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EARLY START

Countdown to Shutdown; Bannon Confirms Subpoena from Mueller; Lawmakers Grill Kirstjen Nielsen; Trump Wins Clean Bill of Health; North & South Korea Hold 3rd Round of Talks at DMZ. Aired 4:30-5a ET

Aired January 17, 2018 - 04:30   ET

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


(COMMERCIAL BREAK)

[04:31:05] DAVE BRIGGS, CNN ANCHOR: A government shutdown looking like a real possibility. The Republican plan to keep the lights on does not have enough support in the party, and there's no immigration deal in sight to please Democrats.

(BEGIN VIDEO CLIP)

REP. ADAM SCHIFF (D), CALIFORNIA: If the White House is permitted to maintain that kind of a gag rule on a witness, no congressional investigation could ever be effective.

(END VIDEO CLIP)

CHRISTINE ROMANS, CNN ANCHOR: Frustration in Congress after Steve Bannon refuses to answer questions in the Russia probe. He'll have to be more forthcoming after a subpoena from the special counsel.

(BEGIN VIDEO CLIP)

SEN. CORY BOOKER (D), NEW JERSEY: That you could even say in your testimony that Norwegians were preferenced by him because they're so hard working --

KIRSTJEN NIELSEN, DHS SECRETARY: I did --

BOOKER: Excuse me, let me finish.

NIELSEN: Happy to.

(END VIDEO CLIP)

BRIGGS: The eye roll.

The homeland security secretary facing anger and pushback after again saying she can't remember whether the president used a vulgarity about African nations.

Also, the president's health under the microscope. We'll talk about that in a bit.

ROMANS: Sure.

BRIGGS: Welcome back to EARLY START. I'm Dave Briggs.

ROMANS: And I'm Christine Romans.

BRIGGS: Good morning.

ROMANS: Nice to see you this morning. Thirty-one minutes past the hour.

Three days until a government shutdown. And on Capitol Hill, the two sides are actually farther apart. House Republicans last night introduced a short-term spending bill that would fund the government through February 16th. It includes six years of funding for the children's health insurance program, and it delays several unpopular Obamacare taxes. Republicans hope the add-ons put pressure on Democrats to support the bill. Right now, even some Republicans oppose it.

BRIGGS: Yes. The chairman of the hard right, House Freedom Caucus, Mark Meadows, says there are enough noes and undecideds among members that the measure won't pass with just GOP votes.

Meantime, Democrats face their own tough choices, many of them coming out against stopgap funding without a long-term fix for DACA. Some Democrats, especially ones facing those tough races in the fall, worry about taking the blame for a shutdown over fighting for Dreamers if there's no real agreement in sight.

ROMANS: On that front, White House chief of staff John Kelly meets with the Congressional Hispanic Caucus later today.

From Capitol Hill, CNN's Phil Mattingly has more on the search for a funding deal.

(BEGIN VIDEOTAPE)

PHIL MATTINGLY, CNN CONGRESSIONAL CORRESPONDENT: Now, Christine and Dave, we're basically at the point now of waiting, waiting to see what's going to happen in the House. Waiting to see what's going to happen in the Senate.

I give you some context here. There are really two questions right now: can House Republicans on their own get the requisite number of votes to pass a short-term continuing resolution, basically a government funding bill, likely into mid-February? If they can, then the drama moves over into the Senate where, obviously, Senate Republicans are going to need Democrats to come on board, at least nine, potentially more than that depending on absences, to decide whether or not the government will remain open past Friday night.

As to where the lines are currently drawn -- well, take a listen to the two leaders in the Senate.

SEN. MITCH MCCONNELL (R-KY), MAJORITY LEADER: With no imminent deadline on immigration and with bipartisan talks well underway, there is no reason my Congress should hold government funding hostage over the issue of illegal immigration. SEN. CHUCK SCHUMER (D-NY), MINORITY LEADER: A very fair, bipartisan

deal remains on the cable. It's the only game in town. We're making steady progress on building additional support in both houses of Congress. There's a deal to be had this week.

