In October, prosecutors told a court they did not believe Trump had turned over all the documents with classified markings in his possession, and they were particularly concerned that he carried documents with him on flights between Mar-a-Lago and his properties in New York and New Jersey. On the advice of his lawyers, Trump hired a team to search for more documents, and they have found at least two more items marked classified and have turned them over to the FBI.
A spokesperson for Trump said in a statement that Trump and his lawyers “continue to be cooperative and transparent, despite the unprecedented, illegal and unwarranted attack against President Trump and his family by the weaponized Department of Justice.”
Trump’s lawyers are doubling down on the idea that presidential immunity protects the former president from virtually anything he might have done in office, even “seeking to destroy our constitutional system.” Today, Trump lawyer Jesse Binnall argued before the D.C. Circuit U.S. Court of Appeals that the former president cannot be sued by police officers and members of Congress for inciting the January 6th attack on the U.S. Capitol, that he is immune from lawsuits even if he had urged his followers to “burn Congress down.”
Such an argument is fingernails down a chalkboard to anyone who knows anything at all about how the Framers of our Constitution thought about unchecked power.
There is, though, ongoing congressional review of the Trump administration. Last night the chair of the Senate Committee on Finance, Ron Wyden (D-OR), and the chair of the House Committee on Oversight and Reform, Carolyn B. Maloney (D-NY), wrote to Secretary of Defense Lloyd Austin III, asking for information in their “ongoing investigations into whether former Senior White House Adviser Jared Kushner’s financial conflicts of interest may have led him to improperly influence U.S. tax, trade, and national security policies for his own financial gain.”
The letter outlines the timing of the 2018 financial bailout of the badly leveraged Kushner property at 666 Fifth Avenue (now known as 660 Fifth Avenue) with more than $1 billion paid in advance from Qatar. Qatar had repeatedly refused to invest in the property, but after Saudi Arabia and the United Arab Emirates imposed a blockade on Qatar—after Kushner discussed isolating Qatar with them without informing Secretary of State Rex Tillerson—Qatar suddenly threw in the necessary cash. Shortly after that, the Saudi and UAE governments lifted the blockade, with Kushner taking credit for brokering the agreement.
Because of this case, and a number of others covered in the letter, the committees have asked the Defense Department to provide any correspondence it had with the Kushners during the Trump administration, or about the various dealings in which business and government appeared to overlap. They have asked for the information by January 13, 2023.
The ideas of the Framers on the nature of government was also in the news today thanks to arguments before the Supreme Court in the case of Moore v. Harper, a crucially important case about whether state legislatures have exclusive control of federal elections in their states, or if state courts can override voting laws they believe violate state laws or the state constitution. Conservative judge J. Michael Luttig, who sat on the U.S. Court of Appeals for the Fourth Circuit, in October called Moore v. Harper “the most important case for American democracy in the almost two and a half centuries since America’s founding.”
The case comes from North Carolina, where the state supreme court in February declared that new congressional and state legislature maps so heavily favored Republicans as to be “unconstitutional beyond a reasonable doubt.” The Republican-dominated legislature says that it alone has the power to determine state districts and cannot be checked by state courts or the state constitution.
The legislature claims this power thanks to the “independent state legislature” doctrine, a new legal theory based on the election clause of the U.S. Constitution, which reads that "the Times, Places and Manner of holding Elections for Senators and Representatives, shall be prescribed in each State by the Legislature thereof; but the Congress may at any time by Law make or alter such Regulations, except as to the Places of chusing Senators.” Lawyers for the legislatures today claimed this clause means that the legislature alone can determine election laws in a state.
In October, Luttig published an article in The Atlantic with the unambiguous title: “There Is Absolutely Nothing to Support the ‘Independent State Legislature’ Theory.” The subtitle explained: “Such a doctrine would be antithetical to the Framers’ intent, and to the text, fundamental design, and architecture of the Constitution.”
Politicians, voting rights advocates, state attorneys general, senators, former governors, military officers, the U.S. Conference of Mayors, the American Bar Association, and so on, all offered their own briefs to the court sharing Luttig’s position, with historians of the Founding Era agreeing that “[n]othing in the records of the deliberations at Philadelphia or the public debates surrounding ratification” supports the idea that state legislatures have exclusive power to regulate congressional elections. “There is no evidence that anyone at the time expressed [this] view…. [T]he interpretation is also historically implausible in view of the framers’ general fear of unchecked power and their specific distrust of state legislatures. There is no plausible eighteenth-century argument” for the independent state legislature theory, they say.
The historians also observed that those embracing the theory ignore the ample documentary evidence and instead rely extensively on a document that scholars proved long ago was written ten years after the actual Constitutional Convention.
Ouch.
The independent state legislature theory would also permit legislators to choose their presidential electors however they wish. Had such a theory been in place in 2020, Trump’s scheme for throwing out Biden’s electors in favor of his own would have worked, and he would now be in the White House.
