ROBERT COSTA: Crisis and confrontations across Washington. President Trump signs a bipartisan spending bill, but not before a shutdown showdown, all as the markets are rattled and the White House faces tough questions over conduct. I’m Robert Costa. We’ll discuss the numbers and the decisions, the fallout and what’s next, tonight on Washington Week.
SENATOR RAND PAUL (R-KY): (From video.) We are in a terrible state as a country. Twenty trillion dollars in debt is bigger than our entire economy.
MR. COSTA: Republican Senator Rand Paul takes a stand against rising government spending.
SEN. PAUL: (From video.) I can’t, in all good honesty and all good faith, just look the other way because my party is now complicit in the deficits.
MR. COSTA: Immigration remains a flashpoint. House Minority Leader Nancy Pelosi gives a marathon eight-hour speech seeking to protect undocumented immigrants known as DREAMers.
HOUSE MINORITY LEADER NANCY PELOSI (D-CA): (From video.) Members of Congress are trustees of the people and of our nation. Why are we here if not to protect the patriotic young people who are determined to contribute and to strengthen America?
MR. COSTA: By Friday, President Trump signed a sweeping $400 billion spending package, expanding federal coffers and with no immigration compromise. We explain what’s inside the two-year deal.
Plus, damage control. The White House chief of staff under scrutiny for his handling of abuse allegations against former top aide Rob Porter. The timeline raises questions about who else was aware of Porter’s past and trouble with his security clearance. The president weighs in, saying he’s very sad about the departure.
PRESIDENT DONALD TRUMP: (From video.) Well, we wish him well. He worked very hard. As you probably know he says he’s innocent, and I think you have to remember that.
MR. COSTA: And a market correction. The Dow dropped more than 1,000 points not once, but twice this week. What’s driving market turmoil?
We’ll get answers from Kayla Tausche of CNBC, Kristen Welker of NBC News, Peter Baker of The New York Times, and Kelsey Snell of NPR.
ANNOUNCER: This is Washington Week. Once again, from Washington, moderator Robert Costa.
MR. COSTA: Good evening. President Trump signed a bipartisan $400 billion budget agreement Friday, ending a brief government shutdown that began at midnight. The measure faced opposition from the right and left. Late Thursday Kentucky Republican Senator Rand Paul tried to block the bill with a procedural move to maintain budget caps, but he was denied. The two-year budget will lift the federal debt limit until March 2019, increase military spending by $165 billion, plus tick up domestic spending by 131 billion (dollars) and add 90 billion (dollars) for disaster relief. Senator Paul wasn’t the only conservative in the House and Senate who considered the package fiscally irresponsible. And House Democrats, their attempts to protect young undocumented immigrants brought to this country as children also failed, just weeks ahead of a March 5th deadline. Peter, when you look at this budget deal, it’s a tick up in spending, a major increase in spending. You have to wonder, is this Republican Party which controls Congress a different Republican Party than it was under President Obama when it comes to being fiscally conservative and trying to maintain those budget caps?
PETER BAKER: Yeah, this is – this is a deal in which everybody decided to solve their partisan differences by spending other people’s money. We’re going to spend money on what you want, we’re spending money on what we want, and it doesn’t matter if it leaves a debt for our kids and our grandkids down the road. And given how much fractious relationship we’ve had in the last year, it may have been the only way to get through it. What was interesting about it was who was on the sideline: President Trump not a player in this particular deal. In fact, he said earlier in the week let’s have a shutdown, I want a shutdown so we can have an immigration deal. Congress, basically both parties said, eh, not going to pay attention to that. We don’t want a shutdown. We want to get through this. So the president basically signed it, but it wasn’t his deal because, in fact, you know, this is a president who said he’s going to restore fiscal sanity to Washington; in fact, he was going to eliminate not just the deficit, but the entire national debt, $20 trillion, in eight years. Now we’re heading the other direction.
MR. COSTA: The question of why the president didn’t get what he wanted, Kelsey, it brings up who really controls Congress. And we hear about the left; they wanted a DACA deal as part of the spending package. We hear on the right they wanted it to be more fiscally responsible. Yet, it’s the middle sometimes, the appropriators, the leadership in Congress that dictates how these things play out.
