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LEGAL VIEW WITH ASHLEIGH BANFIELD

Trump on U.S. Debt; Trump Talks Bill Clinton; North Carolina Responds to DOJ. Aired 12-12:30p ET

Aired May 9, 2016 - 12:00   ET

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


[12:00:00] ASHLEIGH BANFIELD, CNN ANCHOR: Reduction idea that experts say is doable in the business world, but unprecedented and probably impossible in government. Have a listen for yourself to what Donald Trump told our Chris Cuomo.

(BEGIN VIDEO CLIP)

DONALD TRUMP (R), PRESIDENTIAL CANDIDATE (via telephone): So we can buy back debt at a discount. People said I want to go and buy debt and default on debt and - I mean these people are crazy. This is the United States government. First of all, you never have to default because you print the money. I hate to tell you, OK. So there's never a default. But - but the point is, I would - it was reported in "The New York Times" incorrectly, you know, the failing "New York Times" -

CHRIS CUOMO, CNN ANCHOR: That - that you said you would go to creditors and make them take less.

TRUMP: It was reported in the failing "New York Times" and other places that - that I want to default on debt. You know, I'm the king of debt. I understand debt better than probably anybody. I know how to - I know how to deal with debt so - very well. I love debt. But, you know, it's - debt is tricky and it's dangerous and you have to be careful and you have to know what you're doing. But let me just tell you, if there's a chance to buy back debt at a discount, the U.S. - in other words, interest rates go up and the bonds go down and you can buy debt -

CUOMO: Right.

TRUMP: That's what I'm talking about.

(END VIDEO CLIP)

BANFIELD: I want to get some insight now from CNN Money correspondent Cristina Alesci.

This can be somewhat confusing if you don't have a degree in economics. But safe to say, if you're talking about this kind of thing like printing money, defaults not a problem, maybe in the business world that's right. But in the world of governments, the United States government is considered some of the most pristine product in the world. What happens when that gets questioned?

CRISTINA ALESCI, CNN MONEY CORRESPONDENT: Many experts, both on a sovereign debt side, which is what we're talking about when countries issue debt versus companies issue debt, experts both on the country debt and the company debt do not understand what Donald Trump is talking about today because, as you said, what a company issues debt, what you can do is a bondholder or the people that hold that debt could go and renegotiate it because it's an agreement between two private parties. What we are talking about is essentially trying to renegotiate U.S. debt. Well, that's what Donald Trump is talking about. That is a very complex and unprecedented move and it basically blurs the line between corporate and country sovereign debt. It's not the same. It's a horse of a different color.

BANFIELD: And can I also ask you, when Donald Trump talks about, we'll just go and buy back all that debt. He often says, you know, the Chinese owe us and all the rest. If you want to just go back and buy back that debt, they don't have to sell it.

ALESCI: Yes.

BANFIELD: And where are you going to get the money to buy back all that debt?

ALESCI: Well - well, essentially, you'd have to reissue more debt with the very same people who lent you the debt in the first place. So you point out an excellent inconsistency. But here's the thing, Donald Trump is talking about being tough on our trading partners, that he's going to renegotiate these trade deals. And at the same time, you're going to ask these trading partners to take a haircut on U.S. debt? Why would they do that? There's no - there's no reason they would do it.

And, look, the other point here, which is up on the screen, number two is, the negative reaction in the market. If the U.S. says I - we can't - we need to take - we need to pay less than what we owe, which is essentially what Donald Trump is suggesting, the markets would react very negatively. Let's not forget what happened when the S&P, a major credit rating agency, downgraded the U.S. debt for the first time, the markets went crazy, OK?

BANFIELD: Right.

ALESCI: Credit dried up. Now, that was a short-term reaction because people came to their senses and realized, wait a second, the U.S. is going to stand behind its debt. It's not going to try and finagle some deal. So that's why the markets came back. But there would be a very negative reaction, not just on main street, but in the c-suite (ph). These are CEOs who are making decisions on how many people to hire and they're going to be very nervous once credit dries up, once you have any panic in the markets and that's going to potentially make the economy weaker, not stronger.

