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Trump Makes Election Fraud Allegations; Hackers Hit Democrats Again; Trump Spokeswoman: Obama, Clinton Created Vacuum for ISIS in Afghanistan; Flooding Kills 2 in Louisiana; 1st GOP Representative Supports Gary Johnson as GOP Worries Trump Could Cause Loss of Senate; ISIS Loses Grip on Key Syrian City; Senate Majority Leader Issues Warning About Election; E-mails Show Blurred Lines Between Clinton Foundation, U.S. State Department; Clinton/Kaine Release Tax Returns; Comparing Clinton, Trump Economic Policies. Aired 3-4p ET

Aired August 13, 2016 - 15:00   ET

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

(COMMERCIAL BREAK)

[15:00:13] POPPY HARLOW, CNN ANCHOR: Top of the hour. I'm Poppy Harlow, in New York. So glad you are with us.

It is a battle for the White House, and the two sides this weekend with two very different concerns that could hurt them on Election Day. The GOP nominee, Donald Trump, already laying out what he says is the only reason that he may lose the swing state of Pennsylvania. Listen.

(BEGIN VIDEO CLIP)

DONALD TRUMP, (R), PRESIDENTIAL CANDIDATE & CEO, TRUMP ORGANIZATION: We are going to watch Pennsylvania. Go down to certain areas, and watch and study and make sure that other people don't come in and vote five times, because if you do that -- and I know that you are voting. Is everybody here voting?

(SHOUTING)

TRUMP: If you do that, if you do that, and we are not going to lose. The only way that we can lose in my opinion, and I really mean this, Pennsylvania, is if cheating goes on.

(END VIDEO CLIP)

HARLOW: Donald Trump is convinced that the election is going to be, quote, "rigged" -- his word -- so he has added this to the official campaign website, and it is a page to collect the names and addresses of people to, quote, "help me to stop Crooked Hillary from rigging the election," end quote. The submission button then leads to the straight to the donation page.

And for the Democrats, this weekend, more cyber security problems and another hacker to deal with. A hacker dumping a pile of personal information last night online, with private cell phones and e-mail addresses and phone numbers for several Democratic members of Congress. This is not a direct strike on Hillary Clinton, but the House Intelligence Committee calls it interfering with the political process. And they want somebody to be punished. A WikiLeaks data dump back in July caused the DNC chair to resign her position.

With me to discuss, CNN's Brian Stelter; also the head of the New York State Democratic Party, Basil Smikle; and also with us is Amy Kremer, who co-chairs the group Women for Trump.

Thank you all for being here.

Amy, I'll begin with you.

When you say that Donald Trump saying this election is rigged over and over and over again, and he comes out last night and says the only which way is that we will lose is if the Clinton camp cheats. Elections in this country typically are not stolen, especially presidential elections. Why does he keep saying this?

AMY KREMER, CO-CHAIR, WOMEN FOR TRUMP: Well, Poppy, voter fraud is an issue, and it has been across a number of places. And actually there were arrests made in Philadelphia for election fraud.

(CROSSTALK)

HARLOW: Hey, Amy, Amy --

KREMER: Yeah?

HARLOW: -- when has voter fraud been a significant issue in a presidential election?

KREMER: Poppy, all it takes in one election is one county, one precinct.

(CROSSTALK)

HARLOW: And you are saying it happens a lot --

(CROSSTALK)

KREMER: No, I did not say it happens a lot, but I have said that it happens, that voter fraud is an issue a lot of times that people are concerned about. I didn't say that voter fraud happens all of the time, but it is something that people are concerned about. And people who are paying attention know that it is an issue.

But at the end of the day, I think that what Donald Trump is talking about is the number of people at his events and rallies across the country, and not only the events, but the number of people who have signed up, and follow him on the Instagram, and Facebook and Twitter, and the people engaged in the campaign. And the clip that you played, I think it is important for what he is saying there. He said, you know, to go out to do the poll watching, and be engaged and be sure that there is no voter fraud going. And that is what we all need to be doing. We need to encourage people to get involved and be active and work until every ballot is cast at the end of the day when the polls close. But also, you know, if you have the time, and go work at a poll, and do election watching.

HARLOW: And let me bring in Basil.

Basil, as a Democrat, as a Hillary Clinton supporter, are you concerned about this election being rigged or cheating?

