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Early Start with John Berman and Zoraida Sambolin
House Democrats Hitting White House With Oversight; Boeing CEO Says the Company Owns Responsibility for Software Failure; Trump Nominating Loyalists to Federal Reserve Board?; Russia Moving to Dominate the Arctic. Aired 4:30-5a ET
Aired April 05, 2019 - 04:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[04:30:43] BORIS SANCHEZ, CNN ANCHOR: House Democrats versus the White House. Neither willing to compromise on how much to reveal of the Mueller report or the president's taxes.
CHRISTINE ROMANS, CNN ANCHOR: And breaking overnight, not one but two major software flaws on the Boeing 737. Boeing's CEO says the company owns the responsibility to fix the issues.
SANCHEZ: Plus does a former pizza executive belong on the board of the Federal Reserve? The president looking to install loyalists as he battles the Fed chair.
ROMANS: And MacKenzie Bezos is now the world's fourth richest woman. What she got and what she gave up in the divorce from the Amazon founder.
Welcome back to EARLY START. I'm Christine Romans.
SANCHEZ: Great to be here with you, Christine. I'm Boris Sanchez in for Dave Briggs. We are 31 minutes past the hour. And we start with the White House and House Democrats gearing up to fight on two fronts. First the Mueller report and second the president's tax returns.
First on Mueller, House Judiciary Chairman Jerry Nadler demanding communications between the Justice Department and Robert Mueller's office about the special counsel's report.
ROMANS: Nadler wants to clear up reported discrepancies between two different summaries of the 400-page report. Attorney General Bill Barr's four-page summary and the still secret summaries actually written by Mueller's team.
(BEGIN VIDEO CLIP)
REP. JERRY NADLER (D-NY): Yes. So I think it's inevitable that Mr. Mueller is going to testify at some point. But the first thing we need is all -- is the release of the report and the documents.
MANU RAJU, CNN SENIOR CONGRESSIONAL CORRESPONDENT: You think it's inevitable that Mueller is going to come before your committee?
NADLER: At some point, yes. (END VIDEO CLIP)
SANCHEZ: Sources tell us several of Mueller's investigators are frustrated with the way Barr summarized the special counsel's findings, in particular on obstruction of justice. The DOJ is defending the attorney general's handling of the report. The Justice Department saying every page of the report was marked as possibly containing information that should not be publicly released.
ROMANS: The president who had encouraged the release of the report now changing his tune tweeting, "This is the highest level of presidential harassment in the history of our country." Meantime the White House is threatening to block Democrats' demand for the president's tax returns and the president himself suggesting the Justice Department could become involved.
More now from White House correspondent Abby Phillip.
ABBY PHILLIP, CNN WHITE HOUSE CORRESPONDENT: Christine and Boris, President Trump is now facing the full brunt of this new reality in Washington as Democrats who now control the House of Representatives are using their oversight power to ask for a number of things. One of them being the full Mueller report to be released to the public and to the relevant committees, and also now the president's tax returns.
They are asking for six years of tax returns, personal and from his businesses, and the president is responding to all of that by essentially dismissing it saying that he's not inclined to allow them to have access to those returns.
The problem for President Trump may be that this request was not made to him personally, but rather was made to the IRS using an obscure part of the U.S. code that allows select committees on Capitol Hill to gain access to certain people's tax returns. Now it's clear that the White House and the president's allies on Capitol Hill are going to be pushing back on both of these requests.
(BEGIN VIDEO CLIP)
UNIDENTIFIED REPORTER: Are you asking the commissioner of the IRS not to disclose to the House Ways and Means Committee your tax bill?
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: They'll speak to my lawyers. They'll speak to the attorney general.
(END VIDEO CLIP)
PHILLIP: It's not clear what exactly he meant by that and what role he believes Bill Barr will have in this. But either way, the White House continues to insist that President Trump is still under audit and that those tax returns won't be released until those audits are completed -- Christine and Boris.
ROMANS: All right. Abby Phillip, thank you so much from the White House. There may be a Michael Cohen tell-all revival tour in the works if it
keeps him out of prison. President Trump's former lawyer offering up new information to Democrats. According to his attorneys, he has uncovered millions of new files on a hard drive that might have significant value, he says, to investigators.
