Archive for category: Diversified Industries

And don’t forget to check out Delve’s new research-on-demand service, The Administration Project (TAP). Starting November 7th subscribers will be able to receive an unparalleled information advantage into the next presidential administration.

Here’s What You Need to Know

Between weak European central banks, a distorted Chinese property market, political uncertainty in the West, and historically high private and public debt, the global economy is unquestionably a volatile place right now. These uncertain times beg the question – are we prepared to combat a recession? The answer, in a word, is no. However, looking at the state of economic affairs, Stanford University economics professor and former Chairman of President George H.W. Bush’s Council of Economic Advisors, Michael J. Boskin, sees several ways the U.S. and other advanced economies could and should prepare for the next global economic downturn.

• Monetary Policy: While the U.S. unemployment rate is around 5%, which is what most economists consider full employment, and while the Fed is expected to raise its target interest rates in December – the U.S. central bank is moving too slowly. This problem is now being exacerbated with Fed Chair Janet Yellen’s consideration to allow inflation to run a little hotter than normal and create a “high-pressure economy.” In order to be best prepared for a possible recession, Boskin declares the economy requires monetary-policy normalization, and it requires it move at a faster pace than the Fed is currently operating.
• Fiscal Policy: Entitlement programs are going bankrupt while the American economy is saddled with a tax code riddled with often nonsensical policies that inhibit growth – both of these policy sectors must be reformed to enact an overall productivity-enhancing, supply-side fiscal policy. Boskin points out that without correcting these massive, systemic problems the U.S. central bank will remain burdened leaving it inflexible and ill-prepared to respond to economic turmoil.
• Government Spending: The overall thrust of Boskin’s argument lies in an overall shift in the paradigm surrounding government spending. He explains that government spending must not be viewed as the first, best solution to economic woes by policymakers. This type of short-sighted understanding of deficit-financed spending ignores the long-term implications of high debt levels and fails to acknowledge the fact that these public spending programs rarely deliver the results they promise. The reality of stimulus policies, Boskin argues, is that they are only capable of succeeding if they are carefully vetted and implemented quickly – neither of which being feats politicians have traditionally proven capable of.

News You Can Use

BIG TOBACCO WANTS A TAX
Tobacco giant RJ Reynolds is currently fighting against a California tobacco tax, while fighting for a new tobacco tax in Missouri. The logic in spending $8 million and counting to push for a tax on your own business comes from the fact that RJ Reynolds’ only real competitors in Missouri are a number of smaller, off-brand cigarette companies whose business will be significantly more hampered by the tax than a behemoth like RJ Reynolds. It is just the latest example of how understanding and exposing your opponents’true motives can help you overcome their challenge.

WHO’S WATCHING THE FCC?
Federal Communications Commission (FCC) Chairman Tom Wheeler’s time leading the regulatory body has been checkered with controversy, but now new revelations about the independent watchdog meant to oversee the agency have critics even more concerned. Accusations of interdependence between the FCC’s Inspector General (IG) and the Chairman have brought into question how independent the IG really is. A letter from Republican lawmakers revealed that FCC Inspector General David Hunt shared agency audits with Chairman Wheeler, and that the Chairman’s office was able to influence hiring within the IG’s office. As Chairman Wheeler’s tenure ends, and a new President prepares to appoint his replacement, it seems likely this latest controversy will only increase the pressure to reform the FCC and increase the IG’s independence.

FREELANCERS’ PRESIDENTIAL WISH LIST
With one in three Americans having engaged in the freelance economy in the past year, there is a large and growing constituency within the U.S. workforce looking for the next president to enact policies to help freelancers in a variety of industries. This wish list includes greater efforts to research and understand the freelance economy, support for programs promoting income predictability, and potentially expanding the Small Business Administration to provide more information and support for the freelance industry. As the American workforce is evolving, what it expects from its leaders is too – the next President will need to address the concerns of freelancers and the gig economy in a way not required by any previous President. Rather than trying to stop the expansion of freelancers, government has to adapt labor policies to recognize their value to the economy.

INTERNET OF VULNERABLE THINGS
Last Friday morning, numerous websites and key online services, including Spotify and Twitter, were crippled due to a distributed denial of service (DDoS) attack on Dyn, a major domain name service provider. Hackers reportedly hacked tens of thousands of internet of things devices – including household appliances, digital video recorders, security cameras, and internet routers – to send a massive amount of traffic to Dyn and disrupt its ability to function. This effort marks only one event of a major spike in coordinated DDoS attacks that appear to be probing the insecure internet of things to measure the defenses of companies operating critical online services. Sen. Mark Warner (D-VA) has alreadyannounced a probe into the most recent cyberattack, looking into what tools may be needed and could be available to combat similar attacks in the future.  Regardless, the disturbing event underlines how shockingly fragile the internet is to the increasingly sophisticated attacks launched by hackers.

