In the wake of a hard-fought election, the country’s three governing arms prepare to tackle key issues facing the country.
On November 6, conventional wisdom was that President Obama would easily win 18 states and the District of Columbia. By so doing, he would take 237 out of the 538 Electoral College votes available. Though it takes 270 electoral votes to win the presidency, the thought was that, being only 33 votes away from the magic number, he would be well on his way to re-election.
On the other hand, Governor Mitt Romney was seen as having a lock on 206 Electoral College votes by wining the election in 24 states. Thus, he would only need to come up with 64 more electoral votes. This was a much more difficult row to hoe than the president’s, but something that could be done—with luck.
Thus, to reach the 270 threshold, each candidate had to rely on the eight remaining toss-up states: Colorado, Florida, Iowa, Nevada, New Hampshire, Ohio, Virginia and Wisconsin. What made matters even more interesting was the fact that polling numbers in these states showed that neither candidate had a lead of more than 3.3 percent—well within the margin of error. Therefore, the race was going to be tight, and each state was going to be in play well into election night. At least, that was what the political pundits thought.
As we know, luck was not with Romney and, as it turned out, neither were any of these eight toss-up states. In the end, the president won all of those states to secure a second term with an Electoral College vote of 332 – 206.
So, how did Barack Obama become only the second two-term Democratic president since President Franklin D. Roosevelt, and how will his second term impact the private club industry?
How He Won
In every presidential campaign, there comes a time when each candidate knows the race is effectively over. That moment probably came for Mitt Romney at around 9:30 p.m. on election night. It was at that time when the television networks called the state of Wisconsin for the president. With the loss of Wisconsin, the governor had to essentially run the table on the remaining toss-up states, and his campaign had to know that would not happen.
Even though Wisconsin only has 10 electoral votes, 10 votes going to Obama placed him just 23 votes from victory. When that state was called for his opponent, the governor knew the race was done.
Amazingly enough, the president won the state by focusing on the economy, but in a very different way than the governor. He pushed a strong middle class/populist message of economic recovery through “tax fairness.” It was this basic message that was crucial to his victory in Wisconsin and in almost every one of the toss-up states.
In the end, the 2012 campaign did not hinge on how the president handled the economy (much to the chagrin of Romney), but instead it hinged on the perception of everyone paying their “fair share” to get the economy going again. The president’s team did a tremendous job of couching this economic message in a way that turned a real negative into a positive, and it was a major factor in why he won.
The Numbers
The president won the popular vote by a count of 62,600,000 – 59,100,000 (51% – 48%). In 2008, then-Sen. Barack Obama won the popular vote 69,500,000 – 59,900,000 (53% – 46%). Clearly, the economy had something to do with the president losing more than 10 percent of his 2008 vote.
His campaign message turned voters away from the fact that their own pocketbooks had not fared well during his first four years and focused more on how those who had done well could contribute to the common good. The message was that he would help the middle class by making everyone (read: the wealthy) pay their fair share while Romney would protect “millionaires and billionaires.”
To really see the impact of this message on the eventual election outcome, one need only look at two states and one county in each of those states.
As with past elections, Florida was the last to declare a winner but the president came out on top by a vote of 4,236,000 – 4,162,000 (a mere 74,000 votes). Even more interesting was the fact that the president only won 12 of the state’s 67 counties. Of those 12 counties, one helps to show just how successful he was with his populist message.
In Miami-Dade County, there was little doubt the president was going to win. In 2008, he won the county with a vote of 500,000 – 361,000 (+139,000); how- ever, throughout his first term, many of his core supporters in that county were significantly impacted by the country’s economic woes.
Naturally, the concern for the president’s campaign was that the economy could limit his vote total in the county and allow the state to slip away. In fact, that was what Romney’s team was relying on.
On November 6, Obama won Miami-Dade County by a vote of 540,000 – 333,000 (+207,000). Not only did he win, but he also picked up 40,000 more votes than he had in his last election.
A strong Latino and African-American turnout helped the president; but, those were the voters who were most hurt by the economy’s struggles. However, the president’s message resonated with those voters who might have felt compelled to vote against him (or not vote at all).
In Ohio, Obama proved his campaign’s predictions were right as he won the state by 2,697,000 – 2,594,000, a margin of only 103,000 votes. As in Florida, he only won a small number of counties: 16 out of 88, but his victory in Cuyahoga County sealed the deal for him.
Cuyahoga County is home to Cleveland and is a Democratic bastion. In 2008, Obama won the county by a vote of 458,000 – 200,000. That 258,000-vote margin helped him to secure the state and its 18 electoral votes four years ago.
In 2012, the president lost more than 7.5 percent of those who supported him four years earlier. Though he won the county, he did so by a vote of 421,000 – 185,000.
This drop off in support should not have been a surprise. Ohio was one of the hardest hit by the recession, and many in Cuyahoga County were severely impacted by the tepid economic recovery. However, the president’s campaign effectively overcame those voters’ concerns by focusing on building a stronger middle class through higher taxation on the wealthy.
This tactic of stressing the inequality of the Bush-era tax cuts and his steadfast opposition to any extension of those tax cuts for individuals making over $200,000 individually or families making over $250,000 echoed throughout the country—and it earned him great dividends in Florida, Ohio and the remaining toss-up states.
