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THE LEAD WITH JAKE TAPPER

Stock Market Ends Volatile Year; Elizabeth Warren Launches Presidential Exploratory Committee. Aired 4:30-5p ET

Aired December 31, 2018 - 16:30   ET

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


[16:30:25]

PAMELA BROWN, CNN ANCHOR: And we are back with our politics lead, and forget about 2019.

Senator Elizabeth Warren heading full steam ahead into 2020 today and announcing an exploratory committee ahead of a likely run for president.

CNN's M.J. Lee is live in Boston, where we just heard from Warren for the first time since her announcement.

M.J., a Warren presidential run has been speculated for months, but it's New Year's Eve, the government is shut down. Why announce today?

M.J. LEE, CNN NATIONAL POLITICS CORRESPONDENT: Well, Pam, we are told that she actually made the decision to make the announcement today some weeks ago, and when you ask her team why today, they simply say it's because she's ready. She is ready to build an operation, she's ready to make the hires.

And she said herself that she simply believes that the issues facing middle-class Americans are simply too urgent.

(BEGIN VIDEOTAPE)

SEN. ELIZABETH WARREN (D), MASSACHUSETTS: I'm in this fight all the way.

LEE (voice-over): Elizabeth Warren delivering major 2020 news on the final day of 2018. The Massachusetts senator and liberal firebrand revealing that she is formally exploring a run for president.

WARREN: I never thought I would run for anything ever in my life. But America's middle class is getting hollowed out.

LEE: Warren's announcement coming 13 months before the Iowa caucuses, but already her message is clear, laying out a blueprint of her presidential platform.

WARREN: Washington works great for giant drug companies, but just not for people who are trying to get a prescription filled. We want a government that works not just for the rich and the

powerful. We want a government that works for everyone. LEE: Notably, the senator also making multiple mentions of racial

inequality in a video message released today.

WARREN: Families of color face a path that is steeper and rockier.

LEE: A clear acknowledgment of the importance of winning minority support.

Warren already faces multiple obstacles. Her hometown paper, "The Boston Globe," publishing a searing op-ed earlier this month, calling her a divisive figure and saying that Warren missed her moment in 2016 and there's reason to be skeptical of her prospective candidacy in 2020.

In CNN's latest poll, she is at 3 percent, with Joe Biden, Bernie Sanders and Beto O'Rourke leading the field. And there was this perceived major misstep in October.

WARREN: Now, the president likes to call my mom a liar. What do the facts say?

UNIDENTIFIED MALE: The facts suggest that you absolutely have a Native American ancestor in your pedigree.

LEE: Warren releasing the results of a DNA test, responding to criticism that she lied to get a leg up on her Native American heritage to get a leg up on her academic career.

The DNA test confirmed a distant Native American link, but the move falling flat with many Democrats and only prompting the president to continue with his attacks.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: She has no Indian blood. And the only bad thing about that is I can't really legitimately call her Pocahontas anymore, because the press will say I am misrepresenting her. OK. OK. I will call her Pocahontas anyway.

LEE: Warren standing by her decision today.

WARREN: I have put it all out there. It's there for anyone to see.

(END VIDEOTAPE)

LEE: Now, the plan is for Warren to start traveling to these early states as soon as possible, but the big caveat, Pam, of course, is the ongoing government shutdown. She will have to plan her travel around any potential votes coming up on Capitol Hill -- Pam.

BROWN: All right. M.J. Lee, thank you for bringing the latest from Boston.

We have our panel back now to discuss this.

Elizabeth Warren throwing her hat into the ring with this exploratory committee. Her video announcement focused on themes we have heard before from her. Economic inequality. Fighting Wall Street. Government accountability.

Jackie, do you think that these are the kinds of themes that will help her rise to the top News; International> what is expected to be a crowded Democratic field in 2020?

JACKIE KUCINICH, CNN POLITICAL ANALYST: We will have to see, because I think the Democratic Party, you know, far be it for me to tell them what they're going to end up focusing on. But we're very early in the process.

