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EARLY START

Trump Abruptly Ends Heated Call With Australian PM; Trump Offers To Help Combat Mexico Drug Cartels; Tensions Escalate Between US. And Iran; Trump To Dems: Don't Obstruct Gorsuch. Aired 5:30-6a ET

Aired February 2, 2017 - 05:30   ET

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


(COMMERCIAL BREAK)

[05:30:40] MIGUEL MARQUEZ, CNN ANCHOR: President Trump taking a hard tone with the leader of Australia. What did he say and how will the new Secretary of State clean up the mess?

CHRISTINE ROMANS, CNN ANCHOR: The White House puts Tehran on notice in the wake of a missile test. We are live with the latest on this growing feud.

MARQUEZ: And, the president telling Senate Republicans do whatever it takes to get his Supreme Court pick confirmed. Will they really have to change Senate rules to do it? Welcome back to EARLY START. I'm Miguel Marquez.

ROMANS: Nice to see you this morning, Miguel.

MARQUEZ: Good to be here.

ROMANS: I'm Christine Romans. It's 31 minutes past the hour this Thursday morning. Breaking overnight, word of new tension between the president and foreign leaders. Sources telling CNN about a pretty heated phone call on Saturday between President Trump and the Australian Prime Minister Malcolm Turnbull. Things came to a head when the subject of refugees came up, many of these refugees from the Muslim-majority countries listed in President Trump's travel ban.

Now, the Obama administration had to agree -- had agreed to accept more than 1,000 refugees now being detained by Australia -- Australia, which generally does not accept refugees of crime concerns.

MARQUEZ: Now, our sources say President Trump kept telling the prime minister the deal reached with the previous administration was a bad deal and one of the refugees would turn out to be the next Boston bomber. A source says that as the Australian leader pressed Mr. Trump on the refugee issue, the president told aides he wanted to end the call and he did so abruptly when the prime minister tried to change the subject to fighting ISIS. A source familiar with the circumstances says the president was fatigued from a long day of conversations with foreign leaders, conversations that included some tense moments of their own.

Overnight, after the story broke, Prime Minister Turnbull largely avoided questions but said the call ended courteously and such talks are better conducted "candidly, frankly, and privately." Probably a little late for that.

We also have new information on President Trump's phone call with Mexican President Enrique Pena Nieto. That came last Friday right after Pena Nieto canceled an in-person visit to the White House over President Trump's repeated demand that Mexico pay for the border wall.

An excerpt of the transcript from the phone call shows Mr. Trump offered to help Mexico battle its drug cartels. He said, according to the transcript, "You have some pretty tough hombres in Mexico that you may need help with. We are willing to help with that big-league, but they have to be knocked out and you have not done a good job knocking them out."

ROMANS: That differs from earlier reporting by the A.P. and others -- that earlier reporting suggesting Trump was thinking about an incursion -- a hostile incursion into Mexico by U.S. troops to hit those drug cartels. Sources say those reports were based on an inaccurate description of the call, written by aides. One government official who spoke to CNN described Trump as naive to think he will have great relationships with virtually all world leaders, even as he responds with a tantrum when confronted on policy.

MARQUEZ: The White House is raising the stakes with Iran and National Security Adviser Michael Flynn lashing out at the Iranians for conducting a recent missile test. Listen to Flynn's warning to Tehran after taking parting shots at the previous administration.

(BEGIN VIDEO CLIP)

GEN. MICHAEL FLYNN, NATIONAL SECURITY ADVISER: President Trump has severely criticized the various agreements reached between Iran and the Obama administration, as well as the United Nations, as being weak and ineffective. Instead of being thankful to the United States in these agreements, Iran is now feeling emboldened. As of today, we are officially putting Iran on notice.

(END VIDEO CLIP)

MARQUEZ: Now, Iran's defense minister confirms his country carried out the missile test but he says it did not violate any international agreements and warns Iran will not allow outsiders to interfere with its military affairs.

We want to get the latest from CNN's Frederik Pleitgen who was recently in Tehran and has been there many times. He's in London at the moment but, Fred, how are the Iranians likely to see this clearly new aggressive American strategy playing out?

FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, it certainly seems as though they're going to be pretty combative about it. You know, I've had some talks with Iranian officials -- senior Iranian officials and also some hardliners in Iran over the past week or so.

