Thought of the Week
Over the past two weeks, the Washington office received scholars from the TOMODACHI Sumitomo Corporation Scholarship Program. If you’re not familiar with the program, it began in 2014 to support exchange between the U.S. and Japan. More specifically, the TOMODACHI Sumitomo Corporation Scholarship Program provides assistance to high-achieving university students with financial need to enable them to study abroad for one year. Sumitomo’s support is aimed at helping to develop globally-minded young leaders who will serve as active bridges between Japan and the United States (TOMODACHI Sumitomo Corporation Scholarship Program | TOMODACHI (usjapantomodachi.org)). It wasn’t until this year’s farewell dinner that I realized the Washington office had been welcoming TOMODACHI students for nine years. Typically, the office gives a “Washington 101” presentation and arranges a tour. Over the last nine years, we’ve arranged staff-led tours of the Capitol, White House, and Pentagon. During one tour of the Pentagon, we were met by Secretary of Defense Ash Carter, shown the SecDef’s office, and presented with a challenge coin. This year, I changed up the presentation to include an “Advocacy 101” briefing, asking the students, prior to their visiting the Capitol for a staff-led tour by Congressman Raskin’s (D-MD) office, to imagine they were a part of a group of advocates who had flown into Washington to lobby on an education issue. “Fly-ins” are a useful and important part of any advocacy tool kit. During fly-ins, companies host constituents in the nation’s capital to advocate for common interests and goals. During a fly-in, constituents influence governing behavior, whether legislation or regulation, by telling personal stories, sharing ideas, providing information on unintended consequences, and/or showing support. Because reelection is never far from mind, members of Congress value staying in touch with constituents and find individualized communications the most persuasive. A ranking of what lawmakers and congressional staffers find the most influential runs from in-person issue visits from constituents to contact from constituents’ representatives (lobbyists) to individualized email messages to hand-written postal letters. While we used affirmative action and the waiving of student loans as case examples with the students, ashington has made arrangements for fly-ins by SCOA and subsidiary staff and would welcome arranging future fly-ins on any issues of interest. The presentation seemed to have the desired effect, with one student messaging us on LinkedIn stating that it got him “genuinely more interested to learn the public sector side” of his field of study. Rather than anything we said during the presentation, I believe it was the School House Rock clip from my childhood, embedded in the presentation, which probably had the most impact: Schoolhouse Rock – I’m Just a Bill – YouTube
Thought Leadership from our Consultants, Think Tanks, and Trade Associations
Eurasia Group Sees the 2024 Presidential Primaries Heating Up. While on the Democratic side President Biden is clearly signaling his intention to run for re-election in 2024, on the Republican side, the primaries are heating up, with three candidates having declared and numerous others—including Florida Gov. DeSantis—waiting the wings. President Biden’s eventual entry into the race will make him the prohibitive frontrunner in the Democratic primary, with the president likely to emphasize issues such as the economy, health care, policy reform, and democracy in his re-election bid. Former President Trump has gained momentum, at the expense of Gov. DeSantis, in recent weeks as he has ramped up his campaign; however, the field has yet to fully develop with a number of potential candidates waiting until late spring, or until clear signs that DeSantis is falling short emerge, to enter the race. The GOP primary calendar creates no obvious advantage for any candidate and may leave the contest undecided until Super Tuesday in March 2024. The state of the economy and the age gap between Biden and his Republican opponent will be important factors in the 2024 race; incumbents with approval ratings in the low 40s—as Biden currently has—tend to win around 50% of the time, meaning that the campaigns will certainly matter.
Observatory Group Answers its Own Question about Whether We’ll Eventually See Blanket Deposit Guarantee Insurance. Although there are legal/legislative hurdles to change the cap on FDIC deposit insurance—the $250K limit is in Section 335 of the Dodd-Frank law, and new legislation would be needed to change that permanently—in reality, this seems to be beside the point, despite what Treasury Secretary Yellen has said this week. Based on recent actions, a guarantee for all deposits now appears within the scope of Treasury’s authority. On March 12, the FDIC, the Fed, and Treasury invoked the systemic risk exception (SRE) to permit the FDIC “to complete its resolution of Silicon Valley Bank…in a manner that fully protects all depositors.” The SRE permits the FDIC to take actions to avoid or mitigate serious adverse effects on economic conditions or financial stability. While the SRE had been assumed by policymakers to apply to one or just a few banks, under Dodd-Frank, the FDIC was granted authority to lift the deposit guarantee ceiling for all accounts if a “liquidity event” threatened the banking system. While it would be incorrect to assume that the 250K limit has been suspended or increased, ultimately, Treasury stands behind the FDIC, and if Treasury, along with the FDIC and the Federal Reserve, wants to expand the guarantee, it can find a way to do so without Congress. Certainly, any broad guarantee would need to include at least a consultative, and probably, legislative role for Congress, as it would be politically tone deaf to assume otherwise and would surely invite a formal response by legislators. One example of how this might work in practice would be a broad guarantee that included a time limit (such as six months) that could be shortened or extended by Congress. While it is difficult to assess the current momentum for a legislative blanket deposit guarantee, and would probably require more evidence of contagion than has been seen to-date, any large-scale rapid disintegration would be likely to see the FDIC, the Fed, and Treasury act to protect depositors.
