25/06/2024

Dispatch from Washington: June 2024

Donald Trump becomes the first former US President to be convicted of felony crimes. President Biden’s son, Hunter Biden, was also found guilty of several felonies. While in Europe, Treasury Secretary Janet Yellen warned that China’s industrial strategy posed a global threat and urged the EU to join efforts to combat excess Chinese goods. Federal Reserve policymakers left rates unchanged, and the latest inflation data slightly cooled. The Senate Finance and Budget Committees have launched a joint investigation into an alleged quid pro quo offer from former President Trump to the oil and gas industry. President Biden announced a series of measures to address the situation along America’s southern border, an issue that is a significant political liability.

Trump Found Guilty

In May, former President Donald Trump was found guilty of 34 charges in a scheme to illegally influence the 2016 election through a “hush money” payment his attorney, Michael Cohen, made to adult film star Stormy Daniels. This makes Donald Trump the first former American President to be convicted of felony crimes. Judge Juan M. Merchan set sentencing for July 11, just days before the Republican National Convention in Milwaukee, Wisconsin. Under New York law, each count of falsifying business records in the first degree carries a maximum sentence of four years in prison and a $5,000 fine. However, Merchan has broad discretion when it comes to imposing a sentence. Most legal observers expect him to punish Trump with little or no time behind bars based on factors like Trump’s status as a first-time offender and his age. Instead, Merchan could rely on options like probation, home confinement, or a fine. Following the verdict, Trump falsely blasted a ‘rigged trial’ and attacked a star witness in a speech. President Biden, who had remained relatively silent while the case progressed, criticized Trump’s response to the verdict, saying ‘it’s dangerous, it’s irresponsible’ to claim it was rigged. When it comes to predicting the political fallout from the guilty verdict, the first post-verdict polls show the felony convictions are having minimal impact on the campaign. There are also concerns about Trump’s calls for political vengeance and retaliatory prosecutions should Trump win the election. Trump still faces 57 more felony counts across one state court and two different federal districts.

Hunter Biden Convicted

 President Biden’s son, Hunter Biden, was convicted of all three felony charges related to the purchase of a firearm in 2018 when he lied on a mandatory gun-purchase form by saying he was not illegally using or addicted to drugs. President Biden said in a statement issued shortly after the verdict that he would accept the outcome and “continue to respect the judicial process as Hunter considers an appeal.” Hunter Biden faces up to 25 years in prison, though as a first-time offender, it is highly unlikely that he would get anywhere near the maximum, and there’s no guarantee the judge would send him to prison—no sentencing date has been set. First Lady Jill Biden regularly attended her son’s trial, and President Biden never criticized the proceedings or the judicial system, in contrast to Donald Trump’s statements that the justice system is rigged against him. Now, Hunter Biden and presumptive Republican presidential nominee Donald Trump have both been convicted by American jurors in an election year.

Secretary Yellen Calls on EU to Join US Efforts to Restrict Chinese Green Tech

Speaking in Germany last month, US Treasury Secretary Janet Yellen said that the United States and Europe needed to work together to push back against China’s excess industrial capacity, specifically China’s excessive green energy technology production, which has recently become a pressing trans-Atlantic concern. In a speech at the Frankfurt School of Finance and Management, where she received an honorary doctoral degree, Yellen said that “Chinese industrial capacity is currently leading to production that significantly exceeds global demand in key sectors…if we do not respond strategically and in a united way, the viability of businesses in both our countries and around the world could be at risk.” The Biden administration is looking to Europe to help prevent the kind of China shock from the early 2000s, which contributed to a sharp decline in manufacturing in the US In May, the Biden administration also announced new tariffs on Chinese strategic industries, including steel, solar, electric vehicles, and battery parts, and the administration has left in place levies on more than $300 billion worth of Chinese goods that President Donald J. Trump had imposed. The United States hopes that a united front will convince China that its largest trading partners are prepared to erect trade barriers that will prevent their cheap goods from dominating Western markets. European Commission President Ursula von der Leyen has been pushing for “de-risking” Europe’s relationship with China but said that Europe will take a different approach than the US “blanket tariffs” on Chinese imports.   

