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EARLY START

Sources: Trump Revealed Classified Intel to Russians; Trump Hosting Erdogan at White House; North Korea Behind Global Cyberattack?; Ford Cutting 20,000 Jobs Worldwide. Aired 4:30-5a ET

Aired May 16, 2017 - 04:30   ET

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


(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

[04:30:52] H.R. MCMASTER, NATIONAL SECURITY ADVISER: The story that came out tonight as reported is false. I was in the room. It didn't happen.

(END VIDEO CLIP)

CHRISTINE ROMANS, CNN ANCHOR: That's what the White House says, but sources tell CNN and many others the president shared classified information with the Russians. How did it happen, and what is the danger now for the U.S. and its allies around the world? A blockbuster report that is still being felt this morning.

Welcome back to EARLY START. I'm Christine Romans.

DAVE BRIGGS, CNN ANCHOR: And I'm Dave Briggs. It is 31 minutes past the hour.

We are blind and dancing on the precipice. That's what one foreign policy expert said of this latest story. Just when it seemed the optics of the president's relationship with Russia could not get worse, the White House pushing back fiercely against reports the president shared highly classified information with Russia's foreign minister and ambassador to the U.S. in a White House meeting last week in the Oval.

CNN has now confirmed the key points of the story first reported by the "Washington Post." One official with knowledge telling "The Post," quote, I get great intel. I have people brief me on great intel every day -- before the president relayed the intelligence details.

ROMANS: The president did not directly reveal the source of the information, but intelligence officials tell CNN the concern is Russia will be able to figure out the highly sensitive source. It's highly sensitive in part because the information came from a foreign ally.

The White House once again spinning into damage control.

CNN's Sara Murray starts our coverage from the White House.

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SARA MURRAY, CNN WHITE HOUSE CORRESPONDENT: Good morning, Dave and Christine.

Another day at the White House and another damaging headline. On Monday evening, administration officials were sent scrambling, insisting the president did not jeopardize classified information and share it with Russian officials.

MCMASTER: There's nothing that the president takes more seriously than the security of the American people. The story that came out tonight as reported is false. The president and the foreign minister reviewed a range of common threats to our two countries, including threats to civil aviation. At no time -- at no time were intelligence sources or methods discussed, and the president did not disclose any military operations that were not already publicly known. I was in the room. It didn't happen.

MURRAY: Those comments from President Trump's national security adviser, H.R. McMaster, coming after the "Washington Post" broke the story that President Trump shared classified information with Russia's foreign minister and ambassador in a meeting at the White House last week.

Now, CNN has confirmed the main details of this story. One thing is clear -- despite the White House's denial, this has certainly sent the White House off of its message. They were hoping to reset this week after the president's controversial firing of FBI Director James Comey and instead focus on their new FBI director, focus on the upcoming foreign trip.

But if Monday is any indication, it's clear that's not going to come easy.

Back to you guys.

(END VIDEOTAPE)

BRIGGS: Sara Murray, thank you.

You heard H.R. McMaster refer to the story as, quote, as reported. Now, the national security adviser essentially saying that if there is so much as a single detail in "The Post" report that is wrong, well, then they can dismiss the whole thing. One of the story's authors, national security correspondent Greg Miller, telling CNN that the White House claim that the president did not reveal sources and methods pushes back against something "The Post" never, in fact, reported.

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GREG MILLER, NATIONAL SECURITY CORRESPONDENT, THE WASHINGTON POST: I think that the White House is playing word games here to that effect to try -- to try to blunt the impact of this story, nor do any of these White House officials who are denouncing this story, nor have any of them offered any explanation as to why if this was all above board and not problematic in any way, why did the National Security Council coming out of this meeting feel it was necessary to contact the CIA director and the director of the National Security Agency to give them a heads-up on what Trump had just told the Russians?

