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President Trump Dealt Another Legal Defeat; North Korea Briefing; President Trump Unveils Tax Plan. Aired 3-3:30p ET

Aired April 26, 2017 - 15:00   ET



ANNOUNCER: This is CNN breaking news.

BROOKE BALDWIN, CNN ANCHOR: Breaking news here on CNN. I'm Brooke Baldwin. Thank you for being with me.

At any moment now, a high-intrigue, high-stakes meeting at the White House is set to begin. Virtually every single United States senator is being bussed in from Capitol Hill to attend this briefing on North Korea. This is the scene you don't often see in Washington.

Let's go to Jim Sciutto. He's our CNN chief national security correspondent who's been there as those buses have now zoomed away.

But, first, Jim, can you just speak to the rarity that you have essentially 100 senators hopping on tour buses and heading to this classified meeting at the White House?

JIM SCIUTTO, CNN CHIEF NATIONAL SECURITY CORRESPONDENT: That's exactly right, rarity. And that's raised some questions and real skepticism from senators.

You heard Senator Murphy telling me just a few minutes ago that it feels a bit to him like a dog and pony show. He makes the practical point that there are secure facilities up here on the Hill, where White House officials can easily come to brief senators and members of the House of Representatives face-to-face on issues of a classified nature.

Fitting 100 people into kind of a makeshift secure facility down at the Old Executive Office Building is just not practical, doesn't seem necessary to them. Of course they're going. They're keeping an open mind. They're just not sure what news they are going to hear in this meeting.

My understanding is that their best expectation is something along the lines of, here's a summary of the latest intelligence and here's a summary of the latest options we have to deal with this, with no hard decisions as to what option the president is going to exercise, including the possibility of military options.

That's the expectation. Of course, an hour later, we will be talking to those same senators, and they may hear something new in there. But I will tell you, Brooke, on their way over, at least, they are wondering why they are making this trek down the hill.

BALDWIN: Well, maybe the reasons for the why, or at least it sounds like some of these senators are assuming, although we don't have it from the White House, that perhaps the White House will drop by. Do we know, have you heard anything, Jim, as far as whether President Trump will?

SCIUTTO: I know that my colleagues in the White House have been told it's possible that the president will do what is known as a drop-in. In other words, he won't be part of the formal meeting, but he will drop by.

That's for some, at least Democratic senators, has added to the sense, again, Chris Murphy called it a 100-days photo-op for the president. But let's set that aside for a moment because everybody you talk to, Democrat or Republican, is zero -- they're focused in, they're zeroed in on the fact that North Korea is a major threat.

That crosses party lines. We know that President Obama as he left said to President Trump as he came in, North Korea is your most immediate threat. And no one is mincing words about the level of tension on the peninsula now, and the importance of steps that North Korea is taking, this artillery show we saw yesterday, and that the U.S. has taken.

You now have becoming operational in South Korea within a few days what is known as the THAAD missile defense. This is a missile defense system designed to protect South Korea and Japan from a possible North Korean missile strike. They are serious about this.

BALDWIN: And so within this meeting, you have mentioned the THAAD.

I wanted to ask you, you have the USS Carl Vinson, the destroyers. What kind of capabilities do they have, this submarine if there were to be additional ballistic missile tests, or anything even beyond that?

SCIUTTO: They have a number of capabilities.

One of the most obvious would be the possibility of a U.S. missile strike on North Korean nuclear facilities. The trouble with that calculus is you have to enter into the calculus what the North Korean response would be. And the real concern is Seoul, the South Korean capital.

It's very threateningly close to the North Korean border. There are hundreds of artillery pieces trained on Seoul and South Korea. And there are concerns about South Korean -- thousands, tens of thousands perhaps, South Korean civilian casualties. There are tens of thousands U.S. forces based there.

That's part of the calculus. You have enormous military power there. You have got the THAAD missile defense. You have got the Carl Vinson. You have got nuclear submarines with missiles capable to launch. You have got U.S. bombers within close proximity there, including stealth bombers, all enormous capability, but balanced against what a possible South -- North Korean, rather, response would be.

BALDWIN: OK. Jim Sciutto, thank you. And thanks for grabbing Senator Murphy. He did say to you, I jotted this down, he doesn't want the showmanship to degrade the seriousness of the subject, being North Korea.

