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THE SITUATION ROOM

Trump Pushes For "Prorated Down Payment" On Wall Funding As Lawmakers Discuss Bipartisan Plan To End Shutdown; White House Preparing A Draft National Emergency Order, Has Identified $7 Billion For Wall; Interview with Rep. Ted Lieu (D-CA); U.S. Defies Order To Pull Diplomats From Venezuela; Dueling Bills to Reopen Government Defeated in Senate; White House: Temporary Deal on Shutdown Must Include 'Large Down Payment on Wall'. Aired 5-6p ET

Aired January 24, 2019 - 17:00   ET

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


JAKE TAPPER, CNN ANCHOR: -- hall with Democratic presidential candidate Kamala Harris of California. It will be on at 10 p.m. Eastern, 7 p.m. Pacific on Monday.

[17:00:09] You can follow me on Facebook and Twitter, @JakeTapper. You can tweet the show, @TheLeadCNN. Our coverage on CNN continues right now. Thanks for watching.

WOLF BLITZER, CNN ANCHOR: Happening now, breaking news. Ready to deal? Two competing bills to end the government shutdown are shot down in the Senate, as lawmakers huddle, looking for a bipartisan way forward. The White House is insisting on a down payment for a wall. Is that a deal breaker?

Forced to testify. The Senate Intelligence Committee orders Michael Cohen to testify just a day after Donald Trump's former fixer puts off an appearance before a House panel, claiming threats to his family by the president. Will the public finally hear what Cohen has to say?

Blissfully oblivious. Multi-millionaire Commerce Secretary Wilbur Ross downplays the hardships for unpaid federal workers, saying they should just go out and take out -- take out a loan, while President Trump's daughter-in-law dismisses their difficulties as good for the country.

And tunnel to freedom. New testimony in the high-profile trial of the notorious drug lord El Chapo. Was his prison escape through a mile- long tunnel aided by his beauty queen wife?

I'm Wolf Blitzer. You're in THE SITUATION ROOM.

ANNOUNCER: This is CNN breaking news.

BLITZER: Breaking news, two competing proposals to reopen the government are voted down in the Senate with Republicans and Democrats deadlocked over how to end the longest shutdown in U.S. history. That comes after President Trump backed down in his State of the Union showdown with the speaker, Nancy Pelosi, but senators are now looking for a bipartisan way forward as the White House says the president would consider a deal with a, quote, "large down payment on a wall."

Also tonight, President Trump's former lawyer, Michael Cohen, has been subpoenaed by the Senate Intelligence Committee a day after he postponed testimony before a House panel, citing threats to his family from President Trump and his current lawyer, Rudy Giuliani. House committee chairmen say they may also order Cohen to appear.

I'll speak with Congressman Ted Lieu of the Judiciary Committee. And our correspondents and analysts are standing by with full coverage.

Let's begin with the failed efforts to end the government shutdown. Two competing bills were both voted down in the Senate, but there are now some urgent bipartisan efforts to try to forge a compromise. Will the White House go along?

Let's go to our White House correspondent, Kaitlan Collins. She's standing by. But first, our congressional correspondent, Phil Mattingly, is up on Capitol Hill. What is the very latest, Phil?

PHIL MATTINGLY, CNN CONGRESSIONAL CORRESPONDENT: Yes, Wolf, the failure of those two proposals has sparked a flurry of negotiations and talks on Capitol Hill.

A group of 16 bipartisan senators taking to the Senate floor, saying their proposal is a three-month continuing resolution, keeping funding the same for three -- sorry, three weeks -- as negotiations over border security could commence.

Senate Majority Leader Mitch McConnell calling Senate Democratic leader Chuck Schumer to his office to have a discussion about next steps forward.

But all of these talks making clear one thing at the moment. The White House remains the wild card. Wolf, if you take a look at those two bills that failed on the Senate floor, the president's proposal actually got fewer votes than the Senate Democratic proposal, something that led one senior Democratic aide to tell me just a short while ago the president has leverage at all at this point in time after that vote on the floor is, quote, "not in touch with reality."

Now, in that vote, or in those votes, the Senate Democratic proposal brought six Republicans to the Democratic side. One of those Republicans, Senator Mitt Romney. Why did he vote with the Democrats? Well, take a listen.

(BEGIN VIDEO CLIP)

SEN. MITT ROMNEY (R), UTAH: When the vote for the president's proposal failed, we went to see the second alternative. I voted for that, as well. Again, because I want to see government get open and government workers get paid. That proposal also failed. And now it's going to be up to Republican leadership, Democrat leadership to come together and to begin to negotiate.

(END VIDEO CLIP) MATTINGLY: So Wolf, those negotiations are, in fact, happening. But what everybody right now on Capitol Hill is waiting for is where the White House is going to come down.

Senator Lindsey Graham spoke with President Trump just a short while ago, put out a statement saying he believed the president could support a three-week continuing resolution, so long as there is a down payment for the wall. That has remained a baseline no-no for Democrats over the course of this entire 34 days.

So where that ends up is really the big question. The dynamic remains the same, Wolf. For Democrats, reopen the government. Then they can talk about border security. Republicans more and more starting to come in line with that position.

The president has made clear he will not reopen the government without a large border security package. That has been the hold-up, up to this point. That question still hasn't been answered.

[17:05:04] And how this turns out over the next couple of hours, over the course of the proposals that are being traded right now on Capitol Hill, will decide whether or not a shutdown continues for a 35th, 36th, 37th day or whether there might actually be a resolution after weeks of inaction and frozen talks, Wolf.

BLITZER: Is there -- so is there some real movement here? I noticed in Lindsey Graham's statement that you referred to, he says a three- week temporary proposal, to keep the government open for three weeks, in as long as, in Lindsey Graham's statement, "as long as there's a down payment for a wall/barrier funding consistent with Department of Homeland Security priorities."

