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Independent Kyrsten Sinema won't change the US Senate
Jon Lieber, head of Eurasia Group's coverage of political and policy developments in Washington, DC shares his perspective on US politics.
What does Kyrsten Sinema caucusing as an independent mean for the United States Senate next year?
And the short answer is, according to her, not much.
Arizona Senator Kyrsten Sinema today told Democratic Party leaders that she would be no longer identifying as a Democrat, instead choosing to identify as one of the Senate's three independents. Functionally, this probably doesn't mean much because Sinema says this won't affect the functioning of the Senate. Meaning that committee ratios are still expected to favor Democrats next year, giving them more power to easily report nominations and conduct oversight, but also that she would support Democratic Leader Chuck Schumer as the majority leader next year.
Probably where this has a bigger impact is in Sinema's own reelection campaign in 2024. She now can avoid a party primary, which was expected to be from a very well-funded Democrat, as Democrats aren't super happy with Sinema for having frustrated parts of Joe Biden's legislative agenda over the last two years. She can now run as an independent in the swing state of Arizona, which is going to be a presidential battleground state with lots of money and attention paid there in '24. And her expectation, assuming she runs, will be to split the Democratic and the Republican votes in the state and win reelection.
Closing tax loopholes: How US Congress will fund spending bill
Jon Lieber, head of Eurasia Group's coverage of political and policy developments in Washington, DC, shares his analysis on US politics.
How is Congress planning on raising your taxes to pay for their new spending bill?
The short answer is they aren't. The new spending deal being negotiated by Senate leaders relies on several provisions that raise revenue for the federal government, by allowing lawmakers to claim they aren't raising taxes at all. How's that? By closing what policymakers consider loopholes in the tax code.
A loophole is a tough thing to define. Lawmakers have spent decades mangling the tax code to create incentives and special tax rates for all kinds of activities, including investing in equipment, conducting research activities, and hiring certain classes of workers. These special provisions in the tax code are sometimes derived as loopholes, even though most of them were purposely created by Congress.
These provisions also force companies to keep two separate sets of books to account for their income. One, that investors and accountants keep track of. And one for the IRS. This difference between the income recorded for accounting purposes and the income recorded for tax purposes, is one target the Democrats are going after.
By imposing a new minimum tax of 15% on the much broader definition of book income, Democrats raise over $300 billion to pay for new green energy projects and health care spending. This is a controversial provision in the tax world, however, as it means that several things that are normally deducted from company's income for tax purposes, will be wiped out, somewhat at cross purposes with the intention of the rest of the bill, which is to incentivize companies to make investments in green energy.
Another loophole is a whole bunch of new IRS enforcement agents, who are going to be hired to increase the rates of audits and collect taxes that are owed, but not paid. That's a lot of loophole closing, and together with the savings from prescription drug price controls, this bill on net will close the deficit by about $300 billion over the next 10 years.
And of course a loophole is in the eye of the beholder, as even though lawmakers may not see themselves as raising taxes, the entities that will be paying higher taxes sure will. While some of these tax increases will have effects that spill over to affect a small number of workers. They are raising all of this money without raising a single penny from you, unless you happen to be a large corporation.
Voting reform bill will likely be blocked, but still a key issue for Democrats
Jon Lieber, head of Eurasia Group's coverage of political and policy developments in Washington, discusses the Democrats voting bill.
What is the status on the Democrats voting bill?
The Democrats are pushing a bill that would largely nationalize voting rules, which today are largely determined at the state level. The bill would make Election Day a national holiday. It would attempt to end partisan gerrymandering. It would create a uniform number of early voting days and make other reforms that are designed to standardize voting rules and increase access to voting across the country. This matters to Democrats because they think they face an existential risk to their party's political prospects. They're very likely to lose at least the House and probably the Senate this year. And they see voting changes that are being pushed by Republicans at the state level that they say are designed to make it harder to vote, particularly for minorities, a key Democratic constituency.
