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ERIN BURNETT OUTFRONT

Shutdown Set To Extend Into New Year As Trump Digs In And Congress Punts On Budget And Border Votes; Giuliani Incorrectly States That Department Of Justice Report Found That Mueller's Office Erased Texts; Report: Giuliani Claims Trump Might Still Sit Down With Mueller; Sources: Trump Buoyed By Wall Street Gains Despite Rough December; Secretary Nielsen To U.S.-Mexico Border Tomorrow; Trump Tells Troops U.S. No Longer "The Suckers Of The World." Aired 7-8p ET

Aired December 27, 2018 - 19:00   ET

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


[19:00:01] KATE BOLDUAN, CNN HOST: OUTFRONT next, all signs are pointing to no sign the government shutdown will be over soon, as President Trump just now tweeting, this isn't about the wall. Then what is it about?

Plus, Rudy Giuliani calling for Robert Mueller to be investigated, claiming he destroyed crucial FBI evidence. What's the President's attorney talking about this time?

And Wall Street whiplash, as the stock market has an 800-point swing. What is going on? Let's go OUTFRONT.

Good evening, everyone, I'm Kate Bolduan in for Erin Burnett. OUTFRONT tonight, buckle up, it looks like it is going to be a long ride. Tonight, lawmakers are no closer to ending the government shutdown. That has now lasted six days, despite a handful of lawmakers returning to Washington today for the first time since the standoff began.

Both chambers gaveling in about 4:00 in the House, a brief disruption as one Democratic lawmaker tried to push a short-term funding bill on the floor. Right then and there, no border wall money included, but he was ignored. And within minutes then both chambers gaveling back out for the rest of the week.

Meanwhile at the White House, President Trump lashing out, firing off a number of tweets, blaming Democrats for the shutdown. Even saying the following, "This isn't about the wall. This is only about the Democrats not letting Donald Trump and the Republicans have a win. Are you confused? You are not alone".

Earlier, Trump also tweeted this, "Do the Democrats realize that most of the people not getting paid are Democrats?" That is an interesting statistic yet one no one has yet found any evidence for. The White House now not responding to CNN's request for the data to back that up and the head of a federal employees' union adding this today.

(BEGIN VIDEO CLIP)

RANDY ERWIN, PRESIDENT, NATIONAL FEDERATION OF FEDERAL EMPLOYEES: It's ridiculous. I mean, it would be funny if it wasn't really funny at all. We know the political makeup of federal employees. They are split evenly down political lines. It just kind of shows that he doesn't understand the federal workforce very well or he wouldn't say things like that.

(END VIDEO CLIP)

BOLDUAN: The blame game aside, something eventually has to give. But what that is and when that will be still seems anyone's guess. Just ask Republican Congressman Mark Meadows.

(BEGIN VIDEO CLIP)

REP. MARK MEADOWS (R), CHAIRMAN, FREEDOM CAUCUS: Obviously over the last 24, 48 hours things have not progressed. At this point it looks like we could be in for a very long-term shutdown.

(END VIDEO CLIP)

BOLDUAN: Phil Mattingly is now on OUTFRONT live on Capitol Hill. Phil, it does not appear Congress is hopeful this end any time soon. Do you have any hope my friend?

PHIL MATTINGLY, CNN CONGRESSIONAL CORRESPONDENT: Yes, I got to associate myself with the remarks of the gentleman from North Carolina, Mark Meadows, and the fact that this is going to take a white. Kate, look, you're a veteran of covering these types of things, it's such a bizarre scene on Capitol Hill right now. There's no late-night meetings, there's no lawmakers shuffling back and forth between closed-door meetings, trading proposals trying to figure out a pathway forward, trying to figure out that there is not just an elegant solution but any solution to this.

The House is out of session. The Senate is out of session. They're not planning to come back. Really what I'm being told right now is until after the New Year. There's no real proposals being traded back and forth, there haven't been for a number of days. And everybody just seems resigned to the reality of this moment and this moment is right now Democrats are very set in where they stand. They have offered $1.3 billion in border security that would include some fencing, some complete (ph) structures, some repairs for existing fencing and that's it.

The President has said $5 billion is his threshold, his negotiators led by Vice President Mike Pence. Last week they put on the table $2.5 billion border security proposal that was essentially rejected. There have been statements traded back and forth attacking one another in each side but beyond that, there's nothing else happening right now. And I think what it underscores more than anything else is the political reality of this moment.

Kate, you know this as well as anybody, these fights aren't usually won by compromise. They're won by one side giving up when they realize politically they can't handled it anymore and neither side is at that moment. You talk to Democrats and they are very firm in their standing. They know the base is behind them, they know the rank and files behind them and they know Nancy Pelosi becomes a speaker on January 3rd. They're willing to hold out right now in their current position.

You talk to Republicans on Capitol Hill, they're frustrated. In the Senate, they signed off on a stop-gap spending measure that was rejected by the President. The President here is the wild card. He has made it very clear he wants this fight, he believes his people are behind him on this fight, he believe this is a winning issue politically for him and he is not backing down either. So I guess the big question becomes if nobody is feeling the pain, if nobody feels like they're losing, how does this actually end?