BANFIELD: It's a little nerve-wracking to think that the full faith and credit of the United States government, and our treasury, is up for negotiation.

ALESCI: Yes.

BANFIELD: That makes, I think, a lot of people get jittery and those jitters, they certainly dribble downhill.

Real quickly.

ALESCI: Yes, Ashleigh, and, you know, this is a real abrupt change from what he said previously about how he would address the debt. Remember, he said he would address the debt in eight years. It would be not a problem because he would eliminate waste and fraud. Now -

BANFIELD: Yes, there was a lot of criticism that that wasn't going to be anywhere near enough as well, but then this on top of that. Cristina Alesci, I think that's just the very beginning of this story. I know you've got your day cut out for you on this one. Thank you for that.

ALESCI: Of course.

BANFIELD: And then CNN Money team as well.

I want to bring in the brain trust, CNN political director David Chalian, senior editor of "The Atlantic," David Frum, and Matt Schlapp, who's the former political director for George W. Bush, currently chairman of the American Conservative Union.

David Chalian, just first to you. A quick reaction I guess of the fallout, because there are a lot of other headlines I still have to get to, but that seems to be regular Monday, trying to juggle very, very big headlines with a lot of people jaw dropped and shaking their heads.

[12:05:04] DAVID CHALIAN, CNN POLITICAL DIRECTOR: Right. I mean, I think that what Donald Trump said about debt obviously to going to get examination. But there are several other policy areas that he ticked through over the weekend that are also going to get examination. His tax policy and what have you, Ashleigh.

What I think we have here is a candidate who is struggling to transition from the victorious moment of vanquishing all of his Republican opponents and emerging as the nominee, into how he wants to proceed as the Republican Party nominee and he's doing that while the party itself is struggling with how to wrap its mind around the fact that where certain quarters of the party are resistant to him, how they deal with Donald Trump as their nominee. Those are happening on parallel tracks at times colliding into each other.

BANFIELD: At times like this morning. Actually, the hour before this program, David, from Bill Crystal, one of your colleagues, was on the air saying that there's about a 50/50 chance that he and others are going to be able to come up with a third party candidate, an ulterior choice, a different choice to the two currently racing, one of them being Donald Trump. And he said a 50/50 chance. And he actually mentioned Senator Ben Sasse from Nebraska. Do you think this is actually possible?

DAVID FRUM, SENIOR EDITOR, "THE ATLANTIC": It's certainly imaginable. Ben Sasse has said he won't do it. And standing up a presidential campaign in a matter of weeks, because that's what would be required, is an extraordinarily difficult thing to do. But if you understand that what is really being talked about here is a way to provide some exit for those people in the conservative world in the Republican Party who can't pull the lever for Hillary Clinton or offended or frightened by a Donald Trump candidacy, giving them a place to go while trying to rescue the downstream Republicans who are in so much danger because of this weak presumptive nominee, then the project makes a little more sense.

BANFIELD: And, Matt Schlapp, the project. I guess you could say that with the most recent announcement, I just mentioned it, there are a lot of headlines to try to chew through today, and one of the more recent ones is that Chris Christie is now going to head up the transition team for Donald Trump. So this is in Chris Christie's hands now. He has to sort of cope with the financial fallout of what our lead story was, the debt issue, and then, of course, the issues with the schism in the party and the possibility for a third party candidate, et cetera. What is Chris Christie going to be able to do with all of this short of taking juggling lessons?

MATT SCHLAPP, FORMER POLITICAL DIRECTOR FOR GEORGE W. BUSH: Well, first of all, this idea that there's going to be a third party candidate is a fantasy. There's already deadlines and dead (ph) like (ph) in big red states like Texas that are right here at the doorstep. They do not have a candidate. And for every conservative, they know what this ends in. If we have another Ross Perot type independent center right candidate, we lose to another Clinton. We've already done this. We know how this ends. If we divide our coalition with another candidate, we will lose and Hillary Clinton becomes the president.

