weather through friday. >> great to see you, allison. "inside politics" with manu raju starts right now. thanks for joining me. see you tomorrow. welcome to a special christmas eve edition of "inside politics." i'm manu raju. john king is off. it's day three of the government shutdown. the president is at the white house, tweeting about the need for a border wall, while congressional leaders are at home for the holidays, waiting for signs of a deal. president trump also spending his holidays frustrated with his outgoing defense secretary. his acting chief of staff. and his treasury secretary. and democratic senator claire mccaskill lost her reelection bid and is leaving washington telling us what republicans privately say to her about president trump. >> now, they'll tell you, if it's just the two of you, the

guy's nuts, he doesn't have a grasp of the issues, he's making brash decisions, he's not listening to the people who know the subject matter. but in public, if they go after him, they know they get a primary. this is a completely different republican party. now, i think history will judge some of my colleagues harshly, that they didn't stand up to this president. but we start with another market cliff dive. the dow is down big, again, after a weekend that left investors scratching their heads and riddled with new concern over a coming financial crisis. treasury secretary steven mnuchin today is convening the president's working group on financial markets, sometimes referred to as the plunge protection team. word of that meeting follows news from unanimous in a future

mnuchin that caught everyone off guard. we're told secretary mnuchin is now in the president's crosshairs for how things are going on wall street, the president, they say, blames mnuchin for the state of the stock market. here is how the president sums up his frustration with the fed, tweeting this morning that the only problem our economy has is the fed. they don't have a feel for the market, they don't understand necessary trade wars or strong dollars or even democrat shutdowns over the borders. the fed is like a powerful golfer who can't score because he has no touch -- he can't putt. here with me to share their reporting and insights, burgess

everett from politico and reporters from bloomberg. i want to start with this statement from mnuchin that caught everyone off-guard. one person said, if this weren't the end of december i would have thought it was april fool's. the markets are already nervous if you have. it's like sending out a message saying are our space shields intercepting incoming asteroids. uh, i didn't know any were headed our way. any sense on why mnuchin did what he did? >> it seems like he wanted to calm everybody down and do

outreach to banking execs on a number of other issues and there was a reason to call them. but i think this is an unanticipated consequence of that. he's in a bit of a no-win position. the president, if he had his druthers, would like to undo the powell, you know, moappointment. and if he can't get rid of jay powell, he wants to take it out on someone. that's what we're looking at right now. >> that's one of the questions, if he can or can't get rid of jay powell. mick mulvaney, incoming chief of staff, was discussing whether or not the president can fire the fed chairman. >> oh, no, and i'm sorry, we should have talked about this beforehand, i think he put out a tweet saying he realizes he does not have the power to do that. >> how did senators react to this discussion about the

possibility of whether a president can fire powell? >> they don't like it. powell got more than 80 votes in the senate when he was confirmed this year. i thought there was enough of a freak-out about powell among republicans before this mnuchin statement. they're already saying the president shouldn't interfere with this. it's just rolled together into one big problem. >> this is one of several political crises engulfing the trump administration right now. especially the big problem for the president is, remember how often he has touted the strength of the stock market, and now that the stock market is having one of the worst decembers in a decade, not only from his public comments but also he is really furious about it in private. he's angry at mnuchin, this is why he privately talked about

pushing jay powell out. on saturday, when steve mnuchin had that comment that there were no discussions about pushing powell out, our reporting shows that trump didn't want to be the one publicly defending the fed and fed chairman there and that's why he had mnuchin say what he did. >> a tweet over the weekend from president trump sayi-- from ste mnuchin saying that president trump can't fire the fed chairman. >> nobody is safe in trump's orbit, whether it's the defense secretary, who is universal respected or admired, or a chief of staff who obviously has gotten cross-wise with the president as well. i think that's part of what's rattling the markets, is when you look at the lines that presidents are not supposed to cross, right, there is, has been

historically and is legally independence of the fed and the fed chairman from the president, despite the fact that the president appoints. but when investors, when ceos, when marketwatchers look at what this president has done just in the past few weeks, firing all number of staff in his administration, and then they look at his tweets and say, there's no real confidence that the president won't cross that line and do the -- and take out the same kind of frustrations that he's taking out on the staff that he can fire with the fed chairman. that's part of why we see all the instability in the market. >> if you think about the timing of this, so when my team and i reported this on friday, about the discussions about powell, it's important to understand that there are people inside and around the white house that are concerned enough that this might have happened, that the president might want to test that normal, okay, the law says

