Information current as of 1:45 pm on November 9, 2022

Pennsylvania has a long and storied history of being a divided trifecta — that is, having split party control among the office of the governor, state House, and state Senate. Republicans have held the majority of both chambers of the General Assembly for Democratic Governor Tom Wolf’s entire time in office. The 2022 general election was the first since new legislative maps were adopted following the redistricting process. Political pundits said the new state House maps favored the Democrats but to what extent remained to be seen.

Heading into the 2022 midterm elections, Republicans held a 113-88 majority (with 2 vacancies) in the state House and a 28-21, with one independent, majority in the Senate. Twenty-five Senate seats were up for election this year — 13 Republican-held, 11 Democratic-held, and one independent — while all 203 House seats were up for election. Furthermore, this election brought a fair amount of turnover in both chambers, with 33 members of the House (24 Republicans and nine Democrats) and five members of the Senate (four Republicans and one Independent) retiring at the end of this year, promising fresh blood regardless of which party won the majority.

These factors, in combination with the newly implemented redrawn district maps, made Pennsylvania a state to watch, as there was significant potential for change in the state’s power dynamic. Looking ahead to next year, Tuesday, January 3, 2023 will be a busy swearing-in day as both Congress and the PA Legislature officially begin their new terms on that day. Pennsylvania’s new Governor and Lt. Governor will be sworn in on Tuesday, January 17, 2023.

Yesterday’s election results, along with other factors leaving vacancies, will trigger the need for special elections to be held in several state House seats (A. Davis, Deluca, and Lee). All of these seats are in strong Democratic leaning districts and should not impact the make-up of the House. A date for those special elections has not yet been set by the PA Speaker of the House.

Governor/Lieutenant Governor

Democrats Josh Shapiro & Austin Davis defeated Republicans Doug Mastriano & Carrie Lewis DelRosso by double digits.

  • Article IV, Section 8 of the Pennsylvania Constitution grants the governor the power to nominate a successor in the event of a vacancy in the Office of the Attorney General. This nomination must be made to the state State Senate within 90 days of the vacancy. The Senate must then take action (confirming or rejecting nomination) within 25 legislative days.
  • Austin Davis is the first Black Lieutenant Governor in Commonwealth history.
  • Doug Mastriano did not have to resign his Senate seat in order to run for Governor. His seat, Senatorial District 33, was not up for re-election this cycle so he has two years left on his four-year term.

U.S. Senate

Democrat John Fetterman defeated Republican Dr. Mehmet Oz in the hotly contested race for U.S. Senate. Fetterman will now serve with fellow Democrat Bob Casey in Washington.

U.S. House

All 17 of PA’s US House Districts were on the ballot. It appears that all incumbents will win and Dems will win both open seats in PA-12 & 17. This leaves PA’s Congressional Delegation at 8 Republicans and 9 Democrats.

  • PA-07 (Allentown & Suburbs) — Incumbent Susan Wild (D) is leading challenger Lisa Scheller (R)
  • PA-08 (Scranton & Suburbs) — Incumbent Matt Cartwright (D) is leading challenger Jim Bognet (R)
  • PA-12 (Pittsburgh) — (Open Seat vacated by Mike Doyle) In the race to represent the 12th U.S. Congressional District in Pittsburgh, progressive Democratic State Representative Summer Lee defeated Republican Mike Doyle (not to be confused with outgoing Democratic Representative Mike Doyle). Summer will be the first Black woman elected to congress in Pennsylvania.
  • PA-17 (Pittsburgh Suburbs) — (Open Seat vacated by Conor Lamb) In the 17th U.S. Congressional district vacated by Conor Lamb, Democrat Chris DeLuzio defeated Republican Jeremy Shaffer.

PA Senate

The GOP will stay in control of the state Senate. The current make-up of the PA Senate is 28-R, 21-D, 1-I. After last night’s results, the Senate make-up for next session will be 28-R, 22-D. The 14th Senatorial seat used to be held by former Democrat and current Independent John Yudichak. However, redistricting moved his northeastern PA district closer to the Allentown area and he did not seek re-election. That open seat was won by Democrat Nick Miller.

PA House

Control of the PA House is still up in the air as the Democrats do have a path forward to flip the chamber as several races remain too close to call. Unfortunately, it could be several days until results are finalized. However, at the very least, the Democrats have significantly cut into the current 23 seat difference and the control of the House, by either party, could end up being by just a handful of seats. Either way, change is definitely on the docket in the PA House as at least 15 House Republican committee chairs (16 if Todd Stephens loses) and seven House Democratic committee chairs will not be returning next year.

Regional Updates

Southeast PA

  • All U.S. House incumbents in the southeast portion of the state appear to have managed to win reelection — most handily so — with the closest race occuring in the 7th District between incumbent Susan Wild (D) and challenger Lisa Scheller (R).
  • Longtime Bucks County State Representative Frank Farry (R) won election in the 6th Senate District against opponents Ann Marie Mitchell (D) by a margin of 54% to 44%, meaning he will be moving from one chamber of the General Assembly to another.
  • The 16th Senate District will now be represented by Jarrett Coleman (R), who defeated incumbent Patrick Brown during the Republican primary in May. Coleman defeated his opponent Mark Pinsley (D) by a margin of 55% to 45%.
  • Current State Representative Tracy Pennycuick (R) will now represent Senate District 24 after defeating Jill Dennin (D) by a margin of 53% to 48%.
  • So far, seven House districts in the southeast have been flipped from Republican to Democratic control. Notable among these are Paul Friel (D) of House District 26, of Brian Munroe (D) of House District 144, and Lisa Borowski (D) of House District 168 — who defeated incumbents Tim Hennessey (R), Todd Polinchock (R), and Chris Quinn (R), respectively.
  • Philadelphia voters approved both ballot questions, which will create a new Department of Aviation that will allow the city’s airport officials input on budget discussions, and allow for city jobs to grant preference to graduates of Philadelphia’s Career Technical Education programs on the civil service exam.

