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EARLY START

House Votes To Pass Spending Bill; Kelly's Job Safe For Now; Winter Olympics Opening Ceremony Kicks Off Soon. Aired 5:30-6a ET

Aired February 9, 2018 - 05:30   ET

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


[05:30:00] (BEGIN VIDEO CLIP)

RAJ SHAH, WHITE HOUSE PRINCIPAL DEPUTY PRESS SECRETARY: I know there's been some reports about the chief of staff. He became fully aware about these allegations yesterday.

(END VIDEO CLIP)

CHRISTINE ROMANS, CNN ANCHOR: The White House dancing around about what John Kelly knew about abuse allegations against a top White House aide. What does fully aware mean?

BRIGGS: And the eyes of the world are on the Olympics in PyeongChang. The opening ceremony just a short time away. The vice president and Kim Jong Un's sister both in the building.

Welcome back to EARLY START. I'm Dave Briggs.

It looks like that bill will eek through the House.

ROMANS: It's happening right now. No gavel yet but the voting happening right now.

I'm Christine Romans. It's 30 minutes past the hour.

There you see 229 yea, 181 nay. The House voted on that measure --

BRIGGS: That should be enough to do it.

ROMANS: -- I think so -- that would end the government shutdown.

BRIGGS: That should be enough to do it.

ROMANS: While you were sleeping the government shut down, folks. And now, it looks like the House is trying to rectify that. Look, all this started at midnight -- the debate and now, the voting. A couple of hours ago the Senate voted to pass a two-year spending bill.

So how this vote will turn out remains the open question, you know. Democrats have been -- have been hoping to use their leverage to force action on their priorities.

Rand Paul's problem was that there's -- the Republican Party is hypocritical by spending money it doesn't have and adding to the deficit. Let's bring in CNN's Phil Mattingly. So what does it look like to you? I see 234.

PHIL MATTINGLY, CNN CONGRESSIONAL CORRESPONDENT: Yes, Christine, I want to lay out what just happened. It was a very dramatic scene.

Basically, we knew when the vote was called that things were a little bit dicey. Nobody has had a great sense of where House Democrats were over the course of the last 12-16 -- I guess we're at 24 hours now since this thing really kicked into high gear.

What happened when they started the vote is Republican votes started pouring in. Democrats -- almost all of them -- sat in their seats, did not vote, and stared at the voting screen. What they were doing is essentially daring Republicans -- seeing how many votes Republicans could actually put up. How many yes votes they could put up.

Guys, they knew and Republicans knew Democrats were going to be needed to come over at some point. The question was how many and perhaps maybe a little bit of how much can you sweat over the course of the next 15 minutes of this vote? That standoff occurred for more than 10 or 11 minutes with both sides either staring at one another or staring at the vote screen that shows how every single member has voted.

At that point, members started giving the signal that it was time for the votes to come in. At first, there was a Democrat signaling a thumbs down, meaning perhaps the votes were going to go against Republicans on this issue. And then, all the Republicans started coming in -- the remaining Republicans that had been holding out -- and the Democrats soon followed.

They have the votes. They clearly are going to pass this bill. The shutdown is going to come to an end.

The potential crises of spending crises, of debt ceiling crises that it seems like we've been dealing with on a self-imposed basis year after year, week after week, month after month -- those will be pushed aside as well.

But I just want to underscore that was not a normal vote. That was very tense. That was quite a standoff. And while they got it over the finish line by the end of it, there were a couple of minutes there where I think a lot of people were a little bit worried about where that one was going to head.

BRIGGS: I think you're right. Democrats really wanted Republicans to sweat --

ROMANS: There's the gavel.

BRIGGS: -- because we were watching a vote that didn't look like it was going to go their way.

They just gaveled. OK, so it looks like this thing has passed the House.

So, Phil, now the president will sign this bill, presumably, and when will the government reopen.

MATTINGLY: Well, I think the big question right now is what was the actual impact of a shutdown, particularly one that's --

ROMANS: In the middle of the night.

BRIGGS: Right.

MATTINGLY: -- in the middle of the night.

