President Trump defends decision to withdraw US troops from Syria, signals support for US mission in Iraq

This is a rush transcript from "Special Report," December 26, 2018. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

PRESIDENT DONALD TRUMP:  We're discussing strategy, we're discussing lots of things, including even nearby Syria.  It's a place that I've been talking about for many years.  Many, many years, before it started, I was talking about it as a civilian.  Many of you know what my feelings were, and wanted to come and see Iraq.  I wanted to come and pay my respects most importantly to the great soldiers, great troopers that we have here.

(END VIDEO CLIP)

BRET BAIER, HOST:  President Trump and the first lady landing in Iraq, and the news came via, as many things in the administration do, via tweet.  Sarah Sanders tweeting out "President Trump and the First Lady traveling to Iraq late on Christmas night to visit with our troops and senior military leadership to thank them for their service, their success, and their sacrifice, and to wish them a merry Christmas."  A lot of pictures of them on the ground in Iraq.

This of course as many news organizations went with this story, NBC, "Trump becomes first president since 2002 not to visit troops at Christmas time."  
"Newsweek," "Trump is first president in 15 years to not visit troops during Christmas period."  "Daily Beast," a similar headline, this coming out as Air Force One was landing at Al Asad Airbase in Iraq.

So let's start there with our panel, Marc Thiessen, he's a fellow at the American Enterprise Institute, Karen Tumulty, opinion writer for the "Washington Post," and Tom Bevan, Real Clear Politics co-founder and president.  Marc, you know the importance of presidents visiting troops in the field in this context, especially after all that has happened after the Syria announcement.  What about this day?

MARC THIESSEN, AMERICAN ENTERPRISE INSTITUTE:  It's a great day.  All credit to the president for making the trip.  All credit to him for taking the first lady, which is a historic first, and I'm sure our troops really appreciated having her along as well and getting a chance to meet her.

And it's always -- this is the president's first trip to a combat zone since he took office, and it's really important to do that, because you get a chance -- President Bush always said I need the advice, and I kind of deferred to my commanders on the ground.  Now he had a chance to sit down today with the commanders on the ground, and what I'm sure -- and I hope he listened to them, because what I'm sure those commanders on the ground told him that ISIS is not defeated.  It's true the president is right when he's says we have knocked the hell out of them, but they are not defeated.  And he had to knock the hell out of them because of the precipitous withdrawal that his predecessor, Barack Obama, made.  They had about 700 adherents when Barack Obama pulled out, and they turned into tens of thousands and took over a territory the size of Ohio in Syria and Iraq.

Right now, according to our military, they have about 30,000 fighters.  
They have lost their physical caliphate, and President Trump deserves great credit for removing their physical caliphate.  But what they've done is they've reverted into a classic insurgency.  And according to our military ISIS is as powerful today as they were before the surge in 2007.  So they are not defeated yet, and we have a lot of work to do before they are.

BAIER:  Karen?

KAREN TUMULTY, OPINION WRITER, WASHINGTON POST:  I think it was a great thing that he went, and I'm sure the troops very much appreciated it.  And certainly, after Christmas Eve with more than a dozen tweets, it was interesting.  He was relatively disciplined for Donald Trump.  I think the only thing that really marred it was when he kind of went into campaign rally mode at one point where he brought in his fights with the Democrats and those sorts of things.  Those are really not sort of the kind of rhetoric that we are used to seeing out of a president in this kind of setting, this sort of partisan sparring, taking it past our shores.

BAIER:  He also said that he is not pulling U.S. troops out of Iraq, which I'm sure is a welcome news for the Iraqi prime minister, who is still dealing with issues in his country.  About that Iraq commitment, take a listen to two former officials.

(BEGIN VIDEO CLIP)

MICHAEL ALLEN, BEACON GLOBAL STRATEGIES:  I think the president is trying to communicate that he is on top of the national security decisions that he's been faulted for recently, certainly for the Syria decision.  And it's good to see that he is also on top of Iraq.