(END VIDEO CLIP)

ROMANS: So, the report that the president shared this highly secret information with the Russians in the Oval Office, that report has been matched, confirmed by "The New York Times," "The Wall Street Journal," "Reuters", and "BuzzFeed".

But in the hours after "The Post" report, the White House response was mostly confused. Before McMaster even spoke, the administration issued several statements, mostly focused on those sources and methods, and the president did not reveal sources and methods. Again, "The Washington Post" never said the president revealed sources and methods. "The Washington Post" and others reported the president revealed highly secret information to the Russians that our adversaries should not know.

One statement from Secretary of State Rex Tillerson caught the State Department completely by surprise. It issued its own similar statement 20 minutes later after seeing Tillerson's on CNN.

BRIGGS: The classified information at the center of this controversy involves ISIS plans to use laptop computers as bombs to take down planes. CNN first reported in April that U.S. intelligence agencies discovered terror groups were developing new techniques to plant bombs in devices capable of evading airport security screenings. The Trump administration later imposed a ban on devices larger than cell phones for passengers flying from eight Middle East and African countries, citing factors including human intelligence.

ROMANS: Now, at the time, CNN agreed to withhold key details of the intelligence, including the city where that laptop threat was detected by a U.S. ally because U.S. officials were concerned about revealing sensitive sources and methods. "The Washington Post" story citing U.S. officials says President Trump revealed the name of that city to Russia's foreign minister and ambassador, and those officials are now extremely concerned about the president compromising a critical ISIS intelligence source and its impact on global U.S. security partnerships. They also worry President Trump might have put the lives of U.S. agents in the field at risk, to say nothing of the sources itself.

BRIGGS: Lawmakers react to the report with deep concern. House Minority Leader Nancy Pelosi saying at a CNN town hall that if the president did what's alleged here, it would be very damaging.

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI (D-CA), HOUSE MINORITY LEADER: This is a very serious matter. This is code word source highly classified information revealed to an adversarial country and to do so in a way, very sophisticated intelligence Russia never stopped. Putin was head of the KGBT. This is what they do.

(END VIDEO CLIP)

ROMANS: Harsh words as well on the Republican side. Senator Bob Corker, chairman of the Foreign Relations Committee, saying of the White House: They are in a downward spiral right now and have got to figure out a way to come to grips with all that is happening. Corker says: You know, the shame of it is there's a really good national security team in place, but the chaos that is being created by the lack of discipline, it creates a worrisome environment.

BRIGGS: The ranking Democrat on the House Intelligence Committee, Adam Schiff, calling the reports, quote, deeply disturbing, and demanding an immediate briefing for his committee.

Meantime, on the lighter side, Senator Susan Collins quipped to reporters: Can we have a crisis-free day? That's all I'm asking.

ROMANS: If President Trump did reveal classified information to the Russian diplomats, critics, might call it reckless, irresponsible, dangerous, alarming. But in fact, it is unlikely the president broke the law. That's because the president does have broad authority to declassify government secrets. He can even do it on the spot, even by merely stating something in a public setting.

Listen to the reaction of former CIA Chief James Woolsey, who served for a period of time on the president's transition team.

(BEGIN VIDEO CLIP)

JAMES WOOLSEY, FORMER CIA DIRECTOR: We have to distinguish between what's legally permitted and what is wise. It is legally permitted for the president to declassify something, even if he does it quickly and without giving it much thought. There's not a legal requirement on that. But it's not wise to do that.

(END VIDEO CLIP)

BRIGGS: Now, under the heading of political irony, remember the president and many of his key supporters have a history of going after others who allegedly disclosed sensitive information.

Here's House Speaker Paul Ryan tweeting about Hillary Clinton last July: It's simple, individuals who are extremely careless with classified info should be denied further access to it.

ROMANS: White House Chief of Staff Reince Priebus, same time frame, same subject: Those who mishandle classified info have had their security clearances revoked, lost their jobs, faced fines, and even been sent to prison.

As for the president himself, listen.