i can't do it, is that really what the law says? this is a concern that people are raising. there are two camps, people who actually -- hey, why not, let's test the idea, they agree with the president on powell and they're not really sure that's what the law says. there are many, many more people who think that would be a dangerous line to cross, that in trying to help the economy the president might be willing to make the economy worse. it's concerns that the president might be willing to test it that prompted this disclosure. >> it's mnuchin, mulvaney, trying to calm down the markets, saying everything is fine, no one's getting fired. but the markets are concerned, we'll continue to monitor these developments as the day unfolds. up next, part of the government is shut down. today, new signs it could stay that way well into the new year. r car insurance, it was a no-brainer. i switched to geico and saved hundreds.

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welcome back. your government, closed for business and in no danger of reopening anytime soon. the weekend came and went with little sign republicans and democrats are nearing a compromise. the president this morning says democratic objections about a southern border wall are less about the wall itself and more about him. negotiations are stalled as the white house rejected a saturday counteroffer from democrats and leadership won't say when they will make a counter offer and the president has failed to tell lawmakers what his bottom line is. his incoming chief of staff, mick mulvaney, publicly signaled that he was willing to go down from his $5 billion demand for his wall but democrats say any money for a wall is a nonstarter. >> are you open to anything between $1.6 billion and $5 billion? >> what chuck schumer and nancy pelosi have told the president is we're not going to build a

wall period. >> we've learned president trump is going to have a border security meeting this afternoon. homeland security secretary nielsen will be there, we don't know who else will be there. you've spent the weekend at capitol hill, burgess. were there any actual real negotiations happening at the moment? >> it felt like when vice president pence came on saturday to visit chuck schumer, it felt like that was intended to send a signal that everyone hasn't backed into their corners. but democrats have been saying no money for the wall consistently for two weeks now. i have no indication they're ever going to back off that. if republicans are expecting a new offer, they're just going to keep getting the same offer. as of today, i don't think anybody's talking about anything. i think the last real talks were on saturday and even those were not that real. >> and this is what the president is talking about, tweeting just minutes ago, the wall is different than the $25

billion in border security. the complete wall will be built with the shutdown money plus funds already in hand. the reporting has been inaccurate on the point. the problem is without the wall much of the rest of the dollars are wasted. do you want to try to interpret that? >> good luck. >> it's a little difficult right now. i mean, the $25 billion figure has been around for some time, as a border security slash wall payment. this is part of a negotiation that democrats and the president engaged in earlier this year when the fate of the dreamers was at stake. it's a deal that the president rejected that a lot of people now say he probably should have taken because that was his last, best chance at a wall. look, i think mick mulvaney's prediction on the shows yesterday is pretty accurate, when he says he could see this going on for a long time, because you see how the two sides are so did you ug in. there are some private and public indications that the white house is willing to come down from the $5 billion offer.

i imagine democrats, some democratic senators say privately that they may be able to go up a little bit from the $1.3 billion as long as it's not for a wall. but remember, nancy pelosi and the house democrats come in charge january 3rd and at that point the president's leverage is going to continue to decrease. >> they don't really have much of an incentive at the moment to give in. >> exactly. >> there was a brief session in the senate today presided over by pat roberts who said, lbj said sometimes you just have to hunker down like a jack ass in a hail storm and just take it. we heard from outgoing senator bob corker, foreign relations committee chairman, who says for the president this is just a made-up issue. >> not long ago, just a few moments ago, the president could have received $25 billion in border security just by dealing

with the dreamers, which by the way, most republicans want to deal with the dreamers issue. so we had $25 billion that could have been spent on border security. now the government is shut down over what ultimately is going to be $2 billion. this is a made-up fight so the president can look like he's fighting. but even if he wins, our borders are going to be insecure. >> we'll talk about this feud between president trump and bob corker later in the show. but "the wall street journal" made the same point today, saying, most americans don't care. there's a wisdom in that response because this showdown over spending, the third this year, is mostly a symbolic political exercise that won't make much difference no matter who wins. the president doesn't believe that at all. >> no. but to take a stab at destructing this tweet he just did, one of the things i always

