‘Win-win’: Washington is just fine with the China-brokered Saudi-Iran deal

As Washington denizens look toward the Middle East and see China brokering diplomatic deals between Saudi Arabia and Iran, the surprising general response has been: One less thing for us to worry about.

Top diplomats for Saudi Arabia and Iran were in Beijing on Thursday to finalize a deal that would reopen embassies, resume direct flights between their two nations and restart security and trade agreements. It’s the latest sign that Beijing is not content with being solely a regional behemoth, but rather a major global power.

But the Biden administration, which has openly worried about China’s growing clout in the Middle East, has met this development with a shrug. And while some in Washington, D.C. fear that China is filling a vacuum left by the United States, most see only upside to Beijing’s regional foray.

“Not everything between the U.S. and China has to be a zero-sum game,” said Sen. Chris Murphy (D-Conn.), who leads the Senate Foreign Relations Committee’s Middle East panel. Plus, he said, better relations between Riyadh and Tehran means that there will be less conflict in the region, which would lower the chance of the United States getting dragged into a fighting in the Middle East. “I don't know why we would perceive there to be a downside to de-escalation between Saudi Arabia and Iran.”

Others provided reasons stretching from the grand strategic to the tactical.

At the highest level, a more-involved China means the United States can focus on its national security priorities, namely defending Ukraine against Russia and deterring China from invading Taiwan. Friendlier ties between Riyadh and Tehran also mean that the Saudi-led coalition’s eight-year war on Yemen could soon come to an end, a key goal for the Biden administration. And there’s the fact that the U.S. has no diplomatic relations with Iran, meaning Washington couldn’t have brokered the rapprochement.

“The United States should see China's mediation of a Saudi-Iran agreement as a win-win for American interests,” said Martin Indyk, who served as the special envoy for Israeli-Palestinian negotiations from 2013 to 2014. And if the deal falls apart, “the blame for the failure will be on China's back and its foray into Gulf diplomacy will be seen to be much ado about nothing.”

This is generally the argument Biden administration officials make in public and private, despite President Joe Biden’s push for competition with China in the military, economic and technological arenas.

A Democratic Senate aide, who like others was granted anonymity to detail sensitive discussions and diplomacy, said lawmakers express mixed feelings when briefed by senior figures on the deal.

“It’s good in that it reduces the threat of nuclear escalation and conflict in the region,” the staffer has heard lawmakers say, but others argue “it gives China too much influence and positions them in the Middle East, where they have never really been engaged, as a political power.” The good-or-bad arguments don’t fall neatly on party lines, the aide noted.

But there’s no real evidence that China’s role in the Saudi-Iran deal means the United States has somehow removed itself from the Middle East. Gen. Michael “Erik” Kurilla, the head of U.S. Central Command, called Saudi Arabia’s chief of defense Thursday to discuss security cooperation and the military partnership. Col. Joe Buccino, a CENTCOM spokesperson, said the conversation wasn’t tied to diplomacy in China. “Frankly we didn't even think of that," he said.

It shows that Beijing is involved in one aspect of the Middle East’s politics, but hasn’t usurped America’s place in all facets. Among other things, the U.S. is working with Saudi Arabia to normalize relations with Israel, partnering in cyberspace and maritime security operations, investing in Riyadh’s infrastructure goals and developing advanced telecommunications networks. And Washington remains the kingdom’s most important security partner, sending billions in weapons to help defend against regional threats — mainly from Iran — and stationing 3,000 troops in the kingdom.

“It's not like Iran's Shia militias have quieted down on threats or propaganda,” said Phillip Smyth, an expert on Iranian proxies.

China’s maneuvering, of course, has raised eyebrows in Washington and around the world. It shows Beijing’s willingness to make nice with distant partners, like Iran, and a possible desire to play the long game so that the region eventually tips in China’s favor.

“The U.S. is perceived as leaving the Middle East, and China fills the void,” gaining more influence in Saudi Arabia and elsewhere, a Middle East official said. “China becomes the winner here.”

