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DACA Deal Could be Out of Reach as Shutdown Nears; Steve Bannon Testifies on the Hill Russia Probe Amid "Fire and Fury" Backlash; Trial Date Could be Set for Paul Manafort and Rick Gates; White House: Definitely Want To Get A Deal Done On Budget; White House: Dems Show "Unwillingness" On Budget Deal. Aired 9-9:30a ET

Aired January 16, 2018 - 09:00   ET

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

[09:00:20] POPPY HARLOW, CNN ANCHOR: It's 9:00 a.m. Eastern. Good morning, everyone. I'm Poppy Harlow.

JOHN BERMAN, CNN ANCHOR: I'm John Berman. This morning, new fallout from that S storm of an Oval Office meeting. Cussing in the White House is one thing. Cussing that people in the room believe is racist is another, but cussing in a way that threatens the future of 800,000 people living in the U.S. and threatens to cripple the government, now that is an entirely different thing that we might as well call Tuesday.

Yes, the word of the day does have an S, H and a T in it but this time it is shutdown.

HARLOW: A government shutdown seems this morning unfortunately more likely than ever with Democrats and Republicans dug over the fate of the Dreamers, dug in even deeper after the S bomb that the president threw into the middle of those negotiations. And now the big question is, which side if either will actually blink?

That is the main event in Washington today but there are other rings of huge interest. A short time ago Steve Bannon arrived on Capitol Hill to testify before the House Intelligence Committee. This is just weeks after the world learned that he thought that infamous Trump Tower meeting where he called it treasonous. Of course, Donald Trump Jr. was promised dirt on Hillary Clinton.

Is he going to stand by those comments today after sort of half walking them back?

First the president, who said on camera that he'd accept any immigration deal that Congress sent his way even if he didn't like it, apparently has no regrets over killing that deal. The deal most likely to potentially happen.

Our Abby Phillips is at the White House with more.

Good morning, Abby.

ABBY PHILLIP, CNN WHITE HOUSE CORRESPONDENT: Good morning, Poppy and John. While the debate over foul language continues we are learning a little bit more about what transpired in that Oval Office meeting. The president seems to have made a complete 180 flip in terms of what he is willing to accept in exchange for a DACA deal. And over the last 72 hours the president has seemed a little -- much more pessimistic about the prospects that he and Democrats will be able to get on the same page.

He went into that meeting apparently open to the proposal that Lindsey Graham and Dick Durbin were about to present to him and by the end of it, it was a contentious debate between the hard-liners and that bipartisan pairing of congressmen -- of senators.

Now the president just tweeted not too long ago giving us a little bit more of an indication of where his head is at in terms of this DACA deal. He wrote, "We must have security at our very dangerous southern border and we must have a great wall to help protect us and to help stop the massive influx of drugs pouring into our country." So the president once again talking about this border wall which he has reiterated is a must-have for this DACA deal.

Now meanwhile another big issue facing this White House is the prospect that the government might shut down by the end of the week. Sarah Huckabee Sanders just told reporters a few minutes ago in a gaggle that the chief of staff John Kelly is expected to be on the Hill over the next couple of days working with lawmakers on these issues.

But again, none of these debates seem to have been resolved and it seems very much that the president and Democrats are as far apart as they have been in this process at the moment. A couple of days away from a potential government shutdown -- John and Poppy.

HARLOW: All right. Abby Phillip at the White House, thank you for that.

Let's go straight to Capitol Hill. Lawmakers are returning to a big spending mess. Suzanne Malveaux is there.

What are you hearing? Are we, you know, further apart? Are they further apart than they have been in a long time on this?

SUZANNE MALVEAUX, CNN NATIONAL CORRESPONDENT: You know, John and Poppy, we're actually further along when it comes to a government shutdown than we were just a couple of days ago. This is really a high stakes game of chicken. The Republicans are talking about a short-term spending bill kicking this down the road, if you will. And Democrats are saying they are not going to do that.

