Today’s fourth hearing focused on how Trump corruptly pressured state legislators and election officials to change election results — leaning on state officials to alter the vote and to create slates of fake electors pledged to Trump — and their unwillingness to go along with Trump. But under the surface of today’s hearing and its revelations lurks the civil war that Trump has created within the Republican Party — between the dwindling number of Republican officials who maintain their oaths to the Constitution, and Republican officials who were (and still are ) willing to bend — and the committee’s attempt to fortify the former.

1. The committee highlighted Republicans who maintained their oaths of office and did not just refuse Trump’s demands but also stood up to mobs unleashed by Trump.

Rusty Bowers, speaker of the Arizona House of Representatives, testified that in phone calls with both Trump and Giuliani after the election, Giuliani asserted that hundreds of thousands of undocumented people had voted, and that many ballots were from people who had died. Bowers asked for evidence to back this claim but never received it. Trump asked Bowers to hold a hearing at the Arizona State Capitol to investigate allegations of election fraud, but Bowers did not believe that the evidence “merited a hearing” and “did not want to be used as a pawn.” Bowers later told Trump, “You are asking me to do something against my oath, and I will not break my oath.” Bowers’s emotional testimony described the threats he endured as a result.

Brad Raffensperger, Georgia’s secretary of state, testified that President Biden carried the state of Georgia by approximately 12,000 votes. All ballots were twice recounted by hand, with no difference in the result. The committee played the recording of Trump trying to push Raffensperger to “find” just as many votes as he needed to beat Biden. “I just want to find 11,780 votes,” Trump said. “Give me a break.” But Raffensperger testified that “there were no votes to find. It was an accurate count that had been certified.” When Raffensperger refused Trump, Trump threatened him with a “criminal offense.” Raffensperger subsequently received threats to himself and his family, as did his wife and widowed daughter-in-law.

Gabriel Sterling, a top election official in Georgia, also testified today. He had publicly disputed Trump’s false claims of election fraud in the 2020 election. Weeks after the election, Sterling warned the public that unless Trump stopped making false claims, “someone is going to get killed.” Trump dismissed Sterling’s warning in a tweet, reiterating — again, without evidence — that “thousands of votes” in Georgia were fraudulent.

Shaye Moss, an election worker in Georgia was the last to testify. After Giuliani likened Moss, a Black woman, to a low-level drug dealer, she and her mother were subject to a wave of online threats and harassment — including death threats, some racist in nature. Shaye’s mother's house was invaded by election deniers. She and her mother continue to live in fear. Moss’s testimony was a powerful illustration of what Trump has wrought: Regular Americans doing public service jobs being subject to threats and intimidation from Trump followers.

Today’s hearings also added to the list of traitors in the Republican Party, willing to break their oaths of office. They include Senator Ron Johnson of Wisconsin. It was revealed today that an aide to Johnson wrote to a Pence aide that Johnson wanted to hand-deliver to Pence a slate of fake electors from Wisconsin. Pence’s aide responded: “Do not give that to him. Today’s testimony also added evidence of the traitorous behavior of Representative Andy Biggs, Republican of Arizona. Bowers testified that Biggs called him on the morning of Jan. 6 and asked him to support the effort to overturn the election. Bowers says he told Biggs he would not.

2. The committee made much of the fact that its witnesses are Republicans who wanted Trump to win. Raffensperger, for example, described himself today as a conservative Republican who wanted Trump to win in 2020. He said he had to “follow the law and follow the Constitution.”

Clearly, one of the purposes of the committee hearings is to fortify those remaining Republican officials and lawmakers around the country who continue to honor their oaths of office. The committee’s strategy underscores the stark reality that, no matter how much Democrats revile Trump, it is Republicans who will ultimately decide his fate — and whether Trump remains a force in American politics.

3. A third revelation today is that the attempted coup continues — to this day. I was struck by the fact that even this morning, before the committee hearing began, Trump issued a statement claiming that Bowers had told him after the the 2020 election that the election in Arizona was rigged. Bowers denied under oath that he had said this to Trump. Clearly, Trump wants the entire committee hearings to be seen as his word versus the committee’s. If he decides to run for office (which seems increasingly likely), this will be his strategy.

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Friends,

As Congress prepares for summer recess, average working Americans are facing increasingly hard economic times — including a likely recession (see here). Yet Congress has so far failed to provide most Americans with what they need to weather the storm — subsidies for childcare and eldercare, paid sick leave, an increase in the federal minimum wage, lower pharmaceutical costs, additional help with the next strain of COVID, and so on.

At the very same time, American corporations are lining up with their hands outstretched, seeking all sorts of special benefits. And there’s bipartisan support for giving them what they want.

Today I want to explain why corporations so often get what they want while average Americans don’t. It’s not simply that corporations bribe legislators with campaign donations, although that’s a big part of it. There’s another phenomenon at work that you need to know about.

Consider semiconductor chips. They’re the brains of modern electronics — embedded in everything from smartphones, radios, TVs, computers, video games, and advanced medical diagnostic equipment, to automobiles. As the world supply of almost everything tries to catch up with roaring post-lockdown demand, chips inevitably are in short supply.

This week, Congress is putting final touches on the CHIPS Act, which will provide more than $52 billion to companies that design and make semiconductor chips. The subsidy is demanded by the biggest chip makers as a condition for making more chips here.

It’s pure extortion.

You see, the world’s biggest chip maker (in terms of sales) is already an American corporation — Intel, based in Santa Clara, California. Intel hardly needs the money. Its revenue rose to $79 billion last year. Its CEO, Pat Gelsinger, got a total compensation package of $179 million (which was 1,711-times larger than the average Intel employee).

