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Tax Plan Being Unveiled; President Trump And President Putin; Dramatic Change of Tone for Trump on China; North Korea Fights Back; Trump Not Blaming China; Putin and Trump Could Meet. Aired 1-1:30p ET

Aired November 9, 2017 - 13:00   ET


WOLF BLITZER, CNN ANCHOR: It's 1:00 p.m. here in Washington. Wherever you're watching from around the world, thanks very much for joining us.

ANNOUNCER: This is CNN breaking news.

BLITZER: We start with breaking news. A major day here in Washington for Republicans on tax reform. Right now, Senate Republicans are being briefed on their tax plan, and they will unveil their version very soon. We're standing by live.

Meanwhile, at any moment now, we also expect to see the final details of the House Republican tax bill. The big question, what are the gaps between the House and Senate plan?

CNN's Congressional Correspondent Sunlen Serfaty is joining us live from Capitol Hill. Sunlen, what are you already hearing?

SUNLEN SERFATY, CNN CONGRESSIONAL CORRESPONDENT: Well, Wolf, the details are still, right now, emerging up here on Capitol Hill.

But so far, according to sources, there are some pretty big differences between the House and Senate bill that right now lawmakers, here in the Senate, are being briefed on.

So, to just hit a few of them right off the bat. The Senate bill would have five to seven tax brackets. That's different than the House bill. That's four tax brackets.

Also, we expect some different income threshold levels in the Senate bill, which we do not know those threshold levels yet. We are still waiting to see.

The Senate bill has a partial repeal of the estate tax. It will have a full repeal of the state and local tax deductions. That's different than the House bill because that health plan preserves at least some deductions of the property taxes, among others.

Also notably, sources telling CNN that the Senate bill will call for a one-year phase-in of the 20 percent corporate tax rate. That's different than the House bill who -- which had an immediate and permanent reduction of the tax rate.

So, as we talk and in the days and weeks ahead about the differences between the Senate bill and the House bill, expect the House leadership and the Senate leadership to downplay the significance of the differences between their bills.

We're already starting to see that up here on Capitol Hill. Earlier this morning, speaker of the House, Paul Ryan, asked about all these details that are emerging. And the difference is he downplayed it. He said, look, the House has their version. The Senate has their version. This is part of the process. We then reconcile the differences.

But, Wolf, as we've been talking about, they are under such an incredibly tight and ambitious timeline. And that's why the differences here really matter, because they don't want any, sort of, speed bump in the timeline ahead.

BLITZER: Yes, that SALT issue, the State And Local Tax deduction issue, a major issue for a lot of Republicans in states like New Jersey, Connecticut, New York, California, where there are significant state and local tax deductions available to the nation's middle class.

Pressure also mounting, Sunlen, coming in from the White House. The budget director, Mick Mulvaney, pledging that the president will not, repeat not, sign any bill that raises taxes on the middle class. How do these two plans, as far as we know right now, stack up?

SERFATY: Yes, that was a very big and very clear promise from Republican leaders. But every middle-class taxpayer, they say, will receive a tax cut. But some analysis that are coming out in recent days really calling that into question.

Most notably from the Joint Committee on taxation. Their analysis says that, eventually, nearly one in five U.S. households would get a tax increase under the plan as it currently stands. Right now, we're talking about the House plan. And less than half would still be looking at a tax cut.

So, certainly, Republicans, up here, as they push forward to their goals to get this passed by the end of the year, not only is that a messaging problem, but certainly potentially a policy problem as well -- Wolf.

BLITZER: All right, let us know when we get the exact versions of the House and Senate language. We'll come back to you. Sunlen, thanks very much.

The House speaker, Paul Ryan, he sounded very confident this morning about Republicans making good on their promise to cut taxes. Listen to this.


REP. PAUL RYAN (R), WISCONSIN, SPEAKER OF THE HOUSE: We're doing this the right way. We're doing it the regular order way. It takes time. But trust me, we're going to get this over the finish line.

We ran in 2016 on doing this tax reform. The president ran on doing this tax cut and tax reform. So, this is about fulfilling our promises to the American people.


BLITZER: All right, joining us now to discuss all of this, our CNN Global Economic Analyst Rana Foroohar. She's the president of the -- also the president of the Committee for a Responsible Federal Government -- Federal Budget, I should say. Maya MacGuinees is with us. That's Maya. CNN Political Analyst David Drucker is with us. And CNN's Chief Political Analyst Gloria Borger.

So, they made a similar -- a very upbeat promise about repealing and replacing Obamacare. Didn't exactly work out, at least not yet.

