Coronavirus Means the Era of Big Government Is…Back
History shows that national shocks—the Depression, World War II, the financial crisis—have a way of expanding the role of government in lasting ways. This one is looking like no exception.
History shows that big national shocks have a way of changing the role of government in lasting ways—and any shock as big as the coronavirus pandemic inevitably will alter political life and philosophies in America.
The crisis has been not just a public-health emergency requiring a sweeping response, but also the cause of the most searing economic pain since the Great Depression, summoning forth a multi-trillion-dollar government intervention into the economy.
Much of today’s new government activism will recede over time along with the virus. Yet conversations with a broad cross-section of political figures suggest there is little reason to expect a return to what had been the status quo on federal spending, or the prevailing attitude toward the proper role of government.
“The era of Ronald Reagan, that said basically the government is the enemy, is over,” said Rahm Emanuel, a moderate Democrat who served as mayor of Chicago, a member of Congress and President Obama’s first White House chief of staff.
An echo came from the other side of the political spectrum. “The era of Robert Taft, limited-government conservatism?” said Steve Bannon, President Trump’s onetime political guru, referring to the Ohio senator who fought the expansion of government programs and federal borrowing. “It’s not relevant. It’s just not relevant.”
The Great Depression produced both a bigger social safety net and a host of new government programs, World War II led to the creation of a unified Defense Department and the Cold War spawned an interstate highway system. In just the past two decades, the 9/11 terrorist attacks produced new consolidated agencies to handle homeland security and national intelligence, and the 2008 financial meltdown led to a broad range of new actions by the Federal Reserve that are being replicated and expanded now.
Today, both parties and a vast majority of voters have come together behind a broad and aggressive response at both the federal and state level, and have accepted a sea of new red ink at a time the federal budget deficit already was heading toward a trillion dollars annually.
Mr. Trump, more a populist activist than a traditional conservative, has enthusiastically backed that spending, ordered the construction of pop-up hospitals, used his authority to order companies to produce supplies, called for an additional federal infrastructure program and offered an expansive definition of presidential power, including the power to strip away regulations and bureaucracy in some instances.
New Agreement
There is bipartisan support for the government's expanded role during the coronavirus crisis, unlike during the 2009 recovery from the financial crisis.
*March 2009 Gallup Poll
Source: WSJ/NBC News telephone poll of 900 registered voters conducted from April 13-15; margin of error +/– 3.27 pct. pts.
Oren Cass, who leads American Compass, a new organization devoted to revising conservative views on economic policy, argued that “one lesson we can and should learn from all this is that you can’t just flip a switch on strong, effective government when you need it. Just as you can’t get rid of the Defense Department in times of peace and then reconstitute it from scratch when attacked, you can’t push for the smallest possible government in normal times and expect to be ready with a competent response in an emergency.”
At the same time, while there was consensus behind government activism as the crisis struck, a loud and angry backlash now is emerging over whether the needle has moved too far, particularly on the state level. Protesters have taken to the streets in recent days, saying that political leaders, especially
governors, have overstepped their authority by closing down the economy and putting American jobs and livelihoods at risk.
“We were already headed toward a conversation about whether we’re going to have a socialist country or a capitalist country,” said Jenny Beth Martin, co-founder of the Tea Party Patriots, an organization that sprang up amid grass-roots anger over government bailouts in the 2008-09 financial crisis. “When we get past the virus, we’re going to have that debate in a new way.” She and others believe a government overreaction has taken shape in recent weeks, hurting many average Americans along the way.
Similarly, Scott Reed, senior political strategist at the U.S. Chamber of Commerce, is skeptical Republicans will continue to embrace big government in the same way they do now. “The size of the government is going to make Washington more and more relevant to the business community,” he said. “But long term, I think the right of center, the Republican Party, is going to want to roll that back some.”
Government spending rises amid crisis, and tends not to drop back to precrisis levels—at least not for a while. Economists call the tendency the “ratchet effect.” And while there is academic debate over its extent, a look back shows that federal spending as a percentage of the overall economy has never fallen back to its level before 9/11.
The ratchet effect may be more likely in the aftermath of this crisis because of structural problems layered over crisis spending: an aging population requiring more social services, aged infrastructure that needs updating, and the costs of servicing a historically large level of federal debt.
It is too early in this crisis to predict exactly how the size and shape of the government will be affected in the long run. For now, perhaps the clearest impact has simply been a shift in the public’s attitude toward government institutions, which have been much maligned in recent decades.
Ratchet EffectGovernment spending rises during crises andtends not to drop back to precrisis levels.Federal net outlays as a percentage of GDPSource: Federal Reserve Bank of St. Louis via St.Louis Fed
Former Iowa Democratic Gov. Tom Vilsack, Mr. Obama’s longest-serving cabinet secretary, said he expects that the “chants” he’s heard for the past 40 years about government not mattering and being the problem are likely to fade.
