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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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Battery exec leaves Dyson two years after $90 million buyout

Michigan entrepreneur Ann Marie Sastry has left vacuum-maker Dyson, two years after it acquired her controverial lithium-ion battery company, Axios has learned. The $90 million all-cash buyout remains one of the richest lithium-ion deals ever.

Quick take: Sources with knowledge of the situation were not certain of the circumstances of Sastry's departure. But it comes eight months after Dyson relinquished Sakti3's core battery patents, and doubts remain in the field regarding her main claim, asserted repeatedly — that she was on the verge of commercializing much-sought-after solid state battery technology.

Why it matters: For the last two years, Dyson founder James Dyson has spoken of ambitious plans to spend $1 billion to $3 billion to revolutionize batteries and electric cars. He has said said his electric car will ready for the road by 2020. At the time, Dyson's October 2015 purchase of Sakti3 was the spearpoint of the mission, and Sastry's departure suggests more internal turmoil than he has let on.

  • Sastry's Linkedin page says she left Dyson last month. She identifies herself as the founder and CEO of a company called Amesite, which a source said is involved with artificial intelligence and education.

In September, Dyson told Bloomberg that he had created two competing battery teams—Sakti3, plus another that was attempting a different approach to solid state. One explanation for Sastry's departure was that the other team won. In an interview with the Guardian, Dyson said the company's batteries were already more efficient than those in commercial electric vehicles.

At the time of the October 2015 deal and since, numerous leading U.S. battery researchers told me they wondered why Dyson had bought Sakti3. Despite Sastry's robust claims of the company's progress with solid state, she had revealed very little publicly and, since no one else had made much progress, the deep suspicion was that she was exaggerating. Indeed, in reporting for a story at the time of the buyout, former Sakti3 executives told me that the doubters were correct—the company's technology was rudimentary and nowhere near commercial.

Dyson did not offer a comment. Sastry could not be reached.

Dan Primack contributed to this story.

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Bob Corker flips to "yes" on tax reform

Sen. Bob Corker (R-Tenn.), the only holdout on the Senate's initial tax bill, announced Friday that he will vote "yes" on the GOP's tax cuts bill, less than an hour after Sen. Marco Rubio (R-Fla.) said he will also vote yes.

Why it matters: Corker's vote essentially cements the tax bill's passage before the Christmas deadline.

His statement:

"After many conversations over the past several days with individuals from both sides of the aisle across Tennessee and around the country — including business owners, farmers, chambers of commerce and economic development leaders — I have decided to support the tax reform package we will vote on next week.

"This bill is far from perfect, and left to my own accord, we would have reached bipartisan consensus on legislation that avoided any chance of adding to the deficit and far less would have been done on the individual side with items that do not generate economic growth.

"But after great though and consideration, I believe that this once-in-a-generation opportunity to make U.S. businesses domestically more productive and internationally more competitive is one we should not miss. While many project that it is very possible over the next ten years we could be at least $500 billion short on a $43 trillion policy baseline, I believe this bill accompanied with the significant regulatory changes that are underway, and hopefully, future pro-growth oriented policies relative to trade and immigration , could have significant positive impact on the well-being of Americans and help drive additional foreign direct investment in Tennessee.

"In the end, after 11 years in the Senate, I know every bill we consider is imperfect and the questions becomes is our country better off with or without this piece of legislation. I think we are better off with it. I realize this is a bet on our country's enterprising spirit, and that is a bet I am willing to make."

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Release of texts between FBI officials to media was unauthorized

Deputy Attorney General Rod Rosenstein. Photo: Andrew Harnik / AP

The Department of Justice said that some members of the media received early copies of the texts between FBI officials Peter Strzok and Lisa Page, and that the release was not authorized by the department, Business Insider reports.

Why it matters: The texts are part of an ongoing investigation; they were shared with lawmakers on Tuesday night, prior to Deputy Attorney General Rod Rosenstein's testimony to the House Judiciary Committee, and were shared with reporters afterwards. But DOJ spokeswoman Sarah Isgur Flores said some reporters had already recieved them.

