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Trump Facing Questions Over Tax Bombshell; Clinton Heads to Ohio With Lebron's Endorsement; Trump Surrogates Praise His "Genius" With Taxes; Trump Believes clinton Not "Loyal" to Bill; Trump Mocks Hillary Clinton's Health. Aired 10-10:30a ET

Aired October 03, 2016 - 10:00   ET

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


(COMMERCIAL BREAK)

[10:00:28] CAROL COSTELLO, CNN ANCHOR: And good morning. I'm Carol Costello. Thank you so much for joining me. Donald Trump, back on the campaign trail, any minute now he's expected to speak at an event focused on national security in Herndon, Virginia. This comes as a bombshell story from "The New York Times" shines a spotlight on his taxes. The "Times" reporting Trump declared a loss of more than $900 million in 1995, that's almost $1 billion loss. A move that while legal, could have allowed him to avoid paying federal income taxes for 18 years. CNN has not been able to independently verify the authenticity of the documents which the "Times" says were mailed to a reporter anonymously last month. But the Trump campaign has not challenged any of the facts reported in that "New York Times" article.

For her part, Hillary Clinton is heading to another key state, the battleground Ohio. That trip coming as she gets the backing of one of Ohio's most beloved residents, LeBron James. CNN's team of correspondents and analysts here to walk us through the numbers and the political fallout but we begin with senior White House correspondent Jim Acosta. Hi, Jim.

JIM ACOSTA, CNN SENIOR WHITE HOUSE CORRESPONDENT: Good morning Carol. We are waiting to see just how Donald Trump responds to this revelation from over the weekend that you mentioned, that he may not have paid any federal income taxes for nearly 20 years. "The New York Times" obtained a copy of his 1995 return. It shows as you said a loss of more than $915 million. Tax experts say Trump could have used that loss to avoid paying income taxes for 18 years. The Trump campaign did not challenge the accuracy of that "New York Times" report, only saying in a statement late Saturday night that the tax return was illegally obtained, so consider how his top surrogates were spinning this issue on a Sunday talk shows including our "State of the Union."

(BEGIN VIDEO CLIP)

RUDY GIULIANI, (R) FORMER NEW YORK CITY MAYOR AND TRUMP SUPPORTER: I mean the reality is he's a genius. What he did was he took advantage of something that could save his enterprise and he did something we admire in America, he came back. The art of the deal is all about that. He talks about it, so to Steve Jobs, so to Winston Churchill. Winston Churchill was thrown out of politics twice and came back. Great men have big failures and then they take those failures and they turn them into great results. I would rather have a genius like Donald Trump running this country than someone like Hillary Clinton and all she seems to do is produce jobs for the FBI.

(END VIDEO CLIP)

ACOSTA: And that is pretty close to how Trump answered the question. Remember one week ago at that debate at Hofstra University, Trump said he was smart because he was avoiding paying taxes. Here's what he had to say.

(BEGIN VIDEO CLIP)

HILLARY CLINTON, (D) PRESIDENTIAL CANDIDATE: 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 -

DONALD TRUMP, (R) PRESIDENTIAL CANDIDATE: That makes me smart.

(END VIDEO CLIP)

ACOSTA: Now the Trump campaign message of the day does offer a glimpse into how his advisors are handling this tax issue. Top aides say Trump will be attacking Clinton today as someone who never created a job in her life, that she and Bill Clinton made all of that money after they left the White House. A subtle way of framing Trump's careers a businessman, as a positive, Carol, as so much attention is being paid to these income taxes. We will be watching to see if Donald Trump talks about this. This event was supposed to start at 9:00 a.m. in Northern Virginia, has not started yet. He's running about an hour late. But we will be listening Carol.

COSTELLO: Yes, we will. We will be listening. And of course, we will take our viewers there live when Mr. Trump begins speaking. With me now to talk about all of this, CNNMoney correspondent Cristina Alesci, Bob Cusack Editor in Chief of "The Hill" and Molly Ball is a political writer for "The Atlantic." Welcome to all of you.

