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NYT: Trump Could Have Legally Avoided Taxes for 18 Years; Powerful Storm Churns Towards Jamaica, Haiti & Cuba; Trump Tweets About NYT Tax Revelations; SNL Takes on Presidential Debate in Season Premiere; Trump Mocks Clinton's Stumble. Aired 7-8a ET

Aired October 2, 2016 - 07:00   ET


[07:00:00] VICTOR BLACKWELL, CNN ANCHOR: We've got a lot on the breaking news coming up in the next hour of your NEW DAY. That starts right now.


CHRISTI PAUL, CNN ANCHOR: And so, I will say again, 7:00 on Sunday morning. And you just make it worth getting ourselves out of bed in the morning. Thank you for being here. I'm Christi Paul.

BLACKWELL: I'm Victor Blackwell. Breaking overnight, an early October surprise. Trump's taxes revealed. "The New York Times" saying they got their hands on some of Donald Trump's decades old tax documents.

PAUL: Yes, this report shows Trump declared a nearly $1 billion loss back in 1995. Now, this suggests that he may have legally avoided paying federal income taxes for up to 18 years.

BLACKWELL: Plenty of questions this morning, but with fewer than 40 days now until the election, does this change the race at all? We're digging into it.

First, here's what's inside "The New York Times" report.


BLACKWELL (voice-over): "The New York Times" report indicates Donald Trump in 1995 reported a $916 million loss and lists tax benefits used after a turbulent financial period for his businesses in the early 1990s. The paper citing tax experts said Trump could have used his loss to cancel out an equivalent amount of taxable income for nearly two decades. The paper says it obtained the three pages of documents when they were mailed to a reporter last month. A postmark indicated the documents were mailed from New York City and the return address claimed the envelope had been sent from Trump Tower. The paper did not examine Trump's federal return.

"The Times" said it obtained one page of his New York state resident income tax return as well as one page of New Jersey and Connecticut non-resident turns. CNN has not independently verified the document's authenticity.

But in response to "The New York Times" report, the Trump campaign said the GOP nominee has paid hundreds of millions of dollars in other taxes including property and real estate taxes. Quote, "The only news here is that the more than 20-year-old alleged tax document was illegally obtained, a further demonstration that 'The New York Times', like establishment media in general, is an extension of the Clinton campaign, the Democratic Party and the global special interest," the statement said.

DONALD TRUMP (R), PRESIDENTIAL CANDIDATE: I'm going to cut taxes big --

BLACKWELL: "The New York Times" report comes less a week after Trump appeared to indicate during a debate with Hillary Clinton that he had not paid federal income tax over an unspecified period. The Democratic nominee accused the billionaire of refusing to release his returns possibly because he wanted to hide how little tax he had paid.

HILLARY CLINTON (D), PRESIDENTIAL CANDIDATE: Because the only years that anybody has ever seen were a couple of years when he had to turn them over to state authorities when he was trying to get a casino license and they showed he didn't pay any federal income tax. So, if he's paid --

TRUMP: That makes me smart.

REPORTER: It sounds like you admitted that you hadn't paid federal taxes and that that was smart. Is that what you meant to say?

TRUMP: No, I didn't say that at all. If they say I didn't, it doesn't matter. I will say this, I hate the way our government spends our taxes.


BLACKWELL: Our last hour, I spoke with Sue Craig, "The New York Times" reporter who received Trump's tax documents in the mail. And my first question was, if they determined the source of those documents.


SUSANNE CRAIG, THE NEW YORK TIMES (via telephone): We can't say, but we did manage to verify the -- verify them through Mr. Trump's former accountant who looked at them and said they're legitimate.

BLACKWELL: OK, I'd like to get to Jack Mitnick in just a moment who you leaned on in this reporting.


BLACKWELL: First, explain to us the provision. It's early in the morning, so as plainly as possible this net operating loss that would allow Donald Trump to claim a loss of $916 million and then not pay federal taxes for the next 18 years.

CRAIG: Yes. It's pretty crazy, but there is a provision in the tax code when you fill out your taxes if you have business deductions, you can list them and over time if you rack up losses on the net operating losses you can continue to move them forward to reduce your taxes -- essentially reducing your taxes in future years and also back three. It allows you to reduce your taxable income to zero which means you don't have taxes to pay in those years and you can move it forward. You can move it forward 15 years.

In addition, he could have racked up additional operating losses that he could have rolled forward in the future years. So, we know from 1995, 15 years, he potentially didn't pay taxes but it could be further depending on numbers in future years.

