Oil Prices Going Up and Can the Economy Handle the Sticker Price

Global oil prices jumped to a nine-month high Tuesday to $106 a barrel after Iran announced it was stopping oil shipments to France and Britain. Iran is responding to heavy pressure from America, Europe and other allies, who want to stop the country’s nuclear power program before the radical regime can build nuclear weapons.

This most recent move by Iran to ban oil exports to the two European countries comes as a direct preemptive response to the European Union’s planned Iran oil embargo set for this summer. The EU has already frozen assets of Iran’s central bank.

In recent weeks, you’ve also probably heard news stories about Iran threatening to shut down the Strait of Hormuz. It hasn’t happened yet, but Iran has indicated it could close the Strait or take other measures should the country feel threatened enough by the Western allies.

But right now you might be wondering: What is the Strait of Hormuz and why does it matter TO YOU?

If Iran tries to block the Strait it could have a huge impact on world oil prices, which would directly impact how much you pay for groceries, gas and electronics — all of which use oil in some way, whether it’s part of the manufacturing or shipping process.

The Strait of Hormuz is a waterway that connects the Persian Gulf to the Arabian Sea. It is the only passage to the open ocean for some of the biggest oil producers in the Middle East

 About 20% of the world’s oil passes through the Strait of Hormuz, including crude oil produced in Saudi Arabia, Iran, and Kuwait. It’s a water way that’s “absolutely critical to the world economy,” according Dr. Daniel Yergin, energy expert and Pulitzer Prize winning author of The Prize and The Quest.

Yergin calls the Strait of Hormuz “the most important chokepoint in the world.”

Because so much of the world’s oil travels through Strait, any disruption to the shipping channel would have a major impact on global crude oil prices, which ultimately determine the price we pay for gas at the pump.

Some analysts estimate the price of oil could go up by 50% within days if there’s a disruption of supply, which would mean much higher prices for us filling our tanks at the gas station — and anything else that requires the use of oil. Crude oil and gas prices have risen sharply since September in large part because of the threat of a disruption in the Strait of Hormuz.

“We’ve seen oil prices just on threats go up $5, $10 a barrel” in a day, Yergin says. “This is Iran’s trump card.”

The average price for regular unleaded gas today is $3.58 up nearly 9% since the beginning of this year, according to AAA.com. That is still slightly lower than the highest record average price of $4.11 set in July 2008. But many analysts are predicting that with the threat from Iran coupled with the warmer weather ahead, the U.S. maybe be headed for $4 or even $5 gas prices.

Whether Iran really can shut down the Strait is a big question. Jan Stuart of Credit Suisse says it would be “suicidal” for the Iranians to even try.

“Closing the Strait of Hormuz — that thing is…30 miles wide,” Stuart says. “You need a gazillion boats to literally close it off. It can’t happen.” (See: $100 Oil Is Here to Stay, but Iran Closing the Strait of Hormuz “Can’t Happen”: Stuart)

Still, Iran’s Navy has recently been conducting military exercises in the area. Some experts say the Iranians are preparing to attack oil tankers in the Strait with missiles and torpedoes from submarines. They might not shut the critical passage down but such attacks would certainly disrupt crude shipments and cause a spike in oil prices.

Whether the Iranians just bluster or actually go on the attack, we’re likely to hear more news about this critical waterway in the days and weeks ahead, and that news will have a direct impact on the global economy and how much you’re paying for products here in the U.S.

Stocks continued their 2012 surge Thursday, with the Dow breaching 12,900 and the S&P 500 hitting its highest level in nine months. The Nasdaq rose to a level not seen since the dot com bubble more than a decade ago.  Commodities also continued their 2012 trend, with a mixed session highlighted by strength in energy and weakness in agricultural commodities.

The recent action — broad strength in stocks, mixed performance in commodities — belies the conventional wisdom that all “risk assets” are moving in tandem.

There is rotation happening within the commodity sector but, broadly speaking, it should be another banner year for hard assets, according to Frank Holmes, CEO and CIO of U.S. Global Investors.

In addition to continued demand from emerging markets and signs of life in the U.S. economy, Holmes notes global central banks have embarked on another easing cycle.

Indeed, Morgan Stanley’s economics team declares ”the great monetary easing (part 2), is in full swing,” noting 16 major central banks have eased policy since the fourth quarter, including the U.S. Fed, Bank of Japan, European Central Bank, Bank of England and the central banks of Sweden, China and India.

“In response to a slowing global economy and further downside risks emanating from the possibility of an escalating Eurozone debt crisis, central banks all over the world…have been deploying their arsenal for a while now, and should continue to do so,” Morgan’s team writes. “The result is aggressive monetary easing on a global scale.”

Based partially on this easy money, as well as fear of supply disruptions, more capital expenditures in the U.S. and normal seasonal patterns, Holmes is most bullish on oil and gas right now.

“The wind is at their back now,” he says, suggesting the U.S. economy can handle moderately higher gas prices, which have already risen on average more-than 13 cents per gallon in the past month, according to AAA.

“I think we’ll adapt and adjust” Holmes says, while conceding consumer spending cannot handle a sharp, sustained jump in gas prices.

As far as gold is concerned, Holmes is still to his long-term bullish view, suggesting the trend for gold remains higher based on both the “fear trade” and, what he calls the “love trade.”

Subtle Racism Still Very Prevalent in Society Today

When you hear the words “racist” or “racism,” what comes to mind? A man in a white hood, a burning cross on a lawn, a black person swinging from a tree? Unfortunately, many who hear the word “racism” often conjure up images of bigotry at its most extreme. In reality, most members of minority groups in the U.S. will likely never encounter a Klansman or be the casualty of a lynch mob. Instead, people of color in the U.S. are much more likely to be the victims of subtle racism, also known as everyday racism or covert racism. This sort of racism has a pernicious effect on its targets, many of whom struggle to see it for what it is. So, just what is subtle racism?

Defining Everyday Racism

A study conducted by San Francisco State University Professor Alvin Alvarez identified everyday racism as “subtle, commonplace forms of discrimination, such as being ignored, ridiculed or treated differently.” Explains Alvarez, a counseling professor, “These are incidents that may seem innocent and small, but cumulatively they can have a powerful impact on an individual’s mental health.”

Annie Barnes further illuminates the matter in her bookEveryday Racism: A Book for All Americans. She identifies such racism as a “virus” of sorts exhibited in the body language, speech and isolating attitude of racists, among other behaviors. Due to the covertness of such behaviors, victims of this form of racism may struggle to determine for certain if bigotry is at play.

Examples of Everyday Racism

In Everyday Racism, Barnes tells the story of Daniel, a black college student whose apartment building manager asked him not to listen to music on his earphones while strolling the premises. Supposedly, other residents found it distracting. The problem? “Daniel observed that a white youth in his complex had a similar radio with earphones and that the supervisor never complained about him.” This is an example of everyday racism that involves treating two people of the same race differently when they engage in identical behavior. Based on their own fears or stereotypes of black men, Daniel’s neighbors found the image of him listening to earphones off putting but made no objections to his white counterpart doing the same thing. This gave Daniel the message that someone with his skin color must adhere to a different set of standards, a revelation that made him uneasy.

