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EARLY START

Harvey Batters Texas; Trump: Arpaio Pardon Timed to Ratings; Japan: North Korea Launch Gravest Threat Ever. Aired 5-5:30a ET

Aired August 29, 2017 - 05:00   ET

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


[05:00:00] CHRISTINE ROMANS, CNN ANCHOR: The Japanese yen considered a haven currency. It is currently at a four-month high against the U.S. dollar.

Flooding from Tropical Storm Harvey keeping many oil refineries shut down, knocking at least ten key refineries off line. A third of America's refineries are on the Texas coast, including the second largest in the country. These closures remove about 2.2 million barrels of oil per day from supply.

That means higher gas prices. The average U.S. gallon of gas is already up four cents from last week. Expect a 5 to 15 percent rise the next few days. But we think it's going to be temporary. Gasoline futures rose again overnight. Still down from a two-year high on Sunday.

So, you're going to get a little bit of a pain at the pump. But we think that's going to recede in the next week or two.

DAVE BRIGGS, CNN ANCHOR: Short term.

All right. EARLY START continues right now with the latest projections from now-tropical storm Harvey.

(MUSIC)

BRIGGS: Devastating scenes playing out across southeast Texas as tens of thousands are stranded, waiting for rescue from Harvey's wrath. And the rain is not letting up just yet. We're live in Texas ahead.

ROMANS: President Trump heads to Texas today to survey the damage, but questions follow him. Did he really pardon a controversial sheriff to get more coverage during the storm?

BRIGGS: And North Korea launches another missile. This one over Japan. A serious escalation the prime minister says poses the most grave threat ever to Japan.

CNN is the only Western news organization reporting live from North Korea.

ROMANS: Wow.

BRIGGS: We'll go there shortly.

Good morning and welcome to EARLY START, everybody. I'm Dave Briggs.

ROMANS: And I'm Christine Romans. It is Tuesday, August 29th. It is 5:01 a.m. in the East. It's 5:31 in the evening in Pyongyang. It's 4:00 a.m. in Houston.

This morning, desperation settling in for thousands of people on the Texas gulf coast. They are still stranded by Harvey. This with forecasters predicting there is much more rain, much more yet to come.

BRIGGS: There have now been more than 6,000 rescues by Houston police and the Coast Guard alone. That does not include many other agencies out there saving lives. Officials say there are potentially tens of thousands more people trapped, awaiting rescue. The Coast Guard says it's getting upwards of 1,000 calls per hour.

ROMANS: The official storm-related death toll now stands at four people. Several others are suspected to be connected to Harvey. We expect this number to rise. An astounding 58 counties are under a state disaster declaration. All 12,000 members of the Texas National Guard have been deployed to assist.

BRIGGS: Neighbors also trying to help one another like the Good Samaritans here carrying out this wheelchair-bound man above the floodwaters. Four-legged residents also getting help. The chambers county sheriff's office reports rescuing well over 300 animals yesterday alone.

ROMANS: The terrible toll by Harvey coming into focus in these before and after pictures. Roads and highways, houses, green space, all simply unrecognizable.

Derek Van Dam joins us from Sugarland, Texas, southwest of Houston, where more than two feet of rain has already fallen.

Good morning, Derek.

DEREK VAN DAM, AMS METEOROLOGIST: Good morning, Christine.

In fact, if we go back to June 1st, just in Houston alone, 50 inches of rain has fallen. That's more rain than they receive in an entire year's time. It really puts it into perspective what we're dealing with here.

Rainfall totals have been remarkable, historical. From a meteorological perspective, it's just incredible to see what's happened here. And you can imagine that this has been a long treacherous night for the -- for not only the rescue operations but also for the people stranded with the rising floodwaters.

We have witnessed it firsthand behind me how quickly the water can rise and how quickly it can fall. It's got ebbs and flows, as various rain bands feed through the city of Houston and across the area. Incredible, heroic stories coming in from our angles. We've had search and rescue people, efforts rescuing people with medical conditions. We've had pets reunited with their family members, incredible,

incredible stories. In fact, talking to one volunteer, they came across a house as they were navigating some of the neighborhoods here that had flooded. And they had a sign draped over one of their balconies that wrote the letters "help," and that's the only reason that they knew that there were people stranded within that particular household.

Now, the search and rescue efforts staged across the greater Houston area have been remarkable, as well. In fact, just about five miles to the west at the Sugarland airport, there are 26 ready and fueled helicopters waiting for of first hint of daylight so they can continue with their search and rescue operations from the air.

