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And You Thought Your Day was Bad, Part I: James Sues Trump

After years of investigations, NY AG Letitia James yesterday sued Donald Trump, three of his adult children, CFO Allen Weisselberg, the Trump Organization and several other Trump-owned entities for fraud. This is a civil case, so no one will go to prison by James' hand, even if everyone and the company are found guilty. However, there could be some whopping fines.

In case you are wondering which adult child lucked out, it is Tiffany Trump, whom Trump long ago wrote off because he thinks she is too fat and not a 10. This means the only child he actually likes, Ivanka, is included in the suit. Bummer for him. Here are five of the defendants at Trump Tower in 2017. The little guy in the background between Trump Sr. and Trump Jr. is Weisselberg.

Eric, Ivanka, Donald, and Junior Trump in 2017

The suit asks the New York Supreme Court, which is actually a lower court in New York, to bar Trump, Eric Trump, Donald Trump Jr., and dear Ivanka from serving as executives at any company in New York state and to bar the Trump Organization from acquiring any commercial real estate for 5 years. It also seeks to recover $250 million in ill-gotten gains. Penalties are also a possibility./p>

Among other things, James alleges that Trump lied over 200 times about the value of his assets over a period of 10 years. Falsely reducing the value of property to reduce property tax is tax fraud. Falsely increasing the value of property to banks to qualify for loans is bank fraud.

The problem (for Trump) is that cases like this leave huge paper trails. If Trump told a bank that a property was worth $50 million to get a loan and then told local authorities that it was worth $10 million for property taxes, there tends to be a lot of written evidence that is going to be hard to explain away, especially if the two statements were in the same year.

That said, all is not lost for the former president here. The behavior he's accused of is rather common in the world of big-time real estate; he just took it to extremes. And while it's clear that there is far too big a gap between what he was telling the banks and what he was telling the government for tax purposes, it's not necessarily clear in which direction the exaggerations became problematic. Trump could, and presumably will, argue that the valuations he gave the government were legit and the ones he gave to the banks were inflated. If so, then the primary victim here would be his (former) bank of choice, Deutsche Bank. And Trump could, and presumably will, further argue that Deutsche Bank knows how the game is played, and was careless about verifying his claims, and so it's on them for accepting wildly incorrect valuations. This is not a totally meritless argument.

Of course, it is also possible that Trump exaggerated too much in both directions, and that he's guilty of both defrauding his lending partners and also underpaying his tax bill. Although James, as noted, is not pursuing criminal charges, she's referring the case to the Southern District of NY and the IRS for them to consider criminal prosecution. Just in case they didn't have enough Trump-related work already.

One interesting question is exactly why Trump (allegedly) cooked the books as much as he did. Was it just because he could, and once you've gotten away with stealing one cookie, you shoot for two the next time? Or was it because he had no choice, due to his financial picture being precarious. If it's the latter, and it may very well be, then a nine-figure fine (and the other sanctions), if imposed, could be a brutal blow to him, financially.

James has forced both Donald Trump Sr. and Eric Trump to sit for depositions. Eric pleaded the Fifth Amendment over 500 times. Donald did it over 400 times. In civil cases, the prosecutor is allowed to tell the jury that and ask them to consider: "What is he hiding?" So, whatever attorney handles this case for The Donald really has their work cut out for them. (V & Z)

And You Thought Your Day was Bad, Part II: The Eleventh Circuit Makes Its Ruling

The good news for Donald Trump is that, for the appeal of Judge Aileen Cannon's ruling to the Eleventh Circuit, he beat the odds and drew two judges that he'd approved (out of a panel of three; the third is a Barack Obama appointee). The bad news is that they are not buying what he is selling, at all. Yesterday, the judges issued an emergency stay of the portion of Cannon's order that said the Department of Justice had to set aside the classified documents taken from Mar-a-Lago until the special master is able to review them.