While Daniel acknowledged that racial discrimination was to blame for why his supervisor treated him differently, some victims of everyday racism fail to make this connection. These people only invoke the word “racism” when someone blatantly commits a racist act such as using a slur. But they may want to rethink their reluctance to identify something as racist. Although the notion that talking about racism too much makes matters worse is widespread, the SFSU study found the opposite to be true.

“Trying to ignore these insidious incidents could become taxing and debilitating over time, chipping away at a person’s spirit,” Alvarez explained.

Ignoring Certain Racial Groups

Ignoring people of certain races is another example of subtle racism. Say a Mexican-American woman enters a store waiting to be served but the employees behave as if she’s not there, continuing to rifle through store shelves or sort through papers. Soon afterwards, a white woman enters the store, and the employees immediately wait on her. They help the Mexican-American woman only after they wait on her white counterpart. The covert message sent to the Mexican-American customer? You’re not as worthy of attention and customer service as a white person is.

Sometimes, people of color are ignored in a strictly social sense. Say a Chinese-American man visits a mostly white church for a few weeks but each Sunday no one talks to him. Moreover, few people even bother to greet him. Meanwhile, a white visitor to the church is invited out to lunch during his very first visit. Churchgoers not only talk to him but supply him with their phone numbers and email addresses. In a matter of weeks, he’s fully enmeshed in the church’s social network.

The church members may be surprised to learn that the Chinese-American man believes he was the victim of racial exclusion. After all, they simply felt a connection with the white visitor that they lacked with the Chinese-American man. Later, when the topic of increasing diversity at the church comes up, everyone shrugs when asked how to attract more parishioners of color. They fail to connect how their coldness to the people of color who do occasionally visit makes their religious institution unwelcoming to minorities.

Ridiculing Based on Race

Subtle racism not only takes the form of ignoring people of color or treating them differently but of ridiculing them. But how can ridicule on the basis of race be covert? Gossip writer Kitty Kelley’s unauthorized biography Oprah is a case in point. In the book, the talk show queen’s looks are excoriated–but in a particularly racialized way.

Kelley quotes a source who says, “Oprah without hair and makeup is a pretty scary sight. But once her prep people do their magic, she becomes super glam. They narrow her nose and thin her lips with three different liners…and her hair. Well, I can’t even begin to describe the wonders they perform with her hair.”

Why does this description reek of subtle racism? Well, the source isn’t just saying she finds Oprah unattractive without the help of a hair and makeup team but criticizing the “blackness” of Oprah’s features. Her nose is too wide, her lips are too big, and her hair is unmanageable, the source asserts. Such features are all commonly associated with African Americans. In short, the source suggests that Oprah is mainly unattractive because she’s black.

How else are minorities subtly ridiculed based on race or national origin? Say an immigrant of color speaks English fluently but has a slight accent. The immigrant may encounter Americans who constantly ask that he repeat himself, speak to him loudly or interrupt him when he tries to engage them in discussion. These are subtle forms of ridicule that send a message to the immigrant that he’s unworthy of their conversation. Before long, the immigrant may develop a complex about his accent, despite the fact that he speaks fluent English, and withdraw from conversations before he’s rejected.

How to Cope With Subtle Racism

If you have proof or a strong hunch that you’re being treated differently, ignored or ridiculed based on race, make it an issue. According to Alvarez’ study, which appears in the April 2010 issue of the Journal of Counseling Psychology, men who reported incidents of subtle racism, or confronted those responsible, lowered amounts of personal distress while boosting self-esteem. On the other hand, the study found that women who disregarded incidents of subtle racism developed increased levels of distress. In short, speak out about racism in all its forms for your own mental health.

The Cost of Disregarding Everyday Racism

When we think of racism only in extremes we allow subtle racism to continue wreaking havoc in people’s lives. In an essay called “Everyday Racism, White Liberals and the Limits of Tolerance,” antiracist activist Tim Wise explains, “Since hardly anyone will admit to racial prejudice of any type, focusing on bigotry, hatred, and acts of intolerance only solidifies the belief that racism is something ‘out there,’ a problem for others, ‘but not me,’ or anyone I know.” Wise argues that because everyday racism is much more prevalent than extreme racism, the former actually reaches more people’s lives and does more lasting damage. That’s why it’s important to make an issue out of everyday racism.

More than racist extremists, “I’m more concerned about the 44 percent (of Americans) who still believe it’s all right for white homeowners to discriminate against black renters or buyers, or the fact that less than half of all whites think the government should have any laws to ensure equal opportunity in employment, than I am about guys running around in the woods with guns, or lighting birthday cakes to Hitler every April 20th,” Wise says.

While racial extremists are no doubt dangerous, they are largely isolated from most of society. Why not focus on tackling the pernicious forms of racism that affect Americans regularly? If awareness about subtle racism is raised, more people will recognize how they contribute to the problem and work to change. The result? Race relations will improve for the better.

Another Win For Marriage Equality in California in Federal Court

On Wednesday, a week after a federal court rejected California’s Proposition 8, which bans same-sex marriage, another federal court issued a landmark ruling in favor of marriage equality. This time the law declared unconstitutional was the federal Defense of Marriage Act, or DOMA, which prohibits any federal agency from recognizing marriages between couples of the same-sex. Unlike the Proposition 8 case, in which the opinion was written by arch-liberal judge Stephen Reinhardt, Wednesday’s DOMA ruling was issued by a conservative judge appointed by George W. Bush, Jeffrey White.

Surprisingly, where the liberal Reinhardt’s opinion was narrow, the conservative White’s opinion in the DOMA case was broad and far reaching.

Some supporters of marriage equality criticized Reinhardt’s Proposition 8 opinion last week for being too timid. In contrast to the earlier decision of Judge Vaughn Walker in the Proposition 8 case, which held that marriage was a fundamental right for all Americans regardless of sexual orientation, Reinhardt’s opinion refused to make such an audacious declaration. Instead, Reinhardt explained that Proposition 8 was unconstitutional because of the unique circumstances of California, which first allowed gay people to marry and then took that right away. Even if accepted by the Supreme Court, Reinhardt’s approach would not require the recognition of same-sex marriage nationwide.

White’s opinion in Wednesday’s ruling was assertive and bold, calling into question every law that discriminates against LGBT people. White held that such laws are subject to “heightened scrutiny” by the courts, which means that the laws will be struck down unless the government can show very good reasons, backed by strong evidence, for the disparate treatment.

The justifications for DOMA, however — which included encouraging responsible procreation and child-rearing, nurturing traditional marriage, and preserving scarce government resources — had little to no evidence to support them. He cited, for example, numerous studies proving that children are not harmed by being raised in a gay household and he found no credible evidence that allowing gays to marry hurts opposite-sex couples.

In requiring courts to apply heightened scrutiny to laws discriminating against gays and lesbians, White’s opinion showed the profound influence of the Obama administration’s announcement last yearthat it will not defend DOMA. (The current case was being defended by lawyers hired by Congress.) The administration stated that, in its view, heightened scrutiny was appropriate in cases of anti-gay discrimination — a daring position at the time given the Supreme Court had never held that, despite several opportunities to do so. White cited the Obama administration’s announcement as support for his own ruling.

