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Erin Burnett Outfront

Rep. Eric Swalwell (D-CA) Discusses The Reason Of Getting Out Of The Presidential Bid; Trump Says He Will No Longer Deal with U.K. Ambassador to U.S.; Jeffrey Epstein Charged with Luring, Abusing Girls At His Mansions; Pelosi Stands By Comments Dismissing Ocasio-Cortez's Influence. Aired 7-8p ET

Aired July 08, 2019 - 19:00   ET

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

ERIN BURNETT, CNN ANCHOR: OUTFRONT next, Warren's rising, Elizabeth Warren gaining a lot of money outracing two key rivals as another 2020 contender calls it quits tonight. Plus, President Trump says he's done dealing with the U.K. ambassador to the U.S. because he criticized him. So why is the President still talking to a dictator who has said things about him that are far, far worse? And Jeffrey Epstein, a politically connected multi-millionaire charged with operating a sex trafficking ring with underage girls. He's connected to a lot of people including President Trump and former President Bill Clinton, what's next? Let's go out front.

Good evening, I'm Erin Burnett. OUTFRONT tonight, Warren's windfall. Senator Elizabeth Warren, tonight, turning momentum into cash raising a stunning $19 million for her presidential campaign in the second quarter, according to her campaign. Now, this is more than triple the amount Warren raised in the first quarter.

And here's the thing, this is despite holding no fundraisers, not a single one. Her fundraising haul puts her behind Pete Buttigieg and Joe Biden in the Democratic field ahead of Bernie Sanders and Senator Kamala Harris. And when you break Warren's numbers down, the $19 million as I said no fundraisers, this is all small donors, 384,000 people, more individual donors than either Buttigieg or Biden and Warren knows it.

(BEGIN VIDEO CLIP)

SEN. ELIZABETH WARREN (D-MA), PRESIDENTIAL CANDIDATE: As a reminder, you really can build a grassroots movement. A grassroots movement fueled by new people.

(END VIDEO CLIP)

BURNETT: Fueled by new people, 80 percent of Warren's donors are first-time donors to her campaign. Money and polls go hand in hand for Warren right now according to our latest poll at CNN. She's up 8 percentage points after last month's debate. Biden and Sanders are both down and what's amazing altogether though if you just think about this for a moment it's how many Americans are willing to put their own money into a presidential campaign, an election give it to politicians. Trump's campaigns and his committees say they've raised more than a

hundred million dollars all-in, $54 million for him, $51 million for the RNC. That's a lot. And the top seven 2020 Democratic candidates together have raised the same amount. I mean these are jaw-dropping numbers.

MJ Lee is traveling with Elizabeth Warren. She's out front live in Peterborough, New Hampshire. MJ, how significant it is this money and the context here tripling in the second quarter from the first for her campaign.

MJ LEE, CNN CORRESPONDENT: That's right, Erin. This is a significant fundraising haul for Elizabeth Warren. In addition to the $19.1 million that she raised in the second quarter, the other number that they're going to be pretty happy about today is $19.7 million. That is how much cash she has on hand heading into the third quarter and why is this significant, because first of all you might recall that at the end of the first quarter she actually just had 11 million dollars cash on hand. It just goes to show that she is continuing to grow her war chest.

And second, I think it answers the question of can she continue to invest in a large organization. The campaign tell CNN today that they're staffing is now up to around 300 people and that around 60% of those folks are based in the for early states. At the end of the first quarter, when she had just raised $6 million, a huge question that was looming over her campaign was whether or not she could continue to make those investments, keep hiring people and it seems like at least for the time being the answer is obviously yes for the Warren campaign.

And as you noted, Erin, the thing that she is going to continue to hit on, the theme is going to be this idea that she is running a grassroots campaign. When I asked her after this event in New Hampshire tonight was she makes the fact that a billionaire like Tom Steyer might be getting into the race. She says she certainly hope that every one of the Democratic candidates that gets in the race will try to model their campaigns after hers and that they run a grassroots campaign as well, Erin.

BURNETT: All right. Thank you very much MJ and tonight the Democratic field is narrowing. Congressman Eric Swalwell tonight leading the race. He's the first candidate to do so since the race really began and he's planning to run for re-election to Congress instead. Congressman Swalwell joins me out front.

Now, Congressman, I appreciate your time. Look, I know this was a really hard decision and you were on the debate stage just a couple weeks ago. You had some really big moments. What made you choose to get out of the race now?

REP. ERIC SWALWELL (D-CA): Good evening, Erin. And thanks for having me on. I said from the beginning, I was running to win and to make a difference and the issue that would have been my top priority as president was to end gun violence and I feel like we did advance that issue to a top-tier issue. But I also promised my family and my constituents that I'd be honest about our chances and after the debates and as the fundraising quarter closed, it just wasn't there and if we didn't see a path to winning, there's no other reason to stay in and so I wanted narrow this field and let others have their shot so we can get a nominee who can beat Donald Trump.

