Dispatch from Washington: August 2023

Donald Trump faces additional criminal charges at the state and federal level. The Biden administration moved to limit outbound US investment in China. The risk of a government shutdown this fall is rising. The Federal Reserve raised interest rates, again, as recession fears fade. Freshman Senator Tommy Tuberville (R-AL) is blocking hundreds of military promotions, damaging American national security and military readiness. Italian Prime Minister Giorgia Meloni visited the White House on July 27. The Inflation Reduction Act (IRA), one of Biden’s signature achievements, turns one year old. The US and EU finalized a data transfer arrangement, ending years of legal uncertainty. The White House held its first-ever cybersecurity summit on the ransomware attacks targeting US schools.

Trump’s Legal Troubles

Former President Donald Trump’s legal troubles continue to grow. On August 1 special counsel Jack Smith charged the former President in federal court on four criminal counts, including conspiracy to defraud the United States, over his efforts to overturn the 2020 election,  culminating in the January 6, 2021, attack on the Capitol. This was the first time he was taken into custody by the government he tried to overthrow. Federal prosecutors also listed six unindicted co-conspirators.

In Georgia, a grand jury indicted the former President and over a dozen allies in the probe into his alleged efforts to flip Georgia’s 2020 election results. The charges filed in the 98-page indictment by Fulton County District Attorney Fani Willis put forward 41 felony counts including racketeering charges, conspiracy to commit forgery and perjury. Also charged are former members of Trump’s legal team, including John Eastman, Kenneth Chesebro, Jenna Ellis, Robert Cheeley, Rudy Giuliani and Sidney Powell as well as former White House Chief of Staff Mark Meadows.

Trump now faces nearly 100 criminal charges in four jurisdictions. In addition to the federal case and the Georgia case, Trump has been indicted in recent months on criminal counts relating to hush money payments made during the 2016 presidential campaign and the mishandling of classified documents. The use of the term “unprecedented” can be overused when describing matters related to the 45th President, but this is truly uncharted waters – no president has ever been charged with trying to steal an election, and no prosecutor has ever had to navigate such unknown legal and political territory. In total, Trump has five trials scheduled between now and May 2024.

Trump’s quest to regain the White House has become existential, should he win the presidency, a Trump-appointed Attorney General would likely withdraw the charges and end the federal cases. However, even if Trump won the White House, he would not have the legal authority to pardon himself in the case in Georgia, where the power to pardon is vested under the state constitution to a Board of Pardons and Paroles, which requires that a sentence be completed at least five years prior to applying for a pardon.

US Moves to Limit Investment in China

In early August, the Biden administration released an executive order directing the Department of the Treasury to create a new regulatory program to prohibit or require notification of outbound US investments to China in certain sensitive sectors. The move comes after more than a year of deliberations. This new outbound Foreign Direct Investment (FDI) review program complements existing authority to review inbound US FDI conducted by the Committee on Foreign Investment in the United States (CFIUS). Under the order, the administration will draw up a ban on new private equity, venture capital, and joint venture investments in Chinese quantum computing, semiconductors, and some artificial intelligence (AI) applications. The White House also declared a national emergency over the “threat of advancement” by China in “sensitive technologies and products,” specifically sensitive military-related technologies.  

Separately, on Capitol Hill, in late July, the US Senate passed the Outbound Investment Transparency Act (OITA), which would create a notification mechanism for certain US business transactions in China and other countries of concern. The measure, approved in by a vote of 91-6, was attached as an amendment to the annual defense policy bill, the National Defense Authorization Act (NDAA). OITA would require US entities to notify the Department of the Treasury about covered outbound investments, acquisitions, and other business activities focused on six technology sectors deemed critical for national security: advanced semiconductors and microelectronics, artificial intelligence (AI), hypersonics, networked laser scanning systems with dual-use applications, satellite-based communications, and quantum information science and technology. The Senate NDAA will have to be reconciled with the House version, which does not include the investment language. 

