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INSIDE POLITICS

Ohio 12th District Race; Manafort Directed Gates to Commit Crimes; Gates Met for Peal Deal. Aired 12-12:30p ET

Aired August 7, 2018 - 12:00   ET

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


[12:00:00] KATE BOLDUAN, CNN ANCHOR: A very important day to be handing it off to my friend John King and INSIDE POLITICS starts right now.

JOHN KING, CNN ANCHOR: Thank you, Kate.

And welcome to INSIDE POLITICS. I'm John King. Thank you for sharing your day with us.

It's decision day in Ohio. Voters outside of Columbus picking a new congressman and giving Republicans a good clue as to whether this November will be just difficult or disastrous.

Plus, Rick Gates back on the witness stand after admitting he and longtime partner Paul Manafort routinely broke the law to hide millions made peddling influence. It's a big court test for the special counsel.

And, "Groundhog Day" meets "Law and Order." The president, yet again, urged to curb his Twitter habit, this time after suggesting, yes, his son met with Russians expecting what would have been illegal campaign help.

(BEGIN VIDEO CLIP)

ANTHONY SCARAMUCCI, FORMER WHITE HOUSE COMMUNICATIONS DIRECTOR: You don't have to be a Shakespearian scholar. But when you're out there protesting and the words doth does protest to much, it sends a signal to people, that why are you protesting? If you're right on the facts, you don't need to protest. And so I'm not one of the president's lawyers, but if I was one of the president's lawyers, I would say, listen, if you're right on the facts, and I believe that they are, I'll take them both at their word, let the investigation play itself out. I think what has them riled up is that they -- they feel cornered.

(END VIDEO CLIP)

KING: Back to the president's legal dilemmas in just a moment.

But first today, a giant test, a political test for the president and his Republican Party. Voters in Ohio's 12th congressional district picking a new congressman. Just that this special election is close tells us the 2018 midterms already a steep hill for the president and his party.

A Republican loss, though, might tell us even more. If the GOP can't hold this district, which last elected a Democrat back in 1980, then it's a pretty safe bet Democrats will recapture the House in November. That would not only stall any Trump legislative agenda, but also put investigations, possibly impeachment, on the table.

There are some longer term questions, too. If Republicans keep losing in the close-in, vote rich suburbs, is that just a temporary reaction to the Trump presidency or is it a lasting suburban shift that would spell long-term peril for the GOP? The polls are open and the president offered this early morning tweeted supporting the Republican, Troy Balderson, casting the Democrat as, quote, controlled by Nancy Pelosi, among other things.

That Democrat is Danny O'Connor, who hopes to benefit from anti-Trump sentiment in the suburbs, but smartly prefers not to talk about the president.

(BEGIN VIDEO CLIP)

DANNY O'CONNOR (D), OHIO CONGRESSIONAL CANDIDATE: We're crisscrossing this district talking to voters about kitchen table issues, like paying your mortgage, like having access to a safe and secure retirement, like making sure that we're investing in an economy that works for everyone.

RYAN NOBLES, CNN CORRESPONDENT: That extends to like the Russia investigation, Robert Mueller? You don't hear that over and over again?

O'CONNOR: Barely ever comes up.

(END VIDEO CLIP)

KING: CNN's Ryan Nobles, you see him there, he's in Westerville today, tracking at a precinct there the early turnout.

Ryan, what are you seeing on the ground?

RYAN NOBLES, CNN CORRESPONDENT: John, it's been busy here today. Some of the voters I talked to said that this is about what they would expect for a normal, general election. This odd special election happening the first week in August. They're not accustomed to voting this time of year. A lot of people on summer vacations and the like. But we are seeing a steady stream of voters. The lunch rush just pushing through here in this key Franklin County district.

And, you know, to that point you made about Danny O'Connor and his role as it relates to President Trump, we really pressed him yesterday about the president's role in this race, and he simply just didn't want to talk about. It seems as though he wants to benefit through it by osmosis to a certain degree, doesn't want to attack the president.

Meanwhile, his Republican opponent, Troy Balderson, really embraced the fact that President Trump has been here on his behalf. Vice President Mike Pence also visiting this district as well. He really believes that will lead to an enthusiasm bump for Republican supporters, particularly in the outlying counties as you get further away from Columbus, where the district gets even redder. Balderson counting on the president's support to push him over the finish line.

But there's no doubt that this is a close race. And no one really expected it to be a close race. The state's governor, John Kasich, saying that this should be a slam dunk for Republicans, and it's anything but. The latest polls showing this as a statistical tie. And to your point, John, if Balderson ends up coming up on the short end of this race or even wins by only one or two points, that could really shape the fall midterm elections going forward.

