John Cassidy's Blog, page 97

Facebook’s I.P.O.: The Party Fizzles

No prizes for guessing what the stock of the day is on CNBC. On Squawk Box, the daily breakfast show, Andrew Sorkin, the Times columnist, founder of Dealbook, best-selling author, and, in his latest incarnation, would-be Matt Lauer, said he was going to a bar to watch the opening trade at 11 A.M. “We’re gonna have Red Bull and vodka,” he joked. Henry Blodget—yes, that Henry Blodget—put on his serious face and said, “Facebook is an extraordinary success story for America.”

Joe Kernan, who was also around in the late nineties, refused to put on a Mark Zuckerberg-style hoodie, which somebody had thrown onto the set. Good for him, you may say: refusing to partake in this Barnum & Bailey show. Not quite. Kernan’s hesitancy was based on a dislike of putting on an item that somebody else had worn, he explained.

Thank goodness Jim Cramer—yes, that Jim Cramer—popped up to inject a bit of skepticism and sanity. “I am just concerned that the public will get burned again,” he said shortly before Zuck himself, live from the hideous corporate campus in Menlo Park that serves as Facebook’s HQ, pressed a bell to start the day’s trading on the Nasdaq. The great man-boy was wearing his hoodie, of course, and it looked like he’d had his hair cut for the occasion, or perhaps for his twenty-eighth birthday, which was earlier this week. He didn’t say anything, but he received a nice bear hug anyway from Sheryl Sandberg, his C.E.O. and surrogate mother. From below the hastily erected stage, a scrum of geeks who were about to get rich gave him a loud cheer.

That was about that. It looked a bit like an encore by a second-tier college rock band at a sparsely attended music festival. To get across the momentousness of the occasion to their viewers, the CNBC anchors were forced to rely on words rather than pictures. “We’re witnessing a lot of American wealth getting created,” said Carl Campanile, a CNBC regular, who was on the ground in California. “It opens a new chapter, an exciting chapter, for business in this country,” offered David Faber, who was trying to get into the spirit of things from Englewood Cliffs. It was left to Melissa Lee, Faber’s co-host, to summon up a sentence fully commensurate with the occasion. “Mark Zuckerberg has accomplished the substance of the American dream,” she intoned.

In the scheme of things, it was all pretty harmless stuff, and at least some of it had the merit of being true. To those who say America is in inexorable decline, the existence of Silicon Valley, and the college-dorm-to-corporate-park success stories it generates on a fairly regular basis, is the great counter-argument. You can’t replicate Facebook in a Guangdong sweatshop. Where is the French Zuckerberg, or even the French Sandberg? And why even now, despite the rise of Mumbai, Silicon Fen, and other technology clusters, do so many innovative internet companies—Zynga, Pinterest, Instagram—start out or migrate to the Bay Area?

Sadly, none of this has any bearing on whether Facebook is worth a hundred billion dollars—roughly what it would be worth at the issue price of $38. Shortly before 11 A.M., the signs were that “FB” would open at about $45, sharply lower than many people had expected. At eleven, CNBC’s monitors were showing $42, just four dollars above the issue price—an indication that investors were balking at paying a big premium over the offer price. Fifteen minutes later, the stock still hadn’t opened. “I’m getting nervous,” Jim Cramer stammered. He wasn’t the only one. At 11:25, the Wall Street Journal reported that many traders were trying to cancel their electronic orders and having trouble doing it. “Did Nasdaq break?” Henry Blodget, who had gone back to his day job, tweeted. No, it didn’t.

At 11:30, the stock opened at $42, jumped up to $43, fell back $42—and kept falling, back to $40. “For market sentiment, this is not going to be positive,” said Simon Hobbs, the network’s resident Brit. Melissa Lee was equally crestfallen: “Forty minutes ago, I don’t think anybody thought $40,” she said. David Faber had been working the phones, and he reported that his sources had told him the stock might well fall below the issue price of $38, which would be a big embarrassment to the banks underwriting the deal, led by Morgan Stanley. “The big story is that Facebook, the social network, is now a public company,” he said. “The smaller story is that after five minutes, it’s only up six per cent.”

At 11:50, the stock hit the issue price of $38, prompting the underwriters to enter the market and prevent it falling any further. On CNBC, at least, the Facebook party was over. Out in Silicon Valley, things looked quite a bit different. We weren’t back in 1999, after all, but Facebook was, indeed, a public company—one valued at more than a hundred billion dollars. Zuckerberg was worth nearly twenty billion; Sandberg more than a billion. Eduardo Saverin, the Facebook co-founder who gave up his U.S. citizenship to avoid paying taxes on his windfall, was worth $2.7 billion. A bunch of venture capitalists, including a Russian oligarch and an Irish rock star, had made out like bandits. One of them, Roger McNamee, Bono’s business partner, popped up on the screen to say, “I’m very, very bullish about the long run.”

The insiders had done very, very well. Now we’ll see how the public investors fare.

Photograph by Emmanuel Dunand/AFP/Getty Images.

Facebook: The Ultimate Dot-Com

History will record that Mark Zuckerberg wasn’t the first college student to have the idea of enabling people to set up Web pages and share stuff with their friends. Yesterday, my colleague Silvia Killingsworth wrote about the Winklevoss twins, two Harvard grads who famously accused Zuckerberg of stealing the idea for Facebook while working on their fledgling site Connect U. Before the Winklevii, there were the folks behind MySpace and Friendster. And before them, way back in 1995, there were Todd Krizelman and Stephen Paternot, who launched TheGlobe.com from their dorm rooms at Cornell.

TheGlobe.com allowed people to create their personal space online, upload pictures, and set up what came to be known as blogs. By 1998, it had more than two million members, which was then considered impressive. It also had a business plan: sell advertising. On November 13, 1998, Bear Stearns issued 3.1 million shares in the company at nine dollars each to some of its clients—the lucky ones. When Bear’s traders tried to open the stock for trading, they found it difficult to establish a floor price. As I recalled in my 2002 book, “Dot.Con: The Greatest Story Every Sold” (apologies for the plug):

Whatever price they indicated—$20, $30, $40, $50—was too low. CNBC reported that the first trade might be $70, but even this proved to be a conservative estimate. After a lengthy delay, the first trade crossed the ticker at $87—almost ten times the issue price. Even for an Internet stock, this was unheard of. Within an hour, the price had risen to $97.

TheGlobe.com’s I.P.O. marked the beginning of the dot-com bubble’s epic stage. By the time the bubble burst, in March and April, 2000, hundreds of online firms had issued stock, among them many clunkers like Pets.com, E-Stamp, and etoys.com (not to be confused with a later company that used the same name), but also many online companies that survived and eventually thrived, such as eBay, Amazon.com, and Priceline.com. The bursting of the bubble discredited the term “dot-com,” which was understandable but, in a way, unfortunate, because the term itself had come to be the expression of an attitude that saw in online communication and online commerce boundless possibilities. Facebook’s I.P.O. represents a return to that mindset. It’s the fulfillment of the dreams of the nineties—and a reminder of their potentially fatal attraction.

While the term “dot-com” disappeared, the idea survived. Before very long, it was rebranded as “Web 2.0”—a term popularized by Tim O’Reilly and John Battelle, who from 2004 onwards organized a series of conferences under this banner. Supposedly, what distinguished Web 2.0 from Web 1.0 was user control, and user collaboration, with the network serving as a “platform,” but that wasn’t really a new idea: Krizelman and Paternot had fastened upon it years earlier, as had the founders of GeoCities and other Web-hosting ventures.

