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AT THIS HOUR
Drama in D.C. Rattles Wall Street; Trump & Fed Chair Could Meet in New Year; Source: Mnuchin's Job May Be in "Serious Jeopardy"; Agency Changes Coming after 8-Year-Old Dies in Border Patrol Custody; Report: Migrants Dropped Off in El Paso on Christmas Day. Aired 11- 11:30a ET
Aired December 26, 2018 - 11:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[11:00:04] KATE BOLDUAN, CNN ANCHOR: Hello, everyone. I'm Kate Bolduan.
The good news this hour is the Dow started the day by trying to bounce back from its worst-ever Christmas eve. The bad news, the markets are now in the red for the day again. And the seemingly endless drama in Washington is making it tough to make gains. Part of the government shutdown -- part of it is that the government is shut down for a fifth day with talks pretty much at a standstill.
And then there's this. Word that President Trump might have a rare meeting with the chairman of the Federal Reserve, Jerome Powell. That meeting could come soon. The same Jerome Powell that President Trump blamed for the worst December on the stock market since the Great Depression.
(BEGIN VIDEO CLIP)
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: They are raising interest rates too fast. That's my opinion. But I should have confidence. I think is will steady. They're raising interest rates too fast because they think the economy is so good.
(END VIDEO CLIP)
BOLDUAN: The same Jerome Powell that President Trump reportedly wanted to fire or was considering firing or asking if he could fire but recently realized that he does not think that he can.
The trouble on Wall Street could mean another casualty in the cabinet. A source telling CNN that Treasury Secretary Steve Mnuchin could be, quote, "in serious jeopardy" with Trump after Mnuchin tried and failed to calm Wall Street with his call and the bizarre statement that he put out afterwards.
CNN's Alison Kosik has the latest at the New York Stock Exchange.
Alison, what are you seeing there right now?
ALISON KOSIK, CNN CORRESPONDENT: I'm seeing red arrows. The rally that the Dow had at the opening bell quickly fizzling out. It is interesting to see the downward momentum creep back in as we see the Dow and the S&P get close to bear market territory. That's a drop of 20 percent from the highs. There's a lot of pessimism in the market. Political risk is now added on to the list of worries for Wall Street and for the worries about the Fed rate hiking path, and global economic growth slowing down, and earnings growth that is expected to slow down next year and worries about how the U.S. and China trade situation will be worked out. You pile that on and then add the political risk. Usually, in the past. political risk, meaning tweets from President Trump or crazy comments about Fed Chair J. Powell, largely would be ignored by the market, now is becoming part of the trading action. That is really becoming an unpredictable part of the trade. There's one thing that the market hates and that is uncertainty. Each time you see the president go on this tirade against J. Powell or there are rumors about possibly Treasury Secretary Steve Mnuchin, he's having trouble and frustration with him, that sort of seeps into the market sentiment and causes the negativity -- Kate?
BOLDUAN: All right, Alison. On board for another wild ride today.
Thank you so much.
Joining me to discuss this is CNN global economic analyst and associate editor at the "Financial Times," Rana Foroohar, and CNN senior economic analyst and former economic adviser to the Trump campaign, Stephen Moore.
Guys, thank you so much for being here.
Rana, we talked about this just before the markets were closing.
RANA FOROOHAR, CNN GLOBAL ECONOMIC ANALYST: Yes.
BOLDUAN: This month is now on track to be the worst December since the Great Depression. It was the worst Christmas eve day on Wall Street ever.
BOLDUAN: How bad is it right now? It was up this morning. It is down again.
BOLDUAN: How bad is it?
FOROOHAR: There are a few things going on. There are three baskets of things that are wrong in the markets. Some of them we knew weren't going to happen. Recovery cycles tend to last about 10 years. A lot of economists were predicting a slow down a year ago at about this time. It's not really a surprise.
