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Trump trade war sparks anxiety. TRANSCRIPT: 07/06/2018. The Last Word wit Lawrence O'Donnell

Guests: Jared Bernstein, Maria Teresa Kumar, David Honig

Show: THE LAST WORD WITH LAWRENCE O`DONNELL Date: July 6, 2018 Guest: Jared Bernstein, Maria Teresa Kumar, David Honig

JOY-ANN REID, MSNBC HOST: -- Velshi is in for Lawrence tonight. Good evening, Ali V.

ALI VELSHI, MSNBC HOST: Good evening to you, my friend. It`s always a pleasure to see you on a Friday night --

REID: Same.

VELSHI: -- before we see you on a Saturday morning. Enjoy the little rest you get this evening.

REID: I will. I know. I`ll probably just listen to you on my way home in the car, and then I`ll go home and go to bed. See if that works out great.

VELSHI: Well, if you want to fall asleep easily, then listening to me is exactly the solution.

REID: No, no. I`d stay awake.

VELSHI: Joy, you have a great evening.

REID: Have a good show.

VELSHI: Thank you, my friend.

REID: Cheers.

VELSHI: I`m Ali Velshi in for Lawrence O`Donnell.

Trade wars are easy to win. That`s what President Trump tweeted to his supporters earlier this year before he actually started a trade war with Canada, Mexico, and the European Union.

That trade war continues, and now Donald Trump has started another one. The world`s two biggest economies are now engaged in a trade war with the first shot fired by the President just after midnight Friday morning.

Donald Trump imposed tariffs on $34 billion worth of Chinese goods coming into the United States, including aircraft parts, heavy machinery, medical equipment and diesel-powered trucks and busses.

China`s Foreign Ministry immediately accused the President of violating world trade rules and launching the largest trade war in economic history and imposed its own tariffs on $34 billion worth of American goods including soybeans, beef, pork, poultry, seafood, automobiles, and whiskey.

And that might be just the first volley in a long fight. The President told reporters, Thursday, that he had already prepared tariffs on an additional $16 billion worth of Chinese goods and says he is willing to put tariffs on as much as $500 billion worth of Chinese goods, which would be roughly equivalent to every single Chinese import into America.

The first people to lose if the Trump trade war goes wrong are going to be the people who elected Donald Trump. Let me show you a map.

This shows where China`s retaliatory tariffs will hurt the most. The counties in dark colors will feel the greatest pain in their local industries because of the tariffs. As you can see, most of those counties are dark red, meaning they voted for Donald Trump.

According to "The Wall Street Journal," almost 20 percent of the counties that voted for Donald Trump will see more than 25 percent of their economies affected by the tariffs, while only three percent of the counties that voted Clinton will feel the same impact.

Some of those Trump supports say they are willing to bet the farm, literally, on President Trump`s trade war. But farmers work on razor thin margins, and they fear that they`ll be ruined if the fight drags on for too long.

One farmer in Michigan telling NBC News today, quote, the banks are not going to keep writing checks to save your farm. For some family farms, one season could be the death of them.

An owner of the largest family-owned pork producer in the United States telling CNBC the farm industry has been, quote, asked to be good patriots. We have been, but I don`t want to be the patriot who dies at the end of the war.

And here was the reaction in Maine`s lobster industry which, today, woke up to new tariffs on its annual exports of more than $100 million worth of lobster to China. Some workers in Maine, whose livelihoods depend on that industry, spoke to NBC`s Vaughn Hillyard.


CYRUS SLEEPER, FISHERMAN ZONE D, MAINE LOBSTER MARKETING COLLABORATIVE: We have enough challenges already with the prices of fuel. The prices of bait have gone up. And we just didn`t need another challenge like this right now.

VAUGHN HILLYARD, NBC NEWS CORRESPONDENT: So now the concern with these tariffs being placed right now by China is?

TOM ADAMS, OWNER, MAINE COAST COMPANY: That we will lose a crucial part of the markets that we have developed over the years here in Maine, losing sales and revenue for our company, possibly making us eliminate jobs.

MARK MURRELL, FOUNDER, BLACK POINT SEAFOOD: I`m hopeful what he`s doing is going to end up, in the long run, being great for everyone. But, right now, people --

HILLYARD: How confident are you that that`s going to be the case?

MURRELL: Not very. Not very right now.


VELSHI: And so Donald Trump has created economic uncertainty across wide swaths of the United States today. Neither the America -- neither America nor China have shown any signs of backing down so far, and no one is quite sure what happens next.

One piece from Reuters today suggests, ominously, the conflict is likely to escalate beyond trade and into curbed visas for Chinese students, toughened vetting of foreign investment in China, and China imposing administrative punishments on American companies.

All of which threatens to create more collateral damage in the Trump trade war.

Joining us now is a Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities. He was the chief economist and economic policy adviser to Vice President Biden.

Also joining us, David Corn, Washington bureau chief for "Mother Jones," co-author of the book, "Russian Roulette," and an MSNBC political analyst.

And Susan Del Percio is a Republican strategist and an MSNBC political analyst.

Welcome to all of you on a Friday night.

