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Axios Sneak Peek

An extra quick Sneak Peek today, with Congress on recess and the President on a working vacation for two weeks at his New Jersey golf club. As always, I'd love your tips and feedback: jonathan@axios.com. And please urge your friends and colleagues to join the conversation by signing up for Sneak Peek.

1 big thing: About that wall...

The White House director of legislative affairs, Marc Short, says the Trump administration has clear expectations for the fall: "We get tax reform and we also complete funding of the government which includes rebuilding of the military and securing our border." (Read: the wall.)

Sources inside and close to Republican Hill leadership, however, are privately less sanguine:

  • Some say there's a good chance of a government shutdown before the end of the year because of deep rifts over spending priorities.
  • No one sees Trump's wall getting much more than a symbolic nod, which is sure to anger Trump and the Bannon faction, and could lead to a shutdown.
  • Tax reform in this calendar year seems increasingly unlikely. A bill and big debate? Yes. Something signed into law? Very hard given the points above and persistently deep disagreements over which loopholes to keep and how to pay for the tax cuts.

What happens next: Congress must pass bills to raise the debt ceiling and fund the government before the end of September. Top Hill sources believe the most likely scenario is that a coalition of Republican leaders, Republican moderates and Democrats cobble together a bill that extends government funding for three months, reauthorizes the Children's Health Insurance Program and raises the debt limit.

  • Hill leaders have discussed ways to get Trump "enough" on border security so he feels they're making enough progress to sign their funding bills. This could mean modest funding for the wall or other border security measures that moderates could live with, and/or other avenues to add funding to fight international crime gangs like MS-13.
  • But sources close to Trump say he's dead serious about building an impressive wall and will go crazy when he realizes Congress has no plans to pay for it.
  • Even if Paul Ryan can work magic, the bill still needs 60 votes in the Senate to pass. That means leadership will have to work with a messy coalition of Republican moderates and centrist-Democrats — sure to enrage Tea Party types and fuel even more anti-Ryan vitriol.

Bottom line: The wall is no metaphor to Trump. He will accept no substitutes to a huge, long, physical wall, which he believes his voters viscerally want. He told GOP Hill leaders in June he wants it to be 40 to 50 feet high and covered with solar panels. Hill Republicans privately mocked that idea, but some of those same people now recognize that Trump's big, beautiful — and in their minds, ridiculous — wall could be the thing that brings the U.S. government to its knees.

2. The shows

Sunday highlight reel, with a focus on whether Trump will fire Robert Mueller, the special counsel overseeing the Russia investigation.

  • Republican Sen. Thom Tillis appeared on ABC's "This Week with George Stephanopoulos" with Democratic Sen. Chris Coons. They promoted their bipartisan legislation that would let a judge review any decision by the President to fire a special counsel.
  • "Our effort here is just to take that [firing Mueller] off the table, any sort of precipitous removal," Tillis told Stephanopoulos. "But we don't have any specific evidence to suggest that the President is going to do that."
  • FWIW: Stephanopoulos asked Kellyanne Conway whether the President would commit to not fire Mueller. Conway's response: "I'm not the President's lawyer here. But I will tell you, as his counselor, he is not discussing that."
  • Also, some Republicans are still defending the President's authority to fire Mueller. Sen. Tom Cotton told John Dickerson, host of CBS' "Face the Nation": "I don't see them [his colleagues pushing legislation to restrain POTUS] going very far...we have an executive branch in which the power of all the departments and all the agencies reports to the single elected member of the President."

3. See you in court!

Chicago is taking the Justice Department to court. Mayor Rahm Emanuel said in a statement provided to Axios that his city will try to force the DOJ to keep giving it crime-fighting grant money, despite the fact that the city doesn't cooperate fully with federal immigration enforcement.

"Chicago will not be blackmailed into changing our values," Emanuel said.

Two weeks ago, Attorney General Jeff Sessions announced that if so-called "sanctuary cities" like Chicago don't let Immigration Customs and Enforcement (ICE) agents into their jails, they'll lose valuable federal grants. Over the years, Chicago has used the grants they could lose — known as Byrne JAG funds — to buy SWAT equipment, police vehicles, and tasers.

