The Elevator Speech Overview

by Manatt, Phelps & Phillips, LLP

The House and Senate were both on recess this week. On Tuesday, the U.S. suspended the operations of Syria’s U.S. embassy and consulates as the Syrian civil war enters its fourth year.  Also Tuesday, details of an NSA surveillance program - known as MYSTIC - were published, outlining the program’s “time machine” capabilities that allow audio playback of any call placed within 30 days in the target country. The Federal Reserve held a two-day policy meeting this week and announced further reductions to its stimulus campaign. Following the meeting Wednesday, in her first news conference as Fed Chairwoman, Janet Yellen spooked markets when she suggested the Fed might raise rates in approximately six months. On Wednesday, House Speaker John Boehner signaled that the House would not take up the bipartisan Senate bill to retroactively extend emergency unemployment insurance benefits. Commerce Department officials are seek to assuage fears that the U.S. is ‘abandoning’ the Internet after Friday’s announcement that it would transition control over the Internet’s address system to ICANN, an international nonprofit. Following several developments seen as favorable to the GOP, nonpartisan observers are raising the odds of Republican victories in several competitive midterm election races; the Senate race in Georgia, however, had its odds shift in Democrats' favor. Health industry officials are expecting insurance premiums under the Affordable Care Act to more than double in some areas of the country next year, fears that have recently been downplayed by Administration officials. Republican campaign operatives are calling a data-crunching program, known as “Honeybadger,” instrumental in Republican David Jolly’s Florida special election victory last week.

As expected, Crimea voted to join Russia in its Sunday referendum. With initial sanctions against Russian and Ukrainian officials announced Monday, the Russian Duma’s move to approve the annexation of Crimea prompted President Obama to announce a second round of sanctions on Thursday. In response, Russia has sanctioned nine U.S. lawmakers.

The Week's Top 5

Here’s a look at some of the top political stories of the week:

  • Fed Cuts Bond Buying by Another $10 Billion—“The Federal Reserve further curtailed its economic stimulus campaign on Wednesday, even as it said the effort would continue for the foreseeable future given the enduring consequences of the Great Recession. The Fed, as expected announced it would reduce its monthly purchases of Treasury and mortgage-backed securities by $10 billion, to $55 billion, because of its confidence that the four-year-old recovery is finally becoming self-sustaining. The Fed also signaled its intention to keep short-term interest rates near zero after the unemployment rate falls below 6.5 percent. Investors, however, drew the conclusion that the central bank might begin to raise short-term interest rates, which it has held near zero since December 2008, well before the end of 2015. But Janet L. Yellen, in her first news conference as the Fed’s new chairwoman, sought to offset that optimism, saying the committee intended to raise short-term rates only gradually, because the economic environment remains weak…” (NYT)

  • U.S. and Russia Swap Sanctions Tit for Tat Over Crimean Crisis—“President Obama on Thursday announced that he would expand sanctions against Russia, blacklisting wealthy individuals with ties to the government and a bank used by them, and opening the door to broader measures against Russian energy exports. The measures deliver on Mr. Obama’s warning this week that the United States would ratchet up the costs for Russia if President Vladimir V. Putin moved to annex the breakaway province of Crimea. But they were aimed at forestalling further Russian incursions into eastern Ukraine, after what Mr. Obama described as troubling Russian military movements. In a tit-for-tat response, Moscow banned nine American officials from entering Russia, including Speaker John A. Bohener, the Senate Democratic Leader, Harry Reid of Nevada, Senator John McCain of Arizona, as well as three senior White House officials. The Russian action was met with a mixture of bemusement and mild defiance in Washington…” (NYT)

