Axios Sneak Peek

Rep. Ro Khanna (D-Calif.) lambasted Sen. Kyrsten Sinema (D-Ariz.) today, saying "it's insane" that "one senator" is blocking attempts to settle on a palatable figure for President Biden's proposed $3.5 trillion budget reconciliation package, Axios' Alayna Treene, Jonathan Swan and Sarah Mucha report.

Why it matters: The figure is the linchpin to getting progressive support for the companion $1.2 trillion bipartisan infrastructure package. Khanna's statement reflects broader dissatisfaction among House progressives with Sinema and her fellow holdout, Sen. Joe Manchin (D-W.Va.).

What we're hearing: Khanna and fellow progressive Reps. Veronica Escobar (D-Texas) and Jamie Raskin (D-Md.) suggested to Axios that Sinema is the bigger threat to a final deal — decrying what they argue is a lack of transparency and candidness.

• Khanna vented semi-publicly to participants on Yale's semiannual conference call with its CEO Caucus. He branded Sinema's evasiveness as "insane" and an inordinate amount of power for "one senator," two participants told Jonathan.
• Khanna reiterated his opinion later during an interview with Axios, saying progressives "absolutely" need to worry about Sinema more than Manchin.
• "Manchin has always been reasonable," he said. "At the end of the day, he'll do what's needed for the party, he always has."

The other side: “Sen. Sinema is negotiating in good faith directly with President Biden and Sen. Schumer, not through the press,” Sinema’s spokesperson, John LaBombard, told Axios.

• Manchin’s office declined to comment.

Driving the news: The president twice with Sinema and once with Manchin today at the White House, as Democratic lawmakers seek to settle on a final, lower number for what began as a $3.5 trillion spending bill. Sinema returned to the White House a third time tonight.

• Biden also canceled a planned trip to Chicago tomorrow so he can continue to lobby in Washington.
• The meetings came as House Speaker Nancy Pelosi (D-Calif.) is trying to cobble together a deal this week between key progressives and moderates.
• Neither camp wants to commit unless Senate Democrats, who already passed the $1.2 trillion bill, also pass the larger Democratic spending bill.
• The question is whether progressives will yield if Senate Democrats give a firm outline of any deal they'll accept for the bigger bill — which they hope to pass on a purely party-line vote sometime this fall.

Keep reading.

What's next: All eyes are on Thursday's planned vote in the House in the $1.2 trillion package that already passed the Senate with bipartisan support.

• While a series of progressives continue to insist they need a vote on the bigger reconciliation bill first, others, like Khanna, think a specific verbal commitment will suffice.

🚨 Breaking: "McAuliffe says he thinks the $3.5 trillion price tag for the spending bill is 'too high,'" @juliamanch tweets tonight.

A tweak to U.S. export restrictions is letting a prominent Chinese tech company sidestep measures designed to punish the firm over its alleged involvement in the repression of Muslims within the country, according to records reviewed by Axios' Lachlan Markay.

Why it matters: The artificial intelligence company SenseTime's strategy to bypass those measures shows how companies deemed national security risks — or accused of complicity in human rights abuses — can bypass U.S. restrictions.

The backstory: In 2019, the Commerce Department added SenseTime to its Entity List, barring it from doing business with most U.S. companies absent a license.

• Commerce said SenseTime was "implicated in human rights violations and abuses in China's campaign targeting Uighurs and other predominately Muslim ethnic minorities in the Xinjiang Uighur Autonomous Region."
• Last year, the Commerce Department's Bureau of Industry and Security made a subtle tweak to the designation. The company on the Entity List was changed from SenseTime generally to Beijing SenseTime, one of its subsidiaries.
• According to the company, that's left its business largely unencumbered. The designation "has not had any material adverse impact on the [parent company's] business," it recently told potential investors.
• That statement was buried in a 672-page prospectus filed last month ahead of an IPO in Hong Kong.
• It was first flagged by the surveillance technology news outlet IPVM, which shared its findings exclusively with Axios.

How it works: Entity List restrictions, designed to punish "activities contrary to U.S. national security and/or foreign policy interests," apply only to the specific companies named by BIS — not to their parent or sister firms.

• SenseTime attorneys at the firm Hughes Hubbard & Reed concluded that only Beijing SenseTime was restricted from doing business with U.S. firms.
• In its prospectus, SenseTime assured potential investors the designation will not hamper its business. It also said it has put in place "a series of export control compliance measures for the entire Group, in abundance of caution."

What they're saying: "Beijing SenseTime’s placement on the Entity List was the result of information available to the Department of Commerce and the End User Review Committee," a Commerce spokesperson told Axios.

