March 22, 2024

Thought of the Week:

If a group of eagles is called a convocation, a group of ravens a conspiracy, and a group of crows a murder, what is a group of lobbyists from foreign subsidiaries descending all at once on the nation’s capital called (insert your answer in the comment box below)? This week, the Global Business Alliance (GBA) held its bi-annual Fly-In and Spring Advocacy Day. As you may know, GBA is a trade association; comprised of more than 200 major international companies, including SCOA; that exclusively represents the interests of foreign subsidiaries operating in the U.S. Among other facets, GBA member companies operate in all 435 congressional districts, employ an average of more than 12,000 Americans, and invest $78 billion annually in research and development (13% of all R&D performed by U.S. companies). Fly-Ins are simply political tours organized by trade associations, industry groups, and/or companies that bring constituents from around the country to the nation’s capital to advocate for common goals or interests. The specific purposes of this GBA Fly-In were to: (1) advocate in favor of continued foreign direct investment (FDI) in the U.S.; (2) explain how international companies contribute to the building of more resilient supply chains; (3) outline GBA member companies’ investment in American workers and local communities; (4) urge policymakers  to maintain the U.S.’s competitive business policy environment, including on the issues of taxes and trade;  and (4) explain how proposed changes to the Foreign Agents Registration Act (FARA) and Lobbying Disclosure Act (LDA) could impact their constituents’ first amendment rights to free speech, peaceably assemble, and petition the Government for a redress of grievances. In all, lobbyists from 45 GBA member companies met with more than 60 different House and Senate offices. My team was comprised of advocates from CNH Industrial, Nestle, Air Liquide, and RBC Capital, and we met with the offices of Rep. Adrian Smith (R-NE), Rep. Dusty Johnson (R-SD), Rep. Lizzie Fletcher (D-TX), Rep. Brett Guthrie (R-KY), Rep. August Pfluger (R-TX), Sen. Tim Kaine (D-VA), and Sen. Rand Paul (R-KY). If your office or department would like to arrange its own Fly-In to Washington or have a U.S. Congressman or Senator make an onsite visit to your facility, please contact the Washington office.       

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

 AEI Sees Beijing on the Road to a Lost Chinese Economic Decade. At a time when the Chinese property and credit market bubble has burst and the country is on its way to a Japanese-style lost economic decade, policymakers in Beijing continue to cling to the illusion that the economy can grow 5% a year. Judging by efforts to centralize economic power and suppress economic debate, China is in denial about the state of its economy. This will delay needed reforms to address economic imbalances and will increase the chances that China will export deflation to the rest of the world. It also puts an end to the illusion that the Chinese economy will overtake the U.S. anytime soon. It would be an understatement to say that Beijing has allowed dangerous economic imbalances to occur. To start, it allowed savings and investment to reach an unsustainably high level of 42% of the size of the economy. This made sense when the economy was small and could export excess output and savings abroad; however, it makes no sense today. Attempts to export its way out of excess capacity will invite trade sanctions, especially by the U.S. Even worse, China allowed a property and credit market bubble, even beyond that which preceded Japan’s lost economic decade or the U.S.’s Great Economic Recession, to form. President Xi’s disastrous zero-Covid policy, together with a regulatory clampdown on the high-tech sector, has added to the country’s economic woes, contributing to both the loss of domestic and foreign investment. Following years of unbalanced economic growth, the chickens have come home to roost—major developers have defaulted, house prices have fallen, housing sales have plunged, local governments are in financial difficulty, and strains are surfacing in the shadow banking system. At a time when other countries are battling inflation, deflation haunts the Chinese economy. Absent a coherent plan, China appears on the road to a lost economic decade, which will have major implications for the world economy. In fact, the deteriorating Chinese economic outlook is just one more factor that suggests the Federal Reserve would be well served to become forward looking in its policy setting. By doing so, the Fed would avoid the mistake of keeping rates too high for too long and spare us from a hard economic landing.

Trade Analyst Laura Chasen Says the Chorus of Republicans Criticizing the Administration’s Lack of Trade Ambition is Growing Louder. Republicans in the House and Senate have begun pushing the Biden administration to show leadership on international trade and criticizing the USTR’s approach for not delivering results. Republicans view the White House’s approach as lacking ambition and are now urging the administration to return to traditional U.S. trade policy and negotiate new free trade agreements (FTAs).  Although that is something Republicans and some Democrats have been calling for quite some time, the White House has made clear that it considers any such initiatives to be politically toxic (the demand from certain Democrats that the administration drop even the weak IPEF trade negotiations showed President Biden bowing to partisan political winds). Moreover, USTR Tai opposes “traditional” trade policy approaches, which she directly criticizes for emphasizing efficiency over fairness, and has expressed no interest in negotiating new FTAs. Although President Biden might be more open to the idea of trade deals  after the November elections, if former president Trump wins the presidency, it is hard to see how the Republican push for new FTAs could succeed since his trade policies are not compatible with trade liberalizing agreements. 

