National Intelligence Bulletin for 22 March 2019

The National Intelligence Bulletin is a weekly look at threats to social, political, economic, and financial stability in the United States, and provides early warnings and indications of America’s volatile future. This report is available each week for Intelligence subscribers.

 

In this National Intelligence Bulletin

  • InFocus: Supreme Court to hear cases with major implications
  • Is the GOP dying?
  • Update on the Democrat civil war
  • Update on SCOTUS “re-balancing”
  • Far Left Roll-Up
  • Economic Financial Watch

 

InFocus: After the last term ended without taking up the case of gerrymandering, the Supreme Court is set to hear cases next week with significant national implications.

The state legislatures of Wisconsin, Maryland, and North Carolina are trying to give a “partisan advantage” to political representation via district gerrymandering. Says one Republican legislator, “I think electing Republicans is better than electing Democrats. So I drew this [district] map to help foster what I think is better for the country.” Lawyers for North Carolina, who are trying to cement a Republican state house majority, argue that the Constitution allows for partisan gerrymandering. Meanwhile in Maryland, gerrymandering would boost the Democrats.

Chief Justice John Roberts admits the cases are likely to be polarizing. “We will have to decide in every case whether the Democrats win or the Republicans win… And that is going to cause very serious harm to the status and integrity of the decisions of this court in the eyes of the country.”

Prominent Democratic presidential candidates already support “re-balancing” the Supreme Court with additional liberal justices. Should the Court majority rule in favor of gerrymandering, which helps Republicans in the swing states of Wisconsin and North Carolina, then a future Democratic administration would likely feel justified in expanding the court. That’s going to have a detrimental effect on the country because it’s essentially political cheating at the highest levels of government.

I’ve previously reported on both Wisconsin and North Carolina’s efforts to maintain Republican advantages. In the case of Wisconsin, the state legislature voted to protect then-outgoing Governor Scott Walker’s policy decisions from being overturned by the incoming Democratic governor. And the GOP in North Carolina are trying to retain state house power, which is being diluted by demographic changes. Additional red states are having or will have this problem as the effects of demographic shifts become more widely felt. “Demography is trending our way,” said Obama-era attorney general Eric Holder, speaking earlier this year about how demographic shifts favor Democrats.

Starting in 2021, the Congress will begin looking at national redistricting based on the 2020 census. This is going to become a much bigger political fight that transcends the importance of Wisconsin, Maryland, and North Carolina. Former Obama attorney general Eric Holder is heading up the National Democratic Redistricting Committee and he’s already stated his goal is to flip states like Ohio, Wisconsin, and North Carolina. Both Wisconsin and North Carolina have Democratic governors with Republican state houses. This redistricting process is going to re-shape U.S. and State House elections and representation for the next decade, and possibly turn some red states blue. It is a big, big deal.

This is concerning to me because this is an opportunity for Democrats or Republicans to implement massive changes to the U.S. political landscape. And with Democrat’s interest in ‘reforming’ central political institutions like the Supreme Court and the Electoral College, my concern is that partisan redistricting that ends up heavily favoring Democrats is going to cause substantial political and social unrest.

To be perfectly honest, I read articles from political commentators opining about a “civil war” or domestic conflict, and based on the potential for significant changes to the country’s political institutions over the next decade, I don’t think those opinion pieces are far off the mark. – S.C.


 

Priority Intelligence Requirements:

PIR1: What are the new significant indicators of disruptive political, social, or cultural conditions or events?

PIR2: What are the new significant indicators of threats to economic or financial stability?


 

PIR1: What are the new significant indicators of disruptive political, social, or cultural conditions or events?

Is the GOP dying?

Last week, Washington Monthly contributor David Atkins accused the Republican Party of being in a death spiral. He also implied that the GOP would “die” during the coming realignment in U.S. politics.

“This has happened before. The whigs disappeared. After the civil war there was no pro-slavery party. No party still pushes the gold standard. The GOP will adapt or die. It’s called realignment and it has happened many times before…

You’re a shrinking minority of public opinion, and your views are actively repugnant to science and basic morals. So…you know. It’s just a question of how to get around you to fix the country’s problems without actively causing harm under the law and the Constitution.

