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CNN NEWSROOM

Sell-Off Hits Wall Street; Awful School Conditions; Flint Water Situation; Donald Trump Speaks in Iowa, Cruz Campaigns in New Hampshire; Freed Journalist Jason Rezaian Appears in Public. Aired 9:30-10a ET

Aired January 20, 2016 - 09:30   ET

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


[09:30:00] CAROL COSTELLO, CNN ANCHOR: Alison Kosik, she's also following the story.

As we listen to the bell ring, Alison, take it away.

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: I'd say buckle up and get ready for another rough ride, although there is a report that came out that could keep things from getting less crazy than they usually have. A report came out about inflation at the consumer level, showing that inflation unexpectedly fell in December. As far as Wall Street sees it, and as consumers as well, that fall in inflation is a good thing because it could mean that the Fed would be less likely to raise rates in March.

OK, so the opening bell ringing. We see the Dow down within seconds, down 150 points. Yes, we are seeing stocks plunge. We are seeing oil prices plunge. And, yes, it's great to see oil prices plunge in some ways because consumers get to enjoy the benefits of lower gas prices. But the problem is, at some point oil prices getting to such a low level begin to reach a tipping point where you see it effect the economy as far as jobs go, as far as foreclosures go, as far as defaults on loans goes. That is what's worrying Wall Street.

Carol, before I go, I want to tell you, we are keeping our eye on certain levels today. We don't want to see stocks get down past the lows we saw in August because then we could see a cascade of selling today.

Carol.

COSTELLO: Oh, looking really grim. OK, Alison Kosik, thanks so much.

I want to turn our attention to Christine Romans now.

So CNN Money is calling this "red Wednesday"?

CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: I know. The headlines for how terrible it was going to be were already written by 4:00 a.m. But, look, if you see some of these levels hold that she's talking about, that could be encouraging. And already, you know, we had Dow futures down 380 points, you know, two or three hours ago. This is showing you it's been down 200. So it doesn't look at terrible as many had thought it would be. COSTELLO: That's looking at the glass half full.

ROMANS: I know. I know, But, look, you know, you always ask me what, you know, what you're supposed to do, what are people supposed to do and, look, the number that matters for anybody watching right here is the number of years you have before retirement. The closer you are to retirement, you should always make sure you're not 100 percent in stocks. That's what really matters. For young people, the younger people, they're getting a pull back here to add to a 529 plan, to add to a 401(k) plan. You know, stocks have basically been going up for six years and now you have stocks tumbling down to levels pretty much seen since last -- since last August. If you look at a chart of the S&P 500 over the past year, you can see we're going right back to some of those bad old days back -- last August and those were days where we were concerned about China's slowing growth, right?

COSTELLO: Right.

ROMANS: We were concerned about oil. We were concerned whether that was going to have any kind of effect on the U.S. economy. And I've got to tell you, you still have a jobless rate of 5 percent. You still have auto sales booming. You still have home prices back to 2006 peek. So there are some fundamentals tied to the consumer in the U.S. that are still strong. The U.S. is still the prettiest house on the block. The question is, do all the things happening overseas, I don't know, maybe muddy the picture a little bit?

COSTELLO: We'll I guess we'll have to wait and see.

ROMANS: You're welcome.

COSTELLO: Christine Romans, thanks so much.

I'll be right back.

(COMMERCIAL BREAK)

COSTELLO: All right, a quick look at what's going on down in Norwalk, Iowa, right now. you can see Donald Trump is on the stump. We expect that Sarah Palin will join him shortly. We're going to keep an ear on this and an eye on it and we'll take you back to Iowa as is warranted.

Let's talk about Michigan, though, because there are two crises that are thundering through that state and threatening the very quality of life for tens of thousands of children. Today in Detroit, more than 80 schools have been forced to close. Desperate teaches are calling in sick to call attention to decaying schools and a system that could be inching towards financial collapse. They're trying to send an SOS to President Obama, who will be in town. A short time ago we learned he'll have lunch with Detroit's mayor. That should be interesting.

