March 28, 2024

Thought of the Week:

I’ve dated myself numerous times writing this blog over the past several years. At the risk of doing it again, this week, an old adage came to mind, “All politics is local.” Although he may not have been the first to use it, former Speaker of the House Tip O’Neill (D-MA) is largely credited with coining the phrase, which summarizes the notion that a politician’s success is directly tied to his ability to understand and influence the issues of most importance to his constituents. In other words, to stay in office elected leaders must appeal to the simple, mundane, and immediate concerns of those who elected them in the first place. But speak to any political analyst today, and they’ll tell you something different. Something more along the lines of, “sure, there’s a local aspect to winning elections, but party affiliation and ideological orientation are what’s important now.” The National Journal’s Charlie Cook told several of us at a dinner last week that very thing, that politics has become “tribal,” and party identity is a key to winning elections. Using this new tribal theory of politics, the conventional wisdom of the moment is that come November the Senate will turn Republican; although President Biden will lead the popular vote, former President Trump has the inside track at capturing the Electoral College; and the House will turn whichever direction the popular vote points. This may all be true, but at least in one instance, the old adage may still have some life in it. By now, we’ve all seen the tragedy that took place in my home state of Maryland with the collapse of the Francis Scott Key Bridge in Baltimore. As a result of a container ship’s collision with the bridge, six construction workers are presumed dead, and the nation’s 9th largest maritime port as measured by value of cargo processed is effectively shut down. A major economic driver in the state, the port generates more than 15,300 direct jobs (140,000 indirect jobs) and hit a record last year for handling cargo. Baltimore is the country’s 16th busiest port, ranking first for volume of autos and light trucks, roll-on/roll-off heavy farm and construction machinery, imported sugar, and imported gypsum. While events like these certainly hit closer to home, the accident just happened to take place in an election year, in a deep blue state, with an open Senate seat, at a time when a very popular former Republican governor has decided to run. While members of Maryland’s Congressional delegation have already begun to push for funds for the reconstruction of the bridge, which will take years and cost more than $2 billion, the emergency has given new urgency and placed a brighter spotlight on the race to replace retiring Sen. Cardin (D). Former Gov. Hogan (R), Rep. Trone (D-06), and Prince George’s County Executive Alsobrooks (D) are all vying for the seat and have released statements on the disaster. At present, due in large part to his two terms as an effective governor, Hogan leads the race, with polls showing him besting the top two Democrats by more than 14 points each. With minds right now focused on local rather than national issues, Maryland voters are likely to lean toward someone they know and trust to handle a crisis in the state—someone like a former governor. Or they may choose a representative who suddenly has been given the opportunity to spearhead an emergency measure in Congress. What’s certain is that everything having to do with the collapse—reconstruction, clearing the river, returning commerce, and dealing with international business interests—will be a 2024 issue. And Maryland voters are going to look to whichever candidate can prove they’re the best choice at managing this very local issue. 

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

 Center for American Progress Calculates that Trump’s Tariff Plan Would Cost Consumer’s Dearly. Former President Trump’s proposed across-the-board 10% tariff on all imports would cost the typical U.S. household roughly $1,500 per year. While the former president has touted the tariff proposal on the campaign trail, charging it would reduce the trade deficit, combat China, and spur U.S. manufacturing, the proposal is projected to amount to a “roughly $1,500 annual tax increase for the typical household.” According to CAP’s analysis, the tax increase would drive up the price of goods while failing to significantly boost American manufacturing and jobs. In fact, the study’s authors say that Trump’s proposal shows a complete misunderstanding of how tariffs work and would target U.S. importers and consumers. Because the U.S. will import $3.2 trillion in goods in 2025, a 10% tariff on goods would effectively raise taxes on goods by about $300 billion, or an average of $1,700 per household in the tariff’s first year. Middle-income households typically consume about 85% as much as the average, bringing the total cost of the tariffs to $1,500. What’s more, a blanket import tariff would be ineffective at countering China, as roughly 60% of U.S. imports come from six allies: Canada, Mexico, the EU, the UK, Japan, and South Korea. Instead of imposing a blanket tariff on U.S. imports, the U.S. should further entice global manufacturers to move operations to the U.S.

Eurasia Group Continues to See Third Parties as Major Spoiler Threats. Third-party candidates will be a major factor in the 2024 election, as they currently poll in the low- to mid-teens (collectively). Former president Trump is the net beneficiary of the third-party presence in the race, with far-left candidates detracting from President Biden’s vote share and Robert F. Kennedy Jr. taking slightly more from Biden than from Trump. Although securing a spot on the presidential ballot is the first challenge for third parties, the Kennedy campaign has made substantial progress in that effort in recent weeks; whether far-left candidate Cornel West can qualify in swing states on a shoestring budget remains an open question. Third parties do not need significant vote shares to influence the result; votes for third parties exceeded the margin of victory for the eventual winner in 75% of swing states in the 2016 and 2020 presidential elections, a trend that will likely continue in a 2024 race that will come down to just tens of thousands of votes across seven swing states.

