SPECIAL REPORT

USA: The year ahead

Madrid, February 2015

BARCELONA BOGOTÁ BUENOS AIRES LIMA LISBOA MADRID MÉXICO PANAMÁ QUITO RIO J SÃO PAULO SANTIAGO STO DOMINGO USA: THE YEAR AHEAD

1. INTRODUCTION 1. INTRODUCTION 2. PRESSURE FROM THE FAR RIGHT Only weeks into 2015, clear examples are already emerging of the 3. THE ANTI-LAME DUCK PRESIDENCY major dynamics we can expect to unfold throughout this important 4. DECISION 2016 year in Washington. The U.S. Congress returned to work after the New Year with the Republican Party now controlling both the AUTHORS House and Senate for the first time since 2006. That presents the LLORENTE & CUENCA GOP both the opportunity to more easily fight the Democratic president’s agenda, but also the challenge of showing the country that they are responsible enough to govern at a moment when approval ratings of Congress are at historic lows. At the same time, President Obama has begun his final two years in office eager to prove that he is still relevant despite the major losses his Party suffered in November’s mid-term elections, and facing the reality that attention is already shifting to those trying to succeed him in the White House. Both the President’s dealings with Congress and the emerging primaries for president are beginning to show the internal challenges both parties will have in balancing the interests of their base constituencies while trying to work across party lines to advance substantive policy.

The upcoming presidential primaries hold the greatest potential for surprises in 2015. Both parties have open primaries and a legitimate opportunity to retain or recover the White House. While Republicans begin 2015 with energy and momentum from their major victories in November, they also have no clear front-runner for the Party’s nomination and a new level of pressure and expectation of their leadership in Congress that could affect their candidates. The recent exit of their 2012 nominee, Mitt Romney, without endorsing anyone shows that whoever emerges will have to earn the nomination through a hard-fought primary. The problem for Democrats, on the other hand, is that they only have one major potential candidate in former First Lady, Senator, and Secretary of State . Widely embraced as the front-runner and favored candidate by many key voices in the Democratic Party, Clinton can potentially benefit from not having a challenger and may even delay a campaign announcement until this summer. However, not having to run against anyone and not having any Democratic candidate debates could work against her in the harsh spotlight throughout the fall.

In the foreign policy arena, this year Republicans will continue to try to define the President as “leading from behind,” a slogan they’ve used regularly to question his positions on everything from the conflicts in the Middle East to tensions with Russia. With control of both chambers

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of Congress, they’ll be more between Republican leaders and aggressive in trying to rehash the White House to keep the old battles, and hold very public U.S. government open. Those hearings on new ones. Looking members, favorites of the Tea at the Western Hemisphere, Party, are also seeking to be the U.S. Congress will debate more aggressive in fighting the the President’s move to restore President’s executive actions on diplomatic relations with Cuba, immigration and continuing to “Economic concerns in with hardliners trying to stop try to dismantle the Affordable Europe will also be on funding for the implementation Care Act, known as Obamacare Washington’s radar, but of any changes while a collection throughout 2015. of other interests work to further attention on terrorism scale down the embargo through The Tea Party’s early challenge following the attacks in legislation to allow open travel to Boehner led to concessions Paris is more likely to and trade. Economic concerns immediately, evident in that the dominate the political in Europe will also be on House of Representatives began landscape” Washington’s radar, but attention the 114th Congress considering on terrorism following the attacks legislation to fund the Department in Paris is more likely to dominate of Homeland Security (DHS) with the political landscape, as will a bill that would eliminate the the ongoing threat posed by the President’s executive actions on Islamic State in Iraq and Syria and immigration. The Republican bill tensions with Russia. However, the would: hacking of Sony and the recent hacking of Central Command’s • Stop the measures the social media accounts, together President announced in with consumer concerns, will November affecting 5 mean that cybersecurity takes million immigrants, on a much bigger profile in the coming year. • Stop the Deferred Action for Childhood Arrivals program We’ve prepared this memo to that began in 2012 to give break these issues down in greater DREAMers, young people who detail in anticipation of what were brought to the United promises to be an exciting and States as minors by their fluid year. parents, an opportunity to work and study.

