Good morning. Here’s your Daily SITREP for Thursday, 26 October 2023.
TODAY’S BRIEFING:
- READ TIME: 6 Minutes, 50 Seconds
- Inside the Beltway
- (1) Grassley: FBI Shut Down Multiple Investigations into Biden Family
- (2) White House Pushes Ukraine Aid as Economic Recovery
- (3) “MAGA Mike Johnson” Elected Speaker of the House
- (4) White House to Announce AI Executive Order
- Domestic INTSUM
- (5) Retailers May Get Boost from Lower Debit Card Fees
- (6) Utopian Vehicle Strategy Crashes into Reality
- (7) Randy Fine Could Be First Mover in DeSantis to Trump Flip
- Global SITREP
- (8) BRICS Pay System Launched to Challenge Dollar
- (9) Newsom’s Visit to China: A Look Into Future Relations
- (10) Israel Increases Bombardment of Gaza
- (11) Polish Opposition Leader Bends the Knee to European Union
INSIDE THE BELTWAY
- (1) GRASSLEY: FBI SHUT DOWN MULTIPLE INVESTIGATIONS INTO BIDEN: In a letter to Attorney General Merrick Garland, Senator Chuck Grassley (R-IA) said that new evidence shows the FBI Foreign Influence Task Force sought confidential human source reports from 40 sources related to the Biden family from field offices across the country in order to discredit them as foreign disinformation.
- Grassley said there is an effort in the Department of Justice (DOJ) and FBI to shut down any investigative efforts related to the Biden family, and there is a significant political bias infecting the decision-making of the DOJ and FBI that “our Republic cannot survive.”
- Why It Matters: A “smoking gun” is unlikely to connect President Biden to potential illegal or unethical foreign business deals conducted by his family members. However, dubiously legal enterprises run by government officials or agencies are often caught due to attempts to cover up potentially illegal or unethical activity. And Grassley seems to have the strongest evidence yet that a coverup was implemented by DOJ and FBI officials. – R.C.
- (2) WHITE HOUSE PUSHES UKRAINE AID AS ECONOMIC RECOVERY: The White House is quietly urging lawmakers to reframe Ukraine aid as a potential domestic economic boom.
- “As we replenish our stocks of weapons, we are partnering with the U.S. defense industry to increase our capacity and meet the needs of the U.S. and our allies both now and in the future,” the memo said.
- Why It Matters: Allocating money to be spent is not the same as building industrial capacity, and the defense industry is still hamstrung by supply chain disruptions, lead times measured in years, and brain drain as workers with the expertise to build advanced weapons systems are retiring. This move is political theater to get more money but will do little to change the reality on the ground. – R.C.
- (3) “MAGA MIKE JOHNSON” ELECTED SPEAKER OF THE HOUSE: Trump ally Rep. Mike Johnson (R-LA) was elected Speaker of the House with 220 votes after a week of other Republican candidates failing to gain the Speakership and 22 days of the seat being vacant.
- Rep. Matt Gaetz (R-FL) said, “If you don’t think that moving from Kevin McCarthy to MAGA Mike Johnson shows the ascendance of this movement and where the power in the Republican Party truly lies, then you’re not paying attention.”
- Why It Matters: Johnson taking the Speakership appears to be a victory for the Freedom Caucus over the McCarthy-aligned GOP leadership. Johnson is open to passing another Continuing Resolution, so a shutdown fight on 18 November is unlikely. Instead, Republicans are likely to pass appropriations bills with significant spending cuts, putting the ball in the Democrat-controlled Senate’s court. – R.C.
- (4) WHITE HOUSE TO ANNOUNCE AI EXECUTIVE ORDER: President Biden is expected to sign a broad executive order on Artificial Intelligence (AI) on Monday, 30 October, that will require assessments for AI models used by government agencies and ease visa requirements for overseas tech workers.
- Why It Matters: This executive order is ostensibly intended to implement safeguards with government use of AI, but it appears to be a stealth expansion of H1B visas to import more skilled labor. – R.C.
DOMESTIC INTSUM
- (5) RETAILERS MAY GET BOOST FROM LOWER DEBIT CARD FEES: The Federal Reserve proposed an official review of the fees banks can charge retailers for debit card transactions yesterday.
- The 2010 Dodd-Frank financial reform law ordered the Federal Reserve to cap debit card fees at a level that is “reasonable and proportional” to the cost of processing the transaction.
- The fee cap on a $50 debit card transaction would decline from 24.5 cents under the current rule to 17.7 cents under the proposal.
- Why It Matters: This proposal should set up a court battle between banks and retailers. If the Fed lowers the cap and courts uphold the decision, this will be a boon for large-volume retailers and small mom-and-pop retailers, especially with a potential 2024 recession and lower consumer spending. – H.B.
- (6) UTOPIAN VEHICLE STRATEGY CRASHES INTO REALITY: Governments’ push for quick, widespread electric vehicle (EV) adoption and driverless cars has finally run into reality, forcing policymakers and auto manufacturers to adjust plans.
- Honda and General Motors are halting a $5 billion joint venture – announced just last year – to develop affordable EVs for the American market.
