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AP: Russian Charged Was Closer with Manafort than Known; Judge Orders Michael Flynn to Hearing After Special Counsel Delay; Trump Says Be Patient to U.S. as Canada Retaliates Against Tariffs; Trump's NATO Threats Put Allies on Edge; EPA Chief Has Secret Calendar & Pushed Aides to Find Wife a Six-Figure Job; CNN Uncovers Possible Epidemic After Maria Hit Puerto Rico. Aired 1:30-2p ET

Aired July 3, 2018 - 13:30   ET

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


[13:30:00] JIM SCIUTTO, CNN HOST: Sara, how much more closer to Manafort, the president's former campaign chairman, how much more closely was Kilimnik working with him?

SARA MURRAY, CNN POLITICAL CORRESPONDENT: We always know Kilimnik was working with Paul Manafort, that he helped to run this office based out of Ukraine. What this Associated Press story says is this isn't just a guy who was an assistant. It isn't just a guy who was a fixer. This is someone who was heavily involved, according to the A.P., in developing this pro-Russia strategy and helping to execute it. This is one of the things that has gotten Paul Manafort in hot water, the fact that he did not disclose this lobbying work that he was doing for foreign governments, according to prosecutors. That's how they've been able to bring a number of the charges that he's facing against him.

It's also worth noting the special counsel has also brought charges now against Konstantin Kilimnik, saying he and Paul Manafort are still essentially working together or were earlier this year to try to obstruct justice when it comes to this case.

SCIUTTO: Joseph, legally, you're an American, you haven't declared this work with a foreign government, and you're working with someone closely here who's a Russian and has ties to Russian intelligence. To be clear, we should note that a lot of Russian businessmen have ties to the government while not being full-time, paid employees of the Kremlin. From a legal perspective for Manafort, how concerning is this?

JOSEPH MORENO, FORMER FEDERAL PROSECUTOR: It's concerning on a number of levels, both legal and political. So as pointed out, this relationship goes back a lot longer than we had originally anticipated. And it involves a lot more Russia work than we had known previously. Mr. Kilimnik's name is not new to us. It's been floating around for a while. The fact this relationship with Mr. Manafort goes back so far has specifically to do pro-Russia strategic work. And the relationship continued throughout Mr. Manafort's tenure at the Trump campaign, and up to this very day where allegedly Mr. Kilimnik has been involved with potentially tampering with witnesses. It's a lot harder of a relationship than we had known previously. It's definitely a potential headache here. SCIUTTO: The headline is you have Paul Manafort, who is America, working with a Russian to push a pro-Russian agenda for money, right? He's getting paid to do it.

MURRAY: Well, yes. But I think one of the concerns from prosecutors and what the Mueller team has raised in a number of filings is that Paul Manafort continued to be in touch with Konstantin Kilimnik, who, like you point out, prosecutors say has ties to Russian intelligence, during the presidential campaign. So one of the big knocks for Paul Manafort and for his team has been to say, look, why is Mueller going after us? None of the charges you're bringing against us had anything to do with collusion, anything to do with what Paul Manafort was up to during the presidential campaign. Mueller's team has said, wait and see, give us some time, we're still exploring these various ties, we're still exploring whether there's a potential that Paul Manafort could have been involved in some kind of collusion, and whether, frankly, Konstantin Kilimnik could be a part of that.

SCIUTTO: OK.

Other news today, a federal judge ordered Trump's former national security adviser, Michael Flynn, to appear at a hearing in court. Apparently, Joseph, it seems he's a little frustrated with the pace of things, kind of saying get on with it. If you're going to sentence the guy, he's already pled guilty to lying to federal prosecutors, sentence him. Why would the special counsel be delaying on that step? Does that indicate that Michael Flynn is a useful cooperator? Because we also know he's cooperating with the special counsel.

MORENO: That's most likely what it exactly represents, is that he's cooperating. We don't know what that cooperation entails. We can guess based on Michael Flynn's role during the campaign and during the transition. We don't know exactly what he's saying, but most likely that's the delay, because the special counsel wants to know exactly everything Michael Flynn knows before he commits to a sentencing recommendation before the judge.

