The congressional Republicans fiercely defending President Trump's conduct in a July phone call with his Ukrainian counterpart are leaning on a legal technicality.
The president, they say, did nothing wrong by pressuring Ukrainian President Volodymyr Zelensky to investigate one of his chief 2020 rivals, former vice president Joe Biden, because he never framed the request as an explicit quid pro quo in exchange for military aid.
Critics say the argument is extremely tenuous: Any rational person reading the rough transcript of the call would understand Trump made clear Zelensky should open a probe to ensure the release of the $390 million aid package.
Yet Sen. Lindsay Graham (R-S.C.), describing the threshold for a quid pro quo, suggested the president would have needed to say something like, “‘Uh, hey pal, you know, you need to like, go after the Bidens or I ain’t gonna give you any money.’ He’d be really, like, thuggish about it.”
Some election law experts say Graham has a point: Through a series of decisions over the past two decades, courts have raised the bar almost impossibly high for prosecutors seeking to prove public officials have traded their power for personal gain. The resulting dynamic undergirds Washington’s swamp economy — a system protecting the outsize influence of donors and lobbyists by allowing them to keep goodies flowing to policymakers, while ensuring those in power don’t face scrutiny for horse-trading.
“Quid pro quo being a high legal standard is a fair point,” says Noah Bookbinder, executive director of Citizens for Responsibility and Ethics in Washington, “though the words in that phone call come a lot closer to proving quid pro quo than you see in a lot of cases.”
The case that began chipping away at the public corruption standard unfolded in the shadow of the last presidential impeachment. Two weeks before President Bill Clinton was impeached by the House in December 1998, a federal court acquitted his agriculture secretary, Mike Espy, of corruptly taking sports tickets and other lavish gifts from lobbyists for companies he regulated. Prosecutors said Espy accepted $34,000 worth of sports tickets, luggage and other lavish gifts from lobbyists. But the court found Espy hadn’t violated an illegal gratuities statute in doing so, because prosecutors failed to prove he took any official action in exchange.
“Going into that case, people thought this was pretty straightforward,” says the Brookings Institution’s Darrell West. “But what it revealed is that you have to demonstrate you got a benefit and you did something in return … Trump could easily defend himself by saying he just wanted to establish warm relations between the two countries, and he wasn't doing something in return for a campaign benefit.”
West said the Espy verdict had a chilling effect on public corruption cases. And decisions in subsequent cases further eroded the legal standard.
The U.S. Supreme Court has helped turn the tide. A 2010 ruling involving the former Enron executive Jeff Skilling, for example, narrowed the so-called honest-services fraud statute. “The court restricted the use of the provision to only the most egregious forms of fraud, such as bribery and kickbacks, disallowing the charge for grayer types of corporate malfeasance,” Jesse Eisinger writes in the book "The Chicken**** Club.”
Bookbinder says while the decision was aimed primarily at corporate defendants, it had a spillover effect for public officials facing potential corruption charges, as well.
The high court in 2016 ripped some more pages from the prosecutors’ playbook by unanimously overturning the conviction on public corruption charges of Virginia Gov. Robert McDonnell. The Republican had taken more than $175,000 in loans and gifts from a Richmond businessman who wanted state universities to test a dietary supplement his company had developed.
But as The Post’s Robert Barnes wrote at the time, the tests were never conducted and the gifts didn’t violate state law. Writing for the majority, Chief Justice John Roberts reasoned, “There is no doubt that this case is distasteful; it may be worse than that. But our concern is not with tawdry tales of Ferraris, Rolexes, and ball gowns. It is instead with the broader legal implications of the Government’s boundless interpretation of the federal bribery statute.”
These laws are written, of course, by people subject to them. “They’re looking to protect themselves, and the laws have been interpreted very narrowly by the courts,” Bookbinder says. “Courts can be very sympathetic to public officials. Judges don't seem to like broad public corruption laws.”
Whether that stems from judicial philosophy or an interest in avoiding antagonizing another branch of government, the upshot has been good for the swamp. In the 20 years since the Espy decision, spending on federal lobbying alone has more than doubled, from $1.45 billion in 1998 to $3.46 billion last year, according to the Center for Responsive Politics.
George Brown, one of the prosecutors in the Espy case who now teaches at the Boston College of Law, says in Trump’s case, “if I was a lawyer in the House, I would say even though I can't point to a statute, that doesn’t mean this is not grounds for impeachment… We don’t have a federal crime of ‘abuse of office.’ But this is an abuse of office.”
