May 08

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Congress Punches, Trump Administration Counter-Punches

The fight between Congress and the President is entering the "use any tools at our disposal" phase. On Tuesday alone, both sides performed several moves and counter-moves, as they try desperately to outmaneuver each other.

On one end of Pennsylvania Avenue, the Democrats were quite busy. To start, they threatened to hit non-cooperative federal employees where it hurts: in the wallet. House Oversight and Reform Committee Chairman Elijah Cummings (D-MD) sent out a letter to various people he wants to haul before his committee, and in it he warned that anyone who does not show up is at risk of having their salary withheld. Congress does have the power to do that—not only because they control the purse strings, but also because section 713 of the Financial Services and General Government Appropriations Act specifically entitles them to dock federal employees' salaries as a punitive measure.

That wasn't all for the blue team, either. They (specifically, Sen. Richard Blumenthal, D-CT) sent a letter to Dept. of Justice Inspector General Michael Horowitz, asking him to look into the actions of Attorney General William Barr. In theory, the AG is supposed to be independent of the president, and the inspector general is supposed to be independent of the AG. We know that the former part of that is not true right now, but the latter part might still be, so Blumenthal isn't necessarily barking up trees here. Horowitz, for what it is worth, was elevated to his current position by Barack Obama, not by Donald Trump.

Meanwhile, on the other end of the avenue, the administration was making several moves of its own. They stopped former White House counsel Don McGahn from turning over documents subpoenaed by the House, and declared that House Democrats would have to request them from the White House. Needless to say, that's not going to give the Democrats what they want, so it's time for their lawyers to get to work on yet another lawsuit.

In addition, Team Trump also took steps to frustrate the Democrats on the Barr/Robert Mueller front, threatening that they would use executive privilege to stop Mueller from talking to Congress if the Democrats move forward with their plans to hold Barr in contempt of Congress. The administration has no way to stop Mueller from talking if he wants to do so, but he tends to be a good soldier, so if Trump really does try to silence him, he might abide by the order. Whatever choice the Democrats make here, and whatever choice Mueller makes, it once again means more lawsuits.

There are, of course, going to be many posts like this over the course of the next year. Nobody knows how it will all turn out; the only certainty is that the judges and lawyers who work in Washington are going to have a very busy year in 2019. And maybe 2020. (Z)

Iran to Partially Withdraw from Nuclear Deal

Inasmuch as Iran is no longer getting the main benefits of the nuclear deal negotiated by the Obama administration (i.e., reduced sanctions), there isn't much reason for them to abide by its limitations (i.e., limits on their development of nuclear resources). So, early Wednesday morning (U.S. time), President Hassan Rouhani announced his nation's intention to partially withdraw from the pact. The Iranian government, specifically its Supreme National Security Council, also advised that the U.S. has 60 days to lift the new sanctions that have been reimposed in the last year, or the withdrawal will go from "partial" to "complete."

There is zero chance that the Trump administration will change course in response to Wednesday's news. Donald Trump dislikes the nuclear deal because it was the work of Barack Obama, and Secretary of State Mike Pompeo and NSA John Bolton dislike it because they don't like Iran. So, the administration has adopted an aggressive posture, and has recently deployed a carrier strike group and a bomber task force to the Middle East in response to what Bolton called "troubling and escalatory indications and warnings" from Iran. The administration says it has "specific and credible" intelligence about aggressive behavior from the Iranians as part of the ongoing conflict in Syria.

Clearly, there are significant elements in the administration that would like to go to war with Iran. In fact, swap the names "Cheney" and "Wolfowitz" in for "Bolton" and "Pompeo," and this is hewing pretty closely to the script in Iraq, circa 2002. Of course, another war in that part of the world, prompted by vague threats, and in service of vague (and probably untenable) goals, is not going to be politically viable right now. That's particularly true for a President who spent all sorts of time criticizing the Iraq War. The problem is that the administration does not seem to have any plan for keeping the peace, other than "not Obama's plan." (Z)

Stock Market Down for Two Straight Days

Donald Trump is threatening to impose more tariffs on China later this week. Apparently, he still believes that will transfer all of that wealth from China to the U.S., despite the fact that a fair bit of the cost of tariffs is borne by buyers (i.e., U.S. residents) and not sellers. Anyhow, the stock market responded in predictable fashion. It dove on Monday, and was down as much as 471 points, before finishing down just 66 points. Then it dove again on Tuesday, this time by 473 points. However, unlike Monday, it did not recover.

Thus far, every tariff threat has resulted in a temporary bear market. And every time, the market recovers, and the apparently unsinkable U.S. economy just keeps chugging along. Until presented with evidence to the contrary, we have to assume that the same will happen this time. However, the pattern—threat, drop, no long-term damage—is so clear, it does raise an important question. Given the President's comfort with playing fast and loose with the rules, particularly financial rules, and particularly in the service of making money, might he be engaging in some variant of insider trading? In the play "The Producers," the accountant Leo Bloom stumbles onto the realization that a Broadway producer could make big money if he could guarantee a financial loss (since he could sell vastly more than 100% of the profit participation). Similarly, if one has 100% certainty (or near-100% certainty) that the market is going to take a big hit in the next few days, it would be easy to make a lot of money shorting stocks.

