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Yates Warned White House Flynn 'Could Be Blackmailed'; Trump Slams Senate Probe Of Russian Meddling; Appeals Court Hearing On Revised Travel Ban. Aired 5:30-6a ET

Aired May 9, 2017 - 05:30   ET



[05:31:15]CHRISTINE ROMANS, CNN ANCHOR: President Trump dismissing a probe into his campaign ties to Russia as key figures testify to Congress. What's ahead for that investigation.

DAVE BRIGGS, CNN ANCHOR: And President Trump's travel ban faces new scrutiny as an appellate court weighs whether campaign statements about Muslims should impact its survival. Welcome back to EARLY START, everybody. I'm Dave Briggs.

And I'm Christine Romans. It is 31 minutes past the hour this Tuesday morning. Thanks for joining us. A lot to get to. Let's start with the fierce pushback from the president to that forceful testimony from former acting attorney general Sally Yates. Testifying to a Senate committee, Yates made it clear the Justice Department was seriously concerned about then-national security adviser Michael Flynn. Yates says she told the White House that Flynn's talks with the Russian ambassador and his lies to the vice president about those talks made Flynn vulnerable to blackmail.

BRIGGS: Now, Yates says she gave those warning in meetings with the president's lawyer, Don McGhan, expecting some action, but nothing happened.


SALLY YATES, FORMER ACTING ATTORNEY GENERAL: We felt like it was critical that we get this information to the White House because -- in part, because the vice president was unknowingly making false statements to the public and because we believed that Gen. Flynn was compromised with respect to the Russians.


BRIGGS: The Senate hearing came moments after we learned that last November, President Obama personally warned President-elect Trump against hiring Flynn as national security adviser.

ROMANS: White House reaction to the Senate testimony was swift and fierce. The president tweeting this. "The Russia-Trump collusion story is a total hoax. When will this taxpayer funded charade end?" He added, "Director Clapper reiterated what everybody, including the fake media, already knows. There is no evidence of collusion with Russia and Trump."

BRIGGS: Worth noting, FBI Director James Comey has publicly confirmed the Bureau is investigating alleged collusion between the Trump campaign and the Kremlin. The president was apparently so pleased with his comment about James Clapper he penned this tweet to his Twitter banner, Christine.

ROMANS: That drew a wave of scorn on social media. The banner was pulled around midnight Eastern Time. The White House is trying to blame the Obama administration for the Michael Flynn mess, pinning back on the Obama administration. They're questioning why Flynn's security clearance wasn't pulled when he headed up the Defense Intelligence Agency in 2014. Flynn was forced out of that post over policy and management disagreements.

All right. President Trump's travel ban now hanging in the balance after a critical federal appeals court hearing. Both sides under intense questioning from judges on the Fourth Circuit. Administration lawyers were repeatedly pressed on statements the president made during the campaign about a Muslim ban. CNN's Laura Jarrett was at that hearing for us and she joins us this morning from Washington. Bring us up to speed, Laura.

LAURA JARRETT, CNN JUSTICE REPORTER: Well, Christine, the judges grilled the parties for nearly two hours on a host of issues, but what stood out was the way that this case highlights a real tension between the deference the courts want to give to the president's national security judgment on immigration on the one hand, while also safeguarding constitutional rights on the other. And the judges really challenged the plaintiff's lawyer, explaining how is the president ever supposed to protect the country if his campaign statements about Muslims forever taint his policy goals, Christine.

ROMANS: Laura, did the judges seem persuaded by the government's argument that campaign statements don't matter?

JARRETT: The majority of them did not seem persuaded by that and the justice position -- the Justice Department's position on this is that the campaign statements don't matter but once the president has taken the oath of office to protect the constitution, then his words do matter. But most of the judges were skeptical about this at best because it seems to fly in the face of common sense. One judge saying it's the most important issue in the case, another remarking it would be willful blindness to ignore Trump's statements in this case, Christine.

[05:35:10] ROMANS: All right, Laura Jarrett. Thank you so much for that, Laura.

JARRETT: Thanks.

ROMANS: Nice to see you this morning.

JARRETT: Thank you.

BRIGGS: Also joining us this morning, a brand new face for EARLY START. She's Sarah Westwood, White House correspondent for the "Washington Examiner." Great to have you, Sarah.


BRIGGS: All right. So it should be interesting, right, in the future to see if presidential campaigns are aware that their statements could be held against them in court, but the immediate question here is, for the president -- is can he escape those campaign comments about the Muslim ban?

WESTWOOD: This continues to be a huge morass for the White House and in particular because his most controversial statements from the campaign trail -- his comments about Muslims that gave him a lot of trouble back in 2016 -- keep getting dredged up and keep being placed into new headlines and fresh stories when it's clear that the president and the administration would rather leave those behind. And we haven't heard that kind of rhetoric from the president since he took office and not in the final months of the campaign. He's stayed away from some of his more polarizing comments that characterize the early parts of his presidential bid.