Politico Reports that Commerce Can Consider Labor, Environment in Anti-Dumping Probes. The Department of Commerce has announced final regulations overhauling its approach to calculating duties in anti-dumping and countervailing duty cases, which will include for the first-time consideration of labor, environment, and intellectual property laws. The revision comes after years of criticism from domestic companies that complained that foreign competitors received unfair cost advantages as a result of market distortions not factored into U.S. trade remedy law. For instance, if a foreign company’s operating costs are lower because they do not have to account for the use of forced or child labor then “it would be both logical and reasonable for Commerce to reject potential surrogate values derived from sales of that merchandise in a non-market economy [anti-dumping] proceeding,” the regulations note. The regulations also remove a restriction that prevented Commerce from investigating transnational subsidies, which could make it easier to crack down on China’s influence in other countries that export to the U.S. when determining countervailing duties. The final version also clarifies when Commerce can determine that a “particular market situation” exists in anti-dumping investigations. The changes were first proposed in May of last year, and they were published in the Federal Register on March 25.

“Off the Record”

Veepstakes on the Hill. With former President Trump a lock for the GOP presidential nomination, all eyes are on who he’ll pick as his No. 2. According to Punchbowl News, there are several contenders on Capitol Hill. Here’s a look at who downtowners are watching in Congress:

1) Rep. Stefanik (R-NY): as House Republican Conference Chair, Stefanik has led GOP messaging, including being one of the most outspoken Trump defenders. Stefanik speaks with Trump frequently and has long aligned herself with the former president, despite coming to Congress as a more centrist member. While Stefanik was the only senior House GOP leadership member who didn’t run for speaker after Kevin McCarthy’s ouster, she has a chance to move up in the leadership ranks next Congress and would likely be considered for a spot in a Trump administration if she’s not his VP pick.

2) Rep. Jordan (R-OH): Jordan chairs the House Judiciary Committee and remains one of Trump’s closest allies on the Hill. The Ohio Republican campaigned with Trump in Ohio and Georgia this month. If Democrats win the majority in November, some members speculate that Jordan could run for minority leader; others say Jordan would make a good White House chief of staff.

3) Rep. Donalds (R-FL): a fellow Floridian and staunch Trump supporter. The sophomore has quickly made a national name for himself and regularly appears on Fox News and Newsmax. Donalds is a member of the House Freedom Caucus.

4) Sen. Vance (R-OH): part of the new wave of populist lawmakers who have followed Trump’s “America First” platform, especially as it relates to foreign policy. Donald Trump Jr. mentioned Vance as a potential contender for VP.

5) Sen. Scott (R-SC): the former president has already floated the former presidential candidate as “a great advocate” for him. If he stays in the Senate and Republicans take over the chamber, Scott could become chair of the Senate Banking Committee; he is currently the panel’s ranking member.

6) Sen. Rubio (R-FL): NBC News reported that Rubio is among the VP contenders, despite Trump taunting him as “Little Marco” during the 2016 campaign. Rubio said it would be “an honor” to serve if Trump chooses him, and he would be the first Hispanic to be on a major-party presidential ticket.

7) Rep. Greene (R-GA): one of Trump’s loudest advocates on the Hill, the Georgia Republican appears regularly at Trump rallies and frequently talks to the former president. At the State of the Union address, Greene wore a “Make America Great Again” hat.

8) There are also contenders outside of Capitol Hill who are in the running. These include South Dakota Gov. Noem (a former member); former Democratic presidential candidate and Hawaii Rep. Gabbard; Arkansas Gov. Sanders; Arizona Senate candidate Lake; and former presidential candidate Ramaswamy.

In Other Words

“Shorter-term inflation measures are now telling me that progress has slowed and may have stalled. [It was] appropriate to reduce the overall number of rate cuts or push them further into the future,” Federal Reserve Governor Christopher Waller.

Did You Know

Congress approved more than $71 million in earmarks for lawmakers who eventually voted against the most recent $1.2 trillion minibus spending bill, an example of what former Speaker Pelosi (D-CA) used to say, “They voted no but took the dough.” It was once unheard of for a member to get an earmark and then vote against the legislation, which is the point of earmarks; today, it’s relatively commonplace. Examples cut across parties from Sens. Bennet (D-CO) and Sanders (I-VT) to Sen. Tuberville (R-AL) and Rep. Guest (R-MS). The takeaway is that earmarks aren’t the carrot they used to be. Back in the day, if a lawmaker did that to an Appropriations Committee chair or leadership, those senior colleagues may have crossed out the funding while the bill was on the floor or told the offending lawmaker in no uncertain terms, they’d never get another earmark. Things just aren’t the way they used to be.

 Graph of the Week

U.S. Blues Bad News for Biden? The latest World Happiness Report confirms what many already feel—the U.S. is one of the least-happy developed economies, tracking with polls showing satisfaction with the direction of the country near a record low. Unhappiness is most pronounced among young Americans; the U.S. ranks 62nd in the world for happiness among those under 30. Americans’ unhappiness and dissatisfaction with the direction of the country are structural headwinds for the Biden campaign. The unhappiness among young Americans, a key Democratic constituency, only exacerbates the problem. In fact, young voters are Robert F. Kennedy Jr.’s strongest demographic, suggesting that youth dissatisfaction has made them more likely to support candidates outside the two-party system.  

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