The Disney-DeSantis Feud Escalates

Happy Friday! Typically, a story about a black bear wandering through a suburban neighborhood and rummaging through trash cans would be a great set-up for a joke about last night’s NFL draft, but Steve decided to take the morning off. 

Welcome to Chicago, Darnell Wright!

Quick Hits: Today’s Top Stories

• In international waters in the Gulf of Oman Thursday, the Iranian Navy seized a Turkish-operated tanker bound for the U.S., according to the U.S. Navy. Iran says the vessel, chartered by Chevron and carrying 750,000 barrels of crude oil, collided with an Iranian fishing boat and attempted to flee. The U.S. Naval Central Command described the seizure as “contrary to international law and disruptive to regional security and stability,” and called on Iran to release the tanker. 
• The Treasury Department on Thursday imposed sanctions on Russian and Iranian security services and individuals for their role in illegally detaining Americans. This tranche of sanctions is the first to rely on the additional powers unlocked by an executive order President Joe Biden signed in July aimed at bringing detained Americans home. The penalties are largely symbolic but come as Russia rejected a U.S. request for officials to visit jailed Wall Street Journal reporter Evan Gershkovich in Moscow.
• Multiple outlets reported former Vice President Mike Pence appeared Thursday before a grand jury in Special Counsel Jack Smith’s probe into former President Donald Trump’s efforts to overturn the 2020 presidential election. The testimony comes one day after the D.C. Circuit Court of Appeals rejected Trump’s last-ditch attempts to claim executive privilege to keep his former vice president from testifying. Chief U.S. District Court Judge James Boasberg had already ruled Pence did not have to testify specifically about his actions on January 6, 2021, as president of the Senate, which were protected under the Constitution’s “speech and debate” clause.
• Secretary of State Antony Blinken and Homeland Security Secretary Alejandro Mayorkas announced Thursday the U.S. plans to open migrant processing centers in Central and Latin America ahead of Title 42—pandemic-era border controls—expiring in May. The centers—the first of which will open in Colombia and Guatemala—will offer additional legal pathways to the U.S. for roughly 5,000-6,000 people initially and scale up capacity later. 
• Pharmaceutical company Eli Lilly said Thursday it will seek Food and Drug Administration approval to market its Type-2 diabetes drug, Mounjaro, as a weight-loss drug after a new study found patients taking the drug who are also obese or overweight lost as much as 15.7 percent of their body weight. The drug’s approval as a weight-loss treatment would pave the way for insurers to cover Mounjaro, which has a list price of almost $1,000 a month for that use.
• Republican West Virginia Gov. Jim Justice filed paperwork Thursday to run for Senate in 2024, potentially against Democratic Sen. Joe Manchin, who currently holds the seat but has not yet said he will run for reelection. Justice, a former Democrat, joins GOP Rep. Alex Mooney in the Republican Senate primary that is set to be expensive—the conservative Club for Growth PAC has promised to spend $10 million on the race. 
• The Commerce Department reported Thursday that real gross domestic product (GDP) grew at an annual rate of 1.1 percent in the first quarter of 2023, a significant slowdown from a 2.6 percent annual rate of growth in the fourth quarter of 2022 but still the third straight quarter of growth. The bulk of this increase came from consumer spending, which rose at a rate of 3.7 percent in the first quarter but slowed as the quarter progressed, reflecting rising interest rates, instability in the banking sector, and fears of a recession.
• The Department of Labor reported Thursday that initial jobless claims—a proxy for layoffs—decreased by 16,000 week-over-week to a seasonally-adjusted 230,000 claims last week, a sharp decrease amid high-profile layoffs, indicating the labor market remains strong despite weaknesses in other parts of the U.S. economy.

Another Round of Man v. Mouse

The tone of the Walt Disney Company’s first filing in its new lawsuit against Florida Gov. Ron DeSantis and other state officials is very much reminiscent of Widow Tweed having to return Tod to the forest after his disastrous encounter with Chief and Amos in The Fox and the Hound. “Disney wishes that things could have been resolved a different way,” the complaint reads. “Disney regrets that it has come to this.”

For more than a year, the DeSantis-Disney feud has forced hapless tourist websites like The Disney Food Blog and BlogMickey to take a stab at political punditry and legal analysis. After the governor’s allies tried to wrench back power over the special district that governs Walt Disney World, the company escalated the fight Wednesday with a lawsuit alleging DeSantis and his allies were retaliating against executives’ political speech.

