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CNN NEWSROOM

North Korea Soldier Defects across the DMZ; U.S. Warns It Will Be Taking Names during U.N. Vote; Trump, Republicans Celebrate Tax Reform Win; Mass Grave Uncovered in Myanmar; Humanitarian Crisis in Congo; Trump Highlights Recent Stock Market Record Gains; PyeongChang Readies for Winter Olympics. Aired 12-1a ET

Aired December 21, 2017 - 00:00   ET

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


(COMMERCIAL BREAK)

[00:00:11] JOHN VAUSE, CNN ANCHOR: This is CNN NEWSROOM live from Los Angeles. Ahead this hour --

ISHA SESAY, CNN ANCHOR: A hail of bullets ring out as another North Korean soldier defects across the demilitarized zone.

VAUSE: This time it's personal. Ahead of a U.N. vote on Jerusalem President Donald Trump warns foreign aid could be cut to countries which decide to go against the U.S.

SESAY: Plus, a mass grave uncovered in Myanmar as the country bans a U.N. group trying to aid persecuted Rohingya Muslims.

VAUSE: Hello, everybody. I'd like to welcome our viewers all around the world. I'm John Vause.

SESAY: And I'm Isha Sesay. NEWSROOM L.A. starts right now.

Well, we begin with the breaking news. A North Korean soldier has defected to South Korea by crossing the DMZ early Thursday.

VAUSE: South Korea said its troops fired a number of warning shots as North Korean guards searched for the defector. The soldier is currently being held by the South Koreans. This is the second defection across the heavily guarded border in less than two months.

SESAY: Let's go right now to our Paula Hancocks. She joins us live from Seoul. Paula -- at this stage what more do we know?

PAULA HANCOCKS, CNN CORRESPONDENT: Well Isha -- we are being told by the South Korean military that this defector is believed to be 19 or in his early 20s.

Just after 8:00 a.m. local time, so about six hours ago, he crossed over the DMZ over the borderline between North and South Korea. They say at that point there were no shots fired. But just about an hour and a half later the JCS -- Joint Chiefs of Staff say that they actually saw some of the North Korean soldiers looking for him.

They fired 20 warning shots in that direction. And then they say just about an hour later they also heard some shots emanating from North Korea. But they say they don't believe that those shots landed in South Korea.

So it's certainly a tense situation on the border that this defector has managed to walk across and, of course, those North Korean soldiers would have been desperately trying to find him and to stop him -- Isha.

SESAY: Indeed. We wait to get more information on all of this. Paula Hancocks joining us there from Seoul -- we appreciate it. Thank you.

U.S. ambassador to the U.N. Nikki Haley is talking tough ahead of a United Nations vote critical of President Trump's decision to recognize Jerusalem as Israel's capital. Haley says she will be taking names of the countries supporting the resolution.

SESAY: The move sparked protests throughout the Middle East and criticism from even the closest U.S. Allies. Mr. Trump says there will be a price to pay for those who do not support the U.S.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: For all of these nations that take our money and then they vote against us at the Security Council or they vote against us potentially at the assembly. They take hundreds of millions of dollars and even billions of dollars and then they vote against us -- well, we're watching those votes.

Let them vote against us. We'll save a lot. We don't care.

(END VIDEO CLIP)

VAUSE: Foreign ministers from Turkey and the Palestinian Authority say those threats by the United States amount to bullying.

(BEGIN VIDEO CLIP)

MEVLUT CAVUSOGLU, TURKISH FOREIGN MINISTER (through translator): What will you do by getting these names? Will you allow invasions into those countries as well or will you punish them?

The world has changed. The notion of "I am powerful therefore I am right" has changed. Now the world is rising against the unfair. From now on, no honorable nation, no honorable state will bow to such pressure.

RIYAD AL-MALKI, PALESTINIAN FOREIGN MINISTER: This is a new definition of world order in politics. And it seems that the American administration -- they are -- putting their stamp on a new political reality.

(END VIDEO CLIP)

VAUSE: Joining us now California talk radio host Ethan Bearman and California Republican National Committeeman Shawn Steel. Shawn -- I know you want to talk about the tax cuts and the tax bill. So we'll get there. I promise you.