What really got Web 2.0 going was the proliferation of broadband connections, the invention of top-notch search engines (Google), and the creation of idiot-proof tools for doing fun stuff online, such as sharing photos and videos, posting blogs, and creating mashups. By February, 2004, when Zuckerberg launched Facebook, the elements were in place for the Web to fulfill the hopes of the late nineties—or some of them, anyway. But if Zuckerberg was in the right place at the right time—nobody should underestimate the role that the “Harvard” brand played in Facebook’s initial growth—he seized the opportunity ruthless and brilliantly. Now, seven years later, he is about to become a billionaire many times over by selling (non-voting) shares in what is, in many ways, the ultimate dot-com.

Back in the late nineties, I used to read a lot of S-1s—official investment prospectuses produced by companies about to issue public shares for the first time. Delving into Facebook’s S-1, which it has amended repeatedly since February, when it put out an initial version, felt like old times. The numbers were different (by an order of magnitude) from those that the original dot-coms used to put out, but the basic story was the same one that had led to all those bad investments and broken dreams: a Web site expanding this fast, with this many eyeballs focussed upon it, has simply got to be worth a lot of money.

Certainly, Facebook’s growth has been astonishing. As of March 31st, some nine hundred million people—about one in eight of all the humans on the planet—used the site at least once a month. More than five hundred million people—about one in thirteen of the global population—used it daily. Every day, Facebook users upload about three hundred million photographs and generate about 3.2 billion “likes” and “comments.” People on Facebook have a hundred and twenty-five billion “friends.” For many of us, Facebook has become a part of daily life. Many use it to keep up with friends; some use it as a news service; I’m in the camp of those who utilize it mainly as a professional tool. (Once I put up this post, I will link to it on my page.)

Compared to the late nineties, there are some basic differences, of course. Unlike many of the original dot-coms, Facebook makes money—quite a lot, in fact. It sells advertising and also charges other firms that use the site to drum up business, such as the gaming company Zynga and the music service Spotify. In 2011, on revenues of $3.7 billion, Facebook generated a billion dollars in profit. In the three months to March 31st, it made another two hundred million dollars.

That’s reassuring, but does it justify a valuation of a hundred billion dollars? That’s what the company will be capitalized at if the underwriters, led by Morgan Stanley—another echo of the late nineties—price its stock at the upper end of the $34-$38 range they indicated on Tuesday. If the stock goes up when trading starts, and it almost certainly will, Facebook will be even more highly valued. While I don’t think Facebook’s stock will enjoy the sort of crazy leap that TheGlobe.com’s took, I wouldn’t be at all surprised to see it close over fifty dollars, which would value Facebook at more than a hundred and twenty-five billion dollars.

For such a figure to make sense, given the risks attached to the technology industry, you have to assume that, within a few years, Facebook will be making not a billion dollars a year in profit but five billion dollars, or ten billion dollars, or even more. Apple, the world’s most valuable company—its market cap passed six hundred billion dollars briefly last month, and is currently hovering at a little more than five hundred billion—generated more than twenty-five billion dollars in profits last year. Microsoft, which is valued at less than half of Apple, made more than twenty-three billion. Google, valued at about two hundred billion, made nearly ten billion.

If it is to compete with these giants, Facebook will need to find a much better way to monetize its vast user bases. At the moment, it generates barely four dollars a year in revenues per user, primarily in the form of charging fees to advertisers. Maybe it can gin up more of these revenues, but there are still questions about the effectiveness of ads on social-networking sites. General Motors’ decision to pull its advertising from Facebook, which was announced yesterday, is hardly encouraging. Neither is the fact that Facebook still hasn’t properly figured out how to deliver ads to mobile users.

Simply relying on attracting more and more people to the site won’t do the trick. As the site’s audience approaches the saturation point in many advanced countries—more than sixty per cent in the U.S. and the U.K.; more than eighty-five per cent in Chile, Turkey, and Venezuela—its rate of expansion is inevitably slowing down. Between March, 2009, and March, 2010, the number of monthly active users rose a hundred and fifty-four per cent. Between March, 2011, and March, 2012, the growth rate was forty-one per cent. Quarterly figures confirm the slowdown. In the first quarter of 2010, the growth rate was 26.5 per cent. In the first quarter of this year, it was 8.9 per cent.

Another disturbing sign—and one very familiar to students of the dot-com bubble—is that Facebook’s costs are rising considerably faster than its revenues. Between the first quarter of 2011 and the first quarter of 2012, as it hired more engineers and sales people, and continued to invest in the site, its costs shot up ninety-seven per cent. Revenues rose by forty-five per cent. Consequently, Facebook’s profits in the three months to March were actually lower than they were a year earlier: two hundred and five million dollars compared to two hundred and thirty-three million.

None of this necessarily means that Facebook will be a bubble stock, or that it will meet the same fate as TheGlobe.com, which saw its market capitalization shrink to virtually nothing in 2001 before it closed down for good in 2008. Despite the recent slowdown in its growth, Facebook is an innovative, profitable company, which has established a unique and ubiquitous online presence that it may be able to exploit in ways that nobody, not even Zuckerberg, has yet dreamed of. I’d be willing to bet that in ten years’ time Facebook will still be around, and it will be a big player on the Web.

But how big? In Silicon Valley, many people view Facebook’s Web site, and its trove of user data, as the next key technology platform, something akin to Microsoft Windows and Apple iOS, which the company will leverage to create its own economic ecosystem—one that generates huge monopoly rents. Perhaps this will happen. For now, though, Facebook is basically an online media company, and there are some legitimate questions about its prospects. In purchasing its stock, as with buying the original dot-com stocks, investors will be laying out their cash primarily on the basis of hope and optimism rather than a clearly defined and firmly established business plan.

To me, at least, that has echoes of the past.

Photograph of Paternot and Krizelman, in 2001, by Fred R. Conrad/The New York Times/Redux.

Romney Leads Obama in Latest Poll: How Bad Is It?

In my neck of artisanal, hormone-free Brooklyn, the latest CBS News/New York Times poll, which shows Mitt Scissorhands leading “The First Gay President” by three points, landed with a nasty thud. “I can’t believe he might lose,” my wife said when she spotted the offending numbers on the Web. “People are really willing to vote for Mitt Romney? They hate Obama so much they’d vote for Romney?”

Evidently so—not that you’d know it from a casual read of the print edition of today’s Times. The editors buried the lead in the fifteenth paragraph of a down-page story on A17. (I’ve got a helpful suggestion: if Romney’s ahead in next month’s poll, maybe it could go in the Metro section—the one that no longer exists.) Not surprisingly, conservative news sites made rather more of the story. Under the headline “Kaboom: Romney Leads Obama by 3 in New CBS/NYT Poll,” Guy Benson, the political editor of Townhall.com, pointed out several other noteworthy findings n the survey, including the facts that Romney leads Obama by two points among women (so much for the gender gap) and seven points among independents. Two thirds of the survey’s respondents said the economy was in “very bad” or “fairly bad” shape, and Obama’s favorability rating is still stuck in the mid-forties—at forty-five per cent, to be exact.

To add insult to injury, the poll suggested the public is skeptical of Obama’s conversion to the cause of legalizing gay marriage. (This was the finding that the Times devoted most of its page A17 story to.) Sixty-seven per cent of respondents said they thought the President changed tack mostly for political reasons, and just sixteen per cent said his announcement would make them more likely to vote for him.

Put it all together like that and it’s enough to spoil the breakfast of anybody, myself included, who fears what another four years of Republican rule would do to this country. But before pushing aside your Cheerios, it’s worth putting the latest poll in a broader context. If you do that, what you find is a bit more reassuring. With just under six months to go, looking at the overall polling data, Obama retains an advantage, especially at the state level. But it’s a tight race. Even after a disastrous G.O.P. primary, Romney is close enough that he could quite conceivably win.

To make things easier, I’ll divide the polling data into three areas: the head-to-head matchup, key issues, and state-by-state findings.