“This particular circumstance shows the importance of government at every level and the need for all branches to be better coordinated,” he said. “We’ve had people denigrate people in the post office and federal workers. Well, who are the people working today and putting themselves on the line?”
On the left, the crisis already is putting new energy behind calls for a nationalized health-care system. Sen. Bernie Sanders has argued that “the pandemic puts an even brighter spotlight on the shortcomings of the current corporate-run system,” and his followers are pushing the argument.
The crisis is “expediting” a move toward a more progressive Democratic Party agenda, said John Della Volpe, the polling director for RealClear Opinion Research and Harvard University’s Institute of Politics.
Others are skeptical the crisis will fuel something so dramatic as Medicare for All, the progressive proposal that got so much debate in the Democratic primary race. “Clearly, inside the party, that discussion will continue,” said Jim Messina, a Democratic strategist who ran Mr. Obama’s 2012 campaign. “I don’t think it affects the views of swing voters.”
On the Republican side, the big government response in the current crisis stands in stark contrast to the view articulated by the party’s longtime hero, the late President Reagan, in his first presidential inaugural address in 1981. Then, amid an earlier dark economic downturn, he declared: “In this present crisis, government is not the solution to our problem; government is the problem.”
Many Republicans argue that the current economic crisis is fundamentally different because it was caused by government orders to shut down businesses and public places to prevent the spread of the coronavirus, which means aggressive and expensive government action is justified to rectify the resulting problems.
“Because government action is the cause of what is going on, this action is much more acceptable in response, in Republican ranks,” said Eric Cantor, formerly the second-ranking Republican in the House.
Christopher DeMuth, distinguished fellow at the Hudson Institute, a nonpartisan think tank influential among conservatives, has argued that, by clearing away regulatory hurdles for private companies seeking answers for the virus, Mr. Trump has actually given a conservative, deregulatory twist to the bout of government activism now under way.
United Front
The government is winning broader approval during the coronavirus crisis than in 2009.
Q. ‘Do you approve or disapprove of the expansion of the government’s role in the economy?’
2
5
7
Approval is consistent across a variety of demographic groups:
*March 2009 Gallup Poll
Source: WSJ/NBC News telephone poll of 900 registered voters conducted from April 13-15.
In the same vein, Sara Fagen, political director in President George W. Bush’s White House, said that in its response to the health crisis “government was clunky and slow, but companies quickly turned it on, so there is some argument for free enterprise.”
In addition, Republicans have been willing to embrace the recently enacted, $2 trillion economic rescue plan because a main feature was the Paycheck Protection Program, which provides relief to small businesses. Republicans consider small businesses the economic force more compatible with their political philosophy than the big banks that were the main beneficiary of the 2008 rescue package.
“Why is it that Republicans are willing to defend PPP?” asked Karl Rove, chief political strategist for Mr. Bush. “Because it serves the interests of their constituency, small businesses. Their view of a modern society is not one dominated by large corporations, but one where there is opportunity for small entrepreneurs to thrive and move up the ladder of success.”
Share Your Thoughts
Do you approve of the government’s expanded role in the economy? Join the conversation below.Traditionally, Republicans have tended to prefer a federalist approach, which seeks to move
government power away from the national government in Washington and out to the governors and
the states.
Mr. Trump’s sweeping declaration this month that he, as president, has “total authority” to decide
when to order governors to loosen social-isolation restrictions and reopen their economies runs
directly counter to that traditional conservative mind-set. Though he subsequently backtracked on trying to exercise such powers, the tone he struck was decidedly different from Mr. Reagan’s frequent invocation of the Constitution’s 10th Amendment, which reserves for the states or the people powers not explicitly granted to the federal government.
Long before this crisis struck, Mr. Trump had been moving the Republican party away from its Reagan-era embrace of traditional conservative precepts and toward a more populist view of government’s role. That populist philosophy isn’t shy about using government power, or the government’s checkbook, to the benefit of working-class Americans.
Thus, in the midst of the crisis, the Trump administration declared that the federal government would pay the coronavirus health bills of any Americans without health insurance—and reimburse health-care providers at the rates paid by the Medicare health program for the elderly. That step appeared to offer at least a glancing nod toward a Medicare for All system long advocated by the Democrats’ left wing.
Moreover, in direct contradiction to traditional Republican antipathy to deficit spending and a growing national debt, Mr. Trump has explicitly argued in favor of borrowing, at a time of low interest rates, to finance a new, $2 trillion bill to rebuild and improve the nation’s infrastructure. Even before the crisis, there was a push for a larger national effort to build out a 5G wireless network, a cause that seems even more relevant now that much of the nation’s work and learning has moved online.