Longtime TMD readers already know the basics of the drama. In March 2022, succumbing to a public pressure campaign, then-Disney CEO Bob Chapek condemned a Florida bill restricting discussion of sexuality and gender identity in classrooms for students between kindergarten and third grade. DeSantis signed the bill—the Parental Rights in Education Act if you supported it, “Don’t Say Gay” if you didn’t—and swiftly called on Florida’s legislature to consider dissolving “all special districts that were enacted in Florida prior to 1968”—which just so happened to include the Reedy Creek Improvement District, established in 1967. The product of an intense lobbying blitz and controlled by Disney, Reedy Creek gave the company the power to build and control infrastructure in the immediate environs of its Disney World park. 

Some lawmakers and economists fretted dissolving the district would transform Disney’s system of self-taxation and bond issuance into a $1 billion debt burden for local taxpayers. DeSantis’ team denied this, but when Florida Republicans’ plan to deal with the district was released 10 months later, the district remained intact—renamed the Central Florida Tourism Oversight District and its leadership board stacked with DeSantis allies.

Then Disney pulled a fast one. Reedy Creek’s outgoing board quietly—but with the required public notice in a local newspaper—transferred most of its power back to Disney before its members were replaced by five DeSantis appointees. A new development agreement allowed Disney to build freely on its property for the next 30 years, while restrictive covenants gave Disney veto power over board-driven changes to the district and banned the board from using Disney’s name and characters or selling related merchandise. “This board loses, for practical purposes, the majority of its ability to do anything beyond maintain the roads and maintain basic infrastructure,” new board member Ron Peri reportedly complained.

The agreement declares itself valid in perpetuity—or, if that’s too long for courts’ liking, until the “death of the last survivor of the descendants of King Charles III, King of England living as of the date of this Declaration.” The new DeSantis-picked board declared the new measures improperly implemented and therefore void. “The agreement unlawfully delegates the district’s legislative authority to a private corporation, subverts the provisions of the new act, and binds the hands of the new board,” lawyers representing the board said in a statement.

Minutes after the board voted to void the deals, Disney sued. The company alleges first that DeSantis and other Florida officials waged a “targeted campaign of government retaliation” to punish Disney for “expressing a political viewpoint unpopular with certain State officials.” There’s some precedent for companies winning free speech cases after political retaliation, a free-speech advocate told us last year, but a court might worry about opening litigation floodgates by siding with Disney based on lawmakers’ comments. And Disney’s attorneys will have some work to do to prove retaliation—the measures altering districts don’t specifically name Disney, and Florida officials have argued they’re not attacking the company, just revoking the special privileges it wrongly came to consider a divine right. “They’re going to argue it was because [Disney] had a sweetheart deal, and we don’t want corporations to have sweetheart deals,” said Gabriel Malor, an appellate litigator based in Virginia. “And they’re going to elide from that statement the word ‘woke.’”

State attorneys might have trouble arguing that point with a straight face, though. If Florida lawmakers were so serious about opposing districts as corporate sweetheart deals, they probably would’ve tackled a few more of them—the 1968 cutoff to dissolve districts only swept up five of the state’s 1,845 such districts. Then too, Florida officials have outright said they’re targeting Disney as revenge. “You kick the hornet’s nest, things come up,” said Republican state Rep. Randy Fine, who introduced the Reedy Creek dissolution bill. “This bill does target one company. It targets The Walt Disney Company.” 

Disney also alleges Florida officials violated the Contract Clause of the U.S. Constitution, which forbids states from passing laws that impair contracts. A bill passed by the Florida Senate Wednesday may do just that with the previous contracts between Disney and Reedy Creek. “If Florida really passes a law saying those contracts are invalid as a matter of new statute, then [Disney has] a rock-solid Contract Clause case,” said Jacob Schumer, an attorney at the firm Shepard, Smith, Kohlmyer & Hand in Maitland, Florida.

For now, though, Schumer argues the retaliation case is stronger—buoyed by all those public statements. “They’re really loose-lipped since they’re not really trying to win lawsuits, they’re trying to win political fights,” he told TMD. “That’s their calculation to make.”

