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Trump Holds Town Hall in Herndon, Virginia; Trump Discusses Cyberattacks, National Security. Aired 10:30-11a ET.

Aired October 3, 2016 - 10:30   ET


[10:30:00] UNIDENTIFIED FEMALE: And did you ever get work in Atlantic City again?

UNIDENTIFIED MALE: Never. I think I spent over a million dollars in litigation with them. The bottom line was, I would have been much happier, Jess, if he would have left me alone and simply left me to do my business. To him it was sport and to me it was my life.

CAROL COSTELLO, CNN ANCHOR: But Trump told a different story during the last debate.


HILLARY CLINTON, (D) PRESIDENTIAL NOMINEE: We have an architect in the audience who designed one of your clubhouses at one of your golf courses. It's a beautiful facility. It immediately was put to use. And you wouldn't pay what the man needed to be paid, what he was charging you.

DONALD TRUMP, (R) PRESIDENTIAL NOMINEE: Maybe he didn't do a good job and I was unsatisfied with his work.


COSTELLO: All right, with me now is Michael Deal, he sells pianos and you have for 30 years. And thank you so much for being with me today.

MICHAEL DIEHL, SOLD PIANOS TO TRUMP: You're welcome. Thank you.

COSTELLO: You were asked to provide Mr. Trump, what, $100,000.00 worth of pianos and you delivered, right? And tell me what happened next.

DIEHL: Well, after they were delivered I waited for 30 days and then I tried to find out when I'm going to get paid. And all I had was sort of soon or whenever it's going to be. And then about a month or so later I got a letter from the Trump Organization saying they were having financial problems and I had three choices. I could either accept 70 percent on the dollar and consider it a bill paid or we could get together and everybody sue him and put him into bankruptcy and maybe get 10 cents on the dollar or I would wait seven or eight years before the casino made enough money. So I had no other choice, really, than to accept the 70 percent on the dollar.

COSTELLO: So, how did that affect your business?

DIEHL: Well, to take $30,000.00 out of a small business is a pretty big chunk, okay. When you have a small business you need working capital and that's all working capital. Besides that I had to borrow money from my bank to pay off my company that supplied the pianos, so it cost more than (--)

COSTELLO: So it cost you - it cost you a lot of money?

DIEHL: Right.

COSTELLO: And these pianos were for Trump's Atlantic City Casinos, correct?

DIEHL: Yes. They were delivered to the Atlantic City casinos.

COSTELLO: OK. So when you heard that Donald Trump claimed a $900 million loss in 1995 and it was because of these Atlantic City casinos, what went through your mind?

DIEHL: Well, what went through my mind, if you're running a casino like the Taj Mahal and you see things are going bad, you can give yourself a whole bunch of stock, okay? And we're going(ph) to say it's worth $30 a share. And when a casino goes bad, the stock goes down to $2 a share. Well then you can claim that as a loss, but it's not actually a loss because you never really used the money. But you can certainly use the loss.


DIEHL: When I was stiffed $30,000.00 that was tough.

COSTELLO: So, did Donald Trump act as any good businessman would have acted?

DIEHL: I've been in this business for 30 or actually 50 years. I can walk down the street and see people that I've done business with for years. And I've never had anybody come up and complain, okay. I can't imagine Donald Trump getting on an airplane to tell people or find out he's there(ph). They're liable to go up and holler at him or shoot him or get aggravated with him. So you have to have your own plane at that (INAUDIBLE).

COSTELLO: Not shoot him. So Donald Trump didn't pay income tax income taxes for 18 years. That's what some analysts are saying. Because of these losses, he could kind of write them off and not pay income taxes. You lost $30,000.00. Did you continue to pay income taxes during that time?

DIEHL: Well, I might have saved a few dollars out of the $30,000.00 that I didn't pay, but I still had to pay income taxes, of course.

COSTELLO: So, I guess what I'm trying to get at is, Donald Trump sells himself as a great business man who could run this country like a great business and help people like you, small businessmen. Do you think that's true? DIEHL: I think Donald Trump runs his business as a dictator. He makes all the decisions. He cannot be controlled by his own people. He says what he wants to say. I can't imagine him solving the problems of this world on a third-grade level. It scares me half to death.

