Envelope and Tax Wars and the Rejection Election ​

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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.

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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

The Document Leak You Didn’t Hear About​

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Here’s What You Need to Know

In the past two weeks, hundreds of internal documents were leaked from a network of organizations funded by a powerful billionaire that detailed how he had been using his money to influence European elections, back smear campaigns against ideological opponents, pressure the Obama administration to alter their foreign policy, support anti-Israel propaganda, and sway the U.S. Supreme Court. It seems like news of this magnitude should be garnering banner headlines around the world, and yet even active news junkies probably missed this one.

The leaked documents came from billionaire George Soros’ Open Society Foundations (OSF) and, despite the salacious nature of the contents, only the conservative website The Daily Caller appears to have actually covered the story. The documents reveal specific examples of Soros’ staggering web of international influence that pushes his brand of liberalism, including:

  • A proposal to give the Center for American Politics $200,000 specifically to attack conservative activists.
  • An October 2015 memo revealing OSF had donated $650,000 to “invest in technical assistance and support for the groups at the core of the bourgeoning #BlackLivesMatter movement.
  • Coordinated efforts to pressure the Obama administration to increase the number of refugees the U.S. would accept to 100,000.
  • A legal and media strategy to influence the U.S. Supreme Court’s decision on the U.S. v. Texas illegal immigration case.
  • Ninety separate efforts throughout Europe organized specifically to influence the 2014 elections in various countries.
  • $4 million contributed to anti-Israel groups with the stated goal of “challenging Israel’s racist and anti-democratic policies” and “questioning Israel’s reputation as a democracy.”

Those involved in business and advocacy would benefit from looking at this story to see just how well-funded, large-scale operations seeking to influence an agenda are able to organize seemingly disconnected activists and groups through manipulation and funding. Learning about their strategies and tactics can better inform your own strategies and tactics.

News You Can Use

SINGLE-PAYER EXPERIMENTS
Colorado recently proposed a plan to create a single-payer state managed system called ColoradoCare, funded by taxes and the transfer of federal dollars received by the state. Despite the excitement of the program’s backers, a nonpartisan analysis has determined that even with massive tax hikes, the system would run Colorado into massive debt, forcing the state to increase taxes even further, cut benefits, and slash payments to providers. This analysis doesn’t come as a surprise, as a proposal for a single-payer healthcare system in Vermont failed after it was found to be cost prohibitive. State policies are often used to model national legislation. Yet, much to the consternation of its backers, a single-payer system lacks any such validation for it to become a serious proposal at the federal level, and Colorado’s trial balloon is unlikely to change that reality.

BILL AND TONY’S NORTH KOREAN ADVENTURE
Recently revealed emails show the Clinton Foundation pushed Hillary Clinton’s State Department to approve a request by Bill Clinton to travel to North Korea for a paid speaking engagement. Tony Rodham, Hillary Clinton’s brother, helped arrange the invitation to speak at the Gaesong Industrial Complex in North Korea, which is used by South Korean companies seeking to take advantage of the lower wages permitted north of the demilitarized zone. President Clinton eventually turned down the invitation after a Clinton Foundation staffer was told by senior Hillary Clinton aide Cheryl Mills to decline the offer. But it is clear the former President not only considered taking advantage of the opportunity, but allowed aides to pressure his wife’s State Department to approve it.

THERE IS NO MORE ELECTION DAY
In 2012, more than one-quarter of all votes cast in the presidential general election were not cast on Election Day. This year, early voting begins in late September in both Illinois and Wisconsin, and in October, crucial states like Ohio, Florida, and North Carolina open for early voting. The Clinton campaign has devised a plan targeting voters by cultural similarities instead of geography, reflected in an organizational calendar to take into account early voting processes in key states with the hopes that the plan will secure the campaign an early lead. The RNC voiced confidence in their ability to support the Trump campaign in early voting states thanks to the party’s increased investment in its data and ground game. Early voters tend to be older and more partisan, which makes them less likely to be convinced to change their vote. But, this shows that campaigns at all levels need to understand there is no more Election Day and prepare their ground game and messaging accordingly.

ISIS HR EXPOSED
According to documents found in a former Syrian stronghold of ISIS, the terrorist group’s recruits apparently know very little about Islam. Based on the jihadi group’s initial employment forms, “70 percent of recruits were listed as having just ‘basic’ knowledge of Shariah — the lowest possible choice. Around 24 percent were categorized as having an ‘intermediate’ knowledge, and just 5 percent were considered advanced students of Islam.” The employment documents – along with evidence that ISIS recruiters promised “sex slaves” to European men over beers (even though alcohol is forbidden in Islam) – help expose how ISIS manipulates the uniformed into becoming zealots for their murderous cause.

THAT OLD TUNE?
In response to criticism over foreign donations given to the Clinton Foundation, Bill Clinton announced that the organization would stop taking foreign or corporate contributions and that he would resign from the board should Hillary win the presidency. But, eight years ago, similar promises were made when the Foundation said it would no longer accept contributions from foreign governments once Hillary Clinton became Secretary of State. The Foundation later went back on that promise by accepting donations from the governments of Algeria, Kuwait, Qatar, and others. The Clinton Foundation is already walking back Bill’s comments by stipulating that the restriction he described would only apply to “a small portion of the foundation’s activities,” and charities operating under the Foundation’s banner are debating whether to comply with the rule. If past is prologue, these rules are made to broken.

MICHIGAN’S LESSON FOR ONTARIO
Wall Street Journal columnist Mary Anastasia O’Grady featured a report from Canada’s Fraser Institute: “Ontario vs. Michigan: Policy Lessons from the Wolverine State.” Michigan and Ontario have both traditionally served as large manufacturing bases. But, as Michigan’s economy has aggressively rebounded since 2011, Ontario’s economy has lagged far behind. The report looks at how Governor Rick Snyder’s key reforms – like enacting Michigan’s “right to work” policy and lowering the corporate tax rate – could be applied to Ontario. The Governor’s free market approach is now serving as an example to his northern neighbors, and Ontario may just be the first of many provinces to adopt Michigan’s successful comeback strategy.

Mark Your Calendars

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

Trump ‘16 Could Be Clinton ‘92

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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.

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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

Think Tank Trouble, Transition Teams, and Presidents’ Historians

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Here’s What You Need to Know

Think tanks have long been considered one of the last bastions of thoughtful, intellectual analysis in the political arena. A recent investigative series by The New York Times and the New England Center for Investigative Reporting has outlined a number of instances in which they claim think tanks have offered particular corporate or political interests a way to influence policymakers with more subtlety than traditional shoe-leather lobbying. This story offers an important lesson: finding and analyzing information on organizations (including think tanks) that might support, oppose, or be persuaded to your cause is critical to achieving public affairs objectives.