So at this point the big question is, who's going to be blamed if there's a government shutdown?

So on the Democrat side here's what they're telling Republicans. They say, look, a DACA deal would in fact secure their votes. Anything less than that means that they would almost have all Democrats voting against some sort of short-term spending bill.

The big problem they have here of course is really the pressure. The Democratic base putting that pressure on Nancy Pelosi and saying there are 18 Democrats back in December who voted for the short-term measure to keep the government funded. Well, they've been getting some pushback on this saying this is the time to use your leverage. This is the time to push forward very aggressively, as aggressively as you can to fight for those Dreamers.

So that is what they are dealing with, particularly red state Democrats, for the 2018 midterm elections, facing some very tough choices. On the other side here you have what Republicans are messaging to the Democrats at this time.

[09:05:06] They are saying that this bipartisan deal that the president initially had signed on to has been flatly rejected, that there is no deal here. And so that you need to get back and go back to the drawing board.

The problem with this is the Republicans themselves are split on this issue. You have those at the House Freedom Caucus who say, look, we want to raise the cap when it comes to defense spending. We don't want this to be tied necessarily to a short-term spending measure.

So you've got divisions on both sides within both parties. We're going to be seeing them come back this evening to get a temperature check on where they stand with this -- Poppy, John.

BERMAN: All right. Suzanne Malveaux on Capitol Hill, thanks so much.

Also happening at this moment on Capitol Hill Steve Bannon is behind closed doors for the House Intelligence Committee. These were the pictures of him arriving early, by the way, going through security on the capital. This is the first time that Bannon will be speaking pretty much to anyone since the explosive comments that came out in that book by Michael Wolff, "Fire and Fury," where among other things he said the Trump Tower meeting that Donald Trump Jr., where he was promised dirt on Hillary Clinton from the Russians, where Steve Bannon called the meeting treasonous.

What might he say today?

CNN's Manu Raju standing outside the hearing room right now -- Manu.

MANU RAJU, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Yes, that's right. Bannon actually arrived early, more than hour before his 9:30 schedule start. He should be behind closed doors for several hours as members try to press him about any knowledge that he may have had about contacts that occurred with Russians and Trump associates during those three months of the campaign when he was the CEO of the campaign and also what he knew during the transition period about contacts with Michael Flynn and the Russian ambassador Sergey Kislyak.

And in addition those new comments from the book "Fire and Fury" which Steve Bannon of course refers to that meeting in Trump Tower from June 2016 as treasonous and unpatriotic, and also suggesting that perhaps then candidate Trump was aware of that meeting. Now we know that from Donald Trump Jr.'s own testimony he did not tell his father about that June 2016 meeting. We also know that Steve Bannon was not on the campaign at the time of

the meeting. But undoubtedly members are going to ask about why he believes that Candidate Trump knew about the meeting and one thing also the Democrats are very interested in is the suggestion that Steve Bannon had in that book that there could be potential money laundering, something that they believe Jared Kushner should be scrutinized over. Expect those questions also to emerge behind closed doors today -- Poppy and John.

HARLOW: All right. Thank you, Manu. We'll wait. An hour early. Eager. Eager to speak to lawmakers. Thanks, Manu.

Minutes from now former Trump campaign officials Paul Manafort and Rick Gates will be back in court.

BERMAN: Yes. So it is very interesting in the Russia investigation today. Two things could become much more clear. How both sides are planning to fight these charges of money laundering and lying on federal records, and the trial date. The special counsel wants to do it six months from now.

Joining us now, CNN crime and justice reporter Shimon Prokupecz. Shimon, what can we expect?

SHIMON PROKUPECZ, CNN CRIME AND JUSTICE REPORTER: Yes, that's right. So we expect them to be in court sometime around 9:30 or so. The trial date actually has been set. The prosecutors, the special counsel say they could be ready to start this trial on May 14.

