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Trump Insists "Economy Is Doing Really Well" Despite Warning Signs That The Economy Is Not Doing Well; Ivanka And Jared Publicly Missing In Action Amid Trump's Claims That Jewish Dems Are "Disloyal To Israel"; Trump Faces Backlash After Calling Jewish Dems "Disloyal"; 18 States, DC Look To Block New Trump Admin. Deportation Rule; The Attorney General Taking on Trump, 17 Suits in Eight Months; Buttigieg Looks to Iowa to Get His Momentum Back. Aired 7-8p ET

Aired August 22, 2019 - 19:00   ET


BRIANNA KEILAR, CNN HOST: ... unprecedented and the peak of the dry season doesn't even hit until next month. Smoke from the fires has covered nearly half of Brazil and it's spilling over in the neighboring Peru, Bolivia and Paraguay. Erin Burnett OUTFRONT starts right now.

KATE BOLDUAN, CNN HOST: OUTFRONT next, trouble for Trump. New poll numbers show his support slipping at the same time there are new warnings about the economy. Is this what's behind that erratic behavior? Plus, Jared and Ivanka missing in action. Why are the President's closest advisors nowhere to be seen after Trump's controversial comments about Jewish Americans? And the CEO of a major online retailer abruptly resigns after he reveals his relationship with an accused Russian spy. Let's go out front.

Good evening, everyone. I'm Kate Baldwin in for Erin Burnett. OUTFRONT tonight, ignore the warning signs. That's the message from the President tonight who insists today, quote, the economy is doing really well. And he says the reason, it's not breaking records, the Federal Reserve. Even still, there is no reason to worry according to one of the President's top economic advisors.


UNIDENTIFIED MALE: And you have zero fear of a recession?

LARRY KUDLOW, WHITE HOUSE ECONOMIC ADVISER: I myself don't. I don't see it in the foreseeable future. I mean as far as the eye can see, no. No. We are optimistic about the economy.


BOLDUAN: I guess it now all comes down to what your definition of the foreseeable future is. We'll get to that maybe another day. Americans may not be as optimistic though as team Trump and it may be starting to show. Just look at this new poll from The Associated Press in this University of Chicago.

The President's approval rating is down to 36 percent. That's the lowest it's been since January, 66 percent of Americans say the country is headed in the wrong direction. And when it comes to the economy, less than half approve of the way he's handling it and there's more trouble signs.

For the first time in nearly a decade, America's manufacturing sector shrank and there's a major correction, revision to what has been a bright spot in the economy under President Trump, jobs numbers. The Labor Department now says between April of 2018 and March of this year, there were half a million fewer jobs created than originally thought. So while the President is saying everything is great, others are saying it's the source behind his erratic behavior of late.

According to The New York Times, let me show you this, "Former Trump administration officials, they write, in recent days said they were increasingly worried about the President's behavior." Also suggesting that it stems from the economy. What behavior do you ask? Look here.


DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I am the chosen one. I thought that the Prime Minister's statement that it was absurd, that was it, it was an absurd idea, it was nasty. You don't talk to the United States that way.

I think that if you vote for a Democrat, you're very, very disloyal to Israel and to the Jewish people. That was outsmarting Obama. So Russia outsmarted President Obama.

The doctors were coming out of the operating rooms. There were hundreds and hundreds of people all over the floor. You couldn't even walk on it and nobody has done a job like I've done.


BOLDUAN: Boris Sanchez is out front at the White House. Boris, the White House tonight still arguing there is nothing to see here with the economy?

BORIS SANCHEZ, CNN CORRESPONDENT: Yes. That's right, Kate. The message from the administration so far is that everything is fine despite ominous signals to the contrary. You saw there the Director of the National Economic Council, Larry Kudlow was here on the North Lawn of the White House a short while ago.

He was saying that a recession was not in the foreseeable future. I asked him about that report that you mentioned that the manufacturing sector shrunk for the first time in nearly a decade. He said he wanted to take a closer look at the numbers in that report that he wasn't concerned about it.

He said the same thing about that revision that you mentioned from the Bureau of Labor Statistics suggesting that the job market was actually substantially weaker than they had initially estimated. He said that he wasn't concerned about that either that he wanted to take a look at the fine print. The President is aware of all of this information. He's had

discussions with aides according to sources about how the economy could potentially impact his 2020 chances, specifically this ongoing trade war with China. Just yesterday he tried to distance himself a bit from it saying that it's not his trade war with China even though he called himself, as you saw there, the chosen one.

He also sort of scoff to dismiss the idea of payroll taxes pursuing that as a potential way to push off any kind of economic slowdown. Just a short while ago, Larry Kudlow said that it's something that the administration has been working on for some time. He called it tax cuts 2.0 and he effectively said that they weren't imminent but that it's something that they would likely put more out into the public about going into the 2020 campaign season, Kate.