Head to Head: Romney’s three-point lead in the latest CBS News/NYT poll is within the margin of error. Statistically speaking, there isn’t much change from last month, when the two were tied at forty-six per cent. Other surveys also show the two candidates more or less even. In Gallup’s daily tracking poll, Obama leads Romney, forty-six per cent to forty-five per cent. The latest Rasmussen tracking poll has Romney ahead by two points: forty-seven per cent to forty-five per cent.

For now, the poll-of-polls from Real Clear Politics, which averages all the latest surveys, has Obama leading by slightly more than two points—47.1 per cent to 44.9 per cent. In the next day or two, we’ll get more polling data from the Washington Post/ABC News and from the Wall Street Journal/NBC News. Once all three of the big monthly polls are in, we’ll have a better picture of where we stand.

Key Issues: The CBS News/Times poll confirms what both sides already know: the election will be decided primarily on the basis of bread-and-butter concerns. Sixty-two per cent of respondents said the economy and jobs was the most important issue to them in deciding who to vote for. The budget deficit came in a distant second, at eleven per cent. Then came health care, at nine per cent.

While most people still think the economy is in bad shape, which will provide encouragement for Republicans, there were also some positive signs for the White House. The number of people who think the economy is improving is gradually increasing. Thirty-two per cent of respondents said the economy was in “good” shape—the highest percentage since January, 2008. Thirty-six per cent said the economy is “getting better,” and just twenty-four per cent said it is “getting worse.” In April of last year, twenty-three per cent of people said the economy was getting better. Last September, after the debt-ceiling crisis, just twelve per cent said it was getting better.

From Obama’s perspective, much hinges on strengthening the belief that the economy is finally turning around. Two months of weak employment figures clearly haven’t helped. But there is still time for public perceptions to change—in either direction.

As for the legalization of gay marriage, the latest polling data suggests that the public is fairly equally split on Obama’s expression of support. In a new Washington Post/ABC News poll, some details of which were released this morning, forty-six per cent of respondents said they approved of it and forty-six per cent said they disapproved. The response was largely along party lines, with seventy per cent of Democrats supportive and seventy-six per cent of Republicans opposed. Among independents, forty-nine per cent approved and forty-three per cent disapproved.

In the CBS News/New York Times poll, just thirty-eight per cent of respondents said gay couples should be allowed to marry, suggesting that the President is on the unpopular side of the issue. But fifty-eight per cent said that Obama’s statement of support would have no effect on their vote. And Romney’s anti-gay-marriage stance doesn’t seem to be helping or hindering him very much. Twenty-one per cent said it would make them more likely to vote for him; seventeen per cent said the opposite.

State-by-State Polls: In the end, of course, it will come down to the Electoral College, and a few swing states. Obama’s campaign has identified five geographic paths that could see him through to two hundred and seventy votes: a Western strategy, a Midwestern strategy, a Southern strategy, a Southwestern strategy, and a Florida strategy. At least for now, the state polling data suggests that all but the Southwestern strategy are realistic scenarios.

In the West, the key states for Obama to win are Nevada, New Mexico, and Colorado. Not much survey work has been done in these places recently, but what data there is offers encouragement for the President. A Rasmussen poll of Nevada carried out at the end of last month showed him ahead of Romney by eight points, fifty-two per cent to forty-four per cent. A P.P.P. poll in New Mexico, which was done at about the same time, showed Obama with an even bigger lead of fourteen points: fifty-four per cent to forty per cent.

In the Midwest, the battleground states are Iowa and Ohio. Despite the conventional wisdom that Obama will struggle in areas heavily inhabited by evangelicals and white ethnics, he is still doing surprisingly well in these two states. A P.P.P. poll carried out earlier this month in Iowa showed him leading Romney by ten points: fifty-one per cent to forty-one per cent. Similarly, in Ohio, two recent polls showed Obama ahead, and in one of them, which was also carried out by P.P.P., his lead was seven points. “Barack Obama’s led by 7 points or more now on our last three Ohio polls,” Dean Debnam, P.P.P.’s president, said in a statement. “It seems unlikely he’ll win the state by that much in November but it does mean he has some margin for error.”

Obama’s Southern path to victory rests on winning North Carolina and Virginia. Between them, these states have twenty-eight Electoral College votes, more than enough to put Obama over the winning line if he also holds on to all the states that John Kerry won in 2004. A recent Washington Post poll showed him leading Romney in Virginia by seven points: fifty-one per cent to forty-four per cent. North Carolina appears tighter, but Obama also appears to be holding onto a slim lead there. A poll from Survey USA, the only one done in the past month, showed him with forty-seven per cent of the vote, and Romney with forty-three per cent.

In Florida, the latest polls show the two candidates neck and neck. Six months ago, Obama was trailing badly. His comeback is pretty encouraging for him, but many political professionals are still predicting a 2000-style cliffhanger. Hence the constant speculation about Romney picking local boy Marco Rubio as his running mate, which could also help with Hispanics nationally.

Clearly, the state polls are one of the best things Obama has going for him. A note of caution, though. Most of them were carried out a few weeks ago, and they may not fully reflect the bounce Romney has received from the G.O.P. primary ending. It will be fascinating to see how far local polls carried out in the coming weeks follow the national trend and whether Obama’s gay-marriage gambit has had any impact. Already, some G.O.P. supporters are claiming it has turned North Carolina from tossup state to one the Republicans are likely to win.

In conclusion, I would say to my fellow residents of Brownstone Brooklyn, and to all Obama supporters: it’s too early to apply for Canadian citizenship, but it’s not too early to get worried. As James Carville warned everybody last week, “If we don’t get on the offense, reconnect with the American people, talk about how the middle class is in a struggle for its very existence, hold the Republicans accountable and fight like the dickens, we are going to lose…. Nothing is in the bag. Nothing can be taken for granted.”

Photograph by Bill Pugliano/Getty Images.

A Politician Shows Real Courage on Gay Marriage

While President Obama is busy receiving plaudits for his carefully calibrated shift on legalizing gay marriage, which stopped well short of actually doing anything about it, a politician who has showed some real courage on the matter is paying a high price. Eight months after announcing his intention to introduce legislation legalizing same-sex marriage, David Cameron, the Conservative Prime Minister of Britain, is facing a rebellion among his own supporters.

In an interview with the BBC yesterday, Philip Hammond, the defense secretary of the United Kingdom, said pushing gay-marriage legislation through Parliament shouldn’t be a priority, and that the government should concentrate on things voters really care about, such as jobs and wages. Hammond’s intervention came a few days after another member of the cabinet, Tim Loughton, the children’s minister, wrote to his constituents saying he was opposed to changing the marriage law on religious grounds.

All of this is happening at a very bad time for Cameron, whose party suffered heavy losses in local elections a couple of weeks ago, and who is now facing speculation about a challenge to his leadership of the Conservative Party. The big question is whether Cameron will stick to his brave course and go ahead with introducing some legislation to liberalize the marriage law. While Downing Street insists that he remains committed to this course of action, which is strongly supported by the Liberal members of the coalition government, marital reform wasn’t included in a list of the government’s parliamentary priorities that was released last week. But it could still be introduced in the fall.

The comparison between Obama and Cameron is striking. Both are smooth, non-ideological moderates, with liberal views on most social issues. But whereas Obama had, until last week, adopted the public stance of opposing gay marriage, Cameron seized upon the issue as a means of demonstrating to the British public that the Conservatives have shed their image as the “nasty party” and moved into the twenty-first century. Speaking to the Party’s annual conference last October, an event where members of the hang-’em-and-flog-’em brigade used to hold court, he sought to put a Burkean spin on his decision to support legalizing gay marriage, saying,

Yes, it’s about equality, but it’s also about something else—commitment. Conservatives believe in the ties that bind us. Society is stronger when we make vows to each other and we support each other. I don’t support gay marriage in spite of being a conservative. I support gay marriage because I am a conservative.

