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Trump Lashes Out At Australian PM During Phone Call; Shakeup Expected At The White House; White House Officially Putting Iran "On Notice." Aired 7:30-8a ET

Aired February 2, 2017 - 07:30   ET

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


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[07:30:40] (BEGIN VIDEO CLIP)

MALCOLM TURNBULL, AUSTRALIAN PRIME MINISTER: In the course of the conversation, as you know and as was confirmed by the president's official spokesman and the White House, the president assured me that he would continue with -- honor the agreement we entered into with the Obama administration with respect to refugee resettlement.

(END VIDEO CLIP)

ALISYN CAMEROTA, CNN ANCHOR: Well, that was Australian Prime Minister Malcolm Turnbull confident that President Donald Trump will honor former President Obama's refugee deal. This, as President Trump hinted possible pullout last night via Twitter. He said, "Do you believe it? The Obama administration agreed to take thousands of illegal immigrants from Australia" -- that's not true -- "Why? I will study this dumb deal."

How is all of this playing in Australia? Joining us now is Peter Hartcher. He is the political and international editor for the "Sydney Morning Herald." Peter, thank you very much for being here. What is your information on how this call -- this phone call unfolded?

PETER HARTCHER, POLITICAL & INTERNATIONAL EDITOR, SYDNEY MORNING HERALD: Well, the version that we've heard from "The Washington Post" was that it was a fairly angry and argumentative phone call where we now hear that although the Australian prime minister had said that Donald Trump had agreed to honor the deal and his spokesman had confirmed as much, we then hear from "The Washington Post" that Trump had complained about it and called it, in the phone call with the Australian prime minister, worse deal (audio gap).

When this leaked version was reported, President Trump followed up with a tweet, which you've just read out, which seems to suggest the deal is still hanging by a thread. This is being read as an embarrassment for Malcolm Turnbull here and not a great reflection on the temperament of the U.S. president, either.

CAMEROTA: In fact, let me read for our viewers some of the headlines in your newspaper as we understand it this morning. "Do you Believe It: Trump Vents on Twitter After Turnbull Call." "White House Gang of Four: Who Leaked Turnbull's Phone Call?" Exposing Mad King: Donald's Bullying Does PM a Favour." "Worst Deal Ever: Trump Hung Up in First Call With Turnbull." So, what is the impression of what the relationship is now between the U.S. and Australia?

HARTCHER: Well, until now, Australia has been one of the few U.S. allies to avoid the wrath of Donald Trump. That ended today and that's why it's got so much attention. The Australian prime minister has gone to some lengths in the last couple of weeks to reassure the public that the alliance is -- again, the words he used today -- rock solid. Relations are terrific, he says. The alliance which is already 65 years old will continue for generations to come.

And yet, the sort of -- the sort of behavior we see from Donald Trump suggests, in the views of many observers and experts here, that this is a president who doesn't really seem to care so much about the alliance or the relationship. And, Alisyn, it's not so such much about the deal, itself -- whether the deal is going ahead or not. It seems to be more concern about the way Donald Trump is conducting himself, treating his alliance partner, which is not exactly with a lot of respect in an (audio gap) relationship where we've been conditioned to expect, you know, mutual respect.

CAMEROTA: Peter, I think if we can get into the details of it, I think that the White House would say why do I have to honor a deal by President Obama when I don't agree with the policy of President Obama? And furthermore, I think that Mr. Trump would say why do I have to take these 1,250 refugees when Australia won't take them? What's the response?

HARTCHER: Well, nobody argues with Donald Trump's right to make the decision. He's, in fact, as you know, canceled the TPP negotiation which the U.S. conducted with Australia and 10 other countries, plus the U.S., so nobody questions his right to do that. The question is whether he will commit to this deal or not, and the way he seems to be toying with the Australian prime minister in the process.

So, it was the leaking of the conversation, which appears to be a leak from the U.S. side, followed up -- hammered home, really, with that tweet from the president that's really created a breach of trust and raised the question here about whether Donald Trump can be a reliable ally. So, it's not so much the deal itself, it's really the conduct and the way in which Trump appears to be toying with the decision and with the Australian prime minister.

