THIS WEEK IN WASHINGTON
March 11, 2021
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’s Heard on the Hill covers three big items in Washington – Senator Roy Blunt’s announcement that he will not run for re-election; the passing of the American Rescue Plan, the latest COVID emergency legislation; and the possible return of legislative earmarks. Jesse Weathington provides an update on the latest in Georgia with his Gold Dome Report. Total Spectrum Partner and Southwest Regional Director Michael DiMaria provides some thoughts on data privacy. Congressman Erik Paulsen writes about why tax cuts are the wrong medicine for a struggling economy in his article originally printed last week by the Washington Examiner and reprinted by Real Clear Politics. Ramona Lessen summarizes a hearing held this week by the Senate Banking, Housing, and Urban Affairs Committee entitled ‘Who Won on Wall Street – GameStop, Robinhood, and the State of Retail Investing.” As always, make sure to check out the Infographs for an in-depth look at current hot topics.
 
Our Total Spectrum Spotlight this week is a replay of the webinar hosted last week by the Arizona Chamber of Commerce featuring Total Spectrum’s Strategic Consultants Erik Paulsen and Patrick Robertson.
 
Speaking of Patrick, hats off and congratulations to him for his work on behalf of the Independent Restaurant Coalition and 500,000 local restaurants and bars – and the 11 million people they employ. Restaurants will be receiving $28.6 billion as part of the American Rescue Plan to help rebuild their sector. We will cover how restaurants and bars can apply for this program in the next issue of This Week in Washington.

Y’all stay safe, healthy AND sane…

Todd Smith
Chairman, Georgia Group

Jesse Weathington
Director, Georgia Group
Heard on the Hill
By Steve Gordon, Managing Director

Senator Roy Blunt – A Legislator’s Legislator
I first got involved in Missouri politics in 1986 when I became a consultant to former Governor Christopher (Kit) Bond and his campaign for the U.S. Senate. Roy Blunt, a former teacher who became Missouri’s first Republican Secretary of State in more than 50 years, was elected seven times by the people of southwest Missouri to represent them in Congress, where he served as the Majority Whip. Senator Bond announced his retirement from the U.S. Senate in January 2009, and Congressman Blunt announced his candidacy for the U.S. Senate the next month.
 
Jon Kyl was the Assistant Majority Leader in 2009 and 2010, and I was his political consultant. Senator Kyl’s political goal was to elect as many Republican candidates that cycle as possible, but he wanted me to especially help Congressman Blunt become a U.S. Senator. “Watch Roy Blunt and help him all we can,” Senator Kyl told me. “He is going to be the Senate Majority Leader someday.”
 
Senator Blunt’s second term in the Senate is concluding in 2022, and almost everyone – including me – expected him to officially announce that he would be a candidate for reelection next November. Everyone – including me – expected him to prevail. But Senator Blunt surprised almost everyone Monday by announcing that he would retire from the Senate at the end of 2022. “Twenty-six years in Congress is enough for anyone,” Senator Blunt said on a call yesterday morning. “But we have a lot of work to do, and we are going to get it done.”
 
Senator Blunt serves in the Senate Republican Leadership as Chairman of the Republican Policy Committee. He is currently the Ranking Member of the Senate Rules Committee, and serves on the Senate Appropriations Committee; the Senate Commerce, Science, and Transportation Committee; and the Senate Select Committee on Intelligence.
 
He is also the Ranking Member of the Appropriations Subcommittee on Labor, Health, Human Services, and Education. Senator Blunt previously was chairman of this subcommittee, and he used it to massively expand research funding for Alzheimer’s disease, cancer, and mental health. He, along with former Senator Lamar Alexander, developed and funded Operation Warp Speed, which produced COVID-19 vaccines in record time.
 
Roy Blunt will not be the next Senate Majority Leader, but he is getting the recognition he deserves as a legislator’s legislator.
 
I am very pleased to announce that Senator Blunt has agreed to participate in an upcoming Total Spectrum Spotlight interview. 
 
...Continued after the Gold Dome Report
Partner and
Georgia Group Chairman

Partner and
Georgia Group Director

Partner

Partner
Total Spectrum Spotlight
Join us for a look at significant legislation being discussed this week and in the next few months with Total Spectrum Strategic Consultants Erik Paulsen and Patrick Robertson. This episode was hosted by the Arizona Chamber of Commerce and Industry.

