THIS WEEK IN WASHINGTON
July 29, 2022
Welcome to the Georgia edition of This Week in Washington. Thank you for your interest in politics and policy from the Peach State to the Potomac.
 
Patrick Robertson leads off with his Washington Whispers column, reporting on what’s going to happen in the Senate and the House before they leave town for the August recess, and previewing some of the activity that is anticipated during the balance of the calendar year. Al Jackson also updates us on defense and defense appropriations issues. 
 
Jesse Weathington gives us the latest in Georgia with his Gold Dome Report. Ramona Lessen monitored the July 26th hearing of the Senate Judiciary Subcommittee on Criminal Justice and Counterterrorism on decriminalizing cannabis at the federal level, and we’ve included her report in this edition. Make sure to check out the Infographs on current hot topics. 
 
Help wanted signs are really a sign of the times. The U.S. Chamber of Commerce published a report last week entitled Understanding America’s Labor Shortage. It lends insight to the length and breadth of the problem and is worth the read.
 
Next week, we’ll share with you an interesting Spotlight interview with Kyle Zebley of the American Telemedicine Association. And then, we will take the month of August off before starting back up with This Week in Washington and Spotlight after Labor Day.

As always… stay safe, healthy, AND sane.

Todd Smith
Chairman, Georgia Group

Jesse Weathington
Director, Georgia Group
Partner and
Georgia Group Chairman

Partner and
Georgia Group Director

Partner

Partner
INFOGRAPHS
Click image to download full report
Reported ransomware attacks are on the rise, but remain undercounted
Costs up for semiconductor manufacturing materials
16 drought-stricken states receive $118 million for water projects  
Omicron subvariant BA.5 outpacing other variants 
Washington Whispers
by Patrick Robertson, Total Spectrum Strategic Consultant

Congress is racing toward its annual August recess – a break that allows members to campaign in an election year, be home with their constituents, take a little family vacation, and spend time out of Washington, D.C.’s oppressive August heat and humidity. D.C. meteorologists remind us that the last two weeks of July are almost always the city’s hottest, and the action in Congress always reaches the same fever pitch just before the August break.

This year is no exception. Both the Senate and House passed a compromise bill to encourage the domestic manufacturing of computer processing chips. This bill started as a much larger package, including some anti-China measures, a tax title, and some other pro-American manufacturing pieces. The bill has very few tax provisions and limits the incentives to semiconductor makers, but the incentives will total about $52 billion.

This bill came together because the United States lags other countries in chip making and everything in our modern society uses chips – from cars to refrigerators and laptops to doorbells. The bill does not solve critical mineral shortages or other issues, but it will significantly increase the number of semiconductors made on U.S. soil and increase the component parts made here as well.

The House is scheduled to begin its August break at the end of this week while the Senate remains in session next week to wrap up its pre-Labor Day work. One item on Senate Democrat’s to-do list is to pass a reconciliation bill.

Many words have been written in this column and elsewhere on reconciliation, and this week, Senators Joe Manchin and Chuck Schumer agreed on a reconciliation bill that includes deficit reduction, a corporate minimum tax, an increased tax rate on carried interest, the ability for the federal government to negotiate drug pricing, and a suite of energy and climate provisions. You can find a summary of the bill here as well as the full text. If the Senate passes this bill via reconciliation next week, Majority Leader Steny Hoyer has indicated that the House will return to Washington the week of August 8 to pass the bill and send it to the President’s desk in time to avoid increases in health care premiums.

This deal seemed impossible just a week ago, but it seems Senators Schumer and Manchin talked down the possibility of a deal after Senate Republican Leader Mitch McConnell suggested he would scuttle the semiconductor bill if Democrats moved forward with reconciliation. Once the chips bill passed, the Democrats announced their deal.

It is still not certain the bill will pass as all 50 Democrats in the Senate must be on board. The liberal wing of the party has wanted significantly more in climate change resources and less in subsidies to fossil fuels than are currently in the bill. In addition, Senator Kyrsten Sinema (D-AZ) has not said whether she will support the package.

