Generally speaking, primaries are where ideological fights play out. And it looks like we may have some interesting battles to watch next year in a few key Senate races. Both parties are now split by fights over whether it's better to support compromises to achieve shared goals or go down fighting. These divisions, in turn, are fueling some pretty heated show-downs.

There have been some noteworthy developments in all this intra-party Senate feuding lately. Here's the latest:

• In Arkansas, Sen. Blanche Lincoln is feeling pretty squeezed. A moderate Democrat who’s never had to worry too much about reelection before, Lincoln is currently surprisingly weak against third-tier Republican challengers. A new poll shows her leading state Sen. Gilbert Baker 41 percent to 39, and state Sen. Kim Hendren 45 to 29. But just in case her response to the threat is to go all Joe Lieberman on the president’s agenda, she’s got a fellow Democrat, Lt. Gov. Bill Halter, lurking on her left, threatening a primary challenge.
• When Florida Gov. Charlie Crist announced that he'd be running for Senate, he was immediately considered a shoo-in. That status seems to have melted away. A new poll has the moderate Republican leading the conservative he'll be facing in the primary, former state House Speaker Marco Rubio, by only 10 points. Rubio has fast become a favorite on the right, appearing on the cover of the National Review and getting the coveted keynote speaking slot at the CPAC conference. He’s tying Crist, a once-vocal supporter of the stimulus package, to President Obama in much the same way that, say, Ned Lamont once tied Sen. Joe Lieberman, formerly D-Conn., to then-President Bush.
• Being an old party warhorse is no longer good enough to guarantee Sen. John McCain’s reelection in Arizona, apparently. Though the former presidential candidate has never been beloved by his state party’s base, his reelection has never really been in doubt. It probably isn’t now either, but it depends now on what a potential opponent decides. Former Rep. J.D. Hayworth, R-Ariz., is weighing a primary challenge, and McCain's lead over Hayworth in one poll stands at just two points, 45 to 43. Hayworth was defeated for reelection in 2006, but clearly retains a connection with the Arizona conservative base. He was especially known for his hard-line stance on immigration, an issue that has dogged McCain among Republicans for years.

CEDAR CREEK, Texas -- Finding the epicenter of the looming Republican comeback is pretty easy, at least this week. As it happens, you can drive there from Austin-Bergstrom International Airport in less than 30 minutes, and with only two turns. Once you get to the massive golf and spa complex with signs warning pedestrians and bicyclists to stay off the road, you're in the right place.

Here at a fancy resort on the outskirts of Austin, Republican governors and the corporate sponsors who love them gathered to celebrate their recent victories and look forward to what -- they're quite sure -- will be many more to come. "I was chairman of the party 16 years ago when we were last similarly situated," said Mississippi Gov. Haley Barbour, the chairman of the Republican Governors Association, who was chairman of the Republican National Committee when the GOP swept to control of Congress in the 1994 elections. "This feels better this early than it did then."

Win a couple of odd-year gubernatorial contests, it turns out, and the future suddenly looks a lot brighter. Bright enough, in fact, that the RGA had no problem Thursday morning showing attendees a "Saturday Night Live" clip spoofing Fox News Channel's coverage of the 2009 elections. The point of the skit was that the GOP and its friends at Fox were delusional, giddily declaring the 2008 elections overturned on the basis of two statewide elections with low turnout -- which the speakers at the RGA conference then proceeded to come close to doing themselves. It wasn't clear how intentional the irony was.

"For all the hype, [2008] was not a transitional campaign, it was not a transitional year," GOP pollster Ed Goeas said at a panel about the 2010 elections, after promising to pick apart some of the "many" myths about President Obama's victory a year ago. "After $700 million being spent by the Obama campaign, it was not a new electorate."

That was, in essence, the message of the RGA conference: So what if the only thing voters like less than the Democrats in Congress might be the Republicans in Congress? Who cares if the GOP has been reduced to a rump minority in the House and Senate, left on the sidelines with not much more to do than root for Democrats to fight among themselves? In politics, what matters is momentum, and right now, Republicans -- and quite a few Democrats, especially in private -- think they have it.