Susan, let me start with you. This is -- Republicans were always the ones shouting let`s just reduce trade barriers. That the world is better if there is more trade. And, look, that`s a really -- that`s a hot topic that we can debate, but President Trump is up against his own party on this one.

SUSAN DEL PERCIO, REPUBLICAN STRATEGIST: He absolutely is. And many of his -- the people in his own party are up for re-election in four months.

So while President Xi, who is the president for life, can play a long game on this -- I mean, China typically does -- the President has to worry about not just his election but the election coming up in four months. How long can they hold on? Like you said, they go from season to season.

And then, just also on the strategy part of this -- and you actually probably know better than I do -- it seems that this should be all about the intellectual property aspect of it. Why are we --

VELSHI: That`s the issue with China.

DEL PERCIO: Right. And so why are we hurting our own people? Because one thing we know is that Donald Trump has not actually said what he wants as a result of this trade war. And that`s what`s going to be more confusing for people.

VELSHI: He has this nebulous discussion about fairness. Jared Bernstein, I have to tell you, Vaughn Hillyard and our other reporters are out there. They`ve been out there for weeks, talking to whiskey producers and pork producers and lobstermen in Main today.

And I will say one thing, in those Trump counties, these folks that we`re talking to seem to take some satisfaction in the President taking a tough line. To Susan`s point, we`re not quite sure where this tough line goes, but Donald Trump has not lost support among a lot of his base by doing this.

JARED BERNSTEIN, SENIOR FELLOW, CENTER ON BUDGET AND POLICY PRIORITIES: Yes, I think that`s true because, remember, he ran on the proposition that some of our trading partners are cheating us.

And when it comes to trade with China -- and Susan just mentioned this -- there are ways in which the Chinese have been guilty of unfair trading practices. Part of that has been intellectual property. Part of that has been manipulating their currency to make their exports to us cheaper than our imports to them.

So people who have been involved in tradeable good business for many years, they recognize that. The problem is -- and the two of you were just getting at that -- these tariffs won`t have that impact. These tariffs are going to hurt many more Americans than they`re going to help.

And I feel great sympathy for some of those folks who were talking about the possibility that, you know, maybe this will help because, at least as far as I and every other economist on all sides of the aisle sees this down the road, this isn`t the way to go about it. It`s a very misguided strategy. It`s going to lead to higher prices, slower growth.

And, by the way, you say you are not sure what Donald Trump`s goal -- his ultimate goal is to reduce the trade deficit. I don`t think it`s going to do that either.

VELSHI: Let me talk about what Donald Trump said last night in Montana. He often misstates -- David Corn, he often misstates the trade deficit with China. He always calls it $500 billion.

I`ve measured this many times. It`s about $336 billion. That`s actually a very big mistake to make, and they know that they`re wrong but they keep doing it. But here is what he said about it. Let`s listen.


DONALD TRUMP, PRESIDENT OF THE UNITED STATES: We have all the cards. We`re the bank that everybody is stealing from. I respect China and I respect President Xi, but they`ve been killing us. $507 billion in trade deficits last year. $507.


TRUMP: Who the hell can lose $500? Then you want to do something about it and you get attacked. Oh, that`s not nice.

That`s not free trade. The war was lost on trade many years ago. You know when they were saying, not a free trade? I said, no, no. The war was lost. But now we`re going to win it because we have all the cards.



VELSHI: So, David Corn, he says the war was lost on trade many years ago. The issue, though, with trade globally is that when you trade with people, you`re probably less likely to make war with them and they tend to be your allies in other areas. And at this point, it`s a little unusual because we`ve opened up on many fronts.

We are fighting with our allies. We`re fighting with our enemies. We`re trying to make a deal with North Korea. We`re -- apparently, we`re doing something with Russia on the 15th. We`re not clear exactly what that is. And we`re pulling out of the Iran deal.

So there is more to this than whether we lost or won a war on trade.

DAVID CORN, CO-AUTHOR, "RUSSIAN ROULETTE: THE INSIDE STORY OF PUTIN`S WAR ON AMERICA AND THE ELECTION OF DONALD TRUMP": It`s chaos. I mean, the President says that Putin is fine, and then he attacks Justin Trudeau. And his chief trade adviser says there`s a special place in hell for Justin Trudeau, a remark that he had to apologize for.

I mean, I go back to, like, the old Batman movie, "The Joker." The Joker likes chaos. It seems that the President has almost a psychological need to create crises. He is not going about this trade policy in a reasonable, rational way.

Whether his advice is from conservative economists or progressive economists, like Jared, he is just going pell-mell in a way that seems a blunderbuss attack on trade with our allies, trade with our competitors. In a way that`s going to, I think, work to the advantage of China, and even work to the advantage of Russia, and harming Americans in the short run, if not the long run.

Farmers can`t go too long way on taking these hits. A lot of them live season to season. So I don`t know what his end game is. I just know that, psychologically, it looks like he`s lashing out and creating a storm because he feels the need to do that.

VELSHI: You make an interesting point, by the way. This does create an advantage for Russia because all of those things that the Chinese are not going to buy because they`ve got tariffs on from America, i.e. soybeans. They`re getting some of it from Brazil.

