Mitt Romney and Autumn’s Black Swan

In nature black swans are a rarity. In the world of politics and economics they represent rare surprise events that have significant consequences. Of late the term black swan gained renewed currency when economist Nouriel Roubini said that economic crises weren’t “black swan events” but events that could be predicted by observing “macroeconomic and policy mistakes.” However, in the midst of the current presidential race, the extreme weather event that was Hurricane Sandy may very well represent a black swan, one that may have doomed the presidential aspirations of Mitt Romney and along with it, the conservative dream of defeating Barack Obama.

Needless to say, many would not have expected such a powerful storm so late in the season, especially those so heavily invested in climate change denial. Yet the arrival ofSandyhas already had profound effects. First, it pushed the presidential race off of the news cycle for the better part of five days. That effectively precluded Romney from addressing his slowing momentum in the polls. Secondly, it allowed Barack Obama to command center stage as a bi-partisan Commander-in-Chief while Romney found his campaign relegated to a sidebar. Thus Governor Romney’s remarks on how he would “absolutely” eliminate FEMA if elected came back to haunt him at a time when Obama and Hurricane Sandy seemed omnipresent in the news cycle. As it is Obama has garnered a 78% approval rating for his handling of the federal response thus far. Third it refocused the debate on what should be the proper role of government in dealing with disasters and to what extent a crisis like Sandy could be adequately handled by a pared down FEMA, by the states or even less likely, private effort. Fourth it reintroduced the inconvenient subject of climate change into the closing days of the race, a topic that Republicans had sought to avoid.

Not surprisingly, the black swan event of Hurricane Sandy gave immediate birth to several coincident events in the form of Governors Chris Christie ofNew Jerseyand Bob McDonnell of Virginia, both Republicans, praising the president’s efforts in promptly addressing the crisis. Praise of any sort form these two governors would have been unthinkable beforeSandyand can do nothing but cause consternation within the Romney Campaign. Coming on the heels of the positive image of Obama and Christie touring a devastatedNew Jersey,New York’s Mayor Mike Bloomberg endorsed Obama for president claiming that Obama “was the better candidate to tackle the global climate change that he believes might have contributed to the violent storm.” These developments can only serve to heighten the anxiety level within the Romney campaign as it has to now hustle all that much harder to get back on track and on message.

That Mitt Romney was thrown off stride by the events of the past five days was evident in his Thursday stump speech inRoanokeVirginia. That speech, given with an air of rushed desperation, seemed like a presentation in fast forward by a guy who realizes he’s missed the better part of five days of effective campaigning and who seemed to want to make up for that by throwing everything but the kitchen sink into his presentation. It was disjointed and topically Romney was all over the political landscape rushing from subject to subject without anything in the way of a logical segue between topics. Then there was the outburst against Christie by Rush Limbaugh, who accused Christie of “propping up Obama’s campaign.” While such commentary can be seen as a moment of comic relief it is at the same time just one more distraction for Team Romney. But the import of Rush’s latest diatribe didn’t go unnoticed by political pro Howard Fineman who observed: “Rush is sort of a kind of air raid siren for the Republicans. When he’s screaming like that, you know something has happened, something significant has happened.” It goes without saying that any image of disunity within the ranks of the right at this late date represents an unwanted development for Romney who has had problems staying on message throughout the campaign.

To make matters worse, the black swan ofSandyarrived amid other developments that make so many of Romney’s campaign arguments all the more difficult to sustain. For one thing the jobs numbers have come in better than expected and the pitch that unemployment has been stuck above 8% is no longer one that Romney can make: “The Labor Department’s last look at hiring before Tuesday’s election sketched a picture of a job market that is gradually gaining momentum after nearly stalling in the spring. Since July, the economy has created an average of 173,000 jobs a month, up from 67,000 a month from April through June.” Analyzing the jobs numbers, Alan Kruger of the Council of Economic Advisors noted that there was a big increase in the number of construction jobs, something that significantly benefits workers without college. Yesterday we learned that consumer confidence was at a five year high: “The Thomson Reuters/University ofMichigan’s final reading on the overall index on consumer sentiment rose to 82.6 from 78.3 in September. It was at its highest level since September 2007 on a final reading basis…Two-thirds of consumers surveyed expected President Barack Obama to win his re-election bid in just over a week…The barometer of current economic conditions gained to 88.1 from 85.7, while the gauge of consumer expectations rose to their highest level since July 2007 at 79 from 73.”