BASIL SMIKLE, EXECUTIVE DIRECTOR, NEW YORK STATE DEMOCRATIC PARTY: No, not at all. These arguments about voter fraud are spurious, because if you listen to what Donald Trump said --

(CROSSTALK)

HARLOW: Because it is in 2004 that the Democrats worried that the election would be rigged against them.

SMIKLE: Yeah, but if you listen to what Donald Trump said, he talked about certain areas, and that is a not so veiled areas that are referenced to strongholds that are communities of color.

(CROSSTALK)

HARLOW: -- Pennsylvania last night.

SMIKLE: And Dr. Ben Carson followed up talking about specifically Philadelphia, and areas around Philadelphia. So if you are looking over the last few years, 20 to 30 states have enacted laws that have made it more difficult for people to vote, and not made it easier for them to vote. And that is often a reason --

(CROSSTALK)

HARLOW: Well, two weeks ago, a federal judge ruled that you don't have to have voter identification in North Carolina, so doing the opposite.

SMIKLE: Yes, so states like North Carolina, Georgia, Alabama and others have enacted or tried to enact very restrictive voter I.D. laws to make it more difficult for the elderly and the communities of color to vote. No withstanding that, the Supreme Court also gutted very substantial portions of the Voting Rights Act. So these sorts of the comments about voter fraud, and they are statistically insignificant, so that is going to worry me when he talks about Hillary Clinton cheating.

[15:05:23] HARLOW: And, Brian Stelter, it is going to incenses you when you hear this? Why?

BRIAN STELTER, CNN SENIOR MEDIA CORRESPONDENT & CNN HOST, RELIABLE SOURCES: Because as journalists, we face a unique election, and this issue inside of the unique election. Voter fraud is vanishing rare in America, and when it happens, it is investigated and it is reported. It is oftentimes overstated by the press, and particularly the conservative press which fans the flame, and encouraging people to believe it happens more often than it does, and when Donald Trump buys into this, and says it from the microphone to the entire world, it is going to undermine faith in the voting system, and democracy system. And it is dangerous situation for the candidate to say it. It is different when the supporters say, that and a lot of Democrats in 2004 saying that the election was stolen from them, and they were wrong, but somebody like John Kerry he did not support that or encourage it, and Trump is encouraging this language.

HARLOW: Amy, to you, and I want to get you no the poll numbers, because it is important. We have brand-new poll numbers out from NBC/"Wall Street Journal," and it shows that 48 percent to 39 percent there, is in North Carolina for example. I mean, that is a nine-point loss in a state that Mitt Romney took. And you have Colorado, and Virginia and North Carolina where Trump is trailing Clinton significantly now. How concerned are you about the numbers three weeks after the RNC?

KREMER: Right. Well, Poppy, I am concerned. I think most of the supporters are concerned but, thankfully, we are just mid-August and several months the go until the election day, and that is why I think it is important for Donald Trump encourages the people to get out to vote. That is one of the things that is really important here, and just because you show up at the rally, and just because you are expressing the support on social media, that is not enough. You have to take the action to go to the ballot box the vote, and that is important. There is no excuse not to vote. So I am glad that we are here in August, and room for improvement obviously, and this is something that we need to work on.

HARLOW: And it is important when you are looking at the numbers, and Trump is not even at 40 percent in any of these, in any of the four swing states, and it begs the question, has he hit a ceiling over his support?

KREMER: But, Poppy, just as he can fall that quickly, and he can climb as well. And so like I said, there is room for improvement and we have seen him above those numbers, and it is important.

HARLOW: I want to have us listen to this.

Brian, quickly.

STELTER: Connect the dots, because Trump is talking about the rigged election is because he is down in the polls. And connect the dots between the stories, and polls where he is struggling, and then talk of the voter fraud, and if he loses on the Election Day, he can refer back to the voter fraud and say that the election is delegitimized.

HARLOW: Guys, before I let you go, I want you to listen to this, because Katrina Pierson came on CNN earlier today, and she was speaking about the war in Afghanistan, specifically, and she is saying something that is patently not true. Let's play it.

(BEGIN VIDEO CLIP)

KATRINA PIERSON, SPOKESPERSON, DONALD TRUMP PRESIDENTIAL CAMPAIGN: And Barack Obama went into Afghanistan creating another problem. It is Hillary Clinton and her incidents in Libya which was also a reckless decision to create that vacuum. They armed the rebels, and they are funding them now.

