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President Refuses To Budge On Border Wall; Democrats Get Emboldened To Block Trump; Republicans In The Senate Don't Have Any Interest In Cutting Anymore Deals With The President. Aired 12-12:30a ET

Aired December 25, 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]

MANU RAJU; CNN HOST: Welcome to a special Christmas edition of Inside Politics. I'm Manu Raju. John King is off.

Asian markets are down as the president is asked whether his treasury secretary still has his confidence.

Plus, outgoing Democratic Senator, Clair McCaskill, tells me she's a little confused why incoming Congresswoman, Alexandria Ocasio-Cortez is quote, "the thing."

And on day four of the government shutdown, President Trump finds a common thread between his fight for the border wall and the Russia probe.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: As soon as I said I want to bill the wall they were all against it. It's like, take another example, take Comey, everybody hated Comey, they thought he did a horrible job. The Democrats hated him, literally the day before I fired him, they were saying he should be fired. As soon as I fired him they said, oh, what did you fire him for? That was a terrible thing to do. It's a disgrace what's happening in our country. But other than that, I wish everybody a very Merry Christmas.

(END VIDEO CLIP)

RAJU: Very Merry Christmas indeed. We start with the president entrenched in his White House foxhole. His Christmas wishes coupled with Christmas complaints. The president's border wall is still the sticking point in a shutdown standoff, now on it's fourth day.

This morning the president had no answers for federal employees worried about their paycheck.

(BEGIN VIDEO CLIP)

TRUMP: Well, I can't tell you when the government's going to be open. I can tell you it's not going to be open until we have a wall, a fence, whatever they'd like to call it. I'll call it whatever they want, but it's all the same thing. It's a barrier from people pouring into our company -- into our country.

(END VIDEO CLIP)

RAJU: The president says he won't budge on the border wall, but in his remarks there are signals his demands are, again, moving.

In another phone call with troops, with another extended rant, the president put his inner monologue on public display, the optics (ph) of the Oval Office session hint at the president's mindset.

He's increasingly alone and increasingly under siege, his life political, professional and personal all under investigation. He's about to loose control of the house and asked this morning about what happens when Democrats assume power, the president repeated a familiar line.

(BEGIN VIDEO CLIP)

TRUMP: Well, then it's probably presidential harassment and we know how to handle that. I think I handled that better than anybody. There's been no collusion, after two years no collusion. There has been collusion, but it's been done by the Democrats.

(END VIDEO CLIP)

RAJU: CNN's Abby Phillip is live at the White House. And Abby, the president says he wants a wall but is creating some wiggle room on what exactly the wall is and how much he needs. What can you tell us about that?

ABBY PHILLIP, CNN CORRESPONDENT: Well Manu, what we saw this morning from the president was shifting demands and shifting claims about the status of the situation on the border. First he said, you can call it whatever you want, a fence, perhaps steel slats, then he said he wants 500 miles of wall, maybe 550, that's down from 900 miles of wall that about a year ago he said was necessary at the border.

This is a president who is digging in his heels on his demand for funding for something that he can to his supporters, a border wall, but also is saying, at the same time, the wall is already being built at the southern border and that he simply wants to finish it before the next election.

Now, there in lies the underlying problem with this whole issue is that President Trump wants this for is base and Democrats are unwilling to give him that political victory. President Trump going even so far as to say, the federal workers he's talked to have already said that they want him to keep the government closed until he gets his border wall funding.

Now, President Trump is here in Washington for the fourth day after cancelling plans to go to Florida and his aids are already signaling that this will not end soon. Mick Mulvaney, over the weekend, made the point that federal workers next paycheck that might be affected by this shutdown is not for another week or two, so I think we're getting into territory here where President Trump doesn't seem to be giving in much, but he clearly is signaling that he wants this political victory so he can go into his election campaign with a win. Manu.

RAJU: Yes, a shutdown that could last for some time. Abby Phillip from the White House. Thanks so much. And here with me in the studio to share reporting and their insights, a Elana Schor with the Associated Press, Jake Sherman with POLITICO, David Drucker with the "Washington Examiner" and CNN's Sara Murray.

