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McConnell Concedes Defeat on Health Care; Russia Threatens Diplomatic Retaliation; Minneapolis Family Wants Answers After Fatal Police Shooting; No Word from North Korea on Proposed Talks with the South. Aired 4:30-5a ET

Aired July 18, 2017 - 04:30   ET





TRUMP: Mitch has to pull it off. He's working very hard. He's got to pull it off.


DAVE BRIGGS, CNN ANCHOR: But Mitch McConnell has come up short. He's being forced to abandon repeal and replace of Obamacare after he could not get enough Republican support. Repeal and delay, perhaps, the new plan. But even that, can it pass the chamber?

[04:30:02] That is a heavy, heavy lift.

Welcome back to EARLY START, everybody. I'm Dave Briggs.

CHRISTINE ROMANS, CNN ANCHOR: And I'm Christine Romans. Thirty minutes past the hour this Tuesday morning.

It is a devastating blow to President Trump's top legislative priority this morning as Mitch McConnell concedes defeat, defeat on the Senate health care bill in its current form. The Senate majority leader has essentially no choice after two more Republicans defected from the bill, leaving it without enough support even to begin debate.

BRIGGS: Late last night, McConnell explained in a statement: Regretfully, it is now apparent that the effort to repeal and immediately replace the failure of Obamacare will not be successful. McConnell now making a major pivot, announcing he will push for a new version that will repeal Obamacare outright with a two-year phase-out, so there's time to come up with a replacement system.

McConnell notes that a majority of senators already backed a House repeal bill when it came up in 2015. Keep in mind, that's when Obamacare was very unpopular, though.

ROMANS: McConnell's statement came just moments after the president posted a tweet along the same lines: Republicans should just repeal failing Obamacare now and work on a new health care plan that will start from a clean slate. Dems will join in.

Fallout from the defection of the two senators McConnell had been counting on came quickly. Our Ryan Nobles has more on that from Capitol Hill.


RYAN NOBLES, CNN WASHINGTON CORRESPODENT: Dave and Christine, good morning. This is essentially the worst-case scenario for Senate Majority Leader Mitch McConnell. Two more Republican senators, Mike Lee of Utah and Jerry Moran of Kansas, have announced they will not support the latest version of health care reform. It effectively means this bill is dead.

This is what Senator Lee said in his statement last night. Quote, After conferring with trusted experts regarding the latest version of the Consumer Freedom Amendment, I've decided I cannot support the current version of the Better Care Reconciliation Act. In addition to not repealing all of the Obamacare taxes, it doesn't go far enough in lowering premiums for middle-class families, nor does it create enough free space from the most costly Obamacare regulations.

And Jerry Moran went further. He said that the Senate needs to start fresh and open up the legislative process. He also said that he would not put his stamp of approval on bad policy.

Now, Senate Majority Leader Mitch McConnell was already in a difficult position. He needed to hold on to all 50 votes. They had hoped that as early as today they'd be voting on the motion to proceed to bring the bill to the floor, and it looks as though, at least for now, the Senate version of health care reform has been put on indefinite hold -- Dave and Christine.


BRIGGS: Ryan Nobles from Capitol Hill, thank you.

The simultaneous announcements from Senators Lee and Moran came as seven other Republican senators were at the White House for dinner with the president talking about health care. The White House and Republican Whip John Cornyn were given a heads-up on the Lee and Moran defections. Among lawmakers, mixed reaction to the news of the Senate bill's collapse.

ROMANS: John McCain in Arizona, where he is recovering from surgery, calling for a new, more bipartisan approach. He wrote: We must not repeat the original mistakes that led to Obamacare's failure. Congress must now return to regular order, hold hearings, receive input from members of both parties, and heed the recommendations of our nation's governors so that we can produce a bill that finally provides Americans with access to quality and affordable health care.

BRIGGS: That while recovering from surgery!

Meantime, Democrats scoffed at the president's claim that they would join in a repeal now, replace later effort. Connecticut Senator Chris Murphy tweeting: Please, please, please don't call this repeal, then replace. They have proven they can't come up with a replacement. This is repeal, full stop.

