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Mnuchin Promises Biggest Tax Cut in History; Trump Rips "Ridiculous" Sanctuary Cities Ruling; House Oversight: Flynn May Have Broken The Law; White House Distances Itself From Michael Flynn; GOP Tries To Revive Health Care With New Amendment. Aired 9-9:30a ET

Aired April 26, 2017 - 09:00   ET


[09:00:00] CHRIS CUOMO, CNN ANCHOR: You got to love it and you got to love the initiative. You know, they want to help. They have the capacity, and they help somebody, put it to use, youth.

ALISYN CAMEROTA, CNN ANCHOR: OK. Time for CNN NEWSROOM with Poppy Harlow and John Berman. Good morning, guys.

CUOMO: Speaking of beautiful.

JOHN BERMAN, CNN ANCHOR: Good morning, beautiful people. Thanks for --


CUOMO: Berman, looking good as always.

BERMAN: I was going to say you're beautiful. Don't take my line. You guys are beautiful.

CAMEROTA: Love it. It's a lovely thing, Berman.

CUOMO: I finally beaten you to the punch, 20 years later.

BERMAN: Well done. All right. Have a great day folks.

CAMEROTA: It took a long time.

BERMAN: We have some big news this morning, so we're going to jump right in.

HARLOW: Top of the hour, 9:00 a.m. Eastern. Good morning, everyone. I'm Poppy Harlow.

BERMAN: And I'm John Berman. The breaking news this morning, blocked on sanctuary cities, beaten back on funding for the border wall. So what does the White House do this morning? It is going big on tax cuts. It says bigger than anyone ever.

HARLOW: Ever before in history, so says Treasury Secretary Steve Mnuchin, making a staggering promise.

(BEGIN VIDEO CLIP) STEVEN MNUCHIN, UNITED STATES SECRETARY OF THE TREASURY: This is going to be the biggest tax cut and the largest tax reform in the history of our country, and we are committed to seeing this through.


HARLOW: The biggest in history. That is a long time. That is a high bar. Can the White House deliver?

Suzanne Malveaux is on Capitol Hill. Our Cristina Alesci is in Washington with all of the numbers.

So, Suzanne, let's begin with the politics of this. How do they make it happen?

SUZANNE MALVEAUX, CNN NATIONAL CORRESPONDENT: Oh, well, Poppy, that's a very good question. And, of course, this is a far cry from what we heard from Donald Trump during the campaign, some of his slogans saying that Wall Street was getting away with murder and that they would have to pay for it through taxes because, clearly, his economic team is stressing, at least, first dealing with tax cuts for businesses perhaps down the road, kicking the can down the road for families and individuals.

But as you had mentioned, we've been watching the Treasury Secretary Steve Mnuchin at this event in Washington started at 8:30. And he outlined in kind of a broad-brush strokes what this means for the President, what this means for the American people, and of course big businesses.

He said that he started his conversation with President Trump at 7:30 this morning, that the two of them talked, and that they spent a good deal of time in the Oval Office yesterday working out the details, that the President is very much involved in making this happen.

And one of the things that they are really pushing back here, of course, is how they are going to pay for these very big tax cuts. And the thing that he is talking about, Mnuchin, is putting it out there saying that they are counting on big economic growth to pay for this. Take a listen.


MNUCHIN: The difference between 1.6, 1.8, and three percent GDP is staggering. It is trillions of dollars of revenues. It's tons of jobs. This bill is about creating economic growth and jobs. And you're right, we should call this the 2017 tax reform for economic growth and jobs to make America great again. I just named it.


MALVEAUX: So perhaps that will be the name. They know that this is a daunting task. It was back in 1986, the last time tax reform actually passed. It was bipartisan legislation.

And perhaps what is noteworthy, on the political side here, is what is not included in this, and that is the $1 trillion program, the infrastructure-building program. There are still questions about how that is going to be paid for -- Poppy, John.

BERMAN: All right. Suzanne Malveaux in Washington. Just because the White House says it is the biggest tax cut and tax reform in history, it does not make it so. It depends kind of on what we get out of the numbers here. Let's try to understand these numbers.

