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The Republican establishment doesn’t know it yet, but last weekend was a watershed moment for their party.
On April 20, House Republican leadership facilitated passage of a foreign-aid package that sends roughly $60 billion to Ukraine, $26 billion to Israel and Gaza, $8 billion to Taiwan, and exactly zero dollars to the southern border. The bill has since passed the Democrat-led Senate and was signed by President Joe Biden.
The vote will be remembered for the choice Republican leadership made to brazenly reject its own voters in favor of the “uniparty” in Washington, D.C.
In a move that can only be described as “McConnell-esque,” House Republican leadership teamed up with Democrats to overrule the position of their own conference, their voters, and the will of the American people.
Democrats on the House Rules Committee made an unprecedented move by crossing the party line and overruling Republican opposition in committee, signaling an end to the typically Democrat versus Republican battle and the beginning of the conservative versus “uniparty” war.
The disconnect between “the Swamp” and small-town America could not be more profound. How can a political party be so tone-deaf to the plight of the everyday Americans suffering under inflation, crime, and societal rot?
How can a Republican-led House prioritize the borders of another country over our own border, even as American citizens are killed by illegal immigrants?
How can so-called fiscally responsible Republicans sign off on what is now $174 billion in direct Ukraine aid with a national debt of $34 trillion—more than $250,000 for every American household?
And how can House Speaker Mike Johnson, who had pledged repeatedly that no foreign-aid legislation would advance without first securing the border, so quickly be steamrolled by the Establishment?
In their desire to send billions of dollars to a conflict that our commander-in-chief has still, to this day, offered no plan for winning, the GOP’s leadership not only spurned their party’s own supporters but overlooked an opportunity to appeal to independent Americans frustrated by both political parties.
According to recent polling that The Heritage Foundation conducted with RMG Research, an overwhelming three out of four swing voters opposed sending any additional aid to Ukraine without also allocating funds for our own border. A majority (56%) of swing voters in key battleground states thought that the $113 billion the United States had already committed to Ukraine was too much.
The entire Heritage enterprise fought for over a year and a half on this issue. Heritage Action for America engaged our millions of grassroots members to voice their concerns to their representatives. Scholars at The Heritage Foundation presented a national security alternative package that included limited military aid to Ukraine but made border security the central focus. In an unprecedented move, we even issued a “key vote” on our legislative scorecard against Speaker Johnson’s convoluted rule, which was a gimmick that lowered the threshold to a simple majority (not a supermajority under suspension) and provided political cover for members to vote against individual pieces without jeopardizing the package.
Powerful interests were aligned against us, however, and we lost on the day. Though we lost this battle, all signs indicate that we are winning the war for the soul of the GOP. A majority of Republicans (112) voted against Ukraine aid on April 20. Younger and newer members are particularly fed up with leadership’s conciliatory approach and manipulative tactics that have led us to this point. The average age of the Senate Republicans who voted “nay” is 59, while the average age of those who voted “yea” is 66. The average “nay” vote has been in office since just 2016, while the average “yea” vote has been in Washington since 2010. The same dynamic was true with the recent $1.2 trillion omnibus spending bill.
This generational shift can be ignored by the “uniparty,” but it’s not going away. Newer, younger representatives want a choice, not an echo; and increasingly, they’re adopting a populist form of conservatism that champions “government of the people, by the people, and for the people” above all else.
In other words, they want a GOP that puts America first, something a government in any healthy republic would do. They want a GOP that acknowledges the reality that America is a nation in decline but is not yet too late to save.
As Ronald Reagan said in his 1980 address accepting the presidential nomination at the Republican National Convention, “For those who have abandoned hope, we’ll restore hope and we’ll welcome them into a great national crusade to make America great again!”
And that brings us to the importance of this year’s election.
In 2016, despite staunch opposition from the GOP leadership, Donald Trump rejected the Washington consensus and initiated a generational realignment in American politics. If the conservative movement leans into the politics and policies President Donald Trump made successful, the American people will again have the opportunity this fall to accelerate a new consensus in Washington, D.C. This is why I remain optimistic about the future of our great nation.
