Dispatch from Washington: October 2023

For the first time in American history, a Speaker of the House of Representatives, the highest office in the US House, has been removed following a vote of his peers. Washington narrowly avoided a federal Government shutdown, for now, but a brutal spending fight is coming up when the current Government funding runs out in mid-November. The Federal Reserve held off on rate hikes and there are divisions surfacing among policymakers on the future pace of rate increases. Robert F. Kennedy, Jr., scion of the liberal political Kennedy-dynasty, dropped his bid for the Democratic Presidential nomination and announced his candidacy as an Independent. Former President Donald Trump appeared in a New York City courtroom for the start of his civil trial. Three Republican House Committee chairs held their first impeachment inquiry hearing into President Joseph Biden. The Supreme Court of the United States has started its new term, with a number of politically divisive cases expected to be presented before the justices. The White House has directed federal agencies to account for the Social Cost of Greenhouse Gases (SC-GHG) in their budgets going forward, a move intended to embed the cost of climate change into all federal agencies. Senator Robert Mendez (D-NJ) and his wife face serious criminal charges.

Constitutional reform

The constitutional reform proposed by the government, aiming to introduce the so-called “Premierato” – the direct election of the Prime Minister – has been signed by the Quirinale and forwarded to the Senate for initial review. Following approval by the Council of Ministers, the text underwent some revisions and a significant rebranding of its title, now called “Provisions for the direct election of the Prime Minister, the strengthening of Government stability, and the abolition of the appointment of life senators by the President of the Republic.” This renaming is an effort to make the reform more appealing, especially in anticipation of a likely confirmatory referendum. It is recognized that, given the current party landscape, garnering opposition support to achieve the two-thirds quorum may prove challenging.

Ministry of Health’s new Chief of Staff

The Ministry of Health has appointed Marco Mattei as its new Chief of Staff. Dr. Mattei holds a degree in Medicine and Surgery, specializing in Gynecology and Obstetrics, a research doctorate in Physiology of Body Districts, a master’s in health economics and management, and additional qualifications.  Throughout his career, Dr. Marco Mattei has held key roles in prestigious institutions, including the Board of Directors of La Sapienza University and the Board of Directors of ACEA ATO2 s.p.a., an organization managing the Integrated Water System of Rome and its province. 

Coordination Committee on Artificial Intelligence

Alessio Butti, the Undersecretary for Technological Innovation at the Presidency of the Council of Ministers, has nominated 13 individuals to form a Coordination Committee responsible for updating strategies on the use of artificial intelligence (AI). The committee, based at the Presidency of the Council of Ministers – Department for Digital Transformation, will support Butti. The Committee, operating until January 31, 2024, will have its headquarters at the Department for Digital Transformation. Additionally, a Technical Secretariat will be established at the Agency for Digital Italy (AgID) to support the Committee and prepare necessary documents. The Technical Secretariat, comprised of experts from the Undersecretary, the Department for Digital Transformation, and AgID, will present a final synthesis document to the Undersecretary by the specified date.

Speaker McCarthy Sacked! Who Is Next???

Kevin McCarthy, Speaker of the House of Representatives, a position second in line to the presidency, was sacked from his leadership post on Tuesday, October 5 after failing to withstand a rebellion from his far-right flank. This is the first time in the history of the republic that the House has voted to remove its leader. Congress is now in a period of unpredictability and paralysis, but McCarthy’s ouster itself, was entirely predictable – McCarthy needed fifteen rounds of voting to secure the Speakership in January and, in order to gain the gavel, had to give into demands from far-right dissidents including a condition that any single member could bring forward a “motion to vacate.” It was that very procedural maneuver, activated by Congressman Matt Gaetz (R-FL), that brought about the Speaker’s downfall. In the end, all House Democrats and 8 insurgent Republicans voted for the motion. 

In the interim, House Financial Services Committee Chairman Patrick McHenry (R-NC) will serve in the role of Speaker Pro Tempore. McHenry has very limited powers and, technically, the role of Speaker Pro Tempore is limited to overseeing the process of finding a new Speaker. However, since removing a speaker has never happened before, there’s debate about what happens next and discussions about the possibility of granting additional powers to an interim Speaker. This has taken on a renewed sense of urgency as the House Republican Conference remains leaderless and rudderless nearly two weeks after McCarthy’s sacking. Internal division and opposition led to Majority Leader Steve Scalise (R-LA) withdrawing from the Speaker’s race just one day after he won the party’s nomination for the gavel over House Judiciary Committee Chairman Jim Jordan (R-OH). Jordan is now the candidate the GOP will put forward for a vote on the House floor, but his path to securing the requisite 217 votes in the full House of Representatives to gain the gavel is far from certain as over 110 of his fellow Republicans didn’t support him in the Conference’s secret ballot. In an op-ed in the Washington Post, House Minority Leader Hakeem Jeffries (D-NY) argued for a “bipartisan coalition” of Government, and called for a number of reforms to the House Rules, adding an additional variable for any candidate in the race to secure the support a majority of sitting Members of Congress. Meanwhile, the GOP’s internal chaos has spilled out into the public and the House is now paralyzed. Beyond the matter of selecting a Speaker, the House will need to deal with funding the Government by mid-November or again risk a shutdown.

