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White House Briefing; U.S. Worried Execution Will Escalate Sectarian Tensions; Saudi Arabia, Bahrain Cut Ties With Iran Over Protests; Obama To Announce Executive Action On Guns; Dow Plunges In First Trading Day Of 2016; Investors Nervous Over China Meltdown, Mideast Tensions; Iowa Caucus Now Just 4 Weeks Away; Trump Releases First Campaign Ad. Aired 1-1:30p ET

Aired January 4, 2016 - 13:00   ET

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


JOSH EARNEST, U.S. WHITE HOUSE PRESS SECRETARY (live): -- to take a look at what the president can do using his executive authority has been grounded in the knowledge that the gun lobby and the Republicans in Congress who regularly do their bidding are going to look for ways to try and stop it. And we know that they were -- are likely to try to pursue a creative legal theory to prevent their -- the implementation of these rules. And that's why the president wants to be sure that the recommendations that he receives and the executive actions that he carries out are going to stand up in a court of law.

And a lot of the work that has gone on has been to ensure that we would have confidence in the legal basis of these actions. And I feel confident in telling you now that what the president does announce will be the kinds of actions in which we have a lot of confidence that they are within the legal ability of the president of the United States to carry out these actions.

UNIDENTIFIED FEMALE: I want to switch to another topic. Saudi Arabia and now some of its allies have either cutoff or downgraded diplomatic relations with Iran. And how concerning is this to the White House not just the dynamics between the Saudis and the Iranians, but also as it relates to diplomatic efforts in Syria or the situation in Yemen?

EARNEST: Well, Julie, we do continue to be concerned about the need for both the Iranians and the Saudis to de-escalate the situation in the Middle East. That we are urging all sides to show some restraint and to not further enflame tensions that are on a quite vivid display in the region. And Secretary Kerry has been in touch with his Iranian counterpart. U.S. diplomatic officials in Saudi Arabia have been in touch with their counterparts to convey this message.

I would anticipate that Secretary Kerry will be in touch with his Saudi counterpart at some point soon as well to deliver that same message. And we have seen that a lot of the volatility and instability in the Middle East has a tendency to break down along sectarian lines. It's not a coincidence. And we believe that there is more that can be done by people on all sides to try to bridge those divides in a way that advances the interests of countries all across the region.

For example, the Syria, I think, situation is probably the most vivid example of this. The United States has succeeded in leading the international effort to bring all sides together to try to bring about a political resolution to the situation inside of Syria.

UNIDENTIFIED FEMALE: But do you worry that with this now happening between the Saudis and the Iranians that it could influence that effort and perhaps cause it to break down?

EARNEST: Well, we certainly hope -- we're hopeful that it won't. One reason that we are hopeful that it won't is that it is so clearly in the interests of both countries to advance a political solution to the situation inside of Syria.

The reason that Iran and Saudi Arabia have participated in those conversations that are led by Secretary Kerry are not out of charity. They're doing it because they have their own vested interest trying to bring about an end to some of the chaos inside of Syria. And they're looking for a way that they can contribute constructively to that process.

It was a lot of the pain-staking diplomatic work to bring them to the table the first time. And there will always be reasons for them to be suspicious and be reluctant to engage with countries that they consider to be their adversaries.

But the pursuit of this ultimate goal is so clearly within their own direct interest that we're hopeful that they will continue to engage. But, ultimately, it will be up to them. OK?

Roberta.

UNIDENTIFIED FEMALE: You talked about the calls that Secretary Kerry has made or is planning to make. Has the president made any calls to any of his counterparts on his position?

EARNEST: As of this moment, the president has not made any calls to the leaders of either of those countries to discuss this issue. But certainly the president is aware of the situation. And the message that Secretary Kerry and other U.S. diplomats have been delivering is certainly consistent with the president's perspective on the situation.