From the perspective of the United States, the problem is that Intel is not dealing with the current American shortage of chips by giving preference to producers in the United States, and it’s not keeping America on the cutting edge of new chip technologies. In addition to its facilities in the United States, Intel designs, assembles, and tests its chips in China, Israel, Ireland, Malaysia, Costa Rica, and Vietnam. And it sells them just about everywhere. (To add another layer of complication, many of Intel’s “American” customers don’t actually make their products in the United States. They’re headquartered in the United States but, like Intel, they design and make stuff all over the world.)

Obviously, Intel would like some of the $52 billion Congress is about to throw at the semiconductor chip industry — but why exactly should Intel get the money?

Among the other likely beneficiaries of the CHIPS Act will be GlobalFoundries. GlobalFoundries currently makes chips in New York and Vermont, but in many other places around the world as well. GlobalFoundries isn’t even an American corporation. It’s a wholly owned subsidiary of Mubadala Investment Co. — the sovereign wealth fund of the United Arab Emirates.

The point is, the nation where a chipmaker (or any other global corporation) is headquartered has less and less to do with where it designs and makes things or where its customers are located.

Every industry that can possibly be considered “critical” is now lobbying the U.S. government for subsidies, tax cuts, and regulatory exemptions, in return for designing and making stuff in America. But they’re lobbying in other nations, too.

It’s a giant global shakedown. India, Japan and South Korea have all recently passed tax credits, subsidies and other incentives amounting to tens of billions of dollars for the semiconductor industry, and the European Union is finalizing its own chips act with $30 billion to $50 billion in subsidies. Even China has extended tax and tariff exemptions and other measures aimed at upgrading chip design and production there. “Other countries around the globe … are making major investment in innovation and chip production,” says Senate Majority Leader Chuck Schumer. “If we don’t act quickly, we could lose tens of thousands of good-paying jobs to Europe [emphasis added].”

Who is “we,” Senator?

John Neuffer, the chief executive of the Semiconductor Industry Association (the Washington D.C. lobbying arm of the semiconductor industry) says the industry has been under “withering pressure” to build new manufacturing facilities to respond to the explosion of demand for chips, but he warns that chipmaking facilities are often 25 to 50 percent cheaper to build in foreign countries than in the United States. Why are they so much cheaper to build abroad? As he admits, it’s largely because of the incentives foreign countries have offered.

As capital becomes ever more global and footloose, it can play nation against nation to get the best deals in return for where it agrees to do what. Most people, by contrast, are rooted within particular nations, which gives them far less bargaining power.

This asymmetry helps explain why Congress is ready to hand over $52 billion to a highly-profitable global industry but can’t come up with even the $22.5 billion that the Biden administration says is necessary to cope with upcoming variants of COVID in the United States — for testing, therapeutics, vaccines, and essential treatments for the next generation of vaccines.

The reality is that global corporations have no loyalty to any nation. As the then-CEO of U.S.-based ExxonMobil unabashedly stated, “I’m not a U.S. company and I don’t make decisions based on what’s good for the U.S.”

If they are publicly owned, corporations have to be loyal to their shareholders by maximizing the value of their shares. But not even this guarantees that they’ll act in the best interest of the United States. Over 40 percent of the shareholder value of American-based companies is owned by non-Americans. There’s no reason to suppose a company’s American owners will be happy to sacrifice investment returns for the good of the nation, either.

Global corporations also have to obey the laws of the countries where they make or sell their stuff — which can cause problems when those laws or policies conflict with those of other nations. Last December, Intel was slammed by China for writing a letter to its suppliers, published on its website, stating that the corporation had been "required to ensure that its supply chain does not use any labor or source goods or services from the Xinjiang region” — as required by the United States (which has accused China of widespread human rights abuses in Xinjiang, home to the country's predominantly Muslim Uyghurs). Intel then deleted the reference to Xinjiang and apologized for the "trouble" it had caused, explaining that its commitment to avoid supply chains from Xinjiang was an expression of compliance with U.S. law rather than a statement of its position on the issue. (The apology caused Senator Marco Rubio to threaten to make Intel ineligible for CHIP Act subsidies. “Intel’s cowardice is yet another predictable consequence of economic reliance on China,” Rubio said. “Instead of humiliating apologies and self-censorship, companies should move their supply chains to countries that do not use slave labor or commit genocide.”)

This is not to dismiss the critical importance of semiconductor chips to the United States, but only to suggest that paying $52 billion in subsidies to global chipmakers to make them here is a peculiarly inefficient way of responding to that importance. The real question is what conditions the United States (or any other nation that subsidizes chip makers) should place on receipt of such subsidies.

It can’t be enough that a company merely agrees to make or design chips in America, because chip makers are already doing that. It can’t be that they’ll create more American jobs in chip making, because jobs in low-end fabrication that require little skill won’t build the technological capabilities of the U.S. workforce. And it can’t just be that the chipmakers agree to produce more chips in the United States, because additional production in the United States is no guarantee against future shortages in the United States. Remember, these corporations are global. They sell their chips around the world to the highest bidders, wherever the chips are produced.

If we want to tie the public subsidy to the public interest, we should demand that any chips produced in America, over and above those already produced here, focus on the highest value-added parts of chip making — design, design engineering, and high precision manufacturing — so Americans gain that technological expertise. And we should demand that in the event of chip shortages, the subsidized chipmakers give highest priority to their American-based customers — customers using the chips in products made in the United States, by American workers.

But what happens if every nation subsidizing chipmakers demands the same? Obviously, the chipmakers can’t grant most-favored-nation status to every nation. They’ll have to choose.

