Is battle over border security and the partial government shutdown reaching a tipping point?

This is a rush transcript from "Special Report," January 9, 2019. This copy may not be in its final form and may be updated.

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SEN. JOHN KENNEDY, R-LA.: We've got four options here right now, though we are working on some others. Number one, President Trump gives in.

PRESIDENT DONALD TRUMP: If I did something that was polish, like gave up on border security, the first ones that would hit me are my senators, they would be angry at me.

KENNEDY: Number two, Speaker Pelosi gives in.

REP. NANCY PELOSI, D-CALIF., HOUSE MINORITY LEADER: We have a better idea of how to keep our country safe, and it isn't a wall.

KENNEDY: Number three, the government continues to be shut down.

UNIDENTIFIED MALE: This is an emergency. It is time to reopen the government.

KENNEDY: Or number four, the president invokes the national emergencies act.

TRUMP: I have the absolute right to do a national emergency if I want.

(END VIDEO CLIP)

BAIER: Well, the partial government shutdown continues, three and half weeks. Friday really, as we have been talking about, is the big day with the paychecks either going out or not going out for federal workers, again, 25 percent of the federal government, not all of it. The president tweeting about this meeting today with congressional leaders, "Just left a meeting with Chuck and Nancy, a total waste of time. I asked what is going to happen in 30 days if I quickly opened things up. Are you going to improve border security, which includes a wall or steel barrier? Nancy said, no. I said bye-bye, nothing else works!" Here is a reaction to that meeting.

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MIKE PENCE, VICE PRESIDENT: He asked Speaker Pelosi that if he opened things up quickly, if he reopened the government quickly, would she would be willing to agree to funding for a wall or a barrier on the southern border? And when she said no, the president said goodbye.

CHUCK SCHUMER, D-N.Y., SENATE MINORITY LEADER: Again, we saw a temper tantrum. He sort of slammed the table.

PENCE: The president walked into the room and passed out candy. I don't recall him ever raising his voice or slamming his hand.

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BAIER: OK, two different perspectives of that meeting.

Let's bring in our panel, Matthew Continetti, editor in chief of the "Washington Free Beacon," A.B. Stoddard, associate editor at Real Clear Politics, and "Washington Post" columnist Marc Thiessen. Marc, going in here, a lot of people in Washington said eventually the onus is going to be on the president, there's going to be pressure building when you see all these federal workers not getting a check. Again, they have yet to miss a check until Friday.

Is there a tipping point the other way where people say, wait a second, a lot of these Democrats people have voted for a lot of border security and passed bills, understanding that they are part of comprehensive deals, and they are not giving anything on the border security issue. Does the onus go the other way?

MARC THIESSEN, AMERICAN ENTERPRISE INSTITUTE: I think it definitely does, and relatively soon. If you look at the speeches last night, Donald Trump used a word in the speech, he said "compromise." The Democrats, if you look at Chuck Schumer and Nancy Pelosi's speeches, the word "compromise" did not reach in. So I'd tell Senator Kennedy there's a fifth option, which is compromise. We are now about --

BAIER: By the way, look at this image. This is from last night and these two speeches. If this is not the start of "Saturday Night Live," I don't know what will be.

(LAUGHTER)

BAIER: Clearly, it seems well positioned for the open of "SNL."

THIESSEN: That's the state of our country today. We are about to hit on Saturday, assuming nothing miraculous happens in the next few days, the longest government shutdown in American history. It's already reached another historic milestone, which is the stupidest government shutdown in American history, because we have a $4.4 trillion federal budget, and we are having a fight right now about the difference between $1.3 billion that the Democrats have a approved for a wall, and $5.7 billion that President Trump is demanding, which 0.0998 percent of the federal budget.

And on top of that, as you point out, for a while that the Democrats have already supported before he came into office. In 2013, Chuck Schumer, who was a member of the gang of eight, Dick Durbin, who was also a member of the gang of eight, and Nancy Pelosi, who supported it in the House, supported the gang of eight built, which not only funded 700 miles of border fence, it said that no illegal immigrants could get the path to citizenship until the wall was completed. That was five years ago. Now all of a sudden, the wall is in immorality?

The Democrats have leverage here. What's amazing here is that they should be using this to get Trump to agree to a whole bunch of things. And they are giving up their effort unilaterally over nothing. And so eventually, as you said, they will own it if they don't compromise.