And I can tell you right now I'm talking to the staffers who are working behind the scenes to try and figure out a solution here to the extent any work is being done, not only do they not know the way out of this or the solution to this, they don't know how long this is going to take. I was talking to somebody earlier today who said, look, you need to change your perspective on this. This isn't about days, how many days this is going to last, this is turning into a question about weeks, how many weeks is this going to last.

And just one final point on that, just because Nancy Pelosi and House Democrats take over January 3rd doesn't mean this ends that day. As long as President Trump doesn't lay out what he will sign, doesn't say whether he's going to veto or something, Senate Republicans aren't likely to move on something. And that means a shutdown is not coming to an end not just this week, not just at the end of 2018, perhaps late into January, Kate.

[19:05:15] BOLDUAN: And yet again, exhibit, I don't even know how many of how the political reality and reality are not in line. Political reality maybe they're not feeling the pain yet. The reality is there are folks out there that are feeling the pain now as we're learning. Welcome to it all.

Great to see you, Phil.

MATTINGLY: Thanks.

BOLDUAN: Thanks, man.

OUTFRONT now, Rob Astorino, he's a member of President Trump's 2020 re-elect Advisory Council, Joan Walsh, National Affairs Correspondent for The Nation and retiring Republican Congressman Ryan Costello of Pennsylvania. He's joining us on the phone.

Congressman, first to you, you heard what Mark Meadows said there that it could be a very long shutdown. You heard what Phil Mattingly said there were talking -- now we could be talking about how many weeks, not how many days, the shutdown is going to be going. What does it look like to you right now?

REP. RYAN COSTELLO (R), PENNSYLVANIA (through phone): Well I think it will be weeks, not days. It's very difficult to know what the President would be willing to sign, and Mark Meadows, being one of his chief allies in Congress, in the House, unless and until those House members indicate what they're willing to sign, and then have a bill pass the House and get over to the Senate for consideration, it will be weeks.

And I would just echo, again, what Phil said. The Senate passed 100 to nothing a funding bill which I believe they had every expectation, the White House supported and the President was going to sign and it was only after the fact when the President indicated that he would not sign it.

So, in addition to there being uncertainty for those federal workers, there's just a lot of uncertainty over what each entities bargaining position is right here. In other words, what would someone be willing to take? I just don't see a scenario where Democrats are willing to give any more additional border security money beyond a $1.3 billion. That's just my take.

BOLDUAN: And Congressman, you don't have to look far at this point to see that real people are being really impacted. A union President was telling a story today on CNN of one person taking presents already wrapped for Christmas, unwrapping them and returning them to the store as it started playing out. There -- like, I just -- the question of they're going to get paid back, but they don't know when they're going to get paid back, they're not going to get paid until the shutdown ends. With all that in mind, I do wonder, where is the urgency? I know you with retiring, but no one's in town. And --

COSTELLO: I don't think there is any urgency and it's a shame. There should be urgency. Listen, these are middle -- largely middle-income family workers who have an expectation that they're going to get an honest week's pay for an honest week's work and there are times when I've never supported a government shutdown, but where a government will shut down and you know that it's coming in advance. This is not that. This is an after the fact we're going to shut the government down, and we're not really clear what our bargaining position is even going to be.

So I think in this respect, it's extremely unfair to those workers. And it's -- frankly, it's a retiring member, it's disconcerting and disappointing to be retiring. And I'll be going out in a time when the government is shut down because we can't come to an agreement on that.

And frankly, again, the Senate passed, again, the Senate passed a bill 100 to 0. There was no dispute, there was no debate, there was no disagreement as of a week ago, week and a half ago, by 100 United States senators ranging from Bernie Sanders to Ted Cruz and everyone in between. So why can't the House pass what they proffered? And at the time the White House was willing to accept.

BOLDUAN: And with all the reporting the person that changed on that is Donald Trump. Rob, let me bring you in on this. The President tonight tweeted this, Rob. What we read at the top, that this isn't about the wall at all. This is about Democrats not wanting to give Republicans a win.

I want to read you another quote that I think I remember. "I'm proud to shut down the government for border security," that is Donald Trump from the Oval Office when he was sitting down with Nancy Pelosi and Chuck Schumer. You cannot have it both ways on this. It's either the wall or it's not wall.

ROB ASTORINO, MENTOR OF PRESIDENT TRUMP'S 2020 RE-ELECT ADVISORY COUNCIL: Trump translation, it is about the wall because that's part of it but it's not solely 100 percent about a wall. It's about border security which a wall is part of. We got to go back four years ago when we had the government shutdown under President Obama.

The House was controlled by Republicans. The Senate and the White House was controlled by Democrats. And Obamacare was very unpopular. That was a big issue on why it was shut down and they couldn't. President Obama said I'm not signing a continuing resolution.

I want a full appropriations bill with what I want. He was playing to his base. The House were playing to their base. Eventually, they got together. I see this --

BOLDUAN: Because one party was suffering real political damage.

ASTORINO: You know what, I don't think -- there's no urgency right now because there is no urgency. People are on vacation. The government workers, they're going, I feel bad that they're not going to get their check right now.

BOLDUAN: People (INAUDIBLE) on vacation.

[19:10:03] ASTORINO: They will get their paycheck. And, by the way, the President, the Senate, the House, they don't work for the government workers. They work for 320 million people in the United States, as a bigger issue here. And I bet that this is going to go past the State of the Union which is January 22nd. Because then the President can speak directly to everybody and say, this is why it's important.