Mr. Bannon argues that voters will see a powerful central government as essential as the U.S. moves into a long-term era of confrontation with China, where the coronavirus originated. A broad period of tension, he said, “is going to change the focus of government.”
In the long run, the impact of the crisis may depend on how quickly or how slowly the economy bounces back. Voters’ reaction may break not along ideological or personality lines, but rather in favor of more competent government at all levels—government that efficiently builds stockpiles of needed supplies for use in a national crisis, for instance, and responds quickly and efficiently when one strikes.
“The way the pendulum swings, the quieter, competent leaders might be more in fashion,” said nonpartisan pollster J. Ann Selzer.
Write to Gerald F. Seib at
jerry.seib@wsj.com and John McCormick at mccormick.john@wsj.com
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The Secret Group of Scientists and Billionaires Pushing a Manhattan Project for Covid-19
They are working to cull the world’s most promising research on the pandemic, passing on their findings to policy makers and the White House
A dozen of America’s top scientists and a collection of billionaires and industry titans say they have the answer to the coronavirus pandemic, and they found a backdoor to deliver their plan to the White House.
The eclectic group is led by a 33-year-old physician-turned-venture capitalist, Tom Cahill, who lives far from the public eye in a one-bedroom rental near Boston’s Fenway Park. He owns just one suit, but he has enough lofty connections to influence government decisions in the war against Covid-19.
These scientists and their backers describe their work as a lockdown-era Manhattan Project, a nod to the World War II group of scientists who helped develop the atomic bomb. This time around, the scientists are marshaling brains and money to distill unorthodox ideas gleaned from around the globe.
They call themselves Scientists to Stop Covid-19, and they include chemical biologists, an immunobiologist, a neurobiologist, a chronobiologist, an oncologist, a gastroenterologist, an epidemiologist and a nuclear scientist. Of the scientists at the center of the project, biologist Michael Rosbash, a 2017 Nobel Prize winner, said, “There’s no question that I’m the least qualified.”
This group, whose work hasn’t been previously reported, has acted as the go-between for pharmaceutical companies looking for a reputable link to Trump administration decision makers. They are working remotely as an ad hoc review board for the flood of research on the coronavirus, weeding out flawed studies before they reach policy makers.
The group has compiled a confidential 17-page report that calls for a number of unorthodox methods against the virus. One big idea is treating patients with powerful drugs previously used against Ebola, with far heftier dosages than have been tried in the past.
The Food and Drug Administration and the Department of Veterans Affairs have already implemented specific recommendations, such as slashing manufacturing regulations and requirements for specific coronavirus drugs.
National Institutes of Health Director Francis Collins told people this month that he agreed with most of the recommendations in the report, according to documents reviewed by The Wall Street Journal and people familiar with the matter. The report was delivered to cabinet members and Vice President Mike Pence, head of the administration’s coronavirus task force.
Dr. Cahill’s primary asset is a young lifetime of connections through his investment firm. They include such billionaires as Peter Thiel, Jim Palotta and Michael Milken—financiers who afforded him the legitimacy to reach officials in the middle of the crisis. Dr. Cahill and his group have frequently advised Nick Ayers, Mr. Pence’s longtime aide, and agency heads through phone calls over the past month.
No one involved with the group stands to gain financially. They say they are motivated by the chance to add their own connections and levelheaded science to a coronavirus battle effort that has, on both state and federal levels, been strained.
“We may fail,” said Stuart Schreiber, a Harvard University chemist and a member of the group. “But if it succeeds, it could change the world.”
Steve Pagliuca, co-owner of the Boston Celtics and the co-chairman of Bain Capital—as well as one of Dr. Cahill’s investors—helped copy edit drafts of their report, and he passed a version to Goldman Sachs Group Inc. Chief Executive David Solomon. Mr. Solomon got it to Treasury Secretary Steven Mnuchin.
The group’s members say they are aware that many of their ideas may not be implemented, and could be ignored altogether by the Trump administration.
This account is based on interviews with scientists, businesspeople, government officials, as well as a review of related documents.
Break out
Only two years ago, Dr. Cahill was studying for his M.D. and PhD. at Duke University, conducting research on rare genetic diseases and wearing $20 Costco slacks. He assumed he would continue the work after graduation.Instead, he reconnected with a friend who introduced him to a job at his father’s company, the blue-chip investment firm the Raptor Group.
Dr. Cahill got hooked on investing, particularly in life sciences. He reasoned he could make a bigger impact by identifying promising scientists and helping them troubleshoot problems—both scientific and financial—than doing research himself.