Examples of the intersection between think tanks and particular interests identified by The New York Times include:

  • Brookings Institution and Lennar Corporation: One of the primary examples of corporate influence of a think tank has been home building giant Lennar Corporation’s relationship with the Brookings Institute. After contributing $400,000 to the think tank, Brookings began aggressively touting the company’s $8 billion San Francisco development plan and even appointed Lennar executive Kofi Bonner as a senior fellow. The Brookings seal of approval no doubt carried some weight with city officials when Lennar sought approval for various elements of the project.
  • The Atlantic Council and FedEx: The Atlantic Council, a foreign policy-focused think tank, went so far as to publicly team up with FedEx to push for free-trade policies, essentially intertwining the think tank’s advocacy and a corporation’s government affairs operation. One of the internal memos circulated before a report on the TTIP trade deal was even released actually went so far as to list lobbying efforts as one of the purposes of the report. The Atlantic Council argued that FedEx had only donated $20,000 to the effort.
  • Scholars or Lobbyists? The report also found that 75 different think tanks had scholars who also worked as lobbyists, paid consultants, or corporate board members. For example, a Brookings senior fellow for health care policy was advocating for a particular Hepatitis-C treatment while earning a six-figure salary on the board of the pharmaceutical company producing the treatment. A former Senator serving as a visiting fellow on energy issues for centrist think tank Third Way also worked as a registered lobbyist for a waste-to-energy facilities company. These are all relationships that opponents of these lobbying efforts need to know in order to gain an information advantage for their own counter-advocacy efforts.
  • Ballooning Budgets: The Brookings Institutions’ budget has grown to nearly $100 million over the past decade, but other major think tanks have also gone on spending sprees. CSIS – whose donors include energy, financial, and defense companies – recently built a new $100 million office tower. The American Enterprise Institute has also announced a new $80 million headquarters.

Many in the think tank community argue there are systems in place to ensure that donors are not able to impede on the independence of the research and reports. Regardless, it is clear think tanks can and are being used as new tools to influence policymakers. Those seeking to influence policymakers must understand how different individuals and organizations can be leveraged to stymie or achieve their public affairs goals.

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TRANSITION TEAMS, ASSEMBLE!
While nearly all the focus over the next few months will remain on the campaigns, there’s been very little attention given to the members and actions of presidential transition teams. This month, the federal government officially began offering the Clinton and Trump campaigns assistance as they each prepare to staff their potential administrations. As the Partnership for Public Service’s David Eagles explains, transition teams are tasked with the often overlooked task of turning rhetorical campaign promises into agenda implementation plans. While the Clinton transition team appears to be a blast from the past with a cadre of long-time advisers, the Trump campaign has chosen a different path with individuals like New Jersey Governor Chris Christie and former House Intelligence Committee Chairman Mike Rogers that have governing, but not White House experience. Their actions over the next three months will give clues as to how they will build, launch, and operate their administrations.

EU AGENCIES EU EMPLOYEES HAVE NEVER HEARD OF
Politico recently featured a list of ten agencies within the European Union that are so obscure that even most EU employees have no idea they exist. The agencies range from the European Centre for the Development of Vocational Training (CEDEFOP), which claims to exist “at the crossroads between education systems and the world of work,” to the European Fisheries Control Agency (EFCA), which seeks to help member states comply with common fisheries policy. The list provides a peek into the almost comically complex world of the European Union and might give an idea of why leaving the cumbersome regulatory behemoth appealed to a majority of UK voters.

THE MELTDOWN’S LEGACY
Eight years since the 2008 financial crisis, reverberations can still be felt from the global financial institutions to local real estate markets. As Politico notes, that year’s legacy of “too big to fail” still haunts European and American regulators as they seek the so-called “Holy Grail”: allowing a big bank to fail without wrecking economic growth or squeezing taxpayers to rescue it. Meanwhile, The New York Times reports many in the hard-hit Las Vegas real estate market remain underwater on their mortgages. As many as one in four Las Vegas area homeowners owes more to the bank than his or her home is worth. Whether the focus is on global regulators or individual homeowners, it is clear a true economic recovery has not yet arrived and uncertainty is as high as ever for the U.S. and global economies.

ELECTION LAW GROUND WARS
The results of this election will not only be decided by voters casting ballots; they may also be affected by rulings from state and federal courts. As Roll Call notes, “Legal challenges to state election laws are still working through federal courts … The outcome of those cases on issues such as photo identification, polling locations and registration could affect voter turnout in about a dozen swing states.” For instance, Ohio Democrats have challenged a Republican plan to remove voters from the rolls after a number of years of electoral inactivity and failure to respond to state warnings, and North Carolina’s voter ID law was recently halted by a 4th Circuit Court of Appeals ruling declaring the law to have “discriminatory intent.” These changes matter not only for this election, but could also determine how campaigns approach voter turnout for elections to come.

HISTORY 101 FOR POTUS?
Graham Allison of the Harvard Kennedy School and Niall Ferguson of the Hoover Institution recently penned an argument in favor of a “White House Council of Historical Advisers.” The body would mirror the Council of Economic Advisers and offer Presidents analysis of current events through the lens of historical analogues. While some presidents have had informal relationships with historians, and historians proposed similar ideas during the Carter and Reagan administrations, no White House has ever elevated “applied history” to this level of advice and counsel. But given the gravity of issues facing the next President, creating an executive council specifically to provide historical context is an interesting idea.

BRAZILIAN CDOs
Brazilian budget and finance ministers announced their government plans to securitize a portfolio of outstanding tax debt that may reach 60 billion reals ($18 billion). The plan is aimed at easing the nation’s budget gap and settling the distressed Brazilian financial system. Investors seem interested in the concept, but are waiting to see how transparent the government makes the process. This could end up saving the Brazilian economy or making it dependent on terms favorable to foreign investors rather than Brazilian taxpayers.

FIGHT FOR YOUR RIGHT TO TWEET
Last month, the Olympic Committee announced that non-sponsors of the games were banned from tweeting about them using hashtags like #Rio2016 and #TeamUSA. A small Minnesota carpet cleaning business has taken umbrage with this demand and filed a lawsuit in U.S. District Court claiming the ban violated their First Amendment rights. Aside from the general idea that any person or business should be allowed to root for their home team, the lawsuit could actually present an important case of “trademark bullying” before the Courts.

Mark Your Calendars

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

Russian Reality, SIGTARP, and Uncle Sam’s Refi

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Here’s What You Need to Know

Russia has been mentioned in news headlines on a nearly daily basis for the past couple weeks. Between allegations of Russian involvement in the DNC email hack and Donald Trump’s comments on U.S.-Russian relations under a Trump administration, both Hillary Clinton and Donald Trump have been accused of inappropriate relationships with Russian industrial and political leaders. These accusations are being thrown around as consensus has been formed that Russia presents the greatest geopolitical threat to the U.S., a contention made by Mitt Romney in 2012 that President Obama then mocked.

To Make Sure You’re Properly Armed for Your Facebook Fights, Here Are the Facts You Need To Know About Clinton, Trump, and Russia.

