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EARLY START

General John Kelly Is Sworn In Today As White House Chief Of Staff; Keep Working On Healthcare Bill, Trump Says To Senate Gop; Trump To End Insurance Payments; Police Departments Question Trump's Speech; Venezuela Election Violence; Russia Slash U.S. Diplomatic Missions Staff; U.S. And Japan Increase Economic And Diplomatic Pressure On North Korea; U.S. Tests Thaad Missile System; Prison Break In Alabama; Apple's Quarterly Report; Myra Program Ends; Tesla Model 3 Up For Sale. At 4:30-5a ET

Aired July 31, 2017 - 4:30   ET

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


[04:30:00] (JOINED IN PROGRESS)

JASON BRIGGS, CNN EARLY START SHOW HOST: "Early Start" continues right now.

BRIGGS: Will a new chief of staff bring order back to the West Wing? A new era for the Trump administration when General John Kelly is sworn in for his new role today.

ALISON KOSIK, CNN EARLY START SHOW HOST: The president refusing to go quietly on health care after a major rebuke in the senate. He's suggesting sweeping changes which could have a big impact on insurance for millions of low-income Americans.

(VIDEO PLAYING)

BRIGGS: A violent election day in Venezuela. The Maduro regime now celebrating in what global observers say could make him the next dictator. And that's not the only trouble overseas this morning. We have reporters on all our top stories from the White House, Caracas, Moscow, and Beijing as crisis and confrontations develop around the world. It is a crucial morning. Welcome back to "Early Start." I'm Dave Briggs.

KOSIK: Good morning. I'm Alison Kosik. I'm sitting in for Christine Romans this morning. It's 30 minutes past the hour and President Trump's new chief of staff front and center at the White House. John Kelly assumes the position after what many view as the worst week of the Trump presidency.

How many times have we heard that? Kelly will be sworn in this morning at 9:30. The retired Marine Corps general will be enlisted with trying to restore order to a White House that appears to lack direction and discipline.

BRIGGS: No easy task for sure. Both sides of the aisle are cautiously optimistic.

(BEGIN VIDEO CLIP) REP. NANCY PELOSI (D), CALIFORNIA: I look forward to working with General Kelly.

SEN. SUSAN COLLINS (R), MAINE: I do think that General Kelly will do a good job as the White House chief of staff. I think he will bring some order and discipline to the West Wing.

SEN RICHARD BLUMENTHAL (D), CONNECTICUT: If anybody can bring order and discipline to this White House, it is General Kelly.

REP. MARK SANFORD (R), SOUTH CAROLINA: I think that in terms of a great leadership component, the White House needs General Kelly representing it.

(END VIDEO CLIP)

A big early challenge for Kelly concerns chain of command issues. Who reports to who is still unclear. Typically senior advisers report to the chief of staff. As we know though, this is not your typical White House.

KOSIK: A senior administration official does tell CNN Kelly has been given full authority. The president tapped General Kelly who was serving as Homeland Security Secretary to replace Reince Priebus who resigned last week.

BRIGGS: John Kelly's swearing-in will be followed by a cabinet meeting. President Trump and Attorney General Jeff Sessions in the same room for the first time since the president began his barrage of public criticism aimed at his A.G. with the leadership spot at Homeland Security now vacant, there are rumors the president could move Sessions there, install a new attorney general who would then presumably fire Special Counsel Robert Mueller.

KOSIK: The Trump team is said to be weighing all of its options. Jeff Sessions has been in hot water with the president since recusing himself from the investigation into Russia's meddling in the 2016 election and possible collusion with the Trump campaign. Lawmakers on both sides of the aisle have warned against firing Sessions.

Homeland Security secretary is a senate-confirmed position with responsibilities that include the construction of the border wall and implementation of the Trump travel ban.

