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Critical Day For GOP Tax Cut Plan; Trump Adviser Praises "Trickle Down" Benefits; Trump: I Don't Blame China For Taking Advantage Of U.S.; Trump Says He Expects To Meet With Putin. Aired 11- 11:30a ET

Aired November 9, 2017 - 11:00   ET



KATE BOLDUAN, CNN ANCHOR: -- your money and their job security that's what's on the line this morning as Republicans on Capitol Hill kick off a critical day on their most critical issue, tax reform.

Senate Republicans are about to unveil their version of the tax plan, a tax plan that already promises to be different from the House's version. Still reeling from their failure to repeal Obamacare and this week's Democratic sweep of elections, some Republicans say it is now or never.



UNIDENTIFIED FEMALE: (Inaudible) to be worried?

GRAHAM: Yes, if we don't produce. I think the antidote to our problems are success legislatively. Our problem is our base is pretty unenthusiastic. Legislatively we haven't cut taxes or reformed health care.


BOLDUAN: House Speaker Paul Ryan will be facing reporters later this hour and you can be sure he's going to be facing tough and important questions on this very issue. The cost of the tax bill, who really benefits, and can he guarantee the middle class will not take a hit? On that the White House is warning would be a deal bracket.


MICK MULVANEY, WHITE HOUSE BUDGET DIRECTOR: At the end of the day, if we really believe this is a middle-class tax increase, he's not going to sign it.


BOLDUAN: So there you have that. A lot is going on right now on this. Let's get over to Capitol Hill to get the very latest. CNN's congressional correspondent, Phil Mattingly, there to set the stage. So, Phil, let's start on the House side right now. Are they any closer to an agreement on what exactly the final product is going to be that will keep Republicans together on this?

PHIL MATTINGLY, CNN CONGRESSIONAL CORRESPONDENT: Yes. After a very riveting four days in the House Ways and Means mark up on tax policy, Kate, I can say look, we're still waiting for the final changes to come on the House side of things. On the top line everybody knows the basic dynamics and key points of what this plan will include.

But there is still a lot of problem areas that they're trying to resolve during the committee process before they actually move this forward legislatively. Whether it's the state and local tax deduction, mortgage interest deduction, the pass-through rate and how the guardrails will operate.

They are kind of some in the weeds stuff that they will try and figure out before they move forward. One other element there that we saw yesterday is right now the House Republican plan costs more than it's supposed to if it wants to move through the Senate.

Right now, Joint Committee on taxation says it's about $1.57 trillion, CBO says it's about $1.7 trillion, their target is $1.5 trillion. Now Kate, that's not fatal in the House, that's more of a Senate issue than a House issue, but Chairman Kevin Brady told me yesterday they do plan on having their numbers back down to $1.5 trillion before it leaves committee today.

And that's why we're waiting for that final amendment here. I think more broadly, though, and I think this is the important thing in talking to Republican aides in both chambers right now is the question of we know where the policy is right now. We have a good sense of what the policy issues are.

Does the political imperative after Tuesday, after everything we've seen, after the Obamacare failures, is that what ends up winning the day over all else? Republican leaders think yes. A lot of members I'm talking to think yes, but as you know very well, Kate, when it comes to tax reform, details matter an enormous amount.

BOLDUAN: It's all about the details if nothing -- I mean, this one essentially. So Senate Republicans, they're about to push out their version of a tax plan. How is this going to complicate things or let's be Pollyanna, how is it going to make it all better?

MATTINGLY: It's a tax buffet today. Yes. We get the basic tenants of this is your dream, a tax buffet. We get the basic tenants of the Senate plan and look, there is an agreed upon framework, the administration, the House and the Senate. And the Senate plan will have those top line numbers as well.

But there are a lot of key differences and it's important kind as you look through them why they're actually there. In the House, they had four brackets. The Senate I'm told right now at least as it was this morning, it will be between five and seven, and the thresholds for those brackets how much you make to be in each bracket will be different than the House version.

On the corporate rate which is, obviously, a huge component, there is a dramatic cut in both the House and Senate side, but the Senate is phasing theirs in by a year unlike the House which would be immediate.

You also have state and local tax deduction. The House because of negotiations with some of their northeastern Republicans changed it at least for property putting a threshold at $10,000.

The Senate will do away with it entirely. Now why is the Senate so different than the House? Well, budget reasons, these are things that are being done to help pay for the cuts on both the corporate and individual side. Does that create enormous problems? Potentially.

We'll have to wait and see. The idea has always been House passes their version, Senate passes their version, and then they reconcile them together. But the further away they get from one another on several of these key items the more complicated that becomes.