That's a little different than what Sarah Sanders at the White House said: "There's got to be a large down payment on the wall." So there seems to be some inconsistencies between what Lindsey Graham, a strong supporter of the president, is saying, as opposed to the White House, still.

MATTINGLY: One of the big questions on Capitol Hill -- I'm sure Kaitlan has got a lot more insight into it than I do -- is what do they mean by a large down payment for a wall? Is there a specific number they're asking for? That's where Republicans are right now, as these conversations commence and continue, as leadership starts to talk for the first time in a long while.

But the big question outstanding right now is not necessarily what the number is going to be. It's whether the White House is going to back down entirely. I can't stress enough, when you talk to Democrats in the wake of those failed votes, they continually point to the fact the president's plan got fewer votes than the Democratic plan, making clear, they believe, that the president's prerogatives on this, the president's proposals on this, simply don't carry water in the United States Senate, with even six Republicans breaking.

Democrats at this point in time, according to aides and senators I've spoken to in the last hour, feel like they have no incentive to give right now. Talks are ongoing. There are negotiations. But the idea that Democrats are going to give on a barrier, whether a large down payment or, as Senator Graham discussed in his statement, seems unlikely right now.

That said, talks are happening. Whether they result in anything still very much an open question, one that largely sits in the president's lap, Wolf.

BLITZER: I want you to stand by, Phil. We're standing by to hear from the president. He called in the White House press pool. He's making some statements. So far, we're told, he hasn't yet spoken about the negotiations to try to end this shutdown. But we'll have that, we're told, fairly soon.

I want to bring in our White House correspondent, Kaitlan Collins.

Kaitlan, as you know, the reporters, they're now listening to what the president had to say. First of all, what are you hearing?

KAITLAN COLLINS, CNN WHITE HOUSE CORRESPONDENT: And Wolf, that's going to be the first question those reporters have for the president, is what his thinking is in on all of this, because as Phil noted, the president and the White House have been the wild card in all of these negotiations.

Now, the statement coming from Sarah Sanders after both of those proposals failed this afternoon in the Senate, saying that they would support a short-term spending bill for three weeks if there was a, quote -- well, first, she said if there was a down payment on the wall. Then, Wolf, she said if there was a large down payment on the wall.

Now, of course, many people on Capitol Hill are going to be wondering what that large down payment is. But so far the White House and the president have not put a specific dollar amount on it.

But, Wolf, you can draw some logical conclusions here that the White House has been asking for $5.7 billion for the next year for the president's border wall. So you could assume it would essentially be three weeks' worth of $5.7 billion. That's what they're going to be looking for, judging by what Sarah Sanders has said so far in these statements.

Now as Phil noted, the question is whether or not Democrats would support that. Because yes, it would open up the government for three weeks, but they would also have to get the president some funding for his border wall, something they've been opposed to so far.

And then, of course, Wolf, the million-dollar question after that would be what happens when those three weeks are up? Are we back where we started on December 22 that led us into this 34-day shutdown? And where do we go from there?

And of course, the question ultimately will be if the president sticks by what he says he will support, because we've seen him change his mind over the last several weeks with his own White House officials, offering certain numbers to lawmakers --

BLITZER: Hold on a moment, Kaitlan.

COLLINS: And we've heard --

BLITZER: I want to interrupt. Nancy Pelosi, the speaker, is on the House floor right now. Let's listen.

REP. NANCY PELOSI (D-CA), SPEAKER OF THE HOUSE: -- said no, or their bills acted upon by bipartisan group in the House, our most recent contribution to send over to the Senate, and they have said no.

And today, in the simplest -- the simplest of resolutions, we said, "Please vote yes for $12 billion for disaster assistance" -- we all know that we have to do that -- "and two weeks. Open up the government for two weeks in order to have a discussion of how best to protect our borders." And they said no. Twelve billion dollars for disaster assistance, two weeks of opening up government to allow the debate to continue while people who are -- can come to work and those who are working already, all of them can be paid.

Americans like Brenda from Maine, whose family can no longer pay for heating fuel this winter, while temperatures remain below freezing. Americans like Julie from rural Iowa, who says that farmers already are hit hard by tariffs; will feel the squeeze even more now.

Americans like Sarah from Colorado, whose new job at the V.A. is on hold, adding to wait time for veterans who need health care services. And I may say (ph) of veterans, who compose nearly a third of our federal workforce, 31 percent.

Our veterans who have security clearances, who are at risk -- which are at risk when you can lose your security clearance if you lose your credit rating. And you can lose your credit rating if you cannot pay your bills on time: your mortgage, your rent, your car payment, your credit card bills and the rest. Credit rating goes down, the vulnerability of your security clearance goes down -- is increased.

So, it is harmful to our veterans to be doing this. And it's important for everyone to know how they are affected. Because our veterans, who have donned the uniform of our country to protect us and then carry on their commitment to public service in the public sector as federal employees, in some ways still continuing to protect us. In other ways, meeting our needs in another way. All of them affected by this shutdown.

Or like Lily from Georgia, who says Food Stamp recipients will go hungry. Many will lose subsidized housing. State and local services will be overwhelmed, trying to make up for the losses.

As one woman, Vivian from Maine, asks, "How is a wall more important than families?"

The senseless shutdown shows the American people's safety and security is in peril. This week, FBI agents released a report warning of dire effects of the shutdown in nearly every aspect of their work. They write -- the FBI writes, "We don't need funds to get drugs and drugs off the -- we don't have funds to get drugs and guns off the street and to prosecute the violent gang and drug traffickers. We aren't able to take child sexual exploitation cases to grand juries to seek indictments and warrants in order to get our most violent offenders arrested."

