Bank warns Bitcoin value could drop to zero

A senior official at the Bank of England has questioned the value of Bitcoin, which soared to $68,000 last month, citing the currency’s volatility and warning that digital assets could theoretically or practically drop to zero.

According to Deputy Governor Sir Jon Cunliffe, fast-growing digital assets could pose a danger to the established financial system. 

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Representation of cryptocurrency bitcoin is seen in this illustration taken November 29, 2021
Crypto platform glitch briefly makes traders trillionaires

In an interview with the BBC, Cunliffe said that at present around 0.1% of British households’ wealth was held in cryptocurrencies. And, if their value was to fall sharply, it could have a knock-on effect.

Cryptocurrencies are “growing very fast,” he explained, and are being integrated into the financial system; a significant change in price could affect other markets and established financial players.

“It’s not there yet, but it takes time to design standards and regulations,” Cunliffe added.

Not everyone shares Cunliffe’s grim outlook. After reaching peak price in November, Bitcoin dropped back below $46,000 early this month. However, many experts believe the asset is on its way to passing the $100,000 mark. Bloomberg predicted earlier this year that Bitcoin could rise as high as $400,000 by the end of 2021.

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Musk says he’ll pay most tax in US history

Wednesday evening was marked by another bold statement from Tesla CEO Elon Musk on Twitter. The billionaire entrepreneur claims that he will pay more taxes this year than any other American in history.

The tweet came as part of his spat with Senator Elizabeth Warren (D-Massachusetts), who has been a longtime supporter of wealth tax that would target not only the income of the richest US citizens, but their assets as well.

“And if you opened your eyes for 2 seconds, you would realize I will pay more taxes than any American in history this year,” Musk tweeted in response to Warren’s reaction to the fact that TIME magazine named him its “Person of the Year.”

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File photo: Tesla CEO Elon Musk gestures during a tour of a factory in Germany, August 13, 2021.
Musk fires back at ‘Senator Karen’ over tax tweet

“Let’s change the rigged tax code so The Person of the Year will actually pay taxes and stop freeloading off everyone else,” Warren tweeted.

The eccentric billionaire responded by calling the politician a “Senator Karen” in one of his follow-up tweets.

“You remind me of when I was a kid and my friend’s angry Mom would just randomly yell at everyone for no reason,” Musk said. “Please don’t call the manager on me, Senator Karen.”

The term “Karen” has been widely used in America as a slang word to refer to white women perceived as entitled or demanding.

Warren’s claims about Musk not paying much in taxes aren’t entirely baseless. According to a ProPublica investigation published in 2018, Musk paid nothing in federal income taxes that year. The billionaire reportedly paid less than $70,000 in taxes back in 2015 and 2017.

However, Musk, who currently doesn’t earn a cash salary, but only owns stock in his companies, likely owes the federal government at least $8.3 billion for 2021, according to Forbes’ estimates. The figure is reportedly based on the stock sales of nearly $13 billion the world’s richest person implemented through December 13.

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Democrats urge Biden to avert student loan cliff next year

Top Democrats are urging the Biden administration to again extend the freeze on federal student loan payments before it expires next month, warning that requiring tens of millions of Americans to resume paying their debt will drag down the economic recovery.

Monthly student loan payments and interest are set to resume on Feb. 1 for the first time since the beginning of the pandemic when the federal government took emergency action to freeze the debt as the economy cratered in March 2020.

Majority Leader Chuck Schumer, Sen. Elizabeth Warren (D-Mass.) and Rep. Ayanna Pressley (D-Mass.), who for months have been urging President Joe Biden to cancel large amounts of outstanding student loan debt, are asking the administration to further extend the payment pause.

At a minimum, the lawmakers said in a letter this month to Biden, the administration should continue the freeze on student loans “until the economy reaches pre-pandemic employment levels.”