Increasing Risk of Government Shutdown
There is a significant risk of a government shutdown when federal funding runs out on midnight of September 30. Congress left Washington for the August recess period without a plan to pass the twelve Fiscal Year 2024 spending bills – when Congress fails to enact the annual appropriations bills, federal agencies must cease all non-essential functions until Congress acts. In June, to avoid a debt ceiling default, Congress and the White House negotiated the Fiscal Responsibility Act, which lifted the ceiling on the federal debt and set limits on annual federal spending. The expectations were that this settled the overall size of the appropriations bills, and Congress would pass the measures based on the agreed-upon levels. The Senate Appropriations Committee has followed that path and has passed all twelve appropriations bills with bipartisan support. However, House Republicans were unhappy with the arrangement House Speaker Kevin McCarthy struck with the White House and want deeper spending cuts than were included in the Fiscal Responsibility Act. House Republican Appropriators are working on spending bills which go below the agreed-to caps. House Republicans have also included “culture war” provisions in their spending bills – President Biden would veto the appropriations bills that are pending in the House and the measures are unlikely to pass the Democratic-controlled Senate creating an impasse. The Senate and House are scheduled to return from the August break on September 5 and 12, respectively, which means both chambers will be in session only three weeks before the fiscal year ends on September 30. It is not unusual for Congress to pass temporary spending bills, called continuing resolutions (CR), that fund government operations until a specified date. According to the Government Accountability Office, there were forty-seven continuing resolutions between fiscal years 2010 and 2022 ranging in duration from one day to six months, but it will be particularly challenging for a CR to pass the House.
Fed Raises Rates Again as Recession Risk Fades

In July, the US Federal Reserve announced the latest in a series of interest rate increases, bringing the benchmark rate to a range of 5.25 to 5.5%, their highest level in 22 years. Fed policymakers also left the door open to further rate increases in the statement announcing their unanimous decision. The Federal Reserve policymakers began to raise rates from near-zero in March 2022, and pushed them up rapidly last year before adjusting them more slowly in 2023, even pausing in June, in an effort to counter inflation by cooling the American economy. In a news conference following the announcement of the latest rate increase, Fed chair Jerome Powell also noted that the Fed’s staff economists no longer expected a recession later this year, they had previously been predicting one. In June, the Fed projected that it would make two more rate increases this year — the one it ushered in on July 21, and then a follow-up at some point in the future. Fed policymakers will not make another decision on interest rates until the next Federal Open Market Committee meeting on September 20.

Meanwhile, the most recent Consumer Price Index (CPI) report from the Bureau of Labor Statistics showed that the topline consumer price-index clocked in at 3.2% year-over-year (and 3.3% when seasonally adjusted). That was up from a 3 percent annual rise in June, which was the lowest rate in more than two years and is the first-time inflation rose after 12 straight months of declines. A jump in energy prices has pushed some of the inflation pressures underlying the economy. While inflation has come well off its 40-year highs of mid-2022, it is still considerably above the 2% level where the Federal Reserve would like it. Nevertheless, on balance, the inflation picture has improved significantly and while inflation is trending in the right direction, the still-elevated level suggests that the Fed is some distance from cutting rates.

Single Senator Holds up Military Promotions

Freshman Republican Senator Tommy Tuberville of Alabama (pictured right) has been blocking every personnel move in the US military that requires Senate confirmation since February. Tuberville is seeking to force the military to end its policy of paying for service personnel and family stationed in states with abortion bans to travel to states where the procedure is legal if they need care. Starting with a “senatorial hold” on what was then 150 personnel moves waiting for Senate approval in batches, Tuberville’s block has now captured over 300 senior military officers and could balloon to 650 by the end of the year. Each of the Defense Department’s five branches of service is affected. Among those caught in the hold are the Commandant of the Marine Corps, a member of the Joint Chiefs of Staff, the commander of Pacific Air Forces, a post central to US policy toward China and North Korea, the four-star general overseeing US Northern Command, the director of Army Staff, the next commanding general of Marine forces in Japan, and hundreds of others. Democrats have repeatedly gone to the Senate floor to try and call up the nominations, but Tuberville has objected each time and shows few signs of letting up. He has repeatedly said that he won’t drop the holds until there is a vote on the Pentagon policy. Yet he hasn’t introduced legislation on the matter and insists that Democrats should introduce their own bill on the policy and hold a vote – a rather curious tactic since Democratic leaders such as Senate Majority Leader Chuck Schumer support the existing policy. Defense Secretary Lloyd Austin (pictured left) has said “in our dangerous world, the security of the United States demands orderly and prompt transitions of our confirmed military leaders,” in an effort to highlight how Tuberville’s holds are a danger to military readiness and compromise America’s national security. Seven former defense secretaries have also criticized Tuberville over the matter and a number of national security experts have also weighed in saying the Senator’s move sends the wrong message to our adversaries and could weaken our deterrence.

