The Morning Dispatch: Joe Biden Takes the Stage

Happy Friday! Thank goodness the DNC is over—your Morning Dispatchers can finally start putting this newsletter to bed before 2 a.m. again. Oh, what’s that? The RNC starts on Monday?

Quick Hits: Today’s Top Stories

• The United States confirmed 48,266 new cases of COVID-19 yesterday, with 7.3 percent of the 661,228 tests reported coming back positive. An additional 1,278 deaths were attributed to the virus on Thursday, bringing the pandemic’s American death toll to 174,248.

• Longtime Trump aide Steve Bannon, along with three co-conspirators, was indicted on federal fraud charges for “orchestrat[ing] a scheme to defraud hundreds of thousands of donors” as part of an online crowdfunding campaign to build a wall on the United States’ southern border. Bannon pleaded not guilty.

• Initial weekly unemployment claims increased slightly week-over-week according to the Labor Department, from 971,000 two weeks ago to 1,106,000 the week ending August 15.

• A spokeswoman for prominent Russian opposition leader Aleksei Navalny alleged on Thursday that Navalny was poisoned by something put in his tea in a Siberian airport. Navalny is reportedly in serious condition. 

• Sen. Ben Sasse and Rep. Liz Cheney became the highest-ranking Republicans to condemn President Trump’s soft praise for QAnon conspiracy theorists. Cheney called the theory “dangerous lunacy that should have no place in American politics,” while Sasse told the Washington Post that “real leaders call conspiracy theories conspiracy theories,” adding that “if Democrats take the Senate, blow up the filibuster, and pack the Supreme Court – garbage like this will be a big part of why they won.”

Biden Sets the Tone

All eyes were on Joe Biden’s closing speech to officially accept the Democratic presidential nomination. It was the capstone of a bizarre, unprecedented convention—a flurry of Zoom calls and uneven televised set pieces. The speech, delivered not to an arena full of cheering fans, but to a quiet, empty room, set an unmistakable tone for his campaign’s message over the next few months: America’s taken a beating, and he wants to start to heal it.

Biden’s never been a preternatural orator like his former boss, Barack Obama; at times, the platitudes flew thick and fast. “If you entrust me with the presidency, I will draw on the best of us, not the worst,” he said. “I will be an ally of the light, not of the darkness. … United, we can and will overcome this season of darkness in America.”

But then, that’s basically the central argument of the Biden campaign: That in a time when the president has taken a sledgehammer to the foundations of American democracy, the best man for the job of restoring them is one whose primary selling points are basic competence, long experience, and a good heart.

Biden went after President Trump in the expected ways: “A president who takes no responsibility, refused to lead, blames others, cozies up to dictators, and fans the flames of hate and division.” He drew a sharp distinction between his own motives and those of his opponent: “I will work as hard for those who didn’t support me as I will for those who did.”

And he deployed some of his most unflinching rhetoric against President Trump’s handling of the coronavirus pandemic. “We will never get our economy back on track, we will never get our kids safely back to school, we will never have our lives back, until we deal with this virus,” he said. “The president keeps telling us the virus is going to disappear. He keeps waiting for a miracle. Well, I have news for him: No miracle is coming.”

“After all this time, the president still does not have a plan,” Biden continued. “Our current president has failed in his most basic duty to this nation. He failed to protect us. He failed to protect America.”

It’s far from clear how Biden’s big-tent message and promises to transcend partisan politics will play out over the next few months. After all, Biden’s policy platform is unquestionably the most economically progressive one rolled out by a major party candidate in decades, with promises of monster federal spending to fund a cornucopia of new programs and projects.

On social issues, things are more mixed—Biden does not, for instance, support the flavor-of-the-month leftist aim of defunding the police. But he’s plainly more comfortable with flexing federal power than most conservatives would like—in one of last night’s more specific policy moments, he pledged again to implement a national masking mandate. And on issues like abortion, he (like the rest of his party) is about as hard-nosed as you can get, no longer supporting even olive-branch policies at the margins like the Hyde Amendment.

But when it comes to personality and messaging, at least, Biden planted a strong flag last night: I am not who they tell you I am. The basic pitch of the Trump campaign isn’t that Biden doesn’t care about the debt, it’s that he’s a senile old fool who would essentially be an Antifa puppet in the White House. If last night was any indication, that’s going to be a very tough sell in the days ahead.

