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Judges Upholds Suspension Of Trump Travel Ban;Report: National Security Adviser Flynn Under Scrutiny; Trump Agrees To Honor One China Policy;White House Says Kellyanne Conway Has Been 'Counseled'. Aired 5:30-6a ET

Aired February 10, 2017 - 05:30   ET

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

[05:30:20] CHRISTINE ROMANS, CNN HOST: President Trump gearing up for a fight after an appeals court kept his travel ban on hold. How will the White House move forward?

MIGUEL MARQUEZ, CNN HOST: And a top Trump adviser facing a congressional review after she promoted Ivanka Trump's clothing line. What's in store for Kellyanne Conway? Welcome back to EARLY START, I'm Miguel Marquez.

ROMANS: And I'm Christine Romans. It is Friday morning and it's 30 minutes past the hour. Let's begin with President Trump down, but not out, in his battle over his controversial seven-nation travel ban. A unanimous ruling by a three-judge panel means citizens of seven Muslim-majority countries can still legally travel to the United States. The Ninth Circuit judges -- the Ninth Circuit judges determining that the government relied too heavily on the use of executive power to implement that ban.

MARQUEZ: The president firing up his Twitter account moments after the decision say, all in caps, "SEE YOU IN COURT. THE SECURITY OF OUR NATION IS AT STAKE." Moments later, he spoke to reporters in the White House.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: It's a political decision and we will see them in court, and I look forward to doing it.

REPORTER: So you believe the judges made a political decision?

TRUMP: We have a situation where the security of our country is at stake. And it's a very, very serious situation, so we look forward, as I just said, to seeing them in court.

REPORTER: Do you think this undercuts the early days of your presidency? This is such a core issue.

TRUMP: No, this is just a decision that came down, but we're going to win the case.

(END VIDEO CLIP) MARQUEZ: Now, for the latest on the ruling and what's next -- the next step in the legal fight -- let's go to Washington, D.C. and bring in CNN justice correspondent Laura Jarrett. Good morning to you.

LAURA JARRETT, CNN JUSTICE CORRESPONDENT: Good morning. Well, in that 29-page opinion yesterday those three appeals court judges rejected each and every one of the arguments that the Justice Department had used to try to justify a reinstatement of the travel ban. And as you said, this was really an opinion on the limits of executive power.

First, they rejected the idea that a court shouldn't even be allowed to review the legality of the president's executive order, saying that's just not the law. But the judges also fundamentally disagreed with this argument that the travel ban was necessary for national security because the government failed to offer any real evidence that anyone from the seven banned countries had perpetrated a terrorist attack in the United States, Miguel.

MARQUEZ: We also assume that some sort of an appeal or legal move is coming. How is the Justice Department likely to proceed?

JARRETT: Well, last night, the Justice Department said that it was reviewing the court's opinion and weighing its options. There's a couple of different ways it could here. We might see that the government files a petition for a rehearing with a larger panel of judges on the Ninth Circuit to try to get a better result or it could mean that they'll appeal to the Supreme Court, so we'll have to see what's next.

MARQUEZ: All right, Laura Jarrett. Thank you very much.

ROMANS: Let's go to Atlanta again and bring in Michael Moore, the former U.S. attorney for Georgia's Middle District. Nice to see you this Friday morning.

MICHAEL MOORE, FORMER U.S. ATTORNEY FOR GEORGIA'S MIDDLE DISTRICT: Good morning.

ROMANS: I want to listen to this moment at the hearing when these attorneys -- when these -- the judges were grilling the government lawyer -- the Justice Department lawyer about this travel ban. Listen to this.

MOORE: OK.

(BEGIN VIDEO CLIP)

VOICE OF JUDGE MICHELLE FRIEDLAND, NINTH CIRCUIT COURT OF APPEALS: Are you arguing, then, that the president's decision in that regard is unreviewable?

VOICE OF AUGUST FLENTJE, JUSTICE DEPARTMENT SPECIAL COUNSEL: The -- yes, the -- what we -- there are obviously constitutional limitations, but we're discussing the risk assessment.

(END VIDEO CLIP)

ROMANS: I almost feel like that exchange sort of crystalizes a big part of this panel's decision here, that just because the President invokes national security doesn't mean the constitution doesn't apply.

MOORE: I think that's right. I mean, I don't think he can overstate the fact that this was a rebuke of Trump's use of the executive power and I don't think he should tell a court that they don't have the authority to review an executive action. That's almost challenging their hand.