BLITZER: All right. We're going to continue to monitor the speaker, but the president, we're told, has been speaking. We're about to get the tape.

Kaitlan Collins, you're over there at the White House. I assume he's going to describe, define his latest offer. He's demanding a large down payment for temporary relief of the shutdown.

COLLINS: Yes, Wolf. The president is speaking with reporters, not at anything related to the government shutdown but at a trade event here at the White House. And of course, he was asked about what their latest proposal is and how -- he's going to be asked how much money it is that they want, since Sarah Sanders is saying they'd consider a three-week short-term spending bill, but want a big down payment for the wall -- Wolf.

BLITZER: Let's go to the White House right now. Here's the president.

DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: Thank you all very much. I appreciate it. Thank you.

UNIDENTIFIED MALE: Are you open to this idea of the temporary spending measure to reopen the government?

TRUMP: Well, one of the ideas suggested is they open it, they pay a -- sort of a pro-rated down payment for the wall, which I think people would agree that you need. You need the wall.

In fact, I see a lot of the Democrats are all -- almost all of them are breaking saying, "Walls are good. Walls are good." Big difference from what you had two or three weeks ago.

And the vote -- we had the vote on our bill, which we won 50-47. That was our Bill. But we got one Democrat. It was 50-47. We need -- as you know, we have to get 60. We don't have 60 votes, so we need Democrat support. We didn't get Democrat support, other than from a, actually, wonderful man, as you know, Senator Manchin. And -- who's doing the right thing for his people. I mean, he's doing the right thing for West Virginia, frankly.

And the other bill, it was 52-44. And that included a lot of hurricane relief for a lot of different states. So it's not something -- some of them really voted for the hurricane relief, which they felt they needed. That was 52-44. But you need 60, so that didn't go anywhere.

So we knew they both were not going to go anywhere, we thought. And now Mitch is negotiating with Chuck Schumer, and we'll see what happens. I think they just left a meeting. They just had a meeting. I think they're going out to see their people, but they just left.

So we had two bills. I think we did very well. The Republicans held, except for two; the Republicans held. Two were not there. They couldn't -- they weren't able to be there. So, there were two nonvotes. But even with two nonvotes, I think they would have been good votes for us. It's 50-47. We won. But we need 60 votes because of the 60-vote rule.

[17:15:06] And so I just really want to thank the Republicans for holding. Again, on the other one, that was the opening up. That's 52-44. But you need 60 votes, so it's a long way short. And a lot of that, a lot of those votes were based on the fact that there was hurricane relief for certain states.

UNIDENTIFIED MALE: (UNINTELLIGIBLE) go with a temporary spending without money for the wall? Just to reopen?

TRUMP: I wouldn't be happy with it. I wouldn't be happy. But we have a lot of alternatives, honestly, we have -- everybody -- look, for the most part, people agree -- when I say "everybody," I would say almost everybody agree, we have to have border security. We have to have a wall in order to have border security. You cannot have border security without a wall.

I mean, we can play games and we can talk about technology. We can talk about drones flying around. You know, right now, formed, is an 8,000-person caravan. And the caravan is heading our way. Congratulations. We have another one. We stopped the first one. We stopped the second one.

I wouldn't say that Tijuana is too happy. But they're happily living in Tijuana right now, and a lot of them have gone back. But we stopped them. But it's very tough. And if we didn't have a wall in those areas, it would have been very hard to stop them.

We have the military and we have the Border Patrol that's done an incredible job, and ICE has done an incredible job all over the country, frankly. We've removed thousands of MS-13 and others out of our country. But if we had a wall, we wouldn't have that problem. It would be great.

So we have a lot of alternatives. But I'm just honored that almost all of the Republicans voted for our bill. Our bill is the bill that we were really focused on. But we had almost all of the Republicans, so the end result was 50-47. The Democrats lost one that came over to our side. So, they pretty much held, and we held. And again, we were missing two Republicans. They couldn't vote. They were not here.

UNIDENTIFIED MALE: -- your sense there's enough movement in the shutdown?

TRUMP: Well, I have to find out. After this meeting we'll find out. But right now, Mitch McConnell right now is meeting with Chuck Schumer and, Steve, we'll have to see what happens. They're meeting to see if they can work out something, maybe on a temporary basis, where we'll start. But I have -- we have a lot of alternatives. A lot of people that

want this to happen.

I'll tell you who wants this to happen. The military wants this to happen. Because this is a virtual invasion of our country. Of drugs, of human traffickers, of so many different things, of criminals. It's an invasion of our country. And the military wants this to happen.

And the Border Patrol wants this to happen. And by the way, Border Patrol, said all of the drones flying up in the air -- they're having a lot of fun flying drones all over the place -- they don't mean a thing when they look down and they see thousands of people rushing our border. The only thing that works is a strong barrier or wall.

UNIDENTIFIED MALE: Have you talked to Nancy Pelosi

TRUMP: I have not. I haven't spoken to Nancy Pelosi, no. But I'm here. I haven't left, except for a beautiful evening in Iraq. I've been here for -- I've been here for a long time.

UNIDENTIFIED MALE: Mr. President, did you see Wilbur Ross said that he doesn't understand why federal workers would need help getting food. Do you understand?

TRUMP: No, I haven't -- I haven't heard the statement. But I do understand that perhaps he should have said it differently.

Local people know who they are, when they go for groceries and everything else. And I think what Wilbur was probably trying to say is that they will work along. I know banks are working along. If you have mortgages, the mortgagees, the mortgage -- the folks collecting the interest and all of those things, they work along. That's what happens in time like this. They know the people. They've been dealing with them for years, and they work along. The grocery store -- and I think that's probably what Wilbur Ross meant. But I haven't seen his statement now, but he's done a great job, I will tell you that. Yes?