We asked them how they thought their relations with a Trump administration would evolve and they say look, right now we have a wait and see approach towards Donald Trump. They said that they were hoping that some of the rhetoric that they heard during the campaign from candidate Donald Trump would be different than once Donald Trump came into office. But clearly, it looks as though right now there is the stuff for potential new confrontation after you've had a little bit of an easing of tensions during the Obama years.

[05:35:14] And, you know, one of the things that the Iranians are saying is that they believe that they have the right to conduct these ballistic missile tests because they say the missiles that they're testing are not capable of carrying any nuclear warheads. That's, therefore -- they say these are defensive weapons and that's why they say they don't buy like any sort of U.N. resolution. But clearly, a lot of tension right now between Washington, Tehran, and it's certainly something that could get worse over time, Miguel.

MARQUEZ: All right. Frederik Pleitgen for us in London. Thank you very much.

ROMANS: Confirmation hearings for Supreme Court nominee Neil Gorsuch scheduled for six weeks from now and the president is already warning Democrats, do not obstruct this confirmation. He's urging the Senate to deploy the nuclear option if necessary, reducing the number of Senate votes needed from 60 to a simple majority.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: If we end up with the same gridlock that they've had in Washington for the last -- longer than eight years, in all fairness to President Obama -- a lot longer than eight years. But, if we end up with that gridlock I would say if you can, Mitch, go nuclear because that would be an absolute shame if a man of this quality was caught up in the web. So I would say -- it's up to Mitch, but I would say go for it.

(END VIDEO CLIP)

ROMANS: Democrats are divided over how far to take the fight over the Gorsuch nomination. We also learned the first phone call made by Gorsuch after he was nominated was to Judge Merrick Garland, President Obama's stonewalled pick for the Supreme Court. His spokesman told reporters Gorsuch made the call out of respect.

MARQUEZ: All right. Now, joining us to discuss the machinations, of which there are plenty in Washington, CNN POLITICS reporter Eugene Scott. Good morning to you.

ROMANS: Good morning.

EUGENE SCOTT, CNN POLITICS REPORTER: Good morning, guys.

MARQUEZ: So, we are in constant crisis mode with the president and this new administration but he has giant goals, as well.

SCOTT: Yes.

MARQUEZ: Repealing healthcare, putting something else new in. ROMANS: Tax reform.

MARQUEZ: Tax reform. Is all this getting in the way of a real agenda here?

SCOTT: Well, it seems like it. I mean, he definitely has tried to do a lot within 13 days, not even two full weeks yet, but a lot of that has been hit with quite a bit of criticism and so there's been quite a bit of pushback whether or not he's actually going to completely be able to do what he said he wanted to do. And I think he and many of his supporters are a bit surprised by how critical people, including members of his own party, have been on some of the things he campaigned on.

ROMANS: And I think that there's also this realization, at least in my world, you know, covering Wall Street and business, that tax reform is going to be harder than they thought. That there's already some disagreements between the Senate and the House and the president, himself. But we say the Trump trade fades, you know --

SCOTT: Yes, yes.

ROMANS: -- as, sort of, the oxygen is being sucked up by protest and concern about travel ban and the like and not necessarily by a real push toward tax reforms.

SCOTT: Yes, it's very different from business. It's not like I'm the boss and I say this happens and it's going to happen. There's quite a bit of pushback. You have constituents who are very vocal, who are on Twitter as much as you, and who don't have a problem with letting you know, and your subordinates, that they don't support what you're putting forward.

MARQUEZ: And he still doesn't have his full cabinet in.

SCOTT: No.

MARQUEZ: When does this start to become a problem? Obviously, Betsy DeVos is coming up --

SCOTT: Right.

MARQUEZ: -- possibly today.

ROMANS: She's in jeopardy. I mean, don't you think Betsy DeVos is in jeopardy?

MARQUEZ: But --

SCOTT: Yes.

MARQUEZ: -- could they get one more Republican to come over to their side?