We will wait for the senators to come out. Thank you so much for now there on Capitol Hill.

Let's pivot, though, to some breaking news over at the White House, the president's new tax plan unveiled. The proposals cut taxes by a lot, but the administration offered very little specifics as far as how to pay for all of this.

Here is how Treasury Secretary Steven Mnuchin explained it last hour.


STEVEN MNUCHIN, U.S. TREASURY SECRETARY: This will pay for itself with growth and with reduced reduction of different deductions and closing loopholes.



BALDWIN: The president's top economic adviser admitted the nitty- gritty details have yet to be worked out.


GARY COHN, DIRECTOR, NATIONAL ECONOMIC COUNCIL: We are working very diligently with the House and the Senate by coming up with final details of the bill. You're going into very micro-details on some of these...

QUESTION: Very important ones.

COHN: Very important. We agree. Very important. Our basic premise here is to simplify the tax system, lower rates and make it easy. We don't want to penalize people. We want to make the system very fair.


BALDWIN: Besides that, the president's top economic adviser stressed the other prime directive was job growth.

Here are some of the details of the plan that was laid out in today's press briefing. On the personal tax side, they underscore the simplification issue, right, simplify the tax code down from seven to three brackets, double the standard deductions, so that a married couple won't pay any taxes in the first $24,000 of income, end the Alternative Minimum Tax and the death tax, and get rid of most itemized deductions, except for mortgage interest and charitable donations. On the business side, they're talking about this 15 percent tax rate

for small and corporate businesses, a one-time tax on overseas profits. We will come back to this in just a second.

But let's go over to the president signing an executive order on education.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Also, education, Secretary Betsy DeVos, for spearheading our effort to restore state and local control of our schools.

Thank you very much, Betsy.

With her help, we're empowering those who know our students best. I would say by far the best, right, Betsy? Their parents and the teachers, so that every child has a chance to succeed.

In fact, we're proud to have some of those wonderful teachers here with us today. And we'd like to welcome all of them to the White House. It's a great honor.

I also...


TRUMP: Thank you. Thank you very much.

I also want to thank members of Congress, local leaders and governors for joining us here today, including Governor Ivey of Alabama, a new and great governor. Fantastic.


TRUMP: I have been hearing about you for years in the most positive way. So, I'm not surprised that you're governor of Alabama. Congratulations. Tremendous.

Governor Branstad, who is soon going to be heading out, I suspect, to a place called China. They love him, I will tell you. They really love the soon-to-be ambassador. But he also loves China. So it was a good combination. I was really happy to put it together. They're looking forward to seeing you, very much so.

Thank you. Thank you, Governor.


TRUMP: Governor LePage of Maine, Governor Sandoval of Nevada, Governor Herbert of Utah, Governor Mead of Wyoming, we want to thank you all and everyone else for being with us. It's really an honor to have you in the White House.

For too long, the federal government has imposed its will on state and local governments. The result has been education that spends more and achieves far, far, far less. My administration has been working to reverse this federal power grab

and give power back to families, cities, states, give power back to localities. Before this administration, only one time in our nation's history had a president signed a bill that used the Congressional Review Act to cancel a federal regulation.

In less than 100 days, I have signed 13 such congressional resolutions to cancel federal regulations and give power back to the people.

I'm very honored to have done so. I have also...


TRUMP: That's true. As you said, five have come from your committee. That's exactly right. Good job.


TRUMP: I have also signed over a dozen executive actions that reverse federal intrusion and empower local communities.

The executive order I'm signing today is another critical step to restoring local control, which is so important. This executive order directs Secretary DeVos to review current federal regulations and ensure that they don't obstruct the ability of states, local governments, teachers and most importantly parents to make the best decision for their students and in many cases for their children.

Previous administrations have wrongfully forced states and schools to comply with federal whims and dictate what our kids are taught. But we know that local communities do it best and know it best.


The time has come to empower parents and teachers to make the decisions that help their students achieve success. That's what this executive order is all about. So important.

Thomas Jefferson put it best when he said, "I believe the states can best govern our home concerns."

With this executive order and the many actions we have taken in less than 100 days, we're providing our states and communities with control over the matters that are most important to them. Together, we're going to fight to give our children the bright and beautiful future they deserve.