UNIDENTIFIED MALE: In Venezuela, I just want to know, aren't you worried to leave the American diplomats behind?

TRUMP: Well, we're looking at Venezuela. It's a very sad situation. That was the richest state in all of that area, a big beautiful area and by far the richest. And now it's one of the poorest places in the world. That's what socialism gets you, when they want to raise your taxes to 70 percent.

You know, it's interesting. I've been watching our opponents, our future opponents talking about 70 percent. No. 1, they can't do it for 70 percent. It's got to be probably twice that number.

But maybe more importantly, what happens is you really have to study and take a look at what's happened to Venezuela. It is a very, very sad situation. So we have our eye very closely on Venezuela. Very closely. UNIDENTIFIED FEMALE: Mr. President, if Mitch McConnell and Chuck

Schumer can come to some sort of agreement, will you support those results?

TRUMP: Well, it depends on what the agreement is, I mean, yes. But if they come to a reasonable agreement, I would support it.

UNIDENTIFIED MALE: Even if there's no wall money? Or does it have to have wall money?

TRUMP: I have - look, look. I have other alternatives if I have to. And I'll use those alternatives if I have to. We want to go through the system.

We have to have a wall in this country. We have criminals pouring into our country. And I'm not talking about the southern border. They don't stay there. They go through and they permeate all throughout the country, including places like Wisconsin. A lot of -- a lot of different places. And that's the problem.

[17:20:17] I say that we would cut our traffic -- you know, we're doing very well on crime rate, compared to past years and past administrations. But I think our crime rate would go way down. And I know our drug rates -- our drug -- what's happening is the drugs are pouring in.

And yes, they come through the ports of entry, but the big trucks come through areas where you don't have a wall and you have wide open spaces. We have to have the wall. You'd stop drugs. You'd stop human trafficking. I mean, human trafficking, where they tie up women and they put duct tape on their mouths and they put them in the backseat of a car or in a van, they don't come through a port of entry, because the people at the port of entry are going to see that. That's not like hiding drugs in the engine or in the hub caps and they have incredible, ingenious ideas. I mean, frankly, I've said some of these people, it's so genius, if they were ever legit, they'd become very rich people.

But what they do, is they go through the ports of entry with small stuff. But the big stuff comes through areas where you have nobody watching. I mean, you have hundreds of miles of open space. And they go out there and they'll load it up with drugs, or they have women in the back seat of the cars with duct tape all over the place. It's a disgrace.

And you don't catch them. You don't even know the difference between Mexico and the United States. They make a left turn after they go out 20 miles, 40 miles, five miles, in some cases and less. They make a left turn and they're in the United States. And then they do whatever they have to do.

You need the wall. We can all play games and we can all talk about technology. I know more about technology than anybody. But you don't have the wall, the technology doesn't work.

First of all, the wall is based on -- I mean, it's all based -- any technology works only with the wall. It's not going to work otherwise. You need the wall. In fact, a lot of technology is put on top of the wall. That's how you see it, the cameras and everything else. I mean, they literally put the technology -- they fasten it to the wall.

Then you have drone technology. And that's great in terms of what are you going to do? Are you going to follow the people? First of all, once they step into the country, you know what happens, right? You know what they do. It's called -- what do they call it? You know? They put one foot in our country, right, and we got them. That's it.

So the drones don't help us. We have to keep it out. We have no choice but to have a wall or a barrier. And if we don't have that, it's just not going to work. So it's very important to me.

All right. One more question.

UNIDENTIFIED FEMALE: What's your message to federal workers who are missing another paycheck this week?

TRUMP: I love them. I respect them. I really appreciate the great job they're doing. They -- you know, many of those people that are not getting paid are totally in favor of what we're doing, because they know the future of this country is dependent on having a strong border, especially a strong southern border.

Because we have tremendous violence and crime coming through that border. We have tremendous drugs. We have the human trafficking. We have MS-13 and gangs pouring through those borders. And if we don't strengthen those borders, we're going to have a big problem in the future.

One of the people I blame is myself, because the economy is so strong right now, stronger than ever before. Today -- today, right now, we have more people working in the United States than has ever worked in this country before. That's a great compliment. So I blame myself. OK?

But the fact is, people come up, because our country is doing so well; and they want to break through our borders. The fact is, we want them to come up. We have a big -- we took in more people last year legally than we have in a long time, because we need them, because we have a lot of companies are coming into our country. So we need people coming in.

I want people to come in, but they have to come in legally; and they have to come in through merit. They have to be able to help companies, and if they don't help companies, and if they don't help our country, we can't do that, folks. We just can't do that. All right?

UNIDENTIFIED MALE: Why did you decide to agree with Nancy Pelosi that --

TRUMP: Well, it's really her choice. I mean, I would have done it in a different location, but I think that would be very disrespectful to the State of the Union, to pick some other place. I could have done it. I could have gone to a big auditorium and gotten 20,000 people in one day. And you've been there many times. But I think that would be very disrespectful to the State of the Union.

So what she said, I thought, was actually reasonable. We'll have the State of the Union when the shutdown is over.

UNIDENTIFIED MALE: When do you think that's going to be?

TRUMP: That, I can't tell you. That, I can't tell you. But we have a lot of alternatives, but we need border security.

OK. Thank you very much, everybody. Thank you. Thank you very much. Thank you, John.

BLITZER: There he is, the president, now saying he would support some sort of temporary compromise if it included, during the next two or three weeks, what he now calls a pro-rated down payment for a border wall with Mexico.

[17:25:14] Kaitlan, the president also says we have a lot of alternatives if they can't work out some sort of compromise. First of all, what does he mean by a pro-rated down payment?

COLLINS: Well, Wolf, the president didn't give a specific amount of what he would want in a pro-rated down payment, as he's calling it, if they did sign a spending bill to reopen the government, what's closed of the government, for the next three weeks.

