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Iran Releases 10 U.S. Sailors; President Obama Deliver Last State of the Union Address; Latest Polls Shows Ted Cruz Leads in Iowa; Clinton Responds to Biden's View on Democratic Race; Obama Swipes at Trump in Final Address. Aired 10-10:30a ET

Aired January 13, 2016 - 10:00   ET

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


[10:00:41] CAROL COSTELLO, CNN ANCHOR: And good morning. I'm Carol Costello. Thank you so much for joining me.

New developments out of Iran this morning about those 10 U.S. Navy sailors who were just freed. Iran's Revolutionary Guard who had detained the Americans and their two boats say the sailors apologized for drifting into Iranian waters. Vice President Joe Biden told CBS News the U.S. actually did not apologize.

(BEGIN VIDEO CLIP)

JOE BIDEN, VICE PRESIDENT OF THE UNITED STATES: No, there was no apology. There's nothing to apologize for. When you have a problem with the boat, you apologize the boat had a problem? No. And there was no looking for any apology.

(END VIDEO CLIP)

COSTELLO: OK. So let's get more clarity. We may get more clarity when Secretary of State John Kerry speaks at the National Defense University. We'll carry that speech for you live. But we want clarity right now, right?

Let's head to the Pentagon and CNN's Barbara Starr. So did the United States apologize or not?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Good morning, Carol. Well, I have to tell you, a short time ago the State Department spokesman, John Kirby, also issuing a statement saying that Secretary of State John Kerry did not apologize to the Iranians, and the Iranian Foreign Minister Zarif tweeting that he was very pleased that everything was resolved very quickly in this episode.

The question that perhaps is still open on this point is whether any of these 10 sailors, while they were being held by the Iranian Revolutionary Guard Corps on Farsi Island, whether they said to any of those Iranian naval personnel, you know, we're sorry this happened. That's part of the debrief going on of those -- the sailors at the moment. What did they say to the Iranians? What did the Iranians question them about? Everything that happened while they were in essentially Iranian custody.

And the other big question, perhaps even the bigger question, how did all of this even happen in the first place? What happened to those two small Navy boats that were out in the Persian Gulf that were waiting to be refueled? How did they drift into Iranian waters? Did they have a mechanical problem? Did they have a propulsion problem? Did they make a navigation mistake? Did they simply run out of fuel? But whatever it is, I mean, both sides appear to agree at this point, it was inadvertent, it was accidental.

And when a mariner comes under some sort of distress at sea, the rule of the road is that basically you render assistance and then send them back to their home country after several hours. That is what the Iranians did. And by all accounts, that was at the behest of the central Iranian government which has a much bigger fish to fry, which is to get that Iranian nuclear agreement into full force without any sensitivities and any holding back of the funds, the embargoed funds, that the Iranians want back.

Still, when you look at the photos that have been distributed on Iranian media today of these young sailors in Iranian custody, I don't know whether they're -- you know, expressions on their face are boredom or concerned. You see that one female sailor in the corner with her hair covered. Clearly these 10 sailors spent some hours somewhere that they didn't really want to be -- Carol.

COSTELLO: You've probably got that right. Barbara Starr reporting live from the Pentagon, thank you.

I want to bring in Fareed Zakaria now, he's the host of CNN's "FAREED ZAKARIA GPS."

Thanks for stopping by. So this apology thing, let's talk about that because it's very important to the Iranians, but the U.S. doesn't want to seem weak to the voters, to Americans, so what should we make of that?

FAREED ZAKARIA, HOST, FAREED ZAKARIA GPS: Well, at some level, it's a kind of minor incident at sea. These things do happen. Boats do accidentally transgress and cross into territorial waters. As Barbara was saying, there's a procedure for it. It just is happening at a very tense time. It's happening, you know, days before Iranian sanctions are likely to be lifted if Iran complies. There are a lot of people suspicious, waiting to see if Iran will comply.

At the same time, there are people within Iran who are trying in various ways to ensure that the nuclear deal doesn't turn into a broader rapprochement with the United States. And the Iranian hard- liners' view is we're doing the nuclear deal because we're willing to put these constraints on our program in return for the fact that we get these sanctions lifted, but that's it. The United States is still our enemy. We are still opposed to them in every way.

[10:05:06] So, you know, there's almost two games going on. There's a geostrategic game where the United States and Iran are in a kind of cold war in the Middle East still. And there's, you know, a great deal of suspicion, and that's why these boats are patrolling. But the other one is a debate, a battle within Iran, between Iran's hard- liners who want to scuttle any kind of good relations between the U.S. and Iran, and the government, the central government, Rouhani and Zarif, president and foreign minister, who have been trying to create a kind of opening for a new relationship.

COSTELLO: See, everything is complicated surrounding this incident. I talked to General Hertling earlier this morning. And I hate to keep harping on this apology, but General Hertling says yes, the United States should apologize to Iran because we went into their waters and we weren't supposed to. I would bet most Americans out there say, are you kidding?

