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Tillerson: Diplomacy Will Continue 'Until First Bomb Drops'; Trump & McConnell to Meet after Bannon Declares War; U.S., South Korea Conduct Joint Military Exercises. Aired 7-7:30a ET

Aired October 16, 2017 - 07:00   ET

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

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SEN. LINDSEY GRAHAM (R), SOUTH CAROLINA: If we don't cut taxes, then we're going to lose across the board in the House 2018.

[07:00:42] CHRIS CUOMO, CNN ANCHOR: President Trump meeting with Mitch McConnell Republicans remain desperate for a legislative win.

UNIDENTIFIED MALE: He is literally setting the entire health care system on fire just because Congress won't pass a repeal deal.

SEN. SUSAN COLLINS (R), MAINE: If they can't afford their deductible, then their insurance is pretty much useless.

GOV. JOHN KASICH (R), OHIO: What are they doing? Do they understand the impact that this has on families?

GRAHAM: He's decided not to tear it up. He's decided to decertify, which I think he's right to do.

UNIDENTIFIED MALE: That puts us in a very weak diplomatic situation.

NIKKI HALEY, U.S. AMBASSADOR TO U.N.: What we're saying now with Iran is don't let it become the next North Korea.

REX TILLERSON, U.S. SECRETARY OF STATE: It is made clear to me that diplomatic efforts will continue until the first bomb drops.

(END VIDEOTAPE)

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

CUOMO: Good morning. Welcome to your NEW DAY. Alisyn is home. Poppy Harlow here. And once again you've come, and the news comes with you.

Big headline. In just hours, President Trump is going to be meeting face-to-face with Mitch McConnell, the Senate majority leader, of course. Now, he is also the man that the president has attacked repeatedly, blaming McConnell for the Senate's failure to repeal Obamacare. What a lunch this will be.

And at the same time that McConnell is meeting with the president, he's getting beaten up by one of the president's pals, Steve Bannon. The alt-right supporter saying that he declares war on McConnell and the GOP establishment. The partisan battle over health care now raising the specter of a government shutdown.

POPPY HARLOW, CNN ANCHOR: Meantime, Secretary of State Rex Tillerson, another frequent target of the president, declaring the U.S. will continue diplomatic efforts with North Korea, quote, "until the first bomb drops." Those words in a new round of U.S. South Korean military drills increasing tension with Pyongyang.

We have it all covered. Let's go to the White House and begin there with Joe Johns this morning.

Good morning, Joe.

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

The significance of this is an attempt by the leaders to get on the same page. There's been a lot of public sniping between key members of the Republican Party on Capitol Hill, especially in the Senate, especially the Senate majority leader, Mitch McConnell.

The president and the leader talked on the phone this weekend. They're going to sit down for lunch today. The vice president is expected to be there. Tax reform hangs in the balance. If they're going the get that done, they certainly need to try to move a budget by this week.

(BEGIN VIDEOTAPE)

JOHNS (voice-over): President Trump and Senate Majority Leader Mitch McConnell meeting face-to-face today after months of growing tension. Both leaders desperate for a legislative win, set to chart the path forward on key issues like health care and tax reform.

UNIDENTIFIED MALE: Are you going to get tax reform done?

GRAHAM: Yes. If we don't, we're dead.

JOHNS: The president also cozying up to two former rivals, inviting senators Lindsey Graham and Rand Paul to play golf over the weekend.

SEN. RAND PAUL (R), KENTUCKY: He's a better golfer than I am.

JOHNS: But despite these warming relations, growing signs of deep divisions within the Republican Party.

STEVE BANNON, BREITBART MEDIA: Mitch, the donors -- the donors are not happy. They've all left you. We've cut your oxygen off, Mitch.

JOHNS: President Trump's former chief strategist, Steve Bannon, attacking Mitch McConnell by name this weekend and declaring war on the GOP establishment.

BANNON: This is not my war. This is our war. The establishment started it. But I will tell you one thing: you all are going to finish it. JOHNS: This as Republican Senator Susan Collins, a key "no" vote on

health care, criticized the president's move to kill subsidies benefiting poor Americans.

SEN. SUSAN COLLINS (R), MAINE: What the president is doing is affecting the ability of vulnerable people to receive health care right now.

JOHNS: Secretary of State Rex Tillerson addressing his own rocky relationship with the president on CNN's "State of the Union."

JAKE TAPPER, CNN ANCHOR: Did you call him a moron?

REX TILLERSON, U.S. SECRETARY OF STATE: Jake, as I indicated earlier, when I was asked about that, I'm not going to deal with that kind of petty stuff, and I'm just not going to dignify the question.