And Democrats who have now launched a formal impeachment inquiry don’t need to meet a legal standard to press ahead. The Constitution gives lawmakers wide latitude to determine what constitutes presidential “high crimes and misdemeanors.” And Trump may have broken the law anyway, since it is a crime to solicit a campaign contribution from a foreign citizen, and a foreign corruption probe aimed at a rival arguably constitutes an in-kind donation.
Trump and his defenders nevertheless continue emphasizing the lack of an explicit deal between the president and Zelensky. White House press secretary Stephanie Grisham tweeted it:
❌ Myth: The President made a “promise” to Zelensky in return for reviving an investigation relating to Joe Biden and Hunter Biden.— Stephanie Grisham (@PressSec) September 26, 2019
✔️ Fact: There was no promise. The President wanted allegations of corruption potentially involving an American official to be investigated.
The talking points the White House distributed to congressional Republicans — which they accidentally sent to Democratic offices, as well, before trying to recall them — led with the no-quid-pro-quo argument. And some top Republicans on the Hill are sticking with it:
We have the transcript.— Steve Scalise (@SteveScalise) September 26, 2019
So why did Schiff make up his own version of the call in a Congressional hearing?
Because he knows the transcript shows no quid pro quo or crimes.
Dems are literally making stuff up now because they have no legitimate reason to impeach @realDonaldTrump. pic.twitter.com/i4138ocqJ3
PROGRAMMING NOTE: We'll be publishing three days a week, starting next week, as Congress heads out for a two-week recess. See you back here Tuesday.
— Jobless claims increase to three-week high: “Filings for U.S. unemployment benefits rose for a second week but remained near historically low levels, a sign the labor market remains broadly robust,” Bloomberg News’s Reade Pickert reports.
“Jobless claims rose 3,000 to a three-week high of 213,000 in the week ended Sept. 21, according to Labor Department figures released … that were about in line with estimates in Bloomberg's survey. The four-week average, a less-volatile measure, fell to 212,000, the lowest since late July.”
- Consumer confidence is also dropping: “U.S. consumer comfort fell for a third week as views of the buying climate dimmed to the weakest level since June, adding to signs consumer spending will moderate after the strongest quarter since 2014,” Bloomberg’s William Edwards reports. “The Bloomberg Consumer Comfort Index slipped to 61.7 in the week ended Sept. 22 from 62.7 the prior week, data released Thursday show. The buying gauge eased to 54.3 from 54.5 with views on personal finances and the national economy also posting declines.”
— Business investment drop-off was steeper than we thought. Reuters's Lucia Mutikani: "U.S. business investment contracted more sharply than previously estimated in the second quarter and corporate profit growth was tepid, casting a shadow on an economy that is being stalked by financial market fears of a recession... The soft investment and sluggish profit gains, reported by the Commerce Department on Thursday, could raise doubts on consumers’ ability to continue driving the economy...
"Business investment declined at a 1.0% annualized rate last quarter, the government said in its third reading of second-quarter gross domestic product. That was the steepest decline since the fourth quarter of 2015."
— Housing gains are underwhelming: “The housing market is a bit better lately. But considering the overall economic environment, the improvement still counts as underwhelming,” the WSJ’s Justin Lahart reports.
“The National Association of Realtors reported that its index of pending home sales — sales of previously owned homes that are under contract but haven’t been finalized — bounced back in August, putting it 2.5% above its year-earlier level. That follows … [the] Commerce Department report showing that new-home sales jumped last month and last week’s report that existing-home sales firmed in August.”
- Putting the gains in perspective: “Combined new- and existing-home sales have gotten back only to where they were in the beginning of last year. And they are about level with where they were in 2000, when the U.S. population was significantly lower than it is now.”
— U.S.-China talks set to resume next month: "Trade talks between the U.S. and China are set to resume Oct. 10-11 in Washington, D.C., three people close to the talks told CNBC," CNBC's Kevin Breuninger and Kayla Tausche reports. "Chinese Vice Premier Liu He will be representing the delegation from Beijing, one of the people told CNBC."
"Liu visited Washington this spring sporting the title 'special envoy,' empowering him to negotiate on behalf of President Xi Jinping and pledge to buy American soybeans in the Oval Office with [Trump]. But Liu was stripped of that title on a subsequent trip, after hardliners within the Communist Party balked at some of the concessions to which he had agreed."