DANIEL HOFFMAN, FORMER CIA STATION CHIEF:  I think the fact the president has demonstrated a commitment to Iraq is really important because we still have a lot of work to do there, both on the domestic political scene as well as ridding Iraq of those terrorists which are seeking to do them and us harm.

(END VIDEO CLIP)

BAIER:  And Tom, the security was extremely tight.  They had some kind of thought that there was a breach heading over, that they were being tracked, Air Force One, as it landed in Al Asad Airbase, and I think that might have tightened things even further.  They did not meet one-on-one with the Iraqi prime minister on the ground.  There was a phone call.  But just being there and saying that the U.S. troops were staying is probably a relief to the Iraqis.

TOM BEVAN, REAL CLEAR POLITICS CO-FOUNDER:  I'm sure it is.  And also I think it shows Trump -- look, to Marc's point, there has been some discussion about whether this is a wise move or not.  Certainly, the pullout of troops of Syria, it certainly was something that Trump talked about a lot, campaigned on, wanted to do, and he is finally doing it.  But I think there's also reassurance that Trump's not going to be shy if ISIS rears its head, using the troops and Iraq as a base to go back and knock the heck out of them, as Trump would say.  So I think he absolutely is going to be committed to the fight against ISIS.

BAIER:  Let's turn now to the shutdown and where we are in this standoff.  
Here is the president on Tuesday and also his top economic advisors.

(BEGIN VIDEO CLIP)

PRESIDENT DONALD TRUMP:  I can't tell you when the government is going to be opened.  I can tell you it's not going to be open until we have a wall, a fence, whatever they'd like to call it.

I think they understand what's happening.  They want border security.  The people of this country want border security.  It's not a question of me.  
I'd rather not be doing shutdowns.

KEVIN HASSETT, COUNCIL OF ECONOMIC ADVISERS:  They might miss a pay period because the government shutdown.  But in the end, even if they aren't working, then Congress has decided to pay people for the whole time.  And so in the end it's really just a sort of short term problem, not a long- term problem for government workers.

(END VIDEO CLIP)

BAIER:  Marc, there seems to be backbone here on the president's part, and the word from Capitol Hill is that he is not going to back down unless there is significant movement on the wall or border security or a fence or whatever you want to call it.

THIESSEN:  I agree.  Look, I think actually time is on the president's side in this shutdown fight, and here's why.  Nancy Pelosi today made some snarky comment about how his concrete wall has become a beaded wall.  
That's a sign that the Democrats are not negotiating and they are not taking it seriously.

The president on the other hand -- Mick Mulvaney was on "FOX News Sunday," 
and he said they've made a counter offer to the Democrats for a lower price tag.  FOX News has been reporting that it's $2.1 billion.  So the president is trying to compromise and come to an agreement, and the Democrats are making snarky jokes and thinking they have him on the run and not engaging.

For the short term, he owns the shutdown because he claimed the mantle of the shutdown.  He said I want to shut down the government over border security.  But over time if he seems to be the one -- Americans want compromise on this.  If he's the one who's compromising and the Democrats are demanding absolute surrender, then it's going to backfire on them because that's not what the American people want.  And over time as he keeps making -- if he can be responsible and keep making concrete offers that are concessions to the Democrats, then over time they will start to on the mantle of the shutdown.  So I think he's right to stick to his guns and be reasonable and make reasonable offers.

BAIER:  Karen, we put up the pie chart often about this particular shutdown and what has been funded and what is still really in doubt here, whether it gets a deal, and that is 25 percent.  It affects the not yet enacted bills in the spending bills.  That's still a lot of people potentially who are affected, as it could last into the new year.

TUMULTY:  And this idea that this is just a short-term impact and that they will all get their backpay, the fact is for these government workers, their mortgage payments still comes due.  Their credit card payments still come due.  So a lot of these people are living paycheck to paycheck.

