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Defense secretary Mattis quits. TRANSCRIPT: 12/20/2018, All In w. Chris Hayes.

Guests: Tom Perez, Luis Gutierrez, Jill Wine-Banks, Barbara McQuade, Matt Fuller, Paul Sonne, Mazie Hirono, Ezra Klein, Michelle Goldberg

Show: ALL IN with CHRIS HAYES Date: December 20, 2018 Guest: Tom Perez, Luis Gutierrez, Jill Wine-Banks, Barbara McQuade, Matt Fuller, Paul Sonne, Mazie Hirono, Ezra Klein, Michelle Goldberg

CHRIS HAYES, MSNBC HOST: All right, good evening from New York. I`m Chris Hayes.

Utter chaos today in Washington, D.C. even by the standards of these last two years. The House right there you see is wrapping up a vote right now. They`re going to gavel and close on a bill that is basically going to force a government shutdown. Here`s why. This bill, at the insistence of the White House includes $5 billion for the wall, or wall in the words of Kirstjen Neilsen. Also $8 billion for disaster leave (ph). Republicans appear to have the votes they needed to pass this vote. So for the latest on the shutdown, I want to bring in HuffPost, Congressional reporter Matt Fuller.

Matt, they passed this thing. How did we get to this point?

MATT FULLER, REPORTER, HUFFPOST: That`s a good question. A lot of this happens to be just Trump and his sort of normal governing process here where he`s indicated all along that he`s wanted this wall money but it seemed like he would give in at some point here, except, you know, he`s seemed to wake up today and finally said no, you know, I`m not going to do that and, you know, you had a meeting at the White House this afternoon with Paul Ryan, Kevin McCarthy and the freedom caucus leaders, Mark Meadows and Jim Jordan.

And emerged from that meeting and it was clear that Trump was serious about the wall money in some fashion. Obviously this isn`t something that`s going to pass the Senate. I know it just passed the House. And the reason I think it passed the House is because at this point it`s just sort of a political vote. There`s no real practical policy considerations here. In fact, a lot of guys who would have voted for this I don`t think would have voted for it in normal circumstances if they thought this was actually going to become law. So it goes to the Senate --

HAYES: Wait a minute, what do you mean by that? So why are people voting for it?

FULLER: Well, you had -- I mean in some ways this is a thumb -- thumb in your eye to Nancy Pelosi. I mean we were in the, you know, White House it last week, and, you know, Nancy Pelosi was saying you`re not going to be able to pass a $5 billion wall cr, basically the idea was they need money for -- they needed votes from Democrats to pass the cr. And part of that was the conservatives had all these ideas about asylum policy riders.

HAYES: Right.

FULLER: There was a lot of conservatives who were concerned about the disaster aid that was added to this. But because it`s just a political vote, it`s just a really posturing vote, it goes to the Senate where it`s clearly not going to pass. But Republicans can say, no, we -- you know, we went with the President, we voted this way, and now it`s just sort of a standoff between the two chambers.

HAYES: I should note, though, just to be clear, the $5 million is American money, not to the Mexican government, right?

FULLER: It`s not pesos, no, correct.

HAYES: Because I just want to be clear. It`s $5 million of American public funds, not Mexican funds. I want to bring in also NBC News Capitol Hill correspondent Kasie Hunt who`s been covering this all day.

Kasie, I saw you at the press conference with Chuck Schumer and Nancy Pelosi who were they it`s called the Trump shutdown, a Trump temper tantrum. Basically, everyone was ready to pass the thing, get out of town, have the President sign it and then what happened today?

KASIE HUNT, NBC CORRESPONDENT: Yes, the jet fumes were very strong until about 9:30 this morning when everything went sideways in a House Republican meeting because leadership wanted to get this done but there were a lot of rank and file Republicans who looked at them and said, you want me to take this vote, but we don`t even know if the President is going to sign it. And you had the freedom caucus, Mark Meadows on the phone, Jim Jordan with the President telling him, hey this is a really bad deal. And combined what we say from Fox & Friends and Ann Coulter ultimately changed the President`s mind.

And we should underscore here Chris, this is the President`s doing, the reason why today was so chaotic is about the President of the United States. It`s not about the Congress. There was nobody up here that wanted to get to this point. They were ready to go, move forward, get out of town, keep the government open through February so everyone could have a nice holiday season.

And, you know, the Chuck Schumer called it a temper tantrum. Whatever you want to call it that`s why we are in this position. So the big question is going to be what happens next. And, I mean, I will say one thing to what you were talking about with your previous guest, part of this is, you know, some of these Republicans are telling me they voted for $26 billion for the wall over the summer when they voted for the DACA deal. So as the matter if they vote for $5 billion now?

Of course, that obscures the reality that this is completely dead on arrival in the Senate. It`s not going anywhere. So Republicans do know that and, you know, Mitch McConnell said pretty pithily on Tuesday, you never learn anything from the second kick of the mule.

HAYES: Right.

HUNT: They know that they need to be seen as doing something. They think a shutdown would be terrible politics for Republicans. So we`re going to see some action in the Senate tomorrow. The question is kind of how it all plays out. We know that the $5 billion is a complete non-starter for Democrats. There had been, at one point in the negotiation, $1.3 billion for border security on the table earlier about $1.6 had been on the table for Democrats. There some conversations here in the House that perhaps that`s what we could start talking about again. But there are some signals from Chuck Schumer that perhaps that won`t fly --

HAYES: Right.

HUNT: -- in this environment. So there are a lot of unanswered questions. We`re going to have at least another day`s worth of this kind of drama, Chris.

HAYES: All right, Kasie Hunt and Matt Fuller, thank you both for making time here.