[19:05:09] BURNETT: So I want to go through as you raised and talk about the fundraising, but also how many people are on that debate stage and I just went through some of those numbers right together Democrats raised twice what Trump individually raised in this quarter but he brought in you know more than twice what any individual Democrat has.

So in other words, it's broken up among a lot of different people. Do more Democrats need to follow your lead Congressman and get out of the race, get off that debate stage so you can get a nominee.

SWALWELL: It's a really personal decision, Erin, and I would just say I support the Democratic Party process led by Tom Perez which is too narrow the field and raise the thresholds. I do think as time marches on, as we go to this July debate and then the September debate and the polling threshold and the donor threshold goes up, that'll be good, and it's enough time for anyone who's on the stage right now to make their case and see their campaign grow but we do want to really start to see the field shrink so that candidates can contrast themselves and I just found the hardest thing was to contrast myself with so many other candidates when you have a field of 20 plus individuals.

BURNETT: Yes. I mean, and that was the hard thing right now. But I mentioned at the debate, you had 10 people on the stage obviously, both night, you still had some really memorable moments including this one.

(BEGIN VIDEO CLIP)

SWALWELL: I was six years old when a presidential candidate came to the California Democratic convention and said it's time to pass the torch to a new generation of Americans. That candidate was then Senator Joe Biden. Joe Biden was right when he said it was time to pass the torch to a new generation of Americans 32 years ago, he's still right today.

If we're going to solve the issues of automation, pass the torch. If we're going to solve the issues of climate chaos, pass the torch. If we're going to solve the issue of student loan debt, pass the torch. If we're going to end gun violence for families who are fearful of sending their kids to school pass the torch.

UNIDENTIFIED MALE: Vice president would you like to sing a torch song?

JOE BIDEN, FORMER UNITED STATES VICE PRESIDENT, PRESIDENTIAL CANDIDATE: I would. I'm still holding on, on that torch.

(END VIDEO CLIP)

BURNETT: Congressman, would you support Vice President Biden if he's a nominee or does he really need to pass the torch?

SWALWELL: Absolutely and what I would be looking to if he is our nominee is who he assembles as his team. And I had a very good conversation with the vice president today, he could not have been more gracious and thanked me for bringing up the issue of gun violence and said that he is looking to have a diverse team to help him and so I'm excited for that.

The lesson for me there, Erin, I guess is when my two-year-old son Nelson now becomes old enough to run for president, if I'm ever thinking about running for president again, I better do it before he's old enough and can throw that line in my face if he's also on the stage.

BURNETT: Well. I mean, yes, but it was a point you raised. Obviously, it's something that came from your heart. Today, there have been several other candidates, it's interesting you say you spoke to Joe Biden but also others have you know reached out to you via Twitter your fellow California Kamala Harris wrote, "Eric Swalwell, you're a great fighter for the people of California. We are a stronger nation because of your work to protect our children and our communities from gun violence." Are you thinking of endorsing her?

SWALWELL: I'm going to take some time and as I was coming on air spoke with Senator Warren and Senator Booker. And so, now, I'm going to take some time. I'm going to be looking at who will elevate the issue of gun violence as their top issue and to promise Americans that we don't have to live this way and that through policies we can put in place and as a majority of the support among Americans we can ban and buyback assault weapons. We can have background checks and address city violence as well.

BURNETT: You are obviously going to run for re-election to Congress now and I want to turn to that. Congressman Justin Amash, your colleague in Washington who just left the Republican Party because he split with them. He supports impeachment proceedings. They want no parts of him anymore. He said this yesterday about your Speaker, Nancy Pelosi's lack of support for the impeachment proceedings he, a Republican, supports. Here he is.

(BEGIN VIDEO CLIP)

REP. JUSTIN AMASH, (D-MI): When she says things like, "Oh, I think that we need to have the strongest case before we go forward." What she's telling the American people is she doesn't think there's a strong case. If she doesn't think that, then she shouldn't open her mouth in the first place and say she thinks there's a impeachable conduct.

I do believe there's a strong case. I believe she believes there's a strong case and if so she should move forward and make sure that the American people understand what's going on.

(END VIDEO CLIP)

BURNETT: Amash also said behind the scenes that a lot of his fellow Republicans are thanking him, thanking him for what he did. Is he right about the Speaker that she keeps saying there's impeachable conduct, but she doesn't support going ahead with impeachment proceedings that ultimately what he's saying is she shouldn't have opened her mouth then?

