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Stocks Close Sharply Lower; Mattis Out Early; Trump Airs Grievances. Aired 1-1:30p ET
Aired December 24, 2018 - 13:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[13:00:00] BURGESS EVERETT, CONGRESSIONAL REPORTER, "POLITICO": And, you know, I think Bob Corker is probably one of the few. Not only is he speaking out, but he likes to talk about this.
MANU RAJU, CNN ANCHOR: More to say in the weeks ahead, of course. The Dow is down over 600 points. Keep watching as developments continue throughout the day.
Thanks for joining us on INSIDE POLITICS.
Kate Bolduan starts right now.
KATE BOLDUAN, CNN ANCHOR: Hello, everyone, I'm Kate Bolduan, in for Brianna today.
We start with a big lump of coal for investors and the U.S. economy. The markets closing early for Christmas just moments ago. And the Dow is down another 639 points at this moment. Today's tumble comes on the heels of the worst week since the 2008 financial crisis. The president's reaction pointing the finger at a familiar target of his, the central bank, tweeting today that the only problem that the economy has is the Fed.
CNN business correspondent Alison Kosik is at the stock exchange with much more on this.
Alison, is President Trump directly affecting the markets with what he's talking about here?
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Well, I'll tell you this much, Kate, President Trump certainly not instilling any confidence in the stock market. First you heard about that report over the weekend where the president questioned if he has the legal authority to fire Jay Powell because he blames the Fed chair for the market meltdown. And a tweet you just showed from a short time ago blaming the Fed, that actually helped to cause the Dow to accelerate its losses. I'll tell you what, it made the shortened trading session today anything but sweet.
Then you have Treasury Secretary Steve Mnuchin's phone call to big bank CEOs over the weekend. Those calls didn't hit the market in a friendly fashion either. Proof of that are these red arrows and we see the Dow closing at its lowest level since September of last year. Now, a source family with these calls tells CNN that the CEOs were
totally baffled by the move that came out of nowhere with Mnuchin asking if the banks were seeing any liquidity issues. By the way, the banks said, no. Investors have spent the day trying to wrap their heads around why Mnuchin made these calls, out of nowhere, putting out this statement about ample liquidity for lending. The timing really spooking the markets because you think about where Mnuchin was. He was on vacation in Mexico. We're days away from Christmas. During a government shutdown. You know what, Kate, it's reminiscent of those emergency liquidity calls that were made during the financial crisis and these banks are saying, look, there's no crisis. This -- these calls came out of nowhere and they're just not sitting well with investors.
BOLDUAN: Yes, very clearly, among many things.
Alison, thank you so much. I really appreciate it.
BOLDUAN: As the markets tumble, so does the Treasury secretary's status with the president, it appears. Sources are telling CNN now that President Trump blames Steve Mnuchin for recommending Jerome Powell as chairman of the Federal Reserve. He's also complained that Mnuchin hasn't done enough to stabilize the markets.
White House correspondent Boris Sanchez is joining us right now with that.
Boris, and these aren't really even the only problems that Mnuchin has these days. As Alison was just talking about, especially after his bizarre calls with the country's largest banks.
BORIS SANCHEZ, CNN WHITE HOUSE CORRESPONDENT: Yes, that's right, Kate, and as Alison noted, the stock market not really being reflective of what Mnuchin was trying to do and find a sunny side to all of this volatility. A source familiar with the calls that Mnuchin had this weekend with some of the country's top banking CEOs says that they were totally baffled by this phone call. As Alison noted, he was asking them about liquidity issues. He was told there are no liquidity issues. In fact, a source familiar with the conversation told CNN that Mnuchin was told by one bank CEO that some of the volatility in Washington is causing the uncertainty in the stock market with the government shutdown, questions about the position of Fed Chair Jerome Powell, et cetera.
We're told that Mnuchin was in listening mode. And the source says that after the call it sounded like the CEOs had the belief that Mnuchin was simply trying to assert himself at a time when there is uncertainty in the markets and further at a time while he is on vacation. Let's not forget, the president has staked so much of his legacy, his call to supporters on a booming economy. And when he sees these sorts of report coming from Wall Street, it certainly frustrates him, Kate. BOLDUAN: Yes, also new from the White House, though, on a very
important issue, the president now forcing Defense Secretary Jim Mattis out two months earlier than Mattis had planned. Why? What are you hearing today about this?
