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EARLY START

Ohio 12 Special Election Too Close to Call; Star Witness Grilled; Firefighters Gain Ground; Trade War Ramps Up. Aired 4-4:30a ET

Aired August 8, 2018 - 04:00   ET

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


(BEGIN VIDEO CLIP)

[04:00:20] TROY BALDERSON (R), OHIO CONGRESSIONAL CANDIDATE: I'd like to thank President Trump.

(CHEERS AND APPLAUSE)

(END VIDEO CLIP)

PHIL MATTINGLY, CNN ANCHOR: The Republican candidate declares victory, the president takes credit, but the numbers show Ohio's special election is still too close to call.

CHRISTINE ROMANS, CNN ANCHOR: Paul Manafort's lawyers grill the prosecution's star witness, painting Rick Gates as a cheater and a thief who cannot be trusted.

MATTINGLY: Firefighters gained some ground on the largest wildfire in California history. The battle is far from over.

ROMANS: As promised, the Trump administration ramps up the trade war with China, slapping new tariffs on $16 billion worth of imports, chemicals, electronics, here we go.

Good morning and welcome to EARLY START. I'm Christine Romans.

MATTINGLY: And I'm Phil Mattingly, in for Dave Briggs. It's Wednesday, August 8th, it's 4:00 a.m.

And if you're still waiting for Johnson County returns in Kansas, guess what? We have a fresh two hours of news.

ROMANS: Awesome!

MATTINGLY: Can't wait.

All right, if Ohio's 12th district is any indication, a blue wave may be coming in November. The special election that many considered a bellwether for the midterms, the race between Republican Troy Balderson and Democrat Danny O'Connor is still too close that call this morning, an encouraging outcome for Democrats in a deep red district, no matter how it plays out in the end. There are still over 8,000 outstanding provisional and absentee ballots that could take days to count. Now, Balderson currently leads O'Connor by less than one percentage point.

Both candidates spoke late last night, O'Connor refusing to concede, Balderson quick to claim victory.

(BEGIN VIDEO CLIP)

BALDERSON: I'd like to thank President Trump.

(CHEERS AND APPLAUSE)

America is on the right path and we're going to keep it going that way. Over the next three months, I'm going to do everything I can to keep America great again.

DANNY O'CONNOR (D), OHIO CONGRESSIONAL CANDIDATE: Because we see division and discord tearing apart our country. We must remember that each and every one of us are God's children and that all of us need to be treated with dignity and respect. And I think we could use a lot more of that spirit in Washington these days.

(END VIDEO CLIP)

MATTINGLY: Now, President Trump taking time out from his vacation schedule to declare Balderson the winner and take credit for it, even though the outcome is not yet official.

The president tweeting, quote, when I decided to go to Ohio for Troy Balderson, he was down in early voting 64 percent-36 percent. That was not good. After my speech on Saturday night, there is a big turn for the better. No, Troy wins a great victory during a very tough time of year for voting. He will win big in November.

I will just note, that's not how early voting or results or momentum actually works, but the president's right to some degree.

ROMANS: And taking credit -- taking credit first thing out of the gate for that. All right. And when we will call it, we will call it for you, but still too close.

Now, several other primaries to tell you about this morning, including another race too close to call in Kansas. Secretary of State Kris Kobach, a hardliner on immigration, who received President Trump's endorsement, locked in a very tight race with the governor there. The official result could be announced later today in Missouri.

CNN projects that Attorney General Josh Hawley is the winner for the GOP primary for Senate. Republicans are hoping he can unseat a Democrat, Claire McCaskill, in November.

In the Michigan gubernatorial primary, CNN projects Michigan Attorney General Bill Schuette will be the Republican candidate in November. Former state legislative leader Gretchen Whitmer will be the Democratic candidate.

And CNN projects John James has captured the GOP nomination for U.S. Senate in Michigan. James is an African-American Iraq war vet endorsed by President Trump. He will face Democrat Debbie Stabenow in November.

MATTINGLY: Also, former Trump campaign chairman Paul Manafort's longtime right-hand man back on the witness stand. Manafort's defense lawyers expected to pick up where they left off yesterday, trying to undermine Rick Gates' credibility in the eyes of the jury. Now, Gates admitted to a host of transgressions. So far, Manafort's defense team has not done much to pin the bank and tax fraud their client is charged with on Gates alone. That part of their cross examination may come today.

