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Early Start with John Berman and Zoraida Sambolin

Trump News Flexibility on Wall Funding; Cutting Corporate Taxes; State Department Removes Blog Post Promoting Mar-a-Lago; North Korea Conducts Large Firing Drill. Aired 5:30-6a ET

Aired April 25, 2017 - 05:30   ET

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


[05:30:00] CHRISTINE ROMANS, CNN ANCHOR: It is 30 minutes past the hour. Dave has the morning off to rest his voice. President Trump, this morning, showing some flexibility on funding for his promised border wall, indicating it might not be a deal breaker, and 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, well, that will be enough to satisfy the president. Mr. Trump telling conservative journalists at a private meeting that he is open to delaying funding for wall 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 looms.

The new wiggle room eases back from 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 is even an issue at all if Mexico is supposed to pay for it.

(BEGIN VIDEO CLIP)

SEAN SPICER, WHITE HOUSE PRESS SECRETARY: Well, I think, Jim, the president has made very clear that initially we needed to get the funding going and there'd be several mechanisms to make sure that that happens. We feel very confident the government's not going to shut down. Number two, is I think the president has been very 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 that would 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 the table in these negotiations. Now the bipartisan and bicameral negotiators can continue working on the outstanding issues. The White House also floating a proposal to cut the corporate tax rate to 15 percent. The U.S. has the highest corporate tax rate among developed nations, 35 percent. The average worldwide, just 23 percent. Now, critics will tell you companies have complained this makes the U.S. less competitive. They say it forces companies to use innovative tax practices and to stash huge piles of cash overseas instead of bringing it home to build new factories and to support new jobs.

Now, cutting the corporate tax rate won't solve those problems entirely. Two main issues. First, the effective corporate tax rate is just 14 percent. That's how much they really paid big profitable companies. Between 2006 and 2012, that's what they paid, according to the Government Accountability Office. One in five companies paid no tax at all. Tax credits, tax loopholes allow these companies to legally reduce their tax burden.

So, in effect, the big companies are already paying less than the number the president's floating. If the administration leaves those in place and reduces the corporate tax rate, revenue will plunge. That's the second issue. Tax cuts are expensive. If companies pay less, individual taxpayers then are on the hook to make up the difference.

A Tax Policy Center study last year which looked at that initial Trump 15 percent tax proposal, it shows it would cost $2.4 trillion in lost revenue over the next decade. That's about $240 billion a year. For some context, folks, that's about the same as the government spent on food stamps, jobless benefits, and child nutrition. So the big question now on taxes, how will the administration pay for it? The proposal will have to be revenue neutral to be passed as part of the budget process.

I want to bring back in political analyst Ellis Henican, author of the "Trump's America" column for Metro papers here in New York. And, for us at CNN Center, political economist Greg Valliere, chief strategist for Horizon Investments. All right, the 15 percent number here, Greg, floated yesterday. We're told tomorrow will be the principles revealed of the Trump administration's tax reform strategy. What do you make of it?

GREG VALLIERE, POLITICAL ECONOMIST, CHIEF STRATEGIST, HORIZON INVESTMENTS: There are going to be a lot of really lavish promises. I mean, this is like catnip for stocks. I mean, the idea that we could go maybe not to 15, but maybe go to 20 percent as the top rate, that's tremendous for corporate earnings down the road. It's a big story for stocks but there has to be a flip side to that good story. The flipside is the bond market and interest rates, and I think you've got to conclude right across the board more spending for defense, for V.A., for tax cuts -- right across the board. The deficit, I think, is headed higher -- maybe dramatically higher in the next two or three years.

ROMANS: Ellis Henican, I think that the deficit hawks in the House are really concerned about a president they think maybe not too afraid of red ink. ELLIS HENICAN, POLITICAL ANALYST: Right. He was supposed to be one of them. Listen, I think it's great but this is a dumb system, right? If you have a high rate but nobody pays or only the small businesses pay it who start feeling like suckers --

ROMANS: Yes.

