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Trump Questions Loyalty; Clinton on Sanders Supporters; New York A.G. Orders for Trump Foundation. Aired 1-1:30p ET

Aired October 3, 2016 - 13:00   ET

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


JOHN BERMAN, CNN ANCHOR: A $916 million loss in 1995 which would have allowed him to legally avoid paying federal income taxes for up to 18 years. A Clinton spokesman, hardly impartial we might add, calls it a bombshell. We will be listening for new reaction from Hillary Clinton this hour. She gives an economics' speech in the battleground state of Ohio. We have some live pictures, I believe, from that event site. No, live pictures of me.

Bill Clinton, he is on the trail at this hour. He is in Saginaw, Michigan. Vice president Joe Biden, he is in Florida. There we go, live pictures of the -- well, that's of where Bill Clinton will be speaking in Saginaw, Michigan.

All right, not Saginaw. That's Biden in Florida. Live pictures from the Joe Biden Florida event. As for Donald Trump, he started the day in Virginia at a town hall focusing on the military and national security where he managed to get a dig in on Hillary Clinton's e-mail controversy.

A new poll shows Clinton's lead over Donald Trump inching up ever so slightly in Virginia. She's at 42 percent. He's at 35 percent in a poll. By the way, (INAUDIBLE) policy, that's a one-point bump since the presidential debate. But I suppose if you're Hillary Clinton, you will take it.

Senior White House Correspondent Jim Acosta covering the Trump campaign. Senior Washington Correspondent Jeff Zeleny following the Clinton campaign. Jeff joins us now by phone. Jeff, you are in Ohio where Hillary Clinton touched down just a short time ago. What are we expected to hear from -- Jeff, what are we expected to hear from Hillary Clinton when she speaks this hour?

JEFF ZELENY, CNN SENIOR WASHINGTON CORRESPONDENT: John, there is no question Donald Trump is going to be the subject of her talk here in Ohio. She's not been to Ohio for a month. But this is coming at a moment here where she is going to seize on that report in the "New York Times." She is going to talk about the fact that he has not paid taxes. And she's going to basically ask working class Ohio voters if that would work for them.

So, this is why the Clinton campaign and Democrats here believe that this has some resonance because they believe, you know, that it really shines a light on some of Donald Trump's business practices. But it's that open question, if that will work, John, because Hillary Clinton, as I said, has not been in Ohio for a month. Completely unusual for most presidential campaigns. As you know, this is the mother of all battleground states and she is running behind here.

Donald Trump has really attracted some deep and loyal support. This will be a test of that loyal support here, this bombshell tax return report. The Clinton campaign out with a new ad on television also trying to press this point here. So, when she speaks in Ohio, you know, shortly, this is her first opportunity to make that case directly. And she'll be doing it, I expect, throughout the week -- John.

BERMAN: And we will bring that to you shortly when Hillary Clinton does take the stage in Toledo.

Jim Acosta, the Trump campaign, how are they responding or are they pushing back to the "New York Times" report?

JIM ACOSTA, CNN SENIOR WHITE HOUSE CORRESPONDENT: Not much of pushback, John. You recall over the weekend when the story first broke, the "New York Times" put that story out there. The Trump campaign basically did not knock it down, only saying in a statement that, you know, basically, this was illegally obtained, in terms of that tax document.

But, you know, the tax return is something that the Trump campaign is going to have to deal with. It shows a loss, as you said, of more than $915 million. Tax experts say Trump could have used that loss to avoid paying federal income taxes for 18 years. The Trump campaign did not challenge the report, as I said.

But his top surrogates, John, they've been trying to spin this issue as best they can, on the Sunday talk shows, including our "STATE OF THE UNION." Rudy Giuliani was saying this tax story shows what a genius Donald Trump is. That's nowhere near denial.

It's also pretty close to how Donald Trump -- remember how he answered the question himself at the last debate one week ago at Hofstra University when he said he was smart for not paying taxes and using the tax code to his advantage.

