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Trump's Debt Plan; North Carolina Showdown; Trump: U.S. Can't Default Because It Prints Money. Aired 4-4:30p ET

Aired May 9, 2016 - 16:00   ET



JAKE TAPPER, CNN HOST: Welcome to THE LEAD. I'm Jake Tapper.

It is a heated showdown, the Obama administration vs. the government of North Carolina. The issue is complicated, but it does deal with transgender Americans and their rights.

Any minute, we're going to hear from Attorney General Loretta Lynch on this very divisive issue. On Friday, the Obama administration demanded that North Carolina address what the Justice Department calls discrimination, pure and simple.

This was a reference to the state's so-called bathroom law. The law would mean that transgender individuals would have to use public restrooms that correspond with the sex on their birth certificate, not with the gender with which they identify today.

Earlier today, the governor of North Carolina responded to the Obama administration.


GOV. PAT MCCRORY (R), NORTH CAROLINA: This caused major privacy concerns about males entering female facilities or females entering male facilities.


TAPPER: The feds shot back, filing a countersuit against North Carolina just minutes ago. And when the attorney general comes to the podium, we will bring that to you live.

But let me get right to CNN's Martin Savidge.

Martin, what is the main argument from the governor's office? Is it that issue about safety and security, men going into women's bathrooms under some false pretense?

MARTIN SAVIDGE, CNN CORRESPONDENT: Well, that's been sort of the emotional trigger as they describe the potential outcome of all of this, is that they worry there could be something like that.

The federal government pushes back and says you're already stigmatizing a specific class of people, transgender, as being some kind of pervert in some way, which, of course, they are not. So...


TAPPER: All right. Martin, I have to stop you there. I'm sorry. We will come back to you afterwards.

But here's the attorney general, Loretta Lynch.

LORETTA LYNCH, U.S. ATTORNEY GENERAL: Well, good afternoon, ladies and gentlemen.

Thank you all for being here.

I am joined by Vanita Gupta, head of the Civil Rights Division here at the Department of Justice.

We are here to announce a significant law enforcement action regarding North Carolina's Public Facilities Privacy and Security Act, also known as House Bill 2.

Now, the North Carolina General Assembly passed House Bill 2 in special session on March 13 of this year. The bill sought to strike down an anti-discrimination provision in a recently passed Charlotte, North Carolina, ordinance, as well as to require transgender people in public agencies to use the bathrooms consistent with their sex as noted at birth, rather than the bathrooms that fit their gender identity.

The bill was signed into law that same day, and in so doing, the legislature and the governor placed North Carolina in direct opposition to federal laws prohibiting discrimination on the basis of sex and gender identity.

More to the point, they created state-sponsored discrimination against transgender individuals, who simply seek to engage in the most private of functions in a place of safety and security, a right taken for granted by most of us.

Last week, our Civil Rights Division notified state officials in North Carolina that House Bill 2 violates federal civil rights laws. We asked that they certify by the end of the day today that they would not comply with or implement House Bill 2's restriction on restroom access.

An extension was requested by North Carolina and was under active consideration. But instead of replying to our offer or providing a certification, this morning, the state of North Carolina and its governor chose to respond by suing the Department of Justice.

As a result of their decisions, we are now moving forward. Today, we are filing a federal civil rights lawsuit against the state of North Carolina, Governor Pat McCrory, the North Carolina Department of Public Safety, and the University of North Carolina.

We are seeking a court order declaring HB-2's restroom restriction impermissibly discriminatory, as well as a statewide bar on its enforcement. Now, while the lawsuit currently seeks declaratory relief, I want to note that we retain the option of curtailing federal funding to the North Carolina Department of Public Safety and the University of North Carolina as this case proceeds.

But this action is about a great deal more than bathrooms. This is about the dignity and the respect that we accord our fellow citizens and the laws that we as a people and as a country have enacted to protect them, indeed, to protect all of us.

