| | | |  | | By Jack Blanchard with Dasha Burns | Presented by the National Retail Federation | With help from Eli Okun and Ali Bianco On today’s Playbook Podcast: Jack and Dasha discuss the Republican backlash to the criminal inquiry into Fed Chair Jerome Powell, which threatens to overshadow President Donald Trump’s big speech in Michigan this afternoon.
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| Good Tuesday morning. This is Jack Blanchard. Get in touch. In today’s Playbook … — Trump tries to focus on the economy … as D.C. obsesses about Powell. — The latest inflation stats are out at 8:30 a.m. — Trump’s moment of truth on Iran looms.
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The investigation into Fed Chair Jerome Powell has overshadowed all economic discussion, as President Donald Trump prepares to deliver a speech on the economy today. | Julia Demaree Nikhinson/AP Photo | MOTOR(MOUTH) CITY: Donald Trump heads to Detroit for a speech on the economy today. How many outside the room will hear his message? The Trump administration’s decision to launch a criminal investigation into Fed Chair Jerome Powell has overshadowed all economic discussion for the past 36 hours, and the row shows little sign of abating. The whole thing is proving a disaster for the White House — to the extent that you have to wonder how quickly this probe might get wrapped up. As we saw yesterday, Hill Republicans are falling over one another to condemn, criticize or distance themselves from the decision to investigate Powell. You don’t need Playbook to tell you such levels of public pushback from the GOP are rare. It all bodes rather ill for Trump’s prospects of pushing future Fed candidates through the Senate. More from POLITICO’s Inside Congress Even more telling — in terms of how poorly this is playing out for the White House — is the speed at which administration officials have rushed to distance themselves from the Powell probe. Trump immediately claimed on Sunday night that he knew nothing about it — a normal position for any other president to take, but less convincing from a leader who frequently pushes for criminal sanctions against his enemies and who boasted less than two weeks ago that the government may bring charges against Powell. Also running a mile from this decision: Sources close to Treasury Secretary Scott Bessent, who were swift to make his opposition public yesterday. Crucially, that concern stretches right inside the White House itself, as my POLITICO colleagues Megan Messerly, Dasha Burns, Sam Sutton and Cassandra Dumay reported last night. Some inside the Oval Office were blindsided by the decision and “freaked out” about the possible reaction of the bond markets, they report. Opportunity cost: Others in and around Team Trump are upset (yet again) at the administration’s basic inability to focus on core economic messaging. “The American economy was poised for a breakout moment with tax cuts kicking in,” one tells Megan and co. “Rather than headlines about that, they’re talking about the drama surrounding the Fed. This kind of freelancing undermines what the administration is trying to do.” Audience of none: Indeed, the move against Powell didn’t even function as rabble-rousing red meat for MAGA world, in the way the (ill-fated) decision to charge longtime boogeyman James Comey was meant to do. You’ll have to hunt pretty deep to find the story anywhere on the Fox News website, and it barely featured on last night’s primetime Fox News coverage. In fact, only Laura Ingraham mentioned the Powell case on her evening show, though she didn’t sound too impressed with the DOJ. “I tend to agree with Treasury Secretary Scott Bessent, who believes any such investigation is probably unwise,” Ingraham told viewers.