HILLARY HEARTS RUSSIA’S SILICON VALLEY: As Secretary of State, Hillary Clinton worked to convince American companies to invest in an “innovation city” – Skolkovo – which was billed as Russia’s Silicon Valley. The FBI warned tech companies that these types of Russian investments could serve as cover for theft of their proprietary technology. Despite this warning, Clinton brought in top U.S. tech firms, and noted Clinton Foundation donors like Google, Intel, and Cisco. Meanwhile, various Russian leaders tied to the Skolkovo project made multi-million dollar donations to the Clinton Foundation.

PODESTA HID HIS PUTIN CONNECTION: In 2011, current Clinton campaign chairman John Podesta sat on the board of Joule Unlimited, a small energy company that received $35 million from a Putin-controlled tech project called Rusnano. Podesta failed to reveal this on his personal financial disclosure documents required of him when he became a senior advisor to President Obama in 2014.

HILLARY’S URANIUM STAMP OF APPROVAL: In 2013, Russia completed a takeover of Uranium One, a Canadian mining company that gave them control of one-fifth of the uranium production capacity in the United States. Due to the national security implications of the sale, it required U.S. government approval, which included a sign off from then-Secretary of State Hillary Clinton. At the same time, Uranium One’s Canadian sellers continued to make multi-million dollar donations to the Clinton Foundation and former President Clinton received $50,000 in speaker’s fees from a Kremlin-connected Russian investment bank shortly after the deal was announced.

MANAFORT’S URKRANIAN ADVENTURES: Trump campaign chairman Paul Manafort managed the successful 2010 campaign of pro-Russian Ukrainian presidential candidate Viktor Yanukovych. Manafort also helped reshape the image of Yanukovych’s pro-Russian political party before the Ukrainian President was removed from power and exiled to Russia in 2014. In 2005 Manafort served as an advisor on corporate communications strategy for Ukrainian steel and iron magnate Rinat Akhemtov. Akhemtov was a notable supporter of Yanukovych.

TRUMP’S CAMPAIGN CHAIR IS AN OLIGARCH’S MONEY GUY: Manafort managed tens of millions of dollars on behalf of Russian oligarch Oleg Deripaska. Some have reported Deripaska is “close to Vladimir Putin,” but it should be noted that in 2009 Putin very publicly humiliated Deripaska by likening the Russian billionaire to a cockroach and forcing him to tour a factory to witness the state of Russian social unrest.

TRUMP HAS HIS OWN OLIGARCH TOO: Russian oligarch and Putin ally Aras Agalarov helped Trump bring the Miss Universe competition to Moscow in November 2013. At the time, Trump and Agalarov were in discussions to build a Trump Tower in Moscow but the deal never materialized.

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OBAMACARE CONFESSIONAL
From 2009 to 2010, Dr. Bob Kocher served as special assistant to President Obama and an architect of Obamacare. Now he claims, “I was wrong. Wrong about an important part of Obamacare.” He penned a Wall Street Journal op-ed explaining that the consolidation of doctors he and the other policy minds behind Obamacare believed would benefit the healthcare consumer has done the opposite, creating large, inefficient medical bureaucracies. This failure illustrates why reforms perform best when done organically in the marketplace rather than through centralized bureaucracies in Washington. These officials made assumptions about what was best, got it wrong, and saddled the American public with the consequences. In a free marketplace, alternatives would have been present and his error would have been corrected by others without requiring political and policy fights for years to come. Americans are suffering from his error, but at least he got his guilt off his chest.

FOIA FOIBLE AT LABOR
Six years ago, Americans for Limited Government (ALG) requested a set of records from the Department of Labor under the Freedom of Information Act (FOIA). ALG was told the records existed and they were being reviewed. But now federal officials are claiming the documents do not exist and the communication proving otherwise has been deleted. ALG President Nathan Mehrens said, “At best, this is a case of mismanagement. At worst, well, use your imagination. Are they hiding something and trying to run out the clock in order to avoid sunlight into their operations?” It’s another case of FOIA request obfuscation from government agencies over the past several years. So much for the Obama administration declaring themselves the “most transparent administration in history.”

HILLARY’S NOT SO “RIGHT” ON THE MIDDLE EAST
The conventional wisdom is that Hillary Clinton’s supporters are more pro-Israel than Bernie Sanders’ supporters and that there are concerning signs of anti-Semitism among Trump voters. But an analysis from the Brookings Institute shows “there is generally little difference between the supporters of Clinton and Sanders on these issues.” Just over half of both Clinton and Sanders supporters favor punitive measures against Israel on the issue of settlements, and over 80% of Clinton and Sanders supporters say America should generally favor neither side in the Israeli-Palestinian conflict. Conversely, Trump supporters hold decidedly more pro-Israel views, with 74% of them opposing punitive action against Israel and 55% saying U.S. policy should generally lean towards Israel.

SIGTARP VS. SMALL BANKS
The Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) was created in 2008 to investigate and root out crimes committed by banks and their executives related to the financial crisis. Since its creation, the office has charged 102 bankers, including 22 chief executives and presidents, for criminal and civil misdeeds leading up to and during the financial crisis while also recovering more than $10 billion. But critics of the office point out that most of SIGTARP’s investigations have involved community and regional bankers and ignored prominent Wall Street executives that many consider more responsible for the 2008 meltdown. The TARP program is winding down and SIGTARP’s future is unclear, but either way it looks like those still seeking prosecutions of Wall Street executives will continue to be disappointed.

NERVOUS NONPROFITS
Massachusetts nonprofits are on edge as a new proposal has come up in the state legislature challenging the property tax exempt status of nonprofits and schools in certain circumstances. The issue has risen out of the city of Lowell, where the University of Massachusetts Lowell has purchased a large piece of property and has left the city with a substantial budget hole due to the University’s tax exempt status. Some states, like Connecticut and New Jersey, have addressed this problem by limiting the tax exempt status of well endowed, property rich entities like schools and hospitals, but some of these measures have also hurt smaller, traditional nonprofits like local Elks clubs or charities. The challenge for policymakers is to ensure municipalities have the revenue to fund basic services for their citizens while protecting the existence of charities and nonprofits’ ability to function in expensive real estate markets.

THE DNC’S OTHER RUSSIA PROBLEM
Political conventions are often showcases of how proudly American each party is, and videos featuring the U.S. military are commonplace. So it was not out of place that at last week’s Democratic National Convention, retired Adm. John Natham, a former commander of Fleet Forces Command, spoke in front of a video of giant warships. What was out of place was the warships themselves. The vessels were, in fact, Soviet-era Russian Kara-class cruisers. It’s not the first time stock footage has embarrassed a campaign and it probably isn’t the last. But, it does show how a little fact-checking and research can avoid simple mistakes.

SHOULD UNCLE SAM REFI?
A Wall Street Journal editorial recently argued given the staggering and ever increasing national debt, the U.S. government should consider “taking advantage of today’s cheap financing by borrowing for the long term.” Locking in current debt at today’s low rates may only kick the can down the road in terms of actually addressing the looming debt crisis, but it would at least insulate taxpayers from some of the cost of government spending. Without pro-growth policies and comprehensive fiscal reform being enacted, the next best thing may be to make it a little bit more affordable for the American public to pay for deficit spending.

