Axios AM

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February 15, 2017

1 big thing: "Constant touch"

Here's a twist that has top GOP sources buzzing: On Jan. 26, Sally Yates, then the acting attorney general, tells the White House that national security adviser Mike Flynn -- who has just been grilled by FBI agents -- had, in fact, discussed sanctions with the Russian ambassador during the transition, despite denying it, and therefore is vulnerable to Russian blackmail.

Four days later, on Jan. 30, Trump fires Yates, citing her unwillingness to enforce his border order.

Two weeks after her heads-up to the White House, the Flynn secret explodes.

"They had to know she was radioactive, and that there would be consequences," said a West Wing confidant. "It was either reckless, or totally incompetence. It leads back to the fact that nobody is in charge."

A top source described "borderline chaos" in the White House.

"Some staff is in survival mode ... scared to death," the source said.

Internal leaks distract a White House. What we're seeing now is something much more consequential: leaks from throughout the government, plus a host of Obama alumni emptying their clips.

The news eruptions are gaining a Watergate aura -- constant, complicated revelations from intelligence agencies and federal law enforcement; White House denials; frenzied competition among the great news organizations.

Chuck Todd said at 5 p.m. on MSNBC (as quoted by Brian Stelter): "Welcome to Day 1 of what is arguably the biggest presidential scandal involving a foreign government since Iran-Contra. ... [H]unker down, because this is a Class 5 political hurricane that's hitting Washington."

Hours later, first from The New York Times, and then from CNN: "Trump aides were in constant touch with senior Russian officials during campaign."

And Trump has known that since the transition, per CNN's Pamela Brown, Jim Sciutto and Evan Perez: "President-elect Trump and then-President Barack Obama were both briefed on details of the extensive communications between suspected Russian operatives and people associated with the Trump campaign and the Trump business."

The Russia connection now becomes a consequential, ongoing story -- with not just threads for Dems to pull, but a whole new big ball of yarn.

Axios's Jonathan Swan reports that Pence's spokesman, Marc Lotter, said the V.P. only learned of Flynn's misleading statements from the Washington Post's story Thursday night.

And Swan reminds us of an overarching unanswered question: "Why did it take so long for the President to request Flynn's resignation?"

In a twist, Bloomberg's well-wired Eli Lake takes up for Flynn (and gets a "POLITICAL ASSASSINATION" Drudge banner): "[F]or a White House that has such a casual ... relationship with the truth, it's strange that Flynn's 'lie' to Pence would get him fired. It doesn't add up. It's not even clear that Flynn lied."

So does this change now? An AP overnighter ... "For GOP, a dimmed zeal for investigations in Trump era," by Erica Werner: "Rather than go along with Democrats' call for an independent outside investigation [of Flynn resignation -- what Trump knew, and when], Senate Republicans insisted ... that the Intelligence Committee could look at the circumstances as part of an existing probe into Russia's interference in the presidential election."

2. Freeze frame

A stop-action New York Times front-pager by Michael Shear, "'Unbelievable Turmoil': Trump's First Month Leaves Washington Reeling," rewinds the past three weeks: "In record time, the 45th president has set off global outrage with a ban on travelers from Muslim-majority countries, fired his acting attorney general for refusing to defend the ban and watched as federal courts swiftly moved to block the policy, calling it an unconstitutional use of executive power."

"The president angrily provoked the cancellation of a summit meeting with the Mexican president, hung up on Australia's prime minister, authorized a commando raid that resulted in the death of a Navy SEAL member, repeatedly lied about the existence of millions of fraudulent votes cast in the 2016 election and engaged in Twitter wars with senators, a sports team owner, a Hollywood actor and a major department store chain. His words and actions have generated almost daily protests around the country."'

And all that was before firing his national security adviser on Day 25.

Leon Panetta, a Democrat who served as chief of staff, secretary of defense and C.I.A. director during a 50-year career that spanned nine presidents from both parties, to Shear: "I've never been so nervous in my lifetime about what may or may not happen in Washington."