The Trump campaign message of the day does offer us a glimpse, John, into how they're handling all of this. Top aides are saying Trump will be attacking Clinton today as someone who never created a job in her life, that she enriched herself.

She and Bill Clinton enriched themselves post their White House years when he was president through speeches and through their, you know, dealings with various corporations. That, you know, the Trump campaign is saying there was a pay for play scheme going on, where the Clintons would speak to some group in exchange for favors. Obviously, the Clinton campaign has responded to that saying, no, that's not the case.

But this is the Trump campaign's way of saying, look, as a businessman, Donald Trump created jobs. They say that's a positive. But, at this point, we heard from Donald Trump earlier this morning, John. He had that event in northern Virginia, another key, crucial swing area. He did not talk about this income tax issue. He was not asked about it, we should point out. But he did not talk about it.

But he is sort of making some headlines out of that event, when he talked about post-traumatic stress disorder. This is generating some headlines, John, where he said that some of the soldiers who were coming home were just not strong enough to deal with the effects of post-traumatic stress disorder and that is generating a lot of heat on social media right now. A lot of people firing back at that right now as we speak.

[13:05:23] But, as of this point, Donald Trump has not really weighed in on this question as to what was going on with that tax return from 1995, and how, apparently for 18 years, he may not have paid income taxes to the federal government -- John.

BERMAN: All right, Jim Acosta in Washington, Jeff Zeleny in Ohio. A sense of what we will see over the next few hours here on the campaign trail. Thank you very much.

So, I would be safe to say, most of us want to pay as little in taxes as possible. But how does a self-proclaimed billionaire possibly avoid paying income taxes for almost two decades and how does an allegedly successful businessman lose close a $1 billion in the first place? Here to help explain, CNN Money Correspondent Christina Alesci. First, Donald Trump, $916 million. How much do we know about how he lost it?

CRISTINA ALESCI, CNN MONEY CORRESPONDENT: Well, we know, in the early 1990s, his casinos were under pressure. We know that he made a bad bet on the New York Plaza. We know that he had an airline that was facing some troubles. So, those are all, potentially, losses that could have been reported in that 1995 return that we have.

All that said, a billion dollars is a lot of money. And now tax experts -- tax experts that we've spoken to have said, real estate developers have a lot of leeway on what they can classify as a loss. So, now, tax experts are beginning to question, did he puff up those numbers? Are they larger than they should be? And that's going to cause a lot of reporters, like me and the rest of the CNN Money team here, to do more digging on this. And this is raising more questions, even though we have more disclosure about him, than answering them for sure.

BERMAN: Well, we have three bases of disclosure. And it's not disclosure, it's a leak, right? They didn't disclose it. If we get more of the returns, you'd be able to answer some of those questions. But, again, he hasn't released them so we don't have them.

The question is $916 million and how does that translate into 18 years of not paying federal income tax, if that's what happened?

ALESCI: So, what this boils down to is something called net operating losses. And that's essentially when a business has more expenses than profit. The government wants to encourage risk taking. So, it allows you to use those losses to offset future income which is great because it incentivizes people, business people, to take risks with money. Now, the problem is, do real estate developers and certain groups get an unfair advantage, right? Because a lot of people see this and they say, I can't take unlimited losses on my tax -- on my tax return. Why can he? So, now the question is, you know, what's wrong with our tax code, and, potentially, was Donald Trump too aggressive in using it?

BERMAN: You just said, real estate developers have some different rules that apply to them than the rest of us. But we can claim losses, yes?

ALESCI: So, most people think, when they think about the losses that they claim, they're thinking about an investment loss. I buy a stock. I buy a bond. I can offset any loss on that particular stock or bond and anything in excess is capped on your gross income. You can only take the deduction or the offset on $3,000.

So, that's what gets people angry is that the tax code seems to favor the wealthy, and real estate developers particularly, which is interesting because Donald Trump says, you know, hedge funds get away with murder. Well, what do real estate guys get away with? And, more importantly, does his tax plan actually address any of this unfairness?

The answer is, no.

BERMAN: Yes.