JOHNS: Refusing to answer when asked repeatedly if he called the president a moron before pushing back against comments from Republican Senator Bob Corker that the president is trying to publicly castrate him.

TILLERSON: I checked. I'm fully intact. This is an unconventional president. He uses unconventional communication tools. He uses unconventional techniques to motivate change.

JOHNS: Tillerson also defending the president's decision to decertify the Iran deal and the administration's strategy toward North Korea.

[07:05:06] TILLERSON: The president has also made clear to me that he wants this solved diplomatically. He's not seeking to go to war. Those diplomatic efforts will continue until the first bomb drops.

(END VIDEOTAPE)

JOHNS: The president is expected to meet with his cabinet today, the first time since they got together at Camp David last month. Then the president is expected to turn his attention to what could be another divided statewide race in a southern state. That would be South Carolina. He's going to be attending a fund-raiser for the governor there who could face a challenge with two other Republicans on the primary ticket.

The president, of course, looking to right the problem he had back with Alabama where he picked the wrong candidate.

Back to you.

CUOMO: Joe Johns, thanks for getting us off to a good start this Monday. Let's discuss.

CNN political analysts John Avlon and Karoun Demirjian. Big panel. Big panel. Good to have you both here.

All right. So let's take a look. Let's tick through a whole bunch of hot items that we have here. Deal-making time. Can they get it done on health care? Can they get it done on taxes? What happens at this lunch today with the president and the Senate majority leader? Could this be the beginning of a better tomorrow?

JOHN AVLON, CNN POLITICAL ANALYST: The beginning of a better tomorrow.

CUOMO: You like it. You can have it.

AVLON: I like it. Why not. Look, there's a lot of bad blood between McConnell and Trump, but this is a marriage of necessity.

This week matters. They need to get a budget through if there's prayer for tax reform. Let's put health care to the side here. Because you know, we're going to go on round 66 or something like that for repeal and replace.

But tax reform is what the market's depending on. It is what the Republicans are pinning their hopes on for the midterm elections. But to get to that, you've got to get budget first. Trump and McConnell, there may be bad blood, but they've got to find a way to get along to get this bill done.

HARLOW: They do have to find a way to get along. Because of necessity has not actually resulted so far, and as we've seen so far in this administration, on actuality playing out, on it getting done for the American people. What are your -- what are your -- what's your over/under on this one, after the lunch today?

KAROUN DEMIRJIAN, CNN POLITICAL ANALYST: I mean, look, there's a numbers game that has to be played behind McConnell to get the entire GOP on board with anything to have any shot of actually getting the budget through they need as a first step.

And then, of course, there's the question of, you know, is Trump going to be consistent in whatever he and McConnell agree on. Because this is a relationship that cannot seen to be reset, because the reset keeps resetting when the president gets frustrated with somebody who's in whatever corner of the GOP coalition in Congress is. He lashes out on Twitter. Sometimes it's McConnell. Sometimes it's another key player.

And for McConnell to be able to keep those numbers together, he's got to be able to control -- to control the atmosphere and the environment. And we know that he cannot, because the president chooses to do what he chooses to do. We don't know. An agreement today may not be an agreement a week from now.

CUOMO: Karoun, I've got a quick follow up for you on that. You know, that's an interesting set of optics that you're giving us. Because what we often hear is that they dismiss the president's style or lack thereof, and they just stick with their own agenda.

But you're saying that it is part of the challenge for McConnell that his own numbers, hear what the president says; here's the attacks; here's whatever it is that comes on his Twitter feed. And that it is impacting their numbers? DEMIRJIAN: Well, I think it could, right? Think about people like

Bob Corker, for example, who was the big story last week when he made comments about Trump.

CUOMO: Right.

DEMIRJIAN: Now, you know, will it necessarily affect his plans to try to carry through this legislative package on Iran? Not necessarily.

CUOMO: Right.

DEMIRJIAN: Might it affect how willing he is to play ball on tax reform? He was already kind of sitting on the fence about that one. We don't know.

So that's the thing. For a lot of lawmakers, is it going to make them completely change whatever their intention and conviction was? And these fears? No. But health care reform, tax reform is not a very straight, cut-and-dry thing. I think these are massive packages. There are elements that the people do not like even when they decide to vote for the bill, to take one for the team.

And it kind of makes -- it takes a little bit of the loyalty factor away from some of these members. It's just a much more -- they have a decision to make, whereas it may not have been such an open decision for a lot of these members before.

