Quarterly Outlook, August 2021 - BGR Group
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Quarterly Outlook, August 2021 BGR Group
TABLE OF CONTENTS I. Overview......................................................... 3 II. Bipartisan Take.............................................. 7 III. Health and Life Sciences............................. 9 IV. State Advocacy and Appropriations .......... 11 V. Commerce..................................................... 13 VI. Financial Services........................................ 15 VII. Public Relations.......................................... 17 VIII. International..............................................18 2
Quarterly Report, AUGUST 2021 BGRDC.com
I. Overview
After a largely fruitless summer, the
KEY DATES
Biden administration and Congres-
Eviction Moratorium expired July 31, 2021.
sional Democrats finally started ad-
vancing their legislative agenda just Debt Ceiling: debt limit suspension expired July 31,
2021. (Extraordinary measures are in place. Projections
before the traditional August recess. vary on when the government might default on the
The movement on a bipartisan in- debt. CBO projects October or November.)
frastructure package and a budget Withdrawal of U.S. Troops from Afghanistan: August 31,
resolution sets up an extremely busy 2021.
and politically challenging fall. Unemployment Compensation Benefits Expire: Sep. 6,
2021.
The bipartisan breakthrough on infrastructure broke Pandemic Unemployment Assistance and Pandemic
the logjam but did not guarantee a clear path for the Emergency Unemployment Compensation Programs
legislation. The fate of the bipartisan infrastructure Expire: Sep. 6, 2021.
agreement negotiated exclusively in the Senate is un-
clear once it reaches the House of Representatives. Additional Medicaid Funding and FMAP Rate for the
House Democrats have loudly complained about Territories Expires: Sep. 20, 2021.
both process and substance. Passage of a budget res-
olution and subsequent reconciliation package will Surface Transportation Reauthorization Expires: Sep. 30,
also be challenging. For the Democrats, intra-party 2021.
battles are already brewing between moderates and
Government Funding Expires: Sep. 30, 2021.
progressives.
Even as they work to advance the massive reconcili- NDAA Expires: Sep. 30, 2021.
ation package, Democrats will have a very full list
Preserving Health Benefits for Workers Expires: Sep. 30,
of housekeeping items to handle. The government
2021.
will need to be funded, the debt limit will need to be
extended and many pandemic-era relief programs Student Loan Deferral and Zero Percent Interest Rate
are expiring. Navigating all of this, while also pass- Expires: Sep. 30, 2021.
ing a massive $3 trillion plus spending package, will
not be easy and Republicans have made it clear their COVID-Related Paid Sick Leave Expires; Sep. 30, 2021.
votes cannot be counted on for massive spending or
debt increases. Increased SNAP Benefits Expire: Sep. 30, 2021.
The pandemic remains a wild card that has the po- National Flood Insurance Program Expires: Sep. 30,
tential to significantly impact the legislative agenda, 2021.
the economy, and the country’s political mood. Ad-
ditionally, the pressures of inflation are being felt Temporary Assistance for Families, Child Care
across the economy. Knowing their window of op- Entitlement, Healthy Marriage and Responsible
portunity is narrow, Democrats are ready to go full Fatherhood Grants Expire: Sep. 30, 2021.
bore this fall.
3Breaking down the Senate infrastructure agreement’s
$550B in new spending July 29, 2021
A bipartisan infrastructure proposal moved forward in the Senate, as 17 Republican senators voted to break a filibuster blocking
the bill. On top of baseline spending, the bill would add $550 billion over five years to fund improvements in the nation’s
transportation, water, electric power and digital infrastructure. Passage of the bill isn’t a sure thing yet: Republicans will want to
amend the bill, with an eye toward the financing gap. After that, passage will require another 60 votes to close debate.