But first we want to talk about Jerusalem. And what looks to be like a shakedown at the U.N. And the big concern among a lot of experienced diplomats is that this type of action, these kinds of threats will only lead to increasing U.S. isolation and countries simply digging in and standing up to the United States. So the outcome will be quite the opposite of what the President is looking for.

SHAWN STEEL, CALIFORNIA REPUBLICAN COMMITTEEMAN: I disagree. I think the United Nations --

VAUSE: Why am I not surprised?

STEEL: It's been a cancer on the world freedom scale. Most of the countries that belong to the United Nations are not friendly to freedom. They're misogynistic. They're various forms of dictatorships. There are few democracies.

[00:04:57] Israel's one of the brightest spots in the entire world. And of course, we're going to recognize the capital of Israel.

Every president said he was going to do that. Congress has voted to support since 1995 -- Democrats and Republicans. That's why you haven't found a single major Democrat opposing what Trump is doing on this.

And there was going to be a big vote to try to embarrass America. No longer is Obama president. If you want clearer evidence is that the United States doing the right thing by recognizing appropriate capital that Israel has chosen, not other nations.

These cutthroats that you just had on TV -- these are low level, tyrannical dictatorships. The Palestine Organization is not democratic. It's a bunch of bullies that have been terrorizing their people.

The government of Turkey - -this is a great occasion and I'm delighted.

VAUSE: Listen to (INAUDIBLE) because Ethan -- the issue here is not necessarily the United States decision to recognize Jerusalem but what we're talking about here is the tactics being used at the United Nations by President Trump and his ambassador Nikki Haley.

ETHAN BEARMAN, RADIO TALK SHOW HOST: Right. And this is the issue is what we saw through the primaries, through the general election. He doesn't want to act presidential. He wants to be a big bully. And now he wants to be a big bully on a big world stage.

The United Nations has its share of issues that Shawn and I might actually have some agreement on but it's an important organization. We have to have these conversations. VAUSE: The U.S. Ambassador Nikki Haley -- the U.N. Ambassador rather

Nikki Haley has also written to diplomats from most of the member countries. This is part of what she wrote. "As you consider your vote, I encourage you to know the President and the U.S. take this vote personally."

See Shawn -- once again "personally". Everything is about the President. Why elevate Donald Trump on to the same level as Jerusalem as the capital of Israel? Because now essentially this isn't just about countries deciding whether or not to support the United States in the decision -- it is now all about Donald Trump.

STEEL: John -- it is not that at all. What's really happening is this is about America no longer being a nation to be stepped on, being taken advantage of. Billions of dollars given in foreign aid to people that are ungrateful that usually don't go to the people that really need it. They go to various forms of totalitarian societies.

And it's appropriate to say look if you vote against us on a simple issue like honoring Israel the Jews of Israel and the capital of Israel determined by its own people, and if you're going to vote against us don't consider us your friends.

VAUSE: Ok. Let's get on to tax cuts because we want to make Shawn happy tonight. Ok. The President and his victory lap and you know, there's a lot of winning, a lot of love today. Look at this.

(BEGIN VIDEO CLIP)

REP. PAUL RYAN (R-WI), SPEAKER OF THE HOUSE: Something this big, something this generational, something this profound could not have been done without exquisite presidential leadership. Mr. President -- thank you for getting us over the finish line.

REP. DIANE BLACK (R), TENNESSEE: Thank you -- President Trump, for allowing us to have you as our president and to make America great again.

SENATOR ORRIN HATCH (R), UTAH: You're one heck of a leader. And we're all benefiting from it. This bill could not have passed without you.

MIKE PENCE, VICE PRESIDENT OF THE UNITED STATES: President Donald Trump delivered a great victory for the American people.

(END VIDEO CLIP)

VAUSE: Ethan -- will they be thanking Donald Trump at the midterms?

BEARMAN: Oh my goodness. Well, this is actually very complicated because the midterms this could potentially, actually help the Republicans at the midterms. It's going to be 20/20 that we begin to see what the actual effects are with deficits, the debt increasing because this thing is a gigantic giveaway to corporations and wealthy people that is going to be on the backs of mostly lower and middle income people and wealthy people actually in cities in places like California and New York are going to bear the brunt of this.

