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INSIDE POLITICS

Trump Aggravated over Saudi Coverage; Graham on Sanctions for Saudi Arabia; Cruz and O'Rourke Battle in Texas; O'Rourke Won't Share Fundraising; Budget Deficit Highest Since 2012. Aired 12-12:30p ET

Aired October 16, 2018 - 12:00   ET

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


(COMMERCIAL BREAK)

[12:00:23] JOHN KING, CNN ANCHOR: Welcome to INSIDE POLITICS. I'm John King. Thank you for sharing your day with us.

The secretary of state meets with the Saudi king and the crown prince as Turkey's president says the crime scene at the Saudi consulate in Istanbul has been scrubbed and repainted.

Plus, a high-stake Texas showdown. Ted Cruz and Beto O'Rourke debate tonight. Brand new CNN polling releasing this hour shows the Democrat behind despite non-stop national attention and gangbusters fundraising.

Debate night in Arizona was last night. That's another race critical to any Democratic hope of retaking the Senate.

(BEGIN VIDEO CLIP)

REP. MARTHA MCSALLY (R), ARIZONA SENATE CANDIDATE: While we were in harm's way, she was protesting our troops in a pink tutu.

REP. KYRSTEN SINEMA (D), ARIZONA SENATE CANDIDATE: Martha has chosen to run a campaign based on nasty smears and false attacks. And I expect you'll see more of that this evening.

(END VIDEO CLIP)

KING: Back to politics later.

But we begin with what one adviser calls perhaps, quote, the most consequential decision of Donald Trump's presidency, how to respond to the apparent death of the Saudi journalist, Jamal Khashoggi. "The Washington Post" columnist was last seen alive two weeks ago -- two weeks ago -- entering the Saudi embassy in Turkey. Sources tell CNN the Saudi regime now preparing a report that says he was killed while under, quote, an interrogation that went wrong.

The secretary of state, Mike Pompeo, all smiles meeting today in Riyadh with the Saudi king, the crown prince and the foreign minister. Pompeo and the prince, who is the defacto ruler, reaffirming the strong and old alliance between the United States and Saudi Arabia. Pompeo spoke with the president after those meetings. The White House says what happens next depends on just what Pompeo was

told, and what the Saudi regime does to explain what happened. But key members of the Republican Senate say they are already planning action.

(BEGIN VIDEO CLIP)

SEN. MARCO RUBIO (R), FLORIDA: I can tell you that a separate branch of government that I belong to, the Senate, in the Congress, I believe will act in a bipartisan way. And this is going to alter the relationship between the United States and Saudi Arabia for the foreseeable future.

(END VIDEO CLIP)

KING: The Republican majority leader, Mitch McConnell, on the other hand, taking a more cautious route.

(BEGIN VIDEO CLIP)

SEN. MITCH MCCONNELL (R), MAJORITY LEADER: Well, I think it's good the president sent the secretary of state out to talk to the king. We need to find out first what happened before deciding what kind of response is appropriate.

UNIDENTIFIED MALE: You do think there will be some type of response if these allegations are true?

MCCONNELL: I can't imagine there won't be. But I think we need to find out what happened.

(END VIDEO CLIP)

KING: CNN's Jeff Zeleny joins us live from the White House.

Jeff, take us inside the thinking there as the president heard from Secretary Pompeo, what next?

JEFF ZELENY, CNN SENIOR WHITE HOUSE CORRESPONDENT: Well, John, there's no question that despite what else the president is trying to focus on attention on today, this is a diplomatic crisis that is escalating by the day. And the president, I am told by officials here, is agitated by the news coverage of this. He's agitated by the rush to judgment on this.

Now, he is having a phone call. As you said, he had one earlier this morning with his secretary of state, who he dispatched to the region. He was scheduled to have lunch with him earlier today. That was the only thing that was on the week ahead schedule, if you will. So there are no public events on the president's schedule. I'm told he's in the residence of the White House this morning watching television, talking on the phone with his advisers on other matters. But he clearly is agitated about the Saudi Arabian news coverage.

You can see in a tweet he sent out this morning saying, I do not have any business interests in Saudi Arabia. I do not have any involvement in that. Well, that is something that is not necessarily 100 percent accurate there. He has talked repeatedly about how Saudi investors have invested in some of his apartments, some of his other matters here. But, clearly, the president unnerved by this and they're not sure where this is going from here. They're waiting for the Saudi government to issue this report, which is already being -- you know, eyes are rolling across Washington and indeed around the world here.

But the president -- we're not scheduled to hear from him today. Republicans on Capitol Hill and others are talking about this loudly. So we will see what the president does on this.

