions and recommendations herein generally reflect the judgement of Gary D. Halbert (or another named author) and may change at any time without written notice. Market opinions contained herein are intended as general observations and are not intended as specific investment advice. Readers are urged to check with their investment counselors before making any investment decisions. This electronic newsletter does not constitute an offer of sale of any securities. Gary D. Halbert, Halbert Wealth Management, Inc., and its affiliated companies, its officers, directors and/or employees may or may not have investments in markets or programs mentioned herein. Past results are not necessarily indicative of future results. Reprinting for family or friends is allowed with proper credit. However, republishing (written or electronically) in its entirety or through the use of extensive quotes is prohibited without prior written consent.

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