After saying “the Saudi-Iran thing isn’t that big a deal,” a GOP congressional aide added that the “Chinese capitalized on U.S disengagement...We will see others play upon our absence even more in the months ahead.”

There’s also the fear that Riyadh, upset that Biden once vowed to make the kingdom a “pariah,” might leverage China’s clout to extract more support from the United States. It’s why Biden traveled to Jeddah last year to mend relations with Saudi Arabia and box China out of the region.

But in the immediate term, Washington is chalking up China’s work on the Saudi-Iran deal as a win for the United States, not a loss.

“Anything that reduces the chances of conflict between Iran and Saudi Arabia is a good thing, regardless of who brokered it,” said Matthew Duss, Sen. Bernie Sanders’ former foreign policy adviser now at the Carnegie Endowment for International Peace.

Joe Gould contributed to this report.

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IRS releases plan to spend $80 billion windfall — with critical details missing

The IRS released a much-anticipated report on Thursday outlining how it will spend new funding on ambitious hiring plans and increased enforcement aimed at wealthy taxpayers and big corporations — but left a long list of questions unanswered, which is bound to aggravate lawmakers.

The report describes the agency’s objectives for the $80 billion cash infusion that was provided by Democrats’ Inflation Reduction Act, including plans to create “world-class” customer service for taxpayers seeking assistance; develop data management systems so IRS employees can have a 360-degree view of a taxpayers’ information; and hire specialized lawyers and accountantswho can help audit the most complex corporate and partnership returns.

Democratic lawmakers and newly appointed IRS Commissioner Danny Werfel say the agency’s transformation will help bring in an estimated half-trillion dollars that the government misses out on every year due to tax evasion, all the while making it much easier for Americans to file their taxes every year. Republicans fiercely oppose the expansion, contending the agency will unleash an army of auditors against average Americans and small businesses.

But the vaguely worded report, which was delivered more than a month later than the deadline Treasury Secretary Janet Yellen set, answered few of the questions that lawmakers have been lobbing at Yellen and IRS officials for months about specific budget forecasts and department hiring.

The IRS, which counted around 78,700 employees in 2021, says in the report that it plans to bring on nearly 30,000 new employees by the end of fiscal year 2025. That would include 8,782 hires in enforcement and 13,883 in taxpayer services and surely offset some attrition in the agency's ranks from retirements.

The agency intends to spend $2.8 billion of the funding in 2023 and $5.4 billion in 2024 and, over a 10-year period, allot a hefty sum of $41.7 billion alone to scrutinizing the most sophisticated, high-income taxpayers.

However, the IRS did not provide essential information sought by lawmakers on the Senate Finance and House Ways and Means committees, such as how many employees the agency would like to hire long term for enforcement; how exactly the IRS will comply with a pledge by Yellen not to increase audits on those making less than $400,000; and what the agency forecasts to spend on operations, enforcement and customer service from fiscal years 2025 through 2031.

Treasury Deputy Secretary Wally Adeyemo defended the limited budget forecast in a call with reporters Thursday, saying technology advancements such as digital scanning of paper returns and automated phone services will improve agency productivity. That creates uncertainty around how many employees the IRS will ultimately need to hire, Adeyemo said.

“I hope that we can get better at forecasting, but I just think it’s good management and leadership practice” to refrain from projecting beyond fiscal year 2024, Werfel added.

Still, those omissions could be no coincidence with Republicans primed to pounce on any details of the IRS’ bulked-up enforcement. When Treasury first asked for new money for the IRS, the department specified exactly how many workers the IRS would hire to crack down on tax cheats: 86,852.

Republicans have been using that figure ever since as grist for attack ads on Democrats.

Democrats have fired back that the agency has been starved of resources to fairly enforce the tax code — with audit rates for millionaires and corporations falling by 77 percent and 44 percent, respectively, from 2010 to 2017 — and that much of the new hiring is needed to replace the two-thirds of the IRS workforce that will be eligible to retire in the next six years.

