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Early Start with John Berman and Zoraida Sambolin

Ruling Shows Limits of President's Authority Judge; Flynn in Legal Trouble; Trump's Tax Reform; U.S. Anti-Missile System Deployed in South Korea; Rockets Eliminate Thunder with Game 5 Win. Aired 5- 5:30a ET

Aired April 26, 2017 - 05:00   ET

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

[05:00:02] CHRISTINE ROMANS, 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 target a judge again?

DAVE BRIGGS, CNN ANCHOR: And 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.

ROMANS: And it is Tax Day. Not that Tax Day. In just a few hours, we're going to get to see the president's plan for tax reform.

Who stands to gain? Anybody lose? How are we going to get pay for it? Tax cuts are expensive. How do you pay for that?

Good morning. Welcome to EARLY START. I'm Christine Romans.

BRIGGS: These tax cuts are very expensive. Zach Wolf from CNN will help us break it down in a moment.

I'm Dave Briggs. It is Wednesday, April 26th. It's 5:00 a.m. in the East.

And this morning, the White House reaching for an old playbook, slamming a federal judge who has blocked an executive order, then vowing to appeal that ruling. This time, it's Judge William Orrick temporarily halting enforcement of President Trump's executive order on sanctuary cities.

The president says his order would withhold billions of dollars from jurisdictions that refuse to cooperate with immigration enforcement.

ROMANS: Orrick found that San Francisco and other jurisdictions suing to overturn the order could face immediate irreparable harm if that order were enforced. He signaled the legal challenge to the executive order will be upheld once the case is fully heard.

The White House at first steered clear of attacking Judge Orrick, then overnight, this statement went straight at him.

BRIGGS: Sure did. Called the case, quote, "one more example of 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'll ultimately prevail in the Supreme Court."

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

(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)

ROMANS: All right. Jeff Zeleny, thank you.

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 rhetoric, noting what he said about defunding sanctuary cities, contradicted what government lawyers were arguing in court about withholding only a limited amount.

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

ROMANS: The Trump administration will roll out its tax plan today. That is the main event. Later this afternoon, the president himself won't be there but we'll hear from the Treasury Secretary Mnuchin and National Economic Director Gary Cohn. They will present this long awaited plan.

As I have been saying all week, the administration has been light on details and many questions still remain. For example, will it focus on corporate tax cuts first? A White House official says, Trump will slash the tax rate to 15 percent for all businesses that includes pass-through businesses for which owners report profits on individual tax returns. For those firms, it's a cut from a high of 39.6 percent to 15 percent.

Which leads to second question, will it be real tax reform or just tax cuts? It's not the same thing. Comprehensive tax reform is hard. Haven't done it in 30 years.

It involves tradeoffs that pay for any proposed cuts. So far, the treasury secretary suggested economic growth would offset costs but many experts say there's little evidence that that works.

And, finally, what is in it for the middle class? Steven Mnuchin, treasury secretary, has said middle class tax relief is a priority.

Now, analysis of some of President Trump's earlier proposals favor the top 1 percent, actually raise taxes on millions of middle income families. That's going to be key. The optics here at the White House does not want to appear to be favoring rich people and businesses at the expense of middle class tax relief.

BRIGGS: There's a lot of questions you had. We have even more.

So, let's ask them to the editor of CNN Politics Digital, Zach Wolf.

Good morning and good luck to you, sir.

We're going to try and break this all down. She broke down the numbers we expect basically the heart of this.

[05:05:01] Here's what "The Washington Post" says about the tax reform plan to unveil this morning. "It would be the height of imprudence to worsen the problem whether based on phony math or sheer heedlessness. For eight years, Republicans mercilessly attacked President Barack Obama for doing too little to cut deficits. Will they turn around and now approve a budget-busting tax cut?"

Zach, how do they do fight back against that narrative that this will explode our deficits?

ZACHARY WOLF, CNN POLITICS DIGITAL, MANAGING EDITOR: Well, you know, I think there's a lot of people out there, particularly the Republicans who would like the idea of tax cuts even if they hurt the budget. We'll go and figure out how to pay for those some other way.

I really like the way Christine put it just now, there's a great difference between tax cuts and tax reform. It's not really exactly clear to me that this is going to be tax reform yet. In order to do that, you might have to do to stuff like touch the mortgage deduction or, you know, things that people -- these are things that people rely on in their finances day-to-day.

It takes these tradeoffs where if you're going to cut the tax rate, people are going to have to pay more somewhere else or you're going to make more poor people or people who make less money pay more taxes. Are they going to sort of broaden the base?