BOLDUAN: And you think he's going -- why do you project it's going to be that date?

ASTORINO: Because I don't think this --

BOLDUAN: You think he wants it to go past that date?

ASTORINO: No, I don't think the Democrats in the House under Pelosi are going to give anything because they've already said, we're not giving Trump his wall. They're playing to their base, too.

JOAN WALSH, NATIONAL AFFAIRS CORRESPONDENT, THE NATION: First of all, Rob, my friend, you're being awfully cavalier about government workers who are actually showing up to work. I have a friend in the last shutdown who was not paid for six months. There are not a lot of Americans who can go --

ASTORINO: But they did get their money back.

WALSH: They did get their money back. But a lot of people don't live with six months of savings so they can pay their bills, they can take their kids to the doctor. So this is a big deal for a lot of people. We also have to go back and say as the Congressman said, you said, Kate, the President was willing to sign the C.R. without border funding until he got bullied by Ann Coulter and Rush Limbaugh.

ASTORINO: No, I don't think so.

WALSH: And Coulter and Rush Limbaugh took him to the wood shed and suddenly, look, Mitch McConnell doesn't put anything on the floor that he doesn't believe the President will sign. He had every reason to believe the President would sign that. The President was sending all the signals. He got trashed on Fox News and he chickened out and he went -- he flip-flopped entirely.

There will be the votes when Nancy Pelosi takes over, there will be the votes to pass what the Senate passed. Then it's on McConnell. The President might not sign it. He might sign it. But they are also challenged to override his veto if he is acting irrationally.

BOLDUAN: The White House put out a statement tonight on this, Joan, and as Phil said, it's like -- it's just a statement before at this point. Saying that, "The Democrats decided to go home. The only rational conclusion is that the Democratic Party is openly choosing to keep our government closed to protect illegal immigrants rather than the American people." I mean, Democrats did go home. Republicans went home too.

Democrats did go home. Donald Trump did stay in Washington. Do we acknowledge at this point and maybe it's a degree of who's playing more politics but the Democrats are playing politics as well? Do you see there -- if people really wanted to get to a place of yes, they could, other than just waiting for the President to get to, I give up.

WALSH: They could get to a place of yes. Back in March, Kate, I think you and I have talked about this before, they had a deal for a whole lot, up to $25 billion in border fencing, security funding for a DACA deal. The President said yes to that. Chuck and Nancy, we have a lot of love for the DACA kids. Then Stephen Miller and John Kelly overruled him. The problem is the President for all of his bluster really doesn't have the backbone to follow through on his commitments.

ASTORINO: The $25 billion sounded good. But there was a lot of poison pills that the Democrats put in that.

BOLDUAN: Right now, talk about now.

ASTORINO: But I think -- here's what I think is going to happen. I do think this is a perfect time, if the Democrats want to do it, and I don't think they want to give Trump a victory because that's what their base is saying, don't give him anything including DACA. It's an issue that they want to use in two years.

WALSH: That's not true.

ASTORINO: But I hope and I think that they can all get together, they could all have a win, and we can get DACA done, immigration reform and part of a wall, whatever the part would be, $5 billion or whatever. But I think everyone can win. And I think that's the case he's going to have to make at the State of the Union. And that's why they're going to go --

BOLDUAN: Throwing, like, comprehensive immigration reform into this, that's just going to make it all easier.

(CROSSTALK)

BOLDUAN: And I would love to be wrong, but they have been talking about comprehensive immigration reform since I was about seven.

ASTORINO: They're close. Now the Democrats have to make up their minds, do they want it or not?

BOLDUAN: OK.

WALSH: Bring back the 2013 bill. Sounds great to me.

BOLDUAN: Oh, my goodness. Guys, thank you so much. We'll see here -- we're going to be here until 2020 talking about this shutdown. Congressman, I really appreciate you jumping on the phone for us too, thank you so much.

OUTFRONT for us next, Rudy Giuliani sounds off again about the Special Counsel's Russia investigation leaving some to ask, what is he talking about?

(BEGIN VIDEO CLIP)

RUDY GIULIANI, PERSONAL LAWYER TO TRUMP: That should be investigated damn it. I mean, that should be investigated fully. You want another special counsel? Get one for that.

(END VIDEO CLIP)

BOLDUAN: And roller coaster on Wall Street. Stocks went on a wild ride again today. Can anything calm these financial waters?

Plus, the death of this little boy in U.S. custody has prompted calls for investigations. And now the head of Homeland Security is headed to the border.

(COMMERCIAL BREAK)

[19:17:32] BOLDUAN: Tonight, another explosive and uncorroborated claim from President Trump's attorney, Rudy Giuliani. Giuliani telling The Hill publication that Robert Mueller should be the one investigated. Now for destroying FBI evidence. Listen to this.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Have you seen conduct by the Mueller team or are you aware of actions they've taken that you think should be independently investigated by the DOJ? GIULIANI: Absolutely. Destroying the 19,000 texts of Strzok and Page, I told you at the beginning, this thing began illegitimately. Please, if you sell me that you're not going to sell me the Brooklyn Bridge. That should be investigated, damn it. I mean, that should be investigated fully. You want another special counsel? Get one for that.

(END VIDEO CLIP)

BOLDUAN: Evan Perez is OUTFRONT now. So Evan, is any of this true and what's the Justice Department saying?

