Axios Sneak Peek
March 04, 2018
Welcome to Sneak Peek, our weekly lookahead for both ends of Pennsylvania Avenue, plus my best scoops. I'd love your tips and feedback: [email protected]. And please urge your friends and colleagues to join the conversation by signing up for Sneak Peek.
1 big thing: The "globalist" purge—inside the Oval's most feral fight
The biggest, loudest, ugliest fights in President Donald Trump’s Oval Office have been about trade.
This culminated last week. But the war — between Peter Navarro’s economic nationalist camp and Gary Cohn’s free trader-cohort — has been roiling the White House for months.
- It came to a head in the Oval Office in January of this year, when Cohn, Navarro, Rob Porter, Wilbur Ross and John Kelly sat in chairs around the Resolute Desk for another standoff.
Cohn and Porter argued on one side, and Navarro and Ross fought on the other. (This was an adhoc meeting so the other senior officials who are against Navarro and Ross — James Mattis, Rex Tillerson, and Steven Mnuchin — were not in the room.)
Cohn tried to argue that these tariffs would ruin Trump's record-setting stock market streak and wipe away benefits of tax reform. But Trump kept saying Cohn was a "globalist" while he himself was an economic nationalist.
- After making his points, Cohn said there was no point continuing the argument given he'd laid out the facts. He moved to the couches and asked Ross and Navarro: "Where are your facts?"
- Cohn later told associates he believed Navarro and Ross were lying to the president. Asked about this, a Commerce spokesman retorted: "The facts that form the basis for this decision are laid out in the two 232 reports that Secretary Ross submitted to the President. No one has refuted the facts in those reports." (Cohn and others told associates that Ross didn't properly analyze the negative downstream impacts of the steel tariffs.)
Navarro argued that Trump needed to protect the domestic industry, promote American jobs and show the world we were going to be tough on trade and this was the best way to do it. Porter argued tariffs would hurt the manufacturing industries that use steel and aluminum as inputs, tax American consumers, roil global markets, alienate allies and lead to retaliation.
Trump sat and watched the fight. He occasionally interjected, saying things like "I need to take care of my base," "You can't have a country without steel," and "Peter, what do you say to that argument?" By the end, Trump told Porter he didn't realize he was such a "globalist."
In the end, Trump decided he needed more information about the economic effects of aluminum and steel tariffs, which wouldn’t be ready for a while. So the White House would focus on tariffs targeted at China.
- This is an important point: Porter and Cohn were determined to prevent Trump from using an arcane section of trade law — Section 232 — to invoke a national security crisis to impose steel and aluminum tariffs.
- They thought they'd got Trump to agree to a sequence: first impose tariffs on solar panels and washing machines (already done); then impose tariffs on hundreds of Chinese products to punish China for stealing American intellectual property (this action was imminent); then only impose the steel and aluminum tariffs after that (though in their minds hopefully Trump would be satisfied after whacking China so hard and wouldn't feel the need to go further.) Lastly, they were considering an investigation into unfair foreign treatment of American car companies.
In the interim, the Porter disaster happened, and Trump became more and more agitated with the direction of the White House. The day Hope Hicks announced her departure, he was hopping mad, raging at Jeff Sessions and furious about the avalanche of negative stories about Jared Kushner. Trump was angry, agitated, and fed up. So he cut “the globalists” out of the picture, told Ross and Navarro to bring him the tariffs he'd been demanding for months, and made the announcement.
- The process was so rushed that the tariffs don’t actually exist yet — the details haven’t been ironed out or legally vetted. The interagency process effectively died with Porter's departure — though several senior White House officials have told me they think Porter and Cohn were being too clever by half and were never going to succeed at staving off the president's wishes for hardline tariffs on steel and aluminum. The president promised his people tariffs and he demanded them from his staff for months.
Bottom line: Cohn’s move to the couch, and Porter's departure, foreshadowed their defeat. And now that the White House’s inner battle seems at a standstill, a trade war may be poised to start.
- But a note of caution to the celebrating nationalists: If this rollercoaster process is how we got here, is this how it stays? Since there was no paper for the president to sign, when the lawyers go through it and Trump sees the reaction, does he still stick to 25 percent and 10 percent tariffs on everybody? We're betting Trump sticks to his tariff numbers but don't rule out carve outs for certain allies (even though Trump doesn't want to.) This fight is far from over.
2. Shulkin on the edge
The chaos in the White House is overshadowing the chaos at Veterans Affairs — which is truly extraordinary, since what's happening at the VA right now is NUTS.
The short version: After the VA's inspector general reported that VA Secretary David Shulkin used taxpayer dollars to pay for his wife to go to Europe, the VA secretary has been telling anyone who will listen that Trump appointees in his agency are conspiring to undermine him. He started handling his own media relations because he doesn't trust the agency's communications staff. And he told Politico the White House gave him the green light to "purge" his agency (a senior White House official told me they did no such thing, and aren't letting Shulkin fire Trump appointees).
Senior White House officials are losing confidence in Shulkin. One told me it would be "an understatement" to describe Shulkin's position as precarious. "A small, little, tiny breeze would push him over the edge," the official said. "If there’s any hint of anything wrong" in the next inspector general's report, "I don’t imagine he hangs on."
- The White House has been befuddled by Shulkin's media appearances. Senior officials were especially furious when he told Politico that he had their blessing to clean house.
