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THE LEAD WITH JAKE TAPPER

Interview With Alabama Senator Jeff Sessions; Trump Tax Bombshell. Aired 4-4:30p ET

Aired October 3, 2016 - 16:00   ET

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


[16:00:20]

JIM SCIUTTO, CNN ANCHOR: October surprise number one arrives.

THE LEAD starts right now.

And breaking news: brand-new polls releasing right now on THE LEAD showing solid leads for Hillary Clinton after a debate that Donald Trump still insists he won.

And with just five weeks until Election Day, Donald Trump is facing another possible headache, as a leak shows that he could have avoided paying federal income taxes for nearly a generation.

Plus, life-threatening, Hurricane Matthew now a massive Category 4 storm with 140-mile-an-hour winds closing in on the Caribbean. Will the East Coast of the U.S. be next?

ANNOUNCER: This is CNN breaking news.

SCIUTTO: And welcome to THE LEAD. I'm Jim Sciutto, in for Jake today.

And we begin with a key new poll breaking right now, the first national CNN/ORC since the first presidential debate.

CNN executive editor Mark Preston here with the numbers now.

Mark, did last week's debate change this horse race?

MARK PRESTON, CNN POLITICAL EDITOR: It certainly did, Jim.

Since our last poll in September, Hillary Clinton has gained ground with groups she's been struggling with, including independents and non-college whites. Let's take a quick look. Here are the new CNN/ORC poll numbers, Hillary Clinton at 47 percent, Donald Trump at 42 percent, Gary Johnson, the independent, at 7 percent and the Green candidate Jill Stein at 2 percent.

Now, Clinton has gained four points in this national poll since September, while Trump has lost three points in this four-way horse race. And also, Jim, we're seeing that Democrats are starting to rally around Hillary Clinton's candidacy.

Let's take a look at this. While Trump's supporters are more excited about his candidacy, Clinton has cut the enthusiasm gap in half and he now holds a 6-point advantage; 56 percent of Trump supporters say they're enthusiastic; 50 percent of Hillary Clinton voters say they're enthusiastic, Jim.

SCIUTTO: Now, Mark, I know that this poll not in the field long enough to get a meaningful measurement of what kind of impact this "New York Times" story on Donald Trump's taxes has had. But it did ask voters about Trump's tax returns. What did they say?

PRESTON: It did.

It showed taxes are certainly on the mind of voters. And let's take a look at this. That's why the "New York Times" story that broke this weekend is so important. More than seven in 10 voters want Trump to release his taxes.

And in our poll, it shows that nearly one-half of Trump voters believe he should make his taxes public. And get this, Jim. This is not a good number for Donald Trump. Nearly eight in 10 -- or, rather, nearly six in 10 voters think he's hiding something by not releasing them -- Jim.

SCIUTTO: Meaningful numbers. Mark Preston, thanks very much, as always.

Our latest poll shows American voters do care about what's in Donald Trump's taxes, which should make Saturday night's story from "The New York Times" all the more concerning for Trump campaign. Leaked pages from 1995 tax return found their way to a reporter's mailbox.

And the details we learn show that Trump reported a near $1 billion loss in 1995, and to be clear, a loss so sizable that the real estate mogul would have been able to use that loss to avoid paying federal income taxes for the next 18 years.

CNN's Jason Carroll is in Loveland, Colorado.

Jason, has the Trump campaign given any indication they're going to release more of his tax returns in response to this "New York Times" story?

JASON CARROLL, CNN NATIONAL CORRESPONDENT: No, at least not yet, but I can tell you this. It seems as if Donald Trump is planning to address the issue at some point today, address the controversy.

I can tell you that a number of his surrogates, though, have been out defending Donald Trump, basically saying what he did makes him a financial genius.

(BEGIN VIDEOTAPE)

CARROLL (voice-over): Donald Trump is on the defensive after "The New York Times" published his 1995 tax returns over the weekend showing he reported a $916 million loss that year. The loss means Trump could have avoided paying any federal income tax for nearly two decades.

Hillary Clinton seizing on the report today in Ohio.

HILLARY RODHAM CLINTON (D), PRESIDENTIAL CANDIDATE: While millions of American families, including mine and yours, were working hard, paying our fair share, it seems he was contributing nothing to our nation.

