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No End in Sight as Government Shutdown Enters Day 17; White House Falsely Claim Terrorists are Crossing Southern Border; No Deal in Sight as Government Shutdown Enters Day 17; John Bolton Contradicts Trump on Syria Withdrawal; U.S.-China Trade Talks Restart as Tensions Build; U.S. Farmers Brace for Shutdown Fallout; Markets to Open Flat After Recent Volatility. Aired 9-9:30a ET

Aired January 07, 2019 - 09:00   ET

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

[09:00:13] JIM SCIUTTO, CNN ANCHOR: Very good Monday morning to you. I'm Jim Sciutto back from vacation. It feels great to be here.

POPPY HARLOW, CNN ANCHOR: I was lonely here all week.

SCIUTTO: I for one am happy to be here.

HARLOW: And New Year's Day morning. You left me hanging.

SCIUTTO: I did. I did.

(LAUGHTER)

HARLOW: You covered Christmas. We're glad --

SCIUTTO: I did.

HARLOW: We're glad you're back. Good morning, everyone. I'm Poppy Harlow.

No deal, no progress toward a deal. And as the workweek begins in Washington, it's not even clear when talks will resume for those 800,000 federal workers who want to get back to work, that are not being paid, and many of them who are working for free.

Now 17 days into the shutdown and President Trump is considering declaring a national emergency to fund his border wall, which, by the way, he now envisions as, quote, "steel," a steel barrier rather than concrete.

SCIUTTO: As for the alleged emergency that a steel barrier might address, the White House is putting it might address. The White House is putting out misleading and sometimes bogus claims of terrorists slipping into the U.S. from Mexico. Much more on that in a moment but we begin this hour with CNN's Manu Raju on Capitol Hill where the House and Senate return to work tomorrow.

Manu, some Republicans, and some in the Senate differing with the president now on the shutdown. Is that enough to turn this to get the two sides back to the negotiating table? MANU RAJU, CNN SENIOR CONGRESSIONAL CORRESPONDENT: We'll have to see.

At the moment, things at a complete standstill after two days of meeting between Vice President Mike Pence, senior administration officials and leadership staff of both the Republicans and Democrats on Capitol Hill. They met Saturday and Sunday. Initially Democrats have said they want to reopen the government first before discussing border security measures but they said the president has a $5.7 billion request for his wall.

What exactly does that entail? So they asked for a budget justification. And the White House sent a letter last night detailing that. $5.7 billion for a steel barrier at the southwest border. $800 million more for urgent humanitarian needs. Now $798 million for more detention beds. And $571 million for 2,000 additional law enforcement.

Now in addition to that, they sent a letter to White House and the letter to Capitol Hill explaining why they want the steel barriers. The president requests $5.7 billion for construction of the steel barrier for the southwest border. Central to any strategy to achieve operation control along the southern border is physical infrastructure to provide requisite in penance and denial.

But the problem of course is that Democrats are saying they don't want to give a dime to that, let alone $5.7 billion. They've offered $1.3 billion for border security generally, obviously far shorter than the $5.7 billion and they want to reopen the government first before they even negotiate any of these issues.

That's what the White House has rejected. So at the moment, no end in sight. The question is if any of these other Republicans break ranks forcing the leadership to rebel against the White House. At this point, no sign that that's going to happen -- Jim and Poppy.

HARLOW: It's a new week. Let's hope for something new. Some sort of deal.

Manu, thanks very much.

So President Trump says he may not need Congress to get his wall started. Take a listen to this.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I may declare a national emergency dependent on what's going to happen over the next few days. But I think we're going to have some very serious talks come Monday, Tuesday, Wednesday.

(END VIDEO CLIP)

HARLOW: All right. So the president says he can do this, he thinks, alone. He still says he wants to get a deal done with Congress.

Let's talk about the law. Our contributor, Steve Vladeck, professor at the University of Texas School of Law and a constitutional law expert, is with us.

Good morning. So the minute I heard this from the president, I thought, OK, National Emergencies Act 1976. Can he do this and what sort of legal challenge would he face if he tries to?

