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Kelly's White House Mission; Baker's Advice to Kelly; Discipline in West Wing; Trump Handles North Korea; Russia Hits Back at U.S.; Trump Tweets Foreign Policy. Aired 12-12:30p ET

Aired July 31, 2017 - 12:00   ET

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

(COMMERCIAL BREAK)

[12:00:14] JOHN KING, CNN ANCHOR: Welcome to INSIDE POLITICS. I'm John King. Thanks for sharing your day with us.

It is day one for the new sheriff, make that new general, charged with calming the Trump White House chaos.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: We just swore in General Kelly. He will do a spectacular job, I have no doubt, as chief of staff. What he's done in terms of Homeland Security is record- shattering.

(END VIDEO CLIP)

KING: This big White House reboot comes amid big global tensions. Russia expels U.S. diplomats to retaliate for new sanctions and the White House talks tough at both China and North Korea.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: We'll handle North Korea. We're going to be able to handle them, OK? They'll be -- it will be handled. We handle everything.

(END VIDEO CLIP)

KING: Tensions here at home, too, as the president again criticizes his own party for failing to repeal Obamacare, and threatens to cut off payments to the health care program that covers most members of Congress.

With us to share their reporting and their insights, Julie Pace of "The Associated Press," CNN's Jeff Zeleny, Karoun Demirjian of "The Washington Post," and Mary Katharine Ham of "The Federalist."

We begin today at the White House, where John Kelly was sworn in as chief of staff this morning and then was praised by the president at the top of a cabinet meeting called as part of the Trump team reboot.

(BEGIN VIDEO CLIP) DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Overall I think we're doing incredibly well. The economy is doing incredibly well, and many other things. So we're starting from a really good base. I predict that General Kelly will go down in terms of the position of chief of staff, one of the great ever, and we're going to have a good time. But, much more importantly, we're going to work hard and we're going to make America great again.

(END VIDEO CLIP)

KING: Setting the bar high there on day one.

We all know the president wants Kelly to bring his Marine strength and his discipline to a White House operation that the boss thought was weak and ineffective in the six month tenure of Reince Priebus. But there's a bigger question. As General Kelly changes the White House culture, can he change a president who more often than not can be his own worst enemy?

JULIE PACE, "THE ASSOCIATED PRESS": Well, look, Trump has gone through changes before. If you look at the campaign, he went through three campaign heads. And he could go through these cycles -- if you remember the last one where Kellyanne Conway and Steve Bannon came in at the very end, they did go through a period of time where Trump was more disciplined, there were fewer provocative tweets, there was a little more control over his speeches. That can happen in stages. It never happens long term.

And that is because this is -- this is what is known -- Trump is Trump. I really think that that is going to be the most difficult piece for Kelly. He can probably get the staff to get onboard with a new plan. He can probably bring some discipline to the order of the West Wing. But can he really keep Trump at 6:30 in the morning from putting something out on Twitter that is completely off message, or on a Saturday morning? I'm pretty doubtful about that.

KING: And does he view that as his job? We haven't heard from General Kelly about this yet. Does he view that as his job? Is his job also reining in the president or does he view his job as, I'm not a political guy. I don't have Washington White House chief experience, but I am a general. I do have the Marines. I'm going to restrict access to the president. You're not going to have people wondering in and out as they please.

What does he -- how does he view the job?

JEFF ZELENY, CNN SENIOR WHITE HOUSE CORRESPONDENT: It's more the latter. At least people who have spoken to him believe that he's going to try and just bring some order to the building and the hallways that come out of the West Wing and in to the Oval Office. And, quite frankly, now there is a long list of people who have action to walk in and talk to the president whenever they would like. He, I'm told, is going to try and bring some structure to that. I would be surprised if he tries to control the president directly, because, as Julie said, it may happen for a bit. Not going to happen for a long time. But, look, the president is not going to change in office. But I think

the things around him can become a more disciplined. And if the president respects him, I think it's entirely different, because at the end he did not respect Reince Priebus.

KING: Right.

ZELENY: He viewed him as weak and he at least respects this general.

KING: Right. You heard the president there say he thinks General Kelly be remembered soon as one of the greats to be a White House chief of staff. Someone who gets a lot of credit in that job is Jim Baker, back in the Reagan days, who was not a Reagan guy, but he was brought in by Reagan because of his Republican establishment, his D.C. experience. Here's what Jim Baker told "The New York Times" about General Kelly. You can focus on the chief or you can focus on the "of staff." Those who have focused on the "of staff" have done pretty well.

What does he mean?