Also: How do we ensure that a big chunk of the $52 billion isn’t frittered away on shareholders and executive pay — as has been the case every time the U.S. government has subsidized Wall Street banks? Perhaps make chip makers agree not to buy back their shares of stock or pay their executives more than 50 times the pay of their median workers, and also give the government partial ownership in the form of equity interest. As Senator Bernie Sanders (who is pushing these conditions in an amendment to the CHIP Act) has said, there’s no reason to socialize the chipmaker’s risks and privatize their profits. If American taxpayers are going to give the semiconductor industry $52 billion, we should get a return on our investment.

What do you think?

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We fool ourselves if we believe that the televised hearings of the January 6 committee are changing the direction of the Republican Party, or that the hearings will end the attempted coup that Trump launched immediately after the 2020 election. The G.O.P. is becoming ever more divorced from reality. Trump’s attempted coup continues unabated.

The first three hearings of the House January 6 committee demolished the myths of voter fraud repeated incessantly by Trump and his supporters and amplified by Republicans in Congress. A parade of Republican witnesses — including his attorney general William Barr, Ivanka Trump, and his own campaign lawyers — testified that they knew Trump lost the election, and told him so. Trump was also informed that the demands he was making of his Vice President Mike Pence to block his defeat were illegal.

Yet the Republican response to those hearings has ranged from indifference to hostility. Representative Kevin McCarthy, the Republican leader of the House, wrote on Twitter that the members of the committee “will not stop lying about their political opponents,” and he calls the committee “despicable.”

On Friday, speaking at the Faith and Freedom Coalition conference in Nashville, Trump repeated his Big Lie — as if the hearings never happened — and once again berated Pence, charging that his former Vice President “did not have the courage to act” in trying to unilaterally reject the Electoral College votes that were being cast for Joseph R. Biden Jr.

Why aren’t the hearings slowing the Big Lie or Trump’s continuing attempted coup?

First, the Lie is now fully entrenched in the Republican Party, a central tenet of G.O.P. dogma. It has become the vehicle by which Republican candidates signal their fealty both to Trump and to a broad range of grievances — some imaginary, some derived from the so-called “culture wars” — that now constitute the Republican brand.

So far, at least 108 Republican candidates who embrace the Big Lie have won their nominations or advanced to runoffs, and there is no sign that the hearings have reduced the intensity of their demagoguery. Voters have chosen eight Big Lie candidates for the U.S. Senate, 86 Big Lie candidates for the House, five Big Lie candidates for governor, four for state attorney general and one for secretary of state.

In Michigan, the Republican race to challenge Governor Gretchen Whitmer is led by Ryan Kelley, a real estate broker who was arrested this month and charged with participating in the January 6 assault on the Capitol. Republican nominee for Michigan attorney general Matthew DePerno led a November 2020 lawsuit over an election night tabulation error in Antrim County that Trump supporters have seized on in their efforts to perpetuate unfounded claims of fraud. (DePerno has promised to lead criminal investigations of alleged fraud in 2020 despite the conclusion by Republican state senators that his allegations are “demonstrably false.”) Secretary of state nominee Kristina Karamo served as an observer in Detroit during the 2020 absentee ballot count and claimed, without evidence, that she had witnessed fraud.

In Arizona, the leading Republican candidate for governor, Kari Lake, has made the stolen election claims central to her campaign. Mark Finchem, a candidate for secretary of state, was at the front steps of the Capitol on January 6. And Blake Masters, who aims to challenge incumbent Democrat Senator Mark Kelly, says without evidence that “one-third of the people outside the Capitol complex on January 6 were actual F.B.I. agents.”

In Pennsylvania, Republican senate candidate Mehmet Oz has embraced the Big Lie. Gubernatorial nominee Doug Mastriano also asserts it, and has said that the Republican-controlled legislature should have the right to take control of the all-important choice over which presidential electors to send to Washington.

Big Lie nominees for statewide office in swing states also include Herschel Walker for Senate in Georgia and Burt Jones for Georgia lieutenant governor.

Secondly, the hearings have not affected the Republican Party (and are unlikely to) because Big Lie candidates are under no pressure to respond to the findings of the committee. Their districts or states already lean Republican, and most of voters in them have dismissed or aren’t paying attention to the committee hearings.

Recall that the 2020 election was mainly about Trump. You were either for him or against him. Voters in districts and states that voted largely for him in 2020 will not easily change their minds. The cognitive dissonance required to shift from believing Trump’s alleged conspiracy to accepting the reality of what occurred is simply too formidable. In addition, few of their sources of news — Fox News, rightwing radio, and rightwing social media — have questioned the Big Lie.

Because these districts or states lean Republican, these Big Lie candidates are likely to win the offices they are seeking, notwithstanding. In an open primary in a safely Republican Georgia district, for example, all nine candidates questioned the 2020 result. Of the two candidates who advanced to June’s runoff, lawyer Jake Evans touted his past efforts to “overturn” elections, while physician Rich McCormick emphasized that he refused to concede in a 2018 race. Many of these Republican Big Lie candidates will hold positions with the power to interfere in the outcomes of future contests — to block the certification of election results, to change the rules around the awarding of their states’ electoral votes or to acquiesce to litigation attempting to set aside the popular vote.

The third reason the hearings aren’t affecting the Republican Party is that the G.O.P.’s biggest backers — such as billionaire Peter Thiel, who has donated tens of millions of dollars to the campaigns of Big Lie candidates J.D. Vance and Blake Masters — show no signs of reducing their backing in light of the committee’s findings.

It’s shameful enough that Republican lawmakers and candidates have embraced the Big Lie for the utterly cynical purpose of gaining or remaining in power. For the G.O.P.’s billionaire funders to embrace it as well, presumably for no purpose other than to destabilize American democracy, can only be described as traitorous.