And another thing. When the Office of Management and Budget was reaching out to the agencies last night and informing them that they needed to prepare for this, they were allowed contingency plans to allow their workers -- even those that would be furloughed -- to come in for four hours to have kind of a regular order shutdown if you will, if that's something that actually exists. Although, based on the last 18 days, apparently it is a regular thing.

So there isn't expected to be a lot of impact. I haven't heard from friends and colleagues that are federal workers that any furlough notices have gone out, so things should be pretty seamless.

This was a short shutdown.

ROMANS: Yes.

MATTINGLY: One amazing thing.

I want to just to real quick -- the importance of what this deal actually does going forward.

These types of moments, presumably, will now be off the table. This keeps the government open until March 23rd but setting the topline spending numbers, increasing the budget caps -- $300 billion over the course of two years, plus another $100 billion in disaster relief -- that really takes out a lot of almost the tools that led to these types of moments in the past.

It should smooth things out, at least for the next couple of months and probably a year or two. That, I think, for people who are tired of crises is a positive thing.

ROMANS: Yes, and we know now it has officially passed. We saw the gavel. That's the word from the House floor.

Let's listen a little bit to Sen. Rand Paul. I mean, this all was sort of pushed into motion by Rand Paul who has completely -- you know, philosophical differences completely with this -- listen.

(BEGIN VIDEO CLIP)

SEN. RAND PAUL (R), KENTUCKY: Drawing attention to how much debt we're accumulating is something that is important. We've waited all week long to put this at the very end of the week and let it expire towards the end as people get tired. And then, everybody says well, you don't want to shut down government, do you? And I really don't. [05:35:05] My intention has never been to shut down government, but my intention is also not to keep it open and borrowing a million dollars a minute. My intention's not to vote for bills that say oh, it's just keeping it open, but bills that actually spend so much money that I think they endanger our security.

(END VIDEO CLIP)

ROMANS: If I'm not mistaken, this bill automatically raises the debt ceiling so it takes the heat off of them --

BRIGGS: Yes.

ROMANS: -- to have to account for all of that government spending for the next couple of years.

He said earlier in the night, "If you were against Obama deficits and now you're for the GOP deficit, isn't that the very definition of hypocrisy?" Ouch.

MATTINGLY: Yes. Look, and I think you've heard that from a lot of people right now if you were paying any attention to the fiscal battles of the eight years prior to President Trump taking office. And they painful, and they were lengthy, and they were all about reducing deficits --

ROMANS: Ugly.

MATTINGLY: -- they were all about cutting spending.

And now, you have a bill that gets large bipartisan majorities supporting it that has $300 billion in spending increases. It does completely away with the sequester. It does completely away with the 2011 budget caps.

I think the senator makes a point that is -- resonates with even those who have supported this deal. I think the interesting element here -- and guys, I want to point that we knew the House was going to be an issue and that it was going to be --

BRIGGS: Yes.

MATTINGLY: -- a little bit of drama over here.

We woke up Thursday morning, now, with no idea that Senate was going to be a problem. We knew they had the votes in the Senate and that was going to move forward. They expected to move forward in early afternoon.

Obviously, we know what happened. Senator Paul was not willing to give consent --

BRIGGS: Yes.

MATTINGLY: -- because he could not get an amendment vote, and they ended up pushing it to the shutdown. But I think the important component here is why where Republicans willing to go for this? It's the defense spending.

ROMANS: Yes.

MATTINGLY: There's no question about it -- $163 billion over two years addressing a lot of the shortcomings that people like Defense Sec. James Mattis, who is a very powerful voice on Capitol Hill when he comes up here, have been asking for, begging for, pleading for, that won the day and that's why they got this over the finish line, guys.

BRIGGS: Phil, we were led to believe, though, that Nancy Pelosi was going to hold her members out without some sort of guarantee on immigration, similar to what Mitch McConnell did over there in the Senate for Chuck Schumer.

Did they get any guarantee on bringing legislation to the House floor?

