Convention Preview: Republicans and Democrats on Trade
This is the third in a series of insights we’ll be providing on different policy platform fights in the weeks leading up to the Republican and Democratic National Conventions.
Here’s What You Need to Know
The platform committee of the Democratic National Convention has adopted decidedly anti-free trade policies and the Republican National Convention’s platform committee has raised more questions about whether America benefits from its current trade agreements than it has in many decades. Both platform drafts are likely to be officially approved in Philadelphia and Cleveland respectively. While not specifically criticizing the Trans-Pacific Partnership (TPP), both platforms have language that took firm positions calling for tough restrictions on trade deals.
There’s been plenty of discussion on how politically unprecedented this is. But, there are fundamental questions on how a few different key political stakeholders will handle the shift.
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What Do The White House And GOP Congress Do? Bernie Sanders fell short of his desired platform amendment specifically criticizing TPP, with Democrats opting for language calling generally for tough restrictions on trade deals in order to avoid embarrassing President Obama. The White House must now decide how to get TPP enacted before leaving office. Republicans in Congress – who may lose the Senate – could work with President Obama move TPP in a lame duck Congress. Regardless of who wins in November, TPP will be dead-on-arrival come inauguration day 2017. But yesterday, House Speaker Paul Ryan seemed to dash the hopes of those aiming for lame duck passage, telling Politico he has “got problems” with TPP and “think[s] they made some pretty big mistakes” during negotiations.
What Do Pro-Trade Democrats Do? Despite the especially vocal progressive wing of the Democratic Party, many coastal Democrats like Sens. Patty Murray, Diane Feinstein, and Chuck Schumer still represent constituencies that benefit with hundreds of thousands of jobs created by free-trade agreements. With their party’s standard bearer now officially toughening her stance on these policies, how Democrats balance the needs of their constituents with the demands of their party should be watched closely.
What Do Business Groups Do? On the right, traditionally pro-GOP business associations like the U.S. Chamber of Commerce and the National Association of Manufacturers have already openly opposed the party’s newly critical stance on trade promoted by Donald Trump. Now that Trump’s “America First” policy on trade has officially been adopted by Republican delegates on the platform committee, how will these pro-trade business groups respond? These groups may be exploring the option of using their political muscle to go after anti-trade Republicans.
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News You Can Use
WE’RE IN THE DICTIONARY. The Oxford English Dictionary (OED) recently announced their list of new definitions being added to the benchmark of English language and the term “TL;DR” is now among them. The OED defines the term as, “’too long; didn’t read’ (also occasionally ‘don’t read’): used as a dismissive response to an account, narrative, etc., considered excessively or unnecessarily long, or to introduce a summary of a longer piece of text.” We certainly endeavor to make sure our version of TL;DR falls into the latter definition.
S.F. KILLING GOOSE LAYING GOLDEN EGGS. Three San Francisco city supervisors have announced plans to propose a 1.5 percent payroll tax on the city’s tech companies to be voted on in November. The measure has received resounding opposition from other city officials including Supervisor Mark Farrell, who called it, “the worst idea I’ve heard in months,” and Mayor Ed Lee, who’s spokeswoman called it a, “job killing measure.” The tech industry has provided San Francisco with decades of prosperity and the lowest unemployment rate of any city in the country. Singling out the industry out for a tax would likely lead tech firms to find new homes even faster than they are already.
INFLUENCING NOT-SO-REFORMED. Nine years ago, Democrats retook Congress under a banner of ending Washington’s “culture of corruption,” passing lobbying reforms aimed at slowing the spin of the revolving door between Capitol Hill and K Street. But little if anything has changed. Politico’s Isaac Arnsdorf recently concluded, “Not only did the [Honest Leadership and Open Government Act of 2007] fail to slow the revolving door, it created an entire class of professional influencers who operate in the shadows, out of the public eye and unaccountable.” The lobbying reform bill is just another example of Congress’ staggering ability to achieve the opposite of their stated goal when crafting laws.
HOT TUB LOBBYING MACHIN. The $28.6 billion Japanese spa industry relies on the use of the country’s massive geothermal reserves for their naturally occurring hot springs. And now the industry is blocking attempts to tap into those geothermal reserves as a source of alternative energy. The Japan Spa Association has aggressively and effectively lobbied to ensure that the bulk of Japan’s clean-energy program funding has gone to solar instead of geothermal. Those pushing for geothermal expansion were caught off-guard by the spa association’s lobbying effort, a perfect example of the value of identifying your opponents before engaging in a public affairs campaign.
OBAMA’S LOSING SCOTUS RECORD. Presidential administrations are under constant scrutiny by the U.S. Supreme Court. However, Cato Institute fellow Ilya Shapiro explains that the Obama administration has a 79-96 SCOTUS win-loss record, garnering them a success rate of just above 45 percent, lower than any modern President going back to 1960. Even President Obama’s own Justices aren’t voting in support of the administration’s policies. This record is a direct byproduct of President Obama’s attempts to stretch the use of unchecked executive powers to push through his agenda. As Justice Anthony Kennedy wrote in an opinion against one such example of executive overreach, “federalism protects the liberty of the individual arbitrary power. When government acts in excess of its lawful powers, that liberty is at stake.”
WINK-AND-NOD REGULATION. Everyone has read the story of VW’s $15 billion scandal surrounding their attempt to circumvent carbon emissions regulations. While the company’s behavior may be worthy of admonishment, Solutions Consulting President William O’Keefe asks why “manufacturers engage in schemes to beat the required certification tests.” O’Keefe argues the EPA “continues to believe that if it demands the impossible, manufacturers will find a way to comply.” All the while it remains an open secret that regulatory compliance tests in no way reflect real-world conditions. Until this accepted yet unrealistic “wink-and-nod regulation” is reformed, engineers, like those at VW, will continue believing that gaming the certification process is just how business is done in the manufacturing industry.
BUSINESS CARROT VS. STICK. How can the U.K. encourage globally-focused businesses to stay post-Brexit? UK Chancellor of the Exchequer George Osborne has proposed a further reduction in the country’s corporate tax rate from 20 to 15 percent to do just that. Meanwhile, President Obama and Treasury Secretary Jack Lew have been busy using regulations to deal with corporate inversions as U.S. companies seek to move their headquarters’ abroad to avoid the U.S. corporate tax rate. On the one hand, the UK seeks to offer companies the carrot of favorable tax rates, while the U.S. is brandishing a stick in the form of regulations. As Caroline Baum of MarketWatch bluntly puts it, “Carrots are always better than sticks.”
FOOD STAMP FAVORITISM. By the end of the year, the USDA wants to adopt a set of rules that would require stores wishing to redeem food stamps to stock a wider variety of meats and vegetables while selling fewer hot meals, like pizza. The move has been criticized for favoring major grocery chains like Walmart and Kroger Co. – who have the capacity to carry a wider selection of products – while hurting smaller corner grocery and convenience stores who can only offer limited selection. The debate has not garnered much attention, but a group of bipartisan lawmakers on Capitol Hill are opposing the measure, warning that if small stores stop accepting food stamps, both those in need and small businesses will suffer.
Mark Your Calendars
Monday, July 25 – Thursday, July 28: Democratic National Convention in Philadelphia