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Financial services, car companies, and media outlets aren’t the only people facing layoffs this winter. Conservative groups are too. National Journal reported on NAM:

The National Association of Manufacturers, which employs one of the highest paid DC trade association executives, John Engler, who received total compensation of $1.2 million in 2006, has laid off staff just weeks before Christmas, a spokesman for the organization confirmed. He said someone would call me back to say how many employees were let go. One source said as many as eight or ten people received pink slips.

I know of three other high profile conservative groups that are cutting, one 20% of staff and anothers are cutting quite deep. I am not even counting Freedom’s Watch. This is in addition to all the professional Republicans left unemployed by election day, and the resulting shift at lobbying firms.

Some of this is due to the economic cycle, like Sheldon Adelson’s bankruptcy. I imagine that the small-dollar direct-mail and telemarketing that sustains so many smaller groups is falling, but those numbers are harder to get. Some, like the lobbying firms, are a direct result of the political cycle. But when you talk to the donors you hear something more. They are tired of being taken for a ride. They understand that a lot of the older institutions are not providing value. You do see a fetishizing of new media and technology right now because it’s the only really new thing that people are coming to donors with, but they understand that there is some snake-oil out there and are getting confused.

Ultimately, they want value, and they want leadership. And they are cutting off an establishment that isn’t providing either.

This is happening at the same time as many of these groups are considering succession plans. Suddenly, a lack of leadership, a lack of funds, and a dismal political and economic climate are making some of these people think twice about the future of their organizations.

This should be an opportunity. For a while, people in the conservative movement are going to have to live lean and demonstrate value. When people get excited again, whether around new candidates, a new batch of ideas, or responding to Barack Obama and Democratic proposals, they will be opportunities for people that have been putting points on the scoreboard. In the meantime though, it’s going to be very scary.

When we get onm the other side of this, the movement is going to look very different.

A fantastic interview with Barack Obama’s campaign manager David Plouffe. It really shows the link between organization, technology, and media. It also shows how we need to shift focus on budgetting.

In response to a question about how much the campaign spent on media, Plouffe responds:

D.P.: Right, the playbook is 70 to 75 percent, and we did much less than that. Under 50 percent.

I have argued that the fundamental innovation of the Obama campaign wasn’t technology, but it was the investment in grassroots. You can see this Plouffe’s explanation:

D.P.: Well, we spent obviously a lot of money on TV, but as a ratio of our spending, it was much lower than historically is done, and that’s because we spent a lot of money in the field and on the ground. And, in fact, when we did our baseline budget, the field was fully funded because we thought it was very, very important. If we were to raise excess funds, we bolstered the field a little bit, but it went in advertising. Our first priority was the ground operation because we thought that was essential to us winning. It’s very much, I think, a unique approach. In a lot of campaigns, the media gets funded first, then if you have extra money that comes in, you bolster the field and things of that sort. And we kind of did it in reverse.

Patrick, Mindy, Turk, and others have had to argue for shifting a couple of percent of the media budget to online expenditures. They are correct. It is important to enhance an organization. But where do you get the organization? Obama decided to build it.

Think of the seeming insanity of the Obama approach. Build an organization early on, with a minimal media budget. And then use the overage for media, if you can get it.

But it worked. Read on for some of the details.

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Pete Snyder, my boss at New Media Strategies, noted this and the link to technology earlier:

Obama acted quite differently. Having opted-out of his promise to abide by campaign finance laws (which proved to be one of his shrewdest and smartest moves), he went for broke. His campaign started pouring millions of dollars into opening scores of campaign offices in all 50 states, many in areas that Democrats hadn’t contested in decades. In the traditionally GOP-favoring Colorado, Obama set up 59 campaign offices to McCain’s 13.

In 2004, the Bush-Cheney campaign learned that there was a linear relationship between staffed field offices and volunteer activism and enthusiasm. Obama learned that lesson and applied it:

This time around, everyone counted. And given the power of social media, everyone who has the interest has the ability to influence and mobilize networks of friends. A blue dot in a sea of red could now make a real impact, both vote-wise and dollar-wise, to a presidential campaign. Obama got this and McCain really didn’t.

