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Trump's Border Security Compromise?; Trump's Tax Plan; State Dept. Removes Blog Post Promoting Mar-A-Lago; Warriors Advance with Sweep of Blazers. Aired 5-5:30a ET

Aired April 25, 2017 - 05:00   ET


CHRISTINE ROMANS, CNN ANCHOR: President Trump, looking to strike a compromise to keep the government open. He's said to be ready to wait to fund the border wall, at least for now. The president also ready to slash the top corporate tax rate. How low will he go? And what could stand in his way?

And why is the State Department giving promotion to the president's Mar-a-Lago resort? We'll show you the explanation for a very controversial article.

Good morning and welcome to EARLY START. I'm Christine Romans. It is Tuesday, April 25th. It is 5:00 a.m. in the East. Good morning, everyone.

President Trump this morning showing some flexibility on funding for his promised border wall, indicating it might not be a deal-breaker on ongoing talks to fund the federal government past Friday's shutdown deadline. White House officials now signaling that an offer from Democrats for funding border security measures rather than funding the wall itself, that might be enough to satisfy the president.

[05:00:08] Trump telling conservative journalists at a private meeting that he is open to delaying funding for the wall construction until September. So there's no deal yet, but a strong sign the White House may not force a showdown over the wall as that Friday deadline looms.

The new wiggle room eases back from earlier administration demands that at least sounded like the White House was insisting on funding for the wall as part of any deal to keep the government open.

White House Press Secretary Sean Spicer said it this way to our Jim Acosta who asked why wall is even an issue if Mexico was supposed to pay for it.


SEAN SPICER, WHITE HOUSE PRESS SECRETARY: Well, I think, Jim, that the president has made very clear that, initially, we needed to get the funding going. And there's several mechanisms to make sure that that happens.

We feel very confident the government is not going to shut down. Number two, is I think the president has been clear in the past, about the fact that -- and this is not a new thing. He talked about this. That in order to get the ball rolling on border security and the wall, that he was going to have to use the current appropriations process. But he would make sure that that promise would be kept, as far as the payment of it.


ROMANS: Some Democratic support in the House and especially the Senate, where 60 votes are required, will be needed to pass the spending bill. Senate Democratic Leader Chuck Schumer put out a statement late overnight, saying, "It's good for the country that President Trump is taking the wall off of the table in these negotiations. Now, the bipartisan and bicameral negotiators can continue working on the outstanding issues."

The White House is floating the proposal to cut the corporate tax rate to 15 percent. Here's why -- the U.S. has the highest corporate tax rate among developed nations, at 35 percent. The average worldwide is about 23 percent. Now, critics will tell you this makes the U.S. less competitive.

They say it forces companies to use, shall we say, innovative tax practices and keeps huge piles of cash overseas.

But cutting the corporate rate won't solve those problems entirely. Two main issues. First, the effective corporate tax rate is 14 percent, that's not 35 percent -- 14 percent is how much big profitable companies paid between 2006 and 2012. This is according to the Government Accountability Office.

One in five big profitable companies paid no tax at all. Tax credits and loopholes allow these companies to legally reduce their tax burden. If the White House leaves those in place and reduces the corporate rate, revenue will simply plunge. That's the second issue.

Tax cuts are expensive. If companies pay less, individual taxpayers would be on the hook to make up the difference. A Tax Policy Center study from last year, which looked at Trump's initial 15 percent proposal shows it will cost $2.4 trillion in vanished revenue over the next decade. That's about $240 billion a year gone. It's about the same the government spent on food stamps, jobless benefits, child nutrition for some context.

So, the big question now how will the administration pay for it. The proposal will have to be revenue neutral to pass, as part of the budget process. Steven Mnuchin, the treasury secretary, has said they'll pay for it through stronger growth, something that people who score budget could be really tough to do.

Let's talk politics with our panel, politics and money.

Here with us in New York, political analyst Ellis Henican, author of 'The Trump's America" column for Metro Papers, and at CNN Center, political economist Greg Valliere, chief strategist for Horizon Investments. Good morning, gentlemen. Good Tuesday morning.