MATTINGLY: If you paid attention closely, you can see where the positioning is right now. Majority Leader Mitch McConnell making very clear if Democrats don't come along, Republicans will most certainly attack them for leading to the government shutdown and for a government shutdown that is basically entirely because of an immigration issue.

What Senate Minority Leader Chuck Schumer is saying is, Democrats have made very clear they need, they want a resolution to DACA. And as it currently stands, there is a bill that's on the table -- a Gang of Six bill, a bipartisan proposal.

Here's kind of the outlines of that, though: President Trump has made clear that proposal's not sufficient. Republican leaders, while quiet about it, have also said, according to aides, that they agree with the president on this. That means when it comes to DACA, there's no deal in the offing at any point in the near future. That means all focus will be on the continuing resolution.

And for the near term, that means all focus will be on House Republicans.

[04:35:00] Right now, House Republican leaders trying to figure out a way to craft the bill that can get their defense hawks that are worried about another continuing resolution without raising the current spending caps, as well as enough for conservatives to get the requisite number of votes to move it forward.

That's the first step. Then comes the Senate. Right now, we wait -- Christine and Dave.

(END VIDEOTAPE)

ROMANS: All right. Three days to go. Phil Mattingly, thanks.

A long day of questioning on Capitol Hill for former White House chief strategist Steve Bannon. There's more to come for him. According to multiple sources, Bannon informed the House Intelligence Committee he has been subpoenaed by special counsel Robert Mueller to testify before a grand jury. Bannon faced ten hours of congressional grilling on Tuesday, and things got combative when lawmakers pressed him about the transition.

BRIGGS: Yes, Bannon's lawyer cutting off the questioning, forcing the committee to issue a subpoena compelling his testimony. But sources say Bannon was still not forthcoming. Adam Schiff, top Democrat on the committee, claims Bannon was instructed by the White House in advance not to respond on certain topics. Schiff calling Bannon's refusal to cooperate unprecedented.

(BEGIN VIDEO CLIP) REP. ADAM SCHIFF (D), CALIFORNIA: This was effectively a gag order by the White House preventing this witness from answering almost any question concerning his time in the transition or the administration, and many questions even after he left the administration. The scope of this assertion of privilege, if that's what it is, is breathtaking. It goes well beyond anything we have seen in this investigation.

(END VIDEO CLIP)

ROMANS: Connecticut Democrat Jim Himes says Bannon risks being held in contempt of Congress if he does not answer questions. Bannon's attorney told the committee he will answer questions when he goes to the special counsel because executive privilege will not apply there.

Bannon is one of several key Trump associates coming before this panel. Among the others are Cory Lewandowski, Hope Hicks, and deputy chief of staff Rick Dearborn who sources say testifies today.

BRIGGS: Emotions running high on Capitol Hill as lawmakers grilled DHS Secretary Kirstjen Nielsen about President Obama's vulgar description of Haiti and African nations. Nielsen again insisting she did not hear the president say s-hole or s-house in the Oval Office meeting. She says a lot of lawmakers used vulgarities.

New Jersey Democratic Senator Cory Booker not buying it.

(BEGIN VIDEO CLIP)

BOOKER: When ignorance and bigotry is allied with power, it is a dangerous force in our country. Your silence and your amnesia is complicity.

I hurt. When Dick Durbin called me, I had tears of rage when I heard about this experience in that meeting. And for you not to feel that hurt and that pain, and to dismiss some of the questions of any colleagues, saying, I've already answered that line of questions when tens of millions of Americans are hurting now because of what they're worried about what happened in the White House, that's unacceptable to me.

(END VIDEO CLIP)

ROMANS: Senator Lindsey Graham blaming White House staff for the president's rejection of a bipartisan immigration deal. Graham says the president is getting and following bad advice.

(BEGIN VIDEO CLIP)

SEN. LINDSEY GRAHAM (R), SOUTH CAROLINA: This has turned into an s- show, and we need to get back to being a great country where Democrats and Republicans work together to do something that we should have done years ago.