Northeast PA

  • Current State Representative Rosemary Brown (R) will now represent Senate District 40 after handily winning the seat vacated by Republican Mario Scavello by a margin of 55% to 45% against opponent Jennifer Shukaitis (D).
  • In Luzerne County, 21-year-old Alec Ryncavage (R) won the open House seat previously held by Democrat Jerry Mullery.
  • The 14th Senatorial District seat, previously held by Senator John Yudichak (Independent), was won by Nick Miller (D). This Senate seat was moved from Northeast PA to the Allentown area in the Lehigh Valley. This is the only Senate seat that changed parties, resulting in the Senate Republican control now at 28-22 (formerly 28-21-1).

Central PA

  • Congressman Scott Perry defeated his Democratic opponent, Shermain Daniels, by a 52% to 48% margin. The win gives Perry a sixth 2-year term representing the 10th District.
  • Republican Congressman Lloyd Smucker handily defeated Democrat Bob Hollister by a 62% to 38 margin.
  • Incumbent Republican Congressman Glenn Thompson outpaced his Democrat opponent, Michael Molesevich, by a 70% to 30% count.
  • Representative Greg Rothman won his bid to represent Pennsylvania’s newly redrawn 34th Senatorial District by a 67% to 32% margin.
  • Senator Kristin Phillips-Hill handily beat her Democrat challenger, Judith Higgins, by a 67% to 33% margin.
  • Several PA House seats previously held by Republicans (Hershey, Helm, Lewis) have been won by Democrats. All three of those races were open seats after retirements.
  • In Berks County, the seat (129th District) held by retiring Representative Jim Cox flipped to Democrat Johanny Cepeda-Freytiz.

Western PA

  • In the two highly visible, open congressional races out of Pittsburgh & surrounding suburbs, Democrats Summer Lee (PA-12) and Chris Deluzio (PA-17) emerged as winners over their Republican challengers.
  • In Northwestern PA, Republican Incumbent Mike Kelly (PA-16) comfortably defeated his Democratic opponent to be reelected.
  • There will soon be three special elections in Western PA, all in generally safe Democratic districts, to replace Representatives Tony DeLuca (passed away), Summer Lee (elected to Congress), and Austin Davis (elected Lieutenant Governor).
  • In two newly created PA House seats in the Pittsburgh suburbs, Democrats Arvind Venkat and Mandy Steele both defeated their Republican opponents. Venkat will be the first Indian-American elected to the state House.
  • Democrat La’Tasha D Mayes won the seat vacated by Pittsburgh Mayor Ed Gainey, making her the first out, Black lesbian woman elected to state legislature.

General Assembly Election Highlights

Republican House Seats Going to Democrats (12)

  • District 26: Hennessey — Friel
  • District 29: Schroeder (open) — Brennan
  • District 30: Mizgorski (open) — Venkat
  • District 33: Perry (open) — Steele
  • District 54: Brooks (open) — Gregory
  • District 82: Hershey (open) — Takac
  • District 104: Helm (open) — Madsen
  • District 105: Lewis (open) — Fleming
  • District 129: Cox (open) — Cepeda
  • District 144: Polinchock — Munroe
  • District 168: Quinn — Borowski
  • District 189: Rosemary Brown (open) — Probst

Too-Close-to-Call Republican House Incumbent Seat Race (1)

  • District 151: Stephens — Cerrato

Democratic House Seats Going to Republicans (3)

  • District 9: Sainato — Brown
  • District 50: Snyder (open) — Cook
  • District 119: Mullery (open) — Ryncavage

Too-close-to-call Democratic House Incumbent Seat Races (2)

  • District 16: Matzie — Elmore
  • District 158: Sappey — Spencer

Senate Seat Change (1)

  • District 14: Yudichak (open) — Miller
    * formerly independent seat

Public Health

  • Masks now recommended indoors in Cook County: The health department recommends people wear masks indoors to protect those most at risk from COVID-19, including people older than 50, people with underlying medical conditions, and those who are immunocompromised. From Block Club Chicago.

Illinois

Amid spike in crime, Pritzker administration announces new grant funding for community violence prevention organizations

Governor JB Pritzker announced the launch of $113 million in funding opportunities for community organizations working on violence prevention and interruption across the state. This funding builds on $73 million already distributed by the Illinois Department of Human Services to organizations in FY22 as well as an additional $71.8 million in the pipeline, with grant agreements expected to be finalized prior to the summer.

Community-based organizations that provide services in any of the 42 eligible communities (and follow GATA guidelines) can apply. Applications will be accepted and reviewed on a rolling basis to expedite funding.

To apply for funding, visit www.dhs.illinois.gov/rpsa.

Around the State

Chicago

More than 100,000 Chicagoans applied for 5,000 spots in guaranteed income program during 1st week of applications

More than 100,000 people applied for a spot in Chicago’s $31.5 million guaranteed basic income pilot program, Mayor Lori Lightfoot announced Friday.

The program will support 5,000 low-income households with $500 a month for 12 months to provide additional economic stability. To apply for the lottery, residents must live in the City of Chicago, be 18 years or older, have experienced economic hardship related to COVID-19, and have a household income at or below 250% of the Federal Poverty Level (ex. $57,575 for a household of 3).

Program participants will be selected via a lottery.

More information on the new initiative is available here.

More From City Hall

Federal

Beltway Briefing: Forest and Trees

A barrage of divisive economic signals played a role in recent market turmoil. On Capitol Hill, politicians are pouncing on the numbers to support their political agendas ahead of the critical 2022 midterm elections. Meanwhile, the path forward in the war in Ukraine remains unclear, as what many predicted would be a swift victory for the Russian military enters its third month, with no end in sight.

Public Strategies’ Howard Schweitzer, Mark Alderman, Patrick Martin, and Kaitlyn Martin take a step back from the minutiae of Washington to reflect on the bigger picture of politics and try to bring some perspective to the challenging environment in which the country finds itself.

