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The Washington Report – July 18, 2014

18 Jul 2014

The Washington Report – July 18, 2014


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This week’s Washington Report! To sign up for the direct email, click here.

 

It’s a terribly sad day and our thoughts and prayers are with the families of those tragically lost on the Malaysian flight.

Best,

Joyce Rubenstein and the Capstone Team (John Rogers, Alan MacLeod, Steve Moffitt, Diane Rogers, Erik Oksala, Kate Venne and Kathryn Wellner)

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“ECONOMIC PATRIOTISM” MEANING IN THE EYES OF THE USER The Fix writes, ‘”What we need as a nation,” Treasury Secretary Jack Lew told members of Congress this week, “is a new sense of economic patriotism, where we all rise or fall together.” POP QUIZ: What was Lew talking about? … He was talking about corporate tax evasion. But given that the phrase is the perfect combination of all-American, guilt-inducing, and vague, we can see both why you might be confused — and, of course, why politicians like it so much. BRIEF HISTORY One of the first mentions of the phrase in the American press comes from … a 1985 defense of then-President Reagan’s Star Wars missile defense system, William Safire wrote that a “common denominator” among the American people was “nationalism — both a military and economic patriotism — which inclines us to the side of pervasive national defense.”Safires meaning simplified: Economic patriotism is being proud of military investment. Two years later, the Miami Herald interviewed the head of the Export-Import Bank (speaking of things being in vogue). “To him,” the paper wrote, “It means being conscious of our role in the international economic system, and the impact of what we do in this international economic system,” he said. Simplified: Economic patriotism is recognizing the U.S. as a distinct part of the world economy. DUKAKIS FOR PRESIDENT ’88 When Democratic Massachusetts governor Michael Dukakis ran for president he seized on the phrase, bringing it to national prominence. “Dukakis delivered a message of ‘new economic patriotism’ to American workers,” the New York Times reported in 1988. Dukakis Simplified: Economic patriotism is keeping the middle class strong. BACK TO LEW He said, “Economic patriotism is not merging your corporation with a foreign corporation in order to reduce taxes.” The upshot is this. “economic patriotism” is a phrase that means simply, “an economics-related thing that is contentious and which could possibly be framed as being un-American.” Lew’s formulation is a recent iteration. But don’t get too comfortable with his definition. It will shift.”

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JANET YELLEN NOT KIDDING AROUND Fed Chair Janet Yellen was on Capitol Hill Wednesday to testify before the House
Financial Services Committee as part of a semi-annual check-in with the nation’s legislative branch. And, she faced a tough crowd. The AP reported, “Yellen faced a barrage of questions from Republican lawmakers about legislation that they are supporting to make the Fed more accountable and make its policy decisions more transparent….Yellen rejected that approach and said the Fed needed the flexibility it now has to make policy decisions. Her face in the picture  tells you everything you need to know about how she viewed the proceedings.”

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ANTI-OBAMACARE ADS MIGHT HAVE ACTUALLY INCREASED ENROLLMENT TPM writes, “The millions of dollars being spent in televisions ads that criticize Obamacare might have actually backfired and led to increased enrollment under the health care reform law, according to a study published Wednesday by the Brookings Institution. Brookings fellow Yaraghi … observed “a positive association between the anti-ACA spending and ACA enrollment.” Spending on negative Obamacare ads has outpaced spending on positive ads 15 to 1, according to media research.  IN SENATE RACES where Democrats are running for re-election, which have been the major targets for anti-Obamacare ads, Yaraghi detected a spike in enrollment. “This implies that anti-ACA ads may unintentionally increase the public awareness about the existence of a governmentally subsidized service and its benefits for the uninsured,” [he] wrote of his findings.”

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CONGRESS FIDDLES AS BORDER CRISIS GROWS National Journal: “Politics and pessimism on Thursday overtook any possibility of a swift congressional response to the flood of unaccompanied, undocumented children at the U.S.-Mexico border, as the House and Senate continued moving toward dramatically different approaches. Questions and debate swirl around contentious policies, as well as the amount of emergency funding needed to address the crisis. Many key Senate and House Democrats will go along with President Obama’s $3.7 billion request, but House Republicans say they are looking at less than half of that amount.”