KELSEY SNELL: And in particular now the middle has a little bit more power because they’re the only people who can seem to come together. And when you’re trying to cobble together 61, 60 votes in the Senate and 218 votes in the House, you’re absolutely not going to be getting that by trying to court the far right or the far left because they’re never going to come together. And that’s actually part of the problem that we’re looking at going forward on immigration, is those are the two loudest voices. On spending, at least, when you put together a big package like the one that just passed, there’s a little bit of something for everybody, and it’s not going to be that way with immigration.
MR. COSTA: The debt limit was extended, Kayla, until 2019. The markets may like that.
KAYLA TAUSCHE: Well, I think that that’s going to give the markets a little bit of pause, especially as the Federal Reserve moves to increase interest rates. The CBO said that this is going to cost $100 billion more in interest alone because that’s expected to happen this year. The word that I keep hearing used to describe this package is an experiment, a fiscal experiment, because in times of a healthy economy, a strong economy, rip-roaring growth, job creation, you don’t traditionally see spending packages like this, a tax plan that increases the deficit by $1-1/2 trillion, a forthcoming infrastructure plan, and then also a bipartisan spending plan to the tune that we saw agreed this week. People don’t really have a historical precedent for how this is going to play out in economic times just like this.
KRISTEN WELKER: Well, what I think is interesting about this, the president is saying, hey, this is a victory because we did increase military spending, but it has infuriated the two bases. If you talk to President Trump’s base, they say there’s no funding for the border wall; when is he going to start funding the border wall? When are we going to deal with that campaign promise? And, as we’ve been talking about, it’s hiked deficits way up. And then, on the left, you have Democrats saying we didn’t deal with the one issue that we wanted to deal with, which was DREAMers. That’s why you had Nancy Pelosi really trying to block this. Now, she wasn’t able to, and I think that there was a sense within Washington that she wasn’t going to be able to ultimately, but still you see the two sides of this and how far apart they are, and it raises a lot of questions about how do they get an immigration deal done by that March 5th deadline. They want to get a deal on DREAMers. They want to get a deal on border security. Are they going to be able to do it?
MR. COSTA: Peter, Kristen brought up military spending. You don’t really have a debate in this Congress about military spending, it goes up $165 billion in this agreement. What’s happened in this country that has changed in the debate where there’s really little debate on how much the military gets?
MR. BAKER: Well, and it’s striking, too, because the president who actually has wanted to retreat a little bit from our over-, really, in his view, -aggressive engagements overseas – he doesn’t want us to send troops back to Afghanistan in large numbers; he did agree to some – you know, a small deployment that the generals asked him to make. We’re not currently in Iraq or Syria in large numbers at this point. So the idea that we’re going to continue to build up in a time where we’re pulling back, to some extent, is striking. But the military has felt constrained by these sequester caps over the last few years. They’ve complained very vigorously, and it’s a unifying force among Republicans and one that Democrats feel on the defensive about. So it’s an easy – it’s an easy pass in that way.
MR. COSTA: Kelsey, this was a to-do list, in a sense, this whole deal. They extended the Children’s Health Insurance Program even more, 131 billion (dollars) for domestic spending, 90 billion (dollars) for disaster relief. A lot of the Texas delegation, even Senator Cruz, got behind that. Red-state Democrats like Jon Tester of Montana get behind the extension of community health centers. There’s a lot in this. What’s most important?
MS. SNELL: I think most important, if you’re a Democrat, is that they locked in the parity. So that’s that thing that you hear them talk about and you say why? Why are you talking about parity? It is the idea that domestic programs are worth spending the same amount on as you’re spending on the military. They were really worried that Republicans were going to get some sort of longer extension of military funding and it would forever change the way that the government funds the domestic programs that most people interact with on a daily basis. I think if you’re a Republican the thing that you got out of this is not having to talk about spending again until after the election. (Laughter.) And that was on a lot of people’s minds. They don’t want to be in charge of having a spending or shutdown fight every couple weeks.
MR. COSTA: So they kicked that down the road, Kayla, but they haven’t addressed immigration. And you’ve been up on Capitol Hill all week. What’s your read on the next steps for a possible DREAMers package? Will the moderates in the Senate take control? Will this be another leadership deal?
