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Nikki Haley Warns United Nations Over Israel Vote; Train Crash Investigation; President Trump Celebrates Tax Bill; Interview with Senator Pat Toomey of Pennsylvania; Sources: Senate Unlikely to Advance McFarland Nomination; Trump Jr.: Some Don't Want to "Let America Be America". Aired 4-4:30p ET

Aired December 20, 2017 - 16:00   ET



JAKE TAPPER, CNN HOST: Hey, America, your secret Santa has been revealed. It turns out that big, beautiful Christmas gift is from the president of the United States. And so is the IOUs going to your grandkids.

THE LEAD starts now.

President Trump celebrating legislative victory, as Congress passes the biggest tax overhaul in decades, but now President Trump admits there were items in the bill they were trying to keep quiet. What were they?

Distracted at 80 miles an hour? Questions now about what the engineer was really doing right before that deadly Amtrak crash and who else was there.

Taking names and reporting them back to the White House. U.N. Ambassador Nikki Haley issuing a stern warning to the rest of the world, as the United Nations prepares to give a thumbs down to President Trump's proposal to move the U.S. Embassy to Jerusalem.

Good afternoon, everyone. Welcome to THE LEAD. I'm Jake Tapper.

Less than a week before Christmas, and President Trump says he's delivering his fellow Americans a big, beautiful tax cut for Christmas. He and congressional Republicans are celebrating a huge legislative achievement and a political gamble, pass tax reform that will affect nearly every part of America's economy.


DONALD TRUMP, PRESIDENT OF THE UNITED STATES: It was a little team. We just got together and we would work very hard, didn't we, huh? It seems like -- it was a lot of fun. It's always a lot of fun when you win. If you work hard and lose, that's not acceptable.



TAPPER: The bill sharply cuts the corporate tax rate and as of now temporarily delivers tax breaks to individuals.

It also repeals the individual mandate part of Obamacare and permits drilling in the Arctic National Wildlife Refuge in Alaska.

How the bill will affect Republicans' political future is less clear, however, as Democrats insist their celebrations will be short-lived. And a new CNN poll shows reasons for Democrats to be optimistic about the 2018 midterm elections.

CNN White House correspondent Abby Phillip joins me now live from the White House.

And, Abby, the president can now point to a major legislative accomplishment, but I have to say this isn't quite the tax bill he promised on the campaign trail.

ABBY PHILLIP, CNN POLITICAL ANALYST: Well, good afternoon, Jake.

It isn't quite exactly what he talked about on the trail. A lot of the tax cuts that we're looking at right now go to the corporate and also to high-income earners. The president talking a lot about that today, saying that he expects those corporate tax cuts are going to bring businesses back to the United States, that are going to create more jobs, but at the same time you're also hearing a big psychological boost for Republicans who were pretty much as happy as we have seen them this year, showering the president himself with quite a bit of praise.

Take a listen to some of that.


REP. PAUL RYAN (R-WI), SPEAKER OF THE HOUSE: Something this profound could not have been done without exquisite presidential leadership.

SEN. MITCH MCCONNELL (R-KY), MAJORITY LEADER: This has been a year of extraordinary accomplishment for the Trump administration.

TRUMP: All friends. I mean, I look at these people, it's like we're warriors together.


PHILLIP: While this is a president who promised on the campaign trail that Americans would be doing so much winning, they would be sick of it, he is winning now. The question now remains, what does this mean for 2018? They have big plans for other agenda items.

And this victory finally gives them a big boost going into this next year, Jake.

TAPPER: All right, Abby Phillip at the White House for us.

My panel is here for more.

Here is the basic argument from the White House. This is from the Twitter feed of Sarah Sanders -- quote -- "Democrats wasted the year tearing the president down, while the president built America back up. Booming economy, millions of new jobs, ISIS caliphate in ruins, record number of judicial appointments, Obamacare individual mandate repealed, historic tax cuts, America great again."

That's the argument. They have a pitch to make.

JEN PSAKI, CNN POLITICAL COMMENTATOR: Well, look, the president's approval rating is hovering around 35 percent, and two-thirds of the American public, according to the CNN poll, don't like this tax bill. I'm not sure their argument is working.

