01/29/2012 05:21 pm ET Updated Dec 06, 2017

Even as Romney Recovers, Newt's Attacks Are Killing His Chances In the Fall

Mitt Romney was a good governor of Massachusetts.

That alone should disqualify him from being the Republican nominee. Like Bill Weld and Frank Sargent before him, he was part of the cyclical antidote to the deeply rooted Democrat machine politics of the state, the periodic salve to the status quo.

And he could be a good president, but the longer this goes on, the less likely it is that we will ever find out. Newt Gingrich -- a man more in love with his own voice than any in memory -- can smell blood. Who knows if it is Romney's blood, or the blood seeping from dying Republican dreams of taking over the nation's capital.

Romney's weaknesses were well known -- his pro-choice past and creation of Obamneycare -- but these were failings that could be turned to positives in the suburban Pennsylvania and Ohio suburbs that loom to be ground zero in the battle for the White House. The choice for Republicans always looked to be nominating from the right and going to war with a motivated base, or accepting Romney -- liberal warts and all -- and fighting for the independent center.

The world is different now from a decade ago when W. strategists Karl Rove and Matthew Dowd crafted a political strategy in a world with no center. Today, the center looms, and whatever the illusions of Rick Santorum, Republican chances are zero if they cannot win the suburbs.

But Newt's campaign is not about a political position. It is about Newt, and what he chooses to say at any given moment in time.

To hear Gingrich attack Romney for paying an income tax rate of 15 percent, one forgets for a moment that there is no hint of impropriety in Romney's tax returns. It is all legal. He paid what he owed. He did not write the tax code. He never served in Congress, and thus cannot even be accused of sanctioning those inequities. He is just the Republican version of Warren Buffett, a very rich guy who benefits from how we tax investment income.

To hear Gingrich attack Romney for earning his fortune in private equity, one could easily disregard the fact that private equity -- like venture capital -- is one of the best functioning sectors of our capital market. Private equity groups raise money privately, they invest in real companies -- either nurturing young, emerging ones, or redeploying the assets of failing ones -- their funds have no real or implied public guarantees and investors fully accept that their money is at risk. He was not a hedge fund trader, simply making money from money, or from the part of Wall Street that took the world financial system down.

It has been odd to watch these attacks coming from Gingrich. Without doubt, the Obama campaign was poised to raise exactly those arguments against Romney in the fall, and just as assuredly, Republicans would have dismissed those attacks as reflective of Democrat ignorance of how the real world works. Now, by choosing to attack Romney from the left, Gingrich has essentially endorsed that line of attack and undermined one more of Romney's potential defenses.

Romney was badly hurt in the wake of those attacks. As shown in the graph below from Intrade -- a prediction market site that allows individuals to take positions on political events in the form of traded futures contracts -- the price of a contract betting that Romney will be the Republican nominee plummeted from its peak at $92 -- comparable to a 92 percent chance -- on January 18th to $65 six days later in the face of Gingrich's withering assault.


Romney was bruised by the assault, but recovered, as illustrated in the graph showing his bounce back to $88. He finally acceded to demands and published his tax returns, and within days Republicans came to their senses and realized that, in fact, they are Republicans, and making money is not supposed to be a disqualifier.

But the damage was done. While Romney has bounded back to nearly $90, the beneficiary of the Gingrich scorched earth strategy has been the president, whose odds ticked upwards at the same time as the Romney crash, and now remain at $55, and solidly above 50-50 threshold for the first time in months.


Gingrich insists that he is in it for the long haul. Campaigning in Florida he asserted that he will remain in the race through the convention. "Romney's got a very real challenge in trying to get a majority at the convention. This party is not going to nominate somebody who is a pro-abortion, pro-gun control, pro-tax increase liberal. Look, it's not going to happen."

Grand Old Party stalwarts Bob Dole and John McCain see the damage that is being done as the party has moved farther away from its orderly and disciplined past, but their efforts to return order to the process and avert the train wreck that they fear have been to no avail.

Speaking for the grass roots this weekend, Sarah Palin -- who has a way with words like no other -- said it best. "You've got to rage against the machine at this point in order to defend our republic and save what is good and secure and prosperous about our nation. So, if for no other reason, rage against the machine. Vote for Newt, annoy a liberal, vote Newt, keep this vetting process going, keep the debate going."

Unless Newt comes to his senses, or -- more likely -- lightning strikes, David Plouffe and the president will continue to watch as the campaign that once loomed to be an uphill battle becomes easier every day.