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Legal View with Ashleigh Banfield

Top Jeb Bush Adviser Leaves GOP; Trump Decries "Vicious Attacks" From Soldier's Father; Clinton To Talk Economy Today In Nebraska; The Breakthrough Blood Test That Failed; Two Dead In Maryland Flash Floods; Obama In Atlanta For Disabled Veterans Speech; Pageant Winner Under Fire For Past Tweets. Aired 12:30-1p ET

Aired August 01, 2016 - 12:30   ET

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

(COMMERCIAL BREAK)

[12:30:14] CHRISTINE ROMANS, CNN ANCHOR: Nice to see you. I'm Christine Romans in for Ashleigh today.

A lot of politics to get to the day. Joining me now is CNN Political Director David Chalian, CNN Senior Media Correspondent and host of "Reliable Sources "Brian Stelter, and CNN Political Commentator and Washington Correspondent for the "New Yorker" Ryan Lizza. Hi guys, nice to see you this Monday morning.

David, let's start with some reaction from you. I want to get reactions to the news our Jamie Gangel has reported that Jeb Bush's top adviser Sally Bradshaw, she has left her party. She'd left the Republican Party. She says, if the presidential race, David, in Florida is closed, she might have to vote for Hillary Clinton. David?

DAVID CHALIAN, CNN POLITICAL DIRECTOR: Right. It is astonishing in its own right just because of what a dedicated long-time member of the Bush circle Sally has been. And a dedicated member to her party. So it's nothing short of astonishing to hear someone so entrenched in Republican Party politics for so long have this belief that the only way she could continue to move through the rest of this election season is by leaving the party. And yet, it's not terribly surprising in the sense that she doesn't stand alone.

We saw Mary Matalin do this, former Bush Cheney adviser. We certainly saw how Jeb Bush who Sally Bradshaw was advising throughout the whole campaign, how he believed Donald Trump was destroying the Republican Party. And then how he said he is going to be bow out from voting in this race.

So, it does get at the very heart of how hard it has been for Donald Trump to stitch every corner of the Republican Party together to move forward with full united party support into the fall election.

ROMANS: You know Ryan, for life-long establishment Republicans, they don't like Obama's policies, President Obama's policies, they do not like Hillary Clinton's policies. But they would rather drink up a pint of vinegar than drink up a pint of bleach. That being the policies of Donald Trump. RYAN LIZZA, CNN POLITICAL COMMENTATOR: Yeah, and I think there are two aspects of Sally Bradshaw's background that are important to understand. One of course is her affiliation with Jeb Bush and long- time Bush adviser and friend to the Bush family. And so we already know that the Bush family is basically, you know, frankly appalled by Donald Trump campaign. Two former presidents, former governor, all sitting out the race, wouldn't go to their Republican convention. And so, not terribly shocking that she would join that.

The other thing is just that ideological Sally Bradshaw was one of the co-chairs of the RNC Autopsy Report. That was a report published in 2013 that looked at the results of the 2012 election, and tried to spell out a way forward for the Republican Party. And that way forward was outreached to the Hispanics, outreach to non-white voter, a downplaying of social issues. And an entire list of an ideological direction that Donald Trump looked at and basically tore up and went in this completely different direction. And frankly won the Republican nomination. So, that's the back story to this civil war that frankly her wing of the party lost in the presidential primaries.

ROMANS: And it comes at this moment where there's this Khan family controversy. You know, Donald Trump four days into this controversy Brian has backlashed he's facing over this criticism he has of Khizr Khan and his wife. Do you think this hurts Trump's campaign or does he weather this like he weathers, you know, insulting John McCain's POW status or, you know, Judge Curiel's parents' ethnicity?

BRIAN STELTER, CNN SENIOR MEDIA CORRESPONDENT: I would say with a caveat that I was wrong this time last year when the John McCain story broke one weekend, I very vividly remember my Sunday morning program where I had lots of guests on who predicted the end of the Trump campaign. With that caveat in mind, this does feel different, when you think about the wall to wall coverage on Cable News, the wall to wall coverage online. And the fact that Trump's surrogates and spokes people don't seem to know what to say. I sense almost the desperation of voices of some of these commentators who are usually expert at supporting and defending Donald Trump.

When they don't know what to say, when they're waiting just like the rest of us for this 3:30 p.m. event that Trump will be having this afternoon even, I think it tells us that there's a real sense of uncertainty about how this is going to be play out.

