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Economy's Fundamentals Remain Sound; Stocks Bouncing Back; Fed Chair's Job is Safe; Eight-Year-Old Dies in U.S. Custody; Little Progress on Shutdown. Aired 12-12:30p ET

Aired December 26, 2018 - 12:00   ET

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

(COMMERCIAL BREAK)

[12:00:30] MANU RAJU, CNN ANCHOR: Welcome to INSIDE POLITICS. I'm Manu Raju. John King is off.

The Department of Homeland Security announcing changes to how it will take care of migrant children in its custody after another child has died.

Plus, the White House says the Fed chair's job is 100 percent safe, while markets continue to struggle.

And 2020 presidential announcements are just around the corner.

(BEGIN VIDEO CLIP)

SEN. CORY BOOKER (D), NEW JERSEY: During the holidays, I'm going to sit back and be with family, friends and advisers and decide whether to run for re-election, which has been my sole focus, or now begin to think about running for president.

(END VIDEO CLIP)

RAJU: We begin with more market instability, an up and down day on the Dow. New assurances from the White House that the Fed chair's job is safe. On the White House lawn this morning, this guarantee from the White House's top economic adviser.

(BEGIN VIDEO CLIP)

QUESTION: Is the Fed chairman's job safe?

KEVIN HASSETT, CHAIRMAN, WHITE HOUSE COUNCIL OF ECONOMIC ADVISERS: Yes, of course, 100 percent, yes, that --

QUESTION: Oh, 100 percent the Fed chairman's job is not in jeopardy by this president?

HASSETT: Absolutely. That's correct, yes.

(END VIDEO CLIP)

RAJU: The president blames the Fed for the stock market's worst December since at least 1931 and today the White House blamed the market's no good very bad December on a global slowdown but said the U.S. metrics are the ones that matter and they remain solid.

(BEGIN VIDEO CLIP)

KEVIN HASSETT, CHAIRMAN, WHITE HOUSE COUNCIL OF ECONOMIC ADVISERS: All the anecdotal information we're getting is that the fundamentals remain extremely sound. That Christmas sales were through the roof. GDP in the fourth quarter is looking like it's going to be very close to if not above three again. And so I think that the momentum that we saw this year is carried forward to next year.

(END VIDEO CLIP)

RAJU: CNN's Alison Kosik joins us from New York.

Now, Alison, the market is up substantially right now. And Kevin Hassett and the White House say everything is fine. Do what -- does the markets believe him?

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Well, I wouldn't say everything is fine. Look, I think he's right about the U.S. economy. The U.S. economy is strong. It looks like even President Trump's 3 percent growth target, GDP for 2018, may actually happen. The consumer remains strong. All of really the economic data coming out of the U.S. really doesn't point to any looming recession.

Now, when he says everything is fine, I would beg to differ with the sentiment that I'm feeling here on Wall Street. I mean, yes, we are seeing a triple digit rally on the Dow. But if you put it in perspective, it's really just a pin drop into what and to how much the Dow has actually lost over the past month. We are at -- the December that we have had, we haven't seen these kinds of losses since the Great Depression.

Also, you have to think about the political influence. It's now part of the playbook here on Wall Street. When President Trump tweets, he's now directing the trade. In fact, this is a market that's still reeling from Treasury Secretary Steve Mnuchin's phone calls that he made on Sunday to six big bank CEOs. It left lots of investors, lots of traders scratching their heads, why the Treasury secretary would make calls about liquidity during a time that there's no apparent crisis. So it's these erratic movements in the Trump administration that continues to really hang over the market despite you seeing those green arrows. I'm not really seeing conviction trading happening here today.

Manu.

RAJU: Alison Kosik in New York, thank you for that.

And now here with me in the studio to share their reporting and their insights, Margaret Talev with "Bloomberg," John Bresnahan with "Politico," Damian Paletta with "The Washington Post" and Seung Min Kim also with "The Washington Post." And, Damian, I want to start with you. Obviously, the markets have

endured the worst December since the Great Depression, but, you know, they don't tell us everything about what's happening in the economy. So when you look at this drop, I mean, what does it tell you about where things stand with the economy rite large?

DAMIAN PALETTA, WHITE HOUSE ECONOMIC POLICY REPORTER, "THE WASHINGTON POST": Great question.