But I think focusing on her themes and keeping on her themes is what is going to be a challenge for her and a lot of the other Democratic contenders, because President Trump is going to try to knock them off of them. We have already seen it happen with him and, you know, calling her a derogatory name and her responding to it, and getting in the mud with him over it.

(CROSSTALK)

BROWN: It didn't work well for her, right, Scott? How damaging was that?

A. SCOTT BOLDEN, FORMER D.C. DEMOCRATIC PARTY CHAIRMAN: It didn't work well at all.

I got the impression when she released that, it reminded me of the birther movement.

BROWN: You're talking about the DNA test.

(CROSSTALK)

[16:35:00]

BOLDEN: The DNA test. And it wasn't clear to me based on everything I read whether she had some Native American blood or whether she possibly had some.

But it reminded me of the birther movement with Donald Trump and where the president issued his birth certificate, showing he was an American. That's much easier. Here, she went through a DNA test, and she just really played into his hands.

He's not going to let her forget that. That's going to be part of her ongoing challenge in this campaign, whether she's in it for the long haul or not. The other thing is this. This space of economic populism, it's going to be a crowded space for her. Bernie Sanders is certainly going to be in that space. There are going to be some others, maybe Kamala Harris.

And she's got to find three things in every federal or local campaign. Find money, you have got to have a message, and you have got to mobilize your voters in these primaries that are coming up. And it's a difficult task for anybody.

But I think she starts with some challenges, and we will just have to see. Connecting with the voters is also real key for her. And you just don't know.

BROWN: And, Seung Min, there are some who say that she missed her shot to run in 2016 for president and now the opportunity has passed. In fact, your colleagues at "The Washington Post" phrased it this way.

"While the race for the Democratic nomination is only starting, even Warren's supporters acknowledge that she has lost ground in the last few months, both by her own hand and because the November midterm elections redefine Democratic success with candidates who were in many cases a generation younger."

You even see in her home state, in polling, she's not coming up first, which doesn't bode well. What do you think? Did she miss her chance?

SEUNG MIN KIM, CNN POLITICAL ANALYST: Well, I'm not a political strategist, obviously.

But I think there's a sense in politics that when it's your -- when you feel like it's your moment, even if the time seems a little bit premature, you jump on it. And I think people would say that's what former Senator Barack Obama did in 2008, even though he had only been in Congress for a couple of years.

People are saying this could be Beto O'Rourke's moment, even though his biggest accomplishment lately was losing a Senate race. So perhaps 2016 was Elizabeth Warren's moment, and she should have run then.

I think the primaries, however long and drawn-out they are, will tell whether this is the right moment for her or not. But I think there's no doubt that there is a younger generation of Democrats that have really excited Democratic voters.

I think if you look, even just going back to the midterms and looking at the Democratic candidates that seemed to come out of nowhere and really catch the grassroots attention, it was the Andrew Gillums of the world in Florida and Beto again in Texas. And even though those two men...

BOLDEN: Georgia.

KIM: And Georgia as well. And even though those three candidates didn't win their respective races, you see how they really jazzed the grassroots.

And I think Democrats would be looking for someone like that. And perhaps that comes in a different generation than Warren's generation or the former Vice President Biden's generation.

BROWN: And it's so early. We will have to wait and see.

But, Bill, we are already getting a glimpse into how the RNC plans to go after Elizabeth Warren, releasing this statement today. "With her lack of support from voters, including in her home state, on top of her phony claim to minority status, now that she is formally running, Americans will see her for what she is. Another extreme far-left obstructionist and a total fraud."

Is that a good strategy, Bill?

BILL KRISTOL, FORMER EDITOR, "THE WEEKLY STANDARD": By the RNC?

(LAUGHTER)

KRISTOL: I mean, I guess this is Trump's RNC, so you just insult any candidate who announces he or she is running.

Who knows what's going to happen? I kind of agree that it seems to go back and forth. In 2004, the Democrats nominate a senior senator front-runner, John Kerry. They react. He loses. They react to that in 2008. They nominate Barack Obama over Hillary Clinton.