| | | | A message from the National Retail Federation: NRF 2026: Retail's Big Show is a dynamic showcase of retail technology. We are exploring how artificial intelligence is transforming retail, driving innovation and efficiency at every level. AI is rapidly reshaping customer engagement and building loyalty, particularly through personalization and the rise of "conversational commerce." Learn more here. | | | | Obviously, the business community is in full agreement, although markets have largely rolled their eyes rather than panic. The discontent is reflected in a scathing piece from the WSJ editorial board, headlined “Lawfare for Dummies, Monetary Edition,” which argues the probe into Powell should be dropped. “President Trump would do himself and the country a big favor by firing those responsible for this fiasco,” the paper’s editorial board adds. Blame game: The finger for this whole fiasco is being pointed — once again — at federal housing agency boss Bill Pulte, who’s famously had it in for Powell for months. Pulte even mocked up “Wanted” posters with Powell’s face on them to convince Trump that pursuing a legal case was a good idea — and apparently received a positive reception, as my POLITICO colleagues report. Several other outlets have also highlighted Pulte’s role, including the WSJ. He told Bloomberg he knew nothing about it. The bigger picture, as POLITICO’s Kyle Cheney and Josh Gerstein write this morning, is of yet another weaponization case gone wrong. They report that, as in the cases of Comey and New York AG Letitia James, Trump’s past comments would likely hamper any case the DOJ tried to put together. Trump’s frustration at the repeated failures is palpable, and WSJ’s Josh Dawsey and colleagues last night revealed concerns about AG Pam Bondi’s performance. “President Trump has complained to aides repeatedly in recent weeks” about Bondi, they write, “describing her as weak and an ineffective enforcer of his agenda.” So all told, only one man is actually sitting pretty this morning. It feels safe to say that Powell has played his hand pretty well, with the decision to meet the inquiry head-on with a blunt video message having created exactly the right type of shockwaves across D.C. and Wall Street. Powell’s long cultivation of links with Hill politicians have also borne valuable fruit this past 36 hours. Stock traders have been posting Powell memes on social media, per the WSJ. And now he’s going nowhere fast, POLITICO's economics guru Victoria Guida writes this morning. Powell had been expected to quit the Fed board when he stands down as president in May — but may now feel he needs to complete his term through 2028 to prove the Fed’s ongoing independence, she reports. Such an outcome would be another blow to Trump, who had hoped to replace Powell with a loyalist willing to slash interest rates far lower. Such is the stormy backdrop as Trump heads to Detroit for his latest speech on the economy, the topic that Susie Wiles and co. actually want everyone to be talking about this year. His speech will come a few hours after the release of official CPI inflation data for December, which is due from the BLS at 8:30 a.m. November's lower-than-expected figure of 2.7 percent gave Trump’s affordability message a real shot in the arm last month, and he’ll be hoping for something similar today. Trump’s other big theme today will be tariffs, with the president keen to make the case that Detroit’s factories and manual workers stand to gain hugely from his protectionist policies. The cloud hanging over that economic message is, of course, the Supreme Court, which is poised to rule on the legality of Trump’s tariff regime.
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| | | | WAR AND PEACE IRAN ON TENTERHOOKS: Trump will be briefed today on a suite of options for Iran as the White House weighs a military response to Tehran’s deadly crackdown on protesters. The president is due to meet with Secretary of State Marco Rubio, Defense Secretary Pete Hegseth, Joint Chiefs of Staff Chair Gen. Dan “Razin” Caine and others. Press secretary Karoline Leavitt said yesterday that airstrikes are just “one of the many, many options” available, and that diplomacy is always preferable. But but but: Behind the scenes, Trump is leaning toward military strikes, WSJ’s Alex Ward and Natalie Andrews scooped, though sources tell them no final decision has been made, with VP JD Vance among the officials urging talks with Iran first. If Trump takes action, he has a range of possible moves beyond airstrikes including cyber and psychological operations, CBS’ James LaPorta reports. Trump has already announced on Truth Social that “any Country doing business” with Iran will face immediate 25 percent tariffs on all