The lawmakers also released a new analysis by the progressive Roosevelt Institute, which estimates that some 18 million American families would have to collectively pay more than $85 billion next year if the Biden administration restarts payments as scheduled.

Those payments would “hurt individual families and the economy as a whole,” the lawmakers wrote to Biden, adding that the emergence of the Omicron “variant is a reminder the virus is still impacting parts of the economy and public health.”

White House press secretary Jen Psaki said Friday that the administration would release more details about its plans in the coming weeks and is “preparing for a range of steps” ahead of the Feb. 1 expiration.

“We’re still assessing the impact of the Omicron variant,” she said. “But a smooth transition back into repayment is a high priority for the administration.”

Mounting pressure for an extension: The letter comes amid growing calls on the left for the Biden administration to continue the relief for borrowers as the White House decides the broader question of whether to outright cancel student loan debt, which it has publicly said it continues to review.

A wide coalition of mostly left-leaning organizations, consumer advocacy groups and unions last week also called on the Biden administration to extend the payment pause.

The groups, led by the Student Borrower Protection Center, said in a letter to the White House that “a rush to resume student loan payments is a recipe for disaster and will result in widespread confusion and distress for student loan borrowers.”

Earlier last week, Sens. Raphael Warnock (D-Ga.) and Ron Wyden (D-Ore.) led a dozen other Senate Democrats in urging the Biden administration to at least continue to keep the interest rates on federal student loans at zero even if monthly payments resume on Feb. 1.

The Education Department has estimated that the waiver of interest on federal student loans alone saves borrowers about $5 billion each month.

Key context: Biden administration officials at the Education Department have repeatedly said they’re planning to resume the collection of student loans in February — for the first time in nearly two years.

Congress in March 2020 suspended monthly payments and interest on most types of federal student loans, and the Trump and Biden administrations have each used executive action to continue that relief.

The Education Department announced the most recent extension of the relief in August. Some White House officials at the time had been reluctant to issue that extension, which top Education Department officials had recommended, because of concerns that continuing the emergency program would undercut the administration’s messaging about the strength of the economic recovery.

The Education Department has already begun sending emails to borrowers reminding them that payments will resume in February. Department officials and their contracted loan servicing companies have been working to implement some new flexibilities for borrowers as they return to repayment next year.

Biden administration officials have said they are continuing to review proposals for a mass student debt jubilee. But in the meantime they’re focused on improving existing student debt relief programs targeted at specific populations of borrowers, such as public service workers or those with severe disabilities.

The Education Department has touted roughly $12 billion in student debt that has been forgiven under those existing federal programs since the beginning of the Biden administration.

‘Know when to hold and know when to fold’: Progressives accept limits of their power

Free community college. Medicare expansion. A wealth tax.

Democrats tore a litany of progressive priorities out of their signature domestic policy bill, but the House left’s leader is still declaring a win.

Rep. Pramila Jayapal, who leads the Congressional Progressive Caucus, described the $1.7 trillion social policy bill as just about the best-case scenario, a notable acknowledgment of the microscopic Democratic majorities that have bedeviled liberals all year long. And neither Jayapal nor her members are seriously talking about tanking the Senate’s version of the bill when it comes back to the House for a final green light — if it can get past the further cuts and delays that Sen. Joe Manchin (D-W.Va.) appears likely to exact.

“What we’re trying to do is make sure it stays as good as possible. We are now counting on the Senate to make sure to preserve it,” Jayapal said in an interview this week.

To be sure, there’s plenty for progressives to like in their party’s bill to expand the social safety net, from universal pre-K to more than $500 billion for climate change. But Jayapal and many in her caucus have spent months fuming as the centrist Manchin threatens to wield a one-man veto pen over their ambitions and push the bill into next year.

And that leaves liberals with the tough task of convincing their restive base that it is, in fact, a victory as attention turns to the midterms.