And it's about the founding ideals that have led to this country haltingly, but inexorably, in the direction of fairness, inclusion, and equality for all Americans. This is not the first time that we have seen discriminatory responses to historic moments of progress for our nation.

We saw it in the Jim Crow laws that followed the Emancipation Proclamation. We saw it in the fierce and widespread resistance to Brown v. Board of Education. And we saw it in the proliferation of state bans on same-sex unions that were intended to stifle any hope that gay and lesbian Americans might one day be afforded the right to marry.


And that right, of course, is now recognized as a guarantee embedded in our Constitution. And in the wake of that historic triumph, we have seen bill after bill in state after state taking aim at the LGBT community.

Now, some of these responses reflect a recognizably human fear of the unknown and a discomfort with the uncertainty of change. But this is not a time to act out of fear. This is a time to summon our national virtues of inclusivity, of diversity, of compassion and open- mindedness.

And what we must not do, what we must never do is turn on our neighbors, our family members, our fellow Americans for something that they cannot control and deny what makes them human.

And this is why none of us can stand by when a state enters the business of legislating identity and insists that a person pretend to be something or someone that they are not or invents a problem that does not exist as a pretext for discrimination and harassment.

And let me speak now directly to the people of the great state, the beautiful state, my home of North Carolina.

You have been told that this law protects vulnerable populations from harm, but that is just not the case. Instead, what this law does is inflict further indignity on a population that has already suffered far more than its fair share.

This law provides no benefit to society, and all it does is harm innocent Americans. And instead of turning away from our neighbors, our friends, and our colleagues, let us instead learn from our history and avoid repeating the mistakes of our past. And let us reflect on the obvious, but often neglected lesson that

state-sanctioned discrimination never looks good and never works in hindsight. It was not so very long ago that states, including North Carolina, had other signs above restrooms, water fountains, and on public accommodations, keeping people out based on a distinction without a difference.

We have moved beyond those dark days, but not without a tremendous amount of pain and suffering and an ongoing fight to keep moving forward. Let us write a different story this time. Let us not act out of fear and misunderstanding, but out of the values of inclusion and diversity and regard for all that make our country great.

And let me also speak directly to the transgender community itself.

Some of you have lived freely for decades, and others of you are still wondering how you can possibly live the lives that you were born to live -- to lead. But no matter how isolated, no matter how afraid, and no matter how alone you may feel today, know this, that the Department of Justice and indeed the entire Obama administration want you to know that we see you, we stand with you, and we will do everything we can to protect you going forward.

And please know that history is on your side. This country was founded on the promise of equal rights for all, and we have always managed to move closer to that ideal, little by little, day by day. And it may not be easy, but we will get there together.

Let me also thank my colleagues in the Civil Rights Division who have devoted many hours to this case so far and who will devote many more to seeing it through.

And at this time, I will turn the podium over to Vanita Gupta, whose determined leadership on this and so many other issues has been essential to the Justice Department's work.


VANITA GUPTA, ASSISTANT U.S. ATTORNEY GENERAL: Thank you, Attorney General Lynch, for those very powerful words.

Throughout the arc of our country's history, from tragedies of injustice to marches for equality, there have been pivotal moments when America's leaders chose to stand up and speak out to safeguard the ideal of equal justice under law. And history will...

TAPPER: All right.

Let's talk about this all after we have heard from the attorney general talking about the lawsuit that the United States government, the Obama administration is bringing against North Carolina, the government led by the governor, as well as the North Carolina Department of Public Safety and the University of North Carolina about HB-2, which is the law that ensures individuals can only use the bathroom designated by the gender on their birth certificate, not the gender with which they identify. Let's bring back in Martin Savidge.

And I also want to bring in Paul Butler. He is a law professor at Georgetown University.


Professor Butler, let me start with you. How unusual is it for the Justice Department to take a course of action against a state like this?

PAUL BUTLER, PROFESSOR, GEORGE WASHINGTON UNIVERSITY SCHOOL OF LAW: You know, this is a very dramatic and historic confrontation.

