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EARLY START

Campaigns React to Trump Tax Disclosures; Low-Key Clinton Visit to Charlotte; Hurricane Matthew Heads for Haiti, Cuba; Julio Jones's Record 300 Passing Yards Tops Weekend Sports Events. Aired 5-5:30a ET

Aired October 3, 2016 - 05:00   ET

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


[05:00:00] CHRISTINE ROMANS, CNN ANCHOR: Hillary Clinton heads for battleground Ohio but not before grabbing a big endorsement from a superstar in the Buckeye State.

JOHN BERMAN, CNN ANCHOR: All right. Hurricane Matthew is a powerful category four storm now in the Caribbean with the sights set on Haiti, Cuba, Jamaica. What happens after that? Should the U.S. be worried?

Good morning, everyone. Welcome to EARLY START. I'm John Berman.

ROMANS: And I'm Christine Romans. It is Monday, October 3rd. It is 5:00 a.m. in the East.

This morning the tax information that Donald Trump seemed to so badly want to keep secret is secret no more. At least some of it. And now the Republican candidate faces new questions about what he made or didn't make and what he paid or didn't pay. And just how great of a businessman he really is.

The "New York Times" said it obtained three pages from Trump's 1995 state returns that showed Trump claimed a $916 million loss in 1995. He lost $916 million, which the "Times" suggests could have allowed him to avoid paying any federal income taxes at all for up to 18 years. He could have carried that loss forward to wipe out his tax obligations for his future earnings.

Now CNN has not independently confirmed the authenticity of those tax documents both campaigns are reacting to these new disclosures.

CNN's Chris Frates has the latest development.

CHRIS FRATES, CNN INVESTIGATIVE CORRESPONDENT: Hey, good morning, John and Christine. The Trump campaign has not disputed the accuracy or the facts in that "New York Time" story. They put out a statement calling the "Times" and the media in general, an extension of the Clinton campaign.

That statement went on to attack Clinton before finally arguing that Trump had a fiduciary responsibility as a businessman to pay no more tax than legally required.

(BEGIN VIDEO CLIP)

RUDY GIULIANI, FORMER NEW YORK CITY MAYOR: The "Times" fails to point out that he has an obligation as the head of a business to take advantage of and to use the lawful deductions and tax advantages that are available to you. So the reality is this is part of our tax code. The man is a genius. He knows how to operate the tax code.

GOV. CHRIS CHRISTIE (R), NEW JERSEY: And what it shows is what an absolute mess the federal tax code is. And that's why Donald Trump is the person best positioned to fix it. There is no one who's shown more genius in their way to maneuver around the tax code.

(END VIDEO CLIP)

FRATES: And not surprisingly, the Clinton campaign jumping on this. They have been pressuring Trump for months to release his tax returns. They reacted to this story very swiftly. In a statement, campaign manager Robby Mook said, "This bombshell report reveals the colossal nature of Donald Trump's past business failures and just how long he may have avoided paying any federal income taxes, whatsoever. He stiffs small businesses, laid off workers and walked away from hardworking communities. He apparently got to avoid paying taxes for nearly two decades while tens of millions of working families paid theirs."

And that statement ended with Mook again calling on Trump to release his tax returns. So this is not a story line I expect the Clinton campaign is going to let go anytime soon.

John and Christine, back to you, guys.

ROMANS: Yes. No way. All right, Chris Frates, thanks for that.

Time for an EARLY START on your money. So how can Donald Trump lose -- lose $916 million? For Trump losses were a gift that kept on giving. And the bigger the loss, the lower his taxes. The way Trump structured his businesses and all the tax breaks available to real estate developers could have allowed the presidential candidate to reduce his income tax liability to zero.

We don't know which business drove these losses -- this loss or when it occurred. Was it in '95 or maybe before that and just taken in '95? One thing is clear. If the goal was to pay little in tax as possible, one thing working in his favor is that he sets up most of his businesses as limited liability corporations or LLCs. That lets him apply a loss from those business to offset any taxable profits earned from any other businesses.

Plus he's a real estate developer. He could have deducted interest on loans used to finance properties. He's allowed to deduct operating expenses and maintenance costs on his properties. And even though the market value of his property appreciates over time, for tax purposes he's allowed to write off the value of it many years for wear and tear.

Now the Trump campaign said the GOP nominee has paid hundreds of millions of dollars in other taxes, including property, real estate taxes. It also said he has a fiduciary responsibility to his business and his employees to pay no more tax than legally required, although this is his personal tax return.

BERMAN: Yes.

ROMANS: The fiduciary responsibility is only to himself. He doesn't have shareholders.