HENICAN: -- the answer has got to be some version of lowering the rate but making sure that people pay --

ROMANS: Reform.

HENICAN: -- getting rid of some of those loopholes that you're --

ROMANS: Reform.

HENICAN: -- talking about, right?

ROMANS: Reform.

VALLIERE: Yes.

ROMANS: Tax cuts alone are very expensive. Tax reform is very hard. Greg, what will it be? Will it be tax cuts or tax reform?

[05:35:02] VALLIERE: I think it's going to be reform. There's a big debate ongoing on many things including the border tax, do you pay for it?

ROMANS: Right.

VALLIERE: But you hit on a crucial issue. Maybe they just go for the sugar high of tax cuts right away because the economy is only fair. Maybe this could really get the economy roaring. But I think they want to go bigger. I think they want to talk about fundamental tax reform.

ROMANS: Yes, and I think, you know, the Treasury Secretary Steven Mnuchin saying the hypergrowth that will come from cutting taxes will pay for it in the end. But I think that's going to be a tough sell to those deficit hawks --

VALLIERE: Right.

ROMANS: -- in Washington. Let's talk about the other negotiation the president has right now, Greg and Ellis, and that is the border wall. Now, Greg, it sounds like the president -- did he blink here or is he using superior negotiating skills that he has tweaked after health care?

VALLIERE: I think he blinked. I think he realizes that a shutdown would be just catastrophic for a new administration. It would be an embarrassment for someone who portrays himself as a great negotiator, so he doesn't want that. And I think he had to back down on the wall. He'll fight that again in the fall. ROMANS: There's some back-up against the wall metaphor. Let's listen to what "The Washington Post" editorial said about this, that he should stop playing these games of brinksmanship. "No responsible leader would use the possible shutdown of the federal government as a political cudgel." That's such a great word, by the way.

HENICAN: Cudgel.

ROMANS: "The last time a budget impasse produced a partial shutdown, the economy lost $24 billion. Mr. Trump's first priority must be to avoid repeating or doubling down on that debacle." Ellis, I think that the signals we're getting from Washington is this president does now want a shutdown.

HENICAN: That -- it's the art of the blink, not the art of the deal. But don't forget, anytime you're talking about shutting down a government the entire conversation before it involves setting up the other side for blame, right? So, when Chuck Schumer talks about this he wants to make sure that if this actually happens you'll know to blame Republicans. And, of course, Trump and Republicans are going to want to make sure that somehow or another the Democrats are the ones who take the fall for it.

ROMANS: Greg, let's talk a little bit about North Korea quickly --

VALLIERE: Sure.

ROMANS: -- because this is something that's certainly on the radar. I mean, it's not -- look, every day there's a new development about provocations with North Korea. We're here on the, you know, 85th anniversary of the founding of the People's Army there and the president is sounding more forceful than we've heard an administration official in some time. I mean, yesterday, even telling conservative media that you know, Kim Jong Un is not as tough as he thinks he is. Is this a potential risk here to this rosy outlook that you talk about, about the economy and tax cuts and all that?

VALLIERE: The bombast on both sides is unnerving. You can't rule out a U.S. strike, although I do think China may be leaning on North Korea to cool it. I think that's an important development. Bottom line for me, Christine, geopolitically, I worry more about the Iranians.

ROMANS: You do?

VALLIERE: I think that's a story -- that's a story that just seems to get more and more troubling. I wouldn't rule out some sort of skirmish in the Persian Gulf over the next few months.

ROMANS: All right, something to keep on your -- on your radar. I want to ask you, Ellis, about the Mar-a-Lago controversy.

HENICAN: The blog post.

ROMANS: This blog post --

HENICAN: Yes. ROMANS: -- on its embassy website -- a website for embassies -- talking about the winter White House, explaining how the president goes there to host foreign leaders and the outcry was immediate. Look, there are concerns about conflicts of interest. There are concerns about a president who is using his position to enrich his -- burnish his reputation in the private sector.