SANCHEZ: Yes, Kate, that's right, the president tapping Mattis' deputy, Patrick Shanahan, to fill the role on January 1st, a full two months before Mattis was expected to leave. Sources indicate that the president was not aware of just how critical that resignation letter written by Jim Mattis was until after he saw coverage of it on television. That apparently infuriated him. And so did the fact that so many lawmakers and other key figures around the administration seemed to lament Mattis' departure, particularly as one of the adults in the room who was trying to bring order to a chaotic administration. The president clearly taking his departure personally.
[13:05:04] BOLDUAN: Yes.
Boris, thank you so much. Really appreciate it.
For more on the early departure of the defense secretary and his new replacement, I want to go to the Pentagon and Pentagon correspondent Barbara Starr is there for us.
Barbara, it's great to see you.
What do we know about Patrick Shanahan?
BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, Shanahan has been the deputy, the number two at the Pentagon, and fulfilling the traditional role of the number two, mainly kind of the inside guy, looking after business matters, the organization of the Pentagon, budget, funding, acquisition, innovation, getting that space command set up that the president wants. These are all the business executive issues very close to the president's heart.
Shanahan comes from a 30-year career at Boeing, so he's very familiar with these kinds of things. It's interesting, Kate, he hasn't been in the position of having to say no to the president, and that may be the big difference now, as Shanahan steps on the world stage, he will have to deal with NATO, America's military allies, keep a close eye on America's military adversaries, and be the one who has to carry out whatever Mr. Trump may order next regarding American troops.
So it will be -- and issues like North Korea, for example. So it's going to be up to Shanahan. And he may find himself in a much more touchy situation with the president than he has so far.
BOLDUAN: Yes, especially when you lay it out like that, Barbara, this next defense secretary is going to have huge questions and jobs, tasks, advice that he's going to be -- he or she would being need to give the president in the coming year. It's a really critical time. Thank you, Barbara.
BOLDUAN: Joining me right now to discuss this is Democratic congressman from California, John Garamendi.
Congressman, thanks for coming in.
REP. JOHN GARAMENDI (D), ARMED SERVICES COMMITTEE: Good to be with you, Kate, and Merry Christmas.
BOLDUAN: Thank you. To you as well.
Of course you sit on the Armed Services Committee. This is an issue near and dear to your heart.
The president has put -- is pushing Mattis out after hearing the praise for Mattis and hearing, I guess, getting a better idea of what his resignation letter actual said. Your reaction when you first learned that Mattis' was out, that he was resignation, it isn't even really that appropriate for TV when you're talking to Manu when Manu kind of caught you on The Hill.
BOLDUAN: What do you think now that he's being pushed out even earlier than he planned?
GARAMENDI: Well, the problem becomes much worse. The transition that Mattis knew was so necessary isn't going to happen. And it's just -- I don't know, this president seems to be beyond understanding, or maybe he is easy to understand.
He wouldn't allow Mattis to resign. Instead, he wanted to fire Mattis, which he did. But in doing so, he creates even greater chaos. You had a segment about the stock market. The one thing the market really dislikes is uncertainty. And the chaos of this presidency is the ultimate uncertainty. You see that in Syria. You see that with regard to shutting down a government. You see that with regard to the crazy tweets that are coming out moment by moment. There's a very serious question about the stability of our government, and certainly about the stability of the president.
BOLDUAN: What -- what about the man that is being put in Mattis' place, Patrick Shanahan? You have -- you have concerns about him. Why?
GARAMENDI: It's not personal. But what it is, it is the ultimate revolving door. This gentleman, 30-year corporate career with Boeing, one of its biggest defense contractors in the United States, really in the world, and now he's going to run the department with no real foreign policy or military expertise? But certainly a lot of expert on being on the contracting side of the Department of Defense. Is that good? I don't think it's good at all that the revolving door has reached the ultimate, that is, the secretary of defense. Shouldn't happen.
BOLDUAN: Do you -- he was, though, confirmed in his current post right now.
BOLDUAN: He was confirmed 92-7 --
BOLDUAN: By the Senate.
