by Bo Harmon, Senior Vice President of Political Affairs

With primary season almost complete and political campaigns nearing the final sprint to Election Day, it is a good time to review which races are most competitive heading into Labor Day.  In the Senate, Republicans need to pick up six seats to win a majority and control both houses of Congress.  The last three years of a divided Congress (Republicans controlling the House, Democrats controlling the Senate) has led to gridlock in Washington.  The Congress can’t even muster the political fortitude or agreement to name Post Offices and bridges anymore, much less pass things like an annual budget or appropriations.  The result is the lowest approval ratings of Congress in history.  Dissatisfaction with Washington is at depths never measured since polling began tracking such things. 

Three seats currently held by Democrats are highly likely to switch to Republican control.  Montana, West Virginia and South Dakota are all Democratic held seats in very heavily Republican states with well-funded and well liked Republicans.  So, with three seats “in the bag” for Republicans, they need three more to win control of the Senate.  The most competitive seats where they will try to do that are:

TOSS-UPS

LOUISIANA
Incumbent Democrat Mary Landrieu is running against Republican Congressman Bill Cassidy and a handful of other candidates.  Louisiana voted for Romney by 18 points and holds an open primary on Election Day with all candidates on the ballot regardless of party.  If no candidate receives 50%, a runoff election is held in December between the top two finishers, again, regardless of party.  Polls show Cassidy and Landrieu neck and neck, but both under 50%, meaning the two will likely face off in a December 5 runoff.  Landrieu is one of the most pro-business Democrats in the Senate and as the chair of the Energy Committee has been supportive of the extensive oil and gas interests in Louisiana, giving her a boost.  In a run-off scenario however, Landrieu would face an uphill struggle to turn out base Democrat voters in a non-traditional election time.  There are fewer African Americans in the state as many were displaced after Hurricane Katrina and base Democrats who remain are disenchanted.  Landrieu’s family’s political legacy and her ability to bring independent and some Republican crossover votes make this an enormously competitive race.

NORTH CAROLINA
Democratic incumbent Senator Kay Hagan is facing Republican state house Speaker Thom Tillis in what has been the most expensive election to date.  Outside groups have already spent over $15 million on this race with pledges of much more to come.  This attests to the very close split in the campaign.  Hagan has been much more adversarial to the business community than Pryor in Arkansas or Landrieu, but North Carolina is a true swing state and Democrats are much better organized than in Louisiana or Arkansas.  The massive number of attack ads already aired has had the effect of diminishing both candidates severely and many North Carolina voters already view the election as a choice for the lesser of two evils as each candidate is highly unpopular and there is a much larger number of undecided voters than would be expected at this point in an election.  Polling has the race neck and neck with each candidate in the low 40s.

ARKANSAS
Democratic incumbent Senator Mark Pryor faces a tough re-election bid in 2014.  He is being challenged by freshman Rep. Tom Cotton.  While Pryor is relatively well liked in Arkansas, President Obama’s approval numbers in the state are dismal.  The state is trending red and went to 2012 GOP presidential candidate Mitt Romney by over 20 points but has a solid history of electing Democrats to the Senate and Governorship.  Both candidates are showing impressive fundraising numbers and polling on average, has Cotton up three points.  However, taking on an incumbent is hard especially for a newcomer like Cotton against Pryor whose family has generations of elected service in the state.  Pryor is typically considered a pro-business Democrat in the state though his support of Harry Reid has made it difficult for him to break from his party on many significant occasions.  Cotton has frustrated the business community on a handful of occasions as well as he has aligned himself with Ted Cruz and other tea-party oriented groups that are not always supportive of a pro-growth agenda.