But again, it depends. And if Trump is able to kind of sit on his hands for another few weeks to get some of these things through, then it's a lot more advantageous field for Mitch McConnell to be able to make the deals he has to and count the votes he's got without having to worry about the sand under his feet changing.

HARLOW: I'm picturing the president sitting on his hands and not tweeting.

CUOMO: Yes, which...

HARLOW: That's not going to happen. But John Avlon, who's not going to be at this lunch is Steve Bannon. And he would make it a whole lot more interesting. So interesting, what he said about Mitch McConnell over the weekend, we know he's been talking to the president. He said this is war on Mitch McConnell here. So how much do you think that narrative is influencing the president heading into today?

AVLON: If Donald Trump is taking a side shot at Steve Bannon before he goes into this meeting, this meeting is not going to go terribly well.

[07:10:03] You know, Bannon is a -- is a colorful character in terms of spirit animal of this administration, outside as well as within.

But the speech he gave this weekend, I mean, he literally declares war on the GOP.

HARLOW: That's the word. AVLON: and the word "establishment" is sort of meaningless. Let's

talk about the responsible governing class of the Republican Party, as opposed to those people who want to burn it all down and then build something new, maybe, after it's done. Because when declaring war on Paul Ryan, which Breitbart makes a, you know, hobby of doing, on Mitch McConnell. That's directly contrary to what the president needs to do this week.

Karoun talked about the importance of consistency. This is not a quality associated with President Trump. It's definitely not a quality associated with Steve Bannon. But the reality is both parties are not only deeply polarized between themselves. They're deeply divided within themselves.

CUOMO: Right.

AVLON: This GOP civil war is hitting an advanced stage when the president's chief strategist is declaring war against the leadership when they're tied to the majority.

CUOMO: And also, let's not forget: Bannon is just noise playing to a captive audience of alt-right enthusiasts. Unless -- unless Smerconish was right, Karoun, in the last hour. Smerconish was saying, "I'm not so sure that Bannon's not playing ball with Trump on some level, that these attacks on the establishment are a little bit of a proxy war.

I'm not sure. Because I don't know it. I don't have it in that strong a way. But it is some cause for speculation. Let me ask you something, though, Karoun. Rex Tillerson, he goes out on the show this morning. He does not like to do this. That means he's being put out to defend.

He will not answer the question about whether or not he called the president an effing moron.

AVLON: He's answered the question, because he keeps not answering the question.

CUOMO: Well, look, he can say -- he says he's going to deal with the pettiness. He also says he has not been made a gelding, as Jake put it very mildly for him. Let's play that piece of sound.

(BEGIN VIDEO CLIP)

JAKE TAPPER, CNN ANCHOR: You're a cattle -- you have a cattle ranch. You don't want to say anything about the senator calling -- suggesting you've been gelded before the world and it's not anything that bothers you?

TILLERSON: I've checked. I'm fully intact.

(END VIDEO CLIP)

CUOMO: Karoun, for me, that answer works. It's much more satisfying in terms of whether or not he's going to answer the question than on the moron thing. But what do you think the optics are? We know that he's only out there, because he's being told to be out there. He's being told to showing a unified front.

DEMIRJIAN: Yes. I mean, he -- he's trying to make -- the theme of this joke has come up so much in the past year now. It's a little bit odd to be talking about.

CUOMO: I feel for you, Karoun. It's tough. It's tough material.

DEMIRJIAN: But -- no, look, I mean, he's definitely trotting him out. He's definitely trying to put a lid on everything. And it's interesting that it's happening right after the president makes his Iran announcement, because they're trying to show some unity here. Of course, there's not, and of course, Tillerson doesn't want to out and out lie about what it seems to report. And people have reported what he has said. So he's not denying it. But he's trying to sort of deflect attention.

But at the same time, everything he is saying right now about, you know, diplomacy until the first bomb drops, he's backing the president, even though a lot of members in the administration were not happy with the idea -- not fully comfortable with the decertification decision and think it's important to keep the Iran deal intact.

It's showing a good face. But the message is still not the same message as the president is projecting. The president is talking about fire and fury with North Korea and only being military options. We know that he's been -- he threatened to rip up the deal himself if Congress doesn't do what he wants and the Europeans don't agree with it.

CUOMO: Yes.

DEMIRJIAN: So this is -- it's a messaging, but the message itself is -- the way it's being delivered is certainly trying to show unity. But the message itself is not in lock step with the president.

HARLOW: That's an interesting point, John. I mean, what Carmen is arguing is that she sees more daylight between Tillerson and the president, perhaps the messaging suggests.