commerce with the U.S. On the ground: Mass protests continued to erupt throughout Iran last night, and early today. One human rights group said the death toll has risen to 646, including protesters and security personnel, per the AP. WAR CRIMES WATCH: A stunning report last night from NYT’s Charlie Savage and colleagues revealed that during the Trump administration’s first fatal strike on an alleged drug boat in the Caribbean, the U.S. “used a secret aircraft painted to look like a civilian plane.” Experts say such trickery constitutes a war crime, though admin officials including Lee Zeldin are pushing back hard on that assessment. The Pentagon told the Times that it complies with domestic laws and the laws of armed conflict. ON THE HILL: After five Republicans helped advance a war powers resolution in the Senate to prevent Trump from further unilateral Venezuela action, the White House is trying to flip two of them back ahead of a likely final vote tomorrow, POLITICO’s Jordain Carney and Calen Razor report. Sen. Josh Hawley (R-Mo.), for one, said his talk with Rubio was “substantive” and “helpful.” GREENLAND LATEST: As Trump threatens to use military force to seize Greenland, multiple House members are introducing bipartisan legislation to block him from invading a NATO ally, POLITICO’s Nick Wu reports. A bipartisan delegation is also traveling to Denmark at the end of the week to try to reassure the Danes, AP’s Seung Min Kim reports. German Foreign Minister Johann Wadephul, who met with Rubio yesterday, told reporters afterward he feels good about the prospects for the U.S. and Europe to reach a “compromise,” per Bloomberg. JUDICIARY SQUARE SCOTUS WATCH: The Supreme Court will take up its highest-profile tests of the new year so far at 10 a.m., when it hears oral arguments in a pair of cases over transgender girls and women playing in female sports. At issue is whether state bans on trans girls in athletics — which exist across roughly half the country — violate the Civil Rights Act and the 14th Amendment. Trans athletes have won in lower courts, but the Supreme Court has increasingly ruled against transgender rights amid a broader Republican backlash. High stakes: The justices could potentially affect not only these athletics bans, but bigger policy questions around transgender people and equal protection law, if they rule broadly about the definition of “sex” and whether gender identity is included in sex discrimination, Roll Call’s Michael Macagnone previews. Keep a close eye on questions from Justice Neil Gorsuch and Chief Justice John Roberts, who could be pivotal votes. MINNESOTA FALLOUT: Minnesota and the cities of Minneapolis and St. Paul have asked the courts to block the current federal immigration crackdown, per the Star Tribune. The record DHS operation is continuing to yield detentions and stoke tensions across the country, with authorities firing tear gas against demonstrators in multiple locations in the Twin Cities yesterday. More in the state: With the Trump administration having publicly blamed Renee Good for the ICE shooting that killed her, federal investigators are probing not only Jonathan Ross’ actions but Good’s connections to activist groups, NYT’s Alan Feuer and colleagues report. As of now, they say, it’s unlikely Ross will be charged. Unusually, the Justice Department’s Civil Rights Division’s criminal section is not involved in the case, which “has deepened doubts, already raised by Minnesota officials, about whether the shooting will receive a fair and scrupulous examination,” WaPo’s Perry Stein reports. Harmeet Dhillon’s decision to exclude the division has led at least four top leaders to quit, MS NOW’s Carol Leonnig and Ken Dilanian scooped last night. It’s “the most significant mass resignation at the Justice Department since February.” Not just Minnesota: Illinois and Chicago also sued the Trump administration yesterday over its immigration enforcement tactics, seeking to block federal agents’ tear gassing, warrantless arrests and more, the Chicago Tribune’s Jason Meisner and Jack O’Connor report. In Portland, Oregon, federal prosecutors charged the man shot by ICE, whom they accuse of being a gang associate, with aggravated assault, per The Oregonian’s Maxine Bernstein. MORE COURT NEWS: A federal judge ruled that OMB Director Russ Vought’s move to cancel billions of dollars for clean energy projects in states that didn’t vote for Trump was illegal, AP’s Matthew Daly reports. And another federal judge said that for now, the Trump administration cannot shut down a big offshore wind project in New England, AP’s Jennifer McDermott reports. AND MARK YOUR CALENDARS … Jack Smith will go before House Judiciary for public testimony on Jan. 22, the panel announced.
