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Unintended Consequences: How Tariffs Explain Lagging Business Investment

Chart of real private domestic investment.
Real Private Domestic investment has not grown as expected following the tax cuts/. CHART: St. Louis Federal Reserve Bank

Despite a tax cut that strongly incentivized business investment, recent economic data suggests companies are not spending significantly more on new equipment. Fear of tariffs may have something to do with it.

The 2017 tax bill reduced the corporate tax rate from 35% to 21%. That should encourage firms to spend more on expanding their business. Yet, after a short-lived spike last year, business investment has languished. In the second quarter of this year, gross private investment fell 5.5%.

Why is among one of the bigger economic mysteries of late.

Tariffs Breed Supply Chain Uncertainty

So, what’s going on? At least part of the answer may lie in another Trump administration economic policy working at cross purposes to the tax cuts.

One possible explanation is uncertainty surrounding President Trump’s trade wars. As Trump’s trade war ramped up, business leaders grew more conservative about expanding. Federal Reserve Chairman Jerome Powell recently testified to Congress that concern that trade spats could disrupt supply chains is holding back businesses.

“If you’re a manufacturing company in our economy, of any size, chances are pretty good that your supply chain goes across national borders,” Powell said in his testimony. “That supply chain is really part of how you do business, and you just assume that it’s working and you can focus on your clients. When your supply chain is called into question — we hear this a lot from businesses — when it’s called into question, you pull back.”

Even companies that make things in America depend on parts imported from abroad. So, when tariffs rise on imported goods, the input costs of American-made products rise too.

Tariffs meant to hold off foreign imports don’t necessarily help U.S. manufacturers. Even companies that make things in America depend on parts imported from abroad. So, when tariffs rise on imported goods, the input costs of American-made products rise too.

Mr. Trump’s scattershot approach to trade policy exacerbates the problem. Mr. Trump announces new trade fights on Twitter seemingly at random. It’s hard for businesses to know what’s coming next. As a result, manufacturers can never be sure that Trump won’t hit the parts they depend on with tariffs. So, they conclude the risks of ramping up outweigh the potential benefits.

This uncertainty was especially pronounced in the second quarter of this year. In May, President Trump threatened Mexico with tariffs unless it took more robust action to keep illegal immigrants from crossing its border with the U.S. This spooked American companies who depend on parts imported from Mexico.

Trade Wars and the Fed

Mr. Trump has demanded that the Federal Reserve cut interest rates at its next meeting. Analysts expect that they will do exactly that. The Fed holds its independence sacrosanct. They won’t cut rates just because Mr. Trump told them to do it. However, his actions on trade may have contributed to the Fed’s view that a rate cut is needed to shore up a weakening economy.

“All Trump had to do was keep up geopolitical trade uncertainty for a while and he’d get the Fed to cut rates,” Ed Yardeni, president and chief investment strategist of Yardeni Research Inc. told Politico this week. Mr. Yardeni pointed out that Mr. Powell mentioned uncertainty surrounding trade as a headwind to economic growth eight times in his recent Congressional testimony.

The problem with protectionist trade policies is that they come laden with unintended consequences. These can be hard to predict.Protectionist tariffs often undermine the very outcomes they are meant to accomplish.

Increases in input costs for imported parts nullify the benefits to American firms. Further, when we slap tariffs on foreign products, foreign countries are likely to put tariffs on American products too. For example, after Trump levied tariffs on Chinese products, Beijing replied with tariffs of their own. Chinese tariffs on American soybeans have hit U.S. farmers hard. President Trump has spent billions to pay farmers for lost revenues.

Trade protectionism is intended to bolster American businesses. But, recent events suggest that they can end up doing the opposite.

What to Make of Mueller’s Testimony

Still image of Robert Mueller's testimony before the House Judiciary Committee
Robert Mueller appears before the House Judiciary Committee (July 24, 2019; screen grab from C-Span video)

Robert Mueller arrived on Capitol Hill Wednesday in the uniform that has been a trademark throughout his career – dark suit, white shirt, blue tie. Mr. Mueller’s testimony was as unremarkable as his wardrobe. This was deliberate. Mr. Mueller insisted on sticking to the conclusions of his report and scrupulously avoided fanning partisan flames.

In Mr. Mueller’s appearances before the House Judiciary and Intelligence Committees, the partisan battle lines were predictable. Democrats looked to Mr. Mueller as a savior; for Republicans he was a villain, or at least a tool of villains.

Neither side left satisfied. It appeared that’s exactly what Mr. Mueller intended. In this, he was a success.

Democrats hoped Mr. Muller’s testimony would validate their argument that he would have indicted President Trump on obstruction of justice charges had Department of Justice policy permitted him to do so. Republicans hoped his testimony would further their efforts to portray the FBI’s investigation into potential ties between the Trump campaign and Russia’s election meddling as unwarranted, and born nefarious political motivations. Neither side left satisfied. It appeared that’s exactly what Mr. Mueller intended. In this, he was a success.

A Reluctant Witness

In often halting tones, Mr. Mueller delivered several hours of nothing particularly new. A straight-arrow g-man with little interest in the melee of politics, Mr. Muller was a polite but reluctant witness. His responses rarely extended for more than a sentence, often he offered just a word or two: “yes,” “no,” “that’s correct.” He spent more time asking preening lawmakers to repeat their questions than actually answering them.

Democrats pressed their theories of how Mr. Trump criminally obstructed justice. Mr. Mueller shrugged. A Department of Justice Office of Legal Counsel opinion, which concluded that a sitting President could not be indicted, he said, precluded him from considering the question.

Republicans pressed Mr. Mueller on what role the so-called Steele dossier, an opposition research document funded by Democrats, played in the opening of the FBI’s probe. Mr. Mueller simply said that it was before his time. “[T]hat part of the building of the case predated me by at least 10 months,” Mr. Mueller said in response to a question from Rep. Matt Gaetz of Florida.

The Bombshell That Wasn’t

Democrats hoping for a bombshell had their hopes buoyed, only to be deflated again. When Rep. Ted Lieu laid out a theory for Mr. Trump’s criminal liability in obstructing justice, and asked Mr. Mueller if he would have indicted Mr. Trump had Dept. of Justice policy prevented him from doing so, he answered “that’s correct.”

But, an hour later, in his opening comments to the House Intelligence Committee, Mr. Mueller clarified that Department policy prevented him from considering whether to indict the President, not that he would have done so in its absence.

“I want to add one correction to my testimony this morning,” Mr. Mueller said referring to his earlier appearance before the House Judiciary Committee. “[Rep. Lieu] said, and I quote, ‘you didn’t charge the president because of the OLC opinion.’ That is not the correct way to say it. As we say in the report and as I said in the opening, we did not reach a determination as to whether the president committed a crime.”

Mueller’s Testimony: The Bottom Line

Mr. Mueller’s Testimony revealed little we didn’t know about Mr. Trump and Russia. He was determined to stay within the bounds of the report. He grew considerably more animated when he spoke of the threat to American Democracy presented by Russia’s interference in the political process. Every American should be concerned about this.

“Over the course of my career, I have seen a number of challenges to our democracy,” Mr. Mueller said. “The Russian government’s effort to interfere in our election is among the most serious…this deserves the attention of every American.”

Robert Mueller might be the only man in Washington so thoroughly disinterested in the public spotlight.

But, mostly Mr. Mueller seemed weary — and more enfeebled than we might have expected. Robert Mueller might be the only man in Washington so thoroughly disinterested in the public spotlight. He did his job. He did it well. Now, it seems, he’d prefer we all left him in peace.

How Washington Is Sowing the Seeds of Economic Calamity (with James Rickards)

On this week’s Axis of Reason podcast, we talk with best-selling author James Rickards about his new book, Aftermath: Seven Secrets of Wealth Preservation in the Coming Chaos. Jim explains why he thinks the extraordinary steps central banks took to tame the Great Recession, an explosion in the national debt fueled by spending-addicted politicians, and general political dysfunction have put the global economy on a collision course with calamity. Aftermath will be released on July 23rd, but is available for pre-order from Amazon and other booksellers.

How Washington Is Sowing the Seeds of Economic Calamity (with James Rickards)

 

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About Aftermath 

How Washington Is Sowing the Seeds of Economic Calamity (with James Rickards)“In his most prescriptive book to date, financial expert and investment advisor James Rickards shows how and why our financial markets are being artificially inflated–and what smart investors can do to protect their assets…James Rickards, the author of the prescient books Currency WarsThe Death of Money, and The Road to Ruin, lays out the true risks to our financial system, and offers invaluable advice on how best to weather the storm.” – Penguin/Portfolio

About James Rickards

How Washington Is Sowing the Seeds of Economic Calamity (with James Rickards)
Author and economist James Rickards.

James Rickards is the Editor of Strategic Intelligence, a financial newsletter, and Director of The James Rickards Project, an inquiry into the complex dynamics of geopolitics + global capital. He is the author of three New York Times best sellers, The Road to Ruin (2016), The Death of Money (2014), and Currency Wars (2011), and the national best seller, The New Case for Gold (2016), all from Penguin Random House.

 

 

 


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PODCAST: Trump and the Economy Part II (with Jim Rickards)

Why Was Twitter Down?

Twitter error message
Twitter users worldwide were greeted by this error message Thursday afternoon .

Thursday afternoon, a cryptic error message greeted Twitter users. It simply said, “Something is technically wrong.”

According to DownDetector.com, reports of problems at Twitter started pouring in at 2:46 pm ET Thursday afternoon. The outage was widespread. Tens of thousands of users worldwide reported problems accessing the site to the internet trouble-tracking site.

Map of Twitter outage reports
Users worldwide are reporting problems accessing Twitter. (CREDIT: DownDetector.com)

Reddit experienced some outages earlier in the day, according to The Independent. But, there’s no indication that the two are related.

Twitter Down due to an “Internal Configuration Change”

Twitter blamed the outage on an “internal configuration change.” Thursday afternoon, the micro-blogging site posted a message to their status website indicating that they were “investigating.”

An hour later, they identified the problem. “The outage was due to an internal configuration change, which we’re now fixing,” they wrote. “Some people may be able to access Twitter again and we’re working to make sure Twitter is available to everyone as quickly as possible.”

Last month, a configuration error led to a major disruption of Google Cloud services, including YouTube, Snapchat, Venmo, and Gmail among others. Google’s head of engineering, Benjamin Treynor Sloss, explained what went wrong in a blog post:

In essence, the root cause of Sunday’s disruption was a configuration change that was intended for a small number of servers in a single region. The configuration was incorrectly applied to a larger number of servers across several neighboring regions, and it caused those regions to stop using more than half of their available network capacity. The network traffic to/from those regions then tried to fit into the remaining network capacity, but it did not. The network became congested, and our networking systems correctly triaged the traffic overload and dropped larger, less latency-sensitive traffic in order to preserve smaller latency-sensitive traffic flows, much as urgent packages may be couriered by bicycle through even the worst traffic jam.

