Posts Tagged ‘Romney’

New Norm or Obamanomaly?

Friday, November 9th, 2012

Yes, I am still licking my wounds after predicting a Romney win 52-47. An election I thought would be like 1980 with the challenger Reagan beating Carter, ended up more like 2004 with the vulnerable incumbent Bush beating the unlikable Kerry (old rich white guy from Massachusetts).

I’ve spent a little time reading opinions about the election, but not much. Everyone likes to assign blame. Pundits like to make bold points about the winners and losers. Me? I’m just left with a bunch of questions.

In 2008, Obama won with a strong showing from democrats where they outvoted republicans by seven points (D+7). Those of us skeptical about the polls thought the electorate would reflect something closer to its historical numbers. According to exit polls, here’s how party ID has broken down in recent elections (not including independents):

2010: Even
2008: D+7
2006: D+2
2004: Even
2002: R+1
2000: D+4
1998: D+2
1996: D+4
1994: D+1

Even in years where the republicans have done very well, such as 1994 and 2010, party ID is fairly even. I believed that at best the democrats could expect a D+3, which would have won it for Romney. But instead, President Obama wins with an impressive D+6, even though he lost independents by 5 (45/50).

So my question is this: Is this the new normal? Or just an Obamanomaly?

Yesterday, Austan Goolsbee tweeted: “if demogr is the new destiny, are we in for wild 08/10 swings every midterm b/c turnout drops frm 70 to 40 and demo composition shifts?”

I had already decided to write this post before reading Goolsbee’s tweet, but this is the right question to ask. Are we going to continue to see strong showings from democrats in presidential election years on the scale of D+6, and even support for both parties in the mid-term years? If so, don’t be surprised if republicans take the Senate in 2014.

Losing exposes vulnerabilities. And winning masks weaknesses. I’m not sure either party should leap to conclusions about what will happen in future elections.

The Exit Polls

You know I’m a stats geek. Just a few quick thoughts about the exit polls.

Latinos: Obama won with Latinos 71/27. This is a number that the republicans need to take seriously. They can’t lose the Latino vote by such large margins and expect to win national campaigns. The important questions become why did they lose the Latino vote by so much, and what should they do about it? I’m not sure it’s an easy answer.

The War on Women: Much has been made about the war on women. Obama won women by 11 points (55/44). Romney won men by 7 points (52/45). A gender gap exists, but probably not in the way that many of the pundits will explain it to you. Romney won married women (53/46 = almost identical to the “man” vote), but lost single women (31/67). Married women voted on the economy. Single women did not. The big gap wasn’t between men and women, but between married and unmarried women.

The Young Vote: Obama won 18-29 year old voters 60/37 which accounted for a margin of 5.1 million votes. Romney won the 30+ age group by 1.8 million votes. Obama won the election by about 2.5 million votes. Which means that kids in their 20s with little life experience picked the president. (No offense to kids in their 20s. I was there once upon a time, and thought I knew everything, too.)

The White Vote: You probably already know that whites overwhelmingly voted for Romney (59/39). What this stat doesn’t tell you is that millions of whites who voted in 2008 chose not to vote in this election. Whites who voted for Obama stayed home. Whites who voted for McCain stayed home. The republicans thought they had enthusiasm on their side. They did not.

Read more about exit polls here on CNN.

Final Thoughts Election 2012

Thursday, November 1st, 2012

This is likely to be my final post before the election on Tuesday. I am looking forward to the end. Or the beginning.

Mitt RomneyState of the Polls
We’ll have an answer on Tuesday about the polls with the only poll that really matters. In case you’ve missed it, there’s been a considerable disturbance in the force. And I’m not talking about Disney buying Lucasfilm. Pollsters and pundits have fallen into one of two camps, and it’s all about voter turnout and party ID. In 2008, democrats outvoted republicans by seven points and swept President Obama into office, along with significant majorities in Congress. In 2010, democrats and republicans voted evenly, and the GOP was swept into Congress, making huge gains in the House, and modest gains in the Senate.