The sales job is only going to get harder: policies such as paid family leave, immigration, drug price negotiation and subsidized childcare are in jeopardy — facing Manchin’s opposition and the labyrinthine budget rules of the upper chamber. Several senior progressives acknowledged that it would be difficult to communicate liberals’ now-cooperative approach to a broad swath of their voters, who are increasingly restless about inaction in Congress.

“There are a lot of bills that are languishing on the Senate majority leader’s desk because of the filibuster. That’s a very hard thing to explain to people,” said Rep. David Cicilline (D-R.I.). “All they know is we have controlling majorities in all those places, and we ought to be able to deliver, and they’re right.”

Rep. John Yarmuth (D-Ky.), a retiring liberal who’s spent 14 years in the House, chalked up some of the left’s more hardline approach this year to the fact that the House’s newest generation of liberals hadn’t governed in a majority before.

“They were posturing,” Yarmuth said, “but also thinking, ‘maybe I can get 100 percent of what I want.’ Around here if you get 70 percent of what you want, that’s a major victory. I think some of them learned along the way that that’s real life. I think Pramila sure did. But ultimately, she handled it really well and was very effective.”

Indeed, progressives say they’re putting the bill in perspective — as a once-in-a-generation safety net expansion that they fought tooth and nail for, one that still includes some major goals, despite the party’s thin margins. And they say that’ll be the case even if a final agreement leaves out issues such as immigration reform, which the Senate’s parliamentarian has repeatedly rejected under the chamber’s budget rules, or paid leave, a policy that Manchin has said doesn’t belong in the party-line bill.

Yarmuth, the House budget chair, acknowledged his party’s “potential problem”: “We’re not great messengers. But the idea that on the day after the election last year, that we could have done what we’ve done … it’s a miracle,” he said.

Now that the House has passed its version of President Joe Biden’s $1.7 trillion bill, Jayapal wants to focus on what made it in, not what’s out.

“There are always people who are like, ‘you need to do more,’ and it’s true. We do,” Jayapal said. To those who ask why they can’t get more done, given Democrats’ full control of Congress, she replied: “Of course, the answer is, we don’t have enough control.”

But before the House passed its bill, the Washington Democrat took a far different tack, steering her roughly 100-member group through its first real standoff with party leaders over the fate of Biden’s two domestic priorities.

After spending the year consolidating power in her caucus and turning it into a formidable voting bloc, Jayapal and her allies deployed an aggressive strategy that at times alienated her and her members from Democratic party leaders. Progressives singlehandedly — and repeatedly — delayed a vote on an infrastructure bill that some Democrats blamed for confidence-rattling November losses in Virginia, even if some liberals believed it forced senators to take their position seriously.

That progressive House Democrats are not threatening to tank the Senate’s version of the social spending megabill suggests they recognize the limits of their leverage in a divided Congress. The House will need to give final approval before it heads to Biden’s desk, but liberals say they’ve already pushed as far as they can go.

They say it’s now up to Biden to meet his end of the bargain by getting 50 votes in the Senate: “It’s on him to get the job done and make clear that House members’ trust in him wasn’t misplaced,” one senior House aide said, speaking candidly on condition of anonymity.

After a season of intra-party flexes by her bloc, Jayapal also didn’t rule out the possibility of running for leadership in a future Congress.

“I’m always going to be open to whatever is going to help us deliver on the boldest, most transformational agenda, and whatever role that is, and so we’ll see,” Jayapal said, adding she is focused on the progressive caucus’ current work for now.

Jayapal and her liberal allies maintain that, even if more of their policy goals are stripped from the final legislation, they secured procedural wins along the way — such as hitching the social spending legislation to the infrastructure bill for most of the year. The left also advocated for a “trim-everything” strategy that involved more programs, but with shorter timelines, which Biden ultimately adopted.

Those tactics were worth the messy internal battles, as Jayapal sees it, if they help liberals preserve key pieces of the bill.