But there are a couple of things that have happened. The president has come and really rattled the market with tariffs and trade war against China. We had attacks planned. We had -- I'm sure Steve will disagree with me. We had a tax reform plan that enriched companies, allowed them to bolster share prices but didn't do a lot for people on Main Street. All of that is coming home to roost. We have record amounts of corporate debt, which is a reason the Fed wants to raise rates now. Markets are out of sync with the real economy and they need to be brought back together. You need to not have such a big divergence between Wall Street and Main Street.
BOLDUAN: Stephen, how do you see it right now?
STEPHEN MOORE, CNN SENIOR ECONOMIC ANALYST: Well, this was a horrible December, no question about it. I agree with a lot of what Rana said. I think one of the biggest factors of all, other than the Fed -- and I want to talk about that in a minute --
MOORE: -- but I think that the trade situation with China is really the biggest factor of all because this is a high-stakes show down between Beijing and Washington. This is going to get resolved one way or the other probably in the next 60 days or say. Remember, Kate, that Trump gave the Chinese 90 days to come up with some kind of concessions on trade. If that happens -- I will be optimistic today. If they get some kind of trade deal that works for the United States, I think you will see a big reversal of the stock market slide. And it will be jubilation in the stock market. So that is the upside potential.
Now, on the Fed, this was what happened last week, was what we in sports call an unforced error.
[11:05:20] BOLDUAN: On whose part?
MOORE: It was a decision by the Fed. Everyone agrees it was a catastrophic mistake. What I don't really understand is the Fed should meet tomorrow and reverse that decision. I mean, there's no basis for the Fed rate increase at a time when we have deflation in the economy. It makes no sense. Investors, we are talking about trillions of dollars of losses because of a boneheaded play by the Fed that is easily reversible.
FAROOHAR: I think if the Fed met and reversed the decision, I think that would be a terrible thing for the markets because it would be viewed as completely political. It is important that the Fed maintains its independence and is viewed as a stabilizing force in the markets. That's exactly what we need. That is what the Fed has been for the last 10 years. By the way, the president had no right to come in and take credit for the economy. Janet Yellen, Ben Bernanke and J. Powell deserve credit for what's happening. They're been the biggest players in the last 10 years. The president lives by the markets and dies by the markets. It was a mistake to take credit for what was happening in the stock market.
BOLDUAN: Stephen, you have seen in a pervious interview, in the last couple of days, to suggest that Donald Trump would have cause to fire J. Powell. Do you think that would help things right now?
MOORE: I think this was such an inexplicable move by the Fed. Rana may be right that the reason they did something that caused trillions of dollars of wealth loss was somehow because they thought this would establish their independence.
MOORE: Look, Trump was right.
FOROOHAR: They were looking at data.
MOORE: Wait a minute. Hold on.
MOORE: Rana, you just said a few minutes ago that the purpose in the Fed is to stabilize the economy. You think they are stabilizing the economy? I mean, come on.
FOROOHAR: I do, Stephen.
FOROOHAR: You know what they are doing? They are cleaning up the mess of record corporate debt, which you pour kerosene on that with the corporate tax cuts. Corporations brought back not nearly as much money as the president said they were going to.
FOROOHAR: Almost none of it went to Main Street. It all went to share buy backs. Now companies are doing great but real Americans haven't felt it. We have a bubble in the market --
MOORE: When companies buy back their shares, they reduce their debt. They don't increase their debt. So --
FOROOHAR: No, you're confusing things.
BOLDUAN: -- Stephen, but I do want to ask --
MOORE: I don't think anybody thinks the corporate tax cuts have hurt the economy. Let's not forget the 2018 -- we have one more week in 2018. This has been the strongest year for the real economy, in terms of jobs, in terms of GDP growth, and the lowest unemployment rate and manufacturing. This has been a great year for the economy and that was triggered, in no small part, Rana, because of the tax cut we passed exactly a year ago.
BOLDUAN: But I do want to ask, looking forward, looking forward, in the "New York Times," he put it this way, it put this out on Christmas Eve, he said this, "The real risk looking forward is not the insurmountable challenges knock the economy of course. It is that poor leadership converts moderate economic shocks into a crisis."
