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Trump Administration to Call for $54 Billion Defense Spending Hike; Wrong Envelope Leads to Epic Oscars Mix-up; Aired 10:30-11a ET

Aired February 27, 2017 - 10:30   ET


DONALD TRUMP, PRESIDENT OF THE UNITED STATES: So the governors are going to have a lot more decision-making ability than they have right now.

[10:30:06] All states will benefit from our economic agenda.

We will reduce taxes very, very substantially and simplify the tax code.

We're also going to make taxes between countries much more fair. We're one of the only countries in the world that can -- people can sell their product into us and have no tax, no nothing. And they get rich. And yet, if you want to do business with them, you'll have taxes, I've seen as high as 100 percent.

So, they sell into us; no problem. We sell into them -- because we don't sell in, because the taxes are so high that they don't want us to sell into them.

So, I know that's always been a point of contention, but to me, it's just fair. It's just fair. It's reciprocal. It's fair.

And so we're going to be doing a lot of work on that. And that's becoming a very, very important factor, fairness. Because I believe in free trade. I want so much trade.

You know, somebody said, "Oh, maybe he's a total nationalist." Which I am in a true sense.

But I want trade. I want great trade between countries.

But the word "free" is very deceiving because it's good for them, it's not good for us. I want fair trade. And if we're going to be taxed, they should be taxed at the same amount, the other countries.

And one of two things is going to happen: We're going to make a lot of money or the other country's gonna get rid of its tax. And that's good too, because now the product, like Harley Davidson -- I was talking to them -- the product will now flow into other countries where right now they can't do it.

So, we're going to make it easier for states to invest in infrastructure. And I'm going to have a big statement tomorrow night on infrastructure. We spend $6 trillion in the Middle East and we have potholes all over our highways and our roads.

I have a friend who's in the trucking business. He said, "My trucks are destroyed going from New York to Los Angeles. They're destroyed." He said, "I'm not going to get the good trucks anymore." He always prided himself on buying the best equipment. He said, "The roads are so bad that by the time we make the journey from New York to Los Angeles or back," he said, "the equipment is just beat to hell."

I said, "When has it been like that before?" He said, "It's never" -- he's been in business for 40 years. He said, "It's never been like that." Forty years, never been like that.

So, we're going to take care of that. Infrastructure; we're going to start spending on infrastructure big.

And not like we have a choice. It's not like, "Oh, gee, let's hold it off." Our highways, our bridges are unsafe. Our tunnels -- I mean, we have tunnels in New York where the tiles are -- on the ceiling and you see many tiles missing. And you wonder -- you know, you're driving 40 miles an hour, 50 miles an hour through a tunnel, you take a look at the Lincoln Tunnel and the Queens Midtown Tunnel, and you're driving and you see all this loose material that's heavy. You know, it was made many years ago, so it's heavy. Today it's light; it used to be better. The problem is you got to hold it up.

And I say to myself every time I drive through, I say, "Man, I wonder how many people are hurt or injured when they're driving at 40, 50 miles an hour through a tunnel and a tile falls off." And there're so many missing tiles and such loose concrete.

So, we have to fix our infrastructure. It's not like we have a choice. We have no choice, and we're going to do it. But it also happens to mean jobs, which is a good thing.

We're going to repeal and replace Obamacare and get states the flexibility that they need to make the end result really, really good for them. Very complicated issue.

We have Tom Price -- just got confirmed -- sitting here.


Stand up, Tom.


And I spent a lot of time with Governor Walker and Governor Rick Scott the other day. We were talking about it. They're really very expert on the subject and I want to thank them. They spent a lot of time with me.

Governor Christie, who's here someplace -- where's Chris?

Governor Christie, thank you.

And so, we have a lot of -- we have a lot of talent and a lot of expertise here, that I will tell you. And we have come up with a solution that's really, really I think very good.

Now, I have to tell you, it's an unbelievably complex subject. Nobody knew that health care could be so complicated. And statutorily and for budget purposes, as you know, we have to do health care before we do the tax cut.

The tax cut is going to be major, it's going to be simple, and the whole tax plan is wonderful. But I can't do it until we do health care, because we have to know what the health care's going to cost and statutorily that's the way it is.

