. >> rose: welcome to the program am we begin with politics this evening and talk with mark halperin and john heilemann. >> he is thin-skinned to an extraordinary degree. and the polls have gotten worse for him, but they've not gotten so bad that they overcome what is the signature dynamic of the entire election cycle, which is the trump rallies. when he goes to rallies and he sees ten thousand people and told there are three thousand people who couldn't get t all is right in the world. he does for him. he doesn't accept any data to trump the fact that 10,000 people are in there cheering for his bits of comedy, his bits of rhetoric, his bits of attack. so between now and-- . >> rose: he is intoxicated by the crowd. >> he's intoxicated by it, all candidates, particularly at this phase of the campaign, when they go to events and there are big crowds and cheering, all candidates are swayed by that.

>> rose: we continue with david barstow an susanne craig. >> that is what is significant about this, it's not that he did something il league-- illegal or improper but unbeknownst for most people, what has been baked into the tax code over many decades is this set of special quirks and loopholes, et cetera. >> rose: donald trump and his tax returns, and other political news for this day, next. funding for >> rose: funding for "charlie rose" has been provided by the following: >> and by bloomberg, a provider of multimedia news and information services worldwide. captioning sponsored by rose communications

from our studios in new york city, this is charlie rose. >> rose: we begin this evening with politics. and we talk to, who else but mark halperin and john heilemann, they are the managing editors of bloombergs politics and cohosts of "all due respect" an also the circus which is on showtime. i'm pleased to have them any time at this table as we take through this campaign, a snap shot of what the forces are that are causing the forward movement or the backward move am depending on which side you're on. i read from "the new york times," to begin this, talking about the speech that trump made after the revelations about his income tax returns. and we will, in fact, have in this broadcast two new york times reporters who were responsible for that. we just had a conversation with them and will you see this as part of this hour. this is "new york times" today, a kind of sum are of what happened in the past week. mr. trump seemed jarred by the pending revelations from topic

to topic mocking his democratic rival hillary clinton for having had pneumonia and insinuating that she might have cheated on her husband. the performance capped a bruising week for mr. trump who went from a widely panned debate performance grens mrs. clinton on september 26th to repeatedly mocking allies -- alicia machado a former miss universe who is hispanic, including with a string of twitter posts around 5 a.m. on friday. that twitter storm raised new questions about mr. trump's temper am for which mrs. clinton has often criticized him. mr. trump is now limping into the final five weeks of a race in which he has lost the momentum, some of his allies acknowledged. is that a pretty accurate snap shot of how you see where we are at this moment. >> limping is one metaphor, david plot, barack obama campaign manager has a ex-- expression, your turn in the barrel. when are you in the barrel it is hard to get out and you get negative coverage and things

feeds on themselve, trump has been in the barrel since the debate. he has had a terrible time, almost self-inflicted. the clinton campaign defendantly moved to exploit his errors. "the new york times" story on his taxes is another day where he is on deence if. trump is behind. he was behind going into the debate. rose: he was moving up.. >> but he was still behind. is he now further behind and he has no momentum. and-- . >> rose: in fact maybe going the other way. >> certainly going the other way. certainly when are you behind, even if you are standing still, as the clock ticks, are you having a bad time. he's at best standing still. he's probably lost a little bit of ground. that having been said, he can still win. he will get 42 million americans minimum who will vote for him. he needs to change the dynamic. he needs to win probably both we dates. he needs probably hillary clinton to get back in the barrel with some exposes and disclosures about her. and he needs his support to-- his supporters to be more enthusiastic than hers through a combination of his successes and her failures.

