January 5, 2024

Thought of the Week:

Happy New Year, and welcome to The Washington Connection’s first edition of 2024. What did you do for New Year’s Eve? Times Square in New York? Georgetown in D.C.? Broadway in Nashville? Those days are long gone for me. We stayed in, had a few friends over, made dinner, and opened up a bottle of wine…ok, maybe more than just a bottle. During the course of the night, one of my wife’s friends mentioned how, every year, she couldn’t wait until The Washington Post’s Out/In list came out on New Year’s Day, but since the paper went largely digital she hadn’t read it in years. If you’re not familiar with it, the list spans politics, sports, entertainment, and business, and it highlights the trendy topics that where “In” during 2023, and what might replace them in 2024. A couple from this year’s list: Out: the Roman Empire, In: the Mayan Empire; Out: Nikki for president, In: Kristi for vice president; and Out: the A’s leaving Oakland, In: the Wizards and Capitals leaving D.C. To continue this theme, today’s edition includes a number of lists. The first being the worst political predictions of 2023 as compiled by Politico:

Civil war will break out in the U.S., and Elon Musk will be elected president: Dmitry Medvedev.
Donald Trump will not be indicted in Manhattan: Larry Kudlow.
There will be a recession in 2023: Almost every economist.
Joe Biden will face a serious primary challenger: Karl Rove.
Kevin McCarthy won’t be elected speaker; he’ll drop out: Donna Edwards.
McCarthy’s speakership will last a full two-year term: Kevin McCarthy.
Firing Tucker Carlson will be the end of Fox News: Glenn Beck.
DeSantis’ campaign launch on Twitter Spaces is ‘genius:’ Mick Mulvaney.
Housing and rental prices are going to come down: Joe Biden.
TikTok will be banned in the U.S. by June 2023: Scott Adams.
Prompted by DeSantis’ surge, Dems will dump Biden for Newsom: Tomi Lahren.
A Biden impeachment inquiry will launch by the end of September with Democratic support: Darrell Issa.
300 million Americans will rise up in protest if Trump is indicted: Kari Lake.
There will be no federal prosecution of Sam Bankman-Fried because he’s a Democratic donor: Elon Musk.
Trump made a huge mistake by skipping the first GOP debate: Pedro Gonzalez.

Thought Leadership from our Consultants, Think Tanks, and Trade Associations

American Enterprise Institute (AEI) on the 10 best, and 10 worst, things President Biden did in 2023:

Best

He killed a top Islamic State leader in Syria.
He further strengthened restrictions on China’s access to advanced technology.
He hosted the first trilateral summit with South Korea, Japan, and the United States.
He launched the “Replicator Initiative” to better compete with China.
He provided military aid to Taiwan under a program reserved for sovereign states.
He called Xi Jinping a dictator…twice.
He signed a GOP bill overturning Washington, D.C.,’s disastrous changes to its crime code.
He reached a debt ceiling deal with House Republicans that reduced spending.
He continued to stand with Ukraine.
He stood with Israel after the October 7 terrorist attack.

Worst

He made the child-care crisis worse.
He made the U.S. more dependent on Russian uranium.
He circumvented the Supreme Court on student loan forgiveness.
He failed to police antisemitism on the left.
He allowed a Chinese spy balloon to violate U.S. airspace.
He allowed Iran to attack U.S. forces with impunity.
He allowed the worst border crisis in U.S. history get even worse.
He blocked allies from giving Ukraine a clear path to NATO membership.
He continued to slow-roll weapons to Ukraine.
He announced he is running for reelection.

Eurasia Group Sees Former President Trump’s Supreme Court Appeal Setting Up a Monumental Case. As expected, former president Trump asked the Supreme Court to overturn a Colorado Supreme Court ruling barring him from the Republican primary ballot in the state; the move ensures that the state court’s ruling will not take effect while the Supreme Court considers the case, which it is nearly certain to do. It is not clear, however, when the Supreme Court will rule, although Colorado activists and the state GOP have requested a ruling by February 12. The court is highly unlikely to allow uncertainty over Trump’s ballot status to persist into the general election season, meaning a ruling will almost certainly come before summer. A separate case on the former president’s disqualification from the primary ballot in Maine, which was undertaken unilaterally by the state’s secretary of state, is working its way through the court system, but will likely be pre-empted by the court’s ruling in the Colorado case.

