What to Know in Washington: Trump Faces Giuliani Probe Dilemma

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Donald Trump is facing a new dilemma in the expanding Ukraine probe: whether to cement his bond with personal attorney Rudy Giuliani or distance himself from the confidant whose own legal peril threatens to ensnare the president.

As Trump’s personal emissary to Ukraine, Giuliani has been privy to the president’s thinking, strategy and behind-the-scenes efforts to push President Volodymyr Zelenskiy’s government to investigate Joe Biden and his son Hunter. That makes him a key potential witness in the House Democrats’ impeachment inquiry.

With lawmakers returning to Washington from a two-week break today — eager to lay out their next steps in the impeachment inquiry — Giuliani will face growing pressure to testify about his work for Trump.

As federal prosecutors dig into Giuliani’s activities, the president may try to edge away, as he did with another of his lawyers, Michael Cohen. Cohen is now in prison after pleading guilty to tax, bank and campaign-finance crimes.

“We’ve seen the president throw his own folks under the bus on more than one occasion, particularly when he senses or fears disloyalty,” said Jamil Jaffer, who served in the White House and Justice Department during the George W. Bush administration and is now an assistant professor at the Antonin Scalia Law School at George Mason University. “Giuliani knows that, and if he sees it coming, could act first,” Jaffer added. “There is some risk to the president in pushing Giuliani away because he knows a lot.”

So far, the president has kept Giuliani close, but there have been signs that he’s grappling with the decision. Read more from Jordan Fabian.

Guiliani at the White House

This Week’s Testimony: Michael McKinley, who resigned last week as a senior adviser to Secretary of State Michael Pompeo, is scheduled to speak with House impeachment investigators tomorrow, according to multiple officials familiar with the plans, Billy House and Steven T. Dennis report. McKinley’s testimony will be followed two days later, on Friday, with an appearance by Deputy Assistant Defense Secretary Laura Cooper, the officials said. Both will testify behind closed doors.

Deputy Assistant Secretary of State George Kent is scheduled to appear today. Kent, who remains an employee of the State Department, is expected to testify under subpoena, says an official working on the impeachment inquiry. Other witnesses have been issued subpoenas to give them legal cover to appear against the wishes of the White House.

Gordon Sondland, Trump’s ambassador to the European Union, is set to testify Thursday. State Department Counselor T. Ulrich Brechbuhl, who had also been scheduled for Thursday, is no longer scheduled to appear that day.

Two Views of Testimony: Democrats and Republicans on three House impeachment committees professed having decidedly different takes after 10 hours of testimony yesterday from Fiona Hill, a former top National Security Council expert on Russia.

Rep. Jamie Raskin (D-Md.), a member of the Oversight Committee, called her “a very powerful and effective witness” who helped make the case that ousted U.S. Ambassador to Ukraine Marie Yovanovitch was mistreated by Trump and his allies. But Republicans on the Oversight, Intelligence and Foreign Affairs committees continued to raise objections to the witness testimony being held in private. They refused to characterize what Hill said, or whether she was credible. Read more.

Democrats Unlikely to Wait for Courts: Speaker Nancy Pelosi (D-Calif.) wants to finish the impeachment inquiry into Trump before the heart of the 2020 election, but she will likely need to do it without help from federal courts, which could take months to resolve any fight over presidential stonewalling. A historic court showdown became more likely last week when the administration announced it wouldn’t cooperate with the investigation. Although at least two State Department officials are testifying anyway, the White House continues to block access to documents and prevent testimony from other witnesses.

Democrats now must decide whether to ask a judge to enforce subpoenas seeking information about the president’s push for Ukraine to investigate former Vice President Joe Biden and his son Hunter. Any court battle would probably drag the inquiry into the 2020 election year, and even if Democrats were to win, a ruling could come too late to make impeachment politically viable. Read more from Greg Stohr and Erik Wasson.

Secret Testimony Aimed at Keeping Trump in the Dark: House Intelligence Committee Chairman Adam Schiff (D-Calif.) defended holding testimony behind closed doors in the impeachment inquiry, likening this phase of the investigation to a “grand jury.”

