Tillerson remains on thin ice in Trump WH, sources say

Secretary of State Rex Tillerson’s future in the Trump administration is looking increasingly uncertain, an administration source told CNN.

“I would say the ice continues to thin,” the source said. “The question is when does it actually break.”

During a Sunday interview with CNN’s Jake Tapper on “State of the Union,” Tillerson maintained that he’s fully committed to the job. He said he wouldn’t dignify confirming or denying reports indicating that he called President Donald Trump a “moron” in a private conversation with fellow US officials following a meeting with the President at the Pentagon.

While Tillerson has repeatedly declined to flatly deny using the insult to describe Trump, Heather Nauert, a State Department spokeswoman, has denied Tillerson ever called the president a “moron.”

When the “moron” story became public, Health & Human Services Secretary Tom Price had just resigned over his private jet use on the federal government’s dime. Senior Republican sources say Tillerson wasn’t axed then because White House chief of staff John Kelly didn’t want to reinforce the “chaos” theme surrounding the high turnover rate within the administration.

Multiple senior Republican sources say they don’t expect Tillerson to last past January. Some names being floated to replace Tillerson include U.S. Ambassador to the UN Nikki Haley and CIA Director Mike Pompeo.

While Haley has long been mentioned as a contender, some members of the administration are lobbying against her and don’t want her to have such a highly visible job, the GOP sources said.

Pompeo, who briefs the president nearly every day, may be the leading candidate for State, the senior Republican sources said. And Sen. Tom Cotton, R-Arkansas, who garnered support from Trump for his immigration bill, has also been mentioned as a possible replacement for Pompeo at the CIA were he to succeed Tillerson at State, the sources said. Axios first reported the possibility of Cotton taking over at CIA.

Tillerson has also faced critics within the Republican Party, namely, outgoing Tennessee Sen. Bob Corker, who told The Washington Post last week the president “cannot publicly castrate your own secretary of state without giving [himself] that binary choice.”

Corker referenced public statements from the President — including a recent tweet regarding North Korea in which he said Tillerson was “wasting his time” on diplomatic efforts with the U.S. foe — suggesting they undermined the secretary’s efforts.

Behind the scenes, the senior Republican sources say Trump and Tillerson strongly dislike each other — especially following the “moron” incident.

But Tillerson and Trump both say they get along just fine. Trump has said he has confidence in the secretary, and Tillerson has repeatedly stated that he is committed to executing the president’s objectives.

Follow this story

Inspector general says Mnuchin did not fly on government plane to New York

Treasury Secretary Steven Mnuchin did not use a government plane to fly to a meeting with President Donald Trump in New York in August, the agency’s inspector general confirmed Monday.

New travel documents provided to the agency’s inspector general show that Mnuchin, along with his chief of staff, and Justin Muzinich, a counselor to the secretary, flew to New York aboard an American Airlines flight on the morning of August 15, according to a memo from Rich Delmar, general counsel for the inspector general’s office.

The inspector general requested additional travel records from Treasury last week after learning the agency had not provided an accurate portrayal of Mnuchin’s trip to New York that day. Previous travel records provided by Treasury had not specified that Mnuchin had taken a commercial flight to New York’s LaGuardia airport from Washington D.C. to meet with the President in Trump Tower.

“The memo stated, that the Secretary used a military aircraft both ways for his August 15 trip to New York to meet with the President. But an October 10 media inquiry suggested that he flew commercial up to New York,” according to the inspector general’s memo.

Monday’s memo from Delmar did not offer an explanation for the discrepancy by Treasury. A Treasury spokesperson could not be immediately reached for comment.

The inspector general’s office said separate costs were incurred for the other Treasury personnel, along with the Secret Service traveling with Mnuchin, on the American Airlines flight. Those costs were estimated to be less than $100 per seat.

A separate military aircraft carrying government personnel also took off from Washington that day bound for New York, Treasury’s general counsel told the inspector general’s office, according to the memo.

Mnuchin and his chief of staff traveled on the military aircraft on the return flight from New York because Mnuchin was planning to hold a classified phone conversation with Secretary of State Rex Tillerson, according to the records reviewed by the inspector general’s office.

Mnuchin’s return flight from New York was one of seven he completed on military jets. It was detailed in a report released earlier this month by the inspector general.

According to the report, Trump requested that Mnuchin join him that day at Trump Tower in Manhattan to discuss tax reform and tariffs. The meeting was initially scheduled for Bedminster, New Jersey, where the president has a golf property, but it was later relocated.

Follow this story

Sgt. Bowe Bergdahl pleads guilty to desertion

Sgt. Bowe Bergdahl pleaded guilty to desertion and misbehavior before the enemy via his attorney Monday.

Bergdahl was charged after he disappeared from his base in Afghanistan in June 2009 and was held in captivity by the Taliban until May 2014.