I think we've seen really strong jobs numbers and strong GDP growth. The economy's been growing strong for the past year. So, on the one hand, you know, maybe we can endure, you know, this 4,000 or 5,000 point selloff in the Dow for a month. It's just a correction from last year.

But what we have to watch is, you know, this is going to affect consumer behavior, right? If people say, hey, I don't have as much money as I thought I did a few months ago, we're not going on that vacation next year, we're not going to redo the kitchen, then, you know, you start to see this affect a lot more people and that's the kind of stuff that's going to play out in the next couple of weeks and months.

RAJU: And do the president's words have an impact about the way things are going? We saw that tweet from Christmas Eve --

PALETTA: Right.

RAJU: And then there was a big route that day. How much of an impact are these tweets having on investor's behaviors?

PALETTA: You know, I think, it's interesting, today the market's up and we haven't seen a tweet from the president. I think the tweets are actually hurting things. The comments from the Treasury secretary in terms of this press release out of nowhere on Sunday made things worse as well.

[12:05:02] I think the markets just want a little bit of quiet. They want some certainty. They don't like this kind of, you know, whip saw back and forth trade negotiation style. And I think the more quiet we get out of the White House, in the near term, I think it will help a lot.

RAJU: Quiet out of the White House, very difficult to do.

But one thing they're also clearly trying to do today is reassure things that trump all, the Fed chairman, he's safe. This is -- you know Kevin Hassett said 100 percent guarantee he's not going anywhere. But yesterday the president, he didn't go that far.

(BEGIN VIDEO CLIP)

QUESTION: Will the government reopen?

QUESTION: Do you still have confidence in Secretary Mnuchin?

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Yes, I do. A very talented guy. A very smart person.

QUESTION: What about the Fed chairman (INAUDIBLE)?

TRUMP: Well, we'll see. They're raising interest rates too fast. That's my opinion. But I certainly have confidence. But I think it will straighten. They're raising interest rates too fast because they think the economy is so good. But I think that they will get it pretty soon.

(END VIDEO CLIP)

RAJU: So, we'll see is what the president said when he asked about the Fed chairman.

How much trouble is -- you know, obviously, there are questions about whether he can actually do anything to fire the Fed chairman.

MARGARET TALEV, SENIOR WHITE HOUSE CORRESPONDENT, "BLOOMBERG": Yes.

RAJU: But Steve Mnuchin, who he blames on getting Jerome Powell in the first place, how much trouble is, from what you're hearing, Mnuchin at the moment with the administration?

TALEV: So I'm -- you'll never see me go out to a stakeout location and say 100 percent anything about (ph) President Trump, just to be clear.

But it seems that the kind of floating of the discussions that were happening inside and the insane reaction that investors had has hemmed (ph) the president a little bit for now. So I do think he's really frustrated with the situation with the markets, with the perception of what that means of his trade policies and the shutdown and stuff, taking some of the blame for that. And so he's looking for someone to blame.

It does seem that for now his advisers have helped him to be convinced that there's not a clear legal path for him to do anything with Jay Powell. And I think the political situation makes it difficult to do very much with the Treasury secretary. So that's what we're seeing for now.

But there is this continued interest in the president somehow talking to Jay Powell or someone at the White House who's not Steve Mnuchin talking to Jay Powell. So I think that's probably where we're going to see the activity now in the short term. I think there's some in the White House, some in the administration who think maybe a conversation with Powell wouldn't be bad because it could help the president to understand some of the nuances here. And there are probably other people who think that that would not be helpful.

RAJU: Who knows which way it will go if that happens, right?

TALEV: And there is precedent. Presidents have had conversations with the head of the Fed before, but it's not common and it's usually under really special circumstances and like for a reason also.

RAJU: Yes, and actually President Obama did have a conversation with Janet Yellen at the time. Of course, things are a bit different the way this president is dealing with this Fed chairman.

TALEV: Things are a little different, yes.

RAJU: But I want to point out one of the things that's central about the president so far, you know, he's had poor poll numbers across the board since he became president. One thing has been the economy, how he has handled the economy. Generally gets high marks. If you look at just a CNN poll from December 6th to December 9th, the economy was 49 percent believed that he was doing a good job of handling the economy. That's 10 percent higher than everything else basically.