Why this matters:

  1. While many law enforcement leaders decry sanctuary policies, a number of local police chiefs across the country defend them. The defenders say they worry that letting federal immigration agents into their jails will erode trust between police and immigrant communities. And when undocumented immigrants fear the police, they're less likely to call for help if they're victims of crime and less likely to testify in court about crimes they witness.
  2. The politics are powerful. Trump won a lot of support on the campaign trail by railing against sanctuary cities and highlighting instances of undocumented immigrants killing American citizens in sanctuary cities like San Francisco. Democrats have yet to find a smart way to concisely explain why cities that don't fully cooperate with federal law enforcement should still expect to get federal grant money. Emanuel is trying to lead the way here.
  3. Chicago will likely be the first of many cities to sue. An Emanuel aide tells me the mayor is in discussions with a number of other mayors and immigrant groups about joining the suit.

4. Trump's weekend tweets

5. 1 fun thing: the legend lives on

In this July 25, 2017 photo, White House communications director Anthony Scaramucci speaks to members of the media outside the White House in Washington. Scaramucci is out as White House communications director after just 11 days on the job. A person close to Scaramucci confirmed the staffing change just hours after President Donald Trump's new chief of staff, John Kelly, was sworn into office.

(AP Photo/Pablo Martinez Monsivais)

Mooch made an appearance on Saturday night at Dee Angelo's restaurant in Westhampton Beach, N.Y.

The crowd of diners cheered Scaramucci's entrance, and women then flocked over and asked him for pictures with his now-famous aviator sunglasses on. It was 9 p.m.

Meanwhile, back at the White House, incredulous aides are still reminiscing about the brief, crazy reign of Anthony Scaramucci as communications director. My favorite anecdotes from what some West Wingers call "the 10 days of Mooch":

  • Mooch in a communications staff meeting, going ballistic, saying he's going to fire everybody and it's just going to be him and Sarah Huckabee Sanders left on the team. A moment later, he says, "but I don't want to, I want to bring everyone together."
  • Mooch railing against leakers in a communications staff meeting. He said: "Let me tell you a story. You probably don't know this about me but I used to own an ice cream shop." He proceeds to tell a story about how he suspected the guy who was managing the shop was stealing money from the cash register. Mooch told the staff that for a week, he stuffed the drawer with extra money to prove the guy was stealing. He said the moral of the story was: "I always find out." Then someone asked what happened to the guy. Mooch replied that the guy was married to a family member and that he let him go because he's got a big heart like President Trump. "It's kinda like here," he said, "I may end up firing all of you, but I'll help you find a job somewhere else."
  • Mooch would walk around the West Wing saying "I'm stopping with the TV. No more TV. Gotta keep a lower profile today." And then two hours later he'd be on a high-rating cable show or holding an impromptu press conference on the White House grounds. Aides described the Mooch as a man battling an addiction: to media attention.
  • When White House communications staff asked him questions about policy, he would sometimes refuse to answer them, saying he couldn't tell them anything because it would leak.
  • Mooch loved drawing diagrams for visitors to his office — especially diagrams that dramatized the divisions in the communications shop between the RNC staff and the campaign holdovers. A favorite: he'd draw circles around "POTUS" and his own name and draw a line connecting them, explaining to the visitor that he reports directly to the President.

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Trump interviewed U.S. attorney nominees in New York

Photo: Carolyn Kaster / AP

President Trump has personally interviewed at least two candidates to fill the open U.S. attorney vacancies in New York, reports Politico: Geoffrey Berman for the U.S. attorney post in the Southern District of New York, and Ed McNally for the Eastern District of New York.

The interviews are unusual for a president, and have raised concerns among critics of potential conflicts of interest, as U.S. attorneys are supposed to operate independently from the president. Matthew Miller, former Department of Justice spokesman under the Obama administration said Thursday that Obama never interviewed a U.S. attorney candidate during his two terms.

The White House's defense: "These are individuals that the president nominates and the Senate confirms under Article II of the Constitution," a WH official told Politico. "We realize Senate Democrats would like to reduce this President's constitutional powers. But he and other presidents before him and after may talk to individuals nominated to positions within the executive branch."

