Peter Friedmann’s View from Washington DC 

July 2020

 

 

Media and the parties continually politicize everything, including the COVID pandemic, motivated by the rapidly approaching elections – perhaps as pivotal as any in recent memory, with control of the White House and Congress at stake. But now, both parties on Capitol Hill are grappling with some very difficult choices. The answers are not easy for anyone, including the Republican and Democrat legislators

 

Despite all the name-calling, President Trump’s and Speaker Pelosi’s coordinated efforts facilitated unprecedented Federal spending, both in the time to move legislation through Congress, and in the sheer amount of money authorized.  They worked together for rapid passage of USMCA, far less contentious then when NAFTA was originally passed 25 years ago.

 

More recently, Congress and the President have chosen to exacerbate the deteriorating relationship between the US and China. Quickly passing and implementing sanctions against China for abuse of ethnic minorities and violation of Hong Kong’s autonomy. So again, despite the by-now predictable media narrative, even on trade policy and foreign affairs, Pelosi and Trump, the Democratic House and the Republican Senate/White House, are moving major new policies forward – it could not occur without coordinated joint efforts.

 

So why does it appear that the pace of coordinated efforts has slowed? Because they are now confronting some very difficult questions which are not political, but rather, scientific and economic. Should the next COVID relief bill continue to pay an additional $600 a week above the regular unemployment? All recognize it has created a disincentive to return to work for many (those previously earning under $50,000 dollars/year).  To support its narrative of stark partisanship, the media focuses on the Democrats who want to continue the $600, and on the Republicans who want to eliminate it entirely. But the media misses (or intentionally ignores) the Republicans and Democrats who are working to find ways to extricate ourselves from the situation, perhaps to phase out that $600 over an undetermined period of time. In fact, some compromise will prevail.

 

Similarly, there are serious health questions as we approach decisions on reopening schools. Questions as to the physical health dangers of reopening the schools, as well as the social and psychological dangers of not opening schools. Neither party can claim to have the answer, because, they don’t.

 

We remain in uncharted territory. The path forward is unclear.

Peter Friedmann’s View from Washington DC - June 2020

 

“Trump and Pelosi - Working Together, But Never Admitting It”

 

While the world has watched demonstrations (and looting) here in DC, Capitol Hill and White House have been busy, and contrary to the media narrative, working productively together.

 

Together, the Democratic Majority House, Republican Majority Senate, and President Trump have, in the past couple months, passed the largest public relief bills in the nation’s history, to address COVID. The two primary advocates for such massive funding levels were Nancy Pelosi and Donald Trump, both working to overcome pockets of Congressional and Administration resistance. The House and Senate are now discussing and will shortly pass a fifth massive economic relief bill, extending unemployment supplements, funding state and local governments, etc. The President will sign what they pass.

 

The House and Senate are actually quite close substantively (even if politically, they cannot admit it) on unprecedented federal intervention into local policing policies and tactics, in response to the George Floyd catastrophe. The media will highlight the differences between the Democratic and Republican approaches (and there certainly are a number), even though they have much in common.  Again, the President will sign whatever they pass.

 

Nancy Pelosi and Donald Trump had to work together to pass the controversial US Mexico Canada Agreement (USMCA) six months ago. Normally it’s a year (or more) to update regulations to implement complex trade agreements. But this year there is pressure to get the USMCA in place much more quickly -- July 1. The trade community and Customs & Border Protection are working feverishly to be ready. Why the rush this year?  Both Donald Trump and Nancy Pelosi demanded it. They won’t admit it, but we who work to get bills and amendments passed, know that just like the COVID spending, they are “on the same page”, once again.

 

What ‘s the next big objective, and will they work together again? Roads, bridges, ports, transit have long been every politician’s spending perk. But in the past 3 decades, Congress has gotten cold feet. The Highway Gas Tax used to be sufficient to pay for roads and transit. But since 1992, the tax hasn’t been increased, and revenue is grossly insufficient. Now the President is touting a trillion dollar infrastructure bill, more money than any such bill before.  Is it too much for Congress to swallow? It shouldn’t be, after all, Congress/President just this Spring agreed to spend over $4 trillion on COVID response. So, $1 trillion for highways, subways, bridges, roads, so desperately needed, and such a job creator, sounds reasonable to most Democrats, many Republicans and the President.