[10:35:04] So for those people that say, "Oh, gee, I wish we could do the tax first," it just doesn't work that way. I would like to do it first. It's actually -- tax cutting has never been that easy, but it's a tiny little ant compared to what we're talking about with Obamacare.

And you have to remember -- and I say that to Democrats in the room, of which we have many, Obamacare has failed. If you go to Minnesota where they had a 66 percent increase and the governor of Minnesota who is with us today said Obamacare, the Affordable Care Act, is no longer affordable, something to that effect. I think that might be it exactly. But the Affordable Care Act is no longer affordable. Obamacare has failed.

I say to the Republicans if you really want to do politically something good, don't do anything. Sit back for a period of two years because '17 is going to be a disaster -- a disaster for Obamacare if we don't do anything. Let it be a disaster because we can blame that on the Dems that are in our room and we can blame that on the Democrats and President Obama. Let it implode and then let it implode in '18 even (ph). Don't do anything and they will come begging for us to do something.

But that's not the fair thing to do for the people, not the fair thing. Politically, I think it would be a great solution, because as soon as we touch it, if we do the most minute thing, just a tiny little change, what's going to happen? They're going to say it's the Republicans' problem. That's the way it is. But we have to do what's right because Obamacare is a failed disaster.

And it's interesting, it's sort of like when you see it -- you see it with politicians, you see it with President Obama, when you know he's getting out of office and the clock is ticking and he's not going to be there, his approval rating goes way up, even though, you know, not that active in the last period of time, the approval rating goes up. That's not him, that's like almost everybody. I see it happening with Obamacare. People hate it, but now they see that the end is coming and they're saying, "Oh, maybe we love it." There's nothing to love. It's a disaster, folks. OK? So you have to remember that. And very importantly, we are going to work to restore local control to our nation's education system. Betsy's here someplace and she is going to be I think fantastic. I think she's going to be fantastic. Stand up, Betsy.

(APPLAUSE) Betsy feels so strongly and she's had such support from so many people. You know, you don't see that too much because you see the anti, you never see the positive. But I can tell you, I've had so many calls while she was going through that horrible process, that was a tough, tough nasty process and she hung in. She was strong as you get. But so many people were calling Betsy saying, "You will do such a fantastic job once you get it."

It's like sometimes, I'd say it's much tougher to get into Harvard than it is to stay there. Does that make sense? It tougher to get into the Wharton School of Finance. You can't get in. But if you get in, it's fine. You get through, right? I think you're going to do a fantastic job and we're very proud of you. And you took a lot of heat, but you're going to do great.

So she wants to bring decision-making powers back to parents, back to the families and back tot he states where they can really control education.

And just finally, I'm looking forward to working with you on these projects and so much more. We're gonna do these projects and so many more. And I thank you all again for being here. It's going to be a really productive discussion, so productive that I'm going to ask the press to start leaving because I wouldn't want them to see any great productive session.


But they'll be seeing it and hearing about it. Again, thank you very much all for being at the White House. We'll do this many times. I want...


[10:39:08] POPPY HARLOW, CNN ANCHOR: All right. There you have it. The president spending about 20 minutes there meeting with the nation's governors, a big group in there, attacking the military. And we'll get to that with our Barbara Starr in just a moment. As he promised a much bigger budget for military spending, saying this will be a public safety and a national security budget. We're going to see a historic increase in defense spending, but then going on to say we never win wars, we don't fight to win.

JOHN BERMAN, CNN ANCHOR: Yes. We don't even try to win anymore. All right. Let's bring back our panel.

CNN Pentagon correspondent Barbara Starr is here, Jennifer Psaki, former White House communications director under President Obama, and Ben Ferguson, CNN political commentator, all here.

We'll get to the budget stuff in just a moment. But Barbara Starr, you know, when you hear from the president of the United States saying we never win wars anymore, we don't even fight to win, now I assume he's talking about, in his mind, before January 20th because he is now the president of the United States and the commander-in-chief, so, you know, there's that. [10:40:04] But how is that received, do you think, in the Pentagon?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, let me take a deep breath and say that I think it will be received and absorbed. Some may agree. I think a good deal may not. And I think some commanders, some very senior commanders, might want to make the following point. Mr. Trump talked about when he was in high school. So we're going back -- I think he mentioned high school -- when he was a young man, he watched the nation win wars.