EVAN PEREZ, CNN SENIOR JUSTICE CORRESPONDENT: Well, no, it's not true. The Justice Department's inspector general, Kate, looked into this, and found that what essentially what happened was Peter Strzok and Lisa Page left the Special Counsel's team and they turned in their telephones. And then the phones were reassigned. And so the messages weren't necessarily erased, did not necessarily missing.

The FBI was able to basically reconstruct some of these by going to the phone carriers and so the messages weren't exactly lost. They might have been -- when the phones were reassigned, they perhaps weren't on those phones, themselves. But the messages weren't lost forever as matter of fact. The inspector general has been producing additional information about that and that's the reason why Members of Congress have been so outraged about what they found.

BOLDUAN: Bigger picture, looking ahead toward the New Year, Evan, do you have any sense of what lies ahead in the Mueller probe? Are you getting a sense?

PEREZ: Well, look, Robert Mueller was back at work today. So we don't know if he saw his shadow or not, but look, we're looking ahead at least up another couple months of this investigation. There are, you know, indications, Kate, that this is soon to be wrapped up. But then, of course, that's only the beginning of the next phase.

And you can tell from the President's legal team that they have some concerns about what they believe Robert Mueller will find in his report. And that is they believe that there's going to be some very tough things for the President to deal with politically which is why you're seeing some of this P.R. strategy from Rudy Giuliani. And, of course, Kate, no matter what Mueller finds in his report, there's going to be a legal battle between the President's team and the Democrats on Capitol Hill because the President's team believes that the report necessarily doesn't get to become public immediately, that they have to have a litigation over this.

[19:20:12] So, I think we're going to have a few months of some fighting and some legal fighting over whether -- what exactly Robert Mueller's findings are and whether we get to see them.

BOLDUAN: And Robert Mueller has now become the Punxsutawney Phil of Washington. Great to see you -- Thanks, Evan, great to see you, man.

OUTFRONT with me now, two Former Assistant U.S. Attorneys for the Southern District of New York Elie Honig and Harry Sandick. It's great to see you guys. Thanks for being here.

Elie, with what we heard from Rudy Giuliani there, is there any legal strategy in that at all?

ELIE HONIG, FORMER ASSISTANT U.S. ATTORNEY, SOUTHER DISTRICT OF NEW YORK: Always a good question to ask with Rudy Giuliani. There is. This is a well-worn defense strategy of desperation. Harry and I have seen it a bunch of times which is when you've got nothing, put the prosecution on trial, right. We used to talk about it in the Southern District, would be talking about a trial you had coming up. Evidence was strong, someone would go, what's the defense? You know, there is none, they're just going to try put us on trial. And that's what Rudy is doing here.

Normally, look, it's a desperate tactic and it usually doesn't get anywhere but this is not just any case. And I think Rudy is trying to play a P.R. strategy here as well and he's just trying to put something out there that the ardent supporters of the President can cling on to. And so they can say, look at Strzok's texts, look at the dossier. These are just sort of buzzwords that are out there so they have something to say.

BOLDUAN: On the issue of the -- well, let me ask you this. What he's calling for, you've got Giuliani calling for an investigation into Mueller now, at the same time he told the Daily Beast today that talks are still open regarding the always discussed possible Mueller/Trump interview. The much-discussed, never decided, always will be debated issue. How do these two things work together, I do wonder? On one hand, you're accusing them of essentially doing something illegal and then on the other hand you're still saying, but we might still talk to them.

HARRY SANDICK, FORMER ASSISTANT U.S. ATTORNEY, SOUTHERN DISTRICT OF NEW YORK: I mean, I think that there are sort of parallel tracks as Elie said, that you have the one track that's really designed more as maybe a media strategy to try to convince your supporters the 40 percent or so of Americans that are supportive of the President that this investigation is illegitimate. So that whatever report or whatever indictment or whatever findings it comes out with, you can immediately cast doubt on.

And then in terms of the discussion, you know, this is something that Mueller still has up his sleeve, so to speak, and it really depends on whether he wants to fight this legal battle which could take all the way to the Supreme Court to resolve, or whether he has enough now, he has some written answers, to some extent in public corruption investigations, it's also often the target or the subject of the investigation who wants to come in and tell their side of the story. This is why I didn't do it. And so, perhaps, Giuliani's keeping the door open for that.

BOLDUAN: On the issue of this possible interview and more questions to Trump by Mueller's team, Giuliani now says two things. He says what he said to the Daily Beast, which was still open too, but he also then said to The Hill the following. "President Trump's not answering any more questions from these people. They are outrageous activity. We did enough." Despite the obvious contradiction there, would they still be negotiating this?

HONIG: They could be but I don't think Rudy's negotiating in good faith here. I think Rudy gave away his real strategy a couple quotes ago and they keep changing what he said over my dead body will the President ever speak to Mueller. I think that's going to be were. Can you imagine as a defense lawyer walking to Donald Trump in to be interviewed by Robert Mueller and how horribly that would go?

Rudy is posturing here. Look, he doesn't hold the cards. The way this works when a prosecutor wants to talk to a subject that there's an easy way and a hard way. The easy way is we'll work out an interview, we'll meet in the conference room, there won't be a grand jury. But if that doesn't work, then it's the hard way, and Robert Mueller can issue the subpoena.

