Good morning. Here’s your Daily SITREP for Thursday, 05 September 2023.
- READ TIME: 6 Minutes, 59 Seconds
- Inside the Beltway
- (1) FBI Targets “MAGA Extremists” Heading Into 2024 Election
- (2) Raimondo: We Need Different Tools Against China Chips
- (3) Establishment GOP Jumps to Remove Single Member Motion
- (4) SCOTUS Case Could Prevent Unrealized Gains Taxes
- Domestic INTSUM
- (5) Goldman Sachs: The U.S. Government Will Shutdown in Mid-November
- (6) Healthcare Workers Begin Planned Strike
- Global SITREP
- (7) OPEC+ Members Keep Oil Cuts
- (8) Poland Slams Germany for Attempted Color Revolution
- (9) IMF Says U.S. Will Continue Funding Ukraine
- (10) Kenyan Lawmakers Put Brakes on Haiti Peacekeeping Force
INSIDE THE BELTWAY
- (1) FBI TARGETS “MAGA EXTREMISTS” HEADING INTO 2024 ELECTION: According to classified information obtained by Newsweek, the vast majority of current FBI “anti-government” investigations are targeting supporters of former President Donald Trump.
- An FBI official said the agency risks provoking “anti-government activists” that they hope to counter.
- Another senior intelligence official said, “we’ve crossed the Rubicon” and “Trump’s army constitutes the greatest threat of violence domestically.”
- Why It Matters: FBI and intelligence officials interviewed by Newsweek expressed doubts that “domestic terrorism” is the best way to categorize these investigations targeting Trump supporters. However, the classified information in the report showed that “assessments,” investigations by the FBI that are only based on simple suspicion or association rather than any Reasonable Suspicion or Probable Cause standard, have more than doubled in the last few years while simultaneously formal investigations have declined. And nearly two-thirds of those remaining formal investigations are targeting Trump supporters. The significant increase in “assessments” combined with new AI tools being distributed to the intelligence community and federal law enforcement is a recipe for greater surveillance of Americans engaged in what should be protected political activity or speech, on and offline. – R.C.
- (2) RAIMONDO: WE NEED DIFFERENT TOOLS AGAINST CHINA CHIPS: Commerce Secretary Gina Raimondo said reports of a chip breakthrough by Chinese tech company Huawei were “incredibly disturbing” and the U.S. needs “different tools” and additional resources to enforce sanctions on Chinese chip makers.
- Raimondo said the Restricting the Emergence of Security Threats that Risk Information and Communications Technology (RESTRICT) Act would expand the Commerce Department’s authority to block information and technology transfers to Chinese companies that pose a national security risk.
- Why It Matters: The Biden administration is looking for new ways to target the Chinese tech sector and China-based chip makers now that it appears sanctions have been ineffective after reports of Taiwanese companies, and even a French chemical company, were helping Huawei set up a “shadow network” of chip plants in China. The RESTRICT Act, which would expand the types of technology sales and transactions that the Commerce Department can block, has been stuck in committee in the Senate since March. The new advanced chips and expanding Chinese chip plants could be the push needed to get the RESTRICT Act through Congress. – R.C.
- (3) ESTABLISHMENT GOP JUMPS TO REMOVE SINGLE MEMBER MOTION: Senate Minority Leader Mitch McConnell (R-KY) said the House GOP should eliminate the single-member Motion to Vacate rule after former House Speaker Kevin McCarthy’s (R-CA) ouster, adding that Americans expect a functioning government.
- Why It Matters: The attempt by establishment GOP leadership to eliminate the single-member Motion to Vacate used to oust McCarthy will depend on the outcome of the new Speaker vote next week on 11 October. – R.C.
- (4) SCOTUS CASE COULD PREVENT UNREALIZED GAINS TAXES: A bipartisan group of tax professionals and former GOP staffers are sounding the alarm that the coming Supreme Court case Moore v. U.S., centered on a tax on unrealized foreign earnings in a 2017 tax overhaul, could upend large swaths of the U.S. tax code and hinder Congress’s ability to amend the tax code in the future.
- According to a Tax Foundation report, a ruling beyond the “transition tax” at the center of the case that calls into question other parts of the tax code could undermine trillions of dollars in tax revenue.
- American Enterprise Institute senior fellow Kyle Pomerleau said a broad decision in Moore v U.S. could prevent a future Congress from implementing taxes on unrealized gains.
- Why It Matters: A broad decision, in this case, could undermine progressives’ push to tax unrealized gains on investments and real estate that, despite their statements that they would target the wealthy, would hit blue-collar, middle-class Americans who are already economically hurting. At the same time, a broad decision could also cripple Congress’s ability to raise revenue when deficit spending is out of control and national debt is compounding. $275 billion was added to the national debt in the last 24 hours. – R.C.
- (5) GOLDMAN SACHS: THE U.S. GOVERNMENT WILL SHUTDOWN IN MID-NOVEMBER: This week’s removal of Congressman Kevin McCarthy (R-CA) as House Speaker will lead to a U.S. government shutdown on 18 November, according to Goldman Sachs economists.
- The next House Speaker will be under even more pressure to fully fund the government than former Speaker McCarthy had been, Goldman wrote.
- Congress must pass the 12 necessary full-year spending bills before funding expires on 17 November, but there’s a $120 billion difference between the parties on the preferred spending level for fiscal year 2024.