UNIDENTIFIED CNN ANCHOR: You're saying Barack Obama took the country into Afghanistan post-2009, is that what you're saying?

PIERSON: What I'm saying is the policies of --

UNIDENTIFIED CNN ANCHOR: You said we weren't in Afghanistan --

(CROSSTALK)

PIERSON: --Barack Obama and Hillary Clinton -- that was Obama's war, yes.

(END VIDEO CLIP)

HARLOW: OK. She is referring to the 2001 war in Afghanistan, following 9/11. And this is not the first time it has happened. And Katrina Pierson, on "New Day," came out to say something that is empirically not true about President Obama getting us into the war in Iraq.

How much does this hurt, does it hurt the campaign or Trump among the supporters when the spokesperson is coming out to say it is not true.

STELTER: It hurts him with some viewers at home, not all. And there is a repetition with Katrina Pierson here, and not all, but Katrina, who is the national spokeswoman on national television who is saying things that are not true, and I have to give props to Victor who jumped right in there when he heard that.

HARLOW: And, Amy, this is your camp. Does that concern you?

[15:09:55] KREMER: I heard what you just played, and Katrina is a person like all of us, and I make mistake, and I have certainly made mistakes on air, and if she went in and cleaned up that is what she needs to do. And it is one thing and it is like, I don't like to mess up one number, and there goes the credibility.

(CROSSTALK)

KREMER: And it is important that we are accurate in what we say, and sometimes we do get tripped up, because we are humans, but we need to clean it up.

(CROSSTALK)

SMIKLE: And it is more than that though, because Donald Trump has gone on television, and accused the president of being a founder of ISIS. That is reckless. And to me not just from Donald Trump, but for his spokespersons all of the way down, and there is reckless talk here that I don't believe that his core supporters really care about quite frankly, but from the point of view from the Republican that actually cares about the party, the standard bearer of the party is making comments that are so reckless and disgusting in my opinion.

(CROSSTALK)

HARLOW: And Donald Trump says that he was being sarcastic.

(CROSSTALK)

SMIKLE: Sarcastic is me saying that he is thoughtful.

HARLOW: Guys, I have to leave it there.

Brian Stelter, and Basil, and Amy, thank you. We have much more ahead. ANNOUNCER: This is CNN breaking news.

HARLOW: Meantime, Louisiana is under a state of emergency as heavy rainfall is causing flooding that has killed at least two people in the state so far. Look at the floodwaters so powerful they swept an 18-wheeler off of the road. The state police shutdown Interstate 10 in both directions in Baton Rouge because of the flooding. And some areas getting 26 inches of rain in the last 24 hours.

And Governor Jon Bel Edwards saying that Louisiana has received an unprecedented amount of rainfall.

(BEGIN VIDEO CLIP)

JON BEL EDWARDS, (R), LOUISIANA GOVERNOR: What we know is that we have record levels of flooding along rivers and creeks. Because these are record floods, we don't know how wide the water is going to get in those areas. We don't, and this is unprecedented, and so we don't have records that we can go back to see, and who all is going to be impacted.

(END VIDEO CLIP)

HARLOW: Boris Sanchez is live for us in Louisiana.

Boris, I know that people have been asked to evacuate the home, and at this point, is it a mandatory evacuation?

BORIS SANCHEZ, CNN CORRESPONDENT: Well, as far as we know, the evacuations are voluntary at this point, but more than 1,000 people have had to be rescued from the homes, and cars that are stranded on the roads. And I can tell you that at least 100 roads are still closed right now, and more than 12,000 people as of this morning were without power.

And now that the waters are starting to move south, and recede, we are starting to get a clear picture of the damage, and the full extent of the damage. Behind me, this is a body shop, and you can see pickup over, and this is on t other side of the repair shop when the rain came down, and this happened very, very quickly, and washing out the entire area, and it is kind of an industrial zone, and there was a man in two tracker or trying to pull people to their homes to gather things, and one of them was stuck, because the water was so deep. This is one slice of the damage that we are seeing.

I am here, actually, with the neighbor, Mark.

And you had the trailer on the property, and it got swept up, and now it's flattened right over there. UNIDENTIFIED LOUISIANA RESIDENT: Yes, that is where I was living in

that, but it is about 100 yards behind this building here, about 100 yard and come around and floated. It floated that trailer, and that SUV, and it was back there, also. It is floated about 100 yards.

SANCHEZ: And, Mark, you have told us that you lived here 20 or 30 years?

