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THE LEAD WITH JAKE TAPPER

Dow Plunges; Republican Party Division; Controversy Over Detained Sailors; Hillary Clinton Loses Her Lead in Iowa, N.H. Aired 4:00-4:30p ET

Aired January 13, 2016 - 16:00   ET

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


[16:00:10]

JAKE TAPPER, CNN ANCHOR: It turns out Donald Trump, after all, is the great uniter.

THE LEAD starts right now.

Donald Trump trash-talked by President Obama, and then, even more shockingly, by his own party, as Senator Ted Cruz goes full Johnny Reb, accusing Trump of having New York values.

Adding insult to insult, Iran frees 10 U.S. sailors, but not before getting plenty of footage of them being arrested and apologizing. Was this a more hostile act than the White House would like us to know?

Plus, "Shawshank" had Rita Hayworth, and text messages reveal El Chapo's fascination with a different actress, one that may have led to the drug lord's unraveling.

ANNOUNCER: This is CNN breaking news.

TAPPER: Good afternoon, everyone. I'm Jake Tapper.

We're going to begin with some breaking news in our money lead, another rough day on Wall Street, U.S. stocks down, continuing the same pattern from last week, the Dow plunging more than 350 points before the closing bell you're hearing right now.

Let's get right to CNN business correspondent Alison Kosik in New York.

Alison, what drove today's loss?

ALISON KOSIK, CNN CORRESPONDENT: Jake, it's not just the Dow plunging over 300 points. It's the S&P 500 entering correction territory for the first time since September, crossing below that key 1900 level. That's a psychological level. A correction is when you see these indexes drop 10 percent from a recent high.

Now all three indexes are in a correction. Add on the fact that companies right now are in the process of reporting their profits, they're handing in their report cards to Wall Street, and the worry is, is that the news is not going to be good. Also, you're seeing companies brace for the fact and investors brace for the fact that this could be the first recession in earnings, the first back-to-back decline in earnings, in profits for companies since 2009.

Pile on oil prices falling below $30 a barrel during the session today, and you have got a ripe recipe for stocks to fall as well. Look, the mood is really sour on Wall Street. They're calling conditions oversold, Jake, but the problem is even when they rally, even when you see the green arrows, you don't see that follow through -- Jake.

TAPPER: Alison Kosik with some sobering news from Wall Street, thank you.

The politics lead now. President Obama's final State of the Union, and it was quite a night, the first time in recent memory that both the president in his speech and the opposition party representative, in this case South Carolina Governor Nikki Haley in her speech, both of them went after a different politician, a major presidential candidate, in this case one Mr. Donald J. Trump.

Nikki Haley, handpicked by Republicans in Washington, warned Americans to tune out the "siren call of our angriest voices." Haley has since made it clear, yes, she was talking about her party's front-runner.

CNN chief political correspondent Dana Bash is with Senator Ted Cruz in Dorchester, South Carolina.

Dana, this is the first time in history that I know of that both the State of the Union and a State of the Union response united to attack a presidential candidate.

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Jake, just add this to the list of firsts in politics in 2016.

But, you know, I talked to an adviser just a short while ago to the South Carolina governor, Nikki Haley, who said that when she was offered this job by Republican leaders in Washington, she said she had one condition, it would be her own, and that the House speaker responded, yes, your words, your ideas.

(BEGIN VIDEOTAPE)

BASH (voice-over): The Republican response is supposed to rally the party. This time this, part made many in the GOP livid.

GOV. NIKKI HALEY (R), SOUTH CAROLINA: During anxious times, it can be tempting to follow the siren call of the angriest voices. We must resist that temptation. No one who is willing to work hard, abide by our laws and love our traditions should ever feel unwelcome in this country.

BASH: Conservative talk radio show host Laura Ingraham called it insane for South Carolina Governor Nikki Haley to use her platform to chide her own party.

LAURA INGRAHAM, RADIO TALK SHOW HOST: This is about intimidating, demonizing and a rather lame attempt to dismantle the growing populist movement in the country. BASH: Conservative provocateur Ann Coulter tweeted, "Trump should

deport Nikki Haley."

But the daughter of Indian immigrants is standing by her decision to stand up against overheated rhetoric on the GOP campaign trail.

HALEY: I can appreciate that they're angry. I said what I believe. I stand by what I believe.

I think that this country is better when we work together and acknowledge the fact that the fabric of America is based on legal immigrants of all professions, of all races, of all religions.

