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EARLY START

White House Slams Sanctuary Cities Judge; White House To Unveil Tax Plan; General Flynn May Have Broken The Law; Activity Detected At North Korean Nuclear Site. Aired 5:30-6a ET

Aired April 26, 2017 - 05:30   ET

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


[05:30:00] DAVE BRIGGS, CNN ANCHOR: Another attack on the justice system after another legal ruling it didn't like. What's next in the president's battle to strip funding from sanctuary cities?

CHRISTINE ROMANS, CNN ANCHOR: Potential legal trouble for Michael Flynn. Congressional officials say the former national security adviser may have violated the law by not reporting payments from Russia.

BRIGGS: And, President Trump's plan for tax reform is going public today. Who will benefit most and who has to pay to make it happen? That will be the question we ask throughout this day.

ROMANS: Well, tax reform is easy.

BRIGGS: One thirty.

ROMANS: Tax reform is really easy.

BRIGGS: You know, it is simple. Who knew it was, but, you know, how do you do broad strokes on something that is so complicated? It should be a fascinating day. Welcome back to EARLY START, I'm Dave Briggs.

ROMANS: I'm Christine Romans. It's 30 minutes past the hour. This morning, the White House reaching for an old playbook, slamming a federal judge who has blocked an executive order and vowing to appeal that ruling. This time it's Judge William Orrick temporarily halting enforcement of President Trump's executive order on sanctuary cities. The president says his order would withhold billions of dollars from jurisdictions that refuse to cooperate with immigration enforcement.

BRIGGS: Orrick found that San Francisco and other jurisdictions suing to overturn the order could face immediate, irreparable harm if it were enforced. And he signaled the legal challenge to the executive order is likely to be upheld once the case is fully heard. The White House, at first, steered clear of attacking Judge Orrick, but then, overnight, put out a statement that went straight at him.

ROMANS: It called the case "one more example of egregious overreach by a single unelected district judge," adding, "Today's ruling undermines faith in our legal system and raises serious questions about circuit shopping. But we are confident we will ultimately prevail in the Supreme Court." Our coverage begins this morning with CNN's Jeff Zeleny. He's at the White House.

(BEGIN VIDEOTAPE)

JEFF ZELENY, SENIOR WHITE HOUSE CORRESPONDENT: Christine and Dave, the White House is trying to show accomplishments this week as it closes in on the 100th day of the Trump presidency. Something else, though, is stacking up as well -- legal setbacks. That ruling on Tuesday from a federal judge in California about sanctuary cities is the latest in the legal setbacks for the president's immigration agenda.

Now, he signed an immigration executive order five days into taking office. Now, a federal judge, on Tuesday, ruled simply that they cannot do that. It exceeded his authority. Now, the White House is vowing to appeal this. Chief of Staff Reince Priebus told me they will take this all the away to the Supreme Court, but it is another sign of the test and the limits of presidential authority.

Now, this White House, so far, has signed 26 executive orders since taking office in these first 100 days. They're signing even more this week. Now, that is a record for any president but, again, they're also seeing the limits of presidential authority and powers because the travel ban, and now this, have been turned aside by federal judges -- Christine and Dave.

(END VIDEOTAPE)

BRIGGS: Jeff Zeleny, thank you. This is the second time President Trump's own words have come back to haunt him in court. As with the travel ban, the judge looked at the president's own rhetoric, noting what he said about defunding sanctuary cities contradicted what government lawyers were arguing in court about withholding only a limited amount. Judge Orrick wrote, "The president has called it a weapon to use against jurisdictions that disagree with his preferred policies of immigration enforcement."

ROMANS: All right. The Trump administration will roll out its new tax plan today -- this tax day. We don't think the president will be there himself but we know that Treasury Secretary Steven Mnuchin and the National Economic Director Gary Cohn will present this long- awaited tax plan.

As I've been saying all week, the administration has been light on details. Now we're going to get some of these answers and here are some of the questions. For example, will they focus on corporate tax cuts first? An administration official says Trump will slash the tax rate to 15 percent for all businesses. That includes pass-through businesses for which owners report profits on their individual tax returns. For those firms, we're talking about a tax cut from as high as 39.6 percent to 15 percent, which leads to my second question.

Will it be real tax reform or just tax cuts? They are not the same thing. Comprehensive reform involves trade-offs that pay for any proposed cuts. It's means gutting this 30-year-old tax code and making it modern for a globalized economy. So far, the Treasury secretary has suggested economic growth would offset any costs, but most experts say there's little evidence that that works.

