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Deadly Storm Pummels Northeast, One Million Without Power; Trump Ally Says Something Is Very Wrong In West Wing; Trump Doubles Down: "Trade Wars Are Good"; Putin Touts New Invincible Missile Ahead Of Election; Kushner's Business Deals Under Special Counsel's Scrutiny. Aired 7-8a ET

Aired March 3, 2018 - 07:00   ET



[07:00:00] JEANE MOOS, CNN CORRESPONDENT: -- said bring back Darryl Hammond, but Baldwin brought in Melania Trump. And Mr. President, please ask your wife to stop calling me for "SNL" tickets.

UNIDENTIFIED FEMALE: Donald, have you been working out?

MOOS: Don't expect these two to work this out. No kissing and making up. And not even a remote chance of this.

UNIDENTIFIED MALE: I deeply apologize.

UNIDENTIFIED FEMALE: Are you trying to say apologize?

UNIDENTIFIED MALE: No, I would never do that.

MOOS: Jeanne Moos, CNN, New York.



UNIDENTIFIED MALE: Howling winds, soaking rain, and wild waves slamming East Coast.

UNIDENTIFIED FEMALE: There are homes right now, under several feet of water.

UNIDENTIFIED MALE: Tonight is not the night to check out the storm.

UNIDENTIFIED MALE: Dozens of Quincy residents are being rescued from their homes.

UNIDENTIFIED FEMALE: It's kind of scary.

UNIDENTIFIED FEMALE: We're lucky, it's just things that will get lost.

UNIDENTIFIED FEMALE: John Kelly revives the Porter scandal and says he won't resign over it.

UNIDENTIFIED MALE: This seems to be a feeding frenzy inside the West Wing. I mean, everybody is shooting at everybody.

SEN. CHUCK SCHUMER (D-NY), SENATE MINORITY LEADER: I've served under six administrations. I've never seen such chaos.

SARAH HUCKABEE SANDERS, WHITE HOUSE PRESS SECRETARY: If they want to call it chaos, fine. But we call it success.

UNIDENTIFIED MALE: The president is also facing growing criticism over a sudden announcement of new tariffs on steel and aluminum coming into the U.S.

UNIDENTIFIED MALE: On an average car, the actual impact will be a fraction of one percent.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: You're going to see a lot of good things happen.


CHRISTI PAUL, CNN ANCHOR: So glad to have your company, as always. I'm Christi Paul.

MARTIN SAVIDGE, CNN ANCHOR: And I'm Martin Savidge in for Victor Blackwell. Out top story this morning: violent winds ripping through the northeast after a bomb cyclone tore through the area causing widespread damage. As you can see, trees have been toppled right over destroying homes.

PAUL: Oh, my gosh! Listen to that wind. It is strong. At least five people have died as a result of this storm already. And here's the thing, the worst is not over. There's torrential rain that's causing widespread flooding. Another major concern, those violent winds tearing down power lines. More than one million people are without power and that is stretching from Virginia to New England. Massachusetts' seeing the worst of it, with more than 400,000 without power, and there are states of emergencies in Virginia and Maryland.

PAUL: We want to take you there. CNN's Ryan Young is live for us in Quincy, Massachusetts right now -- just south of Boston here. So, Ryan, what are you seeing? And are they prepared for this third tidal wave -- this way, I should say, of what's coming next? This last part of the cyclone that's expected this morning.

RYAN YOUNG, CNN CORRESPONDENT: Well, we certainly are waiting for it. Let me tell you this, we are still getting hit by the heavy winds in this area. And you look at this car here, the last hour when we were here, the water was a lot higher. Now, you can see, the water has started to recede. People starting to come out and also check out and survey the damage from overnight. More than 100 people, just from this area alone, were evacuated. This was a storm with powerful winds that kept punching over and over. It was a long 24 hours.


YOUNG: Coastal communities in Massachusetts pounded by monster waves. High tides, sent water rolling down streets and into homes. In Quincy, dozens of residents had to be rescued by trucks and scooped up by front loaders. Christy Waycotter, was one of those getting a ride out of danger.

CHRISTY WAYCOTTER, QUINCY RESIDENT: It's kind of scary because we were the ones standing up on it and having to hold on. So, we're lucky. It's just things that will get lost.

YOUNG: Storm conditions are expected to improve on Saturday but the wind is still a factor, so is coastal flooding. Near Portland, Maine, storm surge left this home teetering on the edge of the Atlantic Ocean.

