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CNN NEWSROOM

Kelly to be Sworn in as Trump's Chief of Staff; Aired 9-9:30a ET

Aired July 31, 2017 - 09:00   ET

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


[09:00:00] UNIDENTIFIED MALE: They all want to go to the game, and the officers are taking them.

(END VIDEO CLIP)

ALISYN CAMEROTA, CNN ANCHOR: There you go. The officers then pushed the veterans in wheelchairs.

JOHN BERMAN, CNN ANCHOR: That's great.

CAMEROTA: About half a mile all the way to the stadium.

BERMAN: That is dedication. And wonderful to see.

All right. Great to be with you here this morning. Time now for "CNN NEWSROOM" with Poppy Harlow.

Hey, Poppy.

POPPY HARLOW, CNN ANCHOR: Hi, guys. Good morning. Have a great day.

CAMEROTA: You, too.

HARLOW: Good Monday morning, everyone. Hope you had a good weekend. I'm Poppy Harlow.

Just moments from now, pressing reset in the West Wing. General John Kelly sworn in as President Trump's chief of staff in just moments.

Can the retired U.S. Marine Corps general bring a new discipline to the White House that is in chaos?

At top of the hour, President Trump and Jeff Sessions face-to-face. It is the first meeting of the two since the president's public shaming of his embattled attorney general.

All of this playing out against the backdrop of spiraling international tensions. Vice President Mike Pence warns North Korea that all options are on the table after a missile test proves that major U.S. cities are now within range of the rogue nuclear power.

And Russian retaliation. Moscow lashing out at the new U.S. sanctions bill that is right now sitting on the president's desk. U.S. diplomatic missions there gutted, hundreds of staffers booted. The Kremlin warns it may not stop there. A lot to get to this Monday morning. Let's begin, though, at the

White House with Sara Murray.

Good morning, Sara. It's a big day. Thirty minutes from now a new chief of staff will be in place. But what does that really mean for the president?

SARA MURRAY, CNN POLITICS CORRESPONDENT: Well, that's what we're waiting to see. What Many of the president's allies are hoping that this retired four-star general, John Kelly, will be able to come in and sort of create a fresh start, will be able to kickstart the president's agenda, but also calm down some of the chaos and backfighting that we've seen in the West Wing.

His first official day is today, as you said. In just about 30 minutes there will be a swearing in ceremony for John Kelly in the Oval Office. After that, they move on to a Cabinet meeting.

This will be a fascinating new set of dynamics. We are expecting Attorney General Jeff Sessions to be there in the room along with President Donald Trump. To the best of our knowledge this is the first time they will be in the room together, they will be having any kind of interaction together, since the president made disparaging comments about his attorney general in the "New York times," saying he was disappointing with him, saying he wouldn't have picked him if he knew that Sessions would recuse himself from the Russian investigation, not to mention all the tweets he's been firing at his attorney general.

So certainly any interaction between the attorney general and the president will be closely watched. We know the president has been very frustrated but he's also gotten a very stern warning from Republican senators, do not try to replace Jeff Sessions. We are not going to help you. We are not going to confirm a new attorney general. We'll be keeping our an eye on that this morning -- Poppy.

HARLOW: Indeed we will. Sara Murray at the White House, thank you so much.

And you will see that swearing in and ahead also the president's Cabinet meeting at the top of the hour right here so stay with us.

Joining us now David Drucker, CNN political analyst, Margaret Hoover, CNN political commentator, a Republican consultant who formerly worked in the Bush White House, and Jeffrey Toobin, CNN senior legal analyst.

So nice to have you all here.

So 30 minutes, David Drucker, until there's a new chief of staff. I almost said a new man in charge in the White House and that is clearly not true but someone who has a lot of power in the White House. We'll see how much sway over the president.

The "Wall Street Journal" editorial board over the weekend generally, quite friendly to the president but has called him out, wrote this.

"The shuffling of staff furniture won't matter unless Mr. Trump accepts that the White House problem isn't Mr. Priebus, it is him."

So, does Kelly get more authority in this White House than Priebus did?

DAVID DRUCKER, CNN POLITICAL COMMENTATOR: Well, we'll find out. The president tweeted this morning that there is no White House chaos.

I would say that the president respects two kinds of people. He respects people that make a lot of money and he respects generals. And so to the extent that General Kelly, the Department of Homeland Security secretary, can command Trump's respect in way Priebus never could and the president thinks political people are dopes, journalists, political people, Washington, we're all idiots, and he speaks for a lot of Americans in that way.