When the Obama administration first announced that it wouldn’t defend DOMA, I criticized that decision here. Although I still have concerns — it could provide a precedent for, say, a future Santorum administration to refuse to defend Obama’s healthcare reform law — the game-changing impact of the Obama announcement can’t be denied. Achieving equal citizenship for LGBT people, the great civil rights issue of our day, is well worth such risks. Turns out that Obama was right about DOMA and it was me who was wrong.

Whether White’s ruling in the DOMA case will be upheld on appeal, no one knows. But his is the second federal court decision to declare DOMA unconstitutional, suggesting that the tide is turning quickly against anti-gay discrimination – even among many conservatives. And for that, at least some of the credit goes to the brave decision of the Obama administration not to defend this statutory testament to anti-gay prejudice.

Is Wall Street An Illegal Cartel That Needs To Be Busted Up

The big Wall Street banks have achieved so much control over their industry (AND Our Country) that they amount to an illegal cartel, says William Cohan, a former banker and the author of many books and articles about Wall Street, including “Money And Power,” a book about Goldman Sachs.

The pricing power and profits that the big banks have is similar to that of Standard Oil, Cohan argues, referring to the gigantic oil monopoly owned by John Rockefeller that was broken up a century ago.

Cohan observes that prices of transactions like IPOs and M&A deals are basically fixed across the industry and produce humongous profits. And smaller “boutique” firms are not able to compete on price because they lack the distribution and influence of the biggest banks.

Cohan believes that the government should intervene, breaking the cartel’s stranglehold. He notes, however, that a prior case brought against the industry 60 years ago failed. And even if the government were to successfully intervene, the specific remedy is not clear.

See his interview here: http://finance.yahoo.com/blogs/daily-ticker/wall-street-illegal-cartel-needs-busted-william-cohan-141121623.html

SUPER PAC’s and the BUYING of an American Presidential Election

Super PACs, those fundraising behemoths critics say have the potential to sway voters and the 2012 election, recently released the amount of donations they have received since the start of the year. It’s not insignificant: OpenSecrets.org reviewed the filings provided by 313 super PACs and calculated that they have spent a combined $46.2 million in the 2012 election cycle so far.

“Restore Our Future,” the political action group that supports Mitt Romney’s presidential campaign, raised more than $30.2 million, a record for the 313 super PACs reporting donations. The Newt Gingrich-backed super PAC “Winning Our Future” took in $2.1 million, and the “American Crossroads” committee, the conservative group linked to GOP strategist Karl Rove, collected $18.7 million since Jan 1. By comparison, “Priorities USA Action,” a super PAC that supports President Obama’s re-election, raised just $4.4 million in all of 2011.

Super PACs came into being after the Supreme Court ruled 5-4 in favor of Citizens United vs. the Federal Election Commission. Essentially, that sweeping 2010 decision determined that corporations, labor unions and individuals could give unlimited money to political groups to spend on elections. The Supreme Court determined the free speech protections individuals have, courtesy of the Constitution, would now apply to corporations, too. Super PACs cannot directly coordinate with political candidates, but they’re often viewed as “campaign surrogates” that give unfettered advertising dollars to media outlets in support or opposition of a particular candidate.

Many wealthy individuals, from casino mogul Sheldon Adelson to Hollywood producer Jeffrey Katzenberg, have given millions to super PACs. Prior to Citizens United, political action groups were allowed to accept money from corporations, but restrictions were placed on the amount of the largesse and the timing of the donations. Super PACs are required to submit monthly or quarterly filings to the FEC, but are not compelled to disclose the identities of all of their donors.

Super PACs have already shown the tremendous influence they have on elections and candidates. Both Romney and Gingrich have been pilloried by each others’ super PACs this primary season. Super PACs have also been criticized for the personal relationships many of the groups’ officers have with the candidates. For example, Rick Tyler, a longtime Gingrich aide, was hired by the Gingrich-backed “Winning Out Future” super PAC to lead its fundraising efforts.

According to the Wesleyan Media Project, political advertisements from third parties have increased 1,600 percent since 2008. An analysis by the Center for Public Integrity found that the average donation to a super PAC this year has been $35,000 — a marked difference compared with the maximum $2,500 an individual can donate to a presidential campaign.

Two years after Citizens United changed the political landscape, a growing movement has emerged to challenge the decision and ultimately overturn it.

Jeff Clements, a Boston-based lawyer and author of “Corporations Are Not People” co-founded the nonpartisan “Free Speech For People” campaign for one explicit reason — to reverse Citizens United. In an interview with The Daily Ticker’s Aaron Task, Clements explains why in his view Citizens United has become one of the most “terrible and reckless” decisions ever passed by the Supreme Court and talks about the consequences of unfettered corporate spending.

“It’s an old, crony capitalism idea where big corporations and big government work together to advance the interests of a very narrow global set of corporations,” Clements says. “The government is supposed to reflect all of us, not just the wealthy. Americans have far less speech now, far less of a voice in the process.”

Clements argues that Citizens United has caused an imbalance of power between individuals and corporations. The “fair and free election process” that has been preserved for centuries is on the verge of being dismantled, he says. Clements warns that the landmark decision could create an oligarchy system similar to the one in Russia.

Government leaders at the local, state and national level are introducing legislation to overturn Citizens United. Vermont Senator Bernie Sanders has proposed the “Saving American Democracy Amendment.” More than 201,000 people have signed the electronic petition on Sanders’ web site. Massachusetts Congressman James McGovern introduced the “People’s Rights Amendment” in hopes of repealing the Supreme Court case. According to Clements, there are two ways to overturn a Supreme Court ruling: people can ratify a Constitutional amendment or the Supreme Court can strike down a previous decision.

A decade ago, Jack Abramoff was one of the Washington’s richest and most-successful lobbyists.

Representing Indian tribes, telecom companies, sovereign governments, and dozens of other clients, he played the lobbying game extremely aggressively–so aggressively that he eventually caught the attention of the press and federal investigators.

At first, Abramoff says, he thought he was being unfairly singled out and that the scandal would quickly blow over. Then he began reviewing some of the ~850,000 emails he had written during his lobbying career and realized that, at times, even in a city and profession in which “legal bribery” is business as usual, he had crossed the line.

In early 2006, Abramoff pleaded guilty to three felonies, including conspiracy to bribe public officials, and was sentenced to 6 years in jail. He served three and a half years at a minimum security prison in Cumberland, Maryland, as inmate number 27593-112. He was then released to a Baltimore halfway house in 2010, where he worked at a pizza parlor for about $10 an hour.

Since then, Abramoff has published a book–CAPITOL PUNISHMENT: The Hard Truth About Washington Corruption From America’s Most Notorious Lobbyist–and started giving speeches. He still owes $44 million in “restitution,” so a big chunk of any money he makes will go to the government.

Many Americans view those convicted of crimes as “criminals” who are fundamentally different than everyone else. And although the label is technically true–they have, after all, committed crimes–it often draws a much sharper line between criminals and “good people” than is frequently the case. “Criminals,” in many cases, are good people who have committed crimes. And Jack Abramoff seems an excellent example of that.

In this interview, Abramoff talks about what it was like to fall so hard, what jail was like, and how life has been since his release.