Y’all think this country belongs to you by default. It does not. You have to earn a political majority just like everyone else, and you don’t get a violence veto. ” [source]

To be fair, Democrats have a political majority (or will have one soon) due to decades of mass immigration. The Democratic Party has supported murdering tens of millions of likely Democrat voters prior to birth, so immigration is the only way that Democrats can expand their voting base and sustain their political power. And once Democrats come back into power, we have every reason to expect they’ll pursue an amnesty program or generous pathway to citizenship that ensures their political majority for future elections.

According to a 2013 Pew poll, 45 percent of Hispanic immigrants identified with the Democratic Party as compared to just eight percent who identified as Republicans. [source] In another survey, some 75 percent of Hispanics said they prefer a bigger government that provides more public services than a smaller government. [source] Looking at the numbers, there are reasons to believe that some Hispanics could become more conservative over time. This is the GOP’s only out: that they can convince more Hispanics, especially religious ones, to vote Republican than vote Democrat.

Still, demographics are shifting U.S. politics away from GOP power. In the past 30 years, a Republican presidential candidate has won the national popular vote just once and Republicans have won a majority of the overall votes in House elections just three times. “Demography is trending our way,” as Eric Holder said earlier this year.

Democrats have repeatedly gone on record as saying that they would support or pursue measures that would take away Republican advantages in government. The Electoral College, the conservative majority on the Supreme Court, redistricting in favor of Democrats, lowering the voting age, neutering or abolishing the Senate: each of these things will be on the table during the next Democratic administration.

Turning Texas blue through immigration and amnesty would do it. This week, Andrew Gillum pointed out that there are millions of new voters in Florida, a majority of whom are felons and would presumably vote Democrat and turn Florida reliably blue for elections to come. Depending on the ruling in the upcoming Supreme Court cases, the Wisconsin and North Carolina state legislatures could lose Republican district advantages, potentially turning both of those states reliably blue during the upcoming national redistricting process.

We should consider the potential that Democrats pursue policies that relegate the GOP to regional party status. That alone is enough to ‘kill’ the GOP and potentially force the party to move left just to remain competitive nationally. That’s essentially David Frum’s vision for the GOP, and Frum is not alone in this way of thinking. My remaining questions are a) who will be in control of the Republican Party during this time (post-Trump) and b) could the Republican Party formally split between populist and establishment factions? These questions deserve some due diligence, and I’ll continue trying to answer them ahead of time.

 

Update on the Democrat civil war

In previous weeks, I’ve described Rep. Alexandria Ocasio-Cortez (D-NY) as having influence but no power. No where is that more clear in how establishment Democrats are reacting to her democratic socialist insurgency inside the party. This week, the Democratic Congressional Campaign Committee (DCCC) essentially threatened think tanks and political strategists that they’ll cut business ties with any group or individual who supports a primary challenger to an incumbent Democrat.

According to their website, “[To the end of electing House Democrats], the DCCC will not conduct business with, nor recommend to any of its targeted campaigns, any consultant that works with an opponent of a sitting Member of the House Democratic Caucus.” [source: https://action.dccc.org/sign-up/political-vendors]

This is in direct response to a previous comment from Rep. Ocasio-Cortez when she threatened that any House Democrat who opposed the Green New Deal would go on a “list” to be targeted during their next re-election campaign; i.e., being ‘primaried’ from the Left.

House Democrats, especially Speaker Pelosi, are trying to protect the liberals from the socialist insurgency, proving that the GOP isn’t the only circus worth watching.

Gingrich on the future

I came across this November 2018 article published in The Atlantic, which features former House Speaker and Trump advocate Newt Gingrich speaking about what’s happening right now.

“The old order is dying,” he tells me. “Almost everywhere you have freedom, you have a very deep discontent that the system isn’t working.”

And that’s a good thing? I ask.

