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Trump Set to Hike Military Spending in Budget Outline; Trump's Nominee for Navy Secretary Withdraws; Trump to Call for Boost to Military Spending; Trump Administration Kicks Off Crucial Week; Trump Meets with Nation's Governor. Aired 10-10:30a ET

Aired February 27, 2017 - 10:00   ET

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

[10:00:04] JOHN BERMAN, CNN ANCHOR: It does set the stage for the president's prime time addresses tomorrow night. He addresses a joint session of Congress in Washington. We'll of course, be covering that live. Let's get straight to the White House. Joe Johns is there with a preview. Joe?

JOE JOHNS, CNN SENIOR WASHINGTON CORRESPONDENT: Good morning, John. I think this is the outline of the parameters, if you will, of the budget blueprint that the White House is working on. So, what we expect is a little bit more information about what the White House is trying to do, what their thinking is. And as you said, we are expecting a big increase to be requested by the White House, for the Pentagon. The president is on the record of saying he wants to do that.

We're also expecting a lot of cuts to a number of other agencies. The one that's been held out since yesterday is the Environmental Protection Agency, EPA. And then, on top of that the president had some other campaign promises. And one of those was to protect the big entitlements, such as Social Security. So, they're trying to accomplish a bunch of different things, also realizing on Capitol Hill, there are a lot of people who really want to reduce government spending.

Meanwhile, last night the president talking to the National Governors Association also weighed in a bit more on that signature promise he made on the campaign trail regarding getting rid of Obamacare and replacing it. Listen.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: As most of you know, the Obamacare has had tremendous problems. I won't say in front of the Democrats, I'll just say it to the Republicans, it doesn't work. But we're going to have it fixed and we're going to repeal and replace. And I think you're going to see something very, very special.

(END VIDEO CLIP)

JOHNS: Of course, we've had more nominee drama here at the White House. The president's pick for Navy Secretary, Philip Bilden, has withdrawn his name due to complications with his business interests. Besides the meeting today with the National Governors Association, the president is also expected to meet with top Congressional leaders. And no doubt one of the things on the conversation list will be the president's big speech tomorrow on the Hill. Back to you.

BERMAN: All right. Joe Johns for us at the White House where there's a lot going on right now. Again, we're expecting to hear from the president, really, any moment now. While we wait for that, let's try to understand the Math here and if and how it all works out. We're joined by CNN's chief business correspondent, star for all the start, Christine Romans, nice to see you.

CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: The Magic Math. That is the budget -

BERMAN: How do you increase military spending without cutting entitlements?

ROMANS: Well, that's what we have to find out, right? And can you actually do that. Stephen Moore, who we just had on this show last hour, who actually advised -- this campaign, said that at some point, you have to take a look at entitlements. And so, a lot of people who look at budgets say eventually, you have to talk about entitlements. But the president is not doing that. He doesn't want to do that. He doesn't want to touch Medicare, Social Security, and Medicaid.

Let me show what the federal budget looks like here. I mean, this is $3.9 trillion in spending. So, it's big. The top a quarter of it, that's Medicare and Medicaid, those health programs. Medicare, Medicaid, then, Social Security. The president says all of that, those first two categories, he will not touch. That leaves the rest.

Well, military, he has promised one of the greatest military buildups in American history. He's going to focus on more money for shipbuilding, military aircraft, giving more money for those choke points, the Strait of Hormuz, and those international waterways that are so critically important. That's more spending on top of the $600 billion a year we already spend on that.

Then you have interest, you can't cut that. The safety net, there's some money there. Food stamps, maybe school lunch programs. You're going to have to get Congress to go along with that as well. But if you don't touch those entitlements, that means, every other Mathematic choice you make is that much more critical and difficult.

POPPY HARLOW, CNN ANCHOR: Or he goes to Congress and he makes the argument that the economy is going to grow at 4, 5, 6 percent under me as president, things he's said before. But John points out this morning this is based on a 2.4 percent annual growth scenario. -

ROMANS: Right. That's what they're looking at.

HARLOW: So he can't, if you really dig into it, he can't make that argument.

ROMANS: He has promised 3 percent, 4 percent growth. And they've already - his advisors have already sort of laid out you know, that dynamics scoring. You know, the idea that the economy is going to grow so great that you're going to get all these money coming into tax revenues. And so, it's even going to be better.