CARROLL: Trump and his campaign are not disputing the authenticity of the tax returns. Instead, the GOP nominee boasts: "I know our complex tax laws better than anyone who has ever run for president, and I am the only one who can fix them."

Trump surrogates rushing to his defense over the weekend.

GOV. CHRIS CHRISTIE (R), NEW JERSEY: The genius of Donald Trump has been to make sure that he follows the law, which is exactly what he's done.

[16:05:03]

CARROLL: Former New York City Mayor Rudy Giuliani taking the argument a bit further in an appearance on ABC.

RUDY GIULIANI (R), FORMER MAYOR OF NEW YORK: Don't you think a man who has this kind of economic genius is a lot better for the United States than a woman, and the only thing she's ever produced is a lot of work for the FBI checking out her e-mails?

CARROLL: Amid the fallout of his tax returns, Trump today is stirring another controversy after appearing to suggest that veterans with PTSD are not strong.

DONALD TRUMP (R), PRESIDENTIAL CANDIDATE: When people come back from war and combat and they see things that maybe a lot of the folks in this room have seen many times over, and you're strong and you can handle it, but a lot of people can't handle it.

CARROLL: As GOP leaders urge Trump to focus on issues, Trump is unleashing a fresh round of personal attacks against Clinton, insinuating Clinton might not have been faithful to her husband, but offering no evidence to support his claim.

TRUMP: Clinton's only loyalty is to her financial contributors and to herself. I don't even think she's loyal to Bill, you want to know the truth. And really, folks, really, why should she be, right?

CARROLL: And while Trump has repeatedly criticized the Clinton Foundation, today, the New York attorney general ordered the Trump Foundation to cease and desist from collecting donations in the state after reports the organization had not submitted to routine audits mandated by the state.

Trump's finances also getting some attention during the season premiere of "Saturday Night Live."

KATE MCKINNON, ACTRESS: He hasn't released his tax returns, which means he's either not that rich...

ALEC BALDWIN, ACTOR: Wrong.

MCKINNON: Not that charitable.

BALDWIN: Wrong.

MCKINNON: Or he has never paid taxes in his life.

BALDWIN: Warmer.

(LAUGHTER)

(END VIDEO CLIP)

CARROLL: And, Jim, all jokes aside, back to that comment that Trump made about PTSD, retired Lieutenant General Michael Flynn coming to Trump's defense, saying basically that Trump's comments were taken out of context by the media.

Also following up on that, the man who asked the question, the Marine sergeant, also coming to Trump's defense as well, basically saying it is sickening that anyone would twist Trump's words, he said, for political reasons -- Jim.

SCIUTTO: Jason Carroll with the Trump campaign, thanks very much.

Joining me now is Republican Senator Jeff Sessions from Alabama. He's a senior adviser to the Trump campaign.

Senator Sessions, thanks for taking the time today.

SEN. JEFF SESSIONS (R), ALABAMA: Thank you. Good to be with you.

SCIUTTO: So, we have heard the Trump surrogates' response to "The New York Times" story throughout the weekend from Chris Christie and others saying that this makes him a genius, in effect.

So how does losing more than $900 million during what was a very good economic time in America, the mid-1990s, and then not paying income taxes for possibly 18 years, how does that make you a genius?

SESSIONS: Well, look, he had some success in real estate and he had some bad investments in real estate.

That's just what happened. And he had this big loss. And when you take a loss, you can offset that against profits in future years. That's all it is. It's just that simple.

"The New York Times"' own article said right in there that there's nothing on that tax return that suggests any wrongdoing by Donald Trump -- close quote.

SCIUTTO: But Trump's surrogates have gone further to not just that it wasn't illegal, but that it shows some great business acumen, that he's a genius. They used that word genius repeatedly.

SESSIONS: Well, it does show that he has good tax advisers, he does his businesses in a way to minimize taxes.

And that's part of what you need to know if you're going to reform taxes, as he says he is. His plan is to reduce rates on middle-class and corporate tax rates, and, at the same time, close some of these loopholes and Congress I think will continue to look at that policy.

SCIUTTO: But let me ask you a question. I suppose it would be nice for every American to have a team of tax lawyers. I suppose I would like that as well.

But most Americans do not. And I assume you don't either. You don't either.

SESSIONS: Look, just let me be clear about that. Let me be clear about that.