Again, there is a lot of enthusiasm to do something, but the enthusiasm to do anything kind of collides sometimes with those details we are talking about. So, that's why today matters an enormous amount in both the House and Senate, and for the future of this bill all together -- Kate.

BOLDUAN: All right. We'll standby together. Thank you, Phil.

A tax buffet, that's just a perfect way to start your day. Joining me now to discuss, CNN global economic analyst, Rana Foroohar, associate editor at "The Financial Times," and CNN chief political correspondent, Dana Bash.

Dana, first to you. Got love Phil's colorful language all the time. What do you think will happen when the Senate rolls out their version? They roll it out and then what?

DANA BASH, CNN CHIEF POLITICAL CORRESPONDENT: Well, and then they're going to start the same kind of very difficult work that we've seen take place over the past couple weeks in the House.

[11:05:05] But, you know, Phil touched on something that is really critical and that is, you know, although there are several substantive and policy differences between what the Senate is going to roll out and what the House is going to roll out, it all -- I think probably one of the biggest is the question of the elimination of the tax deduction for state and local governments and the reason is because that's a lot of revenue.

That's a lot of money and one of the big rubs right now that's going on in the House in and among Republicans and certainly will in and among Senate Republicans, is the deficit and how this tax reform bill is going to eat into and make the deficit worse.

If you take away its basic math, I'm not that good at math but even I get this, Kate, if you take away revenue for the government, and you don't replace it in another way, it is going to add to the deficit. So, I think that is a major, major difference between the Senate and House bill and will probably be ultimately at the end of the day where the biggest conflicting debates in and within the Republican Party.

BOLDUAN: There you go students, Dana Bash's math lesson just for the day.


BOLDUAN: Done a very good job. Rana, there's a policy I want to get to it, but how this is sold and how this is branded is as important. Just look at what happened with Obamacare, you need to look no further. Asked about this whole effort by CNBC's John Harwood, Trump's economic adviser, Gary Cohn, said this in an interview and I want you to listen to this.


GARY COHN, CHIEF ECONOMIC ADVISER TO PRESIDENT TRUMP: We create wage inflation which means the workers get paid more, the workers have more disposable income, the workers spends more, and we see the whole trickle down through the economy. And that's good for the economy.


BOLDUAN: In the same interview, Cohn also said the most excited group out there are big CEOs about our tax plan. They might very well be excited and it might be good for everybody, but that is not how we're hearing this from Capitol Hill.

FOROOHAR: No. You know, I'm amazed that Cohn is still using words like trickle down. Most Americans just don't believe anything has been trickling down for the last 20 years.

BOLDUAN: Anyone in the policy realm is not talking about it that way anymore.

FOROOHAR: No. You know, for the last 20 years tax cuts really haven't created growth. You know, looking at that proposed 20 percent corporate tax number, OK, it's true, American corporations do pay a lot more than most other international corporations right now, but in reality, because of all the loopholes, most big companies actually pay about 19 percent.

The biggest tech firms like Apple, for example, pay much lower than that because of all these loopholes. Those are not going to be closed. That gets to the math point that Dana was making, how are you going to make all this work and get Republicans on board with something that doesn't blow up the deficit. That's --

BOLDUAN: Go ahead, Dana.

BASH: I just want to say, that sound bite from Gary Cohn is kind of unbelievable. A, because --

FOROOHAR: Totally.

BASH: -- because of what you said with the trickle down, which is, you know, certainly a tenant of conservative and Republican philosophy, but not when you're talking about sort of the Trump coalition.


BASH: Which is much more populist. But on that note, saying that CEOs are going to be so happy about this, I mean, those are not the Trump voters that the president promised would get relief in their pocketbooks, would have economic relief.

I mean, another big, big, big part of the -- of the rub on Capitol Hill right now is, what is this going to look like for the middle class. And assuring their constituents and assuring the rank and file who are not sure about voting for this bill, on the House and Senate side, but most of the House right now, that the middle class will get a tax break.

But when you have the president's chief economic person talking about how great this is for CEOs, that's not exactly ideal messaging. I'm guessing there are lot of House Republicans with a lot of heart burn hearing that this morning.

BOLDUAN: That's exactly right. I mean, when it comes to the differences as Phil laid out, you know, just because we won't go over them again the state and local taxes, as Dana is talking about, more tax brackets than the House bill and the corporate tax that you were mentioning. If all of this is in the bill and there will be more, how different, how far apart do you think the House and Senate are to start off?

FOROOHAR: I think that there are some significant differences. I mean, that point about deducting a local and state taxes is actually a crucial one because if you look at totally eliminating that, like the Senate bill would propose, that's going to hit blue states. That becomes very bipartisan, right.