UNIDENTIFIED LOUISIANA RESIDENT: Yes, 30 years, and I have never seen like this, and back in march when we had the flood like this, and it did not come near this bad, and this water was coming up extremely fast.

SANCHEZ: How does it make you feel that your state, your home fall apart this way?

UNIDENTIFIED LOUISIANA RESIDENT: Well, I mean, it is terrible. The gentleman who had that tractor right there, and he lost his house in the flood back in march. He just couple of weeks ago got his house back in order. And he has lost everything, and he had six or eight feet of water in his house. That is terrible. And there is people that is just -- you know, it is a sad thing to see.

SANCHEZ: It is certainly sad.

Mark, thank you so much for talk talking to us, and we are glad that you are OK. Thank you, Mark.

Poppy, as you can tell, it is a difficult situation for a lot of the Louisiana residents. And the rain is coming down, and right now, it has slowed down where we are, but it is expected to continue until Monday afternoon.

HARLOW: Boris Sanchez is live for us in Louisiana.

And keep us posted through the evening. They need some relief there in Louisiana.

Thank you so much.

Up next, while Donald Trump and Hillary Clinton make the case to the voters, a third-party candidate is making waves and gaining support from a Congressman. Meantime, some Republicans are worrying that Donald Trump's plummeting poll numbers could cost them the Senate. We will see how likely that is.

And Hillary Clinton dealing with new questions about ties between the Clinton Foundation and the State Department while she was secretary of state. Our Drew Griffin investigates.

[15:15:02] We are live in the CNN NEWSROOM.

(COMMERCIAL BREAK)

HARLOW: This year's extraordinary presidential race is yielding more twists and turns. Republican Scott Rigell has become the first member of Congress to endorse Gary Johnson. Looking at the polling, Johnson is currently at 9 percent in the CNN poll of polls. And Rigell says that he is a proud member of the Republican Party, but a Trump presidency would be, quote, "a danger to our country."

He joins me now.

Congressman, thank you for joining us.

REP. SCOTT RIGELL, (R), VIRGINIA: Thank you, Poppy.

HARLOW: And what was the last straw for you?

RIGELL: Well, it got my attention when he mocked Senator McCain, and his imprisonment by the Vietnamese. And I represent the district that has the highest men and women in uniform in the country, active duty and retired. I was raised by an Iwo Jima Marine. I was a Marine. And my son is a Marine as well. As we have moved through the sum of all that Donald Trump has done, it leads me to the most sobering conclusion, and that is that we have presented to the public a deeply flawed candidate. And if he is elected, he is a threat to the country. I believe that. And the Democratic alternative is deeply flawed as well. And that is leading me to consider a third and really viable option, and that is Governor Gary Johnson. And so the 56 -- yes.

(CROSSTALK)

56 --

(CROSSTALK)

RIGELL: I'm really surprised that I am here supporting a Libertarian, but I am happy to do so, because he is the best of the three.

HARLOW: And you have said that Hillary Clinton is, quote, "equally unacceptable a candidate as Donald Trump." And some would point to your support, Congressman, of Gary Johnson and say that is, in effect, helping Hillary Clinton. Your response to them?

[15:20:14] RIGELL: Well, some polling data like an article in "The Atlantic" and others indicate that Governor Johnson is not just pulling from the Republicans, and he is earning the support, I should say, of some Democrat, and I believe perhaps Sanders' Democrats. If you are looking at what he is standing for, which is strong fiscal discipline and a real judicious restraint in the use of military force and going light on the social issues. Look, I hold the social issues that are more conservative than Bush, at the same time a businessman. My number-one concern is the country's fiscal trajectory which threatens every one of us where we live. And the only candidate among the top three that I have seen who is really confronting it in a wise and upfront way is Governor Johnson.

HARLOW: And, Congressman, tell me this, because you have outlined the fact that you have -- you do think that Johnson has a path to winning if he can get to the 50 percent threshold and be in the presidential debates. We will see if that happens. But more broadly, you are standing by the party, and remaining a member of the Republican Party. But you have warned that could change, that you could eventually abandoned the party. How do you think, regardless of whether Trump or Clinton wins, how do you think that Republican party has changed, and where does the party go forward from here after the contentious election within the party?

