‘Will a grand jury be empaneled by the Justice Department? When will Senator Patrick Leahy, chair of the Judiciary Committee… begin an investigation of this matter?’ – November 13, 2012
Blumenthal advised top Obama debate advisor that Romney would ‘falsify, distort, and mangle facts;’ advised Clinton on Libya turmoil disclosed in ‘internal govt discussions high level’
JW: (Washington, DC) – Judicial Watch announced today that on January 7, 2016, it obtained a new batch of documents from the Department of State, including a “Confidential” memo from Clinton advisor Sidney Blumenthal to the former secretary of state suggesting that a grand jury and the Senate Judiciary Committee should investigate whether former Rep. Eric Cantor or his staff violated the Espionage Act by disclosing classified information related to the FBI investigation of former CIA Director David Petraeus.
According to the Blumenthal-to-Clinton email, if classified information was discussed by Cantor, his staff, or anyone “inside or outside the bureau,” it “is a felony” in violation of the Espionage Act. Many legal analysts now believe that if the FBI concludes that Clinton kept classified information on her non-state.gov server, that may be also be a criminal violation of the Espionage Act.
The documents also contain an email to Clinton in which Blumenthal sent a copy of a “Confidential” memo to top Obama 2012 presidential debate advisor Ron Klain warning that GOP candidate Mitt Romney would “falsify, distort, and mangle facts” in the final campaign debate. The Blumenthal memo was sent to Klain and copied to Clinton just four days before the final debate.
The documents include an email sent after the Benghazi attack in which Blumenthal informs Clinton of his “Latest Libya intel” regarding the turmoil in that country. Though barred by the Obama administration from being an official State Department advisor to Clinton, Blumenthal – who at the time was also employed by the Clinton Foundation – claimed to have “a very sensitive source” providing him “internal govt discussions high level” concerning Libyan internal security.
The new emails, also available on the State Department website, were obtained by Judicial Watch in response to a court order Judicial Watch Freedom of Information Act (FOIA) lawsuit filed on May 6, 2015, (Judicial Watch v. U.S. Department of State (No. 1:15-cv-00692), seeking the following:
- Communications between officials, officers, or employees of the Department of State and members of Congress, Congressional staff members, or Congressional members or staff members of the U.S. House of representatives Select Committee on Benghazi concerning the use of non-“state.gov” email addresses by former Secretary of State Hillary Clinton.
- Emails of former Secretary of State Hillary Rodham Clinton regarding the September 11, 2012, attack on the U.S. Consulate in Benghazi, Libya. The timeframe for this request is September 11, 2012, to January 31, 2013.
The State Department’s records include a November 13, 2012, email from Blumenthal to Clinton in which he speculates about former Rep. Eric Cantor’s dealings with then FBI Director Robert Mueller concerning the agency’s investigation of former CIA director David Petraeus. In the email, Blumenthal raises the possible need for both a grand jury and a Senate Judiciary Committee investigation of possible violations of the Espionage Act by Cantor and his staff if classified information was made public:
From: Sidney Blumenthal
Sent: Thursday, November 13, 2012 9:13 AM
Subject: More questions. SidWho else in the Congress besides congressmen Reichert and Cantor knew of the Petraeus investigation before it became public? How many congressional staffers were informed? What roles did they play in deciding who to inform about it? What were their communications among themselves and with others outside their offices if any? Did any of them discuss the matter with anyone in the Romney-Ryan campaign?
Why was Cantor intent on informing FBI Director Mueller of the existence of an FBI investigation that was already resolved?…
What were the internal discussions between Cantor and his staff on his referral to Mueller?…
***
Was the supposedly rogue FBI agent, described in the Washington Post as motivated by his “worldview,” acting alone? Did he discuss the investigation with any individual either inside or outside the bureau before he went to Reichert and Cantor?
Disclosure of an espionage investigation is a felony. Will a grand jury be empaneled by the Justice Department?
When will Senator Patrick Leahy, chair of the Judiciary Committee and a former FBI agent, begin an investigation of this matter?