BAIER: And is a Trump derangement syndrome part of that? It's interesting to see.

A.B., four stand-alone appropriation bills will be voted on and likely passed, and that his Financial Services, Transportation, Housing and Urban Development, Agriculture and Rural Development, Department of Interior and related agencies. The OMB has already issued this veto threat, saying "Moving these four bills without a broader agreement to address the border crisis is unacceptable. If these bills are presented to the president, his advisors will recommend that he vetoes these bills." Where does this stop?

A.B. STODDARD, ASSOCIATE EDITOR, REAL CLEAR POLITICS: I, too, was surprised that Senator Kennedy did not present the possibility of a compromise, because the speeches -- I'm interested in what Marc found in the fact that the word "compromise" was only used by the president, but the speeches are done. No one remembers them. They remember the candy being passed out at the meeting today, and two completely separate versions of what happened at the meeting in the Situation Room.

The more interesting meeting today took place in Senator Lindsey Graham's office where Jared Kushner, the president's son-in-law, who is now dealing with Democrats on a regular basis because he helped pass criminal justice reform, is talking with other Republican senators about the possibility of some kind of DACA dangle. It is not legalization for the Dreamers. It would be work permits in exchange for some kind of wall money.

This is the start of a place where compromise could happen. I agree with Marc and you. I think the Democrats at some point have to look like they are asking for something in this deal instead of just resisting what has been on demand on the president's part all along. And if they don't, they are complicit in dragging this out. And it should be something that bears political costs on the president. The wall will bear political cost on them, and anything that the president's rightwing base believes is amnesty, as they did with this last DACA offer, will bring a political cost to him. That is the way out of the shutdown. Both sides have to win and they both have to hurt.

BAIER: And Lindsey Graham, I think, is cobbling together things and bills to move forward that Democrats have brought forward before in order to say, hey, listen, you guys brought this forward, let's put this forward as part of the deal. Matthew, it feels like Democrats want the paycheck to be missed. Even though they say they wanted to be open. It feels like they want the political pain to be realized before negotiating.

MATTHEW CONTINETTI, EDITOR IN CHIEF, "WASHINGTON FREE BEACON": I noticed something interesting, just in the hours since the speeches, President Trump and the Republicans continuing to talk about border security. Pelosi and Schumer, though, now shifting focus to the government workers, because maybe they are not on a solid political ground if it is them being intransigent over a fence or wall that they have voted for in the past.

So you're right, there may be slightly, cynically hoping to miss that first paycheck. I wonder, though, if it gets to a second paycheck, we already see people beginning to blame the Democrats, or assign them some responsibility for the shutdown. More people assign President Trump responsibility, but that number assigning the Democrats responsibility is rising. That will continue to rise as the shutdown goes on.

And I also have to wonder, here's Nancy Pelosi's restoration as speaker of the House, and she is going to spend, what, her first month dealing with this and not all of that liberal wish list that she had wanted to pass legislation on and shift the debate in terms of the liberal agenda? So I continue to believe the longer this drags on the more leverage President Trump has.

BAIER: Over/under one week, resolved or not?

CONTINETTI: Over.

STODDARD: I hope it's a week. I hope it's a week. That's possible.

THIESSEN: It won't get resolved in a week.

BAIER: There you go. Next up, state and local officials push their jurisdictions to the far left. We'll explain.

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SEN. BERNIE SANDERS, I-VT.: Conservatives, progressives understand there's something wrong. We have a dysfunctional health care system, that we should have health care for all.

GOV. GAVIN NEWSOM, D-CALIF.: We will never waver in our pursuit of guaranteed health care for all Californians.

GOV. JAY INSLEE, D-WASH.: We are proposing to the state legislature that we have a public option that is available throughout the state of Washington so that we can increase the ability to move forward on the road to universal health care.

MAYOR BILL DE BLASIO, D-NEW YORK CITY: From this moment on in New York City, everyone is guaranteed the right to health care. Everyone.

(APPLAUSE)

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BAIER: The progressive side of the Democratic Party is clearly the most energized, and in state and local officials, it is going left as well. As you take a look around the country, you just heard some of the mayors, governors there, New York City, paid leave, paid vacation, guaranteed health care for all New Yorkers, including 300,000 illegal immigrants. California, health care benefits to illegal immigrants in the state. And in Washington, the first step towards universal health care, also $1.1 billion to help save critically endangered orcas.