Cristina, I want to start with you because on "New Day" the millionaire investor Mark Cuban was interviewed by Alisyn Camerota and he talked about what was it, these deferred losses, right, that allow -

CRISTINA ALESCI, CNNMONEY CORRESPONDENT: operating losses. -

COSTELLO: Right. That allows you not to pay income taxes, right, if you are a wealthy individual.

ALESCI: Exactly.

COSTELLO: Mark Cuban says those opportunities have come his way every so often and here's what he did.

(BEGIN VIDEO CLIP) MARK CUBAN, AMERICAN BUSINESSMAN AND INVESTOR: I get offered all the time these tax advantage opportunities and I don't take them. Meaning, you know, if you buy this insurance product, then you can offset your income, and you know, because those things typically end up being disallowed and so I don't do any of them. And you know, if Donald is taking tax shortcuts, maybe he bought an insurance policy as opposed to doing something in real estate and you know, he took a huge tax write-off to offset income. We don't know. And that's the inherent problem. There's no transparency and he is so ashamed of what he's done, he's not willing to speak up and explain to us what happened.

(END VIDEO CLIP)

COSTELLO: OK, so two things go through my mind as Mark Cuban says that. Donald Trump says he's being audited so why is he being audited?

ALESCI: Well, he's being audited because he does have a very complex business for sure.

COSTELLO: But it could be something else too, right? Because we just don't know.

ALESCI: We don't know. And that's the point that Mark Cuban is making, right? We are assuming

[10:05:16] that he is going to act like other real estate developers act which is taking those losses on the buildings and/or on the investments that he made and using them going forward. But the reality is we don't know what those losses are associated with, right? He could put -- look, tax experts are now digging into this. They're saying you could put anything in that basket of losses. And it's very hard to tell from that top line number whether those losses are legit or not. They could be you know, this is not something he did but these are what tax experts are saying. It could be a personal expense that you are marking as a business expense, for example. There are all sorts of questions now being raised, more questions than answers.

COSTELLO: OK. So Bob, you heard what Rudy Giuliani says. He says this only proves that Mr. Trump is a great businessman. He jumped back on his feet after losing almost $1 billion. Do great businessmen lose $1 billion in a single tax year?

BOB CUSACK, EDITOR IN CHIEF "THE HILL": Well, that's a lot of money, there's no doubt about it. There is some truth to the fact that I think most Americans as far as the tax law, they don't want to pay more than they should. And there's nothing to suggest this was done illegally. However, at the same time, this has been a very rough stretch for Donald Trump with the Miss Universe controversy, now this issue and I think the Trump people should be trying to turn it around saying hey, let's talk about policy, let's talk about seven in ten Americans think the country's going the wrong way. This is a critical week for Donald Trump. He's got to rebound. We have just got about a month left and these controversies have hurt him. COSTELLO: OK. So Molly, do you really think Donald Trump will do that? He's a counter puncher. He is going to want to come out and he's going to say exactly what Rudy Giuliani said, right? You know what, I used the tax code legally, I'm a great businessman, I figured out how to get myself out of trouble and here I am, I'm still worth $10 billion, people look at me. That's what he's going to say isn't he?

MOLLY BALL, POLITICAL WRITER "THE ATLANTIC": He's going to say that and he's also - as you mentioned before -- as Jim mentioned before going to attack Hillary Clinton, I think, in increasingly personal and brutal terms. We have seen this from him over and over again, that he does not have the ability to change the subject when he doesn't feel like he's sort of gotten the last word. He gets defensive, things get under his skin, and he feels like he has to double down. So saying, you know, on the tax issue instead of trying to turn the page as I think Bob suggested would be a good thing for him. He's going to double down and continue to pursue this argument that it makes him a genius. And then -- he's going to talk about, you know, the personal issues for Hillary Clinton, talking about her marriage in increasingly sort of personal and graphic terms. I was at his rally on Saturday night in Pennsylvania where he was questioning Hillary's fidelity to her husband and going all the way down that rabbit hole which he's perfectly entitled to do, but the question is you know, the voters who are uncertain about Trump, is that what they want to be hearing from him right now. I doubt it. -

COSTELLO: OK. So -- I know. We're going to talk more about that in the next block. But I want to stick on taxes for a time because I do think that he's running as a good businessman, right? Cristina, right? -- Do you want him to make the same kind of mistakes as President of the United States and then try somehow to make up for it?