[07:35:25] Peter Hartcher, we will follow it on this end as we know you will at the "Sydney Morning Herald." Thank you very much for being on NEW DAY-- Chris.

CHRIS CUOMO, CNN ANCHOR: All right. The Trump team is now trying to course-correct after the rollout of the immigration executive order -- the travel ban. We're going to take a look at this alleged shakeup behind the scenes, next.

CAMEROTA: And, we're waiting for the president to take the stage at the National Prayer Breakfast. You can see the live shot there. When he speaks, we will bring it to you.

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CUOMO: May be a shakeup happening at the White House. CNN has learned the Trump administration is changing the way it does business. Why? The clumsy rollout of Mr. Trump's executive order banning travel from certain countries. CNN's chief political correspondent Dana Bash has more.

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DONALD TRUMP, PRESIDENT OF THE UNITED STATES: The rollout's been fantastic.

DANA BASH, CNN CHIEF POLITICAL CORRESPONDENT: On his Supreme Court pick, the president has reason to be, to use a favorite Trump term, braggadocios --

TRUMP: Judge Gorsuch, the podium, sir, is yours.

BASH: -- choreographing a tightly-scripted event with GOP lawmakers there to applaud and lining up an experienced team to shepherd his nominee across Capitol Hill.

[07:40:00] UNIDENTIFIED MALE: We are a nation of immigrants and we must --

BASH: A stark contrast to the clumsy way team Trump managed the president's executive order on travel restrictions. Sources tell CNN the president has expressed anger to aides at the way that was handled. The fallout still sullying his new administration, high- profile GOP criticism still coming in.

SEN. JOHN THUNE (R), SOUTH DAKOTA: I think this was unnecessarily confusing in the way that it was rolled out and they deserve to give more clarity to the American people on a big decision like this.

BASH: CNN has learned that the White House is taking steps to try to avoid such confusion, even the appearance of incompetence, in the future. Chief of Staff Reince Priebus will now take more control of systems dealing with basic functions like executive orders. It is authority Priebus already technically had but was not able to fully exert, given that power is splintered among several strong players, from Trump's son-in-law Jared Kushner to counselor to the president, Steve Bannon.

One senior administration official blames the sloppy rollout, in part, to "irrational exuberance of Trump aides eager to keep campaign promises but lacking experience to get it done right." Trump aides say one of the biggest systems failures was with fundamental communication, preparing not just the agencies who would execute travel restrictions but arming allies and advocates with talking points on how to defend it.

Message strategy is usually the job of White House communications director but team Trump doesn't really have one. Press Secretary Sean Spicer does double duty. To remedy that, CNN is told that Trump senior adviser Kellyanne Conway will take on more of the communications responsibilities. Trump aides insist they are trying to course-correct -- organize the White House more traditionally or, at least, as traditional as possible with a president who, himself, often guides message for better or worse on Twitter. Dana Bash, CNN, Washington.

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CUOMO: Both political and diplomatic missteps are a big reason why the White House is supposedly looking to shake things up. Let's talk to someone who's been inside the White House for some perspective on what could be going on. His name is David Stockman, former director of the Office of Management and Budget under President Reagan. He's also the author of "Trumped: A Nation on the Brink of Ruin and How to Bring It Back." I hope I sold that title, as intended --

CAMEROTA: You did.

CUOMO: -- with the right --

DAVID STOCKMAN, OMB DIRECTOR UNDER PRESIDENT REAGAN, AUTHOR, "TRUMPED": That was very good.

CUOMO: -- punctuation you had there. So, you've been on the inside. Politics is often action and adjustment. They don't like the way this went out, the messaging has been bad, they didn't consult with the agencies the right way, the criticism is plain. What might be done about it?

STOCKMAN: Well, I think it's more than messaging. This was a giant misfire because Trump was elected because flyover America's hurting economically. The voters of Racine, Wisconsin and Johnstown, Pennsylvania are imperiled or threatened not because of some refugees coming here or visa holders from these seven countries, they're imperiled because their real wages, their living standards, their jobs, have all been disappearing for decades. And the problem is far more the Federal Reserve, Janet Yellen, the bubbles they're creating on Wall Street, the enormous casino gambling that's going on.