Biden Welcomes Prime Minister Meloni at White House

Italian Prime Minister Giorgia Meloni was welcomed at the White House on July 27. Meloni joins a small group of leaders who have been invited to the Oval Office by President Joe Biden this year, among them Indian Prime Minister Narendra Modi, U.K. Prime Minister Rishi Sunak, and South Korean President Yoon Suk-yeol. During their meeting, President Biden praised Meloni for strongly backing Western efforts to help Ukraine fight off Russia’s invasion. The two leaders also discussed the challenges posed by the People’s Republic of China. In 2019, during Chinese President Xi Jinping’s visit to Rome, Italy became the first Group of Seven (G7) country to join China’s Belt and Road Initiative (BRI) – since her election, Meloni has come under pressure to pull Italy out of the BRI and Defense Minister Guido Crosetto recently confirmed Italy’s intention to leave the Chinese program. White House officials said the leaders’ agenda was also focused on the stream of migration from North Africa to Europe’s southern shores, Italy’s presidency of the G7 in 2024, and the role of emerging technologies in shaping the global economy and influencing the future of the international system.

Inflation Reduction Act Turns One

In mid-August, the Inflation Reduction Act (IRA) turned one. The massive environmental, health care, energy and industrial policy bill is a signature achievement for the Biden Administration and Democrats in Congress, and top officials marked the anniversary with trips to nearly a dozen states. The Inflation Reduction Act capped insulin prices and out-of-pocket drug expenses for Medicare beneficiaries and beefed up corporate and high-income tax compliance. The legislation also prompted investment in a massive buildout of battery and electric vehicles (EVs) manufacturing across the states to both encourage Americans to buy and use electric vehicles, as well as build a domestic manufacturing base for electric vehicles. Writing in the New York Times, former Biden White House economic adviser Brian Deese said that since the IRA became law, “companies have announced at least 31 new battery manufacturing projects in the United States.”  According to Rhodium Group, an independent analytics firm, the IRA will also help the United States meet is climate obligations under the 2015 Paris Agreement to reduce greenhouse gas emissions by half of 2005 levels before 2030 with reductions by as much as 42% by 2030 and by 32% to 51% by 2035. The Center for American Progress (CAP), a left-leaning think tank, found that the Inflation Reduction Act created an estimated 170,606 jobs and is projected to create 9 million jobs over the next decade. According to Deese, the IRA is truly transformative and “the investment appetite is defying geographic and political boundaries…from Oklahoma and Ohio to North Carolina and Nevada, new investment is breathing economic life into communities that have seen their economies decline.”

US and EU Finalize Data Transfer Agreement

The United States and the European Union finalized a new data transfer deal after years of legal uncertainty. On July 3, 2023, Secretary of Commerce Gina Raimondo announced that the US fulfilled its commitments that were prerequisites to the implementation of the deal, called the EU-US Data Privacy Framework. Preceding the announcement from the Department of Commerce, Attorney General Merrick Garland designated the European Union (EU) and three additional countries that make up the European Economic Area (EEA) as ‘qualifying states’ for purposes of implementing the redress mechanism established under President Biden’s October Executive Order on Enhancing Safeguards for US Signals Intelligence Activities. On July 3, 2023, the Office of the Director of National Intelligence (ODNI) confirmed that the US Intelligence Community had adopted policies and procedures pursuant to the Executive Order. The agreement was sealed on July 10 when the European Commission adopted of a so-called adequacy decision, which recognized the US as a country with sufficient protection for Europeans’ personal data to be sent to the US The Department of Justice’s designation took effect upon the adoption of the adequacy decision. This agreement ensures that data from American technology companies such as Meta and Google can continue flowing between the United States and the European Union.

White House Hosts Summit on Ransomware Crisis

In early August, the White House convened a group of school superintendents, educators and education technology vendors to discuss the growing number of cyberattacks targeting schools.