We can get some more clarity on that today to see if the defense is going to be ready with the Manafort and Gates' attorney will be ready to start trial on May 14. This date was set by the prosecutors. They told the judge hey, we could be ready for this court -- for this trial.

This comes after they have provided over 600,000 pieces of records to the attorneys for Manafort and Gates that they've reviewed, that they've used to file some of these charges. Now these records are financial records, phone records, e-mail records all used in their indictment. We may hear today if the defense will be ready after reviewing all these documents or if they're going to need more time.

Now there is also the issue of bail. You know, a lot has been in the news about both these men being under house arrest, asking the judge to ease some of the conditions of the house arrest. Their bail was set in the millions. And Manafort and Gates are hoping the judge eases some of those restrictions.

Now there is also the gag order that the judge put in place in this case. And the prosecutors have argued that both Manafort and Gates in various ways have violated those gag order conditions. So we'll get an idea today of where the judge stands and if they face any violations on any of the things that they may have done that the prosecutors have taken issue with.

HARLOW: All right. Shimon, thank you very much. Again that starts in a little less than half an hour. We appreciate it.

Joining us to talk about all of these developments in the Russia probe, our national security and legal analyst, Susan Hennessey. She's also former attorney for the NSA.

[09:10:04] Susan, nice to have you here. Let's start just briefly with Manafort and Gates who are going to court. This is another sort of procedural move ahead of the spring trial. But what are you looking at today in terms of what -- you know, what Mueller may be able to use for leverage here? What will it tell us do you think about the strategy of his team on this?

SUSAN HENNESSEY, CNN NATIONAL SECURITY AND LEGAL ANALYST: Well, May 14 trial date shows that Mueller's team isn't wasting any time. It's not particularly fast but it does show that they feel like they are ready to go. One of the most interesting things is the sheer quantity of documents, almost 600,000 documents. Mueller's team has identified 2200 of those as being especially sort of important or relevant to the case.

That really is a demonstration that they have a -- you know, a really, really well founded case, lots and lots of evidence underlying it, and it also means that this is probably going to be a long trial, a complex trial, and so that really is sort of one thing that sort of jumps out as being, you know, relatively unusual.

BERMAN: All right. Steve Bannon behind closed doors as we speak with the House Intelligence Committee. This of course follow the high drama in the Michael Wolff book "Fire and Fury," where Steve Bannon called the Trump Tower meeting treasonous, and he also said that he thinks that the president's chief vulnerability is on the subject money laundering.

This is what Steve Bannon said in that book. "Their path to f-ing Trump goes right through Paul Manafort, Don Junior and Jared Kushner is as plain as the hair on your face." This is all juicy, this is all colorful. But any reason to believe that he may shed more light on it this morning?

HENNESSEY: That probably is going to be what investigators and congressional investigators are trying to get at. Is this just Steve Bannon sort of spouting off, talking about sort of hearsay or secondary stories, or does he have first-hand information to sort of back up any of these claims?

So certainly it's going to be a topic of questions. Members are certainly going to be asking about those comments. Why does he think that President Trump might have known about that Trump Tower meeting? But there aren't really any indications at least from those "Fire and Fury" comments that Bannon has that sort of first-hand information.

HARLOW: Right.

HENNESSEY: On the other hand there are indications that he might have a lot of first-hand information related to the campaign's relationship with Cambridge Analytica where part of it he met with Erik Prince prior to a meeting (INAUDIBLE) with a Russian representative. And so they are probably going to be more interested in hearing about what he has to say about those things where they know he was actually involved than just sort of, you know, the more headline grabbing insults that he has for the president.

HARLOW: Although we do know from the ranking Democrat on the committee, Adam Schiff, that he wants to ask Bannon a lot more about the Trump Tower meeting even though he wasn't partaking in it, wasn't officially part of the campaign, what else he knows for example saying there is no way that the president -- Bannon said -- didn't meet with these guys, didn't meet with the Russians who were in that meeting. Adam Schiff wants to know more.