ROMANS: In California, Congressman Adam Schiff sent out this tweet: To destroy a health care system that works is the height of irresponsibility. We will not bail you out of a crisis of your own making POTUS," meaning President Trump.

BRIGGS: White House Press Secretary Sean Spicer caught up on the revolving explanations for Donald Trump Jr.'s meeting with a Russian lawyer. At Monday's off camera press briefing, Spicer insisted the meeting was about adoption policy and ending U.S. sanctions against Russian officials.


SEAN SPICER, WHITE HOUSE PRESS SECRETARY: There was nothing that as far as we know that would lead anything to believe that there was anything except for a discussion about adoption and the Magnitsky Act.


BRIGGS: And was Don Jr.'s initial explanation. The problem is, since then, he's admitted he took the meeting he was promised damaging information about Hillary Clinton.

ROMANS: Even President Trump has adopted that explanation. Yesterday, he tweeted this: Most politicians would have gone to a meeting like the one Don Jr. attended in order to get info on an opponent. That's politics.

The White House did not immediately respond to a CNN request for clarification on Spicer's remarks.

Meantime, we have new word from an administration official that staffers are becoming concerned that top Trump aide and first son-in- law, Jared Kushner, may not be granted a final security clearance. Questions have been raised about Kushner's repeated revisions of his application for clearance as he has added more and more Russian and other foreign contacts.

[04:35:02] President Trump has the option of overriding any decision not to grant Kushner a clearance, but that would carry considerable risk of bipartisan blowback.

BRIGGS: Also, new information today about Russia's two diplomatic compounds in the U.S. closed by the Obama administration in retaliation for Russian election meddling. Russia now saying any conditions set for the return of those compounds would be, quote, unacceptable.

CNN's Matthew Chance live in Moscow with the latest.

Good morning to you, Matthew.


That's right. There was a meeting actually in Washington yesterday between the Under Secretary of State Thomas Shannon and his Russian counterpart, the deputy Russian foreign minister, Sergey Ryabkov, and they tried to resolve this issue. It was a meeting sort of spoken of by the Kremlin as being crucial in resolving this diplomatic crisis.

The Russians want the return of the compounds that were confiscated by the former Obama administration as part of the punishment they imposed on the Kremlin for allegations of meddling in the U.S. political situation, the U.S. election. At the time, back in December, President Putin of Russia decided not to respond. He was waiting for the Trump administration to come in. He clearly felt the Trump administration was going to go back on that Obama administration punishment or sanctions.

That didn't happen, though. And I think the fact that this meeting was held, the fact that the Russians are threatening to take reciprocal action, is a sign of just how disillusioned they are with the Trump administration. He promised he was going to make the relationship better with Russia, but he hasn't been able to deliver that.

The problem is, the Trump administration is down whichever way it goes. If it gives back these compounds, it's going to be criticized, of course, in the United States for rewarding the Kremlin for meddling in the election. If he doesn't, the Russians have said they will expel a similar amount of diplomats from U.S. embassies and diplomatic facilities here in Russia and confiscate potentially U.S. diplomatic property in Russia as well, which would further complicate this already very difficult relationship, Dave.

BRIGGS: Yes. The Trump administration boxed in on those compounds.

Matthew Chance live for us in Moscow, thank you.

ROMANS: All right. The editorial board of "The Wall Street Journal" urging radical transparency from President Trump and his inner circle, citing Don Jr.'s Russia e-mail revelations. The editorial board says the president and his family are repeating what they call the legacy of scandal, deception and stonewalling that doomed Hillary Clinton.

Quoting here: Mr. Trump somehow seems to believe that his outsized personality and social media following make him larger than the presidency. He is wrong. He and his family seem oblivious to the brutal realities of Washington politics. Those realities will destroy Mr. Trump, his family, and their business reputation, unless they change their strategy towards the Russia probe. They don't have much more time to do it.

"The Wall Street Journal" is part of Rupert Murdoch's news empire, which generally supports Mr. Trump.