Mehlman Consulting’s Year-End Analysis of the Current Political Situation in the U.S. While Mehlman’s full report is available here, Politcs & Policy 2023, the following provides a summary of the key take-aways and look-aheads:

Key Take-Aways

Failures Undermined Confidence in Leaders.
Persistent Problems Worsened.
Perceived Disorder Drove Discontent.
Trust in Institutions Fell Further.
Legislative Productivity Cratered.
Trump Surged Ahead.
Economy: Soft Landing, Hard Feelings.
Hypocrisy Broke “Woke.”
Courts Had More Impact than Congress.
Don’t Trust the Optimists nor the Pessimists.

Key Look-Aheads

An Intense Sprint to Start the Year.
Biggest Election Year in Human History.
You Can’t Spell CampAIgn without AI.
Political Spending Will Crush Records.
Campaigns Will Play on Anger, Fear, and Mistrust.
Unpopularity Contest Invites 3rd Party Spoilers.
State Policy Patchwork Quilt Will Grow.
Labor Likely to Remain on the March.
Global Supply Chain Disruptions Will Persist.
Expect Plot Twists and Curve Balls.

“Off the Record”

According to Trade Analyst Laura Chasen the Nippon Steel, U.S. Steel bid has riled up American politics, and, perhaps, U.S.-Japan relations. Nippon Steel Corporation’s effort to acquire U.S. Steel has returned trade to the political spotlight and provoked heated responses. While protectionist-nationalist forces blasted the takeover, free-market promoters pointed to the ironies in the situation and tried to explain why the acquisition wouldn’t harm the U.S. whatever the outcome. The responses to the deal from some Democrats and most Republicans brought forth rhetoric and accusations reminiscent of the 1980s, reacting as though Japan is a hostile partner and as though the U.S. industrial base is so fragile that the military would lose vital capability from the sale of a small, troubled, and backward-looking steel company. Those calling for blocking the sale have two main avenues for doing so: (1) a Committee on Foreign Investment in the U.S. (CFIUS) review that rejects the purchase; or (2) to turn up the political heat so high that one or both parties back out of the deal. Neither is the likeliest outcome, but the situation could change if political opposition ramps up further and the issue becomes injected into electoral politics. Although President Biden has not weighed in on the situation, National Economic Council Director Brainard said she “believes the purchase of this iconic American-owned company by a foreign entity, even one from a close ally, appears to deserve serious scrutiny in terms of its potential impact on national security and supply chain reliability.” It is almost certain that the Nippon bid will receive a CFIUS review. Speculation from many analysts is that the review will not derail the takeover because it won’t find a national security risk. However, such a view ignores the politics of the situation. It is possible that Nippon will simply decide to withdraw its bid if the political heat becomes too intense. In fact, the chorus of voices from both parties denouncing the deal have, thus far, drowned out the larger contingent of those who don’t see a reason to object. A primary issue is that U.S. Steel is unionized, and with the USW objecting to the deal, the situation has risen to the forefront of 2024 electoral politics, particularly since the battleground states of Pennsylvania, Ohio, and several states in the Midwest are where organized labor has a big presence and electoral clout. Although the arguments for allowing the acquisition to proceed are strong—it is in the U.S.’s interest to attract foreign investment from friendly and stable countries in key parts of the industrial supply chain and blocking the deal could scare off foreign investors more broadly—the fight now is based on politics, not merits. Both former president Trump and former USTR Lighthizer have so far been silent, although President Trump’s Commerce Secretary Ross, surprisingly, called opponents of the deal “silly” and motivated by “xenophobia.”

In Other Words

“My hope is that everybody has a healthy, happy, and safe new year,” President Biden’s New Year’s Eve message on ABC.

“As the New Year fast approaches, I would like to wish an early New Year’s salutation to crooked Joe Biden and his group of radical left misfits and thugs on their never-ending attempt to destroy our nation through lawfare, invasion, and rigging elections,” Former President Trump’s message on Truth Social.

Did You Know

President Benjamin Harrison (1889-1893) was the first president to erect a Christmas tree in the White House, decorating it with candles in the second floor Oval Room.

Graph of the Week

Partial Government Shutdown Remains Base Case. Over the holidays, Congress failed to advance solutions to critical issues such as support for Ukraine, border security, aid for Israel, and general government funding. As a result, the January 19 partial government shutdown date is unlikely to be avoided. While the Biden administration did announce a final round of aid for Ukraine under expiring authority, Congressional opponents will have even greater leverage as a full government shutdown becomes an increasingly salient political issue for President Biden and Congressional Democrats. Both the House and Senate return next week, with the remaining issues unlikely to be resolved until closer to, or beyond, the February 2 deadline for a full government shutdown.