  • Preet Bharara, the former U.S. attorney in the Southern District of New York who was fired in March, tweeted Wednesday: "It is neither normal nor advisable for Trump to personally interview candidates for U.S. Attorney positions, especially the one in Manhattan."
  • And this isn't the first time Trump has done this. Politico points to Senate Judiciary documents that reveal Trump met with Jessie Liu, the candidate for U.S. attorney in the District of Columbia, earlier this year. That meeting raised questions from Democrats in particular, though she was later confirmed.
  • "For him to be interviewing candidates for that prosecutor who may in turn consider whether to bring indictments involving him and his administration seems to smack of political interference," Sen. Richard Blumenthal (D-Conn.) told Politico.
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Retailers can't find qualified workers

A now hiring sign is shown in the widow of an Express in NYC. Photo: Mark Lenihan / AP

Staffing companies that work with some of America's biggest retailers say that the industry is struggling to attract quality workers at both the store associate and management levels, Reuters reports.

Why it matters: It's good news for workers that an historically good labor market is generally enabling folks to eschew jobs that don't pay well or offer competitive pay. But it couldn't come at a worst time for the traditional retail industry, which will struggle to differentiate itself from cheap e-commerce if it can't afford to hire quality salespeople.

  • Melissa Hassett of ManpowerGroup Solutions, whose clients include Lowe's, Pep Boys, and Staples, says that retailers are having particular difficulty "hiring is the lower level, the seasonal or entry-level employees," because applicants are balking at the low pay and unpredictable schedules typically offered by the industry.
  • The struggles of traditional retailers of late has also limited their ability to pay competitive bonuses for retaining " talented regional managers or heads of business lines."
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Trump attributes U.K. crime spike to terrorism. The report doesn't

President Trump and U.K. Prime Minister Theresa May at the G20 summit in July. Photo: John MacDougall / Pool Photo via AP

In a morning tweet, President Trump tied increasing crime rates in the United Kingdom to the "spread of Radical Islamic terror" after the country suffered a series of terror attacks in 2017:

Fact check: While the U.K.'s Office of National Statistics annual crime report did indeed mark a 13% year-on-year increase in crime, it barely mentions terrorism. The portion of the report likely to cause more concern across the pond: a notable increase in violent crimes like knife attacks and sexual assaults over the past year, per The Guardian.

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Chicago considers ride-hailing tax to fund public transit

A car with both Uber and Lyft signs. Photo: Richard Vogel / AP

Chicago Mayor Rahm Emanuel proposed on Wednesday a tax on ride-hailing companies, the revenue from which would be exclusively invested into the city's public transit. The proposal is for a a $0.15 fee in 2018, increasing to $0.20 in 2019, added on top of an existing fee of $0.52. If it passes, this will be the first ride-hailing fee in a U.S. city dedicated to a city's public transit.

Why it matters: Questions over ride-hailing's impact on public transit have persisted over the years. Last week, researchers published a study that showed that services like Uber and Lyft have led to a 6% decline in public transit use by respondents. Still, the companies have continued to say that they want to be a partner to public transit systems in cities.

From Lyft:

We appreciate the Mayor working to build a sustainable future for ridesharing drivers and passengers in Chicago and look forward to continue collaborating on providing safe, convenient and affordable transportation options for the city.

From Uber:

When safe and affordable rides are available across every neighborhood -- whether it's by train, bus, or rideshare -- Chicagoans can get to their jobs or family obligations without having to own a car. At Uber we believe that the future of urban transportation will be a mix of public transit and ridesharing, and that by encouraging residents to use a variety of options, we can all ride together to build a better Chicago.
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Paul Ryan jabs Trump over tweets, staff turnover

Cardinal Timothy Dolan, the archbishop of New York, hugs Speaker Ryan after he spoke last night. Photo: Julie Jacobson / AP

Speaker Paul Ryan poked fun at Trump during last night's 72nd annual Alfred E. Smith Memorial Foundation white-tie dinner, which always draws top politicians, and includes a comedy routine for New York elite (via AP and NYT):

  • "Enough with the applause ... You sound like the Cabinet when Donald Trump walks into the room."
  • "I don't think I've seen this many New York liberals, this many Wall Street CEOs in one room since my last visit to the White House."