Mark Your Calendars

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

Oppo Truths, Secret Meetings, and Rocking TPP​

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Here’s What You Need to Know

While attending last week’s Republican National Convention, Delve CEO Jeff Berkowitz was interviewed on the often misunderstood art of opposition research, as well as what role national security issues may play in the next Presidential administration.

  • Jeff spoke to Jason Rantz of Seattle’s KIRO talk radio and outlined what goes into a campaign’s political research operation. Jeff explained how the process begins with a vulnerability study of the candidate’s strengths and weaknesses, as well as what issues may exist in their past.
  • The vulnerability study process at Delve is unique because instead of using big questionnaires or relying on a candidate’s memory of their own past for a framework of potential attacks, we dig into every facet of the public record exactly as an opponent’s researchers would. We use this research to expose the narratives that could be used, fairly or unfairly, by a candidate’s opponents.
  • Jeff highlighted the importance of sticking to the facts when launching attacks on an opponent’s record. Dispelling the common misconception of “oppo” as dumpster diving for personal attacks, Jeff explained, “it’s not just about this is a good person or a bad person, it’s also about, if you’re going to choose them to represent you, where do they stand on the issues.”
  • Jeff also discussed how national security and foreign policy issues may be addressed by the next President, citing, “the crucial role of strong American leadership in the world.” Jeff went on to describe how these topics may impact Donald Trump and Hillary Clinton’s general election campaigns.

News You Can Use

ROCKING AGAINST TPP
Last week, a collection of left-wing entertainers launched a “Rock Against the TPP” tour to build opposition to the Trans-Pacific Partnership. The tour listed events in Denver, San Diego, Portland, and Seattle, with celebrities such as actress Evangeline Lilly and musicians Talib Kweli, Anti-Flag frontman Justin Sane, and Jonny 5 of the Denver-based hip-hop group Flobot. With the possibility of Congress voting on TPP in in a lame duck session, and the progressive wing of the Democratic Party feeling betrayed by the DNC, opponents of the trade deal are using celebrities to bring more awareness on this issue to many Americans. No word on whether Tim Kaine will make a guest appearance now that he has changed his tune.

HOW TO STOP OBAMACARE
The platform adopted by the Republican National Convention last week pledges “a Republican president, on the first day in office will use legitimate waiver authority under the law to halt [Obamacare’s] advance and then, with the unanimous support of Congressional Republicans, will sign its repeal.” But, as longtime health care policy analyst Chris Jacobs notes, the “legitimate waiver authority” provided under the law only applies waivers to states, not individuals. These waivers also only apply to a few delineated sections of the law, including the individual and employer mandates. Jacobs suggests a Republican President looking to halt Obamacare should instead focus on blocking insurance payments from the program that were unilaterally determined by the Obama administration for items like reinsurance, risk corridors, and cost-sharing subsidies without clear statutory authority.

SECRET CEO MEETING
Beginning last summer with a secret meeting at JP Morgan Chase’s Manhattan headquarters, a group of America’s top CEOs – including Warren Buffet, Laurence Fink of BlackRock, Abby Johnson of Fidelity, and Mary Barra of General Motors – worked toproduce an open letter and detailed report on the “sorry state” of publically traded companies. The report includes a series of corporate governance “principles” on topics like executive and board compensation as well as earnings guidance. Intended to stir conversation within the business community, this effort could have policymaking reverberations as both parties tackle issues where corporate governance can help or hinder economic growth.

CAR-SHARING’S TAX-BURDEN
As ride-hailing apps like Uber and Lyft compete with car-sharing services like Zipcar and Car2Go, local governments have begun tipping the scales in favor of the former by increasing taxes on latter. New research by DePaul University’s Chaddick Institute for Metropolitan Development shows, “Of the 40 largest U.S. cities, 29 apply taxes of more than 10% on one-hour car-sharing trips, including nine cities with effective tax rates above 30%.” While most public discussion has been focused on how ride-hailing apps’ limited regulatory burdens hurt the taxi industry, it appears local authorities have used the same strategy to place car-sharing services in the same disadvantaged position.

IVANKA’S DRESS FOR LESS
During her primetime speech at the Republican National Convention, Ivanka Trump wore a $138 dress from her line of clothes sold at Macy’s department stores. Yahoo contributor Jennifer Gerson Uffalussy notes, “Wearing a look of her own design while making such a speech certainly affirmed the point of her speech: Ivanka is a mother-cum-scion in her own right.” This wardrobe choice comes after Hillary Clinton was criticized earlier this election cycle for wearing a $12,495 Armani jacket during a speech on income inequality. It’s a good reminder to campaigns that no detail is too small for the spotlight of the news and potential derision from your opponents.

THE NEW SOCIAL NETWORK IS OFFLINE
Modern economic theory has always emphasized the decisions of the individual and assumed individuals operate independently from the direct influence of others. Yet Paul Ormerod, writing for Evonomics, argues that today’s economic policies must acknowledge the fundamental importance an individual’s personal social network has on the outcomes relevant to these discussions. Ormerod’s conclusion is that our policies must move away from seeking to predict and control society, and instead look to build systems that are resilient and robust with the ability to respond well to unpredictable future events. This could be a new way of framing the debate between the innovations that can be produced with market-based policies versus sticking with old, liberal, command-and-control dogmas.

MEDIA NOT A FAN OF THE MEDIA
The state of the American media monolith is not strong. In fact, it’s at an all time low, with American trust in the media hovering around 20%. New York Magazine decided toinvestigate why news has lost the public trust by going straight to the source. The magazine’s survey of journalists and media figures pointed out several issues, including a lack of acknowledgment that news has become an entertainment business and thus does not handle serious issues well anymore. Survey participants also mentioned journalists thinking they know the story before they investigate. And because news is no longer immune to market forces, the media tends to go after the easy stories like gaffes and fuel for political partisanship. The lengthy critique of the media by the media shows that the Fourth Estate is just as troubled as the other three.

Mark Your Calendars

Monday, September 26: First Presidential Debate, Wright State University, Dayton, OH

Convention Preview: Republicans and Democrats on Trade​

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This is the third in a series of insights we’ll be providing on different policy platform fights in the weeks leading up to the Republican and Democratic National Conventions.

Here’s What You Need to Know

The platform committee of the Democratic National Convention has adopted decidedly anti-free trade policies and the Republican National Convention’s platform committee has raised more questions about whether America benefits from its current trade agreements than it has in many decades. Both platform drafts are likely to be officially approved in Philadelphia and Cleveland respectively. While not specifically criticizing the Trans-Pacific Partnership (TPP), both platforms have language that took firm positions calling for tough restrictions on trade deals.

There’s been plenty of discussion on how politically unprecedented this is. But, there are fundamental questions on how a few different key political stakeholders will handle the shift.

