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Sources: Trump "Embarrassed, Pissed" Over Alabama Senate Race; GOP Tax Plan: Cuts For Middle Class, Corporations; IRS Shares Info With Special Counsel In Russia Probe; Roger Stone Defends Himself To House Intel Committee; Critics Slam Trump Administration On Puerto Rico Response. Aired 11-11:30a ET

Aired September 27, 2017 - 11:00   ET

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


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[11:00:17]

KATE BOLDUAN, CNN ANCHOR: Hello, everyone. I'm Kate Bolduan. It is only Wednesday, but it's already got the makings of a terrible, horrible, no-good, possibly, very bad week for President Trump.

His number one legislative agenda item, health care, comes up short for the third time. He starts a feud with the NFL and the league's response, defiance, locking arms and even kneeling in unity.

He's facing continued criticism now for a slow response to Hurricane Maria, as more and more devastating images come out of Puerto Rico. And Robert Mueller is now working with the IRS in his Russia probe to further zero in on key Trump campaign officials.

Now add to this list of headaches, this headache. The president's pick in the Alabama election last night, he just lost. Not Bob Mueller, listen to this.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Here is Judge Roy Moore, the next United States senator from Alabama!

(END VIDEO CLIP)

BOLDUAN: Alabama voters in the Republican primary chose firebrand Roy Moore, a hardline conservative with a history of controversy that follows him everywhere he goes, over the president's pick, Luther Strange. Despite not getting the president's endorsement, Moore does think he can win him over.

(BEGIN VIDEO CLIP)

ROY MOORE (R), ALABAMA SENATE CANDIDATE: I don't think the president knew me and I think that when he gets to know me that he'll understand that I do support a very conservative agenda for this country. And I think that he will back me.

(END VIDEO CLIP) BOLDUAN: And adding insult to injury here, the other big winner last night, Trump's former chief strategist, Steve Bannon. He campaigned for Moore and warned last night, this is just the beginning.

(BEGIN VIDEO CLIP)

STEVE BANNON, FORMER WHITE HOUSE CHIEF STRATEGIST: We're going to see in state after state after state, people that follow the model of Judge Moore, that do not need to raise money from the elites, from the crony capitalists, from the fat cats in Washington, D.C., New York City, Silicon Valley.

(END VIDEO CLIP)

BOLDUAN: All right. Let's start right there and CNN's Kaitlan Collins, she's joining me now from Birmingham, Alabama. Kaitlan, how is the president feeling this morning?

KAITLAN COLLINS, CNN WHITE HOUSE REPORTER: Not too good, Kate. We're told that the president is infuriated that the candidate he endorsed was defeated pretty easily here in Alabama last night by Roy Moore. He watched the returns as he flew back on Air Force One from a dinner in New York.

And during that ride, he vented his frustrations that people like senate Majority Leader Mitch McConnell and his other political advisers had not only told him to endorse Luther Strange in this race, but to come down to Alabama and campaign for him.

And sources tell our Jim Acosta that the president went to bed, quote, "pissed and embarrassed" over that loss. We know that he expressed some concerns about endorsing Strange long before he lost to Moore last night in Alabama, because he was an establishment candidate and the president thought he was too low-energy here.

But the president went forward with his endorsement because he felt that Strange had been pretty loyal to him during his short time here in the Senate. That he had supported the Trump agenda, but now that with this loss on his hands, the president feels like he was misled by his advisers, outdone by Steve Bannon, that former White House chief strategist who backed Moore in this race, and now he has won.

But the president seems to be distancing himself from this endorsement of Strange and blaming everyone but himself for his loss. He's deleted several tweets from yesterday, where he encouraged people to go out and vote for Strange, and that his endorsement of him had narrowed the gap between the two men in the polls ahead of the race.

So, it so seems like the president really wants to distance himself from this loss here -- Kate.

BOLDUAN: Sure does. He could have just gone the route of not endorsing and seeing how this pans out, but that's not what he chose to do. Kaitlan, great to see you. Thank you so much.

