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EARLY START

WH: Trump 'Weighed In' On Son's Misleading Statement; Lawsuit: Fox News, White House Coordinated Fake Seth Rich Story; Tillerson To N. Korea: 'We Are Not Your Enemy'. Aired 4:30-5a ET

Aired August 2, 2017 - 04:30   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


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[04:30:21] SARAH HUCKABEE SANDERS, WHITE HOUSE PRESS SECRETARY: The President weighed in, as any father would, based on the limited information that he had.

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ALISON KOSIK, CNN ANCHOR: The White House forced to admit the president did have a hand in crafting the response to the Don Jr. meeting with the Russian lawyer, but how far did his involvement go?

DAVE BRIGGS, CNN ANCHOR: And the Justice Department set to investigate discrimination in college admissions against white applicants, a new report this morning raising concerns about the future of affirmative action policies.

KOSIK: And Republicans are beginning to defy President Trump on healthcare, the GOP now pushing back against his call for Obamacare cuts that could hurt millions of Americans.

Welcome back to Early Start. I'm Alison Kosik sitting in for Christine Romans.

BRIGGS: I'm Dave Briggs. It is 30 minutes past the hour, a direct contradiction between President Trump's personal lawyer and the White House. The White House now concedes Mr. Trump did weigh in on the response to revelations his son met with a Russian lawyer. And that flies in the face of what Trump's lawyer had said that the President had no involvement.

KOSIK: And this is just the latest example of Trump aides, an official is forced to shift their Russian narrative and the lack of clarity isn't inspiring confidence on Capitol Hill either. Let's get more enough from CNN's Jeff Zeleny at the White House.

JEFF ZELENY, SENIOR WHITE HOUSE CORRESPONDENT: Dave and Alison, we're learning for the first time that President Trump was involved in helping to shape the narrative about that meeting back at Trump Tower on June 9th, 2016.

The White House acknowledged on Tuesday for the very first time the President in their words weighed in on that statement saying that that meeting was about a discussion about a Russian adoption.

So, it was about anything else, was we learned of course, it was about a Russian operative trying to give dirt on the Hillary Clinton campaign. But we learned on Tuesday with White House Press Secretary Sarah Huckabee Sanders saying that, yes, the President added his voice to that first statement. This is what she said.

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SANDERS: The statement that Don Jr. issued is true. There's no inaccuracy in the statement. The President weighed in as any father would based on the limited information that he had. He certainly didn't dictate, but you know, he -- like I said, he weighed in, offered suggestion like any father would do.

ZELENY: Now, that would all be fine except it flies in the face of what the President's own lawyer, Jay Sekulow, has said repeated times. He went on television last month saying the President was not involved in the crafting of that statement saying the meeting was about Russian adoptions.

Now, the reason it matters is this. As they talk about this investigation, as the investigators look into whether there was any collusion between the Trump campaign and Russia, we still don't know that yet, but they are investigating that.

They will look at this meeting, was there a coverup of any kind, was he trying to obstruct justice in any way. We don't know the answers to that yet, important to keep that in mind. But for the first time on Tuesday, the White House contradicting what the President's own lawyer said. Dave and Alison.

BRIGGS: All right. Great stuff, Jeff Zeleny there at the White House. Still no further comment from the President's lawyer after the White House suggested he was wrong, lawmakers on both sides of the isle now publicly casting doubt on the credibility of the White House. Listen.

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SEN. LINDSEY GRAHAM (R), JUDICIARY COMMITTEE: If that's true, then that was a bad decision by the President which will make us ask more questions. When you get caught in a lie about one thing, it makes it hard to just say let the other stuff go.

SEN. MARK WARNER (D), SELECT COMMITTEE ON INTELLIGENCE: This administration continues to say vis-a-vis Russia, there's nothing there. Yet they don't act that way at all.

