STEEL DEAL POLITICS — This week could have been a huge victory lap for Democrats and the Biden administration’s industrial policy. Instead, fear of Trump’s megaphone has them stumbling for a coherent message.

On Monday, U.S. Steel announced it would be acquired by Japan’s Nippon Steel for over $14 billion. The deal puts an end to months of negotiations over the fate of the moribund U.S. industrial giant, but it has ignited a firestorm in Washington.

On its face, the steel deal could show the strength of the U.S. industrial economy under Biden. The president’s infrastructure package and Inflation Reduction Act both contained huge incentives for construction firms to buy American-made steel for new bridges, factories and clean energy products. And Biden has kept Trump-era tariffs on steel and aluminum in place for most of the world, protecting U.S. Steel and other domestic producers.

Those policies helped turn U.S. Steel — considered a hollow husk of the American industrial economy only a few years ago — into a highly investable asset. Nippon is paying a 40 percent premium on U.S. Steel’s stock price in the purchase, and the deal is the Japanese smelter’s first major foray into the American market. Global firms don’t do that without expectations of hefty returns.

That could be cause for celebration: a venerated industrial firm from one of our most reliable allies is paying a huge premium to access the fruits of America’s new economic policies. Encouraging foreign investment in the U.S. has always been one of the stated goals of Biden’s new industrial policy — a reversal of decades of outsourcing — and here’s a chief example of the policies paying off for workers and investors alike.

Instead, Rust Belt Democrats are running in the other direction — seemingly scared by the simple fact that Nippon is a Japanese company, and not American.

Pennsylvania Sens. John Fetterman and Bob Casey have urged Biden to block the deal on national security grounds. Sen. Sherrod Brown (D-Ohio) — facing a tough reelection next year — has lamented that the company wasn’t sold to U.S.-based Cleveland Cliffs instead. Moderate and progressive Democratic House members across the Midwest have piled on, as has Biden’s former economic adviser Brian Deese.

Biden, who must run the industrial swing state gauntlet of Michigan, Pennsylvania and Wisconsin to win reelection, has been listening. Late Thursday afternoon, the White House weighed in with a statement saying that the president believes the planned purchase deserves “serious scrutiny” because of potential national security and supply chain concerns.

Most of these arguments are wrong-headed. A deal with Cleveland Cliffs, for instance, was on the table months ago. But the U.S. company was handily outbid by its Japanese opposition — offering $35 per share to Nippon’s $55. Any deal with Cleveland Cliffs likely would have raised antitrust concerns — the combined company would have owned 80 percent of U.S. blast furnace capacity — and could have resulted in redundancies and layoffs due to the firms’ overlapping footprints.

The national security concerns are even thinner. When Trump invoked national security arguments to impose tariffs on imported steel in 2018, the goal was to protect domestic production, not shut out any foreign ownership. The Japanese government is also among the most steadfast U.S. allies in the world and a crucial regional bulwark against China.

Union concerns do give some pause. The United Steelworkers had previously supported an acquisition by Cleveland Cliffs and has spoken out against the Nippon deal. But their current contract with U.S. Steel stipulates that any new buyer must agree to a new labor agreement before completing the acquisition. If Nippon is so hungry for a deal that it will pay a 40 percent premium, some concessions to the union don’t seem out of reach.

So, why the outcry from Democrats? Trump’s specter lurks behind all of these policy discussions, even though he and his allies have yet to weigh in on the deal.

Still chastened by Trump’s 2016 victory in the industrial Midwest, Democrats have bent over backwards for years to appear more “America-first” than the 45th president. That’s the main motivation behind Biden’s aggressive manufacturing policies in the IRA, his preservation of Trump’s tariffs on China, and his decision — with hefty pressure from Midwestern Democrats — to pull back on Indo-Pacific trade talks last month in San Francisco. The November elections chastened Democrats even further, after voters in a rural Michigan town threw out their local government due to its support for a Chinese-owned battery factory — despite the thousands of jobs it promised an impoverished region.

