POLITICO Playbook: ALEX CASTELLANOS: Trump ‘has room to grow. ... Republicans see a turnaround CEO, coming to save their near-bankrupt company’

DRIVING THE WEEK -- "Obama aims to rise above 2016 in final State of the Union [on Tue.]: The White House will campaign for Clinton, but not in this speech," by Isaac Dovere: "The closest Obama's going to come to 2016 politics ... is ... offering an optimistic, aspirational contrast to the doomsday at-the-barricades mentality that's dominating the GOP primary race. ... [Aides] even skipped the usual State of the Union-specific focus group testing, though regular White House focus groups continue to be run by the firm of Joel Benenson, who's also now the chief strategist for Clinton's campaign." https://politi.co/1TNCTTz

BREAKING - "Neck-And-Neck 2016 Races in Iowa, New Hampshire," by NBC's Mark Murray: "Trump and Ted Cruz are running neck and neck in Iowa, while Hillary Clinton and Bernie Sanders are also locked in a tight race ... Clinton and Sanders are within the margin of error in New Hampshire, [where] Trump has built a 16-point lead." https://nbcnews.to/1PlYejf

By Mike Allen (@mikeallen; [email protected]) and Daniel Lippman (@dlippman; [email protected])

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UNDERSTANDING TRUMP -- ALEX CASTELLANOS, "Trump, Ted Cruz and the Missile Headed for Grandma's House": "Our most likely scenario today? Ted Cruz wins Iowa. Then Donald J. Trump rebounds in New Hampshire, and that's the barbed-wire, no-holds-barred, steel-cage match for the GOP championship. I'd bet on the relentless salesman to erode Ted Cruz in that battle. ... Trump continues to grow both as a candidate and a leader. He has demonstrated a brilliant ability to renew his campaign when many suspected he would exhaust himself. Increasingly, Trump makes other contenders look unimportant. ... 

"Trump has ... shown GOP voters he is the only Republican candidate with the fortitude to take on the Clintons at their own game and give as good as Republicans usually get. For a Republican Party maddened at seeing an inbred Washington establishment rationalize decades of failure, reward itself for the same, and then wipe the floor with those who object, Trump is a righteous avenger - and he still has room to grow. ... Republicans see Trump as a turnaround CEO, coming to save their near-bankrupt company. ...

"Should Hillary Clinton be favored to beat Donald Trump? Not necessarily. Donald Trump is above all a salesman. ... Trump would adapt, pivot, and do anything to make his next deal; winning the general election. ... With a 'new and improved' Trump, a bounce from a celebratory convention, and just a little progress with swing voters, Trump would enter the general election running a breath away from Hillary Clinton, a candidate with a hard base, a low ceiling, and same worn, thin Washington-elite agenda most voters have outgrown." https://bit.ly/1JC3P8k

SUNDAY BEST - Donald Trump to Chris Wallace on "Fox News Sunday": "A lot of people are saying that if it's Trump against Hillary, it's going to be the largest voter turnout in the history of this country. And those extra people -- those people that have never been part of the process before -- are doing it because they're going to vote for Trump. So, I think we're going to do very well."

MAYOR OF THE WORLD - N.Y. Times A1, at fold, "For Republicans, Fears of a Lasting Split as Class Divisions Erupt," by Patrick Healy and Jonathan Martin: "Michael R. Bloomberg ... was intrigued enough by the prospect of Mr. Trump's becoming the Republican standard-bearer that he commissioned a poll last month testing how he would fare against Mr. Trump and Mrs. Clinton." https://nyti.ms/1Zeus57

INSIDE THE CAMPAIGNS -- "In Iowa, Cruz battles Trump - and rising expectations: The Texas senator's allies worry that he is peaking too early," by Shane Goldmacher in Waverly, Iowa: "Cruz wrapped up his six-day, 28-county bus trip looking to lock down his Iowa frontrunner status ... While he delivered nearly the same stump speech, word for word, at every stop, he also worked in some humanizing touches, such as the occasional impersonation of Clint Eastwood and John F. Kennedy. At a gas station in Manly, he jokingly manned the register at a convenience counter." https://politi.co/1JDpehD

--Dallas Morning News p. 1A, below fold, "Cruz hitting stride in Iowa: On script and off, senator scores with his evangelical flare," by Todd Gillman in Storm Lake, Iowa: "[T]he tour ... exposed vulnerabilities that could hurt Cruz beyond Iowa. Doubts that Trump planted about the Canada-born senator's eligibility seeped into Q&A sessions. Saturation-level attacks from the ethanol industry prompted pointed questions from Iowans alarmed that Cruz would scrap a federal mandate that props up the price of their corn. 

