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New Chief of Staff to be Sworn in After Shake-up; Putin Retaliates Over Impending U.S. Sanctions; Venezuelan Leader Declares Victory in Controversial Election. Aired 6-6:30a ET

Aired July 31, 2017 - 06:00   ET

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

(BEGIN VIDEOTAPE)

SEN. SUSAN COLLINS (R), MAINE: General Kelly will do a good job. He will bring some order to the West Wing.

[05:57:29] UNIDENTIFIED FEMALE: The White House looking to reset in the wake of a failed health care bill.

DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: I said from the beginning, let Obamacare implode and then do it.

SEN. BERNIE SANDERS (I), VERMONT: It seems incomprehensible that we have a president that wants to sabotage health care in America.

UNIDENTIFIED MALE: In the White House's view, they can't move on in the Senate.

GOV. JOHN KASICH (R), OHIO: We don't make it as a country when we spend our time fighting all the time.

MIKE PENCE (R), VICE PRESIDENT OF THE UNITED STATES: Russia's destabilizing activities are unacceptable. The president will sign the sanctions to reinforce that.

UNIDENTIFIED MALE: Russian President Vladimir Putin now confirming the staff at U.S. diplomatic missions will be cut dramatically.

UNIDENTIFIED MALE: This retaliation is long, long overdue.

(END VIDEOTAPE)

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

ALISYN CAMEROTA, CNN ANCHOR: And we want to welcome our viewers in the United States and around the world. This is NEW DAY. It's Monday, July 31, 6 a.m. here in New York. Chris is off today. John Berman joins me.

JOHN BERMAN, CNN ANCHOR: What could possibly happen next?

CAMEROTA: What could go wrong? Great to have you here. Here's our starting line.

President Trump hits the reset button after one of the most chaotic weeks of his presidency. In just hours, the president's new chief of staff, General John Kelly, will be sworn in. Now President Trump will finally come face-to-face with his embattled attorney general, Jeff Sessions, after repeatedly attacking Sessions. So what will happen when they meet at a cabinet meeting today?

BERMAN: That will be super comfortable.

The president also launched a flurry of statements about health care, casting blame for the failure of the repeal efforts squarely on Congress, not him. The president is threatening to cut off payments to insurers, which could be a serious blow to low-income Americans. And now the president is even threatening the plans belonging to members of Congress.

Then, there are new threats from overseas. Russia has ordered the U.S. to cut its diplomatic staff by more than half in retaliation for new U.S. sanctions, while the Trump administration increases pressure on China after North Korea's new missile test.

We have to all covered. Want to begin with CNN's Sara Murray, live at the White House. A busy day, Sara.

SARA MURRAY, CNN WHITE HOUSE CORRESPONDENT: That's right and John Kelly's first day here at the White House. As you guys noted, he will be sworn in this morning followed by that cabinet meeting. But everyone has the same question on the top of their minds: Can Kelly really bring order to this very wild West Wing?

(BEGIN VIDEOTAPE)

TRUMP: Reince was a good man. John Kelly will do a fantastic job.

MURRAY (voice-over): President Trump turning to retired four-star general John Kelly for help rebooting a stalled White House agenda and reigning in a chaotic West Wing.

That's after Reince Priebus became the latest in a string of high- profile Trump officials to be pushed out in the first six months.

MICK MULVANEY, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET: I think the president wants to go a different direction, wants a little bit more discipline, a little more structure in there.

MURRAY: It remains unclear how Kelly's appointment will impact the chain of command at the White House and if the former homeland security chief will exert any influence over the president's own behavior, including his use of Twitter.

COREY LEWANDOWSKI, FORMER TRUMP CAMPAIGN CHAIRMAN: You have to let Trump be Trump. Anybody who thinks they're going to change Donald Trump doesn't know Donald Trump.

MURRAY: The president remains at odds with many in his party over his repeated public attacks on Attorney General Jeff Sessions.

JEFF SESSIONS, U.S. ATTORNEY GENERAL: Well, it's kind of hurtful, but the president of the United States is a strong leader.

