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The Lead with Jake Tapper

Trump vs. North Korea; Chuck Schumer Speaks Out; Congress Backs Off Gutting Ethics Panel. Aired 4-4:30p ET

Aired January 03, 2017 - 16:00   ET

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

[16:00:05]

JIM SCIUTTO, CNN ANCHOR: Put lawmakers in charge of their own ethics. What could possibly go wrong?

THE LEAD starts right now.

And breaking news: day one drama, a major about-face by the brand-new Republican-controlled House, dropping an attempt to gut the agency that polices Congress, something that put them at odds with the man who said he's going to drain the swamp.

Tweet heard around the world. After a nuclear threat, president-elect Trump tells North Korea, not going to happen, and takes a shot at China as well.

Plus, president-elect's new year guest, a reported felon nicknamed, no lie, Joey No Socks. How close is Trump and the Trump Organization to him?

Welcome to THE LEAD. I'm Jim Sciutto, in again today for Jake.

Any moment now, the new Congress will cast its first vote since being sworn in. But one thing lawmakers will no longer be voting on is a measure that House Republicans had been pushing just this morning, to gut the independent Office of Congressional Ethics.

Republicans dumped that plan this afternoon under Twitter pressure from president-elect Donald Trump. CNN is covering the story from all angles, as we get our first glimpse of how the new president and Congress could function together.

We begin with CNN senior political reporter Manu Raju. He is live on the Hill.

Manu, this is certainly not the way House Republicans wanted to kick off this legislative session.

MANU RAJU, CNN SENIOR POLITICAL CORRESPONDENT: No, it's not, Jim. In fact, they want to be talking about the things that unite them, whether it's Obamacare or tax reform.

But instead this proposal came out of thin air, catching Republican leaders off guard, and suddenly causing major internal tension on Capitol Hill. (BEGIN VIDEOTAPE)

RAJU (voice-over): It was a rocky start to the new GOP-led Congress, House Republicans in a surprise move voting behind closed doors Monday night to gut an ethics watchdog created nearly a decade ago in the aftermath of the Jack Abramoff lobbying scandal.

The proposal offered by Congressman Bob Goodlatte would have given the very House members who the Office of Congressional Ethics might investigate control over the Office of Congressional Ethics. It prompted pushback from president-elect Donald Trump and even some fellow House Republicans.

UNIDENTIFIED MALE: This was the wrong message to send at the start of the session. And I really didn't agree with that.

RAJU (on camera): I mean, optically, how concerned are you about the way this makes the Republican Congress look as a Congress?

UNIDENTIFIED MALE: Very concerned. I mean, I think it's a terrible mistake.

RAJU (voice-over): But critics argued the ethics panel has overreached in its pursuit of headlines and needed to be reined in.

UNIDENTIFIED MALE: I supported it just because I think it's -- first of all, I think it's duplicative. But at the very least, in my view, it requires greater oversight than it has.

RAJU: The proposal prompting outrage across the political spectrum, from government watchdog groups, Democrats, and even Trump, who tweeted, "With all that Congress has to work on, do they really have to make the weakening of the independent ethics watchdog, as unfair as it may be, their number one act and priority? #draintheswamp."

Under pressure after Trump's tweet, House Speaker Paul Ryan, who had opposed the weakening of the watchdog, convening an emergency meeting, where the GOP reversed course and unanimously agreed to keep the office intact.

Yet the proposal put Republicans in an awkward spot, with some refusing to say if they wanted to weaken the panel.

(on camera): Did you vote for that?

UNIDENTIFIED MALE: That was a voice vote. It was not a recorded vote. Quite frankly, I sat there and observed.

RAJU: Did you abstain from this vote or what was your position?

UNIDENTIFIED MALE: It was clear that it was going to pass, so, there was a lot of discussion about it. So it passed. That's the main thing.

RAJU: Did you support it? UNIDENTIFIED MALE: You know, I have not been a victim of the OCE.

