The Unemployment Rate Is Dead

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Here’s what you need to know…

Last Friday’s jobs report “landed with a thud.” Employers only added 38,000 jobs last month, while March and April numbers were revised down by a total of 59,000 jobs. The Obama administration quickly tried to point out the unemployment rate fell to 4.7 percent in May, its lowest level since November 2007.

But as Delve’s Executive Vice President Matt Moon writes in a new Medium post, as a political talking point, and maybe even as an economic statistic, “The unemployment rate is dead.”

  • Our “New Normal”: With the decline in the unemployment rate “owed almost entirely to 458,0000 people leaving the labor force,” it’s dead as a political statistic because it is no longer a meaningful indicator of how people are doing economically. In this “new normal,” it can’t be used in the vacuum of a campaign talking point and it can’t be divorced from other economic indicators as well as voters’ wavering confidence in America’s future.
  • How Does This Affect The Election? Any Democrat that attaches their political hopes to Obama’s economic record and using the “improving” unemployment situation to their advantage will have a very difficult case to make. It has left Hillary Clinton and Democrats down ballot in a position where there is no clear message on how to achieve economic prosperity.
  • Clinton’s Conundrum: Clinton has the impossible mission of courting both “Bernie or Bust” voters and ticket-splitting independents, both of whom are unhappy with the economy. If she tacks towards the middle to gain those ticket-splitters, she will head into November with a deeply divided Democratic electorate. If she embraces Sanders’s left-wing economic populism, she risks losing voters that will decide this election.

Read Matt’s Medium post here.

News You Can Use

FRIENDS DON’T LET FRIENDS FUND OBAMACARE
University of Michigan law professor Nicholas Bagley, who has generally voiced his support for the legal maneuverings of the Obama administration, recently publisheda piece on how the White House got it wrong with their justification for using taxpayer dollars to fund Obamacare’s consumer healthcare subsidy provision. Bagley argues the administration has run afoul of the Constitution’s appropriations clause in its claim that by passing the Affordable Care Act Congress granted authority for the spending in question. It gives serious credence to House Republicans’ fight against this facet of Obamacare that even ardent supporters of the President admit this funding process represents unconstitutional executive overreach.

THE INTERNET IS FLAT
A recently released Internet Trends report concluded the number of internet users worldwide is essentially flat and growth in smartphone users is trailing off as well. The report attributed the stymied growth to historic stagnation in global GDP, as well as difficulty expanding internet access and increasing affordability in third-world countries. The lack of growth in user bases has many in the tech industry concerned, but the report also highlighted opportunities for growth in areas like online shopping, live sports viewing, messaging, advertising and artificial intelligence.

GLOBAL WAR ON BIG TECH
During the past decade five American tech firms – Apple, Amazon, Facebook, Microsoft and Google’s parent company, Alphabet – have effectively conquered the global business world and become so invaluable it has some countries concerned with pervasive American hegemony. In response to this anxiety, European governments have begun a concerted effort to limit the reach of these U.S. tech giants through new privacy regulations and antitrust investigations. As Farhad Manjoo of the New York Times writes, “The European efforts are just a taste of a coming global freak-out over the power of the American tech industry.” As such, the next few years will likely yield increasing friction between these tech companies and foreign governments.

OUT-UBERING UBER?
China’s biggest ride-hailing company, Didi, says it books four times as many daily rides as the entire U.S. market while only reaching 1 percent of the Chinese population. These staggering figures have recently attracted a $1 billion investment from Apple to help support the company’s market growth. Many more established Western companies may look to engage with Chinese firms like Didi, that are in their infant stage but possess huge potential for profitability.

SODA TAX IS ALL ABOUT THE MONEY
President Obama’s former chef and senior adviser for nutrition policy, Sam Kass, admitted flat-rate soda taxes do little to combat obesity in America. “The soda tax, that’s a revenue generator that’s not designed for public health outcomes,” Kass said. The criticism comes as at least five cities and states – Philadelphia, San Francisco, Oakland, Boulder and Illinois – are considering implementing flat soda taxes.

ARMAN-EQUALITY
Apparently hypocrisy is on trend this spring. It was recently revealed that, while delivering a speech on the issue of income inequality in April, Hillary Clinton wore a $12,495 Giorgio Armani tweed jacket. Bloggers and Twitter were quick to point out the cringe-worthy juxtaposition of talking about the plight of poor Americans while wearing a jacket worth more than many of Americans’ entire wardrobes.

VICTIM OR VILLAIN
In the wake of the housing crisis, Countrywide Financial Corp. executive Rebecca Mairone became a face of corporate greed and a target of those looking to assign blame for the mortgage meltdown. The Justice Department sensed this and pursued civil-fraud charges against her, leading to a 2013 ruling that the 49-year old mother of two must personally pay $1 million in fines. Now she is looking more like the victim than the villain as a federal appeals court recently overturned the ruling thus clearing Mairone of wrongdoing. Despite many people’s desire to seek out and punish individuals responsible for the financial and housing crisis, the Mairone case has proven that assigning that level of personal blame for institutional failures creates substantial legal and ethical challenges.

Mark Your Calendars

Tuesday, June 14: District of Columbia Democratic Primary

What Do Weedkillers Have To Do With Brexit?

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Here’s What You Need to Know

With only three weeks to go before the United Kingdom’s referendum on whether or not to remain in the European Union, the polls show a razor-thin race within the margin of error. Any issue could tip the scale one way or the other, which means the EU’s debate over reauthorizing glyphosate, the UK’s most widely used weedkiller, couldn’t come at a worse time for Team Remain.

In fact, if the UK votes to leave the EU on June 23rd, we may have a ban on a common weedkiller to thank for the move.

  • Brexit Polling Divide: Those Who Benefit From EU Versus Those Frustrated By Its Regulations: Big business and voters in professional services want to remain in the EU because they see the benefits of being within the European common market. Small business owners and other locally-focused constituencies such as farmers, however, are more inclined to support an exit due to their frustration with what they perceive as regulatory overreach from Brussels.
  • In Lead Up To Brexit Vote, Brussels Is Threatening Regulatory Overreach That Will Anger British Farmers: As the Brexit debate is raging, those farmers and small business owners looking to extricate themselves from the regulatory impediments of the Brusselcrats are now facing the possibility of the UK’s most widely used weedkiller –  glyphosate – being banned by the European Commission.
  • The EU’s Great Glyphosate Debate: As Politico has reported, “Glyphosate’s EU authorization expires on June 30, and the Commission proposed a 15-year renewal period earlier this year.” But, contradictory reports of the pesticide’s carcinogenic properties along with pressure from environmental NGOs and European governments led to a last-ditch compromise of a one- to two-year renewal to allow the European Chemical Agency to finish its safety study. However, part of Germany’s fragile coalition government remains firmly opposed to any renewal, leaving the rest of the EU at the mercy of internal German politics.
  • Will The EU’s Move Drive Farmer Turnout? An April poll of UK farmers already found 58 percent of them supporting Brexit. The question is whether that number will rise with an EU glyphosate ban and if it encourages those who weren’t likely voters to go to the polls on June 23.
  • Rural Revolt? While farmers alone are not likely to sway the vote, the 20 percent of the UK voters who live in rural areas are statistically much more likely to show up and vote on referendum day and could tip the scale in favor of the Leave campaign.

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PRODUCTIVITY AND POPULISM
U.S. productivity is set to fall for the first time in over three decades, according to research by the Conference Board whose chief economist says the solution is for companies to “invest seriously in innovation.” Unfortunately, American companies are pulling back on investments in the building blocks of business – such as machines, computers, and steel. With this pairing likely to lead to stagnant wages, look for the populist discontent that helped propel candidates like Bernie Sanders and Donald Trump to remain a mainstay in 2016 American thought.

