This Week:

The Senate confirmed various Biden administration nominees. The House scheduled no votes this week.

Next Week:

Both the Senate and House will be out of session until the week of June 6.

The Lead

School Shootings and Washington Responses.

The mass shooting tragedies in Uvalde and Buffalo have understandably put relevant policy issues like gun control and school safety front and center in Washington. Demands for policy action always follow a mass shooting incident, but such action has been elusive over the years as the issues are overcome by partisan gridlock and the passage of time. This time could be different. A more impactful response would require bipartisanship and for lawmakers and President Biden to be more open to accepting measures they have resisted in the past. Below we examine some potential policy options that we believe will be a part of the debate when both the House and Senate consider legislation in early June.

  • Gun Control Measures.
    There currently are active discussions on two gun control measures. Nineteen states already have “red flag” laws that allow concerned individuals to petition a court to deny a gun purchase or take away a gun from other individuals posing a risk to themselves or others. Congress is considering a national standard or a bill to encourage (not mandate) states to adopt red flag standards. The House will pass some legislation on red flag laws early next month, though its path is less certain in the Senate. Additionally, Congress is considering a measure that would expand background checks on gun purchases to better identify potential security risks. Stronger measures to institute a ban on assault weapons and to prohibit high-capacity magazines aren’t under active consideration at this time. A proposal to increase the age by which individuals can buy and own guns will also be considered.
  • Mental Health Measures.
    As there was following past mass shootings, there will be debate on whether there should be more federal funding to better understand and help individuals with mental illnesses. Integrating this work and funding into local school districts and police departments is a high priority. If it is not a part of short-term response to these crises, more funding could be included in government funding bills crafted later this year.
  • Increased Penalties for Use of Guns in a Crime.
    Some lawmakers have proposed mandatory minimum sentences for individuals who commit crimes with a gun. They will be discussed but likely rejected.
  • School Safety Upgrades.
    Grants to states that help local school districts enhance their security around and in schools will be addressed in this bill. It’s painful for all of us to see schools locked during the day with armed security on the premises, but this is where we are.
  • State Regulations.
    Different states have different laws on such matters as gun ownership, gun purchases, background checks, and the minimum age for an individual to purchase a gun. While the federal government can impose a national standard that would trump state laws, many lawmakers are cautious about maintaining states’ rights. States sometimes can act faster than Washington and likely will change their laws too even if we do see some national standards enacted. Voters are also looking to the states for action.
  • Social Media Issues.
    Many mass shooters leave a trail on social media that hints at their heinous intent. Many lawmakers cite a failure by social media outlets to communicate those clues to law enforcement authorities. This will be subject to discussion, but the imposition of new mandates on those companies is unlikely. However, it does add another headache for social media and technology companies that already face challenges in Washington on a lot of issues.
  • Bottom Line.
    It will be difficult to get the needed support of 60 Senators to pass an impactful bill in the Senate. Nevertheless, the public needs to know that lawmakers and the President are working on addressing this problem in a serious way. A comprehensive bill taking into account some provisions from the aforementioned categories would be responsive and impactful, but it will require bipartisanship. A limited red flag bill, coupled with more federal assistance for schools and mental health illness needs, seems entirely plausible to us. A bigger bill to expand background checks, make red flag rules mandatory and include the school and mental health funding, seems less likely but possible if lawmakers seize the moment and compromise beyond their comfort zones.

Other Issues

ESG Funds.

The SEC this week approved (in 3-1 votes) proposals to ensure that funds that consider environmental, social or governance (ESG) factors are not misleading investors with respect to the actual investment strategy. For two decades, the SEC has had a “names rule” that ensures that funds calling themselves (for example) equity or bond funds have 80% or more of their assets in those types of investments. In the first proposal, the SEC would apply this rule for the first time to types of investment strategy (e.g. value, growth, ESG) and not just to asset classes. The second proposal would require ESG funds to meet enhanced disclosure requirements. These proposals follow the SEC’s issuance of a landmark proposal on the corporate disclosure of climate risk. The comment period on that proposal will close in the coming weeks, and the SEC will hear concerns from businesses on its prescriptiveness and on the practical challenges of producing certain types of climate data. That proposal is also likely to be challenged in court. [This week, two leading Democrats in Congress also called on the SEC to issue a rulemaking on the corporate disclosure of diversity.] Climate and ESG are a cornerstone of SEC Chair Gary Gensler’s ambitious agenda, and he has urgency to finalize these proposals this year while Democrats still control Congress.

State and Local Tax Deduction.

The state and local tax (SALT) deduction, capped at $10,000 by the Tax Cuts and Jobs Act in 2017, continues to be a focal point for a select group of Democrats who represent taxpayers in high tax states. These Democrats have sought to include a repeal or increase of the SALT cap in the Build Back Better legislation, though that effort has stalled in the Senate. As such, these lawmakers have been searching for other options to provide their constituents with tax relief. Their latest attempt for relief has been to try to attach a provision to a bill funding the IRS to bar the agency from implementing a rule that blocks taxpayers from utilizing certain workarounds to the SALT cap that some states have put in place. This is a longshot effort. These funding bills need bipartisan support, and Republicans are in no mood to provide voters from blue states with relief from high state taxes. Nonetheless, while SALT relief is improbable this year it isn’t dead quite yet.

The Final Word

Is Polling Trustworthy Again?

Following the 2020 elections, it became clear that public polling was in a state of disarray. Prior to 2016, polling was widely viewed as the most reliable method of assessing the competitiveness of an election. However, following the defeat of Democratic presidential nominee Hillary Clinton in 2016, many people were quick to point out the inaccuracy of polling in a few key states. Most pollsters claimed these were aberrations due to the unexpected enthusiasm many voters had for President Trump (or for opposing Clinton), but even after adjusting their methodology ahead of the 2020 elections, the polling ended up being more inaccurate than in 2016. These results have led to a wholesale examination of polling and a willingness to experiment with new methods, such as text message polling and re-weighing of different demographics. The primary elections across 13 states this past month have provided the first look at how these updated polling methods are working, and so far the results have been very promising with polling holding its own in virtually every primary prediction. The remaining primary elections and the mid-term elections in November will be an important opportunity for pollsters to prove their reliability. However, even if they do a great job, it’s hard to imagine the general public will reverse its skepticism of polling for the 2024 presidential race.