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House Republicans Gut Independent Ethics Watchdog; Trump Threatens GM over Mexico Auto Factory; Trump Slams House GOP for Ethics Changes; China: Efforts to Resolve N. Korea Threat "Obvious". Aired 10-10:30a ET

Aired January 3, 2017 - 10:00   ET

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


[10:00:16]

CAROL COSTELLO, CNN ANCHOR: And good morning. I'm Carol Costello. Thank you so much for joining me. House Republicans challenge their own party leaders taking action that some say undermines Donald Trump's pledge to drain the swamp. GOP lawmakers meeting behind closed doors. They vote to gut the Ethics Office and put it under the control of the very members it's supposed to police. Full approval is expected on this first day of the new Congress. Phil Mattingly live on Capitol Hill to tell us more. Hi, Phil.

PHIL MATTINGLY, CNN CORRESPONDENT: Hey, Carol. Look, to get some context here and some background. This independent entity was created in 2008 in a wake of series of Congressional scandals. And the entire point of it essentially was to operate outside of the reach of lawmakers and then provide recommendations after their investigations. That looks like it's about to change. Obviously, as you noted, GOP lawmakers behind closed doors last night, voting to put that independent entity again under the thumb of lawmakers. Now Democrats, obviously, have fired back quickly, but Republicans defending it. Take a listen to one of each.

(BEGIN VIDEO CLIP)

REP. STEVE COHEN, (D) TENNESSEE: I haven't seen it running amok and I don't know -- I certainly know its bad optics for this to be the first thing for this Congress to do. This was a Democratic provision put in by Nancy Pelosi after there was corruption on both sides of the aisle. I think the American public is not -- the rating of Congress is very low. This will certainly make it lower.

REP. MARSHA BLACKBURN (R) TENNESSEE: My hope is, what you'll see is more transparency. You will see individuals with the opportunity to know who is accusing them, and that we will see matters resolved in a more timely manner.

(END VIDEO CLIP)

MATTINGLY: Now, obviously, Marsha Blackburn, the congresswoman who was just speaking, voted on that proposal, was in that closed door meeting. What you are hearing repeatedly, what I'm hearing from sources who were in that meeting in the room is basically lawmakers were complaining this independent entity was overzealous. That it was going after lawmakers based on anonymous tips that some lawmakers inside the Republican conference thought were politically motivated. It was -- kind of the exact description of what we heard from one of President-elect Donald Trump's close advisors, the same president- elect who talked about draining the swamp, Carol, over and over and over again throughout the campaign. This seems to fly in the face of that. But this is what Kellyanne Conway had to say.

(BEGIN VIDEO CLIP)

KELLYANNE CONWAY, TRUMP ADVISOR: Gutting, it doesn't mean that there won't be a mechanism. I don't want you viewers to be given the impression, George, that there's no way for complaints to be reviewed. But there's also been overzealousness in some of the processes over the years. And we don't want people wrongly accused and we don't want people mired in months if not years of ethical complaint review.

(END VIDEO CLIP)

MATTINGLY: Now, Carol, there are Republicans who are defending the move on a number of different levels. A lot like what you heard Kellyanne Conway say there. The point is, look, there is still the House Ethics Committee. The House Ethics Committee has always been in position to investigate charges. But the biggest issue now is they want to make sure that there are no such things as overzealous investigations, that there is due process in place, complaints that the OCE was not necessarily living up to those standards before this point.

That said, Democrats, this is an issue that is more or less put on a tee, many of them still trying to kind of cover up their wounds in the wake of the election. They are already having a call to talk about their responsiveness, Carol. They believe this is an issue that they can win on. Expect them to attack immediately. Carol?

COSTELLO: OK. So, just to be clear, this other committee that supposedly is going to investigate ethics violations, that can't -- they can't investigate anonymous tips.

MATTINGLY: Yes. They can't investigate -

COSTELLO: So, if you are bringing a complaint against a powerful lawmaker, you probably would want to be anonymous. So, how is that making things tougher ethically within the halls of Congress?

MATTINGLY: Look, it's not. And I think anybody who would say, otherwise, is not necessarily being truthful for you. I think, what Republicans are saying in their defense right now is they are trying to find a balance. A balance that they thought became skewed with this independent entity over the course of the last couple of years. It's worth noting, the Republicans who stood up in the closed door meeting and defended this proposal are Republicans that had, at one point or another, been under investigation.

