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The Government Still Partially Shut Down; Trump Is Now Kicking Secretary Mattis Out Two Months Early, U.S. Treasury Secretary Throwing Out The Most Unreassuring Reassurance Possible As The Markets Wrap Up The Worst December Since The Great Depression. Aired: 11-11:30a ET

Aired December 24, 2018 - 11:00   ET


KATE BOLDUAN, ANCHOR, CNN: Hello, everyone. I'm Kate Bolduan and welcome to a special edition of "At This Hour" today. Depending on where you live, your dream of a white Christmas may be coming true. That's the good news, but for anyone dreaming of a quiet and uneventful holiday week out of Washington, keep dreaming.

Christmas Eve 2018 feels a whole lot like almost every other day in 2018 -- disruption, dysfunction, and disarray. The government still partially shut down. The President so angry over the response to the Defense Secretary's resignation that Trump is now kicking Secretary Mattis out two months early, and his Treasury Secretary throwing out the most unreassuring reassurance possible as the markets wrap up the worst December since the Great Depression.

So Merry Christmas, everyone. Let's get to the White House to start us off. Abby Phillip is there. Abby, the President stayed back in Washington, not going to Florida because of the shutdown, but no matter where he is, are you sensing any movement?

ABBY PHILLIP, WHITE HOUSE CORRESPONDENT, CNN: Well, we have had an extraordinary Christmas week already, and it's only Monday, but this has been one of the wildest periods of time for the Trump administration, so much turmoil, and the President has been really out of sight and not really heard from or seen from, except in one place, on Twitter.

Even as all of the back and forth has been going on, on Capitol Hill, Vice President Mike Pence trying desperately to make a deal with Democrats and vice versa over the weekend, the President has been largely absent from those conversations, but tweeting nearly constantly about a whole host of issues, but also this issue of his border wall. He doesn't seem to be backing down from it at all.

He said just this morning, "Virtually every Democrat we are dealing with today strongly supported a border wall or fence. It was only when I made it an important part of my campaign because people and drugs were pouring into our country unchecked that they turned against it. Desperately needed," he adds at the end.

But all of that is to say where is the compromise? I think we are still in a place where we're not sure exactly what President Trump's bottom line is, and at this point with the government still partially shut down, the President here in Washington canceling his trip to Florida for now, we are looking at the earliest a resolution on Thursday.

At the latest, the President's acting Chief of Staff or soon to be acting Chief of Staff Mick Mulvaney said on Sunday that could it stretch well into the New Year, into the new Congress when Democrats take over the House of Representatives.

Kate, this is still one of those situation that seems intractable. The offers and counteroffers don't seem to have moved the situation forward, and President Trump seems to be digging in his heels on the border wall as we go into Christmas Day here in Washington, Kate.

BOLDUAN: You sum it up so perfectly. The wildest of Christmas weeks and it's only Monday. Great to see you, Abby. Thank you so much. I really appreciate it. Now, from that to the continued drama surrounding the Defense Secretary's early exit.

The President's order to withdraw more than 2,000 U.S. troops from Syria has now been signed. Plans to pull thousands more out of Afghanistan are still in the works. And over the weekend, having seen the overwhelming praise for Secretary Jim Mattis and his resignation, President Trump is now forcing him out two months early.

Deputy Defense Secretary Patrick Shanahan is now slated to take over as acting Secretary in just one week. CNN's Barbara Starr is at the Pentagon for us with much more on this. Barbara, what do we know about Shanahan? And also, what's the reaction that you're hearing to this announcement?

BARBARA STARR, PENTAGON CORRESPONDENT, CNN: Well, as far as Patrick Shanahan goes, he's been the deputy here since the beginning, number two. And the traditional role of that person is to handle kind of the inside business -- contracting, acquisition reform, innovation -- the business practices of the Pentagon, which of course, has a multi- hundreds of billions of dollars budget.

He's overseeing the beginning of a Space Force, something Mr. Trump wants. Shanahan has been involved in of these business issues and has not ever had to tell Trump "no" because these are the issues the President likes.

So now, he steps on the world stage with no foreign policy or military experience. He's a former Boeing executive, actually. He was there for 30 years in their commercial airliner and military programs.

He steps onto the world stage now. He will be going to NATO meetings. He will be dealing with America's military allies, overseeing these withdrawals and trying to keep a sharp eye on America's adversaries.

He will have this work cut out for him. The feeling is that generally, he brings some stability because he's been here, but, and it's a huge but, Mattis leaves January 1st and officials who are already talking to rank and file troops, some of the senior commanders traveling in this holiday time overseas, are hearing a lot from the troops. There is concern, there is anxiety, there's uncertainty about what

comes next. And that is not something that commanders want to see at all -- Kate.


