How to lose control of Washington in a few easy steps...

Big Legislations are only as good as their PR blitz. Democrats are winning the PR battle on the $1.9T stimulus, unlike how they lost with ObamaCare. Also on the Right’s rhetoric, 2017 tax cut, & more.

Mar 17, 2021

Today’s email is a guest piece by James Cross, a team member of ours who’s currently taking a gap year working for House Minority Leader Rep. Kevin McCarthy (R-CA 23) on the Capitol Hill.

Deeply embedded in the swamp, James pitched the idea to me that he wants to write some politics emails – “Deep-Dive From the Hill” – about what he experiences and overhears first-hand. We hope this can gradually evolve to something weekly and have a nice diversification from my Bitcoin and SPAC emails… Please let us know what you think – feedback, comments, disagreements, or suggestions for future topics.

Pitching a Package

Big Legislations are only as good as their PR blitz. Democrats are hoping they can keep winning.

As the American Rescue Plan took its final form in the Senate, the center of gravity in American politics was arguably the office of Senator Joe Manchin (D-WV). Maybe the office of Senate Parliamentarian Elizabeth MacDonough, who ruled that the minimum wage hike and some other provisions in the package violated Senate rules and couldn’t be included. Perhaps it was the Democratic Cloakroom, or wherever Chuck Schumer convinced his pesky member from West Virginia to get on board with the $1.9T spending bill.

But once a big piece of legislation like this passes, pundits and politicians turn away from the drama brewing deep within the Capitol complex, and look to the rest of the nation. In the coming weeks, congressional Democrats will be returning home to advertise their latest achievement, while Biden and Harris crisscross the country to pitch the President’s signature package to voters. Massive, partisan pieces of legislation come only once in a while. History shows us that no matter how many dissenting Senators and endless votes the majority party withstands, they ultimately must turn policy into political points for their legislation to be a true success.

Democrats in the House and Senate have been winning the PR battle from the beginning, as they’ve pushed through some very popular spending items. But in some ways this is only the beginning. In this week’s Hill Deep Dive, we’ll take a look at what’s in this bill, major legislative breakthroughs from the past, sales campaigns that succeeded and failed, and how lawmakers can pitch this package.

How to Lose Control of Washington in a Few Easy Steps

For better or for worse, a lot of people on Capitol Hill have been there a while. The Democratic lawmakers who remember the passage of the 2009 stimulus bill and Obamacare are gleaning lessons from the past as they shape their pitch to their constituents. Start with the 2009 American Recovery and Reinvestment Act, which bears the most parallels to the American Rescue Plan (ARP) in terms of its timing and goal — healing the economy.

The consensus among Democrats about the messaging lessons from the 2009 bill is surprisingly consistent — Americans will only buy into a piece of legislation if leaders try to sell it. House Majority Whip Jim Clyburn has crystallized similar statements by almost every other Democrat leader, arguing that “one of the — if not the biggest — mistakes that Obama made was getting the Recovery Act done and not explaining to people what he had done.” That’s why Democrats are investing so much energy into promoting the legislation this time around.

Democrats have similar regrets about Obamacare, but the messaging conflicts around the 2010 healthcare reform were more complicated — and interesting. On Tuesday, Nancy Pelosi lamented that “the public didn’t know about the Affordable Care Act, and the administration was not exactly advertising it.”

That’s true, although the ACA was also far more controversial when it passed in 2010 with a filibuster-proof majority. While “Protecting Obamacare” against the GOP-backed challenge to it in the Supreme Court was a major talking point for Democrats this cycle, the ACA didn’t always used to be a winning issue. Republicans made their largest gains in the House since the 1940s in the 2010 midterms after the sweeping healthcare reform passed.

Most of those has to do with the law itself, a byzantine combination of regulations and spending that created exchanges on which Americans could buy subsidized insurance, protected people with pre-existing conditions, expanded Medicaid, and imposed penalties on employers and individuals who didn’t buy or provide health insurance plans. Politically, these policies are a mixed bag, with many Americans expressing consistent support for all but the latter provision, particularly the individual mandate — the requirement that Americans to pay for health insurance or pay a tax penalty. Unfortunately for congressional Democrats, Republicans were able to exploit backlash to this part of the law as they retook the House in 2010.

The other parts of the bill were in many ways too complicated to sell effectively to anyone who wasn’t an expert in healthcare policy. Speaker Pelosi has famously said “we have to pass this bill so you know what’s in it,” capturing just how difficult it was for her to give Americans a clear message about what this bill did. The lesson here is that the political value of a package can be undermined entirely by its least popular components.

Republicans have been slower to find a part of the Democrats’ 2021 bill that is politically toxic enough to seize upon, which is partially a product of the dynamics in Congress. Without 60 seats in the Senate, Democrats are consigned to reconciliation, which means they can only tax and spend; they’ve wisely chosen to only do the latter. Their margins in each chamber also prevented the inclusion of any components that were so radical that the electorate wasn’t ready for them.

