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Markets Open Again After The Worst Christmas Eve Ever; Death of Seven-Year-Old Immigrant; Wall Street Is On Edge After What Has Been A Wild Week and New Word That It Could Lead To Yet Another White House Dismissal; Democrats Are Expected To Bring A New Intensity To Many Russia Investigations After They Take The House. Aired 10-10:30a ET

Aired December 26, 2018 - 10:00   ET

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

[10:00:00]

IM SCIUTTO, CNN NEWSROOM HOST: Tiny dream into a reality. If you wanted something good to think about this year this Christmas, just think about that.

Very good morning to you. It's the day after Christmas. I'm Jim Sciutto in Washington. A day before lawmakers come back to close out the 115th Congress, a Republican ally of the president reports little progress towards fully funding the government. The partial shutdown is now in its fifth day with neither side showing any sign of budging or at least not budging enough on funding for the president's desired wall on the Mexico border.

The markets open again after the worst Christmas Eve in history. A source tells CNN that the president may meet with the head of the Federal Reserve, who he blames for the recent sell offs early in the new year. This hour we are also following a revamp of U.S. government policies for the care of young migrant children. This after the second death this month of a child in U.S. custody.

Just minutes before midnight on Christmas Eve, an eight-year-old boy who'd been detained with his father in Texas days earlier, he passed away in a New Mexico hospital. CNN's Nick Valencia's in El Paso. Nick, tell us how this happened and what the border patrol is doing as a result of this death of a child.

NICK VALENCIA, CNN CORRESPONDENT: Well, good morning, Jim. It is just absolutely such a tragedy that here we are less than three weeks after we reported on the death of seven-year-old Jakelin Caal Maquin, and we're yet again talking about yet another death of a child that was in the custody of Customs and Border Protection. This time it happened to an eight-year-old who made the trek north from Guatemala and arrived here with his father on December 18. And as we understand it according to the timeline given to us by Customs and Border Protection, he was, along with his father, shuffled through processing center after processing center, and it was on Christmas Eve Monday morning around 9 a.m. that during one of the welfare checks made by the CBP agents in these facilities that they noticed that this child had glossy eyes and wasn't doing well. He was transferred to a hospital, diagnosed with the common cold, but held for an hour longer because he had 103 degree fever. He was allowed to leave - eventually allowed to leave and go back into that CBP facility, but it was as those hours progressed on Christmas Eve that his condition deteriorated. He was given medication that he was prescribed for during his first hospital visit. That didn't work, though. He became nauseous, he started vomiting, and he was eventually transferred back to the hospital. He lost consciousness and he never regained it, dying, as you mentioned, Jim, just shortly before midnight on Christmas day.

Because of this, the Commissioner for Customs and Border Protection has released a statement saying that this is a tragedy. He's also saying that he wants to implement some steps here because of these incidents that we've been reporting on over the course of the last three weeks, and among them are health screenings and secondary screenings specifically children migrants under the age of 10. They're also, as we understand it, potentially going to reach out for more help from people like the Department of Defense, perhaps even the Coast Guard to help with these additional screenings, and also focus on the transportation between Customs and Border Protection and ICE.

You know this, Jim. Migrants, often when they're apprehended in the field have to wait hours before they go through the processing - before they go through the system, and they're hoping that these steps will keep things from happening again. Jim -

SCIUTTO: Nick Valencia, thanks for staying on top of the story for us. Joining me now on the phone is Democratic Congresswoman-elect, Veronica Escobar of Texas. Congresswoman, thank you for taking the time.

REP. VERONICA ESCOBAR (D), T.X.: Thank you. Good morning.

SCIUTTO: Good morning to you. First, I'd like to ask just your reaction as an incoming lawmaker to the death - now the second death of a child in U.S. custody here. What's happening?

ESCOBAR: You know, the death of Jakelin and Phillipe are very tragic, but they are two of hundreds of migrants who have died while in American custody at our ports of entry or in holding cells or somewhere along the journey once they've come across the border. And I can tell you our country has known for years dating back to 2014 that the face of migration to our country has changed. We're no longer seeing single Mexican males come across our ports of entry or across our southern border for economic reasons. We've been seeing for the last four years Central American families who are fleeing violence and poverty and persecution coming to our country to seek asylum. But our government has been very slow to react to that changing type of migrant. We're seeing families, not single men. And our country has been - our government has been very slow to adapting to that change.