MS. TAUSCHE: Well, we’ve heard now a couple different times Senator Jeff Flake say that there is a deal, even though we haven’t seen the contours of that actually get agreed to. But what struck me this week was you heard both Senate Majority Leader Mitch McConnell and House Speaker Paul Ryan say that they would move toward an immigration debate and regular order on immigration but not guaranteeing any outcome. It seemed that they were really hedging their bets because they didn’t want to commit to actually agreeing to a package because they don’t know what the president will support at this time. That’s something that Speaker Ryan said again. And Senate Majority Leader Mitch McConnell doesn’t know exactly where he can get the votes.
MR. COSTA: So can the White House step back, Kristen, and let the leaders – Leader Schumer in the Senate and Leader McConnell hatch another deal, perhaps on immigration?
MS. WELKER: Well, I think that’s the big question. Look, I think that top officials at the White House are going to be deeply engaged – Marc Short, the vice president likely, as well as Chief of Staff John Kelly, although he’s obviously had a very rocky week. We have seen this president take a step back, to some extent, and sort of allow his team to take the lead in trying to get some legislative victories. We saw that during tax reform, for example. He really let his team take the lead there.
Look, this deal that he put out, or this proposal, I should say, would give 2 million DREAMers a pathway to citizenship. That’s something that has earned him the nickname of Amnesty Don for his base. So this is, I think, something that he’s willing to compromise on. He’s willing, I think, to take a couple of steps toward the left to try to get something done. The question is, to what extent is he going to tweet, maybe say something that could roil the very sensitive negotiations that we’re about to watch?
MR. COSTA: So they cut a spending deal, they still got to figure out what they’re going to do on immigration. But as we’ve been talking about, there are other factors that play into all these debates, all of these discussions on Capitol Hill. And one of them is Wall Street and Wall Street volatility. That’s been the watchword this week. The stock market, it took a nose dive twice, dropping more than 1,000 points on Monday and Thursday. Kayla, if the economy’s strong with its fundamentals, according to some analysts, then why is the market so volatile?
MS. TAUSCHE: Well, perhaps the economy is too strong. The first initial trigger of the selloff that we saw over the last week was the strong jobs report, and the idea that wages are increasing. And that gave the market the idea that maybe you’d see a lot of inflation, maybe you would see interest rates go up faster than you previously expected. And that spooked people a little bit. Jay Powell is not even in his first week at the Federal Reserve. He hasn’t made any public statements. There’s really nothing that happened to spook people, except for the fact that they’re starting to figure, OK, the market’s gone up 30 percent since President Trump’s election, corporate earnings are strong. But there has to be a pullback at some point. And what happens here?
What’s interesting is that the president’s enjoyed a safety net of sorts from the stock market that has been able to absorb all the headline risk that has come out of the White House. But we’ve seen fractures. We saw some of the slipups when the Treasury secretary was discussing the dollar, when Canada thought were going to pull out of NAFTA. You saw the market really go into a tailspin when that happened. And so if the market starts to continue showing cracks, the White House is going to need to be more thoughtful and strategic about how it addresses economic policy and how it controls the headlines.
MR. COSTA: Kayla mentioned that Jay Powell at the Fed, he’s rattling the markets. In you piece this week, Peter, you mentioned how in 1987 when Greenspan comes in, he rattles the markets. The new Fed chairman always rattles the markets. But there’s a political angle with all this. Your headline in the Times was “Live by the Dow, Die by the Dow,” as a memo to President Trump.
MR. BAKER: Yeah. Right. No, exactly. Look, this is a president who, unlike his predecessors, touted the rise in the stock market day after day after day. He did it 25 times in January alone. That’s something presidents don’t do normally because, in fact, guess what? What goes up can go down. And if you want to take credit for the good days, you’re going to get blamed for the bad days. Now, the president this week tried to sort of put that aside. He says, look it makes no sense that the stock market went down since everything is good. But that’s the way the markets work. And they don’t – they don’t respond to dictates of a president. So you’ve got to be careful as a president to be too out there. But this is something he’s learning the hard way.
MR. COSTA: Will the White House change its tune on continuing to talk about the stock market all the time?
MS. WELKER: I think we’re starting to see that already. From the podium, you had Sarah Huckabee Sanders say: Look, the fundamentals of this economic are strong. She tried to pivot, put the focus on the fact that you have unemployment coming down and that there are other very strong indicators in the economy. But I think we also saw something striking, which is that President Trump wasn’t tweeting a whole lot about the stock market this week, one way or the other. When you talk to officials on Capitol Hill they say: This is a big problem. He’s really got to pull back. So he’s not just getting it, I think, from top officials who are telling him it’s time to sort of stop weighing in the stock market all of the time. I think he’s getting it from allies on Capitol Hill and outside the White House as well.