So, there was a lot of discussion about the lack of due process, the lack of transparency. So, again, both good arguments.

(END VIDEOTAPE)

RAJU: Now, remember, Jim, remember, last night's vote happened in private behind closed doors, which is one reason why that congressman did not want to say which way he voted.

But if it did come to the floor this afternoon, they would have to take a public vote, a recorded vote, and those votes would be certainly used against them heading into the next election.

So, that's one reason why they backtracked from yesterday's position, especially after all the pressure they were getting not just from Donald Trump, but from angry voters who were flooding their offices with phone calls, Jim.

SCIUTTO: Yes, a heck of a lot easier to do that in private. Manu Raju, thanks very much.

Before that ethics reversal and before the president-elect jumped on social media once again, today is typically a day less for news than for celebration and ceremony, smiles and swearing-in, perhaps a couple of meme-worthy Joe Biden moments.

[16:05:05]

CNN senior Washington correspondent Jeff Zeleny, he has the highlights for us from the Hill -- Jeff.

JEFF ZELENY, CNN SENIOR WASHINGTON CORRESPONDENT: Jim, every opening day in Congress, the pomp and circumstance also is underscored by the fact that elections do, indeed, have consequences.

Those consequences, the winners of the November elections, were taking their seats in the House chamber and the Senate Gallery as well. And Speaker Paul Ryan was reelected easily. He had very few defectors. As he walked into the House chamber, he recalled the vitriol in the election and why democracy has shown today is still well at hand.

(BEGIN VIDEO CLIP)

REP. PAUL RYAN (R-WI), SPEAKER OF THE HOUSE: Just months ago, our country held a great electoral contest. And at times, it was a little intense. As you all know, when you're in the heat of it, in the heat of the kind of campaign we had, you start to wonder, will the tempers ever cool?

Will the system still hold? Does our old rich tradition still have that magic? Well, it turns out it does. The clash of opinions, the hue and cry of campaigns, the rancor and the dissension, in the end, they all dissolve in the silent and peaceful transfer of power.

(END VIDEO CLIP) ZELENY: Now, some Democrats might say that's easy for Speaker Ryan to say, because, of course, Republicans will be assuming control of the House, the Senate and the White House come 17 days from now for the first time in a decade.

Now, Democrats are a weakened and rebuilding party here on Capitol Hill. On the Senate side, of course, Republicans still need to work with Democrats to pass legislation. But we saw Vice President Joe Biden presiding over the Senate in one of his last official acts here in Washington after some 44 years, first, of course, on Capitol Hill for so long, and then as vice president.

And Joe Biden was doing the ceremonial swearing-in for all the members of the Senate, in the old Senate chambers, always a moment here on Capitol Hill to see Joe Biden, perhaps unlike any other politician, certainly of this time, more of an old-school one, so gregarious.

But as he takes his leave, Jim, this new Congress, the 115th Congress, is settling up, big challenges and the burdens of governing lie ahead. Republicans now have to show if they can satisfy all those demands that voters called for change -- Jim.

SCIUTTO: No question. Jeff Zeleny, thanks very much.

Soon, Senator Charles Schumer will be the highest-ranking Democrat in the country, and in his first speech today as minority leader in the Senate, Senator Schumer issued this warning to the president-elect.

(BEGIN VIDEO CLIP)

SEN. CHARLES SCHUMER (D), NEW YORK: Making America great again requires more than 140 characters per issue. With all due respect, America cannot afford a Twitter presidency.

(END VIDEO CLIP)

SCIUTTO: CNN chief political correspondent Dana Bash, she spoke with Senator Schumer about Democrats' plans going forward.

Have they picked the battles that they're going to fight with the Republicans?

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: They're not sure. But Senator Schumer said he expects there will probably be a lot of them.

Look, Chuck Schumer was hoping that he was going to walk in today and be the majority leader of the Senate, Democrats would have regained control, because they certainly had the map in their favor going into Election Day, and that he would be working with President Hillary Clinton. Neither of those things is happening today.