In his closing statement before the January 6 committee, former U.S. appellate court judge J. Michael Luttig — one of the most conservative judges in the federal system, whom George W. Bush passed over for the Supreme Court because Bush thought him too conservative — called Trump and his allies and supporters “a clear and present danger to American Democracy.” This was not only due to what happened on January 6, said the Judge, but because they still “pledge that in the presidential election of 2024 if the former president or his anointed successor as the Republican Party presidential candidate were to lose that election that they would attempt to overturn that 2024 election in the same way that they attempted to overturn the 2020 election.”

By not divesting itself of the Big Lie and not embracing the truth of what the January 6 committee is revealing, the Republican Party is losing its last shred of moral authority to function as one of America’s two governing parties.

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My informal weekly coffee with Heather Lofthouse (Executive Director of Inequality Media Civic Action, and my former student), discussing the past week. Today we cover the third hearing of the January 6 select committee, why the committee isn’t turning over its transcripts to the Justice Department, what’s the connection between Ginni Thomas (wife of Justice Clarence Thomas) and John Eastman, the Fed’s dangerous decision to raise interests rates by another 0.75 percent, and celebrating the summer solstice.

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Today marks the end of the school year for many public schools. Every year about this time I think of Alice Camp.

I arrived in her third-grade classroom in Lewisboro Elementary School, in South Salem, New York, as an extremely short, shy, insecure 8-year-old who was often bullied and mocked on the bus and made to feel like a loser on the playground, and had no particular interest in school.

But she saw in me something I didn’t see. She fed me books, projects, ideas. She challenged me and praised me. She made me feel special. Her slightly whacky sense of humor connected with mine. Her curiosity fueled mine (she didn’t mind if I stayed in at recess and barraged her with questions). Her enjoyment of literature made it okay for me to love books. She made me understand that I wasn’t a freak, that I might even be talented, that the drawings and writings I did (up until then alone at my small desk in my bedroom) were okay — perhaps even good. And there was no reason for me to be so sad and ashamed, so fearful, so alone in the world.

I think of Mrs. Camp when I see America’s teachers blamed these days for almost everything imaginable — yelled at by parents over masks, reprimanded by school boards about books they assign or let their students read, vilified by politicians for teaching about America’s history of racism, even told to arm themselves against the possibility that their classrooms will be invaded by murderous young men with semi-automatics.

Instead of berating them, we should honor them. Rather than impose ludicrous demands on them we should free them to teach and inspire. Instead of demeaning them, we should express our gratitude to them — every day.

And we should pay them twice a much as they’re earning, or three times. Why in hell should investment bankers get paid fortunes for moving money from one set of pockets to another, when our teachers can barely afford to live on what they make? Bankers watch over our financial capital. Teachers watch over our human capital — and therefore our future.

I never saw Alice Camp again after third grade ended for me that June of 1954. I never had a chance to thank her (although I do remember sitting cross-legged on the floor at the end-of-year school assembly, quietly crying about leaving her and trying desperately not to show it). She passed away long ago.

I had the great fortune to have other wonderful teachers over the rest of my years of public elementary and high school, and then in college and graduate school. I don’t recall thanking any of them, either. Most are gone by now. But I think of them often. And I am forever in their debt.

I suppose one way I’ve managed to pay back a small portion of that debt is to teach — which I’ve done for most of the last forty years. I love teaching. I love my students. I can’t imagine a more rewarding or noble profession.

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The House select committee investigating the Jan. 6 attack on the U.S. Capitol held its third public hearing today — focused on Trump's efforts to pressure Vice President Pence to refuse to count lawful electoral votes on January 6: the gonzo plan that lawyer John Eastman came up with.

But where did John Eastman come from? And how did he ever reach Trump in the first place? The committee didn’t touch on this today. (When Eastman appeared before the committee he invoked his Fifth Amendment right against self-incrimination 146 times.)

Spoiler alert: The connection seems to be through Supreme Court Justice Clarence Thomas and his wife, Ginni Thomas.

Eastman was a law clerk for Clarence Thomas in the early 1990s. (As a former law clerk to a federal judge myself, I can attest that it’s an intimate working relationship. At the time Eastman clerked for Thomas, he was one of only four such law clerks.)

In the days and weeks after the 2020 election, Ginni Thomas actively sought to overturn the election. She pressed 29 Republican state lawmakers in Arizona to set aside Joe Biden’s popular vote victory and “choose” presidential electors (according to emails obtained by The Washington Post) — urging lawmakers to “stand strong in the face of political and media pressure.” On Dec. 13, the day before members of the electoral college were slated to cast their votes and seal Biden’s victory, she emailed 22 House members and one senator, saying “Before you choose your state’s Electors … consider what will happen to the nation we all love if you don’t stand up and lead.” She also sent messages to Trump’s chief of staff, Mark Meadows, repeatedly pressing him to overturn the outcome of the election, according to text messages obtained by The Post and CBS News. (After Jan. 6, she told Meadows in a text that she was “disgusted” with Pence, who had refused to help block the certification of Biden’s electoral college victory.)

Ginni Thomas also corresponded by email with John Eastman (per The Post). Eastman must have presented his bonkers plan to her, which she related to Meadows (and therefore Trump).

Soon thereafter, Eastman was working closely with Trump. He met the Oval Office with Trump and Pence. In a late-night court filing on May 19, 2022, Eastman disclosed he routinely communicated with Trump directly or via "six conduits" regarding legal strategy leading up to January 6, detailing "two hand-written notes from former President Trump about information that he thought might be useful for the anticipated litigation." (Eastman made the disclosure to claim attorney-client privilege to prevent the January 6 committee from obtaining 600 of his emails. On June 7, Judge David O. Carter ruled that Eastman had to disclose 159 sensitive documents to the committee, ten of which related to December 2020 meetings by a secretive group strategizing about how to overturn the election, which included what Judge Carter characterized as a "high-profile" leader. Carter noted one email in particular contained what he found was likely evidence of a crime and ordered it disclosed under the crime-fraud exception of attorney-client privilege. The email in question contained a comment by an unidentified attorney that litigating a case regarding the January 6 session in Congress might "tank the January 6 strategy" and so the Trump legal team should avoid the courts.)

