Krebs Daily Briefing 25 May 2016


Egypt’s Long History of Air-Disaster Denial

I rely on God.” That’s what Gameel Al-Batouti, the co-pilot of EgyptAir Flight 990, repeated — 11 times in Arabic — before the aircraft he was operating mysteriously plunged into the icy waters of the Atlantic Ocean off the coast of Massachusetts on Oct. 31, 1999. That audio, captured by the recovered flight recorder, was a key piece of evidence for U.S. authorities and the National Safety Transportation Board (NTSB), which concluded that Al-Batouti was suicidal and had purposefully brought the airliner down while the first officer was out of the cockpit. The Egyptian Civil Aviation Agency was adamant, however, that mechanical error was to blame and dismissed the NTSB investigation as “flawed and biased.” Egypt still officially denies that Al-Batouti committed suicide. Now Egypt is once again under scrutiny to deliver answers in the disappearance of EgyptAir Flight 804, which crashed into the Mediterranean with 66 people on board on May 19. This time, in contrast to past air disasters, the Egyptian government initially suggested that it was terrorism, even though the exact cause of the crash remains unclear and no terrorist group has claimed responsibility. As it has done previously, Cairo appears to want to deflect blame onto other countries. A terrorist attack would reflect poorly on France’s airport security, whereas a technical issue with the plane would leave EgyptAir to blame. But Egyptian officials later walked that suggestion back and disputed reports that the small size of the body parts found indicated that a large explosion had brought down the plane. The equivocation from Cairo was a reminder anyone expecting to get to the bottom of the tragedy should reflect on Egypt’s lack of transparency in previous investigations. “There has been a very checkered past in terms of Egyptian openness,” says says Adam Schiff, a California Congressman and House Permanent Select Committee on Intelligence who has long criticized Egypt’s lack of cooperation in international investigations. More:

Taliban Name New Leader After Confirming Predecessor Died in U.S. Strike

KABUL, Afghanistan — The Taliban broke their silence early Wednesday over the death of their leader, Mullah Akhtar Muhammad Mansour, confirming in a statement that he had been killed in an American drone strike. Mawlawi Haibatullah Akhundzada, a deputy to Mullah Mansour, was selected as the new leader of the Taliban, and Sarajuddin Haqqani and Mullah Muhammad Yaqoub were chosen as his deputies, the movement’s leadership council said in the statement. Mullah Yaqoub, believed to be no older than 25, is the son of the previous Taliban chief, Mullah Muhammad Omar, whose death was acknowledged in July 2015. President Obama said Monday that Mullah Mansour had been killed in a drone strike on Saturday in the restive Pakistani province of Baluchistan. The Taliban’s spokesmen, who publish regular updates from battlefields across Afghanistan, had remained silent since Mullah Mansour’s killing, as the movement’s leaders convened in the Pakistani city of Quetta to discuss his burial, as well as his successor. One of their first meetings was at the home of Mawlawi Haibatullah, a figure with deep religious credentials who had been a lesser-known deputy to Mullah Mansour. Over the past year, more attention had focused on another deputy, Mr. Haqqani, who increasingly had been running the day-to-day war for the Taliban as Mullah Mansour was occupied with a campaign of quashing internal dissent and with travel abroad. Taliban commanders who were aware of the conversations in Quetta had described Mawlawi Haibatullah as a voice guiding the discussions of succession, but not as a front-runner for the leadership. Many of the movement’s leaders had pushed for a relatively obscure figure to succeed Mullah Mansour — to avoid a divisive personality and for purposes of enhanced security, keeping in mind that Mullah Omar’s reclusive ways long protected him and even concealed his death for years. It appeared Wednesday that such criteria had served Mawlawi Haibatullah well.

The Overwhelming Barriers to Successful Immigration Reform

Nearly every new American president of the modern era has viewed the nation’s immigration policies as deeply flawed. Yet few of these modern executives have been willing to make immigration reform—one of the most dangerous issues in American politics—central to their agenda. Even fewer have had a measure of success doing so. Even the most dramatic and successful of all—Lyndon Johnson’s landmark 1965 reform—came with high political costs and uneven results. Yet, Johnson’s battle for reform underscores the way immigration policy can be a potent political tool and offers a model for future presidents. Today, as in the past, efforts to significantly revise U.S. immigration laws and policies have divided even the most unified party coalitions. Campaigns for sweeping reform in this arena have regularly followed a tortured path of false starts, prolonged negotiation, and frustrating stalemate. And when non-incremental reforms have passed, rival goals and interests have complicated enactment. The result has been legislation that is typically unpopular among ordinary citizens and stakeholder groups alike, and which often places new and sometimes competing policy demands on the government. These dynamics—intraparty conflicts, elusive problem definition, difficult compromises, and unpopular outcomes—have typically frustrated most American presidents. Lyndon Johnson was well aware of these challenges as a first-year president, yet he forged ahead knowing the fight for sweeping immigration reform would be far more taxing and unpredictable than nearly all of the legislative proposals on his immense agenda. He ultimately expended far more political energy on this issue than anyone on his team anticipated, with bedeviling twists and turns on the path to major reform. The Johnson administration learned that major reform often hinges upon the formation of “strange bedfellow” alliances that are unstable and demand painful concessions. But they also believed immigrants and refugees served their larger visions for the nation and refused to let nativists use rhetoric against those groups to codify their ethnic, racial, and religious animus. Johnson recognized that failing to spearhead an immigration overhaul would significantly undercut his civil-rights, social-justice, and geopolitical goals. He upended xenophobic policies that had prevailed for half of a century, and his remarkable legislative achievement has had dramatic unforeseen consequences over time, including an unprecedented change in the country’s demographic landscape. More:


Senate rejects fiduciary rule; Obama vows to veto

The Senate voted Tuesday to disapprove and nullify the new fiduciary rule released by the Department of Labor, by a vote of 56-41, along party lines. The House of Representatives passed a similar measure on April 28, also along party lines. Under the Congressional Review Act, Congress can pass a resolution of disapproval that legally prevents a federal agency from implementing a rule, or issuing a substantially similar rule without congressional authorization, within 60 legislative days of the rule’s release, which was April 6. The Congressional Review Act is rarely used because presidents can veto them, and President Barack Obama has promised to veto the resolution. Senate Finance Committee Chairman Orrin Hatch, R-Utah, during Senate floor debate called the resolution “the best near-term vehicle we have to putting the administration in check with regard to this rule.” Mr. Hatch has drafted legislation to give the Treasury Department jurisdiction over rules governing financial advice and marketing. Sen. Johnny Isakson, R-Ga., a sponsor of the measure, has also introduced legislation that would block the Department of Labor rule without congressional approval, and allow some types of investment advice to be exempt from prohibited transaction rules.


Kenneth Starr, Who Tried to Bury Bill Clinton, Now Only Praises Him

An unlikely voice recently bemoaned the decline of civility in presidential politics, warned that “deep anger” was fueling an “almost radical populism” and sang the praises of former President Bill Clinton — particularly his “redemptive” years of philanthropic work since leaving the White House. The voice was that of Kenneth W. Starr, the former Whitewater independent counsel, whose Javert-like pursuit of Mr. Clinton in the 1990s helped bring a new intensity to partisan warfare and led to the impeachment of a president for only the second time in the nation’s history. The presumptive Republican nominee, Donald J. Trump, increasingly seems to be trying to relitigate the scandals that Mr. Starr investigated, dredging up allegations of sexual transgressions by Mr. Clinton to accuse Hillary Clinton — the likely Democratic nominee — of having aided and enabled her husband at the expense of Mr. Clinton’s female accusers.

But Mr. Starr expressed regret last week that so much of Mr. Clinton’s legacy remains viewed through the lens of what Mr. Starr demurely termed “the unpleasantness.” His remarks seemed almost to absolve Mr. Clinton, if not to exonerate him. “There are certain tragic dimensions which we all lament,” Mr. Starr said in a panel discussion on the presidency at the National Constitution Center in Philadelphia. “That having been said, the idea of this redemptive process afterwards, we have certainly seen that powerfully” in Mr. Clinton’s post-presidency, he continued, adding, “President Carter set a very high standard, which President Clinton clearly continues to follow.” He called Mr. Clinton “the most gifted politician of the baby boomer generation.” “His genuine empathy for human beings is absolutely clear,” Mr. Starr said. “It is powerful, it is palpable and the folks of Arkansas really understood that about him — that he genuinely cared. The ‘I feel your pain’ is absolutely genuine.” For some time, Mr. Starr, a Christian who is now the president and chancellor of Baylor University, a private Baptist school in Waco, Tex., has sought to put his years as a political combatant behind him. More:


UVa.’s Darden program jumps high on Financial Times list

The University of Virginia’s Darden School of Business offers the fourth-best executive education program in the world, according to the Financial Times rankings for 2016. The school’s executive education open-enrollment program climbed the rankings from the No. 11 position it held in 2015, after a drop from the No. 3 slot it occupied in 2014. On a list that includes 75 schools, Darden sits behind only International Institute for Management Development in Switzerland (No. 1), the University of Navarra’s Iese Business School in Barcelona (No. 2), andHarvard Business School (No. 3). That makes Darden the second-best program in the U.S., according to these rankings. This comes after the university announced in February it would be bringing its MBA for Executives and Global MBA for Executives programs to Greater Washington starting in August, part of an effort to accommodate international students who move to the U.S. to work in the D.C. region while earning their degrees. The executive education program is part of the school’s continuing education offerings and is separate from the MBA and Global MBA programs, which are part of Darden’s degree programs. The Executive Education track also hosts classes in the D.C. area, including “Excellence in Communication: Presenting as a Leader” in October. The Darden executive education’s open-enrollment program, which is taught by Darden faculty and delivered by the Darden School Foundation,also ranks on the Financial Times list as the top program in six categories: teaching methods and materials, course design, preparation, food and accommodation, faculty and facilities. The program has ranked No. 1 for faculty for three consecutive years, and for facilities for two. The program either improved or held its position in nearly every category since 2015, based on both participant survey ratings and data provided by the business school. More:

Trump’s short list of vice presidential candidates

Donald Trump has begun lining up candidates for the ultimate job interview — his vice presidential running mate. The presumptive Republican presidential nominee is considering a list that includes a retired general and some of Washington’s most powerful lawmakers. One of the most talked-about candidates on the billionaire’s short list is Tennessee Sen. Bob Corker, who met with The Donald on Monday at Trump Tower in Manhattan. Corker emerged from the 80-minute meeting claiming there was no reason to believe he’s on Trump’s short list — exactly what a VP candidate is supposed to say.