Now he suddenly finds himself the leader of the Trump opposition and that means walking a very fine line, which we talked about.

(BEGIN VIDEO CLIP) SCHUMER: The only way we're going to work with him is if he can move completely in our direction and abandons his Republican colleagues. That's not going to happen very often.

And I'm even less optimistic any of that could happen seeing his Cabinet choices; 90, 95 percent of the time, we will be holding his feet to the fire and holding him accountable.

But we're Democrats. We're not going to just oppose things to oppose them.

BASH: I have known you for a long time. You love a deal, not unlike the president-elect. I find that hard to believe that you don't want to make deals with him.

SCHUMER: Here's the problem. The Republicans in the Senate and the House have been run by a hard-right group, almost Tea Party group.

And they are so far away from where we are.

BASH: Now they have got a deal maker in the White House just like you.

SCHUMER: Look, we're going to look at the specifics of what is proposed.

And on the overwhelming bunch of them, particularly given who he's chosen as his Cabinet people, we're going to have to oppose him, because we just disagree in principle. Of course I would like to make a deal. You know, we could get together on immigration and have a path to citizenship.

Just as I was happy to work with John McCain and Lindsey Graham, I will be happy to work with Donald Trump. But he hasn't even talked, come close to talking about that, so we're going to end up opposing him on those issues.

BASH: How much pressure are you feeling from the progressives? I will just give you one example. Democracy for America leading progressive group, said, "Democratic leaders from Chuck Schumer down need to stop playing footsie with Trump and pretending we can find common ground."

[16:10:00]

SCHUMER: We're playing no footsie.

My views are exactly the same as Elizabeth Warren and Bernie Sanders.

BASH: Since when?

SCHUMER: Both of them have said the same exact thing. If we can work with him and be true to our principles, we're not going to reject it.

But, overall, we're sticking to our principles. We're not compromising for its own sake. We're not taking a quarter of a loaf to say -- quote -- "We can get something done." Our principles are going to be our guiding light.

(END VIDEOTAPE)

BASH: And one of the things, Jim, that's going to make it even harder for him than some of his predecessors who were the minority leader is that the rules of the Senate are difficult, thanks to his predecessor, Harry Reid, who as a Democrat when he was in charge and had a Democrat in the White House, changed the rules to make it just a 51-vote threshold for approving a president's nominees.

Now that the shoe is on the other foot, the Democrats are not very happy about it and Schumer told me that he fought against that for Cabinet nominees and that he really wishes his party didn't do that when they were in the majority.

SCIUTTO: There's a word for that blowback. Right?

BASH: Yes, or payback.

(CROSSTALK)

SCIUTTO: Dana Bash, thanks very much.

Now I want to bring in two longtime former congressmen to help analyze what we saw today and look ahead to Donald Trump's presidency, former Republican Congressman and former chair of the House Reform and Oversight Committee. He's Tom Davis of Virginia. And former Democratic Congressman, former chair of the Democratic Congressional Campaign Committee Martin Frost of Texas.

Thanks to both of you for joining us today.

Tom, if I could begin, for you, could you help explain the thinking today behind House Republicans trying to sneak this ethics change in and then reversing?

TOM DAVIS (R), FORMER U.S. CONGRESSMAN: I don't think anybody thinks it's worked very well.

We have had at least six members I can think that have spent over $100,000 defending themselves against this committee on charges that proved groundless. And so let's just take this campaign weapon away from Democratic interest groups that are filing these charges.

They could still file charges, but they wouldn't have the same level of power they did today. So, they did it in one fell swoop. Better that than let it stand out and have a public debate, because you're never going to win an ethics debate with the American public.

They are always going to want to go for something they perceive as more ethical.

(CROSSTALK)

DAVIS: They backed down. Look, no faulting anybody on this once it's out there. It's a loser

politically. Everybody understands it, but you get rid of it now, it's forgotten about. You may dredge it up in an election, but by and large there are going to be a lot harder issues the Republicans are going to have to take votes on than this.