So Bob McDonnell and Chris Christie, the winners in Virginia and New Jersey a few weeks ago, were hailed as the heralds of a new GOP majority -- a majority of governors, granted, which doesn't really mean anything in terms of being able to pass legislation or implement policy on a national scale, but a majority nonetheless. (Both winning candidates demurred when asked whether Obama fatigue had helped them to the statehouse; it was local issues that won the day, they insisted.) No one mentioned that the party in the White House almost always loses the New Jersey and Virginia elections the year after a presidential race.

And Barbour came armed with a new poll by Zogby International that showed Obama's approval ratings and reelection numbers were perilously low in states with competitive gubernatorial races on tap for next year. Hawaii Gov. Linda Lingle said there was no reason the GOP shouldn't aim to win every single state. "There's no state that we can't win," she said. "Talking to a Republican from Hawaii -- the first Republican elected in 40 years -- I'm telling you, we could win in every state."

But the most telling numbers may have been the ones Barbour touted a little later, in a press conference, after he'd shared them with governors and Republican loyalists Thursday morning. Forget the polling; what really got the RGA excited was another kind of stat. "We spent $23 million in 2006," Barbour said. "We're going to start 2010 with $25 million in the bank."

Raising and spending money is, after all, the main thing a group like the RGA does. Which is why the big "Victory Barbecue" on Wednesday night was sponsored by the Corrections Corporation of America, whose Web site proclaims it's "the private corrections management provider of choice for federal, state and local agencies." And why Indiana Gov. Mitch Daniels apologized to "the vendors in the room" for boasting of his love of bidding state contracts out using reverse auctions. Everywhere you looked, corporate sponsors popped up. A mining company, an information technology company and a supply chain logistics company teamed up with CCA and the liquor lobby to sponsor a bash at Cindy's Gone Hog Wild, a bar down the road from the conference resort. A "trunk show and fashion boutique" was set up in one hallway Thursday afternoon, so attendees could take a break from hearing about the Obama administration's nefarious healthcare reform plans to get a little shopping in. (The governors, meanwhile, headed out for some skeet and trap shooting on the resort's grounds.)

That's not to say Democrats will have it easy next year, especially if the economy doesn't recover faster. Incumbents in either party are likely to struggle; fairly heavy losses in the House and Senate are probably on the horizon, though Democrats took so many seats in 2006 and 2008 that their majority in both houses is likely safe. Midterm elections almost never bring good news for new presidents, just like the New Jersey and Virginia results.

But the GOP crowing in Texas this week doesn't mean Republicans have it all figured out again, either. The candidates on the Republican line in major races next year may include Ohio's John Kasich, who was the House Budget Committee chairman after the 1994 elections; New York's Rick Lazio, who tried, and failed, to beat Hillary Clinton for the Senate in 2000; and Iowa's Terry Branstad, whom you may have heard of because he already served as governor of the state from 1983 to 1999. That lineup doesn't exactly scream out "new and improved," no matter how much Barbour talked up the GOP comeback.

"One of the things that really does separate this Republican Party from the Republican Party of 1993 is that this one is utterly devoid of ideas," said Nathan Daschle, the executive director of the Democratic Governors Association, the RGA's counterpart. "You can say a lot of things about Newt Gingrich, you can say a lot of things about the Republican Revolution; one thing you can't say is that it lacked some kind of ideological base or agenda."