BOLDUAN: Maybe they'll come out in the foreseeable future. Great to see you, Boris. Thank you so much. Out front now White House Correspondent for American Urban Radio Networks, April Ryan, Moody's Analytics Chief Economist, Mark Zandi and CNN Senior Political Reporter, Nia-Malika Henderson.

April, what are you hearing? Is the economy causing the President's erratic behavior?

[19:05:10] APRIL RYAN, WHITE HOUSE CORRESPONDENT, AMERICAN URBAN RADIO NETWORKS: Yes, yes and yes. This president has been touting a great economy and this is the cornerstone since, I guess, since the very beginning almost of his administration for people to feel that he should win reelection, that he is firmly planted for the American public and he's working for them.

But indicators, non-traditional indicators are saying something different and he's having a hard time trying to marry this great economy with what it looks like for the American public, particularly the grassroots. And I heard from Members of Congress when they come back on September 9th, they're going to deal with the issue of the economy.

Something that the President is not going to want to deal with, especially they're going to highlight the fact that there is a deficit that is expected to be a trillion dollars by the end of the fiscal year. Also the fact that they want to find ways to pay for things now and reduce the tax credit and other things and deal with trade particularly the tariffs to try to help fix correct this economy before it gets out of control.

So the President is erratic now, but come September 9th when they start focusing in on the economy, he might get worse than what he is now.

BOLDUAN: Count me as skeptical and I'm happy to eat my words if all of a sudden a bunch of deficit hawks just start showing up on Capitol Hill. That will be crazy. Mark Zandi thinks about that quite a bit.

Nia, The New York Times though reporting that we mentioned earlier that there's this growing concern by former Trump administration officials about the way that the President is acting. Here's the thing, if folks inside the administration, inside the White House are concerned, what do they do about it?

NIA-MALIKA HENDERSON, CNN SENIOR POLITICAL REPORTER: It's hard to know. I mean if you think about kind of the trajectory of the folks surrounding this presidency, it's very much thinned out over the last month or so, where he came in with a pretty good team, a robust team. And since then folks have left, there's been all sorts of turnover and not other replacements if you think about somebody like John Kelly.

He's a replacement, not a strong personality, not somebody who had this sort of stature to challenge this presidency even though John Kelly in some ways could be criticized for maybe not challenging the President enough. So that's where I think that the staff and the country finds themselves.

A president without the guardrails that he initially had that did serve to curb some of his instincts as public instincts, his public comments. And so now I think you have a situation where the President really doesn't have a filter and then you have this kind of fear factor of the economy. What was sort of different about this president, if you think back to his inaugural speech, he was very clear about the kind of economy that he wanted to see.

He talked about sort of the tombstones of all of these shuttered factories all across the country and he really targeted the manufacturing sector as something he would revive, the steel industry, the coal industry. And if you look at the data here about those manufacturing jobs, they're not really coming back and you do see some layoffs in some of these big industry steel workers for instance, coal still struggling.

So in that way, if you think about those states, places like Pennsylvania, places like Wisconsin, places like Ohio and Michigan, you go to those states and there isn't some sort of rebirth of manufacturing in the way that this president promised in very specific ways. So I can imagine it's something that he is worried about, because it matters in those folks' lives. These promises that he made to them and not necessarily coming to fruition.

BOLDUAN: Yes. And it matters how you feel, how your personal economy feels and that's really where the tough spot is.

Mark, the President and folks around him, but the President especially has been working overtime this week to try to shrug off the concerns and fears of a recession in an economic downturn. Listen to this.


TRUMP: Our economy is the strongest in the world by far, nothing even close.

We're very far from a recession.

I don't see a recession.


BOLDUAN: But news listing out some of those troubling signs, you've got this Labor Department revision in terms of job growth and jobs numbers. What is all of this show you, mark?

MARK ZANDI, CHIEF ECONOMIST, MOODY'S ANALYTICS: Well, economic growth is slowing sharply, manufacturing is now arguably in recession and output decline last month is lower than it was a year ago. And you can connect the dots right back to the trade war. The trade war is really doing a lot of damage to the global economy.

The President is right that the U.S. economy is doing better than the rest of the world. But the rest of the world is pretty close to a recession if not in recession because of the trade war.

BOLDUAN: That is definitely relative in this moment.

ZANDI: Yes, exactly. The value of the dollar is up, so exports are declining and obviously manufacturers rely very heavily on selling what they produce to the rest of the world.

[19:10:04] And here's the dark irony in all of this, I mean the trade war, the tariffs were supposed to help manufacturing but in fact what's happening is it's pushing it into recession. And now the damage is spreading out, so you pointed to the employment statistics, the revision down in the employment gains.

