After declaring national emergency on border wall, Trump says "I didn't need to do this"

• From Congress: $1.375 billion will come from the budget deal that both chambers of Congress passed on Thursday and Trump is expected to sign into law “later today or tomorrow.”
• Through executive action: Roughly $600 million will be pulled from the Treasury's drug forfeiture fund, and $2.5 billion from the Department of Defense's drug interdiction program.
• From a national emergency declaration: Trump will declare a national emergency to free up about $3.6 billion from the DoD's military construction fund.

Mulvaney noted that no money is being pulled from the Texas disaster relief fund to build the wall.

Worth noting: $8 billion is more than the $5.7 billion Trump initially demanded from Democrats. A senior administration official said that they are freeing up an extra $2.3 billion to ensure that they have enough money to build the wall.

How it's playing: Trump's decision to invoke his emergency powers has drawn backlash from both Democrats and some Republicans who are concerned about the precedent it could set for future administrations.

What's next: The $3.6 billion being accessed through the emergency declaration will likely be challenged by the courts.

Go deeper: Why Trump is declaring an emergency

A new report this week underscores a wider trend: The Energy Department's data arm and private forecasters alike have consistently underestimated the U.S. crude oil production surge in recent years.

Why it matters: There are geopolitical, economic and environmental repercussions from the faster-than-expected growth, which is driven largely by surging output in the Permian Basin region of Texas and New Mexico.

What's new: The EIA's latest monthly forecast sees U.S. crude production, already at record levels, averaging 12.4 million barrels per day this year and 13.2 million bpd in 2020. That's a substantial uptick from projections just a month earlier, and if history is any guide, the latest increase won't be the last upward revision.

The intrigue: EIA is hardly alone in low-balling the surge, which saw U.S. output climb 2 million barrels per day last year alone.

• The price recovery that began in 2016 and saw consistent gains from mid-2017 until last October has spurred things along.
• But the known unknowns of price forecasting aren't enough to explain why U.S. growth has confounded banks, the International Energy Agency, and consultancies.

By the numbers: Harry compared EIA's forecasts in their monthly short-term energy outlook with actual production data that arrives later. He found...

• U.S. crude oil production has outpaced EIA forecasts every month since January 2017. The one-year forecasts have been too low by an average of more than one million barrels.
• During the same time period, the 6-month forecasts were always revised upwards but still proved too low — by an average of about 465,000 barrels per day.

Between the lines: This faster-than-expected growth has several effects, including...

• It complicates the joint OPEC-Russia efforts to continue propping up prices through their supply-cutting pact.
• It brings economic gains to Texas and elsewhere, but the speed has also left local officials playing lots of catch-up on housing, infrastructure and other civic matters.
• It could boost global greenhouse gas emissions in the long-term if it keeps going higher and higher, based on findings from a recent study released via the think tank Resources for the Future.

What we're hearing: Analysts offered a suite of reasons why growth has exceeded forecasts, such as the decline in technology costs, which helped U.S. producers expand output at lower costs.

• "Since the end of 2016 through now, operators have really shown that they can optimize their operations and kind of get the most out of different prices far more than we have previously anticipated," Meg Coleman, a senior EIA analyst, tells Harry.

Quick take: One overarching thing is that it's just hard to get a handle on how to model the characteristics of the shale resource, given the complicated geology and the limited history of the U.S. boom.

• “It is just a dynamic resource theme, a dynamic time in the industry where so much is changing so fast. That it makes it hard for anyone to take a snapshot and say this is what informs me about the future," says Wood Mackenzie analyst R.T. Dukes.
• After all, the boom began relatively recently — in the mid-late 2000s — as advances in fracking and horizontal drilling unlocked huge resources in Texas, North Dakota and elsewhere.

Another big challenge is that the U.S. industry is very fragmented, with players of all shapes and sizes undertaking scattered developments. It's harder to analyze than big conventional projects planned far in advance, like big Gulf of Mexico projects.

The big picture: “This is hundreds of operators utilizing hundreds of service companies, accessing hundreds of markets and making their own individual decisions, and the markets have largely rewarded growth," Dukes said.

What's next: Coleman said EIA is working to improve its forecasting models. "Every month we're looking to update parameters, to find that predictor that is a leading indicator of growth," Coleman said. "We're constantly updating and improving models to capture a very very dynamic industry."

What we know: Thursday's release of the 4-week delayed U.S. retail sales report saw the biggest month-over-month drop since 2009. It was such a huge miss from the expected rise in spending that some economists are questioning the accuracy of the data.