RIGELL: The men and women, yes, the men and women who have been traditionally elevated in the party are ones of high character. And as I wrestled with it, I have shared with others, and I say that there is not one character trait of Donald Trump that I would want my son to emulate. And that is a serious indictment on him. And I do not respect the way that he mocks others as he's gone about winning our nomination. I truly don't know what he believes. I think that he is all over the map, and he was for things, and against things, and there is no core principles driving him. And there is a high degree of narcissism in him. And to be the president of the United States, and have a narcissistic mindset, to me, is a troubling mix. Support --

(CROSSTALK)

HARLOW: And what I am asking is what does it do to the party, and post-Trump and what does the post-Trump Republican Party look like?

RIGELL: Well, that is one reason that I said are there any boundaries as to who we are as Republicans? I found my limit. I found mine. And if we have read the Virginia Republican creed, it is a short and beautiful document here, and we don't have the time to do so, but it is a beautiful and eloquent document that I would still suggest is the best for all Americans in terms of the governance. But if my party, the Republican party, and really, if this is the party, then I really do have to wrestle with whether I am an Independent. I say this as a lifelong Republican. And I'm so disappointed that we have presented a deeply flawed candidate to the people. And he is particularly unfit to be commander-in-chief, but I make the case that we have a good alternative in Governor Johnson.

HARLOW: We will see if he hits the 15 percent and is included in the presidential debates at the end of September.

Congressman, thank you for being with me today.

RIGELL: Thank you.

HARLOW: All right. Still to come here, live in the CNN NEWSROOM, celebrations on the streets of a key Syrian city, and this after U.S.- backed rebels force ISIS to flee.

(COMMERCIAL BREAK)

[15:27:47] HARLOW: ISIS is losing ground in northern Syria, and people are celebrating in the streets of Manbij. This after U.S.- backed rebels ended ISIS's two-year stronghold on the city. Manbij is an Aleppo province. Losing it blocks a very key ISIS supply route.

Our Ben Wedeman is live with us in Istanbul. And, Ben, looking at the city, it is very important strategically, and it has a key geographical significance, because it falls on the supply route between Raqqa and Turkey. And how much does it hurt ISIS?

BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, certainly, it is really is one of the last supply routes between Raqqa and the Turkish border, and so for ISIS, and this is the latest in the string of towns and cities in Iraq, and in Syria as well that it has lost where the black banner of ISIS has been torn down.

Looking at the scenes coming out of Manbij, it is reminiscent of the fall of Kabul in 20001 when the Taliban were driven out. This is symbolically quite a defeat for ISIS. And it is just the latest in the string of defeats.

What is interesting, it is only in June that the Syrian Democratic Forces, which is a U.S. group of Kurdish and Arab fighter fighters, came across what is described as a treasure trove of information on ISIS during the fighting in Manbij. They captured the documents, equivalent of 4.5 terabytes off data on the ISIS fighters, and the foreign fighters and their countries of origin and how they got the Syria and Iraq, and all sorts of information that is going to be quite useful to prevent some attacks in the future. And so for a variety of reasons, intelligence, and symbolic, the fall of Manbij is very important -- Poppy?

[15:29:52] HARLOW: No question.

[15:30:00] POPPY HARLOW, CNN ANCHOR: Thank you, Ben Wedeman, live for us in Istanbul tonight.

And coming up next, to politics, and the strong warning about the election from the most powerful Senate Republican. We will show you why Mitch McConnell is worried his party could lose the control of the upper house of Congress, next.

(COMMERCIAL BREAK)

HARLOW: All right. The Senate's most powerful man is issuing a stern warning to the fellow Republicans. Senate Majority Leader Mitch McConnell says that the chances of keeping control of the Senate in the fall are, quote, "very dicey." 34 Senate seats are up for reelection. And the Republicans are trying to defend twice as many seats as the Democrats. Add to that, the presidential candidate, Donald Trump, his poll numbers in recent weeks have been plummeting, and that makes it tougher.

Let's bring in Larry Sabato, the director of the Center of Politics at the University of Virginia.

And, Larry, how many Senate seats genuinely at risk?

LARRY SABATO, DIRECTOR, CENTER OF POLITICS, UNIVERSITY OF VIRGINIA: Well, Poppy, I think that Senator McConnell is absolutely correct, and out of the 34 Senate seats up, 10 of them are highly competitive, and amazingly, nine of the ten highly competitive Senate seats are held by the Republicans, and the Democrats have one seat in Nevada that they are concerned about. There are nine Republican seats that potentially could flip to the Democrats, and all of the Democrats need is to grab four of those ten, and we have 46 right now, and they need to get up to 50 at which point, if the Democratic ticket is elected, then Vice President Tim Kaine would brake the tie.