In February, the coalition government formally announced that it would scrap the centuries-old definition of marriage as union between a man and a woman, and it indicated that the first same-sex ceremonies could take place before the end of the year. In the face of rising opposition from right-wingers and clerics, including the Archbishop of York, Cameron reiterated his position last month, this time citing a religious argument:

The New Testament tells us so much about the character of Jesus; a man of incomparable compassion, generosity, grace, humility and love. In the book of Luke, we are told that Jesus said, ‘Do to others as you would have them do to you’—advice that when followed makes for a happier, and better society for everyone.

In his statement to Robin Roberts last week explaining his personal evolution, Obama picked up on this religious theme, citing the Biblical principle of treating others as you would wish them to treat you. But when it comes to political fortitude, Obama is still lagging well behind Cameron. Far from saying he would introduce legislation to make gay marriage a reality throughout America, he fell back upon the old saw that it was a matter for the states to decide. Since some thirty states have already adopted constitutional amendments banning single-sex marriage, this is another way of endorsing a rigid geographical divide in which gay inhabitants of New York, Massachusetts, and a few other spots can get married, but gay people in places like Georgia, Florida, and Texas can’t. Until and unless the Supreme Court intervenes, it is hard to see how this situation will change.

For now, many gay-rights activists and Democrats are still celebrating the sight of a sitting President endorsing gay marriage. Fair enough. In arguing last week that Obama’s U-turn on gay marriage was largely a political move designed to enthuse his supporters and raise money, I didn’t give enough emphasis to its symbolic importance. In a cover story in this week’s Newsweek, Andrew Sullivan, my old college pal and occasional sparring partner, provides a moving account of what Obama’s words meant to him:

When I watched the interview, the tears came flooding down. The moment reminded me of my own wedding day. I had figured it out in my head, but not my heart. And I was utterly unprepared for how psychologically transformative the moment would be. To have the president of the United States affirm my humanity—and the humanity of all gay Americans—was, unexpectedly, a watershed.

For gay-rights activists who for many years have been engaged in the struggle, last week was, of course, a historic moment. And, as Andrew pointed out, it wasn’t without political import. Obama’s U-turn prompted other senior Democrats, such as Harry Reid and Steny Hoyer, to issue similar statements.

But let’s keep things in perspective. If Obama had really gone, as Andrew writes, from “being JFK on civil rights to being LBJ: from giving uplifting speeches to acting in ways to make the inspiring words a reality,” he wouldn’t be talking about leaving the legalization of gay marriage to the states. He’d be following the example of the leader of the Conservative Party that Andrew used to be a member of and making it a policy priority for his second term. Of that, there appears to be virtually no chance.

Photograph by Mandel Ngan/AFP/Getty Images.

Memo to Mitt: Time to Fess Up on Bullying

Day two of the great Mitt Scissorhands scandal, and the campaign hack pack remains consumed. In my occasional role as an unpaid provider of unsolicited advice to both Presidential candidates, here is an urgent action memo addressed to the Barber of Cranbrook.

My oh my, Mitt: what another fine mess you’ve gotten yourself into. By going on the radio yesterday morning and insisting, once again, that you couldn’t remember how, back in high school, you and some pals pinned to the ground a student from the year below you who later came out as gay, hacking off his bleached-blond bangs, you’ve transformed what would have been a one-day or two-day story into a media feeding frenzy.

The actual hair-shearing incident, first revealed in a long and detailed story by the Washington Post’s Jason Horowitz, was forty-seven years old and unlikely to do you any great or lasting damage. To be sure, the details of how the victim of the attack, a sensitive boy called John Lauber, cried out in vain for help, made you look like a nasty high-school bully. And the timing of publication—a day after President Obama had come out in favor of gay marriage—was awkward. But heck, you were only eighteen when this all happened. With an apology from you to Lauber’s family and an acknowledgement that what you and your classmates did was cruel and malicious, something that you’ve come to regret over the years, most Americans would have been willing to write off the whole thing as a youthful misdemeanor.

There was, after all, other material in the Post piece that didn’t fit the “Lord of the Flies” story line. Like how you volunteered at a nearby mental hospital, worked your way into the top classes, and joined eleven school organizations, including the homecoming committee. With an apology from you in hand, your campaign could have pointed reporters to more favorable accounts of your time at Cranbrook, including one in a recent edition of Automobile Magazine that includes this description of you from a former classmate: with his powerful father, “he could have been an arrogant, stuck-up, snotty little brat, But he was a great guy—an all-American kid with a great sense of humor, very self-effacing.”

But instead of fessing up and putting the story to rest, you called in Brian Kilmeade, a reporter at Fox News Radio, and said to him with a chuckle: “I’ll tell you, the thought that that fellow was homosexual was the furthest thing from our minds back in the nineteen-sixties, so that was not the case. But as to pranks that were played back then, I don’t remember them all, but again, high school days, I did stupid things…. And if anyone was hurt by that or offended, obviously I apologize for that.”

Right there, Mitt, you transformed a disturbing but dated tale about the actions of an immature high-school senior a year before the Beatles released “Revolver” into a front-page story about your credibility and character. In repeating the claim that your press office first made to the Post that you don’t even have any recollection of what you did to Lauber, you came across as either incredibly callous or incredibly disingenuous.

As the Post article made clear, and as my colleague Amy Davidson emphasized in her brilliant and damning post, others who were there remember what happened to Lauber all too vividly. One of them, Phillip Maxwell, who is now an attorney, told ABC News yesterday, “When you see somebody who is simply different taken down that way and is terrified and you see that look in their eye you never forget it. And that was what we all walked away with.” Maxwell went on: “This was bullying supreme.”

Doubtless, you will protest that the Post got some of its minor facts wrong. Lauber’s family has said as much, as has one of Romney’s classmates, Stuart White. You may also point out that that Maxwell is a Democrat, and so are some of the other Post sources. But nobody has contradicted Horowitz’s basic account of what happened to Lauber. One of the witnesses, David Seed, a retired school principal, once served as a Republican country chairman in Michigan. He said to the Post, “To this day it troubles me…. What a senseless, stupid, idiotic thing to do.”

In the face of this sort of testimony, there’s really not much point dispatching, as you did this morning, one of your flaks, Kerry Healey, to defend you on CNN. (“Mitt Romney a bully?” Healey told Soledad O’Brien. “The answer is no…. He does not have a vicious bone in his body.”) If you can’t find some former classmates to contradict the account in the Post (and if you could find them they’d already be out there giving their version of events) you had better change course, and quickly.

Brazening it out won’t work. This details are too juicy, and your opponents are too resourceful, for the saga to fade away. If you aren’t careful, and it might well already be too late, it will join the dog-on-the-car-roof story as one that defines you in the public mind. And politically, this is a much more damaging tale. Think of all those female voters with children, a demographic in which you already trailing badly, to whom the school bully is the worst of the worst.

So suck it up, Mitt, and arrange another interview—this time with a more credible news organization. Tell the interviewer that reading about the Lauber incident and talking it over with former schoolmates has refreshed in your mind at least some of the details of what happened. Say what you and your friends did was a bad act, but one that reflected the stuffy, cloistered, all-male environment in which it took place. For goodness’ sake, avoid the word “prank.” And don’t say again that you didn’t even know the word “homosexual” in 1965. Whether you viewed Lauber as a “sissy,” a “girl,” or just as some sort of nonconformist weirdo doesn’t make much difference. You and your pals terrorized and humiliated him. Display some remorse. Talk about some of the gay people who worked for you in Massachusetts, and how you related to them. Show some humility, and some humanity.

Such a performance won’t convert any die-hard Democrats. It will, however, be noticed by independents and others who are thinking of voting for you but who already have some doubts about your character and your background. Being perceived as an out-of-touch rich doofus is something you can work on gradually. Being perceived as an out-of-touch rich bully is a serious problem that needs addressing right now before it gets any worse.

