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Government Shutdown Examined; Fallout from Mattis Resignation; Global Economic Slowdown Explored. Aired 9-9:30a ET

Aired December 24, 2018 - 09:00   ET

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

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JIM SCIUTTO, CNN HOST: Good Monday morning to you. I'm Jim Sciutto. Poppy Harlow is off today. This morning, more than 380,000 federal employees also have the day off, but they didn't ask for it.

Another 420,000 are on the job but don't know when they'll get paid. Christmas Eve is day three and the first weekday of a partial government shutdown that the White House is warning could last well into 2019.

One federal worker who expected to be on the job through February, instead will be gone in a week. President Trump is said to have hated James Mattis' resignation letter and decided to replace him right away.

That means that the United States will ring in the new year with an acting defense secretary in addition to an acting attorney general and acting White House chief of staff and acting EPA administer and five federal departments completely unfunded.

Let's begin this hour at the Pentagon where uncertainty at the top is quickly being felt throughout the ranks top to bottom and around the world. Our Barbara Starr is there. Barbara, I mean there was a marine commander traveling around visiting deployed marines.

When they asked him what to expect, he said simply he doesn't know. Is that something you're hearing across the board?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: It is, Jim. We really don't know what the reaction is going to be at the end of the day. But at least for now, there's a lot of uncertainty about all of this.

Marine Corps (inaudible) the Navy secretary traveling in the region to wish the troops happy holidays and getting a lot of questions about the uncertainty they feel about what will happen to them, when they're coming out of the warzone, what will happen to the combat zones they are leaving behind.

Secretary Mattis will be gone January 1st. The president upset, it is said, about the resignation letter, upset about all the news coverage now. Deputy defense secretary Patrick Shanahan, number two, a long time bowing executive will take the helm.

As acting secretary he will have to go presumably to an upcoming NATO summit. He will have to testify on Capitol Hill. No foreign policy experience but he will be on the world stage.

And over the weekend in what may be one of his last significant acts in office, Secretary Mattis did sign the execute order that order that spells out how and when troops will be coming out of Syria. Jim.

SCIUTTO: So it's a reality now. Barbara Starr at the Pentagon, thanks very much. Let's go now to the White House where incoming chief of staff, Mick Mulvaney, warns the partial shutdown could last into the New Year. Our Boris Sanchez, is there really -- and Boris, no sign really of either side backing down here, democratic leadership or the president.

BORIS SANCHEZ, CNN WHITE HOUSE CORRESPONDENT: Yes. That's right, Jim. We understand the president hosted some republican lawmakers over the weekend on Saturday.

No indication as to who he's spoken to our dealt with since then. No indication from the White House that any progress has been made and his contacts with Senate democrats. We can tell you that according to sources, Vice President Mike Pence approached Senate Minority Leader Chuck Schumer with a deal this weekend that included $2.5 billion for border wall funding.

This is significant. Obviously the White House has demanded $5 billion for the president's long promised border wall. That deal apparently turned down by Schumer, an aide saying that both sides are still very far apart.

Schumer on his end, has been dealing with the chairman of the appropriations committee, Senator Richard Shelby. A deal that was apparently discussed between them somewhere in the $1.3 billion range for border security ultimately was shot down by the White House.

But as you said, both sides still remain far apart. And to give you an idea of what the dialog is like, we have a sound bite. Here's incoming chief of staff Mick Mulvaney and Chuck Schumer. Listen to this.

(BEGIN VIDEO)

MICK MULVANEY, ACTING CHIEF OF STAFF: We've insisted on $5 but the discussions now are between $1.6 and $5.

SEN. CHUCK SCHUMER, (D-NY) MINORITY LEADER: It will never pass the Senate. Not today, not next week, not next year. So Mr. President, President Trump, if you want to open the government, you must abandon the wall. Plain and simple.

(END VIDEO)

SANCHEZ: Now as you noted, the warning from Mulvaney was that this shutdown could go past December 28th, into the new Congress. Of course that would represent problems for the White House as Democrats take over the House of Representative on January 3rd.

That would be a significant loss of leverage for the president as he tries to move forward on that campaign promise of a border wall with Mexico. No word yet, Jim, as to exactly how Mexico is going to pay for it. Mulvaney was asked about it this weekend, he didn't really give a clear answer. Jim.