But in terms of the three phases of Bannon's involvement during the campaign, during the transition and in the White House he may be able to claim privilege during the transition and certainly potentially during discussions while the president was president -- is president in the White House. But what about trying to claim privilege during the campaign, for example?

HENNESSEY: Right. So he certainly wouldn't have a claim of executive privilege. One thing that we've seen sort of used by members of the Trump team throughout this investigation is sort of they put out assertions of attorney client privilege or executive privilege in circumstances in which it's not really legally justified or well- centered.

HARLOW: Right.

HENNESSEY: But knowing that that majority in the committee isn't inclined to push them on it, you know, maybe Bannon will be inclined to adopt that strategy. That said, you know, in investigations like this sort of a disgruntled ex-employee can be rather dangerous. Right? It can be somebody who is especially inclined to want to tell their story. It doesn't appear like there is a lot of love lost between Bannon and people like Jared Kushner. And so he may want -- you know, really want to tell his story. And he also may not be inclined to put himself in a new legal peril sort of on behalf of the campaign or the administration at this point.

HARLOW: Yes.

BERMAN: And the question is, is this relationship in retribution or relationship rehab?

HARLOW: That's true.

BERMAN: It could be either one. We just don't know.

Susan Hennessey, thanks so much for being with us.

HENNESSEY: Thank you.

HARLOW: No deal without DACA. More on the showdown over the shutdown. Will either side budge? Also what the president is saying newly this morning? We're going to ask a Democratic lawmaker to respond.

BERMAN: And it seems the horrifying story out of California. Thirteen children, starving children, held captive even chained to their beds. We'll have much more on this shocking and disturbing story next.

(COMMERCIAL BREAK)

[09:18:32]

POPPY HARLOW, CNN ANCHOR: All right. Just moments ago, on the White House lawn, Sarah Huckabee Sanders spoke with reporters. Let's listen to what she said.

(BEGIN VIDEOTAPE)

SARAH SANDERS, WHITE HOUSE PRESS SECRETARY: Like 30 seconds. It's a little warmer when that heater is on me.

UNIDENTIFIED MALE: What has President trump done to bring Democrats into this debate? Did he reach out to any of this weekend at Mar-a- Lago?

SANDERS: Look, we have made it pretty clear we want a clean budget deal. We have had quite a few conversations. They talked about the budget a number of different times. The president has had several bipartisan meetings over the last couple of weeks where the budget has come up every time.

We will continue those conversations. Senior members of the administration have been on the Hill meeting with Republicans and Democrats and will continue to. I know General Kelly has gone over to the Hill either today or tomorrow to meet with a number of lawmakers from both Republican and Democrat side, and so hopefully we will get there, and we are still optimistic that we can.

UNIDENTIFIED MALE: How do you see the next three days playing out realistically?

SANDERS: Look, I'm certainly not going to try to look into the future. We will get a deal done on the budget and we want a clean budget deal and I think a number of prominent Democrats said they don't feel like attaching DACA to the budget is a good idea and so hopefully we will stick to that and get something done.

UNIDENTIFIED MALE: What is the message from the White House about spending?

SANDERS: Move you guys inside so we don't have to do this out here.

[09:20:02] UNIDENTIFIED MALE: What is the message from the White House to Democrats who might be thinking about shutting down the government over DACA?

SANDERS: I think one of the strongest messages is this is important for our country's safety and security. The idea that we would hold hostage the government and certainly military spending is a dangerous place to go and one we don't want to go --

UNIDENTIFIED MALE: What happened to I would sign any immigration deal that that group, that bipartisan group brought?

SANDERS: You have to listen to the second part of that sentence where he has also said because he was confident that this group could come together and address big issues that they talked about and agreed to in that meeting which all the Democrats said not only DACA, but border security were part of that. So, the president still hopes that can happen.

