Spiegel Stuff: The Hill's Morning Report: Fallout from inspector general’s FBI report | New York AG drops bombshell lawsuit on Trump, family | House Republicans have a ‘compromise’ immigration bill | Controversy explodes around separating immigrant children from parents | Federal shield for news media gains supporter | Markets brace for next round of Trump tariffs | White House legislative affairs director prepares to leave

Welcome to The Hill's Morning Report, and TGIF! Our daily email gets you up to speed on the most important developments in politics and policy, plus trends to watch, co-created by Jonathan Easley and Alexis Simendinger. (CLICK HERE to subscribe!)

Reminder: Sunday is Father’s Day, a permanent national holiday after President Nixon signed it into law and enthused that “the fabric of American society is woven around the family and at the center of the family is the father.”

📺 Hill.TV’s “Rising” program starting at 8 a.m.: Guests include President Trump’s attorney Rudy Giuliani and former FBI Assistant Director Ron Hosko. http://thehill.com/hilltv

****

Inspector General Michael Horowitz released a 568-page report on Thursday, which was the culmination of a yearlong review of the FBI’s handling of the criminal investigation into Hillary Clinton ahead of the 2016 election.

The report is withering in its criticism of senior FBI brass. The political fallout is certain to resonate through the 2018 midterm elections.

Horowitz does not assert that anyone at the FBI was influenced by political bias in favor of Clinton during the investigation. But the catalog of missteps, private political statements and questionable actions damage the bureau.

The Hill: Five takeaways from the IG’s scathing report on the FBI.

The New York Times opinion: The report’s big picture: Trump is lying.

A brief rundown of those at the center of it:

FBI agent Peter Strzok

Strzok was the No. 2 agent in charge of the Clinton investigation. He also interviewed former national security adviser Michael Flynn, who has since pleaded guilty to lying to the FBI, as part of the Russia probe. And Strzok was briefly a member of special counsel Robert Mueller’s investigative team.

Now, Horowitz has referred Strzok and four other FBI officials for discipline tied to private messages they exchanged ripping then-candidate Donald Trump.

“The messages cast a cloud over the FBI investigations which these employees were assigned,” Horowitz writes.

A smattering of the messages:

“Vive la resistance.”

“Trump supporters are all poor to middle class, uneducated, lazy.”

But the one that is driving the conversation today is this doozy between Strzok and former FBI lawyer Lisa Page. At the time, the two were having an extramarital affair.

“[Trump’s] not ever going to become president, right? Right?!” Page asked.

“No. No he won’t. We’ll stop it,” Strzok responded.

Horowitz suggested the texts were evidence Strzok “might be willing” to take steps to impact the outcome of the presidential election. The House Judiciary Committee plans to subpoena Strzok to force him to testify before Congress.

In his interview with Hill.TV yesterday, Attorney General Jeff Sessions said more people would likely be fired over the Horowitz report. Strzok and the others referred for discipline appear to be possible candidates.

The Hill: FBI Director Christopher Wray defends bureau after “sobering” report.

Sharyl Attkisson: Senate probes FBI’s heavy-handed use of redactions to obstruct Congressional investigators.

Former FBI Director James Comey

The Hill: Inspector General report criticizes Comey over handling of Clinton probe.

Horowitz called Comey’s move to hide his decision to publicly exonerate Clinton from his then-boss, Attorney General Loretta Lynch, “extraordinary and insubordinate.”

The report details draft changes to Comey’s exoneration of Clinton, listing ways he appeared to soften his remarks.

Horowitz describes a top-down institutional lapse for the one-month delay in reviewing a new batch of Clinton emails found on a laptop belonging to former New York congressman Anthony Weiner (D). Comey said he wasn’t aware at the time that Weiner was married to Huma Abedin, a senior Clinton aide.

The report faulted Comey for using a personal email account for official FBI matters while the bureau was investigating Clinton’s use of a private email account and server.

Jonathan Turley: Comey can no longer hide destruction caused at the FBI.

Comey’s op-ed: This report says I was wrong. That’s good for the FBI.

The media

Horowitz describes a culture of FBI leaks and conflicts of interest between agents and members of the press.

“We have profound concerns about the volume and extent of unauthorized media contacts by FBI personnel,” Horowitz writes.

Among the claims: FBI officials accepted tickets to sporting events, golf outings, drinks and meals, and attended nonpublic social events with reporters. Wray said Thursday the bureau would institute a stricter media policy.

Check out this addendum from the report:

(To see full size, click here.)

