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Dow Rises 400 Points On Tariff Delays; U.S Budget Deficit Soars 27 Percent Through July; 2020 Democrats Propose Significant Gun Control Measures; Epstein Not Checked On For Hours, Guard Was Substitute; Officer Killed In Daytime Shootout In California; Sen. Bernie Sanders (D) Vermont Attacks Washington Post Over Coverage. Aired 10-10:30a ET

Aired August 13, 2019 - 10:00   ET

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

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[10:00:00]

POPPY HARLOW, CNN NEWSROOM: All right. Good morning, everyone, top of the hour. I'm Poppy Harlow in New York, and we begin with breaking news.

The market is surging right now. News just in that the tariffs, many of them, set to go on effect September 1st in this ongoing trade war with China. It looks like they're going to be delayed, at least some of them. The market likes that. There's the Dow at 431 points.

Cristina Alesci is with me.

So what -- I mean, these were tariffs that were going to be on iPhones and iPads. Are they all being delayed?

CRISTINA ALESCI, CNN POLITICS AND BUSINESS CORRESPONDENT: They were going to hit the consumer really hard. This is the first round that was going to go into effect and the consumer was going to feel it directly. This seems to be the administration responding to Wall Street saying this is crazy because it's going to hit the one part of the economy that's been really strong and kind of masking the weakness in other parts of the economy.

So what the administration is doing is delaying some of the tariffs on consumer-facing goods until December. Hopefully there will be trade talks that could resolve some of the issues. But as we've seen in the past, these talks have gone absolutely nowhere and the administration has taken a lot of criticism that this has been a tactless sort of discussion and negotiation style, right? There doesn't seem to be an end in sight.

But one thing is very clear, Wall Street is very fearful of a recession and this seems to be what the administration is responding to.

One of the analysts yesterday came out and said this next round of tariffs would be cutting into the muscle of the economy, right, not the fat. So there seems to be this general feeling that there's very little wiggle room for bad decision-making.

HARLOW: And we heard Goldman say last week, I believe, no China trade deal likely before the 2020 election, Bank of America says one in three chance of a recession. Because, as you mentioned, this is the strength of the economy, the weakness is in other sectors, and also things like news overnight that the budget deficit has ballooned again. It is going to hit $1 trillion this fiscal year.

ALESCI: This is amazing that this is happening under a Republican administration with a Republican Congress at least in one of the Houses. You have to step back and take a look at the fact that this was supposed to be the party of fiscal restraint and they are spend, spend, spend, because they feel like it's -- the president and the Republicans feel like it is critical to their re-election that the consumer and the average worker feel good about the economy.

And that is why also we see the president pushing for lower interest rates and a weaker dollar. He sees it critical to his re-election because that means he can continue to fund potentially even more tax cuts to spike the economy before the 2020 election.

And if he keeps rates down --

HARLOW: More tax cuts?

ALESCI: Potentially for the middle class, right?

HARLOW: For sure, those.

ALESCI: The Republicans have gotten a lot of heat because they gave tax ruts to corporate America. Where are the tax cuts for the middle class?

HARLOW: I hear you. I just -- there are repercussions, it's not monopoly money to tax cuts like that. And by the way, Democrats agreeing to, and Republicans both signing on to a spending bill that increases. I mean, no one is blameless here.

ALESCI: Well, that's what's remarkable. It looks like the Republican policies and the way that they're acting is sort of closer to the far- left wing of the party where it's like spend, spend, spend, it doesn't matter what the repercussions are.

HARLOW: Okay. Thank you on both fronts. We appreciate it. Thank you.

So President Trump is taking a break from his summer vacation. This in an effort, again, to highlight the strength in the manufacturing sector, especially in towns that helped him win the 2016 election. He is set to to a petrochemical plant under construction in Western Pennsylvania. You know he is going to talk about the economy and job creation there.

His visit comes amid in growing concerns over that huge national debt that we just talked about, not to mention the escalating trade war with China. Kaitlan Collins is there following the president. She joins us from Berkeley Heights, New Jersey. He is about to go and highlight the fact that his administration has seen 4.1 percent growth in the manufacturing sector.

KAITLAN COLLINS, CNN WHITE HOUSE CORRESPONDENT: Yes. And Republicans, Poppy, really want the president to start focusing on these economic gains that he's seen during his time in office and away from the controversies you've seen surrounding the president just over the last week, including that visit to those in the last two mass shootings.

His former adviser yesterday saying he doesn't think that he'll support him for re-election. That's what they want the president to focus on today, the economy, not what he has been focusing on and Tweeting about over the last several days.

But, of course, this is going to be part of the president's effort you'll see today to hold on to those manufacturing towns that helped him win the election in 2016, but, of course, through their support for Democrats in 2018, which has got some of his campaign advisers concerned.