TRUMP: So, I want to thank you all. As you know, I'm heading over to a Senate meeting.

That's a very important meeting. So, I will be leaving now. But I just wanted to introduce our really exceptional education secretary. She's caught on. You wouldn't believe it, all the great things I'm hearing about you, Betsy. I'm very proud. So, Secretary Betsy DeVos, thank you very much.



BALDWIN: He said always. If you missed that, the question was, do you want to see a health care vote by the end of the week? He said, always.

Also of note, we have been talking about these buses with the senators from Capitol Hill to the White House, key that the president just said he's heading over to the meeting with the senators in the Eisenhower Executive Office Building. So, there's confirmation that the president will drop in.

But back to taxes.

Peter Morici is with me, professor of international business at the University of Maryland. And Dean Baker is here, co-director of the Center for Economic and Policy Research.

Gentlemen, thank you for being with me.

And let's talk, Peter, first to you, on the proposals from both Mr. Mnuchin and Mr. Cohn today. One Republican aide up on Capitol Hill apparently called this plan like cuts only, it's all of the goodies and none of the pain. How do they pay for it?

PETER MORICI, FORMER DIRECTOR OF ECONOMICS, U.S. INTERNATIONAL TRADE COMMISSION: Well, on the personal income tax side, they said they are going to eliminate a lot of the deductions and exemptions.

They are not lowering the top rate that much, but they're taking away, for example, the deduction for state and local government income taxes. So I think on the personal side they are in good shape. On the corporate side, a 15 percent tax rate, even if you eliminate everything in sight, it's really hard to get down that low, especially without those controversial border tax adjustments which seem to be out.

Show me. I don't think they can generate that much growth. They have got an economist over there. For the first time, they finally have an economist. Kevin Hassett. I would like him to see Kevin Hassett show me how he's going to generate enough growth to justify a 15 percent corporate rate. I'm sure Dean will have something to say about that.

BALDWIN: Show me the growth.

And, Dean, that is exactly what Secretary Mnuchin...


MORICI: Very interesting multipliers. I have a very expensive education in economics, but I'm having trouble figuring it out.

DEAN BAKER, CO-DIRECTOR, CENTER FOR ECONOMIC AND POLICY RESEARCH: Yes, I would like to see Kevin Hassett show that, too.

Look, we've been here before. We saw this with President Reagan in 1981, his tax cuts, and then of course George W. Bush in 2001, his tax cuts. And both of them said, OK, we're going to have growth and that will pay for it.

And, look, we did it twice. It didn't work, didn't come close to working. There's a lot of research on this. That's kind of a joke.

But I should also make a couple points that Peter just glided over. At least as I understand it, we just have a few details at this point, it looks like they're getting rid of the exemption on employer- provided health care insurance.

So, most of us at our workplace, we have our employers paying for our health care insurance. We don't pay taxes on that. As they have described it, we would pay taxes. That would be a big hit for a lot of middle-income people.

So that will be quite controversial, if that's at least what they are putting on the table.

MORICI: I don't think that's going to happen. Small businesses are going to scream.

I have got a small business. You take that away, and let's face it, they're not going to give me a 15 percent tax rate. That's baked in the cake. It's not going to happen. And if they take that away in the context of a somewhat lower rate than I currently pay, which is about 35 percent, it's not going to help me a lot.

BAKER: The business tax -- and, again, this is one thing I don't think has gotten the attention it deserves.

They made this big point on pass-through corporations, that they would also pay 15 percent. Peter is probably right. We won't see that. But let's say for the moment we do. That's what they put on the table.


That's an incredibly large tax cut for people like Donald Trump, because they're currently paying the individual income tax, 39.6 percent current rate for top marginal individuals like himself. He would instead have the option to pay a 15 percent tax rate as business income. That is an incredible deduction in the tax rate, and also leaves a situation where you would have middle-class firefighters, school teachers paying a 25 percent tax rate, Donald Trump paying 15.


BALDWIN: That's the issue that I think people are having, Peter.

You have these two former Goldman guys, in Mnuchin and Cohn, and how this would help maybe Donald Trump or in real estate or this is a great Wall Street cut, but not Main Street. How do you help the hardworking middle-class families in this country, many of whom who voted for Mr. Trump?