It's the federal government vs. North Carolina. It's states' rights vs. federal rights, and, in that sense, it's not unprecedented. The attorney general alluded to the struggle for racial justice back in the 1950s and '60s. Then, that issue was decided in the courts. Here, it will also be decided in the courts.

But we haven't seen a case like this in a long time.

TAPPER: So, Martin, as the attorney general suggested, this began when the city of Charlotte, North Carolina, passed an anti- discrimination law. How did we get from there to here?

SAVIDGE: Well, that quickly was pulled up by the North Carolina state legislature. They were not keen on that a city would deem some sort of action that they felt was the power of the state.

So that's when this new legislation began to -- drawn up and it became known as the bathroom bill and it essential said that people transgender had to go with the biological sex bathroom they identified with, not with what they identify with now. So, that's where we have come to.

It was an issue brought up in a city to protect rights. Now many say it is an issue that's been taken over by a state legislature to deprive the rights here. That's certainly the point that the federal government is trying to make.

And they're asking in their lawsuit for a preliminary and permanent injunction against North Carolina to prevent further violations and also to grant such additional relief as the needs of justice may require, in other words, almost carte blanche to do whatever the federal government needs to do to bring North Carolina into compliance.

It's already been threatened with the cutoff of billions of dollars.

TAPPER: And, Professor Butler, opponents of this law, like the governor of North Carolina, say that it would allow grown men to into go into the ladies' room, where they could do who knows what to a little girl.

I have asked supporters of the law to give me an example of that, and I have not been able to hear of one. Tell me more about this charge from the governor about what this law might allow.

BUTLER: So it really is a solution to something that was not a problem. They're just not documented instances of people who the governor divisively called cross-dressers going into bathrooms trying to harass people.

So the court will look and see, well, what is the purpose behind this law? And if it's just animus, if it's just trying to make transgender people feeling less than other people, then guess what? That's unconstitutional. So the Civil Rights Act doesn't say anything specifically about transgendered people. But it does outlaw discrimination based on sex.

And so the Obama administration's interpretation is that discrimination against transgendered folks is sex discrimination and therefore it violates the federal laws against discrimination.

TAPPER: Professor, before you go, how likely is it that this will end up before the Supreme Court?

BUTLER: You know, it's possible, but, interestingly enough, the Fourth Circuit, which is a very conservative federal appellate court, came down on the side of civil rights for transgendered people.

So I don't know if they're going to even get a case from a lower court that goes in favor of North Carolina against the Obama administration. The attorney general was right that history and the law seems to be on the side of the transgender civil rights movement.

TAPPER: All right. Professor Paul Butler of Georgetown University and Martin Savidge, thank you so much. Appreciate it.

In our politics lead today, many economists say it's a dangerous move that could knock the world back to the Dark Ages, Donald Trump's plan to cut a deal on the national debt like it's a hotel gone bust. Is this gratuitous Trump bashing by economists, or is this real? We will truth-squad it for you. Stay with us.


[16:18:21] TAPPER: Welcome back to THE LEAD. I'm Jake Tapper.

Our politics lead: Donald Trump is the presumptive Republican presidential nominee and a candidate in transition. And his transitory stances on his tax plan and whether he wants an increase in the minimum wage now become a whole more important, policies to eliminate the $19 trillion national debt that he has suggested in recent days. Well, many economists are warning they could be cataclysmic for the global economy.

Sara Murray is in New York today.

Sara, Trump is saying he's being misquoted and mischaracterized by the media, but his statement seems pretty clear. He suggested renegotiating how much of the U.S. would pay back its creditors and now, he's talking about least partially solving the debt problem by printing more money.

SARA MURRAY, CNN POLITICS REPORTER: Yes, Jake, and it's interesting talking to experts and economists to see how they're interpreting all of this. And they're essentially saying, look, it's like Donald Trump is floating proposals that might work in the business world, but these don't translate the same way when you're talking about the U.S. economy. And furthermore, they're even more baffled because they've seen Trump sort of trying to moderate his comments about the debt, they've seen him moderate what he's been saying about his tax plan, and go back and forth on the minimum wage. They're just not quite sure what to make of it all.