Those revisions were big, surprisingly big and very broad-based. Not only manufacturing got revised down construction, leisure hospitality, retailing, health care education. So the economy is weakening and if the President doesn't stand down on this trade war, pretty soon recession risks are going to be awfully high by this time next year.

BOLDUAN: Yes. And, I mean, April over the long-term, president Trump's approval rating since he's taken office, I mean one thing we know it has remained remarkably consistent. It's not where any president would want it to be, but it is consistent.

Though there have been like the last three approval rating polls we've seen, we have seen it dip. And for a president I often wonder who is obsessed with polls, is this adding to him lashing out?

RYAN: Not only is he obsessed with polls, he's obsessed with himself. Yes, this is some of the reason why he's lashing out. I mean, when his own television network that he prefers, Fox News, says things that Democratic polls are saying and he's actually saying, "Look, this is not right. You need to recheck this."

There's a problem. There's an independent free press in this nation. This is not Russia. This is not China. That's what makes us different and this president is very upset with the fact that his numbers are slipping.

He is the emperor with the new clothes and I don't know if you want to watch him walk down the street naked, but at this point this president has a hard time facing reality. People are tired of the reality show. The reality is if I don't have money in my pocket, if you're talking against my religion, my culture, there's a problem. So his numbers are slipping for the reasons that he's created.

BOLDUAN: Nia, President Trump and his advisers, they do continue to blame for any problem or worry they have with the economy. The Fed Chairman and also the President is now going back to blaming President Obama. At what point do you think the White House, this White House or any White House, no longer can pass the blame?

HENDERSON: I mean to Obama, I mean, he owes a big bouquet of flowers. I mean he was handed a pretty good economy obviously talked it down and folks who voted for him believed that he could turn it around. But I think the unemployment rate was something like 4.7 percent when he took office, so that's a pretty healthy economy.

I think it was obviously juiced up with those tax cut and some of that, and Zandi can talk to this more than I can, but some of that is obviously waning. But I think he's got to figure out sort of what's next. I think there also is this other dynamic of this is his sort of first post Mueller phase of his presidency.

And so he was obsessed with Mueller and the Russia probe, and now he's got a lot of time on his hands, he really, obviously, liked where the economy was, the stock market was booming and now he's faced with the idea that there could be a recession and the Congress had sort of used all of its tools in its toolbox in facing this big deficit as well.

BOLDUAN: That's really very interesting observation. Thanks so much you, guys. I really appreciate it.

HENDERSON: Thank you.

BOLDUAN: Out front next, Jared and Ivanka both presidential advisers who have no problem speaking out when they want to, so why are they staying silent after this controversial comment.


TRUMP: If you vote for a Democrat, you're very, very disloyal to Israel and to the Jewish people.


BOLDUAN: Plus, the Trump administration facing a new legal challenge over its immigration policies. The Attorney General who is taking the President head-on is my guest. And Russia denying an alarming new report about the spread of radiation after the deadly explosion there. What could Vladimir Putin be trying to hide?


[19:18:02] BOLDUAN: Tonight, missing in action. White House advisers Jared Kushner and Ivanka Trump, the President's daughter and son-in- law, of course, who are also Jewish publicly silent after the President said this.


TRUMP: If you vote for a Democrat you're very, very disloyal to Israel and to the Jewish people.


BOLDUAN: Those comments widely criticized as playing into an anti- Semitic trope of accusing Jews of dual loyalty, something that has been used for long, long time to belittle Jews. Out front now Keith Boykin, former Clinton White House aide and Rob Astorino, a Member of President Trump's 2020 Re-Election Advisory Council. Guys, thanks for being here.

Keith, Ivanka and Trump are known to be strategic in how they weigh in and how they give the advice to the President and we know that that definitely isn't always done publicly as no one should expect it to when they disagree or need to, of course, correct the President. But why do you think they're choosing to stay silent on this, because it often leaks out?

KEITH BOYKIN, FORMER WHITE HOUSE AIDE UNDER PRESIDENT BILL CLINTON: Yes. I mean I think I don't have any special insight into Ivanka Trump's brain or what she's thinking or her relationship with her dad. But I think it's all selective, she chooses to speak out when she feels that it's in her interest to do so and then she often does so privately or surreptitiously.

She leaks the story to a friendly report that she actually didn't agree with something that Trump did. But only when it's incredibly unpopular and she realizes that it's not to her benefit for her brand to do so. But on most occasions she's not inclined to speak out against her father even as her father makes anti-Semitic statements to the public, even as he calls himself the second coming of God, even as he says he's a king of Israel, even as he looks to the skies and says, "I am the chosen one." Ivanka remains silent in the midst of all the chaos and stupidity of the Trump administration.

BOLDUAN: Rob, what do you think of it?