KAROUN DEMIRJIAN, "THE WASHINGTON POST": Well, that kind of is the director for which way Kelly should be looking, right, up or down.

KING: Right.

DEMIRJIAN: Whether he can control Trump or he can control everything else. And probably it will -- it may actually help calm some of the president's more erratic tendencies if he does control everything else because as we've seen, Trump has reacted poorly every time something has emerged from the White House that he wasn't controlling the message of.

[12:05:00] So if Kelly manages to, you know, have order over everything else and -- runs a very tight ship everywhere else, maybe there will be less for Trump to react to. It's a better bet that he might be able to do that with success, because he is their boss, then he'll be able to do that managing up the chain because, again, like we've said several times, you can't really control what Trump's going to do in those early dawn hours when he happens to be awake and nobody else is talking to him right then. So -- on Twitter I mean. So --

KING: Right.

MARY KATHARINE HAM, "THE FEDERALIST": Well, the good news is, as a Marine general, he will be up at 4:00 in the morning and ready for whatever is coming.

Look, I think -- I think that Trump respects him. I think he sees that he's aligned with him or it felt like he did what he wanted him to do at Homeland Security for that brief time. So those are all points in his favor. But does Trump actually want discipline -- Marine discipline in the White House? I think that's a very open question. I don't think he wants it for himself. But I think the key for Kelly would be to make things feel better for Trump very quickly and send the message like, as, I think, Bannon and Kellyanne Conway did, look, this is working for you, the change that I am making here, and that is what is going to -- if at all possible do anything for the Trump part of this.

KING: I think it's the "if at all possible" part in the sense that we know the president thrives on this chaos. He wants a team of rivals, team of, you know, people who fight. He has -- you know, the Steve Bannon wing is still there. A lot of conservatives think of Steve Bannon more as a Democrat. You know, his populist proposals, his protectionist proposals. The Republican establishment is gone pretty much from the White House with Reince Priebus being the last member there kicked out. But you have the New York crowd which, again, if you talk to conservatives, they view them at moderate Republicans at best, if not Democrats.

Listen to Mick Mulvaney, House member, brought into the Trump White House, a conservative, former Freedom Caucus member, now the budget director. Here's his take on the big change.

(BEGIN VIDEO CLIP)

MICK MULVANEY, DIRECTOR OF THE OFFICE OF MANAGEMENT AND BUDGET: I think Reince was terribly effective, but was probably a little bit more laid back and independent in the way he ran the office. And I think the president wants to go a different direction, wants a little bit more discipline, a little more structure in there. You know that he enjoys working with generals. We have several of them in the administration who are doing extraordinary jobs and the president likes that.

(END VIDEO CLIP)

KING: He did like the job General Kelly did at the Department of homeland Security. General Kelly came in and said, OK, let me study the laws. These are the laws. This is what I'm going to do.

Obviously, illegal border crossings are down. Immigration enforcement around the country is up. That's both the Justice Department and Department of Homeland Security.

But what can he do in the White House? Is he going to stop Steve Bannon from walking in and out? Is he going to stop Jared Kushner and Ivanka Trump from being able to wander in any way they want? Anthony Scaramucci was just hired a week ago and he caused a huge dust-up when he came in. I cannot believe, if you look at "The New Yorker" and the vulgar language Anthony Scaramucci used, or the way Anthony Scaramucci goes on TV to talk about himself as much as the president of the United States. Is Chief of Staff General John Kelly going to stand for that and can he control it?

PACE: I mean, this -- look, this is the question. This White House has so many different factions. And one of the things that Kelly has to -- well, there are two main things I think he's got to get his hands around here. One, he's got to get these people rowing in the same direction. I mean this idea that you have people who truly, on a day- to-day basis, are there looking out for themselves and are staffed up to look out for their own interests, that is an amazing thing. And you always have internal rivalries at a White House, but the way that this white House is functioning is really unsustainable. And then the second thing is, they do have to start focusing on

policy. Health care was just this crazy thing that was happening where you had the House and the Senate pushing forward on legislation and the White House sometimes being involved, sometimes choosing to talk about other things. If Trump gets to the end of the year and Republicans haven't move forward on something like tax reform and they head into a mid-term year with not a lot really to show for it, he's suddenly going to be in a really difficult situation.

KING: Yes, but we can't -- I don't think we can blame Reince Priebus --

PACE: Nope.

