Axios AM

An analog clock with only two symbols instead of twelve: the symbols read 'AM' and 'PM'.
August 31, 2017

Good Thursday morning. Enjoy the last day of August!

1 big thing: Trump's DACA dilemma

President Trump could trigger a furious response from corporations and some members of his own staff if he green-lights a plan under consideration at the White House to end DACA, the Obama-era policy that suspends deportation of some undocumented workers who arrived as children.

  • I'm told some top CEOs, including leaders in tech and retail, plan to be tough and vocal if Trump ends the policy. But they're keeping quiet for now because they fear antagonizing him on a question that could have massive implications for their workforces.
  • A top Silicon Valley executive told me: "There's no issue that's more gut-wrenching for us. These are people who came out of the shadows, got jobs and mortgages — we see this as betraying fellow Americans. ... This is consuming a ton of time at every major company."
  • Some multinationals are even making contingency plans to move vulnerable workers to overseas locations.

Why it matters: Trump has faced an escalating revolt from CEOs — starting with the Muslim ban, increasing with his climate-change decision, and peaking with his handling of Charlottesville. Scores of high profile CEOs would pummel him publicly if he clears the way for mass deportation of kids.

  • A similar dynamic has unfolded with his own staff, many of whom have faced pressure in social and family circles with each controversial move. Imagine the blowback if they stood by silently as kids were deported.
  • One person close to the White House said: "This is different. This is families being torn apart. This is something that will follow [the aides] when they go back to real life."

The president has publicly agonized over the DACA decision — publicly lamenting its ugly human consequences — in a way he hasn't with other impending policies.

But senior officials tell us the majority view inside the Trump administration is that DACA is illegal, and the only way to deal with the problem of illegal immigrants who arrived here as children is for Congress to act.

It's for that reason that some top aides expect Trump will terminate it, even though he knows the backlash would be intense:

  • Axios' Jonathan Swan was first to report last week that Trump was seriously considering rescinding Deferred Action for Childhood Arrivals, which provides work and study permits for about 750,000 people.
  • Attorney General Jeff Sessions is a strong opponent of the program, contending that it's not legal. The White House said yesterday that no decision has been made.
  • The N.Y. Times' Maggie Haberman tweeted that White House Chief of Staff John Kelly "has said moving ahead with a DACA-ending decision right now makes little sense."
  • Ending DACA could put 700,000 jobs at risk, according to research released yesterday by, a pro-immigration reform group co-founded by Mark Zuckerberg, and the Center for American Progress, with data from the Cato Institute.

Be smart: The Harvey catastrophe in the border state of Texas make the optics of the decision even more brutal for the White House. So some top Republicans increasingly hope Trump, who was inclined to back his attorney general, will find a less drastic way to fend off conservative legal challenges to the program.

2. Economic impact more than Katrina + Sandy?

See 17 pics on 1 page, "Houston from the air," taken by AP's David Phillip, who has lived in Houston for two decades: His photos show "rows of suburban streets turned into canals and brownish floodwaters creeping up to rooftops. ... [A] mansion's long cul-de-sac driveway resembles a drawbridge over a moat."

  • BULLETIN: "Two explosions were reported [this morning] at a Houston-area chemical plant that lost power amid flooding from Harvey."
  • Accuweather projects Harvey may be "the most costly natural disaster in United States history [with] impact to ... GDP [of] $190 billion, ... which exceeds ... economic impact of Katrina and Sandy combined."
  • "Much of the damage ... is uninsured." (Bloomberg Businessweek)
  • "Harvey death toll surpasses 30; more fatalities expected." (AP)
  • "Houston's airports began trudging back into operation [yesterday], with the first commercial traffic in three days offering a faint symbol of recovery." (Bloomberg)
  • "Harvey is straining the global superhighway of the energy trade," per the Wall Street Journal's lead story: "More than a dozen refineries are affected — including the country's two biggest, Saudi Arabian Oil Co.'s Motiva facility in Port Arthur and Exxon Mobil Corp.'s Baytown facility — cumulatively representing more than 30% of U.S. refining capacity."
  • "Katrina Survivors Relive Ordeal," per a Wall Street Journal front-pager: A dozen years ago, "Katrina uprooted residents to cities across the U.S., but Houston received the largest share outside Louisiana. Of the 150,000 to 200,000 evacuees who initially arrived in Houston, as many as 40,000 remain."
  • Houston Chronicle banner: "THREATS RISE FROM RESERVOIRS, RIVERS: As sun finally returns, a devastated region tallies the damage." (Read the digital paper free.)

