Did Trump Obstruct Justice? Does It Matter?

In a January 29 letter to Special Counsel Robert Mueller that The New York Times published on Saturday, Donald Trump’s lawyers explain in detail why he is not guilty of obstructing justice. They are probably right, and it probably does not matter.

The 20-page letter focuses on the two purported incidents of obstruction that have received the most attention: Trump’s alleged request that FBI Director James Comey go easy on National Security Adviser Michael Flynn and Trump’s subsequent decision to fire Comey. In both cases, attorneys John Dowd and Jay Sekulow argue, Trump did not do what people claim, and even if he had it would be within his constitutional authority as president and outside the scope of the relevant obstruction statutes. “It remains our position,” they write, “that the President’s actions here, by virtue of his position as the chief law enforcement officer, could neither constitutionally nor legally constitute obstruction because that would amount to him obstructing himself.”

That positions has provoked a strong response from Trump’s critics, who argue that it places him “above the law.” Since the president legally could have ordered Comey to leave Flynn alone or halt the Russia investigation, Dowd and Sekulow say, anything short of that direct approach cannot be obstruction, even if the goal was protecting Trump. If the president has the legal authority to do something, in other words, his motive cannot make it a crime. That’s a pretty bold claim, and it is debatable given the broad definition of obstruction in the statute that seems most apposite.

Under 18 USC 1515, someone can commit obstruction by “corruptly” destroying records or by threatening, intimidating, or persuading someone in an attempt to obstruct a “official proceeding.” It also covers someone who “otherwise obstructs, influences, or impedes any official proceeding, or attempts to do so.” It defines corruptly as “acting with an improper purpose.” Hence actions that would otherwise be legal—e.g., deleting email, treating someone to a fancy dinner, or simply talking to him—become a crime when done with “an improper purpose.” Dowd and Sekulow are claiming the president, by virtue of his role as “the chief law enforcement officer,” is special in that regard. Some legal scholars agree; many others do not.

Dowd and Sekulow are on firmer ground in arguing that Trump could not have committed obstruction by interfering with an FBI investigation because an FBI investigation does not qualify as an “official proceeding.” According to the U.S. Attorneys’ Manual, FBI investigations don’t count as “proceedings” under 18 USC 1505, another obstruction provision. Whether they count as official proceedings under Section 1515 is unsettled, but in 2013 the U.S. Court of Appeals for the 9th Circuit concluded that they do not.

Even assuming that interceding with Comey on Flynn’s behalf or firing Comey could qualify as obstruction, proving corrupt intent is not as straightforward as it might seem. Trump’s alleged comment to Comey about Flynn (which Trump denies making) was ambiguous and could be attributed to personal concern: “I hope you can see your way clear to letting this go, to letting Flynn go. He is a good guy. I hope you can let this go.” While Comey said he interpreted the statement as an instruction, it was one he did not follow, and he did not express any concern about its propriety to Trump, to Attorney General Jeff Sessions, or to Deputy Attorney General Rod Rosenstein.

The initial explanation for firing Comey—his unfairness to Hillary Clinton in the way he handled the investigation of her email practices as secretary of state—was hard to believe given that Trump had always complained that she got off too easily. But Sessions and Rosenstein were both complicit in that cover story, putting Rosenstein, who appointed Mueller, in the odd situation of overseeing an obstruction investigation that hinges to some extent on a motive he himself helped conceal. Trump dropped that pretense within a few days of dismissing Comey, when he admitted in an interview with NBC’s Lester Holt that he had already made the decision before receiving guidance from Sessions and Rosenstein.

Trump also conceded that the Russia investigation had been on his mind. But Dowd and Sekulow argue, pretty plausibly, that his rambling comments to Holt were misinterpreted. What the president meant, they say, is that he fired Comey even though he knew that doing so might prolong the investigation. That interpretation is consistent with this excerpt from the interview:

As far as I’m concerned, I want that thing [the Russia investigation] to be absolutely done properly. When I did this now, I said I probably maybe will confuse people. Maybe I’ll expand that—you know, I’ll lengthen the time because it should be over with. It should—in my opinion, should’ve been over with a long time ago because it—all it is [is] an excuse. But I said to myself I might even lengthen out the investigation. But I have to do the right thing for the American people. He’s the wrong man for that position.

Firing Comey, of course, did not actually end the Russia investigation. To the contrary, it was followed by Mueller’s appointment, which probably made the probe broader and longer than it otherwise would have been, just as Trump feared. That upshot casts considerable doubt on whether Trump’s dismissal of Comey was such that “its natural and probable effect would be the interference with the due administration of justice,” as required to make an obstruction charge stick.

