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Ten U.S. Sailors in Iranian Custody; Clinton Trails Sanders in Two Early Voting States; Hillary Clinton on Trump Attacks: "I Have No Response"; Cruz Fires Back on Trump Citizenship Attacks. Aired 7-8p ET

Aired January 12, 2016 - 19:00   ET


[19:00:10] ERIN BURNETT, CNN ANCHOR: Next, breaking news, American sailors seized by Iran. The revolutionary guard arresting ten American sailors in the Persian Gulf. President Obama just briefed moments ago. All of this as the President prepares to come here to deliver his final State of the Union Address. How will he respond tonight?

And Hillary Clinton one-on-one. New poll showing Bernie Sanders beating her in Iowa and New Hampshire. Could she lose the nomination again? Let's go OUTFRONT.

And good evening, I'm Erin Burnett, OUTFRONT tonight, we begin with the breaking news. Ten American navy sailors, nine men and one woman seized by Iranian Revolutionary Guards in the Persian Gulf tonight. The Americans ran two boats, each equipped with three 50 caliber machine gun. Iran's news agency announcing those sailors are under arrest. U.S. officials say the sailors were simply on a training mission traveling from Kuwait to Bahrain. It is a major embarrassment for the Obama administration coming just hours before the President will be here delivering his final State of the Union Address.

The President was expected to toss out the conventional script for his speech tonight and Trump it what considers this successes of his time in office. And one on the top items on that list, if not the top that was the Iranian nuclear deal. We are live in the nation's capital as we countdown to the crucial State of the Union Address.

With this breaking news tonight, we begin our coverage with our National Security Correspondent Jim Sciutto. And Jim, this is not good news for the President.

JIM SCIUTTO, CNN NATIONAL SECURITY CORRESPONDENT: No. Very quickly we heard from both administration officials, Defense Department officials making the case that this was not a hostile act. They said that very early on they had assurances from Iranian officials that the sailors were safe and we're going to be released quickly. That said as we learn new details, defense officials telling us that the Iranian Revolutionary Guards who seized these two navy boats seized also the communications equipment of those ten U.S. sailors so that they cannot be in contact with their mothership in effect. And that led to a search by helicopter. And it was only by helicopter that the U.S. navy was able to determine that those two ships and those ten sailors, both rather in ten sailors were in Iranian custody. And as you mentioned by Iran's own description, at least the semi-officials as far as news agency, they used the word "arrested." They did not say rescued, they did not say given a port of call, they used the word "arrested."

BURNETT: And Jim, you know, what do you make of the timing of this? You know, Iran is acutely aware of important events in American politics tonight. Is the crowning moment for the President of the United States and his administration, his final State of the Union Address.

SCIUTTO: That's right, Erin. Well, listen, there is no immediate evidence that this was planned to take place tonight. Who could have predicted that you would have two U.S. small navy boats, one of which either had a mechanical problem or a navigational error that put it into Iran's territorial waters? But as it happened, you have them go into those waters and the Iranians make the decision to detain them. But you know, I don't like the sound, it sounds like a cliche to say the timing, whether accidental or not couldn't be worst. The fact is, as you mentioned, the President has his final State of the Union speech tonight, a big part of his message is going to be that diplomacy works.

And the two examples of that from his administration are going to be normalization of relations with Cuba and the Iran nuclear deal. To have that happen now, bad timing. But I also tell you, the nuclear deal is meant to be implemented as soon as this weekend, Erin.


SCIUTTO: So, all of those punishing economic sanctions to be lifted as soon as this weekend. You already have many people in that building where you're standing right now, both Republican and Democrat who oppose the Iranian nuclear deal. An incident like this certainly will give them more fuel.

BURNETT: All right. Jim Sciutto, thank you very much. And the breaking news unfolding as we said, as the President is in the final moments preparing his State of the Union Address.

Our senior White House Correspondent Jim Acosta is OUTFRONT live at the White House. Jim, this is obviously not something the President wants to be dealing with right before he addresses the nation. This has changed the narrative for him tonight.

JIM ACOSTA, CNN SENIOR WHITE HOUSE CORRESPONDENT: Well, Republicans say it does. This is sort of like an October surprise right before the State of the Union Address. The President has been briefed on this matter of Iran holding these ten American sailors according to a senior administration official. But the White House is trying to urge Americans to remain calm about this situation. Administration officials say they expect the matter to be resolved promptly and that these sailors will go on their way as soon as possible. These officials are cautioning that it's overnight in Iran so it's not the best time for these sailors to continue with their mission.

The White House is saying at this point that the President's State of the Union Address won't be changed to reflect this very intense situation. But I will tell you having talked to officials over the last several days, democratic sources, the President was going to tout the Iran nuclear deal as part of his defense of the Obama doctrine later on tonight in the State of the Union Address. Obviously, this is going to be a much harder sell to make to the American people. Republicans are going to say once again this is the reason why you can't trust Iran. And while the White House says, no plans to change President Obama's speech, you can bet that Nikki Haley speech might be advised or revised later on this evening to reflect what's happening in the Persian Gulf while she's delivering the Republican response as you know -- Erin.

