US election

Commentators from both sides of the Atlantic offer sharp analysis on the US election campaign.

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The hidden insult that could put paid to Romney's chances

Former Thomson Reuters analyst Ed Rombach explains why the US election is not as straightforward as Obama v Romney.

With the first presidential debate looming, the tendency for the rest of the world is to assume that it’s all down to what Obama or Romney says or does. In fact as I shall explain, there is a third force at work here which could have a significant effect on the November election.

It is somewhat amazing that with unemployment still above 8% and U.S. foreign policy in the Mid-East in disarray, that Mitt Romney trails President Obama in key battleground states by a gap of 5-8% in the polls. This gap will probably narrow before the election, but the data suggest that Romney will be hard pressed to close it entirely in most of these important states. Why? Because the Ron Paul vote in the 2012 primaries will be a decisive factor in the general election.

Casual observers of US presidential elections may not appreciate the dynamics at play in this election cycle, so a little review of the statewide primaries and caucuses leading up to the Republican convention will help. Ron Paul, a 12 term congressman from Texas ran as a Republican candidate for president in 2012 and about doubled his support among voters from his performance in 2008 when he also ran for president as a Republican. However, Ron Paul’s ardent supporters complain bitterly this time around about having many of their delegate seats to the Republican convention in Tampa stripped from them by dirty tricks and political maneuvering of the Romney campaign which prevented Ron Paul’s name from being placed in nomination at the convention.

To make a long story bearable, it is no understatement to say that Ron Paul’s supporters feel they have a score to settle with Romney and it is highly unlikely that any more than a tiny percentage of them will vote for him in the general election. Some of them will write in Ron Paul’s name in the voting booth and some of them will just stay home, but recent reports indicate that a growing number of them will vote for Libertarian Party candidate Gary Johnson. One recent poll taken in Ohio by Gravis Marketing features Obama at 45.2% vs. Romney at 44.3%, but when Gary Johnson is added to the mix, Obama’s share goes down to 44.5% while Romney’s share goes down to 37.8% with Johnson taking 10.6% of the poll. As a point of reference, the Libertarian Party only received a little more than half a million votes in 2008.

Think of it as blowback and retribution for the appalling treatment of Ron Paul and his delegates by the Republican Party at their national convention in Tampa. In this context, it was a critical mistake for the Romney campaign to alienate these crucial swing voters.

To focus on eleven battleground swing states where the election will be won or lost, note in the table below that recent polls show Romney to be trailing President Obama by an average of around 5%. Now note that on average, the votes that Ron Paul received in the primaries and caucuses in these states weigh in at almost 2.5% of the votes that were cast in these battle ground states in the 2008 election. This further suggests that even though the polls for these states may tighten in Romney’s favour, there will probably be a gap of about 2% or more remaining that Romney is unable to close.

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Much has been said in recent weeks about Mitt Romney’s nonchalant willingness to write off as much as 47% of voters nationwide who don’t pay income taxes. In the 2008 election, out of a total of 131.5 million votes cast, John McCain won 45.5% of the popular vote. This makes me wonder if Romney, who has yet to release the details of his own tax returns before 2011 beyond a brief summary that reports an effective average tax rate of only about 13%, will even get as much of the popular vote as McCain did in 2008, not to mention reaching that psychologically important level of 47%.

Intrade, the online trading exchange website currently places odds of Barack Obama being re-elected President in 2012 at 76.8% compared with Romney’s chances of unseating the incumbent President at 23.3%, and so far the trend is clearly Obama’s friend as the following chart shows.

So, the big story on the day after election day may not be that the Ron Paul supporters failed to support Romney and thus threw the election to Obama, but that the Libertarian Party received 5 to 10 times the number it received in 2008. That will brand Gary Johnson and the Liberty movement as the real winners of the 2012 election.

Ed Rombach has worked on Wall Street and as a financial market TV analyst for Thomson Reuters. A recovering political junkie, he was elected from Massachusetts last April as a delegate to the recent Republican National Convention. However, he was purged from the Massachusetts delegation along with 16 other delegates by the Romney presidential campaign which doubted they would vote to nominate Romney on the first ballot at the convention.

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