(BEGIN VIDEO CLIPS)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: We can't hand over our government to someone whose deepest, darkest secrets may be in the hands of our enemies.

I don't think it's safe to have Hillary Clinton be briefed on national security because the word will get out.

We can't have someone in the Oval Office who doesn't understand the meaning of the word confidential or classified.

(END VIDEO CLIPS)

[04:40:06] ROMANS: The parallels are eerie, but that was the campaign, this is the presidency.

BRIGGS: And that was Sarah Huckabee Sanders' pushback in the FBI handling case.

So, more along the same lines from last summer, the president tweeting: Crooked Hillary Clinton and her team were extremely careless in their handling of very sensitive, highly classified information. Not fit.

Worth noting, the quote in that tweet is from now former FBI Director James Comey.

ROMANS: All right. A quick programming note, everybody. Two must- see events tonight on CNN.

First, a CNN exclusive, the former acting attorney general, Sally Yates, fired by President Trump for refusing to enforce the travel ban. Now, she speaks out on that. Her testimony about Michael Flynn, and a whole lot more. Sally Yates speaks to Anderson tonight at 8:00 Eastern, only on CNN.

BRIGGS: That should be intriguing.

Then, CNN's debate night returns. Ohio Governor John Kasich and Vermont Senator Bernie Sanders, they both found a voice but fell short in the 2016 race. Now, they face off on health care, the economy and other issues facing the country.

A live CNN debate tonight, 9:00 Eastern following the Sally Yates exclusive, both only on CNN. You'd have to figure both have to address these latest accusations.

ROMANS: Absolutely.

BRIGGS: Centered on health care, of course.

ROMANS: Absolutely.

All right. All this is ahead of a key meeting for the president today. Turkey's president heads to the White House with some major differences on big challenges in the Middle East. We are live.

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[04:45:43] ROMANS: All right. It is the news Wall Street has been waiting for. The president's top officials will meet with moderate Republicans to talk tax reform. That's today.

According to sources familiar with the matter, the National Economic Director Gary Cohn and Treasury Secretary Steve Mnuchin plan to meet with moderate GOP members Wednesday. That's the ahead of the first major hearing on tax reform. The group will be crucial in passing any tax package.

And this is what investors want to hear. Tax reform is the giant gift to Wall Street, to big companies who want to make more money. Companies stand to make tons of money if there are corporate tax cuts, so Wall Street wants details, and soon. And experts want details on how the government will pay for these cuts.

So far, the White House insists it will pay for itself through growth. However, the Tax Policy Center estimates the proposal could reduce by $4 trillion in the first decade. That's $400 billion a year. Speaking of taxes, while we probably won't be seeing the president's tax returns any time soon, White House officials say his personal financial disclosure for this year will be filed in a short period of time. So, we could get more details on the president's financial information.

BRIGGS: Which reveals what?

ROMANS: Which would reveal --

BRIGGS: Broad strokes.

ROMANS: Broad strokes. But historically, the last two presidents have done that at this time of the year. So, he would be doing that.

BRIGGS: All right. The White House refusing to confirm or deny whether the president is recording phone calls at the White House. Mr. Trump made a thinly veiled threat against James Comey last week, tweeting the fired FBI director, quote, better hope there are no tapes of their conversations before he starts leaking.

The president's spokesman, Sean Spicer, offering no clarity on the controversy.

(BEGIN VIDEO CLIP)

SEAN SPICER, WHITE HOUSE PRESS SECRETARY: I think I made it clear last week that the president has nothing further on that. I made it clear what the president's position on that issue.

REPORTER: Why won't you just explain whether or not there are recordings of president --

SPICER: I think the president's made it clear what his position is.