DANA STERLING, HOMEOWNER: The plan is to lift it and move it back a little bit, I believe. But it's a lot of -- a lot of things that have to happen before that happens. So, we're just trying to keep it from going anywhere.

DOUG CAMPBELL, SACO, MAINE RESIDENT: You feel bad for the people but that comes with having a house on the water. Ocean wins, you lose.

YOUNG: Another issue is power outages. In Watertown, Massachusetts, high winds made power lines fall like dominos.

RAYMOND DUPUIS, WATERTOWN POLICE: We had traffic lights all over town that went out or affected by this grid. But the first responding cable man, he isolated the area and cut the circuit off. As you can see, the wires were over cars and it's pretty dangerous, dangerous situation.

YOUNG: One woman in Brockton, Massachusetts, says her son is lucky to be alive. He was sitting in the backseat of a car when a tree came crashing down.

CYNTHIA CREIGHTON, RESIDENT OF BROCKTON MASSACHUSETTS: The house shook. And then, that shook we've heard, we heard a noise. We didn't know what it was. We ran out. My son was still in the car with the tree on top of it.


[07:05:02] YOUNG: When we look at some of the roof lines in this area, you can see where the shingles and tile of the roof that have blown off. The garage behind me, obviously, been shaken from its foundation. But you can see the debris that's been blown throughout some of the streets here, which makes it almost impassable sometimes. Add that with the idea that high tide could be coming back again. Luckily, we're not dealing with the heavy rains right now, but obviously, there'll be a lot of surveying of damage over the next 24 hours. Guys?

PAUL: Yes, just a few more hours and they expect that other tidal cycle to come through, and that should be last one. Ryan Young, there in Quincy, we appreciate it, thank you.

SAVIDGE: The storm is so severe that more than 3,000 flights have been canceled, and that's just so far. Amtrak was forced to cancel its service but it should resume later this morning.

PAUL: We do have some more images that we want to share with you of what the storm has done. Look at this.

Don't expect it to be quite that bad when it hits again but it is going to hit again. The storm surge there colliding with high tide causing more of a mess throughout this morning, we expect.

And look at the flooding in Boston. Parts of that city are just, as you see, under water. And then, we've got a kayaker, paddling down a waterlogged Boston street. Somebody always thinks, you know what, I'm going to make the best of it, apparently.

SAVIDGE: Yes, they do. They do.

PAUL: And a national guard had to rescue 50 people from their homes in nearby Quincy. Look at that woman just hanging on. It wasn't just high winds and rain, though, there was heavy snow as well and sleet that fell across major cities such as New York and Philadelphia. When it's that heavy wet stuff that really makes it tough to get through.

SAVIDGE: Meteorologist Allison Chinchar is live at CNN Weather Center. Allison, why don't we start by just trying to explaining to people what a bomb cyclone is?

ALLISON CHINCHAR, CNN METEOROLOGIST: Yes, because you hear that term a lot that it is kind of difficult to understand. So, let's break it down in Layman's terms. Technically, what a bomb cyclone is, is when the atmospheric pressure within that storm drops at least 24 millibars in 24 hours or less. In this case, it dropped about 30 millibar in less than 24 hours.

All this really means is these lets us know that the storm is undergoing rapid intensification. And when it does that, these are when you usually end up getting some of the strongest Northeasters to hit these locations. And we had that. Now, one of the other things people often associate with Northeasters is snow. It's not a requirement, but a heavy snow is often associated with it.

Look at some of these numbers. Richmond Ville, New York: 37.5 inches of snow. Jefferson, New York: 34.5 inches. Your highest totals did come out of upstate New York, but other states like Vermont and Pennsylvania were also hit hard with snow as well.

Let's talk about where the storm is now. This is where it was located yesterday over portions of New York and Pennsylvania. Now, it has moved fully off the coast. But with that said, it's still expected to have pretty significant impacts for the Northeast through tomorrow. The biggest one is going to be those strong winds.

We talk about high wind warnings and advisories outstretching from Massachusetts all the back to Maryland. Again, those wind gusts still expected to be 50, even 60 miles per hour. Right now, in Nantucket, it's gusting to 55 miles per hour. This is a concern for a lot of power outages, because as we talk, they may get worse before they get better since those winds really aren't supposed to come down until late tomorrow.