Essentially what they've said is look, we've got the authority to do it and the constitution's not written in invisible ink that vanishes just because you look at it through the lens of national security. And that's really the argument that was made. That nothing matters, the constitution doesn't matter as long as we're talking about national security. And the court pointed out that's just not the law and they recited some Supreme Court decisions and some of those decisions were written by very conservatives justices.

So, it will be interesting to see going forward. I'm not sure that that's where they want to end up at the Supreme Court, but we'll see what the department decides over the next few days.

MARQUEZ: What really is the next possibility here because, presumably, if they go to the en banc to the full appellate court so all, whatever it is, nine members, it's likely to have the same decision. If they wait until the lower court makes a ruling and has a hearing, they may go beyond the 90 or 120 days involved in the executive order itself. If they wait and go to the Supreme Court they may have that problem or they may get slapped down by the entire Supreme Court. What really can they do legally here -- or rewrite the thing.

[05:35:11] MOORE: Well, yes, they could rewrite it and the appellate court mentioned that in the opinion. It said look, he can write an order that complies with the law. This case is just in its infancy. There's just not a lot of evidence that's already been accumulated in the case and so I think there's got to be a decision made about do they just want to go back to the district courts to have a time to fill the record with the evidence, to talk about depositions, to look at emails, to look at other memos between staffers -- that type of thing.

The fear, I think, for the administration, and they need to think about this, is if they go to the Supreme Court, while the court is divided four to four typically on ideological lines, they're going to end up in a situation where a) the Supreme Court could just say look, we're going to be split so the ruling down below is going to stand for the Ninth Circuit.

Or, in fact, it very well could be that the Supreme Court looks at it and some of those justices that are on the conservative side of the court could very well move over and say no, you know, the constitution applies even though we're talking about national security and we just don't let the president exceed his or her executive authority. ROMANS: A pretty strong rebuke. So, finish this sentence for me. Ultimately, the Trump White House wins this case because --

MOORE: Ultimately, they could win the case because some determination is made that, in fact, there's some provable evidence that there's a national security threat or because they decide that the Ninth Circuit and the district court overstepped and made the order too broad.

ROMANS: All right.

MARQUEZ: All right, Michael Moore. Thank you very much.

MOORE: All right. Thank you all. Have a good morning.

MARQUEZ: Have a good weekend. National Security Adviser Michael Flynn under fire for reportedly privately discussing U.S. sanctions against Moscow with Russia's ambassador. "The Washington Post" reporting some senior U.S. officials believe those talks were inappropriate or even illegal. We want to get the latest from CNN's Ivan Watson who is live from Moscow. Ivan, you've just been listening to the Russian government side of this. What have they said?

IVAN WATSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, the spokesman for the Kremlin here, Dmitry Peskov, was asked about this "Washington Post" report about the communications between Michael Flynn before Donald Trump's inauguration, and the Russian ambassador to Washington, Sergey Kislyak.

And when he was asked about it he confirmed that there had been communications but when asked whether sanctions had been discussed, the Kremlin spokesman, Dmitry Peskov, said that is essentially incorrect. So not offering any kind of confirmation of the details in this "Washington Post" article -- details that CNN has not been able to confirm just yet.

It is important to note that the relationship between Russia and the new Trump administration is very much under scrutiny here in Russia. It is something that is somewhat evolving. The initial victory in the election of Donald Trump was met with euphoria in some circles here -- in some media circles and some political circles, as well. I would say that that has been dialed back somewhat and now there is serious examination of the various top officials that are being put in top positions in the Trump administration.

There is a repeated statement coming from the Kremlin that Russia is willing to work with the Trump administration on a number of issues, notably combating international terrorism. That has clearly been a priority from the Trump administration but, also, Moscow has been making it very clear that it is early days yet and they're not quite sure where and how these two governments can work together in the months and, perhaps, years to come -- Miguel.

MARQUEZ: A complicated and difficult relationship and it looks like it's going to remain that way for some time. Ivan Watson for us in Moscow. Thank you. ROMANS: Also breaking overnight, President Trump agreeing to honor the One China policy during a phone call with the Chinese president, Xi Jinping. The White House says the request was made by the Chinese leader and it was granted by the American president last night. President Xi expressing his appreciation overnight. The president had angered Beijing back in December by speaking directly to the prime minister of Taiwan.

All right. Kellyanne Conway managing to unite Democrats and Republicans. The trouble is they're united in their anger against her. We'll tell you why.

(COMMERCIAL BREAK)

[05:43:25] ROMANS: All right, so a big political story this morning. Everyone's talking about it here in "The Washington Post." National Security Adviser Michael Flynn reportedly privately discussing U.S. sanctions against Moscow with Russia's ambassador before the election. This, according to "The Washington Post." I want to bring -- or, before the inauguration, rather. Let's bring in CNN senior media correspondent Brian Stelter and "CNN POLITICS" reporter Eugene Scott.