"And Cruz's relentless appeal to evangelical Christians and hard-core conservatives could prove limiting in states to come. His own rhetorical excesses, like floating a 'spanking' for Hillary Clinton, reinforced his edgy image." https://bit.ly/1nbd0mk

OK! WE GET IT: WashPost A3 today, "Ted Cruz's secret weapon: Heidi Cruz," by Katie Zezima https://wapo.st/1OVGaSF ... Erin McPike video for Reuters, Dec. 15, "Cruz's secret weapon: his wife Heidi" https://reut.rs/1Ocb1al ... San Antonio Express-News, Dec. 5, "Ted Cruz's secret weapon: Heidi Cruz," by Kevin Diaz, D.C. guy for Houston Chronicle https://bit.ly/1OI3vFD ... Same Post reporter, Sept. 14, "Heidi Cruz trying to close her biggest deal: Making her husband president" https://wapo.st/1PQiRa1 ... National Review, March 27,"Ted Cruz's Not-So-Secret Weapon: His Wife," by Joel Gehrke https://bit.ly/1PXqhdu

**A message from Ford Motor Company: We are committed to making people's lives better by changing the way the world moves. Ford is supporting tech startups to help develop mobility and transportation solutions that will drive the future. Learn more about Ford Smart Mobility: https://ford.to/FordCES2016 ** 

HOLLYWOOD TWIST - "Mexico: [El Chapo] located thanks to interview with Sean Penn," by AP's Eduardo Castillo and Katherine Corcoran in Mexico City: "Penn's interview ... appeared late Saturday online ... It was purportedly held at an undisclosed hideout in northern Mexico in late 2015, several months before Guzman's recapture ... after six months on the run. ... Mexican Attorney General Arely Gomez said that Guzman's contact with actors and producers for a possible film about him helped give law enforcement a lead ... 

"[A Mexican] law enforcement official said that Mexico is willing to extradite Guzman to the United States, a sharp reversal from the official position after his last capture in 2014. ... But ... the defense already has filed six motions to challenge extradition requests." https://apne.ws/1mOE1eO

--"White House says 'El Chapo's' boast to Sean Penn 'maddening'" - AFP: "'[T]his braggadocious action about how much heroin he sends around the world, including the United States, is maddening,' White House chief of staff Denis McDonough [told Jake Tapper] in an interview with CNN's 'State of the Union.'" 

--Rolling Stone, "El Chapo Speaks: A secret visit with the most wanted man in the world," by Sean Penn("Disclosure: Some names have had to be changed, locations not named, and an understanding was brokered with the subject that this piece would be submitted for the subject's approval before publication. The subject did not ask for any changes"): "Chapo smiles a warm smile. In fact, in what would be a seven-hour sit-down, I saw him without that smile only in brief flashes. As has been said of many notorious men, he has an indisputable charisma." https://rol.st/1OVH3L7 ... Pic of Penn and El Chapo, who is 5 ft., 6 inches, and his nickname means "Shorty" https://bit.ly/1ZkLiVm

--N.Y. POST cover, "EL JERKO: Penn pals with drug lord on the run."  www.nypost.com/cover

TOP TALKER -- AP: "No winner in record $949.8 million Powerball drawing [which would have been largest prize in U.S. history]; Wednesday's may hit $1.3 billion."... N.Y. DAILY NEWS cover, "DRAWING BLANKS: Powerball jackpot soars to $1.3B."

RUT-ROH - Chicago Tribune lead, "FBI probes another fatal shooting by Chicago cops: Officials said they were returning fire from Esau Castellanos ... that night in 2013. But no gun was recovered - and then their account shifted." https://trib.in/1OIdevt

HAPPENING TOMORROW -- "Clinton to get [Anthony] Foxx endorsement in Waterloo," by Waterloo-Cedar Falls Courier's Christinia Crippes: "Foxx ... [the] Transportation Secretary and former mayor of Charlotte, N.C., will officially endorse Clinton when she holds an organizing event at noon ... at Electric Park Ballroom ... Foxx joins ... Agriculture Secretary Tom Vilsack, Labor Secretary Tom Perez and Housing and Urban Development Secretary Julian Castro in supporting Clinton." https://bit.ly/1OVOdPu

NEW HILLARY ad, "Incredible": Interspersed with clips of what GOP candidates have said, a somber narrator says: "Think about it ... One of these Republicans ... could actually be president, enacting their agenda ... They're backward, even dangerous. So ask yourself, who's the one candidate who can stop them? Hillary Clinton: tested and tough. To stop them, stand with her." https://bit.ly/1kW56LQ

INSTAGRAM OF THE DAY -- @petesouza: "Lilah Steadman, 3, embraces President Obama as her sister, Addison, 4, gazes up at the President while holding on to her mother, Emily, following a promotion ceremony for their father, Military Aide Lieutenant Colonel Andrew Steadman [Friday]." https://bit.ly/1SaJ9Hn

TWEET DU JOUR -- @tripgabriel: "Trump: 'I like money. I'm very greedy. I've always been greedy, I shouldn't tell you that. I love money.'"

--@BillKristol: "Could Ted Cruz's Alberta birth inspire him to take up the cause of resuming U.S. expansion--beginning with, e.g., Alberta? #ManifestDestiny".