3. If you only read 1 thing

The best step-back Harvey piece we've seen ... "Harvey Wasn't Just Bad Weather. It Was Bad City Planning ... Houston exulted in sprawling, free-form growth, but laissez-faire isn't the way to prepare for natural catastrophes," Peter Coy and Christopher Flavelle write in Bloomberg Businessweek's cover story:

  • "No city could have with-stood Harvey without serious harm, but Houston made itself more vulnerable than necessary."
  • "Paving over the saw-grass prairie reduced the ground's capacity to absorb rainfall. Flood-control reservoirs were too small. Building codes were inadequate. Roads became rivers, so while hospitals were open, it was almost impossible to reach them by car."
  • "Sprawling Houston is a can-do city whose attitude is grow first, ask questions later. It's the only major U.S. city without a zoning code saying what types of buildings can go where, so skyscrapers sometimes sprout next to split-levels. Voters have repeatedly opposed enacting a zoning law."

The big picture: "It's a minor event for the $19 trillion U.S. economy, since most of the economic activity that was interrupted will be made up later. It was a light hit for insurers, because few underwrite flood insurance and the wind damage they do cover was minimal; insurers' stock prices barely fell. The refining and petrochemical industries lining the busy Houston Ship Channel also got off fairly lightly (this time), because they've invested heavily in storm defenses."

  • "The impact on taxpayers is more serious, because Harvey is likely to generate tens of billions of dollars in emergency federal aid and claims on the money-losing National Flood Insurance Program ... Above all, Harvey is a humanitarian disaster."

N.Y. Times Quote of the DayJoel Kotkin, an urban theorist who has championed Houston's laissez-faire approach to development, which he credits for creating affordable housing but which may have also worsened the flooding: "Why would you live in a hot, humid, flat space if it was expensive?"

4. What the president is reading

N.Y Times' David Leonhardt, "Harvey, the Storm That Humans Helped Cause": "Warmer weather causes heavier rainfall. Why? When the seas warm, more moisture evaporates into the air, and when the air warms — which has also been happening in Texas — it can carry more moisture."

  • "[S]moking, drunken driving and seatbeltless riding each created a public health crisis. Once the link became clear and widely understood, people changed their behavior and prevented a whole lot of suffering."
  • "Climate change is on its way to becoming a far worse public health crisis than any of those other problems. Already, it has aggravated droughts, famines and deadly heat waves. In the United States, global warming seems to be contributing to the spread of Lyme disease."

5. Apple will change facial recognition with next iPhone

An iPhone to be unveiled Sept. 12 will have facial recognition as the primary means of logging in, a technology that appears to be light years ahead of anything that has been tried commercially, Axios chief tech correspondent Ina Fried writes from S.F.:

  • "[T]he facial recognition on the new iPhone has been trained to seamlessly handle things like eyeglasses and easily adjust to changes in appearance such as beards and mustaches."
  • "Apple needs the technology to work as advertised if it is to replace its rock-solid Touch ID as a means of unlocking an iPhone and authenticating Apple Pay purchases."
  • "[T]hree phones are expected to be introduced at a Sept. 12 event, along with updates to Apple Watch and Apple TV."
  • For the top-of-the line phone, "Apple is switching to a new screen technology and having the screen go nearly edge to edge on all sides."
  • "That makes for a much more complex manufacturing process. As a result, [that] iPhone may ship a month or more after the other new iPhones."
  • "The company faces the risk that too many customers want to wait for the new model, freezing sales of the other models."