MURRAY: The two men are expected to come face-to-face today at the president's cabinet meeting. Trump also turning to health care this weekend, blasting the Senate's failed efforts to dismantle Obamacare, tweeting, "Unless the Republican senators are total quitters, repeal and replace is not dead." Despite the fact that it would have had no impact on Friday's defeat, the president also urging GOP leadership to change the Senate's rules so legislation can pass with a simple majority, saying that Republicans "look like fools who are just wasting their time."

TRUMP: I said from the beginning let Obamacare implode and then do it.

MURRAY: Trump also threatening to end subsidy payments to insurance companies and even eliminate some health benefits for members of Congress if the bill is not passed.

MULVANEY: What he's saying is, look, if Obamacare is hurting people, and it is, then why shouldn't it hurt insurance companies and more importantly, perhaps, for this discussion, members of Congress?

MURRAY: Senator Susan Collins, one of three Republicans who voted against repeal says Trump's threats wouldn't change her vote.

COLLINS: We need to go back to committee, to the Health Committee and the Finance Committee, identify the problems, carefully evaluate possible solutions through hearings, and then produce a series of bills to correct these problems.

(END VIDEOTAPE)

MURRAY: Now, on top of the domestic agenda and organizational challenges, John Kelly, of course, will be here at the White House as they're confronting a number of foreign policy threats, including escalating aggression in North Korea and the U.S. relationship with Russia. We are waiting to hear when exactly Trump will be signing the Russia sanctions bill.

Back to you, guys.

CAMEROTA: OK, Sara, thank you very much for setting all of that up for us. Let's bring in our political panel. We have here CNN political commentator Errol Louis, CNN political analysts John Avlon and David Drucker all in the house. This is a fun morning for us.

Let's start with you, Errol. General John Kelly, what is likely to change with him as chief of staff?

ERROL LOUIS, CNN POLITICAL COMMENTATOR: Probably not as much as people would think. The reality is, if you already have General Kelly, General McMaster, General Mattis, at very high levels of the administration. They have not exercised any restraint that anybody can see. So I think people should disabuse themselves of the notion that simply having a general walk into the White House into the highest levels of the administration is going to set everything right. I suspect that one thing that will change is that he is going to get an education. He, General Kelly, is going to get an education. He has spent most of the last couple decades of his life having people stand up and literally salute him when he walks in the room. That ain't going to happen anymore. He's going to be, I think, probably a little surprised at how people are inclined to, I think in White House parlance leak, from our point of view, simply sort of conduct a public dialogue and sort of have discussions broadly across the government and with the press. I don't -- I don't think we're going to see as much change as people would like to see.

JOHN AVLON, CNN POLITICAL ANALYST: Well, I'm going to push back on my friend a little bit, maybe the triumph of hope over experience. But look, the military members of this administration have been the most effective, in part because they've been working in concert, trying to contain the president.

Now chief of staff is not going to supplant the president's own chaos, his own lack of discipline. But Reince Priebus clearly didn't have the confidence of the president, and this chief of staff is a difficult job. You're not going to have, literally, Anthony Scaramucci reporting to this chief of staff. That seems to be a declaring problem.

The president's daughter and son-in-law don't really report to the chief of staff. But if anyone can make this work coherently, it's going to be a general working within the White House in concert with the other military members. Now, that raises other concerns, but Kelly has got a good reputation; and maybe he can get this administration working.

BERMAN: You know, John Avlon, to control this president, in case people were asleep for the last six days...

CAMEROTA: Or just forgotten.

BERMAN: Or just forgotten. Let us remind folks...

DAVID DRUCKER, CNN POLITICAL ANALYST: Six days? What about 48 hours?

BERMAN: Let's remind people what happened last week. Right? Let's walk people down memory lane.

On Monday, the president attacked the attorney general on Twitter and then he went to the Boy Scouts and gave a speech to the Boy Scouts later had to apologize before.

