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INSIDE POLITICS

CEOs Baffled by Mnuchin Call; Trump Pressures Mnuchin; Trump to Hold Border Security Meeting; Trump Taps Shanahan; Syria Troop Withdrawal. Aired 12-12:30p ET

Aired December 24, 2018 - 12:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


[12:00:00] KATE BOLDUAN, CNN ANCHOR: Buckle up, everybody and Happy Christmas Eve.

Great to see you, Alison, thank you.

Thank you so much all for joining me. "INSIDE POLITICS" with Manu Raju starts right now. We'll see you tomorrow.

MANU RAJU, CNN ANCHOR: Welcome to a special Christmas Eve edition of INSIDE POLITICS. I'm Manu Raju. John King is off.

It's day three of the government shutdown. The president is at the White House tweeting about the need for a border wall, while congressional leaders are at home for the holidays waiting for signs of a deal.

President Trump also spending his holidays frustrated with his outgoing defense secretary, his acting chief of staff and his Treasury secretary.

And Democratic Senator Claire McCaskill lost her re-election bid and is leaving Washington telling us what Republicans privately say to her about President Trump.

(BEGIN VIDEO CLIP)

SEN. CLAIRE MCCASKILL (D), MISSOURI: Now, they'll tell you, if it's just the two of you, you know, the guy's nuts, you know, he doesn't have a grasp of the issues, he doesn't -- he's making brash decisions, he's not listening to the people who know the subject matter. But in public, if they go after him, they know they get a primary.

This is a completely different Republican Party. Now, I think history will judge some of my colleagues harshly that they didn't stand up to this president.

(END VIDEO CLIP)

RAJU: But we start with another market cliff dive. The Dow is down big, again, after a weekend that left investors scratching their heads and riddled with new concern over a coming financial crisis. Treasury Secretary Steven Mnuchin today is convening the president's working group on financial markets, sometimes referred to as the plunge protection team. Word of that meeting followed a statement from Mnuchin on Sunday that caught nearly everyone off guard. He announced had just spoken with top bank CEOs and said they'd assured him they'd have ample liquidity for lending. That left some wondering, was there some concern that they didn't know about? A source familiar with the calls said the bank execs were totally, quote, baffled.

And we're also told that Secretary Mnuchin is now in the president's crosshairs for how things are going on Wall Street. A source tells CNN, the president blames Mnuchin for pushing Jerome Powell's appointment as Fed chairman. Beyond that, the source says that Trump thinks his Treasury secretary isn't doing enough to stabilize markets and believes Mnuchin could be doing more to reassure investors.

And here's how the president sums up his frustration with the Fed, tweeting this morning that, the only problem our economy has is the Fed. They don't have a feel for the market, they don't understand necessary trade wars or strong dollars or even Democrat shutdowns over the borders. The Fed is like a powerful golfer who can't score because he has no touch -- he can't putt.

Here with me to share their reporting and their insights, Seung Min Kim with "The Washington Post," Burgess Everett with "Politico," Michael Shear with "The New York Times," and Margaret Talev with "Bloomberg."

I want to first start with Mnuchin from over the weekend making these calls to investors that -- the bank CEOs that caught everybody off- guard. I want to read to you what a former chief economist to Joe Biden told "The Washington Post" over the weekend. He said, if this weren't the end of December, I would have thought it was April Fool's. The markets are already nervous enough. It's like sending out a message saying our space shields can intercept incoming asteroids. Uh, I didn't know there were any coming our way.

And, Brian Schatz, who sits -- he's a Democrat. He sits on the Senate Banking Committee, he said, like if the local department of health abruptly called a news conference to declare the water is safe to drink.

Any sense on why Mnuchin did what he did?

MARGARET TALEV, SENIOR WHITE HOUSE CORRESPONDENT, "BLOOMBERG": Yes. I mean it seems, at the outset, that he was actually trying to calm everybody down and probably also wanted to do some outreach to the banking execs on a number of other issues and there was a reason to call them. But I think this is an unanticipated consequence of that.

