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2012 Federal Elections: 

2012 Federal Elections: . What You Need to Know With Eight Weeks to Go…. Election Day. Election Day - November 6 th , 2012 . Exactly eight weeks from today – election results have significant impact on energy policy Obama vs. Romney Republican Controlled House

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2012 Federal Elections: 

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  1. 2012 Federal Elections:  What You Need to Know With Eight Weeks to Go…

  2. Election Day Election Day - November 6th, 2012 • Exactly eight weeks from today – election results have significant impact on energy policy • Obama vs. Romney • Republican Controlled House • Democratically Controlled Senate • Lame Duck/Fiscal Cliff

  3. What Do the Polls Say? Obama-Romney Polling - It’s Close… Source: Real Clear Politics

  4. Electoral Math Has Many Variables… Source: Real Clear Politics

  5. Previous Elections 2008 Electoral Map 2004 Electoral Map Source: Real Clear Politics

  6. Expect High Turnover 2013 Will Bring Lots of New Freshman Faces House and Senate Outlook: Throw the Bums Out Number of Freshmen in Congress 2005 – 2013 Distribution of Congress by TenureNJ Research Forecast: Jan 2013 Served more than 6 years Served 2-6 years ? 34% 46% Projected Retirements Open Seats to Date Served 0-2 years 2005(109th) 2007(110th) 2009(111th) 2011(112th) 2013(113th) * 2013 figures are NJ Research forecast based on open seats to date (includes announced retirements), projected retirements, and projected incumbent losses (based on a re-election rate of 90%). Source: National Journal Research, 2012. 6 6

  7. 2012 Senate Race-Majority at Stake Source: New York Times

  8. Control of the Senate Either Party Could Win a Majority Congressional Fortunes – Future Source: Cook Political Report, 2012. 8

  9. U.S. Senate • Energy & Natural Resources Committee • Democratic Chair/Ranking Member- • Sen. Ron Wyden (OR) • Republican Chair/Ranking Member- • Sen. Lisa Murkowski (AK) • Environment & Public Works Committee • Democratic Chair/Ranking Member- • Sen. Barbara Boxer (CA) • Republican Chair/Ranking Member- • Sen. James Inhofe (OK)

  10. Democratically Controlled Senate – Business as Usual? • Sen. Ron Wyden (D-OR) • New Chairman • Emphasis on Natural Resources • History of Bipartisanship • Some hostility to fossil fuels • Skeptical of exporting US energy abroad

  11. Democratically Controlled Senate – Business as Usual? • Sen. Barbara Boxer (D-CA) • California Influence • Record of hostility towards fossil fuels • Good personal relationship with Inhofe • Sanctity of the CAA • Business as Usual

  12. Republican - Controlled Senate • Sen. Lisa Murkowski (R-AK) • Proponent of domestic oil and gas development • Understands the role of states in implementing a successful national energy policy • Centrist Republican who works well with both parties

  13. Republican - Controlled Senate • Sen. Jim Inhofe (R-OK) • Proponent of oil and gas development • Vocal critic of climate science • Anti-regulatory stance • Divisive nationally, but decent working relationship with Boxer

  14. Control of the House If Dems Won Every Toss Up They Would Still Come Up Short Congressional Fortunes –Future Democrats Republicans 158 13 12 25 22 19 218 SEATS NEEDED FOR A MAJORITY Source: Cook Political Report, 2012. 14

  15. Off to the Races – House House and Senate Outlook: The House Most Results Are Clear Solid Dem Likely Dem Lean Dem Currently Dem- Held Toss-Up Currently GOP- Held Toss-Up Lean GOP Likely GOP Solid GOP Source: Cook Political Report, 2012. 15

  16. Possible Electoral Scenarios

  17. The Five Likeliest Scenarios Scenario 4: GOP Sweep Scenario 5: Dem Sweep Scenario 3: GOP President 17

  18. Obama vs. Romney: Energy Source: National Journal, May 5, 2012 “Fuel for the Fire,” Coral Davenport; National Journal Hotline, Dec. 13, 2005, “Romney: Drilling in all the Right Places.”

  19. Obama vs. Romney: Energy

  20. Big Picture… • Rise of gas, fall of coal; • Cautious increases in domestic oil production; • Continuation of current environmental regulations; • Possible movement on climate change after 2014 • Rise of gas, slower fall of coal; • Possible dramatic increase in domestic oil production; • Some continuation of current environmental regulations; • Reduced government investment in energy R&D

  21. Big Picture… For both men, it depends on Congress and the Courts.

  22. 2013 - Big Tax Year • Overriding Issues • Bush Tax Cuts etc. • Industry specific • Possible Repeal of Expensing of Intangible Drilling Costs • Possible Repeal of LIFO • Dividend Tax Rate Expiration • Carbon Tax???

  23. Lame Duck- Six Weeks of Madness Nov 6, 2012 Election Day Nov 13, 2012 Lame Duck Session Begins Jan 1, 2013 Lame Duck Ends; Congress Resumes Lame Duck Session Jan 2, 2013 Dec 31, 2012 • Bush-era tax cuts expire • Emergency unemployment benefits end • Payroll Holiday Tax ends • Alternative Minimum Tax exemptions end • Sequester takes effect • $55B in mandatory defense cuts • $55B in mandatory non-defense cuts 23

  24. What’s in Play, if No Action Taken Flood of Funds Leaving the Market Dollar Value of Expiring Tax Provisions and Mandatory Spending Cuts for FY2013* (In Billions) Automatic Spending Cuts Expiring Tax Cuts Sequester Defense Cuts Sequester Non-Defense Cuts Expiration of Unemployment Benefits Payroll Tax Holiday Bush-Era Tax Cuts Tax Extenders More than half a trillion dollars at play (2/3 expiring tax cuts) $221 $95 $65 $55 $55 $26 *Does not include Sustainable Growth Formula “doc fix” ($11B) Source: Congressional Budget Office; Bipartisan Policy Center; Eurasia Group. 24

  25. Several Scenarios Leading to Fiscal Instability Two Dramatic Scenarios: Doing Nothing vs. Stalling Everything CBO Analysis, May 2012 Short-Term Long-Term Possible recession; growth in real GDP at .5%; deficit reduced by 5.1% Do Nothing (“Fiscal Cliff”) Healthier fiscal course Continue as-is; growth in real GDP at 4.4%; deficit continues on current course Fiscally untenable; deficit on insolvent trajectory Stall Everything Alternative Scenario: Tempered Approach Avoid short-term economic shock and long-term fiscal insolvency by enacting a combination of tax increases and spending cuts that would widen deficit in 2013 relative to current law, but would reduce deficits later in the decade relative to current law Source: Congressional Budget Office, May 22, 2012, Economic Effects of Reducing the Fiscal Restraint That is Scheduled to Occur in 2013. 25

  26. Brian Vanderbloeman bvanderbloeman@mwcllc.com 202-857-1700 Lee Lilley llilley@mwcllc.com 202-857-1700 Federal Public Affairs | State & Local Government Relations | Grassroots Mobilization | Strategic Communications Infrastructure and Economic Development | National/Multistate Strategies | Emerging European Markets Atlanta • Austin • Bucharest • Charlotte • Charlottesville • Chicago • Columbia • Raleigh Richmond •Springfield • Tysons Corner • Washington, D.C. www.mcguirewoodsconsulting.com

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