So, they have the most favorable kind of way that -- they're going to look at the Math for themselves. What this is today that is so critical? This is sort of the first word to the federal agencies telling them what to get ready for. There's some reporting out there, the State Department could see huge cuts. And what that tells me is the world view of this president. He has promised this. He wants to build up military might. He wants the scale back to diplomacy. You know, State Department budget, this what, $50 billion a year, something when you look in the foreign assistance and everything, the military part of is $600 billion a year. That just shows you that will the president -- and he -

HARLOW: Right, right.

ROMANS: Exactly.

BERMAN: We should learn a lot more in the next 24 hours when we see this outlined. Christine Romans, thank you so much for being with us.

ROMANS: You're welcome.

HARLOW: Thank you. Your vision in red, you got them -

ROMANS: There you go.

BERMAN: Look at this.

[10:05:00] HARLOW: You can catch her on morning, "Early Start" 4:00 a.m. Eastern.

BERMAN: Really, this show is better than ever, "Early Start" I'm told.

HARLOW: Because you're stepping in.

BERMAN: Yes, better than ever.

HARLOW: Let's discuss now. Democratic Congressman William Keating of Massachusetts joins us. He also sits on the House Homeland Security Committee, very nice to have you on with us. How do you see this? -- I'm assuming you think this is Magic Math. But is there anything you like in what we're expecting from the president?

REP. WILLIAM KEATING (D), MASSACHUSETTS AND HOUSE HOMELAND SECURITY COMMITTEE: Well, first of all, there will be some details, which we've all been waiting for. We're now transitioning from the campaign rhetoric to actual details. And what's concerning is, from the early reports, the fact that our defense is just not a unilateral kind of vision. General Martin Dempsey, who is the former Chair of the Joint Chiefs, has already struck by the fact, when he was asked at his nomination what the most important defense issue - for our security was in our country. He said the economy.

And when you're cutting back on research, and I'm here, you know, in Woods Hole, Massachusetts at the institute here, where research has been so important for our country. As well as cutting back on environmental matters too, because that affects our economy as well. We're weakening our security. So that weakening the State Department and our diplomacy weakens our security.

So, we have to look at this as a comprehensive plan. But the political side of this, where you have revenues that are, as reported so far, revenues that are predicated on cuts, in taxing and things, we've seen that act before. We saw it dating back to Voodoo Economics. We've seen it in terms of trickle-down. It just has never worked, no economist worth their salt really believes in that. And if that's what's going to be the revenue projections used, we're going to have trouble. And there will also be trouble on the far right with some of the spending too, with the Freedom Caucus, because they look very carefully at the deficit that's being run and they could run into a roadblock there as well.

BERMAN: Well, we will ask them about all sets, if they're willing to vote for this without offsets in some of the spending. But as part of this, Congressman, if President Trump, apparently does not want to make any cuts at all, not a cent, to Social Security or Medicare. Is that something you can support?

KEATING: Well, I certainly believe in keeping them at the levels they should be at. Here is another question I'm asking myself and I think a lot of people will be asking themselves, would the repeal of the Affordable Care Act, that's been one of the major issues to trying to keep Medicare under control and the whole direction of treating the person that way, that's actually had a great effect on Medicare growth. So, if you're repealing the Affordable Care Act, you better factor in that you could be adding to increases in Medicare as well.

HARLOW: Let me ask you about this "Wall Street Journal/NBC" poll over the weekend. The headline is that yes, this is the president who has a historically low, overall approval ratings as early in his presidency. However, when you dig into the numbers, it shows some interesting things.

One of them is that even though people might not love the man as much as they increasingly like his policies, their feelings towards the president have improved. And they also said, 53 percent said the media and elites exaggerate problems within the administration. What do you make of those numbers, the argument that increasingly, more Americans are seeing this country going in the direction they like?

KEATING: I think any new president -- we're a country of optimism. Any new president has the support of the American public. In terms of trying to be effective, to be successful, I think that factors into the polls. So, the early stage of that is a factor, I believe. But in terms of long range, there are some real credibility problems with this administration. We've seen it regarding the whole Russia situation, in terms of our security. We've seen it in terms of not having an independent, you know, investigation of the Russian involvement and the administration's involvement with that.

I think those things are going to have a poor effect unless you see a change in credibility and honesty. There have just been too many contradictions. And if that persists, you're going to see those numbers go down, and the hopes of us all, myself included, that we can go forward successfully as a country, will be diminished.