SCIUTTO: It's -

ESCOBAR: Now for the last several months, agents - according to the agents I've spoken to, they have been raising the alarm.

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They've been telling their higher ups that they don't have the infrastructure, they don't have the personnel and they don't have the training to deal with the families coming across in the more rural parts of our ports of entry where Jakeline was apprehended for example.

SCIUTTO: The president...

ESCOBAR: The investigations into these two deaths as tragic as they are, I hope create change and it looks like the Department of Homeland Security is looking to create change. These investigations need to continue, but we also need to investigate a few other things. Number one, why were agents and community voices not listened to months ago before these deaths occurred? What is happening in the chain of command on the ground where agents with their experience and what they are seeing on the ground are not being listened to by their supervisors?

SCIUTTO: It's an interesting point because -- because you're saying this criticism is not coming from the outside; it's coming from the inside. The customs and border patrol, as you know, they have announced procedural changes in the wake of these two deaths now. In your view does that address any of the issue here? Some of them up on our screen now conducting secondary medical checks, considering federal help with medical care but do these changes get to the root cause of the issue?

ESCOBAR: OK, so these changes actually do help address some of the more immediate issues. They definitely don't address the root causes of migration. That's going to be up to Congress and frankly the president should have been working on this for a long time. We want to stem the flow of Central American families who are putting themselves in danger to flee a place that is too hostile for them to raise their families and to be with their children.

We need to address that over the long term and that's going to take significant investment and leadership. In the short term, these do help. But we do have to investigate again why we are not listening to community voices sooner before tragedies occur. And I'll make one other point. There has been a lot of national obsession about a wall. I want to point out that Felipe and his father were apprehended in the El Passo sector where a wall already exists. So many of us on the border have been saying walls don't work. They don't keep out drugs. They don't prevent migration and this tragedy should be a wakeup call to folks who believe that mythology about walls. They just do not work.

SCIUTTO: That's a good point. I did not know that the area where they came across did already have a wall. Listen, Congresswoman-elect, thanks so much for joining us today and we look forward to seeing you when you are in Washington.

ESCOBAR: Wonderful. Thank you. SCIUTTO: This morning Wall Street is on edge after what has been a wild week and new word that it could lead to yet another White House dismissal. A source telling CNN that President Trump's frustration now focused on the Treasury Secretary Steve Mnuchin is riding and that his job could now be in serious jeopardy. Boris Sanchez is at the White House. So Boris, the president seems to be looking around for someone to blame for the market fall. He started with Jerome Powell, Chairman of the Federal Reserve. He was told he can't fire the Chairman of the Federal Reserve without cause usually defined as legal misbehavior here, so now Steve Mnuchin, he finds himself in the cross hairs.

BORIS SANCHEZ, CNN WHITE HOUSE CORRESPONDENT: Yes, it certainly appears that way Jim. A source close to the White House telling CNN that Mnuchin may be under the gun that he is in serious jeopardy of potentially getting canned. We understand that aides have been busy scrambling to gather economic data and news stories that are positive for Mnuchin to present to the president in order to calm him down.

From -- what we are hearing from sources the president is not happy with what he has been hearing. He's apparently not satisfied with the state of the economy right now. We should point out the president did defend Mnuchin yesterday calling him very smart and very talented. We have seen where the president says positive things about those within his administration before they are ultimately shown the door. As you noted, much of his public ire has been directed towards Jerome Powell, the Fed chair.

We understand from sources that right now aides are working out on a possible face-to-face meeting between the two men potentially in January. The belief there is that it would not only ease tensions between them but also potentially boost the stock market, as well. There is no specific date set but it would be next month.

Of course, the economy, likely a top priority for the White House today, but we shouldn't forget there is a government shutdown going on right now, a partial shutdown ...

SCIUTTO: Yes.

SANCHEZ: ... we're currently getting ready to enter day five and still there is no end in sight. Yesterday the president saying the shutdown will continue until he gets his wall or at the very least a fence, Jim.

SCIUTTO: Eight hundred thousand people enough, ironically enough, some of the folks affected by the shutdown are people who work on the border, not to mention TSA. Boris Sanchez, thanks very much.

