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EARLY START

Time is Running Out for Spending Deal; Kelly: Trump Was Uninformed; Steve Bannon's House Intel Committee Slip-Up; Trump Criticizes Russia on North Korea; Dow Ends Above 26,000. Aired 4:30- 5a ET

Aired January 18, 2018 - 04:30   ET

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


[04:30:28] ALEX MARQUARDT, CNN ANCHOR: Welcome back.

There is bipartisan agreement on one thing. No one wants to give any ground. Under 48 hours to a potential government shutdown, will one party blink or will the lights go out?

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I will have Mexico pay for that wall. Mark my words.

JOHN KELLY, WHITE HOUSE CHIEF OF STAFF: He has evolved in the way he's looked at things. Campaign to governing are two different things.

(END VIDEO CLIP)

CHRISTINE ROMANS, CNN ANCHOR: Apparently, campaign promises are made to be broken. The chief of staff says candidate Trump on the campaign trail was uninformed about the wall.

MARQUARDT: And new signs trying to limit testimony when Steve Bannon went before Congress this week. Did he slip up and reveal a detail about a critical issue in the Russia probe?

Welcome back to EARLY START. I'm Alex Marquardt, in for Dave Briggs this morning.

ROMANS: Dave is under the weather. But we're glad to have you here this morning.

MARQUARDT: Thanks so much for having me back.

ROMANS: Yes, absolutely. Love it when you come.

Thirty-one minutes past the hour. I'm Christine Romans. Nice to see you all this morning bright and early.

Now, the federal government's authority to spend money, it runs out tomorrow, tomorrow night.

Two groups of lawmakers to watch today: House conservatives and Senate Democrats. House is expected to vote on a continuing to fund the government through February 16th. But GOP defense hawks in the House say the party's short-term bill does not meet their campaign promises.

(BEGIN VIDEO CLIP)

CHRIS CUOMO, CNN ANCHOR: Are you in a position to vote on what is out there for a budget resolution on Friday?

REP. JIM JORDAN (R), OHIO: No. Here's what I want -- I want us to do what we told the American people we were going to do. What they elected us to do. Fund defense. Hold the line on non-defense. And do what the election was about on immigration.

If the Democrats want to shutdown the government because they want to give amnesty to people who came here illegally, then you can have them on your show and they can explain why that's the appropriate thing to do.

(END VIDEO CLIP)

MARQUARDT: Senate Democrats are under heavy pressure from administration activists. They want renewed protections for Dreamers, who were brought here illegally as children. Many of those Democrats leaning against the stop-gap bill.

(BEGIN VIDEO CLIP)

SEN. RICHARD BLUMENTHAL (D), CONNECTICUT: I don't know how my colleagues can look the Dreamers in the eye and say, we're going to engage in breaking America's promise and violating our trust. At some point, standing on moral principle is why we're here. And we made a promise to the Dreamers.

(END VIDEO CLIP)

ROMANS: Senate Democrats have at least one Republican ally. Senator Lindsey Graham. He says putting off of a deal on DACA will hurt Dreamers and Americans.

(BEGIN VIDEO CLIP)

SEN. LINDSEY GRAHAM (R), SOUTH CAROLINA: Those who think that we are going to get away as Republicans, we're getting all we want on the fence now and we'll deal with the kids later, the DREAM Act population, closer to March 5th when their backs are against the wall, that is -- that is nuts.

(END VIDEO CLIP)

MARQUARDT: Meanwhile, Senate Republican Leader Mitch McConnell trying to corral Democratic votes. McConnell says the president's waffling on immigration isn't helping.

(BEGIN VIDEO CLIP)

SEN. MITCH MCCONNELL (R-KY), MAJORITY LEADER: I'm looking for something that president Trump supports. And he's not yet indicated what measure he's willing to sign. As soon as we figure out what he is for, then I would be convinced that we would not just spinning our wheels.

(END VIDEO CLIP)

MARQUARDT: But a White House spokesman says the president's priorities are indeed clear.

(BEGIN VIDEO CLIP)

RAJ SHAH, DEPUTY WHITE HOUSE PRESS SECRETARY: Our priorities are clear. We cannot get into a situation where we have -- where we have a temporary stop-gap fix and then a few years down the road, we have hundreds of thousands of new illegal immigrants in this country. That is not a fix. And that's inhumane and that is not a bill of love.