Bannon’s Border Wall Scheme

Former Trump campaign adviser and chief strategist Steve Bannon—who was ousted from the White House in 2017—was arrested and charged on Thursday alongside three co-conspirators for his involvement with “We Build the Wall,” a border wall crowdfunding campaign that allegedly defrauded hundreds of thousands of donors while masquerading as a nonprofit.

Bannon was arrested at approximately 7:15 a.m. Thursday morning by investigators from the U.S. Postal Service while boating off the coast of Connecticut on Chinese exile and businessman Guo Wengui’s 150-foot yacht. Bannon pleaded not guilty to the charges Thursday afternoon during a videoconference court appearance and was released after agreeing to a $5 million bond. He is due back in court August 31, and is prohibited from traveling on private yachts, planes, or boats without permission from the judge presiding over the case. 

We Build the Wall was launched on a crowdfunding website in 2018 by Air Force veteran Brian Kolfage, who told donors that the funds would be given to the federal government to build a wall at the U.S.-Mexico border. According to the 24-page-indictment—unsealed by the Federal District Court in Manhattan—the project racked up a total of $25 million in donations from hundreds of thousands of donors, $17 million of which were raised in the project’s first week of fundraising. Kolfage is also charged in the indictment, along with co-conspirators Andrew Badolato and Timothy Shea. All were arrested Thursday.

“As alleged, the defendants defrauded hundreds of thousands of donors, capitalizing on their interest in funding a border wall to raise millions of dollars, under the false pretense that all of that money would be spent on construction,” U.S. Attorney Audrey Strauss said in a statement on Thursday.

Prosecutors allege that the co-defendants repeatedly lined their pockets with donor money while maintaining that “100% of the funds raised” would “be used in the execution of our mission and purpose” as a “volunteer organization.” Prosecutors allege that Kolfage stole more than $350,000 for personal use while Bannon diverted more than $1 million, which he used “to secretly pay Kolfage and to cover hundreds of thousands of dollars in Bannon’s expenses,” among other things. According to the indictment, the four fraudsters siphoned the funds through a nonprofit organization and a shell company under Shea’s name, using phony invoices and vendor arrangements to cover their tracks.

Sometime around December 2018, the crowdfunding website suspended the project and told Kolfage the funds would be returned if he did not identify the nonprofit that these funds were allegedly being pooled into. Around that time frame, Bannon, Kolfage, and Badolato created “We Build the Wall Inc.” a 501(c)(4) nonprofit organization. They told donors they would have to opt in to the new mission that would fund border wall construction privately rather than through the federal government (or Mexico!), and repeatedly assured them that Kolfage would receive no compensation for overseeing the project.

When asked about the indictment by reporters on Thursday, Trump said he felt “very badly” for Bannon but added, “I haven’t been dealing with him for a very long period of time.” He called the project “inappropriate,” adding that Bannon was likely “showboating and maybe looking for funds.” White House Press Secretary Kayleigh McEnany maintained on Thursday that the president had “no involvement in this project” and that “President Trump has always felt the Wall must be a government project and that it is far too big and complex to be handled privately.” 

Former Kansas Secretary of State Kris Kobach—who recently lost the GOP Senate primary in the state—said back in January 2019 that Trump approved of the project. “I talked with the president,” Kobach told the New York Times, “and the ‘We Build the Wall Effort’ came up. The president said ‘the project has my blessing, and you can tell the media that.’”

There is no other evidence to suggest that the Trump himself is connected to the money laundering scheme, but the effort has been lauded by several Trump associates, including the president’s son. The project’s website includes a photo of Donald Trump Jr. speaking at a 2019 We Build the Wall event in New Mexico, when he called the campaign “private enterprise at its finest.” Amanda Miller, a spokeswoman for Trump Jr., said that speech was the extent of his involvement with the project.

This is not Bannon’s first scandal. While serving as President Trump’s chief strategist, he was routinely accused by other White House officials of leaking private information to the reporters. Just this week, the Wall Street Journal reported that FBI and SEC officials launched a federal probe into a company linked to Bannon and exiled Chinese businessman Guo Wengui over concerns that its $300 million private offering violated security laws. The Senate Intelligence Committee reportedly referred Bannon to the Department of Justice last year after its leaders determined, on a bipartisan basis, that Bannon had lied to congressional investigators during their Russia probe.