BLACKWELL: OK. So, let's now talk about Jack Mitnick, 80 years old now, Donald Trump's former accountant. Trump refers to him in his book "The Art of the Deal." He explained Trump's understanding of what you write in this story is the critical role taxes would play in helping him, Trump, build wealth. What did you learn from Mr. Mitnick?

[07:05:00] CRAIG: Well, just incredibly the idea that Donald Trump in the early 1990s, late '80s, when these losses were probably at their largest, that his businesses were going under, his businesses were failing. Creditors were being left, you know, with pennies on the dollar, that those losses from those business failures are what enabled him to not pay taxes going forward.

BLACKWELL: So, again, these are three pages. The first page of the New York resident filing, the New Jersey and Connecticut nonresident filings. There are still some questions unanswered though.

CRAIG: There are. We have three pages of which gives us a lot of information but we don't have the schedules that went with that to itemize the losses. We don't have a full view of his charitable contributions in those years. We know he checked off boxes saying he didn't want to give to a number of charities but we don't know exactly what that number is.

So, there's a lot of -- leaves out a lot of pieces and there's a lot of -- we got a lot of pieces and there's pieces obviously missing when we only get three pages. There were three crucial pages, but we want all of it.

BLACKWELL: We understand Donald Trump would not comment on what you're reporting here, but there has been a response from the campaign and from an attorney that there could be a litigious response. Tell us about that.

CRAIG: Yes. They threatened to sue the paper if we move forward with the tax returns saying their tax returns are confidential and we made a decision last night to move forward obviously.


BLACKWELL: That was Sue Craig, one of four "New York Times" reporters who contributed to the report.

PAUL: So, again, just to be very clear here, there was no impropriety here as far as we know. This was -- these taxes were done within the legal parameters of the current tax code. A lot of people are wondering how you're able to legally avoid paying taxes for 18 years.

So, CNN Money correspondent Cristina Alesci has been digging into this to get us some answers.

What have you learned specifically about what these returns do tell us?

CRISTINA ALESCI, CNN MONEY CORRESPONDENT: Well, we know that key details are still missing because "The New York Times" doesn't have Trump's complete tax returns and CNN can't confirm the authenticity of the documents that it does have.

That said, here's what "The Times" is reporting. Trump declared a loss of $916 million in 1995. That loss could be used to cancel taxable income for potentially up to 18 years. That's according to tax experts the paper hired. That means that even if Trump made $916 million in years after 1995, he could have potentially paid little or no tax on that income.

How is this possible? It all comes down to something called a net operating loss according to "The Times". This is how it works. When a business has more taxable expenses than income, you end up with what's called -- what the IRS calls a net operating loss.

Now, people may be asking if Trump can write off such a large loss over many years, how come I can't do this? Well, most people are thinking about a different kind of deduction called a capital loss deduction. Typically those are tied to stocks, bonds, other investments and there are different rules for those and limits on how you can use them.

With Trump, we're most likely talking about loss from operating a business, which is the most common reason for a net operating loss according to the IRS. Now, if Trump had much of his wealth tied up in these businesses, which it seems like he did, any of those losses in those business flow directly to him, so he could use them to reduce his own tax bill in future years.

Now as you mentioned, it's important to note that all of this is allowable under current tax code and the Trump campaign responded saying the candidate paid hundreds of millions of dollars in taxes including property, real estate taxes, but it is not directly denying "The Times'" reporting which has to do with federal income taxes.

PAUL: OK. So here's another question. Does this tell us that Trump lost all of that money, that $916 million, only in 1995?

ALESCI: OK. This goes to things we don't know quite yet. The answer for now is no. Almost $1 billion is a lot of money to lose. And we don't know exactly how it happened, when it happened. We do know, however, as I've been reporting, that his businesses were

hurting in the early '90s, the Trump Taj Mahal, The Plaza in New York, for example. Operating losses from those businesses could have been listed on his tax returns in those respective years, earlier in 1992, '91, and he could have carried them over to 1995, the years we're looking at.

[07:10:04] We actually don't even know if he used those losses to offset income in those years. Tax law says he could, but without the returns from later years, we can't know for sure, and that's the point.

PAUL: OK. So do the documents give us any indication of how much Trump really is worth?

ALESCI: That is the multi-billion dollar question. Look, bigger picture here, the newly published documents don't really offer details at all on Trump's overall net worth. We don't know how much money he's made since 1995 on -- based on these tax documents.