SCIUTTO: Yes. Well that one debunked many times over. Boris Sanchez, thanks very much. We want to take a moment now to take stock of really the extremely important events of just the last several days.

[09:05:00]

We have witnessed a president undermining or attempting to undermine three institutions meant to be independent of him, or largely independent, and the office of the presidency. At the Pentagon, the department, of course, operates under the president who is commander- in-chief. But traditionally, generals have given frank advice to presidents during wartime, as have civilian leaders of the Pentagon.

Mr. Trump, over the impassioned advice of the Defense secretary, James Mattis, summarily withdrew U.S. troops from Syria where they continue to fight ISIS. Mattis quit. Trump then ordered half of U.S. troops out of Afghanistan over the advice of military commanders.

And when he bristled at the negative coverage of Mattis' departure, the president forced him out two months early. At the Justice Department, you will remember that the president fired Attorney General Jeff Sessions in November, replacing him temporary with Matt Whitaker who has repeated and publically criticized the probe.

We learned that last week, the Justice Department ethics lawyers recommended that Whitaker also recused himself from the Russia probe, as Sessions had. But Whitaker refused that advice. We also learn that Trump scolded Whitaker for not reigning in prosecutors here in New York from charges against Michael Cohen that the president felt made him look bad.

And now we know that Mr. Trump's choice for permanent pick at the Justice Department, Bill Barr, is no fan of the Mueller investigation either. It seems that the president wants an attorney general willing to limit a probe which directly involves him, and he could be getting just that.

Finally, the Federal Reserve, the institution that oversees U.S. monetary policy is designed expressly to be entirely independent from the president and Congress so it could do its job without political interference.

Now we've learned that the president, unhappy that rising interest rates might threaten his favorite barometer of success, the stock market, explored firing the chairman of the Federal Reserve. But thankfully, his advisors rightfully told him that, by law, he cannot do so without cause.

This is news that matters. I want to bring in now, Mike Rogers. He's CNN national security commentator, former Republican member of Congress who was the chair of the House Intelligence Committee. He was also, for a time, on the Trump transition. Mike Rogers, thanks for taking the time, particularly on Christmas Eve.

MIKE ROGERS, CNN NATIONAL SECURITY COMMENTATOR: Yes, well, thank you, and Merry Christmas. Happy Holidays to you and yours.

SCIUTTO: Much appreciated. First, I want to start with big picture, because you had a president choosing to take troops out of Syria over the advice of his commanders. You had Mattis quit over that, and then you had Brett McGurk who's led that fight, as special representative, for the fight against ISIS for a number of years, through two presidents, he also quit.

What is the state, in your view, of U.S. national security decision making under this president, because clearly he went forward with his decision, not only over the advice of his closet national security advisors, but apparently without informing any of them, or also U.S. allies and partners in the field. Does the U.S. have a decision making process today for key national security decisions?

ROGERS: Well, I don't know. I don't think anyone knows, which tells you there's probably not a great process for getting these decisions done. And I think that's what so upset Mattis in this particular case. But we've seen this before, we've seen this movie before.

If you remember, you know, Trump was giving away things in the North Korean negotiations that many of the national security space (ph) said, "Please don't do this, you're giving up all of your leverage." And Mattis had to get dispatched to Japan and say, "Calm down. We're - you know, just despite we're not joint training exercises, we're still with you."

You know, that was problem, and I know Mattis wasn't there. And certainly, the national security apparatus here was not supporting of those given away without getting something kind of episodes (ph). Pulling out of the INF was one that was not well discussed.

And the INF, the Intermediate Nuclear Forces Treaty, with Russia, it just kind of -summarily pulling out of that created a whole bunch of problems that they were trying to - the national security folks were trying to put back together.

Now you get to Syria and Afghanistan where I - it's by all appearances, he just decided that morning he was going to tweet this thing out, hadn't talked to Mattis, hadn't talked to his security team, certainly hadn't engaged the envoy who was actually in negotiations with the Kurds, at the time, as they were doing a major military offensive.

You know, this is a problem. You can't pull away from your alliances and your allies in a way that creates this level of uncertainty, because what it means is that they're going to stop trusting you eventually.