TRIPPING UP THE ASIA PIVOT
Last week, Filipino President Rodrigo Duterte landed a possibly fatal blow to one of President Obama’s signature foreign policy initiatives – the Asia pivot. President Obama had intended on refocusing U.S. diplomatic interests on East Asia to combat China’s influence, but speaking in Beijing, the Filipino President announced a “separation” with the U.S. He went on to claim “America has lost now,” and said he would consider working more closely with Russia and China. While the Duterte government has proven to be a chaotic one, the major news here is still that America’s one of the most important and steadfast allies in the region publicly criticized U.S. leadership and proposed aligning themselves with direct geopolitical opponents of U.S. interests.

SORRY, THAT BONUS WAS ACTUALLY A LOAN
During the wars in Iraq and Afghanistan a decade ago, the California National Guard enticed thousands of soldiers to reenlist and go to war with bonuses of $15,000 or more. Now the Defense Department claims the bonuses were paid incorrectly and those same soldiers owe that money back – with interest. After an audit revealed the California National Guard improperly distributed bonuses in order to achieve enlistment targets, nearly 10,000 combat veterans were hit with interest charges, wage garnishments, and tax liens if they refuse to pay back the money. Along with criticizing the policy generally, Speaker Paul Ryan specifically pointed out that the House has already established a statute of limitations on the military’s ability to recover future overpayments within the FY 2017 National Defense Authorization Act.  Secretary of Defense Ash Carter has sinceannounced the Pentagon will stop reclaiming the bonuses.

THE GOP’S BIG MONEY WOMEN
The upper echelon of the Republican donor class has traditionally been a boys’ club, but lately more and more women are participating in high-dollar fundraising efforts on behalf of GOP candidates and PACs. So far 37 women rank among the top 150 donors to super PACs this cycle, and they include large contributions from female leaders like Wisconsin roofing company billionaire Diane Hendricks, Bay Area clinical research Laure Woods, and Marlene Ricketts, matriarch of the family that owns the Chicago Cubs. The change is evidence of more successful women seeing an opportunity to hold great influence in politics through financing super PACs and other big money groups that have been used to steer political thinking since the 2010 Citizens United decision.

Mark Your Calendars

Tuesday, November 8: Election Day

Here’s What You Need to Know

Every political season comes with its own set of lessons to be heeded for all future campaigns, and this year’s may have been illustrated last week as Hillary Clinton and Donald Trump both had embarrassing private materials leaked to the public, hitting them on their most vulnerable points. The developments left many people asking how we got here. As Delve CEO Jeff Berkowitz recently noted, the stark difference in fallout from each leak shows how much of a difference good opposition research in a primary can make, and how, with good vulnerability research, campaigns can inoculate themselves from future surprise revelations.

So why did these two leaks produce such divergent results this past week?

• Political Primary Malpractice: The recent 2005 video of Donald Trump using vulgar and offensive language to describe his interactions with women has brought this electoral cycle full circle to its biggest failure, as outlined in a Medium post by Jeff after the tenth GOP primary debate in February. Because all of the other Republican candidates failed to prepare or use opposition research against Trump, it allowed the GOP nominee to enter the general election essentially unvetted. The Democrats and press were always going to dig into the nominee’s background, and allowing Trump to enter the fall so unprepared for these surprise revelations has directly led to the potency of this leak.
• Vulnerabilities? What Vulnerabilities? In the wake of this October surprise for the Trump campaign, many former and current Trump campaign advisers have come forward and discussed their repeated urging that the candidate undertake opposition research on himself to better prepare his campaign to respond to items exactly like this leak. The Republican National Committee even reportedly undertook its own vulnerability research on Trump, but claims the results “yielded nothing substantial.”  This is political malpractice extraordinaire.
• Bernie’s Gift To Hillary: Aside from the obvious disparities in content, the leaked transcripts of Hillary Clinton’s paid speeches to Wall St. bankers failed to deliver any real shock to the Clinton campaign for the simple reason that voters had been hearing about the transcripts for the past six months. During the Democratic primary, Bernie Sanders repeatedly attacked Hillary Clinton over these transcripts, helping lessen the blow from the recent leaks. Most importantly, the entire Democratic establishment –including Bernie Sanders – knew long ago these transcripts could potentially disrupt her candidacy if leaked and were prepared to defend her when they did.

After the 2012 presidential election, many argued there was a lesson to be learned in how the brutal GOP primary process hurt Mitt Romney’s ability to defeat Barack Obama. But, when the 2016 cycle comes to a close, it may be the lack of rigorous vetting through opposition research during the primary that led to Donald Trump’s ultimate weakness, and ultimately one of the greatest failures of this election. For a more detailed breakdown of why these leaks played out so differently, check out Jeff’s Medium post here.

News You Can Use

WHO REALLY CREATED THE GIG ECONOMY?
A new National Bureau of Economic Research working paper challenges the popular notion that the rise of the gig economy is a direct byproduct of the tech industry, suggesting instead that the change was more a function of the country’s sluggish transition into a post-industrial economy. The study, which examined data from 2005 to 2015, found that while the percentage of Americans working in gig economy jobs (i.e. contract work, on-call positions, freelancing, etc.) has risen from 10.7 percent to 15.8 percent, only 0.5 percent of all those workers were employed by digital platforms developed by tech companies. If accurate, the study raises serious questions about the state of the American economy and why so many workers are moving to the gig economy.