ROB ASTORINO, MEMBER OF THE PRESIDENT'S 2020 RE-ELECT ADVISORY COUNCIL: Well, they're on vacation, let's start with that. They're on a family vacation in Wyoming and she's putting that on Instagram. And I think if you go back in time on some of the, quote, controversial things ...

BOLDUAN: I think they are back though and regardless when you're working for the White House and talk to any administration, I don't think you're really ever on vacation.

[19:20:06] ASTORINO: You're never on vacation. I know. But they are entitled to downtime and if you look at her Twitter account, she lists in her bio; mother, daughter, sister, wife and fifth is Adviser to the President.

BOYKIN: Because she's not qualified to be an adviser to the president. She understands that. ASTORINO: No, that's not the reason. That's not the reason.

BOYKIN: Of course, it is.

ASTORINO: The reason is they have a life with kids and they're trying to raise their kids. And so she's not going to comment on everything publicly.

BOYKIN: Having kids is not an excuse for silencing in the face of anti-Semitism.

ASTORINO: No, no, no, if she has something to say to her dad she says it in private and I think that's the relationship that it should be.

BOLDUAN: But some folks inside the White House have conceded to CNN that they think when it comes to this disloyalty remark it went too far. I mean it has been widely criticized. I mean, you know that it's a long-time anti-Semitic trope, don't you agree?

ASTORINO: I think ...

BOLDUAN: Isn't that a crisis moment in the White House?

ASTORINO: Well, I don't think he should have said things like that. I think he's got to be really careful with how he chooses his words. But I think what he meant to say is and this is true, that traditional Democratic black voters, African-Americans, Hispanics, Jewish voters, you really need to start looking at an alternative and that alternative is the Republican Party and this president because of what has happened for groups across the spectrum.

Everyone is doing better than they were three years ago and that's the argument he's going to make and that's --

BOYKIN: How are people doing better when anti-Semitic incidents have increased about 57 percent since Trump became president?

ASTORINO: I'm talking about economic and that's what he's talking about. You can't blame all on Donald Trump.

BOYKIN: How are people are doing better when people are chanting in Charlottesville chanting, "Jews will not replace us." And the President is morally ambiguous threatening that these people might be very fine people.

How are things doing better when there's a shooting, a mass shooting at the Tree of Life synagogue in Pittsburgh and the President blames the synagogue for not having guards there to protect themselves? How are people doing better when the President is tweeting out anti- Semitic tropes calling Hillary Clinton anti-Semitic and Kevin McCarthy and the GOP are also engaged in the same things attacking Tom Steyer, George Soros and Mike Bloomberg? How are people doing better under the circumstances when we consistently see anti-Semitism and racism and bigotry from the President of the United States and the Republican Party?

ASTORINO: This is where1920 [00:02:15] you talk about Tlaib and Omar and those kind of things.

BOLDUAN: Go ahead, you can talk about whatever you want.

ASTORINO: No. And what I was talking about and what I meant, of course, and I think what he means by this is, look, you need to look at a different perspective. You need to look at a different party because you've been voting Democrat for a long, long time and you know what it's time you give a different look (inaudible) by the way.

BOLDUAN: I will say the President is very clear what the President is trying to do is to label the Democratic Party as anti-Semitic. He's trying to --

ASTORINO: Well, there's definitely a problem. There's no question about that.

BOYKIN: Well, time like this --

BOLDUAN: There are certain members who have been called out from within the party about anti-Semitic comments that they have made.

ASTORINO: Well, that's the problem. They really haven't been called that.

BOYKIN: Well, the problem is --

BOLDUAN: They absolutely have.

ASTORINO: The leadership --

BOLDUAN: Absolutely they have, but may I please pose the question? Right or wrong, what he's trying to do is to label the Democratic Party as anti-Semitic.

BOYKIN: Right.

BOLDUAN: This disloyal remark shows that in and of itself. Do you worry that it can actually have an impact on the party?

BOYKIN: Well, no, because I mean first of all if there's any fixed principle in our constitutional system, it is that the President of the United States does not get to determine religious litmus test for people. And you certainly can't set a litmus test that decides that if you don't agree with a particular government, a particular administration that means you're disloyal to your country or you're not being a good member of your faith.

Secondly, the Democrats have won the Jewish vote in every presidential election since the creation of the State of Israel in 1948. Hillary Clinton got 71 percent of the vote, Barack Obama got 78 percent of vote. There's no indication that that trend is going to discontinue, especially when you have an anti-Semite in the White House who refuses to do anything when anti-Semitic incidents are on the rise in his own administration.

BOLDUAN: Rob. ASTORINO: Well, that's projection. Right now you've got a cancer

growing in the halls of Congress, members of the Democratic Party. Some Democratic Jewish leaders have certainly spoken out against what they've seen and unfortunately though when it really came to rubber meeting the road, they would not specifically condemn them in their congressional resolutions.

