Perry v. Romney: what the papers say

The verdict of US commentators on the first ever Tea Party-associated Republican presidential debate

The fifth debate in the Republican primaries was significantly different to the four that preceded it, as it was the first-ever Tea Party-affiliated debate in the history of US politics. It was sponsored by CNN and Tea Party Express, the California-based group founded in 2009 to support the Tea Party Movement. The debate was moderated by CNN anchor, Wolf Blitzer.

Texas governor and Tea Party favourite, Rick Perry -- known for his outspoken and conservative views -- came under attack from his fellow contenders over the issues of social security, vaccinations and America's foreign and immigration policies. Perry was also booed by the audience as he defended his policy of allowing in-state tuition for some illegal immigrants in Texas.

Hours before the debate took place, nominee favourites Perry and Mitt Romney both received campaign endorsements. Perry was backed by Louisiana Governor Bobby Jindal, while Romney won the support of former rival candidate Tim Pawlenty. According to a poll conducted by CNN and ORC international, some 30 per cent of Americans said they would support Perry to be the Republican nominee, compared with 18 per cent for Romney, the former Massachusetts governor.

Most American journalists and analysts have focused on the arguments between Perry and Romney. Many concluded that Perry came out on top, although others suggested that Perry actually suffered as a result of criticism from his rivals. Some view the debate as a success for Michele Bachmann, who has fallen behind in the ratings since Perry entered the race.

Here is a round-up of what the US media made of the candidates' performance:

CNN

Peter Hamby, CNN Political Reporter:

The debate at the Florida State Fairgrounds in Tampa gave the other candidates on the stage a chance to change what many are portraying as a two-person race between Perry and Romney.

Monday's debate was crucial to Bachmann, who has dropped in national polling since Perry launched his campaign on August 13, the very same day that she won a crucial straw poll in Ames, Iowa.

David Gergen, CNN senior political analyst:

There's no question that Romney and Perry will remain the frontrunners. Romney has a better command of the facts. He's a more practiced debater. He gave one of the best answers of his entire campaign when he was asked how he would balance the budget. But Perry has the command presence, and even though people took shots at him... he deflected reasonably well, he came in as a better debater, he was more even this time.

Erick Erickson, CNN contributor and RedState.com blogger:

I think this may be the first debate where Mitt Romney didn't come out the clear winner. Perry needed to do well. I think he did well. I don't think the Social Security exchange helps Mitt Romney at all at a Republican primary... I think the majority of Republican voters agree with Perry.

Politico

David Catanese:

The real message being delivered was a shot across the bow: Any contender who wants a realistic shot at winning back the White House will need the tea party's fervor to make it happen... Despite solid answers and pre-packaged punches, Mitt Romney struggled to gain traction with the crowd, as his top adviser all but acknowledged afterwards in the spin room.

New York Times

Jeff Zeleny and Ashley Parker:

The rapid rise of Mr Perry, who joined the race only a month ago, made him a central target for his Republican rivals. He sought to deflect the critiques with humor and sarcasm, but he tried to clarify his position on Social Security, whose constitutionality he has questioned... The debate went a long way in clarifying the contours of the Republican contest, both in terms of the strength of the candidates -- for the second time in a row, Mr Romney and Mr Perry were the main players -- but also on the issues driving the race. It is rare in a presidential primary to have such a vivid difference of opinion on a critical issue, as is the case with Mr Romney and Mr Perry on Social Security. The Republican presidential debate often took on the feel of a rollicking political game show... The debate was continually interrupted by applause, but it remained an open question whether the cheers or the jeers provided an accurate reflection of how Republican voters elsewhere were judging the evening.

LA Times

Paul West:

The governor, [Rick Perry] who leads by double-digit margins in early polls, was on the defensive for much of the evening. But he shrugged off most of the attacks with folksy retorts and a bemused look, and he stuck to his guns on the issue that has trailed him since his first national debate appearance last week: Social Security.

The two-hour forum -- the most contentious thus far in the 2012 campaign -- marked a revival of sorts for Michele Bachmann, whose candidacy has suffered as Perry's has taken off over the past month. The two are competing for many of the same conservative votes, but last night the Minnesota congresswoman appeared to have won the hearts of many in the crowd of tea party activists. She drew cheers for a rally-style attack on "Obamacare" -- the president's federal healthcare overhaul -- and for her attack on Perry's controversial decision to order vaccinations in Texas against the HPV virus, which can cause cervical cancer.

The debate's opening felt like a mix between a reality show and a sporting event. Moderator Wolf Blitzer delivered several minutes of introductory remarks above a throbbing bass line, followed by another departure: the singing of the national anthem. ...The event was also something of a formal coming-out party for the tea party movement in the 2012 campaign, a tone set before the telecast began.

