GIVE IN, OR DIG IN? President Trump will need all his negotiating skills today as he meets with House and Senate Minority Leaders Rep. Nancy Pelosi, Calif., and Sen. Chuck Schumer, N.Y., to work on a deal aimed at avoiding a federal government shutdown in 10 days. Trump’s newest, biggest ally in Congress, South Carolina Sen. Lindsey Graham, R-S.C., is advising the president to play hardball with Democrats over his demand for $5 billion to begin construction of the border wall — which Trump initially promised Mexico would pay for. “If I were the president, I would dig in and not give in on additional wall funding,” Graham said Sunday on Fox News. “I want the whole $5 billion because the caravan is a game-changer.”

HAPPENING TODAY: Army Col. Jonathan Byrom, who is deputy director of Joint Operations Command — Iraq, will no doubt face some questions today about why the U.S.-led coalition bombed a hospital in Syria, as the U.S.-backed Syrian Democratic Forces closed in on the last remnants of ISIS fighters.

The U.S. says Hajin Hospital lost its a protected status under the Law of Armed Conflict when ISIS began using it as a platform to engage U.S. partner forces on Dec. 9. Hospitals are usually off limits to attack, under provisions of the Geneva Conventions.

“ISIS has no regard for human life. As we close in on them, they are getting more and more desperate and are hiding behind the safety of mosques, hospitals, and other protected sites,” said Maj. Gen. Patrick Roberson, commanding general of the Operation Inherent Resolve mission. “Hiding is futile and we will continue to work with our partner forces to find ISIS and ensure their lasting defeat.”

THEY SEND BOMBERS, WE SEND DOCTORS: Meanwhile the Pentagon yesterday was contrasting the actions of the United States and Russia in response to the humanitarian crisis caused the meltdown of the Venezuelan economy.

The medical staff on the U.S. hospital ship USNS Comfort have treated more than 20,000 civilians and performed over 600 surgeries as its stops in various Central and South American nations, including places where patients have fled the desperate conditions in Venezuela, the Pentagon said yesterday.

“The Comfort is currently in Honduras and will continue treating those in need until the ship departs this week,” Manning said, before taking a swipe at Moscow. “Contrast this with Russia, whose approach to the man-made disaster in Venezuela is to send bomber aircraft instead of humanitarian assistance. The Venezuelan government should be focusing on providing humanitarian assistance and aid to lessen the suffering of its people and not on Russian warplanes.”

Two Russian Tupolev TU-160 Blackjacks supersonic strategic heavy bombers are in Venezuela, along with maintenance and refueling capabilities, according to the Pentagon.

CHINA, RUSSIA NAVAL BRIEFING: The Senate Armed Services Committee will get a closed-door briefing at 2:30 p.m. from Navy and Marine Corps leaders on recent naval activity by Russia and China. Moscow triggered an international crisis last month when it seized three Ukrainian naval vessels off the coast of Crimea. Just last week, a Chinese military official reportedly suggested Beijing should confront and ram U.S. Navy ships conducting freedom-of-navigation operations in the South China Sea.

AI HEARING: The House Armed Services Committee has a hearing scheduled for 3:30 p.m. on the Pentagon’s artificial intelligence programs. Deputy Defense Undersecretary Lisa Porter and Dana Deasy, the Pentagon chief information officer, will testify.

KYL AT HERITAGE: This afternoon at 4:30 p.m. Sen. Jon Kyl, R-Ariz., a Senate Armed Services member, gives a talk at the Heritage Foundation titled, “A National Security Crisis,” which will touch on defense spending and challenges from Russia, China, North Korea, and terrorist groups.

DEFENSE STOCKS JUMP: While trade disputes swing the market, reports over the weekend that Trump has settled on an eye-popping $750 billion defense budget appeared to equal a good day for defense stocks. “Shares of Raytheon, Lockheed Martin, and Northrop Grumman rose more than 2 percent each in trading. General Dynamics also gained 1.3 percent, while Boeing rose off the lows of the day,” CNBC reported.

Lockheed Martin led the rise in the defense sector, rising up to 4.2 percent, which was its best day in over eight months, the Financial Times reported. But Raytheon and Northrop saw similar gains. “Overall the S&P 500 Aerospace and Defense industry index gained 0.7 percent. This compares to the wider S&P 500, which briefly hit an eight-month low after dropping as much as 1.9 percent earlier this morning,” according to FT.