ALESCI: It's a boon to wealthy people. If you look at it, he wants to take away the death tax which many average people feel like, oh, my God, that's terrible. When I pass my money down for my children, I'm going to be taxed on it? Well, let's just clear up this fact. Only 002 percent of Americans paid the death tax last year.

BERMAN: So, what, 5 million bucks?

ALESCI: Yes, it's $5 million. And the point is not many people pay it. It's the wealthy people that pay it. They don't get outraged about it.

BERMAN: Cristina Alesci, Great to have you with us. Let's ask some of these questions to the Trump campaign. Joining us now, Sarah Huckabee Sanders, a senior advisor to Donald Trump. She's in Farmville, Virginia where there is a big debate tomorrow night. The one and only, the vice presidential debate.

Sarah, thanks so much for being with us. You know, your campaign has not questioned the validity of these documents that the "New York Times" got. So, let's assume for a moment that they are real, they are what they say they are. What does it say about Donald Trump's business acumen, that he lost $916 million in one year?

SARAH HUCKABEE SANDERS, SENIOR ADVISOR, DONALD TRUMP: Look, I think one of the real reasons that people respect Donald Trump is that he's made a lot of money. He's created a lot of jobs. And he didn't just do it once. He's done it twice. After the recession in the 1990s, he's rebounded to build a billion-dollar empire. And he's done that more than one time.

[13:10:08] If anybody is upset about Donald Trump not paying outrageous amounts of tax dollars, the only person in this race they should be angry at is Hillary Clinton and her political cronies in Washington. They're the ones who actually wrote the law. All Donald Trump did was follow the law/

BERMAN: Well, hang on.

HUCKABEE SANDERS: And in contrast to Hillary --

BERMAN: Just to be clear -- just to be clear, Hillary Clinton has released her taxes going back for a long time and every year she paid taxes, unlike it seems -- you know, it appears Donald Trump. And on the issue of the tax law because Donald Trump did tweet this. He said, I know our complex tax laws better than anyone who's ever run for president and I'm the only one who can fix them. But his tax plan doesn't do anything to address the rules that allowed him to legally not pay federal income tax for up to 18 years. Does it?

HUCKABEE SANDERS: His tax plan provides tax cuts for all Americans, particularly those at the lowest end of the spectrum. His tax plan is designed to help those at the lower and middle income and that's exactly what it does. Those were the people that have penalized the most under the Clinton policies and would continue to be put down into a box if we continue on this same path.

Donald Trump is the only one that has in-depth knowledge of how this system works. Hillary Clinton's been part of the problem and we need somebody to come in and change the problems that the Clintons and their allies have created in Washington.

BERMAN: Sarah, just -- I just want a yes or no, though. His -- under his tax plan, he would still be able to do this again, hypothetically, right? There's nothing he would change, as far as these real estate deduction and allowances?

HUCKABEE SANDERS: I'm certainly not a real estate accountant, so I'm not going to pretend --

BERMAN: OK.

HUCKABEE SANDERS: -- not even on T.V. that I can get into the intricacies of that specific piece just because I don't know. But what I do know is that his tax plan helps millions of Americans that have been ignored, and frankly pushed down to the bottom and kept there, by the current policies instead of empowering them do to better.

BERMAN: All right, I want to move on to an event that Donald Trump did this morning with a military veterans' group in Virginia, Raw Pack I believe it was called. And he talked about post-traumatic stress which is something, you know, people on both sides of the aisle care deeply about. I'm sure Donald Trump cares about it also. But listen to how he addressed some military personnel who have come home and deal with post-traumatic stress. (BEGIN VIDEO CLIP)

DONALD TRUMP (R), PRESIDENTIAL CANDIDATE: So, 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.

(END VIDEO CLIP)

BERMAN: So, people who deal with post-traumatic stress every day say that that's the absolute wrong message to send. Plenty of strong people deal with post-traumatic stress. Anyone can deal with post- traumatic stress. And to suggest, like he just did there, that it's only not strong people who suffer from it, that that's insensitive. What's your take?

