Now Two Actors Are Running For President

FORECASTS & TRENDS E-LETTER
Gary D. Halbert
September 18, 2007

IN THIS ISSUE:

1.  The Two Actors In The Presidential Race

2.  Hillary’s Illegal Fundraising Dilemma

3.   The Hillary/MoveOn.org Disgrace of General Petraeus

4.  Does Rudy Or Fred Have A Chance To Beat Hillary?

5.  The Compressed Primary Problem

Introduction

It has been over four months since I’ve written anything political, and that’s a long time for me.  President Bush, who I voted for twice, has disappointed his conservative base in so many ways that I decided to mostly lay off of politics in these weekly musings.  Meanwhile, as much as I hate to say it, I concluded late last year that the 2008 presidential race was Hillary’s to lose, so I decided to avoid that issue as well.

But now Fred Thompson has officially thrown his hat in the ring for president in 2008.  Given his huge name and face recognition, and if he plays his cards right, he may overtake Rudy Giuliani, the current frontrunner.  While it’s far too early to tell if Thompson can raise enough money, and not make any fatal mistakes as a candidate, his more conservative views might well win him the trust of Republican voters and the nomination.

If that happens, we’ll then have TWO actors in the race for president.  In my view and that of many others, Hillary Clinton is just as much an actor as Fred Thompson.  In fact, some would argue that she’s been acting ever since her husband first won the governorship of Arkansas in 1978.  I will elaborate on this topic in the pages that follow.

As this is written, however, Hillary is in full “damage control” mode over at least $850,000 in improper or illegal campaign contributions from one Norman Hsu.  It remains to be seen if this latest development is enough to sink her chances, but at the least, it brings back distasteful memories of the Clinton years in the White House.  Hillary is also in hot water for disgracing General Petraeus last week in his Senate testimony on Iraq.

We’ll also take a look at the latest poll numbers that show Fred Thompson vaulting to a near neck-and-neck race with Rudy Giuliani only two weeks after he formally jumped into the race. In addition, we’ll look at the huge mismatch between the Democrats versus the Republicans in terms of how much money they have (very bad news for the GOP).

Finally, we will consider the effects of the accelerated primary season.  As you know, several key primary states are threatening to move, or already have moved, their presidential primary dates months or weeks earlier on the calendar in an effort to jump ahead in line.  As I will discuss below, this acceleration of primary dates is not only harmful to the “second tier” candidates, but it is also bad news for the smaller states and for voters everywhere.

No doubt this will be a lively E-Letter, so let’s get going.

The Two Actors In The Presidential Race

In my view, both Fred Thompson AND Hillary Clinton should be considered to be “actors.”  Here’s why.

She, a lawyer in real life, played the willing accomplice of a liberal two-term governor and president whose main legacy will be an affair with a young White House intern, and then went into politics herself as a carpetbag senator from New York; in two terms in the Senate, she failed to sponsor a single piece of significant legislation.  Unlike her husband whose politics could be whatever was required at the time, she is a big government liberal ideologue trying to masquerade as a centrist to win the White House.  At her core, she is anti-military, yet she wants us to believe she is qualified to be Commander In-Chief. 

He, also a lawyer and politician in real life, was a two-term senator from Tennessee, a conservative on most issues (pro-life, anti-gun control, lower taxes, smaller government, pro-military, etc.), who left politics to star as a tough District Attorney in the wildly popular TV drama Law & Order; as a result, he has enormous national name and face recognition, which is a huge advantage.  Now he wants us to believe he is qualified to be Commander In-Chief. 

They are both actors.  There’s nothing wrong with actors running for president.  Ronald Reagan, who was an actor for most of his career, was one of the finest presidents this country has ever had.  But make no mistake about it, neither Fred Thompson nor certainly Hillary Clinton are remotely in the league with Ronald Reagan, in my opinion.

Some of you reading this, I’m sure, will say it’s a stretch to call Hillary an “actor.”  Maybe so, but consider the following:

■  Acting like she didn’t know or didn’t care as her husband reportedly had numerous affairs, including Jennifer Flowers, during their years in the Arkansas governor’s mansion.

■  Acting like a savvy investor when records from the Chicago Mercantile Exchange revealed she turned a $1,000 investment in cattle futures in 1978 into more than $100,000 in ten months, a return of 10,000%.

■  Acting like she was not involved in the firings at the White House Travel Office. Later, acting like an expert on health care in the first Clinton Administration, when she unsuccessfully tried to nationalize 15% of the US economy.

■  Acting surprised when the Whitewater documents from the Rose Law Firm that had been subpoenaed for several years suddenly appeared in a box in the White House.  Also, acting like an innkeeper while “renting out” the Lincoln bedroom in the White House for campaign contributions.

