What to Know in Washington: Trump Hails Deepening India Ties

President Donald Trump touted “tremendous progress” on a trade deal with India as he sought to strengthen ties with a country key to American efforts to blunt China’s influence in Asia.

Officials have tried to hammer out a modest trade deal opening up India to U.S. agricultural products and medical devices in return for the restoration of preferential export status that Trump stripped from India last year. There was an expectation that a mini-deal would be unveiled before the U.S. president’s visit, but Trump has since said he’s in no hurry to finalize it.

“I’m optimistic we can reach a deal that will be of great importance to both countries,” Trump said today while sharing a stage with Indian Prime Minister Narendra Modi in New Delhi.

The momentum on trade appeared to pave the way for closer strategic relations, as the U.S. looks to court India as a counterweight to China. Trump lauded increased security ties with India and showered praise on Modi, who has faced deadly protests — including during the president’s visit — over a citizenship law that singles out Muslims.

Central to that focus is the $3 billion defense deal the two nations signed on this visit, which will boost the South Asian nation’s naval strength in waters where China is seeking greater leverage. Trump also highlighted the revamped “Quad” — a group involving the U.S., India, Japan and Australia — that’s taking on greater significance as the perceived threat of a more dominant China continues to grow.

“Together the prime minister and I are revitalizing the quad initiative,” Trump said, noting expanded cooperation between the four nations on maritime and cyber security was vital “to ensure a free and open Indo-Pacific.”

Trump also touched upon Chinese communications giant Huawei Technologies’s potential involvement in India’s 5G network. In December, India decided to allow Huawei to be included in its 5G trials.

“We discussed importance of a secure 5G wireless and the need for this emerging technology to be a tool for freedom, progress and prosperity — not to do anything where it could be even conceived as a conduit for suppression and censorship,” Trump said. Read more from Jordan Fabian and Justin Sink.

Photographer: T. Narayan/Bloomberg

Trump and Modi speak on Tuesday.

Happening on the Hill

Trump Officials to Defend Coronavirus Plans: Lawmakers have a chance to question U.S. officials this week on the Chinese coronavirus outbreak that the Trump administration has so far kept from taking hold on American soil, even as the disease spreads to South Korea, Italy and elsewhere.

The White House said late yesterday it asked Congress for $2.5 billion to battle the disease. Half of that money is new, while the rest is being reallocated from other spending, including $535 million from funds to combat the Ebola virus, an official familiar with the proposal said. The total includes $1 billion for development of a vaccine, the official added. At the same time, a debate is being waged within the administration, according to two people familiar with the discussions, with some officials saying the U.S. response has not been aggressive enough, and others fearing that too many restrictions could harm the economy.

Health and Human Services Secretary Alex Azar will testify this week during hearings on the 2021 budget, while two House committees — Energy and Commerce and Foreign Affairs — hold hearings on the coronavirus outbreak itself. The latter committee will also hear from representatives of the State Department and U.S. Centers for Disease Control and Prevention. American intelligence and health care officials are to provide senators a classified briefing on the outbreak today, according to three people familiar with the matter. Read more from Josh Wingrove, Jennifer Jacobs and Daniel Flatley.

Key Republicans Still Undecided on Shelton: Three Republicans on the Senate Banking Committee said yesterday they still have yet to decide on Judy Shelton, Trump’s nominee to the Federal Reserve Board. “She doesn’t have my vote yet,” Sen. Richard Shelby (R-Ala.) said. Sen. John Kennedy (R-La.) said he’s still reviewing Shelton’s work, trying to determine where she stands on policy issues regarding the Fed. “I’m just trying to understand what her position is,” he said. “It’s changed pretty dramatically.” Sen. Pat Toomey (R-Pa.) is also undecided, according to his office. A single Republican “no” vote would be enough to block Shelton’s nomination if all Democrats are united in opposition. Read more from Erik Wasson.

Cicilline Seeks to Address False Ads: House Judiciary Antitrust Subcommittee Chairman David Cicilline (D-R.I.) is drafting a bill that would take away broad tech liability protections for online platforms that knowingly publish “demonstrably false” political ads, he said yesterday at a National Association of Broadcasters’ event. The bill will be unveiled within approximately a month, he said. Cicilline’s panel is also undertaking an antitrust investigation into large tech platforms, such as Google, Facebook, Apple, and Amazon. Read more from Rebecca Kern.

McConnell Aide to Leave: Jay Khosla, Senate Majority Leader Mitch McConnell’s (R-Ky.) top economic adviser, is set to depart Capitol Hill at the end of this week for a job in the private sector, Kaustuv Basu reports. Khosla has spent more than a decade working in Congress, including a stint as staff director for the Senate Finance Committee, where he played a key role in getting the 2017 tax bill through the committee.

“We had to make sure all of our members were aligned in their vision of what tax reform means,” Khosla told Bloomberg Tax yesterday.

