Day Three of Manafort Trial Brings in Several Witnesses; Iran Begins Military Exercises in Persian Gulf
KIRSTJEN NIELSEN, HOMELAND SECURITY SECRETARY: Our democracy itself is in the crosshairs.</s>DAN COATS, NATIONAL INTELLIGENCE DIRECTOR: We acknowledge the threat. It is real.</s>DONALD TRUMP, PRESIDENT OF THE UNITED STATES: We are being hindered by the Russian hoax. It's a hoax.</s>KAYLEE HARTUNG, CNN ANCHOR: The president still dismissing the Russia investigation even after his own top officials blatantly warn Russia is still meddling in U.S. election.</s>DAVE BRIGGS, CNN ANCHOR: The July jobs report due out this morning. Unemployment is expected to tick down. The wage growth remains still.</s>HARTUNG: And who should be responsible for reuniting kids with parents deported? The government says it falls to the ACLU. Good morning, and welcome to EARLY START. I'm Kaylee Hartung in for Christine Romans.</s>BRIGGS: Good to see you, my friend. I'm Dave Briggs. It's Friday -- it is Friday. Let just --</s>HARTUNG: Soak it in.</s>BRIGGS: Let that marinate for a minute. All right. It's Friday, August 3rd, 4:00 a.m. in the East. Because it's Friday, we need to start with a little laughter, don't we, Kaylee?</s>HARTUNG: Let's do it.</s>BRIGGS: Stephen Colbert once again taking on the administration.</s>STEPHEN COLBERT, HOST, " THE LATE SHOW WITH STEPHEN COLBERT": Trump still getting legal advice from attorney and man who just realized how he will be remembered. Rudolph Giuliani.</s>RUDY GIULIANI, PRESIDENT TRUMP'S LAWYER: Playing poker. Put up or shut up. What do you got?</s>COLBERT: You better hope you're not playing poker. Because you're client can't keep a casino running.</s>BRIGGS: OK. His track record with running the economy a bit better than casinos at this point.</s>HARTUNG: Those numbers are in his favor, yes.</s>BRIGGS: Let's see about that. Some good stuff from Colbert. But we start this morning with a bit of a disconnect between President Trump and his National Security team on the subject of Russia meddling. The president ranting once again about the Russian hoax hours after his top intel officials called out the Kremlin for interfering in the upcoming 2018 midterms. At a rally in Pennsylvania last night the president touted the Helsinki summit with Putin while completely ignoring Russian attacks on American democracy.</s>TRUMP: We got along really well. By the way, that's a good thing. Not a bad thing. That's a really good thing. Now we're being hindered by the Russian hoax. It's a hoax. Everybody said wow, that was a great -- that was great. A couple of hours later, I started hearing these reports that, you know, they wanted me to walk up. They wanted me to walk up and go like this. Son of a --</s>HARTUNG: Hours earlier, though, key members of President Trump's National Security team appeared in the White House briefing room to warn the country Russia's election interference is ongoing.</s>COATS: In regards to Russian involvement in the midterm elections, we continue to see a pervasive messaging campaign by Russia to try to weaken and divide the United States.</s>CHRISTOPHER WRAY, FBI DIRECTOR: Russia attempted to interfere with the last election and continues to engage and malign influence operations to this day. This is a threat we need to take extremely seriously and to tackle and respond to with fierce determination and focus.</s>NIELSEN: Our democracy itself is in the crosshairs. Free and fair elections are the cornerstone of our democracy and it has become clear that they are the target of our adversaries who seek, as the DNI just said, to sow discord and undermine our way of life.</s>HARTUNG: Director of National Intelligence Dan Coats told reporters he still doesn't fully understand what took place in President Trump's one-on-one meeting with Vladimir Putin in Helsinki.</s>BRIGGS: Deputy Attorney General Rod Rosenstein laughing off critics of the Justice Department in a speech to the American Bar Association in Chicago. The man who oversees the special counsel's Russia investigation did not specifically mention President Trump or his congressional allies, but Rosenstein did make reference to President Franklin Roosevelt's attorney general Robert Jackson who once famously talked about his special duties of government lawyers.</s>ROD ROSENSTEIN, DEPUTY ATTORNEY GENERAL: And his tenure was replete with challenges. One of the difficulties Jackson faced was that what he called the unpleasant duty of responding to congressional inquiries.</s>BRIGGS: Hard line conservatives have threatened to impeach Rosenstein over the DOJ's slow response to their demands for documents.</s>HARTUNG: A suspected Russian spy worked at the U.S. embassy in Moscow undetected for more than a decade before she was fired last year. A senior administration official tells CNN the woman, a Russian national, worked for years with the Secret Service. She first came under suspicion in 2016. A routine State Department security review found she was having regular, unauthorized meetings with Russian intelligence. She used the Secret Service's Internet and e-mail systems, but the official says she did not have access to highly classified information. There has been no comment from the State Department.</s>BRIGGS: Rick Gates may testify against his old boss, former Trump campaign manager Paul Manafort as early as today. That was one of the big developments in the Manafort trial on Thursday. Another, Manafort's bookkeeper testifying that despite making millions, Manafort went broke and lied to banks to secure big loans. Jessica Schneider has more from Washington.