December 29, 2017

Good Friday morning. Situational awareness: Goldman Sachs said tax reform will cut profit this year by $5 billion, mainly because of a tax targeting earnings held abroad, per Bloomberg. But after the one-time hit, banks are among the biggest winners.

1 big thing: Trump unchained

Trump yells to reporters before boarding Marine One on the South Lawn last month. (AP's Evan Vucci)

If you ask some close to President Trump what worries them most about 2018, it's not Robert Mueller's probe. It's that establishment guardrails of 2017 come down — and Trump's actual instincts take over.

  • Next year will bring "full Trump," said one person who recently talked to the president.

Trump has governed mostly as a conventional conservative — on tax cuts, his Supreme Court pick, and rolling back regulations. Most of his top advisers are fairly conventional conservatives, so that makes sense.

  • Most of those in his current decision-making circle — even if they're not mainstream Republicans — are defending mainstream Republican principles like free trade and an internationalist view of foreign policy.
  • But top officials paint a different portrait of Trump when it comes to what he really wants on trade, immigration and North Korea — but has been tamped down by skeptical staff and Cabinet officials.

In private meetings:

  • Trump keeps asking for tariffs — on steel and aluminum, in particular. He wants a trade war, and has for many years. His economic and diplomatic advisers persuaded him to delay trade actions in 2017.
    • Those advisers recognize that the day of reckoning will come in 2018, regardless of whether economic adviser Gary Cohn and Secretary of State Rex Tillerson — who advocated restraint — stay or go.
    • Cohn and Treasury Secretary Steve Mnuchin successfully persuaded Trump not to do anything rash while tax reform was being negotiated.
    • Trump also saw the advantage of trying to use that as leverage with China to get help on North Korea. He said yesterday in an interview with the N.Y Times: "China's hurting us very badly on trade, but I have been soft on China because the only thing more important to me than trade is war. O.K.?"
    • And he tweeted yesterday, in response to Chinese ships secretly delivering oil to North Korea: "Caught RED HANDED - very disappointed that China is allowing oil to go into North Korea. There will never be a friendly solution to the North Korea problem if this continues to happen!"
    • NEW: Look for Trump to take action on trade in the next month. It probably won't be next week, so as not to disrupt the afterglow of the tax cut. But nothing is final.
  • Trump still wants his wall, and tighter restrictions on legal immigration. He's a true believer on this stuff, and knows intuitively that it keeps his base stoked.
  • Trump seems most interested in discussing military options on North Korea in these meetings. He is surrounded by advisers who share his concern about the rogue state, but not his fixation on a military strike.
    • And some top officials have told us Trump's belligerent rhetoric on the subject makes them nervous.
    • There is a reason the harshest assessments of Trump usually leak after North Korea meetings.

Be smart: The two non-staff issues that worry White House officials most are North Korea and Mueller. Top officials have been telling us for months that the chances for war are higher than most think. And that chances of Mueller striking are higher than Trump thinks.

2. A big winner in 2018's West Wing

Guess who's likely to stick around for all four or eight years, and will be empowered in 2018?

Stephen Miller, the true-believer senior policy adviser, who trumps Trump on hardline immigration views — and may outlast almost everyone.

  • The two issues Miller cares and knows most about, immigration and trade, will be front and center.
  • And Miller channels (and believes) Trump campaign rhetoric more than anyone internally.
  • Although some of Miller's allies speculate that he could one day wind up as chief of staff, he's seen more as an advocate and adviser than manager or leader. He works super-hard, but doesn't delegate.

Some West Wing officials are putting pressure on economic adviser Gary Cohn to stay: He would be vital to a push for a big infrastructure package, one of the year's policy centerpieces. And he's a crucial goalie on trade.

  • But Wall Street sources tell us Cohn may depart.
  • Deputy National Security Adviser Dina Powell — like Cohn, a major moderating influence — has said she's leaving early next year.
  • Finding big establishment names to replace them will be hard, especially with the tax cut already in the win column.
  • If National Security Adviser H.R. McMaster leaves in the dominoes that would follow the expected departure of Secretary of State Rex Tillerson, one possible replacement is hardliner John Bolton, who was U.S. ambassador to the U.N. under President George W. Bush.

