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U.S. Senate Approves Tax Reform Bill; Saudi Arabia Says It Intercepted Missile Aimed At Riyadh; U.S. Directly Blames North Korea For WannaCry Cyberattack. Aired 1-2a ET

Aired December 20, 2017 - 01:00   ET


[01:00:00] ANNOUNCER: This is CNN breaking news.

JOHN VAUSE, CNN INTERNATIONAL ANCHOR: Hello, everybody. Thank you for being with us. I'm John Vause. Our breaking news this hour, the U.S. Senate has approved the tax overhaul bill, setting the scene from a major legislative victory for the president. Senior Republicans have been taking question and talking to reporters in Washington after they spoke in the Senate. Let's listen.


UNIDENTIFIED MALE: Make sure that they come out right as there has been in this effort, and that's important for the American people, and they will notice the difference and they will notice it soon, and this country will be moving forward again.

UNIDENTIFIED FEMALE: So, 31 years for tax reform; 38 years, 38 years to get to this point where we will be able to say that we have opportunity within the 10-02 area of ANWR to access extraordinary potential, not only for the benefit of the people of state but for the benefit of this country -- for energy security, for national security, and truly, for security for our country's economy. It is a good day, and it is indeed a historic day.

UNIDENTIFIED MALE: There's no doubt that this tax reform process was about the American family, the American people. We have delivered on an important opportunity, that opportunity is to see more money in your take-home pay. This is a good night.

UNIDENTIFIED MALE: I would reiterate that this is a historic moment, December 20th of 2017. As I stand before you, we are able to bring relief to the American families and Nevada families just across this nation. In fact, we are able to create jobs, increase pay wages, and also make sure that our businesses are competitive around this nation, makes this a very, very important day.

UNIDENTIFIED MALE: You know, we set out with goals: one was to deliver direct tax relief for the hardworking families that we all represent, and the second was to take what's arguably been the worst business tax code in the world and turn it into one of the best, because the result of that is more invest, more growth, more new business, more expansion of existing business, and that means more jobs and more opportunities, and a higher standard of living for the people we represent. It's a big night. UNIDENTIFIED MALE: You know, for years, Democrats and Republicans

alike have talked about the need for middle-class tax cuts. And tonight, we delivered on that promise. Through other reforms, we're helping small businesses to be successful, and we've now leveled the playing field with other countries around the world so that our workers have the opportunity to compete and win. I'm excited about this because I think it's going to make a big difference for the people we represent.

UNIDENTIFIED MALE: What can you say, it's a big day for the American people, and it's a tremendous amount, extraordinary work on the part of the staff and all the members here and our entire conference, but I think the message that it sends to the world is that America is ready to lead again in the 21st century. And, like I said, for the American people who are going to get bigger paychecks and when this economy taken off and growing at a more normal rate, more wages, better growth, better-paying jobs, this is just a win-win all the way around. And I think the people of this country are going to start seeing that early on next year.

SEN. JOHN CORNYN (R), TEXAS: To my mind, this is really a referendum on whether we still believe that the American dream is alive. We don't believe you have to settle for anemic growth, flat wages, and fewer jobs. And the jobs that we do have, too many of them are being shipped overseas, never to come back. So, we weren't willing to settle for the status quo, because we believe America can do better. And thanks to this important, historic piece of legislation, I think all the incentives and the pieces are in place for the American economy to take off, and for the slumbering giant of the American economy to rise again and lead in the world economically and militarily as well.

[01:05:03] SEN. MITCH MCCONNELL (R-KY), SENATE MAJORITY LEADER: OK. I'll take a couple of questions and then we'll say goodnight to everyone.

UNIDENTIFIED MALE: (INAUDIBLE) changes everywhere, do you believe there's a need for Republicans to go out and sell this bill given how --

MCCONNELL: Absolutely, and we're looking forward to it. My view of this, if we can't sell this to the American people, we ought to go into another line of work. I think this is an important accomplishment for the country that people will value and appreciate, but obviously, it requires us continuing this discussion with the American people and we're all going to be doing that all through the year. Yes?

UNIDENTIFIED FEMALE: Senator McConnell, do you at all feel like you're in the situation that Former Speaker Pelosi was in after the Affordable Care Act passed and was polling formally and Democrats said, we'll take it out to the public and show them, and it took a long time for the public to finally start coming around -- many years later after Democrats lost in the election.

MCCONNELL: I think it's a little bit easier to sell that you have more money in your pocket than it is, the government's running the health care system. So, we believe this will be something the American people will respond to positively. I'm a little surprised the Democrats all decided voting against middle-class tax relief and making American businesses more competitive was a smart vote. And that's an argument we're more than happy to have going into the fall election as well. I'll take one more. Yes?

UNIDENTIFIED MALE: -- says that you're going to rue the day that this bill, that passing long-term corporate tax cuts, and short-term individual cuts is going to cash up to you guys?

MCCONNELL: Your job is to use the Democratic talking points, I understand that. Look, we believe that this product will do two extremely important things for the country. Number one, provide middle-class tax relief. And number two, provide business changes that make us more competitive. With regard to the termination dates, let me tell you what terminates this tax cut.

The Democrat has taken this to Congress. Next November would turn this into a very short tax bill. So, I think focusing on dates that may expire because of the need to fit the reconciliation rules, miss the point. Every single Democrat voted for this. They're all committed to repealing it and raising taxes on the American people. That's what's at stake in the fall of 2018. Thanks a lot, everyone.