(END VIDEO CLIP)

BRIGGS: Attorney General Jeff Sessions met with President Trump about the search for a new FBI director on Monday. It's not known whether Sessions offered a final recommendation or just an update. ROMANS: All right. Critical issues on the table when Turkey's

controversial leader meets with President Trump at the White House today. President Recep Erdogan is critical to nearly everything the U.S. hopes to accomplish in the Middle East, but the meeting comes a week after Erdogan was angered by the U.S. decision to arm Kurdish fighters in Syria.

CNN's Muhammad Lila has a preview for us this morning of this incredibly important meeting.

Good morning.

MUHAMMAD LILA, CNN INTERNATIONAL CORRESPONDENT: Well, good morning, Christine.

You know, on the surface of it, you'd think these are two world leaders that would get along very well. They've got a lot in common. For example, they're both populist leaders. Neither of them shy away from controversy. Both of them have what you would describe as icy relations with the media in their home countries, and they enjoy giving long speeches to their supporters.

You'd think it would be a partnership made in heaven, but there are a couple wedges right now in that relationship between the United States and Turkey. The first, of course, is that Turkey is insisting that the United States stop arming Kurdish fighters on the ground in the fight to battle is. The United States has basically thrown its hat in the ring through those Kurdish fighters as their weapon of choice to dislodge ISIS on the ground, something Turkey is opposed to because they consider those Turkish groups to be terrorists.

And the second big issue, of course, is the fact that Turkey wants a religious cleric who is living in the United States by the name of Fethullah Gulen, they want him extradited back to Turkey, they say, he was responsible for the failed military coup that took place last year. Those are very important issues right now separating both countries and we haven't seen any indication from the Trump administration that they're willing to change course. That they're willing to change their policy on those two issues.

So, while these two world leaders might get along on a personal level, when it comes to policy, they're certainly very far apart -- Christine.

ROMANS: Absolutely. All right. Muhammad Lila for us in Abu Dhabi -- thank you so much for that.

All right. Job cuts coming to Ford. We're going to tell you how many and why on "CNN Money Stream," next.

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[04:53:44] BRIGGS: Missile tests and a nuclear threat may not be the only concerns about North Korea. Security experts tracking the global ransomware attack that affected 150 countries say the trail of clues could lead back to the North Korean regime, which has a long record of computer criminality.

CNN's Alexandra Field following the developments for us. She joins us live in Seoul.

Good morning to you, Alex. What do we know about this possible link?

ALEXANDRA FIELD, CNN INTERNATIONAL CORRESPONDENT: Hey, Dave.

Well, this is a massive attack, so it will take a while to get to the bottom of it, but there are leads, there is a direction to go in.

Here's how you get to the bottom of something like this, an attack that's generated some 300,000 cases, more than 150 countries. You've got security firms and researchers who are looking at the malware code, and they're trying to match it to code used by other hackers in the past, other known hackers. That may have been what led researchers to look at the Lazarus Group, a hacking group out of North Korea. A top researcher out at Google says there are similarities between the code used in this recent attack and code that's been generated by that group for their malware.

Those findings, those similarities have been backed up by two major cybersecurity firms who say they're seeing the same things, but they called these weak links, not strong enough evidence at this point to directly link this major global cyber attack to North Korea or to the Lazarus Group.

[04:55:03] But if Lazarus Group sounds familiar to you, that's because it probably is. This is the same group out of North Korea that was linked to the major hack of Sony Pictures back in 2014 after Sony was set to release a spoof film about North Korea. This group has also been linked to hacks on banks across the world.

Here in South Korea, officials are not seeing whether or not they believe that North Korea could be behind the attack. They say it's too soon. They're looking at all possibilities, Dave, but officials here have said in the past that North Korea is connected to at least ten different cyber plots in just the last decade alone.

We know that North Korea has worked to beef up their cyber attack capacity. Defense officials in South Korea, Dave, estimate that they've got a team of 6,800 people who are dedicated to working to carry out cyber attacks.

BRIGGS: Alex Field live for us in Seoul -- thank you.

ROMANS: All right. Things are heating up on the East Coast today.

Meteorologist Pedram Javaheri has the weather.