So what will the turnout be in 2012? My guess has been somewhere in the middle, probably two to three points favoring the democrats. Many of the state polls from companies such as Marist and Quinnipiac continue to show democrats with equal or even greater turnout than 2008. This makes little sense to me. Based off of these polls, the left’s polling guru Nate Silver is predicting a 79% chance that Obama will win the election, and take 300 electoral votes in the process. Those on the right question the polls and cite the underlying numbers. The GOP is more enthusiastic about this election, and independents have swung from Obama to Romney in fairly significant numbers. A few of the pollsters such as Gallup and Rasmussen are expecting a turnout that more resembles 2010, or possibly even a republican advantage.

One more anomaly I’ve seen in the polls, then we’ll move on. Polling likely voters is more predictive than polling registered voters. And pollsters attempt to determine if a person is a likely voter, or just a registered voter. On some of theses state polls, they’re filtering out very few voters — they’re considering 96-99% of the registered voters to be likely voters. Enthusiasm for the election may be high, but that’s just ridiculous.

President ObamaEarly Voting
In 2008, Obama crushed McCain in early voting by nearly 20 points. And this was to be one of Obama’s great strengths against Romney. The numbers don’t reflect that. Gallup came out with an article a couple days ago that Romney is beating Obama in early voting 52-46. And if you don’t believe Gallup, Pew came out with similar numbers with Romney ahead 50-43 among early voters. That’s a very bad sign for the President.

The Electoral College
Since the election of 2000 when Al Gore won the popular vote but lost the election, many on the left have wanted to dump the electoral college in favor of the popular vote. There certainly is a scenario where Romney could win the popular vote, lose Ohio, and lose the election. Will these same people scream about the unfairness of the electoral college? Will they claim Obama to be an illegitimate President like they did Bush? My guess is no.

Wednesday Excuses
If Obama loses, what excuses will be made? I wrote an article two months ago detailing why it will be difficult for Obama to win. But for months, some on the far left have set the table full of excuses ready to be used.

Voter Suppression: If you don’t think some on the left will use this as an explanation for Obama’s loss, think again. MoveOn.org has already released a web ad to this point. You can watch it here. May not be appropriate to watch this in an office or around children.

Money: I understand the frustration of those wanting campaign finance reform. There’s a lot of money in politics. And where there’s money, there’s corruption. A few months ago we were seeing articles from the mainstream media about the huge amounts of money raised by Romney and the Super PACs. But with Obama and the democrats raising $181 million in September, it’s difficult to make an argument that Obama didn’t have enough money to compete. And for the most part, these stories have disappeared. In 2008, Obama outraised and outspent McCain by a significant margin. Is that why he won the election? No. Obama was the better candidate, and positioned himself as the agent of change. (Which is what Romney is doing to Obama this time around.)

Racism: I’ve made this point before, and I’ll make it again. There’s a group on the left who believe that if you oppose the President, you must be racist. I’m a fiscal conservative. I oppose the President on many issues because I’m a fiscal conservative, and he’s not. You would think that since the President won by a significant margin in ’08 that this argument would go away. But it hasn’t. If Obama loses, it will be because moderates and independents who voted for him four years ago changed their vote this time around.

Prediction
I see nothing to change my mind about my prediction from August. I still believe Romney will win 52-47, and win the electoral college.

What’s Next?
And even though I believe that Romney will win, and that he’s the right choice, President Obama easily could have won this election. And if he loses, next week I’ll tell you how.

Romney’s Path to 270 Electoral Votes

Saturday, October 13th, 2012

It’s interesting to watch the political winds change. A year ago, experts discussed that the election would come down to 12 swing states. For months, the mainstream media and liberal pundits have talked about Obama’s path to victory, and that there was little chance of Romney making the electoral math work in his favor. Two months ago I wrote a post titled “Can Obama Win?” where I discussed the headwinds President Obama would face in the upcoming election. From studying past elections and current factors, I predicted that Romney would win the popular vote 52-47. I wasn’t overly concerned about the electoral math. It would be nearly impossible to win 52% of the vote and not win the electoral college.

Real Clear Politics is one of my favorite sites. They list the top political stories of the day, but they also track all of the major polls and provide an average of the polls. This week they show 12 states in the “toss up” column between the two candidates. The same 12 states that the experts had said would be the swing states that would decide the election. So despite the ebb and flow of the campaigns, we are exactly where we thought we’d be.

Real Clear Politics - Electoral College

As of today, with leaners, Real Clear Politics has Obama winning 201 electoral votes, and Romney winning 181 electoral votes. I don’t see any of these states changing sides. It takes 270 electoral votes to win the election, and there are 156 up for grabs in the 12 swing states. This is the closest I’ve seen the electoral map since the election began — typically they’ve shown the President with a fairly commanding lead.