From: H <HDR22@clintonemailcom>
To: ‘sbwhoeop [Redacted]
Sent: Tue,Nov 13, 2012 9:23 am
Subject: Re: More questions. SidWhat was his “worldview” and why would he think hurting P furthered it? Why would Cantor want to hurt P (beloved by Rs)?
The records obtained by Judicial Watch also include an October 19, 2012, email from Blumenthal to Clinton in which he sends a copy of a lengthy “Confidential” memo to Klain expounding upon how to defeat Mitt Romney in the third and final 2012 presidential debate:
From: Sidney Blumenthal
Sent: Friday, October 19, 2012 10:32 AM
To: H
Subject: H: fyi, see especially point about bush. Sid
- Romney will inevitably falsify, distort and mangle facts on a range of subjects from Libya to the defense budget. But why is this debate different from all other debates? In the dedicated foreign policy debate, the stakes are higher—America’s role in the world. That makes Romney’s errors even more consequential and potentially threatening. And that must be an essential predicate of Obama’s point when he exposes Romney’s falsehoods. When Romney lies on domestic policy it’s shameful, but when he lies on foreign policy it’s dangerous.
***
- Romney’s attack line on Libya is not only false, as exposed in the last debate. (Obama here can joke that Romney apparently wants to rerun the last debate but this time without Candy Crowley present to call him out. Romney will become angry and nonplussed.) His attack line is a reheated leftover of the Bush era attacks on Democrats designed by Karl Rove as weak on terrorism, which were themselves repackaged old Republican attacks from the Cold War. It’s all nostalgia….
***
Then, really stick in the shiv by having Obama say that he was somewhat surprised that Romney in the last debate did not give President George W. Bush credit where credit is due—for example, breaking with the neoconservatives around Vice President Cheney by adopting the surge in Iraq led by current CIA director David Petraeus that prepared the groundwork for Obama’s own policy in Iraq.
An email from Blumenthal to Clinton contains a lengthy “Confidential” memo in which he provides his “latest Libya intel” from “internal govt discussions high level.” The memo, later forwarded by Clinton to then-Deputy Chief of Staff Jake Sullivan, reveals that more than a year after the Obama/Clinton assisted overthrow of Qaddafi, ostensibly intended to bring about a peaceful transition, the country remained at the mercy of the same terrorist groups that attacked the Benghazi consulate. Claiming that his information comes from a “very sensitive source,” Blumenthal informed Clinton of the following:
From: Sidney Blumenthal
Sent: Tuesday, January 15, 2013 11:20 AM
To: H
Subject: H: latest Libya intel; internal govt discussions high level. Sid
- On the morning of January 15, 2013 Libyan Prime Minister Ali Zidan was informed by Interior Minister Ashour Shuwail and Minister of Foreign Affairs and International Cooperation Mohamed Abdulaziz that Italy plan to close its consulate in Benghazi and reduce the size of its embassy in Tripoli following attacks on the consulate itself and the Italian consul general. Shuwail reported that the attacks were carried out by Eastern militia forces associated with Ansar al Islam, which, although put under pressure by the National Libyan Army (NLA) following the attack on the U.S. consulate in Benghazi in September 2012, continues to operate in and around that city.
***
- According to a very sensitive source, General Hassi disagrees with the NLA analysis that the Sabha attack was not aimed at Magariaf specifically, noting that there were five prior assassination attempts against Magariaf in 2012, and that he is a target for a diverse collection of enemies, including former Qaddafi forces, groups like Ansar al Sharia, and even his political adversaries in the GNC. Accordingly, Hassi intends to establish new programs to train a detachment of presidential bodyguards, and his own anti-terrorism personnel.
“It is beyond ironic that Hillary Clinton and Sidney Blumenthal, her secret Clinton Foundation adviser at the State Department, discuss criminal prosecutions of Republicans for the handling of classified information over the Petraeus scandal,” said Judicial Watch President Tom Fitton. “And it is disturbing that then-Secretary of State Clinton was involved in advising the Obama reelection campaign on how to continue lying about the Benghazi attack. No wonder Hillary Clinton tried to hide these email records rather than disclose them years ago as required by law.”