• "The Department of Commerce, with its interagency partners continually reviews available information, including whether parties are receiving items subject to the [Export Administration Regulations], to assess whether parties should be added to the Entity List," the spokesperson wrote in an email.
• SenseTime did not respond to Axios' inquiries. The company told IPVM it has "established an export control compliance program to ensure compliance with the relevant US export control laws."

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In a rare show of bipartisanship, the House voted 361-66 today in favor of the EQUAL Act — a bill that would eliminate sentencing discrepancies between offenses for crack and powder cocaine.

Why it matters: For decades, much smaller amounts of crack than powder cocaine have triggered mandatory minimum sentences of at least five years, despite them being different forms of the same drug. And that's fueled a significant racial disparity in drug-sentencing outcomes, Axios' Stef Kight writes.

• 77% of those arrested for and convicted of crack trafficking in 2020 were Black, compared to 27% for powder cocaine, according to the U.S. Sentencing Commission. 64% of powder cocaine offenders were Hispanic.
• More than half of traffickers for either kind of cocaine received at least five-year sentences. There have been fewer crack than powder cocaine offenders in recent years, but the crack offenders have received more prison time, on average.

Between the lines: Both Rep. Rashida Tlaib of Michigan, a progressive Democrat, and Rep. Louie Gohmert of Texas, a conservative Republican, spoke Tuesday afternoon in support of the bill.

• Their unity showed that while the police reform debate remains partisan and contentious, other efforts at criminal justice reform have garnered more bipartisan support in recent years.

How we got here: A law passed in 1986 created the same mandatory minimum sentences for crimes with 5 grams of crack and 500 grams of powder cocaine — a 100:1 disparity.

• In 2010, that disparity was reduced to 18:1 through the Fair Sentencing Act.
• In 2018, in the First Step Act, that reduced disparity was made retroactive, allowing more than 3,700 incarcerated people — almost all Black — to reduce their sentences and thousands to be released early.
• If the EQUAL Act passes the Senate, the disparity would be eliminated both for future offenses as well as retroactively. The Biden administration's acting director of National Drug Control Policy has voiced support for the bill.

What to watch: The dynamic duo on criminal justice reform — Sens. Dick Durbin (D-Ill.) and Chuck Grassley (R-Iowa) — are working on a larger package that could include measures to address cocaine sentencing disparities.

President Biden sold his strategy for getting out of Afghanistan on uniformity of support. Today, the people in uniform contradicted him, Axios' Zachary Basu reports.

Driving the news: Joint Chiefs Chairman Gen. Mark Milley and Gen. Frank McKenzie, head of U.S. Central Command, testified they recommended keeping 2,500 troops in Afghanistan to prevent the collapse of Afghan security forces.

• Milley went a step further, suggesting the president shouldn't have put a date certain — Aug. 31 — on the U.S. withdrawal. "Make it conditions-based," the top U.S. general told senators during a newsy five-hour hearing alongside Defense Secretary Lloyd Austin.

Flashback: The question of whether Biden ignored the advice of his military advisers before the chaotic withdrawal from Kabul came up during a recent interview the president granted to ABC's George Stephanopoulos.

• "No, they didn't; it was split. That wasn't true," Biden said when asked whether Pentagon leaders recommended he keep a residual force in Afghanistan.
• The advisers didn't argue against pulling out all troops under a specific time frame, Biden insisted. "No one said that to me, that I can recall."

The contradictions from top Pentagon brass today didn't stop there.

• "Al Qaeda is still in Afghanistan. They were there in mid-August," Milley said when asked about Biden's claim on Aug. 20 that the U.S. has no interests in Afghanistan now that the terrorist group was "gone."
• The outcome of the war was "a strategic failure," Milley said bluntly. "The enemy is in charge of Kabul; there's no way else to describe that."
• As to whether America’s credibility has been damaged, Milley said: "I think that our credibility with allies and partners around the world, and with adversaries, is being intensely reviewed by them to see which way this is going to go. And I think that 'damage' is one word that could be used, yes.”
• "The war on terror is not over, and the war in Afghanistan is not over," McKenzie testified, undermining the central message in Biden's address last week to the UN General Assembly.

For the record: White House press secretary Jen Psaki said Tuesday that Biden "values the candid advice" of his military advisers but that doesn't mean he always agrees with them.

• She also correctly noted the two generals, as well as Secretary Austin, testified that remaining in Afghanistan past Aug. 31 would have required an additional troop surge to fight the Taliban.

Between the lines: Despite Republican senators' success in drawing out tacit criticism of Biden, former President Trump arguably took worse blows.

• McKenzie told senators "the primary accelerant to lowering morale and general efficiency of the Afghan military" was the peace agreement the Trump administration negotiated with the Taliban.

Keep reading.

"Saturday Night Live" kicks off its 47th season this week with a new cast member who does a pretty good impersonation of a former president.

• James Austin Johnson also delivers an accurate take on a favorite Saturday cartoon.