Thirteen months into this feud, it’s still unclear whether DeSantis will, in fact, win the political fight, or if he’s tilting at windmills. Former President Donald Trump declared the saga “so unnecessary, a political STUNT!” while Republican presidential candidate Nikki Haley has invited Disney to relocate its jobs and tax dollars to her home state of South Carolina. Former New Jersey* Gov. Chris Christie told Semafor, “I don’t think Ron DeSantis is a conservative, based on his actions towards Disney.” But a poll released earlier this month suggested voters lean the Florida governor’s way—73 percent of Republicans, 54 percent of independents, and 42 percent of Democrats supported his efforts to limit Disney’s autonomy.

According to DeSantis, Disney is the one doing the politicking—and will fail. “We’re very confident on the law,” he said at a press conference in Jerusalem Thursday. “I don’t think the suit has merit. I think it’s political.”

‘American Pie’ and Nuclear Deterrence

The average international alliance requires a certain amount of official backslapping among leading diplomats and lawmakers. But things get fun when leaders move beyond carefully telegraphed displays of alliance strength and just kick it with their geopolitical pals. Take the ice cream date bromance between President Biden and French President Emmanuel Macron, for example. South Korean President Yoon Suk Yeol took it up a notch Wednesday with a little karaoke, serenading Biden to the tune of Don McLean’s “American Pie.”

Yoon didn’t come to Washington just to earn a standing ovation. He and Biden this week announced new initiatives and cooperation in cybersecurity, space science, and biotech. But the centerpiece of the visit was the nuclear file. The two leaders signed  the Washington Declaration, which builds on the post-Korean War Mutual Defense Treaty by bolstering the two nations’ commitment to deter North Korean nuclear advances and South Korea’s promise not to develop nuclear weapons. 

Specifically, the U.S. has agreed to “enhance” the “regular visibility” of military assets in the region by periodically deploying nuclear-armed submarines to South Korean ports—a first in more than four decades. The two countries also agreed to create a “Nuclear Consultative Group,” which will improve coordination and transparency on nuclear deterrence planning and strategy regarding North Korea. “President Biden and President Yoon have committed to develop an ever-stronger mutual defense relationship and affirm in the strongest words possible their commitment to the combined defense posture under the U.S.-ROK Mutual Defense Treaty,” the declaration states. 

Much of the pact rehashes promises already made in the Mutual Defense Treaty, but it’s designed to end recent South Korean flirtation with the idea of developing its own nuclear weapons as North Korea’s weapons tests multiply. “It’s possible that the problem gets worse and our country will introduce tactical nuclear weapons or build them on our own,” Yoon said in January. “If that’s the case, we can have our own nuclear weapons pretty quickly, given our scientific and technological capabilities.” Yoon later walked back the comments, but they’d already drawn international concern about the prospect of further nuclear proliferation on the Korean Peninsula. The U.S. rushed to reassure South Korea of the strength of the American deterrent umbrella—Defense Secretary Lloyd Austin met with South Korean military leaders earlier this year to that end. 

But Yoon’s statement wasn’t the only such rumbling. “South Korea has in the last year or so had greater advocacy for an indigenous nuclear weapons program,” Bruce Klingner, a senior research fellow at the Heritage Foundation and former CIA deputy division chief for Korea, told TMD. “Although it’s been discussed for really a decade, it was really on the fringes until recently.” Polls show that a majority—71 percent—of South Koreans support developing nuclear weapons, and Yoon isn’t the only prominent politician floating the idea. Oh Se-hoon—mayor of Seoul and a likely contender for the presidency in 2027—has suggested the country needs nuclear weapons, as has Chung Jin-suk, a South Korean lawmaker and former chief of the ruling People Power Party. 

To deter such comments, the Washington Declaration includes strong rhetoric about America’s commitment to deterrence for South Korea’s reaffirmation that it will abide by the Nuclear Non-Proliferation Treaty (NPT). 

Yoon, in a likely effort to placate nuclear advocates at home, hailed the agreement as “an unprecedented expansion and strengthening of the extended deterrence strategy.” South Korea will have a seat at the table as the U.S. makes plans for preventing and responding to a North Korean nuclear strike, and the deployment of a nuclear-armed submarine will provide an added layer of deterrence on the peninsula.

The threat of North Korean nuclear escalation has grown in recent years as the rogue nation ups the frequency and sophistication of its weapons tests. Though there was a time when Pyongyang launched a few missiles a year, it fired more than 90 last year and tested an intercontinental ballistic missile just two weeks ago. 

