To: Our Readers

• Special Iowa Report: Democrats optimistic and Republicans lukewarm
• Fred Thompson is the 'X factor' in Iowa
• Obama could be this year's Howard Dean
• Hillary Clinton headed towards third place in caucuses
• Times are bad for Hawkeye State Republican Party

Outlook

1. As this year's session of Congress nears adjournment this week, Republicans are claiming victory with the likely passage of an omnibus appropriations bill roughly meeting President George W. Bush's spending limits. It contains money for the Iraq War and apparently is free of Democratic conditions. Clearly, the Democratic leadership did not want to risk a government shutdown. It's yet more proof that Democrats are unwilling to take bold action on Iraq.
2. However, conservative Republican leaders -- led by Senators Tom Coburn (R-Okla.) and Jim DeMint (R-S.C.) -- would have preferred a continuing resolution (CR) that did not contain any new earmarks. But the Senate appropriators -- led by Senate Minority Leader Mitch McConnell (R-Ky.) with lots of earmarks for his re-election campaign -- insisted on an omnibus bill that would include 12,000 new earmarks. The reformers, getting no support from the White House, feel the GOP has missed a golden opportunity to re-brand itself as the party of fiscal integrity.
3. President Bush and the Republican minority in Congress showed, as the session ended, that they are still capable of stopping tax increases. The energy bill could not be passed until the tax component was removed, and the alternative minimum tax (AMT) patch could not be passed with a big tax hike (on equity funds and hedge funds) to offset the "tax cut." Even a small tax increase, much less major tax revision, will have to await a bigger Senate Democratic majority and a Democratic President.
4. The conflict over the CIA's destruction of interrogation tapes will take a break for Christmas and then return in earnest early next year. Republicans are just as concerned as Democrats over the CIA's acting as an autonomous government and feel President Bush made a major mistake in refusing to let agency officials testify.
5. In the Republican presidential race, on an upswing are former Arkansas Gov. Mike Huckabee -- still is an unlikely nominee -- and Sen. John McCain (Ariz.) -- still in a low position. Former New York Mayor Rudy Giuliani is slipping, and former Massachusetts Gov. Mitt Romney is holding even. Iowa and New Hampshire are vital for Romney. If he wins both, he probably will be nominated. If he loses both, he is surely gone. If he splits them, he is still in the ball game. McCain needs a win in New Hampshire. Giuliani may be able to survive if he loses in both and Romney does not win both. Thompson still has shown little to recommend him, but he could make a late surge in Iowa.
6. In the Democratic presidential race, Sen. Hillary Clinton (N.Y.) will be nominated if she wins Iowa and follows it with a probable win in New Hampshire. Nobody is sure how much a loss in Iowa would hurt her. She will not drop as far and as fast as Howard Dean did, but an Iowa defeat would have consequences. Sen. Barack Obama (Ill.) will have a huge upside if he could string together Iowa and New Hampshire wins. Former Sen. John Edwards (N.C.) has to win one of them just to stay alive.

Special Iowa Report

With the Iowa caucuses on January 3, Senior Reporter Tim Carney travelled through Iowa last week to watch the candidates, speak to voters and meet with local activists. Here is his report:

Overview: Throughout the state, the constant was Democrats optimistic with Republicans lukewarm or afraid.

1. In both parties, about half the voters are undecided, but the indecision in the Republican Party is of a different nature than that among Democrats.
2. While not quite choosing the least of nine evils, most Iowa Republicans interviewed feel they are making compromises in whichever candidate they end up picking. The top candidates have downsides on policy -- former Massachusetts Gov. Mitt Romney is seen as a flip-flopper, former New York Mayor Rudy Giuliani is socially liberal and former Arkansas Gov. Mike Huckabee believes in big government -- and electability: Romney's Mormonism, Giuliani's marriages and Huckabee's lack of funds and overt religiosity.
3. Democratic voters, by contrast, are happy with their whole top tier. Many Iowans torn among New York Sen. Hillary Clinton, Illinois Sen. Barack Obama and former North Carolina Sen. John Edwards -- or two of those three -- feel they are trying to decide among good choices. While some will choose on electability, many Democrats expressed confidence that whomever they nominate will win in November.
4. Democratic candidates' rallies were more upbeat and better attended. A clear contrast was the crowd in Johnston outside last Wednesday's Republican debate compared to that outside the Democrats' debate the next day. The Republicans had nowhere near the energy and enthusiasm of the Democrats, whose rally resembled a Big Ten pep rally.
5. While there was some enthusiasm about some Republican candidates, the closest thing to a real motivation was the prospect of stopping another President Clinton. If she is not the nominee, the GOP ennui on display in Iowa this month could very likely persist through to November.