MORICI: Well, he is helping them by doubling the tax deduction and also the personal exemption, excuse me, the standard deduction.

I have got to get my words straight, the standard deductions.


MORICI: Now up to $24,000, you won't have to itemize. That's great stuff.

And then with some personal exemptions for kids, it goes higher. But I would point out, it might cut Donald Trump's taxes, but last year, my average rate was 28 percent, and Warren Buffett's was 13. Now, that's going to cut my taxes.

I'm a middle-income guy, but I happen to make a lot of my money consulting and things like that. And I'm not a rich person. And there's an awful lot of people in my category that are paying very, very high business taxes. And we're at a competitive disadvantage. I have to pay a higher tax rate than many corporations do.

BAKER: Let's be clear on this, though. There's a separate issue here. The corporation pays the tax. You're getting off -- your corporation, Peter, is paying zero tax. You're complaining about your tax as an individual.


BAKER: The corporation, if they pay it out to the owners, those owners, the shareholders instead also have to pay tax. So they are being taxed twice.

MORICI: They don't. They don't. What they do is, they turn it into capital gains.

BAKER: They pay tax on that.

MORICI: And then it qualifies for the capital gains tax, which is much lower.

BAKER: But the corporation pays the tax and then they pay the capital gains tax.

What you have now is, you don't pay any business tax. You just pay the individual business income tax. I should also point out, by the way, just a very quick point, 70 percent of people already take the standard deduction. So for those 70 percent, raising it is not helping at all.


BALDWIN: Hang on. Hang on, because I have a follow-up for you, Dean.

Is there anything in all of these different line items that they proposed today from the briefing, is there anything that would make liberals happy? Because I talked to someone last hour who said this is a nonstarter for them. How do you see it?

BAKER: It's very hard for me to see much that would make liberals happy. Raising the standard deduction isn't a bad idea, but it does cost money, so you would expect people to say, OK, how are going to pay for it?

And it's not clear what Donald Trump is proposing as an offset to pay for that.

MORICI: I think that creating more jobs will help middle-class people and ordinary people.

And I think that we have to remember that we're cutting the corporate rate, however much we cut it, in the context of international competition. We have a much higher corporate rate than everybody else. That wasn't the case when Ronald Reagan was cutting taxes in the '80s. Right now, we have an uncompetitive tax system, and we do have to bring it in line.


BAKER: But, Peter, our average corporate rate is just 22 percent, which is a little below the average.

MORICI: I understand, but there's great variation. There's great variation. And you know that.


MORICI: And the way you rationalize it is by getting rid of all of the exemptions and deductions and lowering the rate, so everybody pays the average rate.


BAKER: But not to 15.


MORICI: I agree with that.

BALDWIN: I will end by saying a lot of folks are saying where was President Trump on all of this? I did to Stephen Moore last hour who had advised the Trump campaign. And he even admitted he would have liked to have seen President Trump in the briefing kind of going through some of this even himself.

Peter Morici and Dean Baker, thank you so much on all things tax.

Coming up here on CNN, is there a breakthrough in the repeal effort to repeal and replace Obamacare? Find out what just happened on Capitol Hill on that.

Also, President Trump dealt another legal defeat, this one involving his order on sanctuary cities in this country, and he's lashing out yet again at this federal judge. And we are waiting for those senators to walk out of that White House

meeting after their rare briefing over at the executive -- Eisenhower Executive Office Building specifically on North Korea. They are in there now. We just heard from the president he will drop in.



BALDWIN: President Trump ripping another federal judge after yet another legal defeat, this one over his order on sanctuary cities.

A federal district judge in California ruled the government cannot block federal funds from cities that don't fully cooperate with immigration agents. He actually -- this judge called the president's approach, in a word, schizophrenic, saying it stokes cities' worst fears.

President Trump then slammed this ruling. He said it was -- quote -- "ridiculous" and a huge overreach. And he's vowing to appeal.


QUESTION: Were you surprised by the 9th Circuit ruling?

TRUMP: I'm never surprised by the 9th Circuit.


TRUMP: As I said, we will see them in the Supreme Court.


