In Brief
- Government shutdown? Trump & Schumer at war over– DACA, border wall, military and social spending
- Are you ready for endless investigations by Congress, the DOJ and the FBI? Better be.
- Republican legislative priorities for 2018—infrastructure…immigration reform… NOT welfare or entitlement reform.
- Don’t get your hopes too high, but negotiation is the next step on the Korean peninsula.
- China schedules meeting to give “Emperor” Xi more power while its leaders worry about debt, shadow banking risks, widespread poverty and pollution.
- Steve Bannon destroyed his political stature last week and will never regain it.
In-Depth
What’s Important
Investigations and Witch Hunts
Get ready for more investigations than you can keep straight.
It’s an election year and everybody is going to be trying to score political points.
Let us count some ways…
- The Mueller investigation of the Trump-Russia collusion allegations continues.
- Allegations the Clinton campaign had the real connections to the Russians gets attention.
- Both houses of Congress are now also investigating potential political corruption in the FBI, DOJ, intelligence agencies and the Obama White House.
- The Clinton email server/classified documents investigation has been re-opened.
- The “pay to play” scandal about the Clinton Foundation and both Clintons is being investigated.
- Congress wants to know if the FISA Court process and protections were abused for Democratic political gain in 2016.
And on…and on…an on…
Expect serious investigations as well as witch hunts and hyperbole throughout 2018.
Manafort Suit Against Special Counsel Mueller & DOJ
Paul Manafort’s lawyers have filed suit against the Special Counsel and DOJ for exceeding their purview and authority and violating his Constitutional rights.
Most legal experts have opined that the case has little chance of success because the federal courts usually side with the government on issues of federal power.
The core of the issue is that Special Counsel Mueller’s charge and his execution of it has taken him far from anything to do with Trump-Russia collusion. Manafort has had investigated almost every breath he has taken for decades. He has been charged with crimes totally unrelated to the 2016 election.
I’ve sensed an unsavoriness about Manafort since first learning about him and hearing him articulate his ideas in mid-2016, so I will not defend him, but he has the same rights all of us do. You can understand the overall situation clearly by imagining how you would do if a team of FBI agents and lawyers with an unlimited budget had a year or more to investigate every deal you ever made…every tax return you ever signed…every business action you ever took. Think you would be found blameless? No accidental errors?
The Constitution’s 4th amendment reads in part…” The right of the people to be secure in their persons, houses, papers, and effects against unreasonable search and seizures, shall not be violated, and no Warrant shall issue but upon probable cause…”
Recall that the Special Prosecutor law of Watergate fame was terminated because it was abused by the prosecutors. The provisions for a Special Counsel are supposed to focused on particular crimes and the investigation directly overseen by the Justice Department. The document appointing Mueller reads like a license for a witch hunt and no noticeable oversight has been evident.
Manafort is no angel and Trump’s vetting of him, General Flynn and others was lacking, but, he, like all of us have constitutional rights that should not be denied. Manafort’s suit may be a meaningful corollary to the Trump-Russia investigation
Major Legislation and Policies
Republican Priorities
President Trump and Republican Congressional leaders met Sunday to discuss their 2018 legislative agenda.
Signs are that the agenda will be modest compared to the heavy lifting of 2017 with the Tax Bill and Obamacare.
Speaker Ryan has wanted to address entitlement and welfare reform but that is a non-starter for Senator McConnell given his slim majority and the fact this is an election year. President Trump appears to side with McConnell.
Getting anything major through the Senate this year that requires 60 votes will be very difficult. Bi-partisanship is not exactly the rage.
The more modest priorities for the Republicans are infrastructure spending in which many Democrats have an interest and immigration reform where some horse-trading is possible on DACA, the border wall, chain migration and related topics.
Media
30 Day Test
Don’t forget the Tuchfarber 30 Day test—when you get upset about something in the news ask if it is likely to be IMPORTANT IN 30 days or so. Only seldom will it be so, and you can usually ignore it.
Democrats
Senator Schumer’s Dilemma
A showdown between the Rs and Ds is coming within days. The CR [Continuing Resolution] funding of the government expires on January 19. Both sides are posturing about DACA, military and social program funding, border walls and immigration reform.
The key players are President Trump and Senate Minority Leader Schumer. Speaker Ryan and House Minority Leader Pelosi will be important, but the main negotiations will revolve around Schumer, McConnell and the President because of the likely need to get 60 votes in the Senate.
