White House expected to reassign economic adviser amid internal tension


Kenneth I. Juster addresses a speech at the Federation of Indian Chambers of Commerce and Industry during a business meeting in New Delhi, on June 23, 2004. | Getty

The White House is expected to soon reassign a top official on the National Economic Council amid internal tension among President Donald Trump’s aides, two administration officials told POLITICO.

Kenneth Juster, the NEC’s deputy director and an adviser to Trump on international economic affairs, is expected to be removed from the council “imminently,” one administration official said, though it’s unclear where he will land.

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“He is not long for the White House. I know he is going to be reassigned,” the administration official said. “He is not going to be here long. The question is where will he go. That’s the only reason he’s not gone already is they’re trying to find him an alternate position.”

Neither Juster nor the White House responded to a request for comment.

Two officials said Juster had been involved in disagreements within the administration between the so-called “globalists” and “nationalists” at the White House. That tension has prominently played out between NEC director Gary Cohn, a former Goldman Sachs executive and registered Democrat, and White House chief strategist Steve Bannon, who helped shape Trump’s nationalistic rhetoric during the campaign.

The official who said Juster’s reassignment was imminent said Juster is under consideration for an ambassadorship, possibly the U.S. ambassador to India.

Juster is a former partner at the investment firm Warburg Pincus. He worked at the Commerce Department during the George W. Bush administration and at the State Department during the George H.W. Bush administration.

The expected change comes several weeks after Andrew Quinn, a White House trade adviser, was reassigned. Quinn had come under fire from conservatives and Breitbart News, of which Bannon used to be the executive chairman.


Donovan dropping out as Trump’s nominee for deputy Treasury secretary

NEW YORK — Jim Donovan is dropping out as President Donald Trump’s nominee to serve as deputy Treasury secretary.

The Goldman Sachs executive, nominated in March to serve as Treasury Secretary Steven Mnuchin’s No. 2, informed the White House this week that he could not take the job due to family concerns. He was expected to play a critical role in helping shape the administration’s tax reform policy through Capitol Hill.

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“I am deeply honored by President Trump’s decision to nominate me as Deputy Secretary of the U.S. Department of the Treasury,” Donovan said in a statement. “However, at this time I want to focus on my family, and I can no longer accept it. I hope to be able to serve this administration in the future and fully support President Trump and Secretary Steven Mnuchin’s ongoing work to reform the tax system and grow the U.S. economy.”

Donovan’s departure will come as the administration struggles to push the focus back to its major policy initiatives and away from a series of revelations about the administration and Russia.

“Secretary Mnuchin offers Jim his support and friendship as he focuses his attention on his family,” Treasury spokesman Tony Sayegh said in a statement Friday. “Jim has been an enormous asset to the department helping recruit and fill many of the senior jobs at Treasury. He appreciates Jim’s continued support of the President and his administration.”

Donovan, a Goldman partner and managing director, is close to Mitt Romney and served as one of the 2012 GOP nominee’s top fundraisers. He was also a top fundraiser and economic adviser for Jeb Bush in the 2016 campaign. He joined Goldman in 1993 and covered major clients in both investment banking and investment management.


What Trump Needs to Tell the Middle East

Donald Trump’s first priority on his maiden voyage as president must be to restore trust between the United States and its longstanding partners in the Middle East. America’s friends and allies in the region are eager for calm after years of turmoil and mutual suspicions under Presidents Bush and Obama. But it would be a mistake for Trump to ignore the Middle East’s deep dysfunction in his search for a feel-good narrative. Maybe not now—but soon—he will need to deliver some tough messages to regional leaders about the demands of citizens for justice, basic human rights and good governance. Most importantly, he will have to understand that relying on the U.S. military and cutting arms deals are hardly sustainable solutions to the region’s permanent crisis.

The two of us come from different perspectives. Michael is a scholar at the right-leaning American Enterprise Institute, and Brian at the left-leaning Center for American Progress. Last year, our two think tanks came together for a unique project in this age of partisan polarization in Washington—a bipartisan, on-the-ground study of the drivers of instability across the Middle East, based on a series of visits and dialogues in and about the region.

