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Report: Dow Sinks 600 Points; GOP Blames Steele Dossier For Surveillance; Intelligence Community Disputes GOP Claim. Aired 3:30- 4p ET

Aired February 2, 2018 - 15:30   ET

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


[15:30:00] JAKE TAPPER, CNN HOST: Allison Kosik, what's behind the drop?

ALISON KOSIK, CNN CORRESPONDENT: It's on point to have its worst point drop since June of 2016, that's when Brexit happened. And you know, a lot of this you have to kind of put in perspective. Because we've kind of been lulled into this sense of calm. You know, for the better part of the year we've watched the Dow and the S&P, and the Nasdaq as well reach record after record after record. And it's just not realistic. Strategists and analysts are saying, look, a pullback that you're seeing today is healthy for the market. Because it keeps it from really, really overheating.

But there is an underlying reason why you're seeing the market selloff today and that's because of inflationary pressures or worries about inflation coming from the January jobs report showing that we saw the biggest jump in wage growth since the recession. So, that increase in wages is great for main street. It's great for American workers but it's worrying Wall Street because if you have that inflation, they're concerned that the Fed will go ahead and ramp up how much and at what pace the Fed will go ahead and raise rates this year. So, you've got the worries about inflation and certainly these worries are being amplified by the political turmoil that you've been talking about all afternoon between President Trump and the FBI. That's kind of the cherry on top of this selloff -- Jake.

TAPPER: And yet, Rich Lowery, there's been political turmoil since President Trump took office and the market has been setting records.

RICH LOWRY, CNN POLITICAL ANALYST: Yes, it's been remarkable. The market has basically ignored the entirety of the political discussion. I think though this slight downtick we're seeing here goes to how it's a mistake for the president to be overinvested in the market. Ronald Reagan, with one exception of a major correction, had the stock market run-up during his time in office. Didn't talk about it much at all. And the reason is because it can go up. It can also go down. And the reason it might be going down here is actually a good thing for President Trump. If he has to choose between wage inflation, the labor market healing to point that people are getting paid more or the stock market continue its incredible run, I think he would choose politically the wage inflation. But he talks about the stock market almost every day.

TAPPER: All right, Rich and Allison, thanks so much, appreciate it. Coming up next reaction from Capitol Hill. We'll talk to a Republican

congressman who supports the release of the Nunes memo. You're watching CNN special live coverage. Stay with us.

[15:35:00] (COMMERCIAL BREAK)

TAPPER: Let's go back to our breaking news now the House Intelligence Committee, with President Trump's blessings, has released this contentious Republican memo. Top Democrats are issuing a stern warning to President Trump.

(BEGIN VIDEO CLIP)

REP NANACY PELOSI (D), MINORITY LEADER, CALIFORNIA: If the president uses this fake, horrible release of distorted intelligence as an excuse to fire deputy acting attorney general, Rosenstein or Mueller, it could lead to a constitutional crisis.

(END VIDEO CLIP)

TAPPER: My next guest is one of the Republicans who championed the release of this memo, Congressman Matt Gates of Florida. Congressman, your reaction to the minority leader and the warning that the firing of Rosenstein or Mueller will provoke a constitutional crisis.

REP. MATT GAETZ (R), FLORIDA: Well I don't think it's appropriate for Leader Pelosi or myself to give the White House advice on HR policy. I would extend an olive branch to Leader Pelosi and say this is the time for bipartisanship. We should evaluate the politicization at the highest levels of our government not in terms of existing facts but what to do going forward so that this type of thing never happens again. Republicans and Democrats are going to be in government and in power in the foreseeable future and I think it's appropriate that the investigative processes don't get tainted with these political considerations like they clearly were in this case.

TAPPER: You say like this type of thing, you say political considerations are part of this case. How do you mean?

GAETZ: Well the Democratic Party, the Democratic Party paid the Perkins Law Firm. The Perkins Law Firm paid Fusion GPS. Fusion GPS hired Christopher Steele, and Nellie Ohr. Christopher Steele wrote the dossier and then Kellie Orr's husband, Bruce Orr, valeted that document into the Justice Department. Then it was so unverifiable that they had to use a Yahoo News article before a FISA court to validate it. That Yahoo News article was planted by Christopher Steele, the very author of the dossier.

Jake, this is the first time in American political history that an opposition research document has been injected into the bloodstream of our intelligence community. That's not a Republican or Democrat concern. That's an American concern. And for just a moment in this town we would put down our partisan swords and work together. I think we could develop a process that the American people would have greater confidence in moving forward for Republicans or Democrats.

TAPPER: Well, I mean, this memo is a Republican memo. Devin Nunes, the chairman --

GAETZ: It's a staff memo. Devin didn't write this memo.