We also still have the coastal flood threat. High tide for Boston is not expected to hit until noon today. You just saw Ryan Young's live shot there. He's at low tide. That's why you can see the ground that he's standing on. But that image is going to change significantly over the next five hours as that tide comes back in.

Now, the good news is we don't expect this next tide to be a record. The record, Christi and Martin is 15.6. We expect it to be around the 14-foot range. But even with that said, you're only talking a foot difference. There's still going to be coastal flooding with even the most recent high tide that will come in.

PAUL: All right. Allison, thank you so much. Appreciate it.

SAVIDGE: We want to update you on another story. The suspect in a shooting at central Michigan University which left two people dead, that suspect now in custody. CMU police arrested James Eric Davis Jr., this morning when he was spotted on the campus train. The victims in the shooting James Davis Sr. and Diva Davis are the suspect's parents. They arrived at the school Friday to pick up their son for spring break. Police are calling this a domestic situation. This marks the twelfth school shooting this year.

PAUL: And another week of chaos seems to be rocking the White House this morning. A close presidential ally said this time something is "very wrong". While friends of the president say, they're worried about his behavior as members of his family and administration are facing new scrutiny.

SAVIDGE: President Trump says, trade wars are good and easy to win. But are they good for everyone or will there be winners and losers?

[07:09:53] PAUL: Also, Jared Kushner's business deals under some new questions this morning. Some asking if he's been using his father-in- law's presidential power to his financial advantage. We'll take a look.


SAVIDGE: Unraveling and unglued, that's how U.S. officials and close friends of the president are describing him as administration faces chaos and criticism at home and overseas.

PAUL: Yes, and some of that criticism is focused on Chief of Staff John Kelly who tried to defend how he handled a domestic abuse scandal. He ended up changing his story, though, again which has a lot of people wondering what's going on here. CNN's Boris Sanchez, live in West Palm, Florida where the president is spending the morning there. Boris, this chaos is not new in this administration. We've seen it before. What is it that makes people say, this time it seems to be a bit different?

BORIS SANCHEZ, CNN CORRESPONDENT: Hey, Martin and Christi. Yes, sources close to the president telling CNN that this is different, that they're worried about the president that he may be losing control of his staff, in part, because there were number of reports this week that he was lashing out at staffers, including people close to him like Hope Hicks, the Communications Director who announced that she was leaving the White House this week after being berated by the president shortly after her testimony before Congress.

[07:15:17] You also have rumors about other officials in the administration that are apparently planning to exit, including H.R. McMaster and Gary Cohn. Beyond that, you have investigations looming over the president's son-in-law and now his daughter. So, there's certainly a lot of controversy circling the White House. And yesterday, you had Chief of Staff John Kelly trying to clarify Rob Porter saga, seemingly piling onto that. Kelly made the case he secured a resignation from Rob Porter the same day that he learned about allegations of domestic abuse against the staff secretary.

That contradicts the time line of what we know. It wasn't until a full day later that the White House put out a statement defending Rob Porter. It was after that statement that he eventually did resign. And it also contradicts what we've heard from sources who tell us that the FBI provided chief of staff and White House counsel with documentation detailing some of the accusations against Rob Porter. Despite all of that, Chief of Staff Kelly yesterday told reporters, "I have nothing to even consider resigning over".

One final note, Martin and Christi, about the president's schedule, he's set to attend a Trump victory reception here at Mar-a-Lago before he departs for D.C. this afternoon. He's attending the grid iron dinner -- it's a roast type event where journalist skewer politicians and it's on good fun but doesn't seem like the president has a whole lot to laugh about these days. Martin and Christ.

SAVIDGE: Interesting that he's going there. Boris Sanchez, thanks very much.

PAUL: Thanks, Boris. So, I want to get back to John Kelly, because there's this new report from the New York Times that I think caught a lot of people's attention. This report claiming that President Trump has asked General Kelly for help to push his daughter Ivanka and son- in-law Jared Kushner out of the White House.

SAVIDGE: Joining us now, Deputy Managing Editor at The Weekly Standard, Kelly Jane Torrance; and CNN Political Commentator and Former Adviser to the Trump Campaign, Jack Kingston. Welcome to you both this morning.


PAUL: Good morning.