Republicans see this as a power grab. They argue that the changes happening at the state level are reverting back to the pre-pandemic baseline. And during the pandemic, voting laws were expanded nationally. And they argue that the laws in states like Georgia, which Democrats are calling Jim Crow 2.0, are actually no more restrictive than the voting laws in a state like Delaware or New York, where two of the nation's most prominent Democrats come from. Regardless, this voting legislation is going nowhere. Republicans are uniformly opposed. And while Democrats are united in support of the voting reform changes, there are not enough votes in order to change the Senate rules to overcome a Republican filibuster.
As long as the filibuster exists, it will be nearly impossible to pass any kind of electoral reforms that could help Democrats push back on the tide of a system that largely benefits Republicans today. The US political system is structured in favor to benefit the more rural areas, and Republicans largely dominate in rural areas.
So knowing this bill will be blocked, why hold the vote at all? Well, this is a hugely important issue for the Democratic base and for the Democratic Party who worried about being locked out of power for the next 10 years. By holding the vote, Majority Leader Schumer hopes to pressure two moderate democratic holdouts and draw a contrast between them and the rest of the party. And he wants to send a message to the activist base that they support them, even though the Democrats are not united. The end result will probably be a failure to act and also further alienation of the two moderate holdouts, who Biden also needs their support on his fiscal policy bill, the Build Back Better bill, which is currently stalled until least March and probably beyond that.
Should the US cancel student loan debt?
Joe Biden has already cancelled more US student than any other president. But progressive Democrats want him to write off a lot more to reduce the racial wealth gap and help people recover better from COVID's economic ruin. Republicans are against all this because it would be unfair to current and future borrowers and to taxpayers footing the bill, not to mention subsidizing the rich.
Watch this episode of GZERO World with Ian Bremmer: How the COVID-damaged economy surprised Adam Tooze
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Democrats and Republicans unite! At least against China.
This week, the US Senate passed the so-called Endless Frontier Act, a $250 billion investment in development of artificial intelligence, quantum computing, the manufacture of semiconductors, and other tech-related sectors. The goal is to harness the combined power of America's public and private sectors to meet the tech challenges posed by China.
In its current form, this is the biggest diversion of public funds into the private sector to achieve strategic goals in many decades. The details of this package, and of the Senate vote, say a lot about US foreign-policy priorities and this bill's chances of becoming law.
Why did Democrats and Republicans agree to spend a quarter of a trillion dollars? The high-stakes tech competition with China is a threat both parties take seriously. Beijing is directing historic amounts of money toward development of AI and quantum computing technologies that experts say will determine the 21st century's balance of economic, political, and military power.
Just as the 1957 Soviet launch of Sputnik, the world's first artificial satellite, spurred a surge in US spending and new strategic thinking, Washington is now finally heeding warnings that China has taken a great tech leap forward. Democrats and Republicans may not agree on what aspect of China's rise worries them most, but leaders of both parties see a threat to US competitiveness and national security.
What's in the bill? It focuses mainly on tech, with $120 billion for research and development funding, $52 billion for domestic semiconductor production, and $20 billion for space programs. But it also promotes new strategies to counter China's global influence and punish its abuses at home. For example, it authorizes new sanctions in response to China's crackdown in Hong Kong, its use of forced labor in Xinjiang, its skill in cyber espionage, and its theft of intellectual property. The bill also commissions a new study about the origin of the pandemic and calls for a boycott of the 2022 Winter Olympic Games in Beijing by US officials -- though not by US athletes.
What does this bill say about the domestic politics of competition with China? President Biden heralded the news of the Senate passage with a warning for the future: "As other countries continue to invest in their own research and development, we cannot risk falling behind. America must maintain its position as the most innovative and productive nation on Earth." It's safe to assume that "other countries" mainly means China since the bill explicitly labels that country's government the "greatest geopolitical and geoeconomic threat" to US foreign policy.
But it also makes clear there is strong bipartisan support for the Biden administration's position that the era of engagement with China is over. China's growing power has Washington's attention, and its military expansion, human rights abuses, and tech capabilities, and trade practices ensure there is something for everyone on Capitol Hill to oppose.
China has responded. An official statement says this bill is "full of Cold War thinking and ideological prejudice." It will now be easier for Xi to make the case at home that the US intends to stunt China's growth as a great power. US officials counter that years of unfair Chinese trade practices and President Xi Jinping's newly aggressive foreign policy are responsible for the sharp downturn in relations.
