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Economy Adds 157,000 Jobs in July; Trump Slams "Russian Hoax" After Intel Chiefs Warn of Real Threat; Ex-Manafort Deputy Rick Gates Could Testify as Early as Today; Trump Administration Passes Reunification to ACLU; Interview with Representative Ryan Costello. Aired 10-10:30a ET

Aired August 3, 2018 - 10:00   ET


[10:00:00] CRISTINA ALESCI, CNN MONEY AND POLITICS CORRESPONDENT: 37,000 jobs in manufacturing, business services 51,000 and construction 19,000.

Look, at the end of the day, it's also important to note that in this point, like we said in the cycle, we would expect to see a little bit of a slowdown because there aren't that many jobs out there to add. In addition, companies may be nervous about tariffs and the trade war. And we haven't really seen that show up in this report. Now given the news this morning, that might change.

ERICA HILL, CNN ANCHOR: And in terms of the news that we saw this morning from China and those tariffs, what are you hearing? How much concern is there? It was certainly dropped at a rather interesting moment.

ALESCI: So China hitting back. It's showing it's not going to roll over. And this is clearly in response to the administration ratcheting the pressure up earlier this week when it announced that it was going to 25 percent on the $200 billion worth of tariffs. China responding today saying that it's considering hitting U.S. goods between 5 percent and 25 percent tariffs on $60 billion worth of goods.

Clearly China is showing the administration, look, we're not going to take it. And this is not a surprise based on what I'm hearing from administration officials. They don't expect China to exactly roll over. But the president feels strongly that the U.S. has the upper hand because the economy is strong here. And after all, we import more goods from China than China buys from us.

HILL: That said, this is a really wide range of products.


HILL: It's more than 5,000. What kind of things are they targeting here? Seems a little bit of everything.

ALESCI: You're exactly right. So everything from nuts to coffee, chemicals, clothing, fabrics. It runs the gamut here. And you're going to see some of these companies petition the administration and also this puts Republicans heading into the midterms in a tough spot because they're going to hear from constituents in their districts saying, like hey, stand up to the administration. And we may see -- we may see for the first time Republicans actually taking a stand and trying to do something legislatively to stop the administration from imposing these tariffs. So here's where it could get interesting.

HILL: Well, we'll be watching. Cristina, appreciate it as always. Thank you.

CNN's Clare Sebastian joining us now from the New York Stock Exchange. So not a lot of movement this morning. But could we expect to see some more fallout in terms of these tariff threats?

CLARE SEBASTIAN, CNN INTERNATIONAL CORRESPONDENT: Well, Erica, you can bet that tariffs are a bad word down here at the New York Stock Exchange. The traders down here and investors have been watching very closely as this thing has escalated. And the really interesting thing about what has just happened is the hope down here all along has been the administration's view that this is a negotiating strategy, that this will eventually lead China and others to bring down trade barriers, isn't -- clearly isn't working.

China has already retaliated against the U.S. Now it's threatening to do more. So I think the markets are struggling to digest this a little bit this morning along with the jobs report. But certainly they are watching very closely. And we have this earning season already started to see the tariff threat and the uncertainty around tariffs show up in companies' numbers. Large companies have started revising down their outlook and expressing concern about this going forward.

HILL: And we'll continue to see what that reaction is. Clare, appreciate it.

Also want to let you know, we're just hearing from the White House. It will be interesting to see how this affects things. The White House responding to these new tariff threats from China. Instead of retaliating, we're hearing, China should address the long-standing concerns about its unfair trading practices, many of which are laid out in that report.

Sarah Sanders saying this in a statement to CNN's Kaitlan Collins. So we'll continue to watch the fallout there.

Meantime, just hours after President Trump's top intel chiefs made an unexpected show of force, warning Russia is still trying to interfere in our elections, the president downplayed that threat at a rally in Pennsylvania.


DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I had a great meeting with Putin. We discussed everything. Now we're being hindered by the Russian hoax. It's a hoax. OK?

(END VIDEO CLIP) HILL: The president has started his working vacation at his golf course in New Jersey. Kaitlan Collins is near there. She's in Berkeley Heights.

So, Kaitlan, the president once again undermining his own government officials. It's something we've seen before. But boy, what a picture it paints when we saw the five of them yesterday.

KAITLAN COLLINS, CNN WHITE HOUSE CORRESPONDENT: Erica, he certainly wasn't echoing what they had to say yesterday in that briefing where they were very blunt, very candid in their assessment that yes, Russia is still a threat to the United States. And the White House was insistent that it was President Trump who had them come out and talk about election security to reporters. But that doesn't seem to square with what he said at the rally last night comparing that, him calling the Russia investigation a hoax to what they said yesterday.