(END VIDEO CLIP)

ROMANS: President Trump in an interview with "Reuters" telling the news agency a government shutdown could happen. He insists the Democrats will take the blame.

So, 48 hours from the possible government shutdown, what is the state of play on Capitol Hill? Phil Mattingly knows.

(BEGIN VIDEOTAPE)

PHIL MATTINGLY, CNN CONGRESSIONAL CORRESPONDENT: Christine and Alex, for the state of the government shutdown or potential government shutdown, there's no question about it. Thursday is going to be a very big day. You are going to get the first concrete evidence whether or not things are heading on a good pathway in terms of whether or not there actually be a government shutdown, or whether or not there are significant problems.

Here's why: this is a multistep process. First, the House needs to pass a short-term spending bill to be kicked to the Senate. There are major issues in both of those chambers.

When you look at the House, House Republicans basically have to pass the short term funding bill on their own.

Democrats have already made very clear, they are opposed to it. Democratic Leader Nancy Pelosi whipping against the bill entirely. That means Speaker Paul Ryan needs to find 216 of his own votes to ensure this moves to the Senate.

And that has been problematic, there's no question about it.

[04:35:00] Conservatives are very frustrated with the process, not necessarily happy with the content of the bill, are threatening to hold out. Defense hawks are also uneasy about the fact that they are moving forward and just kicking the can down the road.

Can they actually get there? Well, top Republican aides say that they feel like they are on a good path. They've been whipping the bill hard. They feel they can eventually get there. There's no question about it. It's not been an easy task. If

Republicans are able to get the bill through the House, it kicks it over to the Senate. And the spotlight shines directly on Democrats.

Obviously, Senate Majority Leader Mitch McConnell can't pass any without short term government funding bill without Democratic support. They need 60 votes. Republicans only had 51 seats.

If you want to know where Democrats stand on this, stand on this short-term funding bill -- well, take a listen to Senator Chuck Schumer.

SEN. CHUCK SCHUMER (D-NY), MINORITY LEADER: The overwhelming number in our caucus have said they don't like this deal and they believe if we kick the can down the road this time, we'll be back where we started from next time. So, there is very, very strong support not to go along with their deal.

MATTINGLY: Now, obviously, Democrats very unhappy about the current direction of things. Democrats making very clear they don't want to vote on any government funding bill if there is no DACA resolution attached to it or at least close to a deal.

But will they actually withhold their votes? Will they push the government to, you know, the brink of or right into a shutdown?

As of now, most Democrats and top Democratic aides are telling me they're keeping their powder dry. They want to see what House Republicans are going to do first before they commit any one way. But it's worth noting, they are very frustrated.

They are hearing a lot from their advocates, from their base, saying that this is the moment to fight and this is the issue to fight on. Will they? Well, we're at least going to start getting some answers today -- Christine and Alex.

(END VIDEOTAPE)

MARQUARDT: All right. Thanks to Phil Mattingly on Capitol Hill.

Now, White House chief of staff John Kelly says that some of President Trump's positions on the border wall were what he called in uninformed when President Trump was a candidate. Kelly met on Wednesday with Democrats and the Congressional Hispanic Caucus. A source familiar with his comments tells CNN that Kelly told that group he has worked to educate the president and move him away from some of his campaign promises.

ROMANS: Later, he offered up this explanation to Fox News.

(BEGIN VIDEO CLIP)

KELLY: He's a very definitely changed his attitudes toward DACA issue and even the wall. He has evolved in the way he's looked at things. Campaign to governing are two different things. This president is very, very flexible in terms of what is within the realm of the possible.

(END VIDEO CLIP)

ROMANS: Kelly acknowledging money to pay for the border wall will not come directly from the Mexican government. He says the White House will secure funding from Mexico, quote, one way or another. Through visa fees or renegotiation of NAFTA or other methods.

MARQUARDT: That would be a major about-face.

ROMANS: Yes, it would.

MARQUARDT: Now, the Trump administration is now barring Haitians from receiving temporary visas for seasonal and agricultural work. The decision removes Haiti from the list of around 80 eligible nations. Now, those visas will be banned for seasonal workers from Samoa and Belize. The administration recently ended the temporary productive status for nearly 60,000 Haitians here in this country.

