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General John Kelly Becomes White House Chief of Staff; Russia Orders U.S. to Cut Diplomatic Staff in Moscow by Half; Pence: "We Hope For Better Days" With Russia; President Trump: "Let Obamacare Implode"; Trump Taps General John Kelly To Be Chief Of Staff. Aired 8- 8:30a ET

Aired July 31, 2017 - 08:00   ET

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

[08:00:00] UNIDENTIFIED MALE: Russia has ordered the U.S. to cut its diplomatic staff by more than half in retaliation for news U.S. sanctions.

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: Good morning, everyone. Welcome to your NEW DAY. It is Monday, July 31st, 8:00 in the east. Chris is off this morning. John Berman joins me. Great to have you here.

JOHN BERMAN, CNN ANCHOR: Good to be here.

CAMEROTA: OK, so President Trump hoping to turn the tide after one of the most turbulent weeks of his presidency. In about 90 minutes the president's new chief of staff General Kelly will be sworn in. This comes as the president will be face-to-face also this morning with Jeff Sessions for the first time since the president launched repeated attacks on his own attorney general.

BERMAN: Big morning, right. The president also facing several foreign policy threats. Russian leader Vladimir Putin ordering the U.S. to cut its diplomatic staff in his country by more than half. This is in retaliation for new sanctions. While the president is slamming China for not doing enough about North Korea. We're covering all of this for you this morning. L

et's begin with CNN's Sara Murray live at the White House. Good morning, Sara.

SARA MURRAY, CNN CORRESPONDENT: Good morning, John. John Kelly starts his first day in a very big job today. He begins with being sworn in here at the White House. And of course that will be followed by a cabinet meeting. But the question on the top of everyone's minds is does Kelly have what it takes to bring order to what has become a very wild West Wing.

(BEGIN VIDEOTAPE)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Reince is a good man. John Kelly will do a fantastic job.

MURRAY: President Trump turning to retired four-star General John Kelly for help rebooting a stalled White House agenda and reining in a chaotic West Wing, that 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 MANAGER: 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 Republican senators who voted against repeal, says Trump's threats wouldn't change her vote.

SEN. SUSAN COLLINS, (R) MAINE: 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 in addition to the domestic agenda and organizational issues in the West Wing, John Kelly is starting in this job as the administration confronts a number of foreign policy challenges, including this escalating aggression from North Korea but also the U.S. relationship with Russia. We'll still waiting for word from the White House on when President Trump is actually going to be signing this Russia sanctions bill. Back to you, guys.

CAMEROTA: OK, Sara, thank you so much. Bring us all updates as soon as you get them.

Meanwhile, we want to talk with our political panel. We have CNN political analyst John Avlon, CNN senior political analyst Ron Brownstein, and White House correspondent from "Bloomberg News" Margaret Talev. Great to see all of you.

So John Avlon, normally a chief of staff is tasked with making the trains run on time and everything is sort of funneled through the chief of staff. The chief of staff figures out what's important to tell the president. We have no indication what John Kelly's style will be like other than that he was a very effective general, and whether or not there's still people who will be able to go around John Kelly to get to the president, such as Anthony Scaramucci.

JOHN AVLON, CNN POLITICAL ANALYST: Yes, that is the key question. But as you say, the president likes military men. In fact, the national security apparatus that has surrounded him has been the most competent and effective of his administration. And so there's some hope that that background that John Kelly brings, his experience working for really respected bipartisan leaders like Leon Panetta and Robert Gates, will bring some order and discipline to this White House.

[08:05:08] But the key questions are, can Scaramucci, can his son-in- law keep bypassing the chief of staff? Or will the president concede for the good of his administration as well as the country that we need to impose some structure and order on this administration? Trump is going to Trump people, but Kelly at least is a shot at a reset, which would be good for the administration.

BERMAN: But, Ron Brownstein, look, we know that generals in the U.S. military, they are political in the sense that there are political machinations that go in the military. It doesn't necessarily mean they are steeped in politics, particularly the politics of Washington and the politics of Congress. Do we know whether General John Kelly is the type of person that can make things happen in that city?