MEET THE NEW BOSS, SAME AS THE OLD BOSS
As U.N. secretary-general Ban Ki-moon’s term is set to expire in January, his replacement was elected last week – Antonio Guterres, a Socialist former prime minister of Portugal, was the unanimous choice of the 15-member U.N. Security Council. Guterres was known as a modernizer while prime minister, softening his Socialist party’s image in Portugal and closely aligning himself with British Prime Minister Tony Blair and other progressive European leaders. Guterres has spent time in the U.N. serving as the organization’s refugee chief during the recent Syrian refugee crisis, earning him the respect of many diplomatic colleagues. While outlining what his goals would be as secretary-general, he called for greater funding, alongside greater organizational efficiency, a call also made by many of his predecessors. Given the broad nature of those goals, plus Guterres’ reputation for shying away from unpopular decisions in his past political career, it seems unlikely his tenure will lead to any significant change within the U.N.

GOVERNMENT-CHOSEN HEALTHCARE
As health insurers consider leaving the healthcare exchanges created by Obamacare, the Obama administration plans to steer the affected policy holders to other insurance companies in the healthcare law’s markets in order to keep these customers from leaving the exchange along with their insurance companies. The plan calls for insurers and state regulators to barrage these consumers with a constant stream of reminders leading up to and during the 2017 sign-up season. Supporters of the administration claim the move will better inform consumers, but insurers worry if the government starts picking plans to promote, it could confuse consumers and create a backlash over the significantly diminished options.

2016: LESSONS IN DIGITAL MARKETING
Hillary Clinton’s presidential campaign sought to build the best digital campaign yet witnessed in the political universe. So with a few weeks left before Election Day, AdWeek spoke to some of the campaign’s digital team to see what they’ve learned during this bizarre electoral season. The staffers all said that the often vaunted practices of super-targeted advertising and ad bombardments don’t necessarily work in today’s online space. They also found that throwback photos are so popular they turned into campaign ads, and that brand hijacking, or taking an opponent’s line of attack and turning it into your own hashtag or website, yielded notably high online engagement. Overall, one of the most fundamental lessons the Clinton digital team seemed to learn was that the social media strategy doesn’t always need to have an agenda, different platforms reach different audiences, and depending on who that audience is, the message may or may not have anything to do with the campaign message of the day.

PEACE PRIZE WITHOUT THE PEACE
Just days after Colombian citizens rejected a peace deal negotiated between the government and the Revolutionary Armed Forces of Colombia (FARC), Colombian President Juan Manuel Santos was awarded the Nobel Peace Prize for negotiating the rejected plan. The successful campaign against the peace deal called for greater assurances that the former FARC militants would hand in cash from drugs, spend time in jail, and earn their political future through election rather than the guaranteed, unelected seats in Congress outlined in the peace negotiations. The Norwegian Nobel Committee, however, argued that the voters’ rejection does not necessarily mean the peace process is dead, and that despite the vote, President Santos has brought the conflict significantly closer to an end. Despite the Nobel Committee’s optimistic outlook, it remains to be seen whether the peace deal will actually lead to an end of the five-decade long civil war.

WHO FACT-CHECKS THE FACT-CHECKERS?
With a presidential election between two of the least trusted candidates in recorded history, the job of the fact-checkers is especially important. But, a closer look at how they have been conducting their duties this cycle reveals an implicit bias against one of the candidates. After last Sunday’s presidential debate, NBC’s fact-checkers appeared to go to great lengths to nitpick at semantics of Trump’s statements to find them false, and hardly fact-checked any of Clinton’s statements. There have also been several instances in which PolitiFact has found Trump’s statements to be false when they found similar statements made by other politicians to be true. It isn’t necessarily that the fact-checkers are just being unfair to Trump. The deeper problem is that by showing a clear bias in their process, it undermines the credibility of media fact-checkers at a time when so many Americans are looking for third-party validation of statements made by two candidates they simply do not trust.

CLASH OF THE TELECOM TITANS
A few weeks ago, Comcast chief Brian Roberts began the long-awaited convergence of the fixed and wireless broadband industries with the announcement that the company will be launching Comcast-branded mobile phone service next year. The bottom line for consumers is that the cable and wireless markets, both highly competitive industries, are merging to create even more competition – and thus, likely, more competitive pricing for both business sectors. For the businesses, the outlook is murkier. Wireless is clearly the future of connectivity, but given the growing prevalence of wifi (controlled by the fixed broadband companies), the big wireless providers may risk simply becoming wholesalers of basic roaming services for big cable and tech firms unless they can roll out effective 5G wireless. Either way, Roberts’ announcement is just the latest shot across the bow in the emerging cable-mobile wars.

Mark Your Calendars

Wednesday, October 19: Third Presidential Debate, University of Nevada, Las Vegas, NV

Here’s What You Need to Know

**Update as of 10:00am Thursday, September 29: The FCC has removed Chairman Tom Wheeler’s set-top box order from the agenda of today’s open meeting and said the proposal will remain under consideration. “We have made tremendous progress – and we share the goal of creating a more innovative and inexpensive market for these consumer devices. We are still working to resolve the remaining technical and legal issues and we are committed to unlocking the set-top box for consumers across this country,” the three Democratic commissioners, Wheeler, Jessica Rosenworcel and Mignon Clyburn said in a joint statement.**

If you haven’t already, you will soon be seeing lots of coverage of a major Federal Communications Commission (FCC) proposal regarding set-top cable boxes. But, those headlines and hype may be a little short on details about what it really means. Fortunately, we’re here to help breakdown the debate.