All right. Joining me now to discuss this week and beyond, Kevin Madden, a CNN political commentator and former adviser to Mitt Romney. Eric Beach is co-chair of "The Great America Alliance," a pro-Trump PAC that supported Roy Moore in this special election.

CNN political director, David Chalian is here, as well as CNN senior political reporter, Nia Malika Henderson. All right, Kevin, you get to be the final judgement on this. Who's having a worse week right now, Donald Trump or Mitch McConnell?

KEVIN MADDEN, CNN POLITICAL COMMENTATOR: Well, look, I think Donald Trump has an ability to sort of spin these to his advantage and I think just by the fact that he's deleting those tweets --

BOLDUAN: It's not going to change what he tweeted.

MADDEN: It's not going to erase anybody's memory, but I think he has an ability to sort of compartmentalize his losses and immediately turn to his next focus. And I think that's what he's going to try to do.

But, you know, I think the establishment, what I think is going to be the big message out of this, which a lot of Republicans are going to be sort of analyzing today, is just how much the D.C. baggage weighs down primary -- could way down folks in the primary.

And if you think about the fact that Luther Strange was only in D.C. for like eight months and was tagged as the D.C. establishment guy.

[11:05:07] BOLDUAN: His final pitch was, I've been in D.C. less times than Donald Trump has been in D.C.

MADDEN: Right, exactly. So, I think that will also embolden a lot of other new primary challengers around the country. So, that is going to be a tough thing for Mitch McConnell, if he wants to advance his agenda on tax reform, and still trying to take a run up the hill on health care again.

BOLDUAN: Well, Eric, Donald Trump on Friday, he said, if Strange would lose, when he went and did his rally, he said, people are going to view this as a terrible, terrible embarrassment for Donald Trump. Can it be viewed as anything other than that?

ERIC BEACH, REPUBLICAN STRATEGIST: Yes, absolutely. The reality is this, Donald Trump has done nothing but try to work with the establishment, work with the Senate leadership on trying to get reforms passed through both the Senate and the House. And he's been -- it's been deterred by both Mitch McConnell in the Senate and Paul Ryan in the House. So, look, he listened to --

BOLDUAN: And also Luther Strange? I mean, I'm just talking specifically about this race.

BEACH: Yes, but specifically about this race, you talk about Donald Trump's losses, he doesn't have many losses when it comes to campaigns. And you know, last night, the reason why we went in for, you know, for Roy Moore, was because he understood and he basically is going to reinforce that Trump coalition agenda that the establishment has railed against, since he's been elected. You talk about illegal immigration. Roy Moore is closer to Donald Trump than Luther Strange was. You talk about better trade policies. You talk about U.S. job creation. There is an undercurrent inside of Washington, D.C. that has been, you know, really going very strong against Donald Trump.

And you know, our job is to make sure that we try to put in candidates that will reinforce this Trump coalition agenda that is much bigger than people think.

BOLDUAN: David, are we watching, to Eric's point, are we watching a new stage of the reshaping or re-centering of the Republican Party with this special primary?

DAVID CHALIAN, CNN POLITICAL DIRECTOR: Well, we're certainly watching a battle for what that future is. You know, I actually -- I don't think Donald Trump suffers much here, right? I kind of agree with what was being said. Considering most of his supporters, no doubt, were Roy Moore supporters here, quite a lot of them.

BOLDUAN: That's why this whole thing is so confusing.

CHALIAN: Right. I don't think he suffers much here, but I do think what Kevin was talking about, and this is so important to understand, Kate, there are two theories of the case here.

You have the Mitch McConnell, D.C. establishment, smart political strategist who worry on the Republican side that if, indeed, Roy Moore-style candidates start primarying their incumbents in places like Arizona or Nevada, that could -- the only two states, basically, where Democrats have real opportunity on the map.

That, indeed, if you put up a more conservative, outside the mainstream kind of candidate, that there's a chance you actually are vulnerable there. Versus the Steve Bannon world view, which is no, no, no, are you guys not paying attention?