SCIUTTO: That makes sense.

Sara, you --

(CROSSTALK)

MURRAY: I would say the other part is that prosecutors might not want the public to know or the judge to know what they're learning from Michael Flynn, what the relevance he has to this investigation is. I think that is certainly one of the frustrations we've seen of political opponents to the Mueller probe, but also some of these judges. They're kind of saying, you know, look, you're asking us to delay these sentences. You're asking us to continue to give you this runway, but you're not really telling us what the relevance is here.

SCIUTTO: Right.

MURRAY: That's been a huge sort of play from political opponents to say, we don't have any idea what Mueller is up to, this has been going on for a year, and we don't have any indication of collusion.

SCIUTTO: Joseph, I would imagine you would have a reasonable argument as a special counsel to say, you know what, I want to signal to other potential targets here in the investigation what this guy is telling me about what they're up to, and one of those targets or people involved is the president. I would imagine he wouldn't want to reveal what Michael Flynn is saying about the president's interactions.

MORENO: Certainly. Special Counsel Mueller's team has done an outstanding job in not leaking. Most of what we know is leaks, perhaps from the Hill, perhaps from other sources, or what we learn from court filings. Most likely, the most relevant information we're going to find out at this sentencing hearing is what perhaps Michael Flynn is cooperating about. We can surmise right now, but those court filings may give some indication. That's another reason, great point, as to perhaps why it's being delayed as much as possible.

[13:34:56] SCIUTTO: It'll be next week. We'll be following it.

Joseph and Sara, thanks very much.

If the stock market tanked, would the president surrender in his trade wars with global powers? His Commerce secretary's surprising answer next.

Plus, EPA Director Scott Pruitt in the hot seat again over new allegations, once again, of misconduct. And a secret calendar. The details just ahead.

(COMMERCIAL BREAK)

SCIUTTO: Welcome back. Let's get back to one of our top stories today. President Trump lashing out at his NATO allies in the form of individual letters, telling them to start spending more on defense or else. Even hinting that he may withdraw troops from Europe.

I want to bring in Gene Sperling, the former director of the National Economic Council. He was also an economic adviser to both Presidents Clinton and Obama.

Thank you, Gene Sperling, for joining us today.

[13:40:05] GENE SPERLING, FORMER DIRECTOR, NATIONAL ECONOMIC COUNCIL & FORMER PRESIDENTIAL ECONOMIC ADVISOR: Thank you.

SCIUTTO: To be clear, presidents, Democrat and Republican, including Bush and Obama, complained that U.S. allies were not paying their fair share of NATO costs. What's different about the way Trump is going about this?

SPERLING: Well, listen, you know, his recent complaint is about whether people are putting forward the 2 percent of GDP they're supposed to. What was the context they did that in? It was the Wales summit in 2014 in reaction to Russia invading Ukraine. So for Trump to kind of say we're not all doing enough, when at every moment he does, in fact, look like he's a puppet of Trump, doing their bidding, trying to break up the allies, trying to weaken those who want to contain the aggressive behavior of Russia, it just doesn't make sense.

I, of course, am open to any rational discussion about how the U.S. could spend less or more efficiently on defense, but this just ends up looking like he's doing Putin's bidding. It's very hard to interpret it any other way.

SCIUTTO: And the Kremlin, in fact, welcomed the president's comments on both attacking NATO and seeming to give them a free pass on Crimea.

If I could turn now to the other battle with an U.S. ally, this being the tariff battle. Canada retaliated just this week with billions of dollars in its own trade sanctions against the U.S. while Trump continues to say be patient because it takes time to change a global trade system.

Here is what Commerce Secretary Wilbur Ross added to that message for the president. Have a listen.

(BEGIN VIDEO CLIP)

WILBUR ROSS, SECRETARY, COMMERCE DEPARTMENT: There's no bright-line level of the stock market that's going to change policy. The president is trying to fix long-term problems that should have been dealt with a long time ago.