SCIUTTO: Yes. Well, you've just listed a long list of alliances that President Trump has either pulled out of - I mean the missile treaty - but alliances with allies on the ground in Syria, reducing the U.S. presence in Afghanistan, threatening the alliance with Japan. We know his public comments about NATO through the years. I mean

these are consequential things, because alliances stand, don't they (ph), based on the confidence that the U.S. will stand behind them.

[09:10:00]

What are U.S. allies telling you? I'm sure you keep those relationships alive now, about their own nervousness -- I mean including -- including in Europe with Russian increasingly aggressive.

ROGERS: Yes. And I do and I've talked a lot of those folks both in the military and defense and intelligence arenas and certainly ambassadors and what not. Listen, they're very concerned.

And, you know, they're going to put on the happy face as long as they can but they express privately just this notion of we don't know when we're going to get completely abandoned or thrown under the bus or fill in the blank.

And these things take decades to develop, these relationships overseas. And you know the reason that the polls -- that we have such a strength with the Polish government is because it's a counterbalance to Russia.

The reason that we have such a strong relationship with Japan and South Korea, its counters both China and North Korean activities in the region. And -- and so you can't -- you cannot and should not give your word and then just walk away from them.

And that's what -- certainly what happened with the Kurds in the -- in the most obvious way. We encourage them, we helped train them, we helped guide some of their decision making on the battlefield and then somebody just hands them a note that says good luck, we're out.

That kind of thing has impact not just in Syria but the rest of Europe and now they're wondering and our Asian allies are starting to wonder will we be there when things get a little hard. That's what to me is at risk and that's what I hear most from all over the world is we need to understand is the United States really going to be there or not.

And by the way, this is why this is so important is that because we are, because we have these alliances, we stop more problems than most people could possibly imagine by those relationships, by standing by our friends, allies, and allegiances.

When you start to deteriorate that, bad actors will fill the void. China's expansionism. Certainly North Korea's bad activities. The Russians, the Chinese, the Iranians are all looking at this as huge opportunities and it scares the rest of the world in a way I just haven't seen in a while.

SCIUTTO: No, it's great. I was going to ask you that question saying if our allies are nervous, I imagine that our adversaries sense opportunity. But I want to ask you this then that the president has enormous power in -- in foreign policy and national security. That's the -- that's the way our government is structured. But -- but if there is no decision making process, if he's not listening to his advisors, he's not running this through the traps, consulting allies, et cetera and if he looks at alliances in a way that he feels he could pull out of them by tweet; I -- I wonder what Congress can do.

What -- what can -- is there anything that other parts of this government can do to check the president's worst impulses or do we have to sit back and say well, throw your hands up in the air and just watch it unfold.

ROGERS: Yes. No, I never believed that. A matter of fact, and I think you know this, I've been advocating for a congressional role and even the military actions we have around the country and Congress candidly has abdicated their role ever sense the passage of the first authorization to go into Afghanistan.

And then they've used it kind of creative, they -- the executive branch has used it creatively to do other actions and Congress has let them do it. And shame on Congress for doing that.

The can absolutely get back and now they have to have a logic, non emotional substantive of debate, which sometimes is hard for them to do but you need to start talking about what are our interest in making sure that Syria is stabilized and doesn't become a proxy state for Iran in the region that would destabilize the rest of it.

You need to have -- be able to have those conversations. Congress needs to get back in the game of authorizing military activity around the world. They should do it. Constitutionally they're supposed to do it.

And -- and because it's a hard vote, they haven't wanted to take it for a very long time under both presidents, you know, Obama and now Trump. And so I think if they get back into that business, they can have more influence about a rash decision to pull out or push back in.

And that's one way. Power of the purse is the other one. You know you control the money that flows to these operations. You know you can -- you can cause some problems for the administration if you're not in sync. If you think it should get that far and I never believe you should play politics with troops in the field ever.

And so that's -- you have to be careful that doesn't happen but you can have an honest conversation about saying hey, we're willing to fund this at this level but maybe next year we're not. We're going to have to sit down and figure out what our strategy is moving forward.