But really the biggest thing that was buried in all of this besides the fact that they weren't actually kissing Donald Trump's ring in that little video clip is the minor amount of tax money that people on the lower end of the economic scale are going to get back -- they're going to be destroyed because health care costs are going to go through the roof.

VAUSE: And Shawn -- I just want to read this to you -- element five for the guys in the control room. This is from the "Financial Times". "The Tax Policy Center, a think tank, said the bill would reduce taxes for all income groups in 2018 increasing average after tax income by 2.2 percent but in 2027 the year after most of the individual tax provisions expire, it said low and middle income Americans will see little change in their tax bills versus current law while taxpayers in the top 1 percent would receive an average cut of almost a percent."

Is that really smart politics?

STEEL: Actually it is brilliant politics on so many levels. I don't know where you want to start. The Brookings Institute, a far left think tank in Washington D.C., admits that 81 percent of the taxpayers are going to benefit. Now, when you start with the liberals agreeing with the conservative economists this is a big start.

Not only are we seeing all tax groups going to benefit and including -- except a lot of loopholes have been closed up. But we are going to see an economy that's really been gearing up and getting much stronger this year mainly because of the Trump effect.

[00:10:06] The stock market's been anticipating this all this time and now it's finally come across. And then Chuckie Schumer, this pathetic little Democrat from New York, one of those regional Democrats that are not very important anymore, he today attacked AT&T and said this is a disaster. People are going to die. It's going to be a horrible situation. And he attacks AT&T. Within hours AT&T announced a $1,000 Christmas bonus --

(CROSSTALK)

STEEL: Excuse me -- $1,000 bonus to 200,000 employees that's $200 million and then --

BEARMAN: Nice big representation.

STEEL: And then a number of other corporations followed suit. This is the beginning of a fabulous America's back, like Ronald Reagan. The economy --

BEARMAN: With Ronald Reagan there were (INAUDIBLE) tax increases to make up for the deficit.

(CROSSTALK)

STEEL: And good news is the Republicans are going to do well in -- VAUSE: Ok. Well, we'll see. I guess we'll see because the reality

is this is the most unpopular piece of legislation what in a generation.

STEEL: Except --

VAUSE: If not longer.

There were tax hikes in the 90s that were more popular than this. And so now looking at the latest poll a big majority of Americans prefer Democrats to being in control of Congress. If you look at the numbers -- there it is -- 56 percent to 38 percent.

Hold on. You have --

STEEL: I wouldn't --

VAUSE: -- deeply unpopular Republicans with a deeply unpopular tax plan being -- selling this tax plan with a deeply unpopular president. That's a pretty big uphill climb.

BEARMAN: The key is going to be for the Democrats to latch on to what President Trump today said in his own words that this thing was all about the corporate tax cut. It had nothing to do with middle class. He said that in his own words today.

STEEL: Completely fabricated. You find the video and I'll pay you $100.

BEARMAN: It is on my phone right now.

STEEL: His entire purpose --

BEARMAN: He said --

STEEL: -- was to help the working class --

BEARMAN: -- no, no.

STEEL: -- which your party has disregarded.

BEARMAN: His own words. The President's own words today at the White House.

VAUSE: All the independent analyses say about two-thirds of the gains of this go to the top 20 percent. That's not exactly the middle class.

STEEL: Except the top 25 percent that pays --

BEARMAN: Discounting the corporate --

VAUSE: Yes. Let's give them that.

STEEL: -- 80 percent of the taxes. Of course the people that are paying taxes -- BEARMAN: -- giveaway, it is absolutely shameful. He's making

corporate tax permanent but the income taxes are temporary.

STEEL: What you don't like is that the economy is growing, workers are getting jobs again.

VAUSE: Ok.

We just want to finish out though because there's growing concerns --

STEEL: You don't like success and you hate --

VAUSE: We love winning -- Shawn. But there's growing concern among Democrats that the President might --

STEEL: I'm not tired of winning.

VAUSE: -- be actually on the verge of firing Robert Mueller, the special counsel investigating the Trump campaign's ties to Russia.

Listen to this.

