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MTP Daily, Transcript 1/26/2017

Guests: Hampton Pearson, Chris Hill, Ramesh Ponnuru, Anita Dunn, Amy Walter, Chris Collins

Show: MTP Daily Date: January 26, 2017 Guests: Hampton Pearson, Chris Hill, Ramesh Ponnuru, Anita Dunn, Amy Walter, Chris Collins

STEVE KORNACKI, MSNBC HOST: All right, that`s going to do it for this hour. I`m Steve Kornacki in New York. "MTP DAILY" starts right now.

CHUCK TODD, MSNBC HOST: Whoof, what a Thursday. So, yes, it`s Thursday. It`s a possible trade war with Mexico, an investigation into alleged voter fraud and a declaration of war. Good evening, I`m Chuck Todd here in Washington and welcome to an extraordinarily busy MTP DAILY. Folks, this ain`t your father`s Republican Party. It`s Trump`s party now. But how long does this hold? How long do Republicans on Capitol Hill go along? President Trump is aggressively moving to reshape the GOP in his own image with an agenda that would look alien to many Republicans as recently as four years ago. This afternoon, the White House told reporters that President Trump is considering a 20 percent tax on Mexican imports as an option to raise the estimated $10 billion to $15 billion cost to build the wall between U.S. and Mexico. Folks, a massive tariff or tax on trade goods is a move that Republicans, at least in recent history, would never have supported. That is, perhaps, until now. President Trump looks to be gearing up for a possible trade war, maybe not just with Mexico but with others. But of course, it`s something that he campaigned on hard and his voters, essentially, are granting him that mandate. This afternoon at the Republican Party retreat in Philadelphia, he ripped into Mexico after it announced the cancelation of a meeting between the two presidents, President Trump and President Pena Nieto. It was scheduled for next week. Here is what he said.


DONALD TRUMP, PRESIDENT OF THE UNITED STATES: The president of Mexico and myself have agreed to cancel our planned meeting scheduled for next week. Unless Mexico is going to treat the United States fairly, with respect, such a meeting would be fruitless, and I want to go a different route. We have no choice.


TODD: Whoof. President Trump was expected to sign an executive order, by the way, calling for a voter fraud investigation of some scope. And that was to happen this afternoon but that order is not -- is now expected sometime either tomorrow or Saturday, if it happens at all. Perhaps it may not. It all comes after President Trump doubled down on his calls for a massive investigation into the election that he won. Here is President Trump last night on ABC.


DAVID MUIR, ANCHOR, ABC NEWS: So, you`ve launched an investigation.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: We`re going to launch an investigation to find out and then the next time -- and I will say this. Of those votes cast, none of them come to me. None of them come to me. They would all be for the other side. None of them come to me.

But when you look at the people that are registered, dead, illegal, and two states, in some cases maybe three states, we have a lot to look into. Many people feel the same way that I do.

And --

MUIR: You don`t think it undermines your credibility (INAUDIBLE)?

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: No, not at all. They would -- they didn`t come to me, believe me. Those were Hillary votes.


TODD: So, it`s a big agenda. Will Republicans get behind it all? Is there a tip of the iceberg, when it comes to, sort of, traditional movement conservativism? The party of reining in deficits is working with the president who wants massive tax cuts without a clear way to pay for them. And as a trillion dollar infrastructure plan that he doesn`t necessarily think needs to be paid for right now. He has noted, money is cheap right now. It`s a good time to borrow. The party opposed to health insurance mandates as being tasked to find a way to insure every man, woman and child. Party of free market capitalism now confronts the president considering massive taxes on certain imports. President Trump also wants certain American companies taxed, if they move businesses overseas. Republican leadership is against torture. But their president last night sounded, at times, like he wanted to go medieval on combatants. A word that he used. And don`t forget the party that won the election is being asked by Trump to support a massive investigation into it. And so far, Republicans on Capitol Hill aren`t kicking up much of a fuss, publicly. I`m joined now by Republican Congressman Chris Collins of New York, who was the White House transition team`s chief congressional liaison. He joins me now from Philadelphia where President Trump today met with Republicans. Congressman Collins, always good to see you, sir. REP. CHRIS COLLINS (R), NEW YORK: Good to be with you, Chuck, yes. TODD: Well, let me start by asking about the border tax idea. I will tell -- I`ve got to -- I`ve got to show you this tweet from Lindsey Graham, Republican Senator from South Carolina. Let me put it up on screen and I`ll read it to you. But it says, simply put, any policy proposal which drives up costs of Corona, Tequila or Margaritas is a big-time bad idea, mucho sad. Again, Lindsey Graham, you know his sense of humor. Where are you on this? COLLINS: Well, Chuck, yes, part and parcel of us reducing corporate tax rates to 20 percent, three individual rates significantly lower taxes means tremendous growth in the U.S. with business, more jobs. And the fundamental pay for is a border adjustability tax. [17:05:14] If corporate taxes are 20 percent, and to simply put it, if companies can no longer deduct the cost of goods not made in America. So, the cost of goods made anywhere but America, they can`t deduct that as an expense. That, in effect, is a 20 percent surcharge, tariff, tax on anything not made in America. And that is the fundamental pay for. It`s not too dissimilar to a value- added tax -- TODD: Right. COLLINS: -- of 16 to 20 or even more other countries have. This is fair trade. TODD: Right. COLLINS: And I believe the Republican conference can support this as a way to level the playing field and get the jobs back in America.