“It’s essential,” he says, “if you want Western civilization to survive.”

As a teenager: “I decided then that I basically had three jobs. Figure out what [the West] had to do to survive, figure out how to explain it so that the American people would give us permission, and figure out how to implement it once they gave us permission. That’s what I’ve done since August of ’58.”

Gingrich goes on to say that one of the Republican Party’s problems is that the establishment encourages civility; to be “neat, obedient, and loyal, and faithful, and all those Boy Scout words”. But the second problem, he says, is that:

For their party to succeed, Gingrich went on, the next generation of Republicans would have to learn to “raise hell,” to stop being so “nice,” to realize that politics was, above all, a cutthroat “war for power”—and to start acting like it.

Based on what’s happening both inside the GOP and inside the country right now, maybe it’s not success that the GOP should pursue, but long-term survival. It’s several months old, but it’s still a good article. I recommend that you read at least the first half. [source]

 

Update on SCOTUS “re-balancing”

This morning, we have numerous quotes from Democratic presidential candidates about packing the Supreme Court. The issue, as progressives outline, is that no matter how well Democrats do in House, Senate, and presidential elections, a conservative Supreme Court will stand to strike down progressive measures it sees as unconstitutional.

Democrats point to Senate Majority Leader Mitch McConnell’s 2016 decision not to hold confirmation hearings for Obama-pick Merrick Garland as the beginning of the Supreme Court fight. Since then, President Trump has added two conservative justices, and Democrats are now scheming ways to nuke the Court’s conservative majority.

By constitutional law, there is no set number of Supreme Court justices. The Congress ultimately gets to decide how many are seated, which is why Democrats are salivating over the opportunity to remake the Supreme Court. First, though, they have to retake the Senate and the presidency.

For as much as the Left accuses President Trump of “bending the guardrails of Democracy,” packing the Supreme Court and abolishing the Electoral College are two measures that actually remove guardrails, not merely bend them. And both of these decisions would heavily favor Democrats for future elections.

These changes are not imminent. It may take several more election cycles for Democrats to gain the absolute power required to make these changes. But it’s clear that Democrats want them. For me, this begs the question of whether America is ready to have these kinds of fights. I also wonder how changes like these would fuel domestic unrest and possible political violence. This is another reason in an ongoing succession of why I believe that we have some politically darker days ahead of us.

 

Far Left Roll-Up

“Politics around the world will increasingly be defined by two visions: multiracial welfare states that provide a decent standard [of] living for all their people versus white nationalism fueled by corporate elites to preserve hierarchy.” – Waleed Shahid, Justice Democrats

“We have to recognize the threat of white nationalism. We’ve got to call it out. As President of the United States, my Justice Department would go after white nationalists with full prosecution.” – Sen. Elizabeth Warren (D-MA)

“I believe it’s time to start the national full blown conversation about reparations in this country.” – Sen. Elizabeth Warren (D-MA)

“Every vote matters, and the way we can make that happen is that we can have national voting, and that means get rid of the Electoral College.” – Sen. Elizabeth Warren (D-MA)

“We are on the verge of a crisis of confidence in the Supreme Court. We have to take this challenge head on, and everything is on the table to do that.” – Sen. Kamala Harris (D-CA), speaking about court packing

“It’s not just about expansion, it’s about depoliticizing the Supreme Court. It’s a conversation that’s worth having.” – Sen. Elizabeth Warren (D-MA), speaking about court packing

“The debate is quickly moving past the question of whether Democrats should seek to reform our courts to the question of exactly what type of reform to pursue. Adding seats to the Supreme Court is a necessary step. It is reassuring to see so many candidates beginning to recognize the urgency of this.” – Brain Fallon, Demand Justice