Other Democrats, however, insist party leaders would have never abandoned Biden’s broader social policy bill, even if the president did sign the bipartisan infrastructure bill earlier. And some progressives — such as the half-dozen who voted against the infrastructure bill just before Thanksgiving — don’t believe their caucus should have let the bills get decoupled soon as they were.

Yet perhaps most significantly for Jayapal’s caucus, activists who had forcefully pushed for more ambitious legislation are coming to recognize the limits of progressives’ power, now that the Senate holds the final say.

“Progressives can only control a slice of what happens in the entirety of the landscape of the federal government,” said Indivisible National Advocacy Director Mary Small.

Senior liberal Rep. Jan Schakowsky (D-Ill.) summed it up: “You got to know when to hold and know when to fold.”

Several of the half-dozen Democrats who voted against the infrastructure bill in November seem to share that sentiment, signaling this week they were likely to support the final version of the safety net legislation, if their other option is nothing.

“I don’t really see a world in which I vote against Build Back Better, because we need those investments,” said Rep. Cori Bush (D-Mo.).

And Rep. Ilhan Omar (D-Minn.) reserved the right to make a final assessment, but underscored that there was “no scenario where I would vote against a transformative piece of legislation.”

The Jan. 6 puzzle piece that’s going largely ignored

As Donald Trump and his allies squeezed then-Vice President Mike Pence to single-handedly stop Joe Biden’s presidency in the weeks ahead of Jan. 6, they used one particular tool that’s been largely ignored ever since.

Rep. Louie Gohmert (R-Texas) sued Pence on Dec. 27, just as Trump was ratcheting up his pressure campaign against his vice president. Backed by a squad of lawyers associated with Trump ally and conspiracy theorist Sidney Powell, Gohmert argued Pence should assert unilateral control over certification, governed only by the vague wording of the Twelfth Amendment.

Gohmert’s move forced Pence to publicly resist Trump’s subversion of the election, only a week before the fateful Jan. 6 joint session of Congress. When the Justice Department stepped in to defend Pence from the lawsuit on Dec. 29, it marked the first time Pence signaled he wouldn’t fold to Trump’s demands.

Pence allies have long believed that Trump played a role in Gohmert’s legal strategy, and they’ve indicated that Trump was frustrated that the Justice Department intervened to defend his vice president against Gohmert’s suit. But what remains unknown is just how involved Trump was in Gohmert’s legal strategy. A spokesperson for the former president did not respond to a request for comment.

And while it’s unclear whether the Jan. 6 select panel is probing the genesis of Gohmert’s suit — which was quickly rejected by federal district and appellate courts in Texas — one committee member described it as an important episode in the runup to the violence at the Capitol.

“It’s a significant detail in that it was part of a plan to isolate and coerce Pence,” said Rep. Jamie Raskin (D-Md.).

A litany of new details about Trump’s pressure campaign against Pence have emerged in recent weeks. Those include memos from Trump attorneys John Eastman and Jenna Ellis that lay out fringe legal rationales for halting certification, as well as proof of further public and private force exerted by Trump himself. Gohmert’s suit is rarely mentioned in the publicly available pre-Jan. 6 timetable.

Gohmert’s goal, outlined in the suit, was to force Pence to ignore the 130-year-old law that governs the final certification of presidential elections and instead wield total authority over the proceedings. Pence ultimately decided that he lacked this power and his role was almost entirely ceremonial. He revealed his final decision on Jan. 6, shortly before a pro-Trump mob ransacked the Capitol amid chants that he was a “traitor” and should be hanged.

As for why Gohmert led the suit, Powell has publicly indicated that one reason was because Supreme Court Justice Samuel Alito has jurisdiction over his home state of Texas. Alito, Powell argued, might have bought more time for pro-Trump forces to reverse the results by blocking Pence from certifying Biden’s victory. (There’s no evidence Alito was considering this).