COSTELLO: Michael Diehl, thank you so much for stopping by. I'm going to take our viewers to Virginia now where Mr. Trump is holding a campaign rally. Let's listen.


[10:34:50] TRUMP: ... scheme to violate federal law, engineering a massive cover-up and putting the entire nation in harm's way. The fact that a former senator and secretary of state claimed not to know what the letter "C" means is just one more example of why she is totally unfit to hold the office of president. Totally unfit. It's interesting that during her FBI review, which took place on a massive holiday and which wasn't recorded and lots of other things, that she went 39 times, she didn't remember. She didn't remember. She doesn't remember anything. She remembered practically nothing. But when she has to remember something, she remembers. It's a very sad situation, I will tell you. I'm sure the folks in this room are not thrilled. The scope of our cyber security problem is enormous. Our government, our business, our trade secrets, and our citizens, most sensitive information are all facing constant cyberattacks and reviews by the enemy. Just consider some of these recent hacks: JP Morgan Chase, massive bank had 73 million emails stolen. Ebay was involved and gave up 150 million passwords. Target was attacked and gave up 40 million credit card numbers. Attacks like these are happening on a regular basis, both in the United States and around the world and the costs in terms of privacy or security in our financial sector are truly extraordinary. Identity theft, financial laundry, as well as ransom and ransomware - I mean, think of it - all involving extortion of a hacked institution are becoming increasingly common and they are extorting institutions.

Incredibly, hackers were able to obtain at least 20 million of identities of people who are under FBI background and were under FBI background investigations. The information hack contains facts discovered by the FBI in doing background checks for people seeking positions with the federal government. It's a treasure trove which can easily be used for blackmail and other reasons by the enemy. The fact that this highly classified information of very, very important people in many cases was so poorly protected demonstrates that cyber security is just one more area where the Obama administration has failed.

And speaking of failure, when we do our question and answer period, you look at what's happened with our Navy in terms of the number of ships and our armed forces generally, how they're so depleted, how they're at almost record-setting lows and in some cases absolute record-setting lows. It is very, very unfortunate and very, very dangerous for our country.

We should not let this be like the history of the mafia which was allowed to grow into a nationwide organization which infiltrated and corrupted so many areas of society for such a long period of time. We can learn from this history that when the Department of Justice, the FBI, the DEA, and the state and local police and prosecutors were combined in a task force directed by and at the mafia, when they looked at the mafia and really went after them, they were able to get great, great successes and prosecutions out of them in seizing their business interest, in a lot of things; including their business interest, taking them away, and removing their infiltration from legitimate areas of society. They've been very, very effective when everybody got together. That was a long time ago. As president, I will instruct the Department of Justice to create a joint task force throughout the United States to work together with federal, state, and local law enforcement authorities and international law enforcement to crush this still-developing area of crime. And it's getting bigger very fast. It's going to be harder and harder to do. I will make certain that our military is the best in the world in both cyber offense and defense and in every other way, by the way. Every other way. We've rarely needed it more than we do right now.

[10:49:35] I will also ask my secretary of defense and joint chiefs to present recommendations for strengthening and augmenting our cyber command. As a deterrent against attacks on our critical resources, the United States must possess, and has to, the unquestioned capacity to launch crippling cyber counterattacks. And I mean crippling. Crippling. This is the warfare of the future. America's dominance in this arena must be unquestioned and today it's totally questioned. People don't even know if we have the capability that we're supposed to have when you look at what's going on with other countries.

Cyber security is not only a question of developing defensive technologies but offensive technologies as well. For non-state terror actors, the United States must develop the ability, no matter how difficult, to track down and incapacitate those responsible and do it rapidly. We should turn cyber warfare into one of our greatest weapons against the terrorists and they have to know it's coming because right now they know nothing about us. It just seems they have an open blanket. It's like an open mark, do whatever you want to do, nothing's going to happen, take our youth out of the country, infiltrate our country in so many different ways. We can't let this happen. We have to have it stopped immediately before it's too late.

To enhance the defense of the other agencies of government, including our law enforcement agency - it's so important. They're doing such a great job, by the way. We will put together a team of our best military, civilian, and private sector cyber security experts to comprehensively review all of our cyber security systems and technologies. The cyber review team will proceed with the most sensitive systems first, but ultimately all systems will be analyzed and made as secure as modern technology permits. And hopefully that's going to be our technology. We will also require that followup reviews take place on a regular basis, determined by the sensitive nature of the security involved.

