U.S. Chamber Post 2012 Election Update

U.S. CHAMBER OF COMMERCE 100 Years Standing Up for American Enterprise

ICCE Fall Conference

November 15, 2012

U.S. CHAMBER OF COMMERCE 100 Years Standing Up for American Enterprise

The 2012 ElectionsPolitical Landscape Before Vote

Direction of Country: 40% right track55% wrong track

President’s Job : 49% approval 47% disapproval

Congressional Job Approval: 17% approval 75% disapproval

Generic Congressional Vote: 45% Dem45% GOP

U.S. CHAMBER OF COMMERCE 100 Years Standing Up for American Enterprise

The 2012 Elections

U.S. CHAMBER OF COMMERCE 100 Years Standing Up for American Enterprise

The 2012 Elections

U.S. CHAMBER OF COMMERCE 100 Years Standing Up for American Enterprise

The 2012 Elections

U.S. CHAMBER OF COMMERCE 100 Years Standing Up for American Enterprise

The 2012 Elections

Battleground Exit Polls

• Support from key constituencies• President more likable than Romney• Voters were more optimistic about

economy• Super-storm Sandy

U.S. CHAMBER OF COMMERCE 100 Years Standing Up for American Enterprise

The 2012 Elections

President Obama’s Win

Demographics + Ground Game

Women 55 % of the vote

Hispanics 71 % of the vote

African-Americans 93 % of the vote

Asian 73 % of the vote

Youth (18-29) 60 % of the vote

U.S. CHAMBER OF COMMERCE 100 Years Standing Up for American Enterprise

The 2012 Elections

Battleground Exit Polls

“Role of Government”

• 43% of voters want an “activist government”

• Compared to 52% in 2008

U.S. CHAMBER OF COMMERCE 100 Years Standing Up for American Enterprise

The 2012 ElectionsU.S. Senate

Currently: 51 D / 47 R / 2 Ind.(GOP needed 4 for control)

2012 Senate Elections: 23 D / 10 R

– 7 Dem Open / 2 GOP Open– 9 of the 23 seats held by Democrats voted for Bush or

McCain in the past two Presidential elections– 5 Dem held seats are “toss up” = MT, ND, VA, WI & CT– 1 Dem held seats “lean or likely” GOP = NE– 5 GOP held seats are “toss up” = AZ, NV, MA, ME & IN

U.S. CHAMBER OF COMMERCE 100 Years Standing Up for American Enterprise

The 2012 Elections

U.S. Senate Results

113th Congress: 52 D / 45 R / 3 Ind.

Democrats Picked Up: Indiana – Rep. Donnelly defeated MourdockMaine – King defeated Summers and DillMassachusetts – Warren defeated Sen. Brown

Republicans Picked Up: Nebraska – State Sen. Fischer defeated former

Senator Kerrey

U.S. CHAMBER OF COMMERCE 100 Years Standing Up for American Enterprise

The 2012 Elections

U.S. House Results

Currently 242 R / 193 D (Ds + 25 for control)

113th Congress 234 R / 193 D (8 not decided)

24 members are ran against each other, thanks to redistricting

U.S. CHAMBER OF COMMERCE 100 Years Standing Up for American Enterprise

The Fiscal Cliff

U.S. CHAMBER OF COMMERCE 100 Years Standing Up for American Enterprise

Q3 Small Business Outlook Survey

U.S. CHAMBER OF COMMERCE 100 Years Standing Up for American Enterprise

Federal Spending, Deficits and Debt

Federal Deficit

• 2011 deficit was $1.3 trillion.

• 2012 deficit projected at $1.1 trillion

• The fourth consecutive annual deficit exceeding $1 trillion.

U.S. CHAMBER OF COMMERCE 100 Years Standing Up for American Enterprise

Federal Spending, Deficits and Debt

Federal Debt

• Gross debt at $16 trillion dollars ($11 trillion was held by the public and $5 trillion was intergovernmental holdings).

• Could lead to higher interest rates, a weak dollar, more inflation, less private investment, lower economic and job growth and decline in our global competitiveness.

U.S. CHAMBER OF COMMERCE 100 Years Standing Up for American Enterprise

Federal Debt

U.S. CHAMBER OF COMMERCE 100 Years Standing Up for American Enterprise

Federal Debt

U.S. CHAMBER OF COMMERCE 100 Years Standing Up for American Enterprise

Spending Composition

More Than Half Of Spending On “Auto-Pilot” Biggest Driver Is Aging Baby-Boomer Generation

U.S. CHAMBER OF COMMERCE 100 Years Standing Up for American Enterprise

Spending Projections

U.S. CHAMBER OF COMMERCE 100 Years Standing Up for American Enterprise

The Fiscal Cliff

Budget Control Act of 2011 – Set the stage

• Debt limit increase - $900 billion increase in debt limit and $917 billion in discretionary budget cuts.

