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EARLY START

Intelligence Intervention: Trump Talks with Intelligence Chief; Senate Passes Bill to Repeal Obamacare; Tillerson Grilled At Confirmation Hearing; Tillerson Targets Beijing. Aired 4:30-5a ET

Aired January 12, 2017 - 04:30   ET

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


(COMMERCIAL BREAK)

[04:31:16] CHRISTINE ROMANS, CNN ANCHOR: Breaking overnight: a remarkable move from the national intelligence chief. What did he say in a phone call to the president-elect hours after Trump ripped the intelligence community again?

JOHN BERMAN, CNN ANCHOR: Also overnight, the Republicans with the first move to repeal the Affordable Care Act. An early morning vote sets everything in motion.

ROMANS: And a long tough day before the Senate for the Donald Trump nominee for secretary of state. Why one Republican senator could determine whether Rex Tillerson become the next top diplomat?

All right. Good morning, everybody. Welcome to EARLY START. I'm Christine Romans.

BERMAN: I'm John Berman. Nice to see you. Thirty-one minutes past the hour right now.

And breaking overnight: what must have been one heck of a phone call between President-elect Donald Trump and the Director of National Intelligence James Clapper. Clapper said he placed the call following a new round of insults and accusations hurled at the by the president- elect.

Now, CNN reported that intelligence officials gave Mr. Trump a two- page summary of an unverified dossier that claims of Russia has compromising information about Mr. Trump. BuzzFeed released the 35- page dossier, something CNN specifically did not do because the allegations could not be confirmed.

Now, the president-elect without denying he received the two-page report lashed out.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT-ELECT: I think it was disgraceful, disgraceful, that the intelligence agencies allowed any information that turned out to be so false and fake out. I think it's a disgrace. I say that and say that. And that's something that Nazi Germany would have done and did do. I think it's a disgrace.

(END VIDEO CLIP)

ROMANS: All right. So, late last night, National Intelligence Director James Clapper released a statement. He's describing his phone conversation with the president-elect. He says, he conceded that, quote, "the leaks that have been appearing in the press are corrosive and damaging."

He said he took issue with Trump's accusation the intelligence community leaked details that appeared on BuzzFeed. Again, details CNN did not report.

Quote, "I emphasize this document is not a U.S. intelligence community product and I do not believe the leaks came within the IC, shorthand for intelligence community. The IC has not made any judgment that information in this document is reliable and we did not rely upon it in any for our conclusions. However, part of our obligation is to ensure that policymakers are provided with the fullest possible picture of any matters that might affect national security."

Now, that last line certainly implies that CNN's reporting was accurate, that Trump did receive a two-page summary of intel about Russia's alleged compromising information, and all this barely scratches the surface of the news volcano that erupted at Trump's press conference.

Let's begin now with CNN's Jim Acosta. He's got the very latest from New York.

(BEGIN VIDEOTAPE)

JIM ACOSTA, CNN SENIOR WHITE HOUSE CORRESPONDENT: John and Christine, Donald Trump lashed out at the media, including this news organization, over reports that the Russian government may have compromising information on the president-elect. At a news conference, Trump blasted the reports as fake news.

But the president-elect appeared to accept the intelligence community's finding that Russia unleashed a hacking operation intended to harm Hillary Clinton. Here's what he had to say.

TRUMP: As far as hacking, I think it was Russia. But I think we also get hacked by other countries and other people. And I can say that when we lost 22 million names and everything else that was hacked recently. They didn't make a big deal out of that.

ACOSTA: Trump took on other topics, defending his plan to place his vast business holdings in a trust run by his sons. He also told reporters that there will be an Obamacare replacement bill ready as soon as the GOP Congress votes to repeal the health care law.

[04:35:04] And he vowed once again to build a wall on the border and Mexico pay for it, something Mexico says it will never do -- John and Christine.

(END VIDEOTAPE)

BERMAN: All right. So, overnight, Anderson Cooper pressed Trump's senior advisor Kellyanne Conway on the Russian intelligence report. She would not address the issue if the president-elect received the information from officials.

(BEGIN VIDEO CLIP)

KELLYANNE CONWAY, TRUMP SENIOR ADVISOR: Anderson, your sources are not correct. The fact is --

ANDERSON COOPER, CNN ANCHOR: You are saying in that intelligence briefing, there was no information in any of the documents that -- of that two-page summary?

