On Monday, I suggested that new polls coming out of Iowa could signal serious trouble for the both the Democratic and Republican front-runners in 2008. The surprising early leads for John Edwards and Mitt Romney could produce an Iowa Effect, upending the conventional wisdom regarding the dynamics of election '08. Apparently, some in the Giuliani and Clinton camps agree.
On Tuesday, rumors began to swirl that Rudy Giuliani might bypass Iowa's straw poll and caucus. While Giuliani aide Mark Campbell claimed "we are putting in place a full and complete field organization and leadership organization to compete," Iowa Senator Chuck Grassley noted that the former New York mayor trails both in the polls and on the ground in the Hawkeye state. Of Giuliani, who lags Mitt Romney by 30% to 17% in Iowa, Grassley concluded, "The best organizations have to be McCain and Romney. I don't think Giuliani is very far along on organizing."
Just a day later came news that Hillary Clinton's team is similarly debating how to manage expectations leading up to and coming out of the January 14th Iowa caucus. Despite consistently leading the national polls, Clinton (21%) currently runs third in Iowa, behind John Edwards (29%) and Barack Obama (23%). A memo from deputy campaign manager Mike Henry urged the New York Senator to skip Iowa altogether and so deny Edwards or Obama the "exceeding expectations" momentum wave that comes from dethroning the national front-runner in the first in the nation caucus:

"I believe we need a new approach to winning the Democratic nomination. This approach involves shifting the focus away from Iowa and running a campaign that is more focused on other early primary states and winning this new national primary."

While the Clinton braintrust is denying that Henry's memo constitutes the planned strategy for the campaign, the discussion highlights the risk of early defeat in Iowa to entrenched national party leaders. As I wrote Monday, Clinton and Giuliani may face a very game of expectations management should they experience disaster in Des Moines:

"The Iowa Effect is the complete upending of the predicted presidential primary landscape by a candidate's unexpected performance in the nation's first caucus. Riding a wave of adoring press coverage by a media eager to hype the tale of the underdog, the perceived winner in Iowa sweeps through New Hampshire and subsequent primary states to take (or at least seriously challenge for) the party's nomination."

With Florida moving up its contest to January 29th and some of the February 5th "national primary" states such as California encouraging early absentee balloting, the impact of Iowa may be muted. We shall see.
For more background, see "The Iowa Effect."
UPDATE: The Washington Post has more from the Clinton campaign and its move to quickly squelch rumors of her withdrawal from the Iowa race. Meanwhile, ABC notes that the Obama camp is circulating its own memo highlighting his improving prospects in Iowa and across the country.