John Bresnahan, you talk to Republicans all the time on The Hill. I mean -- I mean how much are they concerned right now about what they're seeing in the markets? The president's uneven reaction to what's -- how he's dealing with the economy and what this may mean in the coming years?

JOHN BRESNAHAN, CONGRESSIONAL BUREAU CHIEF, "POLITICO": I think privately they're pretty exasperated with the president. They can't predict what he's going to do next and, you know, that's been Trump's negotiating style. It's been his style as president.

But, right now, in a period where there is market volatility, and there is a government shutdown going on, even a partial government shutdown, they're not sure what he's going to do next, what his next move will be. And that just really frustrates them. You know, they privately they -- you know, bash him, they bash the White House staff, but publicly they tow the line with the president.

So -- but I do think there's a lot of frustration right now. You know, they lost the House. They still hold the Senate. But they want to move on. They want to move away from this shutdown. They want to move on. And they're worried about the economy. Everyone right now is worried about it. They feel like it's a pivoting moment right now. This is a hinge moment in Trump's presidency.

RAJU: And just look at how the Dow has dropped since the president took office in January 2017. A significant decline that we've seen, particularly in this last month.

BRESNAHAN: But still up overall. (INAUDIBLE).

RAJU: Still up overall, a decline. But this is why presidents typically don't embrace the volatility on Wall Street because if you take credit for it, you've got to own the bad side too.

SEUNG MIN KIM, WHITE HOUSE REPORTER, "THE WASHINGTON POST": Yes, live by the Dow, die by the Dow. And that nervousness and frustration from Capitol Hill is why, on matters of the economy, when congressional Republicans do disagree with the president, you have seen them speak out a little bit more. It's really calm on those issues of national security and economics where Republicans have been willing to push back.

[12:10:00] We saw one of the biggest dividing lines between Republicans and President Trump has been the issue of trade and the tariffs that the president has leveled and threatened. Clearly when it comes to the Fed chairman, you're already hearing senior Republicans speak out and kind of warning the president, let the Fed stay independent, please don't mess with the chairman and whatnot because they know that, obviously, Republicans want a good economy, but it's also key to his -- key to Trump's political fortunes in 2020.

RAJU: Yes, and, Damian, you know Jay Powell just as well as about anybody else. He's probably going to have this meeting with Trump in the new year. We talked about that. And he's going to face -- we'll see what Trump has to say. But do you think that he is susceptible to this political pressure that the president is doing publicly and probably will do privately as well?

PALETTA: Right. I mean here's the problem, it's never popular to raise interest rates, OK. Jay Powell's not the first person that has to deal with political blowback from raising interest rates. It does slow the economy down because it makes it more expensive to borrow money.

The problem that the president has created for Jay Powell, though, is now anything Jay Powell does is going to be second guessed and looked through this lens of, OK, he's not raising interest rates because Trump told him to and now the Fed has no credibility, or he is raising interest rates to like stick it to the White House and this guy can't be trusted anymore.

What is interesting to watch the last interest rate increase from the Fed was unanimous, OK. Lots of people with a lot of different, you know, perspectives agreed that it was time to raise interest rates. 2019 though, it's going to be different. It's going to be hard. And if the White House keeps jawboning them and if the political support erodes, you know, Powell has done a good job of kind of rallying political support. But if that erodes, it's going to be really tough heading into 2020 for sure.

RAJU: Yes, so much to watch in the months ahead. Damian, thank you.

And next, new question for the Department of Homeland Security after another migrant child dies in U.S. government custody.

(COMMERCIAL BREAK)

[12:15:47] RAJU: Homeland Security says the agency is making changes after a second Guatemalan child died in Customs and Border Patrol custody this month. The eight-year-old boy died on Christmas Eve after being detained with his father since December 18th. The boy has been identified as Felipe Alonzo-Gomez, according to Congressman Joaquin Castro. CBP hasn't named him at this time. Now CBP says the eight- year-old went to the hospital with flu symptoms but was diagnosed with a cold, prescribed antibiotics and released. Later that night, he was taken back to the hospital with more severe symptoms and that's where he passed away. The CBP says there will be an independent investigation and they don't know the child's cause of death yet.