But the extent that this new chief of staff can command Trump's respect, it's possible he could bring some order and discipline to the place. However, I don't think the problem with Reince Priebus, whatever people think of him, was ever that he could not run a staff. I think the problem was that the president didn't want to listen to him.

And I don't know that anybody can contain the president who is his own communications director, tweets all hours about all things, and these real test will be when all of these people that supposedly still report directly to the president walk into the Oval and want to have a meeting with the president and went away by him.

HARLOW: Right.

DRUCKER: Will he send them walking right back out and say chuck with the cheat, he'll bring me anything that's as important --

HARLOW: That's something we don't know yet. Mnuchin was asked that yesterday on the Sunday shows and he said, you know, I don't -- I don't know.

Margaret, you got a White House that has not lost first chief of staff, national security adviser, communications director, press secretary. And those are just a few of them. I could go on.

[09:05:03] The president this morning says this is not chaos.

MARGARET HOOVER, CNN POLITICAL ANALYST: Yes.

HARLOW: Should that be unnerving to people?

HOOVER: Well, look, a White House chief of staff can't function if he doesn't have the confidence of the president. And that was ultimately -- all of us are continuing to view this analysis through the lens of what's normal and what's traditionally been a conventional way of running a White House.

Trump doesn't think that there was anything wrong with the way it was running under Reince. He was just uncomfortable with Reince because he didn't respect him, he didn't trust him. He had told him that he was going to lose the election. He had told him he should drop out of the election. Now here we are six months into a presidency and he still got the guys who weren't sort of on his team or he doesn't have confidence into. So you can understand why he would want to reshuffle from that perspective.

If Kelly does have his confidence, Kelly can put a pitbull in front of the Oval Office and say, no, no, you don't go in unless the White House chief of staff says that you can go in.

HARLOW: Right. That would mean -- I'm just picturing him telling Anthony Scaramucci, Ivanka Trump and Jared Kushner, no, stop. Don't go talk to your father, your father-in-law, come to me first.

Jeffrey Toobin, is that plausible?

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: No, it's not. And also it's worth remembering, Donald Trump is many things but one of the things he is is 71 years old. I don't know about your experience but at 71 people don't change their personalities. They don't change their styles. I mean, he is who he is.

He got elected president of the United States being this way even though a lot of people were very skeptical, including me, thought he wasn't going to win. So, you know, I don't think he sees that there's a big problem here so the idea that there's going to be some sort of dramatic just seems preposterous to me.

HARLOW: Now however, one would concede that he would like to get more done. More points on the board. You can't argue that he hasn't been effective in legislation --

(CROSSTALK)

HARLOW: -- help him --

TOOBIN: He thinks that he has had the most successful 100 days, first six months of any president in history. He says that.

HARLOW: That's true. A lot of executive orders signed.

TOOBIN: Signed, you know, largely meaningless executive orders.

HARLOW: Yes.

TOOBIN: But his view is he's a tremendous successful. Also, the Trump model of leadership is always declare victory no matter what. So he certainly does not think there's a big problem here. And he thinks the problem is the Senate and he's been blaming the Senate and the House --

(CROSSTALK)

HARLOW: Yes. And the Senate rule.

TOOBIN: And the Senate rules.

HARLOW: The magic number of 51 is going to solve everything.

Margaret Hoover, though, Corey Lewandowski, who is very close to the president, ran his campaign for a time, said the thing that General Kelly should do is not try to change Donald Trump. Smart advice or does he have to do something?

HOOVER: First of all, Corey Lewandowski ran that campaign for a skinny minute before he was ousted and he hasn't been really very close to the -- to the Oval Office for months as far as I can tell. So I -- Corey Lewandowski also learned very quickly you can't change Donald Trump. OK. But nobody is trying to change Donald Trump.

I think, you know, the reports are that General Kelly had resisted taking this job for some time. So -- and he's a smart who is universally respected. He probably took the job out of loyalty for the president and also with a certain set of understanding that he will have some kind of authority that the previous chief of staff didn't have, OK? And part of that will be the confidence of the president and that will go a long way.

(CROSSTALK)

HARLOW: But do you --

TOOBIN: For the time being.

HOOVER: Precisely, insofar as he has the president's confidence, which won't be forever because nobody ever does except family members. He will have the ability to have more of an impact than Reince did.

HARLOW: So, David, what about, arguably, very effective for the most part, former chief of staff James Baker said? And he's quoted in "The Times" this weekend, obviously served under Reagan and George H.W. Bush.

As chief of staff, quote, "You could focus on the chief or you can focus on the staff. Those who focus on the staff have done pretty well."

