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The Insurrection Will Soon Be Televised

Or, at very least, the hearings into it will be. Yesterday, we noted the new reporting from The Washington Post on the 1/6 insurrection, which revealed the existence of a "command center" at the Willard Hotel, wherein key Trump figures—Rudy Giuliani, Steve Bannon, John Eastman, etc.—attempted to coordinate the theft of the 2020 presidential election. Late Sunday night, Rolling Stone magazine added its reporting to the mix, more fully fleshing out the picture. And it's big stuff; the kind of news that wins Pulitzer Prizes.

Rolling Stone's story is based on accounts from two people who say they were at the Willard when all of this was taking place. The magazine granted them anonymity because they are now working with the 1/6 Commission, and revealing their identities could compromise that work. They are referred to in the story as "Deep Throat" and "Deeper Throat." No, wait, we have our anonymous sources confused. Deep Throat was some other news story. These anonymous sources are identified as "rally organizer" and "rally planner," at least for now. Reporter Hunter Walker also received (currently unrevealed) documentary evidence from his sources, and also managed to confirm everything with a third, independent witness, so there's every reason to believe that the two informants are telling the truth.

The picture painted by "rally organizer" and "rally planner" is quite damning, as it makes crystal clear how well organized the insurrection was, and also exactly which high-level people were involved. There were several members of the House Republican conference in regular contact with the Willard command center that day: Reps. Andy Biggs (R-AZ), Lauren Boebert (R-CO), Mo Brooks (R-AL), Madison Cawthorn (R-NC), Louie Gohmert (R-TX), Paul Gosar (R-AZ) and Marjorie Taylor Greene (R-GA). Not one of those names is a surprise; the only thing about the list that is mildly unexpected is that it does not also include Matt Gaetz (R-FL) or Jim Jordan (R-OH).

Meanwhile, the command center was in regular contact with the White House. Longtime Trump spokesperson Katrina Pierson was, apparently, the main go-between. And according to both "rally organizer" and "rally planner," White House Chief-of-Staff Mark Meadows was "100 percent made aware of what was going on." Further, Gosar was reportedly telling everyone involved in the conspiracy that pardons would be issued to participants in the insurrection. This does not directly implicated Donald Trump, perhaps. However, if all of his key lieutenants were either at the Willard or were in the loop, and if his chief of staff and spokesperson were deeply involved, and if pardons were promised, it's all but impossible that he could have been ignorant (even if he has a sixth-degree black belt in ignorance).

In response to the new reporting, House Democrats have called for the members who participated in insurrection planning to be expelled from the House. That's not going to happen in the near future, however, as expulsion requires a two-thirds vote of the House membership. There is no way that Speaker Nancy Pelosi (D-CA) & Co. are going to attract the roughly 70 Republican votes they would need.

In the next few months, however, the tipping point may come. According to the article, "rally organizer" and "rally planner" have every intention of testifying publicly, and thus revealing their identities. Interestingly, they are still pretty Trumpy, and think that he got cheated during the election. They are not advocates of "Stop the steal," but they do think he was unfairly censored by the media. That said, they also think that storming the Capitol was a bridge too far, and "rally planner" is personally offended that Trump has turned his backs on them now that they are no longer of use to him.

When that testimony does come, it is going to be on all the news channels, and probably on Fox as well, and it's going to be a sensation. Is this the smoking gun that the 1/6 Committee needs? It very well could be. Definitely stay tuned. (Z)

Some Presidents Get to Keep Their Secrets, Others Don't

The Pierces' song "Secret," best known as the theme song for the show Pretty Little Liars, observes that "two can keep a secret, if one of them is dead." While it's not quite the way that The Pierces meant it, Joe Biden just may have heard the song and taken the lyrics to heart.

John F. Kennedy, as you may have heard, is dead. And this week, Joe Biden—who as you may have heard, is alive—decided to keep a few of JFK's secrets hidden from public view a little longer. Just as Donald Trump did before him, Biden has declined to fully declassify about 15,000 pages of documents related to Kennedy's assassination. According to the White House, the documents may be made public later in Biden's term, but not now.

Don't count on it, though. The official reason for keeping the documents hidden from view is that they might reveal classified information about American intelligence and law enforcement activities. There may be some truth to that, but Kennedy was killed 58 years ago. It's hard to imagine that there is all that much sensitive information left from that era that is still germane now. It's even harder to imagine that whatever secrets there were have not been decoded by the Russians, the Chinese, etc. in the nearly six decades since.