BERMAN: But you do acknowledge, you know, you look at these polls, you look at the stock market, for instance, and you look back in time, more Americans over the last six months, now than ever see the country moving in the right direction. This is regardless of their views of the president. They think the country is moving in the right direction. Do you think the country is moving in the right direction?

KEATING: Well, when you listen to people like Warren Buffett and his optimism, his latest report, I hope so. I think we have the strongest economy in the world. Part of the reason we have that strong economy are things like rule of law, transparency here. And as those things get questioned, as they have been in these early days, that's something to look at too.

[10:10:06] HARLOW: Congressman William Keating, it's nice to have you on, thanks for joining us.

KEATING: Thank you. Thanks, Poppy.

HARLOW: As we've mentioned, it is a crucial week for the president. We're going to hear at any moment those details that everyone wants or what the new plan is.

BERMAN: Maybe some of the details, maybe some more broad statements. We'll get the details later. Plus the White House trying to crack down on leaks, collecting the cellphones of staffers, telling them do not use encrypted texting apps. And then, the best Oscars finish ever, right? I mean, you want a cliffhanger. You want a -- at the end. Man, did we get one last night.

(COMMERCIAL BREAK)

[10:15:00] BERMAN: All right. We got live pictures right now from the White House, where we're literally minutes away - right now from hearing from President Trump. He's going to speak with the nation's governors. We do expect him to talk about his budget outline, at least in broad terms. About what he wants to spend, a lot more on the military. What he wants to cut, a whole lot of domestic programs. And what he doesn't want to touch at all, entitlements.

So, can he do this and how? Joining us Jennifer Psaki, former White House communications director under President Obama from 2015 to 2017

JENNIFER PSAKI, FORMER WHITE HOUSE COMMUNICATIONS DIRECTOR (2015- 2017): Good morning.

BERMAN: Ben Ferguson, CNN political commentator, also with us, CNN contributor David Fahrenthold, a reporter at "The Washington Post." Thank you all, one and all, for being with us. -

BEN FERGUSON, CNN POLITICAL COMMENTATOR: Good morning. BERMAN: Jen, before we drill down to the budget, I just want to talk about this week, because this week, there is real stuff going on. You know, as opposed to scandal and controversy. We have a speech before Congress. We have a budget outline. We're going to get a new travel ban. The president has a lot on his plate this week. What does he need to do?

PSAKI: Well, I think the expectation from Congress, from the American people, is that he's going to lay out an actual agenda. That means more than just rhetoric. It means more than just saying I'm going to great, this is going to be great. It means details. And if you look back at what President Obama did when he did his joint session speech, the Recovery Act had already passed. But he talked about specific plans for the economy. And also, indicated that he wanted to address health care. So, I think people are expecting a lot more detail, a lot more meat on the bones from Donald Trump tomorrow night.

HARLOW: And Ben, to you, I mean, you're a cheerleader for the president but you, yourself, have admitted we have to hear more details. He has to take this opportunity, if he just does broad strokes today on the budget, tomorrow in front of Congress. He has to dive in with more details especially on Obamacare, does he not?

FERGUSON: Yes, I think, this is a week when you're obviously going to see that. I also think, the White House understands that this is big week for them to not only put up on their promises in the campaign. But really explain those promises and how they're going to come to for wishing. You have to have details if you're going to get the support of Congress, whether you're a Republican or a Democrat.

And I think that's exactly what you're going to see from the president, from the White House. They understand that it has to be a very clear vision. I think they're going to be very clear about Social Security, Medicare, et cetera, and not touching those policies and making those non - you know, basically taking the controversy away from those right now. Even though there does have to be some sort of reform moving forward realistically, no matter who the president is.

At some point, those programs are going to have to have some reform. But they're going to focus on the budget this week, focus on military spending and focus also on cutting back on where they feel like there is too much money being spent on government because when he was elected, the people who voted for him, they thought the government spending was out of control. Our deficit was out of control. And he's got to deliver on that in a clear message this week. And I think you'll see that.

BERMAN: Well, it's going to be hard without cutting entitlements at all, without touching Medicare and Social Security. We need to learn how he intends to do all that. David Fahrenthold, we just got the two minute warning about a minute ago, off when the president - so we may have to cut you off when the president starts speaking.