SWALWELL: Well, I support an impeachment inquiry as well but I think Speaker Pelosi plays a different role than Mr. Amash and I do. She's the conductor of the symphony and she has to make sure that if we go toward impeachment, that all of the instruments are tuned and every performer in the symphony is playing from the same pages and in sync with each other.

[19:10:14] And so it's a different responsibility for her and she hasn't taken it off the table and we have a big hearing coming up next week with Bob Mueller coming in to testify. And I think that'll be illuminating for the American people.

BURNETT: All right. Well, Congressman Swalwell, I know this was a challenging day for you on some level, but I thank you very much for coming on and talking with us. Thanks.

SWALWELL: The work goes on. Thank you, Erin.

BURNETT: And next, Biden sticks by Obama on the campaign trail.

(BEGIN VIDEO CLIP)

BIDEN: Barack Obama and I ...

Barack and I ...

Barack and I ...

Barach and I ...

Barack and I ...

(END VIDEO CLIP)

BURNETT: So how come Barack isn't saying Joe and I? Plus, a leadership crisis in the Trump administration, 19 senior Pentagon positions right now no permanent appointee. Former Secretary of Defense Ashton Carter responds. And Nancy Pelosi calling out Alexandria Ocasio-Cortez dismissing her allies on the Hill. Tonight, the freshman Congresswoman fighting back against Pelosi.

(COMMERCIAL BREAK)

[19:14:45] BURNETT: New tonight, former President Obama and Joe Biden have not talked directly since last month's democratic debates. Now, this is according to two people close to them who tell this to our Jeff Zeleny. But they say they're advisors are in regular contact and that team Obama was aware of Biden's plan to strongly embrace him as Biden apologized you remember for saying that he was proud that he had been able to work with segregationist Senators to get things done. Out front now Keith Boykin who was a White House aide for President

Clinton and former White House Communications Director under President Obama Jen Psaki. So Keith, look, we all know the Obamas and Bidens became very close, okay, so now you've got Obama and Biden that's - I mean, this isn't a thing where you need to go through advisors. They have each other's cell phones. They could talk.

So to me it seems not insignificant that they have not done so directly since the debate two weeks ago when Biden was widely perceived as having done poorly.

KEITH BOYKIN, FORMER WHITE HOUSE AIDE UNDER PRESIDENT BILL CLINTON: Well, I don't know what the president could say to Vice President Biden at this point other than I'm staying out of this. So I think it's wise for Obama not to involve himself in this. I think Michelle Obama was the right to make the comment that their whole family was staying out of this and that's what former presidents do.

They let the people decide not the party elders decide and then they come in and they endorse whoever the nominee is. So I'm not concerned for Joe Biden or for Barack Obama I think this is sort of standard operating procedure for both of them.

BURNETT: It does, Jen though, and I and I get the point, but it seems weird as a person. They're personal friends, the personal advice, I mean, and Keith's just mentioned Michelle Obama, the former first lady, was asked about this and here's how she answered it just yesterday.

(BEGIN VIDEO CLIP)

MICHELLE OBAMA, FORMER FIRST LADY: Barack and I are going to support whoever wins the primary. So our primary focus is letting the primary process play out, because it's very early. It's like trying to figure out who's going to win the World Series on the first seven games.

(END VIDEO CLIP)

BURNETT: And yet, Jen, people want to hear, "We love the guy. He's great. We're not going to endorse." But that's not what people are getting.

JEN PSAKI, CNN POLITICAL COMMENTATOR: Sure. Look, I think first of all Michelle Obama, she's the first one to say she's not political and she doesn't want to be political. She's retired from politics and I think what you just saw is her being really, really careful. She and former President Obama know that anything they say, anything positive or negative they say about anybody will be kind of judged and picked through to see kind of what they think.

And as Keith said and I couldn't agree more, they made a strategic decision to stay out of this, not maybe forever but for now because they think that's the best way to get the party and the people who are supporting all 24 candidates or 23 now united behind Donald Trump. And that's really where their focus is. BURNETT: All right. BUT then, Keith, this brings me to the issue

that Biden has, okay, which is that he's currently defining himself by Barack Obama who is not currently willing to define himself by Joe Biden, okay? So you have Joe Biden falling in the polls after the last debate, Joe Biden looking to find his footing as who am I and yet this is what we keep hearing from him. This is just the past few days.

(BEGIN VIDEO CLIP)

BIDEN: BIDEN: Barack Obama and I ...

Barack and I ...

Barack and I ...

Barach and I ...

Barack and I ...

(END VIDEO CLIP)

BURNETT: Unrequited love? I mean is that going to work?

BOYKIN: Well, obviously, President Obama still has a great deal of affection for his former vice president. I'm sure they like each other, but that doesn't mean that Biden should be President of the United States. What Joe Biden's got to do is he's going to offer a message for why he should be the president for the future, not the president for the past.