It seems likely that Trump fired Comey for a mixture of reasons, one of them being his anger at the FBI director’s refusal to publicly state that he was not a target of the Russia investigation. Given the alternative explanations, proving a specific intent to obstruct justice would be difficult. Even if Trump did tell Russian officials that getting rid of that “real nut job” relieved “great pressure because of Russia,” Dowd and Sekulow note, that comment (which Trump denies) “does not establish that the termination was because of the Russia investigation.”

Mueller, however, does not have to worry about proving that the president obstructed justice, because he won’t be prosecuting Trump. The Justice Department takes the position that a sitting president cannot be indicted, and Mueller’s office has told Trump’s lawyers he will abide by that policy. In practice, then, it does not matter whether Trump broke the law; what matters is whether Congress decides that he abused his powers egregiously enough to warrant impeachment and removal, which might be true even if his actions do not meet the legal criteria for obstruction charges. Although “high crimes and misdemeanors” can involve provable violations of the law, Congress has the power to define the phrase on a case-by-case basis.

The question of whether Trump could preemptively pardon himself, which he brought up on Twitter this morning, illustrates the distinction between what the president can legally do and what he can do without getting impeached. “I have the absolute right to PARDON myself,” Trump tweeted, “but why would I do that when I have done nothing wrong?” On ABC’s This Week yesterday, Rudy Giuliani, who joined Trump’s legal team after Dowd quit in March, agreed that Trump “probably does” have the legal authority to pardon himself, since the Constitution does not qualify that power. But on NBC’s Meet the Press, Giuliani added that “pardoning himself would just be unthinkable” and “would lead to probably an immediate impeachment.”

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In New York-Massachusetts Rivalry, Massachusetts Is Winning: New at Reason

In the Major League Baseball standings, the Yankees and the Red Sox are battling for the lead of the American League East and for the best overall win-loss record. In Amazon’s site-selection contest for its second headquarters, Boston and New York are both finalists. And in a recent report by the real estate technology firm Redfin, New York shows up as a city with a high “net outflow.” Boston, Redfin found, was the top destination for Gotham residents seeking to escape.

Five years after I moved from New York to Boston, the rivalry between the two cities — and between the states of New York and Massachusetts — only shows signs of heating up.

This tends to register barely, if at all, for most New Yorkers. If New Yorkers conceive of their city as having any competition, it’s with Paris, London, Miami, or Los Angeles, rather than with dear old Boston, home of the bean and the cod.

But New Yorkers ignore their smaller rival at their peril, writes Ira Stoll.

Read the whole thing here.

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Lifetime Sex Offender Registration for 18-Year-Old Who Chatted Online with 15-Year-Old

ComputerNew Hampshire’s state Supreme Court has upheld a young man’s harsh sentence—which includes lifetime registry on the sex offender list—for propositioning a 15-year-old girl over the internet.

The man, Bailey Serpa, was 18 at the time. According to New Hampshire law, Serpa would have been guilty of a mere misdemeanor had the two actually had sex. But online solicitation of a minor is considered a felony.

Serpa appealed the sentence on grounds that it was “unconstitutional and grossly disproportional,” The New Hampshire Union Ledger reports. Last month, he lost in court:

The ruling is the latest chapter in a series of cases that have highlighted New Hampshire’s computer-facilitated sex law, which critics say is outdated and wielded too freely in cases involving teenagers.

“The laws were enacted to prevent young people from becoming close with old people because there was concern they were using their age to become close, groom them, and convince them they were in love,” said Wendy Walsh, a professor and researcher at the University of New Hampshire’s Crimes against Children Research Center. “You need to have something on the books, but these cases are so complex and are so individual and have so much variation that ideally there would be more context behind some of the laws.”

It should be clear that when legislators first criminalized online solicitation of minors in 2008, their intention was to prevent much older people from grooming kids for sex. Teens expressing sexual interest in each other isn’t weird or abnormal, and it certainly shouldn’t be a crime. If the court won’t intervene, then the legislature should hurry up and fix its mistake.

Keep in mind that there’s little evidence the sex offender registry helps keep people safe. On the other hand, there’s plenty of reason to believe it shatters the lives of the people who end up on it: They face serious difficulty finding housing, securing jobs, and interacting with young people.

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Tech Stocks Soar To Record High As US Macro Tumbles To 8-Month Low

So this happened…

Which made us think of this…

So much for all those naysayers fearing the impact of a global trade war… US equities love trade tariffs!!

Record highs for Nasdaq… Dow (blue) outperformed, outpacing Nasdaq on the day, as Boeing added most (wait, isn’t Boeing supposed to suffer from a trade war?),Trannies were disappointed by Energy weakness…

NOTE – stocks pretty much went nowhere after the open.

VIX tumbled back to a 12 handle…

 

FANG stocks are roaring higher to a new record high today: the last two days have been the biggest jump since the rip higher off the mid-Feb lows…NOTE – the FANG stock opened at the lows of the day and closed at the highs for the last two days.