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What we found is that while we disagree on a lot of issues—like the Iraq war and the Iran nuclear deal—we agree on one central idea: The United States has to stay engaged in the Middle East. Like his predecessor, President Trump has complained vigorously that America has spent trillions on inconclusive wars over the last few decades, and openly fantasized about walking away from the region and its troubles. That, we are convinced, would be a costly mistake.


The president’s basic impulse to restore trust with America’s partners in the Middle East is not wrong. The 2003 Iraq war, America’s inconsistent response to the 2011 Arab uprisings, and the 2015 Iran nuclear deal all shook the confidence of America’s historic partners in the region, including the two countries Trump will visit—Saudi Arabia and Israel. Rebuilding those relationships is essential.

To rebuild ties, Trump should keep in mind a key lesson from predecessors’ mistakes: rushing to pursue magic-bullet solutions to the region’s enduring conflicts often causes more harm than good. There is no single cure-all for the Arab-Israeli dispute, Sunni-Shi’ite tensions, or the fight against terrorism.

Neither a grand diplomatic bargain nor a military campaign will resolve the daunting demographic, social, economic and political challenges Middle Eastern countries face. With one wobbly exception—Tunisia—the so-called Arab Spring has left the region no more democratic and no less angry. And when it comes to regional stability and security, the path to peace lies not through Jerusalem or Riyadh alone, but rather through every country’s capital individually.

Intuitively, Trump and his top aides seem to grasp this. In his first four months in office, they have sent messages of support to Middle Eastern leaders. Unlike Bush’s “freedom agenda” and the broad outreach Obama first laid out in a series of speeches, both of which prioritized publics over leaders, Trump has simply sought to steady relations with leaders by shrugging off criticisms of his partners’ human rights records and sending messages of support. Establishing personal rapport and trust with kings, sultans, and presidents may be a necessary first step, but it should not be the end goal – that won’t produce lasting stability.

In the Middle East, optimists are the ones who say things have never been so bad; pessimists recognize they could still get worse. Consider what the United States faces: a fight against the Islamic State not only in Iraq and Syria, but also in Egypt, Libya, and Afghanistan; Iran’s continued regional meddling; aging leaders that portend possible succession struggles in Algeria, Palestine, Oman, and Iran; Turkey and Qatar financing radicalism; Al Qaeda regrouping and waiting in the wings; and an unprecedented refugee crisis that risks a “lost generation” and has upended security in the region and politics in Europe.

As Trump seeks to deal with a region in crisis, he should avoid seeing the U.S. military or the Central Intelligence Agency as the solution to every problem. This was the limitation of Bush’s 2007 surge of U.S. troops in Iraq: It sacrificed long-term stability for short-term quiet. In effect, Bush rented rather than won loyalty from Iraqi Sunni leaders and incentivized further sectarian struggle. Today, as the United States and its partners consider Iraq’s future post-Islamic State, the same pattern could repeat if arms and money for militias substitute for a more holistic, long-term strategy. In Pakistan, the face of U.S. policy for decades has been not the State Department, but rather the Pentagon and CIA—and U.S. engagement there has not uprooted the religious extremism that overshadows Pakistan’s internal politics and regional engagement.

Too much reliance on military and intelligence tools can worsen anti-Americanism, fueling the perception that the United States cares only about its own narrow interests, not the struggles and aspirations of the people affected by its massive global influence. Lucrative military aid packages can also disincentivize countries from solving their own security problems. Why should the Pakistani military defeat the Taliban if that group’s existence brings Islamabad billions of dollars? Or take Yemen, where Saudi Arabia and the United Arab Emirates are fighting a war against an Iran-backed movement called the Houthis: Offering unconditional military partnership without a smart political strategy is only going to make that country’s woes deepen, and fuel more extremism.

Trump is right to be cynical about nation-building. Decades on bureaucratic autopilot have left the State Department and USAID sclerotic. Money should never be a metric of effectiveness. Pouring resources into conflict zones often catalyzes debilitating dependence and corruption, rather than good governance.