CONWAY: So, two things on that. Number one, we don't discuss the classified information that is presented in intelligence briefings.

COOPER: Well, you just said it was true.

CONWAY: But, Anderson, if you want me to talk, I know CNN is feeling the heat today.

COOPER: I think you guys are feeling the heat.

CONWAY: What heat do we feel? That you've got this raw information, this complete ridiculous fake news, actually just fake, it's not even news.

COOPER: It has been backed up by multiple sources, but other news agencies.

(END VIDEO CLIP)

ROMANS: This afternoon, top officials hold a closed-door briefing with members of the Senate to discuss the latest on Russian hacking of the 2016 election.

So, how is all of this received by the Kremlin?

Let's bring in senior international correspondent Clarissa Ward, live in Moscow this morning.

And I know there has been talking and tweeting from Kremlin spokesman about all of this -- Clarissa.

CLARISSA WARD, CNN SENIOR INTERNATIONAL CORRESPONDENT: That's right, Christine. A lot of tweeting, a lot of talking, a lot of chittering as well. Russian people are certainly enjoying the spectacle of the Donald Trump press conference.

But the Kremlin is very much presenting these reports as being deeply politicized and attempt to discredit Donald Trump, to poison the well with Russian-American relationship, ahead of the anticipation warming of relations. We heard from the foreign ministry which essentially charged that this report was somehow the fault of the Obama administration.

They said, quote, "It seems that Obama's administration is trying to destroy everything within the U.S. and within American society. All of this story is the Obama administration's revenge against Trump."

We've also been hearing some rather colorful tweets from some of Russia's top lawmakers. They essentially are looking at this as the liberal media, as they would call it, attempting to take on Donald Trump ahead of him assuming office in just over a week. We heard from one particularly colorful member of the Duma here.

One member called Aleksey Pushkov who wrote, "Liberal media in the United States have been conducting for a year and a half an info war against Trump and then they are surprised his relationship with him is bad. But what you sow, you shall reap." And he went on to say that the main intrigue of January will be to see what the coalition of Trump's enemies create to undermine his political legitimacy next -- Christine and John.

ROMANS: So, stay tuned. Clarissa Ward in Moscow for us, thank you this morning for that.

BERMAN: All right. Just a moment ago, you heard our senior White House correspondent Jim Acosta say that President-elect Trump lashed out at CNN during his press conference. Watch this exchange between Jim and the president-elect over the Russian intelligence report.

(BEGIN VIDEO CLIP)

ACOSTA: Since you are attacking our news organization. Can you give us a chance to ask a question?

TRUMP: Not you. Not you. Your organization is terrible.

ACOSTA: You are attacking our news organization. Can you give us a chance to ask a question?

(CROSSTALK)

TRUMP: Go ahead. Quiet. Quiet.

ACOSTA: Mr. President, can you say categorically --

TRUMP: Go ahead. She's asking a question. Don't be rude.

ACOSTA: Mr. President-elect, can you give us a question? You are attacking us! Can you give us a question?

TRUMP: Don't be rude.

ACOSTA: Can you give us a question?

TRUMP: No, I'm not going to give you a question.

ACOSTA: Can you say categorically --

TRUMP: You are fake news.

ACOSTA: Sir, can you say categorically that nobody -- now, Mr. President-elect, that's not appropriate.

TRUMP: Go ahead.

(END VIDEO CLIP)

BERMAN: By the way, Cecilia Vega of ABC News finished the question that Jim was trying to ask, which is, did anyone from the Trump campaign have contact with Russian officials during the campaign? Not a real direct answer either.

Jim tell us, Jim Acosta does, that the president-elect's spokesman, Sean Spicer, threatened to expel him from Trump Tower if he tried to ask another question at this news conference.

ROMANS: Breaking overnight, the Senate passing what Republicans are calling the Obamacare repeal resolution, pushing a day one issue of the incoming Trump administration. Folks, this went just a few hours ago this thing wrapped up. The budget blueprint for dismantling President Obama's signature legislation passed along party lines, 51- 48. Again, just a few short hours ago.

Republicans are using the same reconciliation approach to repeal the law as Democrats used to pass it years back. Now, Republicans repeatedly turned down Democrats' amendments, even ones they say they want, in an eventual replacement plan, despite some passionate pleas from across the aisle.