John.

KING: Another (ph) day in Ohio.

Ryan Nobles, appreciate the live reporting.

Let's take a closer look at the district now. You just heard Ryan explain it.

It's the 12th congressional district. You see it right here. It is all red. It's just north of Columbus. And, again, here's one of the things -- some of the things we'll look for tonight.

As Ryan just noted, one of the counties is rural Morrow County. You see Pat Tiberi, he was the incumbent, he resigned to take a job in the private sector, more than 75 percent of the vote in his last election. Up here, this is rural. But notice the vote count. Only about 15,000 votes total in a presidential year. Fewer voters here. They are loyal Republicans. The question is, does the president's support turn them out in big numbers? Troy Balderson needs that tonight. He needs big turnout. He needs numbers something like this up in the Morrow County part of the district.

[12:05:05] Then you start to get closer to the urban areas, but not close enough yet. Delaware County, the second biggest county in the district, vote full (ph). And, look, Tiberi did great there, 72 percent to 25 percent. And, again, here you have more voters. You're starting to get into the more populated areas. Troy Balderson must keep this red tonight. And in these margins, something like this to offset the Democratic votes closer to Columbus. So watch Delaware County tonight.

And then this, Franklin County, where Ryan is right now. This is the biggest county in the district. This is the biggest slice of the district. Not all of Franklin County is in the district, but the slice that is, you see it, it's closer to Columbus. What have we seen during the Trump presidency? Republicans struggling in the closed in suburbs with younger voters and especially with educated suburban women. If this stays red tonight, then the Republicans likely will hold the seat. If this is blue at the end of the night, then Democrat Danny O'Connor has a chance in a seat the Democrats haven't won since the Reagan presidency. So if you look at this, one-third of the votes here in the Franklin County part of the district, why then, oh, why? Is this a gaffe? Is this honesty? This is the Republican candidate on election eve.

(BEGIN VIDEO CLIP)

TROY BALDERSON (R), OHIO CONGRESSIONAL CANDIDATE: My opponent is from Franklin County. And Franklin County has been challenging. We don't want somebody from Franklin County representing us. And it's really important that we move that needle tomorrow, so that it's just back to that whole community thing again. And I could go on and on and on and tell you how important it is to have a community behind you. And that's the only reason I won that primary. And it shocked -- it shocked Franklin, and it shocked Delaware County. It shocked all those counties, the bigger populated area ones.

(END VIDEO CLIP)

KING: Oh, boy.

With me to share their reporting and their insight this day, Catherine Lucey with "The Associated Press," Michael Bender with "The Wall Street Journal," Jessica Wehrman with "The Columbus Dispatch," and "The Daily Beast's" Jackie Kucinich.

Is it a gaffe? Is it honesty? I had a Republican who was involved in this race send me an e-mail that said, our candidate's a dope. You have one-third of the votes in this area. Is this open honesty actually from the Republican candidate, not a gaffe, saying we know the Republican Party is changing and my votes have to come from those rural areas, the less populated areas or else I lose? What is this?

JESSICA WEHRMAN, WASHINGTON CORRESPONDENT, THE COLUMBUS DISPATCH": I think this was probably an attempt for him to get Muskingum County voters out. I mean his -- the state senate district, Troy Balderson's state senate district includes exactly one county from the new congressional district he would represent if he wins tonight, Muskingum County.

That's very rural. It is definitely Trump country. And I think that was his attempt to -- his very inartful (ph) attempt to get Muskingum County voters out.

So I don't know that there was a broader message. I think he just wanted to get his people out. I mean if you look at his FEC reports, for example, his donors, all during the primary, Muskingum County, Muskingum County. So he needed those people to show up. However, Franklin County, you're talking like tens of thousands of voters versus more than a hundred thousand voters.

KING: Yes, flipping the bird at a big third of your voters is kind of interesting. He's lucky he did this the night before the election, not a week before the election, because the Democrats don't have as much time to take advantage of it.

But we always sit here in Washington and say this is going to be a huge, national message. In this case, that's not an exaggeration, right? We're inside 100 days to the midterms. The dynamic starts to lock in at this point. If Republicans lose or just barely eke this out, what does it tell us?