• Super Committee - 12 member Committee failed to adopt $1.2 trillion in deficit reduction (through budget cuts and/or taxes).

• The Act mandates $1.2 trillion in Spending Cuts over ten years beginning in 2013.

U.S. CHAMBER OF COMMERCE 100 Years Standing Up for American Enterprise

The Fiscal Cliff

This includes the Bush tax cuts, traditional tax extenders (i.e. dividends, marginal rates, R&D, expensing) and other stimulus measures (i.e. payroll tax cut and Unemployment Insurance benefits).

Sequestration would cut funding by approximately $55 billion for defense and $55 billion for non-defense spending – a total of $1.2 trillion over 10 years.

Another increase in the debt ceiling will be required early in 2013, perhaps sooner depending on the cash-burn rate.

THE KEY ELEMENTS WHAT’S INVOLVED

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Economic Impact

Going over the “cliff”

– Moody’s has issued a warning that it would downgrade America's credit rating if Congress fails to reach a deal.

– CBO: going over the cliff would spark a recession by slowing the economy by 0.5% and remain below potential until 2018.

– CBO: unemployment would rise from 7.9 to 9.1 percent by the end of 2013

U.S. CHAMBER OF COMMERCE 100 Years Standing Up for American Enterprise

The Budget

• U.S. Chamber believes that enhancing economic and job growth is a prerequisite to achieve a balanced budget, but growth alone will not be enough.

• Congress must reform entitlement programs and restructure the tax code to bring revenue and spending back into alignment.

– Reform entitlements – Comprises over 55% of federal spending.

– Reform the U.S. tax code – To improve efficiency and drive economic growth and bring revenue and spending back into alignment.

U.S. CHAMBER OF COMMERCE 100 Years Standing Up for American Enterprise

Tax Reform – Why do we need it?

• The United States has the world’s highest corporate tax rate.

• The United States is the only country that has a worldwide system of tax.

• Taxpayers spend 6.1 billion hours a year complying.

• AMT was enacted in response to reports that 155 taxpayers legally avoided paying tax. In 2012, 31 million will be subject to AMT.

U.S. CHAMBER OF COMMERCE 100 Years Standing Up for American Enterprise

Comprehensive Tax Reform

• Lower the corporate tax rate

• Adopt a Territorial Tax System

• Simply Tax Code

• Make reforms permanent

U.S. CHAMBER OF COMMERCE 100 Years Standing Up for American Enterprise

Lame Duck

Set for November 13

• Fiscal Cliff

• Taxes (Extension)

• Spending Cuts (Sequestration)

• Russian PNTR

• Filibuster Rules

U.S. CHAMBER OF COMMERCE 100 Years Standing Up for American Enterprise

Lame Duck

Major Tax Provisions

• Expiration of the Bush tax cuts (December 31, 2012)

• Expiration of the payroll tax cut (December 31, 2012)

• Expiration of unemployment benefits (December 31, 2012)

• Sequestration (January 2, 2013)

• AMT patch (December 31, 2012)

• Expiration of the tax extenders (R&D tax credit)

U.S. CHAMBER OF COMMERCE 100 Years Standing Up for American Enterprise

Lame Duck

Three Options:

• NO DEAL

• Kick The Can

• Bridge Solution / Grand Bargain

U.S. CHAMBER OF COMMERCE 100 Years Standing Up for American Enterprise

Debt Ceiling

Here's a number to watch: $224 billion

That is the difference between the U.S. federal debt outstanding, as of Nov. 5, and the debt ceiling of $16.394 trillion.

The gap will shrink in coming weeks.

U.S. CHAMBER OF COMMERCE 100 Years Standing Up for American Enterprise

Elections

Clearly…

U.S. CHAMBER OF COMMERCE 100 Years Standing Up for American Enterprise

Elections

Clearly…

Elections Matter

U.S. CHAMBER OF COMMERCE 100 Years Standing Up for American Enterprise

The 2014 ElectionsU.S. Senate

113th Congress: 52 D / 45 R / 3 Ind.

2014 Elections: 20 D / 13 R

– 12 D come from either Red States or Swing

States: LA, AR, AK, SD, ND, MT– 1 R comes from a NON Red State = ME (Collins)

U.S. CHAMBER OF COMMERCE 100 Years Standing Up for American Enterprise

Q3 Small Business Outlook Survey

Perhaps THE Most Important Finding!97 % of Small Businesses surveyed cite a candidate’s support for the free enterprise system as important to how they will vote this year.

U.S. CHAMBER OF COMMERCE 100 Years Standing Up for American Enterprise

America’s Small Business Summit!

Save the Date:April 29 – May 1, 2013 | Washington, D.C.

For more information, visit www.uschambersummit.com.

U.S. CHAMBER OF COMMERCE 100 Years Standing Up for American Enterprise

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U.S. Chamber of CommerceMidwest Regional Office

Questions?

Doug LoonVice President, Regional Affairs

952.832.9151dloon@uschamber.com