He's in a bit of a no-win position because the president, if he could, if he had his druthers, would like to undo the Powell, you know, appointment. And if he -- if he can't get rid of Jay Powell, and he wants to take it out on someone, it puts Steve Mnuchin in a really precarious position and I think that's what we're looking at right now.

RAJU: Yes, and that's one of the questions, if he can or cannot get rid of Jay Powell. Over the weekend, Mick Mulvaney, his incoming chief of staff, was discussing whether or not the president can fire the Fed chairman. This is what he said.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Does the president believe that he has the authority to fire the Fed chairman?

MICK MULVANEY, WHITE HOUSE BUDGET DIRECTOR: Oh, no. In fact, I think -- and I'm sorry, we should have talked about this beforehand, I think he put out a tweet last night specifically saying that he now realizes he does not have the ability to fire him.

(END VIDEO CLIP)

RAJU: Burgess, you were on Capitol Hill this weekend talking to senators about this. How did they react to this discussion about the possibility of whether a president can fire Powell or not?

[12:05:00] BURGESS EVERETT, CONGRESSIONAL REPORTER, "POLITICO": I mean they don't like it. Powell got more than 80 votes in the Senate when he was confirmed earlier this year. I thought that there was enough of a freak-out about Powell among Republicans before this Mnuchin statement yesterday. So they were saying the Fed is supposed to be independent. The president should not be interfering in this. Already I think they were worried the markets were going to tank today. So considering what happened last night, it's just rolled together into one big problem.

SEUNG MIN KIM, WHITE HOUSE REPORTER, "THE WASHINGTON POST": And, look, this is one of several political crises engulfing the Trump administration right now. But the -- especially the big problem for the president is, remember how often he has touted the strength of the stock market? This is one of his favorite talking points. And now that the stock market is having the worst -- one of the worst Decembers in a decade, that's not only disappeared from his public -- public comments, but also he is really furious about it in private. Like, as we mentioned earlier, he is angry at Mnuchin. This is why he has talked about privately -- or privately discussed pushing Jay Powell out. And that -- and going back to Saturday, when Steve Mnuchin had that comment about that there were never discussions about pushing Powell out, our reporting says that while Trump realizes that this chatter about pushing Powell out may have disrupted the markets, he didn't want to be the one publicly defending the Fed and defending the Fed chairman there and that's why he had Mnuchin say what he did.

RAJU: It was interesting to just see Mnuchin tweet over the weekend from President Trump's -- to say that President Trump saying that they can't fire -- Powell. But we have not heard that specifically from the president.

How much do you think that Mnuchin himself should be worried about his job at the moment?

MICHAEL SHEAR, WHITE HOUSE CORRESPONDENT, "THE NEW YORK TIMES": Well, look, I mean I think if you -- you know, this is all a piece, the entire Trump presidency, you have to look as a whole, and nobody is safe in Trump's orbit, whether it's the defense secretary, who is universal respected and admired, or a chief of staff who, you know, obviously has gotten cross-wise with the president as well. And I think that's part of what's rattling the markets is that when you look at the lines that presidents are not supposed to cross, right, I mean there is -- has been historically, and there is legally, independence of the Fed and the Fed chairman from the president, despite the fact that the president appoints.

But when -- when investors, when CEOs, when market watchers look at what this president has done just in the past few weeks firing all number of staff in his administration, and then they look at his tweets and they say, you know, there's no -- there's no real confidence that the president won't cross that line and do the same -- and take out the same kind of frustrations that he's taking out on the staff that he can fire with the Fed chairman. And that's -- you know, I mean I think that's part of why we see all the instability in the market.

TALEV: And I think, you know, it's -- if you think about the timing of this, so when my team and I reported this on Friday about the discussions about Powell, it's important to understand that there are people inside and around the White House that are concerned enough that this might have happened, that the president might want to test that norm. OK, the law says I can't do it. Who's going to -- like, is that really what the law says?

SHEAR: Yes.

TALEV: That this is a concern that people are raising. And they, to some degree, are raising -- there are two camps. There are people who actually -- hey, why not, let's test the idea. They also agree with the president on Powell and they're not really sure if that's what the law says. There are many more people who think it would be a really, really dangerous line to cross, that in trying to help the economy, the president could actually make the economy worse is precisely the concerns that he might actually be willing to test it that prompted the disclosure of this outside of those realms (ph).