(END VIDEO CLIP)

SCIUTTO: It sounds like the president's Commerce secretary there and long-time friend is saying that even if this trade war tanks the stock market, policy stays the same.

SPERLING: OK. So now I'm going to surprise you. You know, there are instincts in their trade policy I support. I'm on the board of a steel company. I believe in strong U.S. steel industry. I believe on us getting very tough on China. And I don't believe you should make long-term public policy based on the fluctuations of the stock market.

However, doing what we're seeing is a president who's trying to achieve this in a way that is erratic, reckless, and ends up leading to retaliation that is just putting us in a weaker position. Let me give you an example. A smart, tough strategy would be to unify all of our allies against China on tech transfer. Unify them against China on reducing their excess capacity for steel. Instead of us coming to the table with the strength of everybody behind us, we're picking fights with Canada. We look like a joke when we suggest there's a national security risk with our best friend, Canada. So now we have retaliation from Canada, of all places. We have the rest of the world looking at us and just seeing an erratic type of situation. And really what Trump is doing is saying to other leaders, I'm going to put you in a situation where unless you're willing to be humiliated before your publics, you're going to have to retaliate. Now you're going to see people unnecessarily being hurt, not because they're bearing a little pain for a smart, coherent, tough trade strategy, but they're innocent victims. Like soybean farmers who could get hurt terribly if China retaliates. And if it was retaliation for something that was well planned, conceived, brought all our allies together, maybe you say, tough it out, we're going to win in the end. This just looks like a president who can't shoot straight. Now you're starting to see the ricochets and the retaliation hurting for a lot of innocent workers from --

(CROSSTALK)

SPERLING: -- from soy farmers to others.

SCIUTTO: Let me ask you this. Has anyone ever won a trade war?

SPERLING: Well, I think you're right. You can win being tough. You can win taking a tough position. If the United States says to China, seriously, you do half of the steel production in the world, you've got more excess capacity than a country like United States has capacity, you've been promising to bring that down, we're going to all unify against you. That is a smart, tough policy. You're bringing the world with you, against China, on technology transfers, on excess capacity.

(CROSSTALK)

SCIUTTO: But that's not the way -- the thing is, to your earlier point, it's not just against China. The president is fighting these kinds of individual skirmishes with everybody on this. What's happening is they're now reacting in kind with reciprocity. Right?

SPERLING: That's right.

[13:45:03] SCIUTTO: We put tariffs on 300 billion bucks, they put tariffs on 300 billion bucks. You're an economist. Has that kind of basically game of chicken ever worked when it comes to trade policy?

SPERLING: You know, this kind of reckless trade war does not work. It's just as you say, when you put somebody in a situation where they're going to be humiliated unless they retaliate, they're going to retaliate. What you're seeing is Canada, who should be our close friend we're working with, actually, you know, putting $12 billion of tariffs on us. So you're putting people in situations where they have no choice. Then what does Trump do, the president do? He ups it. What are they going to do? They up it. That is the kind of tit-for- tat trade war that never works, that only hurts innocent workers, and will end up hurting the people of the United States. And I am more concerned about that than I am about the fluctuations of the market. You know, there was an analysis I think in the "Wall Street Journal" suggesting that a typical soybean farmer could lose over 80 percent of their income. Again, if this was for a noble cause, maybe they suck it up for a little while. But just because the president is engaged in a kind of erratic, egotistical kind of macho tit-for-tat, that's not a good reason to have innocent, hard-working Americans losing their jobs and their livelihoods.

SCIUTTO: Gene Sperling, thanks very much for cleaning it up.

SPERLING: Thanks so much.

SCIUTTO: Well, another week, another scandal involving Scott Pruitt. This time, about a secret calendar to hide any controversial meetings. So when would enough be enough for the embattled director of the EPA?

And CNN has uncovered evidence that Puerto Rican officials tried to deny an epidemic stemming from a water-borne illness in the wake of Hurricane Maria. Details on that story are next.

