Thought of the Week
You’ve just won the award for greatest ____ in your field of all time. As you approach the stage to accept your trophy, what’s your “walk up song?” This was the very same question I was asked this week at a council dinner among 25 lobbyists who represent some of the world’s largest corporations. Going around the table, each person had to name their song and explain why they chose it. As you may know, a “walk up song” is the anthem played in a baseball stadium as the player walks from the on-deck circle to home plate, getting ready to bat, or from the bullpen to the pitching mound. The idea is to create swagger, an identity for the player, and to personally connect players to fans. Songs range the gamut of genres—Hip-Hop, Classic Rock, Country, or something entirely unique. In all cases, the idea is for the song to get the player psyched up to hit a 100 MPH fastball and the crowd amped for the big at bat. Walk up songs have become so prominent today that it’s not uncommon for ball players to list their song on their profile next to batting averages, home runs, and RBI’s. Over time, a walk up song can become nearly inseparable from a player or team. Think, “Wild Thing” for Charlie Sheen in the movie Major League; Metallica’s “Enter Sandman” for Yankees Hall of Fame closer Mariano Rivera; or “Baby Shark” for the Washington National’s Gerardo Perra, the latter becoming almost synonymous with the team’s improbable 2019 post-season and World Series run. When you think of it, it makes sense to extend the idea of a walk up song beyond the realm of baseball to the workplace. Each day, all of us, walk from our very own on-deck circle into a meeting, a presentation, or something that requires a little high voltage to place us in the right frame of mind. As we went around the room and people revealed a little about themselves through their choice of song, it dawned on me that you can have more than one walk-up song. My first thought because of its high-octane intro was Van Halen’s 1978 hit “Aint Talkin Bout Love,” but I figured that would probably be my baseball walk-up. My mind then headed to John Denver’s “Take Me Home Country Roads,” because few know the road is in Maryland, not West Virginia, and not far from where my wife and I raised our two kids. Even though some may call our nation’s capital “the swamp,” I settled on Guns and Roses “Welcome to the Jungle.” What’s your “walk up song?”
Thought Leadership from our Consultants, Think Tanks, and Trade Associations
Capital Alpha: It’s Winner Take All in 2024. The 2024 elections are shaping up to be a winner-take-all competition, with one party likely to win both the White House and control of Congress. Winning the White House and control of Congress would put Democrats or Republicans in position to pass an FY 2026 budget reconciliation bill, at a time when once-a-generation decisions need to be made on taxes, Social Security, and Medicare. While the debt ceiling will be interesting this year, the main event to watch will be the presidential election in 2024. The outcome of that election may turn on whether the economy has a hard or a soft landing. Here are 12 predictions that may define Washington for the next two years:
- Neither Biden nor Trump will be their party’s nominee in the 2024 election (50% odds).
- A sweep where one party wins control of both Congress and the White House is likely (75%).
- The party that wins the presidential election will win a House majority (75%).
- Republicans will win a Senate majority if they win the presidential election; Democrats could beat the odds to hold the Senate if they are the 2024 presidential winners (50-50).
- A no-landing economic scenario in 2023 pushes recession risk into the 2024 election year when it will be the most politically consequential (75%); a soft landing in 2023 and a modest recovery in 2024 favors Democrats, while sustained inflation, interest rate increases, and a hard landing in 2024 favor Republicans.
- The Ukraine War will extend into 2024, with the outcome dependent on continued Western aid.
- The party that wins control of the White House and Congress in 2024 will pass a budget reconciliation bill in 2025 (75%).
- This month’s OMB Budget and Treasury’s “Green Book” will preview the tax policies in any Democratic budget reconciliation bill in 2025 (75%).
- The financial markets’ focus will be on the Fed, not the debt ceiling, through the June meetings.
- Supreme Court decisions in June will be politically disruptive in Washington, just as Congress turns to the debt limit.
- A Ukraine supplemental, around mid-year, will be a vehicle for other bills, including border funding (50%).
- The debt limit will dominate mid-year 2023, with a 75% chance the U.S. will come within two weeks of default; a 50% chance within one week; and a 15% risk of an actual Treasury default.