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Rubio officially yes on tax bill

Sen. Marco Rubio Photo: Pablo Martinez Monsivais / AP

Sen. Marco Rubio's office has confirmed to reporters that the senator will be voting for the GOP tax cuts bill now that the child tax credit has been enhanced to meet his standards.

Why it matters: This thing looks ready to pass.

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Report: FCC to fine Sinclair $13 million over undisclosed ads

AP Photo/Steve Ruark, File

The FCC plans to fine Sinclair Broadcasting Corporation milions of dollars over undisclosed cancer ads that aired during newscasts over a six-month period in 2016, Reuters reports.

The news comes one day after reports surfaced that the DOJ wants Sinclair to divest roughly 12 local broadcast stations in order for its $3.9 million merger with Tribune Media Company to be approved. It also comes as FCC Chairman Ajit Pai is being attacked for what is seen as a close relationship with Sinclair.

The fine addresses roughly 1,700 commercials that aired for the Huntsman Cancer Institute. According to the report, Sinclair has previously told reporters that the violations were unintentional.

Reuters reports that the fine was approved by the five-member FCC but has not yet been made public. Sinclair's management has always been right-leaning and conservative-leaning Pai has been accused by progressives as being favorable to the broadcaster.

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White House says Western Wall will stay in Israel

Pence and Israeli Prime Minister Benjamin Netanyahu at a 2014 meeting in Israel. Photo: Amos Ben Gershom / GPO via Getty Images

A senior White House official told reporters today that the Trump administration believes the Western Wall in East Jerusalem will remain part of Israel in any future peace agreement with the Palestinians. The issue came up during a briefing to reporters on Vice President Mike Pence's upcoming visit to Israel.

Why it matters: The statement risks further infuriating the Palestinians at a time when the administration is trying to cool down the crisis created by President Trump's Jerusalem speech. The Western wall was occupied by Israel during the Six-Day War in 1967 and was never recognized as part of Israel by any country around the world.

Context: During previous negotiations between Israel and the Palestinians, the U.S. supported the Israeli position that the Western Wall should stay part of Israel, but it was never articulated publicly.

What to watch: The official said Pence will visit the Western Wall during his trip to Israel, and he will do it as the vice president and not as a private citizen. "We cannot envision any situation under which the Western Wall would not [be] part of Israel," the official said. "But as the president said, the specific boundaries of sovereignty of Israel are going to be part of the final status agreement."

The bottom line: After the briefing ended, the White House official noted that the U.S. "cannot imagine Israel would sign a peace agreement that didn’t include the Western Wall."

What's next: In the meantime, White House special envoy Jason Greenblatt will arrive in Israel early next week. It is unclear whether Greenblatt is going to meet any Palestinian officials. Palestinian Authority president Mahmoud Abbas announced he does not see the U.S. as an honest broker and said the Palestinians will not meet with Pence during his visit.

While in Israel, Greenblatt will meet Fernando Gentilini, European Union envoy for Middle East peace. The 28 leaders of EU member states announced yesterday they see Jerusalem as the shared capital of both Israel and Palestine — pushing back against Trump's announcement that the U.S. recognizes it as the capital of Israel.

The White House official added that given the timing, Greenblatt will stay on for Pence’s visit to provide any relevant support.

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Facebook admits that some social media use can be harmful

The Facebook logo is displayed on an iPad. Photo: Matt Rourke / AP

In a new installment of its "Hard Questions" series, Facebook acknowledges that social media can have negative (or positive) effects on people, depending on how they use it.

Why it matters: This might be the first public acknowledgment from the company that its product — and category in general — can have detrimental effects on people.

Facebook is also addressing the topic shortly after two former executives publicly criticized the company for what they described as exploiting human psychology.

Good and bad use, according to research cited by Facebook:

  • Bad: Passive use of social media — reading information without interacting with others — makes people feel worse. Clicking on more links or "liking" more posts than the average user also leads to worse mental health, according to one study.
  • Good: Active use — interacting with people, sharing messages, posts, comments, and reminiscing about past interactions — is linked to improved well-being.
  • It takes two: Interacting with other users is key, according to research. Simply posting on Facebook without interacting with other people isn't enough.