(BEGIN VIDEO CLIP)

SEN. MARK WARNER (D), VIRGINIA: Any attempt by this president to remove special counselor Mueller from his position or to pardon key witnesses in any effort to shield them from accountability or shut down the investigation would be a gross abuse of power. These truly are redlines and simply cannot allow them to be crossed.

(END VIDEO CLIP)

VAUSE: Almost out of time but Ethan clearly the President's had a big win. He's flexing his muscles. He's feeling pretty emboldened -- a lot of support, a lot of love from the Republicans. Could that now mean that he feels like he could actually, politically get away with firing the special counsel?

BEARMAN: Well, with his mercurial behavior we don't know. It's going to be up to his mood of the day. I would suggest up until now he's actually taking the right approach which is not to address firing Robert Mueller.

VAUSE: Yes, he did actually say I have no plans over the weekend.

BEARMAN: Right.

STEEL: Actually he said it today. He said it yesterday. He said it the day before. Robert Mueller is a disgrace to the FBI.

VAUSE: He is a Republican.

(CROSSTALK)

STEEL: He's won -- America's number one bad cop --

BEARMAN: A wounded Vietnam veteran.

STEEL: He should resign in disgrace.

VAUSE: We are going to stop you right there Robert Mueller was head of the FBI after 9/11 and did a lot for the United States.

STEEL: Actually he made a lot of mistakes at that time.

VAUSE: He is a Republican. He was on the short list to be the director of the FBI.

STEEL: Thank God.

VAUSE: He got a lot of praise from the Republicans at the time. So we're going to end it right there. Ethan and Shawn -- thank you.

BEARMAN: Thank you.

STEEL: Thank you.

VAUSE: Thanks -- Shawn.

SESAY: And we are going to take a very quick break. Yes, I know.

VAUSE: Tough.

SESAY: We'll get you a cold cloth.

Myanmar is restricting access to Rakhine state after a crackdown on the Rohingya. Just ahead -- why they banned a U.N. official from visiting. >

VAUSE: Also a look at the humanitarian crisis in the Congo -- why some aid groups think it's all going unnoticed.

[00:14:15] (COMMERCIAL BREAK)

SESAY: Hello everyone.

A U.N. human rights representative investigating the brutal crackdown on Rohingya Muslims in Myanmar has been denied access into the country.

VAUSE: That came a day after the military uncovered a mass grave on the edge of a village in Rakhine state.

Details from Kristie Lu Stout.

(BEGIN VIDEOTAPE)

KRISTIE LU STOUT, CNN CORRESPONDENT: Authorities in Myanmar are investigating a grizzly discovery. The military says a mass grave containing ten corpses was discovered in northern Rakhine state earlier this week.

State media reports the grave in Maungdaw Township was unearthed by security forces who were acting on a local tip. The military was quote, as saying action will be taken against those involved in the killings. This raises new concerns about what is happening in Rakhine state.

Since late August, Myanmar security forces have launched a crackdown on Rohingya Muslims after militants attacked government posts. The government saying it was targeting terrorists.

Rights groups say the ensuing violence has resulted in the exodus of more than 650,000 Rohingya Muslims from Rakhine into neighboring Bangladesh.

There has been international criticism about how Myanmar's leaders have handled the crisis and pressure on them to let journalists, rights groups, and diplomats into Rakhine to see the situation firsthand.

But the U.N. says Myanmar has denied its special rapporteur on human rights, Yanghee Lee access to the country and that it will no longer cooperate with her. In a statement to CNN, government spokesman Zaw Htay said that Lee is not impartial and objective while conducting her work. There is no trust on her. He told CNN the government's messages have been contradictory.

YANGHEE LEE, UNITED NATIONS SPECIAL RAPPORTEUR: If they say one thing, that there's nothing to hide that anybody can come and then they deny access. I really don't know what message they're sending out and how to interpret that.

STOUT: There was also growing concern for two local journalists from the Reuters News Agency who were covering the situation in Rakhine. They were arrested last week and charged under the Official Secrets Act that could carry a maximum 14-year jail sentence. Human Rights Watch has accused Myanmar of attempting to "disappear" the men, an accusation the government has denied.

This as Rohingya refugees continue to flow into Bangladesh with accusations of massacres, rape and the torching of their villages by government troops -- allegations the government has denied. But the true scale of the crackdown will remain unclear as long as Myanmar continues to restrict access to Rakhine state.