WHEN POLLS MATTER
With 159 days until the election, is it worth paying heed to polling? A recent New York Times analysis of polling for every presidential election going back to 1980 concluded that nationally averaged polls at this point in the campaign cycle have been off by more than eight points. Not until sixty days before the election do the polls begin to solidify within a reasonable margin of error (+/- 4 points). So while recent polling could have a positive impact for campaigns seeking momentum and money, they are not likely to tell us who will prevail in November.

TSCA FIGHTS TO COME
Sometimes compromises lead to more fights. Last week, Congressional Republicans and Democrats – along with the chemical industry and several environmental groups – rallied around a compromise bill updating the Toxic Substances Control Act for the first time in decades. It gives a significant amount of authority to the EPA to evaluate and restrict specific chemicals, but some in the environmental and consumer advocacy world are still dissatisfied. One environmental group told the Wall Street Journal that the compromise “removes too much authority from states” and the organization would continue its consumer campaigns “even after the law is passed,” both within EPA rulemaking processes and in statehouses across the country.

TAKING TO THE STATES
The national fight over internet privacy policy has moved to the state level in Illinois. Major tech firms are sparring with privacy advocates over Illinois’ Biometric Information Privacy Act, which, as written, is one of the toughest privacy laws in the country. The debate in Illinois marks a trend outlined by Pam Dixon of the World Privacy Forum, who says statehouses are increasingly becoming privacy battlegrounds. This attitude isn’t just applicable to privacy policy either, more and more policy areas traditionally considered federal issues are coming up in statehouses across the country.

LIKE YOUR LANDLORD… OR ELSE
Recently, a Salt Lake City apartment building circulated a “Facebook Addendum” to tenants, demanding they become Facebook “friends” with the building within five days or be in breach of their lease agreements. Several residents criticized the policy for violating their online privacy, but building owners claim their only intent was to create a private forum for residents to communicate over social media. The attempt to avoid embarrassment for the building has clearly failed, as their public Facebook page is now littered with complaints and criticism of the policy.

FEDERAL DEBT DENIAL
Following a series of budget deals between the White House and Congress over the past several years, many Americans – even policymakers and reporters who follow such things – think our federal debt level has gotten better. But in reality, Mercatus Center fellow Charles Blahous points out, “Not only are things a little worse than we recently thought they’d be, they’re a lot worse than we expected several years ago.” The latest CBO projection, for example, estimates federal debt held by the public now sits at roughly 75% of GDP, up from roughly 50% of GDP in 2009. Yet, “in January 2010 the baseline debt projection for FY2016 was 65.5% of GDP, substantially less than current levels.” If we don’t assert reality over perception, Balhous warns, the results “would be a highly damaging indulgence of cognitive bias.”

THE SECRET OBAMACARE MEETING
In January 2014, several IRS officials – who objected to the White House’s plan to use billions in taxpayer dollars to implement Obamacare’s crucial consumer healthcare subsidy despite a lack of clear statutory authority – were secretly ushered into a meeting with the Office of Management and Budget to view a memo outlining the administration’s justification. None of the attendees were allowed to take notes or make copies of the information presented to them. This bizarre meeting is a major revelation for House Republicans as they fight key provisions of Obamacare in federal court and proceed with investigations by the Ways and Means and Energy and Commerce committees.

Mark Your Calendars

Sunday, June 5: Puerto Rico Caucuses
Tuesday, June 7: California, Montana, New Jersey, New Mexico, and South Dakota primaries; North Dakota Democratic caucuses
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Overtime Rules, Trudeau’s Elbow, and Proofreading

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Here’s What You Need to Know

Earlier this week, the Obama administration announced a major new rule on how the federal government views overtime pay. The goal of the measure is to expand overtime protections to millions of American workers. But after a year of drafting, many suggest the final rule contains a series of unintended consequences that could lead those millions of American workers to lesser jobs at hourly wages with limited hours.

  • What’s The Rule? The rule is set to go into effect December 1st and would double the salary threshold for workers automatically eligible for time-and-a-half overtime wages, bringing the salary at which workers would qualify for overtime benefits from $23,660 a year to $47,476 a year.
  • Left-Wing Dissent: While the new rule has certainly taken flak from businesses, surprisingly to some, non-profits, including the Ralph Nader-founded U.S. Public Interest Research Group (PIRG), have been vocal opponents. They’ve argued the regulation will force organizations relying on small donations to “hire fewer staff and limit the hours those staff can work – all while the well-funded special interests that we’re up against will simply spend more.”
  • Startup Trouble: Startups will be especially hurt by the change and have voiced their frustration. Alexander Pessala, a partner at the DC-based venture capital firm Middleland Capital, argued the new executive order will force startup executives to hire more contractors rather than full-time employees. Startups who pay their employees, at least partially, in stock options will also be forced to count more employees for overtime since the value of their stock is not measured in the salary figure used to determine who qualifies for the new overtime protection.
  • Salary to Hourly: Historically, transitioning from an hourly wage to a salary has marked the upward trajectory of one’s career and progress toward the American Dream. Salaried workers also tend to receive more lucrative benefits and have more flexible work schedules. James Sherk, a labor economics expert, points out, “The administration’s new overtime regulations will effectively turn [salaried employees] into hourly employees.” The result being managers who worked their way up from hourly to salaried may find themselves going backwards with this new rule.

There’s still roughly five months before the rule comes into effect and a bill designed to override the overtime executive order has already been released by Congressional Republicans. But if the rule does end up in place, the President has already offered a silver lining to those workers whose hours may be cut: At least you’ll get to spend more time with your family.

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JUST-NOT SORRY
During a particularly tense session of the Canadian House of Commons last week, Prime Minister and self-proclaimed feminist Justin Trudeau, threw some elbow to usher along a vote. Unfortunately, that elbow landed squarely in the face of a female MP as Trudeau attempted to manhandle a Conservative lawmaker. Compounding the problem is the Prime Minister’s “unreserved” apology, which came with quite a few reservations. Just like children are taught in grade school, an apology with a “but” is no apology at all.

DOJ LAWYERS SENT BACK TO SCHOOL
In the process of litigating President Obama’s executive orders on immigration, several Justice Department attorneys misled the court about when the Department of Homeland Security would begin granting “deferred action” to undocumented immigrants whose children are citizens. Now, a federal judge has declared that the DOJ attorneys engaged in “intentionally deceptive” behavior while they were defending the executive order against a jointly filed lawsuit by 26 states. The judge ordered any DOJ lawyers wishing to practice in those states to attend annual ethics classes.

(PROOF)READING IS FUNDAMENTAL
The Texas Republican Party learned the value of verb usage when their recent party platform accidentally declared the majority of Texans were gay. In a section on sexual orientation, a line read, “Homosexuality is a chosen behavior that is contrary to the fundamental unchanging truths that has been ordained by God in the Bible, recognized by our nations founders, and shared by the majority of Texans.” Because the sentence uses the word “has” instead of “have,” it suggests homosexuality is approved by a higher power, the writers of our Constitution, and practiced by a majority of Texans. It seems safe to assume this is not the point the drafters intended to make and it’s yet another example of why you proofread before you go public: a golden rule of public affairs.

TERRY GUNS FOR CRIMINALS
Democratic Virginia Governor Terry McAuliffe took unilateral action last week to restore voting rights to over 206,000 felons. But perhaps he moved a little too fast, because the order also eliminated much of the oversight process for felons who seek to have their gun rights reinstated. Of course this wasn’t Gov. McAuliffe’s intention, and he later admitted, “I didn’t think it had anything to do with gun rights. I stayed away from that.” Such oversights are often addressed during the legislative debate that Gov. McAuliffe chose to forgo. No wonder his own legislature is suing him over this order.