■  Acting outraged at a “vast right-wing conspiracy” that was unjustly accusing Bill of having an affair with a White House intern, and then playing the stand- by- your-man wife when it became apparent that the accusations were true.

■  Acting in support of her husband in his final days when he pardoned convicted felon Marc Rich, who had fled the country, and dozens of others.  Then acting as if she was unaware of her own two brothers’ attempts to broker pardons for convicted felons at the same time.

■  Acting like a citizen of New York in order to meet their lax residency requirements for running for political office.  Then as a senator, for political reasons only, acting like she was for the Iraq war when that was popular, and now acting like she’s against the war now that it’s not.

■  And most recently, acting like she wasn’t aware that fundraiser Norman Hsu was a criminal, and that he helped raise improper or illegal campaign contributions totaling at least $850,000 (more details on this below).

If the handful of items above, and there are plenty more, don’t prove she is an actor, I don’t know what does.  Heck, they should take the Academy Award away from Gore and give it to Hillary!  Should it turn out that we have Hillary versus Fred in the general election, let’s just keep in mind that we’ll be voting on TWO actors, not just one.

Hillary’s Illegal Fundraising Dilemma

Over the past few weeks, news has leaked out of the Clinton election machine that they have some potentially suspect or illegal campaign contributions from another shady Chinese-born fundraiser.  Imagine a Clinton in hot water over improper donations from the Chinese!  You’ve likely heard about this story, but I’ll bet you haven’t heard it all.

Norman Hsu, his latest alias, is a Democratic fundraiser who collected at least $850,000 for Hillary’s campaign and hundreds of thousands more for other Democrats. He is also, it turns out, a crook; he pleaded no contest to grand theft in an investment fraud scheme and failed to turn up for sentencing in 1992. The FBI is investigating whether Mr. Hsu, who tried again to flee last week when his fugitive status was revealed, was engaging in similarly shady investment activities, even as he became one of Hillary’s biggest financial backers.

Initially, the Clinton campaign said it had returned Mr. Hsu’s $23,000 personal donation, but said it saw no reason to return the more than $825,000 in contributions he solicited.  Yet as more and more sordid news about these solicited donations began to surface, the worse it looked for the Clinton campaign.  “How could they not know he was a criminal?” was the growing chorus.

So, last week the Clinton campaign reportedly returned the checks to all the donors solicited by Hsu, who will very likely land in jail once he is well enough to leave a Colorado hospital.  There is a fair chance that this whole illegal fundraising story will have disappeared by the time you read this.   But if you look into the details, this story could have legs for a couple of reasons.

First, there is the question of how a dirty Democratic fundraiser got the money to lead a lavish lifestyle and donate nearly $2 million in total to Democrat candidates, including Hillary, since 2004.  According to a report published in last Wednesday’s Wall Street Journal, Hsu received $40 million from a New York investment fund known as Source Financing Investors.

According to the Journal, Hsu reportedly convinced the Source Financing fund manager, Joel Rosenman, that the $40 million would be used to manufacture apparel in China for such top designers as Gucci and Prada, and should yield a 40% profit.  Now the money is missing!  Rosenman admitted that checks from Hsu’s company, Components Ltd., have all bounced.  The Manhattan DA’s office is investigating.  This story is far from over!

Second, and perhaps more important, is the likelihood that this fundraising scandal will revive old memories of the Clintons and their questionable methods and tactics.  Even the liberal New York Times had the following to say last Wednesday:

“The Hsu case has revived ugly memories for voters about the Democratic fund-raising scandals when Bill Clinton was president, the senator’s campaign advisers acknowledge, a time when both Clintons were often photographed with people whose money later turned out to be dirty, including Johnny Chung and Charlie Trie. Mrs. Clinton is running on her White House experience in the 1990s, and any attention cast on past fund-raising controversies could threaten her image with voters.

Even some of her own major donors are aghast that, given the Clintons’ past problems with fund-raising, Mrs. Clinton’s vetting process did not uncover Mr. Hsu’s criminal history. Even though Mr. Hsu had previously donated to other politicians and charities without his past surfacing, these donors say, the Clinton operation had been widely considered one of the best-run in recent campaigns — until now.

‘People have often said about the Clintons, they don’t care who they hang out with as long as the people can be helpful to them,” said one of Mrs. Clinton’s major fund-raisers.’”