ROMANS: Greg, let me start with you and this 15 percent floated tax rate. Is this just where, I guess, the president is starting his negotiation here? It seems like he's jumping out there, he wants to get this tax reform debate started.

GREG VALLIERE, POLITICAL ECONOMIST: Yes, he will say he wants 15 but, you know, Christine, I think he would take 20 or 21 or 22. That's still a dramatic cut from 35 percent.

The other big part of this story, maybe not a good story for the bond market in the long-term, is that they really don't have a clue on how to pay for it and I think they will pay for it by assuming growth that will be extraordinary and maybe illusory.

ROMANS: Yes, we're calling it -- in our CNNMoney story, we're calling that the magic wand of growth to pay for it. Magic wand is right there in that headline.

Let me ask you, Ellis. We also heard the president may be stepping away, may be blinking on this promise to put wall funding in budget negotiations. Has he learned something from the healthcare debate? What did you see in his negotiating tactics here?

HENICAN: Well, yes, don't bet all the marbles on something that you can't make happen in Washington. Clearly, this was really going to be a problem keeping the government open. If the president insists on this and Republicans in the Congress are willing to stand by him, you really could have had a government shutdown at the end of the week. I think that's looking increasingly less likely now. And that, you know, we will fight about it in the fall.

ROMANS: You know, we've heard so much, Greg Valliere, about this fight with Mexico and Mexican -- the president has said about Mexico, taking advantage of the United States, but it's interesting to me that the wall, then, is out perhaps. I mean, indications are that the wall is out of the budget negotiations and the first tariffs the president puts on are on Canadian companies.

[05:05:01] VALLIERE: Yes, what a story. You've got a Republican party in control of both houses and the White House and they can't get what they want on the wall, they can't get what they want on a lot of things, maybe not even on the extent of the tax cuts.

So, the Democrats are feeling kind of emboldened. They're going to get their way on a lot of this stuff.

As far as Canada goes, we now have two big fights, lumber and dairy where this administration is really going after Justin Trudeau and the Canadians. I question why we would want to get into a fight with one of our strongest allies.

ROMANS: Yes, and the commerce secretary saying this was a bad week for U.S. and Canadian trade relation.

Guys, let's talk about 100 days, the White House has called it ridiculous, has called it arbitrary. Last year, it was a contract with the American voter for 100 days, so it really has changed its view on that.

You know, we've had some executive orders, Trump has issued some executive orders. He's had a big legislative accomplishment which is Gorsuch, but I want to stack up Trump, Obama, Bush -- the laws signed in the first 100 days.

And, Greg, you say we are watching a transformation of this president into a typical center right politician with Goldman Sachs faction in control and no real legislative accomplishments here.

VALLIERE: Not a lot yet. I went back the other day and looked at 1933, Franklin Roosevelt in his first 100 days. That was extraordinary, epic, unprecedented. This president said a week or so ago that he has had the most impressive 100 days ever in the history of the presidency. Not quite sure I'm buying that.

ROMANS: I'm glad you bring us FDR, because, Ellis, here's what's interesting. Why we look at the first 100 days is because that construct was introduced by FDR because we were in a national emergency. And President Trump won by convincing voters that we are in a national emergency second only to the Great Depression.

HENICAN: First of all, FDR is a pretty high bar, I don't know that we should be comparing any modern president -- go ahead and try with that one if you like.

But you know what? You're right, on the campaign trail and even in the early days of the administration, the president was really talking about America as being a very dire and bleak place and I've got to tell you, we've got some challenges. But I don't think that's the national mood at this point. Most people are middle class folks, particularly, it's tough but I don't think there is a sense that oh my God, we've got to turn over everything and I think the rhetoric didn't quite match the mood out there, and that's part of the reason why these things are not turning into actual serious legislative accomplishments.

ROMANS: I mean, when you look at investors, investors are making a ton of money, banks are making a ton of money, housing market looks good for the spring selling season, existing home prices up something like 7 percent. I mean, the question is, is the job market going to continue humming and can the president, Greg, take credit for that?

VALLIERE: Some credit but I do think a fundamental shift has been his alliance with the Goldman Sachs faction within the White House. They've won and that's not a bad story for the markets.