Meanwhile, China says it is buying agriculture products: China says it has purchased “a ‘considerable’ amount of U.S. soybeans and pork ahead of the next round of trade talks in Washington,” CNBC’s Yun Li reports.
“Ministry of Commerce spokesperson Gao Feng said at a press conference that the U.S. and China are maintaining ‘close communication’ in preparation for the negotiations next month. He confirmed China has resumed its purchase of American farm goods and said the tariffs on those orders will be exempted.”
— Lumber mills slash jobs amid trade war: “The big bet that U.S. hardwood lumber companies placed on China over the past two decades is collapsing,” the Wall Street Journal’s Austen Hufford reports.
“China was a savior of sorts for the industry after the financial crisis last decade. Customers there kept buying oak and ash boards in large quantities, while construction and furniture production fell in the U.S. Now, after Beijing placed retaliatory tariffs of up to 25% on imports of lumber and other U.S. wood products, exports of hardwood lumber to China have fallen 40% this year.”
— Effects of GM strike start to spread: “The United Auto Workers strike at General Motors Co. is starting to take a toll on businesses throughout Michigan, creating a growing threat to the state’s already-slowing economy,” the WSJ’s Kris Maher reports.
“Michigan’s economy faces the greatest exposure from a prolonged strike, because it has about 15 GM manufacturing facilities employing tens of thousands of workers, more than any other state … The work stoppage had cost GM hourly workers and others in Michigan not working due to the strike a total of about $9.3 million a day in lost wages by the end of last week, according to the Anderson Economic Group. For the state, that meant about $400,000 in income-tax revenue a day.”
- GM reverses decision on striking workers’ health care: The automaker said “it will pay for the health insurance of its striking hourly workers, reversing a decision to push the costs onto the United Auto Workers union,” Reuters’s Ben Klayman reports. “The UAW had accused GM of blindsiding them with the decision to drop coverage during the strike, and some workers had claimed they could not pay their medical bills as a result. The union seized on this issue to rally public and political support for the 48,000 striking workers.”
— Telsa stock jumps after Musk’s comments: “Shares of Tesla jumped more than 5% after Electrek, an electric vehicle news website, reported that CEO Elon Musk said the company ‘has a shot’ at delivering 100,000 cars this quarter, which would be a new record,” CNBC’s Jasmine Kim reports.
“Electrek attributed the update to a leaked email from Musk sent to his employees at Tesla. Musk wrote in the email: ‘We have a shot at achieving our first 100,000 vehicle delivery quarter, which is an incredibly exciting milestone for our company!’ ”
— WeWork’s CEO voted to oust himself: “When WeWork’s directors voted on Tuesday to oust Adam Neumann as chief executive after a failed attempt to take the office-sharing startup public, Neumann cast his vote against himself, according to three people familiar with the situation,” Reuters’s Joshua Franklin, Anirban Sen and Koh Gui Qing report.
“The vote by Neumann, who remains non-executive chairman but gave up majority control of the company he co-founded, was the culmination of a stunning coup to remove him led by his biggest backer, Masayoshi Son, the billionaire CEO of SoftBank Group Corp, these sources said.”
— Senate passes stopgap spending bill: "The Senate passed a stopgap spending bill ... to keep the government open through Nov. 21, punting tough decisions about [Trump’s] border wall and other funding disputes until just before Thanksgiving," my colleague Erica Werner reports.
"The 82-15 vote came days before the Sept. 30 deadline when government funding would expire if Congress didn’t act. The House passed the same measure last week, so the Senate’s passage of the short-term spending bill means it will now go to Trump for his signature. He is expected to sign it."
- What's next: "The stopgap bill is aimed at giving lawmakers more time to finalize $1.4 trillion worth of full-year spending bills for fiscal 2020, which ends Sept. 30, 2020. The bipartisan vote on the spending measure came despite a Capitol in chaos over House Democrats’ new impeachment inquiry of Trump and a whistleblower complaint against Trump related to a call he had with the president of Ukraine."
— Wall Street Democrats warn they'll boycott if Warren wins nod. CNBC's Brian Schwartz: "Democratic donors on Wall Street and in big business are preparing to sit out the presidential campaign fundraising cycle — or even back President Donald Trump — if Sen. Elizabeth Warren wins the party’s nomination. In recent weeks, CNBC spoke to several high-dollar Democratic donors and fundraisers in the business community and found that this opinion was becoming widely shared as Warren, an outspoken critic of big banks and corporations, gains momentum against Joe Biden in the 2020 race."