So, these are all questions I think we need to figure out before we can figure it out. But I think at the end of the day, if some people are going to pay less taxes, other people are going to pay more taxes, and we've got to figure out who those groups --

ROMANS: Mortgage interest deduction, how are you 401(k) is treated, how 529 plans are treated, how saving -- you know, there's a lot of stuff in what's really an old-fashioned tax code. That tax code is not meant for globalized society. But it's interesting to me, it looks like the border adjustability thing is off the table. And that was something that -- that would have been a way to change -- it would have and about way to incentivize companies to keep jobs in the U.S., which is the whole of the Trump administration in the first place, but that's gone now, Zach.

WOLF: Yes, and it's particularly interesting because they keep going on the issue of trade. You know, you see all this stuff going on with Canada and Mexico and renegotiating NAFTA. That's particularly interesting, considering how, you know, keeping companies here seems to be such a priority in other areas.

BRIGGS: I don't want to get too bogged down in the politics it, but it appears the Republicans need to get this through under budget reconciliation because it appears they have no Democratic support. How do they do that?

WOLF: I don't really have an answer for you there. I mean, it's an easy thing to do if you're a party controlling Congress is to do something through budget reconciliation. You only need support from your members because you only need 50 votes in the Senate and simple majority in the House. They have both of those things.

But as we saw with health care, it's not so easy sometimes to get even a broad group of Republicans to get on the same page with something.

BRIGGS: And the big problem there is you can't impact the deficit over years, which seems just about impossible to thread that needle.

ROMANS: But, you know, Stephen Moore in the "Wall Street Journal," Stephen Moore advised the White House on how to make this tax plan he says growth can solve this debt dilemma.

BRIGGS: That's the part of the argument.

ROMANS: That seems to be what the White House is really saying. They are saying that we're going to really explode growth in the United States, and that's going to solve your problem.

He said, Congress and the White House ought to understand what matters most for heading off a fiscal crisis is making sure the economy grows faster than the government. No other debt reduction policy certainly not tax increase comes close to having a fiscal effect of sustained prosperity does.

That's going to be the argument from the White House. WOLF: Yes, and a lot of that will depend on what the CBO says. Can

they convince the CBO of the same thing? You start getting into the other tricky part with budget reconciliation. Who is your parliamentarian? I mean, what exactly is affecting the budget and how do the rules work?

So, it's not the most elegant way to get legislation passed. I think there are probably also some economists out there who say you can't grow your way to cover the difference of these tax cuts that they are proposing. So, that will be a big --

(CROSSTALK)

ROMANS: Is it going to be real reform? Which businesses really want real reform. I mean, the most important jobs in corporate America are the tax office where you figure out how to use Ireland to do these complicated tax strategies to pay for your taxes. It should be more simple.

BRIGGS: And the Senate will have to buy the Steve Moore argument. Real quick the politics the White House attacking another circuit, federal circuit court judge.

WOLF: Well, I mean, you know, the thing that ties these judges together they are hearing something very important to Donald Trump, and usually related to immigration, which was the core message, or one of the core messages of his candidacy. So, if you're a judge getting one of these cases crossing your desk, there's a good chance you're going to get some criticism from the White House.

It's -- you know, we keep saying this is unprecedented, this is different. At this point, it's par for the course that they will criticize a judge who says something or who rules against the way something that they want.

[05:10:06] ROMANS: All right. Zach Wolf, come back in a half hour. We'll try to get a belly laugh out of you again on how you can get tax reform through. Thank you.

BRIGGS: Thank you, sir.

All right. The entire U.S. Senate gets a White House briefing today on the North Korean threat. What's in store? A live report is next.

(COMMERCIAL BREAK)

BRIGGS: Something very unusual happening in Washington today. Virtually every single U.S. senator will be on the 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 Mattis and Secretary of State Rex Tillerson.

[05:15:07] The president himself may not show up. The White House says if he does come by it will be a brief drop by.

ROMANS: A briefing for the full House of Representatives has also been added for tonight. In an interesting new development this morning, the U.S. military observing significant digging activity at a North Korean nuclear testing site. So, what does that mean, that they are close to another test or there's some time and are still preparing?

I want to bring in CNN's Paula Hancocks live from Seoul.

What do we -- what do we gauge from that? What do we gather from that?

PAULA HANCOCKS, CNN INTERNATIONAL CORRESPONDENT: Well, Christine, what we're hearing from the U.S. defense official is that it might be suggesting a nuclear test is not imminent, the fact that work still ongoing, they are digging at the entrance to one of those tunnels that they use for the underground nuclear test, at Punggye-ri, this area in North Korea.

Now, we heard from 38 North, the tracking group in the U.S., that they thought they were primed and ready all that was waiting was or all that was lacking was the green light from the North Korean leader Kim Jong-un. But here in South Korea and Washington as well the assumption is it's when not if there's a nuclear test number six.

Here in South Korea, we also know the element elements of THAAD have been moved to the area they will be set up and hoping according to the defense ministry in South Korea that it will be operational by the end of the year. We had heard earlier from some U.S. officials and also we're seeing a tit for tat when it comes to military drills between the U.S. and South Korea, live fire drill last Friday and again today which we went to showing the military power and the damage that the two sides could do although they say it's routine and defensive in nature.