And now this is a weapon that is in the hand of interest groups that oppose Republicans. And you're going to see charges filed and no due process, et cetera.

SCIUTTO: Martin, I have got to ask you, because president-elect Trump in effect sent a signal here. He saw this. Doesn't fit with his drain the swamp mantra. Of course, are you seeing House Republicans in effect falling in line behind their president-elect?

MARTIN FROST (D), FORMER U.S. CONGRESSMAN: We don't know what they're going to do.

I mean, here, this was a situation, can the Republicans stand a 140- character tweet from the president of their own party? Obviously, they couldn't. This made them look foolish. Now, this is over. We will move on to other things. I disagree with Tom. I think the ethics procedure did work. I think it was set up for the right reason.

I was chairman of the Caucus Rules Committee for the Democratic Party for 10 years. We never tried to sneak something in at the last minute. Whenever we were going to change the House rules, we had lengthy debate. They made a mistake here. We will see what happens in the future.

SCIUTTO: So, Tom, House Republicans have really all the cards to some degree. They have a Republican in the White House. They've got majorities in both, strong majorities, or decent, certainly in the House and in the Senate as well. How do they effectively transition from being an obstructionist opposition to some degree now to the ruling party?

DAVIS: Well, I mean, they're firing real bullets. In the past, you can repeal Obamacare and you didn't have to live with the consequences. Now you're going to have to live with the consequences of that policy.

But, remember, Paul Ryan, who, by the way, only had one dissenting vote today, fewer dissenting votes in his speakership than Pelosi did on her side, he has basically a united caucus that wants to work. He's the kind of leader, he's a can-do leader.

I think they have got the right leadership in place at this point, but it's going to be tough. Governing is a tough business. And the last three times one party has controlled the House, the Senate and the presidency, the public holds that party accountable at the next midterm and they have suffered tough consequences.

So, Republicans have to be cautious. FROST: What you have to look at is in 2009, when Obama was elected,

there were more Democrats in the House than there are Republicans in the House today. There were more Democrats in the Senate than there are Republicans in the Senate today.

And yet it all dissipated over a period of two years. These things can fall apart quickly. And I would urge one word of caution to the Republicans while they're really feeling -- they're feeling full of themselves at this point. They won the election. I don't dispute that. There is real danger for them.

SCIUTTO: Well, the argument for President Obama and Democrats in 2009 was in effect overplaying their mandate, particularly with Obamacare.

(CROSSTALK)

FROST: There is a real chance that the Republicans could also overplay.

If they were to try and privatize Medicare, which some people in their own party, including their speaker, including the new chairman of -- the director of the Office of Management and Budget want to do, that goes to the heart of the

MARTIN FROST, FORMER DEMOCRATIC CONGRESSIONAL CAMPAIGN CMTE. CHAIR: There is a real chance that the Republicans could also overplay.

[16:15:01] If they were to try and privatize Medicare, which some people in their own party, including their speaker, including the new chairman of the director of the Office of Management and Budget want to do, that goes to the heart of the blue collar, middle income constituency of the Republican Party and would be extremely unpopular. If they try and do that, they may wind up with a similar situation that the Republicans faced -- the Democrats faced after the 2009 and 2010.

JIM SCIUTTO, CNN GUEST ANCHOR: And retirees, they go to the voting booth as well.

Tom, not to be Pollyannaish for a moment, but what are the realistic areas of compromise between Republicans and Democrats? There's been a lot of talk about infrastructure investment, perhaps tax reform. Realistically, knowing the divisions between these parties -- if you were to pick a couple of things --

TOM DAVIS (R), FORMER VIRGINIA CONGRESSMAN: I think both of those are areas where members like to build infrastructure. Everybody recognizes the tax system is broken. There may be some spending issues they can come on. So, you have those areas.

And then you're going to have areas like immigration where you just have different philosophies in terms of how you have to attach this. Republicans, though, in the House can move anything with a one-vote majority. Then you send it to the Senate.

