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Manafort Lied About Foreign Bank Accounts to Tax Firm; Ted Cruz Launches First T.V. Ads For 2018 Senate Campaign; WH Credits Tax Cuts, Regulatory Reform For Job Growth; China Threatens to Retaliate, Impose Tariffs on $60 Billion of U.S. Goods; TN Primary: Trump's Endorsement Streak Rolls On. Aired 12:30-1p ET

Aired August 03, 2018 - 12:30   ET

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

[12:30:00] NIA-MALIKA HENDERSON, CNN SENIOR POLITICAL REPORTER: -- to banks about his finances to get loans. The indictment alleges that Manafort asked Gates to doctor those financial documents. And we've got CNN's Shimon Prokupecz, who's been all over this case. Shimon, what have we learned so far?

SHIMON PROKUPECZ, CNN CRIME AND JUSTICE REPORTER: Yes, I think it's another devastating day quite honestly for Paul Manafort. And that the mounting evidence, they just wrapped up a witness on the stand. They're now at lunch where the witness says that -- who works at an accounting firm, said that they have reached out to Paul Manafort and Rick Gates in e-mails saying, you know, if Paul Manafort has any foreign accounts, if there's anything that we need to claim on any of his tax forms, we need to know. And Paul Manafort and Rick Gates both said, no, don't worry about it, there are no foreign accounts.

So here again, you know, another day of just building out this case for the prosecution, showing that Manafort was trying to hide this money, was not reporting it to the IRS, to Treasury. So really just devastating evidence. I think, you know, these are kind of boring witnesses, this a lot of financial documents. But this goes to the heart of the prosecution's case.

HENDERSON: And so everything is leading to Gates. He may or may not testify.

PROKUPECZ: That's right. Look, you know, there were some indications that it could be today, it could be Monday. You know, we're still -- we're half a day into this case today. And we know this judge likes to go late and he likes to work fast, quickly. So it could happen today or, if not, Monday.

HENDERSON: And the level of detail in this case that's been laid out so far, the documents -- I mean, some of the documents laying out that show that Manafort is having these financial documents where the actual revenue is zero dollars, but what he's circulating to bank employees is 2.4 million. So he'll really kind of doctoring these documents allegedly.

That level of detail if you were watching this trial, Michael, I imagine if you're Donald Trump, that level of detail might make you a little nervous. MICHAEL SHEAR, WHITE HOUSE CORRESPONDENT, THE NEW YORK TIMES: Right. I mean, I think there's been a lot made about how and -- how we should connect the two investigations. The Manafort case doesn't directly have anything to do with Russian meddling, doesn't directly have anything to do with the obstruction of justice case. But I do think you're right that when you look at the just methodical way that the special counsel has developed the information, developed the level of detail in these documents, and bringing witnesses to testify at just the really granular level, that if you're Donald Trump and you're his associates, sitting -- you know, thinking about fast forwarding in your head how a trial for you might go forward, you know, you got to be worried that this is -- that Mueller is not a guy, and his team, they're not people that just sort of make kind of broad generalities. They get the details. And that's what's going to be problematic for the president, you know, should that ever get to that point.

MICHAEL WARREN, SENIOR WRITER, THE WEEKLY STANDARD: And I think the public part of this case as well. Almost the P.R. side of things. You look at the way that Trump and his associates and campaign -- and other folks have been making the argument that all of these people caught up have are being treated unfairly.

HENDERSON: Right.

WARREN: That Michael Flynn is being treated unfairly, Paul Manafort. He said earlier this week that he's being treated unfairly. Well, it's harder to make that case when you're sort of -- when you've got all these details that are pretty salacio us of all -- the ostrich coat, jacket or whatever. I mean, all the spending that's going on here. He's not exactly -- Manafort is not exactly coming across here as a witness there -- or rather as a person who you feel sympathy for.

HENDERSON: And this idea that he seems to be blaming Gates. I mean, that's essentially what their defense is. And there's some evidence that Manafort was basically creating these false documents. He would send reports to Gates, and Gates would change them from a PDF to a work document and fiddle around with the profit essentially. And then allegedly show those documents to the banks.

