Dispatch from Washington: April 2024

House Speaker Mike Johnson is facing the greatest challenge to his speakership to date as his far-right flank files a motion of no confidence (motion to vacate) that they could call forth at any time. American and European leaders gathered in Leuven, Belgium, for the final EU-US Trade and Technology Council (TTC) ministerial summit before elections in Europe and the United States. Jury selection has started in the first of former President Donald Trump’s criminal trials in New York, and the prosecutors and defense will present their respective cases imminently. US Trade Representative Katherine Tai appeared before a hostile GOP audience in the House Ways and Means and Senate Finance Committees to present the administration’s trade policy agenda. Federal Reserve Chair Jerome Powell sees a lack of progress on inflation, which continues to pose a sticky challenge for policymakers and is increasingly a political headache for President Joe Biden. The articles of impeachment filed and passed by the US House against Homeland Security Secretary Alejandro Mayorkas were quickly dismissed by the Senate. Treasury Secretary Janet Yellen traveled to China in an attempt to improve relations between the world’s two largest economies.

Speaker Johnson’s Perilous Position

Speaker of the House Mike Johnson (R-LA) is in a very tight spot. Nearly six months after taking control of the US House of Representatives following former Speaker Kevin McCarthy’s fall in a vote of no confidence initiated by far-right members of his own party, Johnson is facing a similar ouster. Infuriated by the Speaker’s handling of a $1.2 trillion government funding package, which passed the House with more Democratic support than Republican support, Georgia Congresswoman Marjorie Taylor Greene filed a motion to remove Johnson from the speakership, the same procedural move used to oust McCarthy. Greene’s motion is not privileged, meaning it’s unclear if or when it will be brought to the floor for a vote. Nevertheless, the measure is a proverbial gun to the head of the Speaker who has the narrowest majority in recent history. If the trigger is pulled, Johnson will need help from Democrats to keep his job and prevent the House from being without a leader and descending into stagnation and chaos. What might be the triggering action? Green said she told the speaker not to move forward on a Foreign Intelligence Surveillance Act (FISA) bill that allows for warrantless surveillance and, separately, aid for Ukraine. The FISA measure passed the House on Friday, April 12, and the supplemental passed during a rare Saturday session on April 19. Now, the saga for Johnson endures and Green continues to dangle her motion to vacate over the Speaker’s head. If she called for a vote, you can expect Democrats to bail Johnson out this time, but the prospect of future motions to vacate is very real.

Sixth (and Final?) EU-US Trade and Technology Council Ministerial

American and European leaders met in Belgium for the final EU-US Trade and Technology Council (TTC) ministerial summit before elections in Europe and the United States. Over a two-day summit, Secretary of State Antony Blinken, Secretary of Commerce Gina Raimondo, and US Trade Representative Katherine Thai conferred with EU Executive Vice-President Margrethe Vestager and Executive Vice-President Valdis Dombrovskis on a variety of trade and technology matters. Artificial intelligence took center stage; the allies updated cooperation on AI terminology and taxonomy and signaled progress in research on AI for the Public Good. While Europe has been the first mover on AI regulations with the formalization of its own AI Act, with AI-related legislation yet to move forward in Congress, despite many stakeholder sessions convened in the Senate, both sides appear determined to work together to stake out global leadership on this transformative technology. Other notable advances include the establishment of a quantum task force and the release of a joint vision for the development and deployment of 6G technology.

There were also announcements regarding sustainable trade practices and stronger links around transatlantic supply chains. Since its launch three years ago, the TTC has helped repair and strengthen the transatlantic relationship, yet the future of the body is in question. The Commission’s point people, Dombrovskis and Vestager, will change after the parliamentary elections in June, and a change in the White House might significantly alter the EU-US relationship. At their meetings in Belgium, leaders avoided discussing structural reforms, and no mention was made of continuing the TTC after this political cycle, leaving many to wonder whether the Leuven summit will be the last one. 

