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Trump's Ex-White House Communications Director No Longer Backs Trump's Re-Election; Dow Sinks 390 Points on Trade Fears; Trump: Failed Explosion Cause Deadly Russian Blast; Rep. Ted Lieu (D-CA) is Interviewed About the Failed Missile Explosion Cause of Fatal Russian Blast. Aired on 7-8p ET

Aired August 12, 2019 - 19:00   ET


WOLF BLITZER, CNN HOST: Thanks very much for watching. I'm Wolf Blitzer in THE SITUATION ROOM. You can always tweet me and Instagram me @WOLFBLITZER. Tweet the show @CNNSITROOM. Erin Burnett OUTFRONT starts right now.

ERIN BURNETT, CNN HOST: OUTFRONT next, the Trump administration touting a new policy that targets illegal immigrants suggesting they rely heavily on social services, but the facts show that to be false. So what's Trump doing? Plus, Trump lashing out reportedly worried about being labeled a racist and the political implications. Could that label drag him down or not? And Russia nuclear mystery, an explosion involving what officials now believe is a powerful new weapon leaves five dead in a secret city. What is Putin doing? Let's go out front.

Good evening. I'm Erin Burnett. OUTFRONT tonight, Trump shutting the door on hundreds of thousands of immigrants, legal immigrants. Trump about change a long standing rule, saying an immigrant who uses a whole range of public services may no longer be welcome in America, services like Medicaid, services that are used only by the poor.

The libertarian Cato Institute, so take it from them. This isn't some liberal think tank. The libertarian Cato Institute says Trump's move is, quote, totally changing the idea of what it means to come to America. Tonight though the President's top citizenship services official insists that the new rule has nothing to do with the President's vast immigration crackdown.


UNIDENTIFIED MALE: Why shouldn't the Latino community feel targeted by this?

KEN CUCCINELLI, ACTING DIRECTOR, U.S. CITIZENSHIP AND IMMIGRATION SERVICES OFFICE: Well, first of all, this is 140-year-old legal structure. This was - the same question might have been asked when my Italian immigrants were coming, immigrant ancestors were coming and all through that hundred and 40 years.

(END VIDEO CLIP) BURNETT: Now, of course, the facts are they're changing the role and

they're changing it dramatically to include a whole lot more things like we said, like Medicaid. Now, we don't know whether Cuccinelli's ancestors would have been allowed into the United States under Trump's new rule. There weren't even services like that back then.

But this does not seem to be about ensuring immigrants who enter the United States are self-sufficient and that is because the facts are not on Trump side. According to analysis by the Associated Press, a very small minority, legal immigrants rely on public benefits, 6.5 percent of people in this country on Medicaid are non-citizens. The same goes for food stamps where immigrants make up about 8% of recipients.

So those numbers are small, but I want to also be very clear, those immigrants who are getting aid who are in those small percentages are not immigrants who are here illegally. People in the United States illegally are not eligible for things like Medicaid and food stamps.

So these are people in the legal process to become citizens and the President of the United States is betting that his move and the confusion around it will help him at the ballot box, especially when he couples it with things like this.


UNIDENTIFIED FEMALE: Raise your hand if your government plan would provide coverage for undocumented immigrants.

UNIDENTIFIED MALE: They're all the same.


BURNETT: And they all raise their hand. Well, President Trump is betting he can scare voters into thinking Democrats will allow immigrants to drain the safety net, trying to appeal to his base, just like he did when he made this baseless claim.


DONALD TRUMP, PRESIDENT OF THE UNITED STATES: When Mexico sends its people, they're not sending their best. They're not sending you. They're not sending you. They're sending people that have lots of problems and they're bringing those problems with us.

They're bringing drugs. They're bringing crime. They're rapists.


BURNETT: All right. That claim resonated with some and it did not matter that it also was not true. One study out of Texas, for example, found native born residents were much more likely to be convicted of crimes and immigrants in the country illegally or illegally and study after study backs that up. But when it comes to immigration facts have not been the driver for President Trump. Pamela Brown begins our coverage tonight. She's traveling with the

President out front live in Berkeley Heights, New Jersey. Pamela, yet again, the President not letting the facts get in the way of what clearly he believes will work for some of his core voters.

PAMELA BROWN, CNN SENIOR WHITE HOUSE CORRESPONDENT: Yes, that's right. His base, of course, likes when the President is tough on immigration. At the same time, Erin, this is a long anticipated rule change. The administration have proposed this 10 months ago and it's all part of a pattern of the Trump administration curbing legal immigration.

