On June 30th, 2020, the Senate Banking Committee held a hearing on the future of the digital dollar. The pressures to create a digital USD are mounting as China recently began testing its own digital currency – the DCEP, which will be included in popular applications like WeChat and AliPay. Of particular concern is widespread adoption of a digital yuan in emerging markets and in international trade.
The idea of a dollar-backed digital currency gained mainstream media attention last year during the Libra congress hearings, where Facebook introduced a new type of digital unit backed by a basket of currencies and commodities.
Although David Marcus insisted that Libra users will not have to put their trust in Facebook and that Libra was a decentralized currency, regulators weren’t buying it and expressed concern over the long-term threat to the traditional financial system. On July 9, 2019, regulators requested a moratorium on the project.
In December, Libra released a new roadmap, proposing several digital-fiat currencies deriving their values from the USD, British Pound, Swiss Franc and others, thus creating an efficiency layer on top of the current financial system. Users would be able to access these digital currencies through a wallet installed on their phone, and potentially through WhatsApp chat and Facebook Messenger.
Distribution issues of the $1200 COVID stimulus checks, created new momentum for the digital dollar (and a more efficient financial distribution machine). It is no secret that many are still waiting for their stimulus checks, while $1.4 billion in stimulus was sent to dead people.
Most recently, Congresswomen Rashida Tlaib (D-Mich.) and Pramila Jayapal (D-Wash.) introduced a new stimulus proposal of $2,000 per month to residents through the Automatic BOOST to Communities Act (ABC Act). Under the ABC Act, Congress would authorize the Federal Reserve to create “FedAccounts,” or “Digital Dollar Account Wallets,” which would allow U.S. residents and business to access financial services through an app on their phone.
Building on this momentum, the Senate Banking Committee continued the discussion of the digital dollar yesterday.
Some highlights from the hearing include:
- Senator Tom Cotton (R-Ark.) stated, “The U.S. needs a digital dollar…The U.S. dollar has to keep earning that place in the global payments system. It has to be better than bitcoin … it has to be better than a digital yuan.”
- Chairman Mike Crapo (R-Idaho) expressed concerns of regulator oversight for stable-coins.
- Charles Cascarilla of Paxos testified advocating for stable-coins, stating that they address the “antiquated plumbing” of our financial system as well as financial inclusion. “Blockchain based stable-coins allow everyone access”.
- Nakita Cuttino, visiting assistant professor of law at Duke University, discussed the friction in the current payday cycle and the rising demand for costly advanced-payment apps which could be resolved with digital currencies. “In the absence of public policy addressing open access payments and real-time payments, low-income and moderate-income Americans will continue to have limited resources needed, whether by traditional fringe services like payday loans or some novel fringe service.”
- Former CFTC Chairman Chris Giancarlo and head of the Digital Dollar Project, emphasized the “social and national” benefits such as increased speed, lower costs and issues of financial inclusion. “Darwin said the most adaptable survive. And I think that is true when we transition to a new architecture. To adapt to it, will help bring benefits to the society at large.”
It is unclear how soon the digital dollar will come into existence, although increasing competition from China may be the push U.S. regulators needed.
And consider, what will it take for the Republican Party to begin to heal itself?
If Donald Trump stages another come-from-behind victory in November — helped, in all likelihood, by the collapse of public order in American cities — the Republican Party will become an oddity for the Trump Organization: the only entity it owns but does not brand. Not only will Trump remain in office for another term, but the Trumpers will also dominate the G.O.P. for another generation.
Look for Tom Cotton to be the likely nominee in 2024 (with — why not? — Laura Ingraham as his running mate).
And if Trump loses? Then the future of the party will be up for grabs. It’s time to start thinking about who can grab it, who should, and who will.
Much depends on the margin of defeat. If it’s razor thin and comes down to a vote-count dispute in a single state, as it did in Florida in 2000, Trump will almost surely allege fraud, claim victory and set off a constitutional crisis. As Ohio State law professor Edward Foley noted last year in a must-read law review article, a state like Pennsylvania could send competing certificates of electoral votes to Congress. Interpretive ambiguities in the 12th Amendment and the Electoral Count Act of 1887 could deadlock the House and the Senate. We could have two self-declared presidents on the eve of next year’s inauguration.
Who controls the nuclear football in that event is a question someone needs to start thinking about right now.
But let’s assume Trump loses narrowly but indisputably. In that case, the Trump family will do what it can to retain control of the G.O.P.