Trump's campaign puts his net worth at $10 billion, but an independent analysis at "Forbes" says he's worth only $3.7 billion, Bloomberg says he's worth 3 billion. To be clear, tax records don't tell us how much somebody is worth. But they do tell us how much someone made in any given year.

PAUL: Very good to point out. I know it's complicated. You did a great job breaking that down for us. Christine Alesci, thank you.

ALESCI: Thank you.

BLACKWELL: All right. So, what does this report on Trump's tax returns mean for his campaign? Hillary Clinton's team already jumping on the attacks saying that the gig is up. We'll discuss that in a moment.

PAUL: And "Saturday Night Live", they're back. They're back with a force.


ALEC BALDWIN AS DONALD TRUMP: My microphone is broken. She broke it with Obama. She and Obama stole my microphone. They think it's a failure. They took my microphone to Kenya and they broke it and now it's broken.



BLACKWELL: Welcome back.

Let's talk more about the potential political fallout from this "New York Times" report. We've got Scottie Nell Hughes, CNN political commentator, Donald Trump supporter, and Tharon Johnson, former south regional director for Obama's 2012 campaign and a Hillary Clinton supporter.

Scottie, welcome back. Tharon, welcome to the conversation.


BLACKWELL: Hey, I want to start with something we're seeing online reporting that Barbara Bush, the daughter of George W. bush and Laura Bush, attended a Hillary Clinton fund-raiser.

[07:15:09] This was in Paris last night, and we have a photo on Instagram here posted by Lauren Santo Domingo, co-founder of an online fashion website. You see Barbara Bush there in the center.

So, Scottie, you've got here the daughter of the last Republican president there fundraising for Hillary Clinton. You make of it what?

SCOTTIE NELL HUGHES, CNN POLITICAL COMMENTATOR: That's disappointing, but that's exactly why Mr. Trump right now is the nominee of the Republican Party, because those within the party are disenfranchised and feel like people like the Bush family less of him. You know, on this week, we had 50 wonderful amazing people tht were part of the Bush administration, his security detail, come out and endorsed Trump.

That means a lot more to voters that a daughter and wife possibly at a fund-raiser for Hillary Clinton, in Paris, by the way. This is not even in America. They're fundraising in Paris. That right there actually helps our argument as to why the status quo needs to be changed and why we need to reform Washington, D.C.

BLACKWELL: Well, typically, when those fundraisers happen overseas, they're open to United States citizens who are living overseas and then donating to the campaign.

But let me go to you, Tharon. You make of this picture and this reporting, what?

JOHNSON: Well, Scottie probably forgot that there are a lot of Americans who actually live in Paris, and so, it's totally fine to have a fund-raiser in Paris. Look, I think what it shows is that the Bushes, and like a lot of disaffected Republicans across the country which polling is showing, is just basically don't want to support Donald Trump. He does not represent the values and the conservative values of the Republican Party and I think it's totally fine.

And more importantly, listen, Hillary Clinton is running for president of the United States. I mean, she's trying to court moderate Republican college educated women. So, I think this is totally fine and there's nothing wrong with raising money in Paris.

BLACKWELL: All right. Let's go back to "The New York Times" reporting that in 1995, according to documents received by reporters there, Donald Trump wrote off a $916 million loss and that could have allowed him to not pay federal taxes for the next 18 years.

Before we get to the taxes, I want you first to respond, Scottie, to how this might undermine Donald Trump's basic premise for running for office. He's a phenomenal businessman. He's run this great company. But in one year alone he, according to the documents, lost nearly $1 billion.

HUGHES: Well, I don't think there's any secret that the '90s were hard on a lot of businesses. As Mr. Trump has said, we talked about Trump Airlines, we talked about others -- other businesses he might have had issues with.

And guess what? He's come back. Now we've seen him to be the success that he is. He unfortunately had this issue, but he's not like Hillary Clinton who made her success -- you know, they left the White House completely broke and now, they are supposedly multi- millionaires. Or you got the inspector general of the secretary of state who came out and said that magically, underneath Hillary Clinton, $6 billion of taxpayer dollars has gone unaccountable.

Those issues should concern the American voter, not necessarily Mr. Trump and his private business money. Like most Americans lost in some way underneath this economy.

BLACKWELL: Tharon, let me -- I want to get your response to that. I want to hear something Donald Trump said during the debate in an exchange about his taxes, tax returns, and his businesses' bankruptcies. Watch.


TRUMP: Now, if you want to change the laws, you've been there a long time, change the laws, but I take advantage of the laws of the nation because I'm running a company. My obligation right now is to do well for myself, my family, my employees, for my companies, and that's what I do.