ALESCI: Well, yes, that's the question, right? And in this case, he actually was able to recover from those bad business decisions because -- in the words of some tax experts, the tax code is unfair and favors wealthy real estate developers. So he has an advantage in this case that helped him recuperate those losses or make them less painful which average people do not have. That's what's being lost in this. Also, yes, he did come back from that, but remember, he came back doing a completely different business. He took those losses as a real estate developer. What does that mean? You put your own money into a development project that is at risk and that's why the government rewards you and tries to cushion the fall if you lose your money. And that's why you have these tax advantages, right? As he didn't do well at that, he came back as a brand, where he doesn't risk his own money for the most part. So yes, he came back, but not what he was doing before, something different.

COSTELLO: OK.

ALESCI: So there's a little bit of nuance here.

COSTELLO: So Bob, we have been looking into Mr. Trump's tax plan, right? So he says that he knows the system is rigged. He's used the system to his advantage and only he can fix it, but when you look into his tax plan, there is nothing to close that real estate loophole, so to speak.

CUSACK: Yes. No, there isn't. There hasn't been honestly a lot of debate on Capitol Hill about closing that loophole, either. I imagine that's going to change in the wake of the "New York Times" report. So, but I do think that he has an opportunity to shift a little bit, stop talking about his own taxes and talking about tax policy and who knows, maybe say yes, I am going to close this loophole or look at my

[10:10:16] tax plan compared to Hillary Clinton's. He's got to get back on policy, period.

COSTELLO: So Molly, you know, I'm just thinking of other things he said about -- being a businessman. He says he's proud of his bankruptcies because that's another way you use the rigged system to keep yourself afloat and to remain a very wealthy man. So I would think he's going to bring all of these things up first in his speech in Virginia before he delves into policy.

BALL: Well, we shall see. It sort of varies from day to day the extent to which he decides to read the teleprompter with the words that his staff would like him to say and the extent to which he talks about something else. But you know, I think Bob makes a really good point, which is that there isn't anything in Donald Trump's tax policy that would address the systemic problem that allows these kinds of losses and these types of tax advantages for real estate developers. And so that makes it harder to shift the subject on policy unless he wants to make a change to the policy he's advocated. You know, he does admit that he benefits from a rigged system and that's pretty much what you see happening in these tax returns. But to say that that's the reason that he can fix it when he hasn't actually proposed anything that would change that aspect of the tax plan, I think makes it difficult for him to make that argument.

COSTELLO: All right. I have to leave it there. But you guys are going to join me in the next block of CNN "Newsroom," so stick around and a quick reminder to my viewers, tomorrow vice presidential candidates Mike Pence and Tim Kaine face off on the debate stage at 9:00 p.m. Eastern. It will be the first time the two go head-to-head. You can catch CNN's special coverage beginning at 4:00 p.m. Eastern. Also, any minute now, Donald Trump expected to speak to a veterans' group in Virginia. We are keeping an eye on that. And in the battleground state Ohio, Hillary Clinton gets a big endorsement from the "King" himself. But can LeBron James help her with minority voters or Millennials? We will talk about that.

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[10:16:08] COSTELLO: Nothing says Ohio like LeBron James and LeBron James says I'm with her, a huge endorsement from the "King" for Hillary Clinton. To say James is a star in Ohio is an understatement. Yes, he won a championship for the Cavs after 52 years of agony. Yes, he attracted a record-breaking one million people to the victory rally. But LeBron James transcends basketball, donating his time and money to children from Northeast Ohio to make their dreams possible.

In an op-ed he says "If basketball has taught me anything it's that no one achieves greatness alone. And it takes everyone working together to create real change. When I look at this year's presidential race, it's clear which candidate believes the same thing. That candidate is Hillary Clinton."

