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Moscow Says Patience is Running Out; Trump Face-To-Face with Putin; Bannon Pushing Tax Hike on Rich; New Jersey Beach Closures; Christie Caught at Beach. Aired 9:30-10:00a ET

Aired July 3, 2017 - 09:30   ET


[09:30:00] FREDRICKA WHITFIELD, CNN ANCHOR: Last during the Obama administration. What - what does that mean, patience is running out? Meaning they - they want those properties back, access back, explanation, what?

MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yes, well those properties, of course, were seized by the United States at the end of last year as a result of the allegations of election meddling by the Russians. Also 35 Russian diplomats were expelled from the United States. The Russians, at that point, decided not to respond. They wanted to wait for Donald Trump to come in, to see whether a deal could be done with him. No such deal has been forthcoming, partially because of the political pressure that Donald Trump's under. And it's just an expression of that frustration on the Russian side. They want those diplomatic missions back. Otherwise, they reserve the right to take action of their own. And the Kremlin and the foreign ministry earlier have been saying they've already got a plan of reciprocal responses to put into force if they don't get what they want. So maybe this is one of the issues that Vladimir Putin is going to be very well briefed when he meets Donald Trump in Hamburg on the sidelines of the G-20. Maybe that's one of the issues he is going to bring up with his American counterpart.

WHITFIELD: OK, so, Matthew, let's widen this conversation even further and invite to the table a couple other people. CNN global affairs analyst and digital news director for "The New Yorker," David Rohde. Also with us, the former U.S. ambassador to Georgia and Kazakhstan, William Courtney. Good that the ambassador, OK, is on the phone with us, could also be with us.

So, David, you know, you first. Can expectations be too high with this meeting between Putin and Trump?

DAVID ROHDE, CNN GLOBAL AFFAIRS ANALYST: I think they can be high on the Russian side, just that -- that President Trump is having this meeting with President Putin shows, again, Russia's re-emergence on the world stage and Putin's own influence.

I think from the Trump administration's side, it wants to downplay expectations. Matthew talked about, you know, possibly handing over these compounds back to the - to Russian officials. I think that would be a tact in Washington and, you know, fairly or unfairly, it would be - it would raise more questions, why is President Trump sort of - it would seem if he handed back these compounds going easy on Russia.

WHITFIELD: And so, ambassador, you know, CNN's Steven Colinson (ph) put it very well, saying the two leaders have been circling one another, intrigued yet at a distance. But now they're going to be face to face. There are an awful lot of things that they could be talking about, including the Russian meddling into U.S. elections. But, Mr. Ambassador, what do you believe could really come from this meeting? Is it just sizing one another up or is there something substantive here?

WILLIAM COURTNEY, FORMER AMBASSADOR TO GEORGIA AND KAZAKHSTAN (via telephone): The key issue will be, what kind of trades are possible? So for the Ukraine issue, which really has been a number one issue between Russia and the west, the trade is fairly clear. If Russia pulls out of eastern Ukraine, the west will give up the big economic sanctions, will lift those sanctions. But in other areas, the trade is less clear. So, for example, those vacation facilities that Russians have, President Obama said they're intelligence collection facilities. One of them in Maryland is close to the National Security Agency. The other on Long Island is opposite the (INAUDIBLE) Naval Base and close to the (INAUDIBLE) industry in Long Island. So if President Trump gives those back, he's going to need something in return. Otherwise the Congress will surely pass this sanctions bill that will expand sanctions and put them into law.

WHITFIELD: And then what would it mean, in your view, if the U.S. were not to receive anything in exchange, if Trump were to go there and say, OK, we're going to give you those compounds back as just another way of chipping away of the Obama legacy?

COURTNEY: Well, that - it's just not going to be possible for Trump to give those back without getting something in return. He has to have a deal of some sort if he's not crucified. For example, the Russians are violating the intermediate range nuclear forces treaty. Well, this may mean that Congress won't extend the strategic arms reduction treaty, the (INAUDIBLE) treaty. So there needs to be a trade in that area, maybe missile defense will be part of that, who knows. But whatever he does has to involve a trade with Russia where Trump can come out saying he's gotten something and Putin can do the same.

WHITFIELD: All right, so - so many are believing that this will be the first time these two men are meeting, but Trump himself, in the past, has said that he's gotten to know him, he's met him, et cetera. Just take a listen to kind of a look back at the many words of Donald Trump on Putin.


DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I never met Putin. I don't know who Putin is.

I have nothing to do with Putin. I've never spoken to him. I don't know anything about him other than he will respect me.

I was in Moscow recently and I spoke indirectly and directly with President Putin, who could not have been nicer. (END VIDEO CLIP)

WHITFIELD: So, David, you know, how does that potentially set the stage of what the mood will be like, the demeanor of these two men will be like since there's been, you know, so many conflicting messages about whether they known each other or have met or not?

[09:35:10] ROHDE: Look, this goes to, you know, back to sort of the belief - the belief of the American public in President Trump. His base clearly believes him and doesn't think there was any, you know, nefarious activity or relationship with Russia. Democrats are, you know, much more suspicious.

So what's odd about this meeting is that there's no script to it. The National security adviser, General McMaster, said it was going to be informal. And that's a sort of very dangerous situation for Trump. An image of Trump, you know, smiling broadly and shaking Vladimir Putin's hands, you know, will be just used against President Trump by his political opponents.

Trump has been so tough with traditional American allies. The new leader of South Korea was just at the White House. He complained about, you know, trade deals with them. He's more confrontational now with European leaders regarding NATO. So if he goes easy on Trump - I agree with the ambassador, if he - if he somehow turns those compounds over for nothing, it will just raise all these questions again, why is he so aggressive toward everyone else but so welcoming and sort of understanding towards President Putin?

WHITFIELD: And so, Matthew, do people in Russia ask that very question, that it seems as though, you know, there's deference to Putin whereas there isn't for many others?

CHANCE: Well, I think you have to see it in the context that when Donald Trump was elected and before he was elected he promised to radically transform the relationship between Washington and Moscow and said there were all sorts of high expectations here about how the two countries could cooperate, for instance, on international terrorism and in the conflict in Syria. Donald Trump, of course, criticized NATO and that was music to the ears of the Kremlin as well. And there was all sorts of expectations that this could be the start of a new era in the relationship and none of that came to pass. And I think that's been genuinely disappointing.

And I think as we go into this meeting between Trump and Putin, this genuine apprehension on the part of the Russians, you know, they want a predictable partner, somebody who they can work with to normalize the relationship between the United States and Russia. Someone who can make them work with - to get these damaging economic sanctions on their economy, imposed by the United States lifted. And I think they're genuinely concerned about what might come out of this meeting. What is Donald Trump going to say? Because they're acutely aware that whatever he says that is perceived as being positive towards Russia, towards taking a step toward building bridges with Russia, is interpreted in the poisonous, domestic political atmosphere in the United States as being a negative. And that's something that is, you know, deeply alarming for many Russians, including at the top of the Russian government.

WHITFIELD: We'll leave it right there. Matthew Chance, Ambassador William Courtney, David Rohde, thanks to all of you. Appreciate it.

All right, here's the premise, tax the rich? One of the president's top advisers reportedly pushing a plan that has the wealthiest Americans paying more than 40 percent. What it would mean for the working class.


[09:42:08] WHITFIELD: All right, welcome back. I'm Fredricka Whitfield, in for Poppy and John.

All right, never mind health care, some in the Trump administration are already looking ahead to tax reform. According to Axios, chief strategist Steve Bannon wants to go against the Republican grain, raising taxes on the wealthy to pay for middle class tax cuts.

Meanwhile, the president is cheering the economy, tweeting this, saying, "stock market at all-time high. Unemployment at lowest level in years. Wages will start going up and our base has never been stronger."

Joining us now to talk about all of this, this plan, will it work, Arthur Laffer, former Reagan economic adviser and also an adviser to the Trump campaign, and Jeanne Sahadi, senior writer for CNN Money.

Good to see all of you. Happy Fourth weekend.


WHITFIELD: All right, so Arthur, you first. Axios reporting that Bannon has told colleagues that he wants the top income tax bracket to, quote, have a four in front of it. That apparently means raising the top bracket to be 40 percent or more. How big of a middle class tax cut could that potentially finance?

LAFFER: Well, I don't think it would finance any to be honest with you. These people who are in the top 1 percent, they just find more shelters, more ways of getting around the taxes, like they do now. In fact, they would lose money. What we have seen in almost the last 100 years is whenever they've raised the tax rates on the top 1 percent of income earners, revenues from that group have gone down as a share of GDP and it's hurt the economy. So I think it's a - it doesn't make any sense whatsoever.

