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Public Policy

Election 2012 in review: The impact on retail

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After $6 billion in campaign spending and a barrage of political ads in an election that hinged largely on jobs and the economy and which will impact a wide variety of public policy issues important to the retail industry, Americans woke up this morning to a familiar government.

President Obama won a clear victory over former Massachusetts Governor Mitt Romney, with a 50-48 percent lead in the popular vote and a total of 303-206 electoral votes, but voters left Congress divided.

Some news organizations reported slightly conflicting numbers, but the New York Times said Republicans retained their majority in the House 233-193 with nine seats undecided as of Friday morning while Democrats remained in control of the Senate 54-45 with one independent.

While Obama’s electoral vote margin was decisive, it was built on slim majorities in just a handful of battleground states, and Obama is the first president reelected since Woodrow Wilson with a smaller margin in the Electoral College than his first-term election. Out of nearly 120 million votes cast, the final margin of victory hinged on fewer than 360,000 votes in Florida, Ohio, Iowa, and Virginia.

As a status-quo election, it is difficult to discern a clear message from the results. The narrow nature of Obama’s reelection margin suggests more of a validation of his campaign strategy than a vindication of his first term policies, and House and Senate leadership are likely to return to familiar scripts in the next session of Congress.

Down the ballot, Senate Democrats defended their majority thanks to strong recruits in open-seat races and a series of self-inflicted wounds among Republican Senate candidates. After most experts at the outset of the campaign cycle projected significant losses for Democrats in the Senate, they actually increased their majority by at least one seat. In the House, the Republican majority was really never contested after redistricting allowed the GOP to protect many incumbents and put vulnerable Democrats into tough districts. While results in many races are still being tallied, it appears that the House balance will change little.

This year’s election came as NRF conducted a “Retail Means Votes” initiative intended to encourage retailers to take an active role in the election campaigns and encourage candidates to address issues on the retail industry’s pro-growth, pro-jobs agenda.

“The top issue facing our nation the day after the election is the same as it was the day before the election – the economy,” NRF President and CEO Matthew Shay said this morning. “The U.S. needs public policy that encourages economic growth and removes barriers to job creation. As the industry that supports one out of every four U.S. jobs, retailers look forward to continuing to work with President Obama and the new Congress toward the goal of putting Americans back to work and ensuring that our economy remains the strongest in the world.”

In Montana, Democratic Senator Jon Tester, a leading opponent of swipe fee reform, defeated Republican challenger Denny Rehberg. In Massachusetts, Republican Senator Scott Brown lost to Democrat Elizabeth Warren. Brown supported swipe fee reform, comprehensive tax reform, and repeal of the Affordable Care Act but Warren has supported regulation of credit card companies. In Ohio, a new retailer was elected to Congress when Columbus Democrat Joyce Beatty won the Third Congressional District race.

The election outcome will affect retail issues in a number of ways:

Health Care Reform: Obama’s reelection will be seen by his party as validation for the Affordable Care Act, and implementation of the ACA will speed up. The controversial health care reform law is highly unlikely to be repealed. Bipartisan consensus may develop around key implementation issues such as eligibility and workforce composition in 2013 and 2014, perhaps even with Obama Administration encouragement.

Labor: Reelection will likely mean a more active labor agenda ahead. The outcome gives more opportunity for labor decisions and actions by the administration and the National Labor Relations Board. Some of the more controversial approaches taken by the NLRB on ambush elections, micro-unions and union access to the workplace are already under legal challenge as is the makeup of the actual board. A decision on the constitutionality of the board makeup is expected in 2013. The Department of Labor is expected to issue regulations restricting employers’ ability to seek labor-related advice from attorneys, consultants and other expects by the end of the year.

Tax: Tax issues are ultimately tied to what Congress does or doesn’t do during the lame duck session in order to avoid the “fiscal cliff” of tax hikes and federal spending cuts scheduled to take effect on January 1. Most of the $500 billion in tax increases are as a result of the expiration of the Bush tax cuts for individuals, and could have a substantial impact on consumer spending. Some economists have warned of a recession if nothing is done.

Obama has called for expiration of the Bush cuts for individuals with income over $250,000 a year. House Speaker John Boehner, R-Ohio, has re-iterated his pledge to not allow the upper income rates to expire because of their impact on small businesses that report their taxes using the individual tax system. However, members of both chambers of Congress have been working on frameworks for a bi-partisan deal to address both tax and spending issues.

Sales Tax Fairness: A new bipartisan sales tax fairness bill, granting states’ authority to require online sellers to collect sales tax on all sales if certain simplifications are adopted, is expected to be released by cosponsors reconciling differences between the current House and Senate versions. As lead cosponsor of the Senate bill, Majority Whip Richard Durbin, D-Ill., will continue his push to pass the legislation while fiscal cliff negotiations continue.

Privacy: The focus on privacy, data security and cybersecurity issues is expected to remain front and center in 2013. This includes the administration's efforts on the Consumer Privacy Bill of Rights, examination of mobile app privacy policies by the Commerce Department’s National Telecommunications and Information Administration, and the National Strategy for Trusted Identities in Cyberspace. Privacy and data breach notification legislation will likely be reintroduced without many changes in both the House and Senate given that chairmanships of the major committees of jurisdiction will stay the same, although reelection of House Energy and Commerce Subcommittee Chairwoman Mary Bono Mack, R-Calif., remained undecided.

Cybersecurity: Obama is expected to issue an executive order on cybersecurity in the coming days, and Senate Majority Leader Harry Reid, D-Nev., has indicated he plans to consider cybersecurity legislation on the Senate Floor during the lame duck. Without a change in the majorities and presidency, not much progress is expected on the legislation unless the bill considered in the Senate is drastically different and more narrowly focused on information sharing than in the past given the business community’s vehement opposition.

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