About 6 years ago

06/20/2017 - Key lessons emerge from off-year elections

In political terms, 2017 is what’s known as an “off year.” Only a few states have elections but two are for governorships – Virginia and New Jersey – and we have had a couple of notable congressional special elections thrown into the mix. Historically, these off-year events have proven to be useful measuring sticks of voter attitudes heading into the broader mid-term elections in 2018. Fortunately, both Virginia and New Jersey are politically important states and diverse enough to give us some meaningful indication about the public’s mood.

New Jersey has a well-known Republican governor and a solidly Democratic legislature while Virginia has an equally notable Democratic governor, with an overwhelmingly Republican Legislature.  As such, they are good swing states to watch. This last week, Virginia held its Republican and Democratic primaries for governor. The “establishment” Republican, who enjoyed a comfortable lead in the polls throughout the campaign, barely won at the wire against a Trump acolyte campaigning mostly on the preservation of Confederate monuments. Obviously, there is still a strong anti-establishment thread running through the Republican party. On the Democratic side, a contest that was supposed to be extremely close turned out not to be very close at all. In layman’s terms, the “Hillary” candidate crushed the “Bernie” candidate.

While that was interesting, the important takeaway comes from the level of voter turnout. Tuesday’s primary election in Virginia attracted well over a half-million Democratic votes. That far surpasses the party’s last competitive primary in the state when 320,000 Democratic voters showed up, signaling a high level of energy on that side. Conversely, Republican turnout was somewhat low – signaling some dissatisfaction among their core primary voters. In the special elections for Congress held in Montana and Kansas, even though Republicans held reliably Republican seats, Democrats wildly over performed. Similarly, there is an important special election in Georgia next week in a seat Republicans have easily held for generations. Amazingly, the Democrat is polling slightly ahead in that race. But no matter the outcome, the Democrat will significantly over perform.

For retailers and operators, what does this all mean? While the results may mean different things in their respective states, their real impact maybe the chilling effect they have on the Capitol Hill agenda. What Republicans in Congress are currently watching is likely to be a new Democratic governor in New Jersey, likely a new Democratic governor in Virginia, and potentially a Democrat representing part of the Atlanta suburbs. What is particularly notable is that these Democrats are not running on issues important to those states and districts – they are squarely making their elections a referendum on Donald Trump. And they are succeeding.

As a result of all this, a lot of congressional Republicans may be less eager to follow Trump into ramming a very unpopular health care reform act through the process. Not to mention corporate tax reform or major changes at the DOL or to environmental policies. The aspirations of a business agenda important to retail operators is now running into the reality of a quickly shifting political dynamic that could ultimately sink it. While these political outcomes are only occurring in a few specific areas of the country, the results and the lessons learned are woven into a national narrative. It remains to be seen whether congressional Republicans will act like legislators and vigorously pursue the agenda or act like politicians and run for cover. I know where I’m putting my money.