(COMMERCIAL BREAK)

[13:51:23] SCIUTTO: Add to the list -- and it is a long one -- another controversy surfacing for embattle administrator of the EPA, Scott Pruitt. This time, an EPA whistleblower is calling him out about an alleged secret calendar he kept.

Joining me with the details of the latest scandal, CNN politics reporter and editor-at-large, Chris Cillizza.

So a secret calendar. What was he trying to hide here?

CHRIS CILLIZZA, CNN POLITICS REPORTER & CNN EDITOR-AT-LARGE: We don't know exactly, Jim, because the truth of the matter is these are public records and, remember, he is paid by taxpayers. So let's go to what we're talking about here. This is a whistleblower who says Pruitt kept a calendar, one public, one secret. There were things left off that included controversial meetings we'll go through. More than two dozen omitted events, meetings, et cetera.

Let's go to the screen. Remember, these are meetings not on the public calendar, but the secret one. Cardinal George Pell, he was charged with sexual offenses shortly afterwards. You could understand maybe why Pruitt would want that off. But again, if he met with them, it's a public-right-to-know issue. Kellyanne Conway, we know she's a counsel to President Trump. And then Joseph Craft, the CEO of a major coal company. So if you head the EPA, being the CEO of a major coal company, you would want to know if the head of the EPA met with someone like Joseph Craft.

On Monday, Scott Pruitt was having lunch and was confronted by someone, which we seen a lot of lately. Jim, let's play a little bit of that audio.

UNIDENTIFIED FEMALE: I just wanted to urge you to resign because you are doing harm. This is my son. He loves animals --

(END VIDEO CLIP)

CILLIZZA: So he did not resign obviously, Jim.

But the truth of the matter is this latest secret calendar that we've gone through is just the latest in a number of Pruitt's sandals. I won't read all these, because we don't have an hour-long show, but the truth of the matter is this is a massive number of things. And these are not little things. Over and over again, using his office to help himself and other people. It is a repeated pattern. Again, this just keeps going.

Back to you, Jim.

SCIUTTO: Chris Cillizza, it is a long list. Thanks very much.

Oprah Winfrey revealing why she will not consider a 2020 presidential run. Details on that story are next.

(COMMERCIAL BREAK)

[13:56:50] SCIUTTO: Hiding a deadly outbreak. CNN has obtained new evidence that there was an outbreak of deadly bacteria that spread through the floodwaters in Puerto Rico after Hurricane Maria, but that the government denied was happening.

I want to bring in Leyla Santiago. She's been following this story.

Help us understand this. There was a deadly outbreak but the government didn't want that news to get out?

LEYLA SANTIAGO, CNN CORRESPONDENT: Jim, let's go over what we found. CNN has identified 26 cases of Leptospirosis deaths in the months after Hurricane Maria, and Leptospirosis, as you mentioned, it is a bacteria illness. It spreads through soil and water. And so when you see the flooding that we saw after Hurricane Maria, it is not uncommon to have that. That said, it is rare for it to be so deadly.

So let's put it into context. With 26 cases we have found through that database that we have been searching through, but in the previous year, 26, that is more than twice what we saw the previous year. And when we spoke to medical experts, they told us, that should be enough to call it an outbreak. Those 26 cases should have been called an outbreak, according to expert, and yet Puerto Rico, the government of Puerto Rico is refusing to do so. And the official Hurricane Maria death toll only has four Leptospirosis cases listed on that death toll.

Now, we have been digging through this database, that list of 26 cases. After we sued the government and won, a judge ordered them to release this to us. That's where we found this information. But we've been questioning that death toll for months now. Last year, our investigation revealed that the death toll could be nine times what the government was reporting after we spoke to funeral directors. A Harvard study also is questioning it, saying it could be 70 times more than what the government is reporting right now. Because remember, the government still reporting that the official Hurricane Maria death toll is 64.

Now from the government stance, they say they have commission an independent review from George Washington University and they are waiting for those results until they make any changes to the death toll.

[14:00:04] SCIUTTO: And of course, if you are hiding the truth, the question is, are the people in need getting help.

Leyla Santiago there. She's been following this story for such a long time.

Thanks very much. That is it for me today.