Jonathan Swan
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Trump wanted to veto bill to keep government open

Andrew Harnik / AP

Publicly, President Trump didn't seem overjoyed when, earlier this month, he signed a $1 trillion bill to keep the government open. Privately, his mood was much, much worse.

Behind-the-scenes: When the spending bill had been negotiated and finalized, White House chief of staff Reince Priebus phoned the former House Speaker John Boehner and told him the president doesn't like how the negotiation came out and is thinking about vetoing the bill. Boehner has told associates that Priebus asked him if he could talk Trump into signing the spending bill. Boehner said he would.

Ten minutes later, Boehner's phone rang. It was the President. Boehner made a couple different arguments to Trump about why he should sign the spending bill:

  1. He told Trump he should be happy about the fact that he doesn't have to give a dollar of domestic spending in exchange for increases in military spending. And he got a substantial boost in military spending.
  2. The most important argument Boehner made: the last thing you need right now is a government shutdown.

Why this matters: I'm not suggesting Boehner's conversation with Trump was determinative. It's telling, however, that the President hated the spending bill so much that his chief of staff felt the need to reach out to the former House Speaker — a guy who captained an implacable conference through plenty of funding battles — to convince Trump to sign the bill.

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Behind-the-scenes on the debt ceiling

Evan Vucci / AP

Last Wednesday, Treasury Secretary Mnuchin met with Republican leaders from the House and Senate, including Mitch McConnell and Paul Ryan.

  • What everyone can agree on: Two sources with direct knowledge of the meeting tell me Mnuchin made it clear he wants the debt ceiling to be raised ahead of any "deadline," as early as before the August recess. (It's no secret that Mnuchin views the debt ceiling as non-negotiable and doesn't want it used as a negotiating tool.)
  • Where the accounts differ: One source told me, "it's not like people laughed when he said before the August recess but the mood was clear that this wasn't something that was ever going to happen." But a source close to Mnuchin says the Secretary heard no rejection of that pre-August timeline and considers it "a viable option."
  • Current timing: Treasury believes it can keep using emergency cash saving measures to avoid breaking the borrowing limit until the early fall.
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Trump budget to slash entitlements by $1.7 trillion

Pablo Martinez Monsivais / AP

President Trump's 2018 budget proposal on Tuesday won't reform Social Security or Medicare — in line with his campaign promise — but it will make serious cuts to other entitlement programs. A source with direct knowledge tells me the Trump budget will save $1.7 trillion on the mandatory side over the next ten years.

Expected reaction: In the past couple days I've spoken to a number of White House officials about the budget proposal. The best summary, from one White House source: "Conservatives will love it; moderates will probably hate it." These mandatory cuts — especially to politically-sensitive programs like food stamps — will make some moderate Republicans as nervous as the recent health care bill did.

  • Balanced budget: I am told Trump's budget will balance over ten years. To get there, it will propose tough cuts on both the mandatory and discretionary sides — e.g. to the EPA and State Department — and will assume that the U.S economy will grow at 3 percent instead of the 1.6 percent rate it grew in 2016. The 3 percent growth rate will be reached after a few years, not immediately.
  • Where the entitlement cuts are made: From programs including SNAP (food stamps), CHIP (Children's Health Insurance Program), and SSDI (Disability Insurance). The budget proposal will also assume that Trump can sign into law the American Health Care Act — the Obamacare repeal and replace bill that passed the House and is now being considered by the Senate. That bill makes substantial cuts to Medicaid.
  • How the entitlement money will be saved: The source tells me there'll be an "emphasis on work requirements for able-bodied people" to save money on these social welfare programs.

"Good news" budget items the administration will tout:

  1. Student loans: As the Washington Post previewed: "students currently can have the balance of their loan forgiven after paying 10 percent of their income for 20 years. Trump's proposal — which makes good on a campaign promise — would raise the maximum payment to 12.5 percent of income, but shorten the payment period to 15 years."
  2. Pell grants: As the Post previewed: "The spending plan supports year-round Pell Grants, which allow low-income students to use the money for three semesters of college, instead of two. That way, students can take a full load of courses year-round and earn a degree faster."
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Axios Sneak Peek

Welcome to Sneak Peek, our weekly lookahead for both ends of Pennsylvania Avenue. I'd love your tips and feedback: jonathan@axios.com. We're all about "smart brevity" at Axios but there's so much news today I hope you'll forgive me serving you 8 items instead of my usual 5.