  • O-Care premiums to skyrocket—“Health industry officials say ObamaCare-related premiums will double in some parts of the country, countering claims recently made by the administration. The expected rate hikes will be announced in the coming months amid an intense election year, when control of the Senate is up for grabs. The sticker shock would likely bolster the GOP’s prospects in November and hamper ObamaCare insurance enrollment efforts in 2015. The industry complaints come less than a week after Health and Human Services (HHS) Secretary Kathleen Sebelius sought to downplay concerns about rising premiums in the healthcare sector. She told lawmakers rates would increase in 2015 but grow more slowly than in the past… Her comments baffled insurance officials, who said it runs counter to the industry’s consensus about next year… The hikes are expected to vary substantially region, state, and carrier… After this story was published, the administration pointed to some independent analyses that have cast doubt on whether the current mix of enrollees will lead to premium hikes… But insurance officials are quick to emphasize that any spikes would be a consequence of delays and changes in ObamaCare’s rollout… Insurers will begin the process this spring by filing their rate proposals with state officials.” (The Hill)

  • Obama Administration Denies ‘Abandoning the Internet’—“A top Commerce Department official pushed back Wednesday against concerns that the Obama administration is opening the door to an Internet takeover by Russia, China, and other authoritarian regimes. The fears stem from the Commerce Department’s announcement last Friday that it plans to give the Internet Corporation for Assigned Names and Numbers [ICANN], an international nonprofit group, control over the technical system that allows computers to connect to Web addresses… He said the U.S. government will continue to push ICANN to adopt policies that are in the interest of the United States and an open Internet. The transition to full ICANN control of the Internet’s address system won’t happen until October 2015… But having the ultimate authority over the domain-name system was the most important leverage the United States had in debates over the operation of the Internet… The House Energy and Commerce Committee will hold a hearing on the plan next month and had promised 'aggressive oversight.'" (NJ)

  • Inside the Republican Database Behind David Jolly’s Upset Victory—“To hear Republican strategists involved with David Jolly’s campaign tell it, the newest Republican in Congress owes his victory to a “Honeybadger.” That’s what officials at National Republican Congressional Committee call the voter database they’ve spent a year tirelessly building from scratch…Led by Honeybadger, a continually updating system that integrates real-time data with existing voter files, they [NRCC leaders] say they were able to track voters they had to target, discover what messages would motivate them to go to the polls, and project exactly how much ground Jolly had to recover when early absentee voting didn’t swing his way… Democrats roll their eyes at the suggestion they were outwitted last week. They may have reason to do so: Many of the tactics described… have been used by Democrats before… But the chest-thumping from Republicans should nonetheless give Democrats and their candidates pause. The much-ballyhooed technology and data gap between the two parties is supposed to be one of the party’s few advantages [in] an otherwise tough year..." (NJ)

The Week Ahead

The Senate and House are both back in session next week.

  • A bilateral meeting between President Barack Obama and Chinese President Xi Jinping will be held in the Netherlands on the sidelines of the Nuclear Security Summit taking place March 24 and 25.

  • Arriving March 20, First Lady Michelle Obama will be in China for week long “cultural exchange,”  during which she will spent time with the Chinese president’s wife, Peng Liyuan. She will be accompanied by her daughters and mother.

  • The House Appropriations Committee will be busy examining the spending requests for individual agencies and programs, with hearings focusing on defense and veterans’ spending March 25, 26, and 27.

  • On March 25, the Senate Foreign Relations Committee will hold a hearing at 2:30 p.m., “Syria After Geneva: Next Steps for U.S. Policy.”

  • Weekly schedules:

    • Although not yet released at the time of publication, the weekly legislative schedule for the House will be posted here.

    • The Senate schedule for the week is available here.

    • Although not yet released at the time of publication, the President’s weekly schedule will be posted here.

Elections: 2014

With the 2014 mid-term campaign season already underway, here’s a look at some developments in the electoral landscape.

  • Key Developments

    • The Cook Political Report changed its ratings of several key Senate races, updating them to reflect recent developments in the political environment. Indicating positive developments for the GOP, Alaska, Louisiana, and North Carolina all shifted from “Lean Democratic” to “Toss-Up”; Colorado and New Hampshire were changed from “Likely Democratic” to “Lean Democratic.” In some good news for Democrats, Georgia was changed from “Lean Republican” to “Toss-Up;” Mississippi moved from “Solid Republican” to “Likely Republican;” and Hawaii and Massachusetts shifted from “Likely Democratic” to “Solid Democratic.” Full race ratings and explanations can be found here.