You mentioned the smiles, John. That is one other thing that is being criticized here. The secretary of state smiling as he walked into that meeting. Most people in Washington certainly do not think this is a laughing or smiling matter.

John.

KING: Not in the least.

Jeff Zeleny, live at the White House, appreciate the fresh reporting.

With me in studio to share their reporting and their insights, Julie Hirschfeld Davis with "The New York Times," CNN's Phil Mattingly, "Bloomberg's" Toluse Olorunnipa, and Lisa Lerer with "The New York Times."

The president's upset. What is he upset at? Is it not a basic threshold minimalist expectation that one would expect the president of the United States to express more outrage and to hold out the possibility of a stronger punishment than he has given? He knows a lot more than we do. And what we know is pretty shocking.

[12:05:05] JULIE HIRSCHFELD DAVIS, WHITE HOUSE CORRESPONDENT, "THE NEW YORK TIMES": Well, I mean, we've seen this before, that this president does not make it a point to go out and make an affirmative statement about human rights or basic conduct that he expects United States allies and adversaries to carry out. And he didn't do that in this case. And he went solely on the denial that he said was given to him by the king, the denial that was given to Jared Kushner by the crown prince, Mohammad bin Salman, who's being held responsible for whatever it was that did happen here. And I suppose it's possible that having gone out affirmatively and basically, you know, given the benefit of the doubt to the Saudis here, he is feeling burned. That he feels that now they're going to admit that, in fact, something did happen, and this man was killed. And whether it was premeditated or not, that they were responsible for it. And he feels that he has sort of vouched for a regime that is now going to come forward and say it did something wrong.

That being said, normally a president would, in a situation like this, withhold judgment. Like you heard Mitch McConnell do there, say, we need to know what happened, but this is of grave concern. People will pay consequences for what's happened here. And having not done that on the front end, I think he feeling that he's, you know, been unfairly criticized. But this is a -- this is a role that we expect the president to play in this country, no matter what the facts are, that you -- that you affirmatively lay out what the United States values are, how we expect people to be treated, whether citizens of the United States or not, and then you say, OK, you know, show us the evidence of what happened.

KING: I don't think it's a bar that any president should not expect to think that, number one, you should stand up for values, including American values. But the president has also has been dismissive of, he's not a citizen. It happened over there, not here. Why should I care? We've seen this before.

LISA LERER, NATIONAL POLITICAL REPORTER, "THE NEW YORK TIMES": Yes, I mean, look, I think it's not just, you know, dealing with this on the front end. It's sort of dealing with it in the pregame. This is not -- the situation is unusual, but the dynamics at play here have been the dynamics with Saudi Arabia for decades. This is a country that's an ally, but it has -- you know, presidents have always had to walk this fine line between, you know, the relationship, the productive relationship with Saudi Arabia, and the human rights abuses. The country's support for radical, you know, Islamic terrorism, things like that.

So this is not a new situation. But clearly at the front end, when they were building this new relationship with the new leader, when they were going to Saudi Arabia for this splashy tour, they did not -- the president and his team did not lay out the conditions. Like, yes, we want to have a new relationship with you, but there are certain things you can do not. You cannot embarrass us. You cannot put us in these kinds of situations. That diplomatic work was clearly not done at the front end and now he finds himself in this really not only difficult situation but pretty embarrassing situation for him and his, you know, foreign policy team.

TOLUSE OLORUNNIPA, WHITE HOUSE REPORTER, "BLOOMBERG": And he's made it somewhat more embarrassing by sort of floating up these new theories about rogue killers.

LERER: Right.

OLORUNNIPA: It almost sounds like he's learning about this information as the rest of the American public is, even though he's the head of the executive branch.

LERER: Right.

OLORUNNIPA: He has all of the intelligence assets at his disposal. And it sounds like he knows nothing, you know, more than a week after this event happened. It sounds like he's learning about this through the newspapers and through the media, just like the rest of us, and that just does not make him seem like the commander in chief in charge of the situation. It sounds like he's just sort of trying to figure out what's happening. And he's been saying for the last week, you know, we're going to get to the bottom of this. We're going to find out what happened. Nobody knows what's happened. And, you know, the American intelligence community is famed as the best in the world. The president has all of that at his disposal. And he could get access to all this investigatory information. It doesn't appear that he has or if he has he's not letting it on. And, instead, he's spreading out these -- he's sort of out of left wing -- out of left field ideas about rogue killers or, you know, a mistake that may have happened.