HUCKABEE SANDERS: I don't think that was his message at all. I think his comments are being taken out of context. There's a reason that hundreds of top military leaders from around the country have endorsed and signed on and sat in that room today to express their support for Donald Trump. Because he's one of the -- he's the only candidate in this race that has made a major emphasis and a major part of his campaign to help veterans, to fix the V.A. which has become a horrible problem and continued to get worse under Obama and Clinton. And we've got to have somebody like Donald Trump who actually cares about veterans to come in and to fix that.

BERMAN: But you agree --

HUCKABEE SANDERS: And I think to try to take that comment out of context and make it mean something it isn't, it's just totally false.

BERMAN: You agree though that strong people -- everyone can suffer from post-traumatic stress, correct? Just to be clear.

HUCKABEE SANDERS: Absolutely I do.

BERMAN: All right. Over the weekend, both Donald Trump and Rudy Giuliani, who supports Donald Trump very much for president of the United States, they both were talking about Hillary Clinton and her marriage. I want to play a little bit of that for you.

(BEGIN VIDEO CLIP)

TRUMP: I don't even think she's loyal to Bill if you want to know the truth. And, really, folks, really, why should she be, right?

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

RUDY GIULIANI, FORMER MAYOR, NEW YORK CITY: 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.

(END VIDEO CLIP)

BERMAN: On what basis is Donald Trump questioning whether Hillary Clinton has been faithful in her marriage? Does he have any evidence at all to make a statement like that? Is that something that he should be saying on the stump, Sarah?

HUCKABEE SANDERS: Look, I think the focus that we need to get back to and the one our campaign has tried to focus on. But unfortunately the Clinton campaign has such a failed record, the only thing that they can turn to are negative and false attacks against Donald Trump. And so, that's what they're trying to do. He's responding to that and responding to their style of gutter politics which they (INAUDIBLE) talking about the economy. When we're talking about national security --

[13:15:00] BERMAN: Donald Trump was the one on that stage in Pennsylvania openly questioning whether Hillary Clinton had been faithful to her husband. That was not the Clinton campaign that said that, was it, Sarah?

SARAH HUCKABEE SANDERS, SENIOR ADVISOR FOR DONALD TRUMP: No, but they are the ones that have made this topic a big point of the last several days. When Hillary Clinton went after Donald Trump on stage at the debate, she created the atmosphere that they claim to be so against.

Look, the only person that said the most offensive thing on the campaign trail this cycle is Hillary Clinton when she called millions of American women, like myself that support Donald Trump, deplorable and irredeemable. Now we find out that she's also gone after millions of young women that supported Bernie Sanders and said that they're basically just living in their parents' basement. Those are two of the most offensive things that have been said about women to date in this cycle and that's come from Hillary Clinton, not Donald Trump. And I don't know why we're not focusing more on some of those things, particularly give than I think it shows the utter contempt that Hillary Clinton has for any woman that does not vote for her.

BERMAN: We're going to talk about those comments that Hillary Clinton made about Bernie Sanders supporters. A little bit of a tease here. Bernie Sanders took no offense to them. He actually agreed with them. We're going to assess that in the next segment.

Sarah Huckabee Sanders, thank you so much for being with us. Appreciate it.

SANDERS: You bet. Thank you.

BERMAN: All right, any minute now, Hillary Clinton, she will take the stage in Toledo, Ohio. These are live pictures of that stage in Toledo. How will she respond to the tax return report from "The "New York Times"? How will she respond to Donald Trump's comments on the campaign trail about her loyalty to her husband? We're going ask the deputy communications director for Hillary for America, Kristina Schake is standing just behind the camera right now as we speak.

(COMMERCIAL BREAK) [13:20:35] BERMAN: All right. Hillary Clinton getting ready to rally supporters in Ohio. We have some live pictures from Toledo right now. Hillary Clinton will be taking that stage shortly to address the economy. We are also told you can expect to hear her address "The New York Times" report about Donald Trump's taxes and whether or not he paid them for 18 years or so.

Bill Clinton is also on the campaign trail. He is campaigning in Saginaw, Michigan, at this hour.