thought would be the way we get out of this is for the president to figure out a way to distort reality and claim victory, right? and i think that's part of what this is -- you know, sort of what he's going to try to do. the the question is can he figure a way to redefine reality, say something about the wall that satisfies his right flank, and then move on. >> and i think that's part of what that tweet was about. >> it's interesting to see how the republican leadership have been distancing themselves from what's been going on. mitch mcconnell over the weekend made it very clear that this is the democrats' and president trump's deal. he thought trump was on board with this short term deal to keep the government open until february 8th, obviously trump undercut him. now he says it's up to the president and the democrats. now, i had a chance last week to

talk to the outgoing missouri senator, claire mccaskill, about mitch mcconnell, his positioning and how she views him as he's dealing with this issue. >> he's a very, very political leader. this isn't somebody who is some -- sitting around at night figuring out how to move the needle on really important policy issues. this is someone who is figuring out how he can win elections, beat democrats like me, and make sure that republicans like cory gardner and thom tillis can hold on to their jobs two years from now. >> there aren't that many who disagree with that assessment. but the larger point is that republicans are trying to keep their -- mitch mcconnell and the republican party do not like the position that the president has put them in right now. at some point do you think the president may end up getting rolled by his party on the hill or will they stick with him? >> i mean, i think this looks different now than it did six months ago, let's say.

the democrats' impending takeover of the house makes a difference. the fact that we're now in 2020 season and that's only increasing, makes a difference. and the fact that there's going to potentially be a tipping point when the republicans get as much as they can out of this system, judicial nominees, appointments. they have already gotten so much from this administration that the calculation about how much president trump is continuing to serve them is going to be constantly visited or revisited. they thought they had a deal, an agreement with him to stave off a shutdown, they all wanted to go home. that fell apart because the president made it fall apart. the situation with syria and mattis is affecting a lot of republican lawmakers who disagree with the president's decision on this or disagree at least with the way it was executed. so i think all these things add up. they have the potential to expand the divide. it's not clear yet, but it's a risk. and the president does that at his peril. >> it will be interesting, if

this does extend into the new year, the democrats pass a short term thing to keep the government open, what will mcconnell do? stick with the president, go back to the position they had? >> a roll call vote? i would say they've already rolled on him in some respects. there was a voice vote to pass the short term cr. you have plenty of conservatives in the senate who say they're aligned with trump on the border issue, none of them obtained to this. it seems like parliamentary theater but it matters, because immediately after that happened you had several senators who said, oops, i opposed this. well, you had a chance to make this happen but you didn't. >> we'll see how that continues to play out. it's been quite the breakup between president trump and secretary of defense jim mattis. next, what to expect as mattis is shown the door two months sooner than planned. e love gave♪ ♪five golden... ♪six golden rings...

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welcome back. the dow is down around 450 points amid continuing uncertainty and comments from steven mnuchin over the weekend. we'll continue to monitor all of this as the day develops. but first, it's been a dramatic split between secretary of defense jim mattis and president trump. and today, trump expanded on their differences, tweeting, we are substantially subsidizing

the militaries of very rich countries all over the world while at the same time those countries take advantage of the u.s. general mattis did not see this as a problem and i do and it's being fixed. mattis' resignation came after trump's announcement that he would withdraw all u.s. troops from syria. deputy defense secretary shanahan will becoming the acting secretary of defense. cnn's barbara starr joins us. barbara, what do we know about shanahan, and do his policy viewpoints align with mattis'? >> reporter: he deals with things like business practices, budget, acquisition reform, developing the space form that mr. trump wants, all of which go

to his experience as an executive at boeing, working on commercial and military programs. but he doesn't have any foreign policy, national security, or military experience. so far he hasn't had to say no to mr. trump. he's been lucky enough to be involved in the issues that trump relates to. now he will be, shanahan will be on the world stage, having to deal with allies and adversaries. and that will present him some very significant new challenges, manu. >> barbara starr at the pentagon, thanks. a new trump tweet. saudi arabia has now agreed to spend the necessary money to help rebuild syria instead of the united states. see, isn't it nice when immensely wealthy countries have rebuild their neighbors rather than a great country, the u.s., that is 5,000 miles away? thanks to saudi a.