MR. COSTA: Kelsey, I like this note in the AP this week: The higher the deficits rise, the more likely it is that interest rates will surge, undercut corporate profits, stock prices, consumer spending, and the overall economy. So what they do on Capitol Hill matters for the economy.
MS. SNELL: It absolutely does. And that’s what conservatives have been saying all week long. We saw Rand Paul saying that at the beginning of the show. It’s also something that House Republicans have been screaming, is that they are worried that they – we’re talking about huge deficits here. They’re worried politically because they don’t want to get primaried by people who are further to the right and will fight them on deficits. But they worry about the – you know, the political outcomes and the economic outcomes of the policies they’ve made.
MS. TAUSCHE: But some of the irony is that Democrats have taken the seat of the new deficit hawks. At a Senate Banking Committee hearing four separate Democrats raised the issue of deficit spending, where money for infrastructure is coming from, and where the deficit will eventually be after these Republican programs. It’s traditional for the minority party to take the opposition for any policy that’s in place, but the irony is that Dems have now become the deficit hawks.
MR. COSTA: A budget fight, the stock market’s going here and there. I mean, it was a big week already. But there was more. More staff turmoil at the White House this week. Staff Secretary Rob Porter resigned after allegations of domestic abuse from two former wives. Porter had worked in the West Wing for more than a year, serving as White House staff secretary. His reputation, it was similar to White House Chief of Staff John Kelly, a smart, steady member of the president’s inner circle. But reports that he physically abused both of his ex-wives led to his resignation.
John Kelly reportedly learned of the allegations against Porter last November, but took no action and did not advise the president. And White House Counsel Don McGahn knew about the allegations of physical and emotional abuse at least a year ago. On Friday, President Trump shared his thoughts on Porter.
PRESIDENT TRUMP: (From video.) He said very strongly yesterday that he’s innocent. So you’ll have to talk to him about that. But we absolutely wish him well. Did a very good job while he was at the White House.
MR. COSTA: You spoke, Kristen, with one of his ex-wives, Jennifer Willoughby. Put a human face on this story.
MS. WELKER: Well, I spoke with Jennifer Willoughby. She has quite a story to tell. She says that her relationship was abusive – mostly emotionally abusive. She does describe an incident in which she was in the shower, she was pulled out very aggressively, she says, by Rob Porter. In another instance, she filed a restraining order against him and during that time he crashed in a window. She was terrified. She called police.
But what I also found very significant about what she said is that she told all of this to the FBI. She shared her story with the FBI, as did Rob Porter’s first wife. And she was very detailed, she says. And when they asked her if she thought Rob Porter could potentially be vulnerable to blackmail her response was maybe, because he had had all of these very volatile relationships. We know that the White House was made aware of this, as you said White House Counsel Don McGahn. And we believe that the chief of staff was also made aware several months ago as well.
Now, one of my colleagues, Kelly O’Donnell, had the chance to actually ask him in person: When did you find out, General Kelly? He said, look, he knew that there was a holdup in terms of Rob Porter getting his full security status, but he didn’t know all of the details until this week.
MR. COSTA: General Kelly, now management questions when it comes to the security clearance process, Peter. Also, credibility questions, how he handled it.
MR. BAKER: Yeah. And this was supposed to a no-nonsense general, right? If there is a problem – if he didn’t get the details, why didn’t he go after the details? And you would think that he might, because Rob Porter’s not just some random aide in the White House. He is or was his right-hand person, one of perhaps five or six most important aides to the president. So it has raised a lot of questions. And it’s raised questions, among others, with President Trump, who’s been sort of on and off about John Kelly now for months, for various reasons. You add that to the DACA comment that he made this week, about how some immigrants were too lazy to apply for protected status under the DACA program, and it creates an impression of a chief of staff who’s kind of on bubble here.
Now, the president has talked to some of his advisors or some of his associates about whether maybe Mick Mulvaney might be a chief of staff. We don’t know he would follow through on that. He has a way of kind of playing personnel off each other. But it’s certainly not a good week for John Kelly.
MR. COSTA: Are you hearing anything on the Hill about a change in chief of staff, or is there an appetite in the Republican Party to get rid of Kelly?
