The meeting, which took place on January 4 in the White House Situation Room, consisted of Trump restating his demand for $5.7 in funding to build a wall along the U.S. -Mexico border.
"The president and Mulvaney joked about it afterwards", the official said.
A White House official told Axios: "This is an exaggerated account of the exchange that doesn't reflect the good relationship Mulvaney has built over the last two years with the president". The shutdown on Sunday entered its 23rd day.
During the January 4 meeting, Trump is said to have reiterated his demand for funding, even after Vice President Mike Pence asked Democrats for less than half of that amount - proposing $2.5 billion be earmarked for a border wall.
Paraphrasing comments made by Mulvaney, the source said, 'If Dems weren't OK with $5.7 [billion] and the President wasn't OK with $1.3 [billion].
"'You just fucked it all up, Mick, '" the source recalled Trump saying.
Democrats have repeatedly poked at the former GOP congressman during negotiations, suggesting that he likes government shutdowns, the source said, because of his fiscal conservative background.
Mulvaney inserted himself into the conversation and tried to negotiate a compromise sum of money, according to the sources in the room. "Mick was not reading the room or the President".