BLACKWELL: No reporting from "The New York Times" that there's any wrongdoing or any breaking of laws. He's doing what, I'm sure if you put a poll in the field, what many Americans would do, pay as little federal taxes as possible.

JOHNSON: What he's doing, he's basically saying that he's manipulating the system and basically he actually is taking credit for it. He's proud of it.

But here's the bottom line with this new report that "The New York Times" is showing. It's showing exactly what you said, Victor. This guy was not a successful businessman. Yes, people took losses. But to basically claim a billion dollar loss and not to come forward and produce your tax returns as Hillary Clinton has done for over four decades, it's just something that the Trump campaign does not want to continue to talk about.

The problem also is this, Donald Trump will not release his tax returns because he's got something to hide. I mean, let's just call it what it is. But going into the election the American people cannot trust Donald Trump because if he cannot release his tax returns, he cannot show how much he's paying or if he's paying in federal taxes, how can we expect this gentleman to basically lead our country and be a transparent president, like Barack Obama has. And so, this is a big, big problem for the Trump campaign.

BLACKWELL: All right. Tharon --

HUGHES: Hey, Tharon --

BLACKWELL: We've got to wrap it.

HUGHES: OK. Even Mr. Trump said he e-mailed them to Hillary Clinton so they must have been deleted, along with her 30,000 emails that she deleted.

JOHNSON: But she released her tax returns, though, Scottie.

BLACKWELL: Scottie Nell Hughes, Tharon Johnson, continue the conversation on Twitter which after the show go back and read both of your accounts. So, I look forward to that. Thanks so much.

JOHNSON: Look forward to it.

[07:20:00] BLACKWELL: All right.

Let's turn now to a pretty fun night, though, after all that we're learning from "The New York Times." Kate McKinnon does a really good impression, Emmy-winning impression of Hillary Clinton on "Saturday Night Live", especially as we start this 42nd season for the show. Watch.


KATE MCKINNON AS HILLARY CLINTON: If you never want to see my face again, elect me president, and I swear to God I will lock myself in the Oval Office and not come out for four years. But if you don't elect me, I will continue to run for president until the day I die.



BLACKWELL: Let's talk about Hurricane Matthew now. Really a serious concern because it is a major and powerful category four storm packing 150-mile-per-hour winds. Haiti is now bracing for the worst of it.

Jamaica is also at serious risk. Shelters have opened. As you can see here, people lined up to buy water, batteries, food, just trying to get ready.

PAUL: Now, Cuba, we should point out is also in the path. Cuban President Raul Castro overseeing preparations. The U.S. is evacuating 700 employees and their families from its naval base in Guantanamo Bay.

CNN meteorologist Allison Chinchar tracking Hurricane Matthew for us right now. So, we know that Cuba is in its sights. After that, what is the

trajectory as far as you can tell, Allison?

ALLISON CHINCHAR, CNN METEOROLOGIST: Listen, the trajectory gets a little bit looser after that point. It still looks like it' a possibility to go to Florida and also a possibility to go to the Turks and Caicos. But both will still have some form of impact, rip currents, some rain from the outer bands. So, again, neither are out of the question at this point.

[07:25:01] Now, as the Caribbean braces for it, and we're talking a lot of rain in the Caribbean. Some places as much as 20 to 25 inches of rain in Cuba. All eyes were on the track.

Now, again, you can see from this map that Miami is still technically in that cone. We can't rule it out entirely. It finally made its shift to the north, which at least helps us in the short term, know where it's going to go.

But there's also been a lot of flight cancellations and delays in this area and for good reason, Victor and Christi. The cloud tops on this exceed 60,000 feet. You can't go over that, you just kind of have to go around the storm.

PAUL: All right. Allison Chinchar, thank you so much.

All righty. Breaking news overnight, "The New York Times" uncovering shocking details of Donald Trump's taxes, saying he could have legally, all legally, avoided paying taxes for nearly two decades. What the tax report could mean for his campaign.

BLACKWELL: Plus, Alec Baldwin's Donald Trump impression. Did you see it? Well, we're going to have a bit of it for you now. He got Trump's voice and the mannerisms down, many say. Watch this.


UNIDENTIFIED MALE: You've criticized Secretary Clinton for voting for the Iraq war but you, yourself, supported the war.

BALDWIN: Wrong, wrong, wrong. You're being very mean to me tonight, Coltrane.



PAUL: Well, as you wake up because we're waiting for you here. Hi. I'm Christi Paul.

