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GOP Tries to Buy More Time; Aligning House and Senate Bills; Trump Gives Aides Assignments; Kushner and Tillerson Clash. Aired 9:30-10a ET

Aired December 04, 2017 - 09:30   ET

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

[09:33:47] POPPY HARLOW, CNN ANCHOR: So, this morning, Republicans are in a race against the clock to prevent a government shutdown. Republican leadership scrambling to buy more time. The deadline, just a few days away.

JOHN BERMAN, CNN ANCHOR: Lauren Fox on Capitol Hill for us with the very latest.

Lauren, what are you learning this morning?

LAUREN FOX, CNN CONGRESSIONAL REPORTER: Well, Republicans have until Friday when the government runs out of money. And Republican leadership is already trying to negotiate a two-week stop gap measure to give them more time to negotiate a bill by the end of the year.

Now, here's the issue. Republicans and Democrats disagree on a key issue. Democrats want to make sure that immigration is included in the spending bill, something that conservatives say shouldn't be included. They say it's two separate issues. But Democrats want to make sure that DACA recipients, those individuals who came to the country illegally as children but were given protective status under the Obama administration are still protected. Congress has been working through this for several months. They have until March, but Democrats say those people in -- in -- must have some kind of certainty moving forward.

Now, we have to remember that with only five days to figure this out, there's absolutely no room for error, even though Majority Leader Mitch McConnell has said there will not be a government shutdown.

[09:35:00] BERMAN: All right, Lauren Fox for us on Capitol Hill.

Lauren, great to have you with us. Thanks so much.

As Lauren's been saying, you know, among other things, the Senate has passed its version of a tax bill.

HARLOW: Yes.

BERMAN: The House passed their own version of a tax bill. Now the two shall meet or at least try to.

HARLOW: They will certainly try to. But there are some big differences in the Senate plan and the House plan. Our chief business correspondent Christine Romans is here to go through all of it.

Some major -- I mean Republicans seem to be downplaying this thing, we'll get there, we'll get there, we'll get there, nothing big is different.

CHRISTINE ROMANS, CNN ANCHOR: They're moving fast too.

HARLOW: But there are big differences.

ROMANS: There are big differences.

What Congress decides will be felt by taxpayers, you guys, in every corner of the economy. A lot depends on whether the Obamacare mandate is repealed, of course, but there are a lot of other wrinkles here to iron out.

First off, personal tax cuts in the House version. They are permanent. In the Senate bill, they expire in the year 2025. Also different, individuals tax rates. The House has four income tax brackets, I can show you those, including preserving the highest tax rate at 39.6 percent. The Senate has seven and lowers most rates, including for the top.

Now, the Senate keeps some popular tax breaks that the House kills, or reduces, quite frankly, deductions for mortgages, medical expenses and student loans. Grad students fare much better under the senate plan, you guys. And this has been something a lot of people have been talking about. Big corporate, permanent corporate tax cuts are the cornerstone of both versions. Make no mistake. There is no guarantee it will add jobs or raise wages and both plans add to the deficit.

Let's zero in on the Senate bill. A score from Congress itself finds winners and losers in every tax bracket. And the losers grow over time. For Americans making the median income, 80 percent get a tax cut in 2019. By the year 2027, only 14 percent still have a tax cut. And a fourth, 26 percent, pay more.

The biggest tax cuts go to the top earners. Other tax goodies for the top repealing or adjusting the alternative minimum and estate taxes and preserving the carried interest deduction that's mainly used by hedge fund and private equity managers and real estate developers. All of this has to be hashed out.

Over the weekend, there was furious, furious lobbying from corporate interests who are concerned about a corporate AMT coming back into this thing. Still discussion about pass-through income. But, you know, a lot of the energy is around the tax cuts. The corporate tax cuts. And here's why. Wall Street really wants it. The futures --

HARLOW: You look at the market this morning.

ROMANS: Yes, the futures are up. Have been up. The stock market's up more than, what, 200 points at the moment.

BERMAN: Fair point. But the deal here is, the stock market, these businesses like it because they're getting a lot more money. HARLOW: Yes.

ROMANS: And they're going to get a simpler tax code. In theory a simpler tax code, not that 35 percent (INAUDIBLE) rate.

HARLOW: And there's -- there's no -- no mandate on what they have to do with all that extra money coming over.

ROMANS: None. None.

HARLOW: Zero. Zilch. Nothing.

ROMANS: So -- so you're -- you're taking it on faith that they're going to take that money, those CEOs --

HARLOW: Create jobs.

ROMANS: And create jobs or raise wages. And when we've asked those CEOs on the conference calls for their earnings they have said, no, they're going to give it back to share buybacks and dividends.

HARLOW: Right, which has happened in history almost every single time.