But we know that the president and the White House have been asking lawmakers for $5.7 billion for the president's border wall. So if you spread that out over a year and three weeks' worth of $5.7 billion for the border wall, it would be roughly $330 million, Wolf. So that's what we're -- assuming that's our own math here at CNN; that's not a number that the White House has given us. But that would be roughly three weeks' worth of what they've asked for so far would be.

Now, whether or not Democrats would support that is still an open question. You heard the president pointing several times there to that meeting between Senator Chuck Schumer and Senate Majority Leader Mitch McConnell. He said they've been meeting. They just broke up and ended that meeting. And we're going to talk to them after that.

And when he was asked by a reporter in the room, would he sign whatever kind of agreement that McConnell and Schumer came to, he said yes, but he said, if it was a reasonable agreement.

Now, Wolf, what the president thinks is a reasonable agreement sometimes has been very different than what not only Democrats but also Republicans up on Capitol Hill have agreed to. So that raises questions there of what exactly it is that they're looking for.

But this is new, that the White House is offering a down payment on the wall in exchange to open the government for three weeks. Of course, Wolf, then that raises the question of what happens when those three weeks are up? Are we going to be right back where we started, where Democrats, if they do give the president a couple hundred million dollars for his border wall over the next three weeks, will they then commit giving the rest of what they've requested over the next several weeks, when they've got to fund the government for the rest of the year?

And then, of course, Wolf, the big question here is the White House is asking for $5.7 billion for the border wall for the next year. That's not all the money they want for the border wall. That's what they want in this year's budget for right now.

So if this is, essentially, what they're asking for, a down payment, this would be a down payment on the down payment for the border wall. Because you have to assume next year in the next spending bill, they're going to want more money for the border wall.

So a lot of things to consider here, Wolf. It doesn't sound like we've got anything concrete coming from the White House. But it does sound like they are, at least, offering to sign some kind of a three- week C.R. But whether or not Democrats on Capitol Hill are going to agree -- agree to that is a whole separate question.

I do want to point out the president was asked about his commerce secretary's remarks that he made earlier today that were getting a lot of backlash from critics, because they said they were tone deaf to those 800,000 federal workers who are not getting paid.

The president said he had not seen Wilbur Ross' remarks, but he does think that perhaps he could have phrased what he said differently. And as -- for the viewers who didn't see what Wilbur Ross said, he said he didn't know why federal workers were going to food banks if they weren't getting paid instead of just taking out loans, and then admitted that some of those federal workers may have to pay interest on those loans to get their own paychecks -- Wolf.

BLITZER: And one other important development. The president repeatedly said, Kaitlan, "We have a lot of alternatives." And he said, "I will do those alternatives if there's no compromise deal."

I assume he's referring to declaring a national emergency and trying to come up with the money to build a wall on his own or some sort of executive order to do so. Is that your understanding?

COLLINS: That was my understanding, Wolf. And that's an idea that we've seen floating around not only in the West Wing but other agencies for the last several weeks during this shutdown, because for a while, the president wouldn't rule out the idea of declaring a national emergency to build his border wall if Congress wouldn't fund it.

Now publicly, a few weeks ago, he said that that was not his first option, but he did not rule it out and take it off the table. And now CNN has this exclusive new reporting that there has been a draft that has been drafted inside the White House that would, essentially, find a way for the president to be able to build his border wall without going through Congress to fund it. That seemed to be what the president was alluding to there, saying that if they can't come to some agreement where he's going to get his border wall money, where does he go from there?

Now, Wolf, this is all raising questions after you just saw those two proposals fail on Capitol Hill, because the White House knew they were both going to fail; but they were watching to see which one was more popular. Now the president said there that they won, the Republican plan that he put forward won. But of course, Wolf, it failed and did not have those ten votes it needed to get 60 votes to pass.

And it ended up being that the Democratic proposal was more popular and got more "yes" votes than the president's proposal, which would show you that lawmakers are getting frustrated, and they want to find a realistic way to open the government soon.

BLITZER: All right, Kaitlan. I know you're working your sources over there. We're going to get back to you.

Phil Mattingly is up on Capitol Hill. You heard the president say that if the Senate majority leader, Mitch McConnell, and the minority leader, Chuck Schumer, if they can come up with what he called a reasonable agreement, he would support it. The definition of a reasonable agreement though remains outstanding.

[17:30:00]

PHIL MATTINGLY, CNN CONGRESSIONAL CORRESPONDENT: Yes, reasonable. Doing a lot of work there. And I think one of the key issue we've seen over the course of the last four or five weeks is both parties, regardless, Democrat or Republican, having a very difficult time trying to pin down exactly what the President is for or whether or not the President is willing to move off his $5.7 billion top-line funding request for the wall. Look, over the course of those comments I was texting back and forth with several Democratic sources in both the House and the Senate, about the idea of a pro-rated wall agreement or down payment.

The idea of a large down payment on the wall over the course of the three-week C.R., continuing resolution, continued funding, and a stop- gap basis, and just about unanimously, Democrats are responding to me, no, it's not something that they're willing to consider right now. And that stays in line with where Democrats both in the House and Senate have been for the entirety of this shutdown. The idea that the President would get anything, let alone order wall funding, for a shutdown, the Democrats very clearly state he was the one who led to the shutdown. It's something that's been a nonstarter for them from the beginning.

Wolf, we've talked about this before. One of the key aspects here that you have to remember from how Democrats approach this is the idea that it's not just what happens with this shutdown or what happens over the course of the next couple of weeks. It's for the entirety of the next two years with House Democrats in power. They don't want to set a standard where the President on funding deadlines or debt limit deadlines could hold something in their words as 'hostage,' in trying to get policy proposals out of Democrats, or policy wins out of Democrats that they're opposed to. That is why they've held the line to the point that they as much as kind of the pain overall for the 800,000 workers that are missing a second paycheck tomorrow, and across the 25 percent of the Federal government that shuttered. But it's why they haven't moved off of it.