Eugene, I want to start with you. So, looking at this picture -- or this story here, we've had repeated denials from the administration that there were these -- there were conversations, but there were not conversations about sanctions per se. So, let's listen to some of those denials and then talk about it on the other side.

EUGENE SCOTT, CNN POLITICS REPORTER: Sure.

(BEGIN VIDEO CLIP)

MIKE PENCE, VICE PRESIDENT OF THE UNITED STATES: They did not discuss anything having to do with the United States' decision to expel diplomats or impose a censure against Russia. What I can confirm, having spoken to him about it, is that those conversations that happened to occur around the time that the United States took action to expel diplomats had nothing whatsoever to do with those sanctions.

(END VIDEO CLIP)

ROMANS: This "Washington Post" reporting has multiple sources here saying that no, it did happen. Flynn did talk about these sanctions. What do you make of this?

SCOTT: Yes, I mean, we have Pence saying that Flynn told him, but we have intelligence that says something differently. I think a very important point is it wasn't that these conversations happened just before the inauguration, there's intelligence to suggest that they happened even before the election. And this was all going on while the U.S. Intelligence agencies were investigating Russia's involvement in the 2016 election that we have now have information to suggest was for the sake of hoping Hillary Clinton would lose everything.

[05:45:08] MARQUEZ: And the legal trouble that Flynn could be in here is because that investigation was ongoing and he was double- dealing, or what's going on?

SCOTT: Well, he had no business having those conversations --

ROMANS: Right.

SCOTT: -- at all. He didn't have the freedom.

ROMANS: He was --

SCOTT: It was illegal.

ROMANS: He was a private citizen, essentially.

SCOTT: Yes.

ROMANS: I mean, that's something, according to the story that the White House officials -- the Obama administration officials were discussing whether, you know -- what kind of ramifications and legal ramifications there were. We should say we haven't -- we have not -- we have not machinated this reporting.

SCOTT: Right.

ROMANS: I want to be very clear. This is all "The Washington Post."

BRIAN STELTER, CNN SENIOR MEDIA CORRESPONDENT, HOST, "RELIABLE SOURCES": These are American intelligence officials that are speaking to the "Post" anonymously --

MARQUEZ: Nine of them.

STELTER: -- sharing, in some cases -- that's right -- the transcripts -- saying that he's read the transcripts of these calls between Flynn and the Russian ambassador. I think a revealing part of the "Post" story, saying that on Wednesday they'd interviewed Flynn about this when he denied talking with the ambassador about sanctions. Then on Thursday he backed away from that denial --

SCOTT: Sure.

STELTER: -- through a spokesperson saying, "While he indicated that he had no recollection of discussing sanctions he couldn't be certain that the topic never came up."

ROMANS: OK.

STELTER: So clearly backpedaling there, trying to clean up a mess, but this is going to be a big topic for Sean.

ROMANS: Today.

STELTER: Spicer, later today -- a big topic for other Trump aides having to address this issue.

MARQUEZ: Another mess to clean up. I mean, this administration cannot seem to get out of its own way at this point. STELTER: I think there are a number of stories, all of them showing this White House tied up in knots, sometimes contradicting itself, clearly on the defensive. We see Trump trying to take various actions or executive orders, things like that, trying to set a tone and show that he's delivering on his promises. But there are so many controversies, frankly, I would understand why our audience has a hard time keeping them all straight.

ROMANS: I just wanted to ask you, Eugene, you know, what you hear from the administration is that we keep talking about the distractions and we haven't talked about all of the policies. I would like to be talking about the policies, you know.

SCOTT: Sure.

ROMANS: I mean, the president said yesterday in two to three weeks we're going to have a tax reform plan, you know, or a proposal. I'd like to be talking about the policies but the distractions overwhelm the message.

SCOTT: They certainly do and the distractions are actually about policy.

ROMANS: Right. You're right.

SCOTT: The travel ban, that's policy.

ROMANS: You're right.

SCOTT: Obamacare, that is policy. Trade is policy. Just last night the conversation with the head of China and One China, that's policy. It just happens that what is happening it's, quite frankly, distracting. How they respond to it moving forward, that remains to be seen, if we really can get deeper into policy conversations without just simply criticizing it.

ROMANS: All right. Thanks, guys.

STELTER: Thanks.