DNC’S ISRAEL FIGHT NIGHT
After being recently granted the opportunity to name five members of the Democratic National Convention’s platform committee, the Sanders campaign has announced their first two appointees. And, they’re likely to reignite the embarrassing 2012 debate over the party’s position on Israel. President of the Arab American Institute Jim Zogby and prominent Princeton professor Cornel West have both been longtime critics of U.S. policy toward Israel, and are likely to balk at any pro-Israel language put forth for the platform. Some close to Sanders claim he has no desire to debate the party’s Israel policy. But empowering the progressive wing of the Democratic Party makes it likely that foes of America’s closest ally in the Middle East will seek to influence the platform committee on the issue.

AIRBNB GOES GRASSROOTS
Airbnb has faced an onslaught of regulatory hurdles across the country, but they’re perfecting use of a powerful tool of persuasion to influence government decision makers: their users. With the company’s future on the line in various regulatory fights, the company has mobilized users who offer their homes up for rent on the site and transformed them into a grassroots lobbying machine complete with prepared talking points, targeted legislators, and matching t-shirts. As companies like Airbnb, who already have easy access to massive user bases, continue to face regulatory pressure, smart startups are going to be able to structure these ready-made grassroots activist armies.

MAINE WORKS
Controversial welfare reform measures put in place by Maine’s Governor Paul LePage have begun to pay off. A new report from the state’s Department of Health and Human Services and Office of Policy Management shows the new welfare process has led to increased employment, higher wages, and decreased dependency on state programs. Many suggest that more data in the coming years will only show more success. As Josh Archamault, a senior fellow with the Foundation for Government Accountability, wrote, “Congress should learn from these successes and give states better tools to re-emphasize work across the board – not just in food stamps, but in all welfare programs.

Mark Your Calendars

Sunday, June 5: Puerto Rico Caucuses
Tuesday, June 7: California, Montana, New Jersey, New Mexico, and South Dakota primaries; North Dakota Democratic caucuses

Subscribe here to get TL;DR in you inbox each week.

Congressional Airbnb, TPP’s Report Card, and Venture Capital Vetting

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Here’s What You Need to Know

Last night, the U.S. International Trade Commission released its report on the Trans-Pacific Partnership trade deal and its effects on the U.S. economy. The report is 792 pages long. Even the “Executive Summary” is 22 pages long.

So here are the five things you need to know from ITC’s report that will have a significant impact on the policy and political debate on trade:

  • Good For America’s Economy, Better For Other Countries: The ITC’s macroeconomic model suggests the “overall impact of the TPP agreement would be small as a percentage of the overall size of the U.S. economy,” with an additional 0.18 percent in GDP growth in the long term. But “it would be stronger with respect to countries [with] which the United States does not already have a free trade agreement.” While the deal could “promote some new U.S. investment” with new trading partners, “it is unlikely that TPP would generate significant new investment flows into” America.
  • Agriculture Wins Big, Manufacturing And Energy Lose Small: ITC’s macroeconomic model shows TPP would increase output in the agriculture and food industry by 0.5 percent with measurable employment gains; but the manufacturing, natural resources, and energy industries would see a 0.1 percent decline with measurable job losses. Dairy, processed foods, and poultry are the biggest winners in the former. Titanium products and textiles would be the biggest losers in the latter.
  • Glass Half Full (Or Half Empty) For Auto And Service Industries: Within manufacturing, ITC says the passenger vehicle sector will see a 0.3 percent increase in output and employment, while the auto parts sector will see a 0.3 percent decrease. And the changes are small in America’s service sectors, with 0.1 percent increases in those figures.
  • Green And Blue Issues: ITC notes, “TPP goes further than any other major trade agreement to address environmental concerns” and “includes several labor provisions” involving workplace safety and minimum wages “not contained in any previous” agreements. But they also acknowledge “concerns about whether the U.S. government would effectively enforce” the environmental and labor provisions.
  • Reviews Are Mixed: Headlines show how much of a mixed bag ITC’s report is. The Hill’s headline: “Pacific trade pact would boost growth, jobs and income.” The Associated Press: “Pacific trade pact would deliver modest gains.” The United Steelworkers response: ITC “Report Validates That Trans Pacific Partnership Is Not Worth Passing.” U.S. Chamber of Commerce: “TPP is in our national economic interest.”

Ironically enough, both major parties’ likely nominees say they oppose this and other trade deals while the sitting Democratic president and Republican majorities in Congress are trying to find a way to ratify TPP. While ITC’s macroeconomic model shows TPP will be more economically beneficial to America than no TPP, specific conclusions of the report gives political ammunition to both sides. Keep an eye out for how the Trump and Clinton campaigns use this ITC report to talk to their constituencies and whether this report pushes the White House and Congress to attempt to pass TPP in a lame duck session.

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VENTURE CAPITAL VETTING
What happens when venture capitalists don’t vet the companies they invest in? When biotech startup Theranos launched in 2014, it seemed like a dream story: a fresh company disrupting the lab testing industry headed by the youngest female billionaire who happened to be a Stanford dropout. Despite receiving healthy VC funding from major firms, that star faded quickly as the company found its testing methods under scrutiny by the Wall Street Journal and the FDA while its business practices are under investigation by the SEC. Theranos is just one example of the boom in health care startups receiving large checks from VC’s, but it illustrates exactly the kind of trouble that can come from startups not going through proper due diligence by industry experts to assess viability in complicated and highly regulated markets.

LABOR PAINS
Some labor unions have begun to recognize their waning power in Democratic politics and taken the unprecedented move of seeking outside funding for a recently formed super PAC aimed at attacking Donald Trump’s presidential campaign. One such outside source of funding is billionaire environmentalist Tom Steyer, which has led to conflict within the labor movement due to the frequent clashes between unions and environmentally driven interests. The aggressive anti-Trump campaign could also foment disunity among labor union membership and leadership considering the Republican nominee’s appeal among the rank-and-file membership.

DEAR TSA, YOU’RE FIRED
As we enter summer travel season, TSA has already begun warning travelers of longer than usual lines nationwide. Cries of frustration over unacceptable wait times for TSA security checkpoints have gone unheard and unaddressed. Enter the Port Authority of New York and New Jersey, operator of LaGuardia, JFK, and Newark International Airports. Recently, the Port Authority has threatened to replace TSA with private contractors at the airports in their charge if the agency does not reduce wait times for travelers. The move to government-approved private security firms has already taken place in some airports and could mark a move toward a private sector solution to the ubiquitous scourge of seasonal travel. Everything old is new again.

FUNDRAISING FOR TERROR
Since 2009, the Obama administration has not blacklisted a single domestic charity for ties to terrorist activities despite the rise of globally integrated terror groups like ISIS. While the administration claims to have continued to address terror funding in other ways, abandoning the blacklist policy allowed certain groups to raise U.S. funds with relative impunity. A recent Bloomberg column explains how Hamas, for example, “no longer needs an American charity to covertly raise funds for its military war against the Jewish state. So the remnants of its former charity are free to raise funds for the war of ideas against the Jewish State at American colleges.” How Congress reacts to this and what a Clinton or Trump administration would do remains to be seen.

FREE SPEECH AND GOOD BEER
As anyone who has ever spent a long night at the bar knows, good beer and free speech just go together. Maryland’s Flying Dog Brewery has taken that edict to heart after winning a lawsuit against the Michigan Liquor Control Commission, which objected to the label of the brewery’s “Raging Bitch” Belgian-style IPA. The ruling found that the regulator had infringed upon the beer maker’s 1st Amendment rights by trying to ban sales of the beer in question and found Flying Dog could pursue damages for lost sales during the ban. Flying Dog has now announced it will use the proceeds to found the 1st Amendment Society to protect free speech and promote “the arts, journalism and civil liberties.”

