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Memo

To: Interested PartiesFrom: Jon Lerner

Date: August 23, 2013

Re: Why Nikki Haley is likely to win the 2014 election comfortably

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This will be the fourth consecutive election for Governor of South Carolina in which Iwill take part. The three previous ones were successful. As Governor Haley enters the2014 contest next week, she enters it with a better probability of success than any of theother previous winning candidates. Heres why:

When Nikki first ran for governor in 2010, she was largely unknown, havingpreviously represented only one state house district in Lexington County, and thatonly briefly. In addition to being unknown and underfunded, she had toovercome the barriers of being the first female and first minority governor in statehistory, as well as being the youngest governor in the nation. Further, the scandalsurrounding then-outgoing Governor Mark Sanford was still fresh in votersminds. None of those barriers exist this time.

Despite all of those obstacles, Nikki defeated Democrat Vince Sheheen by acomfortable 4.5% margin. The Democrat spin that the 2010 Haley-Sheheen race

was one of the closest races in the country that year is utter nonsense. It wasnot close. Among Governors races alone that year, there were nine elections inthe country that were closer:

Governor State

2010

Winning

Margin

Lincoln Chaffee RI 2.50%

John Kasich OH 2.00%

Peter Shumlin VT 1.80%

Paul LePage ME 1.70%John Kitzhaber OR 1.50%

Rick Scott FL 1.20%

Pat Quinn IL 0.90%

Dan Malloy CT 0.60%

Mark Dayton MN 0.40%

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In the 2012 presidential election, Barack Obama defeated Mitt Romney by 3.9%.Does anyone regard that election as having been particularly close?

In the coming 2014 election, Nikki no longer carries the same kinds of burdens ofhaving to break down gender, race, and age barriers, or being an unknown whohas to prove herself. Voters will judge her based on her first term performance inoffice, and thats a record she is eager to be judged on. Its a record that includesthe fastest growing economy on the east coast, the lowest unemployment rate infive years, record-setting economic development success, record numbers ofwelfare recipients moving from welfare to work, and a massive revival ofmanufacturing in the state. It includes a balanced budget every year, tax cuts for

small businesses, tort reform, pension reform, government restructuring, new lawsagainst illegal immigration and voting fraud, a path-breaking requirement that allvotes in the General Assembly be cast on-the-record, and major new investmentsin education and roads.

Unlike in 2010, Nikki will run next year with a unified Republican Party behindher. In 2006, Governor Sanford lacked that unity, losing 35% of the vote in theGOP primary. Despite that, he still defeated Democrat State Senator TommyMoore by 10%. Moore, incidentally, was then considered every bit as much of aDemocrat heavyweight candidate as Sheheen is today. Nonetheless, Moore lostby ten points to Sanford, and Sanford did not have the level of Republican unity

that Haley has.

Since 2010, Nikki has added to her electoral coalition while not subtractinganything. And she has added to it at Sheheens expense. For example, theorganized business community, led by the South Carolina Chamber of Commerce,supported Sheheen in 2010. This time, they are actively and aggressivelysupporting Nikki. There is no major bloc of voters that supported Haley in 2010that is not supporting her in 2014. By contrast, Sheheen has lost structuralsupport and has added nothing to his electoral coalition.

The national political environment will be favorable for Republicans in SouthCarolina in 2014. The Obama Administrations policies are highly unpopular inthe state. Obamacare implementation is causing health insurance premiums torise by more than 50% for many South Carolinians. The Obama NLRBs attackon South Carolina jobs at Boeing is deservedly unpopular. From immigration, togun control, to nuclear waste storage, to voter ID laws, the Obama Administrationhas targeted South Carolina and its values for attack. Nikki has been in theforefront of the battles against these terrible federal policies, often winning them.

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In 2014, South Carolina voters will want a governor who defends its values, notone who supports that very targeting of the state.

Vince Sheheen has even more liberal baggage today than he did in 2010.Sheheen is South Carolinas leading supporter of Obamacare and its expansion.Thanks to the new Haley on-the-record voting law, we now know exactly whereVince stands on many issues, including his votes to kill landmark ethics reformsproposed by Governor Haley. Sheheens record is chock full of support forhigher taxes, bigger government, and policies that benefit trial lawyers likehimself, and labor unions like those who funnel cash to his campaign. Thatssimply not what South Carolina wants in a governor.

At no time in 2010, did Nikki have a meaningful financial advantage overSheheen. They were roughly at financial parity throughout that campaign.Today, she has a $2 million cash-on-hand advantage over Sheheen, and that gap islikely to grow.

Every opponent and every campaign has to be taken seriously, and this one is nodifferent. The South Carolina Democratic Party is in such horrendous shape that theywill likely field no credible candidates for either U.S. Senate seat or any of the six U.S.House seats held by Republicans. The Governors race is their only game in town, so Iexpect them to throw everything they have at it. But their desperation to gain any

foothold in the state should not be confused with their probability of success. GovernorHaley is exceptionally well positioned for re-election, and given her record in office, shedeserves to be.