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China Detains 2nd Canadian in Standoff Involving Trump; Senator Inhofe Criticized for Raytheon Stock Purchase after Pushing for More DOD Spending; Cohen Could Go to Cushy Prison in Otisville. Aired 2:30- 3p ET

Aired December 13, 2018 - 14:30   ET




[14:31:26] DONALD TURMP, PRESIDENT OF THE UNITED STATES: We're interviewing people now for chief of staff, yes.


TRUMP: Five people. Really good ones. Terrific people. Mostly, well known. But terrific people.

UNIDENTIFIED REPORTER: Mr. President -- (INAUDIBLE) -- the special counsel, the FBI, documents related to the interview of Michael Flynn?

TRUMP: That's great.

UNIDENTIFIED REPORTER: Do you believe the FBI acted improperly -- (INAUDIBLE).

TRUMP: Well, the FBI said Michael Flynn, a general and a great person, they said he didn't lie. And Mueller said, well, maybe he did. And now they're all having a big dispute. So I think it's a great thing that the judge is looking into that situation. It's an honor for a lot of terrific people.

Thank you all very much. Thank you.


TRUMP: Thank you.


BROOKE BALDWIN, CNN ANCHOR: Five candidates for chief of staff, so says the president a couple minutes ago.

Also a short time ago, in a FOX News appearance, President Trump touted his negotiating skills with China. He said, quote, "If China's economy, if it's in trouble, it's only in trouble because of me."

This all comes as it's confirmed that China has detained now a second Canadian citizen in a tit-for-tat involving the United States. President Trump says he's open to using the arrest of a Chinese tech executive as his bargaining chip in trade talks. Justice Department officials say such a move would cross a red line.

With me now, Wendy Cutler, former acting deputy trade representative in the Obama administration. She was responsible for the Trans- Pacific Partnership, TPP deal, U.S.-Korea free trade deal.

Wendy, welcome to you.


BALDWIN: When you wrote that, using this arrest for political ends would encourage China to essentially fight back, did Trump make it clear that that is exactly what he's doing?

CUTLER: Well, you know, what's happening, it's hard to keep up with all of these developments. It's interesting that the president is seeming to suggest that we may be willing to go soft on law enforcement issues if China makes big moves on the trade front. And, in fact, the trade talks are moving ahead. But the Chinese now seem to be taking their anger and retaliation out against Canada where the senior Huawei executive is being detained.

BALDWIN: What kind of precedent would this set?

CUTLER: I think a very dangerous precedent. It seems to be suggesting if someone violates U.S. law, maybe we can close our eyes and kind of put the issue aside if we can get the country to buy more soy beans or open their market to autos. In addition, I think it really complicates the trade negotiations. They're complicated enough. China's kept these issues so far with the United States on separate lanes and now sending the signal to China that it's kind of all on the table and maybe it can all get muddled up, I think this can complicate the ability to achieve success in the trade talks and not provide the leverage that the president is suggesting.

BALDWIN: So what would you then say to critics of the Obama administration, saying that people were used then as chips in that Iran deal?

CUTLER: Well, I don't know the specifics of that, but I'm not saying that there's no instances where one doesn't look at the overall relationship and make decisions. But in this instance, a senior Huawei executive is being charged with bank fraud. That's a very serious, you know, alleged violation. And for law enforcement authorities, it must be the result of a long investigation and, once again, sending the signal we may be willing to trade this away just seems to go against everything we've kind of stood for with respect to rule of law. And it really sends a green light to China and to other countries that maybe they should -- the door is open for them to be conflating such issues as well.

[14:35:28] BALDWIN: If you were -- just quickly, if you were a U.S. diplomat or some top U.S. business leader and you were traveling to China right about now, would you be a little nervous? Yes, I would be extremely careful now.


CUTLER: So far, U.S. executives seem to be safe, but I don't think this incident is over yet. I think over the next few days and even the next month or so things will unfold and perhaps other law enforcement actions will be taken against China as well.

BALDWIN: Wendy Cutler. Thank you, Wendy.

CUTLER: Thank you, Brooke.

BALDWIN: Coming up next, an inside look at the prison where Michael Cohen could be headed for the next few years. We'll talk to a man who knows the place very well from his time working for the Federal Bureau of Prisons. Stay here.