ROMANS: This latest move also on the heels of the president's vulgar remarks about African and Haitian immigrants. The Department of Homeland Security defending the decisions on visas for Haitians, citing high levels of fraud and abuse and high rate of overstaying visas.

MARQUARDT: And former White House chief strategist Steve Bannon had what they are calling one major slip-up when he faced the House Intelligence Committee on Tuesday. Despite refusing to answer questions about his time in the White House, "Axios" reports that Bannon did admit speaking with other senior White House staffers about a now infamous June 2016 Trump Tower meeting.

ROMANS: That's where senior aides, Donald Trump Jr., Paul Manafort and Jared Kushner, met a Russian lawyer offering dirt on Hillary Clinton. CNN has also learned Bannon's attorney took breaks during the session to call the White House to determine which questions his client could answer.

MARQUARDT: A source familiar with the proceeding says that all the shots were called by the White House. That's a quote. But Chief of Staff John Kelly claims that the White House never told Bannon to invoke executive privilege. Bannon has struck a deal with special counsel Robert Mueller, agreeing to be interviewed by his team instead of testifying before a grand jury.

ROMANS: Meanwhile, former Trump campaign manager Corey Lewandowski, he had his turn in front of congressional leaders on Wednesday. He left them frustrated, too.

We get more from Manu Raju on Capitol Hill.

(BEGIN VIDEOTAPE)

MANU RAJU, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Good morning, Christine. And now yet another contentious day before the House Intelligence Committee after Corey Lewandowski, the former campaign manager, declined to discuss some key topics of the committee wanted to press him on, namely those topics that occurred after he left the Trump campaign back in 2016.

Now, Lewandowski said he was unprepared to discuss some of these issues. This is according to Adam Schiff, the top Democrat in the Committee, who raised concerns about the fact that Lewandowski would not discuss these matters and also will not discuss whether or not President Trump himself talked to him about the testimony that he delivered to the House Intelligence Committee yesterday.

[04:40:03] Schiff said this is unacceptable.

REP. ADAM SCHIFF (D), CALIFORNIA: Mr. Lewandowski said that he was not prepared to answer those questions today, but that he would return to the committee at some later date to answer questions. This, in my view, is completely unacceptable.

RAJU: Now, this all comes as part of an effort by the White House to limit congressional testimony and limit what these people who are tied to the administration can say behind closed doors, because they believe it is keeping with past precedent. But Democrats in particular see this as an effort to obstruct the investigation.

(END VIDEOTAPE)

ROMANS: All right. Manu Raju, thank you so much.

All right. Apple just made a big promise. It is bringing its cash stashed overseas home, finally, because of corporate tax cuts, it gets a cheap rate to bring it up. It will pay $38 billion in tax on that cash it's been hoarding overseas.

And Apple vows to return the gift using the money it brings to create 20,000 jobs and invest $30 billion for new facilities. For years, Apple would not bring back its $252 billion in foreign cash. That is a lot of money.

That is until the change in the corporate tax code. The new rules mean Apple can no longer avoid paying tax on the foreign profits and bringing that cash home is a big win for the Trump administration. The president tweeting that I promise my policies would allow companies like Apple to bring massive amounts of money back to the United States. Great to see Apple follow through as a result of tax cuts.

In a statement, the CEO Tim Cook says Apple has a deep responsibility to give back to our country. Apple claims this new investments will add $350 billion to the economy over the next five years.

How much of that goes beyond what it would have spent anyway? That is unclear. Before the tax cut, spending was on track for $300 billion over the next five years. MARQUARDT: The president heads to the Pentagon today with a new U.S.

nuclear strategy along the way. Now, he's accusing Russia of helping North Korea. We're going to be live in Moscow, next.

(COMMERCIAL BREAK)

[04:46:09] ROMANS: So, President Trump using his score on the cognitive test to take a swipe at his Oval Office predecessors over North Korea. In an interview with "Reuters", he blamed Barack Obama, George W. Bush and Clinton for their approaches to the rogue regime and the growing nuclear threat.

MARQUARDT: He said, quote: I guess they all realize they're going to have to leave it to the president that scored the highest on the tests.

The White House position says that Mr. Trump scored 30 out of 30 on that cognitive test that he requested.