Another serious problem for Romney is the continuing blowback from his flagging efforts to denigrate the auto bailout and the fallout from that in the Midwest. Of particular import here is his campaign’s completely dishonest claim that the Chrysler Corporation was planning to ship jobs to China. That claim, apparently the result of the Romney campaign misreading a Bloomberg News report led to a broadside of criticism from auto industry executives. To wit: “Let’s set the record straight: Jeep has no intention of shifting production of its Jeep models out of North America to China,” Chrysler executive Gualberto Ranieri wrote in a statement “A careful and unbiased reading of the Bloomberg take would have saved unnecessary fantasies and extravagant comments.” The reality of the situation is, quoting Dana Milbank of the Washington Post, that since the auto bailout Chrysler has “has added about 7,000 jobs in North America…and it continues to expand its U.S. workforce and to invest hundreds of millions of dollars in American plants. Milbank goes on to observe: “The fast-and-loose with Jeep points to a troubling Romney instinct: When the stakes are high, as they are for him in must win Ohio, the truth is often the first casualty.” Likewise Romney received a sharp rebuke from General Motors spokesman Greg Martin for his allegation that GM plans to double the number of cars it builds inChina. Martin said: “The ad is cynical campaign politics at its worst. We think creating jobs in theU.S. and repatriating profits back in this country should be a source of bipartisan pride.” Romney’s problems with the auto industry were only made worse by the law of unintended consequences, another mini black swan if you will, when Donald Trump was rebuked by Ralph Giles, Head of Design at Chrysler for suggesting that the company would move production overseas. Needless to say it would appear that the Romney campaign has blown a head gasket inOhio when it comes to how it has handled the auto industry rescue, a flawed tactic that could cost him that state as well asMichigan.

Finally what of the swing state polls? As of5:00 PMthis afternoon the Real Clear Politics average polling for eleven swing states shows Romney leading in just three and with his lead inVirginiaextremely slim. Likewise the same results obtain when you look at The Cook Political Report. However in this report there is one notable exception, Cook’s findings show that four of the swing states lean Democrat and none lean Republican even though all are considered toss ups. Charlie Cook, one of the best guys in the business when it comes to crunching numbers said today on MSNBC that in terms of probabilities, Romney had a much harder climb in putting together a winning combination on the electoral map. Quoting Time Magazine’s political analyst Mark Halperin “Based on the totality of the public and private polling, the onus is still on Governor Romney to demonstrate he can get to 270 electoral votes. The President still has more paths and clearer paths.” Earlier in the week another political commentator pointed out that Romney has been able to narrow the gap with Obama in the swing states but he’s never been able to get out in front and stay there. Bear in mind that none of these poll results reflect any of the upward bounce that Barack Obama may get from his handling of the response to Hurricane Sandy.

None of this is to imply that Obama now has a lock on being reelected and the fallout from Hurricane Sandy,as it plays out over the next four days, could trend against the president. But one thing is for certain, the arrival of a black swan event, in the form of Hurricane Sandy, has greatly complicated the road to the White House for Mitt Romney. With only three full days remaining till the election it’s hard to see how Romney and his team can make up for five days of lost campaigning wherein which the president was able to take center stage and burnish his own image while Romney stood by as an onlooker, an onlooker who would only reenter the race with yet another blunder in talking about the auto bailout. This latest blunder, against the backdrop of positive economic numbers, has only worked to make Romney seem increasingly desperate in both his message and it’s presentation and that’s not a place a candidate wants to be with just a few more days to go before the polls are closed.