P.S. You're invited ... to an event Tuesday at 8 a.m. in downtown D.C.: Chuck Todd and Jim VandeHei will host a live, onstage version of their famous mini-roundtable, plus talk infrastructure with Atlanta Mayor Kasim Reed and Sen. Jim Inhofe (R-Okla.), an avid pilot. Hope to see you — RSVP here.

1. Scoop: Trump budget to cut $1.7 trillion in entitlements

President Trump's 2018 budget proposal on Tuesday won't reform Social Security or Medicare — in line with his campaign promise — but it will make serious cuts to other entitlement programs. A source with direct knowledge tells me the Trump budget will save $1.7 trillion on the mandatory side over the next ten years.

  • Balanced budget: I am told Trump's budget will balance over ten years. To get there, it will propose tough cuts on both the mandatory and discretionary sides — e.g. to the EPA and State Department — and will assume that the U.S economy will grow at 3 percent instead of the 1.6 percent rate it grew in 2016. The 3 percent growth rate will be reached after a few years, not immediately.
  • Where the entitlement cuts are made: From programs including SNAP (food stamps), CHIP (Children's Health Insurance Program), and SSDI (Disability Insurance). The budget proposal will also assume that Trump can sign into law the American Health Care Act — the Obamacare repeal and replace bill that passed the House and is now being considered by the Senate. That bill also makes substantial cuts to Medicaid (The Washington Post pegs the Medicaid cuts at more than $800 billion over ten years).
  • How the entitlement money will be saved: The source tells me there'll be an "emphasis on work requirements for able-bodied people" to save money on these social welfare programs.

Expected reaction: In the past couple days I've spoken to a number of White House officials about the budget proposal. The best summary, from one White House source: "Conservatives will love it; moderates will probably hate it." These mandatory cuts — especially to politically-sensitive programs like food stamps — will make some moderate Republicans as nervous as the recent healthcare bill did.

"Good news" budget items the administration will tout:

  1. Student loans: As the Washington Post previewed: "students currently can have the balance of their loan forgiven after paying 10 percent of their income for 20 years. Trump's proposal — which makes good on a campaign promise — would raise the maximum payment to 12.5 percent of income, but shorten the payment period to 15 years."
  2. Pell grants: As the Post previewed: "The spending plan supports year-round Pell Grants, which allow low-income students to use the money for three semesters of college, instead of two. That way, students can take a full load of courses year-round and earn a degree faster."

2. Trump changes Mideast posture

Evan Vucci / AP

President Trump gave a measured, disciplined speech to the Muslim world in Saudi Arabia on Sunday, reading almost entirely off TelePrompTer.

What cable TV will focus on: Trump made a profound rhetorical shift from the campaign — and it's a shift we forecasted a few weeks ago after a briefing with senior White House officials. He's now talking about Islam in ways virtually indistinguishable from presidents Obama and George W. Bush.

The key difference: Trump on the campaign said "Islam hates us." Today, Islam is "one of the world's great faiths." And instead of bloviating about how he's the only guy with the courage to say "radical Islamic terrorism," Trump now uses the more PC "combating radicalization."

What really matters: We shouldn't spend too much time obsessing over the rhetorical shift. Trump signaled these substantial breaks from the Obama era:

  1. The most important: While Obama bent over backwards not to offend Iran as he pursued the nuclear deal, Trump did something quite extraordinary: He called on the Muslim world to "isolate" Iran. The Saudis got what they wanted here.
  2. Trump signaled that he'd be very different from past American presidents when it comes to discussing human rights. "We are not here to lecture," Trump told the audience. He won't be using his presidential bully pulpit to pressure countries like Egypt and Saudi Arabia for their human rights abuses. (Sidenotes: Senior White House officials have told me they'd do this privately, but we have no way of knowing how tough they've actually been so far. Also, National Review's Ramesh Ponnuru rightly notes that we shouldn't exaggerate how tough American presidents have ever been on Saudis and human rights.)
  3. Trump showed again that his presidency will be the most transactional in recent history. He framed his $110 billion arms deal with the Saudis as both a job-creating coup and as allowing the Saudis to take more responsibility for their own security. This is a big deal: Trump is putting the onus on Muslim-majority countries to be more aggressive and spend more money to fight terrorism. In Trump's most passionate moment of the speech, he declared: "Drive them out."