Remember this, you have ten Democratic senators up for reelection in states that Trump carried, some by wide margins. So, Leader Schumer who is a very, very smart able guy, he's not going to be able to control all of his troops at one time. He's going to have some defections.

SCIUTTO: Martin?

FROST: I think probably, not the easiest, but the most likely area of real compromise is on immigration. I think that there are a lot of people in this country in the business community who want this immigration issue solved. And if somehow the two parties can get together, that's a real accomplishment. Now, maybe they can't. Maybe the rhetoric is so strong on both sides it will never happen, but you ask, what's an opportunity for compromise? I would say immigration.

And also the issue of corporate tax reform, not necessarily individual tax reform, because you'd have to do away with a lot of sacred cows to do individual tax reform.

SCIUTTO: With repatriation as well.

Congressmen Davis and Frost, we appreciate it. We appreciate your analysis very much.

We have a very special announcement: on Thursday, January 12th, CNN will host a town hall with House Speaker Paul Ryan. Our own Jake Tapper will sit down with the speaker. This at George Washington University, just one week before President-elect Trump's inauguration.

Jake and Ryan will take questions from the audience about the GOP's strategy for the first 100 days of Trump's presidency. You can see the one-hour live event only on CNN, this at 9:00 p.m. Eastern on Thursday, January 12th. A little more than a week away.

Guess who is coming to Donald Trump's inauguration? New details about surprising guests who just RSVP'd yes. That's right after this.

(COMMERCIAL BREAK)

[16:20:42] SCIUTTO: Welcome back to THE LEAD.

In our national lead, Ford Motor Company announced it will forego plans to build a $1.6 billion plant in Mexico and instead invest some $700 million in a plant in Michigan. The move could create some 700 new U.S. jobs.

The automaker CEO told my colleague Poppy Harlow the decision is a "vote of confidence in president-elect's pro-business environment." He stressed, however, Ford did not make any sort of special deal with the incoming president. The markets like the news. Company stock jumped more than 3 percent.

Well, hours before Ford's announcement, President-elect Trump hammered General Motors on Twitter for moving production of one of its vehicles to Mexico. Mr. Trump then threatened the auto giant with a heavy import tax.

CNN's Jim Acosta, he joins me now live from New York.

So, Jim, this is becoming something of a pattern, isn't it, with this president, individual back and forthwith individual corporations.

JIM ACOSTA, CNN SENIOR WHITE HOUSE CORRESPONDENT: It is, Jim. After Donald Trump issued warning to the likes of Carrier and Boeing over business dealings he didn't like, he is doing the same to General Motors in line with his trade rhetoric that we heard out on the campaign trail. The president-elect is threatening to slap a big tariff on GM cars coming into the U.S. from Mexico, tweeting, "General Motors is sending Mexican-made model of Chevy Cruze to U.S. car dealers tax-free across border. Make it USA or pay big border tax."

The problem is, Jim, GM says Trump is wrong. Adding in a statement, "All Chevrolet Cruze sedans sold in the U.S. are built in GM's assembly plant in Lordstown, Ohio. GM builds the Chevrolet Cruze hatchback for global markets in Mexico with a small number sold in the U.S."

But clearly, after Ford decided to scrap plans for a new plant in Mexico that you just mentioned, Trump and his advisers believed this hard-nosed strategy is working. And keep in mind, Trump is building a trade team that will be tough on China, announcing he has tapped Robert Lighthizer to be his U.S. trade representative. Lighthizer joins Peter Navarro and Wilbur Ross on the Trump economic team. They are both also critics of Chinese trading practices, Jim.

SCIUTTO: And China certainly has ways to punish the U.S. economically as well.

We now know the president-elect is going to hold a press conference on January 11th, a day after President Obama will give his farewell address in Chicago. Do we know -- has the Trump transition team given any indications that Trump will divest himself from his business holdings?

ACOSTA: Not yet. We're almost 160 days, by the way, Jim, from when Trump held his last full news conference. That was at the end of July during the campaign. Trump's new White House counselor Kellyanne Conway told CNN that news conference is coming a week from tomorrow.