HOW RETWEETS COULD AFFECT YOUR SECURITY CLEARANCE
Publicly shared social media accounts have long allowed amateur researchers to vet anyone from a blind date to a potential roommate, but the federal government has not reviewed materials posted on these platforms as part of their security clearance process, until now. Last week, the Office of the Director of National Intelligence announced investigators will now scan security clearance applicants’ Twitter, Instagram, Facebook and other social media sites when performing background checks. #WelcomeTo2010, security clearance process!

“WE DON’T TAKE OBAMACARE”
Democrats have consistently touted Obamacare as one of the President’s greatest successes, but patients now using insurance plans purchased from the legislation’s state exchanges have become second-class patients. Research by the Robert Wood Johnson Foundation found, “41 percent of [Obamacare’s mid-level] plans offered a ‘narrow or very narrow’ selection of doctors, meaning at best 25 percent of physicians in an area were included.” So while Democrats have argued the number of Americans without insurance has decreased, the value of having insurance that no one takes remains dubious at best.

CONGRESSIONAL AIRBNB
When attempting to claim you live in a small apartment instead of the much larger house you also happen to own, it’s probably best not to try to rent that apartment for a little cash on the side. This logic was clearly missed by Frank Lasee, a Congressional candidate for Wisconsin’s 8th district whose apartment was recently found on the popular property rental site Airbnb. When confronted with the fact that he was seeking to rent the only property he owned within the district he is running to represent, Lasee responded that he had a “crazy living arrangement.” So crazy, in fact, that his Democratic opponents have filed a complaint over his residency with the state Government Accountability Board.

Mark Your Calendars

Tuesday, May 24: Washington Republican Primary

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Third Parties, Hillary Hecklers, and the New Consumer

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Here’s What You Need to Know

Some of the #NeverTrump supporters are floating the possibility of a third party candidate, and if Hillary Clinton is not successful in bringing Sanders supporters to her side after the nomination process, some on the Left may consider a similar effort. So is it even possible, at this point in the cycle, for someone to mount a third party bid? The answer lies somewhere between not likely and completely impossible.

For a third party candidate to rise to prominence they would have to overcome several key hurdles:

  • Ballot Access Without Money, Time, or Expertise: A presidential campaign is already an expensive process requiring roughly a billion dollars. For a third party candidate, the price tag would be even higher to account for the monumental effort required to get on the ballot in all fifty states. Time is also a factor. Filing deadlines for independent candidate ballot access begin in July and filing deadlines for other political parties have already passed in some states. Lastly, only the political know-how one would find in a major party organization would be able to guide a candidate through the 50 different processes to get on the ballot especially in such a short time frame.
  • Sorry, You’re Already A Loser: A number of states have “sore loser” laws that prohibit candidates who failed to win their party’s nomination from running for that office as an independent or as another party’s candidate in the same election.
  • I Like You, But You Can’t Win: Assuming a candidate could address the above challenges, they still need a path to victory. Getting American voters to like you is one thing; convincing them they are not wasting their vote is a different story. Any real third party candidate would need a VERY convincing argument for how they can get to 270 electoral votes.
  • Who Could Do It? The only parties that could potentially mount a viable third party candidate are the Libertarian and Constitution parties. That said, neither party has a nominee yet and any candidates they pick would still have to overcome the ideological issues that have traditionally kept these parties at the fringe of the political arena – not to mention the high bar to make it into the televised debates and get significant media attention.
  • If Bloomberg Can’t Do It, Can Anyone? In March, former New York City Mayor and billionaire Michael Bloomberg ruled out running as an independent citing the functional deadline to get on ballots as one of many reasons. So if a possible candidate who had the finances, high national name ID, political experience, and his very own global media empire feels a third party run is impossible, it seems unlikely anyone else is going to be able to make it work.

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DEFINING DONALD
Successful 21st century campaigns thrive on defining their opponents before they can define themselves. No one can has taken this mantra more to heart than Donald Trump, dubbing his opponents “Lyin’ Ted”, “Liddle Marco”, “Low energy Jeb,” and now “Crooked Hillary.” Mark Leibovich of The New York Times recently spoke with Trump about how he takes aim at his political opponents. The DNC is trying to match Trump’s magic touch on branding, referring to Trump as “Dangerous Donald,” though Leibovich finds that a “lame effort.”

CORPORATE TROLLING
Ever wonder what would happen if internet trolls took over a multinational corporation’s twitter account? It might look something like car rental giant Avis’ new aggressive twitter campaign against chief rival Hertz. Avis’ twitter account has started directly responding to Hertz customers who tweet complaints of poor service with offers of discounts, upgrades, and status match. Could this style of bareknuckle marketing become the norm?

TOO TAX EFFECTIVE?
Cries for lowering the U.S. corporate tax rate can be heard from Capitol Hill to Wall Street, but no one seems to be able to agree on how to get there. Tax Analysts reporter Jeremy Scott argues that’s because the statutory rate is high but the effective rate for many companies is considerably lower. As Scott writes, “The low effective tax rate is why there is no consensus in the business community supporting 1986-style corporate tax reform. Sure, every corporation would love a lower statutory rate. But companies that benefit from deferral, lax transfer pricing rules, separate company accounting, and bonus depreciation don’t want to sacrifice to get there.” Until a consensus emerges, tax reform will prove difficult.

HILLARY HECKLERS BEWARE
The internet has long been a place for unbridled, unfiltered, and often unwarranted criticism. But a new pro-Hillary Clinton super PAC seeks to bring order to the chaos. The “Correct the Record” super PAC is spending roughly $1 million to “find and confront social media users who post unflattering messages about the Democratic front-runner.” While the Clinton campaign has suffered from a lack of organic online engagement, especially when compared to Bernie Sanders and Donald Trump, “using a super PAC to create a counterweight to movements that have sprung up organically is another reflection of the campaign’s awkwardness with engaging online, digital pros” told the Los Angeles Times.

BETTER CONSUMERS, WORSE ECONOMY
Why has the post-financial crisis economic recovery been so weak? The Washington Post’s Robert Samuelson suggests the economy’s “sluggishness reflects a profound psychological transformation of American shoppers.” The new consumer saves more, spends prudently, manages their credit, and is “the real drag on the economy.” Even as the economy slowly improves, the psychological scars of the Great Recession may have caused a paradigm shift among consumers, creating a “new normal” on the demand side of the curve.

ENDING HOMEOWNERS’ DOUBLE TAXATION
Currently, U.S. home owners living in home owner association communities pay fees to the association as well as local property taxes even though in practice, both payments often fund some of the same services. A measure put forth by Republican Congresswoman Barbara Comstock (R-Va.) and Democratic Rep.s Anna Eshoo (D-Ca.) and Mike Thompson (D-Ca.) would allow those home owner association fees to become tax deductible. For the legislation to catch fire, it will need to become more clear how the Congressional Budget Office may score this proposal and how this might fit into a larger comprehensive tax reform regarding housing and state tax deductions.

LATE TO THE LABOR PARTICIPATION PARTY
While some have been sounding the alarm on America’s low labor force participation for months and years, former chair of President Obama’s Council of Economic Advisers Alan Kruerger is now free from the shackles of politics and acknowledging this economic reality. Krueger said the latest decline in long-term unemployment may be a bad thing because, “the longer a person was unemployed, the lower the odds that they would find a job in a given month—and the higher the odds that they would exit the labor market.” This means the economic uncertainty and angst that has driven much of the support of Bernie Sanders and Donald Trump is going to remain a factor and economic indicators beyond simply unemployment and jobs created will play a large part in campaign debate.

OBAMA’S MISSING MILLION
During the 2012 presidential campaign President Obama made a lot of promises, but few were as specific as his goal to create 1 million new manufacturing jobs by the end of 2016. It now appears the President will fall well short of that target, with only 331,000 manufacturing jobs created since the start of Obama’s second term. While there have been many factors contributing to the lackluster growth in manufacturing, Obama’s own policies, from increased regulatory red tape that costs even small manufacturers $35,000 per year per employee to unfriendly labor policies, have left the President attempting to grow an industry after tying his own hand behind his back.

