Good morning. Here’s your Daily SITREP for Tuesday, 31 October 2023.
TODAY’S BRIEFING:
- READ TIME: 6 Minutes, 38 Seconds
- Inside the Beltway
- (1) Defense Hawks Calling for Retaliation Against Iran
- (2) Biden Admin Struggling to Prevent Israel-Gaza Escalation
- (3) Schumer: House Israel Aid Package DOA in Senate
- Domestic INTSUM
- (4) UAW Scores Another Victory for Labor
- (5) 2024 Non-Union Wage Growth Will Disappoint
- (6) Deutsche Bank: America’s Long-Term Demographic Advantage
- (7) Maine Power Buyout Could be Energy Activism Future
- Global SITREP
- (8) Venezuela Suspends Opposition Campaign Despite Biden Deal
- (9) Taiwan Opposition Parties Form Alliance
- (10) Israeli Forces Press Further Into North Gaza; Free Hostage
- (11) Bataan ARG and Destroyer Escorts to Stay in the Red Sea
INSIDE THE BELTWAY
- (1) DEFENSE HAWKS CALLING FOR RETALIATION AGAINST IRAN: Republican defense hawks are calling for further retaliation against Iran for attacks on U.S. bases in the Middle East and a more combative approach toward Iran.
- Senator Tom Cotton (R-AR) said, “They are laughing at us in Tehran,” and Iran will continue targeting U.S. forces “until President Biden gets serious about imposing severe costs on Iran.”
- Why It Matters: The Biden administration is going to great lengths to prevent escalation, including holding back information on casualties from Iranian proxy attacks on U.S. personnel in Syria and Iraq over the last few weeks. The Biden administration is under pressure to support the Israeli offensive, which is drowning out calls from progressives to push for a cease-fire. And now Republican defense hawks are pushing the administration to take measures that will be seen as an escalation and draw the U.S. further into a regional fight. – R.C.
- (2) BIDEN ADMIN STRUGGLING TO PREVENT ISRAEL-GAZA ESCALATION: The Biden administration is attempting to balance support for the Israeli-Gaza offensive with deterring Iran from joining the war and escalating to a larger regional conflict.
- A senior administration official said, “Everything we are doing is designed to deter and prevent” a wider conflict, but the White House is still preparing for “all contingencies.”
- Why It Matters: The Biden White House is stuck between domestic political realities that require support for the Israeli offensive and the geopolitical reality that the U.S. is being pulled into a regional conflict by Iran and its proxies. The Biden administration’s support for the Israeli offensive is also causing further dissent and demoralization among Arab and Muslim officials, especially in the State Department, setting up a future exodus from the foreign service. – R.C.
- (3) SCHUMER: HOUSE ISRAEL AID PACKAGE DOA IN SENATE: House Speaker Mike Johnson (R-LA) said a $14.5 billion Israel aid package expected in the House this week will require equivalent cuts from IRS funding in the Inflation Reduction Act, which Senate Majority Leader Chuck Schumer (D-NY) said would be dead on arrival in the Senate.
- Senator Rand Paul (R-KY) said a combined package was likewise not going to pass and urged Minority Leader Mitch McConnell (R-KY) to push the House bill.
- Why It Matters: Newly minted Speaker Mike Johnson is attempting to leverage support for Israel to force some Republican agenda items, in this case, taking money away from the IRS that will be used to hire enforcement agents. While this is unlikely to pass the Senate, an IRS budget cut, and border enforcement could end up in a final deal since Democrats are also under pressure from the White House to pass an aid package for Israel. – R.C.
DOMESTIC INTSUM
- (4) UAW SCORES ANOTHER VICTORY FOR LABOR: The United Auto Workers (UAW) Union reached a tentative agreement with Detroit’s Big Three automakers, which should boost labor’s leverage against U.S. corporations in other sectors.
- “This is a set of negotiations, historically, where gains made in Detroit would be viewed and adapted by many other industries across the economy,” said Harley Shaiken, labor professor at the University of California, Berkeley.
- The tentative deals will raise top wages by 33% when factoring in cost-of-living adjustments.
- Why It Matters: The revised UAW contracts follow labor deals from Caterpillar, John Deere, United Parcel Service (UPS), and others negotiated this year. Organized labor should continue to score victories this decade, as American voters support striking workers, and the $1.2 trillion infrastructure law will boost U.S. manufacturing that relies on labor unions. – H.B.
- (5) 2024 NON-UNION WAGE GROWTH WILL DISAPPOINT: U.S. employers are budgeting smaller salary increases next year compared to 2023, and online job sites like Indeed, Glassdoor, and ZipRecruiter are predicting a slowdown in wage growth for non-union, private sector employees.
- “We’re not there yet, but I think we are seeing it shift a bit” to an employer market, where workers have less power to demand higher pay, said LaCinda Glover, a senior principal consultant at Mercer.
- Indeed’s wage tracker forecasts wage growth by early 2024 to be 3.1% – less than the current rate of inflation.
- Why It Matters: U.S. private sector workers without union contracts should continue to struggle next year. Since 2021, inflation has outpaced full-time workers’ wage growth, and the rate of inflation could accelerate again while wage growth remains flat. – H.B.