VAUSE: We've been listening to the Republican senators thereafter that historic vote in the U.S. Senate, passing the tax overhaul bill. We just heard from the -- at the end there from the Senate Leader Republican Mitch McConnell, essentially shaving the parameters for the battle for the midterms elections when Americans go to vote in November of 2018. And so, more about this, we have with us our panel: Dave Jacobson, John Thomas, and Peter Matthews, all with us. OK. It was interesting, you know, we heard -- just heard from Mitch McConnell how this election will be framed. If you want to keep these tax cuts, make sure Republicans keep both houses. Dave.

DAVE JACOBSON, CNN POLITICAL COMMENTATOR AND DEMOCRATIC STRATEGIST: This was a massive shakedown by con artists and hucksters with the likes of Donald Trump and Mitch McConnell. The fact of the matter is, this is a giveaway to big corporations, to Wall Street, and to millionaires and billionaires, and it raises taxes on millions of hard-working families across the country -- from California to New York, to New Jersey.

VAUSE: What did you hear, John?


JOHN THOMAS, CNN POLITICAL COMMENTATOR AND REPUBLICAN CONSULTANT: I think Mitch actually hit all the right points, and exactly, the kind of message you're going to need going into the midterms. I mean, one is, you know, you say we have tax breaks for millionaires and billionaires. He's talking about making America more competitive again, being able to compete against the likes of China and Europe that have lower corporate rates than we do. It's about bringing jobs back home. Real tax breaks for 80 percent Americans, and that message going to midterms about we want you to keep getting these tax breaks and they want to take them away, is something I'm willing to fight on any day.

VAUSE: And Peter, how do you those sort of shady -- obviously, the Republicans now have to go out and sell this bill. I mean, McConnell said, if we can't sell this to the American people, we should get into another line of work.

PETER MATTHEWS, POLITICAL ANALYST: Well, they may have to. John here's something also, the results of the tax cuts, the deficits, you know, we have a 20, $30 trillion debt and we're paying a couple hundred billion a year just on interest alone of debt. Where is the money for investment and infrastructure? You grow the economy once you have a basic backbone for infrastructure. And that's not being done, the American (INAUDIBLE) that you have to have $2 trillion for infrastructure, roads, our bridges, our sewer systems, our water systems, that hasn't been done, it's not going to done with this kind of deficit.

[01:10:03] VAUSE: You know, so, I guess, John, you know, the good news, the president gets to sign something for real, a lot of -- not only executive order but some kind of real legislative accomplishment by the end of the year. As we were saying, the bad news is, it's really unpopular. A CNN poll has it at 33 percent approval rating. It is so disliked that the president's approval numbers are at 35 percent by comparison. Hillary Clinton has higher approval numbers at 36 percent. So, how do you take it from a, you know, 33 percent approval or 28 percent approval to something that people actually embrace?

THOMAS: When Americans -- average Americans start getting up to $2,100 rebates in their mailboxes, I think that does the talking. Right now, I think a lot of Americans are confused, and, quite frankly, misled by the rhetoric on the left about what this bill is going to will do for them. So, the proof will be in the pudding, because we have, we got off to the wrong start, we've lost the messaging battle, but the proof will be in the pudding.

VAUSE: What is inaccurate, though, about the balance here, that someone on a million dollar a year, walks away with $70,000 a tax break, which is basically 3.3 percent. While the average household walks away with less than $900, which is 1.5 percent. It's that fact in it, right?

THOMAS: That is in it. But when we're talking about the messaging and Dave's talking, he's always talking about is what millionaires and billionaires get, not what the middle-class gets. Not the rebate up to $2,100 for working-class Americans. Sometimes it's up to 13 percent of their total income, they're getting back.

JACOBSON: Middle-class families deserve a tax cut. Poor people deserve a tax cut. Rich people don't. We've got unprecedented income inequality in American. The one percent, the millionaires, and billionaires are getting wealthier every day and hard-working families are seeing stagnant wages. What we need is invest -- Peter's right, investment, and infrastructure to create good-paying middle-class jobs.

THOMAS: More spending and taking from my money --

MATTHEWS: But, John, what about the investment? We're talking about, you know, cutting back on schools, we're talking about cutting on so many programs that people actually need that could hurt the demand side of the economy, and if we need to have that. If they don't have that, you can't have growth in the private sector.

THOMAS: Because we believe giving everyday Americans more money back to spend in the economy and re-invest in jobs is a way to do it. Not growing the size of the government or forcing Americans --

MATTHEWS: I understand your philosophy, but the individual mandate was also limited, and which will basically destroy Obamacare and cause more -- the insurance rates are going to go way up.

VAUSE: So, you're including many people who really effectively sorted out of health care because of this tax plan.

THOMAS: They were forced. A lot were forced.

VAUSE: Sure. But (INAUDIBLE) into the affordable health care.

THOMAS: Yes, it does.

VAUSE: And where's the replacement?

THOMAS: Well, what's great about this, it will force the conversation to actually do something, and not just -- to actually meaningfully replace what Obamacare was.

VAUSE: OK. The president has continued to talk about how he will be financially worse off under this tax plan. Our CNN's Jim Acosta had a bit of a back and forth at the White House briefing with the Spokesperson, Sarah Huckabee Sanders, about what that actually means. Listen to this.


JIM ACOSTA, CNN SENIOR WHITE HOUSE CORRESPONDENT: The president did say that this tax cut bill would cost him a fortune. That was false, right?