Khosla moved over to McConnell’s office in mid-2018, where he worked on the U.S.-Mexico-Canada trade agreement and the approval of four protocols amending tax treaties with Japan, Luxembourg, Spain and Switzerland. Khosla likened his job in Senate Finance to designing a train and his job in McConnell’s office to helping the leader make sure “the trains are coming into the station and leaving at the right time.”

“Things never go as planned. There’s always complications. There’s always challenges. You just need to keep your eye on the ball and keep a cool head,” Khosla said.

Elections, Politics & Policy

BGOV’s Super Tuesday Webinar: BGOV analysts are pulling together the data and identifying races to watch as November nears. With Super Tuesday around the corner, a BGOV webinar today at 3 p.m. will discuss the current state of Congress, the pre-election landscape in Washington, and more. Join senior reporter and resident election guru Greg Giroux for a look ahead to Super Tuesday’s races, the 2020 elections, and its surrounding implications. Register here.

Democrats Prepare for South Carolina Debate: Michael Bloomberg is trying for a do-over in today’s Democratic presidential debate, previewing that he’ll turn his focus to newly minted front-runner Sen. Bernie Sanders (I-Vt.) after a much-criticized debut at last week’s face-off. Seven Democratic candidates will meet in Charleston, S.C., for a last encounter before that state’s primary on Saturday, and it would benefit Bloomberg if the rest of the field also sharpened their attacks against Sanders.

Bloomberg is the majority owner of Bloomberg Government’s parent company.

South Carolina’s primary is the last of the February preliminary rounds before the 14-state Super Tuesday contest on March 3, which includes huge delegate prizes of California and Texas, as well as the populous states of North Carolina and Virginia. Sanders is leading or tied for a top place in many of those states, and Bloomberg and former Vice President Joe Biden are in a fight for runner-up. Read more from Mark Niquette.

• Biden remains in the lead in South Carolina ahead of Saturday’s primary, despite Sanders’ surge nationally, according to a poll released yesterday. The survey from Public Policy Polling showed Biden with 36% of support, followed by Sanders at 21%. The rest of the field trailed far behind, with Warren at 8% and Buttigieg at 7%. Hedge fund manager Tom Steyer, who has invested heavily in that state, was also at 7%. Read more from Ryan Teague Beckwith.

Sanders Takes Lead After Nevada: Sanders won 24 delegates from Nevada, doubling his total haul in the Democratic presidential primary from the three early-state contests held so far. With a first-place victory in Saturday’s Nevada caucuses, Sanders now has 45 delegates while Buttigieg has 25, Biden has 15, Sen. Elizabeth Warren (Mass.) has eight and Sen. Amy Klobuchar (Minn.) has seven, according to The Associated Press. Ryan Teague Beckwith and Gregory Korte have more.

Sanders Defends Praise of Castro’s Programs: Sanders yesterday defended comments he made to CBS’s “60 Minutes” praising Fidel Castro for literacy programs he introduced in Cuba. “There were a lot of folks in Cuba at that point who were illiterate. He formed the literacy brigade,” Sanders said at a CNN town hall in Charleston. Castro, he added, “went out and they helped people learn to read and write. You know what, I think teaching people to read and write is a good thing.” Read more from Emma Kinery.

Trump Allies’ Battle in Georgia Prompts Republican Jitters: Trump so far hasn’t been able to head off a drawn-out Republican brawl for a U.S. Senate seat in Georgia that pits two candidates he’s praised against each other and triggered jitters within the party about potentially losing the seat in November. The conflict’s been brewing since Georgia’s GOP Governor Brian Kemp chose businesswoman Kelly Loeffler in December to temporarily fill an open Senate seat, despite lobbying from the president to pick four-term Rep. Doug Collins (R-Ga.), who’s now waging a primary fight. Collins last week rejected Trump’s attempt to lure him away from challenging Loeffler by floating the idea of making him a candidate to become the next U.S. spy chief. Hours after Trump made the surprise announcement, Collins said no. “I’m running a Senate race down here in Georgia,” he said.

The concern for Republicans is that a bitter fight between Republican candidates provides an opening for Democrats. The Georgia race is crucial to the GOP’s bid to keep the Senate majority it has held since 2015. Republicans will be defending 23 seats in November, compared with 12 for Democrats. A net pickup of four seats by Democrats would guarantee them the majority. Read more from Billy House.

Inhofe on Re-Election: Senate Armed Services Chairman Jim Inhofe (R-Okla.) said he will announce March 6 whether he’ll be running for re-election this year. Inhofe said he’s focused on running the committee because once you announce re-election plans, “you are a candidate,” and not a chairman, he told reporters at a roundtable in his Washington office yesterday. Inhofe said that he expects “there will be a lot of people running against me,” Roxana Tiron reports.

Health Group Touts Grassley Drug Bill: One of the most vocal health advocacy groups on Capitol Hill is spending over $2 million in an ad campaign supporting Senate Finance Chairman Chuck Grassley (R-Iowa) and top Democrat Ron Wyden’s (D-Ore.) drug-pricing legislation. Patients for Affordable Drugs said it’s pumping more money into television ads that focus on the high cost of insulin and chemotherapy drugs.