FOROOHAR: I would agree with that.
BOLDUAN: I do wonder if firing J. Powell would be one of those things, Stephen.
MOORE: Look, I think Powell has been incompetent so far. I think every move he has made has as Fed Chairman has caused a massive slump. We have a booming economy. There's a demand for dollars around the world. We've been the strongest economy in the world. You have to be keep putting dollars into the economy and not taking it out. Look what happened to the oil price. Look what is happening to the prices of commodities, whether it is soybeans or wheat or cotton or minerals like copper, these are falling. That is a sign that we have deflation. It makes no sense in any kind of economic theory, whether you're a Keynesian or a free-market person, to say you raise interest rates when you have deflation --
MOORE: This is what --
FOROOHAR: There's a real debate.
FOROOHAR: I will say, there's a real debate -- and this predates Donald Trump -- as to whether or not there's deflation in the economy. That is a debate that the Fed should have and is having. That is a debate that should be had in an apolitical way.
FOROOHAR: If you talk about firing --
MOORE: Rana, hold on.
FOROOHAR: Just a minute, Stephen. Just a minute, Stephen
FOROOHAR: In firing J. Powell, you automatically make the entire thing political. It's the most ridiculous thing I have heard.
BOLDUAN: Go ahead, Stephen.
MOOER: I want to ask you, how do you explain this year that we have a 12 percent decline in commodity prices and say that is not deflation? Of course, that's deflation.
FOROOHAR: Because China is slowing and the global economy is slowing. That could have some effect.
MOORE: But the global economy is --
FOROOHAR: But we have a bubble in the asset market that has been brewing for a number of years and was not helped by the president's tax cuts which benefitted corporations and stock prices but not real Americans.
[11:10:08] BOLDUAN: I will say this as we bring 2018 to a close, the way the stock market was looking and all the signs that we're seeing, we are not pointing for a happy beginning of 2019. We'll discuss that in many days to come.
MOORE: Stocks are cheaper now than they've ever been.
MOORE: Don't sell you stocks, Kate. Hold on to them.
BOLDUAN: I don't think I have heard you once tell me to sell my stocks.
BOLDUAN: I'm just saying, you have a bit of a thing going.
Great to see you guys. I really appreciate it.
MOORE: I'm bullish on America. What can I say?
BOLDUAN: I'm bullish on getting you guys off my show right now. Thank you.
Still ahead, we're getting new details about -- we're getting new details from breaking news about the death of an 8-year-old boy who was in Border Patrol custody and what big changes the agency is making in the aftermath of the tragic news in how it handles children in its care. We will bring that to you.
Plus this. President Trump vows the shutdown will last until he gets full funding for his border wall or fence, or whatever you call it. That is how he put it the other day. Democrats holding firm that that is not going to happen. Who is going to blink first when they get back to work tomorrow?
(COMMERCIAL BREAK) [11:15:33] BOLDUAN: A new tragedy at the southern border. An 8- year-old boy has died in U.S. custody. It is the second time this month that a child has died in the care of Border Patrol agents.
The head of Customs and Border Protection stresses such tragedies are rare.
(BEGIN VIDEO CLIP)
KEVIN MCALEENAN, COMMISSIONER, CUSTOMS & BORDER PROTECTION: Certainly, there are not more children that have passed away. This is an extraordinarily rare occurrence. It has been more than a decade since we have had a child pass away anywhere in the CBP process. This is just devastating for us.
(END VIDEO CLIP)
BOLDUAN: The government says that the boy died on Christmas eve as he was being transported between a border processing center and a nearby hospital.
CNN's Nick Valencia is following this story for us. He joins me now.
Nick, do they know how this happened to this boy?