STEVE VLADECK, CNN CONTRIBUTOR: So the short answer is yes, he can do it in part. The National Emergency Act of course allows the president to declare a state of national emergency, and Poppy and Jim, there are a series of standby or statutory authorities that allow the president once he declares a national emergency to use funds that were previously appropriated for military construction to engage in other projects Congress hasn't specifically appropriated.

But here's the catch. Those authorities certainly would allow the government to build some kind of barrier on government property.

HARLOW: OK.

VLADECK: You still have to get all the private property and a majority of the property along the U.S.-Mexico border is, in fact, private property. So it's not clear that that would get him even remotely close to his goal.

SCIUTTO: That's an interesting point. We did some research that under the National Emergency Act, presidents have used this pretty frequently. George W. Bush declared 13 national emergencies, Barack Obama declared 12, Bill Clinton 17, many of which, nearly all of which is still active today. One of them, George W. Bush after 9/11. You would expect that. A major terror attack on U.S. soil. But others focused on the opioid crisis, for instance.

[09:05:05] That would seem to give the president, at least on the first step, of declaring the national emergency some legal leeway here.

VLADECK: So I think that's right, Jim. I mean, I think what we're learning is that the National Emergencies Act is far too open-ended a grant of authority to any president of any party. But let's be clear. The act just means that various other authorities that are only available in a declared national emergency come on to the table.

HARLOW: Right.

VLADECK: Of course, the irony here is that if these authorities have been available to President Trump all along, then there was no need for the shutdown in the first place. And it suggests that to the president this is really much more about the controversy than it is about the results.

HARLOW: So, Steve, listen to Democratic Congressman Representative Adam Schiff, his take on history and how history might factor in here.

(BEGIN VIDEO CLIP)

REP. ADAM SCHIFF (D), CALIFORNIA: If Harry Truman couldn't nationalize the steel industry during wartime, this president doesn't have the power to declare an emergency and build a multibillion-dollar wall on the border. So that's a nonstarter.

(END VIDEO CLIP)

HARLOW: Who has history on their side here? The president or Adam Schiff?

VLADECK: Poppy, I think everyone has a little bit of history on his side. What Congressman Schiff is talking about is a Supreme Court case, a famous one from 1952. The Youngstown Sheet and Tube case. The difference between what's going on today and what was going on there is that today the president has at least some statutory authorities he can rely upon. The ones we were talking about with regard to military construction.

Part of why the Supreme Court ruled against President Truman's seizure of the steel mills during the Korean War was because he had no authority from Congress. So I think the real question is whether the existing statutes would get the president far enough to his goal.

HARLOW: I think we lost the connection there.

SCIUTTO: We lost Steve Vladeck there.

HARLOW: But we got the most important point.

SCIUTTO: We got the point there. There's some history on both sides.

HARLOW: Yes, sure. There you go.

SCIUTTO: The facts now, though. And we want to take note this morning of a deeply misleading claim on border security that the administration resurrected this weekend. The claim repeated by both Sarah Sanders and the president himself in just the last week is that the U.S. has stopped some 4,000 terrorists, more precisely 3,755, from entering the country. A claim that they shared as justification for a wall on the southern border.

Now we fact checked this claim a month ago. As we said then, that data actually concerns individuals attempting to travel to the U.S. by air, sea or land, and includes efforts to obtain visas from embassies and consulates around the world. That is certainly important work but it is not confined to or even principally related to the southern border.

In fact, in July 2017, the State Department said that no, known terror groups were operating in Mexico, though there has been an increased in sympathizers on social media, but crucially the state department was clear saying that there was, quote, "no credible information that any member of a terrorist group has traveled through Mexico to gain access to the United States."

Moreover, DHS' own figures note that of 2,554 individuals on the terrorist watch list encountered traveling to the U.S. in 2017, the vast majority, 2,170, attempted to enter by air. Just 335 tried to enter by land. Now in response to our fact-check a month ago, DHS claimed at the time

that we had not contacted them but we did. And they gave us those numbers which are also in their press release. DHS' press secretary then repeated that same 3,755 figure ignoring where those suspected terrorists were actually stopped.

This claim does not stand up to the facts. And repeating it does not make it any more true.

HARLOW: Amen to that. So let's talk about only the facts. With us now, congressional reporter for "The Washington Post" Karoun Demerjian and senior columnist from "The Daily Beast," Matt Lewis.