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BRIGGS: Now, Warner, the leading Democrat on the Senate Intelligence Committee says he wants more information from Donald Trump Jr. before the committee asks him to testify. But CNN has longed the President's son and Former Campaign Chairman Paul Manafort are expected to appear before the Senate Judiciary Committee next month. KOSIK: The Trump administration is preparing to challenge affirmative action policies that it believes discriminate against white people in the college admission process. That's according to a report in the New York Times.

The newspaper obtained an internal document from the civil rights division of the Justice Department seeking staff lawyers interested in working on a new project involving quote, intentional race-based discrimination.

The project appears to target school admission policies that prioritize minority students. The administration reportedly plans to redirect Justice Department resources to investigate and sue what it considers offending universities.

BRIGGS: A bipartisan push to pump new life into healthcare reform is starting to take shape. Senators Lamar Alexander of Tennessee and Patty Murray say they are holding hearings in the Senate Health Committee next month aimed at stabilizing the Obamacare health insurance markets.

[04:35:06] Now, Alexander urging President Trump not to stop paying Obamacare's cost sharing subsidies despite his threat to cut that funding.

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SEN. LAMAR ALEXANDER (R), CHAIRMAN, COMMITTEE ON HEALTH, EDUCATION, LABOR AND PENSIONS: I have urged again that President Trump temporarily continue the cost reduction payments through September so that Congress can work on short-term solution for stabilizing the individual markets in 2018.

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KOSIK: Now, this is the first tangible sign that Republicans are moving away from Trump's demands to take another shot at repeal after efforts fell apart last week in the House. At least two Republicans, they're teaming up with Democrats to promote legislation to fund cost sharing subsidies which allow insurers to cut costs for millions of lower income Americans.

BRIGGS: The Senate giving overwhelming approval to Christopher Wray as the next FBI director. Ray was confirmed by a vote of 92 to 5 to fill the post vacated by James Comey when he was fired by President Trump over the Russia investigation.

The vote was varied by partisan by today's standards. But notable, the five Democrats who opposed are far and away the most to ever vote against an FBI director. Only one senator has ever voted against one before when Rand Paul opposed James Comey over use of surveillance drones on American soil.

KOSIK: Attorney General Jeff Sessions assuring the National Organization of Black Law Enforcement Executives. He will hold the officers accountable if they violate the law. His comments coming on the heels of President Trump's remarks suggesting cops should be rougher on suspects when they're arresting them. Sessions tried to make the case the President was just joking, but conceded the comments do have an impact.

BRIGGS: CNN has also learned Chuck Rosenberg, the acting head of the Drug Enforcement Agency sent all of his employees an e-mail denouncing the President's comments suggesting they ignore him.

White House Press Secretary Sarah Huckabee Sanders dismissing the criticism insisting the President was kidding. She accuses the media of trying to make something out of nothing.

KOSIK: U.S. auto sales are falling again as the industry continues to cool down. Auto sales are an important driver for the broader economy and they fell 7 percent in July, the seventh month in a row.

The industry is now on track for its first annual decline since 2009. Sales are slowing after seeing years of growth. And the big Detroit car companies though, they're feeling the brunt. To give you an example here, G.M. sales fell 15 percent in July.

So, these companies are protecting their bottom line in two ways by selling less discounted cars through leases or to rental chains and scaling back production on less profitable vehicles.

And that means trimming jobs which is not going to help the White House's promise of a manufacturing renaissance. The auto sector accounts for 80 percent of all job factory job growth in the past few years and auto manufacturing jobs have fallen for the past three months.

BRIGGS: Often a great indicator of economic growth their lack there of.

KOSIK: Right.

BRIGGS: But then, the Dow set to hit 22,000. So, what do you make of the contradicting messages the economy is showing us?

KOSIK: Well, many see the stock market more as a forward looking indicator.

BRIGGS: Yes.

KOSIK: And it's certainly a sign of confidence, meaning the stock market.

BRIGGS: Yes.

KOSIK: And things are cyclical in the auto industry anyway.

BRIGGS: Yes. It's testable. They're doing all right.

[04:38:28] All right, ahead, astounding claims about the murder of a staffer for the Democratic National Committee. Now, a new hard to believe lawsuit claims the White House worked with Fox News and a wealthy Republican donor to concoct the story about the murder of Seth Rich. Details are next.