You can listen to this episode on any of the platforms below

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“The midterm elections are a natural point for the Biden administration to pivot in terms of both personnel and policy. The White House itself will tack to the center in preparation for the president’s re-election campaign, but Biden’s regulators will continue to pursue an aggressive progressive agenda.” — Howard Schweitzer, CEO, Cozen O’Connor Public Strategies

The Cozen Lens

  • Personnel is policy in a presidential administration. For President Biden, his administration will encounter changing faces and priorities after a looming red wave in the midterms.
  • A federal data privacy bill is under consideration in Congress, but the path forward for the legislation isn’t clear. Meanwhile, the Federal Trade Commission is getting more involved in privacy, and on the state level, California is leading the way in strengthening privacy protections.
  • Democrats and Republicans both have expressed frustration with Big Tech, but they have so far been unable to bridge their differences to pass legislation forcing change on the industry.

Biden’s Post-Midterms Reset

The Biden Administration’s Dynamics Today: As someone who has been in Washington since 1973, President Biden has a routine and established group of confidants. This experience helps in the most difficult job in America but does not help when an administration needs to be nimble.

  • The White House power center today is among a small coterie of advisors with decades of experience working with President Biden. This includes Chief of Staff Ron Klain, Counselor Steve Ricchetti, Senior Advisor Mike Donilon, Senior Advisor Anita Dunn, and Deputy Chief of Staff Bruce Reed.
  • New members in the Biden orbit can enter the inner circle after proving their mettle. Domestic Policy Council Director Susan Rice has become a powerful voice inside the administration. So has Deputy Chief of Staff Jen O’Malley Dillon, who was Biden’s campaign manager for the general election.
  • The vice president and the broader Cabinet play second fiddle, with some exceptions. Vice President Harris and Treasury Secretary Janet Yellen were brought onto team Biden in no small part because of optics. But neither have breached Biden’s inner circle. Meanwhile, Commerce Secretary Gina Raimondo and Transportation Secretary Pete Buttigieg have punched above their respective weights on communicating and operating on behalf of the Biden administration.
  • Biden goes with his gut on long-held positions, but takes a deliberative approach elsewhere that can be stifling. No one needed to push Biden to withdraw from Afghanistan last year, a position he long held. But the morass of governing and trying to appease the different Democratic coalitions has led to a drawn out legislative and executive process on items like reconciliation, student loan debt forgiveness, and tariff relief.

The Biden Administration’s Shift Post-Midterms: With an expected red wave in the midterms, the Biden administration will go through its own pivot to acclimate to the new political environment and seek opportunities ahead of the 2024 election.

  • While the Trump administration tenure was measured in “Scaramuccis,” the Biden White House and administration is waiting for a more natural culling point after the midterm elections. Klain is expected to depart and so is Yellen. Rice, Dunn, and Ricchetti are leading contenders to be the next chief of staff. Raimondo is seen as a top contender for Treasury.
  • The post-midterms White House will be focused on the next election. Biden continues to publicly and privately indicate he’s running for reelection in 2024, especially if Donald Trump runs again. An announcement would likely come in the spring of next year.
  • The White House will be focused on Republican investigations, oversight, and possibly impeachment. The administration is already preparing for GOP oversight investigations, ranging from the Afghanistan withdrawal, the handling of the pandemic, and Hunter Biden. These probes can stretch an administration but can also lead to backlash on the Republican investigators if they’re seen as overtly political.
  • The White House will also pivot to the center. This is a function of being blocked by a potentially Senate Majority Leader Mitch McConnell-led Senate to confirm progressive nominees as well as because perceived moderates perform better in general elections. Donald Trump was perceived as more moderate than Hillary Clinton in 2016 and Biden was perceived as more moderate than Trump in 2020. That Biden moderation, but still Democratic, will likely show up in the new personnel.
  • A populist regulatory agenda will remain on track though. Figures like Federal Trade Commission Chair Lina Khan, Securities and Exchange Commission Chair Gary Gensler, and Consumer Financial Protection Bureau Director Rohit Chopra aren’t planning on leaving anytime soon. They will still be empowered to move forward on their respective aggressive agendas that they have laid out over the first two years of Biden’s tenure.

Data Privacy Gains Momentum at the Federal and State Levels

A Comprehensive Federal Data Privacy Bill. Lawmakers have unveiled a new proposal to enact data privacy protections on the federal level, but passing this legislation won’t be easy.

  • Earlier this month, House Energy and Commerce Committee Chair Frank Pallone Jr. (D-NJ) and Ranking Member Cathy McMorris Rodgers (R-WA) and Senate Commerce Committee Ranking Member Senator Roger Wicker (R-MS) released bipartisan draft privacy legislation. The proposal includes a compromise on two issues that have historically been difficult to resolve: preemption of state privacy laws and a limited private right of action for individuals to sue over privacy violations. The draft legislation would preempt most state privacy laws (but not all), and it would establish a private right of action, which would come into effect four years after passage.
  • Reactions to the proposal from industry and advocacy groups have been divided, as indicated by a House Energy and Commerce Committee Subcommittee on Consumer Protection and Commerce hearing on the draft legislation last week. In his prepared remarks, John Miller of the Information Technology Industry Council, a trade group, objected to the bill’s inclusion of a private right of action. “It is too broad and will not appreciably limit a likely wave of litigation,” he wrote.
  • On the other hand, representatives from advocacy groups called for the legislation to have stronger privacy protections. In their testimony, Caitriona Fitzgerald of the Electronic Privacy Information Center and David Brody of the Lawyers’ Committee for Civil Rights Under Law said that Americans should be able to pursue greater damages in litigation under the privacy law. Jolina Cuaresma of Common Sense Media testified that lawmakers should increase the age cutoff for enhanced children’s privacy protections to cover 17-year-olds. As currently written, the draft bill covers only 16-year-olds and younger.
  • It’s notable that the first hearing on this proposal took place in the House and not the Senate. It looks like the legislation will face a steeper climb in the upper chamber because Senator Maria Cantwell (D-WA) is reportedly not on board. Cantwell is chair of the Senate Commerce Committee, so her support will be crucial for the legislation to move forward. In a statement quoted by Politico this month, she said, “For American consumers to have meaningful privacy protection, we need a strong federal law that is not riddled with enforcement loopholes. Consumers deserve the ability to protect their rights on day one, not four years later.”
  • The window of opportunity for passing a comprehensive federal privacy bill in the near future is seemingly narrowing. There’s just under two months until the August congressional recess, which is the unofficial deadline for passing any legislation not considered “must pass” before the midterm elections. And in the next Congress, Senator Ted Cruz (R-TX) is in line to take over from Wicker as the top Republican on the Senate Commerce Committee based on seniority. Wicker is expected to leave his position on this committee in favor of taking the top GOP spot on the Senate Armed Services Committee left open by retiring Senator Jim Inhofe (R-OK). The deeply conservative Cruz, who is eyeing another run for president in 2024, will likely be less inclined to work with Democrats on privacy.