The 12 states that make up the swing states are (with their number of electoral votes): Colorado (9), Florida (29), Iowa (6), Michigan (16), Missouri (10), Nevada (6), New Hampshire (4), North Carolina (15), Ohio (18), Pennsylvania (20), Virginia (13) and Wisconsin (10).

I’m going to chop off two states for each side. All along the numbers have looked good for Obama in Pennsylvania and Michigan. And Missouri and North Carolina have been widely considered states that would end up in the Romney column. That puts Obama ahead 237-206.

This week, David Paleologos, the director of the Suffolk University Political Research Center, said that they were going to stop polling Florida, Virginia and North Carolina. “In places like North Carolina, Virginia and Florida, we’ve already painted those red. We’re not polling any of those states again,” he said. “We’re focusing on the remaining states.”

So let’s add the electoral votes from Virginia and Florida to the Romney side of the ledger. That puts Romney ahead 248-237.

The polls show Ohio as very close. RCP shows Obama with a slight lead, though that’s largely because of one outlier — the NBC/WSJ poll has Obama up by 6. It will be close, but I’m predicting a Romney win in Ohio. That puts Romney up 266-237 with Colorado, Iowa, Nevada, New Hampshire and Wisconsin still undecided. Romney only has to win one of these states to hit 270 and win the election. In other words, if Romney wins Ohio, Obama must sweep the remaining five states. We’ve discussed before that the undecided voters break heavily for the challenger. Here’s the current breakdown of these five states according to RCP:

Colorado: Romney up 47.7 to 47.0
Iowa: Obama up 48.6 to 45.4
Nevada: Obama up 48.2 to 46.6
New Hampshire: Obama up 48 to 47.3
Wisconsin: Obama up 50 to 47.7

Romney will win at least one of these, and win the election.

The Big Lies

Tuesday, October 9th, 2012

I don’t want to spend much time discussing the recent presidential debate. It’s been analyzed to death. Though the analysis has been entertaining. And mostly it’s been skewed by misconceptions. Before the debate, polls showed a large majority of voters believed that President Obama would win the debate. The theme had been that Romney is not a very good politician, and that Obama is bright and articulate. How could Obama not win the debate handily?

Obama gives a great speech, and he’s good on the stump. That doesn’t make him a great debater. Romney delivers a decent speech, and is not inspiring on the stump. That doesn’t make him a bad debater. Matter of fact, Romney is a smart debater. He navigated through the minefields of the republican debates intelligently. I agree that Obama was not at his best, and that Romney won the debate. I just think the analysis is tainted by pre-debate conceptions that Obama would win big. And when he didn’t, the press couldn’t help themselves by overreacting and over-analyzing the Romney win.

Overall, I thought the two candidates presented their different visions to the country effectively. They each had their share of misstatements and distortions. Most of them relatively minor. I’ve read through the fact checkers, and this piece from the AP does a pretty good job of breaking down the inaccurate statements. But there were two outright lies that bothered me the most.

Mitt RomneyThe Romney Lie
I have been a proponent for healthcare reform for 20 years. I have also been highly critical of Obamacare. I’m in agreement with repeal and replace. My problem is that Romney does not have a good plan to replace it. And during the debate, Romney claimed: “Pre-existing conditions are covered under my plan.” When pressed on this by Obama, Romney went on to say, “In fact, I do have a plan that deals with people with pre-existing conditions. That’s part of my health care plan.”

But his plan (from his website) only says people “should be guaranteed the ability to retain coverage” if they have “maintained continuous health insurance coverage.” This does not extend to people who do not currently have health insurance. PolitiFact details it here, and rates Romney’s claim as mostly false. I’d call it a lie.

To their credit, the Romney campaign came out right after the debate and clarified their plan. From CNN (read full story here):

Eric Fehrnstrom, a top aide to Mitt Romney, suggested in a Thursday interview with CNN that the GOP presidential candidate’s health plan may achieve his goal of covering individuals with pre-existing conditions through “state initiatives and money.”

At least they didn’t double down on the lie. Unlike the Obama campaign.

