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Can Kelly End The Chaos?; Trump Still Pushing Health Care; Turmoil With Russia, North Korea, And Venezuela. Aired 5:30-6a ET

Aired July 31, 2017 - 05:30   ET



[05:34:05]ALISON KOSIK, CNN ANCHOR: Will a new chief of staff bring order back to the West Wing? A new era for the Trump administration when John Kelly is sworn in for his new role today.

DAVE BRIGGS, CNN ANCHOR: The president refusing to go quietly on health care. After a major rebuke in the Senate, he's suggesting sweeping changes which could have a big impact on insurance for millions of low-income Americans.

KOSIK: Incredible pictures there of a violent Election Day in Venezuela. The Maduro regime now celebrating the results that local observers could make him the next dictator, and that's not the only trouble overseas this morning.

We have reporters on all our top stories from the White House, Caracas, Moscow, and Beijing.

Welcome back to EARLY START. I'm Alison Kosik sitting in for Christine Romans.

BRIGGS: I'm Dave Briggs. It's not every day you have Vladimir Putin on the cover the New York tabloids but that is the case -- "Real Vlad Hombre."

[05:35:06] But we start in the nation's capital.

President Trump's new chief of staff front and center at the White House. John Kelly assumes the position after another chaotic week in the Trump White House. Kelly will be sworn in at 9:30 this morning.

The retired Marine Corps general will be listed with trying to restore order to a White House that appears to lack direction and discipline.

KOSIK: That's no easy task and both sides of the aisle are cautiously optimistic.


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

SEN. SUSAN COLLINS (R), MAINE: I do think that Gen. 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.

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

REP. MARK SANFORD (R), SOUTH CAROLINA: I think that in terms of a great leadership component the White House needs, Gen. Kelly represents it.


KOSIK: A big early challenge for Kelly concerns chain of command issues. Who reports to whom, it's still unclear. Typically, senior advisers report to the chief of staff. As we know, this is not your typical White House.

BRIGGS: No. A senior administration official does tell CNN Kelly has been given, quote, "full authority." The president tapped Gen. Kelly, who was serving as Homeland Security secretary, to replace Reince Priebus who resigned last week.

KOSIK: All right. Let's bring back Gregory Valliere. He's the political economist and chief strategist for Horizon Investments.

Good morning to you, again. Thanks for coming back.


KOSIK: Let's first talk about Gen. John Kelly. He's got his new position as chief of staff for the White House, you know, but the White House has had these comings and goings for at least six months now.

I want to show you a list here -- show you a list of just who has left, and this is just in the first six months. So as we look at that list and we think what the tenure could be for the general -- who, by the way, is a four-star general -- what do you think -- what kind of power do you think he brings to this White House, Greg, knowing how the Trump administration -- Donald Trump runs his White House?

Do you think that the general is going to be a yes man or will he be able to go up to the president and say listen, what you're doing, it's not good?

VALLIERE: Well, if the president keeps tweeting, maybe he'll talk to the president. I think that Kelly brings a lot of credibility. He's very highly regarded on Capitol Hill.

But there are two problems.

Number one is you've got three different factions in the White House -- the New York faction, the Washington establishment faction, and then the populist with Steven Bannon. They don't get along. That's one problem.

The other problem, I think, for Kelly is that as we go into the fall the big issues -- maybe more on health care, certainly the budget, maybe we begin debate on tax reform. Those three huge issues may not be his strongest suit.

BRIGGS: But discipline is desperately needed --


BRIGGS: -- and hopefully he can instill that, Greg.

Alison showed the departures in these first six months but one that we thought was coming was the president firing Jeff Sessions --


BRIGGS: -- his attorney general.

It's clear the Republicans have pushed back on all fronts, including Lindsey Graham saying there'd be holy hell to pay --


BRIGGS: -- if he fired Sessions.

But the new theory is that he'd move him over to the Department of Homeland Security to take John Kelly's place there. Would there be holy hell to pay if he tried that maneuver as a way of firing the special counsel Robert Mueller?

VALLIERE: Yes. That story, Dave, has been leaked but I'm not buying it.

First of all, I'm not sure Sessions would want to do it. Second of all, can you imagine the confirmation hearing? I think that would -- that would be pretty embarrassing for the White House.