The plan How they want to pay for it
SPENDING, IN BILLIONS OF DOLLARS REVENUE SOURCES, IN BILLIONS OF DOLLARS
$550 billion
TRANSPORTATION OTHER INFRASTRUCTURE
$283.5 billion $239 billion $471.6 billion*
Unused federal
unemployment
insurance
Power supplements
infrastructure, for states
including grid $53
Roads, bridges, authority
major projects $73
$110
Delayed Medicare
Unused Part D debate rule
Covid-19 $49
relief
funding Cryptocurrency
Broadband $205 reporting requirements
infrastructure $28
$65
Extended fees on
government-sponsored
Passenger and enterprises
freight rail $21
$66 Sales from future
spectrum auctions
Water $20
infrastructure
$55 Reinstated Superfund
fees on polluters
$13
Public transit Economic Mandatory sequester, 2013
$8.7
$39.2 Resiliency, growth from
cybersecurity, return on $17.9 OTHER: Extended
ecosystem investment in customs user fees;
restoration infrastructure * Not yet sales from strategic
Airports $46 projects determined: petroleum reserve;
$25 (est. 33%) Funding from reduced Medicare
$56 recouping spending on
Ports and waterways fraudulently-paid discarded drugs;
$17.3 benefits from Extended available
Other enhanced federal interest rate
Safety and research programs UT supplement. smoothing options
$11 for defined benefit
$27.5 pensions
$15
Infrastructure for
electric, zero-emission
& low-emission vehicles
Sources: The White House, POLITICO report by Marianne LeVine and Burgess Everett By Patterson Clark, POLITICO Pro DataPoint
4Quarterly Report, AUGUST 2021 BGRDC.com
Reconciliation refresher
Democrats will once again attempt to use the reconciliation process to advance their top priorities.
How it works:
FINISH
PRESIDENT SIGNS BUDGET
RECONCILIATION MEASURE START
Both House and Senate
pass a budget resolution
which includes reconciliation
Full Senate instructions
votes ______________________
___________ No filibuster - simple majority vote
- Debate limited Full House in both chambers
to 20 hours votes
___________
- No filibuster
but unlimited Rules for debate
amendments can and final passage
be offered are by simple
(vote-a-rama) majority vote
Instructed committees
BYRD develop and vote on policy
BATH recommendations related
to the instructions
____________________
Budget committees bundle proposals
Simple majority vote
into budget measure and vote
___________________________
Simple majority vote
BYRD BATH
To abide by the “Byrd Rule” in the Senate reconciliation provisions must:
1. have a non-incidental effect on the budget
2. not change overall spending/revenue
3. not add to the deficit outside the budget window covered by the bill
5Economic and Political Snapshot
Here’s a look at key economic and political indicators as of July 31, 2021.
Public opinion of the
direction of the country: New home sales:
55%
of Americans are pessimistic
1.9%
In June, new home sales rose
about the direction. 1.9% from May to a seasonal-
ly-adjusted annual rate of 5.86
This is an increase from the
million units.
36% from May.
This was an increase of 22.9%
Less than 45% are optimistic;
from June of 2020.
a drop from the 64% in May.
Source: ABC News/Ipsos polls
Unemployment Rate: 5.9% - as of June 2021.
Labor Force Participation Rate: 61.6% as of June 2021.
U.S. Seasonally Adjusted GDP Growth: 6.5%
(quarter-over-quarter annualized rate) in Q2 2021.
Consumer Price Index: Up 0.9% in June.
Consumer Prices are up 4.7% since February 2020.
Personal Consumption: 11.8% in Q2.
Core Personal Consumption Expenditures: 6.0% (quarter-over-quarter) in Q2.
New Homes Sales: Fell 6.6% from May 2021; fell to an adjusted rate of
676,00 new homes sold in June, from 724,000 sold in May.
Consumer Confidence Index: Ticked up to 129.1 in July, up from 128.9 in
June; reaching the highest level since Feb. 2020.
Consumer Inflation Expectation: Dropped to 6.6% in July from 6.7% in June.
6Quarterly Report, AUGUST 2021 BGRDC.com
II. Bipartisan Take
STATES SPENDING FEDERAL AID AN UNPRECEDENTED
STRATEGICALLY OPPORTUNITY FOR STATE
BY PATRICK DOLAN AND LOCAL GOVERNMENTS
senior director BY WILLIAM CROZER
state advocacy and appropriations vice president & managing director
state advocacy and appropriations
The influx of $350 billion in emergency funding for state, lo-
cal, and tribal governments from the American Rescue Plan State and local governments across the country are in
(ARP) Act represents a critical opportunity for states and far better financial shape than many anticipated they
local governments to make strategic, would be a year ago. Despite
long-term investments to support job dire warnings, data shows that
creation and propel economic growth. the pandemic-related economic
downturn was relatively muted. In
Unlike the federal government, states
FY 2020, state sales tax revenues
must balance their budgets each year.
