| | |  | BY BEN WHITE | | 
David Badders/POLITICO illustration | POWELL RAINS ON KLAIN — Ron Klain arrived at work this morning, fired up his official White House chief of staff Twitter account and did something that would have been unthinkable just a month or so ago: He jammed out a bunch of happy tweets about the state of the economy. Mainly, Klain wanted to highlight the latest pretty good news on inflation, an issue that has crushed President Joe Biden’s approval rating and left Democrats mostly curled into crash positions, fearing an absolute beat down in the midterm elections. The newly released numbers showed the annual rate of inflation as measured by the Personal Consumption Expenditures Index (wonkery of which we’ve written in this space before) dropping to a 6.3 percent pace in July from 6.8 percent in June. That’s still crazy high by historical standards and a pace not seen since the early 1980s. But at the moment, it’s the trend that matters. And we now have a fair amount of data suggesting inflation may finally — at long last and at great pain — have peaked. That wasn’t everything on Klain’s mind. He also noted positive developments on consumer sentiment, declining gas prices, personal income and spending. But Klain began it all with an important caveat: “A LOT of work left to do on the economy…” he wrote, before ticking off his list of positive trends replete with up and down arrow emojis. And it was certainly no accident he began that way. Because while many economic numbers are indeed showing improvement — prices actually DECLINED in July from June according to today’s report — most are still pretty crummy, and some are getting worse. Consumer and business sentiment remain low. New home sales are tanking and overall declines in house prices are likely ahead in certain markets as the Federal Reserve pushes up interest rates to fight inflation (more on that in just a moment). Consumers are still seeing price hikes outpace wage gains, making everyone feel poorer and angry. Gas under $4 per gallon will likely give Biden and Democrats a little lift in the polls. But pump prices are still higher than when the president took office. And the administration remains at the whim of Russia’s war on Ukraine re-jolting oil markets and shooting gas prices right back up. The White House would love nothing more than inking a global price cap on Russian oil along with other big-buyer nations. But such a deal remains highly elusive. In an email exchange with Nightly , Klain emphasized the caution that prefaced his tweet storm (which also included retweeting a bunch of positive news stories about the inflation report). “I regularly emphasize that there is more work to do, and that inflation is not where we want it to be,” Klain wrote. “These are NOT ‘mission accomplished’ tweets. But I do think the President deserves credit for the fact that we are making progress on his economic agenda.” Fair enough. And the dip in the pace of price hikes will take some of the sting off of criticism that the president’s student loan forgiveness effort is unfair and inflationary. But if things are so groovy … why did Wall Street crash today? The Dow tanked over 1,000 points, or 3 percent. The S&P also plunged 3 percent, and the tech-dominated Nasdaq swooned nearly 4 percent. Why, you ask? Because of Jerome Powell and the aforementioned Fed, that’s why.
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| Stock market investors — and many Democrats — are deeply terrified that the Fed’s campaign of inflation-fighting rate hikes will tip an already wobbly economy into recession and drive up the unemployment rate. And Wall Street hoped that in his big speech today in Jackson Hole, Wyo., Powell would lean harder into a “dovish” message that the size and pace of rate hikes will soon slow. Yeah. He did not do that. Instead he pledged to keep hammering away with hikes until inflation sinks back way closer to the central bank’s goal of around 2 percent. Rates might stay high for a while and it could cause economic “pain,” Powell said. So while Klain and other Democrats could go into the weekend feeling a little bit better about their economic prospects, the mission is quite clearly not accomplished. Welcome to POLITICO Nightly. Reach out with news, tips and ideas at nightly@politico.com. Or contact tonight’s author at bwhite@politico.com or on Twitter @morningmoneyben. Programming note: POLITICO Nightly won’t publish from Monday, Aug. 29, through Monday, Sept. 5. We’ll be back in your inboxes on Tuesday, Sept. 6.
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| | STEP INSIDE THE WEST WING: What's really happening in West Wing offices? Find out who's up, who's down, and who really has the president’s ear in our West Wing Playbook newsletter, the insider's guide to the Biden White House and Cabinet. For buzzy nuggets and details that you won't find anywhere else, subscribe today. | | | | | | | UNFOLDERED AND INTERMIXED — Federal investigators obtained a search warrant for former President Donald Trump’s Mar-a-Lago estate earlier this month by pointing to a raft of highly classified material they’d already obtained from there, according to a legal affidavit unsealed today. Records obtained by the FBI from Trump’s Florida home in advance of the Aug. 8 search bore indications they contained human source intelligence, intercepts under the Foreign Intelligence Surveillance Act and signals intelligence, as well as other tags indicating high sensitivity. Several of those tightly controlled documents contained Trump’s “handwritten notes,” the partially redacted affidavit detailing the Justice Department investigation says. In those boxes, agents found 184 unique documents: 25 were marked “top secret,” 92 were marked “secret,” and 67 were marked “confidential” — the lowest level of national security classification. According to the affidavit, NARA officials found some of those “highly classified records were unfoldered, intermixed with other records, and otherwise unproperly [sic] identified.” Prosecutors also added in another court filing unsealed today that the ongoing criminal probe into government records stashed at Trump’s Florida home has involved “a significant number of civilian witnesses” whose safety could be jeopardized if their identities were revealed. Read more on the affidavit from Josh Gerstein and Kyle Cheney, who both pored through the filings today. You can also read the full redacted, unsealed document.