“You can’t negotiate with these people [Republicans]. They’re not a normal political party. They’re in a demographic death spiral, dependent on an evangelical end-times cult and totally beholden to an extremist infotainment complex. Normal party incentives are out the window…. If we have to kill the filibuster, let’s do that. Expand the courts? Go for it. Add Puerto Rico and DC to the union? Great. Expand voting rights? Sure. Whatever it takes to speed up this process. We don’t have time to wait and we don’t have a real negotiating partner in the GOP… This has happened before. The whigs disappeared. After the civil war there was no pro-slavery party. No party still pushes the gold standard. The GOP will adapt or die. It’s called realignment and it has happened many times before… ” – David Atkins, contributor to Washington Monthly

“Bob Mueller isn’t going to solve our problem. The only way Trump is getting out of here is if we, the American public, do the hard work of winning elections, just like we did in 2018.” – Former Obama advisor Dan Pfeiffer

“We’re looking at a target of 1 million [additional voters]. We’ve got over 3 million people eligible to vote, and that’s to say nothing of the 1.4 million returning citizens.” – Former Florida governor candidate Andrew Gillum, speaking about felons and others who can vote in 2020 and turn Florida blue

Democrats “are not campaigning on a platform of restoring norms, they are just pushing to destroy different norms that they don’t like.” – Philip Klein, Washington Examiner

“There is no longer any debate about whether Democrats must reform the Supreme Court. The only discussion is about the how. Term limits are a good step but we also must expand the Court’s size.” – Brian Fallon, Demand Justice

“Joe Biden went out and apologized for being male, over 50, white… And so everybody else, Beto, whatever his name is, he’s apologized for being born [laughter]. I mean, I don’t mean to be unkind. And a lot of people love him and say he’s a smart guy, and some day if he wins I’d certainly support him.” – Mike Bloomberg

“[Adolf Hitler] went about the business of discrediting institutions to the point that people bought into it… Nobody would have believed it now. But swastikas hung in churches throughout Germany. We had better be very careful [about Trump].” – Rep. James Clyburn (D-SC)

“This economy stopped working for most people years ago. Unfortunately the winner-take-all dynamics are about to accelerate as technology and capital converge. The question is what to do about it.” – Andrew Yang, presidential candidate

“Democrats cannot let fear of these deplorable people scare them away from doing their jobs. Impeachment is not a political tactic; it is a constitutional responsibility… Brett Kavanaugh must be investigated and impeached.” – Elie Mystal, writing for The Nation

 


 

PIR2: What are the new significant indicators of threats to economic or financial stability?

Economic/Financial Watch

This week, the Federal Reserve continued it’s u-turn policy on hiking interest rates in 2019. That’s an important signal for a couple reasons. First, it shows that Fed chairman Jerome Powell sees potential weakness forming in the economy, which further rate hikes would exacerbate. Second, Powell was stung by the market reaction to his December guidance in which he said the Fed would pursue additional rate hikes. That’s leading traders and economists to believe that Powell was influenced away from further rate hikes by stock market reaction. Powell also signaled that the Federal Reserve would end its quantitative tightening by the end of this year, and maintain the Fed’s balance sheet “indefinitely”. Despite this, Powell said that the U.S. economy is in “a good place” and that the growth outlook remains “favorable,” meaning that the economy would be in a worse place after further rate hikes. And some economists are predicting that the Fed will actually have to cut rates at some point this year. [22 Mar]

Morgan Stanley is warning of a reversal in the dollar’s strength. Strategists laid out three reasons why the dollar would weaken: Fed policy is shifting, the likelihood of a U.S.-China trade deal, and Chinese stimulus that will prop up the Chinese economy. “A cyclical slowdown in the rest of the world, rising risks of protectionism and a loose fiscal, [and] tight monetary policy” is what fueled investors seeking safety in the dollar. Now that those trends are reversing, so will the dollar’s strength. [22 Mar]

