Pete Hegseth, 1; House Democrats, 0

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0:17From the opinion pages of The Wall Street Journal, this is Potomac Watch. Defense Secretary Pete Hegseth manages to fend off a House effort to impeach him with a vote to send charges back to the House Judiciary Committee, passing the House on Tuesday evening, 211 to 204. We'll unpack events on the House floor and what it means for the Defense Secretary and the Iran War. Meanwhile, the story heard around the world this week was Jensen Wong's admission of an affair with a woman and business customer of NVIDIA's with alleged connections to the Chinese government. What does this story mean for markets, AI technology, and America's relationship with China?

0:58Welcome to Potomac Watch. I'm Kate O'Dell, your host today, and I'm joined by two of my colleagues, Matt Continetti and Joe Sternberg, both our columnists for the editorial page. Gentlemen, thanks so much for joining us. Matt, looking at the House vote, the House voted around 5.30 p.m. on Tuesday evening. This measure was privileged, and so the House had to consider Republican Thomas Massey's impeachment movement here. And there was talk on Tuesday before the vote that it could pass because some Republicans, especially ones who were defeated in the elections, were not returning to Washington. The GOP had absences issues and a thin majority.

1:38But then that's not what happened. The House Republicans actually held together to defeat this effort, And by referring it back to the Judiciary Committee essentially means it's dead for the duration of this Congress. And now what's striking about this, Matt, is that 11 Democrats did not vote on the floor for this measure either way. And now Democratic leader Hakeem Jeffries over the weekend said he was a hard yes on impeaching Pete Hegseth. But then his members were not on the floor and blamed a traffic jam for not being able to make the vote. So I guess my question, Matt, open us up here. Is that a particular embarrassment for the new Democratic leader?

2:20Because it's hard to imagine Nancy Pelosi saying, oh, I'm sorry, my members were caught in a traffic jam and we weren't able to vote on something we think is crucial. all? Well, Kate, first off, I live and work in the Washington, D.C. area, and blaming lateness on a traffic jam is perfectly acceptable to me. The traffic in this area is horrible. I actually am sympathetic to the Democratic members who might have been stuck. Second, I believe Nancy Pelosi was among the Democrats who was not there to vote for the impeachment of Pete Hegseth. Third, to your specific questions, it is an embarrassment to Hakeem Jeffries, likely the next Speaker of the House.

3:02There's some grumbling among the progressives already in Congress and also the progressives who will be in the next Congress that Jeffries is not catering to their every whim. But the truth is, is that the Democratic majority next year will be so large and much of the growth will be coming from candidates or congressmen-elect who are not progressive activists or do not style themselves that way on the campaign trail, but in fact are basically mainstream liberals in the Biden-Harris mode. They are going to be sure votes for Jeffries. I think what happened with the impeachment vote, what came as a surprise to many in Washington, I think one reason it was a surprise is the Republican unity.

3:48You expect Republicans to really begin the circular firing squad after a defeat like that, which they experienced two weeks ago. Instead, the Republican conference in the House has come together, not just in this vote in stopping the impeachment of Hegseth, but also in electing a new leader, again, unexpectedly, electing Ohio Congressman Jim Jordan, long a leader of conservatives in the House. He's now going to be the minority leader in the next Congress. So I think the winners of the vote were Hegseth, of course, because he won't be impeached, but also the soon to be Republican minority in Congress, which showed that it's preparing for two years of partisan trench warfare.

4:33And it looks like they'll be able to hang together, at least for now. Let's take a quick listen to what Defense Secretary Pete Hegseth had to say in a press conference on Tuesday morning ahead of the impeachment vote on Tuesday night. What one disgruntled and defeated congressman is attempting is not oversight and it's not accountability. It's a political spectacle, a personal manifesto driven by ego and resentment. Time for one man's final days in Congress to try to do damage to this president, this country, and most irresponsibly, the warriors who defend it. It's a farce, and it's a stunt, and everybody knows it.