Early field investment, combined with effective technology, allowed the campaign to later leverage that technology into an organization that, among other things, raised unprecedented amounts of money. With much the same theory as direct mail, you invest early, build a list (in the end nearly 14m people) and then contact it repeatedly for activation and fundraising.

Some Republicans have argued that Obama’s organization will have been a one-off. I am not so sure, although it may only apply at the Presidential level, something Plouffe suggested. In 2012, we will see it again. And we may see it deployed in 2010 or 2014. We aren’t going to be able to approach Obama’s advantages in the meantime. And we can expect that some 2016 Democratic Presidential candidates will try a similar strategy.

This does suggest that campaigns, especially ones at the top of the ballot, should consider shifting more resources towards field and enhancing them with robust technology.

When Barack Obama was on the ballot in Georgia, Jim Martin was within 3% of Saxby Chambliss. Without Obama, Martin gets blown out by 20%. Saxby’s message was that a vote for Martin was a vote for a blank check for Democrats.

Today Georgians rejected a blank check for the Democratic Party by far more than typical GOP margins in a red state.

This tells us that Americans picked Obama and change, but not a broad Democratic or left-leaning agenda for America. Open Left’s David Sirota understood this last week when he said:

So now, because of this, you have a large majority (though not the whole) of his 10 million-person email list overarchingly organized around the celebrity Barack Obama – not really around issues (though certainly people can like Obama and support specific issues).

So when the Democrats try to push through outrageous things like card-check, significant tax-increases, etc., all we need to do is point to tonight. When progressives were on the ballot, not just a celebrity, the progressives were roundly rejected.

My central insight in my recent disagreement with Patrick is that the creativity will take place in the states. While there will be some very important fights in Washington over the next 2-4 years, in particular health care, card check, and bailouts, another equally important fight will happen in 40 or more states over that time period. In the federal fights, our answer is likely to be simply: NO.

But at the states, something else will happen. Check out this map (click for a larger version), courtesy of the New York Times, via The Big Picture:

Our states — and our municipalities — are in fiscal crisis. They have gotten drunk on revenue from a credit bubble. As the economy deleverages to something sane, state and local revenue is, or has already, collapsed. Education budgets based on property taxes will develop massive holes when assessments reflect 40% drops in housing prices. Examples, from the NYT story above, of how bad it is:

In Michigan, to reduce overtime costs, fewer streets will be salted this winter. In Ohio, where the unemployment rate is above 7 percent, the state may need a federal loan for the first time in 26 years to cover unemployment costs. In Nevada, which is almost totally dependent on sales taxes and gamblingrevenues, a health administrator said the state may be unable to pay claims in a few months.

So we are going to need to cut spending and/or raise taxes to pay for some of these services. We are probably going to end up fighting over taxes. I searched Google News for "state tax increases" and came up with the following headlines from the last 24 hours:

• Milwaukee, WI: Most state residents don’t favor business tax increases, poll finds
• Alexandria, MN: Local proposed tax levies higher than state average
• North Mankato, MN: Tax increases for North Mankato
• Johnson County, KS: Readers write about Johnson County tax increases
• Utah: Utah gas tax increase in the pipeline?
• Florida: Budget blues lead lawmakers to eye raising cigarrette taxes
• Cortlandt, NY: Cortlandt cuts costs to reduce tax increases
• Phoenix, AZ: State’s drop in tax collections spurs concerns
• Kingston, NH: Kingston residents suprised over property tax hike
• Stafford, NH: Stafford tax rate to increase 76 cents

And, of course, the government employees unions, with their unsustainable pensions on the model of GM and Ford, are shaking the cup for their local and state tax increases too, as I have pointed out before.

There are opportunities here for Republicans to fix the brand. We can demand no tax increases. Perhaps more importantly, we can demand cost-saving reforms in government services. The leaders and winners of these fights will be the ones who will have earned their place as party leaders in the future.

Once again, the salvation for our party and our future leaders don’t reside in Washington. The real action will be in the state capitals.  Outside of stopping some bailouts, the real action will reside there.

So let’s stop talking about Washington and figure out how to play in these states, state by state, municipality by municipality.

No really. I am serious here

In Canada, after a federal election, federal parties receive a
grant from the federal government equivalent to $1.75 Canadian for
every vote that the party received. The newly re-elected
Conservative government tried
to repeal that subsidy of political parties:

The opposition said the update did not contain needed
stimulus for an economy increasingly squeezed by the global
downturn, but they were most angered by a planned end to direct
public financing of political parties.