grew by 0.5 percent and are track-
Therefore, in an economic downturn,
ing to increase by upwards of 2
states respond to declining personal
percent in FY 2021. State income
and corporate tax revenue by cutting
tax revenues also rose in FY 2020
spending, raising taxes, or both to meet
by 0.3 percent and are expected to
their balanced-budget requirements,
rise by nearly 3 percent in FY 2021.
which creates further drag on the economy and mitigates
the impact of federal tax cuts and fiscal stimulus. This is On top of improving tax revenues, the federal govern-
exactly what happened after the great recession when bud- ment has infused state, local, and tribal coffers with
get austerity measures at the state and local levels worked unprecedented stimulus in response to the COVID-19
against federal stimulus from the American Recovery and pandemic. This includes $150 billion deployed by the
Reinvestment Act of 2009, and subsequently dragged out Trump administration from the Coronavirus Aid, Re-
the economic recovery for nearly a decade. lief, and Economic Security (CARES) Act of 2020 and
$350 billion from the American Rescue Plan (ARP)
The Biden administration and Congressional leaders as-
Act passed in March of this year. Under ARP, $195
tutely recognized this dynamic and responded in kind with
billion is allocated to states and $130 billion to cities,
historic fiscal stimulus to directly support state and local
counties, and other local governments. This direct al-
economic recovery efforts and alleviate the need for states
location to local governments - alongside the overall
and municipalities to pursue shortsighted austerity mea-
dollar amount - distinguishes ARP from CARES with
sures, especially as states and localities were forced to bid
respect to state and local government support.
against each other – and foreign governments – to source
and secure supplies of PPE for medical staff and front-line To put this historic stimulus into context, a recent
workers at the beginning of the pandemic. GAO report estimated the total economic impact of
the pandemic on state and local coffers at $61 bil-
After the Treasury Department distributed the first
lion. Moreover, the report concluded that total state
tranche of ARP funding to state and local governments
and local expenditures remained largely flat through-
in May 2021, Democratic governors plan to invest ARP
out 2020 as state and local governments reprioritized
Dolan continued on next page Crozer continued on next page
7Dolan continued economic recovery; (2) promoting long- water, wastewater, and stormwater infra-
term economic growth by establishing structure. Governor Northam outlined
funding in various ways. a domestic trade program, expanding additional priorities to modernize public
In Michigan, Governor Gretchen Whit- the Maine career exploration program, school buildings, fully fund the Rebuild
mer has proposed a historic $1.4 billion and enhancing workforce training and Virginia small business recovery plan,
investment to expand access to affordable, development; and (3) infrastructure re- replenish the state’s unemployment trust
high-quality child care; enhance work- vitalization to achieve universally avail- fund, and accelerate a 10-year plan over
force development and talent retention; able broadband and critical investments the next 18 months to bring broadband
and invest in sustainable, resilient infra- in transportation and drinking and to all of Virginia’s cities and rural areas.
structure projects such as roads, bridges, wastewater programs.
Exactly one year ago today, the Com-
clean drinking water, and broadband. In Kentucky, Governor Andy Beshear merce Department reported that second
Colorado Governor Jared Polis plans to joined legislative leaders from both parties quarter GDP in 2020 plunged 32.9 per-
use $1 billion of ARP funding to fortify to sign bipartisan legislation appropriating cent on an annualized basis, the sharp-
the state budget and Colorado’s ongo- funds from the ARP to create jobs, build est drop in U.S. history, and nearly four
ing response to the COVID pandemic, better schools, repay federal unemploy- times the 8.4 percent GDP rate decline
between $400-550 million to address ment insurance trust fund advances, ex- at the height of the Great Recession.
affordable housing and homeowner- pand broadband, and invest in infrastruc- Conversely, second quarter GDP in
ship, $200 million to support workforce ture, including clean drinking water. 2021 grew at a 6.5 percent annual rate,
development and education, and at least and despite the murky economic out-
Virginia Governor Ralph Northam plans
$400 million for transportation and in- look due to the precipitous spread of the
to allocate $411.5 million in federal ARP
frastructure investments. Delta variant, there’s reason to be bull-
funding to reduce water pollution and
ish about the historic investments at the
Maine Governor Janet Mills has identi- make substantial investments in aging
state and local level, and America’s long-
fied three key priorities: (1) immediate water systems and improve drinking
term global economic competitiveness.
