State of the Union Callouts: Are You Prepared?

By: Ken Wingert

As DC insiders, media, and yes, even voters anticipate President Biden’s State of the Union address on Thursday night, another constituency should be actively preparing: Corporate America. Presidents have long used the State of the Union to call out sectors of the economy for both praise and scorn. In a bygone era, a positive mention of your brand by the President in a nationally televised address would have been a badge of honor, but with today’s hyper-partisan, and increasingly populist electorate, it is far more likely your brand or industry will be the target of an attack.??

Whether that attack comes directly from the podium, through regulatory actions timed to coincide with the address, or on social media during and after the address, companies should be prepared for a potential callout and have a plan for telling their side of the story quickly and aggressively. With inflation stubbornly high and negative public perception of the economy weighing on President Biden’s poll numbers, here are some of the industries that should be on high alert: ?

Familiar Targets?

Technology Companies:?Last year, "Big Tech" companies faced a direct hit on personal data collection, particularly concerning children's data. Expect a renewed focus on this issue this year, with a call to pass youth online safety legislation, including the Kids Online Safety Act (KOSA) and Children’s Online Privacy Protection Act 2.0 (COPPA), which has drawn bipartisan support. Additionally, the need for comprehensive data privacy legislation will likely be mentioned, given its proliferating impact across all tech issues. Cybersecurity vendors/companies will also likely be mentioned, as the Administration will likely tout its efforts to promote critical infrastructure resiliency in the face of recent cyber-attacks and evolving threats in the face of emerging technologies.?

Private Equity:? A favorite punching bag of Democrats for years, attacks have stepped up on PE’s investments in nursing homes, residential real estate, and manufacturing; blaming investors for poor management, lost jobs, and higher prices. As prices continue to climb, so will the rhetoric around Wall Street investment in some of the largest expenses in families’ budgets.?

Oil & Gas Companies:?While gas prices have come down considerably from last year, along with food prices, the price at the pump is the most visible, and impactful reminder of inflationary pressures. Expect the President to continue to bash oil companies for making profits while consumers suffer.? ?

“Junk Fees” & “Shrinkflation”?? ?

Sensitive to public scrutiny that the Biden administration is not doing enough to tackle inflation, President Biden will highlight his “strike force” to tackle high consumer prices. Leading up to the SOTU address, on Tuesday, President Biden announced efforts by the Federal Trade Commission (FTC) and the Department of Justice (DOJ) to enforce against “corporate rip-offs” including hidden fees and price gouging practices passed on to consumers. ??

Banks & Credit Cards: Yesterday, the Consumer Financial Protection Bureau (CFPB) announced a rule limiting the amount of late fees companies can charge, to say nothing of legislation targeting so called swipe fees. As consumer credit card balances reach all-time highs, the companies who collect the bills make an easy scapegoat for consumer pain. We also expect the President to take a victory lap over efforts to limit bank overdraft fees. ?

Travel & Entertainment:??Last year, President Biden made hotels and airlines a focal point as he launched an attack on “junk fees,” while also singling out ticket resale websites. Expect the President to take credit for agreements that have been struck over the past year, while calling on companies – and Congress to do even more.??

Property Managers:? For many Americans, especially younger voters who President Biden needs to support him in November, the rent is too damn high. While the laws of supply and demand have driven up both rental and home sale prices, the Biden Administration has sought to place blame on property managers for the use of pricing algorithms and “junk fees” to squeeze rents.??

Consumer Brands:? The President already used Super Bowl Sunday to launch an attack on “shrinkflation,” blaming food manufacturers for smaller packaging to avoid higher prices. An attack on consumer staples, and the retailers who sell them, is all but certain Thursday – and throughout the campaign.?? ?

Other Areas of Interest to Watch for on Thursday? ?

AI:?The Administration is expected to highlight its accomplishments in the tech sector over the past year, with a significant emphasis on artificial intelligence (AI). The rollout of the AI Executive Order and its subsequent implementation, such as the development of the AI Safety Institute, will likely take center stage. Furthermore, the Administration will likely underscore its efforts to strengthen worker protections as AI continues to impact the workforce at large and how unions have focused negotiations on the technology.?

Importers:?If you have supply chains that touch China, watch for arrows on Thursday night. In an election year, Biden very well could try to out hawk the China Select Committee and Trump with new or continued attacks on imports and Chinese ties. Some of these targets could be domestic but more likely Chinese companies doing business in the U.S. like Shein and Temu are candidates to be singled out. Also expect The President to tout his “Build America, Buy America” initiatives, which have pushed manufacturers and technology suppliers to redraw supply chains to participate in federal programs.?

Labor:?Every Biden State of the Union speech has included a call to pass the PRO Act. While the bill has no pathway toward passing it is a safe bet that in an election year Biden will once again call for passage of the AFL-CIO’s top legislative priority. It is also a safe bet that Biden will couple the ask with his concerns that corporations are blocking union attempts to organize.?

Tax Policy:??The President may call for final passage of the current bipartisan tax package, which includes extensions of R&D expensing, bonus depreciation, and interest expensing, among other items. ?Also expect a preview of his campaign messaging on expiring Trump-era tax cuts, which likely will include extending some of the expiring individual rates for the middle class, but that those extensions should be offset by corporations and high net worth individuals “paying their fair share.” In this context, he could call for a higher corporate tax rate, closing “loopholes” like carried interest, or further expanding the Corporate AMT. He may also defend the clean energy tax incentives in the Inflation Reduction Act and bash Republicans for criticizing them, further cementing Republican calls for IRA repeal.? ?

About Monument?

Monument Advocacy is a bipartisan firm that offers government relations, public affairs, strategic and crisis communications, and digital services. We focus on providing our clients with the best advice on how to engage effectively in today’s challenging and crowded public policy marketplace. Read more about Monument Advocacy here.?

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