Recall that in the last Canadian federal election, the
Conservatives won a minority government and the Liberal Party had
their worst showing in Canadian history. So, in response to an
attempt by the Conservatives to take political parties off the
public dime, what do the Liberals do? Bring down the government and
try to install themselves:

If neither side blinks, the government will likely
fall, and Canada would either head into another election or into
some sort of coalition led by the Liberals. The other two
opposition parties are the separatist Bloc Quebecois and the
left-leaning New Democratic Party.

Insanity. Pure insanity.

In this tragedy, there is an opportunity

Somehow, in the debate over globalization and geopolitical
strategy, India has been a sort of bastard step-child. Due to
understandable economic concerns — China holds much of our debt,
produces much of our consumer goods, and has had eye-popping
foreign direct investment driven growth — our focus has been on
China.

Yet India’s population is still growing, its universities are
first tier, and it is integrated into the West intellectually,
psychologically, scientifically, among others, like no other Asian
county. Part of this is because they speak the lingua franca of the
West, English. I am not going to argue that China is in strategic
decline, but rather that if we had to pick a friend in Asia, India
may be a more natural friend.

Now. The
Telegraph has described the attacks as “aimed at Western
targets”. USA
Today offers the headline, “Attack forces India onto front
lines of global war on terror.” (undoubtedly, the Indian government
would be displeased with the words, but perhaps not the framing?)
Meanwhile everyone is saying that these attacks were too
complicated and sophisticated to have been executed by
native-Indian terrorists.

Members of the European Parliament were in the hotels and
undoubtedly put a more local face on the attacks in Europe,
including a Muslim Tory MEP. So a Brit, a German (and one of the
leading Atlanticists of the European Left), and a Pole can now be
witnesses both within European institutions and within their
national institutions on the importance of the relationship with
India.

It seems that this attack offers an opportunity for the US and
Europe to step up and engage with India. This framing could be
helpful in a number of ways. They have credibility in the
non-Western world that we could not match as a developing Asian
state and a former colony. The attacks on the West simply do not
apply to them. We have resources and assets that they cannot match.
And we share similar values and see common strategic opponents.

Now is the time for Barack Obama to step up. Engage the Indians
and exploit Obama’s personal capital, especially with the Muslim
world. Obama, Manmohan Singh, Japan, and EU leaders. There are
tremendous opportunities here. Let’s grab them.

Patrick and Matt, who I both respect and count as friends, get something completely wrong. Patrick wants to install an "Ideas Czar" and a "Republican National Policy Committee":

What we need is a policy arm independent of the existing policy infrastructure on the Hill that incorporates the best of what’s happening in the states, on the Hill, and in the think tanks. A Republican National Policy Committee would be tasked with crafting a larger message that’s bigger than just House Republicans or Senate Republicans, but that includes both and Governors as well. An RNPC would have de-facto last word on the elusive question of what the Republican Party is for, would appoint "shadow cabinet" spokespeople to directly respond to what’s happening at the departments and agencies, and have point on crafting a Contract-like Republican platform for the midterm elections. Part think tank, part messaging engine, a Republican policy committee would keep the ideas flame alive until a Presidential nominee emerged.

I think that this gets exactly wrong what we need. Washington is where ideas come to die. They get strangled by interests groups warping them for their own ends. They get strangled by bureaucracies in the parties, in the interest groups, and in government interested in the status quo.

We don’t need Washington to deputize someone with the authority to have ideas on behalf of the party. Anyone who has seen the platform process up close knows that it is, for the most part, a list of shibboleths rather than a serious policy debate. Subordinating our ideas to existing power structures is just going to destroy us.

We need more people with actual ideas speaking and competing in the marketplace. If we are going to take ideas seriously — and I agree with Jon that our institutions are not yet ready to, there might be an alternative model that we could borrow from the European centre-right, the European Ideas Network (EIN) or improve on our existing models.

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EIN brings together politicians, academics, business leaders, think tankers, and interest groups to discuss the problems facing Europe. They come up with new questions, and sometimes even solutions. They compare notes on political viability. The key thing is that this is a Network not a top-down structure and, for the most part, people are allowed to engage freely with little sense of hierarchy.