###
Category Archives: Presidential campaign
Obama to Evict Thousands, Julian and Hillary?
Obama administration considering evictions of thousands from low-income housing
WashingtonTimes:The Department of Housing and Urban development announced Tuesday that it would consider evicting tens of thousands of public housing residents who earn too much money to qualify for public housing.
The announcement comes in response to a July audit from the department’s Office of Inspector General that revealed over 25,000 families had an income that exceeded the maximum level to qualify for government-assisted housing. At least one tenant had roughly nearly $1 million in assets.
Now the department will reexamine tenant’s public housing needs in an effort to root out “over-income” tenants occupying low-income housing that is desperately needed by poorer families.
“Some of those families significantly exceeded the income limits,” HUD wrote in the Federal Register, warning that “scarce public resources must be provided to those most in need of affordable housing.”
Currently, federal law does not prohibit over-income families from continuing to live in low-income housing as long as they met the income requirements when they moved in.
Now HUD is grappling with whether to evict over-income tenants and how long to give them to find new homes.
“An increase in income is a good and welcomed event for families, and when a family’s income steadily rises, it may be an indication that the family is on its way to self-sufficiency,” HUD wrote.
“Any changes that would require the termination of tenancy for over-income families should be enacted with caution so as not to impede a family’s progress,” the agency continued.
The department will seek comment from the public on what to do about over-income families over the next 30 days.
The House is expected to vote Tuesday on an Amendment proposed by Rep. Vern Buchanan, Florida Republican, to tighten income asset verification requirements for public housing applicants.
“It is outrageous that taxpayers are footing the bill for millionaires’ housing,” Mr. Buchanan said in a statement. “This type of abuse hurts truly needy families and erodes faith in government. Holding HUD to the same standards used for other federal benefits will provide much-needed oversight on taxpayer funds and help create consistency across the vast array of assistance programs.”
*** HUD is corrupt and the Secretary of HUD, Julian Castro is just as corrupt. But as a sidebar, he is earnestly jockeying for sharing the presidential ticket with Hillary Clinton.
HUD Secretary Julian Castro attends Maine fundraiser for Clinton
He headlines the private event at the law offices of Preti Flaherty in Portland.
Julian Castro, the U.S. Housing and Urban Development secretary and a rising star in the Democratic Party, was in Portland Monday morning for a private fundraiser for presidential candidate Hillary Clinton.
The event at the law offices of Preti Flaherty in downtown Portland included U.S. Rep. Chellie Pingree and longtime Maine lobbyist and attorney Tony Buxton.
According to an invitation provided by Hillary for America, Castro’s visit was billed as “coffee and conversation.” It was closed to the public and to the media.
Castro arrived at the fundraiser with Pingree and his twin brother, U.S. Rep. Joaquin Castro, D-Texas. After the event, Julian Castro said the crowd was enthusiastic and looking forward to seeing Clinton win the nomination.
When asked if he would accept if Clinton wins the nomination and asks him to run for vice president, he would say only that he is focused on his work with HUD and campaigning for Clinton.
“Both Joaquin and I are happy to help her out,” he said.
Julian Castro, the former mayor of San Antonio, was tabbed by President Obama in 2014 to serve as secretary of the Department of Housing and Urban Development. His ethnic background – Mexican American – makes him a powerful surrogate for Clinton, who will likely need strong support from Hispanic voters, both in the Democratic primaries and in the general election, if she becomes the nominee.
During an interview Monday morning on the “Ken & Mike” show on WGAN, the Castro brothers said they have long supported Clinton, whom they described as a tenacious and strong leader.
When asked by the radio hosts if he would accept an invitation to be Clinton’s running mate if she wins the nomination, Julian Castro said he feels “it’s not going to happen.”
“That’s flattering, but I doubt that,” he said. “I fully expect a year from now to be back in Texas.”
So you voters for Hillary, here is some more facts, Julian is a radical, a Marxist.