(BEGIN VIDEO CLIPS)

SEN. SHERROD BROWN (D), OHIO: Thanks to Medicaid and Children's Health Insurance Program, CHIP, two programs made stronger by the Affordable Care Act.

[04:40:07] Ninety-five percent -- think about it -- 95 percent of children in America now have affordable comprehensive health insurance that covers annual physicals and dental care in hospital states. Why would we want -- why would we want to move backwards instead of building on that 95 percent?

SEN. KIRSTEN GILLIBRAND (D), NEW YORK: Imagine becoming pregnant and having your insurer drop your coverage because you no longer are economic or you cost too much money? Imagine being a cancer survivor and then having your coverage dropped because you've survived cancer? If you love women and you love your mothers and daughters and wives, please, do not unwind the Affordable Care Act.

(END VIDEO CLIPS)

ROMANS: The Republican argument for dismissing those concerns is the amendments aren't relevant to the budget resolution. The measure now heads to the House which could consider the bill as early as Friday.

BERMAN: What a packed calendar of confirmation hearings on Capitol Hill today. At 10:00 a.m., senators will begin taking up the nominations of Dr. Ben Carson to be HUD secretary. Mike Pompeo for CIA secretary.

Also this morning, a confirmation hearing for defense secretary nominee, General James Mattis. The retired general needs a special waiver to be confirmed. He just told lawmakers he won't be available to answer questions at a waiver hearing scheduled for this afternoon.

All of this happens in the wake of the fiery hearing of Rex Tillerson, Donald Trump's pick to be secretary of state. The former ExxonMobil CEO tried to win over critics, including Republicans, in some cases, especially Republicans, skeptical over his relationship and opinions of Vladimir Putin.

I want to go live to Washington and bring in CNN national security reporter Ryan Browne.

And, Ryan, you know, Trump insiders had been telling me that Rex Tillerson was going to charm the Senate when he went up there to Capitol Hill for these hearings. In at least in one important case, a Republican Senator Marco Rubio, not sure that was the case.

RYAN BROWNE, CNN NATIONAL SECURITY REPORTER: That's right, John.

You know, it was a rocky day for Tillerson. I think he came in, expecting tough lines of questioning from the Democrats. He got questions about his role at ExxonMobil and avoiding sanctions with regards to countries like Iran.

He was also away from Donald Trump on some issues, including the Trans Pacific Partnership. A trade agreement that Donald Trump railed against, TPP, he railed against on the campaign trail. He said he didn't oppose it.

He was a little bit more open to the idea of climate change. He started off with a tougher line on Russia than we've been hearing from Donald Trump himself.

(BEGIN VIDEO CLIP)

REX TILLERSON, SECRETARY OF STATE NOMINEE: I think the important conversation we have to have with them is, does Russia want to now and forever be an adversary of the United States? Do you want this to get worse or does Russia desire a different relationship? We're not likely to ever to be friends, I think as others have noted, our value systems are starkly different.

(END VIDEO CLIP)

BROWNE: But, John, as you mentioned, he did run into a little bit of trouble with Senator Marco Rubio, a Republican, who questioned Tillerson whether he thought that Vladimir Putin had committed war crimes with Russia's military intervention in Syria. He also questioned him about human rights in China, in Saudi Arabia and the Philippines. He didn't appear happy with that answer. Listen.

(BEGIN VIDEO CLIP)

MANU RAJU, CNN SENIOR POLITICAL REPORTER: Are you prepared to be the one Republican vote no?

SEN. MARCO RUBIO (R) FLORIDA: Well, I'm prepared to do what's right. I'm not analyzing it from a partisan standpoint. The president deserves wide latitude in their nominations. But the more important the position is, the less latitude they have. It's like a cone. It's really wide and some positions, as it gets higher and higher, the discretion becomes more limited and our scrutiny should become higher.

(END VIDEO CLIP)

BROWNE: Given the narrow Republican majority in the Senate, a defection by Rubio would be a huge blow to Tillerson's chances to become secretary of state. Now, also appearing today will be Ben Carson for HUD secretary, as well as Mike Pompeo for the director of the CIA, as well as you mentioned, General James Mattis will be appearing before the Senate Armed Services Committee to see if he can become the next secretary of defense.

BERMAN: And, of course, the House takes up the issue of this waiver, how Mattis needs to get a waiver in order to serve as defense secretary.

You spent a lot of time overseas, Ryan. Explain why this is an important issue, the idea of civilian control of the military?