There are similar models in the US. We have the American Legislative Exchange Council (ALEC, the conservative/Republican version of the National Council of State Legislators, NCSL), the various Governors Associations (Republican, Democratic, and National). The RGA and NGA regularly make recommendations to Congress and President that are based in actual experience running government outside of the Beltway, rather than the zero-sum game of Washington.

It is true that there are flaws in these models. The RGA and NGA are partly bodies designed for preening by future candidates for President. They tend to have people from one level of government, not multiple. The conveners have agenda of their own that they enforce via the invite list and the topics. And the conveners either are or are accountable to the donors who will, of course, have their own agendas.

So the objective should be multiple networks of conferences, donors and politicians, maybe focused on different issues. These should be tied into the conservative and main stream media. And they should make room for dissenting views, not merely the Ronald Reagan lovefest that we have come to know at conservative meetings like CPAC.

Now is the time for idea entrepreneurship, not idea centralization.

I am bewildered that some people try to make the arguments that they do. The Campaign Finance Institute argues that, "[i]t turns out that Barack Obama’s donors may not have been quite as different as we had thought."

Ummm. Except that there were 3.1m of them. And that’s not a trivial difference. But it doesn’t stop there.

CFI notes that there was a significant difference in people who started out small and moved into a larger donor group:

Many of the repeat donors who started off small ended up in the $201-$999 middle range. Among Obama’s total pool of 403,000 disclosed donors on August 31, more than half (about 212,000) started off by giving undisclosed contributions of $200 or less. About 93,000 of these repeaters gave in cumulative amounts of no more than $400 for the full primary season. Another 106,000 repeaters ended up between $401 and $999. By comparison, Clinton and McCain each had about 100,000 donors in the entire $201-$999 middle range, and for them the number included both repeaters and one-time givers.

So what we found here is not only that there were more donors, but the Obama campaign did a better job of converting their one-time donors into repeated donors. Oh, and, by the way, they did a better job of turning thier interested observers (12 million on the mailing list) into donors (1/4 donated)

So it wasn’t just a difference in mass — although that’s significant enough — but in process.

This weekend, I heard a presentation from a Republican operative and strategist who claimed that to be competitive in the 2012 Presidential race, the GOP candidate will need to raise $1 billion. I suspect that that number is a touch high, but it is not an unreasonable assumption. Let’s run some numbers on that.

If you assume that the donors all came from maxed out donors and that the new limit is $2,500, that would mean that the candidate would need to find 200,000 donors. More likely, the average donation size would be much smaller and the number of donors much larger. Barack Obama had over 3.1 million donors by October, averaging about $200/donor.

Consultants, who get paid by campaigns, tend to focus on the dollars. But that’s not what we should be focusing on when we look at the Obama campaign. We should be looking at the numbers of bodies. It is the size and scope of Obama’s grassroots organization that is really the phenomonal innovation that could transform our politics. That, not the money, is what we need to figure out how to match.

Let’s put it slightly differently. Obama got about 3m donors. He got about 6m cell phone numbers. And about 10m on his email list. Turning that around, about 1 in 3 of the people who signed up to his email list gave him money. That’s earth-shattering.

I wrote a piece for Pajama’s Media on technology in the 2008 race. The key point about the campaign was its decision to put the organizational focus on its grassroots:

In the end, the Obama campaign’s various technologies for fundraising, GOTV, and communications were side shows. They all derived from a much more fundamental innovation. Rolling Stone described the most important insight of the Obama campaign from one of their trainers: “We decided that we didn’t want to train volunteers. We want to train organizers — folks who can fend for themselves.”…

You can make the fundraisers a little more efficient. You can make the GOTV more efficient. You can have a better message and get it out better. These are linear improvements. But political organizations grow exponentially when you improve the organizers. That’s what the Obama campaign did. Everything was focused on making the organizer better.

In the end, either Obama’s organization will be a one-off, which I wouldn’t count on, or conservatives and/or Republicans are going to have to learn to match that level of organizing. But just as Obama’s organization has partially transformed the Democratic Party and Dean’s organization definititely did, the Republican Party will probably be transformed by a shift to a focus on grassroots. Some thoughts on how:

1. The power of the donor class will be signficantly reduced as it shifts to the grassroots.
2. This party would likely involve an overthrow of the current party leadership. And I don’t necessarily mean at the RNC, but down at the county party level.
3. A party with that level of grassroots activity and energy might be more ideologically broadly-based than our current party.