SARAH HUCKABEE SANDERS, WHITE HOUSE PRESS SECRETARY: No, because on the personal side, this actually could impact the president in a large way and --

ACOSTA: Balance out, corporate versus personal if he's going to --

SANDERS: I'm not sure if he's done a side by side, but I know there are a number of provisions that would negatively impact the president personally, and so we contend that those comments are still very consistent. (END VIDEO CLIP)

VAUSE: Sarah Sanders has a really tough job. But Dave, you know, so, OK. So, now we know we have also, maybe you know, personally, he's going to be a little bit hard done by. You know, from a business point of view, it's off to the races.

JACOBSON: Well, and that's, why Forbes magazine today put out a story estimating that he's going to get about $11 million in tax cuts. That's according to his 2005 tax returns. We don't know how much money he's worth as of today. He never released his tax returns to the American people. Apparently, he stills says they're under audit. There's nothing that has shown that he can't legally release them to the Americans. And I think, at the end of the day, the public deserves to know how much Donald Trump is going to personally benefit from this tax --

THOMAS: So, are you alleging that Donald Trump pushed tax reform so he could get richer?

JACOBSON: Donald Trump is looking out for his bottom line, he wants to fatten his wallet. So, at the end of the day, this is the guy -- Donald Trump only -- come on, you can't deny, Donald Trump only cares about Donald Trump.

VAUSE: And Peter, at least that, you know, probably not. I mean, you know, most likely not. But, you know, for some people, there is the reception --

MATTHEWS: There's a conflict of interest.

VAUSE: President's going --

MATTHEWS: Especially when he doesn't put his holdings into a real blind trust. And knows what's going on because he's talking to his sons every day. And there's copy that there's been -- public official making decisions that are good for the whole country, they're getting caught up in their private gain. And by the way, the estate tax alone is going to give few millions of dollars for his children to keep in their pockets.

THOMAS: Well, I imagine he's already planned for the estate tax.


JACOBSON: Many people have.

VAUSE: It was a guy who told me -- only morons pay the estate tax.

[01:15:04] MATTHEWS: I heard that too.

THOMAS: It's actually the small families that get screwed the most because they don't have the ability to get around the estate tax. But the point is, I mean, we can play these games -- I mean, the president is going to be better off, because he has successful businesses and that he's going to see a reduction, but he also is paying more personal tax because he lives on the coasts. He lives in New York, that is high state and local taxes.

JACOBSON: But this is a perfect illustration of, like, why the American public thinks that economy is rigged in favor of the wealthy corporations and Wall Street, and those entities exploit our existing system, our corrupt system at their expense. They're putting the bill. This is Robin Hood in reverse.

VAUSE: And to that point -- sorry, to that point, there was a provision slipped into this bill on Friday, the real estate provision, which is all (INAUDIBLE). But 14 senators, Republican senators, who voted "yes" to this tax bill will benefit enormously from that provision which was slipped in at the last minute.

MATTHEWS: And it doesn't benefit doctors or lawyers --

VAUSE: Exactly, yes.

MATTHEWS: -- just real estate people. One more thing, you have to have a semblance of fairness here. Why not give the middle-class and working people a tax cut, instead of just the wealthiest people so that they can grow the economy --

THOMAS: We are, at 80 percent.

MATTHEWS: John, that's such a pittance compared to what the millionaires are getting.

THOMAS: Well, because they can't pay a lot more taxes, to begin with.

MATTHEWS: Yes. But that should be shifted in my view. Otherwise, you won't have a middle-class in much longer. And according to the country that has done that, you have much larger middle-class where the wealthiest people, they higher rates. The middle-class pays the middle rate, and poor paying nothing. So, this is also programs to help the poor have a chance to get to become middle class of the American view, right?

VAUSE: There's also that this, you know, will increase the deficit by $1.5 trillion. And in return for that, you get, what about, one- something percent, maybe one point something percent economic growth. Which, you know, Dave, I think when they do the math, it's, you know, it's not a good investment compared to a, like, stimulus package or the infrastructure spending which we have yet to see.

JACOBSON: Precisely. Look, we've seen trickle-down economics before. It didn't work in the 80's. It didn't work during George W. Bush's presidency. It isn't going to work in 2018. The fact of the matter is, you're right, Peter brought this up earlier, investments in infrastructure, investments in education, making college affordable. And by the way, going back to the healthcare issue, health care should be a right, not a privilege just for those who can afford it. This strips away health care for millions of people. That's a valued argument at the end of the day.

THOMAS: I don't want a government forcing low-quality health care and forcing me to buy it. MATTHEWS: Can I show you how a health care reform would help -- a

real reform. In Canada, it costs a thousand less to make a car over there. The same car made over here costs more because our employers are paying for the healthcare. In Canada, the single-payer system pays for its (INAUDIBLE).

VAUSE: OK. Well, the president is -- Donald Trump, he is up, maybe he's watching us. He has been tweeting. This is what he put out: "The United States Senate just passed the biggest in history tax cut and reform bill. Terrible individual mandate Obamacare repealed. Goes to the house tomorrow morning for the final vote. If approved, there will be a news conference at the White House at approximately 1:00 p.m. Eastern Time." I guess that's what we'll all be watching. But clearly, you know, Dave, the president's got something to boast about?

JACOBSON: Yes, he's taking a victory lap. I mean, the fact of the matter is, he hasn't, throughout the course of an entire first year in office, he hasn't gotten any milestone pieces of legislation through the Congress. This is an incredibly unpopular bill. The American people rejected it. Donald Trump saw past that and he's going to claim credit for passing some meaningful piece of legislation. Democrats and most Americans are against it, but he's still going to have that victory lap.