P.S. Apple is close to becoming the first U.S. company valued at $1 trillion, per CNBC: "Apple shares hit a record high, coming within $30 a share of reaching a $1 trillion market cap. Investors are betting on strong iPhone 8 sales."

6. Power centers

"Away from the cameras and apart from the nonstop drama of the White House, Defense Secretary Jim Mattis has come to play a role unlike any other Cabinet member," the WashPost's Greg Jaffe and Dan Lamothe write on the front page:

  • "The retired Marine general has become a force for calm, order and, in the eyes of the president's critics, quiet resistance to some of President Trump's most combative and divisive instincts."
  • "Mattis has maintained this air of independence without directly provoking a president who demands absolute loyalty."
  • "The latest example came [yesterday] morning when Trump vented his frustrations with North Korea after its latest missile launch. 'Talking is not the answer!' Trump tweeted ... 'We're never out of diplomatic solutions,' Mattis said."
  • "On Tuesday night, Mattis seemed again to be in mitigation mode when he announced that he would be pulling together a 'panel of experts' to provide advice on how to implement Trump's ordered ban on transgender troops."
  • Why it matters: "Mattis's deft political touch has surprised many who watched him fall out of favor with the Obama White House. ... In the Trump administration he has managed to press his differences without provoking a backlash."

Be smart: Mattis is a linchpin of what we call the unofficial Committee to Save America — administration and congressional leaders who see themselves as playing a behind-the-scenes role in protecting Trump and the nation from some of his instincts.

7. Mueller's muscle

"Lobbyist in Trump Tower meeting spoke to grand jury," by AP's Chad Day and Eric Tucker: "A grand jury used by Special Counsel Robert Mueller has heard secret testimony from a Russian-American lobbyist [Rinat Akhmetshin] who attended a June 2016 meeting with ... Trump's eldest son," plus Jared Kushner and Paul Manafort.

  • Why it matters: "The revelation is the clearest indication yet that Mueller and his team of investigators view the meeting, which came weeks after Trump had secured the Republican presidential nomination, as a relevant inquiry point in their broader probe into Russian interference in the 2016 election."

8. Hollywood's worst summer in 25 years

The number of movie tickets sold in the U.S. this summer (425 million) is likely to be the lowest level since 1992," the L.A. Times' Ryan Faughnder writes in a front-pager, "Theaters, studios hit by summer box-office blues."

  • Short-term factors: "Too many bad movies, including sequels, reboots and aging franchises that no one wanted to see. Some point to rising ticket prices, which hit a record high in the second quarter."
  • Long-term factors: "competition from streaming services such as Netflix and the influence of the movie review site Rotten Tomatoes, [which is part of] an unforgiving social media environment in which bad movies are immediately punished by online word of mouth."
  • How studios are trying to adapt: "discussing ways to make movies available for streaming earlier after their theatrical releases through iTunes and video-on-demand services, despite resistance from theater chains."

9. Princess Di's death: 20 ago today

10. 1 fun thing

"Pumpkin Spice Makes Early Arrival, but Some Complain of Christmas Creep," by N.Y. Times' Tiffany Hsu: " slew of pumpkin-flavored products inspired by fall are turning up earlier each year, arriving in July and August as a harbinger of a season that this year doesn't officially begin until Sept. 22."

  • "Stores began stocking Pumpkin Spice Cheerios cereal in mid-August. Krispy Kreme stores started carrying pumpkin spice lattes and doughnuts this week."
  • "Dunkin' Donuts said it was 'doubling down on fall flavors,' and by Monday its shops were offering a limited run of pumpkin coffees, doughnuts, muffins and a cream cheese spread."