BOLDUAN: I will say though, it does not help - as we leave it here, it does not help though for the Republican Party hearing what you do hear from the President on the top. Really quick because I'm just curious, do you think Jared Kushner and Ivanka Trump, do you think they have the kind of weight that people try to say that they do with their --

ASTORINO: With the President?


ASTORINO: I think as any son-in-law and daughter would, definitely. I think they talk in private. They should.

BOLDUAN: Again, then when there is a crisis and you're father/boss is being accused of anti-Semitism, like I wonder why - all right.

BOYKIN: It's all about grifting and branding. Whatever works for their brand is what they will put out.


ASTORINO: ... in public. That's just - it won't happen.

BOYKIN: It's not fair to expect him to speak out against anti- Semitism?


BOLDUAN: Out front for us next, New York's Attorney General filing lawsuit against the Trump administration one every two weeks. Why she says she's not about to back down? Plus, the CEO of Overstock resigns after revealing he had a relationship with an accused Russian spy.

[19:25:10] Why would he be a target?


[19:29:06] New tonight, President Trump facing yet another legal challenge over his administration's immigration policies. This time, a new rule that could allow for expedited deportations of undocumented immigrants. Attorneys general from 18 states in Washington, D.C. urging a federal court to stop the administration in its tracks on this.

This is just days after multiple states also sued to block another move by the administration to limit legal immigration. That rule making it much easier to deny green cards or visas for applicants who are seen as poor or having little education. Out front now is New York's Attorney General Letitia James who's

involved in both of these legal challenges. Attorney General, thank you so much for being here.


BOLDUAN: First, if I can ask you about the deportations. Why are you challenging this rule? A version of this rule has been on the books for years. Tell me.

[19:29:56] JAMES: So expedited deportations have been on the books for some time. It apply to individuals who were 100 miles from the border and individuals who have been in our country for less than 14 days.

They've expanded it to include all individuals, all individuals who are undocumented across the nation. In addition to that, they will deny them due process rights.

I believe in the Constitution. I believe in equal protection under the law. And it's a value that I hold dearly. And so, I will not sit idly by while the Constitution is trampled upon.

And so, it's really critically important that I, along with my Democratic attorney generals, that we stand up and we defend the Constitution and we defend the law. And we also defend marginal and vulnerable populations.

It's also important to understand that we just recently filed lawsuit against in administration with respect to the public charge rule. Again, individuals who seek to come to the country, who need a hand up and not a handout, and individuals who obviously need temporary assistance, non-cash assistance for a limited period of time.

The public charge rule has been on the books a long period of time.


JAMES: Decades-long rule, but the change in the rule again, would deny visas and would deny green cards to individuals who need assistance. It's important that everyone understand that the best and brightest is should not only apply to those with money. It should apply to all of us.

BOLDUAN: Your office filed 17 lawsuits against the administration in the eight months -- a little over eight months since you have taken office. You are also continuing a civil lawsuit against the Trump Foundation and have investigated the Trump Organization. Seventeen lawsuits in that amount of time is a lot.

Why so many?

JAMES: Seventeen lawsuits, one every two weeks. And since 2017, we have filed -- the office of attorney general state of New York has filed over 68 lawsuits. And again, it's because we are here to defend the Constitution and stand up for the rule of law. And to again reiterate and to stress that no one is above the law,

including the most powerful person in this country and across the -- and across the world. And so it's really critically important that we underscore our values and we stand up for the law and the equal opportunity and under the law and for justice as a whole, and to stand up for the Constitution, and to stand up for those individuals without a voice.

BOLDUAN: President Trump has clearly taken notice. I want to play -- I'm sure you've heard it, but for our viewers, something that he said, it was at a rally just last week. Listen to this.


DONALD TRUMP, PRESIDENT OF THE UNITED STATES: All New York likes to do is sue me. Any like to sue me. They're always suing. I said, which lawyer is handling that case?

Now they sue me for everything so they can try to stop us by any means possible.


BOLDUAN: And in a court filing earlier this year from attorneys for the Trump Foundation, they said, quote, that you ran -- ran on an anti-Trump campaign where you expressed grave antipathy and animus toward Mr. Trump.

Madam Attorney General, is this a vendetta?

JAMES: No, by no means. That office has not politicized. The office is based on facts and the rule of law. It's critically important that individuals understand that.

And what we are trying to do is protect vulnerable and marginalized populations and stand up for the Constitution, and I will not stand by while the Constitution is being trampled upon. And so, it's critically important that, again, we use the law both as a sword and as a shield.