- A "senior private equity executive": "You’re in a box because you’re a Democrat and you’re thinking, ‘I want to help the party, but she’s going to hurt me, so I’m going to help President Trump.’”
- An "executive at one of the nation's largest banks," on hedge fund and bank executives: "They will not support her. It would be like shutting down their industry."
- A "hedge fund executive": "I think if she can show that the tax code of 2017 was basically nonsense and only helped corporations, Wall Street would not like the public thinking about that."
I'm fighting for an economy and a government that works for all of us, not just the wealthy and well-connected. I'm not afraid of anonymous quotes, and wealthy donors don't get to buy this process. I won't back down from fighting for the big, structural change we need. https://t.co/nx7GczQhHl— Elizabeth Warren (@ewarren) September 26, 2019
Via the NYT's Emily Flitter:
A regional bank CEO recently told me that the scariest things about Warren are that she'll appoint a CFPB head who sides only with consumers & could constrain banks through even higher capital requirements & more limitations in things like payday loans https://t.co/WdWJ7fT0Wu— Emily Flitter (@FlitterOnFraud) September 26, 2019
The NYT's Paul Krugman:
This sort of confirms Warren's whole worldview, doesn't? Big Finance, given the choice between treason and a wealth tax, chooses treason https://t.co/hcnGcpY4vq— Paul Krugman (@paulkrugman) September 26, 2019
And my colleague Dave Weigel:
Did... did the Warren campaign pay for this https://t.co/eQ4MsTR0kR— Dave Weigel (@daveweigel) September 26, 2019
Biden, not to be outdone, is weighing a new Wall Street tax, my colleague Jeff Stein scoops: "The plan under consideration from Biden’s advisers could tax financial transactions such as the sale of stocks and bonds, one of the people said... Biden, under pressure throughout the presidential campaign to move left on a range of policy issues, has embraced several ideas to increase taxes on the rich and on corporations but so far has not gone as far as his two main rivals."
The backdrop: Record-high income inequality. The Post's Taylor Telford: "Income inequality in the United States has hit its highest level since the Census Bureau started tracking it more than five decades ago, according to data released Thursday, even as the nation’s poverty and unemployment rates are at historic lows. The gulf is starkest in wealthy regions along both coasts such as New York, Connecticut, California and Washington, D.C., as well as in areas with widespread poverty, such as Puerto Rico and Louisiana. Equality was highest in Utah, Alaska and Iowa.
"And while the nation is in the midst of its longest economic expansion, nine states saw spikes in inequality from 2017 to 2018: Alabama, Arkansas, California, Kansas, Nebraska, New Hampshire, New Mexico, Texas and Virginia."
— SEC finalizes rule to encourage IPOs. Reuters's Katanga Johnson: The U.S. Securities and Exchange Commission on Thursday finalized a new rule that allows all companies to privately sound out prospective investors before filing for a stock exchange listing. The so-called 'testing-the-waters' rule, which currently only applies to smaller firms preparing to go public, will now be extended to all prospective issuers hoping to gauge broader market interest before filing registration statements for initial public offerings, the SEC said.
"The move, which the agency’s commissioners unanimously voted to approve on Wednesday, is part of a broader push by SEC Chairman Jay Clayton to make it easier for companies to go public, amid worries that a 50 percent decline in U.S. listings over the past two decades is hurting investors."
The context: Big-ticket IPOs have been a big disappointment this year, as the NYT's Matt Phillips, Stephen Grocer and Erin Griffith report: "This was supposed to be the year when America’s biggest start-ups would finally make their triumphant debut on the stock market. Billionaire Silicon Valley investors, sneaker-clad founders and button-down bankers all expected enormous stock sales to turn companies like Uber, Lyft and WeWork into a new generation of corporate giants.
"It hasn’t quite turned out that way. Last week, WeWork postponed its planned initial public offering. Uber and Lyft sold shares earlier this year only to see their prices collapse. Investors took a look and backed away, seeing overpriced companies with no prospect of making money any time soon, in some cases led by untested executives. On Thursday, Peloton joined the list with a disappointing first day of trading."
From Mike Luckovich: