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Presented by Morgan Stanley: Playbook is POLITICO's must-read briefing on what's driving the day in Washington Aug 31, 2018 View in browser
By Jake Sherman, Anna Palmer and Daniel Lippman

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DRIVING THE DAY
FIRST IN PLAYBOOK -- ONE NATION, a conservative group aligned with Senate Majority Leader Mitch McConnell (R-Ky.), has spent a whopping $39 million this cycle. The group is up with two new ads hitting Sen. Joe Donnelly in Indiana and Sen. Claire McCaskill in Missouri on their support for "illegal amnesty." The McCaskill ad not only dings her for supporting sanctuary cities -- but also features a cameo by House Minority Leader Nancy Pelosi!
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ONE NATION is spending $1.2 million in Indiana and $1.5 million in Missouri on the radio, TV and digital buy. The group is also up with ads in Arizona and Nevada this week. Other states they have targeted this cycle include: North Dakota, Tennessee and West Virginia. The Indiana ad ... The Missouri ad

ALEX ISENSTADT: "'Tough decisions have to be made': House Republicans prepare for pain": "With a massive field of vulnerable House incumbents to defend and limited resources to go around, Republicans are readying for a painful round of political triage -- deciding which lawmakers are worth trying to rescue, and which ones need to be cut loose to fend for themselves in November.

"GOP officials say as many as 45 Republican-held seats are at serious risk, making it impossible to salvage each one in the costly scramble to protect the party's 23-seat minority - especially those members who have waged sluggish campaigns and posted lackluster fundraising totals. ...

"Behind the scenes, senior party strategists have begun polling to determine which incumbents may be beyond saving. Among those most in jeopardy of getting cut off, they say, are Virginia Rep. Barbara Comstock, Pennsylvania Rep. Keith Rothfus, and Iowa Rep. Rod Blum, all of whom are precariously positioned in their districts.

"The party has to date reserved millions of dollars of future advertising time to buttress Comstock and Rothfus. Yet those funds may be diverted to other incumbents viewed as more likely to win in the fall." POLITICO

Good Friday morning. THE PRESIDENT gave a one hour and 10 minute speech last night in Indiana. INDIANAPOLIS STAR: "'We love winners': Donald Trump shares favorite Bobby Knight story, praises former coach"

-- Daniel Dale (@ddale8): "Trump has said twice this month that car companies are moving back to Pennsylvania. Bernard Swiecki of the Center for Automotive Research notes, 'There are no assembly plants in Pennsylvania at all.'"

FOR THE RECORD -- Bloomberg: "Trump Says He'll Keep Sessions Until November Despite 'Illegal' Probe"

-- OK THEN!: "'I don't think they can impeach somebody that's doing a great job,' Trump said Thursday in a White House interview with Bloomberg News. 'You look at the economy, you look at jobs, you look at foreign, what's going on with other countries. You look at trade deals. I'm doing a great job.'" Bloomberg

THE STEP BACK: WAPO'S ASHLEY PARKER -- "'Totally dishonest': Trump asserts only he can be trusted over opponents and 'fake news'": "Over roughly the past day, President Trump has decried the 'totally dishonest' media, with its 'fake news' and 'fake books.' He has argued that Google is biased against conservatives. And he has accused NBC News of 'fudging' the tape of an interview with him that has been available online for more than a year.

"The president has even declared there is no chaos in his White House, which he claimed is a 'smooth running machine' with changing parts,' despite the tumult that emanates almost daily from within its walls.

"Trump's assertions - all on Twitter, some false, some without clear evidence - come just over nine weeks before the midterm elections that could help determine his fate, and they are bound by one unifying theme: All of his perceived opponents are peddling false facts and only Trump can be trusted." WaPo


Evan Vucci/AP Photo via Instagram

SCOOP -- ELIANA JOHNSON, "Top 2008 campaign aides shut out of McCain funeral": "John McCain's funeral will spotlight some of the late senator's political rivals - but some of his closest campaign aides are being excluded from the proceedings. Three of the most prominent members of his 2008 presidential campaign - campaign manager Steve Schmidt, senior adviser Nicolle Wallace and longtime strategist John Weaver - were not invited to any of McCain's services, according to three people familiar with the guest list.

"It's not clear whether McCain ordered the snubbing of formerly high-ranking aides before his death. The McCain family has carefully organized all of the funeral proceedings, which begin Thursday in Arizona and conclude Saturday at the National Cathedral. Invitations were extended on Monday with RSVPs from invitees requested by Tuesday, according to one of the people familiar with the proceedings.

"Tucker Bounds, a former McCain campaign aide and a spokesman for the team organizing the memorial services, declined to comment. After nearly a week filled with eulogies from friends and family remembering McCain's finest qualities, the exclusion of the trio, along with McCain's 2008 running mate Sarah Palin, is a quiet acknowledgment of an unhappier chapter of his life." POLITICO

-- JOHN MCCAIN will lie in state in the Capitol today. The memorial ceremony begins at 11 a.m., and will feature remarks by Speaker Paul Ryan, Senate Majority Leader Mitch McConnell and Vice President Mike Pence.

Presented by Morgan Stanley:

Getting to the core of rising inflation: A new surge in U.S. healthcare costs could position core inflation for its highest year-over-year gain since 2008. Morgan Stanley Research details what this could mean for markets. Read more.

SCOTUS WATCH -- BEHIND THE SCENES: ANDREW RESTUCCIA, ELANA SCHOR and LORRAINE WOELLERT: "Inside Kavanaugh's hearing prep: mock hearings and faux protesters": "On Monday, Kavanaugh participated in his last full moot court session, which lasted nearly the entire day. Sitting in a large office in the Eisenhower Executive Office Building, he took questions from aides who played key members of the committee, mimicking their style of questioning.

"The mock hearing room has been outfitted with a dais, nametags, microphones and a clock with red and green lights meant to keep his answers within the allotted time limit. The sessions, which are often referred to as 'murder boards,' have also featured faux protesters to make sure Kavanaugh stays cool in the event of a mid-hearing outburst.

"Republican Sens. Lindsey Graham (S.C.), Rob Portman (Ohio) and Dan Sullivan (Alaska) have all helped Kavanaugh practice and critique his performance, according to people familiar with the sessions. Another source said that Sen. Orrin Hatch (R-Utah) -- a former Judiciary Committee chairman -- played the role of chairman in a mock hearing, which included GOP senators standing in for Judiciary members and zeroing in on topics that Democrats are expected to grill Kavanaugh about." POLITICO

-- FIRST LOOK: NARAL AIMS NEW SCOTUS AD AT COLLINS, via Elana Schor: The abortion-rights group NARAL Pro-Choice America is launching a new six-figure ad campaign today appealing to Sen. Susan Collins (R-Maine), a key swing vote in the Kavanaugh confirmation battle, and focusing on the Supreme Court nominee's potential to chip away at Roe v. Wade.

The ad features a Maine woman who voted for Collins sharing her personal experience of obtaining an abortion while in an abusive relationship and is set to keep airing through Kavanaugh's confirmation hearings next week, including TV and digital appearances. The ad

2020 WATCH -- KYLE CHENEY: "Amid 2020 speculation, Deval Patrick supporters plan fall push": "Dozens of former aides to Deval Patrick, who's contemplating a presidential bid in 2020, convened a conference call Thursday to discuss ways to amplify the former Massachusetts Democratic governor's message as he campaigns for congressional candidates across the country.

"The call was organized by Reason to Believe PAC, a federal fundraising vehicle launched Wednesday by some of Patrick's closest political advisers during his two terms as governor from 2007 to 2015. The formation of the PAC was the latest sign that Patrick continues to weigh a White House bid." POLITICO

OOPS! ... "Postal Service Improperly Divulged Spanberger's Sensitive National Security File, and Asks for It Back," by NYT's Mike Tackett: "The Postal Service said on Thursday that it 'deeply regrets our mistake in inappropriately releasing' the official personnel file of Abigail Spanberger, a former C.I.A. operative now running as a Democratic candidate for Congress, and requested that a Republican-aligned super PAC return the documents.

"'We take full responsibility for this unfortunate error, and we have taken immediate steps to ensure this will not happen again,' David Partenheimer, a Postal Service spokesman, said in a statement. ... The Postal Service also acknowledged the possibility of additional inappropriate disclosures, but when asked, would not provide details like whether those disclosures involved other candidates for office." NYT

MORE WHITE NATIONALIST TIES ... "Homeland Security staffer with white nationalist ties attended White House policy meetings," by WaPo's Nick Miroff: "Ian M. Smith, a Department of Homeland Security analyst who resigned this week after he was confronted about his ties to white nationalist groups, attended multiple immigration policy meetings at the White House, according to government officials familiar with his work.