FedEx cut its profit forecast again yesterday — the second time in three months — signalling a slowing global economy. (AC: This is proof of the slowdown, however, it’s not surprising. Economic consensus seems to be that this will not lead to a global recession.) [20 Mar]
Singapore-based bank DBS is warning that China’s debt default problem will continue through 2019. In a report issued yesterday, DBS analysts warned, “China witnessed an unprecedented wave of corporate bond defaults last year… The default wave is extending into 2019 … Given the reduced risk appetite and huge maturing volume, the outlook is poor.” (AC: The slowdown in China is a major driver for the global economic slowdown. The Chinese Communist Party recently cut taxes and the Chinese central bank began their own quantitative easing program to ward off the effects of the trade war. But China’s debt problem, especially its corporate debt problem, is likely too deep to prevent further defaults, which puts the Chinese economy at risk.) [20 Mar]

While the Trump administration expects three percent annual economic growth for the next several years, they do expect that growth to trail off unless additional action is taken. Specifically, White House forecasters want additional regulations removed, the 2017 tax cuts made permanent, and their $1 trillion infrastructure spending plan implemented. If Congress fails to implement those policies, economic advisors say, then U.S. GDP growth will decline. (AC: I expect Q1 GDP growth to be poor, largely due to the effects of the partial government shutdown. White House economic advisor Larry Kudlow remains adamant that we’ll see a quick return to GDP growth for Q2. As for the recession outlook, Kevin Hassett, Council of Economic Advisors chairman, says: “The idea that we would have a recession next year, it’s certainly not impossible. Recessions very often happen, and few people see them coming. But it would be very unusual for such a thing to happen given the maximum amount of capital spending and new capacity that’s being brought online.”) [20 Mar]

According to Agriculture Secretary Sonny Perdue, China could triple its purchases of U.S. agricultural goods as part of, or leading up to, a future trade agreement. Perdue described the “very attractive numbers” as a part of trade talks. (Analyst Comment: This would be a clear win for the Trump administration, but without significant reforms to the trading relationship, the U.S. still stands to lose in terms of overall competitiveness as long as China protects its state-owned enterprises from U.S. competition and forces technology transfers for U.S. corporations doing business in China.) [19 Mar]

The latest Merril Lynch fund manager survey is out and it finds that the largest tail risk to the global economy is… China. The Chinese economy is slowing down, although the Chinese Communist Party rounds of heavy stimulus to avoid a long-term slowdown. [19 Mar]

According to credit rating company Moody’s, there are currently 10 states approaching insolvency, with one — Illinois — on the verge of financial collapse. New Jersey, Connecticut, Pennsylvania, Kentucky, Louisiana, California, and Alaska, in that order, are atop the list, each suffering from chronically spending more than they receive annually in taxes and fees. The biggest budget drain is pension payments that outstrip the state governments’ ability to finance and pay for them. [SOURCE] (Analyst Comment: Illinois owes pensioners more than $133 billion, as of December. Other states have funded less than 50 percent of their obligations. My current expectation is that the stock market will fail to sustain the 7.5 percent annual growth required to fund these pensions. Ultimately, we could be looking at massive restructuring of these agreements — later retirement, reduced benefits, and higher contribution requirements for those still working — or potentially a federal bailout.) [19 Mar]

One area where coming automation will have a substantial impact is over-the-road trucking, a large industry with lots of jobs and good pay. A Government Accountability Office analysis of how automation will affect the trucking industry found one of two likely scenarios: “Long-haul highway driving will be fully automated, resulting in fewer trucking jobs and possibly lower wages;” and/or, “Self-driving trucks may still need operators, possibly changing the skillset and wages without significantly affecting the number of trucking jobs.” [SOURCE] (Analyst Comment: Various analyses have forecast job losses in the millions, but similar reports also claim that technology can also save employment. The GAO trucking report touched on how that might look: There will be jobs, just different ones that will require retraining existing workers or funneling new workers into various related fields. Still, the transition is not expected to be quick or painless. We’re likely to see rising unemployment once these automated trucking systems begin hitting the road in earnest in the coming years.) [19 Mar]

These economic/financial briefs appear each morning in the Early Warning intelligence report. You can sign up for this email on your My Account page.

Samuel Culper is a former military intelligence NCO and contract Intelligence analyst. He spent three years in Iraq and Afghanistan and is now the intelligence and warfare researcher at Forward Observer.

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