What to Know in Washington: A New Week of Inquiry Hearings Begin

The second week of public impeachment hearings begin with a former diplomat at the center of President Donald Trump’s back channel to Ukraine, and a decorated Army officer accused of disloyalty by the president’s allies after he raised alarms about what he saw at the White House.

Kurt Volker, who until recently was Trump’s special envoy to Ukraine, is a crucial witness for both Democrats and Republicans in the House investigation. GOP lawmakers wanted him to testify publicly because he’s said he wasn’t aware of attempts to withhold U.S. aid until Ukraine opened investigations that would help Trump politically.

But other witnesses have described Volker as a key player in an effort led by Rudy Giuliani at Trump’s behest to push Ukraine into public probes that would entangle former Vice President Joe Biden, a political rival of the president. Volker plans to tell the House Intelligence Committee that he wasn’t involved in discussions at key points where linkage between aid and investigations may have been brought up, the New York Times reported, citing a person familiar with his testimony.

He’ll be preceded at today’s hearings by Lieutenant Colonel Alexander Vindman, a Ukraine specialist who had been detailed to the White House National Security Council and listened to the July 25 phone conversation between Trump and Ukrainian President Volodymyr Zelenskiy.

Vindman, an Iraq war veteran whose loyalty to the country has been questioned by some Trump allies, testified that he was so disturbed by what he heard that he reported his concerns to the NSC’s legal counsel.

This week’s hearings — running over three days with nine witnesses — are crucial for both Trump and Democrats. Read more from Billy House.

Photographer: Sarah Silbiger/Bloomberg
Volker at a deposition at the Capitol on Oct. 3

Sondland Poised for Bipartisan Beating: Gordon Sondland, the U.S. diplomat at the center of the impeachment inquiry against Trump, once described himself as the “point man for Europe” who was also assigned by the president to oversee relations with Ukraine. Witnesses have given House panels less flattering descriptions of the wealthy developer-turned-envoy: “Comical,” “clueless” and a “free radical” who exaggerated his ties to Trump and posed a “counterintelligence risk” by ignoring pleas that he stop handing out the personal phone numbers of top security aides.

Sondland, the ambassador to the European Union, is likely to take fire from all sides when he testifies publicly for the first time tomorrow. A crucial question will be whether he had the Oval Office access he claimed or exaggerated his influence over decisions on Ukraine. Read more from Nick Wadhams.

Meanwhile, an aide at the U.S. Embassy in Ukraine told congressional investigators that he “had never seen anything like” the mobile phone conversation between Trump and Sondland. Sondland had called Trump from an open air restaurant in Kyiv in July. The embassy aide, David Holmes, said he overheard the conversation and that the two men seemed to refer to Trump’s wish that Ukraine open an investigation of Biden.

“I’ve never seen anything like this, someone calling the president from a mobile phone at a restaurant, and then having a conversation of this level of candor, colorful language,” Holmes said in a transcript of his closed-door testimony to the House impeachment inquiry. “There’s just so much about the call that was so remarkable that I remember it vividly.”

Transcripts of the testimony by Holmes and Undersecretary of State for Political Affairs David Hale were released last night. Read more from Billy House and Josh Wingrove.

Happening on the Hill

Government Funding: The House will take a step today toward averting a government shutdown at the end of the week with a vote on a four-week stopgap spending measured unveiled yesterday. Funding for federal agencies would be extended through Dec. 20 under the legislation.

The measure has garnered opposition, but not necessarily enough to diminish its chances of landing on the president’s desk by the time government funding runs out at midnight on Thursday. For more, see the BGOV Bill Summary by Sarah Babbage and Michael Smallberg.

BGOV PODCAST: This episode of “Suspending the Rules,” Bloomberg Government’s podcast, budget and appropriations reporter Jack Fitzpatrick lays out the status of the spending fight. Legislative analyst Michael Smallberg also discusses other bills the House has scheduled for this week.

Listen and subscribe to Suspending the Rules from your mobile device: Via Apple Podcasts | Via Overcast | Via Stitcher | Via Spotify

Senate Prepares Hong Kong Vote: A push by Senate Republicans to support Hong Kong protesters has been met with silence from Trump, who has yet to indicate whether he would sign a bipartisan bill that risks angering China as he tries to close a preliminary trade deal. The measure, which could pass as soon as today, was drafted with help from officials of the Treasury and the State Departments, according to a congressional aide. But a senior administration official yesterday cautioned that Trump’s seal of approval is the only one that matters.

“I don’t know if he does or doesn’t” support the bill, said Sen. Marco Rubio (R-Fla.), the measure’s main Republican sponsor. “I expect he would. I don’t know why he wouldn’t.” A White House spokesman declined to comment on the Rubio bill. Read more from Daniel Flatley and Mike Dorning.

