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Biden, Trump Preparing for 1st Debate in Cleveland; NYT: Trump Paid No Federal Taxes in 10 of Last 15 Years; Tax Info Raises Questions about Whether Trump Broke the Law; NYC Schools Reopen Tomorrow as Cases Rise at "Alarming Rate"; Update on Coronavirus Responses Around the Country; Thousands Flee Amid New Wildfires in California's Wine Country. Aired 2:30-3p ET

Aired September 28, 2020 - 14:30   ET

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

[14:30:00]

ARLETTE SAENZ, CNN POLITICAL CORRESPONDENT: Biden started out in his early preparations by reading through briefing books. And he really dove into more intense debate prep sessions his advisories over the past few days.

One of the advisers helping run the debate prep is Ron Klain, who ran Hillary Clinton's debate prep against President Trump in 2016. So he has some understanding of how these debates against President Trump have played out.

We have also learned that Bob Bauer, a former White House council in the Obama administration, has played President Trump in at least one of those debate sessions that they've had with the former vice president.

Biden has said he expects the president to be personal in his attacks.

And what they are hoping that the former vice president can keep a lot of the focus hammering away on the same things he talks about on the campaign trail, related to the economy and the coronavirus pandemic.

For President Trump's part, he has also been preparing. We have a few details about that. He has been reviewing note cards that display possible lines of attack from Joe Biden.

He also said yesterday that Rudy Giuliani and Chris Christie have played Biden at times as he's prepared for this debate.

One question is: How is this story of the president's tax returns going to play into tomorrow night?

We have heard messaging from the Biden campaign that they believe this feeds into their argument that this is a campaign between Scranton, Pennsylvania, working-class roots and Park Avenue, suggesting that the president is only interested in working in his own interests and not in the interests of everyday Americans.

Now, this debate is going to look a lot different from past debates due to the coronavirus pandemic. Biden and Trump will not be shaking hands as they take the stage.

Everyone attending will be tested for coronavirus. It will be a smaller audience as the two candidates face off in person tomorrow night -- Brianna?

BRIANNA KEILAR, CNN HOST: Arlette Saenz, in Cleveland, thank you.

And here to talk more about tomorrow's debate is CNN senior political analyst, John Avlon.

John, this huge story today about the president's taxes will no doubt be featured in this debate. Now that we have such an explosive report, there's no way around that.

How do you think this could play out?

JOHN AVLON, CNN SENIOR POLITICAL ANALYST: Look, I think what the Biden team is going to prosecute the issue of fundamental fairness. That Donald Trump, a self-styled billionaire, paid less in real dollars in taxes, $750 a year, than average working folks, nurses, doctors, farmers, cops, firefighters, teachers. And that's just a reality.

And I think it will speak to the real rigged system that we're dealing with, which benefits the superrich, who can lose millions of dollars a year and never pay a real penalty, versus folks who get squeezed by the system every day. They'll hit the fundamental fairness of it.

But a lot of Donald Trump supporters will simply do what they do and say it doesn't matter. It shows that he manipulated the system well. But that's a kind of denial.

Because I think, when the rubber meets the road, there's a lot of folks who are working class and middle class in this country who are going to say, this is fundamentally unfair and reeks of fraud.

KEILAR: Some will, but some won't. Like you said, they will say he did what was smart.

So then does it come down to Biden having to effectively make a case that this isn't about manipulating the system in a legal way, it goes beyond that? And where is the line for him doing that?

AVLON: Well, I think "The New York Times" article lays out a very clear case that the president committed tax fraud. That's not legal.

It's not simply a matter of creative tax avoidance using armies of accountants and lawyers. There seems to be evidence of bad faith. But that's all things that may be litigated after the election.

What Donald Trump is going to do -- and a core part of Donald Trump supporters, he could shoot someone on 5th Avenue. Supporting Donald Trump has become part of their identity and a part of a belief system that's impervious to fact.