5:17Joe, I actually thought that Hegseth here gave a restrained and effective press conference on Tuesday morning that I think actually plays to Matt's point about what helped produce Republican unity against the impeachment. Okay, Hegseth made several points, the ones we just heard, but he made an extended argument that Rep. Massey was basically elevating a policy difference into a high crime or misdemeanor, which was not what the founders had in mind. He also said that, look, nobody impeached Lloyd Austin, Joe Biden's defense secretary, when the Afghanistan withdrawal was a complete debacle. And nobody impeached Lloyd Austin when he actually went AWOL for several days in a medical episode.

5:56That did not lead to an impeachment. And then he also, I thought, made some good points on The Iran war is not Vietnam, where tens of thousands of Americans died over several years in combat. And so it was a farce to compare the simmering Iran war and basically a naval blockade to that conflict, which is what I think some lawmakers wanted to do by moving this measure that aims to cut off the war at its heart. But I dare say that Hegseth, compared to Massey and others involved in this impeachment, he looked like a grownup. He said that the president made a choice that required conviction and courage.

6:32Now, okay, there was a fair bit of overstatement about it, but I thought he actually did well in his defense against the impeachment. What was your impression of that, Joe? Kate, I mean, I think everything that you've just said is true. And I actually think also that one of the most interesting aspects about the situation is that most of that is really irrelevant here. The basic fact is that impeachment is a political process. We talk about doing a trial or having articles or that sort of thing, but ultimately It is a political decision that has to be made by the Congress, the House, and the Senate.

7:01And, you know, they have to be mindful of where public opinion is going to be on that issue. And we have a bit of a history of failed impeachment efforts where, you know, those things have been out of sync for whatever reason. And something has gone awry politically in the process for the people who were trying to conduct the impeachment against someone, even if you often had the sense that the facts were on the side of the impeacher. So my real read of this Hegseth press conference, which I agree was a masterful performance under the circumstances on Tuesday morning, is it is a warning to Democrats that the politics of this are not going to be straightforward if they want to go down this road.

7:42Because there was an element of that press conference where he did touch a bit on some of the details of the articles that Representative Massey had put forward and pushed back against that. But the real substance of that press conference was, look, guys, I am going to be better at arguing to the American people that I should keep my job than you are going to be at arguing that I should lose it. I think that that is the kind of political calculation that often flows into these things. And I think that it signals that, you know, neither Hegsess nor anyone else in the administration that Democrats might try to impeach once they've actually taken control of Congress in January is going to go down without a fight.

8:25And most importantly, they are not going to allow themselves to get bogged down into the legalistic details about what they have or have not done. They are going to mount a very aggressive political defense. Joe, I think that's a great point. And I also think that the Hegseth and the Pentagon were not a great scapegoat for the failures in the Iran war because the president made the decision to go. He relied on a relatively small set of advisors. Not a lot of reason to think that Hegseth was a defining influence. And also, I think the U.S. military's role in the conflict has largely been to constrain the political fallout by being competent.

8:59I mean, if you think of counterfactuals in the war, if U.S. troops had died of trying to rescue that downed F-15 aviator earlier this year, it could have been a much different political situation for the president. So I think it's a tough sell to the public that the military and that Hegseth following the president's directions is really responsible for what they don't like about the Iran war. We have to take one quick break. We'll be back in just a moment with more Potomac Watch. Congress has talked about permitting reform for decades. Now it's time to actually do it and secure our affordable energy future.

9:32Pass permitting reform now. Paid for by the American Petroleum Institute.

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10:28Welcome back. I'm chatting with my colleagues, Matt Continetti and Joe Sternberg. Matt, I do want to ask you about the merits of the underlying articles and whether you can referee for us a little bit this debate about executive war powers. I think the public does have a dim sense. Look, Hexeth is a polarizing figure. We're not completely happy with the way he's governed himself with the Pentagon. So why don't you tell us a little bit about kind of the specifics of what Massey is alleging, particularly on authorizing action in Yemen, in Venezuela, and in Iran, and whether there's real constitutional merit to that.