 

Steven J. Gulitti

11/2/12

 

Sources:
 
Black Swan Theory; http://en.wikipedia.org/wiki/Black_swan_theory
 
Roubini and Bremmer on Global Economic Problems; http://www.economonitor.com/nouriel/2010/06/06/roubini-and-bremmer-on-global-economic-problems/ 
 
Nouriel Roubini sees ‘the roots of the next crisis in the current one’; http://blogs.reuters.com/chrystia-freeland/2010/12/08/nouriel-roubini-sees-the-roots-of-the-next-crisis-in-the-current-one/

Romney’s Momentum Seems to Have Stopped; http://fivethirtyeight.blogs.nytimes.com/2012/10/25/oct-24-in-polls-romneys-momentum-seems-to-have-stopped/

Presidential Polls 2012: New Numbers Show Romney Losing Momentum, Obama Gaining; http://www.policymic.com/articles/17514/presidential-polls-2012-new-numbers-show-romney-losing-momentum-obama-gaining 

Romney Losing Momentum;http://www.politicalforum.com/current-events/272986-romney-losing-momentum-2.html

Bloomberg Backs Obama, Citing Fallout From Storm; http://www.nytimes.com/2012/11/02/nyregion/bloomberg-endorses-obama-saying-hurricane-sandy-affected-decision.html?hp

Rush: Christie Propping Up Obama Campaign with Hurricane Praise; http://www.newsmax.com/US/rush-obama-romney-christie/2012/11/01/id/462437

Chris Matthews Mocks Rush Limbaugh as the ‘Guy From Deliverance’;  http://newsbusters.org/blogs/scott-whitlock/2012/11/01/chris-matthews-mocks-rush-limbaugh-guy-deliverance-0#ixzz2B1wSCMt5

Jobs, Jobs, Jobs; http://thepage.time.com/2012/11/02/jobs-jobs-jobs-6/?xid=newsletter-thepagebymarkhalperin

U.S.Economy Adds 171K Jobs; Jobless Rate Rises to 7.9%; http://nation.time.com/2012/11/02/u-s-oct-jobs-report-likely-to-show-modest-hiring/#ixzz2B54Mz9Ov

Consumer sentiment at highest in five years in October;http://www.reuters.com/article/2012/10/26/us-usa-economy-sentiment-idUSBRE89P0OR20121026

Survey: Consumer Confidence Gets a Boost; http://www.cio-today.com/news/Consumer-Confidence-Gets-a-Boost/story.xhtml?story_id=0020006NFX3U&full_skip=1

Romney goes off-road with the truth;http://www.washingtonpost.com/opinions/dana-milbank-romneys-jeep-ad-drives-off-the-road-of-truth/2012/10/30/f207c606-22c9-11e2-8448-81b1ce7d6978_story.html?wpisrc=nl_wonk

Romney Caught Trying to Swiftboat the Auto Rescue;http://jaredbernsteinblog.com/romney-caught-trying-to-swiftboat-the-auto-rescue/

Auto companies hit back against Romney ads;http://politicalticker.blogs.cnn.com/2012/10/30/auto-companies-hit-back-against-romney-ads/

Ralph Gilles, Chrysler Executive, Lashes Out At Donald Trump;http://www.huffingtonpost.com/2012/11/01/ralph-gilles-donald-trump-chrysler_n_2060531.html?utm_hp_ref=daily-brief?utm_source=DailyBrief&utm_campaign=110212&utm_medium=email&utm_content=NewsEntry&utm_term=Daily%20Brief 

RCP – Electoral Map Polls; http://www.realclearpolitics.com/epolls/2012/president/2012_elections_electoral_college_map.html#battlegrounds

The Cook Political Report;http://cookpolitical.com/story/4849

Romney and 270; http://thepage.time.com/2012/11/01/romney-and-270/?xid=newsletter-thepagebymarkhalperin