January 28, 2022

Thought of the Week:

My fourth grade teacher, Mr. Liu, used to say his favorite subject was Lunch and Recess. Unlike most of the staff, he ate lunch in the cafeteria with the students, not in the faculty lounge, and brought his basketball every day there was outdoor recess. Mr. Liu was famous for his ball fake. Off the dribble, he would secure the ball between his knees while making an exaggerated move with his hands toward the basket. There wasn’t an 8, 9, or 10 year old at Flower Valley Elementary who hadn’t been duped by the fake at least once. Congress goes on recess as well, and many outside of Washington don’t realize just how often members are out of town. While the Senate and House convened for the second session of the 117th Congress on January 3 and 10 respectively, the House calendar includes just 21 voting weeks before the November midterm elections. At no point are House votes expected to take place for more than three consecutive weeks; there is a two-week break for Easter and Passover; the Fourth of July creates an opportunity to schedule a committee work week followed by a recess week; and all of August and all of October are scheduled to be district work periods. The House will be in session for just 112 days this year. The Senate projects that it will meet for 171 days in 2022, but in actuality, they may not exceed the 158 days they met in 2021. A complete Congressional Calendar is linked here. Recess weeks in Washington are often quiet. Even with Fed Chairman Powell’s press conference and the announced retirement of Supreme Court Justice Breyer, this week seemed relatively quiet. Gone was last week’s pressure stemming from the BBB, a filibuster debate, and voting rights fight. Before the soon to come fight over government spending, which is due to expire February 18, this week seemed to provide a brief hiatus from the ugliness of partisanship. The quiet week allowed me to reflect on just how beautiful a city Washington, D.C., my hometown, really is. That beauty is reflected in today’s headline photograph taken by the Washington office’s own General Manager, Ryota Yoshimura.

Thought Leadership—from our Associations, Think Tanks, and Consultants:

Does Justice Breyer’s Retirement Offer the White House a Chance to Unify Democrats? The Eurasia Group Thinks So. Justice Stephen Breyer’s retirement from the Supreme Court today will leave a vacancy for the Biden administration to fill while Democrats still hold control of the Senate. The announcement sets up what should be an easy win for the Biden administration as long as they go with the obvious choice. The president campaigned on nominating a Black woman to the court, with Judge Ketanji Brown Jackson as the most likely choice. Judge Jackson was confirmed to the Court of Appeals for the DC Circuit in 2021 with bipartisan support, including the senior Republican on the Senate Judiciary Committee. Whoever President Biden chooses will not alter the partisan split of the 6-3 conservative majority, and the choice will be purely defensive in preventing a further slide to the right. While there are other clearly qualified and confirmable candidates, Judge Jackson would be by far the safest pick given her qualifications and recent bipartisan support. The opportunity to unify Democrats would also be a welcome change for the Biden administration, which is coming off a months-long stumble of failed fiscal negotiations, inflation, and surging COVID cases. Both Senators Manchin (D-WV) and Sinema (D-AZ) already voted for Jackson’s lower court appointment and voting for her again is unlikely to be heavy lift for either. A more controversial or progressive pick would require the president to spend political capital he does not have and would be a setback for his ability to finalize the Build Back Better Act. An easy pick would also be good news for Senate Majority Leader Schumer, who has seen his caucus devolve into primary threats over failure to coalesce around a workable version of the BBB. Although an easy pick will not heal intra-party divisions,  it would do no further harm.

Biden-Kishida Summit Displays Alignment and Close Cooperation on Most Issues Says Trade Analyst Laura Chasen.  Last week, President Biden and Japanese Prime Minister Kishida held a 90-minute virtual meeting. The meeting was intended to highlight the strength of the U.S.-Japan relationship and advance shared visions of a free and open Indo-Pacific region. The White House readout on the meeting and comments made by both countries’ officials provided more details than usual about the wide-ranging discussion between the two leaders. While five of the six paragraphs in the readout dealt with strategic issues or Covid, there was a paragraph on economic issues that expressed a desire for the swift resolution of ongoing trade issues. Given that the only serious trade issue requiring resolution is the dispute over Section 232 tariffs on steel and aluminum, the readout was both a signal that the leaders did not make significant progress toward an agreement but that they are committed to dealing with it quickly. It is understood that the U.S. is pushing a similar deal to the tariff-rate quota arrangement reached with the EU but which Japan has rejected as inadequate. Nonetheless, a commitment by the leaders to reach a “swift resolution” suggests a renewed intention to push through obstacles. That the U.S. and UK are also moving toward a Section 232 deal could be an added incentive for Japan to reach an agreement so that its producers are not comparatively disadvantaged by the tariffs and for the U.S. to reach a deal so that its close ally, Japan, isn’t the only one left with “national security” tariffs. Biden and Kishida agreed to intensify economic cooperation apart from the trade spat. 