LEADING THE DAY

INVESTIGATIONS: ***RED ALERT LAWSUIT*** While conservatives were celebrating the FBI getting put through the ringer, New York Attorney General Barbara Underwood (D) dropped a bombshell lawsuit on the president and his family.

The Memo: Trump’s legal troubles pile up despite IG report’s release.

The lawsuit alleges that Trump, Donald Trump Jr., Ivanka Trump and Eric Trump used their family’s charitable foundation as a slush fund for 2016 campaign cash.

Underwood is seeking $2.8 million in restitution. That’s how much she says the Trump family raised for the Trump Foundation and then used for personal, business or campaign expenses. The state attorney general also forwarded the matter to the IRS and the Federal Election Commission to review whether any crimes were committed.

“The Trump Foundation was little more than a checkbook for payments from Mr. Trump or his businesses to nonprofits, regardless of their purpose or legality. This is not how private foundations should function and my office intends to hold the Foundation and its directors accountable for its misuse of charitable assets.” – Underwood.

The president lashed out at the lawsuit over Twitter, linking the investigation to former New York Attorney General Eric Schneiderman, who resigned last month after accusations from several women that he beat them up.

But the new lawsuit holds genuine legal peril for the president and his family.

The Hill: Five things to know about the lawsuit against the Trump Foundation.

Speaking of legal peril…

Trump’s former attorney Michael Cohen’s lawyers have left him. He is reportedly eager to cooperate with federal investigators. And now The Wall Street Journal has a deep dive into the allegations against him. The report says that federal prosecutors are looking into whether Cohen illegally lobbied domestic and foreign companies by promising access to the president and his inner circle.

The FBI raided Cohen’s office and personal residences earlier this year and Trump’s lawyers have been trying to limit what they can review, claiming attorney-client privilege. It’s another case in which the president has a lot of legal exposure.

The New Yorker: What could Cohen tell Mueller?

Meanwhile, New York’s highest court ruled Thursday that a defamation lawsuit brought against Trump by a former contestant on “The Apprentice” can proceed (The Hill). Some believe this case might be the most dangerous of all for Trump, as he’ll likely have to answer questions about it under oath.

****

CONGRESS: Next week’s headline-grabbing legislative action will be House consideration of competing immigration bills, both of which the White House says it supports, and neither of which is likely to find liftoff in the Senate.

House GOP – immigration: The Hill: House Republicans on Thursday released the text of an immigration measure intended to be a compromise between centrists and conservatives, to be voted on next week. It would allow immigrants covered by the Obama-era Deferred Action for Childhood Arrivals (DACA) program to remain in the country, while advancing the president’s border security initiatives, including more funding for a wall on the Mexican border. The upshot? Few lawmakers are coming out to support the compromise (The Hill).

> House GOP compromise immigration measure would bar the separation of migrant families (NBC News).

House – immigration/family separations: The Hill: Speaker Paul Ryan (R-Wis.) said, following weeks of relative silence, that he dislikes separating children from their parents when they arrive at the U.S. border, part of the Department of Justice’s “zero tolerance” enforcement policy for illegal immigration. Ryan blamed the separations, which have sparked bipartisan criticism and emotional news coverage, on the courts.

> House Minority Leader Nancy Pelosi (D-Calif.) dismissed the prospect that GOP lawmakers may move to change immigration law this year to end the administration’s separation of migrant families, arguing that if Republicans objected to the policy, the administration could halt it immediately (The Hill).

House – media shield law: The Hill: The former chairman of the conservative Freedom Caucus endorsed a federal “shield” law for the news media, following the Justice Department’s controversial seizure of phone and email records tied to a New York Times journalist. The communications information was secretly obtained going back to the journalist’s college years as part of the department’s hunt to identify and prosecute government leakers.

Senate – marijuana protection: The Hill: The Senate Appropriations Committee approved a measure that would protect medical cannabis operations. The language, which was part of the Senate commerce, justice and science appropriations bill, would block the Justice Department from targeting either users or providers of medical cannabis in states where marijuana use and sales are legal.

House Dem leadership: The Hill: Minority Leader Pelosi continues to be a controversial figure among some candidates in her own party. This week, New York Rep. Brian Higgins echoed some fellow Democrats in vowing not to back the California liberal to be Speaker, should Democrats win control of the House next year. Higgins said he wants to see a more cohesive party agenda, and he faulted Pelosi for inaction on Medicare changes and infrastructure legislation this year.