[16:05:03]

BASH: Haley was chosen to rebut the president's State of the Union by Republican leaders in Washington, House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell, both of whom have expressed concern about the direction and future of their party in the wake of Donald Trump's call to temporarily ban all Muslims from the U.S.

The fact that Haley is the governor of the critical primary state of South Carolina means Republican candidates are forced to decide whether to side with her, further illustrating the GOP divide. Marco Rubio threw subtle support behind Haley, saying he was proud of her.

SEN. MARCO RUBIO (R-FL), PRESIDENTIAL CANDIDATE: She did a great job.

(CHEERING AND APPLAUSE)

RUBIO: Here's what I was personally most impressed about. She did it without a single sip of water.

(LAUGHTER)

BASH: Meanwhile, the bromance between Donald Trump and Ted Cruz is officially over. Cruz's lead is shrinking in Iowa. And Trump continues to question if the Canadian-born Cruz is eligible to be president, tweeting today, "Sadly, there is no way that Ted Cruz can continue running in the Republican primary unless he can erase doubt on eligibility. Dems will sue."

BASH: Trump is even playing "Born in the USA" at rallies, and Cruz is no longer trying to kill Trump with kindness.

SEN. TED CRUZ (R-TX), PRESIDENTIAL CANDIDATE: I think he may shift in his new rallies to playing "New York, New York," because Donald comes from New York and he embodies New York values. And, but, listen, the Donald seems to be a little bit rattled.

(END VIDEOTAPE)

BASH: Now, Cruz is set to speak where I am here in South Carolina in a short while. And, Jake, he is coming with a fresh endorsement, Phil Robertson of "Duck Dynasty." And I have to just read to you a small part of what he said his criteria was. He said, one of them, will they kill a duck and put him in a pot and make him a good duck gumbo?

I didn't make that up -- Jake.

TAPPER: Of course not. It's 2016. That makes perfect sense.

Dana Bash, thanks so much.

Let's talk about the rift in the Republican Party with former adviser to Mitt Romney's presidential campaign Phil Musser, who remains -- you have not endorsed anybody in this campaign.

PHIL MUSSER, FORMER ADVISER TO ROMNEY CAMPAIGN: That's right. That's right.

TAPPER: And national spokeswoman for the Donald Trump campaign Katrina Pierson.

Thanks to both of you for joining me.

Katrina, let me start with you.

KATRINA PIERSON, TRUMP CAMPAIGN SPOKESPERSON: Thank you.

TAPPER: You heard Senator Cruz say that Donald Trump comes from New York and he embodies New York values. What do you think Senator Cruz is trying to say there?

PIERSON: Well, I'm not quite sure what he's trying to say, Jake, but I can tell you what I heard. And I heard that those New York values are people that are tough, strong, they say what they mean and they're a little bit brash. And that's exactly what we have seen with Donald Trump. And apparently most of the Republican voters seem to agree that that's what's needed today.

TAPPER: That's not, of course -- I appreciate Katrina's standing by New York values, but what do you think Ted Cruz is trying to suggest when he says that?

MUSSER: Oh, I think we're a month out, right?

TAPPER: Not even.

MUSSER: And there's a lot of -- exactly. Not even. There's a lot at stake here. And so this is not a big surprise. I think everyone needs to probably ratchet down the hyperbole a little bit. Candidates are going to use rhetorical flare to kind of draw contrasts with each other. And this is exactly what Cruz is doing with Trump. Both have run really impressive presidential primary campaigns.

We're going to see a lot more of this sharpness and this back and forth in the next couple weeks, Jake. And I don't think we need to read too much into the daily ticktock on it. TAPPER: Phil, let me stay with you for one second. I want to dive a

little deeper on this new poll which shows Senator Cruz falling back in Iowa. "The Des Moines Register" asked voters if it bothers them, these are Iowa Republicans, if Senator Cruz was born outside the U.S., even though he was born to an American citizen; 15 percent said, yes, it does bother them, 83 percent no.

But 15 percent in a very close Iowa caucus, that's a lot of people.

MUSSER: So, if 124,000 people turn out again like they did before, it is a big deal. If the pie continues to grow, and one of the big questions is whether Katrina's boss, Donald Trump, is going to enlarge the base of people who will turn out in the caucus or whether Senator Cruz will do that.