But the cure for a broken finger is not amputation of the arm. Massive cuts to the tools of diplomacy, as the Trump administration proposed, are counterproductive. Just as overstaffing is ineffective, so too does understaffing cripple the folks on the ground who are tasked with figuring out how to implement their orders from Washington. If and when the United States and its allies defeat the Islamic State, as Trump has promised, we’ll need diplomats and aid workers to help keep the forces of chaos at bay. And all throughout the region, the painstaking, often frustrating work of civil servants is vital to advancing America’s overall interest in a peaceful, stable and thriving region.

The Trump administration needs to integrate security and military cooperation with credible diplomatic and political efforts to resolve the bloody conflicts in Yemen, Syria, and Libya. Blank checks may please partners, but they do not bring peace. While Trump must, of course, coerce unwilling adversaries, he must also exercise leverage with partners to ensure they undertake the necessary reforms and compromises to translate military victories into sustainable order.

So, yes, as Trump flies to Riyadh, he should be thinking about how to win back America’s wayward friends and allies in the Middle East. But he also must start planning how to tell them some harsh truths.

Michael Rubin is a resident scholar at the American Enterprise Institute.


Colbert joke prompts thousands of FCC complaints from all political stripes

Stephen Colbert is pictured. | Getty

The number of complaints about Stephen Colbert’s joke is dwarfed by the more than half a million the agency received over Janet Jackson’s “wardrobe malfunction” during the halftime show of the 2004 Super Bowl on CBS. | Getty

Disgruntled viewers of Stephen Colbert’s late-night show on CBS complained to the FCC that a sexually explicit joke about President Donald Trump and his relationship with Russian President Vladimir Putin is “beneath the dignity of American broadcasting,” and urged the agency to sanction the network.

A sample of the more than 5,700 complaints that flooded the agency since Colbert’s joke on the May 1 episode of “The Late Show” included concerns about indecency, hate speech and homophobia from across the political spectrum. Colbert used a crude term to refer to a metaphorical sexual relationship between the U.S. and Russian presidents in a monologue on Trump’s first 100 days in office.

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The FCC, in response to a POLITICO Freedom of Information Act request, released samples of the complaints, with the names of the people who submitted them redacted but their geographic locations intact. The agency provided the first 100 complaints received between May 2 and May 17.

Parents complained about answering questions from their kids, while one viewer thanked God “my children, elderly parents, and other loved ones did not see the dispicable (sic) display of vitriol that spewed from his hateful mouth!”

Some viewers argued that Hillary Clinton or Barack Obama wouldn’t be the butt of a similar joke, and complained that Trump was unfairly targeted by the media.

“I know all you Commie shills hate this president but it is your job to keep these Leftists from dragging this nation further into the gutter,” one complaint from St. Petersburg, Fla. said.

Several raised qualms about what they viewed as the homophobic nature of the joke: “By using accusations of being gay as an insult, it implied that there is something wrong with being gay,” an Urbana, Ill. viewer wrote.

“There is nothing wrong with two men who love each other,” one complaint, from a trans man who identifies as homosexual, said. “I don’t like Trump but I also don’t like anti-homosexual comments being aired for millions of people to see. I have to say, shame on you for allowing this.”

“I really thought we left this kind of bigotry in the wastebin of history,” a New York City viewer said. “Instead I have to endure it during dinner with me and my husband’s son.”

Many of the complaints called for fines against Colbert and CBS, but lawyers familiar with the FCC’s indecency and obscenity rules say that’s not going to happen.

FCC Chairman Ajit Pai has said the agency is reviewing the complaints. Such a review is standard protocol for the FCC, and doesn’t imply the complaints have merit. Pai declined to give an update on the review when asked Thursday at a press conference following a commission meeting.

The number of complaints about Colbert’s joke is dwarfed by the more than half a million the agency received over Janet Jackson’s “wardrobe malfunction” during the halftime show of the 2004 Super Bowl on CBS.

The FCC’s indecency rules apply to broadcasts between 6 a.m. and 10 p.m., and even then, they prohibit material that “depicts or describes sexual or excretory organs or activities in terms patently offensive,” as measured by the community standards.

Andrew Schwartzman, an attorney with Georgetown University’s Institute for Public Representation, pointed out that what Colbert said was bleeped out, and even if it wasn’t, it would probably pass the FCC’s indecency test.