IN FOCUS/SHARP TAKES

➔ WHITE HOUSE & ADMINISTRATION: Immigration: Lawmakers continued Thursday to object to the administration’s policy to split migrant parents from their children at the border as a way to deter illegal immigration, but the White House continued on Thursday to defend the Justice Department’s enforcement (The Associated Press).

> The administration will house migrant children in tents at a border facility near El Paso, Texas, NBC News reports. The Department of Health and Human Services plans construction of a tent city to accommodate 450 beds for children who are separated from adult relatives after illegally crossing the U.S. border.

> The administration is analyzing decades-old fingerprints in an effort to rescind American citizenship from immigrants who may have lied or falsified information on their naturalization forms, The Washington Post reports. Homeland Security investigators are digitizing fingerprints collected in the 1990s for comparison with more recent prints provided by foreigners who apply for legal residency and U.S. citizenship. The government says 2,536 naturalization cases have prompted in-depth reviews so far, and of those, 95 cases have been referred to the Justice Department.

Trade tariffs – China: The Hill: Trump promised tough tariffs on Chinese products, and he could unveil his decision to apply the levies today. The president is expected to direct a “pretty significant action” against China affecting up to $100 billion in Chinese goods, Reuters reports. (The Associated Press reports the range at $40 billion to $55 billion). Treasury Secretary Steven Mnuchin has argued against the tariffs, but the president disagrees. Trump no longer believes China’s influence over North Korea is a compelling reason to hold back, now that his administration has a direct line of communication with Pyongyang. U.S. and Chinese officials have held a series of bilateral discussions about trade, with little agreement.

EPA -- water regulation: Scott Pruitt, the head of the Environmental Protection Agency, is expected today to send Trump a legal proposal to scale back an Obama-era regulation on water pollution, a senior E.P.A. official tells The New York Times. It is widely expected to be one of EPA’s most significant regulatory rollback efforts. Separately, EPA may formally propose to ease an Obama-era tailpipe emissions re on Monday, setting up what is expected to be a battle in court.

White House personnel: Trump’s respected White House legislative affairs director, Marc Short, will leave the West Wing as early as this summer, The Wall Street Journal reports. He’s helped steer the GOP legislative agenda for the president since January 2017 (The Hill) … Schlapp flap: Amid the recurring discord that afflicts the White House communications and press shop, we learn about Trump adviser Mercedes Schlapp’s less-than-adoring old tweets about Donald Trump (CNN).

OPINION

Trump is often depressing. This week he was sickening, by columnist Ruth Marcus, The Washington Post. https://wapo.st/2Mr1nFe

The Democrats take a radical turn, by Kyle Smith, The National Review. https://bit.ly/2JDakO8

WHERE AND WHEN

The House and Senate return to work next week.

The president has no public events.

Vice President Pence will travel today to Michigan and Ohio to lend political assistance to House GOP candidates, headline fundraisers, and talk up GOP tax cuts. In Michigan, he’ll stump for state Attorney General Bill Schuette, the frontrunner in the GOP primary for governor. In Ohio, he’ll back state Sen. Troy Balderson, who’s competing in an Aug. 7 special election against Democrat Danny O’Connor in the race to replace former Ohio Rep. Pat Tiberi (R).

ELSEWHERE

> Federal appeals court rules that insurers are not entitled to collect billions of dollars they say they’re owed by the government under Affordable Care Act, by Nathaniel Weixel, The Hill.

> Supreme Court strikes down state law barring `political’ apparel in polling places, by Nina Totenberg, NPR.

THE CLOSER

And finally … quiz masters who responded to the Morning Report’s contest this week seemed to know a lot about Kim Jong Un. The statement that was false about Kim in Thursday’s newsletter, according to recent reporting about the North Korean leader, was (2), “As a student, Kim wore Chicago Bulls T-shirts to class every day.” (His former classmates at a boarding school in Switzerland recalled that Kim liked to wear Air Jordans and tracksuits in the late 1990s.)

Thanks to all the readers who responded! And the winners who guessed correctly and those who were half-right, can take a bow: Linda Henye, Sophia Boyd, Frank Hatfield, Bob Schneiderman, Ron Wolfarth, Dara Erinashley, Bill Hartnett, Norm Seip and Philippe Cosyn.

The Morning Report is created by journalists Jonathan Easley jeasley@thehill.com & Alexis Simendinger asimendinger@thehill.com. Suggestions? Tips? We want to hear from you! Share The Hill’s reporting and newsletters, and encourage others to SUBSCRIBE!