the president is clearly going alone on this. i want you to listen to one of the top white house aides, mercedes schlapp, who spoke earlier today. asked about who else was involved in this decision, here's how she responded. >> can you name an adviser the president has that recommended he pull out 2,000 troops? >> i'm going to going to get into the internal discussions of how the decision was made. at the end of the day, we all serve in the position of advising the president. it is up to the president to make the final decision. >> any chance the president backs off this decision? it seems like he's digging in. >> he is -- that executive order is now being implemented. i mean, he's certainly been under pressure to at least slow it down if not change his mind. but this is what prompted jim mattis', you know, resignation. and then the backlash from that, the heat on the president is what prompted the president to get mattis out of there before

he could be -- either do a goodbye tour with troops so everybody could see how much everyone loves him or before he could go to capitol hill to be grilled. now the president is defensive about the backlash he's faced. >> the backlash is real and remarkable, over the weekend. when you look at how james mattis, respected for his years of service across the aisle, both sides of the aisle, supposed to leave at the end of february, until trump tweets on sunday that he was dismissing him. and the reason we're all learning about is because of the news coverage, not what mattis said initially, but how it was perceived. help us understand, help our viewers understand how the president processed this decision and why he responded to the news coverage rather than the decision to resign itself. >> this is nothing but personal pique. mattis was being hailed, in

recognition of the fact that he had been widely respect as someone who was a guardrail for the president, helping prevent the president from doing things that allies and his folks here in the government didn't want him to do. and the more that mattis was hailed as that kind of person, the more trump got frustrated with it. so out of the personal pique -- wouldn't you want your defense secretary, outgoing defense secretary, to be in office for several weeks if not a couple of months to do a transition to the next person? but instead, because of the frustration that he -- the personal frustration, that he didn't feel he was -- his decision was being questioned, he didn't feel like he was being compared adequately to this outgoing general, he decided to terminate him in a matter of days. i think that underscores what is so troubling to allies, especially around the world, as much as the decision itself. it's the process. and you mentioned mercedes schlapp was asked about who was

part of the decisionmaking. the reason she had trouble answering that is because from all the reporting, the answer is almost nobody, literally almost nobody. for any of us who have covered the white house over the years, that's so remarkable. we can't say it enough, the extent to which big decisions like this often involve scores of people across multiple agencies, meeting repeatedly to sort of go through what the consequences are. >> even the people aware of the decisionmaking didn't agree with it, and some people were cut out. >> he seems to be listening to turkish president erdogan more than he is his own national security advisers. this is from cnn's reporting today. erdogan was explaining all the problems with the u.s. president in iraq and syria and was irritating trump, according to a senior administration official who received a detail readout of the phone call between both presidents. "okay, it's all yours, we are

done," trump said, according to the source. >> it illustrates the tumultuous situation we're in. there's going to have to be a new secretary of defense that's going to have to be confirmed and will have to satisfy enough democratic senators on capitol hill. mitch mcconnell praised mattis' world view and urged the president to pick someone in the mold of mattis, essentially. that's what a lot of republican senators are hoping for. the problem is it's mattis' world view that got him canned by the president. so who will pass muster among the senators? you have senators like jodie joni ernst pushing for specific

candidates. >> there's still a good chance someone gets confirmed. but this could be a fight. >> this is typically one of the easier slots to confirm, people can come together on national security, on mattis, as michael is saying, you talk to democrats and you ask them who in the trump administration you like, who is doing something you can approve of, this was the answer, mattis. "i can sleep better at night," claire mccaskill told me, because general mattis is in charge of our troops. that's no longer the case. i don't think the president is link to your hawkish types right now. he's praising in his twitter account rand paul and mike lee, people who are outside the mainstream of the republican party with their isolationist views. the president is tilting towards them. >> it's amazing to see the full-on embrace of rand paul and most republicans on capitol hill say the complete opposite of what rand paul does on these

issues. before we go to a break, former intelligence director james clapper with an ominous prediction for next year in washington. >> we may look back in 2019, longing for the relative calm of 2018, because i think there's going to be a lot more of this. h gronk. i'm gronk! i'm big and awesome, but this guy is little, can it really clean? heck yeah it can! it's concentrated detergent plus stain fighters plus odor flighers that fight for clean. boom! even this entire bottle can't beat tide pods. and now a word from future gronk: ugh... tide pods. if it's clean, it's got to be tide. has been excellent. they really appreciate the military family and it really shows. with all that usaa offers why go with anybody else? we know their rates are good, we know that they're always going to take care of us.