Mayor Julian Castro of San Antonio, who will be giving the keynote address tonight, is, according to some, the next Obama. But while Obama’s radicalism may have escaped the notice of the DNC in 2004, Castro’s views are bit more transparent.
Indeed, he, along with his twin, Joaquin, currently running for Congress, learned their politics on their mother’s knee and in the streets of San Antonio. Their mother, Rosie helped found a radical, anti-white, socialist Chicano party called La Raza Unida (literally “The Race United”) that sought to create a separate country–Aztlan–in the Southwest.
Today she helps manage her sons’ political careers, after a storied career of her own as a community activist and a stint as San Antonio Housing Authority ombudsman.
Far from denouncing his mother’s controversial politics, Castro sees them as his inspiration. As a student at Stanford Castro penned an essay for Writing for Change: A Community Reader (1994) in which he praised his mother’s accomplishments and cited them as an inspiration for his own future political involvement.
“[My mother] sees political activism as an opportunity to change people’s lives for the better. Perhaps that is because of her outspoken nature or because Chicanos in the early 1970s (and, of course, for many years before) had no other option. To make themselves heard Chicanos needed the opportunity that the political system provided. In any event, my mother’s fervor for activism affected the first years of my life, as it touches it today.
Castro wrote fondly of those early days and basked in the slogans of the day. “‘Viva La Raza!’ ‘Black and Brown United!’ ‘Accept me for who I am–Chicano.’ These and many other powerful slogans rang in my ears like war cries.” These war cries, Castro believes, advanced the interests of their political community. He sees her rabble-rousing as the cause for Latino successes, not the individual successes of those hard-working men and women who persevered despite some wrinkles in the American meritocracy.
[My mother] insisted that things were changing because of political activism, participation in the system. Maria del Rosario Castro has never held a political office. Her name is seldom mentioned in a San Antonio newspaper. However, today, years later, I read the newspapers, and I see that more Valdezes are sitting on school boards, that a greater number of Garcias are now doctors, lawyers, engineers, and, of course, teachers. And I look around me and see a few other brown faces in the crowd at [Stanford]. I also see in me a product of my mother’s diligence and her friends’ hard work. Twenty years ago I would not have been here…. My opportunities are not the gift of the majority; they are the result of a lifetime of struggle and commitment by adetermined minority. My mother is one of these persons. And each year I realize more and more how much easier my life has been made by the toil of past generations. I wonder what form my service will take, since I am expected by those who know my mother to continue the family tradition. [Emphasis Castro’s]
Hillary Lawsuits, Her Lawyers, Back Channel Operations
Text messages, dinners, dropping documents and negotiations. Ever wonder who is tied to whom and what goes on in DC? Here is a peek while lawsuits are flying.
Bill Press hired by Bernie Sanders: Press put together two dinners for Sanders with about a dozen people at his house on Capitol Hill. One was in April, the other in November.
Among those who attended one or both: Susan McCue, a former chief of staff for Senate Democratic leader Harry M. Reid (D-Nev.); Rep. Keith Ellison (D-Minn.); Brad Woodhouse, a former Democratic National Committee spokesman who now heads the liberal super PAC American Bridge 21st Century; Rep. Barbara Lee (D-Calif.); and Alyssa Mastromonaco, former deputy chief of staff in the Obama White House who had answered phones in Sanders’s congressional office back when she was a college student in Vermont.
At the first dinner, “Bernie gave his ideas. We all kicked it around,” Press said. “The main thing that came out of the first meeting was there was a possibility and a need for somebody to raise those issues, but if he ran, he should definitely run as a Democrat.”
Devine led the discussion at the second dinner, and “basically laid out a plan of how to get from here to there,” Press said. “It was much more focused and much more real. Bernie took that, and off he goes. It was only a matter of when, not if, he announced.”
As Hillary advances in her bid for president: The opening months of her presidential campaign were a deluge of bad news for Clinton.