Finally, what's in this for the middle-class? The Treasury secretary has repeatedly promised middle-class tax relief is a priority, but analysis of some of Trump's earlier tax proposals heavily favored the top one percent of earners and actually raised taxes on some middle- income families.

I want to bring in the managing editor of "CNN POLITICS DIGITAL" Zach Wolf this morning. Good morning. Tax reform is hard. It's why it hasn't been done since 1986. Has the president learned some new tools or how to tweak his negotiation skills post-health care to get this one done?

ZACHARY WOLF, MANAGING EDITOR, CNN POLITICS DIGITAL: Well, you know, we'll have to see. We have some broad outlines here that have been out in media reports about what's going to happen with this unveiling of this tax plan. There are still a lot of questions out there about it. For starters, how do you pay for it? You put -- you made the point really well. Is this going to be tax cuts where they just stop taking in as much money or is it going to be tax reform where they stop taking in as much money and offset it with money there?This whole tax issue so complicated that it will be interesting to see exactly how they decide to go about it.

[05:35:30] And the last question is how are they going to get it through Congress? They weren't able to do it with health care. Is this going to be different somehow, and that's not clear to me yet, either.

BRIGGS: Yes, and how will Democrats oppose this? The headline in "The New York Times" says a 15 percent rate extends to companies like Trump's own companies, so will that be a line they use to oppose it as he seeks to benefit?

But let's move on and talk aboutMike Flynn. Rare bipartisan agreement yesterday. You can't get bipartisan agreement on anything these days but Jason Chaffetz and Rep. Cummings talking about Mike Flynn. Did he do enough to avoid breaking the law regarding these payments from Russia? Here's what they said yesterday.

( BEGIN VIDEO CLIP)

REP. JASON CHAFFETZ (R-UT), CHAIRMAN, HOUSE OVERSIGHT COMMITTEE: Personally, I see no information or no data to support the notion that Gen. Flynn complied with the law, and that is he was supposed to seek permission and receive permission from both the secretary of state and the secretary of the Army prior to traveling to Russia to not only accept that payment but to engage in that activity. As a former military officer, you simply cannot take money from Russia, Turkey or anybody else and it appears as if he did take that money.

(END VIDEO CLIP)

BRIGGS: Now, Rep. Cummings agrees with those sentiments, also saying this could be punishable by five years in prison.

Let's move on from Flynn, though, and Zach, what could this possibly mean for the White House?

WOLF: Well, I think it's really interesting. What you see there is Chaffetz, who has recently said he's going to leave Congress, and Cummings. It's fascinating -- these two men were at odds so incredibly. They were at each other's throats over the Hillary Clinton email issue that Chaffetz was so dogged in pursuing, and then he came under some controversy for not going after Trump's White House on issues. Not that he's leaving Congress he's appearing with Cummings and going after Flynn. I think Flynn, obviously, is no longer at the White House.

ROMANS: Right.

WOLF: He doesn't have that protection anymore. That's key here. If Flynn were still at the White House I think it would be a different thing we'd be seeing. But I would not want to be Mike Flynn right now.

ROMANS: But it must be a burr under the saddle for White House officials, quite frankly, because every time you say Flynn, Russia, you say former national security adviser to the president, it goes -- you know what I mean? I mean, it just keeps the Russia meddling story in the headlines.

BRIGGS: Yes, and "The New York Times" editorial board calls for a special prosecutor. To forget all these congressional committees looking into it. They want a special prosecutor on this issue, but we could talk about that all day.

ROMANS: I know we could. Let's talk about the judge. Let's talk about this judge -- this attack on a judge who ruled against the sanctuary cities order using the president's -- basically, his own words and his own rhetoric. Are you surprised at all that the White House, at first, didn't seem to go after this judge and then overnight did? It fits into the playbook, quite frankly.

WOLF: Right, and we've seen this. It's been a pattern with Trump criticizing several different judges back when he was a candidate, then as a -- you know, with the travel ban as president. His attorney general attacking a judge in Hawaii, you know, then talking about the judge that was hearing the case of the dreamer who was trying to come back into the country. It's basically -- you're right, it is a playbook at this point. I don't think we should be surprised at it. We should, potentially, still be alarmed by it but it's not a new thing.

ROMANS: OK. So, Zach, on the front page of all the major newspapers this morning another unelected official, Ivanka Trump. She's on every page --

BRIGGS: Yes.

