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James Mattis warns North Korea; End of DACA from President Trump; Harvey relief funds tie to the debt ceiling; Start of cleanup in southeast Texas; Recovering from Hurricane Harvey; Hurricane in the Caribbean; Rising feud of Russia and the U.S.; Corporate America donates. Aired at 4:30-5a ET

Aired September 4, 2017 - 04:30   ET



JAMES MATTIS, DEFENSE SECRETARY: Any threat to the United States or its territories will be met with a massive military response. A response both effective and overwhelming.


ALEX MARQUARDT, CNN ANCHOR: The secretary of defense right there with a firm warning for North Korea after Pongyang's latest nuclear test. Now we've learned the U.S. and South Korea will look to deploy military assets including bombers. We are live in Seoul.

ALISON KOSIK, CNN ANCHOR: President Trump will propose ending protections for undocumented immigrants who came to the U.S. as children, but could Congress give dreamers another chance?

MARQUARDT: And could billions in recovery funds for Harvey victims be tied to raising the nation's debt limit? The treasury secretary says yes.

Welcome back to "Early Start." I'm Alex Marquardt.

KOSIK: God morning, I'm Alison Kosik. Its 30 minutes past the hour. And top U.S. defense officials are responding to North Korea's biggest nuclear test yet with a blunt warning. Defense Secretary James Mattis advising that any threat by Pyongyang against the U.S. or its allies would draw what he called a massive military response. Matiss' warning coming after a meeting with the president, vice president, and top national security advisers. Mattis said, quote, our commitments among the allies are ironclad.


MATTIS: Any threat to the United States or its territories including Guam or our allies will be met with a massive military response, a response both effective and overwhelming. We are not looking to the total annihilation of a country, namely North Korea. But as I said, we have many options to do so.

(END VIDEO CLIP) MARQUARDT: The new warning comes after North Korea's claim that it tested a hydrogen bomb on Sunday, a test that was overseen by leader Kim Jong-un. Pyongyang claimed that the weapon was designed to be carried by an intercontinental ballistic missile, the kind that it has also been testing recently. President Trump was asked about the nuclear test on Sunday as he left the church service.


UNIDENTIFIED MALE: Mr. President? Will you attack North Korea?



MARQUARDT: Our coverage begins this morning at the Pentagon with CNN's Barbara Starr.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Alison, Alex, Secretary of Defense James Mattis and General Joe Dunford, the chairman of the Joint Chiefs of Staff, making that extraordinary appearance. In front of the White House, Mattis delivering a very carefully worded message, saying that the U.S. does have military options. That any threat from North Korea to the U.S. or its allies would be met with a massive military response.

He was very clear the U.S. isn't looking for total annihilation of North Korea. But make no mistake, they are looking to send this very stern, grim message to Kim Jong-un, that if he does not give up his nuclear weapons, if he threatens or attacks, that the U.S. would take him out. The U.S. strategy at the moment if there is a military strategy is to try and convince Kim Jong-un that he himself and his regime could not survive if they were to attack South Korea, Japan, Guam, or the United States.

But on the other hand, it's a message we've heard before. None of it has worked to change Kim's mind. And by all accounts, this latest underground nuclear test is a massive step forward. It is a larger test than anything North Korea has done before. Alison, Alex.

MARQUARDT: All right, thanks to Barbara Starr.

The U.N. Security Council is set to meet in an emergency session this morning in the wake of this latest test. It is the second meeting in just a week. Past meetings have done little to stop North Korea's provocations. Earlier this morning, South Korea's army and air force conducted a combined live-fire exercise in response to the North Korean nuclear test.

And just moments ago, North Korean state media blasted South Korea for the drill saying it shows Seoul is hell-bent on escalating the confrontation. The exercise comes after President Trump called out South Korea on twitter, suggesting that Seoul is appeasing the North Koreans.

CNN correspondent Ian Lee is live in Seoul, South Korea, with regional response. Good morning Ian. Let me first ask you what has Seoul's response been to this test on Sunday?

IAN LEE, CNN CORRESPONDENT: Alex, we saw early this morning that those military exercises by the South Koreans and what they were intended to do is show the North that in the event of a war, they could go after the North Korean leadership and their nuclear program. They had advanced ballistic missiles as well as these air-to-surface missiles, long-range missiles from an F15 that could target their various infrastructures. We're hearing that another test could take place quite soon.

[04:35:01] This is a strong show of force to the North Koreans who we're hearing reports that they could be getting ready for another ballistic missile test. South Koreans have said they want advanced U.S. weaponry here in light of this latest nuclear test. What that exactly means they haven't stipulated. But they do want to show the North Koreans that they are ready for any sort of situation.

You know, when it comes to that tweet that President Trump sent out talking about appeasement from President Moon, you know in the beginning, President Moon did want to have a softer approach to the North but he inherited a different reality with North Korea defiant with its nuclear program and tough talk coming from the United States.