By contrast, Barbour boasted Wednesday that Republicans in New Jersey voted for a moderate, Christie, and in Virginia, they voted for a conservative, McDonnell. The main thing they had in common was their party label. As GOP governors gathered to bash the healthcare reform bill Thursday morning, they ran through the same litany of Republican "solutions" to the problem that their comrades in Washington have offered for months -- tort reform, insurance portability, tax credits. Their most famous ex-governor, meanwhile, was running around on a book tour, talking mostly to tea party types who won't exactly help win swing voters over. Minnesota Gov. Tim Pawlenty, who's supposed to be a rising star in the party and is planning a run for president in 2012, stuck to bland pronouncements as he moderated a domestic policy panel on Wednesday. "Citizens are being asked to live on the same amount of money, or less, than they did last year," he said. "They think it's reasonable that government should tighten its belt as well." No one at the conference could open his or her mouth without declaring the states to be "the laboratories of democracy" -- Louisiana Gov. Bobby Jindal must have said at least a half-dozen times that unlike Washington, states can't print their own money. It was not, all in all, a rousing display.

What next year's elections may offer increasingly alienated voters, then, could be a choice between the Democrats, complete with their infighting and chaotic majorities -- who may not have done enough yet to fix the problems that they confronted upon walking into office -- and the Republicans -- who were the ones who helped mess things up in the first place. If the RGA gathering was any evidence, though, the GOP is aiming to win that choice by default. A win, after all, is still a win.

If the New York Times is right, we won't have Rudy Giuliani to kick around next year, because he's decided not to make a run for governor.

There's been no official announcement so far -- the Times sources their report to "people who have been told of the decision." And the National Review's Jim Geraghty writes that he has "a reliable source close to Giuliani" who says the former mayor of New York City hasn't yet made a decision.

If Giuliani has opted not to get in the race, thoughl, it probably would be a good decision. It'd be one thing if he were running against incumbent Gov. David Paterson, whose unpopularity rivals even former Vice President Dick Cheney's. But Paterson's widely expected to lose in his quest for the Democratic nomination to state Attorney General Andrew Cuomo, who'd be a much more formidable opponent in the general election. And if Giuliani loses two races in two years, especially after the way his presidential campaign crumbled, he'd stand to lose quite a bit in terms of his credibility and visibility in politics as well.

Update: The New York Daily News is reporting that Giuliani will be announcing, within the next 48 hours, that he's not running for governor, but is running for Senate instead, against Sen. Kirsten Gillibrand. Gillibrand was appointed to fill out Secretary of State Hillary Clinton's term -- Clinton, as you may remember, won election to the Senate in 2000 after Giuliani opted not to run against her.

Update 2: For what it's worth, Giuliani spokeswoman Maria Comella e-mailed Politico's Ben Smith to deny the report that he's decided to run for Senate. That said, a situation like this, when a politician is pondering a run for office, official denials aren't necessarily all that trustworthy. That's not to say Comella's denial is definitely not credible -- or that it is credible -- just that, in general, the decision to run is generally denied right up until the point when it's announced.

How can the stock market hit new highs at the same time unemployment is hitting new highs? Simple. The market is up because corporate earnings are up. Corporate earnings are up because companies are cutting costs. And the biggest single cost they’re cutting is their payrolls. So they let people go and, presto, their balance sheets look better and their stock prices rise.

In the old-fashioned kind of recession decades ago, big companies laid off people with the expectation of rehiring them when the economy turned up. Then a few recessions back, companies started laying off people for good, never rehiring them even when the economy recovered.

In the Great Recession of 2008-09, companies are going a step further. They’re using this sharp downturn to cut payrolls even below where they were when times were good. Outsourcing abroad, setting up shop in China and elsewhere, contracting out, replacing people with software and automated machines -- they're doing whatever it takes to get payrolls down so earnings bounce up.

Caterpillar earned $404 million in the third quarter, or 64 cents a share. Analysts had expected only 5 cents. Caterpillar’s stock is up 165 percent since March. How did Caterpillar do it? Not by selling more bulldozers. It did it by cutting more than 37,000 jobs.

The result, overall, is an asset-based recovery, not a Main Street recovery. Yes, the economy is growing again, but the surge in productivity is a mirage. Worker output per hour is skyrocketing because companies are generating almost as much output with fewer workers and fewer hours.