 

Tech stocks continue their march higher relative to financials… this won’t end well…

The ratio of tech to financials has only been higher from Feb 2000 to March 2000.

Growth continues to surge (despite the collapse in the yield curve)…

 

And while bond yields have bounced they remain notably decoupled from stocks…

 

European HY spreads have compressed, but remain wide of US HY for now…

 

Treasury yields rose today, basically erasing last week’s moves to unchanged from the Friday before Memorial Day…

 

The yield curve ended very modestly flatter on the day but 2s30s did briefly dip to a new cycle low at 55bps… (and 2s10s just 41bps)

 

Cryptocurrencies faded today after a strong weekend…

 

Don’t get too excited about today’s extension in 10Y Yields – it looks like a run-stop on very low volume…

 

The Dollar Index ended the day modestly lower but after ramping back during the US session from overnight weakness…USD remains in a very narrow range…

 

Commodities were very mixed with Copper surging and crude crushed… PMs ended unch…

 

WTI Crude tumbled to a $64 handle – neat two-month lows

 

WTI broke below its 100DMA…

 

Gold tested back above $1300 today but was rejected again…

 

 

 

 

 

 

 

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Trader Fears Bear Stearns Redux: “The Market’s Fooling Itself”

Morgan Stanley’s Andrew Sheets’ – London-based head of cross-asset strategy – comments that “we’re heading into a summer that is going to remain volatile,” warning that:

“We have upcoming headlines on steel tariffs, we have upcoming headlines on China trade negotiations, we have Nafta, we have an uncertain political backdrop in Italy, we have a new government potentially in Spain. There’s a lot for the market to digest.

And, Sheets is not along, as Bloomberg reports, Wall Street strategists have a word of warning for investors hoping to recuperate this summer after a tumultuous stretch of market trading: Don’t rest on your laurels.

However, it’s tough to fight the constant barrage of mainstream media headlines proclaiming… Record highs for Small Caps; Record highs for Nasdaq; Record highs for tech relative to financials…

 

For credit investors, it’s time to get defensive to “weather what is likely to be a relatively volatile summer,” according to Wells Fargo & Co. strategists led by George Bory. They cite “heightened” concerns about trade wars, and the prospect of tighter monetary policy overshadowing an otherwise healthy economic backdrop.

 

But, as former fund manager and FX trader Richard Breslow notes one could be forgiven for looking from one screen to the next today and concluding everything is cool.

If you share the purported world view of the European Union Budget Commissioner Guenther Oettinger, markets have summed up all of the world’s challenges and concluded everything is okey-dokey.

And if traders are saying so, it must be true, right?

Via Bloomberg,

Equities are happy. Indeed, there isn’t a soul to be found who can’t help wondering if the S&P 500 will finally take a serious run at 2750. Safe havens are being eschewed. Emerging markets are again acting the temptress. Quite the snapshot of calm, cool and collected. There’s just one glitch. I don’t believe it any more than you do.

If this were just an example of asset prices not necessarily portraying an obvious picture of bigger world issues it would be one thing. That certainly isn’t something new. If it reinforces the understanding that while central banks may be plotting their QE exits they have in no way left the building nor harbor any intention of ever surrendering their keys, then I applaud the realism. We’ve yet to see traders show any sustained appetite to take on the powers that be. It wouldn’t even offend me to make the argument that it was doom and gloomers that proved to be the weak hands in this go-round.

The caution should be that in an increasingly complicated world, with challenges that are real but not necessarily imminent nor easily discounted, there is a tendency to skew investment choices to the simple. It’s the market’s way of fooling itself into thinking it can ring-fence the complicated stuff by ignoring it.

Don’t know what effect a trade war will have on Asian high-yield credit spreads? No worries. Buy E-minis while the other stuff sorts itself out.

This is precisely the way the argument went after Bear Stearns’ subprime funds became news.

Why would bad mortgages hurt good old fashioned stocks like AIG or General Electric?

Go back and reread what was being said about plain vanilla in the second half of 2007.

This KISS strategy might work for a trade but is ultimately asking for trouble. Especially if it reinforces a false sense of safety.

What looks like a conservative play to the risk-management department and the Var models might be anything but.

Correlation matrices may not all be a series of plus and minus ones anymore, but they are a lot closer to that than some pre-financial crisis anachronism.

You can’t have one world view for part of your portfolio and a totally different one for the rest. Choose your outlook and go from there but resist the notion that anything is an island.

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Reason Totally Called the Masterpiece Cakeshop Case: Podcast

Burn after listening. ||| ReasonAfter December 2017’s oral arguments in Masterpiece Cakeshop Ltd. vs. Colorado Civil Rights Commission, a lopsided decision but narrow ruling that was decided 7–2 by the Supreme Court today, Managing Editor Stephanie Slade, always worth reading on the intersection of religion and government, made this prescient observation: “The Supreme Court is left with something its members clearly see as a difficult task: defining the contours of a state’s power to require people to do what their religion tells them they may not. But the justices might have found a sort of get-out-of-jail-free card allowing them not to make such a tricky ruling: In stark language, several questioned whether anti-religious animus may have motivated the Colorado Civil Rights Commission’s judgment against Phillips.”