The GOP establishment’s actions this past week portend the end of the GOP establishment, not its survival. Conservatives will win the soul of the GOP, and with it, the hearts of the American people.
Reprinted with permission from The Epoch Times.
The post GOP Establishment’s Days Are Numbered appeared first on The Daily Signal.
President Biden’s Department of Justice appears to be rebuilding a dubious money chain known as “settlement slush funds.” The Obama DOJ used these funds to channel cash from corporate settlements to bankroll private progressive organizations, circumventing the budget and oversight authority of Congress.
On May 5, Attorney General Merrick Garland revoked a Trump-era rule that specifically prohibited the DOJ from directing funds from corporate settlements to finance third-party organizations and causes. The use of these so-called settlement slush funds became so rampant under the Obama administration that the House passed the Stop Settlement Slush Funds Act in 2017 in an attempt to end it. A similar bill was introduced in the Senate but failed to pass.
Under the Obama Justice Department, corporate fines were directed to organizations including the Sierra Club, the National Community Reinvestment Coalition, and the National Council of La Raza. Through arrangements known as Supplemental Environmental Projects (SEPs) and third-party payments, corporations could have their fines reduced if they paid money to organizations that, although not victims in the DOJ suit, were nonetheless approved as beneficiaries.
In addition to reducing fines, these arrangements also gave penalized companies a tax deduction for their charitable contributions, which bought corporate support for the practice and prevented legal challenges. There were hundreds of such arrangements under the Obama administration.
The most notable cases include Volkswagen’s settlement of its emissions cheating scandal, which included a requirement that VW spend $2 billion to build electric filling stations. The Obama administration had twice requested these funds from Congress and been denied, so it used the VW settlement to fund the project instead. Of the $2 billion that VW paid, $800 million went to the state of California.
Settlements with Wall Street banks after the mortgage crisis also featured payments to progressive groups that were favored by Obama’s DOJ. A 2017 congressional hearing revealed internal DOJ memos regarding these settlements, one of which was addressed to then-Associate Attorney General Tony West, asking: “Can you explain to Tony the best way to allocate some money to an organization of our choosing?” Another DOJ email stated that the settlement with Citibank, which included third-party payments, should “not allow Citi to pick a statewide intermediary like the Pacific Legal Foundation,” which the official said “does conservative property-rights free legal services.”
A 2016 congressional report found that:
a year-long Committee investigation has revealed that the DOJ is pushing and even requiring settling defendants to donate money to non-victim third parties. Donations can earn up to double credits against defendants’ overall payment obligations.… Documents show that groups that stood to gain from these mandatory donations lobbied DOJ to include them in settlements.… What is worse, in some cases, DOJ-mandated donations restore funding that Congress specifically cut.
The report further noted that “federal grants come with a litany of rules and procedures designed to ensure that funds are used as intended.… Such controls are entirely absent in DOJ’s banking settlements.” Third-party settlement payments include no provision to track where the funds went, how they were being used, or if they achieved the goals the DOJ intended when arranging the payments.
The DOJ itself was not forthcoming with information regarding these payments. Although the congressional investigation began in November 2014, the report noted that “for over a year, DOJ provided none of the requested internal communications pertaining to the controversial settlement provisions.”
The House Judiciary Committee, however, obtained emails from the president of one of the organizations that received donations from settlement funds, the National Association of Interest On Lawyer Trust Accounts (IOLTA) Programs, stating, “I would like to discuss ways we might want to recognize and show appreciation for the Department of Justice and specifically Associate Attorney General Tony West, who by all accounts was the one person most responsible for including the IOLTA provisions [in the settlement].”
In response, the executive director of the Hawaii Legal Aid Foundation, another recipient, wrote that he “would be willing to have us build a statue [of West] and then we could bow down to this statue each day after we get our $200,000.”
