capitol building

This Week:

The Senate passed legislation to improve safety and privacy protections for children on social media platforms and approved various Biden administration judicial nominees. It also passed legislation to authorize infrastructure projects to improve US waterways. The House was out of session.

Next Week:

Both the Senate and House will be out of session and return to Washington on September 9.

The Lead

Defining Harris.

Vice President Harris is poised to receive the formal party nomination as the party prepares for its convention later this month. She has brought the presidential race close to a draw in national polling. Her honeymoon period may be closing soon, though she likely will continue to have some goodwill through the convention. There is now greater urgency for both the Harris and Trump campaigns to define who Vice President Harris is to voters. While voters know Biden and Trump well, they know less about Harris, her background and her policy views. That is why both campaigns initiated public ad campaigns this week to try to define the Vice President (in very contrasting ways, of course). What voters think of Harris in November may be very different than what they think of her now because of this effort. This process will continue through November and will be a major determinant of who wins the election.

National Polling.

Most new national polls show a very tight race as we enter August. However, winning the popular vote does not always translate into general election wins. Hillary Clinton won the popular vote in 2016, but Trump won the election with the electoral college vote advantage. Most national polls try to reflect the overall US population, including where voters live and their party preferences. While this polling metric has long been the benchmark, it has become less useful in projecting a winner since Republicans have won the race in two of the last six races despite not winning the popular vote (but by winning the electoral college). The upshot is that a Democratic candidate typically needs to poll a few points better than even to have a true advantage. While Harris has drawn Trump to a virtual draw in most national polls, she likely needs to be winning those polls by three points or more to offset Trump’s advantage in the electoral college. The more accurate polls to watch through the campaign season are those in the handful of swing states that will determine which candidates win the electoral vote (we will cover the electoral process in detail in the fall).

Where is RFK Jr.?

In the past month, both Democrats and Republicans seem to have unified around their party’s respective nominees with both Harris and Trump receiving 93% support from within their respective parties. The biggest loser from these intra-party shifts has been independent candidate Robert F. Kennedy Jr. His polling numbers have been in free fall recently. While he was polling in the low-to-mid double digits only a month ago, recent polls have shown him in the mid-single digits, often down to only a third of the support he previously had. His fundraising also has been abysmal recently. He needs to shake up his campaign soon and risks becoming irrelevant. He would get a boost on being included in the next presidential debate whenever that occurs, but he will have a difficult time qualifying to be on stage. RFK’s campaign is in trouble, and, as of today, his presence in the race doesn’t appear to be a major factor in determining which of the two major party candidates will win.

Other Issues in Play

Supreme Court Reforms.

President Biden announced his support for a series of major Supreme Court reforms, which include legislation to establish term limits for the justices and an enforceable code of ethics. The announcement is a major turnaround for Biden, a former chair of the Senate Judiciary Committee. He has long resisted calls to make substantive changes to the Supreme Court. While his change of heart likely reflects a pragmatic realization that it’s an issue that will energize the Democratic base in November, he clearly has other concerns about the direction of some of the Court’s decisions over the past year. The President isn’t alone in his views. In recent polls, the Supreme Court has only 36% approval compared to 56% disapproval. This is a drastic change compared to only two decades ago when public approval typically hovered in the low to mid 60% range. Biden’s proposed changes are a wish list for the Democratic base and therefore more campaign talking points than a basis for the passage of legislation anytime soon.

Crypto Focus.

There continues to be a lot of buzz about cryptocurrencies and digital assets on the campaign trail and in Congress. Former President Trump recently gave a speech where he expressed support for the crypto industry and indicated he would provide a favorable regulatory environment for digital assets if he were to win in November. A recent Supreme Court decision that rolled back court deference to regulators may be a brake on SEC regulation by enforcement of the crypto industry, and it also makes it more incumbent upon Congress (which collectively doesn’t know a lot about these issues) to establish a clear and comprehensive regulatory framework on digital assets. The House passed a bill in May with bipartisan support that would set a broad regulatory structure to delineate jurisdiction over digital assets between the CFTC (commodities) and the SEC (securities). Meanwhile, the leaders of the Senate Agriculture Committee continue to work on a more narrowly scoped bill. With a small and closing window of time for legislative action, it seems unlikely that Congress will be able to pass a major crypto bill this year. Regardless of who wins the presidential election, regulators are likely to have their hands somewhat tied on the regulation of digital assets.

See You in September.

  • In Washington. The primary focus in Washington next month will be passage of a continuing resolution that will extend current levels of government funding into fiscal year 2025, which begins on October 1. Failure to do this will result in a partial government shutdown on that day (this is a challenge every year). There is bipartisan support for passing such a bill, but the process will still feature some drama and uncertainty. Plenty of lawmakers are frustrated that Congress is missing another deadline to have all of its funding bills passed by October 1. At least a handful of lawmakers will try to block the process. Congress will also prioritize the passage of a defense authorization bill, which will address various defense funding and personnel issues for the next fiscal year. There is also a September 30 deadline for passing a comprehensive farm bill that will reauthorize federal farm programs and the federal food stamp program, but lawmakers are not close to passing an updated bill. They will likely extend current programs for a year and try to pass a new bill in 2025. Beyond that, the agenda will be limited as Congress is eager to return home and campaign.
  • On the Campaign Trail. September will be a crunch time in the elections. The small subsection of truly undecided voters, less than 10%, don’t really pay attention until close to when they vote (Sept-Nov). President Biden and former President Trump were scheduled to debate on September 10, but that is now up in the air with Biden’s withdrawal. Still, we believe a Harris-Trump debate sometime in September is nearly certain. A debate with the two vice president candidates will also likely be arranged after the presidential debate in September. Early voting begins in eight states (IL, MN, MI, PA, SD, VT, VA, WY) as early as September 20. Trump’s sentencing is tentatively scheduled for September 18, but that could be postponed. Hunter Biden goes to trial on September 5 for tax evasion charges, but interest in his case may wane due to his father’s withdrawal from the race. More broadly, the race to define Harris will accelerate (as we mentioned above), and both Trump and Harris will be on the campaign trail full-time and in attack mode in the various swing states.

The Final Word

VP Impact.

Like you, we await the selection of the Democratic vice-presidential candidate. The choice will be heavily scrutinized. However, as we have previously mentioned, rarely does the VP nominee move the needle one way or the other for voters come November. Their impact traditionally has been limited to a small and positive (and often short-lasting) bump in polling for the presidential nominee when they are announced at the convention. Trump sought to bring youth, appeal to working class voters and adherence to a more populist agenda to his ticket with the selection of Senator JD Vance. But Vance’s record of policy accomplishments is relatively thin and it’s not yet clear he adds a lot to the Trump vote beyond the base. Harris will seek to walk the tight line of accommodating her base voters while appealing to the undecided voters in the swing states. Despite all of these calculations, does it really matter? Most will instead focus on their support or disdain for Harris and Trump and vote accordingly.