KING: Who was not a perfect choice as chief of staff. I think most of Washington agrees on that. But he was loyal to the president. I don't think you can't blame him or Steve Bannon or Jared and Ivanka or Stephen Miller or anyone else walking in or out of the Oval Office at a moment's notice, or Anthony Scaramucci for the fact that the president tweeted and caught the chiefs of staff -- joint chiefs of staff off guard with his transgender policy. The fact that if you read the president's Twitter feed over the past month or so, he's taken probably eight, 10 or 12 positions on what should happen next in the health care debate.

That's not anybody on the staff's fault. I'm not saying they don't need staff structure there. "The Wall Street Journal" editorial board put it this way, the shuffling of the staff furniture won't matter unless Mr. Trump accepts that the White House problem isn't Mr. Priebus. It's him.

Does the president accept that? Is hiring General Kelly an admission of sorts -- he'll never say it publicly -- that I need help or is it just, I'm sick of Reince and I'm going to put a general there?

DEMIRJIAN: I think that it's probably more of the latter but not purely the latter. Look, Trump -- the issue is that Trump does not fundamentally respect Reince Priebus as much as he respects General Kelly, right? It's easier to listen to somebody who you fundamentally respect and aren't just always kind of jockeying with in your head about, are they right or am I right?

And I if we -- what we've seen in all these different positions that Trump has taken is that there isn't any one person he really listening to. Sometimes he's listening to his kids. Sometimes he's listening to Bannon. Sometimes he's listening to the people that represent the GOP establishment. But there isn't one clear end voice that's actually, you know, filtering that all out, putting it in front of him that he always listens to. And so this is almost a new role that Kelly could try to occupy, if he can craft that in a way that doesn't run afoul of anything that Trump holds very dear. I mean you can't go against Jared and Ivanka all the time. That doesn't work. They're family.

[12:10:11] HAM: Well, and that's the thing is, he often respects people who are outside of his family. I was talking about the original circle, that he respects them until he doesn't. And that's what worries me about this position for Kelly. And, frankly, Kelly is an extraordinary person with this incredible resume, but the White House is a very, very different environment than a military environment and, frankly, I don't want to find out that this man of extraordinary skill and honor and duty cannot move things in the right direction. I would rather find out that he can and I hope that's why Trump brought him in because he does want to listen to him.

KING: When there was talk that this was coming late last week, part of the conversation was that Jared Kushner saw his moment to get rid of Reince and get rid of Bannon. Bannon stays.

Does somebody win here? Is this a victory for Jared in that Reince is gone? Is it only a partial victory because if you believe the New York wing, they wanted either Gary Cohen, the chief economic adviser, or Dina Powell, the deputy national security adviser, they wanted one of them in, and now you get a general who I don't think is beholden to any of them?

ZELENY: I'm not sure if it's a win for them or not. I think it is a win for the process here, though. And I think that it's going to be fascinating to see what happens to Dan Scavino. He is someone that most people probably don't know a lot about, but he is the man who sends out lot of the messages for the president.

KING: Yes. Right. He's the battery in that phone.

ZELENY: Exactly, he's the battery in the phone.

So we'll see if any of that changes.

I do get the sense that there is a, you know, a hope for a new moment for the White House. A reset, if you will. I'm skeptical of it because all the issues remaining the same. The Russia investigation remains the same. The president's still furious about that. But I do think it will restore some semblance of order and, you know, that's just been absolutely absent. But we'll see.

And watch Anthony Scaramucci. He's been pretty silent since last week. And I think that he realizes that he overstepped his bounds perhaps. The president believes that, we believe. So keep an eye on him as well.

KING: All right, first day on the job for General Kelly. A lot of big questions and we will keep on track of them. More on that issue later.

But next, the world stage. The Kremlin retaliates for U.S. sanctions and North Korea's latest missile test bring as tough tone from team Trump.

(COMMERCIAL BREAK)

[12:16:28] KING: Welcome back.

The Trump White House begins the week in a war of words, or tweets, with both Russia and China. Not to mention a new stare down with North Korea. (BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: We'll handle North Korea. We're going to be able to handle them. They -- they'll be -- it will be handled. We handle everything.

Thank you very much.

(END VIDEO CLIP)

KING: But just what does that mean? North Korea, you might know, staged a second test of an intercontinental ballistic missile on Friday and the White House response included flying B-1 bombers over the Korean Peninsula, as well as testing an American missile defense system based in Alaska.

And with the muscle flex came a blunt critique of China. This is the president on Twitter. I'm very disappointed in China. Our foolish past leaders have allowed them to make hundreds of billions of dollars a year in trade, yet they do nothing for us with North Korea. Just talk. We will no longer allow this to continue. China could easily solve this problem.