(END VIDEO CLIP)

BRIGGS: Democrat Senator Dick Durbin worked with Graham on the bipartisan immigration deal. He believes Trump adviser Steven Miller played a role in convincing the president to reject the plan. He says, quote: it's hard to find any effort to kill immigration legislation that doesn't have Steve Miller's fingerprints on it.

The White House pushing back, insisting President Trump is running the show on immigration, not his staff.

ROMANS: President Trump meeting with Utah Republican Mia Love, the only Haitian American in Congress. The congresswoman says she discussed immigration with the president in the wake of those offensive comments about Haiti. She called the meeting substantive and productive and says she emphasized the importance of implementing reforms to make sure the U.S. attracts the world's top talent, regardless of race.

BRIGGS: Fox News had a story ready at the height of the election last year detailing an alleged sexual relationship between Donald Trump and a porn star but decided to kill it, that according to four sources familiar with the matter. "The Wall Street Journal" reported last week that Trump attorney Michael Cohen arranged a $130,000 payoff to Stephanie Clifford, also known by her stage name "Stormy Daniels," to stay silent about the alleged relationship. Now, Cohen, Clifford, and the White House denied the report.

ROMANS: According to three CNN reporters, Fox reporter Diana Falzone had an on-the-record statement from Clifford's manager at the time, confirming her client had engaged in a sexual relationship with Trump. We are told the reporter even saw emails about the settlements, but the editor-in-chief and the vice president of Fox News Digital claims the network was unable to verify all the facts to publish the story. Fox has not responded to why the network has not used previous reporting in recent stories about the alleged relationship between the two.

[04:40:04] BRIGGS: We should note, Falzone, the Fox reporter, filed a lawsuit against the network in May of 2017 alleging gender discrimination. Fox News has denied her allegations. The case is ongoing. ABC News, Slate, and "The Daily Beast" were also working on stories about Stormy Daniels and did not publish.

ROMANS: All right. Seven trading days, that's how long it took for the Dow to jump from 25,000 to 26,000, the fastest 1,000-point game in history. Now, the trip above 26,000 was brief. The Dow closed lower, dragged down by GE and energy stocks.

Still, the Dow spiked almost 8,000 points or 42 percent since President Trump's election. Wall Street excited about a strong economy and big corporate profits. Both of which could be boosted by the new tax bill.

But right now, a corporate tax cut means profit losses for the big banks. The latest Citigroup took a one-time $22 billion hit because of the tax cut. Like other financial firms, it has to lower the value of its deferred tax assets.

But that's a short term. In the long term, a cutting of the corporate rate will give Citigroup's profits a big boost. Banks are some of the biggest winners of the new tax law. Earnings there should jump 75 percent next year.

BRIGGS: All right. Ahead, a clean bill of health for President Trump with some room for improvement. The president's doctor also weighing in on his cognitive health more than a week after the president called himself a stable genius.

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[04:45:43] BRIGGS: The patient is 6'3", 71 years old, blood pressure 122 over 74. The patient is the president. Donald Trump.

While Dr. Ronny Jackson pronounced him in excellent health, and he did say there were a few issues to address, they discussed diet and exercise during the president's physical last week and set a goal for him to lose 10 to 15 pounds.

ROMANS: The president also asked for a cognitive test hoping to rebut persistent questions about his mental fitness. Jackson says the test gave him no concerns.

Chief medical correspondent, Dr. Sanjay Gupta, was at the briefing, this remarkable briefing. He has more from the White House.

(BEGIN VIDEOTAPE)

DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: Well, Christine and Dave, I got to say, first of all, I've never seen anything quite like this. I've been covering these sorts of stories for some 16 years now. And having the White House doctor come out, speak to the press, take basically every last question they had to ask for about an hour was a pretty remarkable thing.

All sorts of things were asked. But the two big areas, Christine and Dave, were his heart health and his mental health. With regard to his heart health, we know that the president is borderline obese. We know he has high cholesterol and we know he has evidence of heart disease. And over the last year since he's become president, those numbers have worsened a bit, which is why the doctor increased the dosage of his cholesterol-lowering medications.

But Dr. Jackson also very clear about the fact that they did test to evaluate the function of the heart right now. Forgetting those risk factors, how is the heart right now? And he says based on things like an echocardiogram and a stress test, his heart's doing well.