He suffered a major loss economically. He set it off against future income, which is perfectly legal. And I can't believe "The New York Times" continues to suggest there is some evil motive here. He didn't want to lose this money. He doesn't want to do -- and they have audited his returns. So, if there's any problem there...

(CROSSTALK)

SCIUTTO: I'm asking you and other Trump surrogates to justify the argument that this shows he is a business genius.

SESSIONS: Well, I don't know what argument you're talking about, other than he said -- Giuliani said he was a genius.

(CROSSTALK)

SCIUTTO: Giuliani. Chris Christie. Donald Trump in the debate said that it makes him smart.

SESSIONS: So, look, he has been able to legally and lawfully pay the taxes he owes. And if he doesn't owe taxes, he doesn't pay them.

One of the things that is important and one of the reasons you get a deduction for your home mortgage is so more people will have a home. One reason you give tax deductions for real estate developers is to develop more real estate, more shopping centers, more hotels, which pay all kinds of real estate taxes and other things.

[16:10:10]

That's a policy that we can disagree on. But that's the law. And that's what he used. And he did nothing wrong in it.

SCIUTTO: Let me ask you this. So, if it does show business acumen -- and, again, that's not my argument -- this is the argument of the surrogates, using the word genius -- why not release his later returns, when, presumably, it shows that he was making profits off his businesses?

SESSIONS: He's made commitment to reduce -- produce what is not required by the law.

He's produced this financial statement that has every holding, every partnership, every stock...

SCIUTTO: But not what he has paid in taxes.

SESSIONS: He's not required to do that. He's done what the law required.

And it absolutely is a big window into his entire financial holding. It lists every holding he's had in America and abroad. And I just would have to say that he knows some things that are important.

One of them is, you are not going to grow this economy, as Hillary Clinton believes, by raising taxes, by raising regulations, by increasing spending, by more government.

What you need is in this economy is to create growth in the private sector. His tax plan is good.

(CROSSTALK)

SESSIONS: It's going to create growth, jobs, and higher wages.

SCIUTTO: But let's drill down on his tax plan, because you and others have said that, because he was able to avoid taxes so skillfully here, that makes him the perfect man, the perfect president to reform the tax code.

But the fact is that his tax proposal does not aim to eliminate the loophole that he used to avoid taxes here.

SESSIONS: Well, he proposes eliminating loopholes.

SCIUTTO: But not the loophole that allowed him to save a billion dollars.

SESSIONS: Well, maybe not.

But his tax reform plan is to create a system that allows more growth to occur. We have the highest corporate tax rate in the world. We have countries like Canada and Ireland that charge so much less. And that's why our corporations are leaving and taking jobs with them.

(CROSSTALK)

SCIUTTO: They pay their taxes.

SESSIONS: They pay taxes if they make a profit. When "The New York Times" didn't make a profit, it didn't pay taxes.

SCIUTTO: Or if they successfully migrate those profits overseas, which we know is a cottage industry in the business.

SESSIONS: Some of that happens. And they after all these year have failed to be able to bring that tax money back. And it takes a bipartisan agreement in Congress. And Donald Trump has said we're going get that done after we're tired of talking.

We're going to bring that money back home, and it's going to be used to stimulate American economy.

SCIUTTO: Let me ask you one final question.

You heard in my colleague Jason Carroll's piece there Donald Trump talking about Hillary Clinton and raises the question as to whether she's been faithful to her husband, asking the audience, has she been loyal to Bill?

Why is that kind of comment appropriate?

SESSIONS: Well, this has been a rough campaign. It's gone back and forth in a lot of different ways.

But he's been attacked in a lot of ways. And he's pushing back. And he has a right to ask the same kind of questions about his opponents that they're asking about him.

SCIUTTO: Senator Jeff Sessions, thanks very much for taking the time. Appreciate it.

SESSIONS: Thank you.

SCIUTTO: Hillary Clinton firing back at the Trump campaign's claim that filing a $916 million loss in 1995 is genius. How the Democratic candidate describes Trump's tax return, that's right after this.

(COMMERCIAL BREAK)

[16:17:04] JIM SCIUTTO, CNN ANCHOR: Hillary Clinton is visiting Ohio today. It's the first time in a month that she's been to this once crucial swing state where a new poll just out this afternoon gives Trump again a comfortable lead.