"Smith quit his job Tuesday after being questioned about personal emails he sent and received between 2014 and 2016, before he joined the Trump administration. The messages, obtained by the Atlantic and detailed in a report published Tuesday, depict Smith engaging in friendly, casual conversations with prominent white supremacists and racists." WaPo


TRUMP'S FRIDAY -- The president is headed to Charlotte, North Carolina, this afternoon. He will participate in a retirement security event before heading to Carmel Country Club to participate in a roundtable with supporters and attend a joint fundraising committee reception. He will then return to Washington, D.C.

PLAYBOOK ON THE ROAD -- THANK YOU for an amazing contest with all your entries from around the world! We will announce the three winners of signed Matt Wuerker cartoons on Tuesday. This week's entries

-- SOME OF OUR FAVORITES THIS WEEK: KARL ROVE and MARK MCKINNON: On the lower Roaring Fork River below Carbondale, Colorado: "Rove and McKinnon always read the Playbook before we find out who can catch the bigger fish. ... I credit this fish to reading the Playbook." Pic ... JOHN JUDIS and SUSAN PEARSON: Mountainview Lake, Sunapee, New Hampshire. Pic ... MARK A. BLOOMFIELD, president and CEO of the American Council for Capital Formation: Paris. Pic ... STEVE ELMENDORF, partner at Subject Matter: Panther pond in Raymond, Maine. Pic ... TODD BREASSEALE, Obama DHS alum: Silicon Valley. Pic ... BRUCE WOLPE, a Henry Waxman alum: "Enroute from Sydney to Boston for a book event for 'The Committee'
at the American Political Science Association convention." Pic ...

... BEN CHANG: "Reading @playbookplus while in the orthodontist's chair getting my braces off - helps ease the pain! #PlaybookLoyal" Pic ... journalist DAVID A. ANDELMAN: "At the 70th annual Artists & Writers Softball Game on Saturday in East Hampton, Long Island." Pic ... MARK EIN, founder of Venturehouse Group and VP of the U.S. Tennis Association board: "Was catching up on my Playbook reading tonight in the President's Suite at the U.S. Open watching Novak Djokovic beat one of our Kastles players Tennys Sandgren." Pic ... KEVIN BROWNING, manager for Umphrey's McGee: Reading Playbook during soundchecks in New Orleans. Pic

SUNDAY SO FAR ...

NBC

"Meet the Press": Sen. Amy Klobuchar (D-Minn.) ... Sen. Dan Sullivan (R-Alaska) ... Andrew Gillum. Panel: Kimberly Atkins, Matt Continetti, Mark Leibovich and Amy Walter

FOX

"Fox News Sunday": Sen. Lindsey Graham (R-S.C.) ... Sen. Dick Durbin (D-Ill.). Panel: Donna Edwards, Marc Thiessen, Charles Lane and Marc Lotter

CNN

"State of the Union," guest-hosted by Dana Bash: Andrew Gillum. Panel: Rep. Tim Ryan (D-Ohio), Jan Brewer, S.E. Cupp and Bakari Sellers

CNN

"Inside Politics," guest-hosted by Phil Mattingly: Julie Pace, Jonathan Martin, Seung Min Kim and Jeff Zeleny

ABC

"This Week": Panel: Matt Dowd, Cokie Roberts, Shawna Thomas and Rick Klein

CBS

"Face the Nation": John Kerry. Panel: Kelsey Snell, Margaret Talev, Edward Wong and Salena Zito
PLAYBOOK READS


PHOTO DU JOUR: Republican Senate candidate Mike Braun thanks President Donald Trump for his endorsement at a rally in Evansville, Indiana. | Denny Simmons/Evansville Courier & Press via AP

GREAT READ -- ANNIE KARNI in Politico Magazine: "Why Mark Penn Is Sounding Trumpy"

FOR YOUR RADAR -- "Trump administration to end U.S. funding to U.N. program for Palestinian refugees," by WaPo's Karen DeYoung and Ruth Eglash: "The Trump administration has decided to cancel all U.S. funding of the United Nations aid program for Palestinian refugees, part of its determination to put its money where its policy is as it seeks a recalculation of U.S. foreign aid spending and prepares its own Israeli-Palestinian peace plan.