ROMANS: All right. Paula, thank you so much for that. An important story, I know you'll stay on it for us.

So, what do lumber and tuna have in common? They are at the center of a trade disputes with two of America's biggest, most important trading partners and starting a tense tone as the U.S., Canada and Mexico prepare to renegotiate NAFTA.

Now, first, U.S. home buyers may be paying for that new tariff on Canadian lumber. The administration slapped percents of up to 24 percent on important soft wood. The Canadian government warns the tax will hurt American home buy terrifies most. Trade groups U.S. trade groups argue the tariff will top the cost of construction for an average home by 3,000 bucks. That price tag, we pass on to consumers.

It could also hurt construction workers. The National Association of Home Builders estimates could it cost 8,000 jobs and $500 billion in lost wages. Trump's decision to hit Canada with tariffs first was surprising, especially considering his criticism of Mexico on the campaign trail.

And then there's this, the fact that the U.S. just lost a $163 million trade battle with Mexico. The dispute was over tuna. The U.S. government said Mexican tuna wasn't dolphin safe. Mexico said it was. The World Trade Organization cited with Mexico, allowing it to impose sanctions worth $163 million against the U.S. So, a tense, tense start to this administration's relationship with our two closest trading partners.

BRIGGS: Who thought, you know, Canada would be the one we went after first?

ROMANS: I know. The Canadian prime minister said we're very polite but hockey is our national sport.

BRIGGS: Hockey playoffs are going on now.

They seemed to be like an odd couple of sports. But Jeb Bush and Derek Jeter are poised to join an exclusive club as Major League Baseball owners. Andy Scholes has the details this morning in our "Bleacher Report". That's next.

(COMMERCIAL BREAK)

[05:22:53] BRIGGS: Let's talk some sports.

Despite incredible season, Russell Westbrook and the Thunder headed home on vacation, thanks to the Rockets.

ROMANS: Andy Scholes has more on this morning's "Bleacher Report".

Good morning.

ANDY SCHOLES, CNN SPORTS CORRESPONDENT: Hey, good morning, guys.

Russell Westbrook is going to be MVP this season, but no matter how great he played the Thunder no match for the Rockets in the end. Check this out. Rockets owner wasn't happy with the officiating. So, he gets up from his seat and gets in the referees ear during a play. The NBA says they are reviewing the matter.

Now, Rockets' Patrick Beverly, he's been frustrating Westbrook all series long and he did it against last night. The two even jawing each other in the fourth quarter. Beverly would get the last laugh as the Rockets win 105-99 to win the series.

All right. After more than 600 races, Dale Earnhardt Jr. is going to call it a career the end of this NASCAR season. Junior announcing his retirement yesterday. The 42-year-old racing in his 18th season. He missed the second half of last season due to concussion symptoms saying he didn't want anything to do with racing during that time.

Junior has been voted by the fans as NASCAR's most popular driver the past 14 years straight.

All right. It looks like Derek Jeter is going from the dugout to the owner's box. According to multiple reports, Jeter a part of a group led by former Republican presidential candidate Jeb Bush that has won the bid to buy the Miami Marlins. Price tag $1.3 billion. But it's not a done deal. The sale must be approved by 75 percent of

the Major League Baseball owners. Jeb's brother George W. Bush was once part owner of the Texas Rangers. Jeb is reportedly going to be the controlling owner of the Marlins.

All right. Finally, it's only April but we may have the play of the year in baseball. Tied 2-2 in the seventh. Blue Jays' Chris Coghlan charging home and goes airborne over the St. Louis catcher. Incredible the somersault on to home plate. It gave Toronto the lead. They won by one run in 11 innings.

[05:25:01] Guys, I don't know if I've ever seen a runner with a more impressive save at home. Just incredible.

And, guys, in case you missed it bleacher report has a new fresh look. Check out the new app and logo as well.

Pretty cool. What do you think?

BRIGGS: We love it, man. We love it. I love that leap.

But I got to tell you, Dale Earnhardt Jr. Massive story. You already had Jeff Gordon. You already Tony Stewart. You already had Paul Edwards.

Now another major star leaving a sport already hurting. Bad news. Bad news.

SCHOLES: Yes, I guess it's out with the old within new. We'll have to see who the new stars are going to be.

BRIGGS: Thank you, my friend.

ROMANS: Thanks, Andy.

SCHOLES: All right.

ROMANS: Legal ruling against the White House is met with another assault on the judiciary. We're going to tell you what the White House says and what it plans on doing about funding for sanctuary cities.

(COMMERCIAL BREAK)

BRIGGS: The White House with another attack on the justice system after another legal ruling it didn't like.