This November Mitt Romney – former Massachusetts Governor, private equity millionaire and the Republican Party’s candidate for President – will attempt to prevent President Obama serving a second term. On Saturday Romney announced Wisconsin Congressman Paul Ryan as his Vice-Presidential nominee and the running mate with whom he will attempt to do so.
Romney faces a daunting electoral map. To become President you have to win the most Electoral College votes. You win these votes by winning states and states have votes according to their size. On the basis of past elections and recent polling, 43 of the 51 state contests can be labeled as either for Mr Romney or Mr Obama.
The problem for Romney is, when you add up the votes from these states, Obama is within just 22 of victory; he does not need to win many of the 100 electoral votes the remaining eight states offer. The second problem for Romney is that Obama currently leads in seven of the eight.
If Obama wins Ohio – where he leads by nearly 5% points and has a 7 in 10 chance of winning according to the New York Times’ Nate Silver – he needs just one other state, and Silver ranks his chances of winning Nevada as greater than 3 in 4.
This is the context in which Romney’s selection of Ryan must be seen. In choosing a Vice-President, Romney needed to pick someone who would either help him win one of the key states – Florida, Ohio, Virginia, North Carolina, Colorado, Iowa, Nevada and New Hampshire – or appeal to a key demographic. Ryan does neither.
The Romney campaign is claiming that picking Ryan puts his state, Wisconsin, into play, but it has not been won by a Republican since 1984 and Obama leads there by over 5% points. Analyses of the effect a vice-presidential pick has on his home state are full of qualifications, but, analysing data since 1920, the New York Times has estimated it does not add more than around 2% points.
The likelihood of Ryan helping Romney carry the state is also diminished by Ryan being a Congressmen. He represents only one of the state’s eight districts, and polling has shown he is relatively unknown in other parts of the state.
Picking Ryan does not help Romney with women or Hispanics, two key groups whom he has alienated by catering to far-right positions on contraception and immigration in a bid to win his party’s nomination. By choosing Senator Marco Rubio of Florida or Governor Susana Martinez of New Mexico, Romney could have appealed to the latter, whom Romney is struggling to support as much as any presidential contender since 1996.
Ryan, as one commentator noted this weekend, instead looks like Romney’s sixth son. At 42, and as a former Congressional staffer elected to the House at 28, he not only lacks the ‘business experience’ Romney has touted as justifying his candidacy, but hampers Romney from running the ‘outsider’ campaign which propelled four of the five Presidents before Obama to the Presidency. In Ryan, the Obama campaign has an embodiment of the Congress just 17% of Americans approve of.
Nor does he have the foreign policy chops which justified Obama’s selection of Senator Joe Biden in 2008. He is however, counter Romney’s aides, the man who crafted the Republican alternative to Obama’s economic policy, and the economy is by far the most important issue in any Presidential election. That is undoubted, but Ryan’s prescriptions are divisive and controversial, and Romney is far from campaigning on the swingeing healthcare cuts at the core of them.
The initial polls contained little to cheer the Romney camp. Ryan’s unfavourability ratings are the highest of recent picks, and, when asked whether they thought it a good selection, voters ranked the pick 6-7% points worse than the Biden and Palin choices in 2008.
Ultimately Romney is trailing and needed to use this, one of the few opportunities he has left, along with the party convention later this month and the debates in October, to change the dynamic of the race. By picking Ryan he has only managed to do so for the worse.
The LIBOR scandal is likely to further erode the public’s respect for and trust in the banking sector. Confidence in banks plummeted following the 2008 financial crisis, as a British Social Attitudes survey has shown. In 1994 63 per cent of the public said banks were ‘well-run’; by 2009 just 19 per cent said so, which was ‘probably the biggest change in public attitudes ever recorded by British Social Attitudes’.
This is the context in which the LIBOR scandal must be seen: it is likely to further worsen the dire esteem banks are now held in. This is likely because the scandal has uncovered criminal behaviour that the public has little reason to look favourably upon. Traders at Barclays and other banks manipulated the rate – which underpins $800 trillion -worth of financial instruments, from credit card rates to mortgages – to benefit their own investments.
The uncovering of such institutional behaviour reinforces the narrative on banking that began to be written when the financial crisis hit: bankers are duplicitous, immoral, and incapable of self-regulation. Calls for binding shareholder votes on executive pay and ‘claw-back’ powers for boards are likely to grow louder as negativity towards banks worsens.
The scandal is likely to have such an effect partly because banks have failed to show why the reputation the financial crisis earned them is unjust – loans to small businesses have failed to meet targets and the gap between executive and entry-level pay has continued to grow exponentially, without any corresponding growth in the effectiveness or quality of banks.
Manipulating LIBOR could be even more damaging for the banking industry than the 2008 crisis, because it cannot be blamed on the unseen consequences of the global financial system. Just 11 per cent of the public gave ‘British banks’ primary blame for the financial crisis when asked by Populus in October ‘08. But rate-fixing has fewer guilty parties and it is more evident its perpetrators knew it was wrong. The series of emails between traders – in one exchange, a trader wrote, ‘Dude. I owe you big time!’ to a submitter who had adjusted the rate for him – has left the industry incriminated in a way it was not before.
The LIBOR scandal is a product of banks’ investment banking divisions, but the commercial arms of the five major UK banks are also suffering by association. The Co-Operative Bank – an alternative – has seen a 25 per cent increase in applications in the past week; public attitudes towards high-street banking are not increasingly negative per se, but attitudes towards commercial banks with investment arms are.
As the Economist wrote this week, “This could well be global finance’s ‘tobacco moment’”. Lawsuits are likely, which will only further worsen attitudes as details emerge.