But this is an opportunity from Russia for whom we`re trying to control their expansion. They now get to sell more goods.

CORN: But they also get hard currency, and it --

VELSHI: They get hard currency, correct.

CORN: It makes it easier for them to get around --


CORN: -- the sanctions that we`ve imposed.

VELSHI: Correct.

CORN: It is great for Russia.

VELSHI: Susan, Oxford Economics predicts that if President Trump follows through on his threats, it could reduce world trade by four percent and wipe away four-tenths of a percentage point of GDP, which equals about $800 billion.

So there is more to this, and this is why our allies are upset about it. I mean, your -- we`re actually costing everybody money. And, you know, I remind people. It was many years ago, but the U.S. sent the world into an economic tailspin in 2008. We do have to be cautious about these things.

DEL PERCIO: Absolutely. And there`s one other thing to consider as we start this war with -- trade war with China. We also -- apparently, the President also wants to end NAFTA. He has problems with the European Union. He`s even drafted legislation to get rid of the World Trade Organization.

And it kind of begs the question. He`s trying to dissolve all of these things. What deal has he actually dealt? He has not made the economy better for the people who are going to suffer as a result of these tariffs, and he`s not making any trade deals whatsoever. So that`s the bigger --

VELSHI: Because there`s no answer to that.

DEL PERCIO: That`s like looking --

VELSHI: Right?


VELSHI: There is nowhere that this logically leads.

DEL PERCIO: So where do you go? What do you think you`re going to get? When you hear the President of the United States say everything is OK with North Korea now, we have a deal, people laugh at that. And they know that you can`t take him on his word.

So how these farmers and manufacturers can rely on Donald Trump, it doesn`t make sense. And that`s how the rest of our -- the world is looking at us, that we did this.

VELSHI: But, Jared --


VELSHI: Go ahead.

BERNSTEIN: I think there is actually even a more fundamental problem or at least a more fundamental misunderstanding of what globalization is in 2018. It`s no longer the case -- and I`m sure this is the way Donald Trump thinks of it -- that everybody is in their isolated space, making their own goods and trying to sell them into global markets.

In fact, globalization is now this incredible omelet of supply chains that you can`t unscramble.

So if you actually look at American cars, in a sense, every American car is an imported car because it has imported parts. One of the American cars with the most -- one of the cars, I should say, with the most domestic content on the American highway happens to be the Honda Odyssey, OK?

The largest BMW plant in the world -- BMW is a German carmaker -- is in South Carolina.

So Donald Trump is going about, once again -- and this is often the case when he`s talking about manufacturing and coal and the environment. He is going about this as if it`s a 1950s world where trade flows were 25 percent of GDP. Now, they`re 60 percent of GDP.

VELSHI: You know, David, the problem is that it is a fundamental misunderstanding of trade.

CORN: Yes.

VELSHI: But it is appealing to what appears to be a third of Americans who are maybe justifiably angry at the fact that while we traded away certain manufacturing jobs for lower prices and lower labor around the world, and while consumers have enjoyed this for the last 30 or 40 years, we maybe didn`t do enough -- our government didn`t do enough to--

CORN: Right.

VELSHI: -- to figure out --

BERNSTEIN: Good point.

VELSHI: -- you know, how it is these people are just affected. So we are now seeing the chickens coming home to roost.

CORN: Donald Trump is a con man who is playing off real resentments and real concerns from a great number of Americans.

I mean, Jared -- I have been watching Jared for years and decades. He`s been talking about how to have a progressive, populist-minded sense of an economy and policy that would bring, you know, the wealth that the country generates to all sections of the country.

And it`s true that, you know, we haven`t had enough of that in both Republican and Democratic administrations.


CORN: And so, you know, Trump comes in, make America great again. I`ll have a trade war. He sells very simple bumper sticker slogans that have no real policy behind them, but it appeals to people because they are desperate for some better conditions.

BERNSTEIN: I mean, the two of you --

VELSHI: But, Susan --

BERNSTEIN: The two of you are exactly right. Donald Trump has identified a problem. Not only does he have no idea how to solve it, he`s going to make it worse.

CORN: Yes.

VELSHI: But, Susan, he`s really right about identifying the problem. There are Americans out there who say I used to have a good job.


VELSHI: My father and grandfather and -- helped build this country, and now I can`t work in a coal mine. I can`t work in a manufacturing facility. No one has given them a real answer, and no one in government has given them a real answer. And now, they`re looking at Donald Trump to be their savior, and he`s not going to be.

DEL PERCIO: Yes, he gave them a slogan. That`s it. He has not delivered on the promises and the policies he said he was going to offer.

He likes to say look at the stock market. It`s doing well. OK. But that`s in its own silo. That`s not affecting the day-to-day lives.

VELSHI: Correct.

DEL PERCIO: And, you know, there is another thing that we are also seeing increase, is oil prices. So now that`s another -- whatever tax cut was in the --

VELSHI: Right.