"In an announcement to be made within the next several weeks, the administration plans to voice its disapproval of the way the U.N. Relief and Works Agency, or UNRWA, spends the funds and to call for a sharp reduction in the number of Palestinians recognized as refugees, dropping it from more than 5 million, including descendants, to fewer than a tenth of that number, or those still alive from when the agency was created seven decades ago, according to officials familiar with the decision." WaPo

SPY GAMES -- "Hacking a Prince, an Emir and a Journalist to Impress a Client," by NYT's David D. Kirkpatrick and Azam Ahmed: "The rulers of the United Arab Emirates had been using Israeli spyware for more than a year, secretly turning the smartphones of dissidents at home or rivals abroad into surveillance devices. So when top Emirati officials were offered a pricey update of the spying technology, they wanted to make sure it worked, according to leaked emails submitted Thursday in two lawsuits against the spyware's maker, the Israel-based NSO Group.

"Could the company secretly record the phones of the emir of Qatar, a regional rival, the Emiratis asked? How about the phone of a powerful Saudi prince who directed the kingdom's national guard? Or what about recording the phone of the editor of a London-based Arab newspaper? 'Please find two recordings attached,' a company representative wrote back four days later, according to the emails. Appended were two recordings the company had made of calls by the editor, Abdulaziz Alkhamis, who confirmed this week that he had made the calls and said he did not know he was under surveillance." NYT

THE INVESTIGATIONS -- "Anticipation builds around Mueller as 60-day election window nears," by Josh Meyer: "The window closes next week for special counsel Robert Mueller to take any more bombshell actions before midterm season officially kicks off, and people in the president's orbit and across Washington are watching with heightened anticipation that a final pre-election surprise could come soon.

"Longtime Donald Trump confidant Roger Stone emailed supporters Monday and asked for donations to his legal defense fund, saying he believes his indictment is imminent. The president's personal lawyer, Rudy Giuliani, has publicly called on Mueller to wrap up his investigation into Trump by the end of next week, when the midterms will be two months away." POLITICO

-- "Trump Foundation Says New York State Probe Is Rooted in Political Bias," by WSJ's Rebecca Ballhaus and Corinne Ramey: "A lawyer for President Donald Trump's family foundation on Thursday accused the New York attorney general's office of political bias, claiming the state's former top legal officer used an investigation into the charity to further his own re-election campaign.

"The accusation is the first formal response to a lawsuit filed in June by the attorney general's office, which claimed the president had used the Donald J. Trump Foundation to pay legal settlements, further his campaign and promote his businesses. ... The NYAG raised money and campaigned on a virulently anti-Trump platform,' the filing says. 'The Office he led reflected his antipathy, was conflicted, manifestly partial, and should never have been investigating this case.'" WSJ

Presented by Morgan Stanley:

A new surge in U.S. health care costs could position core inflation for its highest year-over-year gain since 2008. Morgan Stanley Research Chief Cross-Asset Strategist Andrew Sheets details what this could mean for markets. Read more.

WILD TIMES IN SPRINGFIELD ... AARON SCHOCK UPDATE -- "Federal prosecutors replaced in Aaron Schock case," by John Bresnahan: "The Justice Department is replacing the prosecutors overseeing the criminal case against former Rep. Aaron Schock, an unusual move that could delay the proceedings in the case.

"In a court document filed on Thursday, John Childress, the U.S. Attorney for the Central District of Illinois, told U.S. District Court Judge Matthew Kennelly -- himself new to the case -- that the change was being made. Childress didn't specify in the court filing why the prosecutors were being swapped out, although he did say they would not come from his office.

"'The Department of Justice is in the process of reassigning the prosecution of this matter to a different prosecution team outside of the Central District of Illinois,' the document states. 'When the successor prosecution team is assigned, it will take some time for the attorneys to become familiar enough with the facts of this case, the charges brought and the procedural history to appropriately respond to the pending motions, to determine whether to file new motions, and to otherwise prepare the case for trial.'

"Schock's trial is scheduled to begin in January. It's not clear now whether the trial will actually start then." POLITICO

MEDIAWATCH -- "Ronan Farrow's Ex-Producer Says NBC Impeded Weinstein Reporting," by NYT's John Koblin: "[A] producer who worked closely with Mr. Farrow has accused the network of putting a stop to the reporting, saying the order came from 'the very highest levels of NBC.' Rich McHugh, the producer, who recently left his job in the investigative unit of NBC News, is the first person affiliated with NBC to publicly charge that the network impeded his and Mr. Farrow's efforts to nail down the story of Mr. Weinstein's alleged sexual misconduct. He called the network's handling of the matter 'a massive breach of journalistic integrity.' NBC denied his characterization on Thursday, saying Mr.
Farrow's work was not broadcast-ready when the reporter decided to take his reporting to The New Yorker. ...