On Tuesday, he said he could be more presidential than any president but Lincoln; and he also attacked Jeff Sessions to the "Wall Street Journal." And he talked about him in the Rose Garden.

On Wednesday he tweeted new military policy, apparently without talking to the actual military of the United States of America. And that's when the new communications director, Anthony Scaramucci, started saying things about Reince Priebus behind his back. [06:05:04] On Thursday, this whole West Wing war went incredibly

public, with our friend Ryan Lizza printing words we cannot speak out loud and writing about things that humans cannot do.

And then on Friday -- on Friday, health care went down in the Senate, and the n his chief of staff got fired. Now, any one of these days...

CAMEROTA (REFERRING TO GRAPHIC): Are those Monopoly pieces?

BERMAN: They're bad monopoly pieces. Or maybe Clue, or maybe Clue, and someone is about to get whacked, because Reince Priebus did.

But David Drucker, any one of those days, enough. You know, a month's worth, a year's worth of problems in an administration; and they happened every day last week. There's a short-term problem for John Kelly as chief of staff right now. He's got to stop any of those things from happening.

DRUCKER: Like a yellow brick road to hell you just described there for this administration. Look, I think that both Errol and John make some good points about Kelly. There are two kinds of people that President Trump respects, people who have made a lot of money, made a lot of money, and generals.

And so Kelly comes in with an opportunity and a possibility of commanding the president's respect where Reince Priebus never could, because the president thinks political people are dopes. He just doesn't think they know anything and -- or are good for anything.

The problem is that it isn't Priebus' fault that he couldn't contain a president who won't be contained. Twitter, policy that veers left, right and center at any given time, for any given reason. Look at the six sides of the Obamacare issue that the president has been -- you know, on any given day.

And so I think the question here is not so much can Kelly bring order to the White House staff? I think he can. And I know from talking to Republicans that the president really likes John Kelly, that he has been consulting with him over the phone about things outside of his portfolio at DHS. And so they've developed a relationship.

But the real question here is will Donald Trump, will the president empower Kelly to bring order, and will he participate in that so that when Kushner or his daughter or Scaramucci walks into the Oval with a question and he says, "Hey, did you talk to my chief of staff about it?" And they'll say "No, I'm coming directly to you," will he say, "Turn around. Good to

see you. Go talk to the chief, let him bring it to me"? That's what's required here.

CAMEROTA: Yes, let's talk about Jeff Sessions's future. It will be very interesting to see what happens this morning at their first cabinet meeting, where they come face-to-face. And do you think, Errol, that this is all just one big sort of chess game where, now that John Kelly has been moved out of DHS, that that's a natural fit for Sessions and that that's where he'll be headed? JOHNS: There's some interesting commentary around that, the notion

being that Sessions gets moved to DHS as a way -- a less confrontational way of getting him out of the way, all as a prelude to trying to sort of stop the investigation, fire Mueller or some other kind of chaotic possibility.

I wouldn't put anything past this president when it comes to the Justice Department, when it comes to the probe. There's almost nothing, it seems, that sort of sways Donald Trump, although he goats in a lot of different ways on a lot of different issues. He's been straight as an arrow on this. He doesn't want the investigation. He doesn't want a Justice Department that's going to look into it.

BERMAN: You think actually -- Republicans are nervous about this. They don't want this to happen, and they think this is a possibility.

DRUCKER: Yes, they do. Look, I talked to them last week about the possibility of Sessions being fired or pushed out. And they were super concerned. It wasn't, "Hey, just kick him around. Stick him in a different office."

They're worried that pushing Sessions out of the A.G. post could be effective and where he belongs. It could be a prelude to going after Mueller. That would force them to get off the sidelines and confront the president. This is what they told me. And the signals they're sending is leave Sessions alone. And that's one of the big reasons they're worried about this.

AVLON: And this is also like idiot cunning, you know: "We'll move him over and not fire him and maybe nobody will notice." Like, everyone will notice, because it's really transparent what you're trying to do. You're trying to move him so you can fire Mueller. And the Senate's already said they've got a problem. In addition to the fact that it's a functional demotion in terms of the portfolio of power.