JACKIE KUCINICH, WASHINGTON BUREAU CHIEF, "THE DAILY BEAST": It tells us they have a problem in the suburbs, no matter what. As a Franklin -- as a former Franklin County resident, that's where I was born, or that's where I grew up, the votes there matter. There -- I was talking to a Republican this morning who was talking about those suburban voters that they're worried about and he does -- he said he does know Republicans that are mad at Trump and they're going to cast a vote for Danny O'Connor because they're not happy about where the Trump presidency is going.

But the alarm bells are going to sound. This is a district, I think it's plus seven Republican.

KING: Right.

KUCINICH: If that -- if it even whittles down, this Republican told me, he thinks that Balderson's going to eke it out. That said, even if he wins by 1 percent, 2 percent, though are inroads. Those are inroads and those are alarm bells. And this is a -- these two candidates are not exactly setting the world on fire. They're kind of generic Dem and generic Republican. They're not a lot of -- there isn't the sort of fiery candidates that we've seen in some other places. So the fact that you kind of do have this generic ballot, I think you have a lot of people here in Washington who are sending the money that way to candidates around the country who are keeping a very close eye on this as to where researchers aren't going to go.

MICHAEL BENDER, WHITE HOUSE REPORTER, "THE WALL STREET JOURNAL": And it's going to narrow the window here where Trump is going to be influential or where candidates are going to welcome him.

I -- not to one up you, but I also am a former Ohio resident, (INAUDIBLE), Ohio, and what we're seeing in this race here is a couple of things. I mean one that, as Jackie mentioned, this -- and you mentioned, this candidate has not exactly been setting the world on fire.

We were tracking pretty closely how these candidates were performing at Trump rallies. And we saw, what, four in 12 days, or it's been Trump's busiest stretch. Out of those four -- of those four rallies, he brought up a candidate, each one, and Balderson was by far the least polished and didn't hit his marks as well as the others had. You saw these -- which kind of helps explain that video we saw, you know, his gaffe.

[12:10:05] But, you know, if Trump is going to go to these rallies and go to these districts, he's -- he's going to want to win. And, you know, this one looks as -- like at best a jump ball. And if they come up short, the question is going to be, who's going to welcome Trump into their -- into their backyard?

KING: Right, because you see -- you see -- you see here, this -- you see, this is a great district to look at what I call the shotgun wedding that is the Republican Party under Donald Trump, in the sense that especially suburban women, they find the president toxic. They don't -- they might like the tax cuts. They might like the blooming economy, but they don't like his personal behavior, his tweets and else (INAUDIBLE).

And we've seen that. Alabama has a Democratic senator because of this dynamic in the suburbs. Look back at the special elections throughout 2017 and into this year. But you get out into these white, working class areas, and that's where Trump has brought new voters to the Republican Party.

Ron Brownstein characterized it this way, after the flipping the bird there to Franklin County, I don't know how else to describe it, actually a revealing message for the Trump era GOP, don't you think? The party is now consciously trading suburbs for small towns. The country club for the country. It's the famous Kisnley (ph) gaffe of saying what you really mean. We don't consider those voters who we are anymore.

But -- but, if you just do demographics, that's where they live. The Republican Party can't win in the cities, the urban areas. So their only hope of being competitive in a competitive statewide race, this is the congressional district, but looking forward, how do you -- how can you be competitive if you can't win in the cities and then you can't win in the suburbs?

CATHERINE LUCEY, WHITE HOUSE REPORTER, "ASSOCIATED PRESS": Well, I mean, and you saw with President Trump in '16, he built coalitions that weren't relying on urban areas. I mean in states like Pennsylvania, for example, where Philadelphia and Pittsburgh often dominate. He built a winning coalition there.

So, I mean, I think he has shown some ways to do that, but what's not clear is does it work for anyone else but Trump? I mean Trump found a way to do this. What do we -- but going into these midterms, it's not clear that that's going to work for anybody else.

KUCINICH: Yes, the other thing I wanted to point out, these are Licking County, Franklin County, Delaware County. They're big parts of this district. They all have some of the lowest unemployment rates in the state. So the economic message isn't pushing him -- it might push him ahead, but it isn't having the same resonance that it might because -- in, you know, in other places. And you can probably speak to this better than anyone.

WEHRMAN: Absolutely. I mean you -- 2016 was, in Ohio, in many ways, a vote for economic change. I mean these were people who maybe had felt left out of the global economy to a degree. And Columbus was really sort of an anomaly. I mean they've been -- they've had strong -- a strong economic growth throughout that time. So I think that you really do see sort of that dichotomy of like the Chamber of Commerce Republican versus a more maybe Tea Party or more rural voter in this district. It's -- it's -- I mean it's a very good microcosm, I think, for the rest of the country.