Crozer continued flexibility, including for vaccine lotteries term. To that end, they are cognizant
and to address violent crime. of trailing costs that might impact the
resources to address unforeseen costs long-term value of these investments.
associated with the pandemic. The There are several factors to consider as
takeaway? State and local government states and localities deploy their ARP Finally, consider the timeline. Unlike
budgets fared better than expected dur- dollars. The public comment period for under the CARES Act, states and lo-
ing the pandemic, their economies are Treasury’s interim final rule governing calities have a much longer timeframe
recovering, and they now have access to eligible uses just closed on July 16. While to expend their dollars (December
once-in-a-generation federal stimulus. Treasury has provided periodic guid- 31, 2024 vs. December 30, 2020, but
ance updates (like with the CARES Act), since extended to December 31, 2021)
To date, the U.S. Department of the Trea- many officials are waiting on the final and are taking a more methodical ap-
sury has distributed upwards of $200 bil- guidance to govern their decisions and proach, particularly when considering
lion of ARP’s $350 billion in Coronavirus avoid any compliance issues. Also con- the factors mentioned above.
State and Local Fiscal Recovery Funds. sider prioritization: state and local offi-
Treasury’s interim final rule has shaped Looking ahead, expect the pace of ARP
cials are fielding an enormous amount of
its deployment in four principal areas: deployment to pick up once Treasury ex-
input and requests that they are having
public health and economic impacts, re- ecutes the interim final rule in the com-
to balance - and prioritize - with their
placing lost public sector revenue, premi- ing months. Also expect Treasury – or
own agendas and priorities (political
um pay for essential workers, and water, Congress – to explore enhanced flexibil-
or otherwise). Another factor: impact.
sewer and broadband infrastructure. As ity around eligible expenditures. Already,
State and local officials are looking for
with the Trump administration and de- some localities are lobbying the adminis-
investments that will deliver maximum
ployment of the CARES Act, the Biden tration and Congress to allow ARP dol-
value to and improve the lives of their
administration has provided additional lars to be used to pay down debt.
constituents both in the short and long
8Quarterly Report, AUGUST 2021 BGRDC.com
III. Health and Life Sciences
PUBLIC HEALTH EMERGENCY
EXTENSION WILL HAVE LONG
LASTING IMPLICATIONS
ON COVERAGE
On July 20, 2021, Health and Human Services
Secretary Xavier Becerra renewed the COVID-19
Public Health Emergency (PHE) under section 319
of the Public Health Service Act. First declared in
January of 2020, the PHE can only be active for 90-
day periods but can be renewed continuously. The
Biden administration announced earlier this year
it anticipated the PHE would run at least until the
end of 2021 to provide certainty to
states and other stakeholders that
CONTACTS:
currently rely on the authorities and Practice Co-Head
programs it enables. Remy L. Brim, Ph.D.
The PHE declaration unlocks a range of Practice Co-Head
special authorities, funds, flexibilities, and
Brent DelMonte
waivers not permitted during normal times.
During the COVID-19 Public Health Emer-
gency, the most notable of these are 1) flex-
ibilities around Medicare payment for tele-
health; 2) enhanced federal funding to states for their Medicaid
programs; 3) a bump in Medicare payment for inpatient cases
involving COVID-19; and 4) the ability of FDA to authorize
medical products to test for, treat, and prevent the coronavirus
under emergency use. There are major questions looming over
the expiration of some of these temporary authorities. Con-
gress is likely to consider addressing some of them legislatively,
which will have long-term implications for the health care sys-
tem going forward.
Bipartisan Members of Congress are excited about the greater
prevalence of telehealth enabled by the PHE. Congress is likely
to pass legislation before the end of the year to permanently au-
thorize the broader use of telehealth, but there are many thorny
9“Democrats are considering ways
to provide a health care coverage
expansion in either the Affordable
Care Act exchanges or through
Medicaid as part of their larger
reconciliation effort. But even if
they fail on broader health care
coverage reforms, dealing with this looming
‘coverage cliff ’ will be a priority.”