But one of the things that have been going on for the last several days at the White House is this concern about leaks, leaks to the press, leaks from inside the press offices. You, sir, David, are someone who you know lives off of leaks, as the rest of us do. Do you see the level of concern, Sean Spicer, bringing in his press staff, talking to them, asking to see their cellphones? Do you see this concern as more than we've seen in the past? You have about 30 seconds, David.

DAVID FAHRENTHOLD, CNN CONTRIBUTOR: I think it certainly is. And I think the way that the Trump administration could deal with this is to give government employees, their own White House employees, the sense that their opinions are being heard and listened to internally. If you give people channels within the government, to feel like their ideas, that their concerns are being handed up and dealt with, they won't leak.

HARLOW: Stand by, guys. We're just getting the statement of the president just speaking to this group of governors. Let's listen in.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: And thank you to Vice President Pence. He has been so wonderful to work with. He's a real talent, a real guy and he is Central Casting. Do we agree? Central Casting. He's been great.

(APPLAUSE)

Good morning, everybody. And welcome back to the White House. The first lady and I were very, very happy last night to host you. We saw some real talent, military talent, musicians who were fantastic and everybody enjoyed it.

(APPLAUSE)

I'm very proud to have so many former governors in my Cabinet. Vice President Pence, as you know, big governor from a very great state, a state I like very much, Indiana. Nikki Haley at the U.N. Is Nikki here someplace? I think so, yes. We have -- Rick Perry is going before. We're trying to get people approve approved, we can't get them out. But Rick is going to do a fantastic job. Sonny Perdue will be joining the Cabinet very soon.

Terry Branstad will be our ambassador to China. And interesting story on Terry, every time I spoke in Iowa, he'd say, "Please don't say anything bad about China."

(LAUGHTER)

TRUMP: I said, "What do you mean? What do you mean?" He said, "I like China and we do a lot of business with China and really just don't."

[10:20:05] And I said -- so when it came time to pick an ambassador, I called him up. I said, "You like China." And I can tell you, China is very, very happy with our choice. So we made everybody happy.

(APPLAUSE)

Right?

These governors -- thank you. And thank you, Terry.

These governors have been bold reformers and their success shows why we need to make states the laboratories of democracy once again. Many of you have shared past frustrations with waiting for permission from federal government and agencies. And I understand that and I've had many people tell me about it. And it's been catastrophic for some of your states.

You know your citizens and you want -- you know they want things done but they don't get things done and it's not your fault. Sometimes it's your fault but they understand that. But sometimes it's not your fault. We're going to speed it up because that's not how a partnership is supposed to work.

The government should not stand in your way in delivering needed reforms and services. And it won't. We're going to move very, very quickly, environmentally with Scott and so many others that are involved in the process of regulation.

We are going to be cutting. We're going to be doing the right thing. We're going to be protecting people environmentally and safety wise but we're going to be moving it quickly, very quickly.

(APPLAUSE)

And I can -- speaking of that, I know many of you -- and I've spoken to you, some of you, last night about it -- have many projects that are entire -- I mean, just literally tied up because of environmental concerns and it's been in for years and years and years, that project your state wants, great for employment. Everybody wants them and they couldn't get them out of environmental protection and we will get them out. Now that doesn't mean they're going to be approved but it'll -- they'll be rejected quickly, one way or the other. They'll be either rejected quickly or they're going to get approved.

I would say most will be approved but you're going to know you're not going to wait nine years or 11 years, some of the horror stories that I've heard.

Under my administration, we're going to have a true partnership of collaboration and cooperation. We will get to the answers and we will get them quickly. And the flexibility you need to implement the reforms that you are going to have in order to make decision-making proper and decision-making fast.

So we're going to do both those things, proper and fast. One of the most important responsibilities for the federal government is the budget of the United States. My first budget will be submitted to the Congress next month.

This budget will be a public safety and national security budget, very much based on those two with plenty of other things but very strong. And it will include a historic increase in defense spending to rebuild the depleted military of the United States of America at a time we most need it. (APPLAUSE)

And you'll be hearing about that tomorrow night in great detail. This is a landmark event, a message to the world, in these dangerous times of American strength, security and resolve.

We must ensure that our courageous service men and women have the tools they need to deter war and, when called upon, to fight in our name, only do one thing, win. We have to win. We have to start winning wars again.

I have to say, when I was young, in high school and college, everybody used to say we never lost a war, we never lost a war. You remember. Some of you were right there with me and you remember we never lost a war. America never lost.

