Après Nous, Le Déluge

Here’s What You Need To Know

When President Bill Clinton left office in January 2001, he pushed through a flurry of literally last-minute “midnight” executive orders and regulatory measures. They were aimed at rushing through items in line with his ideological leanings in direct contradiction of his successor. Now, faced with a similar circumstance, President Obama seems poised to do the same thing. President Obama has already said he instructed his team to “run through the tape” in order to make changes up to the last minute of his presidency.

Fearing the dismantling of his legacy and facing a ticking clock, President Obama could ram through a series of regulations that could have serious impacts on a variety of sectors.

  • Tax Policy: The Obama Administration has been in dogged pursuit of regulatory measures aimed at eliminating corporate tax inversions through so-called “385” regulations, which seek to disincentive a business practice known as “earnings stripping,” by which a newly inverted company shifts domestic profits overseas as tax-deductible interest payments on debt owed to its new foreign parent. Republican leaders have already called for the Treasury Department to slow its process of enacting these regulations because Treasury has yet to make clear what the economic impact might be.
  • Environmental Policy: Regulations to combat climate change have been a major goal of the Obama presidency, and could very well be a major part of the President’s last-minute regulatory agenda. Sam Batkins, director of regulatory policy at the American Action Forum, noted renewable fuels and methane regulations are still awaiting action from President Obama. Considering the Bureau of Land Management recently released new methane flaring regulations (which already face legal challenges from the oil and gas industry), Obama seems intent on cementing as many greenhouse gas control as possible to place more pressure on Trump to stick with climate agreements he signed this past year.
  • Labor Policy: President Obama has already displayed a willingness to use executive power on labor issues with his order expanding overtime pay. Meanwhile, the Labor Department and National Labor Relations Board have been seen as especially aggressive in efforts to facilitate the growth of labor unions and increase wages. The process of quietly enacting labor policy has already begun, but the President could still issue orders on big ticket items like wages, overtime hours, union rules, or “card check” rules which allow for faster unionization of workforces.

In addition, President Obama could also enact new telecommunications regulations through his outgoing FCC Chairman Tom Wheeler (who is already being warned by Republican lawmakers to avoid such measures) or offer a surge in acceptance of Syrian refugees. An outgoing President can still have substantial influence and President Obama does not seem likely to leave without a few last-minute additions to his policy resume.

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THE COMING OBAMACARE DEBATE. Repealing Obamacare has been a GOP policy priority since the law’s inception. President-elect Trump has stated “either Obamacare will be amended, or repealed and replaced,” so it’s time to look at what the replacement options may be. Several leading Republicans have proposed detailed replacements to the law, including Rep. Tom Price’s proposal to expand health savings accounts, create new tax credits for purchase of coverage, and lawsuit abuse reforms; or the proposal announced by Speaker Ryan to better protect Medicare, preserve employer-based insurance by eliminating the so-called “Cadillac tax,” and enact real medical liability reform. All of these ideas could form the basis for the replacement or amendment of Obamacare.

BALLMER’S PLAN TO SAVE THE GOVERNMENT. Former Microsoft CEO and self-proclaimed “numbers guy” Steve Ballmer has been spending a portion of his retirement buried inside Excel spreadsheets with a team of 25 data geeks creating a comprehensive accounting of U.S. government spending. Ballmer’s project, called USAFacts, aims to treat the nation like a company and release a full analytical report of the U.S. government as though it were a company preparing for a call with investors. The project will eventually allow anyone to understand how and where the government spends money, but it could also allow for a more private-sector style analysis of government performance based on measurable outcomes vs. taxpayer “capital” invested.

PROGRESSIVES PASS THE HAT. In preparation for the Trump presidency, left-wing progressives are already looking to build an insurgency to obstruct as many of the new president’s policies as possible, and they need wealthy liberal donors to contribute to the war chest. Left-wing mega-donors are already holding three-day retreats to strategize how to fund opposition to the yet-to-be-formed Trump Administration, and former Rep. Henry Waxman and his lobbying firm have started preparing tactics for progressive causes to use in efforts to block key Trump agenda items. Liberal groups like NARAL Pro-Choice America, the Sierra Club, and Planned Parenthood are also taking advantage of the progressive fears of the Trump Administration in order to increase fundraising efforts to prepare for large-scale opposition campaigns. With the election of Donald Trump marking a rejection by voters of the status quo of how Washington operates, it is interesting to see the progressive movement fall into the same old DC ways.

