AMAC Exclusive – By Shane Harris
With the midterm year officially here, both parties are ramping up their messaging efforts to try and secure majorities in Congress this November. After a turbulent first year in power, Joe Biden and Congressional Democrats are in desperate need of a turnaround to bolster their chances of retaining their razor-thin majorities in the House and Senate. Republicans, meanwhile, are aiming to ride a wave of voter dissatisfaction back into power. To help make sense of it all and break down what storylines may come to define what is already shaping up to be a dramatic campaign season, I caught up with Alex Ayers, a top DC consultant and friend of AMAC who has the inside scoop on what lawmakers are talking about as Congress comes back into session next week. In my interview with him, I break down several key issues that could ultimately decide the midterm elections.
Shane Harris: Thanks for taking the time to speak with me. Let’s get right down to it – what do you see as the biggest issue heading into next year that’s going to define how the two parties frame their messaging and how voters make decisions at the ballot box?
Alex Ayers: The biggest issue is going to be inflation, but the stark difference is going to be how the two parties view the solution to inflation.
Republicans are going to advocate for less spending. They’re going to say that putting too much money into the economy is what is driving inflation – that there is too much money out there for the demand for goods that exists.
From Democrats’ perspective, they’re going to see it as inflation needs to be solved by making sure that more people have more money. Their solution to that is more government programs, more spending.
And so that is where you are going to see the two sides fighting over inflation.
SH: What are some ways that Democrats will look to try and pass legislation based on their view of inflation or to try and resurrect their credibility with the American people?
AA: You have seen how Build Back Better in its current form is dead. Manchin has said that inflation is a problem and that he tried to negotiate in good faith with the administration and his colleagues, but they just aren’t seeing eye to eye.
But Democrats are still going to have the mechanism of a reconciliation bill at their disposal, and they are going to spend their time trying to figure out what their ability is to craft a bill that both meets Manchin’s demands and does something about inflation, according to their view of how to address inflation.
This is where the issue of the Child Tax Credit, or I should say the expanded Child Tax Credit, comes into play. I think they are going to spend a lot of time on getting some form of that expanded Child Tax Credit passed into law using reconciliation.
SH: That is something that not a lot of people are talking about right now. Could that be a potential problem for Republicans? After all, who wants to come out as against a tax credit for children?
AA: That’s exactly right. The Child Tax Credit sounds good because who wants to be against children? But also, we are a little broad when we talk about what constitutes a “Child Tax Credit.”
What we are talking about with Democrats’ version is a higher amount per month direct check paid from the government to a family every month with no work requirements and no means testing. Any person, no matter how much income they make, is eligible for this check. It is effectively Social Security for children.
That is a much different system than the old Child Tax Credit, which has existed since the mid-90s. That system was actually expanded under Trump in the 2017 Tax Cuts and Jobs Act, where you had the ability to deduct money from your taxes based on the number of children you had, which is actually a very different policy from just sending someone a check every month, as Democrats now want to do. And so it is going to be very hard to argue against the Child Tax Credit because if they have to get very in the weeds to explain it, that means they aren’t doing a good job of messaging.
SH: So, what can Republicans do to make people understand that this isn’t really a Child Tax Credit and explain why it’s bad policy?
AA: Well, that’s the big question. They are going to have to figure out a way to make people understand that the Child Tax Credit they are arguing against is not the Child Tax Credit that has existed for decades; it’s only the one that has existed since the passage of the American Rescue Plan earlier this year. Folks have started to get used to the idea of the IRS sending them a check every month, so that is the tricky part; how do you message something that sounds good on the surface when it’s the nitty-gritty details that make it essentially a free government money program. Details are very hard to explain from a messaging standpoint.
SH: With the campaign season kicking into full swing, will this tax credit be something that is likely to come up in the first few weeks of the new year?
AA: Yes. At a certain point, every Member of Congress has a switch in their head when they go from legislating to campaigning. And typically, a lot of folks are already in that mode or getting close, and once you hit March, you have a really hard time getting Members to focus on legislating rather than being back home trying to get reelected. And so there is going to be a big push in the first 2-3 months of the year to get something done. Especially because of the Child Tax Credit, which expires at the end of the year. And so the checks are going to dry up.
Between those two factors, there will be a big rush in January and February.
SH: Are there any big obstacles that Democrats will have to overcome to move ahead with this plan for a new Child Tax Credit?
AA: Well, it’s not exactly new – this was part of the American Rescue Plan, which was part of the reason Republicans opposed that early on in 2021. They now just want to make that permanent. But the issue for Democrats is, Joe Manchin does have issues with this new version of the Child Tax Credit. He wants to see means testing and work requirements. That will kind of make Republicans’ jobs easier because they have a Democrat who is willing to work with them.
SH: Is this a policy GOP should work with Dems on if Manchin is able to get certain concessions like the work requirement and means testing?
AA: No. Because they had already gotten their version of what they wanted to see the Child Tax Credit look like in 2017. And at the end of the day, Democrats want to spend more, and Republicans understand that increasing the supply side will only worsen the economic problems we are currently seeing. And if Republicans go along, they won’t get any credit for it, which doesn’t help them at all in the midterms.
Also, a lot of the folks I am talking to are saying that by stopping the Child Tax Credit, a lot of people currently relying on government subsidies will realize that they need to now go out and get a job to pay their bills rather than relying on government money. So that may have a huge positive impact on both the supply chain problems we are currently seeing and the labor force participation, in addition to easing inflation. But it’s going to be very interesting just with how much the economy is changing in so many ways.
SH: Are there any other big issues Republicans will be focused on or should be focused on?
AA: There needs to be some amount of focus on everything. The economy is going to be the big thing, but there are still some voters who won’t be going to the polls because of the economy. So, all of it matters, but the economy is going to be the biggest issue.
Quite honestly, so far, we can see this somewhat as a repeat of ’92, that “it’s the economy stupid.” It’s going to be pretty much impossible to say that there are any issues bigger than the economy, but those secondary issues will matter for getting the margins out there, which will help determine who wins.
SH: Are there any opportunities Republicans are missing right now in terms of messaging?
AA: Not necessarily in terms of messaging, but there is one issue that isn’t very well understood and is flying largely under the radar, but that could potentially become a problem moving forward, and that is redistricting.
Going into this year, with the number of state legislatures, who control redistricting being controlled by Republicans, it was looking like it was a really good possibility that a lot of maps could be drawn in a way that would benefit Republicans. And unfortunately, as we get more of these maps, its looking as if instead of drawing districts in a way to maximize Republican members, they were drawn in such a way as to protect incumbents. And so, some of the gains that we thought we would get from redistricting have been turned into ensuring that certain districts will be Republican for the next ten years no matter what. And some of the swing districts could go either way instead of leaning Republican. With those changes, the things that Republicans could’ve advantaged from in redistricting won’t be as strong as we perhaps thought.
Throughout our conversation, it was clear Ayers had an astute understanding of how lawmakers of both parties might make their case to voters over the next several months. As those storylines continue to develop, we’ll be sure to keep up with him for more valuable insights.