[09:35:12] The other crisis already demanding the president's attention, though, the governor, now vowing to fix it, the tap water in Flint, contaminated with lead and posing the greatest danger to young children who could develop a lifetime of problems.

Let's begin, though, with Detroit's embattled school system and CNN's Jean Casarez.

Good morning, Jean.

JEAN CASAREZ, CNN CORRESPONDENT: Good morning, Carol. You know, we spoke with the school district and they have been scrambling this morning to notify parents around Detroit that there would be no school. And we're standing right in front of Martin Luther King High School. As you can see, parents must have gotten the word. We haven't seen one student dropped off this morning. But it's 88 out of 97 schools and the district tells me they're still trying to get the numbers of how many students that effects.

And last week when we were here, parents weren't exactly in favor of the sick out because they have jobs they have to go to. And all of a sudden, they have child care issues. They have to have someone to stay with their child while they try to get to work. But the conditions here in Detroit, that is what the sick out is all about. And we saw it firsthand last week. Floors that were buckling, gymnasiums at schools that were closed, swimming pools that were not filled with water. The answers, they say, is for a gym teacher, for instance, to try to make alternatives so children can get some exercise. Well, last night at the State of the State Address, Governor Rick Snyder talked about this situation. He said that Detroit Public Schools are in a crisis and the time to act is now.

(BEGIN VIDEO CLIP)

GOV. RICK SNYDER (R), MICHIGAN: All of us, from state and local officials, education to charitable and civic leaders, parents to concerned citizens, need to work together quickly. The challenges are well known. The alternatives are defined. Now is the time to get something done. Great schools are critically important, both to the city of Detroit and the entire state of Michigan. Let's address this decades' long crisis now.

(END VIDEO CLIP)

CASAREZ: Now here's the challenge. The challenge is, Detroit Public Schools are in $515 million worth of debt because of short-term bond interest, because of providers not being paid, and it's just added up. And they have to take money from the students to be able to pay for that debt and they can't fix the schools.

And we do want to tell you, not all of the schools are in that dire of a condition. And the school district really made that apparent to me last week. But many are. And they have to make the tough choices of what schools to fix, how to do it, and in what order. But, Carol, the reality is, the mayor has ordered all the schools to be inspected by the end of April. The first school to inspected is now under an investigation by OSHA, the Michigan Division of OSHA. And today we understand the mayor will speak to President Obama about the Detroit Public Schools and the crisis that they are in, in this community.

Carol.

COSTELLO: All right, Jean Casarez reporting live from Detroit, Michigan, thanks so much.

Now to the Flint water crisis. Michigan's governor also said he was sorry about that. He said he would fix it. But worried residents, especially those with children, say the damage is done. CNN's Sara Ganim is live in Flint, Michigan to tell us more.

Good morning, Sara.

SARA GANIM, CNN CORRESPONDENT: Carol, we're here along the Flint River. This is really how all the trouble began two years ago, because this river water is highly corrosive and it wasn't properly treated when it was flowing through the pipes to people's homes. Those pipes leeched lead and other hazardous metals into people's water supply and that's how they all began to get sick. Now, last night the governor of Michigan, Rick Snyder, asked the Michigan lawmakers to put $28 million towards handling this crisis for the people of Flint. He also apologized for how state and local officials handled it. Take a listen to what he said to the people of Flint last night.

(BEGIN VIDEO CLIP)

GOV. RICK SNYDER (R), MICHIGAN: Government failed you, federal, state and local leaders, by breaking the trust you placed in us. I'm sorry most of all that I let you down. You deserve better. You deserve to know the truth. And I have a responsibility to tell the truth.

(END VIDEO CLIP)

GANIM: Now, Carol, critics say that $28 million is not nearly enough. Doesn't even come close to even the most conservative estimates of what it would take to actually fix the problem here in Flint. Congressman Dan Kildee telling us this week that the EPA estimates it will take between $50 million and $75 million just to replace the pipes in Flint that are now damaged and still leeching chemicals into -- metals, I should say, into the water. That doesn't include things like early childhood education, nutrition, better healthcare for the people who have been effected by this lead poisoning here in Flint.

