This Week:

The Senate passed a bill to address health care for veterans exposed to toxic substances and confirmed various Biden administration nominees. The House passed a bill to overhaul ocean shipping laws, a bill to require financial institutions and federal banking regulators to disclose their diversity practices and a bill to address food and fuel prices.

Next Week:

The Senate will continue to vote on Biden administration nominees. The House will vote on a bill to address mental health and opioid abuse, a bill to require federal agencies that collect demographic information to also gather data on sexual orientation and gender identity and a bill to establish a new agency focused on developing medical breakthroughs for diseases such as cancer.

The Lead

Gun Control / School Safety.

Last Sunday, a bipartisan group of Senators announced an agreement regarding key aspects of a potential gun control / school safety bill. The group has spent this week fleshing out the details in the hopes of finalizing the full text of the bill next week. The bill, which tracks what we reported last week, includes incentives for states to enact red flag laws, an expansion of the federal background check to include juvenile criminal histories, and increases in funding for both school safety and mental health measures. Importantly, the bipartisan group includes ten Republicans, whose continued support of the bill is needed to overcome a 60-vote procedural hurdle in the Senate. While this bill isn’t as ambitious as some lawmakers would like, it is something. It would be the most significant action on guns in decades. The common denominator that is driving Senate Democrats and Republicans to act is that too many people who shouldn’t possess guns do in fact have access to them, and these provisions are designed to address that problem. If bipartisan support can be maintained for the emerging bill, it can pass the Senate late next week and the House shortly thereafter.

A summary of the outline can be found here for those interested.

January 6 Select Committee.

Perhaps the biggest announcement from the ongoing hearings this week was Chairman Bennie Thompson’s (D-MS) comment that the committee would not refer any matters under its jurisdiction to the Department of Justice (DOJ) for criminal referral. It’s not clear if Chairman Thompson made this announcement because of a lack of evidence for any criminal conviction, a belief that it was not the role of the committee to offer a criminal referral, or a desire to just move on from the acrimony surrounding January 6. Before the hearings, there had been significant speculation about whether the committee would refer cases to the DOJ (including one relating to former President Trump). The committee’s first hearing, held last Thursday during prime time, drew 20 million television viewers. While that audience wasn’t quite as large as a typical State of the Union address, or a presidential debate, it was larger than the average viewership for the NBA Finals (12 million per game), last year’s World Series (11.7 million) and popular award shows like the Grammys, Emmys and Golden Globes (fewer than 10 million). This week’s first hearing, which was not held during prime time, drew 10 million television viewers, according to one media source.

Other Issues

Abortion Politics.

The Supreme Court is expected to render its decision on the future of Roe v. Wade in the next two weeks (likely June 21, 23, 27 or 29). We don’t have anything to say about the decision other than to remind you that it is coming. The issue will obviously generate significant media attention, but it remains to be seen how it will compete with the intensity of media coverage on rising inflation, gun control, market challenges, the January 6 congressional hearings and immigration. Will voters be revved up by the decision or has the outcome been sufficiently telegraphed to the point that voters will focus on other issues?

BBB Lifeline.

There has been growing pressure among Democrats on the need to address the looming expiration of the Affordable Care Act’s (Obamacare) enhanced subsidies, which were a part of the American Rescue Plan signed into law last year. These subsidies are set to expire at the end of this year. If unaddressed, the 13 million Americans who receive healthcare coverage through the law will have an average premium increase of 53%. Democrats have sought to tackle this issue by including an extension of the deadline in the Build Back Better (BBB) legislation. However, with this bill stalled in the Senate, the path for an extension is unclear. Behind the scenes, Senate Democrats have restarted talks on a scaled back BBB plan. While this potential package of tax and spending priorities would be significantly slimmed down compared to last year’s BBB legislation, it likely would include an extension of the expiring subsidies. If Democrats are unable to reach a deal, and the expanded Obamacare subsidies are not extended, many Americans could receive notice that their premiums will be increasing in 2023 just a few weeks before the midterm elections. With this potential scenario adding to the already difficult political environment Democrats face, there is an urgency within the party to act.

Privacy Protections.

A House committee this week held a hearing on comprehensive data privacy legislation. The bill, which has bipartisan support and was introduced earlier this month, would establish national standards for the privacy and security of consumer data. Among other things, it would require companies to limit the amount of data that they collect and prohibit (with limited exceptions) the collection of sensitive information like Social Security numbers and biometric data. There has long been bipartisan interest in Congress in passing a national privacy standard, but legislation has stalled in the past because of disagreements on thorny issues like preemption of state laws and legal liability. This bill would preempt applicable state law requirements and create a private right of action for violations beginning four years after passage of the bill. While business groups have expressed concerns about the private right of action, some Democrats think the standards are not tough enough and object to the preemption provision. With these disagreements and a closing window for legislative action, it is unlikely that Congress will be able to pass a major privacy bill this year, though the proposal could provide a basis for discussions in the next Congress.

Electric Vehicles Tax Credit.

Four major automakers (GM, Ford, Chrysler and Toyota) urged Congress this week to lift the cap on the number of cars available for the $7,500 electric vehicle tax credit. Under current law, the credit begins phasing out once a company sells 200,000 plug-in electric vehicles a year. GM and Tesla have already surpassed this threshold. Democrats included an increase in the credit to $12,500 in the stalled BBB legislation. Should a viable BBB package still come together, Democrats could try to lift the cap in that measure. On the other hand, with high gas prices pushing many Americans toward electric or hybrid vehicles, Republicans believe the market is working and these vehicles are selling without the need for incentives. The window that Democrats have to increase incentives for electric vehicles is closing.

Index Restrictions.

The Senate this week held a hearing on the Index Act, a Republican bill that would require fund advisers to follow the input of fund investors when voting in proxies for companies with stocks in the fund’s portfolio. The bill reflects Republican frustration with how fund advisers have voted in proxies on a variety of environmental, social and governance (ESG) matters. The fund industry argues that the proposed requirements are burdensome and difficult to implement and that fund investors rely upon the adviser to not only select investments, but also to conduct ancillary activities like proxy voting. In addition to this issue, the fund industry in recent years has had to push back against concerns that so-called common ownership stocks by a few large fund complexes could have a negative impact on competition. Though the Index Act has no chance to pass this year, it could influence practices at investment companies and reflects a broader concern among some in Washington with concentrated ownership by large investment complexes that likely will continue to linger.

The Final Word

Viable Third-Party Option in 2024?

The White House reiterated again this week that President Biden plans to run for re-election. Meanwhile, former President Trump continues to send signals that he also intends to run again in 2024. Both currently have very low approval ratings, and the speculative polling that has been done on a potential rematch underscores a lack of enthusiasm for both. To say that Americans aren’t excited about the prospect of another Trump-Biden rematch is an understatement. One group appears to have taken note of voters’ desire for an alternative option. No Labels, an organization that promotes bipartisanship, has raised over $50 million this year in an attempt to qualify as a third party in all 50 states. So far, it has successfully qualified for the ballot in five states. It also has started preliminary polling on a presidential ticket of Senator Joe Manchin (D-WV) and Senator Lisa Murkowski (R-AK). It remains to be seen if a third-party candidate can be viable in modern American politics, but the efforts of No Labels may be early enough and more robust than some recent failed third-party movements.