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RNC Moving 2016 Convention To June; Warning For U.S. Olympic Athletes; Corporate Earnings Spook Investors; Dow Losses; McDonnells Plead Not Guilty; U.S.-Iran Diplomacy; Cairo Bombings

Aired January 24, 2014 - 13:00   ET

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


WOLF BLITZER, CNN ANCHOR: Right now, major changes in store for Republicans in 2016. A shortened primary season in the convention in June. So, what will all this mean for the candidates?

Right now, the former governor, Bob McDonnell, pleading not guilty and leaving a Virginia courtroom with a trial date and a stern warning from the judge.

And right now, a message to U.S. Olympic athletes about security. To stay safe, they need to tone down the red, white and blue.

Hello, I'm Wolf Blitzer, reporting from Washington. Republicans are shaking up the political calendar and trying to shake off the problems from the 2012 presidential race. The RNC voted today to move its 2016 convention to June. The GOP is trying to avoid the long, bruising primary battle that ultimately led to Mitt Romney winning the nomination in 2012.

The idea of shortening the primary season was a result of some Republicans soul searching following Romney's defeat in the general election.

Our National Political Reporter Peter Hamby is over at the RNC winter meetings still ongoing in Washington. Peter, this would be the earliest convention for either party since 1948. How could this shift benefit Republicans in 2016?

PETER HAMBY, CNN NATIONAL POLITICAL REPORTER: That's right, Wolf. Yes, the last convention that early was in 1948 in Philadelphia, the Republican convention. One huge take away for the Republican Party after the 2012 primary process was that it started too early, ended too late. It dragged on too long. There were too many hurt feelings.

And the Party felt handcuffed. They had to do too many debates. They had to travel around the country, go to places that maybe they didn't need to go in the end. And they passed a package of rules today, almost unanimously, abbreviating the whole primary process. This is what Party chairman, Reince Priebus, said today after they passed the rules. Listen to this.

(BEGIN VIDEO CLIP)

REINCE PRIEBUS, CHAIRMAN, RNC: We have been saying for months that we were no longer going to sit around and allow ourselves to slice and dice for six months, participate in a circus of debates. But we were going to take hold, once again, of our responsibility at the Republican National Committee, because we are the custodians of the nomination process. And today, I believe, was historical and obviously very important to the future of our Party and our country.

(END VIDEO CLIP)

HAMBY: The Republican National Committee, Wolf, has lost some power in recent years because of different campaign finance rules, et cetera, et cetera. They are also moving to try to enact more control over the Republican primary debates, as chairman Priebus mentioned there. But a vote on that, Wolf, probably won't happen until the spring meeting, which they've just announced is going to be in Memphis in May -- Wolf.

BLITZER: And as you know, Peter, in politics, money talks. By moving up the convention to June, getting a nominee as early as June, that will have some significant fund-raising strengths for the Republican nominee.

HAMBY: Right. This is almost as big a deal as shortening the primary calendar. The convention last year -- sorry, in 2012, in Tampa, it meant that until the convention, Mitt Romney couldn't access the money he had raised for the general election.

So, throughout the entire summer, the Obama campaign was just drubbing him on television, defining him early. And the Romney campaign and Republicans really handcuffed and spending a pot of money they saved up. So, by moving the convention back to June, that means they can access that money earlier, get on T.V., build field stats, field programs, and really get the message out earlier and stronger than they did in 2012.

And one more thing, Wolf. All the cities who are bidding on the convention in 2016 are here, courting members. Kansas City put in a bid. Bob Dole was here for the Kansas City bid. Las Vegas is here. The Denver bid committee is here, giving out Colorado Rockies' hats. Columbus, Ohio and Phoenix are also two of the cities in the running -- Wolf.

BLITZER: What about Las Vegas? I thought they were anxious to get that Republican convention as well.

HAMBY: Yes, Las Vegas is here. They have set up a lounge right down the hall from me for members to hang out with free Wi-Fi. They're giving free Wi-Fi to reporters here. And among all the committees, they seem to have the most robust staff here. They have a really big team of Republican operatives really working behind the scenes to whip up votes for Las Vegas 2016, Wolf. Maybe I'll see you there.

BLITZER: Maybe we'll all go to Vegas. Who knows? All right, thanks very much, Peter Hamby.

