Nov 11, 2018

Axios Sneak Peek

By Jonathan Swan
Jonathan Swan

Welcome to Sneak Peek, our weekly lookahead for both ends of Pennsylvania Avenue, plus my best scoops. I'd love your tips and feedback: And please urge your friends and colleagues to sign up for Sneak Peek.

  • 📷 Tonight on “Axios on HBO” (6:30 p.m. ET/PT): Inside the flood of new
    investigations about to hit Trump ... Impeachment pressure ... The new
    way women ran — and won.
1 big thing: Trump wants no more relief funds for Puerto Rico

Illustration: Lazaro Gamio/Axios

President Trump doesn't want to give Puerto Rico any more federal money for its recovery from Hurricane Maria, White House officials have told congressional appropriators and leadership. This is because he claims, without evidence, that the island’s government is using federal disaster relief money to pay off debt.

  • Trump also told senior officials last month that he would like to claw back some of the federal money Congress has already set aside for Puerto Rico's disaster recovery, claiming mismanagement.

The White House didn't comment on this reporting.

  • Between the lines: Trump won't be able to take away disaster funds that have already been set aside by Congress, and sources close to the situation tell me the White House hasn't asked Republican lawmakers to do so. But Trump could refuse to sign a future spending bill that would make more money available for Puerto Rico's recovery.

Behind the scenes: In late October, Trump grew furious after reading a Wall Street Journal article by Matt Wirz, according to five sources familiar with the president's reaction. The article said that "Puerto Rico bond prices soared ... after the federal oversight board that runs the U.S. territory’s finances released a revised fiscal plan that raises expectations for disaster funding and economic growth."

  • Sources with direct knowledge told me Trump concluded — without evidence — that Puerto Rico's government was scamming federal disaster funds to pay down its debt.
  • On Oct. 23, Trump falsely claimed in a tweet that Puerto Rico's "inept politicians are trying to use the massive and ridiculously high amounts of hurricane/disaster funding to pay off other obligations."
  • At the same time, White House officials told congressional leadership that Trump was inflamed by the Wall Street Journal article and "doesn't want to include additional Puerto Rico funding in further spending bills," according to a congressional leadership aide. "He was unhappy with what he believed was mismanagement of money," the aide said.
  • A second source said Trump misinterpreted the Journal article, concluding falsely that the Puerto Rican government was using disaster relief funds to pay down debt.
  • A third source said Trump told top officials in an October meeting that he wanted to claw back congressional funds that had previously been set aside for Puerto Rico's recovery. "He's always been pissed off by Puerto Rico," the source added.

Trump's wariness about sending federal money to Puerto Rico dates back to the beginning of his administration. In early 2017, when negotiating the omnibus spending bill, Democratic congressional leaders were pushing Trump to bail out Puerto Rico's underfunded health care system that serves the island's poorest citizens.

  • Trump insisted in the negotiations that he wouldn't approve anything close to the level of funds Nancy Pelosi and other Democrats requested, according to two sources involved. (And he didn't.)

The bottom line: Congress took steps to keep disaster relief funds from being used to pay down the island's debt, and as Bloomberg reported at the time, "neither the island's leaders — nor the board installed by the U.S. to oversee its budget — are proposing using disaster recovery aid to directly pay off bondholders or other lenders."

Why it matters: Congress will have to pass a new package of spending bills in December. Hill sources say the package may include a bill to send more federal money to disaster areas. Trump has told aides he believes too much federal money has already gone to Puerto Rico — more than $6 billion for Hurricane Maria so far, according to FEMA. (The government projects more than $55 billion from FEMA's disaster relief fund will ultimately be spent on Maria's recovery.)

  • In comparison, per the NYT, "when Hurricane Katrina hit the Gulf Coast in 2005, Congress approved $10 billion for the Federal Emergency Management Agency four days later, and another $50 billion six days later. The federal government is still spending money on Katrina assistance, more than 12 years after the storm’s landfall."

Trump often blames Democratic-controlled states for the fallout from their natural disasters. On Saturday, Trump threatened "no more Fed payments" for California to deal with its deadly fires unless the state addresses what Trump claims is "gross mismanagement of the forests."

2. Inside Trump's car obsession

Illustration: Lazaro Gamio/Axios

Trump is as jazzed as ever about hitting foreign-made cars with steep tariffs. Just about every member of his senior economic team besides Peter Navarro believes this is a terrible idea. But they haven’t swayed him.

Instead, with each passing month, his zest for car tariffs only swells.

Between the lines: Trump now views the threat of car tariffs as his best leverage over negotiating partners. He has privately told aides that he got a better trade deal with Canada because he threatened Prime Minister Justin Trudeau with car tariffs. And he says the same about the Europeans, according to sources briefed on his thinking.

  • "Trump says gleefully that the moment he started talking about maybe tariffs on cars, that [European Commission President Jean-Claude] Juncker got on the fastest plane known to mankind, comes straight over to Washington and starts offering deals," a senior European official told me. "This tells Trump that car tariffs is real leverage."
  • But, but: The Europeans haven't made any serious concessions to the Americans, and Trump is bound to get frustrated as the talks sputter on. Trump's lead trade negotiator, Robert Lighthizer, hasn't yet persuaded the Europeans to open their markets to U.S. agricultural products.
  • European officials walked away from their conversations with Trump at the UN General Assembly meeting with the impression that he was fixated on auto tariffs and unhappy about America's trade deficit with the EU.

What we're hearing: Trade law dictates that Defense Sec. James Mattis must provide a national security justification for any new auto tariffs. A source who spoke to Mattis more than a month ago said he was deeply skeptical about the idea, worrying that big new car tariffs could further strain relationships with allies. Mattis has not, however, made any final decision.

  • Reached for comment, Pentagon spokeswoman Dana White said, "We do not discuss internal deliberations."

Behind the scenes: There's no sense in the top ranks of the White House that these tariffs are imminent. But Trump still talks about them, so some aides worry he could get impatient one day and force their hand like he did with the steel and aluminum tariffs.

3. Voting rights redux

The Washington Post's Dave Weigel writes in the latest edition of his superb campaign newsletter "The Trailer":

  • "For the first time since the Supreme Court's Shelby decision, Democrats will have a majority in the House of Representatives. You can expect them to use that to try to pass a revised Voting Rights Act, arguing that the problems of 2016 and 2018 belied the court's theories that racial discrimination is no longer enough of a problem to justify the Department of Justice watching over state changes to their voting laws. 
  • "While Republicans would control the Senate, Democrats believe they could put pressure on the number of Republicans facing voters in swing states two years from now."
4. White House clears hurdle on criminal justice reform

President Trump speaks at Police Chiefs Convention. Photo: Paul Hennessy/NurPhoto via Getty Images

Legislation designed to reduce federal prison sentences for some non-violent crimes and to help prisoners prepare for freedom is inching its way toward the Senate floor. And it just got a big boost from an unlikely ally: rank-and-file police.

The Fraternal Order of Police — the largest law enforcement labor organization in the U.S. — announced Friday its support of a bipartisan Senate criminal justice reform bill, which would lower certain mandatory sentences, incentivize prison rehabilitation programs, provide sanitary products to women and potentially release around 4,000 people.

Why it matters: Part of the challenge for reform advocates like Jared Kushner has been persuading hard-liners such as Sen. Tom Cotton and President Trump that the bill could win the support of law enforcement and wouldn’t undermine public safety, a person familiar with the negotiations tells Axios. FOP's endorsement clears a significant hurdle, Axios' Stef Kight writes.

Another advantage: Jeff Sessions was arguably the administration’s single-most effective opponent of this kind of legislation. His departure means reformers have one less barrier.

The big picture: Senate Majority Leader Mitch McConnell has said he would have a whip count on the bill after the midterm elections and has indicated he would bring it to the floor if can get more than 60 votes. Republicans close to leadership believe criminal justice reform could pass the Senate during the lame duck, but this is far from certain and hard-liners like Cotton will be difficult if not impossible to win over.