The Senate has been really clear about this from Chuck Grassley on down, that if you remove the A.G., we're not going to be falling all over ourselves for a confirmation. And those confirmations hearing, if they were to occur, would be incredibly tough. The president needs to recognize it.

They're setting up a constitutional crisis if they move down this path, one way or the other.

CAMEROTA: OK, last, health care. Where are we today, Errol, with health care?

LOUIS: If you talk to members of Congress, they've moved on. They're thinking about tax reform. They're, in some cases, in think, trying to sort of hunker down because some of their adversaries who managed to defeat their repeal effort have actually mounted a public campaign. Even after winning, they're going to hit the road. They're going to target some of the marginal congress members, that they think they they can sort of make this stick on. And they're going to go and say, "Why did you vote for repeal?" So there's a handful of members that are going to have a problem. The

rest, I think, are more than willing to move on. They're going to have, of course, a math problem, because it was supposed to be the savings from repeal that was going to fund the tax cuts that are central to their tax plan. So they're kind of stuck right now. But they are going to move ahead with tax reform.

[06:10:06] BERMAN: And it is a very real decision the president, Kellyanne Conway claims the president will make this week, which is whether to continue the subsidies to insure $7 billion that actually goes towards helping low-income people pay for their insurance, John Avlon. Do you think that the president really will take this money away?

AVLON: I mean, look, you know, the president's rhetoric has been let it fail on its own. If he were to take this money proactively away, this is an arsonist complaining about a fire problem. And it does run against the basest obligation on a president to -- to actually help people.

Let's not forget, I mean, this is the existing situation. A president shouldn't proactively make it worse to score political points. What's heartening is that there's a pushback in the House. There are 40 centrist members, both parties trying to find a reform package to at least keep the system solvent. That's the kind of thing that needs to be supported.

But the fact that the president is considering sort of pouring, you know, this sort of fuel on the fire is a sign of someone who's not thinking about the national interests as much as self-interests.

BERMAN: All right, guys. Stick around. We have two international crises confronting the president, the nuclear threat from North Korea and Russia retaliating against new U.S. sanctions. How will the president respond to these issues? We'll discuss that next.

(COMMERCIAL BREAK)

CAMEROTA: So Vice President Pence is addressing Russia's retaliation over the impending U.S. sanctions. Russian President Putin dealing a serious blow to America's diplomatic presence in Russia, cutting U.S. staff at diplomatic missions by more than half.

[06:15:07] CNN's Claire Sebastian is live in Moscow with more. What's the -- what are the latest developments, Claire?

CLAIRE SEBASTIAN, CNN CORRESPONDENT: Good morning, Alisyn.

Well, 755 people is the number the Russian president says will get cut from the U.S. diplomatic presence in Russia. Just a couple of key points that we just got clarified by the Kremlin in the last hour. One, that the U.S. gets to decide exactly who this affects and, two, that it will be diplomats, non-diplomats and it could include, as well, Russian staff hired by the U.S. mission here in Russia at the moment. So the U.S. State Department says it is assessing the impact of this

and it will see it will respond. But Russia says, if it does respond, it reserves the right to take countermeasures, something that the Russian president said he doesn't want to do at this moment. But the option is still on the table, Alisyn.

And as you say, further potentially inflaming tensions between the two sides this morning. Vice President Mike Pence is in Estonia right on Russia's doorstep, reassuring Eastern Europe and NATO that Russia [SIC] stands with them. He says that Russia is the biggest threat to the Baltic nation. It's an unpredictable neighbor. And he had this to say about relations with Russia.

(BEGIN VIDEO CLIP)

PENCE: We hoped for better days, for better relations with Russia. But recent diplomatic action taken by Moscow will not deter the commitment of the United States of America to our security, the security of our allies and the security of freedom-loving nations around the world.