HENICAN: Right. What's not clear is whether that was ordered by the White House. But I've got to tell you, Christine, this is a culture that's been established of promoting the family business through the government, whether it's spending weekends at the golf club, being down at the private club in Florida and taking foreign visitors there, mentioning your products constantly, talking about the beautiful piece of chocolate cake that -- listen, this is not by accident and unless somebody stops it, it's going to keep going.

ROMANS: They -- and they pulled down this post. I think it's interesting that you mention --

HENICAN: That cake sounded really good, by the way.

ROMANS: -- that you mention -- yes -- that you mention -- that you mention culture because, you know --

VALLIERE: Yes.

ROMANS: -- there's this worry among ethicists that you've got all these people working in this bureaucracy in Washington who will be currying favor with the private industry of Donald Trump. All right, Greg, Ellis, thanks, guys. Nice to see you bright and early this morning.

HENICAN: Good to see you guys.

ROMANS: Thank you.

VALLIERE: You bet.

ROMANS: The Trump administration is hitting the Canadian lumber industry with stiff tariffs, the first imposed by the Trump administration. The president threatened taxing imports on the campaign trail. You didn't hear him talk about Canada very much, he was talking about Mexico and China. But it is Canada, our strong ally and big trading partner, that the Commerce Department is going after, slapping tariffs of up to 24 percent on five Canadian companies. All other Canadian lumber exporters face duties of nearly 20 percent.

This is a response to claims that the Canadian government subsidizes homegrown companies there, allowing them to sell in the U.S. at lower prices. This has been a dispute that goes back to the 1980s. The companies and Canadian lawmakers denounced the decision. The called the accusations baseless. They say the move would hurt American homebuilders most. Most of the $5.6 billion worth of lumber imported last year was used for home construction.

[05:40:20] Commerce Secretary Wilbur Ross called it a "bad week for U.S.-Canada relations" saying in a statement, "This is not our idea of a properly functioning Free Trade Agreement." This sets a tense tone as the U.S., Canada, and Mexico prepare to renegotiate NAFTA. Trump has heavily criticized the terms of that deal but getting a lot of attention this morning that is Canada, recipient of the first strike from the Commerce Department.

All right, 40 minutes past the hour. President Trump likes strong men. We just told you he's not sure Kim Jong Un is one of them. More on what he said about the North Korean dictator and the military drill Pyongyang staged overnight. We're live in Seoul.

(COMMERCIAL BREAK)

[05:45:15] ROMANS: Welcome back. Forty-five minutes past the hour. 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. And now, a nuclear- powered American submarine, the USS Michigan, arriving in South Korea. One U.S. military official describing this as a show of force. This comes just hours after President Trump called for more sanctions against North Korea.

Let's go to Seoul this morning, in South Korea, and bring in CNN's Alexandra Field. And the president with some strong words about the North Korean leader, even as the U.S. is clearly amassing a show of force in the region.

ALEXANDRA FIELD, CNN CORRESPONDENT: Yes, every move, every word really adding to the tension here, Christine. You did have U.S. President Donald Trump doubting that Kim Jong Un, himself, was a strong leader. And then today, on a day that's important on the North Korean calendar -- a holiday that celebrates the founding of the KPA, the Korean People's Army -- you've got these large-scale artillery drills happening in North Korea. That being confirmed by officials in South Korea. It's clearly some sort of flexing of muscles from North Korea -- some sort of show of strength.

It would seem it was enough, though, to trigger a meeting here in South Korea among security officials who say that they are closely monitoring the situation. The same thing that they're doing, of course, in Washington, D.C. where President Trump has summoned senators to the White House for a meeting tomorrow that will involve both the Secretary of State and the Secretary of Defense to discuss the situation in North Korea.