TODD: All right. You and I have actually had this very conversation because you admit this could mean the cost of going to Wal-Mart may go up. The cost of going to target may go up. The cost of going to the mall may go up for individual consumers. Maybe there`s better wage jobs. Maybe it balances out.

But is the American public ready for higher prices?

COLLINS: Well, Chuck, the American public needs jobs. They need better- paying jobs. Competitions for jobs means higher wages. As America is booming, I suspect our currency is going to get stronger.

So, with a stronger currency, that would offset some of these increases coming from other countries. So, I would just suggest what we know is we need the jobs here. Other countries have been stealing our jobs. This is a way to get taxes down, get GDP growth up. And, yes, there is going to be some inflation. But, yes, you and I have also said inflation is something we need. We don`t need runaway inflation but then at least we`re paying the debt down in the future with cheaper dollars.

TODD: So, earlier this week, I was helping my son study for his science test. And he had to memorize Newton`s Laws of Motion. Obviously, one of them is for every action there is an equal and opposite reaction.

The Mexican government isn`t going to take this as if and say, OK, this is what America is doing. There are -- there is plenty of business that`s done in Mexico. There`s plenty of exporting, 40 percent, I believe. Nebraska has a big chunk of its export go agriculturally to Mexico. They`re made -- they may reciprocate. We may find ourselves in a border trade war like this with Mexico. Can our economy handle it?

COLLINS: Well, Chuck, I think what you`re going to find, other countries who have been taking advantage of us with a VAT, or a value-added tax, imposed on our goods where they had a free ride into our country.

What we`re doing is leveling the playing field. If they want to call it a trade war and then up with additional sanctions or tariffs against the U.S., well, then we would have to respond in kind. I don`t believe that`s going to happen. I don`t believe that WTO, the World Trade Organization, would declare our border adjustability tax an unfair tax. This is something we`d have to wait and see. But these other countries depend on the U.S. consumers. We`re 25 percent of the world`s economy. So, they would have to tread very carefully and decide where they pick their fights. All we`re doing here is leveling the playing field, fair trade.

TODD: Well, you brought up the VAT tax. A VAT, I`m sometimes somewhat repetitive by saying VAT tax because of the T there. But is that where we`re headed? Do you think we`re going to become more --


TODD: -- and more -- is that -- is that where this -- is that the logical conclusion to where tax reform goes?

COLLINS: No, absolutely not. A VAT is something -- it`s a very complicated tax that`s put on every step. You know, the value-added is something that`s manufactured.

This is so much simpler. If a product is not made in America, then you`re not going to able to deduct it. It`s a tax paid by corporations when they pay their 20 percent corporate tax. Very simple. The simplicity is really the key to the success. And so, no. A VAT is not something we would support. The European countries, Canada, they have -- you know, GSTs, VATs. TODD: Right. COLLINS: But, no, that is not the logical conclusion. This is a one and done with a border adjustability tax.

TODD: So, how will a -- how will a manufacturing company, of sorts, react to this? So, is it -- do you think the ultimate response is going to be -- let`s say, take a company like Apple. That any -- that they`ll then make - - they`ll make Apple products in Mexico to sell in Mexico to avoid taxes.

So, make Apple products in America to sell in America to avoid somebody -- is that where we could be headed, where corporations are encouraged, via the tax code, to conduct business that way?

COLLINS: Well, first of all, under our proposal, corporations selling products overseas will pay no tax. We`re going to go and start only taxing corporations on products they sell in the United States. So, this will encourage exports.

[17:10:06] And when it comes to whether Apple would make products here versus other where, it comes down to that 20 percent. If something is cheaper by 20 percent or more in another country, they may, in fact, still make it in another country. But time and again, we hear that the cost differential on made in America versus made in China or other countries is in that 16 percent to maybe 30 percent range. And so, if it`s in the 20 percent, obviously cost because you`re doing business overseas. This is going to be a big incentive for the companies, like Apple, to bring manufacturing back in the U.S., so they can subtract the cost of that portion of their revenue. It`ll be a decision they have to make. But, boy, it`s going to level the playing field tremendously and very quickly.

TODD: All right. Congressman Chris Collins, we`ll be watching. Very interesting.

COLLINS: OK. TODD: Always interesting -- always interesting talking to you. COLLINS: It is. TODD: Thanks for your time, sir. Appreciate it.

COLLINS: OK, Chuck. Talk to you soon.

TODD: Let me welcome tonight`s panel. Amy Walter, National Editor of "The Cook Political Report;" Anita Dunn from the White House, communications director for President Obama; and Ramesh Ponnuru, Senior Editor at "The National Review."