Mitt, it’s time to learn a trick from Obama and call in Diane Sawyer. Do it today!

The Full Rupert: Murdoch at the Leveson Inquiry

It isn’t every day that the man widely regarded as the world’s most powerful media mogul is subjected to four hours of grilling under oath. That’s what happened in London on Wednesday, when Rupert Murdoch appeared at the Leveson inquiry, a judicial investigation into phone hacking and broader issues of media regulation in the United Kingdom. Under polite but close questioning from Robert Jay Q.C., and, on occasion, from Lord Leveson himself, Murdoch recalled his dealings with Margaret Thatcher, Tony Blair, and David Cameron, among others, during the forty-four years since he bought his first British newspaper, the now-shuttered News of the World. (He will be questioned again tomorrow about the phone-hacking scandal.)

What Murdoch said was, by turns, informative, amusing, self-serving, and hard to believe. The press baron repeatedly asserted that his support of various politicians was completely divorced from his business dealings. Coming a day after the same inquiry had released a series of e-mails between a senior official and a lobbyist for a Murdoch company that appeared to show the government doing all it could to wave through one of his takeovers, and other evidence to the same effect, this didn’t seem like a particularly hopeful line of argument. But Murdoch stuck to it assiduously.

The entire hearing and transcript can be viewed online. But I thought it might be worthwhile to provide an annotated guide to the day’s highlights.

INTRODUCTION: Murdoch entered the hearing room with his wife, Wendi Murdoch; his eldest son, Lachlan; and his senior adviser Joel Klein, the former New York schools chancellor. Dressed in a dark suit and light-blue tie, his white hair closely cropped, the eight-one year old Australian-American seemed far more alert and engaged than he had in his testimony to parliament last summer, during which a pie thrower attacked him.

Clearly, he had been well prepped. After swearing an oath and saying he had been following British politics “with a varying intensity” for sixty years, Murdoch said rumors that he was angry with David Cameron, the Prime Minister, for setting up the inquiry, were “untrue”: “The need is fairly obvious. There have been some abuses….I welcome the opportunity because I wanted to put certain myths to bed.”

Jay: Is it your perception or understanding that abuses go further than the issue of phone hacking or are they limited to the issue of phone hacking?

Murdoch: Oh, they go further.

CELEBRITY JOURNALISM: Murdoch said that much of the material his tabloids received about celebrities was provided by their public-relations agents, and he argued it was the newspapers’ job to look behind what it was being told.

Jay: So you say, well, you’re fed a load of material by paid publicists. In order to rectify the balance, as it were, it is not inappropriate to use intrusive means to pry into the lives of celebrities; is that fair?”

Murdoch: I didn’t say that.



Jay: No.

Murdoch: “I think it’s perfectly fair—I don’t believe in using hacking, I don’t believe in using private detectives or whatever, I think that’s just a lazy way of reporters not doing their job. But I think it is fair, when people are held up as great—or had themselves held up as iconic figures or great actors, that they be looked at.

As an example, he mentioned Simon Cowell. Murdoch added, “If we’re going to have a transparent society, a transparent democracy, let’s have everything out in the open.”

THE PROPRIETOR: As he has in the past, Murdoch attempted to drew a distinction between his tabloids titles, for which he personally dictates the editorial policy on major issues, and his broadsheets, such as the Times and the Sunday Times, where he claimed the editors had far more leeway.

Murdoch: I never gave instructions to the editor of the Times or the Sunday Times. I didn’t say, ‘What are you doing? What are you saying?’ Sometimes when I was available on a Saturday, I would call and say, ‘What’s the news today?’ It was idle curiosity perhaps.

A bit later in his testimony, Murdoch said, “I am a curious person who is interested in the great issues of the day and I am not good at holding my tongue.” He added,

If any politician wanted my opinions on major matters, they only had to read the editorials in the Sun.”

PRIME MINISTERS: Since buying the News of the World in 1968, Murdoch has seen eight British prime ministers come and go. Starting with Margaret Thatcher, who was elected in 1979, he has had close dealings with most of them. In a fifty-two page witness statement that he submitted to Lord Leveson, Murdoch described some of these interchanges:

Mrs. Thatcher was not one for much personal conversation; I simply do not recall meetings with Mr. Major; Mr. Blair always spoke with enthusiasm about the new Labour Party’s approach to the challenges facing our country and was equally curious about what economic and social trends we at News Corporation were seeing in our global businesses; Mr. Brown and I shared some personal background and also discussed the challenges facing Britain; and Mr. Cameron, since his election as Prime Minister, and I have met principally in social settings, where little of substance was discussed. I do recall that, shortly after his election, Mr Cameron invited me in for tea at No 10 Downing Street, he thanked me for the support of our papers; I congratulated him and told him that I was sure our titles would watch carefully and report whether he kept all of his campaign promises. The meeting lasted at most twenty minutes.

MORE THATCHER: “I remain a great admirer,” Murdoch said. The Sun, which had once been a Labour paper, endorsed Thatcher before the 1979 general election. “We’d just come through the most terrible winter of discontent, the strikes, disruptions to the whole society. And I think we all wanted a change.”

The questioning turned to 1981, when Murdoch bought the Times and the Sunday Times from the Thomson family, of Canada. Many politicians and journalists regarded Murdoch as an Aussie vulgarian, and they vigorously opposed his takeover of two serious newspapers. Controversially, the Thatcher government failed to refer Murdoch’s purchase to the Monopolies Commission, which could have blocked it on competition grounds. A document submitted to the inquiry, an internal memo from Sir Bernard Ingham, Thatcher’s longtime press secretary, revealed that on Sunday, January 5, 1981, Murdoch had a previously undisclosed lunch with the Prime Minister to discuss the takeover bid.

Jay: You… previously had had no recollection whatsoever of this lunch; is that right?

Murdoch: “That’s correct. I still don’t, to be honest. But I totally accept Mr Ingham’s minutes, detailed minutes, which sound to me to be correct… I think I’d asked Mrs. Thatcher could I see her and she said, “Well, why don’t you come to lunch on Sunday?”

He and Thatcher gossiped about American politics and their mutual friend Ronald Reagan, Murdoch said. Jay asked Murdoch if he wished “to point out that no express favors were offered to you by Mrs. Thatcher”

Murdoch: “And none asked. I think if I’d asked for anything, Mr Ingham’s very full note certainly would have recorded that.”

Jay: “But you wouldn’t have been so undeft and cack-handed to have asked directly, would you, Mr Murdoch?

Murdoch: “I hope not. I’ve never asked a Prime Minister for anything.”

(In a comment on the Guardian website, Sir Harold Evans, a former editor of the Times of London who had a famous falling out with Murdoch, disputed Murdoch’s account of the circumstances of the 1981 purchase.)

COMMERCIAL CONSIDERATIONS: “You are completely oblivious to the commercial benefits to your company of a particular party winning an election; is that really the position?” Jay asked. Murdoch replied, “Yes, absolutely.”

Jay: “So this is an entirely, as it were, I’m not saying idealistic approach, because that would be putting it too high, but in one sense its political and ideological and commercial considerations are wholly subordinated. Is that fair?”

Murdoch. “Absolutely. I have no commercial interests except the newspaper. I love newspapers.”

Jay: “But don’t you, put another way, owe some duty to your shareholders, at least, to further the best interests of your companies?”

Murdoch: “Well, they tell me so. They’d like me to get rid of them all.”

THE 1992 GENERAL ELECTION. During this campaign, the Sun lambasted Kinnock, who was leading the Labour Party. The day after the Conservatives won a fourth term, the tabloid ran a full-page headline that said; “IT’S THE SUN WOT WON IT.”

Jay: “Did you appreciate that headline?