Kristie Lu Stout, CNN.

(END VIDEOTAPE)

SESAY: Akshaya Kumar is deputy United Nations director for Human Rights Watch and she joins me now from New York. Akshaya -- thank you so much for being with us.

I want to share with our viewers some satellite imagery obtained by your organization showing the recent torching of dozens of Rohingya villages in Rakhine state.

So according to your organization this first photo shows some villages before their destruction. And then this next one that we're putting up on screen captures the many burned-out buildings.

And what's striking to me, Akshaya is the fact that these images showed damage or destruction since October which drives home the fact that the Myanmar authorities continue to terrorize the Rohingya population despite all the international condemnation, even though the actions have been labeled ethnic cleansing by the U.S. and the U.N.

What does that say to you about this regime? What does it tell us?

AKSHAYA KUMAR, DEPUTY DIRECTOR, U.N. HUMAN RIGHTS WATCH: Absolutely. This satellite imagery does just add to the weight of evidence that we have that this campaign of ethnic cleansing has not completed, it's not finished.

[00:20:02] And unfortunately the international communities' lukewarm statements haven't done the trick. Myanmar authorities are not feeling the pressure. They don't see a need to change their ways.

And in fact they're becoming more obstructionist by the day. Today they announced that they're not letting the U.N. special rapporteur into the country at all which is a big shift.

SESAY: Yes.

KUMAR: So things are just getting worse on both fronts -- multilateral and backhole.

SESAY: So I want to read an extract from a survivor of the violence in Rakhine state and really it is to make the connection with the point you just made about the special rapporteur being banned.

I want to read this. It's from actually one of your reports, one of Human Rights Watch's reports. And it's difficult to read and some of our viewers may find the details extremely disturbing.

It's from Shaufika (ph).

She says "I woke up and realized I was in a pool of sticky blood. I tried to wake the others up but they didn't move. Then I broke through the bamboo wall and escaped. All the houses in the area were on fire. I could hear women screaming from some of the other houses. They could not escape from the fires."

This is just one of many stories that appears in the recent 30-page Human Rights Watch report, called "Massacre by the River: Burmese Army Crimes against Humanity" in (INAUDIBLE). And then of course separately on Tuesday we learned of this mass grave being discovered in northern Rakhine state.

How much harder is it going to be, Akshaya, to ascertain the scale of the killings, all the harmful practices that have gone on, the rapes, the destruction? How much harder is it going to be -- is it going to be to get a full picture now that the U.N. special rapporteur has been banned?

KUMAR: It's going to be harder but it's not impossible. Look. The Burmese military, the authorities are hopeful that if they just keep all of out, if we're not allowed into northern Rakhine state that somehow the truth won't come out. But we've proven them otherwise.

We use satellite imagery. We've taken testimonies. I went to the camps myself. We spoke to people like Shaufika. I can still see her in my eyes, another woman I spoke to whose entire face, her skin, her arms had been burned because of fire. So these wounds, this evidence is so blatant it can't be covered up.

And so this flimsy attempt to kick out the special rapporteur will actually just make things worse for them. Hopefully they'll give some of the members of the U.N. Security Council a wake-up call. They need to take action now. The Burmese are not taking this seriously.

SESAY: You know, you mentioned going to the camps and speaking to survivors like Shaufika. What about those survivors there in northern Rakhine state? I mean we showed the pictures at the beginning of our conversation of the destruction since October.

For those still there on the ground in Myanmar do we know what conditions they are in? What conditions they're living in?

KUMAR: It's deeply worrying. Look. Our satellite imagery counted 40 villages that were destroyed in the past two months so we know that this campaign is still ongoing. But we don't have enough access certainly not for independent journalists, for human rights workers, not even for aid workers who want to deliver life-saving assistance.

And so for those Rohingya who remain and it could be up to 100,000 we have to be really worried because they're trapped without access to people who could champion their rights or monitor what's happening to them.

SESAY: Akshaya -- I want to switch gears because there is so much that is happening right now in the world and I want to turn our attention now to a refugee crisis of even greater proportion in the Democratic Republic of Congo.

Some 1.7 million people have fled their homes in the country year alone. We're looking at about 5,500 people a day due to the ongoing violence in the region.