What Biden is going to do is say, look, for those of you folks who are working class and middle class in the key swing states and pivot counties, 211 of them, who voted twice for Obama, once for Trump, this guy sold you a bill of goods that's wrong, and he doesn't represent your interests, there's a fundamental unfairness. And he'll hammer home at that.

That's a basic American concept even in deeply polarized times.

KEILAR: Especially when it comes to taxes, right --

AVLON: Yes.

KEILAR: -- which no one likes paying --

AVLON: Sure.

KEILAR: -- but they pay them.

So what are you looking for from both sides?

AVLON: Look, I think, you know, Trump walks into this at a disadvantage on two fronts. One, his team has lowered expectations for Biden throughout the course of this campaign.

A key part of their messaging on social media, which just happens to echo Russian disinformation efforts, is that Biden is somehow slipping, that he's not up to the job.

And incumbent presidents have an additional burden, which Trump seems to have played into until recent days, which is they think they're on top of their game. They don't have time for the debate prep that opponents do.

Which is why you saw even President Obama, in his first debate against Mitt Romney, got really housed because Romney was focused. Obama was taking it for granted. And that tends to really disadvantage an incumbent president in the first debate, in particular.

[14:35:12]

KEILAR: That's right. I remember that debate. It does seem to be a phenomenon that can repeat itself. We'll see if that happens here.

John Avlon, great to see you.

AVLON: You, too, Bre.

KEILAR: A man is sentenced to a year behind bars for hosting parties during the coronavirus.

Plus, a wedding in New York shut down after dozens of people were sneaking into the venue.

And do the revelations about the president's taxes show that laws were broken? We're going to dive into the legal impact here.

(COMMERCIAL BREAK) KEILAR: President Donald Trump's branding as a brilliant business mogul is officially shattered after "The New York Times" revealed details from tax records spanning decades.

The president paid just $750 in federal income taxes in 2016 and in 2017. And Trump paid no income tax whatsoever for 10 of the fifteen years prior to that.

[14:40:05]

He also got a $73 million tax refund that is currently being investigated by the IRS. It's possible he will have to repay that.

If you're looking at your own paycheck, and wondering how he's paying so little, Trump's businesses are bleeding money, and he's offsetting those losses.

He appears to be paying consulting fees to his own daughter who is already on payroll. He also had some interesting deductions.

All of that said, there's a big difference between tax avoidance and tax evasion and whether this is illegal or not.

The president says the report is fake news. He also said it was illegally obtained information, which it was not.

I want to bring in CNN legal analyst, Jennifer Rodgers, who is a former federal prosecutor and a lecturer at Columbia University Law School.

Jennifer, the median household income is $67,000 a year. And that household is paying 22 percent in federal income taxes. So the president paying only $750 may feel like an quite an affront to them as they wonder why he isn't paying.

Is it an affront? Did he break any laws?

JENNIFER RODGERS, CNN LEGAL ANALYST: Well, it certainly is an affront in the sense that the tax code massively benefits the wealthy in this country, which is something Congress should dig into.

But he also likely broke some laws here. And there are a bunch of things that jump out at me.

First of all, as you mentioned, some of these deductions seem to be ridiculously inflated. The consulting fee arrangements that "The Times" pointed out, particularly to Ivanka, are likely an illegal attempt to evade those taxes.

And then there are two other areas where we definitely would need more information, but I would want to keep an eye on if I was someone looking to make a criminal case here.

Discrepancies between the information in these tax returns and the financial disclosure forms the president is required every year to file as a member of the executive branch. And then discrepancies between the information in the tax returns and information given to banks and other possible lenders, where Michael Cohen told us, in his sworn testimony, the president actually inflated the value of his assets.

So those are areas I would look at in a criminal case.

KEILAR: And then, according to "The New York Times," his deductions included $70,000 in hair styling, $95,000 that went -- that were written off by nine Trump entities that would have gone to a hair and makeup artist who was known to be Ivanka Trump's favorite.