So now the administration is imposing this new role which appears to favor wealthy and more educated immigrants, because what it does is it makes it more difficult for immigrants who are using public benefits like Medicaid, like food stamps or those who might need to use those public benefits, more difficult for them to get legal status to get the green cards that they would need.

Now, Ken Cuccinelli, a top immigration official said today, as you pointed out, Erin, that this is about making sure that immigrants who obtain legal status are self sufficient. But those who would be excluded are the poor, are those who would need those benefits that I just pointed out.

[19:05:04] And as I said, Erin, this latest move is part of a pattern. The administration previously has crackdown on asylum claims, making it harder for people to claim asylum. Limiting the number of refugees who could come to the United States.

And as you recall, Jared Kushner, the President's son-in-law had proposed a merit based immigration system which would focus on skills of the workers, trying to attract more educated workers to the United States. And so what the administration appears to be doing with this rule change is sending a strong message that not only is it cracking down on illegal immigration, it's also trying to limit legal immigration as well, Erin.

BURNETT: All right. Pamela, thank you very much. And I want to go now to democratic congressman from New York, Adriano Espaillat. Thank you very much, Congressman.


BURNETT: I appreciate your time. So let's just start with your story. You came here when you were nine.


BURNETT: You were undocumented, you became a citizen in your 20s. You became the first formerly undocumented immigrant to be elected to Congress. So here you sit, you came in, your family overstayed a tourist visa, your dad was working at a gas station as a gas station attendant. By the measure that we're in here, maybe you wouldn't be sitting here tonight.

ESPAILLAT: No, I got some student loans. Maybe I wouldn't be here sitting as a Congressman.

BURNETT: So how can you explain, could this new regulation that they're changing prevent another child from doing what you did, for making it ...

ESPAILLAT: It certainly sets out a chilling effect. I think this is part of Trump's sort of like strategy to stop, he rage, he sends out these policy statements that will send out a chilling effect, that 800 plus page document that even today, people haven't fully digested and gone through the details of it. But people will be afraid and even folks that are - want to do things the right way.

He talks about illegal immigration versus legal immigration. Well, guess what? He's got this --

BURNETT: Yes, of course, more people into the illegal.

ESPAILLAT: Yes. And he's going after legal immigration now. So he has no boundaries on the attack front. He raised after a massive shooting in El Paso, Texas. We saw the little kids crying for their parents. Now, he sets out this policy statement that will send out a chilling effect for people that may have taken, let's say, food stamps.

You said very well that undocumented folks don't take food stamps. They're not eligible for them. They're not eligible for those kind of benefits.

BURNETT: Right. If you are here illegally or you're undocumented, you are not getting them.

ESPAILLAT: You're not getting it.

BURNETT: And I think a lot of people don't realize that. It's not as if they're somehow taking but not putting in. These are people who are - the very small percentage of them do ...

ESPAILLAT: That's right.

BURNETT: ... under 10 percent in both food stamps and Medicaid are in a legal process for a green card.

ESPAILLAT: That's correct. That's correct. So he sets out the statement and people are now very confused, very afraid. They don't know what's going to happen. There could be petitioning for their children back home to reunite the family legally as he promotes, but yet he's sending out this chilling effect out there that will, I think, scare a lot of people and certainly it's not the way America should run.

BURNETT: So I know when your family came, you had talked about they had to show some sort of a bank account and they say, "Oh, well, during Bill Clinton there were these things as well." It's been part of 100-year process where they do want self sufficiency, so primarily dependent on government assistance was something they never wanted.

But this is different. Explain why this is such a big change which even the Cato Institute indicates it is.

ESPAILLAT: Because if a mom, a pregnant mom or a mom with a newborn has to go on to get SNAP for her child, because she may have fallen on hard times, because she's just recently given birth. Now, all of a sudden that mom will look back and say, "Wait a minute, I got food stamps for my newborn. Am I eligible to be deported?"

And this is the kind of fear that the President is promoting. He's not leading with aspirations for the American people. He's injecting fear into the American public.

BURNETT: So Ken Cuccinelli, obviously, is the spokesperson for this. We just saw him and he's explaining it and he's putting some words around it that many Americans and aspiring Americans are very used to and comfortable hearing. Here he is.


CUCCINELLI: Throughout our history, self reliance has been a core principle in America. The virtues of perseverance, hard work, self sufficiency laid the foundation of our nation and have defined generations of immigrants seeking opportunity in the United States.


BURNETT: So when they say somebody who is, again, in the legal process but who, at some point, receives Medicaid or food stamps is not a person of perseverance or self reliance.