RAJU: Yes. And it's -- you know, obviously Mnuchin, Mulvaney, trying to calm down the markets, saying everything is fine. We're not going to -- you know, ample liquidity in the banks.

TALEV: Nothing crazy is going to happen here.

RAJU: Nothing crazy. No one's getting fired. But the markets clearly concerned still. We'll continue to monitor these developments as the day unfolds.

But, up next, part of the government is shut down. Today, new signs it could stay that way well into the new year.

(COMMERCIAL BREAK)

[12:12:57] RAJU: Welcome back.

Your government closed for business and in no danger of reopening anytime soon. The weekend came and went with little sign Republicans and Democrats are nearing a compromise. The president this morning says Democratic objections about a southern border wall are less about the wall itself and more about him. Negotiations are stalled after the White House rejected a Saturday counteroffer from Democrats and leadership sources won't say when they'll make another counter offer and the president has failed to tell lawmakers exactly what his bottom line is.

And, privately, Republicans say the president is willing to back off that demand for $5 billion for a wall. And that's something that his incoming chief of staff, Mick Mulvaney, publicly signaled yesterday but Democrats say any wall money is a non-starter.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Are you at all open to anything in between $1.6 billion and $5 billion?

SEN. DICK DURBIN (D), ILLINOIS: Well, what Chuck Schumer and Nancy Pelosi have both told the president is we're not going to build a wall, period.

(END VIDEO CLIP)

RAJU: So we've just learned that the president's going to have a border security meeting this afternoon. Press Secretary Sarah Sanders just said that Secretary Nielsen, the Homeland Security secretary, will be at this 2:00 briefing -- meeting. We don't know who else is going to be there.

But you spent the weekend on Capitol Hill, Burgess. I'm sure you were excited to be there.

EVERETT: Yes, it was great.

RAJU: It was great.

Were there any actual real negotiations happening at the moment?

EVERETT: It felt like when Vice President Pence came on Saturday to visit with Chuck Schumer, it felt like that was intended to just send a signal that everybody hasn't backed into their corners. But the reality is, I mean, the Democrats are saying $1.3 billion for fencing, not the wall. They've been saying that consistently for about two weeks now. I have no indication they're ever going to back off that. And so if Republicans are expecting a new offer, they're just going to keep getting the same offer.

As of today, I don't think anybody's talking about anything. I think the last real talks were on Saturday. And even those were not that real.

RAJU: Yes, and this is what the president is talking about, tweeting just minutes ago, the wall is different than the $25 billion in border security. The complete wall will be built with the shutdown money plus funds already in hand. The reporting has been inaccurate on the point. The problem is without the wall much of the rest of the dollars are wasted.

[12:15:14] We can -- we can -- try to -- do you want to try to interpret that, Seung Min?

KIM: Um --

EVERETT: Good luck.

KIM: It's a little difficult right now. I mean the $25 billion figure has been around for some time as border security/wall payment. I mean this was part of negotiation that Democrats and the president engaged in earlier this year when the fate of the dreamers was at stake. It's a deal that the president rejected that a lot of people now say he probably should have taken because that was his last, best chance at a wall.

But, look, I think Mick Mulvaney's prediction on the shows yesterday is pretty accurate when he says he could see this going on for a long time because you do see how the two sides are so dug in. I mean there was some private -- there are some private indications, and public indications that the White House is willing to come down from the $5 billion offer. I imagine Democrats -- it's some Democratic senators say privately that they may be able to go up a little bit from the $1.3 billion as long as it's not for a wall. But, remember, Nancy Pelosi and the House Democrats come in charge January 3rd and at that point the president's leverage is going to continue to decrease.

SHEAR: Right.

RAJU: Yes, they don't really have much of an incentive at the moment to give in.

KIM: Exactly.

RAJU: And you're hearing some frustration from members on The Hill. You guys just talked to Pat Roberts, other reporters, who is presiding over a very brief session in the Senate today. He said, LBJ said sometime you just have to hunker down like a jackass in a hail storm and just take it. That's about where we are. He's a Republican from Kansas. Obviously not very happy.