After a stint at Raptor, he formed his own fund, Newpath Partners, with $125 million from a small group of wealthy investors, including Silicon Valley stalwart Mr. Thiel and private-equity founders like Mr. Pagliuca. They were attracted to his blunt approach, as well as his interest in tackling intractable problems.
In early March, as the Covid-19 death toll mounted, Dr. Cahill was intrigued and a little depressed with the state of research on the virus. “Science and medicine were the furthest things removed from everything happening,” he said.
His investors peppered him with questions about the virus, and he organized a conference call to share some against-the-grain ideas on how to accelerate drug development and the like. He expected about 20 people.
When Dr. Cahill tried to dial in the meeting, he was rejected because the call had reached capacity. Then his cellphone buzzed from a New York number. It was National Basketball Association Commissioner Adam Silver. He, too, wanted the meeting’s access code. Dr. Cahill later gave him a personal briefing.
Newpath’s deep-pocketed investor base had spread word of the call, and hundreds of people were on the line, most of whom he had never met, including Mr. Milken.
When he finally got on the call, Dr. Cahill took a deep breath and said he had been working with friends to whittle down potential Covid-19 treatments to the most promising. He said he largely dropped his investing work to focus on a hunt for a cure.
After an hour, he hung up and found his email inbox full of ideas and offers to help, including from Mr. Milken’s team. “For the 50 years I’ve been involved in medical research I have never seen collaboration as we have today,” Mr. Milken said.
Dr. Cahill received a handful of notes from advisers to the vice president. They also had been on the call.
The scientist-investor had gained a platform. All he needed was a plan.
Tracing contacts
One of Dr. Cahill’s first calls was to Mr. Schreiber, a founder of several private companies.Mr. Schreiber looped in a longtime friend, Edward Scolnick, former head of research and development at pharmaceutical giant Merck & Co., where he helped develop 28 new drugs and vaccines. Dr. Scolnick was blunt: A vaccine would take at least 18 months to hit the market under normal circumstances, he told Mr. Schreiber, “if you’re damn lucky.”
Mr. Schreiber responded, “What about six months?”
The team drew up a list of roughly two dozen companies that could benefit from their recommendations and pledged to sell any shares in them immediately. One early member said he couldn’t and was kicked out.
Share Your Thoughts
What is your assessment of the group’s Covid-19 plan?Join the conversation below.Personal hygiene went by the wayside. Michael Lin, a Stanford University neurobiologist, began disabling the camera on his phone to protect his vanity. “A couple of days, I’ve had 7 or 8 Zoom meetings, which will itself I’m sure cause some kind of disease,” he joked.
Debates haven’t always been purely science. The group discussed, for instance, whether to suggest that public-health authorities rename the virus “SARS-2,” after the 2003 China animal virus. To them, the name sounded scarier and might get more people to wear face masks. They dropped it.
The team pledged to try to block out politics—not an easy task in the noise and fury of a presidential election year.
Hydroxychloroquine, a malaria drug promoted by the president, was dismissed after the group’s resident expert, Ben Cravatt of Scripps Research in La Jolla, Calif., determined it was a long shot at best. The drug received only a passing mention in the group’s final report.
The group also disparaged the idea of using antibody testing to allow people back to work if their results showed they had recovered from the virus. Mr. Cravatt, a chemical biologist, declared it “the worst idea I’ve ever heard.” He said that prior exposure may not prevent people from giving the virus to others, and that overemphasizing antibody testing might tempt some people to intentionally infect themselves to later obtain a clean bill of health.
The group’s initial three phases of recommendations, contained in its report, center on leveraging the scale of the federal government. For instance, buy medicines not yet proven effective as a way to encourage manufacturers to ramp up production without worrying about losing money if the drugs fail. Another is to slash the time required for a clinical review of new drugs to a week from nine months or a year.
The group next needed to get their recommendations to the right people in the Trump administration. For that, Dr. Cahill tapped another well-placed billionaire.
An introduction
Brian Sheth, co-founder of private-equity firm Vista Equity Partners, and a Democrat, had been watching the effort gather steam from his home in Austin, Texas. He was an early investor in Dr. Cahill’s fund and had been on the first call. His expertise was technology, though, not immunology.He had become friendly with Thomas Hicks Jr., the Dallas businessman and co-chairman of the Republican National Committee. Mr. Sheth introduced Mr. Hicks to Dr. Cahill’s group.
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The Corrupt Socialist Communist Phony liberal Fake News Media will Not Report This A Real Photo OF Meghan O’Sullivan Harvard Law School School Board Member Talks With Susan Rice About The Russian Spies Using The Clinton Foundation Influencing Presidential Election 2016 With Hunter Biden Ukraine’s Burisma.