ESPAILLAT: The furthest from the truth. Nobody works harder in America than immigrants whether they're undocumented or not, nobody. They take care of our children. They take care of our elderly very frail. They wash our dishes in the restaurants where we eat. They serve our food. They pick our crops.

[19:10:05] Nobody works harder in America. They pay taxes. When they go into a store and they buy a product, they pay sales tax. They're contributing to America. Nobody works harder than immigrants and so this is a bad characterization.

BURNETT: So the Trump campaign is now linking this. I mean they're making this all part of a broader thing. There's this role but then there's the ad they're putting out of all the Democrats onstage, "Raise your hand if you would provide health care to undocumented immigrants." And let me just play this brief clip of what they are putting out there.


UNIDENTIFIED FEMALE: Raise your hand if your government plan would provide coverage for undocumented immigrant.

UNIDENTIFIED MALE: They're all the same. These Democrats support giving illegal immigrants free health care at our expense, spending taxpayer dollars covering illegal immigrants.


BURNETT: Again, today's move is about legal, not illegal. But are you worried about images like that?

ESPAILLAT: Well, this is going to be his campaign, it's going to be about immigration. He's going to drive wedges through the American public, it's really scapegoating immigrants. We've seen this before in American history. This is not new. This playbook is not new.

It says all as America and it will not work because those immigrants, although many of them they cannot vote, they have relatives and neighbors and people they associate with that feel very fond about them on what they do and see them getting up at six o'clock in the morning.

BURNETT: And look, even when it comes to undocumented, people may not realize that plenty of them to work get a fake Social Security number. The IRS knows this happens, so they actually are paying Medicaid and other taxes, payroll and getting nothing for it because they're working on a false Social Security number on the undocumented side.

On that Associated Press analysis, I want to ask you though, when you hear 6.5 percent of people in Medicaid are in the immigration process, is that a number that bothers you? Do you think that it could be significantly higher? Are you OK with that or do you also wish that it were lower?

ESPAILLAT: It could be higher. I wish it will be lower. But this is families, sometimes hit hard times. I cannot guarantee you that you would always be successful. You could be a rocket scientist and you can have a bad day. And America has a safety net that allows for people to feel and to insure themselves that if they hit that rocky road one day, America will be there for them.

So to characterize all immigrants, I heard his - most sounded like he's calling immigrants lazy. They are hardworking people. They're the backbone of our economy. They do jobs that most Americans do not want to do and so this characterization is totally false, scapegoating immigrants. This is totally political and partisan and he will be defeated.

BURNETT: All right. Thank you very much, Congressman Espaillat. I appreciate your time.

ESPAILLAT: Thank you so much.

BURNETT: As always, sir.

ESPAILLAT: Thank you.

BURNETT: And OUTFRONT next, President Trump trying to shake the racist label.


REP. BETO O'ROURKE (D-TX), PRESIDENTIAL CANDIDATE: He is an open avowed racist.


BURNETT: So can he get rid of that? Plus, President Trump spending his vacation going after people, including his former top communications aide after he said this?


JOHN BERMAN, CNN ANCHOR: Are you calling for a change to the top of the Republican ticket?



BURNETT: Two Republicans who have stood up to Trump and the GOP respond. And diplomacy by mail, President Trump reportedly conducting business by sending one foreign leader notes using Sharpie.


[19:17:13] BURNETT: Tonight, President Trump lashing out. The President growing increasingly frustrated by people labeling him as a, quote, racist. One close advisor telling The Washington Post the president views the attacks as political and an attempt to discredit him, all the while dismissing actions that have led to that label being so widely used.

Out front now April Ryan, White House Correspondent for American Urban Radio Networks and David Cay Johnston, author of the Making of Donald Trump. Thanks to both.

April, so the President is now saying being called racist is a political attack. Obviously, he knows this is getting out there which then I would suppose adds fuel to people who want to see it as a political attack and that's all, what do you think?

APRIL RYAN, WHITE HOUSE CORRESPONDENT, AMERICAN URBAN RADIO NETWORKS: No, no, no, no, no, this is black, white and brown. This is not about politics. This is about humanity. And actually, his anger is a year and a half late.

Remember, Erin, about a year and a half ago, January 2018, the weekend of Dr. King's birthday celebration. I asked the President, "Mr. President, are you a racist?" I asked him three times in the Roosevelt Room of the White House. He wasn't angry then, he just walked out and let that question linger for about three days.