That is one part of what has been an absolutely wild day. Late this afternoon out of nowhere the President announced the retirement of his Secretary of Defense of Jim Mattis. But it was not a retirement, in fact, it was a resignation. Mattis quit. And we know that because of the extraordinary letter that he wrote. Mattis gently but a firmly rebuking the President`s foreign policy and actions and vision, writing, "I believe we must be resolute and unambiguous in our approach to those countries with strategic interests are increasingly in tension with ours".

Mattis went on to tell the President he was quote, he has quote, "The right to have a Secretary of Defense whose views are better aligned with yours".

And Trump announced yesterday he was suddenly withdrawing troops from Syria and today there are reports he was considering a sudden, substantial withdrawal in Afghanistan. Mattis has called the withdrawal down in Syria mistake. And in his resignation letter, he also broke with Trump over China, Russia and the importance of quote, "Treating allies with respect and also being clear eyed about both malign actors and strategic competitors".

Senators from both parties responded with kind of a collective freak-out. Mark Warner described the situation as scary. Chris Murphy said a secretary of defense quitting over a public disagreement with the President whose foreign policy he believes has gone off the rails asks a national security crisis.

(BEGIN VIDEOTAPE)

SEN. CHUCK SCHUMER, (D) NEW YORK: Today`s events have made one thing clear. President Trump is plunging the country into chaos.

(END VIDEOTAPE)

HAYES: Schumer wasn`t just talking about the situation with Mattis. Also today Trump blew up a deal as Kasie and Matt were saying to avert a government shutdown which is now why they expected to happen, tomorrow after tonight House vote.

The President reversing himself this morning once again on insisting on funding for his mythical border wall, after conservative media freaked out over the White House backing down. NBC News citing a source, close to the President and described Trump as 100% in a tail spin over the shutdown situation.

Meanwhile stock markets plunged once again today. And NBC News reported that Robert Mueller is nearing the end of his investigation and expected to submit a confidential report to the Attorney General as early as mid- February. With everyone in Washington scrambling to figure out what`s going on. Kellyanne Conway`s husband George put forward a theory quote, "All this talk about the lack of process is valid and true, but it`s also a proxy for the unstated postulate that Trump doesn`t have the slightest clue what he`s doing".

For the latest on Mattis, I`m joined now by Paul Sonne, national security reporter for Washington Post.

Paul, did anyone know this was happening or see it coming?

PAUL SONNE, NATIONAL SECURITY REPORTER, WASHINGTON POST: I think a lot of people have actually seen it coming for a quite some time. It was very clear from the start that Mattis had significantly different views on National Security and Foreign policy than President Trump did.

Mattis is a big supporter of NATO. He`s a big supporter of alliances. He wanted a significant and long-term presence in Syria and Afghanistan and, Trump from the very days of the campaign has signaled that he doesn`t really want any of that.

HAYES: Mattis strikes me as a fairly even tempered individual. He is a professional who has navigated all kinds of bureaucracy to the Department of Defense for years. That letter is the kind of bureaucratic version of a screaming "FUI," quit (INAUDIBLE).

SONNE: Yes, I mean, look, Mattis through is almost two years of Secretary of Defense. He`s had numerous instances where he`s surprised by a tweet or the President calls him sort of a Democrat publicly, that gets out that the President`s referring to him as moderate dog after his nickname.

And all the entire time he`s always kept his cool. He`s never gone off the rails. He`s never gone back at the President with a comment or an insult. And as you point out this letter is a kind of bureaucratic -- bureaucratically worded rebuke to the President where he is saying, look, I believe in a world where, you know, our allies need to be our friends. We need to treat them with respect. Our alliances are substantial and critical to American power in the world. And we can`t sort of treat Russia as a friend when Russia and China want to reorient the world in a way that fits their autocratic aims.

HAYES: Yes. And noticeably absent, and George Conway also pointed this out, there`s nothing in there that says, you know, the paragraph about here`s what we`ve accomplished together, here`s why you`ve been great, it`s been a pleasure to serve. And Conway said the nicest thing in the letter was "Dear President".

SONNE: Yes, there are -- there`s nothing particularly complimentary towards the President in that letter. And what we understand is that Secretary Mattis had a meeting with President Trump this afternoon in the Oval Office. This comes a day after Trump`s surprised most of the world by announcing a withdrawal from Syria that Mattis disagreed with. Mattis attempted to urge the President to go back on that withdrawal. The President disagreed and said he wouldn`t do it. And then Mattis submitted his resignation.

And obviously the reason that Mattis thinks that it`s a bad idea to withdraw from Syria at the moment is because it gives more power to Russia and to Iran to shape the future of the country. The Pentagon, the State Department and the Intelligence Community have said the fight against ISIS isn`t over even though the physical caliphate of the extremist group has more or less been rolled back. And they worry that if the U.S. precipitously pulls out of Syria, not only will it send a message to American allies that we`re not with you and we`re not coordinated with you, it could also result in the resurgence of ISIS.

HAYES: All right Paul Sonne thanks for your time tonight.

Joining me on the phone retired General Barry McCaffrey, NBC News Military Analyst. What do you think of this letter General? Do we have general? Sounds --

BARRY MCCAFFREY, NBC NEWS MILITARY ANALYST: Yes.

HAYES: General, what do you think of this letter? I guess we do not. Let`s put a pin in that and come back to the general in just a second, if we may be able to. Can we get Senator Mazie Hirono? Do we have -- do we have the Senator? Senator Mazie Hirono, you there? You are there, senator.

SEN. MAZIE HIRONO, (D) HAWAII: I am here.

HAYES: You were on -- you are on the armed services committee. What do you -- what is your reaction to the resignation of Jim Mattis?

HIRONO: I was very distressed by it, of course. He made it very clear that he and President Trump were not on the same page in terms of their world views. And of course Trump`s world view is very -- how shall I say, out of whack because he comes up with it himself.

And these last two days I feel as though we have been on a roller coaster with him at the controls. Because first there`s the announcement that we`re getting out of Syria where we know he didn`t discuss it with anybody, including General Mattis and now giving a huge Christmas present to Putin and to Iran.