MATTINGLY: They did not and I think if you watch the Democratic Caucus -- House Democratic Caucus over the course of the last day and a half, if you've been speaking to members and aides, as I have, behind closed doors over the course of that same period, you recognize the incredibly difficult and very thin line Democratic leadership was trying to walk on this.

Look, their kind of position on DACA is not a secret. They very clearly wanted something out of this. They wanted -- basically, they wanted Speaker Paul Ryan to remove the forward clause at the end of his commitment to take this up, and that is that the president has to support the bill.

ROMANS: Yes.

MATTINGLY: He was not going to do that. He was never going to do that.

So what you saw is publicly, Democrats saying that they were going to hold out their votes. What you heard privately is the leader, who I would note her staff was an integral part of negotiating this budget deal.

They pushed for a lot of priorities, they got a lot of priorities that they wanted -- who were basically saying we want to have the public fight but we're not going to twist arms to get you to vote no. We want this to get across the finish line eventually, just maybe by only a few votes, not by a very large margin.

So it was just -- it was a very complicated kind of dance Democratic leadership in the House was trying to play over the course of the last 15, 16 hours.

As you guys know as well as anybody, the Democratic Caucus, particularly in the House, is extremely passionate about the issue and is extremely outraged about the fact that it hasn't been addressed yet. ROMANS: Yes.

MATTINGLY: Leaders wanted the budget deal but they knew they had to figure out some way, both poli8itcally and frankly, on the policy side, to try and address concerns that weren't going to be addressed by Speaker Paul Ryan.

BRIGGS: Well, Nancy Pelosi's eight-hour speech in four-inch heels --

ROMANS: Yes.

BRIGGS: -- all for naught, really.

ROMANS: But what about on the Senate side? Mitch McConnell said he's begun the process of starting to address immigration next week in the Senate.

What are we expecting?

MATTINGLY: Yes, that's exactly right. And I think what Sen. McConnell promised he was going to do, he is going to do.

What he did at the end, right after they passed the budget bill, is he filed a cloture to move on to an immigration bill. What's the immigration bill? It doesn't exist. What he did, guys, is basically just lay out a vehicle and that means he has kept his promise.

That means when Senate Majority Leader Mitch McConnell said look, whoever gets 60 votes on something is going to win, that's the truth. Basically, every member is going to have an opportunity to put up an amendment, try and whip the votes, and try and get it there. And if somebody can get 60 votes on a bipartisan agreement, that's what's going to pass the Senate.

I will note there's been a lot of behind-the-scenes work from members, bipartisan groups, conservative groups, more left-wing groups on trying to figure out language to actually move that forward.

It is going to be fascinating on the Senate floor next week. This is an actual debate on a very important national issue where we don't know the end game. That doesn't happen very often up here.

And I will note this isn't going to be quick. Expect it to be multiple weeks. It's going to be very interesting to watch and frankly, I think probably good for the country to watch a debate that has been so kind of riled with heating talking points and bomb- throwing at one another. This will be about the policy and they have to prove that they can get it done.

[05:40:00] BRIGGS: The sausage-making has been --

ROMANS: Yes.

BRIGGS: -- for all of us to see in --

MATTINGLY: Yes. BRIGGS: -- recent weeks.

ROMANS: And the House is in recess and all those people streaming past Phil Mattingly are going to go and try to like --

MATTINGLY: Happy members ready to go home.

ROMANS: Yes. They're getting home to sleep for an hour and a half and then come back.

All right, Phil, thank you.

BRIGGS: All right. Catch a few of them on the way out.

Capitol Phil Mattingly all over it for us this morning. Thank you, Phil.

ROMANS: I know. In fact, we call you Capitol Phil behind your back and to your face, apparently.

You know, I'll say that the president does have to sign it --

BRIGGS: Yes.

ROMANS: -- before you are officially here and not going to have a government shutdown today.

Let's bring in political economist Greg Valliere. He's listened to all of this and watching all this drama overnight. He's the chief strategist for Horizon Investments.

So is this the official end of the fiscal conservative -- you know, Paul Ryan wing of the Republican Party brand?