Burisma Holdings is among Ukraine's largest independent natural gas companies.The company was founded in 2002 by Mykola Zlochevsky, an ally of the former Ukrainian President Viktor Yanukovych — the pro-Russia leader who was ousted in 2014 and has lived in exile in Russia ever since.
Burisma is owned by the Cyprus-based offshore company Brociti Investments Limited, which records show is owned Zlochevsky, BuzzFeed News reported.
Zlochevsky served as Ukraine's ecology minister under Yanukovych, assuming the role in 2010.
Zlochevsky also fled the country not long after Yanukovych went into exile, according to The New York Times, as the office of Ukraine's prosecutor general opened multiple investigations into him and his businesses — including suspicion of tax evasion and money laundering.
WASHINGTON—A consulting firm hired by Burisma Group mentioned
that former U.S. Vice President Joe Biden’s son served on the Ukrainian
gas company’s board so the firm could leverage a meeting with the State
Department, according to documents and a former U.S. official.
The documents—email exchanges between State Department staff members made public this week—show that the consulting firm, Washington-based Blue Star Strategies, used Hunter Biden’s name in a request for a State Department meeting and then mentioned him again during the meeting as part of an effort to improve Burisma’s image in Washington.
The documents—email exchanges between State Department staff members made public this week—show that the consulting firm, Washington-based Blue Star Strategies, used Hunter Biden’s name in a request for a State Department meeting and then mentioned him again during the meeting as part of an effort to improve Burisma’s image in Washington.
Mr. Biden was appointed to the Burisma board in 2014, when the
company and its owner faced allegations of corruption, and he remained
there until April of this year.
It isn’t clear whether the younger Mr. Biden knew his name was being used by Blue Star in its contacts with State Department officials on Burisma’s behalf in early 2016. A lawyer for Mr. Biden didn’t respond to a request for comment.
Hunter Biden served on Burisma’s board when his father, then the vice president, was overseeing U.S. efforts to get Ukraine to reduce corruption. That arrangement has drawn allegations from President Trump and his allies that the younger Mr. Biden sought to profit from his father’s name. Mr. Trump asked Ukraine’s leader to investigate the Bidens—an act at the center of the House’s impeachment inquiry. Both Bidens deny any wrongdoing.
It isn’t clear whether the younger Mr. Biden knew his name was being used by Blue Star in its contacts with State Department officials on Burisma’s behalf in early 2016. A lawyer for Mr. Biden didn’t respond to a request for comment.
Hunter Biden served on Burisma’s board when his father, then the vice president, was overseeing U.S. efforts to get Ukraine to reduce corruption. That arrangement has drawn allegations from President Trump and his allies that the younger Mr. Biden sought to profit from his father’s name. Mr. Trump asked Ukraine’s leader to investigate the Bidens—an act at the center of the House’s impeachment inquiry. Both Bidens deny any wrongdoing.
President Trump's efforts to persuade Ukraine to investigate
his political rival, former Vice President Joe Biden, have set off an
impeachment inquiry by House Democrats. WSJ's Shelby Holliday lays out a
timeline of interactions between the president's inner circle and
Ukrainian officials. Photo Composite: Laura Kammermann/The Wall Street
Journal
The email exchanges between State Department staffers show
that Karen Tramontano, chief executive of Blue Star, cited Mr. Biden’s
position in trying to secure a meeting with a senior official at the
State Department.“She noted that two high profile U.S. citizens are affiliated with the company (including Hunter Biden as a board member),” the special assistant at the Office of the Undersecretary for Economic Growth, Energy and the Environment wrote in the Feb. 24, 2016, email.
Ms. Tramontano met with the undersecretary, Catherine Novelli, on March 1, 2016, the documents show. During the meeting, Ms. Tramontano mentioned Mr. Biden served on the company’s board, according to a former State Department official familiar with the discussion.
In the contacts with the State Department, Ms. Tramontano said that Burisma hadn’t engaged in corruption and wanted to change the view of the company in Washington. The former official said that Hunter Biden’s position on the board wasn’t the reason that Ms. Novelli took the meeting and that no further action was taken after it took place.
The State Department didn’t immediately respond to a request for comment. Blue Star declined to comment for this article.
The documents were released in response to a Freedom of Information Act request submitted by John Solomon, who first published the documents on the website Scribd.com. A copy of the emails were subsequently made available to The Wall Street Journal by the law firm that represented Mr. Solomon, Southeastern Legal Foundation, a conservative public interest nonprofit.
The documents don’t name Devon Archer, Hunter Biden’s longtime business partner, who was also on the Burisma board.