The Clinton campaign is trying to reach out to younger voters. It is a big need for them, and some people say a big problem. According to comments she made about Bernie Sanders supporters might complicate these efforts, "The Washington Free Beacon" posted this audio. The conservative website says it came from a Clinton staffer's hacked e- mail. Listen to what Hillary Clinton said about Bernie Sanders's backers during a fundraiser in February.

(BEGIN VIDEO CLIP)

HILLARY CLINTON (D), PRESIDENTIAL NOMINEE (voice-over): Some are new to politics completely. They're children of the Great Recession and they are living in their parents' basement. They feel that that they got their education and the jobs that are available to them are not at all what they envisioned for themselves, and they don't see much of a future. And so if you're feeling that you're consigned to, you know, being a barista or, you know, some other job that doesn't pay a lot and doesn't have much of a ladder of opportunity attached to it, then the idea that maybe, just maybe you could be part of a political revolution is pretty appealing.

(END VIDEO CLIP)

BERMAN: I'm joined now by Kristina Schake, deputy communications director for the Clinton campaign.

And, Kristina, I know the Clinton campaign all weekend has been saying, we should play that whole sound bite to give it its full context.

KRISTINA SCHAKE, DEPUTY COMMUNICATIONS DIRECTOR, HILLARY FOR AMERICA: Yes.

BERMAN: And we did just there.

SCHAKE: Yes. Well, actually, it goes on further than that, but I'm so glad you brought this up, John. I - I think the Trump campaign's been trying to make something out of nothing here. And Bernie Sanders himself said that on CNN yesterday.

You know, when you listen to the full tape, what she was saying, what she was really urging her supporters to have empathy and understanding for young voters, and to understand that they're really struggling economically. This actually came the - at the beginning of the tape, she talked about a young woman who had talked to her that morning about struggling with college debt, having a hard time finding a job, living with her parents and wanting to talk to Hillary about what she'd do for young people.

BERMAN: There were other parts of the tape -

SCHAKE: Yes.

BERMAN: That we also did not play -

SCHAKE: Yes.

BERMAN: Where she called Bernie Sanders' stances on some issues indefensible, where she suggests they're unworkable and indefensible. And Bernie Sanders, although he said that part we just played right there he agrees with, you know, said that it sort of hurt his feelings when he heard that.

SCHAKE: You know, but I think what he also said is, they were in the heat of a primary, of course. They were in a spirited battle with each other. And he said he ultimately didn't take offense at it because they were campaigning against each other.

BERMAN: Now you said that what Donald Trump is talking about is essentially nothing, but it's not nothing in the sense that Hillary Clinton is having trouble connecting with millennial voters to the extent that Barack Obama did the last two elections. "The Washington Post" has a fascinating article today where they went door to door in Columbus, Ohio, at Ohio State University, trying to canvas for voters to sign them up, and I think in that whole article they didn't sign up or register one voter or log one person to support Hillary Clinton, which is an issue for the Clinton campaign, isn't it?

SCHAKE: Well, you know, John, it is an issue for us. It's something that Hillary is taking really seriously. But I think it's important to point out that she actually is winning millennials and she is on - we're going to catch up to where Obama was in 2012. She understands that she has work to do and she's out there doing it. She's doing what she's doing today, talking about how to build an economy that works for everybody. What she did last week, which was a speech that was very close to her heart, about how to encourage national service. So she's out there talking to young people about her values, her experience, the fight she's taken on her entire life and what she would do for the issues that they really care about.

BERMAN: The question is though, are they hearing? She's talking -

SCHAKE: Yes.

BERMAN: But are they hearing? You know, and I can tell it's a problem for the campaign because, you know, I can see. I have eyes. You know, you see President Obama addressing colleges. Michelle Obama going to colleges. Joe Biden going to colleges. Hillary Clinton appearing on "Between Two Ferns." There is a massive outreach effort right now. And why are you confident that they will listen, millennial voters?

