Mind the Gap

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Here’s What You Need to Know

Nearly 6 in 10 Biden voters and nearly 8 in 10 Trump voters agree that like-minded states (blue and red respectively) ought to secede and form their own separate country. Perhaps no other statistic better underscores “the great divergence” now under way, as red states get redder and blue states get bluer in this November’s election. This domination by one party in state governments mean fewer checks on partisan excesses and strains the country’s ability to form consensus where it can and compromise where it cannot, complicating a broadening range of issues for business.

With fewer representatives in government from the political center, companies will have to navigate a gap in policy direction between red states and blue states that on a growing set of issues has become diametrical opposition. Moderate Democrats who held back the excesses of progressivism and the free market mantra of Republicans that similarly curtailed populist impulses have both ebbed in recent election cycles, and the expectations for November suggest they will continue to fade. Here is what firms need to know as they prepare to navigate this widening divergence between the states.

The Midterms Will Make Red States Redder and Blue States Bluer

When state legislatures are sworn in next year, majority parties are likely to grow even more dominant in more than two-thirds of state legislative chambers. Currently, 24 states have legislatures featuring a “supermajority” by one party and that number is likely to grow after this November. Furthermore, 37 state governments today feature a “trifecta” – where one party controls the governor’s office and both chambers of the state legislature. Only thirteen states have a government divided between the two parties. The gap between trifecta and divided state governments may expand after November too.

While social and cultural clashes might seem like the obvious place businesses will get pulled between red and blue states, the pressures will not stop there. Companies can expect competing demands on a range of business and economic issues from both sides of the chasm:

As this gap in policy direction between red states and blue states expands, stakeholders and policymakers on both sides will crank up the heat on firms to take a stand even as they remain divided over what that stand should be. On a growing range of issues, companies will face immense pressure to conform and accept either the red or blue state version of reality.

In 2023, One in Four State Legislators Will Be New – And More Partisan – Including Key Chamber Leaders

Complicating businesses’ ability to navigate state legislatures and address competing pressures from diverging states will be the number of new members populating those chambers, many of whom will be more ideological than their predecessors. One in four state legislators sworn in next year will be freshmen, thanks to the highest level of open seats in five election cycles. This shift means businesses will start out the year with a bigger-than-usual task of acquainting themselves and building relationships with new policymakers who may be less familiar with issues impacting various industries and firms than their more seasoned predecessors.

Among these open seats are legislative leaders such as Arizona House Speaker Rusty Bowers, Rhode Island Senate Majority Leader Michael McCaffrey, and Wisconsin Assembly Majority Leader Jim Steineke. While the latter two decided to retire rather than seek re-election in the face of primary challenges, Bowers was one of numerous Republican incumbents to lose in primaries this cycle. Thus far, Republican incumbents have been losing state legislative seats at over twice the rate of the past two election cycles, generally to more populist challengers. While not to as dramatic an extent, Democratic incumbents are losing to more progressive challengers this cycle as well. More ideological state legislators mean fewer representatives focused on economic growth and business-friendly reforms rather than the latest front in the culture war.

These Dynamics Leave Businesses Caught in A Chasm with Fewer Allies

This increasing divergence between the states places businesses in a precarious position as they face mounting pressure from stakeholders on both sides of America’s cultural and political chasm. When businesses do take a stand — or no stand — they are bound to alienate a swath of policymakers and other stakeholders on various sides on the issue. Firms must understand that while they may have earned and maintained a great deal of trust, it will take a lot to ensure that trust withstands the growing wave of politicization.

As competing pressures from newer, more partisan faces in state legislatures arise, businesses will have to adjust how they approach their advocacy. They cannot wait for the election results to begin assessing risks and challenges or understanding what range of stakeholders and policymakers will shape those outcomes.

The Hill Op-Ed: There’s A Wave Coming, But It’s Not the One You Think

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In his latest column for The Hill, Delve CEO Jeff Berkowitz explains that businesses have much more at stake this fall than which party controls Congress. From investigations into the Biden Administration that may drag firms into them, to pragmatic lawmakers disappearing as the parties become more dominated by less experienced and more ideological officeholders, to a widening gap in policy direction between states, a rising tide of politicization of commerce is presenting firms with many challenges. To see what firms need to know as they seek to navigate and overcome them, read the excerpt below, then head to TheHill.com to read the full article. 