VAUSE: And I guess, you know, Peter, at the end of the day, if American voters out there, are they feeling richer, do they feel that their job is more secure, if their wages are growing up -- which may not be the result of this tax bill, it may just be a result because it's a booming economy anyway. Donald Trump is going to get the credit.

MATTHEWS: We would argue with success, but I don't it's going to be a success. It will be a reverse in my view from what happened in the past, in history.

VAUSE: What do say, John, that on this point, the economy is doing well, and now there's a narrative set up that regardless of how well it does, you know, if it continues to do well, (INAUDIBLE) continues to do well, and unemployment continues to go down, which is the result of lot of Obama policies from earlier on, Donald Trump gets the credit.

MATTHEWS: John, wages have to go up also, right?

THOMAS: Well, well, Trump's -- I mean, that's politics, but Trump should take credit. But also markets and job creators are forward- looking. We don't look at what Obama did a year ago. We look at where we're going to be in 2018, 2019. So, if the economy keeps going strong and picks up speed, at some point, I think it is fair to say that Donald Trump does deserve some credit here.

VAUSE: But there's a sinister part it seems to the way this is being structured. You know, the biggest cuts are up front, and then they dwindle away to nothing. And then, there is that, you know, cut off point because of the repeal -- they basically, you know, expire. Which seems incredibly political in the motivation of how this is all being done, right?

JACOBSON: Yes. I mean, there's Axios put out a report earlier today that by 2027, taxes are going to go up by $83 billion on hard-working families. That's just the cold, hard reality. Paul Ryan says, you know, we're going to get to that. We're going to fix that. The fact of the matter is, earlier this week, there was a story that Paul Ryan was considering retiring. He can't make that promise.

[01:20:04] VAUSE: Peter, last word to you on all this. You know, if it works, it obviously sets up Donald Trump to be in excellent position, you know, for the midterms, and maybe, you know, for a second term. If it doesn't?

MATTHEWS: A failure. He won't be a two-term president, in that case. And it'll come pretty quickly, I think if that's the case.

THOMAS: Impeachment will be the discussion. If we'll lose both houses, and I think will be impeached, if that happens. So, literally, Donald Trump is living and dying by this tax bill and I like his odds.

VAUSE: OK. We shall see.

THOMAS: We shall.

VAUSE: OK. Dave, and John, and Peter thank you all so much.

Saudi Arabia says for the second time in two months, it's intercepted a missile fired at the capital Riyadh. Where it came from and why more when we come back.


VAUSE: Well, Houthi rebels in Yemen claim to have fired a missile aimed at the Saudi Royal Palace in Riyadh. The Saudis say it was intercepted, there were no casualties. This comes as the Houthis marked 1,000 days since the beginning of a Saudi-led offensive. Our Ben Wedeman reports from Beirut.


BEN WEDEMAN, CNN INTERNATIONAL CORRESPONDENT: The Houthi rebels posted online the launch of the missile. A Burcan or Volcano 2-H -- a modified (INAUDIBLE). It was aimed at the Saudi capital, Riyadh, where an image of a plume of white smoke was captured moments after the missile was intercepted by a U.S.-supplied Patriot anti-missile system. The target, according to the Houthis, was a meeting of the Saudi leadership at al-Yamama palace outside Riyadh.

Saudi Arabia accuses Iran of supplying the Houthis with weapons, the charge Iran enemies. In a lengthy speech broadcast on a Houthi-run T.V. station, the rebels' leader Abdul-Malik al-Houthi, declared that Riyadh and Abu Dhabi, capitals of the two largest members of the Saudi-led coalition are now in range.

He said after a thousand days had passed since the start of the Saudi- led offensive against Houthis, a new phase had begun in the war. "They attacked our facilities and we will attack theirs," he said. "An eye for an eye, a tooth for a tooth."

In early November, the Houthis fired a similar missile at Riyadh's International Airport. The level of violence has increased dramatically recently. According to the United Nations air strikes by the Saudi-led coalition, have killed 115 civilians in the last 11 days.

More than eight million Yemenis are on the brink of famine while supplies of food, fuel, and medicine are desperately low as a result of the Saudi embargo. The United Nations is trying to act as a peacemaker, but it appears no one is listening. Ben Wedeman, CNN, Beirut.


[01:25:03] VAUSE: Let's bring in Arash Aramesh, is a National Security and Foreign Policy Analyst. Good to see you, Arash. OK. It's not just the Saudis who are saying that this missile is coming from Iran, we're hearing the same from the United States. This is the U.S. U.N. Ambassador, Nikki Haley. Listen to this.


NIKKI HALEY, U.S. AMBASSADOR TO THE UNITED NATION: While we don't yet have sufficient insight into this particular attack, it bears all the hallmarks of previous attacks, using Iranian-provided weapons. It is only a matter of time before one of these missiles hits the target.


VAUSE: Yes, and this missile was aimed right at the heart of Saudi power in Riyadh. So, if it is Iran, what's the end game here for Iran?

ARASH ARAMESH, NATIONAL SECURITY AND FOREIGN POLICY ANALYST: Iran is engaged in a deep proxy war with its regional rival, Saudi Arabia. So, if you look at the range of Iranian allies, where Iran has supplied weapons, sent in military advisors, and has spent billions of dollars, not to mention thousands of soldiers that have died, you can count Iraq, you can count Syria, and since the 1980s you can count Lebanon. Iran has expanded its sphere of influence and has opened a new front against the Saudis in Yemen.

