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EARLY START

White House Slams Judge... Again; Flynn in Legal Trouble; Trump's Tax Reform. Aired 4-4:30a ET

Aired April 26, 2017 - 04:00   ET

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


[04:00:09] DAVE BRIGGS, CNN ANCHOR: The White House pushing back with force after judge put a halt to the president's order on sanctuary cities. Why would the administration once again target a judge?

CHRISTINE ROMANS, CNN ANCHOR: Is legal trouble brewing for Michael Flynn? Top members of Congress say the president's former national security adviser may have broken the law by not reporting a big payment from Russia.

BRIGGS: And in just a few hours, we'll get to see the president's plan for tax reform. So, who stands to gain? Who stands to lose? How will this all get paid for? Will it get paid for?

That is the key question this morning, right?

ROMANS: How much will it cost? Tax cuts are never cheap. Tax reform is never easy and this administration going right into that.

BRIGGS: And that's all will be the big story of the day.

Welcome back to the princess and the frog and his throat what we call EARLY START. I'm Dave Briggs.

ROMANS: And I'm Christine Romans.

I'm the princess? You're the frog?

BRIGGS: I can be a princess at times. But the frog is in my throat.

ROMANS: It is -- well, Princess Dave Briggs.

It is Wednesday, April 26th. It is 4:00 a.m. in the East.

Let's begin this morning with the White House reaching for an old playbook slamming a federal judge who has blocked an executive order and vowing to appeal. This time, it's Judge William Orrick temporarily halting enforcement of the president's executive order on sanctuary cities. The president says his order would withhold billions of dollars from jurisdictions that dod not cooperate with immigration.

BRIGGS: Orrick found that San Francisco and other jurisdictions suing to overturn this order could face, quote, "immediate and irreparable harm if it were enforced." He also singled the legal challenge to the executive order is likely to be upheld once the case is fully heard.

The White House first steered clear of attacking Judge Orrick but overnight put out a statement that went straight at him.

ROMANS: It called the case one more example of the egregious overreach by a single unelected district judge, adding, "Today's ruling undermines faith in our legal system and raises serious questions about circuit shopping. But we are confident we will ultimately prevail in the Supreme Court."

Our coverage begins this morning with CNN's Jeff Zeleny. He's at the White House for us.

(BEGIN VIDEOTAPE)

JEFF ZELENY, CNN SENIOR WHITE HOUSE CORRESPONDENT: Christine and Dave, the White House is trying to show accomplishment this week as it closes in on the 100th day of the Trump presidency.

Something else, though, is stacking up as well -- legal setbacks. That ruling on Tuesday from a federal judge in California about sanctuary cities is the latest in the legal setbacks for the president's immigration agenda. Now, he signed an immigration executive order five days into taking office. Now, a federal judge on Tuesday ruled simply that they cannot do that. It exceeded his authority.

Now, the White House is vowing to appeal this. Chief of Staff Reince Priebus told me they will take this all the way to the Supreme Court. But it is another sign of the tests and the limits of presidential authority.

Now, this White House so far has signed 26 executive orders since taking office in these first 100 days. They are signing even more this week. Now, that's a record for any president. But, again, they are also seeing the limits of presidential authority and powers because the travel ban and now this have been turned aside by federal judges -- Christine and Dave.

(END VIDEOTAPE)

BRIGGS: Thank you, Jeff.

Now, this is the second time President Trump's own words have come back to haunt him in court. As with the travel ban, the judge looked at the president's own rhetoric, noting what he said about defunding sanctuary cities, contradicted what government lawyers were arguing in court about withholding only a limited amount.

ROMANS: Judge Orrick wrote this, "The president has called it, quote, 'a weapon' to use against jurisdictions that disagree with his preferred policies on immigration enforcement."

The president and his lawyers disagree about what constitute sanctuary jurisdiction. The lawyers had a more narrow definition saying it would apply only to jurisdictions refusing to share information required by law and to certain Homeland Security and Justice Department grounds.

BRIGGS: Now, Judge Orrick was skeptical, calling that interpretation, quote, "toothless".