DEL PERCIO: -- that got passed earlier this year is basically going to be washed away this summer for most consumers because they -- it`s going to cost them a lot more to get to and from work. Even if they have a job.

VELSHI: So no one is necessarily gaining, but the slogans sound very good.

I want to thank you all. It has been great to see you, Susan Del Percio and Jared Bernstein.

David, stick around. I am going to talk to you a little bit about another topic coming shortly.

Coming up, President Trump`s T.V. lawyer, Rudy Giuliani, has a new condition for the President to meet with Robert Mueller. There`s a new story tonight, and the details are next.

And the President keeps ignoring the crisis that his own administration created with children at the border. And now the Trump administration reveals that it has no idea how to reunite migrant children with their parents by next week`s first court-ordered deadline.


VELSHI: Breaking news tonight. Donald Trump`s defense team has reportedly set new conditions on an interview between the Special Counsel Robert Mueller`s team in the ongoing Russia investigation.

Tonight, "The New York Times" reports the Special Counsel, Robert S. Mueller, III, needs to prove, before Mr. Trump would agree to an interview, that he has evidence that Mr. Trump committed a crime and that his testimony is essential to completing the investigation, said Rudolph W. Giuliani, the President`s lead lawyer in the case.

Giuliani told "The Times," if they can show -- come to us and show us the basis and that it`s legitimate and that they have uncovered something, we can go from there and assess their objectivity.

In May, Giuliani said the President and his lawyers would decide if Trump would sit down for an interview with Mueller`s team after Trump`s summit with North Korean leader Kim Jong-un on June 12th.

Last month, Giuliani pushed the deadline for a decision to July 4th.

The Special Counsel`s office declined to comment when NBC News reached out tonight.

Joining us now is Yamiche Alcindor, White House correspondent for "PBS Newshour" and an MSNBC contributor. And David Corn is back with us.

Welcome to you, Yamiche. Welcome back, David.

David, this development, what do you make of it?

CORN: You know, there is a certain degree of absurdity here in that the President`s team is trying to dictate to a federal prosecutor what the rules of the game are here, and that`s never been the case before with any other citizen.

And we have this past week -- past two weeks, we see the President, again and again, getting out there and basically delegitimizing the investigation in saying, the Russians say they didn`t meddle. Putin`s a fine fellow.

I mean, this is all, in some ways, a big distraction. They`d rather us focus on will he or won`t he testify and lose sight of the big picture, what the Trump-Russia scandal is all about.

But I think, at the end of the day, an interview with Trump may not be that helpful because all his past depositions have been full of inaccurate statements and false statements. And I don`t know what Mueller is going to get out of it.

VELSHI: But, Yamiche, it`s interesting because it`s a P.R. game they`re playing here. Let me just read you another excerpt from this "New York Times" story.

It says -- the President`s lawyers want Mr. Mueller to explain how the Justice Department gave him the authority to investigate possible obstruction of justice by the President in what began as a counterintelligence investigation into Russia`s meddling.

The lawyers also want evidence that the Special Counsel exhausted every other investigative measure before asking the President to answer questions and that he is the only person who could provide them with the information they are seeking.

Yamiche, some might say they`re running out the clock here. They don`t want this thing -- having wanted it wrapped up and tied up neatly early on, they now don`t want this wrapped up before the election and -- so that it does not become an election issue.

YAMICHE ALCINDOR, PBS WHITE HOUSE CORRESPONDENT: Well, the President`s lawyers are requesting conditions that they admit Robert Mueller will not accept or will -- is likely not to accept because they want to have this aggressive strategy where they`re trying to -- where they`re looking and acting like they are really interested in maybe still doing this interview when, in fact, they have assessed that this is a -- that they have said that they believe this is an investigation that`s framing the President.

Rudy Giuliani has said that that is -- that maybe this is an investigation that planted a spy which, of course, no evidence has shown. The President has called this a witch-hunt dozens of times.

So the fact that Rudy Giuliani is saying he wants to assess the objectivity tells you that Rudy Giuliani has already assessed it. I have talked to him several times. Other reporters have too.

There is nothing about this investigation that Rudy Giuliani thinks is right. And a lot of lawyers that I`ve talked to, that I have asked this specific question -- if you were Donald Trump`s lawyers, would you want him to sit down in front of the Special Counsel -- and I haven`t found a lawyer in Washington who would tell me yes.

VELSHI: Right.

ALCINDOR: Because everyone says that the President, sitting down with Robert Mueller, could start lying to him or start saying things that are not true even if he`s not intentionally lying. And that could put him in some really hot water.

CORN: Yes.

VELSHI: But, David Corn, you are literally the guy who wrote the book on the Russia investigation. It is your work that was the work that really set this up, that people know about. And for anybody who hasn`t read your book, they really ought to.

CORN: Thanks.

VELSHI: But here is the problem, increasingly, the public is starting to - - the polls are indicating that the public is starting to worry about this investigation. They`re starting to think it might be a little bit rudderless and that maybe it`s going after him.

So the President`s repeating of witch-hunt all the time, Rudy Giuliani showing up on T.V. all the time and giving interviews, seems to be having some effect in making Americans -- I don`t know -- tired of this or think maybe it is not going in the right direction.

