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Trump's Wall Funding; Trump Won't Withdraw from NAFTA; Tax Code Overhaul; Inspector General Investigating Flynn. Aired 9:30-10a

Aired April 27, 2017 - 09:30   ET

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

[09:30:00] POPPY HARLOW, CNN ANCHOR: Spending bill that will keep the government open through May 5th as lawmakers try to hash out something a little bit more long term.

JOHN BERMAN, CNN ANCHOR: So the temporary solution does not include funding for President Trump's border wall. It does keep subsidies for lower income Americans as part of Obamacare.

I want to talk about this now with New Mexico Democratic Senator Tom Udall.

Senator, a couple of big developments overnight that directly affect you and your border state. First of all, the border wall issue. Second of all, NAFTA. The president saying he's going to stay in NAFTA, even while he renegotiates.

Let's take this in part. First, the wall. No funding now. The president says he'll get it later. Will he?

SEN. TOM UDALL (D), APPROPRIATIONS COMMITTEE: I - I'm not so sure. I think he - I - I think he's going down in terms of having clout with the Congress and so my guess is, is that by putting this aside now and him not getting it now, I'm not so sure he's going to get it in the future.

HARLOW: Why do you think he's going down in terms of what you deem clout with Congress?

UDALL: Well, I don't think he's fulfilling his promises. I don't think he's really engaging the American people in the way that they thought he was going to come to Washington and change things, drain the swamp, that kind of thing. He's just not doing it. He's headed the other direction. We're talking about millionaires and billionaires being in the swamp, lobbyists and lobbyist waivers. I mean it just goes - the stories go on and on in terms of his ethically challenged behavior here in Washington. And I think the American people are seeing it.

BERMAN: And, sir, you are right, he has an historically low approval rating. On the other hand, Americans say that they like where the country is right now. We have a brand new CNN/ORC poll out just this morning, let me read you part of it, 54 percent now say things in the country are going well. That's up from 46 percent in February. Almost six in ten now say economic conditions are good. So regardless of what you might think about the president personally, do you think things are going well?

UDALL: I - no, I think - I think we have a good, strong economy. I think we have a good, strong stock market. I think the country is strong enough to survive this kind of incompetence -

BERMAN: He is the president -

UDALL: This kind of incompetence that's out there.

HARLOW: Your point, though, I mean John's point is, you know, we're 100 days in, does he not deserve any credit for those things?

UDALL: Well, the things that I would look at is, has he passed anything significant in terms of legislation? Does he have a foreign policy? I don't think he has a clear, coherent foreign policy. Has he done anything in terms of draining the swamp? He's moving in the different direction there with the millionaires and billionaires and not disclosing his tax returns. All of those kinds of things I think are just very troubling and disturbing.

BERMAN: You talked about a coherent foreign policy. You sit on the Senate Foreign Relations Committee. And yesterday you were part of the all senators briefing over at the White House about North Korea. What did you learn? And was this big show worth it?

UDALL: Well, I didn't learn anything new. I think we all know that this is a very dangerous region. We know that the leader of North Korea is a rogue person and it's a rogue state and we need to try to do everything we can with the countries in the region, and in particular China, to make sure that they get engaged and push this country in the direction of joining the international community and not violating all of these agreements and U.N. resolutions and things like that.

HARLOW: Let me get you on the record, quickly, on NAFTA, because this is an issue very important to you, your state. You've spoken extensively about it. They're concerned about a trade war. You said you want to make sure that reckless talk doesn't lead to reckless policy. Would you commend the president on the phone calls he had last night with Justin Trudeau and President Pena Nieto of Mexico, and coming out of them and saying, all right, I'm not going to scrap NAFTA, we're going to work on this together?

UDALL: I would commend him for backing off the idea of ripping up NAFTA. I just spent the last weekend when I was home down on the border. There is so much activity. There's so much trade. A state like New Mexico has dramatically increased its trade over the last ten years. And so we want to see those relationships continue. And his failure to give them notice early on to kind of move this process forward and all the threats I think are causing a lot of consternation and disruption down there and businesses aren't investing because they're worried about the uncertainty.

HARLOW: All right, Senator Tom Udall of New Mexico, thank you for being with us today.

UDALL: Thank you. Thank you. A real pleasure.

BERMAN: Yes, invite us down to your state. It's one of the nicest ones around.

UDALL: Please come. You're invited any time. You're invited any time.

BERMAN: Please.

UDALL: You'll love it. You'll love it. Come on down.

BERMAN: (INAUDIBLE) you love it. Thanks, senator. Appreciate it.

HARLOW: John won't be on the show tomorrow.

BERMAN: Yes, that's right, I'll be off tomorrow.

HARLOW: Actually, he'll be here and I'll be at jury duty. That's actually a fact.

[09:34:50] All right, coming up for us, Donald Trump's big ideas about tax cuts all fit on a very, well, 8 by 11 sheet of paper. Who wins? Who loses? Christine Romans explains.

(COMMERCIAL BREAK)

[09:40:02] HARLOW: The biggest tax cut in the history of the country only takes one page to explain, if you don't want any details. The White House distributing this handout with a simple (ph) of points on what is ahead, what they would like to see.

BERMAN: It may be brief. It may be vague. But we do know that there will be winners and losers. Our number one winner, CNN chief business correspondent Christine Romans joins us now.

CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: Oh, thank you.

Youi know, look, I never want to discourage tax reform and a real Washington effort to fix the tax system. It hasn't been fixed since 1986. And 1986 tax code is not what America needs today. Businesses need clarity and they need lower corporate taxes.

But this is really a guideline of principals. This is like me saying I want to be skinnier, younger and richer, right? How am I going to do that? And how am I going to get a team on board to make it happen?

So, look, let's talk about the tax winners here. From what we can tell, because, again, there's not a lot of details. Companies, that's why you see stocks near record highs. They think they're going to get lower tax rates down the road. That means they're going to have to pay less to Uncle Sam and they're going to make more money. Their - wealthy Americans will see some benefits here too. You're going to get rid of some - some - you know, the death tax and all the - the estate tax. You're going to get rid of some taxes on investments and that's going to be good for rich people and for investors who are going to lose in Obamacare tax under this that would - they would pay on some of their capital gains. So basically lowering the capital gains tax. Who - what kind of deductions will disappear? Deductions for student loans, for the home office deduction that's popular, if you deduct your state and local tax and for medical costs. Those are some of the tax deductions that will disappear that some middle class Americans really rely on.

So what do I want to know more about? Well, I know they're going to - they're going to shrink down these tax brackets and that's good, make it simpler for Americans and middle class Americans to file their taxes. But I don't know exactly what it's going to look like. I mean we know there's going to be a below $24,000, no tax. They're going to raise the deduction, no tax. First income tax bracket, 10 percent. You can see 25 percent, 35 percent. I don't know what those levels are.

And, in fact, yesterday, Gary Cohn and Steven Mnuchin, the Treasury secretary, were asked specifically, a family of four who makes $60,000 or less, tell us how this would cut their taxes, and they couldn't answer it.

(BEGIN VIDEO CLIP)

GARY COHN, NATIONAL ECONOMIC COUNCIL: It's going to mean a tax cut.

QUESTION: How much?

COHN: It's going to mean a tax cut. Look -

STEVE MNUCHIN, TREASURY SECRETARY: And why -

COHN: You're asking the same questions we got asked over here. We will - we will let you know the specific details at the appropriate moment. We are in very robust discussions with the Senate and with the House leadership. They are progressing very quickly. And we will continue to give you more details as we have them.

(END VIDEO CLIP)

ROMANS: So, more details as we have them. We have some details for corporate America. We don't really have the details for the middle class yet. And that's what we're all waiting for.

HARLOW: Which is probably the most important question of the day -

ROMANS: Yes.

HARLOW: And they didn't answer it.