BROWNE: Absolutely. I mean, it goes back to the founding of the republic. You know, George Washington took off his uniform to become the first president of the United States. But also, it was kind of in law with the creation of the role of the secretary of defense in 1947.

So, there is actually a prohibition of seven years that a general has to be out of uniform. The Pentagon is a big place. There's a lot of -- thousands and thousands of civil employees. You want to make sure the general is not too beholden to one of the services, you know, they come from the Marine Corps, that they're not favoring that group.

So, it's a long running tradition. That being said, you know, General Mattis is very popular. He actually co-wrote a book on the issue of civil military relations. So, we can expect a waiver coming up in these votes. But I think in this particular issue will raise a lot of debate in the upcoming hearings.

BERMAN: No question. It's an important issue to discuss. And that is what they are doing. But very unlikely that it will get in the way of him becoming defense secretary.

Ryan Browne, thanks so much for being with us.

BROWNE: You got it.

ROMANS: All right. The president-elect is putting his Supreme Court pick on fast track. [04:45:01] Trump says plans to announce the Supreme Court to replace

the late justice Antonin Scalia within the first two weeks of taking office. Trump told reporters at that conference on Wednesday, that his team has met with numerous candidates and indicated he is working off a list of 20 nominees he released during the campaign.

All right. The president-elect said he would be, quote, "the greatest jobs producer God had ever created." He keeps touting one stat about the job market that is flat out wrong. We'll tell you what it is and show you the facts, next.

(COMMERCIAL BREAK)

ROMANS: All right. Donald Trump firing another warning yesterday to companies that plan to move jobs to Mexico.

(BEGIN VIDEO CLIP)

TRUMP: What really is happening is the word is now out that when you want to move your plant to Mexico or some other place and you want to fire all of your workers from Michigan and Ohio and all these places that I won for good reason, it's not going to happen that way anymore. You're going to pay a very large border tax.

(END VIDEO CLIP)

ROMANS: We've heard him talk about this border tax before, but like make no mistake: Donald Trump is changing the tone for U.S. businesses. And these companies, these CEOs are already adopting.

But, you know, he hurts his argument when he says things like this.

(BEGIN VIDEO CLIP)

[04:50:02] TRUMP: Ninety-six million really wanting a job and they can't get. You know that story. The real number, that's the real number. So, that's the way it is.

(END VIDEO CLIP)

ROMANS: So, Donald Trump is right when he talks about these manufacturing workers whose jobs have left for overseas and they can't find a place in a new economy. But when he says there are 96 million Americans wanting a job, that's just not true. There are not 96 million Americans who want a job.

And the people advising him and giving him that context around the labor market, I think it really undermines what he is trying to do. Here are the facts. There are 93.8 million people who are not in the labor market. They're not in the labor market, for whatever reason, right? Well, the vast majority of them, people like my grandma, don't want a job.

Forty-four million are retired, 15.3 million are disabled, 13.3 million are stay-at-home parents, right? They're taking care of family members. Another 13.2 million are in college or job training. Retired, out of the labor market because they are taking care of their kids, they're taking care of an elderly family member. They're home for a reason, for a choice.

And another 13.2 million are in college or job training. So, retired, they are out of the labor market because they're taking care of a family member, or they're in school. That leaves about 8 million people somewhere on the sidelines of the labor market, 8 people are wanting a job, not 96 million. Add to that, the 7.5 million unemployed.

BERMAN: Underemployed, right?

ROMANS: Unemployed. So, you've got 16 million Americans who want a job and can't get a job. That's including the underemployed. That's just 1/6 of the 96 million Trump claims.

There are issues with too many part-time jobs, real issues with wages that are not where they were a decade ago or two decades ago. Real issues with the millions of jobs open right now, but the companies say they can't find workers. So, those are the policy things that are so important to attack, but throwing out 96 million people out begging for a job, the numbers not true.

BERMAN: It's false. It's a false number.

ROMANS: Right.

Check out this aerial footage of the Space Needle in Seattle for New Year's Eve. Isn't that beautiful? So nice. This is a drone taking beauty shots. Lots of drones out there.

Yes, beautiful until, boom, it crashes on the roof of the monument and where crews were preparing for the fireworks display. No doubt, it gave the workers a scare. The video retrieved from the Space Needle staff from the memory card. Police are said to be investigating.