So, she’s giving the money back, and that should be the end of it, right?  The liberal media should just hush-up on the matter and let it go away.  But the New York Times goes on:

“The campaign is refunding $850,000 to these donors, viewing the money as tainted. Yet the campaign is also risking another public relations mess by saying that it would take back the money if it clearly came from the donor’s bank account, not from Mr. Hsu or another source. The risk is that Mrs. Clinton will appear to want more cash no matter whether it was once colored by a disgraced donor.

The campaign will try to get most of the donors to give the money back right after the refunds, said a senior Democratic strategist who advises Mrs. Clinton’s campaign. ‘That’s the plan,’ the strategist said. The strategist, who spoke on condition of anonymity to discuss internal campaign deliberations, added that the Clinton campaign was deeply worried that the controversy could grow.”

I’m surprised the New York Times allowed this story to run (see link to the entire article below).  It remains to be seen whether this Norman Hsu fiasco will really turn voters against Hillary and bring back all the sordid memories of the Clinton’s years in the White House.  My guess is she’ll get away with it.  And don’t forget, she has a huge mountain of cash, as I will discuss below.

The Hillary/MoveOn.org  Disgrace of General Petraeus

As you all know, 4-Star Army General David Petraeus, Supreme Commander of the Multi-National Coalition in Iraq, gave his much-awaited report on conditions in Iraq on Tuesday and Wednesday of last week before the House and Senate.  General Petraeus is one of the most decorated and respected leaders in our military in years.

Last Tuesday, on the morning of General Petraeus’ report, the ultra-liberal political action group, MoveOn.org, had a full-page ad in the New York Times which had the disgusting headline:

GENERAL PETRAEUS  or GENERAL BETRAY US?

MoveOn.org is one of the most bellicose liberal organizations out there, but this was an outrage to question this courageous military leader’s personal and professional character by suggesting that his report would simply be a lie orchestrated by the Bush administration.  I was both embarrassed and livid at the same time.

Most interestingly, it was widely reported that the left-leaning New York Times gave MoveOn.org a very steep discount for the Petraeus ad.  According to the Times’ own admission, a full-page ad of this type and prominent placement would normally cost $165,000 to run, but the Times only charged MoveOn.org a measly $65,000 and ran it on the morning of General Petraeus’ congressional testimony.  Liberal helping liberal to besmirch the character of one of our finest military leaders.

Politicians on both sides of the aisle were quick to condemn the “Betray Us” ad and MoveOn.org for running it.  But not all politicians, of course.  Some refused to condemn the ad.  Hillary Clinton was one of them!  Click here to see the actual MoveOn.org ad.

Making matters worse, Hillary had the opportunity to question General Petraeus on Wednesday of last week when he presented his report in the Senate.  During her questioning, Hillary made the following obnoxious, condescending, and unpatriotic statement to the General:  

“It [Bush’s Iraq war policy] is a policy you have been made to implement by the President, and you have been made the defacto spokesman for what many of us believe is a failed policy. Despite what I view as your extraordinary testimony both yesterday and today, I think -  ah, ah - the reports you provided to us today require the willing suspension of disbelief.” [Emphasis added, GDH.]

The obvious question is, why in the world would Hillary attack the character of one of America’s highest-ranking Generals on the floor of the Senate in this way?  The answer is simple, unfortunately.  Hillary has had to tack toward the center throughout this campaign, appearing as a moderate, to mask her left-wing ideology.

In doing so, she has alienated her far-left base.  By attacking the integrity of General Petraeus, she threw a bone to her liberal base.  But why would she take such a risk?  Here’s why.  Hillary knows that few mainstream voters watch these congressional hearings, but she also knows that her ultra-liberal base does watch her every word.

So, in a very calculated way (I watched her read from her prepared notes), Hillary seized on this opportunity to disgrace one of our greatest military leaders in the Senate chambers, knowing full-well that only those of us who watch politics under the microscope would know about it.  You had to dig through the media reports to find her comments and how she essentially called General Petraeus a liar.

How sad.  But the left-wingers and the blogs got the message loud and clear.  Without much public notoriety, Hillary rifled a message to her base that, while she is trying to appear as a centrist, she is really just as liberal and just as anti-military as ever.  Unfortunately, most voters will never know about it, or will forget about it.  But maybe not…

In the spirit of fairness, Rudy Giuliani demanded that the New York Times run a counter ad in support of General Petraeus – and at the same heavily discounted price of $65,000 – and the full-page counter ad appeared in last Friday’s Times on page A-9.  Interestingly, the headline of Rudy’s ad read: “‘The willing suspension of disbelief’ – Hillary Clinton 09/11/07.”

Way to go, Rudy!  Click here to see the full ad.  It remains to be seen how much Hillary’s disgrace of General Petraeus will hurt her.  Time will tell, but if the Republicans are smart, they will run the Hillary/Petraeus video over and over and over in the months ahead.