So I think what Chris Christie has to do, as he - as this transition takes place, is simple just do as much as they can to get the number of conservatives and Republicans who are behind Trump to grow. He's not going to get the same numbers that previous nominees have gotten. He's probably going to get less because he's a different kind of a candidate. But let's - let's remember, he got a million more primary votes up to this time than Mitt Romney, who a lot of people think is some kind of savior. He's gotten a million more votes. Our turnout is 63 percent higher, even just to May. By the time we get to Cleveland, he'll be the all-time record holder for the most primary votes. I think we have to be awfully careful when we tell those Trump voters that they're not part of our Republican family.

BANFIELD: Well, those Trump voters were very energized, David Chalian, throughout the primary process. They liked his message. What Matt has to say is absolutely true. The only thing I wonder about, David, is how the message is changing for all of those voters who went to those rallies and heard about, you know, tax cuts and heard about minimum wage and heard about self-funding. Those are three very strong prongs that today are nothing like what they were at those rallies. Now, he's great with sweeping rhetoric, but when it comes down to the final details, will his voters be able to catch up to those details, David Chalian?

CHALIAN: Well, I think of the - of the list you just laid out there, Ashleigh, I think sort of the self-funding piece goes right to the Trump brand, that so many voters I talked to on the campaign trail found so attractive that he wasn't beholden to any special interests. So as he now walks through and hammers out how he wants to raise money for the general election, he's clearly said it's not going to be an entirely self-funded thing. The way he sets that up is going to be very important to not diminish his successful brand in any way.

The other issues like on tax cuts, I think he actually did a pretty good job this morning in terms of explaining himself and sort of untwisting some of the comments over the weekend about whether or not he would increase taxes on wealthy people. He says he wouldn't. He was just speaking about increasing from his initial proposal but that it wouldn't be a net increase of taxes on wealthy people. So I think he can still hold faith with a lot of his voters there.

[12:10:08] But you are right to point out that his voters are going to be looking to see how he maintains his bond with them throughout the general election as he, no doubt, tries to bring in some other people. Matt is entirely right, h e's not going to get the same share of Republicans as Mitt Romney did come election day -

BANFIELD: Yes.

CHALIAN: But he may not need it. He's going to bring new people into this process.

BANFIELD: So - so, David Frum, you know, for those who are upset that maybe things are changing from the guy they believed was different, and not the typical politician who waffles or flip-flops, what kind of a vice president is he going to have to choose? He has said he wants a policy wonk or someone who's really, you know, on the inside and knows how to work Washington, but who would you think could be the person that could help him get through some of the muddling?

FRUM: I think it will take more than a vice president to solve this problem. No one cares who your vice presidential nominee is 15 minutes after you announce it. He - and as - that point about self-funding directs our attention to what is going to be maybe one of the early of the many crises in this campaign. What happens - Donald Trump - supposing Donald Trump, his self-funding has taken the form of loans, which is often reported. Supposing Donald Trump begins to receive donations for federal funds and supposing the first thing - just imagine if the first thing he does with that additional money is not to fund his campaign but to repay himself, the money he put into the campaign, what happens then to his bond with the voters? And what happens then to the image of the Republican Party when this whole thing looks like an exercise in financial engineering? There's going to be crisis after crisis through the (INAUDIBLE). And I appreciate Matt's point about the risks of dividing the Republican vote, but we are in a landscape of risk where there are not good options.

BANFIELD: Well, it's been such a fascinating story to cover. I never quite know what question to ask of whom these days, but I would love to have all three of you back in exactly that same formation. Matt Schlapp, David Frum, David Chalian, thank you, all three of you. Excellent insight.

There is also the Democratic presidential race too, the one that's not getting so many of those headlines today. It is still contested, folks. It's still on. After a break, we're going to look at those primaries that are still to come and the challenger who just will not say no, I'm done. What does that mean for unity in this party?

(COMMERCIAL BREAK)

[12:16:18] BANFIELD: Hillary Clinton and Bernie Sanders are facing off tomorrow in West Virginia's Democratic primary. In the meantime, Clinton is also still facing attacks from that GOP rival, Donald Trump, who's just got her now to fight against and Bernie Sanders, of course. Joining us now, CNN political commentator Errol Louis, along with CNN political director David Chalian, who's back with us.