It took Google four and a half hours to fix the issue last month. This was in part because the outage affected tools Google’s engineers use to fix problems. However, Twitter was back to normal more quickly. Most users were able to access their accounts again by late Thursday afternoon. True to form, within minutes the sarcastic tweets followed.

Federal Cannabis Regulation: Stuck in the Weeds

cannabis leaf superimposed on US capitol

The legal marijuana market is growing like weeds in the field. Analysts project that worldwide, consumers will spend $16.9 billion on legal cannabis this year. That according to a recent report by BDS Analytics and Arcview Market Research. But the cannabis industry has been burned by lack of access to green. It is a cash-only business. The reason is simple: any financial company that deals with the industry risks federal money laundering charges.

Congress is currently considering bills that would clear away legal brush by authorizing banks to accept legal cannabis funds. A usual coalition support the measures. It includes the National Association of Attorneys General, state treasurers, and the American Banking Association. They are engaged in joint lobbying efforts.

Treasurer Secretary Steven Mnuchin, Attorney General William Barr, and Federal Reserve Chairman Jerome Powell do not object. All have indicated they welcome congressional action that would hoe a path for cannabis firms to access financial markets.

The measure appears on a roll in the House. The House Financial Services Committee recently approved the Safe and Fair Enforcement Banking Act. That bill would allow banks to deal in cannabis-related business. But it will be a tougher grind in the Senate. Majority Leader Mitch McConnell and Sen. Chuck Grassley, chairman of the Senate Banking Committee, both oppose the measure. They likely will stash it in committee, never to see sunlight.

AG Memo

Deputy Attorney General James M. Cole sewed the seeds of this thicket. In August 2013 he issued a guidance memo on marijuana enforcement in light of state laws legalizing the drug. Mr. Cole noted that federal prosecutors are focused on gangs and drug cartels.

The DAG said federal prosecutors, when deciding to bring cases, should consider the whether a business was “large-scale or for-profit.” Mr. Cole warned that neither the guidance memo “nor state or local law provides a legal defense to a violation of federal law.”

The sale, distribution of marijuana was, and still is, a federal felony under the Controlled Substance Act. That law provides for both criminal and civil penalties.

Treasury: Don’t Try to Take Money

Six months later, in February 2014, the Treasury Department’s Financial Crimes Enforcement Network, or FinCen, issued its own guidance. The document effectively nipped the industry in the bud.

FinCen said banks and other financial institutions could open accounts for marijuana-related business. But, they had to conduct extensive due diligence. Also, they must file a Suspicious Activity Report for every deposit, withdrawal, or money transfers. Finally, they must file a Currency Transaction Report for anything that involves $10,000 or more. Since the cannabis industry is rolling in cash, that essentially means banks would have to continually take some action.

The guidance warned that it “is a serious crime” to distribute or dispense marijuana. FinCen went to say “financial transactions involving a marijuana-related business would generally involve funds for illegal activity.” That could subject financial institutions to prosecution under multiple federal laws. These include the USA PATRIOT Act, the Bank Secrecy Act, and the Racketeering Influenced and Corrupt Practices Act.

Bankers Balk at Taking Money, Making Loans

Financial institutions are not noted for their daring. Banks decided it was too risky to have anything to do with the sprouting industry. Only 35 financial institutions in the country deal with the cannabis industry according to Real Money. Visa and Mastercard will not allow their debit or credit cards to be used at cannabis stores or pharmacies. Gregory S. Deckard, the CEO of State Bank Northwest, said ATM companies won’t service them either.

He said credit card processors and check clearing houses have threatened to cut off services with banks that service cannabis businesses. Mr. Deckard told the committee the largest armored car company cancelled contracts with banks that serve the cannabis industry.

Many banks also will not issue loans to any cannabis-related firm. That particularly hurts minority entrepreneurs. Some states that have legalized marijuana sales have specific set asides for minorities.

Employees, Suppliers Also Hurt

The de facto ban on marijuana money also covers employees and forms that deal with the cannabis businesses.

Mr. Deckard told the House Financial Services Committee his bank won’t give loans to employees of cannabis businesses. Their salaries come from the sale of marijuana, which he noted are “illegal proceeds under federal law.”

FinCen’s guidance did not cover “third parties offering goods or services to marijuana-related businesses, such as equipment suppliers or shipping servers.” In short, the FinCen ban extends to companies that have an indirect relationship with a marijuana firm.

“Indirect connections are often difficult to identify and avoid because growers and retailers don’t operate in a vacuum,” Rachel Ross, the chief risk officer of the Credit Union National Association, told the House committee. “Like any other industry, they work hand-in-hand with vendors and suppliers. These are Main Street businesses like the printing company that makes a business card, the landlord that rents office space, and even the utility company that provides water or electricity.”

The third-party ban also covers plumbers, electricians, internet providers, and accountants. Mr. Deckard said it applies to any company that “offer their services to the general public, whose customer service base includes cannabis-related businesses.”

What’s a Cannabis Business to Do?

The owners and operators of marijuana stores and dispensaries have a limited number of options available to them. They could just take cash. But that raises major risks. A study by the Wharton School of Business Public Policy Initiative found that one in two cannabis businesses are robbed. The average take has been between $10,000 and $20,000.

Owners of some California cannabis business say they deposit cash into their personal accounts. But, if their bank notices a large amount of “suspicious” cash deposits, it must notify FinCen. That puts the owners and their businesses in legal and financial jeopardy.

Another solution is to take advantage of bank-like ventures. Hypur provides what it calls “banking solutions” for business that lack “access to basic banking services.” Hypur hypes its “electronic cannabis payments,” that transfers cash directly into business owners’ bank accounts.

Ms. Ross said cannabis businesses “are frequently bombarded with proposals for payment ‘solutions’ that are unregulated.” She did not mention Hypur or any other company. Ms. Ross did warn that “their ‘solutions’ are often very clearly a form of money laundering.”

States: Here We Come to Save the Day

Two states that have legal marijuana sales will try to bridge the banking gap. A bill in the Oregon state legislature would establish limited state-chartered banks to serve the cannabis industry. The California State Senate recently approved a bill that would do something similar. It would allow individuals to start banks that could accept cash from marijuana retailers.

There is a major problem with that idea. The federal government, which approves most banks, won’t allow it. The Federal Reserve has already rejected just such a bank. It turned down a bank chartered by the state of Colorado to serve the cannabis industry.

A report by a California State Treasurer task-force noted that state-created cannabis banks “would be fenced off from the rest of the banking system.” It wouldn’t be able to clear checks, wire funds, or process credit and debit cards. The Cannabis Banking Work Group said a state bank would be a “closed-loop system.” Customers “could only exchange funds with other customers of the [same] institution.”

Even if a state bank could overcome those obstacles, the Work Group said it “would take a long time to organize.” Some financial industry experts estimate it could take as much as a decade to create a cannabis bank.

Why the State Interest?

States are getting involved because of money. Lots of money in lost tax revenues. California, for example, saw tax collections from cannabis sales fall $100 million short of expectations. Further, the state has lowered its projected marijuana tax revenues over the next year by $223 million.

Fiona Ma, the California Treasurer, explained the problem to the House. Cannabis business owners pay their taxes in cash. Often, Ms. Ma said, stuffed in duffel bags or suitcases. “I asked how much we collected from the cannabis industry and my agency really didn’t know,” she said.

Ms. Ma said the problem does not just apply to sales taxes. “Social Security, State and, Federal Income taxes can’t be accurately collected on cash payments wage statements done manually to employees. This doesn’t allow employees to pay into – or receive – Social Security benefits,” she said.

Advocates say the only permanent solution would come from the federal government. Congress can either legalize marijuana or create a safe harbor so banks can accept money from legal marijuana stores. Or the industry risks going to pot.

Trump’s Congressional Subpoena Fight Explained

President Trump and William Barr shake hands in the Oval Office
White House Photo

President Trump has effectively said he will not comply with a plethora of Congressional subpoenas. He refused to turn over a full copy of Mueller Report and all supporting documents to the Judiciary Committee. He’s also sued banks to prevent production of business records to Congressional Committees. And, he has argued that the Ways & Means Committee’s demand to see his tax returns was invalid.

If, as expected, those disputes wind up in court, the Trump administration is almost certain to lose those fights. In fact, a judge has already ruled that an accounting firm must comply with a Congressional subpoena for Mr. Trump’s financial records. This is not surprising. The law and decades of court decisions are all stacked against the President.

The Mueller Report Dispute

Shortly after Attorney General William Barr made the final report of Special Counsel Robert S. Mueller III public, the House Judiciary Committee issued a subpoena for an unredacted version of the report. It also requested all the evidence Mr. Mueller used to conclude that the Trump campaign did not colluded with Russia during the 2016 campaign and to analyze whether the President obstructed, or attempted to obstruct justice.

The Attorney General first said that to produce the report and its evidence would violate Rule 6(e) which bars the release of materials presented to grand juries. That argument may not fly. The Oversight Manual – The Bible for congressional investigators produced by the Congressional Research Service – says that Congress has a right to obtain grand jury evidence. CRS notes that federal courts have “held that when Congress is acting within the ‘legitimate sphere of legislative activity’ it is legally entitled to Rule 6(e) information.”

What is Legislative Activity?

That raises the question of what exactly constitutes “legislative activity.” Essentially if a committee is acting within its mandate, it has broad authority to ask for any information it wants. The Supreme Court has held that “the scope of [Congress’] power of inquiry . . . is as penetrating and far-reaching as the potential power to enact and appropriate under the constitution.”

The Court also has said the power to investigate is at its height when Congress seeks to expose government corruption. In particular, the High Court pointed to the First Congress’ investigation of “suspected corruption or mismanagement of government officials,” and specifically recognized the power of Congress to “publicize corruption.”

Under Article I of the Constitution, Congress sets its own rules. The current House Rules say the judiciary committee has jurisdiction over the federal courts and judicial proceedings, civil and criminal. Special Counsel Mueller’s report is clearly a criminal matter.

The Judiciary Committee is one of a handful of committees that grant the Chairman, and the Chairman alone, the authority to issue subpoenas. Clearly the subpoena for the Mueller report is Constitutional and the Judiciary Committee chairman acted within his authority.

Limits of Executive Privilege

The Congressional Oversight Manual notes that executive privilege can only be asserted on documents and communications that are authored by or solicited and received by the President or presidential advisors. Courts have held that the word “advisers” only covers White House aides, not cabinet secretaries or their employees. It also does not include “documents that were created and distributed solely within an executive department.”

Mueller received his charter from the Deputy Attorney General after then-Attorney General Jeff Sessions recused himself. The Special Counsel was an employee of the Department of Justice, an executive branch agency. Mueller submitted his report to the AG, who is the cabinet secretary in charge of DOJ. Attorney General Barr decided to make the report public. All of which means executive privilege does not necessarily cover the report. However, some of the interviews with the President’s immediate staff may contain materials that are subject to it.