KATE: Either the Senate's not doing their job or this is a different job, if you will, maybe from your perspective. Why doesn't the fact that he was confirmed 92-7 bring you any comfort?
GARAMENDI: Well, I hearken back to the hearing. Senator McCain raised very serious concerns about the revolving door, and said so in the hearing. Ultimately he did come around to vote for it, quite probably for what you just said, that is, the job really has to do with inside management issues. Perhaps he was very good at that. Although the chaos that is being caused by the president down through the ranks really can't be solved by a good manager in the position. Got to be solved by a president that becomes, you know, less chaotic.
BOLDUAN: Well, let's talk about some of the decisions on the withdrawal from Syria.
GARAMENDI: Sure. Right.
BOLDUAN: It is happening. The orders have now been signed. President Trump says that he's received assurances from Turkey's president that Turkey is going to finish the job, if you will, and eradicate ISIS from Syria.
BOLDUAN: Should the president be taking Turkey's word for it?
[13:10:13] GARAMENDI: Well, it's far more complex than eradicating ISIS.
BOLDUAN: That's exactly right.
GARAMENDI: You now have Turkey invading Syria. You have Turkey quite probably attacking the Kurds, who actually carried out on the ground work for the United States in eradicating ISIS from Syria. All of those things. And now clearly things are being upset with regard to Saudi Arabia. I would assume that Israel is having a fit, going, oh, my goodness, now the door is open for Iran to occupy southern Syria and Hezbollah and directly support Hezbollah.
And, by the way, there is Russia there. What the president simply has done is to totally create a vacuum, a vacuum that is going to be occupied by others who may have our interests in mind and perhaps Turkey does. We certainly know that Russia does not. We know that Assad does not. And we know that Iran does not. Those are the players that are going to be occupying that. And they're the ones that will decide the future of this area. The United States is exiting the stage. And that is a very serious, long term problem for the \United States and for dealing with terrorism. BOLDUAN: Congressman, is that what you see that the president is doing
with Afghanistan? I mean if the president pulls half U.S. presence out of the country, what does that do?
GARAMENDI: Well, I will tell you that I was part of a classified hearing less than two weeks ago in which we discussed in that, from the top people operating in the Afghan space, that they were actually going to increase the pressure, increase the number of troops by a small amount, and put more pressure on the Taliban to force them to the table.
Now, the president is going exactly the other direction. Now, that may be that the strategy radically changed in the intervening two weeks, or maybe the president just woke up one morning and said, well, I'm the president, I'm the commander in chief and I'm leaving.
BOLDUAN: Well, what do you think happened in two weeks? What do you think?
GARAMENDI: Who knows what's on this man's mind? Who knows? He apparently doesn't have advisers that are close to him. Bolton, who was one of the premier hawks, who knows? Bolton apparently has been sidelined or quite or maybe he's completely seen the light and going exactly the opposite direction. Obviously he's not listening to the Department of Defense and to Mattis. And I don't know what he's got going with Pompeo.
BOLDUAN: Well, oddly --
GARAMENDI: There is chaos and it's a very, very real problem.
BOLDUAN: Oddly enough --
GARAMENDI: Sorry, Kate.
BOLDUAN: Oddly enough, who knows. It seems to -- oh, no, no, my fault, sir. Oddly enough, who knows is also the response that it seems that top military officials are having to give the troops when they're visiting them overseas right now. We're seeing that in "The Wall Street Journal" reporting that the Marine Corps commandants over there, when being asked about what this could mean in Afghanistan, he says, we don't know.
I do want to ask you something that hopefully you know -- hopefully will --
BOLDUAN: We will know more about or maybe you can enlighten me right now.
BOLDUAN: When it comes to the shutdown --
GARAMENDI: Yes. BOLDUAN: The latest reporting that we've seen is essentially that Mike Pence brought down the ask, if you will, when it comes to border wall funding, from $5 billion to basically $2.5 billion. That's real money.
BOLDUAN: Do you wish Schumer had taken that offer and ended this shutdown?
GARAMENDI: Well, the offer -- for what is the $2.5 billion going to be spent for? We're more than willing to put up multiple billions of dollars for security, comprehensive security, immigration reform. The Senate, in 2013, by a vote of 67, put out a comprehensive immigration reform, visa reform, border security, 700 miles of fence. When that came to the House, Boehner refused to even have a hearing on it.