Most in Washington are debating whether there will be a red wave this November and, if so, how large it might be. Yet, whether it turns out to be a wave or a ripple for Republicans, the twin tides of progressivism and populism are bringing a much larger wave that will crash down on businesses.

From The White House to statehouses, skepticism, scrutiny and pressure will rise as a new wave of politicians from both parties is elected in November for whom criticizing business has proven to be a resonant line of attack on the campaign trail and in office. This means businesses have more at stake this fall than just which party controls Congress and state legislatures.

The Lesson of 2018

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Here’s What You Need To Know

“There is a massive backlash coming. You will rue the day when it hits you. That day is November 8, 2022.” This declaration, made by Senator Rick Scott (R-FL) to “woke Corporate America,” is one of many warning signs that the expected Republican takeover of at least the House of Representatives and possibly the Senate will not provide relief for companies and industries from excessive regulation and taxation.

Instead, as our CEO Jeff Berkowitz noted in The Hill this morning, Republicans are likely to follow what Democrats did after the 2018 midterm election and exert full oversight authority over an Executive Branch held by the opposing party. As they did in January 2019, companies and industries will find themselves caught in the crosshairs. That’s because everything from the post-2008 financial crisis bailouts to more recent engagement by companies on social issues and environmental, sustainability, and governance (ESG) initiatives has “led an increasing number of conservatives to question whether or not the interests of Corporate America aligned with their own.”

Public affairs professionals cannot wait to prepare their organizations for this whirlwind of investigations. Here’s what you need to know to prepare for the scrutiny that lies ahead.

As GOP Digs Into Biden, Many Industries Will Be Caught in the Web of Investigations

Many Republican members, including those who will likely be chairs of key committees or oversight subcommittees, have publicly pledged to put the Biden Administration under a microscope should the GOP win back control in the midterms. These investigations will hit a range of companies and industries even as they aim at the President.

Healthcare. As we noted earlier this summer, “a wide range of industry participants – from manufacturers to hospital systems to care providers and others,” stepped up to support the government’s response to COVID-19. Now, as Republicans make plans to investigate the Biden Administration’s handling of that response, these firms will undoubtedly be pulled into the inquiries. We have already seen media and government watchdogs dig into how the flood of government funds was allocated and to whom. A Congressional GOP inquiry could add considerable fuel to that fire.

Energy. With the Biden Administration allocating billions of dollars toward green energy projects, Republicans on the House Energy and Commerce Committee will investigate deep into how these dollars are being invested and whether the Biden Administration is creating more climate boondoggles for donors and allies (remember Solyndra?). Banks and asset managers will also face questions about their compliance with the Administration’s pressure to reduce financing for fossil fuels projects, as well as the Securities and Exchange Commission’s efforts to force climate-related disclosures on companies.

Finance. Republican members of Congress – who have already shown skepticism of the practice of ESG investing – are certain to investigate the Biden Administration’s encouragement of and pressure on financial services firms over ESG commitments and social impact investing, with sharp questions for financial institutions Republicans view as cooperating with the Administration. Scrutiny on social impact commitments will stretch beyond finance to other corporations the GOP views as co-opted by the “woke” agenda.

Automaking. Between California’s plans to phase out gas-powered vehicles and Biden’s unilateral executive decisions mandating more electric vehicle (EV) production, the push to grow EV market share by government fiat is already prompting investigations by House Republicans. The recent passage of EV incentives in the Inflation Reduction Act (IRA) is likely to add fuel to that fire. As our energy team noted, the IRA brings to the forefront China’s control over the global supply of critical minerals and metals necessary for EVs. Automakers are moving to address this supply chain issue, but not fast enough to avoid lawmaker questions about post-IRA price hikes and layoffs.