So will LeBron James' message lure his huge fan base to follow his lead? CNN's Joe Johns is here to explore that for us this morning. Good morning.

JOE JOHNS, CNN SENIOR WASHINGTON CORRESPONDENT: Good morning Carol. A lot going on here, the voter registration period is ending in Ohio and the LeBron James endorsement comes just as Hillary Clinton returns to Ohio for the first time since her trip on Labor Day. So in the short term, the campaign is hoping it gets some help on its push to get more Clinton supporters on the voting rolls. Right now, especially Millennials, African-American voters, part of that coalition that got president Obama elected.

What's remarkable about the James endorsement is how impassioned it is touching on themes Secretary Clinton has been hitting on the campaign trail, he writes, "I'm not a politician, I don't know everything it will take to finally end the violence. But I do know we need a president who brings us together and keeps us unified. Policies and ideas that divide us more are not the solution."

Hillary Clinton for her part was back in North Carolina, Sunday, speaking at a black church focusing on the police use of force issues that have been in the spotlight there. Listen.

(BEGIN VIDEO CLIP)

CLINTON: I'm a grandmother. And like every grandmother, I worry about the safety and security of my grandchildren, but my worries are not the same as black grandmothers, who have different and deeper fears about the world that their grandchildren face.

(END VIDEO CLIP)

JOHNS: Hillary Clinton visiting both Toledo and Akron today and returning to talk about her plans for the economy. Expected to touch on corporate abuses and the need for reforms and while there's been some good news for Clinton in a number of states, Ohio has not been a great state for her, Donald Trump still running strong there. Carol.

COSTELLO: All right. Joe Johns reporting live for us this morning, thank you. So while Clinton lays out her economic plan for Ohio voters later today, Donald Trump will soon hold a roundtable discussion in Herndon, Virginia, this after mocking Hillary Clinton, even questioning her health and loyalty to her husband.

(BEGIN VIDEO CLIP)

TRUMP: Hillary Clinton's only loyalty is to her financial contributors and to herself. I don't even think she's loyal to Bill, if you want to know the truth, and really, folks, really, why should she be, right?

(END VIDEO CLIP)

COSTELLO: So let's talk about this with Editor in Chief at "The Hill," Bob Cusack and Molly Ball who's a political writer at "The Atlantic." So Bob, obviously Donald Trump has ratcheted up his attacks against Hillary Clinton, effective?

CUSACK: Well, I think the fact that he's talking about Hillary Clinton is a good thing, -- because he's not talking about Alicia Machado. He's not talking about the Khan family. But I don't think that going down this route is going to work for him. I think he's got to be talking about the contrast, talking about how people are upset, people who ought the economy. You know, talking about ISIS. Those are the things I think that he has gained traction. That's why he won the Republican primary. This is a completely different electorate in the general election but I think going down - that way is just not going to work. And I don't think it's going to sway independent voters. I know he's trying to remind people who don't know about

[10:20:16] Monica Lewinsky and Bill Clinton's infidelities but I just don't think that sways a lot of votes.

COSTELLO: Well, Molly, there's an interesting exchange on Jake Tapper's show yesterday with Rudy Giuliani because he was defending Donald Trump and his attacks on Bill Clinton's infidelity and Hillary Clinton's support of her husband during that time. And things got a little heated. Let's listen.

(BEGIN VIDEO CLIP)

JAKE TAPPER, CNN ANCHOR: Him saying that she is not loyal to Bill isn't about her marriage?

GIULIANI: I am saying the problem with Hillary Clinton has nothing to do as far as I'm concerned with her marriage. It's her protection of Bill Clinton for 20 or 25 years against allegations of rape, taking advantage of an intern and going on the attack and trying to make those women appear to be insane in some cases.

TAPPER: I just find it hard to believe that Mr. Trump would want to start leveling accusations about people's marriages. But that's all the time we have, Mr. Mayor.