FED’S PHILLIPS CURVE OBSESSION. Between maximum employment (from a technical standpoint, if not in reality) and stable prices, Federal Reserve officials seem satisfied with economic performance and look to be on a path to raise the interest rate. But University of Mississippi economics professor Michael Belongia and Boston College economics professor Peter Ireland argue this false confidence is based on the Fed’s infatuation with the Phillips Curve – a systemic tradeoff between unemployment and inflation. When you instead examine Fed performance by looking at the output gap – which is computed as the percentage point difference between real GDP and the CBO’s latest estimates of potential output – it projects a less rosy outlook.

POLLING IN THE POST-TRUMP WORLD. With many asking how the polls could have predicted last week’s election so wrong, polling expert and official Friend of Delve, Kristen Soltis Anderson, penned a column outlining what happened and where the polling world is headed. She points out that one key factor in the Trump campaign’s ability to see their hidden voters was that, unlike most other polling, they were able to avoid “social desirability bias” – or the desire of respondents to not give the “wrong” answer – by looking at voters’ responses to key indicator questions beyond the top line “horse race” figures on which most public polling does. Anderson also points to the Clinton campaign’s mischaracterization of likely voters, arguing, “You can’t take the customer base for Brand Obama, change up the formula, and expect that same level of sales.” Anderson suggests that possibly looking to new ways, such as search trends or social media chatter, to determine voter opinions might help, but that regardless, the polling industry must evolve.

Copyright Chaos, Trade Troubles, and Moral Messaging​

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

One month and one week into serving as the newest Librarian of Congress, Carla Hayden has already done something no one else has done for the past 119 years – she fired the current Register of Copyrights, Maria Pallante.

  • Pallante had been serving as the head of the U.S. Copyright office since January 2011, and had earned bipartisan Congressional support for efforts to modernize and strengthen the American copyright system.
  • Some interest groups, however, have argued that under her leadership the CopyrightOffice had become too strong an advocate for rights holders. Suggestions have been made that she furthered entertainment business interests in the guise of copyright policy, while going beyond the Office’s core mandate to simply create accessible records of who owns artistic works.
  • The original press release announced the move as a “new appointment” for Pallante as a “senior advisor for digital strategy,” but shortly after this announcement, Pallante’s resignation letter, in which she declared she would not be accepting the new position, was leaked.
  • The dismissal led some commentators to suggest it was part of a move by Silicon Valley big tech firms working with the Obama administration to weaken American copyright law, and that removing Pallante sends a disturbing signal to creative industries who have supported her efforts to strengthen the laws. Even after her departure, this clash between content producers and content distributors and aggregators is likely to continue.

U.S. copyright law is integral to industries that generate over a trillion dollars in economic output, according to the International Intellectual Property Alliance. Dr. Hayden’s recent appointment and subsequent decision to take such a drastic measure to impact an important policy area just reaffirms that in Washington, people are policy.

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MESSAGING ON VALUES. New research on effective political messaging from Stanford sociologist Robb Willer shows “the most effective arguments are ones in which you find a new way to connect a political position to your target audience’s moral values.” Most people and candidates tend to focus on an argument centered on their own set of values that, if not shared with their target demographic, only serves to further alienate them from the intended message. Willer’s study shows that whether you’re a candidate in a top-tier U.S. Senate campaign or a participant in a dinner party debate, how you frame your message is often more important that what your message is.

YOUNGSTOWN’S BIPARTISAN BLUES. Youngstown, Ohio was once a major hub of steel production that has been in steady economic decline for almost the entirety of the past 40 years. Hillary Clinton hopes they will support the party of President Obama, who touts keeping a nearby GM plant open. But, Donald Trump has made a strong appeal to the area’s blue-collar Democrats by attacking trade deals. Yet, the Washington Post notes it’s unclear if either candidate will be able to save the struggling rustbelt community. The steel industry’s declining labor needs result more from technological advancements in production rather than trade, and the glimmer of hope the region once received from the shale-drilling industry has been diminished by low natural-gas prices. As a result, most local residents do not expect real economic relief from either party.

THE CHANGING OF THE WINNERS AND LOSERS. With the rise of the gig economy, Kauffman Foundation Senior Fellow Diane Mulcahy examined the changing definitions of economic winners and losers. More Americans are engaging in consulting projects, freelance assignments, and contract opportunities, suggesting a new formulation of the “American Dream” that prioritizes experiences over material goods and quality of life over quantity of stuff. The new “winners” in the workforce are workers with specialized skills or in-demand experience who seek out entrepreneurial opportunities rather than plant themselves in an entrenched position. The “losers,” on the other hand, are now mostly corporate workers whose skills are common, commoditized, or less in demand, such as mid and low-level managers, bookkeepers, and executive assistants, all of whom will likely lose the degree of job security they once had. The gig economy may not solve structural unemployment issues in America, but it is leading to fundamental change in the American workforce, allowing many to choose how, how much, where, and when they want to work. The question remains, when will government begin shifting towards 21st century workforce policies that recognize this fundamental change?