ROMANS: Not a bad story for the markets. Europe not a bad story for the markets. But what about the little guy, Greg? Is the little guy going to feel any better in four years when he goes back to the voting booth? VALLIERE: I think the big story for the little gal, the little guy over the next couple years is how tight the labor market is. You and I have talked about this before. I think within a year the labor market will be so tight you're going to see wages going up. That's a good story as well.

ROMANS: Ellis, how does he -- what does he say about 100 days? I mean, is he going to pass -- he's going to have a rally in 100 days.

HENICAN: Right. And, in fact, he is' going to miss the correspondents dinner to have a rally in Pennsylvania, which apparently will be a much more happy audience, let's say.

You know, I'm still in the incomplete category. He does make a legitimate point that many of the great accomplishments of our presidents have not occurred in the first 100 days, but he's kind of only got himself to blame on this because he set that standard for himself on the campaign and it's coming up a little short.

ROMANS: We will see if they can keep the lights on in Washington over the weekend.

HENICAN: Be careful what you say, by the way.

ROMANS: Yes. All right, guys, thanks so much. Come back in about a half an hour, get a cup of coffee.

The State Department removing a post from its Share America site promoting President Trump's Mar-a-Lago resort. The article posted on U.S. embassy sites gave a visitors guide to the winter White House, saying it's become well-known a the president frequently travels there to work or host foreign leaders.

Officials taking down this post, saying, "The intention of the article was to inform the public about where the president has been hosting world leaders. We regret any misperception and have removed the post."

The post was new fodder for critics concerned about conflicts of interest between the presidency and the Trump businesses. Mar-a-Lago has already seemingly benefited from the Trump presidency. It club raising its initiation fee from $100,000 to $200,000 right after the election.

President Trump with some harsh words for Kim Jong-un in Pyongyang, quick to respond with a military drill overnight. We're going to go live to Seoul, next.


[05:14:06] ROMANS: All right. Breaking overnight, North Korea's military staged a large scale artillery drill, this is according to a top military official in South Korea. It comes the same day North Korea celebrates the 85th anniversary of the founding of its people's army. This is just the latest in a series of recent escalations involving Pyongyang. Now, an American nuclear powered submarine, the USS Michigan, is

arriving in South Korea. One U.S. military official describes it as a show of force. The arrival coming just hours after President Trump called for more sanctions against North Korea and he had some pretty tough unflattering words for Kim Jong-un.

I want to go live to Seoul, South Korea, bring in CNN's Alexandra Field. She's been tracking every one of these recent developments.

A new headline by the hour almost, Alex.

ALEXANDRA FIELD, CNN CORRESPONDENT: Absolutely. More rhetoric, more posturing and the straining of already high levels of tension.

[05:15:00] And now, you have what's being described as this large scale artillery drill that is happening in North Korea. That according to officials here in South Korea who convened a security meeting in light of those drills to talk about the situation happening on the peninsula.

These drills don't particularly come as terribly surprising to anyone who is closely watching North Korea. This is an important day on their calendar. It is a holiday that marks the anniversary of the founding of the KPA, Korean people's army, these kinds of holidays are days around which Pyongyang has in the past done some provocative acts like, say, perhaps, a missile launch, there were analysts who wondered if they could use this holiday to time the country's sixth nuclear test.

No indications of either a missile launch or any sort of nuclear test, but what we are seeing, according to the South Korean officials, are these training exercises and they come as the U.S. seems to bolster its defense in the region. You've got the arrival of one of the most powerful U.S. submarines at a southern port in South Korea. We're told that it's a routine stop but it should also be regarded as a show of force because it does serve to underline the strength of the alliance between the U.S. and South Korea.

Right now, right here in the region, you've got the U.S. participating in joint military exercises with both South Korean military and the Japanese military. These are actions that have enraged Pyongyang in the past. Over the weekend, you had Pyongyang saying that they could sink the USS Carl Vinson, that's the U.S. aircraft carrier that will be in the waters off the Korean peninsula by the end of this month.