At the moment, you've got the U.S. military right here in the region participating in joint military exercises with both Japan and South Korea. Those kinds of tactics have enraged Pyongyang in the past. You also have this U.S. aircraft carrier group, the USS Carl Vinson, making its way to the Korean Peninsula. That has also enraged Pyongyang. Over the weekend, State News said that North Korea was capable of sinking the Carl Vinson. Despite that threat, of course, the USS Carl Vinson is heading to the area. It is meant to be a deterrent measure. And you also now have the presence of this highly powerful submarine,

the USS Michigan, which is in a southern port here in South Korea. It is being called by one U.S. official a show of strength. We're also being told by military officials that this was a scheduled port stop but that it does serve to underline, just with its very presence, the strength of the alliance between the U.S. and South Korea during these increasingly troubling times -- Christine.

ROMANS: Absolutely. Alexandra Field, we're so lucky and fortunate to have you there following every development for us. Thank you so much.

Former President Obama -- Barack Obama in his first public event since leaving the White House, speaking with a group of young leaders at the University of Chicago. Avoiding any mention of the name Trump, the former president lamented how special interests dominate Washington. He talked about the importance of getting involved.

(BEGIN VIDEO CLIP)

BARACK OBAMA, FORMER PRESIDENT OF THE UNITED STATES: And 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 our 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: Obama's next scheduled public event is May 7th. He will receive the 'Profile in Courage' award from the JFK Presidential Library and Museum in Boston.

Ohio Governor John Kasich echoing a similar tone as President Obama in our CNN town hall event last night. The former Republican candidate for president addressing that political divide in America, clearly visible -- evident in President Trump's approval ratings numbers. Kasich says it's important 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 to -- we want to be for our president because if we're tearing each other apart nothing will ever get done.

(END VIDEO CLIP)

ROMANS: Kasich tells Anderson Cooper it is unlikely he will ever seek public office again.

All right, time for a look at what's coming up on "NEW DAY". My good friend and colleague Alisyn Camerota joins us this morning, beautiful in yellow -- bright and sunny yellow. The sun's not up yet.

ALISYN CAMEROTA, CNN ANCHOR, "NEW DAY": I'm bringing the daylight. That's the message. Christine, great to see you. So, we have a lot happening on "NEW DAY" this morning. We have reporters on the front lines of hotspots. We have Will Ripley in Pyongyang with what that North Korea nation is planning. We also have Nick Paton Walsh with an exclusive look inside Raqqa, Syria and the battle against ISIS there.

[05:50:05] Then back at home here I have part three and four of my Trump voter panel. I talked to these diehard Trump supporters about how they're feeling today about President Trump's shifting positions on some things as well as transparency and his taxes, so stick around for all of that when Chris and I see you at the top of the hour.

ROMANS: OK, can't wait. Thanks.

CAMEROTA: Thanks, Christine.

ROMANS: All right. Nasdaq sitting at a record high this morning. Same with a couple of hundred individual stocks. You probably own some of these in your 401(k). We're going to get a check on CNN Money Stream next.

(COMMERCIAL BREAK)

ROMANS: Welcome back. A CNN exclusive now. A rare look at war- ravaged Raqqa, the last ISIS stronghold inside Syria and the next potential target for President Trump. These satellite images obtained by CNN revealing ISIS flags and checkpoints, severed bridges, and tactics ISIS uses to disguise the movements of its fighters. It's a remarkable and revealing set of pictures and Nick Paton Walsh has been monitoring these pictures and the latest developments live from Irbil, Iraq for us. Good morning, Nick.

[05:55:20] NICK PATON WALSH, CNN SENIOR INTERNATIONAL CORRESPONDENT: Make no mistake, this is very much the next city in the crosshairs -- the final city, really, for the coalition fighting ISIS, and it's a place we've only really seen through the lens of ISIS' own propaganda. These satellite pictures revealing some remarkable detail. Let me talk you through what they've shown us.

Two checkpoints in the streets outside a key government building. That is a place that has thought to have been used by ISIS as a headquarters that has been hit by a precision strike -- an outsider. You can also see an ISIS flag distinguished by the large shadow it casts over the city. A bit of symbolism there for you. But also, to those precision strikes which analysts viewing these images say actually appeared to have just hit the places they're designed to destroy, not leveling buildings around them.