Fed Keeps Rates Steady After Latest Inflation Report

US Federal Reserve policymakers left interest rates unchanged at the most recent Federal Open Market Committee (FOMC) meeting, keeping them at the highest in two decades. They signaled one cut in 2024, with more to come in 2025. As recently as March, Federal Reserve policymakers envisioned as many as three cuts this year; now, they are expected to take a more hawkish path. During the last half of 2023, inflation cooled steadily, declining enough that Fed officials entered the year expecting multiple rate cuts—but inflation proved to be stubborn at the start of 2024, and policymakers had to push back their plans for rate cuts, afraid of lowering borrowing costs too early. Fed officials did not indicate when they will start rate cuts, and they are scheduled to meet four more times this year: in July, September, November, and December. At a news conference following the FOMC meeting, Federal Reserve Chairman Jerome Powell said, “The economic outlook is uncertain…We remain highly attentive to inflation risks,” and that officials are looking for “greater confidence” that inflation is moving sustainably to 2 percent before cutting rates.

On the morning of the FOMC meeting, the US Labor Department released the Consumer Price Index data for May, showing that it rose 3.3% in May from a year ago, a slight dip from the 3.4% reading in April. The May inflation reading is down significantly from its 9.1% pandemic-era peak in 2022, the highest level since 1981. However, it remains above policymakers’ long-term target of 2%. While still above the Fed’s target rate, President Joe Biden took a victory lap on the latest report, saying, “Wages are rising faster than prices, and unemployment has remained at or below 4% for the longest stretch in 50 years.” Biden has said “Fighting inflation and lowering costs is my top economic priority.” Americans’ unhappiness with high prices remains a critical vulnerability for President Biden’s reelection bid.

Democrats Open Inquiry into Potential Trump Quid Pro Quo with Oil Industry

In a recording obtained from an April 11 fund-raising dinner at Mar-a-Lago, former President Trump told 20 oil and gas executives that they should donate $1 billion to his presidential campaign because, if elected, he would repeal environmental regulations. Now, two Senate committees are seeking information from oil executives about the engagement, accusing the former President of proposing a quid pro quo. Senator Sheldon Whitehouse (D-RI) and Senator Ron Wyden (D-OR) (both pictured), chairs of the Senate Budget Committee and Senate Finance Committee, respectively, are demanding answers from the oil and gas companies and trade associations present at the event. Their committees have launched a joint investigation, accusing the industry and the Trump campaign of “conferring on how to trade campaign cash for policy changes.” Congressman Jamie Raskin (D-MD), Ranking Member of the Committee on Oversight and Accountability, is also demanding answers from the energy executives following reports of quid pro quo propositions. This raises concerns that the former President is prospectively trying to sell out US policy to fossil fuel companies and that, if re-elected, he will roll back environmental regulations and work with the fossil fuel industry to undermine climate policy.

Biden Announced Border Measures

On June 4, the Biden Administration announced a series of measures aimed at curbing record migrant arrivals at the US-Mexico border, a significant liability for his reelection campaign. Biden said the new actions “will help us gain control of our border.” This was one of the most restrictive immigration policies by a Democratic incumbent in decades. Under the order, officials can quickly remove migrants entering the US illegally without processing their asylum requests once a certain daily threshold is met – the restrictions will come into effect when the seven-day average for daily crossings hits 2,500. The administration also announced a proposed rule from the Department of Homeland Security to ensure that migrants who pose a public safety or national security risk are removed as quickly as possible. Lastly, they shared new actions the administration will take to more quickly resolve immigration cases and expand efforts to dismantle human smuggling networks. The White House and Democrats have sought to lay the blame on Republicans who blocked a bipartisan border security deal earlier this year, and Republicans have criticized the Biden border plan as an election-year ruse – and have argued for tougher action.

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

Department of CommerceEric Joseph Beane is now the Deputy Undersecretary in the Bureau of Industry and Security.

Department of DefenseAmanda J. Dory is the acting undersecretary for policy. Melissa Dalton was confirmed as the undersecretary of the Air Force. Dr. Vipin Narang is the acting assistant secretary for space policy.

Department of StateAmbassador Julie Smith, currently the US Ambassador to NATO, has been nominated for undersecretary for political affairs. Courtney Diesel O’Donnell was confirmed as the US Permanent Representative to UNESCO. Ambassador Steve Lang is now the US Coordinator and Deputy Assistant Secretary at Deputy Assistant Secretary for International Communications and Information Policy. Cardell Kenneth Richardson Sr. is now the Inspector General. Jesse D. Young is the Chief of Staff in the Office of the Special Presidential Envoy for Climate. Nelson W. Cunningham is now a Senior Advisor to the Under Secretary of State for Economic Growth, Energy, and the Environment.

US Trade RepresentativeDr. Laurie-Ann C. Agama is now the Assistant US Trade Representative for Economic Affairs. 

White HouseRyan M. Berger is a Senior Advisor to the Deputy National Security Advisor. Sarah Sullivan is now the director for international economics on the National Security Council staff. Timothy Lomauro is a senior advisor to the Director of the Office of Science and Technology Policy. 

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