The FTC and Privacy. The Federal Trade Commission (FTC) is becoming more involved in digital privacy.

  • In the FTC’s first meeting since the confirmation of Commissioner Alvaro Bedoya, which re-established a Democratic majority, the agenda focused on children’s privacy. Commissioners unanimously approved a new policy statement on the agency’s enforcement of the Children’s Online Privacy Protection Act focused on education technology. The statement delineates prohibitions on collecting children’s personal information when using education tech services. “Parents should not have to choose between their children’s privacy and their participation in the digital classroom. The FTC will be closely monitoring this market to ensure that parents are not being forced to surrender to surveillance for their kids’ technology to turn on,” Samuel Levine, director of the FTC’s Bureau of Consumer Protection, said in a press release.
  • The arrival of Bedoya, a noted privacy advocate, to the FTC makes the agency well positioned for a push to safeguard privacy. Prior to joining the FTC, Bedoya worked as the founding director of the Georgetown University Law Center’s Center on Privacy & Technology and the chief counsel of the US Senate Judiciary Committee Subcommittee on Privacy, Technology and the Law, per his Georgetown bio.
  • FTC Chair Lina Khan has signaled an interest in privacy. In April, she gave a speech at the IAPP Global Privacy Summit suggesting that a new approach is needed to protect user privacy online. With the agency’s Democratic majority back in place, it will be possible for Khan and Bedoya to chart a new course on the issue.

Privacy in California. In the absence of a federal data privacy law, states have forged their own paths, most notably California.

  • On Thursday, the California state Assembly passed the Age-Appropriate Design Code Act, a bill that would boost online privacy protections for children. Components of the bill include a requirement for platforms to make strong privacy settings the default for children and new limits on their ability to collect and distribute data belonging to young users. The bill passed by a resounding bipartisan vote of 72-0, with six assembly members not voting. The Age-Appropriate Design Code Act is now in the state Senate, which will have until August 31st to pass it.
  • The Golden State’s top privacy regulator, the California Privacy Protection Agency (CPPA), is moving towards crafting new privacy rules for the state. Two weeks ago, the CPPA board voted to start a rulemaking process to bring the California Privacy Rights Act into effect. The agency released a draft of proposed rules in a notice circulated before the board meeting. The draft covers consumer rights for opt-out and requests to access or correct information, rules around dark patterns, and the definition of a service provider, among other provisions.

Will Democrats and Republicans Come Together to Legislate Against Big Tech?

Me Before We. One of the changes that members of Congress are aiming to tackle is tech platforms’ ability to self-preference.

  • The American Innovation and Choice Online Act (AICOA) is a bill from Senators Amy Klobuchar (D-MN), the chair of the Senate Judiciary Committee’s antitrust subcommittee, and Chuck Grassley (R-IA), the ranking member of the Senate Judiciary Committee. The legislation takes aim at large tech platforms’ ability to self-preference. This would prevent search engines from promoting links to their own websites first or online marketplaces from putting their own goods at the top of search results. It could also force some changes to search results in app stores.
  • If there is to be a significant federal antitrust bill passed in this Congress, this is the bill. The difficulty for its sponsors is that, despite their optimism, there does not clearly appear to be enough votes to pass. Particularly in the Senate where the bill has yet to gain backing from key Republicans like Senator Mike Lee (R-UT), the ranking member of the Senate Judiciary Committee’s antitrust subcommittee, even some Democrats have urged more revisions as recently as last week. Also complicating this is that some Democrats in battleground states have voiced concern about having to take what they view as a contentious vote ahead of the midterms.
  • Taking these factors together, it would appear that the AICOA is unlikely to pass in the current session of Congress. Its chances in future sessions though should not be dismissed as it does enjoy bipartisan backing. That being said, the current text would have to be pared back to pass in a split or Republican-controlled Congress. Another mark against the chances for the bill in such a scenario is that addressing self-preferencing will likely not be the top item for Republicans when it comes to their issues with Big Tech. The GOP has tended to be more frustrated with content moderation practices and what it views as biased censorship.

Breaking Down the Gates. The other major bill members of Congress are looking to push through would bring a set of changes to the app store ecosystem.

  • In addition to the AICOA, the Open App Markets Act is a meaningful antitrust bill that seemed to have a chance to pass Congress. The legislation would have required app stores to allow mobile apps to communicate with users about fees and would protect sideloading. It would also prevent app stores from requiring developers from using specific payment systems. These are reforms with backing from many app companies which would see it as a welcome curb on the gatekeeper power of the app store companies.
  • When the Senate Judiciary Committee marked up the Open App Markets Act, some observers were surprised that the bill garnered support from twenty of the twenty-two committee members. This was more backing than the AICOA received. It also included key Republican support like Lee, which seemed to indicate it may be the bill into which reformers would put their effort. Since that markup though, the bill has faded from the limelight and it has still yet to receive a hearing or markup in the House Judiciary Committee.
  • Compared to the AICOA, this bill seems to have a better chance of being passed in a split or Republican-controlled Congress given the wider bipartisan backing it has found and support from key GOP members. What is unknown is just how well received it may be in the House. An identical bill has been introduced, but with its lack of progress thus far, gauging the level of support in the lower chamber is difficult.