Moral of the story: Always trust content from Reason!

The gay wedding cake saga was one of several culture-war conflicts discussed on today’s editor-roundtable edition of the Reason Podcast, featuring Katherine Mangu-Ward, Nick Gillespie, Peter Suderman, and me. Others included: Bill Clinton’s #MeToo moment, the Roseanne Barr/Bill Maher/Samantha Bee cycle of outrage, Kim Kardashian’s bizarrely derided White House visit, and the desultory trade-war apologia from Larry “I should totally know better” Kudlow. Along the way we also allow editorial overlord Katherine Mangu-Ward take victory lap about Reason‘s sensational new “Burn After Reading” issue, which you can get a special first-class delivery of if you click this link right the hell now!

Audio production by Ian Keyser.

‘Rebel Blues’ by Sul Rebel is licensed under CC BY NC 4.0

Relevant links from the show:

Bill Clinton Gets Defensive, Pivots to Trump Transgressions When Asked About #MeToo Movement and Monica Lewinsky,” by Elizabeth Nolan Brown

Supreme Court Rules for Baker in Gay Wedding Cake Case But Carefully Avoids Central Debate,” by Scott Shackford

The Masterpiece Cakeshop Decision Leaves Almost All the Big Questions Unresolved,” by Eugene Volokh

Can States Compel You to Bake a Cake Against Your Will? The Supreme Court Will Decide,” by Stephanie Slade

Reason Foundation Supports Florists, Bakers in Gay Wedding Case Before Supreme Court,” by Scott Shackford

Christians Started the Wedding Wars,” by Stephanie Slade

Two Minutes of Listening Beats a Two-Minute Hate,” by A. Barton Hinkle

Samantha Bee Apologizes for Insulting Ivanka Trump After Right and Left Play ‘We’re Offended’ Tit-for-Tat,” by Robby Soave

Decoding Trump’s Dinesh D’Souza Pardon,” by Elizabeth Nolan Brown

Liberals Freak Out As Kim Kardashian Visits White House to Talk Criminal Justice Reform,” by Elizabeth Nolan Brown

Kim Kardashian Is Currently Our Nation’s Greatest Hope for Prison Reform,” by C.J. Ciaramella

This Man Was Released From Prison and Rebuilt His Life; Two Years Later He Got Sent Back Because of an ‘Error,’” by C.J. Ciaramella

Roseanne Reboot Is Dead. Will Real Time with Bill Maher Be Next?” by Elizabeth Nolan Brown

Liberals Killed Roseanne. Conservatives Crushed the NFL Protests. Everybody Happy Now?” by Robby Soave

How Trump’s Tariffs Will Harm National Security,” by Steve Chapman

Study: Trump’s Proposed Automobile Tariffs Will Destroy 195,000 American Jobs,” by Eric Boehm

Today Is the Start of Hurricane Season. Trump’s Tariffs Could Make It More Costly,” by Eric Boehm

Trump Is Standing on the Precipice of a Real and Serious Trade War,” by Eric Boehm

‘Free-Market’ Conservatives Welcome Their New Protectionist Overlord,” by Matt Welch

YouTube Won’t Host Our Homemade Gun Video. So We Posted It on PornHub Instead,” by Katherine Mangu-Ward, Todd Krainin, and Jim Epstein

How to (Legally) Make Your Own Off-the-Books Handgun,” by Mark McDaniel

When You’re Done Reading This Issue of Reason, You Might Want to Burn It,” by Katherine Mangu-Ward

Reason at FEEcon 2018, June 7–9 in Atlanta!” by Nick Gillespie

Subscribe, rate, and review our podcast at iTunes. Listen at SoundCloud below:

Don’t miss a single Reason Podcast! (Archive here.)

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“The Strongest Flashing Red Light Since 2008”: Will Oil Shock Trigger The Next Recession?

When analysts talk about the biggest threats to the second longest economic expansion in US history that has sent the unemployment rate in the US to its lowest level in 18 years, the risk of a trade war often occupies a sizable chunk of the conversation. And now that President Trump has decided to slap Section 232 tariffs on metals imports from some of America’s closest allies, we’ll be hearing even more about the risks as academics and economists latch on to the notion that tariffs will harm the US economy (the same way Brexit would unleash a UK depression).

But while trade-war related risks have yet to materialize, the possibility that we’re headed for – or are already in the middle of – an oil shock is looking increasingly more likely, despite numerous analysts and economists writing off rising oil prices as a non-issue (in a recent note about how rising oil prices will impact the Asian economy, researchers at SocGen played down oil price risks to both growth and inflation).