After the Arab spring in 2011, the government of the late President Saleh, Abdullah Saleh, who was recently actually killed by the Houthis, his government collapses. Post-collapse, the Houthis rebels have been fighting the central government in Yemen now for generations. Formed, sort of, a really odd coalition with Saleh and his outcast sort of government. And they managed to get the new government run by Vice President Abdrabbuh Hadi, who is now the new president out of the capital Sanaa.

This is definitely a power play that Iran is trying to exert more pressure on the Saudis, to try to take the war to Saudi borders. Having said that, it's a really risky move. Now, it's not exactly clear who supplied the missiles, but despite the fact that Nikki Haley and the president and his administration don't have much credibility at the United Nations. Again, it doesn't take a genius to figure out that the Houthis probably got the weapons, and especially got the Scud missile from the Iranian Revolutionary Guards Force or the IRGC.

VAUSE: Are there concerns or questions at least about the effectiveness of the Saudis air defense capabilities? Because it now seems as a clear and direct threat to major population centers in Saudi Arabia.

ARAMESH: Absolutely. The last two attacks were hitting parts of Riyadh, Riyadh is the capital. There are some major population centers in Riyadh. And what if one of these missiles actually lands on a target? And as you know, actually, these Scud missiles are not very accurate. They're not cruise missiles. They are Scud Ballistic Missiles, are highly inaccurate, but their payload can actually cause some damage, with it, carries some civilian casualties.

What would happen next? The question is, what would happen next? If the Saudis decide to retaliate, would they do that against the Houthis? Well, they've been doing that now for almost two years. Bombing Yemen on a daily basis with they're coalition partners, including with the United Arab Emirates. What happens if there is a direct confrontation and direct conflict between the Saudis and the Iranians?

And then, what would happen, in that case, what are we going to do? Are we going to actually get involved and take sides here? And what would happen when this regional proxy war turns into a regional direct war between the Iranians and the Saudis in the Persian Gulf and also around the Middle East?

VAUSE: You know, there was this report by the U.N. Secretary-General, which found that Iran came out on Tuesday is in compliance with the nuclear deal, but at the same time Iran is defying that call from the U.N. to hold its ballistic missile program. The key here is that the U.N. called on Iran to halt the missile program. It was not seen as binding at least, as far as the Iranians are concerned. But we're now hearing from Nikki Haley who is demanding, you know, the international community to step up and stop the Iranians from, you know, spreading weapons across the region. Is this the backdoor way to scuffle the Iran nuclear deal?

ARAMESH: It is and it's not. On the one hand, they prevent -- the sort of the ban on missile tests was never included in the very text of the Iran nuclear deal. Having said that, it was one of the very clear demands of the international community for Iran not to take any provocative actions, including testing new missiles, testing new mid- range ballistic missiles that can target Israel, Europe, or for that matter, short-range missiles that are being and supplied to Hezbollah or the Houthi rebels in Yemen. Iran has not seized to be, sort of, in terms of its regional ambitions and extending the regional sphere of influence, it has not stopped, its regional ambitions.

[01:30:09] Having said that, if you just look at the Iran nuclear deal, yes, I'll give it to you. The Iranians have not done a thing to violate the Iran nuclear deal. But, again, some people would question that the very spirit of the Iran nuclear deal would call for Iran not to antagonize its neighbors and not to antagonize its -- our U.S. allies in the region. But you also have to look at the other side of the equation. The Saudis here have not also been very honest players. On the one hand, Yemen, the poorest country in the Arab world, has been under constant bombardment now for two years, there's no real clear solution and no exit strategy. To add to that, Saudis also have not supported some of the -- some of the moderates in the region.

For years and years, they have been supplying, supporting, and helping, and aiding, and assisting some of the worst radical Islamist elements in the region. But again, the war here to fight here is between Iran and Saudis, and it's really hard to see what the outcome will be, especially if there's going to be a U.S. involvement, which I certainly hope there wouldn't be one. But at the end, it's anyone's guess at this point.

VAUSE: It's a tough neighborhood, to say the least. Arash, thanks for coming in, appreciate it.

We'll take a short break. When we come back here on NEWSROOM L.A., excuse me, it has been said when the U.S economy sneezes, the world catches a cold. So, what happens when it gets a major tax overhaul?


VAUSE: Welcome back, you're watching CNN NEWSROOM live from Los Angeles. I'm John Vause with the headlines this hour. In Yemen, Houthi rebels say this new video shows a missile they fired towards the Saudi Capital, Riyadh. The Saudis say it was intercepted and there were no casualties. This is the second time in two months Houthi rebels have targeted Saudi Arabia with missiles.

12 people were killed in a tour bus crash in Mexico's Yucatan Peninsula. 18 were hurt. The bus was heading towards a Mayan archaeological site and most of the passengers have been traveling with the cruise line stopping there for just a day.

In the past hour, the U.S. Senate has passed the Republicans' tax reform bill. The 51-48 vote came along party lines. Of course, the Senate made some technical changes, the mentioned (INAUDIBLE) goes back to the House for a vote later on Wednesday. After that, it's off to the President's desk for his signature.

Let's take a quick look at the markets in Asia and how they're reacting now to passing the U.S. tax overhaul bill. Everything seems pretty much as we left it last hour, all pretty flat. Journalist Kaori Enjoji joins us now from Tokyo for more on this. So, Kaori, what's going on here? Was everything baked in? Did they expect this to happen? Because, you know, expectation of the tax cut or the tax bill passing had been driving markets around the world for quite some time.