WHITFIELD: OK. So, Jeanne, this coming from Bannon, according to reporting. But if the president were, you know, backing this, would he have the kind of support to push this through like that?

JEANNE SAHADI, CNN MONEY SENIOR WRITER: I actually have no idea. And the reason is, the Republicans are not speaking with one voice on anything. Certainly not in tax reform and in terms of tax - I'm sorry, in terms of health reform and in terms of tax reform. All we know is that Treasury Secretary Steve Mnuchin and Gary Cohn from the White House are leading the discussions. How influential Bannon is, I'm not quite sure. And they're talking with the House and Senate leadership on this. Their conferences are not in agreement about how to do tax reform. I think it will be a surprise to Republicans to say, we're going to raise taxes on anyone, let alone the rich. So, we'll see.

WHITFIELD: And so would a - would a tax cut, you know, Arthur, for the middle and working class, you know, stimulate the economy?

LAFFER: Well, you know, let me just say that Jeanne's completely right on that. The Republicans are not talking with one voice. In fact, I'm not even sure which way the wave is going, let alone one voice. But tax cuts on the middle class is not the right way to go. What you really want to do is cut that corporate tax rate from 35 percent to 15 percent. That is the real adrenaline that would really get this economy going and then provide jobs, provide output, provide employment. You know, Kennedy put it so beautifully when he said, the best form of welfare is still a good high-paying job. And you cannot tax an economy into prosperity. It just doesn't happen.

[09:45:07] WHITFIELD: So, Jeanne, on the supply side, you know, economics, Michael Tomasky recently wrote in "The New York Times" about a Kansas experiment. The cut taxes for the rich and he says "the cuts came. But the growth never did. As the rest of the country was growing at rates of just above 2 percent, Kansas grew at considerably slower rates, finally hitting just 0.2 percent in 2016. Revenues crashed."

SAHADI: Yes. Well, the thing about Kansas - one of the things they did, which is similar to a proposal that's in the White House plan, to the extent we know about the White House plan, is that they cut the rate on so-called past or small businesses. Well, they cut it to zero in Kansas. The Trump administration is proposing 15 percent.

The problem is, is that there's a lot of opportunity for tax sheltering. So revenues crash in part because the business revenue dropped considerably because people didn't pay their taxes.


SAHADI: They - and every conservative economist will say this. This is not, you know, a Democratic point of view. It's a - the problem with all sorts of tax cuts is it's part of a moving system. So how much you cut a rate also then depends on what you do outside of that rate cut. Do you take away tax benefits so that you're preserving the revenue base, which a government needs to function? Kansas is learning that lesson the hard way. The governor, his whole legislature basically out ruled him and started to raise taxes again. So it's a concern for the federal government as well.

WHITFIELD: So then, Arthur, what does this potentially tell you about the direction in which this White House might be able to go? If you've got dissenting views, you've got Bannon saying one thing, Cohn another, Mnuchin another and then, you know, Donald Trump, does this say to you that there really is no framework on a tax reform plan that this president wants to ultimately push forward, that they really are starting from ground zero? LAFFER: Let me just say that Jeanne was completely correct on Kansas.

Exactly correct. When you cut a tax to zero, it's hard to get much revenues from that.

What is happening is what typically happens in a lot of administrations. I've been involved with five presidents over the years. And before they really their really sea legs, they have a lot of conflict, a lot of stuff going on. That will disappear. Which direction it goes, I'm not sure, Fred. But you will see changes coming in this administration. You will see clarity coming. It may be the clarity like Jerry Ford, which is an utter disaster. It may be the clarity like Bill Clinton, which is clear as a bell and a beautiful period after he lost the - after he lost the House and the Senate in '94, it became the best - one of the best presidencies ever. So, you know, the clarity will come, but right now it's a classic time for everyone going after everyone and trying to find out where they fit in this administration.

WHITFIELD: All right, Arthur Laffer, Jeanne Sahadi, thanks to both of you. Appreciate it.

All right, well, new meaning to life's a beach? New Jersey governor Chris Christie caught on camera lounging in the sand right after he closed the state's beaches to the public because of budget troubles. You've got to hear the answer when we come back.


[09:52:43] WHITFIELD: All right, welcome back. I'm Fredricka Whitfield in New York, in for Poppy and John this holiday weekend.