The rise in defense and tech stocks helped the stock market eke out a modest gain, following a week in which the S&P 500 lost more than 5 percent.

BORDER DRAWDOWN: The Pentagon is beginning a drawdown of U.S. active-duty troops at the U.S.-Mexico border this week that will result in about 2,200 being home by the holidays, the Associated Press is reporting. Defense Secretary Jim Mattis just signed an order last week extending the border mission end date from Dec. 15 to the conclusion of January. The Pentagon said Monday that about 5,200 troops remain in Texas, Arizona, and California.

“Some units have completed their mission and have already started to partially redeploy. Other units have been identified to rotate home and will be returning home over the next several weeks,” Pentagon spokesman Col. Rob Manning said. But Manning said the troop totals are “going to flux” and depend on the support requested by the Department of Homeland Security and its U.S. Customs and Border Protection.

LOSING THE NEXT BIG WAR: The first big defeat of the U.S. military could be just around the corner. At least that is the grim warning from a commission created by Congress to review the Trump administration’s national defense strategy. “We don’t have the margins that I would like to see to guarantee a win,” said retired Adm. Gary Roughead, the former chief of naval operations and co-chair of the commission. In this week’s Washington Examiner magazine we dive into the nightmare scenarios laid out by the Commission on the National Defense Strategy, including a China trade blockade, a North Korea nuclear standoff, and a war with Russia in the Baltics.

TRANSGENDER HEARING: Plaintiffs suing President Trump and Defense Secretary Jim Mattis over its transgender military service policy faced tough questioning Monday from judges weighing an appeal by the administration seeking to lift an injunction on the policy. Judge Thomas Griffith, of the D.C. circuit court of appeals, said existing case law suggests the courts should often defer to the government when it comes to who can serve.

“Isn’t that what both those cases teach us is to tell courts, ‘Tread very carefully if at all here,’ because we leave to the political branches, the determination of who is combat ready and who is not combat-ready,” Griffith said during the arguments. “Why isn’t that precisely what we’re dealing with here? You are asking the courts to make determinations we are not equipped to make: Who is combat ready, who is not.”

Transgender plaintiffs and rights groups argued the policy is about discrimination, not readiness and asked the three-judge panel to block the government’s appeal. A decision by the court could take weeks or months. “The weight of the evidence before the district court was that the 2017 White House memorandum was based on discrimination against a class of individuals,” said Jennifer Levi, a lead attorney for the plaintiffs and the director of the Transgender Rights Project for the group GLAD. “And the government was directed to develop an implementation plan to carry out that discriminatory directive.”

MATTIS UNSCATHED: Writing in The Atlantic, James Fallows runs down a list of people he believes have had their reputations sullied while working the Trump administration, including he argues generals such as former national security adviser H.R McMaster and outgoing White House Chief of Staff John Kelly. The exception, argues Fallows is Defense Secretary Jim Mattis.

“He seemed to take a big step in the wrong direction when he approved the political stunt of deploying troops to the southern border, before the election, to fend off ‘the caravan,’” Fallows writes. “But otherwise he’s mostly been sure-footed, and is the one senior Trump official whose personal and professional reputation is not yet in tatters, compared with the pre-Trump years.”

THE RUNDOWN

Breaking Defense: $750 Billion Or Bust? Trump’s (Latest) Big Defense Budget Bound For Big Fights

Bloomberg: U.S. Places Sanctions on Three Senior North Korean Officials

Washington Post: Retired general faces rape charges in Virginia following dismissal of Army case

Breaking Defense: US Army’s Brain Transplant: Futurists Move To Futures Command

Daily Beast: Paul Bremer, Former Iraq Czar, is Utterly Confused How He Became an Internet Meme

Defense News: The US Navy’s last stealth destroyer is in the water

Foreign Policy: The Death of Global Order Was Caused by Clinton, Bush, and Obama

Air Force Magazine: Global Defense Spending Expected to Increase in 2019

Business Insider: Watch Russia’s elite Spetsnaz operators train by drop-kicking the windshields of cars

The Hill: House lawmakers push Yemen resolution as Senate nears vote

Reuters: Accused Russian agent Butina poised to plead guilty: U.S. court papers

Wall Street Journal: Iraq Marks Anniversary of ISIS Defeat Amid Public Discontent

New York Times: A Conflicted War: MS-13, Trump and America’s Stake in El Salvador’s Security