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The Sheldon Adelson Primary Is in Full Swing

Sheldon Adelson, the casino magnate who is worth $26 billion, is now inspecting the Republican candidates to see which one is most worthy of his support. In 2012, he single handedly kept Newt Gingrich afloat by pumping $20 million into his campaign. In all, he spent $100 million helping Republican candidates in 2012 and could easily match that in 2016. Every Republican would be happy to have that and would be unhappy if one of his opponents got it. Consequently, most of them have made a pilgrimage to his office in the Las Vegas Venetian Hotel to make a pitch for his support.

In contrast to most billionaires, where the key question asked of aspirants is: "And how low will you reduce the top marginal tax rate?" Adelson has a different question. What he wants to know is how many billions of dollars of military equipment the candidate will give to Israel. Finding candidates who support Israel is not hard: all of them do. But he wants one who really means it and is not just saying so right now.

Unlike the Koch brothers, who have a massive political network on the ground, Adelson's political operation consists of himself, his Israeli wife, Miriam, and his secretary. Until recently, the secretary's dog also attended high-level meetings, but the dog just died. Adelson has no advisors and no pollsters, it's just his gut feeling. While he prefers not to waste $100 million if he can avoid it, as a man whose fortune comes from the gambling industry, he understands that to win big time you have to place large bets and you lose some of them.

Adelson is said to be conflicted about his choice. He likes Sen. Marco Rubio (R-FL) but feels he may not have the power to take out Donald Trump. Gov. Scott Walker (R-WI) knows a lot about cheese but maybe not enough about Israel and had never even been there until he started campaigning. This brings Adelson to Jeb Bush, but that brings up some problems. One of Bush's top advisors is former Secretary of State James Baker, who Adelson despises because he tends to be even handed on Middle East policy matters. Adelson even told Bush to dump Baker but Bush refused. Of course, Adelson wants to back the winner, so maybe he will have to settle for Bush in the end.

An obvious problem for the Republicans is that if Adelson and the Koch brothers back different candidates and neither of them back Rubio, who has his own personal billionaire, Norman Braman, there could be at least three candidates with enough money to continue campaigning until the moment the Republican National Convention formally chooses the nominee in July 2016. Throw in Donald Trump and you could have four competing billionaires, not to mention Sen. Ted. Cruz (R-TX) who raised $50 million in his first quarter and who could keep going until the end even without his own billionaire. Conceivably this could lead to a nightmare scenario for the Republicans (and a heavenly scenario for political junkies): a brokered convention.

New York Magazine has a long and detailed story about Adelson and his relationship to the various candidates.

Blue-State Republicans Matter

It seems that the Republican candidates are falling all over each other as they run as fast as they can to the right, trying to trump Trump. One thing that all of them seem to forget is the while the chances that the Republican nominee carries New York are infinitesimally small, New York actually has millions of Republicans and they are represented at the Republican National Convention.

Guess which state sends the most delegates to the Convention? No, it's not Texas, it's California, with 172 delegates. The next best-represented states at the Convention (with delegates) are Texas (155), Florida (99), New York (76), and Georgia (76). If we add up all the delegates from the 26 states plus D.C. that Obama won in 2012 the total is 1210 (out of a total of 2470). In other words, 49% of the delegates to the Republican National Convention come from blue states. Although blue-state Republicans are moderately conservative they are nowhere near Oklahoma conservative or Mississippi conservative. Also, they are much more urban than red-state conservatives, so issues like taxes and business regulation are more important to them than abortion and guns. It is surprising that none of the candidates act like blue-state delegates matter, when in fact almost half the delegates are from blue states.

Also worth considering is that Trump makes no bones about being a New Yorker. If he is still in the race in April when New York, Pennsylvania, and other states in the Northeast vote, he could pick up a large number delegates in their primaries.

Trump is Not At All Like Perot

Some pundits have pointed out that eccentric billionaires have run for President before, notably Ross Perot in 1992. They both have monumental egos and think they can solve in 10 minutes problems the country has wrestled with for years. In reality, they have very little in common.