The potential for this case to upend our right to have a say in our government has had democratic advocates deeply concerned, but observers watching the court today seemed to think the right-wing justices would not embrace the theory fully. Perhaps this is in part because they know well that their legitimacy is fraying as they are increasingly perceived as partisan politicians, or perhaps the Supreme Court is wary of undermining the idea of judicial review. In any case, both Marc Elias of Democracy Docket and Rick Hasen of Election Law Blog analyzed the justices’ questions today and guessed they would find a middle ground that preserves some measure of state courts’ oversight of legislatures’ election shenanigans.
Their analysis is only a guess, of course. Elias suggested the court would likely hand down a decision in the case in June.
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Notes:
https://www.washingtonpost.com/nation/2022/12/07/trump-tower-bedminster-records-search/
https://abcnews.go.com/US/trump-hosts-event-featuring-qanon-pizzagate-conspiracy-theorist/story?id=94701765
https://www.wsj.com/articles/trump-lawyers-attend-court-hearing-as-doj-presses-aides-in-mar-a-lago-probe-11666902371
https://www.wsj.com/articles/trump-legal-team-finds-two-more-documents-marked-classified-11670447615
https://www.brennancenter.org/sites/default/files/2022-10/2022.10.26_Amicus%20Brief%20of%20Founding%20Era%20Scholars%2021-1271.pdf
https://slate.com/news-and-politics/2022/12/oral-arguments-colorado-wedding-alito-incomprehensible.html
https://www.bloomberg.com/news/articles/2022-12-07/trump-claims-immunity-over-burn-congress-down-hypothetical
https://www.theatlantic.com/ideas/archive/2022/10/moore-v-harper-independent-legislature-theory-supreme-court/671625/?fbclid=IwAR2ya630ZkNTy9FjtDWn8EWFMn3zhvgGgN8xR_30PuuQaAxjhl2u2tyeVB8
https://www.democracydocket.com/opinion/headed-toward-a-middle-ground-todays-argument-in-moore-v-harper/
https://electionlawblog.org/?p=133564
https://www.finance.senate.gov/imo/media/doc/12.6.22%20Letter%20from%20Chairman%20Wyden%20and%20Chairwoman%20Maloney%20to%20Secretary%20Austin.pdf
https://www.washingtonpost.com/politics/2022/12/07/kushner-democrats-congressional-probe-bailout/
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European Peace Facility expected to be topped up by another €5.5bn DECEMBER 6, 2022 by Valentina Pop
I spoke yesterday with two CEOs who are running companies on the leading edge of change in today’s rapidly evolving economy.
The first was Kent Masters, CEO of Albemarle Corporation, which is hardly a household name but may soon become one. The company is a leading provider of lithium used in electric vehicle batteries. Its market value has increased five-fold since the start of the pandemic, to $31 billion. Masters says the incentives in the Inflation Reduction Act passed by Congress put more fuel on that fire:
“It’s significant. Everyone is positioning themselves to take advantage of it. It will either drive volume or drive profitability. There are both consumer incentives and manufacturing incentives, and they all hinge on manufacturing in North America and where the materials are coming from…We are a U.S.-based company. We already had plans to invest in North America, and now we are accelerating.”
The second was Jeff Green, founder and CEO of The Trade Desk, which operates a digital marketing platform and is riding the wave of growth of video streaming services. His company’s market value has grown three-fold to $24 billion since the pandemic began. “We are the best company nobody has ever heard of,” he says. One of his current challenges is giving all that money away:
“I went from a net worth of $1 billion to a net worth of $5 billion. I signed up for the giving pledge to give away 90% of it, and I am focusing on data philanthropy. It is basically our mission to look at philanthropy similarly to the way venture capital looks at business…When I look at what we have done, there is no doubt that we are having an impact that is exponentially higher per dollar than the federal government has.”
The two conversations were reminders of how today’s rapid disruption creates massive opportunity.
Separately, Citigroup CEO Jane Fraser was Ellen McGirt’s and my guest on this week’s episode of our podcast Leadership Next. Fraser is the first woman to head a major Wall Street bank and has some views about leadership that distinguish her from many of the men who preceded her. An excerpt:
“I view empathy as a hard skill. It’s not soft. This isn’t about being nice. This gives you competitive edge. Empathy in our workforce has enabled us to attract and retain and extraordinary group of people in our organization. We have become an employer of choice. People want to work here because of the positions we’ve taken.”
| China's Covid reopening won't be straightforward |
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China relaxed some of its Covid rules this week as the country inches closer to an exit from its zero-Covid policy. But don't expect a full reopening of China's economy anytime soon.
The fundamental challenge faced by Chinese policymakers is the rising economic cost of maintaining their zero-Covid policy while the vaccination rate for elderly citizens is still low, according to our chief China economist Hui Shan. “The path for the world's most populous and second-largest economy to reopen after almost three years of zero-Covid policy will probably not be straightforward,” she wrote in a report.
Goldman Sachs Research identified four reopening scenarios, with the third scenario being the most likely:
- An immediate, abrupt reopening in a somewhat disorderly manner.
- China launches reopening immediately but manages the pace to cope with the capacity of the health care system.
- China reopens in April 2023 after steady preparations at the beginning of the year. This is the baseline GS Research forecast and is expected to be the most likely path forward. In this scenario, Shan forecasts that China's real GDP growth will rise 1.5 percentage points to 4.5% in 2023, and then to 5.3% in 2024.