In fact, he said has no concerns for the rest of this term. And he says he would have no concerns if the president was elected to another term.

They also pointed out that the president asked himself for a cognitive exam known as the Montreal cognitive assessment exam. Think of this as a screening test for dementia. On this particular test that takes about 10 minutes, there are various things about your spatial relationships, how well you understand that, your orientation, your communication skills. And he said the president scored a perfect score, 30 out of 30 on that.

DR. RONNY JACKSON, PRESIDENTIAL PHYSICIAN: Absolutely no concerns about his cognitive ability or his -- you know, his neurological functions.

GUPTA: So, for Dr. Jackson, he sort of really laid that issue to rest, saying that is not a concern for him. They will follow up on these things every year and the years to come -- Christine and Dave.

(END VIDEOTAPE)

ROMANS: Fifty-five minutes of President Donald J. Trump's health. It was something.

BRIGGS: My health would not hold up to those questions.

But there was one question as to those missing yesterday --

ROMANS: Which was?

BRIGGS: And that is, how did the president grow one inch? He's always been 6'2" on his license and prior physical.

Why does that matter? Well, if you check the Twitter feed of Maggie Haberman from "The New York Times," she just points out if he was 6'2", 239 pounds, the president would be obese. And you can imagine, the cover of the newspapers this morning might be "Obese POTUS" if he was the normal height. The conspiracy, they call it girthers this morning.

ROMANS: Oh, the girthers --

BRIGGS: Poking some fun at the president's birther movement.

ROMANS: That's funny.

BRIGGS: All right. A contraceptive app coming under criticism after more than three dozen users experienced unplanned pregnancies. The natural cycles app considered a certified contraceptive in Europe. It uses an algorithm considering factors to predict when a woman should use traditional contraception.

A hospital in Sweden says at least 37 women checked in for abortions after using the app as birth control. It has 700,000 users worldwide. Natural cycles calls the unplanned pregnancies, quote, an inevitable reality.

ROMANS: All right. The birds and bees --

BRIGGS: Might not want to depend on that solely.

ROMANS: There's an app for the birds and the bees. And guess what? It's not foolproof.

BRIGGS: No.

ROMANS: The fight for the cloud is under the sea. Google's latest plans for the computing business on CNN "Money Stream", next.

(COMMERCIAL BREAK)

BRIGGS: Four-fifty-three Eastern Time. and South Korea are in a third round of talks overnight. A big focus again on the Olympics. But South Koreans are voicing concern that Pyongyang is using the talks to buy time for its weapons program.

CNN's Paula Hancocks live in Seoul for us this morning.

Paula, what do we know?

PAULA HANCOCKS, CNN INTERNATIONAL CORRESPONDENT: Well, Dave, it's the third round of talks that we're hearing today. They're still ongoing. So far, North Korea's agreed to send a 230-person cheering squad and also said that they'd be happy to cross in to South Korea via the DMZ. So, the land route, that's being discussed at this point.

But over where are you in North America, in Canada, Vancouver, there are voices of concern. There are allies of South Korea. For example, Japan, who are saying be careful with these talks, saying the international community must be clear eyed when it comes to North Korea's reasons for wanting to go ahead with these talks saying it is not the time to ease pressure towards North Korea.

Now the U.S. secretary of state, Rex Tillerson, saying something similar. Certainly, the 20 countries that are involved there are talking about potentially further sanctions, more pressure on North Korea, and the need to make sure that the eventual goal of these talks is denuclearization.

[04:55:12] Tillerson, though, did say that it is time to talk potentially, but he wanted to make sure that North Korea was going to take steps to show they were serious about talking, as well. China and Russia weren't at the talks. China is crucial for any sanctions to work, for anything on North Korea to work, being the biggest trading partner.

In fact, we heard from the foreign ministry that they believe these talks showed a Cold War mentality -- Dave.

BRIGGS: Twenty-two days until the Olympics. Paula Hancocks live for us -- thank you.

Meanwhile, as another winter storm bears down this morning, states of emergency have been declared in Alabama, and Georgia, and North Carolina.