On Wednesday George Osborne will unveil his third budget as Chancellor. It seems increasingly likely that in it he will scrap the 50 pence tax rate on income over £150,000. The measure was introduced by the previous Labour government two years ago, and was forecast to raise £7.1bn over its first three years.
Last year Mr Osborne asked HMRC to look into how much the rate was actually raising. That report has been seen by the Chancellor and will be released on Wednesday. It will, for the first time, provide figures on how much the tax raised in its first year – 2010/11.
The Times have reported that the review will show the tax has only raised millions of pounds, rather than the £1.3bn the Labour government forecast it would raise. But, as Ed Balls said on The Andrew Marr Show this weekend, even if the tax raises half as much it is still advisable.
The argument advanced by critics is that a higher rate of tax actually leads to less revenue being raised. This idea has some validity when one is talking about reducing tax from 83%, as Margaret Thatcher did in 1979. But this line of reasoning does not necessarily apply to the 50% rate.
As the Institute for Fiscal Studies, Britain’s leading economic think tank, has noted, the evidence is inconclusive on this. In September 2011 they published the Mirrlees Review, which came to the conclusion that “we do not know with confidence what the revenue-maximising top tax rate is”. It went on to say that it “is certainly not impossible” that the 50p rate will raise revenue.
But even if the rate does not raise much revenue, or indeed raises none at all, scrapping it makes little political sense. YouGov’s weekly poll for The Sunday Times this weekend showed that 60% oppose scrapping the rate, while just 27% support doing so.
Politicians must, of course, occasionally act contrary to public opinion. But there should be compelling reasons for doing so. In this instance there are not. The government cannot be sure scrapping the rate will benefit the UK, and politically Osborne could have afforded to not appease his Party’s right-wing. In January The Telegraph reported the government were likely to keep the rate until 2015 and no backbench movement materialised.
Giving a tax cut to less than 1% of taxpayers, at a time of significant public sector cuts, sends a signal to the electorate that is particularly damaging for a party desperately trying to shred its label as a party of the wealthy. Osborne is renown for his tactical nous in Westminster, but on this issue he is set to commit an tactical, strategic and political error.
This article first appeared in Nouse on March 19, 2012.
In a recent piece for The Times the columnist Daniel Finkelstein recounted a story of the time he watched a particularly riveting Prime Minister’s Questions and eagerly asked a friend if he had seen it. “Of course not,” the friend replied, “I’m working.” Such is the reality of UK politics – most people do not follow Westminster’s weekly jousting. This encouraged Nouse this week to catch up with Allegra Stratton, one of the most informed columnists in Westminster, and Newsnight’s new political editor, to get a picture of how each leader has fared over the past year.
Stratton offers an intriguing take on the current state of the parties. Cameron, she argues, has had “a pretty good year”. She cites the way he has handled the Coalition, both in terms of making it last as long as it has (“a lot of people didn’t think it would”) and in managing to nevertheless convince his backbenches he is one of them.
When asked how, specifically, the Prime Minister has most impressed her most since being elected, Stratton somewhat unexpectedly points to his heartfelt apology in response to the Bloody Sunday inquiry. “The way he did that still stands out in my mind…[that] will probably be something that in years to come we’ll say that was a big moment for Cameron, because…he caught the moment.”
Stratton’s observations on how coalition has changed the Liberal Democrats are some of her most illuminating. She detects a change in Nick Clegg after his “terrible beginning” over tuition fees. “He felt so rotten about reneging on a promise, as he should. And now actually I think that he’s much more sanguine about it being something that he thinks students will realise over the full course of time was actually not a bad deal.”
With regard to the party as a whole she thinks “they are [now] much more careful about doing, dare I say it, the politically right thing to do rather than the necessarily policy right thing to do.”
As for the man seeking to depose the Coalition, Stratton argues Ed Miliband’s analysis – that there is a squeezed middle and such a thing of the promise of Britain – has actually “driven the agenda”, but “you are not really seeing the dividends”.
The problem is he is “really struggling” to turn that into anything more than “a good essay”. The fact that he is “struggling to personally connect with people”, is something Stratton finds remarkable. “When you meet him individually…[you realise it] is not a problem he has.”
Stratton acknowledges Miliband has the problem all opposition leaders face – how do you offer an alternative without committing to specific policies? “The prerogative of opposition is to spend a couple of years licking your wounds and thinking of new ideas”, but by not announcing policies it is hard to offer an alternative.
Looking ahead to her new role as Newsnight’s political editor, Stratton is “looking forward to merging the two things I’ve done on and off for the past ten years. The thing about political journalism is when you do it well, and I’m not sure I do do it well yet but I want to try, is you boil something down – you don’t iron out complexity – but the hope is you turn that complexity into quite clear sentences.” It is about “shrinking but not over-simplifying.”
Such talk of succinctly presenting things encourages me to ask what effect she thinks Twitter will have on the role of the political reporter. Will the ability of citizens to break news on their mobiles through social media make political journalism increasingly about commentary rather than reporting?
“I think it looks like it’s more about commentary now, but I don’t think that’s true and I don’t think it will come to pass.” She says that reporting tells you “what’s actually going on in Westminster, and what the actual debates and rows are.” It’s “much more substantially relevant to people’s lives, and I think people do look for that when they pick up the newspaper.”
“What Twitter and social media changes is who are compelling authors. You have people who tweet a lot, or blog a lot, who have an authentic voice, [but] I don’t think it undercuts the classic lobby team.”
Whether one is interested in reporting or commentary, Stratton advises they “read every piece of history and politics they can get their hands on. If you understand political theory and recent history it does make you a better journalist, because all these themes do come up. The periods in my life when I read a lot, I still rely on now.”
This article first appeared in Nouse on December 8, 2011.