U.S. President Donald Trump also closely watching the security situation here, as he has been. He's called a meeting of senators in Washington, he has summoned them to the White House for a briefing on the North Korea situation that will involve both the secretary of state and secretary of defense and he has sent sharp words to Kim Jong-un himself, saying to a group of conservative journalists that he doesn't believe Kim Jong-un is a particularly strong leader.

And, Christine, you know, in the past, words like that, actions that North Korea perceives as hostile have invoked provocative actions. At this point, all we're seeing are training exercises, however -- Christine.

ROMANS A belligerent and unpredictable leader of a country that is -- it's just, you know, a rogue nation. We will watch and see what comes out of that meeting with senators later today, 100 senators.

All right. Thank you, Alex.

The Trump administration is imposing sanctions on 271 Syrians all believed to be connected to the making of poison gas. They work for the scientific studies and research center which the White House says produced the sarin gas that killed dozens of people in a chemical weapons attack earlier this month. The sanctions freeze any money the employees might have in U.S. financial institutions.

But it's the naming of employees that is most significant here because those individuals are now more likely to be targeted in postwar investigations.

All right. Sports now, the Golden State warriors making it look so easy, sweeping away the Trailblazers in a game that wasn't close to being close.

Coy Wire with the details on bleacher report. That's next.


[05:22:27] ROMANS: The Warriors punched their ticket to the second round of the NBA playoffs in dominating style.

Coy Wire has more in this morning's bleacher report.

Hey, Coy.


No Steve Kerr, no problem for the Golden State Warriors. The head coach out for a second straight game while he deals with complications from a 2015 back surgery. Check out the classy tweet before the game from the Blazers wishing their former player a speedy recovery.

Speaking of back, superstar Kevin Durant has back after being side lined with a calf injury the last couple of games and the Durant would hit the very first shot of the game. From then, it was an avalanche of points, part of a 45-point first quarter for the Warriors, they go on to win by 25, completing an impressive four-game sweep.

Look out, Wizards center Marcin Gortai picked an off time to stop and tie his shoe. His team had the ball. Team John Wahl tried to wait for him but the show has to go on. The best part Gortai throwing up his hands like, what, you were going to wait for me? I was going to trip.

The worst part of the Wizards, his team got tripped up by the Hawks, 111-101. That series now tied at two games apiece.

A 16-year-old Muslim American boxer will no longer have to choose between a religion or the ring. Amaiya Zafar has been fighting to compete while wearing a hijab that fully covering her arms and legs. Well, she won that fight. USA boxing granted an exemption for local fights to the rule requiring boxers to wear a sleeveless jersey and shorts. Now, Amaiya setting her sights on the 2020 Olympics in Tokyo and persuading the international and national boxing associations to allow her to wear her traditional religious attire as well.

NBA legend Larry Bird driving down Fifth Avenue in Manhattan in an Indy car. The Indiana Pacers president of basketball delivering the team's bid to host the 2021 NBA all-star game. Bird said that was a bucket list thing for him.

Indianapolis last hosted the game over 30 years ago but Bird may have just put the city on the fast track to bring the festivities back to Indy.

Christine, good stuff.

ROMANS: That was fun.

WIRE: Big man in a little car, 6'9".

ROMANS: I don't know how they got him in there or got him out.

All right. Thanks so much, Coy. Nice to see you this morning.

WIRE: You're welcome.

ROMANS: All right. A shift towards compromise from the White House. Negotiating skills on full display, new signals. Funding for a border wall can wait if it means keeping the government open this weekend. Is the strategy an adjustment after threats to get healthcare passed went nowhere?


[05:29:28] ROMANS: President Trump's negotiating skills on display. He's now willing to wait to fund the border wall for now. Will it be enough to avoid a government shutdown?

The president ready to act on another promise slashing the corporate tax rate. How low will he go and will the skeptical deficit hawks in his party go for it at all?

And the State Department forced to pull down a post for its global site for embassies. Why was the government promoting the president's private club at Mar-a-Lago in the first place?

Welcome back to EARLY START. I'm Christine Romans. It is 30 minutes past the hour. Dave has the morning off to rest his voice.