 

How do we pay for it?  One might think that if it is urgent, we should do the same as for military spending, for COVID response, for climate change or policing programs – authorize and appropriate from the US Treasury. However, Congress seems stuck on treating infrastructure differently – since 1992 refusing to increase the gas tax, refusing to provide general Treasury funding, insisting that it must be “paid for” by some new or additional taxes or user fees.

 

Will this year be different? Will they abandon dependence on “pay-for’s”; just take (a lot of) money from the Treasury? Or come up with some other infrastructure funding mechanism? Depends on whether Trump and Pelosi can continue their string of successes.

 

No doubt President Trump and Majority Leader Pelosi hate the thought of being seen as a “team”; but their record this year suggests that once we get past the “noise”, in important ways, they are. And the nation is better off.

Peter Friedmann’s View from Washington DC – May, 2020

 

“The Sky’s the Limit”

 

 

Remember the “Great Recession” as the newly elected President Obama termed the economic morass he inherited? Congress jumped in to pump up the economy with what we all thought was a massive cash infusion - $800 billion. The most money the Federal government had ever spent so fast. Many worried that this was too much, too fast, would saddle the country with burdensome debt. The legislation was promoted as an investment in infrastructure. Then, the government agencies charged with pushing this money out so quickly, often demonstrated ineptitude in doing so efficiently and consistent with Congressional intent.  While many were critical, few were surprised; Federal agencies are just not equipped to suddenly spend huge new amounts of money that overwhelm their usual and deliberate annual spending review and selection process.

 

But that was NOTHING compared to what’s going on now. Already Congress (with bipartisan support) and the President have passed and signed off on four COVID-19 pandemic economic rescue bills, that total is 4 times the “Great Recession’s” $800 billion - $3 to $4 trillion. (In fact it is so much that it isn’t even possible to know exactly how much will be spent!) No surprise, considering the precedent of the “Great Recession” spending, that Federal agencies are again having trouble getting all this new money out. It’s not even all out, and the new programs (Payroll Protection, Disaster Relief, Unemployment Add-on’s, etc) implemented, and yet the House passed an additional $3 trillion, which the Senate will consider in coming weeks. However, while the initial 4 COVID stimulus bills had bipartisan support, Senate Republicans are having a hard time swallowing the idea of another $3 trillion.

 

So here is where the media leaves the wrong impression, once again: Media suggests debilitating partisanship here in DC. And the politicians’ statements certainly support that impression. But when it’s no longer just talk and hot air, and they actually turn to legislating, guess what? The Democratic Majority House and the Republican Majority Senate and President Trump all agreed to pass monumental trade legislation, -- the US Mexico Canada Agreement. And they have collectively and quickly passed the largest spending bills in US history -- Republicans, Democrats and the President, all together. 

 

Looking ahead to further spending, while the media trumpets the obvious animosity between President Trump and House Speaker Pelosi, these two do seem to be of the same mind on the largest legislative issue in DC today, one that will impact our lives for years to come – how much to spend now to pump the economy?  So far they seem to agree – the sky’s the limit.

 

Peter Friedmann’s and Ray Bucheger’s View from Washington DC
April 2020

Even with Congress out of session until at least early May and virtually every Congressional staffer hunkering down at home, a tremendous amount of work has been done over the past month to address the health care and economic crisis created by COVID-19. In the span of only three weeks, Congress came together and passed three massive spending bills to expand coronavirus testing capability and federal agency COVID-19 response capacity; enhance family and sick leave, unemployment benefits and other government safety-net programs; and create funding mechanisms to keep American businesses afloat at a time when economic activity has fallen off a cliff. And that is separate from the money that states are making available to individuals and businesses and that the Federal Reserve is pumping into the economy.

While the trillions of dollars that have been made available over the past several weeks have done a lot of good, it is clear that more will be needed. In fact, barely two weeks after being stood up, the Paycheck Protection Program (PPP) – which was created by the recently enacted CARES Act to provide support to small businesses, certain non-profits and certain tribal enterprises to cover payroll expenses, mortgage interest, rent and utilities – has run out of money. This is despite the fact that Congress provided $349 billion for the program, and in spite of implementation problems that have resulted in thousands of small businesses being denied loans.

There is little question that additional money will be provided for the PPP, and there is almost universal agreement in Washington, D.C. that Congress will need to take up and pass another COVID-19 bill in the coming days or weeks. The question is when and how – those questions have exposed disagreement between the two parties with both sides asking good questions and making legitimate points. Broadly speaking, Republicans would like to inject another $251 billion into the PPP now, while Democrats prefer a more expansive approach to address other needs as well. While the stand-off continues, a lot of work is happening at the staff level to develop the next COVID-19 bill, and anything that may come after that, including a comprehensive infrastructure package that would be focused on long-term recovery and could provide billions of dollars for transit, seaports, airports, highways and rail, not to mention water infrastructure, broadband and housing.