BRIGGS: The U.S. dispensing a mixed message on Iran's nuclear compliance, certifying that Iran is still making good on the terms of the nuclear deal, but the Trump administration says Iran's nonnuclear activities show it's, quote, unquestionably in default of the spirit of the agreement. Both the president and Secretary of State Rex Tillerson have been fierce critics of the deal. A senior administration official says they're considering more sanctions targeting Iran's ballistic missile program and state sponsorship of terrorism.

People who fish, boat, jet ski and paddle board on the Potomac unhappy with the new Coast Guard rule that closes a two-mile stretch of the river when President Trump or a senior official are golfing at his club in Virginia. The Coast Guard says it's for security reasons. The proposed security area includes a popular embarkation point for a summer camp and kayaking program for wounded vets. Critics have until August 9th to voice their concerns before the rule becomes final.

The White House and Secret Service are not commenting.

ROMANS: After months of clashing with the White House over conflicts of interest, Washington's top ethics watchdog is resigning. The departing Office of Government Ethics Chief Walter Shaub tells CNN Money he still has concerns, starting with the president's frequent trips to his own properties.


WALTER SHAUB, DEPARTING DIRECTOR, OFFICE OF GOVERNMENT ETHICS: When you see the president essentially giving his own properties free advertisements by traveling there at our expense, you see him holding financial interests that leaves us unable to know whether decisions are motivated by policy aims or by personal financial interests. And we've seen sort of the level of carelessness about ethics on the part of senior appointees.

I don't know that I'd go so far as to say in most cases they're intentionally pushing the envelop, but it's that a message has been sent from the top, and the tone from the top is everything in ethics.


ROMANS: Shaub says he's done all he can in the current circumstances, but he plans to keep up the fight, he says.

[04:40:01] His resignation goes into effect tomorrow. He's using these last moments basically of his tenure there to, you know, talk to people about what he sees are grave concerns about ethics.

BRIGGS: Including, he says, Mr. President, stop going to your own properties and giving free commercials for all your own properties. Stop having administration officials do the same.

ROMANS: Advice ignored.

BRIGGS: Advice will be continued, ignored, yes.

A man left searching for answers after police shoot and kill his fiancee in Minnesota.


UNIDENTIFIED MALE: Our hearts are broken, and we are utterly devastated by the loss of Justine.


BRIGGS: Authorities so far slow to provide information. A report from Minneapolis on this devastating story, next.


ROMANS: A Minneapolis police officer involved in the shooting death of a woman who called 911 for help is now coming forward and offering condolences to her family.

[04:45:04] That officer identified through his attorney as Mohamed Noor. Meantime, stunned family and friends of Justine Ruszczyk are making desperate pleas for information about the last moments of her life.

CNN's Ryan Young has the latest this morning from Minneapolis.


RYAN YOUNG, CNN NATIONAL CORRESPONDENT: Christine and Dave, a lot of people asking questions about exactly what happened. Of course, this shooting has really terrified a lot of people. You see signs like this one, why did you shoot and kill our neighbor and friend?

We do know that phone call was made by Justine. She called 911 because she believed back in this alleyway that she thought she saw a sexual assault going on. When she called 911, two officers arrived. They did not activate their body camera. They did not have their car dashcam rolling. We do know at some point a shot was fired, she was hit and died and it's really tearing apart her family.

DON DAMON, VICTIM'S FIANCE: Piecing together Justine's last moments before the homicide would be a small comfort as we grieve this tragedy. The death of Justine is a loss to everyone who knew her. She touched so many people with her loving and generous heart.

YOUNG: There was a statement released by the officer's attorney, says that the Officer Mohamed Noor extends his condolences to the family and anyone else who has been touched by this event. He takes their loss seriously and keeps them in their daily thoughts and prayers.

We've also learned from the medical examiner's office that she was shot once in the abdomen, and that was a fatal shot where she died just out here. Again, most of the community members out here want to know exactly what happened. They're waiting to hear from police to get those extra details -- Dave and Christine.