Testing Grounds. Given the greater partisan divide of state legislatures, they are the fora where Democrats and Republicans are able to trial their desired reforms.

  • In Texas and Florida, Republican politicians have pushed through laws aimed at what they view to be censorship of their views by social media platforms. These laws have both been largely stopped by legal decisions that have ruled the laws would violate the platforms’ free speech rights under the First Amendment. This is unlikely to be the last time that this issue arises and it is more than probable that in a Republican-led House or Senate, there will be federal proposals that make some progress aimed at a similar goal.
  • As discussed above, at the other end of the spectrum, Democrats in California have been pushing to pass a law that would make social media platforms legally liable for social media addiction in minors. This bill, if passed, would likely face legal challenges from tech groups on freedom of speech grounds too. California Democrats have also been pushing for enhanced privacy protections for children, including new limits on a platform’s ability to collect and distribute data belonging to young users.
  • What these examples both reflect are the partisan differences that are leading to a growing patchwork of tech regulation across the country. Federal legislation can preempt the regulatory gaps, but often those bills get bogged down by the same disagreements that prevent states from creating a uniform standard. States, in their role as laboratories of democracy, are uniquely positioned to advance the national conversations on tech regulation, but they are often doing so in contradictory directions.

“Two of the few things both Democrats and Republicans agree on today in Washington are supporting domestic manufacturing and being tough on China. When you put these two together, the result is the rebirth of US industrial policy.”
— Howard Schweitzer, CEO, Cozen O’Connor Public Strategies

The Cozen Lens

  • After several decades in which industrial policy was out of fashion in Washington, a bipartisan consensus has emerged around the need for the US to have its own, largely to counter China.
  • A rare point of agreement on Capitol Hill over the past two years was providing funding to create US jobs and to compete better with China, culminating in the CHIPS and Science Act.
  • Some provisions that didn’t make it into the final CHIPS and Science Act could make a reappearance during the lame duck session, but the outlook for significant congressional action on trade under divided government is dim. The focal point for trade is likely to shift towards the White House.

Industrial Policy is Back

Reviving Industrial Policy. As the US’s strategic competition with China has evolved under Presidents Donald Trump and Joe Biden, a bipartisan consensus has emerged to support the adoption of a light industrial policy.

  • This effort has been bolstered by industrial policy’s political popularity, making it a relatively easy issue for members of both parties to get behind. While there can be disagreements over the specific details, generally speaking, it is seen as a means to support manufacturing jobs in the US and to be tough on China, two stances politicians are rushing to embrace.
  • The messaging has been tricky at times as it has been important to ensure it is framed as becoming more competitive against China, rather than adopting China’s strategy, which lawmakers and administrations have chided for years.
  • To date, US industrial policy has focused heavily on microelectronics, specifically the semiconductor industry. However, there is increasing focus on other sectors and supply chains that could be vulnerable to exploitation by China, either through acquisition of sensitive technology or by providing China with leverage – i.e., because it is producing something vital that cannot be obtained quickly from another source. Components of clean energy supply chains, such as rare earth minerals, and critical pharmaceuticals and medical devices could be subjects of particular attention.

This Room is Only Big Enough for One of Us. To Trump, industrial policy was part of a paradigm shift in the US competition with China from “cooperation where possible and competition where necessary” toward a zero-sum confrontation based on his “America First” ideology.

  • In practice, this meant focusing on balancing the trade deficit and embracing unilateral confrontation. Both the Section 301 tariffs and Phase I trade agreement were pursued because they were seen as advancing these goals.
  • President Trump and then-US Trade Representative Ambassador Bob Lighthizer saw tariffs as a way to improve the US’s negotiating leverage and position in the zero-sum competition with China.
  • For the Trump administration, acting in conjunction with other countries was not necessary if taking action could be beneficial to the US or hurt China, Instead, the Trump administration sought to make the US the example, such as with restrictions on Huawei, and then encourage allies to follow.

Sticks and Carrots. Biden’s approach to industrial policy is rooted in reducing US and allied reliance on China in critical supply chains and hindering China’s ability to develop its advanced technology domestically.

  • The Biden administration’s recent export controls on semiconductors and the tools needed to manufacture them are being seen as yet another escalatory step in an economic war.
  • What makes these unique from previous measures is that they are aimed broadly at the entire country rather than individual companies. Coupled with the CHIPS and Science Act’s domestic subsidies to high-tech companies, this provides for a comprehensive industrial policy for semiconductors.
  • The Biden administration has combined these initiatives with a new focus on working with allies to counter China. In addition to pushing allies to implement their own sanctions, the administration has sought to deepen engagements that connect allies to the US economically, such as through alignment of regulations and standards. A key element of this has been the Indo-Pacific Economic Framework, which does not include the tariff elimination found in a traditional free trade agreement, but which aims to encourage closer economic relationships between the US and its Indo-Pacific-based partners.

Congress CHIPs In

Industrial Policy is Popular with Populists. With the increasing rise of populism in both parties, members of Congress on both sides of the aisle are willing to fund programs to advance industrial policy.

  • The CHIPS and Science Act passed with strong bipartisan votes in both chambers. In the House, 24 Republicans bucked their leadership who opposed the bill, in part due to inflation concerns. Many of these members were deeply invested in the bill’s components and wanted to support subsidies that would lead to new jobs in their districts.
  • In the Senate, 17 Republicans voted with Democrats to pass the bill, which underscores the popularity of the measure given the upper chamber’s proclivity for gridlock these days. Senator John Cornyn (R-TX), who is seen as a potential successor to Senate GOP Leader Mitch McConnell (R-KY), was the sponsor of the semiconductor incentive provisions and took a prominent and public role in advancing the bill.