Putting the guy on the ballot as the nominee who everyone says can't win in November, did you watch 2016? Donald Trump now has president in front of his name and so Roy Moore may soon have senator in front of his name.

And that this is the way the Republican Party should march forward. Those are just two totally different approaches and we are going to see them play out time and again, unless, you know -- and folks like Bob Corker, the Republican from Tennessee, look at that and say, I want no part of this battle.

MADDEN: We might be seeing the Todd Akinization of the 2018 election already.

CHALIAN: Except Todd Akin may win some of these, Kevin, that's the --

BOLDUAN: Where Todd Akin failed last time, Todd Akin may not fail this time. BEACH: But that's the narrative of the political consultancy class who thinks, OK, there's 40 percent on the Republicans, 40 percent, let's just moderate and see who gets in the middle.

What they don't understand is that there's an intensity to these new and low-propensity voters who have come into our party for the first time in 2016. They have no idea because he worked against them the entire last cycle.

They have no idea what motivates these voters to come out and turn out. And our responsibility as the Republican Party is to make sure that we are --

BOLDUAN: But here's the thing about -- what you're saying is pushing the Trump agenda forward. Health care -- I want to narrow in just on health care. What Trump wants more than anything, Nia, is to get wins on the board.

Luther Strange was a reliable yes vote for policies that were being put forward, that would be wins for Republicans. Roy Moore just said this morning that he would with Rand Paul on health care. He would have been another "no" vote.

Donald Trump wanted Graham/Cassidy to be approved. He was a yes vote. So how are things going to get any better or smoother in terms of getting legislative wins with Roy Moore in the Senate?

NIA MALIKA HENDERSON, CNN SENIOR POLITICAL REPORTER: Right, I mean, that's a complicating factor here. Luther Strange, loyal to not only Donald Trump, but loyal to Mitch McConnell, right? Would basically go along with the majority of the party, the Republican Party.

So now you have a Roy Moore here, who is a maverick, who's an independent, you know, who is this self-styled sort of Christian populist.

[11:10:06] And not only in terms of sort of his rhetoric, the kind of birtherism, the anti-gay rhetoric that I think will probably continue. Not only is that going to be, I think, troublesome to media and the Republican Party, the kind of moderates and centrist Republicans and business wing of the party.

But you're going to have this other factor of him not being a reliable vote on any number of policy issues, if they bring back health care, they keep saying they want to, what are they going to have to do to bring him into the fold?

You know, I imagine, if you are a Donald Trump, who seem not to know Roy Moore's name a few days ago. You imagine that he is reaching out to him or soon to do that. He already did that on twitter, and said, you know, he wants Roy Moore to win. He said that he would campaign for him.

So, we'll see what happens, but it certainly complicates, I think, Mitch McConnell's already very difficult life and job as the leader of this very rambunctious and fractured Republican Party. BOLDUAN: Yes, and Kevin, with that in mind, how is Mitch McConnell approaching his job differently today than yesterday, with everything that -- I mean, if you want to talk about everything that he got hit with, right?

The candidate he supported, Luther Strange in Alabama, he lost. Then on the same day, health care was pulled once again, and Bob Corker, one of his close confidants, he announced that he is retiring.

MADDEN: Well, first of all, I think he has two main priorities. The first is to maintain a majority and the second is to advance his agenda. I think on maintaining the majority, there is just a rule, which is, this is why we have primaries. The voters get to decide them.

So, he's already, last night, you saw the NRSC and Mitch McConnell put out statements embracing the fact that Roy Moore is their candidate and they're going to support him. To try to bring them together and let them see that they have a common vision when it comes to advancing the president's agenda.

And that's where I think Mitch McConnell is still an ally. So many Trump people criticize Mitch McConnell, but nobody knows how to put the votes together better than him. He has had problems with Susan Collins and others who are voting reflective of their states, but, you know, that is the charge that he has right now.

BOLDUAN: The charge that we have right now is trying to make sense of it all and I don't know if we can. But that's -- great to see you guys. Thank you all so very much. Really appreciate it.