Now we see that there has been a dramatic shift in the way he talks about national security and the way he talks about Muslims --


WESTWOOD: -- but those comments keep getting dragged up by the court and the president keeps having to answer for them anew.

ROMANS: Sarah, let's go the main event yesterday, the Sally Yates hearing, James Clapper, and let's just sort of recap what we learned from all of those hours of testimony. She said -- Flynn said that -- or Yates said that Flynn was susceptible to blackmail from Russia. Russia was definitely behind a hack of the U.S. election.

Trump and Russia collusion is still uncertain so we haven't been able to really -- that's what they're investigating but still -- James Clapper said it, too -- still uncertain the Russian investigation does have partisan strains. And, "The Washington Post" report was what may have led to Flynn's resignation in the first place, not those questions and all these urging about the toxicity of Flynn as a candidate. What do you take away from that hearing?

WESTWOOD: Well, certainly the partisan strains of the investigation were on full display yesterday. We saw Republicans going hard after the classified leaks of the information about Gen. Flynn and how that ended up in the hands of "Washington Post" reporters. And on the other hand, we saw Democrats going very aggressively after these unsubstantiated allegations of collusion between the Trump campaign and Russia.

And in the middle, we didn't hear a whole lot about the stated purpose of the investigation, which was how the Russians were able to bypass cybersecurity at the DNC, how they were able to break into John Podesta's inbox. That's the campaign chairman of Hillary Clinton's campaign. Why only Democratic emails were leaked, not Republican documents. Those are supposed to be the central questions of the investigation but, like you said, we saw a lot of partisan lines of inquiry yesterday in that hearing.

BRIGGS: Even more, we had John Cornyn going about the Muslim travel ban. Ted Cruz bringing up the Huma Abedin emails forwarded to Anthony Weiner. It was highly politicized. Where does this go from here? What question to you remains unanswered and do we need a special prosecutor?

WESTWOOD: Well, the main question is what evidence underpins these pretty well and widely accepted allegations that Russia hacked these Democratic actors during the U.S. election. The report that was put forward right before President Obama left office was heavy on the specifics of what the Intelligence Community believed, but very light on evidence and that's the kind of stuff that these congressional investigators were supposed to provide. They were supposed to fill in the blanks, put some meat on those allegations, but that hasn't happened yet because both sides have been distracted by the shiny partisan objects here.

ROMANS: Let's talk a little bit -- I want to play a little bit of sound of an Iowa congressman walking out of an interview. He's being asked, essentially, about why his -- why his team had prescreened people at a -- at a town hall to be from his district and things got tense. I think it highlights just how tense things are post that health care bill -- listen.


REP. ROD BLUM (R), IOWA: I don't represent all Iowans. I represent my -- the first district of Iowa. That'd be like -- that'd be like saying shouldn't I be able to -- even if I live in Dubuque, go vote in Iowa City?

REPORTER: Would you still take donations from a Republican in Iowa City?

BLUM: I'm not -- this is ridiculous. Are you going to sit here and just badger me?

REPORTER: All right, all right.


ROMANS: OK. So all those cute kids behind him and he's in this argument with a reporter. What you're seeing here right now are folks in that town hall waving either green or red for whether they agree with him. They weren't allowed to bring signs in. I think it just really shows how testy all this is and you make a really good point. He called this in "The Washington Post" -- he calls health reform, Dave --

BRIGGS: Obamacare 2.0. And now, again, he's in the House Freedom Caucus, Christine. This is not a moderate, this is not the Tuesday Group.

[05:40:00] ROMANS: So, Sarah, I guess my question is things are going to be tough out there as they try to sell health care.

WESTWOOD: Absolutely. This has a whole new battle to be fought in the Senate, then it has to go to conference, then it likely has to go back to the House. They're far from getting a health care bill passed. And look, it would be a mistake for Republican lawmakers to ignore the warning signs they're seeing in their town halls because that's a mistake the Democrats made in 2010 when there were lots of constituents turning out in town halls to protest the passage of Obamacare.

At the time they were dismissed that was the early warning signs that the Tea Party was rearing its head and Republicans swept to victory in 2010. That same thing could be happening in 2018, so for a Republican, they need to heed their own lesson. A lot of them were put in office by that Tea Party wave. They have to remember the grassroots organization that started the anti-Obamacare movement and that could be what we're seeing with the pro-Obamacare movement.

ROMANS: We've always said that Social Security was the third rail of American politics. I think it is now health care.


ROMANS: Health care is now officially the third rail of American politics. All right, Sarah, nice to see you. Thanks for coming on today. We'll talk to you again very soon. Thank you.

WESTWOOD: Thank you.