BRIGGS: Even after Senate Republicans failed to repeal Obamacare, President Trump refusing to give up the fight. The president goading lawmakers to keep trying to pass a health care bill in a series of tweets this weekend including this one, "Unless the Republican senators are total quitters, repeal and replace is not dead. Demand another vote before voting on any other bill."

KOSIK: Several GOP senators are calling for return to the committee process to craft legislation. Among them, Maine Senator Susan Collins who voted no on last week's repeal bill, and Arizona's Jeff Flake who voted yes. But the Trump administration may already be looking for ways to undercut Obamacare. Health Secretary Tom Price was asked about the individual mandate on ABC's "This Week." Listen.

(BEGIN VIDEO CLIP)

MARTHA RADDATZ, ABC NEWS HOST: What about the individual mandate? Is the president considering directing his agencies not to enforce it? Have you ruled that out?

TOM PRICE, SECRETARY OF HEALTH AND HUMAN SERVICES: The individual mandate is one of those things that actually is driving up the cost for the American people in terms of coverage. So what we're trying to do is make it so that Obamacare is no longer harming the patients of this land, no longer driving up costs, no longer making it so they've got coverage but no care. And the individual mandate is one of those things. All things are on the table to try to help patients.

(END VIDEO CLIP)

BRIGGS: The president also making some threats that could have a big impact on insurance markets. We get more from CNN's Athena Jones at the White House.

ATHENA JONES, CNN WHITE HOUSE CORRESPONDENT: Good morning Dave. The president is keeping the pressure on senate Republicans to continue working on efforts to repeal and replace Obamacare. He tweeted about this numerous times over the weekend. Some of the tweets that got

[04:35:00] the most attention came on Saturday, the president issuing what many viewed as a pair of threats, writing "If a new health care bill is not approved quickly, bailouts for insurance companies and bailouts for members of Congress will end very soon." And that the president is referring to two things here. One is this idea of ending the employer contributions for health insurance for members of Congress. That's the contribution that lawmakers get from the federal government.

The other point he makes has to do with the cost-sharing subsidies that help lower deductibles and co-pays for some seven million lower income people across the country. That is a threat that has drawn ire from both sides of the aisle. Maine GOP Senator Susan Collins took issue with the word "bailout" and argued that getting rid of subsidies which insurance companies rely on would hurt the most vulnerable people in communities across the country.

(BEGIN VIDEO CLIP)

COLLINS: It really would be detrimental to some of the most vulnerable citizens if those payments were cut off. They're paid to the insurance companies, but the people that they benefit are people who make between 100 percent and 250 percent of the poverty rate. So we're talking about low-income Americans who would be devastated if those payments were cut off.

(END VIDEO CLIP)

JONES: White House counselor Kellyanne Conway said on "Fox News Sunday" that the president will be making a decision about whether to continue these cost-sharing subsidies which right now are being paid out on a month-to-month basis. A decision on that will be made at some point this week. Back to you.

BRIGGS: Athena Jones there at the White House. The law enforcement community offering some pretty aggressive push back to President Trump's statement encouraging police officers to be rough with the people they arrest. Police officials saying it sends the wrong message at a time of heightened tensions with the public. The president's remarks coming at a law and order speech last week in a New York suburb directed at cracking down on violent street gangs.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: When you see these thugs being thrown into the back of a paddy wagon, you just see them thrown in, rough, I said please don't be too nice. Like when you guys put somebody in the car and you're protecting their head, you know, the way you put the hand over -- like don't hit their head and they've just killed somebody, don't hit their head. I'd say you can take the hand away, OK?

(LAUGHTER)

(APPLAUSE)

(END VIDEO CLIP)

KOSIK: Now, despite the applause you heard there, police in Suffolk County where the president spoke, they say they have strict rules and procedures that will not tolerate roughing up prisoners. Police departments in New York City, Boston, and Los Angeles among others also criticizing the president's message.

BRIIGS: all right ahead, from new trouble from a trio of global adversaries, Russia retaliating with sanctions, North Korea threatening the same. And Venezuela in chaos after an election being called an affront to democracy. We're live on all three of those stories around the globe, next.