Off the Hill, companies large and small argue that eliminating duties (aka tariffs) assessed against imports from China would free up much needed money that companies could use to keep people on payroll and cover other fixed expenses. If the China tariffs were removed retroactively, it would inject hundreds of millions of dollars back into the economy as quickly as U.S. Customs and Border Protection (CBP) could issue refunds. While efforts to remove the China-specific tariffs continue, the effort has more recently focused on simply deferring duty payments for 90 days. Under this proposal, companies would still be required to pay the tariffs – but the deferral would create much needed liquidity in the meantime . Deferral is consistent with other provisions of the CARES Act, which allow for deferral of payroll taxes, student loan payments, etc. The President has the authority to do this without an Act of Congress.

Meanwhile, most polls show a majority of Americans support erring on the side of caution when it comes to re-opening the U.S. economy, and medical experts continue to preach caution; however, there is a real concern about the economic impact of a prolonged shutdown. As a result, many senior Administration officials are pushing for some states to initiate a re-opening of their economies in the coming weeks, and President Trump has issued guidelines for states to follow when ending shelter at home orders. While scores of people were quick to say the President was moving too fast and putting too many people in harm’s way, a close reading of the White House plan shows that it is relatively conservative, requires sufficient testing and hospital capacity to be in place, and was clearly vetted by Dr. Fauci and the White House medical team. This is notwithstanding the fact that numerous states are already developing plans for re-opening, and the decision to re-open will ultimately be made by state and local officials.

A lot has changed in the past five weeks – many of you were still traveling to Washington, D.C. for annual fly-ins in early March! Similarly, a lot could change in the next five weeks. Regardless of what that change looks like, the federal government will be playing an oversized role.

Peter Friedmann’s View From Washington DC

March 2020

 

Washington DC is a ghost town; hotels, restaurants, office buildings, stores closed or empty, no taxis, no ubers; not even food trucks. Coffee shops empty, other than a lonely barista. Construction stopped. One can feel the entire economy of the country shutting down, and wonder how we will get through this, economically.  Congress and the White House are wondering the same.

 

The light is on at the top of the Capitol Dome, meaning that the House and Senate are working. While talking heads on cable are desperately trying to convince us that political disputes are  raging, in fact, Congress and the White House are working together. They are feeling the threat – as this is being written, a second Congressman has tested positive for COVID-19.

 

So time to put disputes aside and get serious.  For instance, Canada’s Prime Minister and President Trump have been personal adversaries, but today the two of them jointly moved to close the US-Canada border. The President has taken a number of Executive actions, which in pre-coronavirus days would have elicited howls of outrage from Capitol Hill; but this month his actions have been accepted: shutting down entry to the US from China, from Europe, from Mexico. Directing military personnel, hospital ships and equipment to civilian purposes. Forcing liquidity into the financial markets.

 

Back on Capitol Hill, where Democrats and Republicans haven’t agreed on much, and impeachment proceedings dominated the news just a few months ago, those differences have been moved aside, at least for now. The Democratic House and the Republican Senate negotiated between themselves and with the White House, agreeing, passing and signing two major coronavirus packages. With a third, much bigger more expensive package coming later this week.

 

Package #1 was focused on testing and federal agency COVID-19 response capacity. Package #2 is focused on family and sick leave, unemployment benefits, propping up government safety-net programs. Now all eyes on negotiations for Package #3, the trillion dollar economic stimulus package. What might be in it?   The House Democratic Majority is developing its proposal, the Senate Republican Majority, its own (but in conjunction with the White House).

 

 Senate Republicans and the White House propose:

  • Payouts to individual Americans: $500 billion.

    • This would be done via two separate checks of equal amounts, one on April 6 and one on May 18.

    • The specific dollar amounts would be means-tested, meaning it would be based on income level and family size.

    • Each round of payments would be identical in amount, per the Treasury.

  • Airline industry bailout: $50 billion.

    • This would take the form of secured loans to passenger and cargo air carriers, with the Treasury to set interest rates and other terms.

    • Limits would be placed on executive pay increases until the loans were repaid.

  • Other affected industries bailout: $150 billion.