DAN COATS, DIRECTOR OF NATIONAL INTELLIGENCE: We continue to see a pervasive messaging campaign by Russia to try to weaken and divide the United States.

KIRSTJEN NIELSEN, HOMELAND SECURITY SECRETARY: Our democracy is in the crosshairs.

CHRISTOPHER WRAY, FBI DIRECTOR: Russia attempted to interfere with the last election and continues to engage in maligned influence operations to this day.


[10:05:06] COLLINS: There, Erica, it seems to be a tale of two different White Houses. Certainly offering two different messages. The president in one speech that went over an hour long to his supporters and then his top intelligence chiefs offering that very blunt warning.

Now also President Trump last night was saying that Putin did not want him to win the election. But that also doesn't square with what Vladimir Putin himself said just three weeks ago while standing right next to the president.


TRUMP: I will tell you what, Russia is very unhappy that trump won. That I can tell you.

UNIDENTIFIED REPORTER: President Putin, did you want President Trump to win the election?

PRES. VLADIMIR PUTIN, RUSSIA (through translator): Yes, I did.


COLLINS: So, Erica, we are continuing to see these very two different messages from the president and his own officials, continuing to play out. Something we saw play out right in the immediate aftermath of that summit in Helsinki.

We should also note that the director of national intelligence, Dan Coats, said yesterday that even now he still doesn't fully understand and can't speak about what happened when the president was one-on-one with Vladimir Putin -- Erica.

HILL: Kaitlan Collins with the latest for us. Kaitlan, appreciate it.

Joining us now for more, Steve Hall, CNN national security analyst and retired CIA chief of Russia operations.

You know, when we heard from those top officials yesterday at the White House, we also heard very clearly that there's a pervasive messaging campaign by Russia here. What would the messaging campaign be here in the United States beyond there's a disconnect?

STEVE HALL, CNN NATIONAL SECURITY ANALYST: There's a couple of different things going on here, Erica. One of the things that struck me when I listened to these intelligence professionals -- and by the way, those are the ones you should be listening to. The president deals with the Russia situation on a political scale. He sees it as a threat to his presidency so forth and so on. But in terms of actual national security, you need to listen to the professionals.

So the professionals said that yes, it is -- there is going to be and the Russians are already engaged in attacks on the midterm elections. They're getting better at it. They're more discreet. We found that out when Facebook talked about the pages that they took down but also let us know that it was harder to find those pages. So there's really no doubt that the Russians are still going after us. And what they're looking for, they're looking for those social and political issues that has so polarized the United States.

And they're looking to create greater confusion and greater division in the country that they see or that Putin sees as his main enemy, which is still the United States. So that's really what it's all about at this particular point.

HILL: As they are looking to exploit those divisions, though, there are very clear divisions, as we've seen and sort of been laying out. And especially after yesterday. You have these top intel officials, national security experts and officials and you have the president. With that kind of disconnect, does that embolden Russia? Does it embolden Vladimir Putin?

HALL: Yes. Yes. Absolutely. Because again you've got -- I mean, if you're looking to divide the United States, you can certainly divide people along again some of these social issues that we know are all hot button issues. But when you get actual divisions between, you know, the president of the United States, the commander in chief who is ultimately responsible for national security in this country, and his senior intelligence and national security officials, you know, who are nominated by him, when you get a division like that, that for Vladimir Putin is just really a coup.

I mean, it's a fabulous accomplishment for his influence operations when you get that senior level division. So things are going very well for Putin. And I might add, these congressional delegations that we hear about where you get senators and representatives going over to Moscow when we know that they're currently attacking our country, that's another big win for Vladimir Putin. So it's going really well for him in the win-loss column right now.

HILL: So as he checks -- you know, racking up all of those W's here, for the --

HALL: Yes.

HILL: For the American public, for the American voter who's watching all of this, we heard very clearly yesterday that the top priority is to secure the systems here, to make sure that everything is protected. And yet -- I mean, what would you say to the American voter today? Can they have faith in the system? Can they believe that they are going to be protected come November?

HALL: It's a really tough one, Erica. I mean, you know, the bottom line is, we have to believe to a certain extent that the system has at least a minimal amount of protection. Because what are we going to do? I mean, we can't stop the voting. That would be a complete win for Vladimir Putin. So we have to move forward. Complicated by the fact that it's really a hard job. I mean you know, my heart goes out to those government organizations that are actually trying to secure, you know, the voting. It's really tough.

But there's no doubt that we ought not to be, you know, less than, what, 90 days before midterm elections? We ought not to be talking about, what do we need to do? We need to be talking about implementing the stuff that the -- the measures that ought to have been developed over the past year. But I think it's pretty clear from the signs that we're seeing we're not as far along as we'd want to be.