[05:05:05] There's also staging facilities for boat rescues that have been ongoing all night. Brave men and women out there volunteering their time and taking care of the stranded people.

Now, the forecasts going forward is incredible, almost remarkable to see that this storm is going to make a second landfall. That going to happen late Tuesday night and into early Wednesday morning, just east of Houston. It will be a tropical storm.

The fact that it's over the gulf waters now means that it still is pulling in a considerable amount of moisture. So, the threat right now continues to be the ongoing flooding, 15 million people under a flood threat right now. And many thousands in Houston and the general southeast coast of Texas hunkering down at shelters at this hour -- Dave, Christine.

ROMANS: Wet, miserable, drenched, and distressed. So many folks are. Nice to see pictures of people helping people. Strangers and friends alike. All those folks out there, you know, with boats at the ready trying to help folks out.

Thanks so much for that, Derek Van Dam.

BRIGGS: All right. A dire scene unfolding in Texas. The unrelenting rain flooding many city streets and, in some cases, local rivers cresting at record levels, sending water rushing into neighborhoods.

Miguel Marquez has more from La Grange, Texas.

(BEGIN VIDEOTAPE)

MIGUEL MARQUEZ, CNN CORRESPONDENT: Christine, Dave, this is Fayette County, we're about 100 miles west of Houston. And this gives you a sense of how big and wide the storm is. This is the Colorado River. Typically, it is about a quarter mile that way. But it is way, way above flood stage today.

I want to show you how high it came up here. This is the line here where it came up, but it is starting to recede. This is the good news.

Let me jump over here and show just how much it's starting to recede. You can see sort of the wet bit of the street here. This is where the river is now. It's down two or three feet at this point, and it's expected to keep going down slowly over the next several days and into next week. They hope to get back to somewhat of normal in La Grange, Texas.

They had about -- there's about 4,800 people in this town. They had about 1,000 people displaced. About 200 homes and businesses are completely inundated in neighborhoods near here. The worst of it is over for here, but towns downstream like Columbus and others, downstream of the Colorado River, they are looking at crests going into Tuesday and further as the rains and the crest moves down the Colorado River toward the Gulf of Mexico -- Christine, Dave.

(END VIDEOTAPE)

ROMANS: All right. Miguel, thank you for that.

You know, global stock markets right now, U.S. stock futures are falling overnight after North Korea launched a missile over Japan. The Dow currently down about 125 points. More on that in a bit.

But, first, flooding devastating the Texas Gulf Coast. Trying to assess how much damage this will cost. It's honestly too early to tell. Early estimates put property damage at $40 billion, making it one of the costliest storms to ever hit the U.S. Only three hurricanes cost more.

Typically, high winds caused the most damage. But in Harvey's case, it is flooding. And many, many homes in the area do not have flood insurance.

There's also damage to the region's oil industry. Beyond the costs for the current shutdown of many oil refineries and rigs, the storm could damage $20 billion worth of infrastructure. Eventually, Texas needs federal help to help fund the cost. But FEMA's 2017 relief fund only has $3 billion left.

So, Congress will need to pass a large aid package when it returns next week. Possibly complicating another fiscal deadline, current government funding runs out September 30th. Lawmakers must approve a spending bill before then to prevent a government shutdown.

BRIGGS: Will this be politicized?

Greg Valliere joins us to see how easy this may be to fund.

All right. Ahead, President Trump heads to Texas, thus far passing the first natural disaster test. But also raising questions -- did he use the storm to boost publicity for the pardon of Joe Arpaio?

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Well, a lot of people think it was the right thing to do, John. And actually in the middle of a hurricane, even though it was a Friday evening, I assumed the ratings would be far higher than they would be normally. You know, the hurricane was just starting.

(END VIDEO CLIP)

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[05:13:34] ROMANS: All right. President Trump heads to Texas to survey the damage today and assess relief efforts. The White House has not yet announced where the president will travel, but we know flight restrictions are set for Austin and Corpus Christi. So, that's a hint. The president says Congress will take, quote, rapid action on disaster relief funding.

BRIGGS: Ahead of the trip, more than a little controversy, though. The president defended his decision to pardon former Arizona Sheriff Joe Arpaio. The president was criticized for announcing that decision Friday night, just as Hurricane Harvey hit Texas. Many say the timing was meant to bury the story.

But the president -- well, he insisted during a news conference yesterday that he wanted to draw attention to the pardon.

(BEGIN VIDEO CLIP)

TRUMP: Well, a lot of people think it was the right thing to do, John. And actually in the middle of a hurricane, even though it was a Friday evening, I assumed the ratings would be far higher than they would be normally. You know, the hurricane was just starting.

