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Dow Continues Downward Spiral After Brutal Friday; Larry Nassar Sentenced for 3rd Time for Sex Abuse; Government Barreling To Second Shutdown; Ryan Deletes Tweet About Secretary Saving $1.50 A Week; New Nuclear Arms Race Between U.S. & Russia; Mattis: Great-Power Competition Primary National Security Focus, Not Terrorism; NTSB Investigating Deadly Amtrak Crashes. Aired 11:30-12p ET

Aired February 5, 2018 - 11:30   ET

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


[11:30:00] BRIANNA KEILAR, CNN ANCHOR: Well, we have been keeping a close eye on the Dow this morning. It seems to be bouncing back after an ugly 355-point drop this morning. And today's wild ride is coming after a brutal Friday, when the market suffered its steepest point drop since the 2008 financial crisis.

The White House is weighing in on this, this morning, saying, "We're always concerned when the market loses any value, but we're also confident in the economy's fundamentals."

Christine Romans here to explain.

What is happening, Christine?

CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: It was a really ugly end to last week. It was -- a record start to the year, and then real big road bump hit at the end of the week. When he strong economic numbers. The jobs report was strong. Wages grew faster any time since 2009. Finally, workers are getting more money in their paycheck. That turned out to be bad news in the bond market, where yields, interest rates rose and that put the brakes on stock market investing. That's how it all works together. It was that good news in the job market, bad news for the bond market and the stock market, and that's what we saw there. Filtering into overseas markets, really big losses in Asia, and then in Europe. The U.S. opened up, felt like 300 some points, and then buying right away, people coming in. There has been this FOMO, fear of missing out, all along, this big rally.

Let me show you what stock markets have done since the election for important context here. You got the Dow up 30 percent, the NASDAQ up 40 percent, the S&P 500 -- the stocks in your 401K are more likely to be reflective of that S&P 500 number. And you got a 10-year long economic and bull market expansion, getting a little long in the tooth. But overall the economy is still really strong here. I think late in this economic expansion, this bull market, it is going to start to get a little more dodgy, a little more volatile. And I think that's that we need to brace ourselves for.

KEILAR: What goes up must come down, that's what you're always worried about, right?

ROMANS: Yes. And if you go straight up for so long, it is a reminder that sometimes stocks do fall.

KEILAR: Yes. You look at that chart, it says a lot.

Christine Romans, in New York for us, thanks so much.

ROMANS: Thanks.

KEILAR: Today, the disgraced former doctor, Larry Nassar, is starting a prison sentence of at least 40 years for molesting young girls in his care. This is the third and final sentence for a man who was once trusted to treat elite Olympic athletes. He made a brief statement apologizing for what he had done.

(BEGIN VIDEO CLIP)

LARRY NASSAR, CONVICTED SEX ABUSER: The words expressed by everyone that has spoken, including the parents, have I impacted me to my inner most core. With that being said, I understand and acknowledge it pales in comparison to the pain, trauma, and emotions that you all are feeling. It is impossible to convey the depth and breadth of how sorry I am to each and every one involved. Your testimonies will forever be present in my thoughts.

(END VIDEO CLIP)

KEILAR: This may be the last time that we hear from Larry Nassar. Authorities are still looking for answers about how he was able to abuse hundreds of girls and women over several years, even though several victims reported his crimes to police.

Joining me now with more is CNN correspondent, Jean Casarez, who has been covering the story from beginning to end here -- Jean?

JEAN CASAREZ, CNN CORRESPONDENT: You know, Brianna, the assistant attorney general said just that in her final argument before the court. She posed the question, will we ever truly know the breadth of what Larry Nassar did to so many young women, that he practiced and perfected assault, that he took joy in assault, and ruined so many different lives?

The judge in her sentencing said, "Sir, in your pre-investigation interview, you said, although you pleaded guilty to sexually assaulting young women, that it actually was purely a medical procedure. You don't get the reality." And then she sentenced him.

(BEGIN VIDEO CLIP)

JUDGE ROSEMARIE AQUILINA, INGHAM COUNTY CIRCUIT JUDGE: The sentence in this case must send a message, if you molest and sexually abuse children and women, if you use your position of trust and authority to gain their confidence, and then you betray them in the worst way possible, the result will be that you will spend the rest of your life in prison. You will serve 40 to 125 years in the Michigan Department of Corrections.

(END VIDEO CLIP) CASAREZ: The prosecution also focused in her statement on victims, that we have to believe the victims. We have to believe they are credible when they first step forward, saying that not only the victims, but the parents -- so many emotions, Brianna -- talking about how that the parents have guilt because of what was allowed to be done to their daughters for so long. And many of them have immense pain because they didn't believe their daughters, because of this world- renowned doctor to the athletes and the gymnastic originals.

[11:35:14] KEILAR: Jean Casarez, in Michigan for us, thank you for that report.