</s>JESSICA SCHNEIDER, CNN JUSTICE CORRESPONDENT: Kaylee and Dave, several revelations on day three of the Manafort trial. So first, the judge seemed to entice the defense team to have Paul Manafort himself take the stand. The judge said that Manafort obviously does not have to, but if his lawyers wanted to bring up that he has never been audited by the IRS, that would be the way to do it. And that's something the defense team wants. Also prosecutors now say they will call Rick Gates to the stand. Gates of course was Manafort's right-hand man during the campaign. Also in his lobbying business. And Gates has already pleaded guilty and is now cooperating with the special counsel. And finally, Paul Manafort's bookkeeper testified that sure, he may have made millions, but by 2016 he was flat broke, he'd maxed out his credit line, and the bookkeeper even said that Manafort and Gates were then sending out fake inflated business statements to banks so they could get loans. And of course that gets to the heart of the prosecution's bank fraud case. Plus the government keeps hammering home these lifestyle details. They had a landscaper talk about just how much Paul Manafort paid him. $500,000 for the upkeep of hundreds of flowers and what the landscaper called the largest personal pond in the ritzy Hamptons section of Long Island. Plus Paul Manafort spent $2.2 million on home entertainment technology including $10,000 on a karaoke system. So a lot of details prosecutors have packed in. We're going to hear more from Manafort's accountant today as prosecutors continue to delve into all of his finances -- Kaylee and Dave.</s>BRIGGS: Jessica, thanks. A check on CNN Money now. Can the U.S. economy keep up the pace of the swift job creation? We'll get a fresh look at the labor market this morning with the government releases the July jobs report. Economists are expecting 190,000 new positions, down slightly than last month. The unemployment rate expected to tick down to 3.9 percent. It rose last month. As more than 600,000 Americans entered got off the sidelines, entered the labor market looking for work. The big mystery has been wages. That number expected to hold steady at 2.7 percent annual rate. Wages have been stuck in that range for the past three years. Historically as the labor market tightens, wages rise significantly but that has not yet happened in the recovery since the Great Recession. Wall Street will also be looking carefully at where the jobs are being created. So far, no signs that tariffs are slowing this economy, but this will mark the first big economic report of the third quarter following strong economic growth in the second quarter.</s>HARTUNG: First daughter and presidential adviser Ivanka Trump distancing herself from her father's rhetorical blast against the media. At a public event Thursday Ivanka said she does not agree with his characterization of the press as the enemy of the people.</s>IVANKA TRUMP, WHITE HOUSE ADVISER: I've certainly received my fair share of reporting on me personally that I know not to be fully accurate. So I've, you know, had some -- I have some sensitivity around why people have concerns and gripe, especially when they're sort of feel targeted. But no, I do not feel that the media is the enemy of the people.</s>HARTUNG: Hours later, though, President Trump put his own spin on Ivanka's remarks with a tweet saying, "She's right. It is actually the fake news that is the enemy of the people."</s>BRIGGS: Iran launching a major military exercise in the Persian Gulf. Tehran likely to show its ability to shut down the oil flow through the Strait of Hormuz, a move with broad implications. This exercise was planned but it starts amid intensifying rhetoric with the U.S. Nic Robertson joining us live from the Gulf of Oman, near the Strait. Nic, good morning.</s>NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Yes, good morning, Dave. It's causing concern because, of course, 20 percent of the oil supply goes through the Strait of Hormuz, which is about 50 to 80 miles north of me here. We're actually in the Gulf of Oman. What the Pentagon said was that these Iranian major military exercise as they describe them are taking place in the Gulf of Oman, the Straits of Hormuz, and the Persian Gulf. It is a very strategic water way which is one of the reasons why this oil terminal facility here in the United Arab Emirates has been developed because the oil facility here actually is at the end of a pipeline that bypasses the Straits of Hormuz, about 1.5 million barrels of oil a day and bypasses the Straits of Hormuz and be piped out to sea safely here. But the concern regionally and obviously in Washington is that the rhetoric coming from Tehran saying that if they are not allowed to sell their oil, then no one will be able to pass their oil our through the Straits of Hormuz. That this is -- of course it's causing concern in Washington at the moment when they see these military exercises. They describe them as involving dozens of small boats. And it is not clear if this is really to put meat on the bones of that rhetoric to send a message or quite what it is. But we do know within a couple of days the sanctions come back into effect following President Trump's withdrawal for that Iran nuclear deal. So of course, tensions in this region over that are quite high. We're hearing nothing from the Iranians and the region remaining very quiet about it at the moment as well -- Dave.</s>BRIGGS: All right, Nic Robertson just past noon there near in the Strait of Hormuz. Thank you, Nic.</s>HARTUNG: Well, it's looking like Tennessee could play a key role in determining which party controls the U.S. Senate in the fall. Former Tennessee governor, Phil Bredesen, a moderate Democrat, and conservative Republican congresswoman, Marsha Blackburn, won their respective Senate primaries Thursday. The two will face off in November in a race that's expected to be one of the most hotly contested of the midterm elections. Republicans didn't expect a challenge in ruby red Tennessee, but Bredesen's cross party appeal could help Democrats in the race to replace Senator Bob Corker. Meantime in the race for governor, CNN projects businessman Bill Lee will win the GOP nomination defeating Congresswoman Diane Black who was backed by Vice President Pence.</s>BRIGGS: All right. Coming up, the NFL preseason under way. But no protests. The video games mistake, though, did show why the national anthem controversy is not going away anytime soon.