[19:05:22] BURNETT: Yes. It's a good point. All right, Jim Acosta, thank you very much.

OUTFRONT now, former CIA operative Bob Baer. Our senior political analyst David Gergen. And retired Air Force Colonel Cedric Leighton are with me here on Capitol Hill.

Bob, let me start with you though. You believe this is extremely significant.

ROBERT BAER, FORMER CIA OPERATIVE: Oh, I think it is. It couldn't have come at a worst time. You know, our relations with Iran are supposed to be on the mend. You know, there is sort of a rational power. But taking two navy boats like this is a huge setback for this administration. I mean, the one success Obama has in the Middle East is the Iranian nuclear deal. And that, you know, we still have a "Washington Post" correspondent in jail, a missing FBI agent, ex-FBI agent still disappeared in Iran. So, you know, it's a rocky time all around.

BURNETT: And Colonel, you know, they are saying that -- the Iranians are now saying, the press there, the Revolutionary Guards have arrested the Americans. That's the word they are using. They are using the word "snooping" and they're calling them passengers, not necessarily members of the military. And these are all very crucial words.

COL. CEDRIC LEIGHTON, FORMER INTELLIGENCE OFFICER, U.S. AIR FORCE: They are. And especially the part about passengers, Erin. Because once you use the term passenger and don't use the term sailor or soldier, what that means is that the Geneva Convention protections that are established by international law may not be invoked by the Iranians. Now, legally they can't do that. But they will attempt to do that if they are calling them passengers.

BURNETT: So, the administration now saying, don't worry, they will going to be released momentarily. That does not seem to fit with the words we are hearing out of Iran.

LEIGHTON: Definitely not. And the reason that this is a real serious issue is because it's very easy to accuse somebody of espionage even if they've never done it. And that is one of the things that I noted with Jim Sciutto's report.


LEIGHTON: He talked about the communications equipment that they were looking at while they're trying to find not only how they communicated, but what they were communicating. And they are also trying to find out if they can break any of the codes that were used on that ship.

BURNETT: All right. This obviously David, becomes a very significant story that the President, they're saying, is not going to change his speech but this is clearly significant.

DAVID GERGEN, FORMER PRESIDENTIAL ADVISER: It would be a mistake for the President not to change his speech. He must talk about this tonight, he's not to tell a lot of time on it, but he must include it to acknowledge it and say we think it will be resolved quickly. Now, this has become now a pivotal moment in the Middle East and for his presidency. The thing U.S. officials have been briefing reporters, they're saying basically they think these sailors will be released Wednesday tomorrow. If they are not released tomorrow, this drags on as the Colonel suggest --

BURNETT: Well, first things, they seemed to imply would be momentarily then they said, in the middle of the night --

GERGEN: Exactly.


And if they continue to do that, there is going to be hell to pay back here in this country starting right here in these halls in this Congress. Because there's already been growing suspicion that Iran was not doing all it was promised in the nuclear agreement. We have understood that with the nuclear agreement it not only would contain their nuclear program but they would start behaving themselves constructively. And that is exactly what they are not doing now. Not only they seized this, but two weeks ago they are harassing a U.S. aircraft carrier, you know, firing missiles within 1,500 yards.


GERGEN: They've been after no good in Syria, they've been working with Hezbollah, they've been firing missiles in contradiction to a U.N. resolutions.


GERGEN: These are Revolutionary Guards.


GERGEN: It's their extremists and their politics who were trying to derail the nuclear agreement. And they could very well do that.

BURNETT: Bob Baer, I mean, it sounds like that the downplaying of this might be a big mistake, I mean, in terms of the words out of the U.S. BAER: Well, I think he has to downplay it at this point. Because we

don't frankly don't know what is going to happen.


BAER: As David said, this is the Islamic Revolutionary Guard Corps. These are fanatics, they don't like the United States, they don't like the nuclear agreement. They oppose our alliance with Saudi Arabia. They have every reason in the world to hold these sailors indefinitely. I'm not saying that's going to happen but it could be another hostage crisis which would very much cloud this administration's foreign policy in a very, very ugly way.

BURNETT: And David, you brought that point up about a hostage crisis.

GERGEN: If this becomes a hostage crisis like the kind Jimmy Carter had in Tehran when men and women were held 444 days, it unravels his presidency. And by the way, they released them the day Ronald Reagan became president and he gave them enormous belief. If they come out quickly, President Obama will be fine. This will all go away in a matter of days. But if they are held, this gets worse and worse for the whole environment of trying to work with Iran. It could blow this nuclear corps right out of the water.

LEIGHTON: This also makes the Sunni Shia divide even more pronounced -- going to be a real significant issue. And then you have the shades of pueblo kind of related to the Iranian hostage crisis. You have this situation where you've got sailors, you've got a boat, you've got two ships in this case.


LEIGHTON: And you have a real problem -- real problem with this.

[19:10:20] BURNETT: All right. Well, thank you all very much. The President as we said finishing the final touches on that speech. We will see whether he is going to address this head-on tonight here on Capitol Hill.