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KICKING THE CAN DOWN THE ROAD … AGAIN  NYT writes, “The House on Tuesday easily approved a short-term fix to the nearly depleted federal highway trust fund, as the prospects of hundreds of thousands of job losses and stalled road construction in August overwhelmed the protests of conservative groups that opposed the bill. The 367-to-55 vote was more grudging than it appeared. Democrats, led by President Obama, denounced Congress’s failure to pass a multiyear transportation bill that likely would have needed tax increases to fund the nation’s infrastructure needs. Conservatives — and some liberal Democrats — called the funding mechanisms for the $11 billion House bill gimmicks that masked the true cost. But on August 1, the Transportation Department was prepared to cut construction spending by 28%. Without the federal help, states were already planning to halt and delay thousands of projects, putting as many as 700,000 people out of work.”  JUST SAYIN… tax/per gallon of gas in 1993 was 18.4 cents when gas was about $1.57/gallon; tax/per gallon of gas today is 18.4 cents when gas costs an average $3.49 a gallon. So, during these 21 years the tax has lost almost 40% of its value to inflation. Something to think about.

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HOBBY LOBBY BILL Politico writes, “All Senate Democrats were joined by three Republicans to vote in support of the bill to require employers to cover contraception regardless of their religious beliefs, but the final vote of 56-43 fell short of the 60 needed to end debate and bring it to a vote.”  RESPONSE TO HOBBY LOBBY WSJ writes, “The Department of Labor announced Thursday that closely-held corporations will have to notify their employees if they plan to drop contraception coverage from their health plans following the Supreme Court’s Hobby Lobby decision. The announcement is in response to the Senate’s failure to advance a bill that would require employers to cover contraception regardless of their religious beliefs.”

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DEFENSE SPENDING Politico writes, “The Senate Appropriations Committee has approved its defense spending bill for the next fiscal year. The panel beat back an attempt by Sen. Mark Pryor of Arkansas and other Democrats facing tight reelection battles to strip $500 million for arming the Syrian rebels. DETAILS The bill provides $549.3 billion for the Defense Department, including $59.7 billion in supplemental war funds, called the Overseas Contingency Operations account. The topline figure is a drop from the $572 billion enacted for DoD this fiscal year and $550.7 billion requested by the White House for next. The measure would boost procurement accounts by $1.7 billion above what was requested – and, conversely, cut funding for operations and maintenance and research and development. … COUNTERTERROR FUND: The committee report says the White House hasn’t provided a “sufficiently specific plan” for how it would spend the $4 billion requested for the military as part of its new counterterrorism fund. The Appropriations Committee would provide just $1.9 billion for the fund, available for two years – instead of the requested three. The panel would also provide $1 billion in operations and maintenance funds ‘for additional counterterrorism partnership activities under existing authorities.”

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POLITICALLY TOXIC – COMPENSATION CUTS Politico writes, “The Bipartisan Policy Center and the American Enterprise Institute are releasing an analysis today urging Congress to rein in the military’s personnel costs. It comes as the House and Senate Armed Services Committees are gearing up to tackle this issue next year – after the midterm elections and once a congressionally mandated independent panel issues its recommendations, due in February. According to the analysis, personnel expenses have held steady over the past few decades at about a third of all Pentagon spending – but the military has gotten smaller during that time. “More money is paying for fewer service members,” the analysis concludes, explaining that compensation costs per active-duty service member increased 42% from 2001 to 2012 in real terms.”

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TERRORISM INSURANCE BILL Reuters reports, “The U.S. Senate voted overwhelmingly on Thursday to reauthorize a federal terrorism risk insurance program that was created after the Sept. 11, 2001, attacks. Senators voted 93-4 in favor of a bill that gives the federal insurance backstop seven more years. Businesses, owners of sports stadiums and other groups that insure against the risk of terrorist acts have urged lawmakers to renew the program before it expires at the end of the year. … Now, the extension needs to be approved by the U.S. House of Representatives, which has struggled to agree on a reauthorization plan.”