The Bank Subpoena Dispute

Reps. Maxine Waters and Adam Schiff, chairmen of the House Committee on Financial Services and the House Permanent Select Committee on Intelligence respectively, both issued subpoenas to Deutsche Bank and Capitol One compelling the production of President Trump’s financial records.

Trump sued to block the banks from turning over the records on the grounds that the demands serve no legitimate legislative purpose. This author need not reiterate what is a legislative purpose. Suffice it to say the Financial Services Committee has broad jurisdiction over the banking industry, including illicit use of banks, and the Intelligence Committee has an ongoing investigation into allegations of Russian interference in the 2016 elections, including whether the GUR used banks in furtherance of those efforts. The subpoenas thus have a legitimate legislative purpose.

The Financial Privacy Act forbids banks from producing documents pursuant to an administrative subpoena without first notifying the account holder and allowing them to challenge the demand. Federal courts have ruled that provision does not apply to congressional subpoenas, and the House Counsel agrees.

Tax Returns? You Can’t See My Tax Returns

Congress clearly can obtain the full Mueller report and Trump’s financial information. But the issue of his tax returns is more nuanced.

There are two applicable laws. One specifically grants the Ways & Means Committee the authority to obtain copies of any person’s tax returns. That statute, Section 6103 of the IRS Code, also covers the tax returns of corporations, non-profits and other entities. The other law mandates the IRS annually audit a President’s tax returns.

If the Ways & Means Committee wants to obtain Mr. Trump’s tax returns in order to make them public ˗ as some Members implicitly said they would ˗ the President may be on solid legal ground. Section 6103 allows Congress to obtain tax returns, not make them public. The issue of whether Congress can unilaterally release someone’s tax returns without their permission has never been litigated.

Ways & Means also is using the presidential audit provision as a means of justifying its subpoena of Trump’s tax returns. There is one potential problem with that rationale: the law covers a President. Donald Trump did not become president until shortly after noon on January 20, 2017. The committee can see if the IRS fulfilled its mandate to audit Trump’s returns from that date forward, but not before.

Contempt

Congress can only enforce its subpoenas through a contempt proceeding. A committee must vote out a contempt report and resolution, and then the full House must adopt it. If that happens, the House can use one of its two powers: inherent contempt or civil contempt.

Under inherent contempt, the House orders the Sergeant-at-Arms to arrest the person held in contempt, bring them before the body for what amounts to a trial and, if the person still refuses to cooperate, they can be imprisoned in the Capitol Jail. Congress hasn’t exercised its inherent contempt powers in nearly a century, and no one knows whether the Capitol Jail actually exists.

Civil Enforcement

The only other enforcement avenue is civil enforcement, where Congress goes before the district court and obtains a compliance order. The most recent contempt court fight was between the House Oversight and Government Reform Committee and then-Attorney General Eric Holder. Back in 2012 the committee subpoenaed Holder to compel production of documents related to Operation Fast and Furious run by the Bureau of Alcohol, Tobacco, Firearms and Explosives. DOJ handed over the subpoenaed records. On May 9, 2019.

Congressional subpoenas expire the same date as the Congress that issued them. The subpoenas issued by the Judiciary, Financial Services, and Intelligence Committee thus expire on January 2, 2021. If the Holder case is any guide, Congress may win the court battle over its current subpoenas, but Trump may win the war.

READ: Mueller’s Letter to Attorney General Barr

Image of letter from Mueller to Barr
Mueller's Letter to Barr (March 27, 2019)

Mueller’s letter to Barr

In late March, Special Counsel Robert Mueller sent a letter to Attorney General William Barr expressing concern about Mr. Barr’s letter to Congress, which outlined the main conclusions of Mr. Mueller’s Russia probe. In his letter, Mr. Mueller said that Mr. Barr’s overview “did not fully capture the context, nature, and substance” of his investigative findings. Further, Mr. Mueller requested that Mr. Barr immediately release the full introductions and executive summaries of his report in order to rectify “public confusion” about his findings.

Mr. Mueller wrote:

As we stated in our meeting of March 5 and reiterated to the Department early in the afternoon of March 24, the introductions and executive summaries of our two-volume report accurately summarize this Offices work and conclusions. The summary letter the Department sent to Congress and released to the public late in the afternoon of March 24 did not fully capture the context, nature, and substance of this Office‘s work and conclusions… There is now public confusion about critical aspects of the results of our investigation. This threatens to undermine a central purpose for which the Department appointed the Special Counsel: to assure full public confidence in the outcome of the investigations. (Mueller letter 3-27-19)

However, Mr. Barr declined Mr. Mueller’s request. According to a Department of Justice spokeswomen, this was because Mr. Barr did not want to release the report in fragments. Rather, Mr. Barr thought it better to release the entire report all at once.

“The attorney general ultimately determined that it would not be productive to release the report in piecemeal fashion,” Justice Department spokeswoman, Kerri Kupec told The New York Times. Instead, she said, “the attorney general and the special counsel agreed to get the full report out with necessary redactions as expeditiously as possible.”

Barr Under Fire

In recent weeks, Mr. Barr has faced criticism that his initial characterization underplayed the gravity of Mr. Mueller’s findings, especially those related to obstruction of justice. The letter provided evidence that Mr. Mueller and his team agreed. As we post this on Wednesday morning, Mr. Barr was facing questioning about the letter and his handling of the Mueller report from lawmakers at a hearing on Capitol Hill.

You can read Mr. Mueller’s full letter here:

Mueller’s Letter to Bar… by on Scribd

Why Game of Thrones Ep. 3 Was So Dark

Dark image of the Night King from GoT S. 8, Ep. 3
The Night King. Screen grab from GoT Season 8, Episode 3

“The Long Night,” the third episode of the final season of Game of Thrones contained one of the most epic sustained action sequences ever captured on film. The problem is, no one could see it. The episode was so dark that it was hard to follow the action. Fans were not happy.

Now, Fabian Wagner, the episode’s cinematographer, is speaking out to explain what happened. Wagner says that he filmed the episode properly, but he faults HBO’s digital compression for the muddy, monochromatic final product. “I know it wasn’t too dark because I shot it,” Wagner told TMZ.

“[GoT] has always been very dark and a very cinematic show,” Wagner said. He described the particularly dark style of the episode as a creative choice by the director and showrunners intended to immerse the viewer the chaos and confusion of the onscreen battle. John Bradley, who plays Samwell Tarly on the show, told USA Today that the darkness of the episode “reflects how the characters are feeling a sense of confusion and fighting blind, literally stabbing in the dark.”

Still image from GOT S.8 Ep.3
Actual screen grab from Game of Thrones Season 8, Episode 3

 

Compression is the Culprit

Still, by the time the episode reached viewers’ screens, it was darker than the show’s creators probably intended. The culprit is the compression technology cable companies and streaming services use to squeeze digital video into the least possible bandwidth.

Compression works by reducing the amount of information that needs to be transmitted. The compression process discards elements that repeat or that are deemed unnecessary by the compression algorithm. The result is a smaller, more manageable file. However, the process inevitably loses some of the image information along the way.

Most of the time, the compressed video still looks good enough that you wouldn’t notice. But, for a variety of technical reasons, compression algorithms have a harder time dealing with dimly lit scenes. Because “The Long Night” was darker to begin with, the quality loss resulting from the compression process is more apparent — especially when watching on streaming services with slow internet connections.

Do Adjust Your Set

Wagner says he understands fans’ concerns. He suggests that viewers watch the episode in a darkened room and crank up the brightness on their TV. Making sure your internet connection is as fast as possible will improve the image quality as well. “The Long Night” is  remarkable television and well worth the extra trouble.

PODCAST: The Mueller Report (with Nicholas Grossman)

The Mueller Report is in the books. Nicholas Grossman, international relations professor at the University of Illinois and editor at Arc Digital, joins Taylor to sort through what we learned.

 

What to Expect from the Mueller Report

Special Counsel Robert Mueller’s report is coming Thursday. If Attorney General William Barr’s summary is to be believed, those hoping for a grand expose of collusion between President Trump and Russia will be disappointed. But, it will not be the complete exoneration Mr. Trump claimed either. The picture of Mr. Trump and his team it will paint, while not criminal, is likely to be unflattering. This realization may be the motivation for Mr. Trump’s renewed attacks on Mr. Mueller and his team.

Unflattering, But Not Illegal

Mr. Mueller’s report will likely depict the Trump campaign as a group of unscrupulous neophytes blundering around the fringes of Russia’s election meddling efforts. It may show that Mr. Trump welcomed Russia’s help and was anxious to avoid displeasing Moscow. While no one in Trump world directly conspired with the Kremlin, they would have been more than willing to do so had they been given the opportunity. This is not criminal conspiracy, but it could be politically embarrassing all the same.

The enthusiasm within Trump-world for Russia’s intervention is apparent in what we know already. The infamous Trump Tower meeting is perhaps the starkest example. When an acquaintance offered Donald Trump, Jr. damaging information about Hillary Clinton, courtesy of the Russian government as part of its “support for Mr. Trump,” his response was “I love it.” He scheduled a meeting at Trump Tower with a Russian lawyer who was to deliver the goods. While the meeting was a bust and the dirt on Hillary never materialized, the episode demonstrates the Trump Campaign’s ambivalence about receiving the assistance of a foreign adversary and illustrates an “enemy-of-my-enemy is my friend” mindset that, although not illegal, many would find morally repugnant.

What to Expect from the Mueller Report

Further, Mr. Mueller’s report could bolster the notion that Mr. Trump’s fawning over Mr. Putin was motivated, at least in part, by gratitude for Russia’s intervention and a desire to encourage it. Mr. Trump’s desire to score a lucrative Trump Tower Moscow deal may have also been part of his motivation to avoid offending the Kremlin.

The Trump Tower Moscow talks ended before the election, but months later than the Trump camp initially claimed. This doesn’t mean that Trump abandoned the idea. Trump himself suggested as much. “There would be nothing wrong if I did do it,” Trump said in November of last year. “I was running my business while I was campaigning. There was a good chance that I wouldn’t have won, in which case I would have gotten back into the business. And why should I lose lots of opportunities?”

There’s nothing necessarily criminal about that. But, it does suggest a motivation for Trump’s reluctance to say or do anything that might offend Moscow during the campaign.

The Obstruction of Justice Question

Then there is the question of the extent to which Mr. Trump used the power of his office to thwart scrutiny of his dealings with Russia. Among other things, Mr. Trump fired FBI Director James Comey, at least in part, out of frustration with the Russia probe. Mr. Mueller declined to take a position on whether these actions broke the law. Mr. Barr, however, concluded that they didn’t.

“While this report does not conclude that the President committed a crime, it also does not exonerate him,” Mr. Barr quoted the Special Counsel’s report as saying. Mr. Barr said that he and Deputy Attorney General Rod Rosenstein did not think that the evidence supported a charge of obstruction of justice. “The evidence developed during the Special Counsel’s investigation is not sufficient to establish that the President committed an obstruction-of-justice offense,” Mr. Barr wrote.