More from Ryan

  • "I know why Chuck [Schumer] has been so hard on President Trump. It's not ideological; Chuck is just mad he lost his top donor."
  • On Trump's remarks to the dinner last year: "Some said it was unbecoming of a public figure and they said that his comments were offensive. Well, thank God he's learned his lesson."
  • "The truth is, the press absolutely misunderstands and never records the big accomplishments of the White House ... Look at all the new jobs the president has created — just among the White House staff."
  • "Every morning I wake up in my office and I scroll through Twitter to see which tweets I will have to pretend I didn't see later on."
  • "Every afternoon former Speaker John Boehner calls me up, not to give advice, just to laugh."
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The moral voice of Trump's White House

White House Chief of Staff John Kelly speaks yesterday in the Brady Press Briefing Room.Photo: Pablo Martinez Monsivais / AP

Sexual abuse in Hollywood. Social media abuse in Silicon Valley. Political abuse in the White House. Dive into Twitter for a few minutes, and these can feel like the worst of times. So everyone, and the GOP establishment in particular, seems hungry for moral clarity.

White House aides, beaten down by criticism from friends and beleaguered by the words and actions of the boss, got a rare moral boost from Chief of Staff Gen. John Kelly as he offered a highly emotional and highly personal explanation/defense of Trump's outreach to families who lost young men in Niger.

  • Per Jonathan Swan, some White House aides teared up as Kelly described, during a rare appearance in the White House briefing room, what it was like for a fallen soldier to return home. Other aides stood watching him on TV, in stunned silence.
  • "Kelly has managed to make himself the moral core of the Trump administration," a top White House official told us. "He just has so much credibility right now ... And he's in the best possible position, because he doesn't have to go out there and face the press every day. If he picks his spots he is now an extraordinarily credible and effective spokesperson on issues that need some moral clarity to them."
  • Left unspoken: Trump rarely leaves staff feeling this way.
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Five other times Twitter pledged to crack down on abuse

It's not the first time Twitter has pledged to crack down on abuse. Photo: Matt Rourke / AP

The problem with Twitter's latest pledge to keep users safe on the platform isn't the words it used. It's the fact that it has done this so many times before

Do the math: This is at least the sixth time in the last four years that Twitter has pledged to crack down on abuse.

After Axios wrote about Twitter's latest crackdown on Thursday, writer Chuq Von Rospach said, "For the sixth time by my count…"

Von Rospach said he initially just made up a number. Then he counted them.

Here are five other times in recent years that the company has said it was cracking down:

Twitter's response: Asked why Twitter should be believed, a spokesman acknowledged "that's a fair question" and added the following:

Too many times we've said we'd do better and have promised more transparency but have fallen short delivering on them. However, we've never publicly opened up our internal roadmap around safety like this before. Now — for the first time — everyone can see exactly what updates we have planned and where we're headed, and most importantly, hold us accountable for delivering on those specific promises. We'll be giving real-time updates on these efforts to give people a better understanding not only of what these changes are but the process involved. Ultimately our hope is that this new level of openness will help build trust as we work to make Twitter safer place.
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CIA contradicts Pompeo on Russian interference

CIA Director Mike Pompeo speaks during the Foundation for Defense of Democracies (FDD) National Security Summit Thursday. Photo: Carolyn Kaster / AP

After CIA Director Mike Pompeo said Thursday the intelligence community had determined that "Russian meddling that took place did not affect the outcome of the election," a CIA spokesman told The Washington Post the agency had made no such determination. Ryan Trapani, the spokesman, said the CIA had no new conclusions since its January assessment, which found Russia tried to influence the 2016 presidential election, but not whether it was successful.

Why it matters: Pompeo's statement won't reassure the intelligence community that their assessments will be trusted and given due attention, especially after Trump has indicated he doesn't believe the conclusions on Russian interference.

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The (slowly) changing face of VC's next generation

Illustration: Lazaro Gamio / Axios

Venture capital is well-known to be dominated by white men, causing many of the industry's few people of color to raise their own funds.

  • Only 2% of senior venture investors are black or Latino, per a 2015 analysis by Social Capital.

Why it matters: Like the broader tech industry, venture capital has been reckoning in recent years with its lack of racial diversity. But the pace of change has been glacial, mirroring its better-documented issues with gender diversity.

Investors of color going independent:

  • "I just wanted to be able to bring every single piece of me into the office every day," Cross Culture Ventures co-founder Marlon Nichols, who was previously at Intel Capital, explains. This has meant both the ability to focus on sectors and startups he and his partner see as promising, plus establishing their own culture and policies.
  • "It was a means to an end to get capital to certain people," says Arlan Hamilton of her decision to form Backstage Capital.
  • "The cost to start a fund has come way down," Precursor Ventures founder Charles Hudson says. "Now if you can raise $10 million, you could be a full-time VC – you won't make a ton of money but you can do it."