• "It appears that worries over the trade war and turmoil in the stock markets impacted consumer behavior more than we expected," the National Retail Federation said in a statement. "There's also a question of whether the government shutdown and resulting delay in collecting data might have made the results less reliable."

"This is against the backdrop of the only data we had, which was the blockbuster employment numbers," Diane Swonk, chief economist at Grant Thornton, told CNBC.

• December's 222,000 new jobs number was revised lower, but still remains above trend. Though, as we reported last month, jobs growth markdowns show the data may not be breaking out the way initial estimates suggest.

Key components that factor into measures of economic growth are still missing, leaving a gaping hole in economists' estimates for growth.

• The health of business inventories in December remains unknown after contracting slightly in November, the Commerce Department said yesterday.
• Factory orders in the U.S. fell more sharply than expected in November, but we still don't know whether that rebounded or fell further in December.
• December trade data, also delayed, is not expected until the beginning of March.

The bottom line: The data we have so far is pointing to a sluggish end to 2018.

• Jim O'Sullivan, chief U.S. economist at High Frequency Economics, tells Axios the lackluster retail sales data could shave as much as 0.7% off of economic growth in the 4th quarter.
• Economists at J.P. Morgan downgraded their GDP forecast 60 basis points to 2.0% based on the latest retail sales figures, while Barclays slashed its growth forecast to 2.1% from 2.8%, Reuters notes.

1. Jonathan Karl (ABC)
2. Miguel Almaguer (NBC)
3. Kristen Welker (NBC)
4. Peter Alexander (NBC)
5. Hallie Jackson (NBC)
6. Tom Costello (NBC)
7. Cecilia Vega (ABC)
8. Pierre Thomas (ABC)
9. Gabe Gutierrez (NBC)
10. Major Garrett (CBS)
11. Nancy Cordes (CBS)
12. Paula Reid (CBS)

• The president is expected to declare a national emergency today when he appears in the Rose Garden at 10 a.m. for remarks on "the national security and humanitarian crisis on our southern border."

Examples of Trump's maximalist impulse include:

• Building a "Great Wall" vs. the mix of security solutions recommended by border experts.
• Repeated threats to kill all of NAFTA.
• Calls for full, rather than gradual, withdrawals from Syria and Afghanistan.

Months in the making: Last summer, Trump told Mick Mulvaney — then White House budget director, now chief of staff — to find him money to pay for the wall without going to Congress.

• The Office of Management and Budget has been sifting through obscure piles of money ever since, and was well-prepared for the emergency declaration.

The reason some staff pushed back against the emergency was that they knew it would result in immediate court action (it obviously still will), and because they knew the backlash it would spur on Capitol Hill.

• Conservative lawyers close to the White House worried about the precedent it would set.

Be smart: Trump makes big decisions substantially through the lens of: "What can I sell to my people?"

• Trump consistently thinks in terms of public relations: When people ask him what he achieved during the shutdown, he says he got the nation to focus on the border — and the media to talk about nothing but the border for a month.

Context: Amazon has played a high-handed game all along in its headquarters search.

• When it launched the $5 billion HQ2 competition in September 2017, it invited mid-sized cities across the U.S. to compete in what felt like a reality-TV pageant.
• Then, in November 2018, it announced it would split its new headquarters between two of the country's most powerful regions, New York and greater D.C.
• Now it says it really only needs one of these two projects, after all, and will make smaller investments in many other U.S. cities.

How it works: Along the way, Amazon gave us a glimpse into the new playbook that a tech company functioning like a quasi-state can use to flex its power.

• Close the doors: Dicker with cities and states in secret, as if you're negotiating an arms-control deal, not a local building project.
• Hide your cards: Tell the other side what you want without letting on how flexible you're actually going to be.
• Change the game: In the end, Amazon may simply prefer to rewrite its entire expansion plan than have to horse-trade with demanding and unpredictable local elected officials.

Winners: Leaping to conclusions about who came out on top here is a mistake.

• Rep. Alexandria Ocasio-Cortez, whose district is next door to the Amazon site, tweeted about defeating "Amazon's corporate greed, its worker exploitation, and the power of the richest man in the world."
• In this version, New Yorkers won and Amazon lost: It suffered a PR black eye and has to regroup.
• But New York didn't win much. Polls showed wide support in the area for bringing Amazon to Queens, even as some residents feared rent increases.

There's another way to play this game. Google and Apple have been undertaking major expansions outside of Silicon Valley and doing so with a lot less tax money and a lot less drama.