- (6) DEUTSCHE BANK: AMERICA’S LONG-TERM DEMOGRAPHIC ADVANTAGE: Deutsche Bank analysts wrote that demographics favor the U.S. over China and Western Europe, which will help power America’s economic growth over the long term.
- America’s 30 to 44-year-olds as a percentage of the population will remain steady at around 20% until 2040, compared to Western Europe’s slow decline and China’s rapid fall of this age group.
- Europe’s 65+ population will be the only group that grows by 2030, according to Deutsche Bank’s projections.
- Why It Matters: The U.S. faces soaring healthcare costs this decade, and about 10,000 Baby Boomers are retiring each day. But Deutsche Bank analysts believe that America’s 30 to 44-year-old segment will be a counterbalance. Citizens in this age group are more likely to innovate, start businesses, and spend heavily as they’re in their “housing formation years.” However, migration – both legal and illegal – to the European Union and the U.S. is a wildcard in this demographic forecast. – H.B.
- (7) MAINE POWER BUYOUT COULD BE ENERGY ACTIVISM FUTURE: Maine is set to vote on a ballot initiative on 07 November that will create a consumer-owned utility, Pine Tree Power Company, and buyout Maine’s two largest power utilities, Versant Power and Central Maine Power.
- Lucy Hochschartner, deputy campaign manager for Our Power Maine, said, “What we keep hearing is that Mainers can’t trust the utilities to keep the lights on.”
- Why It Matters: If this ballot initiative succeeds, despite the likelihood of years-long litigation, it could spur clean energy activists to push similar ballot initiatives in other states. Using ballot initiatives to force the buyout of private utilities would allow activists to then force the adoption of green energy alternatives, creating grid instability through follow-on ballot initiatives that private utilities could otherwise ignore. – R.C.
Global SITREP
- (8) VENEZUELA SUSPENDS OPPOSITION CAMPAIGN DESPITE BIDEN DEAL: Venezuela’s electoral court said it is suspending “all the effects” of the opposition party primary election and ordered the primary vote organizers to turn over all documents after Venezuelan President Maduro called the vote fraudulent.
- Former electoral official Jesús Castellanos said this could be the first step toward a broader move by Maduro to sanction the primary commission, disqualify winning opposition candidate María Corina Machado, or “persecute others.”
- Why It Matters: Maduro is flouting the deal made with the Biden administration to allow “free and fair” elections in exchange for easing sanctions. Maduro may have concluded that the Biden administration “unfroze” the Venezuelan oil industry to ease energy prices going into 2024 and may be reluctant to restart sanctions. – R.C.
- (9) TAIWAN OPPOSITION PARTIES FORM ALLIANCE: On Monday, the Kuomintang (KMT) and Taiwan People’s Party (TPP) formed an alliance to share legislative seats and break the Democratic People’s Party’s (DPP) majority.
- The presidential candidates disagreed on who would be the lead but will continue negotiations.
- Both opposition parties intend to renew relations with mainland China, which were severed when the DPP took power.
- Why It Matters: Election polling strongly indicates dissatisfaction with the DPP ahead of the January 2024 elections. A political alliance that opposes the pro-independence DPP could swing the legislative election against the DPP, which provides an offramp for military escalations from China. – J.V.
- (10) ISRAELI FORCES PRESS FURTHER INTO NORTH GAZA; FREE HOSTAGE: Israeli Defense Forces continued the attack into northern Gaza under a barrage of air and artillery strikes on Monday – moving slowly but deliberately in an attempt to free hostages.
- On Monday, Israeli forces freed a female IDF soldier captured by Hamas during its Oct 7 raid into southern Israel.
- Reports from Gaza indicate significant breakdowns in civil order, including mass looting of humanitarian aid warehouses, as well as theft of privately owned food, water, and fuel.
- Why It Matters: Despite pressure from the United Nations, Israeli President Benjamin Netanyahu rejected calls for a ceasefire Monday, equating them to calls for Israel to surrender to Hamas. It is unlikely that Israel will halt its military operations until a significant chunk of Gaza has been cleared of Hamas terrorists. It is also possible that Israel will clear the entirety of Gaza and force Hamas and its supporters to relocate elsewhere. The final end state of the war is now in the hands of Hamas, who can surrender, flee Gaza, or continue what Israeli leaders say will be a long and painful war. – M.M.
- (11) BATAAN ARG AND DESTROYER ESCORTS TO STAY IN THE RED SEA: According to a Monday report, the Bataan Amphibious Readiness Group (ARG) was reassigned to the Red Sea with three Destroyers as escorts.
- The USS Mesa Verde will remain in the Mediterranean Sea, while the USS Bataan and USS Carter Hall are in the Red Sea.
- Why It Matters: The three Destroyers likely fill dual roles of an air defense screen for the ARG while also being tasked with shooting down any further anti-ship missile attacks from the Houthis in Yemen. Reassigning the ARG is likely pre-positioning the Marines for a potential landing in Eilat, Israel, for non-combatant evacuation operations in the event of a second front opening up on the Israel-Lebanon border. – J.V.
— END REPORT
M.S. indicates analyst commentary from Mike Shelby
M.M. indicates analyst commentary from Max Morton
J.V. indicates analyst commentary from Jared Vaughn
R.C. indicates analyst commentary from Robert Cook
H.B. indicates analyst commentary from Harrison Burge
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