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EARLY START

House Republicans Vote to Curb Ethics Office; Team Trump Lowering Expectations; Trump Taunts North Korea; Manhunt for Istanbul Gunman Intensifies. Aired 4:30-5a ET

Aired January 3, 2017 - 04:30   ET

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


JOHN BERMAN, CNN ANCHOR: But Virginia Republican Congressman Bob Goodlatte, he's the chairman of the Judiciary Committee, he made this proposal.

[04:30:04] He said he actually strengthens the mission of the Ethics Office and improves due process rights for House members under investigation. Members had complained it was expensive to defend themselves. They had to hire attorneys and whatnot.

House Democratic leader Nancy Pelosi, she blasted the change, saying it would destroy the Ethics Office. She tweeted, "So much for draining the swamp." The full House votes on the measure today.

You know, it should be noted that House Speaker Paul Ryan argued against the change behind closed doors.

CHRISTINE ROMANS, CNN ANCHOR: All right. Also this morning, transition officials defending Donald Trump's skepticism about U.S. intelligence that points to Russia as the culprit in election hacking. They are trying to tamp down expectations about when and how much Mr. Trump will actually tell about this inside information on the hacks that he promised to share today or tomorrow. Remember, he said he knows things others don't know and it will be revealed Tuesday or Wednesday.

We now know that Trump's planned meeting will not come today. So, don't expect any big reveal before that sit down or maybe ever.

Here is senior advisor Kellyanne Conway on "AC360".

(BEGIN VIDEO CLIP)

ANDERSON COOPER, CNN ANCHOR: I want to be clear about the information about the hacks that Trump says he knows. He says, quote, "You'll find out on Tuesday or Wednesday." Will he actually announce what the information is Tuesday or Wednesday as he said he would after being briefed?

KELLYANNE CONWAY, TRUMP SENIOR ADVISOR: Well, he didn't say he -- didn't necessarily say he'd announce it. What he is saying is that he'll -- we'll find out -- he'll find out. I think it's all very contingent on what these intelligence officials reveal in their briefing, Anderson. And everybody should be very happy that the president-elect is open to receiving that briefing.

(END VIDEO CLIP)

BERMAN: To be clear exactly what the president-elect said, was that he already had information that others did not know about Russian hacking and he said to be clear, exactly that he would tell us what it is today or tomorrow. Now, the incoming White House press secretary Sean Spicer says all he is likely to reveal are his conclusions.

(BEGIN VIDEO CLIP)

SEAN SPICER, INCOMING WHITE HOUSE PRESS SECRETARY: As president- elect, he is privy to information that most people aren't. He is able to understand what the intelligence is and draw conclusions from that. He's going to talk about his conclusions and where he thinks things stand. So, he's not going to reveal anything that was privileged or shared with him classified.

(END VIDEO CLIP)

BERMAN: Now, this comes as U.S. intelligence officials tell CNN they identified what they called digital fingerprints and computer code that adds to the evidence that Russia was behind the intrusions. Now, even one of the president-elect's senior advisers on intelligence says he thinks the Russians were involved in the hack.

Joining us now with the latest, live from Moscow, senior international correspondent Frederik Pleitgen.

Good morning, Fred. What are you learning?

FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Good morning, John. There's certainly a lot of information that's been coming out over the past couple hours, especially with these digital fingerprint fingerprints. That really seems to be something that really is causing a big stir. Essentially what that source told CNN is that it says that this digital fingerprints linked back or were linked back to a keyboard using the Cyrillic alphabet. That, of course, is the alphabet that's used in the Russian language, and that further analysis has led to the conclusion that it is the Russian government that was behind these hacks.

Now, a second source is also telling CNN that the quality of intelligence that they're getting on Russia far surpasses the quality of intelligence that they get on many other areas, for instance, North Korea and China. That's also one of the reasons why the intelligence community is so certain that Russia and Russian government entities are possibly behind the hacks that happen.

At the same time, of course, as you noted, the incoming Trump administration and Trump himself, what the president-elect himself still saying that there are doubts. But now, a senior member of his transition team, the former CIA director, James Woolsey, coming out and saying, yes, he believes Russians were behind it, but it's unclear to which extent. Let's listen in.

(BEGIN VIDEO CLIP)

JAMES WOOLSEY, FORMER CIA DIRECTOR: It looks from all the indications that we read about from NSA and CIA and so forth as if the Russians were there and perhaps even principally there. It doesn't mean that there isn't somebody else in there. Donald Trump is an expert of this kind of weaving around and attracting everybody's attention. It's exactly what he did during the campaign.