Senator Schumer has a serious dilemma with his caucus and the Democratic base. Many in that base want him to resist everything Trump wants…the budget…border wall funding…immigration reform. Much the rest of the Senator’s national party base demands at-any- cost, a permanent solution to the DACA “Dreamer” stalemate. Those priorities conflict and greatly increase the complexity in negotiating a deal with Trump.
In addition, ten of Schumer’s caucus are up for election this year in states won by Trump. In most of those states the issues driving the national Democratic base are less important.
The complexity of Schumer’s dilemma is like what Trump, McConnell and Ryan had during the Obamacare struggles last year.
Expect a complicated and interesting show.
Paying for Sex Harassment Accusations Against Trump
The recent sex harassment crisis has naturally reminded many of the harassment accusations against candidate Trump in 2016. More than a dozen women levied sex harassment charges against him going back many years into the past.
The voters chose to dis-regard those charges as well as his sexual braggadocio. A new wrinkle has emerged from documented reports that Clinton donors gave over $500,000 to celebrity lawyer, Lisa Bloom, to “find the courage to speak out” against Trump.
Draw your own conclusions…
Global Politics
Light at the End of the Tunnel in Korea?
The conflict with N Korea is getting more interesting and nuanced, moving from bluster and threats into negotiation…at least for a while. Consider the most recent reports and events.
- China announced last week it was implementing the strong new UN sanctions. If serious, Kim’s country is in major crisis as 90% of its transportation fuel is shut-off. That fuel for the growing of food and its transport to market.
- A variety of reports describe food shortages and permission for the military to forage for food in fields for months at a time.
- Kim Jong-Un’s New Year’s Day address calls for talks with S Korea including the possibility of the North participating in February’s Olympics in the South.
- The US and S Korea have agreed to postpone major annual military exercises until after the Olympics.
Routinely in the past, such progress has led to no solution and a quick return to belligerence by the North.
But, it may be that the sanctions are now crushing the N Korean economy. If the Chinese actually fully or almost fully, implement the sanctions it is because they have finally decided to bring Kim to heel
Stay tuned…
China’s Politics and Economy
China Watch
- NEW– Reuters reports…” China’s leaders fret over debts lurking in the shadow banking system. The complex lending hidden in the shadow banking sector compounds the threat posed by China’s rapid accumulation of debt. Economic pain from a string of defaults would present a challenge for a one-party regime that draws its legitimacy from the promise of prosperity.”
- NEW– During its key Central Economic Work Conference held Dec. 18-20 the Chinese leadership declares “war” on financial risk, poverty and pollution. China’s debt load is crushing, most of its citizens live in poverty or modest means, while many in the rich provinces thrive. And pollution is a major health and political hazard.
- NEW– China is placing its para-military police under the direct control of General Secretary Xi giving him even more extra-ordinary power.
- NEW– Next spring China is likely to modify its Constitution to allow Xi to serve more than two terms as President.
- The ambiguity, contradictions and risk of China’s economic policy is illustrated by two contradictory policy statements last week. On 12/20 the WSJ reported President Xi’s Economic Blueprint for 2018 stresses debt reduction less. Two days later Reuters reports that “China curbs lender-trust cooperation in fight against shadow banking “curbing a trust industry that has grown five times in five years to $3.51 trillion in an “industry which helps channel deposits into risky investments via products often designed to dodge capital or investment regulations”. China wants it both ways…continuing high growth and societal stability but also reining in the debt creation that created the high growth. The two are incompatible and a crash is guaranteed with only the timing in doubt.
- The fragility of China’s companies is illustrated by two headlines from last week, both from the WSJ. In the first, “HNA Seeks to Sell U.S. Properties: Chinese conglomerate to raise cash to pay off debt that funded acquisitions”. This is the same company the Chinese government is reining in. The other headline is “China IPOs in U.S. Aren’t Panning Out”.
- The International Monetary Fund [IMF] reported recently that China’s banks have insufficient capital to weather a credit or debt crisis. The problem is widespread but especially focused in the rapidly exploding “wealth management “arena and in the broader shadow banking arena where the authorities have not been able to keep up with “innovative” approaches by a variety of financial actors.
- Australia introduced legislation to limit foreign interference in Australian politics leading to some swift political resignations of Australians ensnared by Chinese interests
- China is becoming more and more authoritarian, forcing its tech companies and US tech companies to monitor Chinese citizens and make the results available to the government.
- The US and Europe are increasingly unwilling to let China flout the World Trade Organization rules it pledged to abide by when admitted is 2001.
Until next week…
Al Tuchfarber
Professor Emeritus of Political Science, University of Cincinnati