- China continues to tighten Covid controls substantially in the months ahead, with significant restrictions for much of next year.
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| The global economy in 2075: Slow growth as Asia rises |
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Our economists and strategists recently published their outlooks for the year ahead on everything from global stocks to the likelihood of a U.S. recession. This week, Goldman Sachs Research economists Kevin Daly and Tadas Gedminas published a report that looks much further ahead — to 2075. They foresee a world in which global economic expansion slows as population growth declines. Emerging economies, and powerhouses in Asia in particular, are forecast to keep catching up to richer countries.
- Economic expansion is ebbing as the world's rate of population growth slows. That rate has halved during the past 50 years — it's now less than 1% — and according to UN population projections, it will stall by 2075. Weakening productivity, linked to a slowdown in globalization, is another reason our economists expect GDP growth to fade.
- In 2050, the world's five largest economies (measured in U.S. dollars) are projected to be China, the U.S., India, Indonesia and Germany, with China overtaking the U.S. as world's largest economy in 2035. India is expected to have the world's second-largest economy by 2075. The prospect of rapid population growth in countries like Nigeria, Pakistan and Egypt implies that these economies — with the appropriate policies and institutions — could become some of the largest in the world in around 50 years.
- Our economists think protectionism and climate change are two of the biggest risks to their projections. Populist nationalists are in power in some countries, and supply-chain disruptions during Covid have resulted in a greater focus on resilience and onshoring. Reconfiguring the world's economy for sustainable growth won't be easy, but many countries have been able to decouple carbon emissions and GDP growth, which demonstrates the possibilities for the global economy as a whole.
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| Asset allocation in 2023: diversification and divergence |
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Market volatility, inflation and positive correlations across assets have raised questions about the benefits of multi-asset portfolios. But as inflation normalizes and growth slows, investors could see greater diversification opportunities, says Christian Mueller-Glissmann, who leads the asset allocation team for Goldman Sachs Research.
Look for greater divergence in growth, inflation, monetary policy and foreign exchange, Mueller-Glissmann tells Allison Nathan, host of Exchanges at Goldman Sachs. We might be entering a phase of more divergence, he says, with the U.S. grappling with rising prices linked to services and the labor market, while in Europe and many other places in the world, inflation is linked to energy. Also China will go through a bumpy reopening. “That could potentially drive major divergences in the inflation picture [and] in monetary policy and FX,” he says.
In addition, “there are definitely more opportunities in fixed income,” says Mueller-Glissmann. Rather than thinking of bonds as providing a buffer and offering negative equity market correlations and diversification benefits, he says, “bonds can have another role in the portfolio, which is to generate returns,” he says. “I think that is coming back. And that's something which we haven't had in a few years.”
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| A US recession risk in 2023? The two factors to watch |
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In our outlooks for 2023, Goldman Sachs Research estimates the U.S. will narrowly avoid a recession next year. Chief Economist Jan Hatzius says there are two opposing forces at play, one positive and one negative – and the positive one should prove stronger.
“On the positive side, real disposable income is now growing…we're expecting real disposable income to grow by more than 3% over the next year,” Hatzius says. “Now, against that, on the negative side, financial conditions have tightened substantially…[the Federal Reserve is] basically leaning against this income improvement because they're trying to keep growth at a below potential pace.”
When you put those two opposite forces together, what we get is a 1% real GDP growth for 2023 — below trend but still positive, according to Hatzius.
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| Blockchain goes well beyond crypto, David Solomon says |
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Blockchain, the decentralized digital ledger technology behind cryptocurrencies, can support responsible innovation across the entire financial industry, according to Goldman Sachs CEO David Solomon.
In The Wall Street Journal, Solomon argues that crypto is only one of blockchain's many applications and that “we shouldn't miss the forest for the trees.”
“The technology is already making our own work more efficient. Using blockchain, we've been building trading platforms where clients can trade with each other in minutes,” Solomon says. “Last week, using our new tokenization platform, we arranged a €100 million two-year digital bond for the European Investment Bank with two other banks, all based on a private blockchain.”
A bond sale like that typically takes five days to settle, but because of blockchain this one only took 60 seconds, Solomon says. “Under the guidance of a regulated financial institution like ours, blockchain innovations can flourish,” he added. |
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| Half of working women believe their retirement savings are behind schedule |
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| The report, which surveyed 1,566 individuals in July and August 2022, describes the headwinds women face in preparing for retirement. The survey found that overall, women are more likely to reach retirement with insufficient savings than men. And only 47% of working women surveyed reported that their retirement savings are either on track or ahead of schedule (vs. 64% of men). |
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| BRIEFINGS brainteaser: Fear factor |
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According to Wall Street's so-called “fear index,” the VIX (also known as the Chicago Board Options Exchange Volatility Index), equity volatility is relatively low compared with recent periods of economic downturns. Which of the years below saw the highest end-of-day peak in the VIX?
A) 2008
B) 2011
C) 2015
D) 2020
Check the answer here. |
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