Now, they're make being a very, very similar guarantee. They're going to cut taxes, don't worry about it.

GLORIA BORGER, CNN CHIEF POLITICAL Well, it's supposed to be the cut, cut, cut bill, as the president says. And what someone was saying is that we're not so sure, at this point. And who's going to get the tax break?

And you see large differences emerging between the Senate bill and the House bill, regarding state and local taxes which is, of course, very important to legislators from larger states. The question of the corporate tax rate. Would it be a one-year phase-in? Would it -- would it affect immediately?

[13:05:02] We don't know about estate taxes. How many brackets? This has to, kind of, work its way through.

But the big problem they're going to have is that they want to be able to tell every middle-class voter that your taxes are going to go down.

And what we're hearing and talking to Republicans is the promises are more like your taxes won't go up. That's not the same thing. It is not the same thing.

And it is a political messaging problem for them and a real problem for them.

BLITZER: The setbacks that the Republicans suffered in the elections the other day in Virginia, New Jersey, elsewhere around the country, how's that going to impact the ability of the Republicans to get their act together and pass this kind of legislation?

DAVID DRUCKER, CNN POLITICAL ANALYST: Well, interesting enough, it could add to the political will that existed to do it given that healthcare failed. And that is because Republicans are in a pickle. If they pass a bill nobody likes, obviously they've got a problem.

But controlling all levers of government, if they can't deliver anything this year in their first two years of the Trump administration, then voters, especially their voters, are going to say, why bother showing up in the midterms?

And so, Republicans have to be able to have something to show for not just what they promised but for the fact that they run everything.

Now, look, Gloria brings up a good point. You know, the president was going to call this cut, cut, cut and it's become hope, hope, hope.

Because every voter thinks that they're middle class. And I think the bill probably does a decent job of hitting the middle class from the $50,000 to $150,000 range.

But you have a lot of voters, and these were voters that voted on Tuesday, in suburban Philly and New York and suburban Washington and northern Virginia, that are on the upper end of the middle class, and they're not necessarily going to get a cut.

And these are contested districts that Democrats are going after. Some were won by Hillary Clinton last year, even though they're typically Republican. And that's where Democrats are hoping to win back the House majority.

And so, if the Republicans don't deliver for them, talking to Senator Chuck Schumer yesterday, he feels this is where Democrats can really make inroads. Republicans could be in real trouble, even if they do pass this thing and even if it does deliver for some of the voters that they're promising.

BLITZER: You know, Rana, you've spent a lot of time looking at the impact that these proposed tax cuts will have on the middle class. And the president is promising the middle class, the working class, they're going to pay less tax as a result of this legislation. What are you discovering?

RANA FOROOHAR, CNN GLOBAL ECONOMIC ANALYST: You know, there is no question that the majority of the tax plan is going to benefit the rich. And the Joint Congressional Committee on taxation says that.

Now, I want to be fair and say that when 70 percent of your tax base is rich individuals, it's really hard to craft a plan that doesn't benefit largely the rich.

But one of the things that disturbs me is that in both the Senate and the House plan and the White House plan, the real action is in corporate tax breaks.

And there is just no evidence, over the last 20 years, that giving rich corporations a tax break creates jobs and creates growth. That's a real mythology.

I mean, you're hearing Steve Cohen talk about trickle-down economics. We know that's broken.

And so, the idea that we're somehow going to magically create growth and jobs and good things for the middle class, by benefiting rich corporations which have more cash than ever on their balance sheets, is just wrong.

BLITZER: Well, let me ask Maya about that. Maya, you're the president of the Committee for a Responsible Federal Budget. Do you agree, disagree? How's this going to impact the average person out there, if there is a huge cut from 35 percent to 20 percent for corporations?

MAYA MACGUINEES, PRESIDENT, COMMITTEE FOR A RESPONSIBLE FEDERAL BUDGET: Yes. So, I think the way that we've been talking about this whole issue is a little bit too targeted to how does it affect the middle class? When if we keep in mind that the original purpose of tax reform was to grow the economy, and then you want to make sure that that translates into higher wages.

So, there are two things we need to be looking at which is how pro- growth is it? And who will benefit from that?

And in order to, really, have a tax reform bill that makes sense, it does need to be pro-growth. It does need to have a whole lot of elements where all the elements that are permanent instead of expiring every couple years which is what we have now. And it does need to be paid for which this bill is not.

And, recently, we've had a lot of scores that have looked at the plan, even after you account for economic growth, and it shows that it will still lose in the neighborhood of a trillion dollars. This at a time when the debt is the highest it has been, relative to the economy, since World War II.