Cohen is asking prosecutors in the Southern District of New York to allow him to put off reporting to jail, and his lawyers are requesting a sentence reduction. Cohen is scheduled to report to prison on May 6th.
SANCHEZ: Breaking overnight, Boeing acknowledging a second software issue in the 737 MAX flight control system. The new issue separate from the anti-stall system currently under investigation in those two recent crashes. Boeing tells "The Washington Post" the new problem involves software that affects flaps and other hardware. Boeing calls this issue relatively minor. Its discovery delayed the planned software update last week.
[04:35:02] ROMANS: All of this coming a day after the release of the preliminary report on the Ethiopian Airlines crash obtained first by CNN. It left families devastated.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: Obviously this could have been prevented and that's what makes me cry because all of these people, it's not just Sam, you know, one family lost their whole family, grandparents, parents, children. Another guy lost his wife and his 1-year-old child. I mean, this is just repeated 157 times. We've met so many of these families and this could have all been prevented.
(END VIDEO CLIP)
ROMANS: Boeing's CEO acknowledged the company has a major issue to fix.
(BEGIN VIDEO CLIP)
DENNIS MUILENBURG, BOEING CEO: It's apparent that in both flights, the Maneuvering Characteristics Augmentation System, known as MCAS, activated in response to erroneous angle of attack information. It's our responsibility to eliminate this risk. We own it and we know how to do it.
(END VIDEO CLIP)
ROMANS: The back-to-back disaster is raising questions of whether years of looser oversight at the FAA was a factor.
CNN's Tom Foreman has more.
(BEGIN VIDEOTAPE)
TOM FOREMAN, CNN CORRESPONDENT (voice-over): The report says the trouble starts right after takeoff with airspeed and altitude readings from the left side of the 737 MAX 8 that don't match the readings from the right side, and two sensors on the front disagreeing about the angle of the aircraft's nose. A sensor on the right shows steady readings around 15 degrees, but the one on the left swings wildly from 11 to nearly 75 degrees steep, as if the plane is rocketing upward.
ALASTAIR ROSENSCHEIN, AVIATION CONSULTANT: What stands out and is significant is the difference in angle attack indication between the left-hand side and the right-hand side of the aircraft. There was a 60-degree difference. And this feeds directly into the MCAS computer system, the system which forces the nose down in the event of a perceived stall. This is the same as the Lion Air accident.
FOREMAN: The report does name MCAS, but Boeing has now acknowledged it was involved. The captain asked the first officer to pitch up together, to pull back on their controls simultaneously. It does not work. Instead, the flight data recorder shows the plane diving. In all four times without pilots' input. An impact warning sounds in the cockpit, "Don't sink, don't sink."
The report says the cockpit crew even figures out what is wrong and disables the MCAS system. Then the captain asks his first officer about a key part of the plane needed to regain control. The trim. The reply, "It is not working."
(On camera): Still, only a couple of years ago, Boeing was talking about how much it appreciated the government's new streamlined approach to regulation, particularly in regard to the MAX line of planes. And now these planes are surrounded by investigations into how they were developed, how they were tested, how they were certified, and whether people should ever really trust them again.
(END VIDEOTAPE)
ROMANS: All right. Tom Foreman, thank you for that.
A controversial pick for President Trump to fill the last seat on the Fed's powerful seven-member, policy-making board.
(BEGIN VIDEO CLIP)
TRUMP: I recommended Herman Cain. He's a very terrific man, a terrific person. He's a friend of mine. I would think he would do very well there.
(END VIDEO CLIP)
ROMANS: This president, if Herman Cain and Stephen Moore are confirmed by the Senate, would be reshaping the powerful Fed to his liking, away from sort of peer-reviewed, academic PhD economists, and toward Fed critics and Trump loyalists who know less about monetary policy but want the Fed to support the president.
So what is the Fed? It is an independent body meant to be the shock absorber for the U.S. economy. With two goals. It has two goals. Employment, maximum employment, and price stability. That means supporting the jobs market and making sure inflation is not too high or not too low, which can be destabilizing.