The president referred to me as a bludgeoning -- bludgeoning him and I sort of take that as a compliment. The reality is again, the law should be used to shield those who need protection. And that's exactly what I'm doing and standing up for the rights of New Yorkers.

BOLDUAN: Are you at all concerned with so many legal challenges, what losing any one of them would mean in terms of giving President Trump ammunition if you lost one of these cases?

JAMES: So, I think it's important that everyone understand we have stood up on behalf of women, on behalf of reproductive rights. We stood up on behalf of the environment. We have stood up on behalf of immigrants. We stood up on behalf of -- against housing discrimination.

On a wide range of issues, we continue to use the law as a means to address wrongdoings. And this administration has consistently and repeatedly rolled back all of the progress that we have made in this nation, including but not limited to standing up to defend the Affordable Care Act, at a time when individuals are facing bankruptcy, when they are faced with rising health care bills.

It's always important to have an attorney general who understands the rule of law applies to all of us. And I have a duty and obligation to protect the interests and the rights of New Yorkers.

BOLDUAN: The rule -- the law applies to all of us, yes. But as we learned from the Mueller investigation for one it is basically impossible to charge a sitting president. Do you expect President Trump to face charges in New York once he leaves office?

JAMES: So, again, my issue again is making sure that the law is enforced. And so, as we investigate the Trump Foundation, for example -- the Trump Foundation was formed in the not for profit laws in the state of New York.

[19:35:02] And there have been individuals who come to our office to raise questions with respect to the Trump Foundation, as whether -- we are looking into those allegations, and ensuring that in fact the beneficiaries are protected, the assets are protected and that individuals who contribute to the Trump Foundation are doing it in a way that's consistent with the law.

And so, all that we are doing is following the law and making sure that the law is enforced and that the -- and underscoring the point the law applies to all of us. I believe the simple concept of justice and equality for law under our Constitution.

BOLDUAN: Seventeen cases in the eight months.


BOLDUAN: Does this trend continue under the office of the attorney general?

JAMES: Well, it al depends upon this administration. If this administration continues to roll back all the progress that we made in the nation, if this administration continuing to trample upon the Constitution, if this administration continues, again, to violate the rights of vulnerable and marginalized populations, then the office of attorney general will do what we must do and that is defended law.

BOLDUAN: Madam Attorney General, thank you for coming on. I really appreciate your time. Thanks so much.

JAMES: Thank you.

BOLDUAN: OUTFRONT next, Overstock CEO out after divulging his romantic relationship with an accused Russian agent. Did he get caught up in the Russian attempt to influence the election?

And we take to you the epicenter of Mayor Pete Buttigieg's campaign strategy, right now. (COMMERCIAL BREAK)

[19:40:07] BOLDUAN: Tonight, the CEO of the major online retailer has resigned in the wake of his newly revealed romantic relationship with accused agent Maria Butina who's currently serving 18 months in jail.

Patrick Byrne recently shared publicly that he was involved with Butina for three years. His comments triggered a steep decline in Overstock stock price last week, which surged then more than 10 percent today on news of his exit.

OUTFRONT now is Sara Murray.

Sara, what do we know about this relationship between these two?

SARA MURRAY, CNN POLITICAL CORRESPONDENT: Well, Kate, obviously, this is a weird story. As you can imagine, you know, the CEO has now came forward and said that they -- he said in the interview with the "New York Times" they met at Freedom Fest, which is a libertarian confab in Las Vegas. They struck up this romantic relationship. It lasted for three years.

And at some point, Byrne started providing the FBI with information about Maria Butina, about their relationship. He now is saying that he believes that this is some kind of deep state effort at political espionage, although he's no offering any proof to back that up.

Now, as for Maria Butina, it's unclear exactly what she wanted out of this relationship with Byrne. She was trying to make inroads with political groups including the National Rifle Association. She's trying to meet powerful people, and ultimately, she ended up pleading guilty to failing to register as a foreign agent.

She is spending 18 months behind bars. Right now, she is in prison in Tallahassee, slated to get out in October. And, obviously, all of this buzz around Patrick Byrne's relationship with her and, you know, his claims of the a deep state efforts were unsettling to investors and ultimately inspired him to step aside.

BOLDUAN: Absolutely. Thank you, Sara. It is curious. Always has been with Maria Butina. Thank you so much.

OUTFRONT now, CNN national security analyst Steve Hall, the former CIA chief of Russia operations. Steve, if Butina was working as a Russian agent, if, what would make Byrne a target?

STEVE HALL, CNN NATIONAL SECURITY ANALYST: Well, this is sort of confirmation, if you will, in my view as to the fact that Maria was indeed part of an intelligence operation that was run by the Russians, you know, first looking at 2016 elections and then onward.