OUTFRONT next, Hillary Clinton tonight now trailing Bernie Sanders in both Iowa and New Hampshire. Is her campaign in panic mode? She is OUTFRONT, next.

Plus, we are waiting Donned Trump about to speak live to supporters in Iowa. Can he stop Ted Cruz? And we're counting down to the State of the Union Address.

How will the President defend his Iranian nuke deal after tonight's arrest of American sailors in Iranian custody at this hour?


[19:14:39] BURNETT: Tonight warning signs for Hillary Clinton. Two new polls showing Bernie Sanders beating Clinton in two crucial states in Iowa. Bernie Sanders with the five point lead over Clinton. And in New Hampshire, Sanders now topping Clinton by 14 points. Nationally, her lead over Sanders has dwindled. A "New York Times"/CBS poll just released moments ago shows Clinton leading Sanders 48 to 41 percent. It is of course a lead but just a moment ago, she's lead Mr. Sanders by 20 percentage points nationally. And Clinton is now using the best weapon she has to fight back, sending daughter Chelsea on the campaign trail today for the first time.


CHELSEA CLINTON, DAUGHTER OF HILLARY CLINTON: I never thought that we would be arguing about the Affordable Care Act or ObamaCare in the democratic primary. Senator Sanders wants to dismantle ObamaCare, dismantle the chip program, dismantle Medicare, dismantle private insurance.


BURNETT: So, is the Clinton campaign worried? Well, Hillary Clinton sat down with our own Alisyn Camerota.


ALISYN CAMEROTA, CNN ANCHOR: Secretary Clinton, thanks so much for sitting down with us here in Iowa.


CAMEROTA: We are in Ames, Iowa --


CAMEROTA: -- where the temperature as we speak is one degree.


CAMEROTA: And I know that you have been going to countless campaign events here and I'm wondering when you get up in the morning in Iowa if there are ever times you question your life choices?

CLINTON: Absolutely, no. You know, I grew up in Chicago. I'm used to cold weather. It doesn't bother me. In fact, I'm somewhat reassured that there is a real winter, that we are actually seeing snow and lower temperatures. But I get up every day whether I'm in Iowa, in New Hampshire, wherever I am in the country and I really look forward to the day because I find the opportunity to go out and listen to people, hear their stories, give them my views about what I think the next president should do very energizing and very, you know, reinvigorating all the time.

CAMEROTA: So, let's talk about the tightening race between you and Bernie Sanders. Bernie Sanders is speaking to reporters on Monday night here in Iowa. And he said that your campaign is in, quote, "serious trouble." Is that how you feel?

CLINTON: Not at all. In fact, I have always known that if you are going to run to be president, particularly in the Democratic Party, it's a long, hard, challenging road. And so I've been in these elections before. They always tighten up as people begin to make up their minds, as they look at the candidates, totally predictable. I feel really, really good about the campaign organization that I have. A caucus is different from a primary. It takes a lot of intensive work to convince people to come out on a cold Monday night, spend a couple of hours in order to stand up for your candidate, but I'm asking Iowans if they'll stand up for me on caucus night. I will be standing up for them all through my presidency.

CAMEROTA: There is a new Quinnipiac poll out just about one hour ago in which Bernie Sanders is now beating you in Iowa. It is 49 percent to 44 percent. It is the first time that this has happened that he's been beating you in Iowa since September. We are 20 days out. Does he have more momentum than you?

CLINTON: Well, the funny thing Alisyn is, after that poll came out about an hour later there was a PPP poll where I was leading him by the same margin about six points up. I don't pay any attention to this. I don't feel that it's a good reflection about who will actually come out on caucus night. I can only tell you that the energy, the enthusiasm, the excitement of my volunteers, my organizers, the voters who come, who sign up on commit to caucus cards is just building. That's my experience. So I'll let people poll and try to figure out who is going to show up. I'm looking at people who are showing up, making up their minds and trying to, you know, convince them to come out and caucus for me.

CAMEROTA: Why don't you feel that the polls are good reflection of what's going to happen in the caucus?

CLINTON: Because they are so unpredictable. And it's gotten increasingly difficult to poll. And I think you would have to add a degree of difficulty to polling for a caucus. So, that's been my experience. I've watched this a long time. I've had a prior election where I campaigned in Iowa. So, I just put that aside. I'll let pundits and others worry about who's up and who's down. I just get up every day like we were saying, going out there, making my case, drawing the contrast because I have the highest regard for my two opponents, but there are real differences. And we need a spirited debate. Because after the first of the year, a lot more people start paying attention. And now I know it's, you know, the make or break time, people make up their minds.

[19:19:25] CAMEROTA: Bernie Sanders is also winning in New Hampshire. Not surprising. He is from a neighboring state. Have you considered what would happen if he wins in Iowa and New Hampshire what your plan is?