I think the problem -- they have a blissful day today. No doubt. You looked at their faces, they were waiting for this moment. But tomorrow they're going to wake up and realize that the American people don't like this bill because it's a corporate tax cut, and people realize that and recognize that. That's an accurate understanding of the bill.

It is hard for them to campaign on that and tell a different story, because that's what the bill is. The tax cuts for middle class are short-term. They're not permanent. It also means that premiums will go up because of the individual mandate going away for middle-class families.

And what we found in 2009 when we had them Making Work Pay tax cut, which was not a big tax cut, but neither is this for the middle class, is that people didn't really feel it, and they weren't really voting on that.

When they realize these other pieces, it's going to be -- continue to be problematic, is my prediction.

TAPPER: Josh, there is a lot of hope by Republicans that come January when the tax code changes and come February when people start to see perhaps some change in their paycheck, depending on how big their tax cut is, that these numbers, these poll numbers that do not show a tremendous amount of support for this tax bill, will turn around.


JOSH HOLMES, REPUBLICAN STRATEGIST: Well, at some point, reality means the rhetoric and the rhetoric meets reality.

When we talk about a corporate tax cut, I think we saw even today what that means for your average American. You saw AT&T immediately come out upon passage of this tax bill and say they're going to provide 200,000 employees across the United States with a $1,000 Christmas bonus as a result of this tax bill passing.

So you can talk about corporate tax relief, you can talk about this, that and the other thing, but the reality is there are a whole lot of families that are getting 1,000 bucks in their pocket as a result of what happened here today. And that is just in the corporate side.

I think there is a huge story to tell about the middle class and about the child tax credit, about doubling the standard deduction and the kind of real tax relief that really millions of Americans are going to feel next year.

TAPPER: Maeve, earlier today, President Trump said that before the bill passed he had been trying to be quiet about the provision in the bill that repeals the individual mandate part of Obamacare.

Take a listen.


TRUMP: Obamacare has been repealed in this bill. We didn't want to bring it up. I told people specifically be quiet with the fake news media because I don't want them talking too much about it.


MAEVE RESTON, CNN NATIONAL POLITICAL CORRESPONDENT: Well, we did talk about it. And that's just not true. That's not what the bill does.

You know, as Jen mentioned, we clearly are going to see premiums go up for a lot of people because of that part of the bill. And I think what's been sort of remarkable about this whole thing is how badly the Republicans have sold this bill to people.

I mean, you haven't heard cogent arguments about how it's really going to help people until the last couple of days. And that's going to be a huge test in the midterms, you know, how people are feeling about the change in their pocket, whether they really are seeing effects from this. And the climate could be very different next year.

TAPPER: And, Josh, I mean, obviously, the people who pay more taxes get more tax relief, get bigger tax cuts. So there is a question I think of how much are people going to see this in January or February when it starts hitting their paychecks?

I think obviously people who are wealthier individuals might see an additional $1,000 or $2,000 a week in their paycheck, but if you're getting $800, $900 for the year, it might not be a huge number in your paycheck. It might be 50 bucks.

HOLMES: Well, look, there is a concept that has alluded much of the news media here in a lot of the analysis of the tax bill, which is that there is a large number of Americans in the middle class that aren't paying any effective taxes at this point.

And there are -- whether you like it or not, the reality is, the top 20 percent of taxpayers pay almost all of the taxes in this country. And so when you talk about somebody who makes $100,000 getting a 1 percent tax cut and somebody who makes $1,000 getting a 10 percent tax cut, the net savings is about the same, but somehow it's just going to the rich.

This has been mispersonified in the largest possible way. I think now what is going to happen is that people are actually going to find out that this is good for them, that despite what they have read in the front page of the newspaper for the last six weeks, it does mean more money and it possibly means higher wages, more jobs and all the things that keep the economy going.

If the economy is going like it is right now a year from now, Republicans are going to be in a pretty good place.


