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EARLY START

Trump's New Flexibility on Wall Funding; Trump's Tax Plan; State Dept. Removes Blog Post Promoting Mar-A-Lago; North Korea Conducts Large Firing Drill; Senate Dems Frustrated of Russia Probe. Aired 4:30-5a ET

Aired April 25, 2017 - 04:30   ET

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


[04:30:08] CHRISTINE ROMANS, CNN ANCHOR: President Trump deploying his deal-making skills to the federal budget. He's willing to wait to fund the border wall for now. Will it be enough to avoid a shutdown?

The president ready to act on another key promise, slashing the corporate tax rate. How low does he want to go? Could it set up an intraparty battle over the debt?

And the State Department forced to pull down a post from its global site for embassies. Why was the government -- the United States government, promoting the president's private club, at Mar-a-Lago?

Welcome back to EARLY START. I'm Christine Romans. It is 30 minutes past the hour.

Dave Briggs is now resting his voice. We hope to have him back with us tomorrow morning.

President Trump this morning showing some flexibility on funding for his promised border wall as a deal-breaker in ongoing talks to fund the federal government past Friday's shutdown deadline. White House officials now signaling that an offer from Democrats for funding border security measures, rather than the wall itself, would be enough to satisfy the president.

Mr. Trump telling conservative journalists a private meeting that he's open to delaying funding for fall construction until September. So, there's no deal yet. But a strong sign the White House may not force a showdown over the wall as the Friday deadline for the funding bill nears.

This new wiggle room eases back earlier administration demands that at least sounded like the White House was insisting on funding for the wall as part of any deal to keep the government from shutting down. White House Press Secretary Sean Spicer put it this way to our Jim Acosta, who asked why wall funding was even an issue if Mexico is supposed to pay for it.

(BEGIN VIDEO CLIP)

SEAN SPICER, WHITE HOUSE PRESS SECRETARY: Well, I think, Jim, that the president has made very clear that, initially, we needed to get the funding going. And there's several mechanisms to make sure that that happens.

We feel very confident the government is not going to shut down. Number two, is I think the president has been clear in the past, about the fact that -- and this is not a new thing. He talked about this. That in order to get the ball rolling on border security and the wall, that he was going to have to use the current appropriations process. But he would make sure that that promise would be kept, as far as the payment of it.

(END VIDEO CLIP)

ROMANS: Some Democratic support in the House and especially the Senate, where 60 votes are required, will be needed to pass the spending bill. Senate Democratic Leader Chuck Schumer put out a statement late last night, saying, "It's good for the country that President Trump is taking the wall off of the table in these negotiations. Now, the bipartisan and bicameral negotiators can continue working on the outstanding issues."

The White House is floating the proposal to cut the corporate tax rate to 15 percent. Fifteen percent. Here's why -- the U.S. has the highest corporate tax rate among developed nations, at 35 percent. That's the advertised tax rate. The average worldwide is about 23 percent and critics will tell you this makes the U.S. less competitive.

They say it forces companies to use innovative tax practices and keep huge piles of cash overseas, instead of returning them home where they can build factories and support more jobs. But cutting the corporate tax rate won't solve these problems entirely.

Two reasons why: first, the effective corporate tax rate, what they really pay after loopholes is 14 percent. That's how much the big profitable companies pay between 2006 and 2012. That's according to the Government Accountability Office. And one in five large profitable U.S. corporations paid no tax at all.

Tax credits and loopholes allow the companies to legally reduce their tax burden. Now, if the administration leaves those in place, and reduces the corporate rate, well, revenue will simply plunge. That's the second issue.

Tax cuts are expensive. If companies pay less, individual taxpayers would be on the hook to make up the difference, or you run an awful lot of red ink. A Tax Policy Center study from last year which looked at Trump's initial 15 percent proposal, shows it will cost $2.4 trillion in lost revenue over the next decade. That's about $240 billion a year.