Ramesh, I`m going to start with you. Chris Collins does share, I think, a business ideology with Donald Trump. I don`t know if he is representative of the House Republican conference these days. Do you think he is?

RAMESH PONNURU, SENIOR EDITOR, "THE NATIONAL REVIEW": Well, on this specific issue, whether there should be a border adjusted tax, that was part of Paul Ryan`s better way tax plan. This is sort of their idea of how to thread the needle where they can do something that doesn`t discriminate between imports and domestically produced goods, but maybe tries to allay some of that protectionist pressure.

TODD: Anita, the Republican Party you dealt with in the Obama White House would never have gone near something like this. So, it is sort of interesting how if you now have -- and this is why I threw in the VAT ask earlier. I mean, this is, essentially, the way the Europeans tax themselves. Could we be headed that way?

ANITA DUNN, FORMER WHITE HOUSE COMMUNICATIONS DIRECTOR, PRESIDENT OBAMA: The Republican Party that we dealt with, from the Obama White House, insisted that we had to pay for, you know, emergency help to communities that had been wiped out by tornadoes and hurricanes.

And now, they`re talking about passing one -- I think the largest tax cut in history without funding it. And spending a trillion dollars for infrastructure without saying how they`re going to pay for that either. So, it`s a different Republican Party under Donald Trump.

But this tax proposal. Listen, it`s been 31 years since we`ve modernized this tax code. Ronald Reagan was president. The Internet had not been invented. So, nobody argues it isn`t time to do this. It is interesting, though, that a blue print, that not a lot of people paid attention to last year, suddenly has become, you know, rather revolutionary, in terms of its approach. Very different from anything people have been talking about before. Very different from Republican ideology.

TODD: You know, it is interesting. Look, and that is the larger thing here, Amy, that I wanted to get at which is that Donald Trump is changing the Republican Party. And it`s a -- how quickly Republicans are climbing on board. And so many of these folks -- most of them aren`t talking. They`re just going along.


TODD: They were highly critical of these ideas. Forget him, the person. They were highly critical. Some of them would say, this is antithetical, the conservative thought. And, I mean, Ramesh`s entire magazine was devoted to one at some point.

WALTER: (INAUDIBLE.) TODD: Yes, you know. You know, and so, I`m sure it helps Rich Lowry get some more invites to the White House, right?

WALTER: Just think about (INAUDIBLE.)

TODD: Yes. WALTER: So, when you had the vote on fast track -- what was that? Two years ago. DUNN: Yes. WALTER: Two summers ago. 90 percent of House Republicans supported it. That`s how we got the TPP.

TODD: And how many of them are -- and, by the way, most of those guys --

WALTER: And most of them are still around.

TODD: -- are still in the Congress. WALTER: The folks who are in Congress now weren`t around during the Obamacare fights but they were around -- TODD: For the trades. WALTER: -- for those trade things. So, 90 percent, yes, we need to do more. We need to be on board. Free trade. Great. Now off. TODD: Yes. WALTER: On the -- on the issue of tax reform. Obviously, we`re going to -- this is the other question here. It`s one thing, we know we -- about this blueprint and the Paul Ryan plan on tax reform. TODD: Right. WALTER: And what that`s supposed to go to is reforming the tax code, versus are we using this to pay for a wall and reform the tax? TODD: Well, -- WALTER: That`s a -- those are two different discussions.

TODD: So, I want to pivot this conversation -- I want to pivot this conversation to this issue of Mexico. OK. I`ve talked to some folks who work and live and spend a lot of time in Mexico. And essentially the Mexican elite, whatever you want to -- their political elite. There is this nervousness.

They feel like they`re getting ejected from North America. A wall is going up. NAFTA is getting renegotiated. This -- there is going to be political pressure on their government to stop a lot of cooperation with the United States. And we do a lot of cooperation. This is bigger than taxes and jobs.

PONNURU: The Trump administration does not seem to act on the assumption that a stable and prosperous and friendly Mexico is in the U.S. national interest.

[17:15:01] If they believe that, they`re certainly not communicating it. And it`s certainly, I think, the way the Mexicans are taking it.

TODD: This could --

PONNURU: And where are the Canadians in all of this, too, by the way? They`re -- aren`t they not our number one trading partner? WALTER: They have a -- they have a (INAUDIBLE), too, yes. I mean, -- PONNURU: We talked about NAFTA. We`re talking about Canada too.

DUNN: I mean, there`s a reason that, first, George Bush and then Bill Clinton felt NAFTA was a key, important thing, both for the economy of the United States but also for the foreign policy of the United States as well. That this idea that a North American treaty was critical to foreign policy of both parties for a long time.

Donald Trump has been in office for six days. He promised change, Chuck. It`s change.

TODD: And, by the way, picking a fight with Mexico is not -- does anybody think here it`s bad politics to pick a fight with Mexico, if you`re Donald Trump?

WALTER: I mean, in the short term.


TODD: I mean, I think there`s a policy fight that could come. I think there`s a lot of -- so, there`s no part of this is a -- there`s no punishment, politically, for him right now.

