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·        Romney campaign in precarious spot; Huckabee's nomination odds very slim

·        Thompson making small strides

·        Hillary-Obama heating up, with Edwards right behind

·        Democrats toothless on war, expert on fundraising

President 2008

Republican Overview: With the Iowa caucuses in one week and the New Hampshire primary in 12 days, the GOP picture is getting fuzzier, rather than clearer. With former Arkansas Gov. Mike Huckabee under increased scrutiny, and front-running former Massachusetts Gov. Mitt Romney being closely watched for any misstep, lesser candidates are seeing glimpses of hope.

1.    In New Hampshire, a late surge in the polls by Sen. John McCain (Ariz.) shows that the original frontrunner's long-shot strategy is paying off. McCain, as he did in 2000, has written off Iowa, and he is hoping a poor finish in the caucuses won't hurt him in New Hampshire five days later -- especially if Huckabee, and not Romney, wins the caucuses. A win in New Hampshire could aid McCain in third-in-the-nation Michigan on Jan. 15.

2.    If Romney finishes behind Huckabee in Iowa and behind McCain in New Hampshire, he's seriously wounded and probably finished (with a big win in Michigan a week later his only hope to hang on). He still has the most money and the strongest campaign team, but those two early losses would devastate his strategy of winning big early to get ahead of Giuliani, who still leads (though barely) in national polls.

3.    Rep. Tom Tancredo's (Colo.) decision to drop out of the race at the last minute equally helps former Sen. Fred Thompson (Tenn.) and Romney, with some of his support likely going to Representatives Ron Paul (Tex.) and Duncan Hunter (Calif.). Romney garnered Tancredo's endorsement, which has some value, but immigration voters will be most attracted to Thompson. That said, Tancredo's supporters were a small bunch to begin with.

4.    Thompson is counting on a late surge in Iowa. He's shown some superficial signs of success, garnering the backing of Iowa's two grassroots conservative heroes: an endorsement from immigration hawk Rep. Steve King (R) and the support of Tancredo's former Iowa chairman, Bill Salier, who challenged liberal Rep. Greg Ganske (R) in the U.S. Senate primary in 2002. However, it's not yet clear whether Thompson is connecting with Iowa voters on the ground.

5. The campaign of former New York Mayor Rudy Giuliani is looking imperiled. His New Hampshire poll numbers, like his national poll numbers, have steadily fallen since mid-November. He can't count on a strong showing in Iowa or South Carolina, and so all his hopes will rest on big wins in Florida (January 29) and on February 5 Mega-Tuesday after a month of losses. His best hope is if Iowa, New Hampshire, South Carolina, and Michigan go four different ways, which is very possible.

6.    If Huckabee does not win Iowa, his run is probably over, especially if he has to compete with Thompson in Southern states. Even if Huckabee wins Iowa, his chances at winning the nomination are slim. His coffers are too empty, his conservative credentials too flimsy, and his campaign infrastructure too sparse.

7.    For Ron Paul, a third-place finish in Iowa is not out of the question.

Democrat Overview: In the Democratic field, this much is clear: It's at most a three-way race, with Senators Hillary Clinton (N.Y.) and Barack Obama (Ill.) neck and neck while former Sen. John Edwards (N.C.) trails just behind them.

1.    If Clinton wins Iowa and New Hampshire, the race is over. She has the most money and the highest name recognition, and her previous air of inevitability will return at that point, much as it did for Sen. John Kerry (Mass.) after his comeback Iowa win in 2004. If she loses both to Obama, it becomes a two-way race with even odds.

2.    Edwards, however, has a chance of winning Iowa. That would shake up the race considerably, and could even play to Clinton's advantage by weakening Obama.

3.    Obama has nearly as much money as Clinton and a strong campaign team. Two early wins would give him legitimacy (which, as a young, inexperienced politician, he needs badly). Even one early win would almost guarantee he would be the Democratic favorite for President in 2016.

Congress

Session Recap: Democrats faltered in the home stretch of the first session of the 110th Congress, capping off a generally (but not entirely) disappointing opening act as the majority.

1.    Most aggravating to their base, Democrats utterly failed to force policy change in Iraq. Dozens of war-related resolutions, amendments, and bills have died in the Senate or been stripped of all teeth to apply real pressure to the Bush Administration on foreign policy.

2.    While disappointing to the party's liberal base and the anti-war vote that swung Congress to the Democrats, Congress's impotence on war was to be expected. Almost without exception, the other branches stay out of the executive branch's way in foreign policy. This was not so much a case of Democrats' underperforming as their overpromising.

3.    Democrats easily passed a minimum-wage hike, and a large package of subsidies and mandates favoring renewable energy. These were probably their biggest victories – the former to burnish their image as the workingman's party, and the latter to please environmentalist special interest groups and “green” big businesses.

4.    Despite a mixed record of accomplishments, Democrats have certainly established a new tone on Capitol Hill. Their Pay-as-You-Go (PAYGo) rules have instituted the idea that tax cuts must be offset by tax hikes -- heightening the stakes of their class-warfare rhetoric.

5.    The Democrats' strongest suit was in using their legislative power to pressure lobbyists and donors. The most striking example has been the issue of taxes on the “carried interest” in hedge funds and private equity funds earned by fund managers. Democrats have been debating and discussing this issue all year, while never moving close to changing the law.

6.    As we wrote in September, the intention of the debate over hedge fund taxation -- and the effect -- was to bring these hedge funds to the table with the new majority. The industry had spent little on campaign contributions and lobbying before this year, but that has all changed. In June alone, the same month Democrats introduced three bills to change the taxation of these funds, Sen. Chuck Schumer (D-N.Y.), chairman of the Democratic Senatorial Campaign Committee (DSCC), raised $1 million from the industry.

7.    Besides Schumer, the other expert at using the majority as a fundraising tool is House Ways & Means Chairman Charles Rangel (D-N.Y.). Rangel has already raised far more money this cycle than any previous Ways & Means Chairman in history, with $2.7 million by September 30 -- almost as much in less than half of a cycle as former Chairman Bill Thomas (R-Calif.) raised in his last two reelections combined.

8.    Also, with his Senate counterpart, Sen. Max Baucus (D-Mont.), Rangel launched the Baucus-Rangel Leadership PAC, raising funds from financial and real estate firms deeply interested in tax law changes.

9.    Within the Republican Party, there was a year-long clash over spending and earmarking -- particularly in the Senate -- between conservative back-benchers and the old guard, led by the appropriators and the party leadership. At the year-end leadership struggles in the Senate, and in the conservatives' push for a continuing resolution instead of an omnibus, the appropriators gained late victories. Despite the Democrats' demonstrated appetite for spending, congressional Republicans will have trouble credibly running on fiscal restraint.

10. Many of the Democratic clashes with the White House or the Senate minority were standard political struggles, typified by the battle over expanding the State's Children's Health Insurance Program (SCHIP). Democrats could have passed into law a bill almost as expansive as the one vetoed by President Bush, but instead they made political hay out of it. Forcing politically tough vetoes is an old game on Capitol Hill, and the Democrats played it well.

11. Next year, with the Democratic nominee probably sitting in the Senate, expect even more clashes with the White House, although the Democrats may want to avoid the war issue altogether.