With this message, the president was able to consistently turn out a greater number of supporters than many pre-election polls indicated was possible. Above all else, he was able to ensure that he kept his voter attrition rate as low as possible. In the end, that was the key to his success.
What It Means For Private Clubs
TAXES
In his first press conference following the election, the president was asked if he saw any instance where he would back away from his pledge to have the wealthy pay their fair share. His response was telling—if the American people heard only one thing from his campaign, it was that the wealthy had to pay more. He went on to say that this message resonated so well with Americans that exit polls showed more people agreed with him on this point than actually voted for him.
The president’s first proposal to deal with the “fiscal cliff” included a $1.6 trillion increase in revenue over the next 10 years. Those who would pay this additional $160 billion per year are America’s top wage earners, i.e., those who traditionally join private clubs.
In Congress, the Senate Democratic majority is ready, willing and able to pass legislation to effectuate the president’s campaign pledge. In the House, even the Republican majority has indicated it might need to re-evaluate its tax stance in light of the election results. While the House Republican leadership is reluctant to support a tax rate increase on those who traditionally join private clubs, their rank and file members may find the political pressure too difficult to resist.
Simply put, President Obama’s re-election is likely to result in additional financial burdens for upper income Americans, and Congress may afford him the votes to do as he wishes. Since these added financial burdens would affect many private club members who may have fewer discretionary dollars to spend at the club, the private club industry should be prepared for a “new normal”—at least for the near future.
For some clubs, higher taxes on their members may not be an issue. Their members may still spend the same amount of money that they always have. However, there may be clubs that will see some of their members spending less. And, as we all know, private clubs cannot make up that lost revenue by simply opening their golf courses or advertising their banquet facilities to the general public.
Some clubs are still recovering from the Great Recession, and new financial burdens placed on their members could jeopardize the progress those clubs have made. With that in mind, clubs should take to heart the president’s campaign message and expect the worst while hoping for the best.
In addition to handling the immediate concern of the fiscal cliff and the tax burden that could have on private club members, the private club industry can also expect the newly re-elected president to focus on three other major issues in his next term: immigration reform, an overhaul of the current tax code, and full implementation of the health care law.
IMMIGRATION
Regarding immigration reform, private clubs have been struggling with securing legal workers to handle increased member demands for many years. NCA has consistently worked to ensure there is an available source for legal, foreign workers able to take on these duties should American workers be unwilling or unavailable.
In the past, this issue has been caught in the political headwinds of border security and resolving the problem of undocumented workers. With the president’s re-election and with the Republican Party’s inability to gain any traction with Latino voters, there is some thought that comprehensive immigration reform will find a path to passage.
In Congress, the House of Representatives has named a new Chairman of the Judiciary Committee, which has jurisdiction over immigration reform. Rep. Robert Goodlatte (R-Va.) has taken over for Rep. Lamar Smith (R-Texas) and may be more amenable to comprehensive reform. In the Senate, Sen. Patrick Leahy (D-Vt.) will continue to serve as Chairman of the Judiciary Committee. Over the years, he has worked well with our industry on this matter, and we expect that to continue in the 113th Congress.
NCA is a part of the Essential Workers Immigration Coalition, and we will be heavily engaged in any discussions regarding immigration reform. As Congress tackles this issue, so will we.
TAX CODE
There is no doubt that a broader discussion on reforming the tax code will be broached in 2013. Unfortunately, that discussion could have a detrimental impact on the private club industry.
As with the “fiscal cliff” negotiations, the president is likely to continue to demand that those who traditionally join private clubs pay more in income taxes. While leaders in the House of Representatives will surely object to such action, they may back away from their pledge not to raise taxes if the president allows fundamental changes to entitlement programs. Because Social Security and Medicare/ Medicaid are currently on the path to insolvency, Obama may consider some concessions on these programs.
At the end of the day, the president’s desire to raise more in tax revenue and his potential capitulation on the entitlement issue may be a benefit to the country as a whole; but, it could result in higher taxes for upper-income levels.
As of now, real tax code reform negotiations will not come until after Inauguration Day; however, each party is staking out its position. The fight will be intense, and the progress made on the fiscal cliff will be a strong indicator of what to expect on this issue, too.
HEALTH CARE
Finally, the president’s re-election has made the fight to repeal Obamacare moot. The law is here to stay, and it will fundamentally change the way business- es, including private clubs, deal with their employees for years to come.
As regulations that help frame the law are released, NCA is continuing to advocate refining these rules and making them more palatable for clubs. Unfortunately, the federal agencies writing these rules are more interested in getting them issued than anything else.
As the main resource for the private club industry on health care reform, NCA will continue to provide updates to our members so they know what to expect on January 1, 2014. But, the most important thing clubs can do right now is to begin preparing for the law’s full implementation. NCA will be launching a new mini-site in early 2013 dedicated to providing resources for clubs and keeping them informed of details on the health care law.
As always, NCA will be on Capitol Hill explaining to members of Congress how the president’s legislative priorities for 2013 could impact the jobs and lives of many throughout our industry.
Brad D. Steele is NCA’s vice president of government relations & general counsel.