[04:40:00] (COMMERCIAL BREAK)

KOSIK: Venezuelan President Nicolas Maduro declaring victory in a controversial election. It's widely regarded as a fraud and a vehicle to rewrite the constitution to consolidate Maduro's power. Government officials in Caracas claiming a voter turnout of over 41 percent. Maduro's opponents calling that figure pure fiction. The violence on Sunday very real. Now, we want to caution you, the video we're about to show you is disturbing.

(VIDEO PLAYING)

BRIGGS: One police officer caught on fire from that explosion. Election Day clashes between protesters and police claiming at least ten more lives on Sunday. The death toll since early April now at 125. The State Department condemning the election, insisting the U.S. will continue to take strong and swift actions against the Maduro regime. Let's get the latest now from CNN's Leyla Santiago, live from Caracas. Good morning to you Leyla. Now we understand there are wide disputes about how many voted in this election and how about the fact that how many of those that voted did they actually have a choice, or did the government require state workers to vote?

LEYLA SANTIAGO: Right, so Dave the government last night, and by the government I mean President Maduro himself, called this a victory. The opposition is calling this a fraud. There were about 19 million voters eligible to hit the polls and support this constituent assembly but the government is saying there were more than eight million voters who actually came out and did that.

Now, why is that eight such an important number? It's because it's more than the opposition had when it comes to support. Just a few weeks ago when the opposition held a referendum to see if the country even wanted this election for a new assembly that could rewrite the constitution and could also give president Maduro more power.

But to the point you made about was it a choice, did people have any say in whether or not they voted, when I hit the polls yesterday and talked to people, they said no, you know. We are here because we want to support the government. We want to support the President. But many will tell you off camera that there was a lot that depends on that vote. That they were afraid that if they didn't show up to vote that perhaps the government could hold back some of the food that they get, that some could be fired from their jobs.

So, many people say that they had to vote just to be able to continue their life. A life that is

[04:45:00] very difficult these days given the collapsing economy. One of the interesting things when you go out to these protests, the protests being held by the opposition, you really see a young crowd. The youth -- the youth that has never really lived what was once the wealthiest country of Latin America. A youth that is fighting to have what once was here in Venezuela.

I talked to one 12-year-old as he was making a Molotov cocktail on the streets to fight the National Guard that clashed so many times on the streets with the opposition, not only yesterday but this week. And really months of unrest as we had seen it here in Caracas.

BRIGGS: So as they head toward dictatorship, the U.S. considering further sanctions. Leyla Santiago, thank you.

KOSIK: And in response to Venezuela's controversial election, the U.S. is considering slapping sanctions on the vital oil industry. Right now, Venezuela's only source of income is oil exports and the U.S. is one of its top customers. So sanctions would further cripple its economy.

Two senior administration officials have confirmed they could be announced as early as today. But oil sanctions, they're kind of a double-edged sword because American energy firms rely on Venezuela's cheap crude and cutting it off could cause U.S. gas prices to rise. At the moment, sanctions on imports, they don't look likely but even a likely ban on the sale of crude to Venezuela that could still hurt America's supply. And that's because Venezuela mixes U.S. crude with its own before it ships it back to the U.S.

Meantime, corporate America has already fled Venezuela over the instability, names that you recognize -- Delta and United Airlines, they're suspending flights. GM shut operations after the government seized its plant in May -- Bridgestone, Colgate, and Mondelez also cutting ties in recent years.

But a few companies still remain there like Pepsi, General Mills, and McDonald's. However, you look at McDonald's, it no longer counts sales that it makes in the country. You know, you see the devastation that's going on in Venezuela, companies pulling out, obviously only hurting the economic devastation there.