UNIDENTIFIED FEMALE: And did Saudi Arabia --

WOLF BLITZER, CNN ANCHOR: All right. So, there you can see the White House press secretary, Josh Earnest, expressing the deep U.S. concern right now over this deteriorating situation between Iran and Saudi Arabia.

We want to welcome our viewers in the United States and around the world. I'm Wolf Blitzer in Washington. We're reporting all the late breaking developments, much more on this escalating tension between Iran and Saudi Arabia coming up. The U.S. clearly very, very concerned right now.

[13:05:05] Also, the president of the United States begins this new year with a key meeting coming up within an hour on his new push for tougher gun control here in the United States. And a move that will likely spark outrage from the gun lobby and many Republicans. The president is expected to bypass Congress, use his executive powers to try to tighten regulations on gun purchases here in the United States.

In less than an hour, the president will be meeting with the attorney general of the United States, Loretta Lynch, and other top U.S. officials to discuss what steps to take to accomplish this goal. The president, by the way, will also be holding a town hall meeting, a live town hall meeting, Thursday night that will air here on CNN. Anderson Cooper will moderate that town hall. It will be on gun control here in the United States.

Let's get some background on what's going on. Our Senior Washington Correspondent Joe Johns is with me here in Washington. Joe, preview what we anticipate the president will announce.

JOE JOHNS, CNN SENIOR WASHINGTON CORRESPONDENT: Well, we don't really know, obviously, how far the administration is going to go with this. And we did hear from Josh Earnest just a couple minutes ago that they're talking about threading the needle legally. So, we know the administration has expressed some interest in trying to expand background checks for people trying to buy guns.

One of the things, apparently, under consideration from CNN's reporting is executive action clarifying language and federal regulations that controls who has to get a license to sell guns, and therefore is subject to the requirement to do background checks.

Right now, the regulations say you don't need a license unless you're in the business of selling guns for profit. But it's not quite clear what in the business means.

Now, beyond that, as recently as last month, Josh Earnest and the administration expressed interest in a number of changes that might or might not require federal legislative, depending on how the White House decides to thread that needle, including preventing people who are on no-fly lists from obtaining firearms and closing the so-called gun show loophole we've heard so much about, an exemption from background checks on private sales of firearms, including the ones that occur at gun shows.

But, Wolf, I do think the consensus is the administration is going to find itself tied up in the courts if it does anything with too much teeth.

BLITZER: Because there was a similar action the president took on undocumented immigrants here in the United States, an executive action. He wanted to allow some of them to stay. But that went to the courts. That's being adjudicated right now. And that's a major setback legally for the president. Is there concern this could happen on this issue as well?

JOHNS: Absolutely. And I think the fact that the president is meeting with the attorney general today to talk about specifics and what they can do that won't get completely tied up in the courts is an important consideration. Because there's only so much time left in this presidential term.

BLITZER: The legal -- well, he's got a year left to go. And, of course, if the president does sign this executive order and it's allowed to stand firmly by the courts, a new president, if it's a Republican president, can un-sign it on day one if he or she wants.

All right, Joe, thanks very much.

Certainly not everyone is all that excited about the president's proposed plans, including my next guest. Republican Congressman John Fleming of Louisiana is joining us. He's a member of the House Armed Services Committee. Congressman, thanks very much for joining us. I know you don't support the president's proposed executive action. You're opposed to changing existing laws on background checks. Explain what would be wrong with tightening up those laws right now to make sure that people, for example, on the no-fly list can't go out and buy guns?

REP. JOHN FLEMING (R), LOUISIAN, MEMBER, HOUSE ARMED SERVICES COMMITTEE: Well, Wolf, many people have appeared on the no-fly list, such as members of Congress, who just simply have in common a name with someone else who may be a suspected terrorist. We don't know how the list is put together. It's mysterious even in members of Congress. It would be unconstitutional to do something of that sort. And it would be, certainly, very unfair just because somebody's name appears on some list to prevent them from their second amendment rights.