So, I think we need to take a step back and think about the fact that we are moving forward with a plan. And I understand there is a political imperative to get it done. And I understand that everybody wants a tax cut.

But, listen, our debt is huge. We've just passed a budget that has zero spending cuts in it. And we don't have the revenue to pay for our promises in entitlement programs.

So, it's not clear to me -- in fact, it's clear that it's not the time for a big tax cut. It is important to think about how to grow the economy. And a big piece of that is, is what's going to come out of this final bill permanent?

Because if we have things sunsetting all over the place to try to fit into some arbitrary budget window that's already borrowing too much, that's not going to work to grow the economy at all.

BORGER: Don't you get the sense they're trying to just craft something that gets under the $1.5 trillion over 10 years --

[13:10:02] BLITZER: Deficit.

BORGER: -- deficit so they -- adding to the deficit so they can pass it under the budget resolution in the Senate. So, they only need 50 votes. So, they're cobbling together whatever they can. Not about policy but about how do they -- how do they stay under that number? And that seems to me to be, sort of, an odd way to concoct far- reaching legislation.

MACGUINEES: And you want smart economics more than smart politics. And that's always true but it's really true when you're talking about tax reform. Because some of the things that are best for the economy are harder to translate into talking points. And so, we don't want, kind of, the competing talking points to lead this to deterioration of the tax bill.

BLITZER: David, how awkward is this for some of those very conservative Republican deficit hawks who are concerned about the nation's debt, $20 trillion? This would increase it over 10 years by $1.5 trillion, maybe $1.7 trillion, according to the latest Congressional Budget Office report.

But they're willing to go along with that increase in the nation's debt. These tax cuts are not paid for.

DRUCKER: It's awkward for them, especially after the rhetoric we've heard from Republicans over the last eight years. I think what's even more awkward for them, though, is the, sort of, change in political tone which I do think matters in this debate, coming from Republicans for years especially under Obama.

But before that, Republicans argued that everybody that pays taxes deserves a tax cut. That doing things that way was good for the economy and it was fair.

And what they've basically done now is adopt the Democratic argument, even if not fully policies. They've adopted the Democratic argument that, really, the middle class deserves a tax cut. Nobody else needs it.

Now, on the corporate side, I think it's important to note, that Republicans have an argument to make here. Because what we have seen, over the past decade are so, are corporations based in the U.S. seeing that it is more advantageous for them to be headquartered overseas.

The Obama administration tried do something about this in a way Republicans didn't agree with. Republicans are trying to fix that this way.

And that does matter and can have an impact on jobs. And so, on the corporate side, I think there's a lot more unanimity among Republicans. I think the difficulty they're having is on the individual side.

BLITZER: All right, guys. Everyone stand by, Gloria, David, Maya, Rana we're standing by to get the actual language of the new legislation in the Senate and the House. We'll update our viewers, once we get the specifics.

Also coming up, from criticism to compliments, President Trump uses a new strategy with China, saying he doesn't blame for taking advantage of the United States when it comes to trade.

Plus, kremlin calling. Trump and Russian President Vladimir Putin, they're set to meet in Vietnam, with the issue of election meddling in the United States very much on the agenda.



[13:16:48] (BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Because we can't continue to allow China to rape our country. And that's what they're doing. It's the greatest theft in the history of the world.

China is responsible for nearly half of our entire trade deficit. They break the rules in every way imaginable.

We give state dinners to the heads of China. I say, why are you doing state dinners for them? They are ripping us left and right. Just take them to McDonald's and go back to the negotiating table. Seriously.


WOLF BLITZER, CNN ANCHOR: All right, as you heard before and while running as a presidential candidate, President Donald Trump hammered the Chinese when it comes to trades, calling them liars, cheaters and thieves, but now a rather dramatic change of tone by the president. During this, his first trip to China, the president has changed to a much more conciliatory message.


PRESET: Both the United States and China will have a more prosperous future if we can achieve a level economic playing field. Right now, unfortunately, it is a very one-sided and unfair one. But -- but I don't blame China. After all, who can blame a country for being able to take advantage of another country for the benefit of its citizens? I give China great credit. But in actuality, I do blame past administrations for allowing this out of control trade deficit to take place and to grow.


BLITZER: All right, let's go to our White House reporter, Kaitlan Collins. She's traveling with the president in Beijing right now.

Caitlin, trade and North Korea very much two of the big items on the president's agenda in China. So -- and you heard that very different tone coming in from the president when it comes to China. What was accomplished first on trade?