Today the FCC will vote on a proposal put forth by Chairman Tom Wheeler to allow cable and satellite subscribers to pick the device they use to receive their content, ending the effective requirement that customers rent set-top boxes from their providers. The measure has pitted major cable providers, who earn $19.5 billion annually from set-top box rentals, against tech companies, like Google and TiVo, who stand to reap substantial rewards if the set-top box market is opened up to third-party devices.

• “Google’s Proposal”: Tech companies, led by Google, have vocally supported Chairman Wheeler’s proposal. They argue the current system places cable companies as an unnecessary intermediary between users and content. The tech giants have suggested that consumers should be allowed to purchase cheaper, third-party devices to watch cable and online content through one device, allowing non-cable content to exist equally alongside cable content.
• Cable Companies’ Case: The major cable companies and their trade association, the National Cable and Telecommunications Association (NCTA), have lobbied hard against the proposal, arguing that government regulated technology mandates are generally antithetical to innovation. It is also possible that third-party devices will complicate cable companies’ ability to provide technical assistance to users and increase costs as they are forced to ensure compatibility with a variety of new devices. Many, like AT&T, also believe the market has already come up with a winning approach to providing non-cable content alongside cable content: an apps-based system with the cable operator as the hub for a variety of apps.
• Content Producers’ Concerns: The content producers, being represented in the fight by the Motion Picture Association of America (MPAA), have also come out against the FCC proposal over concerns that the move will limit their ability to negotiate deals with operators for individual platforms and features. The MPAA echoed analysis by the U.S. Copyright Office that the proposal would violate copyright law by interfering with a copyright owner’s exclusive rights to license content as it wishes.
• The Swing Vote: The latest development, which will determine how today’s vote goes, is the swing vote of FCC Commissioner Jessica Rosenworcel, a Democratic communications lawyer and policy expert appointed by President Obama in 2012. The five-person commission consists of three Democrats and two Republicans, and while commissioners tend to fall upon party lines, Rosenworcel, unlike her Democratic colleagues, has said she has “some problems” with the proposal. In an email last week, Rosenworcel wrote that she supports the objective of moving beyond set-top boxes, but is not confident this proposal is the way to do it.

Tomorrow’s headlines are guaranteed to show a big victory for someone. Whether it’s big cable companies or big tech companies appears to be up to one FCC commissioner who has yet to make up her mind on the proposal.

News You Can Use

WAITING TO EXHALE, BREXIT EDITION. Last week, Britain’s chief Brexit champion, Foreign Secretary Boris Johnson, claimed negotiations to exit the EU would begin, “by the early part of next year.” But, Johnson was publicly corrected by Prime Minister Theresa May, with Downing Street saying they have yet to determine the timing or strategy for triggering Article 50 of the EU treaty, which begins a prescribed two-year period for exit negotiations. There’s speculation that Prime Minister May is waiting to see what the global political landscape looks like after U.S. and French presidential elections, which could result in victories for the global populist movement with Donald Trump and, far less likely, Marine Le Pen. Dealing with new European leaders or the prospect of more countries leaving the EU could dramatically change how Brexit is maneuvered.

FREE TRADE: THE SCAPEGOAT. Both Hillary Clinton and Donald Trump’s critiques of free trade have centered on the conventional wisdom that decades of free trade policies have primarily benefitted the 1% and left working-class Americans with even less than before. But, the London-based Resolution Foundation has reviewed the data and adjusted for various factors – like population growth and the end of the Cold War – and concluded that the economic hardships faced by low income workers is generally “rooted in domestic policy.” Whether it is the unintended consequences of policies like minimum wage increases or huge marginal tax rates, free trade has served as a scapegoat for failed domestic policy for so long that it has become the accepted culprit for the economic woes targeted by domestic policymakers right and the left.

OBAMA’S PARTING SHOT AT ISRAEL? Middle East Forum director Gregg Roman published an op-ed in The Hill arguing President Obama could further define his foreign policy legacy by agreeing to support, or at least not veto, a UN Security Council resolution recognizing a Palestinian state. Obama’s UN Ambassador Samantha Power has refused to state publicly that the U.S. would use its veto power to block a Palestinian statehood measure, presumably in an effort to pressure Israel to soften their opposition to the Iran nuclear deal. Previously, the U.S. has argued Palestinian statehood should only be negotiated between Palestinian and Israeli leaders, which would require the Palestinians to accept Israel as a Jewish state and concede the so-called “right-of-return” for refugees of the 1948 war and their decedents. Allowing a third-party entity, in this case the UN, to determine Palestinian statehood without these concessions, would be a serious blow to the peace process.