“We had actually never met before. . . We had a conversation,” Corker told reporters. “It was a good meeting about foreign policy, domestic issues.” Corker, who is chairman of the Senate Foreign Relations Committee, said he and Trump discussed US relations with China and Russia. Corker would bolster Trump’s perceived weakness on foreign affairs. Sources said Alabama Sen. Jeff Sessions — one of Trump’s earliest supporters — also is under consideration. Sessions’ views on immigration match Trump’s. A surprise name on the list is retired Lt. Gen. Michael Flynn, a national security adviser to Trump who has emerged as one of the most buzzed-about veep contenders, sources familiar with the deliberations said. Flynn retired in 2014 after a 33-year career in military intelligence that included hunting down terrorists as director of the Defense Intelligence Agency. Flynn would be an outside-the-box choice because Trump has strongly suggested he would likely select someone connected to Congress or with elective experience to be his veep. “I think I’ll probably go the political route,” Trump said this month on MSNBC’s “Morning Joe.” “Somebody that can help me with legislation and somebody that can help me get things passed and somebody that’s been friends with the senators and the congressmen and all.”

But, like Trump, the military man is not afraid to stir up controversy. In February, Flynn said Hillary Clinton should drop out of the presidential race while the FBI investigated her use of a private email server. “If it were me, I would have been out the door and probably in jail,” Flynn told CNN. The Clinton campaign brushed off Flynn’s comments as “silly.” Trump campaign manager Corey Lewandowski on Monday declined to discuss specific names being considered for vice president. “We’re not going to go down that route. Mr. Trump is going to be the person making the final decision,” he said. Lewandowski emphasized that Trump prefers “someone with elective experience,” which would make Flynn a dark horse.

He said Trump’s meeting with Corker focused mostly on “foreign-policy discussions,” not the vice presidency. During a recent interview with Fox News host Greta Van Susteren, Trump suggested as many as seven candidates were on his veep list. He said former Arizona Gov. Jan Brewer and Oklahoma Gov. Mary Fallin could be contenders. Meanwhile, former House Speaker Newt Gingrich is pushing for consideration in the veepstakes, sources said.

Gates Foundation Admits Missteps of Common Core

In the Gates Foundation’s annual letter, dreamily entitled “What If…,” CEO Sue Desmond-Hellman writes of past progress and future goals. The foundation aims to save the world from what Bill and Melinda Gates consider its greatest problems: namely, infectious diseases, cigarette smoking and the American education system. This year’s letter reveals that of the big three, it’s the education overhaul—throwing money at Common Core to bring it live coast-to-coast—that’s presented the most unforeseen challenges.

Unfortunately, our foundation underestimated the level of resources and support required for our public education systems to be well-equipped to implement the standards. We missed an early opportunity to sufficiently engage educators – particularly teachers – but also parents and communities so that the benefits of the standards could take flight from the beginning. This acknowledgement of the bumpy execution echoes a criticism of the broad-scale curricular reset many teachers have voiced since its implementation across more than 40 states started in 2010. That is, that rebuilding every lesson or designing years of original curricula to meet stifling new test-driven standards requires more time and attention than any classroom teacher has to spare, and more guidance and preparation than have been provided. That’s not to mention controversial requirements that math and science teachers instruct students in unfamiliar methods—at an ultimate disservice to their test scores: In the spring of 2015, public high school seniors, who had been exposed to Common Core math since fourth grade, showed a decline in their scores over the last two years. More:


Bill Cosby Sexual Assault Trial Can Proceed, Judge Rules

NORRISTOWN, Pa. — A judge ruled on Tuesday that Bill Cosby’s trial on sexual assault charges could go forward, setting the stage for a potential legal battle over the prosecution’s evidence. The ruling, by Judge Elizabeth A. McHugh, ended five months of efforts by Mr. Cosby’s lawyers to have the charges dismissed. The decision, after a 3½-hour hearing at the Montgomery County Courthouse here, means that a man who was once one of America’s most beloved entertainers but has been pursued by allegations of sexual misconduct by dozens of women must face at least one of his accusers at trial, probably later this year. Mr. Cosby, 78, has denied the allegations. “This case will move forward,” Judge McHugh told the crowded courtroom. Mr. Cosby, who sat flanked by his lawyers throughout the hearing, stood at the end and said, “Thank you.” The judge wished him luck. Mr. Cosby waived a formal arraignment, which means he automatically enters a plea of not guilty. The next stage will be for a judge to set a trial date. Mr. Cosby was helped from the courtroom by his aides without speaking further. His three lawyers crowded into a separate car and would not comment on the decision beyond offering a thumbs up when asked how Mr. Cosby was feeling. The entertainer was charged in December with drugging and sexually assaulting Andrea Constand, a former Temple University staff member for whom Mr. Cosby became a mentor and friend. Prosecutors said he took advantage of his counseling role, gave her pills and assaulted her at his home outside Philadelphia in early 2004. Ms. Constand was not in the courtroom on Tuesday. During the hearing, Mr. Cosby’s lawyers attacked the prosecution for not calling her as a witness but instead relying on a statement she gave to the police in 2005. A Montgomery County detective read portions of the statement outlining the allegations. More:

Ryan Said to Tell Confidants He’s Ready to End Trump Impasse

House Speaker Paul Ryan has begun telling confidants that he wants to end his standoff with Donald Trump in part because he’s worried the split has sharpened divisions in the Republican Party, according to two people close to the lawmaker. Ryan aides say nothing has been decided about a possible Trump endorsement. But Trump’s campaign manager, Paul Manafort, told a small group of Republican lawmakers Thursday that he expects Ryan to endorse the party’s nominee as early as this week, according to two people in the meeting. If Ryan were to endorse Trump, the move would end a nearly unprecedented standoff between the House speaker and his party’s presumptive presidential nominee, and remove the biggest remaining obstacle to Trump’s efforts to unite Republicans around his campaign. In fact, Manafort told the gathering of Republican lawmakers that Ryan’s endorsement would put more pressure on the party’s remaining Trump holdouts to fall in line. It would also link the speaker more directly to Trump, marking a significant break for a man who ran on a presidential ticket in 2012 with Mitt Romney — by far Trump’s loudest critic inside the party. It’s not clear how Ryan, who said that he wasn’t interested in a “fake unification” of his party, would choreograph an endorsement after his initial public reluctance. “There’s no update and we’ve not told the Trump campaign to expect an
endorsement,” AshLee Strong, a Ryan spokeswoman, said in an e-mail. “He’s also not told anyone he regrets anything.”

Jeweler Tiffany posts steepest sales drop since financial crisis

Tiffany & Co (TIF.N) reported its steepest drop in quarterly sales since the peak of the global financial crisis, as a strong dollar discouraged tourists from buying its high-end jewelry and eroded revenue from markets outside the United States. Shares of the company, whose “Blue Book” collection pieces were worn by actress Cate Blanchett on the Oscar red carpet this year, fell 4.5 percent in premarket trading on Wednesday. In the Americas region, Tiffany’s sales at stores open more than a year plunged 10 percent in the first quarter. Analysts on average had expected a 9.1 percent decline, according to research firm Consensus Metrix. “Decline in customer share is evident among most shopper segments, including more affluent households,” said Neil Saunders, the chief executive of research firm Conlumino. “It is especially pronounced among affluent younger shoppers where the brand is seen as representing ‘old world luxury’.” The Americas region accounted for nearly half of the jeweler’s total sales last year. Chief Executive Frederic Cumenal said the company also faced pressure from lower foreign tourist spending in Europe and Asia, particularly in Hong Kong. Slowing economic growth in China has hurt tourist traffic from mainland China to Hong Kong. Tiffany’s same-store sales in the Asia Pacific region, its second biggest market, slumped 15 percent. Japan was the only bright spot for Tiffany in the quarter, with same-store sales rising 12 percent. WEAK FORECAST: Tiffany forecast a mid-single digit percentage fall in its full-year profit. The company had earlier said it expected earnings to stay flat or fall by up to mid-single digit in percentage terms. Net income fell 16.6 percent to $87.5 million, or 69 cents per share, in the quarter ended April 30. Tiffany said it expected current-quarter profit to “decline by a similar rate”. Net sales dropped 7.4 percent to $891.3 million – the biggest fall since mid-2009 – missing the average analyst estimate of $915.1 million, according to Thomson Reuters I/B/E/S. Tiffany’s shares were trading at $61 before the bell. Up to Tuesday’s close, the stock had lost more than a quarter of its value in the past 12 months. Jeweler Tiffany posts steepest sales drop since financial crisis


Three powerful men, three Alabama scandals

(CNN)Football reigns supreme in Alabama, where teams from the state have won five of the last nine national college championships. The bare-knuckled bloodsport that is state politics, however, is producing an equally remarkable if more shameful record. A rare convergence of events has led to the state’s three most powerful public officials — Gov. Robert Bentley, House Speaker Mike Hubbard and Chief Justice Roy Moore — each embroiled in scandals. Bentley, the embattled second-term governor, is facing calls for his ouster over an inappropriate relationship with a former aide. Moore, chief of the state’s supreme court, has been suspended over his flouting of federal law allowing same-sex marriage. Hubbard, meanwhile, goes on trial this week on felony corruption charges. Three state leaders. Three branches of state government. Three potential stains on Alabama’s image and history. It’s enough to make Alabamans weep into their Crimson Tide towels. “It’s not every day that you see three of the most powerful elected officials in a state come under fire like this at the same time,” said Jordan Libowitz, communications director for Citizens for Responsibility and Ethics in Washington, a government ethics watchdog. “Citizens need to know that their elected officials are acting in the public interest, not for their own personal gain.”


Prosecution: Hubbard used office to make $2.3M. Defense: None of this is illegal

OPELIKA, Ala. — Tuesday was day one of the long-anticipated trial of Alabama House Speaker Mike Hubbard, who was indicted in October of 2014 on 23 felony counts of using his public office for personal gain. According to an almost two-hour opening statement from the prosecution, Hubbard has made roughly $2.3 million dollars in various schemes designed to leverage the power of his public positions to enrich himself. The charges are as follows:

  • Four counts of using of his office as Chairman of the Alabama Republican Party for personal gain;
    • One count of voting for legislation with a conflict of interest;
    • Eleven counts of soliciting or receiving a thing of value from a lobbyist or principal;
    • Two counts of using his office as a member of the Alabama House of Representatives for personal gain;
    • Four Counts of lobbying an executive department or agency for a fee;
    • And one count of using state equipment, materials, etc. for private gain.