ALASKA
The fourth Democrat incumbent running in a state carried by Mitt Romney is Mark Begich, who won the seat following the indictment and scandal surrounding longtime Senator Ted Stevens (R).  Begich is the former Mayor of Anchorage whose father was a leading political figure in the state until his death in a plane crash in the 70s.  Begich is the first Democrat to win federal office in Alaska in over 30 years.  He faces former Department of Natural Resources Commissioner Dan Sullivan who won the GOP primary against Lt. Governor Mead Treadwell and tea-party activist Joe Miller.  Begich has run a disciplined campaign to date and has highlighted his work in bipartisan collaboration with fellow Alaska Senator Republican Lisa Murkowski.  Murkowski has pushed back however, asking him not to mention her in his ads and if Begich pushes too far he could draw Murkowski further into the race, but in active opposition to him.  Polling has the race neck and neck and Sullivan has done an admirable job of positioning himself as a practical, business oriented Republican.

COLORADO
Democratic Sen. Mark Udall looked to be safe in his re-election bid, until Rep. Cory Gardner jumped in the race in February.  Once Gardner entered, polling soon showed the two candidates statistically tied.  Colorado went to President Obama (D) in 2012 by six points.  As is the trend nationally, Obama’s approval ratings have dropped significantly in Colorado, hurting Udall’s election chances for 2014.   Gardner got a boost when Bob Beauprez won the GOP nomination for Governor making that a competitive seat as well rather than the highly controversial Tom Tancredo which would have forced a large amount of ticket splitting for Gardner to win.  Udall was helped when the anti-fracking ballot initiatives were shelved recently.  The ballot issues caused a huge rift between the business community and environmentalists, both of whom Udall needs to be successful and having them off the ballot means he will not have the difficult balancing act he had before.  This race is generally seen as the barometer of whether Republicans will sweep a large number of seats or not.  If Colorado goes Republican, it is probably an indication of a larger Republican wave.  If it remains Democrat, it likely means the Democrats have held off the worst of the GOP attacks.

IOWA
Sen. Tom Harkin (D) is retiring, leaving an open seat for 2014.  The Democrats quickly rallied around Congressman Bruce Braley, while the Republicans had several candidates compete for the nomination.   State Sen. Joni Ernst overwhelmingly won the GOP primary, despite the crowded field and that created momentum that has carried her into one of the most competitive races in the country.   Ernst has proven to be an impressive candidate and is running one of the most disciplined campaigns in the field this year.  Even in the primary, she consolidated tea party supporters with more traditional business establishment support and that broad appeal has served her well.  Braley is a standard issue Democrat and even though Iowa has tilted Democratic at the Presidential level the last few years, Braley has made a number of unforced errors including disparaging comments about farmers and senior Senator Charles Grassley who is highly popular in the state.  Also helping Ernst’s prospects is the highly popular Governor Terry Branstand running for reelection who has made high turnout amongst Republicans a priority.  Branstand is close to Ernst and is putting the full force of his political organization to work to support her election.  Polling at this point shows a dead even race.  

LEAN REPUBLICAN

KENTUCKY
Republican Leader Mitch McConnell faces a competitive race from Secretary of State Alison Lundergan Grimes.  McConnell also had a primary challenger, but McConnell's superior fundraising and organizational capacity left him little to worry about.  The real competitive race is the general, and this is one of the Democrat’s two opportunities to pick up a seat in 2014.  Current polling has the race very close despite the outsized Republican performance in Kentucky at the Presidential level.  McConnell is known for his fundraising and campaign prowess, but Grimes is holding her own and even recently outraised the Senator. Grimes, 35, has a political pedigree in the state and has proven her ability to win statewide in the Republican heavy state as she currently serves as Secretary of State.  The position, as in most states, is administrative and she hasn’t had to take any difficult votes and is attempting to position herself outside of the Obama administration, which is highly unpopular in the state, especially in the coal producing areas.  McConnell, meanwhile, is the embodiment of “Republicans in Washington” as the Senate GOP leader, and has served as Senator for almost 30 years in a year when members of Congress generically are literally held in lower esteem than Darth Vader.