I want to start with what Abby was referring to about the president's remarks from this morning. One of the things that stuck out to me was that he made it very clear this wall needs to be done before 2020. This is, tied in his mind, very clearly to the next election.

I mean, I wonder how much you'd think that his base will punish him if he's not able to get funding for this wall? If it doesn't -- if he's not able to carry through with his promise?

[12:05:00]

ELANA SCHOR, REPORTER FOR POLITICO: Well he clearly believes there will be consequences from his base. I mean, witness the backlash among conservative pundits that drove him to this remarkable about face that brought us to where we are today. And also his withdraw from Syria, which he announced is another promise to his base.

So, clearly Trump is already in preparing for reelection mode.

RAJU: Yes, he is. And he also doesn't seem to be feeling much pressure from the, roughly 800,000 workers or so, who have been impacted by this. Many of whom are furloughed, some of are working without paychecks, he was -- he mentioned -- he was asked about these workers today, his concerns about them or if he had any concerns about them. This was his message to them.

(BEGIN VIDEO CLIP)

TRUMP: Well, I think they understand what's happening. They want border security. The people of this country want border security. It's not a question of me, I'd rather not be doing shutdowns. Many of those workers have said to me and communicated, stay out until you get the funding for the wall. These federal workers want the wall.

(END VIDEO CLIP)

RAJU: So, in case you missed that, he said, many of these workers have said to me and communicated, stay out until you get funding for the wall. I mean, this is a president that does not seem to be feeling any heat whatsoever to try to get a deal anytime soon.

JAKE SHERMAN, CO-AUTHOR OF POLITICO'S PLAYBOOK: Well, Treasury is shutdown, so I'm not sure many Treasury employees are communicating their desire for a wall to him. But, with each passing day I think it's safe to say the president looses more leverage, as Democrats get closer to holding a majority and Democrats get emboldened to block Trump.

I mean this is -- the president is entering what will be -- we don't know if he understands this because he's not acting like it, but the most hostile period of his presidency, so far, and this shutdown is going to stretch at least until the new year from what we see now and possibly it -- midway into January these Democrats have literally zero incentive to give in after the president has kind of rejected a host of offers that they've put forward to them.

SARA MURRAY, CNN POLITICAL CORRESPONDENT: I think what guys have seen -- I mean, shutdowns, they get worse the longer they go. So, it's one thing to be in this sort of partial shutdown when some people -- it hasn't hit their paychecks yet, it could still be a couple weeks, where people are on holiday, they're enjoying their sort of Christmas vacation and so they're kind of tuned out to all of this as it is, but the longer it goes on the worse it gets.

The more you start seeing the stories of these consequences, the more you hear the stories of people who were expecting paychecks and aren't getting them. People who still have to show up and go to work without pay, and I think that's when the president begins to feel the pressure.

It's not surprising to me if he's hold up at the White House all alone and he doesn't necessarily feel all this political pressure.

RAJU: And he made a point of saying, his family down in Florida. He's not able to spend it with them. You mentioned shutdowns past, one of which is from 2013 that lasted for more than two weeks. What was different between that shutdown, which we all covered, and this one is that, there were a lot of negotiations that were happening.

The president -- President Obama brought Republicans and Democrats to the White House on multiple occasions, those may not have been fruitful, but there were at least some talks. This is what happened several years ago.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: The Congressional Republican leadership came to the White House and met with the president for more than three hours, but again failed to break the impasse.

MITCH MCCONNELL (R), MAJORITY LEADER OF UNITED STATES SENATE: The president basically called us all down there to tell us he's not interested in negotiating. It was essentially a negotiation about not negotiating and now we hear he's off campaigning today in Rockville rather than sitting down to get this thing solved, which is certainly disappointing.

(END VIDEO CLIP)

RAJU: So that first one was Net Gingrich walking into the White House when Bill Clinton -- during the Bill Clinton shutdowns and this was after McConnell met with President Obama and criticized him, saying it was certainly disappointing the president was interested in -- in not negotiating, but at least they were talking. There's no talking that's happening here. DAVID DRUCKER, WASHINGTON EXAMINER POLITICAL CORRESPONDENT: Yes look, I think for a lot of these Republicans and Democrats, they've gotten so used to these shutdowns, they just don't have the same sense of urgency they used to. But what's remarkable about this shutdown and you played the Mitch McConnell clip there is, McConnell has always tried to place himself at the center of any negotiation or non- negotiation, and in this case he's seated everything to Schumer and said, you go make a deal with the president. Why did he do that? Because the president actually made a deal with Republicans and Democrats in the Senate, Mitch McConnell had all of his members walk the plank and vote for a C.R., that that actually could hurt them in a future primary and then the president goes and changes his mind.