MURRAY (voice-over): Donald Trump may be the GOP nominee, but he's already giving Republicans anxiety.

DONALD TRUMP (R), PRESIDENTIAL CANDIDTE: I know more about debt than practically anybody. I love debt.

MURRAY: Professing his love of debt and making policy proclamations like this one when asked how he would manage debt payments telling CNBC, "I would borrow knowing if the economy crashed, you could make a deal."

Today, Trump's trying to moderate that stance telling CNN he would try to buy back debt at a discount, and adding the country won't default because America can always print more money.

[16:20:08] TRUMP: First of all, you never have to default because you print the money, I hate to tell you, OK? So there's never a default.

MURRAY: There are suggestions economists say aren't feasible or could risk America's credit or lead to a spike in interest rates. Trump's also changing his tune on the minimum wage. After saying wages were too high during the GOP primary --

MODERATOR: So, do not raise the minimum wage?

TRUMP: I would not raise the minimum wage.

MURRAY: Now, he says he's open to an increase.

TRUMP: I don't know how people make it on $7.25 an hour. Now, with that being said, I would like to see an increase of some magnitude, but I'd rather leave it to the states.

MURRAY: And then, there's the shift on taxes. Trump saying he's willing to negotiate the steep tax cuts he's proposed for the wealthy, but insists rich Americans won't pay more than they do now.

TRUMP: They go then and talk about like I'm giving a tax increase for wealthy. I'm not. I said they may have to pay somewhat more than my proposal.

INTERVIEWER: I understand. TRUMP: My proposal is much less than people are paying. You


MURRAY: A claim that's tough to square with Trump's own suggestion that he'd pay more under his tax plan.

TRUMP: It reduces or eliminates most of the deductions and loopholes available to special interests and to the very rich, in other words, it's going to cost me a fortune.

MURRAY: All of this comes as Trump is still struggling to unite the party. Today, Trump passed on the chance to pile on House Speaker Paul after this comment from Sarah Palin.

SARAH PALIN (R), FORMER ALASKA GOVERNOR: I think Paul Ryan is soon to be Cantored as in Eric Cantor. His political career is over but for a miracle.

MURRAY: And while Trump's take on Republican orthodoxy may leave some in the party groaning, "Saturday Night Live" is already celebrating its good fortune.

UNIDENTIFIED FEMALE: Did Donnie ever take a gander at the Holy Scripture?

UNIDENTIFIED MALE: Honestly, I love all the books in the bible, I really do. They're all terrific. Corinthians Part Deux, Book of Revelations, Two Genesis --

UNIDENTIFIED FEMALE: Well, it isn't that special?


MURRAY: So you can see "SNL" already having their fun with Donald Trump as the presumptive Republican nominee, but on a more serious note we are, of course, looking ahead to this meeting later this week between Donald Trump and Paul Ryan. Paul Ryan told the "Milwaukee Journal Sentinel" if Trump is not comfortable with him, wants him to step down as the co-chairman of the convention, he will do that.

So far, Trump has not called for that to happen. So, we'll see what comes out of that meeting on Thursday, Jake.

TAPPER: All right. Sara Murray, thanks so much.

Let's take a closer look at Donald Trump's proposals. Are they really as potentially disastrous as some of his critics are suggesting? It's part of this week's installment of America's debt and the economy.

For it, we're joined by economist Doug Holtz-Eakin, former director of the Congressional Budget Office, former chief economic adviser to the McCain presidential campaign in 2008 and currently president of the American Action Forum.

Doug, thanks so much for being here. Appreciate it.


TAPPER: So, Mr. Trump, the first time he answered this question about handling debt on CNBC, he said, quote, "I would borrow knowing that if the economy crashed, you could make a deal." What does that mean to you and what would the consequences be?