I sort of think Hillary Clinton having lost in 2016, it feels to me like the mood of a lot of Democrats is, can we find someone young, exciting, more like Barack Obama, not someone quite so much like Hillary Clinton?

It's a little unfair to Elizabeth Warren. She's only been a senator, what, for one term, one term plus now -- well, beginning her second term. But she feels a little bit like the Hillary Clinton-type candidate, not the Barack Obama-type candidate.

BOLDEN: Yes, but unlike Hillary, though, if you look at Senator Warren's polling with people of color, who make up 25 percent of the Democratic Party, she doesn't poll very well.

And no one has really figured out why she doesn't poll well, especially with African-American women and African-American men voters. That's going to be a real challenge, because if you have 10 or 15 people in the race, that huge bloc of voters who are highly motivated and will be mobilized to get out and vote in these primaries all across the country, she's going to have to figure that part out.

And you have got some significant African-Americans who are polling higher, obviously, if they get in the race, like Kamala Harris and Cory Booker. So she's got some challenges. But who knows?

(CROSSTALK)

BROWN: Who knows. This is just the beginning, right? All right.

Thank you all. We have much more to come on the show.

The market has been dropping like the ball in Times Square, but on New Year's Eve, a little glimmer of hope. Will this roller-coaster ride end in 2018 or 2019?

(COMMERCIAL BREAK)

[16:44:16]

BROWN: The Dow rising 265 points, rounding out what has been an insane month of trading for investors and officially making 2018 the worst year for stocks in decades.

This also marks the worst December for U.S. -- a decade, I should correct. This also marks the worst December for U.S. markets since the Great Depression.

I want to bring in CNN's Cristina Alesci. She joins me live from the New York Stock Exchange.

So what is driving this latest day surge, Cristina -- last day, I should say?

CRISTINA ALESCI, CNN CORRESPONDENT: Well, the president suggested the U.S. and China are making progress on the trade deal. And the market bought it.

It was definitely an optimistic end to, as you noted, an abysmal month, the worst month -- the worst December for the Dow since 1931.

[16:45:00] Look, at the end the day, stocks were bound to fall you. Can't have a bull market run forever but it's the way that stocks are declining that is causing real serious investor concern specifically this month has been punctuated by panic selling and extreme volatility.

Investors are worried about what's ahead. They're trying to measure the prolonged impact of a trade war, a global economic slowdown, and dysfunction in Washington D.C. For the average person, we're seeing a decline in consumer confidence.

Bottom line, there are a lot of headwinds ahead in 2019 and investors are going to be pessimistic until they have reason not to be. Pamela?

PAMELA BROWN, CNN JUSTICE CORRESPONDENT: As we know, investors like certainty and you point out some reasons why there aren't -- there isn't certainty right now on a few fronts. Cristina Alesci, thank you very much. And I want to bring in CNN's Global Economic Analyst Rana Foroohar and CNN Senior Economics Analyst Steve Moore. Thank you for coming on. Happy New Year.

RANA FOROOHAR, CNN GLOBAL ECONOMIC ANALYST: Happy New Year.

STEPHEN MOORE, CNN SENIOR ECONOMICS ANALYST: Hi, Pam!

BROWN: Hey there! So Rana, first to you. What does this rough December and into 2018 mean for Americans bottom line?

FOROOHAR: Well, strap in for more volatility. You know, if you take a historic step back, we sort of knew that we were going to be at this point. Economic recovery cycles tend to happen every ten years or so. You go from boom to bust and back again. Ten years ago we had the financial crisis. We're due for a period of volatility. We're probably due for a slowdown.

There was a recent Duke University survey of chief financial officers from American companies and about half of them think we're going to have a slowdown in 2019 so it's looking rockier for the year ahead. BROWN: All right. So Steve, back in October, the Dow saw its highest closing record and the President tweeted then the stock market just reached an all-time high during my administration for the 102nd time, a presidential record by far for less than two years. So much potential as trade and military deals are completed.

I remember back then there was the warning to the President. Look, you know if you're going to take credit for one a time, you're going to have to take the blame when it's low. What do you think?