CLINTON: I don't think about that. I'm going to do everything I can to win as bigger margin as possible in the caucus and then go to the primary. But this is a national campaign. We've been organizing in South Carolina, in Nevada, a lot of the March 1st states, the March 15th states. Remember, I campaigned all the way into June last time. And I have always thought that given the unpredictability and the, you know, changes in people's concerns going into this election, that we wouldn't know exactly how the outcome would be for, you know, a couple of cycles of these primaries and caucuses. So, I'm going to do my best to convince more Iowans to come out and caucus for me. And even though as you say, Senator Sanders as a neighbor and a neighbor never lost in New Hampshire, I'm going to take that challenge on and do the best I can to get people in New Hampshire to support me, as well.

CAMEROTA: Vice President Joe Biden offered his thoughts to CNN on why he thinks Bernie Sanders is resonating. He said that he thinks it's about Senator Sanders' positions on income inequality. And the Vice President said, quote, "It's relatively new for Hillary to talk about that. That's been Bernie's. No one questions Bernie's authenticity on those issues." What's your reaction?

CLINTON: Well, the Vice President who I deeply respect and regard as a friend, went on to say as I recall. But, you know, Hillary Clinton has a lot of very good economic policies that are thoughtful and on and on. Look, I have been working toward closing the gaps between people, poor people and well-off people primarily all my adult life. I went to work for the Children's Defense Fund. I helped to reform the education system in Arkansas. I was a legal services lawyer defending poor people. I went to work to try to make sure that we got health care in the beginning of my husband's administration because of so many people who were left out and were uninsured.

I have been on this issue in many different ways. How do we make education more equal? How do we make health care more equal? Of course that's tied to income equality, but there is also a broader range of issues that I have a long record of addressing. And when I was in the Senate I took on corporate executive pay. A lot of the abuses that I thought were there. I took on these derivatives and credit default swaps that contributed to the collapse of the economy and the great recession. I stood up to Wall Street. I called them out. So I have a very long record. I have a broader agenda. It's not the only thing I talk about because I think you have to view equality of opportunity and how we deliver that in the 21st Century for many different perspectives and that's what I tried to do.

CAMEROTA: And since you have been devoting much of your career to talking about this, why do you think the Vice President would say, it's more in Bernie's wheelhouse and it's about his authenticity?

CLINTON: Oh, I don't know. But you know, I have a lot of regard for the vice president. And I think today he clarified what he said and said he was talking about me when I was Secretary of State. Well, when I was Secretary of State, I couldn't talk about domestic policy. There is an unwritten rule, you do not meddle in domestic policy when you are secretary of state or for that matter, secretary of defense. So yes, for four years, despite a long career both in and out of public service where I have been relentless in talking about these issues, there were four years when I did not. I talked about how we were going to get Iran to the negotiating table and try to prevent them from getting a nuclear weapon, how we're going to, you know, deal with a rising China, what we're going to do about women's rights, something that goes to the heart of inequality. So, I had a different agenda because I had a different job.

CAMEROTA: So, you didn't take Biden's comments as a slight?

CLINTON: No. Not at all.

CAMEROTA: OK. You are introducing your tax plan. One of the headlines is that you would impose a four percent surcharge on incomes over $5 million. And I believe that that would raise about $150 billion over ten years. Does that go far enough in addressing income inequality?

CLINTON: Well, we've got a variety of proposals. Not only the four percent surcharge which I call the fair share surcharge. The so- called Buffet Rule which would have a minimum tax rate for people making more than $1 million, limiting deductions to 28 percent with a charitable exception. Going after a lot of the subsidies that, for example, still subsidize the oil and gas industry about $6 billion a year while we have to move toward a clean renewable energy future. So I have put forth plans, paid family leave, tuition, debt-free tuition for public colleges.

[19:24:32] Capping prescription drug costs and much more. And it would cost about $100 billion a year, all of which I pay for. In contrast, Senator Sanders has some very big ideas, but he hasn't yet told anybody how he would pay for them. And he had promised that he would roll out his tax plans before the Iowa caucus on February 1st. Well, if you wait too long, nobody will have a chance to see them or analyze them. And so I am very clear about what I would do and how I would pay for it.

CAMEROTA: Another point of conflict between you and Senator Sanders is on gun policy.


CAMEROTA: We just watched this very emotional event this morning.


CAMEROTA: That you were involved in where this mom who lost two children --

CLINTON: Right --

CAMEROTA: -- to gun violence got up and spoke. And it was really heartbreaking to hear her. It sounds like she lost her children to criminals.


CAMEROTA: So, how would you stop that?

CLINTON: This is a very big difference in this campaign. Because as you saw, I received the Brady campaign endorsement today and both the woman Delfin Cherry (ph) who introduced us to the stage and the head of the Brady campaign had lost family members. It was really hard standing up there because I have held the hands of and listened to countless people who have lost family members to gun violence. And I agree completely with the President about us having to take action now. We lose on an average 90 people a day. It has to stop, Alisyn. I've been in this campaign advocating for comprehensive background checks, closing the gun show loophole, closing the online loophole, closing what's called the Charleston loophole.

You know, there was a loophole, my opponent voted for it, Senator Sanders, that at the end of three days, business days, you get that gun whether they have finished the background check or not. The killer in Charleston who bought that gun, if there had just been a little more time, it would have been discovered he should not have been able to buy the gun because he had a federal record. We have saved a lot of lives. I can't put an exact number on it. But because of the Brady bill which Senator Sanders voted against five times, more than two million people, the Brady campaign says, 2.4 million purchasers have been stopped from buying guns.

