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INSIDE POLITICS

Shutdown Threatens To Drag into 2019; Mulvaney Suggests Compromise; Markets Slightly Up; GOP Democratic 2020 Opponents. Aired 12-12:30p ET

Aired December 28, 2018 - 12:00   ET

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


[12:00:00] KATE BOLDUAN, CNN ANCHOR: The New York City skyline got a remarkable new look last night. You can see a blue glow painted across the skies. The lights could be seen as far as New Jersey and sparked more than a few social media posts. The power company, Con Ed, says that the light was caused by, quote, an electrical fault that caused a sustained electrical ark flash -- whatever that means -- at a power plant in Queens and thank God no one was hurt.

Thanks so much for joining me, everybody. Happy New Year.

"INSIDE POLITICS" with Nia-Malika Henderson starts right now.

NIA-MALIKA HENDERSON, CNN ANCHOR: Welcome to INSIDE POLITICS. I'm Nia- Malika Henderson. John King is off.

On day seven of the government shutdown, the White House is out to reclaim the narrative. They say it's not the president who owns the shutdown, it's Nancy Pelosi.

Plus, Republican strategists weigh in on which Democrat they hope runs against the president. They want someone just like Hillary Clinton.

And, as the president threatens on Twitter to close the southern border if a wall isn't built, one Democrat warns that could impact Trump's reelection chances.

(BEGIN VIDEO CLIP)

REP. GERRY CONNOLLY (D), VIRGINIA: The president lives in this delusional world fed by Fox News and a couple of right wing talking heads and does not connect actions with consequences. So if you close the border, you're going to re-invite huge swings on the stock market, you're going to jeopardize the economic progress we've made, and you're, frankly, going to do a lot of damage to your own prospects for 2020 by inviting a recession.

(END VIDEO CLIP)

HENDERSON: We're begin there with the government shutdown and new signs the week old standoff could go well into the new year. Democrats and Republicans aren't talking. The House and Senate have canceled votes for the remainder of the week. The president's closest ally in Congress says brace for a long shutdown. The White House, they won't say what kind of compromise it would accept. Also, the Democratic leadership says no compromise is possible unless the president abandons his wall. And the incoming acting White House chief of staff says Democrats walked away from the negotiating table and left town.

Still in town, at least for the foreseeable future, the president. Mick Mulvaney says that the president will stay in Washington for New Year's Eve instead of jetting off to Mar-a-Lago. This morning, the president delivered a sample of what we can expect while he's marooned in the White House, a ton of Twitter anger, blame gamesmanship, threatens to close the southern border if he doesn't get the wall money he wants. The White House is also taking active measures this morning to shirk responsibility for the shutdown and shift it to Representative Nancy Pelosi, who's likely to be the next speaker of the House.

(BEGIN VIDEO CLIP)

SARAH SANDERS, WHITE HOUSE PRESS SECRETARY: She's unwilling to actually do anything until she gets her speakership.

MICK MULVANEY, INCOMING ACTING WHITE HOUSE CHIEF OF STAFF: This all comes down to Mrs. Pelosi's speakership. I think left to his own devices, Chuck Schumer and the Senate Democrats probably would cut a deal, but they're protecting Mrs. Pelosi. She does not have the votes. And if she cuts a deal with the president, of any sort, before her election on January 3rd, she's at risk of losing her speakership. So we're in this for the long haul.

(END VIDEO CLIP)

HENDERSON: CNN's Phil Mattingly is on Capitol Hill.

Phil, you've been there for the last couple of days. It looks pretty empty there behind you. And I actually don't know what you can actually report this morning because there doesn't actually appear to be anything happening on The Hill.

PHIL MATTINGLY, CNN CONGRESSIONAL CORRESPONDENT: Yes, other than every single reason you listed as to why things are not going well, everything's great up here, minus the fact that there's not a single lawmaker in town and everybody has pretty much accepted the fact that nothing is going to happen in 2018 and likely nothing will happen until the next congress. And there is real question whether anything's going to happen quickly when Democrats retake the majority on January 3rd.

But, Nia, it's worth noting, that doesn't mean Democrats are not strategizing for what their next steps will be. Now, what the White House says is not wrong, Democrats haven't moved off of their initial positions, which is $1.3 billion in border security. It can't be tied explicitly to a wall. It could be tied to things like fencing or concrete barriers or repairs along the border. And that is going to continue when Nancy Pelosi likely takes the speaker's gavel on January 3rd.