BLUE-COLLAR BERLINERS. Voters in this month’s elections in Berlin delivered a blow to Angela Merkel’s conservatives at the hands of the populist, right-wing Alternative for Germany Party (AfD). The demographics of much of the AfD voting bloc appear similar to British voters who supported Brexit and American voters bolstering Donald Trump’s presidential chances: male, middle-aged, relatively uneducated, blue-collar workers. The local German vote shows there is now a global trend toward populist nationalism. Even if some of the reasons fueling the trend may be different from country to country, at least one consistent element is a growing gap between the transnational elite and the less-skilled, less-mobile blue collar workers they are leaving behind.

MIND THE OBAMACARE GAP. In the age of Obamacare, purchases of gap insurance to cover high deductibles have grown as deductibles have skyrocketed. These gap insurance plans are separate policies with a monthly fee, offering coverage of deductible payments on the original insurance – effectively they are insurance for your insurance. While 8 in 10 individuals may qualify for some form of Obamacare subsidy to help ease the burden of those high healthcare deductibles, these gap plans have a strong appeal to small businesses who must face those costs alone. As consumers and businesses find their footing in this new Obamacare-centric world – a policy that was supposed to reduce health care costs – look for gap plans and other supplemental insurance to increasingly meet the needs of the marketplace and hide the true costs of health care.

TECH’S GOTV STRATEGY. 2016 has proven to be the year of surprisingly robust civic activism in Silicon Valley, with new-tech-backed voting initiatives, many of them aimed at registering millennial voters, multiplying daily. While these initiatives mostly claim to be bipartisan, it is clear that Donald Trump’s candidacy has pushed investors to seek ways to drive up millennial turnout which will in turn help Hillary Clinton’s chances of victory. This type of subtle political activism will likely raise serious questions about the partisan nature of such efforts and could fuel post-election disconnect if these new voters help Hillary Clinton win The White House.

Mark Your Calendars

Tuesday, October 4: Vice Presidential Debate, Longwood University, Farmville, VA

Sunday, October 9: Second Presidential Debate, Washington University, St. Louis, MO

Wednesday, October 19: Third Presidential Debate, University of Nevada, Las Vegas, NV

• Déjà Vu: In February of this year, a similar U.S.-Russia negotiated cessation of hostilities fell apart within weeks. The truce eroded as Russia and the Syrian government accused the American government of failing to get Syrian opposition groups to distance themselves from extremist groups, while opposition groups accused the Russian-backed Syrian government of lumping them in with jihadists.
• Kerry Confusion: Trouble with the cease-fire came almost immediately after it went into effect. Secretary of State John Kerry claimed the U.S. and Russia would approve Syrian government airstrikes against jihadist militants. Yet, within hours the State Department declared Sec. Kerry had been “incorrect,” and explained neither the U.S. nor Russia would have authority over Syrian airstrikes on the jihadists.
• Divided Defense: The agreement apparently states that if the violence in the region is significantly reduced by this coming Monday, the U.S. and Russia will begin to collaborate on joint airstrikes against ISIS and Nusra Front fighters occupying portions of Syria. This portion of the agreement faced strong opposition within the Obama administration from Secretary of Defense Ashton Carter, who has deep reservations about collaborating and sharing intelligence with Moscow.
• Syria Skeptics: Everyone from Syrian opposition leaders to the Obama administration have voiced their skepticism that the agreement (which has yet to be released to the public in a written form) will prove successful. Given the failure of past agreements, and the dramatic increase in violence that occurred over the weekend leading up to the cease-fire, many fail to see how this latest measure will jump-start a political track in the Syrian conflict.

Fawaz Gerges, the Chair of Contemporary Middle East Studies at the London School of Economics, explained, “The Obama administration does not really want to invest any strategic capital in Syria for a variety of reasons.” This cease-fire agreement seems to confirm that the administration is running out the clock on this issue and the Syrian conflict will almost certainly be passed on in its current form, if not worse, as a foreign policy challenge for the next president to address.

News You Can Use

(NOT) THE SUMMER OF BRITAIN’S DISCONTENT
Britain’s June vote to leave the European Union sparked predictions of economic doom, but thus far those prophecies have failed to materialize. Financial analysts are already scrapping their expectations for a 2017 recession in the wake of strong consumer spending, improved industrial production, and growing business investment over the past three months. Economists now argue the policy’s negative economic impact is likely to be prolonged and chronic as opposed to instant and acute. While the consensus suggests tough times still lie ahead, at least for the moment, the “doom and gloom” economic predictions espoused by the Bremain campaigners have yet to materialize.

THE IRS DOESN’T SHARE WELL
In 2014, more than 2.5 million American taxpayers earned income from businesses in the “sharing economy” including Uber, Airbnb, and Etsy. That number is expected to double in the next few years, according to an American University study, and the IRS isn’t happy about it. The agency is concerned it will be losing out on billions in tax collections because much of this income goes unreported thanks largely to the tax system’s failure to keep up with the emerging sharing economy. The IRS has produced a new website called the Sharing Economy Resource Center in order to help address this challenge, but even the new site is likely too complicated to ensure most sharing economy business partners meet their tax obligations. Bureaucracies always lag behind economic shifts, and how fast (or slow) they respond could mean the difference between millions or billions of dollars lost.