So, we are talking about violent criminals. We are talking about domestic abusers. We are talking about the dangerously mentally ill. We are even talking about terrorists because the Republicans won't close the loophole so that people on the no fly zone can buy guns. I feel passionately about this. And the cumulation from Sandy Hook to the community college in Oregon, the fact that we have so many mass killings in the last few years, I think it certainly motivated the President, and I am so proud to support him and I want to make this a voting issue in this campaign.


BURNETT: All right. And OUTFRONT next, Hillary Clinton ongoing head- to-head against Donald Trump.


CLINTON: (LAUGHTER) Yes, it would be amazing. I would look forward to it.


BURNETT: And Donald Trump tonight live at this hour, there he is, addressing the breaking news about Iran holding ten American sailors. That story, next.


[19:31:53] BURNETT: Welcome back to a special edition of OUTFRONT. I am live tonight on Capitol Hill. The president is about to deliver his final State of the Union Address here tonight. The president giving this speech with an eye on the 2016 election.

Tonight, more of Alisyn Camerota's interview with Hillary Clinton where she tells us how she really feels about running against Donald Trump.


CAMEROTA: I want to talk about an issue Donald Trump wanted to make an issue in this campaign, that is -- are allegations from your husband's past. He is going further actually than that. He is making it about you. He is saying that you are an enabler of bad behavior and of sexual assault.

What's your response to Donald Trump?

CLINTON: I have no response. I'm going to let him say whatever he wants to say. He can run his campaign however he wishes. I'm going to keep talking about what the next president will have to do starting January 20th, 2017.

I have deep disagreements with what he's proposing. His tax plans would cut trillions of dollars of taxes from the wealthy and corporations. He doesn't believe in equal pay. He thinks that American workers are already making too much.

So, I'm going to draw the contrast with him that I think the American people are interested in seeing.

CAMEROTA: But when someone accuses you of being an enabler of sexual assault, don't you need to respond to it? I mean, particularly since this is an issue you wanted to talk about on the campaign trail. Can't this sexual assault -- you say survivors need to be believed and they need to be heard.

So, when he's accusing you of doing something that is the antithesis of what you want to talk about, don't you need to address it?

CLINTON: I'm going to let the American voters decide what's relevant and what's not relevant in their decision as to who they're going to support.

CAMEROTA: I have a few more questions. Donald Trump was on "The Tonight Show" and asked about the possibility of you two running against each other, if that's how this all plays out in November. He said that would be, quote, "an amazing thing."


CLINTON: Yes, it would be amazing. I would look forward to it.

Look, I think this is serious business. Campaigns always have some great stories and great characters. That's part of the political process. This is really serious business, who the next president is. We are either going to build on the progress that we've made or we're going to see it ripped away. We are either going to defend human rights and civil rights and women's rights and gay rights and voting rights and workers' rights and all the rest that is at stake, or we are going to turn the clock back.

And that's why I have tried to very clearly explain where I stand on all of these issues because the stakes are so high. And if I'm fortunate enough to get the nomination, I will run hard against whomever the Republicans' nominee, because they represent a brand of politics and policies that I think would hurt our country. I don't want to see that happen.

CAMEROTA: Let's say you get the nomination. Let's say you win the presidency. CLINTON: Yes, let's say that.

CAMEROTA: Let's say it.

[19:35:00] And on day one, you walk into the Oval Office, what's the first phone call you make?

CLINTON: Well, I think the very first phone call would be to whoever I've asked to be the chief of staff of the White House. Let's get a meeting together, let's get our agenda together. There's a lot we have to get going. The earlier we start, the better we'll be off and we'll get more accomplished.

Because I want to really think hard if I do get the nomination, right then and there, how we organize the White House, how we organize the cabinet. What's the legislative agenda?

You know, the time between an election and inauguration is short. You can't wait. I mean, you can't take anything for granted. You have to keep working as hard as you possibly can, but I think it's important to start planning because we know what happens if you get behind in getting your agenda out and getting your appointments made. You lose time. And you're not doing the work that the American people elected you to do.

CAMEROTA: Before I let you go, I definitely want to ask you about your granddaughter. You talk about her on the campaign trail. Today is I believe or recently, Chelsea is making her first appearance on the campaign trail.


CAMEROTA: She said she believes that you becoming a grandmother is a driving force behind your campaign. How so?

CLINTON: Well, she's right, because I feel very fortunate. I like to point out I'm the granddaughter of a factory worker who came to this country as a young immigrant. Went to work in the lace mills in Scranton, Pennsylvania.

So, here I am three generations later asking people to vote for me to become their president. And we have this amazing 15-month-old grandchild with another on the way next summer. And so, I think a lot about the future, but I think not just about her future because we're going to do everything we can to make sure she has the best opportunities life can offer, but I think about what kind of country she'll become an adult in and what kind of world is going to be waiting for her.