PONNURU: Raising prices at Wal-Mart could end up backfiring, right? I mean, we`re going to have to see what the effects --

TODD: I`ve always -- I always like having Chris Collins on. He`s one of those guys that, yes, that is going to be one of the things. Yes. And, you know, Joe Klein I thought wrote a very -- it`s, like, we`ve got to have this societal conversation.

DUNN: That`s right. Yes. That`s right. And we have -- TODD: (INAUDIBLE) is here. DUNN: I agree. TODD: Innovation to the point where people don`t have work. Is that too much.

DUNN: I think the other thing about it, though, which is, you know, you asked him very specifically about the threat to Mexico. Congressman Collins came back with broad tax reform, right?

And I think you get a real sense of how the House Republicans are going to deal with a lot of this stuff which is, oh, you asked me about that? That`s not what I want to talk about right now. Because there`s going to be a lot of rabbit holes that they can chase these guys down over the next four years and they`re not going to follow.

WALTER: And remember, Chuck, there are only 23 Republicans who sit in districts that he did not win.

DUNN: Yes.

WALTER: There are only 23 that sit in Clinton districts. So, the latitude he has is much -- and one senator up in 2018 who sits in the states she won.

TODD: It is -- yes.

PONNURU: The controversy only shows how chaotic policy formation is in this (INAUDIBLE.) Just a week ago, President Trump was saying he was against this border adjusted tax idea. And since then, he`s walked it back and now they`re proposing it, apparently. And then they said, oh, it`s just an option. Who knows?

TODD: It`s what -- on some hand, if you`re a policy wonk, it`s both going to be exciting and frustrating, I think, right now in this town.

All right, you guys are sticking around for the hour. Coming up, details on a staff shakeup at the State Department.

Plus, keeping up appearances, why the president and one of his top strategists have decided to take on the media over and over again.


TODD: Welcome back. There is a seemingly abrupt changing of the guard going on at the State Department right now. Four long-time top staffers are leaving undersecretary for management. Patrick Kennedy, two assistant undersecretaries, Michele Bond and Joyce Barr, and Gentry Smith who heads the department`s office of foreign mission have all decided to resign or left or ousted. We don`t know exactly the situation. Of course, personnel transitions are not unusual between administrations. [17:20:07] Acting State Department spokesman, Mark Turner, said the departures of long-time staffers is business as usual and the American Foreign Service Association agrees. But two State Department officials tell NBC News that one of those ousted officials, Michelle Bond, planned to serve in the next administration. Now, her last day is Friday. Whoever replaces her, by the way, will in charge of implementing Trump`s visa policy. President Trump`s nominee for secretary of state, Rex Tillerson, is still awaiting final confirmation by the Senate. He got out of the committee so he should be there soon. He`s expected to be sworn in as early as next week. Bottom line, though, why this was unusual? The four staff departures come amid reports that other long-time serving diplomats have chosen to quit rather than serve in a new administration. And now, President Trump`s State Department has even more jobs to fill. Most of these folks, by the way, had served multiple bipartisan administrations. That`s why this seems so unique today. We`ll be right back. (COMMERCIAL BREAK)

TODD: Welcome back to MTP DAILY.

All week, we`ve told you about what`s quickly becoming President Trump`s Achilles` heel in his first week in office, his vanity. He cares deeply about appearances and how he`s perceived, especially when it comes to media coverage. In an interview published in "The New York Times" today, the president`s chief strategist, Steve Bannon, says the media should, quote, "keep its mouth shut," telling "The Times" reporter, quote, "You`re the opposition party, not the Democratic Party. You`re the opposition party. The media is the opposition party." That is the position of Steve Bannon, Chief Strategist, inside that White House. Folks, the reason the Trump administration sees the media as the opposition might be because their boss is so driven by his own press coverage.

Just listen to this other part from that ABC News interview.


DONALD TRUMP, PRESIDENT OF THE UNITED STATES: So, I went to the CIA, my first stop. I have great respect for the people in intelligence and CIA. I`m not -- I don`t have a lot of respect for, in particular, one of the leaders but that`s OK. But I have a lot of respect for people in the CIA. That speech was a home run. That speech, if you look at Fox, OK? I am mentioned in it (ph). We`d see what Fox said. They said it was one of the great speeches. They showed the people applauding and screaming.

MUIR: You would give the same speech if you gave back?


MUIR: (INAUDIBLE.) DONALD TRUMP, PRESIDENT OF THE UNITED STATES: People loved it. They loved it. They gave me a standing ovation for a long period of time. They never even sat down, most of them, during the speech. Part of my whole victory was that the men and women of this country, who have been forgotten, will never be forgotten again. Part of that is, when they try and demean me unfairly -- because we had a massive crowd of people. We had a crowd -- I looked over that sea of people, and I said to myself, wow. And I`ve seen crowds before. Big, big crowds. That was some crowd.


TODD: And according to the transcript released by ABC News, Trump said his standing ovation at the CIA was the biggest since Peyton Manning won the Super Bowl. But it isn`t clear what Trump was referring to there, whether it was Manning spoke to the CIA. That we don`t have. It wasn`t in the interview itself. Let me bring back my panel. Amy Walter, Anita Dunn and Ramesh Ponnuru.