The Taliban released Bergdahl in a prisoner swap for five detainees at Guantanamo Bay.

During questioning from a judge Monday, Bergdahl said, “I left my observation post on my own.” He also said, “I understand leaving was against the law.”

Developing story – more to come

Follow this story

Trump allies worry that losing House means impeachment

Top White House aides, lawmakers, donors and political consultants are privately asking whether President Donald Trump realizes that losing the House next year could put his presidency in peril.

In more than a dozen interviews, Republicans inside and outside the White House said conversations are ramping up behind the scenes about whether Trump fully grasps that his feuds with members of his own party and a shortage of legislative achievements could soon put the fate of his presidency at risk.

Donors who trekked to Jackson Hole, Wyoming, in support of House Speaker Paul Ryan were treated to a slideshow late this summer to fundraise off those very fears, according to multiple attendees. Among the slides: An overview of the Democrats who would be tapped to lead key committees if the GOP loses control, including Rep. Elijah Cummings as the head of the House Oversight Committee.

To some attendees, the subtext was clear. If Republicans forfeit the House, Democrats will almost certainly create a spectacle that will derail conservatives’ agenda and the remainder of Trump’s first term — a spectacle complete with a raft of new subpoenas, a spotlight on the Russia investigation and, many are convinced, impeachment proceedings.

“When Democrats take control of the House they will absolutely move for articles of impeachment,” one Trump confidant predicted.

Alex Conant, a partner at GOP public affairs firm Firehouse Strategies, said Trump should focus on protecting his own party.

“The number one thing Trump should be doing to save his presidency is helping congressional Republicans maintain their majorities,” Conant said. “Instead he’s allowing his allies like Steve Bannon to really undermine Republican reelection campaigns. It’s just reckless and politically naive considering how devastating it would be to his presidency.”

Conant served in George W. Bush’s White House when Democrats swept control of the House and Senate in the 2006 midterm elections — and remembers the constant stream of investigations and subpoenas, a stream he said is sure to look more like a deluge in the Trump administration.

“It just cripples your agenda. You’re constantly forced to play defense,” Conant said.

The primary problem

Republican handwringing over losing control of the House has played out largely in public. But in the hushed conversations that follow, Republicans have wondered whether Trump fully grasps the misery Democrats could unleash on his presidency.

A number of Republicans asked not to have their names used in order to speak candidly about a sensitive topic.

“If we lose the House, he could get impeached. Do you think he understands that?” one top GOP donor recalled an exasperated Republican senator saying privately.

“Won’t it be ironic that Steve Bannon helped get the president elected and impeached?” another top Republican official said in a moment of venting.

Bannon, who served in the White House as Trump’s chief strategist before he was fired in August, is planning to field primary challengers against nearly every Republican senator up for reelection.

“Right now, it’s a season of war against a GOP establishment,” Bannon proclaimed at the socially conservative Values Voter Summit over the weekend.

It’s the latest in a string of political calculations that are set to backfire on the president, some Republicans warned.

“It will be on steroids, the amount of lawyers, investigations, inspector generals that come out of the woodwork” if Democrats win back the House, predicted Sara Fagen, who served as Bush’s White House political director. “It will be very debilitating in a way they don’t understand yet.”

Marc Short, director of legislative affairs at the White House, said the White House hasn’t resigned itself to the notion of losing the House.

“We don’t have a defeatist approach on this,” Short said. “There’s no doubt that history suggests that there’s sort of a recalibration after the first midterm, but I don’t think we view it as that means it has to go that way.”

And he insisted the president is cognizant of the havoc Democrats could cause if they regain control of the House.

“I think the president’s keenly aware of that,” Short said, adding that he expects Democrats would move forward with articles of impeachment if they win the majority.

GOP operatives are already envisioning Trump family members and acquaintances being dragged up to Capitol Hill over months to testify.

“Once the House is lost, then it just becomes, ‘Let’s look into Don Jr.’s tweets, let’s subpoena his country club locker,'” one GOP strategist quipped. “Nothing is going to get done.”

“It’s so much more painful than going right to a proceeding of impeachment,” another senior Republican operative added.

Another GOP congressional aide predicted the Democrats would make Trump’s life a “living hell.”

Top White House officials have openly discussed the threat of impeachment among themselves, multiple sources said. And to many, the risk to Trump’s presidency is obvious. But White House personnel are loath to broach the topic with the president, sources said.

“Nobody over there is interested in delivering really bad news to the president on a consistent basis,” the GOP operative said, particularly when it comes to the potential for impeachment proceedings. “Like, ‘hey, this could be a real thing. You shouldn’t be so dismissive about it, because Chuck (Schumer) and Nancy (Pelosi) aren’t your friends.'”

The uphill impeachment process

Booting the president out of office is exceedingly difficult, a point conceded by even some of Trump’s fiercest critics.

