The Cozen Lens

• The leak of a draft Supreme Court opinion overturning Roe v. Wade has brought abortion politics front-and-center. But abortion politics are not as clear cut as "pro-choice" vs. "pro-life" and the court's ultimate ruling will speak to issues of conservative power far beyond one case.
• Elon Musk’s potential acquisition of Twitter could have political ramifications for former President Donald Trump and the Republican Party, as well as for Big Tech as a whole.
• The Federal Reserve is at the center of attention right now for the impact of its monetary policy decisions, but once President Biden’s nominees to the Fed Board are all confirmed, it will become a key player in the Biden administration’s efforts to regulate the financial sector as well. 

The Implications Reversing Roe

What Overturning Roe Means Politically: Midterm elections are often referendums on the party in power. Democrats see a politicized Supreme Court overturning Roe v. Wade as a referendum on the threats of conservative power. 

• American views on abortion are muddled. In a Fox News poll, a majority of Americans support keeping Roe, which protects abortion up until the point of fetal viability, at about 24 weeks. The same poll also had a majority of Americans supporting a ban on abortion after 15 weeks of pregnancy. That's the same threshold as the Mississippi law that's the basis for Dobbs v. Jackson Women's Health Organization before the Supreme Court.
• American views on abortion are relatively constant. Gallup's polling since 1975 shows a stable majority or plurality of Americans supporting abortion "only under certain circumstances" with smaller blocs supporting or opposing abortion "under any circumstances." In 1992, President Clinton said, "Abortion should be safe, legal, and rare." While pro-choice Democrats have shifted away from that recently, it probably encapsulates a majority of Americans today.
• Americans may be muddled but elected leaders are sorted. There are very few "pro-choice" Republicans and "pro-life" Democrats. The last pro-life Democrat in the House, Rep. Henry Cuellar (D-TX), is facing a primary runoff from a progressive challenger. President Biden epitomizes the shift, once being someone opposed to abortion and now falling in line with the Democratic abortion talking points.
• Americans want a return to normalcy. That has benefitted Republicans this election cycle. But Americans don't like extremists who could upset the almost 50 years of "settled precedent" in Roe. Senate Republicans in 2012 lost two winnable races in Indiana (Richard Mourdock) and Missouri (Todd Akin) because the Republican nominees held unconventional views on abortion. 2022 is a better election cycle for Republicans than 2012. The price of gas and violent crime matter to more people than a muddled abortion policy. But clearly controversial stances on abortion by candidates in Senate and gubernatorial races will make life more difficult for the GOP.   

What Overturning Roe Means Judicially: The Roberts Court, led by the eponymous Chief Justice John Roberts has not shied away from a conservative bent in the past. But Roberts' right flank may feel more emboldened to move the court further right.

• The Roberts Court has had more unanimous or near-unanimous decisions than split decisions. It has had the lowest rate of overturning precedent of any court since WWII. It's a reflection of Roberts himself, a conservative but also an institutionalist more concerned about the standing of the Supreme Court than what rulings stand or go.
• A conservative supermajority means more latitude for upending precedent. Justice Samuel Alito, who authored the draft majority opinion overturning Roe, comes from the same conservative legal circles as Roberts. But Alito sees the 6-3 court since Justice Amy Coney Barrett's arrival in 2020 as a moment to leave a conservative imprint rather than to manage the institution of the court.
• There may be a conservative majority to overturn Roe but it becomes more muddled on overturning precedents that are more settled in America. This includes marriage equality and sexual orientation where the public has shifted towards broader acceptance over the years.
• A 6-3 conservative court will feel more emboldened to cut back the power of the regulatory state. This includes on issues like Chevron deference and "major questions" that have given the executive branch power to promulgate regulations in the face of unclear legislative authority.  

What Overturning Roe Means for Corporations: In the era of environmental and social governance (ESG), customers and employees expect corporations to have a voice on hot-button issues. But speaking out requires weighing the trade-offs of conservative lawmakers eager to make an example of "woke" corporations.

• Voters want corporations to do something, but what exactly is unclear. A majority of voters, especially young voters, want companies to speak out about abortion access. This includes "providing resources and assistance to help" employees and customers affected by the upcoming ruling. But specific actions – like reimbursing travel for employees to have access to an abortion or move offices from states with restrictive abortion policies – are more divided.
• Ground zero of these corporate cultural battles will continue to be in red states with a growing metropolitan and corporate sector. Florida, Georgia, and Texas lawmakers have all threatened or made good on punishing corporations meddling in legislation related to voting rights, abortion, LGBTQ rights, and education.
• It will become a greater challenge for corporations to have a one size fits all ESG policy to deal with state-level policies. The rise of one-party rule means a greater bifurcation of state policy on issues like abortion. The number of states with governing trifectas is at its highest level in 30 years. Republicans hold a clear advantage with governing trifectas in 23 states, compared to just 14 states with Democratic trifectas, and 13 states with divided governments. Republicans are aiming to add trifectas with gubernatorial wins in Kansas, Michigan, Pennsylvania, and Wisconsin this year. Democrats are aiming to flip the governor seats in Maryland and Massachusetts.
• A structural electoral advantage means Republicans are less beholden to corporations. This isn't just in one-party Republican states but potentially at the federal level. It's not out of the realm of possibility that come 2025, Republicans could hold the White House, the House, and a filibuster-proof Senate majority. 