Amy, Steve Bannon, clearly, they want a foil. OK? I`m aware I have been quoted as saying, I`m not interested in being a political prop. They want to foil. The media has been a foil for presidents for a long time. But that was something else.

WALTER: To go directly at the very people whose job is to cover you and to say not simply that, look, we`re going to have an adversarial relationship. I`m -- there`s stuff I`m not going to want to tell you. There`s stuff that we`re going to disagree on. But to say you`re actually my enemy and you`re my opposition is a different place to be than we`ve ever seen.

But I think the point for the media, then, to look at that and to say, OK, we`ve got a lot, though, to cover. That has nothing to do with what Steve Bannon does or doesn`t want you to see, or believe or listen to. [17:25:03] And that the spinning about whatever he`s going to spin about, about how we`re dishonest, on how we say the wrong thing, is only going to work until it stops working. When people actually see that policy has consequence, they`re going to like it or they`re not. And that`s the end.

TODD: You got in a war with Fox pretty early in the --

DUNN: I did, yes. TODD: -- Obama administration. I`m going to be frank with you. I thought it was -- I thought -- I was uncomfortable when you attacked a news organization.

DUNN: OK, fine.

TODD: And somebody who was in the White House.

DUNN: Yes.

TODD: I probably -- I think I was critical, at the time. Do you regret that at the time and now what do you think of this today?

DUNN: I don`t think anything that`s happened in the last eight years on the Fox network proved me wrong, Chuck.

And I think this is -- this is very different. We didn`t say the entire news media. We had an issue with one news network that, throughout the campaign, and then throughout the early parts of the presidency, was actually creating news. And was -- and was behaving in a way that I think subsequently events showed really was more like a political opponent, you know, politburo kind of thing. You notice the president-elect, by the way, actually named Fox as a place that gave him good coverage recently. He did it in the interview David Muir last night and he does it all the time. Well, gee, what a coincidence. But, Chuck, let me make a -- let me make a broader point. TODD: OK. DUNN: This isn`t a new tactic for Republicans. I mean, in 1968, Richard Nixon. Spiro Agnew, nattering nabobs of negativism. One of my favorite quotes of all time, OK? That the systemic delegitimization of news coverage, on the part of a president, happened before. And it happened under the Nixon administration.

TODD: No, I wonder this, though. Let me ask you about the bubble effect. Because I`ve always wondered about the bubble effect on a president, on a campaign, which is you`re surrounded by people that tell you all the time how great are you are. You`re doing great.

And even if you didn`t do so hot, you say, oh, you might have been able to do that better but you really nailed X, right? Because there`s a fear of saying -- do you think that, then, warps the view of press coverage from the prism of the west wing?

DUNN: Well, you know, it`s --

TODD: I mean, I --

DUNN: It`s funny you mention that, Chuck, because one of the first pieces of advice I always give candidates, and I have done this consistently, is to tell them not to read their own clips. OK? Not to watch cable or don`t read the newspapers. Don`t read your own clips. If you need to know something, let the staff tell you about it. Because candidates can get obsessed with this kind of thing very easily. And part of it is because candidates are human beings. They want reporters to like them. OK? They want reporters to say, yes, that was a great speech. And when they read negative stuff, they spend a huge amount of time obsessing about it. I think we`re seeing that at a new level with this president but it`s not a new syndrome.

PONNURU: You know, I think part of this is the president`s vanity, the president`s need for respect, his insecurity. But I think there`s something more to it than that which is that he is a populist. And the central conceit of populism is, I speak for the people.

TODD: Right.

PONNURU: And so, if there`s something --

TODD: Damn you, anybody, that tries to get in between me and the people.

TODD: So, the crowd is huge and the applause is great. And I really won the popular vote if you count it correctly. If you question those elements, you`re questioning the central theory of populism, this which is what he stands for.

And why is he choosing the media as a foil? Because you know what? His polling isn`t great. The media`s is worse. The media is not trusted. And if you are Steve Bannon, and you want to make this point, what better foil to choose.

TODD: Well, and here`s the other thing. We don`t fight back.

DUNN: Yes.

TODD: I don`t have a political consultant that I hire. Hey, we got a communications problem. Can you spin this? We don`t do that. We are not actors in this.

DUNN: Well, but you also take the bait every time. OK? Amy is agreeing with me. You take the bait because the reality is that, who cares what Steve Bannon says, at the end of the day. OK?

Who cares what he says because they`re making a lot of news that will have long-term policy consequences. When those farmers in Nebraska can`t export goods to Mexico. When prices at Wal-Mart start going up dramatically and the wages haven`t caught up with the prices because the policy effects, as Amy said. And I think that that`s --

TODD: Well, that`s why we led with policy, not Steve Bannon, because there is a -- there is a reason there. All right. Stick with us.

Still ahead, North Korea defiant, unpredictable and in possession of nuclear weapons. How the regime may be planning to test the new President Trump. Stay tuned.