All right. So, the president is heading this afternoon to the great state of Indiana, no bias here on that great state, to unveil more detail on his next top target, tax reform. And right now, we have new details on that Republican tax plan and what it could look like.

CNN's chief business correspondent, co-host of "EARLY START," Christine Romans is here with that. Hi, Christine. This has been worked on behind closed doors between Republicans in Congress and the White House, for months.

CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: Yes.

BOLDUAN: So what do we know now? What's new?

ROMANS: So, this is a framework. They're hoping to get your taxes down to a postcard-size return every year and it's dramatically simpler. It is real tax reform. Dramatically lower tax rates for business, fewer tax brackets for regular people, and a bigger standard deduction and a bigger child tax credit.

Let me show you those tax brackets, 12 percent on the lowest so that would be a 2-percentage point increase, but they're doubling the standard deduction. So, the first $24,000 of income would be tax free on the federal level. Middle class tax bracket of 25 percent and lowering the top bracket to 35 percent for the rich. That standard deduction goes up to $24,000. This would instantly give millions of Americans extra cash in their pocket.

Now the proposed business tax cuts, every business leader I've talked to is very happy about this, a corporate rate of 20 percent. A pass- through rate, that's for small businesses, essentially.

BOLDUAN: But a corporate rate that they're already paying, effectively they are paying much less than 35 --

ROMANS: They're going to get rid of other deductions and simplify the whole thing, that's the important thing, and also going to a territorial tax system. So, what you sell and the profit you make overseas is taxed at a territorial rate.

A much more simple and better, you know, it's better profit wise for these companies. So, those are sort of the basics here. The president has said several times that he would like to raise taxes on the wealthy.

When he starts talking about taxes, he'll start to ad lib about raising taxes on the wealthy. We're told that the tax-writing teams will have the option, potentially, of adding a fourth tax bracket if that becomes something politically --

BOLDUAN: But then he has to get Republicans onboard.

ROMANS: He's got to get Republicans onboard who want offsets, right, who don't want to blow up the tax code. But we're told that he really wants to cut taxes for everyone. He wants this to be tax cuts, mostly for business, for the middle class so that he can sell that.

BOLDUAN: And where this has run into a wall before is, are those -- is everything paid for, as we say, revenue neutral?

ROMANS: Yes, dramatic scoring or --

BOLDUAN: Dynamic --

ROMANS: Dramatic dynamic scoring --

BOLDUAN: It will be dramatic, I promise you that.

ROMANS: Dynamic scoring is sort of this idea that the growth will be so great that it will pay for all of this. This is expensive and you will have Republicans who will say, no, no, we have to pay for this --

BOLDUAN: Yes, giving everyone something they want, that's an expensive proposition, hence why this is a tough thing to pull off.

ROMANS: And the reason why it hasn't been done by 1986 because every single line on the tax code has a constituency. You know, the mortgage interest deduction apparently that's going to stay, but the state and local tax deduction, something really important in California, New York, New Jersey, they're going to get rid of that. You'll have some state lawmakers screaming about that.

[11:15:11] BOLDUAN: And a huge, important caveat here. This is just the beginning and can Republicans pass this all on their own? Do they need Democrats onboard? Stand by to stand by on that one. Great to see you.

ROMANS: Dramatically stand by.

BOLDUAN: We stand by dramatically every day. Like this dramatic tease.

Coming up for us, exclusive new details on the Russia investigation, CNN has learned now that the IRS is now sharing information on top Trump campaign officials with Special Counsel Bob Mueller. We have details on that, coming up.

Plus, a growing humanitarian crisis in Puerto Rico. The images you cannot turn away when you see this. It is devastating. The president says he's getting good marks for the administration's response. Why, then, are the critics saying that the administration has denied a request that would make it easier to get much-needed supplies to the island and quickly? What's going on there? Stay with us.

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[11:20:05]

BOLDUAN: A CNN exclusive now for you. The IRS is sharing information with Special Counsel Robert Mueller's team about key Trump campaign officials. This after initially putting up something of a fight.