Let's talk a little bit more about the strategy of moving up the Republican convention and what it would mean for the GOP in 2016. Our Chief Political Analyst Gloria Borger is here. I think -- GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: I'm still trying to think of a convention in Vegas, Wolf, and what that would be like.

BLITZER: You know, well, I think a lot of conventions -- there's a lot of conventions in Vegas.

BORGER: Yes.

BLITZER: They did a good job on a bunch of other conventions I've been in Las Vegas, including an NBA all-star weekend I went and Vegas was a lot of fun.

Let's talk a little bit about Reince Priebus. I think he was smart in doing this.

BORGER: Yes.

BLITZER: They had their postmortem, what went wrong. He came up with a bunch of ideas and now he's implementing them.

BORGER: Look, he doesn't want to have a rerun of what he called the circus of debates and the way that candidates were going after each other for months and months for a six-month period last time around. It didn't hurt the party. Lots of Republicans who talked to privately believed that all the fire -- circular firing squads, they formed, did not help Mitt Romney in the general election, because he had to move so far to his right in debating candidates to his right. And was out there for so long that it was very difficult for him to present himself as a credible general election candidate and move -- and move back to the center.

So, what Priebus has done is said, OK, no more of that. We're going to limit that, the primary period. We're going to limit the number of debates we have. And by the way, we're going to have an early convention which as you and Peter were just talking about, means that they can get access to the general election money earlier. Because Mitt Romney was pounded during the summer on Bain Capital, remember?

BLITZER: Right.

BORGER: And while the PACs were out there, Mitt Romney could not do the ads that he wanted to do in direct response to the Democratic onslaught.

BLITZER: And he wants to limit the number of Republican debates where these candidates will beat up on each other. And he -- it's also important, he wants the caucuses and primaries to start in February, not in January, not in December. In February.

BORGER: Yes.

BLITZER: Do four of them in February. A whole bunch in March and April, and wrap things up by May.

BORGER: And by the way, and he's saying to the states, if you don't pay attention to these rules, goodbye at the convention. You're going to lose all of your input there. You're going to lose your importance. So, this is like you better abide by these rules or else. There's no getting around it.

BLITZER: Moving up, accelerating the Republican schedule --

BORGER: Yes.

BLITZER: -- is going to put a lot of pressure on the Democrats --

BORGER: Sure.

BLITZER: -- to do the same thing.

BORGER: It might, because everybody wants that access to the general election funds. I mean, you could look at it both ways. If the Democrats don't need the money, if they've got plenty of money, and they wait until sometime during the summer, July, August, then, you know, everybody gets a bump out of their convention. So, maybe they could argue that getting that bump would be better going into the fall and that the Republicans might be doing it too early. We'll have to see how this -- how this plays out. But right now, the Democrats have a -- have a decision to make.

BLITZER: Yes, and I think that will be an important decision for them. We'll see what they decide.

BORGER: Yes.

BLITZER: All right, thanks very much, Gloria, for that.

Let's get to the Olympics now and a warning to the U.S. team. The opening ceremonies are exactly two weeks away and American athletes are being told to keep their colors under wraps in certain areas around the games.

Brian Todd is joining us. Tell us a little bit more about this warning, Brian. What areas are off limits to wearing let's say a sweater or parka or anything with the showing the United States flag?

BRIAN TODD, CNN CORRESPONDENT: Wolf, we have learned about a memo sent to American athletes by the U.S. Olympic committee. It cautions them about wearing American colors prominently outside Olympic venues in Sochi. The USOC got an advisory from the State Department. In the memo it says, quote, "wearing conspicuous team USA clothing in non- accredited areas may put your personal safety at greater risk." The "Wall Street Journal" and "USA Today" first reported on this memo.

We contacted the U.S. Olympic Committee which would not comment on the memo. A USOC official told us, safety is their top priority and they're working with the State Department and local organizers, as well as law enforcement officials, to ensure the U.S. delegation safety. And just a short time ago, Marie Harf, State Department Spokeswoman, did speak about this.

(BEGIN VIDEO CLIP) MARIE HARF, SPOKESWOMAN, STATE DEPARTMENT: The U.S. Olympic Committee, I think, had discussed with its athletes as part of how to sort of stay safe and things to look out for as part of the games. This issue about, you know, just being careful about where you wear U.S. Logos or things like that. This isn't unique to Russia.