RON BROWNSTEIN, CNN SENIOR POLITICAL ANALYST: It's going to be very difficult for him, not because of competence, but just because of experience. Look, the job of chief of staff is a tough job under the best of circumstances, and these are obviously not the best of circumstances. Essentially it has two components. John talked about one of them, the chief operating officer of the White House. Part of the job is building a structure in the administration to try to create a stable, predictable process in which policy can get made. And by the way, historically, that's one way to reduce leaks.

Everybody feels they are getting a fair hearing usually you have less leaks in an administration.

But the other part of the job is much more of almost a prime minister job. It's about organizing support for the president's agenda in Congress and beyond Congress, orchestrating the interest groups and orchestrating all of the forces that you try to bring to bear to advance what you want to do as president. And I think the gold standard on that has been, obviously I think James Baker was probably the most effective at that for Ronald Reagan. It's a lot to ask of someone who has spent their life in the military to have that kind of feel. It's unlikely that he is going to have that kind of intuitive understanding of the legislative and political process to really do that on his own.

CAMEROTA: Margaret, how do you see it? What do you think that John Kelly can do that Reince Priebus could not do?

MARGARET TALEV, WHITE HOUSE CORRESPONDENT, BLOOMBERG NEWS: Well, for one, he comes in from a greater position of strength. It's not like he wanted the job or was campaigning for the job. In fact he reportedly turned it down several times. So you would think he would be able to set some of the terms of his entre. And everyone I've talked to from across different sectors of the Trump White House, whether it's the globalist camp or the base nationalist camp or the establishment camp all say he starts not only with their respect but with the president's respect and that that's really important.

BERMAN: That's a lot. That's not nothing. That is a lot to come in with. The question is, how long does it last? The question is, is this the first day of the rest of their lives or is it Monday, right?

(LAUGHTER)

BERMAN: And we don't fully know the answer to that. John Avlon, what we do have this morning is we have a cabinet meeting.

AVLON: Right.

BERMAN: We have this meeting where after the president swears in, or after the chief of staff is sworn in, he is going to sit around the table with his full cabinet. It's going to be the first time that he talks with or faces Jeff Sessions, his attorney general, since he began the public campaign of humiliation. How is what we are going to see today -- what are you looking for to tell whether or not they've turned over a new leaf in this White House?

AVLON: I'm laughing because it's so absurd we're in a situation where the public campaign of humiliation is like, well, sure, that happened. Look, hopefully, we're beyond the dear leader affirmations of the previous cabinet meeting, and the question will be Trump actually does not like direct negative confrontation despite his "you're fired" fame. So the question is whether he will go out of his way to try to make Sessions feel comfortable, whether he will be able to resist a little bit of towel snapping, and just how obsequious Sessions is because this is awkward, as Jon Stewart used to say. And this is like the worst, as you said earlier, the worst Thanksgiving meal you've ever had could play out in front of the cameras this morning.

CAMEROTA: Ron Brownstein, do you think that Jeff Sessions as of this morning is long for his job?

BROWNSTEIN: First, to add a point to John's, which is when you look at the overall trajectory of the Trump administration, obviously they're having enormous trouble moving their legislative agenda. They're surrounded in scandal and chaos.

But in the executive branch they are significantly changing policy. They have put people, whether it was General Kelly at DHS on deportation and, you know, enforcement of the border, whether it's Jeff Sessions at attorney general on rethinking the way the oversight of local police departments and also immigration issues, or certainly Scott Pruitt at EPA and the interior secretary on public lands, that is where they're having their most success at significantly redirecting policy in a highly controversial way. So in that sense, using the executive levers, they've been much more effective at dealing with congress.

Look, I think unlike Paul Ryan, who basically shrugged his shoulders at the idea of replacing Jeff Sessions, the Senate Republicans have laid down a pretty clear marker. The chair of the Senate Judiciary Committee saying, look, I am not planning on holding hearings on a replacement.