What this means is that the DoJ can continue working on their case against Trump, without interruption. In theory, while the Eleventh Circuit might rule in the former president's favor when his appeal is actually heard, he really shouldn't count on it. Yesterday's ruling was per curiam, which not only implies that the three judges are entirely in agreement, but that Trump's arguments are lacking in serious merit. Further, their opinion is rather... strongly worded, as far as these things go. For example it includes this observation:

For our part, we cannot discern why Plaintiff would have an individual interest in or need for any of the one-hundred documents with classification markings. Plaintiff has not even attempted to show that he has a need to know the information contained in the classified documents. Nor has he established that the current administration has waived that requirement for these documents. And even if he had, that, in and of itself, would not explain why Plaintiff has an individual interest in the classified documents.

Plaintiff suggests that he may have declassified these documents when he was President. But the record contains no evidence that any of these records were declassified. And before the special master, Plaintiff resisted providing any evidence that he had declassified any of these documents.

In other words, Trump's argument is full of holes (and, by extension, Judge Cannon was apparently smoking something when she issued her order). The former president, who was on Fox last night, has already issued forth with an answer to the Court's remarks. He now claims that it doesn't matter if there's no paper trail proving the documents were declassified because he has the power to declassify them just by thinking it. That's right, telepathic declassification, a new frontier in the handling of sensitive intelligence. We suspect that Trump's lead counsel Chris Kise will not be using this argument in court. Meanwhile, we are wondering if The Amazing Donald could also cause a plate full of ketchup to hurl itself against a wall just by thinking it.

In short, Trump's effort to drag things out and to muddy the waters has now all but completely failed. The Department of Justice won't be slowed by the special master. And the special master plans to complete his work quickly, anyhow. Further, none of the five non-Cannon judges Trump has gotten himself before in this matter (the three Eleventh Circuit judges, special master Raymond Dearie, and Bruce Reinhart in Florida) has shown the slightest inclination to accept anything Trump is asserting. So, things don't figure to get better for him from here. (Z)

And You Thought Your Day was Bad, Part III: E. Jean Carroll Sues Trump under New Law

This item would not normally be ranked this high on the page, but combined with the two above, it shows that Trump has his work cut out for him on the legal front. A new law just signed by Gov. Kathy Hochul (D-NY) gives adult accusers a 1-year window to bring civil claims against someone they are accusing of sexual misconduct, no matter how long ago it was. Writer E. Jean Carroll, who has maintained for over 25 years that Donald Trump raped her in the dressing room of a department store in Manhattan, has decided to take advantage of the new law and will sue Trump on Nov. 24, when the law kicks in. Trump has denied that he did it. This suit is in addition to the defamation suit Carroll filed years ago and which is ongoing. Carroll wants to combine the two suits, but Trump's lawyer, Alina Habba, strongly opposes that.

Carroll's lawyer, Roberta Kaplan, who successfully argued the landmark United States v. Windsor case, which legalized same-sex marriage, wants to depose Trump under oath. The last time Trump was deposed was in August (by NY AG Letitia James). As we note above, he pleaded the Fifth Amendment over 400 times. In a new deposition, he would probably do that again. Also here, the jury can take this into account. Kaplan also wants to obtain a DNA sample from Trump to compare against a dress Carroll claims she wore during the alleged rape. It is not known if the dress is blue.

The courts move very slowly, but if there is action on this case in 2023 or 2024, it is not the kind of news Trump wants in the newspapers during a presidential run. A lot of women voters might decide that Trump did it and is a scoundrel, long before a jury is even selected. A lot of women in addition to the ones who have already concluded that, that is. (V)

Powell Makes His Move

Fed Chairman Jerome Powell wants to crush inflation. Yesterday, he raised interest rates by another 0.75%, the third such raise this year. He is going to keep raising rates until inflation is as dead as the dodo. Probably this will help the Democrats in 2022 and hurt them in 2024. In the near term (the next 2 months), companies will be cutting back on all kinds of stuff and laying off workers. It won't be pretty, but is likely to reduce inflation fairly fast. Clear signs that inflation is slowing could further take the wind out of the Republicans' sails this fall.