BRIGGS: Yes. Things not getting better any time soon. OK, an apparent retaliation for the sanctions bill just passed by Congress, Russian President Vladimir Putin now confirming the staff at U.S. diplomatic missions in Russia will be cut dramatically by more than 700. That includes diplomats and technical workers. The State Department says the move is regrettable and uncalled for. Officials are assessing the impact and a possible response. Let's bring in CNN's Claire Sebastian who is live in Moscow. Claire, why this number, 755 diplomats expelled?

CLAIRE SEBASTIAN, CNN INTERNATIONAL CORRESPONDENT: Right, David, the justification from the Russian side for that is that cutting 755 from the U.S. diplomatic mission here in Russia would bring the total down to 455 which it says is the same number of Russian diplomats that are currently in the United States. Of course, this is still a big number. Don't forget in December when the Obama administration slapped sanctions on Russia, they expelled 35 diplomats.

Now, 755 we know is not just diplomats, it is technical staff and it's not clear yet if that includes Russian people that the U.S. mission employs here in Russia. But you know, President Putin saying that the clinching factor for this was the passage of that bill through Congress. He called that an unprovoked act by the U.S. to worsen relations with Russia. And he explained why that brought him to this point. Take a listen.

(BEGIN VIDEO CLIP)

VLADIMIR PUTIN, PRESIDENT OF RUSSIA (through translator): We waited a long time for things to perhaps change for the better. We had such hope that the situation would change, but judging by the situation, that will not be soon.

(END VIDEO CLIP)

SEBASTIAN: Well they waited seven months, but also not helping perhaps, you know, de-escalate tensions today, Mike Pence, the vice president of the U.S. currently in Estonia on Russia's doorstep, re- assuring that country that the U.S. supports it and supports NATO against Russian aggression. He also said that President Trump still supports the sanctions bill and they expect Russia's behavior to change. Russia, for its part, though, says it does not do anything under pressure, Dave.

BRIGGS: President Trump expected to sign that sanctions bill today. Claire Sebastian live for us in Moscow. Thanks.

KOSIK: The U.S. and Japan agreeing to take further action against North Korea. Prime Minister Shinzo Abe and President Trump speaking by phone Sunday, just days after North Korea's latest missile launch. The two leaders discussing increased economic and diplomatic pressure on the Kim Jong-Un regime.

But that will require help from China, the target of a nasty Trump tweet storm that we saw late last week. Let's go to CNN's Will Ripley live for us from Beijing with the latest developments. You know, you look at what's left of that China can actually do to impact and to influence North Korea. North Korea relies on China's oil so why can't China just

[04:50:00] block access to that oil? Why won't China do it?

WILL RIPLEY, CNN INTERNATIONAL CORRESPONDENT: Because what China doesn't want to do is to take such a strong action that it would de- stabilize the North Korean regime led by Kim Jong-Un, cause possible instability to the point that there could be a humanitarian crisis. People pouring over the border into China or even worse for China strategically would be an entire Korean Peninsula allied with the United States, which would be the likely outcome if a war were to break out.

And of course, nobody's talking war right now, but things have certainly been escalating. President Trump showing his annoyance with Beijing over the weekend, on Friday night tweeting out that China has done nothing to solve the North Korea problem, threatening possible trade repercussions or at least alluding to the possibility that that could happen.

Beijing not taking the bait, not responding. President Xi Jinping did give a speech just hours after President Trump's tweet while he was presiding over a massive military parade at one of China's training sites. In Inner Mongolia you saw stealth fighters, China's own nuclear-capable ICBM's, and a message from the Chinese president that they will continue to strengthen their own army in light of the escalating security situation.

And China cannot be happy with what the United States is doing right now because they think the United States shares the blame just alongside North Korea for the escalating tensions on the peninsula. Hours after North Korea launched its ICBM. The United States displayed its own military force by shooting missiles into the ocean along with the South Korean military, by flying a U.S. bomber along with South Korean and Japanese jets on the Korean Peninsula.