Here’s a look at what the report says about key elements of the IRS strategy:

ENFORCEMENT

The agency says it wants to leverage data analytics and technology to audit complex tax returns and plans on hiring the first waves of specialists focused on big companies, partnerships and high-income individuals in fiscal year 2023. The IRS will increase enforcement activities on cryptocurrencies and in areas where audits have declined significantly over the years, such as in estate, gift and employment taxation.

That will involve increasing staff in the Office of Chief Counsel, the legal adviser to the IRS based at the Treasury Department, to help litigate cases and issue clear guidance on tax laws. The agency insists ramped-up enforcement will apply to only those making more than $400,000.

“People who get W-2s or Social Security payments or have a small business should not be worried about some new wave of IRS audits. We’re taking that off the table,” Werfel said.

In a nod to lawmakers’ concerns about a Stanford study published earlier this year finding that Black taxpayers are three to five times more likely to be audited by the IRS, the agency also said it will create a team in fiscal year 2024 to look at whether enforcement activities disproportionately burden certain groups and address any disparities in tax administration according to gender, race and age.

CUSTOMER SERVICE

The IRS wants to create online business accounts where taxpayers can let the agency know what communication methods they prefer — whether digital, phone or in-person — and hire more representatives to operate the phone lines and staff Taxpayer Assistance Centers.

Under the modernized system, the IRS said taxpayers will be able to access their entire account history, including notices and returns; make payments; and get status updates for their filings, all online. They would also receive personalized alerts from the IRS to better understand their tax obligations and eligibility for credits and deductions.

The IRS launched a new tool this filing season that allowed taxpayers to respond to the nine most common notices online, and the agency plans to add 72 more notices online by the end of fiscal year 2024.

“For many, letters from the IRS in the mail could be a thing of the past. For the first time, the IRS will help taxpayers identify potential mistakes before filing,” Werfel said.

The agency says it wants to make it easier for employees to review tax returns by implementing full digital scanning of paper forms — which National Taxpayer Advocate Erin Collins has called the “kryptonite” that jammed up the IRS during the pandemic — in the next five years and make that data easily accessible to employees in a centralized case management system.

TECHNOLOGY

The IRS is looking to replace old programming language in its aging computer systems and consolidate information on the cloud while improving cybersecurity to protect taxpayer privacy. Machine learning could be used to extract data and do advanced analytics on complex tax returns, the agency says.

PERSONNEL

The agency insists its hiring successes will not only depend on the prospects of higher pay for specialized employees, but also a cultural shift that gets workers excited about the IRS’s mission. It will prioritize recruiting from diverse and underrepresented talent pools and streamline the hiring process, which frequently gets bogged down in bureaucratic hurdles and discourages candidates from joining the IRS.

The agency will consider allowing employees to work from more locations around the U.S. to attract top-tier talent and employ gig workers on an as-needed basis. The IRS adds that it wants its employees to become far more data-savvy.

Brian Faler contributed to this report.

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Defense Department detains hotel guest in training mix-up

BOSTON — Participants in a Department of Defense training exercise at a Boston hotel entered the wrong room Tuesday and mistakenly detained a hotel guest instead of the individual assigned the role of the person to be detained, according to the FBI.

The incident occurred about 10 p.m. with the Boston Division of the FBI assisting the U.S. Department of Defense in conducting the Defense Department exercise.

The exercise was meant to simulate a situation that personnel might encounter during an actual incident.

“Based on inaccurate information, they were mistakenly sent to the wrong room and detained an individual, not the intended role player,” an FBI said in a written statement. “Thankfully nobody was injured.”

A call to the Department of Defense was not immediately returned.

The Boston Police Department was called and responded to the scene to confirm that the incident was indeed a training exercise, officials said.

“Safety is always a priority of the FBI, and our law enforcement partners, and we take these incidents very seriously,” the FBI statement added. “The Boston Division is reviewing the incident with DOD for further action as deemed appropriate.”

A spokesman for Delta Air Lines said the airline was looking to see if anyone from the airline might have been mistakenly caught up in the incident.