If the President wanted to run a scheme like this, he could work with one of his well-heeled friends, or he could have his sons set up something using one of the family's hundreds of passthrough corporations. There is no evidence that this is going on, but it is the kind of thing that someone should be taking a look at. It's hard to imagine someone at Treasury or Justice doing so, as long as Steven Mnuchin and Bill Barr are running the show. Maybe—hopefully—SEC Chair Jay Clayton is keeping an eye out, though as he is a Trump appointee, one can hardly count on that. Congress could plausibly examine the matter, but they would need things like Trump's financial records and tax returns. Maybe they should try to get them. (Z)

Trump, by Contrast, Was Down for Ten Straight Years

The New York Times hasn't laid its hands on Donald Trump's tax returns (at least, not yet), but they did manage to get some of the top-line numbers from long ago from an anonymous tipster who had legal access to them. They just published a story about those numbers, and the major takeaway is that Trump's businesses reported losses of $1.17 billion over the course of 10 years from 1985 to 1994. Because his businesses are set up in a way that there's little distinction between them and him personally, that would pretty much make him the money-losingest individual taxpayer in the country over that time. This meant that he paid zero taxes in all but two of those years.

A Trump spokesman said that the numbers reported by the Times are untruthful, but declined to identify any specific inaccuracies. Assuming that the Gray Lady has the right of it, there are really only two possibilities here. The first is that, far from being a great businessman, Trump is a financial disaster—the walking embodiment of the old line that the easiest way to make a small fortune in business is to start with a large fortune. The second is that the President is a world-class tax cheat, and has scammed the government out of hundreds of millions of dollars over the years. Actually, there is also a third possibility: both of these things are true. Whichever of these it is, it would certainly explain why he wants his tax returns to remain a secret.

There could be other reasons as well why Trump is rather shy about having his tax returns become public. Chris Cillizza of CNN has four theories (most of them also raised by Hillary Clinton during the 2016 election):

Of course, it could be all of these, and maybe more. (Z)

Trump Says His Administration Is "Looking Into" Facebook's Ban of Right-wingers

Late last week, Facebook booted a bunch of right-wing folks off their platform for spreading misinformation and/or hate. The list included Louis Farrakhan, Alex Jones, Laura Loomer, and Milo Yiannopoulos. Most of those folks are not only alt-right trolls, they are also outspoken supporters of Donald Trump. And so, the President said his administration is "looking into" the matter.

This is presumably just another case of Trump blowing off steam and pandering to the base. However, if he or his personal attorney...er, the Attorney General, do decide to pursue it, it's worth knowing how strong their case is. In short: not very strong, but not totally hopeless. As anyone who took high school civics should know, the First Amendment only protects people from government censorship (in most cases), and does not entitle people to the use of private media platforms. In other words, a person has no more "right" to a Facebook account than they have a "right" to print an article in tomorrow's New York Times.

At least, that is probably the case. Should Team Trump (or Team Jones, or Team Yiannopoulos) try to take this to court, they would argue that Facebook and other social media platforms have created a de facto public forum, and that in that forum, Facebook is constrained by the First Amendment. Most of the relevant case law in this area involves, of all things, shopping malls, and whether or not people have a constitutional right to protest in a private space that is open to the general public (the answer, largely, is "no"). Since this has been little explored in the context of virtual public spaces, the courts could theoretically go in any direction, but the odds are not good that they would force social media platforms to do business with people whom they choose not to do business with. (Z)

Another Crook Turns Up in Trump's Orbit

No, the President didn't have a child with Stormy Daniels. It's his longtime friend, supporter, and adviser David Bossie. Over the course of the past few days, we have learned that Bossie, through his group President Coalition, was hitting up elderly Republican voters for donations, ostensibly to be used in "identifying and supporting conservative candidates running for office at the state and local levels of government." President Coalition not only used Donald Trump's office to promote itself, but also his name and his likeness. It took in nearly $20 milllion, most of which allegedly went straight into Bossie's pockets.

Trump is reportedly "livid" with Bossie, though his aides disagree as to the reason. Some say it is because he doesn't like anyone else cashing in on his "brand," which he has spent so much time and energy developing. Others say he's ok with others cashing in on his name, but that he wants credit and thanks, and Bossie gave neither. The careful reader will notice that neither of these causes of anger involves the phrase "people were cheated out of their money." Maybe that worldview is why Trump attracts so many David Bossies, and Michael Cohens, and Paul Manaforts, and Michael Flynns, and Jared Kushners, and Roger Stones, and Jerome Corsis, and other shady operators into his inner circle. (Z)

More on the Kentucky Derby

Speaking of Donald Trump's worldview, people are still trying to figure out what was behind his irritation over the Kentucky Derby result. Several readers wrote in with a fairly obvious theory: Trump had money riding on the outcome, and lost it when the original result was overturned. It's certainly possible, but we are skeptical. First, Trump has not historically been a gambler. If he couldn't win money when he was the house in Atlantic City, then he probably can't win as a bettor. Second, it is no small thing for the President to place a bet on a sporting event. Maybe he could send a USSS agent to the nearest track in Maryland (Rosecroft Raceway), but that would be pretty tenuous. It's true that Trump could have placed a private wager with a friend or associate, but that sort of thing is tricky to work out when there are 20 potential winning horses (as opposed to only two possible winning teams, as in most sporting events).

An alternative explanation, and one that makes a lot of sense, has also been proposed by a reader, but not of this site. Instead, it's a reader of The Bulwark who suggests that the outcome was offensive to Trump's basic worldview. To the President, crossing the finish line first is all that matters, and any rules that complicate or interfere with that are for losers. This explains not only Trump's irritation on Sunday, but also how he ends up with so many "friends" like David Bossie. (Z)


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