“We want to make sure that we meet the needs of the investigation and not give the president or his legal minions the opportunity to tailor their testimony and in some cases fabricate testimony to suit their interests,” he said Sunday on CBS’s “Face the Nation.” Read more from Steven T. Dennis.

Happening on the Hill

Turkey Sanctions Leave Congress Wanting More: Trump may have vowed “big sanctions” on Turkey over its military campaign in northern Syria, but the penalties imposed by the administration late yesterday amounted to a milder punishment than that demanded by U.S. lawmakers of both parties. The decision arose from a measured approach, according to people familiar with the matter. That strategy, one of the people said, reflected the thinking of Pompeo and Treasury Secretary Steven Mnuchin — that the threat of sanctions can often deter bad behavior before any penalty is even in place.

Criticism from both Democrats and Republicans followed the decision, and it showed little sign of abating even after the sanctions, authorized in an executive order, were announced. Pelosi, accused Trump of unleashing “an escalation of chaos and insecurity in Syria.”

“His announcement of a package of sanctions against Turkey falls very short of reversing that humanitarian disaster,” she said in a statement last night. Read more from Jennifer Jacobs and Saleha Mohsin.

Supporting Hong Kong Protests: The House is poised take up three bills aimed at supporting pro-democracy protesters in Hong Kong, potentially raising tensions with China amid White House negotiations with Beijing on trade. The main focus for House lawmakers is the Hong Kong Human Rights and Democracy Act of 2019, which would require annual assessments of whether Hong Kong is sufficiently autonomous from Beijing to justify the city’s special trading status under U.S. law, Daniel Flatley reports. Momentum has been building for quick action in Congress to pressure China to back off any crackdown on pro-democracy protesters. China has raised objections to the moves in Congress as actions that harm China’s national interest.

BGOV Bill Summaries:

Tracking Job Outsourcing: The House will take up a bill this week that would require publicly traded companies to disclose the states and countries where jobs are located in an attempt to monitor the outsourcing of U.S. jobs overseas. The measure, introduced by Rep. Cindy Axne (D-Iowa), has supporters in organized labor that have frequently protested the relocation of jobs overseas, particularly in manufacturing and telecommunications. Read more from Jaclyn Diaz.

Reducing SALT Cap Sting: Senate Democrats plan to force a vote on reviving programs in states like New York and New Jersey designed to help residents circumvent the $10,000 limit on deductions for state and local taxes. Lawmakers from New York, New Jersey and California, who have been seeking to repeal the deduction cap on state and local taxes, or SALT, since it was included in the 2017 Republican tax law, are pressing for the vote. Read more from Laura Davison.

Centrist Democratic Lawmakers Back Privacy Law: A group of more than 100 centrist Democratic House lawmakers is throwing its weight behind a privacy bill that has been praised by alliances of software and internet giants. The move is one of the first large-scale endorsements of a privacy bill in Congress. Separate efforts by Democrats in the House and Senate this year to write even stricter data regulations have produced few results. Read more from Ben Brody.

House Drug Bill Would Save $345 Billion: A drug-price proposal from Democrats in Congress would save taxpayers $345 billion over a seven-year period, according to a new estimate, punching a hole in pharmaceutical company sales and causing ripple effects in health-care systems around the world. The bill is backed by Pelosi and other Democrats in the chamber. It would direct Medicare, the U.S. government health program for the elderly and disabled, to set pharmaceutical prices based on an index of what other developed nations pay for top -selling drugs. For products not sold abroad, the government would set their price at a discount to what U.S. purchasers paid. Read more from Drew Armstrong.