  • Trump has previously expressed openness to the Senate's approach. But he has also expressed concerns the bill could anger his base, as he ran as the tough-on-crime candidate, according to one person familiar with negotiations.
  • Kushner and his allies have been arguing that these prisoners will be released anyway, so they should have the best chance to get jobs and build new lives after their incarceration.

Criminal justice reform is one of only a few policy issues that can win broad bipartisan support. A narrower version of the bill focused on rehabilitation and re-entry programs passed the House 360-59 in May.

  • Since then, four provisions addressing harsh federal sentencing guidelines have been added during Senate negotiations at the insistence of Judiciary Chairman Chuck Grassley, Senate Democrats and others — though the final language of this version of the bill has not yet been released. Including those changes makes it less likely some hard-line conservatives will get on board.
5. What's next: House leadership elections

Nancy Pelosi. Photo: Zach Gibson/Getty Images

House Republicans and Democrats will soon elect their leaders to take them through the 2020 elections. Here’s a read of the field, from well-placed Republican and Democratic sources:

Republicans go first, holding their leadership elections on Wednesday.

  1. Kevin McCarthy is expected to be the minority leader. His only challenge comes from the Freedom Caucus' Jim Jordan, and nobody seriously expects Jordan to trouble him. This will be McCarthy's first time in charge of the Republican conference. But he has experience helping Republicans win back power. As chief deputy whip, McCarthy played a key role in recruiting the class of Republican candidates that flipped the House in 2010.
  2. Steve Scalise, who is popular within the conference, will be the minority whip. There was plenty of speculation that he would challenge McCarthy for the top job, but he's chosen not to.
  3. Liz Cheney of Wyoming is expected to be the House Republican Conference chair.
  4. Insiders consider Rep. Tom Emmer of Minnesota the leading contender to run the House Republicans' campaign arm, the National Republican Congressional Committee.

House Democrats plan to hold their leadership elections on Nov. 28.

  • Nancy Pelosi is the overwhelming favorite for speaker and doesn’t currently face a serious challenger. Many Democrats consider her the best person to keep the caucus disciplined enough to balance investigations of the Trump administration with an ambitious agenda. And some of the most powerful progressive groups and leaders — including EMILY's list, Planned Parenthood and AFL-CIO leader Richard Trumka — have endorsed her.
  • Steny Hoyer of Maryland is expected to continue as majority leader.
  • Jim Clyburn of South Carolina is expected to be the house majority whip. Colorado Rep. Diana DeGette is challenging him, running on the idea that Democrats need to "repay" the trust of female voters by electing more women to leadership. The Congressional Black Caucus backs Clyburn, and DeGette’s bid seems ill-fated.
  • Cheri Bustos of Illinois is a favorite to lead the Democratic Congressional Campaign Committee. She'd be the only member of Democratic leadership from a Trump district, and she has made that understanding of red America a key part of her pitch for the job. Reps. Denny Heck, Suzan DelBene and Sean Patrick Maloney are also vying for the job. All four are members of the moderate New Democrat Coalition.
6. Sneak Peek diary

Congress returns to session after the midterms.

The House has a light floor schedule this week, with Republicans holding their leadership elections on Wednesday. Expect plenty of non-controversial items including "the posthumous award of a Congressional Gold Medal to Rabbi Michoel Ber Weissmandl in recognition of his acts of valor during World War II."

The Senate will take up the Coast Guard reauthorization bill, which includes a lot of local priorities for waterway states across the country, according to a congressional leadership aide.

  • The Senate will also vote to confirm Trump's nominee, Michelle Bowman, to the Federal Reserve board of governors.
  • And Senate Republicans will hold their leadership elections on Wednesday.

President Trump's schedule, per a White House official:

  • Tuesday: Trump participates in the Diwali Ceremonial Lighting of the Diya.
  • Wednesday: Trump has lunch with Secretary of State Mike Pompeo.
  • Thursday: Trump visits Marine Barracks, Washington, D.C., and addresses the Supporting Veterans and Military Families through Partnership Conference.
  • Friday: Trump presents the Medal of Freedom.
Jonathan Swan