WHY CAN’T WE GET THE MIDDLE EAST RIGHT? Last Friday, historian Martin Kramer gave a speech to the Association for the Study of the Middle East and Africa, posing the nagging, decades-old question: why does America keep misjudging the Middle East? Kramer’s chief critique of the way American foreign policy leaders have perceived the region is the erroneous assertion that Israeli-Palestinian conflict, more than any other issue, prompts the rise in terrorism, weakens friendly governments, and makes it impossible for America to win Arab allies. Kramer argues this assumption is the chief culprit preventing America from effectively understanding and influencing the Middle East’s various players and their interactions. This flawed image of the Middle East requires a radical shift in the mentality of many in the U.S. foreign policy establishment.

A TANGLED WEB OF INFLUENCE. The Massachusetts Institute of Technology’s Media Lab has produced interactive charts showing just how large the web of influence in Clintonworld is. Using data from the emails leaked by Wikileaks from Hillary Clinton, John Podesta, and the Democratic National Committee, MIT’s visualized data connects the original sender to the email recipient making it easy for anyone to explore the emails themselves and see how much the top players in the Clinton campaign communicated with other influencers and opinion leaders.

THE LATEST TRADE STUMBLE. The EU and Canada signed their long-delayed trade deal this week, the Comprehensive Economic and Trade Agreement (CETA). Despite the deal eventually crossing the finish line, many have pointed to the arduous process CETA had to go through as further evidence of the EU’s inability to manage its place in international trade policy. The last-minute stonewalling of CETA by the Socialist-led parliament of Wallonia, a region of Belgium, shows just how tenuous is the EU’s control over regional trade policies. Some commentators are worried the EU may be sliding into a “vetocracy,” where regional pathologies serve as roadblocks to proposed multilateral agreements and undermine a key value proposition of the EU itself.

Can We Combat the Next Recession?​

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.

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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.

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Tuesday, November 8: Election Day

Announcing the Administration Project, Plus More News You Can Use

Here’s What You Need to Know

On November 7th, Delve will launch The Administration Project (TAP), our new research-on-demand service that will provide subscribers with an information advantage on the transition into the next presidential administration.

As a sneak peak of what is on TAP, today we are releasing The Insider’s Guide to Forming the Next Administration, an overview of key developments on the road to the presidential transition so far. Highlights of this report, which can be downloaded for free here, include:

  • Trump Brings Trenton to DC: The Trump transition team is headed by New Jersey Governor Chris Christie, who has brought some of his most trusted lieutenants, including long-time political adviser Bill Palatucci and former Christie Chief of Staff Rich Bagger. It remains to be seen if Christie will retain this level of influence over the transition should Trump win, but he has certainly left his mark on the transition process to date.
  • Clinton’s Balancing Act: Hillary Clinton’s transition team appears to be much like her campaign in its attempt to straddle the far left and more moderate wings of the Democratic Party. Senior positions for former Michigan Governor Jennifer Granholm and current President of the Center for American Progress Neera Tanden seem to suggest a more left-wing, progressive agenda. But more classic Clinton allies like Ken Salazar, who has had a lucrative lobbying career, seem more in-line with more centrist Democratic policies.
  • What Are They Doing In There? With limited details on the exact plans these transition teams are crafting, it’s highly likely they are preparing a “first hundred days” plan, a list of potential executive actions the new President could sign right away, and the beginning concepts of a draft budget to submit to Congress. For an understanding of what these planning documents might look like, The Insider’s Guide to Forming the Next Administration breaks down what we already know about the backgrounds of the transition team members who are in the room for these discussions.

We hope this report helps you start preparing for November 9th and beyond. Download your free copy of The Insider’s Guide to Forming the Next Administration here and received a sneak peak of what’s on TAP for after the election.

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OBAMA + HOLDER = REDISTRICTING
Former Obama Attorney General Eric Holder is heading a new group called the National Democratic Redistricting Committee, aimed at combatting the impact of GOP control of the previous redistricting process. The group will be a key platform for President Obama’s post-presidential political activities, and he has already announced that redistricting will be a priority for his fundraising and campaigning after he leaves the White House. This post-presidential strategy is markedly different from previous presidents, like George W. Bush, who have kept relatively low profiles within the world of partisan politics and focused on more charitable efforts. While intending to become active during this election cycle, the group now plans to coordinate for next year’s Virginia and New Jersey elections before mobilizing a large-scale push for redistricting reform during the 2018 midterm elections.