BRIGGS: Yes, 70 million people are under winter storm warnings right now from Texas to Maine. That storm churning toward the Northeast, set to make for a messy morning commute.

Meteorologist Pedram Javaheri live from the weather center this morning.

OK, so what is the latest? PEDRAM JAVAHERI, AMS METEOROLOGIST: Gosh, you know, guys, the timing

really couldn't be worse when it comes to the commute for the rush hour. You look outside, this is a live look out of Atlanta's Centennial Olympic Park. You see snow beginning to cover the grassy surfaces, some of the roadways certainly as well, generally looking at about a couple of inches across parts of the south here.

But that's plenty enough to not only issue state of emergencies that are in place, but, of course, cancel classes across much of the region as well. Atlanta in particular working toward Greenville, notice that you really begin to see the snow coverage expand as you enter Charlotte, into places such as Raleigh. That's the area of concern for the heaviest snowfall.

Follow the same front all the way toward Northeast, and still producing snow across portions of the northeast. Notice as you approach New York City, around portions of central and southern Jersey there, you begin to see a transition take place as temperatures are a little too warm to support any significant snow to come down across the region.

Winter weather advisories away from the major city, at least out of New York City there, is in place across parts of New York state. We know accumulations there generally two to four inches. You work toward the south, talking about 23 states. Parts of 23 states, over 70 million people that are impacted by this, and the timing again really coming into to the morning rush hour.

But notice, as you go on towards, 8:00, 9:00 p.m., this pushes off the eastern seaboard. And everything that will have fallen with the storm system will be complete.

So, this is a quick moving system. Four to six inches around Raleigh, two to four for everyone out of the region, working toward coastal Maine, another high area for snowfall there once again, four to six inches. So, at least, it's a quick-moving system and a warming trend in store after this, guys?

ROMANS: And it's beautiful, sunny, and 80 in California today again. Why don't we live in California again?

BRIGGS: Because it's new California soon. That's why we don't want to live there.

All right. Thank you, Pedram.

The sky in Michigan last night briefly lit up like day. It turns out the brief, bright flash and loud bang, not thunder and lightning, but most likely a meteor.

The National Weather Service says the event triggered a 2.0 quake 40 miles from Detroit. The incident captured on people's smart phones and home security cameras. One woman tells CNN she heard a noise so loud it shook her house.

ROMANS: Isn't that something? All right. Let's check CNN "Money Stream" this morning. Global

stocks lower today following a drop on Wall Street. You know, U.S. stocks have started near records. So, perspective here is really important. The Dow crossed 2,600 -- 26,000 rather after its fastest thousand-point gain in history.

The trip above 26K was brief. The Dow dragged down nearly 300 points lower by energy stocks in General Electric. GE shares fell nearly 3 percent as its cash crisis deepens. It lost more than $6 billion from its insurance operations. The stock was almost cut in half last year. Sources say the country's oldest conglomerate is now considering a breakup.

The top U.S. consumer watchdog will reconsider a rule on payday lending. The Consumer Protection Bureau requires lenders to check if borrowers can pay back loans. If it's thrown out, it marks a major shift for the agency since Mick Mulvaney became acting director.

Until now, the CFPB strongly policed banks and creditors. Mulvaney is a longtime critic of the agency. He took over when the previous head stepped down in November.

In the wake of the Logan Paul controversy, YouTube plans to manually review a significant chunk of its most popular videos shielding advertisers from offensive or controversial videos. Actual humans, not algorithms, actual people, not algorithms, will review videos that are Google preferred. That's the top videos brands pay a premium to advertise on.

Logan Paul was part of Google preferred until this month. YouTube removed him after he posted a video of a dead body to his channel.

The fight for the cloud is now under the sea. Google will expand its undersea cable network to speed up its cloud computing services. The cables will stretch thousands of miles, too, from the U.S. to Europe and South America, a third from Hong Kong to Guam. In total, Google has 11 under-sea capabilities that speed up data transfers, helping it compete in the multibillion dollar cloud market. It's currently third in revenue behind Amazon and Microsoft.