If convicted, Hubbard faces a maximum penalty of two to twenty years imprisonment and fines of up to $30,000.00 for each count, all of which are Class B Felonies. The Alabama Attorney General’s Special Prosecutions Division Chief Matt Hart broke down the charges into four overarching categories alleging the following: 1. While Chairman of the Alabama Republican Party, Hubbard directed money to companies in which he held and ownership stake.

  1. As Speaker of the Alabama House of Representatives, Hubbard used his power to benefit companies that were paying him as a consultant.
  2. While in office, Hubbard solicited investments for one of his businesses from individuals known as “principals,” which are businessmen who employ lobbyists.
  3. While in office, Hubbard solicited business help from numerous registered lobbyists, including former Governor Bob Riley.

“He sees an opportunity and he takes it,” Hart said of Hubbard. Hubbard’s lead defense attorney Bill Baxley, who is a former Alabama Attorney General, called the prosecution’s claims “mumbo jumbo” and essentially conceded Hubbard did some of the things he is accused of, but insisted they are not crimes. Baxley said the state’s ethics laws include provisions that allow citizen legislators, who serve in the legislature in a part-time capacity, to conduct regular business dealings. He also said that Hubbard’s consulting contracts came as a result of his friendships and prior business relationships, not because of his office. “They’re not going to prove anything,” said Baxley. “We’re going to prove something to clear the air, that these things they’re saying are crimes, we’re going to show what they were.” Former Alabama Republican Party executive directors Tim Howe and John Ross were the first to testify in the case. They are now partners in the Montgomery-based lobbying firm Swatek, Howe & Ross. Ross testified that Hubbard had instructed him to use Craftmaster, a Hubbard-owned printing firm, for all of the Party’s printing needs, but added that Hubbard believed it was the best use of Party resources. Both Hower and Ross testified that Craftmaster did a good job on the work they were given. Barry Whatley, the president of Craftmaster Printing, is expected to testify on Wednesday. Other highly anticipated witnesses could include Alabama Governor Robert Bentley and Secretary of Commerce Greg Canfield, who prosecutors say Hubbard lobbied on behalf of one of his clients.


How a Corrupt GOP Is Running Alabama Into the Ground

To get a sense of how Mike Hubbard has affected the lives of everyday Alabamians, type #IamMedicaid into Facebook or Twitter. Up pops a seemingly endless series of photos of children: a pigtailed toddler with a cleft lip and palette; a boy with two missing front teeth who fell into a fire and spent three weeks in a burn unit; a girl with a congenital heart defect; a boy in a wheelchair with a half-shaven head who suffers from Hirschsprung’s Syndrome, and is recovering from brain surgery to cure an infection in his central nervous system. They’re all smiling and holding placards that bear the “I am Medicaid” slogan, a social campaign that is tied to one of the 23 felony counts the speaker of the Alabama House of Representatives faces in a trial that begins this week—the one charge that might well be the most difficult for Hubbard to beat. In 2013, Hubbard voted 12 times for a bill that would give a monopoly over Alabama’s Medicaid prescription drug program, worth some $40 million a year, to American Pharmacy Cooperative, Inc. (APCI), with which he had a $5,000-a-month contract. Hubbard has claimed that his work for APCI concerned only out-of-state business, and that he wasn’t aware that the bill would benefit the company. But one of his former colleagues, Greg Wren, who pleaded guilty during the grand jury phase of the case, is expected to testify that Hubbard directed him to insert 23 words into the bill that would give APCI its monopoly. But Hubbard’s alleged crime is just the most flagrant example of how Alabama lawmakers abuse Medicaid. The Alabama legislature, in which the House speaker enjoys almost supreme power, has repeatedly underfunded the state’s Medicaid program, to the point that it now runs the risk of losing its federal matching funds, which would leave millions of Alabama residents without even minimal health care and imperil the state’s entire medical system. The #IamMedicaid campaign is a response to that perilous shortfall. But Hubbard’s track record suggests that as long as he’s the most powerful man in Alabama, his constituents will only be heard if they speak with dollar signs. More:


Gov. Bentley Signs Bill for Governor’s Office of Minority Affairs

Governor Robert Bentley on Tuesday held a ceremonial bill signing for House Bill 534. This legislation, sponsored by State Representative John Knight and State Senator Roger Smitherman, codifies the Director of the Governor’s Office of Minority Affairs (GOMA) as a cabinet level position and creates an advisory board on minority affairs. Alabama is only the second state in the country to have a cabinet level position devoted to minority and women’s affairs. Governor Bentley said the creation of the office is critical to addressing the challenges of minorities and women.“As  Governor, issues impacting all Alabamians are important to me,” Governor Robert Bentley said. “When I created the Governor’s Office of Minority Affairs in March, I wanted a resource and a new perspective on addressing minority and women’s issues in Alabama. With the executive order, there was no guarantee that the office would continue after my term. I appreciate the Alabama Legislature, especially the bill sponsors, for assisting me in elevating this position to a cabinet level and establishing it into law so that it will remain an important resource for future leaders. The Governor’s Office on Minority Affairs is an important part of the Great State 2019 plan.” In March, Governor Bentley created the office by executive order and appointed Mobile native Nichelle Nix as director. With the new legislation, the office will remain a part of all future governors’ cabinets. The position is an important liaison between minority communities and the Governor.