It's not an insignificant statistic, but remember the thing that people haven't focused on yet about the turnout is that a lot of the late-breaking vote is more of a moderate establishment reliable caucus vote. That's probably 30 percent of what's going to turn out. I doubt that vote puts a premium on this issue.

TAPPER: Katrina, what's the response of the Trump campaign to the fact that Republican leaders picked Nikki Haley, and Nikki Haley in the response went after Donald Trump?

PIERSON: Well, I think your lead-in to this was perfect, Jake, simply because she was picked by the leadership in Washington, D.C., so I think she just continued to toe the line.

And that's what we have been hearing. We have been hearing that Donald Trump is just angry, but Nikki Haley needs to understand that Donald Trump is winning in her state, so apparently there are a lot of people in her state that are angry right now at the state of the nation and the situation around the world.

Donald Trump has already said -- and Nikki Haley even said herself in July that Donald Trump was a supporter. So I think she's just toeing the party line because rumor is she's about to endorse Marco Rubio.

[16:10:00]

TAPPER: Katrina, let me just ask you one other question. Ted Cruz says Trump the fact that he's continually referencing Laurence Tribe, a liberal Harvard law professor who supports Hillary Clinton, that there's something fishy about that.

He's even suggested that that's a sign that the Clinton people are behind Ted Cruz -- I'm sorry -- the Clinton people are behind Donald Trump and want to get rid of Ted Cruz.

PIERSON: Well, you know, this is a person that Mr. Cruz himself even cited when he was running earlier.

But I will say that this is not a brand-new issue that just sort of came up, that he ran into this issue back in 2012, back when no one knew he was a Canadian citizen at the time. And so I think that's putting more pressure on this issue. It's not orchestrated by Mr. Trump or even the Clintons.

This is an issue that's coming up because there is a base out there in the Republican Party that is concerned that since this matter has not been settled by the courts, that the Democrats can and probably most likely will bring a suit.

TAPPER: Phil, last question.

Nikki Haley -- assuming that Donald Trump is not the nominee, Nikki Haley did herself a lot of good you think as a possible V.P. pick?

MUSSER: I think Nikki Haley has been a terrific leader and is a great example of good policy leading to good politics.

Remember, she came from the Tea Party, really. Her rise was ascendant. She's a conservative. She's governed well. Her state has got the right direction, wrong track numbers going in the right place.

I looked at some private polling a couple weeks ago that had her approval with African-American voters at 55-29, repeat, 55-29 with African-Americans. She's wildly popular in her state because she's been a really good governor. She'd be on anyone's short list and I would think even Mr. Trump's.

TAPPER: I don't know about that, but I hear what you're saying.

Katrina Pierson, Phil Musser, thanks so much. Appreciate it.

MUSSER: Thank you.

PIERSON: Thank you.

TAPPER: So, how will Donald Trump respond to the president, to Governor Haley, to Senator Cruz? Find out right here on CNN, as our ERIN BURNETT goes "OUTFRONT" with the Republican front-runner tonight at 7:00 p.m. Eastern.

On the Democratic side of the aisle, Hillary Clinton says she's not nervous about Bernie Sanders, but her campaign's latest moves, well, they might tell a different story. That's next.

(COMMERCIAL BREAK)

[16:16:08] JAKE TAPPER, CNN ANCHOR: Welcome back to THE LEAD.

As of this week, Hillary Clinton's front-runner status for the Democratic presidential nomination is questionable at best. She trails Bernie Sanders in Iowa and in New Hampshire, and her national lead is just outside the margin of error.

Clinton and her team are now going on the attack, going after Sanders on a number of issues suggesting in addition that he cannot win in November.

Today, Clinton's campaign is putting its focus on New Hampshire. CNN's Sunlen Serfaty is traveling with the Clinton campaign. She

joins me now live from Keene, New Hampshire, where President Clinton just wrapped up a rally. That's a beautiful city, Keene.

Sunlen, what's the tone there at the rally with that state's primary less than a month away?

SUNLEN SERFATY, CNN NATIONAL CORRESPONDENT: Well, Jake, I think the tone on the ground here really reflects it is nearing decision time for voters. Hillary Clinton is insisting that she is not nervous about where she stands and about the threat of Bernie Sanders right now. But the focus of her campaign focused so squarely in on Bernie Sanders is sending a different message.

(BEGIN VIDEOTAPE)

SERFATY (voice-over): Hillary Clinton launching an all-out blitz on Bernie Sanders.