More now from CNN's Jessica Schneider.

(BEGIN VIDEOTAPE)

JESSICA SCHNEIDER, CNN CORRESPONDENT: Christine and Phil, Paul Manafort's lawyers went on the attack against Rick Gates on Tuesday. They hammered him with questions that even led Gates to admit on the stand that he had an extramarital affair a decade ago.

But when attorneys accused him of using Paul Manafort's money to fund his so-called secret life, Gates pushed back, saying the money actually came from bonuses. Now, of course, the defense team is doing everything they can to attack the integrity of Paul Manafort's former right-hand man. Gates said he had made some mistakes, but he insisted to the jury that he is now telling the truth.

[04:05:03] And the defense team really wants to establish that Rick Gates was the one who developed that financial scheme to hide money from the U.S. government, not Paul Manafort. Paul Manafort's lawyer even asked the direct question of Gates, did you develop a scheme? And then gates responded, no, I just added some numbers to some reports.

But really, prosecutors have gone to great lengths to show that it was, in fact, Manafort in charge. At the end of Gates' direct examination, prosecutors were painstaking to show the process where Manafort asked Gates on occasion how to add information to a PDF document, and when Gates said that when he got the document back, Manafort had actually changed some of the numbers, falsifying some of their financial reports.

Of course, Rick Gates was a close associate to Paul Manafort for 12 years, but now he's flipped, he pleaded guilty, and he's telling all he knows to prosecutors. So, it will be interesting when he is back on the stand for more cross examination this morning -- Christine and Phil.

(END VIDEOTAPE)

ROMANS: All right. Jessica, thank you for that.

Legal woes multiplying for Michael Cohen. "The Wall Street Journal" reporting President Trump's former lawyer and fixer is now under investigation for tax fraud. Sources tell "The Journal" the federal prosecutor in Manhattan is looking into whether Cohen underreported income from his taxi medallion business. The taxi licenses yielded hundreds of thousands of dollars over the last five years.

"The Wall Street Journal" also reporting federal investigators are looking into possible fraud against the bank that financed Cohen's taxi medallion business. Cohen has not been charged with a crime, and "The Journal" reports he previously denied wrongdoing.

MATTINGLY: Firefighters are struggling to contain the largest wildfire in California history. At this point, the Mendocino Complex Fire has scorched nearly 293,000 acres, 75 homes have been destroyed, and the fire at this point only 34 percent contained.

Now, firefighters are up against a myriad of issues here, but chief amongst them, hot, dry, and windy conditions.

CNN's Stephanie Elam has the latest from Mendocino, California.

(BEGIN VIDEOTAPE)

STEPHANIE ELAM, CNN CORRESPONDENT: Christine and Phil, we are standing in the midst of some of the devastation from the Mendocino Complex Fire, which is actually two fires that started about the same time, burning near each other here.

And you can see how hot this fire got. The devastation here, even in this rural community, you can see that it has really ravaged some of the properties that are here.

And just to give you an idea of how bad the fire season has been, if you go down just a couple of blocks from where we are, there's another building that's burned down. You might think it's from this fire. It's actually from a different one. All in all right now, there are some 17 fires that are burning in the state.

And just to give you an idea of how bad this fire season has been with this one being the largest fire in state history at this point, some 550,000 acres of land that had been burned in the last three weeks because of wildfires.

And, Phil and Christine, fire season is far from over here.

(END VIDEOTAPE)

ROMANS: Yes, that's right.

All right. Stephanie Elam, thank you.

President Trump is claiming without evidence, California's environmental regulations have worsened the fires raging there. The president tweeting this: "California wildfires are being magnified by the bad environmental laws which aren't allowing massive amounts of readily available water to be properly utilized. It is being diverted into the Pacific Ocean.

Now, state and federal officials and wildlife experts say his claims are false. They say there is plenty of water to fight the flames. There is a debate in California about how much water should go to cities and how much to farmland, but officials say water is simply not being deliberately flushed into the Pacific Ocean.

Now, where the president got that idea, not even the White House can say. While his tweets sometimes correspond to segments on Fox News, that does not seem to be the case in this instance.

MATTINGLY: The tweets speak for themselves.

ROMANS: Yes, that's what the White House says.

MATTINGLY: Always.

