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CNN NEWSROOM

Man with Cleaver Killed by Paris Police; Iran Accuses Saudi-Led Warplanes of Hitting Iranian Embassy in Yemen; South Korea to Resume Cross-Border Propaganda; Markets Plunge in Early Trading; Interview with Senator Ted Cruz; Aired 10-10:30a ET

Aired January 7, 2016 - 10:00   ET

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


ANNOUNCER: This is CNN Breaking News.

[10:00:04] CAROL COSTELLO, CNN ANCHOR: And good morning. I'm Carol Costello. Thank you so much for joining me.

I do love if we could begin with breaking news this morning. Much of the world on edge. In Paris a man with a meat cleaver and fake explosives shows up at a police station. In Yemen Iran claiming its embassy has been struck by warplanes in the Saudi-led coalition. And in North Korea, new questions about the rogue regime's claim on that successful, and quote, "h-bomb test."

We have CNN crews spread across the globe. But let's start this hour in Paris where that man with the meat cleaver was killed outside of a police station while reportedly shouting, "Allahu Akbar," and wearing, as I said, fake explosives. The shooting coming on the first anniversary of those deadly terror attacks on "Charlie Hebdo."

Chris Cuomo is in Paris with more. Hi, Chris.

CHRIS CUOMO, CNN ANCHOR: Carol, this is being investigated as a terror situation. Yes, all Muslims, when they're praying, say, God is great, "Allahu Akbar," but it has also become an operative phrase in terrorist situations. And that's how this policeman interpreted it, took his shots, and wound up putting this man down, taking this life.

Now on his body they found a cell phone, an ISIS flag folded up in his pocket and some type of demand note that they have yet to release the translation of. That's the word from authorities. And then the big scare, the big fright, is what you referred to, that he did seem to have on some type of vest or pouch or belt with wires on it that looked like an explosive device. They brought in a robot, they did expert analysis on it, and it turned out to be fake.

However, this was a real fright on really the worst day for it to happen. This, the one-year anniversary of the attack on "Charlie Hebdo," of course the satirical magazine. They put out a new magazine, a million copies of it today with a caricature of a god-like figure saying that the assassin still runs free. This is what they do. They're provocative. And part of the terrorist attack on them wasn't just to take lives, which it did, 12 killed in its offices, but to also change a way of live and they have now become the voice of French defiance. COSTELLO: I was just going to ask you one more question about

"Charlie Hebdo." So has the magazine recovered from those terrible shootings?

CUOMO: Well, in some ways it will never recover because it was its people and it lost some of its cartoonists and editorial staff. In other ways you could argue it's stronger than ever because of the resolve and its challenge to its speaking freely about sensitive topics. You know, we all remember the magazine cover that it put out right after the attacks, again, with the Prophet Mohammed represented on it in an act of defiance.

So in some way I think that "Charlie Hebdo's" relevance is maybe more than ever but it suffered losses that could never be replaced in terms of the people that were lost that day.

COSTELLO: All right. Chris Cuomo reporting live from Paris.

We're also following breaking news out of the Middle East. An alarming spike in tensions between Saudi Arabia and Iran. Situations unfolding right now in Yemen. Tehran, Iran, says its embassy there has been struck by warplanes in a Saudi-led coalition. There are unconfirmed reports that guards and civilians were injured. Iran says the attack was deliberate.

CNN's Nick Paton Walsh is following the latest developments for us from Beirut, Lebanon.

Hi, Nick.

NICK PATON WALSH, CNN SENIOR INTERNATIONAL CORRESPONDENT: Carol, the one thing we're really missing at this stage is clear, hard evidence on the ground that the Iranian embassy was, in fact, hit in some way, specifically in this accusation, by Saudi warplanes. That's what the Iranian Foreign Ministry claims is the fact they say that guards were injured, that was damage done to the building itself.

The Saudi coalition spokesman, Ahmed Asiri, well, he's quite clear in that he believes this is no credible evidence at this stage. But they are investigating the claims and this adds to a broad and troubling raising of the fiery rhetoric between these two powerful Middle Eastern countries.

So much of the violence in the Middle East in Syria, in Yemen, where this alleged bombing occurred is because of the rivalry between Saudi Arabia and Iran. Iran, backing in Yemen, the Houthis, a group who controlled the capital Sana'a where this alleged bombing took place and the Saudis are attacking them from the skies with other Gulf nations alongside them. So an extraordinary violent region, the foundation of which is the rivalry between these two countries because of the execution of a Shia cleric, an activist, Sheikh Nimr al-Nimr, in the past week.