Murdoch. “No…I understand that Mr MacKenzie”—Kelvin MacKenzie, a Fleet Street bruiser who edited The Sun at the time—“said I gave him a terrible bollocking.”

Jay: Yes.

Murdoch: I don’t remember it. I thought it was a little overenthusiastic, but my son, who is here today and was apparently beside me, said I did indeed give him a hell of a bollocking.

Jay asked if Murdoch had found the headline inappropriate or undemocratic.

Murdoch: I think saying anti-democratic is too strong a word, but I just thought it was tasteless and wrong for us. It was wrong in fact. We don’t have that sort of power.

TONY BLAIR: In advance of the 1997 general election, after supporting the Conservatives for almost twenty years, Murdoch swung the Sun behind the Labour party, which Blair had rebranded as New Labour. During the questioning, Jay asked Murdoch about a dinner he had with Blair in 1994, after which Murdoch reportedly said “‘Well, he certainly says all the right things. But we’re not letting our pants down just yet.” Jay repeatedly asked Murdoch about suggestions that he supported Blair in return for assurances that a Labour government wouldn’t force him to sell any of his newspapers or other interests.

Murdoch: You’re making sinister inferences.

Jay: It’s not sinister.

Murdoch: I want to say, Mr. Jay, that I, in ten years of his power, never asked Mr Blair for anything. Nor indeed did I receive any favors. If you want to check that, I think you should call him.

He added, in response to a question about his activities, “I’m afraid I don’t have much subtlety about me.”

(To be continued; I’ll be adding more of the annotation to this space soon.)

Hail to Mitt: Romney Has a Big Night—Sort Of

Now we know what it takes for Mitt Romney to have a really good primary evening. Persuade his principal rival to drop out of the race; wheel out Newt Gingrich to remind G.O.P. voters how bad it could have been; and print a bunch of signs saying “A Better America Begins Tonight” so that even the dimmest bulb in the campaign hack pack twigs to the story line.

If you do all these things, the Mittster can shine—or, at least, he can read from a teleprompter in a manner that is plausible enough for some well-known members of the fourth estate to say he shined. “An excellent speech from his perspective,” Wolf Blitzer intoned moments after Romney finished speaking in Manchester, New Hampshire. “Hard to recall a better Romney speech in 5+ years of running for president,” tweeted Scott Conroy, of Real Clear Politics.

In the face of this love-in, some conservative commentators were more restrained. “It was a good speech: he set the right tone,” Rick Santorum told Piers Morgan, Blitzer’s CNN colleague, while not quite bringing himself to formally endorse Romney. “Solid speech,” Robert Costa, of the National Review, tweeted. “The usual stuff but few mistakes. Nice opening drive on Hole 1.”

The golfing metaphor referred to Romney’s Convention-style acceptance of the G.O.P. nomination: “After forty-three primaries and caucuses, many long days and more than a few long nights, I can say with confidence—and gratitude—that you have given me a great honor and solemn responsibility. And, together, we will win on November 6th!”

Sticklers for political procedure will point out that in hailing himself as the candidate, Romney was being a bit premature—four months, to be exact. But after all his ups and downs, his campaign was understandably eager to seize the moment to reset, wiping clear all references to “vulture capitalists,” “Massachusetts moderates,” and Etch-a-Sketches. And, for one night anyway, a media eager to make a race of it was willing to go along with him.

In addition to printing up idiot-proof signs, the Romney advance team had lit the stage well and assembled what I suppose passes in New Hampshire G.O.P. circles for a rainbow alliance to stand behind the candidate and cheer while he spoke. There was a dad with a baby, a blonde woman, an Asian, a Latino, and a dexterish looking young man with thick glasses and a bow tie. Most impressive of all, the campaign also appeared to have found the only bearded hippie in the state who was willing to hold up a Romney placard and wave a little U.S. flag.

The speech itself was thin on substance and largely bereft of originality. A mélange of “Morning in America” Reaganism with a sprinkling of “I feel your pain” Clintonism, it trotted out the now-familiar trope that Barack Obama is leading America to a future of bureaucratic servitude and the country’s only hope is Mitt the free-market liberator, Mitt the job creator, Mitt the eternal optimist, whose father was a self-made man even if he wasn’t. (“Only in America could a man like my dad become governor of the state in which he once sold paint from the trunk of his car.”)

If the Dad-as-Horatio Alger line was the low point of the speech, its best bit came when Romney evoked Reagan’s famous question from 1980, “Are you better off than you were four years ago?” and then channeled James Carville.

What do we have to show for three and a half years of President Obama? Is it easier to make ends meet? Is it easier to sell your home or buy a new one? Have you saved what you needed for retirement? Are you making more in your job? Do you have a better chance to get a better job? Do you pay less at the pump?

If the answer were “yes” to those questions, then President Obama would be running for re-election based on his achievements…and rightly so. But because he has failed, he will run a campaign of diversions, distractions, and distortions. That kind of campaign may have worked at another place and in a different time. But not here and not now. It’s still about the economy …and we’re not stupid.

I’m with the “Hail-to-Mitt” crowd on one thing. The last line was his best in months—a sign, perhaps, that not everybody working in his Boston HQ is a second-rater. But most of the speech was pablum, and some of the rest was emergency repair work, done to fix gaping potholes that emerged during the primary season. This was particularly true when Romney tried to reintroduce what was originally the raison d’etre for his campaign: his record as a businessman.

You might not have heard that I became successful by helping start a business that grew from 10 people to hundreds of people. You might not have heard that our business helped start other businesses, like Staples and Sports Authority and a new steel mill and a learning center called Bright Horizons. And I’d tell you that not every business made it and there were good days and bad days, but every day was a lesson. And after 25 years, I know how to lead us out of this stagnant Obama economy and into a job-creating recovery!

If Romney thought a few lines like this would put to rest the furor about his record at Bain Capital, he was engaging in wishful thinking. Still, by the time he signed off with the tired old cliché that America’s greatest days are still ahead of it—a line often attributed to Reagan, but which actually originated with Richard Nixon in 1971—CNN was projecting him the winner in Connecticut, Delaware, Pennsylvania, and Rhode Island. (He would also go onto record a big victory in New York.)



It barely needs repeating, but once he comes down from the high of last night, Romney will face a monumental task. As of yesterday, according to the Gallup tracking poll, he was trailing Obama by seven points: forty nine per cent to forty two per cent. In recent days, the President’s approval rating, which has been stuck in the mid-forties for several months, has bobbed up to fifty per cent, six points higher than his disapproval rating. “The 50% approval mark is notable because all incumbent presidents since Eisenhower who were at or above 50% approval at the time of the election were re-elected,” Gallup’s Jeffrey M. Jones noted in a post about the poll.

Before you accuse me (once again) of shilling for Obama, I would point out that the polls jump about quite a bit. Only last week, in the same Gallup survey, the two candidates were tied, and Obama’s disapproval rating was forty eight per cent, two points higher than his approval rating. If there has been any big news to explain this turnaround, I have missed it. (Perhaps the ludicrous efforts of some Republicans to exploit the Secret Service sex scandal prompted Americans to rally around their President. More likely, if there is any real reason for the change, it was the fact that gas prices have fallen a bit.)

For all of the necessary qualifications about Romney’s strategic position, and his abilities as a Presidential candidate, this is his moment. Regardless of what the man from Gallup or anybody else says, Republicans can take heart from the fact that, finally, they have a candidate to unite around. And for one night, he looked presidential—or so Piers Morgan said, anyway.

Photograph by Chip Somodevilla/Getty Images.