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SCIUTTO: Still to come, one of the president's closest allies on the Hill says there has been little progress in ending the partial government shutdown, so where do discussions go from here, if anywhere. Plus Democrats set to take control of the House in just a few days. They are promising investigations. President Trump calls that harassment. (COMMERCIAL BREAK)

SCIUTTO: Right now we are four days and just over ten hours into our country's partial government shutdown. For President Trump, the budget battle will not be over until he gets money for his border wall. Democrats who return to D.C. tomorrow do not appear to be budging either. Republican lawmaker and Trump ally Mark Meadows, telling our (inaudible) in just the last hour that quote, "little progress has been made." Joining me now is national political reporter for the Washington examiner, Salena Zito. Salena, thanks for joining us today.

SALENA ZITO, NATIONAL POLITICAL REPORTER, WASHINGTON EXAMINER: Hey, happy Boxer day, right? Boxer day or Boxing Day?

SCIUTTO: boxing Day.

ZITO: Boxing. That would be like shorts that would be weird.

SCIUTTO: An excuse to extend Christmas another 24 hours.

So Salena, you wrote a very interesting piece, and in it, quoting from you, "over the past week, it appears Trump has forgotten that his supporters are populists and conservatives." Explain your point there.

ZITO: Well, you know, this new coalition is called the Conservative Populous. Like all coalitions, there's a lot of things that a lot of people don't have in common. And when you are the head of a coalition as Obama was with his from 2008 through 2016, you sort of, you know, have to do a delicate balancing act.

And the presidents to date had done a good job of that. But since the election, he has sort of been all over the place and mostly feeding his populist side of his coalition and sort of not paying enough attention or listening to what the conservative side of his coalition has -- sort of wants from him, and what that is stability.

When you see General Mattis leave, when you see John Kelly leave, one of the things that sort of calmed a certain part of conservative part of his coalition was the fact that there were people like Kelly and Mattis and Nikki Haley within the administration. When you see them leave and you see that instability, you start to see conservatives wavering.

You saw that in particular in the lead up to the mid terms. And the Republicans lost. A lot of that was not about good Republicans in the House and the Senate, a lot of that was about the president. That was the conservative part of his coalition, and you saw his losses in suburbs.

SCIUTTO: Let me ask you, I wonder -- the president has been all over the place through his career on principles; giving money to Democrats, giving money to Republicans, having what are democratic positions on issues, including social issues. But basically, changing them when it suits him. As you seem to be saying, you are seeing now, do you believe the president is even a conservative himself?

ZITO: I don't know what his ideological beliefs are. That is part of what his -- made him so popular among a bunch of different people, people liked that he wasn't super ideological. But he did do things that made conservatives very happy, in particular judges. That was very important to evangelistically conservatives and brought them over.

The Iran deal, that made sort of hawkish conservatives like Tom Cotton, very happy. But when you start to lose those people like Tom Cotton, who have been unhappy with the president since sort of how he has dealt with Syria and the withdrawal of troops, you see a wariness, and it's really important to hold that entire coalition together.

You saw president Obama have to sort of do that when he was trying to hold his coalition together and Hillary Clinton remarkably failed in holding the Obama coalition together because she got youth right, she got minorities right, she got women right, but not enough white working class and that's why she -- that was part of why she lost and they went towards Trump.

SCIUTTO: Salena Zito, thanks very much for walking us through it.

ZITO: Thanks so much. Have a good Boxing Day.

SCIUTTO: You, too. Good holidays.

Well we're less than an hour into trading and we are now seeing stocks fall flat. It was already the worst Christmas Eve drop ever. What is going to happen today? The market had been up but now it's down again. The treasury secretary is trying to calm the markets; nerves on Wall Street, but those comments -- certainly the president's comments don't seem to be working, they might be going to other way.

A source tells CNN that Steve Mnuchin's job could be in serious jeopardy, adding that Mnuchin is under the gun. Chief business correspondent Christine Romans is with us. You know, I know I ask you this all the time, Christine, because a lot of folks claim a lot of stuff about the market, the president, as well, often not based on the facts. The market is going down for a whole host of reasons right now, far out of the control of a Fed chairman or a treasury secretary. Tell us what is going on.

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ROMANS: here and an economy that has been just on fire, and investors have decided that this year, 2018, is probably the best it's going to get. You're seeing growth start to slow around the world. You've got, you know, Germany, actually its economy contracted. China's slowing down. There's a trade war that is still a big problem here and unresolved. You've got interest rates rising, and that's what the president has been focusing in on, Jim. He's been focusing on the Fed raising rates. He said the only thing wrong in our economy is the Fed raising rates. You know, the Fed is raising rates because rates were too low for too long, and the U.S. economy is strong enough, the Fed thinks, to withstand it. You know, presidents don't like it when the Fed raises rates when they're the president, but that's what they're going to do. There's probably not much the president can do about that, but the more he complains about it, the more unsettled investors get.