"Mr. McHugh, 43, described NBC as 'resistant' throughout the eight-month reporting process, a characterization disputed by the network. Last August, he said, it seemed that the network was no longer supporting the story. 'Three days before Ronan and I were going to head to L.A. to interview a woman with a credible rape allegation against Harvey Weinstein, I was ordered to stop, not to interview this woman,' Mr. McHugh said. 'And to stand down on the story altogether.' The producer would not disclose which executives had given him that direction. But by doing so, the network was, in his view, 'killing the Harvey Weinstein story.'" NYT

-- "Sources: NBC Threatened Ronan Farrow if He Kept Reporting on Harvey Weinstein: Ronan Farrow had already left NBC News. But a top lawyer at the network threatened to smear him if he continued to pursue the Hollywood mogul, multiple knowledgeable sources say," by the Daily Beast's Maxwell Tani and Lachlan Cartwright. Daily Beast
PLAYBOOKERS
BIRTHDAY OF THE DAY: Brian Johnson, a principal at the Vogel Group and an API alum. How he's celebrating: "Anyone who knows me, knows how much I love the outdoors: specifically the North Carolina outdoors. So, my wife and I are at our family beach house in the Outer Banks for two weeks and we've had several groups of friends come down and spend some time with us. A lot of beach time, great local seafood, and zero cable news." Playbook Plus Q&A

BIRTHDAYS: Tommy Vietor, cohost of "Pod Save America," host of "Pod Save the World" and founder of Crooked Media (hat tip: Ben Chang) ... NYT politics editor Patrick Healy ... Michael Finnegan ... Ryan Stanton of Rio Tinto ... Hillary DeParde (hubby tip: Dick Keil) ... Lauren Fine, press secretary for Steve Scalise ... former Rep. Marlin Stutzman (R-Ind.) is 42 ... NYT congressional correspondent Tom Kaplan ... Politico's Kim Hefling and Paul Demko ... Ed Goeas, president and CEO of the Tarrance Group, is 66 ... Rachel Oliver ... Lenny Stern ... Politico Europe's Mathilde Ciocci ... Alison Schwartz ... Paul Garrahan ... Jennifer Shutt ... Ryan Ellis ... Mattie Duppler, president and founder
of Forward Strategies (h/t Drake Springer) ... Alex Schriver, SVP of public affairs at Targeted Victory (h/t Zac Moffatt) ... Rep. Tom Suozzi (D-N.Y.) is 56 ...

... Christopher Dickey, Paris-based foreign editor for The Daily Beast ... Meghan Barr ... Jess Levin ... Nick Horowitz ... Fox News' Leland Vittert ... Justin Meyers ... Alison Fox ... Ramzi Nemo ... Jordan Ball ... Kaylin Minton ... Sam Merchant ... Ida Rukavina ... Brian Garcia ... Lori Stith ... Tim Marchman ... Adam Dolin (h/t Michael Knopf) ... West Foster ... Neil Alpert ... Bennett Resnik, manager of gov't relations/regulatory affairs at Cardinal Infrastructure ... Elizabeth Pemmerl ... Elizabeth Whitehouse ... Kent Klein ... Jill Rackmill ... Beth Roberts ... Iris Krasnow ... John Leary ... Liz Kurantowicz ... Ethan Gray ... Steve Smith ... Tricia Yates ... Scott Shalett ... Karisa
Johnson ... Barb Helmick ... Philip Smucker (h/ts Teresa Vilmain)


Presented by Morgan Stanley:

Tighter monetary policy has led to greater volatility this year; from the Volatility Index unwind in February, to emerging markets weakness in April, to the wobble in Italian bonds stemming from recent political uncertainty in the country. But something is different this time. For much of the last nine years, easy policy was accompanied by low inflation, which gave central banks a great deal of room to maneuver. However, the inflation picture is now changing. Thanks to rising oil prices, headline inflation is now 1.9%Y in the eurozone and 2.5%Y in the U.S. But this isn't just about the effects of oil prices, which are arguably transitory. Core inflation is rising too. And for the most
important inflation measure-U.S. Core Personal Consumption Expenditures-for the most watched central bank (the Fed), there is a major change afoot that could keep core inflation higher. Read more.

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