So there's been a severing of diplomatic relations between Iran and Saudi Arabia and many Saudi allies have followed suit as well. They've announced damage to their commercial ties, too. In fact just today the Iranian cabinet saying they were banning all imports from Saudi Arabia and preventing Iranian citizens from doing pilgrimages to Saudi Arabia. Extraordinary tense region already and no help at all as the now potential accusation we're seeing here.

[10:05:02] No evidence it's tangible yet but the accusation that Saudi warplanes have hit an Iranian diplomatic target, even the talk of this alone will be extraordinary inflammatory in a region that, frankly, needs greater negotiation and much less rhetoric -- Carol.

COSTELLO: All right. Nick Paton Walsh reporting live for us this morning.

The U.S. and much of the world community scrambling to slap some sort of punishment on North Korea. Even as the so-called hermit nation faces an even greater insult, there are growing doubts over its claims of successfully detonating its first hydrogen bomb.

Our senior international correspondent Ivan Watson is in Seoul, South Korea this morning.

Hi, Ivan.

IVAN WATSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Hi, Carol. South Korea has announced its first retaliatory measure to try to punish North Korea in response for its nuclear test. Get this. It is going to broadcast a blare propaganda across the heavily fortified Demilitarized Zone from huge banks of loud speakers at North Korea. And some of those broadcasts are going to include not just news bulletins, which of course are very tightly controlled and censored within North Korea, but also pop music, K-Pop, that's the word for South Korea's very popular brand of pop music.

So this is one retaliatory measure. It may not sound like much, but it is something that has infuriated the North Koreans in the past. It led to a spike in tensions last August and September between the two governments and they finally had to resolve it with three days of negotiations and finally a deal struck and the loud speakers were then turned off. Now the South Koreans are calling for more measures as well. We do know that the U.S., that you had governments getting together, ambassadors at the United Nations Security Council calling for a new resolution to try to punish North Korea.

But at this stage nobody really knows what measures can really be implemented against a country that's almost entirely cut off from the rest of the world, except for China. China has voiced its condemnation, its disapproval of its long-time trading partner and traditional ally North Korea for this nuclear test. It summoned North Korea's ambassador presumably for a addressing down at the Foreign Ministry in Beijing. But we don't know whether the Chinese will adopt any further measures as well.

In the meantime, all of the countries in the region, intelligence agencies are trying to figure out whether or not North Korea's claim that it set off its first hydrogen bomb explosion or, as it described it, an h-bomb of justice, they're trying to figure out whether or not that was, in fact, true. And we've heard some skeptical comments coming from South Korean lawmakers, from the White House as well -- Carol.

COSTELLO: All right. Ivan Watson reporting live for us from Seoul. Thank you.

Coming up in the NEWSROOM, investors, brace yourself. You're in for one wild ride again on Wall Street. We're following it next.

(COMMERCIAL BREAK)

[10:11:28] COSTELLO: OK. We're off to a brutal start on Wall Street. We're down -- that's better than it was a couple of minutes ago, Christine Romans.

CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: It is.

COSTELLO: But it's a brutal day on Wall Street thanks to, oh, China.

ROMANS: I know. Another brutal day, you know, coming in to today's session the Dow was already down 518 points so you've got another couple of hundred on there. You can see it's been a terrible, terrible week. Chinese gets the blame and here's why. Chinese stocks plummeted overnight and then because of these circuit breakers they have, this automatic stopping in the stock market to slow selling, what happened is then they just stopped trading.

So that just caused even more fear and confusion. And so you had London and Paris and Frankfurt, big losses there as well. And then when the U.S. market opened, it was the same thing. Now just in the last few minutes we've learned that Chinese authorities say they're not going to do that again. They're not going to stop trading again. The Chinese are kind of learning kind of as they go here about what a free market is like. You have to have information and transparency. You haven't really had that in the Chinese markets and that has really made it even worse.

Another thing I want to talk about quickly is oil. The oil market is a big part of this, too. Oil prices are the lowest they've been in 12 years. I mean, this is really unbelievable. This is a crash in the commodity, Carol, that runs the world. All of the emerging markets who depend on crude oil to run their governments are really feeling the heat. Saudi Arabia, Russia, Venezuela, Nigeria, Iraq.

COSTELLO: OK. So the weird thing about Saudi Arabia it's raised its gas prices 50 percent.

ROMANS: Yes.

COSTELLO: In Saudi Arabia.