BERMAN: Exactly.

ROMANS: And there are some really interesting legal analysis this morning in some of the papers that you never bear fiduciary responsibility to your employees.

BERMAN: No. This is his personal returns. This is his personal returns. Not the Trump Corporation return. His own personal return.

All right. This morning, Hillary Clinton, she goes to Ohio, which you may have heard is a pretty important battleground state. She has trailing there in recent polling. She hasn't been there in a while, in weeks, and some people have been wondering whether she's been writing off Ohio. But apparently not. She's got two events there today. And she just picked up the endorsement of a key Ohio resident. That man. Akron's own LeBron James. LeBron James wrote an op-ed for "Business Insider," which posted overnight.

He said, "Policies and ideas that divides us more are not the solution. We must all stand together no Matter where we are from or the color of our skin. And Hillary is running on the message of hope and unity we need."

[05:05:11] This endorsement came after Hillary Clinton struck a more personal note over the weekend. She went to Charlotte in North Carolina to address the recent police shootings there.

CNN's Joe Johns has the latest from Charlotte.

JOE JOHNS, CNN SENIOR WASHINGTON CORRESPONDENT: John and Christine, Hillary Clinton's visit here to Charlotte, North Carolina, after the demonstrations and unrest was scheduled about a week ago but it had to be canceled because the mayor questioned the timing of it.

It was very important for the campaign to get her into the city talking about these issues because this is the largest city in a key battleground state. It's also an issue she's talked about again and again, police use of lethal force. But they also had to strike a tone so as not to attract criticism. They did that by downplaying the trip into the city, not even tipping off parishioners in the church that Hillary Clinton was coming.

When she got here, she spoke from the pulpit. She spoke in a very personal vein and she did not even mention one time the name of Donald Trump.

(BEGIN VIDEO CLIP)

HILLARY CLINTON (D), PRESIDENTIAL CANDIDATE: I'm a grandmother, and like every grandmother, I worry about the safety and security of my grandchildren, but my worries are not the same as black grandmothers who have different and deeper fears about the world that their grandchildren face.

(END VIDEO CLIP)

JOHNS: After that speech here at Little Rock AME Zion Church in Charlotte, North Carolina, Hillary Clinton also met briefly with a group of community leaders to talk about some of the related issues before flying back home. Today she travels to Toledo and Akron, Ohio -- John and Christine.

ROMANS: All right. Joe, thank you.

The Trump tax revelations raising all kinds of questions this morning. We're going to sort through those with CNN Politics reporter Eugene Scott and senior media correspondent Brian Stelter. He's the host of CNN's "RELIABLE SOURCES."

Guys, let's start with taxes here first. I mean, just -- wow, what a bombshell. You know, three of these pages. There obviously must be hundreds of pages of returns. But three pages dropped in a slim, you know, envelope with a return address of Trump Tower to this reporter from the "New York Times." Almost all this cloak and dagger. But really that was the headline of the weekend. Could they be in trouble for publishing that?

BRIAN STELTER, CNN SENIOR MEDIA CORRESPONDENT: The "Times" believes it's on solid ground but depending on who the source is potentially that source can be in trouble. You know, it is a crime to share someone's tax returns without authorization.

The big question, the big mystery is who within Trump world wanted this information released? There's only a few people who would have been involved in the preparation of those tax returns back in 1995. Presumably other people may have had more access more recently. But does Trump has some sort of a leak, some sort of person or mole within his organization?

ROMANS: But to show that year, '95, I mean, with that huge loss, it's -- maybe somebody who wants to show that Donald Trump did not have the Midas touch in business. I mean, that's a big, big loss. And some of the details, I mean, the "Times" went back and talked to the actual tax preparer and confirmed that his tax preparation software did not have enough spaces for such a big loss. He had to go in and type in the 9-1 there to make it --

BERMAN: The software couldn't make up for that much in losses.

ROMANS: Isn't that something? Some of the details is just rich.

BERMAN: So while this was going on on Saturday night, the "Times" posted this article, I don't know, it was like 6:00 or 7:00. I was on my couch, whoa, when I read it. Then Trump had an event in Pennsylvania, Eugene, which a lot of people thought was out there in terms of Trump events. He said stuff that he has never said before, did stuff he's never done before, including -- including questioning Hillary Clinton's loyalty to her husband. Listen to this.

(BEGIN VIDEO CLIP)

DONALD TRUMP (R), PRESIDENTIAL CANDIDATE: I don't even think she's loyal to Bill, if you want to know the truth. And really, folks. Really, why should she be, right?