Among key advisers likely to stay:

  • Chief of Staff John Kelly, who has imposed order and seems to enjoy running the place, despite occasional frustrations with the boss.
  • Treasury Secretary Steve Mnuchin, who is good at engaging Trump in briefings.
  • Defense Secretary James Mattis, a moderate voice in Situation Room meetings.
  • Communications Director Hope Hicks, the closest adviser — period.
  • Staff Secretary Rob Porter, respected for his intellect and instincts.
  • Marc Short, the legislative affairs director, coming off the big tax-cut win.
  • Nick Ayers, chief of staff to Vice President Pence.

Go deeper ... "Scoop: White House reshuffle expected in new year," by Jonathan Swan:

3. Winging it in the Grill Room

Something unthinkable in previous administrations: an impromptu 30-minute presidential interview, with no aides present:

  • "President Trump spoke ... with a reporter from The New York Times, Michael S. Schmidt. The interview took place in the Grill Room of his golf club in West Palm Beach, Fla., whose noise made some portions at times hard to hear."
  • Schmidt, calling in to "Morning Joe," said Trump was bantering proudly about the tax cut, and the reporter suggested he do it on the record. After eating lunch, POTUS did.
  • "[T]he president sat alone with a New York Times reporter at a large round table as club members chatted and ate lunch nearby. A few times, members and friends — including a longtime supporter, Christopher Ruddy ... — came by to speak with Mr. Trump."
  • It was so improvisational that Schmidt asked: "You're O.K. with me recording, right?" Schmidt asked. POTUS replied: "Yeah."

Among Trump's quotes:

  • "I have absolute right to do what I want to do with the Justice Department. But for purposes of hopefully thinking I'm going to be treated fairly, I've stayed uninvolved with this particular matter [whether the Clinton email investigation should be reopened]."
  • "There was tremendous collusion on behalf of the Russians and the Democrats. There was no collusion with respect to my campaign. I think I'll be treated fairly [by Mueller]. Timingwise, I can't tell you. I just don't know. But I think we'll be treated fairly."
  • "I think it's bad for the country. The only thing that bothers me about timing, I think it's a very bad thing for the country. Because it makes the country look bad, it makes the country look very bad, and it puts the country in a very bad position. So the sooner it's worked out, the better it is for the country."
  • "I don't want to get into loyalty, but I will tell you that, I will say this: Holder protected President Obama. Totally protected him."
  • "I know the details of taxes better than anybody. Better than the greatest C.P.A. I know the details of health care better than most, better than most."
  • "We're going to win another four years for a lot of reasons, most importantly because our country is starting to do well again and we're being respected again. But another reason that I'm going to win another four years is because newspapers, television, all forms of media will tank if I'm not there because without me, their ratings are going down the tubes."
  • "Without me, The New York Times will indeed be not the failing New York Times, but the failed New York Times. So they basically have to let me win. And eventually, probably six months before the election, they'll be loving me because they're saying, 'Please, please, don't lose Donald Trump.'"

Michael Schmidt, on "Morning Joe": "My guess is that the press could catch him every day in a situation like that, he'd tangle and go on as he did yesterday."

4. "Families have been torn apart”

"At least 12 people were killed when a fire fueled by gusty winds tore through a century-old apartment building in the Bronx ... was the deadliest fire in the city ... since an inferno at the Happy Land social club — less than a mile from Thursday's blaze — killed 87 people in 1990," the N.Y. Times reports:

  • "It was a bitterly cold night, with temperatures in the teens, and the wind chill made it feel below zero. Water leaking from fire hoses froze in streaks on the concrete, and displaced residents walked around draped in American Red Cross blankets."

5. The talk of tech

"Apple's response to its iPhone slowdown controversy is good — and a lesson to be more proactive about communicating," Recode editor in chief Dan Frommer writes:

"In an unsigned letter to consumers, ... the company:

  • "Apologized in the first paragraph."
  • "Stated on the record that it has 'never — and would never — do anything to intentionally shorten the life of any Apple product, or degrade the user experience to drive customer upgrades.'"
  • "Announced it was cutting the cost of getting an old iPhone battery replaced out-of-warranty to $29 (seems reasonable) from its previous price of $79 (kind of a lot)."