HILLARY CLINTON (D), PRESIDENTIAL CANDIDATE: Senator Sanders has some very big ideas, but he hasn't yet told anybody how he would pay for them.

SERFATY: Challenging her rival to get specific.

CLINTON: I've been laying out, you know, very specific policies for months now. And telling people how I would pay for them. I'm asking that Senator Sanders does the same thing. We meet -- we need to move now from generalization to specifics so people can see what the differences are.

SERFATY: The Clinton campaign ratcheting up the pressure, calling it alarming, alleging Sanders is strategically withholding information from voters on issue after issue, to make it through the early state contests.

CLINTON: We have differences on guns, on taxes, on health care. And I think people should have that information before they could go to the caucus or the primary.

SERFATY: Clinton also pressing Sanders in a new TV ad to clarify his position on gun control.

CLINTON: It's time to pick a side. Either we stand with the gun lobby, or we join the president and stand up to them. I'm with him.

SERFATY: Sanders telling CNN's Dana Bash his stance is clear.

SEN. BERNIE SANDERS (I-VT), PRESIDENTIAL CANDIDATE: I stand with the president on gun issues. The idea of expanding instant background checks, the idea of making sure that people who have criminal backgrounds or are mentally unstable should not have guns something I believed my whole life.

SERFATY: Clinton's strategy prompting the Sanders campaign to divulge new details today on how he would pay for some of his proposals. The escalation of their combat comes as a new poll shows Sanders is

closing the gap nationally, on the heels of Sanders taking the lead in recent Iowa and New Hampshire polls.

A possible reason why the Clinton full-court press against Sanders is becoming a family affair.

CHELSEA CLINTON, DAUGHTER OF HILLARY CLINTON: I don't want to empower Republican governors to take away Medicaid, to take away health insurance for low income and middle income working Americans. And I think very much that's what Senator Sanders plan would do.

SERFATY: A charge from another Clinton that Sanders is brushing aside.

SANDERS: As much as I admire Chelsea, she didn't read the plan.

(END VIDEOTAPE)

SERFATY: And CNN's Dan Merica just spoke with former President Bill Clinton following this event here and talked to him about the shifting tone and this focus on really drawing policy distinctions with Bernie Sanders, asked if he was getting nervous, as if this is a sign his wife's campaign is getting nervous.

Bill Clinton said, no, that this is what this phase of the campaign should be about, drawing these contrasts.

So, Jake, again, really mirroring his wife's new argument for Bernie Sanders that it's time to get specific -- Jake.

TAPPER: All right. Sunlen Serfaty, thank you so much.

Joining me now, Hillary Clinton's campaign press secretary, Brian Fallon.

Brian, this week --

BRIAN FALLON, HILLARY CLINTON CAMPAIGN PRESS SECRETARY: Hi, Jake.

[16:20:00] TAPPER: How are you doing, Brian?

This week, Chelsea Clinton went after Bernie Sanders and his health care plan during a campaign event. What do you say to Democrats who say you guys must be pretty worried if you're deploying the candidate's daughter to go on the offense?

FALLON: Well, she was giving a spontaneous response to a question she got asked. But I think that there is a lot of scrutiny that is now coming as the race gets into the closing weeks. There's a lot of scrutiny that's being applied to Senator Sanders' record and policies, so it's perfectly appropriate for there to be a conversation about the policy differences between him and Hillary Clinton.

And on two issues in the last few days, he has refused to say that he regrets his vote in 2005 to immunize gun manufacturers. And last night, he told CNN's own Dana Bash that he would be releasing before Iowa the details of his health plan that includes how he would raise the money to pay for it. And then today on a dime, his campaign backtracked on that statement.

So I think that that's encouraging scrutiny of his -- why he's withholding details on his health plan.

So, as the race gets into these closing weeks, I think those are questions he's going to have to answer.

TAPPER: Let's talk about health care and debates over health care, because I'm old enough to remember those contentious 2008 Democratic primaries when then-Senator Obama went after then-Senator Hillary Clinton for proposing an individual mandate for health insurance. I want you to take a listen to Hillary Clinton's response back then.

(BEGIN VIDEO CLIP)

HILLARY CLINTON: It is not only wrong, but it is undermining core Democratic principles. Since when do Democrats attack one another on universal health care? I thought we were trying to realize Harry Truman's dream. I thought this campaign finally gave us an opportunity to put together a coalition to achieve universal health care.