ZAKARIA: It's a -- you know, it's a good example of how the emotion and the images kind of overwhelm reality. I think what General Hertling was saying, which makes a lot of sense, is look. If you accidentally violate some country's sovereignty by going into their land or waters, and you didn't mean to, you know, it's nothing wrong with saying hey, I'm sorry, this was a mistake. But because it's the United States and Iran and again at this moment it becomes a very difficult thing to do.

It would be -- you know, remember the Cold War. The United States and Soviet Union had these incidents that were often these sensitivities of, you know, who backed down? Who made the concession? You know, at some level, this is almost like a poker game where neither side wants to admit that they backed off first.

COSTELLO: OK. So the big picture. The Iranian deal, the sanctions possibly being lifted soon. Should Americans be afraid?

ZAKARIA: No. Americans should be, I think, very relieved that the only reason the sanctions will get lifted is if Iran has complied with their part of the bargain and if the International Atomic Energy Agency testifies to that. Now what does that involve? That involves shutting down the plutonium facility, which is the most common, most frequent, most explosive path to a nuclear bomb. That's going to be shut down completely.

Dismantling the vast majority of their centrifuges that produce uranium. Shipping out 98 percent of the enriched uranium they have. So in other words, they're going from being three months away from having the potential to have a nuclear bomb to probably a year and a half away, you know, you're 18 months away. But all of a sudden, the fuse has been lengthened enormously. So, of course, we should be pleased about that.

It doesn't change the fact that there is a rivalry between the United States and Iran, and that will persist as this episode shows.

COSTELLO: Absolutely. Fareed Zakaria, thank you so much for stopping by.

ZAKARIA: Pleasure.

COSTELLO: "FAREED ZAKARIA GPS" airs every Sunday, 10:00 a.m. Eastern right here on CNN.

President Obama did not mention the incident with Iran during his final State of the Union. Instead, the president focused on rallying the American people by selling a sense of optimism. His challenge? Reject partisan politics, set aside cynicism, and work together to find common-sense solutions.

Here are some of the highlights from the president's address.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: The president of the United States.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Thank you. I'm going to try to make it a little shorter.

(CHEERS)

OBAMA: I know some of you are antsy to get back to Iowa.

(LAUGHTER)

OBAMA: Anyone claiming that America's economy is in decline is peddling fiction. What is true, and the reason that a lot of Americans feel anxious, is that the economy has been changing in profound ways. I'm guessing we won't agree on health care any time soon. But --

(APPLAUSE)

OBAMA: A little applause back there. Let's make America the country that cures cancer once and for all. What do you say, Joe?

Look, if anybody still wants to dispute the science around climate change, have at it. You will be pretty lonely.

Let me tell you something. The United States of America is the most powerful nation on earth, period. If this Congress is serious about winning this war and wants to send a message to our troops and the world, authorize the use of military force against ISIL. Take a vote.

It's one of the few regrets of my presidency. That the rancor and suspicion between the parties has gotten worse instead of better. If we want a better politics, it's not enough just to change a congressman or change a senator or even change a president. We have to change the system to reflect our better selves.

[10:10:02] I stand here as confident as I have ever been that the state of our union is strong. Thank you. God bless you. God bless the United States of America.

(END VIDEO CLIP)

COSTELLO: All right. On the Republican side of things, Ted Cruz is sitting atop a new poll out of Iowa, but simmering underneath, possible signs Donald Trump's birther attacks are starting to hurt the Texas senator. A "Des Moines Register"/Bloomberg poll shows Cruz with 25 percent support, that's a six-point drop over last month when he had 31 percent. Athena Jones live in Washington with more. Good morning.

ATHENA JONES, CNN CORRESPONDENT: Good morning, Carol. Yes, Trump is continuing to bash Cruz over the head with this birther issue. It doesn't look like he's going to be letting up. But look, this poll is good news for Cruz in the sense that he is still on top. But it's also good news in a way for Trump because, look, he closed that gap. There was a 10-point gap a month ago. He's closed that gap down to three points.

It's not clear, you know, what caused Cruz to slide a bit. Is it the birther attacks? Is it the fact that he's the frontrunner, and so he's under attack from all sides including folks like Marco Rubio? Because take a look. This poll showed that when people were asked about Cruz's citizenship issue and whether it's a concern, only 15 percent said that it was a concern. 83 percent said they weren't bothered by this.

Now the poll was taken just over between Thursday and Sunday. So it's possible that Trump's attacks haven't really been baked in. Our folks on the ground report back that these Trump and Cruz events in Iowa, the issue is coming up. So that could still do some damage. But the main thing is this poll confirms what we've been talking about recently, which is that the race in Iowa is very, very tight. It's a battle for the top spot between Cruz and Trump. Some polls may show Trump a little bit with the edge. Several polls showing Cruz with the edge.

And then you can see there, there's a battle going on for third place as well between Marco Rubio and Ben Carson. Rubio has actually inched up from fourth to third place in this poll. And everybody else is at 5 percent or below. So folks like Chris Christie, Jeb Bush, they're at 3 percent and 4 percent. They're not even on the screen.