At this point, most experts see Republicans winning the five seats needed to gain control of the House. Even with dismal polling for President Biden, the Senate is closer to a toss-up than it has been in recent months due to the primary results and the localization of some of the Senate races. But an adage says that no one pays attention to midterm elections until after Labor Day at the earliest. That may be less true now with the barrage of television ads, but there are still 10 weeks or so until Election Day.

There will almost certainly be a lame duck session, where the members of this 117th Congress return to Washington to finish their work before their successors in the 118th Congress take the oath in January. During the lame duck session, Congress will pass a Fiscal Year 2023 spending package to fund the government, which will be extended by a continuing resolution at the end of September. There will also be a push for a package of tax bills that propose to change the rules around interest deductibility and the research and development credit – the leading priorities for businesses - while child tax credit will be important to others. There will also be other Members who will push their priorities during the lame duck.

One Democratic Congressman told me he thought as much as half of the legislating in this Congress could happen in the two months after the election. I think that is an overestimation, especially if this new reconciliation bill passes next week, but it does show how much action is possible. It is not yet clear beyond funding the government what proposed legislation will make the cut, but what legislators hear from their constituents in August and then in November will go a long way toward shaping the lame duck agenda.
Gold Dome Report
by Jesse Weathington, Partner and Georgia Group Director

Peach State politicos have been spoiled for choice this week, with two major meetings from both sides of the political spectrum taking place in Atlanta. The Democratic National Committee is visiting the capital city to scope it out as a potential 2024 national convention location, which would be the city’s second major party convention ever (DNC 1988 being the first). Down the street, the conservative American Legislative Exchange Council is holding its annual meeting. Next week, a bipartisan group of lawmakers will head to Denver for the National Conference of State Legislators Annual Summit to cap off convention season before school starts back in a few days. Then campaign season will truly ramp into high gear.

This week saw both the Cook Political Report and a new poll give a boost to the re-election campaign of Governor Brian Kemp. The inside-the-beltway prognosticators moved the gubernatorial race from “Toss-Up” to “Leans Republican.” The latest AJC poll, taken July 14-22, shows Kemp with a five-point lead over his rival Stacey Abrams (MOE 3.3%). The RCP average for this race has Kemp with a 3.6% lead in polling conducted in 2022. Abrams has a sizeable fundraising advantage, and will likely continue to outraise Kemp, however the sources of their respective war chests are almost opposite with Kemp raising approximately 83% of his take within Georgia and Abrams generating 86% of her haul outside the Peach State. Axios reports that Abrams would be the first major party gubernatorial nominee to raise most of their funds from out of the state since the 1990s if the trend continues through the fall.

The most interesting aspect of the poll was not related to the race for the Governor’s mansion but rather in the US Senate race between Sen. Rev. Raphael Warnock and Herschel Walker. The same poll that showed Kemp ahead also put Warnock up on Walker by three points (within MOE). Warnock also enjoys a sizeable fundraising advantage, but the durability of his lead over Walker (consistent all year), taken alongside Kemp’s lead, suggests there may be a significant number of voters who would split tickets if the election were held today. That means appealing to independents may be just as important as the base-turnout strategies that have been key to wining majorities in the current polarized era.

Ultimately, the environmental factors that militate towards a bad year for Democrats (inflation, recession, and the traditional midterm slump) may not doom Warnock’s chances if Walker can’t get traction or keeps making unforced errors. Just look at 2020 – Republicans dominated state legislative races but lost two Senate seats in an epic own goal. 
Defense Update
by Al Jackson, Total Spectrum Strategic Consultant

The Senate Armed Services Committee (SASC) released its annual defense annual defense policy bill, the National Defense Authorization Act (NDAA), for Fiscal Year 2023 earlier this month. It would authorize a $45 billion increase in defense spending over the budget request, to a total of $847 billion to counter the increase in inflation and the ever-increasing threat of both Russia and China. Additionally, the United States is shipping weapons to Ukraine amid Russia’s invasion of the country. The House version of NDAA, highlighted below, provided $839 billion in FY2023 authorized funding.
 