A large percentage of them don't have access to clean water or toilets. Conditions in the camps are described as being simply horrible.

I mean Akshaya -- I mean the truth is what we're hearing is that DRC is facing a constitutional, humanitarian and human rights crisis all rolled up into one. What can you tell us about the situation?

KUMAR: Well, you're right. We have a problem at the highest level with the political situation. There was supposed to be an election before the end of the year. It doesn't lock like that's about to happen.

And more generally in the Kasai we have a huge human rights issue where there's been a climate of impunity. The U.N. has discovered up to 80 mass graves. They estimate 5,000 people have been killed in violence and just no accountability or justice and no attempt from the government to stop the killings.

In fact it's exactly the opposite. Today, news came out that there's good reason to believe the government itself could have been responsible for the killing of two U.N. investigators who were trying to get to the bottom of what's happening.

[00:25:09] And I emphasize that because this is a dire humanitarian crisis. People have been forced to flee their homes, schools have been torched. There's mass displacement. But it doesn't come in a vacuum.

This is a man-made crisis in many ways and the government should shoulder some blame.

SESAY: And to give our viewers, you know, the proper context -- I mean this is a multi-regional crisis that is playing or multi-region crisis playing out in the DRC that has seen all these people flee. How much of the violence -- and I don't know if Human Rights Watch has done the analysis -- but how much of the violence is being perpetrated by non-state actors versus state security forces? Do you have an idea?

KUMAR: We don't know but we know that violence is being perpetrated by both sides, by government actors or state security and by these non-state actors. Militias that are emerging including the Kamwina Nsapu which is a really brutal militia group that has come out of the Kasai region.

So it's hard to tell on balance and one of the reasons that it's so hard to tell is that there have been these cover-ups. There have been restrictions and limitations on independent investigators like those two U.N. experts I mentioned really looking into things. And trying to find out when is the government responsible? And who's behind all of this violence

Our experts actually worry that the government might be sort of taking a calculated approach of chaos to stir things up in this region to just make it easier for them to push off the elections and we can't discount that possibility.

SESAY: No -- absolutely. What is at stake here? What is at stake here when we look at the situation in DRC which some have said may be sliding back towards civil wars we saw in the 1990s that saw millions of people's lives devastated?

As you look at the situation today where is this heading? And what are the consequences here if the international community don't step up?

KUMAR: I really see the DRC on a precipice right now. You have a massive peacekeeping mission there who aren't able to stem this violence and fighting. You have increasing threats not coming from these armed groups as it has historically but from the government itself and then a ticking time bomb of President Kabila refusing to announce his intentions. Will he stay? Will he go? Will there be a credible or real election where the Congolese people feel their voices are heard?

And in an atmosphere like that unless something changes we're really at a breaking point. I think people need to be watching the DRC much more closely going into 2018. This year it slipped off the agenda and the situation just deteriorated for the people who are living there.

SESAY: I can assure you that here on NEWSROOM L.A. we are going to be watching the situation very, very closely going forward. And look forward to speaking to you again soon.

Akshaya Kumar -- thank you so much.

KUMAR: Thank you. We appreciate you covering these issues.

VAUSE: Well the anticipation of the Trump tax cuts has been driving stock markets around the world. A point not lost on the U.S. President but could that be like the rooster claiming credit for dawn?

Details when we come back.

[00:28:31] (COMMERCIAL BREAK)

[00:30:00]

(MUSIC PLAYING)

VAUSE (voice-over): And welcome back, everybody. You're Watching CNN NEWSROOM live from Los Angeles. I'm John Vause.

SESAY (voice-over): And I'm Isha Sesay. The headlines this hour:

(HEADLINES)

VAUSE: Wall Street took a breather. The main indexes dipped on Wednesday after weeks of record highs.

SESAY: The Dow Jones is approaching another milestone. It's less than 300 points away from the 25,000 mark. The tax plans cut into the corporate rate from 35 percent to 21 percent is expected to boost corporate earnings and lead to higher dividends and stock buybacks.

VAUSE: For more on that we're joined by Ross Gerber. He's the co- founder, president and CEO of (INAUDIBLE) Wealth and Investment Management.