KAITLAN COLLINS, CNN WHITE HOUSE REPORTER: Well, the president certainly didn't accomplish the trade goals that he had in mind when he came here. He certainly wanted to notch a few wins for the United States. And that was one of his two priorities, the other being North Korea.

But, Wolf, we saw North Korea really dominate the talks here. And not only that, but we saw the president really change his rhetoric on trade. Instead of criticizing China, which was the center piece of his campaign, saying that they were, quote, raping the United States and promising to label them a currency manipulator, we instead saw the president today praise China for doing so and saying he didn't blame them for the trade imbalance and instead faulted those past administrations. So quite a change in tone from the president here.

We did not see the same from President Xi as President Trump lavished a lot of praise on him. We saw President Xi speak instead in more scripted, measured tones and just saying that he was hopeful about a new start for the relationship between the United States and China here, Wolf.

BLITZER: Kaitlan, when it comes to North Korea, President Trump was expected to push China to take a harder line as far as Pyongyang is concerned. Was he able to get any new guarantees from the Chinese President Xi that the Chinese government, which does have a lot of influence on North Korea given the trade that goes between those two countries, that the Chinese will take much more decisive steps in curbing the North Korean missile and nuclear program?

[13:20:25] COLLINS: Well, that would have been a great question to ask President Trump if we had had the opportunity to do so. But we did not. Because after he delivered a joints statement with President Xi, they did not take any questions from reporters. And the White House says that was at the insistence of the Chinese.

But instead we had Secretary of State Rex Tillerson come to the hotel where I'm standing right now and brief reporters on the president's talks with President Xi. He said there was no disagreement between the two men on North Korea, but instead say that -- said that Xi told Trump that he would attempt to crack down on these Chinese backs that are continuing to do business with North Korea here. But because we couldn't ask the president any questions about this, we didn't hear from him himself on this, Wolf.

BLITZER: Very interesting. All right, Kaitlan, thanks very much. Kaitlan Collins reporting for us from Beijing.

While President Trump attempts to turn up the heat on North Korea, with the help of China and other U.S. allies in the region, the reclusive nation is fighting back with words. State run media in North Korea now calling the president of the United States, quote, a lunatic old man.

Our Will Ripley is in the North Korean capital.

WILL RIPLEY, CNN INTERNATIONAL CORRESPONDENT: Wolf, you have to wonder where North Korea's propaganda writers get their material. Some very fiery words in North Korea's leading newspaper, the (INAUDIBLE), in an article about President Trump's visit to Seoul, South Korea, just before his arrival in China. The article comparing President Trump's words in his speech at the national assembly in Seoul to, quote, filthy rhetoric spewing out of his snout like garbage that reeks of gunpowder to ignite war.

And we did get a look firsthand on the streets of the North Korean capital today at just how the North Korean regime manages to maintain such tight control over the hearts and minds of the 25 million people who live here by controlling the flow of information. North Koreans know that President Trump gave a speech in South Korea, but they have no idea about the comment. It was a very brief mention on television and in the state controlled newspapers.

They didn't talk about President Trump's long list of human rights abuse allegations documented extensively by the United Nations. They didn't talk about the president's direct challenge to North Korean Leader Kim Jong-un, saying that the paradise that his grandfather envisioned simply didn't come into existence. President Trump calling that paradise a hell that no person should endure.

But our North Korean government guides did allow us to ask regular people on the street what they think about the president's words. We read them out to people and the responses were predictably quite indignant. People echoing back their own fiery rhetoric, sounding very similar to what they read in the news and see on television. But at least here in Pyongyang, where people enjoy the nation's highest living standards, they take great umbrage with the statement by the U.S. president that their life here is hell. They say this is their home.


BLITZER: All right, Will, thanks very much. Will Ripley reporting for us from North Korea, in Pyongyang.

Strong reaction in North Korea. Trade concessions in China. Expected meeting between President Trump and the Russian President Vladimir Putin.

A lot to discuss. Let's bring in our CNN global affairs correspondent, Elise Labott, and retired Admiral John Kirby. He's our CNN military and diplomatic analyst, former press secretary at the State Department and the Pentagon.

Elise, what did you think of the president's new tone when it comes to China?

ELISE LABOTT, CNN GLOBAL AFFAIRS CORRESPONDENT: Well, it's very interesting. I mean on the campaign trail he's talking about China raping the United States and now he's saying, I don't blame China for raping the United States.

I think what you have here is his national security advisers saying to him, yes, trade is important, but we really need to get China to the table on North Korea. Whether they're going to be able to do that remains to be seen. And I don't think they really secured any concessions here.