11:05The short answer is no, because in my view, the president has pretty extraordinary powers as commander in chief. But I think in your itemization, Kate, you get to one of the weaknesses of this resolution by outgoing Republican Tom Massey, which is that it's a grab bag. Essentially, he's impeaching Pete Hegseth for Donald Trump's foreign policy. And it gets to your earlier comment about the criminalization of policy differences. There is no high crime or misdemeanor alleged in this resolution. It is literally every single Trump foreign policy initiative, beginning with the action against the Houthis last spring of 25, which was a continuation of a naval operation begun under the last administration that no one was questioning.

11:51Continuing through the capture of Maduro earlier this year, and then the two Iran operations, Midnight Hammer last year, and then Operation Epic Fury. All of these, I think, fall within the president's responsibilities as commander in chief. The one area where I think there is some legal debate is the drug boats, the drug war. Trump has operationalized the drug war. For years, we've called it a war on drugs. Trump has actually been waging a war on the drug cartels, and most controversially, by blowing up these vessels suspected of carrying narcotics into the United States. And that gets to the question of, well, does that contravene earlier U.S.

12:33laws describing these cartels as criminal syndicates and not active enemy agents, as the Trump administration classifies them? Unfortunately, we're not having that debate, right? We're having just this larger debate about what Donald Trump has done. And so I think that it's an evasion for it. Just it's a partisan act by Massey and by the Democrats who showed up. And it's why Pete Hagsworth was able to escape impeachment this time. Now, it does raise the question, should the Congress under the Democrats revive the issue next year? Massey won't be there. Will it be a different bill of impeachment?

13:12Will it focus just on, say, the drug war? That would be a different debate, I think. But instead, we had an expression of really kind of the Democratic and isolationist id here. Well, Joe, I think Matt's right that the Democratic Congress is vowing that they're going to try to impeach Hegseth again. And I do think, though, Hegseth survived, and certainly he and Trump are thrilled to have, you know, the old line being shot at without effect, to have overcome this impeachment resolution when that looked like a close run thing. But look, it was also like I just said, it was a close run thing. I mean, there is enough unhappiness in the Republican Senate right now with the Trump administration that if the resolution had passed, I don't think that there was the political support in the Senate to simply dispense with it and not consider it seriously.

14:02And part of that is because President Trump has alienated a lot of especially retiring members from John Cornyn of Texas to Tom Tillis of North Carolina. And even this week, you saw Joni Ernst of Iowa, who is retiring but is usually less critical of the president, say that she was frustrated by not being able to get answers about the Iran war and had questions about the conflict. This is still not a tremendous vote of confidence to have ended up relying on Democrats in a traffic jam. So I am curious, Joe, kind of what your advice would be to the administration on how to absorb this message. And then do you think Democrats will try it again?

14:39I mean, it just it seems like without that GOP concern that I just mentioned with all those lawmakers gone, it seems like that's just a straight partisan loser. But maybe they don't care about that. Oh, I think pursuing all of these impeachments would be a terrible idea for Democrats over the next two years, because I think that what they have got to do from the perspective of the 2028 election, which you may have noticed we are already talking about only a week after the midterm. Yeah, I think that they've got to demonstrate to voters that Democrats have learned their lesson from the experience of the Biden years and are prepared with an economic agenda, which is not going to repeat all of the things that voters didn't like about the Biden's term from 21 to 25.

15:23And so from that perspective, I think that pursuing the impeachment would be a big distraction. And I think that you always risk getting into this trap if you were the party that is launching a proceeding like that, that you very quickly end up in the weeds with this very distracting process going on that is just sucking all of the oxygen out of the room and voters don't understand what is happening and it becomes very confusing. And none of the legal gotchas that come out of the hearings actually seem very gotcha-y when voters are listening to them. So I think that it would just be a huge distraction.

15:58And having said that, I think Hakeem Jeffries' problem in particular is that it may be irresistible because so much of the Democratic base is looking for this. And I think that you also potentially run into this problem. Hegseth, I think, has made himself a pricklier target after this week because he demonstrated in that press conference on Tuesday morning that he would have the capacity to go out and launch a pretty vigorous political defense directly to voters. It's not always obvious to me that everyone else in the administration is similarly adept at that kind of thing. So there might be some more inviting targets out there.