Guys, I want you to see just what Hillary Clinton is up against. If she thinks Bernie is tough with his rhetoric, this is what was going on at a Trump rally just this weekend. Have a listen.

(BEGIN VIDEO CLIP)

DONALD TRUMP (R), PRESIDENTIAL CANDIDATE: And Hillary was an enabler and she treated these women horribly. Just remember this. And some of those women were destroyed, not by him, but by the way that Hillary Clinton treated them after everything went down.

(END VIDEO CLIP)

BANFIELD: So, Errol, he has indicated, Donald Trump, this this is going to be an off-repeated refrain, the Bill Clinton is connected to Hillary Clinton business of the '90s. And she uses "loose cannon." But which one is a stronger brand if you're campaigning with those two issues?

ERROL LOUIS, CNN POLITICAL COMMENTATOR: Well, when Donald Trump brings this stuff up from the 1990s, what his people have told me is that this is an attempt to acquaint some younger voters, who maybe weren't around for when the impeachment happened, with their version of the facts and their version of Hillary Clinton's connection to it. Whether or not this is going to help them say win women voters or whether this is going to say back the Democrats down, maybe back Hillary Clinton down from seeking women voters, I think it is an extremely unlikely proposition.

On the other hand, I'm not running for president. So Donald Trump wants to try to throw some disruption into what would otherwise be a very standard Democratic play to get women, especially white women, on their side. If he - if it starts to move in the polls, then we'll know he's on to something. If it doesn't move in the polls, I suspect Donald Trump will move on to something else.

BANFIELD: And maybe that something else will be the e-mails, because that controversy doesn't go away until the controversy goes away, David Chalian. And just on "Face the Nation" yesterday, I was pretty surprised, I have to say, when Senator Clinton, Secretary Clinton, said, nobody from the FBI has contacted me about doing any interviewing. It almost sounds as though this it's priority number one. CHALIAN: Well, I don't know that it would be priority number one. I

think priority number one for her is the campaign. But clearly -

BANFIELD: Oh, I meant for the FBI. Make no mistake, David. Heck yes, because they've already interviewed several of her top aides. Huma Abedin having to answer questions. So the fact that she said no one's contacted me, is that semantics for no one's contacted me personally? Maybe they've contacted my campaign or maybe we've tried to set something up, but, me, I haven't had a personal conversation.

CHALIAN: There's an entire cottage industry, as you know, who can parse statements surrounding legal proceedings with the Clintons. There's no doubt that that is true. But I - listen, I read this as saying, she knows her staff has already talked to them. Her campaign went on record last week and said she is more than willing to sit down with any FBI person and answer questions if they want to do a formal interview and cooperate in that way.

The other piece of reporting that CNN had last week on this is that up till now there's yet been no evidence of illegal activity here thus far. So - so with nothing uncovered yet, with her aides having already talked, with her saying that she's willing to talk, you know, at this point I think the burden is on the FBI to wrap this up more than anything about Hillary Clinton. And there's no doubt that Donald Trump will utilize this. He's utilized - he's already been out on the campaign trail talking over and over again how he thinks this entire scenario has sort of made her ineligible for the presidency.

[12:20:02] BANFIELD: So, like I said, she's facing it from two sides at this point and Bernie Sanders is still on the stump against her. Here's what he had to say just this morning on the campaign trail in New Jersey. Have a listen.

(BEGIN VIDEO CLIP)

SEN. BERNIE SANDERS (D), PRESIDENTIAL CANDIDATE: If we can win here in New Jersey and win in California, and win in some of the other states, and if we can win a majority of the pledge delegates, we're going to go into Philadelphia and the Democratic Convention and expect to come out with the Democratic nomination.

(END VIDEO CLIP)

BANFIELD: The chairman of that convention, Ed Rendell, also just happens to be the former Pennsylvania governor, said just recently that the Bernie Sanders supporters are going to have to behave themselves in a recent report because he's going to lose the roll call. So it's tricky to sort of navigate between these kinds of messages, but is Bernie Sanders listening to the likes of Ed Rendell, Errol?