But: This isn't a capitulation from Facebook, admitting that it may be doing some harm. Instead, the company is simply telling us that we just need to use its social network in more positive ways.

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Law school is the popular choice again

Two law students hug after oral arguments in a moot court competition. Photo: Rogelio V. Solis / AP

The number of people planning to attend law schools next fall has increased by 12%, there have been 14% more law school applications and 23 law schools reported 40% increases in applications, according to data from the Law School Admission Council.

Why it matters: Interest in law school has been declining since before the recession, Wall Street Journal reports. Law school deans and advisors told WSJ that the upturn is at least in part due to the legal issues arising from Trump's administration, better discounts at law schools and a revived economy.

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Tillerson breaks with Trump on North Korea for the second time this week

Secretary of State Rex Tillerson urged, for the second time this week, that North Korea abandon its nuclear weapons and enter into negotiations with the U.S. and others, leaving room for a diplomatic solution.

Why it matters: Tillerson's rhetoric doesn't line up with the official position of the White House. President Trump has made clear that he doesn't think negotiations are a viable option in dealing with Pyongyang, and has instead focused on drawing attention to the strength of the U.S. military.

Tillerson's message to North Korea, made during a speech at a UN Security Council meeting Friday:

  • “We have been clear that all options remain on the table in the defense of our nation, but we do not seek, nor do we want, war with North Korea,” he said. “The United States will use all necessary measures to defend itself against North Korean aggression, but our hope remains that diplomacy will produce a resolution.”
  • "Our communication channels remain open. North Korea knows they're open. They know where the door is. They know where to walk through that door when they want to talk."
  • “It can reverse course, give up its unlawful nuclear weapons programs, and join the community of nations, or it can continue to condemn its people to poverty and isolation.”

Go deeper: Trump's gamble on North Korea

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Inside Shervin Pishevar's departure from Sherpa Capital

Shervin Pishevar. Photo: Steve Jennings/Getty Images

Shervin Pishevar yesterday resigned from Sherpa Capital, the San Francisco venture capital firm he co-founded in 2013, following multiple allegations of sexual misconduct (all of which he continues to deny).

A source familiar with the situation says that Pishevar's resignation was voluntary (i.e., he wasn't pushed out). But there has been tension inside the firm over the past several weeks, particularly as Sherpa has kept finding itself playing last-minute defense.

For example, Sherpa was unaware of Pishevar's May arrest in London until just last month, when U.S. news outlets (including Axios) were about to publish stories about it. It also was late to learn that Bloomberg was preparing to publish its initial report on allegations against Pishevar.

Not surpringly, the statements issued yesterday by Sherpa and Pishevar had some major differences. Sherpa thanked Pishevar, but added that it is "deeply committed to our culture of integrity, inclusion, and respect." Pishevar, meanwhile, thanked Sherpa, but also references "truculent opponents out to settle scores."

More details:

  • Sherpa was in the midst of pre-marketing its third flagship fund, as it is more than 70% committed on a pair of funds that officially closed in mid-2016 (but which began soliciting commitments in early 2015, per an SEC filing). Fundraising is now on hold, as the firm tries to figure out its strategy going forward.
  • The fact that Sherpa's current funds are mostly called is a big reason why LPs are unlikely to kill the remaining investment period, as they've done with Binary Capital (which had just raised a new fund). Pishevar's co-founder, Scott Stanford, continues to run the show alongsidea 13-person team, and it's possible that Sherpa could hire a senior investment professional to fill Pishevar's spot.
  • We're unclear on exactly how key-man provisions on the existing funds are structured, but it doesn't sound like they'll be triggered. Pishevar is expected to retain vested carry — as he should, since he did the work — but will no longer have a say in investment decisions (including for existing portfolio companies). He also will no longer represent Sherpa on any boards.