SCOTT: Well, they're trying. I mean, what Democrats are really spending time focusing on is trying to get some of the Republicans in some of the battleground states that almost went blue to vote against Betsy DeVos. The challenge is one of the biggest challenges that DeVos has had. She has given to given to so many Republicans, especially even in the Senate, that their allegiances aren't really clear and people are worried that they can't convince her -- convince the senators to vote against her when she supported them.

ROMANS: The teachers' unions are against her. Some of the labor unions are against her. Eli Broad, who is a philanthropist and a billionaire who sometimes --

MARQUEZ: And supports charter schools, as well.

ROMANS: He supports charter schools. He wrote a letter to the senator saying she just isn't qualified.

SCOTT: Yes.

ROMANS: And some of these -- the two senators who are on the record against her, saying she just doesn't -- has not demonstrated that she knows how to make public schools succeed --

SCOTT: Right.

ROMANS: -- and that's what this job -- the bulk of this job.

SCOTT: Right, yes. No, it's been Murkowski from Alaska and Collins from Maine. And I think a very important point people need to understand is very few senators are questioning her commitment to education or commitment to children. What everyone seems to be questioning is her experience and her commitment to public schools.

ROMANS: Right.

SCOTT: Recently this week there's also been some concerns about plagiarism and so whether or not she has the ethics and the ability to lead, given these concerns, have been proven to be problematic for some.

MARQUEZ: You also have Mnuchin and Price.

SCOTT: Yes.

MARQUEZ: I mean, this is -- at some point you start to run into serious problems here. I mean, the Democrats are trying every trick in the book from their weak position. Will they be effective?

SCOTT: Well, they say they're responding that way because they believe Republicans will try every trick in the book, such as trying to force these nominees and without still completing all of the paperwork that they need to properly vet these people, as we've talked about quite a bit. These aren't people that most of us even know.

[05:40:11] MARQUEZ: Yes.

SCOTT: These aren't people we're familiar with and so there's some -- so many questions and answers are being turned in like less than 48 hours before their hearings.

ROMANS: OK, I'm going to put you on the spot here.

SCOTT: OK.

ROMANS: President Donald Trump, the diplomat.

SCOTT: OK.

ROMANS: Where does he stand now on this? Is he the game-changer disruptor -- is this what he promised -- or is he naive and out there in the woods making mistakes with global leaders?

SCOTT: Well, he certainly hasn't had many global leaders in the last five days speak out affirmatively of his positions on international affairs. And so, when you look at diplomacy at its core, in terms of building positive relationships with other world leaders, he doesn't have a huge track record of that yet. Even last week when we had Theresa May over speaking positively of him, like within 24 hours she was criticizing the executive order. So, where he stands with other world leaders remains to be seen.

MARQUEZ: We need our friends.

SCOTT: Yes, we have to.

MARQUEZ: My friend, thank you very much.

SCOTT: Thank you.

ROMANS: Nice to see you, Eugene.

MARQUEZ: Now, a somber moment for the young Trump presidency. A trip to greet the body of a Navy SEAL killed in combat and what else we're learning about the raid that killed him.

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[05:45:25] MARQUEZ: Now, President Trump paying respects to the first U.S. service member killed on his watch. The president went to Dover Air Force Base to witness the dignified transfer ceremony for Chief Petty Officer William Ryan Owens. The Navy SEAL and married father of three was killed in a firefight during a U.S.-led raid in Yemen over the weekend.

(BEGIN VIDEO CLIP)

TRUMP: And it was something very sad, very beautiful. Ryan, a great man.

(END VIDEO CLIP)

MARQUEZ: And we're learning new details about the raid that killed the Navy SEAL. I want to bring in CNN's national security reporter Ryan Browne. He's live for us in Washington. Good morning, Ryan. RYAN BROWNE, CNN NATIONAL SECURITY REPORTER: Good morning, Miguel. Yes, this raid was what the military calls a site exploitation operation which is designed not to kill a specific al Qaeda leader, but to gather as much intelligence about the terror group as possible to facilitate additional strikes and additional raids down the road. Now, this operation was incredibly complex and had been in the planning stages for months during the Obama administration, but certain operational requirements required that the mission be delayed until Donald Trump was president to greenlight, and he was the one who greenlit the operation.