BLITZER: What if they fixed that no-fly list, and it came out that only people on the no-fly list were, in fact, potential threats to the U.S. national security. Would you then support barring them from purchasing guns?

FLEMING: Well, I would need to see the plan, Wolf. I don't see any indication that anything like that is occurring or even planned to occur. What we really have is a president that finds the Congress, the constitution and the American people to be inconvenient to his gun control agenda.

So, let's say what it really is and that is the president is doing everything he can, despite the fact that evident shows that in venues where you have more gun control, you have more gun violence.

BLITZER: Here is what the president said over the weekend about his proposal. Listen to this.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: We know we can't stop every act of violence. But what if we tried to stop even one? What if Congress did something, anything, to protect our kids from gun violence? Because I get too many letters from parents, and teachers and kids to sit around and do nothing.

[13:10:13] I get letters from responsible gun owners who grief with us every time these tragedies happen who share my belief that the second amendment guarantees a right to bear arms and who share my belief we can protect that right while keep an irresponsible few from inflicting harm on a massive scale.

(END VIDEO CLIP)

BLITZER: So, here's the question. If people who purchase guns at gun stores need to go through a background check, why don't people who purchase guns at gun shows need to go through a background check?

FLEMING: Wolf, the purchases at a gun show is from one private individual to another. In some states, they actually do have such requirements. There's nothing that prevents states from doing that if they choose to do that. But what's interesting is you have a president who seems to show disregard and disrespect for the police officers around the country. And you see an escalation of gun violence even against the police officers. If he really wants to do something about gun violence, particularly in the inner cities, we need to change those policies for the better instead of going down these rabbit trails that really are not going to make a difference.

BLITZER: Are you concerned -- and the president clearly makes this implication, that individuals who have mental problems, who may be involved in terrorism, who are criminals, who have felony backgrounds can go to a gun show and simply buy as many guns as they want. Does that not concern you?

FLEMING: Well, look, if they are criminals, then -- and they need to be locked up if they are terrorists or they are committing crimes. They need to be in prison. This president is out there pushing to get people out of prisons and going exactly the wrong direction which is why in Chicago, and New York and other cities, you see gun violence and gun death going up dramatically. So, we need to go where the problem is and that is with better law enforcement, tougher law enforcement and closer to the people.

BLITZER: But just be precise because we're almost out of time. Felons, you don't have a problem with convicted felons going to gun shows and buying guns?

FLEMING: Well, look, we know that the crime committed by people with guns by criminals, they get the guns by flouting the law to begin with. They don't go to gun shows. The evidence shows, for instance, "The Washington Post" just came out with a study showing that of the last three or four years of mass shootings, there wasn't anything gun laws would have done to prevent those.

BLITZER: Representative John Fleming of Louisiana. Congressman, thanks very much for joining us.

FLEMING: Thanks, Wolf.

BLITZER: Thank you. And this is important programming note for our viewers. Remember, President Obama will join Anderson Cooper Thursday night for an exclusive one-hour live town hall on gun control. That will take place at George Mason University in Fairfax, Virginia. That's right outside of Washington, D.C. It begins at 8:00 p.m. Eastern only here on CNN.

ANNOUNCER: This is CNN breaking news.

BLITZER: I want to get to the breaking news right now from Wall Street. The Dow Jones plunging right now. There you see it, down 346 points at this moment. This follows a meltdown on China's markets. The Shanghai down a whopping seven percent today before trading was suspended.

Our Business Correspondent and Anchor Richard quest is joining us now from New York. A big sell-off in China. I assume that's had this huge impact on what's going on in New York, Richard.

RICHARD QUEST, CNN BUSINESS CORRESPONDENT: Exactly, Wolf. And what you're seeing is just fear, sheer unadulterated fear into a new year. Because, frankly, nothing else has changed. The economics haven't changed. There were some manufacturing numbers out from China overnight that showed the economy is contracting. And that, basically, renewed the worries that China's government will not be able to create a soft landing, if you'd like. But it will be harder and nastier than people thought. And that quickly transmitted itself onto Europe and then into the United States.