[14:40:19] BALDWIN: Republican Senator James Inhofe, of Oklahoma, who is on the powerful Senate Armed Services Committee, is facing all kinds of criticism today for purchasing thousands of dollars in stock with a defense contractor just days after successfully pushing the Trump administration for more Defense Department spending. A Senate financial disclosure report revealed Inhofe listed a purchase of $50,000 to $100,000 in U.S. defense contractor, Raytheon.

The Senator spoke exclusively to CNN's Lauren Fox today.


SEN. JAMES INHOFE, (R), OKLAHOMA: This is a group that has 900 people s clients -- more than 900 people. And they invest -- I intentionally did this so I don't have any decision, any voice, in what they invest in. Neither do any of the other 900 people that are out there. And this way -- in fact, I don't even know who they invest in. That's the truth. And I know that people don't want to believe that, that's fine.


BALDWIN: Inhofe's communications director said the Senator told his financial adviser to reverse the transaction once he was aware and that the transaction was cancelled it was settled. But "The Daily Beast" went in deep and noticed that the documents' metadata indicated it was created 20 minutes after the news outlet reached out for comment.

With me, Walter Shaub, the former director of the Office of Government Ethics, senior advisor for Seniors for Responsibility and Ethics in Washington, and he's also a CNN contributor.

Walter Shaub, always a pleasure. Welcome back.

(CROSSTALK) BALDWIN: So a couple of questions. First, trades weren't made until after this defense spending bill passed. Does that matter?

WALTER SHAUB, CNN CONTRIBUTOR: It's -- it's probably not illegal, and so in that sense perhaps it matters. It looks terrible and it defies common sense, so you can analyze it either legally or ethically and common sense-wise.

BALDWIN: Earlier this month, President Trump called the $716 million defense budget crazy. A week later, Trump met with Secretary Mattis and Republican lawmakers, including Senator Inhofe, and eventually reversed his decision and approved this $750 million budget. Is that significant?

SHAUB: You know, I think what we need to do is step back here and ask why is he investing in these kinds of stocks? I get that he has now told his investment manager not to buy defense contractor stocks, and I applaud him for that. He could have done that before. He certainly knew he was involved in this bill. He could have also made the decision that a lot of executive branch officials make, which is to just invest in diversified mutual funds that aren't going to pose conflicts of interests or to use the statuary mechanism to set up a blind trust, which Senators can do quite easily. So again, I don't think any illegality has occurred here, but it raises concerns about the double standard Congress has applied to t. -- to itself. The Senate armed services committee he sits on is one of the strictest committees in terms of nominees and a nominee cannot hold any defense contractor stock. It would be nice if they held themselves to that same standard.

BALDWIN: It's not unusual that folks who are more affluent, they have people doing all this trading for them, right? Like they have no idea what they're buying, what they're selling. So would his case be any different?

SHAUB: I take him at his word. I'm willing to believe that he didn't know about the purchase. But that would not be acceptable to him if an executive branch official did that. He would be one of the first to come down on them like a ton of bricks.

BALDWIN: Good point.

SHAUB: So again, he could have exercised the due diligence to prevent this from happening. So I don't think he's done anything wrong legally, but I think this is a learning opportunity that he and the rest of the Senate could use to step back and say what more can we do to hold ourselves at least closer to the standard that we hold the executive branch to.

BALDWIN: I think my takeaway from this is really for all of Washington and especially the folks on the Hill, due diligence.

Walter Shaub, thank you.

SHAUB: Thanks. [14:45:50] Back to Michael Cohen. Yes, we know he's going to prison, a prison referred to as one of America's cushiest. We'll talk to someone who knows the place quite well about what life will be like. A hint, he says he's going to be really bored.


BALDWIN: New York's Otisville Prison has been called a castle behind barbs wire. Forbes ranked it as one of the 10 cushiest prisons in the United States. Probably isn't too surprising Michael Cohen wants to serve his three-year sentence there. It's a medium-security detention center. It's right about 80 miles northwest of New York City. The satellite campus has a baseball field and a track. And because of its proximity to the state's sizable Jewish population, the commissary includes items like Matzo Ball Soup.

[14:50:04] It is also a preferred destination for some pretty high- profile names. Bernie Madoff tried and failed to get into Otisville. Celebrity financial advisor, Ken Starr, did a seven-year stint there after pleading guilty to a scheme to defraud clients on $33 million. And another Otisville inmate whose name is synonymous with the phrase Wall Street, at least on silver screen.


