• Democrats retreat on Iraq war plans despite signs that the public backs them
• Does Tuesday's stock market dip portend dire economic scenario?
• Front-loaded primaries will have an unpredictable effect on presidential race
• Right concerned about conservative void in Republican presidential field
• Hillary would likely benefit from an Al Gore primary campaign

Outlook

1. Republicans have recovered from the initial blow of House Speaker Nancy Pelosi's (D-Calif.) early blitz, thanks largely to the Senate's playing its historical role of the saucer cooling the hot coffee from the House. Of the six early bills passed by the House, none has yet gotten through the whole legislative process.
   
   
2. The minimum wage increase surely will be passed in time, but the House-approved measure for now is stuck in the Senate quagmire. Sen. Chuck Grassley (R-Iowa), who no longer is Finance Committee chairman but only its ranking Republican member, is still powerful enough to demand a pre-conference because he does not like the bill's House-passed tax provisions.
   
   
3. The biggest Democratic program remains how to deal with Iraq. Senate Majority Leader Harry Reid (D-Nev.) cannot collect the 60 votes needed to cut off debate on either a non-binding resolution or on repeal of the authorization for the use of force resolution. Rep. John Murtha (D-Pa.), as chairman of the Defense Appropriations subcommittee, is viewed by Republicans as the gift that keeps on giving because of his intemperate statements on cutting off war appropriations (see below).
   
   
4. Organized labor will achieve one of its key legislative goals Thursday with House passage of the "card check" bill, removing the right to a secret ballot on union representation elections. But even if it escapes the Senate death-trap, the bill faces a presidential veto. Polls show overwhelming public opposition to the proposal, but union power controls the votes of House Democrats, including the "Blue Dog" moderates.
   
   
5. House Republican leaders have joined in private complaints that Rep. Jim McCrery (R-La.), as ranking Republican member of the House Ways and Means Committee, is succumbing to the wiles of Chairman Charles Rangel (D- N.Y.). They assert that he is acting more as a statesman-chairman than a partisan ranking minority member.
   
   
6. Former New York City Mayor Rudy Giuliani is the hottest Republican on the presidential circuit, but the expected assault on his record has not yet begun. It will be interesting to see how he is received this weekend in Washington at the Conservative Political Action Conference (CPAC). Sen. John McCain (R-Ariz.), until recently the putative GOP front-runner, is not scheduled at CPAC (see below).
   
   
7. The consensus in Democratic ranks is that Sen. Hillary Rodham Clinton (D-N.Y.) and Sen. Barack Obama (D-Ill.) both suffered in their long-range dust-up but that Clinton looked worse. The winner was former Sen. John Edwards (D-N.C.), who also was the star of the Carson City, Nev., presidential forum (which Obama decided to skip).

Congress

Iraq: Thanks in part to Pennsylvania Democratic Rep. Jack Murtha's talk about Democrats' plans to attach conditions to Iraq-War funding, Democrats are on the retreat with respect to Iraq. In fact, however, Democrats are retreating from their own shadows, even as the public warms to their position.

Murtha had let slip in an interview with an anti-war website that he wanted to paralyze the military by requiring rigorous standards of troop readiness and equipment before funds would be released. This threw Democrats into retreat, despite the fact that a new poll shows support for the Iraq War and the troop "surge" is now a minority position. Most Americans now want a withdrawal date. Support for simply cutting off war funding is now at 46 percent, according to a Washington Post poll.

After the failure of the Senate's "non-binding" troop-surge resolution, Democrats still appear to be cowering when they should probably be bounding forward. They lack the will at this point to take what appears to be a popular step: binding action that would bring about a withdrawal or redeployment.

Republicans' rhetoric has carefully focused on the problems with Congress' trying to micromanage a war -- repeating the idea of "535 commanders in chief" on the floors of both houses of Congress. For now, this works, and it will continue to work as long as Democrats remain too frightened to act.

Stock Market Crash: The Dow Jones Industrial Average lost more than 400 points Tuesday after a plunge in the Chinese markets. The Chinese government had suddenly cracked down on certain speculative trading practices, causing the Shanghai market to lose 9 percent of its value. That exchange, however, had gained 16 percent in the past month.

The Chinese implosion began after former Fed Chairman Alan Greenspan forecast a possible recession in late 2007 during a speech (by satellite) to a Hong Kong business conference. Greenspan's words were much more measured than what was offered up in the headlines about what he said February 26. Greenspan had in fact acknowledged that most forecasters doubted the possibility of a recession this year, and he added that he believed the housing downturn has run its course without significant spillover to other sectors of the economy.