However, those ignoring the very real problems posed by climbing crude prices at this point so very late in the business cycle do so at their own peril, as David Fickling, an opinion columnist at Bloomberg, pointed out in a recent column.

But it’s not just big bank strategists who are overlooking the risks of rising oil: the abovementioned SocGen energy analysts see oil price pressures receding in the near future as OPEC and Russia start to crank up production, pushing the price of crude lower. As it turns out, retail investors are also overlooking the risks, too.

As evidence, Fickling points to the number of web searches for the terms “oil shock” and “oil crisis”. Judging by this trend, an oil shock would seem to be “the last thing anyone should be worried about”

NoWorries

And yet, as Fickling points out, the number of warning signs suggesting that oil prices are already having a very real negative impact on growth – particularly in Asia and South America – are rapidly increasing.

  • In Brazil, a strike by truckers protesting the price of fuel brought the economy to a halt over the past week, interrupting exports of soybeans, coffee and chicken and prompting some to call for a return to military dictatorship.
  • In India, prices for diesel and gasoline have hit multi-year records, leading to demands for the government to cut taxes and for a price cap to be imposed on state-controlled Oil & Natural Gas Corp.
  • Governments in Thailand, Vietnam and Indonesia and implementing or planning increases in retail fuel subsidies to protect consumers from the effects of rising oil prices and weakening national currencies.
  • Airline profits have probably peaked because of headwinds from fuel costs, according to Alexandre de Juniac, CEO of the International Air Transport Association. Philippine budget carrier Cebu Air Inc. this week promised to impose fresh fuel surcharges.
  • Moody’s Investors Service just blamed high oil prices in part for a 0.2 percentage-point cut in its outlook for India’s 2018 GDP growth, and warned of the potential of falling consumption spending and rising inflation across the globe if current high prices are sustained.

Meanwhile, as discussed on several prior occasions, the counterintuitive rise in the US dollar, and the tightening in financial conditions, that has accompanied the increase in oil prices has presented a double-bind for net oil importers in Asia and elsewhere outside the developed world – where investors are also coping with the inflationary shock of a depreciating currency. But the US economy is hardly immune. As a 2011 research paper written by James Hamilton at UCSD suggests, a spike in oil prices is an eerily prescient predictor of economic downturns – even if the increase isn’t, relatively speaking, all that large relative to the recent past.

Take the first Gulf War. In the five months between Saddam Hussein’s 1990 invasion of Kuwait and the start of Operation Desert Storm, a spike drove West Texas Intermediate to an average $30.84 a barrel. Despite representing little more than a return to the status quo before Saudi Arabia flooded the market late in 1985, those prices were high enough to help spark the early 1990s recession.

As it turns out, “it’s not the size of the oil shock, it’s how fast you use it”, or rather the speed at which it takes place. Hamilton’s research shows that rapid jumps in oil prices have preceded 10 of the last 11 peaks in the US business cycle since World War II. The only exceptions were 1970, 1973 and 2003, which took place during – or just after – periods of recession.

Shock

By comparison, over the past 11 months, Brent is up 62% and WTI is up 46%. But how do we determine whether a move is sufficiently “rapid” to present a genuine shock? Hamilton’s analysis involves comparing current prices to levels over the previous three years; this is what he finds:

Where prices are below their previous peak, any increase can be considered a return to the norm; where they’re above that level, there’s the possibility of a genuine shock. On a Hamilton-style measure, we’re seeing the strongest flashing red light since 2008.

Shock

In itself, that’s an ominous signal but as Fickling notes, other signs of impending recession – the end result of any genuine shock – are looking more subdued. Still, Citi’s global economic surprise index is at its lowest level in roughly five years for a reason… 

Global

Meanwhile, as we noted earlier SocGen analysts expect rising prices to have little impact on growth and inflation in Asia, a region that, due to its net-importer status (just 8% of global oil production is rooted in Asia), is often the hardest hit when prices climb, and particularly so when oil rises in tandem with USD. Their reasoning? Improving energy efficiency in China and elsewhere on the continent, combined with comfortably low inflation, suggest that a shock isn’t imminent.

“Only if oil prices were to surge higher from here to $100 per barrel and sustain around that level for several quarters or more, would we start to worry,” the team wrote.

But as Fickling counters, oil shocks are prophets – not partners – of economic downturns. This means that one shouldn’t expect to see other signs of weakness until the shock has already taken root.

So unless supplies surge and prices ease sharply, and in the very near future to offset what has already been a remarkable “oil shock”, the next downturn may already be a forgone conclusion.