PSAKI: Look, I think one of the biggest arguments the Republicans make about this tax bill and how it would help the middle class has been disproven by the majority of economists, which is that there will be some sort of trickle-down impact, that businesses will have these profits and then they're going to help and give their employers more money.

You mentioned AT&T. That was a very smart P.R. activities by AT&T. It is very unlikely that is what is going to happen with companies around the country. They have said so. CEOs have said so.

So it's based on this false premise. What's going to happen is that corporate tax rates are way down. They are going to be helped by that, but how are the middle class and how are average people going to be helped? That's what they're going to be looking at.

TAPPER: Just to explain what you're referring to, AT&T is hoping for a merger. The Justice Department -- with Time Warner, which owns CNN. The Justice Department is suing AT&T to stop that merger.

That's what you're referring to. And, as I said, Time Warner owns CNN.

I want to ask you a question about Susan Collins of Maine. She was wavering on this tax bill. Mitch McConnell told her that the Senate would address her concerns about health care by taking two votes this year on items that will stabilize the Obamacare markets.

It turns out, though, that they're not going to be taking those two votes. And Susan Collins was not at the White House today. And there are Democrats out there saying that Susan Collins got played.

She has also said that some of the coverage of her being duped or whatever is sexist.

What's the truth here? What are the facts?

RESTON: I don't think we know all the facts yet, but what is true is that there were -- Collins and Senator Flake also were wavering kind of up until the last minute, and that there were many assurances made to get everyone on board.


They wanted a united Republican front. You know, a lot of what Senator Flake is looking for is movement on immigration reform next year. Did he get those assurances? Will Susan Collins get what she needs from the Senate? It's just -- it's very difficult to know right now if they can follow

through on the promises that they made to get this done.

TAPPER: It's hard to believe, though, that she wouldn't get anything in exchange for her vote, if that was an important part of it.

HOLMES: Well, they're absolutely going to address it.

What you're referring to is what they call the CSR payments, which are the payments to insurance companies to help balance out the marketplace of Obamacare. And I have absolutely every indication that they will address that at some point.

The question is not whether they deal with it. The question is whether they shut down the government in order to deal with it, which is what they're facing this week with the continued funding of government operations.

I think they want to take care of that first and then they want to address that and things like DACA and other things that Democrats have been talking about for the last couple of months.

TAPPER: And, in fact, we're going to have Jeff Flake later in the show.

So, stick around. We have a lot more to talk about.

We also have Republican Senator Pat Toomey from Pennsylvania, who played a critical role in getting this bill passed. He's still at the White House. He's going to join us next. Stay with us.


[16:15:23] JAKE TAPPER, CNN HOST: We're back with our panel and more in our breaking news coverage of the Republican tax reform bill, which is being prepared for President Trump's signature before it becomes the law of the land.

Senator Pat Toomey, Republican of the great commonwealth of Pennsylvania, member of the Senate Finance Committee, joins me now to talk about the bill.

Senator, thanks so much and congratulations.

SEN. PAT TOOMEY (R), PENNSYLVANIA: Thanks, Jake. Thanks for having me.

TAPPER: So, you've long been a deficit hawk. I have to ask you, this tax bill according to studies will balloon the federal deficit by up to a trillion if not more over a decade. According to "The New York Times," no detailed economic analysis of the bill has supported the idea these tax cuts will pay for themselves.

But you disagree. Why?

TOOMEY: Yes, well, totally, because that's not true. Larry Lindsey has done a great analysis that demonstrates exactly why it's very likely that we will have a smaller budget deficit as a result of this bill, not a larger one. And, fundamentally, you just need to ask yourself how much extra economic growth will it take over the ten-year window of this budget or longer to fully offset the foregone revenue?

The answer, Jake, is less than half of 1 percent of extra economic growth. CBO's projecting that our economy will only grow by 1.9 percent per year over this period of time. If we get to 2.5 percent, we don't have to quite get there, we will more than fully offset all lost revenue. It's a question of whether you believe in America and whether you believe that these reforms and the incentives that we change will be met with a commensurate response from American workers and entrepreneurs and I believe it will.

