[Dave Briggs, Cnn Anchor:] that's not the only trouble overseas. We have reporters on all our top stories from the White House, Caracas, Moscow, and Beijing as we head toward crisis and confrontations around the world. Good morning, everyone. Welcome to EARLY START. I'm Dave Briggs.
[Alison Kosik, Cnn Anchor:] Good morning. I'm Alison Kosik sitting in for Christine Romans. It's Monday, July 31st. It's 5 a.m. in the east. 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. Kelly is going to be sworn in at 9:30 this morning. 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:] That, of course, no easy task for sure. Both sides of the aisle are what you might call cautiously optimistic.
[Representative Nancy Pelosi , Minority Leader:] I look forward to working with General Kelly.
[Senator Susan Collins , 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.
[Senator Richard Blumenthal , Connecticut:] If anybody can bring order and discipline to this White House, it is General Kelly.
[Representative Mark Sanford , South Carolina:] I think that in terms of a great leadership component, the White House has needs General Kelly representing it.
[Briggs:] A big early challenge for Kelly concerns chain of command issues, who reports to whom, still unclear. Typically, senior advisers report to the chief of staff, as we know, this is not your typical White House.
[Kosik:] A senior administration official tells 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:] All right, let's bring in Greg Valliere, political economist and chief strategist for Horizon Investments. He's in our Washington bureau. Good to see you, sir.
[Gregory Valliere, Political Economist And Chief Strategist, Horizon Investments:] Nice to see you, guys. Good morning.
[Briggs:] All right, let's start with General John Kelly, a four-star general, former Marine general. How can he instill discipline, order in what's only described as a chaotic White House?
[Valliere:] Well, it's going to be chain of command, Dave. I think that's an area where it's still ambiguous. We'll see there. To a certain extent, I feel sorry for him. He's got a high bar to clear since you had all the sound bites from everyone saying he's going to be to do a pretty good job or he should be able to do a good job. Number two, he's got a tough boss to work for. But number three, I think the big issue as we get into the fall, which is a budget crisis that's looming, may not be his strong suit.
[Kosik:] And you talk about, Greg, what's looming. We have the debt crisis, raising the did the ceiling coming up in the fall. Wall Street is looking for tax reform. And now there's talk about, you know, forget about skinny health care reform, there's talk of skinny tax reform now.
[Valliere:] Yes, there's talk of that, Alison, and I'd say before we even get to that, we may revisit once again health care. You'd think they'd had a belly full of health care, but we may go back and look at something to bail out insurers. Not out of the question that we could get a bill there. And then as you say, there's a big budget fight coming. You've got to raise the debt ceiling. You have to come up with a budget resolution for the new fiscal year. All this comes first before you get to taxes. So, for the general who's very good, I would be the first to agree, but the issues are going to be tough ones for him to tackle.
[Briggs:] Yes. And Greg, from what we understand, the markets were hoping that it would pivot to tracks reform. It doesn't to tax reform. It doesn't appear that way, the president saying let's get back to another vote on health care, threatening to pull the rug out from under the exchanges and from the Congressional health care plan itself. What is the appetite in the Senate, do you believe, from Mitch McConnell toward sticking with health care and finding another path forward?
[Valliere:] Well, I think a lot of Republicans are saying to the Democrats, well, what ideas do you have? And there may be some bipartisan talks as we get into the fall, but time is really short with the budget issue, with tax issues. So, I'm not sure how much time they'll have to devote to that. And here we have this morning, Monday morning, a new story, and that, of course, is growing geopolitical concerns, especially when its which to U.S.China relations.
[Kosik:] And you look at these geopolitical stories that are hitting the news. We don't see the market being rattled by that. You look at how the S&P 500 is doing and the Dow. They're up more than 10 percent so far this year.
[Valliere:] Yes.
[Kosik:] What can really rattle the market? This is of particular interest to anyone who is invested in the stock market.
