Minnesota is blue
It always galls me when national pundits call MN a purple state or insinuate Republican tendencies. The only reason they say this is that we DFLers cannot get our act together and nominate good candidates for Governor. We've sent Republican Sec. of State Mary Kiffmeyer packing and Governor Pawlenty has never won with a majority.
The southern and western suburbs are trending blue at the legislature. Rep. John Kline's territory, is the southern suburbs and southern Minnesota, is rapidly turning blue. Jim Ramstad's seat, the western suburbs in which Ashwin Madia leads Terri Bonoff in the DFL endorsement, is also turning blue. Rochester, the former Republican bastion, is now mostly blue and voted overwhelmingly for Rep. Tim Walz (DFL).
So now there's a poll and chart released by Pew Research indicating fewer voters than ever are self-identifying as Republicans:

(h/t to DailyKos)
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branding
I like the fact that the Republican graph is trending downward. What is troubling is that the Democrat graph is essentially flat. All the gains are in the "Independent" category. What that tells me is that the Independent voter is still wary of the Democratic "brand".
The Republicans have lost, but we have not won. It's an okay first step, but Democrats are missing a huge opportunity. This should be a year that garners voter loyalty to the Democratic brand. Instead, we are just still hoping and praying that the Republicans will continue to be so bad that voters will pull the lever for the "not-Republican" candidate.
It's very encouraging that we have some really great candidates this year such as Ashwin Madia, Tim Walz, and others. Hopefully, they will help push the Democratic brand. I also think that Obama can have that effect.
If you ever have a chance to read the book, "The Political Brain" by Drew Weston, I would really encourage you to do so. I like his book even better than George Lakoff's books. Very insightful and very entertaining reading.
If only we could get all candidates to reinforce the message of what it really means to be a Democrat, it would go a long way towards giving the voter a reason TO vote for them--and all Democrats.
Branding
There's an element of accuracy in what you write about independents not yet being sure of Democrats. However, much of the rise in their numbers is due to the drop in Republicans numbers. That means more people, including Republicans, are starting to see the error of the GOP's ways.
Nationwide, Democrats are rising, as the Big E points out, and that has been happening ever since Katrina.
Note also that, in Minnesota, the DFL nearly took back the state House in 2004 before magnificently sealing the (unfortunately short of veto-proof) deal in '06, though this year has shown that there are a few Republicans out there who are capable of being honest with themselves and all Minnesotans. Despite not getting their party's endorsement (pretty dubious anyway), I'd bet that most, if not all of the six will win their primaries and be re-elected anyway, and if they don't, that means DFLers won in those races. With the state Senate now in fact veto-proof, and the House obtaining the necessary five more seats this November, Pawlenty will be rendered pretty ineffective. And ain't it been fun watching his party loyalists squirming and screaming? Sorry, I just can't help gloating a little.
But, yes, from then on, Democrats have to avoid falling into the same traps the Republicans did, and which they themselves did to lose control of Congress in 1994 after so many years. The hope is that they have learned a lesson that has very painful for the rest of us. I will admit, it's been a very slow learning process, so they need to get moving as soon as they get power.
Splinter
The problem is is that the Republican party is basically splintering. No independent wants to support one of these candidates who's trying to please all the factions, because it's so obviously dishonest. As long was we don't mess things up, we're gonna see solid democrat wins until the republicans find an identity again.