Now there's questions whether Matt Whitaker or William Barr will approve his subpoena. And as Harry said, if he does, we're going to end up in the Supreme Court.

BOLDUAN: Kind of, I think what Elie is getting to a little bit, maybe I am in every question I'm asking, is that Giuliani is getting a little hard to believe recently. You've got the thing about destroying evidence that we've discussed. And other contradictions not only what he just said about an interview, but also Trump's knowledge of campaign -- there's Trump's knowledge of campaign finance. Rudy Giuliani said that he -- Giuliani told the Journal he didn't know much about campaign finance laws and then there of course there's the old interview that Trump had saying this. Let me play it.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I think nobody knows more about campaign finance than I do because I'm the biggest contributor.

UNIDENTIFIED MALE: What about reform? Does it need --

TRUMP: Well, it's a very complex -- you know what, it's a very complex thing. As an example, I'm allowed to give $1,000 to every senator, right? This was 20 years ago, $1,000. Now, I love it because, you know, I'm capped out at $1,000 per senator and they all love me for it. You know, I give them $1,000 --

(END VIDEO CLIP)

BOLDUAN: More than anybody else. And that's not all. Then you've got Giuliani saying that Trump didn't sign a letter -- the letter of intent with the Trump/Moscow project when that was being discussed and then CNN got a copy of it and Donald Trump's signature is on it.

[19:25:02] My whole point here is, do you think the Mueller team takes Rudy Giuliani seriously? He is one of Trump's attorneys that is, I mean, talking to the Mueller team.

SANDICK: I find it hard to believe that he is the person who they go to when they have a serious inquiry about something in the investigation. That they recognize in this day and age, a person like the President who's a public figure will often have a lawyer who does more sort of speech-making and TV appearances but the real legal work is presumably being done either by the lawyers in Florida or by the person in the White House counsel's office who left a prestigious partnership in Washington at a law firm to respond to issues relating to this investigation.

And so it's probably some combination of those other people who are doing the heavy duty legal work and leaving the speechmaking to the former mayor.

BOLDUAN: And quite the many speeches he does make. Great to see you guys. Thank you so much.

HONIG: OK.

BOLDUAN: OUTFRONT for us next, the definition of a wild ride on Wall Street today. Stocks plummeted more than 600 points then a furious last-minute rally. Is the market chaos here to stay?

And who's to blame for this migrant child's death while in U.S. custody? It's a disturbing question that is now confronting the Homeland Security chief who's going to the border tomorrow.

(COMMERCIAL BREAK)

BOLDUAN: Tonight, a roller coaster ride on Wall Street. The Dow closed up 260 points, but that doesn't even begin to tell the whole story. The market plummeting 600 points giving traders a sense of deja vu from the trading nightmare of Christmas Eve. At first, almost wiping out all of yesterday's historic games. But then a last-minute rally. A big one.

Jessica Dean is OUTFRONT at the White House for us right now.

Jessica, how is the White House reacting to honestly this craziness on Wall Street?

JESSICA DEAN, CNN CORRESPONDENT: Yes, it's a lot of up and down, Kate. That is for sure. And we know that a source familiar with the situation says that President Trump was calling advisers aboard Air Force One Wednesday night as he was on his way back from Germany and Iraq, checking in with them, very pleased, obviously, about what happened with that big comeback. We also know that he closely monitors the stock market. It's a very personal thing for him. He -- it's always at the forefront of his mind and he really views it as kind of a personal barometer of sorts.

You know, the White House and President Trump, the administration, have long maintained the economy's very strong and they really seek to downplay any weaknesses that might be there.

So, overall, the reports are that he's quite pleased with what's been going on over the last couple days in terms of the rally.

We also know that aides are working to put together a meeting, a possible meeting, between President Trump and the chairman of the Federal Reserve, Jerome Powell, and as you remember a few days ago, there was a lot of back and forth there. Trump saying some things about him on Twitter and also in interviews, that they really think it would be great for the two men to sit down face to face, kind of talk through the economy. They're working to see if that can happen in the coming days or weeks ahead.

And that's something that's rare because that's a very apolitical job to be chairman of the Fed, but it's certainly not unheard of. We'll see what transpires -- Kate.

BOLDUAN: That's for sure. Great to see you, Jessica. Thank you so much.

OUTFRONT for us now, the former Senior Economic Adviser to the Trump Campaign, Stephen Moore, also, of course, author of the new book "Trumponomics," White House Correspondent for American Radio Networks, April Ryan. She's also an author of "Under Fire: Reporting from the Front Lines of the Trump White House," and former Press Secretary for President Bill Clinton, Joe Lockhart, he's probably working on a book.

Great to see you guys.

OK. Joe, the Dow was down by -- the Dow, it was down by more than 600 points at one point today, but it did rally -- it did rally at the end. It rallied yesterday in a remarkable fashion. When you kind of look at this, Joe, is this a glass half full type of day for President Trump when you look at this wild ride?

JOE LOCKHART, FORMER WHITE HOUSE PRESS SECRETARY FOR BILL CLINTON: Well, I think you've got to look at this in two parts. The volatility, I think, is squarely sitting in the oval office. You know, over the last week the president has basically told the secretary of defense to clean out his desk. That creates a whole sense of instability.