But I've got to remind everyone, Carol, that there's still 19 days to go before the February 1st caucuses. There's still two debates to go. And there are a lot of folks who have not made up their minds. We're seeing this in several polls including this one. More than half in this poll with 56 percent of voters they talked to said they either hadn't decided on their final first choice or that they could change their mind about who their first choice is. So there's a long way to go in these next 19 days, and some of these candidates are going to need that time -- Carol.

COSTELLO: We hear you, Athena Jones reporting live from Washington, thank you.

Still to come in the NEWSROOM, Joe Biden says Hillary Clinton is new to the fight on income inequality. How does the Democratic frontrunner respond? Find out next.

(COMMERCIAL BREAK)

[10:17:33] COSTELLO: From attacks by Donald Trump to tightening polls to Joe Biden giving his thoughts on the authenticity of the Democratic field, Hillary Clinton has found herself in the hot seat. Now with just days until the Iowa caucuses, she sat down with CNN's Alisyn Camerota to talk policy.

(BEGIN VIDEOTAPE)

ALISYN CAMEROTA, CNN ANCHOR, NEW DAY: 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?

HILLARY CLINTON (D), PRESIDENTIAL CANDIDATE: 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 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 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 think I talk about because I think you have to view equality of opportunity and how we deliver that in the 21st century from many different perspectives. And that's what I try 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 I -- you know, I have a lot of regard for the vice president, and I think he clarified what he said and said he was talking about me when I was secretary of state.

[10:20:04] Well, when I was secretary of state, I couldn't talk about domestic policy. There's 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're 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 the 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 4 percent surcharge on incomes over $5 million. And I believe that that would raise about $150 billion over 10 years. Does that go far enough in addressing income inequality?

CLINTON: Well, we've got a variety of proposals. Not only the 4 percent surcharge, which I call the fair share surcharge, the so- called Buffett 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, capping prescription drug costs, and much more. And it would cost about $100 billion a year, all of which I'd 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.

(END VIDEOTAPE)

COSTELLO: Still to come in the NEWSROOM, President Obama steps up to the State of the Union podium for one last time. So why did he use that time to take a shot at Donald Trump?

(COMMERCIAL BREAK)

[10:26:48] COSTELLO: And good morning, I'm Carol Costello. Thank you so much for joining me.

President Obama promised a nontraditional State of the Union, and last night we kind of got that. Former speechwriters saying it was President Obama's version President Reagan's "Morning in America" speech, a bid to make Americans feel optimistic as a better election approaches. One of the biggest moments came when President Obama singled out Donald Trump. The president did not say his name, but his intent was clear.

(BEGIN VIDEO CLIP) OBAMA: And that's why we need to reject any politics, any politics that targets people because of race or religion. When politicians insult Muslims, whether abroad or our fellow citizens, when a mosque is vandalized or a kid is called names, that doesn't make us safer. That's not telling it what -- telling it like it is. It's just wrong. It diminishes us in the eyes of the world.

(APPLAUSE)

(END VIDEO CLIP)

COSTELLO: The president's remarks were highlighted visually by one of the first lady's special guests, a Syrian refugee. And I thought we were going to see it, but it was a very powerful picture.

With me now to talk about this, Errol Lewis, CNN political commentator and political anchor for New York One, and Noah Shachtman, executive director -- executive editor, rather, of the "Daily Beast".

Welcome to both of you.

ERROL LOUIS, CNN POLITICAL COMMENTATOR: Good morning, Carol.

NOAH SHACHTMAN, EXECUTIVE EDITOR, THE DAILY BEAST: Hey.

COSTELLO: Good morning. Errol, can you remember a time when a president singled out someone running to replace him in a State of the Union?

LOUIS: I don't know if it's so much a singling out of Donald Trump. I mean, it's a sentiment that's reflected by a number of candidates. I mean, there were also comments made about, you know, carpet bombing civilians, which is an allusion to something that Ted Cruz said. This is, I think, the president trying to define not just Donald Trump and push back on a specific policy, but really sort of the entire Republican ticket, the entire Republican brand.

I think he's sort of warning against going in that direction. It will be of some help, I guess, to the Democratic ticket in the fall. But it's also deeply felt politics by this president.

COSTELLO: And apparently it's an emotion that Nikki Haley, the governor of South Carolina, the Republican governor, also feels because in her response to President Obama's State of the Union, she also brought up the divisiveness in this country, and she seemed to single out Donald Trump. Let's listen.

(BEGIN VIDEO CLIP)

GOV. NIKKI HALEY (R), SOUTH CAROLINA: During anxious times, it can be tempting to follow the siren call of the angriest voices. We must resist that temptation.

No one who is willing to work hard, abide by our laws, and love our traditions should ever feel unwelcome in this country.

(END VIDEO CLIP)

COSTELLO: And Noah, with those words, Nikki Haley inspired sort of a backlash from some conservatives like Ann Coulter who tweeted, "Donald Trump should deport Nikki Haley." Of course as you know, Nikki Haley was born to immigrant parents, but she was actually born in South Carolina. But that said, you get the drift here. So does this mean anything? Should we take away anything from this, Noah?