It's been a while, welcome back.

ROSS GERBER: Yes, thank you.

VAUSE: Good to see you. OK. It is a rare day when President Trump does not boast about the stock market, about the Dow. Here he was on Monday, he was in the middle of a major policy speech on national security. Listen to this. (BEGIN VIDEO CLIP)

DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: The stock market is at an all-time high and just a little while ago hit yet another all- time high, the 85th time since my election. America is gaining wealth leading to enhanced power, faster than anyone thought, with $6 trillion more in the stock market alone, since the election, $6 trillion.

(END VIDEO CLIP)

VAUSE: Did you get that?

It's $6 trillion. OK, clearly, he wants credit for the bull run but, up until today, Wednesday, and the (INAUDIBLE) overhaul of the tax code, the president hadn't actually signed any major piece of economic policy that actually got signed into law and he had not actually done anything apart from cutting a lot of regulations.

GERBER: Right. I have definitely done much more to help the stock market go up than Donald Trump, for all the money we've been buying stocks with. So you know, the truth of the matter is the real person behind the engineering of this amazing recovery we've seen over the last 8-9 years has been Janet Yellen and the Federal Reserve and their deft management of this, first, adding so much liquidity and now trying to take it back.

And this is such a delicate thing and she's done a masterful job. So, you know, I congratulate the Fed.

VAUSE: But --

GERBER: So far.

VAUSE: -- so far because this is now a very precarious time because you have got these stocks which are hugely overvalued. It's been a really long bull run, about 103 months, the second longest ever.

And you have a situation where you've got overvalued stocks and the Fed raising interest rates at the same time, which, in the past, has led to some pretty big corrections.

GERBER: That's correct. And I think we have to look at a few different things. Number one, you know, we went through a period of time in '15 and '16, that was almost a recession. So in a way we look at this as almost like a new cycle. Just because the economy didn't hit recession by just a little bit doesn't mean that it wasn't a very difficult time for stocks and also for earnings.

And now we've seen that recovery. So I don't know if I'm going to say it's the longest period of time.

The second thing that you have to consider is we're such at a low real interest rate that even though they're raising rates, I think these rates are ridiculously low. So if you look back into the last decade, you know, you're talking 6 percent and 7 percent rates are what hurt the market. So we're protected from there.

VAUSE: It's still free money.

GERBER: Yes. But I mean with the tax reform, you cannot underestimate the potential for growth that can be --

[00:35:00]

GERBER: -- created from this.

VAUSE: (INAUDIBLE) about the tax cuts driving the stock market because the common belief or the theory is that obviously people get more money, they go out and spend it, companies make more stuff, they make more money.

But there's a lot more expectation with these tax cuts when it comes to the corporate end as well in terms of buying -- stock buybacks, for instance.

GERBER: Right. And so if you think fundamentally that companies are paying their quarterly earnings and taxes and that amount is just subtracted on the tax side, those profits flow straight to the shareholders.

So that can be distributed in many different ways but it goes straight into the economy versus into the government's pockets. And let's keep in mind, the government is one of the most inefficient places for money. I mean, it rarely produces anything there.

So anything that doesn't go there means it's going to be better for growth by coming back into the economy.

VAUSE: Economist Justin Wolf has pointed out that the market, and he's looking at the S&P 500, has risen 70.5 percent so far in the Trump presidency. It rose 37.5 percent over the equivalent part of the Obama presidency. He uses the S&P, not the Dow because he says it's (INAUDIBLE) narrow just measures the best so the biggest companies. It's not adjusted for inflation.

But it should be noted, also, that the stock market is not the economy, despite what Donald Trump says. It is a measure of future profitability. Right?

GERBER: Right. But it also is kind of the economy or a leading indicator of economic growth, too, so you have to look at those two different periods of time. Obama took over at one of the worst period of times.

We had Republicans who almost destroyed the financial system and Obama came in and during much of his presidency really just got the country back to where it needed to be, where Trump took over where things were like ready to go.

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GERBER: Here's the baby. Run with it. VAUSE: (INAUDIBLE) does the economy need this stimulus right now?

Because I mean, as we said, this is the second longest bull run in history, 103 months. Looking at the numbers here, Trump can claim 11 months on his watch. The rest under Obama. So this is the Obama- Trump bull run, if you like.