SCHAKE: Well, first of all, she's still winning millennials. We're really proud of that fact. But, I think, you know, what's import is, they have more at stake in this election than anybody else. And Hillary is the candidate who's talking about the issues they care about. You know, there's one candidate in this race who's going to take on climate change, to make sure that we continue with marriage quality, to build an economy that works for everybody. And that candidate's Hillary Clinton. So we feel confident that when young people start to pay more attention to this race and really think about the issues that they care about, that matter to them, they'll see that Hillary's their candidate.

[13:25:12] BERMAN: LeBron James endorsing Hillary Clinton.

SCHAKE: Yes. Yes.

BERMAN: She's going to Akron. He's not appearing with her, though, is he?

SCHAKE: Yes, but - yes, but he wrote an incredible op-ed talking about his values and what he's fighting for, to give opportunities to young people and how that - why he supports Hillary Clinton. She's been a fighter for children and families her entire life and he trusts her to be a president of the United States.

BERMAN: All right, Kristina Schake, great to have you with us. Thanks so much for your time.

SCHAKE: Thank you.

BERMAN: We are now following some breaking news. This just in. The New York attorney general issued a cease and desist order against the Trump Foundation and ordered the foundation to stop soliciting donations. Senior investigative correspondent Drew Griffin now joins us with the detail. Also with us, Jim Acosta, who is covering the Trump campaign.

Drew, I just had the letter put in front of me. Is this over the fact that the Trump Foundation doesn't have the proper registration here in New York?

DREW GRIFFIN, CNN SENIOR INVESTIGATIVE CORRESPONDENT: That's all it's about, John. Apparently to have a charitable organization in the state of New York, you need to be registered with the Charity's Bureau of New York State. You need to provide financial - audited financial statements annually. The New York attorney general's office has been looking into the Trump Foundation, realized that, hey, this Trump Foundation in New York state is not registered in New York state and has not followed all the paperwork, and thus the attorney general, Eric Schneiderman, has sent basically a cease and desist order on getting solicitations in the state of New York.

So right now the Trump Foundation legally, I guess, cannot accept donations from anybody in New York into its foundation, and this is all based on paperwork that has not been filed in the state of New York.

BERMAN: You know, Jim Acosta, I'm not sure, has the Trump campaign had a chance to respond?

JIM ACOSTA, CNN SENIOR WHITE HOUSE CORRESPONDENT: Yes.

BERMAN: Generally speaking, when you hear about New York Attorney General Eric Schneiderman, the Trump campaign is quick to point out, he is a Hillary Clinton supporter and a Democratic state elected official.

ACOSTA: Absolutely. And that is in this response I just got from Hope Hicks, the spokeswoman for Donald Trump, in just the last few minutes. It says - and we don't have time to put this in a graphic, so I'll just read it to you on screen. It says, "while we remain very concerned about the political motives behind Attorney General Schneiderman's investigation, the Trump Foundation, nevertheless, intends to cooperate fully with the investigation. Because this is an ongoing legal matter, the Trump Foundation will not comment further at this time."

John, this has been very much the response from the Trump camp since the beginning of these questions that were raised about the Trump Foundation. You'll recall there was that $25,000 payment to Pam Bondi, the Florida attorney general. And then just the recent revelations that came out that some of the Trump Foundation's money was used to pay off legal disputes that Donald Trump was involved in regarding Mar-a-Lago down in Florida, his golf course up in New York. And so this is just another one of those questions for the Trump campaign, for Donald Trump, about this foundation. Why are there so many questions? At the moment, the Trump campaign and Donald Trump's chief spokesperson, does not have a clear answer that - other than they question the motives of this attorney general in New York.

BERMAN: All right, Jim Acosta for us, Drew Griffin with that breaking news, a cease and desist order on the Trump Foundation from soliciting donations in New York state. What does it all mean? Coming up, we will discuss that with our panel.

Also, any minute now, Hillary Clinton, she will take the stage in Toledo, Ohio. You're looking at live pictures right there. We're going to find out what she has to say about "The New York Times" report on Donald Trump's taxes. That's coming up.

(COMMERCIAL BREAK)