Republicans: Huckabee's lead in the polls hardly assures a victory, and this race could change dramatically in the next three weeks.

1. The "X factor" in this race is former Sen. Fred Thompson (Tenn.). Most Iowa Republicans did not even mention his name in discussing candidates they supported or opposed. He simply does not register in the minds of potential GOP caucus-goers, but when asked about him, voters have little negative to say.
2. Thompson has far more upside potential than any other Republican, and he is spending the entire final stretch in the Hawkeye State. Thompson has perhaps the most broadly conservative record of any candidate besides the three congressmen (see below). Many conservative Iowans currently settling for Romney, Giuliani or Huckabee (or planning a protest vote of sorts for one of the congressmen) could certainly jump on board with Thompson. If he defies his reputation as a lazy worker, he could make a spectacular surge here.
3. Huckabee's high poll numbers and big leads do not guarantee a victory. He has nowhere near the campaign team, organization or money of runner-up Romney. As media scrutiny is finally arriving, he could be in trouble. Still, he is likable, and his openness about his Christianity plays very well among some blocs in the GOP.
4. Many Iowa Republicans like Huckabee because he comes across as genuine, especially in comparison to Romney. This is soft support that could bail to Thompson if he rises or to another candidate if Huckabee's negatives continue to surface.
5. Immigration is a big issue for Iowa Republicans, and Huckabee's support of state-subsidized education for illegal immigrants hurts him. His big-government record turns off some voters but is not a factor for some of his core supporters.
6. Huckabee's dig at Mormons in Sunday's New York Times magazine has turned off some Republican voters as dirty, bigoted or just politically dumb. This is the sort of thing that could bring him down.
7. Romney, like Giuliani, can afford to lose Iowa, but he still might win. His poll numbers have held steady amid Huckabee's rise, and a late Romney collapse seems unlikely. Iowa Republicans who back him generally see him as the most electable conservative (in contrast to Giuliani). His healthcare mandate in Massachusetts turns off some conservatives but appeals to some older Republicans who see it as a legislative triumph in a Democratic environment. Romney's success in business and the Olympics also appeals to potential caucus-goers.
8. Many Iowa Republicans who like Romney, however, consider him a general election liability, either because of his Mormonism or because of his record of flip-flopping. Interestingly, the flip-flops on abortion and other issues don't directly turn off many GOP voters.
9. Giuliani has some appeal in Iowa, though not much. His personal life -- his three marriages, publicly funded trysts -- combined with his New York brashness hurt him here in the Heartland. His support for legalized abortion is definitely a net drag, although Iowa Republicans are hardly uniformly pro-life.
10. Giuliani's main virtue in the eyes of Iowans is his perceived electability. Some see him as the best chance to "beat Hillary." His particularly hawkish tone does not appeal too much here, as most Republicans do not put foreign policy at the top of their priorities.
11. The three congressmen running for President are broadly understood to be the most conservative, but not electable candidates. Representative Duncan Hunter (Calif.) has the respect of many Republican voters in a state where his brand of protectionism has some cachet. Rep. Tom Tancredo (Colo.) appeals to Iowa voters' deep apprehension about illegal immigration.
12. Rep. Ron Paul (Tex.) continues to amaze on many levels, and he had finally started to register on the polls. In last Tuesday's Midwestern ice storm, almost every Iowa event was cancelled. The exception was a Paul rally, which drew hundreds. His crowds are regularly huge and enthusiastic. He chalked up another record fundraising day on Sunday's anniversary of the Boston Tea Party, with more than $6 million in online donations in a single day.
13. This battle will hinge on Thompson's performance down the stretch. If he excels, he could draw down Huckabee's support significantly, and maybe Romney's, too. If Thompson is as uninspired as he has been to date, Huckabee will probably win.
14. The most likely result at this point appears to be a slight Thompson surge at Huckabee's expense, leaving Romney in first place and either Thompson or Huckabee in second. Leaning Romney.

Republican Debate: The Des Moines Register Republican debate was something of a dud (thanks, mostly to the moderator), which is not bad for the front runners.

1. Huckabee continued to walk the compassionate conservative line, but was more compassionate than conservative. Early on, he hit conservative themes, but he consistently worked in his populist message. He railed against high taxes and regulation, but that was his only attempt to reach out to economic conservatives. He made mildly protectionist promises on trade, and he couched his proposals to limit energy use and emissions in Christian ideas of stewardship.
2. Romney, meanwhile, had a forgettable performance, basically refraining from attacking Huckabee. He made no mistakes, though, and that is what he needs to do at this point.
3. The highlight of the debate was Thompson's refusal to go along with a show of hands on the question of catastrophic man-made global warming. It was the first time Thompson has shown any real fire, and it could be the beginning of a surge.
4. Giuliani and Arizona Sen. John McCain both delivered strong performances, but nobody in this debate made a big impression. McCain's dig at ethanol suggested he, like Giuliani, is playing for New Hampshire.
5. Of the minor candidates, Tancredo was the most impressive, hitting the conservative note on every issue, and not focusing strictly on immigration. Paul continued to hammer away at inflation and monetary policy, which is a distraction from the issues that could resonate with the Republican electorate.