We went through Obama, Democrats are pleased with Obama, but we don't want to have another Obama. We want to have a new president to move the agenda forward and having somebody who takes us backward is not helpful. So if Biden wants to move his campaign forward, he's got to come up with new ideas. He can't just rest on his laurels.

BURNETT: And Jen, look, we've seen a 10-point decline in support for Biden since the debate. And since that happened, since that decline, you hear Biden more and more going into the corner of Barack and I, Barack and I, Barack and I.

PSAKI: Yes, it's clearly become a safe place. It's like a security blanket in some ways. And they do have a close relationship. I mean they're not daily text buddies or anything like that, but they did build a close relationship over many ups and downs for both of them in their lives.

I do think if it was possible to transfer support from an endorsement or a friendship, Hillary Clinton would be president. Barack Obama campaigned his heart out for her, it didn't mean that the same level of turnout was there or people, African-Americans or young people who had supported Obama, the same counties - there are a hundred counties that Obama won that she didn't. So it just doesn't work that way and I think that's a lesson from 2016 that I hope that Joe Biden starts to digest. BURNETT: Keith, she has a point, because somebody else tried this

game and here is that person.

(BEGIN VIDEO CLIP)

HILLARY CLINTON, FORMER FIRST LADY OF THE UNITED STATES: President Obama and I ...

President Obama and I ...

President Obama and I ...

President Obama and I ...

I worked with President Obama.

(END VIDEO CLIP)

[19:20:04] BURNETT: That was not a winning slogan.

BOYKIN: No. I mean in 2008 we had a candidate who ran for president and lost. Served in the Obama administration and then ran for president later on and became Democratic nominee. Now, we're in 2020 cycle, we have another candidate who ran for president in 2008 and lost who served in the Obama administration and now wants to run for president.

It didn't work the last time. It's not going to work this time unless you have some other message to offer Democrats aren't even likely to support that message unless you have something other to offer. And I know Biden is leading in the polls right now, but that is a very tenuous lead that could fall apart as soon as other candidates gain traction.

BURNETT: All right. And I guess, Jen, I would say maybe the one thing I noticed just listening to those sound bites played side by side perhaps it is Joe Biden's informality when referring to President Obama as Barack which might hurt him a little bit more, because that is someone you're that personally close with, the lack of an endorsement almost seems to sting worse than someone you would be formal with, psychological analysis but --

PSAKI: It may be, Erin, and I think Barack Obama wants to defeat Donald Trump and I think he loves Joe Biden, but just like the rest of the American public he's looking at the race, he's looking at all of the candidates and then he knows that the process can also reveal the strongest opponent. I mean that was the case for him.

At this point in the race, he was down by double digits and everybody had counted him out. So there's a lot of time left. I don't think he's ruled out ever endorsing and he could certainly come in when there's a moment when the party needs to come together whenever that may be. But this is a strategic decision he's made for now.

BOYKIN: I know you're going to go - let me say one quick point, I do think that Joe Biden should refer to former President Obama as President Obama not as Barack. I think it borders on being disrespectful, despite their close relationship I don't think it's appropriate for him continue doing that.

BURNETT: All right. Thank you, both very much. And next, Trump says he's done dealing with the British ambassador because he's criticized him. So why is the President still talking to a dictator who has called him far, far worse? Plus, he's rubbed shoulders with the who's who, socialized with the President and the prior president, now in jail facing sex trafficking charges with underage girls. How many people are nervous tonight?

(COMMERCIAL BREAK)

[19:26:39] BURNETT: New tonight, President Trump vowing never to again deal with the British ambassador to the United States. The top diplomat of America's closest ally. Why? Well, because Ambassador Kim Darroch criticized the President in private messages that were leaked. President Trump tweeting, quote, I do not know the Ambassador but he has not liked or well thought of within the United States. We will no longer deal with him.

Well, first of all, Trump of course does know ambassador Darroch, he's met him multiple times. In fact Darroch was actually scheduled to have dinner with President Trump tonight until he was disinvited. Because now Darroch is dead to Trump and this was the nail in the coffin. Darroch writing in one of the leaked documents, quote, we don't really believe this administration is going to become substantially more normal; less dysfunctional, less unpredictable, less faction-riven, less diplomatically clumsy and inept.

Adding that he doesn't think the White House will, quote, ever look competent. All right. That's sort of tough criticism and so president Trump has a right to be upset to not want to deal with a specific ambassador or ask that that person be replaced. But here is the problem, he is holding the ambassador of our closest ally to a much higher standard than anyone else. In fact, someone who really had choice words for the president.