ROMANS: Today, the president meets with senior military leaders at the Pentagon with a new U.S. nuclear strategy on the table. Officials say the Pentagon is discussing a possibility of the nuclear strike if the U.S. is targeted in the non-nuclear attack.

MARQUARDT: And the president is now accusing Russia of helping North Korea evade sanctions aimed at the curbing their nuclear and missile programs. The president says that progress is being made with China's help, but it is effectively being undone by Moscow.

CNN's Paula Newton is live in Moscow with those details -- Paula.

PAULA NEWTON, CNN INTERNATIONAL CORRESPONDENT: Yes. And there is one thing that's clearly worrying the president, and that is those fuel apparently, those illicit fuel trades with North Korea. Fuel is the key part of this. The White House has been working hard to make sure China approved and accepted those sanctions against North Korean fuel. And now, President Trump saying that Russia may be in fact providing that fuel where China isn't.

I want to give you, though, the Russian reaction to this. They are speaking to task this morning. A Russian news service saying these accusations made by the United States are absolutely unfounded. Russia is fulfilling its obligations under the corresponding U.N. resolutions in full. That comment there from the deputy foreign minister.

But here's the thing, we have been covering this story here. My first report on this was in April. It was the U.N. spelled out exactly how Russia was violating the sanctions, and from Russia, they heard no response.

Now, I don't want to mischaracterize this. This was all on the level. But what is Russia trying to do here, they're trying to remind President Trump that look, if you want to solve that North Korean problem, you're not going to do it without us because as President Trump has already accused them, where China is now employing the anxious sanctions, we will pick up the slack.

It is difficult for the president. You know, he doesn't have the trading relationship with Russia that he has with China. He doesn't have the leverage. It will be very difficult to bring his influence to bear on Russia, especially with new sanctions against Russia looming from the Treasury Department at the end of the month.

MARQUARDT: All right. Paula Newton in a very foggy Moscow -- thanks very much.

ROMANS: All right. Secretary of State Rex Tillerson says he perceives a long-term open-ended U.S. presence in Syria. He says this prevents ISIS from gaining strength in Syria and limits Iran's influence. Secretary Tillerson also says the ongoing influence of ISIS requires a U.S. presence to avoid a repeat of the same kind of security vacuum that followed the U.S. withdrawal from Iraq in 2011, allowing ISIS to blossom. The secretary also called for patience on the diplomatic solution in Syria involving Bashar al Assad's departure.

All right. Forty-nine minutes past the hour.

Round two for Silicon Valley in Washington. This time, big tech is depending how it handles extremist content. CNN Money Stream is next.

(COMMERCIAL BREAK)

[04:53:49] MARQUARDT: In California, the parents charged with holding their children captive inside their home will appear in court today. David and Louise Turpin both now facing charges of torture and child endangerment. Police say the victims range in age from two to 29 years old. They were found in dark, filthy conditions. Some shackled and chained with padlocks.

ROMANS: Now, members of the family are speaking out. Louise Turpin's sister, Elizabeth Flores, telling ABC News the couple was so secretive, they wouldn't let her in even as she begged to see her nieces and nephews.

(BEGIN VIDEO CLIP)

ELIZABETH FLORES, SISTER OF LOUISE TURPIN: I asked for 20 years to Skype them. And I want them to know that they have family that they love whether they know us or not.

(END VIDEO CLIP)

ROMANS: The children are now free. They are recovering after one teenager broke out and called for help on a cell phone she found inside the home. Bail for the Turpins has been set at $9 million each.

MARQUARDT: Horrible story.

A freshman at the University of Alabama is no longer enrolled after posting two videos full of taunts and racial slurs on Martin Luther King Jr. Day.

(BEGIN VIDEO CLIP)

HARLEY BARBER: What is offensive? Because I said so. (EXPLETIVES DELETED).

[04:55:02] I don't care if it's Martin Luther King Day. (EXPLETIVES DELETED]. So everyone can (EXPLETIVE DELETED). I'm from New Jersey.

(END VIDEO CLIP)

MARQUARDT: That student has been identified as 19-year-old Harley Barber from Marlton, New Jersey.

ROMANS: Her vulgar video sparking a protest on the campus Wednesday. Demonstrators saying this happens far too often.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: This is not the first time. Really, something like this dramatically happens every year.

UNIDENTIFIED FEMALE: The fact she had friends encouraging this type of thing is just really shocking that nobody was in the back saying, hey, you know, that's not right.