China. Speaking of China, House Republican Leader Kevin McCarthy (R-CA) has already announced a Republican majority will create a bipartisan committee to put our trade relations under a microscope and identify ways to increase our competitive edge with China on manufacturing and supplying critical minerals and minerals, pharmaceutical ingredients, and more. Firms with significant investments in China, or who Republicans believe should be ensuring our national interests over China’s, may find themselves caught in the middle.

Big Tech. McCarthy and Representatives Jim Jordan (R-OH) and James Comer (R-KY) declared a GOP majority will investigate tech companies over alleged censoring of an article in the New York Post detailing emails sent from the laptop of President Biden’s son, Hunter Biden, likely as part of or alongside a more comprehensive investigation of alleged tech censorship and anti-competitive excesses.

Pharmaceuticals. As the Administration moves forward with Medicare drug price negotiations and other measures to rein in prescription costs, Republicans could be either a friend or a foe to the pharmaceutical industry even as some members plan their own efforts to pressure the industry. The sector’s reliance on China for active pharmaceutical ingredients is also likely to draw questions.

Fintech. The Consumer Financial Protection Bureau’s aggressive approach at regulating the growing fintech sector, including “Buy Now, Pay Later” and cryptocurrency, has raised the ire of Republicans, and fintech firms could find themselves caught between their would-be regulators and Congressional demands.

Student Loans. Republican threats to probe Biden’s recent executive action on student loan forgiveness for ethics violations may also prompt hearings on how what are essentially taxpayer dollars contribute to the rising cost of attendance in higher education and whether colleges and universities are spending those dollars judiciously.

You Have 118 Days To Prepare Your Testimony

Representative Jamie Comer (R-KY), who is expected to lead the House Oversight Committee if Republicans take the majority, is already laying the groundwork to roll up his sleeves when the new Congress convenes in January. While many of these investigations could originate in his committee, nearly all House and Senate committees have oversight subcommittees that will also conduct investigations into their areas of jurisdiction.

It is likely that in 118 days, the new Congress will be sworn in with Republicans in control of at least one chamber. Companies and industries cannot wait for the election results to prepare for this onslaught of scrutiny. Smart public affairs professionals are already working to ensure their organizations get a fair hearing when it comes.

Trustbusting the Midterms

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Here’s What You Need To Know

“Bring down the price … And do it now,” President Biden tweeted earlier this month, directing “companies running gas stations” to sell gasoline at cost. The demand defied logic (the majority of gas stations are independently-owned and have very low profit margins), but it did highlight how frustrated presidents can become over their limited ability to address economic headwinds hindering their party’s electoral prospects. If we have reached this level of rhetoric in early July, just imagine how heated things will get after Labor Day.

It is not just the price of gas drawing ire from elected officials feeling the heat from voters. Progressives and even more establishment Democrats are increasingly blaming corporations, from grocery stores to car companies and beyond for rampant inflation. As Congresswoman Alexandria Ocasio-Cortez (D-NY) told Yahoo! Finance, “A lot of these price increases are potentially due to just straight price gouging by corporations,” which the publication noted, “echoes comments in recent weeks from Sen. Sherrod Brown (D-OH), Sen. Elizabeth Warren (D-MA), and the White House.” Progressive voices, such as The Nation, have cheered on such claims, warning, “A failure to be blunt about profiteering leaves a void that will ill serve their party in 2022.”

While it ignores economic reality, left unchecked this rhetoric – and the accompanying policy responses – could cause lasting damage to companies and industries already struggling to hire workers, navigate supply chain disruptions, and prepare for a potential recession. Public affairs professionals cannot wait for the results of the midterms to stave off the lasting reputational and policy impacts. Here’s what you need to know to take action now.

Profiteering Claims Aren’t Just Rhetoric – They’re Driving Policy Action

Blaming business for economic woes isn’t limited to rhetorical gestures—it’s manifesting itself in an agenda that is being pushed by the President, his appointees, and members of his party in Congress.

Anti-Trust Laws: Last year, President Biden was already laying the groundwork for Democrats’ midterm arguments, directing federal agencies to take investigative action to rein-in corporations, urging direct government intervention in a wide array of industries ranging from meat and poultry to oil production and announcing 72 new antitrust initiatives targeting a dozen industries. Many of these initiatives are being led by financial regulators who have a record of hostility towards the private sector that The White House nominated.