You know, on Monday you saw the market down a few hundred points and then the president started, you know, throwing this fit on Twitter about the Fed Chief with this analogy to playing golf, and quite frankly the market went down even more.

SCIUTTO: Yes.

ROMANS: On Sunday, you saw an administration that was trying to sooth fears. The Treasury Secretary issued the statement saying there's ample liquidity in the system, and that made people even more concerned because they're like why is he injecting the doubt of liquidity into the market right now? So there's just been some missteps from the president's own team that have added onto what has already been just maybe a run of the mill downturn.

SCIUTTO: Now, President Trump is trying to offer his own trading advice amid the plunge, saying I think it's a tremendous opportunity to buy, really great opportunity to buy. The president trying to goose the markets there. You speak to big investors on Wall Street. Do they take that seriously and listen to the president?

ROMANS: I mean, they don't want him to talk about the stock market and they don't want him to talk about the Fed. It's not helpful and it adds more noise in a story that right now is a story of chaos. It's about resignations and firings and who's in charge and what's the strategy. It just doesn't add to confidence. And so, they would like to see him stop talking about the market, but he took credit for the market being up.

SCIUTTO: Yes.

ROMANS: This is what happens when you take credit. When you own it on the way up, you got to own it on the way down.

SCIUTTO: Yes. Yes indeed. It's down there as we're talking to you. More red than green. Christine Romans, thanks very much.

ROMANS: You're welcome.

SCIUTTO: We are 19 months into Special Counsel Robert Mueller's probe. Could 2019 bring and end to the investigation? His final report we'll discuss.

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SCIUTTO: When they take over the House, Democrats are expected to bring a new intensity to many Russia investigations. They'll take over one week from tomorrow. On the special council side of things, of course, independent from Congress, this is where we stand with Robert Mueller's probe as 2018 winds down. Four prison sentences so far, one conviction at trial so far, seven guilty pleas, and three dozens defendants charged. Let's bring in former Assistant U.S. Attorney for the Southern District of New York, Elie Honig. Elie, thanks for taking the time.

ELIE HONIG, FORMER ASSISTANT U.S. ATTORNEY FOR THE SOUTHERN DISTRICT OF NEW YORK: Hey, Jim. How are you doing?

SCIUTTO: Very good. Very good. So you heard the president dismissing really any investigation both Mueller but also on the Hill as Democrats take over the House as presidential harassment. That's a phrase that he's going to stick with, I'm sure, in the coming months. From a legal perspective, what new powers do Democrats have now that they chair these key committees on the hill - Intelligence Committee, Oversight Committee, et cetera?

HONIG: Sure, so the president's already been fighting a mutlifront battle. He's been under investigation by Robert Mueller, by the Southern District of New York, by the New York Attorney General's Office, but he's about to see a whole new front open up and a multidimensional front. The fact that the House of Representatives is coming back next week and will be under Democratic control is going to change everything. There's much more and different things that the House can do than a typical prosecutor can do. I'll give you a couple of examples.

First of all, the House can demand and insist on rapid hearings and public disclosure of problematic things that may have happened. One example, we just learned last week that the president met with Matthew Whitaker and berated him or spoke with him angrily about the fact that the Southern District had implicated the president in campaign finance reforms. The new House will have the ability and Representative Schiff has already said he intends to do this, to call that out publically, to hold a hearing to subpoena Whitaker, to subpoena other people and say, "what happened here?" So that's something the Mueller can certainly investigate, but he can't air it publically and quickly the way the House of Representatives can.

SCIUTTO: The president is attempting to exert power over the Special Counsel's investigation. Of course, the principal way he's doing that is constantly publically attacking it so that for a certain portion of the country, they believe him and believe that the Russia investigation is a witch hunt as he has called it. But the other ways is putting in place an Attorney General, the acting one now, Matthew Whitaker, who has criticized the probe and nominating William Barr as a permanent replacement for him, someone else who has publically criticized the probe. What power from a legal perspective do, quote, unquote, "friendly attorneys general" have over the Special Counsel probe if any to hem it in (ph) as the president clearly desires them to do?

HONIG: It's important, Jim, that people realize that the Attorney General, whoever oversees Mueller has a lot of authority over Mueller. The Special Counsel regulations say that Mueller needs to get approval from the Attorney General for subpoenas, for significant investigative.