Senior Washington correspondent Jeff Zeleny is live in Akron, Ohio, where Clinton is giving a speech shortly.

Jeff, Clinton seizing on this report about Donald Trump's tax returns.

JEFF ZELENY, CNN SENIOR WASHINGTON CORRESPONDENT: She is, indeed, Jim. I mean, she has been spent weeks if not months asking questions, what is Donald Trump hiding in those tax returns? Well, today, she attempted to discuss it with the state of Ohio. She came at it from two angles. She said, one, he simply is not contributing to the nation's military and other programs. And she also came after his business strength. She said this, what type of genius does it take to lose a billion dollars in a year?

(BEGIN VIDEOTAPE)

ZELENY (voice-over): Hillary Clinton returning to Ohio for the first time in a month.

HILLARY CLINTON (D), PRESIDENTIAL CANDIDATE: Hello, Toledo!

ZELENY: Just in time to seize on Donald Trump's taxes, or as she said, his lack of paying them.

CLINTON: In other words, Trump was taking from America with both hands and leaving the rest of us with the bill.

ZELENY: Clinton is highlighting a "New York Times" report that says Trump may have avoided 18 years of federal taxes after declaring a $916 million loss on his 1995 tax return. She used it to raise more questions about one of his biggest selling points, his sense as a businessman.

CLINTON: Yesterday, his campaign was bragging it makes him a genius. What kind of genius loses a billion dollars in a single year?

ZELENY: She's trying to erode Trump's Ohio advantage and win over voters without a college degree who are overwhelmingly siding with him. She's hoping a new endorsement will help.

CLINTON: I hope to be elected president, but I know here in Ohio, LeBron will always be the king!

ZELENY: Cleveland Cavaliers basketball great LeBron James said the children of his native Akron and all cities need Clinton in the White House. He wrote, "Hillary is running on the message of hope and unity that we need."

As Democrats fan out across the country today, Trump is wading deeper into old Clinton sex scandals, which he says he may bring up at their second debate on Sunday. He says without admission he doubts Clinton was loyal to her husband.

DONALD TRUMP (R), PRESIDENTIAL CANDIDATE: I don't think she was even loyal to Bill, if you want to know the truth.

ZELENY: Trump and his allies are also revisiting how Clinton defended her husband and blamed his accusers, like in this 1992 interview when she sharply dismissed Gennifer Flowers.

CLINTON: Somebody is willing to pay $130,000 or $170,000 to say something and you get your 15 minutes of fame and you get your picture on a front page of every newspaper and you're some failed cabaret singer who doesn't even have much of a resume to fall back on.

ZELENY: It's a risky ball game for Trump who is trying to expand his appeal to women voters. All of this will be fresh fodder for the second debate with Trump Sunday in St. Louis.

[16:20:04] Their first match-up is still driving the conversation.

KATE MCKINNON AS HILLARY CLINTON: I mean, this man is clearly unfit to be commander in chief.

ALEC BALDWIN AS DONALD TRUMP: Wrong.

MCKINNON: He is a bully.

BALDWIN: Shut up.

ZELENY: Including in the season premiere of "Saturday Night Live."

UNIDENTIFIED MALE: Secretary Clinton, what do you think about that?

MCKINNON: I think I'm going to be president.

(END VIDEOTAPE)

ZELENY: Now, Secretary Clinton is trying to build on this momentum from her first debate into that second debate on Sunday. She is seizing on the national numbers in our new CNN poll that shows her with a five-point lead. But, Jim, it is states like Ohio that still worry the Clintons. Donald Trump is up in a new Quinnipiac poll today here, 47 percent to 42 percent.

The Clinton campaign does not need Ohio to win, but President Obama won it twice in 2008 and 2012, so they would certainly like to repeat that performance -- Jim.

SCIUTTO: Jeff Zeleny with the Clinton campaign -- thank you.

Donald Trump raised some few eyebrows with some pointed remarks about veterans this morning. That's next.

Then, hacking the election. Five weeks until Election Day and we are learning even more states are seeking help fighting a cyber war.

(COMMERCIAL BREAK)

SCIUTTO: Welcome back to THE LEAD.

Our political panel joins me now. "USA Today" Washington bureau chief Susan Page and "Boston Globe" deputy Washington bureau chief, Matt Viser.