For more, see David’s French Press(🔒) and listen to yesterday’s Advisory Opinions episode.

Standoff Over Ridesharing in California

Uber and Lyft saw their lives (in California) flash before their eyes on Thursday before an appeals court granted them a temporary reprieve from a court order—originally scheduled to go into effect at midnight last night—that would have required the companies to classify their drivers as employees rather than independent contractors. Both ridesharing apps had warned they wouldn’t be able to comply with the original court and would be forced to shut down their operations in California.

“This change would … necessitate an overhaul of the entire business model,” a Thursday blog post from Lyft argued. “It’s not a switch that can be flipped overnight.” 

“We may have to temporarily suspend ridesharing in California starting this week,” Uber warned its customers on Tuesday. “We know that riders rely on Uber to get around, and drivers rely on the Uber app to earn income. We wanted to let you know that this is a possibility, so you can plan accordingly.” 

But a last-minute stay was granted by an appeals court Thursday afternoon, meaning that the companies could continue operating normally until their appeal is decided. Oral arguments are set for October.

Ride-hailing in the Golden State had been brought to this precipice by a May lawsuit filed by California Attorney General Xavier Becerra and the city attorneys of San Francisco, Los Angeles, and San Diego, which—following the passage of Assembly Bill 5 (AB 5) in September 2019—claimed that Uber and Lyft were misclassifying their workers as independent contractors rather than employees.

This switch would raise labor costs significantly, making drivers eligible for unemployment insurance, overtime pay, health benefits, and a minimum wage. The bill’s supporters pointed to California’s nation-leading cost-of-living-adjusted poverty rates and extremely high income inequality as rationales for the measure’s passage. “In California, almost half of workers who participate in the gig economy struggle with poverty,” Assemblywoman Lorena Gonzalez—who introduced the bill—wrote. “For decades, many companies have increasingly shifted toward a business model that relies on the misclassification of employees and is based on exploiting workers, lowering labor standards in the workplace, and evading state and federal taxes.”

Lee Ohanian, an economics professor at UCLA and a senior fellow at the Hoover Institution, tells The Dispatch that, if they go into effect, AB 5’s new requirements for ridesharing will result in an industry “very different than what we know,” flipping the business model on its head. “Costs will go up substantially,” he said, noting firms would not only have to pay for additional employee benefits, but large HR departments to administer them. The end result, Ohanian argued, would be more expensive Ubers and Lyfts that operate in smaller areas of service, with much of the increased cost flowing to middlemen in corporate headquarters rather than drivers themselves.

Ricardo Castineda, who drives for Uber and Lyft, pointed out that both sides of the debate had fair points. “I understand that for some people, it’s full time … They drive 12 hours [a day] and they get no benefits,” he said in an interview with The Dispatch. But he also says that for him, “flexibility is important” because he normally works another job with benefits (although the pandemic has complicated that), and needs to have flexible hours on rideshare apps so he can take care of his children.

Castineda’s situation is not uncommon. Drivers tend to work part time and seasonally—an average of three months per year at 17 hours per week, according to a 2018 Economic Policy Institute study of Uber drivers. But AB 5’s advocates note that the minority of drivers who do drive full time make up a disproportionate share of hours worked, and need to have workplace protections reflecting that status. Castineda agreed: “Full time drivers, they need protection.”

“The vast majority of drivers want to work independently, and we’ve already made significant changes to our app to ensure that remains the case under California law,” an Uber spokesperson told TechCrunch earlier this month. Added a spokesperson for Lyft: “Drivers do not want to be employees, full stop.”

Both companies attempted to make some changes to get out in front of the new regulations. Lyft advocated for a minimum earnings guarantee and health care subsidy; Uber made it easier for drivers to decline rides and set their own rates. But the state and the court have dismissed those efforts, and the companies are now advocating for a compromise solution. Proposition 22, a 2020 statewide ballot measure, would classify “app-based drivers” as independent contractors while entitling them to some benefits and an earnings guarantee.

AB 5’s reach extends far beyond the rideshare industry. In December, Vox Media—after running stories on Vox supportive of the bill—ended hundreds of freelance contracts with Californian sportswriters and editors for its SBNation site, replacing them with a few dozen part-time and full-time staff. The Recording Academy has also expressed concerns about AB 5, noting it could raise employment issues for gig musicians and studio engineers. “These were never good jobs,” Gonzalez said in a since-deleted tweet responding to the Vox layoffs. Another tweet remains up: “Vox is a vulture.”