[09:40:14] Now, last night, yesterday, the mayor of Flint, Karen Weaver, met with President Obama over the federal response to this issue. And today, Obama's administration is sending a team from the Department of Health and Human Services to be here on the ground in Flint with the people managing the federal response. But the residents here, Carol, are still very angry. They still believe that on many levels they were failed. They were failed by their local government, their state government, their federal government and they say all of this help, it just seems to be coming so late, almost two years after they began drinking this corrosive water.

Carol.

COSTELLO: All right, Sara Ganim reporting live from Flint, Michigan.

Up next in the NEWSROOM, Trump on the campaign trail, on the heels of getting that endorsement from Sarah Palin. Would Trump consider Palin for a cabinet position? (COMMERCIAL BREAK)

COSTELLO: All right, candidates hitting the campaign trail. As you can see, Senator Ted Cruz there on your left. He's in Exeter, New Hampshire, speaking to supporters. And on the right, there's Donald Trump, hot off -- hot on the heels of that big endorsement from Sarah Palin. He's hoping to shore up support among -- support among evangelicals so he can win the Iowa caucuses.

Let's dip in and listen to Donald Trump. We expect Sarah Palin to appear at any time now.

DONALD TRUMP (R), PRESIDENTIAL CANDIDATE: I watch these politicians. I watched a couple of politicians. He was at one or two. And he said, no, I will never leave the race.

[09:45:00] You know what he's already planning. His people are already calling, "Can you hire us please?" And it's one of the -- they're politicians. That's what they do. They talk. All talk, no action. And that is what we don't need, you know.

(CHEERS)

TRUMP: That's what we don't need. In Iowa we have a great CNN poll. I told the other day, I said why don't they ever use the CNN poll? Even CNN doesn't use the CNN poll, because it is too good. Trump 33, Cruz second at 20. So I'm up by 13 points. Nobody ever uses it. So CNN reports and they show other people's polls where it's closer. I say could I ask you -- and by the way they spent a lot of money on this poll and I think their poll is probably better and I think it's more indicative. I think we might even be better than that.

I said, why are you not using the poll that says 33 to 20? Why are you using one that says 21 to 20 and this and that? And they have no answer. You can't answer. You know what the answer is. It's really unfair stuff. It's called welcome to the world of Trump or welcome to the world of being a conservative Republican or welcome to whatever world it is.

But here they are, they pay for their own poll and they don't put it up. So it's a little unfair, but these are minor details, folks. I want to just -- so the polls are looking good and everything is looking good and it's so important. And I stayed here last night. And I actually had a good steak. You have good steak here, and I've always heard that. I had good steak last night. I mean, you should have -- if they don't have good steak, who's going to have steak? If they don't have good steak in Iowa, we have some problems, right? But you do. And it was great.

I want to just say, though, and I said it a little and I alluded to it. Sarah mentioned it yesterday, Sarah Palin came in and she was so great. She was so great yesterday. And so popular. And amazing, actually. And everybody wanted her endorsement. And she just saw what was happening. She said you've got a movement. This is a movement going on. This is beyond what a normal situation is. And seriously, they were telling me, some of these other candidates, they had 9 people and 20 people come in. And even for Hillary, she had very, very few people coming in. And you know, you look at a crowd like this and it's early in the morning and all of that, and something is happening out there. Something really special.

You know, they used to call it the silent majority. And I'm not -- I used to say, well, the silent majority, I resurrected a term. Some people didn't like that term because it was associated with Nixon or it was associated with something. And I don't even care. It's a great term. But it's not really accurate. Because the accurate is the noisy majority. We're really -- I mean, you have to see these people. They go crazy. We go into stadium and they want to rip down the stadiums sometimes. It's amazing. And it's really become the noisy majority. And that is what we have.