But you've noticed with President Trump, he always says he's going to give China a kind of deal on trade if they cooperate on North Korea. And I think that's what you saw again today. He's trying to butter them up to get something on North Korea. But trade is certainly one of his premiere issues and I think his base is going to be very disappointed with the tone that he took toward the Chinese.


LABOTT: They are still building that relationship, though, and I think this is part of that.

BLITZER: Yes, his message today was, you know, don't blame China for this trade deficit, blame the Obama administration for being weak negotiators, didn't know how to handle this kind of issue.

Do you think he's getting the commitments, John, from China to squeeze North Korea right now on its nuclear and ballistic missile program?

REAR ADMIRAL JOHN KIRBY (RET.), CNN MILITARY AND DIPLOMATIC ANALYST: Look, I'll tell you, Wolf, and in credit to the administration, if you told me a year ago that China would ban all imports of seafood, that they would -- that they would ban natural gas, that they would, you know, cut by quite a lot their export of oil to North Korea, I'd have laughed at you.

[13:25:06] So, I mean, they have put in place tougher sanctions and made some progress. And China is doing more.

Now, that didn't mean that they can't still do more. And I think putting pressure on them is right. And Elise is correct, I mean, he's got to walk a very fine line here. You want China do more on North Korea, so you've got to meter somewhat the trade imbalances issues. You have to pick and choose your battles right now, especially when North Korea is advancing so quickly.

BLITZER: And we're all looking ahead now, when the president's in Vietnam, he's supposedly going to be meeting with Russia President Putin. A lot to discuss on that issue, including the whole issue of Russia's interference, medaling, in the U.S. presidential election.

LABOTT: And you see this kind of jockeying going on, right, between the Kremlin and the administration. The Kremlin kind of put out there that this meeting is going to take place. You heard Secretary of State Tillerson say, listen, we're not so sure the meeting is going to take place. We have to see what those kind of deliverables are going to be, if there's a reason to meet. Are we going to get anything out of that meeting?

So I think that's the kind of thing you usually see behind the scenes. But this meeting is very important in terms of North Korea. That's really the preeminent issue right now. They have to talk about Syria.

Will the issue of elections meddling come up? I don't think it's going to come up in the way that, you know, a lot of people would like it to come up. You better stop meddling in our democratic process. I think it's going to be a recognition that this is a, you know, kind of irritant, as Secretary Tillerson put it, in the relationship and we need to move past that. I don't think it's going to be any recriminatory discussion.

But I think it's a good idea for those two to meet. I mean these are the kind of leaders that President Trump needs to meet with to get things done. BLITZER: Secretary of State Tillerson says that the election meddling by the Russians will be on the table. That doesn't necessarily mean the president of the United States will raise those issues.

KIRBY: That's exactly right. You know, having it on the table doesn't mean -- it doesn't tell you much of anything. It could just be a passing comment by a staffer. Who knows.

But I do think there are real substantive issues that they've got to sit down and talk about and I hope they do take advantage of the time there to have -- even if it's just a pull aside. But, look, it's North Korea, it's Ukraine. People forget what about Russia continues to do in Europe and we got this defense secretary at NATO right now talking about how we can bolster our preparations there.

And, of course, you've got Syria. Elise mentioned that. The civil war drags on. There are incredible amount of people suffering in Syria. And you've seen very little from this administration about how to get to a political diplomatic solution to that civil war. So there's an awful lot of agenda items worth talking about.

BLITZER: Yes, the president in his speech before the national assembly in Seoul, South Korea, he said he wants China and Russia to do more to help on the North Korea tension right now, the nuclear, the ballistic missile program. And Russia is -- can do more on that front.

KIRBY: Absolutely. They are -- they have been sort of playing the double game here. They haven't really cared much about the North Korea issue until recently because they see it as a way to check our influence in the region. But they just, in the first quarter of this year, doubled their trade up to $30 million with North Korea. Now that's not a lot when you compare it to what China trades with the North, but they are playing a bit of a double game. So they can play more of a helpful role.

BLITZER: John Kirby, Elise Labott, guys, thanks very much. We'll watch this trip very, very closely.

Coming up, other important news.

Senate Republicans, they're set now to unveil the details of their new tax plan. We're standing by for that.

Plus, President Trump set to possibly meet once again with the Russian President Vladimir Putin as the probe into Russian meddling in the U.S. presidential election clearly escalating. So what message should he send? I'll ask a key member of the Senate Foreign Relations Committee when we come back.