Conventional wisdom: Most still agree that venture capital remains an apprenticeship business, so learning the ropes – and building out personal networks – by working at an established firm is still valuable (and, to some, even necessary).

  • But: Getting into and moving up the ladder at existing funds remains particularly challenging for women and people of color. Firms still use signals like alma maters and experience at particular organizations when making hiring decisions, as former Venrock vice president Richard Kerby has written. It becomes circular, and exclusionary.
  • The gap between underrepresented minorities at the junior and senior levels also exposes the venture industry's lack of true commitment to diversity. "From what I hear from a lot of my friends, they're constantly being passed over," says Unshackled Ventures associate Maria Salamanca.

Missing conversation: As is the case in the broader tech industry, there's a lack of focus on how various underrepresented demographics overlap, multiple women of color in VC tell Axios. "Even within the underrepresented set, women have it more difficult than men in general," says Arlan Hamilton, adding that she's focusing more and more of her investment into companies led by women of color.

  • Women only make up on 7% of decision makers at VC firms, according to data Axios recently compiled. One caveat is that this data only included funds that had raised at least $100 million, while the recent boom in small, seed-stage funds has created more opportunities for venture's underrepresented demographics. For example, 21% of all micro-VC funds raised in the past three years were founded by women, according to Crunchbase.
Follow the money: Michael Kim is the founder of Cendana Capital, which invests in other venture capital funds. He says that the racial and gender demographics of startups are changing, and that it's imperative for VC firms to keep up. "VC firms have to be able to work with [minority and women-led startups] and have them part of their networks," he explains. "So if traditional funds aren't attracting the best startups, then LPs have to ask what are the funds not doing."

Go deeper:

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New player in solar trade fight: Sean Hannity

Hannity interviews Trump. Screengrab via YouTube

As the White House tariff decision looms, Fox News personality and radio host Sean Hannity has come out against proposals for new penalties on imported solar panel equipment.

Why it matters: Hannity is friends with President Trump, and has a big platform.

The White House will make the final decision on potential new import restrictions at some point after next month's recommendations from the U.S. International Trade Commission, which concluded in September that low-cost imports from Asia and elsewhere are harming U.S. manufacturers.

Hannity cut a radio ad that ran in South Carolina over the past two weeks that calls the tariff petition by two financially distressed panel-makers an attempt to "manipulate" trade laws, and a "bailout" that would increase prices by "government mandate."

  • "Now that the Obama gravy train has run dry, well now they want President Trump to also stick you with the bill for their bankrupt businesses," Hannity says in the spot. "Taxpayers should not have to bail out one foreign-owned company only for their foreign financiers to get another payout."

One level deeper: The spot was commissioned by the group Solar Powers America. The group, a relatively new entrant in the renewables advocacy world, is focusing on topics including the benefits of solar energy in southeastern states, according to Bret Sowers, a board member.

Hannity was compensated for the ad, but Sowers did not disclose the amount of the payment or the overall cost of the buy. It was targeted around Trump's visit to South Carolina a few days ago.

  • "Sean Hannity is a well-respected voice in the south," Sowers, an executive with the South Carolina-based solar developer Southern Current, told Axios on Thursday. "We were pleased with it and we hope to work with Sean and others to continue educating the public on this trade issue," he said.

"The solar industry itself needs to be working with conservatives, needs to be working with both sides of the aisle," Sowers said.

Why you might be hearing about it: The spot achieved wider circulation when the Solar Energy Industries Association—a trade group that fears tariffs would spike costs for solar power projects enough to badly hinder growth—circulated it via Twitter and YouTube on Tuesday.

A spokesman for SEIA said: "We were sent the audio via email, and we thought the message was so great that we put it to video and shared it on social media. Sean Hannity is a highly-influential conservative voice and we are thrilled to have him speaking on behalf of American solar workers."

Big picture: The ad underscores how the tariff petition has emerged as one of the most intense, closely watched energy policy battles of the Trump era. Solar Powers America is also part of U.S. Made Solar, one of the industry coalitions fighting new tariffs via ads on Fox News and other steps.