You know, back in World War II, you had a discernible enemy. You had the Germans, the Japanese at that time, and you went to war and you fought and you won against them. What has happened since 9/11 is something quite different. I think military commanders will tell you, it is a very diffused threat. It is an ideological threat. It has spread as terrorism across many countries.

This is not a war that is going to be won by the major tank battles that you saw the allies prosecute against the Germans in World War II. Life doesn't exist like that anymore. The battlefield is quite different.

And I think commanders would also tell you, when the U.S. did begin to prosecute the war against ISIS, it was a dire situation. One of the reasons the U.S. went back into Iraq so quickly is there was a very specific sense that ISIS had rapidly grown to the point where it might be able to overrun Baghdad, and the U.S. knew that the Iraqis, which was a sovereign country and remains one, not capable of defending themselves and needed U.S. assistance to make sure they pushed ISIS back from any possibility of going through Baghdad.

You know, at that time ISIS was going city by city through Iraq, city by city in some areas of Syria. Not a war that's going to be won by tank battles. It's not even a war that's going to be won by air strikes. But you can look at what happens happened since 2014, and the U.S. military, through training, assistance, advising, and letting local forces go first, has been able to push ISIS back and regain vast amounts of territory. They are being pushed out of Mosul. They are being pushed out of huge areas of Iraq, areas of Syria.

More work to be done, absolutely. But ISIS is in sovereign countries, not places that are going to be very hospitable to tens of thousands of U.S. troops. And again, that ancient, somewhat, concept of major tank battles, not even air strikes alone are going to win against ISIS. I think there is an overwhelming feeling by U.S. commanders that it is going to have to be these countries, with assistance from allies, that are going to be the ones that are going to defeat ISIS eventually.

HARLOW: All right. And also, guys, we're just getting some major reporting in terms of the details of this budget. Let's tick through it for you. What we know from an official from the Office of Management and Budget, this is -- the president is going to call for a $54 billion increase to defense spending, that's a 10 percent increase of the budget, last year it was $584 billion. Most of that is going to go to DOD. They're going to make major federal cuts in almost all federal agencies. Right? It's saying here most federal agencies will see a reduction as a result. This is being touted as a security budget. And the administration is seeking, quote, "a large reduction, also, Ben Ferguson, in foreign aid. Is this a smart --


HARLOW: Is this a smart move? I assume you agree with building up the military, but to make such drastic cuts elsewhere because he can't touch entitlements?

FERGUSON: Well, I think it is. Because, one, he ran on this, and it's unsustainable, our deficit right now, in the trillions upon trillions of dollars. There has to be cuts. But if you look at these cuts to other parts of the government, you're still talking about low percentage points here. So their budget is still absolutely massive. And you can even argue still going to be too big based on the amount of taxes that we're bringing in and based on our massive deficits.

I think what Donald Trump has done here from a businessman's perspective, and this is where he's an expert, is understanding that sometimes you have to spend less money to be successful, and spending more money doesn't automatically mean you are successful. So putting the military back on solid footing where it has not grown the way it needed to, where many of our airplanes are actually grounded due to lack of funding airplanes from even fixing airplanes that we've talked about recently with the military.

This is him putting the military first. And his comments about not winning wars, I do think I want to put that in context real quick. The president has made it clear, we have been fighting very much a limited fight against ISIS. And I think his point is, I'm going to fund the military so -- and we're also changing our mentality at the same time. To take on ISIS where they are in a major way.

[10:45:03] And that is one of the reasons why he got elected, one of the big reasons he got elected. So he's not only saying it but he's actually giving the funds needed to be able to go after them and not allow them to continue to operate the way they are right now.

BERMAN: No, I understand that, but we should note that General McMaster, General Mattis, General Kelly, a lot of these generals who now work for him, have been working over the last, you know, many, many decades, I guess not winning the wars, as Donald Trump, you know, is talking about fighting.

Jen Psaki, though, I want to get your take. You've been through some budget battles over the last eight years. President Trump is talking about a $54 billion increase in military spending. That's a 10 percent increase. So you only need a 10 percent cut elsewhere in the budget, not including entitlements. Without getting political, just explaining to me how would that -- how difficult will it be to find that 10 percent cut across the board not including entitlements?