Mr. Trump’s frustration with Mr. Comey appears more justified in the absence of an underlying crime. Still, there’s room for reasonable debate about whether Mr. Trump’s actions were appropriate. Is a President’s use of the powers of his office to throw sand into the gears of an investigation ok if it is merely motivated by a desire to avoid political embarrassment rather than legal consequences? The answer to that question will break along partisan lines. But, Mr. Mueller’s report may add more details that bolster the case of Mr. Trump’s opponents.

Still, at the end of the day, Mr. Trump’s claims that there was no collusion with Russia look to be vindicated. This simple fact may well outshine any troubling new information the Mueller report reveals. Mr. Trump’s opponents, and their lofty expectations of a grand conspiracy between Mr. Trump and the Kremlin, set a bar that the Mueller report will probably not clear.

What to Make of the Barr Letter and the Mueller Report

AG William Barr shakes hands with Donald Trump in the Oval Office
President Donald Trump and Attorney General William Barr shake hands in the Oval Office. Feb. 14, 2019. CREDIT: United States Department of Justice

Attorney General William P. Barr provided Congress with a letter summarizing Special Counsel Robert Mueller’s Russia investigation. The letter marked the conclusion of Mr. Mueller’s probe of Russian meddling in the 2016 Presidential election.

AG Barr Letter to House and Senate Judiciary Committees 3-24-19 by Taylor Griffin on Scribd

Mr. Barr says that Mr. Mueller did not find that the Trump campaign conspired with Russia in its efforts to influence the 2016 U.S. presidential election. However, he said that Mr. Mueller did not reach a conclusion on whether President Trump obstructed justice. “While this report does not conclude that the President committed a crime, it also does not exonerate him,” Mr. Barr quoted the Special Counsel’s reports as saying.

Still, Mr. Barr’s letter states that he and Deputy Attorney General Rod Rosenstein did not think that the evidence supported a charge of obstruction of justice. “The evidence developed during the Special Counsel’s investigation is not sufficient to establish that the President committed an obstruction-of-justice offense,” Mr. Barr wrote.

While Mr. Barr’s letter presents the principal conclusions of Mr. Mueller’s investigation, it provides few details on how he reached them. However, Mr. Barr committed to releasing more of Mr. Mueller’s report. “[M]y goal and intent is to release as much of the Special Counsel’s report as I can consistent with applicable law, regulations, and Departmental policies,” he wrote.

Mr. Mueller’s report contains confidential grand jury material and other sensitive information that must be scrubbed from the report before its release. Further, information relating to ongoing matters must also be redacted from any public report. So, it may be some time before the public is granted a more complete view of Mr. Mueller’s findings.

What the Barr Letter Means

The Barr letter brings to a close the question of whether the Trump campaign was in on Moscow’s scheme to influence the U.S. election.  Although there were a number of interactions between individuals associated with the Trump campaign and individuals or entities linked with Russian government, there was no active conspiracy between them.

There is considerably more room for interpretation on the question of whether the President abused his power in an attempt to derail the investigation. But, it is hard to sustain an accusation that the President obstructed justice in the absence of an underlying crime. Ultimately, whether Mr. Trump’s actions were right or wrong will now be decided by voters rather than the legal process.

What Happens Next

Evaluating Claims About Drug Seizures at the Border

Chart of relative amounts of various drugs seized at and between legal points of entry
Author's calculation based on CBP FY2018 Enforcement Statistics.

The amount of drugs seized between legal points of entry has become a key point in the debate over President Trump’s proposed border wall. Critics argue that if most drugs are coming in through legal border crossings, a wall is not likely to have a significant impact.

James Carroll, director of the Office of National Drug Control Policy, threw a wrinkle into this debate at a House hearing last week. Testifying before the House Government oversight committee, Mr. Carroll said that by weight, more drugs were intercepted between ports of entry.

Yet, earlier in the hearing, Mr. Carroll seemed to agree with Congresswoman Deborah Wasserman Shultz when she said that 90% of drugs were seized at legal points of entry. So, which is right? The answer depends on the basis you use to measure the amount of drugs coming into the country. And further, the types of drugs we’re talking about.

What the Data Says

We looked at U.S. Customs and Border Protection (CPB) data for Fiscal Year 2018. CPB breaks data down between the U.S. Customs Office of Field Operations, which staffs legal border crossings, and the Border Patrol, which maintains responsibility for the rest of the border.

The data shows that far more high value narcotics like cocaine, heroin, methamphetamine, and fentanyl were seized at border checkpoints then between them. For example, 89% of cocaine and 90% of heroin were seized by Customs Agents at legal points of entry. However, 61% of marijuana was seized by Border Patrol agents between checkpoints.

Chart of relative amounts of various drugs seized at and between legal points of entry
Author’s calculation based on CBP FY2018 Enforcement Statistics.

Marijuana, by weight, accounts for 85% of all drugs seized by CPB. So, when looking at the data in those terms, Mr. Carroll is correct that more total pounds of drugs are seized between border checkpoints. But, this is misleading. By value, marijuana accounts for a far smaller proportion, only 19%, of drug seizures.

More Seized at Border Checkpoints By Value

If we measure by the street value, 76% of drugs seized arrived through legal ports of entry. That’s short of the 90% Ms. Wasserman-Shultz cited, but still a substantially different story. (We assume she mistook the statistic for heroin for all drugs.)

Evaluating Claims About Drug Seizures at the Border
Author’s calculation of FY2018 CBP enforcement data. Values of various drugs were based on recent CBP press releases.

President Trump’s Claim

President Trump has argued that a border wall is needed because drugs were mostly entering the country between points of entry. “And they don’t come in through the portals, they come in between the portals where you have no barrier,” he said in January.

By our calculations about 54% of drugs, by weight, come in between points of entry. However, by value it’s only 24%. Mr. Trump’s statement is way off the mark by any measure.

The Bottom Line

President Trump is wrong to suggest that drugs are coming in exclusively between ports of entry, or “portals” in his words. With the exception of marijuana, most of the drugs seized are at legal border checkpoints.

Still, a lot of the drugs coming in between checkpoints may go undetected and wall might help disrupt this. However, it’s only part of the solution. Drug traffickers are likely to find ways around physical border barriers. They may simply toss drugs over the top of, or dig tunnels under, any wall.

While President Trump is overselling the value of a wall in aiding drug interdiction, it cannot be discounted altogether. In this case, like most these days, the reality is far more complex than the rhetoric coming from Washington.

Mysterious New Construction Underway at North Korea’s Sohae Launch Facility

An image from 10/1/2017 shows the Sohae Satellite Launch facility main pad. Google Earth

Recent commercial satellite images show new construction work at the Sohae (Tongchang-ri) Launch Facility in North Korea. The new activity comes just days after President Donald Trump and North Korean leader Kim Jong Un left a summit in Hanoi without a deal. However, is unclear whether the construction at the site is directly related to the summit’s outcome.

Still, some speculate that the recent activity at the closely-watched facility might be intended to send a message. Following his first summit with Mr. Kim in Singapore last year, Mr. Trump touted reports that North Korea had begun dismantling the Sohae facility. So, restarting work there could be a veiled warning to Mr. Trump.

Trump Walks Away

At the Hanoi summit, Mr. Kim offered to dismantle some parts of the Yongbyon nuclear facility in exchange for sanctions relief. Yongbyon is the primary manufacturing facility for the plutonium and highly enriched uranium used in its bombs. Dismantling it would theoretically diminish North Korea’s ability to build new weapons.

However, Mr. Trump concluded that this was too meager a concession to justify lifting the sanctions. “They were willing to give us areas but not the ones we wanted,” he said at a press conference following the summit. “[W]e had to walk away from that particular suggestion.”

Nicholas Grossman, an international relations professor at the University of Illinois, quipped on Twitter that “North Korea’s heard of the walk away move too.”

Still, the value of what Kim was offering was indeed dubious. Analysts believe that North Korea has other newer enrichment sites that could take the place of Yongbyon. Last year, an article in The Diplomat revealed a covert enrichment site just outside of Pyongyang. Further, even if the North Koreans are taken at their word, this concession would only limit North Korea’s ability to build new weapons. It does nothing to address the existing ones.

If Mr. Trump were to make this deal, he would surrender the most important leverage that the U.S. has over North Korea. The UN sanctions from which Mr. Kim sought relief cut far more deeply than the U.S. sanctions that would remain in place. North Korea cares far more about these sanctions because under them, they are restricted from lucrative trade with South Korea and China.

What’s Happening at the Sohae Launch Facility

Map of North Korea showing the site of the Sohae Launch Facility
Roughly Explained

The Sohae Launch Facility, also known as Tongchang-ri, lies on the coast northwest of Pyongyang near the Chinese border. Sohae is the main site of North Korea’s satellite launches, some of which western analysts believe to be pretenses for missile tests.

Following the Singapore summit last year, Mr. Trump said that Mr. Kim had committed to dismantling the engine test stand at the site. However, this was not part of the official agreement. Now, it appears that Mr. Kim is reneging on that private agreement.

A rocket readied for launch at the Sohae Launch Facility
A rocket readied for launch at the Sohae Launch Facility in April 2012. Sungwon Baik / VOA

According to analysis by 38 North and CSIS Beyond Parallel, satellite imagery showed construction work at the engine test stand and launchpad just days after the Hanoi Summit concluded. The imagery was acquired by commercial satellite imaging firm Digital Globe on March 2nd. Further, 38 North reported that new imagery from March 6 shows clearing of construction materials at the site. This, they speculate, indicates it may be returning to normal operations. You can view the imagery here and here. For reference, here’s an older image of the engine test stand at the site from October 1, 2017.

An image from 10/1/2017 shows the Sohae Satellite Launch facility engine test stand.
An image from 10/1/2017 shows the Sohae Satellite Launch facility engine test stand. Google Earth

We don’t know for sure what this construction work is all about. North Korea has performed most of its actual intercontinental ballistic missile tests from mobile launchers rather than fixed launch facilities like Sohae. So, the activity at the site does not necessarily mean they are prepping for a new missile test. But, the Sohae site is important for engine testing. “Additional work at this stand—such as the construction of a new environmental shelter on the entrance ramp—could indicate deliberate preparations to test rocket engines again,”  and  of CSIS say.

Bottom Line

It’s unclear if the construction at the site is connected to the outcome of the summit. But, if it is, it could be significant. MrBermudez and Mr. Cha of CSIS speculate that it “may indicate North Korean plans to demonstrate resolve in the face of U.S. rejection of North Korea’s demands at the summit to lift five UN Security Council sanctions enacted in 2016-2017.” On Wednesday, when asked about the activity at Sohae, Mr. Trump told reporters that “I would be very disappointed if that were happening.”

The North Korea Nuclear Threat Explained

The National Debt in Five Charts

The U.S. Capitol against a backdrop of dollars.

The national debt is unimaginably large and it is growing larger. The costs of caring for an aging population are driving unsustainable budget deficits far into the future. These five charts explain the problem.

1As a share of the economy, the federal debt is now larger than at any time since the end of WWII.