The documents were released after the Southeastern Legal Foundation filed a complaint against the State Department. The U.S. District Court for the District of Columbia ordered the department to release the documents.
Blue Star’s efforts for Burisma came as the company and its Ukrainian tycoon founder, Mykola Zlochevsky, faced investigations in Ukraine focused on allegations of tax irregularities, money laundering and illegal enrichment
Mr. Zlochevsky was never charged, and a lawyer for Burisma said at the time that the investigations were closed because of a lack of evidence.
The dropping of the investigations in 2016 came after Ukraine’s prosecutor general was dismissed. Vice President Biden and European Union officials had brought pressure on the prosecutor, seeing him as a hindrance to anticorruption efforts. His dismissal has been seized upon by Mr. Trump’s personal attorney Rudy Giuliani as evidence that Vice President Biden exerted undue pressure on Kyiv to help his son.
President Trump and Mr. Giuliani have asked Ukraine to investigate the Bidens. State Department and other officials testifying in the House impeachment inquiry have said that military aid and the prospect of a White House meeting were withheld until the Ukrainian government agreed to investigate. Last month, Ukraine’s prosecutor general said it was reviewing past investigations, raising the possibility of restarting probes.
Write to Jessica Donati at jessica.donati@wsj.com
A Ukraine gas company tied to Joe Biden's son is at the center of Trump's impeachment
- A Ukrainian gas company with ties to former Vice President Joe Biden's son has repeatedly been mentioned in relation to President Donald Trump's impeachment.
- During a July 25 phone call, Trump urged Ukraine's president to launch investigations into former Vice President Joe Biden and his son, Hunter Biden, as well as a debunked conspiracy theory related to 2016.
- Trump wanted Ukraine to launch an investigation into Hunter's work for Burisma Holdings, a Ukrainian natural gas company.
- Hunter began working for Burisma in 2014. This was around the same time the former vice president was spearheading the Obama administration's efforts to pressure Ukraine to root out corruption.
- Trump and his personal lawyer Rudy Giuliani have suggested, without evidence, that Biden improperly pressured Ukraine to fire a prosecutor who had at one point been investigating Burisma Holdings.
- Though some ethics watchdogs have criticized Hunter's decision to work for Burisma in light of who his father is, there's no evidence of wrongdoing or illegal activity on his part or the former vice president's.
- And there's nothing concrete to support the suggestion Biden pressured Ukraine to take actions to the benefit of his son.
- With the Senate impeachment trial underway, Trump's defense team has continued to suggest the Bidens were guilty of corruption in Ukraine despite a lack of evidence.
- Visit Business Insider's homepage for more stories.
In a July 25 phone call, Trump urged Ukrainian President Volodymyr Zelensky to launch investigations into former Vice President Joe Biden and his son, Hunter Biden, as well as a bogus conspiracy theory that Ukraine, not Russia, interfered in the 2016 election.
Trump wanted Zelensky launch an inquiry into the Bidens in relation to Hunter's work for Burisma, despite no evidence of wrongdoing or illegal activity on the part of either of them.
Here's what we know about the company and how it's involved in the back-and-forth between Trump and the Bidens.
Fast facts about Burisma Holdings:
- Burisma Holdings is among Ukraine's largest independent natural gas companies.
- The company was founded in 2002 by Mykola Zlochevsky, an ally of the former Ukrainian President Viktor Yanukovych — the pro-Russia leader who was ousted in 2014 and has lived in exile in Russia ever since.
- Burisma is owned by the Cyprus-based offshore company Brociti Investments Limited, which records show is owned Zlochevsky, BuzzFeed News reported.
- Zlochevsky served as Ukraine's ecology minister under Yanukovych, assuming the role in 2010.
- Zlochevsky also fled the country not long after Yanukovych went into exile, according to The New York Times, as the office of Ukraine's prosecutor general opened multiple investigations into him and his businesses — including suspicion of tax evasion and money laundering.
What we know about Hunter Biden's role at Burisma:
- In April 2014, Biden's son Hunter joined the board of Burisma Holdings. Hunter served on the board until early 2019.
- At the time, a news release from the company said Hunter would be "in charge of the Holdings' legal unit and will provide support for the Company among international organizations."
- Hunter told the New York Times that the news release was not accurate and he was never in charge of the company's legal affairs.
- He joined the company about a month after Russia annexed Crimea, a cataclysmic moment that continues to put the US at odds with Russia and is linked to ongoing conflict in eastern Ukraine.
- During his time with Burisma, Hunter reportedly received compensation up to $50,000 a month.