Now Cain has some experience with the central bank. He once served as a director to one of the 12 regional Fed banks, the Kansas City Fed.
Trump also appointed Jerome Powell, of course, and he's been complaining about that ever since.
(BEGIN VIDEO CLIP)
TRUMP: I think we have much more of a Fed problem than we have a problem with anyone else.
My biggest threat is the Fed because the Fed is raising rates too fast.
I think the Fed is far too stringent and they're making a mistake.
(END VIDEO CLIP)
ROMANS: Now that public criticism of the Fed is pretty rare but it is not unheard of. It is rare, but not unheard of for a president to try to stack his Fed board. You know, Ronald Reagan appointed Paul Volker in the '80s but then also packed the board with some of his loyalists later on. Bit, you know, this is supposed to be an independent body. It's supposed to be separate from the political winds that blow. It basically controls America's printing press. Right?
SANCHEZ: Right.
ROMANS: You don't want to be Venezuela or Argentina or a country where you've got the government, the executive branch in charge of the central bank.
SANCHEZ: Yes. Not your typical president. Not your typical picks for the Fed board.
ROMANS: That's right.
[04:40:03] SANCHEZ: A sad story to tell you about. Hopes raised and then shattered for the family of Timmothy Pitzen. DNA tests reveal the person who told police he had escaped kidnappers and claimed to be Pitzen is not. The news another blow for the family of the boy who vanished in 2011 at age 6.
(BEGIN VIDEO CLIP)
KARA JACOBS, TIMMOTHY PITZEN'S AUNT: It's devastating.
ALANA ANDERSON, TIMMOTHY PITZEN'S GRANDMOTHER: Yes.
JACOBS: It's like reliving that day all over again, and Timothy's father is devastated once again.
ANDERSON: He's a wonderful little boy and I hope he has strength of personality to do whatever he needs to do to find us. My prayer has always been that when he was old enough he would find us if we couldn't find him.
(END VIDEO CLIP)
SANCHEZ: Police say the young man found in Kentucky who identified himself as Pitzen is actually 23-year-old Brian Michael Rini from Medina, Ohio.
ROMANS: He has a criminal history, including prison time for burglary. He was released last month and was on supervised parole. His brother says Brian has mental issues and it's not the first time he has assumed a false identity.
(BEGIN VIDEO CLIP)
JONATHAN RINI, BROTHER OF BRIAN RINI: He's been doing stupid stuff, not this serious, but he's been doing stupid stuff for as long as I can remember. He used my name in a traffic stop in Norton, and then skipped court, and I received a traffic warning for it.
(END VIDEO CLIP)
ROMANS: Timmothy Pitzen's family has searched for him ever since his mother's reported suicide on a road trip with him nearly eight years ago. She left behind a note saying her son was with people who loved him and that, quote, "You'll never find him."
All right. The divorce has been finalized between Amazon founder Jeff Bezos and his wife MacKenzie. The agreement makes her one of the richest women in the world. On Thursday she tweeted that she and Bezos would be -- she would be keeping 25 percent of the couple's Amazon stock, giving her a 4 percent stake in the company. Now based on Amazon's current market value, that worth about $35 billion.
Jeff Bezos retains voting control over all of her shares. He's also going to keep his interest in the "Washington Post" and Blue Origin. That's a private space company.
SANCHEZ: Jeff and MacKenzie both tweeting that they are looking forward to the future. The couple first announced plans to separate in January, ending a 25-year marriage. The separation quickly morphed into a media frenzy with reporting on Bezos' infidelity. Bezos published a tell-all blog post accusing the "National Enquirer" of trying to blackmail him. Bezos' net worth is estimated at $150 billion.
The $35 billion settlement for MacKenzie Bezos makes her the fourth richest woman in the world behind heiresses Francoise Bettencourt Meyers, Alice Walton, and Jacqueline Mars.
ROMANS: Mars, of course the candy company, Bettencourt Meyers, that the L'Oreal --
SANCHEZ: L'Oreal makeup.
ROMANS: And then Walton, of course, the Walmart heiress, so -- SANCHEZ: Yes. Chocolate, Walmart, makeup sounds like a great weekend
for you.
ROMANS: And Amazon. And Amazon. '
SANCHEZ: Yes.
