Smith Experts Comment on Election 2012

From economic policy positions to the inner workings of the campaign, faculty experts in the University of Maryland’s Robert H. Smith School of Business are available to discuss issues relevant to the 2012 election cycle.

The Smith School has an in-house facility for live or taped interviews via fiber-optic line for television or multimedia content.

Hank Boyd: Campaign Strategies

Hank Boyd Tyser Teaching Fellow and associate chair of Smith’s marketing department  301-405-2034  hboyd@rhsmith.umd.edu

“Negative messaging through sound bites and ads travels far, wide and quickly. The information sinks to the back of voter minds and is easily recalled when they enter the voting booth. The Internet and social media can counter such manipulation by empowering voters to investigate, evaluate and advocate for the candidates on their own terms. The candidates can capitalize by crafting more in-depth messaging that hits more planks in the platform. Moreover, campaign strategy involves building and reinforcing the candidate’s brand — much like that of a product. President Obama in 2008 branded himself as the ‘anti-war candidate’ and as an agent for hope and change.

“In 2012, the Obama campaign has had a steeper hill to climb in terms of branding. After 3.5 years on the job, President Obama is no longer perceived by voters as a relatively clean slate on which they can foist their aspirations. In light of a tightening race, President Obama has gone negative which is undermining his ‘nice guy’ appeal. As for Gov. Romney, he seems to have trouble finding common ground with Middle American voters given his privileged background and past business success. Notably, Romney’s camp has tried to invoke national touchstones of entrepreneurial drive and rugged individualism.

“Concerning President Obama’s signature achievement — healthcare reform — Gov. Romney has found it difficult to attack the President given his well-documented history of instituting such a ‘social’ program in Massachusetts. At the end of the day, Romney can’t get off the hook by simply claiming healthcare coverage should be a states’ rights issue.”

Bill Rand: Social Media's Role

Bill Rand Assistant professor of marketing and Center for Complexity in Business director 301-405-7229 wrand@rhsmith.umd.edu

“If the 2008 national elections witnessed the birth of social media as an integral part of the democratic process, then 2012 marks social media's coming of age. Twitter, Facebook and YouTube are more popular than ever as the number of daily users has grown year over year. New platforms, such as Pinterest, a picture-based platform, and Medium, from the founders of Blogger and Twitter, are coming in to their own. Moreover, the power of smartphones has gone up, while their price has come down. This is encouraging even more citizens to partake in a truly active democratic process where they can, during every moment of their lives, consume social media about their (and others’) candidates and contribute their own thoughts and beliefs to this important national dialogue.

“It used to be to become well known as a political commentator you had to get your own TV show, radio show or newspaper column, which required an expensive infrastructure and a large time commitment. But social media is the ultimate democratic — and potentially meritocratic — tool because it allows anyone with computer access to broadcast their thoughts and opinions to millions. As a result, we increasingly see candidates engaging not just with traditional forms of media broadcast, but also on social media.”

Yogesh Joshi: Attack Ads

Yogesh Joshi Assistant professor of marketing Co-authored “A Theory of Combative Advertising” (2009), Marketing Science 301-405-9668 yjoshi@rhsmith.umd.edu

“Attack ads – the use of misleading and inaccurate political appeals – are a typical example of an attempt by candidates of tailoring messages towards specific voter segments. The effectiveness of these messages varies from group to group, often driven by how engaged the group is with the election process. For instance, in the 2008 presidential election, a notably engaged group was young voters, a group historically notorious for their disinterest in election matters.”

Joyce E.A. Russell: Measuring Leadership Style

Joyce E.A. Russell Vice dean Licensed industrial and organizational psychologist  25-plus years of private/public sector consulting  301-405-8146 jrussell@rhsmith.umd.edu

“A candidate's leadership style signals credibility. Pundits are quick to define the candidates in this context and have suggested such perceivable flaws as Mitt Romney’s 'poor connection and lack of empathy' and President Obama’s propensity to ‘avoid conflict’ and to ‘compromise with adversaries.’ Attack ads effectively target the perception of credibility and air frequently and increasingly up to Election Day. But discerning, uncommitted voters who peel away partisan rhetoric and blanket generalizing, study the candidate's history. Does the track record indicate integrity and trustworthiness? To what extent has the candidate delivered on pledges and promises? To what degree has the candidate exhibited emotional intelligence or social skills in negotiating and showing empathy for people?

“Another key leadership trait lies in decision-making experience--indicative of how tough choices will be made while the nation's and world's interests are at stake. While voters can scrutinize President Obama's first term, Mitt Romney, as challenger, can't be expected to be prepared for ‘everything.' But he should at least be self-aware of what he knows and doesn't know, and demonstrate intellectual curiosity to build his wherewithal and surround himself with experts and advisers who can provide effective counsel.”