That's going to hit, you know, the wealthy and the upper middle classes -- and in New York and California. You know, that's an easy way to kind of, you know, get your budget in line, although it's not going to get you there totally.

I think the visuals are not great. I mean, look, we haven't talked about the alternative minimum tax which is something that rich typically pay.

[11:10:04] If you look back to the little information we have on Trump's own taxes, 2005, he paid about $38 million, $31 million of that was the alternative minimum tax. He wants to get rid of that entirely. It's really hard when you have optics like this to sell this as a middle-class program.

BOLDUAN: And makes it hard when they're still trying to negotiate it. It's not cooked yet, not baked. Dana, Rana, thanks, guys. Really appreciate it.

All right. Let's go from here back to Capitol Hill right now because we want to discuss this more with Republican Congressman Trent Franks of Arizona joining me now. Congressman, thanks so much for coming in.

REPRESENTATIVE TRENT FRANKS (R), ARIZONA: Well, thanks for having me on. Always appreciate it, Kate.

BOLDUAN: Thank you. Paul Ryan just yesterday said, with the House bill, everyone gets a tax cut. He said that in a radio interview. Also, yesterday, Kevin Brady, though, stopped short of that and he said many people will see a tax cut. John Thune just said this morning. Listen to this, Congressman.


UNIDENTIFIED FEMALE: Can you guarantee that no middle-class family will see their taxes go up?

SENATOR JOHN THUNE (R), SOUTH DAKOTA: Nora, I don't think you can guarantee every filer is -- that that's going to be the case. Can you guarantee that every single filer might have some different experience? I don't think you can guarantee that.


BOLDUAN: Congressman, at this point, are you comfortable being able to guarantee that no middle-class family will see their taxes go up?

FRANKS: Well, you know, I would never try to guarantee anything like that. But I am suggesting to you that the overwhelming majority of the American people will see a demonstrably clearer tax relief that they can palpably feel.

And I also am convinced that sometimes we look just to the tax relief as far as the money back in the taxpayer's pocket as the primary benefit, but the big benefit here is going to be how this is going to catalyze a tremendous growth in the economy and that's going to hit everyone in almost a ubiquitous way.

So, you know, I'm considered one of the most conservatives in terms of a full spectrum conservative in the entire Congress and if I'm excited about this, it means something to the bottom line foundation of the economy. You know, productivity is what it's all about and this is going to incite tremendous surge in productivity in this country in my opinion.

BOLDUAN: One of the things out there, though, is what happens to the deficit and one idea being floated to pay for this, pay for the cuts, is adding repeal of the individual mandate of Obamacare into the bill. Do you support adding that?

FRANKS: Well, I mean I would love to see the individual mandate repealed. I think that that -- but I don't really predict that's going to happen.


FRANKS: I understand the concern about the deficit and I would say this, that seems to be the primary talking point from our friends on the left and if that is true, then this represents the first time in the history of human civilization that they've been concerned about the deficit.

So -- but I'm concerned about it genuinely. I'm convinced that with a lot of our projections and trajectories here we forget what this is going to do to the economy and how that's going to create productivity.

And literally as it has in future -- in past circumstances, in the future, I believe it's going to see a bigger tax revenue for the government and I think that's going to go a long way towards mitigating any deficit issues.

BOLDUAN: I do think it's important to note that you don't necessarily support adding Obamacare repeal into this bill.

FRANKS: No, I do support that.

BOLDUAN: You're OK with it being in. You just don't think it's going to happen?

FRANKS: I'm not predicting it will happen, but I would love to see the Obamacare repeal go in. The Senate rules as we talked about many times make it very difficult under this Byrd rule. This is the one rare opportunity for us to fit something through the Senate under their Asinine rules that could really be truly historic for the American people. I'm glad, too -- go ahead.

BOLDUAN: One thing I know that you care very much about is not in the bill right now in the House version, the adoption tax credit. If it is not added in, are you a no on the House bill?

FRANKS: Well, I just say that would break my heart because, you know, Republicans have always been under this I think noble mantra of adoption not abortion and we believe in that deeply and I will tell you every person on the leadership team including Kevin Brady embraces that.

I will make this prediction, that the adoption tax credit will either be completely in the way it was before or make it better. I know these men. They're committed to this and Kathleen Morris Rogers is probably one of the most eloquent, poignant state -- you know, she personifies what this is all about.

And I just have to believe that we're going -- you know, I'm not an expert in tax issues. I do mostly children's issues and national security. But I'm convinced that when we look at this from a fiscal point of view, you can't make an argument against the tax credit for adoption on fiscal basis. You just can't do it because we save so much every time a child is adopted. Of course --

BOLDUAN: But if it doesn't make it in, can you support the bill? FRANKS: Well, I'm going to say to you, not to try to dodge your question, but I have so much conviction that this is going to be in.

