February 17, 2023

Thought of the Week

“Why can’t you let a politician on a plane? Because he’ll keep trying to destroy the other wing.”

“When my wife was in labor with our first child, she suddenly starting shouting: ‘Shouldn’t! Wouldn’t! Couldn’t! Didn’t! Can’t!’ Don’t worry, said the doctor. Those are just contractions.”

“When does a joke become a ‘dad joke’? When it becomes apparent.”

Yeah, dad jokes are how eye-roll [sic]. And we can only hope that the meetings of the newly established Congressional Dad Caucus are full of these same cheesy, corny puns that have come to be known as “dad jokes.” While most are familiar with the general structure of Congress—100 Senators, two from every state; and 435 Representatives, with the number from each state determined by population—and are aware that its legislative work, oversight functions, and administrative tasks are divided among various committees and subcommittees within specifically designated areas of interest, fewer understand the role of caucuses. Officially known as congressional member organizations, congressional caucuses are voluntary associations consisting of Representatives and Senators who share specific policy goals or interests. These groups run the gamut of serious and powerful organizations, such as the Congressional Black Caucus and the Republican Study Group, to ones with a quirky or narrow focus, such as the Congressional Baseball Caucus, Congressional Candy Caucus, or Congressional Bourbon Caucus. Congressional caucuses date back to the early 1800s and have exploded in number in recent years. While there were only 100 member organizations in 1993, there were more than 400 caucuses in the previous, 117^th Congress. Congressional caucuses fall into one of three categories depending on their constituency and/or interests. Ideological Caucuses are based around a philosophical point of view within a particular party—the Blue Dog Coalition in the Democratic Party or the Freedom Caucus on the Republican side. National Constituency Caucuses advocate for the interests of specific groups of constituents, such as women, racial or ethnic groups, and veterans. Interest Group Caucuses are the most common and consist of members with a shared policy or interest.  On paper, caucuses have no real authority, and they lack the ability to markup bills or hire staff. However, they provide an avenue for like-minded Representatives and Senators with mutual interests and goals to get to know one another. Through the development of these relationships, caucuses often serve as a means to advance specific ideas that eventually become policy positions or legislation. Beyond linking SCOA offices, subsidiaries, and corporate priorities to legislators from specific states, districts, or committees of jurisdiction, the Washington office can help identify members from caucuses that match SCOA concerns. For instance, in arranging tours of Capitol Hill for Tomodachi scholars, the Washington office reached out to Congressman Raskin (D-MD), a member of the U.S.-Japan Caucus.

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

Eurasia Group Sees House Republicans Taking the Path Back to Earmarks. After banning them a decade ago in the Tea Party wave, House Republicans are now trying to find a way to live with Congressionally directed spending in appropriations bills, better known as earmarks. Earmarks were called a “gateway drug” to corruption by former Arizona Senator McCain (R), but they remain popular as a way to grease the legislative skids and deliver benefits for constituents at home. The fact that Republicans are even willing to consider limited earmarking in appropriations bills shows how the party has changed since the Tea Party movement and demonstrates a recognition that some of the excesses of that antigovernment era may have gone too far in the direction of reform. 

Trade Analyst Laura Chasen’s Take on Infrastructure, On-Shoring Manufacturing, and Buy American in the SOTU. Last week, President Biden delivered his second State of the Union speech with Arkansas Governor Sarah Huckabee Sanders (R) giving the Republican response. The president’s speech was devoted almost entirely to domestic matters, stressing his legislative successes—the Bipartisan Infrastructure Act, the CHIPS & Science Act, and the Inflation Reduction Act—and presenting a laundry list of programs he would like Congress to fund. Although the president did not mention trade specifically, his speech was sprinkled with the usual themes: pledges to bring factories and manufacturing jobs back to the U.S., an effort to stop “importing products” and “exporting jobs,” and initiatives to require more American content in the U.S. supply chain. The populist promises, ones that are, in fact, not much different from the ideas President Trump promoted, and an emphasis on them was fully expected as the White House  prepares to launch a reelection bid that will require attracting independents and pulling some of the Trumpist voter base away from the Republican Party. More than a cynical political tactic for President Biden his SOTU themes reflect his core belief that the U.S. economy is, or should be, based on manufacturing and that the modern economy and its push toward trade expansion has disadvantaged working-class Americans, those he often refers to as having been “left behind.” The parts of his speech where he vows to reverse off-shoring and vows to expand the government’s “Buy American” requirements should be understood to be President Biden speaking from the heart, not just political calculation.