Now, in the wake of his ruling, the Justice Department says it will continue to enforce grant requirements and compliance with the law.

ROMANS: All right. The main event today in Washington, the Trump administration will roll out its new tax plan. The president probably won't be there, but these guys will -- the Treasury Secretary Steven Mnuchin, and National Economic Director Gary Cohn. They will present this long awaited plan.

As I've been saying all week, the administration has been light on details and many questions still remain. Will we get those answers today? We hope. For example, will this focus on corporate tax cuts first?

An administration official says Trump will slash the tax rate to 15 percent for all businesses, including those pass-through businesses in which owners report profits. These are small businesses. They don't pay 35 percent corporate tax rate.

[04:05:00] They use, you know, their personal taxes. For those firms, that's a tax cut from 39.6 percent to 15 percent, which leads my second question. Will it be real tax reform or just tax cuts?

This is not the same thing. Comprehensive tax reform involves tradeoffs that pay for any proposed cuts. So far, the treasury secretary has suggested economic growth would offset the cost of tax cuts. Most tax experts say there is little evidence that works. So, expect him to be grilled about that today.

And, finally, what's in it for the middle class? The treasury secretary repeatedly said middle class tax relief is a priority, but analysis of some of the president's earlier tax proposals heavily favor the top 1 percent and actually raise taxes on millions of middle income families. So, that will be very key to see how that comes down here today.

Will it be real, legal -- you know, it looks like the border adjustability is out.

BRIGGS: It looks like that's gone.

ROMANS: And that was a big, big debate between retailers and manufacturers.

BRIGGS: And the House, too. The House wanted that.

ROMANS: So, we'll see what the deficit hawks and folks who have been crafting tax policy have to say about the president's principles that will be laid out today.

BRIGGS: Yes, "The New York Times" piece about the Laffer curve, which has been brought back from some 40 years ago. That's again -- growth will pay for all the additional debt that we'll be taking on.

Anyway, a legal battle may be looming for former National Security Adviser Michael Flynn. The two top members of the House Oversight Committee raising serious concerns about payments made to Flynn by the Russians and whether he broke the law. While the committee was able to review some classified documents related to Flynn, they did not get to review others. But they had expected.

The White House declined to provide documents related to Flynn that the oversight committee had sought for review.

We get more now from CNN's Manu Raju.

(BEGIN VIDEOTAPE)

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

Now, the House Oversight Committee brought (ph) the bombshell announcement, announcing that Michael Flynn, the former Trump national security adviser, may have broken the law by not disclosing in his security clearance form payments he received for a 2015 trip to Moscow, paid for by RT, that's the Kremlin-based television network that actually had actually paid Michael Flynn up to $45,000 to appear at that event in Moscow in 2015. Him not disclosing that allegedly on that 2016 security clearance form. Also not disclosing, and not getting permission for receiving payments from the Russian entities as well as Turkish entities as required by the law, something that he has to do as a former military officer.

Yesterday, Jason Chaffetz, the chairman of the House Oversight Committee was pretty blunt about the prospects of Mr. Flynn possibly breaking the law.

REP. JASON CHAFFETZ (R-UT), CHAIRMAN, HOUSE OVERSIGHT COMMITTEE: Personally, I see no information or no data to support the notion that General Flynn complied with the law and that is he was supposed to seek permission and receive permission from both the secretary of state and the secretary of the army prior to traveling to Russia to not only accept that payment but to engage in that activity.

As a former military officer, you simply cannot take money from Russia, Turkey or anybody else. And it appears as if he did take that money.

RAJU: Now, Michael Flynn really the center of a number of investigations on Capitol Hill. One the Senate Intelligence Committee which is looking at the broader issue of Russia meddling in elections and campaign ties that occurred between Trump officials and Russian officials, a cyber campaign that was launched under the orders of Vladimir Putin to influence the elections. Michael Flynn's role in that central to the Senate Intelligence Committee's investigation -- Dave and Christine.

(END VIDEOTAPE)

BRIGGS: Manu, thank you.

Flynn's lawyers say his client is not hiding anything and claims he briefed the U.S. Defense Intelligence Agency about his paid trip both before and after this trip. He also claims Flynn answered all questions that were posed by the DIA during those briefings.