For some perspective, that's about the same amount the government spent on food stamps, jobless benefits and child nutrition.

So, the big question now, how will the administration pay for it? The proposal will have to be revenue neutral to pass as part of the budget process. And I can tell you deficit hawks and GOP are really concerned.

Another busy day ahead for President Trump, as he marches towards day 100 on Saturday. This afternoon, he hosts a roundtable with farmers and signs an executive order establishing a task force on obstacles that farmers confront.

We also expect Sonny Perdue to be sworn in as secretary of agriculture, after his confirmation Monday.

On the subject of the 100-day milestone that the president once emphasized, by the way, the White House now claiming it's not a big deal. Even as Sean Spicer touted early administration's accomplishments, he downplayed the focus on 100 days with a big qualifier.

(BEGIN VIDEO CLIP)

SPICER: When you look at the immigration piece in particular, border crossings are way down. The number of executive orders and pieces of legislation the president signed, I think we feel very proud of what we've been able to accomplish and fulfill the promises that he's made in the American people.

[04:35:07] But I think it's got to be kept in context and I think that's the resort of this artificial number that gets thrown out and we feel very good about what we've done as we head up to this 100 days. But I think you're going to continue to see a lot of action and a lot of results going into the second 100 days, the third 100 days, you know, all the way through.

(END VIDEO CLIP)

ROMANS: As a candidate, the president, Mr. Trump, aimed high, touting his, quote, "game-changing Contract with the American Voter," a contract laying out a plan for the first 100 days. Once in office, the president ran headlong into resistance from Democrats and the courts on several key initiatives.

The State Department removing a post from its Share America site, a post that promoted the president's Mar-a-Lago resort. The article posted on U.S. embassy sites around the world gave a visitor's guide to the, quote, "Winter White House", saying it's become well-known as the president travels there or hosts foreign leaders.

Officials taking down this post, saying, "The intention of the article was to inform the public about where the president has been hosting world leaders. We regret any misperception ad have removed the post."

The post was new fodder for critics concerned about conflicts with Trump's business interest. Mar-a-Lago has already seemingly benefitted from the Trump presidency. The club raising its initiation fee from $100,000 to $200,000 right after the election.

All right. Breaking overnight. North Korea's military staged a large scale artillery drill. That's according to a top military official in South Korea. It comes the same day North Korea celebrates the 85th anniversary of the founding of its people's army. This is just the latest in a series of recent escalations involving Pyongyang.

And now, a nuclear-powered American submarine, the USS Michigan arriving in South Korea. One U.S. military official describing it as a show of force. The arrival coming just hours after President Trump called for more sanctions against North Korea and had tough some words for Kim Jong-un.

I want to go live to Seoul, South Korea, and bring in CNN's Alexandra Field.

A lot of moving parts here. Bring us up to date.

ALEXANDRA FIELD, CNN CORRESPONDENT: Day-by-day, Christine. Right now, officials here in South Korea are closely watching what's happening on the other side of the border. They're the ones who confirmed that North Korea was participating in large-scale artillery drills.

Those drills prompted a meeting among the president's staff to discuss security in South Korea. We know there will be another meeting, high- level security issues, tomorrow in Washington, when President Donald Trump summons senators to the White House to me meet with the secretary of state and secretary of defense, along with other top administration officials to discuss what is happening here on the peninsula, the rising tensions that we have seen day after day, week after week now really. And now, the news of these artillery drills in North Korea coming not exactly at an entirely unexpected time. That is because this is a holiday in North Korea. It is the celebration, the anniversary of the founding of the KPA, the Korean people's army.

These holidays are days around which Kim Jong-un has in the past planned provocative measures, like ballistic missile launches. At this point, you're just seeing military training exercises however. But those training exercises are being carried out as the U.S. has sent one of its most powerful submarines to a southern port here in South Korea.