And now we never win a war. We never win. And we don't fight to win. We don't fight to win. So we either got to win or don't fight it at all.

But where we are, 17 years, almost 17 years of fighting in the Middle East, we're up -- I saw a chart the other day, as of about a month ago, $6 trillion we've spent in the Middle East, $6 trillion.

And I want to tell you that's just unacceptable. And we're nowhere, actually, if you think about it, we're less than nowhere. The Middle East is far worse than it was 16, 17 years ago, there's not even a contest. So we've spent $6 trillion. We have a hornet's nest. It's a mess like you've never seen before. We're nowhere. So we're going to straighten it out.

This defense spending increase will be offset and paid for by finding greater savings and efficiencies across the federal government. We're going to do more with less.

[10:25:00] I got involved in an airplane contract, I got involved in some other contracts and we cut the hell out of the prices. I mean, we saved a lot of money, tremendous amount of money, beyond anything that the generals that were involved -- they said they've never seen anything like this before. On one plane, on a small order of one plane, I saved $725 million and I would say I devoted about -- if I added it up, all (inaudible), probably about an hour. So I think that might be my highest and best use.

(LAUGHTER)

Because if we can do that, our budget will be -- it might be my highest and best use.

(APPLAUSE)

And there are many other places it's all the same. And in one way, that's a good thing because we have an answer. David is going to do a fantastic job at the V.A. David is sitting there, shaking his head. Stand up, David.

(APPLAUSE)

So we can't get our people through Cabinet, but he went through -- was it 95 to nothing? How the hell did you do that?

(LAUGHTER)

Boy, oh boy. He must be good. You were the one. One hundred to zero, wow. Shows you, hey, we can do it. But we do -- we have still quite a few Cabinet members and they're just in limbo waiting, waiting. It's like obstruction. It's obstruction. And -- but eventually, we'll get them and they'll put their people in and we'll get those agencies, et cetera, to work.

We're going to do more with less and make the government lean and accountable to the people. We can do so much more with the money we spend. With $20 trillion in debt, can you imagine that, the government must learn to tighten its belt, something families all across the country have had to learn to do unfortunately. But they've had to learn to do it and they've done it well. My budget increases spending and the increase in all spending for federal law enforcement also and activities having to do with law enforcement will be substantially increased and we will fight violent crime.

You look at what's happening in our cities, you look at what's happening in Chicago, what's going on in Chicago. We will fight violent crime and we will win and we'll win that one fairly quickly. Once we give the local police, the local law enforcement the right to go in and fight it and we back them monetarily and also otherwise, we're going to win that one. We're going to win it fairly quickly, I believe.

My budget also puts America first by keeping tax dollars in America to help veterans and first responders. So important. This budget follows through on my promise to focus on keeping Americans safe, keeping out terrorists, keeping out criminals and putting violent offenders behind bars or removing them from our country altogether. And I must say that we've been treated very well, very, very well on the job that General Kelly's done at the border. It's tough, it's strong.

I was talking last night to Terry McAuliffe and he said, "You have to mention this," because he met with -- where is Terry? He's around here some place. Terry. He met with General Kelly and I think I can say you were impressed with General Kelly. And he said, "You have to get the point out that they're removing the bad ones." And that's where our focus is. It's the bad ones. We're getting some very, very bad players out of this country; drug lords, gang members, heads of gangs, killers, murders, we're getting them out. That's what we're focused on. The press isn't covering that unfortunately, but it's something that is very important.

We're getting the bad ones out and that's always where I said I was going to start. I was going to start with these bad players and they are bad. They are rough and tough and we're getting them the hell out of our country and we're bringing them to where they started out. Let their country do what they have to do with them. So the budget, which is going to be a very big part of tomorrow night's speech, is going to be I think a budget of great rationality but it's going to have to do with military, safety, economic development and things such as that. Great detail tomorrow night.

We're also going to do whatever we can to restore the authority of the states when that is the appropriate thing to do. We're going to give you back a lot of the powers that have been taken away from states and great people and great governors and you can control it better than the federal government because you're right on top of it. You have something that's controllable. So I think that's going to be very important. You see that already taking effect.

TRUMP: We have to let the states compete and to see who has the best solutions. They know the best how to spend their dollars and how to take care of the people within each state. And states are different and people are different. So the governors are going to have a lot more decision-making ability than they have right now.

[10:30:06] All states will benefit from our economic agenda.