[11:15:05] I also say this, even without the deduction tax credit, I'm going to break my neck to make sure it stays in, but even without it, if you look at how they've constructed this thing with the child credits and family credits, just adopting a child will bring tax relief.

So, there's already a built-in advantage for adoption in the existing bill. I can't see -- I can't figure out a way to get to no on this bill. Sometimes they say how do I get to yes. I don't know how to get to no on this bill reasonably.

But I am convinced, and I say this with the strongest conviction I know that people involved, and they are deeply committed to this, and we're going to fix this and either going to leave the tax credit for adoption as it is or make it better.

The main point is, that our commitment will be to these little guys that just trying to find their way back home. You know, just trying to find a place to live and grow up in a surrounding where they're loved and appreciated.

BOLDUAN: Congressman, one of the kindest dodges of a question I have definitely encountered, but that would always come from you.

FRANKS: That's great.

BOLDUAN: Let me ask you this, let me finally ask you, want to ask you about politics real quick if we haven't talked about politics enough. Senator Flake is obviously not going to be running for re-election in your state. That leaves an opening for a Republican to run for that Republican seat to step up. Are you going to throw your hat in the ring for Senate?

FRANKS: You know, I'm not going to run for the Flake seat. I wish Jeff Flake nothing but the very best God can give him. That's not a seat that I'm going to run for. But I believe that someone that will be a lot like what I say lot like me believe in the same things I do will step up and I will do everything I can.

BOLDUAN: Would you support Martha McSally?

FRANKS: I will support whoever the nominee is, but I'm not going to suggest who I would support in a primary yet because I don't know who the actual candidates will be. But whoever wins that primary, I will break my neck to see them win on the Republican side.

And I genuinely wish Jeff the best going forward in life that God can give him. This is a man that loves God, his country, his family and even though he and I have had profound disagreements politically, he is a decent and good human being.

BOLDUAN: Congressman Trent Franks, thanks for coming on as always.

FRANKS: Thank you. You take care.

BOLDUAN: All right. Still up for us, congratulating China and blaming America. Candidate Trump once compared China's trade practices to rape and theft and now in Beijing, President Trump offers nothing but praise. What's going on here? That's next.

Plus, could Michael Flynn flip? CNN is learning that Trump's former national security adviser is concerned he's afraid that the special counsel's Russia probe could ensnare his son. How a worried father could factor into the Mueller investigation?



BOLDUAN: President Trump to China, it's not you, it's them. President Trump telling Chinese leaders today he doesn't blame Beijing for taking advantage of American trade practices. In fact, he praised China for exploiting the trade deficit and blamed his predecessor for letting it happen.


DONALD TRUMP, PRESIDENT OF THE UNITED STATES OF AMERICA: I don't blame China. After all, who can blame a country for being able to take advantage of another country for the benefit of its citizens. I give China great credit.


BOLDUAN: The president with a farewell tweet before heading to his next stop on his Asian tour to say very least this is all a far cry from what Candidate Trump said about China on the campaign trail over and over and over again. Remember this.


PRESIDENT TRUMP: We can't continue to allow China to rape our country and that's what they're doing. China is taking our jobs, our pun, our base, our manufacturing.

What they've done to us is the greatest single theft in the history of the world. The greatest abuser in the history of this country, rampant theft of intellectual property. A currency manipulator.

They break the rules in every way imaginable. I have many friends in China, they agree with me 100 percent. We have lost all of their respect. They think we're run by a bunch of idiots.


BOLDUAN: So, how does such criticism morph so quickly into kudos and praise? Let's go over to CNN Kaitlan Collins traveling with the president right now. So, Kaitlan, what is the White House saying about the shift? Kaitlan, can you hear me? I think may have a technical difficulty in the business. All right. Let's discuss this, though, with CNN political and national security analyst, David Sanger, he's also a national security correspondent for "The New York Times." David, can you hear me.

DAVID SANGER, CNN POLITICAL AND NATIONAL SECURITY ANALYST: I'm sorry. I heard the first part there from you.

BOLDUAN: We're having technical problems. David, can you hear me? It's Kate.

SANGER: Now you're back. Say it again.

BOLDUAN: At least there's someone to talk to me. All right. David, let's talk first about what I was going to ask Kaitlan Collins about the pretty shocking and very noteworthy shift in how the president spoke about China and the trade deficit during the campaign and how the president is talking about it today from Beijing?