What Do The White House And GOP Congress Do? Bernie Sanders fell short of his desired platform amendment specifically criticizing TPP, with Democrats opting for language calling generally for tough restrictions on trade deals in order to avoid embarrassing President Obama. The White House must now decide how to get TPP enacted before leaving office. Republicans in Congress – who may lose the Senate – could work with President Obama move TPP in a lame duck Congress. Regardless of who wins in November, TPP will be dead-on-arrival come inauguration day 2017. But yesterday, House Speaker Paul Ryan seemed to dash the hopes of those aiming for lame duck passage, telling Politico he has “got problems” with TPP and “think[s] they made some pretty big mistakes” during negotiations.

What Do Pro-Trade Democrats Do? Despite the especially vocal progressive wing of the Democratic Party, many coastal Democrats like Sens. Patty Murray, Diane Feinstein, and Chuck Schumer still represent constituencies that benefit with hundreds of thousands of jobs created by free-trade agreements. With their party’s standard bearer now officially toughening her stance on these policies, how Democrats balance the needs of their constituents with the demands of their party should be watched closely.

What Do Business Groups Do? On the right, traditionally pro-GOP business associations like the U.S. Chamber of Commerce and the National Association of Manufacturers have already openly opposed the party’s newly critical stance on trade promoted by Donald Trump. Now that Trump’s “America First” policy on trade has officially been adopted by Republican delegates on the platform committee, how will these pro-trade business groups respond? These groups may be exploring the option of using their political muscle to go after anti-trade Republicans.

News You Can Use

WE’RE IN THE DICTIONARY. The Oxford English Dictionary (OED) recently announced their list of new definitions being added to the benchmark of English language and the term “TL;DR” is now among them. The OED defines the term as, “’too long; didn’t read’ (also occasionally ‘don’t read’): used as a dismissive response to an account, narrative, etc., considered excessively or unnecessarily long, or to introduce a summary of a longer piece of text.” We certainly endeavor to make sure our version of TL;DR falls into the latter definition.

S.F. KILLING GOOSE LAYING GOLDEN EGGS. Three San Francisco city supervisors have announced plans to propose a 1.5 percent payroll tax on the city’s tech companies to be voted on in November. The measure has received resounding opposition from other city officials including Supervisor Mark Farrell, who called it, “the worst idea I’ve heard in months,” and Mayor Ed Lee, who’s spokeswoman called it a, “job killing measure.” The tech industry has provided San Francisco with decades of prosperity and the lowest unemployment rate of any city in the country. Singling out the industry out for a tax would likely lead tech firms to find new homes even faster than they are already.

INFLUENCING NOT-SO-REFORMED. Nine years ago, Democrats retook Congress under a banner of ending Washington’s “culture of corruption,” passing lobbying reforms aimed at slowing the spin of the revolving door between Capitol Hill and K Street. But little if anything has changed. Politico’s Isaac Arnsdorf recently concluded, “Not only did the [Honest Leadership and Open Government Act of 2007] fail to slow the revolving door, it created an entire class of professional influencers who operate in the shadows, out of the public eye and unaccountable.” The lobbying reform bill is just another example of Congress’ staggering ability to achieve the opposite of their stated goal when crafting laws.

HOT TUB LOBBYING MACHIN. The $28.6 billion Japanese spa industry relies on the use of the country’s massive geothermal reserves for their naturally occurring hot springs. And now the industry is blocking attempts to tap into those geothermal reserves as a source of alternative energy. The Japan Spa Association has aggressively and effectively lobbied to ensure that the bulk of Japan’s clean-energy program funding has gone to solar instead of geothermal. Those pushing for geothermal expansion were caught off-guard by the spa association’s lobbying effort, a perfect example of the value of identifying your opponents before engaging in a public affairs campaign.

OBAMA’S LOSING SCOTUS RECORD. Presidential administrations are under constant scrutiny by the U.S. Supreme Court. However, Cato Institute fellow Ilya Shapiro explains that the Obama administration has a 79-96 SCOTUS win-loss record, garnering them a success rate of just above 45 percent, lower than any modern President going back to 1960. Even President Obama’s own Justices aren’t voting in support of the administration’s policies. This record is a direct byproduct of President Obama’s attempts to stretch the use of unchecked executive powers to push through his agenda. As Justice Anthony Kennedy wrote in an opinion against one such example of executive overreach, “federalism protects the liberty of the individual arbitrary power. When government acts in excess of its lawful powers, that liberty is at stake.”

WINK-AND-NOD REGULATION. Everyone has read the story of VW’s $15 billion scandal surrounding their attempt to circumvent carbon emissions regulations. While the company’s behavior may be worthy of admonishment, Solutions Consulting President William O’Keefe asks why “manufacturers engage in schemes to beat the required certification tests.” O’Keefe argues the EPA “continues to believe that if it demands the impossible, manufacturers will find a way to comply.” All the while it remains an open secret that regulatory compliance tests in no way reflect real-world conditions. Until this accepted yet unrealistic “wink-and-nod regulation” is reformed, engineers, like those at VW, will continue believing that gaming the certification process is just how business is done in the manufacturing industry.

BUSINESS CARROT VS. STICK. How can the U.K. encourage globally-focused businesses to stay post-Brexit? UK Chancellor of the Exchequer George Osborne has proposed a further reduction in the country’s corporate tax rate from 20 to 15 percent to do just that. Meanwhile, President Obama and Treasury Secretary Jack Lew have been busy using regulations to deal with corporate inversions as U.S. companies seek to move their headquarters’ abroad to avoid the U.S. corporate tax rate. On the one hand, the UK seeks to offer companies the carrot of favorable tax rates, while the U.S. is brandishing a stick in the form of regulations. As Caroline Baum of MarketWatch bluntly puts it, “Carrots are always better than sticks.”

FOOD STAMP FAVORITISM. By the end of the year, the USDA wants to adopt a set of rules that would require stores wishing to redeem food stamps to stock a wider variety of meats and vegetables while selling fewer hot meals, like pizza. The move has been criticized for favoring major grocery chains like Walmart and Kroger Co. – who have the capacity to carry a wider selection of products – while hurting smaller corner grocery and convenience stores who can only offer limited selection. The debate has not garnered much attention, but a group of bipartisan lawmakers on Capitol Hill are opposing the measure, warning that if small stores stop accepting food stamps, both those in need and small businesses will suffer.

Mark Your Calendars

Monday, July 18 – Thursday, July 21: Republican National Convention in Cleveland
Monday, July 25 – Thursday, July 28: Democratic National Convention in Philadelphia

Convention Preview: Republicans and Democrats On Israel​

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This is the second in a series of insights we’ll be providing on different policy platform fights in the weeks leading up to the Republican and Democratic National Conventions.

Here’s What You Need to Know

The Republican and Democratic party platform positions on U.S.-Israeli relations are going to produce two very different debates at the conventions in Cleveland and Philadelphia. On the one hand, the Democratic Party will clash over how politely to ridicule Israel, while the Republican Party will consider altering its platform to provide greater deference to Israel on the path towards peace.