[01:35:16] KAORI ENJOJI, JOURNALIST: Absolutely, John. I think investors, institutional investors have had a long time to work through this long passage of the bill that's worked its way through Congress. And, as you see, I think a lot of it has been priced into the markets already. One of the definitive factors, I think, for 2017, and the Bull Run that we see in equity markets particularly over the last couple of months has been in an anticipation of this. The corporate tax rate going down for multinationals, that has raised expectations.

So, for example, if you're a U.S.-based company and let's say you have a business in Japan and you're -- it's a profitable business if you want to bring those profits back home, you were -- you would have been taxed 36 percent. But under this new overhaul, you're going to be taxed 21 percent. So, the expectations all this time has been that they would convert the yen and buy dollars. And I think that's one of the reasons why the dollar has been fairly strong.

No knee-jerk reaction today. I think we've seen a very quiet trading in the currency markets, around 113 for the dollar-yen, the equity markets, the benchmark, Tokyo stock market has been fairly muted reaction today as well. You -- I think you also have to remember that the market here in Japan is already trading at its best level in 26 years. It's had the catch-up time over the last three months. So, I don't think this is going to be prompting any knee-jerk reaction, but underlying support, I think, for the equity and the currency markets. John?

VAUSE: OK, Kaori, we'll leave it there. Thanks for the explanation, appreciate it.

CNN's Senior Economic Analyst Stephen Moore is a former economic adviser to the Trump campaign. He is currently an informal adviser to the White House on tax policy and Stephen is with us from Florida. Good to see you.


VAUSE: Now, from what I've been reading, ideally, tax reform would simplify the tax code, be deficit neutral, and not increase income inequality. So, when you look at this tax plan, does it tick any of those boxes?

MOORE: Well, you know, it's kind of half of a reform. It's more of a tax cut than it is a reform. I would have liked to have seen more of the loopholes and deductions closed out of the tax code. They -- the Congress closed some of them, but not a lot of them. And so, it's not a full-scale reform, but I do believe the objective of this tax cut, and I think it will achieve that, is to help our businesses become more competitive in a global environment, we're going to cut the rates on our C-corporations that are competing in international markets, but also our small businesses. And we hope that will bring a lot of jobs and a lot of capital back to the United States. And now that this is going to pass today, we'll see whether I'm right.

VAUSE: You know what, clearly, this is weighted towards business and corporations and people have pointed out, especially to the top end.

MOORE: Yes. VAUSE: A non-partisan tax policy said they found those making a million dollars a year or more, we get a tax cut close to $70,000 a year. While the average household in the U.S. only between $50,000 and $70,000. They end up with, you know, less than 900 bucks. And even if you'll get a percentage terms, you know, the million-dollar earners, they walk away with, what, a three percent bump, middle- class, about 1.6 percent. This is not really a tax cut or tax reform for the middle-class, which is sort of how it's being sold, right?

MOORE: Well, there are a lot of tax cuts for the middle-class. And, you know, middle-class Americans are going to save, I mean, depending on their circumstance, but say -- let's say middle-class is between, say, 60 and 120,000 of income. The average middle-class family, again, what -- depending on what state they're in and how many kids they have will save about 2500 to 3,000 a year. Now, if you're living on a 75,000 income, that's a pretty important saving. If you're living paycheck to paycheck as middle -- many middle-class families are.

But I think much more importantly, we do believe this will mean more jobs, higher wages for workers, and ultimately, their -- you know, before tax income will go up as we get a tighter labor market and we're able to see workers bid for higher wages, which is what I want to see, and I think Donald Trump wants to see as a benefit to middle- class in terms of a better economy.

VAUSE: And just pretty quickly, can you explain how does a tax cut for corporations end up boosting wages? Because with, you know, all those CEOs, you know, asked to raise their hand what they'll do with the money, and they will basically go and buy stocks back with it.

MOORE: Well, it's a great question. And, look, we don't want to see this money all go to the CEOs, they're making plenty of money. What we'd like to see is -- and a lot of studies show this, by the way, that when you cut the corporate tax rate, that makes America a more competitive place, when we're competing against -- whether it's Ireland or China, or Canada, or Japan, other -- Mexico. And that means more capital will come to the United States and there's more investment here. And when there's more investment, that leads to more productivity, and then productivity is what leads to higher wages.

[01:40:04] So, we do think -- and by the way, there's some very good studies on this that even the Congressional Budget Office, which is our major scorekeeper here and doesn't normally side with me on these kinds of things, says about 50 to 60 percent of the benefit from cutting business taxes eventually goes to the workers.

VAUSE: OK. There's also the deficit issue, it's either a trillion dollars or 1.5 trillion, depending on how you look at it, you know, when President Obama was in office, Republicans were deficit hawks. Back in 2009, they all opposed, what, an $800-billion stimulus package in a midst of an economic crisis. Let's go back in time, here's the minority -- then-Minority Leader Mitch McConnell.

(BEGIN VIDEO CLIP) MCCONNELL: Yesterday, the Senate cast one of the most expensive votes

in history. Americans are wondering, how we're going to pay for all of this?


VAUSE: The same question could be asked of this tax plan, couldn't it?

MOORE: Yes. And look, a couple of things. I mean, we did pass $800- billion spending bill, and we now know it didn't work, it didn't cause the kind of shovel-ready jobs that the Obama administration had promised. But, look, we think that this is going to grow the economy by almost a percentage point faster a year. And if you do that and if I'm right, and other economists are right about this, then one percent point increase growth means $3 trillion more revenue over the next decade. And that's a big, big increase, and it will reduce our debt as a share of GDP. But, yes, I'm very concerned about our debt situation, and no question about it, we're going to have to get very serious about cutting a lot of spending in Washington that is extraneous and not -- and unnecessary and wasteful.