Then, because I`ve been very focused on what`s going on at the border they make an announcement that people who are coming through for asylum purposes have to wait on the Mexican side where there are huge safety concerns for so many of the children.

And then, of course, the Senate did the responsible thing last night by keeping government running and passing this bill by a voice vote. And only to have President Trump get all worked up because he`s got some right wing loud people yelling at him on Fox News and suddenly he says, "Well, I don`t think I`m going to sign it".

So it is very true that he will bring on the shutdown and he has to take responsibility for it. Any effort on his part to blame the Democrats will be such bullshit that as I said before I would hardly be able to stand it.

HAYES: Do you ever get assurances from Jim Mattis`s staffers or Mattis himself in your role as a senator on the committee that provides oversight that he was essentially working to contain the President, particularly in regards any nuclear issues?

HIRONO: I had tremendous faith in Jim Mattis because one of the first things he did when he became Secretary of Defense was to go to the Asia Pacific area because he knows that that AOR or the area of responsibility is hugely important to our country and he wanted me to know that the first countries he visited were in Asia, Japan for example. And so, as he was flying back from those visits he called me from the plane to let me know that he had touched bases with Prime Minister Abe and others.

And therefore, I knew that he was a person who saw the world in an accurate way, where our allies are very important. And as he said in his letter, we need to treat our allies with respect, especially at a time when China and Russia are definitely making their moves.

HAYES: One more --

HIRONO: And they are near peer competitors to us.

HAYES: One more -- one more question I want to ask about this and then I want to turn to the shutdown. What do you say to people who say, look, generals never want to withdraw troops, every president comes in and we`ve now passed along the Afghanistan war for 17 years basically with the dynamic of we have to stay, we have to stay.

And we have 2,000 U.S. service members in Syria it`s unclear how long they`re going to stay. The president wants to withdraw them. And this is just essentially the kind of institutional force of the Department of Defense which never wants to get out of anywhere exerting its will on the Democratic prerogatives of trying to get out of the conflict.

HIRONO: Well, having served on the Senate Armed Services Committee now for about six years, I wish things were that simple. I realize how complex the world is. And therefore if we`re going to have any kind of withdrawal, I would like it to be a thought through one, not one that the President just comes up with in a tweet and then he --

HAYES: Right.

HIRONO: -- tries to justify the next day. These are serious times, and we have to make serious decisions. And that is not what this President engages in at all.

HAYES: Final question. The House just passed a bill, is to fund the government, but with the wall funding, it`s now going to, I guess, come back to you in the Senate, like what`s the next move there over in the Senate?

HIRONO: Sadly, the House of -- pretty much, you know, that the -- all the people who voted for this bill are not exactly profiles encourage because as I said the Senate last night did the responsible thing to keep government running. Every expectation was that this bill was going to pass the House and that the President would sign it. But then the President puts a wrench in the works. So, it will come back to the Senate. And I would expect, as many of you are saying that it will not pass.

Therefore, the President will own the shutdown. And apparently he`s happy to own it in spite of the fact that hundreds of thousands of federal workers will be adversely impacted. And you see the stock market already going down.

There are all kinds of impacts to a shutdown. And he doesn`t care.

HAYES: Senator Mazie Hirono, thank you so much for your time tonight.

HIRONO: Thank you.

HAYES: All right. Joining me now on the phone is retired General Barry McCaffrey and the Senior Military Analyst. And General, I wanted to get your reaction to that letter, extraordinary letter, I think, that Jim Mattis wrote.

MCCAFFREY: Yes. It was enormously concerning. I think the last thing that we`re looking at is a dispute over Syria. You know, you can put together a rational argument on why you ought to pull out of Syria. What Mattis is responding to, is the White House in which the President of the United States is acting in a lone ranger fashion on defense and foreign policy.

He`s ignoring the input. He can`t listen to complex briefings. He`s not reading the material they give him. He`s making impulsive and frequently bad judgments on his own. It`s almost a world turned upside down in which our long time allies, Japan, South Korea, NATO, Australia are insulted and confronted. And he is cooperative with the strong men of the world.

I think at some point, and Mattis has been -- who`s not only a defense intellectual and is literally worshipped by the armed forces and has been publicly very careful and respectful of the President of the United States. I think finally he said, look, this isn`t going to work.

So, we ought to be concerned. The Attorney General, the Secretary of Homeland Security and the Secretary of Defense are the three people responsible for Domestic and International Security. We`ve got an acting, non-Senate confirmed Attorney General, a Secretary of Homeland Security with one foot over the cliff. And now we`re going to lose Secretary Mattis. This is a very dangerous situation.

HAYES: Secretary Mattis said he is going to extend his term through February for two reasons, one to sort of smooth the transition, but also there`s a NATO ministerial. And I saw a few people talking about the fact that this read to them that he just doesn`t trust the President to preside over that. That it`s important to him to see through that ministerial with NATO allies for precise the reason he lays out in the letter. What do you think of that?

MCCAFFREY: Well, it may well be the argument. I think Secretary Mattis is influence on defense strategy is now gone. It`s over. There`s one bit of good news here, by the way. Somehow Mattis has been able to fend off the crazies as appointments in the Department of Defense.

So, our Deputy Secretary of Defense, Patrick Shanahan, the service secretaries are possibly the most remarkably competent lot we`ve had in 25 years. So that`s the good news. And it`s unknown how or when a Senate would confirm a new appointee.

So -- but Chris, again, you know, the principal agencies of National Security are in disarray. And it looks as if we don`t know what we are doing. Certainly that`s the way our allies take it.

HAYES: Yes.

MCCAFFREY: And the President appears to be incompetent in office.

HAYES: All right. General Barry McCaffrey, thank you very much for joining me on short notice and I really appreciate it.