Republicans in the Senate don't have any interest in cutting anymore deals with the president that he might change his mind on and that's one of the reasons why this impasse is going, I think, to last past the third, Democrats will take the House and then you look at the problem the president has, because shutdowns are political questions, who knows where voters a couple of weeks from now decide they are on this. They might say, you know, the president is not being so unreasonable, give him some more money for the wall, let's end this thing.

But the reason the president's having trouble getting money for the wall, specifically from Democrats, is one, the 40-seat drubbing that House Republicans took when the president spent the final weeks of that campaign talking about the wall, the caravan and all of that and it all failed. And it's become toxic.

[12:10:00]

DRUCKER: And just like, Manu, Obamacare during the Obama years when people would pull on healthcare, oh, they like everything that's in it. Well, what about Obamacare? No, we don't like that. So yes, people like border security. The middle class likes border security. Modern voters like border security. Right now, they're not so hot on Trump's wall and that's why Democrats are emboldened.

RAJU: And, you know, you mentioned the Republicans not knowing where Trump is. That's - was certainly the indication last week in talking to members on the hill after they didn't know where Trump was even after meeting with them. Democrats, too, are saying the same thing. Chuck Schumer, Nancy Pelosi putting up their statement yesterday. Made a lot of statements, but this stuck out to me. He said, "different people from the White House - from the same White Hosue are saying different things about what the president would accept or not accept to end his Trump Shutdown making it impossible to know where they stand at any given moment." And then they criticize the president from being "guided by the House Freedom caucus, it's hard to come up with a solution. To see a solution that could come out and to pass both" chambers, I mean, that's been the big issue here, right? I mean, we don't know where the president stands right now, at least members don't.

SCHOR: And not only that. I mean, all of what David said about Republicans in the Senate is true. Look at Senate Democrats. A lot of their members in vulnerable races. Senator McCaskill, who you'll talk to later in the show for one, are lost. They're gone from Washington. So Chuck Schumer used to have this position of, man, I've got to protect some of these guys in red states and maybe we've got to, perhaps, think about cutting a deal on this. Now he has very little incentive to do that.

RAJU: And one interesting thing from this morning, too, the president tried to tie this to James Comey. He umpromted to criticize the Democrats saying they've taken hypocritical positions just like they did with James Comey.

(BEGIN VIDEOCLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Take Comey. Everybody hated Comey. They thought he did a horrible job. The Democrats hated him. They were calling for his resignation. They were calling for his firing, including Schumer, including Nancy Pelosi until I fired him. As soon as I fired him, they said, "oh, what did you fire him for? That was a terrible thing to do."

(END VIDEOCLIP)

RAJU: I mean, the merits of the argument aside, I mean, he's trying to make the case of the Democrats of taking both sides. He also said that he wanted - he owned this issue. He was going to own the shutdown. He clearly is trying to show that the Democrats should be the blame here.

SHERMAN: The Democrat - the argument the Democrats were for massive border security is completely disingenuous because they were for $46 billion in border security when it came along with massive changes to the immigration system -

RAJU: Yes.

SHERMAN: - in this country. So yes, they were for border -

RAJU: Including a pathway to citizenship.

SHERMAN: They were for border security and Democrats, as a broad proposition, remain for border security but are not for a $5 billion in and of itself.

MURRAY: Yes, and I think part of - I mean, what gets lost in this is just that it's not - it's also just not great policy. I mean, even Republicans don't think it's great policy. They're like, "yes, let's drop another $5 billion into like throwing some concrete blocks." Like no one who is on the border thinks the answer is to build this big, enormous wall. There are lots of things you could do to beef up the border. They don't necessarily involve a concrete wall or whatever Trump wants to make it out of. And there are lots of things you can do to sort of improve border security in general and those mainly have to do with the Visa process, not building this big, glorious wall on the border.