POSTAL WARS EXPOSED
Last week, a new group called “Americans for Securing All Packages” was created after their senior advisers – former Bush administration Secretary of Homeland Security Tom Ridge and former Obama administration Homeland security official Juliette Kayyem – both published columns arguing the poor screening of parcels by the U.S. Postal Service poses a top national security threat. Both Ridge and Kayyem have been paid by the group, which has connections to top DC lobbying and public affairs firms as well as a trade association partially funded by UPS and FedEx. UPS has actively lobbied in favor of measures requiring the Postal Service to use the same security process as the private sector. While the evidence here may be circumstantial, these reports show how savvy stakeholders in public affairs campaigns are increasingly seeking to dig into seemingly grassroots efforts to identify and expose who is really behind them.

MINING BAILOUT
It’s difficult to imagine a scenario where Congressional Republicans would support legislation proposed by a Democratic Senator to bail out a private pension fund of a major labor union. But, that’s exactly what is happening with Sen. Joe Manchin’s Miners Protection Act of 2015. Eight Republicans have co-sponsored the bill to transfer $490 million in federal monies to help replenish the pension plan of the United Mine Workers of America. Former chief economist at the U.S. Labor Department Diana Furchtgott-Roth argues that instead of simply providing a Band-Aid in the form of a bailout, the next President should help America’s miners by simply ending “President Obama’s vendetta against the coal industry.” But it is often politically difficult to oppose an effort to directly help workers in an industry that has fallen on hard times due to both regulations and market forces.

EU HANDS TELECOMMS SOME WINS
This week, the European Union will release a proposal regulating online chat services like Skype and WhatsApp, subjecting them to the same rules that have long governed the telecommunications industry. The details of the proposal are not yet confirmed, but tech companies claim “oversight from the EU’s national telecom regulators could raise costs and lead to jurisdictional disputes, discouraging them from launching new services.” The increased regulation and oversight of tech companies in the EU, along with last week’s reversal of a plan to end all data roaming charges within the EU by June 2017, certainly go a long way in maintaining the strong position of the established telecom providers in the European market.

Mark Your Calendars

Monday, September 26: First Presidential Debate, Hofstra University, Hempstead, NY

Here’s What You Need to Know

In past year, Google’s Paris offices were raided by French authorities seeking evidence of tax evasion, EU regulators ruled a tax deal negotiated between Starbucks and The Netherlands was illegal (a decision the Dutch government appealed), and those same regulators announced  they would rule on a similar tax agreement between Amazon and Luxembourg. Now, in a move this week, EU tax officials hit Apple with a $14.5 billion tax bill.

Brussel-crats have repeatedly claimed that U.S. businesses are avoiding European taxes by engaging in transfer pricing deals that allow them to negotiate favorable tax rates with one EU country, then funnel all or most EU sales through that subsidiary. Here’s what you need to know about the burgeoning U.S.-EU tax war:

• U.S. Treasury Calls Bias: Last week the U.S. Treasury released a white paper suggesting European regulators have been targeting tax deals with American businesses for investigation. The European Commission has denied that there is a bias and said all companies in the EU are subject to the same rules, but Deputy Assistant Treasury Secretary for international tax affairs Robert Stack argued that demanding U.S. companies pay retroactive taxes to European governments “could create an unfortunate international tax policy precedent.”
• EU Takes A Bite Out Of Apple: This Wednesday the EU Competition Commissioner completed a three-year investigation into the tax arrangement between Apple and the Irish government, concluding, “that Ireland granted undue tax benefits of up to €13 billion to Apple.” The Commission claimed the agreement constituted, “illegal state aid” and would require Apple to pay the Irish government the €13 billion in back taxes plus interest. Apple and the Irish government have both criticized the decision and announced plans to appeal the ruling.
• Who’s Next? Aside from the ongoing investigation into Amazon, European regulators also have an open investigation into a tax deal negotiated between McDonald’s and Luxembourg. UK business leader have begun to express concern that major British companies like HSBC, Vodafone, and GlaxoSmithKline could soon face similar discrimination.
• U.S.’s Next Move: The Apple ruling brought bipartisan condemnation from Congress and the Obama administration. The Treasury Department‘s next move may be to revive a previously considered strategy to apply a retaliatory double tax on EU businesses and individuals using an obscure section of the Internal Revenue Code.

News You Can Use

WELFARE REFORM AT 20
One of the legacies of The Personal Responsibility and Work Reconciliation Act (PRWORA) signed into law by President Bill Clinton 20 years ago has been a decline in overall poverty in America. Despite claims that the welfare reform measure would literallykill poor children, a recent analysis by Manhattan Institute fellow Scott Winship illustrates, “Child poverty overall fell between 1996 and 2014, after taking into account refundable tax credits and noncash benefits other than health coverage. After including household heads’ live-in romantic partners in the family (i.e. cohabitation) as well, child poverty was lower in 2014 than at any point since at least 1979.” While Hillary Clinton promises to usher in even more government intervention and bureaucracy, Bill Clinton signed into law a policy crafted with a Republican Congress that demonstrated the positive impact of ending the era of Big Government.