PICS DU JOUR -- @jordanjfrasier: "Guy in crowd at pro-life rally gave @JebBush a Powerball ticket: the governor said 'it's gonna be huge." https://bit.ly/1kW4Yfp

--M. Scott Mahaskey @smahaskey: "OTTUMWBA: Batch of @realDonaldTrump media credentials distributed with Ottumwa, IA misspelled. #Iowa. #IowaCaucus". https://bit.ly/1mNywgy

SPOTTED: John Bolton lugging baggage through security in Phoenix airport.

WHITE HOUSE DEPARTURE LOUNGE - Vikrum Aiyer , senior adviser on manufacturing and innovation policy to the National Economic Council, emails friends: "I now have the opportunity to spend the remainder of the Administration's 4th quarter advancing the President's innovation and technology agenda, as Chief of Staff of the nation's patent and trademark system (USPTO) at the U.S. Department of Commerce."

WELCOME TO THE WORLD - "Daley Edward Prell was born on January 2nd at 10 PM exactly, weighing 6 pounds, 5 ounces. Mom Christy Setzer, of New Heights Communications, and P.R. consultant dad Tyler Prell , are so in love with the little guy and look forward to getting to know him. So far, likes include: playing with his hands, eating, and Mommy. Dislikes include: diaper changes. Pics of the new fam leaving the hospital and one they like to call "Enormous Hands," by Dr. Ben Carson https://bit.ly/1Oj50q6 ... https://bit.ly/1ZTZQIx

BIRTHWEEK (was yesterday): Richard Neffson

BIRTHDAYS: Joanna Rosholm (@Rosholm44), the First Lady's press secretary and deputy comms. director (h/t Caroline Adler) ... Beth Fouhy, senior editor of msnbc.com and an AP and Yahoo alum ... Sen. Roy Blunt (R-Mo.) ... Rep. Lois Capps (h/ts Laura, Bill and Oscar) ... Nick Calio, president and CEO of Airlines for America and a Citigroup and Bush 43 WH alum ... Lauren Edmonds, former Politico now at Glover Park ... NBC News' Freddie Tunnard (h/ts Olivia Petersen) ... Rep. Bill Shuster (R-Penn.) ... AP National Security Writer Robert Burns, the pride of Stanwood, Wash. ... Rep. Chris Van Hollen (D-Md.), now running for Barbara Mikulski's Senate seat ... Luke Johnson of Radio Free Europe/Radio Liberty and a HuffPost alum ... Rep. Greg Walden (R-Ore.) ... Benjamin Hackett ... Teneo's Liesl Hickey, an NRCC alum ... Jeremy Button of the High Lantern Group ... Abigail Ashbrook, daughter of John ... Blake Adami, L.D. to Rep. Blake Farenthold (R-Tex.) ... Nat Sillin, former flack for NRCC and current head of U.S. Financial Education at Visa whose Twitter bio includes the phrase "Wilderness. Adventure. Ramen" ... 

... Morgan Finkelstein, press secretary for the Democratic Party of Virginia ... David Hallock, Sen. Mark Warner's chief of staff and renowned mock debate sparring partner ... Liz Chadderon, president of Chadderdon Group, a "Texas native, godmother, gun control advocate and cabernet enthusiast," per her Twitter ... New Hampshire's Steve Marchand and Dante Scala ... Benjamin Hackett ... Vaughn Ververs, political editor at NBCNews.com, is 47 ... Leonard Boswell ... former Sen. Mark Pryor (D-Ark.) ... Fox News' Michelle Fields ... Jessica Mudditt ... Stacy Hawkins Adams ... Braxton Marcela ... Lanny Wiles ... Cheryl Benton ... AnnMaura Connolly ... Richard Gaumer (h/ts Teresa Vilmain) ... Bush 43 admin alum Sally Lovejoy ... Baseball Hall of Famer Willie McCovey is 78 ... Frank Sinatra Jr. is 72 ... Rod Stewart is 71 ... Donald Fagen (Steely Dan) is 68 ... George Foreman is 67 ... Pat Benatar is 63 ... Hall of Fame race car driver and team owner Bobby Rahal is 63 ... actress Sarah Shahi is 36 (h/ts AP)

** A message from Ford Motor Company: We are driving innovation in every part of our business, using smart technology, data science and advanced materials to solve the world's biggest transportation challenges and deliver safe, convenient and fuel efficient solutions. 

Ford-sponsored Techstars Mobility, driven by Detroit, is now talent-scouting for a new class of innovators to develop mobility and transportation solutions. Selected startups will receive funding and three months of training and mentorship to develop future mobility and transportation solutions aligned with Ford Smart Mobility, the plan to take the company to the next level in connectivity, mobility, autonomous vehicles, the customer experience as well as data and analytics. Some of today's most innovative thinking is coming from startups, and we're excited to bring this new thinking to Detroit and the auto industry.

Follow us @ford to learn what is ahead for Ford Smart Mobility in 2016 or visit https://ford.to/FordCES2016 ** 

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