And then on Sunday, the United States tested the THAAD missile defense system that can shoot down North Korean missiles. But China views the THAAD placement in South Korea as a destabilizing act, just like the ICBM because THAAD could also theoretically be used to shoot down Chinese missiles. So at a time when the U.S. and China need to be coming closer together, Alison, they only seem to be drifting further apart.

KOSIK: And it's becoming a more and more complicated chess game that's to say the least. All right, CNN's Will Ripley live for us from Beijing. Thanks very much. Tesla is delivering its first attempt at an affordable electric car. But what's the reaction to it? That's next on CNN Money Stream.

[04:55:00] (COMMERCIAL BREAK)

BRIGGS: Breaking overnight, two inmates remain on the run after escaping from an Alabama jail. A dozen inmates originally busted out of the Walker County Jail Sunday night. Ten have since been captured. One of the two still on the loose was being held on attempted murder charges. Authorities say it's not clear how they made their escape.

KOSIK: Chris Christie may want to consider avoiding beaches and ballparks. I want you to go look at the New Jersey governor at a ball game in Milwaukee getting in the face of a heckling fan without spilling a single nacho. How about that skill?

Notice the cradling action the governor uses to protect the bowl. Christie was in Milwaukee over the weekend visiting his son who works for the Brewers. Now, in case you're wondering he told the heckling fan, "you're a real big shot." The fan replied, "I appreciate that."

Let's get a check on CNN "Money Stream" this morning. We're watching global markets -- they're mostly higher after the Dow hit a record high. But the Nasdaq and S&P 500, they slipped on negative reaction to earnings from Amazon. However, you look at earnings season overall, it's been strong. The S&P 500 profits are expected to rise 11 percent this quarter. That's going to mean 2017 had the best two consecutive quarters in six years.

Coming up this week, the most valuable company in the world delivering its quarterly report -- Apple reporting on Tuesday. It's another potential market mover this week. The July jobs report that comes out on Friday morning. And we're going to find out whether employers continued adding workers at a strong pace. In June, the U.S. economy added 222,000 jobs.

The treasury is ending an Obama-era program called Myra to help Americans begin saving for retirement. Treasury is citing costs. The program has cost taxpayers $70 million so far. However, just 30,000 people have opened an account. Only 20,000 of those have money in them. The Treasury Department is promising to help participants transfer their money into private investments. However, advocates are saying the U.S. Has a retirement savings crisis. Almost one in four workers has less than $1,000 saved.

Tesla is handing over the first Model 3 electric cars to buyers. It's the company's first attempt to deliver an affordable electric car to the masses. The Model 3 starting price at $35,000 -- it's much cheaper than Tesla's previous offerings which could exceed $100,000. So far the cheaper version has over half a million advance reservations.

But prepare to blow -- pass through the advertised price tag if you want the most eye-catching feels that includes a different color, enhanced auto pilot, and longer lasting battery. That last one alone, that's going to cost you an extra $9,000 so suddenly the $35,000 bottom-base sticker price --

BRIGGS: Which isn't cheap to begin with, just to be clear.

KOSIK: I know, you're going to start adding on, you're going to wind up with a $100,000 car anyway.

BRIGGS: But if you're going to get a tesla, you got to have the auto pilot. I'm not sure what that involves --

KOSIK: Absolutely.

BRIGGS: -- but I'll sign up for that. OK, "Early Start" continues right now.

Will a new chief of staff bring order back to the West Wing? A new era for the Trump administration when General John Kelly is sworn in for his new role today.

KOSIK: The president is refusing to go quietly on health care after a major rebuke in the senate. He's suggesting sweeping changes which could have a big impact on insurance for millions of low-income Americans.

BRIGS: A violent election day in Venezuela. The Maduro regime now celebrating a result global observers say could make him the next dictator.

[05:00:00] That's not the only trouble overseas this morning. We have reporters on all our top stories from the White House, Caracas, Moscow and Beijing as we head towards crisis and confrontations around the world.

Good morning everyone and welcome to "Early Start." I'm Dave Briggs.

KOSIK: Good morning --