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BRIGGS: All right. Some explosive claims in a new lawsuit alleging that White House, Fox News and a Republican donor teamed up to push a false story, true fake news about the murder of Democratic National Committee Staffer Seth Rich.

The suit was filed against Fox by an investigator who'd been looking into Rich's killing. The suit claims the story was part of an effort to discredit intelligence committee findings that Russia hacked the DNC.

CNN's Randi Kaye breaks down the players and this bizarre conspiracy tale.

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RANDI KAYE, CNN CORRESPONDENT (voice-over): When Democratic National Committee Staffer Seth Rich was killed, a conspiracy was born, caught up in it, this man.

ROD WHEELER, FOX NEWS CONTRIBUTOR: I do believe I was used as a pawn in this entire thing.

(voice-over): His name is Rod Wheeler. He's a former DC homicide detective and Fox News contributor. And now, he's filed a lawsuit against Fox News. Wheeler claims he was used to help fabricate a story connecting the murder of Seth Rich to the WikiLeaks released thousands of e-mails from the Democratic National Committee.

The idea being that Rich was murdered by some sort of DNC operative in retaliation for the leaks. All of this despite the fact that police say Rich's murder was the result of a botched burglary and that this is key, authorities had already determined that Russians hacked the DNC e-mails and gave them to WikiLeaks.

(on camera): What was the goal?

WHEELER: I think their goal based on the e-mails and the voicemail messages that I got from Ed Butowsky was to debunk this Russian hacking narrative.

(voice-over): Ed Butowsky is a GOP supporter and Fox News financial commentator. The alleged goal to distract from the Russia investigation was not only pushed by Butowsky, but according to the lawsuit, it was done in coordination with the Trump White House with Butowsky even arranging Wheeler to meet with then Press Secretary Sean Spicer.

Spicer has acknowledged meeting them but said he was unaware of any contact involving the President. Still, just two days before the article was published on Fox's website, Butowsky left this voicemail for Wheeler. [04:45:08] ED BUTOWSKY, FOX NEWS FINANCIAL COMMENTATOR: Hey, Rod, it's Ed. So a couple minutes ago, I got a note that we have the full attention of the White House on this. And tomorrow, let's close this deal.

(voice-over): Hours later, this text from Ed Butowsky to Wheeler, not to add any more pressure, but the President just read the article. He wants the article out immediately. And according to the lawsuit, Ed Butowsky sent an e-mail to Fox News producers and anchors encouraging them to push the narrative that Russia wasn't behind the hack. It seemed to take hold.

SEAN HANNITY, AUTHOR: This issue is so big now that the entire Russia collusion narrative is hanging by a thread.

KAYE: According to the lawsuit, Butowsky had also texted Wheeler before the article was published saying, the narrative in the interviews you might use is that your and Malia's work proved that the Russians didn't hack into the DNC and steal the e-mails and impact our election.

WHEELER: I thought it was horrible because what did it have to do with the murder of this guy that I was investigating?

(on camera): Wheeler insists the Fox reporter attributed stay close to him. One, even suggesting he had information that there had been an e-mail exchange between Seth Rich and WikiLeaks. He called Butowsky to find out why.

BUTOWSKY: One day, you're going to win an award for having said those things that you didn't say.

WHEELER: Keep the award. Let's just tell the truth here.

BUTOWSKY: You're going to be begging to own those words.

(on camera): In that conversation, was he basically acknowledging to you that yes, it's true, you didn't say these things but they sound good and we're going to use them?

WHEELER: That's exactly what he was saying and he knew and Ed knew it and so did Malia Zimmerman. They knew I never said these things. And I challenged them immediately.

(voice-over): Fox retracted the bogus story a week after it was published. Fox News told CNN in a statement today that the accusations that Fox helped to detract from coverage of Russia collusion is completely erroneous and that it has no evidence that Rod Wheeler was misquoted.