TAPPER: OK, the Republican staff. As you know the committees have Republican staff and Democratic staff. This could have been done in a bipartisan way. It was not done in a bipartisan way. In fact, Democrats submitted their memo to counter this. And that's going through a process right now. It's not being released at the same time. But I have to ask you, in this memo, it make clear that a counterintelligence investigation by the FBI began in July 2016, investigating George Papadopoulos. That's of course, the former campaign staffer for the Trump campaign, who has pleaded guilty to lying to the FBI about his interaction with Russia. If that is the counterintelligence investigations Genesis -- which it is according to the Devin Nunes memo, the Republican House intelligence committee memo -- why is the idea that Carter Page, in October 2016, who had already been on FBI's radar -- we know he was surveilled in 2013, 2014. Why is that evidence that this entire investigation is tainted?

[15:40:00] GAETZ: I would point to the statements of Andrew McCabe before the intelligence committee. Mr. McCabe said that the dossier was absolutely essential and but for the dossier, there would have been no FISA warrant to spy on Americans citizens. That's particularly troubling in the context of the renewals though, Jake. Because as you well know these FISA warrants have to be renewed every 90 days. Even after the FBI terminates Christopher Steele because they're mad at him for going and talking to the media and they deem him unreliable, they still repeatedly reauthorize the FISA warrant. And again, Andrew McCabe, not Republicans, you know but Andrew McCabe says but for the dossier, dad war would have never been issued, and certainly would not have been reauthorized.

TAPPER: That warrant is what Nunes claims McCabe said.

GAETZ: Sure.

TAPPER: But I'm talking about an investigation, not just a warrant in October but an investigation that began in July. The investigation, this counterintelligence investigation according to the Nunes memo begins in July because George

Papadopoulos, as we know, said something to an Australian diplomat about how the Russians had dirt on Hillary Clinton. We also know, according to the Mueller plea agreement with Papadopoulos that he had said that in, I believe, March or April, that he learned about this through a London professor who had relationships with the Kremlin. So, my only point is the investigation into collusion or whatever, I mean we don't know when it is yet, if anything, that investigation began in July. You're talking about a warrant in October. The investigation had already begun.

GAETZ: Correct, Jake. However, if you take the entire universe with of Papadopoulos claims and you put them into a bucket, that bucket alone would never have functioned as a basis to continue this investigation. It may have been sufficient to start it. But it certainly would not have been a basis for the intelligence gathering and the continuation of that investigation. If I just said Jake Tapper is a bad guy and he colludes with Russia, that may be the basis to start an investigation into you, but it wouldn't be able to be continued in the absence of actual facts. And unfortunately, instead of getting facts and getting a basis, there was a reliance on this memo from Christopher Steele that was so unverifiable, they had to use a Yahoo! News article from Michael Isikoff to be able to justify it before a FISA court.

TAPPER: Congressman, you're asserting a lot of things that I don't know to be demonstrable fact. But on the things, that I wonder about is when you talk about what you know about Papadopoulos, is we have no idea what Papadopoulos knows. We have no idea --

GAETZ: But McCabe did. We don't even have to get onto that, Jake, because McCabe was aware of all those facts and he testified before the intelligence committee that this dossier was the proximate cause of these surveillance warrants. And that alone is far bigger than the Russia investigation, it's far bigger than Donald Trump's presidency. It goes to the very core of our democracy and whether or not we want to have political documents to serve as the basis to spy on American citizens. We should rise above partisanship and solve that problem.

TAPPER: It's an excellent question, whether or not it was just this political document. But FBI officials that we've been talking to and Christopher Wray, the FBI director himself, all of them saying that there is no way a dossier like this would be presented in a FISA court without corroboration of some of the things they're talking about.

GAETZ: Yes, but the corroboration was the Yahoo! News article. The corroboration for the dossier was a news article planted by the very author of the dossier. So, it becomes factual and logical and legal tautology.

TAPPER: How do you know that? Have you seen the FISA warrant?

GAETZ: Because that's what's in the memo. We should, honestly.

TAPPER: I'm not talking about the partisan memo. Have you looked at --

GAETZ: It's not a partisan memo. These are statements of facts. You should not characterize it that way. These are verifiable facts. And the letter I sent to Devin Nunes signed by over 60 of my colleagues calls for not only for the release of the memo but the actual supporting documentation. And I think it would be appropriate to redact sources and methods and dig further into how this happened. Because I think that will help us forge bipartisan consensus on how to make sure it doesn't happen in the future.

TAPPER: I hope that there is bipartisan consensus. The House Intelligence Committee historically has worked in a bipartisan way. There's a complete breakdown in that. I'm calling this a partisan memo because normally the House Intelligence Committee and Senate Intelligence Committee they work together and put out a bipartisan memo. But Congressman, I want to ask you a question that is not actually relevant to this. I want you to be able to clear something up. Because people have been criticizing you for your personal behavior, for A, giving an interview to "Info Wars", a conspiracy theory website that, as you know, puts out the horrific claim that Sandy Hook was a false operation and those were all actors.