| | — RNC fires national spokesperson: The Republican National Committee has fired Paris Dennard as its national spokesperson , according to two people familiar with the move. Dennard had been serving as a national spokesperson and director of Black media affairs for the committee. “Paris Dennard no longer works for the RNC. We don’t comment on personnel matters,” RNC chief of staff Mike Reed said in a statement. One person familiar with the firing said it took place earlier this week. Dennard did not respond to a request for comment. — Senate GOP super PAC cancels ad buys in Arizona, Alaska: The Senate Leadership Fund is canceling roughly $8 million in Arizona and Alaska ad reservations , raising questions about the party’s commitment to Blake Masters, its Senate nominee in the Copper State. In November, Masters will face Sen. Mark Kelly (D-Ariz.), who already enjoys a heavy financial advantage down the stretch. The super PAC’s move will exacerbate that Kelly edge as Republicans seek to net the one seat needed to take back Senate control. On the other hand, the decision to cut two weeks — or about $1.7 million in advertising — to boost Sen. Lisa Murkowski (R-Alaska) is seen as a vote of confidence in her prospects.
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Rep. Charlie Crist stands with United Teachers of Dade President Karla Hernández-Mats outside of the United Teachers of Dade offices, Tuesday, May 31, 2022, in Miami Springs, Fla. | Lynne Sladky/AP Photo | — Crist to pick Miami teachers union head as his running mate: Democrat Charlie Crist will pick Karla Hernández-Mats, the head of Miami-Dade County’s largest teachers union, as his running mate as he seeks to unseat Gov. Ron DeSantis. Crist is expected to formally announce his pick during a Saturday rally in Miami that he’s holding to officially kick off his general election campaign, which will be an uphill battle. Crist’s pick ensures education will remain at the forefront of the race, especially since schools have been the main focus of DeSantis’ policy and political agenda. — Apple faces growing likelihood of DOJ antitrust suit: Justice Department lawyers are in the early stages of drafting a potential antitrust complaint against Apple , according to a person with direct knowledge of the matter — a sign that a long-running investigation may be nearing a decision point and a suit could be coming soon. The department’s antitrust division hopes to file suit by the end of the year, the individual said. Still, the department has made no decisions whether or when to sue Apple, the world’s most valuable public company, cautioned that person and one other familiar with the probe — and it’s still possible no case will be filed. — Defendants targeted in DeSantis’ voter fraud crackdown were told they could vote: Several people who were arrested last week as part of DeSantis’ voter fraud crackdown were notified by official government entities they were eligible to vote , according to court documents and interviews. The defendants told authorities they had no intention of committing voter fraud, according to affidavits, and in some cases were baffled by their arrests because counties had sent them voter registration cards and approved them to vote.
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People receive iodine-containing tablets at a distribution point today in Zaporizhzhia, Ukraine. | Andriy Andriyenko/AP Photo | TOO CLOSE FOR COMFORT — Fears of a radiation leak led authorities to begin distributing iodine tablets today to residents near a nuclear power plant in the Ukrainian city of Zaporizhzhia “amid mounting fears that the fighting around the complex could trigger a catastrophe,” The Associated Press’ Paul Byrne reports: “The move came a day after the plant was temporarily knocked offline because of what officials said was fire damage to a transmission line. The incident heightened dread of a nuclear disaster in a country still haunted by the 1986 explosion at Chernobyl. “Continued shelling was reported in the area overnight, and satellite images from Planet Labs showed fires burning around the complex — Europe’s biggest nuclear plant — over the last several days. “Iodine tablets, which help block the absorption of radioactive iodine by the thyroid gland in a nuclear accident, were issued in the Ukrainian-controlled city of Zaporizhzhia, about 45 kilometers (27 miles) from the plant.”
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| | | THE ICEMAN COMETH — Biden plans to establish a new ambassador-at-large position focused on the Arctic region , an area of growing geostrategic concern to the United States — as well as Russia and China. It was not immediately clear who the nominee for the role will be, but a State Department official familiar with the issue predicted a name would be submitted soon, writes Nahal Toosi. The Arctic is of growing interest to the United States and its top rivals in part because of climate change. Though the warming of the region could have cataclysmic effects on global sea levels, the reduction in ice has opened new shipping lanes and made possible opportunities for energy extraction. With its long Arctic coastline, Russia is putting its mark on the region, including by expanding its military presence. China has eyes on the territory, too, calling itself a “near-Arctic state” and seeking ways to expand its access for economic and other reasons. Did someone forward this email to you? Sign up here. | |
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