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EARLY START

Trump Forces Mattis to Depart Early; Government Shutdown Still Going. Aired 4-4:30a ET

Aired December 24, 2018 - 04:00   ET

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


[04:00:00]

CHRISTINE ROMANS, CNN HOST: The outgoing Defense Secretary forced to depart now two months early, the president frustrated by the critical resignation letter from Jim Mattis.

UNIDENTIFIED MALE: Well, it's very possible that this shutdown will go beyond the 28th and into the new Congress.

JOE JOHNS, CNN HOST: And it is day three of the Christmas government shutdown. The sides remain very far apart on the president's demand to fund a border wall.

ROMANS: And this, the Treasury Secretary trying to reassure investors after the worst week for stocks in a decade. What Steven Mnuchin told the world about his conversation with the heads of big banks.

JOHNS: And, did the president cross a red line venting to his acting Attorney General about revelations that implicate him in the Michael Cohen case? Good morning and welcome Early Start. I'm Joe Johns. Happy Christmas Eve.

ROMANS: Happy Christmas Eve, nice to see you today Joe. I have you all week. I'm Christine Romans. It is Monday, December 24, it is Christmas Eve, it is 4:00 am in the east.

We begin here with the Defense Secretary James Mattis, he's now being forced out of his job, January 1, two months earlier than planned. Now, Mattis has announced his resignation, you know, Thursday, saying his views were not aligned with his boss.

The departure triggered by the president's decision to withdraw U.S. troops from Syria. Acting Chief of Staff, Mick Mulvaney, defended President Trump's decision to pull out of Syria, saying, it's aimed at pleasing his supporters. In the next breath Mulvaney admits supporters don't understand the consequences.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: He went the recommendations of Mattis, McGurk, Dunford, the Chairman of the Joint Chiefs, apparently Pompeo and Bolton, who is he listening to?

MICK MULVANEY, ACTING CHIEF OF STAFF: Here's -- the president listens to a bunch of different people, OK? Including the people who ...

UNIDENTIFIED MALE: But, that's his national security team.

MULVANEY: No, but wait a second, including the people who live here and the ordinary Americans, the people he promised, when he ran for office, that he was going to lead. We recognize the fact that this is unpopular within the beltway. But we recognize this fact is unpopular within the Defense Department.. It's very popular with ordinary American people.

UNIDENTIFIED MALE: Do they really know what the stakes are of pulling U.S. troops out and leaving the Syrian defense force to the Turkish slaughter and what the impact is going to be on Iran? I mean, really, we're going to make this a plebiscite?

MULVANEY: Ordinary Americans have no idea about those things. They elect the president so that he does.

(END VIDEO CLIP)

JOHNS: The one thing the president apparently did not immediately recognize was that Mattis was resigning in protest, once that became clear aids say the president remarked, Mattis was only being portrayed as the smartest guy in the world because he was leaving the Trump Administration.

Now, sources tell us senior military officials are worried about the uncertainty that the upheaval is causing with Mattis on the way out, who's in charge for now. He's Pentagon correspondent, Barbara Starr.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Deputy Secretary of Defense, Patrick Shanahan, number two at the Pentagon, has been named, by the president, to become Acting Secretary of Defense.

There was a feeling inside the White House, officially, that they needed to get a new person in, that they didn't want Mattis in a lame duck position, but, administration officials will tell you that behind the scenes the president was not happy with the extensive news coverage of Mattis' departure, of his resignation letter saying basically that he was resigning over protest over the president's decision to withdraw troops from Syria.

So, Shanahan now has the leading role here at the Pentagon. He has been involved mainly in things like acquisition reform and innovation, now, with no foreign policy experience, he will take on a national security role on the international stage dealing with America's military allies and America's military adversaries.

Barbara Starr, CNN, the Pentagon.

ROMANS: Thank you Barbara. President Trump's decision to pull the U.S. forces out of Syria leading to another resignation, Brett McGurk, the special presidential envoy for the global coalition against ISIS, he has decided to step down. The president's decision has now been turned into formal military directives. Pentagon officials confirming the executive order for Syria has been

signed by outgoing Defense Secretary James Mattis. CNN has learned -- has also learned that days the president decided to withdraw, he mad a crucial phone call to Turkish President Erdogan.

CNN's Gul Tuysuz is live with us. More from Istanbul, what do we know?

GUL TUYSUZ, CNN CORRESPONDENT: Well, before that decision by Trump was announced we know that there was phone call between Trump and his Turkish counterpart, Recip Tayyip Erdogan. In that phone call, Trump apparently asked the Turkish president, can you handle ISIS? To which Erdogan responded, yes we can, as long as we have support from you. And it was at that point that Trump said, okay, it's all yours, we are done.

Basically saying that Turkey is going to be taking care of the remaining ISIS presence in Syria.

[04:05:00]

But this really leaves the U.S.'s main allies on the ground in the fight against ISIS in Syria in a lurch, because Turkey views that Kurdish fighting force as a extension of what they cause a terrorist group here at home.