JIM SCIUTTO, CNN CORRESPONDENT: Are you saying he is playing us?

WOOLSEY: There is a possibility that he is --

SCIUTTO: But is that something the president-elect should be doing on the serious issue of national security?

WOOLSEY: Why not? He is not interfering with anything. He's not talking about anything classified.

(END VIDEO CLIP)

PLEITGEN: Just gives you an indication how murky these waters of cyber hacking and cyber security are, with James Woolsey there saying he believes the Russians were there. But others may have been there as well.

I was able to speak to one of Russia's top journalist for cyber security and cyber hacking. He says all the indications he has been seeing so far is that there were possibly Russians involved, but it's difficult to say whether or not it was direct involvement by entities of the Russian military or the Russian government. Of course, the government itself, the Kremlin, is still saying that they believe that these charges are politically motivated and they're calling them absurd -- John.

[04:35:00] BERMAN: All right, Frederik Pleitgen. Well, James Woolsey, add that to White House, Senate Republicans, as well as intelligence agencies that do say the Russians were involved. Fred, nice to see you this morning.

ROMANS: All right. Trump is using Twitter to challenge North Korea and take a shot at China. President-elect responding to Kim Jong-un's latest threat to test an intercontinental ballistic missile, tweeting this, "North Korea just stated that it is in the final stages of developing a nuclear weapon capable of reaching parts of the U.S., it won't happen."

Trump turned attention to China, tweeting, "China has been taking out massive amounts of money and wealth from the U.S. in totally one-sided trade but won't help with North Korea. Nice."

BERMAN: Members of the president-elect's transition team are meeting this week to work on executive actions and orders that could be signed just hours after the inauguration. According to the Trump's incoming press secretary, Sean Spicer, we can expect a lot of regulations enacted by the Obama administration to be repealed for what he calls hampering job and economic growth. The Trump team is now specifying exactly which executive actions top the president-elect's list.

Efforts to get the transition off to a quick start may be stalled by Senate Democrats. They are vowing to delay eight of the president- elect's cabinet nominees, including his picks for secretary of state, attorney general and secretary of health and human services. Democrats say that if they do not get what they like in terms of background and financial records and time to review them, they will use procedural maneuvers to drag out the confirmation process, maybe for months. Incoming Senate Minority Leader Chuck Schumer said, "Any attempts by Republicans to have a series of rush, truncated hearings before inauguration day is something Democrats will vehemently resist. If Republicans think they can jam through a whole slate of nominees without a fair hearing process, they are sorely mistaken."

ROMANS: All right. Congress returns to work this morning and at the top of the many of lawmakers' to-do list, dismantling Obamacare. The big question is, does the GOP have a legitimate plan to replace it? Republicans do not control enough seats in the Senate to repeal and replace right away. So, instead, they likely will try to gut some provisions and while changing others. It's in the budget process.

A CNN Money analysis shows some of the changes that may be coming.

First, tax credits instead of subsidies. This could help more middle class families who don't qualify for help under Obamacare, but it could hurt some lower income families.

Second, high risk pools for the sick. This would cover some people with pre-existing conditions who have insurance and would send money to states for new enrollees. States would also get federal block grants for Medicare, limiting how much the government spends for insurance for the poor.

And, finally, bolstered health savings account. This is the favorite tool of Republicans. HSAs are common with high deductible plans.

BERMAN: Thousands of travelers were delayed for hours at airports across the country on one of the busiest travel days of the year. The problem was a computer outage that lasted about four hours from 5:00 to 9:00 p.m. It created a long line of international travelers.

Customs and Border Patrol officers, they had to process passengers through so-called alternative procedures. A U.S. official told CNN that at this time, there is no indication that the service disruption was malicious in nature.

ROMANS: Alternative procedure means with the old way.

BERMAN: Actually talk to humans.

ROMANS: Yes, right.

Thirty-eight minutes past the hour.

The manhunt intensifies in Turkey for the gunman who opened fire at the nightclub on New Year's Eve. We are live in Istanbul. (COMMERCIAL BREAK)

[04:42:05] ROMANS: In Turkey, the manhunt intensifies for the Istanbul nightclub attacker, 39 people were killed in the New Year's massacre, most of them foreigners. And ISIS has now claimed responsibility.

Police have detained eight people in the connection with the attack. And fingerprints found at the scene could help identify the shooter.

CNN's Ian Lee following developments. He is in Istanbul for us.

Ian, what do we know about the shooter? What kinds of evidence or clues are they following?