(END VIDEO CLIP)

TAPPER: So, Brian, in Hillary Clinton's words, it is not only wrong but it is undermining core Democratic principles. Since when do Democrats attack one another on universal health care? Isn't she doing just that now against Senator Sanders?

FALLON: Not at all. There's no difference or distinction in terms of the fact that both Hillary Clinton and Bernie Sanders support the goal of universal health care.

What happened in that 2008 campaign is that Senator Obama put out a plan, then-Senator Hillary Clinton put out a plan. And they had a debate about whose plan was better.

What's happening right now is that Senator Sanders won't put forward any details about how he intends to make good on his plan to achieve universal health care. And the reason for that is clear, because the bill he introduced for 12 congresses in a row pays for his proposal by levying a 9 percent tax on middle class households, including working class middle class people.

And that's an honest distinction between Hillary Clinton and Bernie Sanders. While they both support universal health care and she wants to build on the Affordable Care Act, she thinks that we should look to multimillionaires to pay for her proposals. Bernie Sanders apparently disagrees but he won't own up to it and flip-flopped on his commitment to Dana Bash last night that he would release the details.

TAPPER: OK. But in that 2008 speech that we saw then-Senator Hillary Clinton just give, she faulted Barack Obama for not introducing specifics. And her point was that there was something wrong and un- Democratic, capital D Democratic, to attack a Democratic rival in the primaries on the issue of universal health care.

And that is exactly what Hillary Clinton is doing by going after Bernie Sanders on this issue of single payer health care, not only talking about how to pay for it that you're talking about, but Chelsea Clinton talking about how it's going to be left up to the governors and Republican governors and she doesn't trust them, Hillary Clinton saying he's going to undermine CHIP. He's going to undermine Obamacare.

This is a full frontal assault on Sanders' universal health care proposal.

FALLON: Well, it is true, Jake. We don't back off of this. Hillary Clinton is pretty proud after her lifetime spent fighting for universal health care including as you recall in 1993, helping lead the effort under President Clinton for universal health care. She's pretty proud of the fact that under Obama -- President Obama we've been able to achieve the Affordable Care Act.

And when Republicans are voting 50 plus times to try to repeal it and undermine it, I think she's rightly putting the priority on trying to protect and defend the Affordable Care Act. She wants to go beyond it and address the issue of premiums and co-pays that people still pay.

TAPPER: Uh-hmm.

FALLON: But the idea that we would uproot the Affordable Care Act is a legitimate policy difference as well.

But it's not -- it's not a critique of single payer at all, Jake. The point is that across a vast array of proposals --

TAPPER: Yes.

FALLON: -- Senator Sanders has been willing to pay for them by taxing middle class households. Hillary Clinton's point is, if you care about raising incomes for middle class families, the last thing you should be doing is socking them with a tax increase right off the bat.

TAPPER: All right, Brian, one last question quickly if you could. What do you say to supporters, potential donors, others who say, hey, your campaign looks like you're about to lose Iowa and New Hampshire to a 74-year-old socialist who as Donald Trump points out wasn't even a Democrat at the start of this race. How is that going to happen?

FALLON: I think that this is the tightening that you're seeing in the race in Iowa and New Hampshire is completely natural. Democrats rightly want a competitive primary contest. That's good for the party. It's good for both candidates.

I think there's two factors here that will help us. Number one is when voters consider who's the best candidate to take the fight to the Republicans and make progress as president and actually get things done as opposed to just talking and platitudes, they'll conclude that Hillary Clinton is the best candidate. And then also, I think in terms of the ground game we have built, we're very proud of the organization we have on the ground in both Iowa and New Hampshire.

TAPPER: All right. We'll see. Brian Fallon, thanks so much for joining us. Appreciate it.

FALLON: OK, thank you.

TAPPER: Conversations between "El Chapo" and the Mexican actress that might make you blush. We'll see you the text messages that seem to suggest they might have been more than casual acquaintances.

(COMMERCIAL BREAK)

TAPPER: Welcome back to THE LEAD.

We have some breaking news now in our national lead. It was a brazen attempt to assassinate a police officer sitting in his patrol car, and it's now being investigated as a terrorist attack. Last week, Edward Archer allegedly told investigators he had pledged his allegiance to ISIS and that's why he fired 13 bullets at Officer Jesse Hartnett.