And also, there are a lot of federal workers, people who work for the government, who are contractors, who clean the buildings, who really are paid on an hourly basis, and those people will not be getting backpay.  So, for the people who are affected, and yes, it is a small piece of that pie chart, but to say that these are temporary effect and that it's like no big deal as long as you get your backpay is simply not true for people who do live paycheck to paycheck.

BAIER:  Right.  And to that point, what if the shutdown continues into the new year?  This is an official talking about that, Kevin Hassett.

(BEGIN VIDEO CLIP)

KEVIN HASSETT, COUNCIL OF ECONOMIC ADVISERS:  -- lasts longer than December, then all that backpay that people would get for the weeks in December would come in January, and so that would have a slight negative effect on GDP in the fourth quarter and a positive effect on GDP in the first quarter.

(END VIDEO CLIP)

BAIER:  Tom, I guess I just don't see -- it's kind of rolling off of them.  
And if that's the case then eventually this negotiation is going to go the other way.

BEVAN:  We'll see how it plays out.  Right now, this is sort of like the first quarter of this thing.  People are on holiday.  They're going to be on holiday through the first of the year.  But after the first of the year, pressure is going to get ratcheted up.  Democrats are going to come back.  
Nancy Pelosi is going to put a bill in the House on January 3rd to reopen the government, and then they're going to put the pressure on Trump. Why won't you sign this, why won't you do this?

There won't be any border funding in that, and that's when the fight is really going to heat up, and we're going to see who has got the leverage and where the pressure points are, and whether Marc's scenario plays out whether Trump can flip this on them and say, listen, I'm negotiating in good faith.  You guys are not negotiating at all, so now it's your shutdown.  But it is going to get serious in about a week.

BAIER:  All right, panel, stand by.  Next up, the rollercoaster ride on Wall Street today, a huge day would have led any newscast except for the 
trip to Iraq.  Where is the U.S. economy headed?  Next.    

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

TRUMP:  I have great confidence in our companies.  We have companies, the greatest in the world, and they are doing really well.  They have record kinds of numbers.  So I think it's a tremendous opportunity to buy, really a great opportunity to buy.

KEVIN HASSETT, COUNCIL OF ECONOMIC ADVISERS:  The fundamentals remain extremely sound.  Christmas sales are through the roof.  GDP in the fourth quarter is looking like it's going to be very close if not above three again.  And so I think that the momentum that we saw this year is carrying forward to next year.

(END VIDEO CLIP)

BAIER:  The close -- that was good, a recovery for the American Red Cross to be ringing the bell on Wall Street today because the recovery happened, and the Dow up more than 1,000 points, its biggest day in a long time.  If you look at the intraday trading, it took a dip at the beginning, but then just soared for the rest of the day.

And if you look at the year to date, you can see how it has been a rollercoaster ride really since about six months ago.  But in reality, some of the worst numbers on Christmas Eve we've ever seen.  We are back with our panel.  The fundamentals of the U.S. economy, Karen, that, I guess, is really what the White House is focused on, less so about the market up and downs.

TUMULTY:  That's right.  And the fundamentals are -- a lot of analysts think there will be a weakening in the economy in part.  Just cyclical in part because interest rates are going up in part as a result of the trade war and the tariffs.  So there is in fact likely to be some sort of softening of the economy over the next few months, again, partly cyclical.

And what really kind of drives the market into these rollercoasters is the sense that after Mnuchin's call to the bankers over the weekend, this sense that the administration sort of is putting matches to gasoline sometimes on this, at least in in the very short term.

BAIER:  There are a lot of positives just going through the stats, Marc.  
And if you look at, for example, holiday sales, November 1st to December 24th, up 5.1 percent from 2017, $850 billion, strongest growth in the last six years.  Online sales up 19.1 percent from the previous year.  But there is this volatility.