In order to stop this practice, in June 2017 then-Attorney General Jeff Sessions enacted what has become known as the “Sessions Rule,” prohibiting third-party settlements at the DOJ. Immediately upon assuming office in January 2021, however, President Biden directed his administration to review this rule, which his DOJ has now rescinded.
“The fact that they’re spending resources on getting rid of an anti-corruption regulation shows that they intend to engage in the corruption that the regulation was intended to prevent,” said Ted Frank, senior attorney at the Hamilton Lincoln Law Institute. “It’s a good way to avoid voter accountability, and it gives power to the DOJ that Congress didn’t give them. They can direct hundreds of millions or even billions of dollars to pet causes.”
Not only do these settlements “disrespect the Constitutional process in a way that is anti-democratic,” said Michael Buschbacher, a former DOJ attorney who helped draft the regulation codifying the Sessions Rule, “it’s also bad environmental policy. The way Congress set things up with the Clean Air Act and the Clean Water Act, the penalties for violating these statutes are enormous. The goal there is designed as this massive deterrent, and what SEPs do is radically undercut that deterrence because penalties get dramatically reduced to pay for these projects.”
Buschbacher also pointed out the potential for corruption in this practice. “It discredits the government and law enforcement as faithful agents in enforcing the law and doing what’s right, and turns government power to the illegitimate end of rewarding one’s friends and punishing one’s enemies.”
When Garland announced his decision to revoke the Sessions Rule, he also declared that his DOJ would prioritize the pursuit of “environmental justice.” This statement coincided with a new ruling by the Securities and Exchange Commission (SEC) that it would require all publicly traded companies to file extensive public reports on their carbon emissions and other climate-related data. Taken together, these and other actions by the Biden Administration signal that they plan to be more aggressive in bringing environmental suits against companies, with less restraint or oversight over where those proceeds go or how they are used.
“It creates an incentive to engage in prosecutions,” Frank said. “It’s one thing if the money is going to the Treasury through the democratic process. That’s a lot less exciting than if you prosecute somebody and the money is going to your favorite pet cause.”
“I don’t think it’s lost on anyone that in the same speech in which [Garland] announced the policy, he suggests that environmental justice is one of the things they’re going to be taking on,” said William Yeatman, a research fellow at the Cato Institute. “They’ve tipped their hand with respect to which groups can expect to benefit. The only limit, unless Congress gets involved, is restraint by the President or by the Justice Department, and that’s in short supply.”
Garland’s memo on third-party settlements stated that “when used appropriately, these agreements allow the government to more fully compensate victims, remedy harm and punish and deter future violations.” The Sessions Rule, the memo states, “is more restrictive and less tailored than necessary to address concerns that these agreements could be used to inappropriately fund projects unrelated to the harm involved in the matter.”
Garland’s new policy includes provisions that the DOJ “shall not propose the selection of any particular third party to receive payments…although the Department may specify the type of entity,” and the DOJ “may also disapprove of any third-party implementor or beneficiary.” In addition, a senior DOJ official must approve third-party settlements.
But these provisions may fail to reassure those who are skeptical about the legality and legitimacy of reviving the Obama-era settlement policies.
A spokesperson for Sen. Tommy Tuberville of Alabama, the Republican who introduced the Senate’s Stop Settlements Slush Funds Act, stated “AG Garland’s memo rightfully recognized the practice under the Obama administration was flawed, but failed to recognize that Congress alone has the ability to direct federal funds, including those obtained as a result of a settlement. AG Garland’s policy is still an example of executive overreach. Settlement funds should go first to the victims, and then the Treasury. Funds should not go to a third party and be used to advance a political agenda.”
“There needs to be Congressional oversight on this,” Frank said. “There needs to be [Freedom of Information Act] requests, there needs to be somebody figuring out where this money is going.”
“I think the scrutiny that’s on it will probably keep them from doing some of the ridiculous stuff they did last time,” Buschbacher said, “but on the main, this is likely to be a return to the approach under President Obama. One of his key DOJ attorneys involved in these kinds of settlements, Vanita Gupta, has returned for a second tour. Now she’s the number three attorney in the Department and will have final decision-making authority over many of these settlements.”