[08:10:02] Donald Trump has crossed many red lines before so you can't rule it out, but I think they have put down about as clear a marker as they can that says do not go down this path. And I think that will at least give others in the administration second thoughts about whether they want to precipitate that kind of conflict when they want to begin now the very complex process of tax reform.

BERMAN: Margaret, I think you heard this weekend we were talking about some the metaphors that was going out of the West Wing, which is it will be repaired, actual physical, structural repairs going on in the White House over the next few weeks. One of them is for HBAC. So the idea that maybe the heated rhetoric of this administration might get cooled off, right? There is that going on. To wit, I will say on Saturday, the president tweeted 13 times, including a whole lot about Senate changes that wouldn't have actually helped health care get through. Yesterday he barely wrote anything at all on Twitter, and this morning nothing. This must be a clear sign, Margaret, that he has completely changed during John Kelly's administration.

(LAUGHTER)

TALEV: Or everything could change again by lunchtime. But I think overwhelmingly the idea behind today's cabinet meeting is to show unity, to show that reset button. It is not to, you know, highlight differences with Jeff Sessions. It is to say we've got a new chief of staff in charge and we want everyone to give him your support and to coordinate. And, look, it's August. People both in Congress and in the White

House, hopefully the president, begin to take some time off for vacation. They really would like for the next few days to send a very clear, unified, consistent narrative that suggests that this idea of a reset really is possible.

CAMEROTA: So last, John, about health care, now what. Now where are we?

AVLON: The president's sort of tweet storm on Sunday was absurd and frustrating to many members of the Senate. One of Mitch McConnell's former staffers said the real problem is someone keeps telling the president to go on these Quixotic quests.

But the president kept saying, OK, go to 51 votes. Destroy the filibuster, seemingly ignoring the fact that it was a 51 vote standard they were going for and failed this time around.

The White House continues to say that this should be the Senate's first order of business. The problem is separation of powers. The Senate has other ideas. They're going to vote on a judge today. They don't seem to have a second pass coming out of the Senate on health care. And the administration itself signaled last week that they wanted to move on to tax reform. So it's incoherence. But the Senate is going to pursue its own agenda and the world's leading expert on that is Mitch McConnell, not Donald Trump.

BERMAN: Ron, how nervous are Republicans in general, right now, the White House issues, how nervous is it making them?

BROWNSTEIN: I think it makes them very nervous because, look, they are -- when parties have tough midterms, two things usually happen. One is that independents turn against them, and right now Donald Trump's approval rating among independents is in the mid-30s. The other thing that happens is that their base usually is depressed. You have this dynamic, particularly in unified government, where the opposition party becomes outraged. We saw this in '94, 2010, and 2014 -- 2010, excuse me. But the party that's in control feels they're not getting enough done. They're not meeting their promises.

And that is exactly the kind of toxic combination that they are sailing toward at this moment where you have Democrats talking about resistance and see Trump as a threat to everything they hold dear, and Republicans are saying when are we going to get anything done, ignoring to some extent the executive branch actions I talked about before? So yes, they are very nervous.

And in particular I think, John, one other point, whatever role President Trump played on the inside game on health care, he was a complete failure at the outside game. He did not provide any air covering. He did not build any public support. This bill faced enormous opposition, even mixed to negative reaction from key Republican constituents, blue collar and older whites. So the question of whether he can effectively provide them air cover and sell what they are trying to do is very much an open one heading into tax reform. BERMAN: Guys, thanks, very, very much. Again, in the next two hours

we will see this cabinet meeting and see what it all feels like. Appreciate it.

Vice President Mike Pence is in the Baltics taking on Russia's retaliation on new U.S. sanctions. Russian President Vladimir Putin has ordered the U.S. to cut its staff in Moscow by half.

CNN's Clare Sebastian live in Moscow with more. Clare, what are you learning?