The secretary of treasury had a bizarre press release this week saying that, you know, he talked to all the CEOs of the bank which for the average person is a little bit like being on vacation and having your neighbor calling you and saying, by the way, your house isn't on fire. What do you think? Your house is on fire.

And, you know, you've got the president talking about firing the head of the Fed. So that's the volatility. The other part is the fundamentals. The fed is following orthodox policy here. They ease rates when they think the economy needs a boost. They raise rates when they're afraid the economy may be overheating.

The problem with this, what's exacerbated this, is, you know, the huge tax cut last year which now has added to the, you know, what will be a trillion dollar deficit over the year, was with a very -- with a very strong economy, the Obama economy that Trump inherited. So I think that the president, himself, threw the -- making volatile statements has hurt, but also that tax cut has certainly put pressure on the Fed to raise rates, you know, in a way more aggressively than they might not have. If the deficit wasn't so large if he didn't have this tax cut.

BOLDUAN: Stephen, is the president's enthusiasm for the rally you saw when he was calling advisers as Jessica Dean was reporting, is that premature or unfounded? Because when you look, yes, the rally yesterday was absolutely enormous. It was remarkable.

I was talking to Richard Quest, CNN's Richard Quest earlier today, he said honestly, you can't really count it as real because it really was a one-off in his terms. He said because he's looking at the long-term trend. Is he right?

STEPHEN MOORE, INFORMAL WHITE HOUSE ADVISER: Well, Kate, first of all, I'm so disappointed you didn't mention yesterday on this show with you, I said I was bullish and since then the market's gone up --

BOLDUAN: It's all because of you. It's all because of you is what I'm taking from this.

MOORE: Look, I think that this is -- this is, you know, 1,300 points in 2 days is a very, very good comeback. I think we're going to continue to see a lot of volatility in the stock market. No question about it.

BOLDUAN: Yes.

MOORE: I think Joe is a better political analyst than an economic analyst. The Fed did exactly the wrong thing last week.

Joe, we have a booming economy with low inflation, high employment. You know, the best of all worlds, and the Fed comes along and takes the punchbowl away. I just thought it was a bad decision.

BOLDUAN: April, Joe, I think you're both very good at politics and economics. Stephen, I think you're good at politics and economics as well.

I do want to get April in on this. This comes amid all the back and forth. Both were talking about, may or may not be a meeting in the new year between President Trump and the Federal Reserve Chairman Jerome Powell. A meeting between the sitting president and the Fed chair, rare, not unprecedented.

I do wonder, April, why is there so much focus and talk and a lot of leaking, if you will, on the will they/won't they? Are they going to meet? Are they open to a meeting? I do wonder what this is about. What the White House is getting at out of this?

[19:35:03] APRIL RYAN, WHITE HOUSE CORRESPONDENT, AMERICAN URBAN RADIO NETWORKS: What the White House is getting is the president likes attention for this erratic behavior. The president, number one, let's put it plain on the table.

This erratic behavior, in the stock market, Joe was absolutely right with a lot of things but you also have other issues. You know, GM, the president got upset with GM. If he gets upset with anyone who makes his optics look different than what they really are, he gets upset and he goes on Twitter and he says things. Words matter.

This president, if he -- we saw it Christmas eve when he -- or Christmas Day, whenever he went to go to Iraq. He was off of Twitter. People -- his silence was deafening. It was a good thing for the markets.

So when the president speaks and words mean something, he causes a ripple effect in a lot of instances that's negative. Now, when it comes to this meeting with Powell, it could be a good meeting because Powell will give him a tutorial on what it means to raise the interest rates four times in this one year.

And granted the president doesn't like it because it's tightening some of the already tightened pocketbooks but also when you talk about the economy, you cannot just put it on the Fed. He is also causing a problem when left to his own devices, he's creating this government shutdown that will affect the pocketbooks of many federal government employees, whether they're Democrat or Republican. They're affecting people and also the small businesses around those federal buildings and those entities where federal employees frequent.

There is a ripple effect from this. He cannot put it all on Powell, but meeting with Powell to help him understand what's going on is a good thing.

MOORE: I think that you're right that, you know, Trump sometimes can disrupt the market and the economy that we speak.

RYAN: Sometimes?

MOORE: His policies have been phenomenal. I mean, we've got the best economy now in 20 years. As I said, I mean, this year we got the -- 7 million more jobs than people to fill them. We got -- there's no inflation, Joe, in the economy. That's why I don't understand why you'd say they should raise interest rates when, in fact, if anything, prices have been falling a little bit and we got industrial production up.

We got to end the year -- we got one more week in this year, we're going to end the week with GDP growth rate of 3.25. That's higher than any single year we had under Obama.

So, whatever Trump is doing --

RYAN: In 2013 --

MOORE: -- it's doing good for this economy.

BOLDUAN: Go ahead.

RYAN: In 2013 --

(CROSSTALK)

LOCKHART: What Stephen's leaving out -- sorry, what Stephen's leaving out and I'll -- Trump keeps talking about it's the best economy ever. When I worked for President Clinton, we had an economy that was

creating more jobs. We cut taxes on the middle class. Not on corporations. And we had a budget surplus.

He's leaving out the idea that this entire growth here is happening with -- in two parts. One in the federal sector, government jobs, and the second with a trillion-dollar deficit, that's not sustainable. That's why you need the Fed.