I want to make sure -- it's not just our grandchild, but every child who has the opportunity to go as far to fulfill their God-given potential as possible. And a lot of that depends on the kinds of decisions that our presidents make. It's not, you know, you have to have family support, you have to have community support.

I wrote a book called "It Takes A Village." I understand that. Do you kids have health care? That's why I created the children's health care insurance program, because too many didn't. Your kids have good education, that's why I'm for early childhood, because too many kids come to school unprepared. How about college affordability? Too many kids are weeded out because they can't afford to start or stay.

I go through the list of what is really dampening the opportunities that young people in our country have right now. And I want to be the president who unleashes that potential again.

CAMEROTA: And when you think about your grandchildren's future, are you worried or hopeful?

CLINTON: I'm always hopeful, Alisyn. I'm always hopeful. I think this is the greatest country.

When I listen to the negative comments made about our country on the campaign stage predominantly by the Republicans, I mean, look at what we've come back from. It was a Republican administration under which we had the Great Recession. That is just a fact.

President Obama inherited an economy that was losing 800,000 jobs a month. I don't think he gets the credit he deserves for digging us out and getting us standing again. So, I know that choices really matter in politics, but I am absolutely committed to the belief, the conviction that I have that our country is resilient, we're strong, we're smart.

Given the right leadership, we can do anything. That's why I actually am quite optimistic and confident about the future.

CAMEROTA: Secretary Clinton, thank you so much.

CLINTON: Thank you, Alisyn.

CAMEROTA: Great to talk to you.

CLINTON: It's great to see you.


BURNETT: And OUTFRONT next, Donald Trump live in Iowa at this hour. Tonight, Ted Cruz punching back at him. Who is going to win the Iowa prize?

And they are taking their seats as we are counting you down to the State of the Union which will be here on Capitol Hill. Can the president say when the Americans held by Iran will be set free?


[19:43:01] BURNETT: Breaking news: Iran holding ten American sailors in the Persian Gulf tonight. The White House spokeswoman saying the president will not address this in his State of the Union. A senior official tells CNN the sailors will be released in the morning. They had said they would be released quickly. We'll see when they are released. Donald Trump speaking in a big rally in Iowa moments ago was quick to

jump on the story.


DONALD TRUMP (R), PRESIDENTIAL CANDIDATE: It's just an indication where the hell we're going. I mean, hopefully, they get released and fast. It seems to be an indication where we are going. That Iran deal is the dumbest deal I think I've ever seen. I don't think I've ever seen a deal --


BURNETT: Trump is out working for every vote in Iowa as he finds himself neck and neck with Ted Cruz.

Sara Murray is OUTFRONT.


SARA MURRAY, CNN POLITICS REPORTER (voice-over): Tonight, Ted Cruz is hitting back at Donald Trump for questioning his qualifications for president.

SEN. TED CRUZ (R-TX), PRESIDENTIAL CANDIDATE: You know, the past couple of elections, we saw the Democrats thrilled they got the nominee they wanted to run against in the general election. It seems the Hillary folks are very eager to support Donald Trump and the attacks that are being tossed in my direction.

MURRAY: Cruz suggesting it's Democrats buying into Trump's claims that Cruz's Canadian birth place could disqualify him for America's highest office.

His sharper tone coming as he and Trump are locked in a dead heat in Iowa.

CRUZ: Four weeks ago, just about every Republican in the race was attacking Donald Trump. Today, just about every Republican is attacking me.

MURRAY: Trump is back in Iowa tonight, just three days after his last trip to the Hawkeye State, a state he says could be key to a huge victory.

CRUZ: I would love to win Iowa. We'll see what happens. I think I'm going to do great there. If we win Iowa, I think we run the table. I think we run the table.

MURRAY: Trump is banking on new caucus-goers and big turnout to carry him to victory. Even voters who waited in 2 degree weather to see him aren't fully sold.

GABBY GROVE, FIRST TIME VOTER: I'm really excited to see what he has to say. I have thought hard about who I am going to vote for and it's fun to be here and see what he is going to do. [19:45:05] MURRAY: And ensuring first-time voters actually turn out,

that can be a heavy lift.

(on camera): So, will you definitely turn out in caucus, one side or the other?

UNIDENTIFIED MALE: If it's a little bit warmer, sure.

MURRAY: The GOP primary far from over. Trump already sharpening his attacks on Hillary Clinton.

TRUMP: I mean, I think she's having a hard time. She's got some guy -- I mean, he should be easy to beat. I mean, how can you lose like this? He isn't even a Democrat.

MURRAY: Telling "The Tonight Show's" Jimmy Fallon, that's just a taste of what he has in store for Clinton if the two go head-to-head in a general election.

TRUMP: So, you know, look, and I haven't started on her yet. Although, last week I did a little bit, I guess. We haven't even started.

MURRAY: Even claiming in a mock job interview his other assets could give him a boost along the way.

JIMMY FALLON, THE TONIGHT SHOW: You want to tell me about yourself?

TRUMP: Well, I'm an extraordinarily handsome person.


TRUMP: I have a beautiful head of hair.

FALLON: I noticed that, I noticed that. Yes.