ROMANS: Well, they'd rather be talking about Hillary Clinton and her trustworthiness. And they'd rather be hearing about this. You know, Hillary Clinton claiming that the FBI director said her e-mail answers were truthful. I want you to listen to what FBI Director James Comey said in exchange with Congressman Trey Gowdy during that hearing. And then listen to what Hillary Clinton told Fox News in an interview yesterday.

(BEGIN VIDEO CLIP)

REP. TREY GOWDY, (R-SC), CHAIR, BENGHAZI COMMITTEE: Secretary Clinton said there was nothing marked classified on her e-mails either sent or received. Was that true? JAMES COMEY, FBI DIRECTOR: That's not true.

[12:35:03] GOWDY: Secretary Clinton said, "I did not e-mailed any classified material to anyone on my e-mail. There is no classified material." Was that true?

COMEY: There was classified material e-mail.

HILLARY CLINTON, (D), PRESIDENTIAL NOMINEE: Director Comey said that my answers were truthful and what I've said is consistent with what I have told the American people.

That there were decisions discussed and made to classify retroactively certain of the e-mails.

(END VIDEO CLI)

ROMANS: So David, the Washington Post gave Hillary Clinton four Pinocchios for her answer. You know, this is not going to go away anytime soon. Is there a way for her to address this and put it to rest once and for all?

CHALIAN: No. You know, there's no way for her to put on rest once and for all. I also think the damage on the e-mails to Hillary Clinton, it's pretty much done. Her honest and trustworthy numbers are not budging, her favorability remains upside down. I think that this whole story goes directly to those points.

You know, clearly, Hillary Clinton was answering in the most cherry- picking way, and I think that gets exposed. I think anybody who've watched James Comey's performances both at his press conference and before Congress that walked away thinking that James Comey was giving some sort of a seal of approval to Hillary Clinton. I just -- only Hillary Clinton would probably walk away with that impression.

ROMANS: In the meantime, says she's going to be try about the economy, she's got billionaires behind her, she's got, you know, Bloomberg and now we heard yesterday, Mark Cuban. She's got Warren Buffett, she'll be in Hillary early in Nebraska. And Ryan Lizza, she had a fine line to walk when it comes to the economy. She really does in business because, you know, she's got this strength to the Obama economy that she can try to embraced right. You see in your screen.

Hundreds of the percent increased in stocks. Almost 10 million net new jobs, unemployment cut in a half to 4.9 percent. Home prices back to where they were before. But the there are these weaknesses that she has to acknowledge and tell working class voters, I feel your pain. Incomes' flat, 70 percent of kids graduating from college were student debt. Government debt Ryan is not from ten trillions and 19 trillions under Obama.

GDP, two percent in this recovery going 1.2. percent in the most recent quarter. It's a tricky, tricky thing message.

LIZZA: Absolutely. And, you know, anyone who's tried -- any candidate who's tried to run for a third term for their party has faced this problem of wanting to point out what your party did right over the last eight years. But not being too celebratory in pointing at to the American people what's -- where people are suffering and how you're going to fix that

So, on one hand, she doesn't want to condemn Obama or criticize the Obama economy and recovery. She wants to celebrate the bright spots. But on the other hand, median wages haven't budged as you pointed out, the debt has doubled. And there are a lot of source spots and she needs to, you know, to sort of Goldilocks strategy with, you know, appreciating what she think Obama did right. But at the same time, saying, I know Americans are still struggling and here's how we're going to do better.

That's always the challenge for someone -- yeah, trying to try to get a third term. Al Gore faced this and George H.W.. Bush faced it.

ROMANS: Yeah, you're right. And, you know, in the primarie season we, you know, we kept asking people in the exit polls, you know, is the economy bad, they say yes. They say how do you personally feel though, oh I'm okay. So there's also a perception problem that's sort of interesting there guys. Although we have to see how that plays out. David Chalian and Ryan Lizza and Brian Stella. Thanks gentlemen.

Up next, her multi-billion dollar medical breakthrough had people calling her the next Steve Jobs, oh, until the bottom fell out. But she's fighting hard to make a come back, and sitting down with Dr. Sanjay Gupta to tell her fascinating story. That's just ahead.

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[12:42:38] ROMANS: It was literally a billion dollar idea and then some developed a blood test that requires just a drop and offers near instant results. Such was the promise of Theranos, a company founded by a Stanford dropout who quickly drew comparisons to her hero, Steve Jobs. And while that promise may someday be realized. Right now, it is in shambles.