(BEGIN VIDEO CLIP)

KELLYANNE CONWAY, COUNSELOR TO THE PRESIDENT: Go buy Ivanka's stuff is what I would say. I'm going to -- I'm going to -- I need shopping. I'm going to go get some myself today. It's a wonderful line. I own some of it. I fully -- I'm going to just give -- I'm going to give a free commercial here and go buy it today, everybody. You can find it online.

(END VIDEO CLIP)

ROMANS: All right. Well, that was an endorsement by Trump adviser Kellyanne Conway, triggering ethical and legal concerns about using her position to promote a family business. Critics were quick to pounce. There's even a bipartisan call now for an investigation. A letter from the chairman and ranking member of the House Oversight Committee sending a letter to the Government Ethics Office concerning possibly disciplinary action. Asked about the uproar, Conway said this.

(BEGIN VIDEO CLIP)

CONWAY: Where is that letter and we're reviewing that internally. I'm just really happy that I spent an awful lot of time with the President of the United States this afternoon and that he supports me 100 percent.

(END VIDEO CLIP)

MARQUEZ: White House Press Secretary Sean Spicer says Conway has been counseled but did not elaborate, and we're told Conway did acknowledge making a mistake. No comment so far from Ivanka Trump.

ROMANS: Yes, I wonder if she will comment. But a lot of people are saying --

MARQUEZ: There's not much to gain there.

ROMANS: -- it's all about her line that she was stepping away from, right --

MARQUEZ: Right.

ROMANS: -- so we'll see. Nordstrom showing a presidential tweet doesn't always sink a stock. Shares were up seven percent over the past two days. Nordstrom says it was a business decision to drop the Trump -- the Ivanka Trump brand. You know, traditionally, retailers have been struggling so the idea here is that if that line were selling, you know, you can't afford to get rid of it, right?

Look, the stock market's rise coming as the broader market hit record highs. After stalling for the past few sessions, the rally got a jumpstart right after the open and here's why. The president met with airline executives and said this about tax reform.

(BEGIN VIDEO CLIP)

TRUMP: We're going to be announcing something, I would say, over the next two or three weeks that will be phenomenal in terms of tax.

(END VIDEO CLIP)

ROMANS: Phenomenal in two to three weeks. Right after he said that the Dow instantly jumped 100 points and held onto those gains to hit a record high.

MARQUEZ: That is going to be giant thing to do if he can get tax reform done.

ROMANS: A lot of work to do.

MARQUEZ: Yes. Let's take a look at what's coming up on "NEW DAY." Chris Cuomo -- lucky us. ROMANS: Happy Friday.

MARQUEZ: He's talking to us.

CHRIS CUOMO, CNN HOST: Not only could that be a huge thing but, boy, could it be a great thing for the president if he can get something done on it. It will give him a real broad-based appeal. All right, so we have two big stories this morning. The first one is the obvious, what happened with this Ninth Circuit ruling. What does it mean? There are now four options for the White House. We'll take you through them. Remember, this was a decision on this temporary restraining order, not necessarily on the merits of this ban, so we'll take you through what all that means.

[05:50:00] The second story is what's going on with the National Security Adviser Michael Flynn. There are two issues there. One, is there any real legal controversy here over something called the Logan Act. What is it and why it's unlikely that this is going to turn out to be a legal matter. The second point is were they telling the truth about the exchanges between the Trump incoming administration and Russia? We have it all for you straight ahead.

ROMANS: And I know -- I can guarantee you Sean Spicer will be asked about it 100 different ways later this afternoon, as well, so that will be a big story today. Thanks, Chris.

CUOMO: Hopefully, he doesn't give 100 different answers.

ROMANS: Thank you, Chris. President Trump hosting another big CEO meeting at the White House. This time it was airline executives. Besides the usual tax cut and job creation talk, these CEOs asked the president for one major specific change. I'll tell you what it is.

(COMMERCIAL BREAK)

MARQUEZ: Democratic Sen. Richard Blumenthal is calling on Supreme Court nominee Neil Gorsuch to go public with his criticism of President Trump. Blumenthal is one of two Democratic senators who were told by Judge Gorsuch that he finds the president's attacks on the judiciary disheartening and demoralizing. Mr. Trump claims Blumenthal is misrepresenting Gorsuch's remarks and the press -- White House press secretary Sean Spicer is backing up the president.

[05:55:20] (BEGIN VIDEO CLIP)

SEAN SPICER, WHITE HOUSE PRESS SECRETARY: I just was very clear that he was not commenting on any specific matter, right, and then he was asked about his general philosophy, so you can't then take that and equate it back to the -- to the specific. He literally went out of his way to say I'm not commenting on a specific instance.