[Valliere:] Well, first and foremost, Alison, the fundamentals are great. Moderate growth, great labor market, low inflation, steady interest rates, good corporate earnings. So that's fine. There's only two things that I would see that could rattle the markets. Number one would be any sign that tax reform is dead. I don't think it's dead. I think it's going to plod along. It's going to take a while. The other one, though, the wild card now is geopolitical. And I think since Donald Trump loves scapegoats, since he can't get North Korea to do what he wants, he's going to make China a scapegoat. So, I worry later this week we may hear the announcement of new U.S. trade sanctions against China. For the markets, a U.S.China trade war is not a good story.
[Briggs:] Yes. You know, if there's any country on earth that's immune to Twitter diplomacy it's probably China, right, Greg? What can the president do to try and move China on doing something to stop the North Korean nuclear program?
[Valliere:] Well, he can threaten. But I think we'll see on health care, you can't threaten Congress. On China, you can't threaten them to do anything. You know, I do think that we're going to have more military exercises, maybe more of these harm missiles that could shoot down Korean missiles shipped into South Korea. There are a few things we can do. The idea that China can wave a magic wand and immediately get North Korea to behave, I think that's farfetched.
[Kosik:] You know, back to health care. You know, you talk about what the market doesn't want to see. Does the market want to see Trump try to implode Obamacare? We heard from Health and Human Services Secretary Tom Price on Sunday about this. Let's first listen.
[Valliere:] Sure.
[Unidentified Female:] 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:] Well, the individual mandate is one of those things that actually is driving up the costs for the American people in terms of coverage. We're trying to make it so Obamacare is no longer harming the patients of this land. No longer driving up cost, making it so that they've got coverage but no care. The individual mandate is one of those things. All things are on the table to try to help patients.
[Kosik:] Greg, is the individual mandate driving up costs, or if you take away the individual mandate, this is like a house of cards, obviously the whole thing will just collapse.
[Valliere:] A lot of arguments pro and con to whether it's driving up costs. If you take it away, less people will be insured. And one thing that President Trump said a couple of weeks ago that simply doesn't ring right is that I don't own insurance. Yes, he does. He owns health care. Whatever party is in power usually views it as an albatross. They don't like to own it because it's such a difficult issue. I think if Obamacare really does implode this fall, the Republicans get the blame.
[Briggs:] All right. Greg Valliere from Horizon Investments. We'll ask you about the future of Jeff Sessions coming up. Thank you.
[Kosik:] Thanks, Greg. All right, insurers have until August 16th to set Obamacare rates for 2018. The president's threat to cut off subsidies could mean higher premiums. The president tweeting that if a new health care bill isn't approved soon, bailouts for insurance companies could end. Insurers hate uncertainty, and they're swimming in it now. They rely on $8 billion on cost-sharing subsidies to help pay for low-income Americans. Some carriers, they've already requested large rate hikes next year to offset costs. Nearly half of the company the plan to increase premiums by 20 percent or more. Meantime, other insurers, they're exiting the exchanges completely. Big payments that like Aetna, Humana, and Anthem. In fact, 25,000 people in three states, they're at risk of having no Obamacare options at all next year. While an additional 2.7 million Americans could have just one option for an insurance carrier. Insurers say they want to work with the administration to fix Obamacare, but Washington's actions so far have fueled instability. Besides threatening cost-sharing subsidies, the White House hasn't committed to enforcing the individual mandate, and that one is getting younger, healthier people to enroll. Offsetting the costs for more expensive customers.
[Briggs:] Not clear what the path forward is. Susan Collins said let's go back to committee and try to fix health care exchanges but
[Kosik:] It's unlikely
[Briggs:] it's unclear if anyone has the appetite for that either. OK. New trouble from a trio of global adversaries, Russia retaliates for sanctions, another missile launched from North Korea, and Venezuela in chaos after an election being called an affront to democracy. We're live on all three stories next.