Spotlight on Semis. The implementation phase of the CHIPS Act is already underway with applications for the semiconductor fab subsidies scheduled to open as soon as February 2023.

  • The most well known portion of the CHIPS Act is the $52.7 billion that is appropriated over the next five years to support semiconductor manufacturing in the US. The largest portion of this is $39 billion “in financial assistance to build, expand, or modernize domestic facilities and equipment for semiconductor fabrication, assembly, testing, advanced packaging, or research and development.” $2 billion of the $39 billion is to be set aside to support “mature nodes,” which is aimed at older chips used in automotive manufacturing. The set-aside was included following intense advocacy from auto manufacturers who have sought first-in-line access to chips.
  • The Commerce Department released its strategy for the CHIPS for America fund in September. The strategy paper provides insights on priorities for reviewing applications, with Commerce explicitly stating that it is looking for projects that prioritize “broad economic gains, rather than outsize financial contributions to a single company,” adhere to standards and guidelines on components of information security, provide workforce solutions that enable stakeholders to work together, employ creative recruitment strategies and hire workers based on their acquired skills, and proactively work to include small businesses, minority-owned, veteran-owned and women-owned businesses, and businesses in rural areas.

What Else Hitched a Ride. The CHIPS and Science Act does more than just fund its namesake.

  • The vast majority of the rest of the package provides expanded scientific research funding. The largest portion of this is $102 billion over five years in authorizations to the National Science Foundation (NSF), Commerce Department, and National Institute of Standards and Technology, representing a $52 billion increase over the existing baseline. $81 billion will go to the NSF, including the largest increase over baseline of $20 billion to create a new technology directorate at the NSF. The remaining $61 billion going to the NSF will support its core activities.
  • What should be noted about the above funds is that this legislation only authorizes the funds, but does not appropriate the money, meaning no money goes out the door until further appropriations legislation passes. Congress may choose to appropriate the funding as part of a year-end omnibus bill in the lame duck session.
  • The only money other than the semiconductor support that is actually appropriated in the legislation is $1.5 billion to support the development of open radio access network (Open RAN) technology. The goal of this funding is to support the development of competitive alternatives to 5G hardware and be able to build software-based wireless technologies.

What Comes Next?

Déjà Vu. It’s possible that some provisions left out of the final CHIPS and Science Act may come under consideration again during the lame duck session, including the controversial trade title.

  • Noncontroversial components that were ultimately left on the cutting room floor could potentially be included in the FY23 National Defense Authorization Act (NDAA). As a must-pass bill, the NDAA offers an opportunity for other legislation to be attached as an amendment and become law. Generalized System of Preferences and Miscellaneous Tariff Bill renewal may be prime candidates to hitch a ride on the NDAA. These provisions enjoy support from the business community and amid rising inflation; they could bring some costs down for businesses and consumers.
  • The fate of other trade-related provisions is more uncertain. Lawmakers could try to revive an outbound investment screening mechanism as was previously proposed by Senators Bob Casey (D-PA) and John Cornyn (R-TX) or a change to the de minimis rule. There could also be a push, led by House Democrats, to reauthorize Trade Adjustment Assistance benefits. However, congressional Republicans have insisted any trade legislation reauthorize Trade Promotion Authority. It’s unclear how much of a viable path forward these provisions have.

Trade Policy Under Divided Government. Republicans are likely to retake control of one or both chambers of Congress, resetting the political dynamics in Washington, DC next year.

  • Democrats and Republicans will likely continue to have differences on trade policy beyond China in the 118th Congress, particularly as the 2024 presidential election inches closer. This creates doubts around major congressional action in areas such as renewal of the executive branch’s Trade Promotion Authority.
  • There’s a strong likelihood of continued consensus between the parties about being tough on China, although there may be slight differing views on the best overall approach. Democrats and Republicans are likely to increase their focus on trying to outflank the other party. This dynamic could impede efforts to find common ground, standing in the way of legislative success or reducing congressional action to the lowest common denominator with support from both sides of the aisle. This was the case with the CHIPS and Science Act, which took over a year to pass Congress as a slimmed-down version of its original self.

Executive Action. With Congress expected to be largely stalled on the trade front, the White House is set to become the focal point on trade policy.

  • The Biden administration will likely aim to deliver on trade in areas that don’t require approval from Congress. Traditional free trade agreement negotiations don’t fit that picture.
  • Narrower initiatives will allow Biden to pursue a multilateral approach without the political baggage associated with free trade agreements and tariff elimination, and without needing to rely on Congress.
  • Standards-setting and regulatory alignment will likely feature in negotiating initiatives, as these are areas on which the administration can secure commitments without needing congressional approval.
  • Labor and the environment are also expected to feature prominently in the White House’s trade agenda, including in negotiating initiatives with other countries and in enforcement activity.
  • For example, the Biden administration has already brought five matters targeting facilities in Mexico under the US-Mexico-Canada Agreement’s facility-specific Rapid Response Labor Mechanism.
  • On China, the Biden administration is now undertaking a four-year review of section 301 duties imposed under Trump. Some observers have speculated that this could result in a focusing of the tariffs on strategic items, or in the opening of a new tariff-exclusion process. It remains to be seen what the administration will do. Finally, the administration may continue its aggressive use of export controls as a tool to impede China’s rise and protect US technology interests.

City Hall

United Way and Local Legal Associations Host Free “Clean Slate” Clinics

The United Way is hosting free legal clinics that will help eligible Philadelphians expunge their records of certain offenses; this could help open up employment and educational opportunities. Pennsylvania’s clean slate law allows for convictions to be cleared after 10 years and non-convictions after 60 days. However, the process requires legal assistance that can be costly. The clinics will be hosted in different locations across Philadelphia.