• Related: Hong Kong Siege Persists as Hundreds Evacuated From University

Trump Poised to Flip 11th Circuit: Trump is on the cusp of flipping the U.S. Court of Appeals for the 11th Circuit to a majority of Republican-appointed judges, the third such changeover during his administration. The Senate is closing in on the expected confirmations of Barbara Lagoa and Robert Luck in the coming days to the Atlanta-based court that is central to several cases involving significant election law disputes.

Trump has turned over two other circuit courts with conservative appointments. The Pennsylvania-based 3rd Circuit flipped in March, followed by the New York-based 2nd last week with the confirmation of White House lawyer Steven Menashi. Read more from Madison Alder.

Recovering Money From Fraudsters: The SEC would have more time to recoup money from Ponzi schemers and other scammers who bilk investors under bipartisan legislation the House passed yesterday. The House voted 314-95 to pass the Investor Protection and Capital Markets Fairness Act. The measure from Reps. Ben McAdams (D-Utah) and Bill Huizenga (R-Mich.) would overturn the Supreme Court’s 2017 Kokesh v. SEC decision limiting the Securities and Exchange Commission’s disgorgement power. Read more from Andrew Ramonas.

Democrats Want Criminal Penalties in Privacy Law: A group of top Senate Democrats said yesterday that any federal privacy legislation should include the possibility that violators will face criminal penalties or consumer lawsuits. Senate Minority Leader Chuck Schumer (D-N.Y.) and top Democrats on relevant committees issued a set of privacy principles — rather than legislative text — that reiterated proposals that Republicans have rejected. “I applaud my colleagues for their great work and am proud to support these strong principles,” Schumer said in a statement.

Lawmakers on both sides of the aisle have been calling for laws to tackle data use, but the pushes have produced little consensus in Congress. What began earlier this year as an effort to write a law by a bipartisan group of legislators on the Senate Commerce Committee collapsed in June. Read more from Ben Brody.

Veterans’ Aid to For-Profit Colleges: Senate Health, Education, Labor, and Pensions Chairman Lamar Alexander (R-Tenn.) threw his support behind a bipartisan Senate bill that would restrict how much revenue for-profit colleges can earn by enrolling student veterans. For-profit colleges are limited to generating no more than 90% of revenue from federal student aid; the exception is veterans benefits, which have no such cap. Veteran service organizations have long called for closing what they call the 90/10 loophole. Read more from Andrew Kreighbaum.

FEMA Chief Nominee Advances: The Senate Homeland Security Committee yesterday approved the nomination of Peter Gaynor to head the Federal Emergency Management Agency amid concerns about the growing list of leadership vacancies at the Department of Homeland Security. Gaynor advanced the panel by a unanimous voice vote. Chairman Ron Johnson (R-Wis.) said he is pushing for the nomination to win Senate confirmation by unanimous consent before Thanksgiving. Read more from Michaela Ross.

• On a separate nomination, a top Justice Department official said yesterday the American Bar Association’s unqualified rating of Trump’s federal appellate nominee, Lawrence VanDyke, “undermines” the group’s important work in all areas of the law. The ABA’s judicial ratings report on VanDyke “paints a distributing picture of the abuse that all of us lawyers should take seriously and try to work to remedy,” Makan Delrahim, the head of the DOJ’s antitrust division, said at an ABA antitrust conference in Washington. Read more from Victoria Graham.

Elections & Politics

Georgia Highlights Voter-Rights Feuds: Democrats are working to put the diverse state of Georgia in play for the first presidential election in decades, but it remains a long shot where the party will have to fight with Republicans over access to ballots and other voting rights issues. Highlighting its new competitiveness, 10 candidates seeking the Democratic nomination will debate in Atlanta on Wednesday at Tyler Perry Studios. The selection of the site is a nod to both the state’s civil rights history — the studios were built where a Confederate Army post once stood — and its growing stature as the “Hollywood of the South.” Read more from Gregory Korte and Margaret Newkirk.

$7 Million Anti-Impeachment Ad Buy: A nonprofit group allied with House Republican leaders is pouring $7 million into television and digital ads opposing impeachment of Trump. The $5 million in TV ads sponsored by American Action Network began airing yesterday. They target 18 swing districts held by Democrats, as well as two Republican-held districts. The TV effort is in addition to $2 million in digital and social media advertising running across 37 districts, including 30 represented by Democrats and seven by Republicans. Read more from Kenneth P. Doyle.

Louisiana Target of Attempted Ransomware Hack: Louisiana was targeted by an attempted ransomware attack that affected some of the state’s server computers, Governor John Bel Edwards said in a tweet. In response, the state initiated “security protocols” and took its servers down, the governor said. The moves affected many agencies’ email, websites and other online applications, he wrote yesterday on Twitter. The state was attacked as election officials canvass the results of a tightly contested Nov. 16 gubernatorial election won by Edwards by about 40,000 votes. Read more from Kartikay Mehrotra.