Do you remember dotard? North Korea's leader Kim Jong-un in an official statement, an official statement about President Trump in 2017, not even a leaked secret thing an official statement, quote, I will surely indefinitely tame the mentally deranged U.S. dotard with fire. Oh, and Kim also called Trump a frightened dog and a gangster. Trump's response to that, no not getting banned or canceling dinner with him, love letters.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I was really being tough and so was he. And we go back and forth and then we fell in love, okay? No, really, he wrote me beautiful letters and they're great letters. We fell in love.

(END VIDEO CLIP)

BURNETT: Trump met Kim three times after Kim called him a mentally deranged dotard gangster dog. So let's get this straight. If you're an American ally and you criticize the President and the administration with being clumsy and inept, you're done. But if you're literally a murdering dictator, you get love letters. Abby Phillip is out front live outside the White House.

And Abby, the U.K. is sticking behind its ambassador which is actually very significant tonight, not bending to this at this point. How far is President Trump willing to take this fight?

ABBY PHILLIP, CNN WHITE HOUSE CORRESPONDENT: Well, at least, for now the President is doing what he can to make this situation as uncomfortable for the U.K. ambassador as possible. This disinvitation for a dinner that is actually going on right now as we speak is the latest public sign that the President's anger is really being materialized in concrete ways. But at the same time, this could be one of those decisions that is out of President Trump's hands.

The U.S. is in, as you know, a political turnover period right now. They are about to elect a new prime minister and in that process, it may be possible that the U.S. receives a new ambassador anyway. So President Trump has sent a message in this tweet by saying that he associates Ambassador Darroch with Theresa May's administration which is on its way out.

He is sending a message to the candidates who are vying to become the new prime minister that whoever is in that position needs to be in favor with the White House but he's also doing it by also misrepresenting the relationship over the last several years.

[19:30:02] Despite what was said in these cables, the U.K. and the United States have had a pretty good relationship up until this point. But President Trump clearly wants this embarrassment put behind him. And I think at the moment, it's going to be up to the U.K. what they do about it once their new administration comes into power.

ERIN BURNETT, CNN HOST: All right. Abby, thank you very much.

I want to go OUTFRONT now to the former secretary of defense under President Obama, Ashton Carter, author of "Inside the Five-Sided Box: Lessons from a Lifetime of Leadership in the Pentagon."

Under many presidents, Secretary Carter, you have served. So, President Trump won't work with Ambassador Darroch because he insulted him. He says he didn't know him but, of course, he does. And Darroch was even going to go to dinner tonight, but that obviously got canceled.

So the president is willing to work very fondly with Kim Jong-un. What do you make of Trump's response to the British?

ASHTON CARTER, FORMER SECRETARY OF DEFENSE: Well, I mean, when cables like this get leaked, no good can come of it. But, you know, the relationship's bigger than any particular individual. And the British have been a good friend of ours, and we've been a good friend of theirs for a long time. When I first worked in the pentagon, it was the Reagan administration.

Caspar Weinberger was the secretary of defense. And we helped the British in the Falklands War. They didn't forget that. We worked together in the Cold War. We worked together in Afghanistan, Iraq, terrorism.

And you know, it's a country that shares our political values as well. So this whole thing is bigger than any one personality.

BURNETT: Right, whether it's I suppose an ambassador or the president of the United States. I mean is the implication. Obviously, the U.K. Prime Minister Theresa May, her spokesman says may has full faith in Kim Darroch, full faith, and providing an unvarnished assessments, that's again a quote, is the ambassador's job, so standing by the ambassador, defiant as President Trump says get rid of this guy.

Are you surprised the U.K. is standing defiant on this?

CARTER: I'm not surprised. Nobody's in a good position. Here our president isn't because he's been insulted. Their leader isn't because cables that were to the leadership and supposedly in private have been leaked. Lord knows the ambassador's not in a good position.

I would hope that we all recognize that this is a relationship that's bigger than this situation and we get through this and continue on with the important business we have. You know, spin a globe, anybody listening to this or you, Erin, or me. And look where on the earth you think there are people who kind of share what Americans cherish and stand for and stick up for. And the British are one of those.

BURNETT: So, you know, obviously, this I point out, the stark contrast in the way the president handles this as opposed to Kim Jong- un. You write in your book about U.S. policy and you say -- let me just -- in one memo on June 27th what Darroch says and I'll compare it to what you say. He wrote: It's unlikely that U.S. policy on Iran is going to become more coherent anytime soon. This is a divided administration.

That's what Kim Darroch said. In your new book, secretary, you write, I couldn't accept an offer from someone like President Trump. By no means do I disagree with all his policies, but there would be major differences between us on important issues like Russia, the Middle East, and the importance of alliances. More important, I couldn't support decisions about defense made on sudden impulse.