CORN: The Trump White House, his lawyers, and many Republican leaders in Congress, including Representative Jim Jordan who is in trouble for other matters these days, have spent a year and a half trying to discredit the investigation, trying to say there is nothing here, saying there are no connections to look at.

It doesn`t matter that Paul Manafort was possibly in contact with a Putin- friendly oligarch during the campaign. They have shown more concern and more outrage over the ins and outs of the investigation than over the fact that Putin attacked America. It wasn`t meddling. It was an attack.

And this is all about trying to discredit Mueller and the investigation. They act as if he`s taken a long time. He`s been on the case for a little over a year. The Iran-Contra Independent Council took six years. There is nothing slow about this investigation. It is complicated, it takes time.

You know, when Yamiche talks to Rudy Giuliani, his mission is to try to discredit the investigation, which is -- which looks at, really, the most important political scandal we`ve had in the history of this country.

VELSHI: It is interesting, though, because you talked about Jim Jordan. Last week, in testimony before the House, Rod Rosenstein was there. Jim Jordan was going after him. So was Trey Gowdy.

And Trey Gowdy actually said, Yamiche, to Rod Rosenstein about the investigation, finish it the hell up because this country is being torn apart. I don`t know if you recall how much time Trey Gowdy spent on Hillary Clinton`s e-mails.

But all of a sudden -- I mean, this is the kind of the inconsistency here. The White House is slow-walking this thing. Jim Jordan and Trey Gowdy and others in Congress are saying finish the hell up. Nobody really knows what people want done with this.

ALCINDOR: Well, what`s really interesting is that the Benghazi investigation that went on and on and on --

VELSHI: That`s correct, that`s what it was, yes.

ALCINDOR: -- they had no indictments. Robert Mueller has secured several indictments. Several people have pleaded guilty.

But when I -- I mean, I was out in Minnesota talking to Trump supporters. And they feel as though the President is being treated unfairly. And it`s because his message is getting to them, the idea that he is being treated unfairly, that this investigation is about is completely really rigged.

I mean, this idea that the American public, when you have story after story coming out about Russia, even if you`re a Democrat who thinks that the President should not be in office anymore, people are starting to get lost. People -- it is easy for Americans to start getting tired of this.

But I think what Rudy Giuliani said to "The New York Times" is really important. And it is that he said that they are also concerned that if the Democrats win, that he could be impeached.

And there is this idea that Democrats have been trying to -- at least Democratic leadership has been trying to be really cautious about the idea that electing Democrats means that you`re going to impeach the President.

But almost every reporter on Capitol Hill realizes that if the Democrats take back the House, they are going to start going after the President. And they`re going to start saying we need to figure out what`s going on and what`s legal. So he`s in a political jeopardy if he -- if this Robert Mueller investigation actually has teeth to it and actually sticks to him.

VELSHI: So what is the best plan, David Corn? For a guy like you who has been looking at this Russia problem since the inception, since we first learned about it, what`s the best outcome?

I`m not talking about for Donald Trump or Robert Mueller or Democrats or Republicans. But in the interest of our republic, in the interest of getting to the root of what is wrong, what Russia and others may be doing to our democracy, what is the best outcome here?

For a quick end to this investigation? For a longer end to it? For a recommendation of impeachment? Or for a report to Congress that describes everything that happened?

CORN: The American public needed two things after the election. They needed a full investigation of what Russia did and any activity of the Trump campaign or associates that was connected to that. And that was the province of the House Republican-led Intelligence Committee and the Senate Intelligence Committee.

The House Committee turned into a circus and felt -- basically fell apart. The Senate Intelligence Committee is still investigating, but we`re not sure how deep and wide it is going.

And then the second thing it needed was a look at whether any laws were broken by Russians, by other foreigners, or by Americans. And that`s the job that Robert Mueller has to do.

And these things could -- you know, should have gone on side by side, each on their own timetable.

And at the end of the day, the public needs a full accounting of a Russian attack on American democracy and a full accounting of whether the President of the United States and his people were involved or if they aided and abetted the attack, even if indirectly by denying, again and again, that it was happening, and why the heck, even now, is Trump out there defending Putin.

Those are questions that needed to be answered, and I`m afraid that because of Republicans intransigents -- I don`t mean to sound partisan -- we`re not getting the answers we need. And we`re going to see if Robert Mueller can provide some of those on the way to investigating any criminal actions.

VELSHI: All right, David, Yamiche, thanks to both of you.

Coming up next, the Trump administration says it is going to fail. It is going to miss the court-ordered deadline to return children under five to their parents. That`s next.


VELSHI: Tonight, as the Trump administration stares down a court order deadline to fix a problem entirely of its own creation, there is a drastic idea from one of the country`s top experts on government ethics on what should happen in reaction to the humanitarian crisis at the border.

Walter Shaub, former director of the Office of Government Ethics under President Obama and initially under President Trump tweeted -- the administration stole these babies and children, then destroyed the records needed to return them. When they missed the deadline, the court should hold Secretaries Nielsen and Azar in contempt, jail them until their agencies prove that every last child has been returned.