Presidential Appointments: The seeds of the current regulatory environment were sown with appointments made by Biden upon becoming President, including: Lina Khan, Chair of the Federal Trade Commission; Rohit Chopra, Director of the Consumer Financial Protection Bureau; and Jonathan Kanter, Assistant Attorney General of the Department of Justice’s Antitrust Division. All three have pursued a more aggressive approach to regulating firms.

Wage and Price Controls: In charging that companies are price-gouging, some Democrats are considering price controls as a remedy. In May, the House passed a bill banning “excessive” gasoline prices. Senator Bernie Sanders (I-VT) and five Democratic members of Congress have introduced legislation that would impose tax rate increases on companies with CEO to median worker ratios above 50 to 1, while some have called for implementing a maximum wage.

Ending Stock Buybacks: In April, Senate Democratic Leader Chuck Schumer (D-NY) and leaders of the House Oversight and Reform Committee demanded executives of major oil and gas companies stop stock buybacks and dividends to provide relief at the pump. Of course, suspending buybacks and especially dividends could make it even harder for oil companies to attract the capital required to fund expensive drilling programs that generate more oil. Beyond the energy sector, there had previously been a push among some Democrats to ban stock buybacks entirely.

What’s Really To Blame for Economic Woes?

As we wrote in May, in addition to Russia’s invasion of Ukraine, growing demand post-pandemic and difficulties faced by oil producers in ramping up output have been contributing to an upsurge in gas prices. Beyond the pinch at the pump, there are several factors driving inflation:

  • Monetary Policy. The pandemic spurred unprecedented levels of stimulus spending, introducing trillions of dollars of cash into the American economy that would not be circulating under normal circumstances.
  • New Spending Habits. After receiving stimulus payments and accumulating cash savings during the pandemic, American consumers now have greater purchasing power that is accelerating consumer spending.
  • Supply Chain Issues. Even as Americans want to buy more products, they are unable to do so because the supply chain can’t produce and deliver enough of them. Producers must contend with skyrocketing prices for materials, labor, fuel costs, and shipping, ultimately weighing production costs with guesses on future consumer demand.
  • Shrunken Workforce. America’s labor market is still recovering from the pandemic. Meanwhile, the federal government continues to extend eligibility for social safety net programs like Medicaid, food stamps, and unemployment insurance, which some scholars argue deters workforce reentry.

Despite Democratic focus on corporate profits, many economists, including those aligned with past and current Democratic administrations, say the price-gouging and antitrust zeal fails to understand the true nature of the inflationary spike, which they say are more a product of market forces and government policies than corporate greed.

As the Midterm Rhetoric Heats Up, Public Affairs Professionals Must Be Ready

Faced with unhappy constituents frustrated with the party in power, Democrats in Congress and the Biden Administration hope to refocus the conversation on “Big Business” profiteering, and no industry or company will be safe from scrutiny. That means public affairs professionals must be armed with the facts necessary to make their case to the public and policymakers about the current economic reality. Otherwise, damaging ideas based on false premises can gain traction and set the terms of debate for future policy proposals. The right competitive intelligence can equip public affairs professionals with the tools they need to anticipate and address such challenges with calm and confidence.

Forbes Column: Do You Know How Government Is Impacting Your Business?

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In his latest Forbes column, Delve CEO Jeff Berkowitz outlines how an ever-changing legislative and regulatory landscape can have a significant impact on your business. To learn the key actions that keep you ahead of change, read the except below, then head to Forbes.com to read the full article.

From mom-and-pop shops on Main Street to Fortune 500 companies trading on Wall Street, the last two years of the pandemic have made clear just how much government action (or inaction) can determine whether and how businesses can operate and grow. That reality was made clear by the frequent changes to Covid-related rules by officials at every level of government, from The White House and U.S. Supreme Court to governors and even city councils. This volatility forced businesses to constantly adapt to ever-changing guidance and regulations, from shutdowns to vaccine mandates to masking ordinances and beyond. Even as we move beyond the pandemic, businesses must remain cognizant of just how much influence elected (and unelected) officials have on their business operations.