All right. Last night, President Trump hosted an informal dinner for some of the country's top business leaders at his Bedminster golf club. The president and first lady welcoming more than two dozen CEOs and their spouses, including the heads of Pepsi, Fiat Chrysler, FedEx and Boeing.

(BEGIN VIDEO CLIP)

MELANIA TRUMP, FIRST LADY: Welcome to Bedminster. It's great to have you here. And we're looking for a great discussion tonight and I just want to thank the president for doing an incredible job and for all of your help.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: The policies of the other administration would have been more regulation and much higher taxes. And what you're witnessing now could never have happened. And growth has taken us out of a lot of problems that have been caused, and you're going to see super growth soon when it's all said, when it's working like a fine-tuned machine. You're going to see some real growth.

(END VIDEO CLIP)

MATTINGLY: That exclusive guest list also included the heads of smaller companies who have been extremely loyal Trump supporters.

ROMANS: All right. The U.S. unveiling tariffs on another $16 billion in Chinese goods, bringing the total value to $50 billion. The Trump administration released its list of 279 products yesterday, targeting things like chemicals, motorcycles, and antennas.

[04:10:00] The 25 percent tariff will take effect August 23rd.

Chinese state media slammed the move overnight, warning that wantonly raising tariffs will only hurt the U.S. Beijing already said it would strike back in equal measure, just like it did last month when the U.S. imposed tariffs on Chinese goods worth $34 billion. Wall Street shrugged off the first round, but U.S. business warned they will raise prices for consumers, especially as the trade spat escalates. The White House is threatening an additional $200 billion in tariffs on Chinese goods.

China plans to hit back with its own tariffs worth $60 billion. The Trump administration says the tariffs are punishment for China's unfair trade practices, like stealing U.S. technology, stealing U.S. trade secrets. Beijing denies those allegations.

MATTINGLY: The street reaction to this has been fascinating, or lack of reaction.

ROMANS: The super growth that the president talked about, that's really -- earnings have been so good because of some of these Trump policies, like cutting taxes. I mean, that's really been the most important here. So, at this point, they feel like the trade war is contained, and there are some who say if you didn't have this trade spat, you'd see stocks even better.

MATTINGLY: Yes. Worth watching. Obviously not stopping any time soon.

All right, Iowa college student Mollie Tibbetts now missing for three weeks. Coming up, why her father believes she's still alive.

ROMANS: And why Secretary of State Mike Pompeo may be headed back to Pyongyang. A live report after this.

(COMMERCIAL BREAK)

[04:15:22] ROMANS: The White House is offering to Defense Secretary of State Mike Pompeo back to Pyongyang for a meeting with Kim Jong-un, in response to a letter sent by the North Korean leader to President Trump.

National Security Adviser John Bolton not ruling out a second summit between the two men, but first he wants to see less rhetoric and more action on denuclearization from the Kim regime.

Let's go live to Hong Kong and bring in CNN's Will Ripley.

And a lot of folks saying, what have the North Koreans done? What have they exhibited in terms of denuclearization to earn a second very high-profile meeting?

WILL RIPLEY, CNN INTERNATIONAL CORRESPONDENT: Well, this from the North Korean perspective -- not launching anything since last November, blowing up their nuclear test site at Punggye-ri, although some experts question what really happened there. They're possibly dismantling their Sohae satellite launch station and they returned 55 sets of U.S. service member Korean War remains.

So, from the North Korean perspective, they feel they've done quite a bit, but what they haven't done, according to the global community is steps towards denuclearization. And yet, the North Koreans are saying that they done enough, they want the U.S. to do something now.

They want gradual sanctions relief right away, not at the end of the process, which the U.S. has said they're going to do only once the nukes are out. That's not acceptable to the North Koreans. And they also want a peace treaty formally ending the Korean War.

We've been saying for a couple weeks. North Korea's foreign minister reiterated that publicly over the weekend and blasted the State Department, saying that the U.S. State Department's stance post summit is not helpful, is not helping them build confidence and could derail the denuclearization talks. But the foreign minister of North Korea also praised President Trump, and said that President Trump has a vision, the North Koreans believe in that vision, and my source telling me the North Koreans want to sit down face-to-face with Trump.