Really quickly, didn't the president say a while ago that hedge fund folks were getting away with murder and now they get to keep the carried interest with both --

ROMANS: Again and again. They get to keep the carried interest. They get to keep the carried interest.

Now the president also, over the weekend, said he would be OK with a 22 percent corporate tax rate. Clearly Wall Street isn't concerned about 22 percent either because it's still up.

BERMAN: It's big no matter what. They never cared.

ROMANS: Well, you know, Wall Street doesn't see this as a middle class tax cut.

BERMAN: Yes.

ROMANS: Wall Street sees this as a Wall Street tax cut.

BERMAN: Christine Romans, great to have you with us. Thanks so much.

ROMANS: You're welcome.

HARLOW: Still to come, is President Trump really making moves to go around his chief of staff? A new report this morning says, yes, but how? That's next.

(COMMERCIAL BREAK)

[09:42:47] BERMAN: All right, this morning's pretty fascinating new reporting out about the president's mindset and relationships inside the White House. According to "The Wall Street Journal," President Trump is going around the back of his chief of staff, going around John Kelly's back to give assignments directly to staffers.

HARLOW: So joining us now is the reporter who broke the story in "The Wall Street Journal," Michael Bender.

It's nice to have you here.

This is fascinating. There's a lot to tick through. But your reporting is that the president is -- I'm not totally shocked by this, but I'm sort of shocked that he's succeeding somewhat in it, in having folks come into his office late at night or people are going through Melania Trump, et cetera, to go around General Kelly. Explain.

MICHAEL BENDER, "THE WALL STREET JOURNAL": Well, as you -- as we all remember, John Kelly was brought in to institute kind of a rule -- some rule and order in the White House. There was some -- there was some discipline that the staff was craving after the first six months in the White House had been marked by a lot of internal fighting and back biting. But while the staff was seeking this kind of discipline, the president looked for the loopholes.

As you mentioned, it's not all that surprising. This is a president who enjoys operating in a kind of tumultuous environment. He referred to the internal back biting at one point a few months ago as people fighting over who loved me the most. So he enjoys hearing different points of view. And that's the other piece on this too, he wants to be able to touch his friends on the outside.

The problem with a lot of this is that his friends on the outside are not necessarily always looking out for his best interest, which would -- this is the -- the rule and order that John Kelly was putting in place, trying to keep the White House focus on the issues at hand and the task at hand.

So what's happened is occasionally the president will call staff into the residence at night and order them to carry out specific tasks and tell them, don't tell John Kelly. I know at least on one occasion -- this obviously put staff in a terrible position. And sometimes they -- they refuse to carry out the president's orders out of fear of what will happen that Mr. Kelly would probably rightly fire them.

[09:45:00] Another work around here is the president's wife, First Lady Melania Trump, who I'm told has become much more important in the White House in terms of Mr. Trump's thinking. She's become more and more of a sounding board for him. And some of his friends, who don't want to wait the 24 hours or go through Mr. Kelly's checks and balances to get on a schedule, wait for a return call, know they can call Melania and that Melania can get Mr. Trump, President Trump, a message a lot quicker.

BERMAN: It seems like a healthy thing. It seems like a healthy, you know, flow chart, organizational flow chart inside the White House.

Look, even though -- I'm making fun of it -- even with all of this, Michael, and assuming it's all going the way you're reporting here, everyone you're speaking to still says there is this very good relationship between the president and his chief of staff still? BENDER: Yes, that's at really good point. So the first week John Kelly

was on the job, my colleague, Rebecca Balhouse (ph) and I did a report on some of these rules and order. Remember, Kerry fired Anthony Scaramucchi within minute of taking the job with little -- with little warning to anyone else in the White House. The Oval Office had kind of become a free range of senior and junior staffers all vying for the president's attention for their pet issue. Kelly closed the door.

So we had a -- we had one Trump confidant saying early on that Kelly would last maybe four months. That the president would buck at these kind of -- at this kind of discipline that Kelly wanted to institute. So we're right at the -- it's been four months. We're now in the fifth month of the John Kelly era. So I went back and looked at some of this.

And that's -- and that's -- and that's sort of the takeaway that while the president is looking for some of these work-arounds, he and Kelly have adapted to each other. I'm told that these two will never be friends. They'll never be really close, right? John Kelly's a -- he's a four star Marine general and Donald Trump is a free-wheeling former real estate executive. Just different personalities. But they've adapted. They've figured out how to work together. And even some of the folks who know about these work-arounds are telling me that they won't be surprised if John Kelly lasts quiets a long time.

HARLOW: He doesn't read the tweets though. He says he doesn't --

BERMAN: HE doesn't read the tweets.

HARLOW: The end of your reporting is great. He says -- Kelly says, I don't, you know, I don't follow the tweets. So, there you go. Michael Bender, thanks.

BENDER: Yes, we --

HARLOW: Go ahead.

BENDER: OK, Thank you.