HARLOW: And it is interesting, because Donald Trump has made the case that he will bring in many, many new voters, and that is going to help the party across the board, and help the party down ballot. Does he have a point?

SABATO: Well, sure, if he actually is winning, but we are not seeing it in the key polls. We are not seeing it in the polls in the states where the Senate seats are vulnerable or in the swing states in the presidential campaign. And now, if he turns it around between now and November 8th, but that is another story.

[15:35:16] HARLOW: Yeah, but what about splitting the ticket, right? I mean, the voters, the Republicans are come ting to the polls, and even if they are not going to be voting for Donald Trump, and just like Congressman Scott Rigell that I had on, who he is going to be voting for Gary Johnson, and he is calling himself a Republican, and so he is going to be voting Republicans. And Pat Toomey said that in the race in Pennsylvania, the people are smart enough to know what is going on, one race is for and the other is for the United States Senate.

SABATO: Well, Poppy, that's a good point, and it was valid a couple of decades ago. What has happened is that we have a very partisan polarized country and electorate today. Fewer and fewer people vote for Democratic for president, and then Republican for Senate or House, and particularly the Senate. So you have people sticking with the same party, from top to bottom of the ballot, from the White House to the poorhouse.

HARLOW: And you say it is relative a few decades ago, and not so much today.

Thank you, Larry Sabato.

All very key elections to watch, as you mentioned.

Thank you.

HARLOW: After the break, I will speak one-on-one with one of the Donald Trump's key economic advisors. We'll talk about the Clinton tax returns just released and why his candidate won't release his tax returns, next.

(COMMERCIAL BREAK)

[15:40:09] HARLOW: Newly uncovered e-mails are raising questions of whether a Clinton Foundation donor was given special access within Hillary Clinton's State Department. Her presidential campaign denies anything inappropriate occurred and claims no conflict of interest, nor any favors granted. But the larger issue raised was the Clinton family's many competing and overlapping pools of interest, the foundation, her role as secretary of state, and her presidential campaign, et cetera.

That brings us to the latest news about one of Hillary Clinton's top State Department aides that was simultaneously involved with the Clinton Foundation and with Clinton while she was secretary of state.

Our senior investigative correspondent, Drew Griffin, has been digging into that.

(BEGIN VIDEOTAPE)

DREW GRIFFIN, CNN SENIOR INVESTIGATIVE CORRESPONDENT (voice-over): On June 19, 2012, Cheryl Mills, then the chief of staff for Secretary of State Hillary Clinton, boarded an Amtrak train in Washington's Union Station bound for New York. For the last seven months, Senate investigators have been trying to find out what Mills was up to. And for seven months, the U.S. Department of State refused to answer. Now CNN has learned a potential reason why.

Cheryl Mills, then a U.S. government employee and Secretary of State Clinton's chief of staff, was in New York working on behalf of the Clinton Foundation. A source close to the situation confirms to CNN, Mills was interviewing two potential candidates to lead the Clinton Foundation. Mills would interview the top-level executives at Walmart and the drug company, Pfizer, both companies huge donor to the Clinton Foundation, and both have worked with the Clinton Global Initiative.

Was Mills' role in violation of government ethics rules? Did she have permission from the U.S. Department of State? Did State even know that the trip was taking place?

CNN asked the U.S. State Department all of these questions. This was the response: "Federal employees are permitted to engage in outside personal activities within the scope of the federal ethics rules," a states spokesperson tells CNN. "All federal employees are subject to federal laws and regulations, including rules pertaining to conflicts of interest."

The vague response raises more questions that are not being answered, not to CNN, but worse, says one watchdog group, not to the Republican- led Senate Judiciary Committee, which has a right to know.

SCOTT AMEY, PROJECT ON GOVERNMENT OVERSIGHT: Congress has a right to ask for any information that it wants to from the executive branch of government to keep track of them. And the government should be turning that information over. When you have is a breakdown in that system, we have a breakdown in the democracy.

GRIFFIN: It's easy to understand why Cheryl Mills was trusted with helping to find the next director of the Clinton Foundation. Her relationship with the Clintons goes back decades.

CHERYL MILLS, FORMER CHIEF OF STAFF FOR SECRETARY OF STATE HILLARY CLINTON: I'm honored to be here today on behalf of the president.