BALDWIN: With me now, Jeff Toobin, CNN senior legal analyst and former federal prosecutor. And Page Pate is here, CNN legal analyst and constitutional attorney.

Gentlemen, nice to have you on.

Jeffrey Toobin, I think the piece of the story that really jumped out at me was all of what this judge used. It was Trump's own words, right? It was even some of Sean Spicer's words from the briefing and Attorney General Jeff Sessions, all used against them.


But the basis is not really in the Constitution. It's really in the laws, is that it is perfectly -- the federal government is perfectly capable of removing money from states, but it has to be done by law.


Congress has to pass a law that says this money is taken away. What the judge's ruling said at its core is that this was not within the president's power under the laws to take this money back. Now, can he get Congress to pass a law like this? Certainly, he

hasn't had much success getting Congress to do much of anything so far. But this was really a statement that the president can't do this alone. The Congress has to authorize it.

BALDWIN: You have the president now, he's essentially zero for three on these major legal defeats, right? You had the two travel ban issues and then now this one, Page.

And my question is, I know he has lots and lots of lawyers. How does this keep happening?

PAGE PATE, CNN LEGAL ANALYST: Well, I think what we have seen, Brooke, is that the White House is not always listening to their lawyers and certainly not the Justice Department.

Even with this particular case, I think we're seeing some inconsistency between what the Justice Department says is federal policy and what the White House says. We have had at least one sanctuary city say, look, you're telling us we have to follow federal immigration policy. Does that mean we can no longer prohibit people from giving information about folks that may be here illegally or do we have to honor detainers?

It sounds like the White House says if you don't honor our detainer request, if you don't keep these folks locked up, we're taking away your money. But that's not what the Justice Department is saying.

So I think one thing that needs to be done, first and foremost, islet's get some clear legal constitutional policies on the books, so that these cities know what they are supposed to do and not do.


Let's move on to just the fact that the president did again rip this federal judge, Jeff Toobin. Should he be criticizing judges from his perch as commander in chief?

TOOBIN: I think Donald Trump is well within his rights in criticizing federal judges.

Federal judges, they serve for life, they're unaccountable, they're unelected, they are very powerful, and they're big boys and girls, and they should be able to take criticism just like anyone else.

I think Trump has said some dumb things. He said that one of these judges is a so-called judge. Another time, he said the judge was unelected. Well, all federal judges are unelected, including Judge Gorsuch, Justice Gorsuch, who was just appointed.

So some of the criticism I think has been off-base, but should he have the right to criticize judges? Absolutely.

BALDWIN: Page, you totally disagree. Tell me why.

PATE: I totally disagree. I think the statement and his tweets are incredibly dangerous, because

what he's doing is chipping away at the credibility of the federal courts. Now, look, I don't always agree with federal judges in my practice, but I criticize their ruling, I criticize their opinion. I don't criticize them.

I don't think that helps anything. And when you say to a judge, your ruling is a gift to criminal gangs and cartels, what are you telling the American people? That if we don't like a federal judge's ruling, let's just ignore it because he doesn't agree with us? I think that's incredibly dangerous.

TOOBIN: He never said that. He never said ignore it. I think it's important to point out that, for all that Donald Trump has said terrible things about judges, he's always, at least so far, abided by their rulings.

He has not tried to be like President Andrew Jackson and said, well, let the courts try to enforce it because I'm not going to do it. I think he has abided by these injunctions and these prohibitions by these judges.

PATE: So far.

TOOBIN: Well, so far, but I'm not prepared to criticize him for something he hasn't done yet.


PATE: Clearly, he is taking steps in that direction.

First, he wants to undermine their credibility in the public sphere so that because out there will support Trump when he says, I'm not going to follow them anymore. So, let's wait until it works its way to the 9th Circuit. If I like that ruling, I will applaud it. If I don't, I will criticize it.

That's not the way we need to deal with judicial orders in this country.

BALDWIN: I just wonder what the president's judge sister thinks when he does this.

Jeff Toobin and Page Pate, thank you all very much.

PATE: Thank you, Brooke.

BALDWIN: Coming up next here, a huge endorsement on Capitol Hill. The House Freedom Caucus now says it will support this Obamacare replacement bill now that a new amendment has been included -- details on what this looks like as they go, what, round three on health care.

We will be right back.