SASC’s version of the NDAA gives the Pentagon $158 billion in procurement, up from $144.2 billion in the administration’s budget request. Congress increased funds for combat aircraft, Navy and Marine Corps vessels, armored vehicles, and munitions. The bill authorizes $137.7 billion in research, development, test, and evaluation funds (RDT&E), which is more than $7.5 billion over the budget request. That RDT&E spending “supports” the Army’s modernization efforts on long-range fires, future vertical lift, next-generation combat vehicle, and air and missile defense. The RDT&E account also authorizes spending increases for micro-electronics and hypersonics.
 
The legislation also provides $800 million in funding for the Ukraine Security Assistance Fund. The U.S. recently sent another $400 million of weapons, bringing total U.S. security aid for the Ukrainians to $8 billion since the start of the Russian invasion. In the Pacific region, due to the influence of both Russia and China, the Senate version of NDAA increased authorized funding for the Pacific Deterrence Initiative by $1.1 billion “for unfunded requirements identified by the Commander of U.S. Indo-Pacific Command.” 
 
The House Armed Services Committee (HASC) authorized in their version of NDAA a $839 billion defense budget for FY2023. During debate of well over 600 amendments, the committee approved an amendment that added $37 billion for more ships, aircraft, and other equipment bringing the final number to $839 billion. The funding increase for the FY2023 authorization bill received strong bipartisan support in a 42-17 vote, with 14 Democrats joining all the Republican members of the committee to pass the amendment. HASC Chairman Adam Smith (D-WA) opposed the funding increase. The bill passed in committee by a vote of 57-1, with the opposing vote coming from Rep. Ro Khanna (D-CA). The bill was passed from the House chamber by a vote of 329-101.
 
The HASC provided a substantial increase in aircraft procurement, authorizing an additional 25 warplanes and rotorcraft, to include eight FA-18E/F Super Hornets, five C-130Js, two V-22 Osprey tiltrotors, two E-2D Hawkeyes, two CH-53K helicopters, four EC-37B Compass Call electronic warfare aircraft, and two UH-60 Black Hawks to replace combat losses for that helicopter. The bill also adds $550 million for security assistance to Ukraine. Those five C-130J aircraft are manufactured in Marietta, GA.
 
The legislation from the House and Senate Armed Services Committees only authorizes funding, as it’s up to the Appropriations Committees to obligate dollars to the federal budget. Appropriators in both chambers have indicated that they’re less likely to approve substantial increases in funding for the Department of Defense. In fact, the House version of appropriations only approved the administration’s topline number of $762 billion. It’s believed the Senate will go a little higher. Their bill will likely be introduced by the end of July and acted upon after the long August recess. In September, the Senate plans to conduct floor action on their version of NDAA. 
Hearing Report
by Ramona Lessen, Executive Director, Total Spectrum

Senate Judiciary Subcommittee on Criminal Justice and Counterterrorism hearing on Decriminalizing Cannabis at the Federal Level: Necessary Steps to Address Past Harms
Tuesday, July 26, 2022; 02:30 PM
 
To view a livestream of the hearing please click here.
 
Senator Cory Booker, (D-NJ) Subcommittee Chairman

Senator Tom Cotton, Subcommittee Ranking Member

Witnesses:
Dr. Malik Burnett
Medical Director
Maryland Department of Health's Center for Harm Reduction Services
Baltimore, MD

Edward Jackson
Chief
Annapolis Police Department
Annapolis, MD

Weldon Angelos
President And Co-Founder
The Weldon Project
Salt Lake City, UT

Steven H. Cook
Former Associate Deputy Attorney General
Knoxville, TN

Alex Berenson
Author, Former New York Times Reporter
Hudson Valley, NY
This e-newsletter is produced by Total Spectrum/SGA and Total Spectrum Georgia. The views expressed herein may include subjective commentary and analysis that are the views of the editors and authors alone. Information in this e-newsletter is obtained from sources believed to be reliable, but that cannot be guaranteed as independently investigated or verified. Information in this e-newsletter is not an endorsement, advertisement, recommendation, or any type of advice, political, legal, financial, or otherwise. With questions about the content of this e-newsletter, please contact Total Spectrum Georgia.