Robb Walton
Principal, Health and Life Science
issues to work through, such as inter- will end at the conclusion of the PHE,
state licensure, reimbursement, and and experts predict as many as 20-30
what form of telehealth is appropri- percent of the 80.5 million now en-
ate under different circumstances. rolled in Medicaid could lose their
Lawmakers have introduced legisla- coverage. Democrats are considering
tion to address such issues with the ways to provide a health care cover-
hope of influencing any larger pack- age expansion in either the Affordable
age that might emerge. Care Act exchanges or through Med-
icaid as part of their larger reconcili-
The PHE has also had a significant im-
ation effort. But even if they fail on
pact on Medicaid enrollment. Med-
broader health care coverage reforms,
icaid is typically funded through a
dealing with this looming “coverage
partnership between the federal gov-
cliff ” will be a priority.
ernment and states. Last spring, Con-
gress boosted federal funding to states Stakeholders need to continue to make
to lessen their financial obligations - their voices heard on these issues as
but also required states to maintain Congressional committees and leader-
coverage for their Medicaid beneficia- ship begin to give them attention to-
ries while they take the funding. The wards the end of the year as the expira-
funding and coverage requirements tion of the PHE draws closer.
10Quarterly Report, AUGUST 2021 BGRDC.com
IV. State Advocacy
and Appropriations
STATES DEALING WITH FUNDING “In the months
INFLUX, APPROPRIATIONS ahead, dozens
SEASON SLOW TO START of state
When legislative sessions ended last year, governors and legislatures
state lawmakers were braced for a sustained economic
slowdown caused by the COVID-19 pandemic. But the will reconvene
much-feared recession lasted just two months. to finalize
Overall, state budgets fared better than expected. Some allocations for
states experienced large increases in tax collections. The
American Rescue Plan (ARP) Act further boosted state spending federal funds as well
budgets with $195 billion in aid. For 37 states, ARP aid is as to redraw congressional
equivalent to between 5 and 10 percent of total spending
last fiscal year. ARP also provides a separate $130 billion
and state legislative district
to cities, counties, and other local governments. The ad- boundaries following
ditional federal funding has propped up Medicaid pro- completion of the census.”
grams, local schools, higher education, transit systems,
and other areas of budgets. Kristin Strobel
Forty-eight states have enacted a budget so far this year, principal
according to the National Conference of State Legis- state advocacy and appropriations
latures. Most states begin their fiscal years July 1 and
lawmakers were able to restore past cuts, save money
for future emergencies and spend more on everything
from housing to income tax reductions. States across the
country are increasing their spending for fiscal year 2022.
Many states are increasing spending by double digits, in-
cluding Vermont at 14.5 percent, Pennsylvania at 21.3
percent and North Carolina at 11.6 percent. States have
until the end of 2024 to obligate all the federal funds and
most are not rushing to do so. The Biden administration
is currently reviewing public comments and is expected
to issue a final rule in the coming months on eligible uses
of the State and Local Fiscal Recovery Fund.
Ongoing infrastructure negotiations are front and center at
the state and local level. Just recently, 369 mayors from all 50
states sent a letter calling on congressional leaders to “take
immediate action” on infrastructure. Additionally, the na-
tion’s mayors are pushing Congress to provide permanent
11legislative protections for DACA recipi- APPROPRIATIONS
ents, TPS holders, and undocumented
To date, the House has completed
essential workers following a recent
the markups of all of its appropria-
ruling from a federal judge in Texas de-
tions bills for Fiscal Year 2022. For
claring DACA unlawful. Additional is-
the first time in roughly a decade, the
sues challenging state and local leaders
appropriations bills include a signifi-
include surges in homicides and violent
cant number of community-funded
crimes, addressing affordable housing
projects, previously referred to as
amid a housing boom that has inflated
earmarks, for colleges and universi-
home prices, as well as expanding ac-
ties, municipalities, medical centers,
cess to affordable early education and
airports and not-for-profit organiza-
child care programs.
tions. The House is steadily advanc-
One of the many lessons of the pan- ing individual appropriations bills as
demic that state and local govern- well as multi-bill “minibus” packages.
ments are already addressing is the Currently, the Senate is still in the be-
need to invest resources to harness ginning phases of committee mark-
data as well as improve customer ups and is not expected to tackle the
experience across the myriad of ser- more challenging bills until after the
vices that governments provide. The August recess.
response has elevated the use of data
Given the new fiscal year starts in
in decision-making and underscored
October, and ongoing disagreements
the ways leaders can bring data to
about levels of appropriations for the
bear on their most pressing concerns
Department of Defense as well as
including COVID vaccinations and
other federal agencies, Congress will
testing, learning loss and public safety.
need to pass a Continuing Resolution
With taxpayers continuing to rely on
in September to allow more time to
remote work opportunities as well as
continue working on appropriations
virtual government services, leaders
bills. Final passage is not expected
at all levels are investing in technol-
until the end of the calendar year and
ogy upgrades in an effort to control
there is potential for a yearlong CR for
future costs, reduce fraud and data
the remainder of Fiscal Year 2022.
breaches as well as improve services.