To break down the absolutely insane news, I am joined by Ezra Klein, founder and editor-at-large of Vox and Michelle Goldberg columnist of New York Times.

Here`s how I feel about what were seeing happening. I feel like we`re playing Russian roulette with an enormous revolver, with one bullet and maybe a thousand slots. And everyday we just keep spinning and spinning.

MICHELLE GOLDBERG, THE NEW YORK TIMES COLUMNIST: Correct. And then everyday --

HAYES: And eventually --

GOLDBERG: -- everyday it doesn`t go off people then think like --

HAYES: It`s OK.

GOLDBERG: Yes, but that`s going to be fine --

HAYES: That`s right.

GOLDBERG: Great. And eventually it`s not going to be fine. I mean, then already he`s sort of, if this all happened, you know, in the first couple months of the administration, which is sort of what I`ve expected, you know, stock market melt down, government shutdown, you know, wild, erratic foreign policy decisions. I think maybe people wouldn`t have been -- they wouldn`t be quite to emerge. So the chaos they might have acted a little bit more quickly. I think if the country is already in serious crisis even though aside from people at the border few people few people actually feeling it --

HAYES: Right.

GOLDBERG: -- feeling viscerally in their own lives.

HAYES: Was an idea that presidents grow in office?

EZRA KLEIN, FOUNDER, VOX: Yes. They come into the White House and they feel the weight of the responsibility on them and no matter who they were when they got in, they change, they become grayer --

HAYES: Yes.

KLEIN: -- they become more taken with what the office really requires of them. And Donald Trump has done literally the opposite.

HAYES: Literally the opposite, exactly right, yes.

KLEIN: He came in -- he did bring at least some people who were reassuring to folks who were critical of him. And day by day, week by week, month by month, the office that has driven him if anything is crazy if more irresponsible.

HAYES: Bejamin Button situation.

KLEIN: Benjamin Button situation. And is it goes on he`s becoming much more unleashed.

HAYES: Yes.

KLEIN: I mean to respond to losing the midterm election the way he has with the Mattis stuff, with the shutdown, with all of it, that`s not how -- that is not how previous presidents have done it. And so have this advising him to do it

HAYES: You know, to mean a big difference that we`re seeing here is that for while, you know, I was thinking about -- we -- he doesn`t really want to be one of the presidents. He wants to be like a cable news pundit or like the guy that bar watching talking back to the T.V.

And for a long time they`ve sort of allowed him to kind of like tucker himself out doing that. So, he`ll sit there at the T.V. and be like, I want to fire Mueller, they`re like, yes boss, yes boss, we`ll get to it. You know, Mueller doesn`t get fired. I want to pull out of Syria, yes boss, yes boss, yes boss. But now, there`s like, whatever that barrier was seems to be gone, whether that`s Kelly or whatever it is and he`s like he just going for it.

GOLDBERG: Right. And it look so bizarre is that I mean, we often talk about Fox News being state television, and (INAUDIBLE) to notice this. But, the difference between normal state television and authoritarian state and what we have here is that it`s not him dictating what`s on Fox News --

HAYES: They`ve been around.

GOLDBERG: -- its Fox News dictating what he`s doing. I mean, so you could literally -- you know, yesterday I was working on a column about criminal justice reform. And I started looking at comments on Breitbart where people were really disgruntled, that you know, we`re getting criminal justice reform and no wall and he`s sort of trying to convince everyone that his fence is really going to be a wall and technically Mexico is paying for it. They`re not buying it. They`re getting angrier, and angrier. And eventually he decides he has to responds to the voices on the television.

HAYES: Rush Limbaugh says today on his show they got assurances from people in the White House that the wall funding was going to happen.

KLEIN: But this is the thing about it. It is purely expressive governance.

HAYES: 100%.

GOLDBERG: He is not trying.

HAYES: We don`t even know what the wall is, is like a made up thing.

KLEIN: He is not trying to get on the wall --

HAYES: That`s right.

KLEIN: -- there`s a way you try to get the wall and that`s you give the Democrats something to get them to vote for it.

HAYES: They have the deal.

KLEIN: There is a negotiation he could have done DACA --

HAYES: Exactly. He would already if.

KLEIN: -- year and a half ago. If what it would have been done. He doesn`t want it. He wants to be seen fighting for it. This is your point about him basically being a reality T.V. programmer.

HAYES: Right.

KLEIN: He wants to be in the program.

HAYES: Right.

KLEIN: He wants to have great story lines, he wants to win sweeps sweep. He doesn`t want --

HAYES: What about the wall?

KELIN: -- that he`s arguing for. He`s not trying to govern. And as the shutdown too, he has no end game to any of this, everything is just like, got to have a cliff-hanger so people tune in tomorrow.

HAYES: But again, I mean the thing, that`s so crazy here is the consequences are so real, like there are a bunch of Kurdish fighters who were going to be ethnically cleansed. And this is not to say like that`s the reason we should stay in Syria, I think actually withdraws in Syria as a completely defense on the policy, but to just up and announce this, one day to the next like --

GOLDBERG: Right.

HAYES: -- life or death. There are people on the front lines who will find themselves in themselves in a pincher movement between Assad`s forces and Erdogan`s forces in Turkey who will find themselves killed, because one day he woke up and decided to do it.

GOLDBERG: Right. And what`s more in frightening is that he appears to have possibly done this in coordination with Erdogan, right? Like he has a covers get a phone call with Erdogan.

HAYES: Yes.

GOLDBERG: Erdogan basically says we want to go in there and go after the PKK. And then he tweets we`re getting out and Mattis doesn`t know, our allies don`t know, the Kurds don`t know, nobody knows except for, you know, that -- who`s someone who`s supposed to be someone, if not our enemy, someone we have at least a tense relationship with.

KLEIN: But, we`re talking about Donald Trump here. And the thing that I want to know about is Republicans in Congress. Here`s my understanding of their theory of the presidency. Jim Mattis is excellent.