[10:04:56]

So the White House says president is going to go there today, tour this factory, even though we should note that while he's going to be touting his accomplishments, this is a factory that shall announce this complex they were going to build when Obama was still in office back in 2012, long before Donald Trump took the White House. But they still want the president to focus on the economic accomplishments of his time in office.

But, Poppy, this is going to come with this back ground of the markets reacting to this announcement from the trade office about what they're going to do, delaying some of these tariffs months later than the president said they were going to go into effect.

Of course, as Cristina noted, this budget deficit that has ballooned surpassed what it was with last year was still two months to go. And, of course, those stalled trade talks with China where essentially no progress has been made, even though that is certainly coming as something as a concern to the president. So that is going to be the backdrop as you're seeing the president make these remarks today.

But, of course, the White House aides really want the president to turn his focus away from those controversies of the week and at least focus on something like the economy, something focused on that related that they think can help the campaign.

HARLOW: Kaitlan, just quickly before you go, I know you've got to travel with the president today, do you have any read from the White House on why they are delaying these additional tariffs on China? I mean, the president was so straightforward in his -- he said this is happening on September 1st. Does this mean they've made progress with the Chinese or is this them getting cold feet? COLLINS: Well -- and the president said that not that long ago, that these are going into effect. So that's the question, what's decision behind this, why are they delaying it on some of these products, because they list some factors in there, citing national security, health reasons, but then they also say, quote, other factors, which seems to be a phrase that's doing a lot of work here. Because if they are delaying this on the phones and on the computers, which, of course, was the big concern for consumers, the question is going to be what was behind that decision? Because you'll remember that Apple asked for a waiver for part of their products that are made in China and the president Tweeted they weren't going to get it.

Now, we asked the president's Chief Economic Adviser, Larry Kudlow, at the time, is this for sure, is Apple not going to get a waiver on this? And he said, yes, the president had Tweeted. Now, of course, we're going to have to wait for this come out. But that's going to be something that people are paying close attention to and what is the reason behind this? Because we know the president has been frustrated, that this trade deal with China has not worked out the way he thought it was going on, even though he's insisting otherwise on his Twitter feed.

HARLOW: Okay. Kaitlan, thank you for the reporting. We'll see you a little later today at that factory with the president.

Our Senior Political Analyst, Ron Brownstein is here.

So, Ron, what's your read on this? The market loves it. The Dow is up almost 500 points, but the president's base also loved that he was hammering China.

RON BROWNSTEIN, CNN SENIOR POLITICAL ANALYST: Well, do you remember during the Cuban missile crisis, the Secretary of State, Dean Rusk, famously said, we were eyeball to eyeball and the other fellow just blinked. This feels like they were eyeball to eyeball with China and the president just blinked.

The warnings from the various banks that you cited, Goldman Sachs and Bank of America, others talking about the possibility that the increased risk that the trade war would tip the economy into recession, which would obviously be another big brick on the load for the president trying to win re-election. And I think just the pocketbook effect of these tariffs, I think, made them very reluctant politically to accept the heat.

You are in a contest against a non-Democratic system, an authoritarian system that can impose a lot of pain on their society in China. It's always tougher in a democracy. And why this strategy of kind of tit- for-tat tariff increases is one that is difficult for the U.S. to win, even though we are obviously a key market for the Chinese.

HARLOW: Okay. So let's turn to some other issues here, because you've also got the ballooning national debt, which apparently no one cares about in Washington anymore. It doesn't matter if you're a Republican or a Democratic. You're just going to vote for more spending here, essentially. You've got the White House's own office of management and budget saying that the deficit will exceed a trillion dollars this year. I am old enough to remember when the president gave that interview. I believe it was with The Washington Post. And He said he can eliminate the national debt in eight years.

BROWNSTEIN: Yes.

HARLOW: What's going on?

BROWNSTEIN: And these are the tax cuts who pay for themselves. I mean, look, this is an enormous tax cut that is at the heart of this deficit explosion that we are experiencing. And these kinds of deficits, you have to understand them as a tax on the future.

I mean, look at who benefits from a tax cut. The principal beneficiaries tend to be older people who have more assets and make more money. And who pays for the tax cut in the form of interest payments that will reduce the ability of future generations to invest either in themselves or in infrastructure or anything else? It's younger people who will be paying the bill.

I mean, this really is a kind of generational theft and it comes at a time when 60 percent of Donald Trump's -- a majority of Donald Trump's votes came from whites over 45, when the Republican Party is very weak among millennials. And I look at this kind of tax cut essentially as rewarding our voters today at the expense of future generations.

[10:10:06]

HARLOW: Ron, let's turn the page here and let's talk about gun control, because I don't want to get off this. When the cameras are in longer in Dayton, Ohio or El Paso, the lives are still lost, right? And there are countless cities and families reeling from this.

