What to Know in Washington: Defense Policy Bill at Risk on Iran

Senate Democrats may be preparing for a standoff over Donald Trump’s strategy in Iran, and the annual defense policy bill could provide the vehicle for their opposition to the president.

The Senate voted 86-6 last night to officially begin debate on the fiscal year 2020 defense authorization bill. But despite the votes to debate the traditionally bipartisan, must-pass measure, its adoption is no longer a sure thing.

Democrats indicated they could delay the adoption of the bill because they want consideration of an amendment sponsored by Sen. Tom Udall (D-N.M.) that would prohibit any funds authorized under the National Defense Authorization Act to be used in “hostilities” against Iran, Senate Minority Leader Chuck Schumer (D-N.Y.) said on the Senate floor.

The $750 billion bill authorizes spending for defense programs at the Pentagon and other agencies. The Senate Armed Services Committee approved the measure 25-2 in May, an example of the bipartisan support the bill draws each year.

There are almost 600 amendments filed to the measure and Sens. Jim Inhofe (R-Okla.) and Jack Reed (D-R.I.), the leaders of the Senate Armed Services Committee, have worked to get agreement on amendments that they offered as part of an en bloc package.

Earlier yesterday, Schumer also said the chamber should delay a vote on the bill because not all senators will be available this week to vote. Some Democrats are likely to miss votes, Schumer said, because they will be participating in the party’s presidential primary debates starting Wednesday. Schumer added that President Donald Trump should seek congressional authorization if he’s going to engage in war with Iran.

The Senate will continue consideration of the measure today. Senate Majority Leader Mitch McConnell (R-Ky.) has filed for cloture on the bill, limiting debate on it.

Meanwhile, Trump told The Hill in an interview yesterday that he believes he possesses the authority to strike Iran without the approval of Congress. “I like the idea of keeping Congress abreast but I wouldn’t have to do that,” Trump said. He decided not to order airstrikes on Iran “because it wasn’t really proportional,” he told The Hill.

Photographer: Andrew Harrer/Bloomberg

Iran, U.S. Trade Blame at U.N.: The U.S. and Iran blamed each other for rising tensions as they exchanged barbs at the United Nations yesterday while other members urged both sides to de-escalate. Outside a session of the Security Council called by the U.S. — where Iran wasn’t allowed to participate — Iran’s Ambassador Majid Takht Ravanchi told reporters “you cannot start dialogue with someone who is threatening you, who is intimidating you.”

But Jonathan Cohen, the acting U.S. ambassador, said Iran was responsible for the recent attacks on tankers in the Gulf of Oman, and urged the Tehran government to “meet diplomacy with diplomacy.” He said he presented other Security Council members with evidence refuting Iran’s denial that it was behind the attacks and argued that an American drone shot down by Iran wasn’t in the Islamic Republic’s airspace. While Cohen told the Security Council that “it’s time for the world to join us” in saying Iran perpetrated the tanker attacks, the council stopped short of that. In a statement, it said only that it condemned the incidents as “a serious threat to maritime navigation and energy supply,” David Wainer reports.

Iran said today that the path to a diplomatic solution with the U.S. had closed after the Trump administration imposed sanctions against its supreme leader and other top officials.

Trump yesterday unveiled sanctions on Ayatollah Ali Khamenei and eight senior military commanders that deny him and his office access to financial resources. Treasury Secretary Steven Mnuchin said financial restrictions would also be introduced against Iran’s Foreign Minister Javad Zarif later this week.

“The futile sanctions against the Iranian leader and the country’s chief diplomat mean the permanent closure of the diplomatic path with the government of the United States,” the Foreign Ministry’s spokesman, Abbas Mousavi, was quoted as saying by the semi-official Iranian Students News Agency. “The Trump government is in the process of destroying all the established international mechanisms for maintaining global peace and security.” Read more from Golnar Motevalli.

Also Happening on the Hill

Border Battle: The House could vote as soon as today on Democrats’ plan to provide billions for humanitarian needs at the border. But lawmakers aren’t sure they’ll be able to strike a deal before leaving town on Thursday, as House and Senate negotiators appear unlikely to quickly reconcile their differences, Jack Fitzpatrick reports.

The House plans to vote on a $4.5 billion measure that, unlike the Senate bill, would require the Trump administration to send aid to Central America and excludes $145 million for the military. That measure appears unlikely to gain much bipartisan Republican support and might be close to the 217 needed for a majority.

“We’re working on it,” House Majority Whip Jim Clyburn (D-S.C.) said when asked if Democrats had the votes to pass the measure.