Stephen knows this. He's been arguing this for 20 years. And something's happened in the last couple of years that's changed him.

MOORE: Joe, why is it -- why is it under Obama we have deficits twice as large as Trump has?

(CROSSTALK)

BOLDUAN: I will say -- I will say there is no more budget hawks, deficit hawks left in Washington.

Go ahead, April. Final word.

RYAN: OK. Really fast in 22013 when there was a government shutdown, GDP was affected, 13 days. We're talking about a long stretch with this one.

Going back to Joe's point, when Bill Clinton was in office, black home ownership was at its height. Right now, there seems to be a weakness in home ownership. Right now --

MOORE: Why do you want to raise the mortgage rates? Why do we want to raise mortgage rates?

RYAN: Wait a minute.

MOORE: The Fed is --

(CROSSTALK)

RYAN: That's a question for Powell and President Trump. That's a question for Powell and President Trump.

MOORE: OK.

RYAN: Here's the last thing. And let's talk about -- let's talk about this wall that is the stalemate and the reason for this government shutdown. If this president gets his way and does the $5 billion wall and he does shut off low-wage workers coming from Mexico, the price of everything will go up in this nation. The economy will be hurt.

BOLDUAN: I think the only thing I can say is everyone still continue to please keep your seat belt on because this is not going to end any time soon. That's what I conclude from this conversation. Thank you, all. I really appreciate it. OUTFRONT next, the death of this little boy in U.S. custody has

Democrats calling for an investigation and we have the very latest coming from the U.S. border.

Also this: The president says U.S. troops are staying in Iraq. What about Afghanistan where they are bracing right now for a big possible change?

(COMMERCIAL BREAK)

[19:43:18] BOLDUAN: Tonight, after migrant children, two migrant children, died in U.S. custody in the last month, we are now learning that Homeland Security Secretary Kirstjen Nielsen is headed to the border. This as Democratic Senator Dianne Feinstein is now calling for the Senate to investigate these children's deaths. As everyone is also still searching for answers of why they died.

Dan Simon is OUTFRONT with more.

Dan, what are you hearing first about the secretary's trip to the border?

DAN SIMON, CNN CORRESPONDENT: Well, Kate, the stated purpose for her to come to the border is for her to see firsthand the medical screenings that are taking place at the border control stations. Obviously, she is facing this fresh new crisis with two children who have died within the past month, and so she has ordered her agency to offer enhanced medical screenings and she wants to see that process firsthand. She'll be coming to El Paso tomorrow then on to Yuma, Arizona, on Saturday, Kate.

BOLDUAN: And the family of the 8-year-old boy from Guatemala who died on Christmas Eve in U.S. Border Patrol custody, the family is now speaking out. What are they saying?

SIMON: Well, we're getting, you know, clearer access, or a better understanding in terms of why the family wanted to make this journey. The mother spoke to "Reuters". Her name is Catarina Alonzo. She told them that they were under the impression if you bring a child, you have a better chance of gaining entry into the United States. And they were basically encouraged to do this by their neighbors.

This is a quote that she gave "Reuters". She said: Lots of them have gone with children and managed to cross, even if they're held for a month or two. She says the goal was for her husband to find work so he could pay off some debts and for the boy to get a better education.

[19:45:05] And, obviously, this is something that critics will say this is exhibit A with what is wrong with U.S. immigration policy. That it incentivizes migrants to bring children with them and you have the so-called catch and release policy that the Trump administration wants to end, that if you're a family and you're from a country that does not border the United States, that you're not automatically deported -- Kate.

BOLDUAN: All right, Dan. Thanks so much for the update. Really appreciate it.

OUTFRONT for us next, the president says America's not the policemen of the world. Suckers, is actually the word that he used. What does that mean for Afghanistan now? America's longest war.

On a much, much lighter note, witches are taking offense to this.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: It's a witch hunt, that's all it is. The witch hunt as I call it. Russian witch hunt. This is a witch hunt like nobody's ever seen before.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

BOLDUAN: President Trump after his secret and unannounced trip to visit troops in Iraq is putting the world on notice, saying that America will no longer be the policeman of the world.

(BEGIN VIDEO CLIP)

TRUMP: If they want us to do the fighting, they also have to pay a price. And sometimes that's also a monetary price. So we're not the suckers of the world. We're no longer the suckers, folks, and people aren't looking at us as suckers and I love you folks because most of you are nodding your head this way.

(END VIDEO CLIP)

[19:50:04] BOLDUAN: So what does that mean for U.S. troops abroad? President Trump says troops will be staying in Iraq, no change there. But CNN has reported the White House has ordered the pentagon to cut about half of the troops currently serving in Afghanistan.

I just returned from there and had the chance to speak to both troops and the top U.S. commander of U.S. and NATO forces there. Here's my exclusive.

(BEGIN VIDEOTAPE)

LT. COL. KEITH BENEDICT, U.S. ARMY: We truly believe that we're here defending the homeland by preventing safe haven for terrorist organizations here in this region.

PFC BRENNEN BLEDSOE, U.S. ARMY: The training we get, I feel like I'm doing something for my country.

BOLDUAN (voice-over): Two different soldiers, two different stories. Lieutenant Colonel Keith Benedict, he joined the military a month before 9/11.