SCIUTTO: Well listen, right now Congress can't fund the government so we'll see what -- what progress they make on these other issues. Mike Congress -- Mike Rogers, thanks very much and wish -- wish the best to you and your family for the holidays.

ROGERS: Thank you so much.

SCIUTTO: This government shutdown comes down to one thing, a 2,000 mile long border wall the president wants.

[09:15:00]

President Trump says it's the only way to stop gangs and drugs from entering the U.S. Is there anything to back that up? Plus, the new year could bring us the one government report that everyone wants to read. Now a top Democrat says he's ready to square off with the White House to make sure the Mueller report goes public. And new concerns now in Indonesia as the death toll continues to rise. Could this deadly tsunami just be the first of many there?

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UNIDENTIFIED FEMALE: We apologize, but due to the lapse in federal funding, we are unable to take your call. Once funding has been restored, our operations will resume. Please call back at that time.

SCIUTTO: That's what you'd hear today if you called the White House. The White House itself not immune from the impact of the government shutdown. On day three of the partial shutdown, the White House still cannot take your calls. Eight-hundred thousand federal workers have been left in limbo right during the holidays, more than half of them working right now, though, without pay.

The shutdown could last well into the new year. Keep in mind, from the beginning of this budget battle, President Trump's border wall has been front and center. The president insists that the wall will make America safer. Is he right?

[09:20:00]

Joining me now is former DHS assistant secretary under President Obama, Juliette Kayyem.

Juliette, thanks for joining us this morning.

JULIETTE KAYYEM, FORMER ASSISTANT SECRETARY, DHS: Thank you for having me.

SCIUTTO: So - so this is a debate that's played out in public for - really, for months and years. The president makes claims that, and he's tweeted again, "Everyone knows you can't border security without a wall."

Listen - listen, we've had Republicans on this broadcast who question that, particularly when you look at the whole expanse of this 2,000- mile border. But you were at DHS, part of your job is - I mean your job is there, defending - defending the country, defending the border. Who's right?

KAYYEM: Well, I think those who worry that the wall is some simplistic solution to very complicated border management problems, because the wall is - it doesn't solve the problem that we have the Mexican-U.S. border, which is essentially you need it to be open, right. I mean, in other words, there's 1 million people going across the

border every week, there's commercial activity, it's our second largest trading partner with - in terms of NAFTA. So the challenge of border management is how do you secure a border but still allow the flow of people goods, ideas, networks, all sorts of things.

And so, the wall should be utilized in places where it will be beneficial. And I think what Donald Trump never sort of acknowledges is about 700 to 800 miles of wall already exist. You know, it's fencing, it's wall, it's a combination of things. You don't put wall where there's mountains, you don't put wall over water.

And then the question is simply, how do you minimize the illegal border crossings, and people - the last two administrations have done a pretty good job. Border crossings are down at historic levels. Their CBP, Customs and Border Protection, is - the number of people working the border is up by four to five times than it was even 10 years ago.

So it's not a crisis, and the wall is not a solution. It is - it is - at this stage, I think, Jim, just honestly, it's an ego thing. I mean it is - he promised a wall, he promised Mexico would pay for it. Mexico's not paying, but he still has to deliver on the wall.

SCIUTTO: How much would it cost to do what the president wants, which is clearly this vision of a giant 2,000-mile wall, in effect, trademarked Trump, right? I mean how much would that cost, because even if he got $5 billion, that doesn't cover it, in fact? That's a fraction of it.

KAYYEM: No, no, it wouldn't. I mean so I've estimates anywhere between $30 billion to $50 billion, because the - look, Secretary Napolitano who I used to work for, because she was border governor, she understood borders, she used to say, "If you - if you build me a 50-foot wall, I'll find someone who could build a 51-foot ladder."

You know, it's just a way of saying there are ways also to get around walls. So this investment in the wall as a solution to really complicated migration patterns, which is why do people want to come here, why do they want to leave here.

Those sort of fundamental questions by a simplistic wall that's going to cost the taxpayers, you know, name the number, $30 billion, $40 billion, $50 billion, and that Donald Trump has promised his supporters that Mexico was going to pay for it. This weekend, obviously, his new chief of staff is already starting to, you know, say what you and I have already known, which is Mexico is not paying for it.