3. The shows

Sunday highlight reel, with the focus on Trump's first foreign trip:

National Security Adviser H.R. McMaster, beamed in from Saudi Arabia to talk to George Stephanopoulos on ABC's "This Week." Axios' Dave Lawler has these key takeaways:

  • McMaster twice declined to say whether Trump confronted the officials about Russian interference in the election.
  • He acknowledged Trump discussed Comey's firing with the Russians though he said the notes printed by the N.Y. Times (see: "nut job") may not be direct quotes. He said Trump had been trying to make a point about being "hamstrung" in his efforts to deal with Russia because of the investigation.
  • He said the FBI investigation did not come up when they were preparing for the meeting, suggesting Trump was improvising when he raised it.

Other highlights from today's shows:

  • Secretary of State Rex Tillerson further demonstrating the Trump administration's rhetorical moderation — calling the terror group "Daesh" (the Arab world's preferred terminology, and the term John Kerry always used) rather than ISIS in his interview on "Fox News Sunday."
  • Sen. Marco Rubio to Jake Tapper on CNN's "State of the Union:" "If any president tries to impede an investigation…It would be not just problematic. It would be, you know, obviously potential obstruction of justice."

4. Scoop: Trump didn't want to sign bill to keep government open

Publicly, President Trump didn't seem overjoyed when, earlier this month, he signed a $1 trillion bill to keep the government open. Privately, his mood was much, much worse.

Behind-the-scenes: When the spending bill had been negotiated and finalized, White House chief of staff Reince Priebus phoned the former House Speaker John Boehner and told him the president doesn't like how the negotiation came out and is thinking about vetoing the bill. Boehner has told associates that Priebus asked him if he could talk Trump into signing the spending bill. Boehner said he would.

Ten minutes later, Boehner's phone rang. It was the President. Boehner made a couple different arguments to Trump about why he should sign the spending bill:

  1. He told Trump he should be happy about the fact that he doesn't have to give a dollar of domestic spending in exchange for increases in military spending. And he got a substantial boost in military spending.
  2. The most important argument Boehner made: the last thing you need right now is a government shutdown.

Why this matters: I'm not suggesting Boehner's conversation with Trump was determinative. It's telling, however, that the President hated the spending bill so much that his chief of staff felt the need to reach out to the former House Speaker — a guy who captained an implacable conference through plenty of funding battles — to convince Trump to sign the bill.

5. Healthcare's moment of truth

House GOP leadership expects that on Wednesday the Congressional Budget Office will release its final score — showing the cost and coverage estimates of the American Health Care Act that recently passed the House. Paul Ryan said Friday the House hadn't sent the bill to the Senate because "out of an abundance of caution" they were waiting for the CBO score. House leaders say they don't anticipate any problems in the score that would force them to vote on AHCA all over again.

6. Montana special election

Polls close Thursday on a House special election in Montana, between Democrat Rob Quist and Republican Greg Gianforte. Montana is considered red — Trump won by 20 points — but Quist, a folk singer, has raised a stunning $5 million and is capitalizing on the energy of the progressive "resistance" against Trump.

Still, we expect Gianforte, a multimillionaire businessman, to prevail. Republican sources on the ground in Montana had recent internal polls with Gianforte ahead by around 4 points. And a source pointed out that Gianforte got a boost this week with Montana's largest tribe, the Crow Tribe, endorsing him along with all the state's major newspapers endorsing him including the Billings Gazette, the Missoulian, and the Great Falls Tribune.

7. Behind-the-scenes on the debt ceiling

Last Wednesday, Treasury Secretary Steven Mnuchin had a meeting at the Capitol with Republican leaders from the House and Senate, including Mitch McConnell and Paul Ryan.

What everyone can agree on: Two sources with direct knowledge of the meeting tell me Mnuchin made it clear he wants the debt ceiling to be raised ahead of any "deadline," including as early as before the August recess. (Note: It's no secret that Mnuchin views the debt ceiling as non-negotiable — this is money that's already been spent — and doesn't want politicians using the debt ceiling as a tool to negotiate spending cuts.)

Where the accounts differ: One source told me: "it's not like people laughed when he said before the August recess but the mood was clear that this wasn't something that was ever going to happen." But a source close to Mnuchin disputes that account and says the Secretary heard no rejection of that pre-August timeline from anyone in the room and "we believe it's on the table as a viable option."

Current timing: Treasury believes it can keep using emergency cash saving measures to avoid breaking the borrowing limit until the early fall.

8. 1 fun thing: the way to Trump's heart

Saudi Arabia's King Salman has pushed a core insight about Trump to its logical extreme: the way to this President's heart is through his ego.