But the core, I think that if there is any good in any of what we're seeing this morning, it is that it is not based on any new fundamentals, Wolf. There is no real rational reason why on the 4th of January, the market suddenly woke up and decided to fall out of bed.

BLITZER: The Dow, as you know, dropped, what, about two percent in 2015. Should investors out there be worried right now that the country could be in the middle of an emerging bear market? What's your assessment?

QUEST: No, I don't -- the bear market concept, I don't think, is on the horizon. And nobody seems to be talking about a full throttle bear market. I think investors, most definitely, having seen last year the worst since 2008, so it's the first time that they've seen losses when previously they had seen double-digit gains. I think that 2016 and from everything I'm reading suggests an air of caution.

[13:15:04] It is not going to be a barn burner of a year for markets. Economic growth, the IMF's managing director, Christine Lagarde, she described it as it will be disappointing in 2016. You've got problems in emerging markets. You've got problems in Russia. You've got problems in Brazil. You've got problems in parts of Africa. And, of course, you've got China. So into this maelstrom of market misery, you do have the United States, with reasonable growth at 2, 2.5 percent, but, of course, it also has an election.

BLITZER: The Dow Jones now down about 350 point. We'll continue to monitor what's going on in the Dow Jones Industrials.

Richard, thank you very much.

Coming up, Donald Trump releasing his first TV ad, while Bill Clinton hits the campaign trail to stump for his wife. What are the candidates doing in their month long sprint to Iowa's caucuses.

Plus, tensions - serious tensions right now between Saudi Arabia and Iran, and it's spreading beyond these two very important countries as other Middle Eastern nations are choosing sides. Could it trigger what's a really dangerous escalation? Could it affect the war against ISIS? We have details. All that coming up.

(COMMERCIAL BREAK)

BLITZER: Four weeks from today, that's how long it is until the first votes are cast in the race for 2016. The Iowa caucus is now exactly only four weeks away, so expect the back and forth between the candidates to heat up even more dramatically.

Our Jeff Zeleny is joining us now live from Cedar Rapids, Iowa.

What's the latest storyline happening in Iowa? The candidates, I assume they're coming big time to shake hands and get people to show up at those caucuses.

[13:20:10] JEFF ZELENY, CNN SENIOR WASHINGTON CORRESPONDENT: Wolf, they sure are. There are candidates fanning out across the state. And of course they're trying to meet some new voters. But, Wolf, they're also trying to steal other people's supporters. That's what happens in the final months leading into the - the key Iowa caucuses that open this whole 2016 campaign. You know, voters take a second look at all these candidates. So you have a bunch of Republicans out right now trying to ask some voters for a second chance, if you will.

And, of course, on the Democratic side, some of those Bernie Sanders supporters, so committed. So, Wolf, I would say it's important at this point to keep in mind that we do not know what is going to happen in this Republican primary, first and foremost, and there may be some surprises on the Democratic side as well. It was eight years ago this morning that Hillary Clinton woke up and found out that she had come in third in the Iowa caucuses. Of course, Barack Obama won those Iowa caucuses. John Edwards came in second. And that did not - it was not how it looked a month out from that. So anything could happen at this point.

And Ted Cruz is someone on the Republican side that we are keeping an eye on out here in Iowa. He's already campaigning. He's stopping in 28 cities over the next six days. He's asking every voter to bring 10 more people with them to try and increase his support on February 1st, the night of February 1st, at the Iowa caucuses here, Wolf.

So anything could happen over the next 28 days. We'll be out here taking a look. Hillary Clinton will be here in about an hour or so trying to get those Democrats on her side from Bernie Sanders.

Wolf.

BLITZER: Exactly as I said, four weeks from today, the Iowa caucuses. Then a few days later, the New Hampshire primary.