And again, I have been talking to Democratic aids about this idea, they are all for the idea of reopening the government for three weeks and having border negotiations, border security negotiations. The idea that they would give any money for a wall in the near term and, to be fair, the idea that they'd give money for a wall in the long term is something that nobody is willing to agree with at this moment.

Now, there is urgency to end things. And there are absolutely talks going on, both at the highest levels, you mentioned McConnell and Schumer meeting a short while ago, and lower on the rank and file levels, a group of bipartisan senators have been trading ideas back and forth continuing discussions, so they haven't been fruitful up to this point. But I think on the top line, the reality is that Democrats, not only do they hold that position of not giving in on any policy concessions at this point, they also believe that they hold the stronger hand here.

They're seeing the poll numbers, and Kaitlan was talking about the President's view of the floor votes that just occurred a short while ago, both proposals failed. But I'm hearing it repeatedly from Democrats, our proposal got more votes. Both fell short of the 60- vote threshold, but the President's proposal, the one he pitched as a compromise, the one he thought could pull Democrats over only pulled one Democrat and fell 10 votes short of the votes needed. The Democratic proposal, just a clean reopening of the government until February 8th pulled six Republicans over, six Republicans who made clear they're frustrated with what's going on, six Republicans who have been in negotiations on a bipartisan basis, trying to find a way out.

So, the idea right now the Democrats would concede on a policy matter seems slim. That being said, if you compare right now to where we've been over the course of the last 32, 33, 34 days, it feels very different up here because people are talking. And I think the big question now is will it result in anything? And will all of these conversations actually produce some kind of end game, whatever that may look like? And I think Kaitlan made a crucial point early on, the President is the key to everything. The President will dictate whether or not Republicans move off a position or move towards Democrats or the President will dictate if nothing gets solved at this point in time. So, to your initial question, how one defines reasonable here in the President's words, that is the key to whether or not this ends in the near term, I think.

BLITZER: Let's see if these leaders, the Democrat and Republican leaders in the Senate could come up with a reasonable, reasonable compromise. We're going to get back to you, Phil. Thanks very much.

Let's discuss all of this with Democratic Congressman Ted Lieu of California, he's a member of the Judiciary and Foreign Affairs Committees. Congressman, thanks so much for joining us. So, both government funding bills up for consideration in the Senate, they failed this afternoon. Now, the President says he would support a temporary reopening of the federal government if there was a pro-rated down payment for a wall. What's your reaction?

REP. TED LIEU (D-CA), MEMBER, FOREIGN AFFAIRS COMMITTEE: Thank you, Wolf, for your question. Let me first say that I'm pleased the Democratic proposal to reopen government with no strings attached actually got more votes in the Republican-controlled Senate than Donald Trump's own proposal. Very pleased that six Republican Senators broke ranks with the President including Mitt Romney. I'm glad he's showing that he's not a flake, and I'm glad that Mitt Romney is putting country above party. I'm hopeful that this would now lead to talks to reopen government. And the Democratic position has always been consistent and reasonable, reopen government Mr. President, negotiate a deal.

BLITZER: But would you as a member of the House, vote for some sort of temporary spending bill that would reopen the government for the next two or three weeks if it included a few hundred million dollars for a border wall?

[17:35:07] LIEU: Absolutely not. The principle at stake is that we cannot allow Donald Trump to use the harm of a government shutdown as a negotiating tactic. We cannot allow any party or any person to take our federal government as a hostage and then extract a ransom. We will not pay that. This is much bigger than about one-eighth funding for a wall. This is about the principle. You can't put people's suffering and use that as negotiating tactic.

BLITZER: Well, the President, you heard him, repeatedly say, if there's no deal, he's got other alternatives. He says we have a lot of alternatives. I think he's referring to declaring a national emergency, a national security threat, and doing it on his own, finding funds from the Pentagon or elsewhere to build the wall, or through some sort of executive order to do so. What would you do if he decides to take those kinds of unilateral steps without Congressional legislation?

LIEU: Well, I think Donald Trump should reopen government and then if he wants to do that, that's up to him. We can fight it out in the courts. But the Democrats in the Senate and in the House simply are not going to cave to Donald Trump's demands in the middle of a government shutdown. Now, Donald Trump reopens government, then everything is on the table, and I'm happy to consider the wall in the context of a large immigration reform bill that would provide a pathway to citizenship as well as permanent status for DACA and TPS recipients. So, everything is on the table. Trump and McConnell will just have to open government first.

BLITZER: He says the U.S. is now -- and he believe -- he says the military has told him, is facing what he calls a virtual invasion of our country because of drugs and criminals trying to come in and he says the only thing that will work is a strong barrier or a wall. What's your reaction to that?

LIEU: Well, today is Thursday, Wolf., that means Donald Trump is lying again. And he told some whoppers. For example, with regard to an invasion, if you look at the Department Homeland Security's own data, border crossings are at an approximate 20-year low. If you look at the FBI's latest data, violent crime is down, property crime is down, and study after study shows that immigrants, both documented and undocumented, commit less crime. In terms of drugs, approximately 90 percent of it goes through or ports of entry, not through places where there's not a wall. So, a wall wouldn't even stop that. That's why, I think, is important that we agree on basic facts and I'm pleased six Republican Senators seem to have done that today.

BLITZER: But, you know, as you know in your district out in California, all over the country, a lot of Americans right now are suffering because of this government shutdown, the longest in U.S. history. Why not accept at least some compromise to allow them to go back, not only work but get paid for their work under the old theory, don't let the perfect be the enemy of the good?