Renters Now Facing same Competitive Market as Home Buyers

A general shortage of rental properties in the Philadelphia area means those looking to rent are facing an ever more competitive market, and some longtime renters are seeing their monthly rates increase significantly. Some prospective tenants are now offering above-advertised rates for rentals, sometimes paying hundreds more a month to secure units in short supply.

Democrats Shift Away from “Defund Police” Messaging

Some Philadelphia-area Democrats are moving away from “defund the police” messaging and platforms two years after the death of George Floyd, following a nationwide trend toward policies that call for additional police funding. But while some see the shift as a response to record-setting violence in the city, attempts to label progressive elected officials as “soft on crime” have yet to result in incumbent losses.

Council to Consider Two Bills Designed to Add Protections for Airport Workers

Philadelphia City Council will soon consider two bills that will increase protections for workers at the Philadelphia International Airport. One such bill, introduced by Councilmember Kenyatta Johnson, will tie airport labor agreements to the city’s prevailing wage regulations. A second bill, introduced by Councilmember Mark Squilla, will extend city displaced contract worker protections to people working at the airport.

Parker Introduces Bill Allowing Special Exemptions to Retirement Benefits for Rehired City Workers

Council Majority Leader Cherelle Parker introduced a bill that would allow retired city employees who are rehired for extraordinary reasons to not have their retirement benefits suspended or otherwise changed. The move comes after Philadelphia officials said the police department would look to hire retired officers to plug staff shortages.

Changes to Tax Law Could Exclude Certain Intangible Property from Taxation

A tax change proposed by Councilmembers Clarke and Parker would exempt the “sale, lease or license of intangible property” from taxation if it is used outside of the city limits. Intangible property includes intellectual property, brand assets, and computer software.

Upcoming Hearings

Philadelphia City Council holds several hearings throughout the legislative calendar. You can watch the hearings here.

  • On Tuesday, June 7 at 4:00 p.m., the Committee on Licenses and Inspections will hold a hearing on fire suppression systems.

PUBLIC HEALTH 

— IDPH Urges All Who Are Eligible to Get Up to Date With Newly Approved Bivalent Booster Shots, from The Illinois Department of Public Health.

— New COVID-19 boosters headed to Chicago area after CDC recommendation: What you need to know, by The Chicago Tribune.

— Free At-Home COVID Tests From the Government Will be Suspended Tomorrow: “Ordering through this program will be suspended on Friday, September 2,” by NBC 5 Chicago.

— Illinois Department of Public Health Achieves Re-accreditation from National Public Health Body, from The Office of Governor JB Pritzker.

ILLINOIS

Illinois EPA invests over $254 million in water infrastructure loans in fourth quarter of FY22

The Illinois Environmental Protection Agency today announced the issuance of $254,355,659 in water infrastructure loans to local governments and sanitary districts for the fourth quarter of Fiscal Year 2022 (April – June 2022).

The Illinois EPA State Revolving Fund (SRF) Program – which provides low-interest loans for wastewater, stormwater, and drinking water projects – has issued a total of $557,559,375 in loans for all of State Fiscal Year 2022, which includes $58,730,372 in Principal Forgiveness.

A complete list of FY22 fourth quarter loan recipients can be found here.

AROUND THE STATE 

— Gov. Pritzker Announces $300 Million in Funding for Energy Bill Assistance: “Governor JB Pritzker and the Illinois Department of Commerce and Economic Opportunity (DCEO) are encouraging families in need to apply for $300 million in available funding for energy bill assistance through the Help Illinois Families program,” from The Office of Governor JB Pritzker.

— Pritzker’s personal fortune intersects with state contracts: “The governor’s promises to divest his vast portfolio of state contractors has not extended to his so-called blind trust, which has the governor’s money in at least a dozen companies with billions in state business,” by Crain’s Chicago Business.

— Gov. Pritzker Welcomes Immigrants Traveling From Texas to Chicago: “Illinois welcomes refugees, asylum seekers and immigrants and we are working with federal and city officials to ensure that these individuals are treated with respect and safety as they look to connect with their family and friends,” from The Office of Governor JB Pritzker.

— Record number of Republican candidates running for House seats as party tries to end Democrats’ super majority: “House Minority Leader Jim Durkin (R-Western Springs) is hoping to bring down the House Democrats’ supermajority with a record number of Republican candidates running for seats in the Illinois House on Nov. 8. Illinois has 106 Republican candidates running for House seats in November — a record, Durkin said at State Fair festivities earlier this month,” by The Daily Line.

— Advocates want lawmakers to eliminate court fees in juvenile cases: “Illinois lawmakers should eliminate court fees for juveniles, advocates told members of the state Supreme Court Statutory Court Fees Task Force during a hearing Tuesday. The task force is preparing to release a report later this year with recommendations to the General Assembly about the state’s laws on court fees,” by The Daily Line.

— Rebuilding Will County Major projects Highlight Year Four of Rebuild Illinois: “Entering Year Four of Rebuild Illinois, the Illinois Department of Transportation announced today that multiple projects in Will County are underway or planned to begin, highlighting an ongoing commitment made possible by Gov. JB Pritzker’s historic, bipartisan capital program,” from The Office of Governor JB Pritzker.

CHICAGO 

Mayor Lightfoot announces delegate agencies for ‘Justice for All’ Initiative 

Mayor Lori Lightfoot and the Chicago Department of Public Health Thursday announced that the Chicago Abortion Fund and Planned Parenthood of Illinois have been selected as the two delegate agencies for the City’s ‘Justice for All’ initiative.

“The City of Chicago is committed to ensuring that no person will lose their rights to reproductive healthcare,” Mayor Lightfoot said.

Mayor Lightfoot first announced this funding in May in response to the leaked draft opinion in Dobbs v. Jackson’s Women’s Health by the majority of the Supreme Court.