Cristina Alesci joins us right now. Cristina, you have been digging through what the actual proposals are.


CRISTINA ALESCI, CNNMONEY TELEVISION AND DIGITAL CORRESPONDENT: That's right, guys. So essentially, what the administration wants to do is make companies more competitive so they can hire more people, invest in the economy. And the administration firmly believes that one of the reasons the companies in the U.S. are not competitive is because of their high tax rate.

So if you take a look around the world, they do have a point -- 35 percent in the U.S. versus much lower rates around the world. But in reality, as you guys know, 2016, the GAO put out a report that most companies do not pay that 35 percent rate.

Also, in the plan, what is going to come out, we think and Steve Mnuchin, the Treasury Secretary confirmed this today, that there will be a 15 percent reduction for major companies and also for pass through entities, which are basically business owners who put everything on their personal return, business income as well. That's major and that actually can impact President Trump as well.

Now, the big question is, as Suzanne alluded to, how do you pay for it? There is a $4 trillion hole. But that is not the only question here. There are two other ones that are going to be at the top of business leaders' minds.

One, is this temporary, or is this permanent? Because CEOs want to plan forward, they want permanent change. And if this is temporary, it is not exactly or it's not at all a tax reform.

[09:05:08] And then the other big question for average Americans is, what happens to the middle class? Why aren't we hearing more about how this plan will impact the middle class? So those are two big questions.

Overall, though, if we go back to the issue of corporate taxes, there is no way to guarantee that companies that save on their tax bill will go ahead and take that money and reinvest it in jobs and investment unless there are programs to incentivize them to do it. So what we could see is a scenario where the companies save on taxes but take that money and reward shareholders in the form of dividends. And that necessarily wouldn't generate the kind of growth the administration is hoping for, John, Poppy.

HARLOW: And that's exactly what happened in 2004 with the big tax holiday. They did not add jobs. The biggest companies cut jobs, and they bought back a lot of shares and the money went back to their shareholders. Will it be different this time?

It's a great point, Cristina. Thank you very much.

Meantime, President Trump is unleashing on Twitter this morning. Once again, he is targeting the Judiciary branch, this after a part of his effort to strip federal funding from so-called sanctuary cities was blocked.

BERMAN: Yes. He wrote, "First the Ninth Circuit rules against the ban" -- notice, he's calling it a ban again -- "and now it hits again on sanctuary cities. See you in the Supreme Court."

And then, "Out of our very big country with many choices, does everyone notice that both the ban" -- again with the ban -- "case and now the sanctuary case is brought in the Ninth Circuit, which has a terrible record of being overturned, close to 80 percent. They used to call this 'judge shopping.' Messy system."

Busy writing from the President this morning. CNN's Joe Johns live at the White House with more on this White House reaction. Joe.

JOE JOHNS, CNN SENIOR WASHINGTON CORRESPONDENT: Good morning, John. In a lot of way, this is a case that plays right into the concern to the President's political base and so does the outrage emanating from the White House over the last several hours. But the language perhaps is a bit strong given the fact this is a matter under litigation.

The White House, among other things, complaining that an unelected judge ruled against yet another executive action by the White House. We have some of the language here from the White House. "The rule of law suffered another blow as an unelected judge unilaterally wrote immigration policy for our nation. City officials who authored these policies have the blood of dead Americans on their hands."

And there is this prediction, "We are confident we will ultimately prevail in the Supreme Court, just as we will in our lawful efforts to impose immigration restrictions necessary to keep terrorists out."

On the other side of this case, this ruling was praised by the likes of the Mayor of Los Angeles who talked about it last night.


MAYOR ERIC GARCETTI, LOS ANGLES, CALIFORNIA: Unconstitutional political threats against our cities cannot take away our rights, and they certainly can't steal our tax dollars.


JOHNS: So as you might have gathered, the administration is planning on appealing this. And they are predicting that it will eventually be overturned, even if it has to go all the way to the Supreme Court, John and Poppy. HARLOW: All right. Joe Johns at the White House. Thank you very

much for that. Let's talk about all of this big breaking news this morning. David Drucker is here, political analyst and senior congressional correspondent for the "Washington Examiner."

