Memo To: Interested Parties From: Jon Lerner Date: August 23, 2013 Re: Why Nikki Haley

is likely to win the 2014 election comfortably ________________________________________________________________________ This will be the fourth consecutive election for Governor of South Carolina in which I will take part. The three previous ones were successful. As Governor Haley enters the 2014 contest next week, she enters it with a better probability of success than any of the other previous winning candidates. Heres why: When Nikki first ran for governor in 2010, she was largely unknown, having previously represented only one state house district in Lexington County, and that only briefly. In addition to being unknown and underfunded, she had to overcome the barriers of being the first female and first minority governor in state history, as well as being the youngest governor in the nation. Further, the scandal surrounding then-outgoing Governor Mark Sanford was still fresh in voters minds. None of those barriers exist this time. Despite all of those obstacles, Nikki defeated Democrat Vince Sheheen by a comfortable 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 was not close. Among Governors races alone that year, there were nine elections in the country that were closer: 2010 Winning Margin 2.50% 2.00% 1.80% 1.70% 1.50% 1.20% 0.90% 0.60% 0.40%

Governor Lincoln Chaffee John Kasich Peter Shumlin Paul LePage John Kitzhaber Rick Scott Pat Quinn Dan Malloy Mark Dayton

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Page Two 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 of having to break down gender, race, and age barriers, or being an unknown who has to prove herself. Voters will judge her based on her first term performance in office, and thats a record she is eager to be judged on. Its a record that includes the fastest growing economy on the east coast, the lowest unemployment rate in five years, record-setting economic development success, record numbers of welfare recipients moving from welfare to work, and a massive revival of manufacturing in the state. It includes a balanced budget every year, tax cuts for small businesses, tort reform, pension reform, government restructuring, new laws against illegal immigration and voting fraud, a path-breaking requirement that all votes in the General Assembly be cast on-the-record, and major new investments in education and roads. Unlike in 2010, Nikki will run next year with a unified Republican Party behind her. In 2006, Governor Sanford lacked that unity, losing 35% of the vote in the GOP primary. Despite that, he still defeated Democrat State Senator Tommy Moore by 10%. Moore, incidentally, was then considered every bit as much of a Democrat heavyweight candidate as Sheheen is today. Nonetheless, Moore lost by 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 subtracting anything. And she has added to it at Sheheens expense. For example, the organized business community, led by the South Carolina Chamber of Commerce, supported Sheheen in 2010. This time, they are actively and aggressively supporting Nikki. There is no major bloc of voters that supported Haley in 2010 that is not supporting her in 2014. By contrast, Sheheen has lost structural support and has added nothing to his electoral coalition. The national political environment will be favorable for Republicans in South Carolina in 2014. The Obama Administrations policies are highly unpopular in the state. Obamacare implementation is causing health insurance premiums to rise by more than 50% for many South Carolinians. The Obama NLRBs attack on South Carolina jobs at Boeing is deservedly unpopular. From immigration, to gun control, to nuclear waste storage, to voter ID laws, the Obama Administration has targeted South Carolina and its values for attack. Nikki has been in the forefront of the battles against these terrible federal policies, often winning them.

Page Three In 2014, South Carolina voters will want a governor who defends its values, not one 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 where Vince stands on many issues, including his votes to kill landmark ethics reforms proposed by Governor Haley. Sheheens record is chock full of support for higher taxes, bigger government, and policies that benefit trial lawyers like himself, and labor unions like those who funnel cash to his campaign. Thats simply not what South Carolina wants in a governor. At no time in 2010, did Nikki have a meaningful financial advantage over Sheheen. They were roughly at financial parity throughout that campaign. Today, she has a $2 million cash-on-hand advantage over Sheheen, and that gap is likely to grow.

Every opponent and every campaign has to be taken seriously, and this one is no different. The South Carolina Democratic Party is in such horrendous shape that they will 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 I expect 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. Governor Haley is exceptionally well positioned for re-election, and given her record in office, she deserves to be.