First came the revelation that she had been using a private email account, rather than a government one, for conducting business as secretary of state. Then a spate of stories about the finances of the Clinton Foundation and her six-figure speaking fees. Then came the news that Vice President Biden was considering a late entry into the race — in part because some Democrats worried that Clinton was starting to look like a weak general election candidate.
In October, it was coming to a head, with the added tests of the first Democratic debate and her grilling before the House Select Committee on Benghazi.
The day before she was to testify, Clinton and her aides were holding a prep session at her dining room table in Washington when communications direction Jennifer Palmieri got a text message telling her to turn on CNN. Biden was heading for the Rose Garden, with President Obama in tow. That choice of venue could mean only one thing, they knew: Biden was not running. One crisis was averted.
Hillary get ready for a daily crisis: Clinton was preparing to leave home for Capitol Hill, she got a jarring call from longtime aide Cheryl Mills. With just an hour to go before the start of the hearing, the Republicans had just dropped a binder full of hundreds of documents they intended to use in their questioning — documents that Clinton had not prepared for.
Among them, Clinton aides say, was an email she had sent to her daughter, Chelsea, on the night of the attacks in which the secretary blamed “an Al Q[a]eda-like group.” GOP lawmakers saw it as a smoking gun, evidence that the Obama administration knew the attack had been terrorism even though officials initially said the incident had been sparked by an anti-Muslim video.
Hillary, ‘where is David’?: Clinton lawyer David Kendall had negotiated to prevent something that could have been more damaging: a plan by committee Republicans to have Clinton raise her right hand and be sworn in at the opening of the hearing, which would have produced an image that would be a GOP admaker’s dream. Instead, Clinton signed an oath before the hearing started.
(The above snippets are from the Washington Post, to read the full article, click here).
Lawsuit Seeks Clinton Lawyer David Kendall’s Communications with State Dept.
Williams & Connolly lawyer represents Hillary Clinton.
NationalLawJournal: A government watchdog group is suing for emails and other communication between Hillary Clinton’s personal lawyer David Kendall and the U.S. Department of State about any confidential information stored on Clinton’s private email server.
Kendall, of counsel to Williams & Connolly, has served as the Clintons’ personal lawyer since the early 1990s. He is representing Hillary Clinton as she responds to demands for emails on the private server she used as secretary of State and for information about how the server was maintained.
In a lawsuit filed by Judicial Watch on Jan. 29 in the U.S. District Court for the District of Columbia, the group said it sent the State Department a request in September for all records of communications between Kendall and the State Department about confidential or potentially confidential information on Clinton’s server or any copies of the server.
The group filed suit after several months passed with no response besides a general acknowledgement that the State Department received the records request in October.
Kendall declined to comment Monday.
It’s not the first time that Kendall has been the subject of public-records requests related to the Clinton email controversy. In September, two lawsuits were filed in the D.C. federal district court—one by the James Madison Project and another by journalist David Brown—seeking records about the State Department’s decision to allow Kendall to keep a thumb drive in his office with copies of emails from Clinton’s server.
The James Madison Project, a government watchdog group, joined by journalist Shane Harris, explicitly asked for copies of communications between the State Department and Kendall about the thumb drive.
In both cases, the State Department told the court in December that it had identified thousands of pages of documents that might be responsive to the requests. The State Department was ordered to update the court on its progress by Feb. 12.
Kendall is also no stranger to Judicial Watch. Since the 1990s, court records show that he represented the Clintons as they defended against various lawsuits Judicial Watch filed.
The federal district court in Washington is handling dozens of public-records cases tied to Clinton’s email server. Some of the requests are for emails from the server, while others more broadly seek information about how Clinton and the State Department managed the server and the exchange of confidential information.
State Department officials have repeatedly told judges in these cases that they are understaffed and overwhelmed by the volume of requests, which has led to delays.
The State Department has been reviewing 55,000 pages of emails from Clinton’s server to release to the public under court order. The department was supposed to produce the last batch of emails—about 9,000 pages—by Jan. 29. The agency missed that deadline and instead produced 1,670 pages, according to news reports.