MEDICINAL RENT-SEEKING
Under the Affordable Care Act, the U.S. Preventive Service Task Force is tasked with publishing recommendations on what should be covered in insurance plans without copays and deductibles. Not surprisingly, this requirement has made the agency the focus of an onslaught of pressure from outside groups looking to ensure specific types of screenings, counseling, and medications are within the list of recommendations. In anAnnals of Internal Medicine article, three former chairs of the task force argue that the influx of aggressive lobbying of the agency might mean it is time to reconsider the role it plays in the regulatory process.

ROPE-A-DOPING ROBERTS
Recently leaked emails revealed Hillary Clinton ally and President of the Center for American Progress Neera Tanden outlined a strategy to intimidate the Supreme Court to uphold Obamacare. Emails showed Tanden describing tactics used during the first major challenge to the healthcare reform law, writing, “As [former White House communications director] Jennifer [Palmieri] will remember, it was pretty critical that the President threw the gauntlet down last time on the Court, warning them in the first case that it would politicize the role of the Court for them to rule against the ACA. As a closer reader of the case, I honestly believe that was vital to scaring Roberts off.” The email exchange sheds light on a possible reason why Chief Justice Roberts, a Republican appointee, sided with the Obama administration on the crucial decision upholding the law, and the tactics the administration and their allies used to intimidate the Court.

CAN’T THEY JUST AIRBNB?
As San Francisco’s homeless population has grown, so too has the debate over how to handle the issue of the large homeless camps that fill the spaces between some of the most expensive real estate in the country. A few of the city’s many billionaires have finallydecided to put hundreds of thousands of their dollars behind a new effort to solve the problem: a ballot measure banning the tent cities. Notable contributors include tech billionaires Ron Conway and Michael Moritz, hedge fund manager William Oberndorf, and husband of Yahoo CEO Marissa Mayer and venture capitalist Zach Bogue. The supporters of the campaign have argued the measure will help get the homeless to shelters, but they have taken criticism for prioritizing the comforts of their luxury over the needs of the less fortunate.

2016’S BEST HIT?
In campaigns across the country, some of the best attacks leveled at political opponents has been to accuse them of personal financial gain thanks to their political connections. The attack has proven to have bipartisan resilience, with effective use against candidates ranging from Indiana Democratic Senate candidate and former lobbyist Evan Bayh to incumbent Missouri Republican Senator Roy Blunt. High levels of dissatisfaction with the status quo and long-time incumbent politicians have led to the success of this hit.

HOW TO REALLY FIGHT POVERTY
Democratic politicians, including Vice President Biden and Sen. Bernie Sanders, have often used the talking point that “nobody who works 40 hours a week should live in poverty.” Preston Cooper of the Manhattan Institute recently published an article arguing this mantra “misdiagnoses poverty in America.” Cooper explains the largest cause of poverty in America is not low wages, but rather lack of work. Recent census data actually shows that just 2.4% of working-age individuals who are employed full-time live below the poverty line year round. The focus on wages often lead to pressure for an increase in the minimum wage, which actually leads to fewer people being employed. As Cooper’s analysis suggests, a real prescription to fight poverty requires policymakers to focus on increased employment opportunity instead.

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Tuesday, November 8: Election Day

2016’s Political Lesson, a New UN Boss, and Telecom Wars

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.

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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.

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

SCOTUS Takes on Business, Governments Take on Cash

Here’s What You Need to Know

The Supreme Court’s 2016-2017 term is now underway, and there are several cases that could have big implications for businesses.

Here are a few cases to watch this term:

  • How much does a copycat owe? In 2012, a jury ruled that Samsung had infringed on Apple patents by copying the iPhone’s design, and ordered Samsung to pay $548 million in damages. Samsung argues that the current law, which states that the infringer is liable for the total profit made from infringement, goes too far. A group of tech companies, including eBay, Dell, Facebook, and Google filed an amicus brief backing Samsung, arguing the current law could lead to “absurd” results. Other companies, including Calvin Klein, Tiffany & Co., Adidas, and Crocs, filed briefs in support of Apple, arguing that if the court rules that design infringement can be apportioned, it devalues the worth of design and could result in a proliferation of copycat products. If the court rules in favor of Samsung, it could mean marked change in how infringement damages are calculated.
  • When can cities sue businesses? The court will decide whether the City of Miami has standing to sue Wells Fargo and Bank of America for alleged lending discrimination, which the city argues drove down city tax revenue and property values while forcing the city to absorb the costs of foreclosed properties. “Banks should be responsible for those consequences,” Miami’s complaint states. The city accused the banks of “disproportionately placing vulnerable, underserved [minority] borrowers in loans they cannot afford.” While the merits of Miami’s claims will not be considered, the court’s ruling could have a dramatic impact on types of law suits  that cities can bring against businesses.
  • Can a company going bankrupt play favorites among creditors? In Jevic Holding’s bankruptcy, the company used a strategy called structured dismissals that allowed them to pay their bankruptcy lawyers but leave their laid off truck drivers unpaid, even though both had equal standing as creditors. If the lower court’s ruling allowing this strategy stands, it could, according to one lawyer, “threaten the main intent of the Bankruptcy Code, to ensure the fair distribution of assets to creditors.” For their part, nineteen states that filed briefs in the case “are concerned about companies that use structured dismissals to downgrade, or entirely avoid, tax claims.” With such high stakes, the court’s ruling has the potential to change how companies structure bankruptcy payouts and whether creditors can have confidence in a fair process.

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WORLD WAR $

There’s a worldwide “war on cash” with national and local governments joining credit card companies in the push for a post-cash world. Brett Scott, author of The Heretic’s Guide to Global Finance: Hacking the Future of Money, says this phenomenon is troubling because a cash-free system creates a world where every transaction becomes a “have your people talk to my people” affair requiring consumers to conform to the automated bureaucracy of intermediaries. Cash-free payment options are unquestionably convenient, but to make them the only form of payment could mean individuals ceding a deceptively large amount of power to those running automated transactions. How governments try to balance innovations in financial transaction with consumer protection should be closely watched in the months and years to come.

ABUSERS GENERAL?

In many states, AG has always stood for “Almost Governor.” But some Attorneys General in a handful of blue states have been going beyond the norm in their attempts to play the role of partisan political activist instead of serving as their states’ chief legal advocate. In New York, Attorney General Eric Schneidermann is leading a sweeping investigation of fossil fuel companies, looking to prove they intentionally misled investors about the dangers of climate change. In California, Attorney General Kamala Harris – currently a candidate for the U.S. Senate – led an investigation into a charter school company that had pushed back against the California Teachers Association’s attempts to unionize their employees. Yet, both of these investigations have yielded no results and have cost millions in taxpayer dollars. In most elected offices, there is an accepted level of politicking. But given the broad investigatory powers and substantial budgets given to Attorneys General, these examples could mark a disturbing trend.

TRUMPED UP TAX REPORTING

This past weekend, The New York Times (potentially illegally) obtained and published three pages from Donald Trump’s 1995 New York state tax return, reporting that Trump declared a $916 million net operating loss (NOL) that year. While the Times painted the loss as an “extraordinary tax benefit” that Mr. Trump “derived from the financial wreckage he left behind,” tax expert Ryan Ellis writes in Forbes that “none of this is unusual in the high stakes investment business Trump plays in.” Political reporters’ ignorance regarding taxes failed to note that a net operating loss is quite common in business, with about 1 million businesses reporting a NOL in 1995. In fact, in 2015, the Clintons realized a $700,000 capital loss, a different type of loss that is even more beneficial for offsetting future tax on capital gains. The political reporters’ and pundits’ attacks on Trump beg some questions beyond the presidential race, according to Ellis: “If this is a ‘loophole,’ what are these political reporters suggesting? That a business loss should simply be eaten by the taxpayer? That Uncle Sam should be a full partner in your profits but not in your losses? How is that fair?”

LOBBYISTS ON BOARD

In the wake of the 2008 financial crisis, regulators created a rule intended to ensure those on corporate boards are free of potential conflicts of interest. It requires that members of a board’s compensation committee must be “independent directors with no financial ties to the company or its executives.” Yet a recent Wall Street Journal review of securities filings and lobbying data found several instances in which board members served as contract lobbyists for the company and oversee CEOs’ compensation, despite the conflict of interest. Such ties, and such mining of public records, show how important due diligence for boards and public affairs teams can be. If you don’t find it, someone else may do it for you – and get it published in The Wall Street Journal.