MOORE: So look, the stock markets had a brutal month. By the way, this last week was -- I think you might have buried the lead. This last week is maybe I think, the biggest point increase for any week in American history in terms of the turnaround so it's been an incredibly bullish week this week.

BROWN: But the month, the overall, the month. Correct me if I'm wrong --

MOORE: I know, I know. But I mean, the big stories --

BROWN: Certainly, there was a big sure, absolutely. Yes, go ahead.

MOORE: Yes, but number -- point number -- point number two is this that -- what about the real economy. I mean, the big story of 2018 for the economy is as I wrote in my column this week, this year of 2018 that ends in a few hours, this was the best year for the American worker probably in 50 years.

We saw the lowest unemployment rate in 50 years. We have the lowest Black and Hispanic unemployment rate. We have seven million more jobs today than people to fill them. We have wage gains. That's the big story of the year. I don't understand the negativity. Yes, stock market was down, but look for workers, it was a great, great year and nobody can deny that.

FOROOHAR: Well, you know, the thing is though, yes, the headline numbers are as good as they've been in several decades. It seems right. But there's a lot of bifurcation. That's important to say. If you look at you know the top 12 or so cities around the country, the big coastal cities, the rich areas that we know are taking most of those gains. There are large chunks of the country that are being left behind.

There's also a big gap in terms of the types of jobs that are being created. There's a lot of jobs at the very high end, there's a lot of $15.00 an hour jobs, not enough in the middle. And I think that that's why you've had this sense, even though we've been in a cover -- in a recovery now for so long -- and by the way job creation was actually even better in the last couple of years of President Obama's tenure than it was under President Trump. But even so, a lot of people haven't felt that recovery because it's been so divided geographically.

BROWN: All right, so I want to just -- MOORE: Well, look, if you look at the statistics by The Wall Street

Journal. I mean the Wall Street Journal had a great piece about a month ago that showed actually, Rana, that the biggest wage gains have actually been for the people at the bottom. So we're actually for the first time in a long, long time seeing a shrinking of the income inequality because people at the bottom have a lot -- they have a lot more flexibility in terms of their job choices --

FOROOHAR: Actually, what we need is jobs in the middle. We don't have enough middle-class jobs. And one of the reasons -- one of the reasons we're actually -- you know, if you are seeing any kind of coming together it's because stock market gains have been responsible for a lot of the growth in the economy.

I mean, let's face it, and those are saccharine. You know, that's something that can come and go. That's not the same as growth in the real economy.

BROWN: OK Stephen Moore, Rana Foroohar, thank you for that spirited discussion.

MOORE: Yes, but don't forget, the two biggest gains --

FOROOHAR: Thanks.

BROWN: Sorry, Steve.

MOORE: -- construction and manufacturing have been the biggest gains.

BROWN: You always get the final word in there.

MOORE: Happy 2019!

BROWN: All right, Happy 2019! Thank you both. We do appreciate it. Well, as if President Trump doesn't have enough issues with Russia, now a new one. An American arrested in Moscow and the timing that could have been more suspicious.

(COMMERCIAL BREAK)

[16:50:00] BROWN: Is it a mission gone wrong or payback from Putin. That's the question in our "WORLD LEAD" today, after a United States citizen was detained in Russia and accused of being a spy. The arrests of American Paul Whelan comes just weeks after a Russian citizen Maria Butina pleaded guilty in a Washington courtroom to acting as a foreign agent and trying to influence the election.

CNN's Matthew Chance is live in Moscow. So Matthew, explain these allegations Russia is making against this American.

[16:55:10] MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, they're very sketchy in the sense that no detail has been added to them. All that we know is that the Russian intelligence services, the FSB that are in charge of basically counter espionage have said that they've arrested an American citizen. They've named him as Paul Nicholas Whelan. They said they arrested him on December the 28th so a couple of days ago in the Russian capital, and that he was caught "spying." Although they didn't fill in any specifics as to what exactly he was actually caught red-handed doing.

Now, the US State Department hasn't been much help either because they've issued a short statement as well saying that they acknowledge that they've been formally told that this American citizen is in Russian custody. They've asked for consular access though they didn't indicate it's been given yet. And they said that because of privacy considerations, that's what they say, they're not going to give any further information at this stage.

