What Does Indiana's Religious-Freedom Controversy Mean for Mike Pence's Political Prospects?

Pence hasn't been making tangible presidential preparations, but he has to run for reelection in 2016. Indiana Democrats think he's newly weakened, but they have their own issues.

Indiana Gov. Mike Pence has faced an intense backlash over his state's new Religious Freedom Restoration Act. But the political consequences for Pence, a Republican up for reelection in 2016, are decidedly unclear.

Despite buzz about a possible presidential campaign, Pence has not been making tangible preparations to launch a bid for the White House. But he will have to seek reelection in 2016. And while Indiana Democrats almost universally say that Pence's recent trouble has left him more vulnerable to a credible challenge next year, they aren't quite united on how to make it happen.

Three big questions face Democrats, who have been locked out of the Indiana governor's mansion for more than a decade now. One is whether moderate Republicans in the state's business community, who fiercely opposed the religious-freedom measure, would go so far as to financially support a Pence alternative in 2016 despite the governor's record on other business issues. Another is which candidate is best suited to challenge Pence in the conservative state and what role the religious-freedom law might play. And the third is simply whether Democrats can maintain a spotlight on Pence for another grueling 20 months between now and November 2016.

Before the Religious Freedom Restoration Act erupted into a national issue, Pence seemed nearly untouchable. He was a popular incumbent in a Republican state that has never unseated a full-term governor. Most Democrats saw the prospect of challenging Pence as intimidating.

(RELATED: How Indiana's "Religious Freedom" Law Turned Into a Nationwide Political Storm)

Now, one Indiana GOP operative said the blow-up over RFRA has even raised "some emotional grumblings, predominantly from 'business Republicans,' that there needs to be a primary challenge to the governor."

That operative, who requested anonymity in order to speak candidly about Pence, added, "I say emotional grumblings because I think everyone's just gotten caught up in the moment, and this will more than likely quiet down."

But Democrats are more bullish that this has caused Pence lasting damage. (Pence's campaign declined to comment for this story.)

"I for one actually think this will impact him a great deal," said Dan Parker, a top Democratic political operative in the state. "I don't think it's going to go away, because people have been harmed. Businesses have lost income over it; Indianapolis has lost conventions. There's real harm that's been done to the state's reputation, and it all falls in his lap. And he should have seen it coming, because it happened in Arizona."

Yet despite the national news and pressure from the local business community, Indiana isn't as progressive on gay-rights issues as the rest of the country. A national Pew Research Center poll from September 2014 showed the country was evenly split on whether wedding-related businesses should be required to provide services to gay and lesbian couples, and Indiana Democrats only added support for same-sex marriage into their official party platform last year. In 2012, the party's nominees for both Senate and governor opposed legalizing gay marriage.

(RELATED: Pence's 2012 Opponent: Rematch Interest "Heightened" by Indiana Religous-Freedom Controversy)

Indiana Democrats say in order to stick Pence with the controversy in 2016, they have to focus squarely on how it reflects on Pence's role as the state's top economic steward. "Mike Pence caused an economic panic in Indiana with this," said state Democratic Party chair John Zody. "This damages Mike Pence's credibility when he talks about the economy."

"We all have our personal beliefs, but [Pence] allowed his personal beliefs to get in the way of the betterment of the state," Parker said.

Pence's most likely challenger is the man he beat in 2012, folksy former State House Speaker John Gregg. Gregg has been considering a rematch for months, but not all Democrats are enthusiastic about supporting him a second time, partly because of conservative-leaning social views—another major reason why Pence's current troubles may not rebound against him at the ballot box next year.

Gregg opposed same-sex marriage when he ran three years ago and has not modified that position. (Gregg did recently advocate for a full repeal of the original RFRA.) Indianapolis City Councilman Zach Adamson, who was the city's first openly gay elected official, isn't convinced Gregg is the best candidate to meet the moment.

"[Gregg] and I have a very good relationship," Adamson said. "I like him as a person, but I thought even when he ran last time, he was running too far right of center, and he had too many opinions on LGBT issues that really didn't need to be said. Obviously, if he's the nominee, we'll support him, but I can't tell you how excited anyone will be.

(RELATED: Mike Pence Says Criticism of Indiana's Law Is a "Smear." But He'll "Clarify" it Anyway)

Others are skeptical Gregg can raise the money he'd need from the business community to fund a race against Pence. Gregg only narrowly lost to Pence in 2012, but Pence out-raised him more than two-to-one. The financial disparity prevented Gregg from putting up TV ads until late in the race, and when he did, Gregg refused to go negative and offer a sharp contrast with Pence. He instead offered up a series of whimsical, upbeat ads that were more memorable for his mustache than for hard-hitting content.

Gregg told National Journal last week that his interest in running has "heightened," but he's not the only one. Indianapolis businessman Jim Schellinger ran unsuccessfully in the 2008 Democratic gubernatorial primary and said he has also been fielding calls from people encouraging him consider the race. "I haven't thought about it a great deal," Schellinger said. "I may, but right now we're very distracted as a state with what's happened."

Some Democrats think former Indianapolis Mayor Bart Peterson is the strongest possible candidate they could field against Pence, but Peterson hasn't indicated any interest in making a return to politics. Peterson was considered a rising Democratic star until an upset reelection loss in 2007. He's now a vice president at Indianapolis-based pharmaceutical company Eli Lilly, and he recently reemerged on the political scene as one of the many business executives who pressured Pence and Republicans to amend the religious-freedom measure to be more LGBT friendly.

Hammond Mayor Thomas McDermott, another Democrat who is often mentioned as a potential statewide candidate, offered a different take on the situation. Indiana Democrats have seen their numbers dwindle over the past decade, and McDermott views any Democrats who left the political scene for the business world once the going got tough with skepticism: "Now all the sudden that we have a wounded governor, all the sudden everybody else, they want to be super Dems again and want to be back on the team like nothing ever happened, and I'm not going to forget. I know who's been with us, I know who hasn't been in it with us."

"We're going to have a great candidate, I promise you, but it's not going to be some Johnny-come-lately who wants to take advantage of the situation," McDermott said. "I'm not going to let that happen."

Despite his potential flaws, McDermott praised Gregg for sticking his neck out in the state legislature and signing on for a challenging race in 2012, when no one necessarily saw an obvious opening for a Democrat.

"John's gone through the mud with us," McDermott said. But that quality alone won't bring victory against Pence next year.