ROMANS: -- after her -- the front page of "The Wall Street Journal", "The Washington Post" -- all of them. Yesterday, you know, got a lot of press for being jeered or booed. Hissed --

BRIGGS: Hissed, even -- yes.

ROMANS: -- some would say, when she talked about her father being a champion of working women and working families. And I've got to tell you, there's this big discussion going on among women -- working women -- about whether this is the face of the plight of working women and working families. Is it -- is it Ivanka Trump? Is she speaking for her company? Is she speaking for working women? What is her role, really, within this White House? What are you making of the Ivanka Trump story, day two?

WOLF: Well, I think if you oppose Ivanka Trump in that she is sort of this more moderate face for a White House that has more conservative policies -- if you want to criticize that or if you want to undermine it, I don't think hissing or booing at her is the way to go about it. You only, you know, work against yourself so that was probably the wrong thing to do for those folks. On the other hand, I think it will be interesting to see how her role evolves. Does she actually have any kind of moderating influence on her father on these issues that are so dear to her?

[05:40:05] ROMANS: But what is her role? Here's one of my questions. What is her role? She said I'm still learning about this job. I'm still learning here. That's what she told reporters yesterday. But, you know, I mean, she clearly is at the right hand of her father here. At what point could she not say I'm still learning and she has to say something else?

WOLF: I -- you know, I think we're getting pretty close. There were a couple of months -- almost 100 days, you know, later this week into this administration. The learning period is over. Her official role is relatively recent but she's been one of her dad's top advisers, you know, since way before he was thinking about coming into politics.

But I think at the end of the day we have to -- despite all the nepotism laws and all that, we've kind of gotten beyond that. These people are working the White House. This is a family business. This is a family-run operation where the president is looking at his daughter and his son-in-law as two of his top advisers. Two of his most trusted, you know, people that he's going to talk to. They're not going to go anywhere. I don't think those two are going to get fired. So --

ROMANS: No, and politically, if you're Angela Merkel and you're trying to figure out what is your back-channel way to Donald Trump, I mean, probably building a relationship with Ivanka Trump is a good idea.

BRIGGS: And she carries herself very, very well under --

ROMANS: She was poised.

BRIGGS: Yes.

ROMANS: She handled that well yesterday. I don't know if I would have handled it quite --

BRIGGS: No.

ROMANS: -- as well, having your dad attacked.

WOLF: I wouldn't have.

BRIGGS: Very eloquent, very poised.

ROMANS: All right. Thank you so much, Zach. Nice to see you today.

WOLF: Thank you.

BRIGGS: All right, let's move to health care. While both sides fight over how to fit health care into President Trump's first budget, key Republicans are taking steps to advance a broader repeal and replace effort. They've not taken the critical step of circulating legislative text for a new bill, hoping that will trigger another round of health care talks before the president's 100th day in office.

ROMANS: A draft amendment obtained by CNN shows where the GOP may be headed. The draft would allow states to seek waivers to weaken several key Obamacare provisions like protections for patients with preexisting conditions. Measures designed to bridge the gap between the conservative House Freedom Caucus leader Mark Meadows, and the more moderate head of the Tuesday Group, Tom MacArthur. But there is little evidence the math has changed to get a new health care bill through the House.

BRIGGS: No, that's going to be a massive lift. Meanwhile, the entire U.S. Senate heads to the White House today for a briefing on the North Korean threat. We have a preview from Seoul, next.

(COMMERCIAL BREAK)

[05:46:30] ROMANS: OK, a little pop quiz here. What do lumber and tuna have in common? Well, the answer, they're both at the center of trade disputes with two of America's biggest trading partners, setting a tense tone as the U.S., Canada, and Mexico prepare to renegotiate NAFTA. First, U.S. homebuyers may be paying for that new tariff on Canadian lumber after the administration's flat tariffs up to 24 percent on imported soft wood. The Canadian government immediately warned that tax is going to hurt American homebuyers the most. Canadian lumber makes up 30 percent of the U.S. market.

Trade groups here argue that the tariff will increase the cost of construction for the average home by $3,000. The price tag will be passed on to consumers, they say. It could hurt construction workers. The National Association of Homebuilders estimates it could cost 8,000 jobs -- they're high-paid jobs -- that's 500 -- wow, $500 billion in wages, that's a lot.