CNN's Nick Valencia is live in El Paso, Texas, with more.

Nick, DHS officials briefed reporters today. What new policies is Customs and Border Protection implementing?

NICK VALENCIA, CNN CORRESPONDENT: Well, according to the DHS secretary, effective immediately they're asking -- or going to count on more resources from the Department of Defense. They're also expecting the Coast Guard to come in with what is now going to be secondary screenings for these child migrants. All child migrants are going to be getting that secondary screening. But from what we hear, this new information, that the focus, the primary focus will be on children 10 years and younger. Children like this eight-year-old from Guatemala who passed away on Christmas Eve.

According to the CBP statement, he did get medication. You mentioned the amoxicillin, that generic antibiotic, as well as ibuprofen. But it's the type of medical care that he got that is going to be, you know, essentially part of this investigation. You know, was he given the proper attention that he needed?

He was effectively diagnosed with a common cold. You know, he goes in the morning of Christmas Eve and within 14 hours of CBP agent first noticing that he's in bad shape, he's dead. He passes away just shortly before midnight on Christmas Eve. And that leaves a lot of people wondering what kind of care he got, what kind of condition he was in. We understand the Guatemalan authorities have reached out and have interviewed the father to get what they say is his version of the facts. And we understand that father is still in custody. But these steps now, Manu, are being taken immediately by CBP and the government.

RAJU: Nick Valencia from El Paso, Texas, thank you so much. And now here with me in studios, Sara Murray joining our conversation.

I want you to listen to, first, this is, of course, the second tragic death of a migrant child from Guatemala in the past month. Last time when a seven-year-old girl died, the administration, they were very -- they expressed their concerns and sympathies for the family but they didn't accept any responsibility for their policies contributing to it. Here's how they responded at the time.

(BEGIN VIDEO CLIP)

REP. HANK JOHNSON (D), GEORGIA: How many children 17 years old or younger have died in DHS, ICE, or CBP custody since you took office?

KIRSTJEN NIELSEN, HOMELAND SECURITY SECRETARY: I will get back to you on that figure.

What I can tell you is that we have saved 4,200 migrants who were at distress due to their --

JOHNSON: Approximately how many have died?

NIELSEN: I understand your question, sir. I will get back to you.

JOHNSON: Can you give me an approximate figure?

NIELSEN: I will get back to you. I'm not going to guess under oath. STEPHEN MILLER, SENIOR ADVISER TO THE PRESIDENT: Right now, as we

speak, there is a surge of illegal immigration heading towards our country that presents a national crisis now. Not a month from now, not a year from now, right now.

QUESTION: Does the administration take any responsibility for the girl's death?

HOGAN GIDLEY, WHITE HOUSE DEPUTY PRESS SECRETARY: Does the administration take responsibility for a parent taking a child on a trek through Mexico to get to this country? No.

(END VIDEO CLIP)

RAJU: The first thing they -- when Nielsen testified last week, she didn't -- couldn't give them any answers about how many children have died.

SARA MURRAY, CNN POLITICAL CORRESPONDENT: That's pretty stunning to think, you know, that she's there, she's going before Congress. It seems like that's a number you should know. I mean it doesn't seem like this should be happening so frequently that that's a statistic you should be unaware of. You know, obviously, if you're the United States, you would like this to never happen. It's a tragic loss. Some has lost their child. Yes, it is a harrowing journey to decide to cross the border and they do take their own lives, they take their children's lives in their hands when they decide to do that. But it gives us an idea of how little we know about what happens to these children and to these families once they are in custody. And the fact that she would go before members of Congress and not have that answer at the ready, I mean you could see that members were not very pleased.

[12:20:01] RAJU: Yes, and she'll continue to get that going forward.

Seung Min, you cover immigration very closely. The one thing you hear the admiration say time and time again is that there's not much difference in the way they've implemented their policies with the Obama administration. They often say that. Obviously they've taken a much more hardline approach. But how do you access the difference between the Trump administration's handling of these migrant crossings of the border with the way the Obama administration did as well?