So now he's angry thinking it's politics? No, it's about the fact that this president goes after people of color. This president talks about people of color in very personal and unsavory ways. This president has talked about both sides. This president continues with the rhetoric and it's getting harder and harsher as he is running for president, running for reelection. This is not about politics. What Anthony Scaramucci did is not about

politics. This is about humanity in 2019. This is not 1959, 1960, this is 2019.

BURNETT: So David, you've been following Trump for decades. Does he really believe this is politics or is he saying that he believes it's politics because to those who want to believe that they then do.

DAVID CAY JOHNSTON, AUTHOR, THE MAKING OF DONALD TRUMP: Oh, it's the latter. Donald is simply trying to use this to his advantage as he does everything else and calling him a racist, which is exactly what he is. It's just one more conspiracy against poor Donald, the victim.

BURNETT: So he, in terms of things like this, has been one to traffic in conspiracy theories. Obviously, April, one of the most infamous conspiracy theories that he trafficked in being the birtherism one, which is when some of this all began.

RYAN: Yes. This president began his political career, short live political career, well, it's short so far, through calling then President Barack Obama a legitimate because allegedly in his mind he was born in Kenya where Barack Obama's father was from.

[19:20:06] But no, he was born in Hawaii which is one of the states, 50 states. So this president just likes to put things out there. It's like the old saying, you take a wet noodle and throw it at the wall to see if it sticks and that's literally what he's doing. And this conspiracy theory against the Clintons, horrible, he's trying to see if it sticks.

But you know, we've seen this movie. No, we've seen this reality show before and people who use critical thinking and people who just have common sense, I'm not talking about book smarts, just common sense, will understand what he's doing. And if indeed they really do, it'll show up at the polls in 2020.

BURNETT: I mean, so David, obviously, the Clinton conspiracy theory to which April is referring is the President retweeting a conspiracy theory about Jeffrey Epstein, the pedophile's death that suggested that President Bill Clinton was involved in his death. I mean, what do you make of the President of the United States, obviously, jumping in and weighing in, in that way is unprecedented and strange. But what do you make of that? Should we be surprised by that?

JOHNSTON: Well, this is a magical happy land that Donald lives in. The Clintons apparently can reach into the Trump administration run jail to have somebody killed but they couldn't fix the election to make sure that Hillary Clinton beat Donald Trump. It's just absurd on its face.

Donald has been relying on conspiracy theories his whole life. They are a way for him to explain things he doesn't understand because he's appallingly ignorant and doesn't learn things. And keep in mind, Donald has been found by a federal judge to engage in a conspiracy to cheat workers out of their pay. I've written about the mystery of missing Manhattan sewage where

somehow in Manhattan when Donald Trump needed to show less sewage in the system and was there for a building permit, he wanted 25 million gallons a day just disappeared from the records and the only person who benefited from that was Donald Trump. So this is somebody who engages in conspiracies and everywhere he can't explain something or he sees a political advantage, it's somebody else's conspiracy. It's real tinfoil hat stuff.

BURNETT: And to remind some people, April, look there are tons of them. There are tons of them. Here are just a few starting with when he tried to link Ted Cruz's father to Lee Harvey Oswald, of course, the assassin.

RYAN: Exactly. Exactly, yes.


TRUMP: His father was with Lee Harvey Oswald Prior to Oswald's being, you know, shot.

UNIDENTIFIED MALE: Donald, I need to come back to the topic we've been all screaming about here, which is Scalia, was he murdered.

TRUMP: I just landed and I'm hearing it's a big topic, but they say they found the pillow on his face, which is a pretty unusual place to find the pillow.

I watched when the World Trade Center came tumbling down and I watched in Jersey City, New Jersey, with thousands and thousands of people were cheering as that building was coming down.


BURNETT: Needless to say false, false and false. I mean, but literally out there talking about someone's sticking a pillow on the face of a Supreme Court Justice to murder, that did not happen. But April, what is his obsession with conspiracy theories and gossip?

RYAN: He's limited in his thinking and he hears these things from other people because he doesn't have any justification or knowledge on anything else. And it's sad to say that about a sitting U.S. President. And for these Republicans, it's not about the President, it's about the enablers for the Republicans who allow him to do this and don't say anything. They turn their head and hold their nose.

It's terrible. This country is now in a crisis state on so many levels, on so many issues. And when this president comes up, I mean, this Epstein situation is real and it's serious and for him to say this about the Clintons is wrong. I mean, there are people who are pointing fingers at the President of the United States, but we can't listen to that. You have to listen to fact.