Where are we going here? If nothing else, in those tweets, the president on day one remembers, said he was going to label China a currency manipulator. They have talked for the past six months about eventually getting tougher on trade. It sure sounds there like the president has reached the end of the rope when it comes to the China piece of this. When he sits at the table and says we will handle it with North Korea, what does that mean?

PACE: That's a great question. The only thing that has really changed substantively since Trump took office as it relates to North Korea is that Pyongyang's capacity seems to have increased here. And we have tough talk from the Trump administration. There was a little flurry of activity a few weeks ago where the Trump administration was taking a couple of steps that made it look like they were moving closer toward really cracking down on China, trying to force them to cut off North Korea economically.

But Trump, so far, has been reluctant to take some big steps against China and he still seems to be in this mode where he wants to talk tough, see if that will change the Chinese.

But the thing that he doesn't seem to grasp about the way that Beijing handles pretty much any policy situation is that China moves slowly. China is not the type of government that says, you know, we're going to shift on a dime here. You talked tough there. We're going to suddenly change. They are methodical. They are slow. They do not react to this type of public pressure.

KING: And they had very different interests. I just want to bring in the Chinese foreign ministry spokesman just today who said, China has fulfilled its responsibility in promoting a proper solution to the North Korean nuclear issue and our efforts have been clear for all to see. This issue was not caused by China and its resolution requires multilevel efforts.

The Chinse want to get the United States back at the negotiating table. The Trump administration says there's nothing to negotiate, at least until Kim Jong-un says he's willing to sit down and that the goal, the end is, giving up the nuclear program, which isn't going to happen.

DEMIRJIAN: Right. And, also, I mean, the other options that Trump has at his disposal are economic measures, like more -- heavy sanctions that actually hit China harder than they have in the past, or military options, which nobody really wants to see happen because you do not know what happens after you take that first step as a response.

With the economic measures, China knows that it hurts the United States to take any sort of harsh action against China. We can't do that without disrupting our own economy because we are very co- dependent. It's a lot easier to sanction Russia because we don't have that much that goes through Russia. It's why Europe doesn't like it. But we're kind of fine with that when it comes to Russia, but China, there's a cost. And I think China is -- the government in China knows that that bluff call it there that they can exploit. And so they can look at these angry tweets and be like, OK, show us what you really mean, and there's no incentive for them to hop too before we actually say what we mean by that. And we haven't.

KING: I just talked -- yes. And the president's credibility at some point, look, he's -- this is not to pick on him. You can go back to the Clinton administration, the George W. Bush administration, the Barack Obama administration, they've had this problem, North Korea is accelerated this program. To your point, what scares the Pentagon is the pace, the sudden acceleration of their progress in developing the missile capability.

[12:20:06] Nikki Haley, the ambassador to the United Nations, no point in having an emergency session of the Security Council if it produces nothing of consequence. China must decide whether it's finally willing to take this vital step.

So the administration's eggs are all in the China must get tougher basket to the point of the president even threatening some kind of trade retaliation. But to Karoun's point, that's going to start a trade war that would hurt both economies maybe and hurt the relationship maybe, but I don't think it's going to change the behavior in Pyongyang.

HAM: Well, to me, what the Trump administration dos come down the same thing often on foreign policy, which is that on international diplomacy tough talk and angry tweets can be a strategy in and of itself, or a tool that you can use. Say, look, we' ae going to take a tougher line. This is what it's going to look like. And perhaps people will respond differently and then you can move forward.

Do, I think, there's a grand strategy or a world view behind that, that's the part that is concerning to me. I don't think there's -- I think Nikki Haley probably has one. I think Rex Tillerson might have one, but I'm not sure that the guy in charge, as we were talking about earlier, with the chief of staff situation, that he has that and is communicating it down to (INAUDIBLE) --

KING: Right. I -- well, and I also think the missile program, the nuclear program have progressed to a point where it's hard to have a -- your options are very limited now because there are very -- your military options are almost non-existent now because of that.

I want to keep the conversation going but I want to shift to Russia now. The Kremlin, over the weekend, retaliated for new U.S. sanctions that the president hasn't even signed into law yet. President Vladimir Putin says the number of Americans allowed to work at diplomatic outposts in Russia will be slashed dramatically. Two Russian properties used by the State Department now being seized.

(BEGIN VIDEO CLIP)

SERGEI RYABKOV, RUSSIAN DEPUTY FOREIGN MINISTER: I think this retaliation is long, long overdue. We are not gamblers. We are people who consider things very seriously and very responsibly. But I can assure you that different options are on the table.