What happens next? The bill now heads for the House of Representatives where its fate is TBD. News coverage rightly focuses on the rarity of 68 Senate votes for any bill of this cost and ambition, but 32 senators voted against it, and their reasoning highlights partisan differences lurking beneath the bipartisan consensus which might force a rework in the lower house.
Thirty-one Republican senators opposed it. Some said it costs too much. Others said it should include funding for border security. Former Democratic Party presidential candidate Bernie Sanders voted no to protest the amount of money the bill would move from US taxpayers to private-sector companies without enough accountability for how the money is spent. Other Democrats warn that its aggressiveness can make Cold War fears a self-fulfilling prophecy.
We won't know until autumn just how ambitious the final legislation will be, but the bipartisan Senate bill makes clear that the US-China rivalry will only become more intense.
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What We’re Watching: China’s vaccination blitz, Nicaraguan opposition crackdown, Dems/GOP vs China
China goes big on vaccination: China is now vaccinating about 20 million people a day against COVID, accounting for more than half of the world's daily shots. Following a sluggish initial rollout, Chinese vaccine makers have scaled up production in recent months. That's good news for the world, particularly for developing countries that rely on vaccines distributed through the COVAX global facility, which now includes China's WHO-approved Sinopharm and Sinovac jabs. It's also good news for China's government, which for months has struggled to make its production capacity match its ambitious vaccine diplomacy program (though it has already supplied a whopping 350 million doses to more than 75 countries). And finally, it's good news for the Chinese people, who can travel without restrictions, both inside and outside China, once they're vaccinated. It's not good news for India, which earlier this year had a window of opportunity to compete with the Chinese on doling out jabs to low-income countries but then had to suspend exports in order to address its own COVID crisis.
Don't try to run for president in Nicaragua: Nicaraguan police have arrested four prominent opposition figures as part of a widening crackdown on challengers to strongman President Daniel Ortega. Two of those jailed were planning to run in November elections to try to deny Ortega a fifth presidential term. In recent years, Ortega — a former guerrilla who reinvented himself as a pious, business-friendly nepotist — has faced increasing protests over corruption and authoritarianism. Last fall he passed a law that permits him to detain any citizens considered "terrorists" or "traitors." And his handling of the pandemic has been epically bad: after refusing to take any public health measures, he and his wife simply disappeared for a month. The US has imposed sanctions and labeled Ortega a "dictator," but Washington must tread carefully — the last thing this White House wants right now is more instability in Central America that will encourage more migrants to head for the US southern border. But for many Nicaraguans, the last thing they want is more Ortega.
China's hottest new export: US bipartisanship: Democrats and Republicans agree on almost nothing these days, but lawmakers of both parties fear that a rising China threatens US global dominance. That's why on Tuesday evening senators flashed a rare moment of bipartisan unity by voting overwhelmingly to pour $250 billion worth of subsidies and grants into developing advanced technologies like semiconductors, artificial intelligence, and quantum computing. One of the bill's sponsors, Senate Majority Leader Chuck Schumer (D-NY), framed it explicitly as a bid to combat the "authoritarian image [that] President Xi Jinping would like to impose on the world." The bill now moves to the House, where it faces a few obstacles but will likely pass. Thought bubble: 20 years ago, the US thought that bringing Beijing into the "rules-based" order would make China more like the US politically. Instead, China's state capitalist model has forced the US to become a bit more like China economically — as the US develops ambitious and expensive state-driven industrial policies of its own.
What you should know about Elise Stefanik’s rise in the GOP
Get insights on the latest news in US politics from Jon Lieber, head of Eurasia Group's coverage of political and policy developments in Washington:
Who is Elise Stefanik and what does she mean for the Republican Party right now?
Elise Stefanik is a young member from Upstate New York. She had originally started her career as a staffer in the George W. Bush administration, but in recent years, has turned into one of the most outspoken defenders of President Donald Trump, particularly during the impeachment trial last year. She's relevant right now because it looks like she'll be replacing Liz Cheney, the Representative from Wyoming and also the daughter of the former Vice President, who has been outspoken in her criticism of President Trump since the January 6th insurrection, and probably more importantly, outspoken in her criticism of the direction of the Republican Party.