The Politics of Twitter, Big Tech, and Elon Musk

Impact on Electoral Politics. Elon Musk’s purchase of Twitter is likely to be good for Donald Trump but bad for Republicans.

• As Musk moves to acquire the social media platform, he has emphasized his vision of free speech. “Free speech is the bedrock of a functioning democracy, and Twitter is the digital town square where matters vital to the future of humanity are debated,” he said in a statement last month.
• Could this mean allowing Twitter users who have been banned, most notably Trump, to use the platform once more? The Wall Street Journal reported last month that “people who have spoken to him and his team recently say Mr. Musk remains dismayed that former President Donald Trump is still barred from the platform.” A federal judge ruled against Trump late last week in his lawsuit against Twitter over the ban, suggesting that Musk represents his best chance of regaining access to his account.
• A return to Twitter would be a boon for Trump. The 16 months since he was banned following the January 6, 2021 insurrection at the US Capitol have been a relative PR drought for the once-prolific Twitter user. Lacking the megaphone provided by his Twitter account, Trump has slid (somewhat) out of the public eye. His press releases generally don’t get the same attention as some of his tweets once did. His new social media network, Truth Social, has flopped, with downloads cratering from 200,000 on the day the app became available in February to an average of 10,000 per day in March, according to The Washington Post.
• While Trump said in a recent Fox News interview that he wouldn’t get back on Twitter even if Musk bought the platform, it’s an open question of whether he would be able to resist reactivating the account that helped fuel his political rise. Once back on Twitter, Trump could communicate directly with his supporters, energizing the Republican base and driving the news cycle in a way that he hasn’t been able to do since leaving office.
• This could create political problems for other GOP candidates, however. Trump famously used Twitter to share remarks that were inflammatory or offensive, thrilling the base but attracting negative attention to other Republicans who would have to answer for them and risk being dragged into a controversy. Many GOP members of Congress began saying that they hadn’t seen the latest Trump tweet when asked to comment by journalists. Trump on Twitter could be a political gift for Democrats: a distraction from Republican midterm messaging on Biden’s political weaknesses like inflation and the border and a reminder for voters of the chaos of the Trump years. 

Impact on Tech Regulation. Musk’s acquisition of Twitter could also shape the debate in Washington, DC around regulating Silicon Valley.

• In 2022, Big Tech is a common punching bag for Republicans and Democrats alike, but the parties disagree on how to approach changes to tech policy. The GOP generally voices concerns about alleged anti-conservative bias by internet platforms, while Democrats focus more on issues with hate speech and misinformation. This disagreement makes reforms to Section 230, the provision of federal law that shields the platforms from liability for user-created content, politically difficult.
• Musk is becoming a polarizing figure in the wake of his announcement that he would buy Twitter. A Generation Lab/Axios poll published last week found that approval of his Twitter acquisition is divided by party and gender. According to the poll, “69% of Republicans and 65% of men want Musk to do so, compared to 22% of Democrats and 29% of women.” This is likely to exacerbate partisan divisions over Big Tech, making it harder for Congress to reach bipartisan compromise on Section 230 reform and other topics relating to Big Tech. Musk’s Twitter buyout is already becoming a political issue, with Reuters reporting last week that Rep. Jim Jordan (R-OH) has requested Federal Trade Commission Chair Lina Khan to save records having to do with the agency’s review of the acquisition.
• Musk’s acquisition of Twitter might cause both sides of the debate over Big Tech to harden their positions. If Musk loosens the platform’s content moderation policies, as his public stance in favor of “free speech” implies, Republicans could hold up Twitter as an example for other social media companies. At the same time, if this potential change in content moderation resulted in increased hate speech targeting protected classes or greater spread of misinformation, it could embolden Democrats to keep pushing their own approach to Big Tech. 

Fed in Focus

The Politics of Quantitative Tightening. As much as Federal Reserve Board of Governors Chairman Jerome Powell may have tried to take ownership of inflation last week, President Biden will still have a political price to pay for it.