And finally, I think if Sessions were pushed out of the Justice Department amid speculation that the president might like to fire Mueller --boy, that would create a firestorm in both parties.

KOSIK: Maybe Gen. Kelly will put up a big stop sign in front of Donald Trump --

VALLIERE: Right, yes.

KOSIK: -- and say wait, don't do it.

BRIGGS: Chuck Grassley may have already done that, saying we will not have time to confirm a new A.G. this year.

KOSIK: OK. The president not giving up on health care just yet --


KOSIK: -- even though it's barely on life support.

BRIGGS: Tweetstorm. KOSIK: The president -- I mean, the president had a tweetstorm. He's threatening to implode Obamacare much to the chagrin of those in Congress.

I want you to hear --


KOSIK: -- what Susan Collins said over the weekend.


COLLINS: It really would be detrimental to some of the most vulnerable citizens if those payments were cut off. They -- they're paid to the insurance companies but the people that they benefit are people who make between 100 percent and 250 percent of the poverty rate, so we're talking about low-income Americans who would be devastated if those payments were cut off.


KOSIK: And she's referring to those subsidies that those certain people receiving Obamacare get. Your -- you know, the president trying to basically dismantle Obamacare more than it already is.

[05:40:10] Is this the right thing to do to get what he wants?

VALLIERE: I'm not sure it's the right politically, Alison. I think that not only Democrats but a lot of Republicans would say look, if some of these insurers are going under we have to prop them up because the consequence for people is going to be huge.

So believe it or not, I do think some form of health reform gets resurrected in the fall. I do think there could be a modest bill that will keep the insurers afloat.

BRIGGS: The president also threatened to take away health care from members of Congress.


BRIGGS: He also threatened on Twitter to, again, change the rules of the Senate. This one --


BRIGGS: "If the Senate Democrats ever got the chance they would switch to a 51 majority vote in the first minute. They are laughing at Republicans. Make change."


BRIGGS: Here's what the senator from Arizona, Jeff Flake, said about the possibility of changing the Senate rules.

(BEGIN VIDEO CLIP) SEN. JEFF FLAKE (R), ARIZONA: We've just seen the limits of what one party can do even if you change the rules of the Senate, which we should not do. There are limits to what one party can do.


BRIGGS: And to be clear, they didn't get 51 on health care --


BRIGGS: -- so forget about 60. But this reminds me of my nine-year- old who when he doesn't win a game just says, you know, I'm going to manipulate and change the rules.


BRIGGS: Is there any appetite for that in Congress?

VALLIERE: No, and these threats -- you know, threats to take away their health insurance are not going to prevail.

But let me just skip real quickly to another threat that I think could affect the markets this week -- that's a threat to China. This is a really serious story.

Trump sees China as a scapegoat because we can't get North Korea to behave. If he imposes new trade sanctions on China in the next few days, which I'm hearing could happen, that would be unnerving because China has the ability to retaliate.

KOSIK: And we certainly have seen a very hefty run-up in the markets. We will be keeping an eye on the markets --


KOSIK: -- if that happens.

Greg Valliere, thanks so much.

VALLIERE: You bet, yes.

KOSIK: All right. A new trio from -- new trouble for the trio of global adversaries Russia, Korea, and Venezuela. We are live on all three of those stories, next.


[05:46:20] 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.

Government officials in Caracas claiming a voter turnout of over 41 percent. Maduro's opponents calling that figure not true.

Violence marred Election Day and we want to caution you the video you're about to see is disturbing. (BEGIN VIDEO CLIP)



BRIGGS: One police officer caught on fire from that explosion.

The U.S. now considering slapping sanctions on its vital oil industry. The State Department condemning the election as well.

Let's get the latest from CNN's Leyla Santiago. She's live in Caracas.

Good morning, Leyla. We heard estimates of 40 percent turnout in that election. Are you hearing any independent analysis of how many people, indeed, did vote?

LEYLA SANTIAGO, CNN CORRESPONDENT: At this point, it is back and forth as the opposition calls this a fraud, as the government calls this a victory.

You know, there were more than 19 million voters that were eligible to take part in this election yesterday and we know that the government is saying more than eight million voted. The opposition is saying that less than a third of that actually showed up to vote. But no independent agencies chiming in here to maybe give a better idea of what may have actually been the case, just a back and forth.