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Under Trump, Republicans Become the Party of ‘You Didn’t Build That’

For at least the past decade, Republicans have positioned themselves as the defenders of what passes for laissez faire economics in modern Washington. During the Obama administration, the GOP attacked new environmental regulations as hidden taxes on American businesses, decried the stimulus as cronyism on a grand scale, and lashed out at a president for claiming that Americans “didn’t build” successful enterprises without government assistance.

Now, with President Donald Trump walking the nation to the precipice of a trade war—one that sees America pitted against not only a longtime Republican boogeyman, China, but also such major trading partners as Canada, Europe, and Mexico—congressional Republicans have a choice to make. They can embrace free markets, or they can can embrace Donald Trump.

A trade war will cause significant pain for American businesses and consumers. It will create new hidden taxes in the form of the costs tariffs impose on consumers. It will be cronyism on a grand scale, with Trump and his top advisers deciding which industries get protected and which get crushed. And it is premised on the same idea that angered so many tea partiers when Obama expressed it. Trump hasn’t said “you didn’t build that,” but his actions suggest that America can’t build much of anything—steel, cars, the list goes on and on—unless the government steps in with some protectionism.

What will Republicans in Congress do? For most of them, probably nothing.

But some of them are going to try to pull the party in a different direction. Sen. Bob Corker (R-Tenn.), who on Saturday described news coverage of Trump’s trade policies as “like something I could have read in a local Caracas newspaper last week,” says he is prepared to work “with like-minded Republican senators on ways to push back on the president using authorities in ways never intended and that are damaging to our country and our allies.”

It is, for now, unclear what that plan might look like. Still, the statement signals at least a willingness to do something. Previously, many Republicans responded to Trump’s tariff threats merely by expressing their opposition and hoping the issue would simply go away. “I’m not a fan of tariffs, and I am nervous about what appears to be a growing trend in the administration to levy tariffs,” Senate Majority Leader Mitch McConnell (R-Kentucky) told the Louisville Courier-Journal in April, as if he wasn’t in a position to do anything about the administration’s bellicose trade policies.

It’s true that Congress has limited its control over trade policy. In 2015, for example, it enacted a Trade Promotion Authority (TPA) allowing the White House to negotiate trade deals with other countries without congressional interference. Congress doesn’t enter the picture until it hold a a straight up-or-down vote on the final product, essentially promising that it won’t try to alter whatever deal the president makes.

This was a deliberate abdication of the power granted by Article 1 of the U.S. Constitution, which explicitly allows Congress “to lay and collect taxes, duties,” and the like. In a previous era, this abdication felt like a pro-trade move: Congress has, traditionally, been more open to protectionist policies (just think about how defensive legislators get about anything in their home districts), while the White House has been more likely to support free trade, since the president tends to get credit (and blame) for the economy as a whole.

“They never anticipated having a protectionist president,” says Dan Ikenson, director of trade policy studies at the Cato Institute. Like so much else in the Trump presidency, the trade war is partly a consequence of a decades-long slide of power from the legislature to the executive.

Reversing that trend won’t be easy, but if Congress wants to rein in Trump, there is an important deadline looming at the end of this month.

Congress has until June 30 to reauthorize the TPA it passed in 2015. This is supposed to remain in place for six years, but there’s a catch: After three years, Congress can exercise an option to revoke that authority. While revoking Trump’s TPA would not directly block tariffs—the steel and aluminum tariffs have been issued under Section 232 of the Trade Expansion Act of 1962, which gives the president more or less carte blanche to impose tariffs on national security grounds—it would be at least a symbolic blow, and an indication that congressional Republicans reject Trump’s trade policies.

A more dramatic option would be to pass the Global Trade Accountability Act, a bill proposed by Sen. Mike Lee (R-Utah). This would require congressional approval before tariffs could go into effect. The bill would also give Congress the ultimate authority over whether to withdraw from other trade agreements, including NAFTA and the WTO. Again, this would not apply to Trump’s Section 232 tariffs, but it could limit the damage the president can cause and it may put America’s top trading partners slightly at ease.

But don’t get your hopes up. Corker, who is not running for re-election, appears to be in the minority when it comes to standing up for free trade. And he seems to know it—hence his tweet’s call for Democrats, who are also in the minority, to come to his aid.

“There is no Republican Party. There’s a Trump Party. The Republican Party is kind of taking a nap somewhere,” former Speaker of the House John Boehner said last week.

Well, maybe; it depends on which Republican Party you mean. There have been periods when the GOP was a more protectionist party, and even seemingly pro-trade presidents like Ronald Reagan and George W. Bush erected trade barriers at times. But the Republicans discovered a strong free market message during their years as Obama’s opposition, and that message is now all but lost.

A Harvard-Harris poll released last week found that 71 percent of self-described Republicans approve of Trump’s decision to place tariffs on steel and aluminum imports, while 60 percent believe those tariffs “will mostly protect American jobs”:

The part about protecting jobs is simply not true. Even if the tariffs do protect some steel-making jobs, they will destroy more jobs in downstream industries, according to projections from both pro-trade and anti-trade groups.

