Feb 4, 2018

Axios Sneak Peek

By Jonathan Swan
Jonathan Swan

Welcome to an early, Super Bowl Sunday edition of Sneak Peek, our weekly lookahead for both ends of Pennsylvania Avenue, plus my best scoops. I'd love your tips and feedback: jonathan@axios.com. And please urge your friends and colleagues to join the conversation by signing up for Sneak Peek.

1 big thing... House GOP: more memos to come

Photo: Drew Angerer/Getty Images

"The memo" — which pitted the Justice Department against the White House and brought ugly partisan sniping into stark relief — is only the beginning.

Republican sources close to Devin Nunes tell me he's assured them there's much more to come. The House Intelligence chair and his team have told members and associates they've found other examples of politically motivated "wrongdoing" across various agencies, including the FBI, the broader Justice Department, and the State Department.

What we're hearing: Republicans close to Nunes say there could be as many as five additional memos or reports of "wrongdoing." But a source on the House Intelligence Committee tells me there's no current plan to use the same extraordinary and highly controversial process they just went through, with a vote and ultimately a presidential approval to declassify sensitive information.

  • A Republican member briefed on Nunes' investigations told me: "There are several areas of concern where federal agencies used government resources to try to create a narrative and influence the election. Some have suggested coordination with Hillary Clinton operatives, [Sidney] Blumenthal and [Cody] Shearer, to back up the false narrative."

I'm told the Nunes team has discussed producing additional reports or disclosures that don't require declassification.

  • Nunes hinted at what's coming next in an interview with Fox News anchor Bret Baier on Friday.
  • Baier asked Nunes if more memos are going to come out. "Yeah, so this completes just the FISA abuse portion of our investigation," Nunes replied. "We are in the middle of what I call phase two of our investigation, which involves other departments, specifically the State Department and some of the involvement that they had in this.”

Names you'll hear a lot more often: A Republican source briefed on Nunes’ investigations told me some of the work focuses on the activities of two longtime backers of Bill and Hillary Clinton: Sid Blumenthal and controversial activist Cody Shearer. The Guardian has reported that the FBI reviewed a second Trump-Russia dossier which Shearer — an ally of Bill Clinton’s White House back in the ‘90s — put together.

Philippe Reines, Hillary Clinton’s closest aide for more than a decade, told me he has never heard of Shearer.

2. Republican resurgence?

Photo: Mark Wilson/Getty Images

A month ago, Republicans across the country were deeply dejected and grim, expecting a Midterm wipeout with Democrats flipping the House and then quickly moving to impeach President Trump. Now, that conventional wisdom is starting to shake.

Three things have happened since late December:

  • Republicans have tightened the gap with Democrats on the generic congressional ballot, from double digits to about 7 points.
  • Trump's approval ratings have risen from the high 30 percent range to the mid 40 percent range.
  • The Republican tax bill has gone from being woefully unpopular to marginally supported by voters.

Between the lines: Most forecasters still predict Democrats will win the 24 seats they need to flip the House. Democrats have history and retirements on their side; according to Politifact, "In midterms since 1862, the president's party has averaged losses of about 32 seats in the House and more than two seats in the Senate."  

  • But there are a few reasons it’s wildly premature to predict a wipeout. Trump is riding a booming economy and voters are starting to feel the benefits of tax cuts in their paychecks. The conventional wisdom that the popularity (or unpopularity) of that bill is "baked in" doesn’t gel with recent polling.
  • Public polls on tax cuts have moved substantially in the right direction for Republicans. At the start of January, Gallup found that just 33 percent of voters approved of the tax cuts bill, while 55 percent disapproved. But public polls later that month — Fox and Monmouth — show that split narrowing to 38/37 and 44/44.

Republican internal polls mirror that, according to Ryan Mahoney at the RNC and Brian Walsh at the pro-Trump group America First Policies. Mahoney said the tax bill has gained favorability both nationwide and in key congressional districts.

  • One example, per Mahoney: In Pennsylvania's 18th congressional district, in late November 2017, 40% of voters thought tax reform would benefit the middle class and voters like themselves, while 48% thought it would benefit the 1% (net = -8).  In the most recent round, however, it was now right side up with a 45-44 split (net = +1).