The Department of Justice was asked to comment on this article but did not respond.
Kevin Stocklin is a writer, film director, and founder of Second Act Films, an independent production house specializing in educational media and feature films. Previously, he worked in international banking for more than a decade.
The post Biden DOJ Brings Back Obama-era Slush Funds appeared first on The American Conservative.
“Give me control of a nation’s money,” an 18th-century banking oligarch once said, “and I care not who makes its laws.” That may have sounded like hubris at the time, but digital technology could soon make it an understatement.
Central bank digital currencies (CBDCs), currently in various stages of development around the world, are being created as a new form of money that, depending on how they are structured, could give government bureaucrats more control over citizens than any law ever could. In contrast to what most Americans today understand as money, commercial bank deposits denominated as dollars, a U.S. CBDC could be issued directly by our central bank to individuals in the form of a “digital wallet.” A digital dollar could also be programmable with controlling features.
On March 9, President Biden took a first step toward creating a U.S. CBDC, directing his administration to report to him by this fall on whether and how to implement a federal digital dollar. And in February, the Boston Fed completed the first phase of Project Hamilton, a CBDC simulation it has been developing together with MIT’s Digital Currency Initiative.
“My Administration places the highest urgency on research and development efforts into the potential design and deployment options of a United States CBDC,” Biden’s order stated. Among the goals he cited for a U.S. CBDC were faster and cheaper payments, financial stability, fighting financial crime, maintaining the preeminence and security of America’s currency, and “financial inclusion and equity.” Biden also ordered a report on “the potential for these technologies to impede or advance efforts to tackle climate change.”
Biden instructed Attorney General Merrick Garland to determine whether or not he will need congressional approval to implement a CBDC, and if so, to draft legislation by October, leading some observers to speculate that Democrats may try to introduce a bill before the midterms. Federal Reserve Chairman Jerome Powell said in March 2021 that he would not move forward with establishing a U.S. CBDC “without support from Congress, and I think that would ideally come in the form of an authorizing law, rather than us trying to interpret our law to enable this.” But what the administration would do if it cannot get legislation passed is unclear.
Nine countries have established CBDCs thus far, and 15 others, including China, Russia, and Sweden, currently have pilot programs in place. Altogether, 87 countries that collectively represent 90 percent of global GDP are in some stage in the development of CBDCs. The European Central Bank (ECB) is also moving forward with the implementation of its own CBDC, the digital euro, and Deutsche Bank predicts that central banks collectively representing one-fifth of the world’s population will issue CBDCs by 2025.
Agustin Carstens, general manager of the Bank of International Settlements, explained one of the key motivations to create CBDCs at an October 2020 IMF seminar: “We don’t know who is using a $100 bill today, we don’t know who’s using a 1,000-peso bill today. The key difference with a CBDC is the central bank will have absolute control of the rules and regulations that will determine the use of that central bank liability, and also we will have the technology to enforce that.”
China has taken the lead on implementation among the world’s major economies, issuing its e-CNY, or digital yuan, in 2020. By the end of 2021, the digital yuan had 261 million users, representing about one-fifth of China’s population, according to the People’s Bank of China.
China issues the e-CNY directly from its central bank to consumers, who set up a digital-wallet app that allows them to buy from vendors by scanning their phone at the point of sale, thereby transferring digital yuan directly from the buyer’s government account to the vendor’s without transaction fees. For those who don’t have a smartphone, a British company called Walletmor now offers microchips that are implanted into a person’s palm. The buyer makes payments by placing his hand over a vendor’s card reader.
China touts the privacy of these transactions; users can set the app so that purchases are anonymous between buyer and seller, just as with cash. Unlike cash, however, the Chinese government can observe and track every transaction.