The National Journal Raises a Red Wave Alert for Senate Democrats. President Biden’s weak approval ratings, compounded by ugly Democratic divisions, have increased the likelihood of a significant Republican wave election this year. Biden’s job approval rating at the one-year mark is just under 41%, according to the RealClearPolitics average, the second-lowest of any president in the modern era. In addition, Republicans hold a 3-point advantage on the generic ballot per RCP, a position that’s similar to the party’s commanding positions in the midterm elections of 2010 (when they netted five Senate seats) and 2014 (when Republicans regained the Senate majority, winning nine Senate seats). Truth be told, race-by-race analysis hasn’t kept up with the deteriorating macro-political reality for Democrats. At the beginning of the cycle, Senate Democrats looked like they would benefit from a favorable Senate map, not defending a single state that Trump carried in 2020. However, the president’s downturn means that the swing states he carried narrowly (Arizona, Georgia, Pennsylvania, and Wisconsin) now look like tough territory for the party in power. Meanwhile, Republican-leaning states such as Florida, North Carolina, and Ohio, which once looked competitive, now look like longer shots. Meanwhile, Senate Majority Leader  Schumer’s decision to put all senators on the record to roll back the legislative filibuster—in a failed attempt to pass a voting-reform package—only gives Republican challengers fodder to argue that even the swing-state Democratic senators (except Manchin and Sinema) are doing the bidding of the progressive base. Given the punishing national environment that Democrats face, even weak Republican challengers can prevail. With Biden’s approval rating lagging about 10 points behind his 2020 vote share, it’s easy to see how the president drags a whole lot of Senate Democrats down with him. The (realistic) best-case scenario for Democrats now looks like simply holding their 50-seat majority, capitalizing on weak GOP candidates in a few key races; the worst-case scenario for Democrats could mean four or more GOP Senate pickups, moving into the bluer parts of the map. The “wave scenario” is looking more likely, and adding insult to injury, the Senate map gets brutal for Democrats in 2024, with the party defending seats in Republican-friendly West Virginia, Ohio, and Montana, along with other swing-state challenges. This is a formula for Democrats to sink into a long-term Senate minority, unless the White House starts to tend to the interests of its most vulnerable members. 

More Ideas of Interest:

-Capital Alpha: Does a Supreme Court Nomination = Build Back Later?

-Eurasia Group: China and U.S. downgrades anchor a cautious IMF outlook.

In Other Words (Quote): 

“It’s seemed clear for a while that the strategy Schumer is running has more to do with his fear of getting primaried than it did with actually achieving anything with the caucus he has or with protecting or expanding the majority. The level of malpractice is stunning. BBB is a once-in-a-10-year opportunity, and we f****d it up,”

-Anonymous Democratic Senate staffers.

Did You Know:

President Biden has issued more executive orders (EOs) in his first term in office than his three immediate predecessors. Biden’s 77 EOs outpaced former Presidents Trump (55), Obama (35), and Bush (36). 

Image of the Week:

The Global Business Alliance (GBA) released its latest Inbound Investment Survey. Among the survey’s key takeaways were:

  • The GBA Employment Expectation IndexTM shows a dramatic increase in job growth optimism, reaching its highest level since the survey’s inception in 2010.
  • GBA’s Business Climate IndexTM has jumped 33 points since May 2020. Although companies remain pessimistic about the U.S. economy, that pessimism is lessening. 
  • Supply chain disruptions are having a greater impact on U.S. operations than the COVID-19 pandemic—with many companies indicating an intent to diversify global supply chains, including reducing their reliance on Chinese suppliers.
  • “Buy American” procurement policy changes create potentially large negative impacts.

Read the full findings of the GBA Inbound Investment Survey at globalbusiness.org/survey.


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