Mark Your Calendars

Tuesday, May 17: Kentucky Democratic Primary, Oregon Primaries
Tuesday, May 24: Washington Republican Primary

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Election Questions, Hiding Your Bonus, and Getting Arrested

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Here’s What You Need to Know

Political pundits have been wrong about nearly every prediction they’ve made this election cycle. But with the 2016 stage set with Hillary Clinton and Donald Trump as the presumptive nominees of their respective parties, pundits are continuing to make plenty of prognostications. The smartest people in politics aren’t making up answers; they’re asking questions.

In a new Medium post, Delve’s Executive Vice President Matt Moon put together the top 4 things we DON’T KNOW about the 2016 presidential election:

  1. Who will win? A diet of cable news commentators and opinion columnists would have you believe Hillary Clinton is on her way to trouncing Donald Trump in the general election. The standard rationale suggests that, while Clinton is unpopular, Trump is more unpopular. The reality is this is an unprecedented election where both major party candidates have shattered records with their net unfavorability ratings. How that translates into mood, turnout, and issue prioritization of the electorate is anyone’s guess.
  2. Where will “Bernie or Bust” and “Never Trump” voters go? The GOP is just beginning the process of unifying around Trump and the Democrats will have to do the same around Hillary (assuming no indictment). It remains to be seen how both parties approach unity and what degree of success they find, but securing the support of the disaffected factions left over from their fractious primaries will prove crucial in November – especially if the Libertarian Party make the politically savvy move of nominating former Republican New Mexico Gov. Gary Johnson and he is able to qualify for the general election debates.
  3. Should we trust polling? For all of the reasons listed above polling may prove especially unreliable in this election. Pollsters may also find themselves scrambling for updated and untested polling models to reflect the huge questions of turnout 2016 poses. The Republican primaries and caucuses brought out droves of new voters, all of whom may not be accounted for in existing polling models.
  4. How will these candidates impact other campaigns? Much of the supposed conventional wisdom seems to suggest Trump’s unfavorability at the top of the Republican ticket is going to lead to the GOP losing the Senate and possibly the House of Representatives. This fails to take into account that other piece of political conventional wisdom: all politics is local. There could certainly be some races that may actually be helped by Trump as the nominee because of the demographics of their specific districts or states. It’s presumptuous to simply predict that Trump will cost Republicans the Senate and hurt all candidates down ticket.

This election cycle, above all others, savvy political observers should approach all predictions with an extra dose dose skepticism. If your friends ask you what you think is going to happen between now and Election Day, the only smart answer is: I don’t know.

News You Can Use

NESTLE’S NOODLE NIGHTMARE
When it comes to a company bungling a crisis by “misread[ing] a fast-moving situation at every point,” Nestle has learned the hard way. The company’s Maggi 2-minute noodles, a staple of their $1.6 billion share in India’s food products market, went from being one of the nation’s most trusted brands to a national pariah. The situation, which began as a minor regulatory annoyance regarding a batch of Maggi noodles that failed testing by India’s central food regulator, spiraled into a public relations disaster costing the company half a billion dollars. This led to public outcry and an eventual ban of the product, as well as a new case study emphasizing what not to do in a corporate communications nightmare.

RADICAL BANKERS
Mike Cagney, CEO of the fintech company SoFi, along with many of his peers in the fintech industry are seeking to do to banking and loans what Amazon did to books and Uber did to taxis: move it to an on-demand service right on your smartphone. Cagney claims, “There is going to be a seismic redistribution of market cap in the banking world,” and traditional banks “won’t see it coming until its done.” Some banks have expressed interest in simply purchasing firms like SoFi and bringing them into the fold of traditional banking. But fintech executives, like Cagney, have thus far resisted this approach as they remain committed to fundamentally disrupting the banking industry rather than simply joining it.

HOW CONSERVATISM CAN BEAT POVERTY
Is anti-poverty policy the next great American import from Britain? In a recent op-ed, former senior advisor to UK Prime Minister David Cameron, Steve Hilton, explained how he helped craft the UK Conservative government’s successful strategy on combatting poverty. Cameron’s approach focused on individual families and their needs, rather than the traditional approach of clunky bureaucratic systems that address individuals as case numbers within a disconnected structure of counselors and social workers. Hilton writes that the key to the conservative approach on issues like poverty lies in efforts by politicians and the private sector alike to, “help make the world more human.”

CRITICS BURNING SIGAR
The chief taxpayer watchdog for government development programs in Afghanistan, the Special Inspector General for Afghanistan Reconstruction (SIGAR) John Sopko, is facing criticism over the accuracy of some of his bombastic claims of mismanagement in Pentagon programs. The accusations suggest Sopko “spun the facts in pursuit of an appealing soundbite.” Lawmakers overseeing the efforts have thus far been careful about engaging in open criticism, but one former senior DoD official said, “God knows there is no lack of need for an objective assessment of the Afghan mission, but Sopko has turned his office into a cheap media operation that does real damage to due process and U.S. policy.” The SIGAR’s troubles show that, like a political candidate, government bureaucrats too can find themselves in hot water for fudging the figures for the sake of a headline.

THE REAL 1%
Last summer, Hillary Clinton vowed to rebuild the Democratic party across the nation through an unprecedented fundraising campaign to support state parties. Now, roughly nine months later, the reality is that less than 1% of the $61 million raised in the effort has actually trickled down to the state parties. Instead the money has primarily gone to fund the Clinton campaign and the Democratic National Committee. It seems the Democratic state parties have joined the ranks of the 1%, just not the one they thought they were joining. There has been a historical problem of presidential campaigns and national political committees, treating state and local level organizations as chess pieces instead of breeding grounds for grassroots support.

HIDE YOUR KIDS, HIDE YOUR BONUS
While some regulations are necessary to solve specific problems, other regulations are created by lawmakers in order to “never let a good crisis go to waste.” American Enterprise Institute senior fellow, Peter Wallison wrote a scathing critique of the latest proposed regulation restricting incentive pay on Wall Street. He argues that limitations suppress the risk-taking necessary to grow the economy and the new regulations are “based on the same false idea about the causes of the financial crisis that underlies Dodd-Frank, a law that has discouraged credit expansion and resulted in the 2% growth rate of the past seven years.” Regardless of one’s stance on Wall Street bonuses, it seems there should be little debate over the need for further study of the economic ramifications of these policies before they are simply foisted upon an industry.

LET’S GET ARRESTED
There are few things more effective than an arrest when it comes to attracting cameras and reporters, and environmentalists have caught on to this earned media tactic. Anti-fossil fuel groups in Colorado are upping the ante in their “leave it in the ground” campaign against fracking by recruiting protestors specifically willing to get arrested. A group called “Break Free Colorado” recently sent out an email to area college students calling on activists, “willing to risk arrest, nonviolent direct action” to attend a seminar apparently teaching them how to properly get arrested. With these groups now realizing protests themselves don’t guarantee news coverage, those who are targets of these tactics should prepare for this possibility.

MAPS WITHOUT BORDERS?
In an age where issue like TPP and Brexit dominate international news cycles, it’s useful to visualize the world through the lens of connections instead of borders. That’s what Parag Khanna of the Center on Asia and Globalization at the National University of Singapore did by producing a series of updated world maps that reflect the new reality of postmodern geopolitics in his new book Connectography: Mapping the Future of Global Civilization. Khanna’s maps focus the connectivity of nations, superficially tracking transportation, energy and communication infrastructure, the three areas Khanna argues are the most relevant for connectivity.