The subtext is the same when it comes to the U.S. Steel deal. Even when the economics could be on their side, Democrats are so afraid of appearing like Clinton-era globalists that they will disavow any investments that come with a foreign flag — even one of our closest allies.

Those protestations won’t protect Democrats from GOP attacks. In Pennsylvania, Casey has already been fending off accusations that he’s soft on China from his Republican challenger David McCormick – despite the fact that Casey is one of the most hawkish Democrats on China and has worked for years to increase oversight of American banks’ activities in the Chinese economy. If Democrats are to recapture the economic narrative, they might do well to take a page from Dan Kildee, the labor-friendly, veteran Democratic congressman from Flint, Michigan, who is retiring next year.

“What we’ve learned is you make the right decisions about the right policies, no matter what [Republicans] are going to turn it into a political question,” Kildee said when asked last week about trade policies in Congress. “So, just do the right thing and we’ll handle the politics later.”

Welcome to POLITICO Nightly. Reach out with news, tips and ideas at [email protected]. Or contact tonight’s author at [email protected] or on X (formerly known as Twitter) at @GavinBade. PROGRAMMING NOTE: We’ll be off next week for the holidays but back to our normal schedule on Tuesday, Jan. 2.

— Senate returns dozens of nominations to Biden to restart process in 2024, including Julie Su: The Senate sent back more than 50 nominations to President Joe Biden as it wrapped its work for 2023 on Wednesday, most notably that of acting Labor Secretary Julie Su. Those nominees will have to be resubmitted by the president and begin the Senate confirmation process anew, since the chamber didn’t approve them within the calendar year. The positions range from Cabinet-level posts like Su’s to appeals court judicial nominees to ambassadors, but also less visible roles like ones on the Merit Systems Protection Board and the European Bank for Reconstruction and Development. “It is clear Ms. Su lacks the necessary votes for confirmation,” said Sen. Bill Cassidy (R-La.), ranking member of the Senate HELP Committee. “I urge President Biden to put forward a nominee who is committed to fair enforcement of our nation’s labor laws and is capable of being confirmed in the Senate.”

— Giuliani files for bankruptcy: Former New York City Mayor Rudy Giuliani filed for bankruptcy in New York today, as legal bills from his failed efforts to overturn the results of the 2020 election for former President Donald Trump pile up. The filing comes days after Giuliani, 79, was ordered to pay $148 million in damages to two former Georgia election workers who said their lives were upended after the former Trump lawyer falsely accused them of manipulating ballots during the 2020 election.

— Harvard president Claudine Gay facing new plagiarism accusations: Harvard University President Claudine Gay is facing new plagiarism accusations as the news media and conservative activists scrutinize the academic record of the leader of America’s oldest university. An internal review from Harvard Wednesday night announced that while her actions did not rise to the level of serious wrongdoing under the university’s rules, Gay still used “duplicative language without proper attribution” in the writing of her 1997 dissertation, according to the student newspaper, the Harvard Crimson. The university told the paper that Gay, who earned her doctorate from Harvard in political science, would submit three additional corrections to her dissertation in response.

COLORADO CALL — Top officials with Donald Trump’s presidential campaign and the Colorado Republican Party spoke today to discuss plans of action after the Colorado Supreme Court’s decision to throw the former president off of the Republican primary ballot, reports POLITICO. The call, which involved Clayton Henson, a former White House aide who has been a liaison between the Trump campaign and state parties, was confirmed by Dave Williams, the chair of the Colorado GOP.

Williams said that the Colorado GOP will appeal the Colorado court’s decision — holding that Trump was invalidated from appearing on the ballot because he’d incited an insurrection on Jan. 6 — to the Supreme Court. Depending on how the U.S. Supreme Court ruled, he said, the party would ask the Republican National Committee for a waiver to hold a caucus instead of a primary election.

VEEP TOUR — Vice President Kamala Harris is visiting Nevada and South Carolina next month, two of the earliest states on the Democratic presidential calendar, where she’ll court voters she and President Joe Biden hope to win over, reports the Associated Press.