LUCEY: I think the other question, too, is what Republicans stay home. And we're going to see that in this race and also the midterms and looking ahead it's not just who you're turning out but sort of the quiet voters who aren't going to show up.

KING: Right. And do the -- that's a great point there. That's where you've seen a lot of the suburban women factor. They just stay home because they don't like the president.

LUCEY: Yes, they just don't vote.

KING: And this president, who often runs against his own party's congress, can he get voters to come out -- can he get his voters to come out to vote for Congress? That's what -- in those rural areas, it's a fascinating question. In my mind you say, I'm with the president, but I don't care about Congress.

LUCEY: Yes. Yes.

BENDER: Yes, I mean and that -- a big piece of that Trump strategy is -- is sort of relying on a -- on a depressed vote for your opponents. And we -- that seems to be one of the trends here so far post-Trump is Democrats don't seem to be staying home at any of these races.

LUCEY: The one thing Trump has done has energized Democrats.

WEHRMAN: This is a super strange time, by the way, to have a special election. It's August.

KING: Right.

WEHRMAN: And in Ohio, kids are returning to school next week. Now, a lot of families would consider going on vacation this week. So this is actually -- turnout is going to be a little stranger than normal, but I think the energy from the last -- the final days of the election will probably fire it up.

KING: It's a fascinating race. We'll count the votes tonight. We'll come back to it a bit later, show you some of the ad wars.

Up next for us here, though, Paul Manafort's defense team about to get a crack at cross-examining the star witness, but has the damage from Rick Gates already been done?

(COMMERCIAL BREAK)

[12:18:05] KING: Welcome back.

Rick Gates, the key witness testifying against his former boss and partner Paul Manafort, on the stand right now. And evidence backing up one part of his story. E-mails presented in court indicate that Manafort did direct Gates to commit fraud by shifting money their company earned from Ukraine through foreign accounts. Yet Gates told the jury that during that time he stole hundreds of thousands of dollars from his partner, Manafort, by filing false expense reports.

CNN's Shimon Prokupecz, following Gates' testimony and the broader Manafort trail, joins us now live from Washington.

Shimon, take us inside the court. What is the most significant thing happening today?

SHIMON PROKUPECZ, CNN CRIME AND JUSTICE REPORTER: I mean there's been a lot of significant things, John, when you really think about it. Certainly those e-mails. They have direct evidence there by the prosecution of e-mails that show Manafort was directing how the money be moved from the Ukrainians to these overseas accounts in Cypress. And Gates really going over kind of the nitty-gritty details of this scheme, of what Manafort -- how Manafort was involved in it, who the Ukrainians were. This was all about, Gates says, about money that was being paid to them for their campaign -- essentially campaign work that they were doing on behalf of the Ukrainians.

A couple of new things that we did learn certainly was that Gates and Manafort were interviewed by the FBI in 2014 regarding a forfeiture investigation involving the Ukrainians and that Gates says Manafort directed him to go talk to one of these Ukrainians about the FBI interview. Gates says he went to France to do that.

The other thing we learned, that there is an e-mail of a -- from a suspected Russian intelligence official. Now, this e-mail is from 2014, of where Manafort was getting paid, money was being moved from this person. His name is Konstantin Kilimnik. He's been indicted by the special counsel. He's suspected of being this Russian intelligence official. He was moving some of the money, paying Manafort. And that there's an e-mail where Kilimnik and Gates are talking and Gates is saying that Manafort is concerned, that he needs money, he's not getting paid. And Kilimnik writes, this is to calm Paul down, meaning he's going to send him money, he's going to be wiring him money in the next week.

[12:20:12] So certainly little details, but significant here for the prosecution's case.

KING: Shimon Prokupecz, appreciate that. Keep us posted. Pretty soon they move to the cross-examination from the defense. That shall be, to put it mildly, interesting.

Tarini Parti, White House reporter for "BuzzFeed News" joins this discussion now.

Paul Manafort, chairman of the Trump campaign. Rick Gates, deputy chairman of the Trump campaign. This trial has nothing to do with the Trump campaign and that this is conduct before then. It does get you into the conversation about, you know, this is great insight on the swamp, number one. And while Donald Trump -- candidate Donald Trump would have had no way of knowing these guys were involved in illegal activity, it was well-known in town that they were involved in what's considered the more shady part of the swamp, and yet he brought them in.