TTIP TROUBLE
Environmental groups are now adding fuel to the fire that is the growing skepticism over free trade. They have opposed the Transatlantic Trade and Investment Partnership (TTIP) since the start of negotiations between U.S. and EU officials. But, after publishing leaked documents from the negotiation outlining several confidential details, Greenpeace claims TTIP will lead to lower food safety and environmental standards. U.S. trade officials asserted the group’s interpretation of the documents is “misleading at best and flat-out wrong at worst,” while EU officials described the issue as a “storm in a teacup.” While no one appears particularly concerned about the leak, both American and European negotiators feel the need to close on a deal before a new, potentially anti-free trade American President enters the equation.

Mark Your Calendars

Tuesday, May 10: Nebraska Republican Primary & West Virginia Primaries

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Has Contemporary Environmentalism Failed the Environment?

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It would be hard to imagine a time when nearly four out of every five Americans would declare themselves to be environmentalists. And it would be even harder to fathom that same figure applied to both Democrats and Republicans. Yet this was the case less than three decades ago.

Medium 042816 Graph

A recent Gallup poll found 42 percent of Americans would identify themselves as environmentalists today, down from 78 percent in 1991. Additionally, when broken down by party affiliation, only 27 percent of Republicans consider themselves environmentalists versus 56 percent of Democrats. Compare that to 1991 when Americans of both parties shared the same high percentage of 78 percent.

Medium 042816 Graph 2

So what’s changed in the last 25 years? Some of the general decline can be attributed to the tangibility of environmental problems. In the late 1980s and early 1990s, combatting important problems — like the deterioration of the ozone layer and cross-regional air pollution leading to acid rain — mobilized national and international support for solutions because people could see the environmental damage happening right in front of their eyes. Under Republican administrations, policymakers from both parties worked together to ratify the Montreal Protocol and pass amendments to the Clean Air Act. The reality of today’s marquee environmental issue, climate change, is that most Americans do not see its negative effects on a daily basis.

There’s also an inverse relationship between Americans’ concerns about the economy and concerns about basically everything else. In times of prosperity, Americans feel the freedom to worry about a variety of issues. Yet when the country enters a period of economic uncertainty and discontent, many other issues fall away.

Yet those reasons don’t explain the growing party gap in identifying with environmentalism. It may be fair to fault a variety of stakeholders on all sides. But one can’t ignore that there has been a major evolution where environmentalism has become ideological rather than rational.

The result is the environmental movement being perceived as just another special interest. A number of organizations leading the charge on environmental issues have transformed into partisan political machines as opposed to being issue-based, results-oriented advocates. These groups seem to take greater pleasure — and raise more money — out of simply attacking their opponents instead of seeking actual solutions.

Regardless of your stance on the science of climate change, it is undeniable that many environmental groups who claim to be advocate for a solution on this issue have ceased to persuade the public and instead have engaged in the politics of shame against those who disagree with them. This trend within environmentalism is vividly illustrated in the New York State Attorney General’s investigation into Exxon for allegedly misleading to the public regarding the risks of climate change. While many environmental groups have touted this investigation, few point out the simple fact that it achieves nothing in the effort to curb greenhouse gas emissions while offending those who believe such political speech is Constitutionally protected.

This is how contemporary environmentalism is failing the environment. Gallup argues, “While dwindling identification of the public as environmentalists may not be a welcome development for supporters of the environmental movement, it may not reflect a substantial weakening of the movement and its ability to achieve its objectives.” Yet it’s actually their objectives that have changed. Many environmental groups have shifted from promoting solutions to simply serving as political vehicles to admonish those they perceive to be their enemies. What would better serve our environment and our climate would be laying the groundwork for a bipartisan path to generate thoughtful consensus on policy.

Make no mistake: there is space for bipartisan compromise on these issues. Look no further than the recent bipartisan work on energy reform legislation backing clean energy sources like nuclear and hydropower. And there’s the recent creation the bipartisan House Climate Solutions Caucus, aiming to find solutions a broad spectrum of Americans can get behind to confront global warming. The question at hand is whether contemporary environmentalism once again can be inclusive and solutions-oriented.

I’ve been involved in partisan politics and I’ve had experience in energy and environmental policymaking debates. From that experience, I’ve learned partisan politics itself isn’t the culprit; it plays a very important role in our democracy. From my observations, if those who truly strive for smart clean energy policy want Americans to stop thinking of environmentalism as a four-letter word, they should be wary of anyone who uses environmentalism as a veil for their own political agenda.

Big Data vs. Big Personalities: Environmentalists Failing the Grade

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Here’s What You Need to Know

This past week, Gallup released a poll that found 42% of Americans would consider themselves to be environmentalists, whereas the same poll in 1991 garnered 78% of Americans polled.

In a new Medium post, Delve Executive Vice President Matt Moon explains the shift:

  • Party Gap: Today, only 27% of Republicans consider themselves environmentalists versus 56% of Democrats. In 1991, Americans of both parties shared the same high percentage of 78%.
  • What’s Changed? Twenty-five years ago, the deterioration of the ozone layer and cross-regional air pollution leading to acid rain were problems Americans could see with their own eyes. Today, climate change has very few short term tangible features and rising levels of economic uncertainty and discontent limit Americans’ concern for non-economic policy issues. But, these factors only provide a limited explanation.
  • Have Environmentalists Failed The Environment? The environmental movement has become ideological rather than rational, leading to environmentalism being seen as just another special interest. Many major environmental groups are now partisan political operations as opposed to results-oriented advocates. They seek to attack opponents instead of search for solutions to the problems facing our environment today.
  • Room for Reform: There is space for bipartisanship on today’s environmental issues, as seen in the recent bipartisan work on energy reform legislation backing clean energy sources like nuclear and hydropower, and the recent creation of the bipartisan House Climate Solutions Caucus seeking solutions that a broad spectrum of Americans can support to confront global warming.

Gallup’s figures leave a grim prognosis for contemporary environmentalism, but more disturbing still is the impact that prognosis will have on honest attempts to address environmental challenges. The question at hand is whether contemporary environmentalism once again can be inclusive and solutions-oriented.

News You Can Use

WORDS MATTER
Speaking in London last week, President Obama urged British voters to remain in the European Union, but he may have done more harm than good. During the press conference, Obama used the British English word “queue” in place of the American English “line.” The seemingly minor choice of phrase raised eyebrows. The Washington Post reports: “Some Brits quickly grew suspicious – was Obama pandering to his audience with this Britishism? Or was this a secret sign that someone British had been helping him craft his speech?” Whatever the intentions of Obama’s remarks, they may have missed their intended mark as the pro-Brexit group, Vote Leave,posted a video pulling selected remarks in which the President pointed out the irrelevance of Brexit on the Anglo-American relationship.

EVERYONE’S A LITTLE BIT IMPLICITLY BIASED
At a roundtable discussion on gun violence, Hillary Clinton seemed to catch inspiration from the parody Broadway show Avenue Q’s musical number, “Everyone’s a Little Bit Racist.” While discussing the issue of race, Clinton said “We all have implicit biases,” and that these biases have been part of our “DNA going back probably millennia.” Clinton called on Americans to be more honest and open about their racial biases even as her campaign faces difficult questions surrounding their candidate’s support for 1994 criminal justice reforms that have become controversial in some circles.

SILICON VALLEY’S JUDGMENT DAY
Last week, “Benchmark VC Bill Gurley posted a 5,700-word piece sounding the alarmabout the state of over-funded Silicon Valley companies and the investors who over-funded them.” Peter Kafka of Re/Code explains: “This is the most important part of Gurley’s essay: He sketches out a scenario in which companies that have gotten used to easy money but have yet to build a business that makes money, find that they need to raise more money — and that the easy money is gone.” It remains to be seen if or when judgment day will arrive for Silicon Valley’s overfunded startups and their investors.