BRIGGS: Still a lot more to learn there. Ryan, thank you. Police in suburban Cincinnati have uncovered a strange mystery in

their investigation of a deadly shooting this month at a gender reveal party. Authorities say the host of the party, Cheyanne Willis, was not pregnant. Investigators cannot explain why the party was organized under false pretenses, but they say the lie is hampering their investigation of the shooting.

One woman was killed, eight people were hurt. The police chief says the false leads they have been provided are, quote, uncommon from victims of crime wanting a solution.

ROMANS: That is a real mysterious story.

All right. Amazon could be joining the meal kit delivery business, and that's bad news for Blue Apron. That's on "CNN Money Stream," next.


[04:51:38] ROMANS: All right. Stephen Colbert taking a shot at the White House's Made in America Week by kicking off his own version, Russia week. Listen.


STEPHEN COLBERT, HOST, THE LATE SHOW WITH STEPHEN COLBERT: Russia's coming up later in the show. Meanwhile, back in the United States, Russia. He's reportedly a former soviet counterintelligence officer. Of course, when it comes to Don Jr., there's not much intelligence to counter. Last week, Don Jr. did not mention this other Russian spy guy. No, he just said this --

DONALD TRUMP, JR., SON OF PRESIDENT TRUMP: This is everything. This is everything.

COLBERT: This, this is everything. It must have slipped his mind. I mean, with all that hair gel, things just slide out.

Before you leap to conclusions here, before you leap to anything, no one is saying that there were seven people in the meeting, because it turns out, there were at least eight people in the room. It wasn't one Russian, it was five. This is the first time a Trump has lied about having a smaller crowd size.

Donald Trump unveiled Made in America Week, possibly to distract from the fact that his campaign was made in Russia. One of the products made in America that Trump highlighted was a big, shiny fire truck. And the president, of course, could not resist getting in.

Where's the fire? Well, we haven't found the fire yet, Mr. President, but there's more smoke every day.


ROMANS: He really does have a twinkle in his eye unlike I've ever seen. BRIGGS: Yes. Twitter could not get over the touch the trucks event

at the White House. It brings to mind Michael D'Antonio biography in which Donald Trump says, when I look at myself in the first grade and I look at myself now, I'm basically the same.

The temperament is not that different. Still likes to play with big trucks.

ROMANS: Still plays with big trucks.

BRIGGS: OK. So far, no word from North Korea on whether it will accept the South's unexpected offer to hold talks. That's to defuse the international standoff over the North's missile program. As South Korea waits, House Majority Leader Kevin McCarthy telling CNN he wants new sanctions on the north, echoing calls by Japan and the E.U. to ramp up pressure, all this as we are learning more on how the sale of luxury goods inside North Korea's connected to a secret slush fund for Kim Jong-un.

CNN's David McKenzie live in Seoul with the latest.

Good morning to you, David. What do we know?


Yes, you know, there is a market split, it seems, though the South Koreans deny it, of the South Korean strategy and that of the U.S. The Americans wanting to push sanctions, potentially, harsher sanctions towards the North Koreans because of their missile program. The South Koreans wanting to talk. They're proposing for military-to- military talks and humanitarian talks, and we'll have to see whether those come through. It requires the North Koreans, of course, to say they want to meet.

And all of this while we're learning new details about the financing and funding of that missile program. Take a look at these images. These are from a luxury department store from inside Pyongyang where rich North Koreans can shop and get goods, many of them banned by those very same sanctions.

We spoke to one diplomat, Dave, who said that there were North Koreans shelling out $100 notes, up to $2,000, $3,000, to buy some of these goods, and a defector told us that this luxury market as well as other forms of funding are going directly into the missile program, and that it's all controlled by supreme leader Kim Jong-un -- Dave.

BRIGGS: Fascinating story. David McKenzie live for us in Seoul, thank you.

President Trump offering assurance to nervous residents of Venezuela, saying in a sharply worded statement overnight, the United States will not stand by as Venezuela crumbles. Trump adding that if President Nicolas Maduro's regime imposes its so-called constituent assembly on July 30th, the United States will take what he calls strong and swift economic actions. Opposition leaders say the constituent assembly will be a puppet of

the regime. The tough talk coming a day after participants in an opposition referendum overwhelmingly voted for a presidential election and against the imposed assembly in a nonbinding referendum.