BLACKWELL: I'm Victor Blackwell. Good to be with you.

Let's get straight to the breaking news this morning about Trump's taxes. Overnight, "The New York Times" says they've obtained some of Donald Trump's 1995 state tax documents. Now, "The Times" says when they were anonymously mailed to a reporter, the return address claimed the envelope was sent from Trump Tower.

[07:30:06] PAUL: Now, the documents show Donald Trump declared a loss of $916 million. If that's true, that kind of loss could have legally, we want to point out, legally exempted him from paying federal income taxes for up to 18 years. CNN, we want to point out, cannot independently confirm the authenticity of the documents.

But Hillary Clinton's campaign is seizing on "The New York Times" report. They call it a bombshell. Her statement is the campaign says, quote, "There it is. This bombshell report reveals the colossal nature of Donald Trump's past business failures and just how long he may have avoided paying any federal income taxes whatsoever. Now that the gig is up, why doesn't he go ahead and release his returns to show us how smart he really is?", unquote.

Trump's campaign is pushing back saying he has a fiduciary responsibility as a businessman to pay no more tax than legally required.

Jeremy Diamond has been following the campaign's response closely and there has been a response here within the last four minutes.

Jeremy, what are you hearing?

JEREMY DIAMOND, CNN POLITICS REPORTER: We're hearing Donald Trump is awake and he is tweeting this morning about this "New York Times" report. He just tweeted, quote, "I know our complete -- our complex tax laws better than anyone who has ever run for president and I'm the only one who can fix them."

That is very similar to the statement that we saw last night from the Trump campaign where they're essentially saying, listen, you know, they're slamming "The New York Times", first of all, as Trump did here with hashtag #failingNewYorkTimes.

But the Trump campaign and Donald Trump here is saying essentially, you know, this shows that he understands the tax laws. That he was able to essentially pay no taxes that year because of his understanding of the tax law.

Of course, Donald Trump has a number of tax attorneys who help him file his very complex tax returns every year, and, again, this report from "The New York Times" really is, again, bringing to the forefront this idea that Donald Trump may not have paid any federal income tax for years.

"The New York Times" reports suggested Donald Trump may not have paid income taxes for 18 subsequent years following that 1995 year because of the amount of losses that he declared, but certainly this is raising questions about that, about his -- the other things that may be contained in this tax report.

PAUL: You know, we should point out, too, in this tweet that you read, he's not refuting what "The New York Times" is reporting in terms of the papers that they acquired. But a lot of people, again, there's the tweet for you. But a lot of people care about this. Monmouth University poll last month said 62 percent of the people

polled say it's important that the presidential candidate releases tax forms. A FOX News poll last month said 60 percent believe Donald Trump is hiding something. So, help us understand how pivotal this could be, or perhaps not, to this election?

DIAMOND: Well, certainly, it's going to be the focus of the narrative, the political narrative of this race in the coming week at least. You know, the Clinton campaign is already pouncing on this issue, calling it a bombshell report and once again re-upping their calls for Donald Trump to release his taxes and essentially show just how smart he really is. That's a reference to what Donald Trump said in the first presidential debate early last week when he said essentially that, you know, if he didn't pay any taxes, well, that would be smart because the federal government would squander that money.

So, certainly, Donald Trump is saying that. But again, this brings the tax issue to the forefront. It also potentially undermines Donald Trump's business appeal. You know, his supporters have frequently cited his business acumen as why he would make a good president, but this shows that he lost $916 million, nearly $1 billion which he declared in 1995.

So, again, poking holes in that narrative. And certainly the Clinton campaign and Trump's other political opponents will be bringing that to the fore this week.

PAUL: All right. Jeremy Diamond, we appreciate it. Thank you so much.

Donald Trump, by the way, said he was going to get nasty. He seems to be keeping that promise. The Republican nominee mocking Hillary Clinton over her stumble when she was battling pneumonia. We'll show you what happened.

BLACKWELL: Plus, "Saturday Night Live" is back and turning its attention to the election season as we all expected they would. Take a look.


KATE MCKINNON AS HILLARY CLINTON: He's spent his life cheating middle class laborers, laborers like my own human father who made I guess drapes or printed drapes or sold drapes or something with drapes. And he was relatable and I am, also, relatable.



[07:38:08] BLACKWELL: Well, it appears that Donald Trump is awake and tweeting. We're hearing from the candidate for the first time now after reporting from "The New York Times." Trump writes here, "I've created tens of thousands of jobs and will bring back great American prosperity. Hillary has only created jobs at the FBI and DOJ." Again, first time we're hearing from the candidate since "The New York

Times" reports that Trump claimed a $916 million loss in 1995 which would have allowed him to forego paying federal taxes for the subsequent 18 years. We'll continue this conversation throughout the morning.