Jeff Zeleny, thanks very much. At the center of the storm in Iowa certainly is Donald Trump. He's not there in person today, but he is releasing his first TV ad. Watch this.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE (voice-over): He'll quickly cut the head off ISIS and take their oil. And he'll stop illegal immigration by building a wall on our southern border that Mexico will pay for.

DONALD TRUMP (R), PRESIDENTIAL CANDIDATE: We will make America great again!

(END VIDEO CLIP)

BLITZER: Trump, of course, is self-financing his campaign. He's a billionaire. He plans to spend, he says, $2 million a week to air commercials in the run-up to the Iowa vote.

Let's talk about all of this and more, the political headlines of the day. Joining us, Republican strategist Doug Heye, Democratic strategist, our CNN political commentator, Donna Brazile, and joining us from Harrisburg, Pennsylvania, Jeffrey Lord, he's a CNN political commentator, former political director for Ronald Reagan and Donald Trump, I think it's fair to say, supporter.

Jeffrey, his ad, the logical next step. Is there a little too much fear in that ad? What's the purpose of that specific ad?

JEFFREY LORD, CNN POLITICAL COMMENTATOR: You know, Wolf, that - that commercial is very much like a 1980 commercial from Ronald Reagan, who depicted the - the chaos in the Gulf, went through a brief history of American military involvement, and then pinned it all back on Jimmy Carter. The commercial was called "Peace Through Strength." It is remarkably like that, remarkably Reagan-esque. It touches all those sort of nerves that Ronald Reagan himself touched in 1980, basically saying, the country isn't safe. We've got a problem here and we've got leadership that isn't taking care of the problem.

BLITZER: He was on, Doug, he was on CNN's "New Day" with Chris Cuomo earlier today and he made a point of saying, you know, if you attack me, I'm going to attack you. Hillary Clinton raises questions about his attitude towards women. He's going to raise questions about her attitude and her husband's attitude. Listen to this exchange Trump had with Chris Cuomo.

(BEGIN VIDEO CLIP)

DONALD TRUMP (R), PRESIDENTIAL CANDIDATE: I know many of the people in the Clinton campaign. The last person they want to run against is Donald Trump, believe me.

CHRIS CUOMO, ANCHOR, CNN'S "NEW DAY": But what does that have to do with you bringing Bill Clinton's sex life up?

TRUMP: Well, it's very simple. They, during the course of the debate, and many other times, she was talking about - she used the word sexist. I'm sexist. And he was using very sort of derogatory terms.

(END VIDEO CLIP)

BLITZER: How's that going to play in the Republican caucus or primary?

DOUG HEYE, REPUBLICAN STRATEGIST: You know it will get a lot of headlines, it will maybe even get some laughs, but there's so much ammunition that we can use on Hillary Clinton, on her tax increases, on health care, certainly her time as secretary of state, Benghazi. You look at the information you were talking about earlier with the stock market. There's so much anxiety in America right now. Their talking about Gennifer Flowers or Monica Lewinsky or anything else from the 1990s just doesn't work if we want to try and move forward and really face Hillary Clinton as strongly as possible.

BLITZER: And despite all those scandals that occurred during his administration. Donna, as you know, he's still very popular out there on the stump. He was out there earlier today, his first event. I want to play a little clip of what he had to say.

(BEGIN VIDEO CLIP)

BILL CLINTON, FORMER U.S. PRESIDENT: Sometime I follow this debate in the presidential elections, especially when I watch the other guys debating, and I think, you know, I don't fit anymore. First of all, I'm a happy grandfather, and I'm not mad at anybody. And, secondly, I thought an election was supposed to be a job interview.

[13:25:08] I do not believe, in my lifetime, anybody has run for this job at a moment of great importance who was better qualified by knowledge, experience and temperament to do what needs to be done now to restore prosperity, to deal with these human issues, to make us as safe as possible. Thank you very much and God bless you.