BOLDUAN: Not something any of our service members need who are in harm's way right now, this uncertainty in what their mission is and where they're going to be. It's so great to see you, Barbara. Thank you so much.

STARR: Thank you.

BOLDUAN: Joining me right now to discuss this is CNN military analyst and retired Air force Colonel Cedric Leighton, and CNN global affairs analyst and "Daily Beast" contributing writer, Kim Dozier. Thank you both so much for being here. I really appreciate it.

Colonel, jumping off of what Barbara was just talking about, what was your reaction when you heard that Mattis was pushed out two months early and Patrick Shanahan is taking his place?

CEDRIC LEIGHTON, MILITARY ANALYST, CNN: Well, many ways, Kate, it wasn't a real surprise to me because that's kind of a typical answer when somebody is being forced out or has resigned and they're popular. And an uncertain executive is going to remove that person very quickly to take away from that aura, if you will, of that individual.

And General Mattis, of course, has that aura. He is well known and well respected, as we all know, among the military and among the allies. But in this particular case, so I think we see him as being in essence the indispensable person who was let go.

And now of course, we'll see if Patrick Shanahan can come in and take his place, which will be a very, very hard thing to do.

BOLDUAN: Yes, I think that seems to be the resounding sentiment of anyone who would be taking the place of Jim Mattis at this point. Kim, on the pullout from Syria, and French President Emmanuel Macron, he did not parse any words over the weekend about kind of the impact in what this means, at least when talking about in terms of allies.

He says, that he very deeply regrets the U.S. decision on Syria and also says, "Being allies means fighting shoulder to shoulder, and an ally must be reliable and coordinate with other allies." What are you hearing is likely to be the real fallout from this decision?

KIMBERLY DOZIER, CONTRIBUTING WRITER, THE DAILY BEAST: Well, I was hearing alarm before President Trump moved up Mattis' retirement date. If he hoped to tamp down the criticism of his Syria decision by getting Mattis out of the way, I think this is going to have the opposite effect.

Already, the Pentagon had been scrambling to manage this decision, to see if maybe French and British forces could back fill them in Syria, somehow protect their Kurdish allies and also deflect the influence of Iran, but when I last checked in, that was still being worked, at least to save the air war over Syria. All of this also came from a phone call between President Trump and Erdogan of Turkey, and that's left allies concerned that one phone call could change months, years of work on this problem, which was supposed to lead to a stepped-down withdrawal, leaving some framework of aid and services in its place inside Syria.

BOLDUAN: And that does also make you wonder, Colonel, what do you take from the fact that it appears the President is taking the word or advice, if you will, of Erdogan over the advice of Jim Mattis and the other American U.S. advisers that he has on the payroll, on the job, to put U.S. interests at heart?

LEIGHTON: Well, I think it's a real problem, Kate and obviously, we have seen this movie before. It's a very hard movie to watch if you're somebody who is in a role of advising the President and trying to make the President understand what the consequences of particular actions are.

To take advice from Erdogan is a very risky thing because President Erdogan has his own national interests and his national interests include the elimination of the Kurdish, what he perceives as a Kurdish threat to Turkey and he's going to do all kinds of things to go after the Kurds in Syria because now the is going to be open for him to do so.

And for President Trump to take Erdogan's word without further checking with his advisers, I is a colossal mistake.

BOLDUAN: Let me also ask you, Colonel, about Afghanistan. Afghanistan, of course, likely there's going to be a drawdown there. "Wall Street Journal" has been traveling with the Marine Corps Commandant to visit troops overseas. And they posted a piece about it and asked about the drawdown plans. The Marine Corps Commandant's response was "The honest answer is I have no idea. I don't think anybody really knows exactly what's going to happen." That's from General Robert Neller. He said that on Friday. Is that what you would expect to hear from the head of the Marine Corps?

LEIGHTON: No, and General Neller himself would not have wanted to say that, but he felt compelled to say it because of the situation we all find ourselves in. You know, there are times to be unpredictable in foreign affairs and in military affairs, but there are also times to be completely predictable, and unfortunately, I think we're conflating the two right now, or at least the administration is.


LEIGHTON: And that is a real difficulty because in a place like Afghanistan, we really need to have a coherent policy. We want to be able to, if not win, at the very least we want to be able to leave a place like that better than we found it and give them the wherewithal for some kind of peaceful arrangement with the Taliban.

And I think that's where we were headed for, but looking at what's going on now, nobody knows what's happening and if the Commandant of the Marine Corps doesn't know what's going on, nobody else does either.

BOLDUAN: That's a great point, and Kim, add to that, you have the man in charge of the fight against ISIS, Brett McGurk, he resigns on Friday saying that he can't defend the President's decision on Syria. What does this do?