THIESSEN:  We are living in volatile political times, so it's not surprising that there is volatility in the market to match it.  It looked like the traders were getting a good after Christmas sale today, buying a lot of the stocks that were at bargain, bargain prices after Christmas and after the sell-off on Christmas Eve.

But Kevin Hassett is right, the fundamentals of the economy are strong.

And I think that's why President Trump feels that he can do things like take on China on trade, because, look, a lot of people may disagree about the wisdom of starting a trade war with your allies like Canada and the European Union, but I don't think there's a serious person out there who doesn't believe that China is a trade predator, that they are stealing our intellectual property, that they are forcing American companies operating in China to hand over the propriety technology as a cost of doing business, that they're putting illegal subsidies into dozens of sectors of the economy to make it impossible for American companies to compete.

And Trump understands that he's not going to be able to get them to stop doing that by filing a complaint with the WTO.  So he's using the threat of tariffs in order to get to the Chinese to the table and to cut a deal.  And that causes volatility in the markets.  That makes people unsettled, but he feels that because the American economy is so strong and the Chinese economy is slowing down, that he has the reserves in order to survive a trade war whereas Beijing doesn't really have that.  So he's trying to make some fundamental changes in our trading relationship with Beijing that most people agree need to be made even if they disagree with his techniques.

And this is the only way -- he understands this is the only way he's going to do it.

BAIER:  Tom, the president has put a lot of the problems on the Fed decision to raise interest rates.  He's been very vocal about that, much more vocal about the Fed ever than any other president has really been.  
There were stories that Steven Mnuchin's job is in danger, that the Fed somehow could get changed out, Jerome Powell.  Kevin Hassett was asked about that today.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE:  You made it very clear that Secretary Mnuchin's job is safe.  Is the Fed chairman's job safe?

HASSETT:  Yes, of course, 100 percent, yes.

UNIDENTIFIED MALE:  One-hundred percent the Fed chairman's job is not in jeopardy by this president?

HASSETT:  Absolutely, that's correct.

(END VIDEO CLIP)

BAIER:  It doesn't seem like the market is that worked up about the federal government shutdown.  It doesn't seem like that, at least according if you listen to experts.  But the Fed action, what the president does and says about it, seems like it adds to volatility perhaps.  Is that something, Tom?

BEVAN:  Sure.  And 100 percent, this is Kevin Hassett trying to reassure folks because that was part of what contributed I think to the market jitters just a couple of days ago.

And look, Trump was warned early on not to peg the market, not to tout the market as being success of his policies because markets go up and down, and you live by the sword, you die by the sword, and to really focus on the fundamentals, which is what the administration is trying to do now.  But Trump really can't help himself.  He sees the market go up and he tweets how great it is, markets have never been higher, all that.

But it's the political uncertainty.  The market hates uncertainty, and that's what we've got going right now.  Not so much the shutdown, to your point, Bret, as it is about interest rates, the Fed chair, Steven Mnuchin, all the turnover in the administration, and the fact also that the tax cuts are done and it doesn't look like they're going to have any more -- nothing to juice the economy in 2019.

BAIER:  We shall see.  We are just beginning, almost to the end of the year.  Panel, thank you very much.

When we come back, an officer pulling over people to put a smile on their 
faces.

(COMMERCIAL BREAK)

BAIER:  Finally tonight, an Arizona police officer spent his Christmas pulling people over, but not for the reasons you'd expect.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE:  How are you doing officer?

UNIDENTIFIED MALE:  Good, how are you?  You're not in trouble.  Just want to tell you, merry Christmas.

(END VIDEO CLIP)

BAIER:  Goodyear Deputy Chief of Police Justin Hughes patrolled the town with a car full of gifts for people he chose at random.  He handed out around 50 stuffed animals, $350 in gift cards, and $150 in cash.  Officer Hughes has been doing this for nine years, and each year he tries to top himself.  So that's a great thing, getting pulled over by Officer Hughes there.

Thanks for inviting us into your home tonight.  That's it for this "Special Report," fair, balanced, and unafraid.

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