TAPPER: I want to ask you about a provision in the bill, the carried interest deduction, which is included in the tax reform bill. Of course, this allows hedge fund managers and the like to pay a much lower tax rate on their income than anyone else, just 15 percent.

Now, last year, Donald Trump as a candidate, he promised to get rid of the carried interest loophole. Take a listen.


DONALD TRUMP, PRESIDENT OF THE UNITED STATES: As part of this reform, we will eliminate the carried interest deduction, well-known deduction, and other special interests loopholes that have been so good for Wall Street investors and for people like me but unfair to American workers.


TAPPER: Now, the president's top economic adviser today, Gary Cohn, said the White House tried, quote, probably 25 times to get the carried interest deduction out of the bill but lawmakers wouldn't go for it. Now, I know there was a tweaking to it so that it went to three years instead of one year. But instead of getting rid of the loophole, it is there to a degree, it remains.

Who in Congress wanted to keep it?

TOOMEY: So, I don't know what Gary is referring to, Jake. Look, find me a hedge fund that has holdings that last more than three years. Hedge funds are trading vehicles. They're in and out. They're actually -- most investments are much less than a single year.

So, the fact is, there is no capital gains treatment, there is no lower tax rate for the vast majority of hedge funds. In fact, I'm not aware of any that have these long holding periods.

On the longer periods, we have long said if you make a long-term investment and the value of that investment goes up, you tax that at a capital gains rate. But the hedge funds you're talking about, they're not going to get that capital gains rate.

TAPPER: So, you see this as closing the loophole? TOOMEY: Yes, well, extending the holding period to three years. And,

by the way, that is specifically for financial managers. So, we do single out that industry and say, you alone have to hold assets longer than anybody else in order to get that capital gains treatment. I don't know how that's not dealing with the so-called loophole.

TAPPER: House Speaker Paul Ryan said the Republicans are going to try to tackle the deficit next year by making cuts to the social safety net programs, entitlement programs such at Social Security, Medicare, reforming them, tackling them, cutting, however you want to describe it. We talked about how the hedge fund managers are going to be able to keep their tax rate for provisions over three years --

TOOMEY: Which they don't hold.

TAPPER: OK. But moving on from that issue, are you concerned at all Democrats are going to use this issue, the idea of entitlement cuts, entitlement reform coming down the pike as, see, this is what the Republicans do, they cut taxes for people, especially the wealthy, and then they come after the social safety net programs because, all of a sudden, they're concerned about the deficit? What's your response to going to be?

TOOMEY: Yes. My response, Jake, is I've been hearing that since I entered public life and ran for office almost 20 years ago. That is what the Democrats always say. I'm quite sure that they will say it again. That's what they do.

But I'll tell you what we should do and what we're in the process of doing -- reforming the tax code so that we can maximize economic growth. And, by the way, that also tends to maximize federal revenue and then recognize that we've got entitlement spending that is not sustainable.

[16:20:06] These big spending programs that are growing faster than the economy, you can't tax your way out of that problem. You've got to make some curbs.

And the responsible way to do that, Jake, is you don't make changes for people who are currently enrolled or close to being eligible for these programs. You make changes that go into effect 10 years, and 15 and 20 years from now so that you slightly curb the rate of growth so that these programs are sustainable. So, nothing changes for people who are in their 50s or 60s, but someone who is 40 years old, you know, we explain now, look, there are going to be changes 25 years from now when you retire. And that way, the program is viable and sustainable.

So, look, I think we will make some improvements to ensure the long- term viability of these programs.

TAPPER: But just to play devil's advocate, you're going to say that to people about Medicare and welfare and Medicaid and the like just after you gave me and Anderson Cooper a huge tax break.

TOOMEY: Yes, I'm going to defend the proposition that tax reform should be about maximizing economic growth, and if we do that then we also, by the way, maximize revenue. And, separately, no matter what you do, whether you do it right or wrong on the revenue side, you still have to have a government spending that is growing no faster than the economy. You have to get that right.

So, we're dealing with the first. I think we got that done to a very large degree with today's completion of this tax reform. And over time, we still need to address these fundamental imbalances in our big entitlement programs.