- From the start, Hunter's role at Burisma was criticized by ethics watchdogs as a conflict of interest for his father, who was still vice president at the time and heavily focused on pressuring Ukraine to do a better job rooting out corruption. But some ethics watchdogs at the time also said that unless there was clear evidence Hunter got the job to influence US foreign policy then there was no cause for concern.
- His hiring by Burisma was seen as an attempt by the company to bolster its image and the perception it had strong ties to the US as the world vilified Russia for its annexation of Crimea, the Times reported.
- Yoshiko M. Herrera, a professor of political science at the University of Wisconsin at Madison and an an expert on Russia and Eurasia, told The Washington Post: "I think there is a conflict of interest even if it doesn't break any laws. It's a big deal. It's the vice president, who is the point person of the Obama administration's policy on Ukraine, and his son is suddenly hired to be a director on the board of Ukraine's largest private gas producer."
- With that said, Hunter has never been accused of wrongdoing regarding his work with Burisma.
- Hunter also said he only had one brief conversation with his father about Burisma which did not go into substantive details about the deal. Joe Biden has said he learned about his son's role at the company from news reports.
Here's why this is now linked to Trump's impeachment:
- Trump and his attorney Rudy Giuliani have suggested that Biden improperly leveraged his role as vice president to push for the ousting of a man named Viktor Shokin as Ukraine's top prosecutor in order to help his son avoid getting caught up in corruption investigations.
- Trump has admitted that in a July 25 call with Ukrainian President Volodymyr Zelensky, who was elected in April, that he addressed investigating Biden and his son.
- The White House released a memo on the call that showed Trump repeatedly pressuring Zelensky to investigate the Bidens.
- "There's a lot of talk about Biden's son, that Biden stopped the prosecution and a lot of people want to find out about that," Trump said to Zelensky on the call, according to the memo. "If you can look into it … it sounds horrible to me."
- The call is also central to a whistleblower complaint from an intelligence official that says Trump, among other things, asked Zelensky to "initiate or continue an investigation into the activities of former Vice President Joseph Biden and his son, Hunter Biden."
- The complaint alleges Trump has used "the power of his office to solicit interference from a foreign country in the 2020 US election."
- The scandal surrounding the call and whistleblower complaint sparked an impeachment inquiry into Trump that ultimately led to his impeachment.
- Trump has tried to flip the situation around, contending that the real issue is the role Biden played in Ukraine as vice president and keeps pointing to Shokin's firing and Hunter's work for Burisma.
- After Shokin was appointed as Ukraine's prosecutor general in February 2015, he inherited the investigations into Zlochevsky. He also ultimately launched another probe into the profitable gas licenses that were awarded to Zlochevsky's companies as he served as a top minister in Yanukovych's government.
- But by March 2016, Shokin was ousted. Hundreds of Ukrainians had demonstrated in front of the president's office calling for Shokin to be booted and the Ukrainian parliament voted to accept his resignation.
- For months before that, the US and other countries had pressured for Shokin to be ousted because he didn't make a concerted effort to fight corruption. Biden, who was spearheading the Obama administration's Ukraine work, was at the center of these efforts, and threatened to withhold $1 billion in loan guarantees from Ukraine if Shokin wasn't fired.
- So, it's true that Biden was among those who pushed for Shokin to be fired as Ukraine's top prosecutor, but by the time this happened the probe into Burisma was dormant, according to Bloomberg.
- According to the Times, Ukrainian and American officials have also debated whether Shokin was using the threat of prosecution against Burisma in order to solicit a bribe.
- Daria Kaleniuk, co-founder of the Ukrainian Anti-Corruption Action Center told The Washington Post, "Shokin was not investigating. He didn't want to investigate Burisma. Shokin was fired not because he wanted to do that investigation, but quite to the contrary, because he failed that investigation."
- Yuriy Lutsenko, Ukraine's former prosecutor general who left the post at the end of August, told Bloomberg in an interview in May that neither Biden nor Hunter are the subject of investigations: "I do not want Ukraine to again be the subject of US presidential elections. Hunter Biden did not violate any Ukrainian laws — at least as of now, we do not see any wrongdoing. A company can pay however much it wants to its board."
- Lutsenko added: "At the end of the day, Shokin submitted his own resignation."
- Additionally, Lutsenko on September 26 told The Washington Post: "From the perspective of Ukrainian legislation, [Hunter Biden] did not violate anything."
- Lutsenko in an interview with the Los Angeles Times on September 29 echoed his previous comments and said that he'd not seen any evidence of wrongdoing on the part of either Biden.
- Trump on October 3 stood on the White House lawn and once again called on Ukraine to investigate the Bidens.
- On October 4, it was reported Ukraine's new prosecutor general, Ruslan Ryaboshapka, is reviewing past investigations into the owner of Burisma. This raised the possibility of inquiries being restarted, the Wall Street Journal reported.