SAVIDGE: Jack, let me start with you. What do you make of this reporting that the president wants Jared and Ivanka pushed out? They're causing him too many problems? Why wouldn't a dad turn to his daughter and say, hey --

JACK KINGSTON, CNN POLITICAL COMMENTATOR AND FORMER ADVISER TO THE TRUMP CAMPAIGN: I've been around the president, with his son-in-law and daughter. I could not imagine him going to any third party to talk to them. They're very close. They have a great working relationship. I can't imagine -- I think this is a bizarre story. I don't think there's any truth to it whatsoever.

PAUL: You don't think that he wants them out?

KINGSTON: No, I don't. I think that he may say, listen, we may need to change something here, we may need to change something there, but I don't think he wants them out. And I can say this, having served in elected office, it's very good and healthy thing to have people you trust close to you, particularly family members if they fit in, because it gives you the moral security that you sometimes want, the morale.

PAUL: OK. So, Kelly Jane, General Michael Hayden, a Former NSA Director, said yesterday, style, he believes, is part of the problem here. He said that this incoming administration didn't have a great deal of regard for the norms. There are norms out there not because they're arbitrary. There are norms out there because lessons through learned, through history. We understand if you don't do it that way you're increasing the odds. Things are going to end up unhappy. Is nepotism part of that? How much of that, with Kushner, is really the problem here?

TORRANCE: Yes, you know, Donald Trump won election as an anti- establishment outsider candidate, and he thinks he can govern that way, too. And I think, him and the people around him are discovering that doesn't always work. And you know, remember when John Kelly was brought in to stamp out the chaos in the White House? Now, he himself has become part of it. And I wonder if, you know, if it's the Trump hires people that are like him and have the same sort of lackadaisical attitude to the way things are done as he does or do people change after working for Donald Trump and, you know, end up becoming apologist for him. But either way, John Kelly, who himself admits they mishandled how they dealt with clearances. And I'm -- you know, I'm waiting for the chance of lock him up to be heard here in Washington.

SAVIDGE: Jack, Kelly brings up a point there with John Kelly and what he was trying to talk about the latter part of the week. It seems that he has even testified against himself in his own words when it come Rob Porter and how things were handled. He had that famous quote, "we didn't cover ourselves in glory". So, what do you make of this rather bizarre thing?

KINGSTON: Well, I'm not sure why he brought it back up. I think his statement previously was sufficient that, hey, we screwed up. It's not going to happen again. We made changes to address the situation. I think that's all we need to know. I don't think anybody would say John Kelly needs to go because of Rob Porter. I think the fact he came clean and said, screwed it up, won't happen again, that was sufficient.

[07:20:06] PAUL: All right. Kelly Jane, I want to ask about Hope Hicks. Because I was listening to New York Times, Maggie Haberman, talking about how she was like family to this president. She was somebody he trusted. She was actually a filter for him. She took a lot of the brunt from him but she was able to direct him to some degree. With her leaving, is there any sense of who can fill that void in the White House?

TORRANCE: You know, that's a great question, Christi. And it does go to show Jared and Ivanka rumors may just be rumors. But if, you know, Trump is willing to let go or to be fine with seeing someone who's like family going, then what about actual family? But we constantly heard this, you know, we need people in the White House like John Kelly, like General Mattis, you know, like Rex Tillerson to keep Trump strong -- you know, tame that chaos. Well, nobody has been able to do that, and even Hope Hicks, who was close to the president, and seems to have been a consummate professional, young as she was couldn't do it. So, why would we think anyone else can do it? And given the fact John Kelly has been on the job now for, you know, two-thirds, three- quarters of a year and the chaos is nowhere near being lifted, I think nobody can do it.

SAVIDGE: Jack, do you really see this chaos the same way, say, opponents of the president may look at it? Do you see this kind of, I don't know, dishevelment as far as the political actions in the White House?

KINGSTON: I don't see it at all. If you look back at George Washington's administration, it was absolutely chaotic. And I think every president since then has had some degree of it. But what I do know is that the Heritage Foundation recently said that Trump has implemented 61 percent of his objectives of his campaign promises. The economy is purring along. He's addressing the very difficult issues of guns, and trade, immigration. He's all but appealed Obamacare, and even opened up after 30 or 40-year debate, the Alaskan wildlife reserve for oil drilling. That was something not any president could do. So, in my opinion, you get the accomplishments done, that's what really counts. That's what the American people want.

PAUL: We have yet to see what trade, though, is going to do if he's going to implement what he's been saying last 24 or 48 hours here. Jack Kingston and Kelly Jane Torrance, always a pleasure to have you both. Thank you.

KINGSTON: Thanks a lot.

TORRANCE: Thank you.