#TSSpotlight
INFOGRAPHS
Click image to download
What you need to know about the
The PPP Program Relaunch
Fentanyl and methamphetamine use surges in the pandemic
What you need to know about the
Health Worker Shortages
Covid-19s economic toll on the US travel industry
U.S. infrastructure has improved since 2016 - but not by much
Gold Dome Report
by Jesse Weathington, Partner and Georgia Group Director
 
This week under the Gold Dome marked a heralded anniversary and the always eagerly anticipated event of Crossover Day. A year ago, the General Assembly abruptly pushed pause on the session until June due to the worsening pandemic, returning briefly only to ratify and extend the extraordinary executive powers granted to Governor Brian Kemp by the declaration of a public health emergency, a hitherto unprecedented event.

Fifty-two very long weeks later a partially vaccinated, still socially distanced legislature met Monday for this year’s version of Crossover Day, the last day a bill can typically pass the chamber in which it was introduced and still expect to reach the Governor’s desk. In perhaps the most unexpected political development of the past twelve months, Crossover, much like the whole session, proceeded rather… normally.

The Senate and House worked well into the evening, clearing a logjam of bills built up over a flurry of committee activity in February and earlier this month. There have been no widespread coronavirus outbreaks among the daily denizens of the Capitol, no disruption from unruly citizens, and remote committees that have worked through legislation much like a typical year. The starkest reminder of the recent national political turmoil is the fence being installed around the Capitol, and how the grounds have been torn up by construction.

So far, the heavy partisan action has revolved around a slew of election bills forming both parties’ response to the 2020 and 2021 elections, with competing GOP proposals aimed at “election integrity” which have been met with unified Democratic opposition to tactics labeled as “voter suppression.” National political groups are heavily involved in drumming up grassroots action both for and against the measures with a keen eye on the 2022 re-election bid of Senator Raphael Warnock (run, Herschel, run?). The House and Senate majorities have taken distinct approaches to addressing the concerns their constituents have about elections administration. The session endgame will largely revolve around how the two chambers reconcile their dueling elections bills in the face a unified Democratic front.

The just-passed $1.9 trillion COVID relief bill has largely ameliorated any big-picture budget concerns for the near term, easing some pressure on the state as the Senate Appropriations committee begins working on their version of the FY 22 budget. The Governor has decried the package, which received no GOP support in Congress, as profligacy designed to benefit California and New York. The Peach State isn’t totally out of the woods, with large outflows expected this spring and summer due to refunds owed on extra federal aid withheld from checks over the last year.

The period between crossover and the budget conference committee sets up the endgame of every session. Like a typical year, the 2021 version has the usual interests all trying to rush to the end zone before Sine Die. Between here and there lies a titanic struggle over voting rights and elections, lots of Christmas tree decorations, and a catfish or two lying gutted on the floor. March 31st can’t come soon enough.
Heard on the Hill (continued)
 
Emergency COVID Legislation
Democrats passed the American Rescue Plan using the budget reconciliation process, which requires a simple majority rather than a filibuster-proof majority in the Senate. It passed in the Senate 50 to 49, with Senator Sullivan of Alaska called home on a family emergency. The House of Representatives passed it today, and President Biden will have a signing ceremony on Friday.
 
Republican Senators were willing to do anywhere from $600 to $900 billion, and a few were willing to go a little higher. The final price tag is $1.88 trillion. Senate Democrats published this title-by-title summary of the bill.
 
Almost everyone agreed that some items are both good and necessary. Those items included more money for vaccines, schools (K-12), colleges, and preschool programs, as well as some additional targeted direct payments, continuation of the federally enhanced unemployment program, assistance for small businesses, restaurants, broadband for schools, and funds for airlines and airports.
 
Many Republicans objected to funds directed to states and local governments and the huge increase of the child tax credit. Almost all Republicans objected to items that they considered way outside the bounds of a COVID relief package, especially after the emergency funds that were passed by Congress in 2020. Examples of questioned items in this bill are funds for museums, libraries, the National Endowment for the Arts, and Amtrak.
 
All Senate Republicans objected to the size of this bill. Yes, $1.88 trillion is a mind-boggling number. But it means that the total cost of all six emergency COVID relief bills will be $5.5 trillion. I have been told that more than $450 billion dollars of previously appropriated funds from COVID legislation has not even been spent, and that the entire cost of World War II to our government was $4 trillion (in 2020 dollars).
 
Democrats argue that Federal Reserve Chairman Jerome Powell encouraged the federal government to spend big, and that there is no cost to government spending when interest rates are near zero. They believe that the pandemic has hit lower and middle-class Americans the hardest, and that these funds will help those who need it the most.
 