One official, as you pointed out, has said that it is a show of strength, a flexing of U.S. muscle. Others have described this as more of a routine stop, saying those submarines it's not to participate in the exercises, but that its mere presence does serve to underline the strength of the alliance between the U.S. and South Korea. And that it is meant to be something of a deterrent symbol against North Korea in this recent of rush of provocations, including that failed missile launch that you saw, just a bit over a week ago.

Analysts in the U.S. predict that North Korea is ready to pull off its sixth nuclear test at any moment. Washington closely watching. And just yesterday, President Donald Trump speaking to conservative journalists saying Kim Jong-un is perhaps not a very strong leader. No response from North Korea to those words. Everyone is watching, though, to see if they will attempt other provocative measures, timed to coincide with this holiday -- Christine.

ROMANS: All right. A very nerve-racking moment here on the peninsula. Thank you so much for that, Alexandra Steele. All right. Over here, the Trump administration hitting the Canadian

lumber industry with stiff tariffs, the first imposed by the Trump administration. The president threatened taxing imports on the campaign trail, mostly you heard him really striking out hard against Mexico. But it is Canada, his first move.

The Commerce Department slapping tariffs of up to 24 percent on five Canadian companies. All other lumber exporters face duties of nearly 20 percent. The decision is a response to claims that the Canadian government subsidizes homegrown companies, allowing them to sell in the U.S. at lower prices.

[04:40:02] This has been a bone of contention, by the way, since all the way back to the 1980s. This has gone all the way to the World Trade Organization. The companies denounce this decision, calling the accusations baseless. They say the move would hurt American home builders, most of $5.6 billion worth of lumber imported last year was used for home construction.

Commerce Secretary Wilbur Ross called it a bad week, a bad week for U.S.-Canada trade relations. That's something coming from a commerce secretary. He said in a statement, quote, "This is not our idea of a properly functioning trade agreement." This sets a tense tone as the U.S., Canada and Mexico prepared to renegotiate NAFTA. Trump has criticized the terms of that deal.

Again, a lot of attention paid this morning to the fact that it's Canada the target of the first tariffs of the Trump administration, not Mexico.

All right. There's new frustration among Senate Democrats investigating Russia's election meddling. Why they say things aren't moving fast enough. That's next.

(COMMERCIAL BREAK)

[04:45:09] ROMANS: Role reversal, you could say, in the investigation into Russia's election meddling. Sources tell us the House Oversight and Government Relations Committee will get a look at classified documents related to Michael Flynn's foreign contacts. But while the House investigation gets back on track, there's emerging partisan squabbling on the Senate side, weeks after they claimed to be the leading the more unified investigation.

Let's get more this morning from CNN's Manu Raju.

(BEGIN VIDEOTAPE)

MANU RAJU, CNN SENIOR CONGRESSIONAL REPORTER: Good morning, Christine and Dave.

Now, the Senate Intelligence Committee was supposed to be the committee that was going to conduct the investigation along a bipartisan basis. But what we've heard over the last couple of days have been complaints on party lines, particularly among from Democrats who believe that this investigation is moving too slowly from their likes and they want to move much quicker. They believe that this committee can and should immediately interview some of those Trump associates who apparently have connections, ties and contacts with Russian officials during the campaigns. And they also believe there should be subpoenas, something that the committee has not yet issued.

Yesterday, I had a chance to talk to Senator Ron Wyden, one of the top Democrats on the committee, who expressed serious frustration over the pace of the investigation.

SEN. RON WYDEN (D), OREGON: I think this must move more aggressively and particularly on the key issues, open hearings, following the money. And I have made it clear to the bipartisan leadership of the committee that this needs to move faster. And it moves more transparent.

RAJU: Now, Republicans are pushing back, saying, look, this investigation is proceeding. It's taking time to go through reams of data, including data that they just received from the intelligence committee. This has to be a thorough review in the words of Senator Susan Collins of Maine. And one senator, James Lankford, the intelligence committee Republican, also said, yesterday, said that even if there's no public report, a lot of things are happening in private.