so he needs a lot to win. and the current period is not one where any of those things are likely to happen. >> rose: part of the reason it's not likely to happen if you want to make that argument is that he is incapable of not getting in the way of himself. >> of himself. >> yeah, of himself. he can't get out of his way. >> and getting in the way of what the natural dynamic of this political year, having to do with change and having to do with not necessarily a very popular democratic nominee. >> we say at the end of our show, we always say sigh nara at the end of the show, a japanese phrase there is another jeez praise tepoku, like hari cari where you are stabbing yourself over and over again. he does this all the time and he seems to do it at at every moment where he gets momentum. he finds a way-- . >> rose: why does he do that. >> i really think you would need a degree in psychotherapy to understand it. i think he wants to be president. i think he does. i mean i don't know that he wants to be president as much as she does. and he obviously hasn't tried, he hane had that in his sights for as long as hillary clinton

and maybe has a more cavalier attitude about it. but there is no universe in which it makes any sense what he did last week, right? i mean he actually on the debate stage on monday night when hillary clinton brought up miss machado at the end of the debate, she wanted to get that hit out there, he was relatively restrained. he took on rosie o'donnell but he didn't attack her, miss machado, the private citizen. he got on television the next mork, and decided to to attack her and for days after that and this crazy thing on friday in the early predawn hours. all of them, against the advice around him and against all common sense. he has gotten himself in political trouble most acutely when he has gone after private citizens. something we don't see very often. there is a high tolerance with people in the electorate for politicians attacking each other. there is not that high a tolerance for going after private citizens. so why attack the chan family, judge cu rial, miss machado when are you trying to make up ground with women, you need to win female votes in order to overcome what mark said, which is correct.

he has never been ahead in the race. not one day. and if he is going to inwith he has to attract a bunch of independent, republican leading suburban college educated women. attacking another woman calling her fat, over and over again and insinuating that she is part of a sex tape. there is no universe which-- that that advances his goals. none. >> it is a first time candidate. he is thin-skinned, to an extraordinary degree. and the polls have gotten worse for him. but they've not gotten so bad that they overcome what is the signature dynamic of the entire election cycle, which is the trump rallies. when he goes to rallies and he sees 10,000 people and is told there are 3,000 people who couldn't get in, all is right in the world. he does for him. he doesn't, he doesn't accept any data to trump the fact that 10,000 people are in there cheering for his bits of comedy, his bits of rhetoric, his bits of attack. and so between now and the debate-- . >> rose: he is intoxicated by it. >> he is intoxicated by t and he

sees it at-- all candidates when they go to events at this stage, go to event they are swayed by that. trump is swayed by that throughout and since he won the primary with that data, i think he still thinks is he going to do well. this is not my theory, this is a theory they say as long as the polls have not collapsed trump will be reluctant to change. but i don't think anybody believes and him despite their public position that he won the first debate, i don't think anybody believes that he can do anything but win that next debate, or his chances of winning go down dramically, it is his last big chance to show that he can be something of a comeback kid. >> this is also just the psychology of it. the trump seems to enjoy, if we look at him over the course of the time he has been a can the darks he seems to enjoy winningment being ahead of the polls, and he cites them all the time. >> rose: polls and ratings are his bench mark. >> and this other thing he seems to enjoy which is fighting with people. the quote in the new york times

at the end of last week with the interview with the times, i can be nasdaqier than her, proudly saying he can be nasdaqier than hillary clinton, again a strange thing to say for somebody aspiring to be president of the united states. it seems there is a tug a war between the dope mean hits he is ahead in the poll.ts whennd >> rose: like a runner's high. >> it seems to be the case. the key important thing that mark said at the beginning, he was as close to being ahead or at least being even on the night, the morning of the debate last monday, and he's gone, there is no doubt he is further away from being president now than he was then. how far we can't really judge. the polling is still coming in. but there is no doubt he has taken a step backward ward if only the thing that is so important that mark mentioned, which is time. there is just not that much time left. we are now five weeks out. and he is now because of this new york times story and other things, he will spend i think, i would predict, much of this week on defense. when are you on defense are you not marching toward your goal.