If Democrats win the House, they could vote on articles of impeachment. If at least one of those articles garners a majority vote, the president is technically impeached, as was the case with former President Bill Clinton in 1998.

Then the issue moves to the Senate, which conducts a trial presided over by the Supreme Court’s chief justice. If two-thirds of the Senate finds the president guilty, he is removed and the vice president becomes president.

No American president has ever been removed from office via the impeachment and conviction process.

While Trump may not be overly preoccupied with the threat of impeachment, he has been livid about what he sees as Congress’ inability to execute his campaign promises.

“The Congress has been frustrating to him,” retired Gen. John Kelly, Trump’s chief of staff, told reporters in the White House briefing room Thursday, lamenting the sluggish pace of the legislative process. “In his view, the solutions are obvious, whether it’s tax cuts and tax reform, health care, infrastructure programs, strengthening our military.”

In response to that frustration, the president has begun making as many changes as he can unilaterally. He announced he was ending the Deferred Action for Childhood Arrivals program, which protected young immigrants brought to the US illegally as children.

Last week, he began to chip away at Obamacare with an executive order that overhauls the insurance system. He chased it with an announcement that the administration plans to end subsidies to insurance companies that help low-income Americans pay for health care.

Trump also said he had no intention of certifying Iran’s compliance with the nuclear deal, punting the issue to Congress to determine whether to reimpose sanctions on Iran and scrap the deal.

Still, the moves fall short of a signature legislative accomplishment. They also risk charges of hypocrisy after Republicans, including Trump, spent years hammering Obama for governing via pen and phone rather than through Congress.

“The most important factor for how the Republican Party does in 2018 is whether we cut middle-class taxes or not,” said Corry Bliss, the executive director for the Congressional Leadership Fund and American Action Network. “The Republican Party controls the government and we’re going to be judged on delivering results.”

Slow progress on the Hill

Trump’s approach to governing via executive action highlights the precarious situation the president’s team has found itself in, roughly a year before the 2018 midterms, after multiple failed attempts to repeal and replace Obamacare and on the precipice of a tax reform fight that is far from a surefire victory and could easily spill over into next year.

“We’re really proud of the successes that he’s had so far but they’re really limited to the things he controls and oversees directly,” Nick Ayers, chief of staff to Vice President Mike Pence, said of the president’s accomplishments to a room full of donors recently, according to a recording obtained by Politico. “We’re really frustrated with what our Republican Congress has not been able to do.”

Even as some of Trump’s allies see little culpability on the president’s side, many on the opposite end of Pennsylvania Avenue take a different view. They see a president who has done little to sell his agenda since taking office. Instead, he has cut deals with Democrats, sparred with top-ranking Republicans and stood by as Bannon takes aim at sitting senators. All moves that are hindering his legislative progress and, Republicans fear, squandering the GOP’s window of opportunity while it controls both the House and Senate.

In his speech to GOP donors, Ayers served up a dim projection for the midterms: “We’re on track to get shellacked next year,” he said.

He implored donors to “purge” Republican lawmakers who don’t line up behind Trump’s agenda. And, perhaps in a sign of the West Wing’s defiance or political naiveté, he offered a glossy assessment of the president’s fate.

“The president’s going to be fine,” Ayers declared.

Follow this story

Trump campaign subpoenaed over sexual assault allegations

Lawyers for one of the women who have accused Donald Trump of sexual assault subpoenaed his campaign for all documents relating to her, all communications with or about her and “all documents concerning any woman who asserted that Donald J. Trump touched her inappropriately.”

This comes in the case of Summer Zervos, a former contestant on “The Apprentice” who accused Trump of sexually assaulting her in 2007. The accusations were made in October of last year at a news conference.

Zervos claims Trump kissed her twice on the lips during a lunch meeting in his New York City office and on a separate occasion in Beverly Hills, she alleges he kissed her aggressively and touched her breast.

In a statement at the time, Trump denied these claims.

“To be clear, I never met her at a hotel or greeted her inappropriately a decade ago. That is not who I am as a person, and it is not how I’ve conducted my life. In fact, Ms. Zervos continued to contact me for help, emailing my office on April 14 of this year asking that I visit her restaurant in California,” Trump said.

Trump also dismissed Zervos’ and another woman’s accusations at a rally, calling them “total fiction,” “all false stuff” and said that there is a “concerted effort” to take down his campaign.

The subpoena, issued in March, is just coming to light now and is part of a defamation lawsuit filed by Zervos in January in the New York State Supreme Court against Trump following his denials.

Buzzfeed News first reported the existence of the subpoena.

The subpoena was served to the campaign, but Zervos’ lawyers and the campaign agreed to suspend the response date until after a motion to dismiss the lawsuit is decided, Mariann Wang, one of her attorneys, told CNN. She said campaign officials gave assurances that the documents be preserved which they did.