ALL’S FAIR IN LOVE AND MERGERS

After the headlines announcing a merger or acquisition fade, losing bidders sometimes still try to convince government regulators to scotch the deal. Last Thursday, for example, Salesforce urged EU regulators to probe antitrust issues surrounding Microsoft’s acquisition of LinkedIn, even though the acquisition already won approval in the United States, Canada, and Brazil. Salesforce’s Chief Legal Officer Burke Norton argued in a Medium post that Microsoft’s purchase of LinkedIn will stifle innovation and allow Microsoft to gain an unfair competitive advantage through their collection and sole ownership of LinkedIn’s metadata. Responding to Salesforce’s claims, Microsoft argues the merger will allow them to become competitive in the CRM market that Salesforce currently dominates, ultimately driving down prices. It is a good reminder that the deal is never done until it is really done, and companies must be aware of efforts to disrupt their business plans that may be subject to regulatory approval or other government oversight.

Mark Your Calendars

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

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

It’s Boxing Day at the FCC

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.

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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

Is There a “Trump Phenomenon” the Polls Are Missing? ​

Here’s What You Need to Know

As the polls in the presidential race continue to tighten, many pollsters and political observers have spent countless hours trying to determine whether, as Donald Trump has claimed, there is a silent majority of American voters who are planning to come out and support the Republican nominee on Election Day that do not typically vote in presidential elections. The assertion that current polling is missing these voters is being referred to as the “Trump phenomenon.”

If these voters do exist, where would they come from? The Wall Street Journal recently outlined one potential answer, examining how Trump has successfully tapped into the needs and frustrations of Americans living “in places with fraying social fabric.” These former industrial hubs have been ground zero for the decline in American manufacturing and the rise in heroin addictions, along with the corresponding decline in overall quality of life, are leaving these Americans feeling abandoned and longing for the ways of the past – which is exactly the message Trump delivers on the campaign trail.

So how are pollsters accounting for the possibility of a “Trump phenomenon”? We asked one of our favorite pollsters and one of our favorite data crunchers what they thought about the potential of the “Trump phenomenon” to cause a surprise on Election Day.

Kristen Soltis Anderson, Co-Founder of Echelon Insights, says Trump’s voting base is hiding in plain sight:  

“If there’s a ‘hidden Trump vote’ – and that’s a big if – the place one would expect to find them is ‘white college educated men.’ Right now, Clinton is performing better than normal with white college educated voters than Democrats tend to do, and if we take seriously the idea that there are people who like Trump but are afraid to admit it, that’s where I’d guess you’d find them. But let’s be clear – the ‘hidden Trump vote’ is not about sampling problems. Old white voters are easy to survey; younger voters, urban voters, voters in racial and ethnic minority groups are the ones that might be ‘missing’ in a sample these days, and they’re not voting heavily for Trump.”

Mark Stephenson, CEO of Red Oak Strategic, says this unique cycle requires opening the aperture of the lens much wider than usual to capture every possible supporter in the analysis:

“As far as Trump’s ‘silent majority’ goes, they are less silent and less hard to find than one might think. In much of the research and models that we are building, we aim to cast as wide a net as possible for possible turnout scenarios. In fact, in many surveys, voter interest is actually higher than in 2012, indicating that at this point in the cycle, the race is still up in the air. Just this week, our Red Oak Strategic survey found Trump beginning to solidify his vote share among Republicans and actually take a 2-point national lead over Clinton among all likely voters.”

Whether there is some segment of the electorate quietly waiting for Election Day to come out in force for Trump remains to be seen, but it is clear neither side can take anything for granted except that we have yet to see the final twists and turns in this crazy election cycle.

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FILIPINO RENEGADE
President Rodrigo Duterte of the Philippines has prompted concerns within his country’s military after a rash of anti-American, and more recent anti-EU, outbursts placed the country’s relationship with Western powers, including their military alliance with the U.S., in question. In a country prone to coups by a military that strongly favors cooperation with the U.S., Duterte has sought to maintain the support of the military through his campaign promise to double soldiers’ salaries. But, many top military officials have been caught dumbfounded by the President’s demands for American military advisers supporting counterterrorism efforts to leave the country. Given how important the American military presence in the Philippines is to U.S. interests in Asia, grappling with an unfriendly government or the destabilizing impact of a coup could present the first major foreign policy challenge to the next President.

NO MORE AUTO-PILOT SPENDING
In a recent paper, Urban Institute economists C. Eugene Steuerle and Rudolph G. Penner argue  that the federal budgeting process must begin requiring non-discretionary spending items, like automatic increases to entitlement funding, to be scrutinized with the same attention as those discretionary programs that fight for funding each year. Steuerle and Penner point out that these expenditures often go unchecked because the budget process focuses on 10-year increments, allowing programs’ true cost to be hidden outside the budget window, and thus a problem for a future Congress. Forcing more regular reviews of these big ticket programs would allow the budget increased flexibility to allocate resources and better reflect the changing nature of national priorities.