Does Rudy Or Fred Have A Chance To Beat Hillary?

There seems to be a lot of new excitement building in the Republican base, just in the two weeks since Fred Thompson officially threw his hat in the ring.  Prior to that, many in the GOP base had not been enthusiastic about the field of candidates.  It will be interesting to see how much support and money Thompson can generate in the months ahead as voters come to learn who he really is and what his convictions are on the issues.

But whether the GOP nominee is Thompson, Giuliani or Romney, the big question is, do any of them have a chance to beat Hillary in the national election?  It is a near-certainty that Hillary will capture the Democratic nomination.  She leads her nearest challenger, Barack Obama, by wide margins in all of the major national polls. 

It is still very early and anything can happen (and usually does), but I think Hillary’s advantages in recognition, political powerbase, funding and the compressed primary schedule (more on that below) will prove very difficult to defeat.  And let’s not forget her “ace in the hole” in the person of Bill Clinton.

Any attempt to answer the question of whether or not any Republican nominee can beat Hillary brings us right to the old slogan: “Follow the money.”  According to the Federal Election Commission (www.fec.gov), as of June 30, Hillary is the 800-pound gorilla in the room with some $62.5 million in her coffers, and that puts her ahead of any of her challengers.  Obama is a close second, with a surprising $58.6 million, and Edwards has only $23 million.

In total, all of the Democratic candidates had a whopping $177.2 million versus all Republican candidates who had only $118.7 million, again according to the FEC as of June 30.

Breaking down the GOP number, Mitt Romney surprisingly has the most money with $43.5 million.  Rudy comes in second with $35.4 million.  McCain has only $25.9 million, and Thompson, who just entered the race, reportedly has only about $1 million – mere pocket change in the presidential election business.

The obvious conclusion is that whether it’s Rudy or Fred as the GOP nominee, they have nowhere near the money that Hillary, or even Obama, has.  As noted above, there is a lot of excitement about Thompson entering the race, but Thompson will have to pull off nothing short of a fundraising MIRACLE to have any shot at winning the nomination, much less the general election.

But let’s pretend for a moment that money doesn’t matter (even though it does).  In a hypothetical match-up between Hillary and Giuliani, Rudy’s greatest strength is in the Northeast.  However, Hillary is almost certain to carry New York and several of the other liberal Northeast states.  That is a very bad thing for Giuliani, since some analysts say losing New York’s 31 electoral votes could be enough to doom any chances he might have on election night.

In the South, Rudy’s position on social issues is not expected to play well.  Plus, he has other problems as well: Romney has a 16-point lead in Iowa, a 9-point lead in New Hampshire and a 10-point lead in Nevada.  It could be well into primary season before Rudy wins one, at least based on the latest statewide polls in these early primaries.  Without the momentum of an early primary win, Giuliani may not even get a chance to run against Hillary.

Will Thompson be able to do any better?  It’s entirely too early to tell, but I tend to think he could run Hillary a better race than Rudy.  Thompson is very popular in the South where his conservative stances on major issues are well received, and would likely garner him the full support and backing of the GOP, including the far right.  He is also an excellent speaker with a commanding and reassuring presence.  Hillary is actually a relatively poor speaker by comparison, which could make her look weak in debates.

It’s also very likely that Thompson could get the “anti-Hillary” vote wherever he campaigns, which could be a big plus considering how much of a polarizing figure she is – voters either love her or hate her.  Thompson’s Southern charm and heritage will also go a long way in making him competitive in states such as Florida, where Hillary’s national health care rhetoric may attract many voters.  So, based on raw electability, Thompson has the edge over Giuliani in being able to hold his own against Hillary, at least in my opinion.

Fred does have his negatives, however.  Thompson’s health is a big concern.  He is 65 years old and is in remission from lymphoma.  The potential that he may not be able to serve out his term as president is fair game in an election, and you can expect it will be exploited to the fullest by the Clinton machine.

Next, and perhaps most important, Thompson has no money in the bank.  As I noted above, he would have to pull off a fundraising miracle in order to avoid having to accept federal matching funds just to keep his campaign alive.  Maybe he can, but as I will discuss below, he has very little time in which to do it.

Finally (and I hate to put this into words), I will not be surprised one bit if Hillary selects Obama as her running-mate.  And why not?  He’s young, black, very popular and he’s got a ton of money.  In fact, his age could be a great asset, in that he would be perfectly positioned to take over should Hillary be elected and serve two terms as president.  With eight years of experience as the VP, he’d likely have no trouble getting the Democratic nomination, and be a formidable foe to any Republican challenger.