GEORGIA
Republican business executive David Perdue, former CEO of Reebok and Dollar General Stores, won a crowded and hard fought GOP primary and will take on Democrat Michelle Nunn in this open seat being vacated by Republican Sen. Saxby Chambliss.  While Georgia hasn’t voted for a Democrat for Governor or Senator in over a decade and the state went solidly for Romney in 2012, Democrats are hoping Nunn can draw on the goodwill towards her father, former Senator Sam Nunn who is still very highly regarded in the state, as well as the fact that she has no voting record to pick apart.  She will attempt to paint Perdue as a Romney-like corporate raider but in a Republican leaning state in a Republican leaning year, the odds are with Perdue.  Ironically, Perdue can demonstrate his independence from the corporate world thanks to a high profile spat with the US Chamber of Commerce during the primary.

LEAN DEMOCRAT

MICHIGAN
This open seat features Democrat Congressman Gary Peters against Republican former Secretary of State Terri Lynn Land.  The state went for Obama by 10 points in 2012 but has a Republican Governor, Republican Legislature and a majority of its Congressional seats are Republican.  When Land was elected Secretary of State, it was with the highest percentage of the vote of any Republican running statewide in recent history.  She also has the ability to partly self-fund the campaign and has already put in over $2 million of her own money.  Union groups in the state, especially autoworkers, are furious with Governor Rick Snyder for passing Right to Work legislation last year and have vowed an all-out voter mobilization and turnout effort that would benefit Peters should it materialize.  While every state tends to see non-Presidential year electorates that are slightly older and less minority than Presidential year turnouts, this is especially pronounced in Michigan for some reason, giving Republicans an almost even playing field in off-year elections as opposed to Presidential year turnout.  Peters has still been able to maintain some lead in the polls and the Democratic tilt of the state make it an uphill climb for Land though it is a race both parties are heavily invested in.

MINNESOTA
Republican business executive Mike McFadden is taking on Democrat incumbent Al Franken.  Franken has been a reliably Democratic vote, sometimes at the expense of home state interests but has proven himself to be a serious policy maker who gets the job done for his constituents.  McFadden is an attractive candidate with the ability to raise substantial financial resources.  Franken won in 2008 by less than 1000 votes but polls to date show him with a consistent lead but still with less than 50% of the vote and Obama with a surprisingly weak approval rating in the state.  

Another strong sign that private sector job creators are showing increased confidence in our recovering economy...

Learn more in today's Associated Press story, "U.S. employers post most jobs in 7 years in May; more Americans also quit in sign of confidence."

The June jobs report from the BLS is out.  Following a positive ADP report, we see an increase of 288,000 non-farm private sector jobs added to the economy.

The Wall Street Journal also reported that:

The revised reports from May and April, plus June's official U.S. Department of Labor stats continue to show promise that we are rebounding.  As I write this blog post, CNN also reported that the Dow surpassed the psychological 17,000 today. 

Although job gains are still mostly coming from the traditional low-paying sectors:  retail (+40k) and leisure and hospitality (+39k), economists and analysts continue to show increased confidence due to the skilled laborer increases - such as manufacturing (+16k) and construction (+6k).

To learn more, read WSJ's story from today by Jonathan House and Ben Leubsdorf.

It is understood the GOP will maintain control of the U.S. House of Representatives, which does not speak to "who" will control the House GOP. The exodus of so many senior Democrats is telling. Regarding governors, although the GOP will lose ground, the big gains Democrats hoped to achieve in state houses isn't going to materialize. All eyes are then focused on whether the GOP will regain the U.S. Senate.
 
Washington wisdom suggests outright control of the Senate is the GOP's to lose. The environment seems consistent with that. The public leans towards GOP control of Congress. The President's approval is under water by double digits in key states and some core issues are going south for their party. Historically, the party of the White House doesn't do well in the off year election during a President's second term and given their base historically doesn't show up well in off year elections anyway, therefore Democrats face a potentially toxic political environment in November.
 