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topping our political radar, we're now 20 minutes from the early close on wall street, and it's been another ugly session for stocks. right now the dow is down close to 500 points. this follows the steep losses we saw last week. the worst week for the index

since the 2008 financial crisis. uncertainty in israel as leaders of the coalition government announce they'll dissolve the parliament and hold elections in april. israeli prime minister benjamin netanyahu faces trouble on multiple fronts. netanyahu faces corruption allegations and israeli police say there's enough evidence to indict him. senator bob casey is still kicking himself for hillary clinton's loss in his state back in 2016. he tells politico he regrets not urging her campaign team to visit non-major cities in pennsylvania. he won last month carrying some of the counties that he says clinton should have seen more of. political sources say it's unlikely casey will enter the presidential fray but could be someone's pick for vp.

more intrigue starring the so-called mystery company that's become part of the mueller investigation. chief justice john roberts last night paused a contempt citation ordering the company to turn over information about its commercial activity until the justices can review responses from the government. next, the nickname is back. president trump and senator bob corker trade jabs once again. tu about the colonial penn program. if you're age 50 to 85 and looking to buy life insurance on a fixed budget, remember the three p's. what are the three p's? the three p's of life insurance on a fixed budget are price, price, and price. a price you can afford, a price that can't increase, and a price that fits your budget. i'm 65 and take medications. what's my price? you can get coverage for $9.95 a month.

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president trump had his own airing of grievances happening on twitter. in the past hour trump has tweeted about the shutdown, border security, saudi arabia, and the wall. his latest tweet, i'm all alone, poor me, in the white house, waiting for the democrats to

come back to make a desperately needed deal on border security. at some point the democrats not wanting to make our deal will cost our country than the border wall we're all talking about. crazy. mentioned in today's tweet storm is outgoing republican senator bob corker. trump's message, don't let the door hit you on the way out. corker wanted to run but his poll numbers tanked when i wouldn't endorse him, the president tweeted. trump goes on to say that without his endorsement, it would game over for corker. the senator fired back, yes, just like mexico is paying for the wall, insinuating trump was just lying, and ending the tweet with the hashtag hashtag, #alertthedaycarestaff. trump gave majority leader mitch mcconnell a shoutout sunday saying, mitch mcconnell just told a group of people and me that he has been in the u.s. senate for 32 years and the last

two have been by far the best and most productive of his career. tax and regulation cuts, va choice, farm bill, criminal justice reform, judgeships and much more. great. it's not entirely clear what meeting this was. there's clearly some factual inaccuracies with that. i do want to point out, he was responding to corker's comments yesterday on the "state of the union." corker said the next three months of this presidency could be integral in determining the future of president trump. >> this next three months is going to be a very important three months for our country. i'm cheering the guys on that are there. but i think these next three months could well determine whether he decides to run again or not. >> i mean, do you guys who cover the white house, do you think that the white house views it this way, the next three months

are that important, or not? >> look, one of the things that's characterized this white house has not been extended planning and looking down the road in any long way. but i do think that there is a sense of dread in the west wing about what potentially is coming on a number of fronts. there's the mueller investigation, and that looks, to the extent we all can know the timeline of it, it looks like that might be wrapping up in the next few months. there's the democrats taking over tin the house which leads o investigations. there's sense the president has reached the end of his rope to the extent that he was self-modulating his actions, if we can call it that, over the last two years, you know, people in the white house think that's now over. so yeah, the next few months, if you combined all of those things, they could be critical. >> then there's the economy, which is, let's be honest, what we're talking about this week and what's gotten the president

so frustrated with his fed chair, his treasury secretary and so on and so forth. he's in a position where he's been able to pursue some of the more controversial policy measures of his administration both because republicans controlled both chambers of congress and because he had the economy on his side. when the markets decline, if there is further economic erosion, people start using the "r" word, it not only changes the balance of power in congress which the democrats are already taking over the house, but it changes the bedrock on which he's built all the rest of his calculations. >> it changes how people speak out again him. i want to bring in something that i spoke about with claire mccaskill, outgoing democratic senator from missouri, last week. she says privately republican senators say things much differently about trump. >> they're keeping their head down. and here's what they're rationalizing in their heads. they'll tell you, if it's just the two of you, the guy's nuts,