THE ORIGINAL SIN
In a recent Wall Street Journal op-ed, Peggy Noonan reminded us that the American people’s distrust of Hillary Clinton goes all the way back to the 1993 firing of seven nonpartisan, career staffers in the White House Travel Office. At first, the White House claimed the staffers were the targets of a criminal investigation by the FBI. But when the media began to scrutinize the terminations, the administration changed its story to suggest the firings were part of a pledge to cut White House staff. Throughout the process, Mrs. Clinton denied any knowledge or involvement in the firings. Several years later, it became clear the staffers had been removed by Mrs. Clinton in order to make room for political operatives who would ensure the travel office business went to an Arkansas company with long personal and financial ties to the Clintons. The pattern of this scandal – “lie, deny, revise, claim not to remember specifics, stall for time,” and ultimately dismiss it as “old news,” became the Clinton’s model for all future scandals.

A TEA PARTY DEMOCRAT?
In April, Republican Rep. Bill Shuster of Pennsylvania narrowly defeated his erstwhile Tea Party challenger Art Halvorson in a primary. But Halvorson hedged his bets, encouraging more than 1,000 Democrats to vote for him as a write-in candidate in their primary, which was enough for him to become the Democratic nominee. The move creates challenges on both sides. For those on the right, it challenges party loyalty versus ideological agreement, and for those on the left it creates a conundrum of whether to vote for an extreme candidate who will be easier to beat in 2018 or support the more centrist candidate who helps the Republicans keep the House. Either way, if Halvorson is successful, look for political parties to scrutinize ballot access rules that allowed this situation to occur.

STATE BUDGET CUTS =/= TUITION INCREASES
Recent conventional wisdom has suggested college tuition increases are the result of state budget cuts to higher education funding. But a recent analysis from the Manhattan Institute’s Preston Cooper has poked holes in this assumption. Budget cuts fail to explain the rise in tuition at private universities, and there’s very little correlation between states where budgets have been cut most and states where school tuition has increased most. The actual culprit behind the tuition increases, Cooper argues, may be the growing availability of indirect subsidies through federal student aid programs that artificially drive up the cost of a college education, leading students to pay more and go deeper into debt.

Mark Your Calendars

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

Dubious Diplomacy, Postal Wars, and a Mining Bailout​

Here’s What You Need to Know

The U.S. and Russia negotiated a cease-fire between rebel and government forces in Syria this week. The shaky truce began on Monday at sundown, with many skeptics already questioning whether the measure will have a meaningful long-term impact.

  • 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.

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(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

Internet Abdication, The Global Super Court, and Pentagon Politics ​

Here’s What You Need To Know

For years, the U.S. government has helped maintain the internet through a Department of Commerce contract with a private non-profit called the Internet Corporation for Assigned Names and Numbers (ICANN). At midnight on September 30th, however, the Obama administration will cede U.S. protection of the internet.

Despite their claims that the void will not be filled by the United Nations, it seems that is exactly what will happen.

  • How Did We Get Here? Two years ago, the Department of Commerce began the process of ceding oversight of ICANN to a “multi-stakeholder” group instead of a single government. While the plan for the privatization of ICANN dates back to 1997, the Obama administration made it a telecommunications policy priority in a way the previous administrations never did. Congressional Republicans have tried to defund the plan, but while this legislation is stuck on Capitol Hill, the Obama administration has moved forward with the October 1st transfer.
  • Thanks, Obama, But Why? As Obama Commerce Official Lawrence Strickling explained, “For the last 18 years, the United States has been working with the global Internet multi-stakeholder community to establish a stable and secure multi-stakeholder model of Internet governance that ensures that the private sector, not governments, takes the lead in setting the future direction of the Internet’s domain name system.”
  • What’s Next? ICANN currently benefits from an antitrust exemption in U.S. courts, but on September 30th, that protection will end. ICANN will be forced to seek antitrust protection elsewhere. Authoritarian regimes have already suggested ICANN become part of the UN, making it easier for them to censor the internet globally. This development comes despite the Obama administration’s pledge that the U.S. would never be replaced by a “government-led or an intergovernmental organization solution.”
  • What Could Go Wrong? An Americans for Limited Government FOIA request for “all records relating to legal and policy analysis … concerning antitrust issues for” ICANN resulted in no responsive documents, suggesting either the Administration has prepared no such analysis, or their analysis is too disturbing to make public. The Administration’s lack of concern has shocked many in the tech community and on Capitol Hill who fear what could happen if the internet were, even in part, controlled by one or more entities who don’t share U.S. commitment to free speech and expression.