CNN's Shimon Prokupecz has all the details on this. Shimon, do we know exactly what they're sharing? What are you learning?

SHIMON PROKUPECZ, CNN CRIME AND JUSTICE PRODUCER: Well, Kate, we're told information that's being shared by the IRS would obviously include anything tax return related, things like real estate and banking records, and metadata, such as what your taxes were or were not filed.

Now, the IRS is extremely restricted. They are very restricted in what they can share and you know, most of their stuff would require specific subpoenas, so that they can share some of the information.

It's likely, Kate, that they do have a lot of the tax information and the financial information surrounding Paul Manafort and Flynn, and Michael Flynn, the former national security adviser, who now seem to be at the center of the Mueller probe.

BOLDUAN: Why did they -- some of your reporting is that initially, they did not want to cooperate with the Mueller probe. Why not?

PROKUPECZ: Right, so the two sides were at odds for months over the scope of the special counsel's investigation. You know, this started as a Russia meddling investigation. It has now broadened. And Mueller's investigators wanted information on several people associated with the Trump campaign, including Manafort and Flynn. And we're told by sources that the IRS had concerns over the broad requests from the special counsel's office.

And specifically, in Manafort's case, they've been asking for records that go as far back as 2006, well before Russian meddling and well before the special counsel even started this investigation.

BOLDUAN: Does that fit the scope? That is, of course, something that has become a bit of a political debate, as well. What does this mean for Donald Trump's tax returns?

PROKUPECZ: Well, it's not clear whether the special counsel has asked or obtained the president's tax returns. To do that, you know, the special counsel would need permission from Rod Rosenstein over at the Department of Justice, who's overseeing this investigation, and it would require specific kind of subpoenas.

We do know that there is information at special counsel from Paul Manafort and Michael Flynn and other people associated with the campaign, but specifically as to the president, we don't know.

And it's very restrictive. This information requires all sorts of permission and it's highly, highly sensitive, and you know, for Mueller to have it would require a lot of steps.

BOLDUAN: Yes, and rightfully so. The IRS doesn't want to be handing out everyone's financial information, just by any request. Great to see you, Shimon. This could be a big step. We'll see where this takes us.

Joining me now, Democratic Congressman Jim Himes of Connecticut. He is a member of the House Intelligence Committee. Of course, this is one of the congressional committees investigating Russia's meddling in the 2016 election. Congressman, thanks for coming in.

REPRESENTATIVE JIM HIMES (D-CT), HOUSE INTELLIGENCE COMMITTEE: Good morning, Kate.

BOLDUAN: So, as we just heard from Shimon, we know now that Mueller is getting some information from the IRS. Is your committee getting the same information from the IRS?

HIMES: No, we're not. These are separate investigations. In fact, we're doing very little coordination with the FBI investigation, which is appropriate, of course. The FBI investigation is at the end of the day about whether laws were broken.

And it has to be insulated from any sort of partisanship, any sort of politics, whereas the investigation we're doing in the Congress is about very specifically the Russian hack, how it happened, whether there was any cooperation. We're not about law enforcement or issuing indictments.

So, it's very important that these processes be separate. That said, it's not surprising to me that there is -- and this is an allegation, IRS cooperation here, one of the hallmarks of this administration, from the very beginning, has been a refusal to separate the president's many, many businesses from the president's official activities.

And of course, that is, you know, Kellyanne Conway encouraging people to buy Ivanka's products. It's the president holding official meetings at his many, many resorts. When the administration itself says, we're not drawing an adequate line, nobody should be surprised when an investigation that starts on official questions around Russia can easily morph into, is there something weird happening in these businesses.

BOLDUAN: Of course, we don't know exactly what information is being passed along, we'll wait to see that. Let's talk about where your investigative committee has been focused. You all met with Roger Stone, just yesterday, a long-time friend of Donald Trump. After your conversation with him, do you have any reason to doubt what he says, which is, there is no collusion?

HIMES: Well, he's not qualified to make a blanket statement that there is no collusion. He did say that, but what he is qualified to say and what he said very, very explicitly was that I did not collude.