So, obviously, they had a reason to do this at this point. But Carol, when you look through the amendment text line by line by line, it is difficult to make the argument that this is in any way going to increase kind of tougher ethical requirements on Capitol Hill. Republicans, though, are going to have to defend that going forward.

COSTELLO: And just by the way, you know, the ethics commission as it stands right now, did have some successes, right? Representatives William Jefferson, Bob Ney, Duke Cunningham. They were all investigated. They were all convicted of bribery charges and all of them served jail time. So, it's not like it's done nothing, right?

MATTINGLY: Look, I think that's an important point to note while there have been complaints. And it's worth noting, there have been complaints on both sides of the aisle that this committee was operating without respect to due process. But this is a committee and an independent staff and an independent operation that got results. It did what it was put in place to do back in 2008. And it was put in place for a very good reason in the wake of a very difficult time on Capitol Hill with a number of different scandals. This committee on several levels has worked. This committee will now no longer take the form that it did as it was working, Carol.

[10:05:16] COSTELLO: All right. Phil Mattingly reporting live from Capitol Hill. Well, this controversy swirls around the gutting of the Ethics Commission and what it means when it comes to Trump's promise to drain the swamp. Another Trump tweet that has nothing to do with ethics but General Motors. This morning, the president-elect tweeted this, "General Motors is sending Mexican made model of Chevy Cruze to U.S. car dealers tax-free across border. Make in U.S.A. or pay big border tax." Cristina Alesci is following this. Good morning.

CRISTINA ALESCI, CNN CORRESPONDENT: Good morning. This is Trump, another example of Trump going after a company for essentially manufacturing outside of the United States and selling products back in. What he's talking about is a specific model. It's a smaller car, Carol, and just to put this into context, you know, Chevy responded today in a very carefully worded statement, being careful not to offend the president but also to clarify the facts around this. And there is a version - there is a model of the car that is manufactured here in the United States in Ohio and then another model, the hatchback version of the Cruze is manufactured in Mexico. GM comes out with a statement saying that "GM builds the Chevrolet Cruze hatchback for global markets in Mexico, with a small number sold in the U.S."

But this is part of a theme that we keep seeing over and over again, Carol, and it's sort of a game at this point. Trump attacks these companies on Twitter. The companies respond by clarifying with facts and then unveiling or seeming to make some kind of concession to Donald Trump. And it becomes this big show. You know, we had it with Carrier's decision to keep jobs here in the U.S. Boeing saying that it would make sure that its planes were affordable for the U.S. military. Lockheed Martin also, commitment from the CEO saying, that it would reduce the price of the F-35 fighter jets.

Like all of these seems to be a carefully orchestrated attempt by Donald Trump to show that he is making an impact. But it's almost a distraction from the real issues that face the American economy and American companies. How do we deal with these bigger questions of keeping the cost of goods low while also keeping jobs here in the U.S.? And ultimately, on a large scale, Donald Trump is going to have to face those issues, not on a one-off basis but on a policy basis. And that's what people are waiting for.

COSTELLO: OK. So, let's talk about this and Cristina, I want you to stick around and be part of the panel, also joining me, Patricia Murphy, a columnist for "The Daily Beast" and Bob Cusack, editor in chief of "The Hill." Welcome to all of you. OK. So, I've been looking. Donald Trump has a partial tweet. And it seems to have to do with this ethics group within the Congress that Congress has just gutted. And he's written only half of it. And this is what it says. "With all that Congress has to work on, do they really have to make the weakening of the Independent Ethics Watchdog, as unfair as it" And then it ends. I'm not sure what to make of that, Bob. Do you want to take that?

BOB CUSACK, EDITOR IN CHIEF "THE HILL": Well, it's certainly not praising opening day of the Republican Congress. And I think this is very interesting because you know members on both sides of the aisle had been critical of this ethics watchdog. Why? Because they've been investigated. This Ethics Office was supposed to keep things confidential but occasionally things would get out. We got our hands on some documents on a bipartisan investigation of members of both sides of the aisle, was later dismissed but it was embarrassing for those members. But this was something that then Speaker Pelosi, as Phil Mattingly was saying, put into place when she -- she is the initial one who said drain the swamp. So, it's very interesting that this half tweet of Donald Trump is being critical of the Republican Congress. I think that could be a trend.

