Thought of the Week:
As the interactions between business and government continue to become more and more complex and fall under an ever-widening net, many companies in Washington are adding government affairs specialists to their full-time staff. Like never before, the influence of government is not just on politics, but also on the legislation and policies that will directly impact the corporate bottom line. So, it is not surprising that Washington job boards show no shortage of available government relations positions and that second quarter lobbying revenues rebounded from 2023’s slow start. The primary catalyst for lobbyists: Congress began work in earnest on an array of must-pass bills touching on everything from farm and conservation issues to defense and aviation policy to funding the federal government. In fact, more than half of K Street firms reported steady revenue increases. The goal for Washington’s influence industry this past quarter was ensuring that their clients and companies were well-positioned for an expected end-of-year legislative sprint following the annual six-week August recess. Among the biggest issues for the lobbying industry post-Labor Day will be bipartisan committee work on artificial intelligence, partisan debates on taxes and ESG issues, U.S.-China ties, appropriations, and several remaining high-profile bills such as the National Defense Authorization Act (NDAA), which could include a number of possible amendments completely unrelated to defense policy (we highlighted one, airline slots at Reagan National Airport, last week). Beyond lobbyists’ legislative battles, the fall is also likely to see growing consultant work related to the implementation of the Inflation Reduction Act (IRA), CHIPS and Science Act, and bipartisan infrastructure bill. Considering all this, the question becomes how does a firm ensure that it is represented before the federal government as effectively as possible—does it call a consultant or lobbyist? Although professionals in the two industries are often thought of interchangeably, there are important differences between the two in terms of how they approach a solution, how they are regulated, and the potential power they can possibly convey. Broadly speaking, a consultant is a professional who provides expert advice on a specific issue or set of subject areas, but normally lacks the authority to actively advocate for legislative or regulatory change. On the flip-side, lobbyists not only provide advice but actively seek to influence external decisions at the federal and/or state government level. In addition to being members of several influential trade associations, the Washington office has deep relationships with both consultants and lobbyists. If you’re your office has an issue that might benefit from either consultant or lobbying expertise, consider contacting the DC office.
Thought Leadership from our Consultants, Think Tanks, and Trade Associations
Despite Widespread Optimism, AEI Thinks a Recession is Still Possible. Optimism is growing that the U.S. can avoid a recession. A Wall Street Journal survey of economists in July found that only 54% expect a recession in the next 12 months, down from 61% in April. Economists at Goldman Sachs have lowered their estimate of the probability of a recession to 20%. Following the release of encouraging consumer price index (CPI) data on July 12, investors have grown more confident that inflation can be tamed without sacrificing economic growth. This emerging consensus may end up being correct, with analyst and investors are all rooting for a “soft landing” in which inflation continues to glide down toward the Federal Reserve’s 2% target without the economy shrinking. Regardless, some analysts at the American Enterprise Institute (AEI) still worry that a recession in the next year is much more likely than not. They argue that underlying inflation is still double the Fed’s target, and its downward trend has not made meaningful progress in 2023. Furthermore, they say with high underlying inflation, financial conditions that aren’t tightening as much as people assume, and relatively low real interest rates, the Fed still has ample reasons to pursue additional rate hikes. If that happens, the risk of recession increases.
Bloomberg Government Reports that White House Economic Doctrine has been Called ‘Increasingly Dangerous.’ Former Treasury Secretary Summers said he largely supports President Biden’s economic policies but worries about the White House’s focus on industrial policy and outbound investment limits, describing the approach as nationalistic and “increasingly dangerous.” Appearing alongside former USTR and World Bank President Robert Zoellick, Summers remarked, “I am profoundly concerned by the doctrine of manufacturing-centered economic nationalism.” The Chips and Science Act and Inflation Reduction Act—two prongs of the White House’s attempt to boost domestic manufacturing of key industries—were “appropriate steps,” agreed Summers. Those laws heavily subsidize the American semiconductor, electric vehicle, and clean energy sectors and have promised to bring thousands of jobs to communities across the U.S. while reducing reliance on China for critical technologies. However, according to Summers, the main challenge facing the U.S. economy is rising costs, not a lack of jobs—raising red flags for an administration that touts its industrial policy achievements in terms of employment opportunities. In addition, Summers and Zoellick were both critical of the restrictions on U.S. investments in China and other countries the Biden administration is weighing, saying that while the curbs will likely be limited at the start, they could expand and cause harm over time.