CONTACT: Practice Head Loren Monroe
12Quarterly Report, AUGUST 2021 BGRDC.com
V. Commerce
SUPPLY CHAIN ISSUES WILL
DOMINATE ADMINISTRATION,
CONGRESSIONAL AGENDA
Supply chain issues continue to reverberate
throughout the U.S. economy even as it
recovers from the COVID-19 slowdown. “Many of the actions
These issues are receiving intense focus from
outlined in the report
both the administration and Congress.
Looking toward the third quarter, we do expect the House are narrowly targeted
to pass something similar to the United States Innovation
and Competition Act (USICA), which moved through the
to support domestic
Senate earlier this year. The legislation provides $52 billion
in funding for semiconductor research and development in
production of four critical
the United States. This funding, known as the CHIPS Act, products identified in the
was authorized by the Congress in 2020. Speaker Pelosi
has made clear that the House legislation will differ signifi- EO. However, some of the actions and
cantly from the Senate and will thus require a conference to
resolve differences. However, we believe both sides under- recommendations will have broader
stand the importance of providing emergency funding for
semiconductor manufacturing in the United States. implications.”
In June, the White House released a comprehensive report,
as directed by President Biden in a February Executive Or- Jonathan Mantz
der (EO), assessing vulnerabilities in critical supply chains, Practice Co-Head, Commerce
and announcing further actions to be taken by the admin-
istration to strengthen supply chain resilience and address
near-term disruptions. Many of the actions outlined in the
report are narrowly targeted to support domestic produc-
tion of four critical products identified in the EO, includ-
ing pharmaceuticals, advanced batteries, rare earth ele-
ments, and semiconductors. However, some of the actions
and recommendations will have broader implications. Key
highlights include:
Supply Chain Disruptions Task Force
Led by the Secretaries of Commerce, Transportation, and
Agriculture, this task force will convene stakeholders to
help alleviate near-term supply chain challenges that have
emerged as the economy starts to recover from the impact
13of the pandemic. The initial focus will funding for at least $50 billion to sup-
be on industries where there has al- port semiconductor manufacturing
ready been a notable supply/demand and R&D, and $50 billion for a new
mismatch: construction, semicon- Supply Chain Resilience Program at
ductors, transportation, and agricul- Commerce that would make invest-
ture and food. This will provide a new ments in domestic production across
avenue for high-level engagement and a range of critical products. Com-
potential solutions for stakeholders merce would have significant discre-
impacted by the ongoing shortages tion to support projects viewed as
in these areas. Commerce will also be critical.
leading an ongoing effort to improve
Defense Production Act (DPA)
the federal government’s ability to
identify and address supply chain dis- The report details plans to invoke
ruptions going forward, potentially DPA authority in specific industries,
leading to requests for a broad range including pharmaceuticals and de-
of data and a need for sustained en- fense, but also the formation of a new
gagement. DPA Action Group to determine how
best to leverage the DPA to strength-
Long-Term Strategy to
en supply chain resilience more gen-
Strengthen Supply Chain
erally in critical industries, building
The EO makes recommendations to on the previous administration’s work
Congress for significant investments responding to COVID-19. Given the
to strengthen U.S. supply chain resil- broad potential impact of more wide-
ience by rebuilding the U.S. industrial spread application of the DPA, this
base, including support for the Presi- new Action Group will require close
dent’s American Jobs Plan, dedicated monitoring and engagement.
CONTACTS
Practice Co-Head Jonathan Mantz
Practice Co-Head Erskine Wells
14Quarterly Report, AUGUST 2021 BGRDC.com
VI. Financial Services
INFRASTRUCTURE PAY-FORS, HOUSING
ISSUES WILL DOMINATE FALL AGENDA
Since the passage of the American Rescue Plan ear-
lier this year, the Biden administration has laid out an
ambitious agenda for the first session
of the 117th Congress. President Biden
CONTACTS:
introduced two more major initiatives:
Practice Co-Head
the American Families Plan and the
Sean Duffy
American Jobs Plan. Both of these
Practice Co-Head
plans were billed as part of the Build Andy Lewin
Back Better Plan, as part of the Presi-
dent’s infrastructure package. How-
ever, this infrastructure package extends beyond the
traditional definitions, extending to include “human
infrastructure,” which includes non-traditional infra-
structure policies ranging from universal child care to
combatting the repercussions of climate change.