Good morning to you both. Thank you for being here. And Matt, let's jump to that. Right? Facts are so important. We will always fact check them here as Jim just did. And listen to the president's own chief of staff over the weekend, just yesterday, to Jake Tapper about the importance of facts. Mick Mulvaney. Here he is.

(BEGIN VIDEO CLIP)

MICK MULVANEY, ACTING WHITE HOUSE CHIEF OF STAFF: There are not your facts and my facts. There are just facts. If you can't even have a basic understanding of the facts, it's going to be very difficult to come to an agreement.

(END VIDEO CLIP)

HARLOW: So then how damaging is what the White House is doing here to their own argument?

MATT LEWIS, CNN POLITICAL COMMENTATOR: Well, so I agree. I think facts matter. And you can make a pretty compelling argument that some day terrorists could try to cross that border. There are plenty of other reasons nations should have control of their border. But I think, clearly, they are misrepresenting, they're trying to scare people into supporting what they are doing right now in terms of trying to get this wall built and using the shutdown as leverage.

[09:10:03] And I just think it fell apart. Interestingly, I guess it's Chris Wallace on FOX News who really, you know, put Sarah Sanders in a tough spot having her try to defend this misinformation.

The administration is sloppy. They need to get their facts straight. I think they have an argument but they need to get the facts right.

SCIUTTO: Karoun, it was interesting to hear from Christopher Rudd, he of course heads Newsmax, a strong supporter of the president, friend of the president, the president speaks to him. He told "The New York Times" the following. And I wonder if there was a message here. He said, I don't think the president's base moves even one inch from him, even if he doesn't get a wall. They know where his heart is, they know where his mind is.

Is that a message? Should we read that as a message from Ruddy and from others to say to the president, listen, you can back off this and it won't be a fatal mistake?

KAROUN DEMERJIAN, CNN POLITICAL ANALYST: I think that Trump's friends and allies and surrogates do a lot of messaging to him through the media. And yes, this seems like it's a sign to him that look, given where this all started from where we expected the president to sign an extension of the budget that would have not put us into a shutdown and then the pushback from the talk radio hosts and conservative media made him rethink that plan.

I think this is definitely a signal of you don't have to listen to the people that have the microphones for those radio programs because the base itself will actually listen to you. The base is committed to Trump and thus Trump can turn the heads of the base and explain things to the base in any way that he wants to where they will willingly go along with what he says is his reasoning for doing certain things.

You started to see some shifting from the president to move away from this singular focus of the word wall as you know, Mulvaney and others who are in his team try to convince him to talk more about border security. That's one sign of that potentially starting to happen. But I think that messages like this are intended to give the president room and space to be able to feel like he can make a deal. And he does have to be able to make a deal because I don't think the Democrats or Republicans in Congress are actually going to be able to agree to anything with any of his surrogates because the president has changed his mind so many times.

So the president has to be the one to kind of stand up and say this is what we're going to do in order to get the country back up and running. It's going to have to be something different than the changing -- the change position he took that led us to this shutdown in order to please his base.

HARLOW: And, you know, Matt, those cracks in the Republicans are growing, right? We talked within the last week about the five Republicans in the House who voted with Democrats on this bill to reopen the government at the end of last week and then on Friday you had Susan Collins of Maine and Cory Gardner of Colorado saying look, end the shutdown and we'll deal with the wall later.

Add that -- add that list now, you can add, Senator Thom Tillis of North Carolina who just wrote a whole op-ed about it in the "Hill" and he blames the far left and, quote, "the far right," quote, "who think we should round up all the undocumented immigrants and send them home."

How much pressure can the president sustain from this growing list of Republicans?

LEWIS: I mean, I think that's where the action is, right? I think Donald Trump has no incentive to change because he cares about his base, and the base want a wall.

HARLOW: Yes.

LEWIS: And Democrats have no incentive to change because they care about their base. The base sees the wall as a symbol of more than just a wall now. Of racism and bigotry. And, frankly, I think Democrats believe that they have public opinion on their side. So Trump has no incentive to change. Democrats have no incentive to change. The one vulnerable group are Republicans -- elected Republicans who are not Donald Trump. They -- and so if they start to peel away, I think that might be the only thing that would actually bring people to the table.