Chart showing the growth of the national debt,
The national debt will soon be larger than at any time since the end of WWII. (CBO)

2 The Congressional Budget Office projects that government spending will substantially exceed government revenue over the next decade. This will result in large deficits and mounting government debt.

Spending that exceeds revenue will drive large government deficits (CBO)
Spending that exceeds revenue will drive large government deficits (CBO)

3 The rising costs of popular programs such as Social Security and Medicare are the primary reason the debt is growing. However, interest payments are also a significant factor. Spending on everything else is falling as a share of the economy. So, cuts in spending in other areas, including defense, are unlikely to make a significant difference.

Increased costs of Social Security and Medicare are driving growth in the national debt. (Congressional Budget Office)
Increased costs of Social Security and Medicare are driving growth in the debt. (CBO)

4 Over the next decade, the cost of interest payments on the debt will exceed the cost of national defense. An unexpected rise in interest rates would make things far, far worse.

The National Debt in Five Charts
Interest payments on the debt with exceed spending on defense by 2025. (Roughly Explained; CBO data)

5 The cost of paying the interest on the debt is the fastest growing part of the Federal budget. As interest payments grow, there will be less money to spend on other priorities that benefit the general population. Think of it as a tax on our failure to address the debt problem.

Net Interest as Proportion of Spending (Pete Peterson Foundation)
Net Interest Relative to Other Forms of Spending (Peter G. Peterson Foundation)

The Bottom Line

We have yet to feel the effects of unsustainable government spending. This is because the demand for U.S. dollars around the world has kept interest rates relatively low. Someday the world might not need so many dollars.

When that day comes, investors will demand higher interest rates in exchange for loaning money to the U.S. government. This means the cost of interest payments will skyrocket. The government will have no choice but to impose steep tax increases and deep spending cuts to make up the gap. Also, interest rates on everything from mortgages to auto loans will likely rise as well. As a result, consumers will be less able to buy things and the economy will slow dramatically. However, by then it will be too late.

The consequences of ignoring the growing federal debt range from bad to catastrophic. The longer we wait to address it, the harder fixing it becomes.

Mark Harris Calls for New NC09 Election

Congressional candidate displays emotion in ballot fraud hearing.
Mark Harris tears up during his son's testimony in the NC-09 ballot fraud case. PHOTO: Screenshot from NC State Board of Elections video.

UPDATE: On Thursday, the North Carolina State Board of Election ordered a new election in the Ninth Congressional District. The vote was unanimous. The State Board of Elections did not set a date for the new contest at Thursday’s meeting. Mr. Harris has not decided whether he will run again.


Republican candidate Mark Harris is calling for a new election in the NC09 congressional race that he narrowly won last November. But, the North Carolina State Board of Elections refused to certify the election after allegations of ballot fraud emerged late last year.

Citing new evidence that a contractor working for his campaign had engaged in a fraudulent absentee ballot harvesting operation, Mr. Harris told a NC State Board of Elections hearing on Thursday that “a new election should be called.”

The Election Fraud Allegations in North Carolina’s 9th Congressional District Explained

This was a surprising reversal. Previously, Mr. Harris had argued that the Board should certify him as the winner.

Mr. Harris’ call for a new election capped a dramatic week of hearings held by the state board of elections. A decision could come as soon as Thursday about whether to certify the race or hold a new election.

John Harris’ Warnings

In an emotional statement at a North Carolina State Board of Elections hearing on Wednesday, Mr. Harris’ son, John Harris, said that he had warned his father about hiring Leslie McCrae Dowless, the independent contractor at the center of the fraud allegations.

“I thought what he was doing was illegal. And I was right.”

“I thought what he was doing was illegal,” John Harris told the State Board of Elections. “And I was right.”

John Harris’ testimony and emails he provided to the Board of Elections document his dogged efforts to warn his father that Mr. Dowess’ methods were at the very least shady, if not illegal.

“I raised red flags at the time the decision was made to hire Mr. Dowless,” John Harris said Wednesday. But, he said, his father brushed aside his concerns.

“I had no reason to believe that my father actually knew, or my mother or any other associate with the campaign had any knowledge,” John Harris told the board as his father watched on choking back tears. “I think Dowless told them he wasn’t doing any of this, and they believed him.”

What Happens Next

Mr. Harris narrowly defeated his Democratic rival, Dan McCready, by a scant 905 votes in North Carolina’s Ninth District Congressional race. But, it now seems increasingly likely that the Board will order a new election. Even if they were to certify the election, there’s little chance the Democratic-controlled House of Representatives will seat Mr. Harris. One way or another, voters in NC09 will have to return to the polls.

The big question is whether a new election will be held in the primary as well. Republicans fear that Mr. Harris has been irreparably tarnished by the scandal and would almost certainly lose a head-to-head rematch with Mr. McCready. A new primary would give Republicans a chance to put a new GOP candidate on the ballot with a better shot at winning.

PODCAST: The Dramatic NC09 Ballot Fraud Hearing

PODCAST: The Dramatic NC09 Ballot Fraud Hearing

Man testifies in hearing.
John Harris delivers an emotional statement in the NC-09 ballot fraud case.
Man testifies in hearing.
John Harris delivers an emotional statement in the NC-09 ballot fraud case. CREDIT: NC State Board of Elections video.

As the NC State Board of Elections prepared to decide his father’s fate, Mark Harris’ son took the stand. in an emotional statement, John Harris described his warnings to his father before his campaign hired Leslie McCrae Dowless for the NC09 race. Nevertheless, John Harris said, his parents believed Mr. Dowess, “I didn’t.” It was Mr. Dowless’ shady absentee ballot operation is now at the center of fraud allegations in last November’s NC09 Congressional race. Plus, we unpack President Trump’s declaration of a national emergency. How will it fair in the courts?

UPDATE: On Thursday, the North Carolina State Board of Election ordered a new election in the Ninth Congressional District. The vote was unanimous. Earlier in the day, Republican candidate Mark Harris told the Board that a new election was needed. This was a surprising reversal. Previously, Mr. Harris had argued that the Board should certify him as the winner.

“It’s become clear to me that the public’s confidence in the 9th District seat general election has been undermined to an extent that a new election is warranted,” Mr. Harris said Thursday.

However, Mr. Harris maintained that he was in the dark about the illegal methods allegedly employed by a contractor working for his campaign.

The State Board of Elections did not set a date for the new contest at Thursday’s meeting. As of now, Mr. Harris has yet to decide whether he will run again.

 PODCAST: The Dramatic NC09 Ballot Fraud Hearing

 

Various Border Wall Prototypes as they take shape during the Wall Prototype Construction Project near the Otay Mesa Port of Entry.
Mani Albrecht, U.S. Customs and Border Protection.

Can President Trump Declare a National Emergency and Build the Wall?

Virginia Democrats Achieve Simultaneous Faceplant

If you are interested in scandal-free government, do not ask Virginia Democrats. Over the past few weeks scandals have ensnared many of the Commonwealth’s top elected officials, including Virginia Governor Ralph Northam, Lt. Governor Justin Fairfax and Attorney General Mark Herring.

Gov. Ralph Northam's medical school yearbook page depicts two men, one in blackface and another in Ku Klux Klan Robes. (Eastern Virginia Medical School)
Gov. Ralph Northam’s medical school yearbook page depicts two men, one in blackface and another in Ku Klux Klan Robes. (Eastern Virginia Medical School)

A scandal over racist overtones in his college and medical school yearbooks has enveloped Virginia Governor Ralph Northam. Mr. Northam’s college yearbook lists “Coonman” as his nickname. His medical school yearbook page includes a photograph of two men, one in blackface and the other dressed as a Ku Klux Klansman. Mr. Northam initially acknowledged, then denied, that he was the one in blackface.

Separately, Mr. Herring acknowledged that he too had once worn blackface in college when he dressed in costume as an African-American pop musicians. Finally, a woman recently came forward to accuse Mr. Fairfax of sexual assault.

What’s Oppo and Vulnerability Research

Opposition research is a deep dive into your opponent’s background to uncover anything that potentially could be used against him or her. Vulnerability research is the same thing conducted on yourself.

A Google search or a news media dump alone does not qualify as research. Those are merely starting points. Researchers must step away from their computers and go through the target’s entire life. That means trips to courthouses, deed offices, libraries and dusty archives, and interviews with people who knew the candidates earlier in their careers of in college.

None of the people who ran against the governor, lieutenant governor or attorney general in either the primary or the general election apparently did not conduct effective oppo research. The campaigns also either did not hire a vulnerability researcher, the candidates forgot their earlier transgressions or neglected to tell their staff and consultants about their pasts.

How Not to Handle a Scandal

Mr. Northam’s response to the scandals was horrific. Future college textbooks may well cite it as the penultimate example of what not to do when faced with a political scandal and public relations disaster.

Hours after a conservative blog revealed Mr. Northam’s medical school photo, he issued a press statement acknowledging that it was he in the photo. “I am deeply sorry for the decision I made to appear as I did in this photo and for the hurt that decision caused then and now,” he said.

Less than 24 hours later, he called a press conference to deny it. “I reflected with my family and classmates from the time and affirmed to [sic] my conclusion that I am not the person in that photo,” he said. Mr. Northam then proceeded to make things worse. He admitted that his Virginia Military Institute classmates did call him “Coonman,” but claimed to not know why. The actual headline from a Politico report on the press conference was  “6 Moments of Weirdness with Ralph Northam.”

White Men in Black and Brown Face

In an apparent effort get ahead of another damaging story that had begun to circulate among political insiders, Mr. Northam said he took part in a dance contest where he “darkened” his face in a portrayal of Michael Jackson. He said he had only used a little bit of shoe polish on his face “because, I don’t know if anybody has ever tried that, but you cannot get shoe polish off.” Mr. Northam said he had won the contest because of his moonwalk dance and seemed on the verge of demonstrating it to reporters.

Further, Mr. Herring issued a February 6th statement acknowledging that he had worn blackface while imitating an unidentified rap star at a college party.

White male statewide Virginia elected officials seem to have a great sense of respect for the Witmark brothers — the vaudeville actors who blackened their faces and performed in minstrel shows. The brothers also wrote “Coon Tunes.” Unlike office holders in the Old Dominion, this author knows how racist and offensive that sounds, but that is what people called these songs in the late 1800s and early 1900s.

Thank Heaven for Life’s Little Ironies

For those who appreciate irony, the current Mr. Fairfax and Mr. Herring scandals are for you. A college professor from California claims Mr. Fairfax forced her to perform oral sex on him during the 2004 Democratic National Convention.

If that sounds familiar, it should. In the midst of his confirmation hearings, a California college professor accused Supreme Court nominee Brett Kavanaugh of sexual assault. The only difference between Mr. Fairfax and Mr. Kavanaugh is that, as of February 7th, not a single Democratic elected official has demanded that Mr. Fairfax step aside.

Before Mr. Herring admitted that he also had blacked his face in college, and after Mr. Northam’s Moonwalk press conference, the attorney general had demanded that the governor resign. Mr. Herring said, “It is no longer possible for Governor Northam to lead our Commonwealth and it is time for him to step down.” It goes without saying that Mr. Herring has not called on himself to quit.