Information about the subpoena was entered into the court record as part of a filing in which Zervos’ attorneys argued against dismissal of the suit.

Attorneys for Trump said the suit “… has no legal merit,” that these were “fame-seeking accusations” and argued the lawsuit should be dismissed. In a motion, his lawyers said because this is a state lawsuit it cannot proceed against a sitting president.

“Ms. Zervos does not and cannot state a cause of action for defamation under California law, which applies here because Ms. Zervos is domiciled and was purportedly injured there. The allegedly defamatory statements were made during a national political campaign that involved heated political debate in political forums. Statements made in that context are properly viewed by courts a part of the expected fiery rhetoric, hyperbole and opinion that is squarely protected by the First Amendment,” his lawyers argued in a court motion.

His lawyers also said if the case isn’t dropped at least it should be stayed until he leaves office.

Also representing Zervos is Gloria Allred, who has represented many women in sexual harassment cases, and appeared with Zervos at her original news conference in October.

Trump’s attorneys, who referenced her as part of the filing, have said the subpoena is overly broad. “Ms. Allred has served a far-reaching subpoena on the Trump campaign that seeks wholly irrelevant information intended solely to harass the President. Indeed, Ms. Allred herself has questioned how the President could run the country if faced with broad discovery.”

While Trump’s attorneys have said Zervos’ allegations are politically motivated, her lawyers disagreed.

“Contrary to Defendants’ spin, this case is not about robust political debate. Ms. Zervos was not a political opponent, nor was she a political commentator routinely engaged in criticizing candidates,” Zervos’ attorneys countered in a court filing last month. “She came forward to report the details of Defendants’ unwanted sexual battery only after he repeatedly lied publicly about his behavior. Defendant then used his international bully pulpit to violate her for a second time.”

Trump’s attorneys face an October 31 deadline to further respond in support of the request for the case to be dismissed.

Trump’s attorney did not respond to a request for comment. The White House referred comment to the campaign, and a representative did not return a request for comment.

Follow this story

Janet Yellen expects healthy inflation to return

Federal Reserve Chair Janet Yellen gave a glimpse Sunday into what she called the most surprising thing about the American economy: the stubbornly low rate of inflation.

Speaking to a group of international central bankers in Washington, D.C. on Sunday, Yellen said she doesn’t expect inflation to continue on its recent anemic trend.

The talk came at a time of heightened political visibility for Yellen, whose term as chair ends in February. President Trump is said to be considering a nominee among a list of five candidates — Yellen among them. Yellen was named by former President Obama.

The appointment of Fed chair is among the most powerful roles the president has in his management of the economy.

Economists look to healthy inflation as a sign of economic stability. Ideally, the Fed wants to see about 2 percent annual growth. That’s considered the “Goldilocks” rate for inflation: Not too high, not too low.

While the United States was on track to hit that target earlier this year, inflation readings “have been surprisingly soft” lately, as Yellen put it.

“My best guess is that these soft readings will not persist, and with the ongoing strengthening of labor markets, I expect inflation to move higher next year. Most of my colleagues on the FOMC agree,” she said.

But, she conceded, “our understanding of the forces that drive inflation is imperfect.”

Yellen ticked off a few factors that could be behind sluggish inflation:

1) Underemployment: “It is possible that there is more slack in U.S. labor markets than is commonly recognized,” Yellen said.

2) Expectations: Inflation may be kept low because that’s what people expect, Yellen suggested. If people think prices will stay low, they don’t rush out to buy, thus keeping prices low. She said the long-term inflation outlook in other major economies has “edged lower over the past few years” — potentially causing a drag on actual inflation rates.

3) Technology: The Fed’s entire framework for understanding inflation could be off, Yellen said, particularly in light of new technology. She said developments “such as the tremendous growth of online shopping,” could be smothering inflation.

Anything off the ideal mark for inflation tends to make the Fed hesitate before hiking its benchmark interest rate.

The Fed set the core interest rate at virtually zero in the wake of the 2008 financial crisis as a way to help kickstart the economy by making it ultra-cheap to borrow money. Low rates are bad news for savers, who see virtually no returns on the cash they keep stashed away.

The central bank has raised the benchmark interest rate three times over the past year as the economy has gotten stronger. Another rate hike is expected in December.

In her speech Sunday, Yellen also expressed optimism about the overall economy despite this year’s devastating hurricane season.

Among the fallout: The United States lost 33,000 jobs in September, marking the first monthly decline in seven years.

“I would expect employment to bounce back in subsequent months as communities recover and people return to their jobs,” Yellen said. “While the effects of the hurricanes on the U.S. economy are quite noticeable in the short term, history suggests that the longer-term effects will be modest.”

–CNNMoney’s Donna Borak and Patrick Gillespie contributed to this report.

Follow this story