Why it matters: "[A] little proactive communication could have gone a long way, and should be Apple's big lesson here. If Apple had noted to individual iPhone users that their batteries were getting old — and that it could lead to reduced performance — this probably would have never been an issue."

6. The conversation: "A storm is gathering"

Joe Scarborough writes for The Washington Post: "[T]here is every reason to believe that 2018 will be the most consequential political year of our lives."

[Winston Churchill's 1948] "The Gathering Storm" is on my holiday reading list because of Republican strategist Steve Schmidt's insistence to me that Churchill's ominous warnings to future generations will be more relevant to 2018 than at any time since it was written in the years after World War II.

Churchill: "The malice of the wicked was reinforced by the weakness of the virtuous . . . They lived from hand to mouth and from day to day, and from one election to another . . . The cheers of weak, well-meaning assemblies soon cease to echo, and their votes soon cease to count. Doom marches on."

7. Trump has yet to visit ...

... California, the nation's largest state, as president, the L.A. Times points out in its lead story, by Brian Bennett:

  • "Trump is about to become the first president since Dwight D. Eisenhower 64 years ago to skip a visit to California during his first calendar year in office."
  • "And he doesn't appear to have any plans to take Air Force One to the country's most populous and economically powerful state before he marks his first full year in office Jan. 20.
  • "Even past presidents who, like Trump, didn't win the state's electoral votes made it a destination, if only for California's allure as the Golden State of campaign cash."
  • Why it matters: "For Trump, [California is] ground zero for 'the resistance.'"

8. You can concede, now

Documents certifying the special election, in Montgomery, Ala., yesterday (AP's Brynn Anderson)

Democrat "Doug Jones was certified by Alabama's state canvassing board ... as the winner of the Dec. 12 special election for the U.S. Senate, despite a last ditch legal challenge by opponent Roy Moore," per

  • "Official vote tally: Jones, 673,896, or 50 percent. Moore, 651,972, 48.3 percent and write-ins, 22,852, or 1.7 percent."
  • Why it matters: "Jones' margin increased from the unofficial totals reported on election night, when it stood at 20,715."

9. An epic year: 27 of 30

Reliving 2017 in 30 images ... People fly into the air on Saturday, Aug. 12, as a vehicle drives into a group of protesters demonstrating against a white nationalist rally in Charlottesville, Va.

  • Law enforcement agencies around the country are honing their responses to a string of rallies held by white nationalist groups, AP reported last month.
  • At the heart of the changes is a determination to prevent a repeat of the Charlottesville bloodshed.
  • "Charlottesville Police Chief Alfred Thomas resigned abruptly Dec. 18, ... 17 days after the release of a report that was highly critical of the police department's handling of [the] white-supremacist rally." (WP)

10. 1 😊 thing

Google proposed these emojis showing the diversity of women's careers (Google via AP)

There's 🍞, 🥐 and 🥖. But where's the bagel? AP Tech Writer Barbara Ortutay looks at the emoji approval process (complete with lobbying and campaigning):

  • "How can our emotional vocabulary be complete without a teddy bear, a lobster, a petri dish or a tooth?"
  • "These are the kind of questions that trigger heated debates ... among members of the group burdened with deciding which new emojis make it onto our phones and computer screens each year."
  • "The Unicode Consortium is tasked with setting the global standard for the icons. ... The nonprofit group [is] mostly made up of people from large tech companies like Apple, Google and Facebook."
  • Why it matters: "Not since the printing press has something changed written language as much as emojis have, says Lauren Collister, a scholarly communications librarian at the University of Pittsburgh. 'Emoji is one way language is growing.'"
  • Former N.Y. Times reporter Jennifer 8. Lee "didn't understand how there could be no dumpling. ... The process took almost two years, including research, many meetings and a written, illustrated proposal that reads a bit like an academic paper, complete with research on dumpling history and popularity."
  • "But thanks largely to her efforts, the 🥟 was added to the Unicode Standard this year. "