Christine, thank you so much.

Let's continue the conversation with Stephen Moore, CNN senior economic analyst and also a former senior economic adviser to the Trump campaign.

So, I mean, Stephen, you have a window into this that almost no one else has since you advised this president for months and months and months on economic policy. Any chance - any reason to think this White House can get through Congress what no White House has been able to for 31 years?

STEPHEN MOORE, CNN SENIOR ECONOMIC ANALYST: Well, it's a heavy lift. You're exactly right, Poppy, this is not easy to get done. To try to reform the tax system and to get this tax cut done, it's going to be a nail biter all the way. I - I really advised the White House to try to get this done this year because I think the economy needs the pick me up. You know, we're going to get those first quarter GDP numbers in a number of days and they're going to be less - a lot less than we hoped for.

HARLOW: Yes.

MOORE: So the economy just isn't doing what we hoped.

But, look, I think, at the end of the day, I put pretty good odds that this is going to get done. The Republicans seem pretty committed. I talked to the Senate Republicans yesterday at their weekly lunch and people were fired up about this. They understand after the health care debacle that they need a victory here and they're really aiming to get this done by the end of the year.

BERMAN: How concerned - you said you talked to Republicans up in the House. Republicans in the House and Senate have been concerned about debt and deficit for years. How much concern do they have about that now given that the White House and the administration hasn't given any clarity about how you're going to make up for the lost revenue?

MOORE: Well, good question. I mean, look, one of the things that - I had a piece in "The Wall Street Journal" that a lot of them had seen, which basically made the point, you know, if we didn't get this growth rate up, we're going to have a hard time bringing the deficit and debt down - numbers down because at 1.8 percent growth, you just don't generate enough revenue. So growth is really the key and jobs.

And I think they get that. They're like, look, let's get the economy moving again. We'll get more revenues. And now, look, I'm not saying, John, that this is going to pay for itself, but I am saying you've got to get the economy moving before you can make much progress in terms of reducing the debt.

And don't forget also that there are offsets in this plan. I mean the media is saying, well, this is just a one gigantic tax cut, but they are - we are talking about reducing and eliminating a lot of the deductions in the tax code that will free up money for reducing these rates.

BERMAN: Stephen Moore, thank you so much for your time. Appreciate the discussion. We've got to split because there is some really interesting breaking news.

[09:45:01] ANNOUNCER: This is CNN breaking news.

HARLOW: All right, let's great straight to Manu Raju. He's joining us on The Hill.

Manu, you're reporting, former National Security Adviser Michael Flynn in more hot water?

MANU RAJU, CNN SENIOR POLITICAL REPORTER: Yes, no question about it. Remember earlier this week two issues came up. One, as a former military officer, he did not get permission from the secretaries of Army and State as required for foreign payments that he received, including from Russian backed entities. And he also did not disclose this information on his security clearance form, something that is required by federal law.

Now, we are receiving new documents that are being released just now by - from Elijah Cummings, who's the top Democrat on the House Oversight Committee suggesting that Flynn could be even in more trouble. Now, in 2014 - there are three pieces of information here. In 2014 there was a letter from the Pentagon that explicitly warned Michael Flynn not to accept these foreign payments unless he got permission. So he knew, Michael Flynn knew ahead of time that he had to get permission because of this letter, this new letter that we have received.

Now, another newly unclassified letter said that Flynn did not report his foreign payments. Now, this actually seems to contradict what Flynn's attorney suggested earlier this week after those new revelations came out, when the attorney said that actually Michael Flynn did extensively brief the Defense Intelligence Agency before and after a trip he took to Moscow that was paid for by the Kremlin-backed television network RT, that he received upwards of $45,000 to speak there. Now, this new letter from the Defense Intelligence Agency suggests that they did not locate any records relating to Michael Flynn's receipt of money from a foreign source.