Trump’s First Criminal Trial Starts in New York, Other Legal Challenges Advance

Jury selection for the first of Trump’s four criminal trials started in New York on April 18. Trump’s legal team has tried several times to postpone the trial, but now the case is fully moving, and prosecutors and defense lawyers will introduce their dueling cases to the newly empaneled jury as early as April 22. The proceedings are expected to last around six weeks, and Trump is required to be present throughout the trial under New York law. So, his ability to hit the campaign trail will be constrained. Nevertheless, expect Trump to assert that this case, as well as the others he faces, are part of a politicized effort to hobble his 2024 candidacy while he holds impromptu press conferences on a regular basis from the courthouse steps.

The former president, the first to be charged with a crime, faces 34 felony counts of falsifying business records for actions related to hush money payments made to porn actress Stormy Daniels and former Playboy model Karen McDougal in the closing days of the 2016 presidential campaign; both women say they had sexual relationships with Trump, which he denies. The case being made by Manhattan District Attorney Alvin Bragg is that Trump falsified business records in order to conceal breaches of state and federal election law. The offenses with which Trump is charged are usually a misdemeanor rather than a felony. However, it can fall into the latter category when prosecutors contend, as they do here, that a defendant falsified records as part of another crime.

Ambassador Tai Faces Criticism at Annual Trade Policy Hearings

US Trade Representative Katherine Tai faced tough questions over the Biden administration’s trade policy agenda when she appeared before the House Ways and Means Committee and Senate Finance Committee for the annual trade policy agenda hearings. The publication of the administration’s signature trade report late last month provided the framing for Tai’s presentation to Congress. In advance of her testimony, a number of Ways and Means Republicans sent Ambassador Tai a letter criticizing USTR’s decision to scale back references to digital trade in the agency’s recent annual report on foreign trade barriers. The back-to-back hearings provided an opportunity for lawmakers to question Tai on her agency’s nearly two-year-old review into whether to remove or increase any of the tariffs that former President Donald Trump imposed on more than $300 billion worth of Chinese goods—to which she responded that the administration is “taking a serious look” at US trade defense tools to deal with threats posed by China’s trade and economic policies. Lawmakers also pressed Tai to discuss her view on Chinese-made electric vehicles, which already face a 27.5 percent US tariff due largely to actions taken by Trump when he was in office. Members of the Ways and Means and Senate Finance Committees also expressed concern with the President’s lack of negotiating real trade agreements, weak record on enforcement of existing trade agreements and pressed Ambassador Tai to expand market access and level the playing field for American producers and companies.

Sticky Inflation Delays Fed Rate Cuts

Inflation remains a persistent challenge for the Federal Reserve, and the most recent Consumer Price Index (CPI) showed that prices in the United States picked up, rising 0.4% over the past month, according to the latest figures from the Labor Department. Over the 12 months through March, CPI unexpectedly surged to 3.5%, compared to 3.2% in February. At the end of last year, inflation seemed to be falling decisively; now, at the end of the first quarter of 2024, that outlook is in doubt. The latest numbers were certainly an unwanted surprise for the Fed, which has been making slow and halting progress toward its 2% inflation target. Many expect multiple interest rate cuts this year, but Fed officials have made it clear that with the economy healthy, they’re in no rush to cut their benchmark rate. Federal Reserve Chair Jerome Powell reiterated that message while speaking at a conference at the Federal Reserve Bank of San Francisco; while the Fed expects to cut interest rates this year, it won’t be ready to do so until it sees “more good inflation readings.” Powell futher stated that it will “take longer than expected” for the central bank to gain the confidence that inflation is sustainably falling before the Fed cuts rates. 

Analysts said the new figures will likely postpone rate cuts until July or later, possibly waiting for the European Central Bank to move first, and some investors are starting to doubt there will be any cuts this year. Notably, former Treasury Secretary Larry Summers said the Fed’s next move might be in the opposite direction, speaking to Bloomberg, “You have to take seriously the possibility that the next rate move will be upwards rather than downwards.” In his annual letter to shareholders, Jamie Dimon, the CEO of Chase Bank, also warned of higher-for-longer inflation. This poses a political challenge for the Biden administration in addition to an economic challenge as his reelection campaign was counting on a steady easing of price pressures this year, and Republicans are centering their election messaging around rising prices.