KAROUN DEMIRJIAN, CONGRESSIONAL REPORTER, THE WASHINGTON POST: Right. I mean, like there's a lot of finger pointing that's going on in general, right. And so if you're the guy who goes on trial, you're blaming it on the little guy. But of course the little guy is the person who's cooperating with the prosecutors. And that's what's kicking it back up a notch.

You could use this as an example of what's going on in all corners of Trump world right now. There's various different legal cases being built against various people that were Trump subordinates along the way. And Trump is pointing the finger and saying, not me, it's their fault, at every turn.

HENDERSON: Cohen, for instance.

DEMIRJIAN: Exactly. That's the most present example right now. And then -- but the question -- if those people are working with Mueller's team or with other prosecutors and saying, no, actually, you know, I was asked or told to do this through a chain of command that goes back to the big fish, that's problematic for the big fish. And you're seeing that play out here in a different way between Manafort and his deputy.

HENDERSON: So Shimon, maybe we'll see Gates at some point today. There could -- I mean, what would be the gotcha moment for Gates if you're the defense?

PROKUPECZ: Well, look, I think Gates will be a big witness certainly for the prosecution. We're all looking forward to it.

[12:35:01] It's going to bring some highlights. It's going to bring some drama probably to the court. I think we're going to see an aggressive move by the defense team to go after him for sure. So it's going to be interesting.

And also just seeing Gates, we haven't seen Gates in so long. Hearing from him, that is what's going to be the most interesting I think element. It certainly could happen this afternoon, if not Monday.

HENDERSON: All right, we'll wait for that. Thanks, Shimon.

And before we go to break, we want to note a milestone in the Mueller probe. One year ago today, we learned the special counsel issued grand jury subpoenas related to that June 2016 Trump Tower meeting. And one year ago today, Republican Senator Susan Collins had this message for the president.

(BEGIN VIDEO CLIP)

SEN. SUSAN COLLINS (R), MAINE: The president can't set red lines for Bob Mueller.

(END VIDEO CLIP)

[12:40:13] HENDERSON: And topping our political radar, in a new court filing, the Trump administration says the ACLU should be responsible for tracking down the parents of more than 400 migrant children being held at detention centers. Most of the parents have been deported, and the ACLU says although it's eager to help, the government must bear the ultimate burden of finding the participants since it was responsible for separating the families in the first place.

So if actors and reality show stars can win elections, why not pro- wrestlers? Republican Glenn Jacobs better known as WWE wrestler Kane won his bid for Knox County, Tennessee mayor. So after years of playing a WWE villain, Kane has taken off the mask and gets to play the good guy in the mayor's office.

Republican Senator Ted Cruz's campaign launched its first T.V. ads for the 2018 election. And as we mentioned yesterday, his opponent Democrat Beto O'Rourke is catching up. A Quinnipiac poll has him just six points behind Cruz. And one of the new Cruz ads may be sensing the closeness of the race attacks O'Rourke according to the Texas Tribune of the other one Cruz's were helping Hurricane Harvey victims. (BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Ted Cruz, who brought home billions in disaster relief and passed emergency tax relief for those hit by Hurricane Harvey.

UNIDENTIFIED MALE: No official, state, or federal has been more involved in the recovery of Galveston County than Senator Ted Cruz.

UNIDENTIFIED MALE: When the hurricane hit, you stood up for Texas. And Ted Cruz stood up for you.

(END VIDEO CLIP)

HENDERSON: So Ayesha, in that ad, it's a kind of a kinder, gentler Ted Cruz, not the ideological fire brand that we often seeing.

AYESHA RASCOE, THE WHITE HOUSE REPORTER, NPR: He's making the case that he's working for Texas and he's working for local Texans when they need it. The fact that we're talking about Ted Cruz in a competitive race, I think, is what is the issue and should be concerning for Republicans who want to make sure they keep the Senate.