The Republican candidates for president face off tonight in the last debate before the next round of primaries on Tuesday, Feb. 28, in Arizona and Michigan. Ahead of the critical Super Tuesday primaries set for March 6, these two races gained importance, not only in terms of delegates but in terms of momentum, after Rick Santorum swept Mitt Romney in the trifecta of races held earlier this month in Minnesota, Colorado and Missouri. (See: Ralph Nader’s Advice to Gingrich on a Third Party Run: “Go for It!”)

The two candidates are now in a virtual tie in Michigan, but Romney still has a slight edge over Santorum in the Arizona, according to an NBC/Marist poll of likely Republican voters. In Arizona, Romney has 43% of the support and Santorum 27%, followed by Newt Gingrich with 16% and Ron Paul in fourth place with 11%. Meanwhile in Michigan, Romney is favored by 37% of voters versus 35% who are supporting Santorum.

The race has certainly stayed hot, with no clear frontrunner to date. But in light of the poll results and where the candidates stand on the issues, what’s really making the most headlines these days is the amount of money being spent this election and who’s spending it.

The campaigns of the presidential candidates, including all Republican contenders and President Obama, have raised $330 million thus far, according the New York Times’ interactive charts on campaign finance. Obama leads the pack, having raised $151 million since 2008. Romney comes in a distant second having raised around $64 million. In just the month of January, the Republican campaigns raise around $21 million. Romney’s campaign raised $6.5 million and spent nearly three times as much, former House Speaker New Gingrich raised $5.6 million and spent $6 million, while both Rick Santorum and Ron Paul raised $4.5 million, according to the most recent report from the Federal Election Commission.

On the other hand, the “Super PACs” supporting the top Republican candidates raised around $22 million in January and ended the month with $5 million more than the campaigns themselves. The inflow of money to Super PACs resulted from the Supreme Court’s Citizens United decision, which allows individuals and corporation to give unlimited contributions to the candidates of their choice. (See: Super PACs: It’s a Bird! It’s a Plane! It’s — Well, It’s complicated)

As a result, the money has not stopped flowing from some of the country’s wealthiest, like Peter Thiel who has given the pro-Ron Paul Super PAC Endorse Liberty $2.6 million. Casino mogul Sheldon Adleson has given the pro-Gingrich Winning Our Future $11 million to date and is considering giving him another $10 million to $100 million. (See: Rise of the Super PACs: U.S. Votes Essentially Bought, Says Reuters’ Felix Salmon)

The candidates have almost come to rely on the Super PAC financing, but the question now is: Can money buy an election?

 There is perhaps no better person to weigh in on the subject than former Washington insider and lobbyist Jack Abramoff, who knows all too well what money can buy you in D.C. He spent years building influence with many of our elected officials, bestowing them lavish gifts, dinners and campaign contributions. All that stopped in 2006 when he plead guilty to fraud, tax evasion and conspiracy to bribe public officials. He subsequently served 43 months in jail.

“There is no question money on both sides is going to win this election,” says Abramoff who is also the author of the new book, Capitol Punishment: The Hard Truth About Washington Corruption From America’s Most Notorious Lobbyist.

Earlier this month, President Obama reversed his stance on contributions from outside interest groups and pushed big donors to contribute to the Super PAC in his favor, Priorities USA Action. The pro-Obama Super PAC, founded by two of his former aides, raised nearly $60,000 in January.

If money continues to influence the presidential election and the entire political process in the country, isn’t there a case for it to stop? Do we need to get the money out of politics? Abramoff says, no, but with a caveat.

“I think we need to get certain money out. I think we need to get the money out that wants something back … . Because that money is bribery money,” he explains to The Daily Ticker’s Henry Blodget in the accompanying interview. “In terms of the other money, personally, I feel that if somebody wants to give money because they believe in somebody [or] they believe in their candidacy and they are not asking for something, let them give all the money they have as long as we know about it and as long as it is public.”

On the flip side, others would argue that money is not the only answer to getting elected. (See:Money & Politics: Freakonomics Author Gives “Big Fat No” to Idea Money Buys Elections)

Take for example Texas Governor Rick Perry, who amassed a lot of money only to lose it all after flubbing debate after debate. Fast forward to today. Gingrich has lost his allure even with the multimillion-dollar backing of Adelson, and Santorum has surged back with relatively little support.

“I don’t think there is any doubt that money alone won’t do it — an odious character can come forward with tons of money and go nowhere,” says Abramoff. “I think you have to be a substantial candidate who people want to vote for, and unfortunately Governor Perry did not present himself like that.”

The impact of money on politics in the United States is a hotly debated topic these days as tens of millions of dollars flow freely into the presidential election as a result of the Citizen United decision handed down by the Supreme Court. The high court’s ruling allows individuals and corporations to donate unlimited amounts of money to Super PACs that support individual candidates. (See: Super PACs: It’s a Bird! It’s a Plane! It’s — Well, It’s complicated)

To date, many millionaires and billionaires have contributed to the candidate of their choice, and companies have done the same. Many Super PAC critics argue that this influx of money will tip the election results in the favor of whoever can raise the most money, essentially buying the election.

But that is not the only issue to be concerned about, says ex-lobbyist Jack Abramoff. The American people should be concerned about what these donors may eventually ask for in return for their financial support, especially those who are registered lobbyists, or people whose job it is to persuade lawmakers to craft legislation to the benefit of their employers.

As a former Washington insider, Abramoff knows all too well the influence money can get you in D.C. He spent years building influence with many of our elected officials, bestowing them lavish gifts, dinners and campaign contributions. All that stopped in 2006 when he plead guilty to fraud, tax evasion and conspiracy to bribe public officials. He subsequently served 43 months in jail.

While Abramoff served his time and repented for his crimes, little has changed in Washington. The legalized bribery that got him into trouble still exists between K Street and our elected officials, which is why he is on a crusade against the very industry and dealings that got him into trouble.

Abramoff, who is also the author of the new book, Capitol Punishment: The Hard Truth About Washington Corruption From America’s Most Notorious Lobbyist, joined The Daily Ticker’s Henry Blodget to discuss the current corruption in Washington as it pertains to the multi-billion dollar a year lobbying industry and how to change it.

The problem is rampant when it comes to influencing legislation, he says. “In the same way that every $20 bill or $100 bill in America has cocaine on it at some level, there is some aspect of bribery and some aspect of corruption in every one of the [legislative] dealings just because of the pervasive nature of this system.”

From 2008 to 2011, special interest groups spent nearly $3.5 billion a year to peddle influence, according to OpenSecrets.org. The top spenders from 1998 to 2011 include the U.S. Chamber of Commerce spending a total of $805 million, the American Medical Association spending $265 million and General Electric (GE), which spent $293 million.

What is it that these companies and organizations are buying? They are buying access to make sure they are in the game, Abramoff says.

“The are putting a good defense on the field to make sure nothing happens to them… . They are also on offense [as] a lot of companies use the government to smash their opponents,” he says. “If you cannot talk to the person making the decision, you are going to lose.”

In the accompanying video, Abramoff explains how lobbying really works. And yes, as it turns out, it is all completely legal.