Such government involvement is not new or unique to the pandemic. In some places, its intervention is obvious, such as permitting processes under the National Environmental Policy Act or labor rule disputes at the National Labor Relations Board (NLRB). In recent years, however, governmental scrutiny has compounded, and businesses must increasingly consider the role that lawmakers and regulators have on less obvious day-to-day functions of their business, from pressuring corporations on their boards’ demographic makeup to licensing rules that come with costly repercussions.

At every turn, the government is adopting policies that affect businesses, industries and sectors. Whether your organization is large or small or your industry niche or broad, you may have significant policy challenges that make operating your business more difficult, more time-consuming and costlier. That means you need to stay ahead of government actions, so you can help shape policy in a positive way.

Continue reading at Forbes.com and find out three key actions to help your business manage a growing and complex web of governmental influence.

The Roe Dilemma

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Here’s What You Need To Know

Amidst the uproar over the leaked U.S. Supreme Court draft opinion in Dobbs v. Jackson that could determine the fate of Roe v. Wade, companies face pressure from competing stakeholders to take a public stand. Whatever position they take—or even if they stay silent—is bound to alienate one or even both sides of this charged debate. Yet, news of the draft decision is just the latest social issue flashpoint in which companies are caught in the crosshairs, with questions, concerns, and demands coming from employees, consumers, investors, elected officials, and beyond.

Public affairs professionals know threading this needle will be difficult. As we’ve warned before, “Especially in this hyperpolarized political environment, it is important for CEOs and companies to remember that while they may believe they are signaling the right thing, they very well may be widening the divide instead of closing it.” Here’s what you need to know to navigate this ongoing challenge smartly…

The Demand To Take a Stand

The leaked draft caused a wave of activism demanding and expecting companies to act. Some companies, including Amazon, Apple, Citigroup, Levi Strauss & Co., Lyft, Salesforce, Uber, and Yelp, swiftly adopted new employee benefit packages covering the travel costs of employees seeking abortion procedures. The moves come in response to pressure from not just outside activists but also employees within companies. The pressure, though, is not one-sided. Congressional Republicans, for example, were already pursuing cancellation of Citigroup’s contract to provide payment services for House offices over the bank’s plans to cover abortion travel for workers.

Companies must also contend with the fact that younger consumers—an influential demographic sought by many companies—expect companies to speak out on important social issues, including abortion access. Those consumers claim to be more likely to patronize businesses that openly share their values. Investors are likewise seeking companies committed to social impact, including pledges on abortion rights and similar social issues. In February, a group of 36 investors managing $236 billion in holdings sent a letter to CEOs of more than thirty companies requesting they disclose their stances and employee benefits related to reproductive healthcare.

Every Action Has a Reaction

The desire to respond quickly to the leaked draft may be driven in part by corporate executives who just watched The Disney Company’s CEO forced by employees and activists to belatedly speak out regarding a Florida sex education measure. Yet, the second half of that all-too-true fable is just as important a lesson. In response to Disney’s opposition to the measure, the Florida legislature empowered Governor Ron DeSantis to revoke Disney’s special operating privileges in the Sunshine State. Similarly, when Delta spoke out against a Georgia election law, state House Republicans passed a bill stripping Delta of a jet fuel tax break.

As we noted after Texas passed a contentious abortion law last year, this “new reality means trying to get along with the leaders who enact policies that are good for business while placating the activists whose agitation isn’t, or finding ways to speak up for important values without blowback from elected officials.” Indeed, as we saw with Disney, such blowback is no longer just coming from politicians, but also from consumers who do not share the more vocal protestors’ views. After all, Americans remains split 50-50 on whether firms should address this issue.

This Isn’t Going to End Any Time Soon

Last week, the U.S. Department of Homeland Security circulated warnings to corporate leaders “flagging the potential for civil unrest” once a ruling in Dobbs becomes official. The potential for extreme rhetoric, violence, and destruction means companies will have to be careful in how they respond to the ruling, and if or how they associate with various advocacy groups that could be implicated—fairly or unfairly—to disruptions.