“They’re dealing with vast amounts of data, so it’s difficult even today with the computers we have to handle it all,” said former Fed official Chris Whalen, chairman of Whalen Global Advisors. “But over time, these networks are only going to get more efficient and more robust, and they’ll be able to chew on this data and follow everything you do, financially.
“A central bank digital currency is not a herald call for freedom,” Whalen said. “In an authoritarian society, it will be used as a means of control.”
“China’s reasons for doing this ought to horrify us all,” said former Fed Vice Chair Randal Quarles, now chairman of the Cynosure Group, “but there’s a concern that we’ll somehow fall behind them.”
“There is a concern that the ECB is doing this, Sweden is doing this, the Brits are looking at it, the world is moving forward, and we’ll be left behind,” Quarles said. “I just don’t think any of that is true. Anyone who has a teenager has heard this argument and pushed back against it. It can’t be just: everyone is doing it, so I need to.”
* * *
The big questions regarding the architecture of a digital dollar system include whether Americans’ CBDC accounts would be held at private banks or the Federal Reserve, and what form the CBDC should take, with proposals ranging from an anonymous digital token to one that is traceable and programmable. Many progressives want the Fed to set up personal CBDC accounts, claiming that such accounts would eliminate banking fees and allow Americans without bank accounts to access our financial system. But some Republicans reject this approach.
In January, Rep. Tom Emmer of Minnesota introduced a bill to ban the Fed from establishing retail CBDC accounts, stating that “not only would this CBDC model centralize Americans’ financial information, leaving it vulnerable to attack, but it could be used as a surveillance tool that Americans should never tolerate from their own government.”
Among American consumers, there does not appear to be significant demand for the government to replace private commercial banks. According to an FDIC report, 94.6 percent of U.S. households had at least one bank account as of 2019, and 97.3 percent of account holders were “very or somewhat satisfied with their bank.”
Private initiatives such as the nonprofit Cities For Financial Empowerment Fund’s Bank On project are working to connect underserved people with affordable banking services, which may prove a simpler and more effective way to achieve inclusion than turning the Fed into a retail bank. Furthermore, it is questionable whether the Fed, or any government agency, realistically could handle hundreds of millions of individual accounts, process trillions of transactions, respond to customer inquiries, and conduct the required anti-money laundering and “Know Your Customer” inquiries that private banks currently perform.
Whether or not private banks remain as intermediaries, however, the Fed’s ability to control the economy would be greatly enhanced if the CBDC were programmable.
“When the White House was asked about the CBDC, they talked about how the currency could be used to improve diversity and equity and inclusion and all these other things,” said Justin Haskins, a director at the Heartland Institute. “The only way that any of this works the way they’re promising is if it is a programmable currency, and that means it can be controlled.”
“This fits right in line with all the ideological justifications for having more regulations, for having the Federal Reserve print more money, for giant welfare programs, for diversity, equity, and inclusion,” Haskins said. “You could accomplish all of those goals with a CBDC that is programmable in a much more effective way, and in a way that gives you political cover because you don’t need to pass a law to do it. You could just do it all through the Federal Reserve.”
In order to make stimulus payments more effective, for example, CBDCs could include negative interest rates, which are a tax on savings, or even expiration dates. This would impel Americans to spend rather than save.
The Fed could also pose restrictions on what CBDCs can be used for. Environmental policy could be implemented through the Fed by, for example, limiting the amount of CBDC a person can spend on gasoline. If the federal government wanted to expand gun control, it could limit CBDC payments for firearms and ammunition. Americans’ ability to access their digital wallets could even be tied to something like vaccination status.
Another critical issue related to CBDCs is their effect on credit. Under our current system, banks leverage dollar deposits and lend them out, effectively creating money for our economy. According to the FDIC, the percentage of households that used credit cards or bank loans increased from 67.9 percent in 2015 to 72.5 percent in 2019. A CBDC system could reduce the availability of credit and lead to its politicization.