GREG VALLIERE, POLITICAL ECONOMIST, CHIEF STRATEGIST, HORIZON INVESTMENTS: And there are two things, I think, Christine.

Number one is I fully agree with Phil that the dysfunction is over for a while. We've got a year or maybe longer without --

ROMANS: The last --

VALLIERE: -- these debilitating, humiliating, embarrassing budget fights. That's a good story.

The second story that I think is very important for the markets is that deficits are headed significantly higher. I've been arguing for a while that if there's a problem with the economy it could overheat. With all the stimulus, tax cuts, more spending, tight labor market, synchronized global growth.

So you're now in a situation where the bond market, which really began the stock market sell-off -- the bond market is still worried about an economy that might get too hot.

ROMANS: So what you're saying is all the stimulus is at the wrong time for all this stimulus.

VALLIERE: Yes. I mean, in '08-'09 we really needed a lot of stimulus --

BRIGGS: Yes.

VALLIERE: -- during the --

ROMANS: Oh, but the Republicans didn't want to do that in '08-'09 --

VALLIERE: Yes.

ROMANS: -- and now they want to do it.

VALLIERE: Yes. When the economy doesn't need it we're getting all this stimulus, right.

BRIGGS: You've got the markets down. The Dow down 866 points or 3.5 percent since the tax cut legislation was signed in to law. Not related perhaps but bad optics.

ROMANS: So maybe -- so maybe. He's saying it probably is.

BRIGGS: It could be somewhat related.

Paul Ryan, he is celebrating this victory for the --

VALLIERE: Yes.

BRIGGS: -- GOP. Quote -- he just tweeted "This is a great victory for our men and women in uniform. We ultimately reached a bipartisan compromise that fully funds our troops and gives our generals the --

VALLIERE: Yes.

BRIGGS: -- certainty they need to plan for the future."

But let's take folks back -- there's the Paul Ryan tweet. Let's take them back, Greg, to Rand Paul taking his stand. This was just past 7:00 Eastern time when he laid out the problems for the Republican Party in the future -- listen.

(BEGIN VIDEO CLIP)

PAUL: The reason I'm here tonight is to put people on the spot. I want people to feel uncomfortable. I want them to have to answer people at home who said how come you were against President Obama's deficits and then how come you're for Republican deficits? Isn't that the very definition of intellectual dishonesty?

If you were against President Obama's deficits and now you're for the Republican deficits, isn't that the very definition of hypocrisy?

(END VIDEO CLIP)

BRIGGS: You might be seeing that again in -- VALLIERE: Yes.

BRIGGS: -- in 2018 in the midterms.

What does that mean for the Republican Party?

VALLIERE: Well, if by Labor Day the economy is red hot, if unemployment is below four percent, which I think is likely, an awful lot of voters will look at their pocketbooks and say that this is all warrant. But it's a great sound-bite for Democrats to throw at the Republicans, especially if interest rates continue to rise.

ROMANS: Trillion-dollar deficits.

BRIGGS: Yes.

ROMANS: Here we go again.

VALLIERE: Yes.

BRIGGS: But to his point, if this -- if people feel like this is a healthy economy this may turn out well for the Republican Party.

ROMANS: All right, Greg Valliere.

VALLIERE: Yes.

ROMANS: Nice to see you, Greg.

VALLIERE: You bet.

ROMANS: Thanks for sticking around this morning.

BRIGGS: Greg, thanks.

VALLIERE: Yes.

ROMANS: Have a great weekend.

VALLIERE: Yes, you, too.

ROMANS: Well, let's talk about the stock market. It is officially in correction. Yesterday was a really ugly day and Wall Street's woes spread overseas right now.

Asia markets plummeting two, three, four percent overnight. Right now, we've got Europe is open -- been open a couple of hours. It's lower.

U.S. futures are up. We're watching that very carefully. It's been pretty volatile.

Both the Dow and the S&P 500 tanked yesterday. They are both in a correction. That's the technical term for when an index drops 10 percent from a recent high. The Nasdaq almost there. The Dow fell 1,033 points, the second time in history it has lost more than 1,000 points in a single day. The other time was Monday. But a four percent move, while big, is not even in the top 20 of percentage moves, so keep that in mind.