ROMANS: I've got to tell you, the economy there is just -- it's a wreck. And the middle class, people are suffering, you know. It's a really big story, what's happening there in Venezuela right now.


ROMANS: Fifty-six minutes past the hour. The weather starts warming up today in the east. Meteorologist Pedram Javaheri has more.


PEDRAM JAVAHERI, AMS METEOROLOGIST: Dave and Christine, a big story developing here across the central United States. We're talking about excessive heat, widespread over an area, home to almost 15 million people. And the advisories stretch from Ohio into Kansas City, warnings in place for places like St. Louis.

And the reason for that is we get a multiday event set up here where potentially through Friday, maybe even Saturday, we have triple-digit heat, and this is just factoring in, of course, without the humidity. This is just in the shade into the afternoon hours. But you factor in the humidity, it could feel as high as 113 in a few spots across this region and we'll see that kind of expand off towards the eastern half of the country.

So, by say Thursday and Friday, Atlanta gets into the middle 90s. We'll feel like into the 100s. New York City also will get into the lower 90s, will feel like close to 100 degrees by the afternoon hours. And with all of this set, plenty of instability in the atmosphere, severe storm potential there into parts of Minnesota, into western Wisconsin today.

Some flooding associated with this could also be seen around this region, mainly south of Minneapolis going in towards the afternoon hours, and watching couple of areas of disturbed weather, Tropical Storm Don in the works. At this point, it looks like it will have a Central America impact and we'll follow this into the weekend -- guys.


ROMANS: All right, Tropical Storm Don. Thank you.

Let's check on "CNN Money Stream" this morning. Global reaction to the failure of Republicans to repeal and replace Obamacare.

Global stock markets fall overnight, the whole world here questioning the future of the Trump economic agenda. The U.S. dollar falling to its lowest level since September. Wall Street stocks have been hanging very close to record highs here, driven by fat corporate profits. Investors are gearing up for more. Goldman Sachs, Bank of America, United and IBM all report today, but

again, we're watching a lot of different markets move on a reassessment of whether this administration can get its agenda through.

All right. Let's talking about Netflix here, its stock surging 10 percent overnight, reporting millions of new subscribers, much better than Wall Street expected. Five million customers in the new customers the second quarter. The majority coming from overseas. In fact, Netflix now has more subscribers outside of the U.S.

The boost in sign-ups was helped by some of its best-known series. Oh, I love that show, "House of Cards." Have you been watching it?

BRIGGS: I missed this season.

ROMANS: It's good. "Orange is the New Black" and "Master of None" also a good one, all came out last quarter. It's all about programming, all about content, I'm telling you, and they are signing up millions of new subscribers.

Amazon could be joining the meal kit delivery business, and that's bad news for Blue Apron. Its shares plunged as much as 11 percent after Amazon filed to trademark a prepared food kit service. Competition in the industry is tough and Amazon has a history of disruption. Blue Apron was the first meal kit company to go public, but its value is down about a third since its IPO last month.

BRIGGS: Yes, you talk about "House of Cards," I love Frank Underwood, but the current occupant of the oval office is so intriguing that that's good enough drama for me at the moment.

All right. Speaking of that, we'll have the latest twists and turns there as EARLY START continues right now.



TRUMP: We do have to repeal Obamacare, and we will end up replacing it with something that is going to be outstanding, far, far better.


BRIGGS: A Republican health care bill that was on life support died overnight. Repeal and replace, now repeal and delay. The Senate majority leader forced to change course after two more senators refused to back the Senate bill and a big blow to the president's agenda. Major developments on health care and Russia as well.

Good morning and welcome to EARLY START, everyone. I'm Dave Briggs.

ROMANS: A lot to get to this morning. I'm Christine Romans. It is Tuesday, July 18th. It is 5:00 a.m. in the East.

And, first, a devastating blow to President Trump's top legislative priority as Mitch McConnell concedes defeat on the Senate health care bill in its current form.