MURRAY: Now, in just the last few hours, Ted Cruz ratcheted up his attacks against Donald Trump, even further an interview saying Trump embodies New York values and Cruz saying he'd do better in a head-to- head matchup against Hillary Clinton than Trump would.

For Trump's part, he is here campaigning. You can see him behind me in Iowa. He went after his Cruz over his stance on ethanol, a big deal here in Iowa, and took another swipe at him over citizenship. So, it seems this is quickly turning into an all-out brawl as the caucuses are just weeks ago -- Erin.

BURNETT: All right. Thank you, Sara Murray. As you see, Donald Trump speaking behind her.

OUTFRONT now, Kevin Madden, former Romney campaign adviser, and veteran Democratic strategist Donna Brazile, also with me.

Good to have both of you. DONNA BRAZILE, CNN POLITICAL COMMENTATOR: Good to be inside, Erin,

not outside.

BURNETT: Speaking as you heard that young voter say, if it's warmer, I'll go caucus. You understand that.

BRAZILE: It's snowing outside. I'm a weather wimp.

BURNETT: Kevin, Ted Cruz starting to fight back, right? First, he said, I'm going to take the high road and not engage. Maybe it's coincidence. But as he was saying that, he was weakening in the polls. Donald Trump was catching up. Now, he seems to be fighting back.

Is Ted Cruz worried?

KEVIN MADDEN, CNN POLITICAL COMMENTATOR: Well, look, he should be worried in the sense that the goal behind Donald Trump's attacks is actually being realized in the sense he is totally distracted Ted Cruz from his core messages. Ted Cruz wants to be out in Iowa talking about immigration. He wants to be in New Hampshire talking about national security.

And instead, day to day, the news cycle has been dominated by whether or not he's even eligible to be president.

Now, it's an absurd attack. But, you know, absurd attacks, when repeated over and over could have an impact. So, that's why I think you're seeing Ted Cruz might have an impact. That's why he's sharpening his message. He is hitting back at Donald Trump.

BURNETT: You call it an absurd attack, but Ted Cruz' own law school professor, one of the most prominent experts of the country, Lawrence Tribe says it's a real issue and the Ted Cruz he knows who believes in the original Constitution would not allow Ted Cruz to be president, that they mean naturalized born in the United States. Republican Governor Terry Branstad has said this is an issue.

BRAZILE: John McCain said it.


BRAZILE: I would love to peddle in this Republican mess. When Donald Trump began to say this about President Obama, very few Republicans came out and denounced the kind of birtherism that he was out there spewing. And so, it's ironic that Ted Cruz finds himself, a candidate who is trying to campaign I think in an awkward manner as somebody who's fiercely opposed to immigration reform, at the same time proud to be a son of an immigrant, he finds himself now having to somehow or another push back Donald Trump.

This is a very awkward moment for Ted Cruz. I don't know where he is going to get help on the Republican side.

BURNETT: Kevin, should Ted Cruz go ahead and get someone to take this to the courts? Donald Trump said, just do it. It is true, if he is the nominee, someone is going to take this to court. Someone is going to do it.

MADDEN: I think they would lose. I think giving that credence to it by doing his own court action would land some validation to the charges.

The most important thing to do is what he is doing today. Sharpen his attacks against Donald Trump, try to draw distinction on the seriousness of each other's candidacies and get back on the core issues that helped vault him to the front. Values issues for a lot of voters in Iowa, national security in New Hampshire, that's where he needs to push his message.

BURNETT: All right. Now, what about Hillary Clinton here? What we have seen is a dramatic, things can change quickly and a poll could be a poll. She said she doesn't pay attention to the polls, but she was armed with a competing poll when she said that.

But you now have her losing to Bernie Sanders in Iowa and New Hampshire, and by a very wide margin in New Hampshire. In 2008, the polls tightened. She was the presumptive nominee. All of a sudden, she lost to Barack Obama.

Everyone said it can't happen again. This time, it's different.

[19:50:01] BRAZILE: So, here's what the campaign is saying. The campaign is saying we thought this would happen, that the race would tighten up.

I think they're absolutely right. The race is tightening up. A lot of undecided people --

BURNETT: Did they really think that would happen?

BRAZILE: Look, there's a sweet spot within the Democratic Party and Bernie Sanders has found it. He's been able to mobilize young people. He's out there really energizing the Democratic Party, talking about issues that Democrats care about, whether it's the income from gap or student loans, et cetera.

But here's the problem with Hillary Clinton and I said this in all due respect. I love all of them. I'm neutral.

They need to figure out their closing argument and they need to stick to it. What is the closing argument? Why is she running? She started off by saying she's a champion, now she's a fighter for all.

Get that closing argument so that Democrats can rally around her, and at the same time, Bernie is going to energize and make a difference.

BURNETT: She made women a part of this campaign.

BRAZILE: Absolutely.

BURNETT: Donald Trump has now made Bill Clinton's past transgressions against women part of the campaign. And some people say it isn't fair, but, look, it's Bill Cosby's past is now fair. Things have happened 20 years ago. Isn't this also --

BRAZILE: I reject the analogy of Bill Clinton and Bill Cosby. I actually know both men.