Still ahead, we're only in the second month of the year, but Congress could be barreling toward a second government shutdown. Are Democrats and Republicans close to cutting a deal? Our political panel will weigh in on that.

(COMMERCIAL BREAK)

KEILAR: Feels like deja vu all over again. A possible government shutdown looming as lawmakers return to Capitol Hill. What is new, right? The government funds running out just four days from now. Lawmakers also have to reach a deal on immigration. Senators John McCain and Chris Coons plan to formally introduce a new bipartisan bill which would grant permanent legal status to so-called DREAMers and bolster security along the border with Mexico. But this new proposal does not include the $30 billion the president wants for his border wall. The plan may be dead on arrival. An official at the White House telling CNN that it takes a lot of effort to write up a bill worse than the Graham/Durbin immigration bill, but somehow this is worse.

I want to bring in my panel of CNN political commentators to talk about all of this. Robby Mook is Hillary Clinton's former campaign manager, Mary Katharine Hamm, senior writer at "The Federalist," and Brian Lanza, joining us, a former communications director for President Trump's transition team.

OK. I mean, those are not glowing words, Brian, about this bipartisan compromise, but it -- there is the four pillars, right? The President Trump wants, this addresses two of the pillars, doesn't include that 30 bill for the border wall. And the president tweeted, he said, "Any deal on DACA that does not include strong border security in the desperately need wall a total waste of time. March 5th is rapidly approaching, and the Dems seem not to care about DACA. Make a deal."

Is this -- doesn't sound good when it comes to this going to the White House. Sounds like it is DOA.

[11:40:12] BRIAN LANZA, CNN POLITICAL COMMENTATOR: It is DOA. The president has been clear, Senator Schumer, at one point, offered the wall in exchange to get out of this negotiation, but, you know, the president is clear, he wants a wall, wants to do something for DACA, but believes in border security and that's where he is.

I think he's a little disappointed in John McCain. McCain ran for re- election, two cycles ago, he did an ad saying build that wall, and to see him now take the softer position on this wall, I think the president is like, we're all playing games, we know what it takes, get to the table and hammer it out.

KEILAR: Robby, the president is hitting Democrats there for not making a deal with him for DACA protections. Why not, you know, throw a bunch of money at border security, allow the president to say, this is for the wall, and get those protections for DREAMers that so many Democrats so desperately want?

ROBBY MOOK, CNN POLITICAL COMMENTATOR: Well, the problem here is that they had a deal on last go around. Chuck Schumer was at the White House, they thought they had a deal in motion and the president suddenly blew it up. And I think the problem, this goes back to some -- you talked about the four pillars, also the pillars of Trump's dysfunction and among those are the fact that, you never know where he's going to be on a given day, and he'll change his tune based on who he just talked to. And secondly, he doesn't care about the substance. In fact, I think he likes this fight because if he feels like it is a fight that benefits him. If we're focused on immigration, which is divisive, it plays to his base. He doesn't have to worry about the tax bill just passed. We just had the tweet that Paul Ryan wrote about getting $1.50 is a big deal for people. He doesn't want to talk about that. He wants to keep fighting about immigration. That's why I think he'll keep dragging this out, and, you know, we'll keep going to the shutdowns. And the Democrats, frankly, don't trust him anymore because he left them at the altar last time.

KEILAR: But the Democrats don't exactly have a leg to stand on here, right? That shutdown didn't go too well for Chuck Schumer and the Democrats. And may be telling how optimistic Dick Durbin was yesterday about getting to a resolution here.

(BEGIN VIDEO CLIP)

SEN. DICK DURBIN, (D), ILLINOIS: I don't see a government shutdown coming. But I do see a promise by Senator McConnell to finally bring this critical issue that affects the lives of hundreds of thousands of people in America, finally bringing it to a full debate in the Senate. That's what we were looking for when there was a shutdown. We have achieved that goal. We're moving forward.

(END VIDEO CLIP)

KEILAR: Seems like Democrats realize here. We're not going to have a shutdown 2.0. Didn't work too great for us.

MARY KATHARINE HAMM, CNN POLITICAL COMMENTATOR: They didn't have a ton of leverage the first time, I get trying to work for that leverage and that moment and it makes your base happy and you need to do that. But after they lost that fight, it was proven how little leverage they had.

So here is the thing. This compromise bill feels like a bill from another time. It does not respond to recent elections. It doesn't respond to the idea there is a different person in the White House. It doesn't respond to the fact that this side of the argument doesn't have leverage. Yes, the DREAMer part of this is very popular. But guess what is also popular? Enforcement. Oh, one party wants one, the other party wants the other. We could make a zeal. It is a distillation of how dysfunctional Washington is. But I think that the McCain part of this does not recognize the reality of what you're trying to negotiate here.