The past week has left Virginia a political laughing stock, known for scandals and political incompetence.


Matthew Tallmer is a former congressional staffer who has been involved in Virginia politics. 

PODCAST: Peak Trump with David Stockman

Ronald Reagan’s OMB Director, David Stockman, talks about his new book, Peak Trump. In a wide-ranging discussion, Mr. Stockman presents a sobering, data-driven assessment of the serious challenges the American economy faces. While he voted Trump, Mr. Stockman warns that Mr. Trump’s economic agenda now threatens disaster. But first, Tyler and Taylor grade President Trump’s State of the Union address.

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About David Stockman

PODCAST: Peak Trump with David StockmanDavid Stockman is the ultimate Washington insider turned iconoclast. Mr. Stockman won a seat in Congress at just 31 years old and quickly rose through the ranks of Washington.  Just four years later, President Ronald Reagan appointed him to be Director of the Office of Management and Budget in 1981. After leaving the White House, Mr. Stockman had a 20-year career on Wall Street.

A Brief History of the State of the Union

President Wilson delivers the first modern State of the Union address in 1913.
President Woodrow Wilson addresses Congress Dec. 13, 1913. (Library of Congress)

The State of the Union, with all its pomp and pageantry, is largely a 20th Century invention. Until 1947, what we now call the State of the Union Address was officially known as the Annual Message. And, it wasn’t always a speech either.

The U.S. Constitution dictates that the President “shall from time to time give to the Congress Information of the State of the Union, and recommend to their consideration such measures as he shall judge necessary and expedient.” (U.S. Const. Art. II, Sec. 3) The form that this takes has varied throughout the nation’s history.

The President’s ‘Annual Message’

The first two presidents, George Washington and John Adams, delivered their annual message as a speech to Congress. However, President Thomas Jefferson found the monarchical trappings of a grand address distasteful. When Jefferson took office in 1801, he delivered his annual presidential messages as a written report. (Jefferson was also a notoriously poor orator, which might have had something to do with it.)

Throughout the 19th Century, Presidents followed Jefferson’s model of delivering their annual message as written reports. These were often lengthy bureaucratic documents that bear little resemblance to the grand rhetorical performances of the modern State of the Union address.

The Modern State of the Union

President Woodrow Wilson, seeking to refashion the Presidency into a less impersonal institution, revived the tradition of the president’s annual message as a speech before a joint session of Congress in 1913. Truman’s 1947 address was the first to be called a “State of the Union” and also the first to be broadcast on television.

Dwight Eisenhower’s 1959 address was the first to use the familiar “my fellow Americans” opening line. “Prior to that,” says Anne Pluta, a professor at Rowan College, President’s addressed the speech “to ‘Fellow Citizens of the Senate and House of Representatives,’ ‘Members of Congress,’ or some variation thereof.” Later, Lyndon Johnson began the tradition of delivering the State of the Union as a prime time address in 1965.

The State of the Union has been shaped by the forces of history and technology as well as the personalities of the men who occupied the Presidential office. “There is no law on the subject,” Senator George G. Vest said in an 1895 speech to the Jefferson Club of St. Louis. “It is a matter of taste and convenience, a question which every President can settle for himself.”

How an Ascendant Left Could Be Democrats’ Undoing

Photo Credit: Phil Roeder; Gage Skidmore; Lauren Gerson; CA Attorney General's Office; U.S. Senate; Wikipedia Commons.

The Democratic Party is riding high. They took the House of Representatives in the midterm elections. They bested President Donald Trump in the most recent round of the shutdown fight. Judging by Mr. Trump’s poll numbers, Democrats have a real shot at the White House in 2020. And yet, the party’s left wing is busily planting the seeds of its own demise.An ascendant Democratic left, galvanized by President Trump’s chaotic two years in office, is pushing the Democrats’ agenda out of the mainstream.

An ascendant Democratic left, galvanized by President Trump’s chaotic two years in office, is pushing the Democrats’ agenda out of the mainstream.

The Left Field

The early entrants in the Democratic primary race all come from the far left. Kamala Harris, the California Senator who was first to throw her hat in the ring, wants to eliminate private health insurance. Ms. Harris’ opponent, Senator Elizabeth Warren, is calling for more IRS audits and punitive taxes on the wealthy. Not to be outdone, Sen. Bernie Sanders thinks a 90% top marginal tax rate wouldn’t be such a crazy idea.

Yet, even the most aggressive soak the rich schemes will not come close to paying for the array of massive new government programs the Democratic Presidential contenders promise. For example, all of the Democratic presidential hopefuls have embraced Medicare for All. Yet, none can explain how they will pay the massive price tag of free government health care for everyone. Ms. Warren’s wealth tax, for instance, is estimated to raise $2.75 trillion over ten years. But, that will cover only a fraction of the programs $32 billion cost.

Mashing the Hot Buttons

Meanwhile, Democratic-controlled legislatures are mashing hard on hot button issues that are sure to alienate moderate voters. A bill moving through Virginia’s Democrat-controlled state legislature would permit late-term abortions, even after the mother was in labor. Virginia’s Democratic Governor Ralph Northam said that in such cases the baby would be delivered and “kept comfortable” while the doctor and mother would have a conversation about whether the child is permitted to live. For even many pro-choice advocates, this seems barbaric. Under the law, it’s arguably murder.

Some will argue that this is no more crazy than Mr. Trump’s promise of a 2,000 mile border wall paid for by Mexico. But, the swing voters Democrats need to take back the White House are fed up with outlandish promises. Democrats will need to convince these voters that they offer a more sober, competent alternative to Mr. Trump. At the moment, they are leaving precisely the opposite impression.

Putting the 2018 Midterms in Perspective

Many on the left interpret Democrats’ midterm electoral success as not only a backlash against President Trump, but a ringing endorsement from the voting public of a progressive agenda. They are getting ahead of their skis. While Democrats have plenty of reason for cheer, their midterm win wasn’t quite as resounding as it first appears.

Republicans were defending far more House seats in districts Hillary Clinton won than Democrats were defending in districts Donald Trump carried. Among the reasons incumbent parties tend to lose seats in a new President’s first midterm election is that as parties are on the rise, they gain seats in opposing party territory that are especially vulnerable to being retaken by the party that more naturally represents them. While this isn’t the only reason Democrats regained the House, it played a bigger role than many Democrats would care to admit. Dissatisfaction with President Trump, rather than a new-found embrace of progressive policy fantasies, accounts for most of the rest.

 

The Bottom Line

The fantastical fictions on offer from the Democratic left are hardly an improvement on the current state of affairs.

Voters are frustrated with government dysfunction and incompetence. The fantastical fictions on offer from the Democratic left are hardly an improvement on the current state of affairs. The shift in 2018, such that it was, is less a shift in ideology than a shift in which party voters are willing to entrust with competently running the government. Democrats ignore this reality at their own peril.

As Democrats race each other to the left, they are leaving the public who might vote for them further behind. The ominous caricature of Democrats drawn by the far right and the reality of what Democrats actually stand for are beginning to converge. The further they go, the less outrageous Mr. Trump appears in comparison.


Correction

An earlier version of this article referred to Alexandria Ocasio-Cortez as a Representative from California. She is, of course, a Representative from New York. We regret the error.

Why a Solution to the Government Shutdown Remains Elusive

Credit: The White House, YouTube Screenshot

President Trump has offered a proposal to end the government shutdown, but it probably won’t be enough to satisfy Democrats. House Speaker Nancy Pelosi issued a statement, based on news reports of what he would propose, dismissing Mr. Trump’s offer as a non-starter before he even formally made it. Ms. Pelosi’s rejection likely was met with little surprise at the White House. Mr. Trump’s proposal seems mostly intended to strengthen his hand in negotiating a final deal. Still, it is a modest step in moving towards resolving the longest government shutdown in history and a signal of willingness to compromise on the part of the White House.

Mr. Trump’s proposed deal includes the $5.7 billion in funding for a border wall he has been asking for, and in exchange offers Democrats a three-year extension of the DACA program, which allows so-called “Dreamers” — undocumented immigrants who arrived in the country as children — to stay. It also extends Temporary Protected Status (TPS) for three years. This would shield immigrants covered under the program — mostly victims of natural disasters from Central and Latin America — from deportation. In addition, Mr. Trump’s proposal would increase the number of border agents and provide funding for humanitarian relief and drug detection technology at border crossings.

Why Democrats Rejected Trump’s Offer

On its face, this appears similar to a deal Democrats offered, and Mr. Trump rejected, last year. However, there are some key differences. Last year, the Democrats offered $25 billion in wall funding in exchange for a permanent DACA fix, including a pathway to citizenship. Mr. Trump’s proposal is temporary and does not include a mechanism for DACA recipients to become citizens. Democrats judge a temporary DACA fix insufficient. A legislative solution for the DACA program, an Obama-era initiative implemented by executive order that Mr. Trump has sought to end because he says it overstepped Presidential authority, has been a key sticking-point between Democrats and the White House for more than a year.

It’s likely that Mr. Trump is offering a temporary DACA fix to retain negotiating leverage for additional wall funding down the road. This is not lost on Democrats. But, Mr. Trump is betting that while Democrats will make the distinction between a permanent and temporary DACA fix, the public at-large will not. Mr. Trump reckons that if Democrats accept his compromise, great. But if they don’t, at worst it helps turn the tables, making Democrats look like the ones who are intransigent.

But, Democratic activists are having none of it. “Americans overwhelmingly voted for Democratic control of the House to put a check on Trump on exactly this kind of reckless behavior,” said Charles Chamberlain, chairman of liberal activist group Democracy for America.

Why Trump is Seeking a Way Out

The government shutdown, already the longest in history, is now nearing the one-month mark. Thus far, Mr. Trump has shouldered much of the political blame. Polls show Americans blame Mr. Trump for the shutdown and his approval ratings have slipped since it began. By wide margins, voters just want the shutdown to end.

Why a Solution to the Government Shutdown Remains Elusive
SOURCE: FIveThirtyEight.com

But, perhaps a stronger incentive for Mr. Trump is the potential that the shutdown will become a drag on the economy and imperil his clearest argument for the success of his Presidency.

Kevin Hassett, the chairman of the White House Council of Economic Advisers, estimates that the shutdown is shaving 0.13 percent off of quarterly economic growth for each week it goes on. That means that the economy has already lost 0.5 % in growth over the four weeks the government has been shut down.

While this may not be enough to tip the economy into recession, it certainly doesn’t help. It is another drag on an economy already facing headwinds from Mr. Trump’s trade war with China, Federal Reserve rate hikes, and a sagging stock market.

“The longer it goes on, the bigger the risk is of broader damage,” Ian Shepherdson, an economist at research firm Pantheon Economics, told Vox News. “If the shutdown lasts for the whole quarter, it won’t be trivial.”