Recently, the Senate, through a bipartisan group of 22 members,
came to an agreement on a bipartisan infrastructure deal. The bi-
partisan infrastructure framework (BIF) totals $1.2 trillion, which
includes $550 billion of new infrastructure funding, over five years.
Additionally, Congress is considering a $3.5 trillion budget resolu-
tion. Although this resolution is for Fiscal Year 2022 (FY22), Dem-
ocrats are focused on breaking up President Biden’s infrastructure
plan into the BIF and a budget resolution through reconciliation.
As both deals are negotiated, Congress and the White House aim
to offset all spending through pay-fors. This is an area of major dis-
agreement between Democrats and Republicans, as Republicans
have vowed to block any increases to corporate taxes. Amongst
those taxes, the most contentious pay-fors include increasing IRS
funding for audit enforcement, corporate tax rate, capital gains,
carried interest, and dynamic scoring. There is much uncertainty
15“I expect Senate Banking Committee
Chairman Brown (D-OH) and his
subcommittee chairs to have a robust
fall agenda. In particular, I predict
action focused on overall economic
policy, the securities space, and finally
housing and mass transit funding.”
Fred Turner
Senior Vice President, Financial Services
about which pay-fors will be included Member Pat Toomey (R-PA).
in the BIF and the budget resolution.
Treasury Secretary Janet Yellen has
Pay-fors will continue to be an area of
begun the conversation on stable-
heightened interest as both packages
coins and has actively made the Biden
move forward.
administration’s climate related goals
Additionally, the SEC is moving for- publicly known. Both the House and
ward full force in a number of areas. Senate have increased skepticism of
Chairman Gary Gensler was con- cryptocurrency; there is a chance leg-
firmed in April. Since then he has islation and regulatory guidance will
instructed SEC staff to investigate a emerge in this space.
number of topics, including crypto-
Lastly, the House Financial Services
currency, SPACS, and ESG related
Committee will not be idle. The com-
disclosures. Most recently, Gensler
mittee has already been active, hold-
has levied fines related to SPAC vio-
ing a number of hearings and passing
lations, stated that there is a need for
several bills, including a number of
new cryptocurrency related regula-
ESG and housing related bills. Hous-
tion, and expressed the need for cli-
ing is a priority for Chairwoman
mate and diversity related disclosures.
Maxine Waters, but she has made di-
The SEC is not the only entity that
versity and inclusion a major theme
anticipates being active in these areas.
for every hearing. This trend will cer-
Additionally, the CFPB is soon to see a
tainly continue. For the remainder of
new director, as Rohit Chopra’s nomi-
the year, the committee will pick back
nation is expected to be voted on the
up consumer protection, investor
Senate floor. His nomination, how-
protection, and capital markers relat-
ever, has come with major pushback
ed legislation, including a bill related
from Senate Republicans, especially
to legacy contracts for the transition
Senate Banking Committee Ranking
away from LIBOR.
16Quarterly Report, AUGUST 2021 BGRDC.com
VII. Public Relations
“THE ESTABLISHMENT” AND VACCINES
BY JEFFREY H. BIRNBAUM
Communications is sometimes an after- The credibility of highly educated experts is
thought. Other activities in an organization also doubted, presenting a similar dilemma.
are given greater weight – from
What to do? No one has found the answer. But
operations to legal affairs. And of-
three approaches have promise.
ten that makes sense. But not with
COVID-19. First, slogans go only so far. But when people
are provided the many reasons vaccines are
The nation, indeed the world, is
safe and prevent serious illness or death, they
facing a true crisis of the unvac-
are more likely to take the vaccine. People who
cinated. A sizable minority of
are hesitating need time – and patiently deliv-
Americans are refusing to take the
ered arguments – to get comfortable enough to
shot, which is fueling a dangerous
change their minds
fourth wave of infections. Hospital wards are
filling fast. Second, friends and neighbors are considered
better sources of information than remote ex-
This is a classic problem of communications:
perts, the media or government officials. Un-
How can the government persuade more peo-
vaccinated people are prone to go for it if a
ple to get vaccinated?
