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“ Wall Street’s and investors’ rising concerns about rising U.S. debt and the deficit were not addressed directly or convincingly.”
The second Republican presidential primary debate produced three results. First, it continued the trend of the now-seven candidates minus Donald Trump painting a largely united picture of their economic policy priorities. Second, South Carolina Senator Tim Scott won the debate. Third, the candidates’ separation into top and bottom tiers is well underway, something that’s needed to further winnow the field and produce a strong not-Trump candidate.
Republican candidates again displayed a strong contrast with, and indictment of, President Joe Biden’s administration, particularly Bidenomics and the “green New Deal.” Many are trying to make a policy break from Trump by arguing that runaway spending by both Biden and Trump caused the inflation that make worse the wage pressures that, among other things, caused the UAW auto strike.
Markets and investors also heard more pledges to restore and expand economic dynamism, while some signature Biden bipartisan policies weren’t attacked, including greater infrastructure investment, semiconductor investment and reshoring manufacturing.
Wall Street’s and investors’ rising concerns about rising U.S. debt and the deficit were referred to frequently, but the candidates didn’t address it directly or convincingly. While Washington incompetence was a frequent theme, the Moody’s ‘crisis of governance’ negatively affecting markets wasn’t addressed.
Republican candidates went into the second debate wanting to continue two trends: increasing their “favorables” — positive perceptions of them by potential voters — and increasing ‘openness’ to voting for them. Each candidate on the stage achieved both in the first debate, and most likely did so in the second. One candidate who didn’t have these increases after the first debate: Trump, thanks both to attacks and his absence.
“ Scott now will attract even more interest and big-ticket funding that can move his campaign into a higher gear. ”
The night’s top stories were the debate winner — Senator Tim Scott of South Carolina, with a potentially breakout performance — and the candidates sorting into top- and bottom tiers almost four months before the first primary votes are cast.
The top tier of candidates now are Scott, former South Carolina Governor and Ambassador Nikki Haley, and Florida Governor Ron DeSantis, in no particular order.
These three again delivered positive performances, this time with Scott in top position, as Haley was in the first debate. They have, and will continue to have, core followings and sustained interest in their candidacies.
These debate performances will permit Scott, Haley, and DeSantis to continue to feed their top-tier candidacies — particularly Scott, who is said to have the most cash on hand and now will attract even more interest and big-ticket funding that can move his campaign into a higher gear.
Scott had the galvanizing performance he needed to stay in the top tier and potentially vault himself to the top of the pack. Scott showed command of the issues, passion and energy that took over the debate repeatedly, both on economic opportunity and social issues.
Haley continued her strong performance from the first debate, but with less splash this time — there was no “if you need something done, get a woman” moment. Haley put herself in the middle of every debate issue, showed policy command and projected a calm but assertive demeanor.
DeSantis finally educated and reminded the audience of his state’s huge economic successes and made the case that his experience could help replicate those results on a national stage. DeSantis also gained style points for leading the refusal to vote one candidate “off the island”.
The second-tier candidates now are former New Jersey Governor Chris Christie; former Vice President Pence; Vivek Ramaswamy; and North Dakota Governor Doug Burgum.
Christie is the Republican Greek chorus — sounding like a first tier candidate, and he is consistently the most articulate and forceful one. But Christie hasn’t yet broken through to the first tier, and it seems doubtful that he will.
The good news for Christie: Almost everything he said on issues is both applauded by Republican audiences and likely treated as revelations and “aha” moments by many independent voters. (His direct shots at Trump — “Donald Duck” — and voting Trump “off the island” were highlights and provoked divided audience responses.)
The bad news: It’s unlikely to make much of a difference to New Hampshire voters, where Christie is lagging despite focusing all his campaign resources there. But should Christie’s performance spark New Hampshire interest and movement towards him, he’s got real potential to hoist himself into the first tier.
“ Pence seems to be refighting the 2016 nomination using 2016 sparring tactics. ”
As to the rest: Pence seems to be refighting the 2016 nomination using 2016 sparring tactics. The other candidates talk in a post-Trump world. Pence seems to be proposing a return to pre-Trump, but Hurricane Donald has made that metaphorical return impossible. Burgum meanwhile got marginalized.
Ramaswamy’s first debate performance was a poor one — the “tech bro” hubris and unattainable and performative policy positions, like gutting the Fed and unilaterally cutting 75% of the federal workforce, were a bad combination. Nothing changed in the second debate. The other candidates wouldn’t even let Ramaswamy atone for his “bought and paid for” slaps in August by calling them “good people,” and mostly ignored him otherwise. The major exception was Haley’s “Every time I hear you, I feel dumber” broadside, designed to underscore a lack of seriousness that’s coming to define Ramaswamy.
Does any of this matter to voters or markets? Yes. Trump isn’t inevitable or impregnable, and likely will be even less so after four more months of sustained attacks from other candidates as featured in this debate.
Forget the national polls,which not only are beauty contests but use a format that’s never used in U.S. presidential elections: simple national popularity. Yet, even in national polls today, 50% to 60% of those polled don’t prefer Trump.
All that matters for the Republican nomination is performance in early primary states. That will be the yardstick four months from now, when the first primary votes are cast.
There, Trump’s lead isn’t so large: today he’s mid-40% in Iowa and high 30% to low 40% in New Hampshire. Translated: roughly 60% in Iowa and New Hampshire already don’t want Trump.
If and when those not-Trump voters coalesce around a candidate or two, the race changes very quickly.
Today, you’re seeing the beginnings of that coalescence in the candidates sorting into top and bottom tiers. What’s next? The candidates will continue to winnow down, with the second tier likely unable through year’s end to create interest and sustain campaign cash. By January or earlier, some or all will drop out. We’ll then be left with two or three GOP candidates, and a winter battle that has significant potential to displace Trump as Republican frontrunner by the spring.
Terry Haines is founder of Pangaea Policy, an independent policy and political forecasting and analysis company for financial markets.
