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Early Start with John Berman and Zoraida Sambolin

Obama Promises Nominee, Takes on Trump; Breaking Down the Cruz Tax Plan; U.S. Blasts Russian Airstrikes in Syria; Apple Ordered to Help Unlock Terrorist's Phone; FDA Issues Zika Guidelines for Blood Bank; Flint Water Crisis; China Puts Missiles on Disputed Island Chain; Pope to Visit Cuidad Juarez, Mexico; Futures Pointing Higher; Kashkari: Banks Too Big to Fail; Gas Prices Tick Higher. Aired 5:30-6a ET

Aired February 17, 2016 - 05:30   ET

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

[05:30:00] MIGUEL MARQUEZ, CNN ANCHOR: President Obama pushing back against Republicans, promising to nominate someone to fill the Supreme Court vacancy. A battle looming as the president weighs in on the 2016 race, lashing out at the Republican frontrunner.

Welcome back to EARLY START. I'm Miguel Marquez.

CHRISTINE ROMANS, CNN ANCHOR: I'm Christine Romans. It is 30 minutes past the hour.

President Obama, this morning, keeping mum about who he might nominate to replace Antonin Scalia, except to say that it will be someone with, quote, "an outstanding legal mind, undisputedly qualified to serve on the Supreme Court." The White House strategy for getting a nominee on the high court -- it's starting to take shape with a news conference in which the president pushed back against what he calls Republican obstructionism.

Our justice correspondent Pamela Brown has the very latest from Washington.

PAMELA BROWN, CNN JUSTICE CORRESPONDENT: Well, good morning, Christine and Miguel. This was the first time that President Obama took questions following Justice Scalia's death, and he took a tough stance, saying that the constitution is clear. Both he and the Senate have responsibilities in filling a Supreme Court vacancy. He said he expects Senate Republicans to consider any nominee he puts forward, no matter what. That they have a job to do until they are voted out. And, he made the point that whoever he chooses will be so indisputably qualified that Republicans will essentially look bad if they refuse to even consider that person.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: We're going to find somebody who has an outstanding legal mind. Somebody who cares deeply about our democracy and cares about rule of law. There's not going to be any particular position on a particular issue that determines whether or not I nominate them, but I'm going to present somebody who indisputably is qualified for the seat. And any fair-minded person, even somebody who disagreed with my politics would say, would serve with honor and integrity on the court.

(END VIDEO CLIP)

BROWN: He would not give any hints about who as on his short list. He said don't jump to any conclusions about whether they are moderates. We know that the White House has already started whittling down potential nominees, and normally this is a process that takes about a month before the president comes out and announces his nominee is. And then the ball is in the Senate's court. Christine and Miguel.

MARQUEZ: Thanks to Pamela Brown.

President Obama says Donald Trump is not ready or qualified to be president and the American people are too sensible to elect him to that office. The president slamming all the GOP candidates for their stances on climate change, on Muslims, and on immigration, but calling out Donald Trump by name as the candidate least ready to be president. Criticism that Trump wore as a badge of honor.

(BEGIN VIDEO CLIP)

OBAMA: I continue to believe Mr. Trump will not be president, and the reason is because I have a lot of faith in the American people and I think they recognize that being president is a serious job. It's not hosting a talk show or a reality show.

DONALD TRUMP (R), PRESIDENTIAL CANDIDATE: He has done such a lousy job as president. You look at our budgets, you look at our spending, we can't beat ISIS, Obamacare is terrible, and for him to say that, actually, is a great compliment if you want to know the truth.

(END VIDEO CLIP)

MARQUEZ: There were great big cheers with that as indicative of Trump's support only growing in South Carolina, holding huge leads in a brand new CNN poll. He is 16 points ahead of his nearest rival, Ted Cruz. Joining us to discuss it all, CNN politics reporter Tom LoBianco live in our D.C. bureau. We have a 15-course breakfast for you of politics, Tom. There's so much to talk about. Let's talk about the Supreme Court to begin with because that's, sort of, on everyone's mind. The president coming out very strongly during this press conference and talking about why he thinks it is his right to name a candidate.