CUOMO: People care about this, too. There's fear of terror, there's fear of Muslims --

STOCKMAN: Well, the worse thing to do, though --

CUOMO: -- and that fueled this executive order.

STOCKMAN: I know, but the worse thing to do is actually fuel that fear. The fact is between 9/11, which was a fluke, and San Bernardino, 14 years, there were 425 people killed in America from lightning. There were six killed -- civilians on American soil -- by terrorists, if you don't count the military bases which most people don't go to. So, we need perspective. He didn't need to do this. This whole idea of lickety-split, hit the ground running, ready, fire, aim is going to cause enormous trouble. They need to get back on the economic issue.

As someone famously said in 1993 in the Clinton era -- CUOMO: I know where this is going.

STOCKMAN: -- it's the economy, stupid. That's how, you know, Trump got elected. He needs to refocus on that and curtail this whole agenda of Steve Bannon and what I call the nationalist, combative, cultural warrior right.

CAMEROTA: Yes.

STOCKMAN: They're trying to stir up the country -- use the agencies of government to build the political coalition, not to drain the swamp.

CAMEROTA: But there's another element that you're leaving out --

STOCKMAN: Oh, OK.

CAMEROTA: -- and it is that -- well, I mean, I've spoken to scores of Trump supporters in panels. They don't like the old guard. They're ready to shake it up. They think that Washington has become way too bloated and bureaucratic and sporadic, and they don't like the old guard that you --

STOCKMAN: I agree 100 percent.

CAMEROTA: OK.

STOCKMAN: That's what my book is all about.

CAMEROTA: There you go. And they think that --

STOCKMAN: But if you fill up --

CAMEROTA: -- all these shakeups --

STOCKMAN: Yes.

CAMEROTA: -- assigning people new roles and Steve Bannon on the NSC and Kellyanne Conway coming in and having a bigger role -- they like these shakeups.

[07:45:05] STOCKMAN: Well, I'm all for shakeups but I want to drain the swamp. I don't want to just fill it with, you know, other creatures who are going to build up Homeland Security, border control, more money for defense, more money for spying and national security.

Frankly, this whole falderal going on now with Australia, I think, is a good thing. Everybody's bleating about they're our greatest ally. I think they're our stupidest ally. Every time in the last 50 years Washington has called a war and invited them to come, they've come. Every one of those wars, from Vietnam to Gulf One, to Iraq, to Libya, to Afghanistan has been a failure. It's done nothing for the Australian people except drain their blood and resources. And so, maybe if they're offended and other allies are offended -- and this is the silver lining of Trump -- maybe the world will start pushing back every time Washington wants to have a war. CUOMO: Right, but you have to be careful about the different --

STOCKMAN: We have too many wars.

CUOMO: -- tentacles.

STOCKMAN: That's the problem.

CUOMO: Fine, but you have a lot of tentacles, you know, that keep you tied to these countries. As you know, Australia is part of the Five Eyes coalition and that's about intel. Mexico is part of our understanding of who comes across the border, you know, so you have to be careful. You need these people even if sometimes the decisions aren't in the U.S.' best interest or Australia's best interest. You don't want to alienate them altogether.

STOCKMAN: No. You need Five Eyes because we're creating terrorists all over the world -- blowback. We're bombing, droning. We've destroyed the whole Middle East -- look at it. We've liberated all these cities and now they're rubble. There's no place to live. There's refugees everywhere. People are angry at Washington and for good reason. So, likewise, the Mexican border -- the bad hombres, so to speak, that's the war on drugs. The problems is the policy. Get rid of the war on drugs. If you got rid of the war on drugs you wouldn't have half the problem or most of the problem you have on the border today.

But if it's all going to be just more militancy, more dollars, more military intervention, you know, more huffing and puffing like they did yesterday at the Iranians -- after all, the best thing that Obama did was make the nuclear deal -- and bring the Iranians back into the community of nations. What do they have to do 10 days into their administration by drawing red lines? This is really heading in the wrong direction. They need to get back America first. Our economy needs fixing, the Fed needs to be brought under control. We need to have a housecleaning there and not, you know, all of these digressions and diversions that they're in.