HAYES: Right.

KLEIN: He`s a wise sage --

HAYES: They`re all saying it right now going with their tweets.

KLEIN: -- job of politics who is keeping Donald Trump and going off the rails. Jim Mattis is now resigning, saying Donald Trump has gone off the rails so deeply that he cannot countenance being in the administration anymore. So, what do Republicans in Congress do? What does a branch of government meant to check an out of control President do when the person they said they trusted in the administration said you can no longer countenance being part of this.

When do they -- we can talk all we want about how Donald Trump acts. But, we know how he acts --

HAYES: Yes. And we --

KLEIN: -- he`s acted this way the whole time. When do Republicans in Congress stand up and do their job?

HAYES: Paul Ryan, Kevin McCarthy, all of them went up to the White House today after (INAUDIBLE) came through the wall. They went in and they came out having been fed this sandwich that they have to eat, and they just came out with this grin on their face like, oh, well, the President wants the wall.

GOLDBERG: And they didn`t have to do it. I mean Paul Ryan, has got literally nothing to lose, right? He`s got a few days left.

KLEIN: Yes.

GOLDBERG: And also he could have -- they could have passed a veto proof version. They could have done it.

(CROSSTALK)

GOLDBERG: Yes. They could have done it. And but, yet they are still in his thrall in this bizarre sort of way that, you know, sort of like when does that crack, that mystique, because he doesn`t have a lot of political support but he does have this pull --

HAYES: Yes.

GOLDBERG: -- that they`re so scared of him.

HAYES: Yes, it`s going to be like bankruptcy, you know, slowly and then all at once, I think. Ezra Klein, Michelle Goldberg, thank you both for your time.

All right. Huge news about the special counsel tonight on a crazy new today, it appears this investigation is nearly done. And Mueller could submit his report as early as February. Ken Dilanian broke the news, he will join with me with all the details, next.

(COMMERCIAL BREAK)

HAYES: Tonight as Donald Trump`s defense secretary quits in protest and the government teeters on the brink of shutdown. There is also breaking news from the Mueller investigation. Government officials to NBC News, special counsel is nearing the end of his probe in the Russian election interference and is expected to submit his report to the attorney general as soon as mid-February.

I`m joined now by NBC News Intelligence and National Security reporter Ken Dilanian who broke that story tonight. MSNBC legal analyst and former U.S. attorney for the Eastern District of Michigan, Barbara McQuade.

All right, Ken. So, where are we getting this? What are now?

KEN DILANIAN, NATIONAL SECURITY REPORTER, NBC NEWS: I didn`t bring along and Chris it was with Pete Williams and a team of NBC journalists. But I think what`s happening here is that when Robert Mueller ultimately submits his confidential report to the attorney general it involves more than Robert Mueller and his staff. So, other people have to start planning for that process. And we`re picking up wind of that essentially and it`s going to be a confidential report. That`s all the regulations say.

And then it`s up to the attorney general, which if it happens in February is likely to be Matthew Whitaker, to decide what to do with it, how to make it public, whether classified information needs to be redacted, grand jury information, whether it goes to Congress all those kinds of things.

I think there is a universal acknowledgment, though, that there have to be some public answers as a result of this probe.

HAYES: I mean, Barbara, there`s no universe in which this report stays secret, right?

MCQUADE: Well, I hope not because there`s such keen interest in it, but if you look at the special counsel regulation what it says is that the special counsel submits a report to the attorney general and then the attorney general decides what to do with it, whether it ought to be released to the public or he could provide his own report to the congress.

I can`t imagine the public will allow him to get away without producing some version of the report. Maybe some of it needs to be redacted, but I think there`s been such keen interest. I just can`t imagine how this stays quiet.

HAYES: Let me ask you this, Ken, we have seen -- and I`ve seen people reacting to this story today with this, which is that we`ve seen time and time again it`s going to be a few more months, it`s wrapping up, it`s wrapping up. In fact, a year ago, I think it was Giuliani being like should be done by end of year. We`ll be done by January. What do you say to people who are skeptical, who hear this and be like I feel like we`ve heard this before and it hasn`t borne out?

DILANIAN: I`m very sympathetic to their skepticism. I was skeptical. Honestly, Chris, I was surprised by this. And we would not be reporting this just based on the assurances of Donald Trump`s defense attorneys, but, by the way, every lawyer we talked to with a client in this case also believes it`s wrapping up in February. But we have other sources who are in a position to know who are saying this.

But they`re also saying that it could slip, because there`s a couple loose ends here, one of which is, what is Mueller`s approach to the president of the United States? And if he does that, that`s going to result in a month-long legal fight, that could delay this.

And then the other loose end, of course, is Roger Stone and Jerome Corsi, but of whom say they expect to be indicted.

HAYES: Well, that`s the question, Barabar. I mean, there`s the report, which we -- which is sort of mandated by the regs, but there`s also whatever other grand jury activity or indictments, right, that could happen between now and whenever that report is issued.

MCQUADE: Yeah. And one doesn`t necessarily have to follow the other. I would think ordinarily you would want to go through the process of indicting maybe a Jerome Corsi and a Roger Stone if that`s in the works in hopes that you might be able to flip them and get information about what happened with WikiLeaks. But it could be that they`re going on different tracks, that they have already pinned down what they feel they need to learn about WikiLeaks. But I would fully expect Jerome Corsi to be indicted based on the fact that he disclosed his own plea offer. And usually prosecutors don`t make a plea offer unless they`re prepared to back it up with charges.

So it seems to me likely that at least Jerome Corsi would be charged and then, you know, we`ve got the report that Robert Mueller was seeking the transcript from Roger Stone`s testimony before congress. That seems that he`s at least still looking very carefully there. In a perfect world, you would imagine he would charge them first, kind of see what you get there before you issue a final report. So it makes me wonder whether they`ll be able to finish in February. But it is possible that those could go on parallel tracks.