Did Eastman communicate with Justice Thomas, too? Eastman knew things about the Supreme Court at the time that no one else outside the Court knew. According to the New York Times, Eastman told an ally on Dec. 24, 2020, that there was a “heated fight” among Supreme Court justices about whether to take up election-related lawsuits. Recall that the Supreme Court rejected an 11th-hour effort by Trump allies to have it step in during the legal fight over the election results, during which dozens of lower court cases were almost all decided against Trump. Justice Thomas and Justice Samuel Alito disagreed with that decision. Then in January 2021, the Supreme Court rejected a request by Trump to block the release of his White House records to the House committee investigating Jan. 6. Clarence Thomas was the only justice to dissent, siding with Trump.

According to committee testimony from Pence’s then-chief counsel Greg Jacob, Eastman told Jacob he was confident Justice Thomas would have backed his strategy to have Pence reject some Biden electors on Jan. 6.

The leaders of the House Jan. 6 committee say they plan to invite Ginni Thomas to speak to the committee (it’s unclear if the committee will first ask for a voluntary appearance or a closed door deposition, or send a subpoena). Ginni Thomas told the right-wing news site The Daily Caller in an interview today that she would "look forward" to speaking with the committee. Thomas has worked with the Daily Caller in the past, including producing an interview with her husband.

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Last Sunday night, as cryptocurrency prices plummeted, Celsius Network — an experimental cryptocurrency bank with more than one million customers that has emerged as a leader in the murky world of decentralized finance, or DeFi — announced it was freezing withdrawals “due to extreme market conditions.”

Earlier this week, Bitcoin dropped 15 percent over 24 hours to its lowest value since December 2020, and Ether, the second-most valuable cryptocurrency, fell about 16 percent. Last month, TerraUSD, a stablecoin — a system that was supposed to perform a lot like a conventional bank account but was backed only by a cryptocurrency called Luna — collapsed, losing 97 percent of its value in just 24 hours, apparently destroying some investors’ life savings. The implosion helped trigger a crypto meltdown that erased $300 billion in value across the market.

These crypto crashes have fueled worries that the complex and murky crypto banking and lending projects known as DeFi are on the brink of ruin.

Eighty nine years ago today the Banking Act of 1933 — also known as the Glass-Steagall Act — was signed into law by Franklin D. Roosevelt. It separated commercial banking from investment banking — Main Street from Wall Street — in order to protect people who entrusted their savings to commercial banks from having their money gambled away. Glass-Steagall’s larger purpose was to put an end to the giant Ponzi scheme that had overtaken the American economy in the 1920s and led to the Great Crash of 1929.

Americans had been getting rich by speculating on shares of stock and various sorts of exotica (roughly analogous to crypto) as other investors followed them into these risky assets — pushing their values ever upwards. But at some point Ponzi schemes topple of their own weight. When the toppling occurred in 1929, it plunged the nation and the world into a Great Depression. The Glass-Steagall Act was a means of restoring stability.

It takes a full generation to forget a financial trauma and allow forces that caused it to repeat their havoc.

By the mid-1980s, as the stock market soared, speculators noticed they could make lots more money if they could gamble with other people’s money, as speculators did in the 1920s. They pushed Congress to deregulate Wall Street, arguing that the United States financial sector would otherwise lose its competitive standing relative to other financial centers around the world.

In 1999, after Sandy Weill’s Travelers Insurance Company merged with with Citicorp, and Weill personally lobbied Clinton (and Clinton’s Treasury secretary Robert Rubin), Clinton and Congress agreed to ditch what remained of Glass-Steagall. Supporters hailed the move as a long-overdue demise of a Depression-era relic. Critics (including yours truly) predicted it would release a monster. The critics were proven correct. With Glass-Steagall’s repeal, the American economy once again became a betting parlor. (Not incidentally, shortly after Glass-Steagall was repealed, Sandy Weill recruited Robert Rubin to be chair of Citigroup’s executive committee and, briefly, chair of its board of directors.)

Inevitably, Wall Street suffered another near-death experience from excessive gambling. Its Ponzi schemes began toppling in 2008, just as they had in 1929. The difference was that the U.S. government bailed out the biggest banks and financial institutions, with the result that the Great Recession of 2008-09 wasn’t nearly as bad as the Great Depression of the 1930s. Still, millions of Americans lost their jobs, their savings, and their homes (and not a single banking executive went to jail). In the wake of the 2008 financial crisis, a new but watered-down version of Glass-Steagall was enacted — the Dodd-Frank Act — which has been further diluted and defanged by Wall Street lobbyists.

Which brings us — 89 years to the day after Glass-Steagall was enacted — to the crypto crash.

The current chair of the Securities and Exchange Commission, Gary Gensler, has described cryptocurrency investments as “rife with fraud, scams, and abuse.” Yet in the murky world of crypto DeFi, it’s hard to understand who provides money for loans, where the money flows, or how easy it is to trigger currency meltdowns. There are no standards for issues of custody, risk management, or capital reserves. There are no transparency requirements. Investors often don’t know how their money is being handled or who the counter-parties are. Deposits are not insured. We’re back to the Wild West finances of the 1920s.

In the past, cryptocurrencies kept rising by attracting an ever-growing range of investors and some big Wall Street money, along with celebrity endorsements. But, as I said, all Ponzi schemes topple eventually. And it looks like crypto is now toppling.