[15:45:00] It's just a horrible, horrible media organization. You gave them an interview. And then also you brought to the State of the Union, or you gave a ticket to somebody who is a fairly notorious racist and holocaust denier, who is so bad he was actually banned from Twitter. I want to give you an opportunity to clear up these facts.

GAETZ: Certainly, Jake. I don't just talk on platforms where people agree with me. I think it's important to take a message even to people who say horrible, zany things. "Info Wars" is a platform that I think has spread lies and mistruths and I'm very critical of the work they've done. That said, people that watch that need to hear the truth. So, I'm willing to go on and discuss the truth on platforms that even spread conspiracy theories that I don't agree with. As to the State of the Union, I mean I would refer folks to the statement of the individual that attended saying he is not a denier of the holocaust, not a white supremacist, detailing the donations he has given to the Simon Wiesenthal Fund to hunt down Nazis living double lives, bring them before courts so they can face justice. So again, I don't agree with everything that Mr. Johnson says, I don't agree with everything that "Info Wars" says. But I think that when we get into an environment where we only talk to audiences or people that agree with us, can I think we end up in a myopic state of politics and it really erodes public discourse and the ability to face facts with truth.

TAPPER: Congressman Matt Gaetz, a Republican of Florida, thanks so much, always appreciate it. Coming up more on her special breaking news coverage.

GAETZ: Thank you.

TAPPER: Moments away from the close of the Dow. Stay with us.

[15:50:00] (COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Are you likely to fire Rosenstein? Do you still have confidence in him after reading the memo?

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: You figure that one out.

(END VIDEO CLIP)

TAPPER: More on our special breaking news coverage. President Trump with a kind of cryptic remark about the fate of Deputy Attorney General Rod Rosenstein. In the wake of this partisan memo alleging FBI abuse of surveillance power, I want to talk about this with CNN senior political commentator and former adviser to President Obama, David Axelrod. First of all, David. Is it not possible that there was something fishy that went on when the FBI went to the FISA court to get a surveillance warrant on carter page? Is it not possible that they used political opposition research? They weren't up front with it and that would be troubling?

DAVID AXELROD, CNN SENIOR POLITICAL COMMENTATOR: Look, I can't answer that question because we've only gotten a partial account of what actually happened. All I know is that you talked to the prosecutors and lawyers who are familiar with the operations of the FISA court. And they would be very, very dubious about that. That that's even possible. Because of the standards that are required by that court. And because of the nature of the people who serve on that court. So, I am very, very doubtful about that. I just don't have firsthand knowledge, nor do any of us, nor do we have all the evidence or information we need to make a judgment.

And that's the problem with this, Jake. You've got a document that reads a little bit like the screeds you see on the lunatic fringe of the internet that kind of weaves together all these figures who are targets of the president. And suggests a conspiracy, but with very flimsy evidence. It is a disturbing and kind of underwhelming document at the same time.

TAPPER: President Trump gave this somewhat cryptic remarks when asked about the fate of Deputy Attorney General Rod Rosenstein, who according to the Nunes memo signed off on one of the warrants, of surveillance for Carter Page, and also is because the attorney general had to recuse himself in the case after he gave a misleading answer to the Senate Judiciary Committee. The Deputy Attorney General is in charge of the Mueller investigation.

AXELROD: Right.

TAPPER: The president was asked, are you thinking of firing him? Do you still have confidence in him? The president gave the remark he just gave, what do you think the response would be, the political repercussions if the president were to fire Deputy Attorney General Rosenstein?

AXELROD: Well, under normal circumstances, you know, I lived through Watergate. I know what happened when President Nixon tried to fire Special Prosecutor Archibald Cox in order to short circuit the investigation at that time. And there was a firestorm. And his attorney general quit, and the deputy quit and ultimately, a new special prosecutor was appointed, and the case proceeded. And the president was impeached, and he resigned.

I don't know what would happen here. I know there would be a tremendous outcry.

I know there'd be a constitutional crisis. How the House of Representatives, and Republican members of Congress would respond, I don't know based on what we've seen and that's the disturbing thing. We just heard Congressman Gaetz say, well, we shouldn't advise the president on an HR problem. As if we're talking about the receptionist at the front desk of the White House.

We are talking about the person who was making the oversight decisions on this Mueller investigation. And the easiest way for the president to get control of that investigation and limit the parameters of it, would be to fire Rosenstein. Which makes you wonder, is that the motivation behind this memo. Is this why he was eager to get it out and his response in that room was not very encouraging.

TAPPER: David Axelrod, thank you so much. Don't miss the "AXE FILES" tomorrow 7:00 eastern. We are moments away from the close of the Dow which is pledging more than 600 points, stay with us.

[15:55:00] (COMMERCIAL BREAK)