(END VIDEO CLIP)

BERMAN: Let me just be clear here. That is not normal. That is not something that's done. Questioning the marital fidelity of your opponent in a presidential race with no evidence.

STELTER: None.

BERMAN: Whatsoever. There's really no way to defend that, Eugene.

EUGENE SCOTT, CNN POLITICS REPORTER: Yes, I mean, and this is just days after he made the argument during the debate that he has the best temperament, and that he is not as unhinged or unhinged at all as his opponent tries to promote him or paint him, should I say? How voters will respond to this, I'm very interested in seeing how you would defend something like this. This is a significant allegation.

ROMANS: Well, Rudy Giuliani tried to defend it. He's with Jake Tapper yesterday and said, look, she's running for president, everything is fair game.

SCOTT: Right.

STELTER: What's underappreciated about Donald Trump is that he's an improviser. You know, for better or worse, he's like a character. He plays improv really, really well. He changes the subject, he surprises you with new information. He always has something new to say. And surrogates are doing that as well, Rudy Giuliani, Chris Christie.

(CROSSTALK)

BERMAN: And you don't get a free pass because it's improvised. You don't get a free pass because you're not a career politician. You don't get a free pass because you're not rehearsed. I mean, he said something there --

[05:10:04] STELTER: Look, this is the dark side of him, when we say he's unpredictable, when we say he's entertaining.

BERMAN: Right.

STELTER: This is the dark side of that. There is a very dark side. When he is questioning the integrity of the Commission on Presidential Debates or whether you're talking about election rigging or when he's talking about Hillary Clinton's fidelity to her husband without a shred of evidence. And let's be honest. His audience eats it up.

SCOTT: Right. STELTER: The rally-goers at these rallies eat it up. Love what he is

saying. There is such a disconnect between that crowd that comes to his rallies and many other viewers who are appalled by this.

SCOTT: I was just going to say what surrogates have said and what they have tolerance for is very different from independents and people who don't know yet what they're going to do when this happens. So what they would do in terms of voting for him, I think, remains to be seen. But I can't imagine it would be incredibly favorable.

ROMANS: So much happened this weekend. When you come back, we're going to talk about "Saturday Night Live" and how they did. We're going to talk about the leaked tape as Bernie Sanders is discussing about Sanders supporters and what Hillary Clinton had to say about Sanders supporters. There's just a lot this weekend so don't go away, you guys.

BERMAN: There's a real storm. Not a political storm brewing in the Caribbean right now. Hurricane Matthew is a powerful category storm. A lot of people in its path. Reason this morning to worry. We'll tell you where it's headed.

(COMMERCIAL BREAK)

[05:15:19] BERMAN: Serious concern this morning in the Caribbean this morning with new hurricane watches and warnings posted. Hurricane Matthew is a powerful category four storm heading toward Jamaica, Haiti, the Bahamas, Cuba. The U.S. Navy evacuating about 700 family members of U.S. personnel stationed at the base in Guantanamo Bay, Cuba.

Let's get the latest on the preparations there in the region. CNN's Patrick Oppmann in Santiago de Cuba right now.

And Patrick, getting ready on that island right now.

PATRICK OPPMANN, CNN CORRESPONDENT: Absolutely. The islands across the central Caribbean, John, from Jamaica to Haiti, here in Cuba to the Bahamas. People across the region bracing for a very powerful, possibly catastrophic storm.

Here in Cuba, we've seen workers cutting down trees, boarding up hotels, starting to evacuate people from the low-lying coastal areas that could flood, warning people who live in the mountains that surround the city to be aware of mudslides.

There really is no shortage of preparation that needs to be done and this is, of course, on a country that has a lot of economic shortages and hardships. You go into stores on a good day here and they're seem pretty bare. So there is a limit to how much people can do here.

But talking to residents in Santiago yesterday I was reminded of being here almost four years ago when they endured Hurricane Sandy, a category three when it struck Santiago de Cuba, much less powerful storm that caused a lot of damage, 11 people died in that storm. Millions of damage. So people are aware of the power of the storm and are doing what they can to prepare.

Of course just to the east of me is Guantanamo Bay Navy base. And as you said last night evacuations were completed. About 700 family members of employees of the base were evacuated by military aircraft. That evacuation is now complete. And that base is hunkering down to endure the wrath of Hurricane Matthew -- John.

BERMAN: I was in Cuba for a hurricane in 2004. The regime takes storms very, very seriously, with the leader Fidel Castro was out basically filling sandbags when I was there as well. They like to make a show of preparation.

Patrick Oppmann, for us in Cuba, thanks so much.