BRIGGS: Lastly, I thought it was odd that the question set him off about campaign donations. It's easy to defend that. Everyone takes donations from outside their district -- Democrats, Republicans, all over the United States. It was odd that that set him off but we could on for a while. But first, late-night host Jimmy Kimmel bringing tough words for critics who slammed his emotional monologue about his son and health care. And last night, he had a Republican senator on the program. We'll tell you what happened ahead.


[05:45:50] ROMANS: All right. The economy is buzzing, earnings are strong, investor fear is at a 24-year low, but that isn't enough to give the stock market a big lift because Wall Street is still waiting on tax reform. Wall Street's fear gauge -- we call it the VIX index -- is the lowest since 1993. You know, the results of France's election eased investor anxiety -- lulled it here into kind of complacency and it's not translating really into market gains. Stocks have barely budged since April 25th. That's because on April 26th the Trump administration released its tax outline and investors want more details, specifically on tax cuts.

Lower taxes could stimulate the economy with a flood of cash. For example, these five companies -- Apple, Alphabet -- that's the Google parent -- Microsoft, Cisco, and Oracle -- they have more than one-half a trillion dollars overseas. Until investors have a better sense of Trump's economic proposals, specifically on tax reform, the stock market will probably tread water here. Don't feel too bad, though. The market has enjoyed quite a run since the election. All three indices are near or close to or at record highs.

BRIGGS: OK. Jimmy Kimmel returning to late-night, thanking well- wishers, taking on critics who blasted him for that emotional monologue last week after his newborn son's health scare.


JIMMY KIMMEL, HOST, "JIMMY KIMMEL LIVE!": And as a result of my powerful words on that night, Republicans in Congress had second thoughts about repeal and replace and I saved health insurance in the United States of America. Thank you. (Applause) I didn't? I didn't save it? They voted against it anyway? I would like to apologize for saying that children in America should have health care. It was insensitive. It was offensive and I hope you can find it in your heart to forgive me.

There were also not-so-nice things that people said online about me, including members of the media. Now, this is from -- this is a real headline from "The New York Post." "Jimmy Kimmel's obscene lies about kids and medical care." Yes, it is true that if you have an emergency they will do an operation, and that's terrific if your baby's health problems are all solved during that one visit. The only problem is that never, ever happens. We've had a dozen doctor's appointments since our son had surgery. You've got a cardiologist, a pediatrician, surgeons. Some kids need an ambulance to transport them. That doesn't even count the parents who have to miss work for all this stuff.

I think it's important to remind everyone that this is Donald Trump's doctor, OK? This is who he chose to handle his health care. Of all the doctors in New York, he picked the one who looks like the guy you'd buy peyote from at (INAUDIDLBE).


BRIGGS: That guy is outstanding. He reminds me of that dude from "INDEPENDENCE DAY." Kimmel also invited Republican Sen. Bill Cassidy to the show. And Cassidy, who is a doctor, last week suggested a "Jimmy Kimmel test" where children born with defects, like Kimmel's son, could get the care they need in their first year. Kimmel says his son Billy is doing well, eating and sleeping and gaining weight. He thanked all the fans for the humbling outpouring of support. And if you listen to the interview with Cassidy you might have hope for some sensible, strong health care reform coming out of the Senate, and they are weeks away from starting that, by the way.

ROMANS: We live in a world where we're talking health care policy via late-night, you know.

BRIGGS: Right. That's progress.

ROMANS: That is, I guess. All right, 49 minutes past the hour, Dave. Apple is hitting another record. It's now the most valuable company in the U.S. We'll tell you exactly how much it's worth on CNN Money Stream, next.


[05:53:30] ROMANS: The battle to expel ISIS from Mosul may be nearing an end. It's been seven bloody months since Iraqi forces, with coalition support, launched a multi-prong offensive against the terrorists. Some civilians have been able to flee the region but for hundreds of thousands more these are desperate times here. Let's go live this morning to Irbil, Iraq. I want to bring in CNN's Ben Wedeman. And Ben, the fighting has been intense in Mosul in these recent days. Where do things stand this morning?

BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, what we understand is at this point the Iraqi Forces are pushing into the ISIS-controlled areas, those that remain -- about one-third of the city, somewhat less, from several directions. Now, the offensive had been stalled for quite some weeks because of ISIS resistance, but what the Iraqi army has done is that they're now coming down from the north and the northwest. So essentially, the remaining pockets of ISIS control are under assault from a variety of directions.

Of course, the problem is that according to the U.N. there are more than 400,000 people still inside those parts of the city and they are living under desperate conditions. Not only have they been short for months now of water -- clean water, electricity, medicine, food, but they are also under intense bombardment as a result of this assault.

