April 26, 2024

Thought of the Week:

The Big Year is an American comedy starring Jack Black, Owen Wilson, and Steve Martin. The film is based loosely on the real-world experiences of three birdwatchers, with the basic plot revolving around two bird enthusiasts (Black and Martin) trying to defeat the reigning world record holder (Wilson) in a year-long bird-spotting competition. Among others, the movie makes reference to rare birds like the Blue Grosbeak; Great Spotted Woodpecker; Pink-Footed Goose; Xantus Hummingbird; Flammulated, Great Gray, and Snowy Owls; American Goldfinch; and Indigo Bunting. 2024 is shaping up to be a “big year” of its own, not in terms of birdwatching, but in terms of campaigns and politics. In fact, this year may be the rarest of birds—some might say even rarer than the Antioquia Brush Finch with an estimated population of less than 20—a presidential election that turns on foreign policy. Before the primaries have even ended, the National Journal reports that a range of international crises have already demanded presidential attention, received extensive news coverage, and destabilized the campaign. In fact, Presidents Biden and Trump face the very real possibility that a campaign they thought would be waged on inflation, the economy, democracy, and age/competence might actually be altered by events overseas. While foreign policy has taken a back seat in nearly all the presidential elections held since the Cold War, leaving no clear map for Biden or Trump to follow, ongoing wars in Ukraine and Gaza, fresh turmoil in the Middle East, problems on the U.S.’s southern border, and relations with China have all injected greater uncertainty into a campaign that has already tested the ability of the two major parties to respond to unexpected developments. During the Cold War, 60% of voters said foreign policy issues were the most important problems facing the country, but this changed after the fall of the Berlin Wall, and by the late 1990s, foreign policy as an electoral priority fell to the low single digits. Today, when immigration is included, foreign policy ranks as the overriding issue in the campaign, which presents a challenge to both campaigns. For Trump, the test will be how to maintain relevance when out of office; for Biden, the challenge is to be seen as competently managing the crises and keeping the U.S. at peace, without neglecting domestic issues. To date, Trump has yet to outline clear differences with Biden on Gaza, but he has expressed differences with the current president on Ukraine—a war that has faded in saliency for many voters despite the recent passage of a Congressional aid package. So far, both campaigns have reacted cautiously to developments, and neither campaign has strayed far from its talking points. Going forward though, foreign policy is likely to factor into this campaign in a fundamental manner. A general perception that the world is spiraling into chaos will increase voter demands for a strong commander in chief and may play into the personality contrasts between the two candidates to a degree that may matter more than the specifics of their individual policy platforms. In any event, foreign policy does not have to be the driving force to be pivotal. Just as the spotting of a single additional feathered friend could tip a birder into having a personal best “big year,” in an election this close, even the smallest advantage on a single issue could determine the electoral outcome.

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

 Eurasia Group Says Speaker Johnson (R-LA) Will Survive by Turning the House into the Senate. In light of Ukrainian aid passage, House Speaker Johnson (R-LA) is likely safe in his position for the remainder of the 118th Congress, for three reasons: (1) a number of far-right members who had expressed support for a motion to vacate have retreated from their initial enthusiasm for such a motion; (2) Democrats have expressed an openness to voting to prevent a motion to vacate the chair, saving Johnson’s job; and (3) the number of wedge issues that could divide House Republicans for the remainder of the year is limited. FY25 funding will be the next major issue the House takes up, but that is unlikely to lead to Johnson’s ouster so close to the election. For the remainder of the year, conservative opposition will force the House to act like the Senate, with a moderate coalition from both parties working together to pass necessary bills. Whether Johnson survives past the 2024 election will depend on its outcome. Speaker Johnson could be a candidate in either scenario but is by no means guaranteed to continue in his current role. If former president Trump wins the White House and Republicans win the House, Trump would in effect pick the speaker. If Trump loses and Republicans win the House, selecting a new speaker would be a messy, prolonged process that would see Republicans battle over the direction of their party. 

Observatory Group Sees Mild Response from Beijing over New U.S. TariffsSo Far. On balance, the state of U.S.-China relations is becoming increasingly fragile. Even as Beijing and Washington have tried to stabilize relations along certain dimensions, such as communications, ever since the Biden-Xi San Francisco Summit, fierce competition remains the primary theme and may eventually lead to new trade and geopolitical tensions as the November elections approach. Last week, President Biden announced plans to triple average tariffs on Chinese steel and aluminum from 7.5% to 22.5%. In addition, USTR Tai vowed to wrap up the statutory review of Section 301 tariffs. From the Chinese perspective, such steps seem to be part of a broad domestic policy agenda that the Biden administration is unfolding against China in an election year. In a largely symbolic measure, Beijing responded to the new tariffs by imposing 43.5% import duties on U.S. propanoic acid, of which the total value from the U.S. was only $7 million in 2023. Because Chinese officials seem to understand that the main driver behind the new tariffs is domestic politics, it can be expected that Beijing will only retaliate in-kind to the trade measures with no incentive at the moment to escalate the conflict. Secretary of State Blinken visits China this week to discuss sensitive geopolitical issues such as Ukraine, the Middle East, Taiwan, and the South China Sea. A more imminent threat to Beijing, when compared to the steel tariffs, is the U.S. threat to cut Chinese banks off from the global financial payments system for supporting Russia’s defense industry. That said, if the USTR’s review of Section 301 tariffs leads to substantial harm to China’s advanced manufacturing industries, especially EVs and other green sectors, Beijing is likely to take strong retaliatory actions, including export controls on critical mining products, particularly rare earths.