BUBBLING DEBATE
The Soda Wars have come to the Democratic Presidential campaign. While campaigning in Philadelphia, Clinton became the first presidential candidate to explicitly endorse a tax on sugary drinks, claiming it both increases government revenue and promotes community health. Sanders, on the other hand, criticized the regressive nature of that tax, arguing it disproportionately hurts low-income and middle class Americans. For those who suggest Bernie never met a tax increase he didn’t like, his supporters now have a retort.

THE LEANING TOWER OF EU DEBT
While most people think of Greek debts, Middle Eastern refugees, and the potential for Brexit as the biggest dangers facing the European economy, the American Enterprise Institute’s Desmond Lachman argues the real danger may be the Italian economy. Italy, the Eurozone’s third largest economy with over $2 trillion in public debt, has seen banking shares decline by 40% so far this year. “At a time that Europe faces the real risk of a Brexit or a Grexit,” Lachman notes, “The last thing that it needs is financial market turbulence in Italy.”

21st CENTURY LOBBYING
Alaska Sen. Lisa Murkowski recently used hyper-targeted Facebook advertising to lobby employees at the Department of the Interior on approval for construction of an 11-mile road connecting two remote Alaskan towns. The advertisement used Facebook’s geotargeting technology and garnered the video over 3,100 views during the one-day ad blitz. While the ad was also seen by Facebook users in a few surrounding buildings, the tactic could provide a radical new way for lobbyists and advocacy groups to force their issues to be seen by the decision makers they seek to influence.

MONEYBALL? NEVER READ IT
After seeing the power of “big data” put to use in the 2008 and 2012 Obama campaigns, traditional candidates like Hillary Clinton and Ted Cruz sought to follow suit, engaging in a political arms race to build the best statistically-driven campaigns of the 2016 cycle. Meanwhile, outsider candidates like Bernie Sanders and Donald Trump have decimated the conventional wisdom of late by running “broader, more emotional appeals to voters rather than trying to slice the electorate into ever-narrowing segments.” The question is, can big data ultimately trump big personalities? That remains to be seen.

Mark Your Calendars

Tuesday, May 3: Indiana Primary
Tuesday, May 10: Nebraska Republican Primary & West Virginia Primaries

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Doha Dancing and Obamacare Opioids

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Here’s What You Need to Know

What does Doha have to do with the 2016 elections? A lot more than you think. Earlier this week in Doha, Qatar, the Organization of the Petroleum Exporting Countries (OPEC) and Russia failed to agree to an oil production freeze in an attempt to respond to declining oil prices and overproduction. Negotiations fell apart after Saudi Arabia demanded Iran also cap its oil production.

What happened in Doha won’t stay in Doha and has significant political ramifications here in America:

  • Presidential Campaign Game Changer? Low oil prices mean low prices at the pump for American consumers, thus removing from the 2016 Presidential campaign debate the time-honored political troupe of bemoaning pain at the gas pump. But this pain has been replaced by another challenge. Low oil prices are thanks in part to the fracking revolution that has made America into the Saudi Arabia of natural gas. But that boom has turned to bust as low prices have made it difficult to keep operations afloat, resulting in struggling economies in battleground states like Ohio and Pennsylvania that will have an impact in November.
  • Middle East Instability – With More To Come: With President Obama traveling in Saudi Arabia this week as part of his foreign farewell tour, the failed Doha negotiations have the potential to define his Middle East legacy as one of complete failure. As Ian Bremmer of the Eurasia Group explains, “Geopolitically, the impact of low oil prices is concentrated in the Middle East, where political structures are brittle and based on oil wealth-supported patronage.” Low oil prices increase the potential for chaos in a region already steeped in turmoil. And the next leader of the free world will have to construct a foreign policy within these conditions in order to address the region’s instability.
  • Wild Markets, Wildcard Voters: The fallout from this failure has led to increasedvolatility in an already unstable oil market. Crude oil futures fell internationally as traders were caught off-guard by the meeting’s failure. In a recent interview, oil analyst John Kilduff at Again Capital, claimed oil could fall to $20 a barrel before rebalancing. Geopolitical unpredictability has a multiplier effect on economic unpredictability. And economic unpredictability that has fed much of the discontent we have seen from voters this primary season will only get larger.

What seems like just another failed negotiation among rival oil producers is a game changer for this November and beyond.

News You Can Use

TAXPAYER-SUBSIDIZED POLITICO REPORTERS?
A new document released from California’s Office of Business and Economic Growth reveals Politico is set to receive a $205,000 tax credit from the state for opening a Sacramento bureau. The Daily Caller reports: “According to the document, in 2017 the number of employees in the bureau must be 34 and the minimum salary would be $50K. By 2020 the employee head count rises to 41.” There has been a longstanding debate on whether state and local governments should engage in job creation tax incentives, and it appears that the stakeholders now include journalists.  

OBAMACARE INCENTIVIZING OPIOID USE?
A new Obamacare initiative aimed at rewarding quality of care may in fact be fueling America’s opioid epidemic. The patient satisfaction survey used to determine the reward payments to hospitals asks patients multiple questions regarding the hospital’s attention to their pain management. Yet, a 2012 study found that more satisfied patients spend more on prescription drugs and have higher mortality rates, and a 2014 study found that “over 48% of doctors reported prescribing inappropriate narcotic pain medication because of patient-satisfaction questions.” It’s yet another example of how increased government involvement in healthcare can lead to unintended consequences.

THE INTERNET NEVER FORGETS
Last week UC-Davis reportedly spent $175,000 in an attempt to remove from the Internet a 2011 photo of a campus police-officer pepper spraying peaceful student protesters on its campus. The Sacramento Bee reported that “the payments, made to two separate firms—a company called Nevins & Associates and a second called IDMLOCO—were meant to polish the school’s damaged reputation.” UC-Davis soon learned a lesson efficiently explained by Esquire’s Luke O’Neil “On the Internet, any cover-up is just another opportunity to remind everyone that the crime happened in the first place.”

FACEBOOK BUBBLES
Megan McArdle of Bloomberg View writes “Even as Americans talk more and more about diversity, they are increasingly dividing themselves into like-minded bubbles where other people, with other experiences and viewpoints, almost never penetrate.”Social media amplifies this problem, as sites like Facebook tailor our newsfeeds based on our “likes” – showing us more content that we agree with than content that we don’t agree with. McArdle argues this phenomenon is influencing the 2016 presidential race as voters appear less interested in the broader political landscape and “people are not even aware that there is another side that doesn’t share their thinking.” This phenomenon may help explain the increasingly unpredictable electorate that has shocked the political elites of both parties.

BIPARTISAN OPPOSITION TO LEW RULES
Politico featured a letter from “a group of bipartisan high-ranking Treasury officials from six presidential administrations” sent to Treasury Secretary Lew on Tax Day, encouraging him to reconsider his recent decision to curb inversions through increased regulatory measures. They argued, “Current rules regarding corporate inversions don’t need revision. Instead, we urge you to focus your attention on addressing the competitive disadvantages that harm capital investment, employment, and economic growth in the United States.” These former senior economic, tax, and financial policy experts said the only solution to the problem would be comprehensive tax reform that would “level the playing field with international competitors.”

FREE TRADE’S “LOSERS” ARE WINNING
Historically the U.S. has favored free trade policies, but 2016 has proven to be a paradigm-shifting year as presidential candidates from both parties have opposed President Obama’s Trans-Pacific Partnership (TPP). Irwin Stelzer of The Weekly Standard writes, “Voters are convinced free trade is inimical to their interests, and even if it were a good thing our trading partners don’t play fair.” What has changed is a perception of the “balance of winners and losers” in these agreements. Yes, free trade results in lower priced goods for consumers. But, what voters focus on are the layoffs of blue-collar workers whose industries have shifted overseas. If a campaign hopes to revive the popularity of free trade, they will need a new message that addresses voters’ concerns rather than wonky explanations.