The review will be very much exact and recommended by experts. We want experts, our finest people. We don't want people that are B level, C level, D level. We have to get our absolute best and the recommendations have to be a combination of defensive technologies tailored to specific agencies and every other discipline involved. This will include the various methods of internal monitoring, attack and penetration, investigation of suspected hackers, or rogue employees - and you have plenty of rogue employees - and identity protection for government employees. The review team will also remain current on the constantly evolving new methods of attack and will attempt to anticipate them and develop defenses as often as possible before breaches occur. And there are ways of doing this through modern technology, but we are not using that and, frankly, our technology is not up to date. We're letting it slip by. And with technology, as we know, it can go very, very rapidly.

This group of experts will set up protocols for each agency and government officials, requiring them to follow best and strongest practices. They will also establish a training program for all government employees to make certain that they understand what defenses are available and utilize them along with a continuing education program so everyone is aware of the newest methods of both attack and defense. That means attack and defense. Those who violate classification rules will be held responsible to the fullest extent of the law, something which we don't do too much anymore.

You know, in our country lately we're more interested in protecting the criminals than we are in making sure that we're strong and powerful and know what we're doing. We're so so interested in protecting criminals and people that want to do us harm and I think we have to go back to a little more old fashioned method of thinking, if that makes sense.

I will appoint an attorney general who will reform the Department of Justice like it was necessary after Watergate. My attorney general will restore the integrity of the Department of Justice which has been severely questioned.

[10:44:54] Frankly, nobody's ever seen anything like what's happening today. When you have somebody getting a subpoena from the United States Congress to have your emails and all other information sent and after, not before, after getting the subpoena, 33,000 emails are deleted and acid washed and nobody even knows that that means, acid washed. It's a very expensive thing to do. Most people don't even know what it means. When you see something like that and there's no crime, everything's just wonderful. You know, if you're in a private case with Mr. Smith and they call for your records and you get rid of your records so blatantly as this, you have serious consequences, like, the most serious consequences. The congressman sends out a tremendous subpoena. They want to see the emails and they delete the emails. I can't think of anything in terms of what we're talking about much more serious than that. Congressman, do you agree? It's hard to believe; hard to believe that they can get away with this kind of thing.

Today is just the beginning of a long and overdue national discussion on how to protect ourselves from modern cybercrime and evolving national security threats and how to develop the cyber offense strategies necessary to gain a critical security edge in the 21st Century. We need the edge and ideally at day one(ph). I want to thank everybody in this room. I have such respect for the

people in this room for being here and now let's begin our discussion. Thank you very much, folks. Thank you.


COSTELLO: All right, you just heard Donald Trump speaking before veterans, retired veterans in Hearndon, Virginia. He talked a little bit about everything but mostly cyber security and of course about Hillary Clinton's email server. Jim Acosta was also listening to the speech and it was a rather subdued Donald Trump, Jim, because some people were expecting him to come out full guns against Hillary Clinton. And he did talk about her emails, but in a more measured way.

JIM ACOSTA, CNN SENIOR WHITE HOUSE CORRESPONDENT: That's right. And we did get a heads up from the campaign, Carol, just before this event got going that he was really going to tailor his message more toward these cyber issues and what a perfect opportunity the Trump campaign feels to talk about Hillary Clinton's use of a private email server when she was secretary of state. We do understand at these events in Colorado later on today that he's going to be going after what she did after leaving the White House. She and President Clinton made a lot of money after leaving the White House. The Trump campaign wants to highlight this and they want to highlight the fact that most of that money was made off of books and speeches and that sort of thing, whereas Donald Trump, they say, you know created jobs. And, Carol, part of this is a defense, a subtle one, but it is a defense of the story that exploded over the weekend with regard to his 1995 tax returns which shows that, you know, he took a $900 million loss, that that enabled him, according to tax experts, to not pay income taxes for 18 years. You know, what the Trump campaign is trying to say today until the candidate says it himself is that, "Listen, I knew how to create jobs. Yes, I do know how to use the tax code to my advantage. That is just one of the weapons in the arsenal of a successful businessman." And I think you're going to hear that from his surrogates, from the campaign, if not the candidate himself.

