Week of January 2, 2023
Happy New Year from your friends at Franklin Square Group. We hope your holiday season was filled with joy, and that the new year’s resolutions to eat better, drink less, and workout more still seem like a good idea.The 118th Congress gavels into session today, and while the Senate will welcome seven new Senators to its chamber and Mitch McConnell (R-KY) will become the longest serving party leader in history, most of the attention in Washington will focus on the race for Speaker of the House. Kevin McCarthy (R-CA) has been negotiating with Republican Members in order to secure the votes necessary to become Speaker, but the GOP's narrow majority guarantees that any vote in the House will be tight in the 118th Congress. As a reminder, the Speaker is elected by the entire House (as opposed to other leadership positions, which are voted upon by each party), so McCarthy needs votes from a majority of Members present on January 3. There promises to be plenty of drama and inside politics in the Capitol today, but a more positive (and less stressful) happening today will be the reopening of the Capitol complex to visitors. Effective at 12 noon today, visitors will no longer need to be escorted or checked-in in order to visit their elected representatives.
What We’re Watching:
What A Republican House Means for Tech: The “techlash” mood will continue with Republicans in charge of the House, as committees focus on antitrust, content moderation, and privacy reform, along with greater oversight of federal agencies under the Biden Administration. The split Congress—with Democrats controlling the Senate and Republicans the House—makes it unlikely that much legislation will be signed into law; however, the privacy reform efforts in the House last year demonstrated that there are bipartisan paths forward on these issues if Members are willing to work across the aisle.
Congress’ Biggest New Innovation Players: The 118th Congress will see new members move into leadership roles that could impact technology and innovation.
Rep. Cathy McMorris Rodgers (R-WA) - McMorris Rodgers will be the Chair of the House Energy and Commerce Committee. She was the Republican lead on the bipartisan privacy legislation deal last year, and it is likely that she will again work to move a privacy bill through her committee. Section 230 reforms are also likely on agenda. Issues related to child privacy and protection have long been priorities for McMorris-Rodgers.
Rep. Jim Jordan (R-OH) - Jordan, a prominent member of the Freedom Caucus, will become the Chairman of the House Judiciary Committee. His focus will be on Biden Administration oversight, including the new Select Subcommittee on the Weaponization of the Federal Government, which will have a focus on social media companies and content moderation. Jordan has been less interested in competition policy issues than other members of that committee; however, the bipartisan support for addressing this issue makes it likely that Jordan’s committee will have to engage in some manner.
Sen. Ted Cruz (R-TX) - Cruz will become the Ranking Member on the Senate Commerce Committee. Cruz generally takes a more conservative stance than his predecessor, Roger Wicker (R-MS), who functioned as more of an operator willing to get deals done when possible. Content moderation and privacy reform garner most of the headlines, but the Committee also has jurisdiction over key issues such as broadband, artificial intelligence, and CHIPS implementation.
Rep. Mike Gallagher (R-WI) — Gallagher will be Chairman of the new House Select Committee on China. We expect an active hearing agenda and a somewhat bipartisan effort on the new Committee, as confronting all issues related to China remains a top issue in Washington, D.C. While the Select Committee has no legislative authority, Gallagher will be pivotal on driving the agenda on China policy on everything from the CHIPS Act to TikTok.
Rep. Hakeem Jeffries (D-NY) - The new House Minority Leader represents a generational, tech savvy shift in Congress. Jefferies, who has represented the tech hub of New York City for over a decade, will bring that experience as well as a generational shift to his leadership position. We expect him to be an active player on key tech legislation.
What Tech Issues to Expect First: Going into a new divided Congress, issues with strong bipartisan support, or items on the new House Republican majority wish list, will be the first lawmakers tackle.
Crypto. The fall of FTX last November resulted in Congress continuing its trend of having hearings—and more hearings—related to digital assets. Patrick McHenry (R-NC) taking the gavel at the House Financial Services Committee should result in crypto-focused legislation being introduced, and actually moving through committee. This does not guarantee any bills are signed into law in the 118th Congress, but McHenry will drive more action on this front at the banking committees while the House and Senate Agriculture Committees will resume their push on CFTC-focused legislation.
Content Moderation. The Republican House will spotlight Section 230 protections for social media companies in their broader scrutiny of big tech. It remains to be seen what proposed legislation would look like, but with the Supreme Court set to hear oral arguments in the content moderation cases Gonzalez v. Google and Twitter v. Taamneh in late February, the Court’s decision could play a prominent factor in how Congress acts on CDA 230.
China. China competition concerns continue to top the charts of concern across the aisle, and this is an area where additional action is expected this year. Members in both chambers have been vocal about the national security concerns of TikTok, passing legislation included in the omnibus to ban TikTok from government devices, and Members could take even further action on the social media giant. With another recent batch of companies placed on the Department of Commerce Entity List, trade and export control will be an area of particular focus for Congress and regulators alike.
What’s Happening This Week:
Tech Hearings
No relevant hearings this week.
Tech Events
No relevant events this week.
What’s Interesting This Week:
Dot.Dot.Dot. On January 6, 1838, Samuel Morse’s telegraph system was demonstrated for the first time at the Speedwell Iron Works in Morristown, New Jersey. The telegraph, a device which used electric impulses to transmit encoded messages over a wire, would eventually revolutionize long-distance communication, reaching the height of its popularity in the 1920s and 1930s.