The math and the cadre of quality GOP candidates also seems to suggest a GOP advantage. The GOP needs six seats to regain the majority outright. Three of those seem certain, assuming the GOP candidates in Montana, South Dakota and West Virginia keep their eye on the ball. That leaves a target rich environment of another eleven or so potentially competitive Senate races from which the GOP needs to win three, assuming they hold Georgia and Kentucky. In six of those eleven states, Alaska, Arkansas, Colorado, Iowa, Louisiana and North Carolina, the GOP candidate leads in three and the other three are legitimate jump balls. Let's not slice this to fine at this point. They are all close. There are five other races in Oregon, Michigan, Minnesota, New Mexico and Virginia that lean Democratic but with numbers to iffy to provide much comfort. A little push from a legitimate wave and the close seats and anyone of these leaners could move in the GOP direction.

Still, the GOP has recently squandered similar opportunities. This time, however, it may be less about bad candidates than outdated campaigns. The recent upset of House Majority Leader Eric Cantor in Virginia teaches us three obvious lessons; keeping your eye on the ball back home matters, money alone is no cure for taking your eye off the ball and the electorate everywhere is pretty angry at Washington arrogance. Maybe not so obvious, however, was the oft stated disdain for Leader Cantor's cozy relationship with "corporate influence."   While anti-big business, "crony capitalism" has been part of the Tea Party line for some time, it was full-throated the day after this unknown and underfunded candidate upset the Majority Leader even after being outspent 5 to 1.
 
As I was preparing my thoughts for this newsletter, Red State published an article entitled "Big Business is afraid of conservatives - and they should be." Although I don't buy the full narrative, it does speak to a growing belief among many that "corporate" America is as much a part of the problem as "big government" and hints that big, overt corporate support of candidates may not always be as helpful as it once was.
 
This carries a significant warning, less related to the rhetoric of the extreme right than it to the tactics used to defend against their insurgency. Congressman Ralph Hall (R-TX) had the support of the business "establishment" and lost in a run off.  Senator Thad Cochran (R-MS) had the support of the establishment too and came in a close second in his primary and is forced to a runoff. Conversely, Tea Party targets Congressman Mike Simpson (R-ID) and Senator Lindsey Graham (R-SC) made the ground game and personal voter contact mainstays of their campaigns and won handily. While it is obvious there was a significant difference in the capability of these candidates, it does suggest there is no substitute for real grassroots in this environment, even by, or especially by, business. Maybe we should keep our eye on the same ball.
 
Brad Dayspring, a former Cantor aide and NRSC Communications Director said last week, "one of the extremely valuable, must follow lessons is you have to adapt and run a modern campaign. Doing things the same old way in the current environment and with the current electorate isn't going to cut it anymore." Good advice for the GOP and for the business community.

Good news from the U.S. Department of Labor, via today's USA Today story, "Job Openings Soar to Highest Since 2007" by Doug Carroll:

To learn more about this report, please visit http://www.bls.gov/jlt/.

Exports supported 11.3 million U.S. jobs in 2013.  This is an increase of 1.6 million since 2009. Learn about the fight for jobs, supported by exports, from the CNH Industrial Digital Trade Toolbox and CNH Industrial’s Joseph Samora.

The CNH Industrial Digital Trade Toolbox includes a tool so you can make your voice heard in the fight for jobs that are supported by exports.  Visit www.cnhindustrialtrade.com and click on the “Write to your Congressperson” link to help support the re-authorization of the U.S. Export-Import Bank (Ex-Im) before its authorization expires on September 30.  In 2013, Ex-Im helped to finance $37 billion in U.S. export sales, supporting approximately 205,00-0 export-related American jobs.

The U.S. Department of Labor's Bureau of Labor Statistics (BLS) released the May Jobs report this morning, saying:

To learn more, read the Forbes ongoing story, "Jobs Report: U.S. Economy Added 217K Jobs In May, Unemployment Remains Unchanged At 6.3%" by Maggie McGrath.