Salena Zito joins us, CNN contributor and reporter for the "Washington Examiner," and a columnist for the "New York Post." David Swerdlick is here, our political commentator and assistant editor for "The Washington Post." And Laura Coates, our great legal mind and former federal prosecutor this morning.

Laura, got to start with you.


HARLOW: What exactly did the court do here, and what is the legal impact and what is the political impact?

COATES: Well, the court honored what's called the 10th Amendment and said, essentially, two things. One, the right to actually have federal funding can be conditioned but it's got to be done beforehand. It cannot be done after the fact.

And so when you have the 10th Amendment, it essentially says you cannot just commandeer these individual state and local officers or enforcement agencies to try to take on the role of the federal government. But if you are going to do that, they have to have notice and opportunity to be heard beforehand.

And what it sounds like happened with this particular executive order is that the rug was being pulled out from under these cities who took funding, did not know about the new conditions, and now are being asked to align themselves and their prosecutorial priorities with that of Donald Trump's campaign. And that is not going to be an effective strategy when you have Congress, who is in charge of allocating those spending.

BERMAN: You know, Salena, this is not the first, this is not the second, but the third time that a federal judge has stepped in to block something having to do with what the President wants to do with the borders or with immigration right now. Is he essentially learning here the power of the judiciary?

[09:10:02] And the second part is, even though we may not be getting anything done here, is he OK with the political dynamics at play?

SALENA ZITO, CNN CONTRIBUTOR: Well, to answer the second question, yes, he is OK with the political dynamics at play because it gives him the opportunity to remind voters what he promised he would do and to underscore that through his tweets of why he wanted to have this done. Not only the travel restrictions, which were stopped by a federal judge, but also the sanctuary cities.

Look, presidents face this all the time. I think President Obama had 15 of his executive orders that a federal judge interfered on. And so this is a humbling experience. But they all come back out and say, this is why I want it done, we're going to take it further. Or sometimes they just step back and move on to the next thing. It depends on how politically important that whatever it is is to them.

HARLOW: David Drucker, let's talk about what this administration is promising will be the biggest ever, the biggest in history, tax cut and also tax reform. You might as well hang a $4 trillion sign on Paul Ryan's office door because he is going to have to come at this and deal with this and get this through Congress. Can he do it, or is it dead on arrival?

DAVID DRUCKER, SENIOR CONGRESSIONAL CORRESPONDENT, "WASHINGTON EXAMINER": Well, I don't think it's dead on arrival. I mean, we're talking about a tax cut proposal primarily and Republicans love tax cuts. I have deducted in conversations with Republicans this morning concern about the deficit and how this proposal would impact the deficit because even though it would be paid for, according to the administration, via economic growth and that --

HARLOW: Maybe. Maybe.

DRUCKER: Well, according to the administration, their argument is that economic growth would pay for this. But as I was about to get to, a lot of Republicans, who do actually believe in dynamic scoring -- and that's the technical term for this -- are themselves concerned that that is, in fact, not the case.

And so I think that this is going to be a lot more politically tricky than the White House might assume, or maybe they're prepared for that. But here is the larger question, Poppy, to me that's very interesting.

Secretary Mnuchin is not just promising a large tax cut. He's saying that what they're going to do is the largest tax reform in U.S. history. And so I want to see today if they actually propose tax reform.

In other words, are they going to propose eliminating a lot of deductions and carve outs that are very popular with many constituencies, with many Republicans on Capitol Hill, because reform means simplification. It means overhauling how you pay your taxes, what kind of deductions you are able to claim, and all of that.

And so if they don't propose something that's very specific and expansive in terms of how you alter the structure of the code, then it's not really tax reform. And the one reason I'm suspicious is because reform is how you pay for it. It's how you eliminate a lot of the deductions that create the revenue to pay for the cuts. And without that, we're not really dealing with tax reform.