As you take a look at the latest Gallup poll, you look at where people are ideologically, and since 1992, the percentage of Americans identifying as a liberal risen from 17 percent then to 26 percent today, mostly from shrieking moderates, went down to 35 percent. Conservatives consistently between 36 percent and 40 percent, now dipping 35 percent in 2017 and 2018, as you take a look at the country, according to Gallup.

We are back with the panel. Matthew, when you look at this and see this, what do you see?

CONTINETTI: I see blue states that are turning indigo or ultraviolet, and they are doing so because they are in a paradoxical situation. The Trump economy is giving them a gusher of tax revenues. And so Jerry Brown, the progressive governor of California, hands the gavel over to Gavin Newsom with many billions and rainy day funds that Newsom now wants to spend. It's the same with de Blasio. Economies are doing very well, and so they get these very ambitious spending proposals which tend to run into trouble as soon as the recession hits or the tax revenues begin to decline.

BAIER: If you're a Republican and you're looking at these numbers and this kind of map, aren't you thinking, licking your chops for 2020, saying I can make a case against big spending liberals?

STODDARD: Matthew is right in the states, but at the federal level, they would just like to use debt spending to pay for pie-in-the-sky proposals. They're making it very clear.

BAIER: They are not exactly cutting back --

STODDARD: It's rollback the tax cut, cut back defense spending, and right into the deficit and debt. And so that is very popular, and many people come from very gerrymandered districts where every single person in their district wants to spend their way in the debt crisis you were talking about with Tom that is coming and that neither party is addressing.

And that is a real problem, when I see that Gallup polling, and I know that Gallup's recent findings show 42 percent of independents, we are actually moving away from the two parties as they become more extreme. More of us are independents, 30 percent Democrat, 26 percent Republican. On immigration, legalization is no longer tolerable on the Republican side, as on the Democratic side border fencing is no longer tolerable, so both parties are moving to the extremes.

I think that this is, as I said, really about the fact that we are gerrymandered to the point where we can't solve problems together. We have parties that are shrinking tents, they are not big enough. And that creates this gridlock where we can't get to our biggest problem which is the coming debt crisis.

And all of these discussions on the Democratic side about this kind of Medicare for all or Medicare for everybody, or I want this public option, none of it matters. It can't pass, it wouldn't if Hillary was president. But I do think the one thing is there it a bit of a liability for President Trump in 2020 on health care. He didn't solve it. It's a huge issue in the midterm elections. So if they can stick on that topic without talking about the price of giving everybody everything, I think it's --

BAIER: When he talks about it, he says he tried, and there was a vote in the Senate that didn't go his way. The second Gallup chart is the Democrats' views since 1994, and the percentage of Democrats identifying as liberal averaged 51 percent, the first time a majority of Democrats have decided liberal is where they stand.

THIESSEN: So what I think we are seeing here, it's a double-edged sword that affects both parties, because there is a fundamental realignment taking place in the political ecosystem. In the 2016 election, the working-class voters, many millions of them who had voted for Obama twice, switched to Donald Trump, and they stayed loyal in the 2018 midterms to Donald Trump. So the Republican Party is becoming the party of the working class.

The Democratic Party which lost those poor, working-class struggling voters to the Republicans in the 2018 midterms, they won the suburbs. Almost all of the seats that switched in the 2018 midterms were suburban districts, though the working the class stayed loyal. So what is happening is the Republican Party is becoming the party of the working class and the Democratic Party is becoming the party of the suburban and urban liberal elites. And so by definition they are going to become more liberal and the conservatives will be more conservative.

BAIER: It is shifting, and we will talk about it a lot. Panel, thank you.

When we come back, faking out drivers who may be going too fast.

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BAIER: Finally tonight, it is Law Enforcement Appreciation Day. Thank you all you law enforcement folks out there. Here is a look at an unusual way to deal with speeders in Texas, which residents there may or may not appreciate. Williamson County sheriff had a picture of a traffic deputy made into a life-sized cutout holding a radar begun. Convincing decoy in areas such as school zones. Apparently, drivers are slowing down, and now they may have more of these. So watch out for that.

That's it for the "Special Report." Fair, balanced, and unafraid. I mean the good thing, Martha, is you don't get a ticket, it's just a cutout.

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