(END VIDEO CLIP)

ROMANS: So, timing it to maximize the news.

BRIGGS: That's right.

ROMANS: Arpaio was convicted of criminal contempt for ignoring a court order in a racial profiling case. The president said he felt, quote, Sheriff Joe was treated unbelievably unfairly.

BRIGGS: All right. Let's bring political economist Greg Valliere. He's chief strategist for Horizon Investments.

Good morning to you, sir.

ROMANS: Hey, Greg.

GREG VALLIERE, POLITICAL ECONOMIST: Hey, good morning.

BRIGGS: We will get back to the controversial pardon of Joe Arpaio, but let's start with Texas. Hurricane, now tropical storm Harvey on the minds of everyone as the president heads to Texas today.

[05:15:01] Thus far, do you think he's passed the test pretty well, and what does he need to do in Texas today?

VALLIERE: I give him good grades, Dave, for being on top of this, for monitoring it closely. But he absolutely, positively cannot do a victory lap and say things are getting much better. It's been well- coordinated. I think clearly in the last 24 hours, the level of human suffering has increased dramatically.

It poured all night last night in Houston. It's going to rain more. It's way too early to declare this a victory.

ROMANS: Yes. There are so many people displaced. There are so many people who are still in their homes, and the water will continue to rise, who will be displaced in the next few days. And you have sort of these citizen rescuers out picking people up in their boats and in borrowed boats. I mean, it really is a remarkable, remarkable story. And we are only in the very beginning of it here.

It seems may be crass and inappropriate to talk about, you know, the functioning of government and how to pay for this, but this will be a fight in Washington, won't it? And it will come in a time when, you know, we have to fund the government in September. How does Harvey complicate the work that's going to go on in Washington in the next four to five weeks?

VALLIERE: Well, I tell you, Christine, I'll give you a contrarian thought this morning and that is the absolute necessity to pass a hurricane relief bill does make it easier, perhaps, to avoid the debt ceiling crisis or budget crisis because they're going to put the hurricane aid on one of those bills. I would guess the debt ceiling bill. And how can you vote against it?

There will be a few and it's worth noting some Texas Republicans oppose the Hurricane Sandy aid. I think the opponents of any new aid will get drowned by obviously the enormous support for aid. That makes it easier to get a budget deal done.

BRIGGS: Yes, that Sandy aid coming back to haunt John Cornyn in particular, the senator from Texas, who's out there speaking on behalf of victims as well as crews, as well, who voted against it.

But let's move on to interesting reporting regarding the Russia story and ties to President Trump. Front-page news on both "The New York Times" and "The Washington Post" this morning, in particular the post who reports an e-mail from Michael Cohen, who's one of Trump's closest business associates. This went directly to Dimitri Peskov, a first lieutenant to Vladimir Putin, talking about direct communication between the two parties regarding a Trump Tower in Moscow.

Where does that leave this investigation?

VALLIERE: Well, I tell you, had it not been for North Korea last night and the hurricane, this would be an even bigger story, Dave. I think that you've got to expect a Robert Mueller to issue subpoenas to Cohen to find out just what he was trying to solicit from te Russians. This could be a pretty big story.

ROMANS: Interesting, too. The president, you know, he was asked about where he sees the threat level on Russia at a press conference yesterday. Listen to what he said.

VALLIERE: Yes.

(BEGIN VIDEO CLIP)

REPORTER: Mr. Trump, would you consider Russia a security threat? Thank you.

TRUMP: Well, I consider many countries as a security threat, unfortunately.

(END VIDEO CLIP)

ROMANS: That caught a lot of folks by attention. You know, that he --

BRIGGS: Political punt.

ROMANS: Yes. He won't say Russia is a threat. He broadens it, moves it around it.

VALLIERE: That angle apparently will never change. He -- he has a blind spot for Putin and the Russians. I think that's going to prevail.

I would add, though, the big story geopolitically as we all know came overnight. I would argue that the latest North Korean launch represents the greatest threat we've seen so far to some wider military action. I think you've got to say strikes against the Korean missile sites are no longer off the table. I think they're very much in the mix right now.

BRIGGS: Yes. We haven't heard the president use the language "fire and fury" about this, no tweets about it. How do you expect the Trump administration to react to that provocation?

VALLIERE: Well, I'm sure they're talking to the Japanese, and the Japanese are aghast and feel threatened. I think that at the very least, we're going to have to really ratchet up sanctions. I think negotiations are pointless.