(END VIDEO CLIP)

ROMANS: The University of Alabama calls the video offensive and deeply hurtful. Barber apologized on Wednesday telling "The New York Post" she said something really bad, that there was no excuse and she feels horrible. She plans to return home to New Jersey.

The thing about social media, it gives a mega phone to the ugliest and most ignorant thoughts and people.

MARQUARDT: But it also begs the question, why she felt compelled to post that as well?

ROMANS: Right.

MARQUARDT: All right. Well, airports getting back to normal following Wednesday's winter storm. Airlines forced to ground more than 1,800 flights were canceled yesterday and 800 today, mainly in Atlanta and North Carolina.

ROMANS: Today, the Deep South faces the deep freeze and much of the East Coast looks forward to a January thaw by the weekend.

CNN meteorologist Derek Van Dam has the latest for us.

(BEGIN VIDEOTAPE)

DEREK VAN DAM, AMS METEOROLOGIST: Good morning, Alex and Christine.

With the exception of the Pacific Northwest and great lakes, we are pretty much precipitation free across the U.S. The storm system that brought the snowfall to the Southeast yesterday has moved offshore but has left frigid temperatures in its wake. In fact, nearly 30 million Americans under a hard freeze advisory or warning this morning. All the way down to the Gulf Coast.

This is what it feels like as you step outside: 13 in Pensacola, Birmingham, 11, single digit wind chill values this morning as you step outside near Atlanta. Now, daytime highs warming to about 35 in Cincinnati, 31 for Detroit, 42 for the nation's capital.

But there is some light at the end of the tunnel. We will replace the cold weather as we head into the weekend. Great news for Southeast and East Coast. Check out this warming trend for Boston, 34 today, 49 by Saturday, and well above normal as we head into the weekend for New York City.

Back to you.

(END VIDEOTAPE)

ROMANS: All right. That's the weather. How about some money for breakfast?

Global stocks mixed after Wall Street with a fresh round of records. The Dow climbing more than 300 points. The Dow closing above 26,000 for the first time ever. It had briefly touched that milestone the day before.

Stocks rose on earnings and it has been a good season so far with just a few disappointments. Ford stock with the worst day since July of 2016 after a poor profit forecast.

Big banks are taking hits from the corporate tax cut. It lowers the value of the deferred tax assets. Bank of America, $3 billion one- time tax charge on nearly half profits. But don't worry, they knew this was coming and it's really good news for the banks going forward.

Speaking of banks, Goldman Sachs with the first loss in six years, again due to the short-term tax hit, as well as drop in trading revenue. This is hitting employees. They made 4 percent less than last year. Goldman stock has lagged to its top rivals like JPMorgan, Citigroup and Bank of America, up less than 10 percent in the past year.

Big tech is defending its handling of extremist content, claiming it is fighting terrorism with counter propaganda. Executives from Facebook, Twitter and YouTube were on Capitol Hill yesterday and they stressed to lawmakers the effectiveness of using A.I. to post posts from terrorists. They have gone beyond screening. They are now creating anti-terror content to counter hate message. This is round two for Silicon Valley and Washington. Late last year, Facebook, Google and Twitter were grilled to use their platforms to meddle in the U.S. election.

MARQUARDT: EARLY START continues right now.

(MUSIC)

MARQUARDT: There's bipartisan agreement on one thing. No one wants to give any ground. Under 48 hours to potential government shutdown, will one party blink or will the lights go out?

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I will have Mexico pay for that wall. Mark my words.

JOHN KELLY, WHITE HOUSE CHIEF OF STAFF: He has evolved in the way he's looked at things. Campaign to governing are two different things.

(END VIDEO CLIP)

ROMANS: Apparently, campaign promises are made to be broken. The chief of staff says candidate Trump was uninformed.

MARQUARDT: And new signs the White House tried to limit testimony when Steve Bannon went before Congress this week. But he did slip up revealing one detail about a critical issue in the Russia probe.

Good morning and welcome to EARLY START. I'm Alex Marquardt in for Dave Briggs. Always good to be with you.

ROMANS: Dave a little bit under the weather. But we're glad to have you as co-pilot.

[5:00:00] I'm Christine Romans. It is Thursday, January 18th. It is 5:00 a.m. in the East.