SCIUTTO: Yes. Final question. One of the many decisions that Jim Mattis apparently differed with this president on was deployed U.S. active military to the border, some of whom - many of whom are still there, as Christmas approaches. You work for DHS, was there any justification for putting active U.S. military on the border, beyond the politics of pre- and post-election? KAYYEM: None, whatsoever. I mean because you do have a very, very aggressive law enforcement agency, a Customs and Border Protection. The military, as we've seen the pictures, is just sort of - you know, honestly, just sitting around. And I'm looking back at Mattis' decision about Syria and resigning.

Syria may have been the reason why, but I really put, you know, sort of Mattis' sort of recognition that he could not control this president with the border. You knew that Mattis did not want to send active military to the border, and he lost that battle as well. There's no reason for it, we have very complicated civilian management with local, state and federal authorities.

Overlaying the military is just - you know, it's all symbolism now, Jim. I mean it's all to sort of protect the president's promise. And meanwhile, you know, we - we - we should - people are working without pay. I mean this is just what it's come to, and it's just sort of so shocking at this stage.

[09:25:00]

SCIUTTO: 800,000 people, about half of them not working at all. Government employees, about half of them working but not getting paid. Imagine that with Christmas tomorrow. Sorry. Sorry ...

(CROSSTALK)

KAYYEM: I'm going to the airport on the 26th. You know TSA agents, they make an average of $26,000 to $30,000 a year; they are living paycheck to paycheck.

SCIUTTO: And when folks say and -- and some of the president's reporters (ph) say well, these are not essential federal workers. They're TSA. Some of them are TSA, the folks who are protecting our planes from terrorist. Juliette Kayyem, thanks so much.

It looks like another nail biting day on Wall Street. Even with a shorter session on this Christmas Eve, the markets open just a few minutes after a brutal week of drops, futures are down again.

And President Trump is reportedly blaming his Fed chair for the market instability and a source tells CNN that President Trump is blaming Treasury Secretary Steven Mnuchin for recommending Jerome Powell for that position in the first place.

A decision the source says Trump is now calling the worst decision of his entire presidency. Allison Kosik is at the New York Stock Exchange. Listen, Allison, two things that unsettle the market.

One this talk of firing the Fed chairman but also this odd statement from the Treasury secretary over the weekend saying that banks have ample liquidity, which is the kind of thing -- kind of assurance you typically hear from the Treasury Department in the midst of dramatic fall. What is happening here and how is Wall Street reacting.

ALLISON KOSIK, CNN CORRESPONDENT: OK. So let me get to the -- the sort of fundamental side of things and let me get to the administration drama, which clearly is making all this uneasiness even more so here on Wall Street.

So at this moment, it looks like the DOW is set to drop another triple digits at the opening in about four minutes when the opening bell rings. The full plate of worries that weighed on investors last week, still weighing today.

I'm talking about weaker economic growth around the world. Fading benefits of the Trump business tax cuts, the unresolved trade situations have concerns about -- about how that's going to eat into corporate earnings.

So investors they continue to take profits off the table, they're readjusting their positions based on where they see the economy next year. And just because it's a holiday, Jim, not much relief expected this week.

Volume is expected to be light, which can only exaggerate those volatile moves. OK. Let me get to that Mnuchin thing that you were talking about. Treasury Secretary Steve Mnuchin, while on vacation in Mexico over the weekend, meaning yesterday, was on the phone individually calling six CEOs of the biggest banks.

He emerged with the statement saying the banks had ample liquidity for lending to American households and businesses. Now he's the one who reached out to them and while it's normal for him to talk to these executives, the timing is a little weird.

Here's the thing; it has the potential to cause panic because of the timing. You look at the government shutdown, Christmas around the corner, he's making these calls while on vacation, it creates the thinking does the administration that there is reason for concern.

Now just to be clear Jim, there isn't a liquidity problem but suggesting you might know something that no one else knows that creates more uneasiness. Jim.

SCIUTTO: Which is, you might say the last thing the market needs. We're going to see how it reacts to that. Just a couple of minutes here, Allison Kosik, we know you're going to be watching it. Thanks very much.

A top democratic lawmaker sends a message to President Trump saying that like it or not, Robert Mueller's report on the Russian investigation will become public. More on that next.

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