so the time-- the clock vunning down. >> rose: as political observers s it likely we will look at the past week and say the week that turned the campaign? >> not if he wins the second debate. >> rose: how does he win the second debate. >> i think he-- he nug a bigger hole, he's going to have to do even better than he would have had he done well in the first debate. it starts with having's demeanor that is calm and relaxed and presidential and gracious. and he didn't pull that off in the first debate. he did on monday he did-- monday morning he did this practice session basically with some veterans where he took questions the in a townhall style and clearly was trying out the demenner of calm, relaxed. not failing to criticize hillary clinton but not dg it in a trumpy an over the top way. i think if he-- it is a townhall style, he talks to the voters in a way that seems gracious and dignified and listens and asks followup questions, i think the clinton people will mock that and say 90 minutes can't erase a

lifetime of insults and a certain way of behaving. right now, you got to look at their floors and sealings. in the national polls but also in the battleground state polls. because the two third party candidates are not doing as well, trump probably needs to get to 47% to win the states. right now he is rarely above 43 in any of them, sometimes 44, so he needs to win over additional people. >> with respect to hillary clinton, has she primarily damaged him but not necessarily enhanced her own self with respect to how voters perceive her? >> yes, but i thought since this became a general election matchup for her to win she needs to damage him and eliminate him for-- i don't think there is space in her repertoire or time to do both. so while they are trying to build her up, it is largely about eliminating him. i think she did a great job of that in the debate and i think her campaign apparatus an performance on the trail has kept that out there, putting pressure on trump to perform and he's failing. >> rose: are was there any

evidence of what roger ailes wanted him to do that he didn't do? do we know what the ailes recommendation was? >> well, i think one of the most strike striking things about the debate was the degree to which he did not make the arguments that one would have made against her. if he had been on offense. the whole thing of how you do a debate is when are you on defense is you answer the question as quickly and cleanly and crisply as possible and pivot on to an attack point. he left millions of things on the table. he didn't talk about the clinton foundation. things we want to talk about. didn't talk about those things. he didn't talk about shall did shall did he didn't talk about the affordable care act. he didn't talk about a million things that would have been, like the most obvious hits from what should have been his plan of attack or left on the table. and that's putting aside the degree to which he took the bait although they're con joined in some ways. the degrees to which he got trapped by talking endlessly on defense in a kind of unpersuasive way. the main thing he left, i'm sure roger ailes would have told him to do. these are the things you need, the messages you need to hit her

with. >> rose: he is the one that gave her. >> how many of those did you hear, effective one-liners did you hear from him, none. >> all trump's memorable lines from the debates were horrible. they weren't offense lines. >> rose: why do you think affordable care is not an issue in this campaign? >> well, trump has no great specific plan to propose to change it trump is also for universal health care. >> rose: right. >> an she doesn't want to talk about. >> even when, now that he repeated sijer payor he still says is he for universe health care. and she i think doesn't want to take on the baggage of the negative aspects of the law. the law is popular with some people but still more unpopular than popular. and i think the specifics-- . >> rose: it is certainly not popular with republicans. >> right. and a lot of independents. i don't think she wants to pick fights where she's forced to talk about repudiating barack obama because she wants to be seen as trying to carry on his legacy for democrats. >> and he is awhilely imperfect messenger for taking the case for reasons mark suggested.

your earlier point, if trump loses the election which i think right now is the by far the more likely outcome is he is going to lose. i think this last week will be important in the narrative of it. i think again, because of the fact-- . >> rose: if he does better. >> because of the fact he had never been ahead and because of the fact literal leigh never ahead in one day of the general election, you can never point to this week and say that is where it all turned because it never turned in some sense. but it was the moment as i said where he got closest to being in striking distance of her an had the momentum and so on. and this last week really was a huge setback for him. so you know, again, if he performs better in the second debate, better in the third debate he will still be the underdog, even if he does those things, he has to do those things to win. but that will, he will still be the underdog until the day comes when we look and see him over a span of days where we see him clearly ahead, in ohio, north carolina and florida. until you see polls that put him ahead in a consistent way in those three dateds-- states which he must win in addition to winning a bunch of others that