In the longer term, companies’ response to this anticipated decision are likely to be scrutinized to see if their practices match their proclamations. For example, how many companies will now cover employees’ travel for an abortion but not for critical cancer care or other complex health issues? The potential for such questions regarding companies’ real commitment to women’s health is a future viral moment waiting to happen. In addition, a decision dismantling Roe in whole or part will lead to a lengthy state-by-state battle, with Republican-led states emboldened to restrict abortion and Democratic-led states encouraged to protect and expand access. This widening legal divergence will undoubtedly foster tensions between companies and state governments. Even at the federal level, firms have to consider that Democrats’ current hold of the reins of power may end in November, and Republicans are already planning their investigations.

Abortion laws also are not the only social issue companies will face pressure to address. From voting laws and sex education to transgender rights and critical race theory in public schools to issues not yet ripe for politicization, stakeholders and policymakers will crank up the heat on firms to take a stand even as they remain divided over what that stand should be.

Conclusion

While the Dobbs leak provided little time for companies to react, public affairs professionals must anticipate the pressure campaigns to come. As crisis communication guru Richard Levick warned last week, “Taking sides on the most problematic issues of the day may not be advisable, but it may also be unavoidable.” At Delve, we recommend firms “take a cohesive approach that aligns their brand strategy and policy stances … assess[ing] risk from both a global and local perspective so that you can better understand and address key vulnerabilities—before they are pointed out in the public arena, and before you lose control of the narrative.”

Forbes Column: Are You Ready to Launch Your Brand’s Social Impact Initiative?

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Social impact is more than a buzz word. For growing numbers of organizations, it’s an operational principle. Yet the public remains skeptical that businesses mean what they say on such issues. In his latest Forbes column, Delve CEO Jeff Berkowitz outlines how organizations can make a real commitment to social impact without any surprises, and what a failure to fully consider such initiatives through can mean for an organization. Read the except below, or head to Forbes.com to read the full article.

With brands taking greater leadership roles in society, they’re now expected to engage on a wider range of issues, including those not directly related to their business. A variety of stakeholders will encourage an organization to lead with social impact as much as they do the products they make or the services they provide. Employees, investors, advisers, community activists, policymakers and even executives see how critical dedication to shared social values can be not only to a company’s corporate culture but also to its bottom line.

In a deeply divided nation, such corporate activism can present challenges to organizations once reticent to take public stands on contentious issues but now thrust into today’s political and social debates. As Axios reported, a recent survey warned about “the danger of speaking out impulsively on issues that aren’t core to the business.” According to Fox Business, the survey found that while 63% of corporate executives think “companies should speak out on social issues,” just 36% of voters agree. Even worse, only 39% of voters think corporate communications of social issues is effective.

Here are three practices executives must adopt to shape their organization’s social impact in a thoughtful and authentic way that minimizes risks and increases the likelihood their efforts will be well-received: (1) Know your history before you engage. (2) Don’t sign up for principles before you understand their implications. (3) Actions speak louder and longer than words.

Continue reading at Forbes.com and learn why these three practices are crucial to social impact success.

Forbes Column: Are You Prepared for a Communications or Reputational Crisis?

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It may not always seem it on the surface, but political and reputational risks exist in every organization. In his second column as a member of the Forbes Business Council, Delve CEO Jeff Berkowitz explains why organizations need to be prepared to anticipate and mitigate a communications or reputations crisis before it happens, because once the viral moment hits, it will be too late. Read on to learn more.

It’s the day you have long feared. You wake up to frenzied phone notifications and emails from colleagues and questions from reporters. Your viral moment has arrived. Someone said or did something — now or years ago — and your organization is under siege from the press, public, shareholders and policymakers.

Today, it’s no longer a matter of if your viral moment will happen, but when. That’s because companies are made up of people, and people make mistakes — both in their work and personal lives. Sometimes, no one does anything wrong at all, and the blowback is seemingly unjustified. No matter the circumstances, your viral moment is inevitable.

So, as the old adage goes, “by failing to prepare, you are preparing to fail.” That’s why organizations must invest time and resources before something bad happens. Smart companies are doing so by applying the same kind of competitive intelligence they leverage elsewhere in their business to build a public affairs toolbox that ensures they can respond quickly and effectively to any viral moment.