LOUIS: Well, I think Bernie Sanders personally has been in politics far too long not to realize that what Ed Rendell is saying is the most likely scenario for what's going to actually play out step by step at the convention, which is that if you are a challenger, if you are going in and waiting to get your delegate count done publicly, you are entitled to that and you can have your people stand up and cheer, you might even be allowed to give a speech, but then the vote will be over and the convention will move on. And Ed Rendell is suggesting, contrary to what you just played in your clip, that Bernie Sanders is not being quite straight with some of his followers.

The reality is, he would have to win every single delegate in California, he would have to win every single delegate in New Jersey. The polls show him behind by double digits in both states. So, I mean, yes, lightning can strike. The political revolution can arrive. He could sweep every single delegate from here on out, but that's not likely to happen. What's much more likely to happen is that he'll go to the convention, he'll have a chance to make his case, he'll have a chance to make a case to the super delegates, to have all of his delegates counted, to have a demonstration, cheering on the floor, maybe even a speech, but that all doesn't really add up to capturing the nomination. That's really what Ed Rendell I think was saying.

BANFIELD: Yes. But it does give you a lot of oomph when it comes to the party platform.

I got to leave it there, guys. Thank you, Errol Louis and David Chalian. Appreciate your insights, guys.

LOUIS: Sure. Thank you.

BANFIELD: Thank you.

And don't forget, tomorrow, Democratic and Republican voters go to the polls in West Virginia. And Republicans are going to vote in Nebraska. They're still going. They're still going. Presumptive is presumptive for a reason. We're going to cover those primaries all day tomorrow right here on CNN.

And in other news, North Carolina has a four-letter word, a four- letter answer, or I should say a four-word answer. Let's be clear. Definitely not a four letter. A four word answer to the U.S. Justice Department, and that is it, "see you in court." We're going to look at the escalating legal fight over the bathrooms and birth genders issue, next.

(COMMERCIAL BREAK)

[12:27:36] BANFIELD: North Carolina's transgender bathroom war is getting uglier. In about a half hour from now, Governor Pat McCrory is going to give a statement to the media where he will no doubt defend his state's law, a law that bans people from using public restrooms that do not correspond with the gender on their birth certificates. The Justice Department says that is in violation of the Federal Civil Rights Act. So it's feds against state, folks. And the feds gave the governor until the end of business day today to respond. And this morning, that governor on your screen did and, boy, did he do it with a lot of oomph, filed a lawsuit against the federal government. Martin Savidge joins me now.

So, explain what the lawsuit is, Martin, and what this means now for the Department of Justice. MARTIN SAVIDGE, CNN CORRESPONDENT: All right. There's a lot there.

BANFIELD: I know.

SAVIDGE: Initially, what it's designed to do is clearly, North Carolina is trying to buy time and it's trying to buy a victory. Remember, billions of dollars at stake here, potential federal money that could have been withheld. The Department of Justice said that the bathroom bill violated the Civil Rights Law of 1964. North Carolina says, no, that is totally wrong. That this is a gross overreach by the federal government to make such a claim. They also say that transgender is not a protected class and thereby the bathroom bill, the bathroom law that North Carolina has, is not violating any kind of federal law.

Now, they're going to court. Let me read you the quote that comes from the governor on this. "The Obama administration's bypassing Congress by attempting to rewrite the law and set restroom policies for public and private employers across the country, not just North Carolina. This is now a national issue that applies to every state and it needs to be resolved at the federal level. They are now telling every government agency and every company that employs more than 15 people that men should be allowed to use a women's locker room, restroom, or shower facility." That last line there is an emotional trigger to what is otherwise seemingly a civil rights debate. It's going to go before a judge, Ashleigh.

BANFIELD: Yes, it will. And guess what I have in my hands right now, Martin? Right as you are speaking, this was handed to me. And it's a notice from the Department of Justice. We don't always pay attention to the news conferences that they set up. Sometimes they're sort of kind of pro forma stuff. But this one, I can guarantee you, there's going to be something good in here.

[12:30:04] Today, Monday, May 9, 2016, 3:30 p.m. Eastern Time, the DOJ is going to provide an update on a law enforcement matter.