will be hard for him. until that day is he the underdog. because he has to win all of those three, and she literal leigh has no single must-win state. he has three. so you know. >> one other thing. >> but i think if he loses will you look back on this week you will say that was the moamentd he squandered his best opportunity to win. >> rose: because he had momentum. >> yes, one thing about health care and policy in general. our show on bloomberg we asked trump campaign regularly, we want to do a thing on health care or on tax cuts or on isis, you can give us an expert from your campaign to talk with the clinton. >> they won't give us anyone. the clinton people off earn won't give us anyone. that problem from the candidate's side not withstanding, the press has failed. we have every day nolled-- followed the drama that done all trump, to some extent hillary clinton creates about insults and process. >> rose: right, right. >> and i believe it's not too soon. and we're as guilty of this as anyone, so i'm not being holier than thou about this. the press has failed to just basically say, at least on some days, you know what, people are concerned about health care.

taxes, jobs. education. we just have to ignore the candidate's to some extent and talk about these issues. >> rose: why don't you take, we should do this too. why don't you take ten minutes of your show, i have an hour, you have 30 minutes. >> you have an hour, the problem is, he's gotten-- . >> rose: say we're going to do this. >> we should, we should, and if i could turn the clock back and do more of it. it is hard to do at the en. but the problem is, he has got almost no policies on almost anything. he has some but they're not very specific. she has got fewer specifics in her campaign pretends. and it's hard if the campaigns won't talk about it. if they won't put forward their experts, it's very hard to have meaningful discussion about it in the context of the presidential campaign. at he's not an excuse, i wish i could turn the clock back six months and fore see how this would go and say everyone in the media should figure out ten minutes a show, figure out a way to do something on policy. >> or even just ten minutes a week because most of vus done less than that. and we all found it irresistible because they both do especially trump, make so much news.

and it's hard to say i'm going to ignore this thing that happened today and focus on this thing that neither campaign wants to talk about. it is really hard. i agree with mark, we collectively, all of us, have not done a great job in this campaign on that matter. >> every four years there is reason to look at the job the prises did. and to find fault and vow to do better. this has been just a national tragedy. and again i'm not exempting myself at all. trump, particularly, but also the clintons just create so much as rick perry would say cirrus, so much stuff, daily back and forth that it's hard to find room to cover issues. when they're not really talking about issues very much either. but i will say, hillary clinton talks about issue, she talked about national service last week. later in the day she talked about trump's tweets. and her campaign new full well the minute she did that, any examination of her proposed of national service, out the window. >> rose: why did they do it? >> because they're in battle. and trump's tweets were a big, irresistible target. >> rose: neerdz. >> and because of the fact that

the way in which, when you think about how they have decided to disqualify him which is obviously what they are doing. the same way obama disqualified romney and george bush john kerry, largely on matters of temp ofmentment not on the inadd quains-- inadds quawsee of policy, they are not. >> they did he sided temperment. i'm not being critical of that. they decidedded his temperment sun fit for office because of some of the thing hes has given plenty of ammunition on complu including the way he by lifed last week. but if that is the frame, the main message you are trying to drive, this man is not suited for the oval office because temperment will you not be inclined even when you see flaws in his proposals will you not be anne inclined to chase those. >> rose: when you look at the national security officials who either are strong republicans like bob gates or national security figures without a pronounced sort of political