Bloomberg TV's Kevin Cirilli has been prolifically tweeting on the foreign trip, and has my favorite picture of all the Saudi attempts to flatter Trump. The Kingdom ensured one of Trump's tweets was screened on a billboard in downtown Riyadh. (As Cirilli notes in his tweet, the poor photo quality is because of the sandy conditions.)

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Trump breaks from Obama, and himself

Evan Vucci / AP

President Trump gave a measured, disciplined speech to the Muslim world in Saudi Arabia on Sunday, reading entirely off TelePrompTer.

What cable TV will focus on: Trump made a profound rhetorical shift from the campaign — and it's a shift we forecasted a few weeks ago after a briefing with senior White House officials. He's now talking about Islam in ways virtually indistinguishable from presidents Obama and George W. Bush.

The key difference: Trump on the campaign said "Islam hates us." Today, Islam is "one of the world's great faiths." And instead of bloviating about how he's the only guy with the courage to say "radical Islamic terrorism," Trump now uses the more PC "combating radicalization."

What really matters: We shouldn't spend too much time obsessing over the rhetorical shift. Trump signaled these substantial breaks from the Obama era:

  1. The most important: While Obama bent over backwards not to offend Iran as he pursued the nuclear deal, Trump did something quite extraordinary: He called on the Muslim world to "isolate" Iran. The Saudis got what they wanted here.
  2. Trump signaled that he'd be very different from past American presidents when it comes to discussing human rights. "We are not here to lecture," Trump told the audience. He won't be using his presidential bully pulpit to pressure countries like Egypt and Saudi Arabia for their human rights abuses. (Note: Senior White House officials have told me they'd do this privately, but we have no way of knowing how tough they've actually been so far.)
  3. Trump showed again that his presidency will be the most transactional in recent history. He framed his $110 billion arms deal with the Saudis as both a job-creating coup and as allowing the Saudis to take more responsibility for their own security. This is a big deal: Trump is putting the onus on Muslim-majority countries to be more aggressive and spend more money to fight terrorism. In Trump's most passionate moment of the speech, he declared: "Drive them out."
Featured

Exasperated Trump WH staff admit his special resilience

Evan Vucci / AP

As the the bombshell headlines flew with Air Force One en route Saudi Arabia yesterday, a top outsider adviser to the West Wing emailed me: "The drips are filling the bucket."

And a top official in another Republican White House told me in a phone call: "He may be abroad, but he can't escape."

In conversations all over town, people realized they were living history: momentous revelations about peril inside the West Wing, just as "The Trump Show" was headed overseas for the first time.

Axios' Jonathan Swan is in 24/7 communication with White House sources, and tapped out this gripping postcard on his iPhone:

[M]ost WH officials I've spoken to privately this week are closer to being numb than panicked. Those who went through the campaign with Trump are numb to the crises and thought so many times before that *this* would be the one to break Trump. They've been wrong so many times before — the vast majority of Trump campaign staff, no matter their public posturing, thought Clinton would crush him.
They view their boss as completely undisciplined and self-destructive. They're exasperated by him ... They're sick and tired of the media feeding frenzy. But even in their most frustrated moments, they'll admit that Trump has got some special resilience that they can't begin to understand. A coat of protection that almost seems supernatural to them.
White House sources have texted me this week asking how bad I think the story of the day is. One asked me whether I thought Trump's private comments to Comey were a better story or worse for Trump than the release of the "Access Hollywood" tape. Those who were there for "Access Hollywood" have no idea what it would take to sink Trump.

After we talked, Swan sent this P.S.: "The core Trumpers from the campaign — who view themselves as loyal to Trump above all else — are completely unfazed by the Russia and Comey revelations. They're just swinging for Trump and have no qualms working to defend him."

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Jeb Bush gives rare advice to President Trump

Matt Rourke / AP

Jeb Bush hasn't said much publicly since the election, but on Friday at the SALT hedge fund conference in Las Vegas, he was asked what advice he'd give to Donald Trump if he could be assured the President would listen to him. The former Florida governor says "chaos" organizes Trump's presidency so far and the White House urgently needs restructuring and discipline.

Why it matters: Jeb has watched at close quarters the functioning of two professionally-managed White Houses, his father's and brother's. He personally knows three of the most disciplined and effective White House chiefs of staff in recent history — John Sununu, Jim Baker, and Andy Card.

