Washington Weekly: China Visit

The Senate approved Trump administration nominees. The House was out of session.

The Senate will continue to confirm Trump administration nominees and will vote on name, image, and likeness (NIL) legislation for college student athletes (see below). It also may consider legislation regarding data centers and energy permitting. The House will be out of session until the week of November 9.

China Visit.

After a wide-ranging and sometimes combative speech at the United Nations this week, President Trump rolled out the red carpet for Chinese President Xi Jinping for a summit and state dinner. The visit quickly yielded an extension of last year’s trade truce to January 10 (it was set to expire on October 10). Particularly with China’s demonstrated ability to use its dominance in the mining and processing of critical rare earth metals as leverage, it was in the interest of both sides to maintain the détente on trade. Another key issue in US-China relations is artificial intelligence (AI). President Trump has been dismissive of public concerns about safety and other risks of AI. With each leader seeing AI development as essential in its competition with the other, it’s not surprising that the discussions did not yield much tangible progress in addressing AI risks (beyond a notification system around security incidents and further dialogue).

Iran.

With ongoing concerns about the economic impact and costs of the war in Iran likely to be an important issue in the November elections, the Senate this week held yet another vote on war authorization. While Republicans mostly continue to support publicly the administration’s war effort and mostly supported the authorization, four Republican Senators joined all but one Democrat in voting to oppose the war. With no end to the war in sight, a key question will be how Congress will pay for the rising fiscal cost of the war. The Pentagon’s official estimate is $44 billion, but outside analysts have had significantly higher estimates. Republicans may try to take a shot at trying to pass a reconciliation bill with Iran war funding after the election. However, there are major hurdles to getting this done during the lame duck period. Otherwise, there will need to be an effort to build bipartisan support for a supplemental bill for war funding. However, given Democrats’ opposition to the war, there are even bigger obstacles with that approach. There’s an imperative to pass this spending (in particular, to rebuild the military’s depleted munitions supply), but there is no clear path forward.

College Sports.

The Senate is nearing the final vote on bipartisan college sports legislation after making progress on the bill this week. Senators are still working through potential amendments. Several Senate Democrats are seeking changes that would allow college athletes to collectively bargain and would protect personal injury lawsuits involving student athletes. The bill would establish federal standards for name, image, and likeness (NIL) compensation, athlete transfers, and eligibility. It also would target antitrust protections for the NCAA, conferences, and schools. The legislation has maintained bipartisan support, though negotiations over amendments pushed a final vote into next week. Once the Senate passes the bill, it will need to maintain momentum through the midterm elections for the House to consider it during the lame duck session.

Crypto and Taxes.

Over the summer, we discussed interest in a tax bill that would address crypto issues, such as the tax implications for mining crypto and wash sales rules. The House Ways and Means Committee approved such a bill last week just before the House adjourned until after the election. This bill passed the committee with a strong bipartisan vote. The Senate is also interested in similar legislation but is a little behind the House in crafting its version. While the Senate’s intentions are similar to the House, it remains to be seen if their process will be as well. There is chatter about a year-end bipartisan tax bill and this would be a strong contender to be included. However, given the busy to-do list for Congress and the likely outcome of the election, we are skeptical of this tax bill becoming law this year.

Permitting Reform.

After months of bipartisan Senate negotiations, lawmakers appeared close to reaching an agreement on permitting reform before talks hit a roadblock. Senate Republicans and Democrats had made significant progress on a package that would speed up approvals for energy and infrastructure projects by streamlining environmental reviews and legal challenges and facilitating the development of interstate transmission lines. The emerging agreement also included protections against data center driven utility cost increases. The Trump administration also made a concession this week by offering to allow stalled wind and solar projects to move forward (a key concern for Democrats). Senate Republicans and the Trump administration pushed for a vote before the elections, but Senate Democrats sought more time to review the legislation and wanted additional clarity on the administration’s commitments to renewable energy projects. With a vote now unlikely before the elections, negotiations could resume during the lame duck session, though the Trump administration has indicated that its current concessions on wind and solar projects would not remain on the table. 

the election, but politicians who don’t take the issue seriously may find themselves removed from the debate With Members of Congress heading to their states and districts to campaign and the midterm elections just over a month away, attention in Washington is increasingly turning to the campaign trail. Several issues are likely to shape the political conversation in the final weeks before Election Day.

Data Center Flashpoint.

Data centers have rapidly become one of the country's most politically toxic issues. With Members of Congress at home until the elections, they are sure to hear from their constituents about their concerns. What was once a bipartisan economic development win is now generating opposition across the political spectrum, with communities pushing back against proposals to build new data centers over concerns about power consumption, water use, noise, and impacts on property values. As broader public attitudes toward AI continue to sour, policymakers at all levels of government are struggling to strike the balance between ensuring that the US remains at the forefront of technology while also taking into account the public’s concern. AI and data center policy won’t be settled before entirely by voters.

The Price of Gas.

In Washington, there’s an old adage; tell me the price of gas on election day and I’ll tell you the results. With the elections rapidly approaching, Republicans are hoping the adage doesn’t play out this year. However, traditional midterm trends already favor the party out of power. And with the combination of the president’s sinking approval rating (see below) and rising fuel costs, even traditionally safe Republican seats are on notice. Particularly concerning for Republicans is the surge in diesel prices, which are hitting record levels and placing additional pressure on farmers, trucking operators, and rural communities in key agricultural states. For the past decade, rural communities have been the bedrock of Republican support. If the increased cost of diesel, among other factors, begins to put those seats into play, then the potential for a blue wave could come into view.

Presidential Approval.

Polling this week shows that President Trump’s standing with voters has slipped to a new low-water mark, with multiple national surveys this week putting his approval rating at the weakest level of his presidency. The decline reflects growing concerns over the economy, cost-of-living pressures, and a broad erosion of support on issues that were once political strengths. While approval ratings can fluctuate, history shows that a president’s job approval is often one of the strongest indicators of his party’s midterm fortunes. From Obama in 2010 to Trump in 2018 and Biden in 2022, presidents with underwater approval ratings have seen their parties suffer significant congressional losses. With the elections just over a month out, and ballots already starting to be cast, Trump’s all-time-low numbers are adding to Republican anxiety that the political headwinds facing the White House could soon become a gale force challenge for GOP candidates.