HILL: That is for sure. Steve Hall, always appreciate it. Thank you.

HALL: Sure.

[10:10:04] HILL: Still to come, it is day four of the Paul Manafort trial under way now. So could his longtime aide Rick Gates take the stand today? Prosecutors meantime detailing how Manafort went from living large to going broke.

Plus the Trump administration says the ACLU, not the government, the ACLU should now be tasked with finding deported parents, parents the government deported after separating the children from them. New details on that just ahead.

Plus a bizarre story out of Washington where police are on high alert investigating the possible abduction of a 12-year-old girl. We are on top of it.


[10:15:02] HILL: As we near the end of week one of the bank fraud and tax evasion trial of President Trump's former campaign chairman Paul Manafort, today could be the day jurors hear from the government's star witness, that's Paul Manafort's longtime business partner, former co-defendant Rick Gates. After laying out some eye-popping evidence to paint this lavish, luxurious lifestyle that Paul Manafort led, including everything he bought with the millions that he allegedly hid from the IRS, prosecutors turned yesterday to the fraud he allegedly committed to get loans when his lobbying business tanked. And that's where testimony resumed this morning.

It brings me to our expert next, CNN legal analyst, former federal prosecutor, Shan Wu.

Shan, good to have you with us here. So interesting to see as we saw this shift, the judge we know in the beginning was not loving all the details about the lavish lifestyle. Now that we're really getting into the nuts and bolts of the bookkeeping, what was there, what wasn't there, folks saying that there was definitely a shift in the judge and how he is even dealing with this. What does that tell you?

SHAN WU, CNN LEGAL ANALYST: That tells me that Judge Ellis is very concerned about keeping the trial on focus. I think he sensibly pointed out that too much focus on very ostentatious lavish lifestyles, I think his comment was it could engender resentment with the jury. And he wants to protect the verdict. If there is a conviction there'll be an appeal, he wants to make sure that the record is a good one.

Now as they move more into the document evidence, really the meat of the case, I think he is more pleased on this going in that direction.

HILL: There's a lot of anticipation, obviously, for Rick Gates, what he will say when he takes the stand. We have a sense, obviously, of what the prosecution wants to get out of him. But it will be fascinating to see what the defense does with Rick Gates there on the stand.

WU: Absolutely. He's critical to both sides. Anything I'm talking about of course is not based on attorney-client privilege information. I represented Rick briefly. And he is going to either be devastating for one side or the other. I think it's a been a very bold move by the defense to really put all their eggs in one basket. They're pinning everything on him. It's very clever really because the prosecution needs to rely on him as being at the center of everything. So by attacking the center, they're able to really attack all aspects of the case without having to necessarily get bogged down in individual details.

It also offers them a further defense, very typically used against immunized witnesses. They're going to be attacking them, but they can also attack Rick through his guilty plea saying, you know, you got a good deal, you'll say anything that the prosecution wants you to say.

HILL: Although to your point, that's something that we would often hear. I mean, that's not new to hear that from the defense.

WU: Absolutely. And --

HILL: No matter the trial, right? I mean, no matter the charges, really.


WU: That's right. That's exactly right. But what's a little bit unusual is they have so many immunized witnesses in this case. So it does give the defense a little bit more of a hook and leverage to use against the prosecution for that reason. And, you know, Rick's a very smart man. I know him a little bit. I think he will do well on the stand. And I don't it's revealing any confidences when I say about his personal style he's not prone towards the ostrich leather.

HILL: Well --


HILL: Nor many of us but, you know, I guess there's a certain market for it and there you have it. As we look at this, as we're all waiting to see what happens obviously today, there are a couple of other headlines that I just want to get your take on here.

Former Trump campaign manager Corey Lewandowski telling CNN, President Trump actually hasn't asked him, but that if he did he would tell him he should not sit down for that interview with Robert Mueller. Surprising to you?

WU: Not surprising. I think any lawyer, any staffer, any handler for the president who knows him is going to be very leery of him sitting down. I mean, one is always cautious with a client sitting down for an interview with prosecutors and FBI agents. But President Trump has shown such an inability to stay on message or stay disciplined that if I were his lawyer, I would absolutely be petrified of that.

HILL: Right. And we know we've heard that, right? We've heard from his legal team in the past. They don't want him sitting down. The president has at least been making the case or sources have been making the case for the president that he really wants to. Is there a chance, too, that that could also be part of the legal strategy, even just putting that out there in the ether? The president really wants to sit down but nobody will let him because that could help him in the court of public opinion.