GRIFFIN: Still, as Bill Clinton's deputy White House council, she defended the then-president during impeachment proceedings.

In 2008, when Hillary Clinton was running for president, Mills was her senior legal campaign adviser.

HILLARY CLINTON, (D), PRESIDENTIAL CANDIDATE & FORMER SECRETARY OF STATE: I, Hillary Clinton --

GRIFFIN: And when Hillary Clinton became secretary of state, Mills left the board of the Clinton Foundation and became Hillary Clinton's chief of staff.

The secrecy about the New York trip, the duel roles played by trusted assistants, the mixing of business between state, Clinton Foundation and its donors, all play into a central theme of Donald Trump's campaign, that politicians like the Clintons use government to Benefit themselves.

TRUMP: These are crooked people. They've been crooked from the beginning. You look hat that foundation. It's pure theft and pure crookedness.

GRIFFIN: Cheryl Mills' attorney says her client was simply doing volunteer work for a charitable foundation. She was not paid.

The Clinton Foundation also says Mills was not a paid employee.

And late today, Clinton campaign spokesman, Brian Fallon, sent this statement: "Cheryl volunteered her personal time to a charitable organization, as she has to other charities. Cheryl paid for her travel to New York City personally. And it was crystal clear to all involved that this had nothing to do with her official duties. The idea that this poses a conflict of interest is absurd."

Drew Griffin, CNN, Atlanta.

(END VIDEOTAPE)

HARLOW: Thank you, Drew.

[15:44:28] Coming up next, live in the CNN NEWSROOM, Donald Trump is refusing to release his tax returns, so we will ask his senior economic adviser, why, next.

(COMMERCIAL BREAK)

HARLOW: Hillary Clinton released her 2015 tax returns on Friday, putting pressure on Donald Trump to do the same. For months, Trump has said he will not release his tax returns because he is being audited. Now the Clintons made $10.6 million last year when they filed jointly and they paid an effective tax rate of 31 percent. That's what the return showed.

On the campaign trail today, vice presidential candidate, Tim Kaine, floated a theory as to why he thinks perhaps Donald Trump has not released his returns.

(BEGIN VIDEO CLIP)

SEN. TIM KAINE, (D), VIRGINIA & VICE PRESIDENTIAL CANDIDATE: What doesn't he want to show? It could be, you know, he brags about all the stuff he has done for charity. But there has been some good articles to suggest that's all brags and it's not really backed up. In fact, there was one just this week where he has been claiming to have given $20 million to St. Jude's Hospital. And "The Washington Post" dug into it and could find no record of any such gift.

We might find that this generosity that he is claiming is just smoke and mirrors.

(END VIDEO CLIP)

HARLOW: Trump's senior economic adviser, David Malpass, is with me. He is also the chief economist for Bear Stearns.

David, thank you for being with me, sir.

Let me begin with this, Donald Trump says he is being audited and won't release the returns until after the audit. We haven't seen proof of an audit. He could release the audit letter that the IRS sends to everyone they are auditing. Why not do that.

[15:49:49] DAVID MALPASS, SENIOR ECONOMIC ADVISOR, DONALD TRUMP PRESIDENTIAL CAMPAIGN & CHIEF ECONOMIST, BEAR STEARNS: There's nothing new to thins. So you can run clips about innuendo. I was invited here to talk about the dramatic difference between the two tax programs.

Hillary Clinton is running on the idea of status quo, of continued special interests dominating Washington, and higher tax rates. And Trump is running for -- to create a transformation of Washington that will make it more effective and lower the tax rates. So that's what the election is about. And you can't make it about other stuff, even by running over and over again the same stories.

HARLOW: Well, I do think transparency is key on both sides. And to be very clear, look, many people are calling on Hillary Clinton to release the transcripts of those speeches, the paid speeches she gave to those Wall Street banks. In her tax returns, we saw that 60 percent of her income last year came from paid speeches. So the media and the public are asking both candidates for transparency.

I'm asking you, as an economic adviser to Donald Trump, why not release the audit letter? Also, even if you are not going the release your full returns, why not release a few key pieces, like the marginal tax rate, like your charitable contributions? Isn't it important for the public to see?