  • Bernie’s Spoilers: Bernie Sanders and his progressive wing of the Democratic Party may have lost the primary but they still have two seats on the DNC platform committee which they have opted to fill with Princeton professor Cornell West and Arab American Institute President James Zogby, both noted critics of Israel.
  • DNC Storm Warning: Last weekend the DNC platform committee produced a preliminary draft of their position on Israel. Despite calls from progressives like West and Zogby for language to describe settlements in the West Bank as an “occupation” and to refute Israel’s claim to Jerusalem, the current draft mostly maintains the centrist stances supported by Hillary Clinton and her allies. Despite the present victory, however, the centrists aren’t out of the woods yet since the committee will meet again to debate the draft later this month and nothing is official until it passes a vote on the convention floor giving progressives several more opportunities to alter the platform language on Israel.
  • Where Do The DNC Delegates Stand? Bernie Sanders’ pro-Palestinian rhetoric from the campaign trail has emboldened the left-wing of the Democratic Party to even more vocally push for official positions that are critical of Israel. It should not be forgotten that anti-Israeli sentiment was notably present at the last DNC Convention. The truth is that even if you believe Hillary Clinton is centrist and reasonably pro-Israel, poll after poll shows the party she hopes to represents no longer is. Many delegates in Philadelphia would commend Palestinian Authority President Mahmoud Abbas, despite his virulently anti-Semitic remarks, while criticizing Israeli Prime Minister Benjamin Netanyahu.
  • Meanwhile, In Cleveland: In contrast, the GOP’s debate will be a quintessentially Jewish one: the platform language is good, but, it could always be better. Spurred by groups like the Iron Dome Alliance, GOP delegates on the platform committee may consider changing the party position to make explicitly clear that the U.S. will not force or pressure the Israeli government to take steps it does not deem appropriate toward achieving peace and security. Currently, the party officially supports a two-state solution regardless of Israeli policy and does not explicitly reject the application of U.S. diplomatic pressure to achieve it. The proposed changes would bring the party more in line with GOP nominee Donald Trump’s position that the U.S. should not dictate terms while serving as an arbiter of Israeli-Palestinian negotiations.

Despite suggestions by some, mostly left-leaning news outlets like the Jewish Forward, that Republicans will face a nasty fight over their position on Israel, it will in fact be a friendly debate over how best to support Israel’s security and prosperity. Meanwhile, the potential for vocal and nasty opposition to the diminishing centrist Democrats’ putatively pro-Israel positions could be just another in a long list of issue areas Hillary Clinton will need to worry about during a convention nominating her while solidifying in a new progressive era in Democratic politics.

News You Can Use

THIS IS WHY YOU ALWAYS VET
Michael Levin was recently surprised to see images of him and his family in Sen. Elizabeth Warren’s latest video attack on Donald Trump. Not only did neither Warren nor the video’s producers at MoveOn.org ever ask Levin for permission to use the images, Levin actually voted for Donald Trump in the Republican primary. Had anyone cared to vet the images or people being featured in the video, this snafu could have been avoided, but that’s why you always vet the people and images in your videos.

EU EXODUS?
Following last week’s historic vote by the United Kingdom to leave the European Union, many have begun questioning whether these types of referendums are going to begin spreading. Will we see a Oustria? Czechout? Departugal? French National Front leader Marine Le Pen has already called for similar referendums in France and across the EU. Nationalist leaders in the Netherlands also began to push for a referendum on EU membership. As the dust of Brexit settles and the long-term impact of the decision becomes more clear, it is likely other European countries may take the British lead and let their people decide the fate of the Union. What is driving this push? As U.K. Independence Party leader Nigel Farage noted to the EU Parliament after the vote, “The main reason the United Kingdom voted the way that it did is you have by stealth, by deception, without ever telling the truth to the British or the rest of the peoples of Europe, you have imposed upon them a political union … When the people in 2005 in the Netherlands and France voted against that political union … you simply ignored them …”

SO MANY QUESTIONS
Here at Delve, we believe that small details can make big things happen. In a recent example of this belief, The Daily Caller’s Chuck Ross picked up on a local Arizona news station asking why “Attorney General Loretta Lynch met with former President Bill Clinton for a half-hour on her government airplane at the Phoenix airport on Tuesday.” The Attorney General claims Clinton “spoke to myself and my husband on the plane. Our conversation was a great deal about his grandchildren. He mentioned the golf he played in Phoenix.” Given the scrutiny his wife is under by her department, however, such a claim leaves us skeptical. Not to mention, why were they using an official, government-owned plane for a social call? Why was her husband traveling with her? And does anyone really believe they just spoke about grandkids and golf? 

AWOL IN THE RECOVERY
Poor, prime-aged men (ages 25-54) without college degrees are disappearing from the U.S. labor force by the millions. Altogether, 10 million American men are either unemployed or have given up the search for jobs. This disappearance is largely due to the decline in sectors typically dominated by male workers like manufacturing and construction. Bloomberg View analyst Conor Sen recently wrote that housing would be the dominant economic force over the next five years, but questioned where the U.S. economy could find 500,000 construction workers tomorrow. Could these millions of missing men be the answer to that question, with a resurgent housing construction market allowing them to reenter the workforce?

FACEBOOK CHECKS THEIR BIAS
Facebook COO Sheryl Sandberg announced plans to add a section on “political bias” to its employee training program on “management bias.” The move comes after claims that Facebook’s “trending topics curators were suppressing conservative news and events from users’ newsfeeds. As more and more political discourse is occurring online it will be interesting to note whether “political bias” training becomes a new standard for those tasked with managing and curating the platforms where these conversations take place.

STATE OF THE BRUSSELS PRESS CORPS
A recent survey of Brussels-based journalists offers lessons for all of those who deal with reporters. The EU press corps’ number one complaint of their public relations and media counterparts was that they were “too evasive.” Other criticisms at the top of the list included failure to contact reporters in a timely fashion, inability to provide usable quotes, and mixed or unclear messaging. PR professionals should also take note that the survey found that more than half the reporters claimed to receive over 20 press releases a day, meaning to get their attention a release better be eye-catching.

IS THE RIGHT BEING IGNORED BY POLITICAL SCIENTISTS?
Academic studies on political persuasion have become all the rage today, but a recent examination by Maggie Koerth-Baker at FiveThirtyEightdiscovered that the questions posed by those researching this subject area are almost always liberal ones. Researchers claim “their own interests and personal connections more easily lead them to questions and collaborators on the liberal side.” But until academia expresses an interest in and willingness to collaborate with the Right, any study claiming to dissect how American voters are persuaded on particular issues is going to fall short of understanding how a large portion of the electorate actually thinks about and discusses the issues of our time.