NICK VALENCIA, CNN CORRESPONDENT: Officially, Kate, there's still no cause of death. All of that is part of the internal investigation which we expect to focus on the kind of medical care that this child got. There's no doubt, according to CBP, that this 8-year-old boy was attended to, but it was the kind of medical care that he got. He was diagnosed with nothing more than a common cold when he was taken into the hospital on Monday morning. He was released, even though he had 103-degree fever. He was given amoxicillin, which is a generic type of antibiotic. He was prescribed ibuprofen. It didn't do enough. It was hours after he took that medication that fell even more ill. He started vomiting, becoming more nauseous. He eventually lost consciousness. When he was transferred to the hospital, he died just minutes before midnight on Christmas eve.
A lot of people are wondering how this could have happened again. Here we are, Kate, less than three weeks since we talked about another victim, another 7 year old who died in U.S. custody. She was just laid to rest in a touching ceremony in her home country of Guatemala. Here we are talking about yet another child.
This has shaken the CBP. I was on the phone with a source yesterday. This has really shaken members of the Customs and Border Protection, including the commissioner, who has implemented some steps, some secondary medical screening for all children, all children, especially those under 10 years old. They are asking for more resources. It was a short time ago that Secretary Nielsen, with the Department of Homeland Security, asked for more resources from the Department of Defense as well as the Coast Guard to help with the medical screenings. They are hoping that will keep something like this from happening again Kate? BOLDUAN: Nick, you are in El Paso, Texas, where another story is
playing out related to this. Hundreds of migrants are being dropped off and left at places like bus stations and restaurants by ICE officers. What is going on there?
VALENCIA: They are being dropped off without warning, we understand. Congresswoman-elect, Veronica Escobar (ph), who is about to represent this district, saying that 200 migrants were dropped off at this very bus station without warning to local charities. That is not usually what happens. That's not usually how the process works. ICE released a statement and didn't specifically address what happened here. They blamed Congress for releasing, so many while local charities and those who support migrants are released because the time table for them to be held by the government has expired. They were caught off guard. There's an expectation that more migrants will be released in the coming days. We are waiting for that to happen -- Kate?
BOLDUAN: Nick, thanks so much. I really appreciate it.
Joining me now to discuss this and more, the former acting director of Immigration and Customs Enforcement, John Sandweg.
John, thanks for coming in.
JOHN SANDWEG, FORMER ACTING DIRECTOR, IMMIGRATION & BORDER ENFORCEMENT: Yes. Good to be here.
BOLDUAN: Thank you.
The head of Customs and Border Protection said it was devastating in speaking out this morning about the tragedy of the 8 year old and 7 year old who passed away in their custody but he also said their facilities aren't equipped to handle families and young children. He blames Congress for that. Is that what you saw? Is he right?
SANDWEG: He is definitely right about the facilities themselves. These are short-term lockup facilities designed to house adults for a few hours. They were built with the initial of what we were dealing with at the border up to about 2015, which was people from Mexico crossing into the United States who could be deported quickly. They are not designed to hold 7-year-old children or children for days. So this was inevitable. You take vulnerable populations, who are under incredible duress, and put them in facilities that weren't built to house them, no matter how deeply the officers care and how much attention they pay, something like this is just going to happen.
[11:20:21] BOLDUAN: After the 7-year-old girl died earlier this month, I remember you saying that if not for the detention, I think is how you put it, coming from federal authorities, then that little girl would probably be alive. What then is the answer to when families cross the border illegally, if the facilities aren't up to it and detention you say isn't helping them, what is the solution?
SANDWEG: We can be tough at the border and ensure that every one of the people are placed in deportation proceedings and returned to their country quickly and still release them. That's the solution. We continue to spend hundreds of millions of dollars, and we take 7-year- old children and put them in dangerous situations. The CBP positions themselves to get blamed for this child's death, not matter -- it is possible the child was so ill that there was nothing they could do. But just by having custody of that child, you own it and are fully responsible for the child. Why would we take a 7-year-old child and place them in detention when we can put them in deportation proceedings, hire some immigration judge, and expedite the hearings. If they're not eligible for asylum, return them to their home country quickly. It makes very little sense to me why we are doing this.