Amazon Stumbles In Attempts to Play Politics: Amazon is a company that is accustomed to winning, but the $869 billion e-commerce giant has spent the last few weeks suffering through humbling defeats. On Oct. 25, the Pentagon announced it was awarding a $10 billion cloud computing contract to Microsoft. Then Amazon’s preferred candidates failed to capture control of the Seattle City Council in local elections less than two weeks later, even after the company had spent $1.5 million on the campaign. The setbacks are not directly connected, but they follow a familiar pattern. Amazon gets into an interaction with government officials with supreme confidence—critics invariably call it arrogance—only to snatch defeat from the jaws of victory. Read more from Eric Newcomer and Spencer Soper.

Foreign Affairs

U.S. Walks Out of Military Talks With South Korea: The U.S. walked out of military cost-sharing talks with South Korea, after the key American ally balked at Trump’s demands for a five-fold funding increase. The chief U.S. negotiator, James DeHart, said that the American side cut short talks planned for today in Seoul because the South Koreans “were not responsive to our request for fair and equitable burden-sharing.” The South Korean foreign ministry said it had expected to discuss “an acceptable range for both counterparts” based on past cost-sharing discussions. Read more from Jihye Lee.

Esper Says Increased Sea Patrols Aimed At China: The U.S. is conducting more patrols in the South China Sea to send a signal to China that it intends to maintain freedom in the area that’s crucial for global trade, Defense Secretary Mark Esper said today. Esper said at a media briefing in Manila the U.S. “rejects attempts by any nation to use coercion or intimidation to advance international interests at the expense of others.” He also urged nations with South China Sea claims to take a public position and assert sovereign rights to get China “on the right path.” Read more from Andreo Calonzo and Glen Carey.

Erdogan Told Trump Turkey Won’t Give Up S-400s: President Recep Tayyip Erdogan said he told Trump during their White House meeting that Turkey wouldn’t halt its deployment of a Russian air-defense system, as he downplayed differences between the NATO allies over the deal. “We agreed to seek solutions on the S-400” issue, Erdogan told parliament in Ankara today, referring to the missiles. Most of the problems between Turkey and the U.S. consist of “minor complications,” he said. The remarks suggest Erdogan remains confident his personal rapport with Trump will ward off punitive actions against Turkey. Read more from Firat Kozok and Cagan Koc.

Around the Administration

Nominations: Trump announced his intent to nominate Steven Dowd to be U.S. director of the European Bank for Reconstruction and Development, the White House said in a statement. Trump also plans to nominate Jason Myung-lk Chung to be U.S. director of the Asian Development Bank, with the rank of ambassador, Chelsea Mes reports.

Trump ‘Protested’ to Powell About U.S. Interest Rates: Trump said he “protested” U.S. interest rates that he considers too high relative to other developed countries in a meeting on Monday with Federal Reserve Chairman Jerome Powell. Powell met with Trump and Treasury Secretary Steven Mnuchin at the White House residence in the morning at the president’s request to discuss the economy. It was the second face-to-face encounter this year between Trump and Powell amid the president’s relentless criticism of the U.S. central bank. Read more from Jeff Kearns, Justin Sink and Josh Wingrove.

Hiring of Military Spouses: Making it easier for military spouses to find jobs is “a national security issue” that should be a top priority for federal agencies, Sara Egeland, deputy assistant to the vice president and policy director to the second lady, said yesterday. Married military personnel and their families often need two salaries to get by, and the availability of good jobs for spouses despite frequent redeployments to different parts of the world is a major factor in keeping them in the service, Egeland said. Read more from Louis C. LaBrecque.

International Student Enrollment: The number of new international students enrolling at U.S. colleges and universities fell for the third straight year in the 2018-2019 academic year, according to the annual Open Doors survey released yesterday. The number of international undergraduates by fell by 2.4 percent and enrollment of international graduate students fell by 1.3 percent, Andrew Kreighbaum reports.

• The report, produced by the Institute of International Education, showed the total number of international students in the U.S. still hit an all-time high of more than 1.095 million, in part thanks to training programs that allow STEM graduates to remain after completing their studies. The report is based on a poll of international enrollment at over 2,800 institutions. Over half of international students in 2018-2019 were enrolled in STEM programs and 21.1 percent were in engineering programs. China, which sent nearly 370,000 students to U.S. campuses, led the way in international enrollment for the tenth straight year.

Trump Gets Reprieve From Release of N.Y. Returns: Trump should have a chance to block House Democrats from obtaining his New York state tax returns, a federal judge decided, in a boost for the president as he fends off other subpoenas for his financial records while facing an impeachment inquiry. U.S. District Judge Carl Nichols in Washington ruled last night that the House Ways and Means Committee must notify the court and the president if it plans to ask the state’s Department of Taxation and Finance to turn over Trump’s records. The lawmakers then must wait two weeks for the documents, giving the judge time to rule on whether the Democrats’ request is lawful. Read more from Andrew Harris and Laura Davison.

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