So why isn’t this market regulated? Mainly because of intensive lobbying by the crypto industry, whose kingpins want the Ponzi scheme to continue. The industry is pouring huge money into political campaigns. And it has hired scores of former government officials and regulators to lobby on its behalf — including three former chairs of the Securities and Exchange Commission, three former chairs of the Commodity Futures Trading Commission, three former U.S. senators, and at least one former White House chief of staff, the former chair of the Federal Deposit Insurance Corporation, and more than 200 former staffers of federal agencies, congressional offices and national political campaigns who have worked in crypto. Former Treasury Secretary Lawrence Summers advises crypto investment firm Digital Currency Group Inc. and sits on the board of Block Inc., a financial-technology firm that is investing in cryptocurrency-payments systems.

In a famous passage from his 1955 book The Great Crash 1929, my mentor, Harvard professor John Kenneth Galbraith, introduced the term “bezzle” (derived from embezzlement). Galbraith observed that the bezzle in a financial system grows whenever people are confident about the economy, and reveals itself when confidence ebbs:

At any given time there exists an inventory of undiscovered embezzlement which … varies in size with the business cycle. In good times, people are relaxed, trusting, and money is plentiful. But even though money is plentiful, there are always many people who need more. Under these circumstances, the rate of embezzlement grows, the rate of discovery falls off, and the bezzle increases rapidly. In depression, all this is reversed. Money is watched with a narrow, suspicious eye. The man who handles it is assumed to be dishonest until he proves himself otherwise. Audits are penetrating and meticulous. Commercial morality is enormously improved. The bezzle shrinks.

Crypto is pure bezzle — as is now being revealed. If we should have learned anything from the crashes of 1929 and 2008, it’s that regulation of financial markets is essential. Otherwise they turn into Ponzi schemes filled with bezzle — leaving small investors with nothing and endangering the entire economy. It’s time for the Biden administration and Congress to stop the crypto bezzle.

What do you think?

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Friends,

Bennie Thompson, chair of the January 6th Committee, has told reporters that the committee has no plans to make a criminal referral to the Justice Department. This strikes me as absurd. The major purpose of the committee’s carefully constructed prosecutorial brief is to clear the runway for indictments.

The pushback on Thompson’s statement was instant, beginning with vice chair Liz Cheney, who put out a statement flatly contradicting Thompson: “The January 6th Select Committee has not issued a conclusion regarding potential criminal referrals. We will announce a decision on that at an appropriate time.”

Thompson’s statement won’t influence the Justice Department. As every constitutional lawyer knows, it doesn’t take a criminal referral from Congress for the attorney general to proceed with an indictment. But what will it take?

After watching the second day of hearings, Susan (from our substack community) wrote on this page:

Let's hope AG Garland is paying very close attention. Whereas Ford's pardon put Nixons criminality to rest for the nation, he opened the door for the likes of Trump. It's time to prosecute, we can never allow this to happen again.

Susan raises the key issue, which is this week’s Office Hours question: What levers do we have to get Attorney General Merrick Garland to prosecute Trump?

Please comment below. (I’ll chime in as well.)

Friends, here are my two cents:

There's no way to push an attorney general to prosecute a case, and in our legal system there should not be. But I believe -- contrary to the view of the chair of the January 6 select committee -- that when the committee completes its work it should make a formal criminal referral to the Justice Department that spells out its findings in the clearest possible terms. If the facts lead the committee to conclude that Trump likely committed crimes against the United States, the committee should say so explicitly.

It is traditional for congressional committees to make criminal referrals when they think a crime may have been committed. Although the Justice Department is under no obligation to pursue these referrals, a criminal referral signals that the legislative branch of government finds or suspects a crime – an important symbolic act.

There are three arguments against the committee making such a criminal referral:

(1) It could backfire. Decisions about whether to prosecute must be made independently of politics: Garland and the Justice Department won’t want to be seen as doing the committee’s bidding. And the district and appellate courts that would handle Trump’s prosecution might take a dim view of any intermingling of the work of the political branch with the work of federal prosecutors.

(2) It’s unnecessary. Attorney General Merrick Garland has repeatedly pledged to follow the evidence wherever it leads, and he has said that he and his Jan. 6 prosecutors are closely watching the committee hearings.

(3) The committee has already, in effect, made a criminal referral to the Justice Department – arguing in a legal filing last fall (over whether it should be able to access emails from John Eastman, Trump’s attorney) that Trump broke multiple laws. In response, U.S. District Judge David O. Carter issued an opinion that said Trump “more likely than not” committed crimes to stay in power.

Notwithstanding these considerations, public opinion is crucial. Trump attempted a coup while president of the United States. As many Americans as possible should understand how dangerous and vile this act was. Yet at this point, a third of Americans (including some two-thirds of Republicans) still believe Trump’s big lie. For a bipartisan committee of Congress to conclude that Trump has likely committed such a crime would be significant. A criminal referral would garner big headlines. Even if it did not change the minds of die-hard Trumpers, it would be an important part of the historic record. And it would almost certainly increase public pressure on Garland to prosecute Trump -- or at least make public his reasons for not doing so.

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Last Friday, the Bureau of Labor Statistics released its May Consumer Price Index (CPI) report, which showed inflation worsening. Yet the bigger story — and bigger worry — is not inflation. It’s the distinct possibility of recession. Or perhaps both (what’s termed “stagflation.”) Here are the questions I’m getting asked most often, and my answers.

1. Are we heading for a recession? Many signs point in that direction. New home construction slowed in April. Mortgage demand continues to decline. Some of the country’s largest and most influential retailers are reporting disappointing sales and profits. The stock market is in bear territory. Futures markets are signaling trouble ahead.

2. What exactly is a recession? “Recession” is a technical term, defined as two consecutive quarters of shrinking gross domestic product. The National Bureau of Economic Research is the authority that declares recessions in the U.S., and its own definition is “significant decline in economic activity that is spread across the economy and that lasts more than a few months.” As a practical matter, recessions mean fewer jobs and lower wages.

