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Who Reports To White House Chief Of Staff?; Trump To Senate GOP Keep Working On Health Care Bill; Putin Slashes U.S. Diplomatic Mission Staff; U.S. And Japan Taking "Further Action" Against North Korea; Maduro Claims Victory. Aired 5-5:30a ET

Aired July 31, 2017 - 05:00   ET



DAVE BRIGGS, CNN ANCHOR: -- that's not the only trouble overseas. We have reporters on all our top stories from the White House, Caracas, Moscow, and Beijing as we head toward crisis and confrontations around the world.

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

ALISON KOSIK, CNN ANCHOR: Good morning. I'm Alison Kosik sitting in for Christine Romans. It's Monday, July 31st. It's 5 a.m. in the east.

President Trump's new chief of staff front and center at the White House. John Kelly assumes the position after what many view as the worst week of the Trump presidency. Kelly is going to be sworn in at 9:30 this morning. The retired Marine Corps general will be enlisted with trying to restore order to a White House that appears to lack direction and discipline.

BRIGGS: That, of course, no easy task for sure. Both sides of the aisle are what you might call cautiously optimistic.


REPRESENTATIVE NANCY PELOSI (D-CA), MINORITY LEADER: I look forward to working with General Kelly.

SENATOR SUSAN COLLINS (R), MAINE: I do think that General Kelly will do a good job as the White House chief of staff. I think he will bring some order and discipline to the west wing.

SENATOR RICHARD BLUMENTHAL (D), CONNECTICUT: If anybody can bring order and discipline to this White House, it is General Kelly.

REPRESENTATIVE MARK SANFORD (R), SOUTH CAROLINA: I think that in terms of a great leadership component, the White House has needs General Kelly representing it.


BRIGGS: A big early challenge for Kelly concerns chain of command issues, who reports to whom, still unclear. Typically, senior advisers report to the chief of staff, as we know, this is not your typical White House.

KOSIK: A senior administration official tells CNN Kelly has been given full authority. The president tapped General Kelly, who was serving as homeland security secretary, to replace Reince Priebus who resigned last week.

BRIGGS: All right, let's bring in Greg Valliere, political economist and chief strategist for Horizon Investments. He's in our Washington bureau. Good to see you, sir.


BRIGGS: All right, let's start with General John Kelly, a four-star general, former Marine general. How can he instill discipline, order in what's only described as a chaotic White House?

VALLIERE: Well, it's going to be chain of command, Dave. I think that's an area where it's still ambiguous. We'll see there. To a certain extent, I feel sorry for him. He's got a high bar to clear since you had all the sound bites from everyone saying he's going to be to do a pretty good job or he should be able to do a good job.

Number two, he's got a tough boss to work for. But number three, I think the big issue as we get into the fall, which is a budget crisis that's looming, may not be his strong suit.

KOSIK: And you talk about, Greg, what's looming. We have the debt crisis, raising the did the ceiling coming up in the fall. Wall Street is looking for tax reform. And now there's talk about, you know, forget about skinny health care reform, there's talk of skinny tax reform now.

VALLIERE: Yes, there's talk of that, Alison, and I'd say before we even get to that, we may revisit once again health care. You'd think they'd had a belly full of health care, but we may go back and look at something to bail out insurers. Not out of the question that we could get a bill there.

And then as you say, there's a big budget fight coming. You've got to raise the debt ceiling. You have to come up with a budget resolution for the new fiscal year. All this comes first before you get to taxes.

So, for the general who's very good, I would be the first to agree, but the issues are going to be tough ones for him to tackle.

BRIGGS: Yes. And Greg, from what we understand, the markets were hoping that it would pivot to tracks reform. It doesn't -- to tax reform. It doesn't appear that way, the president saying let's get back to another vote on health care, threatening to pull the rug out from under the exchanges and from the Congressional health care plan itself. What is the appetite in the Senate, do you believe, from Mitch McConnell toward sticking with health care and finding another path forward? VALLIERE: Well, I think a lot of Republicans are saying to the Democrats, well, what ideas do you have? And there may be some bipartisan talks as we get into the fall, but time is really short with the budget issue, with tax issues.

So, I'm not sure how much time they'll have to devote to that. And here we have this morning, Monday morning, a new story, and that, of course, is growing geopolitical concerns, especially when its which to U.S./China relations.

KOSIK: And you look at these geopolitical stories that are hitting the news. We don't see the market being rattled by that. You look at how the S&P 500 is doing and the Dow. They're up more than 10 percent so far this year.


KOSIK: What can really rattle the market? This is of particular interest to anyone who is invested in the stock market.

VALLIERE: Well, first and foremost, Alison, the fundamentals are great. Moderate growth, great labor market, low inflation, steady interest rates, good corporate earnings. So that's fine.