But still pending, whether Trump's lawyers are ready to roll out the plans for the president-elect and his business holdings. So, Jim, this is still somewhat up in the air, but advisors are indicating that this press conference and these plans for those dealings is coming.

SCIUTTO: We'll get those answers then. We're also learning more about who is going to be attending his inauguration. Some surprises there.

ACOSTA: Yes, absolutely. Aides confirmed that Hillary Clinton and Bill Clinton will attend Trump's inauguration. That will be the first time she has been face to face with Trump, that we know of, since the debates. And also George W. and Laura Bush announced they will also be at the inauguration. So, some signs of national healing after Trump waged a very tough

general election battle against Hillary Clinton and lashed out at the Bush family as we all recall during the campaign.

SCIUTTO: Very personal with the Bushes and the Clintons. Jim Acosta, thanks very much.

He is a convicted felon. So, what is he doing with the president- elect at a New Year's Eve party? That's next.

(COMMERCIAL BREAK)

[16:27:25] SCIUTTO: Welcome back to THE LEAD.

And continuing with politics now. Lots to talk about with my panel. They are Mollie Hemingway, she's senior editor at "The Federalist", Anne Gearan, she's political correspondent at "The Washington Post", David Drucker, senior congressional correspondent for "The Washington Examiner."

Thanks to all of you for being here.

So, Mollie, looking at Donald Trump taking to Twitter threatening yet another American company, this time, it was GM, saying that he's going to slap some sort of import duty on them, also have this deal with Ford now keeping their plant here. The Ford CEO told my colleague there was no deal made with the president.

Do you buy that? Any sweeteners?

MOLLIE HEMINGWAY, SENIOR EDITOR, THE FEDERALIST: There is a larger context here where you have -- you've had big businesses and corporations working with the government for a long time, getting cozy deals. The size and scope of the government have increased the past few decades. They can get favorable regulations. They can keep other companies from competing in this environment.

What Donald Trump is doing is kind of trying to change the game here. He's saying, if we're going to have all of this deal-making between government and big businesses, we're going to start caring more about whether your company is based here or not.

I don't know if you need the actual tangible deals being made to know that it's having some kind of influence. The people are aware of this kind of pressure that's out there and they want to try and appease him for better or for worse.

This is not a free market solution. This is not a good idea for moving things into a more market-based economy. But, if you're going to have that type of relationship between the government and big businesses, he's just saying, let's care a little more about the little man.

So, politically speaking it's actually a really smart move. It's just not enough to actually change the economic condition. SCIUTTO: David Drucker, it wasn't long ago Republicans eviscerated

President Obama for picking winners and losers. You remember that going back to the auto bailout, Solyndra, et cetera. Is this not picking winners and losers?

DAVID DRUCKER, SR. CONGRESSIONAL CORRESPONDENT, THE WASHINGTON EXAMINER: I am old enough to remember that and yes, this is picking winners and losers. When you have power you don't mind. It's only when the other guy does it.

Look, I think --

SCIUTTO: As long as you're doing the picking, right?

DRUCKER: Yes, that's correct. So, I mean, I think Republicans if they want to talk principle here have a lot to answer for. This is not small government conservatism.

However, there is something to be said for this idea that if you're a company looking about what to do about expansion, where you're going to manufacture products, if you think that the Republican Congress working with Trump is going to reform the tax code, reduce regulations -- in other words, reduce the cost of doing business so that it's more cost-effective and affordable for you to stay in the United States rather than going to a foreign country, dealing with foreign countries where the rule of law isn't like ours and you have to deal with the change in language --

SCIUTTO: Silly little things like labor regulations, environmental regulations.

DRUCKER: You know what? All of those things cost money.

SCIUTTO: Sure.

DRUCKER: And if you want to look at why some foreign countries are -- it's more cost-effective to manufacture there and import back is because in America, we want the best price and the best quality together.