    • Secured loans or loan guarantees would be extended to "other critical sectors of the U.S. economy experiencing severe financial distress due to the COVID-19 outbreak."

    • Among the sectors raising their hands for bailouts, largely or wholly for the purpose of paying workers: Hotels, casinos, cruise line operators and shopping mall operators. 

  • Small business interruption loans: $300 billion.

    • Employers with 500 employees or fewer would be eligible, would have to keep paying all their workers for eight weeks from the date of the loan.

    • The government would guarantee 100% of six weeks of payroll, capped at $1,540 per week per employee, with the Treasury to set interest rates and other terms.

 

Democratic Senate proposals (which include concepts expected in the House Democratic Majority Proposal):  To get the votes to get the bill through the Senate, Majority Leader Mitch McConnell (R-KY) will need to include some Democratic priorities, including:

  • Public Health, Medical Supplies, and Treatment Capacity Surge funding

  • Federal funding for the Community Development Block Grant program and disaster relief through the Economic Development Administration’s Economic Adjustment Assistance program

  • Education and child care

  • Amtrak and other public transit

  • Mortgage assistance and rental assistance

  • Unemployment insurance

  • Food stamps

  • Student loan payments

  • Infrastructure Resilience, defined as broadband build-out; distributed, sustainable energy, water infrastructure and public housing.

 

So there you have it – devoid of cable “news” shouting and name-calling; just a list of how Congress and White House are negotiating and collaborating for a coronavirus economic stimulus package they all agree is urgently needed.

 

Not to say there aren’t some emerging covid-19 policy differences. For instance, a bipartisan chorus from Capitol Hill, Republicans and Democrats, is calling on the president to suspend the tariffs on imports from China. Stay tuned.

The View from Washington – February 2020

 

This is a very interesting, but odd time here in DC. The impeachment hearings and trial are ‘old news’; however, while partisan tensions are as high as ever, they have still done some big bipartisan things.

 

On every Congressperson’s mind is ‘decision-day’ (November 3) when voters will not only determine the occupant of the White House for the next 4 or 8 years, but will decide which will be the Majority party in the Senate and House Are Congress and the White House eager to show more accomplishments before November, and if so, what is realistic?  The relationship between the White House and the Speaker of the House is toxic, but that did not prevent them from working together to pass USMCA and avert a budget battle leading to a government shutdown.

 

On both sides of the Capitol, there is disagreement within the Majority parties, as to whether to continue to pursue partisan battles, or to move on to the kind of accomplishments they can brag about as they run for re-election in November. In the House, some Democrats want to continue the investigations of the President and hearings, while other have had enough and want to move on. In the Senate, the same thing: some Republicans wish to investigate the Bidens as well as processes at the FBI which led to the investigations of the President in the first place. But in the wake of the impeachment drama, others have had enough and want to move on. Fortunately, “let’s move on and accomplish something” seems to be prevailing, although the year is young, and attitudes can change on a dime.

 

The common wisdom is that not much gets done in an election year, but that has been disproven by passage of USMCA. More can be accomplished this year.

 

First, the Executive Branch. The President has substantial Executive Authority, and that is where most of the activity will be:  regulatory authority to advance the commercial use of drones, lift restrictions on autonomous vehicles, and in the trade arena, launch trade agreement negotiations with Kenya, Great Britain, expand the recently signed US-Japan and US-China ‘phase one’ deals, adjust or extend retaliatory measures against EU for ‘tech taxes’ or Airbus subsidies. Of course, foreign affairs including military initiatives, remain the province of the President. The targeting of terrorist leaders or the deployment (or withdrawal) of troops left to the President, even though Congress will consider (but not pass) legislation to limit the President’s war powers.

 

Second, Congress. In the Senate, there is a clear top priority of the Republican Leader:  to fill as many vacant federal judge positions as possible – it is being accomplished at record-breaking pace, generally on pure party-line votes. There is no such specific priority in the House. However, it may be possible this year for House and Senate to accomplish something never achieved before: develop a means to fund rebuilding of the nations’ transportation infrastructure that all agree is essential. This may be accomplished by increasing the Federal gas tax for the first time since 1992, or by supplementing the existing gas tax with some other revenue stream capturing electric vehicles (that do not pay any Federal gas tax).

 

Elections will grab the headlines, but legislative achievement and meaningful oversight over federal agencies forward, is still possible this year.

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FBB Federal Relations © 2017  | Main photo taken by John Peterson from Peter Friedmann's balcony