Be smart: For Democrats, big Midterm wins are far from guaranteed.

3. Shutdown, the sequel

Congress continues to stagger from near-shutdown to near-shutdown, with the government set to run out of money on Thursday. Leadership sources tell me they expect to seal yet another short-term funding deal to keep the government sputtering along while leaders of both parties try to compromise on the toughest items: defense spending, domestic spending levels, and an immigration deal.

  • Republican leadership sources expect the ultra-conservative House Freedom Caucus to oppose the funding bill, which means they'll need Democratic votes to keep the government open.
  • One source said they will attach disaster relief funding and "a grab bag of health-related spending” to sweeten the deal for Democrats, with the biggest expenditure on community health centers.

Sources in Republican and Democratic leadership tell me they've still not agreed on how long the temporary bill will last. They're currently discussing dates in late March. Then we'll lurch back to crisis mode.

Bottom line: The next month will be a mess, and it's hard to predict the outcome. Democrats and Republicans are trying to pass a massive spending deal to dramatically boost defense spending and inflate other domestic spending. It'll be expensive, add to the national debt, and further undermine the notion that Republicans are the party of fiscal discipline. They'll also need to raise the debt ceiling, while aiming to fund the border wall and protect DACA recipients.

A source close to Republican leadership texted that they don’t expect any other big legislative successes before the midterms.

"My general premise is the whole rest of the year is going to be them holding things together with chicken wire and duct tape,” he wrote.

A GOP leadership source rebutted: "There’ll still be big things to get done but obviously nothing will be bigger than tax reform. It’s the biggest thing in 30 years."

4. Sneak Peek diary

President Trump's schedule this week:

  • Monday: Trump meets with Vice President Pence, then he and the First Lady travel to Cincinnati, Ohio. 
  • Tuesday: Trump participates in a law enforcement round table.
  • Wednesday: Trump meets with the new Secretary of Health and Human Services, Alex Azar.
  • Thursday: Trump meets with the president of Guatemala; Trump will deliver remarks at the National Prayer Breakfast; he'll meet with Defense Secretary Mattis and he'll have lunch with the Secretary of Veterans Affairs​​ David Shulkin.
  • Friday: ​Trump meets with the Secretary of State Tillerson and has a separate meeting with EPA Administrator Scott Pruitt.

The House and Senate need to cut a deal to keep the government funded beyond Thursday.

  • The Senate will have a confirmation vote on Monday for Andrei Iancu to be Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office.
  • Negotiations continue on budget caps and immigration. 
5. 1 potentially done thing: State Department Steve

Tillerson in Mexico City. Photo: Hector Vivas/Getty Images

A little-known State Department spokesman named Steve Goldstein has won the universal loathing of White House staff. He's the mystery official who told reporters last week that "The president's comments [to Homeland Security officials] were not helpful," per a source briefed on the situation.

  • The backdrop: On Friday, while Secretary of State Tillerson was visiting Mexico City trying to convince officials there that his boss's immigration plan wasn't so bad, Trump was delivering a much harsher message about illegal immigrant drug pushers to Homeland Security officials in Virginia.

White House staff want him canned: Unprompted, a senior White House official sent me a screenshot of Goldstein's quote. "What's 'not helpful' is that people who aren't willing to do their duty and support the president's agenda are being allowed to keep their jobs," the official texted.

  • "What kind of dumbass diplomat makes a comment like that, knowing how the president of the United States will react when he sees it?” the official added. “They prove his point, and shoot themselves in the foot, every time they do something like this."

Other administration officials say they believe Goldstein has a history of exacerbating tensions between the White House and the State Department. They point to comments he made to the NYT and other newspapers about the Jerusalem embassy move that were seen as unhelpful in the lead-up to the vice president's recent trip to Israel.

Asked about this, Goldstein replied: "In the nine weeks since being sworn in I have had only one goal: to support the Secretary of State and this administration as we work to support America’s foreign policy.  Ultimately we all work for the American people, and that’s how I spend my day."

Our thought bubble: It's Steve Goldstein vs. the world — and we're betting on the world.

Jonathan Swan