Obama Greased the System for Big Lobby/Money
Government Drags Us Back in Time – Because Cronies and Ideology Tell It To
Motley/RS: Government by ideological fantasy – at the expense of actual facts – is a terrible idea. So too is government of, by and for the donors. Far too often government regulators and bureaucrats ignore Reality – to tilt at ideological windmills. And WAY too often government becomes one giant stenographer for contributors – writing laws and regulations to accommodate their check-cutters’ every whim and wildest dream.
Thus does equal protection before the law – become special treatment for Friends of Government (FOG, if you will). Donors and dumb ideas are favored – at inordinate expense to the rest of us.
To wit: “green” “energy” (wind, solar, hydro, geothermal, ethanol) is neither green nor energy. It’s far worse for the environment than traditional energy sources – that actually produce, you know, affordable energy. Governments here and all around the world have spent hundreds of billions of dollars on this phony energy. It’s been a titanic failure – for decades.
Why has government continued to throw this copious coin out the window – to keep us locked into an uber-failed yesterday? Because their ideological fantasies trump Reality. Why else? Because donors get government money at dollars-on-the-pennies they donated. To wit: President Barack Obama and his Democrats threw $80 billion more at the fake “green energy” industry in the 2009 “Stimulus.” 80% of that money – went to Obama donors.
The more government gets involved – the less the private sector can advance. The more rapidly a sector is advancing – the bigger an impediment government is. Likely no sector is advancing more quickly than the Tech sector. Enter government.
The Obama Administration’s Federal Communications Commission (FCC) has already done egregious damage there. To appease their ridiculous fantasies – and huge donors. About a year ago the Commission’s three unelected Democrat bureaucrats decided to go all the way back in time to1934 landline telephone law – and unilaterally impose it on the Internet. Behold Internet Reclassification – so as to impose the ridiculous Network Neutrality.
The Obama Administration did it – because donors asked for it. Donors like Google. No one did more to get President Obama elected and reelected – than Google. Just about no company swapped staff with the Obama Administration at such prodigious numbers – than did Google.
And after Google greased the skids for Obama – Obama greased the skids for Google. Google spent nearly the entirety of the 2000s trying and failing to get Net Neutrality passed in Congress. Because it is government forcing Internet Service Providers (ISPs) to give uber-bandwidth-hogs like Google – unlimited free bandwidth. We the People didn’t want it – Congress couldn’t pass it. So Obama just issued a fiat – and gave it to them.
But the problem with buying support – is that the “supporters” rarely stay bought. Google is now channeling West Wing President Josiah Bartlet – “What’s next?” And most unfortunately, President Obama’s government stenographers have many, many responses to that request.
Here’s one: FCC Chairman Tom Wheeler has penned a defense of the next backwards-looking power grab – huge new backdoor mandates via television set-top-boxes. Which they have attempted to obfuscate – as a deregulation of set-top-boxes.
Set-top-boxes are the devices we lease from cable companies – to watch their television packages. Which we are doing to a lesser and lesser degree – as the marketplace has already created myriad ways for us to “cut the cord.” Meaning give up cable television – and the set-top-boxes – altogether.
The future (and increasingly the present) of television – isn’t boxes. It’s apps (and alternate hardware like Apple TV and Amazon Firestick). Netflix, Amazon Prime, Roku, Hulu and a host of other companies deliver you (via their apps) unlimited streaming TV and movie content – using only an Internet connection. No cable TV subscription required. And unlike programmed TV, you can watch whenever you want, wherever you want. So more and more people are cutting their cords.
Meanwhile, the government is yet again stuck in the past. The FCC is dubiously invoking a twenty-year-old law (and seriously, how unbelievably different was how we watched TV twenty-years ago?) – to “open” to competitors the collapsing set-top-box market. This is a terrible idea for a number of reasons.
It is just stupid from an evolutionary standpoint. This is like the government issuing mandates to “open” the horse-buggy industry – as Model T Fords are rolling with ever increasing frequency into our driveways and hearts. If you’re “helping” prop up yesterday’s technology – you aren’t helping.