“Life Isn't Easy for Any of Us”: Ann Romney’s Speech Raises Peril for Both Sides

In a speech last night in Stamford, Connecticut, which is overshadowing today’s G.O.P. primaries in the Northeast, Ann Romney waded into the Hilary Rosen flap, talking about how she stayed at home to raise five kids, her struggles with serious illness, and how her “extraordinary husband” stood by her side, but left most of the domestic chores to her. She also sought to head off suggestions that, as the wife of an extremely wealthy chief executive, she had little understanding for the career choices that less well off Americans have to make, saying, according to Politico’s transcript:

My hats off to the men in this room too that are raising kids—I love that, and I love the fact that there are also women out there that don’t have a choice and they must go to work and they still have to raise the kids. Thank goodness that we value those people too. And sometimes life isn’t easy for any of us.

During her remarks, Mrs. Romney was interrupted several times by cheering supporters. At the same time, though, the speech raises some dangers for the Romneys. Now that Ann is using the details of her domestic life for political purposes, journalists and Obama supporters are sure to focus on parts of that existence that might reflect less well on her and her husband. For example, she has said that when Mitt was in college, the two of them were so financially strapped that they had to liquidate some of their stock portfolio to get by. At the time Mrs. Romney said that she was engaged in a “struggle” to bring up her children, the family was living in a seven bedroom, six-and-a-half-bathroom mock-Colonial mansion in Belmont, Massachusetts, while spending summers at their five-thousand-square-foot vacation home, which sits on eleven lakefront acres in New Hampshire.

Clearly revelling in the opportunity to exploit an issue that the Obama campaign would love to put to rest, Ann Romney, without naming Rosen, refuted at length the accusation that she had never, as Rosen put it, “worked a day in her life.”

“I know what it’s like to finish the laundry and look in the basket five minutes later, and it’s full again,” she said to eight hundred G.O.P. supporters, who had gathered at the annual Prescott Bush Awards Dinner. “I know what it’s like to pull all the groceries in and see the teenagers run through and then all of the sudden all of the groceries you bought a few hours ago were gone. And I know what it’s like to get up early in the morning to get them off to school and I know what it’s like to get up in the middle of the night when they’re sick and I know what it’s like to struggle and to have those concerns that all mothers have.”

The speech, which is all over the Internet this morning, came as the White House was seeking to shore up support for President Obama among women voters, which is key to his prospects of being reëlected. In addition to distancing itself from Rosen’s remarks, the White House has organized a forum on women and the economy and put out a lengthy report detailling its record on women’s issues. But the Obama campaign hadn’t budgeted for Mrs. Romney’s latest intervention, which came laced with details of how, after being diagnosed with multiple sclerosis, in 1998, and later with breast cancer, she continued to do the housework:

There were days when I didn’t think I could [keep going] and there were days when I thought my only future was going to be in bed and too weak to even have any kind of a normal life, and yet [Mitt] kept encouraging me and he kept on loving me and telling me that none of those things that I actually did physically to take care of the house and the children and the bills and all the things which—some people think that I didn’t work, but you know, those were things, those were things I was (very) busy doing!

As a woman you actually end up having done those things for so many years—taking care of the children, doing the laundry, doing the grocery shopping, doing the cooking—which I did, by the way. I didn’t have help for many, many years—as a matter of fact, I didn’t have any help at all until the fifth baby was born and I had emergency surgery when he was four months old and I was in bed and realized that I couldn’t take care of five small boys with Mitt working so hard and needed a little extra help.

Mrs. Romney has acknowledged that, at some point, she did engage domestic help, but few details have emerged. The Romneys’ tax records show that they paid a total of $20,603 to four household employees in 2010, which suggests that all four worked part time that year. By that stage, however, the Romneys’ five children were adults.

Mrs. Romney’s remarks had clearly been worked on by her husband’s campaign, which is determined to exploit her popularity to close some of the gender gap. Although much of the speech was taken up with details of her own life, she stressed that her husband had been entirely supportive of her decision to become a stay-at-home mom. “But getting back to how Mitt treated me,” she said, he “would remind me all the time that my job was more important than his.” Mrs. Romney also said she was “grateful for the response” to Rosen’s remarks, “recognizing that women have choices in life and some choices are not all the same, but that we value everyone’s choice in making their profession.”

The speech places the Obama campaign in an awkward situation. Should it respond to Ann Romney’s remarks, or keep quiet and hope the whole thing goes away? For the past few weeks, it has pursued the second strategy, but both she and the Romney campaign are apparently eager for her to play a significant role in the race.

On Twitter this morning, David Axelrod et al were conspicuously silent. Commentator Jeff Greenfield tweeted, “My hunch: when they read this account of Ann Romney’s speech, they reached for the Maalox at Obama Campaign HQ.” Republican supporters, meanwhile, were busy celebrating Ann Romney’s latest gambit. “The thing is that everyone who knows him, likes, admires and respects Mitt Romney. And they love Ann Romney. Not like her, love her,” tweeted John Ellis, a former Fox News executive who is George W. Bush’s cousin.

Photograph by Jessica Hill/AP Photo.

Obama’s Money Game: Small and Big Bucks

With six and a half months left until election day, the money war is in full swing. A few days ago, the Obama campaign said that it had raised $53 million in March, bringing its total to just shy of $200 million. Meanwhile, Mitt Romney’s campaign and a Super PAC closely tied to it raised $12.7 million, bringing his total to $87 million.

In announcing the latest fund-raising figure, the Obama campaign boasted that much of it had come from small donors. Some 567,000 people contributed to the reëlection effort last month, the campaign said. More than ninety-seven per cent of the donations were for less than $250, and the average donation was $50.78. Some were as small as five bucks. “This really is how it works,” Jim Messina, Obama’s campaign manager, said in a video that was posted on YouTube. “People building this organization five or ten bucks at a time to take on Mitt Romney.”

Mmm. Up to a point, Jim.

The Obama campaign’s grassroots fund-raising effort is certainly impressive. Heavily based on the Internet, it allows donors to create their own fund-raising pages and uses many of the tricks of online marketing. On Friday, the campaign launched an online raffle, with the prize being a seat at a fund-raising dinner that George Clooney is hosting for Obama at his Los Angeles home, on May 10th. For people who want to try and win the prize, which includes round-trip airfare and accommodation in Los Angeles, the suggested donation is just three dollars each.

Drawing on data from the Obama campaign, some media accounts have suggested that grassroots fund-raising is replacing the traditional technique of soliciting big checks from rich people. A front-page story in Saturday’s Times featured the headline: “Big Donations Drop Sharply for President: Campaign is Relying on Smaller Gifts.” That is certainly what the Obama campaign would like people to think: scrappy Barack, the defender of ordinary Americans, is relying on small donations from waitresses and factory workers to take on big bad Mitt and his fellow-members of the one per cent. But this isn’t the full picture.

Obama has certainly raised a lot more money in small donations than Romney, who has had a hard time attracting any. But soliciting donations from non-wealthy Americans is just part of the President’s fund-raising efforts—and a relatively small part. Even now, his campaign is raising most of the money it will rely on in the election from rich people. The President’s big donors haven’t disappeared for the 2012 campaign. By some measures, there are more of them than ever. You just need to count them properly.

Some accounts focus too narrowly on the fund-raising figures from individual campaigns. Saturday’s story in the Times, for example, said that “about 58 percent of Obama’s total fund-raising during the election has come in checks of less than $200.” That sounds impressive. But it ignores the fact that, these days, most of the money rich people contribute to a candidate doesn’t go to his campaign. In order to comply with campaign-finance laws, it is channelled through allied groups, such as political-action committees (PACs) organized by the two parties, or by outside Super PACs. (Under the Supreme Court’s 2010 Citizens United ruling, the latter groups can raise unlimited contributions from individuals and corporations.)