BENEDICT: This is my fifth deployment, fourth to combat, I went to Iraq in 2006, 2007, and in Haiti in 2010, and now, three times to Afghanistan. BOLDUAN: Private Brennen Bledsoe was 3 years old when 9/11 happened.

Now, on his first deployment.

BLEDSOE: This is what I signed up for. As long as I stay on my task, I'll be fine.

BOLDUAN: These soldiers say they know what their mission is. But now, 17 years in, what about the overall mission today?

I asked Four-Star General Scott Miller, the new top commander of U.S. and coalition forces, in Afghanistan.

(on camera): You've been in command for a few months now and have seen other top military officials offer their assessments that things here are essentially a stalemate. I want to know your assessment.

GEN. SCOTT MILLER, COMMANDER, U.S. & COALITION FORCES IN AFGHANISTAN: This fight will go to a political settlement. These are two -- these are two sides that are fighting against one another, neither which neither will achieve a military victory. I like how the Afghan national security force is performing.

BOLDUAN: Seventeen years on, why is the United States still here?

MILLER: This is ultimately about national interests, not just for the United States, but vital national interests, 9/11, terrorist groups came from here. And today, there's other terrorist groups that could affect external to Afghanistan and the homeland.

BOLDUAN (voice-over): Our exclusive sit down came after General Miller briefed the ambassador to Afghanistan, John Bass, and Republican Senator Lindsey Graham on a trip there to visit the troops.

(on camera): When you look at the over 17 years, the troop levels, over 100,000 at one point, down to just over 10,000 now, do you have enough? Can you be successful with the U.S. mission with even less troops?

MILLER: We have the resources we need. The Afghans -- this is an Afghan fight. Resolute Support provides support. We enable them, but make no mistake, the Afghans are in the lead in this fight. You can see that through the casualty figures. But it's their fight now.

BOLDUAN: You mentioned 9/11. You were one of the first troops in Afghanistan after 9/11. Do you want to be the commander who ends U.S. involvement in the war in Afghanistan?

MILLER: What I tell people is when I leave Afghanistan this time, and I tell this to the Afghan people, it will be my last time as a soldier. What I would like to leave is a country that's peaceful and unified. That's a tall order, but that's what I -- would be my hope.

BOLDUAN: You're confident you can accomplish that?

MILLER: We'll keep working at it and supporting the political process, we'll keep supporting the Afghan security forces, all designed to support the political process. So, I do see some pathways of hope.

(END VIDEOTAPE)

BOLDUAN: And until then, this is another holiday season with U.S. troops stationed in Afghanistan. Another holiday, 14,000 service members are spending away from their families. Some now deployed for so many holidays that when I asked, they said they lost count. But we won't lose count, though. And we won't stop talking about this.

Coming up for us still, Jeanne Moos on which is united, if you can believe it, against President Trump.

(COMMERCIAL BREAK)

[19:57:59] BOLDUAN: Witches of the world have a problem with President Trump.

Here's Jeanne Moos.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT: They don't fly on broom sticks. They tend not to be bewitched. But Donald Trump --

TRUMP: You know I call it a witch hunt, and it is a witch hunt.

MOOS: Modern day witches are hard to categorize.

UNIDENTIFIED FEMALE: Are you a good witch or a bad witch?

MOOS: Are you a witch?

UNIDENTIFIED FEMALE: I'm a practicing witch. That's how I make my living, yes.

MOOS: Which kind of witch are you?

UNIDENTIFIED MALE: I'm initiated into Wicca, which is the religious side of things.

MOOS: Witches tend to side with liberals. And you know what they wish President Trump would stop saying about the Mueller investigation.

TRUMP: It's a witch hunt. That's all it is. A witch hunt, as I call it. Russian witch hunt. This is a witch hunt like nobody has ever seen before.

MOOS: The author of "Witchcraft Activism" calls the president's use of the term --

DAVID SALISBURY, AUTHOR, "WITCHCRAFT ACTIVISM": Really disgraceful. Thousands of people were executed on suspicion of witch hunt.

MOOS: Closer to home were the Salem witch trials.

Nineteen supposed witches were hanged.

AMANDA YATES GARCIA, THE ORACLE OF LOS ANGELES: There are a lot to be offended by by Donald Trump, and I think his use of the term "witch hunt" is very low on the list of priorities for most witches, but nevertheless, it does demonstrate his ignorance, as usual.

TRUMP: The entire thing is a witch hunt.

MOOS: But if the president stopped saying witch hunt, he would have to hunt for a new term. Tweeted somebody, I guess he will have to start referring to it as a wild goose chase, but that might offend geese.

The last time witches got mixed up in politics, a losing Tea Party candidate for the Senate had to proclaim --

UNIDENTIFIED FEMALE: I'm not a witch.

MOOS: After having said she dabbled in witchcraft in high school.

If there's one demographic President Trump hasn't put a spell on, it's witches. They would rather put a spell on him.

UNIDENTIFIED FEMALE: I'll get you, my pretty. And your little dog, too.

MOOS: Jeanne Moos, CNN --

TRUMP: And it is a witch hunt.

MOOS: New York.

UNIDENTIFIED FEMALE: You cursed brat. Look what you've done.

(END VIDEOTAPE)

BOLDUAN: As is often the case, I'm not sure what to do with that one.

Thanks for joining us, everybody.

"AC360" starts now.