If the Chinese implosion worsens, it could cause trouble for certain commodities connected to China's recent industrial growth period. As its economy has expanded significantly, China is a major consumer of commodities, and the potential of an economic slowdown there puts downward pressure on copper, oil and even gold, the natural refuge for those panicking.

As of Tuesday evening, most American analysts were insisting that the market correction is a brief panic that does not offer proof of general economic weakness. The Dow appeared to be making a modest rebound on Wednesday. However, some analysts argue that the Dow sell-off had more to do with weakness in the United States sub-prime lending market, which portends a more dire scenario.

Governor 2007

Louisiana: Former Sen. John Breaux (D) is now talking up a run for governor in place of Gov. Kathleen Blanco (D), who is looking very weak now as a candidate for re-election. Breaux will not challenge Blanco in the October jungle primary, but it would surprise no one if Blanco steps aside to let him through.

Blanco trails by 30 percentage points in polling of a repeat contest between her and Rep. Bobby Jindal (R). Unlike her neighboring governors, whose positions were strengthened after Hurricane Katrina, Blanco has been vilified for what was perceived as a poor response to the natural catastrophe.

One of the problems Breaux could face is Louisiana's residency requirement for gubernatorial candidates, requiring them to be a "citizen" of Louisiana for at least the past five years.

Breaux insists that he is legally qualified to make the run, but he lives in a Washington condominium -- owned by "John B. Breaux" according to tax records -- and takes the so-called "homestead exemption" on his property. This could create grounds for a court challenge to his candidacy in Louisiana. The homestead exemption, which is a substantial annual property tax break, is legally available only to those who actually live in a D.C. home as their primary residence.

Senate 2008

Mississippi: Sen. Thad Cochran (R-Miss.) has begun fundraising, a sign that he is likely in the hunt for another term. That Cochran might retire has been a source of fear for Republicans, who, the common wisdom says, stand to lose a Senate seat or two in 2008.

President 2008

Front-Loaded Primary: In a previous edition, we discussed the change that could result from front-loading the Presidential primaries. As many as 19 states may hold primaries on the same day, February 5, with only the Iowa caucus, the New Hampshire and South Carolina primaries, and the Nevada Democratic caucus preceding it (some state legislatures are in the process of moving up their primaries). There are two possible, opposite scenarios here. One of them is that this setup could augment the importance of the early primaries, allowing them to choose the winner almost unilaterally.

1. Under this scenario, it would be nearly impossible for any candidate to mount credible campaigns in 19 different states during a presidential primary. Therefore, anyone who can dominate the early primaries enters that "Super-Duper" Tuesday with more credibility than anyone else.
   
   
2. That is what happened in 2004. Although the situation was somewhat different, recall the shift that occurred between the Iowa Caucus and New Hampshire. Democrats were looking for an anti-Howard Dean candidate. Just weeks before the caucus, it was by no means clear who could beat Dean in Iowa. In the final two weeks, Massachusetts Sen. John Kerry, thanks to a compelling story of service in Vietnam and smart Election Day tactics (as well as the fundamental weakness of Dean's organization and its lack of understanding of Iowa), overtook Dean suddenly and won decisively.
   
   
3. As soon as the Iowa result established him as the anti-Dean, Kerry -- up until then a candidate with nothing special to single him out from the pack -- experienced a sudden and positive lift elsewhere. As of January 15 in New Hampshire, Kerry had been running third against Dean, trailing by 20 points, with retired Gen. Wesley Clark in second place. After Iowa, however, Kerry surged ahead in New Hampshire, cannibalizing much of Clark's support and topping Dean by 12 points.
   
   
4. The point here is that Kerry, in the midst of a very open field, caught momentum as the alternative candidate as soon as he was able to prove himself in one of the early contests. This is a scenario which could easily come about on either side early next year -- particularly on the Democratic side if Hillary Clinton remains the putative frontrunner there.
   
   
5. The second scenario: a split decision on February 5 that keeps many of the candidates alive. This would cause a diminution of the importance of the early primaries and heighten the importance of late primaries that have not been truly meaningful for years. If large states such as California, Michigan, Florida and Georgia all go different ways, the race could remain lively for months.
   