HAYES: Ken, it`s amazing to me, you know, there`s two things in Washington that don`t leak, one thing that doesn`t leak are Supreme Court decisions. It`s -- they never leak, ever, even when there`s huge interest, they just don`t. That building is just a vault. And anything from Mueller. Like these guys -- only two things in Washington that you just cannot crack the safe. It is amazing that all these players in Washingotn are dealing with this big mystery that`s going to affect everyone`s lives and not knowing what`s inside.

DILANIAN: It`s incredible. And so we have a situation where Robert Mueller and his team have been investigating this for a year-and-a-half. And I can`t tell you the first thing, Chris, about whether he`s answered the central question of his investigation, which is, is there evidence or proof that Donald Trump and the people around him conspired with Russia?

We know a lot about a lot of crimes. He`s charged 33 people. But we don`t know that answer nor do we know whether he`s accusing the president of wrongdoing on the issue of obstruction of justice. It`s just a black hole. And I guess credit to Mueller for having a policy of not leaking and sticking to it.

HAYES: Do you think, Barbara -- do you imagine there is going to be pressure between now and February on Whitaker, or can you imagine him staying in this position until then?

MCQUADE: Well, I think he`ll stay until William Barr or someone else is confirmed as the attorney general. I think today`s news that William Barr wrote a memo talking about what he thinks of the obstruction of justice investigation, that he thought it was ill- placed, is going to cause him some speed bumps, at least, before the senate confirmation process. I think they`re going to have some strong questions for him, which could delay his ascension to the attorney general position, which means it could be Whitaker who`s in place there.

But I think regardless of who`s at the top, Rod Rosenstein will still play a key role. And as long as he`s there, that gives me some confidence that things will be handled appropriately.

HAYES: Final question, Ken, and you may or may not know the answer to this, but if the government shuts down does the Mueller team just not come to work?

DILANIAN: I don`t know if they`re deemed essential employees, Chris. I apologize to the viewers for not knowing that. It`s a great question. But I don`t think it will ultimately derail them.

You know what, these are the kind of guys that would come to work without pay if they were allowed to do that.

HAYES: Right. All right, Ken Dilanian and Barbara McQuade, thank you both.

This all happened today, all of it, while a huge scandal, a really enormous scandal broke out at the Department of Justice. Talking about Matt Whitaker, he`s not going to recuse himself from overseeing the Mueller investigation.

Now, Whitaker, who is on the record many times in print and on television slamming the special counsel probe had pledged to consult ethics officials about whether or not to step aside. But according to The Washington Post, Whitaker has now disregarded the recommendation of the Justice Department ethics officials, instead assembling a group of his own advisers who, you`ll be shocked to hear, recommended the opposite.

Whitaker has no plans to step aside.

Joining me now is Jill Wine-Banks, former assistant Watergate spcial prosecutor and MSNBC legal analyst, and Ben Wittes, also an MSNBC legal analyst and editor-in-chief of the Law Fare.

Jill, is this as shady and as wrong as it looks to me?

JILL WINE-BANKS, FORMER ASSISTANT WATERGATE SPECIAL PROSECUTOR: Yes, it is. It`s a real wow. I`m just stunned.

First of all, there was an announcement that the ethics people had advised that he did not need to recuse himself. And then they withdrew it and said, actually, the ethics people had advised that he should recuse himself, because it looked bad, because it looked like there was a conflict of interest, and the appearance was enough to require him to recuse himself.

And yet here he is saying he will not recuse himself. It is wrong. It is just plain wrong. His opinions have been expressed both factually and legally, and that bars him from making an objective decision on it that isn`t predetermined.

HAYES: What do you think, Ben?

BEN WITTES, EDITOR-IN-CHIEF LAW FARE: I largely agree with that. I think the -- look, he received advice apparently from the ethics people that it was a close call, that there was no actual conflict of interest, but there was an appearance problem. And in that situation, given the magnitude of the appearance problem with respect to the most important thing on the Justice Department`s plate right now, the right thing to do is not to put the department in that position.

And ironically, of course, the person who is slated to replace him on a permanent basis, Bill Barr, has very much the same problem. As we learned today, you know, wrote a memo, 20 pages, that he shared with both the Justice Department and apparently with the president`s lawyers that also weighs in on the substance of the obstruction case.

And so I think there`s a -- I think it`s very hard to argue that it is a good idea for Matthew Whitaker to be supervising this investigation and to ask for the input of the ethics people and then to disregard their advice strikes me as very ill-advised and very inappropriate.

HAYES: Jill, this Barr memo, it`s a 20-page memo on some of the legal issues, particularly around obstruction of justice. It`s sent to the White House counsel and to people at the Department of Justice. And it sure looks to me like a job application, given that we know this is the front of the president`s mind, just oh, by the way I`ll just drop off this 20-pager dashed off with some thoughts. Here you go. Do you think it`s inappropriate?

WINE-BANKS: I think it was very inappropriate. It`s hard to explain because it was completely unsolicited. He just volunteered to write this memo, taking exactly the position that the president wants. And if Whitaker auditioned for his job by going on television, then Barr auditioned by sending this memo saying you can`t indict the president for obstruction.

And I`ve had a chance to review very quickly his memo, and I cannot agree with almost anything in it. And it would show things like well then Richard Nixon couldn`t have been charged, even as an unindicted co- conspirator, for his obstruction of justice, because after all he could have, according to the theory put forth by Barr, he could have just told the FBI to stop investigating, because he has total prosecutorial discretion, which is completely not true.

The president, unlike any other department, cannot supervise detailed decisions. He can set policy for the Department of Justice like I don`t care about anti-trust, please put more lawyers on criminal matters, but he can`t say prosecute this particular criminal case. And that`s what this is saying is that he has total authority to say go ahead with the case or not go ahead with the case. And we can`t look at his corrupt motive in deciding which cases to pursue.