At this point, with this market going so long and this economy doing so well, does it need the extra stimulus from what will come of this tax cut?

GERBER: I think we're going to learn that soon, you know. Honestly, I think it actually does. I mean, when you look at rising rates and still a lot of people out of the workforce, you know, maybe this economy's really just getting going here. And this puts a little bit of fuel into the fire to push it into a few more years of growth versus -- you know, we were thinking maybe we're at a turn for a recession pretty soon, too.

So let's not underestimate, this is a fundamental change in the way we've done business. My entire career, taxes on corporations have been much higher. So let's see how this works before we are critical or this is good or bad.

But I can tell you, as a guy who owns a lot of stocks, we are thrilled about it and we expect the markets to go higher.

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VAUSE: Well, I'm glad for you.

(CROSSTALK)

GERBER: It's great for our clients and --

VAUSE: Merry Christmas.

GERBER: -- they're regular people so, you know.

VAUSE: OK. Well, good to see you. Have a great Christmas. Enjoy the stocks. I'm sure you will have a good time at least (INAUDIBLE) before the bubble burst.

GERBER: We'll see.

SESAY: All right, now, with the Olympic Games just weeks away, PyeongChang is making sure it's ready for just about anything, including a possible security threat. Still to come how its organizers are working to keep the games safe.

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VAUSE: Hello, everyone. The start of the 2018 Winter Olympic Games in PyeongChang, South Korea, is just 50 days away.

VAUSE: Hosting Olympics can be a challenge for most countries but South Korea's also contending with nuclear threats, (INAUDIBLE), slow ticket sales. Paula Hancocks has the latest on the games and the security.

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HANCOCKS: SWAT team rappels down a high-rise building; a drone carrying a bomb is shot out of the sky and the chemical bomb is removed by a specialist team. PyeongChang Winter Olympics is preparing for any eventuality. These latest mock drills were the backdrop of the Olympic stadium.

UNIDENTIFIED MALE: We have a government body consist of 19 different authorities, military, police, intelligence, et cetera. And they're just preparing for all kind of scenarios, including cyber attacks.

HANCOCKS (voice-over): (INAUDIBLE) is executive vice president of the PyeongChang Organizing Committee, with North Korea just 50 miles or 80 kilometers away from the games, the focus is on security. But Kim points to the opportunities for more unity, 30 years after Seoul hosted the Summer Olympics.

UNIDENTIFIED MALE: The Olympics are much more than just global sporting event because it's the event that bring, that unite the global citizens through shared love of sport.

And we saw this during the '84 games, when the Eastern and Western bloc countries came together, putting aside their differences, to celebrate Olympic Games in Seoul.

HANCOCKS (voice-over): North Korean figure skaters (INAUDIBLE) have qualified for the Winter Games. No word from Pyongyang if they'll be allowed to compete. North Korea boycotted the '88 Games (INAUDIBLE).

As for the IOC decision to ban Russia for violating antidoping rules, Kim says those wanting to compete under a neutral flag will be welcomed and treated fairly.

UNIDENTIFIED MALE: During the games we'll have 300 international experts, monitoring the whole doping process. Samples that we take will be delivered and analyzed at the state-of-the-art laboratory in Seoul, which will deliver the result in 24 hours.

HANCOCKS (voice-over): For Kim, the main legacy of the Olympics he hopes will be making PyeongChang a famous winter holiday destination for years to come and sparking a winter sports movement among the youth of South Korea, creating the athletes of the future -- Paula Hancocks, CNN, PyeongChang, South Korea.

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SESAY: Hasn't quite got the buzz yet, has it?

VAUSE: Not yet. I wonder how much the cloud of North Korea hanging over it and maybe people are concerned.

SESAY: Maybe.

VAUSE: But it shouldn't be (INAUDIBLE).

SESAY: I'm sure 50 days from now, who knows. We'll be watching.

VAUSE: Absolutely.

SESAY: Thank you for watching CNN NEWSROOM live from Los Angeles. I'm Isha Sesay.

VAUSE: I'm John Vause. Stay with us. "WORLD SPORT" is up next and then we will be back with another hour of news from all around the world. You're watching CNN.