President ObamaThe Obama Lie
President Obama came into the debate with one central point to pin on Romney — that his tax reform plan will add $5 trillion to the deficit, and necessitate income tax increases on the middle class. Obama returned to this point repeatedly during the debate. But he’s wrong, and he knows it. Romney’s plan calls for lowering tax rates for everybody, and eliminating deductions and loopholes in the code. Romney claims that his plan is revenue neutral. There’s room to debate whether or not the plan is deficit neutral, but it’s a lie to say that it will add $5 trillion to the deficit.

Take this exchange as an example. This is between CNN’s Erin Burnett and Stephanie Cutter, Obama’s deputy campaign manager:

Erin Burnett, CNN host: So you’re saying if you lower them (tax rates) by 20% you get a $5 trillion tab, right?

Stephanie Cutter: It’s a $5 trillion tab.

Burnett: But then when you close deductions it’s not going to be anywhere near $5 trillion, that’s our analysis.

Cutter: Well, okay, stipulated. It won’t be near $5 trillion but it’s also not going to be the sum of $5 trillion in the loopholes that he’s going to close.

I added the bold for emphasis. Cutter has just openly admitted that their central point is a complete lie. It will not add $5 trillion to the deficit. But the President has continued with this line of attack all week in his stump speeches. And there’s ample evidence that it’s possible to reduce rates by 20%, eliminate deductions, and end up with deficit neutral tax policy, though it does require a small increase in GDP to get there. Princeton economics professor Harvey Rosen has written a paper detailing how it’s possible. I’ve read it. I’m guessing that Stephanie Cutter has not. From Rosen:

The main conclusion is that under plausible assumptions, a proposal along the lines suggested by Governor Romney can both be revenue neutral and keep the net tax burden on high-income individuals about the same. That is, an increase in the tax burden on lower and middle income individuals is not required in order to make the overall plan revenue neutral.

The Results
Polls are showing surges for Romney nationally and in the swing states. And yes, some polls are still oversampling democrats. Don’t live and die with the polls. And don’t read too much into articles that proclaim “if the election were hold today”. The election is not today. It’s in a month. The race is a marathon, and reminds me of the old story about the tortoise and the hare. And yes, Romeny is the tortoise who will win in the end.

Romney, Teachers and Taxes

Wednesday, January 25th, 2012

There are few things in this world that I hate. I hate pickles. I hate discrimination. And I hate our tax code.

People are talking about taxes. And specifically talking about Mitt Romney’s tax rate. There’s a lot of misunderstanding and misinformation out there about taxes. Take this graphic for example:

Romney vs Teacher Taxes

Mitt Romney finally released his tax returns this week, and we found out that he paid an effective tax rate of 13.9%. The Internet and the media have been buzzing. I was watching MSNBC and the anchors were gleefully discussing the unfairness of Romney paying only about 15% of his earnings in taxes. After all, teachers and others in the middle class have to pay more than this!

But do they really?

I did a quick Google and it appears the average teacher’s salary in Kansas is somewhere around $40,000. That does indeed put the teacher in the 25% tax bracket as the image above shows. So the teacher must be paying $10,000 in income taxes! (For the mathematically challenged, that’s 25% of $40,000.)

But no. That’s not how income taxes are computed.

First of all, income tax rates are really marginal tax rates. We currently have six tax brackets (see Wikipedia). Income tax is computed for your income through each tax bracket up to your last dollar earned. It’s confusing. Here’s an example:

For this example, we’re going to assume the teacher is single and without children. Under today’s rates, a tax payer who makes $40,000 pays 10% of their first $8,500 of income (the first bracket), plus 15% of the next $26,000 (the second bracket), and then 25% of the remaining $5,500 (the third bracket). Well that’s still $6,125 in taxes — an effective income tax rate of 15.3%! That’s still higher than what Romney is paying!

Except the teacher isn’t paying $6,125 either. At this income level, the teacher automatically takes a $5,800 “standard deduction” and a $3,700 “personal exemption”. This takes the teacher’s taxable income down to $30,500. Go through the math and the teacher is now paying $4,150 in income taxes — an effective tax rate of 10.375%. That’s assuming no other deductions or credits.

Hhhmm. That’s now lower than Romney’s effective tax rate.

But wait! Great news! The teacher has a baby! Yay! (For my math I’m going to assume the teacher is still single. Don’t judge.)