CNN Chief Medical Correspondent Dr. Sanjay Gupta sat down for an exclusive interview with Theranos founder and CEO and got an unprecedented look at her lab and what went wrong.

(BEGIN VIDEO CLIP)

DR. SANJAY GUPTA, CHIEF MEDICAL CORRESPONDENT: For the first time, Elizabeth Holmes is opening up the secret labs of Theranos.

ELIZABETH HOLMES, FOUNDER AND CEO, THERANOS: No one has ever seen this. You are the first one.

GUPTA: Wow.

In 2003, then 19-year-old Elizabeth Holmes dropped out of Stanford and founded Theranos, with the hope of using amounts of blood, just a few drops to do what normally took numerous tubes. Testing blood may seem like a simple process, but in fact, there are numerous steps that can impact the results.

For example, the tourniquet. How long is that supposed to be on? Was that alcohol or iodine used to clean my arm? What's the size of the needle? And why are there so many tubes? The anti-clotting medicine is not standardized nor the various reagents used to do the testing itself. Let alone the machines that finely spit out the results. It is a big $75 billion industry with thousands of players controlling little pieces of the process. Theranos wants all of it.

OK. What was resulted is this black box, a mini lab. The company says it can run up to 40 different tests on a tiny sample of blood.

HOLMES: We've designed it to allow for the same operations that a technologist could do in a laboratory.

GUPTA: Holmes believes that a finger stick instead of a needle will make people more likely to get their blood tested.

I may do this myself. That means "hello".

That's still a needle in there.

HOLMES: Lancet.

GUPTA: A lancet. OK.

HOLMES: A needle has a hole. Lancet is a poke.

GUPTA: For what's it worth, this Theranos blood test put my cholesterol at 170. My own doctor found it to be 169, just a week before. Holmes says she wants to make this sort of testing available anywhere, anytime.

HOLMES: There's no reason why this can't be distributed in very, very decentralized locations.

[12:45:03] GUPTA: Your home?

HOLMES: Yes.

GUPTA: Do you think people somehoe should have this, essentially a clinical laboratory in their own house?

HOLMES: I think that's a very interesting space.

GUPTA: But whereever the tests occur, the results need to be precise and accurate, and that's where the story of Theranos starts to crumble.

DAVID KOCK, EMERY UNIVERSITY SCHOOL OF MEDICINE: There were several labs that were tested that weren't totally accurate.

GUPTA: One study in The Journal Of Clinical Investigation found the test from Theranos retail testing sites in Phoenix, Arizona to have significant discrepancies, but even more damaging an assessments from the Centers for Medicare and Medicaid Services of their newer California lab which questioned Theranos's ability to run a clinical laboratory, and citing, "A global and long-term failure of the quality control program," and demanding they get their act together.

Wall Street Journal Investigative Reporter John Carreyrou first broke that story last October.

JOHN CARREYROU, WALL STREET JOURNAL: Theranos wasn't able to do so to the agency's satisfaction. So, the agency has now decided it's going to shut that lab down, and it's going to ban Elizabeth Holmes from the blood testing industry for at least two years.

GUPTA: Holmes has until September 5th to appeal, but in her first interview since the CMS decision, she insists that the technology was never to fault for the erroneous results. Instead she blames it on flawed operations in personelles.

HOLMES: At the highest level, we didn't have the right leadership in the laboratory and we didn't have the implementation of the quality system in terms of procedures and the associated documentation to ensure that we were realizing the quality standards that we hold ourselves to.

GUPTA: Of course, in the middle of all of are patients whose health depended on Theranos for accurate results.

There this man who goes by the initials R.C. right now in Arizona who is suggesting that the lab results that he got from Theranos were not accurate and it lead to him having a heart attack.

Based on what you know, is it possible that what he is saying is true? Could he have gotten a lab result that was so eschew that he didn't act on it, and then a month later he ended up having a heart attack.

HOLMES: I'm not the lab director and so ...

GUPTA: I know, but you are the CEO and founder of the company. I mean, is this as serious as it gets?

HOLMES: What I know is that I've put the best people in place to be able to investigate every aspect of this and ensure that we meet the quality standards that we hold ourselves to, and I know they're doing that.

CARREYROU: The biggest problem was going live with blood tests that didn't work or that worked only part of the time.