And for him, the President of the United States where words matter to say something about a former U.S. President, considered one of the greatest and for his wife, former Secretary of State, it's atrocious and what he did to Ted Cruz is wrong, what he did about 9/11 is wrong. Pure wrong, it's insanity.

BURNETT: All right. Thank you both very much. And next, let's talk about that President Trump escalating his feud with Anthony Scaramucci tonight after this.


SCARAMUCCI: It is a responsibility of people in the Republican Party, OK, to say, "Hey, man, we may need to put a relief pitcher in here.


[19:24:58] BURNETT: And stocks plunging nearly 400 points. Trump's budget deficit now closing in on $1 trillion, surging almost 30 percent. Is the US economy in real trouble?


[19:29:36] BURNETT: Tonight, Trump at war, a war of tweets and words with a man he briefly employed as his top communications aide in the White House, Anthony Scaramucci. Trump tweeting late today, quote, Scaramucci who likes so many others had nothing to do with my Election victory is only upset that I didn't want him back in the Administration, where he desperately wanted to be. Also, I seldom had time to return his many calls to me. He just wanted to be on TV.

Well, this latest salvo coming after Scaramucci said this on CNN today.


[19:30:05] JOHN BERMAN, CNN ANCHOR: Are you calling for a chance at the top of the Republican ticket?


BERMAN: You are no longer an active supporter of President Trump in his reelection bid?

SCARAMUCCI: Yes, I think that's -- I think that's pretty obvious from over the weekend. I mean, the guy's actually dissembling a little bit and sounding more and more nonsensical.


BURNETT: Dissembling and nonsensical.

OUTFRONT now, two Republican politicians who have recently stood up to their party and President Trump: State Senator John McCollister from Nebraska just last week, and former Congressman Tom Coleman from Missouri.

I appreciate both of you taking the time, because I know you feel the need to speak out, but I also know you -- it's not easy to do it, right? It's not easy to do it for a lot of reasons. Senator McCollister, let me start with you. What's your reaction to

what Anthony Scaramucci just said?

STATE SENATOR JOHN MCCOLLISTER (R-NE): Amazing. I think he's right now. He's right on target. Donald Trump is a guy, is our divider in chief. And I think people are finally starting to recognize the guy for who he is.

BURNETT: Congressman Coleman, White House Press Secretary Stephanie Grisham responded to Scaramucci's comments today about not supporting the president in 2020. She said in part, this is all self-serving on his part. The media plays right into it. It's embarrassing to watch.

So, they say that it is embarrassing to watch Anthony Scaramucci.

What do you say?

TOM COLEMAN, FORMER GOP CONGRESSMAN FROM MISSOURI: I would say this, probably, the Mooch isn't --

MCCOLLISTER: Well, very --

COLEMAN: -- the best messenger for the message, but I certainly hope that he's correct. I don't see it right now and as far as the White House, whatever they say, you cannot believe. I mean, this is a president who has lied over 12,000 times. So, their credibility is pretty well gone. And I'm surprised even that it's even, quote, newsworthy to listen to him.

BURNETT: I mean, you know, of course, you are put in a position where that's the press secretary for the United States. So, it's -- you can see the challenge of the situation.

Senator, let me ask you. You know, one thing Anthony Scaramucci says is that he has been inundated with support from Republicans for taking on Trump. He's getting all these calls. All these people are reaching out.

You and I spoke about a week ago. And you spoke out against the president's racism. You made this decision that you were no longer going to stay silent.

Then, your own state GOP party, they said get out. Switch your registration. That was their response.

What has happened since?

MCCOLLISTER: Well, they did ask me to leave the party. And I'm not going to do that. Absolutely no way. I'm going to stay in the party and use the platform that I've recently acquired to talk about politics in Nebraska and the country.

I think what's happened environmentally -- we had that occur today with the president's announcement -- is despicable. We need to sign back up for the Paris accord, environmental accord and move back into that in that area because the environment needs our attention. BURNETT: And there was that. There was also, of course, Endangered

Species, all of that as you point out today.

I mean, Congressman Coleman, Scaramucci said one other thing that I want to make sure our viewers hear and in a sense, it reflects what the senator just said. Let me play it for you.


ANTHONY SCARAMUCCI, FORMER WHITE HOUSE COMMUNICATIONS DIRECTOR: If he continues like this over the next three or four weeks, it is a responsibility of people in the Republican Party, OK, to say, hey, man, you know, we may need to put a relief pitcher in here. I'm a loyal Republican. And I tried to be loyal to him. But let's face it -- I mean, he's gone off the rails. And so, we just have to call it for what it is.