The ‘Justice for All’ pledge is supported by a $500,000 investment from the Chicago Department of Public Health, which will continue the City’s efforts to support transportation; lodging; safe and necessary reproductive, obstetric, and gynecological care; and follow up services for all people.

MORE FROM CITY HALL

— More Migrants Expected To Be Bused To Chicago — And City Will Need Aid To Help Them, Lightfoot Says: “Cook County already has stepped up but Chicago needs support from local and federal governments to provide medical care, housing and other resources,” by Block Club Chicago.

— CPD working to fill 975 patrol officer vacancies, 105 detective openings, top mayoral aide says: “Earlier in August, the Office of Budget and Management reported 1,408 sworn vacancies — and a staggering 814 retirements this year, compared to 973 in all of 2021 and 625 in 2020,” by The Chicago Sun-Times.

— Aldermen question funding for police surveillance cameras, support expanding co-responder pilot: “Spending on police surveillance cameras and expanding an alternative police response pilot program for mental health calls will likely be hot topics during this year’s budget hearings as aldermen prodded city officials on the topic Wednesday,” by The Daily Line.

— Drag racers, drifters and unruly spectators would face prison time under new proposal in Springfield: “The bill was introduced after Chicago police officials struggled to respond to the street takeovers and drag racing that gave way to clashes with police and possibly left a woman dead this weekend,” by The Chicago Sun-Times.

— Lightfoot Blasts Abbott’s Policy of Bussing Migrants to Northern Cities as ‘Racist and Xenophobic’: “Chicago Mayor Lori Lightfoot used a Thursday press conference to welcome a group of migrants to the city after they were put on buses and driven north from Texas this week, but she also took the opportunity to blast Gov. Greg Abbott’s immigration as ‘racist and xenophobic,’” by NBC 5 Chicago.

— Multiple tree planting bids offer local companies chance to supply trees to Chicago: chief sustainability officer: “The city of Chicago has changed the way it bids out its supply of trees to be planted in the public way to broaden job opportunities and give local companies the chance to add to the city’s tree canopy. Chicago’s Chief Sustainability Officer Angela Tovar touted the change during a town hall on the city’s tree canopy hosted by Ald. Matt Martin (47) on Wednesday,” by The Daily Line.

  • The NYS Senate and Assembly are actively considering the NY Privacy Act, and may vote to approve it before the legislative session ends on June 8.
  • The bill, while still under discussion and in flux, would impose strict new disclosure and licensing requirements on legal entities that access, collect, and/or sell data from online sources. A brief summary of key provisions is below.

Bill Summary:

  • The NY Privacy Act will require companies to obtain explicit consent from consumers before processing their personal and sensitive data.[1]
  • The law will apply to most for-profit and nonprofit businesses, with some exceptions, that conduct business in New York State or produce products or services targeted to residents in NYS.
  • Consumer rights include:
    • Notice of how their data is processed and sold
    • Right to opt-out
    • Ability to request access and obtain a copy of their data in an electronic format
    • Ability to ask for the deletion or correction of data
    • Private right of action against companies for violating their privacy
  • “Personal” data refers to any data that identifies or could be linked with a specific person or household.
  • “Sensitive” data refers to personal data that reveals:
    • Racial or ethnic origin
    • Religious beliefs
    • Mental or physical health condition
    • Sexual orientation or sex life
    • Citizenship or immigration status
    • Genetic or biometric information for the purpose of identifying a person
    • Precise geolocation data
    • Social security, financial account, passport, or driver’s license numbers.
  • Businesses will be obligated to regularly conduct data protection assessments for activities that present a heightened risk of harm to consumers, and must develop “reasonable safeguards” to protect the security of the consumer data.
  • Companies are also not permitted to discriminate against consumers for exercising their data rights, such as opting out of data sharing.
  • Companies will be required to register and pay an annual fee to the Attorney General and submit information regarding their use practices.
    • The AG will maintain a “data broker registry” on its website.
  • If passed, most aspects of the bill shall take effect two years after becoming law.
    • However, the private right of action will take effect three years after the law is passed.

 

Background:

  • Thomas has been the primary champion of this bill, and he also introduced it in the 2021-2022 and 2019-2020 legislative session.
    • AM Rozic is the Assembly sponsor in the 23-24 session.
    • AM Rosenthal sponsored the bill in 19-20 but has not sponsored it since.
  • Many other states are considering data privacy bills in the absence of a federal privacy law; however, New York’s is unique in the private right of action.[2]
    • At this point in 2023, 16 other states have proposed or passed data privacy laws with varying degrees of protection.[3]

[1] https://www.nysenate.gov/legislation/bills/2023/S365#:~:text=S365%20%2D%20Summary,whom%20their%20information%20is%20shared.

[2] https://www.politico.com/news/2023/02/22/statehouses-privacy-law-cybersecurity-00083775

[3] https://www.rila.org/blog/2023/04/states-continue-to-pass-major-privacy-legislation

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On this special edition of the Beltway Briefing Road to the 2018 Midterm Elections podcast, CPS Managing Partner Howard Schweitzer and Former Virginia Attorney General and member of the Cozen O’Connor State AG group Jerry Kilgore join Blake Rutherford to discuss the highlights of key incumbent and open seat races in the 31 State AG elections in 2018. Former AG Kilgore breaks down how top-of-the ticket races (Governor, U.S. Senate, and U.S. House) will impact the results of AG elections and discusses what we can expect with AG enforcement priorities should a “blue wave” sweep several of these races on election day. The Beltway Briefing Road to the 2018 Midterm Elections is an ongoing series hosted by Cozen O’Connor Public Strategies providing timely insights into what’s happening in key battleground states and a sense of how a shifting House and Senate map will impact policymaking in Washington. Please email PublicStrategies@cozen.com to subscribe for updates on our upcoming calls, or visit our website at www.copublicstrategies.com.