Politico Reports that Senate Absences are Beginning to Cause Headaches for Both Parties. The last time all 100 senators were on the floor was more than seven months ago, and the absences are starting to take a toll on both parties. Although this Congress features one of history’s oldest Senates, it is not just age keeping members from the floor—blame a confluence of illnesses, family matters, and impending retirements. Last week, five senators missed every vote, with several out for extended absences, and all 100 senators did not return this week. Absence is no longer an idle matter, and both parties’ attendance issues are affecting Senate business, from floor votes to committee hearings. The Senate last had all 100 members in attendance, prior to the 2022 elections, when Democrats passed the Inflation Reduction Act (IRA). It remains unclear when senators can expect the return of Senate Minority Leader McConnell (R-KY), who is recovering from a concussion, Sen. Fetterman (D-PA), who is receiving treatment for depression, or Sen. Feinstein (D-CA), who is battling shingles. Sen. Feinstein’s absence from the Judiciary Committee is an acute Democratic concern; the party is trying to move judicial nominees but have had to postpone votes during her absence. Sen. McConnell’s injury has also affected the Senate’s day-to-day as well as the GOP’s internal operations. Last week, Republicans wanted to address environmental regulations, but the vote was delayed because McConnell, No. 3 Senate Republican Barrasso (R-WY), and Sen. Cruz (R-TX) all missed votes. With a 51-49 Democratic majority, attendance can play a major factor in whether or not a vote proceeds and succeeds. Some blame the lax attendance on certain senators not considering the recent schedule a must-attend affair because the agenda has largely consisted of disapproval votes on Biden administration or D.C. Council policies, nominees, and rolling back the Iraq military authorization. While it has been an atypical three-year run for the chamber with pandemic-related absences and down-to-the-wire votes in the 50-50 Senate, going forward the 2024 Senate map hangs over everything. With Democrats gearing up to protect their majority, downtime for campaign activities has been built into the chamber’s schedule. What’s more, while senators typically fly in on Monday and work until Thursday, they’ve recently pushed their arrivals to Tuesday.
“Off the Record”
TikTok CEO Shou Chew’s disastrous congressional appearance on Thursday has injected new momentum into a White House-backed Senate bill that could lead to a significant crackdown on the Chinese-owned social media platform. Punchbowl News was told that the Senate Commerce Committee is soon expected to mark-up bipartisan legislation that would create a process to review and take action against foreign technology companies operating in the U.S. In fact, Speaker McCarthy (R-CA) say that he expects there will soon be a House companion to his bill, and that efforts are already being made to craft a compromise proposal that can garner broad support in both chambers. Chew’s appearance before the House Energy and Commerce Committee only served to harden the bipartisan concerns about TikTok, running from national security risks to data security to the app’s effects on minors. Other lawmakers, including Sen. Rubio (R-FL), have advocated a different approach—banning TikTok outright. While narrow proposals for a ban also have bipartisan support, the White House-backed bill is designed to address foreign technology threats long term. Bottom line is that there is an impressive bipartisan roster of senators ready to take action against TikTok, and Chew’s testimony only served to boost to their efforts.
In Other Words
“We have not considered or discussed anything having to do with blanket insurance or guarantees of all deposits,” Treasury Secretary Yellen at a Senate Financial Services Appropriations Subcommittee hearing; the administration is in a bind as explicit support for a larger backstop would indicate concerns about the state of the banking sector, leaving, for now, only ad hoc options to address bank failures.
“I don’t know how to spell the sanctimonious one. I don’t really know what it means, but I kinda like it, it’s long, it’s got a lot of vowels,” Florida Gov. DeSantis (R) on President Trump’s nickname for him.
Did You Know
Although no president or former president has ever been indicted, a sitting president was arrested…once. In 1872, President Ulysses S. Grant was arrested at the corner of 13th and M streets, NW, in Washington for speeding in his horse-drawn carriage. While not a high crime, it was, theoretically, a misdemeanor.
Graph of the Week
President Biden issued the first veto of his presidency, rejecting legislation that would thwart a Labor Department rule allowing retirement portfolio managers to weigh climate, social, and governance issues in their investments. Labor’s rule was created to undo a Trump-era requirement mandating that workplace retirement-plans focus purely on financial gains. With Democrats in control of both the House and Senate during his first two years in office, Biden had been spared having to exercise his veto power; the veto portends more confrontations to come with Republicans, who took control of the House in January.