Politico Reports that the Debt Limit will be Hit by September. The Congressional Budget Office (CBO) predicts that the federal government will run out of cash somewhere between July and September, putting the apex of the debt limit standoff right in the middle of lawmakers’ August recess. CBO’s prediction puts additional pressure on President Biden and congressional leaders to reach a compromise that prevents the U.S. from defaulting on its loans this summer. The CBO cautioned that the actual X-date, when Treasury can no longer pay interest on its $31 trillion-plus debt, will depend on the flow of money in and out of the government over the next few months; once tax payments begin to be received in earnest in April, forecasters will be able to narrow the debt-limit time frame. To date, President Biden and Speaker McCarthy have made little progress on negotiations, despite meeting personally to discuss the nation’s borrowing limit. The GOP leader is demanding spending cuts in exchange for lifting the borrowing limit, while the president has refused to use the debt ceiling as a bargaining chip. The closer the nation gets to the point of default, the more skittish Wall Street investors will become, potentially stunting stock market gains. There is also a risk that the U.S. credit rating could be downgraded if cross-party talks drag on too long, as happened in 2011. While Treasury Secretary Yellen previously said the government could keep meeting its financial obligations through at least early June, a conservative estimate aimed at prodding congressional leaders into action, complicating matters is that Republicans aren’t in agreement on where they want cuts. Some are pushing for limits on discretionary spending similar to the restraints imposed more than a decade ago, but the party remains divided on other questions, such as whether to slash the Pentagon’s budget. Across the aisle, Democrats are pushing the GOP to outline proposed spending cuts in detail, and argue that House Republicans don’t have enough support from within their own caucus to coalesce around a plan, let alone get the Democratic-led Senate and White House to sign off on any spending concessions. According to comments from Senate Minority Leader McConnell’s office, the real players in this debate are the President and the Speaker, but it is still too early for either to show their cards.

“Off-the-Record”

Ian Bremmer, Founder and President, Eurasia Group floated the rumor that Vice President Harris may not be on the next Democratic presidential ticket. According to Bremmer, President Biden’s White House is exceptionally consolidated and loyal. His administration has seen very low turnover, and they almost never leak to connected media sources unless the president wants them to. Recently, however, very well-sourced pieces on the Vice President’s poor performance seem to have too many insider quotes for President Biden not to at least given tacit approval. Although it’s nearly impossible to imagine a Democrat candidate tossing the first black Asian woman vice president, it is plausible she would decides to drop on her own.

In Other Words

“I haven’t ruled out anything,” U.S. Air Force General VanHerck when asked if he had ruled out an extraterrestrial origin for the three objects shot down over the weekend.

“So if they’re green and if they’ve got big eyes—I would say yes,” Sen. Kelly (D-AZ), a former astronaut, on how to identify aliens.  

Did You Know

There are 14 former governors in the Senate in the 118th Congress—the most in a generation.

More astronauts have served in Congress, four, than Super Bowl winners, one—just Rep. Burgess Owens (R-UT).

Graph of the Week

Although the Consumer Price Index (CPI) slowed to 6.4% year-over-year in January, vs. 6.5% in December, in month-over-month terms the inflation metric increased by 0.5%, the largest month-over-month increase since October. The index for shelter accounted for nearly half of the monthly increase, and indexes for food and energy were also significant drivers. Despite the elevated inflation, prices are expected to cool slowly over the course of 2023 and 2024. The most recent data does not suggest that the Fed will deviate from its stated goal of hiking interest rates at least two more times; forecasts are for two more 25 basis points hikes over the next two meetings, with the Fed unlikely to consider rate cuts until 2024.