Elections & Politics

Biden Braces for Rivals’ Attacks: The Democratic candidates will meet for the fourth presidential debate today after an extraordinary series of events that has dramatically altered the race since the last forum in September. The debate on the campus of Otterbein University, outside Columbus, Ohio, is hosted by CNN and the New York Times, and will be broadcast on CNN at 8 p.m. For the three top-polling candidates — and the man they hope to succeed — it will be defined by a succession of firsts:

For former Vice President Joe Biden, it will be the first debate in which his Democratic rivals may risk criticizing him over his son Hunter’s business dealings in Ukraine and China. For Sen. Elizabeth Warren (D-Mass.), the forum will be the first opportunity to defend her statistical tie with Biden and perhaps rise into the lead, and the first chance to defend her status as the standard-bearer for the progressive wing of the party against Sen. Bernie Sanders (I-Vt.). For Sanders, it will be his first public appearance since a heart attack on Oct. 1. Jennifer Epstein has more.

With eyes on Ohio for the debate, Gregory Korte and Mark Niquette take a look at the state’s suburbs as a battleground that can help win the presidency. Read more.

The twelve Democrats who qualified for the debate will attempt to convince voters that their policy positions make them stand out from the other candidates. That’s hard to do, according to a Bloomberg News analysis of House and Senate votes since 1990. In a typical year, the candidates’ votes matched the positions taken by the majority of Democrats more than 4 times out of 5. Hannah Recht looks at the data.

Warren on the Rise for Leadership, Electability: As Warren continues to rise into a tie with Biden for the lead in polls of Democratic candidates, she also has benefited from increasingly positive voter perception of her, according to a Quinnipiac survey released yesterday. Warren led Biden 30% to 27% among Democratic voters and independent voters who lean Democratic. A Quinnipiac poll released last Tuesday had her ahead 29% to 26%, also a 3-point spread, within the margin of error. Sanders was at 11%, down from 16% a week ago. Read more from Emma Kinery.

Louisiana Governor’s Race Heads to Runoff: Republicans have succeeded in pushing the only Democratic governor in the Deep South, Louisiana’s John Bel Edwards, to a general election against businessman Eddie Rispone. The Nov. 16 election will test the appeal of a candidate running on his support for the policies of Trump versus that of a Democrat who expanded Medicaid in the state while taking a position on abortion that’s contrary to his national party’s platform. Read more from Jennifer Kay.

Sanders Pledges 20% Worker Stake: Sanders proposed sweeping changes to U.S. corporate governance that would give workers 20% ownership in public companies and the right to elect 45% of their directors, while expanding the government’s power to stop mergers. The 2020 Democratic presidential contender’s “corporate accountability plan” proposes to restore the corporate tax rate to 35% from 21% and repeal the 2017 tax cuts passed by Congress with only Republican votes. He also proposes to review mergers approved by the Trump administration and unwind any deemed “improper.” Read more from Laura Litvan.

Billionaires Could Face Tax Rates Up to 97.5% Under Sanders: Billionaires may have much more to fear from a Sanders presidency than they do from an Warren administration, according to two economists advising both candidates. That’s one of the conclusions of a new interactive website developed by University of California, Berkeley professors Emmanuel Saez and Gabriel Zucman.

If Sanders had his way, they calculate that the 400 richest Americans, on average, would have an effective tax rate of 97.5%. That includes not only their income, but also a wealth tax that whittles away at the family fortune. The 97.5% average effective tax rate under his plans compares with 23% now and 62% under Warren’s proposals, according to the two economists. Read more from Rich Miller and Laura Davison.

Hunter Biden Says Ukraine Gas Board Service Was ‘Poor Judgment’: Hunter Biden said his service on a Ukraine gas company board was proper but may have been “poor judgment” in hindsight, Kathleen Miller reports. “In retrospect, I think that it was poor judgment on my part,” Hunter Biden said during an ABC News interview this morning. “Did I do anything improper? No, not in any way, not in any way whatsoever.”

“I joined a board, I served honorably, I focused on corporate governance,” he told ABC. “I didn’t have any discussions with my father before or after I joined the board, as it relates to it, other than that brief exchange that we had.”

Hunter Biden is stepping down from the board of a Chinese-backed private equity company and promising to forgo all foreign work if his father is elected president in 2020. After months of keeping a relatively low-profile as Trump leveled a barrage of unsubstantiated accusations of corruption at him, the younger Biden is publicly vowing to avoid any conflict of interest. Read more from Stephanie Baker.