JEN PSAKI, FORMER WHITE HOUSE COMMUNICATIONS DIRECTOR: Very difficult. One of the areas that we're just keeping the national security scope that we've heard they're going to make cuts is at the State Department. And what should be concerning about that, is that even people like former Defense Secretary Gates who served under President Bush and under President Obama said that one of the lessons that we learned from the war in Iraq and the war in Afghanistan is that military force alone is not going to win wars.

And what we've seen in terms of the work the State Department is doing, and I worked there for a couple of years, they are the ones who are coordinating with countries on the ground. They're plussing up what we're doing to push back on ISIL online. And they're helping address and support the activity of the military. So I think the concern here that people should look at is even in just the national security space, where he's actually cutting in order to plus up the military budget.

HARLOW: Well, we know he's likely going to cut a lot out of the EPA, right? So that's an $8 billion budget for the EPA.

BERMAN: But it's not going to go to zero, is it?

HARLOW: It's not going to go to zero.


HARLOW: But he's going to -- he could cut it in half. I mean, that could certainly happen. He could take some meat there. He could take some meat out of, you know, all these other regulatory agencies. The question is, you know, to what end? A lot of presidents, Republicans and Democrats, have tried to cut waste.

BERMAN: Ben, go ahead.

FERGUSON: Look at how -- look at how large the State Department budget will still be, even if there is a cut in the single digits. It is still a massive budget which allows the State Department -- it is correct. I mean, how much of the State Department money is going to actually be cut here that you're concerned about in implying that somehow the State Department is not going to be able to do their job? They're going to be able to more than do their job with the amount of cash that they're still going to receive.

These cuts are not undermining the ability of these positions or these departments to do their job. It's just saying we're not going to give you an unlimited budget to go out when we're changing the way that we do budgeting.

HARLOW: Look, they didn't have -- quickly to wrap it up, they didn't have an unlimited budget either under -- you know, under President Obama. But Jen Psaki, you were in the administration.

FERGUSON: It's pretty large.

HARLOW: Where did you see waste? Where could he cut that would be smart?

PSAKI: Look, I think -- there are places -- I'm not sure why the military needs a 10 percent increase. And what is that specifically for? Is that to put more people closer to the front lines? That's a big foreign policy decision.

I think it's absolutely inaccurate to say the State Department -- that's a misinformation that travels around the Internet. The State Department has a significantly smaller budget than the Defense Department yet they're funding embassies around the world to do important diplomacy every day. There's security to protect those embassies. There's work to work with governments. And so that's just false information.

But, look, I haven't looked at the details of the budget, no one has.

FERGUSON: The budget is still huge.

PSAKI: And I think no one can speak to what exactly -- what the impact of the cuts would be. If it's EPA, that impacts protecting our clean air and clean water that our kids drink. There are significant decisions that are made in every budget fight. That's why it's hard to lop off huge amounts from the budget. But I don't think fiscal hawks will be happy with this either.

BERMAN: $54 billion worth of decisions that we need to see I think over the coming days and weeks. And we will have you back to talk about those decisions.

Jen, Ben and Barbara Starr, thank you all, one and all, for being with us.

All right. Coming up for us, what I consider to be --

HARLOW: Your biggest story of the year.

BERMAN: The greatest ending to an Oscars broadcast ever. In the 1 1/2 minutes roughly that "La La Land" had won the Academy Award for Best Picture.

HARLOW: You had one job.

BERMAN: You had one job. How on earth does this happen? Come back.


[10:53:30] BERMAN: It says "Hollywood's Biggest Night," again which has got to be the understatement of the century, in what was the best ending to an Oscar broadcast ever.

HARLOW: Berman is enthusiastic with the story. And I was certainly fast asleep, but it's all everyone is talking about this morning, easily the biggest mix-up in Academy Award history, "La La Land" awarded the Academy Award for Best Picture until it wasn't.


WARRANT BEATTY, PRESENTER: The Academy Award for Best Picture --



JORDAN HOROWITZ, "LA LA LAND" PRODUCER: Guys, guys, I'm sorry, no. There's a mistake. "Moonlight," you guys won Best Picture.

UNIDENTIFIED MALE: "Moonlight" won.

HOROWITZ: This is not a joke.

UNIDENTIFIED MALE: This is not a joke. I'm afraid they read the wrong thing.

HOROWITZ: This is not a joke. "Moonlight" has won Best Picture. "Moonlight," Best Picture.