Is that sage advice for Kelly?

DRUCKER: Well, I think normally that would be sage advice. But I think, again, this all gets back to the president and whether he empowers Kelly to do the job that he has hired them to do. I mean, there is so much focus on everybody in the White House that seems to be failing Donald Trump but at the end of the day, the real problem in the White House, in terms of the problems that they have had has been Trump in terms of he has been on every side, message wise, of the Affordable Care Act, for instance.

So they're trying to do some very, very tricky. They're trying to repeal this law and make a lot of changes and one minute that Trump says the Republican solution is mean, the next minute he says it's not mean enough essentially. And so when you have a lot of mixed messages coming out of the White House and whenever you have a president that's encouraging the kind of staff infighting because he kind of wants to see who's going to come out of top and who's a real fighter, this doesn't bode well for a staff working together and getting along.

Look, I'd say a real key thing to look at here, there's been a lot of good people in the White House. Maybe they haven't meshed with the president. But one of the failings here has been there's been nobody under the president with real experience, negotiating high-level legislative deals. They've been experienced in a lot of things.

[09:10:02] And Mr. Kelly, I think -- the question is, can he negotiate some high-level legislative deals and provide the president with a skill that he does not have either?

HARLOW: Jeffrey, also ahead, a big Cabinet meeting at 10:00 a.m., in less than an hour. This is the first time -- you have a new "New Yorker" piece on Jeff Sessions, the embattled attorney general. The first time Sessions and the president will be in the same room since that scathing "New York Times" interview he gave about Sessions and all of the subsequent tweets but he hasn't said anything about Sessions in a few days. So?

TOOBIN: Look at the bright side.

HARLOW: Wow.

TOOBIN: Well, no. I think one of the curious things about Donald Trump is that, you know, he's very good at attacking people when they're not directly in front of him, in person. And he does not -- he does shy away from directly personal confrontation. He has other people do his dirty work. So I anticipate he will shake Sessions' hand. They will not discuss the past. They'll discuss the issues. But I don't think there will be any sort of dramatic confrontation between them.

Certainly Sessions doesn't want that. And the president is not disposed to that, especially now that he knows that if he were to make a move on Sessions the Senate Republicans, who run the confirmation process would --

HARLOW: Grassley said don't bring me anyone else.

TOOBIN: Right.

HARLOW: But you know, he did hug James Comey. Remember that moment?

TOOBIN: He did. That was like in "The Godfather."

(LAUGHTER)

HARLOW: Thank you very much, David, Margaret, Jeffrey, we appreciate it.

The Trump administration says the time for talk on North Korea is over, as Russia steps up its response to looming U.S. sanctions. Two major foreign policy tests. What is the president's next move under this new chief of staff?

And maybe the repeal fight isn't over on Obamacare. Yes, the president rips into Republicans again this morning for their failed attempt to repeal and replace. And some are signaling they'll go back to the drawing board.

Plus, hours after a violent and controversial election in Venezuela, The White House weighing in on new sanctions on the country. Potentially are they going to hit the oil export? That's ahead.

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[09:15:53]

POPPY HARLOW, CNN ANCHOR: Vladimir Putin talking tough and taking action after Congress overwhelmingly passes a sanctions bill in response to Russia's meddling in the U.S. election.

Putin says that while Russia has long hoped things would change for the better in his words with the United States. It now seems, according to him, that will not happen any time soon.

Those comments come as the U.S. has been ordered to cut staff at diplomatic missions in Russia by hundreds. Just one way that Putin regime is retaliating against this new sanction bill.

Let's go straight to Claire Sebastian, our CNN international correspondent live in Moscow with more -- Claire.

CLAIRE SEBASTIAN, CNN CORRESPONDENT: Yes, Poppy, 755 people, that's the number that Russian President Vladimir Putin says he will cut from the U.S. diplomatic mission in Russia. That affects not only the embassy in Moscow, but three other continents around the country.

It is a big number any way you look at it. We had some clarification from the kremlin on how this will actually work. They say the U.S. gets to pick who is affected, who gets cut, which 755 people. It will not be diplomats, non-diplomats and also Russians local staff hired by the U.S. diplomatic mission here.

So, a big number here but this isn't 755 diplomats. Having said that, the U.S. State Department, a senior official there told CNN that they are -- they see this as uncalled for and regrettable.

They are setting the impact of this and try to figure out how to respond and certainly if they do respond with other measures against Russia, Russia says it reserves the right to do the same.

President Vladimir Putin saying on state TV last night that he doesn't want to do that. He thinks that would be detrimental to Russia and to international relations, but there are options on the table should the need arise. They're being very clear about that.