SAVIDGE: Speaking of trade, Europe is threatening to respond to President Trump's threat of the trade war by taxing U.S. products. Next, should shoppers in the U.S. be worried about price increases here?


[07:26:54] PAUL: So glad to have you with us here. I'm Christi Paul.

SAVIDGE: And I'm Martin Savidge in for Victor Blackwell. Well, the president has announced new tariffs on steel and aluminum, and he says that they'll go into effect next week.

PAUL: In several tweets, the president said, "Trade was good. They're easy to win." And then he said, "We must protect our country and our workers. Our steel industry is in bad shape. If you don't have steel you don't have a country."

SAVIDGE: But if the steel industry wins, then the real question is who loses? Here's CNN Correspondent, Tom Foreman.


TOM FOREMAN, CNN CORRESPONDENT: Take a look at the numbers here. The United States imports about a third of all the raw steel; it uses up more than 90 percent of all the aluminum it uses. And these proposed tariffs would push up the cost by 25 and 10 percent respectively. That's money that would be paid by the foreign companies that wanted to get their product onto U.S. soil. If it became more expensive for them, it could help U.S. producers of steel and aluminum by making them more competitive, especially since they've complained for years about unfair practices overseas anyway.

But what about all the companies that rely on that raw material to make cars and airplanes and equipment and aluminum cans and appliances? What about those companies? Because now, they would face a different supply chain where there maybe shortages, there may be higher prices and that could affect an awful lot of people in other fields. One estimate has it that more than 80 times as many people work making stuff out of that raw material than in actually producing raw material. Those people would now potentially face uncertain wages, uncertain hours, maybe more off shoring, not to mention what would happen with consumers out there. One estimate said some products in some places could go up by 15 percent. I don't think we really know that but we do know that there is uncertainty about the consumer market and what the impact would be.

Here's another question, though: does this actually get at the trade practices of other countries? Does it strike a blow for that? It depends who you're talking about and how this would actually be applied. We don't have the details yet. This is where the United States gets its foreign steel from: Canada the biggest supplier than Brazil, South Korea, Mexico, Russia, and so forth. You know who's not in the top 10, though? China. The country that the United States, the president has said so many years is not being a fair-trading partner out there. This the one President Trump has said he wants to get at. Would this get at them? It might. But the numbers suggest only after it had an impact on a lot of long-standing trade allies and possibly unleashed a trade war with very uncertain outcomes.


SAVIDGE: All right, Tom. Thank you very much for that. The European Union may strike back, though, if the president follows through on his tariff plan. They could retaliate by putting their own tariffs ongoing major U.S. brands like, say, Levi Jeans, Harley Davidson motorcycle and bourbon whiskey. What may be even more important than their response from Euro could be China. They could tax soybeans or airplanes, or they squeeze specific U.S. companies like Apple and say Intel.

PAUL: Stephen Moore is CNN Senior Economic Analyst is with us now. So, first and foremost, do you see a winner or loser in this trade war?

[07:30:14] STEPHEN MOORE, CNN SENIOR ECONOMIC ANALYST: Well, not -- I don't see a winner in a trade war. And there is no winner in trade war, although, I am in favor of getting tough with China. I do think China violates a lot of agreements. I think they are stealing a lot of our technologies, that's a separate issue, though, from these steel terrorist which in that excellent analysis you just did. You know, I think what we get three or four percent of our steel from China. So, I don't see this as being-- you know, well targeted at the -- at the country that Donald Trump is most obsessed about, and that is China.

So, this is going to -- in the end, it's going to end up hurting American consumers. I think, it's absolutely true that all of these American manufacturers that use steel, whether it's our auto industry, whether it's a producer of machinery, heavy equipment. Even as the commerce secretary showed yesterday the kind of soup from Campbell's. All those things are going to cost a little more now.

PAUL: What about let's listen to that, we've got it.

SAVIDGE: Glad you brought that up, take a listen.


WILBUR ROSS, UNITED STATES SECRETARY OF COMMERCE: For a beverage cans, this only about three cents worth of steel or aluminum. In this case, it happens to be aluminum in it, to begin with. So, if that goes up 10 percent, you're talking a fraction of a penny. These products sell for over $1 in the store. So, it's nonsense to say that there's a great tragedy looming.


SAVIDGE: Now, he was saying that in response to, of course, the markets were taking a dive and after all of this came out. And of course, we're now concerned about retaliation. So do you buying his argument?