But, you know, if you look at it from the Russian perspective, from Butina's filter, she comes from a country, Russia, that is ruled by an autocrat, Vladimir Putin, who surrounds himself with a bunch of powerful guys that are known as oligarchs. So, when she comes to the United States with her tasking being, you need to look for important people in the U.S. system to plug into so we can understand better and maybe influence what's happening in the United States, she is looking for an American oligarch.

So, she reaches out to a number of different people. She was very active. And one of the people she makes contact with is the CEO of Overstock, and begins a relationship with him.

This is exactly what the Kremlin would have wanted her to do, because big companies, big CEOs have influence in the United States. And that's what the Russians were interested in doing, influencing politics and other events in the United States. She was successful in that.

BOLDUAN: Interesting. I also want to ask you about, Steve, about a report out of Russia we are finally learning more about the highly secretive botched nuclear missile test that killed at least five people. The Kremlin is now denying a report from Russian newspapers that a radioactive the isotope was found in the muscle tissue of one of the treating some of the folks who are injured.

The more we hear, the worst it sounds. What does this sound like to you?

HALL: Well, what it sounds like to me is typical Kremlin and Russian spin of any situation. Look, one thing we can be fairly certain of, and this is not because anybody is a Russiaphobe or because we don't like Vladimir Putin or any of things, but it's simply based on Russia's track record, is that if we say five people were killed we have to multiply that at least by a factor of ten or if not more to get a better idea.

I mean, if you go back to Chernobyl accident, which bears a lot of eerie similarities to what's going on right now in Arkhangelsk, in another part of Russia, we see this pattern. One thing we can be sure that Russia will do and Vladimir Putin will do in this is deny everything. He will make counteraccusations and he will simply refuse to admit that there's anything at all going on.

This is a real chip on the shoulder that the Russians have on their nuclear and scientific programs and they are very, very concerned about what they look like in the international world when something goes wrong.

BOLDUAN: Yes, that seems to be one thing clear here for sure. Steve, thank you so much.

OUTFRONT next, we're going to take you inside Mayor Pete Buttigieg and his make or break strategy to remain a top candidate.

Plus, the man who paved the way for the designers who dressed First Lady Michelle Obama.


[19:48:38] BOLDUAN: Tonight, the fight for 2020. Democratic candidate Pete Buttigieg trying to win over voters in a key swing state, running ads on Pandora and Spotify as college students return to school in New Hampshire.



PETE BUTTIGIEG (D), PRESIDENTIAL CANDIDATE: Hello, Spotify. I'm Mayor Pete Buttigieg from South Bend, Indiana. And I'm running for president because our country is running out of time. But it's not too late.


BOLDUAN: Buttigieg is also making moves in Iowa as he tries to regain momentum there.

Phil Mattingly is OUTFRONT.


PHIL MATTINGLY, CNN CORRESPONDENT (voice-over): A biography can grab attention.

BUTTIGIEG: I'm definitely the only left-handed, Episcopalian, Maltese American, gay war veterans in the race. So, I got that going for me.

MATTINGLY: A message can create energy and raise money.

BUTTIGIEG: Are you ready to turn the page and the start a new chapter in the American story?

MATTINGLY: But it's here in homes like this 8 miles away from the Iowa state capitol where campaigns live or die.

SHANNON SANKEY, BUTTIGIEG CAMPAIGN ORGANIZER: We just want to rethink how you guys think about campaigning and how you think a campaign is done and this is the just the beginning we are doing this.

MATTINGLY: It was the bio, Harvard graduate, Rhode scholar, military veteran, mayor that along with this CNN town hall --

BUTTIGIEG: We would be well served if Washington started to look more like our best-run cities and towns rather than the other way around.

MATTINGLY: -- sent Pete Buttigieg from nowhere, polling at 1 percent in March in the CNN/Des Moines Register Iowa poll to a blow out $25 million second quarter fundraising number and firmly in the top five of Democratic primary candidates.

[19:50:10] BUTTIGIEG: Well, it's been a rocket ship.

MATTINGLY: But Buttigieg's rocket ship moment, at least according to the polls, has passed. And now, the campaign is under pressure to turn that early rise and big cash into the type of operation that can win. BUTTIGIEG: This is a state where I think the campaign has really to be won, because now we have people on the ground forming the interpersonal relationships that are the really stuff of good politics, especially in a place like Iowa.

MATTINGLY: Iowa and its looming caucus is ground zero for those efforts.

UNIDENTIFIED FEMALE: So, we're calling tonight to talk about Mayor Pete.

MATTINGLY: With seven visits in a rapidly growing organization.

Compared to his competitors who spent a year or more building their Iowa organizations, Buttigieg's campaign launched lean and minimal and is just reaching full strength in the state with more than 60 staffers. But it's the campaign's volunteers who are key to their strategy.

PAM KENYON, BUTTIGIEG CAMPAIGN VOLUNTEER: So there was a house party in Dallas County. Didn't know anybody.