MALPASS: Right. He has answered that many times. What I wanted to do was correct the media in some of the errors that are creeping in on the tax plans themselves. There was a big "New York Times" article this morning that hit on this child care credit, which is an important difference between the two plans. There are numerous errors creeping in. Hillary Clinton on Thursday talked about it being a tax credit for the rich. And that's simply not correct. It's capped. And it's going to benefit the middle class. That's a general problem with the coverage of the two tax plans. Trump's plan is specifically designed to help the middle class and to create jobs. And Hillary Clinton wants to raise tax rates --

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HARLOW: So let's dig into that.

MALPASS: And it's not getting reported. What that does is slows growth. We're already going too slow.

HARLOW: So, David, let's dig into that. Let's turn to Trump's tax proposal. Right? Here is what Hillary Clinton said about it on Thursday.

(BEGIN VIDEO CLIP)

HILLARY CLINTON, (D), PRESIDENTIAL CANDIDATE & FORMER SECRETARY OF STATE: It would allow him to pay less than half the current tax rate on income from many of his companies. He would pay a lower rate than millions of middle class families.

(END VIDEO CLIP)

HARLOW: So, David, she calls it the Trump Loophole. What she is talking about is pass-through entities, like LLCs, like S Corp, because today they are taxed at 39.6 percent. His proposal cuts that to 15 percent. But for many people, many Americans who work at a retail store or a restaurant that make an ordinary paycheck, if you will, many of them have to pay a higher rate than that, than 15 percent. So the argument here, David, is that this is really helping higher income professionals because their tax rate would be cut by more than half, and it's going help them more than those on the lower end of the income scale. Your response?

MALPASS: Right. There were quite a few errors like that in her speech. The reality is she has been --

(CROSSTALK)

HARLOW: No, no, no, it's not an error. What I said is fact.

MALPASS: I'm going to come --

(CROSSTALK)

HARLOW: He wants to cut the rate to 15 percent for pass-through entities like LLCs, like S corps.

MALPASS: Right, but he has made clear that there will be guardrails and the intent is to help really small businesses. It's incorrect to say it would affect his enterprises. Over the -- Hillary Clinton has been in office -- in federal power for 30 years. And what we've got is the rich getting richer, and the middle class real incomes going down. So what you need is to have new ideas, some transformation of what's going on in the tax code. And Trump is proposing that.

HARLOW: So, David, what does it do for the Average Joe who brings home his paycheck from a retail store, for example?

MALPASS: Right. So "New York Times" was correct on that this morning that Trump is reducing the income tax rate for those people, whereas Hillary is not. So there is a clear difference on that.

But in several areas, remember, she is raising the tax rates on capital gains, on the estate tax, on upper income, and even on small businesses. So for a lot of small businesses, their tax rate is going to go to 47.4 percent under her -- because she is applying a premium to the existing high income tax rates. Trump wants to cut all those rates, plus cut estate taxes. And that's critical to small businesses, family farms, people that don't want to do estate planning. Clinton is going to raise the estate tax rate, so everybody's going to -- so lots of the middle class will need lawyers in order to protect themselves from the possibility of getting hit by her estate tax.

HARLOW: And, David, finally, you bring up the child care tax credit. And some critics of that have said, by saying that you are allowing all child care expenses to be tax deductible, that arguably could help higher income individuals, more than lower income individuals who pay very well in payroll tax, and therefore deduction doesn't mean as much to them. It's not as significant a portion of the pie. Your response?

[15:55:21] MALPASS: Right. There were three major errors in the "New York Times" story today. And CNN, I don't think, has been covering it correctly. There is a limit on the amount. And Trump was clear in his speech a week ago that there was a limit on the amount of the deduction.

HARLOW: What is that? Because that's a number that I haven't seen. What is the limit?

MALPASS: That -- so he said the -- the average expenses, which we think is $12,000, so that's going to help.

HARLOW: $12,000.

MALPASS: That's going to help middle class America. Number two is it's an above-the-line deduction, meaning you don't have to itemize. And that was specifically erroneous in the "New York Times" this morning. And then third is the amount of the deduction is larger than in the current code. So this is a great tax change for the middle class.

HARLOW: David Malpass, I'm getting the wrap.

But come back, join me again. Lots more to discuss.

MALPASS: OK.

HARLOW: Thank you very much. MALPASS: Thank you.

HARLOW: Donald Trump tonight will speak in Connecticut, just 24 hours after insisting that if he loses Pennsylvania this fall, he says that's because he was cheated. What will he say tonight? You will hear from the Republican candidate, live, later on, right here in the CNN NEWSROOM.

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