(END VIDEO CLIP)

BLITZER: He's Bill Clinton. He's obviously popular with a lot of Democrats, that Democratic base. He left office with high job approval numbers. Which raises the question, you, obviously, were one of the key people running Al Gore's campaign in 2000. You really didn't use him then. It's smart for Hillary Clinton to be using him now?

DONNA BRAZILE, CNN POLITICAL COMMENTATOR: Look, Bill Clinton is a very important asset, not just to Hillary Clinton, but also to Democrats across the country. In 2012, it was Bill Clinton who went to the Democratic convention and really made a great case for President Obama's second term. It's Bill Clinton who I believe Democrats across the country reach out to in not just the 2012 presidential, but 2014. He's invaluable in terms of explaining what's at stake and why it's important to select the right person.

BLITZER: Was it a mistake not to use him in 2000?

BRAZILE: You know, I'm not going to re-litigate 2000. I've had my opportunity to look back at it for a long time. We used him strategically. But what's important for Hillary Clinton right now is that she uses Bill Clinton strategically to help her make closing arguments and a very, very, what I call, interesting contest on the Democratic side.

BLITZER: Jeffrey Lord, you - is there a downside, from your perspective, as a Trump supporter, to reviving all these issues from the 1990s about Bill Clinton's scandals?

LORD: No, I don't think so, and I'll tell you why. There's one particular allegation out there about Bill Clinton from Juanita Broaddrick. You know, I hate talking about this. But it is about rape. Now, we are at this moment involved in this huge coverage of Bill Cosby and all of these women from long ago. It is very much the same kind of situation here with women making accusations from years ago and people saying, well, the person being attacked is so popular and he's an icon, this isn't going to work. We're watching Bill Cosby's life unravel here. I mean I'm not thrilled with that either. But I do think that when you - when you make a point, as Hillary Clinton does, of, you know, women tell the truth and all this sort of thing, and yet you've got a woman out there who's saying Hillary herself was an enabler and threatened this woman to keep silent about her husband's conduct, then I -

BRAZILE: You know, this is like -

BLITZER: Hold on.

BRAZILE: This is like getting toilet paper out of the trashcan.

BLITZER: I'm going to let - I'm going to let Donna react? Hold on a second here, Jeffrey.

BRAZILE: Jeffrey, this is like getting toilet paper out of - out of a trashcan. I mean, you know, I understand that Donald Trump doesn't like to talk about substance issues. I mean when it comes to dealing with ISIS, of improving the economy or even figuring out education issues, Donald Trump will not get into the substance. So if you want to go into the trashcan and pick out toilet paper from the 1990s, here's the thing, Donald Trump is also going to have to deal with the litter box. I think it's a stupid mistake. I think it will backfire. Bill Clinton did a lot to help women in this country, help improve women's wages. He helped to - the Family Medical Leave Act. So let's have a debate on the issues and not trash.

LORD: Donna, the -

BLITZER: All right.

LORD: These accusations (ph) are coming from women, not from me, and not Donald Trump.

BRAZILE: Trash - trash talk, Jeffrey. Trash talk.

BLITZER: Well, I'm going to let Doug just weigh in. Button it up.

HEYE: We've seen - we've seen another embassy on fire this week. We have so many international issues. We nailed it. Donald Trump is somebody who doesn't have the temperament to deal with this. And it all goes back to Trump. You know, I don't want Donna to be popping open champagne corks on election night in November, but if we nominate Donald Trump as Republicans, she's going to be saber opening magnums (ph) of champagne because we're going to lose the White House and we're going to lose the Senate. And those are the ultimate stakes for Republicans right now. Obviously everything else going on in the world too.

BRAZILE: So simple (ph).

BLITZER: Doug, Donna and Jeffrey, guys, thank you very much. Four weeks to go until the Iowa caucuses.

By the way, for the latest in politics and all the presidential contenders, head over to cnnpolitics.com.

After a weekend of protesters, Saudi Arabia now says it's cutting all ties with Iran. Still ahead, why this significant riff could have a huge impact on U.S. diplomatic efforts in the region.

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