CHUCK TODD, NBC NEWS POLITICAL DIRECTOR, "MEET THE PRESS DAILY" SHOW HOST: If it`s Sunday, "Meet The Press" has an exclusive this week with Virginia senator, Tim Kaine, first Sunday show interview since the election. We`ll have more "MTP Daily" just ahead. First, here`s Hampton Pearson with the "CNBC Market Wrap."

HAMPTON PEARSON, REPORTER, CNBC: Thanks, Chuck. We have stocks ending mixed. The Dow climbing by 32 points to a new all-time high above 20,000. The S&P shedding a point. The Nasdaq is also down by one as well. Lots of earnings to tell you about. Alphabet, the parent of Google, reporting earnings that missed targets. Revenue came in ahead but shares lower in late trading.

A mixed report for Starbucks. The coffee giant`s profits were in line with estimates but revenue fell short. And Intel reported results that beat expectations. Shares are fluctuating after hours. That`s it from CNBC, first in business worldwide.


TODD: Welcome back. Could the first major test for President Trump come from a nuclear North Korea. The regime is reportedly developing ballistic missiles that could reach North America and they`re making it clear they aren`t afraid to use them. A North Korean official told Bill Neely in Pyongyang yesterday that a test of a long-range missile could happen any day.


CHOE KANG II, DEPUTY DIRECTOR GENERAL FOR NORTH AMERICAN AFFAIRS AT NORTH KOREA FOREIGN MINISTRY: Last year`s joint military exercises convinced us that we should match the U.S. nuclear weapons with our own nukes and match the U.S. IDBM with our own missile.


TODD: If you remember, North Korea tested a nuclear device soon after President Barack Obama took office. Recently I talked to outgoing Defense Secretary Ash Carter about how the U.S. would respond if North Korea carries through with its threat.


TODD: Is it policy now that if they test an intermediate range ballistic missile, the United States would shoot it down?

ASH CARTER, FORMER U.S. SECRETARY OF DEFENSE: If it were threatening to us, yes. If its predicted impact.

TODD: Or one of our friends or allies.

CARTER: Yes, we would shoot it down.


TODD: North Korea is notoriously unpredictable, but a North Korean diplomat who defected last summer warns things are getting worse there. He said at a news conference yesterday, "the traditional structures of the North Korean system are crumbling."

Joining me now is a former U.S. ambassador to South Korea and a former head of the U.S. delegation. To those intimate six-party talks on North Korea`s nuclear program back in the day, Chris Hill. Ambassador Hill, long time, no check. Good to see you.


TODD: Let me start with the threat here of North Korea. I assume, knowing their history, you think it`s when not if they decide to test this president.

HILL: That`s right. I think they`re doing more than testing a president. They`re testing ballistic missiles. And they could be testing a weapons design. It`s one thing to explode a nuclear device. It`s another thing to explode a device that has been put into a design that can be replicated. And they say they have the latter.

We don`t know that. But what we do know, in the next few years, I hope not less than that, but certainly in the next few years and probably in the next four years, Donald Trump will be faced with a nuclear North Korea. That is a North Korea that has a deliverable nuclear weapon.

TODD: Let me ask you this. This talk from the defector. I was watching the more news this defector is making about the situation in North Korea. How does the North Korean regime hear that? And is it become almost like a challenge or a threat to disprove? HILL: Well, I mean, they certainly listen to these defectors, buy they really go after them, they go after anybody who has ever had any association with them. So if you are a defector and you left North Korea, there is a considerable amount of trauma. And so often they say things that we may want to hear, but it`s not sure, really, whether they`re true.

In his case, to talk about the crumbling of the state structure there, I hope it`s true, but I am not convinced of it yet. It seems Kim Jong-un, hideous has he has been, is very much in charge there. And I don`t think we have any reason to hope at least in the short run that it`s all going to be taken care of.

TODD: So what is the right policy now to check North Korea? You know, there was a time candidate Donald Trump basically implied, hey, this needs to be China`s problem. And he is not the first to say that. I mean, there is a lot, President Obama in different ways saying, hey, isn`t this your client state? You need to take care of it.

In China, it sort of sometimes admits it`s a client state and sometimes wants to wash its hands of North Korea. What is at this point -- if you are advising President Trump, what`s your advice?

HILL: Well, first of all, I mean, I would love it if we could just outsource it to China and say, China, you created this mess, you fix it. But it`s not going to happen. China has a lot of things going on and certainly, they are not quite prepared for the complete demise of North Korea, the emergence of South Korea as a successor state, the potential that you could have U.S. troops on the border, potential that the U.S. could use Northern Korea as some kind of listening post.

And overall, the impression that China would have lost strategically to the United States. I don`t think they`re there yet. And I am not sure they ever will be there unless we are prepared to really have some serious discussions with them, go deep with them. And most importantly, like everything in life, you`ve got to set some priorities. And to some extent, we have not done that with North Korea -- with China with respect to North Korea.