Tommy Hicks Jr., the current Republican National Committee co-chairman, is one possible candidate to move up to become chairman, and run the R.N.C., but the likelier choice is Hicks’s good friend Donald Trump Jr. The Trumpers will make the argument that NeverTrumpers cost them the election and are thus responsible for everything bad that might happen in a Biden administration, from crime on the streets to liberal Supreme Court picks to some future Benghazi-type episode.
Something unpleasant might come of this. It tends to happen whenever a large mass of conformists convince themselves that they’ve been betrayed by a nonconforming minority in their midst.
Then there’s the third scenario: An overwhelming and humiliating Trump defeat, on the order of George H.W. Bush’s 168 to 370 electoral vote loss to Bill Clinton in 1992.
The infighting will begin the moment Florida, North Carolina or any other must-win state for Trump is called for Joe Biden. It will pit two main camps against each other. On the right, it will be the What Were We Thinking? side of the party. On the further right, the Trump Didn’t Go Far Enough side. Think of it as a cage match between Marco Rubio and Tucker Carlson for the soul of the G.O.P.
Both sides will recognize that Trump was a uniquely incompetent executive who — as in his business dealings —
- always proved his own worst enemy,
- always squandered his luck,
- never learned from his mistakes,
- never grew in office.
Both sides will want to wash their hands of the soon-to-be-former president, his obnoxious relatives, their intellectual vacuity and their self-dealing ways. And both will have to tread carefully around a wounded and bitter man who, like a minefield laid for some long-ago war, still has the power to kill anyone who missteps.
That’s where agreement ends. The What Were We Thinking? Republicans will want to hurry the party back to some version of what it was when Paul Ryan was its star. They’ll want to pretend that Trump never happened. They will organize a task force composed of former party worthies to write an election post-mortem, akin to what then-G.O.P. chair Reince Priebus did after 2012, emphasizing the need to repair relations with minorities, women and younger voters. They’ll talk up the virtues of Republicans as
- reformers and problem-solvers, not
- Know-Nothings and culture warriors.
The Didn’t Go Far Enough camp will make the opposite case. They’ll note that Trump
- never built the wall,
- never got U.S. troops out of the Middle East,
- never drained the swamp of Beltway corruption,
- ended NAFTA in name only,
- did Wall Street’s bidding at Main Street’s expense, and
- “owned the libs” on Twitter while losing the broader battle of ideas.
This camp will seek a new champion: Trump plus a brain.
These are two deeply unattractive versions of the party of Lincoln, one feckless, the other fanatical. Even so, all who care about the health of American democracy should hold their noses and hope the feckless side prevails.
As with the Democrats after Jimmy Carter’s defeat in 1980, it will probably take more than one electoral shellacking for conservative-leaning voters to appreciate the scale of disaster that Trump’s presidency inflicted on the party and the country. It will probably also take more than one defeat for the party to learn that electoral contests should still be waged, and won, near the center of the ideological spectrum, not the fringe.
But everything has to start somewhere. A decisive Trump loss in November isn’t a sufficient condition for the G.O.P. to begin to heal itself. It’s still a beginning.
Keeping track of the Jacksonians, Reformicons, Paleos, and Post-liberals.
I like to start my classes on conservative intellectual history by distinguishing between three groups. There is the Republican party, with its millions of adherents and spectrum of opinion from very conservative, somewhat conservative, moderate, and yes, liberal. There is the conservative movement, the constellation of single-issue nonprofits that sprung up in the 1970s —
- gun rights,
- right to work
— and continue to influence elected officials. Finally, there is the conservative intellectual movement: writers, scholars, and wonks whose journalistic and political work deals mainly with ideas and, if we’re lucky, their translation into public policy.
Actually it is the president who abandoned the DACA kids. He was offered a deal by Senate Minority Leader Charles E. Schumer (D-N.Y.) — money for the border wall in exchange for DACA relief — but senior policy adviser Stephen Miller and Chief of Staff John F. Kelly, along with Sen. Tom Cotton (R-Ark.) nixed it. Or does Trump not remember?
.. Whatever his intention, Trump is communicating to Congress and the entire world that his word is worthless, that when you think you have a deal, you really don’t.
What then are the Europeans, in discussion with the administration over his threatened exit from the Iran nuclear deal, the South Koreans, the North Koreans, our trading partners and just about everyone else on the planet supposed to think?
.. “With Bolton, [Joseph E.] diGenova and [Mike] Pompeo feeding Trump’s worst instincts, we’re entering incredibly dangerous times.”
(He could add to the list Peter Navarro, Cotton, the right-wing echo chamber and his favorite Fox News propagandists — all of whom egg on Trump without regard for the catastrophe that might await us if he followed their advice.)
.. Trump is never going to get better, and chances are he’ll get much worse. Everyone should act accordingly.