Harris will meet with members of the powerful casino workers’ Culinary Union in Las Vegas on Jan. 3, which offers one of the most powerful endorsements in Nevada Democratic politics, the White House said today. Three days later, she plans to head to Myrtle Beach in South Carolina, home of the Democrats’ leadoff primary, to address an annual women’s retreat of the African Methodist Episcopal Church, the oldest historically Black denomination in the U.S.

Harris has been touring the country to tout the administration’s accomplishments, most recently angling to energize younger voters during a multi-stop college tour. Next month she plans to embark on a nationwide series of events to rally voters to give Biden a second term and regain full control of Congress.

THAWING RELATIONS — Gen. C.Q. Brown, chair of the Joint Chiefs of Staff, spoke to his Chinese counterpart Gen. Liu Zhenli this morning, ending a nearly year-and-a-half impasse between the two militaries, the Pentagon announced, reports POLITICO.

Brown is the first senior U.S. military official to speak with his Chinese counterpart since the two countries’ leaders agreed in November to resume military communications after China froze all talks in retaliation for then-House Speaker Nancy Pelosi’s visit to Taiwan in August 2022. The two spoke during a video teleconference this morning, according to the Pentagon.

Brown and Liu, China’s chief of the Joint Staff, discussed “the importance of working together to responsibly manage competition, avoid miscalculations, and maintain open and direct lines of communication,” according to a readout provided by the U.S. Joint Chiefs of Staff. Brown “reiterated the importance of the People’s Liberation Army engaging in substantive dialogue to reduce the likelihood of misunderstandings.”

GLOOM AND DOOM — European leaders are increasingly concerned by the stalemated war in Ukraine, and with allies’ struggles in keeping ahead of new Russian arms production, reports POLITICO.

A year that began with promises of a huge Ukrainian counteroffensive to match last year’s surprise push through hundreds of miles of Russian-occupied territory devolved into a bloody, yard-by-yard fight across hundreds of miles of front, that saw little territorial gain despite a massive human cost.

“Russia has the capability and the ability to go on with this war for years,” Finnish Defense Minister Antti Häkkänen said during a visit to Washington this week where he signed a new defense agreement with the U.S. “Many are overestimating that the West is winning this, that Ukraine is winning.”

This month, Häkkänen’s government announced it is doubling its production of ammunition, committing to send much of it to Ukraine as it struggles with thinning supplies from Western allies and the slow buildup of production capabilities in the U.S. and Europe. He declined to disclose how large the new output will be, or identify the exact munitions that will be involved.

With about $25 million in seed money from the government along with multiyear contracts to guarantee that the work continues in the coming years, the project is also being funded by new investments from NAMMO, the Norwegian defense firm with a large presence in Finland. The production increases will reach their peak by 2027. Public and private investments, plus long-term purchase contracts will total $1.3 billion from 2024 to 2030.

Those kinds of long-term contracts have proven a major hurdle for American and European governments, which have been reluctant to make guaranteed commitments to defense spending in future years. But without them, even some major defense companies have been reluctant to invest their own money in weapons critical to the war in Ukraine, fearing that the resolve of governments will eventually falter.

CHAPLAIN PD — Meet the Los Angeles Police Department Chaplain Corps, 47 volunteer chaplains across multiple faiths aimed to build camaraderie within the police department and trust within their community. In first responder jobs where trauma is a near daily experience, LAPD has recruited Catholic, Buddhist, Jewish, Muslim, Toaist, Protestant and Interfaith leaders to be a listening ear in the department. The corps is just one instance in the trend of law enforcement bringing spiritual leaders into the force — there are more than 600 chaplains in police departments across 32 states, according to the general director of the United States Chaplain Corps. In this story for CNN, Mike Valerio looks at the members of the LAPD Chaplain Corps — including a motorcycle riding monsignor — and how the group is trying to destigmatize mental health issues in their police departments.