ROMANS: All right. The Trump border wall no longer standing of a bill to fund the federal government. The White House budget director says the president is willing to sign a bill that does not include money to begin construction on border wall so that a government shutdown can be avoided.

While backing off his demand, the president says, for him, nothing has really changed.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: The wall is going to be built, folks. Just in case anybody has any question, the wall is going to get built and the wall is going to stop drugs and it's going to stop a lot of people from coming in that shouldn't be here and it's going to have a huge effect on human trafficking, which is a tremendous problem in this world, a problem that nobody talks about, but it's a problem that's probably worse than at any time in the history of this world. Human trafficking, what's going on. The wall is going to get built.

(END VIDEO CLIP)

ROMANS: Of course, we at CNN has a whole program -- whole initiative about human trafficking and do stories about human trafficking.

[04:10:00] It's interesting that illegal immigration across the border has actually been going down over the past ten years. And 60 percent of the drugs coming into this country come in through legal commercial travel, through trucks across the border. So, some issues about the border wall, and some of those issues -- even the border wall funding off the table for now, obstacles of getting a spending bill passed by the deadline Friday remains.

Let's get more on that from CNN's Phil Mattingly.

(BEGIN VIDEOTAPE)

PHIL MATTINGLY, CNN CONGRESSIONAL CORRESPONDENT: Dave and Christine, four negotiators trying to keep things open after Friday night, some good news, the border wall money, that is now no longer in the negotiation. That's a big deal going forward. Democrats made very clear they would not support anything that had that funding inside of it and Democrats are needed to pass this bill in the Senate and probably the House as well.

But that doesn't mean the problems are resolved. At the center right now is Obamacare subsidies, these cost reduction subsidies that insurance companies more or less require in order to be able to function opinion in the exchanges. These are subsidies that the House Republicans have actually sued over, but understand that they more or less need to don't exist in order for the exchanges to operate.

There's one problem. President Trump, he's not so sure about that. Because of that, Democrats trying to force this money into the funding negotiations, Republicans very wary of this, even as they acknowledge that it's a necessary kind of entity that has to be in there -- Dave and Christine.

(END VIDEOTAPE)

BRIGGS: Phil, thanks.

While both sides fight over how to fit health care into President Trump's first budget, key Republicans taking steps to advance a broader repeal and replace effort. They've actually taken the critical step of circulating some legislative text for a new bill. They hope that that would trigger another round of health care talks before the president's 100th day in office.

A draft amendment obtained by CNN shows where the GOP may be headed, Christine.

ROMANS: That's the French versions of the Republican.

The draft would allow states to seek waivers to weaken several key Obamacare provisions like protections for patients with pre-existing conditions. The measure is designed to bridge the gap between the conservative House Freedom Caucus, Mark Meadows, and the more moderate head of the so-called Tuesday Group, Tom MacArthur.

There is little evidence, though, the math has changed to get a new healthcare bill through the House.

Also on the agenda today, the entire U.S. Senate gets a White House briefing on the North Korean threat. What's in store there? A live report next.

(COMMERCIAL BREAK)

[04:16:27] BRIGGS: Something very unusual is happening in Washington today. We can say that virtually every day, though. Virtually every U.S. single senator will be on a White House grounds for an all hands briefing on the standoff with North Korea. The briefing will be led by top officials, including Defense Secretary James Mattis and Secretary of State Rex Tillerson. The president himself may not show up. The White House says if he does come it will be a, quote, "brief drop by."

That has a lot of president's critics concerned that this meeting is nothing more than a giant photo-op. But Republicans are pushing back, insisting it does have value as a show of force.

ROMANS: And an interesting new development this morning, the U.S. military observing significant activity at a North Korean nuclear testing site. New digging effort at a tunnel suggesting another nuclear test is not imminent.

CNN's Paula Hancocks is tracking the latest developments live from Seoul.

Good morning, Paula.

PAULA HANCOCKS, CNN INTERNATIONAL CORRESPONDENT: Hello, Christine.