The Trump administration acknowledged today that it will miss the deadline to reunify children with their families and has requested an extension from the court.

In a hearing with the California federal judge who ordered the reunifications, government lawyers said U.S. Health and Human Services would only be able to reunify about half of the approximately 100 children under the age of 5 by the deadline of July 10th.

For 19 children, their parents have been released from custody into the United States and their whereabouts are unknown. Another 19 children`s parents have been deported.

But only 10 days ago, HHS Secretary Alex Azar made the claim that it`s easy to locate the children in U.S. custody.


ALEX AZAR, SECRETARY OF HEALTH AND HUMAN SERVICES: There is no reason why any parent would not know where their child is located. I could at the stroke of -- at keystrokes. I have sat on the ORR portal. With just basic keystrokes, within seconds, could find any child in our care for any parent.


VELSHI: Apparently, it`s not that easy. Reuniting all the children with their parents will not happen before Tuesday`s deadline, if it will ever happen at all.

"The New York Times" reports that records linking children to their parents had disappeared and in some cases, have been destroyed, according to two officials at the Department of Homeland Security.

Joining us now, Mariana Atencio who has tirelessly been covering this border crisis for MSNBC and Maria Teresa Kumar, the president and CEO of Voto Latino and an MSNBC contributor. Welcome to both of you.

Mariana, what is the update? You have just received one from the government.

MARIANA ATENCIO, MSNBC CORRESPONDENT: I was at that -- listening to this status hearing, Ali, I basically found out that the government lost track of 38 parents of these tender age children. You mention it in the numbers -- 19 parents were deported, 19 other parents released to the U.S., their whereabouts unknown.

So basically the judge is asking the government to provide a master list of the 101 children under the age of five by tomorrow at 5:00 p.m.

And basically, the judge said, listen, I`m willing to give you an extension of this deadline -- the deadline is Tuesday, by the way -- but you have to give me a reason. And so you have to comply.

You have to give me the list of children. But put them in categories and tell me, we can`t reunify these kids because, you know what, we deported their parents. And then I will decide on a case-by-case basis.

But there needs to be some urgency because there are still, again, 101 children under the age of five that haven`t been reunified with their parents.

VELSHI: Maria, 19 children of tender age were separated from their parents. And then their parents were deported without the children? I mean, where are we living?

MARIA TERESA KUMAR, PRESIDENT AND CEO, VOTO LATINO: Well, and that`s the absurdity because, now, the U.S. government, what they are trying to fight is saying they that shouldn`t be responsible for the reunification of these families that they basically separated by a flimsy policy that the Trump administration decided to do literally less than two months ago.

But when you start digging in a little deeper into these facts, you also recognize not only is the extent of the cruelty, they are also providing now government contracts to former defense contractors that managed facilities in Iraq and Afghanistan.

Most recently, today, it was reveal -- found that there is a Phoenix holding facility that didn`t have a kitchen, that only had three bathrooms, that basically held children of tender age for over three weeks, run by a government contractor. MVM, run out of a facility -- excuse me, out of Virginia.

And, again, these are -- MVM is normally a defense contractor that manages facilities for folks in Afghanistan.

VELSHI: Unbelievable.

KUMAR: It is unbelievable. And the fact that the Trump administration, right now, is saying that they should not be responsible for this reunification is not only on our watch, but we demand -- we should be demanding a government oversight hearing tomorrow.

Trey Gowdy, Elijah Cummings need to bring in and basically get the record straight. Every single agency head right now is singing a different tune because they have not been asked to testify before Congress.

We need to make sure that Jeff Sessions, ORR Lloyd is -- the head of ORR, Shawn -- Scott Lloyd is being questioned, that Azar is being questioned, and also Secretary Nielsen. Because we need to have clear answers to make sure that we can actually unify these children.

There is one government contractor that has all of the information. It is the nonprofit Vera Institute. They are the government contractor that has managed every single entry of every single child that has been managed by ORR.

They cannot release the information by the public. What they need to do is, in order to release -- get the information, parents have to go to the Vera Institute to request this information.

VELSHI: Yes. Last night in Montana, the President went on in attack of Elizabeth Warren in which he used the pejorative about calling her Pocahontas. She attacked her claim to be of Indian heritage.

She responded interestingly. She said, hey, Real Donald Trump, while you obsess over my genes, you`re administration is conducting DNA tests on little kids because you ripped them from their mamas and you are too incompetent to reunite them in time to meet a court order. Maybe you should focus on fixing the lives you`re destroying.

Tell me about this, Mariana. They`re having to resort to DNA testing. So the bottom line is the allegations, the reports we`re hearing that records have been either lost or destroyed seem to be true.

ATENCIO: First of all, let`s even go back a little further. The fact that they`re requesting DNA testing and fingerprinting at this point in the game means that the intake, when they originally separated the kids from the parents, wasn`t done properly.

This is the claim by many of the organizations that are helping these families get reunified. If you write down Ali Velshi, who are your kids, and you know where one kid is, and you know where the parent is, you wouldn`t need to do DNA testing and fingerprinting --

VELSHI: Right.