ROMANS: It's internal gas -- right. Because look, it has a whole country that depends on one thing to run it, and that is oil, and oil prices are down 65 percent over the past year and a half. It is remarkable how that's hurting some of those governments.

COSTELLO: And it's also affecting our economy here because in Alaska they had instituted a tax because the oil revenue isn't what it was in Alaska.

ROMANS: We actually have -- we're brimming with oil. The world is brimming with oil. They can't find enough place just to store all the oil that we have. We had a gasoline stockpile number yesterday that was unbelievable the amount of gas that's just sitting around. So that's why gas prices have been low for consumers. That's great. But at some point that big disruption in such an important commodity is hurting the -- you know, hurting the overall economy.

So a couple of things here. China's slowing. We know its growth is slowing. And getting a handle on that has been difficult. And that's one reason why there's so much concern that maybe China's slowing growth is going to hurt everybody. Then you also have this crash in the commodities. And you also have sort of this uncertainty about the transparency of the Chinese market. It's just been a very icky way to start the year.

We're going to get a jobs report in the U.S. tomorrow. Hoping that kind of changes the conversation.

COSTELLO: Gosh, I hope so. But sit tight. Don't worry too much. Right?

ROMANS: Yes.

COSTELLO: Can I give you that advice?

ROMANS: Yes. Absolutely. I mean, look, we had days like this back in August. Remember?

COSTELLO: Yes.

ROMANS: So, you know, we're only at the lowest of the last few months. But it is -- it feels a little nuts when you have so much money coming out of stocks going into gold and going into bonds. Those are fear trades. That shows you that fear is really driving the markets right now.

COSTELLO: All right. Christine Romans, thanks so much.

ROMANS: You're welcome.

COSTELLO: Still to come in the NEWSROOM, top GOP Senator John McCain siding with Donald Trump, at least when it comes to questions about Ted Cruz's eligibility to run for president.

(COMMERCIAL BREAK)

[10:18:03] COSTELLO: A sideshow and a nonissue, that's how Republican presidential candidate Senator Ted Cruz is fending off attacks about his birth place by rival Donald Trump.

(BEGIN VIDEO CLIP)

WOLF BLITZER, CNN ANCHOR: Do you believe Senator Ted Cruz is a natural born citizen? DONALD TRUMP (R), PRESIDENTIAL CANDIDATE: I don't know, to be honest.

And I like him a lot. And I don't like the issue. I don't like even bringing it up, but how can you have a nominee running, you know, against a Democrat, like whoever it may be, probably Hillary Clinton because she'll probably escape the e-mail problem, which is disgusting that she's able to. So how do you run against the Democrat, whoever it may be, and you have this hanging over your head if they bring a lawsuit?

(END VIDEO CLIP)

COSTELLO: Two candidates now exchanging punches as Cruz leads the pack in Iowa. In a one-on-one interview with CNN's chief political correspondent Dana Bash, Cruz defended his American citizenship and tackled hot-button issues like gun safety and immigration.

Dana joins us from the campaign trail in snowy Iowa.

Good morning, Dana.

DANA BASH, CNN CHIEF POLITICAL CORRESPONDENT: Good morning. Snowy and beautiful Iowa, Carol. We are waiting for the Trump -- excuse me, the Cruz bus to start rolling again. We are in the middle of a six- day bus tour going all through Iowa. And I did get a chance to talk to him about a wide range of topics on his bus.

(BEGIN VIDEOTAPE)

BASH: We're now driving through Osceola County.

SEN. TED CRUZ (R), PRESIDENTIAL CANDIDATE: Yes.

BASH: I'm not sure if you know this, I looked it up and I saw that, you know, the whole idea of there are more cattle than people is actually true here.

CRUZ: Oh, wow.

BASH: 38,500 heads of cattle and 6500 people. Is this the Ted Cruz's insurance policy for winning Iowa?

CRUZ: Look, this is certainly how we approach campaigning, which is grassroots campaigning from the ground up. Asking one person at a time for every vote here in Iowa, we're doing the same in New Hampshire and South Carolina and across the country.

BASH: And you know cows can't caucus, right?

CRUZ: Well, you know, I'm actually thinking of the Democratic caucus, they're welcome.

BASH: Oh, ouch.

[10:20:02] OK. On a much more serious topic, the president's executive action on guns, trying to tighten background checks. Purely on the issue, not on the way that he did it, what's wrong with making it harder for criminals, for the mentally ill to get guns?