Meanwhile, on the streets of Caracas -- on the streets of Venezuela as a whole, really a lot of uncertainty as the opposition continues to take to the streets. They plan to come out again. A lot of the opposition leaders, last night on social media, calling people to take to the streets, to not stand for this new assembly that could rewrite the constitution and could give President Maduro more power.

And, you know, as I was on the streets just in the last week as that tension was building to that day that the opposition had hoped would never come for that election, you could really see people of all ages out there.

I talked to a 12-year-old who was out there as he was putting together a Molotov cocktail to take a stand against the National Guard here in Venezuela.

I talked to a medic who showed me pictures that were too graphic to share of the injuries that he has treated as he treats people in these protests. And one of the things he said that stuck with me is that these are Venezuelans fighting Venezuelans, brother fighting brother, and all we want is peace, but at this point all we have is uncertainty.

BRIGGS: The economy continuing to collapse, the government headed toward dictatorship.

Leyla Santiago live for us in Caracas. Thanks. KOSIK: Tesla is ready to sell its first mass market electric car but is it really affordable?

"CNN Money Stream" coming up next.


[05:52:30] KOSIK: In apparent retaliation for the sanctions bill just passed by Congress, Russian President Vladimir Putin now confirming the staff at U.S. diplomat missions in Russia will be cut dramatically by more than 700. That includes diplomats and technical workers. The U.S. State Department calling the move regrettable.

Let's bring in CNN's Clare Sebastian. She's live for us in Moscow. Good morning.


I want to bring you some new information that we just got from the Kremlin in the last half hour or so clarifying that the 755 people that the Russian president announced last night would have to be cut from the U.S. diplomatic mission in Russia. That, they say, is up to the U.S. to decide who is affected and clarifying that it will include diplomats, non-diplomats, and also local Russian staff in the country.

So yes, this is a big number, 755 -- significantly more than the 35 diplomats that the Obama administration expelled -- the Russian diplomats that the Obama administration expelled back in January. But two mitigating factors there that the U.S. can decide who and that it is not just diplomats that are going to be cut from the U.S. diplomatic mission in Russia.

The Kremlin also saying that should the U.S. respond to this, they will take counter measures. The president saying last night that he was not ready to do this as of yet but it was still an option on the table.

And, Alison, further set to inflame tensions this morning, Vice President Mike Pence is in Estonia, right on Russia's western border, reassuring that country and NATO of Russia's commitment to stand with them. He said that Russia was the biggest threat that the Baltic nations face. He called it an unpredictable neighbor.

So we really do have a standoff here and these comments set to entrench it even further, Alison.

KOSIK: They certainly are. CNN's Clare Sebastian live for us in Moscow, thanks.

BRIGGS: The U.S. and Japan agreeing to take further action against North Korea just days after North Korea's latest missile launch.

President Trump and Prime Minister Abe discussed increased economic and diplomatic pressure but that will require help from China, the target of a nasty tweetstorm last week. CNN's Will Ripley live in Beijing.

Good morning to you, Will. Greg Valliere warned the markets would have a stern reaction to any trade war between the U.S. and China, but how might President Xi react to a President Trump tweetstorm?

WILL RIPLEY, CNN INTERNATIONAL CORRESPONDENT: Well, President Xi did have an opportunity to respond to President Trump's tweets over the weekend because he gave a speech just hours after that tweetstorm where President Trump said that China is doing nothing about North Korea and that he's very disappointed in China.

[05:55:11] And, predictably, Beijing has a policy not to directly respond to President Trump's tweets and so President Xi gave a speech never mentioning the United States, never mentioning North Korea, for that matter.

But he did talk about the importance that China beef up its own military. In fact, they staged a massive military parade at one of their top military training sites in Inner Mongolia. Pretty dramatic to see Chinese stealth fighters, and even their own nuclear-capable ICBMs.

And just within the past five minutes or soI received this statement that has just come in after CNN sent questions about President Trump's tweets on China. No direct response to the content of the tweets, however, this is what a spokesperson for the Chinese Foreign Ministry is telling me.

Quote, "China has fulfilled its responsibility in promoting a proper resolution to the North Korean nuclear issue and our efforts have been clear for all to see. The issue was not caused by China and its resolution requires multilateral efforts."