- California ordered Honda to remove its driverless cars from state roads this week, calling the vehicles a risk to the public after a recent safety incident.
- Why It Matters: Sales of electrified vehicles – a category that includes plug-in hybrids and fuel cell cars – captured 9% of the U.S. auto market in the first half of 2023. Tesla was the EV leader, outselling its competitors by ten times or more. Tesla’s dominance should continue, but higher interest rates and a lack of affordability for middle-class Americans have popped the EV bubble. – H.B.
- (7) RANDY FINE COULD BE FIRST MOVER IN DESANTIS TO TRUMP FLIP: Florida State Representative Randy Fine (R) publicly shifted his 2024 endorsement from Florida Governor Ron DeSantis to former President Donald Trump.
- Fine said he received messages from colleagues that Fine said were “tinged with envy” and that they “felt stuck” and wanted to change their endorsements from DeSantis to Trump as well.
- Why It Matters: Randy Fine could be the first mover in a wave of Florida Republicans switching their endorsements from DeSantis, whose campaign has been cratering for months now, to Trump, all but handing Florida to Trump in the primary. – R.C.
Global SITREP
- (8) BRICS PAY SYSTEM LAUNCHED TO CHALLENGE DOLLAR: Brazil, Russia, India, China, and South Africa – the BRICS countries – launched BRICS Pay as a new financial settlement platform for the member countries.
- BRICS countries unveiled BRICS Pay in 2019, and the payment method has been under development for the past few years.
- The State Bank of India and the United Kingdom’s Standard Chartered Bank have now integrated BRICS Pay into their digital payment platforms, allowing customers to make payments to other BRICS countries.
- Why It Matters: BRICS Pay is not a decentralized cryptocurrency or central bank digital currency (CBDC). Instead, it uses blockchain technology to facilitate cross-border payments between companies, their suppliers and partners, and investors using member countries’ national currencies. This new payment service will increase the volume of trade and financial transactions between members, but it won’t displace the dollar as the world’s leading currency anytime soon. – H.B.
- (9) NEWSOM’S VISIT TO CHINA: A LOOK INTO FUTURE RELATIONS: California Governor Gavin Newsom is in China for a state visit. He met with Chinese President Xi Jinping, Vice President Han Zheng, and Foreign Minister Wang Yi yesterday.
- Newsom says he hopes to increase cooperation between China and California and provide a pathway to fix China-U.S. relations.
- Newsom signed a Memorandum of Understanding with the National Development and Reform Commission that is focused on climate change.
- Xi said, “the vitality [of China-U.S. relations] lies in sub-national areas” and that he highly values sub-national cooperation.
- Why It Matters: Newsom has referred to California as a nation-state and has repeatedly implied that the state has its own diplomatic power. While it appears that Newsom will sit out 2024, he’s preparing a CV to run in 2028. – M.S.
- (10) ISRAEL INCREASES BOMBARDMENT OF GAZA: Israel increased its bombing of targets in Gaza on Wednesday as it prepares for a ground invasion of the Hamas-led state.
- U.S. President Joe Biden said the future should include a two-state solution for Israel and the Palestinians – an idea now widely regarded as a dead letter.
- At the United Nations, Russia and China vetoed a U.S.-drafted Security Council resolution calling for pauses in hostilities to allow much-needed food, water, and medicine to be delivered to Palestinian civilians.
- Why It Matters: Israel is continuing on its path to a ground invasion of Gaza, despite pressure from the U.S. and the international community to work toward a ceasefire. Israeli leaders likely believe there is no room for pulling back on their promise to hold Hamas terrorists accountable for the murder of 1,400 Israeli citizens. The U.S. position in the Middle East is sketchy due to a rift between hard-left, pro-Hamas administration officials and Department of Defense officials who recognize the danger of a coming regional, or even world war-level, event. China and Russia’s U.N. veto is hardball maneuvering to support their ally Iran in its goal of a wider regional conflict involving the U.S. — a scenario that would most likely distract Washington from the situation in Ukraine and China’s threat to Taiwan. – M.M.
- (11) POLISH OPPOSITION LEADER BENDS THE KNEE TO EUROPEAN UNION: Polish opposition leader Donald Tusk said on Wednesday that Poland must do whatever the E.U. wants in order to unfreeze funds tied to diversity and open immigration policies demanded by Brussels.
- Tusk, who said he was speaking only as the Polish political opposition, is likely to be the next Prime Minister following recent elections that ousted the ruling Law and Justice Party (PiS).
- At stake is Poland’s access to 35.4 billion euros ($37.41 billion) in grants and loans from the EU’s recovery fund.
- Why It Matters: The defeat of Poland’s ruling PiS effectively puts the brakes on populist resistance to E.U. meddling in Poland’s internal affairs. Poland’s PiS government had flatly rejected the E.U. mandates on immigration and diversity – popular themes with Polish voters. However, foreign money poured into opposition party coffers from Germany ahead of recent elections and tilted the outcome in favor of a leftist coalition in Parliament. This will likely introduce instability in Eastern Europe as E.U. member state sentiment begins to swing back to the right following Islamist terror attacks in the region. – 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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