And so you know, Pamela, we're still very much in the dark as to what exactly this individual, this American is -- has been caught doing.

BROWN: And just for context, Matthew, how rare is it for Russia to detain an American?

CHANCE: I think pretty rare but it's not unheard of. And it's sort of these kinds of detentions punctuated moments of tension in the relationship between Moscow and Washington. Remember in 2013, there was an American diplomat, Ryan Fogle I think his name was, who was arrested and paraded on television accused of espionage and he was sort of wearing -- pictured wearing a disguise this bizarre blond wig which all Russians kind of laughed at, at the time.

There was several other incidents as well the Russians being arrested for espionage. It's not unheard of but it is rare and of course it marks the start of what could be a very tense period in relations between the two countries.

BROWN: All right, and we're going to talk about that. Mathew Chance, thank you so much. So we have heard from the State Department about this as Matthew alluded to. And in this statement, the State Department acknowledged, we are aware of the detention of a U.S. citizen by Russian authorities. We have been formally notified of the detention by the Ministry of Foreign Affairs. And then it goes on to say it has requested consular access and "due to privacy considerations we have no additional information to provide at this time."

So, Bill, I think one of the extraordinary things here is that there is a little information coming out of Russia about this American citizen and even coming out of the State Department though it seems like even state isn't getting a lot of information here. How do you see this playing out in terms of it impacting U.S.-Russia relations moving forward.

BILL KRISTOL, EDITOR AT LARGE, THE WEEKLY STANDARD: Yes, I don't know but I think if this is -- my suspect, this is Putin sending a message to the world. You know, we've gotten out of Syria which is very much in Russia's interest, but Putin likes to do the symbolic stuff and to sort of rub people's noses in it as well as just to do well in foreign policy. He thinks the rest of the world notices that and I think here he's telling the world at the end of this year, we just arrested an American here in Moscow. Let's see what happens. Maybe they'll trade us something for him. But he's not -- right away, at least he's not paying any price for it.

BROWN: Well, and of course this is in the wake of the arrest and the guilty plea from Maria Butina who pleaded guilty to being an illegal foreign agent in the U.S. This is what Vladimir Putin said following that. "We will be guided by the principles of the old testament, a tooth for a tooth, an eye for an eye. Then he went on to say that Russia would not arrest innocent people just to exchange them. What do you think, Scott? Do you think this is retaliation or not?

A. SCOTT BOLDEN, FORMER CHAIRMAN, DEMOCRATIC PARTY, WASHINGTON D.C.: Well, that's a documentary evidence number one. I think -- I certainly think so. And this tit for tat or a prison exchange and what-have-you, Putin like Trump can say whatever he wants to say but you have to watch their actions ultimately. And so this may be some misdirection. But they -- ultimately, arrested him. Obviously, I think the CIA knows a lot more than we do and what's been published and what have you.

And so, I would think that more will leak out coming forward. And then if there is some type of prisoner exchange because this individuals family certainly will want that person out of Russia, we'll just have to wait and see.

JACKI KUCINICH, CNN POLITICAL COMMENTATOR: And President Trump's actions will definitely be watch. Speaking of actions that are watched, his actions and how he reacted that will be closely watched because of his relationship with Vladimir Putin.

BROWN: Right. I mean, he had -- he had drawn criticism since he's been in office that he's been too friendly with Putin so it will be interesting to see if that tone changes.

SEUNG MIN KIM, CNN POLITICAL ANALYST: Exactly. And one thing to watch this year as well. Remember, the President was actually supposed to meet with Vladimir Putin at the G20 last month. That meeting was canceled. Some signs that another Putin Trump summit could happen in 2019 so we'll be on watch for that.

BROWN: There's a lot to be keep an eye on in the year ahead. That is for sure. Happy New Year to you all. Thank you for coming on the show. I'm Pamela Brown in for Jake Tapper wishing you a very happy New Year. And be sure to tweet the show @THELEADCNN.