RAJU: And that opens up a whole new - MURRAY: So part of what's stuck in this is just not good policy.

RAJU: And that opens up a whole new can of worms that would certainly is not going to get resolved in this fight.

DRUCKER: Not in this fight.

RAJU: No, not anytime soon, but more to come ahead. By spending Christmas in the capital, President Trump ends a holiday streak that lasted 18 years. Not since 2000 has a president spent Christmas in Washington, and that was Bill Clinton's last year in office. The Clinton's had dinner at the White House, did some shopping, attended midnight mass. We'll be right back.

(COMMERCIAL BREAK)

[12:15:00]

(COMMERCIAL BREAK)

RAJU: Welcome back. The economy also on the president's mind during that Oval Office meeting today as he vented more frustration over the Fed's decision to raise interest rates once again. Now, the U.S. markets are closed for Christmas, but some exchanges in Asia picked up where Wall Street left off Christmas Eve. CNN's Business Correspondent Alison Kosik is with us now. Alison, global traders clearly struggling to find anything positive as December winds down.

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: That has certainly happened overnight. So what often happens is you see global markets move in lock step with U.S. markets especially when you see such dramatic moves as we saw yesterday in the U.S. where we saw the Dow fall 650 points. So overnight we saw Japan's Nikkei average fall 5 percent into bare market territory. That's a 20 percent fall from a recent high. China Shanghai Composite falling 2.5 percent during this session but making up some of those losses. So clearly the U.S. problems become other countries' problems as well or concerns in this point, and one analyst putting it this way. The market seems to be getting pummeled in every direction. So globally there are worries about an economic slow down not just here in the U.S. but around the world as well.

There are the - there's the issue of the unresolved trade situation between the U.S. and China. And then, of course, there are the concerns, at least in the market, of the Fed - the Federal Reserve really not pulling back on its path of raising rates, something to the consternation of President Trump.

And that brings me to my other prong of concern for the market. Now, something new. It's political risk, something that usually didn't effect the market as much as it is now. Up until now I think how the market saw President Trump when he would tweet about the Fed, about the markets, it would be more of a distraction. Now we're actually seeing President Trump when he tweets impact the markets moves. I saw this yesterday. 10:45 when the president tweeted saying that the economy, there's nothing wrong with the economy, that the Fed is the problem. We saw the market take a turn for the worst. We saw the market plunge to that 650 points lower on the Dow. It had been on upswing, Manu, before Trump tweeted that. Manu -

RAJU: Alison Kosik in New York for us. Thanks so much.

KOSIK: Sure.

RAJU: The big back of all the market volatility has been friction between the president and the Federal Reserve over rising interest rates and the bizarre failed effort from Treasury Secretary Steven Mnuchin to sooth the markets or at least attempt to. Trump was asked just this morning if he had confidence in his Treasury Secretary.

(BEGIN VIDEOCLIP)

TRUMP: Very talented. Yes, very smart person.

[12:20:00]

UNIDENTIFIED MALE: What about the Fed chair? Who's the (ph) Fed chair?

TRUMP: Well, we'll say yes. They're raising interest rates too fast. That's my opinion, but I certainly have confidence.

(END VIDEOCLIP)

RAJU: I mean, it's hard to overstate how much the president must be concerned about the state of affairs. Obviously he's used this as a central point of his presidency. Look at what he tweeted last year at this exact same time about the economy. He said, "we're delivering historic tax relief for the American people." He said, "the stock market is setting record after record and unemployment a 17-year low." He said that, "all signs are that business is looking really good next year only to help buy (ph) their tax cut legislation that they had just passed." He said that, "this is going to be a great year for companies and jobs." Obviously not ending on the note he wanted.