And yesterday you heard from another Republican senator, an outgoing senator, Bob Corker, the Senate Foreign Relations Committee chairman, who is also frustrated at this president. He says this is just all a made-up issue.

(BEGIN VIDEO CLIP)

SEN. BOB CORKER (R), TENNESSEE: Not long ago, just a few moments ago, the president could have received $25 billion in border security just by dealing with the dreamers, which by the way most Republicans want to deal with the dreamers issue. So we had $25 billion that could have been spent on border security. Now the government is shut down over what ultimately is going to be $2 billion. This is a made-up fight so the president can look like he's fighting. But even if he wins, our borders are going to be insecure. (END VIDEO CLIP)

RAJU: We'll talk a little bit more about this feud with President Trump and Bob Corker later in the show. But "The Wall Street Journal" made the similar point with -- as Bob Corker did, in its editorial today, saying a quarter of the federal government has shut down. Most Americans don't care. There's a wisdom in that response because this showdown over spending, the third this year, is a mostly symbolic, political exercise that won't make much difference no matter who wins.

The president doesn't clearly believe that at all.

SHEAR: No, but I think, to take a little bit of a stab at destructing this tweet that he just did, one of the things that I've always thought would be the way that we get out of this is for the president to figure out a way to kind of distort reality and claim victory, right? And I think that's part of what this is -- you know, sort of what he's going to try to do is reshape the idea that, well, there's a certain pot of money that's actually going to build the wall, or the wall is already built, which he says all the time, parts of the wall that are built, which is actually not true but he keeps saying it. And so the question is, can he figure a way to redefine reality, say something about the wall that satisfies his sort of right flank, and then move on.

RAJU: Yes.

SHEAR: And I think that's part of what that tweet was about. And I think that's the only way we're getting out of this.

RAJU: And it's interesting to see how the Republican leadership have been distancing themselves from what's been going on. You heard Mitch McConnell over the weekend --

SHEAR: Right.

RAJU: Make it very clear that this is the Democrats' and President Trump's deal. He tried to -- he thought Trump was on board with this short term deal to keep the government open until February 8th. Obviously Trump undercut him. Now he says it's up to the president and the Democrats.

Now, I had a chance last week to talk to the outgoing Missouri Senator Claire McCaskill about Mitch McConnell, his positioning and how she views him as he's dealing with this issue. This is what she said.

(BEGIN VIDEO CLIP)

SEN. CLAIRE MCCASKILL (D), MISSOURI: He's a very, very political leader. This isn't somebody who is sitting around at night figuring out how he can move the needle on really important policy issues. This is someone who is figuring out how he can win elections, beat Democrats, like me, and make sure that Republicans like Cory Gardner and Thom Tillis can hold on to their jobs two years from now.

(END VIDEO CLIP) RAJU: There aren't that many people who would disagree with that -- that assessment.

But the larger point is that Republicans are trying to keep their -- they don't -- Mitch McConnell and the Republican Party do not like the position that the president has put them in right now.

TALEV: Yes.

RAJU: At some point do you think the president may end up getting rolled by his party on The Hill or do you think they're going to end up sticking with him?

TALEV: I mean, I think this looks different now than it did six months ago, let's say. The Democrats' impending takeover of the House makes a difference. The fact that we're now in 2020 season and that's only increasing makes a difference. And the fact that there's going to potentially be a tipping point when the Republicans get as much as they can out of this system, judicial nominees, appointments. They have already gotten so much from this administration that the calculation about how much President Trump is continuing to serve them is going to be constantly visited or revisited. They thought they had a deal, an agreement with him to stave off a shutdown. They all wanted to go home. That fell apart because the president made it fall apart.

[12:20:35] They -- the situation with Syria and Mattis is affecting a lot of Republican lawmakers who disagree with the president's decision on this or disagree at least with the way it was executed. And so I think all these things add up. And they have the potential to expand and divide. It's not clear yet, but it's a risk. And the president does that at his peril.