And since then, we have seen President Moon have a number of military exercises to show the North that they are capable and also the president talking about having close ties with its regional partners and that's an important thing. The tweet, while it doesn't help the situation because it does have a little bit of light in what's supposed to be a united front, Alex.

MARQUARDT: Well, some troubling developments there. Thanks very much to our Ian Lee in Seoul.

KOSIK: OK. Time for your money on "Early Start" on your money. Treasury Secretary Steve Mnuchin says he's drafting new sanctions to put economic pressure on North Korea. This coming just week after the U.N. Security Council passed its latest round of sanctions aiming to kill a billion dollars worth of North Korean exports by hitting major industries like coal, iron ore, and seafood.

The question is what's left for President Trump to go after. Curtailing oil shipments to North Korea from China is one of the measures the U.S. is seeking. Textiles and apparel are also potential target. And taking stronger action against Chinese banks that's also an option but some experts are warning that by ramping up the pressure on Beijing. President Trump could wind up provoking a Chinese backlash against U.S. businesses in the region.

MARQUARDT: Now joining us to help break this all down is CNN contributor Jean Lee. She is a global fellow at the Wilson Center. Good morning, Jean.

KOSIS: Good morning Jean.

MARQUARDT: I want to ask you off the bat, in the wake of this nuclear test, there's been speculation that North Korea will soon launch on September 9th, specifically another intercontinental ballistic missile test. Now, what more do we know about that?

JEAN LEE, CNN CONTRIBUTOR: We are hearing reports here in South Korea from the intelligence agency that there are signs that they're preparing another ballistic missile launch, possibly another intercontinental ballistic missile launch. I haven't really seen much more than that. I don't know if it's what they're looking at satellite imagery showing some movement around one of these launch pads.

But we shouldn't be too surprised. I think that there are two things here -- first of all, part of what's happening here is this is North Korea gearing up for an anniversary. You mentioned September 9th. That is the day that North Korean the -- the modern Republic of North Korea was founded. And so that's their foundation day. That's an important anniversary for North Korea obviously and one that they want to have something to celebrate for.

So, part of what Kim Jong-un is doing is launching ballistic missiles, also testing nuclear devices so that they have something to celebrate on Saturday. The other thing that's happening here is that if there is another launch, it is a retort or response to the continued threats or the new threats from Washington and possibly gearing up for anything that the U.N. Security council might say when they meet to respond to North Korea's provocations.

KOSIK: I want to get your --

LEE: North Korea will respond with defiance so --

KOSIK: Go ahead. I'm sorry. Finish your thought.

LEE: I was just going to say that if anyone is thinking that North Korea is going to back down from threats coming from Washington, I think that's a miscalculation. North Korea will respond with defiance no matter what and I think that that's what this nuclear test shows, is that Kim Jong-un is going to be undeterred on his mission to get a nuclear war head on a ballistic missile that's designed to target the mainland U.S.

KOSIK: As we see North Korea make one provocation after another, what is North Korea's end game here?

LEE: That's a complicated question because what North Korea is telling its people is that we need these nuclear weapons in order to survive. Remember that the Korean Peninsula is still technically in a state of war. The Korean War ended in an armistice, not a peace treaty. So the official line is

[04:40:00] we need this nuclear deterrent. We need what they call a treasured sword to protect us from the United States. So that's important to keep in mind this is a standoff that has gone on since the 1950s. but there are a couple of other things going on here. Kim jong-un, remember, he is a young man. He's 33, maybe 34. We're not quite sure. He's a young man who took power when his father suffered a heart attack and passed away in 2011.

He was not very well known. He may still need to bolster and really secure his place at the top of his country, at the top of the Kim family tree. He may still need something like these nuclear weapons to show his people that despite his youth and his inexperience that he can lead them for generations and for decades to come and that he can defend them.

He -- and so there's that, as well. He also is recognizing -- just remember that we've seen from economic figures. Now, they have not released data, but we do have ways of getting a sense in terms of their trade, how their economy's doing. And it has grown. War in many countries is very good for the economy. War has been great for the North Korean economy. So he's using wartime rhetoric, he's using these tensions to build up production in his country.

Give his people something to work for and work towards so, there are a couple of different incentives going on here. And the end game is really what he says that he wants to do is get the Americans who are the North Koreans' wartime foe, to agree to a peace treaty to bring this Korean war to an end.

In the course of those negotiations, he is undeniably going to ask for some major concessions. He's going to ask for food and fuel and things to ensure that it's OK for him to negotiate away some of their nuclear weapons. I'm not going to go so far as to say they're willing to do that but perhaps a freeze is something that they'd be willing to negotiate.