We worried about their trade surpluses. We worried about the South China Sea. We worried about Tibet. What are we worried about with China? I think we gonna have so set some priorities with them and then try to do a deep dive. The situation is pretty tough. A lot of nationalism in China.

The Chinese government is not handling things well internally. They also have been pretty belligerent on the South China Sea. So we have some issues. Then I think trying to put the one-China policy back on the table, I don`t think that`s a dog that`s going to hunt.

TODD: Let me go back, though, to North Korea and ask you this sort of fundamental question. When we took out the Iraqis, when they tried to start a nuclear -- we knew they were going to try to start a nuclear weapons program, got to it early. How did -- how did this get this far with North Korea?

HILL: Well, it`s been going on for a long time. It didn`t just start when George W. Bush called them a member of the Axis of Evil and somehow hurt their feelings. We know that they`ve been working on this since the 1980s. But the problem is there are no really good options. Obviously, we do need China as part of the solution. They can`t do it all but they certainly need to be part of the solution.

I think that was important for us to do. At the same time, if you look at a map and if you look at where Seoul is, if you look at the South Korean population centers, if you look where North Korean artillery is, to go for some kind of kinetic solution invites the potential of war.

And so I think, understandably, people have tried to kick the can down the road. The Obama administration talked about patience or even better yet, they talked about strategic patience. Well, clearly, that`s not something that you`ll find in the lexicon of this current president. So its going to be interesting, to put it mildly, in the next four years. TODD: That`s for sure. As we put on the banner there, we know Secretary Mattis will be in South Korea during his first maiden trip as defense secretary. Ambassador Chris Hill, always a pleasure, sir. Appreciate your coming on to share your views.

HILL: Thank you.

TODD: Still ahead, why I am obsessed with fragile freedom when it comes to two American institutions. Stay tuned.


TODD: Welcome back. Tonight, I am obsessed with where we are less than one week into the Trump presidency. And where we are ready as in a cul-de-sac with respect to two basic premises of our society, a free and fair vote and a free and respected press. Let`s start with the vote. Donald Trump is now president of the United States.

And when he insists there is widespread voter fraud, when he says 3 to 5 million people voted illegally, when he says he knows they all voted for Clinton, and when he says this not only in the absence of evidence but in the spite of universal conclusion that there was no fraud.

When he says all of that, he is undermining confidence in our democracy. It may not be his intention, but a lot of people will believe everything he is saying about this. That is not good. And then there is president`s assault on the press. He calls reporters the most dishonest people on earth, insists they lied about his inauguration turnout, about his viewership, about his CIA speech.

And now, his attacks have been amplified if not encouraged by his chief strategist, Steve Bannon, who calls the media the opposition party, that it should keep its mouth shut and listen for a while, not exactly first amendment stuff. Look, I know this is all feel-good stuff. I am not naive. I know this is a political tactic and designed to spur excitement among us small group of folks.

But this is not a campaign anymore. As president, Mr. Trump`s words have outsize impact not just in the U.S. but around the globe. And yes, we in the media are guilty of chasing after shiny metal objects rather than telling stories of what matters to voters.

We didn`t have a good handle on what a lot of people living away from big metro areas were thinking. But it`s not an excuse for somehow disbanding two basic premises when it comes to the media, the press, and democracy. The fact is we are all custodians of our freedoms, all of us. Let`s not throw it away over an argument about vanity.


TODD: Time now for "The Lid." Panel is back. Amy, Anita, and Ramesh. We got a lot to talk about today. One thing we didn`t get to was the president on the issue of waterboarding. Let me play a sound from his interview last night on ABC.


DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Would I feel strongly about water boarding? As far as I am concerned, we have to fight fire with fire. I have spoken as recently as 24 hours ago with people at the highest level of intelligence. I asked them the question. Does it work? Does torture work? And the answer was yes, absolutely.

I will say this. I will rely on Pompeo and Mattis and my group. And if they don`t want to do it, that`s fine. If they do want to do, then I will work toward that end. I want to do everything within the bounds of what you are allowed to do legally. But do I feel it works? Absolutely I feel it works.

(END VIDEO CLIP) TODD: So it`s the convention of using the phrase "torture." Something that Dick Cheney -- George W. Bush never said. They didn`t believe it was torture. They believed it was -- this is just outright saying torture. How is it going to get heard around the world?

RAMESH PONNURU, SENIOR EDITOR FOR NATIONAL REVIEW MAGAZINE: Let`s also keep in mind that while he was campaigning, Trump was talking about even worse things like killing innocent family members of people we`re at war with. So this is not new for him. This is his basic attitude towards human rights.

I don`t think it`s gonna go over around the world. I do think that at least -- maybe to small blessings department (ph) the fact that he is talking about obeying the law is a good thing, and the law does now flatly prohibit waterboarding.

TODD: I have to tell you, I mean, you look, Ryan and McConnell, they both - - I mean, McConnell, I think director of the CIA made it clear he is going to follow the law. Ryan, torture is illegal and torture is not legal, and we agree with it not being legal.