Mitch McConnell, we heard him say a few days ago, red flag laws, background checks will be front and center when the Senate comes back. But, honestly, I mean, should people told their breath? When you look back at 2013, my colleague, Chris Cillizza, has a great column on this today, and you look at the makeup of the Senate then and you look at what was proposed after the Sandy Hook massacre and you had four Democrats vote against it with those background checks, four Republicans vote for it, and now you've got a Senate with Republicans 53 seats, less friendly to gun control than in 2013.

So has something fundamentally changed or are Americans misguided to think that this time will be different?

BROWNSTEIN: Look, what's different is just a sheer weight of the rapidity with which these events have been occurring. But underlying political dynamics are not that different. You have a Republican Party particularly in the Senate that is rooted in smaller, rural states where gun culture is very strong.

If you go back to the 2013 vote on the background checks and you assign half of each state's population to each senator, the senators who voted for the background checks represented about 195 million people. The senators who voted against hit represented about 120 million people. You can't get more decisive than that in a democracy, and yet the 120 million people, because of the filibuster, carried the day.

The politics in the House have fundamentally changed because Democrats have won the suburban seats where gun control was popular, and they're now as a gun control majority in the House.

But in the senate, the distribution of seats, the two senators per state rule, the filibuster makes it very difficult.

HARLOW: So let's talk about the filibuster. I know it's wonky but it really matters. And you have a new opinion piece by Harry Reid this morning calling for an end to it in The New York Times. He calls it an era of obstruction and inaction.

But when you look at the 2020 Democratic candidates, really, the only that have definitely called to end the filibuster are Senator Elizabeth Warren and Governor Jay Inslee. In fact, Joe Biden touring Iowa just a few weeks ago called it a very dangerous move. So there's a division in the party on this.

BROWNSTEIN: There is because, look, if you're Democrats and you look at again what we're talking about, the two senator per state rule, it is not at all guaranteed that Democrats are routinely going to be the majority party in the Senate and the short-term benefit of ending the filibuster in 2021 could easily come back on the other side in a few years.

I do think guns is one of the issues. I think the big issue that's going to create this pressure is climate above all, because those same smaller states where Republicans are so strong in the Senate are also states that are most bound to kind of the fossil fuel economy, most likely to send Republicans to Washington who will resist any action on climate.

And as that imperative becomes greater in the years ahead and the damage and the threat becomes more apparent, I think that is the issue that will create the most pressure to eliminate the filibuster to act. Because it's very hard to see how the U.S. ever passes meaningful climate action through the Senate while the filibuster is in place.

HARLOW: When you need 60 votes. All right, thank you, Ron, on all those fronts. And you have a great column, which I meant to bring up when we ran out of time on Texas. Everyone should read it on cnn.com. Ron, thanks very much.

BROWNSTEIN: Thank you.

HARLOW: All right. So ahead for us, Jeffrey Epstein is dead from that apparent suicide but the investigations into how he operated and how he died, those are intensifying. Dual investigations into his death are looking at why he was left alone for hours before he apparently killed himself and why one of the guards who was supposed to be checking in on him every 30 minutes wasn't even a regular guard but a fill-in.

At the same, time there is an investigation into his alleged sex trafficking network. The FBI is all over his home there in the U.S. Virgin Islands. Our Reporter, Kara Scannell, joins me from Washington.

So let's start at what happened at that jail in lower Manhattan.

KARA SCANNELL, CNN REPORTER: Well, Poppy, I mean, that is one of the most secure facilities in the federal system. It's where the New York prosecutors keep some of those high profile inmates, including terrorists.

And what we're learning now is that there were some breakdowns in protocol and also just some issues about staffing.

So according to sources familiar with the prison in the days leading up to Epstein's apparent death, one of the guards was not even a full- time guard. And sometimes that's what happens when they have people working overtime and there's understaffing, for the two guards, including the one that wasn't quite a guard that were there from Friday to Saturday morning when Epstein was found dead, they had both been on overtime shifts and one of the guards was serving his fifth overtime shift in a row. And the president of the union representing those officers is saying that this is a bigger problem about understaffing in the federal prison system.

But we're also learning about some breakdowns in protocol. We had had -- Epstein when he was moved from the suicide unit, was put in the special housing unit.

[10:15:00]

A guard should have been checking on him every 30 minutes. We have learned that guards had not been visiting or checking in on Epstein for hours before he was found dead. This is all going to be the focus of the FBI and the investigation in the Office of Inspector General with the Department of Justice.

But as you say, there is also the other investigation that is still ongoing. That was the one into Epstein's sex trafficking operation, the alleged operation. The FBI had agents from the New York Field Office and at Little St. James, the compound that Epstein owns in the Caribbean, they were there yesterday presumably collecting evidence as they're continuing to investigate who else helped Epstein carry out this alleged scheme.