Observatory Group’s Outline of a Trump 2.0 Energy Policy. If elected to a second term, President Trump is expected to reverse many of the Biden administration’s energy priorities. Energy policy in a Trump 2.0 administration will be similar to Trump 1.0. Many of the changes can be done with unilateral executive action; however, some of the more controversial, like repealing parts of the Inflation Reduction Act (IRA), would require Congressional action. With a Republican Congress (House and Senate majorities) and Trump in the White House, the IRA’s tax credits for EVs and clean power projects are vulnerable. However, even with a Republican Congress, sections of the IRA are likely to survive. Even without a Republican Congress, there are areas where Trump will attempt to undermine Biden’s signature climate legislation. Trump will reverse many of Biden’s energy transition policies, attempting to go back to a pre-Biden energy policy. He will promote an “all-of-the-above” energy strategy that takes the federal government’s thumb off the scale in favor of “green” sources; Trump would focus on natural gas and nuclear energy as his preferred lower-emission alternatives. Trump’s “America First” energy policy will aim to maintain American dominance as the world’s leading energy producer, a distinction the U.S. achieved during the first Trump administration. One of Trump’s first acts would be to exit the Paris Climate Accord. To prepare for energy price spikes or interruptions in energy supplies, Trump would rely on Saudi Arabia. Additionally, Trump wants to replenish the Strategic Petroleum Reserve (SPR). However, this may require Congressional action and a “buy low” price. Geopolitics will be a factor under a Trump 2.0 energy policy, as Trump will seek to expand markets for the export of energy to Europe and Asia while tightening sanctions against geopolitical foes like Iran, Venezuela, and Russia.  

“Inside Baseball”

How Did the Ukraine Bill Get to “Yes?” Punchbowl News reported this week that the Senate passed a $95 billion aid package for Ukraine, Israel, and Taiwan, bringing an end to Congress’ months-long standoff over Ukraine. The legislation also requires TikTok to divest from its Chinese parent within a year or face a U.S. ban. In addition, the bill authorizes the seizure of Russian assets to be used for Ukraine’s reconstruction. The 79-18 vote sent the package to President Biden’s desk. In the end, thirty-one Republicans voted for the bill, compared to just 22 who supported a similar version in February. Senate Republican Conference Chair Barrasso (R-WY) was the only member of the GOP leadership to oppose it, and three Republicans were absent—Sens. Paul (KY), Tuberville (AL), and Scott (SC). Although President Biden had pushed for the legislation’s approval, a number of GOP senators say former President Trump actually enabled passage of the bill—or at least gave political cover to those who flipped from “no” to “yes.” While Trump declared his opposition to new Ukrainian aid, the presumptive Republican presidential nominee didn’t try to kill the measure as he did with the bipartisan border security deal a few months ago. Instead, Trump issued a vague statement about European nations doing more to help Ukraine, and then defended Speaker Johnson (R-LA) amid calls from GOP hardliners to vacate the speaker. To many Senate Republicans, this was a green light from Trump to vote for the bill. Although Republican infighting over Ukraine dominated the headlines, another key to passage was that House and Senate Democrats remained united on the issue.  

In Other Words

“Drink more, tweet less,” former Rep. Gallagher’s (R-WI) farewell remarks to Congress.

“I serve with some real scumbags,” Rep. Gonzales (R-TX) on CNN.

Did You Know

 Sen. Collins (R-ME) cast her 9,000th consecutive vote last week, giving her the second longest voting streak in history. She has not missed a vote for the entirety of her time in the Senate since 1997. Late Sen. Proxmire (D-WI) cast 10,252 consecutive votes between 1966 and 1988, but he missed votes early in his career, which began in 1957.

Graph of the Week

Over 2024’s first quarter, the 10 largest lobbying entities, including the Chamber of Commerce and Meta, spent a combined $90 million to influence the federal government on issues such as tax, technology, and health care policy. As Congress debated legislation concerning online privacy and children’s safety, Meta posted its top-spending quarter ever at $7.6 million. Debates over federal funding, annual defense authorization, a farm bill, Federal Aviation Administration reauthorization, and congressional probes will drive advocacy efforts over the remainder of the year, even as campaigns begin to dominate the calendar and congressional agenda. In addition, the elections themselves, and the uncertainty over which party will control Congress and the executive branch next year have sparked lobbying business.

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