That would be a fundamentally different Republican Party, and one that is focused on the voters and the activists and the donors rather than the intrigue of Washington, which has been so much the focus of the party.

The third point about a somewhat different ideological composition could be important, and the Republican primary might even provide a guide. John McCain won his primary based on winning rank-and-file Republicans who were not part of the party apparatus. He campaigned to these people. In March of 2007, I was in New Hampshire on the Straight Talk Express, and McCain was speaking at veterans halls to whoever would come. Mitt Romney was speaking that same day to Lincoln Day dinners. McCain probably wasn’t even invited to those dinners.

At the same time, at some state and local conventions the local parties only maintained control under the attack by Ron Paul supporters by cheating them out of their delegate spots. A more vibrant party could have handled — and perhaps beaten — new entrants into the process. A more vibrant party could have built a coalition with those people rather than driven them away. Healthy political parties add people because they help them win. Unhealthy ones drive people away.

So in the end, I am somewhat bored with an ideological debate about the future of the party. The real change will be if people are willing to empower a new grassroots of this party and give up power to it. If we don’t it’s over. If we do, there could be tremendous opportunities that start to address some of the weaknesses of our party.

I have spent the last week recovering from the disappointment of election day. I have spent a lot of time talking to the mid-level operatives from the McCain campaign. (the top level are on TV playing the recriminations games, in undisclosed locations, or drinking their brains out in Vegas)  There are things that we can learn from this election.

The first is that John McCain won the primary because of an often neglected part of the coalition: military voters. Redstate’s Erick Erickson said the point well on the night of the Florida primary:

Tonight was not a failure of conservatism, but a triumph of military voters who have made their home in the Republican Party because we are the party of a strong national defense.

In both South Carolina and Florida, they won it for McCain. In the grand coalition of the GOP, we’ve talked about social conservatives and fiscal conservatives. We’ve all ignored the military voters, except John McCain. And he won them big. His message resonated.

This is not a sufficient grassroots for the GOP in a national race, but it was a powerful one in the primary. We as a party should feel and water this part of the coalition better than we have done in the past. We will likely get a generation of candidates who served in Iraq and/or Afghanistan who will be powered by the volunteer work of volunteers who supported McCain. In addition, I wouldn’t be surprised if this developed into a meaningful faction in GOP politics in the next couple of years.

Second, the GOP is good at managing the mechanics of GOTV. However, we are not very good at managing and empowering our grassroots. The Democrats are. Open Left’s Mike Lux, now on the Obama transition team, said:

I am grateful that field organizing and working with grassroots volunteers is actually in fashion again, and in so much bigger a way than it has ever been in my lifetime.

At a time that technological and volunteer energy was at an all-time high, even on the GOP side, the RNC deployed a mythically small number of field staff, opened a mythically small number of campaign offices, and generally deprioritized grassroots. We simply didn’t tap into that energy effectively. Often we failed because we were inept. Often, these were the product of intentional decisions by state parties (see below) who were afraid of new people (see above). More broadly, a whole number of volunteer engagement plans failed to materialize. I still have drafts of some of them.

Third, many of our state parties are completely dysfunctional. COMPLETELY. There have been some horror stories out of state parties that should have been able to pull their own weight but simply weren’t. I won’t name names yet, but it is not good. There is indeed a correlation between the states that have lost elections and the state of their parties. There are two solutions to this. Either someone needs to take them over from below or, much less preferably, they need to be fixed top-down from DC with new staff, bypassing and eventually surpassing the state parties.

Fourth, history will probably show that the mistake of squashing of the libertarian grassroots out west in the form of the Ron Paul campaign could resonate for years. Fewer activists, less money, etc. Many people will try to blame McCain and/or his campaign, but I do not believe that a single state party stood up for a significant part of their grassroots. Often, the parties were so weak that they ended up being complicit in tossing out Paul-supporting libertarians because they were afraid of new people coming in and taking over. These same parties were already in desperate places because of their inability to respond to the growing strength of latino voting blocs with outreach to bring them over. These are not the responses of healthy parties.