I think that the fact that this race has become competitive is really something to watch. And if something -- if he were to be -- to lose his seat, that would be a huge thing for this idea of a blue wave.

HENDERSON: Yes, it would be the blue wave in and of itself in Texas.

WARREN: Just a little bit of irony. In Ted Cruz, one of the conservatives who never wants government --

HENDERSON: Voted against the Sandy funding.

WARREN: Voted against the Sandy (INAUDIBLE). The ad saying, oh, he got all of this money for you. I mean, there's just some irony there.

HENDERSON: Up next, the new jobs report shows steady growth as China strikes back in the trade war.

(COMMERCIAL BREAK)

[12:47:08] HENDERSON: The U.S. economy is a little light the energizer bunny. It keeps going and going and going and going. The Labor Department says 157,000 jobs were created in July. Now, that's a little less than forecast. But when you look at those average monthly jobs growth numbers, you see that we've been around about 200,000 jobs a month for a number of years now. White House spokesman Mercedes Schlapp says credit belongs solely to the president's economic agenda.

(BEGIN VIDEO CLIP)

MERCEDES SCHLAPP, WHITE HOUSE DIRECTOR OF STRATEGIC COMMUNICATIONS: Our economic fundamentals are strong. There is no question that because of President Trump's leadership, his vision on terms of pushing forward economic policies like tax cuts and tax reform, in addition to his deregulatory agenda, it's working.

(END VIDEO CLIP)

HENDERSON: CNN's Cristina Alesci joins me now from New York. Now, Christina, you've looked at these numbers. What stands out to you in this report?

CRISTINA ALESCI, CNN MONEY AND POLITICS CORRESPONDENT: Well, Malika, one thing that really stands out to me is wage growth at 2.7 percent. That has been stubbornly low. Not a terrible number without context, but the context here is that we are in the later stages of a business cycle. What does that mean? That means that Americans who are able and willing to work pretty much have a job.

So we are at or at near full employment. And at that stage in the business cycle, you would expect to see the wage number between three and four percent, not stuck at that 2.7 percent. So that is going to be a persistent challenge for the administration.

Now, that said, a 157,000 jobs as you pointed out is actually a pretty solid report. I think Wall Street probably wanted to see the number closer to expectations, closer to the average that we've been getting. But again, given the stage and the cycle that we're in, 157,000, how many more jobs can you add?

So I think Wall Street and investors and employers and companies will have to look forward and say, is this the new normal, or is this just a blip and we'll continue on the 200,000 going forward?

HENDERSON: And today we saw that China threaten to put more tariffs on U.S. goods after there was a similar announcement this week from the Trump administration. Are there any signs yet that either side will blink or no? And are we seeing I guess any reaction yet in the jobs market to this potential trade war?

ALESCI: So on whether either side is backing down, no. We see China hitting back, proposing five to 25 percent tariffs on $60 billion of goods, of U.S. goods. That in reaction to the administration floating the idea of 25 percent tariffs on $200 billion worth of goods.

Look, I don't think anybody in the administration is surprised by China's response today and its rhetoric.

[12:50:02] I mean, earlier in the week, China suggested that the U.S. was blackmailing it. So I don't think anybody in the administration really thought that China was going to stand down. But, the reality is President Trump thinks that the U.S. can inflict more harm on the Chinese economy than the Chinese can retaliate with.

And to a certain extent, he's right because the U.S. actually imports a lot more than China imports in U.S. goods. So on a dollar-for- dollar basis, China can't fight back, but it can do other things. It can take other retaliatory measures, and that's the kind of thing that all businesses in the U.S. are bracing for and watching very closely.

HENDERSON: Cristina Alesci, thanks for that report. Next, a big win and a big loss in Tennessee's Republican primary. Did President Trump have a hand in both?

(COMMERCIAL BREAK)

[12:55:29] HENDERSON: President Trump's winning streak with endorsements is alive and well in Tennessee. Congresswoman, who actually likes to be called congressman, Marsha Blackburn getting well over 80 percent of the vote in the Republican Senate primary after enthusiastic backing from the president. She'll face the former governor, Phil Bredesen who easily won the Democratic Senate primary.