As The Wall Street Journal Columnist L. Gordon Crovitz notes, “The only thing worse than a monopoly overseen by the U.S. government is a monopoly overseen by no one—or by a Web-censoring U.N.”

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THE GLOBAL SUPER COURT

An international judicial system created by and for elite Western corporate attorneys, known as investor-state dispute settlement (ISDS), has been quietly written into many of the treaties that govern international trade and investment. A BuzzFeed News investigation found that the mere threat of an ISDS case can intimidate nations into altering laws while enabling companies and executives accused or even convicted of crimes to escape punishment through ISDS tribunals. Provisions further cementing ISDS authority have been incorporated into the Trans-Pacific Partnership trade deal, which Congress may consider soon and which both Presidential nominees have rejected.

WHY UNILEVER ENDED ITS CORPORATE SOCIAL RESPONSIBILITY

Unilever Chief Marketing and Communications Officer Keith Weed recently published a post on why he disbanded the company’s Corporate Social Responsibility department in an effort to embed sustainability “in every corner of the business, as opposed to just the corner where the CSR folk hung out.” In changing what social responsibility means at Unilever, Weed found that CSR must be sincere and holistic rather than seen as a “weight on one side of a set of scales” trying to balance out the “bad” things a company does with “good” things. Unilever’s approach shows how important it is for any business to approach CSR genuinely and throughout its business if it wants CSR to succeed. Conversely, if a company does not understand who, what and why it is funding CSR efforts, it can undermine their own business interests without even realizing it.

EXECUTIVE ORDERS

Whether the next President is Hillary Clinton or Donald Trump, they are likely to continue President Obama’s aggressive use of executive orders as a tool to push through major policy initiatives. Clinton would likely become the first Democratic president in over a century to take office without full control of Congress, and after convincing supporters of Bernie Sanders to support her by promising a number of far-reaching and contentious policies, they will expect her to follow through on those promises with unilateral executive action if needed. Likewise, Trump has put forth an aggressive agenda that may make Congress balk. He has argued that President Obama has “led the way” in use of executive powers. But, Trump has assured Americans he will “use them much better,” because his executive orders will “serve a much better purpose” than Obama’s orders have.

PENTAGON POLITICS

A recently leaked memo outlines how the Pentagon plans to play “hardball” against House Speaker Paul Ryan’s defense spending proposal by seeking out conflict within the Republican caucus and undermining Speaker Ryan. The document outlines a strategy of applying “public and private pressure” on lawmakers through a coordinated public and government affairs strategy. There is outrage among Republicans over the overtly political nature of the Pentagon’s strategy, but it does show the DoD applying the principles of competitive intelligence to enhance their efforts influence leaders and outcomes on Capitol Hill, which is a pretty brilliant idea if we do say so ourselves.

LABOR UNION’S HAMBURGLED TACTICS

As part of their nation-wide “Fight for 15” campaign, the SEIU has hired workers to protest outside of businesses and restaurants, specifically targeting McDonald’s on several occasions. Recently, one of those activists sought to apply the rhetoric she was taught to her own employer, attempting to deliver a letter asking the SEIU to allow the activists to organize. She was blocked by the union’s security. The SEIU told her it “supports the ability of all workers” to unionize, but claimed it does not employ the “Fight for 15” workers directly because technically they work for the individual organizing committees in each city. This claim is shockingly similar to the legitimate argument used by McDonald’s but rejected by SEIU. McDonald’s operates using a franchise model and therefore doesn’t directly employ the workers at individual restaurants,. But, SEIU has fought to get the NRLB to classify them as a joint employer. Looks like those organizers may soon have to start a separate campaign if they hope to unionize the unions.

WHEELER DEALER

Today, FCC Chairman Tom Wheeler will decide whether to bring any of three major policy proposals that could be voted on by the commission in the final months of the Obama administration. The three proposals include whether or not the ways Americans watch television could be expanded through replacing the ubiquitous living room set-top box, how internet providers can use their customers’ personal data, and potential changes to the market for broadband connections used by big businesses. Wheeler’s decisions are worth watching because each of these proposals could mean a last minute fight that major telecommunications companies weren’t necessarily expecting to have before Election Day.

Mark Your Calendars

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