COSTELLO: OK. So, I have the whole tweet now because he just tweeted out the second part. So, just put up the whole thing because I can't do it from memory. I wish I was that good but I'm not. OK, here's the tweet. With all -- this is from the beginning. "With all that Congress has to work on, do they really have to make the weakening of the Independent Ethics Watchdog, as unfair as it may be, their number one act and priority. Focus on tax reform, healthcare and so many other things of far greater importance!" So, Patricia, take it away.

PATRICIA MURPHY, COLUMNIST "THE DAILY BEAST": Well, Donald Trump here, I think he is probably channeling the inner thoughts of the Republican leadership, of most Americans. And he's also very quickly putting some distance between himself and the Republican Congress. And he is saying if you do something I don't agree with, you're going to know about it and so is America. And to Donald Trump's point, this is literally the first action that the Republican majority in the 115th Congress has taken. It was done without debate. It was done without announcement. They can argue that this is a way to strengthen Congressional Ethics on the hill. It is not.

[10:10:16] So, I think, that for this to be the very first thing that they do before Congress is even in session, I think is a terrible move optically when there are ethical problems and charges that come up later. We'll all look back to this move and remind them that they did this.

So, I'm with Donald Trump on this one. I think that if Republicans in Congress are going to get a lot of blowback for this, even though there have been complaints about this office doing it in the dead of night with no debate is really not the smart way to go about it.

COSTELLO: And Bob, I have to admit that the GM tweet I thought was a total deflection, right? To try to get the conversation away from this ethics controversy within Congress but then, Donald Trump came through with a tweet.

CUSACK: Yes, I mean, it's something - remember the Congress is not popular now. It hasn't been for a long, long time -- hasn't been really popular since really after 9/11. So, Donald Trump's popularity is higher than that of the Congress. But they're going to have to work together on a number of those policy fronts. And any time that the party is divided and certainly they are divided on this. And without a doubt, I definitely agree that the optics here, are not very good, especially on day one of the new Congress.

COSTELLO: Yes. OK. So, going back to this GM tweet, Patricia, you know, I guess go back to the Carrier deal. When we're really not sure what exactly happened there, Carrier in the end, I guess, saved 800 jobs. But they got a lot of big tax breaks from the state of Indiana. And they moved to automate a lot of their plants. So, it is unclear how Donald Trump's interference in this helped, hurt?

MURPHY: Well -- and there's been really no specific action taken by GM other than just to clarify where these cars are built. I think, when Donald Trump fires off tweets like this, it's clear he's channeling the voters in Ohio who put him into office. However, it doesn't take into account that there are a number of foreign car dealers, foreign carmakers that manufacture their cars here in the United States. BMW has a gigantic plant in South Carolina. If -- German automakers decided to do something similar, you could see how a trade war gets off to a start very quickly. In a Trump administration that would hurt the people that Donald Trump says he is trying to help.

COSTELLO: Well, Bob, is it possible that Donald Trump is trying to make Congress pay attention to his tweets on General Motors and jobs and to steer them in the direction he would like them to go?

CUSACK: Yes, I think this is the power of the job and certainly, he's going to have the power of the bully pulpit. But as far as getting legislation through on increasing tariffs, that is not something that is in the Republican orthodoxy. So, I don't think legislatively we're going to be seeing major changes. But, this is a way for him to go after specific companies and corporations across this country have to be concerned that they're going to be the next one targeted and there will be concessions. Does that really fix the big issue? No, but individually, he can claim a victory, and has. And I think you're going to see a lot of companies being targeted by Trump in 2017.

COSTELLO: All right. I have to leave it there. Patricia Murphy, Bob Cusack, thank you so much.

Still to come in the NEWSROOM, Trump uses Twitter to send a stern message to North Korea. Is his character count diplomacy doing more harm than good or vice versa? (COMMERCIAL BREAK)

[10:16:48] COSTELLO: President-elect Trump pushes back against a rogue nation and its latest nuclear threat against the United States. Trump taking to Twitter, batting away North Korea's claims that it will test a rocket powerful enough to strike U.S. soil. For good measure, Trump also took a poke at China. CNN's Jessica Schneider is outside Trump Tower with more. Hi, Jessica.

JESSICA SCHNEIDER, CNN CORRESPONDENT: Good morning, Carol. You know, Trump's latest Twitter tirade coming after an announcement by North Korea's leader Kim Jong-un that his military was on the brink of testing its first intercontinental ballistic missile. Donald Trump responding via Twitter to that, his first tweet coming over last night saying, "North Korea just stated that it is in the final stages of developing a nuclear weapon capable of reaching parts of the U.S. It won't happen!" Then, Donald Trump honing in on China on a second tweet saying, "China has been taking out massive amounts of money and wealth from the U.S. in totally one-sided trade, but won't help with North Korea. Nice!"