Eurasia Group Believes Republicans are Still Favorites to take the Senate After Ohio Primary. Courtesy of an endorsement from former president Trump, former car dealer Bernie Moreno won Ohio’s Republican Senate primary, fending off a more moderate challenger and setting up a general election contest with incumbent Senator Brown (D-OH). Although Moreno is a relatively weak candidate, his victory does not meaningfully change Republicans’ 75% odds of taking the Senate in 2024—the Ohio seat is more likely to be icing on the cake, bringing Republicans’ margin to 52-48, than to be decisive, given that Senator Tester (D-MT) looks more vulnerable in his bid for reelection and Republicans are all but guaranteed to pick up West Virginia. While former president Trump won 80% of the vote in the five states that held primaries this week, former South Carolina governor Haley garnering of vote shares in the teens despite suspending her campaign by no means indicates significant Republican disunity heading into the general election.

“Off the Record”

While more on the record than off, this week marked the 45th anniversary of live gavel-to-gavel TV coverage of Congress—C-SPAN first broadcasted from the House of Representatives on March 19, 1979. To celebrate televising its unfiltered view of government, the network is rerunning 45 notable moments from its first 45 years, including: Republicans flipping the House for the first time in 40 years in 1995; Nancy Pelosi becoming the first woman to take the Speaker’s gavel in 2007; and Sen. John McCain’s (R-AZ) infamous thumbs down to repeal the Affordable Care Act in 2017.

In Other Words

The Golden Rule of Political Comedy. When it comes to political comedy, self-deprecation is the name of the game. Poke fun at yourself and your party, you’ll get the audience roaring. Lambast the other side too much and you look mean-spirited. This week’s annual Gridiron dinner featured speeches by Utah Gov. Cox (R) and Michigan Gov. Whitmer (D) and provided an example. Gov. Cox followed the golden rule: 

  • “They don’t usually let farm kids like me into rooms like this…Unless you count January 6th.”
  • “Oh, I’m sorry. I should explain: Utah is a state between Tyson’s Corner and California,” referencing the ritzy Virginia suburb.
  • On the GOP’s version of President Clinton’s famous “I didn’t inhale” quip: “Where I’m from, they say they went to the rally, but didn’t go inside.”
  • On Senate Minority Leader McConnell’s health issues: “I also reached [out] to my friend Mitch McConnell for some ideas, and he said…,” Cox trailed off, paused, and didn’t move. “Anyway, thanks Mitch! You always know just what NOT to say.”

Gov. Whitmer started strong, but fell flat with jokes that took aim at Republicans and went easy on Democrats. Among her best/worst lines:

  • On Sen. Britt’s (R-AL) SOTU response: “She outdid me. I did the response four years ago, and no one remembers it. Sen. Britt’s? No one will ever forget it.”
  • On why Gov. Youngkin (R-VA) loves wearing red vests: “Your arms don’t get cold at book burnings, do they?”
  • Whitmer did make a self-deprecating joke, about one day running for president and about being 52— “or as Don Lemon would put it… ‘past my prime.’”
  • Her best line of the night: “As governor, I’ve been able to get a lot done by extending my hand across the aisle—and not in a Lauren Boebert (R-CO) kind of way.”

Did You Know

Four presidents have been assassinated (Abraham Lincoln, James Garfield, William McKinley, and John Kennedy), but unlike Julius Caesar, none knew the person who killed them. Although President Garfield did not know the man who shot him, the shooting itself did not kill the president. While Garfield survived the shooting, what killed him was 19th-century medical practices. Believing that the most important thing was to get the bullet out of his abdomen, doctors searched for the errant round without washing their medical instruments—they never found the bullet, and after 79 days, the president died from septic blood poisoning.

 Graph of the Week

 Although President Biden regularly promotes signs of a strengthening economy and easing inflation, when it comes to the indicator that hits closest to home, it’s a tough sell. The surge in grocery prices since 2020 has been stunning: up more than 25%, a full 5% more than consumer prices overall. While the president has tried to channel consumers’ ire toward food companies and grocery chains and tried commiserating by complaining about “shrinkflation,” Americans’ regular trips to the grocery store are a powerful driver of economic discontent. The outsized increase in the cost of food is hurting support for Biden, especially among crucial Democratic constituencies.

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