TAPPER: Senator Pat Toomey of the great commonwealth of Pennsylvania, thank you so much. Congratulations again, sir.

TOOMEY: Thanks for having me, Jake.

TAPPER: This conversation is far from over, of course. We have lots more, including the president's son pushing a narrative that's raising some eyebrows. Don't go anywhere. Stay with us.


[16:26:16] TAPPER: Welcome back.

We've got much more to discuss with our panel. But, first, some breaking news from Capitol Hill. A setback for President Trump's pick for ambassador to Singapore, KT McFarland. Before her nomination, she served as deputy national security adviser under General Michael Flynn before he was ousted.

Let's go live to CNN's Manu Raju on Capitol Hill.

And, Manu, McFarland, she was facing some questions about discussions with Flynn about Russia during the transition. Explain how that's posing a problem for her nomination.

MANU RAJU, CNN SENIOR CONGRESSIONAL REPORTER: Well, senators from both parties, Jake, are telling me by the end of this week, when the Senate is done for the session, that her nomination is going to be sent back to the White House. At that point, the White House will decide whether or not to renominate her and members from both parties are saying her chances of reconfirmation, even if renominated are exceedingly grim.

This because of that plea agreement that was reached between Michael Flynn and special counsel Robert Mueller. In that plea agreement, it said that Flynn had a discussion with a senior transition official in December of 2016 about conversations that he, Flynn, was going to have with Sergey Kislyak, then the Russian ambassador, about sanctions just imposed by the Obama administration.

But McFarland, when she testified before the Senate Foreign Relations Committee, was asked in written correspondence about whether he had any conversations with Flynn about Kislyak. And what she said, Jake, she was not aware of any such conversations. Now, she has not said anything to the committee since this was revealed, did not send anything in written correspondence back and it's unclear what she will decide to do.

But, Jake, she is derailed, as many senators expect, this will be the second time a Trump nominee has been gone -- has been thwarted because of the Russia probe. The other one being Sam Clovis, senior Agriculture Department position because of his communications and contacts with George Papadopoulos, that foreign policy adviser -- Jake.

TAPPER: All right. Manu, stick around. We're going to come back to you.

Also in the Russia investigation, a steady stream of pushback against the notion that there are forces inside the highest level of government trying to deliberately block President Trump's agenda. That was the narrative offered last night by the president's oldest son, Donald Trump Jr.

Take a listen.


DONALD TRUMP, JR., SON OF PRESIDENT TRUMP: I also look at what's been going on for the last few months, now years, as it relates to sort of the investigation when we talk about the fight that we're up against. As Charlie alluded to earlier, I have now spent 23 hours testifying about a 20-minute meeting. Hillary Clinton, as secretary of state, spent 11 hours testifying about Benghazi.

You know, my father talked about a rigged system throughout the campaign. And people were, oh, what are you talking about? But it is. And you're seeing it. There is and there are people at the highest levels of government that don't want to let America be America. They don't want to let the little guy have a voice.


TAPPER: In response, former CIA and National Security Agency Director Michael Hayden, a Republican, said those comments from the president's son are frightening.


MICHAEL HAYDEN, FORMER NSA DIRECTOR: That's more than just a little bit scary. That is a barely coded attempt to say America should be governed by the unchecked will of the executive.


TAPPER: I'm back with the panel that talk about this.

Josh, your response. Donald Trump Jr. talking about how, well, it's hard to know exactly what he was specifically saying. But he seemed to be suggesting that law enforcement is trying to stop the Trump administration from doing -- from enacting its agenda.

JOSH HOLMES, REPUBLICAN STRATEGIST: Well, I think if we step back and look at this objectively from their perspective, what they've seen is multiple investigations that have been launched by the Senate, by the House, by a special counsel, all under the guise that somehow the Trump campaign itself had colluded with the Russian government. That's why this all started. That's why the investigations started.

And here we are a year later, we have found out that lobbyists have extremely bad reporting requirements. We found out that some low- level campaign staffers had testified fraudulently in front of the FBI.