- Ryaboshapka on October 4 also told Reuters he's not aware of any evidence of wrongdoing on Hunter's part and that he'd not been in touch with any foreign lawyers regarding the case.
- Multiple witnesses in the impeachment inquiry have said there's no evidence of illegal activity on the part of the Bidens in relation to Burisma.
- Witnesses have also tied Trump's decision to freeze roughly $400 million in military aid to Ukraine to his call for investigations, suggesting there was an explicit quid pro quo. In short, they've alleged Trump withheld the aid as part of an effort to pressure Ukraine into launching an investigation that would smear Biden's name and benefit the president politically.
- In the Senate impeachment trial, Trump's defense team has continued to shift attention away from the president and toward Hunter and the former vice president.
- Biden has rejected suggestions from Republicans that he should testify in the impeachment trial. "I have nothing to defend. This is all a game," Biden told reporters on January 27.
GOP Senators Appear Likely to Block Witnesses in Impeachment Trial
Senate to vote Friday on whether to introduce additional evidence
The Senate will vote Friday on whether to introduce additional evidence in the trial after the House Democratic impeachment managers and the president’s defense team each present arguments on the question for two hours. Sen. Lamar Alexander (R., Tenn.), considered one of the key swing votes on the measure, said Thursday night that he would vote no, bolstering Republican chances of blocking Democratic efforts to extend the trial.
Without new evidence or witnesses, the Senate could complete the trial later Friday, though Democrats have indicated they may force additional votes that some lawmakers are cautioning could extend the process into early Saturday. While a simple majority is necessary to consider more evidence, two-thirds of the Senate would need to vote to convict Mr. Trump for him to be removed from office.
The question of bringing in new evidence has been at the heart of the nine days of arguments and questioning, pitting Democrats—who want to acquire additional material—against Republicans who have sought to quickly vote to acquit Mr. Trump and avoid potentially dramatic testimony.
Each of the 47 Democrats in the chamber has previously voted in favor of new evidence and at least four Republicans would need to join with Democrats for the chamber to move forward with introducing new material. Sen. Susan Collins (R., Maine) said Thursday night that she would vote in favor of new witnesses and Sen. Mitt Romney (R., Utah) has said he would like to hear testimony from John Bolton, Mr. Trump’s former national security adviser.
Sen. Lisa Murkowski (R., Alaska), another swing vote, said she would announce her position Friday after reviewing her notes.
In leaked manuscripts of his book, Mr. Bolton wrote that Mr. Trump told him he was freezing security aid to Ukraine until it opened investigations into former Vice President Joe Biden, a leading Democratic presidential candidate, and other matters. Mr. Bolton has said he would testify if subpoenaed by the Senate. “Isn’t it true that the allegations still would not rise to the level of an impeachable offense, and that therefore for this and other reasons his testimony would add nothing to the case?” the question signed by Mr. Alexander and Ms. Murkowski read. Sen. Roy Blunt (R., Mo.), a member of the GOP leadership in the chamber, said the question encouraged the leadership that the senators would vote to block new evidence in the trial. Ms. Collins and Mr. Romney didn’t join the question. The charge that Mr. Trump linked the hold on roughly $400 million in security aid this summer to opening investigations of Democrats was at the center of the House impeachment inquiry. Mr. Trump has denied that the two were related, saying he held the aid to both investigate corruption in Ukraine and ensure other countries were contributing to its defense; he has called the impeachment case against him a hoax. Mr. Trump and his allies have alleged that it was corrupt for Mr. Biden during the Obama administration to seek the ouster of a Ukrainian prosecutor who had once investigated a Ukrainian gas company where Mr. Biden’s son Hunter sat on the board. Mr. Biden sought the prosecutor’s removal as part of a broad international effort to combat corruption in Ukraine. The Bidens have denied any wrongdoing, though Hunter Biden has said it was poor judgment on his part to serve on the Burisma board, which paid him $50,000 a month, while his father was involved with Ukraine policy as vice president. “I’m going to go back, put some eye drops in so I can keep reading, and I’ve been forming a lot of thoughts,” she said Thursday night. If Ms. Murkowski were to join Ms. Collins and Mr. Romney to vote in favor of new evidence and every other Republican voted against it, the Senate could tie 50-50 on whether to call witnesses. A tie raises the possibility of Chief Justice John Roberts intervening in the vote, though experts have cautioned that is unlikely and lawmakers in both parties have said they hope to avoid needing a tiebreaker. In the question-and-answer session Thursday, Ms. Murkowski joined Mr. Alexander and several other Republicans to cast skepticism on the relevance of Mr. Bolton’s testimony.
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