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ERIC CANTOR’S LOTTERY TICKET NYTs writes, “While LeBron James shopped his talents around the N.B.A. this summer (YES…BACK TO CLEVELAND CAVS!), Cantor was preparing for his own free agency. Fortunately for the former House majority leader, one truth remains self-evident in Washington: No matter how soundly you’ve been walloped by voters, “opportunities in the private sector” await. Cantor is the latest example of Washington’s upward-failing, golden-parachuted, everybody-wins calculus. … “What seemed really bad at the time,” Cantor continued to Jonathan Karl on ABC’s “This Week,” “may turn out to be really good.” THE UNCOMFORTABLE REALITY Cantor’s loss was widely attributed to his growing “out of touch” with his Richmond-area constituents — he had become too steeped in Washington’s machinations, too cuddled up with Wall Street, too beholden to the entrenched insider’s world. …Yet those qualities are precisely what now make him such a prized recruit in his next career. He’s living proof … that membership in its political class guarantees a win-for-life lottery ticket.”

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NO. THE HOUSE ISN’T IN PLAY.  NOT EVEN CLOSE. The Fix, “House Minority Leader Nancy Pelosi predicted that Democrats could pick up as many as 25 seats this fall, a gain that would hand her side control of the chamber for the first time since 2010. SO NOT GOING TO HAPPEN … Start with the election models.  Election Lab, WaPo’s version, gives Republicans more than a 99% chance of keeping control of the House. Then, move to the non-partisan political handicappers. … Charlie Cook and his Cook Political Report rate 73 seats as competitive — 39 held by Democrats, 34 controlled by Republicans. Of the 13 most competitive contests, which Cook ranks a true “toss ups”, 11 are Democratic held while just two are in Republican hands. (Both parties have two pickups close to in the bag, according to Cook. Stu Rothenberg and Nathan Gonzales at the Rothenberg Political Report have a far smaller playing field of competitive seats — 50 total — but the story is the same.  Twenty four of those seats are held by Democrats, 26 are held by Republicans. Of the six “pure toss ups”, four are Democratic seats, two are Republicans ones.  There are five Democratic seats in Rothenberg’s “toss up/tilt Democratic” column and five Republican seats in his “toss up/tilt Republican” one. THE MATH To net 17 seats, Democrats would need to hold all eleven of their own seats rated as toss ups by Cook, win the two Republican toss ups and then win 15 out of the 16 seats Cook ranks as “lean Republican”. To get to 25 seats, Democrats would need to win every tossup and lean Republican race in Cook’s rankings and also win seven of the 16 seats he ranks as “likely Republican”. Pelosi is saying what she needs to say, as Chief fundraiser and public face of the House Democrats, but saying it doesn’t make it so.”

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COMMON CORE National Journal writes, “As Obamacare becomes slightly less prominent on the campaign trail as an issue built to rally conservatives frustrated with the federal government and national policies, the Common Core education standards crafted by governors are slowly taking its place. Gov. Scott Walker (R-WI) on Thursday joined a growing list of GOP governors including Pat McCrory (R-NC) and Bobby Jindal (R-LA) calling on their states to repeal the standards. WHAT? But don’t expect the issue to be as easily tied to, or blamed on the president – the federal government didn’t write the standards or force states to adopt them.”