Huffington Post

Jon Ward:

The frontrunner status is starting to smart. If Rick Perry felt like a piñata during his first debate last week, the second debate on Monday night might have left the Texas governor and Republican presidential candidate feeling like the bashed-in fax machine in the movie "Office Space". ... Altogether, the three criticisms of Perry chipped away at his image of a rock-ribbed conservative.

As for Bachmann, her fiery attack on Perry was a key moment for the Tea Party favorite. She has been hurt by Perry's entrance into the race - he has overshadowed her with an emphasis on his executive experience and has cut into her support among conservatives. But by tearing the Texan down, Bachmann injected herself back into the race. She still faces an uphill battle against Perry, but if she is to have any chance of staying in the race, she must deconstruct him. All of this helps Romney, who also has seen his standing in the polls diminished by Perry. If Bachmann and Perry are locked in a battle for the right wing of the GOP, that gives Romney a clearer path to the nomination.

The next Republican debate will take place on Thursday 22 September, 2011 in Orlando, Florida. It will be sponsored by Fox News, Google and the Florida Republican Party.

Ralph Orlowski / Getty
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Labour's investment bank plan could help fix our damaging financial system

The UK should learn from the success of a similar project in Germany.

Labour’s election manifesto has proved controversial, with the Tories and the right-wing media claiming it would take us back to the 1970s. But it contains at least one excellent idea which is certainly not out-dated and which would in fact help to address a key problem in our post-financial-crisis world.

Even setting aside the damage wrought by the 2008 crash, it’s clear the UK’s financial sector is not serving the real economy. The New Economics Foundation recently revealed that fewer than 10% of the total stock of UK bank loans are to non-financial and non-real estate businesses. The majority of their lending goes to other financial sector firms, insurance and pension funds, consumer finance, and commercial real estate.

Labour’s proposed UK Investment Bank would be a welcome antidote to a financial system that is too often damaging or simply useless. There are many successful examples of public development banks in the world’s fastest-growing economies, such as China and Korea. However, the UK can look closer to home for a suitable model: the KfW in Germany (not exactly a country known for ‘disastrous socialist policies’). With assets of over 500bn, the KfW is the world’s largest state-owned development bank when its size is measured as a percentage of GDP, and it is an institution from which the UK can draw much-needed lessons if it wishes to create a financial system more beneficial to the real economy.

Where does the money come from? Although KfW’s initial paid-up capital stems purely from public sources, it currently funds itself mainly through borrowing cheaply on the international capital markets with a federal government guarantee,  AA+ rating, and safe haven status for its public securities. With its own high ratings, the UK could easily follow this model, allowing its bank to borrow very cheaply. These activities would not add to the long-run public debt either: by definition an investment bank would invest in projects that would stimulate growth.

Aside from the obviously countercyclical role KfW played during the financial crisis, ramping up total business volume by over 40 per cent between 2007 and 2011 while UK banks became risk averse and caused a credit crunch, it also plays an important part in financing key sectors of the real economy that would otherwise have trouble accessing funds. This includes investment in research and innovation, and special programs for SMEs. Thanks to KfW, as well as an extensive network of regional and savings banks, fewer German SMEs report access to finance as a major problem than in comparator Euro area countries.

The Conservatives have talked a great deal about the need to rebalance the UK economy towards manufacturing. However, a real industrial policy needs more than just empty rhetoric: it needs finance. The KfW has historically played an important role in promoting German manufacturing, both at home and abroad, and to this day continues to provide finance to encourage the export of high-value-added German products

KfW works by on-lending most of its funds through the private banking system. This means that far from being the equivalent of a nationalisation, a public development bank can coexist without competing with the rest of the financial system. Like the UK, Germany has its share of large investment banks, some of which have caused massive instabilities. It is important to note that the establishment of a public bank would not have a negative effect on existing private banks, because in the short term, the UK will remain heavily dependent on financial services.

The main problem with Labour’s proposal is therefore not that too much of the financial sector will be publicly owned, but too little. Its proposed lending volume of £250bn over 10 years is small compared to the KfW’s total financing commitments of  750 billion over the past 10 years. Although the proposal is better than nothing, in order to be effective a public development bank will need to have sufficient scale.

Finally, although Brexit might make it marginally easier to establish the UK Investment Bank, because the country would no longer be constrained by EU State Aid Rules or the Maastricht criteria, it is worth remembering that KfW’s sizeable range of activities is perfectly legal under current EU rules.

So Europe cannot be blamed for holding back UK financial sector reform to date - the problem is simply a lack of political will in the current government. And with even key architects of 1980s financial liberalisation, such as the IMF and the economist Jeffrey Sachs, rethinking the role of the financial sector, isn’t it time Britain did the same?

Dr Natalya Naqvi is a research fellow at University College and the Blavatnik School of Government, University of Oxford, where she focuses on the role of the state and the financial sector in economic development

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