KOSIK: All right, Jean Lee, you know that's if of course they're even willing, meaning Kim Jong-un, is willing to get to the negotiating table. Jean Lee, thanks so much for your expertise and our analysis this morning.

And breaking overnight, President Trump is moving to end the program that protects undocumented immigrants who came to the U.S. as children. But the move is far from a done deal. Multiple sources saying the White House is looking at a six-month delay in any action against the so-called dreamers program so that Congress actually has the time to pass legislation which would allow them to stay in the country.

MARQUARDT: The expected move ending the Deferred Action for Childhood Arrivals Program called DACA which comes after weeks of deliberation within the White House. The move might satisfy the president's base, but it could also disrupt the lives of nearly 800,000 people working and studying in the U.S. DACA protects qualified applicants from being deported.

Several sources are cautioning that the decision is not final until it's announced Tuesday. But already there's been a flood of reactions. Immigration advocates calling it cruel while Trump's core supporters are applauding it as restoring the rule of law.

MARQUARDT: And the Treasury secretary says money for Harvey recovery should be tied to the nation's debt ceiling. Is the White House playing with -- '

(BEGIN VIDEO CLIP) STEVE MNUCHIN, TREASURY SECRETARY: Without raising the debt limit, I'm not comfortable that we will get the money that we need this month to Texas.


MARQUARDT: Is the White House now playing politics with billions of dollars needed for aid? That's next.



MNUCHIN: Our first priority is to make sure that the state gets money. It is critical, and to do that we need to make sure we raise the debt limit. So, if Congress appropriates the money but I don't have the ability to borrow more money and pay for it, we're not going to be able to get that money to the state.


KOSIK: That was Treasury secretary Steve Mnuchin over the weekend and the Trump administration now says it wants federal spending on relief for Hurricane Harvey to be tied to raising the debt limit. The move, setting up a potentially fierce political battle -- the ultra conservative wing of the GOP does not want to raise the debt ceiling without spending cuts which means they would have to vote against aid for Texas if the debt ceiling and Harvey aid are tied together.

MARQUARDT: Now, the White House has already asked Congress to approve a $7.8 billion package as parts of an initial request for funds. A request for more cash is expected later this month. The death toll for Hurricane Harvey now stands at 53. Thousands of people are still unablee to return home. Tens of thousands of others are still living in shelters and relying on aid.

KOSIK: In just the last few hours, officials have lifted the evacuation zone around the Arkema chemical plant near Houston after remaining trailers full of explosive chemicals were deliberately set ablaze in a controlled ignition. A Harris County fire marshal says there's no additional risk to the community.

In Houston, across the southeast Texas flood zone, you see piles of trash there lining the streets. Items big and small left unsalvageable. Gosh, heartbreaking. They're just sitting for days.

MARQUARDT: Now, one piece of good news -- officials say that 95 percent of Houston is dry. The city's mayor says that most businesses will reopen tomorrow after the holiday. Still, a small area evacuated in west Houston remains in dire shape. The floodwaters there are not receding because of nearby dams releasing water. Water levels at the Addicks and Barker dams are dropping but emptying the reservoirs will take weeks.

KOSIK: Drinking water has been a big concern in some flooded areas. And as of this morning as of the 4,500 drinking water systems affected by Harvey, 166 had boil-water notices and 50 are shut down. In Beaumont, Texas, the water can only be used to bathe or flush at this point. Officials estimate people there will have to boil water for possibly up to a month more. CNN's Miguel Marquez begins the latest from Beaumont.

[04:50:00] MIGUEL MARQUEZ, CNN CORRESPONDENT: Alison, Alex, this is the Neches River in the middle of Beaumont and this is a good thing right now. This is an industrial area that is clearly inundated by water but much lower than it was when it was at its highest peak. It peaked here around 1:00 p.m. on Saturday and I want to show you just how far it's come down since then.

That's where it is now. Up here is where it peaked and this isn't the only place having problems. There are still neighborhoods in Beaumont that are completely underwater. There are towns around Beaumont that are still inaccessible. Places like Bevel Oaks, Sour Lakes, Pinewood Estates. All of them still inaccessible because they're six or eight feet of water on the roads between them.

People are coming together here like you've never seen, handing out water in big ways and small. Some local restaurants have even come together, shut down business for themselves but serving thousands of meals to evacuees. As for the water here, it is sputtering back to life, literally out of faucets in Beaumont. It is starting to come back. Officials say once the Neches goes down more, they'll be able to get to the main pumps for the city water system. They then be able to get in there and figure out how to fix them, and get water pressure finally restored to the entire city, Alison, Alex.

MARQUARDT: Some incredible scenes down there in Beaumont. Our thanks to Miguel Marquez.

Now, with Harvey cleanup just getting started, Hurricane Irma is gathering power out in the Atlantic. Meteorologist Pedram Javaheri has the latest on that and our holiday forecast.