MOORE: Well, let me just say one thing to defend the president on this spot, there are two things, actually. Number one, I think that -- you know, Wilbur Ross and especially Donald Trump has really do care about the steelworkers.

I traveled with Donald Trump on the campaign, we went to a lot of the steel mills and place like that. And there are lot of areas of the country that where people feel like these trade laws have actually led to the shutting down of factories and the loss of American jobs. And I think Trump has genuinely tried to -- you know, protect their jobs. I just don't think this is a very good way of doing it.

Now, the problem actually, as I see it, is not so much that -- you know, the penny more that you might pay for a can of coke. It's more that -- if we want a competitive auto industry, if want a competitive cars and trucks and vans and heavy equipment, all the manufacturing products, those are going to be less competitive as your -- as your analysis just showed. And that means -- you know, if our American car companies competing against a German Car Company and we have to pay more for steel, you can see why that would make our companies over less competitive.

And what I would say to Donald Trump, I'd say, Mr. President, yes, you're going to help the steel jobs but what about -- you know, the 50 jobs per steel job that are going to be negatively affected? And in the end, I actually think we may lose jobs as a result of this rather than gaining them.

PAUL: Let's listen to Michael Bless, the CEO of Century Aluminum. And he supports this idea.


MICHAEL BLESS, CHIEF EXECUTIVE OFFICER, CENTURY ALUMINUM: Lower down 70 percent in production, thousands of jobs in the last couple of years alone, the price was destroyed beginning a couple of years ago. And so, all we think is this doing, is correcting those abuses and making the environment such that those abuses shouldn't be able to continue anymore --


PAUL: We don't know what is in this deal per se, but let's face it, Stephen, this the president keeping a promise at the end of the day. Do you think it's really going to go through?


MOORE: My think all about -- well, I think that -- Well, first of all, I think you're absolutely right that the president is keeping a promise. And you know, for people who say why is he doing this? Well, he campaigned on this. I mean, I was there with him when he said some of these trade deals were the worst things that ever happened to America. And that appealed the lot of these workers in Pennsylvania, Ohio, or Michigan, those rust belt states.

But in the end, I just don't think we're doing the economy a favor. And I think the timing of this is odd. As The Wall Street Journal said yesterday, here we've got an economy that's firing on all cylinders right now. Where in a lot of areas in the country now, the problem is finding workers rather than finding jobs in the construction sites.

Can find enough workers, a lot of manufacturers, what we're seeing a comeback are really having a hard time finding skilled workers. So, I don't think this is well timed. I do hope, Christi that the president does reverse the policy but we will see. He seems a little bit dug into me right now.

SAVIDGE: Yes, we would say, it looks like he's going to move forward on that. Stephen Moore, thank you very much. MOORE: Yes.

PAUL: Thank you, Stephen.

MOORE: OK, have a great weekend.

PAUL: You too. So, gun companies are facing some pressure this morning from a major shareholder. We're talking about the investment from BlackRock.

SAVIDGE: They own major stakes in several gun companies and they're not pleased with how those companies reacted to the Parkland shooting in Florida. BlackRock also manages the holdings in millions of retirement accounts. So, in a statement, they said they will offer their customers the option to invest in portfolios that exclude gun companies.

[07:35:14] PAUL: Russian President Vladimir Putin, flexing his military muscle, as you know, by introducing this new invincible missile, the U.S. isn't buying it. How serious should the U.S. be taking these Russian threats?

SAVIDGE: Plus Jared and Ivanka Kushner's finances, they're under watch. Details on the first family's business deals since entering the White House, that's coming up.


[07:40:13] PAUL: So, Russian President Vladimir Putin, flexing his military muscle, so to speak, as he's boasting about this new weaponry that he says will make NATO defenses useless. In a warning to the world, he touted an invincible -- as he called it missile, with "unlimited range".

SAVIDGE: Now, the State Department dismissed Putin's comments as cheesy and made clear that U.S. defense and military capabilities remain second to none.

PAUL: Former RT-America anchor Liz Wahl, with us now. Liz, so good to have you with us. Listen, the State Department responded to Putin's remarks. Let's listen together here.


HEATHER NAUERT, SPOKESPERSON, UNITED STATES DEPARTMENT OF STATE: President Putin has confirmed what the United States government has known for a long time that Russia has denied prior to this, that Russia has been developing destabilizing weapons systems for more than a decade in direct violation of its treaty obligations.