Quite frankly, a Hillary/Obama ticket would likely be a juggernaut, unless they commit some tremendous blunders along the way.  Could Hillary’s acceptance of dirty money from Mr. Hsu be such a blunder?  That remains to be seen, but I don’t look for it to get a lot more play in the mainstream media.

The Compressed Primary Problem

I am sure you have heard by now that the presidential primary schedule has been turned upside down this election cycle.  The primaries have been compressed, for the most part, into a narrow timeframe.  So narrow in fact that we will likely know who the prospective nominees are by the end of February at the latest.

This is great news if your name is Hillary Clinton or some other well-funded first-tier candidate.   You actually might have the resources required to campaign in the 35 primaries that will be held by February 26.  Not campaign effectively, mind you, no one could possibly do that in such a short time. But the second-tier candidates have absolutely no chance.  None.  Zero.

As a result of this new compressed schedule, candidates will be forced to rely on television ads very heavily.  This is, naturally, very expensive.  And assuming a candidate decides to make personal appearances in the larger of these 35 states - MI, CA, GA, IL, NJ, NY, TN, MN, MD, MO, WI and WA - they had better have a chartered jet because a folksy bus tour is not going to cut it – just not enough time to travel by ground.  More than ever, early success will be needed to build momentum and recognition (if you aren’t Hillary or Fred), as there will be several states that candidates simply cannot visit due to the compression of the primary schedule.

In the last few weeks, a new wrinkle in the primary reshuffle has occurred.  Florida has moved its primary up to January 29, and this has caused a huge stir within the DNC especially.  You see, in moving its primary that far up the schedule, Florida has violated agreements with the DNC and the RNC.  Florida had previously promised not to hold a primary prior to February 5. 

The DNC and its chairman, Howard Dean, have gone absolutely ballistic over the decision by Florida to vault its primary ahead of the traditional order of primaries.  Several states that have just been leap-frogged by Florida are outraged as well.  The DNC has given Florida until September 30 to reset the primary date.  So far, Florida has not budged.

Under its agreement with the DNC, if Florida moves its primary earlier than February 5, then none of Florida’s Democratic delegates to the national convention will be seated.  They won’t get to cast their votes for the presidential nominee.  Under a similar agreement with the RNC, only half of Florida’s Republican delegates will be seated at the national convention and get to vote.  So this is a huge fight between Florida and both the DNC and the RNC!

And it gets even worse.  All of the Democrat candidates have signed a pledge not to campaign in Florida after September 30, unless Florida changes its mind.  It remains to be seen if Florida will blink.

If you are Hillary Clinton this is great news.  You know you have huge name recognition and support in Florida.  And while you might not be able to pocket the delegates, a win there sure goes a long way toward building momentum.

Of course, it isn’t only the second tier-candidates who get the shaft in such a compressed primary season: the American people do too.  We will not have nearly enough time to look over the candidates, to hear them on the issues and to see them in debates. We will be asked to make a very important decision with less information than usual.  Which is, of course, exactly the way Hillary wants it.

Very best regards,

Gary D. Halbert

SPECIAL ARTICLES

Hillary Missed Her MoveOn Moment
http://www.realclearpolitics.com/articles/2007/09/hillary_missed_her_moveon_mome.html

Petraeus Poses A Problem For Democrats (this from a liberal)
http://www.foxnews.com/story/0,2933,296590,00.html

If the Hsu Fits – read this
http://www.spectator.org/dsp_article.asp?art_id=12010

How Hsu swindled the venture fund out of $40 million
http://online.wsj.com/public/article/SB118956680238724783.html?mod=blog


Read Gary’s blog and join the conversation at garydhalbert.com.


Forecasts & Trends E-Letter is published by ProFutures, Inc. Gary D. Halbert is the president and CEO of ProFutures, Inc. and is the editor of this publication. Information contained herein is taken from sources believed to be reliable but cannot be guaranteed as to its accuracy. Opinions and recommendations herein generally reflect the judgement of Gary D. Halbert (or another named author) and may change at any time without written notice. Market opinions contained herein are intended as general observations and are not intended as specific investment advice. Readers are urged to check with their investment counselors before making any investment decisions. This electronic newsletter does not constitute an offer of sale of any securities. Gary D. Halbert, ProFutures, Inc., and its affiliated companies, its officers, directors and/or employees may or may not have investments in markets or programs mentioned herein. Past results are not necessarily indicative of future results. Reprinting for family or friends is allowed with proper credit. However, republishing (written or electronically) in its entirety or through the use of extensive quotes is prohibited without prior written consent.

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