The Capitol riot worked in Powell’s favor but also against it, in her stated view: It delayed a last-ditch Jan. 6 attempt to seek Supreme Court consideration of Gohmert’s suit but also provided more time for Alito to weigh the suit that afternoon. The decision by Pence and congressional leaders to keep certifying votes after the riot dealt a mortal blow to Gohmert’s legal fight, Powell said.

“Had [Speaker Nancy] Pelosi not rushed, the outcome of the case could have been different, and the President as well,” Powell wrote on her website in September.

Powell did not respond to requests for comment for this story but told POLITICO in September that she “was not speaking with the President in that time frame” around Gohmert’s suit. She did, however, famously meet with Trump in the Oval Office on Dec. 18 along with Lt. Gen. Mike Flynn and other advisers working to help Trump stay in power.

Gohmert, who is now running for Texas attorney general, has said little about his lawsuit. His office declined multiple requests for comment.

The Texan made headlines at the time, though, after the district court rejected his court challenge. He said the effect of the court decision would leave street violence as the only option to contest the election.

“In effect, the ruling would be that you’ve got to go to the streets and be as violent as antifa and BLM,“ Gohmert said on Newsmax on Jan. 1.

One aspect of Gohmert’s legal fight that went unnoticed at the time but is relevant in hindsight: One of Pence’s Justice Department defenders was Jeffrey Clark, then acting assistant attorney general.

In recent months, House and Senate investigators have revealed that Clark was marshaling allies inside DOJ who might help him deploy the department in support of Trump’s bogus claims of voter fraud. He pressured department leaders to issue a letter calling into question the results in multiple states, a push that then-Acting Attorney General Jeffrey Rosen resisted. Trump came within inches of removing Rosen and installing Clark as acting attorney general, but relented amid a promise of mass resignations.

Rosen told congressional investigators that he viewed Clark’s role in the Gohmert suit as a sign that Clark had begun to come back into the fold, only to realize later that his colleague was still in contact with Trump about taking over the department.

A source familiar with Rosen’s thinking said that even in hindsight, it’s not clear Clark’s involvement with the Pence suit was improper.

“The outcome in that case was correct, and there’s no evidence even in hindsight so far that Clark tried to do anything sketchy on that front,” the source said.

But it’s unclear whether Pence ever realized that Clark — while simultaneously fending off Gohmert’s case — was in talks with Trump about effectively commandeering the DOJ on the president’s behalf. The Senate investigation of Clark’s actions showed that one day after his name first appeared in the Pence case, he told Rosen that Trump would be making him acting attorney general within hours.

An attorney for Clark declined to answer questions about Clark’s involvement in the Gohmert lawsuit.

“Mr Clark has taken a strong stance to protect President Trump’s Executive Privilege,” attorney Harold MacDougald said. “He will continue to do so.”

The Jan. 6 committee has already voted to hold Clark in contempt of Congress for refusing to testify but has deferred asking the House to send the matter to the Justice Department while it awaits Clark’s return for a deposition as soon as this week. Clark’s attorney has indicated that his client intends to plead the Fifth, and the panel has indicated that it expects Clark to do so on a question-by-question basis.

On Wednesday, Clark’s former deputy Ken Klukowski was seen heading into an interview with Jan. 6 committee investigators.

In revisiting the Gohmert case, POLITICO reached out to each of the lawyers involved, including Powell associates Howard Kleinhendler, Julia Haller and Lawrence Joseph. Joseph was one of the attorneys who crafted Texas’ failed legal effort — later joined by Trump with a brief signed by Eastman — to get the Supreme Court to invalidate election results in four key states Biden won.

“I do not talk about litigation with the media unless a client directs me to do so, which has not happened,” Joseph said in an email.

A fourth attorney, Texas-based William Lewis Sessions, also declined to comment and copied Gohmert’s House email address on the reply.

“The areas of interest you have indicated are ones for which I either have no knowledge or which I believe are protected by a privilege,” he said. “The person who would have the best knowledge is Representative Gohmert, who was one of my clients.”

Gohmert did not respond to this email or a subsequent one.