As is well known, Romney and the Republicans are relying heavily on Super PACs. In March, Restore Our Future, a Super PAC closely allied with Romney, raised $8.7 million, bringing its total to $51.9 million. This figure pales in comparison to the fund-raising efforts of American Crossroads GPS, a Republican Super PAC founded by Karl Rove, which said last week that it has raised $99.8 million. Since Crossroads isn’t obliged to disclose its donors, we don’t know where most of this money came from, but we do know that much of it came in big chunks. In a tax filing last week, the group said that twenty-four donations of over a million dollars have accounted for eighty-seven per cent of its total fund-raising. Two of the donations were for more than ten million dollars.

Obama is also encouraging people to donate to a Super PAC tied to his campaign, Priorities USA Action, but in raising the big bucks he is mainly relying on a more traditional tactic: exclusive dinners where well-heeled Democratic supporters pay $35,800 for the privilege of dining with the President and hearing him talk. That figure is no accident. Under campaign-finance laws, the maximum an individual can give to a candidate is $2,500, and the maximum an individual can give to a PAC legally aligned with a candidate is $5,000. But individuals can give another $30,800 to a national-party committee, in this case, the Democratic National Committee. When the dinner checks for $35,800 come in, the money is split between the Obama campaign and the D.N.C., but the distinction is moot. Practically all of it will be used to help get Obama reëlected.

While the Obama campaign has raised less money so far than it did in 2008—$196 million compared to $235 million—the D.N.C. has raised a lot more: $150 million compared to $69 million. If you combine the two sets of figures, you will find that the broadly defined Obama reëlection campaign has raised $346 million this year, which is more than the $304 million it had raised at this point in 2008. And much of this money has come in large donations.

At the top end, much of Obama’s fund-raising activity is organized by “bundlers,” wealthy individuals who donate the legal maximum of their own money and then put together contributions from their friends, associates, and co-workers. As the Washington Post ’s T. W. Farnam pointed out in an informative story on Saturday, the number of big-money Obama bundlers isn’t declining—it’s increasing. The campaign has published the names of a hundred and seventeen people who have raised at least five hundred thousand dollars. The number of big bundlers has doubled since the start of this year, and it compares with just forty-seven bundlers who raised that amount in 2008.

The list of big-name bundlers was about what you would expect. It was heavy on the media and entertainment industries—Jeffrey Katzenberg, Tyler Perry, Harvey Weinstein. But there were also plenty of rich folks from other walks of life, such as lawyers, industrialists, and real-estate developers. Despite all that has been written about Wall Street turning against Obama, there were also some financiers, including the two hedge-fund managers David Shaw and Blair Effron, and Jon Corzine, the embattled former head of MF Global.

“The lengthening list of top fund-raisers is a sign that bigger donors are coming off the sidelines as the outlines of the race against Romney becomes clear,” Farnam wrote. That sounds about right. Raising money from ordinary Americans is all very well, and the Obama campaign will continue to do it to the best of its ability. But with Democrats and Republicans both aiming to raise upwards of $750 million by the time the election is done, the President will also be busy doing what all of his recent predecessors have done: hitting up rich people for donations. And on the evidence so far, he’s rather better at it than he’s been given credit for.

Photograph by Chip Somodevilla/Getty Images.

The Economy and the Election: How Bad for Obama?

The headline on the lead story in Thursday’s Times reads: “In Wariness on Economy, Poll Finds Opening for Romney.” Citing the findings from a Times/CBS News opinion survey carried out earlier this week, the article went on to say that a lingering concern among Americans “about their own financial circumstances is allowing Mitt Romney to persuade voters that he could improve their economic prospects more than President Obama.”

On the face of it, this is highly encouraging news for the presumptive G.O.P. nominee. In our straitened times, it is a rarely challenged truism that economic concerns dominate elections. Now that we are well into the third year of a recovery, however weak, from a deep recession, the incumbent should be getting some credit. If he isn’t, if voters still think somebody else could do a better job of improving their lot, his electoral prospects would appear to be grim—much grimmer than the conventional wisdom among political professionals, pundits, and speculators would indicate. (On the betting site Intrade, Obama is still the strong favorite to defeat Romney.)

But is that the full story? Not quite. A close look at the Times/CBS News survey, and other recent polls, reveals a complicated and ambiguous picture. Yes, there are some positive signs for the G.O.P. and worrying ones for the White House. But the trends are still going in Obama’s direction. What the poll really reinforces is just how critical what happens to the economy in the next few months will be.

The United States is still a disaffected country. Just one in four Americans (twenty-five per cent) believe the economy is in “very good” or “fairly good” shape, according to the Times/CBS poll—and an even smaller proportion (twenty-three per cent) believe they personally are “getting ahead.” The voters’ pessimism isn’t restricted to the short term. Just one in four of them (twenty-four per cent) think that the next generation of Americans will be better off, and almost one in two of them (forty-seven per cent) think they will be worse off.

Pessimism is generally negative for incumbents. But Americans have been feeling crotchety for a long time now, and in recent months their gloom has lifted slightly. Last September, just one in ten respondents to an earlier Times/CBS News poll said that the economy was in very good or fairly good shape, and fewer than one in eight said that it was getting better. In this month’s survey, a third of the respondents said the economy was improving, which was more than the twenty-eight per cent who said it was getting worse. (The rest said it was about the same.)

This uptick in sentiment has also been reflected in the economic-optimism indices collated by the University of Michigan and the Conference Board, both of which have risen quite a bit since last summer. This has coincided with a jump in Obama’s economic approval rating. Last September, thirty-five per cent of respondents to the Times/CBS poll said they approved of his handling of the economy. In the new poll, forty-four percent did. In answer to another question, fifty-one per cent said they were very confident or fairly confident in Obama’s ability to make the right decisions on the economy. Clearly, the pick-up in G.D.P. growth and job growth has changed people’s opinions of Obama’s economic stewardship, at least somewhat.

Another hopeful sign for Obama is that a majority of Americans appear to agree with his economic philosophy, rather than the G.O.P.’s espousal of supply-side economics. Asked what was the best way to grow the U.S. economy, fewer than two in five people (thirty-seven per cent) said that reducing taxes, and cutting government spending on services and programs to pay for them, was the best way to go. More than half (fifty-six per cent) favored the option of spending more money on education and infrastructure and raising taxes on the wealthy and businesses to pay for it.

The bad news for the White House, which the Times stressed, is that, in some dimensions, and for whatever reason—most probably because of his business background—Romney inspires more trust as an economic manager than Obama does. Fifty-five per cent of the respondents said they were very confident or somewhat confident in Romney’s ability to make the right decisions about the economy as a whole, which is four points higher than Obama scored on this question.

Even more strikingly, the Times/CBS poll suggested that Romney also comes out ahead when people are asked to think about their own prospects. Twenty-eight per cent of respondents said that if Romney were elected, his policies would be good for them personally, and twenty-six percent said so of Obama. When the question was turned around, Romney came out further ahead. Just twenty-six per cent of the respondents said that his policies would make their personal situation worse. Thirty-eight per cent of respondents said Obama’s policies would be bad for them personally.

As I said, the poll numbers can interpreted in at least two ways. My reading is that with the country suffering the after-effects of the recession, and the unemployment rate still above nine per cent, Romney came into the campaign last year with a big edge on economic issues. As the outlook has improved, Obama has eliminated some of his opponent’s advantage. In the Times/CBS poll, at least, his overall approval rating is still rising. Last month, it was forty-one per cent; this month it is forty-eight per cent.

The danger to Obama is an obvious one. If recent signs of a pause in spending and job growth develop into a full-fledged economic slowdown, economic sentiment, which is still pretty fragile, could take another downward lurch, leaving him in a very sticky situation. If the recent hiccup proves to be just that, and growth holds up going into the summer, Obama should still be in pretty good shape. Since I view a fairly decent economic outcome as the mostly likely scenario, I am sticking with my assessment that Obama is a justifiable favorite. But I am not quite as confident of this as I was a month ago.

Photograph by Drew Angerer/The New York Times/Redux.