This mandate forces cable companies to spend a LOT of money totally reconfiguring their networks – to accommodate the new boxes. A new configuration for each new box, most likely – because each box will most likely connect uniquely to each network. And cable companies have a LOT of proprietary information and content to protect – so they will have to spend EVEN MORE time and money reconfiguring so as to ensure its protection. For which we will inexorably pay in higher fees – on TV, and the other services cable companies provide (like Internet). All to make room for more devices – of which people want less.
And you will be trading the box lease – for the box purchase. Which requires more coin upfront. And unlike with the lease, when the next upgraded model comes out – you won’t get it for free. You will pay all over again. And given the rapid technological advancement – how often will that purchase have to happen again, and again, and…?
Think how quick is the smart phone tech turnover (which is a MUCH more intensive product). Where you just purchased the “latest” Google Android – only to almost immediately watch Google roll out the next Android. Does Google give you that next version for free? Of course not. Google won’t give you their latest set-top-box either.
Wait – Google wants to get into the going-out-of-business set-top-box business? You bet they do. So the Obama Administration is prepping to issue yet another fiat – to make Google’s wishes come true. Again.
Crony-infested and ideologically-blinded is no way to go through life, Son. It is also absolutely no way to run a government.
Obama Lies, has Jack Lew Doing the Same on Debt Crisis
Ted Cruz is right, but there is a caveat, a White House cartel inside the Washington cartel.
EXCLUSIVE: Secret Fed Docs Show Obama Misled Congress, Public During Debt Limit Crises
Pollock/DCNF: Federal Reserve Bank of New York officials secretly conducted real-time exercises during the 2011 and 2013 debt-limit crisis that demonstrated the federal government could function during a temporary shutdown by prioritizing spending, even as Treasury Secretary Jack Lew publicly claimed many times that such efforts were “unworkable,” according to a new report by the House Financial Services Committee obtained by The Daily Caller News Foundation.The staff report, to be released Tuesday, charges that Lew and other Obama administration officials deliberately misled Congress and the public during the federal budget and debt limit showdowns in both years. The committee will convene a public hearing on the report Feb. 2.
The report also states that the Obama administration crafted actual contingency plans to pay for Social Security and veterans benefits, as well as principal and interest on the national debt if the government was temporarily unable to borrow more money. The Committee concludes that over the last two years the Treasury Department has “obstructed” congressional efforts to get to the bottom of the administration’s real-time policy during the two showdowns.
The Constitution stipulates that only Congress can determine how much money the federal government can borrow. Presidents thus cannot unilaterally spend beyond congressional debt ceiling limits set. The committee — chaired by Republican Rep. Jeb Hensarling of Texas — charged that during both confrontations, the Obama administration held the country’s creditworthiness “hostage” by claiming default was the only possibility if the debit ceiling was not raised.
“These internal documents show the Obama Administration took the nation’s creditworthiness and economy hostage in a cynical attempt to create a crisis so the president could get what he wanted during negotiations over the debt ceiling,” Hensarling said in a statement to be released with the report Tuesday.
The report also revealed that the Treasury Department did not publicly divulge its plans to prioritize payments “for the express purpose of creating market uncertainty in an effort to pressure Congress to acquiesce in the administration’s ‘no negotiation’ posture on the debt ceiling.”
Wisconsin Republican Rep. Sean Duffy, the financial services panel’s oversight subcommittee chairman, said the administration “manufactured a crisis to put politics ahead of economic stability.”
The massive, 322-page report chronicles frank, behind-the-scenes discussions among Federal Reserve Board and Federal Bank of New York officials as Congress debated whether to keep existing debt limits or allow Treasury to borrow more money. The House committee and the Treasury Department have been fighting a bitter, two-year battle over Federal Reserve documents.
The report states that “Treasury apparently directed the New York Fed not to answer valid congressional oversight inquiries because Treasury knew the answers would expose the dishonesty of the administration’s public statements.”