CLARE SEBASTIAN, CNN CORRESPONDENT: Yes, John, 755 people, that is the number that Russia wants to cut from the U.S. diplomatic presence in Russia. That is a big number. However, you look at it, especially considering when the Obama administration imposed sanctions on Russia in December, it expelled 35 diplomats.

There's a couple of key differences there. We just got clarification from the Kremlin. The U.S. gets to decide who is effected, who are the 755 people they cut, diplomats, non-diplomats, and it could also include local Russian staff. So those are two potentially mitigating factors. But the U.S. State Department says it is assessing the impact of this and how it might respond. And if it does respond, you can be sure Russia might hit back. They say they reserve the right to do so, to impose countermeasures.

[08:15:07] Although President Putin says he doesn't want to do that at this point. He thinks it would harm Russia and international relations.

But another potential irritant as you said, today, Vice President Mike Pence is in Estonia, affirming the U.S.'s commitment to NATO and Eastern Europe in the face of Russian aggressions and had this to say about relations with Russia.

(BEGIN VIDEO CLIP)

MIKE PENCE, VICE PRESIDENT OF THE UNITED STATES: We hope for better days, for better relations with Russia. 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 is also affirming that President Trump will sign that sanctions bill. It is on his desk, having passed both houses of Congress. That is something that will be watched closely here in Moscow. It won't change Russia's position because they didn't even wait for the president to sign it before retaliating -- Alisyn.

ALISYN CAMEROTA, CNN ANCHOR: That's right. Very interesting timing. Claire Sebastian, thank you for the reporting.

So, Senate leaders say they will move on and turn the page after last week's health care defeat. So, why is President Trump making a big push on it again? That's next.

(COMMERCIAL BREAK)

[08:20:04]

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES OF AMERICA: You know, I said from the beginning, let Obamacare implode and then do it. I turned out to be right. Let Obamacare implode.

(END VIDEO CLIP)

JOHN BERMAN, CNN ANCHOR: All right, President Trump vowing he will let Obamacare implode after last week's defeat in the Senate to repeal and replace Obamacare. Moments ago, the president wrote some more.

In a statement this morning he said, "If Obamacare is hurting people, and it is, why should it hurt the insurance companies and why should Congress not be paying what the public pays?"

Let's discuss. Joining us now, Republican Congressman Charlie Dent of Pennsylvania. He was one of the few Republicans in the House to oppose the House bill to repeal and replace Obamacare.

Congressman, thank you for being with us. The president seems to be talking about this morning in the statement he just put out is withholding the subsidies to insurance companies, some $7 billion that goes to insurance companies so that they can provide insurance to low- income Americans, the people just above the poverty line. Do you think it would be a good idea to withhold that money?

REP. CHARLIE DENT (R), PENNSYLVANIA: No, I do not, John. First, withholding that money would ultimately hurt a lot of people making between 150, 200 percent of the poverty level trying to afford insurance. So, I think that would be a mistake.

But let me tell you what is happening actually. Just this morning, a group of members of Congress, problem solver's caucus just released a bipartisan plan, 43 Republicans and Democrats released a plan on how to move forward, you know, bipartisan, incremental change to the health care system.

Part that have proposal is stabilize the individual market by ensuring that the cost sharing reduction payments are going to be brought under the appropriations process, decree ought a stability fund.

We make reforms to the employer mandate, repeal the medical device tax, and allow states to innovate with respect to the exchanges and regional compacts. So, we have a plan to move forward and it was just released a few moments ago.

BERMAN: I think this type of bipartisan discussion is exactly what voters are looking for. In some ways what has been missing this time around and, in some ways, what has been missing all along when we're talking about health care reform in the United States of America. What does it do to your efforts when you have the president writing the types of things that he is then, suggesting to withhold this money, which you say will hurt low-income Americans, or threatening your own health insurance as a member of Congress also. What does that do to the discussion?

DENT: Well, I believe the president wants a health care bill on his desk. I think he has been a little less concerned about the specifics. So, I think it's important for us to let us do our work in Congress.