Little Room to Maneuver

Still, hemmed in by uncompromising base supporters, neither Republicans nor Democrats have much room to maneuver. Even this modest proposal faced blowback from immigration hawks. Ann Coulter, a conservative commentator influential among Mr. Trump’s base, ridiculed the proposal as “amnesty” on Twitter.

It was also Ms. Coulter’s criticism that prompted the White House soften its demand for wall funding in a bid to avert a shutdown last month.

Democratic leaders face similar pressure from a left-wing already discontented by Ms. Pelosi’s re-elevation as House speaker. For them, opposition to the wall is a proxy for opposition to Mr. Trump. For Democratic leaders to cave to Mr. Trump on his signature initiative as their first act after winning control of the house would be read by Democratic Party activists as a betrayal.

Endgame Remains Elusive

For now, Democrats will likely continue to try to saw off the limb Mr. Trump walked out on when the shutdown started. Still, by rejecting Mr. Trump’s proposal, it becomes easier for the White House to argue that the Democrats are the ones being unreasonable. While this compromise may not end the shutdown immediately, Mr. Trump likely hopes that it will turn up the political pressure on the Democrats and increase the chances of their accepting a compromise more to his liking.

There remains no easy solution to this mess. The shutdown fight is emblematic of an era of governing in which the affairs of state are in direct conflict with the political forces shaping both parties. Until the politicians find a way to strike a balance between the two, hundreds of thousands of Federal workers going without a paycheck will continue to be caught in the middle.

The Government Shutdown Fight Explained

PODCAST: State of the Shutdown

Nancy Pelosi suggested that the State of the Union address be delayed until after the government shutdown is resolved. Has the annual address, with all its pomp and pageantry, become an overwrought symbol of the imperial modern presidency?

Then, we discuss a pair of back-to-back bombshell news stories. First, the NY Times reports that the FBI opened a counterintelligence investigation into President Trump after he fired James Comey. But, did the FBI step over the line? Second, the Washington Post revealed that President Trump concealed records of his one-on-one conversations with Vladimir Putin. Why this might not be as bad as it first appears.

Reading Material

– Charles C.W. Cooke: The State of the Union Is Inappropriate

– Jack Goldsmith: On What Grounds Can the FBI Investigate the President as a Counterintelligence Threat?

Interview: The State of the Union and the Shutdown

A view of the east steps of the United States Capitol Building.

If the government shutdown continues, Mr. Trump may have to deliver the State of the Union on paper. Nancy Pelosi suggested that President Trump cancel the annual prime time address until the shutdown is over. Roughly Explained Editor Taylor Griffin discusses what this all means with the BBC’s Clare McDonnell.

Can President Trump Declare a National Emergency and Build the Wall?

Various Border Wall Prototypes as they take shape during the Wall Prototype Construction Project near the Otay Mesa Port of Entry.
Ground views of different Border Wall Prototypes as they take shape during the Wall Prototype Construction Project near the Otay Mesa Port of Entry. Photo by: Mani Albrecht, U.S. Customs and Border Protection.

President Donald Trump has suggested that he has the power to declare a national emergency and build a border wall with or without Congress — and he might be right.

Democrats’ opposition to President Trump’s request for $5 billion to construct a wall on the southern border has resulted in a government shutdown that is now stretching into its third week. Declaring a national emergency and building it anyway could allow Trump a way out of the impasse.

The Government Shutdown Fight Explained

Presidential Emergency Powers and the Wall

There’s a non-trivial legal argument that under emergency authorities granted to the President by Congress President Trump could unilaterally order the construction of a wall, even in the absence of an explicit appropriation from Congress. Still, the President’s ability to invoke these laws is not clear-cut and would surely face legal challenges.

There are at least two relevant statutes on which the Trump Administration could rest a case for his authority to use emergency powers to build a wall:

  • Under a law passed by Congress in 1986, in the event of a Presidential declaration of a national emergency under the National Emergencies Act of 1976 (NEA), the Administration is permitted to reallocate resources from the Army Corps of Engineers to “construct or assist in the construction, operation, maintenance, and repair of authorized civil works, military construction, and civil defense projects that are essential to the national defense.”
  • Another law gives the President, after declaring a national emergency that requires the use of the armed forces, broad latitude to reassign funds appropriated by Congress for military construction projects to other projects “not otherwise authorized by law that are necessary to support such use of the armed forces.”

Both of these statutes require that the President declare a national emergency under the 1976 National Emergencies Act (NEA). But, the bar for doing so is not all that high according to Bobby Chesney, a law professor at the University of Texas. “If President Trump wishes to state that the border is in a state of disarray or exposure such that it constitutes a national emergency under the NEA, he is pretty much free to do so,” Chesney wrote in a post on Lawfare.

Not a Slam Dunk

While the Administration can certainly make a plausible case for the President’s legal authority to use emergency powers to build the wall, it’s not a slam dunk.

The President’s authority to reassign Army Corps of Engineers resources is limited to civil works projects that Congress has previously authorized. Congress has not explicitly approved a barrier covering the entire border. Still, Congress has authorized the military to construct “roads and fences and installation of lighting to block drug smuggling corridors across international boundaries of the United States.” The Trump administration could argue that the border wall falls under the military’s authority to build fencing for the purposes of drug interdiction.

The statute permitting reassignment of military construction funds applies only to a declaration of a national emergency “that requires use of the armed forces.” The statute allowing the use of Army Corps of Engineers resources is a bit broader, allowing emergencies that “may require” the armed forces. President Trump did order troops to the border last year in a support role, so there’s precedent for this.

Some argue that border security mission runs afoul of the Posse Comitatus Act, which places limits on the extent to which the military can be used for domestic law enforcement. For example, the President could not deploy the Army to round up drug dealers. But, he clearly could deploy the Army to stop an invading military force.

Can President Trump use the military to stop migrants from crossing into the country illegally? Securing the border falls into a sort of gray area, which is why the military was confined to a support role when it was deployed to the border last year. Stil, Presidents have pushed the envelope of what the military is allowed to do further than this in the past. Even if the armed forces are only “required” in a support role it’s fair to argue that this is enough to satisfy the statute. When Congress passed these laws, it likely had things other than border walls in mind. Nevertheless, the Trump Administration can reasonably argue that they apply here.

Courts are generally reluctant to second guess the President’s national security judgements. Recent court battles over other Trump initiatives give little reason to believe this will change. In the case of President Trump’s travel ban, after the administration made some revisions to address due process and other concerns, the Supreme Court upheld it in the end, specifically citing the Judiciary’s general deference to Presidential authority over national security matters. “The Executive’s evaluation of the underlying facts is entitled to appropriate weight, particularly in the context of litigation involving ‘sensitive and weighty interests of national security and foreign affairs,’” Chief Justice John Roberts wrote in the court’s opinion.

Why the Supreme Court Upheld President Trump’s Travel Ban

The Bottom Line

There’s no guarantee that declaring an emergency resolves the shutdown. For example, Democrats might insist on a provision in any funding package that explicitly prohibits him from using appropriated funds for a border wall. Setting that aside, declaring a national emergency to build a wall is not explicitly within the scope of the President’s powers; but, it’s not clearly outside of them either. Although there are legal obstacles, they are not necessarily insurmountable. Whatever happens, if President Trump choses to go this route, it will be up to the courts to sort it out.

The Government Shutdown Fight Explained

A week into the partial government shutdown, Roughly Explained Editor Taylor Griffin explains what you need to know.

READ MORE


The Government Shutdown Fight Explained

PODCAST: Danielle Pletka on Trump’s Syria Withdrawal and Mattis’ Resignation

LISTEN ON APPLE PODCASTS

Roughly Explained Editor Taylor Griffin talks with Foreign policy expert Danielle Pletka about the implications of President Trump’s surprise decision to pull U.S. troops out of Syria and why she thinks he is repeating the same mistakes President Barack Obama made when he pulled U.S. troops out of Iraq in 2011. Plus, what the resignation of Defense Secretary James Mattis means for U.S. national security policy.

LISTEN ON APPLE PODCASTS

 

 

Danielle Pletka is Senior Vice President for Foreign and Defense Policy Studies at the American Enterprise Institute and an adjunct professor at Georgetown University’s Walsh School of Foreign Service. You can find her on Twitter at @dpletka, or read her very astute analysis of the middle east and other foreign policy issues at AEI’s website.

LINKS

Barack Trump and the failure of leadership on Syria — Danielle Pletka

The Government Shutdown Fight Explained

A stalemate between President Donald Trump and Congressional Democrats over funding for a border wall threatens a partial government shutdown. As of Friday afternoon, there was little optimism that a deal to keep the government open could be struck before a midnight deadline.

Here’s what’s going on:

  • Mr. Trump has threatened to veto any spending package that doesn’t include at least $5 billion in funding for the wall. Democrats, whose support in the Senate is necessary to muster the 60 votes needed to pass any funding bill, are equally determined not to give it to him.
  • Democrats say they will agree to a continuation of last year’s $1.6 billion border security funding level, which includes $1.3 billion for pedestrian fencing, but not a penny more.
  • For the third time this year, Mr. Trump and Congressional Democrats find themselves hemmed in by political bases that reject any concessions to the other side as unacceptable.

A Tumultuous Week

Over the course of a tumultuous week, Mr. Trump has lurched between veto threats to signaling willingness to compromise, and back again. By Friday afternoon, both sides seemed to have dug in their heels.

“Shutdown today if Democrats do not vote for Border Security!” Mr. Trump tweeted Friday morning.

“President Trump: you will not get your wall,” Senate Minority Leader Chuck Schumer shot back on the Senate floor later in the day. “Abandon your shutdown strategy. You’re not getting the wall today, next week or on January 3rd, when Democrats take control of the House.”

Last week, President Trump said he was unmovable in his resolve to veto any bill to keep the government open that did not include at least $5 billion to fund the wall. Perhaps recognizing the futility of securing even one Democratic votes in the Senate, much less nine, by Tuesday, the White House shifted course.  In a Fox News interview Tuesday, Press Secretary Sarah Huckabee Sanders said that they might not need the full $5 billion after all. “We have other ways that we can get to that $5 billion (for a border wall),” she said.

Senate Republicans saw an opening and rushed to pass a short-term spending measure that would extend existing funding until early February, essentially punting the fight to next year. Lawmakers were optimistic that Mr. Trump would sign it. But, after a fierce backlash among the President’s abase — conservative commentator Ann Coulter, one of Mr. Trump’s earliest supporters, denounced him as “gutless” — the White House reversed tact.

“This utterly unlikely and, at least for president, in many ways, a not particularly attractive presidential candidate beat the most qualified woman ever to run for the office, basically on one promise: the promise to build a wall and never backing down on that,” Ann Coulter said on the Daily Caller’s podcast.

Thursday morning, Mr. Trump summoned key House Republicans to the White House and renewed his vow to veto the Senate bill or anything else that fell short of the full $5 billion in wall funding. At Mr. Trump’s insistence, House Republicans passed a largely symbolic funding bill that included $5 billion in wall funding. It landed in the Senate with a thud.