GUPTA: Theranos is under the microscope of the U.S. securities office and the Securities and Exchange Commission about whether it misled investors about its technology. But for now, Holmes and Theranos are hellbent on gaining back the significantly eroded public trust and proving the product they have to offer is the real deal.

It's probably the most important question I think anybody who's watching has about this, does it work?

HOLMES: Yes. GUPTA: You're confident in that?

HOLMES: I am confident in that.

GUPTA: Dr. Sanjay Gupta CNN, Palo Alto, California.

(END VIDEO CLIP)

ROMANS: All right, up until this point all of the data that proved how well the test works has been collected by Theranos. Right now Theranos says it is working on third party verification of those results.

In other news, parts of Maryland are recovering today after just epic flooding. Two people were killed as roads turned into raging rivers.

Look at this. Drivers were rescued including this woman. Three men formed a human chain to pull her to safety. She is coming out of the window of that car. Just unbelievable. Nearly 6 inches of rain fell in the Baltimore suburbs in two hours.

Is there a relief in site, let's get to meteorologist Tom Sater for a look at the forecast. I mean, those pictures of her, you know, climbing across the human chain while the water is rushing over the hood of her car, over the top of her car. Just ...

TOM SATER, METEOROLOGISTS AND WEATHER ANCHOR: Amazing.

ROMANS: ... frightening.

SATER: It is, and in fact Christine you can probably say that this is one of those things you categorize as a freak of nature. But there were number of different elements that played a role in this.

If you look at the amount of rain that has fallen, blue is upwards to an inch, green 2 inches, 4 inches in yellow, but Ellicott City also plays a role here. Thunder storms were developing and following each other. We call it training like the box cars on a rail road system one after another.

So this event, you could say it's a one in one thousand years event. Doesn't mean it's going to happen again on the next 1,000 years. But the chance of the raid of rain fall that had fallen is about 1 percent or a 0.1 percent for any given day.

In the first 10 minutes, the rate of rain fall would have been its highest point about an almost an inch and a half, within 30 minutes over 2 inches. In an hour, 3.16, 6 inches when you end up a two-hour time period. But the city itself plays a role.

Ellicott City, I know the area well. I live in Rockville, Maryland and working in Washington. Ellicott City is an old historic town. It's gorgeous, but because it's historic they don't have modern-day storm draining systems. Their roads are narrow, the streets are narrow because it is a historic town but it's very steep. [12:50:06] There are incredible inclines in this beautiful city so the rush of water was just intense. We got pictures like this out of China sometimes and during the monsoon season.

Most of the rainfall is going to the north Baltimore. It's not in the watch, parts of Pennsylvania, Northern Jersey and to New York. Not New York City but thunderstorms will make their presence known a little bit later to the north.

Good news though, no more rain in Baltimore.

ROMANS: No more rain in Baltimore. All right, thanks so much for that Tom Sater. Nice to see you.

Up next, the ugly side of the beauty pageant, shortly after she was crowned Miss Teen USA, tweets with the n-word came to light on her social media.

(COMMERCIAL BREAK)

[12:54:56] ROMANS: OK. I want to bring you some pictures here of President Obama just landed at Hartsfield Jackson International Airport near in Atlanta. He'll be speaking to the convention for disabled veterans the next hour, and the White House has weighed in on presidential candidate Donald Trump's comments about the Khan family who's army captain son was killed in Iraq.

Speaking aboard Air Force, our spokesman says that Gold Star families deserve only honor and gratitude for their loved one's service. The spokesman would not detail whether President Obama would touch on the controversy during his remarks, those remarks later today in Atlanta.

All right there you go. And finally, the newly crowned Miss Teen USA under fire for a string of past tweets laced with the racial slurs.

Here's Karlie Hay of Texas all smiles after winning Saturday.

(BEGIN VIDEO CLIP)

CODY JOHNS, MISS TEEN USA HOST: Ladies and gentlemen, Miss Teen U.S.A. 2016 is Texas.

(END VIDEO CLIP)

ROMANS: Oh, but then there's social media. People on social media quick to point out Hay had used the N-word on her Twitter account in 2013 and 2014. The 18-year-old posted an explanation online, chalking it up to personal struggles years ago. She said she is better person now.

Hay will keep her crown despite the controversy. The pageant is saying her words were inappropriate but they stand with her in her development in growth. Let's bring in former Miss Teen USA Kamie Crawford.