It sounds like you feel much the same way as the British ambassador.

CARTER: Well, this is a passage in the book on which I'm answering the question if the president calls you -- and this is completely hypothetical in my case.

BURNETT: Right.

CARTER: Should you automatically say yes? And I say no, you shouldn't automatically say yes. You should say can I help the president to succeed? Because that's the principal reason why you take a job like that.

My reservation about President Trump and his secretary of defense is that he doesn't seem to listen to his secretary of defense. I was lucky. The president I worked for when I was secretary of defense listened to me. But I mentioned Weinberger and Reagan long ago when I first started my career, Cap Weinberger was listened to by Ronald Reagan and therefore, Weinberger could help the president to get where he wanted to go.

And President Trump doesn't seem to listen to the leader of his Defense Department. I will find that pretty frustrating.

BURNETT: As certainly Jim Mattis did.

In that context, we are dealing with an escalation with Iran, right? They are now -- Trump got out of the deal. They're now out of the deal essentially, 3.67 percent. They have exceeded that limit for nuclear power. They're now at 4.5 percent for uranium enrichment. They say look, Europe, you've got a couple months and then we're going to 20 percent and once you get there, obviously some experts say you could be weeks away from a nuclear bomb if you wanted one.

How significant is this?

[19:35:00] CARTER: I think it's a toe in the water. I think they're not going to be able to sprint real quickly to a bomb. One of the nice things about the JCPOA, whatever you thought of it, that is the Iran nuclear agreement, was it required them to destroy a lot of stuff up front. So there are some things they can't put back together very quickly. That's a good thing.

I mean, if I were -- I'm less concerned about that with Iran at the moment than I am -- and I'm less concerned about deliberate or advertent war between the two sides because both governments say they don't want war. But I am very aware, and I was very aware as secretary of defense, how close up against one another we are there in the Gulf.

BURNETT: Yes.

CARTER: So in an advertent war in a climate where everyone's trying to measure everyone else and not much is going on on the negotiating front, that is my principal concern at the moment.

BURNETT: Also at the Pentagon you're dealing with this as 19 of the most senior roles lack permanent appointees. There's no confirmed secretary of defense. And we've gone through acting after acting. How big of an issue is this for this country?

CARTER: Well, the place has a very deep keel. So it's not going to flounder around. It's got a very strong bench of professional military and civilian leaders. So, that's good.

What it can't do without a leader is move into the future. Only with a secretary of defense can you make the tough decisions and drive the change that the Defense Department, excellent as it is, needs, not because there's anything wrong with it but because the world and warfare are changing so quickly.

And so, we're not moving forward without a leader. We're not going to fall back. We're not going to drift around. We're not going to lead forward.

So I think internally, things will be OK. But in terms of external strategic direction, that's where the absence of a secretary of defense for a long time will really show up. And that's unfortunate.

BURNETT: All right. Thank you very much, Secretary Carter. I appreciate your time tonight.

CARTER: Good to be here with you always, Erin.

BURNETT: And next, multimillionaire Jeffrey Epstein charged with rung a sex trafficking ring with underage girls. He has friends in high places, including the White House.

Plus, Alexandria Ocasio-Cortez fighting back at Nancy Pelosi for slamming far left lawmakers. How is the House speaker responding tonight?

(COMMERCIAL BREAK)

[19:41:07] BURNETT: Tonight, jail. Jail for the multimillionaire Jeffrey Epstein, a man with close connections to President Trump. Epstein charged with paying underage girls for sex, even keeping pictures of them in a safe according to prosecutors. He's pleaded not guilty to charges of operating a sex trafficking ring. Girls involved as young as 14.

But his acts allegedly continued for years, and let's just be honest, were known by a lot of people. And he's as connected as it gets, with ties not just to President Trump but also to former President Bill Clinton.

Miguel Marquez is OUTFRONT.

(BEGIN VIDEOTAPE)

MIGUEL MARQUEZ, CNN NATIONAL CORRESPONDENT (voice-over): Lurid sexual allegations again against multimillionaire investment banker Jeffrey Epstein. New York prosecutors looking for more.

GEOFFREY BERMAN, NEW YORK PROSECUTOR: If you believe you are a victim of this man, Jeffrey Epstein, we want to hear from you.

MARQUEZ: The allegations over four years, Epstein lured underage women, some as young as 14 years old, to massage him and engage in sexual acts in his Palm Beach, Florida, and New York homes. Epstein has pleaded not guilty to the charges.

Epstein arrested Saturday on his private jet upon returning from Paris. Shortly after, investigators forced their way into his Manhattan mansion. In addition to finding hundreds, possibly thousands of photos of nude and partially nude young women, some of them locked in a safe, investigators found, quote, compact discs with handwritten labels including the following, young name plus name, miscellaneous news one girl picks, nude.