And if we are, then it's very, very complicated on the Hill. If we're not, it still may be complicated because of the deficit implications. But in some ways, it may be easier to create consensus because every Republican is at least theoretically in favor of cutting taxes.

BERMAN: Right. They say this is the biggest tax reform in history, but we have not seen any evidence like a shred, a single proposal which is reform rather than just a cut. We will wait and see if that comes out today.

And on dynamic scoring, this would take more than dynamic scoring to make up $4 trillion. It would take up historically wicked dynamic scoring, the likes of which we have never seen before, in order to make up $4 trillion. But, you know, economists, they'll look at that.

David Swerdlick, there's another aspect of this that is interesting too, and it has to do with the pass downs, which basically means all businesses will be included in some of the tax cuts.

"The New York Times" has this take, "Mr. Trump's decision to extend the corporate tax cuts to real estate conglomerates like his own will give Democrats a tailor made line of attack."

I think we could probably put the CNN countdown clock up here, and it will be within the hour that we'll hear from Democrats harp on this.

DAVID SWERDLICK, CNN POLITICAL COMMENTATOR: Yes, John. I think "The New York Times" is right on that. I think Democrats already had a tailor made line just talking about what David was saying a moment ago.

There is a lot of skepticism, even privately among Republicans, that you can go from less than two percent GDP growth to over 3 percent GDP growth just based on dropping the corporate rate, potentially cutting the top marginal income tax rates, then you add on what you're talking about, John, this idea of, you know, changing the tax code to favor businesses like Trump's.

Democrats have talking points. They're already not inclined to give the Republicans help with this. I think the Republicans can do this, but it is going to be a very tough slog to convince enough people to vote for it, especially in the Senate.

[09:15:04] BERMAN: All right, guys, stand by. A busy, busy morning. So many issues being up in the air being discussed right now.

The president's tax plan as you just heard about right there could get some push back from his own party. People who fought against deficit and debt for years, they are going to have to explain why they don't care about the hole it might blow in the deficit.

Plus, former national security advisor, Michael Flynn, facing new legal pressures with Republicans and Democrats suggesting he did not obey the law when not disclosing his business dealings with Russia.

HARLOW: Senate invited to the White House to get a briefing today on North Korea. This as North Korea says it will not avoid going to war.


HARLOW: So the hits just keep on coming for former national adviser, Michael Flynn. The House Oversight Committee now saying he may have broken the law by not properly disclosing payments from Russia and Turkey during the process of getting his security clearance. [09:20:00]BERMAN: Yes, one Democratic senator even goes as far as to say that Flynn could be looking at years behind bars. Our panel back with us right now. Attorney Laura Coates, behind bars? Really here? What kind of legal jeopardy is Michael Flynn under?

COATES: Well, the kind that says he may fit up to five years in prison and also a hefty fine because it is a felony to withhold or falsify any information where there is a material concern.

The information we're talking about is he filled out a form to try to renew and achieve top security clearance and on that form he failed to disclose relevant information being that he was taking money from a Russian entity.

And also that he late filed to say that he was in fact acting as a foreign agent on behalf of Turkey last year. This collective amnesia that he's had from meeting with Ambassador Kislyak to the disclosure forms suggests that perhaps he has done more than simply falsify or mislead.

Even Vice President Pence he's misled on a federal document that was (inaudible). And of course the risk here is that he is facing criminal exposure, which is why he wanted to have immunity. He was not going to get that, according to any of the Congressmen now.

But what he could still have if the prosecutors decide whatever story he has for them is going to lead them farther down the path for the Russian collusion investigation, they may be able to make a deal with him, but immunity is probably off the table.

HARLOW: So another bit of news out of this yesterday from the House Oversight Committee is this letter in which they say, David Swerdlick, that the White House, you know, was not giving them some key documents related to this. The White House says, look, we don't have all of them, et cetera, but frankly, these are documents the White House can get.

So now you have Sean Spicer in the White House trying to put distance, even more, between themselves and Flynn. Listen.


SEAN SPICER, WHITE HOUSE PRESS SECRETARY: What he did or did not do, that all happened -- he filled that form out prior to coming here.


