CEO Daily: Saturday, December 12th

As the presidential race tilts off its axis, it can be easy to miss some of the real-time, real-world consequences. Here’s a big one: The Trans Pacific Partnership, the mega-trade deal topping the corporate lobby’s wish list, finds itself newly imperiled. Senate Majority Leader Mitch McConnell is threatening to ice the 12-nation pact until after the 2016 elections, an acknowledgment in part that the populist crosswinds stirred by the campaign make Congressional approval in the next year a long shot. The Kentucky Republican, in an interview this week with the Washington Post, said it’d be a “big mistake” for President Obama to send up the deal any earlier and suggested his successor should determine its fate.

That represents a stark about-face from early summer. Back then, McConnell and the rest of Congressional Republican leadership locked arms with the business community and the Obama administration in an unlikely coalition that narrowly secured fast-track negotiating authority to smooth completion of the pact. Since, the rise of Donald Trump has rattled the GOP to its core. The Republican frontrunner regularly trashes the agreement as the work of elites indifferent to American workers who stand to suffer. Texas Sen. Ted Cruz, angling to inherit Trump’s supporters if he falters, has likewise denounced it. And others who in ordinary circumstances would champion the package, like Florida Sen. Marco Rubio, now are hugging the sidelines. Trump can’t claim credit (which isn’t to say he won’t), but he has helped complete a feedback loop that’s toxifying the debate.

There are other forces at work. McConnell’s home state tobacco interests object that the pact excludes them from protections extended to other agricultural sectors. And pharmaceutical companies are protesting that the deal shaves four years of intellectual property protections off of next-generation biologic drugs — a major stumbling block for Senate Finance Chairman Orrin Hatch, from Utah, a growing industry hub. Those complaints are at least temporarily neutralizing the big business groups that would otherwise help lead the charge, leaving the White House alone among the deal’s erstwhile boosters to urge action in the first half of next year. The administration will do what it can, arguing that while the U.S. dithers, China is racing to wrap up its own multilateral agreement to cement its primacy in the Asia-Pacific region. But at home, in an election season, global considerations will struggle to surmount parochial fears.

Top News

• Rubio continues winning the GOP donor primary

With the sands in the hourglass dwindling before voting gets under way in Iowa and then a burst of other contests in the Republican presidential sweepstakes, establishment GOP moneymen appear to be gravitating toward Florida Sen. Marco Rubio as their best hope for nominating one of their ideological own. The latest evidence came this week from a pair of endorsements for the freshman senator — from Chicago hedge fund magnate Ken Griffin and North Carolina entrepreneur Art Pope.  Fortune

• A top Clinton loyalist says Cruz will win the GOP nod, for whatever that’s worth

As Hillary Clinton solidifies her grip on the Democratic presidential nomination, her team increasingly trains its attention on sizing up the Republican field that will eventually produce her general election matchup. To hear them tell it, now, they view Texas Sen. Ted Cruz as her likeliest White House rival. David Brock, one of Clinton’s most trusted lieutenants, this week laid out the case for Cruz’s emergence and the arguments the Democrats will marshall to bring him down. His analysis should be taken with a softball-sized grain of salt, considering that Clinton’s campaign will do what it can at this moment to legitimize the candidate she’d prefer to face. Cruz’s vulnerabilities are manifold, and Marco Rubio strikes a more profound fear into Democratic hearts. But the fact that Brock can make the argument for Cruz with a straight face reveals something worth considering about the state of the Republican contest.  Politico

• The cold ward between Trump and Cruz is heating up

It was only a matter of time. For the duration of the Republican presidential contest to date, Donald Trump, still leading the polls, has maintained something of an unofficial nonaggression pact with Texas Sen. Ted Cruz, though the firebrand conservative has his sites trained squarely on the frontrunner’s base of support. Cruz just acknowledged in a private briefing that he’s strategically sought to avoid a confrontation with the candidate whose voters he hopes to gather, in part because he doesn’t view Trump as a serious threat down the stretch. Unsurprisingly, that revelation prompted a rebuttal from Trump, the first indication that a long-simmering battle between the two may finally be joined.  NBC

Around the Water Cooler

• Republicans could be staring down their first contested convention in 40 years

Back in August, in this space, we laid out the math that could prompt the first contested Republican convention since 1976. At the time, the exercise could be written off as wishful thinking by media types hungry for drama from an event that’s become little more than a carefully-managed stage show. But a private huddle among GOP mandarins to discuss just that possibility reveals it’s more than idle threat. Trump’s continued dominance has forced Republican leaders to actively war-game how they’d handle a contest that spills all the way into the party’s July convention in Cleveland.  Fortune

• Independent presidential bids are tricky, but Trump is singularly situated to launch one

If Trump fades, the possibility of a contested GOP convention would presumably recede as well. But Trump would preserve some authorship over his role in already-unconventional race. Though he signed a pledge of allegiance to the GOP effectively foreswearing an independent bid, he’s made noises of late suggesting he doesn’t feel bound by the commitment. Launching an independent bid would present logistical hurdles. But Trump is uniquely positioned to overcome them, considering his resources and demonstrated ability to turn out hordes of devotees. The scenario is nightmare stuff for Republican leaders — and, as Trump himself knows, incentive for them to appease him as long as he dangles the threat.  Fortune

• Reckoning with the endurance of the Tea Party

By this point, it should be clear that the rise of the Tea Party right is hardly a fluke — some electoral burp that will fade as quickly as it surfaced. Conservative hardliners have cornered a voting bloc in Congress sizable enough that older-line Republican leaders must reckon them. And yet, the forces that fueled and solidified their empowerment — demonstrated incontrovertibly with the ouster this fall of then-Speaker John Boehner — remain poorly understood. They have shifted the priorities of the party rightward, tactically and ideologically. How Paul Ryan learns the lessons of the last few years will go a long way toward determining whether the party can heal itself, from within its perch in the Capitol and beyond.  New Yorker