you know, he doesn't have a grasp of the issues, he's making brash decisions, he's not listening to the people who know the subject matter. but in public, if they go after him, they know they get a primary, and they know that's tough. they watch what happens to their colleagues who do go after him. this is a completely different republican party. now, i think history will judge some of my colleagues harshly, that they didn't stand up to this president. >> do you think the next congress will be any different in the senate specifically, flake gone, mccain passed away, will there be republicans speaking out against him? >> that's to be seen, especially with incoming utah senator mitt romney. what's important to remember is the senate's political fortunes this cycle really hinged on the president and his popularity. but for the next cycle, people like cory gardner, thom tillis, joni ernst, they'll have to distance themselves from trump politically speaking.

that will determine a lot of what they say and how they act on capitol hill. up next, what was the vibe on capitol hill this year? >> what was the mood like? >> the mood in there is not good.

my colleagues and i spend most of our working hours on capitol hill, chasing members of congress through the hallways to ask them about issues of the

day, brett kavanaugh, the midterms, and the president's twitter account. there's been a lot to ask about in 2018. >> do you know what number cr this is? this has been going on for six months. they've had a one-month cr, they've had a two-week cr. >> do you believe there's a secret society in the fbi trying to take down the president? >> if you were him, getting humiliated day after day. >> i hope he continues in the job because i would hate to replace him. if you want to blow up the senate, try to find someone to replace jeff sessions under these circumstances. >> i'm standing on this hill. if they want to kick me out of the senate, so be it, bring it. >> are you comfortable with the president's taxi on christine blasey ford? >> the president's comments were just plain wrong. >> democrat dies in darkness, my

friend. >> how are you doing? >> about to find out how little i know again today. >> how do you cover the white house and talk about what's coming out of it every single day? >> often republican senators haven't seen the thing president trump hasn't just tweeted about. >> or they say they haven't seen it. >> they feign ignorance quite a lot. there has been so much of an impact on congress. we know a lot of people on capitol hill are among the president's closest advisers. senator lindsey graham went from an enemy to one of his closest advisers. the freedom caucus, in the obama administration were just kind of annoying to house republican leadership, now has the

president's ear. to cover that nexus of the administration and congress has been a really interesting relationship to watch. and the relationship between democrats and the trump administration will be one to watch as well. >> it's interesting, watching how the republicans distance themselves from what trump is saying, they're trying to say, saying versus doing. but saying is doing, the president's words actually matter. how long can they continue separating that as we head into this new congress and this uncertain people for this white house? >> we'll be looking a lot to the senate republicans. in some of those states you still have people close to the president until their primaries are over, and then they need to win a general election, which suggests they don't flip that switch until the middle of 2020. i don't anticipate a huge break from the president on daily issues, no matter how upset they are about mattis, syria, shutdown. right now in two months we'll be on to something else. >> members are really, really weary about the fight and

controversy. we covered the kavanaugh confirmation proceedings. what stuck out to you the most in dealing with watching that unfold in front of your eyes? >> i think just how contentious the nature of this fight was. a lot of senators said afterwards how they felt this particular nomination battle really changed the texture and the fabric of the senate forever. i maybe thought that was hyperbole at the time but you do see how lindsey graham had become a key figure in that fight, and he campaigned against his own sitting senators, which he said he usually hasn't done before. and so that raises the question, if we found ourselves in another confirmation fight in the next two years, what's going to happen in that instance? >> burgess, the members seem like they just totally dislike each other at this point? >> i wouldn't even say that. i don't even know -- i don't even sense that the fabric of the senate has necessarily been

changed as much as people are weary about what's coming next. and, you know, i think bob corker is probably one of the few -- not only is he speaking out but he likes to talk about this. >> more to say in the weeks ahead, of course. the dow is down over 600 points. keep watching as developments continue throughout the day. thanks for joining us on "inside politics." kate bolduan starts right now. hello, everyone, i'm kate bolduan in for brianna today. we start with a big lump of coal for investors and the u.s. economy. markets closing just moments ago. the dow is down another 639 points at this moment. today's tumble comes on the heels of the worst week since the 2008 financial crisis. the president's reaction, pointing the finger at a familiar target of his, the central bank, tweeting today that the only problem that the