To start with, Perot ran in the general election as an independent. He didn't compete in either of the major party's primaries. He regarded both parties as broken beyond repair. Second, he had a very detailed platform. Among other things he wanted to have term limits for Congress, strengthen the war on drugs, raise the gas tax by 50 cents, help the former Soviet Union republics become democratic, pass a balanced-budget Amendment, and have national referendums on important topics. He also supported gay rights and abortion and opposed trade agreements ("NAFTA will cause a giant sucking sound as jobs go south"). Trump has no platform at all. Third, Perot's TV ads often showed him with graphs and charts depicting budgetary and other issues. For this he was widely mocked because it was said that Americans' math skills were like that of a third grader. Fourth, Perot was not primarily interested in immigration as an issue. His main focus was on economic issues, especially how to bring the federal deficit under control.

Finally, their personalities are totally different. Trump is an egomaniac who craves attention and is willing to say absurd things to get it. Perot is first and foremost a data-driven businessman who carefully weighs the advantages and disadvantages of each decision. While not everything he said pleased everyone, all of it made sense and could, in principle be implemented. Perot never suggested deporting 12 million undocumented immigrants, but if he had, he would have shown statistics about how many immigrants were deported in 1991, how much that cost per immigrant, and then extrapolated it to 12 million. It wouldn't have been a moral or emotional issue, but a financial one: how much would it cost, how many federal workers would have to be hired to get the job done, how much would the government gain in paying less welfare, how much would it lose in taxes the deportees were paying, etc. Trump probably hasn't thought for a second about this and probably doesn't care, either.

Another thing that sets Perot and Trump apart is Trump's attacks on women, something that Perot would never do. In addition to getting into a food fight with Fox News' Megyn Kelly last month, yesterday he said about Carly Fiorina: "Look at that face! Would anyone vote for that?" Has Trump forgotten that 53% of the voters are women? Now it is legitimate for Trump to go after Fiorina, who is rising in the polls. But the obvious way would be to attack her business record and point out that boards of directors almost never fire CEOs. You have to be really, really, really incompetent to be fired, as Fiorina was. That way it is simply an attack on Fiorina's competence, not a statement that ugly women don't deserve to be in public office. By now, RNC chairman Reince Priebus is probably wetting his pants thinking about how he is going to get women to think well of the Republican Party in the general election.

Bush Follows Trump on Taxes

While many people still regard Donald Trump as a clown not worthy of even running for President, he is already having a big effect on the race. Jeb Bush has now announced a tax plan remarkably similar to some remarks Trump made, including higher taxes for hedge-fund managers and limiting deductions for the rich. The latter is a sneaky way to reduce the mortgage deduction for McMansions without saying so explicitly. In 2011 during a Republican primary debate in Iowa, the moderator asked the candidates to raise their hands if they would reject a deal that had $1 in tax increases for every $10 in spending cuts. Every candidate raised his hand. If that question comes up again this year, Bush is probably going to be the only candidate who would accept the deal. He will obviously stand out from the pack in that case, for better or for worse.

Bush's tax plan reduces the current seven tax brackets to three—10%, 25%, and 28%—which means a big tax cut for millionaires and billionaires now paying a 39.6% top marginal rate. It would also allow about 15 million low-income people to escape federal taxation altogether, something not likely to appeal to Republicans who divide the country into "makers" and "takers." Bush's own advisors estimate his plan would add between $1.2 trillion and $3.4 trillion to the national debt over the next decade. Expect the other candidates to ever so gently point this out.

While business-oriented Republicans are generally for low taxes, the business community is much more divided than is commonly assumed. Real-estate developers, like Trump, care about the mortgage deduction much more than they care about the carried interest loophole for hedge-fund managers, for example. As another example, since hotel construction and operation can't be outsourced to China, Trump sees no value in laws that encourage outsourcing or allow corporations to hold profits overseas tax free. None of that benefits him. Historically, there have been many examples where the business community was bitterly divided over public policy. For example, during the fight over airline deregulation in the 1970s, the big legacy carriers with unionized staff knew they wouldn't be able to compete with nonunion startups, so they fought strenuously against deregulation. Tariffs are another area that have divided business interests since the country was founded.

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