(BEGIN VIDEO CLIP)

OBAMA: Unwritten law that says that it can only be done on off years. That's not in the constitutional text. I'm amused when I hear people who claim to be strict interpreters of the constitution suddenly reading into it a whole series of provisions that are not there. There is more than enough time for the Senate to consider, in a thoughtful way, the record of a nominee that I present, and to make a decision.

(END VIDEO CLIP) MARQUEZ: And now, you have senators -- Republican Senators Grassley and Tillis saying, well, let's just hold off and see --

ROMANS: Yes.

MARQUEZ: -- what -- who he puts forward, and then we'll decide where this all goes. Is there a sense, Tom, that things are starting to thaw a bit? We might kind of get back to a more normal place with this?

TOM LOBIANCO, CNN POLITICS REPORTER: Well, you know, it's interesting really, especially with Tillis and Grassley backing off the comments a little bit there. You know, McConnell, Senate minority -- or, Senate majority leader, I'm sorry -- Mitch McConnell -- really kind of laid -- threw the gauntlet down, initially, on this and they're kind of backing away from it. And you can sense that this really has a lot to do with the Republican primary.

[05:35:16]

McConnell and John Boehner before him, you know. Not really so much Paul Ryan, but Boehner earlier last year, have really taken a beating in the Republican primary from conservatives, and especially people who -- like Donald Trump, who were just angry. They said you never deliver. We gave you the Senate, you never delivered. We gave you the House, you never delivered. And, you could hear a lot of that in the initial comments from McConnell, saying that no way will we give you another Supreme Court appointment. It's just not going to happen.

ROMANS: Let's listen to what Hillary Clinton had to say. She made some comments about what she says is the subtext of the opposition to the president's job to nominate a new Supreme Court Justice. Listen to what she said.

(BEGIN VIDEO CLIP)

HILLARY CLINTON (D), PRESIDENTIAL CANDIDATE: Now the Republicans say they'll reject anyone President Obama nominates no matter how qualified. Some are even saying he doesn't have the right to nominate anyone, as if somehow he's not the real president. You know, that's in keeping what we've heard all along, isn't it? Many Republicans talk in coded racial language about takers and loser. They demonize President Obama and encourage the ugliest impulses of the paranoid fringe.

(END VIDEO CLIP)

ROMANS: She was in Harlem when she made those remarks, and she got a lot of yeses and you're rights in that crowd.

MARQUEZ: She looks different there.

ROMANS: You think she does?

MARQUEZ: She looks like a different candidate in that one little soundbite. ROMANS: Yes. You mean, like fired up?

MARQUEZ: Fired up and serious.

ROMANS: I thought you meant, like, her hair. I was like, why do you care what her hair looks like?

MARQUEZ: No. She just looks -- her message is different. Something's different, Tom. What's different?

LOBIANCO: Well, she's Obama's best friend and she needs that support, you know. Going -- yesterday was a big event for her yesterday meeting with Al Sharpton and other black leaders. And she really, really, really needs to wrap herself in the president. That's been her strategy. And, you know, she's -- they're dog whistles, right, where this language that both sides use to speak to the base. And she's, ironically, using a dog whistle to talk about the Republican dog whistle that they blow when it comes to Obama. It's really funny. But what she's doing is, she's wrapping herself in the president and presenting herself as the defender of Obama. It's a great strategy for her.

ROMANS: Meantime, I was just - it's remarkable to hear the president stand up there yesterday and talk about the Republican side of the race.

MARQUEZ: How, I mean -- to talk about both. I mean, he almost endorsed Hillary before sort of walking back and saying -- and taking it back and saying, oh, I'm sure I agree with a lot of things with Bernie, as well. Taking on the Republicans, though, by name, as well, how incredible -- how extraordinary is it for a sitting president to take on this?

ROMANS: I mean, he said Donald Trump cannot be president and the American people are too sensible to elect a man like Donald Trump. He just said it outright.

MARQUEZ: It helps Donald Trump for all we know.

LOBIANCO: I mean, isn't it fascinating that he did -- he used Trump by name. You hardly -- that almost never happens. And then you can see his hesitation on the Democratic side -- on his side of the aisle where he doesn't want to get involved in this family feud. And yet, he almost slipped into -- again, this is the second time he's almost done this where he almost slipped into an endorsement of Hillary Clinton.