“We are looking into reports of an alleged incident in Boston that may involve Delta people,” the spokesperson said in a written statement. “We have nothing further to share at this time other than to reaffirm our commitment to ensuring the safety and well-being of our people.”

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Hochul officials drop proposal to weaken climate law amid criticism

ALBANY, N.Y. — Gov. Kathy Hochul’s top climate officials, a day after defending a proposal to rewrite the climate law because of cost concerns, said Wednesday that the major change is no longer a priority in budget negotiations after backlash from environmental advocates and lawmakers.

In an interview with POLITICO, state Department of Environmental Commissioner Basil Seggos and NYSERDA president and CEO Doreen Harris indicated that Hochul would not be pushing a controversial plan to change how New York accounts for its emissions.

Last week, POLITICO was the first to report that the climate law revision was a priority in budget talks that are set to go into overtime at least until Monday. She is still seeking a deal on “cap and invest,” which would set up an auction for emissions allowances and drive increased gas and energy prices that would include a rebate to consumers to cushion the cost at the pump, they said.

They didn’t rule out the measure being considered in the future but noted it won’t be a top agenda item in the budget for the Democratic governor.

“The other other elements that we’ve discussed recently may take time to get done. We may get it done during the budget. That may happen during the session; it may take the course of a year,” Seggos said Wednesday. "The fundamental takeaway is it’s full steam ahead for cap and invest with the climate action rebate and any other elements we’ll take up as soon as we can.”

The shift comes after Seggos and Harris earlier this week went on a media blitz to defend Hochul’s proposal. They penned an op-ed on the cost concerns, went on Spectrum News’ Capital Tonight and even defended the plan to rewrite the climate law to POLITICO in an interview on Tuesday.

Some Democratic lawmakers have slammed the proposal, as have environmental groups who see it as a weakening of the state’s climate law.

“With respect to the budget, we’re focusing on the rebates in the first instance,” Harris said Wednesday. “Ultimately, there’s a lot of nuance around this accounting framework that we are committed to sorting out.”

Liz Moran, the New York policy advocate for Earthjustice, said it was good the governor has dropped the push.

“This is a conversation that really sidetracked us from being able to have a meaningful conversation for about a week,” Moran said. “What took place over the past week should not be repeated.”

She said now the focus could turn to proposals such as electrifying new buildings, a measure to limit gas utility expansion and cap utility bill expenses for low and moderate income New York residents and other priorities. Environmental groups will continue to oppose the accounting change.

New York’s law was the most ambitious statutory mandate in the nation requiring emissions reductions when it passed in 2019. It required emissions to be slashed 40 percent from 1990 levels by 2030 and 85 percent by 2050, with the remainder offset. It also requires zero-emissions electricity by 2040.

While other states have passed laws requiring more aggressive percentage reductions since, New York is unique in using three factors that increase the emissions that have to be reduced: a 20-year metric, out-of-state upstream emissions from imported fuels and “biogenic” emissions from burning fuels like wood and ethanol.

New York is the one of only two jurisdictions to use a 20-year time horizon to account for the damaging effects of planet-warming gasses instead of 100 years. Maryland’s 2022 climate law also uses the 20-year metric.

The important distinction was a key provision pushed by supporters of the state’s Climate Leadership and Community Protection Act passed in 2019. It makes methane, the main component of natural gas, more potent than under the longer accounting timeline. Backers say this more accurately reflects the short-term warming impact of greenhouse gasses and the urgency around reducing emissions.

The three components make New York’s law more ambitious in terms of the urgency of action and the amount of reductions required. If New York were to use the same accounting nearly every other state does, its statutory targets would fall behind at least Washington, Massachusetts and Maryland — the only other state to use the 20-year timeline for its emission reduction requirement.

Seggos and Harris said Tuesday that unique accounting approach also raises potential costs of New York’s climate mandates for residents.

Some business groups, biofuels producers and the New York State AFL-CIO have backed the accounting change.

“We think reviewing the emissions accounting standards makes sense in the context of cap and invest, building decarbonization, building public renewables, and other vital proposals to reduce emissions,” Mario Cilento, president of the New York State AFL-CIO said in a statement March 31.