SCIUTTO: Yes. Worried about their own electoral future.

HARLOW: Yes.

SCIUTTO: But, Karoun, to be fair, there are risks for Democrats here as well. This wave election, that they were elected to change things in Washington. To get things done. They have an ambitious agenda that extends far beyond immigration here.

Do they not have the risk of being portrayed as obstructionists here, rather than doers?

DEMERJIAN: Sure. I mean, look. The president is already spinning hard to make this the Democrats' shutdown. As many times as he has said that he owns the statements he has made saying he would own the shutdown, he is still trying to make this the Democrats' fault. And eventually it doesn't even -- you don't even have to listen to the blame game anymore. If this goes on long enough, there's just going to be a general frustration with why can't the government be up and running and doing things, especially as the paychecks start not coming, as people's -- as this starts to radiate beyond just the 800,000 furloughed workers to actual programs that start to run aground.

You're going to have a general frustration, discontent is a polite way of saying that, with Washington. Because the country is already inclined to think that Washington is not functional anyway.

SCIUTTO: Yes.

DEMERJIAN: And then it's anybody's guess who's going to end up taking the blame for it. If the president keeps going out there and saying that OK, he'll own the shutdown, maybe he will. But if he doesn't, you're right, it's Democrats who are supposed to be bringing change around.

[09:15:00] It's Democrats who have always tried to campaign and looking out for, you know, the little guy who is going to basically be hit hard eventually --

POPPY HARLOW, CO-HOST, NEWSROOM: Right --

DEMIRJIAN: When things like food stamps stop working. And how long --

HARLOW: But the president says he can relate --

DEMIRJIAN: Can either side -- well, yes, the president -- HARLOW: Yes, but the president says he can relate --

DEMIRJIAN: But how -- who do people relate to really? And then sometimes --

HARLOW: Yes --

DEMIRJIAN: Relate to Democrats or Republicans, sometimes they just relate to Washington D.C., and then everybody loses --

HARLOW: There you go --

DEMIRJIAN: And that's a risk for people --

JIM SCIUTTO, CO-HOST, NEWSROOM: Yes --

DEMIRJIAN: On both sides.

SCIUTTO: And that's one agreement, right, dysfunction in Washington D.C. Karoun, Matt Lewis, thanks very much as always. Now, there are conditions. National security adviser John Bolton contradicts the president on the Syria troop withdrawal.

Plus, the U.S. and China restart trade talks as tensions build. Can they reach any sort of compromise?

HARLOW: Also, we're going to take you to the heartland. Farmers feeling the pain from the brutal trade war, taking another hit with this government shutdown. We'll take you to Illinois and show you exactly what we mean.

[09:20:00] (COMMERCIAL BREAK)

HARLOW: Welcome back. This morning, more mixed messages from the White House on something incredibly important, our presence in Syria. The president's national security adviser now says there will be no rapid withdrawal of U.S. troops from Syria until certain conditions are met.

SCIUTTO: John Bolton's words directly contradicting the president's vow in December to immediately withdraw U.S. forces from Syria. Decision that's sparked criticism from lawmakers and prompted the resignation of Trump's Defense Secretary Jim Mattis.

Joining us to discuss, Cnn military analyst Lieutenant General Mark Hertling. General, thank you for joining us as always. I mean, to put a fine point on this, this is not a delay. This is a reversal of the commander-in-chief's decision to immediately withdraw U.S. forces from the front lines of a war zone here.

How jarring is that for U.S. partners on the ground, for U.S. national security policy, to have things turn on a dime like that? The U.S. is in, then it's out, now it's back in.

MARK HERTLING, RETIRED UNITED STATES ARMY OFFICER & CNN MILITARY ANALYST: Yes, Jim, I put it in the context of a delay, then a reversal, then a reversal of a reversal. And this is strategic improvisation with uncoordinated messaging with not only our allies, but you also have to remember the individual military personnel on the ground maybe don't know what's going on either.

I mean, they're hearing the same kind of things with the tweets and the commentary by first with Lindsey Graham, then by Rand Paul, then by Prime Minister Netanyahu and then President Erdogan.