UNIDENTIFIED MALE: (Inaudible).

SANDERS: Yes, the president (inaudible) as long as we get what he has laid out he would be happy to sign that.

UNIDENTIFIED FEMALE: (Inaudible).

SANDERS: I think he is worried that -- I'm trying not to get run over by a truck.

UNIDENTIFIED FEMALE: Is he worried that his comments in the oval office that heated language could be stalling negotiations?

SANDERS: No, I think he is worried that Democrats' unwillingness to actually put the country ahead of their party is what is stalling things from moving forward whether the budget or a deal on DACA.

UNIDENTIFIED MALE: Democrats are definitely using Thursday comments as leverage.

SANDERS: I don't think they are using it as leverage, but as an excuse not to help this president get something accomplished, which I think is a sad day for our country that they're willing to throw away the progress and negotiations and not make big steps that we need to have whether funding our military, supporting our government or making a deal on DACA which they say is a huge priority and something they want to do.

The president brought them all here and had a very candid conversation, which you guys were all witness to on getting that done and laid out, things that all of these individuals have voted for. It seems absolutely hypocritical that now all of a sudden they don't want border security.

They don't want merit based immigration system when they have supported it, voted for it, and spoken about it many times in the past. Look, everybody wants the same thing here. It seems like it should be pretty simple. Hopefully, Democrats will stop playing politics and start governing and getting their job done.

UNIDENTIFIED MALE: But Schumer did try to use it as leverage. He said last night, Mr. President show you are not a racist and cut a deal on DACA.

SANDERS: Look, I think that is an outrageous claim. Frankly, I think if the critics of the president were who he said he was, why did NBC give him a show for a decade on TV and why did Chuck Schumer and all of his colleagues come and beg Donald Trump for money?

If they are who they want to try to portray him as, why did they want to be with him for years and years in various activities whether events and fundraisers and other things? I think it is an outrageous and ludicrous excuse and they need to get on board and start doing what they were elected to do. Thanks, guys. I'm freezing.

UNIDENTIFIED FEMALE: (Inaudible) the remarks about --

SANDERS: Defending it to allies and calling people from West Palm Beach.

UNIDENTIFIED FEMALE: If he didn't make that remark, the expletives, why did he spend the weekend calling allies and friends defending it?

SANDERS: Look, the president hasn't said he didn't use strong language and this is an important issue. He is passionate about it. He is not going to apologize for trying to fix our immigration system. He is committed to doing that and hopefully Democrats will be, too. Thanks, guys.

(END VIDEOTAPE)

JOHN BERMAN, CNN ANCHOR: The White House going from not denying the meeting to denying it to bragging about it to now not denying if they were bragging about it.

HARLOW: Right. And not denying the language.

BERMAN: Exactly, fascinating.

All right. Joining us now, Josh Green, CNN political analyst, Amber Phillips, political reporter for "The Washington Post" blog, "The Fix" and Asawin Suebsaeng, politics reporter for "The Daily Beast." Guys, let me add to this a statement that we just got from the president, which is also noteworthy.

The Democrats want to shut down the government over amnesty he writes for all -- listen to this because it's important again, "Democrats want to shut down the government over amnesty for all and border security."

I think we have this tweet, "The biggest loser will be our rapidly rebuilding military at a time we need it more than ever. We need a merit based system of immigration and we need it now. No more dangerous lottery." There is a lot.

HARLOW: There is a lot that is incorrect in that. The dangerous lottery he is talking about the deal that was brought to the White House they wanted to change a lot of it substantially. DACA is not amnesty for all. Those are just few things.

BERMAN: Yes, and the military would not be shut down completely. They would be paid because they've already (inaudible). [09:25:03] All that aside, Amber, you start to see the lines being drawn here and how the White House is now trying to leverage this.