But here's what I would like to believe: in the end of the day, elections are about futures. Whether Donald Trump wants to bring up past stuff, whether it's Ted Cruz birth rights or whatever it is, or he wants to bring past sexual misconduct of any kind, fine, that's Donald Trump. He likes to play in this ballpark.

But Hillary Clinton has to make this election about the future and about her vision for the country. If she's able to do that, she's going to have a fight on her hands with Bernie Sanders.

BURNETT: What about women, Kevin? I mean, Kevin, this has been an issue she's taken on, right? This is why this Bill Clinton conversation might be relevant. She has taken on this issue. She says she's passionate about it, yet in the latest polls, Bernie Sanders is now winning among women, 50 to 44 percent in New Hampshire. I mean, that is a significant thing.

MADDEN: I think that's why even though the Democrats will argue it's an old issue, it's still a new shy. The Democrats have made the war on women a central part of their efforts to draw a contrast with Republicans, and in a way, when Hillary has the history or Bill Clinton has the history he has, when they try and prosecute that argument, she can look hypocritical.

And one of the things that voters don't like about Hillary Clinton is that she's not trustworthy or that she doesn't relate. So, I think those are the type of things that come to the forefront when they try to prosecute it.

So, that's why I think so many people have gravitated towards Donald Trump on this. They like the fact he is taking the fight to the Democrats that maybe in the past some Republicans have tiptoed around, and that's why I think you're seeing it become a whole new news cycle of its own in this particular --

BRAZILE: Now I'm getting warmed up. I can go outside, because look, equal pay for equal work, that's a women's issue. And Democrats will run on that.

Giving the women the full range of reproductive health care, and tonight, we're going to hear from President Obama, who essentially lowered or health care premiums because we're women. So, I don't care --


MADDEN: But also, I think sexual harassment against women in the workplace is also an issue that women care about. Bill Clinton has a problematic history.

BRAZILE: Violence again women in the workplace, sexual assault, harassment, we have championed. We're not going to let these issues somehow or another go by the wayside because Donald Trump is raising his loud voice.

BURNETT: But to his point.

BRAZILE: What is his point?

BURNETT: If you like at Bill Clinton's history, right, with an intern in the White House, is that something when you talk about sexual harassment in the work place, it becomes relevant.

BRAZILE: With the misconduct of Bill Clinton in the 1990s, which all of us condemn. I was there. All of us condemn.


BRAZILE: If we want to relitigate it let's get Ken Starr, but if you talk about issues women care about today, this is why we need presidential campaigns to talk about the future. If we want to talk about the past we can litigate that, but Bill Clinton as president of the United States, did a great job I think in promoting women's issues and that's a different subject than talking about somebody's past indiscretion, which he has case of promoting women's issues and that's different that is the discretions, which he has apologized before.

BURNETT: All right. Thank you both very much.

BRAZILE: Thank you.

BURNETT: And OUTFRONT next, we're waiting the State of the Union Address, counting down moments away. The White House spokeswoman says the president will not address the American sailors now held by Iran tonight. Can he afford to ignore their arrest?


[19:58:12] BURNETT: We are live in the nation's capital tonight, where President Obama will give his final State of the Union Address. He has just been briefed on the breaking new at this hour, Iran announcing it has arrested ten American sailors, the U.S. officials telling CNN the sailors will be released in the morning. Another official saying the navy boats may have run out of gas or had mechanical issues before entering Iranian water.

But an Iranian news agency said they were suspected of, quote, "snooping and arrested". How should the president respond tonight?

OUTFRONT now, David Gergen is with me again.

And, David, the White House's spokeswoman came on CNN and says the president does not intend to mention this in the State of the Union speech at all.

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: I can't believe it. I mean, it -- the president wants to go out and claim credit, as he should for his accomplishments over the last eight years. Good for him. But if you want to be credible on foreign policy, you have to

acknowledge this very evening we have ten sailors who are basically being held hostage by the Iranians. They were arrested. We don't know -- all of us want them out, of course.

But to be president, you've got to be square with people. You've got to say, look, here are the great things we're going now. We do have this problem here, but here's the rest of it.

BURNETT: Especially when it comes with his Iran deal, which is -- they have put forth as perhaps the greatest achievement of his presidency.

GERGEN: Absolutely. They want to go down in history for Obamacare and for the Iran nuclear agreement. Those are others, but those are the big ones.

And for the Iran deal to stay together, people have to believe he's being straight with them, he's telling the complete truth, not shading it in some way. And what he risks, if he doesn't talk about this, at least acknowledge it. It doesn't have to be a big part of the speech. He should at least acknowledge that we expect to get them out in the morning and if they don't, they're going to have real problems. If we don't, we'll have real problems --

BURNETT: He needs to say that.

GERGEN: He needs to warn the Iranians. Don't screw this thing up, you'll blow a hole in the middle of the nuclear court.

BURNETT: We will see if he changes his mind, as we said. But so far, they're saying he won't --

GERGEN: Yes. All right. David Gergen, thank you very much.

Thank you all so much for joining us.

Our special coverage of President Obama's final State of Union Address starts now.