So there's a lot of people who are attempting to influence a strategy of the United States in a certain part of the world. And the president doesn't seem to be -- or at least it appears --

HARLOW: Right --

HERTLING: He doesn't seem to be listening to his national security advisors.

HARRLOW: Not to mention, as Jim and I were just talking about it in the break, this is what Mattis quit over. I mean --

SCIUTTO: Yes --

HARLOW: He lost his Secretary of Defense over this, and remember, our reporting is that the red line in it for Mattis was the Kurds, and leaving the Kurds without U.S. support on the front line. And now Bolton has said that he has assurances from Erdogan, from Turkey's government that they'll not -- you know, that they will not attack the Kurds, et cetera.

And that would have to be met before the U.S. were to totally pull out. Can the U.S. -- should the U.S. believe Turkey? Yes, our NATO ally --

HERTLING: Yes --

HARLOW: But they view the Kurds as terrorists at points.

HERTLING: I would be very hesitant in believing that statement. We've had those kind of assurances before, from not only the Turks, but the Russians and Iranians. So this all contributes to the confounding complexities of this part of the world, but also --

HARLOW: Not a good morning for technology --

SCIUTTO: Lost the signal there -- I know --

HARLOW: Twice --

SCIUTTO: Good gracious, someone was listening in --

HARLOW: We're going to fix that --

SCIUTTO: But thanks to General Hertling --

HARLOW: Yes -- SCIUTTO: We'll work on that. You heard his answer there, I mean, it

gets down to the process here. I heard this from a senior administration official in the wake of this that there is no national security process. And the president makes a decision by tweet often, and then folks have to move. What happens in the midst of a real crisis?

HARLOW: Exactly --

SCIUTTO: What happens in the midst of a --

HARLOW: And what do you believe? The advisors --

SCIUTTO: Terror attackers -- yes --

HARLOW: Or the president? That's a good point. So right now, also, this is a really key issue in terms of foreign policy and the economy. U.S. negotiators are in China as part of this big trade delegation, trying to hash out a trade deal before that 90-day deadline ends.

Can headway be made or will these new tariffs kick in at the end of February?

SCIUTTO: Wall Street is certainly watching these talks closely, we're moments away from the opening bell there. Stocks should open the day relatively flat, slight uptick there based on futures. Investors wait to see how these negotiations pan out.

[09:25:00] (COMMERCIAL BREAK)

HARLOW: Right now, trade talks under way between the U.S. and Chinese negotiators. A U.S. delegation in China right now. The two sides are racing against a clock here, because the president's deadline is 90 days, right? End of February, then those additional tariffs will kick in March 1st if they don't have a deal.

SCIUTTO: It's already having big economic effects. Investors bracing as tensions have roiled markets in the U.S. and around the world. Let's discuss now with Stephen Moore; he is a former economics adviser for the Trump campaign, he's also author of a new book "Trumponomics", Stephen, thank you as always.

STEPHEN MOORE, ECONOMIST: Hi, guys.

SCIUTTO: So first question here, in the midst of this trade war, the president claiming a win here, he's claiming leverage over China. But you look at the numbers, Chinese imports from the U.S. have dropped 25 percent over the last several months.

So the trade deficit actually worse. U.S. companies being hit as well, a majority of companies polled by the U.S. Chamber of Commerce in Shanghai reported that the trade war has hurt their profits. Who is winning the trade war right now?

MOORE: Well, look at the "Wall Street Journal" today. there's a really interesting report about how China's economy is doing, and they're doing miserably. They've been hit really hard by these tariffs. So you know, when you ask the question, does the United States have leverage over China? Certainly, we do.

I mean, their economy --

SCIUTTO: Right --

MOORE: Can't grow unless they have access to U.S. market, so --

SCIUTTO: I don't minimize that leverage, but --

MOORE: Yes --

SCIUTTO: The U.S. -- based on the numbers is clearly hurting as well. I mean, the point is --

MOORE: Yes --

SCIUTTO: Can you say both sides are losing at this stage?

MOORE: Well, look, it's a great point. I mean, neither side can win a trade war. I think the point is that we are in an abusive relationship with China. I think all Americans have come to understand that. You're seeing the espionage that China is engaged in now.

The fact that they're hacking into our computer systems now, that there are -- you know, they're stealing $300 billion a year of our technologies.

END