Thought of the Week:
Among the questions I get asked regularly is, “do you meet with Senators and Congresspersons, and, if so, when and where?” The answer: “Yes, sometimes,” and, “well, it all depends.” While meetings with congressional offices during the pandemic were all held virtually, in person meetings resumed earlier this year. Just this week, we were among a small group of National Association of Manufacturers (NAM) members who met directly with Representative John James (R-MI-10). A freshman, Congressman James sits on the Transportation and Infrastructure (Aviation subcommittee), Foreign Affairs, and Education/Workforce Committees. His family’s business once partnered with SCOA two decades ago, a piece of trivia he brought up during our meeting. Getting a face-to-face meeting with a member of Congress is not easy; members get hundreds, if not thousands, of meeting requests each month. The truth is that routine, day-to-day meetings on the Hill are likely to be held with congressional staffers, more often than not legislative directors and legislative assistants, not actual members. However, beyond trade association events like the one we attended this week, opportunities do exist to meet directly with lawmakers. “Fly-ins” and hosting in-district town halls are among the better ways to guarantee an audience with a member of Congress. Often, direct access to a member is made easier when accompanied by a donation to his or her reelection campaign. In fact, with Covid now over, with the pause in giving from corporate Political Action Committees (PACs) due to the events of January 6 having come and gone, and the approaching presidential election year with both the House and Senate up for grabs, I receive more than a dozen invitations each week to meet with legislators while donating to their campaigns. The solicitations come from lawmakers as diverse as Senator John Tester (D-MT) and Rep. Marjorie Taylor Green (R-GA). Here are just a few examples I received this week:
- A modern twist on Indian cuisine? We’ve got a lunch for you. Rep. Deborah Ross (D-NC) is hosting a fundraiser at Rasika in Penn Quarter. Costs are between $1,000 and $5,000 to get in the door.
- How about a bar vibe this beautiful Monday? Rep. John Garamendi (D-CA) is hosting a luncheon at Beuchert’s. You can get in for as little as $500.
- Attend a reception w/Congressman Juan Ciscomani (R-AZ) and hear Speaker of the House Kevin McCarthy at the Capitol Hill Club. Suggested contributions are $5,000 Host/$2,500 Co-Host/$1,000 to Attend.
- Skeet Shooting & Beach Resorting this October with Congressman John Rutherford (R-FL)? Suggested contribution are $5,000 Host/$2,500 Co Host/$1,000 Attend/$500 Personal.
- Come join Rep. Abigail Spanberger (D-VA), a former CIA Officer, on a private tour of the International Spy Museum.
- Baseball at Nationals Park? Sen. Ted Cruz (R-TX), Rep. Donald Norcross (D-NJ), and Rep. David Valadao (R-CA) are all hosting events this month with suggested contribution levels set at: $5,000 Host/$2,500 Sponsor/$1,000 Attend.
- Why not a California wine trip during the August recess with Congresspersons Doug LaMalfa (CA-1), Jake LaTurner (KS-2), Jay Obernolte (CA-23), Lori Chavez-DeRemer (OR-5), and David Valadao (CA-22)? Suggested Contribution Levels: $5,000 Host/$2,500 Attend.
For the record, SCOA does not currently have a PAC, and these are just a bit out of my personal budget.
Thought Leadership from our Consultants, Think Tanks, and Trade Associations
AEI Says Companies Can No Longer Ignore Geopolitics. Until about two years ago, most companies lived far away from geopolitics. How rapidly the world has changed. Last year, 93% of multinationals reported losses linked to political instability, up from 35% in 2020. Corporations should brace themselves for even more turbulence this year…and next…and the year after that. For decades, businesses operated in a world where they could float above the squabbling among countries—that era has ended. For example, just weeks after Russia invaded Ukraine, BP decided to let go of its 19.75% stake in the Russian energy giant Rosneft and two other joint ventures in Russia, writing down more than $20 billion in the first quarter of 2022; the German DIY chain Obi Baumarkt sold its Russian stores to local staff for 10 euros; Italian bank UniCredit lost $1.3 billion; ExxonMobil lost more than $3 billion; and H&M lost nearly $200 million. Every company that left the country (and hundreds have made announcements to that effect) incurred substantial losses.
Eurasia Group Sees an Uneven Social Policy Landscape Presenting Risks to Companies. Today’s uneven social policy landscape, and with it, the intense, polarized debate on social issues present reputational, compliance, and talent management challenges for companies. While the varying degrees of abortion access across the country provide one example of this phenomenon, risks can originate from any hotly contested social issue. Companies should expect their marketing, product, leadership, and strategic decisions to be viewed through partisan lenses; their state-level regulatory burdens to increase; and the political interests of Gen Z to make it increasingly difficult to attract and retain employees. In this prolonged era of highly polarized politics, even the most politically neutral companies should anticipate public pressure to take a position on partisan issues as lawmakers and consumers seek to score political points. Companies need to develop response strategies that are in line with their brands, values, and priorities.