2. PRESSURE FROM THE FAR • It would also restrict the RIGHT prosecutorial discretion measures the Department Before he could start the year, of Homeland Security U.S. House Speaker John Boehner established throughout the was already being challenged entire Obama Administration by far-right conservative House Republicans unhappy with • And restart the Secure the U.S. $1.1 billion spending Communities program bill negotiated in December that required information

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sharing from local and state bill to raise the definition of a police agencies with federal full-time employee with the goal immigration officials, and of undermining the employer require those local officials mandate under Obamacare, to hold immigrants until which affects how many people immigration officers pick will get health care through their them up. employer. It’s only the first of many likely attempts in this new “The White House has Even if this bill fails to get to Congress to try to undermine already confirmed that the President’s desk, the far- the health care reform law that the President would right of the Republican Party will defined the President’s first term, continue to look for opportunities and is evidence that the Senate’s veto the immigration throughout 2015 to undermine the Republican majority will also bill if it includes the President’s executive actions, and be aggressive in trying to erase measures to stop his are signaling they don’t believe Obama’s legacy achievements executive actions” delaying the Department of this year. Homeland Security’s budget is a real problem. They’ll also continue If these types of measures do pass to try to roll back the President’s both chambers, the President is agenda in other areas like health ready to veto them, a scenario care and banking regulations. likely to repeat itself throughout 2015 on many issues. The White The battle lines over immigration, House has already confirmed that however, expose the fault lines the President would veto the inside the Republican Party immigration bill if it includes the between their leadership and measures to stop his executive the far-right, and also between actions. Ironically, the Republican the leadership in the House strategy of obstruction has also and Senate. The Republican emboldened the President, who leadership in the Senate will also isn’t waiting for Congress, and try to reverse the President’s is already driving an aggressive policy achievements in a number agenda for the coming year and of areas, but will be more introducing a budget much more tempered by the reality that to the left than his past and more most legislation requires 60 votes centrist approaches in earlier to overcome a filibuster. On years. That dynamic increases the immigration, for example, Senate likelihood of ongoing and tense Republicans have introduced a battles between the President and similar bill to the one in the House Congress throughout the year. but it is separate legislation from the larger bill funding DHS. Senate leadership, however, has 3. THE ANTI-LAME DUCK designated a staunch opponent PRESIDENCY of immigration reform to lead their immigration subcommittee, After the Democratic Party’s so any real progress on the issue heavy losses in November’s mid- this year is unlikely. At the same term elections, President Barack time, the Senate is moving on a Obama responded with an

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aggressive agenda that includes earlier, he is a strong opponent using executive authority where of reform. Congress has either failed or refused to act. Within weeks On Cuba, the incoming Chairman of the elections, the President of the Senate Foreign Relations had announced a major set of Committee, Republican Bob actions on immigration reform, Corker, said recently that the and a historic move to re- embargo has been ineffective “The incoming establish diplomatic relations and promised hearings on the Chairman of the Senate with Cuba. Both will become the President’s announcement to Foreign Relations focus of attempts in Congress to restore relations. That’s a much stop him. better tone than the one from Committee, Republican the Democrat who preceded him Bob Corker, said Ironically, those actions may as Chairman of that committee, recently that the also result in Congress taking Bob Menendez, who is Cuban- embargo has been the two issues seriously enough American and is opposed to any ineffective” to move on legislation they changes in Cuba policy. The might have otherwise ignored. President’s bold move creates an On immigration, moderate opportunity to work with both Republicans are looking for Democrats and Republicans, many alternatives that can help them driven by agriculture and business address their sinking support interests, and potentially achieve among the nation’s growing Latino legislation that goes further than electorate, while helping them he can on his own. show they’re working on border security. What’s certain is that Already the first week of February Congress will not move anything has seen a hearing of the Senate close to the bipartisan bill that Foreign Relations subcommittee on was approved in the Senate in the Western Hemisphere featuring 2013, and there is little to no dissidents on both sides of the chance that Congress would issue, and a serious bipartisan bill approve any path to citizenship has already been introduced by four for the nation’s 11 million Democrats and four Republicans in undocumented immigrants, but the Senate to end the travel ban either a standalone bill or several on Americans that denies them smaller bills are likely to emerge the right to travel freely to Cuba. to address different pieces of Seven Senate Republicans have also reform, and the President is likely sent the President a letter stating to make concessions if he can their support for a policy shift and formalize some of the protections willingness to engage Congress he implemented in his executive in the new policy, including action. The Senate’s designation presidential contender Rand Paul, of Senator Jeff Sessions to run so it presents an opportunity for the immigration subcommittee, possible bipartisan action this year however, does create challenges on at least parts of the embargo. for the Republican leadership in trying to find a creative and The President is also starting out constructive approach. As noted 2015 with an extensive agenda