The group pushed similar ads in October for a trio of drug measures, including the Grassley-Wyden package, House Democrats’ bill, and Trump’s International Pricing Index plan. This round is focused solely on the package by Grassley and Wyden. Part of the strategy is highlighting Republicans who have signed onto the bipartisan package, including Sen. Joni Ernst (R-Iowa). The group is also currently airing ads in favor of Sen. Martha McSally (R-Ariz.), who endorsed the Grassley-Wyden bill this month, Jacquie Lee reports.

Defense & Foreign Affairs

DOD Touts A.I. Ethics Code: The Pentagon adopted new ethical guidelines this week for the use of artificial intelligence that officials say could ease concerns in Silicon Valley that troubled its earlier work on the cutting-edge technology. Google decided not to renew its contract work in 2018 on the Pentagon’s Project Maven, a program that analyzes and sorts thousands of hours of drone video surveillance footage, when its employees balked over the ethics of using AI to target potentially lethal military air strikes.

The five broad new rules approved by Defense Secretary Mark Esper lay down ethical guardrails for the technology. They require that Defense personnel will make responsible choices; develop reliable and secure systems; make traceable decisions understood by operators; avoid bias in capabilities; and be governable so the AI can be shut down if problems arise. Read more from Travis J. Tritten.

Amazon Adopts Rivals’ Playbook to Fight JEDI Cloud Bid Loss: A powerful executive with Amazon in October portrayed attempts by archrival Oracle to block her company from winning one of the biggest-ever government deals as a last-ditch attempt to rescue a business that was becoming irrelevant. Now, Amazon is borrowing a page from the playbook Oracle used to unseat it as the front-runner for an up to $10 billion, 10-year project to overhaul the military’s technological operations.

Amazon filed suit in federal court in November after the Pentagon, in a surprise move, on Oct. 25 awarded the contract to Microsoft. Amazon asserted that the procurement was corrupted by the intervention of Trump, whose disdain for Jeff Bezos, its chairman and chief executive officer, is widely known. “Amazon is going to the mattresses,” said Stan Soloway, a deputy undersecretary of defense under President Bill Clinton and now president of Celero Strategies, a Washington-area consulting firm. “It feels like the same scorched-earth approach” that Oracle took. Read more from Naomi Nix.

U.S.-South Korea Talks on Sharing Costs Stalled: The U.S. and South Korea remain stalled after six rounds of talks on an updated cost-sharing agreement, but the allies’ top defense officials said they hope to break that deadlock next month. “We are engaged in negotiations,” and the “minister and I are hopeful they will reach agreement soon, preferably before the end of March,” Defense Secretary Mark Esper said at a news conference alongside South Korea’s Defense Minister Jeong Kyeong-doo after they met yesterday at the Pentagon.

If not, Jeong said, South Korean civilians who provide services to U.S. forces will start to be furloughed on April 1 for lack of funds. The countries are at an impasse over Trump’s demand that the South Koreans contribute much more than in the past for the American troops stationed in a joint defense against threats from North Korea. “Shouldering the cost of our common defense cannot fall disproportionately to the American taxpayer,” Esper said, echoing a burden-sharing complaint that Trump also makes consistently about NATO allies. “South Korea can and should contribute more,” he added. Read more from Tony Capaccio.

Italy, Iran Coronavirus Cases Jump: Iran reported a total of 15 deaths from the coronavirus, the most fatalities outside China. Italy, the outbreak’s epicenter in Europe, said infections in the Lombardy region rose to 206 from 172. Earlier today, South Korea reported 84 new infections for a total tally of 977, making it the country with most cases outside of China. The U.S., Japan and Hong Kong issued travel warnings for South Korea, while the United Arab Emirates banned flights to all Iranian cities.

The head of the World Health Organization had earlier called the new cases “deeply concerning,” but said the outbreak isn’t yet a pandemic. China plans to release results from clinical trials of a Gilead Sciences drug in April.

Bloomberg News is following developments of the corornavirus outbreak here. Find some highlights below:

• There are now 53 people in the U.S. with the novel coronavirus, the Centers for Disease Control and Prevention announced yesterday. Those include 12 people who tested positive for the condition after traveling to places where the coronavirus is spreading widely. Additionally, two spouses of people in that group were infected by direct human-to-human transmission. Another three were diagnosed after being repatriated from Wuhan, China, on State Department flights, while 36 had previously been aboard the contaminated Diamond Princess cruise ship.
• Biotechnology company Moderna announced yesterday it has released the first batch of mRNA-1273, the company’s vaccine against the coronavirus, for human use. Vials of mRNA-1273 have been shipped over to the National Institute of Allergy and Infectious Diseases to be used in the planned Phase 1 study in the U.S., Greg Chang reports.

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