PLAGIARISM SOUTH OF THE BORDER
A team of investigative journalists in Mexico recently revealed the country’s president, Enrique Pena Nieto, plagiarized nearly a third of his 1991 undergraduate law thesis. This revelation comes two years after the same team of journalists uncovered a plan by Pena Nieto’s wife to purchase a luxury home from a government contractor, which led to a significant blow to the president’s credibility. These revelations show that no matter how well-vetted a candidate is or how often they have run for office before, there may still be concerning facts hiding in their background.

WHAT 2 WATCH 4 NEXT ON THE HILL
The presidential campaign may be taking up all of the media airspace, but there are important upcoming policy debates when Congress is back in session next week. Even on the thorny issue of immigration, which has been a hot topic between Clinton and Trump, Congress is set to take up critical items like Cuban migration policies, EB-5 investor visas, guest worker programs, biometric entry, exit procedures, and visas for Afghan allies. Beyond immigration, the remaining eight legislative session weeks of this Congress could see debates over reauthorization of the Commodity Futures Trading Commission and the FAA, criminal sentencing reforms, and various appropriations and budget issues. Just because the campaigns are driving the daily message doesn’t mean Capitol Hill will stay dormant on key issues.

EPI-POLITICS VS. REGULATORY REALITY
Hillary Clinton has joined the chorus of politicians and pundits criticizing EpiPen producer (and Clinton Foundation donor) Mylan over accusations of price gauging while dramatically increasing executive salaries. While price increases are usually the result of treatments or major R&D processes that end up being expensive, the EpiPen situation is actually the result of a monopoly created by government regulations. The FDA has repeatedly rejected other pharmaceutical companies’ efforts to receive approval for generic EpiPens. This delay is, of course, not by chance. Mylan employs a team of lobbyists and influencers to ensure this remains the status quo, which is why calls for increased regulation requiring drug companies to justify price increases miss the point.

THE PERSONAL IS NOT REALLY POLITICAL
Maria Konnikova, a psychology and science contributor for the New Yorker, recentlyargued that most studies seeking to tie political preference to unifying personality traits are “malarkey.” Konnikova cited a Virginia Commonwealth University study by a geneticist showing that rather than these traits having a causal relationship with a person’s politics, “It is far more likely that politics and personality traits are both influenced by some earlier genetic and environmental factors. In other words, they may indeed be related, but the fact that someone is liberal does not make him more tolerant, for instance, just as being tolerant does not make someone liberal.” Based on this study, political campaigns that attempt to craft a unifying message based on assumptions of unifying personality traits of their base or undecided voters should rethink their approach.

THE ENVELOPE LOBBY
A group called “Consumers for Paper Options,” which promotes the interests of the paper envelope industry, just scored a big victory from the Securities and Exchange Commission. The group helped convince the SEC to abandon efforts to loosen rules forcing mutual funds to mail paper documents to their investors. Mutual funds had been lobbying for the freedom to make electronic delivery of investment documents the industry default. But Consumers for Paper Options began a successful campaign to convince SEC regulators that the electronic communications would confuse consumers. The group’s coalition didn’t only include envelope company CEOs and paper lobbyists; they recruited labor unions representing postal workers and paper mill workers. Consumers for Paper Options is a prime example of how coalitions in Washington often don’t represent who they say they do – a group claiming to be for vulnerable consumers could actually just be a lobbying operation for paper producers and big labor.

ON ELECTION DAY, WHO WILL YOU REJECT?
With most polls seeming to suggest more Americans disliking both Hillary Clinton and Donald Trump than approving of them, University of Texas professor of psychology and marketing Dr. Art Markman suggests there is a subtle difference in how we chose between two things when we dislike each option. He writes, “When people are dissatisfied with all of their options, research suggests that they often focus on finding reasons to reject one over the other rather than reasons for preferring one.” The subtle difference forces people to focus on the negative attributes that help determine who to reject rather than the positive attributes of who to prefer. The resulting consideration leaves pollsters and political operatives not only focused on the question of who undecided voters will reject, but whether or not undecided voters reject going to the polls at all.

Mark Your Calendars

Monday, September 26: First Presidential Debate, Hofstra University, Hempstead, NY

Here’s What You Need to Know

Throughout the 1992 Clinton presidential campaign, three simple messaging elements were posted to a board in the famous campaign “war room”: 1) Change vs. more of the same, 2) The economy, stupid, and 3) Don’t forget healthcare. Now, in 2016, those same themes that won Bill Clinton the White House could help Donald Trump defeat Hillary.

Delve’s own CEO Jeff Berkowitz published a Medium post outlining exactly how the ’92 Clinton campaign may have crafted the perfect strategy for countering the ’16 Clinton campaign.

• Change vs. More of the Same: Bill Clinton once said, “I have news for the defenders of greed and the status quo, your time has come and gone.” Purely by a side-by-side review of their resumes, if 1992’s George H.W. Bush represented “more of the same,” so too must 2016’s Hillary Clinton. Both are twenty-plus year veterans of the political establishment up against candidates who present a dramatic change from the status quo.
• The Economy, Stupid: Gallup’s most recent polling shows that only 17% of Americans are satisfied with the U.S., the exact same percentage of Americans who were satisfied with the country in August of 1992. By focusing his message on economic issues and outlining how he intends to bring back prosperity, Donald Trump can speak to the large segment of the country who have little faith in the American economy the same way Bill Clinton spoke to the more than 7 in 10 voters who considered the economy not so good or poor in 1992.
• Don’t Forget Healthcare: Healthcare is important to both campaigns, but in very different ways. For Bill Clinton, healthcare was a call to look forward and a reminder to push his vision for healthcare reform. Alternatively, for Donald Trump, the phrase could represent a reminder of why voters are so desperate for change by pointing to Obamacare as a highlight of the failure of Democratic leadership over the past eight years.

