A Major Shift on Regulations; Confusion on China; Trump Infuriates GOP Leaders
Author: Greg Valliere
July 5, 2022
IN STRIKING DOWN the Biden Administration’s regulations on emissions — from power plants to auto tailpipes — the court ruled that the Environmental Protection Agency does not have the authority to regulate “major questions” without input from Congress.
THIS HAS POTENTIALLY ENORMOUS IMPLICATIONS for other regulatory policies, including the Securities and Exchange Commission’s imposition of new transparency rules and the Federal Trade Commission’s antitrust policies. Virtually every new regulation would be subjected to litigation.
INDUSTRY LOBBYISTS tell us that any major new Biden regulation almost certainly would face a challenge that would land at the conservative Supreme Court. The era of aggressive regulation has ended; the issue is how significantly it can be rolled back.
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CONFUSION ON CHINA: Two major policy initiatives toward China will be in the spotlight this summer. First, some easing of China tariffs seems likely, although bitter divisions persist within the Biden Administration. One camp favors keeping leverage against Beijing, while the other camp supports an easing of tariffs, which could be portrayed as combatting inflation.
SOME MODEST TARIFF RELIEF seems likely, although the impact on inflation would be minor. For Joe Biden, any easing of tariffs will expose him to criticism that he’s “soft on China.”
THE SECOND CONTROVERSY is the stalled U.S. Innovation and Competition Act, or USICA, which includes $52 billion for U.S. semiconductor manufacturers to compete with China.
SENATE MAJORITY LEADER Mitch McConnell is threatening to kill the measure as long as Democrats pursue the remnants of Biden’s Build Back Better bill, which includes prescription drug price controls, tax hikes on the wealthy and corporations, and energy and climate provisions.
INCENTIVES FOR U.S. MANUFACTURERS has strong support in Congress, but McConnell has the votes to scuttle the plan. Like most Republicans, he adamantly opposes drug price curbs. We still think there’s a chance that Congress will aid manufacturers and pass a scaled-back Build Back Better bill, but time is running short and odds have slipped below 50% that either can pass.
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REPUBLICANS ARE FURIOUS OVER DONALD TRUMP’S apparent plan to announce — soon — that he’s running for president. Trump reportedly may declare his candidacy later this summer, which would would make him the biggest political issue heading into the Nov. 8 election.
ONE REPUBLICAN WE TALKED WITH this weekend explained the anger: “We have a winning hand — inflation and the shaky economy — and should take the House and Senate.” But if Trump makes the campaign all about the “stolen election,” he will obscure the Republican message, this source says. If Trump is under indictment by late summer, that would enormously complicate the GOP’s message.
AFTER A MONTH OF PUMMELING by the Jan. 6 committee, Trump clearly has been damaged. He wants to reclaim the limelight, but many Republicans have moved on; they have no interest in re-litigating the 2020 election. More importantly, Republicans have a new star, Gov. Ron DeSantis of Florida.
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