BURNETT: Congressman, you have been speaking out and calling it like it is. Do you -- do you think that -- do you have any reason to believe -- the two of you are sitting here tonight, right? But, Congressman Coleman, anyone else in the Republican Party is going to stand up right now and say, me, too?

COLEMAN: Well, I think you have to look at the Republican Party in two ways. First of all, the elected officials especially in the ones in our federal government. They are enablers. They have been silent. And until their own reelections are in doubt, that's the way they're going to be. There is no profile in courage in that Senate.

As far as the regular what I would call rank and file -- and maybe Senator McCollister thinks -- you know, that's what he is and he probably is, although he is a high official in Nebraska, I think a lot of people who are traditional Republicans forget that when Ronald Reagan, for example, left the Democratic Party, he said, I didn't leave the Democratic Party. The Democratic Party left me.

And if a lot of the rank and file Republicans sit down and thought about it, they'd say, hey, the Republican Party has left me, too, because the Republican Party is branded by Donald Trump is whatever Donald Trump thinks, which is a dangerous thing to consider. I mean, where are the people who always were for a balanced budget, who were for free trade --

BURNETT: Well --

COLEMAN: -- who are for strong defense?

[19:35:01] All of these issues are now been turned upside down.

BURNETT: And, of course, I will just point out, this is on a day where we find out the budget is up 30 percent just over a year. If there's one thing he said he was going to do, I mean, that promise is incredibly broken. If you think debt matters in this country, you better be pretty darn concerned.

Senator, many elected Republicans, right, if they -- let's say they agree with you or are being quiet for whatever reason, or, you know, look at some of the leaders in Washington, why are they so afraid of Trump at this point? Why are they so afraid of him?

MCCOLLISTER: Yes, I'd argue that Donald Trump is a political shape shifter. And so, he has no positions of himself. He is a transactional kind of president. So, I think we need to find somebody to run against him in the Republican Party that will give us a better choice because this guy is just not doing it for us.

BURNETT: Congressman, why do you think they're so afraid? I mean, there's plenty of reasons. They can do what Mark Sanford did on this program the other day and say it's about the debt. They don't have to go there on morality or on race as you both have courageously done. They can stick right there in the debt lane and say we're done with the guy, but they don't.

COLEMAN: They are afraid of not --


COLEMAN: -- being primaried, first of all. And they're afraid of their shadows basically. As I said, there is no profile in courage. There's no courage at all.

And as a former Republican, because I have left the Republican Party. It left me. I thought Donald Trump was unfit for president. And I said so on this network during the campaign of 2016.

He's emotionally and mentally unfit. He has proven that every day of his presidency. He's lied 12,000 times. He's buddied up to Putin. Who knows what he's doing with North Korea?

It's a shambles, it's chaos and the public has to address it. Traditional Republicans have to think, is that my party? Is that what I want to stand for? Is that what I want to be identified with?

BURNETT: All right. Well, I thank you both very much for your time. Thank you tonight.


BURNETT: And Anthony Scaramucci will be ahead on CNN next hour talking to Anderson. Don't miss that.

And next, Trump's trade war sparking serious concerns of a recession. One major bank now raising a "red flag". So, just how dire is the risk.

Plus, a mysterious deadly weapon that may have been Russia's worst nuclear accident since Chernobyl, testing a missile they say can reach anywhere on Earth.

(COMMERCIAL BREAK) [19:41:03] BURNETT: New tonight, stocks plunge. The Chinese trade war sparking fears of a serious recession, and sending the Dow down nearly 400 points. We also learned that Trump's budget deficit has surged, Trump's deficit is up 27 percent just so far this fiscal year, which means it is bigger than the entire deficit for last year.

OUTFRONT now, Mark Zandi, chief economist at Moody's Analytics.

You know, look, Mark, nearly a trillion in the red. Trump has added trillions of dollars in debt. So, we are now at a record level of borrowing, well over $20 trillion. Are all signs flashing warning or not?

MARK ZANDI, CHIEF ECONOMIST, MOODY'S ANALYTICS: Yes. For me, they're flashing bright red, given the massive tax cuts that the president put in place last year and given the large increases in government spending that policymakers agreed to just a few weeks ago, this trillion dollar deficit we're going to get this year is on track for a trillion dollars for this fiscal year is as small as it is going to be for many, many years to come.

The other thing to consider, Erin, is the fact that these deficit and debt are happening at a time when the economy is as good as it gets, right? The unemployment rate is 3.7 percent, a 50-year low, and it's not going to stay there forever. We can talk about that. And that's also in the entire deficits and debts. So, yes, I think this is something to worry about.