We have an amazing group of people that want to just see this country get great and be strong and be smart and not be ripped off with trade and not be ripped off with so many different things. I mean, you look at China. $505 billion, we have a trade deficit. A deficit. What they get, what we get. $505 billion a year. This isn't like in 20 years. This is a year. It goes on. It goes on. And I have some of the great business leaders endorse me. Like Carl Icahn endorsed me, who's a fantastic guy and a fantastic business leader. And when he endorsed, I mean, a lot of other business leaders also want to endorse me. The problem is nobody ever heard of them, but I'm going to use them. Then I said, you don't have to endorse me. What difference does it make? Nobody knows who you are. The guy could be worth $500 billion --

COSTELLO: All right, we're going to break away from Donald Trump. In all fairness, we have to go to New Hampshire and check in with Senator Ted Cruz, Donald Trump's main rival at this point in time, to hear what he's saying. Let's listen.

UNIDENTIFIED MALE: Ethanol, the production of ethanol use is almost as much petroleum. In other words, you've got all the fertilizers ---

SEN. TED CRUZ (R-TX), PRESIDENTIAL CANDIDATE: Can I ask you something, sir?

UNIDENTIFIED MALE: Sure.

CRUZ: What do you understand to be my position on ethanol?

UNIDENTIFIED MALE: I think you were originally opposed to it but then you changed it. No?

CRUZ: So let me answer your question, because I think you're going to be happy with my answer. So let me -- let me get to -- My position has not changed one iota. Which is my view on energy, and we talked about it just a minute ago, is there should be no mandates, no subsidies whatsoever for any energy source, whether ethanol or oil and gas or anything else.

(APPLAUSE)

CRUZ: And I'll point out, I'll tell a story. So right now, I am the only major candidate in Iowa who's taking that position. Right now, my opponents are all attacking me for it. And they are all promising -- just yesterday Donald Trump promised not only to protect the ethanol mandate but to expand it, to have the federal government do even more picking winners and losers by mandating ethanol be a larger part of t he marketplace.

So I'm getting hit literally with millions of dollars of attacks on exactly this issue.

Let me tell you a story, and this is good for the young people, to give you a sense of politics.

[09:50:03] A number of months ago I was in Iowa at an ag summit.. About 1,000 farmers, 1,000 people active in the ethanol industry. We talked about all sorts of agriculture issues, and one of the questions came was the ethanol mandate. And really the purpose of the summit was to get every candidate there to kiss the ring of the ethanol mandate. And every candidate there, including several who had opposed the mandate in the past, did a 180 flip and said, I am for ethanol forever. Except me.

And when I told folks there, is I said, listen. I support ethanol. I support every fuel source. We ought to pursue all of the above; God has blessed America with rich and abundant energy resources. But it shouldn't be Washington picking winners and losers. That's why I filed legislation to phase out the ethanol mandate over five years.

(APPLAUSE)

COSTELLO: All right, we're going to step away. And he's talking about ethanol subsidies, which is very important to Ted Cruz's campaign in the state of Iowa, because farmers depend on those subsidies, some for their livelihood. In fact, the governor of Iowa just came out and slammed Ted Cruz for his position and urged people not to support him. So let's talk about all of this.

With me now, Larry Sabato, the director of the UVA Center for Politics, and New York -- and Errol Louis is also here, the political anchor for New York 1 News and a CNN political commentator. Welcome to you both of you.

So I'll start with you, Larry. And let's start with the endorsement from Sarah Palin for Donald Trump, because, frankly, that's all anyone's talking about right now. Will it help Donald Trump, you think?

LARRY SABATO, DIRECTOR, CENTER FOR POLITICS, UNIVERISTY OF VIRGINIA: Yes. Look, Iowa is a game of inches, Carol. And I think certainly Donald Trump gains some inches. He may have gained a couple of yards. Why is that? Because the Iowa caucuses have really relatively low participation. You're talking about 100,000, 150,000, maybe 200,000 people. It's a state of 3 million.