But that doesn’t matter because “The Late Show” airs at 11:30 p.m., in what’s known as the safe harbor, where the rules are looser because children are presumed to be asleep. The FCC would have to prove the joke was obscene, and as broadcast attorney David Oxenford wrote in a blog post on the subject, “for a program to be obscene, it needs to be really bad.”

“A television program like that in question here is never going to be found obscene — the words describing the specific sexual act itself was bleeped out of the broadcast, the description was not designed to appeal to prurient interests (sexual interests — it was not delivered in such an explicit way as to appeal solely to sexual interest), and it did have social significance — it was delivered in a politically motivated statement,” Oxenford wrote. “Under these circumstances, the extremely rigorous obscenity test simply would not be met.”

Schwartzman was even more blunt, “There is zero chance the FCC would even dream of bringing a obscenity case against this. … There is less than zero chance it could succeed.”


HUD budget slashes housing programs, drawing protests from advocates

A for sale sign is pictured. | Getty

In all, the request cuts funding to Ben Carson’s agency by some $6 billion for fiscal year 2018, to about $40 billion. | Getty


President Donald Trump’s administration will seek to slash spending on affordable housing and community development programs, a plan that housing advocates condemned as “immoral” and a blow to voters who sent him to the White House.

The administration is seeking to cut spending on affordable housing and community development and wants mortgage lenders to fund technology fixes at the Department of Housing and Urban Development, according to a budget draft obtained by POLITICO. The proposal also eliminates the Housing Trust Fund, a program financed by Fannie Mae and Freddie Mac profits.

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In all, the request cuts funding by some $6 billion for fiscal year 2018, to about $40 billion. The draft, dated May 4, might not reflect the administration’s final spending request, which is expected next week. A HUD spokesman did not respond to requests for comment.

The document puts increased responsibility on state and local governments and calls for the private sector to do more to meet community needs, a key goal of HUD Secretary Ben Carson.

The budget “recognizes a greater role for state and local governments and the private sector in addressing community development and affordable housing needs,” the document states.

Skeptics say some of those programs exist precisely because private money hasn’t stepped up.

“Private companies won’t build water and sewer; they expect the cities and counties and states to provide this infrastructure,” said Matt Chase, executive director of the National Association of Counties.

“They’ve taken the Heritage Foundation budget, and we’re trying to educate them on the real-world impact,” Chase said. “This is no longer a think tank exercise.”

The biggest cut would eliminate the $3 billion Community Development Block Grant program, a state and local entitlement that benefits low- and moderate-income communities. The grants support a range of economic development projects, including roads, sewers and housing.

The document also zeros out Choice Neighborhoods revitalization grants and the HOME Investment Partnerships Program, which leverages private funds to expand the supply of affordable housing.

Rental assistance to tenants would fall by $974 million, to $19.3 billion, with the elimination of a housing program for veterans and reduced spending on Section 8 and other voucher programs. Capital funding for public housing would fall by two-thirds.

Diane Yentel, president of the National Low Income Housing Coalition, called the spending plan “immoral.”

“The budget reflects a cruel indifference to the millions of low-income seniors, people with disabilities, families with children, veterans, and other vulnerable people who are struggling to keep a roof over their heads,” Yentel said.

Cuts to HUD’s safety net and development spending, combined with reductions at other agencies, will hit rural communities the hardest, Chase said.

“These chainsaw cuts go across the budget,” Chase said. “All these programs were to help build community infrastructure for people and places that have been left behind.”

HUD’s mortgage agencies, which help low-income borrowers buy homes, would get small funding increases. The administration wants to levy $30 million in fees on lenders who sell mortgages through the Federal Housing Administration, money that would be used to upgrade technology and risk-management systems.

The budget includes a slight increase in staffing for Ginnie Mae, which pools and sells FHA loans and is second-largest provider of U.S. mortgage liquidity.

The draft budget maintains funding to support and enforce the Fair Housing Act, a Civil Rights-era law to end housing discrimination. Before becoming HUD secretary, Carson had called a recent fair housing rule a “social-engineering” scheme.