Have you seen the drones with the first person view and you can fly them?

BERMAN: No, I'm not a giant -- I'm always afraid they're going to fall on my head. So, no.

ROMANS: I'm actually afraid you're going to lose them in the back or something --

BERMAN: Somewhere this morning, Dan Fouts is crying. San Diego announcing they are moving to Los Angeles for the 2017 season. This is according to multiple sources, including ESPN and "L.A. Times".

The chargers would be the second NFL team in less than a year to relocate to Los Angeles, following the Rams from St. Louis. Remember, two years ago, Los Angeles had no football teams. As of this year, next year, they will have two.

Now, the Chargers, they did begin in Los Angeles, in the AFL in 1960, before moving to San Diego a year later. What I don't understand is if Los Angeles couldn't support a single

football team two, three years ago, how it can support two football teams now? You don't need that.

ROMANS: I lose sleep over this question.

BERMAN: These are big questions. Dan Fouts wants to know the answer.

Rex Tillerson's confirmation testimony. He had a lot to say about a lot of important issues. Big words about Russia that are causing controversy, but also what China and what China is doing in disputed territory. We are live in Beijing with reaction, next.

(COMMERCIAL BREAK)

[04:46:46] BERMAN: All right. Critics of Rex Tillerson, the nominee to be secretary of state, claim that he was too fuzzy on issues surrounding Russia and Vladimir Putin during hearings yesterday on Capitol Hill. But the same could not be the said for his tough talk on China. A lot of people think the Trump administration plans to take a hard line against Beijing for its trade policies, also the military buildup on the South China Sea.

And Tillerson's testimony seems to back that up.

(BEGIN VIDEO CLIP)

TILLERSON: The island-building in the South China Sea itself in many respects, in my view, building islands and putting military assets on those islands is akin to Russia taking of Crimea. It's taking of territory that others lay claim to.

(END VIDEO CLIP)

BERMAN: Let's get to Beijing and bring in CNN's Matt Rivers.

Matt, we are getting some new reaction from China to these statements.

MATT RIVERS, CNN CORRESPONDENT: We are. And China MOFA officials, Ministry of Foreign Affairs officials are not really rising to the bait here. They're pretty much sticking to their line, which is to say that any issues in the South China Sea should be resolved in a bilateral way between the countries, between the different claimants with different territorial claims in the South China Sea. It's a line we've heard used before from Chinese officials.

The question that Mr. Tillerson's testimony brings up. He has gone a step farther than the president-elect has by talking about wanting the United States to prevent China from accessing those artificial islands that they had built over the last several years.

Now, how exactly he would do that is a question left unanswered. But many people are wondering, would the United States Navy actually would go so far as to blockade these islands to prevent the Chinese from getting to the islands that they have built up and militarize over the last several years. That's an answer to the question we don't have right now. But it does leave many people wondering, could we be facing an early crisis in what has been a rocky start to the relationship between China and the United States under the incoming administration?

BERMAN: That's right. That relationship beginning almost immediately after the election. Matt Rivers in Beijing, thanks so much.

ROMANS: All right. It is that time of hour when we get a check of CNN Money Stream.

Investors still have a lot of questions after Donald Trump's news conference yesterday. It's putting the Trump rally at risk. Dow futures are down. Shares in Europe retreating. Stocks in Asia closing mostly lower.

Forget Trump rally. For drug stocks, it was a Trump slump. Watch the timing, drug stocks tanked around 11:20. That is when Trump said in his press conference, the industry has been disastrous. He vowed to cut drug prices and stop drug companies from moving overseas.

One of America's top health insurers is dropping coverage of the pricey EpiPen. Cigna says the name brand version of the life-saving drug is just too expensive. You may have recalled the outrage earlier this year over the price, which is up 400 percent since 2009. Cigna will cover the generic version, which launched in December. It's about the price of the name brand version, about $300 for a two-pack.

Six Volkswagen executives indicted for their role in that emission scandal. The U.S. Justice Department says it has significant responsibility overseeing engine development, serving on the management board. Those who were indicted are all German citizens. They are charged with conspiracy to defraud the U.S. and American customers, and violating the federal Clean Air Act, which regulates harmful emissions from cars.

Looks like it also finalized the deal we told you about yesterday. It will pay the Justice Department $4.3 billion in fines and take the very unusual step of pleading guilty to criminal charges.