DOZIER: Well, from what I understand just on Afghanistan from our reporting, they're still trying to manage that withdrawal. The Pentagon wants to at least keep as many troops in there as it can while it waits for this Taliban peace deal and for Afghan forces to be able to step up.

In terms of Brett McGurk leaving, look, what happened from my reporting is that the administration officials like National Security adviser Bolton were talking about deflecting Iranian influence in Syria and keeping troops inside Syria until that was able to be achieved.

The Turks heard this, were worried about the US. supporting, as they called it to me, a Kurdish terrorist statelet on Syrian soil, and that led to this phone call in which Erdogan offered to take care of the ISIS problem.

President Trump has always wanted to hand over these intractable problems to his foreign allies. So this was sort of his gravity. He heard what he wanted to hear and said "Great, that works for me," surprising everyone.

BOLDUAN: Yes, well, now still a surprise and still what is going to happen now and how long is that pullout going to be from Syria. What is the drawdown going to look like in Afghanistan, these are huge questions with huge implications and no answer right now. Thank you guys. I really appreciate it. Kim, Colonel, thank you.

LEIGHTON: You bet.

BOLDUAN: Still ahead, Republican Senator Bob Corker, he says this whole shutdown situation is totally made up. He even called it juvenile. Now, the President, no shocker, is firing back.

Plus, the Treasury Secretary's attempt at damage control that went horribly wrong. Why a call to the country's biggest banks baffled their CEOs and rattled the markets. We'll be right back.


BOLDUAN: If the Treasury Secretary of the United States has one job, it definitely includes not injecting more uncertainty into the economy, so then you be the judge now of what Steve Mnuchin just did.

After a weekend of check-in calls with CEOs of the country's largest banks, Mnuchin put out a statement that in part said this, "The CEOs confirm they have ample liquidity available for lending to consumer, business markets and all other market operations." That's great except for one thing. There wasn't any question that the banks wouldn't be able to meet their obligations, leaving investors and everyone else scratching their heads and wondering, should they now be questioning that?

The CEOs themselves reportedly found the whole thing strange, and that is maybe what is happening today in the shortened trading session today, but let's find out actually. Let's get over to business correspondent, Alison Kosik. She is taking a look at that. So Alison - that's Rana, I am going to talk to Rana in a second. We're going to Alison on the floor of the New York Stock Exchange. Alison, what are you seeing there?

ALISON KOSIK, BUSINESS CORRESPONDENT, CNN: I'm seeing a lot of investors, Kate, trying to wrap their heads around why Treasury Secretary Steve Mnuchin made these calls individually, one by one, to these bank CEOs on a Sunday.

It's kind of reminiscent during the financial crisis when you had these investment brokers making these liquidity calls on Sunday to preempt the market action on that next Monday. So this is kind of causing some fears here in the market.

As you can see playing out here on the Dow, the Dow down 368 points. If Steve Mnuchin was looking to calm the markets, I would say this was certainly a misfire. CEOs are calling this call totally baffling. They find it puzzling and largely unnecessary because as they told the Secretary, there is no liquidity problem with each of their banks.

Now, this can be troublesome for the market because it can cause this panic because the thinking is, does the Trump administration know that there's something coming that we don't know? So it really amps up that fear that you're seeing play out in the market today -- Kate.

BOLDUAN: That's right. Alison, thanks so much. We'll look at the New York Stock Exchange. Joining me is the aforementioned, Rana Foroohar, CNN global economic analyst, also global business columnist and associate editor for the "Financial Times." It's great to see you, Rana.


BOLDUAN: So the democratic Senator Brian Schatz, he loves to take to Twitter to kind of needle the President. He had this to say about Mnuchin. "It's like if the local Department of Health abruptly calls a news conference to declare the water is safe to drink," because telling people not to panic seems to be the best way to get people to panic. I think. Is he overstating this?

FOROOHAR: Absolutely. No, I don't think he is. Actually, I mean, it would be funny if it wasn't tragic. I mean, the one thing we have been sure about is that U.S. banks - big U.S. banks have gotten their balance sheets in order over the last 10 years. They are actually very safe.

So okay, fact check, banks are in good shape.

BOLDUAN: I told you, stop fact checking.

FOROOHAR: I know, well, we are in opposed bank world? We are, okay. Officially. Okay, so that's - I mean, it is incredibly bizarre that he took that move. I can only think that in light of everything the President has done in the last few days, and in particular, calling into question Jay Powell and the Fed, I mean, that's so destabilizing.


FOROOHAR: So, I'm sure Mnuchin is looking for whatever way he can to reassure the market, but the fact is, nobody wants to see the President calling into question what the Fed is doing. The Fed is supposed to be apolitical.