The question is, will any of the Trump officials when they come testify before the Senate Intelligence Committee, will any of that be public? That's a question we just don't know yet -- Christine and Dave.

(END VIDEOTAPE)

ROMANS: All right. Manu Raju, thank you.

Randolph "Tex" Alles, a retired two-star marine general, expected to be named director of the Secret Service today. He's been serving as acting deputy commissioner of Customs and Border Protection. Alles takes over an agency plagued by embarrassing security breaches. Last month, a man jumped the White House pence, wandered the grounds undetected for more than 16 minutes.

Earlier this month, an agent on Mike Pence's detail was suspended for meeting a prostitute at a Maryland hotel.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: When you talk to individuals one-on-one, people -- there's a lot more that people have in common than divides them. But, obviously, it's not true when it comes to politics and our civic life. And maybe more pernicious is the fact that people just aren't involved. They get cynical. And they give up.

(END VIDEO CLIP)

ROMANS: He said political gerrymandering also had pushed parties further away from each other. The former president's next scheduled public event is May 7th, when he

receives the Profile in Courage Award from the JFK Presidential Library and Museum in Boston.

Ohio Governor John Kasich echoing the tone we heard from President Obama in that CNN town hall last night. The former Republican candidate for president addressing the political divide in America, clearly divisible in President Trump's approval numbers. Kasich says it's important for us not to retreat to our respective political corners.

(BEGIN VIDEO CLIP)

GOV. JOHN KASICH (R), OHIO: But I think this is sort of symptomatic. You know, I voted for him, I wear that uniform. I didn't vote for him, I wear a different uniform.

And I think people who voted for him who see things they don't like need to recognize that. And people who didn't vote for him have to recognize when he does something that's positive. I mean, we want -- we want to be for our president, because if we're tearing each other apart, nothing will ever get done.

(END VIDEO CLIP)

ROMANS: The Ohio governor tells Anderson Cooper, it's unlikely he will ever seek public office again.

Singer Elton John cancelling a run of upcoming shows in Las Vegas, after contracting a rare bacterial infection. According to a statement, Elton John contracted the infection during a recent South American tour and became ill on the flight home. He was hospitalized for treatment in the U.K. and released this weekend after an extended stay.

Elton John is expected to make a full recovery, a full recovery. He intends to return to performing in June. We certainly wish him well this morning.

Stocks, coming off one of the biggest rallies of the year, but it was NASDAQ that stole the headlines and is one small gain away from a milestone.

[04:50:02] We're going to get a check on CNN Money Stream next.

(COMMERCIAL BREAK)

ROMANS: Good morning. Welcome back.

A CNN exclusive now: a rare look at war-ravaged Raqqah. The last ISIS stronghold inside Syria and the next potential target for President Trump. These satellite images obtained from CNN, revealing ISIS flags and checkpoints and severed bridges. And they reveal the tactics ISIS uses to hide the movement of its fighters.

I want to bring in Nick Paton Walsh. He's the monitoring the latest developments. These latest pictures live for us from Irbil, Iraq.

They're certainly revealing about a place where -- you know, a place that the last stronghold for ISIS.

NICK PATON WALSH, CNN SENIOR INTERNATIONAL CORRESPONDENT: Absolutely, a place that's increasingly under siege now from the north and west and east. They're all coalition-backed Syrian rebel fighters closing in to the south, too, potentially encircling the city.

[04:55:04] It is really cut off. It is really very much I think the center of ISIS, repressive grip.

So, these images from space are kind of the closest of what you get to seeing objectively what's going on. And they show us checkpoints in the streets, manned by ISIS. An ISIS flag near the government building, they often used the headquarters, distinguishable because of the shadow that it casts around it. And also, too, the damage done by airstrikes, particularly here to one of the bridges that goes in and out of the city.

In fact, analysts saying, looking at the satellite images, many of the buildings that appear to be hit, are actually still standing but damaged badly by these precision strikes, so contained and precise. In their analysis, they appear to be.