Now, one of those operational details was the need for a moonless night to provide additional cover as the -- as the U.S. special forces and their UAE allies moved in. Now, despite that concealment they were detected and the al Qaeda fighters engaged them in an intense battle that saw small arms fire, grenades, and close air strikes. Now, 14 al Qaeda fighters were killed and, of course, four U.S. service members wounded, including Owens, fatally.

Now, during that battle the U.S. called an airstrike against a building where they were taking fire from and that resulted in what the military thinks is a significant number of civilian casualties including, possibly, children. Now, during the mission an MV-22 Osprey aircraft was called in to support, to help evacuate the wounded. That suffered a technical malfunction and a hard landing. The U.S. had to destroy that to prevent the technology falling into enemy hands.

So really, we're kind of seeing some things go wrong in this mission but the U.S. military is confident that the intelligence it gathered will help deter future terrorist attacks down the road -- Miguel.

MARQUEZ: All right, Ryan Browne for us in D.C. Thank you very much.

ROMANS: All right. More than 100 companies and industry groups are forming a new coalition to stop the proposed border adjustment tax. That's an idea floated by Republican lawmakers and the Trump administration that would change the way imports and exports are taxed. These companies, along with many others, say it would lead to higher prices for consumers at places like Best Buy, IKEA, Macy's, Target, and Walmart. The group says it's the wrong approach and could cost each American family $1,700 a year.

Now, proponents of the border adjustment tax say it will bring manufacturing jobs back to the U.S. It disincentivizes a company -- an American company building a big factory overseas and then shipping those products back to U.S. consumers. President Trump has also threatened to put tariffs on certain goods or countries. That would affect -- only affect imports. So, interesting to see the retailers starting to move against the border adjustment tax.

MARQUEZ: They would be hit the hardest, those big box guys.

ROMANS: Oh, yes, absolutely.

MARQUEZ: A demonstration at U.C. Berkeley just the latest in a string of emboldened protests since the president took office, but why did this one turn violent?

Now, fans across the country are gearing up for Sunday's Super Bowl, but only one city can claim the title for most Super Bowl wins. Former Pittsburgh Steeler, Super Bowl MVP, and CNN's own Hines Ward shows us what he loves about the Steel City.

(BEGIN VIDEOTAPE)

HINES WARD, CNN SPORTS CONTRIBUTOR: Pittsburgh is my home away from home. I played my entire NFL career with the Pittsburgh Steelers and when I come back to Pittsburgh one of my favorite places to visit is the Strip District.

How much is this shirt right here -- this 86 shirt?

The thing I love about the strip is it's a great place to visit Pittsburgh's most unique shops, food, and sights. If you're an out- of-towner why come to the Strip District?

UNIDENTIFIED MALE: You really feel like you're in an essential American city when you're here in the Strip District. It not only has all this food and Steelers paraphernalia you can get here, but the Heinz History Center is right here.

WARD: So when you're in the strip check out my favorite,Primanti Bros.

UNIDENTIFIED FEMALE: Special ordered.

WARD: Hot sauce, it's fries, cole slaw, delicious. The background, truck drivers used to come in and they would just put everything on one sandwich. This is a typical Primanti Bros. sandwich.

[05:50:04] UNIDENTIFIED FEMALE: Love you.

WARD: If you're ever in Pittsburgh, come on down to the Strip District. I guarantee you you've got good people, great food, and you're going to have a great time.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

MARQUEZ: Overnight, a new protest at University of California Berkeley flaring into violence as a peaceful demonstration against a planned speech by a right-wing commentator escalated with protesters lighting fires, throwing rocks and bottles, and smashing windows. CNN's Kyung Lah was in the middle of all of it.

[05:55:07] (BEGIN VIDEOTAPE)

KYUNG LAH, CNN CORRESPONDENT: Christine and Miguel, amid a wave -- a national wave of post-election protests, students here at U.C. Berkeley organized one of their own with a very specific goal. This protest, which happened here right outside the Student Union, was to stop right-wing speaker and Breitbart editor Milo Yiannopoulos. About 1,500 students gathered here with the goal to stop him, saying that he's not free speech, he is hate speech.

So, at some point, this protest became violent. These barricades were used to smash in the first-floor windows of the Student Union. The protesters set fires and they even faced off with police who had to use tear gas. The university says that it was about 150 outside agitators of the 1,500 who showed up. That's who they are blaming for this violence. Six people were injured and it became so violent that they had to cancel the event. The irony here is that U.S. Berkeley, in the 1960s, was the birthplace of the free speech movement. That was for students to have the right to express their political opinions -- Miguel, Christine.