And the people who participate in the Republican caucuses in Iowa often are associated with the Tea Party and with evangelical Christianity. Well, Sarah Palin clearly has great influence with the Tea Party. And so I think it probably did help him. He's already in a close race with Ted Cruz. Cruz got that double whammy, you mentioned, of Governor Branstad, which may have been the more important shot, at Cruz. Governor Branstad basically telling Iowa Republicans do not vote for Ted Cruz. He didn't endorse anybody. He just said don't vote for Ted Cruz. It was Ted Cruz's worst day on the campaign trail, and therefore a good day for Donald Trump.

COSTELLO: Interesting. So Errol, you heard Ted Cruz -- Senator Ted Cruz standing up for his position, saying he wants to phase ethanol subsidies out over a period of five years. And that's not the only energy subsidies he wants to phase out. So it's all fair, right? Will that make the governor of Iowa any happier?

ERROL LOUIS, CNN POLITICAL COMMENTATOR: Well, now, I don't know that it will. I mean, you know, it's really remarkable, Carol. I was out there a few weeks ago and I didn't realize that, you know, when you're fueling up your car, you can pay, you know, something like $2.10, $2.20 a gallon, or you can buy the ethanol stuff which is about 20 cents cheaper, 20-30 cents cheaper. It was really a remarkable difference, something that people would notice.

So Ted Cruz was always going to sort of be on the outs there and kind of hoping that both on principle and the fact that a lot of people don't work in farming as much as in the past, that maybe he could sort of skate by. I guess that's not going to happen.

But I think something to keep in mind -- and we keep going back to the comparisons of past Iowa caucuses -- it is a game of inches, but it's also kind of an uncertain game. We're 15 days out. And, you know, four years ago when we were 15 days out, Rick Santorum, the eventual winner, was, you know, polling in the single digits. I think he was in sixth place, as a matter of fact. So there's stuff that's going on out there, and until people decide to get in their car and drive to the local firehouse, the local school, or wherever the local caucus site is, you can't really be sure how much of this is going to be influenced by star power, which is the main factor Trump has going for him, and how much by just plain old organizing on the ground, which Cruz has been very diligent about.

COSTELLO: Well, oe thing is for sure, Larry, nobody's talking about, oh, Marco Rubio or Jeb Bush or John Kasich. The focus is right on Donald Trump and Ted Cruz, and that's it.

SABATO: I vaguely recognize those names you just mentioned. I'm not sure who they are. But Errol is -- Errol made a very good point.

[09:55:00] We actually have enough time between now and February 1st for the momentum to change several times. And, in fact, Iowans are famous for shifting in the last 48 72 hours of these caucuses. They could all shift on caucus night, because they're all together. They're talking to one another. They're listening to one another. It's not like going into a polling place and casting a ballot all by yourself. So yes, these things are pretty unpredictable, and that's why we watch them as closely as we do.

COSTELLO: And we'll continue to watch them quite closely. Larry Sabato, Errol Louis, thanks to both of you.

The next hour of CNN NEWSROOM after a break.

(COMMERCIAL BREAK)

COSTELLO: And good morning. I'm Carol Costello. Thank you so much for joining me.

New this morning, freed journalist Jason Rezaian appears in public for the first time since being released from Iran. Last hour, Rezaian appeared with his wife and mother and his brother outside the Landstuhl Regional Medical Center in Germany. Rezaian of course was imprisoned in Iran and part of that prisoner swap.

Let's get right to CNN's Phil Black; he's at the medical center to tell us more. Hi, Phil.

PHIL BLACK, CNN INTERNATIONAL CORRESPONDNET: Hi, Carol. It was, I think you'd have to say, a somber Jason Rezaian that walked out of the hospital building just behind me. He wasn't joyous, perhaps a little pensive, thoughtful. We had been warned in advance that he didn't want to talk publicly just yet, wouldn't be taking any questions, but he stood there flanked by his family, who I think it' fair to say were pretty much beaming, really. His brother, Ali, wife, Yegi (ph), and mother, Mary. This was the core team of people who had fought so hard, so publicly, so long to secure his release. They're obviously very happy to have him here.

[10:00:02] While he, on the other hand, well, he's got a long road ahead of him. He released a written statement at around the same time that he walked out. He talked about being very thankful at all the efforts.