HAYES: Yet...

WINE-BANKS: That is just wrong.

HAYES: This has been a legal theory, Ben, that has been -- a number of people have sort of put it forward. Alan Dershowitz, I think, is very associated with it. Basically, if the president has the constitutional authority and the role of executive to do a thing, you can`t look essentially behind that to see what the motive is, if it`s corrupt intent, you just -- that`s it. He`s got the power to do it and you guys have got to buzz off.

And it does seem like that it`s going to end up being his best defense, given what we already know about the actions he`s taken in the White House vis-a-vis obstruction.

WITTES: Yeah. So, I mean, the degree to which Article II of the constitution limits the application of the obstruction statute to the president is a really, really complicated question, and it`s one in which I actually think there are some good arguments on both sides. It`s a complicated issue.

The problem with this memo, other than that it takes a rather extreme view of that question, is that the memo is based on two sets of facts that Barr appears to have just made up. One is what the legal theory that Bob Mueller is proceeding under is, and I don`t know how Barr purports to know that, because certainly Mueller has said nothing about his legal theory about obstruction. I mean, there`s been a lot of speculation about it, but we actually know nothing about it.

Moreover, the facts that Mueller is investigating with respect to the president`s conduct are also -- you know, we know some of them, but we don`t know what the sum total of them is and we don`t know how much of it is or is not a part of his Article II responsibilities as president. So, for example, some of the issues that Mueller appears to be looking at involve the president`s, you know, contacts with potential witnesses. Now, that is not an Article II authorized activity.

HAYES: Right, right.

WITTES: And so I don`t really understand how Bill Barr got to either of the two major factual premises of the memo, which he then proceeds to write 20 pages of pretty hard line views of the law on the basis of it seems all based on made up facts.

HAYES: All right, Jill Wine-Banks and Ben Wittes, thank you both.

Still ahead, more of the Mattis resignation and looming shutdown and today`s explosive hearing with the Homeland Security Secretary, Congressman Luis Gutierrez on all of the above next.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

KIRSTJEN NIELSEN, SECRETARY, HOMELAND SECURITY: I will continue to work with the northern triangle countries, with Mexico, to help vulnerable populations as soon as possible. From congress, I would ask for wall. We need wall.

(END VIDEO CLIP)

HAYES: We need wall. Give us wall.

On Capitol Hill today, Homeland Security Secretary, Kirstjen Nielsen announced a new Trump administration policy that would keep many asylum seekers in Mexico while they wait for processing.

House Democrats took umbrage with that, along with the administration`s previous treatment of immigrants.

(BEGIN VIDEO CLIP)

REP. LUIS GUTIERREZ, (D) ILLINOIS: The all time record for lying in the face of all the evidence was a tweet, you madam secretary, sent out on June the 17th. And it says, "we do not have a policy of separating families at the border, period." That`s your Twitter account. That`s what you put out. Yet you came here today to tell us exactly is your policy of separating families and children from their families, another lie.

(END VIDEO CLIP)

HAYES: That, Congressman Luis Gutierrez, Democrat from Illinois, is leaving congress after 26 years, and he joins me now. What do you think about the new policy that is going to keep a lot of people near the border in Mexico where many people say they will be exposed to tremendous danger?

GUTIERREZ: I expect that we will be in court promptly to ensure that the asylum and refugee laws on the books are complied with by this administration. That`s what I expect. I say how cruel, how inhumane, as I called them out today -- you know they love to wear their religion and their christianity on their sleeve or around their necks with crucifixes, and yet their policy is cruel and inhumane and really detrimental to women and children.

And so, look, I expect to be going into court, Chris. And, look, here`s what she`s doing. You and I both know, she`s auditioning for Donald Trump so that she can keep her job. We don`t know if the New Year she`s going to have a job, so the president wants a wall -- she has actually evolved in the wrong direction. I guess like many people that work for this administration, she`s not going to leave with her reputation or her dignity intact.

HAYES: When she said wall today, which by the way it`s a weird style thing at DHS. They don`t use definite or indefinite articles in front of wall, it`s wall, the wall, a wall, the wall, wall. She is pushing this now. The president insisted is going to shut down the government over it. Do your Republican colleagues realize the whole thing is a preposterous con?

GUTIERREZ: I think many of them do, but I think that what they have done is they`ve set themselves in motion in a certain way, Chris, and they`ve articulated some things to their base and they can`t find the way out of their own dilemma, right, that they`ve created for themselves.

Look, when I met with Mr. Kelly, the chief of staff, when I was sitting right next to him and he said don`t worry the president has evolved, that was campaign rhetoric, we`re really not going to build a wall, it was very much publicized, these comments of Mr. Kelly.

So, look, we all know that there are -- the wall -- it`s not going to get built, right. Democrats aren`t going to give them $5 billion. We`re coming back.

Here`s what I expect to happen. I expect that tomorrow we don`t have a resolution, because it`s kind of complicated in the senate, and there are rules in the House. And unfortunately hundreds of thousands of people are going to go with a Christmas without a paycheck, without a job. That`s sad. That`s also very un-christian of them during the Christmas season, especially when all the members of congress are going to get their pay and their health care. So I expect that`s going to happen.

Look, I think it`s going to be kind of two to nothing, Nancy Pelosi, when she assumes the speakership of the House of Representatives and says next 60 minutes let`s reconvene after she gets sworn in as speaker and let`s reopen the government on January 3.

I think, sadly, that is what...

HAYES: So you think a shutdown -- you think they`ve painted themselves into such a corner over this wall they basically shut down everyone who leaves town, come back and basically Nancy Pelosi passes the deal they had anyway with the senate and McConnell says OK and they reopen the government.