VAUSE: And we'll leave it there, Stephen. Thank you, Steven Moore, CNN Senior Economics Analyst and an informal adviser to the White House on tax policy.

We'll take a short break. When we come back, it happened months ago, the biggest cyber-attack the world has ever seen. And now, North Korea is getting the blame. We'll have a lot more on the WannaCry Virus in just a minute.


VAUSE: Well, paralyzed parts of Britain's National Health Service, major companies like FedEx and Nissan were compromised, so did hundreds of thousands of computers and around the world and now the U.S. and a lot of other countries as well say that North Koreans were behind it all. Details from Brian Todd.


BRIAN TODD, CNN CORRESPONDENT: It is the biggest cyber-attack the world has ever seen. Hundreds of thousands of computers around the world in about 150 countries rendered useless. Businesses, homes, and hospitals were hit, holding critical systems hostage. Even parts of Britain's National Health Service were crippled, putting lives at risk. Now, the U.S. government is publicly placing the blame for that cyber assault uniquely dubbed "WannaCry" squarely on Kim Jong-un's army of hackers.

THOMAS BOSSERT, U.S. HOMELAND SECURITY ADVISER: It was directed by the government of North Korea. We're also comfortable in saying that there were actors on their behalf, intermediaries carrying out this attack, and that they had carried out those types of attacks on behalf of the North Korean government in the past. [01:45:03] TODD: Sources tell CNN British intelligence officials and Microsoft had previously concluded that groups associated with the North Korean regime were responsible for the WannaCry hack, which occurred in May. But this was the first time the U.S. publicly singled out the Kim regime.

DANIEL RUSSEL, DIPLOMAT, ASIA SOCIETY POLICY INSTITUTE: North Korea is in the extortion business. It's in the intimidation business. And frankly, it's in the larceny business.

TODD: Experts say the North Korean attack was unique for a foreign government because it was Ransomware, designed to shut down computers until users paid ransom money to unlock their screens. But officials say in the "WannaCry" hack, the attackers botched the Ransome technology and didn't make much money.

BOSSERT: Once word got out that paying didn't unlock your computer, the payment stopped. Still, the disruption was widespread and costly, carried out by a cyber-war team that experts say has become dangerously proficient. Kim Jong-un is believed to have an army of more than 6,000 hackers, most of them from North Korea's top intelligence agency. The best of them worked for an elite unit called Bureau 121. The same unit is believed to have hacked Sony Pictures and has infiltrated systems in other countries.

JASON HEALEY, SENIOR RESEARCH SCHOLAR, COLUMBIA UNIVERSITY: They're causing disruption of banks, ATM machines in South Korea, they're attacking the finance sector and affecting Swift, one of the -- one of the main ways that we move money around to do financial heists.

TODD: Financial heists designed not just to disrupt the west but to generate real money for the Kim regime.

RUSSEL: That money has been used in turn by the regime for its nefarious purposes for the nuclear program, for the missile program.

TODD: Publicly, White House officials say they don't have many options for retaliating against the Kim regime for the WannaCry attack.

BOSSERT: President Trump has used just about every lever you can use short of starving the people of North Korea to death.

TODD: But behind the scenes, White House officials tell us they are taking measures to hinder North Korea's hacking capabilities, applying what one official calls, max pressure. They say they won't discuss their options in advance, but cyber experts tell us that could mean that U.S. cyber command is launching its own offensives to disrupt Kim Jong-un's hackers. Brian Todd, CNN, Washington.


VAUSE: Well, for more, let's bring back in our national security and foreign policy analyst, Arash Aramesh, he is in San Francisco. Also with us, internet security analyst, Hemu Nigam, the founder of SSP Blue. Thank you for being with us. You know, we should note, it's not just the United States here calling out the North Koreans, the U.K. warned on Tuesday that, "international law applies online as it does offline. The United Kingdom is determined to identify, pursue, and respond to malicious cyber-activity regardless of where it originates, imposing costs on those who wish to attack us in cyberspace."

Hemu, you know, talk about the options over here. I mean, international law applying to North Korea, really?

HEMU NIGAM, FOUNDER, SSP BLUE: Well, it's no different than -- this is a way to look at it, take what's happening in the online world and put it in the physical world where you're actually seeing is a country that's sending digital boots into the borders, inside the borders of another country, attacking their businesses and citizens. So, I think it's that perspective that the U.S. government, the British government, and other government powers are saying, hey, look, you are actually violating international laws, and in a sense, declaring war or engaging in an act of war.

VAUSE: And Arash, you know, there's been a lot of focus on, you know, North Korea and its nuclear missile capability, those missiles would still have not been able to deliver a nuclear warhead to the U.S. mainland anytime soon, but right now, if you look at North Korea's cyber capabilities, they can reach anywhere in the world. So, is that more of an immediate threat?

ARAMESH: North Korea poses both a conventional threat to our allies in the Korean Peninsula and also Japan with its missiles and its nuclear capability, but it also poses a really serious unconventional threat with its use of cyber-attacks. Now, we just realized how important it is and how significant these cyber-attacks can be. They can shut down multiple networks, they can shut down hundreds of thousands of users, and some critical, critical infrastructure, the National Health Service in the United Kingdom was shut down.

Not long ago, just a couple of days ago, because of some accident, no foul play yet, but some accident, the Atlanta airport was shut down. You can see the effects of a potential cyber-attack on a sensitive military or even civilian infrastructure here in the U.S. that could devastate hundreds of thousands of people. It could shut down lights and electricity, not only that. But it could disrupt commerce, it could disrupt or means of communication, it could disrupt daily life. So, this is the wave and the new threat.