TARINI PARTI, WHITE HOUSE REPORTER, "BUZZFEED NEWS": Right. And one of the aspects of this, what prosecutors are trying to show, is even though this is not directly related to the Trump campaign, there could have been a certain period of time when Manafort, who was used to a very lavish lifestyle, as we've seen with the, you know, ostrich jackets and whatnot, was short on money. And even though he was working voluntarily for the campaign, he was -- he did have these relationships with Russians and Ukrainians that he could have used in his favor to make some money.

KING: I think that's a great point. "The Atlantic" talks about this as well. Is this something that was handed to the special counsel? The investigation, Shimon just noted, the FBI's been looking into these two going back as far as 2014. When the special counsel was appointed, the Justice Department said, you take this too since it involves some of the same issues. You take this case.

Is it just an isolated case, or as "The Atlantic" puts it, Mueller has shown once he can get a campaign insider talking, what flows is damaging beyond expectations. The question is now whether Gates' testimony represents the culmination of a long and corrupt story, or the opening pages of a much more complicated tale, meaning, can you connect this to the 2016 campaign, or are these just two guys who apparently now, in the case of Gates, admitted lawbreakers and Trump just made the mistake of hiring them?

BENDER: Yes. And a lot of attorneys who are watching this are asking that very question, that -- and if -- and if -- if it gets to the point where Manafort sees a conviction coming, where if it's -- if it's clear that this is happening, then if Mueller can flip Manafort. And a lot of people are sort of speculating behind the scenes that that's what a lot of the motivation here is to try to get Manafort talking the same way he get Gates talking because, as you mentioned, the story is about tax -- or this trial is about tax evasion, about bank fraud. It also tells us a lot about Trump world. It tells us a lot about Washington. And it's just like a -- I mean it's just a fascinating personal story here of a political operative and a mentor and a protege turned against each other.

And, really, some folks think that Manafort's best shot here is today, to basically have his attorneys disembowel his one-time protege on the stand. To just totally discredit Gates as much as possible. It may be their last chance.

But I've got to say, covering the campaign and the start of the White House, Rick Gates is a survivor. He's -- you know, he's deputy campaign manager, but he wasn't really quite the number two, right? You had -- you had -- you had Manafort there. You had the kids. You had the family. Even after Manafort left, you had Bannon, Kellyanne. But somehow Gates just stayed around all the time, into the transition.

One time -- one story I heard was, it was a right-ranking campaign official, there's an issue with Gates. And there was -- face to face, like, I need your badge. You're not coming back in. This is your last day. Next morning at the all-staff meeting, there's Gates sitting at the table, and no one could figure out how he did it. And that was a story about Rick Gates over and over again.

So keep an eye on Rick Gates. He really is a fascinating character.

LUCEY: Well, that seems like a lot of people in Trump land too, they never seem to go away. BENDER: Fair.

LUCEY: I mean I think the other thing we see here also is, it gives us some insight or understanding of Mueller's methodology.

KING: Right.

LUCEY: So -- I mean and this -- learning what we're learning about these two individuals, I mean it shows that the depth of detail we're hearing here, the amount of evidence they have, the way that they're going after this, I mean the big thing I think we've all talked about a lot, and we keep coming back to with this investigation is, we just don't really know the extent of this.

KUCINICH: Right.

KING: Right.

LUCEY: We don't know what Mueller knows, what they have. But this suggests a very deep process.

KING: And to that point, we'll get to more of this a bit later in the program, the preparation, the e-mails, the documentation that tell the truth or else we will show you this that proves you're not telling that truth.

And just to that point, up next for us here, President Trump really doth protest too much. Why his advisers think the president tweets, especially about that Trump Tower meeting, are make things worse.

(COMMERCIAL BREAK)

[12:29:22] KING: Some advice for the president today, a lot of it coming from friends, if you want people to stop talking about something, lead by example. A source telling CNN, President Trump has been urged to stop tweeting about that 2016 Trump Tower meeting between his top advisers, including his son, and several Russians. He's been advises that his tweeting, no surprise here, only gives oxygen to the topic. And, in this case, perhaps evidence to investigators. It seems just about everyone, including former advisers, trying to telegraph that message to the boss.

(BEGIN VIDEO CLIP)

ANTHONY SCARAMUCCI, FORMER WHITE HOUSE COMMUNICATIONS DIRECTOR: When you're out there protesting, you don't have to be a Shakespearian scholar, but when you're out there protesting and the words doth does protest too much, it sends a signal to people that, well, why are you protesting? If you're right on the facts, the facts will unfold in a way that are favorable to you, and you'll be better served not talking about it.

(END VIDEO CLIP)

[12:30:12] KING: That from Anthony Scaramucci there. The advice coming