David Kass: Forecasting the Outcome

David Kass Tyser Teaching Fellow in finance Harvard Business School classmate of Mitt Romney (corporate financial management course, fall ’73) 301-405-9683 dkass@rhsmith.umd.edu

"The 2012 Presidential election may be determined largely by the debate over the future of Medicare, and how the economy and stock market perform between now and Election Day. A relatively stable or rising stock market, an improving gross domestic product, and a declining unemployment rate, should help President Barack Obama. However, a weak stock market, slowing economy and a rising unemployment rate should assist Gov. Mitt Romney. Economic events in Europe, China and the Middle East may also have a significant impact. A good forecasting tool is provided by Intrade, the online futures market. This indicator has had a very high degree of accuracy in predicting both national and statewide winners in recent years based on its reading the evening before an election. Recently, this highly volatile measure indicated President Obama’s probability of being re-elected is approximately 57 percent, with Gov. Romney at 43 percent. The candidate whose probability of winning exceeds 50 percent on the eve of the election has won in the overwhelming majority of statewide and national elections in recent years. The winner will likely work with a Republican controlled House and a 50-percent chance of a Republican controlled Senate, according to Intrade. The outcome of the House and Senate elections will greatly influence the extent to which the President will be able to pursue his policy initiatives.”

Bill Longbrake: ‘Capitalism’ as a Dominant Theme

Bill Longbrake Executive-in-residence 206-588-9044 Wlongbrake@rhsmith.umd.edu

“A primary theme often drives presidential election debate. In 2008, it was race relations. In 2012, capitalism – how it should be modified or constrained – is that dominant theme. Mitt Romney has focused on President Obama’s abysmal economic record but seems befuddled as to how to respond to Obama’s campaign theme which centers on ‘How ruthless do Americans want capitalism to be?’ Romney has stated his belief in a clear and unapologetic defense of the American ideals of economic freedom, and Paul Ryan’s addition to the Republic ticket changes the tenor of the campaign to a more pointed debate about the role of government and future fiscal management, especially around spending policies with Medicare prominent in campaign discussions.”

Mike Faulkender: Corporate Tax Reform and Job Growth

Mike Faulkender Associate professor of finance Co-authored “Investment and Capital Constraints: Repatriations Under the American Jobs Creation Act” in Review of Financial Studies (forthcoming) 301-405-1064 mfaulken@rhsmith.umd.edu

“According to data published earlier this year, 70 U.S. companies hold $1.2 trillion in untaxed (by the United States) profits around the world, an 18-percent increase from a year earlier. Those firms and others unsuccessfully lobbied Congress in 2011 for a tax repatriation holiday — similar to the one enacted seven years ago within the 2004 American Jobs Creation Act.

“Though legislative debate on a tax holiday has stalled, the candidates differ on how to deal with a 35 percent U.S. corporate tax rate — highest among industrialized nations and an obstacle to increasing American jobs and production on U.S. soil. The Romney campaign has suggested a 25 percent tax rate, plus a territorial tax system that would eliminate the repatriation tax on U.S. company earnings already taxed by foreign governments. The Obama Administration has proposed a 28 percent rate and a global minimum tax system based on immediately taxing revenue in the foreign subsidiary on top of the host government tax. Both ideas fall short. A territorial tax would produce no incentive for reinvesting domestically. A global minimum tax could incentivize large firms to entirely pull out of the United States. Instead of overhauling the system, simply flipping the income tax ratio to 15 (corporate) and 35 (individual), for example, would offset potential lost revenue by creating incentives for long-term domestic investment. It would also bolster a sparse tax base. Meanwhile, individuals would be less likely to move abroad. But such a position is politically risky as it’s much easier to target and demonize an Exxon Mobil instead of its individual shareholders.”

Additional Expert: Cliff Rossi on the Financial Policy Debate

With insight from 25 years in senior risk management and credit positions at Citigroup, Washington Mutual, Countrywide, Freddie Mac and Fannie Mae, Rossi can break down financial policy rhetoric encompassing market regulation and related issues involving the banking, real estate and small business sectors. A Smith executive-in-residence and Tyser Teaching Fellow, he writes the weekly Risk Doctor column for American Banker and is a frequent source/contributor on outlets ranging from Bloomberg and CSPAN to CNN and Canada’s Business News Network. Contact him at crossi@rhsmith.umd.edu or 301-908-2536.

About the Robert H. Smith School of Business
The Robert H. Smith School of Business is an internationally recognized leader in management education and research. One of 12 colleges and schools at the University of Maryland, College Park, the Smith School offers undergraduate, full-time and part-time MBA, executive MBA, MS in business, PhD and executive education programs, as well as outreach services to the corporate community. The school offers its degree, custom and certification programs in learning locations in North America and Asia.