That puts both the Dow and the S&P 500 on track for their worst week since 2008, mostly because stocks have been going up, up, up, up since then. Blame fears about soaring bond yields and inflation. Both could force faster interest rate hikes from the Federal Reserve.

On Wall Street, that threatens the bull market. On Main Street, it means higher mortgage rates. Interest rates affect borrowing costs and mortgage rates just hit their highest level in two years. There it is -- a benchmark 30-year rate now, 4.32 percent.

Don't panic just yet, homebuyers. I want to give you some history there. That's how that fits into the historical chart. Back in the eighties you were paying 16 percent per market --

BRIGGS: Yes.

ROMANS: -- so it's up a little bit but still historically low.

BRIGGS: Basically, the markets are celebrating the Olympics, doing the downhill this week.

ROMANS: Yes.

BRIGGS: All right. Speaking of the Olympics --

ROMANS: Fun.

BRIGGS: -- the opening ceremony about 15 minutes away in PyeongChang. We have a trio of reporters covering the games, the pageantry, the politics -- all of it. We're live in South Korea, next.

(COMMERCIAL BREAK)

[05:49:25] ROMANS: White House chief of staff John Kelly's job is safe for now even though there's mounting frustration in and out of the White House over his handling of abuse allegations against former staff secretary Rob Porter.

According to one officials, Kelly's job is still secure, largely because no one can identify a natural replacement.

BRIGGS: CNN has also learned President Trump is telling associates he is disturbed by the Porter scandal but is not sure how to fix it. He spent the last two nights phoning friends and former aides, including Kelly's predecessor, Reince Priebus, and got wildly differing opinions on the way forward.

On Thursday, deputy press secretary Raj Shah was asked about the White House response to the Porter debacle.

[05:50:05] (BEGIN VIDEO CLIP) RAJ SHAH, DEPUTY WHITE HOUSE PRESS SECRETARY: I think it's fair to say that, you know, we all could have done better over the last few hours -- or last few days.

(END VIDEO CLIP)

ROMANS: Sources tell CNN Shah's admission of error there did not sit well with the president. Shah also said Kelly became quote "fully aware of the allegations this week." But according to CNN's reporting, Kelly has known about the accusations for months.

BRIGGS: Now, "The Washington Post" reports White House counsel Don McGahn was told last January Porter's ex-wives were prepared to make damaging accusations. A White House official tells the "Post" McGahn did not ask what the allegations were because Porter denied them.

Kelly sent a long memo to the White House staffers Thursday night addressing the allegations against Porter, calling them shocking and troubling while insisting the administration takes matters of domestic violence seriously.

Across the world in South Korea, the opening ceremony for the Winter Olympics kicking off in about 10 minutes. These are live pictures seen of the stadium. The Games officially begin in PyeongChang with momentous political overtones.

We start our coverage of the Winter Games with Will Ripley outside the stadium -- Will.

WILL RIPLEY, CNN INTERNATIONAL CORRESPONDENT: Well, Vice President Pence seemed to avoid an awkward, potentially, with the North Koreans. He skipped the dinner with South Korea's President Moon Jae-in and the head of the North Korean delegation Kim Yong Nam. Instead, he attended a prescheduled dinner with the U.S. Olympic team.

But obviously, the political situation here is really overshadowing the sporting situation. You had the vice president with Fred Warmbier, the father of Otto Warmbier who died six days after being released from North Korean custody. They posted photos of Mr. Warmbier embracing North Korean defectors and the vice president telling them that the United States stand in solidarity with those in North Korea who yearn for freedom.

The vice president also announcing on his trip here Asia tough new sanctions against North Korea and calling on the South to disengage with Pyongyang, saying don't fall for the charm offensive. They're still developing nuclear weapons. Join the United States in a maximum pressure campaign.