They've also taken out a bridge you can see severed at one end here. Apparently, that's done to make it easier to rebuild such structures at a later date when the city is liberated. And finally, most intriguingly, tarpaulins stretched across the street of a busy market area. That is done not to protect ISIS from the heat and the punishing summer months of Raqqa, but to protect them from being spotted by collation drones in the skies, perhaps trying to seek intelligence about where they gather or even launch strikes against specific key leaders.

But these very revealing images about what it's really like in there, those same analysts saying that the normal patterns of daily life appear to be continuing despite ISIS' presence. This city very much almost surrounded by coalition forces at this point. In the weeks ahead we may see them moving in to try and take it. Back to you.

ROMANS: Really fascinating. All right, Nick Paton Walsh, thanks for that in Irbil, Iraq for us this morning.

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 -- that's May 26th -- and there are reports of hundreds of gays being rounded up, tortured, and killed. The Russian journalist who first reported the anti-gay crackdown, she has gone into hiding. Elayna Malishina (ph), receiving death threats from Muslim clerics and political figures in Chechnya.

All right, let's get a check on CNN Money Stream this morning. All three major stock averages jumping one percent Monday following the French elections first round and more talk of tax reform. More gains in store today. Dow futures solidly higher right now -- same with the S&P. Nasdaq nearing a milestone, folks -- 6,000-- just 17 points away. It's about a quarter of a percent. It's also sitting at a record high. The Nasdaq first hit 5,000 at the height of the dot.com bubble all the way 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.

All right. Check out some of the big names hitting all-time highs during trading Monday. Google, Facebook, Home Depot, Microsoft, McDonald's, MasterCard -- these are widely-held stocks. They may be part of your retirement account. One hundred ninety-five other U.S. stocks also hit all-time highs yesterday. The stock market, of course, reflects corporate profits and investor confidence is high across many industries.

All right, one more, the banking industry king on Monday. Look at these gains. Morgan Stanley up 4.2 percent, Bank of America, JPMorgan Chase, Citigroup, big gains there. It's the higher interest rates, strong economy, and less regulation. That's what they like.

Thanks for joining us. I'm Christine Romans. See you tomorrow.

(BEGIN VIDEO CLIP)

SPICER: We feel very confident the government's not going to shut down.

UNIDENTIFIED MALE: The border wall has never really been vetted by the Congress. You won't get one Democratic vote for that.

ROMANS: President Trump looking to strike a compromise to keep the government open. UNIDENTIFIED MALE: This is a waste of money and it's counterproductive.

STEVE MNUCHIN, TREASURY SECRETARY: The tax plan will pay for itself with economic growth.

SEN. ELIZABETH WARREN (D), MASSACHUSETTS: What he's delivered is a gut punch to America.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: North Korea is a big world problem and it's a problem we have to finally solve.

UNIDENTIFIED MALE: From the level of provocations, the pace of provocations, there's an urgency.

UNIDENTIFIED MALE: Diplomacy against an adversary can be only effective when it's backed up with a credible threat of force.

(END VIDEO CLIP)

ANNOUNCER: This is NEW DAY with Chris Cuomo and Alisyn Camerota.

CHRIS CUOMO, CNN ANCHOR: All right, we want to welcome our viewers in the United States and around the world. This is NEW DAY. It is Tuesday, April 25th, 6:00 here in New York. And up first, shutdown averted. The White House says President Trump will take the wall off the table for now.

CAMEROTA: And the president's tax plan being unveiled tomorrow. We've learned that it includes a drastic cut in the corporate tax rate. What will that do to the deficit? It's day 96 of the Trump presidency. Let's begin our coverage with CNN's Joe Johns. He is live at the White House. Hi, Joe.

JOE JOHNS, CNN SENIOR WASHINGTON CORRESPONDENT: Good morning, Alisyn. Another lesson on how a spending bill becomes law for this new administration. Taking the border wall off the table was starting to look like the only priority for the White House and congressional Republicans, given the fact that they had made keeping the government open, avoiding a government shutdown a priority.