Movers & Shakeups

Next Homeland Chief to Face Familiar Battles: The exit of the acting Homeland Security chief could deal a blow to Trump’s promises of building a border wall and lowering immigration, as the administration loses a leader who has been seen as key to easing congressional negotiations of those priorities. Acting DHS Secretary Kevin McAleenan, who announced his resignation late Friday, departs as lawmakers return ready to battle over how much money to allocate for Trump’s border wall.

McAleenan’s departure is the latest in a six-months-long leadership shakeup at the department that may further complicate White House negotiations with Congress over wall funding ahead of a Nov. 21 deadline to keep the government running. The move may push lawmakers to resort to passing a full-year continuing resolution to avoid turmoil, Andrew Howell, a partner at Monument Advocacy who lobbies on homeland security issues, said in an email. Michaela Ross has more.

$500,000 Seat on U.S. Accounting Watchdog: A White House economic policy aide was named to fill one of the most sought-after, and highly paid, regulatory jobs in Washington, the U.S. Securities and Exchange Commission said in a statement Friday. Rebekah Goshorn Jurata, special assistant to the president for financial policy at the National Economic Council, will join the Public Company Accounting Oversight Board in the coming weeks, the SEC said. Appointments to the panel, which oversees auditors, are coveted because they pay more than $ 500,000 a year. Read more from Ben Bain and Robert Schmidt.

Fox News Anchor Shepard Smith Quits: Longtime Fox News anchor Shepard Smith abruptly left the cable news channel on Friday, removing one of the network’s primary hard-news voices and a frequent target of Trump’s ire. Smith, 55, who had been with Fox since its inception in 1996, hosted his daily show at 3 p.m. Eastern for the last time. “Recently I asked the company to allow me to leave Fox News and begin a new chapter,” he said in a statement. “After requesting that I stay, they graciously obliged.” Under an agreement with Fox, Smith said, he “won’t be reporting elsewhere at least in the near future.” Read more from John J. Edwards III and Gerry Smith.

What Else to Know Today

Puerto Rico Bankruptcy Clash Hits Supreme Court: The Supreme Court is poised to consider a challenge to the oversight board responsible for pulling Puerto Rico out of its record bankruptcy, hearing a case that could mean a new phase of uncertainty for an island still recovering from a devastating 2017 hurricane. The high court will hear arguments today from bondholders who say the seven members of the Financial Oversight and Management Board were appointed in violation of the Constitution because they weren’t confirmed by the U.S. Senate. The bondholders, led by Aurelius Investment, are seeking to unravel much of the board’s work and eventually get more for their stakes than the oversight panel is offering. Read more from Greg Stohr and Michelle Kaske.

Diverting Military Funds to Wall Rejected: A federal judge in Texas said he would block Trump’s plan to build a wall on the Mexican border with funds shifted from the Pentagon’s construction budget. U.S. District Judge David Briones in El Paso, Texas, ruled Friday that Trump’s declaration of a national emergency to redirect Defense Department appropriations to a wall project that Congress specifically refused to pay for was illegal. He told the plaintiffs to draft a preliminary injunction for his review. The ruling conflicts with the U.S . Supreme Court’s decision in July to let Trump begin diverting the money as litigation over the matter proceeded. Read more from Laurel Calkins.

China Wants More Talks Before Signing Trade Deal: China wants to hold more talks this month to hammer out the details of the “phase one” trade deal touted by Trump before Xi Jinping agrees to sign it, according to people familiar with the matter.

Beijing may send a delegation led by Vice Premier Liu He, China’s top negotiator, to finalize a written deal that could be signed by the presidents at the Asia-Pacific Economic Cooperation summit next month in Chile, one of the people said. Another person said China also wants Trump to scrap a planned tariff hike in December in addition to the hike scheduled for this week, something the administration hasn’t yet endorsed. The people asked not to be named discussing the private negotiations. Read more.

To contact the reporter on this story: Zachary Sherwood in Washington at zsherwood@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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