Republicans argue that putting this on the ‘credit card’ just adds to our growing national debt and when rates go up – as they surely will eventually – the cost of servicing the debt will squeeze out other programs. They say that we added 379,000 jobs in February and that almost everyone predicts that our economy will take off like a rocket through the balance of 2021. Many economists fear that this stimulus bill may make the economy too hot and create inflation.
 
The Washington Post’s longtime economic columnist Steven Pearlstein published an article on March 3rd entitled ‘In Democrat’s progressive paradise, borrowing is free, spending pays for itself, and interest rates never rise.’
 
Both political parties know that the voters will have the last say next November.
 
Democrats point to a new Pew Research poll that shows:
  • 70% of adults favor the bill; 28% say they oppose it.
  • 41% of Republicans and GOP-leaning independents favor the bill.
  • 75% of women favor the bill.
  • 91% of Blacks favor the bill.
  • 80% of Hispanics favor the bill.
 
Republicans admit that sending out money is popular, but they point out that free money is rarely free. They suspect that the total cost of the legislation – and where some of the money was spent – will be remembered after the checks they received have been cashed.
 
The Debate over Earmarks
Earmarks are spending that is made by Congress to a specific location or project, usually in a Senator’s home state or a Congressman’s home district. Earmarks became synonymous with wasteful spending, and Republicans and Democrats in Congress stopped using them in 2011. But that allowed agencies of the federal government to end up disbursing most of the same funds.
 
Opponents of earmarks say that they are an inappropriate and irresponsible way to spend federal money. Legislators who are opposed to earmarks can point to any number of legitimate cases where earmarked money was wasted, and they are pleased that earmarks are no longer part of the legislative process.
 
Supporters of earmarks say that the money is going to be spent, and if Congress will not spend the funds the administration will, and that legislators best know the needs of their district or state. Supporters contend that Congress stopped getting things done for the American public about the same time Congress stopped using earmarks. 
 
Senate Appropriations Chairman Patrick Leahy is all in to restore earmarks this year. Senator Richard Shelby, Ranking Member of the Senate Appropriations Committee, is widely expected to agree to an understanding with the Chairman on how to use earmarks.
 
House Majority Leader Steny Hoyer has been saying for several months that earmarks will be revived, and he thinks there will be bipartisan support for them. Congressman Peter DeFazio, who is the Chairman of the House Transportation and Infrastructure Committee, sent out a press release last week on “how Members of Congress can submit requests for highway and transit project designations.”
 
Chairman DeFazio has said that there will be guardrails to ensure that past scandals are not repeated, to include:
  • Each House Member can submit no more than 10 requests.
  • Members must prove there is community support for the project.
  • Members must certify that they have no financial interest in the project.
  • The total amount of earmark funded projects will be limited to one percent of all discretionary spending.
  • For-profit institutions will not be eligible for funding.
  • The relatives of Members cannot have connections to projects.
 
The House Republican caucus has a rule against earmarks, and there are a significant number of Members who would like to run against the past excesses of earmarks. But it is hard to imagine how Republican members can stand on principle when Democratic members sit down to appropriate funds for their districts.
 
We will watch this issue and keep you advised.
Consistency Required for Data Privacy 
By Michael DiMaria, Partner and Southwestern Regional Director

In the early 2000s customer privacy was becoming an important issue for policy makers.  Rules and regulations were passed to ensure telecommunication network providers keep personally identifiable information private.  Like most policies in the tech world, regulation has a hard time keeping pace with the marketplace. There's a complex mosaic of laws and regulations that address different business sectors, including financial institutions, marketing data, telecommunications, as well as health and credit information.  There are also different rules for application providers vs. network providers.  This is becoming a larger problem for the business community as more than 25 U.S. state attorneys general oversee data privacy laws governing the collection, storage, safeguarding, disposal, and use of personal data collected from their residents.  Many of the laws have different applications on how to deal with notifications of data breaches and the release or hacking of personally-identifiable information. In addition, one must consider the General Data Protection Regulation, which is a data protection and privacy regulation in the European Union and the European Economic Area. Among other issues, it addresses the transfer of personal data outside the EU and EEA areas.  
 
To provide perspective on the size and scope of customer privacy, Pew Research recently reported that “roughly six-in-ten U.S. adults say they do not think it is possible to go through daily life without having data collected about them by companies or the government.” 
 