However, all this interest rate raising is likely to cause a recession in 2023 or 2024, just as the presidential election gets going. Democrats will crow that they beat inflation, but Republicans will say: "Maybe, but you put millions of people out of work." Actually, the Democrats did neither. Jerome Powell is the hero/villain here, but most voters don't really understand that. To the extent that the economy dominates in 2024, it could be nasty for the Democrats. Of course, if the recession hits in 2023 and things are clearly improving by Nov. 2024, the Democrats might be able to dodge the bullet.

The Dow Jones index was down 522 points yesterday, but it always reacts strongly to interest rate increases. If investors begin to believe that inflation can be licked, it could tick up again. However, if T-bills start paying 3-3½%, some money is bound to flow into T-bills and Treasury bonds and out of the stock market. People whose 401(k) plans are invested in stocks may get a shock when they see their statement, which probably won't help the Democrats. (V)

McCarthy Wants to Be the New Gingrich

House Minority Leader Kevin McCarthy (R-CA) has to demonstrate that he can unify the House Republican caucus if he hopes to be elected speaker in January. Remember, the speaker is elected by the entire House, so to win, a candidate needs 218 votes. Current predictions suggest the Republicans will have a majority, but it could be quite small. If, for example, the Republicans get 225 seats, then any gang of eight Republicans could torpedo McCarthy's dreams. Also, nobody thinks of McCarthy as the greatest speaker since Joe Cannon. His test of leadership will be uniting the caucus before the midterms and then winning a majority. If he can pull that off, he will probably be elected speaker in January.

To that end, he has devised an updated version of Newt Gingrich's "Contract with American." He will present that tomorrow in a suburb of Pittsburgh. Nothing like giving a speech in some random suburb instead of in D.C. to demonstrate what a forceful leader you are.

The details of the plan haven't leaked out yet. That is because there are no details. The way McCarthy will try to unite his fractious caucus is to avoid having any details in it. That's because his caucus doesn't agree on the details. As a refresher, here is Gingrich's eight-point Contract with America:

  1. Require all laws that apply to the rest of the country also apply to Congress
  2. Select a major, independent auditing firm to conduct a comprehensive audit of Congress for waste, fraud or abuse
  3. Cut the number of House committees, and cut committee staff by one-third
  4. Limit the terms of all committee chairs
  5. Ban the casting of proxy votes in committee
  6. Require committee meetings to be open to the public
  7. Require a three-fifths majority vote to pass a tax increase
  8. Guarantee an honest accounting of the Federal Budget by implementing zero base-line budgeting

#1 has always been the case, so it has no content. #2 is doable, but one member's "waste" is another member's essential service. #3-6 are inside baseball. How many members of the public really want to watch the Agriculture Committee mark up the farm bill? #7 might work, but a simple majority could change the rule at any time. #8, zero-based budgeting, would be complete disaster and destroy the federal government, but maybe Gingrich saw that as a feature.

Little actually came of the promise. A study by the libertarian Cato Institute in 2020 showed that the combined budgets of the 95 major programs Gingrich wanted to eliminate were up by 13%. Getting rid of programs sounds easy on paper, but just remember, each one had a majority in the House (and Senate) at one time and some of the members who voted for it are still around and still like it. Is it wasteful to pay farmers not to grow corn or produce milk? Sure. Just ask any member from Brooklyn or San Francisco. However, members from Nebraska often take a different view.