"I don't know whether this White House is capable of responding in a thoughtful or careful way should a crisis erupt .... You can do hit-and-miss stuff over a period of time. But at some point, I don't give a damn what your particular sense of change is all about, you cannot afford to have change become chaos."

3. Another shoe (store) drops

ABC's Jonathan Karl tweets that at yesterday's briefing when he asked about contacts between the Trump campaign and Russia, Sean Spicer "stood by earlier denials. Or I think he did."

Spicer said: " I don't have any -- there's nothing that would conclude me -- that anything different has changed with respect to that time period."

Well, now he does. The N.Y. Times drops combustible new information under a two-column lead headline, "Trump Aides Had Contact With Russian Intelligence: U.S. Officials Tell of a Flurry of Phone Calls Intercepted Before the Election," by Mike Schmidt, Mark Mazzetti and Matt Apuzzo: "

  • "Phone records and intercepted calls show that members of ... Trump's ... campaign and other Trump associates had repeated contacts with senior Russian intelligence officials in the year before the election."
  • "American law enforcement and intelligence agencies intercepted the communications around the same time they were discovering" that Russia was" hacking the DNC.
  • "[T]he intercepts alarmed American intelligence and law enforcement agencies, in part because of the amount of contact that was occurring while Mr. Trump was speaking glowingly about the Russian president."

4. Something else to fix

USA Today White House correspondent Greg Korte, who focuses on executive power as part of his portfolio, reports in the paper's lead story today, "White House posts wrong orders": "The White House has posted inaccurate texts of President Trump's own executive orders on the White House website, raising further questions about how thorough the Trump administration has been in drafting some of his most controversial actions."

  • The paper's findings: "at least five cases where the version posted on the White House website doesn't match the official version sent to the Federal Register. The differences include minor grammatical changes, missing words and paragraph renumbering — but also two cases where the original text referred to inaccurate or non-existent provisions of law."
  • Why it matters: The discrepancies look minor, but are a new symptom of a process that has looked hasty. Republicans on the Hill, and even West Wing officials, have complained that some orders were signed with too little vetting, consultation or explanation.

5. Why Obamacare repeal is suddenly a huge mess

Axios' Caitlin Owens, who's constantly on the Hill (ran into her yesterday when I was boarding the Senate subway), paints the GOP's trouble ahead in the starkest terms we have seen: "Despite Republican leaders' insistence that the Obamacare repeal effort is making steady progress, deep rifts have split the caucus. Hardliners in both the House and the Senate have threatened to oppose any repeal that isn't aggressive enough, which could kill the effort in both chambers if a bill loses either conservatives or moderates."

  • Hurdle 1: "Perhaps the most irreconcilable issue among different factions is, of all things, Medicaid expansion."
  • Hurdle 2: "While the [hardline] House Freedom Caucus won't say it collectively opposes including pieces of a replacement in the repeal bill, it prefers a straight repeal — even though the leadership is already planning to include replacement."
  • The bottom line: "Put it all together and it's a tenuous path forward, at best. At worst, the repeal effort is falling apart."

6. GOP lawmakers "a bit unnerved"

And now, the backstory on how we got here ... Robert Draper's cover story of the upcoming N.Y. Times Magazine, "Will Obamacare Really Go Under the Knife?," adds to evidence that Trump's base is headed for disappointment, with the GOP unlikely to end up with "a single gargantuan replacement bill."

Get smart fast:

  • The Affordable Care Act's approval rating has rarely exceeded 50%. "And over time, ... it has proved itself worthy of several of the criticisms aimed at it."
  • "In spite of all this, Obamacare has done far more good than its critics predicted it would."
  • This is key: "[D]uring each month that Obamacare has been in existence, the private sector has grown."
  • Phrase that pays: 3 million Americans under 26 have been allowed to stay on their parents' health care plans, thanks to the provision the conservative group Heritage Action refers to as the "slacker mandate."
  • The raw politics: "[I]t took more than the conservative base to elect Donald Trump, and it will take more than them to re-elect many Republican senators and representatives in 2018 and 2020. The rest of the public has begun a decided turn against" full repeal.