KIM: Well, the Trump administration has been much stricter in terms of how they want to process these asylum seekers. Under U.S. law, I mean you can apply for asylum once you're in the country, but the Trump administration has said even if they -- they must essentially arrive at a port of entry to be able to apply for asylum, which is not the case. You can cross between ports of entry and still be able to apply for asylum, but the administration is taking a different interpretation of that, and that has been challenged in the courts.

The one thing -- another thing to remember about the administration's immigration policies is that the House Democrats are coming in charge next year. And while we talk a lot about investigation over Russia issues or conflicts of interest, one of the constant areas of potential investigations that comes up when I talk with Democrats is the issue of immigration. Speaking with the presumed homeland security chairman, Benny Thompson, he has a litany of administration policies on immigration he wants to investigate. So the asylum policy, the family separation policy, the travel ban. And once the House Dems gain gavels and subsequent subpoena power, this is going to be something they're going to be asking a lot of questions about.

RAJU: And how much -- how much is Pelosi making this an issue for the oversight responsibilities of, when you look at all of the things they want to investigate, what -- how -- where does this rank in her priority list?

BRESNAHAN: Oh, really high. Seung Min talked about -- I mean, look, she -- Pelosi strongly opposed the border wall. She's called it immoral. She's called Trump administration immigration policies wrong and immoral. She's attacked them repeatedly. And I think not only will you see investigations, I think you're going to see amendments that will attack spending. They'll try to attach provisions to legislation that will prevent the Trump administration from implementing these policies.

Now, the Republican Senate will block it, but there's going to be votes repeatedly in the next Congress on this issue.

RAJU: Yes, it --

BRESNAHAN: Not only investigations, they'll be voting on this and --

RAJU: And already that's already leading to this crisis they're in right now.

The other crisis --

BRESNAHAN: Right.

RAJU: A shutdown crisis, which we're going to talk about in the next segment. A new message from a presidential ally, it's unlikely the shutdown ends anytime soon.

(COMMERCIAL BREAK)

[12:27:16] Today, the first full day of business missed because of the five day old government shutdown. Look for urgency to end the shutdown and you'll find little. Most of official Washington is still not in Washington. When they get back, the conversations will pick up, but without a firm idea of the president's bottom line or if the Democrats have any incentive to meet the White House somewhere in the middle.

Congressman Mark Meadows is a chairman of the conservative House Freedom Caucus and one of the president's closest allies on The Hill. He joins me now.

Congressman, thank you so much for joining us here.

On Saturday, Chuck Schumer took to the Senate floor and he said very bluntly, the president must abandon the wall to reopen the government. Mr. Meadows, you met with the president on Saturday. Do you think there is any situation where the president will give in to that demand to give up on the wall?

REP. MARK MEADOWS (R), CHAIRMAN, FREEDOM CAUCUS (via telephone): Well, I don't think there's any situation where the president should give up on that demand. I can tell you that Senator Schumer, in 2006, he voted for what we call a bill that would actually have provided for 700 miles of fencing. And so his position has changed from 2006. But to suggest that we shouldn't have a secure border is just not a position that most Americans would agree with. I can tell you that the president is very firm in his resolve that we need to secure our border and I can -- he is encouraging me and others to enter in discussions with Democrats. But, as you mentioned, I don't know that there's a lot of progress that has been made today.

RAJU: He's encouraging you to try to talk to Democrats, to try to come up with some sort of deal, is that what you said, and which Democrats, with Chuck Schumer and Nancy Pelosi?

MEADOWS: Well, he -- yes, he certainly encouraged rank and file members to have discussions with those across the aisle. He's had a great team of negotiators, the vice president, Jared Kushner, Mick Mulvaney, Shahira Knight, all of them engaging really around the clock. And -- and the president, I will say this, was fully engaged up through the Christmas break, getting on the phones with different senators and members of Congress, trying to find some kind of path forward.

But most of what we've -- we've faced is really a wall of sorts with the Democrats who say that they're not willing to allocate a single dollar towards border security. And I don't know that that's a position that is defensible, especially in light of some of the past votes that many of my Democrat colleagues have taken.

RAJU: Have you talked to him since Saturday? And, if you have, what is -- have you had a chance to speak with him since you met with him on Saturday?

MEADOWS: Well, I have. I mean, obviously, I don't make public a lot of the private conversations I've had either with the president or the administration. But (INAUDIBLE).

[12:30:05]