What I'm told right now is Democrats are really mulling three different options, and they may actually send multiple to the United States Senate shortly after they are sworn in for the 116th Congress. One would be a repeat of what the Senate already unanimously passed, a stop gap bill through February 8th that would reopen the government, more than 25 percent that's currently shuttered. Another would be maintaining the current levels of funding through the fiscal year, basically through the end of September.

And there's also an idea being kicked around right now about basically separating the Homeland Security Department Appropriations Bill, which is where the wall would be located, from the other six outstanding appropriations bills, packaging all of those together, sending them over and then a short-term proposition for that Homeland Security bill. Those are the options they're considering right now.

One thing they don't have an answer to, whether the Senate will move on any of them. Nia, you know this as well as anybody, Senate Majority Leader Mitch McConnell was burn by the White House when they decided to reject what the Senate passed. He's very wary of moving on anything until the president signs off. The president has made clear, he's not going to sign off on what House Democrats are considering. And so that, more than anything else, is why people right now are thinking this stalemate is not a day's thing, it's not a couple weeks thing. It could even be longer than that.

[12:05:17] HENDERSON: Phil, thanks so much.

And here with me to share their reporting and their insights, Catherine Lucey with "The Associated Press," David Drucker with "The Washington Examiner," Karoun Demirjian with "The Washington Post," and joining us from Chicago, we've got Astead Herndon with "The New York Times."

So let's just jump right in here.

You have, Catherine, this morning a very active president on Twitter, not surprisingly, very much ramping up his rhetoric, talking about closing down the southern border, talking about cutting off aid to some of these Central American countries. What is the goal here? Is there a real strategy to try to reclaim the narrative? And is this possibly working?

CATHERINE LUCEY, WHITE HOUSE REPORTER, "ASSOCIATED PRESS": I mean, I think we're seeing a president whose frustrated.

HENDERSON: Yes.

LUCEY: He wants -- and he wants to take over the conversation. He wants to push this idea that he is doing things. That he is seeking to get something done. He wants to reassure his supporters, his base, that he is trying to do everything he can for border security and he sees that as the wall. The wall is a key promise that he has made again and again and he doesn't want to suggest he's backing off.

But you are also seeing the effort to frame it -- the shutdown that he said he would be happy to take the mantle for --

HENDERSON: As the Pelosi shutdown.

LUCEY: As another -- as a responsibility now of others.

HENDERSON: Right.

LUCEY: And you saw that today not just with the president, but with his advisers, trying to suggest that really this is up to Pelosi. They appear to be trying, in some ways, to drive some sort of wedge or, you know, suggest there's separation between Pelosi and Schumer. Not clear that that will actually work. But they are trying -- they seem to be trying to hit on a message that, you know, gives them credit while still pushing off some of the blame.

HENDERSON: And you saw aides really fan out on TV over these last couple of hours. Here is Mick Mulvaney this morning talking about maybe impossible compromise with the wall.

(BEGIN VIDEO CLIP)

MICK MULVANEY, INCOMING ACTING WHITE HOUSE CHIEF OF STAFF: If you're at $5 billion on something and I'm at 1.3 and we're talking about money, maybe there is a place in between there that we can compromise. It makes sense to sit down across a table when you're trying to negotiate with another party and see if there's someplace in the middle between there, 5 and 1.3.

UNIDENTIFIED MALE: So what deal are you willing to accept?

MULVANEY: Oh, I'm not going to tell you guys that.

(END VIDEO CLIP)

HENDERSON: And, Drucker, you closely follow conservatives, Republicans, and it seems like the president very much tracks them, too, right? What do you feel like they are willing to accept from this president?

DAVID DRUCKER, SENIOR POLITICAL CORRESPONDENT, "WASHINGTON EXAMINER": Well, I think right now it's really immaterial because we're going to get into the new year, Democrats are going to take control of the House and all of this is going to have to do with the politics of who ends up taking the blame for the shutdown long-term.

HENDERSON: Right.

DRUCKER: And this is probably somewhat of a long-term proposition. So the president said he would own it, but after Democrats take control of the House and start passing spending bills, there's going to have to be a compromise of some sort between them. And I think voters are going to make a decision at some point who seems to be the most amenable to compromise and who seems to be the most stubborn.