leaning, they all cite temperment. >> yes, they do. >> rose: not qualified to be president. >> right. >> rose: because there is a distinct qualification to be able to handle the demands on the national security front. >> you don't even need to go to national security for a lot of guy who gets up at 5:00 in the morning and starts tweeting an attack on a woman for her looks and her alleged sex tape is not someone most of those people are comfortable having, controlling nuclear weapons. >> rose: we haven't seen policies like that before. >> no. >> rose: most of them don't know anyone like that. >> it's true the economic realm too. there say reason why all these head to the cay there is no one, i believe not a single former head of the economic advisors who is for trump including republicans, marty felledstein are for clinton there is a temperment place there too, right. because things you say rattle the markets. if he attacks the head of the fed. he said things in the course of the campaign about the head of the fed that would be disastrous if a president said them. that is part of the factor for

the economic perspective. >> the idea of government is not a new idea. it is a bit like all the way back to fdr, oliver wendel hold ams, walter littmann who famously said about fdre he had a second class mind and first class temperment. temper. has been introduced and that is the capacity to listen, the capacity to seek out the best advice, the capacity to have people who work for you butt heads to get the best possible recommendations. >> and also to control yourself and your intemp erat impulses which std thing that is most disconcerting for a lot of people. which is that everybody in the world gets mad. everybody in the world wants to throw a tantrum now and then but one of the jobs as president is not to do that. >> rose: and an adult is often characterized by some element of-- discipline. >> right self-discipline and restraintd are huge qualities that a president must have i think part of the reason the people are you talking about, and others look at trump, that

is the quality that he most lacks in their view, is that-- he can't restrain himself. >> almost everyone we know looks at trump's temperment and says that say big problem, or that is disqualifying. i will say again, been saying it a lot in the last week, at least 42 million americans are going to vote for donald trump. that is a lot of people who are familiar with his temperment, and say that's not going to decide it for me. >> rose: because they have an overwhelming reason. >> they don't like her. they think will change washington and that is what they want. >> rose: they don't like her and want something different. >> i think it's deeper than that, it goes to 25 or 30 years of people who we don't hang out with, seeing establishment politicians of both republican and democratic party come in, promise to change things, not change anything and their life pros pecks have gotten worst over 25 years, those 42 million people, not all of them there are some very successful people in that group but the core of trump's support are people pissed off at establishment

politicians, financial establishment, media establishment, all have had a pretty rough ride for 30 years and they are kind of like well, i am willing to roll the dice on this guy. because the way it's been going for the last 30 years, we tried dem kratds and republicans of a certain kind, none have worked out well for me, my family, my kids. there are things i don't like about what trump says but i know he will throw a stick of dynamite in there and that is less of a risk than just doing the same thing over and over for another administration. >> within elite circles it is common now to ask republicans elites who are supporting trump, how could you. how could you support trump. i think again for the good of the country, no matter who wins, some he leads should be asking themselves, who are opposing trump, how could these 42 million people be voting for him, what is it that they are looking for in their president, to which trump is their answer. given his temperment. it is a profound question. >> rose: i agree. >> that is not being asked enough, swi a lot different if trump gets 42 percent as opposed to 36 percent. >> rose: yeah.

>> and tbe dises missive of 42 million americans, is not an adequate answer. they lost, they losers, good-bye and move on. that is not good for the country. >> rose: do we assume of those 42 million americans that will vote for trump, some have never voted other than republican, they will vote for this republican too. >> oh sure. >> rose: they are not all people that felt the system. >> no, to be sure. but they don't-- don't render the judgement that bob gates renders or marty felledstein renders that this guy's temperment just makes him impossible to be president. >> right. >> rose: when you look at this election in terms of constituencies, is education-- educated sur su bauer ban woman the one constituency if he does not do something to attract them to his side, he can not do when?