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| | | | BEST OF THE REST APPROPS ACTION: The House Rules Committee will tee up the next minibus of government funding bills (Financial Services and State-Foreign Operations) at 2 p.m., with leaders aiming for a floor vote tomorrow night, per POLITICO’s Meredith Lee Hill. Look out for the latest details from Speaker Mike Johnson at his 10 a.m. presser. And the Senate will meet at 10 a.m. to take up its own minibus (Commerce-Justice-Science, Energy-Water, Interior-Environment), which moved forward in a lopsided 80-13 procedural vote yesterday. But but but: The most contentious funding bills have yet to be released, and still pose the greatest threat of a partial government shutdown at the end of January. More on the Hill: House Administration Republicans released a leadership-blessed bill to block stock trading by members of Congress, with a markup tomorrow, per Roll Call’s Nina Heller. … The U.S. Commission on Civil Rights is back under Democratic control after Hill Republicans failed to tap a new member to replace a Republican whose term expired, POLITICO’s Hassan Ali Kanu reports. LEE ZELDIN’S HISTORIC CHANGE: “E.P.A. to Stop Considering Lives Saved When Setting Rules on Air Pollution,” by NYT’s Maxine Joselow: “Under President Trump, the E.P.A. plans to stop tallying gains from the health benefits caused by curbing two of the most widespread deadly air pollutants, fine particulate matter and ozone, when regulating industry … It’s a seismic shift that runs counter to the E.P.A.’s mission statement.” A NEW YORK MINUTE: “Hochul’s new agenda blends Trump fighting with affordability,” by POLITICO’s Nick Reisman: “Gov. Kathy Hochul is making a simple pitch to New Yorkers: Defying President Donald Trump will be good for your pocketbooks. The moderate Democrat will unveil her 2026 agenda Tuesday with the interlocking goals of tackling wide-ranging affordability woes — while also making New York a bulwark against the Trump administration’s aggressive policies on immigration, energy and funding cuts.” TRADING PLACES: The U.S. and Taiwan are getting close to striking a trade deal, NYT’s Ana Swanson and Tripp Mickle report. The agreement could lower tariffs on Taiwan to 15 percent and commit Taiwan Semiconductor Manufacturing Corporation to building another five semiconductor facilities in Arizona. IMMIGRATION FILES: The State Department said the number of visas it has revoked since Trump returned to office has now reached a record 100,000, per Reuters. FOR YOUR RADAR: “Labor secretary’s top aides sidelined amid inspector general complaint,” by POLITICO’s Nick Niedzwiadek: “Two of Labor Secretary Lori Chavez-DeRemer’s top aides were placed on administrative leave Monday amid an investigation into their conduct … It is unclear who will help run Chavez-DeRemer’s office in [Jihun Han’s and Rebecca Wright’s] absence, or whether they are still being paid … The aides’ temporary removal is not indicative of any wrongdoing.”
| | | | A message from the National Retail Federation: The retail industry is the nation's largest private-sector employer, and retailers are deeply connected to their communities and customers. The One Big Beautiful Bill Act helps retailers grow, create jobs and deliver value to American families. This legislation also enables retailers to invest in logistics, technology and storefront modernization. NRF will continue to advocate for pro-growth policies that benefit American businesses and hard-working families. Learn more here. | | | | | | TALK OF THE TOWN | | Dan Bongino is officially getting back into the podcast game next month. Kevin Rudd will leave his post as Australian ambassador ahead of schedule to become head of the Asia Society. SCENE SETTER — “The Hottest Spot for Sunday Church Is a MAGA Dive Bar in Washington DC,” by Tara Palmeri in Vanity Fair: “Saturday night, Penn Social is your typical DC dive filled with conservative 20-somethings. Come Sunday morning, it’s still a hot spot — but by the name of King’s Church.” STORY OF THE TIMES — “Inside the scramble to keep a divided America’s 250th birthday on track,” by Semafor’s Ben Smith: “Trump suggested to aides before Thanksgiving that he’d replace [Rosie Rios] with his longtime adviser Kellyanne Conway [on the bipartisan semiquincentennial commission] … But the president then uncharacteristically demurred, and instead announced the creation of a parallel group called Freedom 250 to fund and produce his passion projects. … And so, fittingly for a divided 2026 America, two quite different groups are preparing for the same date.” WHISKEY TANGO FOXTROT — Federal prosecutors have charged Christopher Southerland, a former House Transportation and Infrastructure Committee staffer, with the theft of roughly 240 government cellphones. More from The Hill OUT AND ABOUT — SPOTTED at Janet Donovan’s Dine ’n Dish at Peacock Cafe last night: Raymone Bain, Amy Nathan, Judy Kurtz, Tamara Buchwald, Susan Blumenthal, Kandie Stroud, Anita McBride, Kimball Stroud, Susan Tolson, Kathy O’Hearn, Eileen O’Connor, Aniko Gaal Schott, Mignon Clyburn, Connie Coopersmith, Virginia Coyne, Enid Doggett, Judith Thomas, Marie Royce and Ann Klenk. IN MEMORIAM — Austin Wright “passed away unexpectedly in New York on January 6 at age 34 from a brain aneurysm. … Austin built his career as a talented political consultant and fundraiser … He was President of Family Capital Partners … Austin served as the Chairman of the Museum of Democracy,a nonprofit which comprises the largest collection of political and historical memorabilia and artifacts in the United States.” Read the full obituary TRANSITIONS — Hans von Spakovsky has joined Mike Pence’s Advancing American Freedom, The Washington Free Beacon’s Zach Kessel scooped. He previously worked at the Heritage Foundation, which he left in part due to the organization’s antisemitism controversy. … Kelli Parsons will be the next CEO of Avoq. She previously has led Hill & Knowlton. … Katie Dailinger is joining Bentley Systems as director of state and local government relations. She previously worked for the National League of Cities. … … Kevin George is joining the Structure Finance Association as a director of advocacy. He most recently worked at the Conference of State Bank Supervisors. … LSG is adding Ben Goldey and Phoebe Ferraiolo as VPs. Goldey previously worked for the House Agriculture Committee, and is a Duke Energy and Trump Interior Department alum. Ferraiolo previously worked for Sen. Susan Collins (R-Maine) and the Senate Appropriations Committee. … Andrew Ginsburg is now a manager of government relations at Lenovo. He most recently worked at the Consumer Product Safety Commission, and is an Eric Swalwell and Jerry Nadler alum. HAPPY BIRTHDAY: Rep. Thomas Massie (R-Ky.) … Nate Silver … U.S. Capitol Police Officer Caroline Edwards … Andrew Yang … Rod Rosenstein … Tim Noah … Marc Thiessen … Blackstone’s Julia Tishman Elias … Natasha McKenzie … Andrew Riddaugh of Liberation Technology Services … Jason Chung … Nevada Independent’s Mini Racker … Ali Tulbah … Christina Robbins … Kristina Schake … Britt Bepler of Monument Advocacy … Nora Walsh-DeVries of Planned Parenthood … Mollie Bowman … Rich Gold of Holland & Knight … Dave O’Brien … POLITICO’s Alexandra Velde, Corey Jaseph, Reina Melgar, Robin Bravender and Dana Beckman … Delianny Brammer … Ken Pollack … Jordan Bell … Will Baskin-Gerwitz … Allan Rivlin … Laurence Wildgoose … Liana Guerra of Rep. Darren Soto’s (D-Fla.) office … Katie Murtha … Microsoft’s Kristin Emery … Ingrid Duran of D&P Creative Strategies … Tali Stein … Julia Bartusek of the Democratic Women’s Caucus … Jason Berardo of Rep. Mike Turner’s (R-Ohio) office … Claire Rosenwinkel of Trident GMG … Vincent Pan … Andrew Kossack … Abigail Seldin Did someone forward this email to you? Sign up here. Send Playbookers tips to playbook@politico.com or text us on Signal here. Playbook couldn’t happen without our deputy editor Garrett Ross. Correction: Yesterday’s Playbook misspelled Ari Gerstman’s name. | | | | Follow us on X | | | | Subscribe to the POLITICO Playbook family Playbook | Playbook PM | California Playbook | Florida Playbook | Illinois Playbook | Massachusetts Playbook | New Jersey Playbook | New York Playbook | Canada Playbook | Brussels Playbook | London Playbook View all our political and policy newsletters | | Follow us | | | |
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