Trump Admin Broke the Law by Withholding Ukraine Aid: Watchdog

Trump Admin Broke the Law by Withholding Ukraine Aid: Watchdog

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Plus, how big banks are benefiting from Trump's tax cuts
Thursday, January 16, 2020

Trump Administration Broke the Law by Withholding Ukraine Aid: Watchdog

At the heart of the impeachment trial of President Trump that got underway today in the Senate lies a question of budget authority: Just why did the president and his administration place a hold on congressionally approved military aid to Ukraine?

The Government Accountability Office, a nonpartisan watchdog agency that reports to Congress, said Thursday that, in withholding the aid, the White House Office of Management and Budget violated the law — specifically, the 1974 Impoundment Control Act, which was enacted to ensure that funds are spent as directed by lawmakers.

“Faithful execution of the law does not permit the President to substitute his own policy priorities for those that Congress has enacted into law,” the GAO said it its legal decision.

The Nixon-era Impoundment Control Act lays out the specific processes under which the president can defer or withhold funds appropriated by lawmakers. It requires the president to send a special message to Congress detailing the proposed amount to be held or cut and the reasons for the desired change. GAO said that the White House never sent such a message and did not meet the requirements for a deferral. “The burden to justify a withholding of budget authority rests with the executive branch,” the report says. “Here, OMB has failed to meet this burden.”

The White House had asserted that its actions were lawful because the hold was just a “programmatic delay” and not a deferral. But the watchdog agency rejected that claim.

“OMB told GAO that it withheld the funds to ensure that they were not spent ‘in a manner that could conflict with the President’s foreign policy,’” Thomas H. Armstrong, general counsel at the GAO, said in a statement. “The law does not permit OMB to withhold funds for policy reasons.”

Some OMB officials had objected to the hold, questioning whether it was proper, and at least two officials resigned in part due to concerns about the aid money.

The money in question: The GAO report focuses on $214 million in withheld security assistance funds, part of a congressionally appropriated $250 million Defense Department military aid package for Ukraine for 2019. The agency said it was still pursuing more information regarding a similar hold on $141.5 million in funding for Ukraine provided through the State Department.

It added that the White House budget office and State Department had provided very little information regarding those funds, and warned that it considers “a reluctance to provide a fulsome response to have constitutional significance” as it affects the agency’s ability to perform its role “essential to ensuring respect for and allegiance to Congress’ constitutional power of the purse.”

The White House quickly disputed the GAO conclusion. "We disagree with GAO's opinion,” Rachel Semmel, the OMB's communications director, said in a statement. OMB uses its apportionment authority to ensure taxpayer dollars are properly spent consistent with the president's priorities and with the law." And Russ Vought, acting director of the budget office, tweeted that the administration “complied with the law at every step.”

Why It Matters: GAO’s opinion doesn’t carry any immediate legal consequences for the White House given that the funds were ultimately released, so there’s no reason for the agency to sue to get the money unfrozen. But the report undercuts Trump’s defense that the hold was within his legal authority. Combined with new documents and allegations from Lev Parnas, an associate of Rudy Giuliani, Trump’s personal attorney, the report gives Democrats new ammunition — both to say that the administration violated the law and to pressure Republican leaders to allow witnesses and new evidence in the Senate impeachment trial.

"This bombshell legal opinion from the independent Government Accountability Office demonstrates, without a doubt, that the Trump Administration illegally withheld security assistance from Ukraine,” said Sen. Chris Van Hollen (D-MD), who requested the GAO report last month. “The GAO’s independent findings reinforce the need for the Senate to obtain all relevant documents and hear from key fact witnesses in order to have a fair trial."

Several Republicans have reportedly said that the GAO opinion doesn’t change their views. “The GAO report identifies the OMB, not the president, and said it was for policy reasons, not for political reasons,” Sen. John Cornyn (R-TX) said. “I think we’re going to hear some more about it but I don’t think that changes anything.”

Read more at The Washington Post, The New York Times or Roll Call.

Treasury Watchdog Is Probing Trump Tax Law’s Opportunity Zone Program

The Treasury Department’s internal watchdog said Wednesday that it is investigating the use of the federal Opportunity Zone tax break, a multibillion-dollar program introduced as part of the 2017 Republican tax law. Jesse Drucker of The New York Times reports:

“The inquiry is being conducted at the request of three Democratic lawmakers, Senator Cory Booker of New Jersey, Representative Emanuel Cleaver II of Missouri and Representative Ron Kind of Wisconsin.

“The lawmakers made their request after articles in The New York Times and ProPublica raised questions about the Opportunity Zone tax break.

“The legislation, part of the 2017 tax overhaul, is supposed to encourage new investment in poor neighborhoods, leading to new housing, businesses and jobs. However, wealthy investors are piling into the initiative, including developers with ties to the Trump administration.”

Read more at The New York Times.

Trump Tax Cuts Have Saved 6 Big Banks $32 Billion

The six biggest U.S. banks have saved $32 billion in taxes, including $18 billion last year, as a result of the 2017 Trump tax cuts, Yalman Onaran reports at Bloomberg News.

The average effective tax rate for JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley fell to 18% in 2019 from 20% the year before. “Because banks used to pay higher tax rates than many other industries, they were among the biggest beneficiaries,” Onaran writes.

The tax savings helped the banks post record profits of $120 billion last year. Onaran notes that the bank profits had never topped $100 billion before the tax cuts.

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