16:38And I think that it would be a mistake. And if Hakeem Jeffries was smart, he would recognize that rather than being some kind of challenge to his authority, the fact that so many of his caucus got themselves stuck in traffic is actually a big gift. Yeah, that's a good point. But I mean, And Joe, I mean, there's no question that this impeachment effort, it really revived Pete Hegg Seth standing in the administration. I think, you know, the reports even a week ago about the possibility of confirming a new defense secretary during a lame duck, Trump doesn't like to, you know, make concessions to Democrats under duress and is unlikely to do that.

17:14And so I think the Democratic game plan here, if it were really serious about getting a new defense secretary or getting a good outcome in the Iran war, it's just the whole effort has backfired. Well, I mean, history shows if you're going to launch a coup, you have to succeed. That's true, Joe. And I just say that everything that Trump has done since the election shows that he's not taking the normal course of presidents who just suffer a large six year defeat. So he did replace Susie Wiles, but he replaced Susie Wiles with Stephen Miller, the hardliner on immigration and deportations after an election where heavy handed immigration enforcement definitely played a role in the Republicans defeat and most certainly contributed to the ginormous swing among Hispanic voters across the country.

18:05And then on the Secretary of War, Hegseth, you know, after the 2006 thumping, George W. Bush did cashier Donald Rumsfeld, who had been his Secretary of Defense up until that point. And he went with the technocrat Bob Gates. He also changed his strategy in Iraq. Trump has not. He signaled early on, even before the impeachment resolution, that he liked the job Hegseth was doing. And Trump is now saying that he has decided that he's going to stick with the current policy of the naval blockade against Iran and adding to it so-called Operation Iron Gate, which will be the attempt to stop the overland traffic that Iran has been engaged in smuggling and also importing technologies and so forth from China.

18:52So Trump is staying the course. What I think was interesting about Heggs' press conference was that it was an argument. It was an argument not just on his behalf, but it was an argument on the reforms he's made at the Department of Defense. He talked a lot about the record recruiting numbers he's experienced, the revived morale of the troops and the enlistees. And he also made the broader argument for Donald Trump's foreign policy. And I was just so happy to hear an argument because I haven't heard an argument about Donald Trump's foreign policy for months. And I think that if you had given this press conference throughout the war, we might be in a different political position right now.

19:32But instead, what we've had is a secretary of war who is not accessible to the press, who rarely gives statements or press conferences such as this, and does not enjoy the best relationship with Republicans, people who should be his allies on Capitol Hill. So if there's any pivot that comes out of this experience, I hope the message to Hexeth is, hey, do this more, be more accessible. And there will be fewer Republicans on Capitol Hill next year. But you're going to need to have good relationships with every single one of them. I completely agree, Matt. I mean, it's essential to have a good relationship with people who write the budget for your department.

20:08So hopefully that is a takeaway. Hang tight. We have to take one more quick break. Congress has talked about permitting reform for decades. Now it's time to actually do it and secure our affordable energy future. Pass permitting reform now. Paid for by the American Petroleum Institute. Don't forget, you can reach the latest episode of Potomac Watch anytime. Just ask your smart speaker. Play the Opinion Potomac Watch podcast. From the opinion pages of The Wall Street Journal, this is Potomac Watch. Thanks for staying with us and welcome back to the show. Let's shift gears and we'll talk briefly now about one of just the biggest stories in some time, which is the NVIDIA CEO Jensen Wong's admitted affair with a woman who is a business customer of his companies and also allegedly has a relationship with the Chinese government.

21:08Joe, this is an enormous story that touches corporate governance. You now have the board of the company saying they are going to investigate the situation and have denied that any national secrets were jeopardized by this relationship. This is a big story for artificial intelligence domestically, just as the public follows it and whether it will fuel more interest in domestic AI regulation. And it's also just a massive story about the AI competition with China and the larger strategic competition the United States is in with China. I mean, to me, fundamentally, this is a story about just how significant Chinese espionage, that it's real, it exists, that the United States is already in some kind of cold war with the Chinese Communist Party.