But also, too, most intriguingly, the network of tarpaulins placed up around the city. These are huge nets, pieces of cloth, between buildings, designed to shelter ISIS fighters as they walk the streets, the crowded market area. Not from the oppressive sun of Raqqah in northern Syria, but from coalition drones, trying to find out where they are, to find where they congregate, which buildings they can hit those.

An interesting view from space, but the closest, frankly, we're going to see, until the coalition-backed fighters move in to liberate it, potentially in the months or even weeks ahead.

Back to you.

ROMANS: A remarkable, remarkable view from space of a city under siege.

Nick, thank you so much for that.

The president of Chechnya denying his country is conducting a brutal crackdown against gays. And the Kremlin says it has no reason to distrust him. Chechen leader Ramzan Kadyrov has reportedly vowed to cleanse the region of gay men by Ramadan on May 26th. And there are reports of hundreds of gay being rounded up, tortured and killed.

A Russian journalist who first reported the anti-gay crackdown has now gone into hiding, Elena Milashina, receiving death threats from Muslim clerics and political figures in Chechnya. The Chechen government pushing pack on claims of an anti-gay purge saying it's impossible because Chechnya has no gays. The U.S. Air Force sending its newest fighter jets right to Russia's

doorstep. A U.S. official tells CNN the move is part of a program set up by Russia annexed Crimea from Ukraine in to 2014. The F-35A stealth fighters are set to fly from the U.K. to Estonia, a NATO ally that shares a border with Russia, nearly 200 miles long. The F-35s are set to deploy to Romania, another NATO member. Both Estonia and Romania are wary of Russian aggression, following Moscow's annexation of Crimea.

All right. Let's get a check on money stream. All three major stock market averages having a great day yesterday, jumping 1 percent. It was because of the French election's first round and more talk of tax reform.

More gains in store today. Dow futures are solidly higher right now. Same thing for the S&P.

Stock markets in Europe are up, Asia, stock markets are up as well, mostly higher. And Paris turning down a bit this morning.

NASDAQ is nearing a major milestone, 6,000. That's 17 points away. That's just a quarter of a percent. It's also sitting at a record high right now.

The NASDAQ first hit 5,000 at the height of the dotcom bubble back in 2000. It took 15 years to make it back to that level and just more than two years to go from 5,000 to 6,000. So, some really interesting momentum there for tech stocks.

Check out some of the big names hitting all-time highs during trading Monday. Google, Facebook, Home Depot, Microsoft, McDonald's, MasterCard. These are wildly held stocks. They maybe part of your retirement account.

One hundred ninety-five other U.S. stocks hit all-time highs yesterday. The stock market is a gauge of potential corporate profits and investor confidence is high across many industries.

But the banking industry was king on Monday. Look at these gains. Morgan Stanley, up 4.2 percent. Bank of America, up 4 percent. J.P. Morgan Chase, Citigroup, a big jump as well.

It's a perfect environment for banks -- less regulation, rising interest rates and promise of tax reform, and renewed confidence among businesses. Big gains for banks.

EARLY START continues right now.

(MUSIC)

ROMANS: President Trump, looking to strike a compromise to keep the government open. He's said to be ready to wait to fund the border wall, at least for now. The president also ready to slash the top corporate tax rate. How low will he go? And what could stand in his way? And why is the State Department giving promotion to the president's

Mar-a-Lago resort? We'll show you the explanation for a very controversial article.

Good morning and welcome to EARLY START. I'm Christine Romans. It is Tuesday, April 25th. It is 5:00 a.m. in the East. Good morning, everyone.

President Trump this morning showing some flexibility on funding for his promised border wall, indicating it might not be a deal-breaker on ongoing talks to fund the federal government past Friday's shutdown deadline. White House officials now signaling that an offer from Democrats for funding border security measures rather than funding the wall itself, that might be enough to satisfy the president.