Like I said, we have this bipartisan proposal. It's a good one. It's a good start. It's incremental. I mean, we Republicans get some things, real relief on the employer mandate, changing the threshold from 50 to 500 employees and returning back to a 40-hour workweek, repeal the medical device tax.

Democrats get things, too, on cost-sharing reduction payments, stability fund. So, this is progress. There are parallel efforts ongoing both in the House and the Senate on a bipartisan reform.

The mistake that the Democrats made with Obamacare is they muscled the law through on a partisan basis. We shouldn't make the same mistake as Republicans. We have an opportunity to strike right now.

BERMAN: I don't want to burden you with the Senate's problems. Lord knows you have enough issues in the House yourself right now. One of the things the president has been saying is that the Senate should change the rules so they can pass things without 60 votes, go down to 51.

Health care went down to the Senate on 51 votes. It gets to the point, you know, do you think that the president fundamentally understands the process that's in play right now?

DENT: Well, it's not only the president who talks about changing the Senate filibuster rules. There are plenty of my colleagues in the House who talk about it. I always tell my colleagues, if you want to change the Senate rules, there's a way to do it.

Announce your candidacy, raise a gazillion dollars, get yourself elected and you vote to change the rules. They're not going to change the rules. We just have to accept that, that reality. We can complain about the Senate all we want.

If the Senate ever came over to the House and told us to change our rules we would consider that a human rights violation. We do it regularly to the Senate. So, I think it's a discussion that is not worth having at this point.

That's a matter for the Senate to decide. We have to just deal with the rules the way they are, not as we wish they would be.

BERMAN: General John Kelly will be sworn in as White House chief of staff in about an hour. What do you want to see changed inside the White House starting now? DENT: Well, General Kelly is an excellent selection, a good man. I hope that General Kelly is fully empowered by the White House. He needs to be empowered to do what must be done. I hope he can bring that order, discipline, and focus to the White House operations because, obviously, it's been very chaotic and dysfunctional, particularly as of late.

I hope General Kelly has real authority and the president has to give him that authority and then respect that authority. I hope that happens. Again, Reince Priebus, a good man, but he never stood a chance. He was never fully empowered. I hope that all changes now.

[08:25:13] BERMAN: Chaotic and dysfunctional, what do you mean?

DENT: Well, just the Scaramucci interview last week, there's an example. The tweets that go out all the time on things that are, frankly, not very important. I mean, I think -- the constant infighting, what appears to be (inaudible) the factionalism within the White House.

You know, there are various camps there. It seems like they're all competing for power. It's pretty obvious to all of us that there's a fair amount of dysfunction. I expect a certain amount of dysfunction in government. I've been around long enough, but they're taking the fun out of dysfunction right now. We have to get back to a better spot there.

BERMAN: Do you have faith? I mean, when you go to sleep at night, do you feel like this White House, you know, what happens starting today with General Kelly going forward aside, do you feel safe? Do you feel like this White House has the best interests of your constituents at heart?

Look, I think they want to do the right thing for the American people. I do. I believe that, you know, there are a lot of good people in the administration, General Mattis, Tillerson, McMaster and Kelly and others.

But you know, I guess, when we get back to this whole issue of dysfunction, take the transgender issue. You know, if Secretary Mattis had asked us not to pursue that issue at this time while he was conducting his review, then a tweet came out that basically appeared to me undermining or contradicting what the Defense Department had been telling us as members of Congress. That's what I'm talking about when I see this instability and dysfunction.

So, there is a lot of good people in the White House. Lot of good people spread throughout the government that they've appointed, but I think they need a much more clear chain of command and somebody who is empowered to bring order and discipline and focus to this administration.

BERMAN: We will see if that starts to happen about 9:30 today. Congressman Charlie Dent of Pennsylvania, thanks so much for being with us.

DENT: Thank you, John.

CAMEROTA: OK, coming up, we'll get the other side of the Democratic lawmaker next. What's their plan for health care?

(COMMERCIAL BREAK)