So, it's really a complicating factor because the U.S. is effectively leaving it's main partners on the ground in Syria, in a very tough place. In fact, Mattis' resignation came after a statement from the Turkish Defense Official who said that, they would basically bury the members of that Kurdish fighting force in the trenches, and tunnels, and holes that they are digging now.

So, we're seeing how complicated this is all getting, and effectively we're seeing the U.S. pulling out of that very vital mission to fight ISIS in Syria and really leaving it up to their Turkish allies, who clearly have more pressing priorities on the ground in Syria.

ROMANS: Fascinating developments. All right, Gul, thank you so much for that.

JOHNS: And that's really only the beginning of the upheaval in Washington. The third government shutdown of the year, now entering it's third day and right now there's no end in sight.

UNIDENTIFIED FEMALE: We apologize, but due to the lapse in federal funding, we are unable to take your call. Once funding has been restored our operations will resume. Please call back at that time.

JOHNS: Call up the White House, that's the recording you're going to get. The shutdown forcing about 400,000 government workers to work without pay and that's not all, another 400,000 are sitting at home unpaid. A number of national parks and monuments shuttered for the long holiday weekend.

One thing that is working, NORAD's Santa tracker, thanks to more than 1,500 military personnel and volunteers.

ROMANS: Incoming Acting Chief of Staff Mick Mulvaney says, it is possible the shut would be something the new Congress tackles. Lawmakers will be seated in early January. Mulvaney also suggested House Democratic leader, Nancy Pelosi, may be delaying a deal because she wants to reclaim her role as Speaker.

(BEGIN VIDEO CLIP)

MULVANEY: I think there's an implication here for Nancy Pelosi's election for the Speakership. I think she's now in that unfortunate position of being beholden to her left wing to where she cannot been seeing as agreeing with the president on anything until after she's Speaker.

(END VIDEO CLIP)

ROMANS: A couple of reminders, first Pelosi already has the votes to be Speaker. Second, it was House Republicans who held up a deal to keep the Government open. House Democrats were ready to vote and approve a Senate bill keeping the Government funded through early February.

CNN's Sarah Westwood has the state of play at the White House.

SARAH WESTWOOD, CNN CORRESPONDENT: Well, Christine and Joe, President Trump is bracing for what could be a lengthy shutdown that stretched beyond the holidays, as he continues his demand for money for his promised border wall and Democrats continue their refusal to fund it.

Now recall that President Trump had initially demanded $5 billion in funding for the border wall and he said that had to be for the construction of a physical barrier along the southern border, it couldn't just be for border security in general.

Now sources say, Vice President Mike Pence offered support for a border security package worth $2.5 billion if it included funding for the wall. That offer came during a meeting on Capitol Hill Saturday with Senate Minority Leader Chuck Schumer, but those sources say, Schumer rejected the offer, so the talks do still to be deadlocked.

Now, Trump has been all over the map when it comes to this shutdown. He first said he would be proud to accept responsibility for it if it was in pursuit of money for his border wall before shifting to blame Senate Democrats.

But it's still unclear just how much less than $5 billion the president would be willing to accept and it's unclear what, if anything, Democrats would be willing to approve, because Democrats have little incentive right now to negotiate on the president's terms, given that they'll be in the majority in the House in just about two weeks, Christine and Joe.

JOHNS: Sarah Westwood at the White House, thanks for that. CNN has learned that President Trump has vented to Acting Attorney General Matt Whitaker at least twice in the last few weeks, about the explosive revelations in the Michael Cohen case.

Sources say, the president is frustrated that prosecutors of southern district of New York overseen by Whitaker filed charges that made Mr. Trump look bad. Cohen pleaded guilty to crimes he said he committed at the president's direction.

None of our sources at the White House say the president ordered Whitaker to stop the Mueller probe, but the conversations highlight how convinced the president is that the Attorney General should serve as his personal protector. That's the significance of it. Also important to note, this is not Mr. Trump venting about looking bad. This is the President of the United State confronting the nation's top law enforcement officer about a case in which he, himself, the president, has been implicated. The president's actual attorney, Rudy Giuliani, could not confirm the conversations with Whitaker, but he said the president does view federal prosecutors in New York is out of control.

[04:10:00]

ROMANS: All right, to the markets now. The Treasury Secretary from Cabo San Lucas where he's vacationing, Steven Mnuchin spent Sunday on the phone talking with CEOs of the country's six largest banks in an attempt to reassure investors after the worst week since the financial crisis.

Last week the Dow down 6.9 percent, the worst week - weekly drop since October 2008. Remember that, Joe Johns?

JOHNS: Absolutely, very well.

ROMANS: The September 500 lost 7.1 percent on the week. It's worst since August 2001. The NASDAQ fell more than (ph) 8 percent worse since November 2008. The NASDAQ is now officially in a bare market. In this remarkable statement after he spoke on the phone with these bank executives, Mnuchin said none of the financial institutions experienced, quote, "any clearance or margin issues," and, quote, "markets continue to function properly." He added, "we continue to see strong economic growth in the U.S. economy with robust activity from consumers and businesses."