The irony here though, is that while Cheney is going down, she's being replaced by somebody who, when she came into office, was expected to be a pretty standard-bearing Bush Republican. And so this is just really indicative of where the Party is, very hard to stay on in Republican leadership if you aren't going to be a supporter of President Trump. Too many of Cheney's colleagues thought she had become a distraction and wanted her gone. Stefanik is probably a placeholder. She says she doesn't want to serve in the position long-term. She eventually wants to take over the chairmanship of a committee, and she has many years ahead of her in Congress. She is very young.
What's the outlook for the Democrats' election bill?
Well, the Democrats in the House and Senate have introduced a bill to rewrite federal election law. Traditionally, election laws have been set by the state. States are allowed to choose how to do their redistricting. They're allowed to choose how people vote. Do they do mail-in votes? Do they have no-excuse mail-in votes? How many days of early voting are they going to allow? And, the Democrats bill would append that entire regime, and create a federal standard that every state would have to meet for number of days of pre-election day, in-person voting, standards around absentee voting, how to draw districts, taking it away from partisan gerrymandering and moving it towards a commission, in most states. And, there's been a lot of opposition to it. So the Democrats argue that this bill is necessary because Republicans are passing what they think are restrictive voting laws across the country. And Republicans are saying the Democrats are trying to take over and federalize elections to increase the chances that they win future elections and hold onto their current majorities in the House and Senate. And there's truth to both claims. The bill is very unlikely to move anywhere. It has 49 Democratic Senators who support it, who are co-sponsors, and one Democratic holdout, Joe Manchin. But even if Manchin never came around and said he supported the bill, it would require 60 votes to overcome a filibuster in the Senate, or the elimination of the legislative filibuster, so it's very unlikely to pass into law. You know this is a really big deal for the Democrats. They've given it the special designation S.1 in the Senate, H.R.1 in the House, which is a symbolic act suggesting this is their highest priority. But also, in a Rules Committee hearing earlier this week, both Majority Leader, Schumer, and Republican Minority Leader, McConnell, showed up to debate the bill in-person, debate amendments, and there've been multiple showdowns on the Floor. This is a really high-stakes piece of legislation. It would fundamentally tip the balance of power in favor of the Democrats were it to pass, which is, among other reasons, why Republicans are so opposed to seeing it get into law.
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The importance of Kamala Harris
John Nance Garner gave up the powerful position of Speaker of the House to serve two terms as Franklin Roosevelt's vice president (1933-1941), but he's best remembered today for a comment (he may never actually have made) that the job of VP "is not worth a bucket of warm spit."
In reality, the role of US vice president is determined almost entirely by the president. With that in mind, how might Kamala Harris advance President Biden's agenda? A few thoughts.
As everyone surely knows by now, the 50-50 partisan split in the US Senate means that Harris — who as VP is president of the Senate — will be called upon to break tie votes. But that power has limits, because the even split within Senate committees will force Chuck Schumer and Mitch McConnell, leaders of the Democratic and Republican parties respectively, to agree on rules to even bring legislation up for a vote.
There are three factors that make her more important.
First, Biden says he's asked Harris to be "the last voice in the room," the final opinion he listens to before making big decisions. Early reports indicate that Biden has not given Harris a specific issue portfolio. That means that rather than exercising lead influence on one issue, she will have meaningful influence on many.
Second, Harris will also be a lightning rod, a person who can divert attacks from Biden. The Trump campaign found it difficult to land rhetorical punches on the avuncular Biden, but Harris was often targeted as a "far-left radical." Some Republicans belittled her by mocking the sound of her name. She certainly knows what misogyny and racism sound like.
By drawing fire from the president, Harris can help protect Biden's popularity as he works to advance his agenda.
Finally, the vice president's most important job is to be ready to serve as president on a moment's notice. See Harry Truman (1945), Lyndon Johnson (1963), and Gerald Ford (1974). That's the part of the job that ensures that even the least influential of vice presidents should always hold our attention.