(LAUGHTER)
ROMANS: A lot of people were saying, a lot of women were saying, why didn't she get half?
SANCHEZ: That's a good question.
ROMANS: Why didn't she get half? But she got a lot.
Jussie Smollett refusing to repay the city of Chicago for investigating a purported hate crime, so now the city will take him back to court.
(COMMERCIAL BREAK)
[04:47:22] ROMANS: President Trump confident the U.S. and the Chinese are close to finalizing a deal to end their yearlong trade war.
(BEGIN VIDEO CLIP)
TRUMP: This is -- this is the granddaddy of them all, and we'll see if it happens. It's got a very, very good chance of happening. I think that it will be great for both countries.
(END VIDEO CLIP)
ROMANS: The president acknowledged compliance is a sticking point here, but sounded optimistic.
(BEGIN VIDEO CLIP)
TRUMP: Just to finish, the deal is coming along really well. We'll probably know over the next four weeks. It's looking very good. A lot of really good things have been negotiated and agreed to.
(END VIDEO CLIP)
ROMANS: With the S&P 500 up almost 15 percent this year, and just 2 percent from record highs in stocks, there's a lot at stake here if, A, it doesn't happen, or B, this deal happens but is hollow.
Now President Trump declined to confirm reports he would hold a summit with Chinese President Xi Jinping later this month, instead stressing if there is no deal a summit with Xi is off, he said.
And new this morning, President Xi is calling for negotiations on that trade agreement to end as early as possible. In a message delivered by the vice premier to President Trump, Xi said trade negotiators had achieved new substantive process on finalizing this deal. The comments were a rare note of optimism from China on these ongoing negotiations.
SANCHEZ: The legendary head fencing coach at Harvard is under investigation for transactions involving the family of a current and former student athlete. Officials at the university are focusing on Peter Brand's real estate and nonprofit deals. According to the "Boston Globe," a wealthy Maryland businessman purchased Brand's home for $989,000 when it was valued at just over half that amount.
The businessman's son was eventually accepted at Harvard. The school says it became aware of allegations against the coach on Monday, and all applications for student athletes are reviewed thoroughly.
ROMANS: For the third time in eight days, there's been a death at the Grand Canyon. The body of a 67-year-old man found 400 feet below the rim of the Canyon on Wednesday morning. Ten days ago, a possible foreign visitor was found dead in a wooded area south of the Grand Canyon Village. And two days later, a 50-year-old tourist from Hong Kong fell into the Canyon while trying to take photos. Park officials cautioning all visitors, keep a safe distance from the Canyon's edge.
SANCHEZ: Police in North Dakota have charged a suspect with murdering four people this week at a property management business in the town of Mandan, North Dakota. 44-year-old Chad Isaac allegedly killed the owner and three employees at the RJR Maintenance and Management office building on Monday. The victims were either stabbed or shot. Police say Isaac lived at a trailer park run by the company, but a motive for the killing still not known.
[04:50:03] ROMANS: All right. Snapchat wants to keep its users on their phones with a new online gaming app. CNN Business has details next.
(COMMERCIAL BREAK)
SANCHEZ: Russia is boldly moving to dominate the Arctic, opening new trade routes, exploiting resources, and expanding its military presence as it beats the U.S. to the punch. CNN was the only U.S. network to get access to one of Russia's largest Arctic bases on Kotelny Island.
Let's bring in CNN's Fred Pleitgen, he's live now in Moscow.
Fred, we know Russia has had its eyes on this part of the world for years. How is the United States responding?
[04:55:05] FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, so far there's very little in the way of a U.S. response. The U.S. is sailing some more ships, Boris, to that area. But if you look at for instance the amount of ice breakers that the Russians have, they have a whole fleet of nuclear ice breakers. The Americans have one diesel ice breakers.
So certainly you can see that the Russians really very much overpowering the U.S. in that part of the world and they aren't letting up, They are putting more and more resources up there in the Arctic as we saw when we went to the base in Kotelny. Here's what happened.
(BEGIN VIDEOTAPE)
PLEITGEN (voice-over): Racing north across the frozen Arctic Sea a Russian army chopper.