SANGER: Well, I think it has more to do with where he was speaking than what he was speaking about. Because he went on into this trip and particularly into the visit with Xi Jinping, the newly re- empowered president of China.

He had to take care of his North Korea issues first and you'll remember that a few months ago, the president in a very telling aside said, why would I pressure China on trade while they're helping me on North Korea.

Now, we can have a debate later on about how much they're really helping on North Korea, but he has clearly faced the issue that every president before him has faced which is, how do you get the Chinese to cooperate on a political goal while you're beating them up on an economic goal.

[11:25:08] And I read his comments today as suggesting that he was going to step back a bit on the trade issues and he did that by saying the Chinese are simply acting in their own self-interest.

Who doesn't act if their own self-interest in trade? We do, they do, everyone else does. Blaming this on President Obama I thought was particularly strange because if you go back to the history of this, if there is a moment that most of the President Trump's allies sort of put on this it was the moment that China came into the World Trade Organization.

That happened at the very end of the Clinton administration and it was promoted pretty heavily by the Bush administration and it was President Bush who decided not to press them hard on trade because he needed them on counterterrorism.

BOLDUAN: But when it comes down to it, though, is this what China needs to hear on trade in order to get them to yes on what the president wants or needs from them on North Korea? Does this language move them when it comes to what he needs their help on? SANGER: Well, it certainly doesn't make them think that they have got a very large, imminent problem. For President Xi the strategy here is, give the Trump administration just enough on North Korea to show that they're cracking down, without leading to the collapse of the regime, which the Chinese desperately want to avoid happen in North Korea.

And meanwhile, forestall some of the trade issues and you didn't hear very much about the South China sea and China's territorial ambitions and all that. What worries me about the discussion that we heard was it was all very transactional, as it frequently is with President Trump.

How do you put together a deal? But not much about the long-term relationship with China even in the economic sphere. So, what are we worried about with China? Is it the current trade deficit or is it their extremely aggressive and understandable move into electric cars, quantum computing, into areas where they're no longer taking our intellectual property but amassing their own.

And that's really where the future focus of this has to be and we didn't hear very much about that at least in public.

BOLDUAN: David, hang on with me one second. I think Kaitlan Collins is overseas is with us now. Kaitlan, let me bring you in on the other question that I have about what's coming up next. I mean, it's been a big question mark throughout this whole trip. Is the president going to sit down with Vladimir Putin? What more are you hearing about whether or not this is actually going to happen?

KAITLAN COLLINS, CNN WHITE HOUSE REPORTER: Well, Kate, it certainly seems that the White House is anticipating a meeting between those two on the side of that economic summit in Vietnam. Now Secretary of State Rex Tillerson came to the hotel that I'm at right now and briefed reporters today, and he was asked about that.

Now he didn't say that there was a concrete meeting set in place. He said that the officials are still trying to determine it if there was enough substance for the two leaders to warrant a pull aside on the sidelines of that summit.

But then shortly after he told reporters that, a Russian state news agency was saying that the meeting is going to happen on Friday. So that's what we're waiting to confirm from the White House, that that meeting is happening.

But Tillerson did say that they did speak and focused on Syria and Ukraine and asked if Russian meddling in the election would still be on the list he said almost certainly, Kate. We can expect that.

If that meeting does happen it will certainly be remarkable because as you know, that investigation into Russian meddling in the 2016 election still hangs over this Trump White House quite a bit.

BOLDUAN: Absolutely right. Kaitlan, thank you so much. David, let me bring you in on this finally. I mean, on one level isn't there always something, I don't know how Rex Tillerson put it, something sufficiently substantive to talk about between two world leaders especially between these two. It's a yes or no. I'm -- I find this curious.

SANGER: Yes. Well, there's certainly plenty of substantive issues. The question is, are the two of them ready to talk about it?

BOLDUAN: There you go.

SANGER: The continued Russian meddling in Ukraine, its military buildup in Europe, apparent violations detected during the Obama administration, continuing in the Trump administration, of the intermediate nuclear forces agreement, a major nuclear agreement, would all be you would think right subjects.

On the question of meddling in the election, they met, you recall, in July in Hamburg and I was at that summit meeting and at the end of it, President Trump said well, he had heard from President Putin that if Russia had meddled in the election, they would have been so stealthy about it.

BOLDUAN: I'm only interrupting you for one person. I have to head to Capitol Hill right now. House Speaker Paul Ryan speaking with reporters right now. Let's listen in.

REPRESENTATIVE PAUL RYAN (R-WI), HOUSE SPEAKER: -- every income level. You know, you know how much I love this stuff. I love helping craft and shape policy especially tax policy. It has been nearly a lifelong --