ROMANS: All right, Kyung Lah, thank you for that. Now let's get a check on CNN Money Stream this morning. Apple shareholders pretty happy this morning. The stock is the highest price in 18 months -- BOFO sales of the iPhone 7. The stock launched six percent higher yesterday and this morning analysts are raising their price targets. Apple, by far, the best performer on the Dow this year, up 11 percent. There is caution, though, in global stock markets this morning. Dow futures are down slightly here and you've seeing this push into gold.

Playing into the gloom this morning, Chairman Janet Yellen and the Federal Reserve giving no clues on timing for its next rate hike. The Fed holding rates steady. It says the U.S. economy is doing well but will need to see more positive economic data before hiking rates again. The fed still expects three rate increases this year. Investors putting their money on late spring or early summer for the next move.

Some of the president's policies could push the Fed to hike faster if, for example, there's infrastructure, border taxes, or any kind of big tax reform. That could lead to higher prices -- the border tax and the infrastructure spending -- which could mean higher rates.

Facebook nearing a milestone. Two billion -- with a 'b' -- members. There were 1.86 billion monthly active users at the end of the year, up sharply from a year ago and Facebook is making more money on every one of those users, about $20 apiece in the fourth quarter. That pushed sales up 50 percent to $8.8 billion.

They may have to put some of that cash aside, though. Facebook-owned virtual reality company Oculus lost a $500 million lawsuit last night. A jury found Oculus guilty of copyright infringement and violating a non-disclosure agreement, but it said it did not steal company secrets from a game development firm as the suit claimed. Oculus plans to appeal.

This looks like it could be a little bit of a stall in stocks today, I'm saying, overall. Tech stocks did very well -- nicely, yesterday, but it's just kind of a stall here. We're waiting to see what President Trump's economic policies actually do.

MARQUEZ: And whether they actually start to take some shape, given --

ROMANS: Yes.

MARQUEZ: OK, we get out of crisis mode and get into --

ROMANS: Punxsutawney, Pennsylvania.

MARQUEZ: Ah, my favorite day of the year.

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

MARQUEZ: And I'm Miguel Marquez. "NEW DAY" starts right now.

(BEGIN VIDEO CLIP)

DR. SEBASTIAN GORKA, DEPUTY ASSISTANT TO THE PRESIDENT: There's a new sheriff in town. His name is Donald J. Trump.

UNIDENTIFIED MALE: His call was really hostile. Trump was badgering the Australian prime minister.

SEAN SPICER, WHITE HOUSE PRESS SECRETARY: The deal that was made will go forward.

UNIDENTIFIED FEMALE: Donald Trump talked to Enrique Pena Nieto and said Mexico needs to deal with its bad hombres?

UNIDENTIFIED MALE: When he tries to fight real threats he's going to find himself not just America first, but America all by itself.

FLYNN: As of today, we are officially putting Iran on notice.

UNIDENTIFIED MALE: Confirmation chaos on Capitol Hill.

UNIDENTIFIED MALE: I join my colleagues in boycotting this hearing.

UNIDENTIFIED MALE: We need to work together rather than obstructing the will of the American people.

TRUMP: I would say if you can, go nuclear.

(END VIDEO CLIP)

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

CHRIS CUOMO, CNN ANCHOR: We want to welcome our viewers in the United States and around the world. This is NEW DAY. It's Thursday, February 2nd, 6:00 here in New York.

We begin with another day of White House damaging control focusing on the president's approach to foreign policy. New details this morning about a heated phone call from last Saturday between President Trump and the prime minister of Australia, Turnbull. He could now trigger an international rift with one of our staunchest allies. We're also learning Mr. Trump also had rough words for the president of Mexico in a phone call from last Friday, letting him know he's done a terrible job knocking out his country's "tough hombres."

ALISYN CAMEROTA, CNN ANCHOR: The administration also raising tensions with Iran. National Security Adviser Michael Flynn officially putting Tehran "on notice" for test-firing a ballistic missile. It is not clear what "on notice" means.