So, a direct response now to CNN reporting just within the past few minutes.

This just really underscores the difference between the way that U.S. and China look at this, Dave. China thinks the United States shares a lot of the blame because of its military exercises with South Korea and also Japan.

The U.S. thinks that China shares the blame because they're trading with North Korea and sending a lot of money to that country. North Korea's economy grew by almost four percent last year.

BRIGGS: Well, the president has a full agenda for a cabinet meeting at 10:00 a.m. this morning.

Will Ripley, thank you.

KOSIK: All right, let's get a quick check on "CNN Money Stream" this morning.

Global markets mostly higher after the Dow hit a record high, but the NASDAQ and S&P 500 slipping on earnings misses from Amazon and Exxon. However, look at earnings overall. They've been really strong.

What's coming up this week? Well, the most valuable company in the world delivers its quarterly report. Apple reporting on Tuesday.

Another potential market-mover this week, the July jobs report. That comes out Friday. In June, the U.S. economy added 222,000 jobs.

That's it for us. Thanks for joining us. I'm Alison Kosik.

BRIGGS: I'm Dave Briggs.

Can a Marine Corps general restore some order in this Trump White House? We'll find out, starting today.

"NEW DAY" starts right now.


COLLINS: General Kelly will do a good job. He will bring some order to the West Wing.

KOSIK: The White House looking to reset in the wake of a failed health care bill.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I said from the beginning, let Obamacare implode and then do it.

SEN. BERNIE SANDERS (I), VERMONT: It's incomprehensible we have a president who wants to sabotage health care in America.

UNIDENTIFIED MALE: In the White House's view they can't move on in the Senate.

GOV. JOHN KASICH (R), OHIO: We don't make it as a country when we spend our time fighting all the time.

MIKE PENCE, VICE PRESIDENT OF THE UNITED STATES: Russia's destabilizingactivities are unacceptable and the president will sign the sanctions to reinforce that.

BRIGGS: Russian President Vladimir Putin now confirming the staff at U.S. diplomatic missions will be cut dramatically.

UNIDENTIFIED MALE: This retaliation is long, long overdue.


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

ALISYN CAMEROTA, CNN ANCHOR: And we want to welcome our viewers in the United States and around the world.

This is NEW DAY. It's Monday, July 31st, 6:00 here in New York.

Chris is off today; John Berman joins me.

JOHN BERMAN, CNN ANCHOR: What could possibly happen next?

CAMEROTA: What could go wrong? Great to have you here.

Here's our "Starting Line."

President Trump hits the reset button after one of the most chaotic weeks of his presidency. In just hours, the president's new chief of staff, Gen. John Kelly, will be sworn in.

Now, President Trump will finally come face-to-face with his embattled Attorney General Jeff Sessions after repeatedly attacking Sessions, so what will happen when they meet at a cabinet meeting today?

BERMAN: That will be super comfortable.

The president also launched a flurry of statements about health care, casting blame for the failure of the repeal effort squarely on Congress, not him. The president has threated to cut off payments to insurers which could be a serious blow to low-income Americans. And now the president is even threatening the plans belonging to members of Congress.

Then, there are new threats from overseas. Russia has ordered the U.S. to cut its diplomatic staff by more than half in retaliation for new U.S. sanctions.

Will the Trump administration increase its pressure on China after North Korea's new missile test?

We have it all covered. I want to begin with CNN's Sara Murray, live at the White House. A busy day, Sara.

SARA MURRAY, CNN WHITE HOUSE CORRESPONDENT: That's right, and John Kelly's first day here at the White House, as you guys noted. He will be sworn in this morning followed by that cabinet meeting.

But everyone has the same question on the top of their minds. Can Kelly really bring order to this very wild West Wing?


TRUMP: Reince is a good man. John Kelly will do a fantastic job.

MURRAY (voice-over): President Trump turning to retired four-star General John Kelly for help rebooting a stalled White House agenda and reining in a chaotic West Wing.

That's after Reince Priebus became the latest in a string of high- profile Trump officials to be pushed out in the first six months.

MICK MULVANEY, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET: I think the president wants to go a different direction. Wants a little bit more discipline, a little more structure in there.