You tweeted about this. Nice to see you. You tweeted this and now you're getting all that love on social media.

KAMIE CRAWFORD, MISS TEEN USA 2010: Oh, of course.

ROMANS: You say, if you win a pageant, you have to clean up your page. If you are in the pageant, first things first, clean up your page because if you're under 21, you shouldn't be drinking. And if you're white, the N-word ain't your word.

CRAWFORD: Well, I mean, I also want to note that it's not anyone's word. It doesn't belong for any one I think that everyone knows the historical significance of this word and that it's painful for a lot of people, and it makes a lot of people uncomfortable.

But when girls win pageant the first thing we tell them is clean up your page, make sure you know what's on your social media, make sure you know what's on the internet about you. You don't want to have any red cup photos because nothing good happens on a red cup, and you probably don't want to be swinging racial slurs on your Twitter page.

ROMANS: No racial slurs ladies and nothing good happens in a red cup.

CRAWFORD: Nothing good.

ROMANS: Some -- These words to live by. You were Miss Teen, you were saying in 2010.

CRAWFORD: Yes.

ROMANS: Social media has really exploded and changed since then and I almost feel like these contestants over the generation, when they grow up, sharing too much and doing too much online. What do the contestants need to do to prepare?

CRAWFORD: Well, you want to make sure that the image that you're putting out there is clean. Obviously, you're trying to be Miss Teen USA. So, obviously it's not as big as being the president or an elective official but you are in an elected official in a way. You are representative of this country and you have to make sure that what you're putting out there is inclusive of all people. And I think that's the biggest issue here.

ROMANS: Well, speaking of inclusive though you look at sort of like the five finalists here. And there's just a lot -- I mean, I looked at this sort of split screen of five of these finalists, I don't know if we have it but really remarkable here, you got.

CAWFORDD: Yup, totally different, right.

ROMANS: You got totally beautiful, young, blond women. I think all of them blue-eyed too.

CRAOWFORD: Yeah.

ROMANS: Is there an inclusion problem in general?

CRAOWFORD: You know, I think that obviously no one's going to deny that they're beautiful and I hope that they all made the top by them assuming on their own merit. But you have to also look from the very beginning the entire judging panel were white. The entire top 15 with the exception on one girl were white.

So, it didn't surprise me that the entire job by was white. It doesn't surprise me that they're all blond, blue-eyed. Not really, that's not really the court issue I don't think and you can't blame these girls for making it to a spot they've always dreamed of making. It was just the top by them ...

ROMANS: Should the organization have done a better job of vetting this. Because there's people online right away she's crowned on Saturday, right away people are talking about them online it's like whoa, I mean, you know, should they have found this?

CRAWFORD: It's not really the organization that looks deep into these things. I think its starts at the state level.

ROMANS: Should they stand by her?

CRAWFORD: Well, here's the thing. I feel as though, you know, if you are crowned Miss Teen USA, part of what they look for in a Miss Teen USA is someone who is socially aware and it's on the website. And that's what girls who are going to for this title are assuming the job of being socially aware, being socially conscious. This is not showing any level of social consciousness at all.

And I don't think that it's going to be able to allow her to do her job properly as a Miss Teen USA, and that's a part of the thing that's why we have first runner ups, because if Miss Teen USA is not able to fulfill her duties, the first runner comes and takes over the role. She's not able to fulfill her duty ...

ROMANS: So do you think this is an example way the first runner up should be doing that job.

CRAWFORD: Absolutely, absolutely. I think she would gladly do it. I think that as Teen Miss USA, you know, they're not just going to red carpet event. You're going to inter cities. And you're looking at a lot of ground faces.

ROMANS: Right.

CRAWFORD: And its little kids who are obviously they have a lot of questions they want to know could they be the next president. Do you think I could be the next Miss Teen USA?

And with this kind of language being used by our Miss Teen USA currently I don't see how she can actively go out and do her job this way. I just think that it's going to be very difficult for her this year.

[12:59:57] ROMANS: All right, well the pageant so far is standing by. You said the language is unacceptable. But did they look forward to helping her grow on the mission of the pageant to promote education and active purposeful lives. We'll see if this is the end of that story.

CRAWFORD: Yeah.

ROMANS: Nice to meet you, Kamie Crawford.

CRAWFROD: Thank you. Nice to meet you too and I wish for the best.

ROMANS: Yeah, thank you.

All right, thanks for watching LEGAL VIEW. "WOLF" starts right now.