Well, these were Donald Trump's latest forays into foreign policy after over the New Year's holiday saying that he knew more than a lot of other people when it came to hacking, specifically, honing in on his doubt about U.S. Intelligence that Russians were responsible for the hacking during the election season. And here today at Trump Tower, VP-elect Mike Pence came here a little bit earlier this morning and indirectly addressed some of Donald Trump's talk about foreign policy. Take a listen.

(BEGIN VIDEO CLIP)

GOV. MIKE PENCE, (R) VICE PRESIDENT-ELECT: It's 2017. We are just a few weeks away from a new administration taking office. And I think the world will see that with our president-elect taking office. So that America will be standing tall in the world again, engaging the world again and standing firmly for America's interests.

(END VIDEO CLIP)

SCHNEIDER: And Donald Trump, also taking to Twitter in just the past few minutes talking about the latest moves in Congress. He tweeted this. "With all that Congress has to work on, do they really have to make the weakening of the Independent Ethics Watchdog as unfair as it may be, their number one act and priority. Focus on tax reform, healthcare and so many other things of far greater importance!" Of course, Donald Trump is talking about the action that happened late night in Congress.

And in fact, VP-elect Mike Pence will be headed to Capitol Hill tomorrow to meet with Senate Republicans for their -- first order of business which will be, in their words, "repealing and replacing Obamacare, moving forward with their plans." And also this morning, Donald Trump, making an announcement as to his nomination of Robert Lighthizer to U.S. trade representative. That of course, being the chief negotiator when it comes to trade policy. Lighthizer did serve in the Reagan administration as deputy U.S. trade representative and for the past few decades, he's been working as a law partner at Skadden Arps heading up there international trade law practice. Carol?

COSTELLO: All right, Jessica Schneider reporting live from Trump Tower this morning. The fallout of Trump's tweets continues when it comes to his accusation of not doing enough to stop North Korea. And I'm talking about China because Mr. Trump says China is not doing enough to stop North Korea. China said this morning, not so fast.

(BEGIN VIDEO CLIP)

GENG SHUANG, CHINESE FOREIGN MINISTRY SPOKESMAN (through translator): China's position has been clear and consistent. We insist on denuclearizing the peninsula, maintaining its peace and stability and resolving the issue through dialogue and consultations.

[10:20:16] China has been making great efforts in maintaining regional peace and stability as well as promoting a peaceful and effective resolution on the North Korean nuclear issue. Our efforts have been obvious to all and widely recognized.

(END VIDEO CLIP)

COSTELLO: All right. So, let's bring in David Rohde. He's a CNN global affairs analyst and a national security investigations editor for "Reuters." Hi, David.

DAVID ROHDE, CNN GLOBAL AFFAIRS ANALYST AND NATIONAL SECURITY INVESTIGATIONS EDITOR "REUTERS": Hi.

COSTELLO: So, Donald Trump's tweet certainly caught China's attention. Is that a good thing?

ROHDE: It is. I mean, this is again, very aggressive Trump approach with China. He is clearly being more aggressive with China than he was with Russia and North Korea will be an immediate test for him. Can the Chinese rein in North Korea or not? -- We'll have to see as soon as he takes office.

COSTELLO: There's this theory out there that Donald Trump with his tweets is just trying to throw other nations off-balance. So that when he becomes President of the United States, it will be easier to deal with them because there will be an intimidation factor built in.

ROHDE: That's the question here. And look, Korea is you know, this is not a game. We're talking about a nuclear weapon on a missile. Even if it doesn't reach the United States, the U.S. has over 20,000 troops based in Korea. Seoul, the capital and largest city in Korea is only 30 miles from North Korean territory. 24 million people live in Seoul. There's a belief that North Korea has enough artillery they could kill tens of thousands of people within minutes. And the only sort of option to sort of stop the North Korean preparation of its missiles is some sort of preemptive U.S. military strike. China doesn't want that. South Korea may not want that. So, you know again, it is foreign policy by Twitter. Maybe the intimidation - COSTELLO: Some Americans might be thinking, you know, it's easy. Just impose more sanctions on North Korea. Like starve the nation. What's he going to do?