We haven't seen the unredacted documents, of course, but we strongly suspect that the real issue is the response they will provoke. It is highly unlikely that the government is sitting on information that proves that JFK was actually killed by Lyndon Johnson, or the Mafia, or Cuban agents, or members of the USC Class of '63, or five-sixths of Monty Python's Flying Circus. However, there is every chance that the documents do speak to stonewalling of the Warren Commission by government officials. And regardless of what's in the documents, even if it's nothing, the conspiracy theorists are going to have a field day. No sitting president benefits when "you can't trust the government" becomes a talking point among members of the electorate. Even Donald Trump managed to wrap his mind around that. So, when those papers finally see the light of day, it will probably be the light produced when the sun goes supernova in +/- 4 billion years.

So between Biden and JFK, that's two presidents, one of them dead, and the secret will be kept. By contrast, Trump, as you may have heard, is—like Biden—still alive. That's two presidents where neither is dead. And so, in contrast to JFK, Trump's secrets will not be kept. At least, not all of them. On Monday, for the second time in as many weeks, the White House declined to abide by Trump's demand that documents from his presidency be protected by executive privilege. The administration further ordered NARA to turn the requested documents over to the House Select Commission on 1/6 in the next 30 days.

There is still a stumbling block, of course, namely the lawsuit that Trump filed in an effort to override Biden's judgment. The former president has no legal leg to stand on here; he's just trying to drag things out and buy time. Not much time is being bought, though, as the case has been fast-tracked, with oral arguments scheduled for Nov. 4. It's possible that the judge, Tanya Chutkan, could squash it right then and there. Presumably Trump would appeal, but if someone at NARA has a USB drive with scans of the documents ready to go, they could hustle it over to the Hill before he's able to do so. For what it's worth, NARA's building in Washington is located about 0.8 miles from the U.S. Capitol. That's a 15-minute walk, a 7-minute jog, or a 2-minute drive. (Z)

Democrats Go Boldly Where No Tax Has Gone Before

Well, no American tax, at least. As congressional Democrats cast about for ways to pay for the reconciliation infrastructure bill while keeping Presidents Joe Manchin and Kyrsten Sinema happy, they are now giving a long look at the possibility of taxing unrealized capital gains They are calling it a "wealth tax," but it really is not. Many European countries have a wealth tax that is a percentage of your net assets as of Jan. 1 or Dec. 31 of the tax year. This tax, which would apply to unrealized gains, is neither fish nor fowl.

What, exactly, are the Democrats trying to tax? Well, we're going to answer that question, but keep in mind that explaining financial black magick is not exactly our forte. So, hopefully we can make things clear. Let us draw your attention to this exposé from ProPublica, published a few months ago. They got access to a bunch of leaked documents from the IRS, and crunched the numbers to figure out how much in taxes America's billionaires are paying. The answer: not much. Among the case studies ProPublica looked at were Warren Buffett, Jeff Bezos, and Elon Musk, who had an effective tax rate, respectively, of 0.10%, 0.98%, and 3.27% over a 5-year period. That is just a wee bit less than John and Jane Q. Taxpayer are coughing up.

How do they accomplish this? There are many tricks, of course, but the biggie—the one that ProPublica focused on—involves the aggressive use of loans. The billionaires, using their vast stock holdings in their companies as security, take out massive loans, often multiple billions of dollars, and then use those to fund their day-to-day lifestyle. Since loans are not income, and since income used to repay loans is generally tax deductible, the billionaires can live lavishly, backed by their immense wealth, without paying taxes.

This, in short, is what the Democrats are thinking about going after. At the moment, for example, Musk has a net worth—on paper—of $220 billion. The vast majority of that is unrealized, however, since he hasn't cashed his stock out. Still, he's using it to live on (and to fund his other business ventures) as if it were realized income. So, the Democrats want to tax that wealth. According to Berkeley economists Emmanuel Saez and Gabriel Zucman, America's thousand (or so) billionaires have $4.25 trillion in wealth, with $2.7 trillion of that unrealized. Some of it will never be realized, since billionaires are also very good at using things like trusts to transfer wealth in low-tax or non-taxed ways. If that $2.7 trillion is hit with a one-time tax at the top marginal rate (around 37%), then Uncle Sam would collect about $1 trillion.