But, President Moon of South Korea caught in the middle here because the high-ranking delegation that arrived included -- really, historically -- Kim Jong Un's younger sister Kim Yo Jong. She flew in on the North Korean leader's private jet. She's expected to have lunch tomorrow with the South Korean president.

Several diplomatic sources are telling me it is very likely that she will offer an invitation for President Moon to visit North Korea sometime this year. That's something that President Moon has indicated he would be willing to do if certain conditions were met.

The big question, what does North Korea want to get out of this? One thing seems clear. They are certainly try to drive a wedge between Washington and Seoul in trying to extend this period -- this buffer that they have where it's going to be difficult for the United States to take much action while these talks with the South are taking place -- Dave.

BRIGGS: Totally normalized. Will Ripley live for us in PyeongChang. Thank you.

Also at the Olympics there are actual sports happening. Coy Wire updates us from all of that. Good morning, Coy.

COY WIRE, CNN SPORTS ANCHOR: Good morning, Mr. Briggs.

The opening ceremony just moments away. Nearly 3,000 athletes from over 90 nations will see their dreams come true as they walk into the stadium.

One unfathomable dream for most of these athletes, carrying the flag for their nation. For the USA, that honor was given to four-time Olympian Erin Hamlin. She's just the sixth female to be named flag bearer for Team USA at a Winter Olympic Games.

And get this, she says her parents almost decided not to come this time. They would have missed this incredible moment. Listen to this.

(BEGIN VIDEO CLIP)

ERIN HAMLIN, FOUR-TIME OLYMPIAN: They always end up going because they're like we're here, let's just do it, and this time was the same. And they were like well, it's your last Olympics. Let's -- we'll go.

I think they're going to be really glad that they made that decision. But yes, they're really pumped. I'm sure my brothers will be really pumped.

We've grown up watching the Olympics and we're always like who's going to be carrying the flag? And to actually be that person is insane.

(END VIDEO CLIP)

WIRE: All right. We want to give you one athlete to watch in PyeongChang.

The skiing speed demon on the slopes and the one who at the 2014 Sochi Games became the youngest slalom champion in Olympic history at just 18 years old, Mikaela Shiffrin. She's a favorite to win medals in multiple events this time around so we had to catch up with her and find out where's here mind -- listen.

(BEGIN VIDEO CLIP) MIKAELA SHIFFRIN, TWO-TIME OLYMPIAN: I'm going into this Games with a similar mindset that I had in Sochi, which was I have a capability of winning a medal, if not multiple medals, and I certainly feel more like a veteran going into this Olympic Games.

But, at the same time, I still feel like sort of a starry-eyed girl and still competing with some girls who are, you know, my all-time idols in the sport.

(END VIDEO CLIP)

WIRE: All right. So, Mikaela -- athletes are getting ready to go out in the opening ceremony.

One more quick thing on Erin Hamlin. She said that she was on her phone with her parents before the flight. Mom was crying and she was crying, and the brother said, though, don't drop the flag. And now, she says that's all she can think about. Let's hope she doesn't do that.

[05:55:10] ROMANS: Oh, I hope she --

BRIGGS: She is terrific.

ROMANS: Yes.

BRIGGS: A great story to watch. Thank you, Coy.

ROMANS: Coy, we can't wait to see your reporting in the coming days. Thank you so much.

BRIGGS: Looking good in that Ralph Lauren, as well.

ROMANS: All right. Thanks for joining us. I'm Christine Romans.

BRIGGS: I'm Dave Briggs.

The government is going to be back open today. That's right, it shut down overnight. "NEW DAY" has it all covered for you.

We'll see you on Monday.

(COMMERCIAL BREAK)

ANNOUNCER: This is CNN breaking news.

ALISYN CAMEROTA, CNN ANCHOR: OK. We want to welcome our viewers in the United States and around the world. This is NEW DAY. It is Friday, February ninth, 6:00 here in New York.

Chris is off. John Berman joins me. It's been a wild night here in the U.S.

JOHN BERMAN, CNN ANCHOR: We survived the grueling shutdown.

CAMEROTA: Yes, we did. We begin with breaking news for you because the House passing a massive budget deal just moments ago.