To be clear, we generally give this kind of guidance around big international events, particularly if there is some kind of threat like we have seen here. This was based on discussions with the State Department. But it's my understanding that it was actually the U.S. Olympic Committee who passed that along to the athletes. But we are setting aside the details. We are in very close contact with the U.S. Olympic Committee on issues related to security.

And in general, it's not unusual for us to recommend that athletes or, you know, people around the world, be careful where they wear certain things and just be careful of their surroundings.

(END VIDEO CLIP)

TODD: Now, in the wake of all the threats we have been reporting, including the Black Widow suicide bomb threat, the warning issued by a top Chechen leader that the Olympics would be attacked, we are told the Russians have really bolstered security. They've really tightened that cordon in the Olympic venues but it's the areas of Sochi outside those venues which, of course, Wolf, could present the greatest risk at this point.

BLITZER: I assume family members, fans, tourists, Americans who are heading to Sochi, they are being given the same advice as the athletes.

TODD: That's right. Americans have been warned in general. And more specifically, we spoke with Lisa Cervantes, she's the mother of American speed skater, Kyle Carr. She told us that U.S. speed skating, that federation, has asked athletes' relatives for all their travel arrangements, hotel addresses, cell phone numbers and they are compiling a list of relatives who will be there.

So, separate from the USOC, you've got the various athletic federations saying to the relatives, hey, give us your information. Let us know where you're going to be. Give us your cell phone. I mean, they're keeping very close watch on a lot of these people.

BLITZER: A lot of people are nervous going into these Olympic Games. They start two weeks from today. All right, Brian, thanks very much.

Still ahead, it's been a bruising week for U.S. stocks and the Dow still falling. Take a look right now, down about 190 points. What's going on? We'll explain.

Also, once a rising star in the Republican Party, now a criminal defendant in a federal corruption case. The former Virginia governor, Bob McDonnell, appears in court today. We're going to tell you what happened.

(COMMERCIAL BREAK)

BLITZER: The Dow, the NASDAQ, the S&P 500, they're all down again today. Let's take a closer look at what's causing the market shakeout, whether it's something that might stick around. Alison Kosik joining us from the New York Stock Exchange. Alison, not such a great month across the board so far. Why the slide? What does it tell us?

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: What you're seeing, Wolf, is really -- think of it as a setting -- a resetting, actually, of expectations. You know, we're coming out of 2013. It was a year where optimism was high. We saw stocks, you know, have gains of 20 percent or more. And it was expected going into 2014 that that kind of momentum just couldn't last.

So, now you've got some of the stronger fundamentals from last year. What's happening is they're not showing up as strong this year. Case in point, China. A weak manufacturing report came out of China, and that's worrying the U.S., because China is one of our biggest trading partners. If China is not doing well, the U.S., the thinking is, wouldn't do well.

And then you look at the U.S. It's not doing too hot either. We're in the thick of fourth quarter earnings season and it's pretty underwhelming for investors. Big company names, like Verizon, Johnson & Johnson, IBM and Citigroup are disappointing Wall Street because the thinking is, if corporate America doesn't do well, it won't hire more people, the companies won't spend money, the companies won't grow and that won't help the economy.

So what do you get when you roll all that together? You get a lot of red on the screen. You've got the Dow down 185 points. It was down more than 200 points. We did see the Dow dip below that 16,000 level. Right now, only four components of the Dow 30 are higher. Right now those higher prices are coming from Microsoft, Procter & Gamble, Merck and Verizon. Those are the winning stocks of the day.

Wolf.

WOLF BLITZER, CNN ANCHOR: Almost 200 points, 185 points down so far. All right, Alison, thanks very much.

Obamacare enrollment is on the rise. The Obama administration released new numbers today showing that overall health care enrollments have hit the 3 million mark. That means 900,000 people have signed up for private insurance during the first three weeks of this year. The deadline to get insurance, by the way, without paying a fine, is March 31st.

The former Virginia governor, Bob McDonnell, and his wife plead not guilty to corruption charges that could send them to prison, potentially, for 30 years. They're accused of accepting at least $140,000 in illegal gifts, including luxury items like designer clothes and a Rolex watch. But a source is telling our Joe Johns, the former governor had a chance last year to keep his wife Maureen from being indicted, but decided instead to, quote, "throw her under the bus." Joe is here with us with more on this story.

What else are you learning?