Assuming that enough House Democrats, and all Senate Democrats, get om board with this—which is far from guaranteed—there would still be some significant challenges to overcome. Properly valuing some assets would be very tricky, particularly if this becomes a regular tax as opposed to a one-time assessment. Congress could declare that, for tax purposes, the value of a billionaire's stock holdings is based on the closing price on the final day of the fiscal year. But the tax would also apply to other assets like art and real estate, which are not so easily valued. And that's before we talk about the inventive new deductions that would be "discovered." For example: "Oh, my cleaning service got a thumbprint on the Van Gogh. That reduced its value by $40 million. Too bad!" Or maybe: "The demand for mutton in Afghanistan has fallen due to increased poverty under the Taliban, so the value of my gigantic sheep station in Australia has dropped by $50 million."

Further, the billionaires would fight this change tooth-and-nail, backed by an army of high-paid lawyers. After all, paying your law firm $10 million is way better than paying Uncle Sam $10 billion. And the first thing those lawyers would point to is the Supreme Court's ruling in Eisner v. Macomber (1920), which found that Congress cannot redefine the meaning of the word "income," and that the only thing that counts as income is actual income. That case had to do with a stock split, rather than the sort of unrealized capital gains that someone like Elon Musk benefits from, but it's close enough.

The Supreme Court certainly could revisit the case and change the rules, now that a century has passed and the loopholes have become obvious. But do you really imagine the current Court is going to be eager to help the Democrats out on this? The dictionary isn't going to help the Democrats, either. Dictionary.com defines income as: "Revenue received for goods and services, or from other sources, as rents or investments." Expect the billionaires' lawyers to harp on the word "received." If you haven't received it, it isn't income.

What would be much easier to enforce and would not raise any legal issues about "income" would be to tax capital gains when someone died. Currently when someone dies, the basis for future capital gains taxes on the deceased's assets is the value they had at death, not the purchase price years ago. In other words, if a hypothetical billionaire—say, a fellow named Mupert Rurdoch—acquired stock in a company worth $200 million, and that $200 million in stock grew to be worth $10 billion when he died, then his heirs only pay taxes on any value above $10 billion, while the $9.8 billion increase in value goes untaxed. That could be changed in one sentence. The objection is "but what about family farms?" The law could be changed to say that farms that have been in the family for at least 20 years and which have turned a profit in at least 10 of those years get a $20 million exemption. That should cover genuine family farms but exclude large agribusinesses. And there would be no legal fights since taxes on capital gains are well established. But the Democrats seem hell-bent on doing it the hard way.

That said, there is some good news for the Democrats. While it is not at all clear that the Democratic caucuses in the House and in the Senate are willing to line up behind this idea, it is entirely possible that they can be whipped into shape. And if that happens, then the blue team will actually have what it needs. That is to say, some members of the Democratic caucus (e.g., Sen. Elizabeth Warren, D-MA) would like to see the rich pay more, but what the Democratic leadership really cares about is getting the reconciliation bill through Congress, and being able to tell voters it's paid for and that the rich have paid their fair share.

If, a year or two down the road, the unrealized-capital-gains tax is struck down, well, by then the infrastructure bill will be in effect, Congress will have committed to funding its programs, and the midterms will be in the rearview mirror. So, it's not actually crucial that the maneuver survives long-term, merely that it survives long enough to get the bill passed into law. And if SCOTUS strikes it down eventually, that could also benefit the Democrats, who would point out that they want the rich to pay their fair share, but the Republican-appointed meanies on the Court apparently don't. (Z & V)

The Facebook Papers Drop

It would seem that "Papers" is the new "-gate." That's appropriate, since the original "Papers" were the Pentagon Papers, which came during the Nixon administration, just like the original "-gate" did. And so, the day you see that the Electoral-Vote.com Papers have leaked, we're done for. We won't survive once people know the deep, dark secrets of the staff mathematician and Otto the dachshund.

This week, the Pentagon Papers, Panama Papers, Paradise Papers, and Pandora Papers have been joined by the Facebook Papers. Apparently, someone did not get the message that these things are supposed to be alliterative. Oh, well, perhaps if Facebook's new name—whenever it's announced—starts with a 'P,' we can fix that.