KEILAR: OK. It is looking like, I mean, we're just a few days out and here we are. They need more time to do something. You're looking at a short-term funding bill, Mary Katharine, another one. At some point don't conservative Republicans say enough, we hate signing these things?

HAMM: Yes, there is that --

(CROSSTALK)

KEILAR: Signing on to these things.

HAMM: But they would much less rather -- they would much less not want to do the bill that has, like, a promise to study border security. They have seen that a thousand times, as many times as the continuing resolutions. The problem for the White House is if you kick this can down the road, they have said this is unconstitutional, the way we're doing DACA is unconstitutional. That's supported. Barack Obama said he didn't have the power to do it, supported by none less than him. If you kick the can down the road too far, and you're keeping this program in place, you are doing something that is unconstitutional without a legislative solution.

KEILAR: Let's talk about that tweet that Robby brought up that the speaker put out, and then he deleted it. "Secretary of public high school in Lancaster, Pennsylvania, said she was utterly surprised her pay went out more than $1.50 a week. And she said that it will more than cover her Costco membership for the year."

Brian Lanza, also, let me tell you it doesn't actually cover the one that gives you cash back, just so you know. It covers, like, the low- level membership.

(CROSSTALK)

KEILAR: Pardon?

(CROSSTALK)

KEILAR: No, it's pretty good.

OK, what was he thinking? What was he thinking?"

LANZA: I think he was thinking the liberals are sort of overreacting. This is a woman that saw the positives of the tax -- the tax reform package. And he was highlighting that. Of course, you know, it could have been more -- it could have been this and that, she was excited about what she was receiving. She found value in it. My sister is a teacher. She just did the adjustments of the tax reform. She found out because of the president's tax plan she'll get five extra days she can pay for day care. What we're seeing, what may be peanuts to a lot of people on the west coast and east coast --

(CROSSTALK)

LANZA: -- that's real value to the American people.

[11:45:20] Robby, I want to bring you in on this. I mean, five days day care, that's, to me, not peanuts compared --

MOOK: That's real, yes.

KEILAR: -- compared to $1.50 a week. And I -- the speaker himself deleted the tweet.

MOOK: Well, I think the $1.50 a week shows how out of touch the Republican leadership here is. You know, the idea that that is somehow relief to a working-class family is absurd.

But I think the bigger issue at hand here is the disparity. Great, a family is getting help paying for their child care, but look at the Koch brothers, who are going to make billions of dollars off of these tax breaks. Families that are able to transfer wealth, you know, corporations who got a massive, I think, 40 percent tax cut, it is totally out of whack. And then the other thing we just heard is how much debt the government -- how many bonds the government is going to be issuing to take on more debt next year.

KEILAR: And --

MOOK: Yes, middle class families are getting a little bit of money. It's nothing compared to what corporations and millionaires and billionaires are getting.

(CROSSTALK)

KEILAR: Well, Nancy Pelosi

(CROSSTALK)

MOOK: Our nation is borrowing money to pay for all of this. It's crazy.

KEILAR: Nancy Pelosi made that point. She was saying these thousand- dollar bonuses are crumbs. But comparatively is what she's says. But does that fly? I mean --

(CROSSTALK)

HAMM: Out of touch. I'm mystified, the speaker shouldn't have deleted the tweet. I'm mystified that they think the right take here is to call a woman who did get a tax cut and finds it beneficial to her middle-class family absurd and say her argument for her family is absurd.

(CROSSTALK)

HAMM: Saying her family is absurd. And people shouldn't be sneering at somebody who is buying a Costco membership with the results of this tax cut. That A.P. story that came from is an indictment of all of the Democrats arguments against that bill. And they don't like that. They don't like that these stories are being highlighted. People were told they were going to die by tax bill, and it turns out they paid for their Costco membership. There is a big difference. No wonder she's excited about that. She didn't die and got $1.50 a week.

To me, it is mystifying and out of touch that people would attack people for finding benefit even when they're small? Barack Obama made the right argument several times that $40 a week or $40 a pay period matters to people. These aren't crumbs.

KEILAR: That's different than $1.50 a pay period. That's what you're saying?

(CROSSTALK)

HAMM: -- This woman said this is a thing that matters.

(CROSSTALK)

HAMM: And why are we sneering at her?

KEILAR: Brian, Mary Katharine, and Robby Mook, thank you so much to all of you.

Coming up, the Cold War is over. Right? So why are the U.S. and Russia locked in a new nuclear arms race? Warhead numbers are dropping. But the contention between the two countries is rising to levels not seen in decades.

(COMMERCIAL BREAK)

[11:50:22] KEILAR: A nuclear arms treaty between the U.S. and Russia goes into effect today. The Strategic Arms Reduction Treaty, or New START, limits the two militaries to no more than 1,550 nuclear warheads. It's actually the lowest since the Cold War. But instead of leading to a world without nukes, the two countries may be launching a different kind of nuclear race with new types of weapons and more ways to use them.