Well, we were -- was in Asia with them when -- that was when trump tweeted that Kim Jong-un was short and fat. So when we asked John Kelly on that trip about the tweets, and he said, you know, you might be surprised but I don't follow the tweets, which, of course, surprised all of us. All of us and really most of Washington's phone buzz with alerts every time the president tweets.

HARLOW: Yes.

BENDER: John Kelly says he's not even -- he's not even on Twitter. He doesn't even use Twitter. And tells the staff not to be influenced by the president's tweets, which, again, is -- we've seen policy be made by the -- White House policy be made by the --

BERMAN: Yes.

HARLOW: Right. BENDER: By these tweets.

HARLOW: I was just --

BENDER: So some of the -- this just shows some of the short comings of John Kelly's approach in the job.

BERMAN: Yes, if, in fact, it's true. That's a whole other issue.

HARLOW: John just gave a skeptical --

BERMAN: Yes, I'm not so sure I buy that.

All right, but it's great to have you, Michael.

BENDER: Again --

BERMAN: Great reporting in "The Journal." Really appreciate you being here.

BENDER: Thank you.

BERMAN: We're also hearing about new White House tensions between Jared Kushner and the Secretary of State Rex Tillerson. This time over a really big subject, Middle East peace. Stay with us.

(COMMERCIAL BREAK)

[09:52:17] BERMAN: All right, new this morning, we're learning of tensions inside the White House between Jared Kushner and the Secretary of State Rex Tillerson.

HARLOW: So this time sources tell CNN they're clashing -- the two men are clashing over the attempt at a Middle East peace deal.

Joining us is Elise Labott, our CNN global affairs correspondent in Washington.

So the two men not seeing eye to eye on this. Why?

ELISE LABOTT, CNN GLOBAL AFFAIRS CORRESPONDENT: Well, you know, guys, the president has called the Israeli/Palestinian agreement that they're shooting for the ultimate deal and didn't tap the secretary of state, but his 36-year-old son-in-law and adviser Jared Kushner to lead the effort. And U.S. officials are saying that the White House is drafting this peace deal to submit to the parties early next year.

Now, Kushner, according to several sources familiar with his thinking, is confident that his relationship with Saudi Crown Prince Mohammed bin Salman, the 32-year-old heir to the throne, is going to help convince the Palestinians to accept the administration's proposal and stop the region from revolting.

And this is a gamble that's fueling some tensions with Secretary of State Tillerson. He has been embattled himself. There are reports the White House is trying to force him out. Some people -- some Tillerson allies think maybe Kushner has been behind that. He denies that.

Now, Tillerson is concerned that the Saudi crown prince is trying to use his country's political cooperation and economic cooperation for the peace process to obtain a blank check from the White House to confront Iran in the region, for these arrests that have gone down in Saudi Arabia, those -- in the anti-corruption drive and Tillerson doesn't really believe that Kushner understands what a tinderbox the Middle East is. That he's moving too fast in the region. That the crown prince is too young and that Saudi actions are going to tip the region into chaos.

Now, the White House insists there's no grand bargain there. They see the crown prince as a reformer. Diplomats also saying Kushner is trying to balance a lot in the Mideast. They appreciate that Kushner is consulting with world leaders. And, you know, this strategy is going to face this first test very soon when President Trump is expected to announce something on the U.S. embassy moving to Jerusalem.

HARLOW: Yes.

BERMAN: So, Elise, on than note, what is the timing? What is expected?

LABOTT: Now, we're expecting sometime this week, we're hearing as early as tomorrow, probably Wednesday, some kind of announcement from President Trump recognizing that Israel is the -- that Jerusalem is the capital of Israel. This is something he's pledged to do. He's made this campaign promise. And, you know, as recently as last week, Mike Pence, the vice president, also said it's moving in that direction. We expect him to recognize Jerusalem as the capital of Israel and announce plans to eventually move the embassy there. He might sign one more waiver kind of halting the immediate move of the embassy, but I think there's going to be some move to move the embassy into west Jerusalem, maybe hold out the hope of the east Jerusalem being the capital of the Palestinian state. But a lot of concern that this will cause a lot of protests in the region. And we'll see what the Saudis are able to mitigate and how they're going to react.

[09:55:29] HARLOW: And further complicate those attempts at a Mideast peace deal.

Elise, thank you.

BERMAN: All right, a big morning for criminal justice at the White House. The president endorses a man accused of being a child molester and he defends convicted felon Michael Flynn. We've got a lot of breaking news. Stick around.

(COMMERCIAL BREAK)

[10:00:03] BERMAN: All right, good morning, everyone. I'm John Berman.

HARLOW: And I'm Poppy Harlow. Top of the hour.

This morning, President Trump says he feels, quote, very badly, for Michael Flynn, despite Flynn admitting that he lied to the FBI.