The documents—thousands of pages of them—were provided by Facebook whistleblower Frances Haugen, who had a chat with Congress a couple of weeks ago and who paid a visit to the British Parliament this week. Here are the main revelations about Facebook contained within the papers:

It is not surprising, in view of all of this, that Zuckerberg & Co. are taking steps to draw a distinction between the social media platform Facebook and the company-soon-to-be-formerly-known-as-Facebook. Perhaps they will pick this as their new name, since it is not currently in use:

the logo that the musician Prince used as his name for a few years

In any event, regardless of what its name is, the company faces rough waters ahead. The regulators, both in the U.S. and internationally, are circling. They are reaching a point where people are boycotting their products for political and philosophical reasons. And their core properties depend on an audience whose tastes are fickle. (Z)

Biden Finally Gets His FCC House in Order

We've written several times about the FCC and, in particular, its enormous power to potentially change the nature of the Internet. As a reminder, among the things that is under their purview is the question of net neutrality. As a general rule, Democrats want the Internet to remain neutral, such that Internet Service Providers (ISPs) are required to treat all traffic the same. Republicans, by contrast, tend to prefer a non-neutral Internet, wherein ISPs are allowed to give some traffic favored status (or unfavored status). This would allow a Spectrum or a Comcast to extract a king's ransom from, say, Netflix to serve up their content at usable speeds while dropping any content provider that does not pay up, say Disney+, down to intolerable speeds. As we understand it, "The Mandalorian" isn't terribly enjoyable when being streamed at 56 kBps, unless your screen is the size of a postage stamp.

Under the leadership of Republican chair Ajit Pai, the FCC took steps in the direction of non-neutrality. It's not entirely clear that this would have worked out, since states like California passed their own laws requiring neutrality, and it would be pretty difficult to be neutral in some states and not in others. That said, "difficult" is not "impossible." There was also the possibility that the courts would tell the Californians that they can't make their own rules in defiance of those established by the federal government. Though it would certainly be interesting to see the courts make that declaration while simultaneously upholding the Texas abortion law.

In any event, the desires of the Pai-led FCC are about to be moot. Pai himself resigned on the day Joe Biden took office. He presumably saw the writing on the wall, and his term would have ended in 2022 anyhow. And after dragging his feet for a curiously long amount of time, Biden has nominated acting Chair Jessica Rosenworcel to a new five-year term and to be no longer "acting," along with Gigi Sohn to fill the seat on the commission that is currently vacant.

Rosenworcel, who is more of a moderate, is particularly known for her interest in supporting online schooling and in expanding rural broadband access. Sohn's nomination is a nod to progressives; she is an outspoken advocate of net neutrality. So, Biden's goals for the FCC are not much of a mystery (though once the appointees are confirmed, they no longer serve at his pleasure, and so are not required to take his orders).

The Senate will need to take up the nominations fairly quickly, as Rosenworcel's term has already expired, and if she is not renewed, then she has to leave office on Jan. 1 of next year. She could still plausibly be renewed after that, but in the interim, if she and Sohn both go un-confirmed, Republican appointees would control the FCC 2-1. We suspect that Senate Majority Leader Chuck Schumer (D-NY) will somehow find time in the next couple of months to get this done, making that concern moot.

As to Biden's foot dragging, there may have been some method to his madness. FCC members get 5-year terms, and the counting starts on June 30 of their first year. Further, even once their term expires (as Rosenworcel's did on June 30, 2020), they can serve up to 1½ years longer if no replacement has been appointed. So, having waited until June 30 of this year passed, Biden will be seating the two Democrats for terms that end on June 30, 2026, and that could last until Jan. 3, 2028. It has been customary in recent years for chairs to resign on the inauguration of a new president, such that Biden, Donald Trump, Barack Obama, George W. Bush, and Bill Clinton were all afforded the opportunity to pick a new chair. However, it's not legally required, and it cannot be demanded by the White House. The other Democratic commissioner (Geoffrey Starks) will be up for renewal/replacement next year, so it's possible Biden is setting things up such that Democrats will control the FCC through the end of the next presidential term, even if the Democrats lose the White House in 2024. (Z)

Back to the Back to the Future, Part X: Foreign Affairs

We paused these for a short while, in part because the world of politics got busy, and in part because we thought it was maybe too much of the same thing all at one time. But now we resume. There are three more sets and, of course, there are about 10 weeks left for them to come to pass. We'll revisit them all when the calendar turns to 2022.

Here are the installments we've already run:

And now, readers' predictions for foreign affairs:

The next set will be about national affairs. (Z)


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