AMBER PHILLIPS, POLITICAL REPORTER, "WASHINGTON POST'S THE FIX" BLOG: Right. You see the White House -- I think both sides -- let me step back for a minute -- are back on their heels. I think Democrats feel offended that the president not only said what they heard him said, but that the president has been denying this or blaming them.

I think President Trump feels like he needs to retreat to his corner and double down on what he said after the news came out, which is I use tough language on immigration. We've got to be tough on immigration.

All of this is sort of reminding him of what he campaigned on, which is you talk to conservative members of Congress like Steve King and they say DACA is amnesty and the president did not campaign on letting illegal immigrants stay in this country.

That is the language I hear from the president in that tweet. Day by day, yes, tough as you said to pin down what the White House feels about any of this. I see them going more towards the right as this war of words escalates between Democrats and Republicans.

HARLOW: You heard Sarah Sanders just say that the Democrats are and I'm paraphrasing, throwing away progress and negotiations. This is the president who said I will sign whatever they bring me even if I don't like it. They who brought it to him were not just Democrats. It was Democrats and Republicans who reached an agreement. He didn't agree to it like he said he would.

ASAWIN SUEBSAENG, POLITICS REPORTER, "THE DAILY BEAST": Right. It shouldn't be surprising to anybody on this panel that this particular president would have such rapid reversal in terms of both policy and promise. The president and the White House have been saying that this is the Democrats throwing away a potential deal or DACA fix.

This isn't happening because the Democrats have come to the table with something that the White House wasn't expecting or proposing a segment of the deal that they would deem unreasonable. This is because the president went on a couple of racist outbursts during a White House meeting that became public.

Just to go back to what we were talking about earlier, there seems to be like this mini debate with regards to whether the president said hole or house when referring to African countries, Haiti and El Salvador.

And I just want to make clear, it is almost immaterial which word he used. The point he was making was the people from these poorer, minority, dominant countries should not be allowed into the United States. This is a question of policy, not crass language.

BERMAN: You can see the White House trying to flip that, trying to move beyond that if they can, and put the pressure back on the Democrats from where they are standing right now on this issue, Josh. I'm wondering if you think they are under any pressure here.

JOSHUA GREEN, CNN POLITICAL ANALYST: Yes, I think they are. I mean, I take the president's tweet just now, Sarah Sanders's comments to be a reflection of the realization that there is not going to be any kind of immigration deal passed before Friday and there's therefore a very high likelihood that the government shuts down.

So, I think what you see happening right now are the two sides positioning to try to tag the other party with the blame. That is the purpose of Trump's tweets blaming Democrats. I'm sure Democrats will be out today saying that in fact it was Donald Trump and Republicans who will be responsible.

Because let's remember the context of Trump's racist comments was in turning down a bipartisan immigration deal that had been negotiated by a set of Republicans and Democrats in the Senate, who were under the impression that this was something Trump could sign because he said he would a couple of days earlier.

He said bring me something that the parties can agree on and I'm likely to assign it. He has flip-flopped on that position and so now it looks like we are headed for a shutdown. One party or the other will have to get the blame.

BERMAN: It is interesting the president did write something else I want to read you. "Do you notice the fake news mainstream media never likes covering the great and record-setting economic news, but rather talks about anything negative or that can be turned into the negative?

The Russian collusion hoax is dead except when as it pertains to the Dems. Public gets it." I was surprised, Amber, that in the midst of everything that's going on, he went back to Russian hoax.

PHILLIPS: Yes. And it sounds like he is always going to go back to that because the president is sort of driven by the desire we saw from his conversations that James Comey released last year to prove that he is not under this, quote/unquote, "cloud of Russia.

But you are absolutely right. The irony is he is reminding people of this ongoing parallel investigation. The president's tweet isn't accurate. None of the investigations in Congress or at the FBI have come out and said we haven't found collusion, there is nothing there.

They are still investigating. A year in the FBI case almost two years later, and so for the president to prematurely say, these investigations are over, I'm out from under this cloud, is wishful thinking, creating his own reality.