A Treasury Department spokesman told TheDCNF, “Treasury has been committed to working cooperatively with the Committee to provide it with the information it needs,” including providing it with the New York Fed documents. The report is based on 3,878 pages of internal documents the committee eventually acquired despite Treasury’s opposition. The panel finally obtained the documents by subpoena. The report contains 41 separate appendices.
The revelations will likely add new intensity to the long-running public debate on the proper level of federal spending as the 2016 election campaign accelerates with Monday’s Iowa presidential caucus and next week’s New Hampshire presidential primary. Obama administration officials repeatedly declared that a complete government shutdown with no partial or interim payments was the only alternative to congressional approval of an increased debt ceiling.
In testimony Oct. 13, 2013, before the Senate Finance Committee, for example, Lew said the government could not “pick and choose” the funding of individual government programs once the debt limit ceiling was reached.
“I do not believe there is a way to pick and choose on a broad basis. The system was not designed to be turned off selectively,” Lew said.
The Federal Reserve documents revealed in the report show the Obama administration was in fact prepared to pick and choose which payments to make “in order to protect the creditworthiness of the United States.”
An internal e-mail from an official in the New York Fed’s Financial Institution Supervision Group states that regardless of the congressional outcome, “Treasury is adamant they will make [Principal and Interest] payments. Not considering possibility of missing debt payments.” The P&I payments are made to Treasury bond holders.
“At the same time that Treasury was insisting to Congress and the American people that prioritization is unworkable, Treasury and New York Fed officials were working behind the scenes on a prioritization plan,” the report charges.
In private, Federal Reserve Board Federal Reserve Bank of New York officials vigorously denounced the administration’s secrecy over its contingency planning, one calling it “crazy, counter-productive, and add[ing] risk to an already risky situation.”
Federal Reserve Governor Jerome H. Powell, for example, complained that the administration tactics were part of political brinkmanship. “Treasury wants to maximize pressure on Congress by limiting communications on contingency planning,” he said in an email.
The report noted that both the Federal Reserve Board of Governors and the Federal Bank of New York had “grave concerns with Treasury’s political decision not to inform the public of the administration’s debt ceiling contingency plans.”
The Federal Reserve Board staff “strongly encouraged Treasury to reveal its plan in advance” so that the private sector could prepare properly for a debt ceiling event but Treasury officials were “very reluctant to do so,” according to the report.
The Federal Reserve documents also depict officials at the Federal Bank of New York twice engaging in intense “tabletop exercises” about how government agencies could operate under a spending limit.
A March 16, 2011, table-top exercise included an hour-by-hour simulation of how 29 governmental agencies and market players would react when the federal government reached its debt limit.
At the time, the federal government would be within $25 million of its $14.3 trillion budget limit. The Secretary of the Treasury would invoke the Federal Reserve Debt Ceiling Crisis procedures, which provide that the “The President and the Secretary of the Treasury meet with the Fed Chairman at noon and agree that the Federal Reserve should pursue actions to honor and settle SSI, veterans benefits and P&I payments.” SSI refers to Social Security and disability payments.
A similar April 9, 2013, debt ceiling table-top exercise focused on a “scenario” in which “Treasury begins controlling the flow of payments” and in which ”SSI, veterans benefits and P&I payments [would] be prioritized over all other governmental obligations.” The debt ceiling was $16.3 trillion at the time of the second exercise.
The procedures also state that “based on direction from the President, Treasury will pay only selected type of payments and withhold other government payments.”
Both Moody’s and Goldman Sachs publicly suggested during the 2013 crisis that it was possible the government could assure markets by pledging to pay principal and interest, Social Social and veterans benefits.
When contacted by TheDCNF, the Treasury Department did not directly address the issue of prioritizing payments but forwarded an October 16, 2015 blog, which stated in part, “The New York Fed’s system would be technologically capable of continuing to make principal and interest payment,” but added, “this approach would be entirely experimental and create unacceptable risk to both domestic and global financial markets.”
Multiple think tanks, including the Mercatus Center, have released reports suggesting numerous alternatives to default if the debt limit ceiling is not increased.
The national debt limit has tripled under Obama and now stands at $18.9 trillion.