First Lady Jill Biden, Education Secretary Miguel Cardona and Secretary of Homeland Security Alejandro Mayorkas hosted the meeting, called the Cybersecurity Summit for K-12 Schools. Ransomware attacks have been plaguing school districts across the United States, from major cities to small towns, yet schools have struggled to fight back due to a lack of money, employees and technical resources. At least 48 districts have been hit by ransomware attacks this year and hackers have posted sensitive student data online, including medical records, psychiatric evaluations and even sexual assault reports. These attacks come at a high cost for schools – according to a report from the Government Accountability Office, school districts lose anywhere from $50,000 to $1,000,000 when responding to a cyberattack, the loss of learning following a cyberattack ranges from 3 days to 3 weeks, and recovery time could take anywhere from 2 to 9 months. Among measures announced at the summit the Cybersecurity and Infrastructure Security Agency (CISA) will step up tailored security assessments for the K-12 sector while technology providers, including Amazon Web Services, Google and Cloudflare, are offering grants and other support. The Department of Education will also establish a Government Coordinating Council (GCC) that will coordinate among various stakeholders to strengthen the cyber defenses and resilience of K-12 schools.

“Who’s Who” – Personnel Updates from the Biden Administration

Department of AgricultureXochitl Liana Torres Small was confirmed as Deputy Secretary.

Anton Malkowski is the Chief of Staff in the Office of the Deputy Secretary 

Department of DefenseAdmiral Lisa M. Franchetti, USN has been nominated for the position of Chief of Naval Operations, if confirmed she would be the first woman to be a Pentagon service chief and the first female member of the Joint Chiefs of Staff.

Department of Homeland SecurityDan Watson is the Assistant Secretary for Public Affairs.

Department of StateElla J. Lipin is now a Deputy Assistant Secretary in the Bureau of International Organization Affairs. Lalitha Adury is now Chief of Staff at the Office of Policy Planning. Cardell K. Richardson was nominated for the post of Inspector General. Nabila M. Baptiste is the Deputy Chief of Staff at United States Mission to the United Nations. The following Ambassadors were confirmed by the Senate: Robin Dunnigan for Georgia; Joel Ehrendreich for Palau; Kathleen A. FitzGibbon for the Republic of Niger; Bryan Hunt for the Republic of Sierra Leone; Jennifer L. Johnson for the Micronesia; Eric W. Kneedler for Rwanda; Yael Lempert for the Hashemite Kingdom of Jordan; Jack A. Markell for Italy; Ervin Jose Massinga for Ethiopia; William Popp for Uganda; Nicole D. Theriot for the Republic of Guyana; Martina Anna Tkadlec Strong for the United Arab Emirates; Hugo Yue-Ho Yon for the Maldives.

Development Finance CorporationNisha Desai Biswal was confirmed as Deputy Chief Executive Officer.

Office of the United States Trade RepresentativeSarah C. Ellerman is now the Assistant US Trade Representative at Southeast Asia and the Pacific. Angela Dela Cruz Perez is now the Press Secretary.

White House Harry Coker Jr. was nominated for the post of National Cyber Director. The Office of the National Cyber Director also has several new additions: Dr. Daniel J. “Rags” Ragsdale, USA (Ret) is now Deputy Assistant National Cyber Director for Workforce and Education, and Joe L. Billingsley and Keenan R. Skelly are Senior Policy Advisors. Haley A. Ring is now a Special Advisor at the Office of the National Cyber Director. There are several new additions to the National Security Council (NSC) staff: Monte B. Hawkins is the Senior Director for Transborder Security at Border and Transportation Security, Mira Rapp-Hooper is now Senior Director for East Asia and Oceania, Caitlin M. Clarke is Senior Director for Cybersecurity and Emerging Technology, Kelly L. Razzouk is Senior Director for Democracy and Human Rights, Brendan S. Kelly is Director for China Economics, and Dr. Josh Baron is the Director for Technology and National Security. Ryan Majerus is now a Senior Policy Advisor for Supply Chains on the National Economic Council staff. Shuwanza Rebecca Goff has a new position as Assistant to the President and Director at the Office of Legislative Affairs. Major General Paul A. Friedrichs, USAF, PhD is the Director at the Office of Pandemic Preparedness and Response. Navva Z. Sedigh is a Special Assistant in the Office of the Director of the Office of Science and Technology Policy.



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© 2022 Created by ABCPRODUCTION.digital