Well, there's satellite imagery is the way we find out exactly what's happening, that Punggye-ri site. We've heard 38 North, a tracking group in the U.S., already has said it's primed and ready for nuclear test number six, but this U.S. defense official now suggesting that the test may not be imminent.

So, it really is a case of when not if according to most experts. So, remember, just a few days ago, we saw what appeared to be a volleyball game happening outside of that particular area. So, North Korea is still keeping the world guessing as to when it will carry out its nuclear test.

Here in South Korea, we know that THAAD, the U.S. missile defense system, those elements for that system have now been taken to the location where they will be set up, South Korea security defense officials saying by the end of this year, although we've heard earlier from some U.S. officials they say they want to it be operational as soon as possible. Some local residents protesting against that being there.

And, of course, we're now seeing this tit for tat massive military drills on the U.S.-South Korean side and, of course, on the North Korean side. I went to a military drill with the U.S. and South Korean, a massive show of force, which the U.S. says is defensive, it's annual and it is routine. But, of course, it's imagines that will be lost on North Korea.

North Korea having its own massive military drill on Tuesday. They said it's largest ever combined fire demonstration they say for the 85th anniversary of the founding of the military, the KPA -- Christine.

ROMANS: All right. Paula, in South Korea, for us -- thank you this morning for that.

BRIGGS: A dangerous close call between a U.S. Navy destroyer and an Iranian revolutionary guard ship in the Persian Gulf. Defense officials say the USS Mahan was forced to alter its course Monday in response to what it called a provocation by the Iranian vessel. It came within a 1,000 yards of the warship with its outward weapon systems manned.

Officials say that Mahan fired a flare but no warning shots. Second time this year the U.S. and Iran have been at an intense standoff in the Gulf.

ROMANS: All right. The U.S. voicing objections after airstrikes by Turkey targeting U.S. allies in the fight against ISIS. Why was the strike carried out now? We're going to go live to Istanbul next.

(COMMERCIAL BREAK) [04:24:06] BRIGGS: American officials say they are deeply concerned about a series of strikes by turkey targeting U.S. allies fighting ISIS. It's a delicate situation as all sides have to carve out influence in the complex battle against the terror group.

Journalist Andrew Finkel live for us in Istanbul.

Good morning to you, Andrew. What's the latest on these strikes?

ANDREW FINKEL, JOURNALIST: Well, Turkey has certainly put the cat among the pigeons by these joint air strikes at either side of the Syria and Iraqi border late Sunday night.

Now, they are now basically trying to defend these attacks. They say the attacks were very much aimed at preventing these mountainous regions from becoming a base in a campaign against Turkey, about preventing Kurdish separatist from operating there. But Turkey's allies in the anti-ISIS coalition are saying that this was, in fact, the opposite, that they were striking at a Syrian-Kurdish force which is vital to the defense against ISIS.

[04:25:11] So, they say basically that they are undermining the fight against ISIS. Turkey is saying, well, we did this to protect ourselves and our own interests. And the Turkish minister for European affairs has really reacted with some alarm to the fact that the U.S. military are now visiting the site, the camp site, where the attacks were, Dave.

BRIGGS: Andrew, what about the timing here? Might this have anything to do with that referendum that gave President Erdogan those new swiping new powers?

FINKEL: Well, that is a possibility. The referendum was a week before these attacks. That the result of that referendum, as you say, gave the Turkish president incredible new powers. But in a curious way, it has weakened him international.

Now, yesterday, the Council of Europe decided to put Turkey on a monitoring list. They say that it really has abandoned these paths to democracy.

So, Turkey is feeling very defensive. It's trying to prove its strategic importance by basically, you know, saying that it has the will and ability to protect its own interest. So, Turkey is coming out fighting at a time when the rest of the world has put the spotlight on it.

BRIGGS: It could further complicate things for President Trump after calling to congratulate Erdogan.

Andrew Finkel live for us -- thank you.

ROMANS: All right. Another legal ruling against the White House is met with another assault, an evisceration of the judiciary in return from this White House. We'll tell you what the White House says and what it plans to do about funding for sanctuary cities. (COMMERCIAL BREAK)