(On camera): The Russians are making a huge effort to upgrade their military infrastructure in the Arctic. Several of their bases are already fully operational, and right now they are flying us to one of their most modern ones.
(Voice-over): They call this space northern clover. The Russian army has already deployed coastal defense rockets here and specialized Arctic anti-aircraft systems built to perform in the cold.
UNIDENTIFIED MALE (through translator): This complex is adapted for much harsher weather conditions of the arctic. It works in temperatures as low as negative 50 degrees.
PLEITGEN: It's all part of Vladimir Putin's long-term strategy to dominate the Arctic.
(On camera): The space has a clear mission, to defend and enable Russia's interests in the Arctic north, and as the ice here becomes weaker because of global warming, those economic interests are becoming more important.
(Voice-over): The northern clover base is in a strategic location in Russia's Arctic far east. It seems remote until you look at the world from the top and see that this space is one of Russia's closest to U.S. territory.
The base can house up to 250 soldiers. Aside from its weapons arsenal, it also has high-powered radars to make sure America and its allies don't come close.
Russia is pouring major resources into its Arctic endeavor. It's the only country with a fleet of nuclear ice breakers to open up and control Arctic trade routes that could make trade between Asia and the West much faster and cheaper.
And Russia is already tapping into natural resources in the Arctic, like liquid natural gas, even deploying floating nuclear power stations to fuel its Arctic ambitions.
UNIDENTIFIED MALE (through translator): Our base performs radar control, monitors the airspace, secures the northern sea route and eliminates damage to the environment.
PLEITGEN: The Trump administration seems woefully unequipped to counter Russia's Arctic endeavors. While Moscow was expanding and fortifying its position in this vital area, America and its allies lack even the same ice-breaking power of Russia's fleet.
(END VIDEOTAPE) PLEITGEN: And Boris, the numbers really are quite staggering. One of the things that the Russians are saying is that they've put in place more than 470 pieces of military infrastructure in the Arctic since 2012 -- Boris.
SANCHEZ: An impressive look at Russia's efforts in that region.
Fred Pleitgen, thank you so much.
ROMANS: All right. It's that time in the morning, Friday morning, let's get a check on CNN Business. This morning global stock markets mixed here, but mostly higher amid optimism that the U.S. and China may end their yearlong trade war.
On Wall Street, checking futures right now, they're pointing a little bit higher ahead of the March jobs report. Markets closed mostly higher Thursday, the Dow ended the day up more than 160 points, the S&P 500 rose a little bit. The Nasdaq fell slightly.
The big event this morning that jobs report at 8:30 a.m. The big question, which version of the labor market is closer to reality? January's 311,000 jobs, created new jobs or February's 20,000. Economists expect it's somewhere in the middle.
Hey, Elon Musk and regulators, just work it out. A judge gives the Tesla CEO and the SEC two weeks to work out their problems. Musk appeared in federal court yesterday to attend a hearing where the SEC asked the judge to hold him in contempt. Judge Alison Nathan said the two sides should use the time to renegotiate, adding, "Put your reasonableness pants on."
(LAUGHTER)
ROMANS: The SEC accuses Musk of violating a settlement deal reached last year that require he get preapproval for social media posts about Tesla. Musk has denied wrongdoing and accused the SEC of trying to stifle free speech.
If the judge sides with the regulators and holds Musk in contempt, he could face another hefty fine and further limits to his social media use.
Snapchat is getting into online gaming gearing up for a battle with Fortnite, the social media app is launching a new gaming platform called Snap Games. It will feature original games only available on Snapchat through its group chats. Snapchat hopes the move will keep users on the app. Snap's audience growth has stalled. It only recently stopped losing users after two straight quarters of declines. Just faced heightened competition from Facebook's Instagram and Fortnite. Snap stocks closed up 1 percent on the news.
Do you play Fortnite?
SANCHEZ: I have not. I have friends who play it but I got to jump on. How about you?
ROMANS: Yes. It's fun.
SANCHEZ: Yes?
ROMANS: It's fun. Yes.
SANCHEZ: I got to get on there.
Stay with us, EARLY START continues right now.
ROMANS: House Democrats versus the White House. Neither willing to compromise on how --
(END)
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