Back in 2010, Pelosi could afford to lose 34 Democrats on the final vote. Today, she must be much more careful with her six-seat majority. Nonetheless, progressives like Sen. Bernie Sanders — after grumbling about cuts in unemployment benefits and the exclusion of the minimum wage hike — are lauding it as a victory for progressives. If Democrats are to learn anything from the ACA, they should realize that they’ll have to head off the GOP’s existing and future campaigns to highlight the most progressive, radical, or unsavory parts of the bill.

Trump’s Tax Cuts and Why Mitch McConnell Should Retire

When Trump shocked the world in 2016 and Republicans regained complete control of Washington, Speaker Ryan and then-Majority Leader McConnell were able to deliver on one of conservatives’ longtime promises: the sweeping tax reform that became President Trump’s hallmark legislative achievement. Mitch McConnell said on the Senate floor, “if we can’t sell this to the American people, then we should go into another line of work.” Well, Republicans couldn’t sell the massive tax cut, and Mitch McConnell hasn’t yet resigned -- gasp! a career politician is breaking his promises.

The Democrats won the PR war, and this time, it was less about the policy and more about the messaging. Polls conducted after the bill passed consistently found that around 20% of Americans believed their taxes had been reduced, while academic analyses of the policy consistently found that taxes fell for two-thirds of Americans. Under the bill, middle-class households saw the highest reduction in their effective tax rates, households on average received a $1400 tax cut, and the Child Tax Credit — which is most impactful for poor families — was increased.

All to say, there was plenty for Republicans to work with. In fact, they could’ve even employed some “soak the rich” rhetoric themselves. The top bracket ended up paying a higher share of federal taxes under the bill, and taxes increased tremendously for high earners in states with high taxes when the State and Local Tax Deduction was capped.

Democrats won the PR war for several reasons: they effectively played into voters’ existing suspicions — in this case, that Republicans are the party of tax cuts for the rich — and they had their own set of statistics that cast the bill as a spending blowout for the rich. The best the GOP could do was Sarah Huckabee Sanders’ analogies about journalists drinking beers (readers can explore this rabbit hole at their own risk here).

The Right’s Rhetoric Right Now

Lawmakers and strategists on both sides of the aisle could learn from past blunders and success. Republicans, in particular, will be looking for inspiration as they face an uphill battle to convince Americans to turn against the bill. Their messaging so far has been consistent, if relatively muted.

In interviews, speeches on the House and Senate floors, and even ads, Republicans have been highlighting that “only 9% of the bill is devoted to fighting the virus” (i.e., vaccines and testing), 95% of the funding for education will be spent in FY2022 or later (hence, the money isn’t for reopening), much of the funds from previous COVID bills haven’t been used, the bill “bails out” blue states while leaving red states out to dry, and Democrat pet projects like “Pelosi’s subway” and “Schumer’s bridge” were given funding (at least in the original bill). Overall, Republicans made the sorts of arguments about fiscal responsibility that were seldom heard in Washington during the Trump years.

These are valid critiques, but Republicans either don’t have the right message or they’re not reaching enough Americans with it. Polls vary, with most finding that overall support for the bill is 60% to 70%, while 40% to 50% of Republicans back it. To be fair, a massive spending bill that will send out checks, more unemployment benefits, and increased tax credits for families is inherently difficult to oppose.

Perhaps the GOP will indeed see the numbers move once they launch their own PR campaign and invest in ad spends in important states and districts. According to a memo from the NRCC — the campaign committee for House Republicans — obtained by Politico, polling of battleground districts shows that “just 44% of voters, including just 38% of Independents, approve the bailout to mismanaged state governments.” The memo also notes that Obama’s 2009 stimulus package was popular when it passed, but most voters disapproved of it by the midterms.

Republicans are betting that as Americans learn what’s in the bill, they’ll cool to it. But time may not be on their side. As the latest Covid numbers and the February jobs report indicate, Biden took the reins at the nadir of the nation’s public health crisis, and right as the economy seems to be turning a corner. There are several messages that could be essential for the GOP’s long-term efforts to taint public perception of this bill, and they don’t seem to be getting enough attention.

First of all, Republicans continually talk about funding for projects that are unnecessary or wasteful, without talking about where the money could have been spent. Rep. Dan Crenshaw (R-TX) gave a critique that could be amplified more, saying, “The COVID package costs every single American $5,750 and then gives some people $1,400.” He’s right -- if the bill only included stimulus checks, every American could receive a stimulus check four times larger than the targeted $1,400 check that Democrats say makes this bill popular. These are the sorts of statistics that helped Democrats pummel Trump’s tax cuts — simple, clear metrics that highlight waste or hypocrisy in a piece of legislation.

What if Republicans stopped talking about too much wasteful spending, and started talking about where their priorities would have been if they passed a big spending bill? Could schools reopen if aid to states were tied to returning to school? Could a massive infusion of funding dramatically accelerate the vaccine rollout and bolster testing? Could the bill have funded small businesses and promoted employment instead of expanding unemployment benefits?