The tests made South Korea nervous about deterrence, and not without justification. Despite U.S. assurances, South Korea has experienced how the White House’s commitment to its defense can wax and wane. The Trump administration, for example, suspended American and South Korean joint military exercises in 2018 and pressed South Korea to pay more of the costs of U.S. troops stationed in the country. “That led to four years of degradation of alliance defense and deterrence capabilities,” Klingner said. (Biden resumed those exercises last year.)

While South Korea is currently bound by NPT, the country could decide to withdraw—which North Korea did in 2003–if it deems the security threats dire enough or if political pressure for an indigenous nuclear program continues to mount. For now, the best thing the U.S. can do is give South Korea’s leadership—and its public—full-throated assurances of its commitment to the country’s defense. “We’ll see how the [South Korean] public reacts over time,” Klingner said. “We’ll see if the Korean government is happy over time, and that’ll require the U.S. to continue to be more forthcoming than it has wanted to be in the past.”

Worth Your Time

• With state after state legalizing sports gambling in recent years, leagues are increasingly all-in on a lucrative practice that’s sending more and more betters into debt, Eric Spitznagel writes for the Free Press. “Today, sports betting is legal in 33 states and Washington D.C., and will soon be legal in four more,” he writes. “An array of betting apps has sprouted to meet the new demand: DraftKings, WynnBET, BetRivers, FanDuel, and Caesars, among others. Brian Hatch, a recovering gambling addict who’s now an addiction counselor, compared the rise of sports betting to the opioid crisis. Referring to the family behind Purdue Pharma, Hatch told me: ‘This industry is profiting off of people with an addiction the same way the Sackler family profited off of opioids. Opioids were pushed by the drug companies and doctors relentlessly. Gambling is pushed by the industry and state governments.’ Elected officials across the country who have welcomed legal sports gambling into their states prefer not to talk about the money the bettors are losing and instead focus on the revenue flowing into state coffers. In Kansas, where sports betting became legal a little over six months ago, bettors have already bet $1.1 billion, and the state has collected almost $2.7 million.”

Presented Without Comment

Bloomberg: Fed’s Jerome Powell Tricked by Russian Pranksters Posing as Zelenskiy

“Chair Powell participated in a conversation in January with someone who misrepresented himself as the Ukrainian president,” a Fed spokesperson said Thursday. “It was a friendly conversation and took place in a context of our standing in support of the Ukrainian people in this challenging time. No sensitive or confidential information was discussed.”

Also Presented Without Comment

Washington Post: A Second Firm Hired by Trump Campaign Found No Evidence of Election Fraud

“Former president Trump’s campaign quietly commissioned a second firm to study election fraud claims in the weeks after the 2020 election, and the founder of the firm was recently questioned by the Justice Department about his work disproving the claims. Ken Block, founder of the firm Simpatico Software Systems, studied more than a dozen voter fraud theories and allegations for Trump’s campaign in late 2020 and found they were ‘all false,’ he said in an interview with The Washington Post. ‘No substantive voter fraud was uncovered in my investigations looking for it, nor was I able to confirm any of the outside claims of voter fraud that I was asked to look at,’ he said. ‘Every fraud claim I was asked to investigate was false.’”

Also Also Presented Without Comment

The Hill: Greene: ‘I Didn’t Come to Washington to Be a Performer’

“The Hill’s Briahna Joy Gray asked [Rep. Marjorie Taylor] Greene on Rising whether her push to defund the FBI was a ‘performative call’ or if she was actively taking steps to cut funding to the agency. … ‘I didn’t come to Washington to be a performer, I came here to make real changes for our country,’ Greene responded.”

Toeing the Company Line

• In the newsletters: Nick argues (🔒) the Republican Party has given up on persuasion in favor of changing the rules of the game to fix outcomes.
• On the podcasts: Mike Warren joins Sarah and Jonah for his inaugural Dispatch Podcast appearance to discuss Biden’s reelection bid and the future of the GOP. 
• On the site today: Mike reports on quiet rifts between House Speaker Kevin McCarthy and Majority Leader Steve Scalise, Kevin covers the labor disruptions plaguing West Coast ports, and Steven Waldman looks at how the collapse of local news outlets hurts conservative Americans. 

Let Us Know

Do you think Gov. Ron DeSantis’ measures against Disney are “non-conservative,” as his possible 2024 rivals have suggested?

Correction, April 28, 2023: Chris Christie was governor of New Jersey, not New Hampshire.