Unfortunately, the public is not very informed about it, and unfortunately, we haven't done a good job informing the public. But steps are being taken, what the Koreans cannot get through provocation, through their missile tests and their nuclear provocation, they try to get by holding other people hostage and getting ransoms through these cyber-attacks.

[01:50:12] So, it's a real problem, has to be dealt with. And again, my certain is, when a small player, like North Korea, starts misbehaving like this, what would happen when countries like China and Russia decide to misbehave? Apparently, much quicker capabilities, much more potent. VAUSE: Yes, it was a rat that chewed through a cable at the Atlanta Airport. It makes you wonder what a determined North Korean hacker could do. Hemu, Facebook posted on Tuesday that deleted profiles operated by the group and notified people who may have been in contact with suspicious accounts have been suspended. It seems like there could be a lot more that the tech companies could be doing.

NIGAM: Yes, there is a lot more. And I think one of the things like Arash just said is, educating the public. When they say update right now, you don't hit remind me later. You don't wait for two days or three days, because at the end of the day, WannCry is a perfect example of what happens when the public says I'll wait on the update, I don't care if it's a security update, rather than doing it now. And even the I.T. professionals in places like hospitals, this is a failure of people to keep their systems updated. Otherwise, this vulnerability never would have been exploited because Microsoft had actually already released a new patch for that.

And so, I think what we have to really be concerned about, more than anything else is what if North Korea identifies what's called a zero- day vulnerability, something you can't even fix, and it takes a while to fix, you can really go way beyond the hundreds of thousands and 150 countries and go into the millions, and that is a very serious danger that a tiny country can impose or a large country, depending on what their interests and missions are.

VAUSE: I just want to finish what the U.S. National Security Adviser H.R. McMaster, he kept up the pressure on North Korea on Tuesday. Listen to this.


UNIDENTIFIED MALE: Is there any way in which the U.S. can co-exist with a nuclear North Korea?

LT. GEN. H.R. MCMASTER, U.S. NATIONAL SECURITY ADVISER: I don't think we can tolerate that risk, the world can't tolerate that risk. I mean, if North Korea has a nuclear weapon, who is -- who are you going to try to prevent getting one? I mean, look at the hater of this regime, the hostility of this regime to the whole world.


VAUSE: Arash, we got about 30 seconds left. So, is that statement consistent with current policy and nothing to see here because it is being interpreted by some as sort of the opening door of potential military action?

ARAMESH: You know, it's hard to see what the current policy is. You got Tillerson at the State Department, you got one of the adults of the White House, General McMaster as National Security Adviser, and then you got the President. So, General McMaster and Secretary Tillerson can talk about policy, talk about preventive measures and talk about proportional response, but then, every morning, we wake up and the President sends out a tweet and it does set policy, it does wreak havoc and it creates mayhem. So -- but this is a serious problem, we have to take it seriously.

And the only hope we have is to pressure the Chinese to put pressure on the North Koreans. But the Chinese won't do that, because, A, the Chinese are masters of cyber-attacks themselves, they have a cyber- attack unit within the Chinese military and the intelligence service. And B, they would not want to increase too much pressure on the North Koreans because they're worried about instability that it may cause in case they lose their leverage on the Koreans. So, it's a tough spot to be in, especially dealing with the -- with the Korean government of Kim Jong-un.

VAUSE: North Korea has never been easy. Arash and Hemu, thanks for being with us. Appreciate it.

NIGAM: Thanks, John.

VAUSE: After the break, the death of Bernard Law, Boston's disgraced former archbishop.


[01:55:22] VAUSE: Welcome back. Cardinal Bernard Law, the former archbishop of Boston has died at 86. He was a powerful figure in the Roman Catholic Church. Many thought he might become the first American pope, but he resigned in disgrace. In 2002, after a reporting from the Boston Globe uncovered a massive sex abuse scandal in his archdiocese. Law was accused of protecting priests who were abusing children. Vatican Correspondent, Delia Gallagher, is with us now from Rome. So, Delia, you know, it seems that Cardinal Law was actually living there in Rome at the time of his death, but it remains fairly unclear exactly how he died.

DELIA GALLAGHER, CNN VATICAN CORRESPONDENT: That's right, John. We have a statement from the Vatican that he died in the early hours of this morning after a long illness, they say. You know, John, for those who remember, Cardinal Law was really the symbol of the Catholic Church leadership at the time of the sex abuse crisis when it first occurred in Boston in 2002. Kind of the symbolic leadership that refused to see the gravity of the situation. The Cardinal, of course, before this, was much loved in Boston and indeed at the Vatican. He was a favorite of John Paul II, he was made archbishop by John Paul II.

You know, he was a Harvard-educated man who worked for civil rights in the United States on the part of the immigrants and the poor. So, he was really a star of the Catholic Church. And then when the sex abuse scandal broke, it became clear that he was one of the members of the Catholic Church leadership that moved priests around. There was a particularly grievous case of Father John Geoghan, who was accused and convicted of molesting 130 boys. And the Cardinal sort of absolutely refused to see the gravity of the situation. And I think that was the real lightning rod for many people and their anger towards the Catholic Church leadership in handling these cases. John?

VAUSE: Delia, thank you. We shall leave it there. Obviously, more details to come on this story, we appreciate you being with us. And we appreciate you watching CNN NEWSROOM live from Los Angeles. A lot more news after a very short break. You're watching CNN.