IAN LEE, CNN CORRESPONDENT: Well, the police haven't released much evidence or much clues to the media about what they know. At least what they say they think they know. What we do have, though, is that there are hundreds of police officers scouring the nation, looking for this man.

We can see when he entered the nightclub, he had an automatic weapon. A Kalashnikov. That was left behind. That's going to give them evidence.

They also have that picture. They also have the fingerprints. They say not only will that help them identify the attacker, they say that will also help them figure out if he had any help and security experts say that it is likely he had help because he was able to slip away easily and they still haven't found them, even it has been 48 hours since this attack happened.

ISIS claimed responsibility for it and if he is an ISIS operative, there is a chance that he might try to slip into Syria where ISIS controls territory. So, for Turkish officials, it is a bit of a ticking clock, similar what we saw in Berlin where the attacker was found 800 miles away before authorities were able to catch up to him.

Right now, though, in Turkey, a lot of people are nervous with the person still on the loose. A lot of people are staying indoors. I spoke with some who say they don't feel it's safe even though there is this ramped up security presence across the country.

ROMANS: All right. Ian Lee, keep us up to speed if you find any developments this morning. Thank you.

BERMAN: Israeli Prime Minister Benjamin Netanyahu faced police interrogation overnight in a corruption probe authorized by his own attorney general. Netanyahu accused of receiving illegal benefits from businessmen and he faced three hours of questioning. Authorities are not releasing details. Netanyahu denies any wrongdoing and calls the accusations politically motivated.

ROMANS: Republican House leaders are planning to vote Thursday on a measure condemning last month's U.N. resolution against Israel. That U.N. resolution label Israeli settlements in the West Bank a flagrant violation of international law. And the Obama administration abstained when it came time to vote.

Republican leaders say the Obama White House has lost credibility on Israel and that their bipartisan reaffirms America's longstanding commitment to the Jewish state.

BERMAN: In Brazil, local officials want the national government's help to fight drug trafficking and strengthen security in state prisons. This after a bloody 17-hour prison riot Sunday that left 56 inmates dead. Authorities believe the disturbance began when members of rival gangs started fighting over control of the prison and drug trafficking routes.

[04:45:06] Brazilian media is reporting that gang members deemed responsible for the uprising will be transferred to federal prison.

ROMANS: All right. It's the first trading day of 2017. Do you know where your money is? We're going to show you some bullish and not so bullish predictions for stocks this year, when we get a check on CNN Money stream next.

BERMAN: I haven't lost money yet this year.

ROMANS: I know.

(COMMERCIAL BREAK)

BERMAN: President-elect Donald Trump lashing out at the mayor of Chicago, Rahm Emanuel, over the soaring murder rate in that city. Fifty-seven percent spike in 2016. Donald Trump wrote, "Chicago murder rate is record setting." It's not, by the way. It's the worst in 20 years, but it's still very, very bad. "4,331 shooting victims with 762 murders in 2016. If mayor can't do it, he must ask for federal help."

It didn't take long for Mayor Emanuel to respond.

Let's get the latest from CNN's Rosa Flores.

(BEGIN VIDEOTAPE)

ROSA FLORES, CNN CORRESPONDENT: Well, John and Christine, the city mayor's office responding to the president-elect's tweet by saying in part, quote, "We are heartened he is taking this issue seriously and look forward to working with the new administration on these important efforts."

Now, let's dive into the details a bit here because in 2016, the city of Chicago saw 762 murders, 3,550 shooting incidents and 4,331 shooting victims. Now most of these killings happened in five districts on the west and south sides of the city. This is according to police, in an area, they say, where 59 gangs are fighting for territory.

Now, if you ask the former police superintendent, he'll say that the Chicago Police Department is in crisis. Here is what he told "60 Minutes." [04:50:02] GARRY MCCARTHY, FORMER CHICAGO POLICE SUPERINTENDENT:

Officers are under attack. That's how they feel, right? That's how they feel in this environment. And they're not going to put themselves and their families in jeopardy.

FLORES: The Chicago Police Department responding to the former Chicago police superintendent by saying in part the police across the country are more cautious in this climate. They arrested more bad guys, they called them, in 2016 than they did in 2015. But if there were one thing that could change, that could help them do their job better and keep Chicago safer, they say, is tougher laws for repeat gun offenders. That's what they are hoping for in 2017 to make Chicago a little safer -- John and Christine.

(END VIDEOTAPE)

ROMANS: All right. Rosa Flores, thank you.

A violent storm system sweeping across the southern U.S. is blamed for at least five deaths. Emergency officials say four people were killed in southern Alabama when a tree fell and collapsed a mobile home during a tornado. A fifth weather-related death is reported in Florida. Someone drowned, drowning outside someone's home.