There's only two things that I would see that could rattle the markets. Number one would be any sign that tax reform is dead. I don't think it's dead. I think it's going to plod along. It's going to take a while.

The other one, though, the wild card now is geopolitical. And I think since Donald Trump loves scapegoats, since he can't get North Korea to do what he wants, he's going to make China a scapegoat.

[05:05:07] So, I worry later this week we may hear the announcement of new U.S. trade sanctions against China. For the markets, a U.S./China trade war is not a good story.

BRIGGS: Yes. You know, if there's any country on earth that's immune to Twitter diplomacy it's probably China, right, Greg? What can the president do to try and move China on doing something to stop the North Korean nuclear program?

VALLIERE: Well, he can threaten. But I think we'll see on health care, you can't threaten Congress. On China, you can't threaten them to do anything. You know, I do think that we're going to have more military exercises, maybe more of these harm missiles that could shoot down Korean missiles shipped into South Korea.

There are a few things we can do. The idea that China can wave a magic wand and immediately get North Korea to behave, I think that's farfetched.

KOSIK: You know, back to health care. You know, you talk about what the market doesn't want to see. Does the market want to see Trump try to implode Obamacare? We heard from Health and Human Services Secretary Tom Price on Sunday about this. Let's first listen. VALLIERE: Sure.


UNIDENTIFIED FEMALE: What about the individual mandate? Is the president considering directing his agencies not to enforce it? Have you ruled that out?

TOM PRICE, SECRETARY OF HEALTH AND HUMAN SERVICES: Well, the individual mandate is one of those things that actually is driving up the costs for the American people in terms of coverage. We're trying to make it so Obamacare is no longer harming the patients of this land.

No longer driving up cost, making it so that they've got coverage but no care. The individual mandate is one of those things. All things are on the table to try to help patients.


KOSIK: Greg, is the individual mandate driving up costs, or if you take away the individual mandate, this is like a house of cards, obviously the whole thing will just collapse.

VALLIERE: A lot of arguments pro and con to whether it's driving up costs. If you take it away, less people will be insured. And one thing that President Trump said a couple of weeks ago that simply doesn't ring right is that I don't own insurance. Yes, he does. He owns health care.

Whatever party is in power usually views it as an albatross. They don't like to own it because it's such a difficult issue. I think if Obamacare really does implode this fall, the Republicans get the blame.

BRIGGS: All right. Greg Valliere from Horizon Investments. We'll ask you about the future of Jeff Sessions coming up. Thank you.

KOSIK: Thanks, Greg. All right, insurers have until August 16th to set Obamacare rates for 2018. The president's threat to cut off subsidies could mean higher premiums.

The president tweeting that if a new health care bill isn't approved soon, bailouts for insurance companies could end. Insurers hate uncertainty, and they're swimming in it now. They rely on $8 billion on cost-sharing subsidies to help pay for low-income Americans.

Some carriers, they've already requested large rate hikes next year to offset costs. Nearly half of the company the plan to increase premiums by 20 percent or more.

Meantime, other insurers, they're exiting the exchanges completely. Big payments that like Aetna, Humana, and Anthem. In fact, 25,000 people in three states, they're at risk of having no Obamacare options at all next year. While an additional 2.7 million Americans could have just one option for an insurance carrier. Insurers say they want to work with the administration to fix Obamacare, but Washington's actions so far have fueled instability.

Besides threatening cost-sharing subsidies, the White House hasn't committed to enforcing the individual mandate, and that one is getting younger, healthier people to enroll. Offsetting the costs for more expensive customers.

BRIGGS: Not clear what the path forward is. Susan Collins said let's go back to committee and try to fix health care exchanges but --

KOSIK: It's unlikely --

BRIGGS: -- it's unclear if anyone has the appetite for that either.

OK. New trouble from a trio of global adversaries, Russia retaliates for sanctions, another missile launched from North Korea, and Venezuela in chaos after an election being called an affront to democracy. We're live on all three stories next.



KOSIK: Welcome back. In apparent retaliation for the sanctions bill just passed by Congress, Russian President Vladimir Putin now confirming the staff at U.S. diplomatic missions in Russia will be cut dramatically by more than 700, and that includes diplomats and technical workers.

The State Department says the move is regrettable and uncalled for. Officials are assessing the impact and a possible response.

Let's bring in CNN's Claire Sebastian. She's live for us in Moscow. So Claire, how does this impact the U.S. mission in Russia?

CLAIRE SEBASTIAN, CNN INTERNATIONAL CORRESPONDENT: Well, it looks like it's going to cut the number of personnel by more than half -- 755 positions will get cut, according to the Russian president, Vladimir Putin speaking on Russian television last night.