>> i think educatedded, married white women, and young people, she needs to get young people not just to vote for her but to turn out. she will get a high percentage of young people but she needs a high percentage to actually decide to vote. >> those are the two-- if you account campaigns you think are what are they worried about, you know, the trump campaign, the raise, the ethnic dynamics of those democrat-- demographics are baked. will not do well with hispanics. she needs to turn out with hispanics and african americans he will not move those numbers in a meaningful way. the trump campaign the path to krict vee-- victory would be solving the problem with suburban, mostly married white college educated women who would normally voted republican but are freaked out by donald trump. on her side, the key element is trying to figure out how you get young people who voted in huge numbers for obama in 2008 and 12 and don't seem to care much about her. how do you get those people to the polls.

those are likely the closing five weeks, those are the voting groups that the two campaigns are most concerned about and most focused on. it's not to say that donald trump is, because his behavior seems to suggest yoars, is he not as to tus-- focused as the campaign is but those are the two porntd voting blocs in terms of what people are trained in on. >> rose: help me understand this. is the disclosure of the 1995 income tax, three pages state return, the most important disclosure of this campaign season? >> the most important, i don't think so. we knew, its a he an porntd story and the time kudos to them for getting it and developing it. we already knew that he had huge losses. >> rose: this just brought it home. >> sure. >> rose: validated it because he tried to talk and say. >> invalidated for whom r there voters who will have read "the new york times" and heard about this story and think anew. a lot of voters think yeah, rich people take advantage of the tax code. >> rose: right. >> they buy trump's line, this

shows i'm a smart guy who takes advantage. who wants to pay more taxes. >> rose: and gives me the capacity to fix it i know it's not fair that you couldn't do this because you can't afford the experts i can afford, therefore i know how to fix it. >> the tax breaks that real people in real estate get are outrageous and they get them because they are an influential lobby. but the fact that he had losses, the fact that he pays little or nothing in federal income tax, i think people already knew or suspected this. hillary clinton said as much in the debate and trump seemed to confirm it, although-- . >> rose: makes him smart. >> but i think it's an important story. i really don't think that this is show changing the dynamics of the race except for the factd he will be on defense for at least 48 hours when there are not that many days left. >> i think the one thing that is true about it, and this goes yet again to the economy, which is like we all knew it, you know. i think we all knew it, there is something about, i think, for voters who are just now tuning

in to the election in places like ohio and pennsylvania and florida, north carolina, to, they have known there has been, that trump hasn't released his taxes. when he lost almost a billion dollars in the middle of the 1990s which was pretty good time economicically for america. you see quoted frses average voters talking about ordinary voters talking to reporters. >> rose: bill clinton was president. >> he is supposed to be a great business guy, lost a billion dollars and hasn't paid taxes since then, i don't know that it changes the dynamics of the race but there are some number of voters who just hearing those things, even if the basic contours were kind of broadly known by people like us f you are someone who is just now turning in, that is a big number, i think-- again, it's not proven he hasn't paid taxes, we don't know that. but again we have a lot of voters absorb be, he lost nearly a billion dollars and didn't have to pay income taxes for 20 years. >> rose: we don't know. >> that is what they are hearing. >> rose: they are talking about 50 million a year though, that is how they come to the number that he could, over 20

years. >> i just think that. >> why not better years than that. >> rose: rudy made the point. let me just ask you quickly before i go. bloomberg politics polls and nbc polls, "new york times," cbs polls, where is the election today in florida? today, snap shot. >> pick them. >> rose: okay, ohio. >> trump's ahead. >> rose: north carolina. >> she's a little ahead. >> rose: what else am i looking at, virginia. >> she's way ahead. >> rose: nevada. >> trump is probably a little rose: so pennsylvania.lose. >> she's ahead. trump either has to win pennsylvania or three or four other states. look everything starts as we said before, everything starts with florida, florida, north ka carolina. he must win all three. if he wins all three, which the clinton campaign concedes he could, they don't think he will but he could, he either must win

pennsylvania or, and win iowa, probably, then he needs to win two or three other states to get over the top. so if he wins the big three, florida, ohio and north can linear than he is in hailing distance of winning. but he still has a much narrower path than she does. >> that path basically gets him, if he pulls that off, wins all three of the must win, two of which are had are hugely close right now, and assume he doesn't win pennsylvania which is he probably not going to win pennsylvania, probably not, the more likely path is doing this thing where he stitches together these smaller states. even that just barely gets him to 270 electoral votes it is a very narrow path he is on right now. it's not impossible. but it's narrow. there is not much margin for error. >> rose: back in a moment. we will talk to the new york times reporters who got the letter that contained the documents about the 1995 tax returns of donald j. trump and marla maple. "the new york times" revealed on