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for the coming year, introducing With Europe and Japan facing several initiatives meant to use economic woes, the President the power of his office where is eager to take credit for the possible, but also challenging American economy, which through Congress to act on his priorities. December had added 11.2 million Among the initiatives the jobs over 58 consecutive months “With Europe and President has proposed: of job growth, the longest streak Japan facing economic on record. With only two years left • Better protecting consumers in office, the President will spend woes, the President is from identity theft and time throughout the year touting eager to take credit for safeguard privacy that record, something he believes the American economy, Democrats failed to do on their which through • Reducing Annual Mortgage way to losing the Congressional December had added Insurance Premiums elections in 2014. 11.2 million jobs over • Making Community College The President and his 58 consecutive months Free for Two Years Administration will also make of job growth” a concerted effort to promote • Promoting American Foreign Direct Investment in Manufacturing, Research & the United States, and the U.S. Development Department of Commerce is organizing a summit to connect • Attracting more international investors with representatives investment to the United from every U.S. state and States territory, called the SelectUSA Investment Summit, to be held in • Increasing Access to Affordable Washington, DC on March 23-24. High-Speed Broadband The American economy is one of the world’s bright spots and the In all reality, most of the Administration is touting data to President’s calls for Congress to show that U.S. affiliates of foreign act on anything will go unheeded firms employed 5.8 million people by the Republican majorities in in the United States in 2012, Congress. The exceptions are high- spent $48 billion on research profile issues like Authorization and development, and exported for Use of Military Force (AUMF) $344 billion worth of goods with regard to ISIS. Concerns over manufactured in the United States high-profile hackings may also to build support and participation help the President make progress in this initiative. U.S. Commerce on his privacy initiative and for Secretary Penny Pritzker has made collaboration on cybersecurity it clear she is eager to boost FDI in generally, driven not only by 2014 consistent with the growth the hacks of the U.S. Central seen from $170 billion in 2012 to Command’s social media accounts $231 billion in 2013. and Sony, but also others that exposed millions of credit cards to Energy and climate change will hackers at corporations like Target also be a major focus of the battles in recent years. between Congress and the White