LIEU: Because Donald Trump three weeks later will shut the government down again. If we cave in to Donald Trump's demand for a wall the first time, he's going to keep shutting government down every time we don't fund additional parts of the wall. That's why Democrats have held firm under this, and will continue to hold firm. This is not about the wall anymore. It's simply about not allowing the American President to use the opening of government as a concession. Think of how perverse that is. He's trading the opening of government in exchange for his demands. No American President should ever be doing that.

BLITZER: Congressman Ted Lieu, thanks so much for joining us.

LIEU: Thank you, Wolf.

BLITZER: All right. We got a lot of breaking news unfolding right now. We'll be right back.

[17:40:00] (COMMERCIAL BREAK)

BLITZER: We're following multiple breaking stories, including President Trump just now telling reporters over at the White House, he wants what he calls a pro-rated down payment on a border wall on any temporary deal to end the government shutdown for two or three weeks. Lawmakers are working on some sort of compromised plan right now after dueling bills backed by Democrats and the President failed this afternoon in the U.S. Senate. Let's ask our political and legal experts about what should happen next. And Dana, the President was pretty firm. He says, if they don't work out some sort of deal, he's got a lot of other alternatives ready to go, which he didn't describe but he's got alternatives.

DANA BASH, CHIEF POLITICAL CORRESPONDENT: That's right, and CNN -- our colleagues have some -- have some exclusive reporting that one of the things that he has done already is prepared a draft executive action, a proposal for emergency declaration of sorts. Just a draft, it's just -- it may be a potential, but that is one of the options, clearly, that the President is looking at. But I do think it's noteworthy that after we saw, as expected, these two Senate votes, show votes. No one thought they were going to pass, taken up on the Senate floor and then failed again. We knew that was going to happen. That greased the skids, not for a deal yet, but at least for conversation, which is something, compared to what we saw for the past two weeks. The President trying to sound, you know, like he's reaching out.

Same goes for Nancy Pelosi, but more importantly, we're hearing and seeing the fact that the Democratic leader in the Senate, the Republican leader -- the Majority Leader Mitch McConnell, are talking, trying to find a way out of this. And then, in addition to that, House Democrats are formally going to unveil as soon as tomorrow a proposal of sorts, which has a pretty high number for them, $5 billion for border security. Not the wall but border security, not what the President wants but at least a potential negotiating starting point right now.

[17:45:03] BLITZER: You know, it's interesting, Chris. The White House Press Secretary, Sarah Sanders, originally said the President will accept a temporary three-week deal if there is what she called a large down payment on the wall. The President then said he needs a pro-rated down payment. Explain what's going on.

CHRIS CILLIZZA, CNN POLITICS EDITOR AT LARGE: I don't think he knows what's going on. I don't know what pro-rated down payment means. And go backstep, I also don't know -- I mean, I know what the word large, I know what the word down payment mean, but what does large down payment mean? Half, quarter, 15 percent? I mean, I think the truth of the matter here is that Donald Trump doesn't know and doesn't necessarily care all that much. And that remember, he views himself as a dealmaker. He's going to go in, he's not going to be stuck in a number, though I would argue for the last 34 days, a big part of the shutdown is because he's stuck on a number about the wall. But not stuck at a number and see what happens.

I actually thought his comments there that you played earlier in the hour, he left it open. Yes, he's not going to say, hey, I'll take whatever they give me, but he did say if it's reasonable, I'll accept it. We'll see what they say. I mean, he wasn't saying, look, they can talk but ultimately, if we don't have the money for the wall, it's over, which is, you know, to Dana's point, both sides talking, him not ruling things out, it's not a lot of progress, but in this stalemate, it comes as some progress.

BASH: And Wolf, I'll just quickly add, Ashley Killough, our producer in the House, just got this quote from Nancy Pelosi coming off the House floor about that potential down payment. She said, that is not a reasonable agreement between the Senators.

BLITZER: Well, David Axelrod, you see any movement or are we back at square one right now?

DAVID AXELROD, CNN SENIOR POLITICAL COMMENTATOR: Well, I don't know that we're at square one, but we're barely to square two. I mean, I think we're better off today than we were yesterday for the reasons that Dana suggested, but look, you know, I thought the President's tone was interesting there because he clearly was trying to strike a more conciliatory note. He needs a way out of this. This is a political disaster for him. Now, you've got members of the administration out there, kind of competing for the Marie Antoinette Award, by saying callous things about people who are clearly suffering out there, federal workers who are clearly suffering out there.

His poll numbers -- and we know how much the President cares about ratings. Well, he's not -- he's not unaware of the fact that he has been in a steady slide since this whole controversy began. And he needs a way out where he can plausibly or close to plausibly claim that he got something. But he needs to get out of this. And so, I think what you saw today was a beginning, potentially, of that process. And maybe Mitch McConnell, always wiley (ph), and Chuck Schumer can put their heads together with Pelosi and come up with some formula that will allow the President an escape -- an escape path here.

BLITZER: You know, Joey, CNN is now reporting -- and I'll read to you specifically what we're reporting. The White House is preparing a draft proclamation for President Donald Trump to declare a national emergency along the southern border and has identified more than $7 billion in potential funds for his signature border wall. Should he go that route, that according to internal documents reviewed by CNN. If he were to do so, either through executive -- an executive order or declaring a national emergency, this would wind up in the courts very quickly. How do you see that unfolding?

JOEY JACKSON, CNN LEGAL ANALYST: Such an executive order, Wolf, would not be worth the paper that it is written on. Let's be clear about a couple of things, the first thing is about leadership. The reality is that some things as a leader, a leader should recognize are bigger than you. The President, to save face, is having almost 1 million federal employees miss paychecks. You know, the economy tumbled down based upon the fact that it has ripple effects, and people not spending money, family hurt. And what does he say in the White House? Oh, the federal workers support me because they know this is about a larger issue. It's horrific.