Certain industries—particularly white collar professions like lawyers, doctors, stockbrokers, and real estate agents—receive carve outs in the bill. Some of these exceptions, Ohanian notes, seem arbitrary and politically motivated. Architects received an exception from the law, for example, but landscape architects did not. 

Opposition to AB 5 in California has been led by Uber, Postmates, the California Trucking Association, The American Society of Journalists and Authors, and the National Press Photographers Association. The mayors of San Diego and San Jose (a Republican and a Democrat, respectively) issued a joint statement Wednesday urging the court of appeals to stay the injunction and asking for legislators to reach a compromise solution. 

During the Democratic primaries, Joe Biden, Kamala Harris, Elizabeth Warren, and Bernie Sanders all endorsed AB 5. The Protecting the Right to Organize (PRO) Act, which would make AB 5’s stricter test for classifying employees the law of the land, passed the House in 2019. California, long seen as a testing-ground for progressive policy, could see its campaign against the “gig economy” go national.

Worth Your Time

• Is it possible for the fringes of the anti-racism movement to go so far around the bend that it ends up espousing beliefs previously reserved for the alt-right? The Atlantic’s Conor Friedersdorf was taken aback by a viral video showing a white woman deriding a fellow member of the “NYC Community Education Council for Manhattan District 2,” also white, for holding his friend’s baby nephew, a black child, on his lap during a Zoom call. “It hurts people,” she yelled, “when they see a white man bouncing a brown baby on their lap.” Friedersdorf dug into the literature and the culture that could lead her to such a conclusion. “As long as sharp disagreements persist about what causes racial inequality and how best to remedy it,” he argues in his latest piece, “deliberations rooted in the specific costs and benefits of discrete policies will provide a better foundation for actual progress than meta-arguments about what ‘anti-racism’ demands.”

• Yesterday’s writeup of President Obama’s DNC speech sparked quite the discussion in the comments yesterday. Here’s another take on it, from Daily Beast editor Sam Stein. “Former and current aides say that Obama long ago recognized that the incentives built into the political system—from gerrymandered districts to a balkanized media ecosystem—were more powerful than pleas for better angels, moving oratory, or basic rationality,” Stein writes.

Presented Without Comment

Also Presented Without Comment

Toeing the Company Line

• Catch the latest episode of Advisory Opinions for some highlights (and lowlights) of the Democratic convention, a deep-dive into the Steve Bannon border wall funding scam, a primer on employment law, and Facebook’s strike against QAnon and Antifa.

• David expands on this Advisory Opinions discussion in his Thursday French Press (🔒), looking at not just the Steve Bannon indictment itself, but what it signifies about the right’s grifter problem as a whole. “Casting themselves as men (and women) of the people—avatars of the working class—this allegedly populist fundraising class intentionally and cynically lines their pockets with the hard-earned dollars of the very people they purport to represent,” David writes. “It’s the corrupt televangelist’s playbook, applied to politics.”

• Tom Joscelyn’s latest Vital Interests (🔒) newsletter looks at both President Trump and Vice President Biden’s repeated promises to “end endless wars” in the Middle East. “It would be easy for America to ‘end’ its role in these wars. President Trump or President Biden can simply withdraw all American forces,” Joscelyn writes. “But the ‘endless’ or ‘forever wars’ narrative is vacuous. The terrorists are waging an ‘endless jihad.’ America cannot simply assume that the terrorist threat will go away once all service members are brought home.”

Let Us Know

What other nonprofit organizations should Steve Bannon stand up to take matters into his own hands and fulfill what should be governmental services?

• We Collect The Trash, 501(c)(4)

• We Set Up A Competent Test-And-Trace Apparatus, 501(c)(4)

• We Secure Lori Lightfoot’s Home, 501(c)(4)

• We Confront Putin Over the Alleged Russian Bounties on American Soldiers, 501(c)(4)

• We Reach a Bipartisan Deal On a COVID-19 Relief Package, 501(c)(4)

Reporting by Declan Garvey (@declanpgarvey), Andrew Egger (@EggerDC), Charlotte Lawson (@charlotteUVA), Audrey Fahlberg (@FahlOutBerg), James Sutton (@jamespsuttonsf), and Steve Hayes (@stephenfhayes).