Can you write those things off?

RODGERS: No, it turns out that you cannot. I'm sure you're not surprised to hear that, nor was I. You cannot write those things off.

Now, things like deductions that are put in that aren't really deductions don't typically end up in criminal court with an indictment.

Those are often civil matters. You have to pay that money back but it doesn't result in an actual criminal case. So you know, I wouldn't expect those necessarily to go in that direction.

But they are not proper. They should be -- he should be required to pay that money back.

And some of the other areas that I mentioned in terms of different statements of assets to different entities are more serious and could actually lead to a criminal case if there's an investigator who's willing to do it.

Trump's IRS, Trump's DOJ are not those investigators.

KEILAR: So Eric Trump, in the meantime, is about to sit down with New York prosecutors as part of an investigation into whether the Trump Organization has inflated its assets to get loans.

What does that mean considering this point in time as we have this information?

RODGERS: Well, I mean, the timing couldn't be more ideal for the New York attorney's office who's spearheading this investigation.

Listen, everyone's been trying to get ahold of the tax returns forever. And the A.G.'s office likely already has the New York tax returns, which probably contains much of the same information. So I don't think this is a big surprise to them.

But at the same point, it likely gives them some more ammunition as they question him about the inflation of assets in the loan documents.

You have in one hand the loan documents, which are going to value the assets in a certain way. And then likely in the other hand you have tax returns or at least you have the reporting on tax returns from the "New York Times," which isn't good enough for evidence in court.

But it can give you enough to ask questions of Eric Trump that says, wait, these numbers are different, how can you possibly explain this to us?

KEILAR: Will the president get in trouble for any of this? I mean, for instance, writing off one property in Upstate New York as an investment property when you have on the record it is, by the Trump Web site, said to be a family retreat.

You have Eric Trump saying that this was a home base for him and his brother at one point. It appears more to be something for the family than an investment property. And maybe an investment property but it certainly appears to have yielded no income.

I mean, is there any price to pay for this?

[14:45:02]

RODGERS: In theory, there is. And I do think that there's an appetite to hold them responsible for this conduct, especially in New York State.

But I think what is the most frustrating thing is, you know, this was going on for years and years before Trump became the president, and had all of a sudden, all of these defenses and the inability to be charged and things.

Now, that didn't apply before 2016 and, yet, this has been going on for years with no, you know, no repercussions.

So I think it's frustrating but I think and hope investigators are looking at it and that something will happen because of it.

KEILAR: Jennifer Rodgers, thank you so much.

And next, a Maryland man just got a year in jail for holding parties that violated the state' coronavirus guidelines.

Plus, South Carolina's case count is up in the last week but that is not stopping thousands of people from descending on Myrtle Beach for its annual biker rally.

(COMMERCIAL BREAK)

[14:50:17]

KEILAR: New York City public schools will reopen in person tomorrow for kids in grades K through five.

This is a decision that's coming after a lot of back and forth, including just yesterday when a prominent union representing school principals in the city gave the mayor a vote of no confidence over school reopening measures.

Laura Jarrett is the anchor of CNN's "EARLY START." She is following this story for us.

Laura, kids in elementary school head back to school tomorrow. Tell us about the safety precautions that are being taken.

LAURA JARRETT, CNN ANCHOR, "EARLY START": That's right. All eyes are on New York as the kids head back to school this week.

There's also been in dustup, as you mentioned, between the principal's union and Mayor Bill De Blasio. The union unanimously voting to have a vote of no confidence in the mayor.

He's faced a lot of criticism as he's pushed back the start date for in-person learning twice. There's also been criticism about staff shortages of teachers.

But even as kids go back to school this week, Brianna, there's questions of how long it will actually last as about half of kids have been doing remote learning already, about a half of the 1.1 million students.