“We think of [Europe] as more instinctively socialist than the United States, but there’s not pressure from the left there to disintermediate the private banking system and have the [European Central Bank] become a retail bank,” Quarles explained. But even with private commercial banks still in place, “they estimate that [a digital euro] will still end up taking 12 to 20 percent of the deposits out of the banking system into the central bank, and they have to figure out some way to put that back in. That will come with strings.”
Banks would be unable to leverage CBDC into loans, and it would be left to government authorities to dole out these funds to those individuals whom it favors. Indeed, the ECB is already pursuing a policy of Green Quantitative Easing, in which the central bank provides financing to “non-polluting” companies. Some U.S. officials would like the Fed to also become more active in promoting climate and social justice policies.
Lael Brainard, the current Fed vice-chair, stated in October 2021 that the Fed should get in step with the ECB and other central banks and develop new ways to fight climate change. She pointed to the Fed’s recently established Stability Climate Committee and a Supervision Climate Committee. Regarding social issues, the San Francisco Fed stated that “achieving racial equity fits into the Federal Reserve’s mandate for maximum employment, which is central to our mission.”
The Biden administration has fervently pursued these political and social goals, but many believe this single-minded approach has come at the expense of Americans’ civil liberties. This perception could undermine public trust regarding a digital dollar.
“It will never be a priority of the Biden Administration to defend individual liberty or to ensure that the design of a central-bank digital currency is not going to prevent people from purchasing the products they want or doing things they want,” Haskins said.
Biden-administration agencies, including the CDC, OSHA, the SEC, and the DHS, have been accused, often with the concurrence of federal judges, of unlawfully exceeding the authority given to them by Congress. The administration’s actions have raised concerns about individual liberty, like its attempt to force Covid vaccines on American workers (which a federal judge overturned), its institution of an unpopular mask mandates (also overturned), its proposal that the IRS monitor bank transactions more than $600, its establishment of a Disinformation Board within the Department of Homeland Security (likely to be shut down after public backlash), and the Justice Department’s intimidation of parents who protested at school-board meetings.
But even under ideal leadership, many say the federal government is not the best vehicle to foster financial innovation. America’s private banking and payments system is generally efficient and affordable, and conservatives argue that whatever improvements and innovations Americans may want should come from the private sector, not the Fed.
“The reason the U.S. economy is so resilient and able to generate the growth that we do is because we have a private financial system,” Whalen said. “People who argue for efficiency and say, ‘Let’s have one big public bank,’ they don’t understand. There’s no leverage in a system like that. Then you essentially have China… an allocation system.”
“I’m 100 percent in favor of advances in digital technology,” Quarles said. “But if we want to lead the world in this, we will do that by allowing our private-sector companies to do that, as opposed to having the government come in and do that, with all of the attendant problems of politicization of credit and sacrifice of privacy that come with that.”
Actor Jeff Goldblum famously told dinosaur-engineering geneticists in the blockbuster movie Jurassic Park that their “scientists were so preoccupied with whether they could, they never stopped to think if they should.” Likewise, much of the discussion from central bankers and tech consultants regarding CBDCs has focused on solving logistical problems, with less thought going toward what sort of society the technology would usher in.
“People come at this as just a technical discussion,” Whalen said, “but it is much more. A lot of the researchers I interact with are fascinated by the functionality, but they don’t consider the implications for our system of political economy.”
“It’s one thing to have the government recognize that individuals should be able to have an electronic version of their money, just like we are able to have cash, and not have to hold most of our money in a bank,” said former Assistant Treasury Secretary Greg Zerzan, now an attorney at Jordan Ramis. “But the danger is that well-meaning government officials decide: This is how you should use your money, or we want to take a look and see where your money is going, or we don’t like how you’re using your money so we’re just going to freeze your account.”
Requests sent to the Federal Reserve and MIT’s Digital Currency Initiative for comment for this article were declined.
Kevin Stocklin is a writer, film director, and founder of Second Act Films, an independent production house specializing in educational media and feature films. Previously, he worked in international banking for more than a decade.
The post Biden Admin Takes Steps Toward a Digital Dollar appeared first on The American Conservative.
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