Institute of International Finance’s (IIF) Optimistic U.S. Inflation and Covid Supply Shock Outlook. Severe supply chain disruptions due to the COVID pandemic have faded, which has encouraged the belief that their impact on inflation has faded too. While delivery times in global manufacturing Purchasing Manager’s Indexes (PMIs) have mostly normalized, there is no law of nature that says their link to inflation has to be contemporaneous. It is estimated that standard Phillips curves have lagged delivery times from the PMIs; these lags have turned out to be very significant and explain 30% – 70% of 2022 inflation. Lagged effects could reflect delayed normalization in prices, but also strong demand. If they’re about delayed normalization, this is a point in favor of “Team Transitory,” since the normalization of supply chains will pull down inflation for some time.
Observatory Group Offers Some Debt Limit Strategies to Watch For. With debt limit/budget negotiations likely to heat up later this year, analysts are presenting frameworks for the various stages of negotiations that are likely to unfold. Overall, there will be as many as five stages in the negotiations, with any resolution coming shortly before the debt limit must be increased. Stark Congressional Budget Office (CBO) fiscal projections have stiffened the resolve of House Speaker McCarthy, and House Republicans, to use the debt limit as leverage to seek structural spending changes. In contrast, Democrats will use the CBO’s projections to advocate for additional revenues—mostly from corporate America and the wealthy, a view which Republicans oppose. Hence, the fault lines between the two parties on fiscal policy have been reinforced. While fiscal policy talks between Congressional Republicans and the White House are still in the posturing stage, the new CBO baseline projections have set the legislative baseline for the debate to continue. Most important to investors, the CBO said that Treasury’s use of extraordinary measures to avoid hitting the debt limit will be exhausted sometime “between July and September 2023,” depending on actual April income tax receipts. Therefore, the actual bargaining stage on the debt limit will not begin until after Memorial Day, when markets start to take notice of the debate. With the debt limit debate still in the posturing stage, Speaker McCarthy is attempting to strengthen his position by requesting moderate Republicans to hit pause on publicly discussing the possibility of a discharge petition to resolve the impasse. Although moderate Republicans will give the Speaker the room he needs to negotiate a deal, and Plan B talks are unlikely for now, GOP moderates continue to discuss off-ramps with their Democratic counterparts behind closed doors.
“Off the Record”
Congressional staff report hearing more-and-more talk about Biden administration efforts to seek Inflation Reduction Act (IRA) truces. In fact, the idea to seek “free trade-ish agreements” to bring trading partners into the IRA’s fold has resurfaced within the administration. Secretary Yellen told an Indian audience that there have been discussions about forming critical minerals-FTAs to enable Europe to qualify as a free trade partner, saying the agreements would not require Congressional action because the IRA is not specific to what qualifies as an FTA. However, Congress, including Democrats, may have something to say on that. Senate Finance Committee Chair Wyden (D-OR) stated that he is increasingly concerned about the administration ignoring Congress when it comes to trade deals; House Appropriations Committee Ranking Member DeLauro (D-CT) said that Congress must be included in any negotiations; and Rep. Khanna (D-CA) stated that if Congress wanted Europe in the fold, it would’ve written the bill that way.
In Other Words
“Taken as a whole, the video does not support the claim that Jan. 6 was an insurrection. In fact, it demolishes that claim,” Fox News Host Tucker Carlson painting his own picture of the Jan. 6 insurrection footage.
“It was a mistake, in my view, for Fox News to depict Jan. 6 in a way that’s completely at variance with what our chief law enforcement official here in the Capitol thinks,” Sen. Minority Leader McConnell (R-KY)
“If you don’t like your pillow, it’s not my fault. If you don’t like the menu, I don’t care. I don’t even care,” Rep. Nancy Pelosi (D-CA), and former Speaker, on her newfound freedom from responsibilities.
Did You Know
In an effort to attract more women into its boundaries, the territory of Wyoming granted women the right to vote in 1869; at the time, Wyoming had 6000 male residents and only 1000 female residents. Once Wyoming became a state, in 1890, it became the first in the nation to allow women to vote.
Graph of the Week
Agencies are seeing less money in small business contracts going to female-led firms despite federal efforts to increase work with women-owned small companies. Of the top federal agencies contracting with small businesses, the proportion going to women-owned companies decreased between fiscal 2018 and fiscal 2022. The most notable declines were in the Treasury Department, with a nearly 10% decrease, and the State Department with almost 6% less going to women over those five years.