British Prime Minister Theresa May said, you know, we did not get involved in that, that will continue to be our position, we do not sanction torture. It`s going to have an impact around the world.

ANITA DUNN, POLITICAL STRATEGIST, FORMER WHITE HOUSE COMMUNICATIONS DIRECTOR: Well, it will. It`s time like this that you`re saying, thank God for John McCain, whose voice always at times like this adds a level of credibility and depth to any discussion. Think about how much there`s to unpack in the president`s statement.

Just the part about where he says he will obey the law, it seems news worthy in itself when it comes to this. (inaudible) throughout the campaign, he basically talked about violating the law in this area. I think people around will do hear this, and they say, what has American done?

AMY WALTER, NATIONAL EDITOR OF THE COOK POLITICAL REPORT: Not just people around the world but people within the military. I know that -- people I know who come from military background, when they heard during the campaign, this idea that he was going to kill or torture the family members of people who are terrorists or suspected terrorists, bring waterboarding back, they were horrified. They said, I would never -- if I were in the field, I would have to disobey that order.

TODD: Let`s remember what he is channeling, right? He`s channeling this guttural reaction that`s out there to Americans getting their heads shut off. Okay? And it was.

DUNN: To terrorists and here at home. TODD: That right. And to terrorists that don`t -- you know, you are at war with the group of people that aren`t abiding by the Geneva convention. That`s been his argument. It is -- that sells with the certain segment of the population but there is an outside segment.

PONNURU: And he also seems highly influenced by whoever he has last spoken to an issue.

TODD: Twenty-four hours, so, right.

PONNURU: Right. And previously, remember he had spoken to General Mattis and.

TODD: You think the person is that rhymes with Mike Flynn (ph), sorry.

PONNURU: I think he starts with an inclination to think that these methods which are generally considered to be torture are useful, that they work, and that should be the end of the debate. He can be influenced by people on the other side as he can be across the board apparently.

TODD: Well, I think that is potential -- I`ve always said, what`s his greatest strength potentially as president is no is never no, with him. You can talk him out of no which you can argue you want that in a president to a point.

DUNN: I think that you are exceptionally good today in finding that silver lining. He is a deal maker. And he has been clear with everybody. He is a deal maker. He is a negotiator. If he talks to people who dealt with him as a businessman, his no is never a no until it becomes a no. And you can get to that point. With presidents, you would like that point to be arrived at after some deep reflection or maybe even some reading.

TODD: The problem with stuff like this though is you brought up John McCain, Anita. You will create fishers in your own party over this. So politically, this becomes problematic.

WALTER: Well, and this is where you see members of congress then, and this is going to be the constant for them, trying to focus on the stuff they know, they want to get done, and they don`t want to be spending time on this. Quite frankly, most of them don`t want to be spending time talking about a wall either or how are they going to fund a wall.

They want to do tax cuts, they want to repeal Obamacare, and if possible get a couple other regulatory reforms done and be done, that would be a great year for a republican conference. Anything that takes them away from that is going to be.

TODD: I have to say, it is amazing that already the house of senate already said, yes, we`ll fund the money for the wall. That is amazing. I did not think it would be that quick, anyway. You guys are great. Thank you very much.

WALTER: Thank you.

TODD: After the break, its` getting closer to a metaphorical midnight. Stay tuned.


TODD: In case you missed it, you know, you maybe better off missing this, because as of this morning, apparently we`re 30 seconds closer to the end of world. And America is one step closer to authoritarianism, at least on paper, at least according to people that do these things. Let me get to the end of the world issue. According to the so-called Doomsday Clock, we are now two and a half minutes to midnight, with midnight being the apocalypse.

What is the Doomsday Clock, you asked? Well, it is a symbolic countdown to global annihilation. According to the group of scientists who created this depressing metaphor 70 years ago, the Doomsday Clock "warns the public about how close we are to destroying our world with dangerous technologies of our own making."

The bulletin of the atomic scientist say they moved the clock closer to midnight today because "over the course of 2016, the global security landscape darkened as the international security failed to come effectively to grips with humanity`s most existential threats, nuclear weapons and climate change.

That`s not the only chicken little thing happening today. According to the Economist Intelligence Unit`s 2016 Democracy Index, the United States has been downgraded from a full democracy to a flawed democracy. Some of you might say, why were we full or were flawed before.

But anyway, according to the report, "the decline in the U.S. democracy score reflects an erosion of confidences in government and public institutions over many years." But this report is clear that the United States` downgrade is not a result of President Trump`s election but rather that he was the beneficiary of this decline in trust. I think that is fact.

So, let`s leave this on a semi-positive note. First, we`re in good company in the flawed democracy category. It includes countries like Japan and Belgium, and you know, we`re all huge in Belgium.

But back to the Doomsday Clock, this is the closest we`ve been to metaphorical midnight. In 1953, the clock was set to two minutes to midnight after both the U.S. and Soviet Union tested H-bombs, and the apocalypse hasn`t happened yet. So there`s hope.

That`s all we have for tonight. Back tomorrow, more MTP Daily.

For The Record with Greta starts a little late - I`m sorry.