“You can be completely contemptible, frankly, within the system and be completely legal and that is part of the problem of Washington,” he says. “Basically what it comes down to is making a relationship with a senator, Congressman or his staff and then availing oneself of the relationship and going into your friend and seeing if that friend would reasonably agree to the thing you are asking for. And that, by the way, is all fine, except for the money part.”

As Abramoff tells Henry, he is not outright against lobbying because he does believe people have the right to petition the government. However, he feels money should be taken out of the game and that these four rules should be instituted.

1. Institute term limits for members of Congress so it is less likely they can be influenced by special interests.

2. Shut the revolving door between public service and the influence industry, which he explains is much more than just lobbying.

3. Ban all financial contributions from anyone who does business in Washington including meals, fundraisers or campaign contributions.

4. Every law that they make needs to be applied to them.

Abramoff is confident that these rules would completely change the way Washington works, but the most important thing is taking money out of the special interest game. In doing so, “hopefully [Congress] members would have to go out and raise money among people who actually think they are good members of the legislature,” he says. “They wouldn’t be selling their vote, even thought they don’t call it selling their vote to the highest bidder.”

 

Pro Romney Super Pac’s Money Sources

Restore Our Future, the super PAC supporting Mitt Romney’s presidential candidacy, raised $7 million in January, topping off its deep reservoir of funds and allowing the group to flood media markets from Sioux City to Sarasota with some $14 million in advertising. The group’s FEC disclosure on Monday revealed that its extensive effort to elevate Romney and bury the competition relied on a set of donors that runs the gamut from famous heirs and CEOs to the most opaque and controversial kind of corporate interests.

Unlike its competitors, Restore Our Future doesn’t have a lone high-profile benefactor, like Newt Gingrich has in Sheldon Adelson or Rick Santorum has in Foster Friess. But Romney’s super PAC doesn’t lack for big-name individual donors: Hewlett-Packard CEO and former California gubernatorial candidate Meg Whitman gave $100,000 in January, as did Alice and Jim Walton of the Walmart fortune. The Marriott brothers, J.W. and Richard, each gave $250,000. (Romney once sat on the company’s board, and his given name Willard was taken from the late John Willard Marriott Sr., the hotel chain’s founder.) Oklahoma mine mogul Joseph Craft gave $500,000, as did hedge funder Bruce Kovner and David Lisonbee, who stared the Utah vitamin company 4Life Research. (MORE: Super PACs, the Great Democratizers)

In this sense, the disclosure reflects a broader post-Citizens United development. Campaign finance-reform advocates have warned that unlimited donations from corporations, newly empowered to give limitless sums, would have a corrupting influence on American democracy. In many ways, their worst fears have not materialized: the overwhelming majority of donations to super PACs disclosed so far have come from a new class of celebrity super-donor.

This is certainly the case for Romney. Of 25 six-figure donations made to Restore Our Future in January, only two of those came from corporations: $100,000 from the Larry H. Miller Group, which bears the name of the late founder, a Salt Lake City businessman and sports-team owner whose family maintains control of his company; and Select Management Resources, a limited liability corporation registered in Alpharetta, Georgia. The former reflects a trend among corporate donors: a well-known company connected to a well-known executive, in many cases one who has already given to Romney’s presidential campaign directly.

The latter represents a more mysterious group of contributors that could prove controversial for Romney in the long term. Donations from limited liability corporations like Select Management Resources comprise a small fraction of total super PAC gifts, but they come from the kind of organizations that campaign finance reform advocates worry about: difficult to track companies, sometimes with ties to special interests. Last April, a newly registered corporation called W Spann LLC gave $1 million to Restore Our Future, only to dissolve a few weeks later. After a month of scrutiny, Ed Conard, a former managing director of the Romney-founded private equity firm Bain Capital, came forward as the source of the funds. Another entity, F8 LLC, also gave $1 million. It was created by a lawyer with ties to Steve Lund, the former CEO of Nu Skin cosmetics, who had given another $1 million through a company called Eli Publishing Inc. The New York Times tracked $250,000 from Paumanok Partners LLC back to William Laverack Jr., an investor and major Romney supporter. (MORE: What Will Mitt Romney Talk About if the Economy Gets Better?)

The biggest LLC checks to Restore Our Future in January came from entities close to one industry: short-term lenders. Select Management Resources LLC, the aforementioned $100,000-donor, is owned by Rod Aycox, the president of LoanMax, a nationwide auto-title lender. Aycox has given heavily to politicians of both parties, including Barack Obama, in the past. RTTTA LLC, a limited liability corporation based in Provo, Utah, that gave $75,000 to Restore Our Future, is registered with J. Todd Rawle, an executive at payday lender Check City and a Romney donor. Another $25,000 check came from REBS Inc., a company based in Las Vegas that shares an address with a Check Citystore. REBS Inc.’s registered agent is Yahi Peak LLC, which is also the registered agent for Tosh Inc., Check City’s parent company.

These donations make sense. Lenders like LoanMax and Check City top the list of regulation targets for Obama’s new Consumer Financial Protection Bureau , and Select Management Resources spent $600,000 lobbying on consumer finance issues in 2010, the year the legislation that created the CFPB was passed. (Romney has pledged to repeal the law.) They’re also the kind of donations that can be politically tricky if Democrats cast Romney as indebted to lenders accused by consumer advocates of exploiting the poor with massive interest rates. In a 2005 report on how auto title lending is “Driving Borrowers to Financial Ruin,” the Center for Responsible Lending and the Consumer Federation of America noted:

As they have grown in size and number, title lenders have made substantial campaign contributions and have succeeded in forwarding their legislative agenda in a number of states. Title lending giant Rod Aycox, a former partner in Title Loans of America and the creator of Select Management Resources, has contributed to political campaigns throughout the country and was reportedly the largest individual contributor in the 1998 Tennessee state elections. The Atlanta Journal-Constitution recently reported that Mr. Aycox, his companies, and his close relatives had donated over $300,000 to 130 state and federal candidates and political committees in 10 states since the year 2000.

Other corporate contributors to Restore Our Future include companies with more apparent ties to the usual mix of power players who fill campaign coffers in each party every election cycle. (MORE: Attack of the Super PACs!)

One $50,000 check came from Buena Vista Investments LLC, a Seattle company registered to hotelier Gordon Sondland, a major Republican donor who served as a bundler for John McCain in 2008. JTC Holdings LLC, a California corporation registered with real estate executive Justin Chang, an active Republican donor who’s given to Romney and his PAC in the past, donated $20,000. Mostcorporate donors were not LLCs.

United Refining, an oil company whose chairman and CEO John Catsimatidis has donated to both Democrats and Republicans, gave $25,000. Manchester Financial Group, a San Diego company headed by Doug Manchester, a hotelier and developer who donated money to gather signatures for a gay marriage ban in California, donated $25,000 as well. So did Clinical Medical Services, Inc., a medical equipment provider affiliated with Raul Rodriguez, a donor to the Romney campaign.

Ryan Enterprises Group, an investment firm founded by Chicago businessman Pat Ryan, a longtime political donor who threw George W. Bush a fundraiser at his home in 2004 and has also given directly to Romney this cycle, kicked in $25,000 too, as did Suffolk Construction Company, a contractor based in Massachusetts. Its CEO, John Fish, raised funds for Romney in 2007, only to switch allegiances to Obama after Romney dropped out.