Let's get the latest on Hurricane Matthew and the predicted path. Want to get to meteorologist Derek Van Dam.

DEREK VAN DAM, AMS METEOROLOGIST: Good morning, John and Christine.

Hurricane Matthew is still a fierce category four Atlantic hurricane, still churning across the Caribbean Sea. Gusts still in excess of 175 miles per hour as the storm slowly meanders to the north.

What's in its path? Well, we have Jamaica, we have Haiti, as well as eastern Cuba. And the rainfall totals here are impressive, easily exceeding 10 to 15 inches, especially in the mountainous regions. That will cause landslides, mudslides, and flash flooding. So not only a flood threat a concern but, obviously, the extremely strong winds.

We will see deteriorating conditions throughout the day near Port-au- Prince and into the Guantanamo Bay region. And eventually by Wednesday, the islands near the Bahamas will also be impacted by this.

But the big question on everyone's mind, where will this go from here? Will it impact the East Coast of the United States? Still a little too early to tell. Some of our computer models impacting the Carolinas, perhaps. Something we'll monitor for days to come.

Here's a look at your daytime highs for the day. Seventy-four degrees in New York City. Back to you.

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

A baseball legend signs off for the last time. Andy Scholes with this morning's "Bleacher Report." That's next.

(COMMERCIAL BREAK)

[05:23:05] BERMAN: All right. The fourth Sunday of the NFL season saw plenty of big performances. None bigger than one receiver who caught 300 yards in passing.

ROMANS: Whoa. Andy Scholes has more on this morning's "Bleacher Report." Hey, Andy.

ANDY SCHOLES, CNN SPORTS CORRESPONDENT: Hey, good morning, guys.

Safe to say, if you had Julio Jones on your fantasy team, you did pretty well this week. Jones absolutely tore apart the Panthers' defense, hauling in 12 catches for a Falcons record 300 yards. Now Matt Ryan at 503 yards passing. And this is the first time a quarterback and receiver combined for 500 passing and 300 receiving in NFL history. Falcons will win 48-33. Dropping the Panthers 1-3 on the season. Cam Newton actually had to leave this game in the fourth quarter after he suffered a concussion going for that two-point conversion right there.

All right. LeBron James is making it known who he is voting for in November, endorsing Hillary Clinton over the weekend. In an op-ed hosted by "Business Insider" James wrote, quote, "I support Hillary because she will build on the legacy of my good friend President Barack Obama. I believe in what President Obama has done for our country and support her commitment to continuing that legacy."

After 67 years, Hall of Fame broadcaster Vin Scully said farewell to the Dodgers play-by-play booth. Scully calling his final game yesterday as the Dodgers played the Giants.

(BEGIN VIDEO CLIP)

VIN SCULLY, HALL OF FAME BROADCASTER: I have said enough for a lifetime and for the last time, I wish you all a very pleasant good afternoon.

(END VIDEO CLIP)

SCHOLES: All right. Finally for the first time in eight years, the Ryder Cup is coming home. The U.S. beating the European team over the weekend. And this really was must-see gold. Rory McIlroy and Patrick Reed, an epic exchange in their matchup. Check out Rory yelling at the fans, I can't hear you. And then Reed coming right back with another great putt and then he gave Rory the Dikembe Mutombo finger wag.

[05:25:02] But, guys, the picture of the weekend was right here. All of the U.S. players kissing their wives/girlfriends, and check out Rickie Fowler in the middle. I guess he was going stag so he obviously just smiled right into the camera.

(LAUGHTER)

ROMANS: It's like an awkward New Year's Eve when you don't have a date, right?

BERMAN: Poor Rickie Fowler.

SCHOLES: I'll tell you what, I never turn away from football on an NFL Sunday, but I watched golf for quite a bit yesterday because that was really must-watch TV.

BERMAN: No. The McIlroy-Patrick Reed thing was amazing. They looked like they were both enjoying it there which makes the trash-talking OK-ish?

SCHOLES: Absolutely. Right. Absolutely.

ROMANS: All right.

BERMAN: Team golf.

ROMANS: I don't know how you guys consume so much sports information on the weekend.

BERMAN: There's not enough time.

ROMANS: I know. I know.

BERMAN: We need a third day in the weekend every weekend.

ROMANS: I know. All right. Thanks so much, Andy.

BERMAN: All right. 25 minutes after the hour. And this morning, it is the story the political world is talking about. Waking up to the news in the "New York Times." Donald Trump's taxes. At least one year's worth. $916 million in losses.

Did he pay federal income taxes? So many questions. That's next.

(COMMERCIAL BREAK)