And the horrific nature of this is that sometimes leadership also means you have to be an adult and recognize that this is significant and important. To the core issue of a national emergency drafting an executive resolution, the fact is is that a national emergency, the President has authority, of course, you know, to declare in such instances where there is an emergency. National emergencies or executive orders are not prepared to get you out of a negotiation, to find an alternate route to invent a national emergency where there is not one, to talk about people pouring into borders and criminals running amuck when the fact is that they're at all-time lows in that regard.

And so, yes, it'll be challenged in court rightfully so. Number one, it's a check on the President's authority and number two, on the check in the President's reality. And I think unless he gets with reality, I think we're going to be in a very bad place, Wolf.

[17:50:05] CILLIZZA: It's interesting, though, Wolf -- just quickly, it's interesting that because -- I went back and looked at the clips and what we were covering. In January 10th, January 11th, not that long ago, everything from Lindsey Graham recommending he declare a state of emergency to Trump essentially saying, I'm going to do it, I'm almost certainly going to do it. I'm probably going do it, and then suddenly, no. And then from about January 12th until today, until our reporting tonight, we didn't really hear that much about it. So, what I would wonder is, what changed his mind, if anything? Like Dana said, this is a draft. I mean, it's not like he's going to do it. But when he floats things like I have lots of other alternatives, if the Senate agreement -- if Schumer and McConnell can't come to an agreement, that would certainly I would think qualify that. So, what changed between --

BASH: Oh, I can tell you just from back then, because we did think it was potentially going to happen right around that time, when the President was talking about it, Lindsey Graham supported it. My understanding in talking to Trump sources is the President was convinced very aggressively that that is a bad move by the senior most people in and around him. Bad, bad move. And so, he let it go for a little while. Now, it looks like that is something that again, he's just holding out there but not necessarily pulling the trigger on it.

BLITZER: Everybody, stick around. There's more news we're following. We're going to have much more on the efforts to try to reopen the federal government. There is so much at stake right now. But we're also keeping our eyes on a very dangerous situation as protests rock Venezuela where strongman Nicolas Maduro is locked in a showdown with the United States. Let's go to our Pentagon Correspondent Barbara Starr. What's the latest, what are you hearing, Barbara?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Good evening, Wolf, tonight, as tensions rise in Venezuela, the key question for all of the Americans who are there is what happens next.

(BEGIN VIDEOTAPE)

STARR: Tonight, the U.S. is in the middle of a violent flashpoint in Venezuela with wreckage on the street and massive protests. After 35- year-old Juan Guaido declared himself the Venezuelan President and even swore himself in this week.

President Trump quickly acknowledging him as the new leader of Venezuela, prompting President Nicolas Maduro to order all U.S. embassy personnel, including U.S. Marines out of the country. The U.S. digging in and ignoring the order.

JOHN BOLTON, NATIONAL SECURITY ADVISER: -- our personnel are still there. They've been invited to stay by the legitimate government and consistent with their safety, that's our intention. But we're working, really, around the clock here to do what we can to strength the new government.

STARR: Secretary of State Mike Pompeo urged other countries to declare the Maduro regime illegitimate.

MIKE POMPEO, SECRETARY OF STATE: His regime is morally bankrupt, it's economically incompetent, and it is profoundly corrupt.

STARR: The U.S. pledging $20 million in humanitarian assistance. But the next step may be up to the Venezuelan military, a crucial power center. MAJ. GEN. JOSE ESCALONA, VENEZUELA CENTRAL COMMAND (through translator): We proclaim loyalty and absolute subordination to Nicolas Maduro.

STARR: For the U.S., the main job in the coming hours will be keeping embassy workers and families safe if Maduro musters military support to threaten them. And if Maduro doesn't step down, what will happen next?

BILL RICHARDSON, FORMER U.S. AMBASSADOR TO THE UNITED NATIONS: It's risky for our diplomats. However, we have a lot of security at the embassy. I don't think Maduro would mess with our diplomats. But I think it was a bold move by the administration, by the OES, by several Latin America countries, a majority to say, we're not recognizing Maduro anymore.

STARR: In 2017, President Trump threatened military action.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: We have many options for Venezuela, including a possible military option if necessary.

STARR: But if the President decided to use military power to either protect the embassy or remove Maduro, the challenges are significant. Venezuelan forces could fight back. It could require U.S. ground forces. Logistics and supply capabilities would have to be placed in the region. For now, the administration wants essential U.S. diplomats to stay put.

REAR ADM. JOHN KIRBY (RET.), CNN MILITARY AND DIPLOMATIC ANALYST: I don't think we should backing down from this challenge. Now, look, if the threat gets too high, we'll have do that. And we do have to recognize that Maduro has the military power in his hands. But I do think in this case, that the Trump administration made the right decision.

(END VIDEOTAPE)

STARR: And Wolf, we are now getting late word that the State Department has ordered non-essential employees out of the embassy in Caracas. Typically, they're trying to get them out by commercial aircraft. We will see if that is what happens, Wolf?

[17:54:56] BLITZER: It's a really dangerous situation that's unfolding. Barbara Starr at the pentagon, thanks.

Coming up, after dueling bills to reopen the government both failed, lawmakers hold urgent talks and President Trump demands a down payment on wall funding. Is the White House willing to compromise?

And after putting off his testimony before a House committee, President Trump's former fixer, Michael Cohen, is ordered to appear before a Senate panel. Will he show up?

(COMMERCIAL BREAK)

BLITZER: Happening now, breaking news. Down payment on a deal? There's a new push tonight to find a way to reopen the government temporarily to pave the way --

END