But having said that, you know, there are -- this relationship isn't improving. That is the bottom line and any further evidence that Russia was looking for of a change in tone from the Trump administration, they can find Vice President Pence in Estonia, reassuring that country and other NATO allies of the U.S.'s commitment to the alliance. He called Russia the greatest threat that the Baltic nations face, an unpredictable neighbor and he had this to say about relations with Russia.

(BEGIN VIDEO CLIP)

MIKE PENCE, VICE PRESIDENT OF THE UNITED STATES: We hope for better days, for better relations with Russia. Recent diplomatic action taken by Moscow will not deter the commitment of the United States of America to our security, the security of our allies and the security of freedom-loving nations around the world.

(END VIDEO CLIP)

SEBASTIAN: Yes, Poppy, the vice president, Mike Pence, also reaffirming that President Trump does plan to sign that sanctions bill into law. He hasn't done so yet. Russia didn't wait for him to do that before retaliating. They saw that as a foregone conclusion. Certainly, when he does, they'll be watching closely from here in Moscow.

HARLOW: And making a statement with just where he's visiting, also going to Georgia and Montenegro after this. Claire Sebastian, thank you very much for us in Moscow.

This morning, the Trump White House is weighing its options on North Korea after the rogue nation successfully tested a missile on Friday that could potentially strike major U.S. cities.

The dramatic escalation, an escalation that prompted a conversation between the president and his Japanese counterpart, Prime Minister Shinzo Abe. Together they are bound to ratcheted up both the diplomatic and the economic pressure on North Korea.

Let's go to our Alexandra Field. She's live in Seoul, South Korea. Yes, they are working together but some tense words towards China.

ALEXANDRA FIELD, CNN INTERNATIONAL CORRESPONDENT: That's right. From the two leaders who vowed to work together to solve the North Korea problem. All you see is a mounting of frustration.

Look, we have seen this cycle repeat itself over and over again for months now. We watch as North Korea fires off missiles, the response from around the world remains largely the same. Then North Korea fires off another missile and jaws drop when people recognize the kind of advances that North Korea is making with the rapid development of their missile and nuclear program.

Poppy, let's not forget, we're talking about the test launch of two ICBMs in the space of just a month. So how do you change the approach? How do you change the response to North Korea? How do you rein them in?

[09:20:02] It's the question that's being asked in Japan, South Korea, China and the U.S. That's where the U.S. ambassador to the U.N., Nikki Haley, has tweeted that this really isn't the time for talking anymore.

But she says that it is time for China to act. U.S. President Donald Trump echoing those same sentiments essentially saying that China, for all its promises to help with the North Korean problem, has done nothing but talk. He also again is looking to China.

But we're hearing from Beijing is a defense of the efforts they say that already employed. Officials in Beijing say they've already offered a solution to this problem, calling on North Korea to freeze its missile and nuclear program.

In exchange, they want to see the U.S. and South Korea put an end to military training exercises that so enraged North Korea. That has been a nonstarter, Poppy, and you've got both sides really digging in here.

HARLOW: Indeed. Alexandra Field for us in Seoul. Thank you so much for that.

Here to discuss, Gordon Cheng, a columnist from the "Daily Beast," and the author of "Nuclear Showdown: North Korea Takes On The World." We are also joined by U.S. Army Major General James "Spider" Marks. He's also a CNN military analyst.

Gentlemen, thank you for being here. Gordon, let me begin with you because the president's tweets not only ripping into China, but saying, quote, "China could easily solve this problem."

Two-part question to you, A, is that factual? Is there anything that China could do to easily solve that problem and, B, you wrote a column about this and you said that China should fear what the president is saying over Twitter. What do you mean?

GORDON CHANG, COLUMNIST, "THE DAILY BEAST": Well, first of all, China has overwhelming leverage over the North Koreans, and it's not just economic or diplomatic. The most important thing that China supplies is confidence to regime elements that they are safe from China -- safe from the U.S., South Korea, international community.

That really bolsters the Kim regime. If China would signal that it was withdrawing its support, I think we would see things occur in Pyongyang which probably would be at our advantage.

The other thing, though, you know, right now, President Trump's Saturday tweet really reverses four decades of U.S. policy towards China and it questions the whole basis of this policy, which is trade. So, I think the Chinese have a lot to be worried about.

The U.S. has overwhelming leverage over China. We ran last year a $309.8 billion trade deficit with the Chinese for both goods and services. That puts us in a pretty good position if we were going to have a trade war, if there were going to be trade frictions.