Most of all, Republicans have been late to point out that this COVID relief bill, according to even its proponents on the left, is more about a progressive expansion of welfare than “crushing the virus.” Press Secretary Jen Psaki has called it “one of the most progressive pieces of legislation” in recent history and prominent House progressive Rep. Ro Khanna (D-CA) is calling it an “ideological revolution.”

Republicans could use this rhetoric as a wedge between moderates and progressives across the aisle, and attempt to force Democrats to define the bill as either relief for a public health crisis or a sweeping overhaul of the welfare system. Throw in the fact that all this spending cut could trigger tens of billions of cuts to Medicare and other programs if Senate Republicans refuse to waive certain budget rules, and it’s easy to see how Republican messaging could show the drawbacks of expanding the safety net.

All in all, Republicans would benefit from simply attacking this legislation more — as Democrats learned with the 2009 stimulus and the ACA, you can’t win the battle to shape the narrative if you don’t even try.

It’s the Economy, Stupid

In the end, as the saying goes, “people vote with their pocketbooks,” and Republicans should prepare themselves to exploit mediocre economic conditions in the midterm season. As with Obama’s 2009 stimulus bill, the most important political impact of this bill will likely be its overall economic impact. The vast majority of Americans believed the financial crisis package failed to reduce unemployment and voters took this discontent with Democrats’ economic agenda to the polls in 2010. Likewise, if the economy is humming in 2022, congressional Democrats will credit the American Rescue Plan, and Republicans will have trouble swaying voters by pointing to wasteful spending and arguing that the economy was already doing just fine.

If the economy isn’t doing well in 2022, however, Republicans need to be prepared, especially if the ARP triggers higher inflation. Critics of the Biden plan from all ends of the political spectrum consistently point to inflation as the principal threat it poses to the economy in the short-term. Unfortunately for Republicans, this is 2021, not 1980, and inflation has been primarily an academic preoccupation, not a political issue, for decades.

Predictions in politics are always dangerous, but if the GOP were to loudly remind Americans that rising prices do real damage to households — and that overspending is often responsible for inflation — they’ll be better able to capitalize on possible economic distress in 2022.

Ultimately, the best reason for voters to oppose legislative action isn’t that it was wasteful and didn’t help Americans enough; voters get angry if they think the Democrats have caused them harm, in this case financially. As with the ACA, inefficiencies in the modifications to healthcare law didn’t resonate with voters as much as this simple message: “the government is going to tax you if you don’t have healthcare.” The downside of talking up inflation right now is also probably low; it’s hard to imagine that any voters in ‘22 will care if an old Republican talking point never really panned out.

Surprise! People like Getting $1400 Checks

An analysis of Democrats’ strategy has been noticeably absent from the commentary here. For the most part, that’s because this messaging war is theirs to lose, and they’re already taking the initiative in promoting the straightforward appeal of stimulus checks, unemployment benefits, and money for small businesses and poor families.

House Majority Forward, an outside group that supports House Democrats, is spending $1.4 million on TV to promote the package in swing districts. The DCCC, the campaign committee for House Democrats, has released its first set of ads highlighting the achievements of the ARP. They hit on a lot of expected themes, noting stimulus checks and reductions in child poverty, but also implying that the bill will re-open schools, something Republicans are sure to contest.

Expect offensive DCCC ads to forcefully remind voters that every swing-district Republican voted against the package. When GOP lawmakers go back home and tout provisions of the bill they support, as Sen. Mike Crapo (R-ID) has done with small business funding, Democrats will continue to call them out. Biden and his team’s victory lap to boost the American Rescue Plan will also bring dividends for congressional Democrats where he travels.

It is possible that the economy won’t be as big of a voting issue in 2022, or voters will simply forget about the plan come November. But overall, Democrats seem like they’re in prime position to continue the use of the ARP in their messaging all the way to the midterms. At least that’s their plan.

Some argue that how politicians spin a package like this rarely matters, and voters only care about how a policy directly affects them. That's a minority view within the punditocracy, but even if that’s the case, Democrats will still need to do whatever they can in the short term to make sure they get credit for those stimulus checks reaching bank accounts in the coming months. And if big bills only matter politically insofar as they affect broad economic conditions, Democrats must ensure they use the ARP to take ownership of a roaring comeback. Meanwhile, Republicans will hope to make them (and this bill) responsible for a tepid recovery if the economy is somehow stagnant.

Another complicating factor for this set of midterms is that a six-seat swing determines control of the House, and only one seat protects Senate Democrats from returning to the minority. Republicans don’t need to count on broad politico-economic trends; the NRCC will be examining new maps after redistricting, targeting Democrat-held districts where Trump beat Biden, and finding just the right candidate for each crucial race as their tactical calculus gets increasingly specific.

The story will be similar in the Senate, as Republicans will be defending some open seats, but only need to unseat one Democrat to gain control of the Senate. They’ll be spending big against whichever seat or two they deem to be the most vulnerable (AZ and GA, in all likelihood).

Ultimately, when political prophecies are combined with economic forecasting, it’s hard to predict much of anything. But we can say with certainty that Democrats have given Americans a whole bunch of money, and, for now, everyone seems to like it.

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