For a more detailed analysis of How Bill’s 1992 Campaign Provides the Roadmap to Hillary’s Defeat check out Jeff’s medium post here.

News You Can Use

MINIMUM WAGE = MAXIMUM YOUTH UNEMPLOYMENT

The past twenty years of minimum wage increases have forced employers to respond by requiring greater experience for their money. This has led to a 17% drop in teen labor force participation, as most have become unable to secure jobs without having previously held a job. Preston Cooper of the Manhattan Institute has proposed allowing younger Americans to work for less than older Americans. Then, “after working in an entry-level position at a so-called ‘youth minimum wage,’ a teenager will have the experience and references at his disposal to obtain a higher-paying job.” While there is a federal youth minimum wage, many states have failed to add the provision as they have increased their minimum wages. Proponents of minimum wage increases tend to make a straightforward appeal to paying American workers more money, but ignore the unintended economic consequences as well.

NO, THERE OUGHT TO NOT BE A LAW

Dr. Tom Palmer of the Atlas Network, a global resource center for center-right think tanks and policy groups, recently published a blog post applying supply and demand analysis to government. In this analysis, the product of government is state control, with policymakers and bureaucrats serving as the suppliers, and citizens driving the demand. Palmer argues that the demand for state control comes from individuals making reckless decisions that prove detrimental to everyone and then lead to greater demand for state control of the decision making process. Those wishing to shrink government, Palmer concludes, must focus on decreasing public demand for state control by calling for greater individual responsibility. This new paradigm could lead to innovative free market solutions to society’s problems instead of relying on new laws and regulations.

WHO’S BEHIND TRUMP’S TWEETS?

An analysis of Donald Trump’s tweets has determined that those coming from an Android phone are crafted by Trump himself versus those coming from an iPhone which appear likely to be from a campaign staffer. Comparing the tweets from the two sources for content and time posted, tweets from an iPhone tended to occur later in the day and were more likely to include a picture or a link, and include more generic statements (e.g. thanking supporters, wishing the U.S. Olympic team good luck, etc.). Tweets from an Android consistently occur in the morning and usually involve more vocal attacks on Trump’s political opponents. Data analytics, even at its simplest level, can reveal any individual’s or organization’s rhythms, habits, and tactics that could prove helpful in predicting what they do next.

THE MYTH OF THE PROTEST VOTE

Voter frustration with major party presidential nominees has led many to consider protest votes either for Jill Stein of the Green Party, Gary Johnson of the Libertarian Party, some other write-in candidate, or no vote at all. Yet social and economic writer Clay Shirky argues there is no such thing as a protest vote because while that vote intends to send a message, that message will never be received. As Shirky explains, “The system is set up so that every choice other than ‘R’ or ‘D’ boils down to ‘I defer to the judgment of my fellow citizens.’” Elections have always been about choices; those choosing to “protest” at the ballot box should know their message will likely fall on deaf ears.

DOES IMMIGRATION POLICY = ECONOMIC POLICY?

America’s population growth since 1945 has played an important role in the generally strong economic performance of the country since the end of World War II. A consistent influx of immigrants has been a key component of that population growth. A recent analysis from Sami Karam Of Populyst.net shows that if America stopped taking in immigrants in 2005, our population would essentially be static by 2035, with the number of deaths roughly equally to the number of births. This would have potentially significant implications for our ability to grow the economy and ensure broader prosperity for all Americans.

BREXIT WAS NO ACCIDENT

In the wake of the UK’s vote to leave the EU, a media narrative began to emerge that those who voted in favor of the Brexit simply did so out of ignorance, with a number of leave voters now claiming they had been ill-informed of the nature of their vote. Yet public polling does not support such claims and historic research has failed to establish any correlation between knowledge of the EU and favorability. While the merits of Brexit can be debated, pro-EU forces are doing what several campaigns usually do after losing an election: trying to look for any excuse for their failure, including an attempt to dismiss Brexit voters as uninformed and regretful.

THE SAUDI WAR ON COMPETITION

Saudi Arabia’s oil production is at record highs, and the kingdom’s decision not to slow production suggests that they are more interested in killing the competition by flooding the market than propping up the global price of oil. The Saudis are inflicting the short-term pain of increased gasoline prices on their own citizens while accepting a 2015 budget deficit of $98 billion. All of this in the hopes it will lead to the long-term gain of crippling key foreign competitors in Russia and the U.S. How the Saudis deal with low oil prices will provide a glimpse into how they may fare implementing their aggressive economic reform plan aimed at decreasing dependence on oil revenues.

Mark Your Calendars

Monday, September 26: First Presidential Debate, Hofstra University, Hempstead, NY