3. When is a recession likely to happen — and should I panic? Don’t panic! If it occurs, it won’t happen immediately. I’d guess some time over the next six months. It’s a possibility that you ought to be aware of.

4. Who gets hurt most by a recession? Lower-income Americans are especially vulnerable because they tend to be the first fired when the economy slows (and the last hired when it rebounds). Recessions also hurt younger people trying to get their footing in the job market. And they can be hard on retirees whose IRAs or 401(k) accounts get clobbered.

5. Why are we heading toward a recession? Partly because of continued uncertainty from the coronavirus pandemic and Russia’s invasion of Ukraine. But the main cause is interest-rate hikes by the Federal Reserve. The Fed has raised interest rates by 0.75 percentage points so far this year, and Fed officials are signaling more aggressive increases ahead. When it meets Wednesday it will discuss raising its benchmark rate by as much as another 0.75 percentage points. That would be the largest single interest rate increase since 1994.

6. What’s the connection between Fed rate hikes and a recession? Rate hikes increase the costs of borrowing to individuals and consumers — which causes them to cut back on purchases of everything, including homes. This, in turn, causes the economy to slow.

7. Do Fed rate hikes always lead to recession? No. It’s possible we could have a “soft landing” that lowers inflation without causing a recession. But Fed rate hikes often over-shoot, resulting in recession — especially when they’re on the scale the Fed is contemplating. In 1981, for example, the Fed under Paul Volcker raised interest rates so high (to reverse double-digit inflation) it plunged the economy into deep recession.

8. Why is the Fed doing this now? Because it believes it must slow the economy in order to slow inflation, which is at a 40-year high.

9. Is the Fed correct? Slowing the economy will reduce inflationary pressures somewhat, but the Fed is operating under an old model of the economy — at a time when inflation was driven largely by wage increases. The way to slow inflation then was to take the steam out of wage increases by reducing employment. Essentially, the Fed drafted a certain number of workers into the fight against inflation by pulling them out of the labor force. That was when American workers had strong unions and it was difficult for companies to increase capacity by outsourcing abroad. These conditions no longer apply. Workers now have very little bargaining power relative to what they had thirty or forty years ago. Just look at the data: although wages are rising, they aren’t rising nearly as fast as prices.

10. But if raising interest rates will reduce inflationary pressures somewhat, why shouldn’t the Fed at least try? Because raising rates as much as the Fed seems likely to do will cause more harm than good. Current inflationary forces are worldwide — coming from huge global pent-up demand following the worst of the pandemic, coupled with supply shortages around the world, which have been aggravated by Putin’s war. In fact, inflation in the U.S. isn’t nearly as bad as in most other advanced economies. Slowing the U.S. economy may put a dent in these forces, but not much of one. Yet the cost here — in terms of a recession or near recession, and loss of jobs and wages — is likely to be huge.

11. Are there unique factors driving inflation in the United States? Yes. One of the biggest is coming from hugely-profitable corporations with significant market power, that are using inflation as a cover for raising their prices. (See my analyses here, here, and here.) Oil and gas giants, for example, are raking in record profits. In the first quarter of 2022, Chevron’s profits more than quadrupled from the first quarter of 2021, and ExxonMobil’s profits more than doubled despite taking a $3.4 billion hit for exiting its business in Russia. ExxonMobil won’t be using its sky-high profits to ease the burden on consumers at the gas pump, but to increase its stock buybacks. The oil giant now plans to buy back $30 billion of its own stock, up from the $10 billion it announced earlier this year. Note: The Fed’s rate hikes won’t stop this price gouging.

12. What will stop them? Three things: (1) Vigorous antitrust enforcement that reduces their pricing power (even the threat of such enforcement will make them more reluctant to raise prices). (2) A windfall profits tax that takes away a portion of their recent profits (and redistributes them to consumers), as the Conservative government in Britain is doing. And (3) publicity: the government should shine light on highly-profitable corporations that are most flagrantly raising prices (such as Tyson Foods and ExxonMobil).

13. So why doesn’t the Biden administration pursue these? It seems to be embarking on stronger antitrust enforcement, but it’s doing so very quietly — too quietly to get big profitable corporations to pull back from raising prices. Biden has begun shining a light on profitable companies that are raising prices. Last Friday, he placed blame for rising prices on oil and shipping companies. In a speech at the Port of Los Angeles, when asked about Exxon-Mobil’s profits, Biden said “Exxon made more money than God this year.” On Tuesday, Biden sent a letter to the CEOs of major oil companies, in which he wrote:

“At a time of war, refinery profit margins well above normal being passed directly onto American families are not acceptable. There is no question that Vladimir Putin is principally responsible for the intense financial pain the American people and their families are bearing. But amid a war that has raised gasoline prices more than $1.70 per gallon, historically high refinery profit margins are worsening that pain.”

But he and his administration seem strangely unwilling to criticize big corporations any more extensively than this. And they have not embraced or advocated a windfall profits tax. I don’t know why. It makes enormous sense economically.

14. Speaking of politics, what’s the likely fallout if the nation succumbs to a recession? Bad news for Biden and the Democrats. Even though presidents and parties that control Congress don’t have much leverage over the economy, they get blamed for a bad one and get credit for a good one. Jimmy Carter and George H.W. Bush both lost reelection because of bad economies.

15. Ugh. Precisely. Which is another reason why it’s important for Biden and the Democrats to be seen taking all the actions I mentioned above — and calling out corporations and CEOs that are using inflation as a cover for hiking prices.