Eurasia Group Says Trump Remains GOP Frontrunner Despite Legal Challenges. Former President Trump remains the clear frontrunner in the Republican presidential race, maintaining a thirty-point polling lead over Florida Governor DeSantis. The former president is also the strongest fundraiser and is leading his competitors in endorsements from Republican elites. DeSantis’ slide is the most important development of the campaign so far, and though he remains Trump’s closest competitor, he has lost his status as the clear Trump alternative. In fact, DeSantis’ decline makes it more difficult for the non-Trump lane to consolidate, which only reinforces Trump’s chances of becoming the nominee. Trump’s legal problems are serious issues for the general election but will not affect his standing among the Republican electorate, as nearly all voters have already formed strong opinions of him. The next crucial event in the primary calendar is the first Republican debate in late August, which will determine who of the field’s longshot candidates will remain viable into the fall.
“Off the Record”
#1: One of the most urgent items for the U.S. Chamber of Commerce was championing a deal between the Biden administration and House Republicans to raise the debt ceiling and avoid a government shutdown. As such, the nation’s largest business lobby went into overdrive, meeting with 150 members of Congress and flying state and local officials to Washington to bolster its case with lawmakers. House Majority Whip Emmer (R-MN) wished the Chamber hadn’t bothered; it was his job to round up support for a debt ceiling bill, and he says the Chamber’s involvement made things more difficult: “That cost us numerous votes. We should have had 218 Republicans…Instead we got 149…All the Chamber did was convince them that it was a bad idea. So, yeah, they had influence. Unfortunately it wasn’t the influence they think they had.” The idea that Republicans might vote against a bill promoted by the Chamber is a testament to its diminished influence in Washington. For years, the GOP moved in tandem with the business lobby, and to say the relationship between the Chamber and the Republican Party has chilled puts it mildly. Neil Bradley, the Chamber’s chief policy officer, acknowledges that the rise of populist Republicans and progressive Democrats has made it tougher to advocate for its traditional causes—free trade, lower taxes, and less regulation.
#2: The House budget process ground to a halt amid conflicts over spending levels and hot-button social issues, raising the risk of a government shutdown ahead of the September 30 deadline. House and Senate lawmakers have left D.C. for an extended August recess with budget disagreements entirely unresolved. The House isn’t scheduled to return until Sept. 12 and will have a long to-do list that includes passing 11 of the 12 annual appropriations bills and reconciling differences with the Senate over the course of just 12 work days that month. Even a continuing resolution or stop-gap spending bill could be a tall order, given deep divisions over spending and indifference among conservatives over the effects of a federal shutdown. President Biden and congressional leaders had hoped a compromise on spending caps as part of the debt-limit deal would pave the way for a relatively smooth budget process, but the push by conservatives to make deeper cuts and attach language on social issues has upended those plans.
In Other Words
“I can almost hear the words from ‘Dumb and Dumber’—‘So you’re telling me there’s a chance?’” — Sen. Romney (R-UT) describing PACs backing long shot presidential candidates.
“This is rising to the level of impeachment inquiry, which provides Congress the strongest power to get the rest of the knowledge and information needed,” House Speaker McCarthy (R-CA) on investigating President Biden.
“The technology that we faced is far superior to anything that we had and there’s nothing we can do about it, nothing,” Former Navy officer David Fravor in House Oversight subcommittee testimony concerning the national security threat of Unidentified Aerial Phenomena (UAP), more commonly known as UFOs.
“My fiancé tried to pull me by my waist over this morning in bed and I was like, ‘No, baby, we don’t got time for that this morning. I got to get to the prayer breakfast and I got to be on time.’ A little TMI,” Rep. Mace (R-SC) opening her remarks at Sen. Scott’s (R-SC) prayer breakfast.
Did You Know
President Gerald Ford is the only president never to be elected to the role of president or vice president.
Graphs of the Week
A federal judge set a May 20, 2024, trial in the classified documents case against Donald Trump, rejecting the Justice Department’s bid to try the case in December as well as the former president’s request for a delay until after the 2024 election. Mr. Trump now faces as many as six criminal and civil cases in the next year, including lawsuits against him, his family, and companies. The trials, some of which are expected to last for weeks, overlap with key primary election dates.