Joining me is David Sanger, CNN political and national security analyst, and he's chief Washington correspondent at "The New York Times."

You wrote about this in "The Times," front-page story. Really interesting read, David. And one section of the nuclear-posture review by the Trump administration that you highlight declares that the U.S. might use nuclear weapons to respond to a non-nuclear attack such as the power grid or cell phone networks. That's pretty shocking for many people to hear.

DAVID SANGER, CNN POLITICAL & NATIONAL SECURITY ANALYST: It is. And I think what is reflects, Brianna, is the new reality that it wouldn't necessarily take a nuclear weapon or electromagnetic pulse to take out a good part of our infrastructure, that cyber weapons have now gotten to the point where you actually could, with a cyberattack, take out a good deal of infrastructure. The new policy doesn't say that if you are hit with a big cyberattack we would necessarily respond with a nuclear weapon, but it lays out that possibility as an option to the president, and tells you, really, what new dangerous territory we're headed into where a cyberattack could escalate to nuclear.

KEILAR: Tell us about this Russian nuclear torpedo that's described in the review. How does a weapon like that still allow Russia to be in compliance with this New START treaty?

SANDEDRS: The New START treaty deals in large part with strategic weapons that are launched from submarines, from bombers, and also from our ground base systems. The torpedo would not add necessarily to the numbers. In other words, the treaty just sets a limit, as you said at the beginning, of 1,550 deployed weapons. If they deployed this torpedo -- and it looks like they're on the verge of that -- it would essentially be an artificial intelligence-driven torpedo that could cross the Pacific, not very quickly, but if it's doing it underwater, it's obviously going to avoid our missile defenses, and then would have a tremendous radioactive load on the west coast. So it's an example of how the arms race has changed now. Back in the old Cold War, it used to be numbers. You have 10,000, I'll build 12,000. Now it's turning to very different delivery technologies and a mix of low- yield and high-yield radioactive weapons. And that tells you a little bit about what the future looks like here, where numbers are not actually the big part of the game, it's the technology of the weapons themselves.

KEILAR: And, David Sanger, real quickly, before I let you go, Secretary Mattis has talked about the great-power competition, not terrorism, being the primary focus of national security. But that's not what the president said in the State of the Union.

SANGER: That's right. And there is a very strange disconnect. The president has talked about the need to build up the nuclear arsenal, but he hasn't offered the rationale why, which is all through the strategy the Pentagon put out was basically about Russia, and to some degree, about China. The question is, does this fit into the president's allergy about saying anything particularly negative about Vladimir Putin or Russia's strategy? Certainly, his aides, his defense secretary have been quite critical, and this policy is quite critical. Raises the really interesting question, when would the president step out and explain why he would spend $1.2 trillion on this?

KEILAR: It is a lot of money.

David Sanger, thank you so much for breaking this down for us, making this important information very digestible. We appreciate it.

SANGER: Thank you, Brianna. Great to be with you.

KEILAR: Growing safety concerns in the wake of the fourth deadly train accident in just two months. Amtrak blames a freight train operator for a deadly collision with a passenger train early Sunday morning in South Carolina. The impact killed two Amtrak employees. It injured more than 100 passengers. The NTSB is now investigating this as well as other recent crashes.

Joining me now is CNN aviation and government regulation correspondent, Rene Marsh.

People want to know, why have there been so many accidents lately?

[11:55:02] RENE MARSH, CNN AVIATION & GOVERNMENT REGULATION CORRESPONDENT: Right. The one this weekend is the one investigators are focusing on. This was the Amtrak train going from New York City to Miami. More than 100 people were injured. Two people dead. And investigators, at this point, are focusing on the rail switch, which essentially guides one train from one track to another. This switch was manually set to divert the train into the direct path of this freight train that was sitting on the track. The question this hour is, why was it manually set to put the train on the path to collide with this freight train? That's what the NTSB is trying to get to the bottom of.

But you mentioned, Brianna, this is one of four fatal Amtrak crashes involving Amtrak trains since December. You had the situation in North Carolina last week. In Virginia, there was that train accident that derailed. They were carrying congressional members. North Carolina, another incident where two people were killed and an SUV was struck. And again, in December in Washington State. Not a good span of time for Amtrak to see so many of these incidents.

KEILAR: Certainly, isn't.

Rene Marsh, thank you so much. Really appreciate it.

Still ahead, #releasethemo, part 2. The Democrats hope to get their rebuttal of the Nunes memo out to the public. When we could see it, coming up.

(COMMERCIAL BREAK)

[12:00:04] DANA BASH, CNN HOST: Welcome to INSIDE POLITICS. I'm Dana Bash. John King has the day off.

President Trump and the first lady are about to board a plane together to go to Ohio. But they'll got their separate --