BURNETT: Yes, people don't realize, that's when things are good. Then things get bad. You want a tax cut and unemployment benefits go up and all of those things mean a heck of a lot more debt.

I mean, look, the borrowing benchmark is coming close to the end of the month, or the beginning of next month, right, more tariffs on Chinese goods, according to Trump. That's the plan, right? That's things people buy, not inputs but actual products that people buy, finished products like phones.

How big of a hit could this be?

ZANDI: It's sizable. I mean, if he follows through on his threats, the total amount of tariffs that people will pay in the coming year come in close to $100 billion. A hundred billion, just for context, it's about a half a percent of GDP, about half the size of the tax cut last year. So, it's sizable. And, of course, with an economy starting to struggle, that could do a lot of damage.

BURNETT: And it's, you know, one-eight, I know it's only one-eighth, but it's one-eight of this deficit, right? So, it does run up quickly.

Before we go, Mark, Bank of America tonight saying there is a one in three chance of a recession before Election Day. How dire is that risk to you?

ZANDI: Well, I think they're optimistic, frankly. I mean, if the president follows through on his threats, I think the odds of a recession are better than even. I mean, we talked about the tariffs and the higher tax increase that would be. But the real damage would come because of the uncertainty created by the tariffs.

I mean, are the tariffs 10 percent, 25 percent? Which products? Which countries? I mean, this is going to do a lot of damage. I think recession risks are very high.

BURNETT: All right. Mark, thank you very much.

And next, breaking news. President Trump revealing new details about a mysterious nuclear explosion in Russia. What is Putin doing?

And President Trump and Canadian Prime Minister Trudeau have become apparently pen pals, ala Jeanne. But as she found, it's not exactly a pen the president has deployed.


[19:48:01] BURNETT: Breaking news on Russia's nuclear disaster. President Trump tonight saying a missile test caused the explosion which left at least five people dead and one of the worst nuclear accidents there since Chernobyl. Trump tweeting, quote, the United States is learning much from the failed missile explosion in Russia. We have similar, though more advanced technology. The Russian "Skyfall" explosion has people worried about the air around the facility and far beyond. Not good.

Barbara Starr is OUTFRONT.

Barbara, so what do you know about the tests?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, what officials are telling us this missile, which is called "Skyfall" by NATO and the U.S. is a missile with nuclear propulsion, if it all worked, if it ever worked. This nuclear propulsion would allow the missile, of course, to fly extremely long distances for extended periods of time, and that could put the U.S. at risk.

What apparently happened last Thursday, there was some sort of terrible explosion at this site in Northern Russia. Not clear to the U.S. just yet whether a full prototype missile exploded or components of it. There was an initial reading of radioactivity in the atmosphere. The Russians then pulled back on that claim.

But earlier today, we spoke to Norwegian nearby nuclear authorities and they said there had been a reading of nuclear missions in the atmosphere. So, they will all be watching this area of northern Russia for the coming days to see if there is further spread of radioactivity. It is a mystery still, something that is grabbing the attention of intelligence services from Washington into Europe -- Erin.

BURNETT: All right. Thank you very much, Barbara Starr. Certainly -- certainly so when you think about the significance of this.

I want to go to now to Democratic congressman from California, Ted Lieu, because he sits on the House Foreign Affairs Committee.

And, Congressman, I appreciate your time. I know you received a briefing about the explosion. Look, the word "Chernobyl" has been used. President Trump is tweeting. People are worried about the air around the facility and far beyond.

What can you tell us?

REP. TED LIEU (D-CA): Thank you, Erin, for that question.

[19:50:02] Let me first say that it's not surprising the Russians are trying to build a new class of nuclear weapons. Donald Trump has been very weak towards Vladimir Putin. As we sit here today, he still takes Putin's denials over our intelligence experts for Russia cyber attacks.

With regards to this explosion, the Russians had admitted that it was nuclear propulsion system that exploded. All counts show it was a "Skyfall" cruise missile, and that if it worked, would be an unlimited range nuclear power cruise missile. And the U.S. tried developing this many decades ago, we stopped because we realize this isn't going to work and this explosion shows that we were likely correct.

BURNETT: OK. Here is my question, though, because the president, of course, we have similar more advanced technology and, obviously, they have this explosion and now, this possible huge health risk as I say with a nuclear explosion. But nonetheless, they are going ahead with something. So, when he says we have way more advanced technology, given -- understanding that their test did fail. Is it true, though, or are we also pursuing something?