But, Carol, you know who would have thought that the October surprise would have come on October 1st. And I think at this point the Trump campaign is still trying to figure out how they're going to deal with this story. Because, as we've noted, out on the campaign trail when you talk to his diehard supporters, they have been through him - been with him through everything. You know, they like to say that he can make just about any kind of comment on the campaign trail and he'll - they'll stand by him. The question now is, this week heading into this week is, will they stand by him knowing that he didn't, basically didn't pay any federal income taxes for nearly 20 years. I think that's a big question this week.

COSTELLO: Well, we were - we were hoping maybe that he would bring the subject of his taxes up at this event, but I don't think he will, Jim. They're asking him (--)

ACOSTA: I don't think so. Now this is a town hall discussion here, so it's possible the question could come up. COSTELLO: Well, that's true. OK, let's listen. There's a question from the audience.




[10:49:28] UNIDENTIFIED MALE: I'm on. Mr. Trump, I only speak for the Army. It's not because I ignore the needs of the Air Force and the Navy, but - and I accept everything you have said about the cyber threat to us - but my question has to do with the United States Army, which has been too small ever since the Cold War ended and we paid the peace dividend out of the defense budget and they army has been too small ever since. When we were committed into Iraq and Afghanistan and the chief of staff of the Army was asked how many troops he was going to need to finish that war and he said about $300,000, he was made a pariah and nobody asked for his advice and counsel for the rest of his tour of duty. We've been using that army for the last 15 years and it's the first time we ever went to war without expanding the size of the army. Instead of that, they hired 200,000 civilian contractors to do the work that the Army wasn't big enough to do.

Now we have an army that's being worn out. We are losing experienced soldiers who are being left - being dismissed from the Army in order to bring the size down even more. Now we think the United States Army is going to be a major element that you will want to use in your national strategy and we'd like to know what your thoughts are on how to go about this.

TRUMP: Well, General, thank you. And thank you for your bravery, amazing. I've heard your name mentioned many times, so thank you for being here and thank for the question. Not only the Army, the Navy, the Air Force, the Marines, everything is going away at a time when certainly we are at a top priority for making sure that doesn't happen. We're not respected to the extent we were and if we keep going like this, we won't be respected at all. You look at what Russia's doing with their nuclear capability and the newness of their capability and look at what we're doing and nobody wants to do that with respect to nukes because nukes are horrible. But you have countries that are going out of their way to do things that we're not doing. And we have to be very, very careful. The size of the army, absolutely. It's getting too small. In fact, a certain general when he left about a year and a half ago said, "We are not only too small, we're the least prepared we've ever been" since he can remember. The least prepared. So it's a combination of that of both.

Look, I feel so strongly that I use a different word in going around in that our forces are depleted. They're depleted. We're the greatest people on earth, but they're depleted. You see where the fighter jets are so old that they can't get parts anymore and they have to go to plane, airplane graveyards and museums to get parts for our fighter jets that we're currently using. They don't make the parts. And you have other countries that have brand new equipment and in some cases we sell them the equipment. The whole thing is ridiculous. Now, we're going to build up our forces, including the Army, but we are going to build up our forces. We have no choice. You know, they can talk about sequester, they can talk about all of the different things that they've - that they're doing, but this isn't like we have a choice. This is something where - and we're going to be cutting elements of government, certainly. But when it comes to the military, we have no choice. We cannot have a depleted military.

We have to have the strongest military by far and with that being said, as you know, we spend a lot of money on protecting other countries. And yet those other countries aren't paying nearly what it costs us for that protection. We're - they're getting one of the great bargains of all time, but we're spending on numerous countries - very substantial countries, you know the countries we're talking about - but we're defending them for a fraction of the cost. We have to go to those countries and we have to ask them to make contributions that are greater than the contributions they're making right now. You know, we're going to protect them, we're going to remain loyal to them, but at the same time it's a two-way street. They have to help us also. So I think your question is a great one. We will build our military forces to a level that will be, I believe, stronger than ever before if I become President of the United States, OK? Thank you.