The White House yesterday issued a statement of administration policy against the House’s supplemental funding measure for the southern border. The administration “strongly opposes” the plan, “a partisan bill that underfunds necessary accounts and seeks to take advantage of the current crisis by inserting policy provisions that would make our country less safe,” the White House said.

Trump also opposes a Financial Services spending package the House will consider later this week, which “would put the Federal Government on track to add nearly $2 trillion to deficits over 10 years.” If the bill were presented to Trump, his advisers would recommend he veto the measures.

Reining in Transit Agency on Funding Delays: House lawmakers want to keep the pressure on the Federal Transit Administration to move project money out the door with the transportation funding bill this week and an oversight hearing in July, providing potential clues for what they’ll want in a surface transportation policy re-write. The Capital Investment Grant program funds rail and bus rapid transit projects, but the administration sought to cut all transit grants in its 2018 and 2019 budget proposals except for those with full funding already in place. Read more from Shaun Courtney.

White House Rejects Conway Testimony Request: The White House told the chairman of a House committee that Kellyanne Conway, a top aide of Trump’s, would not testify before the panel. Last week, a federal government watchdog recommended that Conway be “removed from federal service” for disparaging Democratic presidential candidates in her official capacity as a senior White House adviser. A report by the independent U.S. Office of Special Counsel said Conway violated the Hatch Act, which prohibits federal officials from conducting politics while acting in their capacity as a federal employee. Read more from John Harney and Billy House.

Paul Could Slow Senate Tax Treaty Progress: Senate progress on tax treaties could once again be stalled. Sen. Rand Paul (R-Ky.) plans to offer amendments this week that could derail Senate efforts to make progress on tax treaties for the first time in nearly a decade. He plans to introduce information-sharing amendments into four protocols amending existing tax treaties, a source with knowledge of the matter said. Paul’s amendments would make it harder for both foreign governments and the U.S. to request or share taxpayer information when the tax authority suspects wrongdoing. Read more from Isabel Gottlieb and Kaustuv Basu.

Movers & Shakeups

Kavanaugh Confirmation Attorneys Get New Roles: Andrew Ferguson, a key player during the fight to confirm Justice Brett Kavanaugh to the Supreme Court, is expected to become McConnell’s top attorney, a source close to the process told Bloomberg Law. Ferguson clerkedfor Justice Clarence Thomas and was an associate at Bancroft PLLC, the firm that included former U.S. Solicitor General Paul Clement and later merged with Kirkland & Ellis. He will leave his job as chief nominations counsel for Judiciary Chairman Lindsey Graham (R-S.C.).

Justice Department official Michael Fragoso is expected to replace Ferguson as chief nominations counsel for Graham, a Justice Department spokesman said. Fragoso served as a deputy in the Department of Justice’s Office of Legal Counsel, where he’s been involved with the vetting of Trump’s judicial nominees including Kavanaugh. Read more from Patrick L. Gregory.

Trump Says He’d Fill SCOTUS Vacancy Before: Trump told The Hill yesterday in an interview he would make a nomination to the Supreme Court if there was a vacancy ahead of the 2020 election. His remarks suggest a reversal for Trump who as a candidate in 2016 backed Senate Majority Leader McConnell’s decision to block President Barack Obama’s nomination of Merrick Garland to the court. “If there were three days left, I’d put somebody up hoping that I could get ‘em done in three days,” Trump said.

Arnold & Porter Taps Elwood for SCOTUS Group: Arnold & Porter snagged Supreme Court veteran John Elwood to head its Appellate and Supreme Court practice. Elwood, who started yesterday, moved over from Vinson & Elkins to replace Supreme Court superstar Lisa Blatt, who left the firm in January for Williams & Connolly. “It’s a very big platform for what I want to do,” Elwood said in an interview about Arnold & Porter, citing its strong presence in the nation’s capital and its litigation prowess. Read more from Melissa Heelan Stanzione and Rebekah Mintzer.

Mueller Prosecutor Joins Paul Weiss: Former prosecutor Jeannie Rhee said she believes her move to become a litigation partner at Paul Weiss after two years on Special Counsel Robert Mueller’s team will open up a whole new chapter in what’s already been a high-powered career. Rhee told Bloomberg Law “it was a privilege and a honor” to be part of the Mueller team investigating Russian cyber, social media and intelligence efforts to influence the 2016 presidential elections. Rhee, a former partner at Wilmer Cutler Pickering Hale and Dorr, said she hopes at Paul Weiss she can focus on sophisticated legal work and helping grow diversity in the profession, Meghan Tribe reports.