Trump's decision to hit Canada with tariffs first was surprising, especially considering his criticism of Mexico on the campaign trail and the fact that the U.S. just lost a $163 million trade battle with our southern neighbor. That dispute was over tuna. The U.S. government said Mexican tuna wasn't dolphin safe. Mexico assured it was and the World Trade Organization sided with Mexico. It will now be able to impose sanctions worth that $163 million against the U.S. So, tuna, dairy, lumber -- these are all the things the U.S. is sort of quibbling about with its closest neighbors.

BRIGGS: You know, you had me at tuna.

ROMANS: I had you at tuna.

BRIGGS: All right. Today, President Trump signs an executive order to review the national monument status of over 10 million acres of federal land. Interior Secretary Ryan Zinke says the order could reshape about 30 different monuments. At the center of the proposal, the Bears Ears National Monument in Utah, sacred to Native Americans and home to tens of thousands of archaeological sites. President Obama protected the land in December but now Republicans want control of it returned to the state, claiming that it stifles new commercial and energy developments.

All right, time now for a look at what's coming up on "NEW DAY." Chris Cuomo has nothing, really, to talk about. I don't know, taxes, Mike Flynn.

ROMANS: What, you guys -- did you guys call each other this morning? Look at these ties.

BRIGGS: He's a sharp dressed man. I'm just trying to emulate him.

ROMANS: Yes, yes, yes.

CHRIS CUOMO, CNN ANCHOR, "NEW DAY": I like that he's got the pocket square matching the tie. That's kind of Dave's thing. I don't do that.

BRIGGS: I'll rush that up to you.

CUOMO: I always have a white one. I always have a white one but yours is better. You're the new breed. You're the new breed. You're the upgrade. All right, so this morning we're going to dig deeper, as Dave was saying, on a lot of big stories including the court ruling on the president's executive order that would cut funding to sanctuary cities. What is the order's future in the courts? Well, that's one thing, but politically, the president has really set a tone of attacking the judiciary in a way that is different than usual. Presidents get sideways with the courts on a regular basis, don't kid yourself, but stylistically this is different. We'll look at it.

And there's a new proposal for health care. Every vote will count. Can this version get through the House? Does it fix the problem of throwing tens -- maybe 10-12 million people off their roll? So, we're going to have congressmen on who are in the mix. That's what we've got, and a lot of other things, too.

ROMANS: All right.

BRIGGS: Yes. Love how the "Daily News" spins it as "spancutary" as Trump takes on another judge. Chris Cuomo --

CUOMO: But again, not the first president to be sideways with a federal judge.

ROMANS: Right, right.

BRIGGS: That's true. All right, we'll see you in a bit.

ROMANS: All right, thanks, Chris. Nasdaq at an all-time high this morning, above 6,000. The Dow charging higher as well. I'm going to tell you whether it can continue. That's next.

(COMMERCIAL BREAK)

[05:54:10] ROMANS: Something unusual happening in Washington today. Virtually every single U.S. senator will be on the White House grounds for an all-hands briefing on the standoff with North Korea. The briefing will be led by top officials, including Defense Secretary James Mattis and Secretary of State Rex Tillerson. But the president, himself, may not show up. The White House says if he does come it will be a brief drop-by.

BRIGGS: A briefing for the full House of Representatives has also been added for tonight and an interesting new development this morning. The U.S. military observing significant activity of digging at a North Korean nuclear test site. What does this mean? Let's bring in CNN's Paula Hancocks live from Seoul. Good morning to you, Paula. What does this mean that we have detected this digging?

PAULA HANCOCKS, CNN INTERNATIONAL CORRESPONDENT: Well, Dave, this mean, according to the U.S. Defense official, that it may mean a nuclear test from North Korea is not as imminent as previously thought. Basically, from this satellite imagery they've been able to tell that there is more digging at the entrance to one of the tunnels where these underground nuclear tests would take place. So they're assuming that could mean that they have a little more work to do, although we have heard from 38 North, the U.S. tracking group, that they believe they're primed and ready for nuclear test number six. All that is lacking at this point is the green light from the North Korean leader Kim Jong Un. But here, inside Korea, there's still an assumption it is when, not if, number six is going to happen.

[05:55:30] Now, also here in South Korea, the elements of THAAD, the U.S. missile defense system are now being put in place in the location where they will be deployed. They were moved in the cover of darkness. There were many protestors and local residents not happy about this deployment. But the U.S. and South Korean Defense Ministry saying that it is necessary to counter that threat of the missiles from North Korea.