CAMEROTA: David Stockman, you're the author of "Trumped." Great to get your perspective. Thanks so much for being here to talk.

STOCKMAN: Great.

CAMEROTA: All right. The Trump White House putting Iran on notice, as we've been reporting all morning, for test-firing this ballistic missile. What does on notice mean? We're going to ask our military and terrorism expert panel, next.

CUOMO: All right, and this is a live picture of a podium. This is the National Prayer Breakfast --

CAMEROTA: Riveting.

CUOMO: -- in Washington. Eventually, we're going to have President Trump at that podium.

CAMEROTA: All right.

CUOMO: It's supposed to happen at about the top of the hour. He has a lot to address. How he does that just as important as what he says. We'll bring it to you next.

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[07:52:03] CUOMO: Tough talk from the White House following Iran's ballistic missile test. National Security Adviser Michael Flynn calling it a "provocative breach of a U.N. resolution." What is behind the threat of "putting Iran on notice?" Let's discuss. We have CNN military analyst, retired Lt. Gen. Mark Hertling. General, good to see you. CNN terrorism analyst Phil Mudd. Phil, as always. And, CNN senior international correspondent Fred Pleitgen who was just in Iran.

Fred, let me start with you. You were there. You were talking to hardliners. Where was their head about Trump as a non-conventional person --

FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yes.

CUOMO: -- and what do you think this means to that dynamic?

PLEITGEN: Well, I think it really pours cold water on a lot of thinking that some of the Iranians had, especially some of the hardliners. And I was really surprised speaking to some of them where they said look, we're not sure whether or not some of what we heard from Donald Trump on the campaign trail will actually translate into policies.

Of course, he was always very negative towards Iran, towards the nuclear agreement, but they thought that because he's, what they think, an unconventional politician that they were maybe even able to do deals with Donald Trump.One of the things the deputy oil minister told me -- he said, look, we have a lot of oil to offer, obviously. We have huge investments that Iran has to make not just in the oil sector but in other sectors as well. Perhaps American companies could benefit from that.

But now I think they're seeing that the reality could be very different and certainly those statements by the National Security adviser last night will be something that will cause a lot of headaches in Tehran -- have already caused some backlash with the Grand Ayatollah, they are saying, where his adviser is saying that it's useless to threaten Iran and that Donald Trump is someone who is a novice politician. So certainly, it really looks as though there could be a pretty big conflict in the next couple of years, Chris.

CUOMO: Well, you've got the political and you've got the military aspects of this. Phil, let's start with you. You've been in the room when people decide how to speak to another country about what's going on, how to be tough. I saw you making a face when we were hearing about the Ayatollah representative's response. What is the plus-minus on tough talk? PHILIP MUDD, CNN TERRORISM ANALYST: I think the difficulty here is when you look at what options the Iranians have. For example, confrontation with the U.S. Navy in the Persian Gulf. You have words out of the White House from Gen. Flynn and the Iranians have to interpret those seriously. They have options themselves.

I would be concerned if I were walking into the State Department, as the new Secretary of State Rex Tillerson, about the implications not just for the White House about whether they back up their words, but about whether Iran takes steps, particularly in the Persian Gulf, that are more provocative and that the White House doesn't appear to have planned what to do if that happens or what to say if someone asks the question that we're all asking. What does that mean when Gen. Flynn says you're on notice? Is that like no cookies with your milk after dinner? I don't know what that means, Chris.

[07:55:00] CUOMO: Well, sometimes it's good to have an opponent thinking about what you could do militarily. General, let's bring you in here. It is estimated that 20 percent of the world's oil goes through the Strait of Hormus, which Iran obviously controls. What do you see on the menu of what "on notice" can mean for the U.S. and what potential responses are from Iran?