Good to have you both on.

We want to dig more into these numbers from this new CNN/ORC poll a little bit. Let's look at two constituencies where Clinton has been far outpacing Trump. Here's a breakdown of independent women voters. Clinton beating Trump among independent women by 20 percent, sizable lead. Break down much more sharp among black voters, our poll shows Clinton up 50 percent, 95 to 5.

These, of course, both constituencies the Trump campaign has been trying, Susan, to reach out a bit more in recent weeks with events. What do these numbers tell us?

SUSAN PAGE, USA TODAY: First of all, there is no question Clinton is going to get the overwhelming majority of African-American voters. The question is how enthusiastic will they be? We saw the last two elections, African-Americans actually voted at higher rates than white Americans. Can they continue that even if Barack Obama is not on the ballot?

And when you look at women, independent women, even Republican-leaning women, that is the swing vote I think is most crucial to look at. And Hillary Clinton has been doing pretty well with them. Donald Trump had made some inroads, but I think he may have cost himself with some of the antics this past week.

SCIUTTO: Machado, are antics? The comments about Hillary Clinton being faithful to his husband --

PAGE: Exactly. Comments questioning her faithfulness in her marriage, ridiculing beauty queen for gaining weight, Hillary Clinton's health. This not a prescription to gaining women's votes.

SCIUTTO: Yes. Two new state swing polls, Matt, as well out today. Let's have a look at them.

She's up 11 points in Colorado. That, of course, a key state there, 49 to 38 over Trump. This, of course, in a four race. Let's look at Virginia. She's got an eight-point lead over Trump in Virginia. She's been consistently strong there. Of course, Tim Kaine, her vice presidential candidate from Virginia.

What will it take for Trump when you look writ large the national polls over the last couple of weeks trending, particularly after the debate, trending back in her favor and, also crucially -- these are really polls the campaigns watch -- what's it going to take for him to turn that around?

MATT VISER, DEPUTY WASHINGTON BUREAU CHIEF, THE BOSTON GLOBE: Well, you notice Trump is on the way to Colorado. He's just landing in Colorado right now. These polls are not looking good for him in a state that had been kind of been closing in his favor before the debate. He has very few paths here to the presidency and he needs to change the game up in some of the Rust Belt states. Pennsylvania, you notice he's been in Michigan lately hoping for some kind of change in that.

And I think to the degree he's talking about trade, to the degree he's talking about Hillary Clinton and her record on that, those are some of the best moments of his debate performance. And he really needs to get back on that and off of the Machado stuff which is really a diversion for him to focus on her so personally instead of keeping the focus on Hillary Clinton.

SCIUTTO: I supposed to be sort of self-critical here, the last week the narrative before the debate was, oh, look at this, it's tight, it's a toss-up, how is Hillary Clinton going to reverse this narrative? You do have a vice presidential debate tomorrow and you have, of course, another presidential debate on Sunday where we know the results on this race can change very quickly.

PAGE: Yes, there's only 36 days left. You know, the clock is really ticking. I think that first debate as it often is turns out looked pretty pivotal. We have candidates come back in the second debate, but the big examples of that have been incumbent presidents who start with maybe a stronger standing than Donald Trump will have. It's not that the campaign is over, but since that first debate, you definitely see the trend more in Clinton's favor.

VISER: We also shouldn't forget that people are voting now. I mean, voting has already started in so many states, and you'll have 40 percent of the electorate who will have cast their ballots before November. So, I think the ability of people to solidify their decision right now is sort of really shaping the election.

SCIUTTO: For many voters, to count down to zero, if you're going today.

Matt, if you're talking about changing narratives, this is obviously not ideal news for Donald Trump. We learn today that the New York attorney general sent a cease and desist letter to the Trump Foundation because he apparently never registered in the state of New York as a charity. I mean, he connected to other stories for instance about Trump University, et cetera, how powerful is this for his campaign?

VISER: I mean, I think it is damaging. It feeds into the narrative of him, sort of taxes, his money, his organization, failing to sort of do a very basic thing, which is register with the state. So, I mean, I don't know that this is a multi-day story like some of other things, like his taxes I think will prove to be, or, you know, him fueling the stories on women. So, this maybe a more limited thing, but it's crucial at the start of a week.