Apple said a year ago it was looking at a spot outside of California and Texas in which to expand. It decided instead to expand in Austin, pledging to invest $1 billion there.

• It's also setting up new offices in Seattle, San Diego and the Los Angeles suburb of Culver City and expanding operations in Pittsburgh, New York, Boston, Portland, Oregon and Boulder, Colo.
• Impact: No public search, minor tax breaks.

Google announced last year a major expansion in New York, spending $2.4 billion to acquire Chelsea Market and then, in December, announcing a further $1 billion investment.

• This week the company announced it was spending $13 billion this year on data centers and offices throughout the US.
• Impact: Lots of jobs in New York, no tax breaks.

Go deeper:

• Why Amazon pulled the plug
• What New Yorkers have to say about Amazon's huge reversal

Why it matters: The projected shifts in climate if greenhouse gas emissions are unmitigated show that the climate young people are growing up with today will be drastically different by the time they are older — and may even have "no modern equivalent."

By the numbers:

• In the scenarios with unchecked emissions, all 540 cities showed an increase in the average annual temperature between the current city and its contemporary analog, with an average increase of 8.2°F.
• Annual precipitation was more mixed, with 218 cities experiencing less rain and 322 with more, for an average change of +3mm.
• On average, the contemporary analog city was 528 miles from its 2080 partner.
• With lower emissions, the average distance shrinks to 230 miles, average annual temperatures would increase by 4.6°F, and precipitation would increase by 22mm.

How they did it: The study, led by Matt Fitzpatrick at the University of Maryland's Center for Environmental Sciences, used 12 temperature and precipitation variables to create 27 climate projections for each city.

• The projections are based on two underlying emissions scenarios, which were combined with Earth system models to generate 54 future climate scenarios.
• One of the emissions scenarios involves the world reining in greenhouse gas emissions, but not sufficiently to meet the Paris Climate Agreement's temperature goal.
• The other scenario, shown in the map, involves emissions continuing to increase unchecked.

The researchers took the mean of the 2080's projections for the 540 cities they examined and matched it with the contemporary city with the most similar climate.

Go deeper:

• Find your city in this interactive map.
• Earth's 5 warmest years on record have occurred since 2014.

The big picture: House Democrats are "actively looking into potential solutions to patent abuses by companies that delay cheaper generics from coming to market," according to a Democratic aide. And Republicans are more open to that idea than ever before.

• "I think it’s terrible that Big Pharma sort of abuses the system to try to sort of evergreen these patents and keep them around forever, and I think it’s part of the answer," Sen. Rand Paul (R-Ky.) said.
• "I'm open to looking at a lot of things, and I think maybe Big Pharma might be more cooperative if they thought we might actually limit the exclusivity," he added.

It's not just flame-throwers like Paul who are talking about this.

• Sen. Susan Collins (R-Maine) said she's introducing legislation soon that's "aimed at some of the gaming of the system that we see going on.”
• "I think it's time to look at the broader issue of whether the way in which companies are protecting their patented drugs is leading to higher costs," Sen. Rob Portman (R-Ohio) said.
• In the past, Republicans were quick to defend the existing patent system, saying it's a necessary incentive for innovation, while they avoided defending individual bad actors. But many members' tone, at least, is changing, and they aren't ruling out reform.
• And drug companies are getting worried about the GOP's interest in patents, according to a GOP lobbyist who works with the companies.

Between the lines: It's unclear how far any of this will ultimately go. But some Democrats are optimistic about compromise.

• "Evergreening might be an area where we can get some bipartisan agreement on rooting out the worst of the abuses," said Sen. Elizabeth Warren (D-Mass.).

How it works: New drugs get patent protections and a period of market exclusivity, both of which block competition from cheaper generics. The idea was to reward innovation and give drugmakers an incentive to come up with new products.

• But critics say pharma is gaming the system — for example, by making minor changes to their drugs and taking out a new patent, extending their monopolies longer than the system intended.
• One study published in the Oxford Academic last year found that 78% of the drugs awarded new patents between 2005 and 2015 weren't new drugs, but existing ones.
• There has been a bipartisan push to end specific categories of gaming, but there is a much wider world of potential targets.

The bottom line: A mix of Trump's rhetoric, his administration's aggressive policies, and Democrats' leftward march on health care has forced Republicans to become more proactive on drug prices.

• "Big Pharma needs to wake up and say, we need to talk to people...who believe in capitalism, believe in profit, believe in businesses succeeding, but don’t like to see the government manipulated for people’s profit," Paul said.