You know, Jake Carney -- I think it was last week, Jake Carney, the former White House spokesman, said that he was pretty confident that Obama wants Hillary Clinton. I mean, this is not somebody who's on the outer circle of Obama world. This is somebody who knows what the President's thinking, and that's not hard to see.

ROMANS: All right. Tom LoBianco, so nice to see you this morning. We got through maybe 12 courses of our 15-course breakfast.

MARQUEZ: Yes.

ROMANS: But, you can go to "CNN MONEY" --

MARQUEZ: We'll be back. I'm famished, guys. Famished.

ROMANS: You can go to cnn.com and "CNN MONEY" and you can read the rest of it. It's awesome. Thank you.

MARQUEZ: All right. Thanks, Tom.

Republican candidates speak out on CNN this week in a unique two-night event tonight and Thursday at 8:00 p.m. for the very first time in this campaign. All six candidates will answer questions with voters of South Carolina in two live town halls moderated by our own Anderson Cooper. Looking forward to that.

ROMANS: And you can see Ted Cruz is on that plate tonight. You might hear from him about his flat tax plan tonight at that town hall in South Carolina. He says it is so simple Americans could file their taxes on a single postcard. But, a dive into the numbers shows the deficit would explode. The group called the Tax Policy Center predicts the plan would add $8.6 trillion to the nation's deficit over the first 10 years, and at least $12 trillion over the follow decade. The only way that won't happen, they say, is if huge, huge spending cuts are imposed.

[05:40:32] The group does agree that Cruz's tax plan is simpler than current law. It's simpler than his rivals. And the group says there are elements that would benefit the U.S. economy. But without unrealistic spending cuts, though, the country's deficit would increase significantly, and it would disproportionately benefit wealthier Americans as they would see more tax cuts than the middle class. I predict you will hear talk about this tonight. It's going to be amazing to have two nights where voters -- South Carolina voters -- will really be able to ask all of these candidates some pointed questions about what they plan to do to help us -- to fix taxes.

MARQUEZ: And these town halls have been so effective at really getting to understand the candidates and where they stand on stuff.

ROMANS: Yes. More, more, more, more. Love it. Love it.

MARQUEZ: The U.S. blasting Russia for increasing airstrikes in Syria, attacking schools and hospitals just days before a proposed ceasefire. We're live with that coming right up.

(COMMERCIAL BREAK)

{05:45:59]

MARQUEZ: Today, vital humanitarian aid is set to reach starving civilians trapped behind the front lines in Syria's civil war. At least that is the plan. But as of yesterday the U.N. was still negotiating for permission from the Assad regime. And that is just days before a proposed cessation of hostilities is set to go into effect. Violence only increasing. Airstrikes on schools and hospitals in Rebel-held territory that the U.S. is blaming on Russia.

For the latest we turn to senior international correspondent Matthew Chance, live in Moscow. Matthew, this uptick in Russian strikes in Syria, is it a sense that they are getting in as much as they can prior to this cessation?

MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: You could interpret it that way, yes. I mean, certainly, over the past week, according to the Russian defense ministry, they've staged 444 sorties involving more than 1,600 strikes -- that's just in the past week -- against various targets, obviously opponents of Bashar al-Assad, their ally in Syria. And yes, we're assuming that this is an attempt to give President Assad as much power as possible on the battlefield before that cessation of hostilities goes into force.

But, of course, the Russians have also said that they will not stop bombing terrorists. They'll still target ISIS and other militant groups, and perhaps some of the moderate rebels, as well, that the West is backing even when this cessation of hostilities takes place. And so it's not clear that after Friday, when this agreement comes into force, there's going to be any decline in the amount of people being killed or the amount of airstrikes being carried out by the Russians.

MARQUEZ: Hard to call that a cessation of hostilities in that case. Well, we'll have to watch it very closely. Thank you, Matthew Chance, for being there to watch that.

ROMANS: All right. Apple says it will fight a court order that requires it to help law enforcement recover encrypted data from the iPhone used by one of the San Bernardino shooters, Syed Farook. A federal judge ruling on a request by prosecutors to have Apple assist in finding the passcode and access information from Farook's last cell phone. Apple CEO Tim Cook, in a letter on the company's Website, says the court order essentially requires Apple to create a back door, through iPhone security code, exposing customers to a greater risk of attack.