And again, I do think the Pentagon has a plan. I think they prefer not to execute it. But I think they have a plan to strike some of these missile sites if North Korea continues this type of outrageous behavior.

BRIGGS: President Trump did speak with Shinzo Abe on Monday. The situation far, far from over.

ROMANS: That's right. All right.

VALLIERE: Yes.

ROMANS: Greg, come back in a few minutes. We'll talk some more. Thank you, sir.

VALLIERE: OK. ROMANS: All right. Japan voicing grave concerns after that North Korea missile flew over Japanese territory. It comes a week after the president said North Korea was starting to respect the U.S.

CNN, we have a live report. We will go to Pyongyang, next.

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(BEGIN VIDEO CLIP)

[05:24:20] TRUMP: Kim Jong-un, I believe he is starting to respect us. I respect that fact.

(END VIDEO CLIP)

ROMANS: Well, apparently not. The U.N. Security Council holding an urgent meeting in response to North Korea launching a missile that flew over Japan. The Japanese Prime Minister Shinzo Abe calling the launch reckless and the most serious and grave threat to his country ever.

Will Ripley is the only Western journalist in Pyongyang right now. He joins us live from there with the very latest.

Will, we're so lucky to have you there with the perspective that you're getting from the North Korean regime. What are they telling you?

WILL RIPLEY, CNN INTERNATIONAL CORRESPONDENT: Well, as of right now, officially, this missile launch still hasn't been announced here in North Korea, Christine.

[05:25:04] So, we were just out speaking with people. But we're told that we could not tell them about the launch itself until there is the official, likely triumphant announcement on state media which could come in the coming hours, maybe tonight or even tomorrow morning. North Koreans are always the last to know when things like this happen.

But officials who are aware of the launch are telling us that this sends a very strong message, a message of defiance, a message of anger at the United States over the ongoing joint military exercises with South Korea. It's noteworthy that they launched the missile pretty close to where I'm standing right now, at the Pyongyang Airport, about 20 miles from our hotel. It's the airport we fly into when we come here.

North Korea, by launching a missile in a highly populated area like their capital, is saying essentially to the U.S. that if they even consider something like a preemptive strike on missile facilities, it could have very grave humanitarian consequences. Then, of course, the trajectory taking it up over northern Japan, highly provocative to fly a missile over a key U.S. ally. Five million Japanese woken up with a frightening air raid sirens and messages on their phones.

But the missile trajectory was not south toward Guam, as North Korea threatened several weeks ago. Which Japan's foreign minister hinted may be a sign of North Korea backing down by not carrying out the threat. Perhaps they thought strategically they could fire it in this particular direction.

Of course, Christine, the North Koreans will tell you they are not backing down whatsoever, and they are prepared to step up the escalation even further if they deem it to be necessary.

ROMANS: Wow. Will, that's just fascinating, the ideas of you being able to go in the streets. You know that this has happened and you can't say anything because the handlers there, of course, control so tightly the information that the North Korean people receive.

We know that analysts believe this launch shows a new level of confidence from North Koreans. It is ki think the 14th launch since February 2nd, the last few days.

What is the effect on potential diplomatic efforts?

RIPLEY: Well, you heard Secretary of State Rex Tillerson just within the last week praising North Korea for showing restraint. It will be interesting to hear what he thinks now. Remember, he did speak over the weekend saying that any ballistic missile launch is a violation of U.N. Security Council resolutions.

President Trump and Japanese Prime Minister Shinzo Abe spoke for 40 minutes in an emergency phone call last night, and they talked about the need to potentially move for defensive military assets into the reason. South Korean authorities told us that, as well. We might have more military equipment rolling in. You might see the U.S. and allies pressuring the U.N. for greater international sanctions.

Yet in the back-channel world, there's always ongoing back-channel discussions usually happening in New York. What I have been told on the ground here is that the discussions have not been happening much between the U.S. and North Korea. And the previous discussions hadn't been very fruitful.

North Korea is determined not to come to any bargaining or diplomatic table from a position of weakness, Christine. They say they're going to do it from a position of strength which may be why they continue to defiantly test these missiles.

ROMANS: All right. Will Ripley, so -- so fortunate to have you there in Pyongyang. Thank you so much for that, Will. Stay safe.

BRIGGS: Boy, so many tests facing this president.

Devastation and desperation in Texas, not to mention some inspiration. We heard from guests earlier in this program. But the death toll is rising. And sadly, the rain is not letting up in Texas. We're live with the damage and the forecast, next on EARLY START.

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