Jeb's unsolicited advice for Trump:

  1. Don't tweet.
  2. Bring structure to the White House: "You're not constraining the leader when you have order. It can't be so chaotic that people can walk into the Oval Office any time and have an opinion and the last opinion is the one that ends up being the dominant one...any of the chiefs of staff that have served in either Democrat or Republican administrations have probably given that advice when asked, and it hasn't been heeded."
  3. Uncover and fire the leakers: "There's too many different interests and the problem with this is I've never seen a White House as leaky as this one...there could be 15 to 20 sources on a particular subject. People should be fired if they're disloyal to the President of the United States and leaking. Good administrations set that tone and don't have to fire people because people have a little bit more discipline and structure."
  4. Hone your foreign policy doctrine: "The President has a disproportionate say in foreign policy...and I think there's a two steps forward one step back emergence of the Trump Doctrine, but it ought to be clearly stated and adhered to." Jeb says the president has a huge opportunity on his first foreign trip to lay out a clear doctrine to reassure friends that it can "stick with the United States and count on its leadership."

Other highlights from Jeb's talk:

  • He doesn't think Republicans will repeal and replace Obamacare this year.
  • He thinks "maybe" tax reform can be done this year — but he didn't sound confident.
  • He says diversity in hiring is important, not for political correctness, but to get the best quality decision. Jeb says when you have "ten overage white guys looking at something there's a better than 50/50 chance it's going to be a total screw-up."
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Joe Lieberman's law firm a concern inside White House

Pablo Martinez Monsivais / AP

It's not only Democrats who think it's a terrible idea for President Trump to make the former Connecticut Senator Joe Lieberman his next FBI director to replace Jim Comey.

Lieberman works at the same law firm as Trump's longtime lawyer, Marc Kasowitz, and an administration source tells me that connection — which could make it look like Trump is trying to install an ally at the top of the bureau — has become a matter of concern within the White House.

Curious footnote: The Daily Beast's White House reporter Lachlan Markay found that somebody edited Wikipedia to remove Trump from Lieberman's law firm's list of clients. As Markay pointed out, the IP used to make those edits previously edited the page for White House senior advisor Stephen Miller.

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Famed short-seller believes markets have priced in President Pence

John Minchillo / AP

Jim Chanos, the billionaire hedge fund manager known for predicting the collapse of companies like Enron, believes that the financial markets are already factoring in the possibility that President Trump won't make it through his first term.

"I think they're beginning to factor it [Pence] in, that's for sure," Chanos told Axios on Thursday, at the SALT Conference at Vegas' Bellagio Hotel. "The markets are hoping for Vice President Pence to become President... a more stable person being able to enact a Republican agenda."

Market theory: Chanos thinks stocks are unnaturally stable amid unrelenting White House chaos and dysfunction, because investors see an alternate path to getting business-friendly legislation like tax reform. "The odds-makers have Trump even money to last his term," Chanos said. "If the perception was that Trump was going to be staying there I think at this point [the markets] might be worse."

Caveats: Chanos is big Democratic Party fundraiser who shorted Trump's companies in the past, although he did not support Hillary Clinton's 2016 campaign. It's also worth noting that the markets tanked yesterday, when the prospect of a President Pence hit its peak (so far).

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House leaders worry more meetings secretly recorded

Evan Vucci / AP

House Republican leadership is agitated after the Washington Post published a transcript from a secret recording of one of the inner-sanctum conversations in the office of Speaker Paul Ryan.

The transcript shows House Majority Leader Kevin McCarthy joking with his colleagues that then-candidate Trump and California Republican Dana Rohrabacher were both on the payroll of Russian President Vladimir Putin.

"The unknown is frustrating," said one senior GOP aide, referring to the possibility that this wasn't the only private leadership conversation that was secretly recorded.

Behind-the-scenes: House leadership sources have pored over the article and are privately discussing theories about where the leak came from:

  • One theory — bolstered by the article's dateline ("Kiev, Ukraine") — is that the Ukrainian Prime Minister Volodymyr Groysman, or one of his associates, left behind a recording device after meeting earlier that day with Ryan.
  • But of the five senior House GOP sources I've spoken to since the leak, none of them really believe that this leak came from the Ukrainians. Capitol security teams do regular sweeps of leadership offices and my sources aren't aware of recording devices being found.
  • The most widespread theory in House leadership is that the secret recorder and the leaker was Evan McMullin, who as a former leadership aide participated in the June 15 conversation and confirmed the private conversation to the Washington Post. (I am told that the Post, in their back-and-forth with leadership over the story, privately said that the source wasn't McMullin. There's no evidence that he was the leaker and I've reached out to him for comment.)
  • Evidence or not, leadership sources are privately worried that McMullin had a tape on while he sat silently through all of their confidential meetings. They're concerned about what leaks could come next.