BERMAN: Never knew him. Not with us. Who is Michael Flynn?

HARLOW: This is this distance, distance, distance that we heard the White House do when it came to Paul Manafort. I guess, the question is wouldn't this stuff have come up in the vetting process? Shouldn't it have, and how dangerous of a juggling act is this for the White House do you think?

SWERDLICK: Poppy, very dangerous. General Flynn has legal problems, but there is a real problem for the White House in terms of how this at least looks and then if you go further into it how they conducted the transition of vetting, right?

I mean, these things about General Flynn working for the Turkish government and also his speech or the speech he gave where he sat next to President Putin at the RT dinner, these were knowable things. There weren't hidden things.

These could have been found out if the transition team had done a methodical job of vetting him and of course, he also should have disclosed these things.

The White House has never been able to get its arms around that or the idea he was fired because he misled Vice President Pence. But at the same time when the White House put out that line they also said he didn't do anything wrong.

So if he didn't do anything wrong by talking to the Russian ambassador, which is what he was said to have lied to Vice President Pence about, why did he have to lie about it to Vice President Pence?

And again why didn't the White House team or the transition team have some awareness of what was going on in that regard. These are the questions that I think still dog the administration.

BERMAN: And will be being asked in various hearings that will come up. All right, health care, guys, we have word of a possible deal, there is an amendment being circulated right now on a health care proposal that would allow states essentially to opt out of requiring insurance providers to give essential benefits and also it would mean that if you have pre-existing conditions you could be charged infinity if states waive their rights for that. David Drucker, is this deal for real this time?

DRUCKER: Well, I think it's for real in that you have an agreement by the head of the Freedom Caucus and the head of the moderate group on the language and on the concept. And while we've been talking about this, a key outside group that has been opposed to the Republican health care plan said they approved of the Meadows-McArthur plan and urged House Republicans to move on the bill now and I think that that could create some momentum for Republicans and for the administration where this has been stopped.

What we still don't know though is how this thing is going to score with the Congressional Budget Office and if they could put together the votes. I think it is commendable and notable that Mark Meadows, the chairman of the Freedom Caucus, has reached a deal with Mr. McArthur, the New Jersey congressman who leads the Tuesday Group.

What we don't know yet is how many of his Freedom Caucus members he could bring along. He's going to have to bring along I'd estimate around 20 to 25 of them but at least around 20. The Freedom Caucus has never achieved something like that, where they have negotiated a deal and brought along the votes.

[09:25:09]And you still have a lot of moderates that have been vocally opposed to the Meadows-McArthur amendment. That's a tongue twister. Charlie Dent from Pennsylvania is one of them. I think we can say this is real progress.

I don't yet know that we could say that it is going to get them somewhere where you have a bill that gets to the Senate and of course, that's a whole another story the first things first.

HARLOW: Salena, do you think in any way this actually makes it a little bit easier for the White House because it no longer has to thread the needle as much between, you know, between the Freedom Caucus and the Tuesday Group? Does it make their job easier at least in that sense?

ZITO: Yes, definitely. I think that, and you know, and I sat around with a group of voters last night who voted for Trump in Kent, Ohio and we talked about Obamacare and watching this play out in Washington.

What they like is what David was talking about. They like seeing everyone sort of bringing their compromise to the table and hashing it out. To them, that is what they expected from this process.

And to your question, Poppy, I think watching Congress hash it out is a great exercise for voters to see, you know, the entity of Washington they dislike the most taking this on and making it happen.

HARLOW: All right, guys. Thank you very much.

DRUCKER: I'd like to say one quick thing. The polling on the Republican health care bill is so much lower than the idea of repeal and replace when they started, and that is a challenge they are going to have to get over because people think so much higher of Obamacare now than when this process started and that is a challenge for Republicans.

HARLOW: All right, you've got over 50 percent of folks who want it altered but not totally gotten rid of. Thank you very much, guys. We appreciate it.

Still to come for us, $20 trillion in debt and counting. How does the president's plan do anything at all to tackle the national debt? That's next.