[05:55:03] Now, we're learning, for instance, that one of the tactics that ISIS uses is that they will weld shut people's doors so they cannot leave and sometimes they take -- they go inside those houses, fire a few shots, and therefore that house, they think, will be targeted by Iraqi forces or by the coalition.

But what we were able to see when we were up on the edge of Mosul was that American and Iraqi officers are monitoring the city with drones. They know exactly what's going on. They've been able to avoid incidents in the past where civilians have been killed and they've also been able, as a result of this close observation of movements in the city, see ISIS car bombs before they get to Iraqi forces and take them out.

And they've been able to do that because the regulations have changed. Until the end of last year to call in an airstrike the Americans, for instance, had to get permission from very high in the chain of command. Now, the officers on the ground can identify a target like a car bomb and take it out.

ROMANS: All right. A certainly dangerous and scary situation there for those civilians. Ben Wedeman, thank you.

BRIGGS: Elsewhere, boosting troop levels in Afghanistan on the agenda when National Security Adviser H.R. McMaster meets with President Trump today. He'll be presenting final proposals for ramping up forces, with anywhere from 1,500 to 5,000 new troops to accelerate training missions for Afghan forces. Also being presented to the president, strategy options for fighting the Taliban in Afghanistan with more military strikes against the terror group. The White House is not saying when President Trump plans to make a final decision.

ROMANS: All right, let's get a check on CNN Money Stream this morning. Global markets up slightly. U.S. futures flat after Wall Street barely moved yesterday. That's a whole lot of nothing there but that nothing was enough to make the S&P and the Nasdaq hit new records, so there you go. Trading may have been muted by Emmanuel Macron's victory in the French election -- I like to say that -- Macron --

BRIGGS: I know. You say it so well.

ROMANS: -- it sent the fear gauge on Wall Street to the lowest level in decades -- oui, oui.

All right. Apple is first $800 billion company after billionaire investor Warren Buffett said he nearly tripled his stake in the tech giant. The stock rose 3.2 percent to an all-time high. That put the market value above $800 billion, the largest of any company. Apple shares had a great year. The stock is up 32 percent so far and many are betting on tax cuts from the president could even be better for Apple.

Coach bagged a great deal. The company is buying competitor Kate Spade for $2.4 billion. Where's the drum roll, Dave? It's the latest effort to appeal to a younger, trendier shopper. But this deal is good news for both companies, but bad news for bargain hunters. Coach said the savings generated by the deal will allow Kate Spade to have fewer online flash sales, which helps bolster the brand's luxury image.

And finally, the road to summer usually pumps up the cost of gas. This year prices are falling and you can thank plummeting oil prices. The cost for regular gas fell four cents last week alone. Now a few pennies may not sound like a lot but every 10 cent drop in prices saves you $1.50 per fill-up. Happy Memorial Day.

BRIGGS: Always good for your wallet, bad for the economy --

ROMANS: That's right.

BRIGGS: -- generally speaking.

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

BRIGGS: I'm Dave Briggs. "NEW DAY" starts right now. We'll see you tomorrow.


YATES: We believed the national security adviser could be blackmailed by the Russians.

UNIDENTIFIED MALE: Her warnings to the White House were unmistakable and strong.

UNIDENTIFIED MALE: It's a real question. Who knew what and when in the White House.

SEAN SPICER, WHITE HOUSE PRESS SECRETARY: If President Obama was truly concerned why didn't he suspend Gen. Flynn's security clearance?

JAMES CLAPPER, FORMER DIRECTOR OF NATIONAL INTELLIGENCE: And the vetting process for someone working in the White House is far, far more thorough than a standard clearance process.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Donald J. Trump is calling for a total and complete shutdown of Muslims entering the United States.

UNIDENTIFIED MALE: He made clear he was not talking about Muslims all over the world and that's why this is not a Muslim ban.

YATES: I believed that any argument that we would have to make in its defense would not be grounded in the truth.


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

CHRIS CUOMO, CNN ANCHOR: All right. We want to welcome our viewers in the United States and around the world. This is NEW DAY. It is Tuesday, May 9th, 6:00 here in New York.

And up first, former acting attorney general Sally Yates sounding the alarm, saying she repeatedly warned the White House that Michael Flynn was vulnerable to blackmail after uncovering that he had lied to the administration about his contacts with Russia. So why did the White House wait weeks before doing anything about Flynn?

ALISYN CAMEROTA, CNN ANCHOR: We're also learning that former President Obama personally warned Mr. Trump against hiring Flynn just two days after the election in November, so why did it take President Trump 18 days to fire Flynn as his national security adviser? Let's begin our coverage with CNN's Jessica Schneider. Good morning, Jessica.

JESSICA SCHNEIDER, CNN CORRESPONDENT: Good morning, Alisyn. Former acting attorney general Sally Yates laid it all out for lawmakers, saying she talked to the White House three times warning them about Michael Flynn's misstatements.