It’s possible that these well-established donors are beginning to shift political giving to their primary companies, or others within the corporations might be behind these contributions. Some may prefer to make such gifts through LLCs to secure an extra layer of distance. Or not. We don’t know. Even though corporate donations account for a small slice of super PAC funds, that uncertainty is part of the post-Citizens United landscape.

Romney Foolishly Believes E-Verify is Effective and Working

At Wednesday night’s GOP debate, Mitt Romney called Arizona a “model” for immigration enforcement, singling out the state’s 2007 law mandating that all employers use the national E-Verify database when hiring workers. He promised to institute a national E-Verify law if elected. “You do that, and just as Arizona is finding out, you can stop illegal immigration,” he said. Last May, the state defeated the Chamber of Commerce’s suit against the law in the Supreme Court.

Kansas Secretary of State Kris Kobach, Romney’s adviser on immigration issues, helped write Arizona’s E-Verify law as well as Arizona’s 2010 SB1070 law (Support Our Law Enforcement and Safe Neighborhoods Act). At the recent Conservative Political Action Conference in Washington, Kobach touted what’s happened in Arizona as proof that “self-deportation”—Romney’s chosen immigration strategy—is working. “People started self-deporting by the tens of thousands,” after E-Verify passed, he said, according to the Hill.

Romney and Kobach are right that, on at least one level, the law has had a significant impact in Arizona. A study published last year by the Public Policy Institute of California shows that about 92,000, or 17 percent, of the Hispanic non-citizen population of Arizona left the state in the year after the state passed E-Verify legislation; most of those who moved were probably illegal immigrants. PPI researchers told Yahoo News that the law—not the recession, or highly-publicized raids targeting illegal immigrants—was the most likely cause of the exodus.

Yet while PPI’s research helps predict what might happen if an E-Verify system were implemented nationally, as Romney hopes, it exposes some of the less-desirable side-effects of the law as well. In Arizona, the non-citizen Hispanic workers who did stay behind increasingly shifted into a shadow economy, said Magnus Lofstrom, a co-author of the study. The self-employment rate among non-citizen Hispanics in Arizona nearly doubled post-E-Verify, and a higher proportion of people who said they were self-employed lived in poverty and lacked health insurance.

Lofstrom told Yahoo News that the informal economy would grow significantly nationwide if a national E-Verify system were established. While illegal immigrants in Arizona were able to move to other states to find work, their choices would be significantly limited if E-Verify were implemented nationally; the only real (and unlikely) option would be to for undocumented workers to move to another country. In other words, we’d be much more likely to see an increase in informal employment rather than a massive movement among illegal immigrants to “self-deport.”

What would that mean? An increase in informal employment among the nation’s estimated 11 million illegal immigrants would result in lower tax revenues–since non-self employed illegal immigrants are more likely to have taxes withheld from their paychecks–higher poverty levels among illegal immigrants, and a higher potential for employer abuse, said Lofstrom. (Right now, America has a relatively small shadow economy compared to other developed countries, like Italy.)

Another snag with instituting a national E-Verify program is that the current system cannot detect identity fraud. A 2009 government-commissioned study found that E-Verify only flags illegal immigrants half the time, because it can’t detect when a worker is using documents that belong to someone else. (Employers enter in Social Security or alien registration numbers, birthdates and names of employees into the database, which figures out whether they match the federal immigration and Social Security databases.) To combat this fraud, Romney has said he supports biometric ID cards for immigrants that would contain a fingerprint or other identifying device that clears them for work. Romney hasn’t explicitly said that every person in America should have this card–an idea that many libertarians object to. But without being adopted universally, undocumented people could still use false documents. (The Romney team had not responded to requests for comment from Yahoo News by the time this article was published.) Mandatory national ID cards have played a starring role in failed bipartisan immigration reform proposals in Congress over the past few years.

In Arizona, there is no state-wide system to make sure businesses are using E-Verify. Rather, individual citizens are asked to expose employers that they suspect of hiring illegal immigrants to their local district attorneys. Yet district attorneys were not granted the power to subpoena businesses that are suspected of hiring illegal immigrants, and some DAs have complained that the law is an unfunded mandate for their offices, according to Judy Gans, immigration policy director at Arizona University’s Udall Center. Only three businesses were prosecuted under the law in the first three years after it passed.

But business owners still worry that E-Verify’s high error rate could leave them open to prosecution. Republicans in Arizona’s state Senate are now moving to change the law at their request. Republican state senator Jerry Lewis, who defeated anti-illegal immigration hardliner Russell Pearce last year in a historic recall election, is co-sponsoring a bill with seven other Republican senators to provide “safe harbor” to businesses that use E-Verify but still accidentally hire unauthorized workers.

Lewis, who is backing Romney, told Yahoo News that he is not a fan of Kobach’s draft immigration laws.

“Does Kobach’s presence in Romney’s campaign create a difficulty for him? I believe it does,” Lewis said. “I think people want a real solution and I don’t think the legislation that has been drafted by Kobach is a real solution.” Lewis said the immigration laws “polarize people.”

Lewis added that he thinks Romney will eventually agree with him that making all illegal immigrants leave the country is not a solution to the country’s immigration problems.

“I think he’ll realize that there is a place for a real solution to the issue, and it’s not just let’s get everybody that’s undocumented out of the country,” Lewis said.

Are Republicans Liars or Just Stupid When They Blame Obama for High Gas Prices

In a blistering election-year attack on his political foes, President Barack Obama charged Thursday that Republicans are “licking their chops” over painfully high gas prices that threaten the fragile economic recovery.

“Only in politics do people root for bad news and they greet bad news so enthusiastically,” he said in a combative speech at the University of Miami. “You pay more, and they’re licking their chops.”

The defiant rhetoric came after days in which the White House has worked to get off the defensive over high gasoline prices, insisting that Obama has done everything he can to bring those costs down. The administration blamed sticker shock at the pump on unrest in the Middle East, speculative trading, and heightened demand in China, Brazil, and India.

Obama assured Americans that he feels their pain, saying the rise in gas prices “hurts everybody” and “means you’ve got to find even more room in a budget that was already tight.”

The president accused Republicans of seeing “a political opportunity” and mockingly described them as “dusting off their three-point plan for $2 gas.”

“I’ll save you the suspense:  Step one is drill, and step two is drill, and then step three is keep drilling,” he said. “Well the American people aren’t stupid.  They know that’s not a plan — especially since we’re already drilling.  That’s a bumper sticker.  It’s not a strategy to solve our energy challenge.  It’s a strategy to get politicians through an election.”

Republicans angrily shot back that the president was the political opportunist.

“Facing an election, the President would like everyone to forget that gas prices have doubled over the past three years while he consistently blocked and slowed the production of American-made energy. From his drilling moratorium to his denial of the keystone pipeline, the President has time and again sided with his liberal base over American families” said Brendan Buck, spokesman for House Speaker John Boehner.

Obama said there were “no quick fixes” and “no silver bullets” to solve the situation and called for a “sustained, all-of-the-above” approach to develop domestic energy.

“Anyone who tells you we can drill our way out of this problem doesn’t know what they’re talking about — or just isn’t telling you the truth,” he said.