HARLOW: Hmm. Kept Brian Stelter up late, our senior media correspondent.

BRIAN STELTER, CNN SENIOR MEDIA CORRESPONDENT: I had already written my headline, "La La Landslide," that was my headline for "La La Land."

HARLOW: But it didn't get published on that, my friend.

STELTER: It would have been fake news, instead this was a fake Oscar. It was fake out by Warren Beatty and Faye Dunaway. We don't think it was their fault, though. We think it was these anonymous people at PricewaterhouseCoopers, the accounting firm responsible for tabulating the results. They must have handed the wrong envelope to these actors.

[10:55:04] BERMAN: Right. They must have handled the wrong envelope to the actors. As "The New York Daily News" says in the headlines they have one job. Right?

STELTER: One job.

BERMAN: They used to be -- I don't know if they still have a shot, but we'll have the shot of the Pricewaterhouse guys walking --

STELTER: Yes, every year.

BERMAN: With the envelopes.

STELTER: Handcuffed.

BERMAN: Handcuffed together.

STELTER: That's right.

BERMAN: It is their job to get this right. They brag about getting this right. So, you know, can it be explained away so easily, oh, they got the wrong envelope?

STELTER: No, it cannot. They're only human, though. And of course it happened to Steve Harvey, right, a year or two ago at that pageant. Harvey weighing in on Twitter, he said, "Good morning, everybody. I went to sleep early. What did I miss?" And then later, he said, "Call me, Warren, I can help you get through this."

And, you know, Miss Universe -- the pageant also weighed in saying, have your people call our people, Oscars, we know what to do in this situation.

HARLOW: You just spoke on the phone, working your sources, your reliable sources, as always, with the director of "La La Land?"

STELTER: One of the first was "La La Land." Yes, he was about to go to bed. They stayed up all night celebrating, of course. So before he was going to bed, he said, I'm not angry, I'm not trying to get an apology from the Academy, this was just a surreal experience. He was holding the Oscar, he gave his acceptance speech, and then had to hand it over to the "Moonlight" producers.

But you know, they've been on the same awards circuit for months. So the producers of both films knew each other pretty well at this point. And they are sort of strange rivals but also family. So it made sense in a way to be handing over the prize. And there's always next year, I suppose.

BERMAN: Ratings? Do we know about ratings yet?

STELTER: A little bit lower than last year but pretty strong. You know, normally the Oscars are the second biggest show on TV every year after the Super Bowl. And Jimmy Kimmel, the host, he's been getting rave reviews. Kimmel did a really strong job, he said all the things he had to say, poked fun at President Trump, made the liberal crowd in the room cheer for it, but didn't go too far either.

HARLOW: He also stepped in and did a nice job when the chaos and the confusion was going on at the end there.

STELTER: He did. He sort of took the blame, even though he had nothing to do with it. Made a joke at the end, saying, "I know I'll never be invited back, I'll never come back again," but I actually think he should be invited back. He was great.

BERMAN: And it's funny, you brought up the Super Bowl. Right? I mean, they had the same ending. Essentially the Oscars and the Super Bowl had the same exact ending.

STELTER: You could say the election had the same ending, as well. Maybe the World Series. What is it about all of our major national events and these shocking finales?

HARLOW: The only thing that would have made John Berman happier in getting to talk about this is if Tom Brady had won Best Picture.


BERMAN: I assume --

HARLOW: In a stunning upset. BERMAN: I assume that Tom Brady did.

STELTER: So what's the twist ending to NEWSROOM today? What are guys going to surprise us with?

HARLOW: Berman is going on a run because I told him he'd put on a few on vacation.

BERMAN: I went on vacation. Like Matt Damon, essentially.

Brian Stelter, thanks so much for being with us. Appreciate it.

HARLOW: All right, everyone. We're glad you're here, we're glad John is back. We will see you tomorrow morning. I'm Poppy Harlow.

BERMAN: I'm John Berman. "AT THIS HOUR WITH KATE BOLDUAN" after a quick break.


KATE BOLDUAN, CNN ANCHOR: Hello, everyone, I'm Kate Bolduan. A critical moment for the Trump presidency. That is the word right now from Capitol Hill today, just 24 hours before the president delivers a prime time address to Congress, a possible showdown now between Republican leadership and this president. Why? Obamacare.