(END VIDEO CLIP)

SEBASTIAN: Now Vice President Mike Pence also reaffirming that President Trump does intend to sign that sanctions bill. He has not done so yet. It won't affect Russia's position. They have already made their move, but it's certainly something they'll be watching closely, Alisyn and John.

BERMAN: Thank you very much. Want to bring back CNN political analyst John Avlon and David Drucker.

And joining us now, CNN political and national security analyst David Sanger. David with a great piece today in "The New York Times" today, helping us to understand, really, what's going on here.

And one of the big questions is why is Russia doing this now, David? Why is Vladimir Putin kicking out these U.S. personnel now and not, you know, last winter when Barack Obama, then president of the United States, first issued some of these types of sanctions?

DAVID SANGER, CNN POLITICAL AND NATIONAL SECURITY ANALYST: You know, it's a fascinating question, because you'll remember last winter he was urged by some in the incoming Trump administration not to overreact. And instead of throwing out diplomats, he invited the children of diplomats to come to a Kremlin Christmas party.

So what's changed? The main thing that's changed is Putin's calculus. I think he now recognizes that he is not going to get out of President Trump the kind of change that Mr. Trump talked about during the campaign, a better relationship. Not because Mr. Trump doesn't want it, but because Congress has now taken control of this with a mix of Democrats, who are angry about Russia's interference in the 2016 election, and Republicans, who I think worry that President Trump doesn't fully appreciate who he's dealing with here, and who overwhelmingly passed these sanctions even though the administration had made it clear that they believe this tied their hands.

BERMAN: So John Avlon, what are the real-life repercussions of this move by Russia to throw out 755 diplomatic staff?

AVLON: Well, I mean, it's cutting our diplomatic staff in more than half. But I think to David's point, this is the Russia administration recognizing they're not going to get the free hand that maybe they thought they were with a presidential candidate who refused to criticize Vladimir Putin.

But at the same time, that man is still president. And, you know, they're not going sort of, you know, to be the most extreme element they could in terms of pushback. We're going to need to see, now that the president has announced he's going to sign the sanction bills, what happens with the Russian properties, what happens on ancillary negotiations.

In the meantime, Vice President Pence is out there sounding like a traditional Republican, while Donald Trump is trying to do his best to not really antagonize the bear.

BERMAN: He didn't talk a whole heck of a lot about election meddling when he was standing on quarters (ph) there .

AVLON: Fair point.

BERMAN: He -- you know, he was taking a fair stance on Russia. And David Drucker, you know, there was a third entity in this relationship between, you know, President Trump and President Putin now in the United States, and that's Congress. And Congress has made it abundantly clear that the president does not have a free hand now in terms of Russia policy.

DRUCKER: I don't think it's possible to overstate how significant Congress's action is.

I was talking to Aaron David Miller. He reminded me not since 1986, when the Congress overrode President Reagan on the South African sanctions bill, has a Congress rebuked a president on a matter of foreign policy in this matter.

Ad I was talking to Tom Cole last week for a story I wrote about this Republican from Oklahoma, and he said this bill is a direct shot at Vladimir Putin to let him know that he's not just dealing with President Trump when it comes to matters of Russia. He's now dealing with the United States Congress.

[06:20:13] Republicans do not trust President Trump when it comes to negotiating and dealing with Vladimir Putin. That's why they passed the sanctions bill that Putin is reacting to so strongly. President Trump does not have a free hand to negotiate or waive sanctions away without congressional approval. That is a huge deal.

Now ironically, this might be the kind of thing that Putin actually respects, and over time it might help us get a handle on the U.S.- Russia relationship. The Russian president has played President Bill Clinton, President George W. Bush, President Barack Obama, and Republicans in Congress have had enough of it. Democrats have also had enough of it and are sort of born-again Russia hawks. But this is a very big deal.

CAMEROTA: All right. David Sanger, let's talk about North Korea. They had yet another ballistic missile test this weekend, and President Trump seems to be quite frustrated, particularly with China.

He tweeted this: "I am very disappointed in China. Our foolish past leaders have allowed them to make hundreds of billions of dollars a year in trade, yet they do nothing for us with North Korea, just talk. We will no longer allow this to continue. China could easily solve this problem."