MATTINGLY: Pam Kenyon, a Democrat who never actively volunteered on a campaign before is the prototype for that effort.

KENYON: He just filled the room, and I wanted more. I signed up, I did some phone banking which I did the week after that and the week after that, and then there was another house party. I couldn't get enough.

MATTINGLY: With money, media and more than five months to the caucuses, Buttigieg has staying power in the race. Even if for the moment the polling has hit a plateau.

BUTTIGIEG: You need to have that kind of army of people who can spread the message, and often they find ways that I wouldn't have even thought of to describe what's at stake and why this candidacy matters. When somebody is explaining what this campaign means to them, it creates a whole new way to bring it home that just multiplies what I'm able to do in a podium or in an app.


MATTINGLY: And, Kate, there's no question the Buttigieg campaign has the money and the organization to be in the race for the long haul. But the question is, whether or not the long haul can actually turn into a victory? That victory may well lie with those volunteers and their relationships -- Kate.

BOLDUAN: Phil, thanks so much. Great to see you.

OUTFRONT next, from Jackie O to Studio 54, it's the new CNN film about one of the most influential designers.

(COMMERCIAL BREAK) [19:56:52] BOLDUAN: When you think Studio 54, you have to also think of designs by Halston. The fashion icon dressed stars like Elizabeth Taylor and Bianca Jagger. Ahead of the new CNN film about Halston, Erin sat down with celebrity stylist, Joe Zee, to remember the man, the legend.

But, first, here's a look at the film.


UNIDENTIFIED MALE: Is success fun?

ROY HALSTON FROWICK, DESIGNER: Oh, sure, it's fun. And it's not fun, and as my mother says, it's the price you have to pay.

UNIDENTIFIED MALE: The most successful individual in the history of American fashion, Halston.



FROWICK: I'm Halston.

I made it in New York.

UNIDENTIFIED FEMALE: His clothes danced with you.

UNIDENTIFIED MALE: Halston felt that he had to design everything.

UNIDENTIFIED MALE: Rugs, sheets, perfume, bags. He came like a king.



ERIN BURNETT, CNN HOST: All right. OUTFRONT now, fashion journalist and former creative director of Elle, Joe Zee.

So, look, to give people a sense of Halston, right? I mean, he was an all-American hero from the cornfields of Iowa, originally, right? As he said, moves to New York.


BURNETT: You can make it in New York. Becomes a superstar in fashion.

Remind us how famous he was, how influential for people who see that and say, wow, I didn't know.

ZEE: I mean, he really was an all-American boy. Roy Halston Frowick from Des Moines, Iowa, he started off a hat maker in Bergdorf Goodman and really rose to acclaim because you will all remember this. He designed the infamous pill box hat that Jackie O. wore at the inauguration of her husband in 1961. BURNETT: I mean, let's take a look at that.


UNIDENTIFIED FEMALE: Were you the person who put the pill box on Jackie Kennedy?

FROWICK: Yes, I was. It's a very funny story. It was a rather windy day. And she put her hand on the hat and it ended up to have a dent in it. And so, during all the ceremonies it had a dent in the hat, and everybody who copied it put a dent in it which was so funny.


BURNETT: It's pretty incredible. But it just goes to show you how influential it was, and his design was.

ZEE: Oh, absolutely. I think it is really the influence of the first lady, the influence of the White House, but the influence of Jackie O. I mean, you look at this, she wanted something different. She didn't love hats and she wanted to wear something different and she did, and she created a lot of news around that particular look.

BURNETT: Michelle Obama also did that with some designers. We think about Jason Wu, Tracy Reese, Thakoon, Brandon Maxwell, a whole lot of them, obviously inauguration, inaugural dresses were a big part of that. Melania Trump, of course, a controversial first lady, but one with glamorous taste and style.

Is there any designer who could make their career a Melania Trump or is it too controversial?

ZEE: It's a difficult place. You know, the fashion industry has become incredibly political the last few years in terms of what --

BURNETT: Some people refuse to even dress her. She did wear Ralph Lauren, obviously, on inauguration, but that was not really --

ZEE: She did.

BURNETT: -- you know, hugely -- it wasn't like he stood up and said, take a look.

ZEE: No, and, honestly, there wasn't like press releases sent out.


ZEE: It's a very different situation and there are still a lot of designers that refuse to dress her. Maybe the legacy of Melania will end up one day being the controversy.

BURNETT: All right. Thank you very much. Good to see you as always, Joe.

And be sure to tune in, the all new CNN film "Halston". It premiers Sunday at 9:00 p.m., only on CNN. (END VIDEOTAPE)

BOLDUAN: All right. Thank you so much for joining us, everybody.

"AC360" starts right now.