MS. TAUSCHE: No, but from headhunters and from people who are considering joining the administration, if you’re considering becoming part of the White House staff, you want to know who the chief of staff will be, who you’ll be reporting to. So especially now that we are just past the one-year mark of the Trump administration, there has been turnover. There are a lot of people who are either returning to the private sector or think tanks, and the White House is going to have to do a big hiring surge yet again. And having situations like this that continue to go unresolved are not helpful.
MR. COSTA: There’s another situation tonight, Kelsey. We had David Sorenson, a speechwriter, just before we went to air, a speechwriter for the White House, he resigned amid allegations from I believe it’s a former wife – his former wife. These are everywhere, these stories.
MS. SNELL: Yeah. The thing that I think is important to think about with the Hill, though, is that they want to see more of the stability. All of this instability makes them feel like they can’t trust this White House. They trust Kelly. They have relationships with him. And they are – it makes it so much harder to strike a deal. Even if Kelly is going rogue on some things or is upsetting the apple cart, they would rather work with somebody they know, understand, and trust than be put in a volatile situation where they don’t know what the president’s going to do and they don’t know who the chief of staff is going to be.
MS. WELKER: What I found striking about this week is that you had the deputy press secretary, Raj Shah, from the podium acknowledging that this situation had been mishandled. John Kelly put out a statement when the first news reports came out saying that he had absolute faith in Rob Porter, and then the very next day essentially walking that back, and so the president was very frustrated by the way that this was handled. And so you have publicly and privately these frustrations boiling over, and I have to say being at the White House this week felt like one of the most volatile weeks because of this Rob Porter upheaval since the very early days when people were leaving. You know, a lot of Fridays we had resignations and ousters. It felt like that this week, very tense at the White House.
MR. COSTA: And there is – there is something to that. I mean, Rob Porter was not just another aide. He was someone who controlled the paper flow for the president of the United States; clean-cut; Rhodes scholar; close with Jared Kushner, the senior advisor to the president; close with General Kelly. His removal, it’s not just an embarrassment for the White House, it’s not just a troubling situation all around, but he was part of that nucleus that runs this White House.
MR. BAKER: Yeah, there’s the moral question and then the process question, and then there’s the who you get to work for you question which we were just talking about. I mean, the truth is he was given a benefit of the doubt in part because he seemed very professional, he seemed very reliable, very competent and mature in a White House that is kind of dysfunctional. So, you know, John Kelly relied on him and obviously was willing to overlook other things because he did need him. He’s not the only one leaving. As you mentioned, David Sorsenson. We also got before air Rachel Brand, the number-three person at the Justice Department, just resigned today. She would be the person who would step in if Rod Rosenstein, the deputy attorney general, were somehow fired, which is something we’ve obviously spent a lot of time wondering about in the last few weeks. So another big blow to creating a coherent team that can move forward on all these big priorities.
MR. COSTA: Well, final thought. Don McGahn, the White House counsel, what’s his status at this point with all the talk about the timeline?
MS. WELKER: Based on my conversation with sources inside and outside the White House, the president’s very frustrated with his handling of this situation. He was told about this a year ago, and so why wasn’t more done? Why was Rob Porter allowed to serve in the White House without full security clearance that close to the president? And I’m told that the president’s frustrated that he wasn’t alerted about this earlier, and so a lot of that frustration being directed at Don McGahn. Will he go? There’s a big question mark over that. This is a president who has mused about a number of different top officials leaving his administration, so there’s no indication that that’s imminent, but certainly the president feels as though he mishandled this.
MR. COSTA: Can we expect congressional hearings on this matter?
MS. SNELL: Republicans have been hesitant to engage in this in any way. They want to stay as far away from the chaos in the White House as they can, though Democrats would be very happy to make a public show of asking for hearings, particularly about the process of getting security clearances and the role of the FBI.
MR. COSTA: Thanks, everybody. Great conversation. Appreciate you being here.
And our conversation will always, as ever, continue online on the Washington Week Extra. We will discuss a late-breaking story, as Peter mentioned, that sudden resignation of the number-three official at the Justice Department; and how North Korea is handling the Olympics, which opened today. Remember, if you miss the show or the Extra, you can always watch it online later tonight and all weekend long at PBS.org/WashingtonWeek.
I’m Robert Costa. Enjoy your weekend.