   
6. California's contest could be especially lively since this time delegates will be awarded by congressional district.

Conservative Void: Republicans around the country are now talking about the possibility that a conservative candidate outside the big three could suddenly catch fire and suck support away from both the frontrunners and several of the minor candidates. A push poll for the 2008 Iowa presidential caucuses is instructive on the reality of conservative discontent with the current "big three" GOP candidates. The poll gives Sen. John McCain 20.5 percent, former New York City Mayor Rudy Giuliani 16.3 percent, and former Massachusetts Gov. Mitt Romney 3.5 percent. The candidate for whom the push-poll was conducted, former Virginia Gov. James Gilmore (R), leads them all with 31 percent.

1. This is not legitimate survey, of course -- it's a "push poll" that tells respondents positive and negative things about various candidates. The pollster peppered respondents with tales of the liberal deviations by McCain, Giuliani and Romney, and the true-blue conservatism of Gilmore. But it proves a point that is widely accepted in Republican ranks: None of the "big three" is a natural fit for the nation's right-of-center party. A conservative void unquestionably exists. The question is whether there is anyone who can fill the void.
   
   
2. The name usually mentioned as the void-filler is not Gilmore but Newt Gingrich. A straw poll by the right-wing Citizens United organization of contributors to its political fund showed Gingrich ahead with 31 percent (followed by Giuliani at 25 percent, Romney at 10 percent and McCain at 8 percent). But based on his record as speaker of the House, Gingrich's conservative record is far from flawless.
   
   
3. Before the "push" element of Gilmore's poll, the unadulterated results showed McCain leading in Iowa with 33 percent, followed by Giuliani at 31.5 percent and Romney at 8.8 percent (the unknown Gilmore took just 1.3 percent). That the pollsters could cause so much movement by pushing -- or "informing" -- respondents that McCain opposed tax cuts, Romney took a pro-choice abortion stance in Massachusetts, and Giuliani supported Democratic Gov. Mario Cuomo's re-election in New York, for example, is very telling as to just how committed voters are to the "big three," even the ones who say they support them. Giuliani dropped by nine points with pushing, Romney lost five points (McCain actually rose 2 points).
   
   
4. Then the pushers went to work projecting Gilmore as a tax-cutting, job-creating governor of Virginia, head of a congressionally appointed commission on terrorism, chairman of the Republican National Committee and a National Rifle Association member. With that buildup, Gilmore finished first, well ahead of the field. That suggests that, under the current conditions, a campaign knocking down the conservative credentials of the "big three" could make a nominee out of even a long shot such as Gilmore -- at least theoretically.
   
   
5. With Gilmore a latecomer to the presidential fundraising game, it is doubtful that he will have sufficient funds to tear down his opponents and build up himself nationally or even in the state of Iowa. But he or any other long shot will have a lot of help beating up on the "big three." This week, the Conservative Political Action Conference (CPAC) will attract right-wingers from all over the country. They will receive a 23-page attack on McCain from the right-wing group Citizens United, declaring: "He's no Ronald Reagan." (McCain is the only announced Republican presidential hopeful not scheduled to attend CPAC.) At then same time, McCain operatives are putting out material casting Guiliani as a throwback to the old Tammany Hall Democratic machine that rode into City Hall on the shoulders of the New York Liberal Party, which cross-endorsed him in New York.
   
   
6. There is plenty of time for such negative campaigning to tear down the Republican front-runners as having inadequate conservative credentials. At this point in the 2000 election cycle, Bush was far in front with 45 percent in the polls, with Elizabeth Dole second at 29 percent, and McCain at a forgettable 3 percent. McCain went from that 3 percent to run a strong insurgent campaign that nearly delivered him the nomination.
   
   
7. The lesson is that the prominent coverage of the "big three" is by no means an indicator that they will remain out front. The conservative void on the Republican side is simply too great. Nature abhors a vacuum, as does the political world.

Al Gore: Former Vice President Al Gore's Oscar win for An Inconvenient Truth has naturally fueled more speculation that he will run for President, notwithstanding all of his denials. But Gore would likely compete most with Sen. Barack Obama as a left-wing alternative to Hillary Clinton who never supported the Iraq War. Gore's entry into the race would likely give the uncharismatic Clinton a better chance of victory.

Currently, Obama is the subject of much interest because he could well overcome Clinton by Election Day, and as a general election candidate, he is a more elusive target than Clinton. Other than race -- an issue which Obama has exploited with subtlety and finesse -- the biggest issue between Gore and Obama would be Gore's long track record and Obama's relative lack of experience.

Sincerely,

Robert D. Novak