Government Shutdown Averted, For Now…

After a chaotic week, the House and Senate finally passed a bill late on Saturday, September 30, hours before the federal Government was due to shut down, to fund federal agencies at fiscal year (FY) 2023 levels until November 17. For weeks, (now former) Speaker Kevin McCarthy declared that House Republicans would not pass any Government funding bills that didn’t include massive spending cuts and new border security provisions. McCarthy tried, and failed, to pass a solely Republican temporary spending bill only to be stymied by hard-right Republicans in an extraordinary display of defiance, setting up what appeared to be an imminent Government shutdown. Somewhat surprisingly, McCarthy then put forward a “clean” continuing resolution (CR), using a parliamentary procedure of putting the measure before the House under “suspension of the rules,” which would require two-thirds support – meaning House Democrats would have to vote in favor of the legislation. In the end, the 45-day continuing resolution passed the House 335-91 and the Senate 88-9, with more Democratic support than Republican. This delays the funding fight for several weeks, but does not resolve the fact that the House and Senate are in vastly different places on overall funding levels – with the House Republican Majority still calling for steep cuts and the Senate basing their federal funding levels off of the Fiscal Responsibility Act, a measure that made a number of changes that affect federal spending and revenues. The ouster of Kevin McCarthy as Speaker (see previous section) sets up weeks of uncertainty and chaos and appears to increase the odds of a Government shutdown next month.

Divisions at the Fed Over Future Rate Hikes

Minutes from the September Federal Open Markets Committee (FOMC) meeting show that Federal Reserve policy makers are divided on future rate increases. Policy makers have raised rates eleven times since March 2022, bringing the bench-mark rate from near zero to 5.25-5.5%, a 22-year high. While the Federal Reserve did not alter rates after the September, the divide highlighted in the minutes foreshadows upcoming policy debates. The minutes also indicate that a majority of Fed officials think that at least one more rate hike will be needed. Policymakers have been grappling with stubborn inflation, raising rates and tightening financial conditions in an attempt to bring it down to the 2% target. The economy has proven surprisingly resilient in the face of higher borrowing costs and consumer spending has remained strong. The latest inflation numbers, released on October 12, showed that consumer prices rose 3.7% in the year through September, the same rate as the previous month, but still above the target rate. 

The Kennedy Variable – Who is More Vulnerable?

Robert F. Kennedy Jr., son of former Senator Robert F. Kennedy and nephew of former President John F. Kennedy, both of whom were assassinated, and nephew of deceased Senator Edward Kennedy, announced this month that he would run for the office of President of the United States as an Independent. This move comes after a quixotic campaign for the Democratic Presidential nomination. When Kennedy announced his initial candidacy on the Democratic ticket, he was sharply critical of Democratic leadership, which he has accused abandoning their principles and of “hijacking the party machinery” and fashioned himself as a “Kennedy Democrat.” Runing as an Independent will be an uphill battle – each state has its own rules, there are signature requirements for ballot access, and it is very costly. But Kennedy does not have to get on the ballot in every state in order to be a spoiler – but for whom? He could collect tens of thousands of votes in a few critical states, swinging the election one way or the other. There is genuine uncertainty and a great deal of interest in which side Kennedy will be helping or hurting as many Americans who are alienated from our politics have been drawn to him. There is also a question of who has more to fear from Kennedy’s Independent bid, Democrats or Republicans. Right before he declared his Independent bid, the Republican National Committee put out an email entitled “23 Reasons Not to Vote for RFK, Jr.”, demonstrating that they see him as a threat to Donald Trump, or the potential nominee. Democrats also fear this candidacy as there is a feeling that the incumbent has more to lose when there is the presence of a third-party candidate. Some polls show Kennedy with up to 20 percent of Democratic support  but he has also garnered the attention of those on the right as he spreads conspiracy theories and consorts with right-wing figures. For his part, RFK, Jr. has alienated his own family members, many of whom have denounced his bid and his own siblings called his candidacy “dangerous to our country.”

Trump Civil Trial Begins in New York, Gag Order Issued

Former President Donald Trump appeared in an New York City courtroom on October 2 for the start of the civil trial against him, his eldest sons, their companies, and Trump Organization executives. The allegations center on claims that Trump and his co-defendants committed repeated fraud in inflating assets on financial statements to get better terms on commercial real estate loans and insurance policies. Trump has repeatedly lambasted the proceedings, stating that “This is a continuation of the single greatest witch hunt of all time.” Trump has also attacked individuals associated with the case, including Judge Arthur Engoron’s clerk, in social media posts – his activities prompted Engoron to issue a gag order. Just prior to the start of the trial, Judge Engoron ruled that Trump, and his co-defendants are liable for “persistent and repeated” fraud.  This delivered a victory for New York Attorney General Letitia James, who brought the $250 million lawsuit last September, by, in effect, saying that James had already proven the core of her case. Engoron ordered Trump’s New York business certificates to be canceled and that the assets be placed in a receivership – a ruling Trump has since appealed. Trump and his companies could be forced to pay significant sums in damages for the profits they’ve allegedly gained through their fraudulent business practices and the former president could lose control of some of his famed properties.