BERMAN: The alleged behavior shocks the conscience.

MARQUEZ: Epstein already a registered sex offender after agreeing to a plea deal with prosecutors in Florida in 2008 related to sex crimes alleged by dozens of young and underage women. The man who headed the Florida case, Alex Acosta, now secretary of labor in the Trump administration.

ALEX ACOSTA, LABOR SECRETARY: At the end of the day, Mr. Epstein went to jail. Epstein was incarcerated. He registered as a sex offender.

MARQUEZ: "The Miami Herald" in an investigative report helping prompt today's charges found that Acosta signed off on a deal essentially shutting down an FBI investigation giving immunity to any potential co-conspirators allowing the multimillionaire to pay restitution to his victims, register as a sex offender, and plead guilty to two state charges. He spent 13 months in Palm Beach county jail where he was allowed to leave six days a week, 12 hours at a time.

ACOSTA: The world was put on notice that he was a sex offender, and the victims received restitution.

MARQUEZ: Epstein's connections go beyond Acosta. Photographed here with Donald Trump in 1997 and 2000 at the president's Mar-a-Lago estate, also in Palm Beach, Florida.

In February this year, the president had this to say about his labor secretary and the plea deal given to his long-time friend.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I really don't know too much about it. I know he's done a great job as labor secretary and that seems like a long time ago.

MARQUEZ: In a 2002 "New York" magazine Epstein profile, Trump said, I've known Jeff for 15 years. Terrific guy. He's a lot of fun to be with. It is even said he likes beautiful women as much as I do. And many of them are on the younger side.

Just yesterday, the president had this to say about Jeffrey Epstein.

TRUMP: No, I don't know anything about it. That I don't know.

(END VIDEOTAPE)

MARQUEZ: Now, in court today, Epstein's lawyer basically said this is a do-over of that 2008 information. Basically, there is no "there" there. Prosecutors say, though, they're already hearing from other victims and lawyers about more possible cases out there -- Erin.

BURNETT: All right, Miguel. Thank you very much.

And OUTFRONT now, Harry Sandick, former assistant U.S. attorney for the Southern District of New York. [19:45:02] You -- Epstein obviously knows the president. There's ties

to the labor secretary. You heard what Miguel said.

Is there more out there? What do you think?

HARRY SANDICK, FORMER ASSISTANT U.S. ATTORNEY, SOUTHERN DISTRICT OF NEW YORK: I think there could be more out there. It's a little bit early to say. But one of the red flags here is that the case is being handled by prosecutors in the public corruption unit, which is not normally the place you would expect to see a sex trafficking case. Many of us in the white-collar community recall when the Elliot Spitzer case first came to light because public corruption prosecutors brought charges involving prostitution in that case.

And so, one does wonder, although we don't have any basis for it, the U.S. attorney was asked is this because of some public corruption angle and he declined to comment. But one does wonder if there's a reason why it's in public corruption as opposed to just some random thing like a friendship between the case agent and a prosecutor.

BURNETT: So, I mean, you know, obviously, Epstein served 14 months in prison. Well, as we saw, sort of, registered sex offender. But he's a really connected guy. Among others, President Trump, President Bill Clinton. Trump quotes New York magazine again, I've known Jeff for 15 years, terrific guy, a lot of fun to be with. It's even been said he likes beautiful women as much as I do, and many of them are on the younger side.

Making light of this, it seems. Obviously that quote isn't today, but in light of what we've known about Epstein. Bill Clinton puts out a statement tonight acknowledging four flights on Epstein's private jet but saying he knew nothing about anything that Epstein was doing.

Does all that add up to you?

SANDICK: I guess it sort of says a lot about our society and that somebody who has this reputation as has been reported elsewhere can nonetheless ingratiate himself with the wealthy and powerful, and it's disappointing to see. And maybe one of those connections, not Trump or Clinton necessarily, but is why this is being handled by the public corruption unit.

BURNETT: And we just don't know whether those relationships are relevant to it or not at this point.

Harry, thank you very much.

And OUTFRONT next, the feud escalating between Nancy Pelosi and Alexandria Ocasio-Cortez. So, how did this get there?

Plus, Jeanne on President Trump tweeting what he thought was a glowing endorsement from a former president.

(COMMERCIAL BREAK)

[19:51:01] BURNETT: Tonight, House Speaker Nancy Pelosi downplaying the influence of Alexandria Ocasio-Cortez and other freshman Democrats. Pelosi telling "The New York Times", quote: All these people have their public whatever and their Twitter world, but they didn't have any following. They're four people and that's how many votes they got on the border bill. Ouch!