KING: Which is angering key members of Congress, not as much because what the Saudis are accused of here is beyond reprehensible. Kidnapping, essentially, interrogating, killing and dismembering a journalist. There's a lot of focus on that. He's a human being. Whether he's a good human being or a bad human being, he's a human being. And they're accused of kidnapping, torturing, killing, dismembering and then lying to the world about it.

The president has not taken a firm stand. Listen here to Senator Lindsey Graham, who, on most issues of late, is with the president. On most issues of late has defended the president. Listen to what he says here, not just that the president has to do more. Listen to how far Lindsey Graham goes.

(BEGIN VIDEO CLIP)

SEN. LINDSEY GRAHAM (R), SOUTH CAROLINA: Nothing happens in Saudi Arabia without MBS knowing it. (INAUDIBLE). This guy is a wrecking ball. He had this guy murdered in a consulate in Turkey. And to expect me to ignore it, I feel used and abused. I was on the floor every time defending Saudi Arabia because they're a good ally. There's a difference between a country and an individual. The MBS figure is, to me, toxic. He can never be a world leader on the world stage.

UNIDENTIFIED FEMALE: So what does the president do, sanction them?

GRAHAM: It's up to the president. But what I would do -- I know what I'm going to do. I'm going to sanction the hell out of Saudi Arabia.

(END VIDEO CLIP)

KING: Sanction the hell out of Saudi Arabia, Phil, but -- but this is the key part, the MBS figure to me is toxic. He can never be a world leader on the world stage. His father, the king, is 82 and not in great health. The prince runs the show. He's in his early 30s. Lindsey Graham is saying, for this relationship to have a new chapter, after this horrible chapter, MBS has to go.

[12:10:16] PHIL MATTINGLY, CNN CORRESPONDENT: Senator Graham, who is a hawk, who has defended what the president -- what this administration has done in their Middle East policy, which is -- of which Saudi Arabia has become essentially a fulcrum to what they've been doing over there, and you can tell that he almost feels personally wronged. And you can also tell -- and this has been something, kind of an undercurrent on Capitol Hill for the last year or so, that people are uncomfortable with the direction that MBS has gone on certain issues with what he did at the hotel with prominent business leaders, with what he's done throughout the country. And the concern that you can't just paper over this if it gets and gets more aggressive. It's now gotten more aggressive. And you see that Lindsey Graham feels like he's been almost personally attacked by what has actually happened and what has taken place because of how often he's defended Saudi Arabia, because of how often he's visited the kingdom. I think there's a couple things here. One, the rubber is going to meet

the road in less than 120 days, right? When they're talking about sanctions, what Congress did, or what members of the Foreign Relations Committee did, is they sent a letter triggering a 120-day review on the Global Magnitsky Act, which essentially allows people to freeze individual assets or deny travel to specific individuals going up to the highest levels, including potentially MBS. The president doesn't have to necessarily take that action, but he does have to respond with the findings in those 120 days. That's kind of the baseline for the sanctions you're looking at right now.

But there's also the overall relationship with members of Congress. Saudi Arabia, as we all know, has very close relations and extreme money ties to just about every corner of this town, and just about every member of Congress regardless of party. And when you see those things start to fray, when you see people no longer willing to look past things because they're a close ally, that's a significant problem for the country.

KING: That's a good way to put it. They have -- they have bought the blinders for years.

MATTINGLY: Yes.

KING: They have bought the blinders for years. It's time to drop them. And it would help if it started at 1600 Pennsylvania Avenue.

We'll keep an eye on that story.

Up next for us here, three weeks until Election Day. What we're learning from brand new CNN polling on a huge Senate race in Texas.

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[12:16:14] KING: Senator Ted Cruz and his Democratic challenger, Beto O'Rourke, debate tonight, three weeks exactly to Election Day.

Some brand new CNN poll numbers releasing right now suggest the Democrat, O'Rourke, needs a breakthrough night to help his odds of engineering an upset. Remember, this Texas seat, critical. Right now we favor Republicans to keep control of the Senate. Democrats would either run all of these toss-ups, or flip Texas, hold North Dakota, to get to the majority of these numbers.

Not so great for O'Rourke heading into the debate. Our new poll, Ted Cruz at 52 percent. Beto O'Rourke at 45 percent. Number one, it's seven points. Number two, the incumbent is above 50. You always want to be above 50 if you're the incumbent. You look at the numbers here.

Let's break it down this way. Unlike other races you see, they're running about even among women. That's a problem for the Democrat. A Democratic candidate needs a gender gap. Beto O'Rourke leads among Latinos. The question is, will they turn out on Election Day, and among independent voters, Ted Cruz with a lead right now. In many other races across the country, you see Democrats with a lead this midterm year among independents, not, though, in more conservative Texas.