But the first part is what congressional Republicans are hearing loud and clear. On Sunday, House Majority Leader Kevin McCarthy took to CNN to defend Trump’s tariff plans.

“We are standing up for the process of where we’re moving forward that we have fair trade,” McCarthy said.

If a majority of Republican voters are going to follow the president into a trade war of choice, then Republicans in Congress appear ready to dutifully stand aside. This year has already seen the GOP abandon its rhetorical role as the party of fiscal responsibility by passing a budget-busting omnibus bill that required the repeal of spending limits once championed by the party’s leaders.

Now, in the service of a president pursuing anti-market trade policies, Republicans are casting aside another principle that they recently treated as a clarion call. Just as Republicans seem to be stawart fiscal conservatives only when they are in the opposition, it looks like they might be ardent free traders only when they aren’t led by a president who refuses to see the benefits of trade. Republican opposition to big government doesn’t seem to have been about anything more than partisanship.

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The Steady Enmity Of Powerful People (Or “Crime Does Pay After All”)

Via Golem XIV’s blog,

“Crime doesn’t pay.”

Actually it does, handsomely. If you are a banker or large financial player, it pays wonderfully. You get filthy rich committing the crimes and after… you continue to get filthy rich.

What doesn’t pay is reporting crime.

Not long ago I read a rather good book about a small number of honest people who did not understand this dirty fact. It was a book telling the stories of the handful of honest and tragically idealistic insiders who blew the whistle about banking fraud and crime during the Global Bank Debt Crisis.  It was full of disturbing facts. Not the least of which is that not one of their stories ended well.

All of the stories involved the whistleblower following the law and reporting their concerns.

In every story the result was being threatened with punitive, some might say vindictive, legal action by the very banks whose wrong doing they had reported.  In every case the ‘Proper Authorities’, in charge of regulating the banks, hung the whistleblowers out to dry.

All the whistleblowers were blackballed from their profession and lost their livelihoods. The majority lost their homes. Another disturbing common thread was that many of the whistleblowers, who had been well paid, and respected employees of the banks, found that as soon as they went public with their complaint, they were accused, by the banks, of being mentally unstable and in need of detention in a mental facility. Many lost their family as a result.  In every case the leading politicians of all the major parties in the whistleblowers’ country, ignored the whistleblower and closed ranks with the banks and the regulators.  Very often they too would join the banks in solemnly suggesting the Whistleblower had had some sort of tragic mental breakdown and was now unstable or delusional.

But the most depressing thing about the book is that it was never published.

One of the stories, in this unpublished book, concerned the UniCredit whistleblower, Jonathan Sugarman, who is a close friend.  I have a detailed knowledge of his case. Over the years I have watched as the Financial Inquisitors repeatedly threatened and intimidated him. And he was intimidated. They are powerful people. Yet I have never seen him silenced nor recant his heresies.

I have seen him unable to keep down his breakfast before yet another inquisition. I have seen him cringe with embarrassment at having to borrow a pair of shoes so he could look smart when testifying, because he had none. I know other friends have helped. Because he cannot do it all alone. It is not possible.

And yet in all the years we have known each other Jonathan has never asked me for anything. Until now…

Something has happened. I don’t know what. Perhaps it is just the steady enmity of powerful people that has finally taken its toll. Perhaps it is trying to attend too many empty and rigged enquiries in too many places.  I don’t know.

I you feel you could help in even the smallest way please click on this link and listen to Jonathan himself – https://www.patreon.com/posts/personal-of-on-18978650

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Democratic Congressman: “Looks Like Zuckerberg Lied To Congress”

Responding to a report in the New York Times which revealed Facebook gave at least 60 major device manufacturers unprecedented access to user data, Democratic Congressman David Cicilline (RI) tweeted on Sunday: “Sure looks like Zuckerberg lied to Congress about whether users have “complete control” over who sees our data on Facebook,” adding “This needs to be investigated and the people responsible need to be held accountable.”

The Times reported Sunday evening that Facebook gave at least 60 major device manufacturers access to user data over the last decade – including Apple, Amazon, BlackBerry, Microsoft and Samsung – as part of a data-sharing partnership program which allowed the companies to integrate various features such as messaging and “like” buttons into their products.

The agreement has allowed manufacturers to access information on relationship status, calendar events, political affiliations and religion, among other things. An Apple spokesman, for example, said that the company relied on private access to Facebook data to allow users to post on the social network without opening the Facebook app, among other things.

Even more disturbing, the manufacturers were able to access the data of users’ friends without their explicit consent, despite Facebook declaring they would not let outside companies access user data. The catch? The NYT explains.

Facebook’s view that the device makers are not outsiders lets the partners go even further, The Times found: They can obtain data about a user’s Facebook friends, even those who have denied Facebook permission to share information with any third parties.