GIULIANI: -- I think the accusations are about Hillary Clinton taking money from countries -

TAPPER: The accusation - wait a minute -- Hillary Clinton was cheating on Bill. That's what the accusation was. It was an unhinged and wild accusation. I can understand why you can't defend it because it's indefensible.

(END VIDEO CLIP)

COSTELLO: So Molly, we have another debate coming up. Do you think -- that Donald Trump will go down that road -- and talk about whether Hillary Clinton cheated on Bill and protected him from -- you know where I'm going. Will he do that in such an intimate setting? BALL: Look, I learned long ago not to try to predict what Donald Trump is going to do. But he's certainly doing it now. And I think, you know, as Bob was saying, for independent voters, for women voters in particular, which are a real weakness for Donald Trump which are the majority of the electorate and which are the biggest swing group in this electorate, to hear him seeming to blame woman for the problems in her marriage is really tough. And you know, it works really well with the thousands of people in that room at that rally who are eager to hear any kind of red meat and any kind of negativity about the other side. I don't think it works very well outside the room.

And you could hear in that sentence the first half of the sentence was on the prompter. His campaign wants him to put forward this message about Hillary being beholden to her donors. The second half of that message was all Donald Trump that was ad-lib. That was him going off into wild speculation and conspiracy theories as he likes to do. That is not the on-message Trump that his advisors would like to see.

COSTELLO: OK. The other issue that keeps coming up with Donald Trump, Bob, is Hillary Clinton's health and Donald Trump made no bones about it. -- He made fun of Hillary Clinton's coming down with pneumonia. Let's listen.

(BEGIN VIDEO CLIP)

TRUMP: Despite all of these different things, and she can't make it 15 feet to her car. Give me a break. Give me a break.

(APPLAUSE)

TRUMP: Give me a break.

(END VIDEO CLIP)

COSTELLO: So Bob, again, effective?

CUSACK: Carol, I don't think so. I think one of the big things that a lot of voters who are now tuning in post-Labor Day, in October, is who is more presidential. And Donald Trump has a lot of areas that he could be talking about. I mean, I was stunned he didn't bring up Hillary Clinton's staffer smashed one of her mobile devices with a hammer. He should be talking about that every single day. I think that imitating her - now, I think her health issue is a serious issue. She didn't tell the press that she had pneumonia until after she had that near fainting but I just don't think that imitating her is helping his campaign. I just don't -- I just don't think it's going to, as Molly was indicating, he's got problems with female voters. And he's got to sway them and move them in his corner. I don't think doing that is going to do that.

COSTELLO: All right. I have to leave it there. Bob Cusack, Molly Ball, thanks to both of you. Still to come in the "Newsroom," stiffed by Donald Trump, up next we'll hear from a retired businessman who calls Trump callous and says the billionaire short-changed him tens of thousands of dollars. (COMMERCIAL BREAK)

[10:29:00] COSTELLO: And good morning. I'm Carol Costello. Thank you so much for joining me. You're looking at a campaign rally for Donald Trump in Herndon, Virginia. It's taking place right now. You see Jeff Sessions, who's a Trump surrogate, speaking. We expect Donald Trump to speak at any moment. And when he does we will bring you back to Herndon, Virginia.

But let's talk about that $900 million loss. Here's the thing with that $1 billion loss, -- that nearly $1 billion loss. The very people Mr. Trump now says he wants to help, he hurt in Atlantic City. Small business people hired by Trump to build his Glitzy Casinos say they were stiffed through Trump's bankruptcy filing. The Jenkins family built bathroom partitions for Trump's Taj Mahal and they're not alone.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: He put so many good contractors out of business.

UNIDENTIFIED MALE: If you went against him, he simply put a list out and said these are bad guys and everybody else is a good guy.

UNIDENTIFIED FEMALE: And you guys were on that list?

UNIDENTIFIED MALE: We were on the list.

UNIDENTIFIED FEMALE: And did you ever get work in Atlantic City again?

UNIDENTIFIED MALE: Never.

UNIDENTIFIED MALE: I think I spent over $1 million in litigation with him. The bottom line was I would have been much happier, Jess, if he would have left me alone and simply left me to do my business. To him -