And so this begins, I think, with the president in a little bit of trouble because he's the one that instigated this. And usually voters penalize the politicians that instigate a shutdown because they think shutdown politics is stupid politics. But eventually, as the compromises start to move back and forth across Pennsylvania Avenue, they might start to make judgments about which side is more reasonable. And so, on the one hand, I think the president isn't in the poll position that he assumes he's in. On the other hand, once Democrats actually have control of one part of the government --

HENDERSON: Right.

DRUCKER: I think voters rite large are going to expect a little bit more of them because they're no longer going to be able to say, hey, Republicans control everything in town. It's up to them. Well, it's not going to be just up to them. And then we're going to see how wylie (ph) Speaker Nancy Pelosi, and I'm sure she'll be speaker, is when she has to then corral a fractious Democratic base and say, look, we're not going to give the president everything he wants, but we have to compromise somewhere and how much willingness is there going to be for that.

HENDERSON: And one of the things you hear from some of his aides at this point is they're not necessarily talking about a wall in the firm ways that he's talking about the wall.

Here is Mick Mulvaney again talking about a barrier.

(BEGIN VIDEO CLIP)

MICK MULVANEY, INCOMING ACTING WHITE HOUSE CHIEF OF STAFF: Well, we're still building a barrier. That's what the -- that's why the government is closed is the president is not willing to give up on the southern barrier.

UNIDENTIFIED MALE: The moral thing to do is to keep it shut down until you get a wall. Trump supporters are going to expect that. How attune to you are you to the reality that compromise that makes it look like Republicans are caving again. Here we go. Democrats always -- no, that is a real thing that has to be factored in, right?

MULVANEY: Keep in mind, we're not compromising on the importance of border security.

(END VIDEO CLIP)

HENDERSON: And there you have it again, the Fox guy talking about the wall and then you have Mulvaney talking about barriers and border security.

KAROUN DEMIRJIAN, CONGRESSIONAL REPORTER, "THE WASHINGTON POST": Barrier and border security. Right. He's using -- Mulvaney in that clip is using the lingo that the GOP would love to use, which is talking about what they've been talking about since the George W. Bush administration, which is a mixed bag of options to keep security along the southern border.

[12:10:02] HENDERSON: A border wall system sort of thing. Yes.

DEMIRJIAN: Exactly, which sometimes involves invisible barriers. I mean the GOP is pretty united around that. It's something that the Democrats have voted to approve before in various, you know, comprehensive immigration bills that have not made it all the way through Congress. But that's not controversial. The driving home about the wall, wall, nothing else but wall is. So it's going to be a thing -- the question right now is, what is the president going to spin as a wall to his base because you cannot actually erect a wall along rivers. I mean there are parts of the border that make it impossible to have a wall.

HENDERSON: And there are imminent domain issues also.

DEMIRJIAN: And imminent domain issues. And we could get into the nitty-gritty of it. The point is, a wall along the entire border, an impossibility.

So what is the president going to spin as a wall? We've heard him use other terms as well, you know, wall or whatever you call it I believe he said a few days ago.

LUCEY: Steel slats.

HENDERSON: Yes. That's right, beautiful steel slats, right?

DEMIRJIAN: That's right, steel slats.

DRUCKER: Very decorative. Very decorative.

HENDERSON: Yes, yes, the most beautiful you've seen.

DEMIRJIAN: But this isn't -- I mean this isn't about the wall, in terms of the wall -- the term wall, I suppose. It's also, I mean, we're talking the last Mulvaney clip where he was talking about numbers, I mean we're talking about single billions. That's not very much. I mean I know that sounds like a huge number, but that's a drop in the bucket when you're talking about a federal -- a federal budget that is over $4 trillion a year, right?

So this is more about the -- setting the terms of what the compromising is going to be between House Democrats and the White House going forward about making sure they don't give something for nothing. For Democrats, they want to see some sort of other immigration compromise. For the president he needs to get the win. And they're going to just be spending -- it's actually -- if it was just about the dollars, if it was just about the terminology, it's an easy deal to make.

HENDERSON: Yes.

DEMIRJIAN: But it's not. It's about something so much bigger than that.

HENDERSON: But it's not. It's (INAUDIBLE) D.C. in gridlock.

DEMIRJIAN: So, yes.

HENDERSON: And here's Corey Lewandowski, another adviser, close ally of the president, speak here about what people would accept. (BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: What is acceptable in your mind?

COREY LEWANDOWSKI, FORMER TRUMP CAMPAIGN MANAGER: Look, the compromise is very simple, we secure the southern border.