RET. LT. GEN. MARK HERTLING, CNN MILITARY ANALYST: You've got me, Chris -- don't know. I mean, I'm on Phil's camp on this one. I don't know what the definition of "on notice" is and I don't know what will happen if something occurs today what our reaction might be. You know, I think it was Truman that said, you know, the definition of diplomacy is making -- telling someone to go to hell and making them look forward to the trip.

I don't think this plays a role in that. This is just language that no one really understands and it's not -- it's not building our respect, not only in Iran but around the world. We are being seen -- or Mr. Trump and his administration and, especially, Gen. Flynn are being seen as loose cannons without an idea of the effect. If something happens today what are we going to do? Are we going to go to war with Iran if another attack comes against a ship? Are we going to just have a war start on that or are we going to try and do some diplomatic action that will prevent a war? I don't know.

CUOMO: General, let's stay with you and talk about what just happened in Yemen. We mourn the loss of one of our own that we know about, and we know that there were civilian casualties as well. We are told that this is an operation that was scheduled and planned under the Obama administration but that it was pushed over for scheduling reasons and, in part, to let the new administration make the call. Is that your understanding?

HERTLING: Well, you know, I'm not sure it was pushed over to let the new administration make a call. I think it was just like a delayed action because of a variety of things. You know, I'll tell you, Chris, from a guy who's been in the field a lot and had to make tough calls, you don't make calls necessarily with only the politics in mind. I mean, you have an indicator of that but, you know, if I'm the special operations commander or the central command commander I'm not going to go say hmm, I'm going to wait until Trump gets in office so he can make one call on an attack.

There were a whole lot of other factors involved in this and I saw much of the reporting yesterday blaming Trump for not having the right kind of approach to this. I don't buy any of that. This was a tough mission and the special operations command does tough missions all the time and sometimes they go awry because often in cases the enemy gets a vote.

CUOMO: Is -- you use the word awry, General. Is that your sense of this? That this was what can happen when, you know, you're dealing with violence and conflict or is there any indication that something was done wrong here?

HERTLING: No, not at all. This is -- this is all about combat, Chris. Nothing was planned incorrectly or decisions weren't made too hastily. This is combat. This was a tough mission. It was a sensitive site exploitation mission -- an SSE -- and whenever you do that instead of just firing drones -- firing missiles from drones, you put American forces on the ground and no plan survives first contact with the enemy. Bad things can happen and they did in this case where an extreme firefight went on. You've got to plan for those kind of things, too, and I think the special ops guys did a very good job in this.

CUOMO: Phil, last question to you. Your perspective of being in the room and knowing what it's like to deal with allies in other states that aren't pulling their weight in situations. The expectation was that Donald Trump would come in and do what he said he would do, which is I'm going to tell everybody off. They're not doing what they need to do. America's carrying too much weight. People need to step it up. And that's what he's doing when he's talking to the Australian prime minister, when he's talking to the Russian -- the president of Mexico. What is your take on that?

MUDD: The next day people like me, around the world, are talking to their counterparts over a drink, over dinner, over lunch, saying calm down here. You've got some serious people coming into cabinet offices. People in my world who are highly regarded. Tillerson at State, you have Gen. Mattis at the Pentagon, you have CIA Director Pompeo. I think people like me, overseas and in Washington, are saying we're 13 days in. We can't take four years of this. This might calm down with the guys moving into cabinet positions.

CUOMO: Fred, that's for giving us the best information from the ground. General, appreciate the perspective. Phil, as always. We're following a lot of news. The president is going to speak at the National Prayer Breakfast in just minutes. What will he say? You will know because we'll bring it to you live. Let's get to it.

ANNOUNCER: This is CNN breaking news.

CUOMO: Good morning and welcome to your new day. It is Thursday, February 2nd, now 8:00 in the East or just before. In just moments, President Trump is expected to take the stage at the National Prayer Breakfast. We're going to go there live to hear his speech. Meantime, the president triggering rifts with two staunch American allies while ramping up tensions with a longtime adversary. Relations with Australia now said to be strained over a heated phone call last weekend with the Aussie prime minister. Mr. Trump also creating tension with Mexico's president, telling him he wasn't doing a good job knocking out "tough hombres."

CAMEROTA: The Trump administration also calling out Iran for testing a ballistic missile.