Just this year, another proposal was put together, bipartisan in the House, that included fences, included walls, included a better work and more access through the various ports of entry. All of those things are important. And, by the way, if you're concerned about drugs, you better furnished the Coast Guard, because the Coast Guard interdicts ten times the amount of drugs as do the Border Patrol agents on the Mexican border. So this needs a comprehensive thing.
I'm not going to give the governor -- or the president a billion or $2 billion or $5 billion slush fund until he tells us precisely where and how that money is going to be used.
BOLDUAN: But in the most immediate, we are --
BOLDUAN: We are days into -- we're now three days into a shutdown. What is going to change when you -- come Thursday when you all get back to town? Something has to give. You've been through many a shutdown before. What's going to give this time?
GARAMENDI: For me, Mr. President, tell me where the plans are. You wouldn't put up a casino without construction plans. Do you expect us to put up $5 billion without construction plans as to where the wall will be, what this spiked fence will be or whether it's just a cyclone fence? We need to know. We wouldn't give the military money for a garage unless they told us exactly how they would spend it. And we shouldn't let the president do that either.
[13:15:16] Beyond that, we do need a comprehensive solution to this. We need drones. We need aerial surveillance. We need better ports of entry. We need to be able to review not one out of five cars that pass but every car that passes through.
BOLDUAN: Looks like that might have to be a debate for the next Congress is where this is all headed right now. Congressman Garamendi --
GARAMENDI: Well, yes, it will.
BOLDUAN: Thank you very much for coming in. I appreciate it.
GARAMENDI: Thank you. Thanks, Kate.
BOLDUAN: Thank you.
GARAMENDI: Merry Christmas.
BOLDUAN: Thank you very much. Merry Christmas to you.
Multiplying investigations, a crumbling stock market as we're looking at where it ended today, mounting scandals. A new report details what it's like these days inside the White House as the president becomes increasingly isolated. That's coming up.
And devastation in Indonesia. Nearly 400 dead after a tsunami slams into the nation's cost. And now officials are warning there may be more deadly waves to come.
[13:20:25] BOLDUAN: Two years in, President Trump is depending more on his own opinion and isolating himself more than ever from those who don't share it. That's according to a new report from "The New York Times." Here's a quote for you, Mr. Trump is said by advisers to be consumed by the multiplying investigations that have taken down his personal lawyer, campaign chairman, national security adviser and family foundation. He rails against enemies who were often once friends, nursing a deep sense of betrayal and grievance as they turn on him.
How's that for the Christmas spirit right now?
Just moments ago the president tweeted this. This is a direct quote. I'm all alone, poor me, in the White House waiting for the Democrats to come back and make a deal on desperately needed border security. And he goes on. So if that is how he is ending 2018, what does a 2019 President Trump look like?
Let's find out. Joining me right now, CNN political analyst Karoun Demirjian, she's a "Washington Post" congressional reporter, and CNN political commentator Doug Heye, he's a Republican strategist, former RNC communications director.
It's great to see you guys.
So, Karoun, if he's isolated and feeling alone, more than he has been before, is this -- let me put it up on the screen for everybody, is this the evidence that -- all the evidence that you need to see? He has tweeted I think now ten times this morning so far on a myriad of topics, but basically kind of just Trump home alone. And this is what this looks like. Is this what everyone now has to look forward to for the next week plus?
KAROUN DEMIRJIAN, CNN POLITICAL ANALYST: Well, I mean this is part of the shutdown, right, is that the president -- everybody has left D.C. for at least a few days on Capitol Hill. The president has to fill space and time. And if he's not cooking Christmas dinner, then maybe he's just alone with his phone a good amount of time.
I think that we have seen the president, when he feels like things are not going his way, take to Twitter. He's doing that again right now. And the thing is that nothing else is going on right now because everybody's on vacation because D.C. has been at least partially shut down and so everyone is listening to the continued spinning that the president's doing for who is to blame. Despite the fact that he said he was to blame a week ago, he no longer likes that idea and so he is now playing for the pity points about being all alone and having nothing to do until Democrats come back and try to fix all of this, which Democrats, of course, do not agree that this is their fault in the slightest.