JOE JOHNS, CNN SENIOR WASHINGTON CORRESPONDENT: Well, Wolf, a source familiar with the criminal case has told CNN last year federal prosecutors offered McDonnell, while he was still governor, a plea deal that would have spared his wife exposure to criminal charges. The source, who asked not to be identified, said McDonnell rejected the deal. The source did characterize McDonnell's decision as throwing his wife under the bus, though McDonnell has always said he's innocent.

The source also said the McDonnell team asserted they did not believe DOJ could get a criminal conviction against the former governor at trial based on the evidence they had. McDonnell has said repeatedly that he didn't break any laws, and that he's paid back all the money that they got through their relationship with Jonnie Williams, the CEO of a dietary supplement company, Wolf.

BLITZER: What were they like in court today, the McDonnells, the demeanor?

JOHNS: Well, the couple went into court holding hands. A priest prayed with the couple in the hallway, we're told. They are allowed to remain free while they wait for trial. They pleaded not guilty. The trial was scheduled for July 28th. The former governor said he was under the care of a physician.

BLITZER: Because there also have been some reports about his health.

JOHNS: Right.

BLITZER: That he's had some issues. What do we know about that?

JOHNS: Well, this is something that's very common. And questions were asked of him by the magistrate at the hearing about his medical condition and whether he was taking any types of medications. He did say that he was taking Crestor, that is for high blood pressure. Again, very routine questions. His wife was also asked if she was taking any medications and she said she was taking something for stress.

BLITZER: Crestor's for like cholesterol, try to lower the --

JOHNS: Right.

BLITZER: It also helps you with blood pressure, is that right?

JOHNS: Apparently. He said he --

BLITZER: We've got to get Dr. Sanjay Gupta here for this kind of subject (ph).

JOHNS: Right. I know. I think we need Dr. Sanjay Gupta for that one.

BLITZER: Yes. Lipitor, Crestor.

JOHNS: Right.

BLITZER: I know that doctors, cardiac physicians, they try to give it to you to lower your cholesterol. But that's not a - Crestor, that's very, very common.

JOHNS: No, and he said he's fine. He said he's fine.

BLITZER: Yes. So he's OK on that. All right, we'll see what happens. Thanks very much.

And this is not a slam dunk by any means.

JOHNS: No.

BLITZER: I mean you're a lawyer.

JOHNS: Right.

BLITZER: You went to law school. They only have to convince one juror, potentially, that he didn't do anything wrong, or the government doesn't have enough evidence. So it's by no means a slam dunk, given the lax, you know, gifting laws in the state of Virginia.

JOHNS: Right. Absolutely. It's a sweeping indictment, 14 counts. And the state law is very lax in Virginia on the issue of gifts.

BLITZER: Yes.

JOHNS: But as to the federal law, they're going after corruption charges here. There's a variety of others, as well. But he's got a big problem over in federal court. And you're right, it's a high bar for the prosecutors to get him on this one.

BLITZER: Certainly is. All right, thanks very much.

A former top Republican aide has been found dead inside the Maryland home where he was living with relatives. Authorities say Jesse Ryan Loskarn's body was discovered yesterday, and a preliminary investigation indicates he may have killed himself. Loskarn was a former chief of staff for Senator Lamar Alexander of Tennessee. He was under house arrest after being charged in December with possessing and distributing child pornography.

You've heard what Iranian leaders have to say about their nuclear program. But what do the people in the streets of Tehran have to say about the new deal? We're going there live when we come back.

(COMMERCIAL BREAK)

BLITZER: We're getting some word now of new developments out of Geneva, Switzerland. That's where the Syrian peace talks are underway. The United Nations special envoy, Lakhdar Brahimi, says Syrian officials and rebel leaders will meet face-to-face on Saturday. You'll recall those talks started with very bitter statements from both sides in the conflict. We'll see what happens. Iran's promises, meanwhile, must be kept. That's the message today from the secretary of state, John Kerry. He says the U.S. has, quote, "enduring interests" in the Middle East and will be engaged in the region, in his words, "for the long haul." Kerry spoke today in Davos, Switzerland, at the World Economic Forum. He touched on a broad range of issues, including the war in Syria, the Israeli/Palestinian peace process, and he also addressed the rollback of Iran's nuclear program and what it potentially means for the entire region.