    • Top Republican operatives are now saying the odds of a Republican Senate takeover is around 55%, up from 45% this winter.

    • The Democratic Senatorial Campaign Committee (DSCC) outraised the National Republican Senatorial Committee (NRSC) by more than a million dollars in February. The DSCC raised $6.8 million in February, finishing with $18.1 million cash on hand and $1.2 million in debt. The NRCC raised $5.47 million, giving it $12.75 million cash on hand and no debt.

    • On March 14, Former Massachusetts Sen. Scott Brown officially launched an exploratory committee for the New Hampshire Senate race in which he will challenge incumbent Senator Jeanne Shaheen (D).

    • Both the Republican National Committee (RNC) and the Democratic National Committee (DNC) are spending heavily to support state party apparatuses ahead of the November midterm elections. In the period from January 1, 2013 to January 31, 2014, the RNC has contributed the most to Virginia, Pennsylvania, Florida, and Michigan; the DNC has contributed most heavily to Virginia, Iowa, Florida and Ohio. Spending totals by state can be found here.

    • A national survey conducted by Public Opinion Strategies and Global Strategy Group found that for the first time, fewer than half (48%) of all voters say that live TV is their primary source for watching video content. With live TV advertising still a primary medium for communicating with voters, the trend highlights the difficulty political campaigns face in reaching critical swing voters.

  • Illinois Primary

    • Held March 18, the second primary in the nation held no major surprises other than a tighter margin of victory for candidate Bruce Rauner in the GOP gubernatorial primary. Rauner captured 40% of the vote while runner-up Kirk Dillard finished with 37%.

    • Rauner’s victory sets the stage for what is certain to be an expensive and bitterly fought general election race against incumbent Democratic Governor Pat Quinn.

    • In IL-13, Ann Callis won the Democratic primary with 55% of the vote and will challenge incumbent Republican Rep. Rodney Davis in the general election. Rep. Davis survived his Republican primary with 55% to challenger Erika Harold’s 41%.

    • In IL-16, Republican incumbent Rep. Adam Kinzinger defeated his primary challenger 78% to 22%. Full results of all IL races can be found here.

  • Retirements

    • There were no new retirement announcements this week.

Public Opinion

New Hampshire GOP 2016: The Northeast Republican Leadership Conference Presidential Survey conducted by WPA Opinion Research in Nashua, NH last weekend shows a crowded field for the 2016 Republican presidential nomination:

  • 15%-Sen. Rand Paul (R-KY)

  • 13%-Gov. Chris Christie (R-NJ)

  • 11%-Dr. Ben Carson

  • 11%-Gov. Scott Walker (R-WI)

  • 11%-Former Sen. Rick Santorum (R-PA)

  • 9%-Gov. Bobby Jindal (R-LA)

  • 8%-Former Gov. Jeb Bush (R-FL)

  • 4%-Sen. Ted Cruz (R-TX)

  • 3%-Sen. Marco Rubio (R-FL)

  • 3%-Rep. Paul Ryan (R-WI)

  • 3%-Former Amb. John Bolton

Colorado 2014: According to a Public Policy Polling poll conducted March 13-16:

  • Senate:

    • Incumbent Mark Udall (D) over Randy Baumgardner (R)= +7

    • Mark Udall (D) over Cory Gardner (R)=+2

    • Mark Udall (D) over Owen Hill (R)=+5

  • Gubernatorial

    • Incumbent John Hickenlooper (D) over Bob Beauprez (R) =+10

    • John Hickenlooper (D) over Greg Brophy (R)=+15

    • John Hickenlooper (D) over Scott Gessler (R)=+12

    • John Hickenlooper (D) over Mike Knopp (R)=+17

    • John Hickenlooper (D) over Tom Tancredo (R)=+14

Recommended Reading

National Journal: “The World Wide Web Turns 25”

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Manatt, Phelps & Phillips, LLP | Attorney Advertising

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