neighbor or friend who was slow to take the
At the heart of this challenge is a daunting fact. vaccine finally gets one. In other words, con-
A growing number of citizens don’t trust “the vincing the informal community leaders to
establishment,” a word that encompasses many speak out could be key.
things including experts, government officials
Third, appealing to public welfare might work.
and the media. When these sources urge com-
Unvaccinated people, especially younger peo-
pliance, a lot of people reflexively refuse.
ple, often say that they probably won’t die if
People don’t like being told what to do. Ameri- they contract COVID, so why shouldn’t they
cans are particularly stubborn. But not long just get the disease, survive, and move on. A
ago, they were willing to go along with a lot. response that might succeed in this case in-
Vaccinations don’t appear to be one of those volves the threat to life of passing the virus
things. along to more vulnerable people.
Part of the reason is a contradiction. Some re- Americans are criticized for being self-cen-
fusers say the Food and Drug Administration tered. In fact, we are generous and caring peo-
has yet to fully approve the vaccines. It’s given ple. The argument that others might get hurt
only emergency permission so far. At the same because of our inaction could ultimately win
time, plenty of the same people wouldn’t be- the day.
lieve the FDA, a government agency, even if it
gave its blessing.
CONTACT PRACTICE HEAD JEFFERY H. BIRNBAUM
17VIII. International and Trade U.S.-CHINA RELATIONS The U.S.-China bilateral relationship is as hostile today as it has ever been. The Biden administra- tion has taken the scattershot anti-China approach of the Trump administration and is making it sys- tematized, comprehensive, and sustainable. In the business sector, this means a sanctions process that will survive legal challenges while also looking to curtail pos- CONTACT sible threats to U.S. national se- Practice Head curity and overreliance on China Walker Roberts for critical supply chains in high tech, health care, and commodi- ties. However, in particular situations when en- gagement with China works for the middle class and does not sacrifice national security priorities or put critical supply chains at risk, look for the Biden administration to be more flexible than it has appeared so far. The very public embrace by President Biden of “the Quad” (India, Japan, Australia, and the United States) as a framework for Indo-Pacific policy is another nod to Trump’s hardline ap- proach. At the same time, Biden’s lack of bellicose rhetoric – at least compared to Trump – indicates there is some room for engagement. Meanwhile, the Executive Branch is actively engaged in a broad effort to ramp up government regulations to deal with the China challenge but also to effect change that would ostensibly allow for more competition from small busi- 18
Quarterly Report, AUGUST 2021 BGRDC.com
“Both the Democratic and
Republican parties are becoming
more isolationist, and the band
in the middle of both parties
that supports American global
leadership is shrinking, although
noticeably still present. Overall, this growing
isolationist trend would seem to support a tougher
line on China, as overt engagement with Beijing
will not be seen as a positive in either party.”
Lester Munson
Principal, International and Trade
nesses. (See the Executive Orders on the necessary middle ground.
America’s Supply Chains and Pro-
Generally, in Congress, we are see-
moting Competition in the Ameri-
ing Senate Democrats take a harder
can Economy.)
position on China than their House
Congress is also actively engaged in Democratic colleagues, who are more
China policy in a somewhat hap- progressive and focused on diversity
hazard manner. The Senate passed and environment issues. Both House
the bipartisan U.S. Innovation and and Senate Republicans are adopting
Competition Act, which is over a fairly hardline approach on China.
2,400 pages long and will fund high- However, where House Republicans
tech research and has a bevy of hard- are looking to criticize their House
line policies on China. The House is Democratic colleagues (and the Biden
moving a Democratic-only bill, the administration) as too soft on Beijing,
Ensuring American Global Leader- Senate Republicans are more will-
ship and Engagement Act, that fo- ing to work across the aisle and have
cuses more on climate change than a Democratic colleagues who are will-
tougher line on China. It is not clear ing to do so too.
whether the two Chambers can find
19CONTACT US 601 13th St. NW Washington, DC 20005 www.bgrdc.com Jo Maney, Public Relations Principal Liz Fontaine, Public Relations Director Usman Rahim, Financial Services Policy Analyst Katie McHenry, Executive Assistant to Founding Partner Lanny Griffith
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