CFTC International Affairs Office Head to Leave: The Commodity Futures Trading Commission announced today that Eric J. Pan, Director of CFTC’s Office of International Affairs, will leave the agency in August. After leaving the agency, Pan will spend a semester as a Senior Research Fellow in the Center for Law and Economic Studies at Columbia Law School where he’ll be writing about financial markets and regulation, Meghan Genovese reports. Pan joined the CFTC from the SEC in September 2015.

What Else to Know

Trump Considers Ending Postwar Japan Defense Pact: Trump has recently mused to confidants about withdrawing from a longstanding defense treaty with Japan, according to three people familiar with the matter, in his latest complaint about what he sees as unfair U.S. security pacts. Trump regards the accord as too one-sided because it promises U.S. aid if Japan is ever attacked, but doesn’t oblige Japan’s military to come to America’s defense, the people said. The treaty, signed more than 60 years ago, forms the foundation of the alliance between t he countries that emerged from World War II.

Even so, the president hasn’t taken any steps toward pulling out of the treaty, and administration officials said such a move is highly unlikely. All of the people asked not to be identified discussing Trump’s private conversations. While Trump’s repeated criticism of security pacts around the world has alarmed allies from Seoul to Paris, he hasn’t moved to withdraw from such agreements the way he has with trade deals. Read more from Jennifer Jacobs.

Pompeo in India: Secretary of State Michael Pompeo arrives in India today fresh from a last-minute trip to the Gulf aimed at building a global coalition against Iran to tackle a different tricky subject: trade. He’s seeking to strengthen ties in the Indo-Pacific region where America’s key economic rival, China, is expanding its reach. But Pompeo and India’s Prime Minister Narendra Modi will confront key foreign policy challenges, from retaliatory tariffs to New Delhi’s plans to purchase the S-400 air defense system from Russia. Read more from Bibhudatta Pradhan.

Trump Plans to Meet With Xi, Putin, Erdogan: Trump will meet with China’s Xi Jinping, Russia’s Vladimir Putin and Turkey’s Recep Tayyip Erdogan at the Group of 20 summit later this week in Osaka, Japan, White House officials confirmed yesterday. Trump also plans to meet with Saudi Crown Prince Mohammed bin Salman about regional stability, an official said.

Trump announced plans to meet with Xi on Twitter last week after repeatedly threatening more tariffs if Xi spurned the opportunity. Xi earlier said he’s willing to meet with Trump and exchange views, the state-run China Central Television reported. The meeting is likely to be on Saturday, the final day of the two-day summit, according to one of the officials. Read more from Alyza Sebenius.

Russia, China Said Trying to Influence Elections: A Trump administration official said that Russia, China, and Iran are trying to manipulate U.S. public opinion ahead of the 2020 elections but that none have successfully corrupted physical election infrastructure, which remains a potential target for state and non-state actors. China has mainly used conventional media outlets to advocate for certain policies, including trade, while Russia and Iran have been more active on social media platforms, a senior U.S. intelligence official told reporter s. Read more from Alyza Sebenius.

Health Price Order: Hospitals and insurance companies are quietly preparing for potential legal battles over Trump’s executive order calling for greater price transparency in health care. The order, issued yesterday, directs the Departments of Health and Human Services, Labor, and Treasury to develop new rules requiring that patients receive up-front information about how much their treatment will cost.

It’s unclear what shape the new rules will take, but it’s likely that the insurers and hospital systems will fight any efforts to force disclosure of confidential pricing deals struck between them. The network deals between health providers and insurers is the process that determines the costs that consumers end up paying for any type of care, said David Hyman, a health law professor at Georgetown University School of Law. Read more from Valerie Bauman.

FedEx Sues U.S. Over Exports Law: FedEx sued the Department of Commerce to block enforcement of regulations that the shipper claims make it effectively an arm of the government, forcing the company “to police the contents of millions of packages” handled every day. The lawsuit filed yesterday in federal court in Washington comes on the heels of a Trump administration ban in May on U.S. companies selling technology to Huawei, a Chinese maker of telecom equipment, as part of a widening trade war. Read more from Chris Dolmetsch, Bob Van Voris and Thomas Black.

To contact the reporters on this story: Zachary Sherwood in Washington at zsherwood@bgov.com; Brandon Lee in Washington at blee@bgov.com

To contact the editors responsible for this story: Giuseppe Macri at gmacri@bgov.com; Loren Duggan at lduggan@bgov.com

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