So he had, as you know, had a good relationship with President Xi. Where are we now?

SANGER: Well, Alisyn, a few things. First, this missile test was something of a breakthrough. For the first time, they demonstrated a range -- this missile went very high up into space and then back down. If you flattened it out, it demonstrated a range that could reach Los Angeles and beyond.

And that's the point that most American presidents, the past four American presidents, have said the U.S. would not tolerate.

Secondly, I think that President Trump himself acknowledged a few months ago that it's a lot more complicated than he thought during the company and that China's influence over North Korea is not quite the on-off switch he might have thought.

And threatening the Chinese on trade basis to do more ignores the fact that the Chinese have a lot they can do back to us on a trade basis.

The truth of the matter is, China is going to act in China's interests here. And their overwhelming interest is still not to see North Korea collapse and have the U.S. and South Korea up on its borders.

I was talking over the weekend at a conference with Henry Kissinger, the legendary former secretary of state, who makes the point that, until we're ready to assure the Chinese that they will get the United States out of the Korean Peninsula after a North Korean collapse, that there would be very little U.S. presence, they're not likely to go change their view. And so something radical is going to have to change here. Just announcing new sanctions for the 15th time isn't going to do it.

BERMAN: Look, one of the radical things that's changed here is that North Korea has this capability. I mean, North Korea has tested nuclear weapons; and now they're testing ballistic missiles and they seem to be working. To a certain extent, they have succeeded, John Avlon. They have gone further than past administrations, the current administration has said they would allow them to go and they're there.

AVLON: They continue to advance. But this administration actually deserves some credit, I think, for being more proactive about North Korea than some in the past. That said, we are at a point that is unacceptable.

And China's largest interest is regional stability. Right? So you know, to David and apparently Henry Kissinger's point, if they need to make assurances to China that, if the North Korean regime falls, that it won't be further destabilized in their interest, that's fine. But the administration is definitely facing a strong message this weekend that they're going to try to try to internationalizing the problem, that it's not the U.S.'s to deal with alone but that this has hit a point of unacceptable progress towards...

BERMAN: Nikki Haley doesn't see the point of bringing it up in the Security Council. No emergency meeting in the Security Council, because she's not sure that that will do anything else right now, which was interesting.

CAMEROTA: It does just feel so intractable.

DRUCKER: Yes, well, part of the problem is that it's not in China's interests to help the United States put to bed a very thorny problem. China looks -- China obviously sees the United States as a competitor for hegemony in the Asia Pacific. So any time that we are tied down and distracted by dealing with North Korea is a good day for them. And I think the question here is has the president realized that he is not going to be able to use Xi to stop and fix this problem?

CAMEROTA: Gentlemen, thank you for laying it all out for us. Great to talk to you this morning.

More international news, Venezuelan President Nicolas Maduro claiming victory after a bloody and controversial election. Critics call the whole process a sham. How will President Trump respond to this? That's next.

(COMMERCIAL BREAK)

[06:29:01] CAMEROTA: We need to tell you about the developing story out of Venezuela. Venezuelan President Nicolas Maduro declaring victory after voters gave his special assembly the green light. This is drawing swift condemnation from the opposition and the United States.

CNN's Leyla Santiago is live in Caracas with the latest. What's happening there, Layla?

LEYLA SANTIAGO, CNN CORRESPONDENT: Alisyn, Venezuela is waking up to what is sure to be a day of uncertainty, given the last 24 hours, given the last week, the last few months as violence has taken over on the streets from protests from the opposition.

Now, yesterday at the election polls, a lot of voters, mostly government supporters, came out and moved forward with this new assembly that could rewrite the constitution and could give President Nicolas Maduro more power. And that is something that protesters and demonstrators are speaking out against.

And as we were on the streets yesterday and we saw the violence unfold, in some cases, these were young children protesting. I talked to a 12-year-old, as he was putting together a Molotov cocktail, speak out against the government and its current state of being.