The State of Alabama has a strong population of diverse racial and ethnic groups, including African-Americans, Hispanics, Caucasians, Asians, Native Americans, and others. The GOMA will advise the Governor on issues affecting minorities, including women, and will focus on the improvement of the overall quality of life of minorities, specifically in the areas of education, health, economics, political participation and empowerment, housing, employment, civil rights, criminal justice and race relations.

“It has been an honor to serve as the Director of the Governor’s Office of Minority Affairs for two months. During my short time, I have met so many wonderful Alabamians who create a unique and significant mark on our state.  I have developed a greater awareness for segments of the community that may need additional assistance, and it is my singular mission to connect minorities and women to opportunities that address their needs and help them reach their full potential.  I appreciate the Alabama Legislature taking an important step to codify this legislation and allow the office to become a permanent position in the Governor’s cabinet, and I thank Governor Bentley for his vision to prioritize the needs of minorities.”

This legislation was signed into law May 11, 2016.



Dewey, Cheatam & Howe? First witnesses in Hubbard trial are doozies

One line stood out in the trial of Alabama House Speaker Mike Hubbard today. One line. And it came from Tim Howe, a political operative and former executive director of the Alabama GOP, a guy who had just admitted on the stand not only that he used a pass-through company to funnel money to a Hubbard business, but that he unilaterally made the decision to skim 5% off the top. A decision, by the way, that ticked Hubbard off for a time. But that wasn’t the line that stood out. No. That was when Howe was describing the panic that took place in his firm, Swatek, Howe & Ross, on the 2013 evening when lobbyist Ferrell Patrick told Howe’s partner John Ross that Hubbard was taking boatloads of cash from American Pharmacy Cooperative Inc. It happened in the Statehouse, just as the Legislature was about to vote on the state budget, a budget that included a clause that would greatly benefit Hubbard’s client, APCI. The partners were summoned. A meeting was called with Hubbard’s chief of staff, and hands were wrung all around. And what were they concerned about, prosecutor John Gibbs asked? And then came the line: “It could present ethics problems for all of us,” Howe said. And the jury heard that. Loud and clear. This was a guy who just admitted setting up a company with his partners to hide money for Hubbard, who admitted taking a percentage just because he could. And he was the one worried about ethics. He didn’t recall everything that was said in that meeting at the statehouse on the night the budget was passed. But he knew the gist of it:  “This is a problem.” It was a bigger problem when Hubbard voted for the budget, even though it had that nugget for his client – a phrase that would give APCI a monopoly over Medicaid prescriptions in Alabama — buried inside. The language was later stripped out in conference committee, but the damage – at least the way prosecutors see it – was done. And it didn’t end there. Howe’s partner John Ross testified that he was angered by the revelation, though he said he was most angry at lobbyist Patrick, who approached him about representing APCI but didn’t initially reveal the Hubbard connection. “There was a perception problem if there was no other problem,” Ross testified. Two days later Swatek, Howe & Ross severed ties with Patrick. The first day of the Hubbard trial – he faces 23 counts of violating Alabama’s ethics law – began with prosecutor Matt Hart laying out a sobering timeline of Hubbard’s alleged transgressions. It describes how Hubbard rose to power, how his private businesses began to struggle, and how he used the mantle of his office to solicit hundreds of thousands of dollars in consulting business. And how, Hart described, he did little to earn that money except serve as speaker of the house. Defense lawyer Bill Baxley countered by saying the charges are “mumbo jumbo” and “gobbledygook.” He said Hubbard tried to follow the ethics law, but is being prosecuted anyway. At one point he argued that “it appears they indicted Mike for being friends with the Rileys.” He was referring to former governor Bob Riley, who is named in the indictment as a lobbyist Hubbard tried to solicit for business. Baxley on day one did not so much dispute the facts, but argued that they don’t add up to felonies. Mike “sent out emails that seem to be pushy and seem to be greedy but they are not criminal,” Baxley said. The trial will continue Wednesday, when former Hubbard Chief of Staff Josh Blades is expected to take center stage.


Morning Money

WARREN RIPS INTO TRUMP — Sen. Elizabeth Warren on Tuesday night cranked up her general election rhetoric against Donald Trump. A VP warm-up act? Maybe. But even if Warren isn’t Hillary Clinton’s running mate she will be a powerful surrogate throughout the campaign.

Highlights: “Donald Trump was drooling over the idea of a housing meltdown — because it meant he could buy up a bunch more property on the cheap. What kind of a man does that? Root for people to get thrown out on the street? … I’ll tell you exactly what kind — a man who cares about no one but himself. A small, insecure moneygrubber who doesn’t care who gets hurt, so long as he makes some money off it. What kind of man does that? A man who will NEVER be President of the United States.

“Sometimes Trump claims he is tough on Wall … But now he’s singing a very different song. Last week, he said that the new Dodd-Frank financial regulations have, and I’m quoting here, ‘made it impossible for bankers to function’ and he will put out a new plan soon that ‘will be close to dismantling Dodd-Frank.’ Donald Trump is worried about helping poor little Wall Street? Let me find the world’s smallest violin to play a sad, sad song.”