And as prosecutors had already signaled, they were looking at employees and associates of Epstein's. This investigation is still very much continuing, Poppy.

HARLOW: Far from over. Kara Scannell, great reporting, thank you very, very much.

We have a lot ahead, including this dramatic video of a gun battle that broke out during rush hour on this highway in California. A police officer lost his life in the fight.

Also, Bernie Sanders picking a fight with The Washington Post with comments that sound pretty familiar to someone else who often slams The Washington Post, President Trump. Does Senator Sanders want that comparison?

Plus residents in Newark, New Jersey, listen to this, they are being told to drink bottled water only because the tap water there has levels of lead that are too high. We are learning people in that city may have been drinking that tainted water for years. We'll take you live to Newark.

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[10:20:00]

HARLOW: All right. Tragic news to tell you about a dramatic daytime shootout near Los Angeles yesterday has left one police officer dead and two others wounded. Look at this.

This happened during rush hour traffic yesterday right outside of L.A. You see some of the police ducking behind their patrol cars. They had to exchange gunfire with the suspect.

The shootout began after just a routine traffic stop.

Stephanie Elam is with me now this morning from Los Angeles. Do we know why the suspect started shooting?

STEPHANIE ELAM, CNN CORRESPONDENT: No, we don't. And what I can tell you, what we do know at this point, Poppy, is that it was a California Highway Patrol motorcycle officer that pulled over this white GMC truck, pulled him over and then decided that the car needed to be impounded.

That officer went back to his vehicle to process the paperwork, at which point the suspect allegedly reached back into his vehicle, retrieved a rifle and began shooting. The first officer was hit, but he was able to call for backup. And multiple agencies responded to his call for needing assistance. They got there and a massive gun battle ensued. In fact, the Riverside Police Department Chief, Sergio Diaz, called it a, quote, long and horrific gun battle.

And during that two other CHP officers were hit. One is still in critical condition. The other was minor injuries. The suspect was killed at the scene.

However, that first officer, that motorcycle officer that was processing that paperwork, the first one that was there, he did succumb to his wounds. They airlifted him to the hospital and he died. He's 35 years old. Andre Moye was his name. He survived (ph) by his wife and his family and his siblings. And he had been with CHP for nearly three years.

So this officer lost his life, but it's still unclear at this point, Poppy, why this man allegedly went back to his vehicle and got this rifle and started shooting at him.

And remember, this was an officer on a motorcycle. There was no vehicle for him to stand behind. And so that's part of what made it such a difficult situation and such a huge response that they're still processing the scene now.

HARLOW: Wow, so sad for the officer, for his family, for the two other wounded officers. Stephanie, thank you for that.

All right, so The Washington Post this morning is hitting back hard against allegations of bias by the Bernie Sanders campaign. Sound familiar? We'll discuss.

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[10:25:00]

HARLOW: All right. So this is surprising, to me at least. Senator Bernie Sanders is going after The Washington Post this morning, specifically their coverage of his campaign. The newspaper is not taking it.

Listen to the criticism levied by Sanders just yesterday in New Hampshire.

(BEGIN VIDEO CLIP)

SEN. BERNIE SANDERS (D-VT), PRESIDENTIAL CANDIDATE: Anybody here know how much Amazon paid in taxes last year? I talk about that all of the time and then I wonder why The Washington Post, which is owned by Jeff Bezos who owns Amazon, doesn't write particularly good articles about me. I don't know why.

(END VIDEO CLIP)

HARLOW: Well, those and past comments by Sanders and his campaign prompted this reply by Marty Baron, the executive editor of The Post, quote, Senator Sanders is a member of a large club of politicians of every ideology who complain about their coverage contrary to the conspiracy theory the senator seems to favor. Jeff Bezos allows our news room to operate with full independence and our reporters and editors can attest to that.

Dana Bash, our Chief Political Correspondent, is here with me, Chris Cillizza, CNN Politics Reporter and Editor at Large is here.

So, Cillizza, I remember Nixon in the White House on the phone saying no more reporters from The Washington Post.

DANA BASH, CNN CHIEF POLITICAL CORRESPONDENT: Exactly. You read about it and heard about it. You weren't there.

HARLOW: I wasn't there. I am old enough to have watched it.

BASH: There you go.

HARLOW: Thanks, Dana, making me feel young this morning.

BASH: You're welcome.

HARLOW: But, Cillizza, but in not a joking manner here, you worked there. I mean, this is a very serious claim against The Washington Post with no evidence, and it is echoing what the president says.

[10:30:01]

CHRIS CILLIZZA, CNN POLITICS REPORTER AND EDITOR AT LARGE: Yes. It's a ridiculous claim. If you condemn Donald Trump for saying Amazon, Washington Post, you need to condemn Bernie Sanders for.

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