Yesterday’s news that presumptive Democratic Presidential nominee Joe Biden selected California Senator Kamala Harris as his running mate is the most consequential campaign-related news since Biden emerged from the primaries as the party’s frontrunner in early March.
Senator Harris’ law enforcement background and record (prior to her election to the Senate in 2017 she was former chief law enforcement officer of California, serving as attorney general from 2011-2017) will be under an intense media microscope.
We also expect attacks from the Trump campaign to begin immediately; this announcement is a fresh “opportunity” for a campaign that has struggled to identify an effective angle of attack on Biden and is trailing in most national polls.
Senator Harris is also the first Black woman and first person of Indian descent to be nominated as a vice presidential candidate by a major party. And while her selection is historic and meaningful, it joins a dizzying array of variables – including a persistent pandemic, a recession, and a serious focus on racial inequity – that will impact the November elections.
In light of the unprecedented situations shaping this election, companies need to go one level deeper and undertake a more complex analysis to ascertain how the outcome of this election – and the personnel voted into office – will shape the policies that impact their business for the next two to four years. To help, we have identified five “below the radar” variables for companies to consider that will influence politics, policymaking and advocacy in 2021.
- Politics of a Narrow Senate Majority
Political pundits will expel a lot of hot air predicting Democratic or Republican control of the Senate. And majority control does have many advantages such as determining which party chairs committees. In a narrowly divided Senate, however, companies should scrutinize small voting blocs of 1-2 senators. These blocs become extremely consequential – they can “swing” the majority on cloture votes and on closely contested (and often controversial) legislation or nominations. Swing senators can come under tremendous political pressure, but they can also exert tremendous leverage – and extract commitments for their districts or future consideration, in exchange for their votes. Control of the White House also matters. In the case of a tie, the Vice President casts the 101st vote – breaking any 50-50 Senate deadlock.
- Policy is Downstream from Personnel
Personnel drive policy. Presidential administrations have 4000 political positions to fill; about 1200 require Senate confirmation. For sophisticated advocates this is not a passive exercise. Long before election day they identify and during the transition they advocate for personnel who will best-serve their interests. Relatively obscure assistant and deputy assistant secretaries make decisions that impact millions of Americans and can add – or remove – billions from a corporate bottom line. The Assistant Attorney General for Antitrust, for example, wields influence over the regulatory approval of mergers and acquisitions. In 2017, the pharmaceutical industry effectively advocated for Scott Gottlieb to serve as President Trump’s first FDA Commissioner, which helped distinguish him in a field of more marginally-qualified nominees – one of whom advocated replacing the FDA with “Yelp for Drugs.”
- Internal Public Affairs
Companies that advocate for policy positions inconsistent with their stated values or the sentiments of their employees, customers and shareholders can expect – at a minimum – to be questioned on those positions as well as the policy positions of lobbyists they retain in Washington. If it’s not in place already, it’s time for companies to develop an internal public affairs strategy; to review federal contracts, PAC contributions, outside lobbyists’ twitter feeds, and develop internal public affairs strategies to equip managers, investor relations professionals and others with the information and messages to justify the company’s political expenditures and policy positions.
- Investigation Crossfire as a Way of Life
Democrats, eager to showcase the shortcomings of the Trump Administration, have sent hundreds of investigatory letters to businesses querying those businesses relationships with and accountability to the federal government. The strategy works. The press-friendly letters are shared with media, generating often-favorable press coverage. Their receipt sends companies scrambling to determine how best to respond. The response, in turn, often generates a second round of press coverage if not carefully calibrated. The letter can also serve as the pretext for an oversight hearing or legislation. Regardless of whether there is a Trump or Biden administration, expect the serial deployment of the investigatory letter to increase.
- Fiscal Challenges in the States
By June 2021, states can expect to have more than $200 billion erased from their coffers due to Covid-19. According to the Urban Institute, from March through May of 2020, 34 states experienced a revenue decline of 20 percent or more compared with the prior year. Righting this fiscal ship (40 states require a balanced budget) will require state legislatures to make painful choices about which services they cut and which taxes go up when they gavel back into session in 2021. There will be very little state money for new initiatives. Companies may need to consider not only whether they are on the hook for higher taxes, but more fundamental hypotheticals, such as whether cuts to mass transit impact employees’ ability to commute to work, presuming it is again safe to do so.
This is a time when companies are being tested – to live their values, to justify their advocacy and support their employees and communities in new and essential ways. The companies that take this seriously, look beyond the headlines to carefully assess their plans and demonstrate how they serve the public interest, will separate from their competitors and distinguish themselves with policymakers and regulators. The challenges today are great but so is the opportunity – to make a significant difference for many different stakeholders.
Sarah Knakmuhs provides strategic communications counsel to senior executives on a variety of disciplines including investor relations, public policy, transactions, and crisis situations. She is an accomplished corporate executive with a strong financial and business background that includes leading an investor relations team and extensive government affairs experience.
Mike Hotra has more than 25 years of experience in corporate and public affairs, counseling companies on some of their most consequential corporate, political and legal challenges and opportunities.