BOLDUAN: Not in the slightest. Just, yes, have any -- anybody on a panel, they will make that very clear.
Doug, he is now moving on to his third chief of staff in two years. The last two weren't able to calm the president when it comes to the Russia investigation. If he's feeling more isolated and lonely when it comes to this, how is Mick Mulvaney going to do anything different?
DOUG HEYE, CNN POLITICAL COMMENTATOR: I think the short answer is, he's not even going to ty to. This hasn't been successful for Reince Priebus or General Kelly and there's no way to think that Mick Mulvaney will change anything. But the reality is, I think the problem for the administration is, it's not just that they're on a new acting chief of staff. We also have an acting attorney general, an acting, potentially, defense secretary, also Department of Interior is dealing with an active -- acting secretary. There's not a lot of permanence right now and that's causing real problems for the administration as it tries to move forward on its own priorities, much less dealing with this -- with the shutdown.
But, ultimately, the other challenge that they face is, people aren't so much focused on -- I'm here in Raleigh, North Carolina. I've been spending the holidays in Chapel Hill. People aren't talking so much about the shutdown but they are talking about what's happened with the Dow over the past few days and that's really emanated a lot from the Department of Treasury, the phone calls that Secretary Mnuchin was making to banks basically asking about their credit caused more panic instead of reassuring folks. It caused panic. And we're seeing 600 points down again. If you're the economy president that Trump has really billed himself to be, that's going to be a really big challenge moving into 2019. Chaos in multiple directions and especially the markets.
BOLDUAN: Well, and, Karoun, I mean we can throw -- we can -- we can put up the big board and where things ended because, obviously, trading closed early today because of the holiday. I mean not only is it -- did trading end down, you know, 650 points, you've got a president, as Doug lays out, the president lashing out at the Federal Reserve chairman. You've got Steve Mnuchin doing -- basically no one really knows what Steve Mnuchin was doing or intending to do. But I -- this is -- if this -- this -- there is no way that this is improving the president's mood because it's not just the economy that the president has kind of based success on. It is -- it is the market gains that the president has based success on.
BOLDUAN: And how he has measured success all throughout his presidency.
DEMIRJIAN: Yes, he has specially tied his own presidential prowess to the success of the markets. And he's said it over and over again in various speeches. And that's a risky thing to do because the markets react to what's going on in the country.
[13:25:05] And for the president he seems to be connecting the dots only to his Fed chairman, only to things that his Treasury secretary is doing. I mean the markets can react to a number of things, such as pulling all of your troops out of Syria and Afghanistan and a number of other controversial decisions that the president has made that has left people in the country unsure of where things are going, not just in terms of, you know, what the interest rate is going to be today or tomorrow. That's very significant, but it's not the only thing that shocks the market in any given point in time.
So the president doesn't quite tie this back to himself in terms of his own responsibility for affecting the markets, even though a president very much can because of the power a president wields. And yet he's tied his success to the market, so he's doing a lot of things to try to fix it that are not necessarily fixing it because there is no automatic quick fix to these sort of things unless things stabilize.
And right now the more decisions, the more statements Trump is making, the more people don't know what's going to be happening tomorrow because things are not -- things are changing in the last few weeks, at least more dramatically perhaps than ever before on a day-to-day basis of, of course, will there be a deal to keep the government open? Won't there? What are we doing internationally? What are we doing at home? Who's going to be running the Fed? These are all causing -- these are potential causes, I should say, of instability that keep the markets rocky. And that's -- it's like a cycle that's going to feed itself because Trump cares about this a lot.
BOLDUAN: Yes. And, I mean, by definition, everything you've laid out is uncertainty. And that's the one thing that we know that markets don't like.
BOLDUAN: But if you're going to -- if you're going to take the good with the market, you have to -- you do take the bad as well when things turn south.
Great to see you guys. I really appreciate it. Merry Christmas.
HEYE: Thank you. Merry Christmas.
DEMIRJIAN: To you too.
BOLDUAN: Thank you so much.
Coming up next for us, a stunning admission from President Trump's acting chief of staff on who will pay for his boss' beloved border wall. That's next.