You know, on all the Sunday shows, McMaster, Haley, Tillerson, you name it, they were all essentially saying that "We don't want the Iranian deal to go away. But maybe a secondary deal." Maybe something to make it a little stronger. I mean, they were shown the daylight, were they not?

AVLON: Absolutely they were. This is the constant theme of containing the president we see. Official administration policy given by chief surrogates is different than what the president says in tweets. You can only square it by saying it is mad man theory and that's how they're strategically leveraging the president's comments.

But there's an administration line, and there's a president line. We have never seen a division like that. But then again, we've never seen, you know, a secretary of state be accused of calling the president a moron. And other folks insinuate that he's been castrated. I mean, it's completely insane.

But "Diplomacy will continue until the bombs drop" is the most sane thing said over a weekend by the leadership of a State Department and diplomacy? That's -- we're in real surreal, strange times, folks. Then again, we knew that.

HARLOW: Topic for your next book, John Avlon. You just put your last one out, so time for the next. Thank you both very, very much.

We have a lot ahead. The U.S. and South Korea are conducting joint military exercises to counter North Korea's provocations. Pyongyang calls the drills rehearsal for war. Let's go to our Will Ripley, who has spent so much time in North Korea. What's your read, Will?

WILL RIPLEY, CNN CORRESPONDENT: Hi there, Poppy. Well, we know that joint military exercises happen regularly between the U.S. and South Korea. And we know that they always infuriate the North Korean regime.

But what is different as of now is that tensions have never been higher. And there has never been this kind of bellicose rhetoric traded back and forth between the U.S. and North Korea.

[07:15:07] President Trump saying everything from threatening to totally destroy the country to making up a demeaning nickname for their supreme leader, Kim Jong-un, calling him Little Rocket Man.

All of that has really pushed the North Koreans to a level of anger that we haven't seen in quite some time. Their foreign minister calling the president mentally deranged and threatening to detonate a bomb over the Pacific, a nuclear bomb.

And so now we are here where we have these joint military exercises that have kicked off today. They will last for 10 days; about 40 naval ships involved. The aircraft carrier, the USS Ronald Reagan involved, along with fighter jets and helicopters. They say these were defensive exercises. North Korea thinks otherwise. And previous joint drills have resulted in North Korean nuclear tests and missile launches, including most recently a missile that was fired over Japan.

The question now, will they fire a missile during these joint drills, and where will that missile go? Just last week they revived their threat to point a missile towards the U.S. territory of Guam. And in the midst of all this, Chris, practice has also gotten under way to evacuate U.S. service members and their families from South Korea to Okinawa here in Japan. Those are routine drills. They take on new significance, giving the heightened tensions now.

CUOMO: You are absolutely right. Everything has to be looked at through the window of this current conflict.

Will Ripley, thank you as always.

So this partisan battle over the ACA is looming very large right now, because we have to figure out whether or not there will be a budget deal down there in D.C. The Democrats are saying this could be the battle line. Will they shut down the government over a heated health care battle? We have a Democratic senator. Their take next.

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[07:20:44] HARLOW: Welcome back to NEW DAY. Could the partisan fight over Obamacare lead to a government shutdown? That is a real question we are unfortunately asking this morning.

Democrats accuse the president of trying to sabotage the health care system by ending those subsidy payments, $7 billion worth of payments that help poor Americans afford insurance.

Joining me now, Democratic Senator Richard Blumenthal of Connecticut.

It is nice to have you here.

SEN. RICHARD BLUMENTHAL (D), CONNECTICUT: Great to be here, Poppy.

HARLOW: Thank you for being with us. Let's start with health care. Let's move on to Puerto Rico. Because you're taking some action on that front right now, as well.

You are supportive of and involved in the bipartisan effort between Senator Lamar Alabama and Senator Patty Murray, too, that would restart those subsidy payments, and it would come at some compromises, as well, for Democrats.

Where does this go? I mean, are you willing to risk a government shutdown over this?

BLUMENTHAL: The president is playing a very dangerous game of brinksmanship with the Congress, in effect, tossing a bomb to Congress that we have to handle. And Congress now must rescue the health-care program of the United States. I think the Alexander Murray talks are very promising. And I think we can avoid a government shutdown.

HARLOW: But it is a federal judge in district court in Washington, D.C., that as you know, who ruled months and months ago that these payments were illegal, that Congress had not appropriated the money. So this is something that could have been tackled a long time ago. Would you admit that?