BREXIT’S FOREIGN POLICY REVOLUTION
While most of the global implications of Brexit have focused on economic impact, the European Council on Foreign Relations released a report highlighting what the move means for the state of European foreign policy. The European far-right and far-left have begun to form an unlikely alliance over issues of foreign policy such as: a desire to dismantle the EU through referenda, worries over refugees, terror and radical Islamism, opposition to foreign intervention (especially in the Middle East), and a lack of enthusiasm for pro-American relationships and agreements like a Transatlantic Trade and Investment Partnership. Brexit signifies a total change in how foreign policy is viewed in Europe and perhaps the world. As the ECFR report concludes, “foreign policy is no longer an elite game.”

Mark Your Calendars

Monday, July 18 – Thursday, July 21: Republican National Convention in Cleveland
Monday, July 25 – Thursday, July 28: Democratic National Convention in Philadelphia

Convention Preview: Left vs. Far Left on Energy​

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This is the first in a series of insights we’ll be providing on different policy platform fights in the weeks leading up to the Republican and Democratic National Conventions.

Here’s What You Need to Know

While several left-wing environmental organizations are now coalescing around Hillary Clinton, many in the environmental movement are still unsatisfied. Liberal donors to these organizations have threatened to pull funding if they endorsed Clinton, hurting their ability to provide grassroots support to the presumptive Democratic nominee. These concerns are partly why the Democratic establishment struck a deal with the Sanders campaign that gave them five of the 15 slots on the convention’s platform committee for them to air out their policy views.

Yet, by making this concession to Sanders, the DNC has lit the fire of a messy debate. One of Sanders’ picks for the platform committee attacked Clinton earlier this year for being “slow, halting and grudging” in her efforts on climate change. And last weekend in Phoenix, the DNC held hearings that turned into a left vs. far-left dispute on energy policy.

The fault line being drawn focus on these three energy issues that are likely to come up on at the Democrats’ convention next month:

  • Fracking: Earlier this month, several environmental groups petitioned the DNC to ban fracking in the party’s platform. Sanders has attacked Clinton for not supporting such a ban as recently as two weeks ago. But Clinton’s supporters have told “the ban’s proponents [they] are being unrealistic.” If environmental activists don’t get a fracking ban in the platform, whether or not they sit on the sidelines for the rest of the election should be closely watched.
  • Pipelines: A recently released report from an electric reliability watchdog notes President Obama’s “Clean Power Plan” will spur the need for additional pipeline infrastructure to deliver natural gas and reduce emissions. But some environmental activists are joining the Rockefeller Family Fund, who convened a meeting this week to “craft a strategy to fight the use of eminent domain for pipelines and other fossil-fuel infrastructure.” Watch for activists to demand a ban on any future pipeline construction.
  • How To Meet Paris Goals: A former Sierra Club lawyer said last week that Clinton’s choices on how to meet emissions reduction goals from the Paris climate agreement are limited to what’s available in the Clean Air Act. But some may want Clinton to go even further by promoting a cap-and-trade program that went down in flames six years ago under a Democratically-controlled Congress. Clinton has avoided mentioning cap-and-trade for good reason, but environmental activists on the platform committee may force her to take a position.

Clinton has tried to play small ball on energy issues so far with a focus on solar panels and conservation, while attempting to walk back her statements suggesting the coal industry should be put out of business. But energy issues have increasingly become ‘up or down’ items for a large segment of the Democratic base Hillary needs to unify in order to win in November. What happens at platform committee will be the first indication of how far left Clinton is willing to go without sacrificing voters in the middle.

News You Can Use

Voting is already underway in the UK referendum on EU membership. Check out our “Here’s What You Need To Know” from earlier this month on some of the unexpected factors that could drive turnout and voting preferences.”

REPUBLICAN RED TAPE REMOVAL PLAN
Can Congressional gridlock be good for business? If House Speaker Paul Ryan gets his way, it can. The Congressional Republicans’ economic policy agenda released last week includes a plan to require Congressional approval of any federal regulations that would have a significant impact on businesses. As Speaker Ryan explained, “No major regulation should become law unless Congress takes a vote.” Throughout the Obama administration, Republicans have been searching for a better way to block regulations that have hurt the economy and they may now have finally found their solution in the form of Congressional logjam.

RETWEETS = GROUPTHINK
A new Columbia University study found that 59 percent of links shared on social media outlets were not clicked before being shared. The study discovered that these peer-to-peer shares play an important role in determining what news gets circulated online and what news get brushed aside. As more and more people get their news almost exclusively online, these trends mean thoughtless retweets driven by confirmation bias are actually shaping our political and cultural discussion.

BOARD MEMBER NOT FOUND
Lululemon Athletica has had recent financial troubles, and founder Chip Wilson is quick to blame the company’s longest serving board members. And yet, on closer inspection, the single longest serving board director, Rhoda Pitcher, appears to have no traceable personal history, no identifiable photo, a business that could not be found, and a degree from an unaccredited entity with a residential street address. The discovery has prompted uncomfortable questions for the company’s management, board and auditor: who is ensuring proper due diligence is done on board members? We happen to know a good firm for that.

PRESIDENTIAL EMAIL PROJECT
Michael Winters of EdSurge.com recently published a Medium post after reading 3,000 campaign and fundraising emails from various 2016 presidential candidates. His effort determined “there is precious little to be learned from emails from our presidential candidates.” Winters formed key conclusions that candidates email A LOT, it’s almost always to ask for money and never to discuss issues, the emails are only unintentionally entertaining, and every other 2016 candidate hates Hillary Clinton. Not surprisingly, the project confirmed that campaigns merely use email for fundraising from loyal supporters by scaring them with visions of a world where their political rivals win the election.

OBAMA’S RULES OF ENGAGEMENT
President Obama’s desire to deliver on his campaign promise of ending the American combat mission in Afghanistan is beginning to complicate achieving some of the ongoing U.S. foreign policy goals in the region. With the end of the official combat mission, the U.S. is no longer technically at war with the Taliban, requiring the remaining Special Forces troops in the country to consider the legality each time they fire on Taliban fighters. By forcing into reality his goal of declaring mission accomplished in Afghanistan, President Obama has actually created a situation that makes it even more difficult to achieve stability there.

INTIMIDATION GAME
In the wake of the 2012 shooting of Trayvon Martin, several left-wing groups saw a unique opportunity to go after their long-time opponent the American Legislative Exchange Council (ALEC) in a way that shut down all reasonable debate over their true policy differences. As Kimberley Strassel outlines for the Wall Street Journal, these groups used ALEC’s support of controversial stand-your-ground laws to apply pressure to ALEC and its members. This style of boxing in center-right organizations, trade groups, and corporations using highly divisive issues unrelated to the true policies being debated is going to remain a staple of left-wing groups looking to attack and smart observers should review the ALEC incident as an important warning sign of things to come.