• Powell and Biden have a shared goal of lowering inflation, but there is no questioning that Powell has by far the strongest tool at his disposal to do so. This may matter in the economic world, but it means little in a political world where Republicans are trumpeting their view that inflation is a Biden-created issue. Regardless of what policies or decisions are actually to blame, perception is what ultimately matters when voters go to the polls.
• Biden and Democrats are likely facing negative scenarios heading into the 2022 midterms as the Fed begins its quantitative tightening cycle. Inflation is expected to either remain elevated going into early November or, even if the Fed’s actions start to tame inflation, they will also likely slow economic growth as the holy grail of a “soft landing” is not only difficult to achieve, but will likely need longer than just the rest of this year to materialize to the point where it becomes readily apparent in the daily lives of Americans.
• Most likely, any positive economic reaction to the Fed’s quantitative tightening that does come to fruition won’t be politically realized by Biden and his fellow Democrats until the 2024 election cycle. 

Filling the Seats. Biden has struggled to have his nominees confirmed to the Fed with setbacks becoming the norm more than the exception.

• The tale of Biden’s efforts to fill the vacant seats on the Fed has been plagued by delays. There were problems in committee due to Republican objections to the nomination of Sarah Bloom Raskin to be vice chair of supervision that prevented the movement of the other nominees to the Senate floor. Raskin’s nomination was ultimately pulled due to opposition from Senator Joe Manchin (D-WV), paving the way for the rest to be voted out of committee.
• What makes the 50-50 Senate precarious to navigate for Senate Majority Leader Chuck Schumer (D-NY) is that if he does not have all of his members present, there are some votes he is unable to hold. Two weeks ago, the positive Covid-19 tests of Vice President Kamala Harris and Senators Ron Wyden (D-OR) and Chris Murphy (D-CT) meant that Schumer did not have enough votes to confirm Federal Reserve Chair Jerome Powell and the two new board members Biden nominated, Lisa Cook and Phillip Jefferson. These nominations appeared set to move last week, but a positive test from Senator Michael Bennet (D-CO) once again postponed the votes for a week. Schumer is expected to get votes on these nominations this week, so long as his caucus can stay healthy long enough to hold the requisite series of votes on the Senate floor.
• The last nominee that is waiting for his confirmation process to begin is Michael Barr, Biden’s new nominee to be vice chair for supervision. Barr’s public perception is more moderate than Raskin, though his views in practice are likely more similar than his reputation would suggest. But his history of being less outspoken than Raskin should be enough to get him through the confirmation process, although Barr has not been given a preliminary hearing date in the Senate Banking, Housing, and Urban Affairs Committee yet. Senate Democrats will want to get this process well under way before the August recess, so there is reason to believe that it could begin as soon as the next few weeks. 

A Cop on the Beat. If Michael Barr is ultimately confirmed to be the Fed’s vice chair for supervision, he will enter the role facing a long to-do list and political pressure to act quickly on issues ranging from climate risk in the financial system to stablecoin regulation. 

• One of the first things that Barr will also be responsible for is to help finalize new rules for the Community Reinvestment Act. The Fed, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency proposed an overhaul to these rules last week that aims to ensure lending to lower-income individuals and small businesses is distributed more evenly where banks do business. The regulators will now collect public comments through August before writing a final draft of the rules. The new rules would subject large banks to increased scrutiny of their auto lending activities in addition to mortgages and small-business loans. Nonbank lenders will still not be covered by the new rules as to include them would require congressional approval.
• Although Barr is less outspoken than Raskin was about environmental concerns, he will still likely look to push the envelope on climate-related regulation. In his position as vice chair of supervision, Barr will play an important role in the Biden administration’s effort to include financial regulators as part of its “whole-of-government” approach to climate change. Barr will likely accelerate the Fed’s on-going efforts to ask banks to explain how they are mitigating climate-related risks to their balance sheets as well as the introduction of a formal climate change scenario analysis. The big question is whether Barr will lead a push for restrictions or stiffer capital requirements on banks with significant exposures to polluting industries or other climate-specific risks. Given the controversial nature of this regulatory effort. Barr will assuredly face questions on it during his confirmation hearing, which may offer some insight into how far he envisions going, although Barr will want to avoid giving any particular details on such a controversial topic as his only goal at the hearing is to avoid risking the loss of support from any Democratic senators.
• Another area in which Barr will be under political pressure to do more is to step up the role of the Fed in policing bank mergers. This has been a big gripe among progressives especially who feel that these deals reduce competition and hurt consumers. Several mergers have been delayed by the uncertainty of who would be the vice chair for supervision, which will give Barr an opportunity to make an impression early on in his new role.
• Lastly, although a central bank digital currency still is a long way off from becoming a reality, if it ever does, the seeds of this and other future crypto regulation will be laid under Barr’s watch. Barr has a history with the crypto industry having worked on the advisory board for Ripple Labs, which is viewed as an advantage for digital asset advocates given his pre-existing knowledge, but that did not play out for them the way they expected it would in the case of Securities and Exchange Commission Chair Gary Gensler. Under Barr’s watch, the Fed will also be expected to play a role in the development of stablecoin regulation, but he has given no public indication yet what policies he would want to pursue.