CRUZ: What's wrong with what the president did is it's illegal. He doesn't have the legal authority to ignore the Constitution or ignore the law. And that's what Barack Obama has done over and over again. And it's also focused on the wrong problem. Look, he's targeting private, consensual gun sales between law-abiding citizens. And this is what Obama gets wrong over and over again, is he can't distinguish between good guys and bad guys.

So following the tragic shooting in Sandy Hook, President Obama could have brought everyone together. Could have brought Democrats and Republicans together and said, let's focus on violent criminals, let's focus on the criminally insane, let's come down on them like a ton of bricks. That's what I believe we should do. Instead what he did is say let's go after law-abiding citizens. Let's undermine the right to keep and bear arms, not of the criminals but law-abiding citizens.

BASH: But he says -- he says he's -- you know, he said he's not doing that. That he is simply trying to protect --

CRUZ: But he's not telling the truth. He's not telling the truth. And it's the same thing, San Bernardino, we saw the exact same thing happened. After that tragic terror attack, President Obama did a national TV conference. He once again refused to even say the words radical Islamic terrorists. But what does he say? Let's go after the right to keep and bear arms of law-abiding citizens.

He can't distinguish between violent criminals and law-abiding citizens. He can't distinguish between radical Islamic terrorists and law-abiding citizens.

BASH: If you're elected president, how are you going to make sure first graders, girls and boys who are about the same age as your girls --

CRUZ: Yes.

BASH -- can go to school and not have to worry about being victims of gun violence?

CRUZ: Well, listen. There is an easy answer to that. If you look in the wake of Sandy Hook, I joined with Iowa's own Chuck Grassley in drafting legislation, it was the Grassley-Cruz legislation. It became known as the Law Enforcement Alternative. And it focused where Obama should have gone, on targeting the bad guys.

So, for example, in recent years, in one recent year, I think it's 2013, there were 54,000 felons and fugitives who tried to illegally buy a firearm. Do you know how many of those the Obama administration prosecuted? Forty-four. 44 out of 54,000. That is utterly unacceptable. And so the Grassley-Cruz legislation created a task force, created funding so if a felon or a fugitive tries to illegally buy a gun, we prosecute them.

Likewise, you know one of the most shocking things the Obama Justice Department has done? Significantly decrease the prosecution of gun crimes, the prosecution of violent gun crimes. The Bush administration ratcheted it up. They had a project called Project Exile whereas if you used a gun in a crime of violence you would be prosecuted with the full force of the law. You would do hard time. Gun prosecutions decreased under President Obama.

Let me give you third element that's really relevant. You asked about first graders. Do you know that the Obama administration slashed the funding for school safety by roughly $300 million? So the Grassley- Cruz legislation restored the funding for school safety. That's actually -- if you're trying to solve the problem, you direct it at the violent criminals. And what is interesting, Grassley-Cruz got a majority of the senators to support it.

And this is in the Harry Reid Democratic Senate. We've got nine Democrats. Got most crossover bipartisan support of any of the comprehensive legislation. Do you know why it didn't pass into law? Because Harry Reid and Chuck Schumer and the Democrats filibustered it because their view was if they couldn't strip the constitutional right to keep and bear arms of law-abiding citizens, they didn't to want do anything to actually stop the violent criminals.

BASH: Right after the president gave his speech, your posted or campaign posted on your Web site a menacing picture of President Obama and the headline says, "Obama Wants Your Gun." How is that anything but fear-mongering?

CRUZ: It is actually quite accurate. This is the most anti-gun president we've ever seen. Eric Holder, the first attorney general under Barack Obama, said he believed it was his job as attorney general to, quote, "brainwash Americans against guns."

BASH: But he's not the president.

CRUZ: I believe -- but it's at the president's direction. At every instance the president uses every terrorist attack, virtually every criminal incident --

BASH: You don't -- so you don't take him at his word that he just wants to protect your children, his children --

CRUZ: Absolutely not.

BASH: -- everybody else.

CRUZ: And in fact, I'll tell you who I do take at her word?

BASH: Why not?

CRUZ: Is Senator Dianne Feinstein who said if I could go to Mr. America, Mrs. America, and say hand over your guns, I want all of your guns, I would do it. I believe Dianne when she said that, and you know what, Barack Obama is in exactly the same boat. And by the way, if you want to know what his position is, you should take a look at the Supreme Court's case in "Heller versus Direct of Columbia."

Now I represented 31 states in the Heller case which upheld the individual right to keep and bear arms. You know what Barack Obama's position is? That there is no individual right to keep and bear arms whatsoever under the Constitution. That you and I and every American we have no Second Amendment --

[10:25:11] BASH: That's not -- but that's not what he said when he spoke. He said he's a constitutional lawyer and he very much believes in the Second Amendment. You're just saying you don't believe him?