GUTIERREZ: I think that`s exactly what`s going to happen, because to the surprise of many, we have friendships, right. I mean, I have Republican friends, Republicans -- Democratic friends, unfortunately, you know, bipartisanism and our friendship isn`t usually something that is much talked about.

I went to talk to them, they feel cornered. They feel trapped. Many of them see this as simply a continuation of the decline of the Republican Party and their brand and their effectiveness in the next elecitons.

Look, I kind of look at it this way, Chris, Hillary Clinton won by 3 million votes and then now more than 7 million last November voted Democrat than Republican. This is really headed in the wrong direction, and the wall is something that is immoral, and that the American people aren`t demanding.

So the group that they have of voters are with them and they don`t expand their base with this.

HAYES: They think it is -- it is really a through the looking glass, they think the wall is a political winner.

GUTIERREZ: They do it`s a political winner from them. It is what Trump began with, right, it is what he`s insisted. But think about it, they could have had this victory. If you recall, Chris...

HAYES: I remember the DACA deal. They would not take yes for an answer.

GUTIERREZ: We offered $5 billion for the freedom, right. The ransom...

HAYES: Pay the ransom. You were right to say the ransom.

GUTIERREZ: We`re going to pay the ransom. It got better for them. Do you remember when all of the Democrats got together, including Bernie Sanders...

HAYES: $25 billion.

GUTIERREZ: $25 billion.

HAYES: I remember the numbers.

GUTIERREZ: Because you know what, you cannot negotiate with them, because what they want in the end is something that is unnegotiable: the destruction of our immigration system. They want to end immigration to the United States, and that is a step that we will never enter into. That is just a step we`re not going to take.

HAYES: Congressman Luis Guiterrez, thank you for being here.

GUTIERREZ: Thanks, Chris.

HAYES: As the White House Trump chaos continues, Democrats are officially plotting their plan to unseat him. The DNC is out with its plan for primary debates and much more. Tom Perez joins me exclusively to explain it all next.

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HAYES: The first debate of the 2020 presidential campaign is now officially just six months away. Today, the DNC announced the Democratic primary debate schedule with the first two debates in June and July and the next debates happening once a month from September 2019 through April 2020.

Anticipating a boatload of candidates, the DNC will be not dividing debates into the grown up and kids table model famously used by the RNC last year, which segmented the debates based on polling numbers, instead they will have a random drawing with debates on back to back nights if needed.

Joining me now to explain how this all going to work, DNC Chairman Tom Perez.

What were your big problems you had to solve as you crafted this, given the size of the field everyone is anticipating.

TOM PEREZ, DNC CHAIRMAN: Well, Chris, I welcome the large field. I think that is a first class problem to have. We have got a really deep field. And my goals were two-fold: make sure everybody gets a fair shake, and then make sure -- if we have 14 people running for president, 13 aren`t going to make it to the mountain top, I want to make sure that all of those candidates and their followers feel like their candidate got a fair shake. And that is why we`ve put in place this very transparent process that is going to give them that fair shake and give voters an opportunity to hear from candidates what, they stand for and what they are fighting for.

HAYES: You said this, and I thought this was really interesting, so you are not going to use polling to sort of segment, that was a big thing that happened in that last -- in the last round on the Republican side, the sort of undercard. You say candidates will qualify for the first two debates by meeting criteria include both polling and other objective measures that reflect a candidate`s support such as grassroots fundraising, which I thought was interesting.

Tell me more about how you`re going to think about what the cut-off is for who gets to participate.

PEREZ: Sure. well, if you want to apply for public financing of a presidential campaign under the law that congress passed over a couple of decades ago, you have to show that you have a grassroots fundraising capacity. I believe under our current campaign finance laws you raise a certain amount of money in 20 states in increments of -- I think under the current law it is $250 or less, that shows that you`ve built an operation nationwide.

And so we`re looking at that as a framework for trying to make sure that we`re not simply looking at polls that all too frequently just measure name ID.

HAYES: Exactly.

PEREZ: But we`re actually looking at other people and what they are doing to show that they deserve to have a shot in those first couple of debates, and then make sure when you draw the -- say it is 12 people, when you draw them randomly, again, I want people to have a fair shake and we`ll do that drawing publicly.

HAYES: It will be like the NBA lottery.

You got -- you got this issue, it is interesting you said that, right, because there likely could be very wealthy individuals running who could self fund and who could so something like self fund a huge amount of air time to push up their name recognition. It is interesting to me that you`re thinking about ways to get around essentially the early polling problem, which is that early polling in the summer of 2019 isn`t going to mean that much.

PEREZ: Look at all of the candidates who were in first place in the summer before the election, you know, 16 months before who didn`t make it to the mountaintop.

I had the privilege, Chris, of meeting and working with many, many people who are considering running for president. They are spectacular. They have a story to tell. They`ve had careers of accomplishment, and our goal is to make sure that the American people have an opportunity to see them, to kick the tires, to understand what they`re fighting for. And we`re going to be fighting -- we`re going to be talking about the issues in these debates, we`re not going to be talking about hand size. We`re talking about health care. We`re talking about climate. We`re going to be talking about how we regain our democracy.

Your show tonight has been a compelling case study in why we have to elect a Democrat next year -- in 2020 and what I want to make sure we do with this process is continue to earn trust and give folks a fair shake, and make sure that as many eyeballs as possible have an opportunity to watch our candidates, because I think we`re going to have a great stable of them.

HAYES: All right, Tom Perez, who got a heck of a job. And I gotta say, going into the next two years, I do not envy the amount of heart burn that you`re going to be experiencing trying to manage this process. But thank you for coming on tonight and explaining. I really appreciate it.

PEREZ: My pleasure.

HAYES: All right, that is -- I think we`ve done it. That is All In for this evening -- I think I`m still here -- what is it -- good, OK. Rachel Maddow Show starts now. Good evening, Rachel.

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