Supreme Court Starts New Session Amid Deteriorating Public Trust

The Supreme Court of the United States (SCOTUS) gaveled in its new term on October 2 and will run through June 2024. The Court has a decidedly conservative leaning with Chief Justice John Roberts presiding over a 6 to 3 conservative to liberal body. The docket includes major cases concerning the intersection between the First Amendment and social media, gun rights, the Americans With Disabilities Act, racial gerrymandering in South Carolina, and whether Purdue Pharma’s proposed reorganization plan and its provisions related to a multibillion-dollar opioid settlement violates the Bankruptcy Code, with more cases to be added over the coming months. The four ongoing criminal prosecutions of former President Donald Trump could also prompt appeals to the high court, and several states are trying to keep Trump off the ballot under the 14th Amendment’s insurrection clause. Public trust in the Supreme Court is also at a historic low, with a June survey by Gallop finding that only 25% of Americans have confidence in the Court, down from 36% in 2021.

Federal Agencies to Account for “Social Cost” of Climate Change in Budgets

In President Biden’s “Day One Executive Order,” the administration established an Interagency Working Group (IWG) tasked with identifying areas of budgeting, purchasing, and other key decisions where federal agencies should consider the Social Cost of Greenhouse Gases (SC-GHG). In September, President Biden approved the IWG’s recommendations on the expanded use of the SC-GHG for budgeting, procurement, and other agency decisions. The potential impact is significant – under the executive order, federal agencies must consider the economic damage caused by climate change when deciding what kinds of goods and equipment they purchase. The federal Government is the world’s largest consumer of goods and services, spending over $630 billion each year, according to a White House statement. Through this directive “the federal Government has the ability to move markets, invest in new ideas, and act as a model contracting partner.”  The move will redirect the flow of billions of dollars of Government grants and reshape or kill some major construction projects.

Senator Robert Menendez Indicted on a Range of Charges

New Jersey Senator Robert Menendez, chairman of the powerful Senate Foreign Relations Committee, was indicted by a federal grand jury before the Southern District of New York in Manhattan on a range of felony charges. Menendez and his wife, Nadine Arslanian, face corruption charges alleging that they used the Senator’s influence to pocket hundreds of thousands of dollars in bribes. The pair were charged with three other defendants — New Jersey businessmen Jose Uribe, Fred Daibes and Wael Hana. A search of the couple’s home turned up $100,000 in gold bars and $480,000 in hidden cash. Prosecutors also alleged that Nadine received a $60,000 Mercedes convertible after the Senator expressed willingness to interfere in the criminal prosecution of a New Jersey businessman. In 2018, Arslanian was involved in a deadly car crash which is now connected with the overall bribery scheme, she was cleared of wrongdoing at the time, but the New Jersey attorney general’s office is now investigating whether authorities properly handled the investigation. In a separate filing, prosecutors accuse Menendez of accepting bribes from a foreign Government and acting as a foreign agent for Egypt. During his time as chairman of the Senate Foreign Relations Committee, Menendez helped oversee billions of dollars in US aid to Egypt. Many of Menendez’s colleagues, including fellow New Jersey Senator Cory Booker, have called for him to resign. The Senator faces up to 45-years in prison. 

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

Department of DefenseGeneral Charles Q. “C.Q.” Brown Jr., USAF, has been sworn in as the Chairman of the Joint Chiefs of Staff. General Eric M. Smith, USMC, has been sworn in as Commandant of the United States Marine Corps. Melissa G. Dalton was nominated to be the undersecretary of the Air Force. Aprille Joy Ericsson was nominated to be Assistant Secretary of Defense for Science and Technology.

Department of Homeland SecuritySarah (Rothschild) Schakow in now the Deputy Assistant Secretary for Media Relations at Office of Public Affairs.

Department of StatePenny Pritzker was named the Special Representative for Ukraine’s Economic Recovery. James C. O’Brien was confirmed as Assistant Secretary of State for European and Eurasian Affairs. John N. Nkengasong is the nominee for Ambassador-At-Large for Global Health Security and Diplomacy. Jacob J. Lew, former Secretary of the Treasury, was nominated as Ambassador to the State of Israel.

Department of the TreasuryLaura Still Thrift is now a senior advisor in the Office of Financial Markets.

The White HouseVictoria “Tori” Taylor is now Director of Political Outreach in the Office of Political Strategy and Outreach. Jonathan R. Ring is now Deputy Assistant National Cyber Director for Technology Security at the Office of the National Cyber Director. Alec D. Johnson is now the Director for Legislative Affairs on the National Security Council (NSC) staff. Beth Ingalls is now Director for Counterterrorism Strategy on the NSC staff. Naomi González is now Director for Aviation and Surface Transportation security on the NSC staff. Jessica W. Killin is now the chief of staff in the Office of the Second Gentleman.

United States Trade RepresentativeBryant Paul Trick is now the Assistant US Trade Representative for Europe and the Middle East.



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