Trade Analyst Laura Chasen Explains the Biden Administration’s Guidance for Accessing IRA Clean Energy Project Subsidies. The Treasury Department has released its “Guidance to Boost American Clean Energy Manufacturing,” which explains the rules to receive tax breaks for using domestic content in clean energy projects under the Inflation Reduction Act (IRA). A companion to earlier guidance on how to access the IRA for tax breaks on electric vehicles, this guidance relates to American “manufacturing and sourcing requirements” for clean energy projects and facilities. It lays out the domestic content rules-of-origin that renewable energy projects must meet to receive subsidies, and provides an array of clarifications, including the treatment of labor costs. Under the Production Tax Credit, facilities that meet domestic content requirements receive a 10% bonus; and under the Investment Tax Credit, projects that meet the domestic content requirement receive up to a 10% bonus. Projects are eligible for the full value of the bonus only if they meet the domestic content requirement and one of three other conditions, one of which being the IRA’s prevailing wage and apprenticeship requirements. While Treasury indicated it may show some flexibility, the Department is expected to continue issuing guidance on the IRA’s clean energy provisions on a rolling basis. While the IRA’s electric-vehicle credits provoked intense opposition from other countries, the credits for energy projects have also provoked alarm because of their protectionist nature. These subsidies, like the subsidies for semiconductor manufacturing in the CHIPS & Science Act, are obviously intended to benefit domestic interests at the expense of companies of even the U.S.’s closest allies.
Mehlman Consulting Identifies Our Four Addictions. Over the first two decades of the 21st century, the U.S. and the world have developed four major addictions. Each affords great upsides, but their downsides are unsustainable. The first is an excessive dependency on China. On the upside, China’s enormous workforce and efficient production has lowered the prices that Americans pay for goods, keeping inflation down. At the same time, the Chinese market for U.S. goods and services has become critical. The downside is a dependency on China for semiconductors, critical minerals, advanced batteries, and many key ingredients for pharmaceuticals and medical supplies. Given China’s very different attitudes toward human rights, this dependency has contributed to the erosion of U.S. leadership across the world. The second addiction is technological, with nearly everything “digitized, networked, or automated.” The benefits are faster innovation, greater productivity, access to information, and a reduction of costs. Yet, digitization is “a weapon of mass disruption” that opens us up to cyberattacks, eliminates certain jobs, spreads misinformation, invades privacy, and addicts kids to devices, which has led to a spike in mental health concerns. The third addiction is to easy money. Low interest rates protect asset values and help avoid depressions, but they encourage asset bubbles and inflation that can crush growth and savings. The fourth addiction is a greater dependence on debt financing. Institutions, public and private, have been able to spend far more than they take in, enabling them to avoid making hard choices that now imperil future spending on needed priorities. Policies to address any of the four addictions could worsen the others. The central policy and political challenge of the coming decade will be to kick these four addictions without crashing economies, stifling innovation, or provoking wars.
“Off the Record”
Trump adviser, and 2016 Campaign Manager, Kellyanne Conway is acting as an unofficial adviser to Miami Mayor Francis Suarez, texting and chatting with him as he looks to build his national profile. She’s been spotted by his side in Miami, all while staying inside Trump World. The interesting backstory: Mayor Suarez reached out to Conway after seeing Trump speak at a recent RNC event in Nashville. He told her he was impressed by the performance, calling it the most compelling speech he’d heard Trump give. Since then, Conway and Suarez have been in contact, and now Conway believes he could be among the best picks to be Trump’s running mate. Suarez, her thinking goes, would (1) frame the presidential campaign as an alternative to President Biden; and (2) has a strong governing record given his success in Miami.
In Other Words
“The objective facts show that the FBI’s handling of important aspects of the Crossfire Hurricane matter were seriously deficient,” Special Counsel Durham, who released a report indicating that the FBI mishandled a number of aspects of their investigation into Russian interference in the 2016 election.
Did You Know
Louisiana is the king of state exporters. In fact, Louisiana’s $122 billion in exports last year gave the state a 43% export-share-to-GDP ratio when matched against its $281 billion GDP, more than twice the 20.6% ratio of second-place Texas. The boom is a reflection of the growth of U.S. energy exports centered on the state’s three liquefied natural gas (LNG) export terminals.
Graph of the Week
The carbon removal industry has become a major player in the fight against climate change. Although efforts to scale the industry are being led by private companies, the Biden administration has devoted billions in federal funding. Consider that the bipartisan infrastructure law boosted tax credits to $180 from $50 for permanently removing 1 ton of CO2 from the atmosphere, and the administration has devoted $3.5 billion in funding for creating regional direct air capture hubs around the country.