(END VIDEO CLIP)

MARQUEZ: Gorsuch's own spokesman confirms the judge made those comments to Sen. Blumenthal. The senator also says Gorsuch told him he should feel free to mention his thoughts publicly. ROMANS: All right, let's get a check on CNN Money Stream this Friday morning. Ah, you're going to end the week here with, you know, record highs. All three major averages sitting at record highs this morning and it's looking like more gains at the open. Dow futures are up. The S&P 500 futures higher as well. Stock markets in Europe and Asia are rising, including a big gain in Tokyo. Now, here's where the optimism comes from. A comment from the president -- President Trump -- who says a tax reform plan will be read in the next two to three weeks. A pivot back to pro-growth policies is exactly what the markets wanted to see.

Trump made those comments to reporters but his love of Twitter has some analysts thinking more users would flock to the struggling social platform. Not happening, even -- what was one of the headlines you saw?

MARQUEZ: If he can't save Twitter, nothing can.

ROMANS: Shares of Twitter tanking 12 percent after it earnings report Thursday morning, near an all-time low. Sales increased just one percent last quarter. You know, Wall Street was expecting a much bigger rise. Weak advertising revenue, it's an ongoing problem for Twitter. It also can't seem to grow its user base -- not attracting new users. It has 319 million monthly active users. That's up just two million from the quarter before -- the quarter before, so you think about that. You're not -- they're not reaching a new audience, really.

Now, Snapchat, you can see -- which is relatively young as far as social network goes -- it has less but it's growing more quickly. Instagram has nearly doubled Twitter's total. Facebook is king with 1.8 billion.

All right, Donald Trump met with airline executives at the White House and the big topic of conversation, the country's outdated air traffic control system. The president says the current plan to modernize it is not good enough.

(BEGIN VIDEO CLIP)

TRUMP: I hear we're spending billions and billions of dollars. It's a system that's totally, you know, out of whack. It's way over budget, it's way behind schedule, and when it's complete it's not going to be a good system. Other than that, it's fantastic.

(END VIDEO CLIP)

ROMANS: Some of the CEOs in attendance urged the president to privatize the air traffic control system, taking it out of Federal Aviation Administration control. No official comment on that from the White House but executives leaving the meeting say the plan is still on track.

It's so interesting. I wonder if before you go to the White House if the C-suite -- the corporate suite -- has a big discussion of the tone you want to take. You have to go there, say you're creating American jobs. A lot of these industries, they also have a wish list for tax reform --

MARQUEZ: Yes.

ROMANS: -- and things that they want to change, as well.

MARQUEZ: Well, this White House has got to get its message out there and start acting more like a White House, I suppose --

ROMANS: Yes.

MARQUEZ: -- to get that done.

ROMANS: All right, thanks for joining us this Friday morning. I'm Christine Romans.

MARQUEZ: I'm Miguel Marquez. Have a good weekend. "NEW DAY" starts right now.

(BEGIN VIDEO CLIP)

ROMANS: A federal appeals court refusing to reinstate the president's travel ban.

TRUMP: It's a political decision and we're going to see them in court.

UNIDENTIFIED MALE: We have seen them in court twice. They are suffering defeat after defeat.

UNIDENTIFIED MALE: The Ninth Circuit is wrong here. The constitution and statutes clearly give this power to the president.

UNIDENTIFIED MALE: To say it's not a setback would be to just misread the entire thing.

CONWAY: We will get our day in our court to argue this on the merits.

SEN. RICHARD BLUMENTHAL (D), CONNECTICUT: Judge Gorsuch said he found these attacks disheartening and demoralizing.

TRUMP: These comments were misrepresented.

SEN. CHUCK SCHUMER (D), NEW YORK, SENATE MINORITY LEADER: Not a good start for Judge Gorsuch.

CONWAY: Go buy Ivanka's stuff. I'm going to give a free commercial here.

UNIDENTIFIED MALE: She clearly broke the law. This is unacceptable.

(END VIDEO CLIP)

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

CUOMO: All right. We want to welcome our viewers in the United States and around the world. This is your new day. It's Friday, February 10th, 6:00 here in the East. And up first, the court has spoken and the travel ban cannot be reinstated. The unanimous ruling and sweeping 29-page explanation rejects the administration's claim that the courts have no role as a check on presidential power, but it ain't over. There are multiple options head.

ALISYN CAMEROTA, CNN HOST: So, President Trump vows to fight this decision, once again saying the ban is for national security. What is the administration's next move? It is day 22 of the Trump presidency. Let's begin our coverage with CNN's Joe Johns, live at the White House. Joe, what's the latest?

JOE JOHNS, CNN SENIOR WASHINGTON CORRESPONDENT: Good morning, Alisyn.