HOLTZ-EAKIN: What it means to me is America does not pay on time and it does not pay in full. And that's unthinkable.

TAPPER: And that's what would cause the economy crashing in his construct.

HOLTZ-EAKIN: If we didn't pay on time, two things would happen. First, we would be a pariah borrower. If you don't pay your debts, you don't get lent to again, and if you do, interest rates are higher. That's a cost every American bears for a long time to come.

But more importantly, the global financial system is built on the notion that U.S. treasuries are absolutely safe assets, that you can sell one at any time, you can buy it and be sure you'll get your money back. If he were to put a crack into that foundation, the global financial system would crater and we would have global economic recession.

TAPPER: He's basically suggesting we default on the debt a then we say, OK, Japan, OK, China, we'll give you back -- I'm making this up, these aren't his words -- we'll pay you back 75 cents on the dollar.

HOLTZ-EAKIN: Think Puerto Rico on global steroids. It would be unimaginable. That's what the proposal was.

TAPPER: What does it mean to the average American? What would it do?

HOLTZ-EAKIN: The average American, it means take the Great Recession we just went through and imagine something much, much worse, so your jobs go away, and when we finally recover, we like with a higher borrowing cost. It hampers the ability to finance every house, every car, every durable good in America.

TAPPER: And then this morning on CNN, Mr. Trump said the United States would never default on its debt, quote, "because you print the money." Is that true and what would that mean for the average American, that policy?

HOLTZ-EAKIN: It would mean two things.

First is he would have to say dear Janet Yellen, please print some money and buy this debt. And that would break the independence of the Fed, which has been foundation of our economic success. So, now, he's running the Fed out of the White House, not a good thing.

Number two, it leads to inflation. And so, every American who bought a treasury security and put it away for their retirement back, they get 100 bucks back, now the 100 bucks only buys, you know, a Snicker's bar. That cuts into the standard of living. [16:25:01] High inflation and high debt are not a good combination.

TAPPER: One of the things I've heard from Trump's supporters on social media is -- and maybe I should stop bringing social media but --

HOLTZ-EAKIN: New sources --

TAPPER: That's another story.

One of the pushbacks is, hey, what about quantitative easing? How is we'll print more money different from quantitative easing?

Without getting two wonky, what is the difference between the two?

HOLTZ-EAKIN: Quantitative easing is the Fed purchasing asset, don't have to be treasuries. Some are mortgage-backed securities, for purposes of pumping money into the banking system. This is buying a particular treasury security for the sole purpose of having the money to repay.

And so, it means that you have lost the ability to tax the economy, which is typically how we repay, and you've lost the ability to have the economy growing and pay it back.

So, you're in a very bad place when you start to print money for the purpose of repaying debt.

TAPPER: So, it's not the same thing.

HOLTZ-EAKIN: It's not even close to the same thing.

TAPPER: All right. And lastly, in our most recent CNN/ORC poll of registered voters nationwide, Donald Trump beats Hillary Clinton on how he would handle the economy, 50 percent to 45 percent. What do you think voters see in his economic policy that they like if you can speculate?

HOLTZ-EAKIN: Well, first of all, this is a horse race and the loser's bracket of the economic tournament because she hasn't got anything on the economy. He hasn't introduced much proposals to grow the economy. They're picking between really some undesirable economic options at this point.

I think the thing they see the most is he's talking about issues that Americans care about. People are worried about China, are worried about trade. They're worried about our place in the world. I don't endorse the solutions. Obviously, this debt thing is a bad idea. But he is talking about the issues they care about. I think that's why they notice it.

TAPPER: All right. Thank you so much. A little truth into this presidential debate. We appreciate it.

Doug Holtz-Eakin, thank you so much. More flip-flopping from Donald Trump. At first, Bill Clinton's affair

didn't matter, he said. Now, Trump says it does and Hillary was the enabler if his words. So, which one is it?

Then, CNN given unprecedented access to one of the most secretive events inside North Korea, this as the hermit kingdom threatens to wipe the United States off the face of the earth.