Obama explained that he had expanded drilling and pushed for continued investments in American-based energy — “oil, gas, wind, solar, nuclear, biofuels, and more” — and the development of more fuel-efficient vehicles and buildings. And he warned the problem might take more than a decade to solve.

Ahead of the speech, Republicans sent reporters findings from independent fact-checking organizations that show the drop in oil imports, which Obama ascribes to his policies, actually stems from declining demand, which has resulted from the worst recession since the Great Depression.

And Republican Senate Minority Leader Mitch McConnell scoffed at Obama’s call to end government subsidies to hugely profitable oil companies — a stable of the president’s campaign rhetoric.

“If someone in the administration can show me that raising taxes on American energy production will lower gas prices and create jobs, then I will gladly discuss it,” said McConnell. “But since nobody can, and the president doesn’t, this is merely an attempt to deflect from his failed policies.”

McConnell pushed Obama and congressional Democrats to “open their eyes to the opportunity presented by the Keystone XL pipeline” designed to carry oil from Canada to the Gulf of Mexico.

The Obama administration postponed a decision on the pipeline, which is expected to come after the November election.

Are Republicans Really ANTI – WOMAN or Just Prudish Chauvinists

The social conservative wing of the Republican Party has also long contained a strong strain of hostility to sex for purposes other than procreation and a fear of women being able to control their bodies without the dominance of men.

As the GOP rushes headlong to the extreme right in order to satisfy its base primary voters, that strain is now manifesting itself in the mainstream of the Republican Party as active hostility to protecting the basic health of women, particularly in areas that have anything to do with reproduction.

Republicans are now transforming themselves into a party that is dangerous to the health and safety of American women.

The fight over whether Catholic institutions that hire non-Catholics and serve the general public like universities and hospitals must follow the general law and provide contraception under their employee health plans — which should have been resolved by President Obama’s compromise that the insurance companies and not the Catholic employers would provide it — is just the tip of the iceberg.

• All 8 Republicans on the Senate Judiciary Committee voted against reauthorizing the Violence Against Women Act (VAWA), which was first enacted in 1994 with bipartisan support and was last reauthorized in 2005 by unanimous consent in the Senate and with 415 votes in the House and signed by George W. Bush. VAWA is aimed at improving criminal justice and community-based responses to domestic violence, date rape, sexual assault and stalking. Although some Senate Republicans like Mike Crapo of Idaho did co-sponsor the bill, all 8 Republicans on the Judiciary Committee voted no. Among other things, the Republicans wanted to defund the Office on Violence Against Women in the Justice Department, and objected to provisions which extended the protection of the Act to gays and lesbians, and provided protection to abused women who are illegal immigrants to come forward. Apparently Senate Republicans don’t believe that gays, lesbians and illegal immigrant women who are raped or sexually assaulted deserve the protection of VAWA.

• Under a new law passed by the Virginia State Legislature, and expected to be signed by Republican Governor Bob McDonnell (a contender for the Republican vice presidential nomination), women who want to have a legal abortion will be required to have a transvaginal ultrasound in which a probe is inserted into the vagina, legally forcing a woman to be penetrated for no medical reason. A Republican lawmaker justified this on the grounds that women had already made the decision to be “vaginally penetrated when they got pregnant.” The law is almost certainly unconstitutional as an “undue burden” on women’s rights, but that hasn’t stopped Virginia Republicans from passing it.

• From 1976 until this year, there has been a de facto bipartisan truce between anti-abortion and pro-choice supporters in Congress under which taxpayer dollars could not be used for abortion except in the case of rape, incest, or when the pregnancy endangers the life of the mother. 173 House Republicansco-sponsored a bill that would drastically redefine “rape” and “incest”. Incest wouldn’t be included in the exemption unless the girl is under 18. The definition of “rape” would be limited to “forcible rape.” Rapes in which women are drugged, or given large amounts of alcohol, rapes of women with diminished mental capacity, and many date rapes wouldn’t be covered. Nor would statutory rape — so a 30-year-old man having sex with a 12 year old girl wouldn’t count. This attempt by the Republican House to redefine rape downward stands in stark contrast to Democratic Attorney General Eric Holder’s recent announcement of an expanded definition of rape in the Uniform Crime Report to mean “the penetration, no matter how slight, of the vagina or anus with any body part or object, or oral penetrations by a sex organ of another person, without the consent of the victim”. Faced with a firestorm of pressure, the House GOP eventually decided to remove the forcible rape redefinition from the bill, but that doesn’t take away from their initial impulse to include it.

Moreover, it may come as a shock to many women that in 2012, their access to birth control should become a political issue in the Republican primary. But as recently as 1965, 30 states outlawed or limited the right to use birth control. In that year, the Supreme Court overturned such laws in the case of Griswold vs. Connecticut which held that the Constitution implies a right of privacy which prohibits states from interfering with the right of married people (later extended to all people) to use birth control in the privacy of their bedroom.

One of the leading Republican presidential contenders, Rick Santorum, has stated that contraception is “not okay. It’s a license to do things in a sexual realm that is counter to how things are supposed to be.” Moreover, Santorum told ABC’s Jake Tapper that the Supreme Court was wrong in Griswold and states should have a right to ban birth control.

Mitt Romney, the supposed moderate in the Republican race, is not far behind Santorum when it comes to a woman’s right to contraception. ABC’s George Stephanopoulos asked Romney, “Do you believe that states have a right to ban contraception? Or is it trumped by a constitutional right to privacy.” Romney evaded the question, responding “I don’t know whether a state has a right to ban contraception.” Romney — like Barack Obama a graduate of Harvard Law School — would have learned the Griswold case in Constitutional Law 101, so he was being ingenuous.

More recently, Romney has started calling certain birth control pills “abortive pills,” joining Michele Bachmann in denouncing Plan B “morning after” pills as abortion. But Romney is just joining Bachmann in her ignorance. The Plan B pill is not an “abortion pill” or an “abortive pill” and the label on its package already warns pregnant women not to take it because “if you’re already pregnant, it won’t work.” The Plan B pill uses the same active ingredients as regular birth control pills and works in the same way as regular birth control pills by preventing the implantation of an egg in the uterus. So if Romney thinks that Plans B pills cause abortions — which he now opposes — then he must also be opposed to ordinary birth control pills.

Put aside whether you’re anti-abortion or pro-choice — many people have good faith and strongly held disagreements on abortion. But recent Republican attacks on a woman’s right to obtain contraception, on laws protecting against violence on women, Republican-backed legislation to require women seeking legal abortions to have medically unnecessary ultrasounds which penetrate the vagina, and Republican attempts to redefine “rape” as only including forcible rape, should raise serious concerns that the GOP is becoming dangerous to the health and safety of American women.

Romney Continues to Bring Yawns to GOP aka BORING

If Mitt Romney wins the Republican nomination for president, he’ll face the urgent task of inspiring the party’s conservative core and rallying them to beat President Barack Obama.

Judging by his performances in the primaries and caucuses so far, and the challenge he faces next week, he’s got his work cut out for him.

Even Republicans who think he’ll be the nominee worry about whether he can generate the intensity required to beat the Democratic incumbent.