So what is McCarthy going to promise tomorrow that will unite Rep. Marjorie Taylor Green (R-GA) and Rep. Nicole Malliotakis (R-NY)? Turns out McCarthy is technologically challenged, as well as being challenged in many other ways. He inadvertently put information about his plan on the Web (by accident) and realized his mistake and took it down quickly. But not before some people had made screenshots of it. It addresses the following issues but provides little detail:

  1. Fight inflation
  2. Strengthen Social Security and Medicare
  3. Repeal the Democrats' bill to reduce drug prices for seniors
  4. Deal with the voting crisis, basically by making it harder to vote

Probably all Republicans can live with these vague generalities. The problem comes when, say, when the Republicans try to "strengthen" Social Security by privatizing it. Before trying, they should ask George W. Bush how well that went in 2005. Still, the goal here is to produce a few bromides that all Republicans can support and worry about the details in January. (V)

Florida Takes Internet Censorship to the Supreme Court

Conservatives are in favor of free speech. Specifically what they mean by that is that Republican politicians feel they have a constitutional right to lie through their teeth on all matters of public interest and tech companies have no right to censor them, or even label the lies as such.

To punish companies that deplatform liars or label lies as such, Florida and Texas have passed laws allowing states to regulate tech companies—for example, prohibiting them from banning people for ideological reasons or removing posts. There were naturally lawsuits claiming these laws violate the First Amendment. In the conservative Fifth Circuit (Texas), the conservatives won. In the slightly less conservative Eleventh Circuit (Florida), they lost. What now?

Florida has responded by asking the U.S. Supreme Court to make a decision. In most cases where two circuit courts make opposite rulings, the Supreme Court takes the case so there will be one national ruling. We assume the Court will take the case with oral arguments next spring. A ruling will then come in June.

If the Court decides that states can regulate tech companies, then all the red states will pass laws saying anybody can post anything he or she wants to and the tech companies can't block them. They will be very happy. Until somebody posts a message to Twitter saying: "Everybody come to the governor's mansion next Friday at noon with a (semi)automatic weapon so we can all storm it and demonstrate to Gov. DeSantis that we think he is a stinking rotten skunk."

If the states get the power to regulate the tech companies, then many blue states will pass laws making it a felony to lie on social media or to post hate speech, with a prison term upon conviction. The country will again be divided along partisan lines, just as with abortion. If the Supreme Court thinks that giving the states the power to regulate online speech will resolve the matter and then they are done, the justices have another think coming. (V)

How To Think about the Polls

Stephen Clermont, the polling director at Change Research, a Democratic firm, has written a piece for Politico discussing polling with a special emphasis on predictions, freakouts, and contradictory data. The title is: "'Are the Polls Wong?' Is the Wrong Question." He says poll consumers should take a deep breath, embrace the uncertainty, and go beneath the surface.

Next, he points out that he—and every other pollster in the country—is aware that some Trump supporters refused to be polled in 2016 and 2020 so they were undercounted. But that doesn't mean that polls are useless.

This midterm has been unpredictable for months. To start with, there is the historical background that the president's party usually loses seats in both chambers of Congress, but there have been exceptions. Then the Dobbs decision shook everything up. Next came high inflation, which is now slowly abating, and Donald Trump being caught stealing top-secret defense documents. And then there is the war in Ukraine, which is currently going well and Joe Biden's legislative successes. How to interpret all of this? Clermont has three tips:

So keep this advice in mind and don't fret about day-to-day fluctuations in the polls. (V)

Thirty States Will Choose an Attorney General

On Monday, we looked at some of the races for Secretary of State. Now we will look at the 30 races for state Attorney General. These are the highest law-enforcement officers in each state and the AGs get to decide which crimes to go after. As we see above, NY AG Letitia James decided to go after people accused of tax fraud and bank fraud. Other AGs may prioritize welfare fraud, (imaginary) voter fraud, performing abortions, or whatever they think is important. Here is a brief rundown of the 30 AG races.


Now we come to the fun part. There are 12 seats that are at least somewhat competitive, so theoretically either party could win any of the seats, although some are more competitive than others. Currently seven are held by Democrats and five by Republicans. The races are listed from most likely to go Republican to most likely to go Democratic.