Now the Russian rationale behind this is that that brings the total number of U.S. diplomatic personnel in Russia down to 455 which Russia says is the exact same number of Russian diplomatic personnel that it has in the U.S.

It should be noted on the face of this, Russia says this is settling the score for actions that the Obama administration took back in December, seizing two Russian diplomatic compounds and expelling 35 diplomats, 755, a significantly bigger number than that.

But as you said, it does affect technical staff as well as diplomats. And we expect, as well, local Russian staff here in Russia, as well. The president saying that the clinching factor for this was, of course, that passage through Congress of that bill authorizing new sanctions. He said this is why he took that action. Take a listen.


VLADIMIR PUTIN, PRESIDENT OF RUSSIA (through translator): We waited a long time for things to perhaps change for the better. We had such hope that the situation would change, but judging by the situation, that will not be soon.


[05:15:06] SEBASTIAN: Vice President Mike Pence is in Estonia right now reassuring that country and NATO of the U.S.' commitment. That will certainly enflame tensions further. He says he expects Russia's behavior to change. For its part, Russia says it does not bow to pressure. This is a tense moment -- Alison.

KOSIK: It certainly is. CNN's Claire Sebastian live for us from Moscow. Thanks.

BRIGGS: The U.S. and Japan agreeing to take further action against North Korea. Prime Minister Shinzo Abe and President Trump speaking by phone Sunday, just days after North Korea's latest missile launch.

The two leaders discussing increased economic and diplomatic pressure on the Kim Jong-un regime. That will require help from China, the target of a nasty Trump tweet storm last week.

CNN's Will Ripley live from Beijing with the latest developments. Good morning to you, Will. Is there a country more immune on earth to a Twitter diplomacy storm?

WILL RIPLEY, CNN INTERNATIONAL CORRESPONDENT: No. I think China has figured out the strategy to deal with President Trump's tweets, and that is they ignore them at least publicly. Chinese President Xi Jinping gave a speak hours after President Trump blasted China on Twitter.

He didn't mention the U.S., he didn't mention North Korea. But he talked about the importance of China to strengthen its own military. And he staged a massive military parade over the weekend, showcasing his latest stealth fighter jets and trying his own nuclear-capable ICBMs.

Vice President Mike Pence also speaking about North Korea over the weekend, saying that the United States insists that North Korea completely disarm, that they abandon their nuclear and missile programs.

I can tell you after visiting North Korea most recently, just last month, and speaking with officials at length about this, that is a non-starter for the North Koreans. It's not going to happen. They view the missiles as vital to protect themselves against the United States.

They also view them as valuable leverage with the international community. China would argue that, and North Korea, as well, that the United States' actions over the weekend certainly wouldn't be an incentive for North Korea to disarm.

Just hours after North Korea launched that ICBM that analysts say could strike many portions of the mainland U.S., as far to the east as Chicago and certainly Los Angeles, Seattle, Denver, as well.

Hours after that the U.S. with its own show of force, launching missiles into the sea, flew U.S. bombers along with Japanese and South Korean fighters over the peninsula, and they tested their THAD missile defense system, which China views as a destabilizing act that threatens their own national security here.

So, Dave, you can see China, the U.S. need to work together. They're really far apart right now.

BRIGGS: Certainly are. Will Ripley live for us this morning in Beijing, thank you.

KOSIK: Venezuelan President Nicolas Maduro declaring victory in a controversial election. It's widely regarded as a fraud and a vehicle to rewrite the constitution to consolidate Maduro's power.

Government officials in Caracas claiming a voter turnout of over 41 percent. Maduro's opponents calling that figure fiction. The violence on Sunday very real. Now we want to caution you, the video you're about to see is disturbing.


BRIGGS: One police officer caught on fire from that explosion. Election day clashes between protesters and police claiming at least ten more on Sunday. The death toll since early April now at 125.

The State Department condemning the election, insisting the U.S. will continue to take strong and swift actions against the Maduro regime. Let's get the latest from CNN's Laila Santiago. She's live in Caracas. Good morning, Laila.

LEYLA SANTIAGO, CNN CORRESPONDENT: Good morning, Dave. Certainly, a lot of uncertainty remains. President Maduro may be calling this a victory, but as you mentioned, the opposition is calling this a fraud.

You know, that video you actually just showed is not far from where I am standing right now where for days now I have heard consistent blasts as the opposition and the government forces clash on the streets of Caracas.

As the opposition protests what has become a way of life, not just because of the protests and the violence but because of a collapsing economy because of food shortages and medical supply shortages, the hospitals are filled with people who may get medical attention from doctors, but those are doctors who don't have the supplies they need to treat the patient.