In Mississippi, trees ripped from the ground, homes damaged in more than a dozen counties may have been hit by tornadoes. Remarkably, no injuries have been reported there. Some 20,000 customers are without power right now.

Let's get the latest on this storm damage from meteorologist Pedram Javaheri.

(BEGIN VIDEOTAPE)

PEDRAM JAVAHERI, AMS METEOROLOGIST: Good morning, John and Christine.

The severe weather we saw on Monday night beginning to really fall apart as it migrates to the east. The wet weather, the severe characteristics of which are all done with, but notice, a lot of rainfall in place for parts of the mid-Atlantic and certainly the Northeast by this afternoon. And a big story back behind this is the arctic air mass. Highs struggling to climb above zero across parts of the Northern Plains, while eventually some of that cold air will shift to the east.

But I want to show, the tornadoes concern we had on Monday, of course, because if you think about the month of January, it is as quiet as they come. Typically, it is December out towards January and February. Just a couple of dozen tornadoes is what you expect. We saw just 12 alone in the second day of the year. Remarkable and, of course, the number of fatalities with it very early in the season rather unusual as well.

But here we go with a cold air as it shift off to the East. Look at this, Friday and Saturday, really the eastern half of the country gets locked in a very, very strong area of cold air. And temps eventually make it up to 52 in New York City, could get down into the teens in the overnight hours of Sunday going into Monday. And the high temperatures closer to the freezing mark at that point as well.

So, big time changes in the forecast into this weekend -- guys.

(END VIDEOTAPE)

BERMAN: A South Carolina judge clearing the way for a convicted church shooter Dylann Roof to represent himself when the sentencing phase of this federal hate crimes trial begins tomorrow. After a day- long hearing Monday, the judge ruled that Roof is mentally competent to act as his own lawyer. The judge also issued an order that prevents Roof from approaching the jury physically or any witnesses during the proceeding.

Roof plans to make an opening statement and is refusing to present any kind of psychological defense at sentencing. Roof was convicted last month of killing nine people at the Emanuel AME Church in Charleston in 2015. Prosecutors are seeking the death penalty.

The daughter of Carrie Fisher and granddaughter of Debbie Reynolds is speaking publicly for the first time since losing both last week. Actress Billie Lourd posted a picture of herself with Fisher and Reynolds who died just one day apart. Lourd also posted a message that said, in part, "Receiving all of your prayers and kind words over the past week has given me strength during the time I thought strength could not exist. Your love and support means the world to me."

ROMANS: All right. Let's get a check on CNN Money Stream.

Stocks are set to ring in 2017 with big gains at the open. Dow futures jumping 120 points right now. That's about 0.6 percent. S&P futures are up.

The optimism coming from global stock markets and rising commodity prices. Shares in European stocks starting the day off with solid gains. Stock markets in Asia are rising as well overnight.

Back here in the U.S., lots of econ data for investors to consider this week, including that big jobs report on Friday.

So, it's looking like a solid start to the year for the stocks. But what about the finish? Predicting how the stock market will perform is nearly impossible. That some big banks do it every year anyway. Royal Bank of Canada is bullish, predicting a 11 percent jump in the S&P 500 by the end of the year. Deutsche Bank seized about a 5 percent rise. Citigroup forecasts 3.8 percent. Bank of America and Goldman Sachs both predict about 2.7 percent gain by year's end.

A new law going into effect in France this week will give workers the right to ignore e-mails when they're not on the clock. The French ministry of labor says the law aims to promote a better work/life balance by respecting rest periods.

Here's how it works: companies with 50 or more employees -- John Berman is giggling over here -- 50 or more employees can negotiate new out of office e-mail guidelines with staff. Firms must ensure employees get a break. If management and staff cannot agree on new terms for handle your email when you're off the clock, the firm must publish rules on when employees can switch off. French unions have long pushed for a so-called disconnect rule, saying digital technology has created a, quote, "explosion of undeclared labor", end quote.

[04:55:02] BERMAN: This has progress and growth written all over it, right? I mean, what could possibly go wrong here? I am sure this won't hamper, you know, opportunities.

ROMANS: It is why the French economy is booming because people are turning off their e-mails.

BERMAN: One sentence you haven't heard recently. The number one economy in the world, France! We'll e-mail you all the details.

EARLY START continues right now.

(MUSIC)

BERMAN: Ethics, schmethics? In a closed door vote, Republicans in Congress vote to drain most power from the independent Ethics Office that serves as a watchdog.