And there's also questions because there have been these COVID clusters cropping up across the city, namely in Brooklyn and Queens.

So as a part of that, New York Governor Andrew Cuomo announced today that schools will be regularly tested daily to manage these clusters.

And they're also sending about 200 rapid testing units across the city, particularly to those high-risk areas where we see the cases cropping up.

KEILAR: Laura, thank you so much for that update.

For more coronavirus headlines around the country, let's check in with our CNN correspondents.

(BEGIN VIDEOTAPE)

JEAN CASAREZ, CNN CORRESPONDENT: I'm Jean Casarez, in New York. A Maryland man has been sentenced to one year in jail for violating the state's order of not having gatherings more than 10 people.

Shawn Marshall Myers was convicted on Friday on two of counts of failing to comply with that emergency order.

On March 22nd, he held a gather of about 50 people. The police arrived, they told him to disband it and he said he would.

Five days later, he held a party of more than 50 people. When police arrived, he said he would not tell them to leave.

He will spend his time at the Charles County Detention Center.

CNN has reached out to his attorney for comment. He has not responded to our calls.

NATASHA CHEN, CNN NATIONAL CORRESPONDENT: I'm Natasha Chen, covering bike week in the Myrtle Beach area. The Annual Fall Motorcycle Rally in Horry County, South Carolina, is under way going through October 4th.

This year, the event required a special waiver from the state to have a large gathering. The state's approval of bike week stimulates required social distancing and face masks.

But the week-long event stretches across 70 miles, according to one of the event organizers in North Carolina, right across the border.

He said his message to attendees is just to use common sense and that wearing a mask is up to the individual.

He also said there could be up to 20,000 people in total across the whole week, even though South Carolina's waiver lists the event as having only up to 5,000 people.

BRYNN GINGRAS, CNN NATIONAL CORRESPONDENT: I'm Brynn Gingras, in New York. A wedding in New York City got shut down this weekend after authorities found nearly 300 party guests partying inside a venue.

This happened in Queens. And heavily goes against the COVID-19 restrictions that are in place in this city.

Authorities with the New York City's Sheriff's Office issued a ticket to both the manager and owner of the venue. Both of them did not return CNN's calls for comment.

This comes, though, as the city saw a thousand new coronavirus cases on Friday, the most its seen since June.

(END VIDEOTAPE)

KEILAR: Back to our top story, the stunning "New York Times" report that lays out how the president managed to avoid paying federal taxes for years and the mountain of debt that he's piled up at the same time.

[14:54:07]

We're going to discuss how that debt could potentially compromise national security.

(COMMERCIAL BREAK)

KEILAR: Wildfires have ravaged towns across the west. And the forecast show there's no relief in sight as the region experiences record heat and no rain.

CNN correspondent, Dan Simon, is in St. Helena, California, where thousands are evacuating.

(BEGIN VIDEOTAPE) DAN SIMON, CNN CORRESPONDENT: Brianna, California's wine country is once again under siege. You can see all the smoke behind me. And earlier, you could really see the flames darting into the air.

The town of St. Helena, where I am, it's taken on significant damage. We drove through some the neighborhoods. We saw that several homes have been destroyed.

At least one winery has been destroyed. Of course, this area is known for its wineries. It's known for its vineyards. You can see one of them behind me.

This fire is being pushed by the wind. And it's reached the nearby town of Santa Rosa, which, just a few years ago, had unthinkable losses. Thousands of homes destroyed. So they're dealing with this once again.

It appears people are heeding the evacuation orders. We saw cars heading south. People headed towards safety. So that is good news that it looks like everyone is taking this seriously.

But the bottom line is, this area remains under a red-flag warning through tonight. Hopefully, crews will begin to make some progress. But right now, this fire is zero percent contained -- Brianna?

(END VIDEOTAPE)

[15:00:06]

KEILAR: Dan Simon, thank you.

And our special coverage continues now with Pamela Brown.