04.27.2022 Washington Update

Overview – Is politics downstream from culture, or is it the other way around?  Right now, in modern-day America, it’s hard to tell.  One could make a convincing case either way.  After all, politics are part of culture; but culture can easily shape politics.  Just ask Herbert Marcuse or William F. Buckley.

Why do we ask, you might say, when economic issues appear to be dominating the agenda in DC?  Good question.  To be sure, inflation shows no sign of abating.  No surprise, then, that according to Public Opinion Strategies, who cited an NBC January 18 National Survey, 65 percent of voters think the country is on the wrong track.  POS listed 8 issues for voters to rank in importance.  At the top of the heap, 48 percent responded with “cost of living.”  Coming in last place was “coronavirus,” with just 14 percent.  (Notably, coming in third, 23 percent said “immigration and border security.”)

As Public Opinion Strategies put it in one of its recent political update slides, “voters continue to view the state of the economy as dismal,” and, when it comes to voter sentiment on the economy, it is “some of the worst data we’ve seen in a decade.”  Fifty-six percent of respondents believe the economy will be in recession “in the next year.”  Perhaps even more ominous for Democrats, 58 percent of Hispanic voters disapprove of Biden’s handling of the economy.  Moreover, 76 percent of Hispanics say the economy is “not so good/poor.”  “Keep an eye on Hispanics moving away from Biden/Democrats,” POS wrote.

Meanwhile, Biden’s approval rating hasn’t budged in months, and it’s alarmingly low.  In an average of 8 major polls, only 41 percent of voters give Biden a thumbs up.  Quinnipiac put Biden’s approval at just 35 percent.  What do these figures mean?  Some historical context is in order.  In 1994, President Bill Clinton’s approval rating was 46% and Democrats lost 54 seats. President Barack Obama’s approval was 45% in 2010 with Democrats ultimately losing 63 seats that election year.

These data suggest turbulent waters ahead for Democrats in November.  But more than the economy, battles waged over cultural issues remain heated, are only likely to intensify, and remain highly relevant.  For one thing, according to staff and GOP officials we talk with, Republicans are eager for the fight—which, by the way, they don’t believe they started.

Consider Florida.  Or Texas.  Or take House Republicans’ recent splenetic denunciation of the Business Roundtable’s “energy policy recommendations.”  Here is an excerpt:

At a time when skyrocketing inflation is hammering American families, it is shocking and tone-deaf that The Business Roundtable’s latest energy policy proposal calls for a new energy tax that would increase energy costs even higher while also pushing for crony tax credits that will only benefit special interests and Washington insiders…

Advocating for an energy tax while soliciting massive government handouts for special interests is destructive, ineffective, and unaffordable…

By pushing radical policy positions like a national energy tax, the Business Roundtable will quickly find itself alongside other fading organizations who lost their way.

The very notion of Republicans condemning policy from a group of the nation’s most prominent CEOs was once considered unthinkable.  But no longer.  Of course, it’s not our job to report on the merits of this approach; we only advise that, from a congressional Republican point of view, the approach is real, its appeal is growing stronger, and it portends further fractures with certain segments of the business community that the GOP believes have gone woke.

Such critiques of former corporate allies are, again from the GOP perspective, part and parcel of broader fights over masking in schools, vaccine mandates, and school curricula that continue to rage in middle America.  Again, it’s not our place to say who’s the victim and who’s the aggressor, only to report that, from what Republican officials all over the country tell us, their voters feel culturally besieged, they feel bullied by teachers’ unions, Hollywood, news media, corporate and academic elites, and they’re darn tired of it.

The upshot here is that policy once considered routine and bipartisan may turn out to be neither in the coming months.  Here’s one (hypothetical) example: tax extenders legislation.  Depending on what’s in it, such a bill could fall victim to the “corporate welfare” charge—that is, tax policies being sought, according to certain Republican officials, by big corporations who have taken sides in the culture wars against their voters.

All this could invert the usual playbook for governance, not to mention lobbying.  If culture is downstream from politics, then conservative populism and progressive liberalism, as they have to a meaningful degree already, could define, and indeed determine, political battles, large and small, and how each party deals with them, in the months and years ahead.

Congressional Agenda – While many in DC are turning their attention to the conference committee negotiations on the China package, the COVID response supplemental, a potential second Ukraine supplemental, and nominations, there will have to be a moment soon when more politically driven legislation will take over the legislative agenda on the Hill.

For their part, Republicans continue to pick and choose their fights.  Coming back to DC this week we expect Republicans to be almost singularly focused on immigration and Title 42.  Senators such as Raphel Warnock (D-GA), Jon Tester (D-MT), Kyrsten Sinema (D-AZ), Mark Kelly (D-AZ), Catherine Cortez Masto (D-NV), and Maggie Hassan (D-NH) are all distancing themselves from President Biden’s potential decision.  Republicans are now even further incentivized to make this their focus this work period.

We also don’t expect there to be any reduced focus on inflation—from either party.  The on-again, off-again talk about a revised Build Back Better plan is music to Republicans’ ears, as it gives them another opportunity to drive home that additional Democratic spending will further exacerbate raging hot inflation.  While Federal Reserve Chair Jay Powell is continuing his aggressive interest rate increases, there are still elevated risks for a recession if the Fed fails at a so-called “soft landing.”

Primary Season – There are also new developments on the fundraising front that have Republicans excited.  The Republican party committees have been besting their Democratic counterparts and significant resources are coming to help expand the House and Senate Republican map.  Combined, the Senate Leadership Fund and the National Republican Senatorial Committee raised a combined $116.6 million.  The Senate Majority PAC and the Democratic Senatorial Campaign Committee have $74.4 million cash on hand.  That means Senate Republicans have a $42.2 million advantage—for now.

Having the most money does not mean victory is guaranteed but all signs show Republicans will ultimately be close to parity with Democrats’ fundraising levels come November.