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Friends,

I trust Joe Biden’s steadiness and judgment, and if he runs again, I’ll probably back him in 2024. But today I want to suggest someone who isn’t even a Democrat, and whose positions on many issues I (and I suspect you) strongly disagree with — but who could possibly be the best president of the United States for the perilous time we’re entering.

I’m referring to Liz Cheney.

Before you reject this idea out of hand, please bear with me. Even if you still end up thinking it’s a ludicrous notion, let me take you through the argument.

I’ve been in and around American politics for well over a half century. I’ve never seen this nation as bitterly divided as it is now — not during the Civil Rights movement, not during the Vietnam War, not during Watergate. And it looks as if the current division is growing deeper and even more dangerous.

Donald Trump didn’t just attempt a coup. He attempted to push America into a civil war. And he’s still at it — endorsing candidates who will repeat his Big Lie that the 2020 election was stolen from him, encouraging states to change their election laws so Republican lawmakers can disregard the popular vote, and pushing them to install secretaries of state and other election officials who will count votes in ways favorable to Republicans — especially him, should he run for president again in 2024.

In short, Trump wants a civil war centered on himself — on his Big Lie, and on the racist nationalism he fueled to build his political base. Trump’s narcissism is so poisonous that he is committed to splitting the nation over its commitment to him. As president, Trump never understood that he was president of America as a whole. He considered himself to be president only of his supporters, whom he called “my people.” Those who didn’t support him were his enemies. Since the 2020 election, he has done everything possible to stoke war between his supporters and his perceived enemies. Clearly, that’s his aim in 2024.

It will be impossible to reunite this nation without a leader who is the exact opposite of Trump — driven not by narcissism but by a passion for the rule of law and the Constitution — someone who has staked everything on opposing Trump’s demagogic authoritarianism, someone with huge stores of courage and integrity.

Since the attack on the Capitol, Liz Cheney has demonstrated more courage and integrity than any other politician in America. Democratic lawmakers have opposed Trump’s Big Lie, to be sure, but most knew they wouldn’t pay a price for their opposition. Cheney knew she would pay a price — and she has.

Six days after the attack on the Capitol — when no other Republican in the House or Senate was willing to rebuke Trump — she said this on the House floor:

Much more will become clear in the coming days and weeks, but what we know now is enough. The President of the United States summoned this mob, assembled the mob, and lit the flame of this attack. Everything that followed was his doing. None of this would have happened without the President. The President could have immediately and forcefully intervened to stop the violence. He did not. There has never been a greater betrayal by a President of the United States of his office and his oath to the Constitution.

The following day, on January 13, Cheney joined nine House Republicans and 222 Democrats in voting to impeach Trump. She subsequently agreed to be vice-chairman of the committee investigating the January 6 insurrection.

As a result of these actions, Trump and House G.O.P. leaders have sought to drive Cheney out of the party. House Republicans revoked her status as the third-highest-ranking leader of the Republican caucus. Wyoming Republicans have censured her. Trump and the Republican Party are backing her primary challenger in Wyoming, Harriet Hageman, whose campaign has received huge amounts of funding from rightwing groups. Polling shows Cheney faces an uphill battle to keep her seat.

But she has not wavered.

Last Thursday evening, at the start of the televised hearings of the committee, Cheney laid out the case against Trump, whom, she argued, had thrown the republic into “a moment of maximum danger” not seen before. “The sacred obligation to defend this peaceful transfer of power has been honored by every American president — except one,” she said. She told members of her own party who continued to support Trump’s Big Lie that they were “defending the indefensible” and “there will come a day when President Trump is gone, but your dishonor will remain.”

As I said, Cheney is a firm conservative and I have opposed many of her positions. But we are at an inflection point in this nation over a set of principles that transcend any particular positions or policies. If we cannot agree on the sanctity of the Constitution and the rule of law, we are no longer capable of self government.

The real battle in 2024 will not be between Democrats and Republicans. It will be between forces supporting democracy in America and those supporting authoritarianism. Trump is the de facto leader of the forces supporting authoritarianism. Liz Cheney has become the de facto leader of the forces supporting democracy.

I hope she declares herself a candidate for president and runs in the Republican primary against Trump. The G.O.P desperately needs her moral clarity and authority. She would give voice to Republicans who have been voiceless, and allow the Republican Party to redeem itself — to reclaim the status it needs to ever again be a governing party. If she runs, many currently independent voters — who outnumber registered Republicans — could register as Republicans and vote for her, possibly delivering Trump a sharp repudiation in his own party and making it safe for other Republican lawmakers to declare the truth about the 2020 election.

In her courage and integrity, Cheney — although conservative — reminds me of Senator Paul Wellstone, one of the most progressive politicians I’ve ever known. They also have in common a love of democracy.

The last time I spoke with Paul was soon after he voted against the resolution authorizing war in Iraq, on October 11, 2002. The trauma of 9/11 was still fresh, but Wellstone doubted that Iraq had “weapons of mass destruction,” as George W. Bush and his administration claimed. Wellstone worried that America was acting out of anger rather than principle, and that there was no justification for such an invasion.

I agreed with him but was concerned for him. He was up for reelection. It was a tight race. Polls showed that most of his constituents in Minnesota supported the war.

“Don’t worry, Bob,” he said. “If I lose, that’s okay. I was elected to vote my conscience. If my constituents don’t support my conscience, I shouldn’t represent them.”

In the following days, Wellstone explained to Minnesotans why he voted the way he did, and his polls rose. Had he lived, he may well have won reelection. (On October 25, 2002, eleven days before the election, he died in a plane crash on his way to a campaign event near Eveleth, Minnesota. His wife, Sheila, and daughter, Marcia, also died on board.)

Liz Cheney’s courage and integrity are closer to Paul Wellstone’s than to almost any current politician I can think of. All of America needs her to run for president in the Republican primaries for the 2024 election. Do we need her to win as well?

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