Barring something very, very strange, these states are likely to elect a Democrat to the AG's office. They are listed in alphabetical order:

Hope we didn't lose you. These downballot races are important and don't get enough attention. (V)

Debates Are Dying

Campaign managers hate candidate debates. They want to control every aspect of the campaign and having the candidate appear live on television can result in a huge blunder from which they can't recover. It is far better to "debate" by sending out carefully vetted tweets and then responding to the opponent's carefully vetted responses with carefully vetted rejoinders. Consequently, live debates between candidates are increasingly rare. Candidates tend to demand them when:

Given these rules of thumb, there ought to be a series of debates in the Missouri Senate race featuring beer heiress Trudy Busch Valentine and Missouri AG Eric Schmitt. Valentine should be demanding six debates because she is way behind and absent a lot of debates has no good way of catching up. Schmitt should be demanding six debates because Valentine is a stilted speaker who has never run for public office before and he has been in elected office since 2009, as state senator, state Treasurer, and now Attorney General. But so far, there haven't been any debates or plans for debates.

Instead, Schmitt is claiming she is scared of debating him and she says he is the one who won't agree to debate her. These aren't the only Senate candidates bickering over debates. Another high-profile case is playing out in Pennsylvania, where Lt. Gov. John Fetterman (D-PA) is way ahead of Mehmet Oz (R) in the polls and as such has no reason to accept—except Oz is hammering on his recent stroke and is saying Fetterman is unable to debate and unable to function as a senator. After much hounding, Fetterman finally agreed to one debate in a month, by which time he might be fully recovered. Of course, if he can make the case on stage that illness can strike anyone so the Democrats' plans for health care are really important, the debate might work for him.

Another state where the debates are being debated is Georgia. Sen. Raphael Warnock (D-GA) is a very experienced public speaker who has preached in church hundreds of times. Herschel Walker (R) played football for many years, which resulted in him getting bashed on the head hundreds of times. This has not led to improving his speaking style. He recently said that he is not that smart. Such a statement is proof that he is not that smart. No smart candidate would ever say anything like that. "Vote for stupid" fits on a bumper sticker, but is unlikely to win the hearts and minds of those much-desired affluent college-educated suburban women.

Another issue is that debates are almost always moderated by television or newspaper journalists. Only 5% of Republicans say they trust newspapers and only 8% say they trust television news. That is an obvious lie because if they don't trust television news, why do so many of them watch Fox? Maybe they don't consider it news. After all, it isn't. This means that when Republicans skip debates they can say they don't trust the moderators to be fair and their bases acepts this as a legitimate reason not to debate. Consequently, absent debates, both parties concentrate more on turning out their own loyal voters and not bothering to try to win new converts.

The Internet has also made debates less relevant. Anyone who wants to get a feel for what a candidate is like can just go to that candidate's website. In less than 5 minutes, you can get a pretty good idea of what a candidate thinks is important. On our candidates' page all 68 known candidates are shown and by clicking on a candidate's photo, you get the candidate's webpage in a new browser tab. (V)

Today's Senate Polls

State Democrat D % Republican R % Start End Pollster
Arizona Mark Kelly* 47% Blake Masters 35% Sep 06 Sep 09 OH Predictive Insights
Connecticut Richard Blumenthal* 57% Leora Levy 40% Sep 15 Sep 19 Quinnipiac U.
Florida Val Demings 41% Marco Rubio* 45% Sep 15 Sep 18 Suffolk U.
Florida Val Demings 47% Marco Rubio* 49% Sep 17 Sep 20 Civiqs
Georgia Raphael Warnock* 45% Herschel Walker 41% Sep 15 Sep 19 Monmouth U.
Georgia Raphael Warnock* 51% Herschel Walker 49% Sep 14 Sep 19 YouGov
Kansas Mark Holland 33% Jerry Moran* 45% Sep 15 Sep 18 Emerson Coll.
North Carolina Cheri Beasley 49% Ted Budd 48% Sep 17 Sep 20 Civiqs
Ohio Tim Ryan 47% J.D. Vance 48% Sep 12 Sep 15 Marist Coll.

* Denotes incumbent

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