The issues debate in this race is interesting. Voters who say immigration is a top issue, overwhelmingly for Cruz. Voters who list economy at the top of their list, overwhelmingly for Cruz. It is voters who say health care is number one, who are going by a huge margin for Beto O'Rourke.

So headed into the debate tonight, again, if Democrats are going to regain control of the Senate, they would really love that one. Right now we lean it red. High stakes debate. You see the tension playing out in the campaign ads as well.

(BEGIN VIDEO CLIP)

BETO O'ROURKE (D), TEXAS SENATE CANDIDATE: You may have seen some of these negative attack ads seeking to scare you about what we're trying to do for this state. When we see each other not has Democrats or Republicans but as Texans, as Americans, as human beings, there's no stopping us. That's why I'm running to represent you and everyone in the state of Texas.

UNIDENTIFIED MALE: Deported 11 times, deported 20 times. But Beto O'Rourke said crossing the border illegally should not be a crime and said he's, quote, open to abolishing ICE. We need a leader to stop the chaos at the border.

(END VIDEO CLIP)

KING: This one gets tons of attention, number one, because Ted Cruz ran for president and liberals don't like Ted Cruz. Republicans don't like Ted Cruz. But all the money, all the attention, you look at the polling numbers and it looks like, three weeks out, Texas is Texas. That's not a huge margin for Cruz, but he's ahead.

MATTINGLY: Yes, look, I think one of the interesting things was a couple months ago talking to people on both sides of this on the national level basically saying, like, if we're spending money -- if you're a Republican and you're a national group spending money in Texas, like you have a lot bigger problems than whether or not you're going to win North Dakota or hold Tennessee, like you are in a world of hurt right now.

KING: Right.

MATTINGLY: And that seems to line up. And same on the Democratic side. If the national party is spending in Texas, we're in the greatest position in the history of the world. Texas doesn't align like that despite battleground Texas or any number of groups that have tried to turn it blue demographically. It's not there yet. And we don't necessarily know when it's going to be there.

I continue to think -- I know everybody's focused on this and everybody's focused on the candidates, and they're certainly two candidates that you want to pay attention to. But whether it's Beto O'Rourke's money or whether it's the enthusiasm he's generating in pockets of the state, the real fallout of this, the real repercussions of it are House races.

KING: Right.

MATTINGLY: And I think that's what you need to pay attention to here is what this does for Texas 7, what this does in Texas 32, if people -- if Democrats in House races can ride those coat tails to something. Maybe Beto O'Rourke doesn't win, but maybe he helps the House Democrats get the majority.

KING: Right. More Democratic turnout statewide helps in those suburbs of Houston, suburbs of Dallas, where you do find more Democratic, more suburban voters there. It's a key point. Democrats are happy just to have a competitive race because they think it gets more people on the midterm playing field.

But there was so much put into this race and there's so much money going into it that some Democrats now are saying, you know, Beto, if you can't move these numbers, you should share your money. He says no. I want to -- he said this. This is what he said. Folks contributed to this race because they want us to win this race. If they want to contribute to another campaign, of course they're welcome to do that. No, we're going to spare no expense. We will bear any burden to make sure that we deliver this state for our country. That means a victory.

[12:20:11] There are a lot of Democrats saying, you're getting like tens of millions of dollars. You can't spend it all. Send some of that elsewhere. He says, no.

LERER: Right. I mean there are a lot of grumbling Democrats and certainly Democratic voters and Democratic grass roots are very excited about this race. It's Texas. It's Ted Cruz. He's a dynamic candidate. He skateboards into rallies. What's not to love, right?

But within the party there are these grumblings. He's getting a lot of money. And part of that is rooted in this idea that it looks like he can't win, but it -- there's a rumor or a sense that he has higher ambitions. That even if he doesn't win, like, well, what's he doing with all this money? Is he going to make a play in 2020? Everybody else is running for president. Why not this guy who captured all this attention? And that's what a lot of Democrats here in Washington and Democrats working on other races that really are in more of a tossup position don't like.

KING: And you see -- you see Ted Cruz in the ad playing up the immigration issue. Listen to Ted Cruz here saying Bet O'Rourke, you saw his ad, I'll work for all Texans, I'll reach out to the middle, I understand and respect conservatives in Texas. Ted Cruz says uh-uh.