Our economy is, in reality, twice the size of China's. We can push those guys around. We do not have an economy that is geared to selling things to China. China has an economy geared to selling things to us.

HARLOW: General, to you. So, this is a host of major international issues that General Kelly comes into as he becomes chief of staff. The Twitter diplomacy that President Trump keeps utilizing here, instead of picking up the phone or meeting with, as far as we know, Xi Jinping, calling him out on Twitter, is that something that you believe General Kelly will be comfortable with and will advise the president to keep doing?

MAJOR GENERAL JAMES "SPIDER" MARKS (RETIRED), CNN MILITARY ANALYST: I think John Kelly will probably not be comfortable with that. But at the end of the day, the narrative is not necessarily changing the president's behavior but changing fundamentally and first order of business is the behavior of the White House staff and that's what General John Kelly will be able to affect immediately and he needs to.

It's also be square with each other and that there will always be exceptions to the rule in terms of everybody must come through the chief of staff before you get to the president. The president has family members that are personal staffers.

They will continue to have direct access to their father, to the president of the United States. What General Kelly will have to ensure is that when those folks come out of the oval office the first place they stop is with the chief of staff.

So clearly what we see what's taking place in North Korea is problem number one internationally because it's existential and, as Gordon described, we have to be able to establish some leverage with China because the solution for the problem in the regime in the North goes through Beijing.

We realize that. China realizes that. We have to work this out very, very quickly because we cannot afford to have a confrontation on this peninsula.

HARLOW: Gordon, explain the resistance from China, from Beijing, from Xi Jinping to this mounting pressure from the United States. What is in it for China to not step up sanctions, for example, to not do more to push back against North Korea?

CHANG: In the short term, Poppy, Beijing finds this dynamic of North Korean provocations very much to its benefit because every time North Korea does something awful, we send our secretary of state or some other high envoy to Beijing and we plead for Chinese cooperation.

You know, the Chinese get concessions from us and also we stop talking about that things that are important to us like predatory Chinese trade practices, South China Sea, human rights, Taiwan, you name it. Beijing likes this going on right now.

[09:25:03] HARLOW: Final word to you, General. As you look at the landscape that is ahead and you look at the new leadership in the west wing, obviously, under the president, you have General Kelly. What do you hope to see from this new relationship? What do you believe he can accomplish on the Russia front, on the North Korea front in dealing with China that Reince Priebus perhaps was not able to advise the president successfully on?

MARKS: I think this White House needs to have an alignment of policies, policy priorities, and then the alignment most importantly is in the communications. When I say communications, it's everything that cascades from a policy directive, everything that needs to be in place to support that.

That's what the chief of staff clearly is in place to do, to ensure that all of that alignment because let's be frank. When you come out of the oval office the chief of staff is the very first person who has to say OK, here are the resources that must be in place in order to accomplish these tasks.

Those tasks clearly are, in the near term, still remain, always will remain, military readiness, health care, infrastructure and tax reform. If you can get your arm around those four, I think we're making progress. We try to parse every tweet we're into this continual swirl, lot of whitewater that does no one any good.

HARLOW: Thank you very much, General. Nice to have you on. Gordon, thank you as well. We'll be watching. Again, we're moments away from General Kelly being sworn in as the president's new chief of staff.

Meantime, the president talking up economy on Twitter, highest stock market ever. Best economic numbers in years, unemployment lowest in 17 years. Wages rising.

CNN business correspondent, Alison Kosik, is with us before the bell. Indeed the stock market is soaring. Just an important note, doesn't matter for half of America that doesn't have money in it.

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Good point but for companies that are in the stock market, of course, it means everything. We are looking at second quarter earnings season right now. We are in the middle of it and it's red hot. It's much stronger than expected.

With more than half of S&P 500 companies porting. We are expecting to see an 11 percent rise in profit in the second quarter. That follows a 15 percent rise in profit for the first quarter. So, you're seeing companies healthier, strong, and that's why you are seeing investors buying into the market.

For those who are invested it's also why you're seeing year-to-date the S&P 500, the Dow up 10 percent year-to-date and that's nothing to shake your nose at because the reality is that the expectations was that the market wasn't going to perform as well.

What's coming in August is the expectation that we're going to see some legislation passed, tax reform and infrastructure.

HARLOW: Maybe.

KOSIK: If that doesn't happen expect to see markets --

HARLOW: August a little aggressive to see big things like that done. Thank you very much, Alison. We appreciate it.

If the GOP gives up on health care right now, the president, in his words, says they are total quitters. Next, what he says he will stop paying if the repeal and replace effort does not persist.

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