Ed Butowsky told CNN it was all just a joke. And White House Press Secretary Sarah Huckabee Sanders pushed back on allegations the White House played a role in this scheme.

SANDERS: The President had no knowledge of the story and it's completely untrue that he or the White House involvement in the story. (on camera): In response to the lawsuit directly, Ed Butowsky told CNN that the lawsuit is B.S. He said the message about the President that he sent Wheeler via text was a joke referring to what he said was Wheeler's desire for a job with the Trump administration.

This was Rod and I, Butowsky, said, we teased all the time. We were basically telling him, you're doing a great job and that the President or the White House or somebody would be interested in meeting you.

Also, Jay Wallace the president of news for Fox News told us, the retraction of this story is still being investigated internally. Now, keep in mind, it's been two months since they retracted the story, but Fox News apparently is still investigating what happened.

Randi Kaye, CNN, New York.

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BRIGGS: Outrageous story and on the heels of that, great reporting by Randi Kaye. These cover from the Daily News, fake news channel and look, this is the President who alleges fake news on almost a daily basis, did it yesterday. And here, you have the true definition of a made up fake story.

KOSIK: It was also interesting to watch Chris Cuomo last night filling in for Don Lemon.

BRIGGS: Yes. He spoke to Ed, I believe.

KOSIK: He exclusively interviewed Ed Butowsky, intense interview. That went all areas of the universe and it sort of makes your head feel like it's going to explode after you watch it. But--

BRIGGS: Well, Cuomo is back on New Day at 6 a.m. because he's a machine. He'll explain the latest on that story as well.

[04:48:56] KOSIK: All right. Let's talk Apple. Apple shares hitting an all time high overnight, and that could help the Dow reach a new milestone. CNN MoneyStream coming up next.

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SEN. LINDSEY GRAHAM (R), ARMED SERVICES COMMITTEE: There will be a war with North Korea over their missile program if they continue to try to hit America with an ICBM.

UNIDENTIFIED MALE: Every military expert says there is no good military option.

GRAHAM: They're wrong. There is a military option to destroy North Korea's program and North Korea itself.

(END VIDEO CLIP) BRIGGS: And North Korea itself, a blunt assessment from Senator Lindsey Graham on the widening North Korea crisis. The White House refusing to reveal whether it has a plan to destroy North Korea or its nuclear program, but the administration is reiterating all options are on the table.

Secretary of State Rex Tillerson taking a shot at diplomacy, he says the U.S. is going to sit down for talks with North Korea if the regime halts its pursuit of nuclear weapons.

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REX TILLERSON, SECRETARY OF STATE: This is going to be a continued effort to put ever greater pressure on the North Korean regime because our other options obviously are not particularly attractive.

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BRIGGS: They are not. Let's go live to Seoul and bring in CNN's Alexandra Field for the latest developments. Alex, good morning to you. Is there any indication at all that North Korea might halt its nuclear ambitions and what are the reactions to these statements from-- particular from Lindsey Graham there in South Korea?

ALEXANDRA FIELD, CNN INTERNATIONAL CORRESPONDENT: Well certainly, North Korea has never given any indication that they would be willing to do that.

In fact, they see this essential to the main objective in North Korea which is regime preservation. They believe that nuclear weapons are key to that, the only deterrent that would protect them.

As for all these lines that are coming from Washington, some of them contradictory, some of them alarming to people who would live right here in South Korea. Well, they're hearing everything that's coming from Washington and they're focusing for now on what they want to hear.

[04:55:00] That means putting aside some of what Senator Lindsey Graham has said and focusing more on what the Secretary of State Rex Tillerson has said. South Koreans do not want to focus on the idea of a military option.

Remember, the city of Seoul, its metropolitan area, more than 20 million people is just 35 miles south of the DMZ. That means that the people who live here are well within rocket range of an attack from North Korea.

Instead, they're in line with the kind of policy that Secretary Tillerson is advocating for laying out the idea of talks with North Korea, again with that precondition of denuclearization.