In interviews, several former Facebook software engineers and security experts said they were surprised at the ability to override sharing restrictions. –NYT

It’s like having door locks installed, only to find out that the locksmith also gave keys to all of his friends so they can come in and rifle through your stuff without having to ask you for permission,” said Ashkan Soltani, a research and privacy consultant and former chief technologist for the Federal Trade Commission (FTC).

The Times even performed a test to verify their claims: 

To test one partner’s access to Facebook’s private data channels, The Times used a reporter’s Facebook account — with about 550 friends — and a 2013 BlackBerry device, monitoring what data the device requested and received. (More recent BlackBerry devices, which run Google’s Android operating system, do not use the same private channels, BlackBerry officials said.)

Immediately after the reporter connected the device to his Facebook account, it requested some of his profile data, including user ID, name, picture, “about” information, location, email and cellphone number. The device then retrieved the reporter’s private messages and the responses to them, along with the name and user ID of each person with whom he was communicating.

The data flowed to a BlackBerry app known as the Hub, which was designed to let BlackBerry users view all of their messages and social media accounts in one place.

The Hub also requested — and received — data that Facebook’s policy appears to prohibit. Since 2015, Facebook has said that apps can request only the names of friends using the same app. But the BlackBerry app had access to all of the reporter’s Facebook friends and, for most of them, returned information such as user ID, birthday, work and education history and whether they were currently online.

The BlackBerry device was also able to retrieve identifying information for nearly 295,000 Facebook users. Most of them were second-degree Facebook friends of the reporter, or friends of friends.

In all, Facebook empowers BlackBerry devices to access more than 50 types of information about users and their friends, The Times found. -NYT

And as we noted early Monday, despite winding down the partnerships in April – including the posting capabilities used by Apple, Facebook has defended the data-sharing agreements, saying they comply with the company’s privacy policies and a 2011 consent decree issued by the FTC. Facebook officials say they don’t know of any cases where user information has been misused. 

These partnerships work very differently from the way in which app developers use our platform,” said Ime Archibong, a Facebook vice president. Unlike developers that provide games and services to Facebook users, the device partners can use Facebook data only to provide versions of “the Facebook experience,” the officials said.

“These contracts and partnerships are entirely consistent with Facebook’s F.T.C. consent decree,” said Archibong.

Former FTC official Jessica Rich, however, disagreed with that assessment.

“Under Facebook’s interpretation, the exception swallows the rule,” said Ms. Rich, now employed by the Consumers Union. “They could argue that any sharing of data with third parties is part of the Facebook experience. And this is not at all how the public interpreted their 2014 announcement that they would limit third-party app access to friend data.”

And because Facebook does not consider the device makers to be outsidersthe data sharing partnerships go even furtherThe Times discovered, which is what allows the companies to access user data of a Facebook user’s friends – even if they’ve denied Facebook permission to share information with third parties

Apparently Facebook discussed the issue as early as 2012 and simply decided not to change the arrangements, despite the data-sharing agreements being flagged as a privacy issue. 

But the device partnerships provoked discussion even within Facebook as early as 2012, according to Sandy Parakilas, who at the time led third-party advertising and privacy compliance for Facebook’s platform.

This was flagged internally as a privacy issue,” said Parakilas, who left Facebook in 2012 and has emerged as a new voice against the company’s data handling policies. “It is shocking that this practice may still continue six years later, and it appears to contradict Facebook’s testimony to Congress that all friend permissions were disabled.

As for the various answers given by the device manufacturers (via The Times)

  • Samsung declined to respond to questions about whether it had any data-sharing partnerships with Facebook. Amazon also declined to respond to questions.
  • Usher Lieberman, a BlackBerry spokesman, said in a statement that the company used Facebook data only to give its own customers access to their Facebook networks and messages. Mr. Lieberman said that the company “did not collect or mine the Facebook data of our customers,” adding that “BlackBerry has always been in the business of protecting, not monetizing, customer data.”
  • Microsoft entered a partnership with Facebook in 2008 that allowed Microsoft-powered devices to do things like add contacts and friends and receive notifications, according to a spokesman. He added that the data was stored locally on the phone and was not synced to Microsoft’s servers.
  • Facebook acknowledged that some partners did store users’ data — including friends’ data — on their own servers. A Facebook official said that regardless of where the data was kept, it was governed by strict agreements between the companies.

On Monday, Facebook pushed back against the Times, claiming that the data shared with manufacturers was never abused. 

“These partners signed agreements that prevented people’s Facebook information from being used for any other purpose than to recreate Facebook-like experiences,” wrote Ime Archibong, Facebook’s vice president of product partnerships 

“Contrary to claims by the New York Times, friends’ information, like photos, was only accessible on devices when people made a decision to share their information with those friends.”

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