And then the third piece of news here, the Department of Defense inspector general announcing a new investigation of Michael Flynn in light of these new revelations that came out earlier this week. So all of which point to the trouble, the serious trouble that Michael Flynn is in and those allegations that he may have broken federal law and by failing to disclose these foreign payments that were linked not only to Russia but also to Turkey as well, and as well as not reporting that on his security clearance form.

Now, in just moments, Elijah Cummings, who is releasing these letters at this moment, he will come and talk to reporters as part of that broader Democratic press conference. We do expect him to address this new news. But, clearly, more problems for Michael Flynn, of course, Donald Trump's ex-national security advisor, who was fired after those revelations, those contacts with the Russian ambassador that he did not disclose to the vice president of the United States.

Guys.

BERMAN: Manu Raju, fascinating. You know, a Department of Defense inspector general investigation of Michael Flynn, that is new information. Also the fact that he was warned about accepting these kinds of funds. What that gets to is intense and that is crucial here because when he failed to fill out the proper forms in the proper way, he could say, oh, I didn't know. But now we are learning, Manu, that he was warned. That means not only did he fail, did he violate the law by not following - you know, filling out the form correctly, but he might have known about it at the time. That could put him in some serious jeopardy, not just with Congress, but with the federal government.

RAJU: Yes, no question about it. And I'll read to you a little - a little bit of that - of that letter here. It says that he actually was warned because of the constitutional requirements that require him to disclose these foreign payments. The reason why that's important is because as a former military officer, you can presumably get recalled to the service at any time. So the Pentagon wants to know if there's any foreign influence that is affecting your judgment, especially if you go into the battlefield, which is why they asked for these disclosure, this permission ahead of time, which is why this is very significant that he allegedly did not get the permission and that he was warned that he had to get that permission and also saying that the Department - Defense Intelligence Agency saying explicitly, quote, they did not locate any records referring or relating to Flynn's receipt of money from a foreign source. So that seems to be problematic here for Michael Flynn, as his attorney suggested, that they did brief the Defense Intelligence Agency extensively about that trip.

BERMAN: All right, Manu Raju, this is fascinating.

Don't forget, everyone, the White House, or transition team for Donald Trump, vetted Michael Flynn -

HARLOW: Absolutely.

BERMAN: And apparently didn't find any of this. May not have vetted him enough to find this. There are going to be serious questions about that. Serious questions about all of this. A lot of breaking news this morning. We'll be right back.

(COMMERCIAL BREAK)

[09:54:22] BERMAN: All right, the breaking news this morning, we just learned that former National Security Adviser Michael Flynn had been warned against taking foreign payments when he retired as a general in 2014. And we also just learned there is a new Department of Defense inspector general investigation into Michael Flynn.

Our Manu Raju joins us now. He had this breaking news.

Manu, how much trouble is the general in?

RAJU: Potentially significant. Remember, earlier this week, when they announced some other issues in which he did not disclose some of these foreign payments as part of his 2015 security clearance application - sorry, 2016 security clearance application, that that could be a felony. That could be punishable for up to five years now - in prison if, of course, he's found guilty of that, which his attorney so far has denied any wrongdoing. But new revelations here of specifically about him not getting permission from foreign governments, from the Pentagon and from the State Department for accepting these foreign payments from any foreign source, including Russian-backed entities. He was warned explicitly that he needed to get permission, and allegedly he did not.

[09:55:29] A very significant development here that we're going to hear more about shortly when Elijah Cummings, a top Democrat on the Oversight Committee, plans to discuss this a little further.

HARLOW: Manu, why did the White House not see this or catch this in the vetting?

RAJU: That is a very significant question that we do not have the answer to. Sean Spicer was asked about that extensively earlier this week. He did not really address that directly. We'll see what he says later today, guys.

HARLOW: Yes, we're going to have to.

BERMAN: All right, we got - yes, we got a lot more questions about this, Manu.

Again, a lot of breaking news this morning. Much more on this revelation right after the break.

(COMMERCIAL BREAK)

[10:00:10] ANNOUNCER: This is CNN breaking news.

HARLOW: Top of the hour. Good morning.