Ocasio-Cortez firing back, using Pelosi's words against here, tweeting: a glass of water could have beat a 20-year incumbent, the Green dreamer, whatever, the public, whatever. Those aren't quotes from me. They are from the speaker. Having respect for ourselves doesn't mean we lack respect for her, it means we won't let everyday people be dismissed.

Phil Mattingly is OUTFRONT.

Phil, these are sometimes the most sarcastic, how is Pelosi responding?

PHIL MATTINGLY, CNN CONGRESSIONAL CORRESPONDENT: Yes. So, the speaker, you know, isn't backing down but she's expanding a little bit and, Erin, I think the context is this was a divisive debate over that border funding bill, an emergency border funding bill and the speaker referring to the House Democratic version in which four Democrats led by Alexandria Ocasio-Cortez voted against it.

Here is how the speaker expanded on what she was trying to say in the "New York Times."

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI (D-CA): Our blue dogs, our moderates and all the rest voted to protect the children. They did not and they did not have a further following. So that was what I was saying. They have a following in the public, but I'm just talking about in the Congress.

(END VIDEO CLIP)

MATTINGLY: And, Erin, I think what you're seeing is reflective of each individual, both who they represent and their respective power bases. For the speaker and what she's trying to say right there actually reflects what she said over the course of the last couple months. Some of the issues Alexandria Ocasio Cortez points out in the tweet. She represents all 235 members including those from districts they flipped in 2018 that President Trump had won in 2016 and so, she focuses on that.

Internal dynamics are her power and her power base. Alexandria Ocasio-Cortez, she was thrust into the national spotlight by running an insurgent campaign. Her power comes from the outside. Her power comes from the massive social media following and from the fact she was largely sent by a progressive base that expects her and like- minded colleagues to essentially break things.

So what you have, Erin, is two very different mentalities. Two very different focuses and sometimes they clash. The big question is coming up in the months ahead, there's going to be more immigration related issues, more spending issues. Can the speaker and Alexandria Ocasio-Cortez stay in line with one another on those big issues, well, that, we just have to wait and see, Erin.

BURNETT: That's right. The schism is even bare.

Thank you very much, Phil.

And next, President Trump tweets that Reagan predicted his presidency but that is not what Jeanne Moos uncovered.

(COMMERCIAL BREAK)

[19:57:27] BURNETT: Tonight, in the words of Reagan, there he goes again. Here is Jeanne Moos.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN NATIONAL CORRESPONDENT (voice-over): President Trump tweeted it with a four letter comment: Cute.

But a better world would be false. What the president linked to was a photo of President Reagan meeting Donald Trump back in 1987 with this prophetic Reagan quote super imposed credited to Reagan: For the life of me and I'll never know how to explain it, when I met that young man, I felt like I was the one shaking hands with a president.

Critics shook their heads. For someone who is constantly shouting fake news.

TRUMP: Fake news.

MOOS: Sure do like to retweet it.

"PolitiFact" gave it a pants on fire, quoting the administrative head of the Reagan Foundation as saying, he did not ever say that about Donald Trump.

(on camera): To mock the fake Reagan quote, critics on Twitter responded to President Trump with a real Reagan quote.

RONALD REAGAN, FORMER PRESIDENT: There you go again.

MOOS (voice-over): Reagan's quip to Carter during a debate.

Trump and Reagan did share the same slogan.

TRUMP: We are going to make America great again.

REAGAN: Make America great again.

MOOS: But great isn't what Reagan's daughter says her dad would think of the Trump presidency.

UNIDENTIFIED FEMALE: I think he would be horrified.

MOOS: If Reagan didn't actually predict Trump's presidency, maybe George did. Donald J. Trump is going to the best, most handsome president ever. George Washington after liberating the airport at Fort McHenry. That's a dig at President Trump's Fourth of July blooper touting the Continental Army success.

TRUMP: Our army manned the air, it rammed the ramparts, it took over the airports --

MOOS: Airports in 1776. The president blamed the rain soaked tell prompter.

TRUMP: Right in the middle of the sentence it went out.

MOOS: Inspiring Sidney Blumenthal to impose the war quiz with questions like did George Washington shuttle airline go bankrupt before or after he captured LaGuardia? Cute.

Jeanne Moos, CNN, New York.

(END VIDEOTAPE)

BURNETT: And tonight, some great news. We have a new addition to our team.

Nicholas Lee is a July Fourth baby surprising his mom, our executive producer Susie, and dad Dave. Look at his big brother Nolan. This is a proud little guy beaming with joy. He is as proud as can be, Nicholas Lee, Lee is his middle name means gift in Chinese and he's a true gift to that family.

And to Susie, just wonderful and adorable, and congratulations to the whole family. Enjoy your special moments with him.

And thanks to all of you for joining us.

"AC360" starts now.