BOLDUAN: To your point, I want to play for you what another former director of ICE, under President Trump, Tom Homan, what he said this morning about people -- I don't know if they are quick to blame Border Patrol agents for what has happened here. Listen to this.
(BEGIN VIDEO CLIP)
TOM HOMAN, FORMER DIRECTOR, ICE: Let's not vilify the Border Control because they're doing their best. These people are coming from third- world countries. At the detention facilities, the mother and children there, many times, their first pediatrician that child has ever seen is the one the government gives to them.
I can't tell you how many people who are in ICE custody that need to go to a medical trauma center. I mean, these people are in bad shape.
(END VIDEO CLIP)
BOLDUAN: John, is Tom right?
SANDWEG: Tom's right. I have worked with Border Patrol agents along the border quite a bit. They care. They will do everything they can. They are put in an impossible situation. They are not medical professionals. You are putting 6 and 7 year olds in facilities that are small and designed to house adults, and frankly, not overnight. Now you have these children there. Look, no matter how deeply you care -- and I believe 100 percent they care and they are doing everything they can to protect the health and welfare of the children -- you just put them in a much higher-risk situation and an impossible situation. There are other ways that are just as tough at the border to deal with this problem. I don't understand why our reluctant and why we are fighting the legal framework that has worked for decades in order to shift to this mandatory detention approach. We don't have the resources, the facilities to do it. Now you have 7 and 8 year olds dying as a result.
BOLDUAN: It is just so horrific that it would have to come to children dying. Yes, even if their parents come here illegally, the reasons they come over are varied. The fact that children are dying because the process is broken and no one -- they can't get their act together to fix it just compounds the tragedy.
Real quick, I want to get your take on ICE dropping hundreds of migrants off, it seems at random, in parts of Texas, bus stations and restaurants, not even giving heads up to local authorities. ICE, when asked about it, said they had nowhere to hold them, kind of to our discussion about detention. There has to be a better way. Is there?
SANDWEG: This all should be a much more orderly process. What I point the finger at is the insistence we're going to take the families. The threat along the border shifted. I use the term "threat" just like the DHS would, right?
SANDWEG: Historically, we were seeing single males from Mexico who cross the border who try to evade capture. In 2015, you began to see the massive uptick in Central American families who want to present asylum claims. I get where people's frustration that they think it is a loop hole they can take advantage of. The reality is it's not. But what's true is we have never adequately resourced the immigration enforcement system to handle large numbers of families. Instead of addressing this problem -- I get what you are saying, people are frustrated that people take their children on this difficult journey. From where we sit in the U.S., the practical reality is they are coming and we have to deal with it. Let's deal with it in a way that is efficient and safe. In my mind, let's stop fighting this. Let's go ahead and resource up the immigration courts so we can have fast asylum hearings. If not eligible, they get sent home right away. But building these detention facilities have overwhelmed the system. It prevents and hinders ICE from deporting serious criminals. Now you're getting families dropped off, scattered along the border. There's no coordination or insufficient coordination with the aid societies that will take those people in and help integrate the people back in a place while they wait for their deportation hearing. You have 7 or 8 year olds dying.
I think it is time to stop looking at shortcuts like new regulations that eliminate the need to see immigration judges or trying to rapidly build out camps that can house families. Let's hire the immigration judges, fast-track these hearings. It's a pro-enforcement approach. It is cheaper for the taxpayer and a lot safer for the migrants.
[11:25:25] BOLDUAN: That would come with a conversation of Congress working together to have this kind of thing happen.
John, thank you for coming on. Unfortunately, I think we will have to talk more about this coming up. I appreciate your time. Thank you.
SANDWEG: My pleasure.
BOLDUAN: Still ahead for us, President Trump vowing to keep the government -- vowing the government will continue to be shut down for as long as it takes to get the money for his border wall. Just as discussed with John Sandweg right there. Democrats, they're just as unflinching. Will the two sides be able to reach a deal anytime soon as we are now in day five of the shutdown?