RAJU: You know, it will be interesting if this does extend into the new year and say the House Democrats come in, they pass a short term thing to keep the government open.

EVERETT: Yes.

RAJU: What will McConnell do at that point? Will he say, stick with the president, will he go back to the position that they had?

EVERETT: Will he give it a roll call vote even?

RAJU: Will he give it a roll call vote? We'll see what he decides to do. These are all --

EVERETT: I would say they've already rolled on him in some respects. There was a voice vote to pass this short term CR. You have plenty of conservatives in the Senate who say they're aligned with Trump on the border issue. None of them objected to this and even demanded a roll call vote. I mean that seems like parliamentary theater, but it matters, because immediately after that happened you had several senators saying, oops, I actually opposed this, and you're like, well, you have a chance to actually make this happen and you didn't.

RAJU: (INAUDIBLE) ran the floor making that very clear. Yes. We'll see how that continues to play out.

It's been quite the breakup between President Trump and Defense Secretary Jim Mattis. Next, what to expect as Mattis is shown the door two months sooner than planned.

(COMMERCIAL BREAK)

[12:26:31] RAJU: Welcome back.

The Dow is down around 450 points amid continuing uncertainty and comments from Steven Mnuchin over the weekend. We'll continue to monitor all of this as the day develops.

But first, it's been a dramatic split between Defense Secretary Jim Mattis and President Trump. And today Trump expanded on their differences, tweeting, we are substantially subsidizing the militaries of many very rich countries all over the world, while at the same time these countries take total advantage of the U.S. and our taxpayers on trade. General Mattis did not see this as a problem. I do and it is being fixed.

Mattis' resignation came after Trump's unexpected announcement to withdrawal all U.S. troops from Syria. Now, Deputy Secretary of Defense Patrick Shanahan will becoming acting secretary on January 1st, two months earlier than Mattis had planned for his resignation.

CNN's Pentagon correspondent Barbara Starr joins us now.

Barbara, what do we know about Shanahan? Is he more aligned with the president's policy views than Mattis'?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, at least in the areas that he's already been dealing with, Manu, Shanahan, as number two at the Pentagon is sort of, think of it this way, the inside man. He deals with things like business practices, budget, acquisition reform, developing a space force that Mr. Trump wants, innovation, all the business matters, which really go to his experience as a 30 year executive at Boeing working in both commercial and military programs.

But he doesn't have any foreign policy or national security or military experience. So, so far he hasn't had to say no to Mr. Trump. He's been lucky enough to be involved in the issues that Trump relates to. Now he will be, Shanahan, will be on the world stage, having to deal with allies and adversaries. And that will present him some very significant new challenges.

Manu.

RAJU: Barbara Starr at the pentagon thanks.

A new Trump tweet, Saudi Arabia has now agreed to spend the necessary money to help rebuild Syria instead of the United States. See, isn't it nice when immensely wealthy countries help rebuild their neighbors rather than a great country, the U.S., that is 5,000 miles away? Thanks to Saudi A! So clearly the president continuing to feel all the backlash of a number of his decisions, namely pulling troops out of Syria.

The president is clearly going alone on this. I want you to listen to one of the top White House aides, Mercedes Schlapp, who spoke on -- earlier today, asked about who else was involved in this decision, and here's how she responded.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Can you name an adviser the president has that recommended he pull out 2,000 troops?

MERCEDES SCHLAPP, WHITE HOUSE DIRECTOR OF STRATEGIC COMMUNICATIONS: I'm not going to get into the internal discussions of how -- of how the decision was made. At the end of the day, we all serve in the position of advising the president. It is up to the president to make the final decision.

(END VIDEO CLIP)

RAJU: Any chance the president backs off this decision? It seems like he's digging in.

[12:29:37] TALEV: Well, he is -- that executive order is now being implemented. I mean he's certainly been under pressure to at least slow it down, if not change his mind. But this is what prompted Jim Mattis', you know, resignation. And then the backlash from that, the heat on the president is what prompted the president to get Mattis out of there before he could be -- either do a goodbye tour with troops so everybody could see how much everyone loves him, or could go to Capitol Hill still in his capacity and be grilled.