The Fed, meanwhile, has become an enabler to all this, making it as cheap as possible for companies to ax their employees. Money costs so little these days it’s easy to substitute capital for labor. It’s also easy to buy up foreign assets with cheap American money. And it’s now blissfully easy for Wall Street to borrow money almost free and buy all sorts of interests in foreign assets, especially commodities. That's why we're seeing the prices of foreign commodities and other assets go through the roof.

At the same time, the Treasury continues to be fixated on keeping banks afloat. The administration's mortgage mitigation efforts are lagging. Small businesses are starved of credit. The White House has announced a "jobs summit," which is better than nothing but not nearly as good as pushing immediately for a larger stimulus, a new jobs tax credit, and a WPA-style jobs program.

The Fed and the Teasury have, in effect, placed a huge bet on a recovery driven by asset prices. That’s a bad bet. The great disconnect between the stock market and jobs is pushing stock prices way out of line with the real economy. This isn't sustainable.

No economy can recover without consumers. Yet American consumers, who constitute 70 percent of the U.S. economy, are facing mounting job losses as well as pay cuts. They’re in no mood to buy and won’t be for some time.

Where is this heading? No place good. Without a major shift in policy -- both at the Fed and in the White House -- the economics point to a big stock-market correction and a double dip. The politics point to substantial losses for Democrats next year.

This is probably not the smartest thing for someone who works for a company that's headquartered in the state to say, but let's face it: Californians don't have the greatest record on Election Day. They elected (and then un-elected) Gray Davis, set up a system of referendums that has essentially crippled their state government. Also, don't forget, they chose one governor who co-starred with a chimp -- and another who co-starred with Jamie Lee Curtis.

Still, it does seem a stretch to think that California might elect a senator who sympathizes with the Birthers next year. But it's not out of the realm of possibility.

The Washington Independent's David Weigel has a good profile today of Assemblyman Chuck DeVore, who's running as the conservative candidate in the Republican primary next year, providing the right with an alternative to Carly Fiorina, who's seen as too moderate. It's hard to imagine that DeVore will win, in part because of remarks like the one he made in this excerpt from Weigel's article:

Nonetheless, asked what he thought of Brown’s ideas, DeVore didn’t take the chance to denounce “birther” rumors or the movement itself–which has been heavily active in California.

“The president is doing himself no favors by spending millions of dollars to block the release of documents surrounding his birth certificate,” said DeVore. “As long as the president keeps fighting tooth and nail to prevent the release of such things, people are going to remain skeptical.” The door was left open, said DeVore, because Hillary Rodham Clinton’s campaign didn’t go after Obama’s qualifications when it had the chance, and because there were no statutory requirements for verifying a candidate’s citizenship.

Still, DeVore does have a shot at the Republican nomination (he'd have very little chance in a general election, however). The Congressional race in upstate New York this year, in which a third-party choice favored by conservatives pushed out the official Republican candidate, demonstrated just how much power activists on the right have in their party. And DeVore's getting endorsements from some prominent conservatives -- on Monday Sen. Jim DeMint, R-S.C., gave his backing to DeVore in a post published on the Corner, one of the National Review's blogs.

Update: DeVore's campaign is trying to walk this one back, and to claim that Weigel took the candidate out of context. Weigel has posted a fuller transcription, though, which indicates that DeVore wasn't taken out of context at all.

The assemblyman's campaign has put out this statement, disavowing any Birtherism:

I said ten years ago that the move to impeach and convict President Clinton was a distraction from countering his liberal policies. So too is the effort now to question President Obama’s legitimacy. Make no mistake, the Constitution is clear: Barack Obama is the President. The more time Carly Fiorina’s campaign spends on this side issue, the less time we have to work against the far-left agenda and failed policies of President Obama, Speaker Pelosi, and Senator Boxer.

A spokesman also told TPMDC, "Assemblyman DeVore believes that Barack Obama is the rightful, legitimate and constitutional President of the United States,"