LIEU: I have no idea what the president is talking about. To the best of my knowledge, the United States is not developing or looking at developing a nuclear powered cruise missile. One reason for that is it turns out, when you have a cruise missile powered by nuclear material, it spews out active waste. And that's just not something the U.S. is gong to develop and I frankly don't really understand what president is saying.

BURNETT: So, how big of a risk or threat is this technology if they were to develop it and perfect it. As you say, it is unlimited in range and of course, in power, if you're able to get past -- they clearly wouldn't have the moral qualms you're raising but if they were able to get past the explosive issue.

LIEU: If the Russians could perfect this technology, it would increase the risk the United States somewhat, which is why I think the United States and Russia should get back into their INF Treaty, which is an intermediate range nuclear treaty, and it was not a good idea for the United States to pull out of that. We need to deescalate tensions and look again at stopping nuclear proliferation.

BURNETT: So, you know, recently, you mentioned that you feel like that Putin has become emboldened. Obviously, the president recently, when it comes to North Korea has downplayed all these missile tests which are in violation of U.N. treaties and obviously are tests which could be used, which could kill tens of thousands of U.S. troops in South Korea or be used to perfect other technology. But to him it was all fine because, this is how he put it.


DONALD TRUMP, PRESIDENT OF THE UNITED STATES: The missile tests have all been short range. No ballistic missile tests. No long range missiles.

These are short-range missiles. They're very standard.

They are short range missiles and many people have those missiles.


BURNETT: So what's he going to say to Putin? Many people want long- range unlimited range nukes and I'm fine with that or is this relevant to what Putin is doing?

LIEU: So again, I don't really understand what the president is talking about. I know with respect to North Korea, I previously served in active duty under U.S. Pacific Command. It's very clear to me that we have no good military options against North Korea, which is why I do support diplomacy.

At the same time, we have to rely on facts. And as of right now, North Korea has not gotten rid of a single nuclear missile or a single nuclear weapon. And when it comes to Russia, again, we need to rely on facts, and not what the president actually thinks.

BURNETT: Thank you very much, Congressman Lieu. I appreciate your time tonight.

LIEU: Thank you, Erin.

BURNETT: And next, Jeanne Moos on Trump's bizarre way of doing business that has the Canadians scratching their heads.


[19:57:43] BURNETT: Tonight, the truth about Trump's love of sharpies.

Here is Jeanne Moos.


JEANNE MOOS, CNN NATIONAL CORRESPONDENT (voice-over): You know how President Trumps describes the letters he gets from North Korea's letter.

TRUMP: A really beautiful letter. A very beautiful letter from Kim Jong-un.

MOOS: Well, apparently, he's been sending some beauts of his own to Canadian Prime Minister Justin Trudeau. Beautiful at least if you love sharpies.

"Axios" reports that Trump took a May 2017 magazine cover which called Trudeau the anti-Trump and scrolled something like, looking good and hope it's not true in silver sharpie.

Someone on Twitter created this mockup.

(on camera): The president and his sharpies inspired some sharp criticism online.

(voice-over): Maybe he's inhaling too many sharpie fumes. What? No crayons?

Critics suggested President Trump is jealous of Trudeau, even jealous of the way Ivanka once looked at the Canadian prime minister.

When the sharpie annotated cover arrived at Canada's Washington embassy --

(on camera): -- the Canadian ambassador thought it was a prank according to "Axios". The embassy called the White House, the White House said it was real.

(voice-over): Trump has a habit of writing with sharpies say folks who have gotten mail from him.

HOWARD STERN, RADIO HOST: He writes mostly in magic marker, like with block letters.

MOOS: Trudeau sent Trump a letter of his own. It was after the president described disagreeing with Trudeau.

TRUMP: No, no, you have a trade surplus. I said, Mr. Prime Minister, we do not.

MOOS: Trudeau's letter included a web page from the U.S. Trade Representative's Office with the U.S. goods and services trade surplus. Surplus not deficit for that year circled. Next to it, Trudeau drew a smiley face. Trump has his sharpies.

TRUMP: I said to myself, this writes much better.

MOOS: But Trudeau takes the edge off Trump's sharpie with a smiley.

Jeanne Moos, CNN, New York.


BURNETT: I just say, there is one thing, he's right about a sharpie, but only a sharp sharpie if you know what I'm saying. Blunt sharpie is terrible.

Thank you for -- not this kind, either. Too pointy.

Don't forget. You can watch OUTFRONT anytime. Go to CNN Go.

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