Senate Dismisses Mayorkas Impeachment

 In a manifestation of the political drama surrounding the ongoing challenges along America’s southern border, the House of Representatives voted to impeach Department of Homeland Security Secretary Alejandro Mayorkas to bring attention to the Biden administration’s record on immigration and border security. The last Cabinet member to face impeachment was President Grant’s Secretary of War, William Belknap, in 1876. More than a month after House Republicans passed the articles of impeachment in a party-line vote, which failed in its first attempt, the articles were finally delivered to the Senate on April 16, setting in motion the upper chambers’ consideration of the matter. Republicans in the Senate demanded a full impeachment trial – they didn’t get one. The Senate Democratic majority quickly dismissed both of the articles against the DHS Secretary just hours after the proceedings began. There were a series of procedural votes, but the issue concluded as many expected, marking an end to a failed political gambit launched by House Republicans seeking to highlight the Biden administration’s handling of the southern border ahead of the general election.

Yellen’s China Trip Yields Little Progress On Trade Tensions

 US Secretary Janet Yellen traveled to China in early April, visiting the southern manufacturing and export hub of Guangzhou and then Beijing, seeking to build closer ties between the world’s two economic superpowers. Yellen’s focus was China’s over-capacity and she came with a request: please slow down your economic growth because you have an over-capacity and are flooding the market. Yellen laid out plans to formalize dialogue with China over excess industrial capacity in electric vehicles (EVs), solar panels, and batteries, and she emphasized the problems of Chinese unfair trade practices hurting US businesses and workers, “underscoring the global economic consequences of China’s industrial overcapacity,” saying that “China is too large to export its way to rapid growth.” The primary concern from Washington is that state-led support for manufacturers, coupled with depressed domestic demand, is pushing excessive Chinese supply onto global markets. Yellen refused to specify how the US could retaliate against China, but she did say the Biden administration would move to stop any repeat of 10 years ago, when China dumped cheap steel onto global markets, hurting foreign competitors and costing its trading partners jobs. The issues Yellen raised reflect real concerns in the United States and Europe—in particular about hi-tech and clean energy sectors. While there were generally warm interactions between Yellen and Chinese officials during her trip, Chinese officials later pushed back at many of Yellen’s main talking points, with senior officials saying that US and European assertions of excess capacity were groundless. While Yellen’s visit drove massive interest across Chinese social media platforms, tensions and contrasting visions remain between the two largest economies in the world.

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

Department of AgricultureDr. Basil Ivanhoe Gooden is the Undersecretary for Rural Development.

Department of Homeland SecurityFayrouz Saad is Assistant Secretary of Partnership and Engagement.

Department of TransportationChristopher A. Coes is the Undersecretary for Transportation Policy.

Department of StateJoe Scheidler in now an Advisor in the Office of the US Special Coordinator for the Partnership for Global Infrastructure and Investment. Sean Patrick Maloney was confirmed as the US Permanent Representative to the Organization for Economic Cooperation and Development (OECD).

The White House – There are several staff announcements on the National Security Council staff: Dr. Michael R. Carpenter is Senior Director for European Affairs; Dan Erikson is Senior Director for Western Hemisphere Affairs; Ken A. Bomongcag is Director of Counterterrorism Policy; and Jesse E. Pleger is Director for Humanitarian Assistance. In the Office on Clean Energy Innovation and Implementation, Emma C. Hutchinson is now Deputy Director and Avi B. Zevin is a Special Assistant to the President for Clean Energy Implementation. Navtej S. Dhillon is now Deputy Assistant to the President and Deputy Director on the National Economic Council (NEC) and Mike T. Konczal is Special Assistant to the President for Macroeconomic Policy on the NEC.



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