The morning after, Democrats: We have a new favorite

The Democratic results might not have been a surprise considering the Obama campaign itself was predicting victory in the final days, but they upend the state of the race dramatically. Hillary Clinton was the inevitable front-runner all the way until the end of October; after the Philadelphia debate, she lost her inevitability but she was still favored to win it all. That is no more true; the roles have been reversed, and Barack Obama has to be anointed the new favorite to become the Democrat nominee.

The scenario that played out last night was Clinton's nightmare: She came in third and Barack Obama came in first. The one comforting thought has to be that she managed to stay in a tie for second-place (only 7 delegates separate Edwards and her) but the press is loving the symbol of Clinton coming in third and is going to run with it for the next few days.

Yet, it is undeniable that something big happened last night. Turnout surpassed anyone's expectations, even those of the most optimistic Obama aides. Nearly 240,000 Iowans went to caucus for Democrats which is nearly the double of what it was in 2004. Among the 57% who were first-time caucus goers, Obama demolished his adversaries: He got 41% to Clinton's 29% and Edwards's pale 18%. On the other hand, Edwards led among voters who had already caucused. Furthermore, and while Obama did win a huge share of independent voters (41%), they only comprised 20% of voters -- much less than what some had predicted. Hillary Clinton cannot claim that Barack Obama won solely on the basis of his strength among non-Democrats, as the two were tied among registered Democrats. Obama appears to have won mostly because of a turnout surge among the youth who participated in much greater numbers. And a stunning 57% of the 17-29 year old crowd voted for Obama. This is what Howard Dean tried to pull off 4 years ago and failed miserably at.

As predicted, realignment played a huge role in the results -- especially the Richardson-Obama deal. What is most puzzling is not that there was such a deal in the first place (there is ample documentation that Richardson voters did go massively for Obama last night and that precinct captains told them that those were the instruction), but why did Richardson and Obama keep it secret and the campaigns kept denying it? To avoid the press talking about it in what could undermine the purity of victory? Obama would have won without Richardson's boost but his lead could have been smaller. And we've got to wonder about the ethics of not publicizing such a deal and repeatedly denying it.

A second observation about second-choice preferences is that they pushed Clinton into third-place. Entrance polls showed Edwards trailing Clinton by about 4-5% in raw votes, and he managed to narrowly pass her at the end. That conforms to a lot of anecdotal evidence across the state as observers reported that Clinton gained very few votes between the two rounds of counting and Edwards very often passed her in places where he was third in hte first round of counting.

What does this mean for the rest of the race? Clinton knows that early wins for Obama could make him invincible in the coming weeks, especially if the African-American vote in South Carolina flips in favor of Obama (it has been tied for most of the year). Clinton can hardly afford to wait until Florida where she cannot even campaign due to her pledge -- though it will be interesting to see whether she is tempted to go back on her promise once Iowa and New Hampshire have voted -- and has to get back on track in New Hampshire. Polls have Clinton up in New Hampshire by varying margins -- anywhere between 4% and 15%, and we will see in the coming days just how much of a bounce Barack Obama gets.

And Clinton is working fast to move on from Iowa -- and has started questioning the legitimacy of the caucus process. Her staff is murmuring that Iowa has never elected a woman in any gubernatorial and congressional election, which, to be fair, is a rather disturbing fact. And Hillary said today in New Hampshire: "You're not disenfranchised if you work at night. You're not disenfranchised if you're not in the state."

Don't underestimate Clinton's chances in New Hampshire. Given that Obama and Clinton were almost tied prior to Iowa, Obama has to be given a slight edge in the Granite State, but Clinton's organization and network is much stronger here than it was in IA. Bill Clinton is very popular in the state and will be dispatched everywhere in the coming days -- and she has many other surrogates. The big question now is how negative will Hillary Clinton go in NH; she had started to go down that route in December and then stopped. But she could have no other path at this point: Obama has got momentum, people are starting to see he is electable after all and a second loss could be near-fatal. And one mystery: What will happen in Michigan? With Dodd's exit, Clinton is now the only candidate in the race. She'll try to spin it as a "I stayed and was not afraid of the fight," will anyone buy it?

The trouble for Clinton: Movement candidacies pick-up steam remarkably fast. Many high-profile Democrats such as Al Gore and Ted Kennedy might have been staying away from endorsing for fear of offending the likely nominee, but now that Hillary has been defeated once Obama could start seeing the tangible benefits of that. Money, of course, but such high-profile names could start lining up behind him. Obama's victory in Iowa could make the rest of the campaign fundamentally different. And with Obama as the favorite, the spotlight is now turned on him -- with everything good and bad that entails. More attention, people taking him more seriously... but also increased criticism and negative stories coming out.

And what this means for other candidates: John Edwards had a good showing. But let's face it, he is toast. He put everything in the caucuses, and he would have won if turnout had been lower. But he is tied for second -- and got less than he did in 2004. That said, it is undeniable that Edwards did great given that the press barely covered him for much of the year. That he remained competitive with Obama and Clinton despite the way the campaign was framed speaks to his resilience and his talent as a campaigner. But Edwards needed a win to remain viable. He has no real organization in later states and not that much money -- and what next for him? Where does he go, and where does he win?

He is presenting himself as the underdog and the change agent who defeated the status quo, but he got a higher share of the vote among conservatives than among liberals; and as the white male of the race, he definitely attracted some of the status-quo vote. His speech last night meant that he is staying in the race -- and he has been reframing it as an Obama-Edwards race now. Look at what he said today: "I am not the candidate of glitz; I am not the candidate of glamor. I am the candidate who will fight with every fiber of my being every step of the way." But the more he stays in and is competitive, the better that is likely to be for Hillary Clinton as it gives her an opening to corner Obama.

Meanwhile, Joe Biden and Chris Dodd both dropped out. It is still unclear whether they are planning to endorse anyone but the results must have been disappointing for them. Biden apparently got about 5% at the entrance but less than 1% of the delegates. More than anything, this frees up a ton of endorsements: Chris Dodd especially had the backing of the prized firefighters union, and we'll have to see where they go next. And Ted Kennedy was rumored to be reluctant to endorse anyone given his friendship with Dodd, so this could also liberate him. Keep in mind that Dodd grew into a whole new persona over the past few months and positioned himself to challenge Reid for Majority Leader at some point in the future. And contrary to reports in the press, Mike Gravel is not pulling out.