BLUMENTHAL: It could have been tackled a long time ago. And the talks began a long time ago. Bipartisan lines. They were sabotaged, basically, by the president when he pressed for repeal and replace not once but twice. And so the talks were suspended.

I think we need a bipartisan solution. I think one is within reach not only to make sure that those subsidies are legal, that funds are appropriate but also that states have some degree of flexibility, perhaps, some reinsurance. There are ways to build on the Affordable Care Act, not tear it down and destroy.

HARLOW: You're hopeful. And I want to know what makes you so hopeful. You say we could be close to this. Let's talk about your state of Connecticut specifically. This year, what the folks in your state are dealing with with the existing system, with Obamacare, before these subsidies were stopped is two of the big providers on the individual market pulled out.

And the other two big providers saw premiums go up between 31 and 27 percent. Now, even with those subsidy payments intact, the premiums still would have gone up somewhere between 16 and 24 percent. So the question to Democrats is what are you willing to give?

BLUMENTHAL: What the president has done, essentially, is to sow chaos in the health insurance market and also take steps that led to those premium increases, because...

HARLOW: But they were going to increase anyway. With 16 to 24 percent in your state is what the premiums were going to increase without the subsidy payments being stopped. That's just a function of issues with Obamacare that fellow Democrats have admitted have to be fixed. No?

BLUMENTHAL: What needs to be done, Poppy, is to bring down the cost of medical care. We have higher health care costs per capita than most, if not all, industrial countries, with no, really, better results; and particularly the pharmaceutical drug costs need to be diminished. So that's an area that offers a basis for compromise going forward.

You are absolutely right that those premiums might have been increased by that amount. And I actually opposed those increases in letters that I wrote. State regulatory systems over health care costs need to be strengthened. And perhaps the federal government ought to be taking over that kind of oversight and supervisory role.

But the point is that those premiums have been raised even more because of the president's chaotic policies here.

HARLOW: Let's talk about Puerto Rico. The death toll in Puerto Rico has tripled since the president visited Puerto Rico a few weeks ago. These are American citizens, as already Ed Lavandera reported for us this morning, drinking out of contaminated water sites, on super fund sites. American citizens. I mean, can you imagine, if that were happening in any other state, what the reaction would be?

You have called for an investigation into the Trump administration's response. Now, what do you say to skeptics who look at that and say, "Senator, how is that productive? How is that not just partisan? How does that help right now, in the immediate state, the people of Puerto Rico?"

[07:25:08] BLUMENTHAL: I've called for an investigation of the faltering and failing relief efforts there, but I've also called for a disaster relief czar who can offer better management and leadership.

And today I'm writing to the Center for Disease Control about exactly that problem that CNN so well reported earlier about people drinking from hazardous waste sites but also the danger of mosquito-borne disease epidemics. There are standing pools of water. I saw them when I visited Puerto Rico just about a week ago. I also saw the devastation, whole towns destroyed. HARLOW: You know, it's the EPA, the president's EPA under Scott

Pruitt, that put out that -- that warning at the end of last week saying, "Do not drink out of these wells near the super fund sites." So the administration has put it out there. What do you think needs to be investigated?

BLUMENTHAL: What needs to be investigated is whether there are enough people on the ground, whether resources are being well directed. In management there's a lack of leadership. The president, in fact, is saying mission abandoned, not mission accomplished. And the investigation...

HARLOW: I hear you with that tweet on Thursday. He revised it on Friday, saying, "We will always be with you." You don't buy it?

BLUMENTHAL: The stark, staggering fact is that fellow Americans are facing devastation and death in Puerto Rico. The CDC needs to give us an accurate account of what is happening in forestalling and preventing those epidemics. Mosquito-borne diseases, Dengue fever, zika, chikungunya all present real and imminent threats.

And one of the reasons why people are leaving Puerto Rico and taking with them the talent, and energy and skills that are needed to rebuild is the fear of a public health collapse. And that's what the CDC and the Department of Health and Human Services need to forestall. That's the reason that I am asking them for an immediate plan to avoid this public health collapse.

HARLOW: All right. We are out of time. But I should note, you are sending a letter to all the FCC chairmen, calling on all of them to call out the president and ensure First Amendment rights when it comes to any threatening of television licenses. People can look online for more on that.

Senator, we appreciate it. Thank you for being here.

BLUMENTHAL: Thank you.

HARLOW: Chris.

CUOMO: All right, Poppy. Thank you.

The president moving aggressively to dismantle key parts of Obamacare and, arguably, destabilizing the health care market. So are the Republicans on guard with the president? Can they make a deal on taxes? Do they think the government will shut down? We have a Republican senator with their take next.

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