(BEGIN VIDEO CLIP)

SEN. TED CRUZ (R), TEXAS: I think Democratic turnout is going to be very, very high in November. Now, the good news in Texas is that there are a lot more conservatives than there are liberals. Typically in Texas, a Democrat in a general election at least pretends to run to the middle, pretends to be moderate. And that's not happening in this race. Beto O'Rourke is running hard, hard left. He's running like Bernie Sanders or Elizabeth Warren.

(END VIDEO CLIP)

KING: Not exactly great brands in Texas, probably, Bernie Sanders and Elizabeth Warren. I'll go out on a limb there.

DAVIS: Well, I mean, and the president is heading there next week for Ted Cruz.

KING: Next Monday, right.

DAVIS: And, I mean, it's interesting that he initially said he wanted the largest venue he could get. He's got -- he's going to the Energy Arena, which, I think, holds 10,000 people. That's what Trump likes to do at these rallies is have a big overflow so he can say, you know, look how crowded it is. All these people love me. The rallies are much more about Donald Trump than they are about any of the Republican candidates who he has been campaigning for.

But to Ted Cruz's point, just then, they -- he needs to really juice the Republican enthusiasm and the energy in the conservative movement to really turn out for him because this race shouldn't, by all rights, be as tight as it is given that it's Texas. Beto O'Rourke should not have had as much success as he has had, just looking at the fundamental numbers.

So if Republicans can't get their people out and really energize ahead of the midterms, then Ted Cruz could have unanticipated problem. Now, it looks like that -- there's not going to be enough structurally for Democrats to make the sale with O'Rourke, but, you know, Democrats are very energized. And the fact that Beto O'Rourke has not tried to tack (ph) to the middle I think has built that momentum in a lot of ways. So Ted Cruz then has to tack to his right and make sure that he really gets those people out as well.

KING: Is there any greater irony on the president's schedule than a rally for his very good 2016 friend Ted Cruz?

OLORUNNIPA: Right. We remember lying Ted. The nickname. The president has some new nicknames he's trying out today. But the last -- a couple years ago it was lying Ted, and they were really going at it. And Ted Cruz hit back and said that Trump was a pathological liar. And there was a pretty intense battle between Trump and Cruz back in 2016.

MATTINGLY: So long ago.

OLORUNNIPA: And now they're trying to -- yes, and now they're trying to -- trying to make up and --

DAVIS: (INAUDIBLE).

OLORUNNIPA: Yes.

LERER: And it's worth noting that with these rallies that there is a counter effect, which is that it also gins up Democrats. And, yes, probably not enough for Beto O'Rourke. Might be enough in the districts you're talking about.

KING: We'll see. And, again, to the money question, a lot of Democrats grumbling outside the state. If he spent it smartly within the state, it helps with the voter I.D. and helps with turnout. In the end, maybe people will say, OK, thanks for the help, but we'll watch. It's one of the fun ones to watch.

A programing note. Not just the debate tonight. You can watch CNN's town hall with Congressman Beto O'Rourke. That's this Thursday at 7:00 p.m. Dana Bash with moderate that conversation. Ted Cruz declined to attend. We should make that clear. He was invited. Hope you can joins us.

Up next, the federal government running up quite the credit bill. That's exactly the opposite of what the president promised to do.

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[12:28:37] KING: The White House budget director calls it a blunt warning to Congress. The U.S. federal deficit spiking 17 percent from a year ago to $779 billion. Watchdogs warned this would happen after Republicans passed their tax cut plan and the president signed it into law. Getting the number down is one of the many things the president promised to do if he won the election.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Will you put forward a balanced budget, your first budget, or will it take a couple of years?

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: No. No, but it will take fairly quickly and it can be done.

(END VIDEO CLIP)

KING: Fairly quickly and it can been done. That's what candidate Trump said. Instead, fiscal conservatism is out the window in a Washington where the White House and Congress are controlled by politicians who say they are fiscal conservatives.

CNN's Christine Romans has a close look at all the new red ink.

CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: Question, John, do deficits matter in Washington anymore? The federal government is racking up the bills, spending so much more than it takes it. It's running the largest budget deficit in six years, up 17 percent this year to $779 billion. The highest since 2012. That's when the country was spending big to stimulate a struggling economy.

But, John, 2018 is very different. The economy is strong and growing. Unemployment very low. Typically, deficits shrink during boom times as the government collects more taxes from taxpayers. But thanks to tax reform, the U.S. is spending more than it takes in. Spending rose 3 percent because of higher interest payments on debt and more defense spending. But tax revenue failed to keep up thanks to tax cuts.

[12:30:11] Government revenue was flat. Corporate tax collection, taxes