Continue reading at Forbes.com and find out the three steps executives should take to protect their brand from an unexpected uproar.

Delve’s New E-Book: Everything Public Affairs Professionals Need To Know About the Infrastructure Bill

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Download the Infrastructure E-book

A Message from Delve’s CEO, Jeff Berkowitz

After years of “Infrastructure Weeks” and months of legislative jockeying, Congress is poised to send a bipartisan infrastructure package to President Biden’s desk. Like many such bills, its passage represents countless hours by Members of Congress and their staff, along with pressures and encouragement from a wide range of outside interests. Last fall during the presidential transition, we outlined the bipartisan opportunities offered by an infrastructure bill like this one, and each of those is represented in the final package.

Yet, even as champagne gets chilled at both ends of Pennsylvania Avenue and up and down K Street, smart government affairs professionals realize passage is just the end of the beginning, not the beginning of the end. Particularly with legislation so historic in both size and scope, signing the bill merely passes the baton from Congress to federal agencies, and in many cases, state and local governments and private sector partners.

That reality means government affairs professionals must work with public officials to ensure favorable regulatory conditions for their projects, priorities, and industries, because their opponents are already engaging in these fights, and a variety of stakeholders will likely need to buy in before the project proceeds.

To understand the fights spawned or compounded by this bill, our analyst team dug deep into what comes next, as we always do for our clients. This report provides a brief overview of ten public affairs challenges and opportunities across a range of industries that will unfold as this bill goes from legislative language to real world implementation.

While passage is a great success for government affairs professionals, Congress, and The White House, for both the winners and losers in this bill, the fight will go on. It is our hope that this report helps prepare you and your organization to stay ahead of the curve. As you do, please reach out – we’re here to help.

Thank you for reading,

Jeff Berkowitz
CEO
Delve

From Europe, With Disappointment

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Here’s What You Need To Know

Contrasting himself with then-President Trump’s “America First” diplomacy, Joe Biden pledged during the campaign to strengthen America’s alliances to “address the most urgent global challenges.” Then-campaign advisor and now Secretary of State Antony Blinken said Biden’s foreign policy “means engaging the European Union instead … treating it like it’s an enemy,” promising Biden would “bring to an end [Trump’s] artificial trade war,” and “rebuild strong ties with the European Union.” As President-elect, Biden underscored these commitments in a call with European leaders, vowing to “deepen and revitalize the US-EU relationship.”

These overtures from the Biden campaign was met with resounding anticipation, with the former French Ambassador Gerard Araud calling the prospect of a Biden victory as “orgasmic” for Brussels. London-based Business Insider reporter Thomas Colson boldly prognosticated that a Biden win in 2020 would, “repair most of the damage Trump has done to America’s historic alliance with Europe.” There were high hopes for an end to so-called trade wars with Europe, as well as greater financial investments in Europe’s security.

Yet eight months into the Biden Administration, some analysts may be wondering if Biden is actually the most Eurosceptic president in recent American history. From reinstituting a travel ban on European visitors to a bungled Afghan departure and beyond, transatlantic tensions have intensified, reaching a crescendo with the controversial AUKUS submarine deal earlier this month. For organizations counting on stronger transatlantic ties, the unexpected turmoil poses unique challenges for both day-to-day operations and long-term growth. Indeed, even where the two sides of the Atlantic appear to be cooperating, the policy direction may hurt rather than help. Here’s what public affairs professionals need to know to help their organizations navigate the turmoil.

The Biden Administration’s Action Have Not Matched Campaign Promises – Or European Expectations – For a Strengthened Alliance

BAD BAN: When President Joe Biden took office, he reinstituted a travel ban on visitors from most European nations, regardless of an individual’s vaccination status and with very few diplomatic or commercial exceptions, even though individuals from nearly 170 other nations could visit America, regardless of their country’s COVID-19 situation or vaccine campaign efficacy. After Europe lifted its restrictions on vaccinated or negative-testing American travelers, they expected the U.S. to reciprocate. In the several months that followed, President Biden wouldn’t budge, leaving European leaders furious and triggering a deluge of public statements from ambassadors, national leaders, and EU chiefs emphasizing how damaging the Biden Administration’s decision was to U.S.-Europe relations, international commerce, and the millions of families kept apart for nearly two years. While Biden finally ended the ban last week, the damage had already been done.