But a much different outcome in the governor's race for Congresswoman Diane Black, also likes to be called congressman. Like Blackburn she ran as a Trump ally, but without his endorsement, and came in third in the GOP primary, losing to a political novice, businessman Bill Lee.

Listen to the president's praise here of Blackburn, versus his pretty lackluster treatment of Black.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: And finally, the person we are all here tonight to support, the next United States senator from the great state of Tennessee, a very, very early supporter of ours and a really wonderful woman. She loves your state. She loves your country. She's going to win. Marsha Blackburn.

Diane Black. Diane, where's Diane? She's in a big race. Good luck.

(END VIDEO CLIP)

HENDERSON: Just good luck, Diane. Congresswoman Black losing despite spending millions of her own dollars and getting an endorsement from Vice President Mike Pence. And adding salt to her wounds, President Trump's first tweet of the day, a total and enthusiast endorsement of the man who beat her.

So is the president sort of the X factor here, Ayesha in some of these races?

RASCOE: For Republicans, absolutely. They need to be as close to president Trump as possible. They need to be wearing those hats. They need to be saying whatever they can do to say I am with Trump. Because that clearly is what will get you over the finish line. Diane Black did not have that.

HENDERSON: Yes. She wasn't wearing her hat enough. And this is going to be a really interesting race here. You've got a race between Phil Bredesen, who was the governor of Tennessee. And then you're going to have this other candidate in Marsha Blackburn, who's a real fiery ideological Trump supporter in sort of ideologue in the mold of Donald Trump. What do you see happening here, Michael Warren? Where is (INAUDIBLE).

WARREN: I would say Phil Bredesen is a sleeper to actually win this seat. I don't think it's a guarantee that the Republicans hold on to it, even though Tennessee has gotten much more Republican since Bredesen was in the -- he served two terms in the governor's office. But he's a moderate and he sort of fits the state in a way that I think not a lot of Democrats in the Trump era have been able to do. Maybe in some of these House districts in California where they're trying to beat off Republicans who won in Hillary districts.

Bredesen, I think, fits the mold for what Democrats in Trump states ought to be doing. This is a race I would be watching.

HENDERSON: And what isn't fitting the mold in some of these states, Karoun are people who are House members, not able to sort of get the ticket to the bigger job. We saw that of course with Diane Black. She's the fifth House GOP member to run for statewide office to lose in 2018.

DEMIRJIAN: Right. I mean, you see people making these bids and trying to -- the traditional path, right. That you start in the House, neither go and try to run for governor and you try to make a bid for the Senate as we're seeing in the race. And it's kind of a crap shoot sometimes as to whether that works or not.

At this point, we're also seeing a lot of women trying to make that advance, and it's especially when you're talking about the governor's offices. It's a difficult road and it's one that's going to require a lot of, you know, people kind of break glass ceilings. I think that a few months ago, we have Christine (INAUDIBLE), she did that for South Dakota, that's going to be the first time thing that it happens.

So it's a lot of different elements at play. But of course, right now just the political landscape is so much different than it used to be. The traditional you paid your dues, you were the insider that went all the way I think just doesn't work in this environment (INAUDIBLE). Republicans love outsiders, right?

WARREN: Outsiders and businessmen.

HENDERSON: And quickly, Michael, even given sort of the dynamics and demographics in Tennessee, do you want Trump down there if you are Blackburn wearing your Trump hat?

SHEAR: I mean, I think you do, especially in smaller races where the, you know, population is more homogenous and more conservative.

HENDERSON: Yes.

SHEAR: You're going to want him in some of these states that, you know, you're going to be a little bit more cautious.

HENDERSON: All right, thanks for that.

And thanks for joining us on INSIDE POLITICS. We'll see you right back here on SUNDAY at 8 a.m. Eastern. Wolf starts right now.

WOLF BLITZER, CNN ANCHOR: Hello, I'm Wolf Blitzer. It's 1 p.m. --