MORE WARREN ACTION — POLITICO’s Zachary Warmbrodt: “Earlier in the day, [Warren] gave a speech to a roomful of her allies at an event kicking off a ‘Take On Wall Street’ campaign backed by labor and public interest groups — including officials who are on opposing sides of the Clinton-Sanders primary fight. A goal of the campaign is to drum up support for reining in the finance industry, including reinstating Depression-era restrictions on banks — a signature policy of Warren and Sanders, but one that Clinton has declined to adopt”

POLITICO AT THE CONVENTIONS — Live programming originating from the POLITICO Hub during both the Republican and Democratic National Conventions this July will feature a range of conversations from headline interviews and policy discussions to watch parties and performances. Sign up to receive notifications about live programming. MM will be hosting economic panels at each convention.

FIRST LOOK: CEI ON INCOME INEQUALITY — CEI has a report out Wednesday on income inequality, arguing that it’s “wrong to focus on the ratio between the haves and have nots instead of real solutions that improve people’s lives.”

FIRST LOOK II: BUDGET COMMITTEE RIPPED — Qorvis’ Stan Collender in opening remarks prepared for a House Budget Committee hearing this morning on “Reclaiming Congressional Authority Through The Power Of The Purse”: “The premise of this hearing is that the White House has seized control over the budget and usurped Congress’ power of the purse. This is completely false. The White House has not seized control over spending and taxing. Instead, Congress has willfully and shamefully ceded its fiscal powers by refusing to exercise them and any attempt to characterize it differently is nothing more than political misdirection.

“Actually, saying that Congress has abrogated its power-of-the-purse duties gives it way too much credit. In reality, the House and Senate have been running away almost at full speed from their legally required budget responsibilities, and they have been doing it with impunity. How else can you characterize this committee’s refusal to hold a hearing earlier this year on the president’s budget?”

TRUMP PAID LOWEST RATE POSSIBLE — WSJ’s Byron Tau: “Trump’s campaign manager said Tuesday that the businessman and presumptive Republican presidential nominee aggressively took deductions to pay the lowest income-tax rate possible so he could pump the tax savings back into hiring more people for his businesses.

“Corey Lewandowski told CBS News Mr. Trump would publicly release his tax returns when the Internal Revenue Service concludes an audit. ‘Mr. Trump is proud to pay a lower tax rate, the lowest tax rate possible,’ he said”

GREECE MAKES A DEAL — FT: “Greece’s creditors agreed the terms on a wide-ranging deal to secure debt relief for the country, after marathon talks in Brussels … Creditors have decided on measures to provide short, medium and long-term debt restructuring on Greece’s 180 per cent debt mountain, having been locked in eleven hours of negotiations in Brussels, ending at 2am local time”

DRIVING THE DAY — House Budget Committee hearing on the power of the purse at 9:30 a.m. … Senate Banking has an Iran sanctions hearing at 2:30 p.m. … Advanced goods at 8:30 a.m. expected to show deficit of $60B.

FBI/SEC PROBE CORKER — POLITICO’s John Bresnahan and Anna Palmer: “The FBI and Securities and Exchange Commission are scrutinizing Tennessee GOP Sen. Bob Corker’s personal finances, including stock transactions involving one of the nation’s top developers of shopping centers and malls … Corker, the chairman of the Foreign Relations Committee and potential vice presidential pick, failed to report millions of dollars in assets and income on his annual financial disclosure until the Wall Street Journal revealed the discrepancy last fall.

“In the wake of that report, Corker was forced to revise years’ worth of disclosure reports. Corker denies any wrongdoing in how he has conducted his personal finances, and he declined to comment Tuesday … Corker said his office would have a statement on the issue. A Corker spokeswoman blamed a watchdog group, Campaign for Accountability, for filing a complaint with the SEC last year that led to the current federal probe that has ensnared the Tennessee Republican”

ASIA FOLLOWS WALL STREET HIGHER — Reuters: “Asian shares jumped on Wednesday, taking cues from sharp gains in European and U.S. markets, while the dollar firmed as upbeat U.S. home sales supported the view that the economy may be strong enough for the Federal Reserve to raise interest rates in coming months. … U.S. new home sales data on Tuesday showed a jump in April to their strongest monthly pace in more than eight years, with prices setting record highs …

“The gains, coming on the heels of a raft of positive U.S. data and comments from various Fed officials highlighting the chance of a rate hike in June or July, helped cement the case for one in the next few months and eased investors’ fears that the economy may not be resilient enough to withstand an increase in borrowing costs, however modest. … U.S. interest rate futures are pricing in more than 60 percent chance of a rate hike by July, compared to around 20 percent about 10 days ago”

CHAOS IN NEW MEXICO — Via the Albuquerque Journal: “Albuquerque police launched smoke into a crowd of angry Trump protesters who gathered outside the convention center Tuesday evening. … The protesters had formed a massive angry crowd outside the convention center and were hurling burning T-shirts and bottles at Albuquerque police mounted units before officers fired the smoke. … A group of about 100 protesters forced their way through a police barricade and tried to storm Albuquerque’s convention center minutes after presidential hopeful Donald Trump took the stage for his rally.