(BEGIN VIDEO CLIP)

JOHN KERRY, SECRETARY OF STATE: Now, clearly, there are good reasons to ask tough questions of Iran going forward. And believe me, we will. And good reasons to require that the promises Iran made are promises kept. Remember, we certainly haven't forgotten. There is a reason that the world has placed sanctions on Iran. There's a reason why they exist in the first place. And there's a reason why the core architecture of those sanctions remains in place. And that is why this effort is grounded, not in trusting, not in words, but in testing. Taken all together, these elements will increase the amount of time that it would take for Iran to break out and build a bomb. The breakout time, as we call it. And it will increase our ability to be able to detect it and to prevent it. And all of this will to an absolute guarantee beyond any reasonable doubt make Israel safer than it was the day before we entered this agreement, make the region safer than it was the day before we entered this agreement, and make the world safer than it was.

(END VIDEO CLIP)

BLITZER: Let's bring in our chief national security correspondent, Jim Sciutto. He's in Tehran, Iran, right now.

Jim, it's not every day that a western reporter gets there. As you know, Iran's leaders say they will honor this nuclear deal that has just gone into effect. But how is the deal playing out -- you've had a chance now, you've been there for a little while, to - how's it playing out among the people on the streets of the Iranian capital?

JIM SCIUTTO, CNN CHIEF NATIONAL SECURITY CORRESPONDENT: Well, I'll tell you, Wolf, the people here support diplomacy between the U.S. and Iran. We went to Friday prayers this morning, and the Iranians there told us they welcome this and they see a chance that Iran and the U.S. can be friends.

But when it comes to the nuclear deal, and I've been coming here a long time, this has always been the case, whether Iranians are pro- reform or hard line, they believe their country has a right to a nuclear program. They believe it's a peaceful program and they have a right to it and shouldn't give it up. And it's interesting, or interview with the foreign minister, Dr. Zarif (ph), made the news here. You'll remember his comments saying that Iran is dismantling no part of its nuclear program under its deal. And when I spoke to Iranians, they say he got it exactly right, we're not giving up our nuclear program under this. They support their leaders' very hard line on that issue. BLITZER: We've been hearing those chants, "death to America," from Iranians over these many, many years, going back to the late '70s. Are you still hearing that now or are folks reacting a little bit more positively to the possibility of an improved U.S./Iranian relationship?

SCIUTTO: Well, I'll tell you, Wolf, the contrast is really sharp. We went to Friday prayers at the main mosque here and I went with my producer, Jen Rizzo (ph), you know her. And when an Iranian woman found out she was American, she came up to her and gave her a hug and a kiss. I got a very warm reception, as well, from people. They shook my hand. They smiled. They said "welcome to Iran."

But there is still a lot of very hard emotion here. And inside those Friday prayers, when the presider spoke about earlier this week when Iran was invited to the Syria talks and then disinvited, the crowd, as you're seeing there now, broke out to those -- into those familiar "death to America" chants.

Now, in my experience here, there's always a bit of theater involved with those chants. The people do it a little bit for the cameras. But it does show you that the emotions are still raw, and there's some issues here that Iranians will not forget and will not relent on.

BLITZER: And give us a little sense, when you walk around the streets of Tehran, you've been going there for several -- for many years. As you say, you see an improved atmosphere, despite those chants against the United States.

SCIUTTO: I do for sure. I think people have hope. And I'll tell you where they really have hope. You know, the economic sanctions have hit this country very hard. And you hear that from people here. And they want a way out, you know. And it's interesting, when I talk to them, they will often say, even people who support a more open policy towards the west, they blame America for the sanctions. And many of the people will say, you know, the sanctions may be aimed at the government, but they hit us, hit the people, hit average Iranians. So when you talk to them, they're really desperate for economic change that will take, in their view, some of the pressure off them.

BLITZER: Jim Sciutto in Tehran for us. Good luck over there. We'll stay in constant touch with you. We'll see you later in "The Situation Room" as well. Not every day, as I say, we have some -- one of our reporters on the ground in Iran.

From Iran, let's head over to Egypt right now, where a series of explosions rocked the capital. It happened just a day before the third anniversary of the uprising that ousted the then president, Hosni Mubarak. The most powerful blast ripped through Cairo's police headquarters. Altogether, the bombings killed at least six people and left dozens of people wounded. Our Reza Sayah is joining us now from Cairo.