As the head of the household, the teacher’s “standard deduction” jumps from $5,800 to $8,500. (I think I’m understanding this correctly, but if I’m wrong on the standard deduction, shoot the IRS, not me.) Plus the mom now receives a $1,000 child tax credit. Tax credits are much better than tax deductions. Tax deductions reduce your taxable income. But tax credits actually reduce the total taxes owed.

So the teacher’s taxable income is now $27,800. Do the math and you end up with $3,745 in taxes minus the $1,000 child tax credit equals $2,745 in income taxes — an effective tax rate of 6.8%.

Does the teacher own a home? Deduct the mortgage interest. Make some charitable donations? Deduct that too. And there’s more.

I hope you get my point. When Romney pays a tax rate of 13.9%, he’s paying a higher tax rate than most of us. According to the Tax Policy Center, the average effective income tax rates of U.S. households is 8.2% (as of 2010). Nearly half of all U.S. households pay no income tax at all.

But we do pay taxes. Payroll taxes. Gas taxes. Sin taxes. Property taxes… We can talk about tax burden another time.

But Mitt Pays Less Than Other Rich People!
Yes he does. And there are reasons for this. I’m not defending the tax code, only explaining it.

Capital gains are taxed differently than regular income for several reasons.

Rich people have options for what to do with their money. And what we’ve found is that as we lower the capital gains tax rate, rich people engage in MORE activity that is subject to the capital gains tax. When the capital gains tax rate was lowered (first under Clinton from 28% to 20%, then under Bush from 20% to 15%), it created an increase in activity each time that actually generated MORE tax revenue for the federal government. When the capital gains rate was increased in 1980, tax receipts decreased.

Some people, including President Obama, believe that the capital gains tax rate should be increased to be more fair. But keep in mind, this will decrease tax revenues, and enlarge our deficits. That means less money to spend on education, the environment, shovel-ready jobs, whatever. (I discussed this in a previous post here.) All in the name of the rich paying their fair share.

Much of this income has already been taxed, and many economists believe it shouldn’t be taxed at all. I’m going to borrow this next bit from James Pethokoukis. He explains it well:

The capital gains tax is a double tax. For instance, corporate profits are taxed first as income and then a second time when they are distributed to shareholders as dividends. And capital gains from investments are not inflation adjusted, so taxes are often paid on illusory profits.

We shouldn’t tax what we want more of. And the real problem with the capital gains tax isn’t the rate or how it is structured, but what is taxed: gains on investments, which are savings put to work. Economists of all stripes have been saying Americans have consumed too much and invested too little over the past decade. So why would we want to tax investment even heavier, as the Obamacrats want to do?

Indeed, we shouldn’t want to tax capital at all. As an AEI study on consumption taxes explains: “The income tax’s penalty on saving is an undesirable distortion of consumer choice. It also causes less capital to be accumulated in the United States. The reduction in capital accumulation reduces labor productivity and lowers real wages throughout the economy, depressing the standard of living of future generations. Some studies have found that a switch to consumption taxation would increase the size of the U.S. economy by as much as 9 percent in the long run, although other studies estimate smaller gains.”

So the main reason people want to keep taxing capital—or even tax it more heavily—is one of theology rather than sound economics. As the Concise Encyclopedia of Economics puts it: “Strange as it may sound, most economists would agree that having zero taxes on capital income is theoretically the best thing to do. But many reject putting this theory into practice because they think that too much of the benefit would go to the ‘wrong’ people, namely high-income households and the wealthy.” That’s right, the desire to make sure the wealthy like Romney “pay their fair share” is desired by class warriors even if it make everyone poorer than they otherwise would be.

Take it away, JFK (in his Special Message to the Congress on Tax Reduction and Reform from Jan. 24, 1963): “The tax on capital gains directly affects investment decisions, the mobility and flow of risk capital from static to more dynamic situations, the ease or difficulty experienced by new ventures in obtaining capital, and thereby the strength and potential growth of the economy.”

Bottom line: Americans should pay taxes on their wages only, not on any income from saving. The right capital gains tax rate is zero, for everybody. Might a few rich people like Romney pay less in taxes? Maybe. But the result would be a stronger economy, more jobs, and higher incomes for all Americans.

I’m not advocating lower rates for capital gains. That’s not my point. Just trying to put a little reason behind the madness. A little fact behind the fiction.