DRUCKER: Look, one of the reasons the U.S. markets and the U.S. economy is so resilient compared to our competitors, and this is even in down periods, is because there's a certain level of political stability that comes with putting your money into the United States, and the president is turning that all of that on its head in a sense to defend his own performance in the economy in a sense I am so concerned that I'm going to get blamed for this. I'm just going to blame the Fed. And look, you can argue about monetary policy. You can argue about tax policy. Markets don't like unpredictability and upheaval, and having a president call out the Fed chair is the last thing you want to do when you're going to have some possible natural softening as the sugar high from the tax reform bill wears off, as the president's multifront trade, let's say trade war or trade dispute or, you know, attempt to rejitter U.S. trade policy continues, all of these things make markets nervous, but you're going to make it worse if you're the President of the United States and you're yapping about the Fed on Twitter.

RAJU: Yes.

DRUCKER: The best thing he could do is just leave it alone, but he does not know how to do that.

RAJU: He doesn't know how to do that. We've seen that time and again, but it was interesting today. I mean, he didn't take a whack at Jay Powell. I thought he was going to come after him when he was asked about it. He sort of took his foot off the gas. He said we'll see. How long is that going to last? What did he learn from yesterday?

MURRAY: Maybe - maybe someone showed him the market dive that happened after he decided to take to Twitter yesterday. I mean, look. Yes, there's a reason people put money into the U.S. because of political stability but also because the Fed isn't dependent and the stock market prizes that independence. The Fed does not make monetary policy based on what the stock market is doing day-in and day-out. You know, they look at the long-term trends obviously, but that's the way investors like it. That's the way the U.S. monetary policy system is supposed to work, and when the president decides he's going to inject himself in it and he's going to decide he knows better, then everyone who works for him, because he has a private business that he has run for his life, so he understands how monetary policy works and should decide -

RAJU: Because of his gut.

MURRAY: Yes! You're going to rattle the markets. So, you know, maybe someone got that through -

RAJU: Yes, and - and listen to him this morning also blaming President Obama earlier saying President Obama had low interest rates.

(BEGIN VIDEOCLIP)

TRUMP: The economy is doing so well that they raise interest rates and that's as a form of safety. No way. President Obama didn't do much of that. Much easier to run when you have no interest rate. He had a very low interest rate. We have a normalized interest rate. A normalized interest rates means, you know, it's good for a lot of people. They have money in the back. They get interest on their money. For many years nobody got interest on their money.

(END VIDEOCLIP_

RAJU: I mean, it's a standard Trump blaming Obama, but he also has criticized Obama's economy but now says that Obama benefited from a low interest rate. Is that argument square?

SCHOR: I mean, the statute of limitations on comparing yourself to Obama has already run out. You know, we're talking about years ago at this point, and I think this has to be seen of a piece (ph), right, his comments about the Fed and the shutdown. It paints a picture of a government that investors cannot rely on. They have no idea what Trump is going to do next and it's clearly showing.

MURRAY: And also, Obama had double-digit unemployment, so yes. He had low interest rates. Like, what is the trade off here -

RAJU: Yes, the economy is in a much different place now.

DRUCKER: It was a very (ph) sluggish job market. Remember what Republicans said about it, they felt it was overregulated, they didn't feel it grew fast enough, and apparently they felt a lot better about this economy until, you know, a few days ago.

SHERMAN: Look at the broad picture here. You have the president's advisers almost every day saying we have a hot economy. Meanwhile the stock market is nose diving, and across the globe we don't see any positive signs for any economy. Every single asset class on planet Earth is down this year.

RAJU: Yes.

SHERMAN: So I'm not sure what the president's advisers are seeing and then investors say we can't take this seriously anymore and that's why the economy's slowing.

RAJU: Yes, and a lot of fears, clearly, at the White House including this morning. Next, an exit interview with Democratic Senator Claire McCaskill. But first, get - big Christmas get togethers equal big preparations for Senator Chuck Grassley, and that means 24 people and a vacuum cleaner we think he named Beth.

"I'm 24 hours late getting Beth cranked up to have house cleaned for Christmas celebration," Grassley tweeted. "Mrs. G and daughter, Wendy, have mostly finished food for approximately 24 people." Good luck with that, Senator. We'll be right back.

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[12:25:00]

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RAJU: After over a decade of service in the United States Senate, Democrat, Clair McCaskill is bowing out. She lost a reelection campaign last month to a Trump favorite, Missouri Attorney General, Josh Hawley. McCaskill tried to enter the campaign to bridge the divide between herself and Trump supporters, in part, by distancing herself from members of her own party.