Democrats: The Democratic field is in flux, but the primary movement seems be a slow fall for Sen. Hillary Clinton (N.Y.) and a possible surge for former Sen. John Edwards (N.C.). Sen. Barack Obama (Ill.) is the legitimate front-runner.

1. Obama is ahead in most, but not all, Iowa polls. While certainly not guaranteed victory, he is the favorite. He is an expert at melding his attacks on the Bush Administration and big business into a positive message. For many Democratic voters, he represents the change they feel Washington needs.
2. While charismatic, Obama raises some questions. Many Iowa Democrats are unsure of his views on issues, and his inexperience could certainly make his current supporters think twice in the voting booth. Every four years, there is some candidate who is supposed to bring out young voters, and it never pans out. Obama could be this year's Howard Dean.
3. Edwards has the greatest upside potential of the Democratic candidates. He is the one Democrat who really brings voters to their feet, and his anti-big business posture resonates with many Democrats. He inherits a strong base of support from his 2004 second-place Iowa finish, plus he is the only one in this field who has done this before. On the strength of being the most popular second-choice candidate, Edwards could possibly win the caucuses or at least finish a close second.
4. Clinton can take some comfort in continued strong showings in Iowa polls, sometimes coming in first. But her momentum is going the wrong way, and her negatives are high among potential caucus-goers. She's not a strong second choice for supporters of second-tier candidates or undecided voters.
5. Many Iowa Democrats see Clinton as a continuation of divisive and dirty Washington politics. She is also perceived as too cozy with lobbyists and big business. She could certainly find herself in third place.
6. While many Republicans are ready to delve into the second tier on their side, Democrats are basically sticking to their top three. New Mexico Gov. Bill Richardson and Senators Joe Biden (Del.) and Chris Dodd (Conn.) don't look likely to make big impacts in Iowa, and will likely be non-viable in many precincts.

Democratic Debate: The Democratic debate was more lively and interesting than the Republican debate, but it did not shake up the race much. It did, however, reveal some of the candidates' strategies.

1. Obama continued to blend his message of hope and optimism with his ceaseless attack on the Bush Administration. Of the top-tier candidates, Obama took the most shots at the President, looking for attack opportunities in every question. He expertly softens the blow with his upbeat tone and speeches about hope.
2. For Edwards, the prime enemy was not the White House, but corporate America. "Corporate power and greed" was his refrain, and each of his first three answers hit on that theme. This angle allows him not only to attack Republicans, but to contrast himself to Clinton, whom some Democratic voters see as being too cozy with lobbyists.
3. Clinton, on the other hand, spent the first hour staying positive, even when speaking about the Bush Administration. As usual, she focused on her husband's administration (but, interestingly, spoke about the "1990s" instead of the "Clinton Administration"). Despite her positive script, Hillary has trouble coming across as upbeat as Obama does. She spent the last hour attacking Bush.
4. Richardson continued to behave like a candidate for Vice President or secretary of State by praising the Bill Clinton years and avoiding anything resembling a criticism of his opponents.
5. Dodd and Biden had strong performances, but not enough to break out of the lower tier.

Non-presidential: Times are bad for the Republican Party in Iowa.

1. The general ennui that shows itself in the presidential race persists throughout most levels of government. A bad year in 2006 will be followed by another bad year in 2008.
2. Sen. Tom Harkin (D) has typically been a top target of the GOP, thanks to his arch-liberal voting record and his tendency to fly off the handle. This year, however, he will coast to re-election without a serious challenge.
3. Representatives Bruce Braley (D) and Dave Loebsack (D), who both won Republican districts last year, are not drawing serious challengers this year. For incumbent congressmen, the first re-election is usually the toughest, and so their free pass this year suggests they should be safe at least until redistricting in 2012. Only three Iowa incumbent congressmen have lost re-election in four decades.
4. Rep. Leonard Boswell (D), typically a GOP target, also looks likely to cruise to re-election. This means an Iowa delegation that was four-to-one Republican since 1994 will be majority Democrat for a while.
5. As in many states, Hawkeye State Republicans are hoping 2006 was a one-time occurrence rather than a trend. The state GOP hopes to gain seats in the state senate and possibly win back the state house.