So certainly not just uncertainty but frustration is what we're seeing on the streets. We expect the opposition to take to the streets as leaders have called for protests in a matter of hours at noon local time here.

But while the opposition maintains that it will continue to fight, despite admitting that they are tired of the political unrest that we've seen on the streets for months now, the government is calling this a victory saying it will move forward with the new assembly that was elected last night.

[05:20:10] This is a new assembly that could rewrite the Constitution and essentially give President Nicolas Maduro more power in the future.

BRIGGS: The economy continues to collapse. The government heads toward dictatorship. Leyla Santiago live for us in Caracas, thank you.

They say the vast majority of the 12 percent estimate that voted were state workers who had no choice. They threatened to take away benefits if they didn't vote.

KOSIK: And the question on that ballot wasn't whether or not the Constitution should be changed, it's who's going to do it. They didn't have a choice whether it should happen or not.

BRIGGS: From bad to worse --

KOSIK: Absolutely.

BRIGGS: -- in Venezuela. All right, we are going to talk some sports ahead, the first big-league hit for Kyle Farmer. One he won't soon forget. This ridiculous Dodger season continues. Coy Wire with more in this morning's "Bleacher Report" next.



BRIGGS: Another commotion at the ballpark for New Jersey Governor Chris Christie.

KOSIK: Coy Wire has the viral video in this morning's "Bleacher Report." I have to say, we have been enjoying this. Good morning.

COY WIRE, CNN SPORTS CORRESPONDENT: Yes, and we're unfortunately going to have to just talk you through this one. He was at the ballpark in Milwaukee where his son is part of the club. They were playing the Cubs and he went nose to nose with a heckling fan and basically called him a big shot after that fan had been heckling him.

It was great video. Unfortunately, technical difficulties -- I'm sure Dave and I can -- we can tweet that for you later to see it. It has gone viral.

We'll talk about a major milestone for Rangers Slugger Adrian Beltre. The first slugger to hit 3,000 hits. He is also the first Dominican- born player to achieve the feat. The standing ovation from the hometown fans. Then his children out there unveiling a logo marking the occasion. Look at this -- two daughters and his son with big hugs for dad. They were able to share that moment there. Watching it all from the front row.

Let's tell you about Dodgers rookie, Kyle Farmer. He has one hit in the big leagues. Boy, was it a good one. In his first at-bat he smacked a two-run double in extra innings to give his team 39-2 win over the Giants.

The first Dodger to congratulate Farmer, his former teammate from the University of Georgia, Alex Wood, and Farmer's parents flew all the way from Atlanta to see their son's first weekend in the big leagues. They were there to see it. And guess what -- after the game he gave dad that ball from his very first at-bat. What a memorable moment.

Finally, how much money would you pay for a piece of dirty laundry? How about more than 160,000? That's how much the jersey of Yankees rookie, Aaron Judge, went for at auction. It was the jersey he wore in his Major League debut last August in which he hit a home run, something he's been doing all season long.

He's currently tied for the most in the majors with 33. That number is nearly 29% of his salary. A ton of money. It's also more than the $135,000 Steph Curry jersey that was game worn in the finals. I like to relate everything to food. That would be 42,382 quarter pounders with cheese.

BRIGGS: Nice math, my friend!

KOSIK: The burning question that I have is how do you preserve the body odor smell? Put it in a Ziplock bag.

BRIGGS: A Ziplock. I never understand the game-worn jersey phenomenon, Coy, but that's just me. I like the quarter pound with cheese math. Well done this morning, Coy Wire. Thank you, my friend.

Ahead, a White House in desperate need of some discipline about to get a Marine Corps general added to the mix. John Kelly starts as chief of staff today. Can he get the culture under control and advance the president's stalled agenda?

KOSIK: Just a few miles outside Boston, a rock-climbing adventure that can take your next trip to new heights.


UNIDENTIFIED MALE: What I love about rock climbing is combining the physical challenge with the mental challenge of solving the problem. It makes you think. Makes you work.

UNIDENTIFIED MALE: We're here at Quincy Quarry. Quincy Quarry is a really unique spot outside of Boston. It's a little bit different of a location than you'd associate with rock climbing. It's definitely like a little bit more urban. People that climb here have all sorts of abilities. The lessons that we run here are primarily for beginners or folks that are transitioning outdoors from gym climbing. Climbing's a great way to work your entire body.

You discover various muscles that you didn't know you had. It's also really rewarding in that in one or two goes you can normally work your way up the route and see a real sense of progress.

UNIDENTIFIED MALE: I'm actually kind of scared of heights. I think it sort of every time you climb the rock, it's battling a little bit of that fear.