President Trump understands the threats facing America and our allies in this -- in the century. And is determined to protect our homeland and preserve peace through strength, U.S. defense capabilities are and will remain second to none.

(END VIDEO CLIP) PAUL: These Russian threats are the primary reason the U.S. wants to build up its defense budget. So, first and foremost, are you surprised that we heard from the State Department but we didn't hear directly from President Trump in terms of a response to this?

LIZ WAHL, CORRESPONDENT, NEWSY: Yes, well, that's a thing is that we don't hear this -- a response from the president. We've only heard glowing things about Russia and glowing things about Russian president Vladimir Putin. So, it is interesting, you hear that from leaders abroad that they tend to kind of gain their comfort from those around Trump that Russian foreign policy and the approach towards Russia is -- you know, will remain in line with normal foreign policy norms. But you're not hearing -- you're not hearing it from the president.

You still haven't heard him speak out against the meddling in our elections. That's something that is still -- it seems to still make him quite angry when his national security adviser calls out the president for doing so.

So, no, we still haven't heard anything from the president in regards to this new display of weapons and Russia flexing its muscles militarily, in a way that was kind of shocking. The demonstration and this big speech before members of the Russian parliament actually showed these missiles raining down on what appears to be Florida.

PAUL: Right.

WAHL: And we haven't heard anything.

PAUL: Right. And we do know that the president spoke in separate phone calls last week with French President Macron and General Chancellor Angela Merkel. The leaders at that point we know, and I'm quoting here from what we are told, shared their serious concerns over Putin's comments. But when we look globally here, the president knows this is a concern for our allies. So, how does the U.S. move forward with this?

WAHL: Yes. Well, it would be nice to hear the concern from our own president. You're hearing in terms of election meddling and other shows of force that European leaders are kind of taking, are being the voice of, you know, standing up to Russia. When it came to the elections in France, or in Germany, for example. You heard very loud -- very loud condemnation and warnings from the top, from the heads of State saying, do not interfere in our elections. If you do, there will be repercussions.

PAUL: Do you get the sense that President Putin was taunting President Trump?

WAHL: You do. It's interesting because Russia does have an election coming up. So it's possible that he -- I mean, what we know from Putin's behavior in the past with annexation of crime. MIA, for example, that he uses military -- his military might to gain the approval of his domestic audience. There's an election coming up, it's widely seen as rigged. But the annexation of crime MIA, the military involvement there really brought his ratings up. The war in Syria, supposedly they're backing terrorist there but we know that they're actually targeting civilians. But he does use the military to bolster support within Russia. At the same time, he seems to be, yes, taunting the president or the United States by basically saying -- I mean, what is -- similar language to what we've heard from our president. You know, that kind of our missiles are bigger than yours. You know, we're big and strong and you should watch out and not mess with us.

PAUL: Yes, very, very different reactions to North Korea as there are to Russia from this president, which has a lot of people wondering what's going on. Liz Wahl, certainly appreciate it so much. Thank you.

[07:45:06] Wahl: Thank you.

SAVIDGE: Coming up, a look at Jared Kushner's finances and how his business deals have profited since he took his position at the White House. Coincidence or not? We'll discuss.


SAVIDGE: Details of Jared Kushner's finances are being looked into by Special Counsel Robert Mueller, including how his family businesses may have been profiting from his powerful father in law which is, of course, President Trump.

PAUL: And we're learning that at least four countries, Mexico, Israel, the United Arab Emirates and China all discussed ways in which Kushner could be used for their own political leverage.

SAVIDGE: CNN's Christina Alexai, has more. Christina?

CRISTINA ALESCI, CNN MONEY AND POLITICS CORRESPONDENT: That's right, Christi, Martin. Jared Kushner and his family's real estate holdings do leave him exposed to potential conflicts of interest and vulnerabilities. While he is in the White House and possibly beyond that.


[07:50:09] ALESCI: This Chicago skyscraper is majority owned by Jared Kushner and his family. Mortgage documents show a fund linked to New York City private equity powerhouse Apollo Global Management provided them with $184 million mortgages for the building. Apollo was founded by Josh Harris. Months earlier that same executive was in talks with the White House about an advisory role according to a source with knowledge of the discussions.