7. Trending in business: Bank boom

Big banks, after nearly a decade of defensiveness, have roared back since the election. A Wall Street Journal front-pager, "Boom Time for Bank Stocks As Goldman Regains Peak," by Liz Hoffman and Christina Rexrode, captures the post-crisis milestones:

  • The winners: Goldman Sachs Group Inc., J.P. Morgan Chase & Co. and Bank of America Corp. hit fresh trading milestones yesterday that seemed unreachable during the crucible of the financial crisis.
  • The records: "Goldman hit a record high, passing a bar first set in 2007 before the financial crisis. J.P. Morgan also hit an all-time closing high. ... Bank of America's market value is on the cusp of retaking it's all-time high."
  • The reason: "Investor expectations of higher interest rates, lower taxes, lighter regulation and faster economic growth under the Trump administration."
  • The result: $280 billion in combined market value added to the nation's six largest banks since Nov. 8 ... "Bank stocks overall have outperformed broader stock markets since the election."

8. Tops in tech: Behind the screen

When Jim VandeHei, Roy Schwartz and I were doing our listening tour as we refined the big idea for Axios, one of the most frequently recommended sources of tech news was the Stratechery newsletter by Taiwan-based Ben Thompson, who focuses on tech companies' business strategy.

Recode's Peter Kakfa interviewed Ben at yesterday's Code Conference in California, with highlights in "How Ben Thompson built Stratechery into a one-man publishing empire":

  • The genesis: "Thompson was working at Microsoft when he started the publication in 2013, and launched his subscription business — currently $10 per month, or $100 per year — in 2014." He now has subscribers in 30 countries.
  • Ben's big quote: "People underestimate the scale of the internet ... Certainly I work hard, but the amount of work I'm doing today is the exact same amount of work I was doing three years ago. The only difference is my income is 100 times higher. And it's because that $10 scales, and it scales very, very well."

9. White House tours back

With requests and complaints from the Hill piling up as the customary post-inaugural suspension stretched on, First Lady Melania Trump announced that White House tours will return March 7:

  • Tours of public areas are self-guided, and requests for a ticket must be submitted through a member of Congress.
  • The route includes the Blue, Red and Green Rooms, the State Dining Room and the East Room.
  • Tours are offered 7:30 to 11:30 a.m. Tuesday through Thursday, 7:30 a.m. to 1:30 p.m. Friday and Saturday.
  • More info here.

10. 1 fun thing

Esquire says Daniel Humm, a Swiss 40-year-old, is the greatest chef in America -- and that his Eleven Madison Park (11 Madison Ave., in the Flatiron District/Midtown South, at East 24th Street) is the best restaurant in America and may soon be #1 in the world. Jeff Gordinier, the magazine's Food and Drinks Editor, in the March issue:

"Eleven Madison Park ... is celebrated around the world for a casual clockwork opulence ... a vein of white-tablecloth grandeur that supposedly went out of style a long time ago. When people talk about the food there, they talk about a delirium of pleasure, a rush of extravagance that's usually associated with the Old World. ...

"Eat at Eleven Madison Park and a bartender will wheel a cocktail cart alongside your table to make you a manhattan as deftly balanced as Philippe Petit on a tightrope; a snowy globe of celery root will come hot and tender out of an inflated pig's bladder before being bathed in a truffled sauce; a sommelier will open a bottle of wine by firing up a pair of tongs with what looks like a Bunsen burner and then squeezing the hot tongs right below the cork to melt the glass; for dessert, a torrent of blue flame will pour down the white slopes of your Baked Alaska."