ATENCIO: -- which, obviously, is going to take weeks, if not months. But then, in addition to that, you`re doing DNA testing, some lawyers say, on little kids, without the consent of their parents because their parents may have been deported. We know that`s the case of 19 out of the 101.

And in addition to that, I have been speaking to a Maria, a mother from El Salvador who you profiled on your show. She told me she got the request for DNA and fingerprinting, birth certificates this week. She is trying to get reunified with her 2-year-old and her 7-year-old.

So the fact that this request is coming in this late in the game also leads you to believe that it was either destroyed originally or not properly taken in.

VELSHI: Well, Maria Teresa, I`m trying to get my head around whether this is cruelty or incompetence or both.

KUMAR: Right.

VELSHI: But there is something that now is sinister about the fact that we are DNA testing these people. I get the --

KUMAR: That`s exactly right and --

VELSHI: Right?

KUMAR: That`s exactly right. There are multiple civil rights organizations that are basically saying that you are violating the rights of the child because you are asking them to basically provide a -- to consent to something -- to their DNA and putting it in the government database where, at this point in time, frankly, people are trusting the government less.

Let`s not forget, there are 800,000 DACA recipients that came out of the shadows that are now -- may face deportation under this government. The idea that, now, you`re going to collect people`s genetic DNA and trust this government that they`re going to do right by it is really a strong stretch.

VELSHI: But this whole conversation, it is -- I can`t say it enough. I mean, I say it every day as many times as I`m on T.V. It`s what --

KUMAR: It`s our wheeling (ph) in, Ali. It`s --

VELSHI: Because it`s not actually illegal to be an asylum seeker. There is no crime anywhere -- it`s just not a crime --

KUMAR: Exactly right.

VELSHI: -- to seek asylum.

KUMAR: Well, and let`s -- the -- it was an American lawyer that actually crafted international refugee laws. We are the ones that crafted the standards to say this is what it means to actually step in foot into another country and ask for asylum.

We are, technically, by law, supposed to be providing these individuals not with -- you know, not locking them up and separating their families and providing the most cruel means necessary, but instead providing them respite, having them opportunity to speak counsel, having the opportunity to actually talk to -- to speak -- have a judge actually understand their case, and then we are supposed to make the final decision.

But we crafted these laws. The U.N. declared three weeks ago that we are violating human rights laws, the rights of children, by separating families and children. We are violating so much standards.

And what concerns me is that we are now basically telling the world that we are abdicating our responsibility of our moral right to making sure that we are protecting the most vulnerable. And there are other countries that are watching very closely and how they are going to impact other minorities and other refugees is quite serious, what we`re telling the rest of the world right now, Ali.

ATENCIO: Final thought, Ali. When you talk to the parents -- this is about little kids that are in the middle of all this, and I just want to give you one example. This is a phone call I made an hour ago before coming on the air.

It`s a lawyer who represents a parent trying to get reunited with her 8- year-old and her 10-year-old. And she said, Mariana, within the facility, the kids requested to sleep in the same room. They have them in completely different isolated areas.


ATENCIO: So even in the details, if you were to treat an American child like that in a country like Turkey or Russia, what would the U.S. government do?

VELSHI: Yes, yes. We would be an uproar.

Mariana Atencio, thank you for your continued reporting on this.

Maria Teresa Kumar, thank you for your continued analysis and support of bringing this to an end.

Coming up, businessman President Trump made deals where he won no matter who lost. So can America win if Trump tries to make our allies lose? We`ll address that next.



TRUMP: We need a leader that wrote the art of the deal.

I`m Donald Trump. I wrote "The Art of the Deal." I say not in a braggadocious way.

I have been doing deals for a long time. I have been making lots of wonderful deals, great deals. That`s what I do.

Everybody wants me to negotiate. That`s what I`m known as, as a negotiator.

I do hundreds of deals. I deals -- the deals come out of my ears and they`re good deals. Most of them are phenomenal deals.


VELSHI: Donald Trump, the businessman, made deals with one goal -- success for Donald Trump. It`s been widely reported that many of Trump`s business deals left behind jobs and livelihoods as collateral damage while giving the Trump empire fame and fortune.

Here is what Trump`s ghostwriter, Tony Schwartz, wrote in Trump`s book, "The Art of the Deal."

I`m the first to admit that I`m very competitive and that I`ll do nearly anything within legal bounds to win. Sometimes, part of making a deal is denigrating your competition.

So someone wins and someone has to lose. One name for that is distributed bargaining. And Professor David Honig from Indiana University has this warning about that type of bargaining.

One of the risks of distributive bargaining is bad will. In a one-time distributive bargain, negotiating with the cabinet maker in your casino about whether you are going that pay his whole bill or demand a discount, you don`t have to worry about your ongoing credibility or the next deal. If you do that to the cabinet maker, you can bet he won`t agree to do cabinets in your next casino, but there is always another cabinet maker.

There isn`t, for instance, another Canada. There also isn`t another Germany. And we have a specific type of deal with Germany and NATO called a treaty.