WU: Absolutely. I think that part of Giuliani's public relations strategy has been working well. I mean, they seem very much geared towards heading off a possible impeachment type of trial. And I think by putting this out there, they reserve the right to say if, let's say, Mueller does not get to interview him, puts out a report, they can say gosh, you know, we wanted to talk, but they were just unreasonable about it. So we never heard our side of the story.

[10:20:04] HILL: We will be watching and waiting with baited breath. Always appreciate it. Thank you. WU: Good to see you, Erica.

HILL: The Trump administration says immigrant advocates like the ACLU, well, they should really find the hundreds of parents who were deported after they were separated from their children. Justice Department lawyers said the government would turn over whatever information it could on the parents who were deported.

CNN's Dianne Gallagher joining us now with more on this. So what's the ACLU's reaction to all of this?

DIANNE GALLAGHER, CNN CORRESPONDENT: You can imagine, Erica, this once again sounds like the government asking someone else to clean up the mess that it made. A lot of this comes from court filings that came through this week where essentially, they were working through how to locate these -- the parents of these children who have already been deported while the children remain in custody because they were separated from their parents under the zero tolerance policy.

Now, look, the ACLU has said, we are eager to help with this. We want to reunite these families. But maintains that the onus should be on the U.S. government because the U.S. government is the one who separated them. And they have more resources.

I want to read a quote from ACLU attorneys here. They said, "Not only was it the government's unconstitutional separation practice that led to this crisis but the United States government has far more resources than any group of NGOs."

Now in this court filing the government actually proposed that they meet every Monday with the ACLU and they can then turn over information to them about parents, about children, what research and abilities they've done to track them down.

But, Erica, the ACLU said that in certain instances, 12 of the parents that they tracked down in their home countries, they had already been contacted by the U.S. government. That once again, as we have seen from the start of this saga here, the government is not communicating with these NGOs and at the same time asking for their assistance.

In all of these reunification efforts when we have been down at the border, down in these communities when they do this, Erica, we have watched these NGOs and these volunteer organizations kind of pick up the slack and take the lead when the government appears in many cases to be doing the bare minimum.

Now according to testimony, there are still more than 500 kids who remain in custody, at least 400 of them, according to court supplemental filings, they have parents who are outside of this country. So there is a lot of work still to be done.

And Erica, according to the ACLU, the government has resisted giving them entire case files. So it makes it even more difficult to work with them on this. Again, they're saying that there is red tape and that there is a lack of communication which is making this even more difficult as deadlines start to come closer and pile up. HILL: Right. Yes, but don't worry, they're going to meet every month

-- I mean, every week, rather, and they'll get an update so I'm sure it will all get worked out. It is remarkable once again.

Dianne, appreciate the reporting. Thank you.

Still ahead this hour, the president steps up his attacks on what he now calls fake, disgusting news while repeating claims that have no apparent basis in fact.


[10:27:44] TRUMP: They can make anything bad because they are the fake, fake, disgusting news.


HILL: President Trump continuing to wage his war on the free press during a rally last night. The president does get one thing right there. Fake news is bad. It hurts all Americans. Facts, accuracy, they matter.

The president last night also touting an industry that is near and dear to Pennsylvania where he was, steel.


TRUMP: We're putting our steel workers back to work at clips that nobody would believe. Right? U.S. steel is opening up seven plants.


HILL: That sounds pretty great. So where are those seven plants? We asked U.S. Steel. In a statement to CNN the company didn't deny the president's claim but also did not confirm his statement that seven new plants were opening up saying only that the openings of new mills would be, quote, "publicly announced if they happened."

Joining me now, Republican congressman from Pennsylvania, Ryan Costello.

Sir, good to have you with us. So U.S. Steel of course is based in your state. Do you know anything about these seven plants, any announcements you want to share with us?

REP. RYAN COSTELLO (R), PENNSYLVANIA: I don't have any announcements on that front. I do -- I mean, let's be honest. I hope that we do hear an announcement from U.S. Steel but I don't know of anything. No.

HILL: So what we heard from the president then at this point, we don't know that that's actually happening?

COSTELLO: Yes, I have no way of -- I don't know that. I have no way of knowing that. HILL: There was a lot of talk understandably yesterday after we saw

and heard from five officials, of course, in the White House briefing room about where things stand in terms of Russia trying to interfere in U.S. elections. And we were told very clearly, this is a top security priority for all of these officials for these various departments and agencies.

When it comes to lawmakers, what we've seen in terms of that threat, we know in the Senate Republicans blocked a Democratic amendment that would ramp up election security. And in the House, Democrats tried to add an amendment to a bill last month for election security funding. Republicans voted against it. Is this -- is election security a priority for Republicans?

COSTELLO: Election security is a priority for Republicans. It's a priority for everyone. I thought that the press conference yesterday with --