PEDRAM JAVAHERI, CNN METEOROLOGIST: Good morning Alex and Alison, here's what's going on with Hurricane Irma sitting out there across the Atlantic. The Leeward Islands really the main area of concern at this point for the immediate landfall of the storm system. Sometime on Tuesday into Wednesday morning but notice the consistency in this remaining Category Four.

So we think this will be a major hurricane for the foreseeable future through potentially parts of the Dominican Republic, Turks and Caicos, into the Bahamas, maybe even Cuba. The track right now wants to keep a southerly track on this taking it potentially around Cuba into (ph) parts of the gulf. If that verifies of course, that is bad news for anyone along the gulf coast states.

But we do have a massive area of high pressure. The Bermuda high sitting across this region that could actually steer and tug the storm system farther to the north and eventually to the east. The possible alternate scenario could be parts of the Carolinas. If we're lucky of course, a trough coming out of Eastern from the U.S. could actually push the storm well offshore. So certainly several variables at work here over the next few days to

watch but what's going on across the northeast, some showers, generally mild temperatures across this region. Expected to be much, much cooler going into the latter portion of this week. Looking at the forecast in places like D.C., how about a little bit of fall? From 88 down to around 70 by Wednesday afternoon. Guys?

KOSIK: OK Pedram, thanks very much.

How are global markets responding to North Korea's biggest nuclear test yet? We're to get a check on CNN "Money Stream" next.


MARQUARDT: There's a new conflict brewing this morning between the U.S. and Russia. Moscow now demanding that the State Department return its San Francisco consulate and the diplomatic annexes in Washington, D.C., and New York. Russia calling the U.S. decision to close those facilities a blatantly hostile act. A Kremlin statement saying, we urge the U.S. authorities to come to their senses. Now for the latest, we go to Moscow. Let's bring in CNN's Fred Pleitgen. Good morning, Fred.

FRED PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Good morning, Alex. And you know, it really has been a weekend of a barrage of angry tweets, facebook posts, statements by Russian authorities, especially by the foreign ministry. The spokeswoman for the foreign ministry, Maria Zakharova calling the events there in San Francisco tragic buffoonery and saying that U.S. authorities threaten to knock down the door of the consulate in San Francisco in order to get in and to search the premises.

Obviously that's been denied by the State Department. At the same time, Demetri Peskof, spokesman for Vladimir Putin, he was on a conference call yesterday with journalists which in of itself is quite rare and it's something that they did because of the North Korea crisis and because of the events there in San Francisco. And he said, this is a quote, a month ago one could think that there were no further worsening in our relations, but the U.S. side is demonstrating that it can't go further and further on that path. We regret it.

That's been Moscow's statement. They say they regret the most recent events. They also say they might want to retaliate. They're still studying them. The U.S. for its part and I think this is really important to also state in saying, look, all we're doing is we're getting the Russians to be on parity with the United States as far as diplomatic institutions on each other's countries are concerned.

With the Russian closure of the consulate in San Francisco, both countries have three consulates on each other's territory. The U.S. says it hopes that all this doesn't spiral further downward in a relation with these two countries, Alex.

MARQUARDT: Let's hope not. Our thanks to Fred Pleitgen in Moscow.

KOSIK: OK, let's get a check CNN "Money Stream" this morning. European markets are trading lower this morning while Japan's Nikkei declining almost 1 percent at the close. That's after North Korea's biggest ever nuclear test send a fresh wave of nervousness through the markets. Bit traders are saying that the impact of other recent North Korea-related scares hasn't lasted. U.S. Markets are closed today for the Labor Day holiday.

Gas prices, they continue to rise more than a week after Hurricane Harvey knocked the gulf coast oil refining industry off line. Some good news here -- those price increases, they're beginning to slow. AAA says the national average price for a gallon of regular is up 26 cents in the last week, sitting at about $2.62. Hurricane Harvey knocked almost a quarter of the nation's refinery capacity off line. It's amazing. The colonial pipeline which carries huge amounts of gasoline between Houston and the east coast is expected to be back up and running today.

The damage caused by Hurricane Harvey could be in the billions, that's with a "B." Some big businesses, they have pledged more than $157 million to relief efforts as of this weekend. That's according to the U.S. Chamber of commerce. Sixty-nine companies have donated $1 million or more so far. Who are some of the biggest donors, tech billionaire Michael Dell pledging $36 million to relief efforts. Good for him.

Retailer Wal-Mart has pledged up to $20 million in cash, products, and matching donations. And Verizon has contributed $10 million.

[05:00:00] You know, we saw the best of humanity out there, and now we're seeing some good corporate do goo.

MARQUARDT: Putting their money where their mouth is, very impressive.

KOSIK: Exactly.

MARQUARDT: All right, well "Early Start" continues, right now.