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PEDRAM JAVAHERI, AMS METEOROLOGIST: Dave and Christine, the tremendous heat that's in place across the eastern half of the country here are really not only is going to remain put, but it's going to actually expand the next couple of days. We could see multiple days of 90-plus degrees there across parts of the Northeast. Temps generally 10 to 15 above average, some areas could be more than 20 degrees above average.

And back out towards the Plains, around Des Moines into Sioux Falls, and strong storms, through much of this afternoon and this evening. We'll see that migrate off toward the East and a second round develop into the overnight hours around say Wichita into Kansas City. But generally speaking, the severe concern is locked in back out towards the Plains for mainly damaging winds and hail with a few isolated shot of a tornado across parts of the Texas panhandle.

How about almost 90 out of Dallas, 86 out of Chicago today. Same story expected out of Detroit, while the upper 70s and low 80s around parts of the Northeast, but it's really not until tomorrow and especially come Thursday where we get into the 90s and stay there. About 21 degrees above normal in New York City come Thursday afternoon.

Look at Washington. First time we get into the middle 90s this season, and it looks like we might stay there for a couple days. A good 20 degrees above normal by Wednesday and Thursday afternoon around the Northeast -- guys.

(END VIDEOTAPE)

ROMANS: All right, Pedram.

That's your weather. Let's check your money this morning.

U.S. futures and global markets mixed after the S&P and NASDAQ, record highs. I feel like a broken record. You know, just doesn't take much to get up there.

Oil prices rallied 2 percent after Russian and Saudi energy ministers agreed to extend a production cut. The Dow also less than 200 points away from its own record high, ending a four-day losing streak after a Cisco Systems rose after the worldwide cyberattack.

Investors today looking ahead to Trump officials meeting with GOP lawmakers about tax reform. By the way, that's what Wall Street really is concerned about. It's the main event here as we ended the best earnings season since 2011. Profits from S&P 500 companies up about 15 percent this quarter.

While the Trump administration calls on U.S. automakers to add jobs, Ford announcing plans to cut 20,000 jobs worldwide. That's about 10 percent of its global staff, not insignificant. This is according to a report in the "Wall Street Journal" citing people familiar with the matter.

Ford isn't cutting staff on assembly lines, as union workers are protected. Reportedly, these are salaried workers without union protection that will be fired. Ford would not confirm or deny this report to CNN, saying only that becoming lean and efficient is a key priority. The company announced last month plans to reduce costs after profits sank 35 percent in the first quarter. How about facial recognition at the airport? Delta testing a face-

scanning kiosk for baggage checks. The machine allows passengers to bypass checking agents. Instead, you go right up to this kiosk. It uses recognition technology to match your identity to your passport photo.

The company said customers shouldn't have privacy concerns. The scanned images will not be stored. That could really speed things up, I think.

BRIGGS: Anything that will speed it up, but certainly some privacy concerns, you would think will happen.

All right. So, EARLY START continues now -- the latest on these accusations from the Trump White House sharing intelligence.

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(BEGIN VIDEO CLIP)

MCMASTER: The story that came out tonight as reported is false. I was in the room. It didn't happen.

(END VIDEO CLIP)

ROMANS: The White House with a full-throated denial after the president was accused of sharing classified information with the Russians. What did he share? Why does it matter?

BRIGGS: Welcome to EARLY START, everybody. I'm Dave Briggs.

Serious accusations once again facing the White House.

ROMANS: And I'm Christine Romans.

Another big story reverberating through Washington and all over the world, really, as it just, the optics of the president's relationship with Russia just get worse. The White House pushing back fiercely against reports the president shared highly classified information with Russia's foreign minister and the ambassador to the U.S. in a White House meeting last week.

CNN has now confirmed the key points of that story first reported by the "Washington Post." One official with knowledge telling "The Post" that Trump said, quote, I great intel. I have people brief me on great intel every day.