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The battle for second place is heating up ahead of the New Hampshire primary tomorrow (Tuesday), testing whether Rick Santorum and his "Santorumnomics" ideas supporting tax cuts and credits can win over voters.
The former Pennsylvania senator snagged second place in the Iowa caucuses with 24.5% of the vote. Mitt Romney is expected to again capture first after winning Iowa by a narrow 0.1% margin.
Another second-place finish for Santorum in the New Hampshire primary is far from a sure thing, with various polls showing fellow presidential hopefuls Ron Paul, Newt Gingrich and Jon Huntsman Jr. gaining support for the runner-up spot.
Santorum's better-than-expected performance in Iowa's election kickoff last week has led many voters to become more familiar with his economic policy – "Santorumnomics," as Bloomberg's editors referred to it – ahead of the New Hampshire primary. Instead of heading straight to South Carolina, where there are more of Santorum's target demographic of social and religious conservatives, since Iowa Santorum has been campaigning hard in New Hampshire.
Tomorrow will determine if those efforts worked, or if Santorum's Iowa finish was just a lucky start.
Santorum: "Defender of the Taxpayer"
Santorum is pushing a typical Republican low-tax economic agenda. Santorum's 12-item tax plan – his solution to reviving the U.S. economy as "Defender of the Taxpayer" – includes 10 tax cuts and two tax credits/deductions.
He proposes cutting top corporate tax rates to 17.5% from 35%, cutting rates for the richest individuals to 28% from 35%, and creating a special zero tax rate for manufacturers to spur job creation.
His pro-family platform also includes a tax deduction for families with children.
The former Pennsylvania senator wants to limit government spending to18% of gross domestic product (GDP). He said his "Santorumnomics" plan would cut spending by $5 trillion over five years.
The major problem, though, is where the missing revenue will come from – widening the budget deficit isn't an option.
"Santorum's numbers don't add up," said Money Morning Global Investing Strategist Martin Hutchinson. "In Congress he was always a big spender, "compassionate conservative.' He's not really interested in economics. He got very lucky in Iowa, but Iowa always elevates socially conservative, economically illiterate candidates (such as Mike Huckabee in 2008) thus making it impossible for the economic conservatives to stop the establishment squish."
While unrealistic, Santorum's tax-cut plans do benefit some key Republican constituencies: corporations and wealthy taxpayers.
"This should play well in future (Republican) primaries," Howard Gleckman of the Tax Policy Center told Reuters. "If he somehow gets the nomination, he'll still have to explain the huge hole he'd blow in the budget."
Romney: No. 1 Ahead of New Hampshire Primary
As of Monday afternoon, it looked likely that former Massachusetts governor Romney would retain his lead in the New Hampshire primary.
A Suffolk University/7News tracking poll of likely voters showed Romney with 33% of the vote, although his lead slipped for the fifth day in a row. Second-place Paul was still 13 points behind.
The shift in polls could be traced to questions surrounding Romney's position at private equity firm Bain Capital, which could prove an ongoing threat to him keeping the lead.
"I think Romney's big political weakness is coming out, which is his Bain Capital work," said Hutchinson. "Basically Romney got the Bain Capital job because he was "teacher's pet" in Bain, and Bain Capital was bound to do well because it had all the very smart people finding deals and having ideas about how to run companies. Initially, it focused on venture capital, which genuinely creates jobs, like its work at Staples Inc. (Nasdaq: SPLS), but later it moved to leveraged buyouts, which generally don't create jobs, and can hollow out the company, making it vulnerable to failure."
Hutchinson said it's a point that the opposing party will run with.
"It's too easy for the Democrats to demonize, especially as President Obama is clearly running on a class warfare platform," said Hutchinson.
There's still more than five months of primaries until they wrap up in Utah June 26, meaning no candidate can feel too comfortable despite a strong start out of the gate.
"This time the process is more drawn out and Romney is vulnerable, so Iowa and New Hampshire may not be the end of the story," said Hutchinson. "Being ancient, I remember "76, when [Ronald] Reagan's first primary victory was North Carolina, the seventh contest, yet he very nearly beat [Gerald] Ford, the incumbent president."
After the New Hampshire primary Tuesday, the candidates will battle in South Carolina, where voters head to the polls on Jan. 21.
News and Related Story Links:
- Bloomberg News:
Santorumnomics, a Guide to Republican Hopeful's Policies