This Week in Washington, Georgia Edition

THIS WEEK IN WASHINGTON

June 10, 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.

Steve Gordon describes in Heard on the Hill the environment and mood in Washington, and what Congress is likely to tackle in the final six months of this Congressional session. Al Jackson updates us on defense and related appropriations, and Ramona Lessen monitored a hearing of the Senate Finance Committee that dealt with the President’s budget for Fiscal Year 2023.

Jesse Weathington will shed some light on the latest in Georgia with his Gold Dome Report. Be sure to check out the Infographs on current hot topics.

We have also included our recent Total Spectrum Spotlight with Charlie Cook, founder of and contributor to the Cook Political Report. His insights on political momentum and which issues will truly drive voters in the midterm elections are worth a watch.

We’ll be back in two weeks for the next issue of This Week in Washington.

As always… stay safe, healthy, AND sane.

Todd Smith

Chairman, Georgia Group

Jesse Weathington

Director, Georgia Group

Heard on the Hill

By Steve Gordon, Total Spectrum Managing Partner

Legislative Outlook for the Balance of the Year

I recently had a series of off-the-record conversations with key Republican Senators on issues to watch during the balance of this legislative session.

First, let’s set the table and call it what it is. The Democratic agenda is stalled and stymied. There is a bucketload of reasons for it. But here are a few – an unpopular President, a deadlocked 50-50 Senate where a majority can only be achieved with the vote of Vice President Harris serving as the President of the Senate, Majority Leader Schumer’s inability to build consensus in his caucus, the filibuster rule that requires 60 votes, and strong inflation that is being felt every day by almost every American.

The Biden Administration and the Democratic majorities in Congress ruled the roost at the beginning of last year and had the opportunity to push their agenda. But they went for a bigger agenda than their razor-thin majorities could pass, and they pushed a more progressive agenda than America wanted.

The first midterm election is rarely good for the party in power, and this year will not be the exception. This political reality is strongly impacting the legislative items that can be passed in the last six months of this Congress.

A Brewing Wave

Tip O’Neill, the former Speaker of the House, famously said that “all politics is local”, and it was true for years. But we’ve nationalized our politics, and that has fostered waves of momentum and money. Waves are fun if the wind is at your back, but they bite when the wind is blowing directly at your face.

Most people predict that Republicans will pick up about 30 seats in November and regain the Majority in the House. Senator McConnell is doing everything possible to pick up seats to regain the majority, and a pickup of 2 or 3 seats is probably realistic.

What to Watch for from Congress Yet This Year

Best chance of passing: The China Competitiveness bill. The bill was originally pushed in the Senate by Senator Todd Young (R-IN) and Majority Leader Chuck Schumer. It’s been passed by both the Senate and the House and has gone to a conference committee to reconcile the differences. The conference committee will most likely approve a compromise bill that should give an emergency appropriation of as much as $50 billion to the American semiconductor industry and will support other technologies.

Second best chance of passing. Senate Veterans’ Affairs Chairman Jon Tester (D-MT) and Ranking Member Jerry Moran (R-KS) have crafted a bill that will for the first time provide care to veterans who have been exposed to toxic chemicals and conditions under the Department of Veterans Affairs.

Best chance of causing anguish. A subsidy in Obamacare is scheduled to run out prior to the election in November. Democrats know they need to deal with this ticking time bomb, and one way would be to use the budget reconciliation process and pass it with their 50 Senators and a vote from the Vice President.

Appropriations. Both Senators Patrick Leahy and Richard Shelby, respectively Chairman and Ranking Member of the Appropriations Committee, are retiring as of December 31. They would both like to do one more budget. The issue always is how much money will go to defense and how much will go to non-defense items in the budget. They are currently waiting on these ‘top-line’ numbers, and then a few of the appropriations bills could pass sometime before the election. The balance of the appropriations bills will pass in some fashion either in a lame duck session or after January in a new Congress.

Taxes. There are a number of tax credits, often appropriately referred to as tax extenders, that must be extended every so often. These must be handled and may come up in a lame duck session or could be handled retroactively after the first of the year.

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Todd W. Smith

Partner and

Georgia Group Chairman

Jesse Weathington

Partner and

Georgia Group Director

Michael Reilly

Partner

Jeremy Collins

Partner

Total Spectrum Spotlight:

Charlie Cook

ICYMI: Charlie Cook, who’s been called the “Picasso of election analysis,” founded The Cook Political Report in 1984 as an independent and non-partisan newspaper that analyzes both elections and political trends. For nearly 40 years, people from both parties have wanted to know “What does Charlie think?”

In this edition of Total Spectrum Spotlight, Congressman Erik Paulsen talks with Charlie Cook about what issues may actually drive voters in the 2022 midterms, how we could see a wave election while our country is so divided, and two Members of Congress who, in Charlie’s opinion, have really improved the American experience.

INFOGRAPHS

Click image to download full report

What you need to know about Masking

What you need to know about Mining on Federal Land

What you need to know about The Cyberspace Solarium Commission

What you need to know about Defense Policy and the Midterms

What you need to know about Cannabis Lab Testing

How the Biden Administration is Battling Extreme Heat

Omicron subvariant comprises majority of Covid-19 cases

What you need to know about Energy Policy and the Midterms

Gold Dome Report

by Jesse Weathington, Partner and Georgia Group Director

Primary elections and Memorial Day weekend are in the rear view mirror, summer is upon us, and the stage is mostly set for this fall’s epic electoral throwdown. Like a long-anticipated blockbuster sequel, the rematch between Governor Brian Kemp and Stacey Abrams is coming soon to a ballot box near you. Georgians are already being treated to a massive marketing campaign, although at this point it is a light dusting compared to what is in store later. So, let’s kick the tires and light the fires for a quick flyby of the coming electoral battlefield.