QUANTUM LEAPING TRUDEAU
The collective media horde hailed Canadian Prime Minister Justin Trudeau’s seemingly spontaneous explanation of quantum computing this past week. But the reality is far from the fawning media reports. After spending the morning touring Perimeter Institute for Theoretical Physics, Trudeau had encouraged reporters to ask him the question and his answer did not stand up to expert scrutiny. It seems the media was so enamored with the fact that Trudeau had an answer that they forgot to actually listen to it.

BREXIT-ICSM
EU Commissioner for Financial Stability Lord Jonathan Hill calls for “for more scepticism in the debate about Europe,” noting, “Thirty years ago it was the Euro-enthusiasts who were the utopians. When people like me asked what the Euro might mean for Britain’s economy, we were told not to worry and that everything would be fine. But today the Outers are the utopians. It is Leave campaigners who give sweeping assurances and try to close down the argument about what might happen after June 23rd if Britain votes to leave. We needed scepticism before and we need it now.”

Mark Your Calendars

Tuesday, April 26: Connecticut, Delaware, Maryland, Pennsylvania, and Rhode Island Primaries
Tuesday, May 3: Indiana Primary

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Inversions, the Car Bubble, and Bernie’s Slackivists

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Here’s What You Need to Know

Last week the Obama administration announced plans to curb the practice of American companies shifting their headquarters’ overseas to avoid U.S. taxation, commonly referred to as corporate tax inversions. The decision promptly killed a $160 billion merger between U.S. pharmaceutical giant Pfizer and Ireland-based Allergan, as Pfizer sought to take advantage of the Emerald Isle’s significantly lower corporate tax rate.

  • Business leaders and economic experts have explained tax inversions are not the problem, but rather a negative symptom of the true issue of an “antiquated, outdated tax system” producing the highest corporate tax rate of any OECD nation. They argue government regulators should address the core issues of the taxation leading companies to seek inversions, rather than attack the inversions themselves.
  • Indeed, America has gone from the best corporate tax rate in the industrialized world in the 1980’s to the worst rate in the industrialized world today, even as other countries (most recently Britain) reduce their rates to encourage business investment and growth.
  • Of the remaining presidential candidates, Donald Trump has most readily taken up this argument and put forth strong language in his tax plan, which calls for the corporate tax rate to be decreased from 35 to 15 percent, and will eliminate the need for inversions. His Republican opponent, Ted Cruz has gone so far as topropose eliminating the corporate tax altogether. Nearly all of the Republican field included some reduction in the corporate tax rates in their tax reform and economic growth proposals.
  • On the Democratic side, Bernie Sanders drafted a letter in response to the proposed Pfizer-Allergan merger calling on the U.S. Treasury to impose new tax rules eliminating the incentives to engage in tax inversions. Hillary Clinton alsoproposed an “exit tax” program to crack discourage American corporations from moving abroad.
  • Both political parties seem to agree on the basic premise that corporate tax inversions are bad for American industry, yet Congressional intervention on the issue has stalled as Democrats promote measures to specifically block the inversions, while Republicans demand a more permanent solution to the problem through comprehensive tax reform, which they have organized a task force on as recently as last month.

Despite these latest efforts to decrease the appeal for American companies to move abroad, experts still expect corporate tax inversions to continue  until the federal tax code is completely overhauled to place the U.S. marginal corporate tax at a rate competitive with other economically developed countries.

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SAY WHAT?
A Hillary Clinton campaign donor confirmed the use of a noise machine to prevent reporters from hearing a fundraising speech in Colorado last Thursday. Stan Bush, a reporter for Denver’s CBS-4 tweeted about the machine and posted a video of the noise, writing “campaign dsn’t want reporters to hear fundraiser speech. Turned on a static noise machine pointed at us when she spoke.” The fundraiser took place at the home of Colorado Governor John Hickenlooper, a superdelegate who has endorsed Clinton. This comes after last July, when the Clinton campaign roped off reporters at a parade. Reporters covering the Clinton campaign have repeatedly complained of lack of access to the candidate and information.

PRIMARY CARE EXPERIMENT
On Monday, the Obama Administration announced the new Comprehensive Primary Care Plus program, calling it “the largest-ever initiative to transform primary care in America, an effort to give doctors more flexibility and reward them for producing better results for their patients.” The experimental program will be limited to 20 states and regions chosen by the Administration which will partner with private insurers, expanding its reach beyond government payments. The good news? Nearly everyone agrees that this type of delivery reform is necessary, Democrats and Republicans alike. The bad news? The reforms are complex and it will be difficult to make them work.

HUD-WINKED
The Government Accountability Office has determined two political appointees at the Department of Housing and Urban Development (HUD) may be required to returnsix-months salary after they reportedly refused to allow a civil servant to speak with the House Committee on Oversight. The Committee was investigating an alleged administration deal to avoid a possibly damaging lawsuit by stymying a separate HUD investigation into the potential litigant.

ECONOMIC AMBIGUITY
Economists are now debating whether or not the economy actually grew at all last quarter. The U.S. deficit increased more than expected, to $47.1 billion in February, causing many economists to revise their GDP forecasting. CNBC/Moody’s economists revised their 0.9% growth forecast down to 0.5%. Atlanta Fed’s GDPNow dropped expected expansion to a mere 0.4%. At the same time, a new CNBC report advises caution when looking at GDP numbers, suggesting that based on an analysis of all quarterly reports since 1990, the average margin of error comes in at 1.3 percent.

LIES, DAMN LIES, AND GUN STATISTICS
At a recent New York campaign event Hillary Clinton charged that, “Most of the guns that are used in crimes and violence and killings in New York come from out of state. The state that has the highest per-capita number of those guns that end up committing crime in New York come from Vermont.” With 7,686 guns recovered from New York crime scenes in 2014, it is surprising to think so many would come from a tiny state from Vermont. In fact, The Associated Press notes, only 55 of them came from Vermont. By inserting the term, “per capita,” Clinton makes Vermont’s small size into a statistical disadvantage to misleadingly attack her opponent. She isn’t the first or last politician to skew statistics, but she did provide the latest example of how to sort good oppo from bad oppo.

CAR-MAXED OUT?
While the media has not been shy in covering the massive increase in student loan debt over the last decade, it has failed to bring to light another equally enormous debt crisis: car loans. Edward Niedermeyer, unpacking this phenomenon for The Federalist, reveals that “car loans have grown at roughly the same rate as student loans. Together, loans for cars and education contributed 90 percent of the growth in consumer debt since the end of 2012.” While the student loan crisis is framed by the media as just that – a crisis – the auto loan crisis is often framed as higher auto sales and touted as a portion of economic growth. Even more unnerving, “Auto Asset Backed Securities (ABS), securitized bundles of car loans not unlike the mortgage-backed securities at the heart of the 2008 credit crisis, are the hidden driver of the auto debt boom.”

SLACKTIVISTS FEEL THE BERN
Apparently Bernie Sanders has found a way to transform online “slactivists” into true activists. As Nancy Scola writes for Politico, “Sanders’ organizational success — fueled by free or low-cost, off-the-shelf apps like Hustle and Slack — is the lesser-known counterpart to his campaign’s prowess in raking in campaign cash from hordes of shallow-pocketed donors online … Sanders’ virtual volunteers do campaign work that has traditionally been handled by paid operatives … such as identifying likely voters or turning out people to campaign events. The goal is to till the ground in primary and caucus states so that when Sanders’ paid staffers arrive, they can devote their attention to voters who aren’t yet sold on the 74-year-old democratic socialist.” His digital field organizing may be the key to his unexpectedly vigorous challenge to the Clinton campaign. It remains to be seen if these tactics will prove transferrable to younger, hipper candidates.

Mark Your Calendars

Thursday, April 14: CNN Democratic Presidential Primary Debate
Tuesday, April 19: New York Primary
Tuesday, April 26: Connecticut, Delaware, Maryland, Pennsylvania, and Rhode Island Primaries

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