ROMANS: Donald Trump's team setting a low bar for what the president- elect will reveal about the election hack, after he meets with intelligence officials. Now, new information linking Russia to the hack. We're live in Moscow.

BERMAN: So, how exactly do you respond to the threat of a intercontinental ballistic missile?

ROMANS: On Twitter.

BERMAN: You use Twitter, right?

Hear what the president-elect has said to the erratic leader of North Korea, Kim Jong-un.

Good morning, everyone. Welcome to EARLY START. Extra early this morning. I'm John Berman.

ROMANS: Happy first trading day of the year, John Berman.

BERMAN: This is marked in your calendar, you have encircled?

ROMANS: It is. It is.

I'm Christine Romans. It is Tuesday, January 3rd. It is 5:00 in the East.

Also happening today, a very big day. The newly elected Congress gaveled to order at noon. Among the first orders of business, a big change to House ethics rules. Republicans are taking steps to loosen their own ethical range, even as questions mount over President-elect Trump's potential conflict of interest in the White House. The move all but ends the independence of the independent House Ethics Office.

Last night, house Republicans approved a measure to bar the ethics office from reviewing alleged criminal violations by House members. Require the office to refer complaints either to law enforcement or to the House Ethics Committee, which is controlled by the House leadership. The measure would allow the House committee to stop any ethics office investigation and would bar the committee from making any public statements.

BERMAN: Look, this just makes the independent ethics office not independent. It takes away the independence. It takes away any relationship it has with the public.

Nevertheless, Virginia Republican Bob Goodlatte said in a statement that his proposal strengthens the mission of that office and improves due process rights for House members under investigation.

House Democratic leader Nancy Pelosi blasted the change, saying it would destroy the ethics office. She tweeted, "So much for draining the swamp." The full house votes on the measure today.

You know, it should be noted that House Speaker Paul Ryan actually argued against the change. This was a closed door Republican meeting. He argued against the change, behind closed doors. His caucus approved it. It will be voted on by the full Congress today, but because it's in a rule, it's likely to pass.

ROMANS: Interesting.

All right. This morning, transition officials defending the skepticism about U.S. intelligence points to Russia as the culprit in the election hacking. They're busy trying to tamp down expectations now about when and how much Mr. Trump will actually tell about inside information on the hack, inside information he said that he would share today or tomorrow.

We now know the Trump's planned meeting with intelligence officials will not come today. So, don't expect any big reveal before the sit down or maybe ever.

Here is senior advisor Kellyanne Conway on "AC360".

(BEGIN VIDEO CLIP)

ANDERSON COOPER, CNN ANCHOR: I want to be clear about the information about the hacks that Trump says he knows. He says, quote, "You'll find out on Tuesday or Wednesday." Will he actually announce what the information is Tuesday or Wednesday as he said he would after being briefed?

KELLYANNE CONWAY, TRUMP SENIOR ADVISOR: Well, he didn't say he -- didn't necessarily say he'd announce it. What he is saying is that he'll -- we'll find out -- he'll find out. I think it's all very contingent on what these intelligence officials reveal in their briefing, Anderson. And everybody should be very happy that the president-elect is open to receiving that briefing. (END VIDEO CLIP)

BERMAN: Just to be clear. It was the president-elect himself who said he already had information that others did not know about Russian hacking. He wasn't waiting for the briefing.

It was the president-elect who said that he would tell us what he knows that others don't know today or tomorrow.

Now, the incoming White House Press Secretary Sean Spicer said all the president-elect is likely to reveal are his conclusions.

(BEGIN VIDEO CLIP)

SEAN SPICER, INCOMING WHITE HOUSE PRESS SECRETARY: As president- elect, he is privy to information that most people aren't. He is able to understand what the intelligence is and draw conclusions from that. He's going to talk about his conclusions and where he thinks things stand. So, he's not going to reveal anything that was privileged or shared with him classified.

(END VIDEO CLIP)

BERMAN: This as U.S. intelligence officials tell CNN they've identified what they called digital fingerprints and computer code that add to evidence that Moscow was indeed behind the intrusions. Now, even one of the president-elect's senior advisors on intelligence says he thinks the Russians were involved in the hack.

Joining us now with the latest from Moscow, senior international correspondent Frederik Pleitgen.

Good morning, Fred.

Digital fingerprints. What does that mean?

PLEITGEN: Yes. Digital fingerprints. Yes, good morning, John.

Yes, one of the things that that source also told CNN is saying that these digital fingerprints basically mean that the intelligence services were able to follow all of this back, trace all of this back to a keyboard using the Cyrillic language, which is, of course, the language used in the Russian alphabet and/or in the Russian language.