The Federal Trade Commission Act (15 USC § 41 et seq.) has broad jurisdiction over commercial entities under its authority to prevent unfair or "deceptive trade practices." While the FTC does not explicitly regulate what information should be included in website privacy policies, it uses its authority to issue regulations, enforce privacy laws, and take enforcement actions to protect consumers.  At some point in the near future, it will be important for federal policy makers to have a consistent set of rules and regulations that will provide direction for multi-state companies instead of a different set of rules for every individual state.  The United States Senate began discussions a few years ago on a comprehensive bill to deal with privacy concerns but have yet to finish the legislation.  Stay tuned for future articles in This Week in Washington for updates on this crucial legislative effort.
Opinion: Tax increases are the wrong medicine for our struggling economy
by Congressman Erik Paulsen, Strategic Consultant
 
America’s economy was in high gear prior to the pandemic. Our country’s gross domestic product grew 4.1% in 2019 after increasing 5.4% in 2018. Unemployment reached a 50-year low of 3.5%, and 6 million new jobs created historically low unemployment levels across all demographic groups. Business optimism was at record highs, and workers saw their wages increase by their highest levels in 10 years.
 
These impressive numbers were no accident. The 2017 Tax Cuts and Jobs Act created prosperity and opportunity and made our economy boom again.
 
One of the most significant provisions of this pro-growth policy was lowering the U.S. corporate tax rate from 35% to 21% to make America more internationally competitive. Previously, America’s unfair and uncompetitive tax code made foreign countries more attractive for investment.
 
With increasing frequency, U.S. companies were moving their headquarters to other countries, and good-paying jobs and manufacturing were shipped overseas. These transactions, where an American company acquires a foreign company for the purpose of relocating its headquarters to another country with a lower tax rate, are called inversions.
 
Losing a U.S. headquarters to another country isn’t just a news headline. It means losing investment, innovation, and jobs. Lowering the corporate rate to 21%, closer to the average rate of our trading partners, was a central component of our national commitment to bring back jobs and manufacturing to the United States. It allows American businesses to make smart decisions based on factors other than tax avoidance and discourages them from shifting profits to lower tax jurisdictions.
 
News reports of inversions have largely disappeared from the financial pages, but that could easily change. President Biden and some in Congress are proposing to raise the corporate rate to 28%.
 
This would be a major mistake and discourage investment in domestic manufacturing, technology, and production. It would widen our competitive disadvantage with our major trading partners. Competition is fierce, and the rest of the world isn’t standing still. Just last year, nine countries lowered their corporate tax rate, and others are sure to follow.
 
Treasury Secretary Janet Yellen was asked during her Senate confirmation hearings if the proposed 28% would hurt the competitiveness of American corporations. She dodged the question but said that “the administration could reach an agreement with our trading partners to stop a destructive global race to the bottom on corporate taxation.” This is, at best, wishful thinking.
 
Analysts at Bank of America Securities have estimated that Biden’s tax plan could cut the S&P 500 earnings by 7%, and companies in the technology, healthcare, and communications industries would be the hardest hit.
 
Yellen pledged in her testimony that Biden would not move to raise the top corporate tax rate until the pandemic is over. If it is true that it makes no sense to diminish the attractiveness of the U.S. to locate a business, invest in new equipment, and hire new workers during the pandemic, then it is equally true that it would be just as controversial in good economic times.
 
Instead of tax hikes, I hope that a bipartisan consensus develops in Washington on ways to keep America economically competitive and strong. Otherwise, senior corporate executives may start asking their tax advisers to dust off their inversion plans and begin to move their companies and jobs to countries where the tax and regulatory environment is more friendly.
 
Erik Paulsen is a strategic consultant with Total Spectrum. He represented Minnesota in the U.S. House of Representatives from 2009-2019 and was chairman of the Joint Economic Committee.
 
This op/ed originally appeared in the Washington Examiner on March 5, 2021. The views expressed in this article are the writer’s own.
Hearing Report
By Ramona Lessen, Executive Director, Total Spectrum
 
Senate Banking, Housing and Urban Affairs Committee Hearing entitled,
“Who Wins on Wall Street? GameStop, Robinhood, and the State of Retail Investing.”
Tuesday, March 9, 2021; 10:00 a.m.
 
To view a live stream of the hearing please click here.
 
Senator Sherrod Brown (D-OH), Chairman
 
Senator Pat Toomey (R-PA), Ranking Member
 
Witnesses:
Professor Gina-Gail S. Fletcher
Professor Of Law
Duke University School of Law
 
Ms. Rachel J. Robasciotti
Founder & CEO
Adasina Social Capital
 
Dr. Teresa Ghilarducci
Bernard L. And Irene Schwartz Professor Of Economics
The New School
 
The Honorable Michael S. Piwowar
Executive Director
Milken Institute Center for Financial Markets
 
Mr. Andrew N. Vollmer
Senior Affiliated Scholar
Mercatus Center
George Mason University
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.