21:51And the only question is whether or not our policymakers are going to live up to that. So Joe, why don't you start us off? What element of this just big moving story are you most focused on and you think will be most salient in the coming weeks as we learn more exactly about this relationship? Well, I think there are two interrelated things that have really been catching my attention about this. And the first is, you know, there is this interesting question about exactly what Alice Wong, the woman at the center of this romantic entanglement with Jensen Wong, and they are not related to each other, exactly what she is.

22:27Because you often hear her described as some sort of spy or Chinese intelligence agent in some of the more breathless media reporting. It's not actually obvious that that is true. And I think that what is happening here, say this is someone who's covered the Chinese economy for a long time now, you often end up in a situation with business figures like her, We'll come to what that means in a minute, where there is a very nebulous relationship with the state. And it isn't necessarily that she is on the payroll of Beijing security services or some way has formally been recruited as a spy or an agent in the way that you ordinarily think of if you're watching a James Bond movie.

23:09But you can have a large number of people in the Chinese business world who have very nebulous connections to the state, which they themselves may not always fully understand, and that can then create vulnerabilities when that ecosystem starts interacting with the outside world, as happened in this business relationship between Alice Wong's company and NVIDIA and the personal relationship between Alice and Jensen. So that's one issue. And related to that, the big news for me as someone who is somewhat aware of AI but not always following the details of this is the specific nature of Alice Wong's company because it is a Singaporean company that seems to have been involved in operating or renting out space in data centers around Southeast Asia.

24:00And the real purpose of this was to circumvent U.S. export controls of high-end chips to China, because the theory would be that you can build the data center somewhere else in Southeast Asia. Chinese companies can access that computing capacity, either renting it or through some poorly understood ownership structure with the companies that are operating those data centers. And then China has successfully worked around the controls. And this phenomenon has been reported before, but I suspect that this is going to be the first time that it has really crashed into the broader public consciousness in a pretty big way as a consequence of how flamboyant this romantic scandal is.

24:50Your point about the nebulousness is a good one. We don't know exactly this woman's relationship with the Chinese government. But I mean, the Chinese have a very sophisticated form of spycraft here where maybe she was not even talking to the government at all before she was involved with him. We don't know. But that is fundamental to kind of how the Chinese Communist Party operates. I mean, one irony is that in the debate over whether we should sell chips to China or whether we should block those exports. I mean, one of the problems is that there's really no line between what they use for civilian purposes and what then have a military application.

25:24And China's, you know, military-civil fusion strategy just blurs those lines quite significantly. And so I think, again, it's an interesting story about kind of the nature of the threat from the Chinese Communist Party. But Matt, I wanted to ask you, do you expect this to become a larger issue as President Trump meets soon again with Xi Jinping? We've been talking about an AI working group. We've been talking about potential guardrails working with Xi on some project like that. I mean, surely this has to upset that possibility to have this kind of infiltration of a of a premier American AI CEO.

26:01You would think. I mean, this is President Trump we're talking about, though. So I am not sure if it's going to really factor into how he approaches his upcoming meeting with both Xi Jinping and Vladimir Putin and specifically about chip policy. Trump has stuck by Jensen Huang's side throughout this story, which I believe will only grow larger. Just a couple of things. I mean, this is the fifth major example of Chinese infiltration efforts going back several years. I mean, just earlier this year, we had the mayor of Arcadia, California, 55 ,000 people, resign her office and say that she was an unregistered agent of China.

26:44We, of course, have Fang Fang, former Representative Eric Swalwell's liaison, former Senator Dianne Feinstein of California. Her driver was suspected of being tied to Chinese intelligence. And then we had the former deputy chief of staff to the recently reelected New York governor, Kathy Hochul, who was also a Chinese intelligent asset. And this is an extraordinary effort to permeate our society with agents. Maybe they don't even know the full extent of their relationship to the government, as Joe points out. But it is clearly a sustained operation to influence American politics. I mean, not to mention the Confucius Institutes or these Chinese police stations that pop up in communities where Chinese Americans reside in America's cities.