In fact, he went even further to say he doesn't have Russian contacts or Russian friends. That all may not be true. That, of course, does not dispose of the question of whether people otherwise associated with the administration or the campaign might have.

I will say he appeared voluntarily. He is, of course, a colorful character. You know, there were accusations leveled at a number of members of the committee, which is a little bit unusual, but I will say that he did answer the questions.

[11:25:09] There are -- I walked out with a few questions unanswered that I don't want to get into, but, you know, investigations take time and we will follow up.

BOLDUAN: Of course, one of the things that many members have been talking about is that he did not divulge or share with you his go- between, his contact in connection with Wikileaks and with Julian Assange.

Do you -- Adam Schiff, others have said that if he doesn't provide that information to the committee, he'll be subpoenaed to provide that information. What do you -- why -- what's your sense, why he did not want to answer that?

HIMES: Well, and I want to be a little careful. All of us are trying to sort of preserve the integrity of this investigation without divulging details. In this particular case, of course, Roger Stone wanted this to be an open hearing.

He wanted to have access to the transcript, that the transcript be released publicly. And so, I will say that I agree with the other members that you talked to, that there are still some very specific questions about exactly the nature of how he was communicating with Assange, with Wikileaks, how it was that he appeared to, and he denied that he predicted the John Podesta leaks.

He had what I would characterize as a sort of somewhat twisted process to explain that, but, yes, at the end of the day, we did not get a clear picture and --

BOLDUAN: Wait, wait, wait, Congressman, when you say "twisted process," you didn't believe the explanation he gave you?

HIMES: Well, I will say that it was incomplete. I don't want to accuse the man of lying. Of course, lying to Congress is a very serious offense, but I think both Republicans and Democrats would agree that his explanation was incomplete.

BOLDUAN: I do want to ask you about the government's response and it ties into congressional responsibility here to the devastation to Puerto Rico from Hurricane Maria. Even though this sounds technical, it's become a very big issue, the Jones Act.

It's a long-standing law that allows only U.S. ships to transport goods within the United States. After Hurricane Irma and Harvey, the government waived the act and the requirements and the restrictions there, making it cheaper and faster to get help to victims after those hurricanes.

As far as we know, the Department of Homeland Security says that they have not received a request to do the same for Puerto Rico, meaning it hasn't been done. Do you know why?

HIMES: Well, in general, the response to Puerto Rico has not been as fast as it should be. It was not as fast, quite frankly, it was not as intense as the response to Texas and Florida. And that's very, very disturbing, because, of course, Puerto Rico is an isolated island and actually the damage to the power grid, to the people there is actually in the long run more dangerous than what we saw in Florida and in Texas.

Look, the Jones Act is a very complicated piece of legislation, but it must be suspended now for a limited period of time because if we don't do that, there could be a British-built or a Chinese-built ship full of food, full of relief supplies that would be prohibited by law from landing at Puerto Rico.

And that, you know, forget about the complexities of the Jones Act, that from a humanitarian standpoint is outrageous. So, it is time to really ramp up the intensity and the focus, both on the part of the military, the military as aviation assets and other assets that could be really alleviating the situation in Puerto Rico.

It was too late, but finally the hospital ship that the United States military maintains is on its way. The response to date has not been intense, specific, or focused enough.

BOLDUAN: We'll see exactly -- a little bit -- a lot of confusion around the Jones Act, especially today, even explaining what it is. Quite frankly, we'll get it into a little later in the show. Congressman, it's always great to have you on. Thank you.

HIMES: Thank you, Kate.

BOLDUAN: Coming up for us, the president patting himself on the back, somewhat, for the government's response to the crisis in Puerto Rico. We heard what Congressman Himes thinks about the government's response to the crisis in Puerto Rico so far.

He has been facing criticism that it's been too little and too slow, but also about whether or not this administration has denied a request that would make it easier to get relief to the islands. Why is there confusion around this? Well, something doesn't add up. We'll get into it. That's coming up.

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