Hey Influence Traders,
A poll just released shows that just 30% of Americans approve of the current US government.
Is it any wonder?
There is constant gridlock, not just between the two parties but amongst the Democrats themselves.
There are a couple of massive bills sitting on Capitol Hill!
The big question – despite Democrat support, will they collapse under their own weight?
Some parts of the bills are contentious enough that they are driving Dem infighting.
Some of the tax bills are being written by a revolving group of players between K-Street and Wall Street – incestuous activity at its finest.
But it’s not just Dems. Republicans do not want to help raise the debt ceiling and they are willing to go to the mattresses over it.
But do they know the extent of the fight they are picking?
Pelosi and Schumer might have something to say about it.
The Revolving Door
I have often talked about the revolving door between K-Street and Wall Street. People move from the private sector to positions of power in government and back (sometimes starting in government).
The relationships they form often curry favor with private employers and that incentive sometimes impacts their actions while in government.
Today we have massive tax bills being written on the Hill.
Much of that legislation, rules and regulations are written by folks who move from big accounting firms to the treasury department and back … folks who, in the private sector, help some of the world’s biggest companies avoid taxes.
Sometimes that influence can be worth millions, if not billions, of dollars to accounting firm clients, and a lucrative partnership position for the government employee when they return to the private sector.
The NY Times recently reported that “in the last four presidential administrations, there were at least 35 instances of round trips from big accounting firms through Treasury’s tax policy office, along with the Internal Revenue Service and the Congressional Joint Committee on Taxation, and back to the same firm, according to public records and interviews with government and industry officials … and that in 16 of those cases … officials were promoted to partner when they rejoined their old accounting firms.”
And that is why we watch the players and their related firms. Knowing where influence might lie helps us to see where favorable legislation for certain companies might lie.
More Bipartisan Moves
Just when you thought the bipartisanship couldn’t get any worse …
For four years during the Trump administration, Dems complained almost daily that the office of the president was getting too powerful.
Yet, since the spring congressional democrats have been rewriting House rules to make it harder for Republicans to put checks and balances on Biden.
Specifically, they have been restricting the GOP's ability to press for investigations, including over the administration's handling of Afghanistan.
The minority party has the use of a tool called a “resolution of inquiry" that permits a lawmaker to formally request information from the executive branch.
It does not have the force of a subpoena, and the majority party can vote to block it, but it's one of the few tools that the minority has to gut-check presidential action, and call things to light.
Even with the possibility of blockage, it is effective as it forces the majority to take public stances and vote on issues raised in committees.
Democrats frequently used resolutions of inquiry when they were in the minority during Trump's first two years in office, including over Russia and Trump’s taxes.
While it might seem silly, these procedural moves are important checks on our tri-party government.
Killing it is not only bad for our government … it’s how autocracies are born, but it could bite Dem’s in the rear if they lose their majority in the midterm elections (spoiler alert, I don’t see Rep. McCarthy adding the rule back in if he is in charge).
Debt Ceiling and Emergency Spending Bill
Biden and Congressional Democrats are scrambling to get signature pieces of legislation passed that could define his presidency, keep their caucus cohesive, and raise the debt ceiling.
Republicans have decided that’s on them, and want to roadblock Biden’s massive spending agenda.
Speaker Pelosi announced this week that House Democrats will combine a short-term government spending bill with a suspension of the debt limit.
The plan is to suspend the debt limit until the end of 2022 … a “kicking the can down the road” strategy … while funding the government through December.
Pelosi’s strategy is to force Mitch McConnell to either back down or sink the package and risk a government shutdown on Oct. 1.
To make it harder for Senate Republicans to vote against the extension, the Dems included $28.6 billion in funds to help recent natural disasters, which hit Republican strongholds hard and which will create a tough NO vote for some senators.
$3.5 Trillion Spending Bill & Taxes
With regard to the boondoggle bill, Pelosi’s biggest headaches are coming from her own party.
Centrists and progressives are at odds over how much to spend and how many new tax increases should be levied to pay for it.
They are also divided on prescription drug pricing, tax credits for the poor, and green energy initiatives and much, much more.
For example, Rep Alexandria Ocasio-Cortez said she would resist the full repeal of a cap on deductions for state and local property taxes that would aid high earners in high-tax areas, something that Chuck Schumer is trying hard to get passed.
And money from the pharma industry talked because its lobbying efforts killed a proposal that would allow the federal government to negotiate drug prices, something that is of high importance to the progressive wing.
Nancy P. only has three spare votes in the partisan $3.5 trillion bill and the word is that close to a dozen Dems are balking at the drug provision.
The Senate has even less wiggle room. Schumer can’t lose a single vote, and he has some thorns.
In an apparent attempt to gain his vote, Schumer is allowing Joe “Coal Country” Manchin to write the details of the bill’s climate change program.
That put a pretty stunned look on AOC and other green party faces.
Manchin is closely aligned with the fossil fuel industry. West Virginia is second in coal and seventh in natural gas production among the states, and Manchin has received more campaign donations from the oil, coal and gas industries than any other senator (per OpenSecrets).
Manchin founded coal brokerage firm Enersystems Inc. in 1988, and while he no longer controls its operations, he made $491,949 in dividends from his Enersystems stock last year.
NOT TOO SHABBY!
And it should make for some unbiased legislative drafting.
What About Infrastructure?
The infighting in the Dem ranks continues to keep the fate of the $1.2 trillion infrastructure bill in doubt.
This week the House progressives threatened to tank a vote on the bipartisan infrastructure bill next week if the Dem’s $3.5 trillion reconciliation package is not complete.
That led to Biden calling a meeting at the White House to smooth over tensions.
Anti-Trust is a Must
The Biden Admin is trying to be the Antitrust Admin.
The Department of Justice just filed an antitrust suit against an “alliance” between American Airlines (Ticker: AAL) and JetBlue (Ticker: JBLU), despite the Dpt. of Transportation under Trump having approved it.
DoJ argued the “alliance” created a “de facto merger” that hurts competition in the NY to Boston corridor.
The airlines contend that the partnership increases competition against Delta (Ticker: DAL) and United Airlines (Ticker: UAL).
Federal Reserve officials expect the U.S. to end the year with higher unemployment and inflation along with slower economic growth than anticipated.
Regardless, they believe that the pace of economic improvement is likely to warrant a decline in Fed stimulus.
It was announced that the US is buying an additional 500 million Covid vaccines from Pfizer (Ticker: PFE) to give to other countries.
Pfizer is having quite the run.
Regardless of what’s happening in DC or elsewhere, trading guru Andrew Giovinazzi has been making #powermoves in the Capitol Gaines portfolio.
Cutting Through the Noise for You.