MCKINNON: He hasn't released his tax returns, which means he's either not that rich.


MCKINNON: Not that charitable.


MCKINNON: Or he's never paid taxes in his life.

BALDWIN: Wronger.


PAUL: Well, it's coincidental.


PAUL: That they're talking about that on the heels of this report here, but you saw this, "Saturday Night Live", oh, they are back with a vengeance. They jumped right into election mode, something that they're very good at.

BLACKWELL: Yes, very good.

PAUL: In terms of the political arena taking on Hillary Clinton, Donald Trump, and talking about some good timing, as I said.

BLACKWELL: Yes. Donald Trump's taxes there. Alec Baldwin is this season's Trump. Kate McKinnon back as Hillary Clinton after winning an Emmy there.

Let's bring in CNN media analyst Bill Carter, and Chris Spencer, comedian, writer and producer.

Good morning to both of you.



BLACKWELL: Hey, Chris, I want to start with you. What did you think of "SNL" last night starting with the debate sketch?

SPENCER: I thought Alec Baldwin was spot on, Kate McKinnon is always good. It was hilarious. It was hilarious.


CARTER: Well, I thought it was really good. I think bringing in Alec Baldwin was the extra touch. Kate is terrific as Hillary, but I think Alec is doing sort of a broad caricature, not just an impression, you know, a comic caricature, which I think is adding something to the performance.

[07:40:02] BLACKWELL: Let's watch a bit of Kate McKinnon.


MCKINNON: My opponent's tax plan benefits the top 1 percent so much, it's not just trickle down economics, it's -- I don't know, I guess if I had to call it something off the top of the old dome with no prep whatsoever, I don't know, I guess I'd call it trumped up trickle down economics.


BLACKWELL: Kate McKinnon just took home an Emmy a couple of nights ago for her role on "Saturday Night Live."

Chris, back to you, you know, we watched yesterday with Brian Stelter some of the political impersonations, impressions on "SNL" over the years. Now there are prosthetics, there's makeup, and there's wigs. You look back at Chevy Chase, he was just there in a smoking jacket as Gerald Ford. Now, these roles are really, really rich.

SPENCER: Yes. Comedy has taken an upgrade, if you will. The funniest thing, I was watching this with a group of black people and there was a young black girl who was a Republican, she got mad at me because I said I was voting for Hillary. And I was like, why are you voting for Trump? And she said yes. And if you're voting for Hillary, you've drank the Kool-Aid. And I said, well, if you're voting for Trump, you never had Kool-Aid.

BLACKWELL: All right. Thank you there for that, Chris. I'm sure that will be tweeted out by a lot of people this morning.

Bill, let me come back to you, the value and the impact of these sketches. Jeanne Moos was out with a group of people asking them who said, "I can see Russia from my house". They all said Sarah Palin. In fact, it was Tina Fey.

CARTER: Right, exactly. You do get a little bit of a crossover. And I think -- you know, they've done this for so many years now, it's part of the history and the impact of "Saturday Night Live", as a political year, they get really ramped up. I mean, I know Lorne Michaels well. And really focuses on this political -- he thinks satire works when people are really paying attention to the news.

Ands, of course, in this election, people are super interested in the news, so the satire can be way more effective.

BLACKWELL: Chris, let's look at the spoofing of the family. I think we have that, too. (BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Trump, what's the reason people give for being late?

UNIDENTIFIED FEMALE: What an interesting and wonderful question, Steve. May I ask my brothers for help?




UNIDENTIFIED MALE: I'm Donald Jr., the brains.

UNIDENTIFIED FEMALE: I'm Ivanka, the beauty.


UNIDENTIFIED MALE: OK. Show me "Children of the Corn."


BLACKWELL: So, Chris, I imagine that when a candidate's children, adult children, put themselves so close to the campaign that they're all fair game?

SPENCER: Yes. I mean, if you are going to wear a Pat Reilly haircut and come on TV and brag about your dad, people are going to talk about you.

BLACKWELL: So, what do you imagine, Bill, we're seeing Donald Trump tweeting this morning after "The New York Times" reporting. We've seen Donald Trump tweet about Alicia Machado for about a week now. His response is to this parody. He likes the media, he likes the attention but I don't know if he likes so much the spoofing.

