Donald Trump just got tagged with the moniker he hates the most: loser. The real estate billionaire got badly beaten in the Iowa caucuses by Texas Sen. Ted Cruz and finished only narrowly ahead of Florida Sen. Marco Rubio, who surged to a surprisingly strong third place finish.
The loss does not mean Trump is finished. He still holds big poll leads in New Hampshire and South Carolina. But things can change fast now that actual voting is underway. And Trump failed the first test of whether he could fully turn out his coalition of angry, blue collar, less-educated supporters. Will polls in other early voting states also wind up overestimating Trump's support? It's quite possible. And entrance polls showed late deciders went heavily for Cruz, suggesting Trump's decision to skip the final debate turned out to be a very bad one.
New Hampshire should be somewhat friendlier terrain for Trump. It has fewer evangelical voters and tends to ignore results in Iowa. But Trump's brand is built on always winning. Now that he has lost, his numbers could begin to sag. Trump was low key in defeat, congratulating Cruz and thanking Iowans before quickly exiting the stage. There was no screaming Howard Dean moment foretelling a rapid decline.
Still, Cruz is a relentless force, and his campaign clearly out-organized Trump in Iowa. But the biggest story coming out of the Hawkeye State is the rise of Rubio, who delivered what amounted to a victory speech before jetting off to New Hampshire. The Florida senator is now clearly the leader in the more mainstream, establishment-friendly lane of the GOP primary.
Rubio still needs to dispatch Chris Christie, John Kasich and Jeb Bush. A strong showing in New Hampshire would go a long way toward doing that. If Bush, Christie and Kasich all lag in the Granite State, the rationale for staying in much longer will quickly deteriorate. Bush has the money to stay in through Super Tuesday but will likely face pressure from the party to step aside in favor of Rubio if he doesn't crack double digits in New Hampshire.
If Rubio can winnow the field to himself, Cruz and Trump, he will likely benefit from the two conservative front-runners attempting to destroy each other. The Rubio path to victory depends on convincing voters he can unite the party and present the biggest challenge to Hillary Clinton in the general election.
On the Democratic side on Monday night, Clinton held onto the narrowest of leads over Vermont Sen. Bernie Sanders, a self-described democratic socialist. Clinton declared victory, and NBC said she was the projected winner, but The Associated Press called it a virtual tie. Should Clinton hang on to the lead, it would represent a big win for her given she faced the very real prospect of going 0 for 2 in Iowa and New Hampshire.
There remains little chance that Sanders will take the nomination from Clinton. Once the race moves beyond New Hampshire, where Sanders is expected to win big in his neighboring state, it will turn to Southern states that are much friendly territory for the former secretary of state. But Sanders is not really Clinton's biggest problem. That instead comes from the FBI, which continues to actively investigate her use of a private email server while at the State Department.
Democrats continue to worry privately that more revelations will emerge. And in the doomsday scenario, Clinton could face a crippling indictment over her handling of classified information. Such an event would require an emergency strategy in which Joe Biden (or some other savior) would make a late entry to try to secure the Democratic nomination.
The bottom line out of Iowa: Trump's dominance is over, Cruz is a force, Rubio has a clear shot at the GOP nomination and Clinton remains a deeply flawed front-runner whose path to the White House is fraught with potential landmines.
—Ben White is Politico's chief economic correspondent and a CNBC contributor. He also authors the daily tip sheet Politico Morning Money [politico.com/morningmoney]. Follow him on Twitter @morningmoneyben.