AFGHANISTAN FALLOUT: Despite broad international criticism, President Biden has remained defiant about his decision to end a U.S. presence in Afghanistan. The chaotic departure has infuriated European allies – in particular, France, Germany, and the United Kingdom – who have made long-term troop and financial commitments to support U.S. efforts in the region and expected Biden to strengthen, not surprise, the NATO alliance. In mid-August, the British Parliament held President Biden in contempt over the messy withdrawal, while Europeans openly discussed whether they can still rely upon the United States as a partner in global security. “There was a time when the U.S. talked about upholding the global order,” Sweden’s former Prime Minister Carl Bildt told the BBC. “But that is not the language now coming out of the White House. Expectations for a revival of the transatlantic relationship have been deflated. And one is resigned to an America that does it its own way.”

LAFAYETTE, NOUS NE SOMMES PAS DÉSOLÉS: The U.S.-EU relationship deteriorated further after the Biden Administration “torpedoed a multibillion-dollar French submarine deal with Canberra,” with the French insisting they were left in the dark about the incoming hit to one of its most prized industrial products until it became public. The French were so angry, in fact, that they recalled their ambassador from Washington to Paris – one of the deepest cuts in America’s longest alliance dating back to the American Revolution. Even as President Biden attempted to smooth things over by lifting the travel ban, Europe isn’t forgetting the slight anytime soon. The EU delayed the first session of the U.S.-European Trade and Tech Council planned for September 29th, and EU Internal Market Commissioner Thierry Breton suggested, “It is probably time to pause and reset our EU-U.S. relationship.”

WAIVER-ING RELATIONSHIP: These missteps in the U.S.-EU relationship are not recent. Back in February, the Biden Administration caught European officials by surprise when it endorsed efforts at the World Trade Organization to provide waivers on COVID-19 related intellectual property protections. Meanwhile, Speaker Nancy Pelosi (D-Calif.) is sending signals to London that, should Prime Minister Boris Johnson interfere with a Northern Irish peace process, it would hinder his ability to secure a post-Brexit trade deal. And allies in Central and Eastern Europe were disturbed by the Biden Administration’s abrupt decision to withhold sanctions against Russia’s controversial Nord Stream 2 pipeline project. With so many developments in a short eight months in office, it is no surprise European Council President Charles Michel expressed disappointment, noting Biden had declared, “America is back. … What does it mean … Is America back in America or somewhere else? We don’t know … We are observing a clear lack of transparency and loyalty.”

Transatlantic Tensions Add Challenges for Companies in This “New Era” of U.S. Diplomacy, but So Does Cooperation

NAVIGATING A NEW ERA OF UNEXPECTED TENSION: Last week, President Biden gave a speech at the United Nations where he outlined his vision for a “new era” in U.S. diplomacy. Yet while the Council on Foreign Relations once lauded the President Biden and Secretary Blinken as “confirmed Atlanticists” eager to re-engage with Europe on initiatives like the Paris Agreement and World Health Organization, the economic picture remains unclear. The state of trade wars, once portrayed as relics of the Trump Era, are no longer the exclusive sign of the health of America’s economic relationship with Europe. For public affairs professionals, the Biden Administration has not turned out to be as predictable on transatlantic affairs as experts once hoped.

COOPERATION BRINGS COMPLICATIONS OF ITS OWN: Even areas where there is cooperation between the U.S. and Europeans do not bode well for companies. From anti-trust crackdowns to global minimum taxes to carbon reduction initiatives, this collaboration can be just as much a source of angst among companies that expected Biden to get the U.S.-Europe relationship “back on track.” Now, corporate public affairs professionals must juggle what’s happening with Washington, Brussels, and London – and Paris, Vienna, and Berlin, too. With this expansion in what developments in which jurisdictions can impact their interests, companies will need sharp competitive intelligence efforts to make sense of it all.