Jared stepped down as CEO of his family's business, Kushner Companies since going to Washington. But questions of conflicts still persist. Also at the White House, Jared met with Citibank CEO Michael Corbat, last year. Around the same time, Citibank meet a $325 million loan to Kushner Companies and its partners. Spokespeople for both Apollo and Citibank said their executives were not involved in granting those loans. NOAH BOOKBINDER, EXECUTIVE DIRECTOR, CITIZENS FOR RESPONSIBILITY AND ETHICS IN WASHINGTON: You also have to worry about whether he has an incentive to use his official power to use the power of the White House to help people that he has business relations with.

ALESCI: A Kushner Company spokesperson said, "There was nothing inappropriate and stories like these attempt to make insinuating connections that do not exist to disparage the financial institutions and the companies involved."

Just last week, CNN reported that Special Counsel Robert Mueller is inquiring about Kushner approaching foreign investors during the transition, including a Chinese insurance company and Qatari investor for the family's biggest bet. 666 Fifth Avenue, the building hasn't generated enough profit to cover its debts.

HITEN SAMTANI, EDITORIAL DIRECTOR FOR DIGITAL, THE REAL DEAL: 1.8 billion was the record price for Manhattan skyscraper was a highly, highly leveraged deal. Which means the income in the building wasn't even close to covering what they would have to pay in interest. So it was a deal that a lot of people say was doomed from the start.

ALESCI: About $1.2 billion in debt on the tower comes due next year. But sources say that negotiations with lenders and new sources of capital need to start soon. Kushner Companies confirmed it's in talks to buy out its partner in the project, but the question remains, how will they pay for it? When asked by CNN, they declined to comment.

SAMTANI: They're always looking for loans and construction loans and development loans and acquisition loans. So I would say, it's an active business.

ALESCI: Kushner Companies also needs to find investors for a development in Jersey City. The company scuttled the plan to use a government program that would help foreigners get U.S. visas in exchange for an investment after Jared's sister was reportedly referencing him during a presentation in China.

Another deal raising questions, The New York Times reported that Kushner Companies received $30 million from one of Israel's largest financial institutions just before Jared's first diplomatic trip to the country.

Last week, the Washington Post reported officials from at least four countries, Mexico, Israel, China and the United Arab Emirates discussed ways they could manipulate Jared because of his family's finances. The constant search for capital which is normal for any Real State Firm casts a cloud over Jared's White House role because like his father in law, he has refused to fully divest from his holdings.


ALESCI: Bottom line here is that Kushner and his family have complex real estate holdings across the U.S. And during the transition, I was told that Kushner and his advisers were essentially trying to reassure ethics officials in Washington that these deals would not be problematic because they were inactive, static, boring and these examples really show that these deals are anything but.

PAUL: All right, Cristina Alesci, thank you so much. Listen, coming up here, incredible video of a bomb cyclone that's hitting the northeast. There are more than a million people waking up right now in the dark. This storm has ripped through overnight and the thing is, the third level of it has yet to hit. It's going to hit in the next few hours. So, we'll to take you live where officials are now just getting their first look at what it's done so far.



[07:58:39] UNIDENTIFIED MALE: I'm getting a massage much like was on the table. My body relaxes and it just as blissful feeling. She's working my neck and my shoulders and getting the knots out.

CRYSTAL SPICER, MASSAGE THERAPIST: You're floating on a surface of the water, it's cradling you. It's kind of like being weightless, it's anti-gravity.

As I move the person through the water, my goal is to get them relaxed first and foremost. So, in order to do that, I might balance the entire system with acupressure. I'm providing pressure to relieve pressure. We do have to have the water at a specific temperature, between 92 and 98 degrees that facilitates the muscles relaxing and everything moves a lot better. We see people who are not very agile on land and when they get into the water, they're able to move more freely.

UNIDENTIFIED FEMALE: My pain is sometimes at a level of 5 coming into it. And when I walk out, I'm not even aware of it. That feeling could last for a couple of days. And it choose into a gentler wider place, how could it get any better than this?



UNIDENTIFIED FEMALE: Holy waves, show me grain and wild waves slamming the East Coast.

UNIDENTIFIED FEMALE: There are homes right now under several feet of water.

UNIDENTIFIED MALE: Tonight is not the night to check out the storm.

UNIDENTIFIED MALE: Dozens of Quinsy residents are being rescued from their homes.


UNIDENTIFIED FEMALE: We're lucky, it's just things that will get lost. UNIDENTIFIED FEMALE: John Kelly revives the porter scandal and says he won't resign over it.

KELLY: This seems to be a fitting --