These party leaders and activists, from the states voting Feb. 28 and the most contested ones ahead in the fall, say Romney has made strides toward addressing this problem. But, they say, he needs to do more to convince the Republican base that he’s running to fundamentally reverse the nation’s course, not simply manage what they see as the federal government’s mess.

“I think Romney will be the nominee, but there is still tremendous work to be done,” said Sally Bradshaw, a Florida Republican and adviser to former Gov. Jeb Bush. “He has got to find a way to unify the party and increase the intensity of support for him among voters who have supported Newt Gingrich, or Rick Santorum or Ron Paul or someone else. And that is going to be the key to how he does in the fall.”

Romney leads in the delegate count for the nomination, and by a wide margin in private polling ahead of the Arizona primary Feb. 28. But the rising challenge from former Pennsylvania Sen. Rick Santorum in the contest also that day in Michigan, where Romney was born and raised, underscores doubts about Romney’s ability to ignite fervor in the GOP base.

He nearly tied Santorum in Iowa, although entrance polls showed that more of Santorum’s backers than Romney’s said they were strongly behind their chosen candidate.

Romney lost the primary in South Carolina last month to former House Speaker Newt Gingrich. More of Romney’s supporters in that state said they would support him with reservations in the general election than would support him enthusiastically.

Santorum swept caucuses Feb. 7 in Colorado and Minnesota, and the nonbinding Missouri primary.

Romney’s challengers have risen by sounding more conservative and displaying sharper differences with Obama, while nipping Romney’s appeal as the most electable against Obama.

Romney, a former Massachusetts governor with a moderate past, has campaigned more as the likely GOP nominee, portraying himself as acceptable to swing voters in a race where polls show voters prizing most a candidate’s perceived ability to beat Obama.

Romney has pivoted toward the GOP’s conservative base in light of Santorum’s surge.

He dove into the debate over whether birth control ought to be covered by health insurance provided by church-backed employers by faulting the Obama administration’s original push to do so as an “assault on religion.” But Romney was accused of overreaching after recently telling influential conservative activists, “I was a severely conservative Republican governor.”

“In Romney’s case it’s like the difference between someone who grew up speaking Spanish and someone who went to school to speak Spanish,” said Constantin Querard, an Arizona Republican operative. “The moment Romney starts speaking, people know the difference.”

A Pew Research poll taken last week shows the Republican voters nationally who think Romney is a strong conservative has dipped to 42 percent from 53 percent in November.

Romney’s campaign aides say it’s unrealistic to think conservatives staring at the possibility of a second Obama term will not unify behind Romney. “President Obama is the best unifier the Republican Party could ever hope for,” Romney’s political director, Rich Beeson, told The Associated Press.

The campaign points to recent conservative opinion leaders who have signed on to his campaign, and his support from popular rising conservative figures such as South Carolina Gov. Nikki Haley as evidence of Romney’s newfound buzz.

Michigan Republican Holly Hughes, who supported Arizona Sen. John McCain in the 2008 primary, said Romney is more passionate than during his failed bid that year.

“He’s a different candidate than he was four years ago,” said Hughes, a Republican national committeewoman from Muskegon County. “There wasn’t the excitement there.”

Hughes and others also point to Romney’s winning the straw poll at the recent Conservative Political Action Convention in Washington, which attracted thousands of the nation’s most ardent conservative activists.

Yet Michigan GOP consultant Tom Shields said Santorum, now ahead of Romney in polls Romney’s native state and where his father served as governor, is exciting people where Romney isn’t.

Establishment Republican figures are lining up behind Romney in Michigan, including Gov. Rick Snyder. But in 2000, Gov. John Engler promised to deliver the state as George W. Bush’s firewall; McCain won the primary that year.

“For whatever reason, Romney’s not objectionable. But people just haven’t fully warmed up to him,” said Shields, who conducts public opinion polling in Michigan. “They’ve just refused to take the next step and marry the guy.”

It foretells problems assuring the die-hard GOP activists will be lining up in November, when their phone-banking and door-knocking could make the difference in a close election against an Obama re-election campaign projected to have $1 billion to spend.

“I voted for him. I don’t want to screw around because he’s who we’re going to end up with,” said former Arizona GOP Chairman Mike Hellon, referring to his absentee primary vote for Romney. “But I talk to people who are generally reluctant to pull the trigger for him. More than anything else, that’s’ a problem of intensity which could be a problem in the fall.”

Romney could spice things up with his running-mate choice, although some say an August announcement might be too late to lock in the GOP foot-soldiers.

“There’s a lot of speculation that Marco Rubio could be the vice presidential nominee,” Iowa Gov. Terry Branstad told the AP, referring to the freshman Florida senator and tea party favorite. “I think somebody like him could add some real excitement to the ticket, would be kind of a help to Romney if he does wrap up the nomination.”

Candidates historically do not win close elections based on their running mate, although they have in recent elections received a temporary bump in their national poll standing. The choice can ignite passion among the party base, as did McCain’s selection of Alaska Gov. Sarah Palin in 2008.

Concerns about the enthusiasm Romney generates correspond with a general dip in excitement among Republicans in a nominating campaign that has lurched one way and another in nine contests over the past six weeks.

A CNN/ORC International poll published Wednesday showed 51 percent of Republicans nationally were extremely or very enthusiastic about voting for president in the election, down from 64 percent in October.

But the dip in GOP enthusiasm, and especially Romney’s three-way loss this month, is a stark warning to Romney that he cannot wait or rely on public unpopularity with Obama to provide momentum for him.

“He cannot bank on the anger against Obama among Republicans to create the turnout we need in the Fall,” Florida’s Bradshaw said.

Republicans Secretly Hope for Another Candidate Soon

Could the battle for the Republican nomination go all the way to the Republican convention in August? Could we see an entirely new candidate getting into the race?

One long-time Republican leader tells ABC News the answer to both questions is yes.

“If the Republican primary voters continue to split up their votes in such a way that nobody is close to having a majority, then there is a chance that somebody else might get in,” former Republican Party chairman Haley Barbour said in an interview with ABC News.

Barbour calls such a scenario unlikely, but not out of the question.

“I think the odds of having a contested convention are not good but the fact that we are where we are and there is actually a possibility, I guess this is why there is so much talk,” he said.

A contested convention would mean another six months of Republicans battling Republicans, but Barbour says that’s not necessarily bad for the party.

“It is not accurate to say that a hotly contested convention is necessarily bad,” Barbour said. “I am not saying it is necessarily good, but I don’t think it is accurate to say it is necessarily bad. Let’s just see.”

Barbour, who has not endorsed any candidate, says Mitt Romney has never really been a true front-runner.

“In our primaries the more conservative candidates have an advantage,” Barbour said. “Doesn’t mean they always win. But that is just a fact and I think Romney is showing himself to be moderately conservative. We still have a long way to go with three candidates who are to the right of Romney.”

That doesn’t mean, however, that he thinks Romney cannot win.

“In our party it is an advantage to be more conservative, but at the end of the day I think most Republicans want somebody who can beat Barack Obama,” Barbour said. “And nobody in my opinion has made that case to the Republican voters yet – Romney, Santorum, Paul or Gingrich. I don’t think any of them has made the case that ‘I am the guy who has the best chance to beat Obama.’”