Mr. Trump spent early Friday morning on Twitter goading Democrats. “If the Dems vote no, there will be a shutdown that will last for a very long time. People don’t want Open Borders and Crime!” he wrote.

The Democrats Aren’t Going to Budge

Democrats have little political incentive to acquiesce to Mr. Trump’s demands. Fresh off a midterm election victory, Democrats are in no mood to cave:

  • For the left, opposing the wall is a proxy for opposing Mr. Trump. Any concession on the wall is unacceptable to the Democratic base. Ms. Pelosi has only recently put down an insurgency from members of her party’s left wing, which revolted against her election as speaker. There’s no interest in pouring salt in those wounds.
  • If a shutdown happens, Mr. Trump will shoulder much of the blame. Last week, in a wild televised Oval Office negotiating session with Democratic Party leaders Nancy Pelosi, the incoming speaker of the house, and Chuck Schumer, the Senate minority leader, Mr. Trump said he was perfectly willing to accept responsibility for a shutdown. “If we don’t get what we want … I will shut down the government. Absolutely,” Mr. Trump said. “I am proud to shutdown the government for border security.” In a USA Today/Suffolk University poll out this week, 43% said they’d blame Mr. Trump and the Republicans for a shutdown while just 24% would blame Democrats.
  • Regardless of whose fault the shutdown is, political memory is short. We’re on our third shutdown this year. Few remember who was at fault. In February, Democrats took heat for forcing a shutdown over a legislative fix for DACA. Yet, they nevertheless went in to score big victories in the midterms. “Few people feel an impact from it in their own lives,” Molly Murphy, a Democratic pollster, told Vox News. “They think it reflects Washington’s dysfunction, which they loathe, but it is still too distant from what hits home.”

What Will, and Won’t, Shut Down

If a shutdown happens, some, but not all of the government will shutdown. Congress has passed appropriations bills funding about three quarters of the government, including the Departments of Defense and Health and Human Services. But, funding bills for nine other agencies remains mired in the impasse over wall funding.

  • The Defense Department and Department of Health and Human Services, which have already been funded will be largely unaffected.
  • At agencies that must shut down, non-essential workers will be furloughed. In the past Congress has usually paid them in arrears.
  • Employees designated as essential personnel will continue to come to work. Air Traffic Controllers, border patrol agents, and TSA agents are all considered essential personnel.
  • National Parks will probably close, and the IRS will furlough a large portion of their workforce.
  • Mandatory spending programs do not require annual appropriations. So, Social Security and Medicaid checks will arrive as usual.
  • Federal courts have independent sources of funding that should allow them to stay open for at least three weeks or so.

The Bottom Line

On Capitol Hill at least, neither side really wants a shutdown. Even if Mr. Trump is spoiling for a fight, war-weary Congressional Republicans mostly just want to go home. After a bruising midterm, there’s little appetite for a big showdown over the Christmas Holiday. Yet, the divide between the two sides seems wider than any mutually agreeable compromise can bridge. And neither side is ready to cave.

With hours to go before the stroke of midnight, on Capitol Hill, lawmakers gamely continued to search for a last minute way out. In a darkened West Wing, there was little sign of activity other than the whir of the cleaning staff’s vacuum cleaners. A reporter, stumbling upon Kevin Hassett, one of the President’s economic advisers, on the White House driveway asked what would happen next. “It’s up to the president,” Hassett replied.

 

READ: Defense Secretary James Mattis Resignation Letter

DOD photo by U.S. Air Force Staff Sgt. Jette Carr

James Mattis, President Trump’s Defense Secretary, has resigned his post. A reserved, yet forceful when necessary former Marine Corps General, Mr. Mattis is widely respected and had long managed to stay in Mr. Trump’s good graces despite fundamental disagreements about the President’s foreign policy approach. However, relations between the men have reportedly soured in recent months. Mr. Mattis resignation comes a day after Mr. Trump announced his decision to pull U.S. troops out of Syria, a move Mr. Mattis bitterly opposed.

“Because you have the right to have a Secretary of Defense whose views are better aligned with yours on these and other subjects, I believe it is right for me to step down from my position,”  Mr. Mattis wrote.

Mr. Mattis stressed the importance of our international alliances and his concern about the threats posed by Russia and China, whose authoritarian leaders Mr. Trump has often embraced more readily than traditional American allies.

“While the US remains the indispensable nation in the free world, we cannot protect our interests or serve that role effectively without maintaining strong alliances and showing respect to those allies,” Mr. Mattis wrote.

Adding, “I believe we must be resolute and unambiguous in our approach to those countries whose strategic interests are increasingly in tension with ours. It is clear that China and Russia, for example, want to shape a world consistent with their authoritarian model – gaining veto authority over other nations’ economic, diplomatic, and security decisions – to promote their own interests at the expense of their neighbors, America and our allies.”

“My views on treating allies with respect and also being clear-eyed about both malign actors and strategic competitors are strongly held and informed by over four decades of immersion in these issues,” Mattis said.

The full letter is below.

December 20, 2018

Dear Mr. President:

I have been privileged to serve as our country’s 26th Secretary of Defense which has allowed me to serve alongside our men and women of the Department in defense of our citizens and our ideals.

I am proud of the progress that has been made over the past two years on some of the key goals articulated in our National Defense Strategy: putting the Department on a more sound budgetary footing, improving readiness and lethality in our forces, and reforming the Department’s business practices for greater performance. Our troops continue to provide the capabilities needed to prevail in conflict and sustain strong U.S. global influence.

One core belief I have always held is that our strength as a nation is inextricably linked to the strength of our unique and comprehensive system of alliances and partnerships. While the US remains the indispensable nation in the free world, we cannot protect our interests or serve that role effectively without maintaining strong alliances and showing respect to those allies. Like you, I have said from the beginning that the armed forces of the United States should not be the policeman of the world. Instead, we must use all tools of American power to provide for the common defense, including providing effective leadership to our alliances. NATO’s 29 democracies demonstrated that strength in their commitment to fighting alongside us following the 9-11 attack on America. The Defeat-ISIS coalition of 74 nations is further proof.

Similarly, I believe we must be resolute and unambiguous in our approach to those countries whose strategic interests are increasingly in tension with ours. It is clear that China and Russia, for example, want to shape a world consistent with their authoritarian model – gaining veto authority over other nations’ economic, diplomatic, and security decisions – to promote their own interests at the expense of their neighbors, America and our allies. That is why we must use all the tools of American power to provide for the common defense. My views on treating allies with respect and also being clear-eyed about both malign actors and strategic competitors are strongly held and informed by over four decades of immersion in these issues. We must do everything possible to advance an international order that is most conducive to our security, prosperity and values, and we are strengthened in this effort by the solidarity of our alliances.

Because you have the right to have a Secretary of Defense whose views are better allied with yours on these and other subjects, I believe it is right for me to step down from my position. The end date for my tenure is February 28, 2019, a date that should allow sufficient time for a successor to be nominated and confirmed as well as to make sure the Department’s interests are properly articulated and protected at upcoming events to include Congressional posture hearings and the NATO Defense Ministerial meeting in February. Further, that a full transition to a new Secretary of Defense occurs well in advance of the transition of Chairman of the Joint Chiefs of Staff in September in order to ensure stability within the Department. I pledge my full effort to a smooth transition that ensures the needs and interests of the 2.15 million Service Members and 732,079 DoD civilians receive undistracted attention of the Department at all times so that they can fulfill their critical, round-the-clock mission to protect the American people.

I very much appreciate this opportunity to serve the nation and our men and women in uniform.

James Mattis

READ: Defense Secretary James Mattis Resignation LetterREAD: Defense Secretary James Mattis Resignation Letter

PODCAST: The Wild Michael Flynn Sentencing Hearing

In this week’s Axis of Reason podcast, the last before Christmas, we unwrap Tuesday’s wild sentencing hearing in the Michael Flynn case and why Judge Emmet Sullivan thought Michael Flynn deserved a lump of coal.

LINKS


READ: Mueller Court Documents Detailing FBI’s Interview of Michael Flynn

 

READ: Mueller Court Documents Detailing FBI’s Interview of Michael Flynn

Special Counsel Robert Mueller released several documents Friday disputing the suggestion made by Michael Flynn’s attorney’s in their sentencing memo that Mr. Flynn was duped into lying in an interview with FBI agents. Among them, Mueller’s reply to the defendant’s sentencing memo; the FBI’s 302 report from the Flynn FBI interview; and, FBI Director Andrew McCabe’s notes on the interview. In his reply, Mueller says that the argument that Flynn was tricked or ambushed does not hold water, and should not be considered a mitigating factor in Flynn’s sentencing.

“Nothing about the way the interview was arranged or conducted caused the defendant to make false statements to the FBI… The defendant chose to make false statements about his communications with the Russian ambassador weeks before the FBI interview, when he lied about that topic to the media, the incoming Vice President, and other members of the Presidential Transition Team.”

According to Mueller’s reply and supporting documents, Mr. McCabe brought up the need to conduct an interview after Mr. Flynn called him on an unrelated topic.  Mr. Flynn asked Mr. McCabe if the interview would concern his interactions with U.S. Ambassador to Russia Sergei Kislyak, he said it would. Nevertheless he gave false statements to the investigators even after being confronted with his own words.

During the interview, the FBI agents gave the defendant multiple opportunities to correct his false statements by revisiting key questions. When the defendant said he did not remember something they knew he said, they used the exact words the defendant had used in order to prompt a truthful response.But the defendant never corrected his false statements.

In notes following the interview, Mr. McCabe said that he told Flynn he wanted to clear the matter up as quickly and discreetly as possible. Mr. Flynn agreed and offered to do an interview that day. Mr. McCabe said that if Mr. Flynn felt he needed counsel present, he’d need to involve the Department of Justice. The quickest way to “get this done” was to just meet directly with the agents. Mr. Flynn agreed. He said he didn’t need a lawyer present and told Mr. McCabe to go ahead and send  the agents over. Not having an attorney present does not, Mueller argued, absolve him of his responsibility to be truthful.

The defendant agreed to meet with the FBI agents, without counsel, and answer their questions. His obligation to provide truthful information came with that agreement; it did not turn on the presence of counsel… A sitting National Security Advisor, former head of an intelligence agency, retired Lieutenant General, and 33-year veteran of the armed forces knows he should not lie to federal agents. He does not need to be warned it is a crime to lie to federal agents to know the importance of telling them the truth. The defendant undoubtedly was aware, in light of his “many years” working with the FBI, that lying to the FBI carries serious consequences.

Nevertheless, Mueller concluded, Flynn’s cooperation and military service justifies a sentence of little or no jail time.

While the circumstances of the interview do not present mitigating considerations, assuming the defendant continues to accept responsibility for his actions, his cooperation and military service continue to justify a sentence at the low end of the guideline range.

Here are the documents in their entirety.

Mueller Reply to Flynn Sent… by on Scribd

McCabe Memo re: Flynn Inter… by on Scribd

Michael Flynn FBI Interview… by on Scribd

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