ROHDE: Well, there is very tough sanction, you know, and North Korea is being more aggressive. There were 20 ballistic missile tests by North Korea in 2016, its largest nuclear test in September. The sanctions aren't working. This all comes back to China. Can we work with China to contain North Korea? Lighthizer, the new trade representative is a China trade hawk. So, again, what's our message to China? Is it we're going to have a trade war with you? We're going to confront you via Twitter or we're going to try to work with you on North Korea? The Chinese are very, you know, aggressive. They are on the rise and they want to push us back.

COSTELLO: I think the other factor to perhaps consider is if North Korea has nothing left to lose and you choke off everything, then why wouldn't Kim Jong-un, because a lot of people feel he's unbalanced, just blast off his nukes?

ROHDE: It could be nukes. Again, it could be just conventional weapons. Just using conventional weapons, he could kill tens of thousands of Koreans in the Seoul area and the northern suburbs. So, yes, we can topple that regime. We can wipe them out militarily, but there would be a huge cost. So we'll see. Again, to be fair to Trump, maybe this toughness -

COSTELLO: Some Americans say, well, it won't be huge cause (ph) to us.

ROHDE: Well, there are 20,000 American troops in Korea. That's larger than the number we have in Iraq or Afghanistan. They've been there decades. The Korean War killed 4 million people and tens of thousands of Americans. So this is not a game. This could kill many people and we're also talking about nuclear weapons. So I think this could be the -- if he continues playing down Russia and the hacking, North Korea could be his biggest foreign policy challenges as soon as he becomes president.

COSTELLO: So, can you predict anything down the road? I always ask these questions knowing that no one can, but -

ROHDE: I think the Chinese will push back. President Xi, he is a nationalist himself. He is very similar to Trump in his domestic appeal in China. So, average Chinese are not going to want to see him back down to the United States. China believes it's now world power, it wants to confront the United States. So, if China is treated with sort of disdain, you know, President Xi will be for his own domestic political reasons, will want to push back on that.

COSTELLO: David Rohde thanks for stopping by.

ROHDE: Thank you.

COSTELLO: U.S. Intelligence officials say when it comes to those hacks that took place during the presidential election, digital fingerprints point straight to the Russian government. At the same time, a top Trump adviser says Russia was probably behind the hacking but others could be involved, too. CNN Pentagon correspondent Barbara Starr is here to tell us more. Hi, Barbara.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Good morning, Carol. Well, that's really the problem, isn't it? Nothing or very little in intelligence is 100 percent slam dunk. The president, the president- elect will have to decide as he gets the information from the Intelligence Community how he wants to assess it. How he wants to process it and what he wants to do about it. But there are indications the Intelligence Community believes that Russia indeed and Vladimir Putin was behind the hacking in the election season.

Some of the things they are looking at, officials are telling us, are, in fact, those digital fingerprints. You know, even able to track, perhaps, the keyboards that were used with the Cyrillic alphabet of Russia to -- engage in this hacking activity and those hacking tools are said to be so sophisticated.

[10:25:16] They basically mimic the kinds of capability that the U.S. National Security Agency has. That's a part of the U.S. government that engages in cyber activity. Not the common run of the mil activity the U.S. believes. And finally, that the dispersal, the publication of the hacked information was so widespread and such a large volume that Vladimir Putin would have been the only person with the authority to authorize that kind of activity.

These are some of the indicators. We expect to learn more. As you know, President Obama has ordered an investigation into all of this to be completed before he leaves office. So what remains to be seen, perhaps, when that investigation is completed in the next several days, how much of it will be declassified? How much of it will be shared with the American public? Carol?

COSTELLO: Barbara Starr, reporting live for us this morning. Thank you.

Coming up in the NEWSROOM, we're heading back to Capitol Hill for more reaction on Trump slamming Congress -- sort of slamming Congress -- for reining in that ethics watchdog. I'll be right back.

(COMMERCIAL BREAK)

[10:29:43] COSTELLO: And good morning. I'm Carol Costello. Thank you so much for joining me. Congress is back in session today and already taking hits from President-elect Trump, slamming the House for his plan to gut the ethics watchdog group that's supposed to police them. Trump tweeting moments ago, "With all that Congress has to work on, do they really have to make the weakening of the Independent Ethics Watchdog, as unfair as it may be, their number one act and priority. Focus on tax reform, healthcare and so many other things of far greater importance!"