- Why It Matters: Goldman Sachs’ base case is a government shutdown that will last for two weeks or less. A shutdown that lasts over two weeks would have political consequences, namely a failure to pay military members and national security civilian workers. Republicans cannot afford this political baggage heading into an election year with a slim majority on the line. – H.B.
- (6) HEALTHCARE WORKERS BEGIN PLANNED STRIKE: More than 75,000 nurses and other healthcare employees started a planned three-day strike at Kaiser Permanente facilities across the U.S. on Wednesday after failed contract talks with the workers’ unions.
- “Both Kaiser Permanente management and coalition union representatives are still at the bargaining table, having worked through the night in an effort to reach an agreement,” Kaiser said in a statement yesterday.
- The eight healthcare workers’ unions formed a coalition to push for better wages and more staff, as Kaiser needs to hire 10,000 more workers to fill vacancies, according to union representatives.
- Why It Matters: Organized labor is gaining more leverage in contract negotiations across industries. This strike against Kaiser Permanente, one of America’s leading not-for-profit healthcare networks, is the largest strike ever in the U.S. medical industry, with 40% of staff on the picket line. Kaiser said its hospitals and emergency departments will remain open through the strike, and the greatest impact will be felt in California, Colorado, Oregon, and Washington state. – H.B.
- (7) OPEC+ MEMBERS KEEP OIL CUTS: Saudi Arabia, Russia, and an OPEC+ panel decided in yesterday’s meetings to keep their voluntary oil supply cuts in place.
- “The committee will continue to closely assess market conditions,” according to the OPEC+ statement after Wednesday’s online meeting.
- Saudi Arabia and Russia confirmed earlier Wednesday that their separate, voluntary cuts of 1 million barrels per day and 300,000 barrels per day, respectively, will be in place through December 2023.
- Why It Matters: The price of Brent crude oil has jumped about 20% since the June lows. The latest estimates show a 2-3 million barrel per day global deficit, which could increase if Saudi Arabia, Russia, and OPEC+ cut more supply from the market. Oil prices should remain above $80 per barrel on a weekly average for the remainder of the year despite a slowing global economy. – H.B.
- (8) POLAND SLAMS GERMANY FOR ATTEMPTED COLOR REVOLUTION: Ahead of Poland’s mid-October national elections, the ruling Law and Justice party (PiS) accused Germany of meddling in its elections and attempting to install a pro-German liberal opposition candidate.
- Prime Minister Mateusz Morawiecki accused Germany of funding the political opposition to force the reintroduction of liberal E.U. policies on immigration and climate change.
- The feud between the two NATO allies threatens the future of a joint Polish-German main battle tank repair facility used by Ukraine.
- Why It Matters: Poland has been pressured by the E.U. to relax its immigration policies and embrace liberal E.U. diversity initiatives. PiS has pushed back on what it calls E.U. interference in its internal politics, specifically German support for Polish political opposition groups. The resulting friction has carried over onto the NATO alliance, with Poland’s Prime Minister threatening to stop all military aid to Ukraine. PiS will likely win in the upcoming elections, but the friction between Warsaw and Berlin will persist – threatening overall European support for Kiev in its war with Russia. – M.M.
- (9) IMF SAYS U.S. WILL CONTINUE FUNDING UKRAINE: Officials with the International Monetary Fund said they expected the U.S. to continue its military and humanitarian aid to Ukraine despite efforts in Congress to halt the program.
- IMF European Deputy Director Uma Ramakrishnan said at a news conference that “President Biden has made an announcement that he is fully committed to supporting Ukraine.”
- IMF officials said foreign aid to Ukraine was keeping the country afloat, and its economy was doing quite well as a result.
- Why It Matters: Halting aid to Ukraine is a major agenda item for Republican lawmakers upset with what they say is a money laundering operation washing U.S. aid money back to politicians and wealthy donor-class individuals. The confidence expressed by IMF officials that the Biden administration will disregard or overcome the resistance from Congress appears to indicate potentially inappropriate backchannel assurances have been made by administration officials. – M.M.
- (10) KENYAN LAWMAKERS PUT BRAKES ON HAITI PEACEKEEPING FORCE: On Wednesday, Kenyan lawmakers said that parliamentary approval is required before the controversial U.N. peacekeeping mission to Haiti can proceed.
- Opposition lawmakers said conditions for foreign deployment of Kenyan forces had not been met under the country’s National Police Act.
- Kenyan Foreign Minister Alfred Mutua was reassigned on Wednesday to the Office of Tourism Affairs after he told reporters that the peacekeeping force would deploy “within a short time.”
- Why It Matters: The Haiti peacekeeping mission has taken over a year to fill with an acceptable security force. In the meantime, Haitian gangs have strengthened their control of the country, making for a difficult and hazardous environment for inbound Kenyan forces. Kenyan lawmakers are complaining that the country’s security situation with al-Qaida and al-Shabaab has not been stabilized sufficiently for the country to dispatch troops to Haiti. Expect further delays in the departure of the Kenyan peacekeeping force while approval for the mission works its way through Kenyan politics. – M.M.
— END REPORT
M.S. indicates analyst commentary from Mike Shelby
M.M. indicates analyst commentary from Max Morton
J.V. indicates analyst commentary from Jared Vaughn
R.C. indicates analyst commentary from Robert Cook
H.B. indicates analyst commentary from Harrison Burge
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