UNIDENTIFIED MALE: Are you confident, not the president, whether or not Republicans will stand firm on this wall line?

LEWANDOWSKI: Look, I'm not because I look at the last two years and I see the failed leadership in Congress when they had the opportunity to pass the money -- the money for the wall and they didn't.

(END VIDEO CLIP)

HENDERSON: So, Astead, you've got Lewandowski essentially predicting the Republicans might cave on this. And, in some ways, you've already seen that. They, obviously, passed a clean CR out of the -- out of the Senate already.

ASTEAD HERNDON, NATIONAL POLITICAL REPORTER, "THE NEW YORK TIMES": Yes, you have simultaneous games of cat and mouse happening here. You have the Democrats and Republicans largely. You have President Trump and his base. And you have Speaker Pelosi trying to wrangle an enraged House Democratic base. And all of those people have different moral calculus that are happening at the same time.

You have President Trump supporters who do feel that the congressional leadership has caved too often on this issue. This is President Trump's signature policy and the only one in which we've seen real blowback from the base come on last year when he decided to go ahead without securing that wall funding. He is very aware of that. Congressional Republicans are very aware of that. And that's why you have the language from folks like Corey Lewandowski that you would need that wall funding to happen for them to be satisfied.

But at the same time, this is also a moral issue for Democrats. The -- you know, I think that folks are right in saying the $5 billion is not a ton of money, but you have a Democratic base that refuses to give in on what they view as a moral issue. And so that's the -- that's the kind of difficulty that you have Speaker Pelosi in and Minority Leader Schumer in right now is that if it was just about dollars and cents, this may have happened before, but it's the signaling that we cannot give in on something that our base sees as a fundamental red line that we cannot cross.

HENDERSON: And you're right about that red line. There was a quote in "Politico" from a Democratic aide who said, what part of Democratic majority and he's not getting the wall do they not understand? So that's where things stand right now.

Down, then up, then down again. A roller coaster ride for the market this week. Will the slide stop or will it continue into 2019? That's next.

(COMMERCIAL BREAK)

[12:18:00] HENDERSON: The stock market is just slightly up right now -- you can see that on the screen -- capping off a week of wild trading over political uncertainty. We've got CNN business correspondent Alison Kosik. She's live from the New York Stock Exchange, where she always is, I feel like.

Alison, yesterday, when I had you here, the markets were way down. Once, by the end of the day, there was that mad dash and they were up over 200 points. What are they looking like today?

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Well, today it looks like, Nia, that stocks are struggling to find direction. It's only been three hours of trading so far today and already the Dow has been in negative territory three times and positive territory three times. So it's been zigzagging back and forth and where it ends really nobody knows.

The good news is, is the kind of swings we're seeing aren't really exaggerated or big. I mean we saw the Dow up as much as 160 points and down as much as 130 points. So we shall see if things get more exaggerated as the day goes on.

Part of the reason you're seeing the skittishness in the markets is because you've got this cloud of uncertainty hanging over investors about a number of issues. The economic slowdown happening globally, that's a big worry for investors. The unresolved trade situation between China and the U.S. and then the recent Federal Reserve decisions are certainly keeping the market on edge as well.

And who can forget the uncertainty in Washington. That's a big one as well. Whether it's the partial government shutdown or whether or not the Fed chair, Jay Powell, gets to keep his job next year.

If you look at December, December is usually a month where you see gains for the market. This month, though, very unusual. Even with the gains that we've seen this week with that historic rise on the Dow of more than 1,000 points, when all is said and done, all the major indices are still down 10 percent for the month of December. So it remains to be the worst month -- the worst performing month since 1931, and that was during the Great Depression.

Nia.

HENDERSON: Alison, the watch word seems to be uncertainty. We'll have to see what happens today. Thanks so much for that report.

[12:20:00] KOSIK: Yes. You got it.

HENDERSON: Next, decision time for Democrats. Why the crowded field could be a 2020 burden for the party.

(COMMERCIAL BREAK)

HENDERSON: The next couple of months will be decision time for 2020 hopefuls. Many Democrat who have toyed with the idea of a White House run say that they'll make up their minds by early 2019. Democrats and Republicans are both waiting to see who's in and who's out.