(END VIDEO CLIP)

KING: Now, you want more proof there's no warming with Moscow on the horizon? Here's Vice President Mike Pence in Estonia earlier today.

(BEGIN VIDEO CLIP)

MIKE PENCE, VICE PRESIDENT OF THE UNITED STATES: And no threat looms larger in the Baltic States than the specter of aggression from your unpredictable neighbor to the east. At this very moment, Russia continues to seek to redraw international borders by force, undermine democracies of sovereign nations and divide the free nations of Europe, one against another.

(END VIDEO CLIP)

KING: A number of ways to come at this. But, for starters, if you listen to what the vice president just said there, including undermining democracies. Has the president of the United States ever spoken so forcefully about Russian aggression in a coherent way? To the Baltic States, he's messing with your borders. He's trying to undermine democracies. He doesn't pay attention to international -- there it was in about three sentences, boom. Where is that from the president?

ZELENY: He has not said that. He has said, oh, it maybe was Russia. It happens all the time. He has never specifically said that. So I think the vice president saying that is certainly interesting. He's not freelancing. I mean it is essentially the position of the administration, but the president simply won't say that.

But I think again, back to the chief of staff position. I think it's coming at a great time to have someone new in that corner office in the West Wing, because all of these threats are -- are very important and urgent and I -- KING: And to your point, can I come up here for a minute? There's also

a crisis playing out in Venezuela in our backyard in the hemisphere right now.

ZELENY: Sure.

KING: One of the things that strikes me about the president six months in is, we hardly ever hear from him on these things. He did give a speech in Poland and there was some tough talk about Russia in that, to the president's credit. He gave that one speech. Some people didn't like it, but at least he laid out -- whether you agree or disagree with him -- he laid out what he thought in that speech.

But we very rarely hear from him talking about sort of his views on how we got here, where we're going. Sort of the North Star about these international crises. Why is that?

DEMIRJIAN: He may not have them. I mean this is the problem, he may not actually have thought out the genesis of how we got to this point and exactly what needs to be done from this point forward. In certain spheres, like North Korea, it's really hard to come up with that answer. There is no easy answer. In defense of the president, he's not in a good position.

In Venezuela, we don't pay that much attention to our neighbors to the south, unfortunately, and so that's why things kind of get to this point before we even talk about them in the news cycle.

And with Russia, I mean, Trump and Russia has been a theme for several months now, that he came at it with a very different mind-set. He's -- there's an investigation that's implicating him that involves Russia and himself. He's never been able to see that one purely either.

And so it's just -- you know, to expect them to have a very well thought out policy, I mean, perhaps there's staffers that are working for him that do and would put it into a speech. But he'd like to take off the cuff and it may not be the, you know --

HAM: Sorry.

DEMIRJIAN: No, no, go ahead.

HAM: Those three sentences from Pence and some of the tweeting that you're seeing today from Nikki Haley on Venezuela, are the sentences that very easily came out of the Republican Party of Reagan and the Republican Party of Mitt Romney, who thought that Russia was the number one geopolitical foe. That -- this is a -- the president is a shift away from that party. And so there is a divide between how they're going to talk about it. And like you said, it is -- oddly sort of seems to be the position of the administration, but the president is not speaking to it because that's not his language. It never has been.

KING: That's just an interesting --

PACE: There is just a remarkable gap, though, between what we, you know, are used to having from U.S. administrations about the world. When -- I remember when Barack Obama took over, he basically said, I have to focus on domestic policy. There's an economic crisis. So I'm going to send Hillary Clinton around the world and she's going to be the voice. Now we have Trump who doesn't speak like this. Tillerson does not speak like this publically. There's a major gap there.

[12:25:15] KING: All right, well, we'll see what happens in the week ahead. A lot of pressing foreign policy issues right there front and center. We'll see what happens.

Up next, though, what chaos? The president welcomes in a new chief of staff, but says, for the most part, all is well.

(COMMERCIAL BREAK)

KING: Welcome back.

Bringing in a new chief of staff a week after bringing in a new communications director is a big deal this early in a new administration. A sign to many here in Washington of a fundamental discipline and management problem at the Trump White House. But the president, listen to him earlier today. He has a different take.

[12:29:41] (BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: We were discussing a little while ago before the meeting how well we're doing, however. We have the highest stock market in history. We have GDP on Friday. Got very little mention. Although I guess in the business areas it did. But got, I think, very little mention, 2.6 is a number that nobody thought they'd see for a long period of time. Unemployment is the lowest it's been in 17 years. Business enthusiasm is about as high as they've ever seen it. In fact, it is as high.