DEMOCRAT’S ABORTION TROUBLE
Senator Tim Kaine of Virginia is seen as a likely VP pick for Democratic presidential nominee Hillary Clinton. On the plus side, he is a white man fluent in Spanish from a crucial swing state with solid fundraising experience as a former Chairman of the Democratic National Committee. But on the negative side, The Hill notes, his abortion stance may be too mainstream for some Democrats. As The Hill explains, “While Kaine does not back overturning the Roe v. Wade decision legalizing abortion, he is personally opposed to the practice and has backed controversial restrictions, such as parental notification laws and a ban on late-term abortions.” With turnout among the party bases being crucial to any winning strategy in this election year, Kaine’s divergent opinion on an issue that many liberal voters see as fundamental could trip up the Clinton campaign’s plans.

TRUMP’S UNEXPECTED BACKERS
Despite Hillary Clinton’s latest offensive claiming a Donald Trump presidency would be bad for the economy, a new Bloomberg/Morning Consult national poll found a majority of voters with a stake in the stock market believe that a Trump White House would serve their portfolios better than Clinton. Even among women, a demographic with which Trump has fared poorly, many female business owners have flocked to support the GOP nominee, arguing they connect with him over their shared spirit of entrepreneurship. Democrats are trying to sell Trump’s economic plan as “bad business that’s bad for you,” but it appears business owners and investors are not buying it (yet).

ASSASSINATION ATTEMPT NOT HEARD ‘ROUND THE WORLD
Last weekend at a California campaign rally for Donald Trump, a British citizen named Michael Sandford tried to pull a police officer’s gun with the intention of completing a yearlong plan aimed at assassinating the real estate mogul. Despite the gravity of attempted murder, the incident received almost no media coverage as the Trump campaign’s lagging fundraising numbers and the firing of campaign manager Corey Lewandowski dominated the news cycle. The Washington Post attempted to argue the lack of coverage was justified since Sandford did not come close to achieving his goal, but it is difficult to imagine the coverage not becoming wall-to-wall if the same incident had occurred at a Clinton campaign rally.

Mark Your Calendars

Monday, July 18 – Thursday, July 21: Republican National Convention in Cleveland
Monday, July 25 – Thursday, July 28: Democratic National Convention in Philadelphia

Russian Hackers, Microsoft, and Clinton Omissions

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Here’s What You Need to Know

This week, it was revealed that Russian hackers had broken into the Democratic National Committee’s computer network and stolen, among other things, all of their opposition research on Republican presidential nominee Donald Trump.

The incident has left many scratching their heads, wondering why? As Delve’s CEO Jeff Berkowitz outlines in a new Medium post, the answer is simple: why not?

  • Everyone Wants the Inside Scoop: It’s no secret that Russia and other foreign governments have a keen interest in the internal workings of American politics, given that it is the domestic political process that produces the next leader of the free world. And, foreign government hacking against U.S. political organizations is nothing new.
  • Why not? Couple the DNC’s failure to adequately secure their digital information with that fact that their oppo database on Trump offered Russia a full collection of research and informed analysis on a potential future President of the United States, his businesses, his associates and key advisors, and his policy positions all wrapped up and presented to them with everything but a bow on it, and it becomes clear why the Russians did it.
  • Propaganda Ammunition: Opposition research is also the ammunition for any potential public relations attack and with an army of pro-Russian internet trolls at its disposal, the Kremlin could disseminate the DNC’s fodder using their vast online propaganda machine.

For Russian hackers, there was really no downside and considerable upside to stealing the DNC Trump oppo. To put it bluntly, it was simply easier for them to steal a completed dossier than to build their own from scratch. Check out Jeff’s full Medium post here.

News You Can Use

THE NEW TAX REFORMS ARE (ALMOST) HERE
In the heat of 2016 partisanship, it may be difficult to imagine a time when comprehensive tax reform could be achieved. But some are now saying that time could be 2017. With members of both parties admitting publicly that tax reform is necessary and both sides offering serious proposals on how to go about doing it, whatever the final policy ends up being, the two key themes of any serious tax debate will center on how large the economic effects of each proposal are and how high a base tax rate should be. Thanks to a newly published report from the Tax Foundation, policy makers and pundits alike can see what those effects might be.

MICROSOFT’S DEBT DILEMMA
Microsoft is buying LinkedIn for $26.2 billion, but they won’t be using their ample supply of cash to do so. Instead, Microsoft will take out a large loan to purchase the business networking site. The move allows Microsoft to avoid paying a 35 percent tax rate to repatriate its roughly $100 billion in cash reserves from overseas accounts while gaining tax benefits from taking on the debt, providing the latest example of the ways the current U.S. corporate tax code offers perverse incentives for growth-oriented companies.

STEVE JOBS DIDN’T BUILD THAT
At a DNC platform hearing last week, House Minority Leader Nancy Pelosi pulled out her iPhone and proclaimed that, “Steve Jobs did a good idea designing it and putting it together. Federal research invented it.” Pelosi argued that the components of the ubiquitous smartphone had been produced from federal investment in technology research. The statement is just the latest in a series of Democratic leaders’ awkward claims of government responsibility for game-changing innovation in American industry.

MAYBE IT WAS A SERVER ERROR?
The recently-published paperback edition of Hillary Clinton’s memoir of her time in the State Department omits references to the Trans-Pacific Partnership that had appeared in the book’s hardcover version. Specifically, the passages describing how hard Secretary Clinton fought to convince other countries to join the TPP negotiations have been left on the publishing house floor. Clinton’s Hard Choice is just the latest effort to rewrite her history on trade as she seeks to an electorate that appears to have grown more populist and anti-trade.

HEDGE FUNDS IN THE HOT SEAT
Hedge funds have long been considered the most elite of investment vehicles, but recent years of underperformance have led to increased scrutiny and a need for new approaches in how fund managers communicate with their investors. Various major investors have already moved large portions of their holdings out of hedge funds, but for public pension plans who have been steadfast beneficiaries of previous hedge fund performance there is a question as to what the future holds. With funds like the New York City pension fund and the California Public Employees’ Retirement System already liquidating large portions of their holdings, it will be telling to see which public pension funds cut-and-run and which look to ride it out.

DISRUPTING THE MARKET
Silicon Valley entrepreneur Eric Ries, best known as the author of The Lean Start Up, has assembled a team of about 20 engineers, finance executives, and attorneys, and organized seed capital from around 30 major investors to create a new Silicon Valley-based Long-Term Stock Exchange (LTSE). Ries first hinted at the idea five years ago in the epilogue of his best-selling book where he diagnosed the main issue with current stock exchanges as “short-term thinking that squashes rational economic decisions.” Though only in its infancy, the LTSE would seek to correct this problem through a series of reforms incentivizing long-view financial maneuvering.

DO AS I SAY, NOT AS I DO
Recent criticism of Donald Trump’s accusations of bias against a Mexican-American judge currently hearing the Trump University lawsuit has brought to light a similar incident in 2015, when the Obama administration ordered Judge A. Ashley Tabaddor to recuse herself from “all immigration cases involving Iranians.” Judge Tabaddor is of Iranian descent and despite no accusations of bias by anyone appearing before her court, the Department of Justice claimed it was “concerned with the appearance of impropriety.” It may be worth noting that the Obama administration’s claims regarding Judge Tabaddor seem to closely echo those made by Trump.