[12:25:07] We've got David Drucker here, who talked to several Republican insiders about 2020 and they named Massachusetts Senator Elizabeth Warren as the candidate the GOP wants to see as the Democratic nominee. This is what one said. There's a lot of Hillary Clinton in her, said a veteran Republican operative in D.C. who hails from the Midwest and keeps a close eye on the heartland. She's elitist and doesn't appear very nimble. It would be hard for her to expand her base or reach directly into Trump's base. Close behind were Senators Cory Booker of New Jersey and Bernie Sanders of Vermont.

President Trump, he seemed to share that sentiment. He was asked about Warren back in October. Here's what he had to say.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I hope she's running for president, because I think she'd be very easy. I hope that she is running. I do not think she'd be difficult at all. She'll destroy the country. She'll make our country into Venezuela. With that being said, I don't want to say bad things about her because I hope she would be one of the people that would get through the process. It's going to be a long process for the Democrats.

(END VIDEO CLIP)

HENDERSON: And, Drucker, you've got this great piece in "Vanity Fair." They talk about Elizabeth Warren, Cory Booker, obviously, and Bernie Sanders. But there are people that they're more afraid of. Who did they cite?

DRUCKER: Well, look, I think, you know, something to understand is that, that Trump can win reelection. This is far from a foregone conclusion. And there are certain strengths he brings to the table. But as I like to warn Republicans when I talk to them, you never know what happens when Democrats nominate somebody who's likeable, trustworthy and not under FBI investigation.

Having said that, there are certain Democrats that really smack of Hillary Clinton and a lot of her flaws. And when I talked to Republicans, they looked at Elizabeth Warren, they looked at Cory Booker and even Bernie Sanders as politicians who do not have the ability, they believe, to build on a coalition that can eat into what was Trump's winning coalition in 2016 by getting a lot of those sort of culturally conservative Democrats, even though they're Democrats that are fine with liberal economic policy and even liberal foreign policy, to bring them back into a sort of Obama-style winning coalition. And so you look at Elizabeth Warren, who's not very nimble on social media, and we saw some of the issues that she's had and you look at Cory Booker, who they see as a lightweight and they say to themselves, these are people that are so progressive --

HENDERSON: They're sort of boutique liberals.

DRUCKER: And -- correct, and not welcoming about it.

HENDERSON: Yes.

DRUCKER: Not welcoming to people who don't follow sort of the liberal line that it gives President Trump a chance to attract voter who really don't like him all that much but are going to say, that's just a bridge too far. That's what happened in 2016. There was a lot of holding their nose and voting for Trump because they simply couldn't vote for Hillary Clinton. She was that polarizing. And that's one of the reasons why Republicans are worried about somebody not -- you know, there's a lot of talk about Vice President Joe Biden, the former vice president, and we know all of those reasons.

But even somebody like Beto O'Rourke, who they loved to lampoon publicly, but privately --

HENDERSON: But are nervous about.

DRUCKER: Yes, but privately they see somebody who is very progressive but is welcoming and is not judgmental and doesn't ridicule conservatives for some of the views that they hold.

HENDERSON: And is from a big, diverse state like Texas.

DRUCKER: Correct.

HENDERSON: Speaking of diversity, Astead, you had a piece in "The Times," I think it was on Christmas Day. You talked to black voters who were at an event where Elizabeth Warren was at an HBCU. Here is what one of them said about Warren. She didn't sugarcoat anything, but my question is will she keep black issues on the forefront asked Karrianne Largie, a 39-year-old woman who backed Senator Bernie Sanders of Vermont in the last Democratic primary. Ms. Largie warned against white politicians who talk about their black friends when around black audiences and then move on.

The takeaway here is that black voters, at least the ones you talked to, want white politicians who talk openly about the experiences of racism and systematic discrimination that many black voters experienced.

HERNDON: Exactly. I mean you have a diverse set of interests, but you have a couple of unifying things. You know, the black voters I spoke with, both at this event and throughout the midterm season across the country, want politicians who speak to issues that aren't necessarily just racism and justice, but the same kind of kitchen table issues we talk about all across the board, but may affect black voters in a unique way. So things like the minimum wage, things like job increases, things like a housing crisis, also have a racial component to them. They affect black communities and black voters in separate fashions and they want politicians who speak to those differences.

[12:29:48] I think it's interesting that when I was talking to people about this speech, you know, certainly you have Elizabeth Warren, someone who is a hard line progressive, but also you have -- she speaks about race and injustice in a different way than someone like a Bernie Sanders did in 2016. You know, that was someone who had to come around to being pushed to those issues, whereas Senator Warren has made