New York’s 20-year standard “will make us far less competitive to attract private developers and other clean energy manufacturers. It will also make it difficult to prevent leakage associated with manufacturing and other employers leaving the state for other jurisdictions,” he said.

Environmental groups have also raised concerns that an accounting change could allow more import and burning of fuels like renewable natural gas, which still emit health-harming co-pollutants but could be counted as lower carbon if the state changes its policy.

New York implementing a cap-and-trade system to limit emissions would be a significant step. But there’s a gulf between Hochul’s proposal and legislative leaders. Assembly Democrats have indicated they’d rather deal with “cap and invest,” as the state has branded it, outside the budget. The Senate has proposed a version that would prohibit any trading of allowances and put more restrictions on the spending side.

Seggos said he wasn’t sure if the Senate’s restrictions on trading had implications for affordability and that he’d leave the details up to staff at the negotiating table.

“Cost remains a priority for us, and that the governor’s original proposal through her State of the State remains a priority for her, and the more difficult potential changes to the law that that have been contemplated may take more time,” he said.

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Wisconsin Republicans once more felled by a common foe: The mail

Republicans lost big in Wisconsin. But their downfall came well before Tuesday.

Liberal Milwaukee County judge Janet Protasiewicz crushed former conservative state Supreme Court Justice Dan Kelly. The race wasn't particularly close. Protasiewicz won by 11 points, or over 200,000 votes.

One reason she won: She had a big head start on votes before polls even opened on Tuesday.

At least 435,000 people voted early, either by mail or in-person. Democratic Party officials estimated ahead of the election that Protasiewicz banked at least a 100,000 vote advantage from that bucket of voters.

“Democrats are playing a totally different game than Republicans are,” said Rebecca Kleefisch, a Republican who has served as Scott Walker’s lieutenant governor and lost a gubernatorial primary last year.

Democrats have embraced a big mail and absentee voting strategy in the past few cycles, but Republicans have been skeptical — in part because of loud criticism of the practice from former President Donald Trump. But it comes at a cost. Republicans are increasingly finding themselves in the hole before Election Day even arrives.

“We need to do what is legal, the same way Democrats are doing what is legal," Kleefisch said. "Republicans sometimes cling to strategies that are not embracing all of the new opportunities that have been afforded.”

The lack of mail strategy creates a huge financial and get-out-the-vote disadvantage for Republicans — and after Tuesday’s blowout, some in the party are renewing calls for that to change.

“You can't be down several hundred thousand votes and think that you're going to make it up in 13 hours on Election Day. I mean, that's just not a math equation that works for our side,” said state Republican Party executive director Mark Jefferson.

Perhaps ironically, Wisconsin is a state where the conservative apparatus has been among the most proactive about trying to get voters to vote early. Jefferson was paraphrasing party chair Brian Schimming, who has been practically begging Republicans to vote early in the run-up to the election.

The more reliable Republicans who vote early, they say, the more it frees the party up to contact lower propensity voters for Election Day.

Jefferson argued that the party made progress this cycle. But, he noted, “I don't think anyone was under the impression that we were going to change the culture on early voting in one election cycle.”

“We've had some struggles on our side in the past because a lot of our folks have a philosophical problem with early voting,” he added.

It isn’t the first time Republicans have grappled with this conundrum: Shortly after Trump’s loss, operatives and media pundits declared that the GOP’s unilateral disarmament with early and mail voting was a mistake.

But, operatives say, that is not something that will simply change over night. It requires a consistent drumbeat from party leaders to get Republican voters to do it.

“I think Chairman Schimming has done a really good job on that, letting people know it's okay,” said Bill McCoshen, a longtime Republican lobbyist and operative in Wisconsin. “There is a method to the madness: We [need to be] banking as many votes early as we can so that we can focus on those traditional voters who haven't voted by Election Day, who become the focus over the final weekend.”