UNIDENTIFIED FEMALE: In 1993, he was sent off to federal prison for almost eight years. And so here, in person, I welcome the man himself, Mr. Insider, Gordon Gecko.



BALDWIN: A clear nod to Otisville.

Jack Donson worked as a case manager at Otisville in the '90s. He's with me.

Jack, this is still if. We don't know for sure. But if Michael Cohen goes to Otisville, you say his biggest problem is he will be bored. Why will he be bored?

JACK DONSON, FORMER CASE MANAGER, OTISVILLE FEDERAL CORRECTION INSTITUTION: Absolutely. He'll be in a very controlled environment. He'll have no peace and quiet so to speak, he'll be in a bunk bed, in a dorm-type setting. One of the biggest problems people have, especially movers and shakers and people who are active is just time, unless you have a good plan. Boredom, his biggest challenge will be boredom.

BALDWIN: Not a bad thing if that's your biggest challenge if you're in prison. I could think of worse things. Maybe I watch too much criminal tv shows. What about his close ties for so many years with now President Trump? How will he be treated by other inmates behind bars? Might he be targeted at all? DONSON: High-profile people definitely have a unique set of

challenges. The Boston police has what's -- BOP has what's called -- anything involving him is going to get extra scrutiny, will go under higher review authority. When it comes to high-profile visitors, you know, hypothetically President Trump could come and see him if he gets put on the visiting list --

BALDWIN: I don't see that happening any time soon.

DONSON: Right. Exactly. So it's going to be a challenge not only to boredom but also his high-profile nature is going to be also a challenge.

BALDWIN: But, Jack, how do you think knowing inmates at Otisville at least from the 90s, what will they think of a Michael Cohen?

DONSON: Well, listen, I actually worked there, I ran the camp in '97. I went back from 2005 to 2008. I know people who work there right now. He's going to be treated -- when you're high profile, you're kind of like a celebrity. You're going to have some of the population that loves you, some of the population that might not love you. So, you know, he's going to navigate those things. Everybody is going to want to know what he's doing. One time, we had Leona Helmsley. One of her co-defendants there, they were taking meticulous notes at Danbury on Leona. People are going to be watching every move he makes and keeping logs and people like to leak things out to the press. It's very more nuanced with a high-profile guy doing time.

BALDWIN: Wakes up at 6:30, lights out 11:30, no perimeter, no barbed wire. We'll be listening for stories, I'm sure, three years at the castle behind bars.

Jack Donson -- potentially, again. We don't know he's going there but potentially.

Thank you so much. Good to talk to you.


BALDWIN: I'm sure we'll chat again.


[14:54:00] BALDWIN: Ahead here on CNN, new numbers, new CNN poll numbers, including Melania Trump's favorability rating dropping double digits in just two months. Why?

And ahead, she cozied up to Republicans, the NRA, and today this alleged Russian spy admits to knowingly engaging in a conspiracy against the United States. Hear what she has just said in court.


BALDWIN: When a person calls 911, it is the worst moment of his or her life, and they put their lives in the hands of the first responders. So now some people in Patrick County, Virginia, are wondering whether one of their first responders can be trusted to do his job. He's MIT Alex McNabb. He's been placed on unpaid leave after racists comments he's made on a white nationalist podcast. He's accused of comparing black people to gorillas and mocking the Holocaust.

Sara Sidner is with me with more.

Who is this guy? Does he still have a job?

[14:59:23] SARA SIDNER, CNN CORRESPONDENT: Look, it's really disturbing. There's an investigation, as you mentioned, that is underway.

But 35-year-old Alex McNabb is a part-time emergency medical technician who has said some really racist things. He's a frequent co-host on a white supremacist podcast. But this one, in particular, stood out. McNabb, who goes by this nickname, Dr. Narcan, on the podcast, tells the story of his travails as a first responder. And at one point, he says, "Dr. Narcan enjoyed great immense satisfaction as he terrorized an African-American youngster with a needle and stabbed him in the arm with a large gauge I.V. catheter. He said, oh, it was hard to find a vein because they are black.

Now, when confronted with his own words, he said his persona as Dr. Narcan was all the work of --