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House this year, as Republicans planning on running this time continue to try to force approval around, no one has formally for the Keystone XL Pipeline announced their candidacy yet. that the President threatened to veto. This year, the President’s At the macro level, Republicans Climate Action Plan will also get have a deeper bench, and more “Republicans have scrutiny from the new Republican potential candidates, some of a deeper bench, leadership as the Environmental whom have been running for Protection Agency (EPA) prepares several years. Former Florida and more potential to issue a final rule to limit the Governor Jeb Bush has positioned candidates, some carbon pollution from existing himself as the most likely of whom have been power plants. The final rule was frontrunner, particularly after running for several scheduled for June, but the EPA has essentially forcing Mitt Romney years” now said it will delay publishing the out of the race by getting many of new regulation until mid-summer, Romney’s former backers to move giving Republicans in Congress to his camp. Bush’s formation of more time to work aggressively to a Super PAC also suggests he has stop the EPA through legislation the donors and organizational and oversight. More than half of strength to be the strongest Republicans in this Congress have contender. Senator Rand Paul, openly denied or questioned the more Libertarian than Republican, science related to climate change, will continue to run and may stay according to a recent analysis. in through the end, but is unlikely Still, natural disasters including to make a serious dent. tornados, floods, and wildfires have had a significant impact in The Republican Party may also see recent years, and could very well other previous contenders like shape 2015 and the debate over former Arkansas Governor Mike climate change. The extended Huckabee run again, along with drought in the state of California, former Vice Presidential candidate for example, has already had an Paul Ryan, and new candidates impact on food prices and spurred like New Jersey Governor Chris competition for water. Christie, who has made an effort to expand his appeal with a recent trade mission to Mexico. Another 4. DECISION 2016 possible contender is Florida Senator Marco Rubio, though This year will also bring the next with fellow Floridian Bush gaining major American presidential strength, Rubio may not last long. campaign to life, as Republicans and Democrats begin to formally A major problem for the compete for the White House. Republican field will be how they The last time there was an open handle immigration, an issue contest for the Oval Office, that’s toxic for a Republican campaigns got underway early primary, but that can complicate in 2007, nearly two years before any Republican’s chances in a the election. While there are general election. Jeb Bush has clear indications of who is been on both sides of the issue

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at different times, and Marco President’s appointees to the Rubio helped broker the Senate Treasury Department over his ties bill that passed in the Senate in to Wall Street. Late last year, an 2013, which may kill his potential open letter signed by more than among the base of the party. With 300 former Obama staffers urged his announcements, Jeb Bush Warren to run. Vice President “Candidates will has emerged as the early leader trails both Clinton and have to build their among Republicans, but doesn’t Warren in early polling, though look as strong in a potential no poll today could predict what organizations and have match up with Hillary Clinton. will happen once the candidates credible campaigns in are running. For now it seems place by the summer in That’s one of the reasons Clinton unlikely either will challenge her order to be ready for will remain the favorite for as Clinton feels safe to consider an aggressive campaign Democrats. Clinton holds an edge delaying her announcement until in the fall” over other potential Republican July, but anything is possible. candidates as well, and has a commanding lead over her With the first primary contest, potential Democratic opponents. the Iowa Caucus, scheduled for While there are rumors of Vice February 1, 2016 and the New President Joe Biden being Hampshire primary for February 9, interested in the race, the most 2016, all of these candidates will likely challenger for Clinton have to build their organizations could be Senator Elizabeth and have credible campaigns in Warren, who is quickly becoming place by the summer in order to be a favorite of the party’s liberal ready for an aggressive campaign base and was recently credited in the fall. This year, 2015, will with knocking out one of the determine their chances.

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AUTHORS

Juan Verde is Former Assistant Secretary for Trade Relations US and Europe, founder of The Climate Project Spain and president of the Advanced Leadership Foundation, a nonprofit that promotes and develops leadership skills in future business, political and social leaders. Juan has a BA cum laude in Political Science and International Relations from Boston University and a Master of Public Administration from . He has been international co-director of the Campaign for Re-election of President and his advisor on international economics , sustainability and Hispanic community. Previously, he served as Deputy Assistant Secretary for Europe Commerce Department US Government. [email protected] @juanverde

Joan Navarro is Partner and Vice-President of Public Affairs of LLORENTE & CUENCA. He is a sociologist and PDG in IESE. He was the Director and Spokesman of Coalición de Creadores e Industrias de Contenidos Audiovisuales and has held public positions within the Public Administration, such as Head of Staff for Minister of Public Administrations (2004-2006) and Head of Institutional Relations in Sociedad Estatal Aguas de las Cuencas Mediterráneas (2006-2008). [email protected] @joannavarro0

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