We're also seeing more military drills. The U.S.-South Korean (audio gap) the end of the month. They're defensive in nature, we're being told, but the one I went to was certainly massive and it is inevitably going to send a message to North Korea. North Korea holding its own live fire drills as well -- Dave. BRIGGS: And we also saw digging last week, only it was the volleyball sense of digging when we saw the satellite images of North Koreans playing that. Paula Hancocks live in Seoul. Thank you.

Meanwhile, a dangerous close call between a U.S. Navy destroyer and an Iranian Revolutionary Guard ship in the Persian Gulf. Defense officials say the USS Mahan was forced to alter its course Monday in response to what it called a provocation by the Iranian vessel that came within 1,000 yards of the warship with its outboard weapons systems actually manned. Officials say the Mahan fired a flare but no warning shots. It's the second time this year the U.S. and Iran have had a tense standoff in the Persian Gulf.

ROMANS: That certainly bears watching. All right, let's get a check on CNN Money Stream this morning. Nasdaq topping 6,000. Two huge days of gains and solidly quarterly earnings from big-name companies. There's excitement over tax cuts that will enrich big companies and that's why the market soared. Here's a look at markets around the world right now. Inventors today can expect more earnings and that announcement later today about Trump's proposed tax plan.

Huge day for the Dow, too. The average up triple digits, driven by four of those 30 Dow stocks. Look at Caterpillar. Look at McDonald's, Dupont, Goldman Sachs -- all helped power the Dow 230 points higher. They all had earnings that were solid -- that were better than Wall Street had expected.

Your Uber is arriving now but you may want to look to the skies. The tech company plans to bring flying taxis to Dallas and Dubai by 2020. Uber is partnering with aviation companies to develop these flying vehicles. The technology is brand new, largely unproven, but Uber says flight is the future of the business. The company also said the cars will help in areas with busy traffic. How many times have you wanted just to lift up over Fifth Avenue and cross town? The fare will be the same price as Uber. It's not coming next week.It's going to be some time.

And one quick correction. Really important to tell you about this. A few minutes ago we told you about that tariff -- the Canadian lumber tariff. We said the National Association of Homebuilders estimates that new tariff on Canadian lumber would cost $500 billion in lost wages. You heard me say wow, that seems like a lot. Well, we had a typo in that story. It's actually $500 million in lost wages. I want to personally apologize on that one.

BRIGGS: Nonetheless, an awful lot of money --

ROMANS: Yes.

BRIGGS: -- as is this tax reform plan that will be rolled out today by the White House. It should be a fascinating day.

ROMANS: Thanks for joining us. I'm Christine Romans.

BRIGGS: And I'm Dave Briggs. "NEW DAY" starts right now.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: We all have a duty to confront justice even when it emanates from the White House.

ROMANS: The White House slamming a federal judge who has blocked the president's executive order on sanctuary cities.

UNIDENTIFIED MALE: It's pretty easy to find a left-leaning judge that would block it.

UNIDENTIFIED MALE: We're under no obligation to respect an executive order which violates the U.S. Constitution.

CHAFFETZ: I see no information that Gen. Flynn complied with the law.

SEAN SPICER, WHITE HOUSE PRESS SECRETARY: I don't know what he filled out and what he did or did not do.

UNIDENTIFIED MALE: Knowingly falsifying or concealing a material fact is a felony.

UNIDENTIFIED MALE: The question becomes now, was it a deliberate omission or was it an accident?

(END VIDEO CLIP)

ANNOUNCER: This is NEW DAY with Chris Cuomo and Alisyn Camerota.

ALISYN CAMEROTA, CNN ANCHOR: We want to welcome our viewers in the United States and around the world. This is NEW DAY. It's Wednesday, April 26th, 6:00 here in New York.

The Trump White House slamming another federal judge after a third legal setback to the president's immigration orders, accusing the judge of "egregious overreach" for blocking an order that would have stripped federal funds from sanctuary cities.

CUOMO: Also, lawmakers say Trump's former national security adviser and close aide, retired Gen. Michael Flynn, may have committed a crime by failing to properly disclose payments from Russia. A very busy day 97 of the Trump presidency. Let's begin with CNN's Joe Johns live at the White House. Good morning, Joe.

JOE JOHNS, CNN SENIOR WASHINGTON CORRESPONDENT: Good morning, Chris. The president's first 100 days ending with a familiar tussle with the federal judiciary. This time, a complaint from the White House that an unelected federal judge ruled against the administration. That judge using the president's own words in the ruling.