27:29It is time, as you point out, Kate, that we really wake up to it. And I would hope that this story would do that. But then there's the politics of this. And I think that much of the relationship between Jensen Wong and Donald Trump has been based on this idea of the AI buildout. and how important the AI build out is to the American economy and also to America's competition with China. Trump definitely stresses both points. Wong stresses the first primarily. And what the effect of this scandal may be is to actually put a harsher approach on our exports to China. Trump has been open to Jensen Wong's argument, the NVIDIA argument, that some of these older chips, older chip models are fine to export because if anything, it might actually increase China's dependence on us in kind of a reversal of the critical supply chains the way they've been working over time.

28:24Now, I think in response to this, it will be much tougher for the Trump administration to loosen export controls on chip sales to China and to other countries. And if anything, we can expect that the next Congress, the Democratic Congress, will try to impose pretty tough controls, similar to those that were imposed by Joe Biden during his administration. Well, Joe, I want you to weigh in on that real quick in this, because the fundamental argument for exporting chips to China has been, we want to make them reliant on the U.S. compute and not develop their own system. Now, I don't think the Chinese Communist Party is going to let themselves get dependent on our chips for their own, because they think AI is just an indispensable technology for their larger project to be a global world power.

29:11But that has been an argument like that Matt says has worked on Trump, that we'll just get China hooked on our chips and that should be our strategy. Now, do you think that Matt's right that we will get some bipartisan cooperation on export bills? And then I want to ask you about the larger kind of domestic AI politics and whether, you know, this may build a public consensus that this could help build a public consensus that the current U.S. system for managing chips and the relationship with China is too lax. But I wonder if it will kind of feed public suspicion against AI companies that we are already seeing as data center referendums lose all over the country, and whether it will kind of fuel that distrust of these companies and kind of put us into another period of vulnerability of big time AI regulation with some cross-bipartisan appeal.

30:00Well, I mean, on that last point, Kate, the anti-data center movement does not need help from a scandal like this. I mean, it has already been underway. So I don't necessarily see this having a huge effect on that side of it. I mean, if we had a president who is actually capable of making this case in an articulate and sustained way, and I know that this is a big if, you could imagine political leaders getting out there and saying about the scandal that it illustrates how important this technology is to China, which means that it has to be important to us. We can't afford to let the Chinese continue developing this and for us not to be participants in that, particularly because I think you're absolutely right, Kate, we are not going to have the kind of leverage that some people hope that we will in terms of creating Chinese dependency on our hardware or any of the rest of it over time, because that clearly is not Beijing's plan.

30:59And it is worth pointing out that pretty much any other new cutting-edge technology that anyone has ever sold to China, they ended up sort of leaping ahead of at some point or finding some way to steal. This creating Chinese dependency on the U.S. is not going to work now any more than it has in any other circumstance. And, you know, I think that we also, you know, coming back to the specifics of the NVIDIA scandal now, I think that this actually illustrates in a really interesting way the danger of pursuing that strategy. Because the key conclusion here is that if you were going to do business with Chinese companies or China-adjacent companies, it is always going to be very difficult for you to know whom you were doing business with.

31:48I mean, if you look at a lot of the reporting about the background of Alice Wong, the paramour for Jensen here, her career based on public reporting appears to have been as a sort of fixer, which is a common job in China oriented around arranging business deals that help you obscure the underlying beneficial ownership of various companies. And I'm here to tell you, having spent eight years in Hong Kong, this is big business, is widespread activity over there. And a consequence of it is that you don't know who is on the other side of the table when you do these commercial deals. And so I think this is all a wake-up call.

32:31We have to ask ourselves, can we afford to do business that way if we're dealing with a technology that is as important as the chips or AI in general? Well, Joe, we'll let you have the last word for today. But House Republicans have asked Jensen Wong to come give them a briefing about this matter. And we will certainly keep you posted on what those investigations reveal. That's all for today on Potomac Watch.

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