- A senior White House official told me it was nonsense that Kelly authorized a purge, and that the White House made that clear to Shulkin when it blocked him from firing Trump appointees John Ullyot and Curt Cashour.
The Daily Beast reported last week that another IG report may come out in the next few weeks that could also damage Shulkin. The White House will have little tolerance for even a whiff of further evidence that Shulkin has been improperly using taxpayer funds for personal activities.
Behind the scenes: Last Monday morning, some of Shulkin's allies who lead veteran service organizations visited the White House armed with arguments to defend the secretary. They met with Kelly in the Roosevelt Room.
- About halfway through the meeting, Rick Weidman, the co-founder of the Vietnam Veterans of America, told Kelly he thought political appointees at the VA were undermining Shulkin.
- According to a source familiar with the meeting, Weidman tried to appeal to Kelly as a fellow military man. He compared Shulkin's situation to that of a military unit and said you need cohesion and proper chain of command, and that you can't have subordinates undermining the leader of the unit.
- After listening to Weidman, Kelly didn't give him the response he was clearly looking for. "From my standpoint," Kelly replied, "you just made an argument to fire Shulkin."
- Kelly told Weidman that every time he was in command of a unit or leading a group, he was always able to get people on board with what he was trying to do and get them to accomplish the mission together. He wasn't impressed by the notion that Trump's political appointees were to blame for Shulkin's fate.
Bottom line: The meeting ended with Kelly telling the veterans group leaders that the president still has confidence in Shulkin.
- White House deputy press secretary Hogan Gidley gave this response to details in this story: “The President has confidence in Secretary Shulkin. Under the President’s leadership, the Secretary has worked to reform the VA so it can better provide our nation’s heroes with the care they rightfully deserve.”
- VA press secretary Curt Cashour told me that "nothing will distract the President, the Secretary and the Department from finding the best ways to provide care and benefits to our country’s heroes."
Why this matters: Of the federal agencies, only the Department of Defense is larger than Veterans Affairs.
What's next: Shulkin, his deputy and his new chief of staff are meeting Monday with Kelly. They will have plenty to talk about. I've yet to meet a senior White House official who genuinely believes Shulkin is long for this world.
3. Scoop: Mueller's hit list
Axios has reviewed a Grand Jury subpoena that Robert Mueller's team sent to a witness last month.
What Mueller is asking for:
- Mueller is subpoenaing all communications — meaning emails, texts, handwritten notes, etc. — that this witness sent and received regarding the following people:
- Carter Page
- Corey Lewandowski
- Donald J. Trump
- Hope Hicks
- Keith Schiller
- Michael Cohen
- Paul Manafort
- Rick Gates
- Roger Stone
- Steve Bannon
The subpoena asks for all communications from November 1, 2015, to the present. Notably, Trump announced his campaign for president five months earlier — on June 16, 2015.
Bottom line: In December, the president's lawyer Ty Cobb told me the White House would be free of the Mueller investigation "shortly after the first of the year absent some unforeseen delay." We know very little about what's keeping the investigators so busy, but the breadth of this subpoena means Mueller's team could easily stumble into goodies about Trump's inner circle given so many people are coughing up material. (Cobb didn't respond to a request for comment.)
4. Rudy's tasteless Hillary joke
On Friday night, President Trump entertained around 250 Republican donors in his Mar-a-Lago ballroom. Spotted in the audience: Trump's lawyer Michael Cohen, who recently admitted to paying $130,000 to porn star Stormy Daniels.
The most shocking moment of the evening came when Trump brought his old pal Rudy Giuliani onto the stage.
Giuliani told the crowd he had been down there for Trump's wedding. "Hillary was also here," he said, according to two sources in the room, "and she actually fit through the door.”
The crowd gasped. I'm told Giuliani's wife gave him a "most foul look."
Trump later told the audience: "I'm just glad I didn't say it."
5. Sneak Peek diary
Today, Jared Kushner, Jason Greenblatt and Ambassador Friedman checked in with Prime Minister Netanyahu at Blair House, a White House official told me. "They discussed the Administration's ongoing peace efforts and related matters in advance of the President's meeting with the Prime Minister tomorrow."
This week, the House will reauthorize the Federal Communications Commission (FCC) for the first time since 1990.
The Senate will confirm three more district court judges on Monday. Mitch McConnell then pushes forward on legislation to relax some regulations on banks. Senate Banking Committee Chairman Mike Crapo sponsors the bill. (The House has already passed its version of the bill.)
- Per Bloomberg: "one of the biggest rewrites of financial industry rules since the Dodd-Frank Act was passed nearly eight years ago."
- Expect fierce debate this week, which will expose divisions within the Democratic conference. A group of at least 10 moderate Democratic senators — including some, like Jon Tester of Montana, who are vulnerable in this year's midterms — back the bill.
- But most of the Democratic conference — including leader Chuck Schumer and, most vocally, liberal firebrand Elizabeth Warren — oppose the bill.
President Trump's schedule, per a White House official:
- Monday: The President and First Lady host the Prime Minister of Israel and Mrs. Netanyahu. Trump also meets with UN ambassador Nikki Haley.
- Tuesday: Trump hosts the Prime Minister of Sweden.
- Thursday: Trump holds a Cabinet meeting.
- Friday: Trump meets with Defense Secretary James Mattis.