CARTER: Well, he has sort of been okay with "Saturday Night Live" has portrayed him over and over again. And remember, he did appear as a host last season. So, he's got a connection to the show. I think his skin is getting very thin though because if you go across the entire landscape of comedy, especially late night comedy, he's taking a lot of hits. So, it wouldn't surprise me if he's getting past the point where he's enjoying it.

BLACKWELL: You know, Chris, we had a conversation yesterday about where the line should be drawn for just entertainment without challenging some of these politicians. Jimmy Fallon got a lot of push back for messing up Donald Trump's hair instead of asking him serious questions.

Is there a place in late night television, especially with weekday shows, for just a good time? Or should they all hold these candidates accountable? SPENCER: I think we should all hold them accountable, but I think

there's a line where it becomes disrespectful and they just have to be careful to steer, you know, away from it. When you start -- like Donald Trump, he himself is mocking Hillary Clinton for her -- when she was sick. I don't think that's something we should actually make light of. If she's sick, then we actually show some love.

BLACKWELL: Yes, we saw that at the rally yesterday. Bill, weigh in on that. You wrote a whole book on it.


CARTER: Well, I do think you have to be -- if a person's a guest on your show you have to be gracious and courteous. But I do think at some point if there's something in the news to really substantively ask, I think it's your obligation as an interviewer of any kind, you've got to ask something along those lines.

[07:45:02] I think most of the hosts do that. I do think Jimmy Fallon has a different show and is more of a broad entertainer.

But, you know, when there's something in the news, it's kind of incumbent on these guys to ask at least one question of substance I think.

BLACKWELL: All right. Bill Carter literally wrote the book on late night wars and Chris Spencer who has been making us laugh for years -- thank you, guys.

SPENCER: Thank you.

CARTER: Good to be with you.

BLACKWELL: All right. Donald Trump launching a round of what he calls nasty attacks. The Republican nominee mocking Hillary Clinton about her bout with pneumonia and calling her sarcastic and incompetent.

PAUL: Also, Haiti and Jamaica bracing for some really wicked weather. Hurricane Matthew churning that way. A lot of people watching it wondering how close is this going to get to Florida. We'll tell you.


PAUL: Well, Donald Trump promised to get down right nasty in his attacks against Hillary Clinton. That's what he told "The New York Times" yesterday and he is delivering, it seems. Not only is he hitting Secretary Clinton on her marriage, she's mocking her bout with pneumonia last month.

Take a look.


DONALD TRUMP (R), PRESIDENTIAL CANDIDATE: But here's a woman, she's supposed to find all of these different things and she can't make it 15 feet to her career. Give me a break. Give me a break. Give me a break!


[07:50:01] PAUL: Remember, cameras were rolling when she stumbled trying to get into a campaign vehicle here.

That incident prompted questions over the lack of transparency after the campaign initially didn't reveal her diagnosis at the time that it was pneumonia.

I want to get back to Scottie Nell Hughes, CNN political commentator and Donald Trump supporter, as well as Tharon Johnson, the former south regional director for President Obama's 2012 campaign.

Thank you both for sticking around with us.

I want -- I want to get to that in a moment but, Scottie, I do have to tackle the tweets that have just come out from Donald Trump in the last few minutes in reaction "The New York Times" article, where they say they have gotten a hold of his -- pages of his 1995 tax returns from the 1990, 1995, showing a loss of $916 million.

Donald Trump writing this morning, "I know our complex tax laws wetter than anyone who's ever run for president, and I'm the only one who can fix them." He went on the say, "I created tens of thousands of jobs and will bring back great American prosperity. Hillary Clinton has only created jobs at the FBI and the DOJ."

Now, he's probably doing something that's completely legal we want to point out. Everything that he has done, that we have seen this morning, is within the parameters of the current tax codes. He hasn't done anything illegal by any means and there are a lot of people try to pay as little tax as they possibly can. However, it seems to be serving him.

So when he says he's going to fix it, what does that mean?

HUGHES: Well, because he's always said all along, Christie, he's done nothing illegal in this. He's always done everything by the book just like he filed exactly what he needed to do to run for president.

But he also knows where the loopholes are. He knows where businesses are getting away, where businesses are able to take their money offshore. He knows all that. So, therefore, he can fix it internally.

There's nothing different from what he said in the beginning. He has personal experience with these sorts of thing and will be able to fix the problems that have caused to be in $19 trillion of debt that we are in today.

PAUL: But how does he fix them when he utilizes those loopholes?