There were already going to be plenty of market jitters right now to begin with, by the way. You know, we have known interest rates are going to be going up for some time. We're ten years into a recovery cycle which is historically when you start to see slowdowns and so - and there's the U.S.-China trade issue still bubbling.

So there was already going to be turbulence at this period. To create more with this drama is just - it's a crazy thing.

BOLDUAN: Yes, so down 350 points. That is all Steve Mnuchin today, says Rana Foroohar. Let me ask you this, you mentioned Jerome Powell. This is another person that the President seems adding to his list of grievances and that he's angry at right now. Jerome Powell is the Fed Chairman and he has been asking his advisers about his legal authority to fire Jerome Powell.

He also, the President, just tweeted moments ago about the Fed. "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 Democratic shutdowns over borders. The Fed is like a powerful golfer who can't score because he has no touch. He can't putt."

FOROOHAR: Well, I love the putting metaphor. I think that tells you that the President wants to be on the green at Mar-a-Lago. But you know, what's amazing to me about this is that Donald Trump likes to use the stock markets as a proxy for the health of the real economy. That has never been the case, okay.

We have been disconnected -- real economy, Main Street, and Wall Street have been disconnected for many, many years and in fact, that's one of the reasons that the Fed wants to raise rates right now. They think there's too much froth in the market, that stocks are too high, that there's too much corporate debt, there is record corporate debt by the way, which is one of the things that they want to deal with.

Now, they have also said that they're going to be very data dependent. That they're going to look at this carefully. But this was a debate that was happening way before Donald Trump parachuted in and either tried to take credit for the markets or now criticize the Fed for tanking them, incorrectly, by the way.

BOLDUAN: Bu I do want to ask you, he's asking advisers if he has legal authority. So far, the least they say, he does not. But - legal authority or not, he could try it. If he did, what would that do?

FOROOHAR: that would be a real disaster. I mean, honestly, I can't think of anything more apocalyptic for the markets right now than if the President were to really try and push for Powell's removal. If there's been any institution, and by the way, just to step back, we are at a period where there's trust in no institution right now. Not in government, not in business. Media has been hit.

But if there is an institution that does have a lot of trust, I think, in many places, it is the Central Banks of the world. They have done a lot in the last ten years to bolster the economy. They are apolitical. They're one of the few bodies that can really kind of be above the squabbling that we're seeing not only in Washington, but in other capitals around the world, and it's so important right now that that not be compromised.

BOLDUAN: So stay tuned.

FOROOHAR: Stay tuned.

BOLDUAN: Great - good to see you, Rana, thank you so much.

FOROOHAR: Thank you.

BOLDUAN: Coming up next for us, no movement toward ending the government shutdown as both sides retreat to their corners even further, if it's even possible. Who's getting the blame and who really deserves it? And honestly, how is this going to pan out? They apparently are coming back to work on Thursday. Be right back.


BOLDUAN: The third government shutdown of the year enters its third day, and all signs to point to no changes, no progress, no movement. Look no further than the President's Twitter feed where he is as focused as ever on scoring political points rather than trying to hash out a deal. Though we could all make an argument, they're hashing a deal on Twitter, ill-advised, regardless - a reality not lost on retiring Republican Senator Bob Corker.


BOB CORKER, RETIRING REPUBLICAN SENATOR: This is a made-up fight, so that the President can look like he's fighting, but even if he wins, our borders are going to be insecure. So this is something that is unnecessary. It's a spectacle, and candidly, it's juvenile. The whole thing is juvenile.

I want to see real border security and that's why I'm disappointed at where we have ended up at the end of this Congress.


BOLDUAN: That criticism led to a mind-boggling back and forth on Twitter between the Senator and President complete with name calling and even a new hash tag #AlertTheDayCareStaff. So, see what I mean? No progress. Joining me, CNN political

commentator, former Clinton White House Press Secretary, Joe Lockhart; CNN political commentator and member of President Trump's 2020 campaign advisory council, Rob Astorino. Great to see you, guys. Thank you so much for being here with your festive ties.



BOLDUAN: Let us start with the premise of this question, whose shutdown is it right now? Can you make the case, Rob, that this is not Donald Trump's?

ASTORINO: Yes, you can. I mean, I think, look, I think if he just played his hand the right way, we would have had Democrats coming to the table quicker, but he kind of took control of it in the Oval Office, and now he owns it for now, but I think after a period of time, people are going to see that this is the Democrats as well because look, he's already come down from his $5 billion, apparently, and all these Democrats voted for it in the past, not too long ago when President Obama was in office.

The $25 billion they offered was over ten years with poison pills in the last bill. So I do think that this Corker fight, all right, maybe that's a little juvenile, but you know what? I think the President is right on border security. I think most people agree that we do need that.