MARQUEZ: The Food and Drug Administration issuing new guidelines to prevent the Zika virus from contaminating the nation's blood supply. It will require blood banks in areas where Zika has been transmitted, like Puerto Rico or the U.S. Virgin Islands, to import blood rather than use local donations. Experts say it's likely the Zika virus could be transmitted through tainted blood. The FDA has recommended that certain at-risk donors not donate blood for now.

ROMANS: Michigan Governor Rick Snyder blaming the federal government for multiple failures in responding to lead contamination in Flint's drinking water. Snyder telling reporters he hopes U.S. officials are being asked, quote "tough questions". The EPA took exception with that, issuing a statement that said state and local officials failed to work the agency in what they called a transparent and proactive manner to address the risks to public health.

MARQUEZ: Well, let's take a look at what's coming up on "NEW DAY" with Chris Cuomo. Hello there, Christopher. ROMANS: Good morning.

MARQUEZ: Good morning.

CHRIS CUOMO, CNN ANCHOR, "NEW DAY": Hello, my friends. How are you?

ROMANS: Great.

CUOMO: President Obama is calling on the Senate to do its job. He says he's going to nominate someone who is eminently qualified to replace Antonin Scalia on the Supreme Court. He is saying, basically, let's all follow the constitution, but this isn't about the constitution. It's really about politics. So, we're going to look at what's really going on. The dynamic does seem to be shifting. We'll tell you how. We also want to highlight what President Obama took time to say about Donald Trump. And, of course, what Trump took time to say back. We also have some very interesting poll numbers for you from South Carolina, but more importantly Nevada, especially if you're a Democrat. Coming up.

MARQUEZ: Dying to see those numbers. That's going to be interesting.

ROMANS: Eleven minutes.

CUOMO: Well, maybe we can make an arrangement, Miguel. Reach into your pocket.

ROMANS: In 11 minutes it will all be revealed. All right. Chris Cuomo, thank you so much. Oil prices are rising. That means your gas bill is rising, but you'll still save hundreds this year. We're going to get an early check on your money next.

(COMMERCIAL BREAK)

[05:55:00]

MARQUEZ: Breaking overnight, China appears to be ratcheting up tension in the South China Sea. U.S. military officials say the surface-to-air missiles have been deployed on an island chain in disputed territorial waters.

CNN's senior international correspondent, Ivan Watson, is following developments. He is live in Hong Kong. Ivan, this has been -- these islands have been so controversial for so long. How much more fuel to the fire does this placement of these missiles put it?

IVAN WATSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, it's going to continue raising concern for the much smaller countries in this region. We're talking about the South China Sea here, Miguel. And the island in question -- one probably most people haven't heard of. It's called Woody Island and it has competing claims. Vietnam, Taiwan, China, all claiming to own it. China has controlled it for more than 50 years.

And satellite imagery, published by a group called ISI, show what appear to be the deployment of a new weapon system up on this beach here. What they say, and what the Taiwanese defense ministry and the Pentagon says, appear to be surface-to-air missiles. Now, why is this a concern right now? Well, there's a much bigger competing, basically tug of war, over who controls this whole body of water around 30 percent of the world's cargo is estimated to travel through. All these neighboring countries -- Malaysia, the Philippines, Vietnam -- they all claim to control part of the South China Sea.

[05:55:31] China claims to control all the way down to here, to right next to the Philippines, including an archipelago here called the Spratly Islands. Now, what they've beendoing there is what is really raising concern. Look at one of these reefs in 2005. This was called the Fiery Cross Reef. Nothing sticking out above the water except for a little man-made structure here that the Chinese built. Look at it 10 years later.

The Chinese built an entire island here, including a deep water harbor port, as well an airstrip. President Obama has been meeting with Southeast Asian leaders and he's been arguing against what he calls the militarization of the South China Sea. The U.S. has been sending war planes and Navy ships into these areas to challenge China's claim, so that ratchets up tensions. China claims putting things, I guess, like surface-to-air missiles does not amount militarization. China calls that self-defense.

MARQUEZ: My guess is -- Ivan Watson, thank you very much for that.