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POLITICS AIN’T BEAN BAG Backstory Mississippi Senate Run-off. Here’s the problem for Chris McDaniel (who lost to Sen Thad Cochran). In Mississippi, you don’t register by party.  So, anyone can vote in either party primary. And, if you don’t vote in a primary, you are eligible to vote in a runoff. That fact is what Cochran exploited in the runoff. Because the Mississippi Democratic primary — particularly for Senate — wasn’t a high-profile affair (only 84,00 votes were cast as compared to more than 313,000 in the GOP primary) there were plenty of black voters who took a pass, and, therefore, were eligible under state law to vote in the GOP runoff. McDaniel’s campaign  alleges — without any proof made public yet — that many of the people who voted for Cochran in the Republican runoff had, in fact, voted three weeks earlier in the Democratic primary. If so, that is a violation of the law. But, if McDaniel is simply unhappy that Cochran took advantage of the rules in a way he thinks is unfair, well then welcome to the world of big-time politics. KNOW WHEN TO FOLD’EM Remember that McDaniel is only 42 years old.  One of the key lessons any successful politician learns early on is that you have to know when it’s better to live to fight another day. McDaniel’s high profile fight against the results is the opposite of what he should be doing if he wants to preserve a political future in the state.”

DEFINE ‘politics ain’t beanbag’ (H/T Taegan Goddard’s Political Dictionary):  A response to politicians who complain about the rough and tumble of the campaign trail, below-the-belt shots from their opponents or unfair treatment from the media. … first uttered by Mr. Dooley, an Irish-American character created by writer Finley Peter Dunne in an 1895 newspaper column. The full quote: “Sure, politics ain’t bean-bag. ‘Tis a man’s game, an’ women, childer, cripples an’ prohybitionists ‘d do well to keep out it.”

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KENTUCKY SENATE RACE MOST EXPENSIVE. EVER. The Fix writes, “Two years ago, Elizabeth Warren and Scott Brown — and their various and sundry allies and enemies — combined to spend $82 million in the Massachusetts Senate race, making it the most expensive Senate race. Ever. Now, that eye-popping record is in serious jeopardy thanks to the massive cash coming in for this November’s race between Kentucky Sen. Mitch McConnell and Secretary of State Alison Lundergan Grimes. OVER $100 MILLION  “I think there is absolutely a chance that the Kentucky race ends up costing more than $100 million,” said Billy Piper, a former McConnell chief of staff. STILL 5 MONTHS TO GO There’s no sure things in politics, but, all signs point to Kentucky vaulting into the history books as the most expensive ever. Somewhere TV station owners in Kentucky are giving each other high fives.”

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THE ELIZABETH WARREN 2016 FANTASY Politico Magazine writes, “Bored pundits, hungry progressives and mischievous conservatives are frantically looking for signs that Sen. Elizabeth Warren’s busy 2014 schedule points to a colossal 2016 primary clash pitting the scrappy Okie against the House of Clinton. She’s turning heads by campaigning for Democratic Senate candidates in the red states of Kentucky and West Virginia. She’s earning insider chits the way nascent presidential candidates do, raising $2.3 million for 28 Democratic candidates as of last month. Without lifting a finger, and over her public objections, she has inspired devotees to form Ready for Warren, which has launched a petition drive encouraging her to run. TAKE HER AT HER WORD “She has repeatedly given flat denials, including a pledge to serve out her six-year term, and most recently telling the Boston Globe ‘I am not running for president. Do you want to put an exclamation point at the end of that?’ … Polling data and anecdotal reporting suggest Hillary Clinton’s base of support in the Democratic Party is broader and deeper than ever … any 2016 drama will likely be over faster than you can say ‘Wesley Clark.'”

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LEAPFROGGING IOWA … During his debut Iowa visit of the 2016 presidential election cycle,” New Jersey Gov. Chris Christie’s (R) “was ostensibly here simply to drum up money for Republicans competing in 2014 races. He was the guest star at three private fundraisers. … The passion for Christie was most obvious at a meet-and-greet open to the general public at a Marion cafe, where Iowans said his force-of-nature personality would be the perfect fit for the Oval Office.” (Des Moines Register)

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SUNNI-SHIA DIVIDE Excellent piece by the Council on Foreign Relations

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CAPSTONE CLIENT IN THE NEWS Our client, Geppetto Avatars, appeared in the news – national and local – four times these past few weeks, including USA Today, and the most recent story this week — check out Fox 6. You’ll want to meet Sophie!

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