That is what the President said about our -- here is what the President said about our defense and security treaty with NATO last night.


TRUMP: I said, you know, Angela, I can`t guarantee it, but we`re protecting you. And it means a lot more to you than protecting us because I don`t know how much protection we get by protecting you.


VELSHI: Actually, you can guarantee it. That`s what a treaty is for. And the only time that NATO`s Article Five, where everybody comes to the defense of one country that is attacked, the only time that was ever invoked was right after the attacks of 9/11 when all other NATO members came to the defense of America.

David Honig who is warning about the dangers of Trump`s deal-making joins me next.


VELSHI: Joining us now is David Honig, adjunct professor in the study of negotiations at the Indiana University McKinney School of Law.

David, you have outlined what many people have observed, and that is Donald Trump`s method of negotiating, which he claims to have brought him a great deal of success and may have actually worked for him in real estate, is just not really compatible with international treaties, with discussions with North Korea and Russia and NATO and our trade allies.


VELSHI: Why has he succeeded -- why is it that you succeed in real estate but you can`t succeed in these kinds of things? What is Donald Trump missing?

HONIG: Well, what he`s been doing is what we call distributive bargaining. Very simply defined, it`s two parties who don`t have any mutual interests trying to distribute a defined pool.

And it`s what we`re all familiar with. It`s what we`ve done. It`s the same thing when you`re negotiating for a used car or negotiating for a high-rise in Manhattan. You`re just bargaining over the price. There aren`t additional considerations, there`s no ongoing relationship.

VELSHI: So in this case, is there a danger in Donald Trump not realizing that the things that he claims or believes have made him successful in terms of negotiating won`t work? Is there a reason why that -- the principles that you apply to distributive bargaining don`t work when dealing with Canada on NAFTA, North Korea on nuclear weapons, Russia on interfering in our elections?

HONIG: Of course, because everything is connected, and Russia and soybeans are a perfect example. We impose tariffs on China. China responded with a tariff on soybeans. Very simply, that affects our farmers.

But on a much broader scale, it goes beyond even trade. So what did China do? They tripled their purchases from Russia, so now Russia is getting hard currency. And that affects our ability to project power in the world because we can`t sanction Russia as effectively because our sanctions are addressed at starving them of currency.

So there are ripple effects if you look at things as distributive and they`re actually integrative. And the world, particularly international treaties, are integrative by definition. We all share the world and we all have some mutual interests.

VELSHI: You said on NPR today, sometimes, you have to deal with people again. And if you`ve taken them or they feel like they`ve been taken, they`re not going to deal with you again.

You can do that with a cabinet maker who put the cabinets in your hotel or casino because you can find another one. But you can`t find another Canada, you can`t find another China.

Those last two sentences -- you can`t find another Canada, you can`t find another China -- that doesn`t seem to resonate with Donald Trump.

HONIG: Well, I don`t know why because Donald Trump isn`t negotiating for Donald Trump. Donald Trump, today, is the United States today and tomorrow and forever. He`s negotiating for all of us.

And so he will need to deal with China again. And the next president will need to deal with China again. And it goes on and on. And we are in an integrated world. We`re not simply buying a high-rise.

VELSHI: Which is part of what the problem is when he talks about how he`s going to -- you know, Vladimir Putin`s a great guy, he`s a fine guy. It`s not actually about the personal relationship right now, it`s about something much more serious.

David, we`re out of time. I`d love to spend an hour talking about this. Thank you for the research you`ve done on it.

David Honig is an adjunct professor in the art of negotiations at the Indiana University McKinney School of Law.

David Honig, thanks very much. Tonight`s last word is next.



TRUMP: -- you see here, the thousand points of light. What the hell was that, by the way? Thousand points of light, what did that mean? Does anyone know?


TRUMP: Thousand points of light, I never quite got that one. I tried to. What the hell is that? Has anyone ever figured that one out? And it was put out by a Republican, wasn`t it?


VELSHI: Yes, it was put out by a Republican. A Republican president of the United States of America. And there was nothing about it that was hard to understand.

But the words were spoken so many years ago, during a speech that was about hope and what can be achieved when Americans pull together. The words "thousand points of light" were written by Peggy Noonan for President George H.W. Bush.

Here is President Bush explaining at his inauguration.


GEORGE H.W. BUSH, FORMER PRESIDENT OF THE UNITED STATES: I have spoken of a thousand points of light, of all the community organizations that are spread like stars throughout the nation doing good. We will work hand in hand, encouraging, sometimes leading, sometimes being led, rewarding. We will work on this in the White House, in the cabinet agencies.

I will go to the people and the programs that are the brighter points of light, and I`ll ask every member of my government to become involved. The old ideas are new again because they`re not old. They are timeless -- duty, sacrifice, commitment, and a patriotism that finds its expression in taking part and pitching in.


VELSHI: That was a different time. President George H.W. Bush gets tonight`s last word.

President Trump has faced some tough weeks. But next week could be the toughest yet for the President, and the easy part is announcing a new Supreme Court justice.

That`s ahead in "THE 11TH HOUR WITH BRIAN WILLIAMS" and that starts now.


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