But that only goes so far with Trump. The indicted former president has raged against mail voting for years — falsely saying it is a source of significant fraud that benefits Democrats — and has regularly called for most voting to happen in-person on Election Day.

His campaign has tried to sing a different tune lately, but in an interview with Fox News host Sean Hannity late last month, Trump said “I never changed anything, what I did is say ‘mail-in ballots are automatically corrupt,’” and that he would want “same day voting ideally.” After some gentle coaching from Hannity, Trump eventually allowed that Republicans “will have no choice” but to accept those voting methods.

That puts Trump at odds with Republicans who believe the party needs to speak with one voice on the issue.

“Some groups have pushed [early voting], Trump even says that in some capacity — some days, other days he doesn't,” said Matt Batzel, the Wisconsin-based national executive director of American Majority Action, a conservative group that had a ballot chase program in Wisconsin for this election. “That just has to change, otherwise we’ll continue to get whooped like last night.”

Batzel noted, however, a general resistance from some voters and party operatives that is tough to overcome. “Culturally, and tactically, we're stuck in the 90s,” he said.

Democrats crowed about their successful program following Protasiewicz’s win on Tuesday, crediting their robust early vote program as one of their keys to success.

“The Democratic early vote machine really started in the spring Supreme Court race of 2020, when Covid hit,” state Democratic Party Chair Ben Wikler said. (Kelly was also a candidate in that contest, losing with a similarly lopsided margin.)

That change in 2020 necessitated a whole new approach for how the party reached out to voters, Wikler said. A major investment for the party then was helping would-be early voters navigate the sometimes-complicated ballot request system for the first time. But that pays dividends for the party now, with a sizable number of those voters now sticking with early voting.

“By the time we get to Election Day, we're focused on the people that we know haven't voted yet, which in effect multiplies the size of our volunteer operation,” Wikler said. “Because if you take the same number of volunteers focused on a smaller number of voters, you get more knocks on the doors and more calls to people's phones.”

Some Republicans also believe that they are missing out on independent, persuadable voters. By the time they are contacted by the conservative apparatus, they may have already made plans to cast an early vote for a Democrat.

“There's still a large number of independents that are voting absentee,” Batzel said. “And we don't want to just cede independents to the other side because we're just not having the conversations about voting soon enough.”

And if Republicans don’t eventually embrace it, it will only hurt the party in the long term.

“The message to our voters needs to change,” said Jesse Hunt, a veteran GOP operative who has served in senior roles at the RGA, NRSC and NRCC.

Madison Fernandez contributed to this report.

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DeSantis picks up second 2024 House GOP endorsement (despite not yet announcing)

Thomas Massie joins Chip Roy in supporting the Florida governor, who has yet to officially declare his candidacy.

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DOJ reaches $144.5M tentative settlement over 2017 Texas mass shooting

The Justice Department announced Wednesday it reached a $144.5 million tentative settlement with the families and victims of the 2017 mass shooting at a church in Sutherland Springs, Texas.

If the settlement is approved by a court, it would end a yearslong legal battle over the federal government’s partial responsibility for the shooting that left 26 people dead and 22 wounded.

A judge ruled in 2021 that the U.S. Air Force failed to exercise reasonable care when it didn’t submit the shooter’s criminal history to the FBI’s background database, which “would have prevented him from purchasing guns from a federally licensed firearms dealer,” DOJ said.

Devin Patrick Kelley, a former Air Force service member, opened fire during a Sunday service at the First Baptist Church of Sutherland Springs in November 2017. The shooter died of an apparent self-inflicted gunshot wound.

“No words or amount of money can diminish the immense tragedy of the mass shooting in Sutherland Springs,” Associate Attorney General Vanita Gupta said in a press release. “Today’s announcement brings the litigation to a close, ending a painful chapter for the victims of this unthinkable crime.”

The tentative settlements will resolve claims by more than 75 plaintiffs arising out of the shooting, DOJ said.

DOJ reached a $127.5 million settlement with the victims of the school shooting in Parkland, Fla., in 2018 and a $88 million settlement to the families of those killed in the South Carolina church shooting in 2015.

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