CRUZ: Let's be more clear. So Hillary Clinton, for example, has said she will put Supreme Court justices on the court who will overturn Heller. And if Heller is overturned, there were four justices, including Obama's appointees, who said -- actually, Obama's appointees weren't there but there were four justices who said that there is no individual right to keep and bear arms whatsoever, that it is only a collective right in the militia which is fancy lawyer talk for a nonexistent right.

What it would mean if the four dissenters became the majority and Hillary Clinton gets one more Supreme Court justice, what it would mean is the Supreme Court would say you and I and every individual American have no constitutional right under the Second Amendment at all and either the federal government or a state government could make it a crime to possess a firearm.

That's the consequence of their legal position. And I don't believe it's right for the president to try to write the Bill of Rights out of the Constitution.

BASH: Speaking of the Constitution, you may have heard that Donald Trump is bringing up the fact that you were born in Canada and saying that if you're the Republican nominee, it could be held up in the court for two years.

You're a constitutional scholar. You've argued before the Supreme Court. Why do you think on the legal basis he's wrong?

CRUZ: Oh, look, the legal issue is straightforward. The son of a U.S. citizen born abroad is natural born citizen.

BASH: But it's never been tested. You know full well because you've done it on other issues.

CRUZ: Listen, the Constitution and laws of the United States are very straightforward. The very first Congress defined the child of a U.S. citizen born abroad as a natural born citizen. And by the way, many of those members of the First Congress were framers at the constitutional convention. At the end of the day, this is a nonissue. But you know my response, as you and I were talking about just a minute ago, I tweeted a link to a video of Fonzie jumping a shark.

You know, I'm not going to engage in this. And the reason is simple. There are far too many serious issues facing this country. Last night North Korea claims to have tested a hydrogen bomb. What the American people are looking for is who's prepared to be commander-in-chief. Who has the seriousness, who has the judgment, who has the knowledge, who has the clarity of vision, the strength and resolve. BASH: Let's just button this up, though. Just on the issue of the

passport.

CRUZ: What passport?

BASH: Donald Trump is suggesting -- saying that you had a Canadian passport.

CRUZ: That's not true.

BASH: It's false.

CRUZ: Yes.

BASH: Never had a Canadian passport.

CRUZ: No, of course not.

BASH: In your entire life.

CRUZ: Of course not.

BASH: And you're sure. You asked your mother, you asked your dad?

CRUZ: I'm sure.

BASH: You never had one.

CRUZ: Yes, I'm sure.

BASH: I remember covering you in the Senate a few years ago, you were arguing how important it is for legal immigration to continue and you called for an increase in visas for highly skilled workers by 500 percent. Now on the campaign trail you say that they should be done away with completely, or at least suspended. Is it just because the politics of being a candidate have changed?

CRUZ: No. No. There's changed circumstances. So, listen, my principles remain identical. My principles are, number one, we should secure the border and stop illegal immigration. And number two, we should welcome and celebrate legal immigrants. Now, as it concerns the h1b visa program, I used to support an expansion of that program. And I support the original goals of that program which is bringing in high skilled workers that produce jobs and economic growth.

But any rational person responds to changed circumstances. What's changed? We've seen a whole number of employers abusing the program. Number one, bringing in people who are not high skilled, bringing in medium and low-skilled IT workers, and then firing American workers and add insult to injury, forcing the American workers to train their foreign replacement.

BASH: But you know the rap on you, on this, on what is being talked about where we are here in Iowa about renewable energy is that you're flip-flopping. CRUZ: So let me get this straight. Your point is that political

opponents of mine are attacking me? You know, as they would say in "Casablanca," I'm shocked, shocked to hear such a thing.

(END VIDEOTAPE)

COSTELLO: All right. I want to bring Dana Bash back in. You know, something else Ted Cruz said that was interesting about undocumented immigrants in this country, he said he was in favor of deporting all of them and not allowing any of them to come back into the country. Is that right?

BASH: It is. And there was a moment, the first day of this bus tour a few days ago, where a voter here in Iowa asked Ted Cruz about the difference between his immigration plan or plan for illegal immigrants and Donald Trump's. And Cruz's answer was effectively what you said. That Donald Trump wants to deport everybody, as Cruz does, but that unlike Trump, Cruz won't let them back in because Trump has said eventually if the undocumented immigrants are not criminals and can pass a series of tests --