“The protesters were blocked at the door, and police managed to get the barricades back up a few minutes later. The attempted siege prompted police to respond in riot gear. They arrived around 7:30 and blocked the doors to the convention center, and officers inside the center put up barricades. … Trump began speaking to a crowd of at least 4,000 around 7:20 p.m., but was frequently interrupted by protesters in the crowd. … Protesters tried to set fire to Trump T-shirts they stole off a vendor cart as the vendor ran from the increasingly agitated crowd.”

DEPT OF RIDICULOUS COVERS — Via USAToday: “Yahoo CEO Marissa Mayer has been embattled. But religiously doomed savior? That’s seems to be what the illustration on the latest cover of Variety magazine is hinting. The scene depicts Mayer, buckling to her knees while carrying a giant wooden Y. ‘The End is Nigh,’ the cover says. ‘CEO Marissa Mayer carries Yahoo’s weight on her shoulders,’ the words below read. ‘But with a sale on the horizon, her days are numbered — and there’s no resurrection in sight.”

SUMMERS ON TRUMP — Larry Summers: “[T]he possible election of ‘Demagogue Donald’ dwarfs congressional dysfunction as a threat to American prosperity. Beyond lunatic and incoherent budget and trade policies, Donald Trump would for the first time make political risk of the kind usually discussed in the context of Argentina, China or Russia relevant to the United States. How else to interpret threats to renegotiate debt, prosecute insubordinate publications and rip up treaties? Creeping fascism as an issue dwarfs macroeconomic policy!”

RYAN READY TO BACK TRUMP? — Bloomberg: “House Speaker Paul Ryan has begun telling confidants that he wants to end his standoff with Donald Trump in part because he’s worried the split has sharpened divisions in the Republican Party … Ryan aides say nothing has been decided about a possible Trump endorsement. But Trump’s campaign manager, Paul Manafort, told a small group of Republican lawmakers Thursday that he expects Ryan to endorse the party’s nominee as early as this week …

“If Ryan were to endorse Trump, the move would end a nearly unprecedented standoff between the House speaker and his party’s presumptive presidential nominee, and remove the biggest remaining obstacle to Trump’s efforts to unite Republicans around his campaign. In fact, Manafort told the gathering of Republican lawmakers that Ryan’s endorsement would put more pressure on the party’s remaining Trump holdouts to fall in line”

CRUDE HITS 7-MONTH HIGH — FT’s Gregory Meyer and Mamta Badkar in New York: “US crude oil bounced to the highest level in seven months on Tuesday, as traders foresaw a decline in bloated inventories in the world’s biggest petroleum consumer. Nymex July West Texas Intermediate, the benchmark for light, sweet crude, jumped as much as 2.5 per cent to $49.27 a barrel late in New York, the highest since October 2015. The move came after the American Petroleum Institute reported US crude stocks dropped by 5.1m barrels last week, suggesting an inexorable build-up may be peaking.

“More definitive stocks data from the US government were due on Wednesday morning in Washington. A Reuters poll suggested the data would show that stocks had fallen by 2.5m barrels from 541.3m barrels earlier this month. Crude has almost doubled from 12-year lows in January on the belief that the market will start to rebalance as supplies of high-cost oil decline and rising consumption by motorists and other oil users reduces a global surplus”

HP PLANS SERVICES SPIN-OFF — WSJ’s Don Clark and Tess Stynes: “Hewlett Packard Enterprise Co. plans to spin off most of its technology services operations and merge them with those of Computer Sciences Corp., in an $8.5 billion transaction that marks HP Enterprise’s latest adjustment to a shifting landscape that is roiling the market for corporate technology. … HP Enterprise will shed a business that accounts for roughly 100,000 employees, or two-thirds of the Silicon Valley giant’s workforce.

“The deal, a blockbuster follow-up to the breakup of Hewlett-Packard Co. last fall, will create a corporate technology services specialist that will be led by Computer Sciences executives and have roughly $26 billion in annual revenue … The remaining HP Enterprise operations will concentrate mainly on software, server systems, networking and storage hardware.”

BIG CHANGES COMING TO TWITTER — NYT’s Mike Isaac: “Today, this article’s 140-character first paragraph forms the entirety of a Twitter post. But this will not be the case for too much longer. … Twitter said it planned to introduce a series of changes in the coming months to make it easier for people to communicate with one another on the social media service. In particular, the modifications will loosen the 140-character limit of a Twitter post, a restriction that has at times stumped and infuriated people, but that has come to define the tweet as an economical and idiosyncratic form of communication.

“Under the rule-bending, tagging users by their handles at the beginning of replies and adding photos, GIFs and videos will no longer count against the 140-character limit in tweets … This will enable users to post longer messages with more interactive content without running afoul of the character restriction.”

POTUS Events

12:05 AM The President holds a YSEALI town hall

GEM Center, Ho Chi Minh City, Vietnam Open to pre-credentialed media

1:50 AM The President departs Vietnam en route Japan

Tan Son Nhat International Airport Open to pre-credentialed media

6:50 AM The President arrives Japan

Chubu Centrair International Airport Open to pre-credentialed media


Floor Action

The House returns at 10 a.m. First votes expected: 2:15-3:15 p.m. Last votes expected: 5:30-6:30 p.m. The Senate is back at 10 a.m.