HUGHES: Because it's legal to do. And he's always said he's not going to be running -- he's not going to be a businessman of the Trump Organization when he's president. He's going to be a businessman -- he's going to be the leader of the United States of America. Just like he's put his company and employees first as head of the Trump Organization, he will do the same for the United States of America. Something we've not seen probably in the last eight years and possibly even longer.

PAUL: Tharon?

JOHNSON: Well, what Donald Trump is a classic, you know, exercise of trying to deflect from the issue. The issue here is this gentleman has not released his tax returns. So, he wakes up this morning and he now basically finds out what's been revealed to the American people is that he's basically cheating the tax system, he's manipulating the tax system and more importantly, that he's not as successful a businessman as we thought he was.

So, no matter how he tries to spin it -- and then this thing about, you know, distrusting me and I'll fix it is not the temperament nor the presidential way of going to basically try to lead this country.

The other thing is this, Scottie got on this show and when we were talking about the Clinton emails -- I kept saying she did nothing illegal. She did nothing illegal. It's so funny to me now we get closer to Election Day, Scottie is coming on the show, he did nothing illegal. He did nothing illegal.

The problem is the perception and the lack of transparency that Donald Trump has displayed throughout this entire campaign. So, if he wants to stop talking about this, if he wants American people to trust him, just release your tax returns. That's all he has to do.

PAUL: But just to clarify, based on everything that we've seen and heard --

HUGHES: Exactly.

PAUL: -- there's nothing that was illegal in what has been released to "The New York Times".

But, listen, I need to shift here because there's something else we were talking about. You just saw that clip where Donald Trump was making fun of Hillary Clinton when she had pneumonia. This was something that, Scottie, that he had pulled back on. I mean, he seemed to have a little bit empathy with her when it happened.

Why now is he hitting her there?

HUGHES: I like this double standard, Christie, a lot of people in "The New York Times" and "The Washington Post" continue to say that, you know, Donald Trump can't defend himself which he can. But anything he goes against Hillary Clinton, that's just inexcusable.

I mean, let's remember this week, Howard Dean, former chairman of the DNC, accused Donald Trump of using cocaine. That's how dirty this campaign season has gotten. We know the last three weeks are going to be harsh and I guess nobody's holding back. But he's simply pointing out the fact she did have problems week ago. She did not tell her campaign staff. She did not tell the American people how sick she really was.

Once again, leading to this air that we don't know exactly what's going on behind closed doors of the Clinton family or Clinton Foundation or anything tied to the Clintons. Maybe it's deleted, maybe we find out after they are out of office like we have found out with so many things that happened during Bill's presidency.

PAUL: Tharon?

JOHNSON: Listen, this is another attack by Donald Trump. I mean, he's got a long history not only through this campaign but throughout his life of attacking people, particularly disrespecting women. This whole mockery that he's going to Hillary Clinton just shows that he cannot talk about issues that matter most to the American people.

[07:55:04] I mean, he's so incredible when it comes to basically talking about foreign policy, education and how he's going to put forth a plan for the economy.

Now, he's got to be careful, is that women are going to basically turn out in great numbers during this election. And Scottie knows like I know that when you're a man attacking a woman, appear to be sort of a bully, that can necessarily backfire. Now, what he's doing, he's trying to really rally up his supporters. I mean, if you look at the response from the audience, these are Donald Trump supporters who no matter will vote for him.

But, again, this election is about appealing to independent, college- educated women.

PAUL: And, I'm wondering how much the cheers in the audience mattered. That's what Hillary Clinton got herself into a bit of problem when she mentioned the basket of deplorables. Everybody cheered, she kept going.

JOHNSON: Well, what's going to be interesting is now to see how Hillary Clinton campaign responds to it. I mean, let's give Donald Trump some credit. When she made that comment that she apologized and said she would word it different if she could do it over again, but Trump campaign highlighted that issue. I think the Hillary campaign will highlight it as well.

PAUL: All right. Scottie Nell Hughes, Tharon Johnson -- I'm sorry we've run out of time. I apologize. But it's so good to have you both with us. Thank you.

JOHNSON: Thank you.

PAUL: Sure.

And a couple of programming notes that I want to cue in on here, Bernie Sanders is going to join our Jake Tapper this morning on "STATE OF THE UNION". That's at 9:00 a.m. Eastern. And at 2:00 Eastern, Libertarian presidential candidate Gary Johnson joining "NEWSROOM" with Fredricka Whitfield. That's only here on CNN.

And thank you for sharing your morning with us. We appreciate it always.

BLACKWELL: "INSIDE POLITICS WITH JOHN KING" starts right after a break.