The secretary of state did go on to say that the U.S. is not looking for a regime change, they're not looking for accelerated reunification of the peninsula, those are the kinds of positions that very much align with the position here in South Korea. You did in fact hear one official here in South Korea come out and say that despite all the contradictory statements that are coming from Washington, it doesn't appear to South Korea that the U.S. has changed its position.

And by that, they meant that there is an agreement between the U.S. and South Korea that there is no hostile policy toward North Korea. But that if provoked, there would be a response. These are topics and issues that have certainly given rise to a whole host of considerations for how to respond.

You've got this line coming from the White House that all options are on the table, but few details about what options would be pursued. Certainly, that's something that the secretary of state is expected to be talking a lot more about when he travels to the region later this week. Dave.

BRIGGS: That could be a pivotal trip as Rex Tillerson says we are not your enemy, we are not your threat. Alex, thanks.

KOSIK: All right. I've got some incredible video to show you, A Fort Worth, Texas police officer pulls a car over for a traffic stop when suddenly another vehicle crashes right into him and the car.

Somehow, it's amazing. Look at this. The officer is able to walk away from the violent collision and detain the suspect driver until backup units arrived on the scene. Fort Worth police are saying the driver was arrested and charged with intoxicated assault. Amazing.

BRIGGS: All right. Some more incredible video, less painful though. Indians Center Fielder Austin Jackson and what might be baseball's play of the year, check this out.

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UNIDENTIFIED MALE: -- into the ball pen. There's a high flyer, right center, hit well. Jackson back, triangle. He's there. Leaps. He goes over. He went over and he holds on to the baseball.

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BRIGGS: Unreal. Jackson up and over the fence at Fenway robbing Boston's Hanley Ramirez of a home run, the Red Sox challenged the catch. It was upheld because Jackson's feet were over the field of play when he caught the ball.

Amazing grab though came in a losing effort. Red Sox get a walk off three run home run with two outs in the bottom of the night, 12-10 in what might be the game of the year and the play of the year as well.

KOSIK: Amazing.

BRIGGS: Incredible stuff.

KOSIK: I don't know how they do it. All right. Let's get a check on CNN MoneyStream this morning. Global stocks are mixed after the Dow hit its fifth straight record close. That's its 31st this year and then puts it less than 40 points away from the next milestone, 22,000.

The Dow -- the Nasdaq actually and the S&P 500, they also closed higher as well. You look at all of the major industries, they are coming off their strongest month since February launching record highs as investors shrugging off the turmoil that we're seeing in Washington.

You can give all the credit to big corporate profits. Earning season is well underway for the second quarter and more than 70 percent of the companies reporting so far have beat expectations.

Apple shares surging 6 percent overnight to an all time high after delivering surprisingly strong earnings. The June quarter is usually its weakest, but profits rose 12 percent. Two main reasons for that, iPhone sales were steady even as consumers anticipate a new iPhone this fall and a revival in iPads.

There was some indication that iPads were dead. You know, for the time in three years, iPad shipments actually increased rising 15 percent mainly to schools and businesses and any move in Apple stock is going to wind up moving the entire market because it's the most valuable company in the world.

It's in the Dow, in the Nasdaq, it's in the S&P 500. So since it's in the Dow, we could see Apple's rise. That could push the Dow over the 22,000 mark today.

Amazon may have violated U.S. sanctions on Iran. In its most recent SEC filing, the company disclosed it's under investigation for selling tens of thousands of dollars in products to an Iranian embassy. This has been happening since 2012. It also sold to individuals with ties to the Iranian government.

That may have violated 2012 sanctions that were placed on Iran. Now, Amazon didn't immediately respond to comment, but the filing does say it no longer does business with those accounts and is cooperating fully with the government's investigation. They're saying, enough with that. We will continue selling to others then.

BRIGGS: That sounds like a Trump tweet in five, four, three, two -- all right. Early Start continues right now.

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[05:00:07] SANDERS: The President weighed in as any father would based on the limited information that he had.

(END VIDEO CLIP)

BRIGGS: The White House forced to admit the president did have a hand in --