It is the holiday and so a great time to go to the state beach or park, right? Well, not in the state of New Jersey right now. The garden state has closed all of them because of budget constraints. Closed to everyone except the governor, Chris Christie, and his family. And there are pictures to show it. The beach deserted except for Christie and company in beach chairs, swimsuits, shorts, the whole nine yards. Well, here's what the former presidential candidate said when asked whether he had gotten a tan.


GOV. CHRIS CHRISTIE (R), NEW JERSEY: No, I didn't, Claude, but go ahead. I didn't get any sun today. No. No. There's no one at Island Beach State Park. There are no lifeguards. There's no one to pick up the garbage. There's no one providing any services at Island Beach State Park.

Next. Next. Excuse me, next. Next. I'm done. We're talking about the closure of government and you're talking about your TMZ stuff.


WHITFIELD: Oh, my goodness. Well, the pictures are resonating and folks are wondering why the governor can be on a state beach and not everybody else. So Polo Sandoval is at Liberty State Park at Jersey City, New Jersey.

And, Polo, what have people been saying, if anything, as they try to make it into the state parks or beaches today.

POLO SANDOVAL, CNN CORRESPONDENT: Well, Fred, you know, we talked about it yesterday, people here are clearly frustrated. They had their holiday weekend plans. They wanted to bring their family out. Not only people from New Jersey, but from around the world. Yesterday I spoke to some people from South America, for example, who wanted to use this as a launching point to the Statue of Liberty. It's a very popular launching point where you can take the ferry, see Lady Liberty, check out Ellis Island. Instead, though, a lot of people now having to go to Manhattan, and that's pretty much what we've seen behind me where state park police are essentially telling people to turn around and head in the other direction. And that is what has several people upset, especially after some of those images were released, or at least were shown, showing the state's chief executive with his family at the governor's retreat in Island Beach State Park.

And we're hearing from some of the spokespeople who say it's a little more complicated than that. Essentially saying that that is the governor's residence. And yesterday Governor Christie, along with his family, were on the portion of the beach that is attached to the property. So that's their explanation.

[09:55:08] And a few moments ago, we heard a - or at least we read a statement that - or a portion of an interview that Governor Christie granted a New York program. I want to read you a portion of it as he spoke to "Good Day New York," essentially saying that last Monday he said that regardless of what went down, regardless of whether or not this budget battle will get sorted out, he still planned on taking his family out there and said that's exactly what he did. This - he said in his own words, "this is where we live. One of the places we live." And so what a great bit of journalism by "The Star Ledger," which essentially did show some of these images saying that this is something that he can do, something that he will do. Today, though, we do expect him to call back legislators to see if this will come to an end finally and finally people will be able to make their way back into the dozens of parks throughout the garden state.

Back to you.

WHITFIELD: So, Polo, we just put a statement up. Can we put that up one more time? Now, this statement, my producers, did this statement come after the images have been revealed? Can we see that again, that statement?

SANDOVAL: This is something that she - yes, Fred, this is something that - this was part of an interview. This was a transcript that was released by his office of a phone interview that was given to "Good Day New York" in which he essentially addresses this because, yes, that is essentially a focus of the conversation right now. And, of course, we're hearing from the governor who wants -

WHITFIELD: OK, well, let's read it because it says, "I'm sure they're going to get a Pulitzer" -sorry to interrupt you, Polo, because I don't think you have a return monitor where you can -

SANDOVAL: Sure. Go ahead.

WHITFIELD: See it and read it. But let's see at the beginning again.

SANDOVAL: Exactly.

WHITFIELD: There we go. "I'm sure they're going to get a Pulitzer for this one because they actually proved they caught me doing what I said I was" - turn the page - "was going to do with the people I said I was going to be with." Which is quite different from, you know, his statement in front of cameras where he seemed to be a little agitated that people were asking him about being on the beach and he said he wanted to move on, et cetera. So there's still a lot of explaining to do, as they say, Polo.

SANDOVAL: Right. And, Fred, he made clear in that interview too is that the governor has his residences. There are two in this case. These are state-owned residences and he as a right to go to those residences. But, again, the optics certainly not what the governor would want, especially in light of this government shutdown, partial shutdown in New Jersey.

WHITFIELD: All right, Polo Sandoval, thank you so much.

And we'll be right back.