My guess is it's not going to go away very soon, this controversy. Thanks much for keeping track of it. The final stop on Pope Francis' trip to Mexico may be the most dramatic. The Pontiff travels to the notorious border town of Cuidad Juarez. He'll visit a prison, pray for migrants who died trying to cross into the U.S., and celebrate mass today just a stone's throw away from the United States border.

ROMANS: All right. Fifty-six minutes past the hour. Time for an early start on your money. Stock futures higher. Stocks here in the U.S. coming off a couple of big gains -- two big days of gains. Oil prices are risingand that's driving some of the optimism. Stocks and oil have been just locked together. So, when oil goes up, stocks goes up.

MARQUEZ: Stocks and oil sitting in a tree.

ROMANS: That's right. All right. The man who helped saved the big banks during the financial crisis. He says they are still too big to fail. Neel Kashkari served in the Treasury Department under both George W. Bush and President Obama. In his first speech as president of the Minneapolis Federal Reserve Bank, he says regulatory reforms have not gone far enough. He called for a breakup of the large banks, making them smaller, less connected, and less important. He said regulate them like public utilities. Taxes -- more taxes to reduce risk. He says the banking system has lobbied hard to prevent fundamental change to the system. It's a view that sounds more like some of the progressive calls for breaking up banks. Kashkari is a Republican. He ran for the governor of California, you may recall, a couple of years ago. For the first time in three weeks gas prices are rising folks. The national average for a gallon of regular ticked up to $1.71 overnight. But don't fret. It's still 19 cents lower than it was last month, and more than $1 below the peak prices of last summer. Why now? Well, oil prices have recently rebounded somewhat. Gas follows closely behind. Don't worry. Analysts expect the national average to stay well below $2 for much of this year. The average household -- typical household -- is likely to save about $400 extra dollars this year compared with last year because of those lower prices at the pump.

MARQUEZ: We like lower prices at the pump.

ROMANS: I know. We do.

MARQUEZ: Amazing, we're like Kashkari and the banks.

ROMANS: Interesting, isn't it? You know, you've mostly heard from the progressives that --

MARQUEZ: Right.

ROMANS: -- you know, look, break up the banks, break up the banks. They're too big to fail. And the banks are, you know, by assets I think they're larger today than they were at the peak of the financial crisis. The banks says that Dodd-Frank -- that they've done what they need to do. Kashkari says no.

MARQUEZ: Amazing. President Obama defying Republicans, promising to nominate someone to fill the Supreme Court vacancy. "NEW DAY" starts now.

(BEGIN VIDEOTAPE)

OBAMA: The constitution is pretty clear. This will be the opportunity for senators to do their job.

UNIDENTIFIED MALE: We're not going to bring this nominee out this year.

UNIDENTIFIED MALE: We'll take it a step at the time.

UNIDENTIFIED MALE: The Democrats are crying, and moaning, and groaning. It's highly hypocritical.

OBAMA: Mr. Trump will not be president.

TRUMP: He has done such a lousy job as president.

OBAMA: It's not hosting a talk show or a reality show.

TRUMP: Look at our budget, look at our spending. We can't beat ISIS.

OBAMA: I am not unhappy that I am not on the ballot.

CLINTON: We can, and must, do better.

OBAMA: I know Hillary better than I know Bernie. On the other hand, there may be a couple of issues where Bernie agrees with me now.

SEN. BERNIE SANDERS (I-VT), DEMOCRATIC PRESIDENTIAL CANDIDATE: We've often had to fight for change.

(END VIDEOTAPE)

ANNOUNCER: This is NEW DAY with Chris Cuomo, Alisyn Camerota, and Michaela Pereira.

CUOMO: Good morning. Welcome to your NEW DAY. It is Wednesday, February 17th, 6:00 in the east. And, once again, Michaela's keen eye saves us. Indeed, this isnot Alisyn Camerota, no matter how much he insists. It is John Berman.

Up first, do your job, says President Obama to Senate Republicans, referring to when he nominates a successor for Supreme Court Justice Antonin Scalia. President Obama saying the constitution is pretty clear and that he intends to pick an undisputedly qualified nominee. And, in a move that pundits should not punish, one key GOP senator now says he isn't ruling out holding hearings.