As anticipated, but by a far higher margin than foreseen by most predictions, Kemp annihilated former Senator David Perdue in the GOP gubernatorial primary. By every metric, Kemp blew Perdue out of the water. So lopsided was the victory that Perdue did not carry a single county, even his own. Unlike the SoS race, the argument cannot be made that Democratic crossover votes attributed to Kemp’s romping win. They do underscore the unpopularity of the Mar-a-Lago message in the core urban counties, but no one can say that they made a difference in this race. Perdue’s contention that he could unite the feuding Republican Party was correct, just not in the way he meant it. Kemp won on money, message, and maneuvering.

Kemp had an even higher margin of victory than in his 2018 primary win over Casey Cagle, despite the full-blooded opposition of former President Trump and a whole slate of MAGA-favored candidates. As it stands, none of the MAGA ticket was able to defeat an incumbent Republican, nor come close. The exceptions are Herschel Walker’s even more lopsided dominance in the Senatorial primary (a special case) and the LG’s race where Trump-backed Sen. Burt Jones was able to narrowly avoid a run-off against Sen. Butch Miller. Neither of these races featured an incumbent on the ballot. The results do point to a widening gulf between partisan activists and the actual electorate since straw polls and well-known GOP figures were predicting just the opposite prior to the balloting.

In an odd symmetry, the paradoxical results have the Democrats unified at the top of the ticket with two extremely well-known and resourced candidates but with run-offs down ticket and no household names below Abrams and Warnock. Charlie Bailey and Kwanza Hall will square off for the Dem’s LG nod, and Reps. Bee Nyugen and Dee Dawkins-Haigler will vie to see who faces incumbent Secretary of State Brad Raffensperger in the fall. Raffensperger, America’s most famous SoS, was able to narrowly avoid a run-off with Congressman Jody Hice due to crossover support from Democrats in the open primary. The GOP on the other hand, despite bloody top-ticket primaries, emerges with surprising unity and no statewide run-offs. The tea leaves get hard to read when interpreting the GOP results; Kemp’s win is a huge repudiation of Trump, except the success of Walker and Jones point the other way. Perhaps the main lesson is that candidates need to articulate at least some positive vision and that voters care more about the future than the past.

Looking into the future, Abrams is going to have a hard time tying Kemp to Trump. The obvious playbook on the GOP side, already apparent in early negative ads, is to hang President Biden’s low approval rating and rampant inflation around Abrams’ and Warnock’s necks. The classic wedge issues are also back: 2022 is on track to have as many mass shootings as 2021, so gun control will also feature prominently. As will abortion rights, should the Supreme Court vote to overturn Roe v. Wade this term, as revealed in the leaked Alito draft opinion. The old is new again, much like a rehashed blockbuster from the past. We’ve seen this movie before, but we have a few months more to find out who is going to be Top Gun in Georgia…

Defense Update

By Al Jackson, Total Spectrum Strategic Consultant

In a recent House Armed Services Committee, Chairman of the Joint Chiefs of Staff Gen. Mark Milley, Defense Secretary Lloyd Austin, and Pentagon comptroller Mike McCord all acknowledged the submitted Fiscal Year (FY) 2023 budget does not adequately reflect the current rate of inflation. “This budget assumes an inflation rate of 2.2%, which is obviously incorrect because it’s almost 8%,” said Milley. “Because the budget was produced quite a while ago, those calculations were made prior to the current inflation rate.”

The FY 2023 request marks a $30.7 billion increase over the $742.3 billion enacted budget for FY 2022. According to McCord, nearly half of that increase, approximately $14 billion, was attributed to the Pentagon’s need to incorporate a “goods and services inflation increase in buying power.” Another $6 billion went to increases in compensation for personnel, including a 4.6% pay raise for service members and civilian employees, increases in the Basic Allowance for Housing and Basic Allowance for Subsistence, and a raised minimum wage for contractors.

Republicans and some pro-defense Democrats have criticized the low inflation rate, arguing the defense top-line number should be higher than the $813 billion the Pentagon is proposing. The FY 2023 budget is $30 billion over the $783 billion Congress appropriated for the Defense Department for FY 2022, a 4% increase. “Nearly every dollar of increase in this budget will be eaten by inflation,” Rep. Mike Rogers (R-AL), House Armed Services Committee Ranking Member, said at the hearing. “Very little, if anything, will be left over to modernize and grow capability.”

Inflation typically hits defense harder than other economic sectors, according to a McKinsey & Company report released in March. Currently, the Pentagon’s budget is expected to increase to $810 billion by 2026, excluding military construction. If the inflation rate stays at 7% annually and the budget isn’t increased to reflect the rising costs, that would decrease the Defense Department’s purchasing power to $578 billion in 2026, according to the report, significantly reducing the money it can spend on new weapons, equipment, suppliers, and other items. The cumulative lost buying power between 2021 and 2026 could be around $480 billion, or the equivalent of approximately 6,000 F-35 fighter jets.

Ranking Members on both the House and Senate Armed Services Committees, Rep. Mike Rogers (R-AL) and Senator Jim Inhofe (R-OK) respectively, who have long advocated for major increases in the Pentagon’s budget, are currently proposing an additional $100 billion to the administration’s FY 2023 budget request to allow for inflation.

In related news, both the House and Senate Armed Services Committees will begin markups of the FY 2023 National Defense Authorization Act in early June.

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.