So, now you have John Bolton saying that a meeting could happen, maybe at the United Nations General Assembly next month. We just don't know. They probably haven't set a date or time yet, according to the Trump administration. But it does seem the North Koreans feel they're going to get a more favorable deal if they're face-to-face with Trump, than anyone else, including Secretary Pompeo, Christine.

ROMANS: All right. Will for us in Hong Kong -- thank you, Will.

MATTINGLY: Investigators are trying to identify the remains of a boy found during the search of a New Mexico compound where 11 children were discovered living in filthy, decrepit conditions. Investigators say they recovered the remains of an unidentified child inside the compound on Monday.

Now, authorities raided the compound last week in what initially started as an investigation into a man's alleged abduction of his son last year. County sheriff's officials say the children ranging in age from 1 to 15 were turned over to state child welfare workers. The children found living in squalled conditions with no running water or electricity. Police say they looked emaciated. Five adults have been arrested.

ROMANS: The reward for a missing Iowa college student now over $300,000. Mollie Tibbetts' father says he believes his daughter is still alive.

(BEGIN VIDEO CLIP)

ROB TIBBETTS, MOLLIE TIBBETT'S DAD: I think the longer this goes on, the absence of finding her, that she could be someplace where we can still get her back.

(END VIDEO CLIP)

ROMANS: Rob Tibbetts says he believes his daughter may have gone willingly with someone she knew. His daughter was last seen taking a jog three weeks ago. Wayne Chaney, who lives near the search area, has been questioned by the FBI. He told "The Des Moines Register" he has refused to take a polygraph, saying, I have nothing to hide. He has not been charged in connection with this case.

Mollie's father, Rob, will join us on CNN's "NEW DAY" at 7:30 a.m. Eastern Time.

MATTINGLY: Definitely tune in for that. I think the reward's $300,000 right now? Wow.

All right. The city of Chicago vowing to put hundreds of additional police officers on the streets, the move coming after 66 people were shot over the weekend. Of those, 12 people died. Chicago's police chief says 430 officers are being put on street duty while 200 more will be on patrol over the weekend. Some officers will have their hours extended or vacations canceled. Officials say others are also being reassigned from other duties.

ROMANS: A fighter jet launches a missile by mistake. That's a real bad day --

MATTINGLY: Oops.

ROMANS: -- for that pilot. That story just ahead.

MATTINGLY: Plus, a brand-new Chinese rocket with a need for speed.

(COMMERCIAL BREAK)

[04:23:58] MATTINGLY: An air-to-air missile accidentally launched over Estonia. A search is under way to find the missile, which is believed to have landed perhaps 25 miles north of Tartu. The Spanish fighter jet accidentally fired the missile during an air policing mission. Estonia's prime minister called the incident extremely regrettable. He also called the NATO air policing mission over the Baltic country necessary to Estonia's national security.

ROMANS: China says it successfully tested its first hypersonic aircraft.

It's a big first step forward in aerospace technology that could intensify pressure on the U.S. military. The wave rider uses shock waves in the air generated by its own flight to soar faster than five times the speed of sound. Experts say it can carry nuclear warheads and that its speed and unpredictable trajectory made it nearly impossible for any antimissile defense systems to intercept.

MATTINGLY: And here's the story of the winning bidder.

ROMANS: Well done.

MATTINGLY: And with that, I have done what I said I would never do, and that is sing on live television.

[04:25:03] But more importantly, we now know HGTV is the new owner of "The Brady Bunch" house. The chief executive of the network's parent company, Discovery, said the house in North Hollywood will be restored to its 1970s glory. Architectural genius in that era, I think.

The house was listed at a starting price of almost $1.9 million. Now, former 'N Sync band member Lance Bass took to social media this week to express his disappointment on social media at losing out on the house.

But it seems now, all is forgiven, with Bass tweeting in part: Kudos, HGTV. I know you will do the right thing with the house. That is always my biggest worry. I can smile again.

ROMANS: Gosh, that house iconic. MATTINGLY: Yes.

ROMANS: How much, $1.9 million?

MATTINGLY: That's not terrible, right?

ROMANS: Well, in California.

MATTINGLY: Hey, I couldn't --

ROMANS: You could buy ten houses in my hometown for that.

All right. Up next, all eyes on Ohio with a special election race that's still too close to call.

MATTINGLY: And high drama in the courtroom as the star witness against Paul Manafort is confronted about an extramarital affair.

(COMMERCIAL BREAK)