All three major averages are now down more than 12 percent December there, on pace for the worst December since the great depression. Here's the thing - two things. One, no one ever suggested there was a problem in the banking system with liquidity or being able to fund loans. He actually raised an issue saying there's no problem in the banking system that isn't even there. So some are question what the motive was there and whether that was a rookie mistake. That's just something that's not done in the economy.

And also, economists generally don't see an imminent downturn. No one is saying there's a downturn coming. Yes, the blockbuster growth of 2018 I likely to fade, risks like an escalation of the trade war with China, they loom. Still, market veterans say that a panicky Wall Street is prematurely pricing in a recession that may not hit until 2020. Now, adding to the concerns, a source said President Trump has been asking advisors if he has the legal authority to fire the Fed Chief, Jerome Powell. Markets don't like this. This is not about how banks are working. This is how the president is messaging his stewardship of the economy. The president has repeatedly attacked Powell for raising interest rates and blames him for the market declines. Interest rates have gone up seven times since Trump took office. Four of those increases have been under Jerome Powell, but interest rates are still, what, like 2.5 percent?

JOHNS: Right.

ROMANS: They're still historically very, very low.

JOHNS: So why even bring up this issue of Jay Powell and firing him? And the other thing is just a question of pure stability. You don't create an issue by talking about it if there's no issue, right?

ROMANS: Right, so the idea that the Treasury Secretary's releasing a statement while he's in Cabo San Lucas and the country - government - the government is partially shutdown to say that there's not a problem with liquidity in the banks. The CEOs have assured me. No one thought there was. To raise that - I mean, I've seen a lot of different analogies, but that's - as one Democratic congressman said, that's like being the - you know - the water safety people and saying our water's not poisoned. You know, it's like why would you even bring that up?

JOHNS: So - right. So does it really go back to what you said, rookie mistake?

ROMANS: I don't know. I think the president needs scapegoats for the market. He has put his own success behind the benchmark averages and trying to find somebody to blame if the market doesn't keep going up.

JOHNS: All right. Now, in other news, nearly 300 people including some beachside concert goers wiped away by a tsunami that hit Indonesia without warning. Overnight, the government ordered equipment to detect tsunamis earlier. A live report coming up next.

(COMMERCIAL BREAK)

[04:15:00]

JOHNS: Authorities now warning more deadly tsunamis could strike the Indonesian coastline in the coming days. The volcano which triggered the weekend's devastating wave continue to erupt. At least 281 people have died, more than 1,000 are injured, and 11,000 people have been displaced. The tsunami struck without warning Saturday night.

OK, so take a look at this frightening scene. A massive wave suddenly crashing down on a crowd at a pop concert. CNN's Ivan Watson live in Hong Kong now with the very latest. Ivan -

IVAN WATSON, CNN CORRESPONDENT: Good morning, Joe, and I might add that the lead singer of that band, he says that at least two members of the band were killed, and at least two more and his wife, who's birthday it was on Sunday, are still missing, so just one heartbreaking story from this natural disaster. It's supposed to be a Christmas holiday in Indonesia, and instead parts of the country are trying to pick up the pieces after this deadly tsunami.

The Indonesian President toured the disaster area and has called for the purchase of additional measures to help detect tsunamis. The experts in Indonesia are saying that it was caused by a volcanic eruption, a massive one from this island that's called Anak Krakatau, Child of Krakatoa, and in that eruption on Saturday, about 64 square hectares, 158 acres of the volcanic island slope collapsed into the sea and helped drive this deadly wave. It was exacerbated, the experts say, by a full moon and a high tide.

The question of tsunami detection, if you've ever visited Indonesia, there are many signs around the coastal areas telling you where to go for shelter in the event of a tsunami, but we're learning that much of the buoy system that's supposed to detect tsunamis has been debunked (ph) since 2012 because of vandalism and other problems. There was another deadly tsunami just last September but that doesn't seem to have forced the authorities to up the ante and put in place something to protect a country made up of more than 17,000 islands in an earthquake and volcano prone region. Joe -

JOHNS: And now they are rushing to try to get caught up with the technology. Thanks so much for that Ivan Watson.

ROMANS: Just such a sad story there. All right, 20 minutes past the hour. [04:20:00]

Don't expect a white Christmas this year, but what should you expect for the holiday? The forecast next.

(COMMERCIAL BREAK)

JOHNS: A little bit - a little bit of good holiday news. Today a quiet but cold Christmas Eve ahead in the east, safe (ph) for people who are travelling, but a new storm brewing in the Pacific Nortwest could complicate holiday travel.

(WEATHER)

[04:25:00]

ROMANS: Jim Mattis will not be allowed to leave on his own terms. The Defense Secretary forced out two months early. His critique of the president apparently too much to bear.

JOHNS: You can't quit. You're fired.

(COMMERCIAL BREAK)