UNIDENTIFIED MALE: Earlier before you arrived, we mentioned today is the anniversary of the Black Hawk Down in Mogadishu, and one of the officers that was there, that we recognized, is going to ask our second question. Major General Gary Harrell. General Harrell has had multiple tours with the 82nd Airborne Division, has been on combat missions from Panama to Somalia, he was a commander of the U.S. Special Operations Forces assent com(ph), and led the first special forces into Afghanistan. He retired in 2008 from the United States Army Special Operations Command, General Harell.

[10:55:16] TRUMP: Hello, General.

GARY HARRELL, MAJOR GENERAL U.S. ARMY SPECIAL OPERATIONS: Sir. The Obama administration has yet to develop a strategy for dealing with the global Jihad movement. The terrorists are motivated by a theology that drives them to atrocities against nonbelievers, be they Christians, Jews, or other faiths. Americans have not been allowed to know the enemy or call them by name. We need a strategy, not a tactical plan. What is your plan to defeat radical Islam and how will you reverse the strategic confusion of the Obama era?

TRUMP: Well, it is confusion not only there but it's confusion in many other fields, long beyond military and defense. The country is confused in terms of even the divide in our country, we have such divide and really divides. We have many different forms of divides, so, there's a lot of confusion. But we have a president that won't use the term radical Islamic terrorism, won't use it; will spend long periods of time explaining to people why he won't use it. At the end of the explanation, nobody knows why he still won't use it, because the explanation is no good. And, I mean, honestly we have a president that, in my opinion, really doesn't know what he's doing. We have a president that doesn't know what's happening. And when it comes to the military, you know, I always said, keep the oil. I said, don't go in, but I said keep the oil. Had we kept the oil, you wouldn't have ISIS, because they feel they're growth with the oil.

But I read something and saw something over the weekend that really bothered me, because I believe in - I'm a big fan of General Douglas MacArthur and General George Patton and, you know, these great generals; some of the generals - big fan of some of the generals in this room. We have - General Flynn is with us and General Kellogg. We have a few generals that have been so incredible to me, now we have 200 but - generals and Admirals. I'm never going to forget admirals, right? Those admirals. I will never forget the admirals, that I can promise you. But it was very disconcerting when is saw that an attack is planned on Mosul, an attack is planned. And, you know, we're involved in the attack, but the Iraqi forces are planning an attack on Mosul. It should happen over a short period of time and the work will be - why do we have to talk about it? Why? I never saw anything like this. Every time we're going to attack somebody we explain, "We're going to attack. We're going to be attacking at 3 noon on March 25th." I don't know, unless you disagree with me, wouldn't it be better, if we were going to go after Mosul, to not say anything and do it as opposed to announcing? They're announcing all over television they're planning to attack Mosul.

And whenever they ask me the question about "what are you going to do about ISIS?" I say, "You know, I have a real chance of winning." I don't really want to tell you. I have very strong ideas and I'll be dealing with the people in this room and other folks that are, you know, very good at this. But the last thing you want to do is give notice to the enemy. When President Obama announced that he was leaving Iraq, I mean he was talking about dates and times and what we're going to do - the enemy pulls back, we think we're doing well. Well they pull back, they're not stupid. Then after they leave, you see what happened. So I just - I just want to say that we are going to hit ISIS hard, and I mean really hard, but I do think this. The American public doesn't have to know the date and hour and second that we're going to attack and from what side we're going to attack. We're going to attack from the eastern quadrant and it'll take place on a certain day at a certain hour. We don't need to - they just want to see victory. We don't have victory. I mean, we're dropping our - we're dropping things all over the place. Who knows what they're hitting. Who knows how many people are being killed and who knows if they're the right people.

But at some point we have to stop a force that's going out and drowning people in steel cages and chopping off heads. These are barbaric people. These are people that - you know, I used to study medieval times and, you know, they chopped off heads. But until recently, this was a phenomena that you wouldn't see. The level of barbarism is unbelievable. So we're going to stop them. We're going to stop them cold. We're going to stop them very powerfully, but I don't think all of us should be - unless it's a very confined room - we shouldn't be giving up our plans and it bothers me every time I see where we're planning to attack this one, that one, but the one I saw over the weekend was Mosul. And they're talking about attacking.