saturday that republican presidential candidate donald trump could have avoided nearly a billion dollars in income taxes over two decades. the report was based on documents obtained by the newspaper which showed that trump declared a $916 million dollar loss on his 1995 income tax returns. this loss could have allowed him to legally avoid paying any federal income tax for up to 18 years. trump has refused to release his tax documents himself. the news comes after a bruising week for trump following his poor debate performance and combative public statements on social media. joining me now are new york times reporters david barstow and susanne craig. i'm pleased to have them. i just saw them several moments ago on cbs this morning it is good you come back and tell this story again. what would we learn if we knew what his nabbing tax, that he says is being audited, what would we learn about him from that? >> oh, gosh, we would learn so many different things. i mean first of all, we learn fundamentally, is he paying federal income taxes.

what is the rate. has he given to charity, beyond that, we learn an awful lot about the income or losses flowing to him from all of his var yaws pirps. >> rose: we learn who he owes money too. >> there say whole ton of things that you can learn, especially from a tax return filed by donald trump. >> rose: is there a consensus as to what they think the reason he's with holding the income tax returns? >> you know, from my reporting, the leadinger in ree is that he wasn't paying federal income taxes, primarily because when are you a real estate developer, there is no better autopsy to be in this country to avoid paying income taxes. there is a whole set of just fabulous tax deductions, loopholes, et cetera, that apply specifically to commercial real estate developers that don't apply to anyone else. >> that et goes to the how he has managed to do it, which i also think-- . >> rose: how does he manage to do it. >> i think that is one of the things he also doesn't want

people to figure out is exactly how he's done it. >> rose: is it essentially because he uses a subchapter s corporation, which is a way that you have corporate protection, yet-- it goes directly into your personal income. >> it can flow into your personal income which is what we think we saw into the 1995 tax return, separately have i looked at his filings that he did make with the federal election commission as part of his bid for for president. and those documenteds show that corporations that control his businesses then flow down to him, they are 99% ultimately owned by him. it was a theme that you couldn't get around when are you looking at the 512llcs that he disclosed that he does have an there in on his federal election commission filing. >> rose: explain to the audience the difference in what he-- why it is that he can lose money, a significant amount of money, 915 million dollars, and then carry it forward so that everything he earns after that,

first can be compared to what he has lost, so that he doesn't have to pay income tax and you have calculated that if in fact he earned 50 million a year, it would still be 18 years. in which he would pay no federal income tax. is there any-- help me on this. is there anything that ordinary citizens can take advantage of in order to have the same kind of a record. for example, if they had bad investments, could they take a loss on their investments if they bought a stock at x and sold it for x mine us ten, could they take that loss forward and say if they made money on the stock the next year, they could. >> so, sure, ordinary, you know, folks do have things like carry forward and capitol losses, but they are quite limited. >> there is a limit to them. >> 2,000. what, the trick here, i mean the thing, maybe that is the wrong word. but the instrument here is this

thing called net operating loss carry forward. and it is a provision that-- provision that is particularly advantageous for wealthy filers like donald trump, someone who has a whole kind of complex partnerships and llcs and s corporates. >> some-- and what that does is it gives a mechanism for the losses from those entities to flow directly on to his personal income tax statement. that creature, the net operating loss carry forward, i promise you, 99% of the people in this country have probably never heard of it, they don't use it. >> is this something they don't know about it or. >> it disunt apply to them. >> rose: it doesn't apply to them. >> most people don't have partnerships and s korps and llcs. >> a lot of people are making 20, $30 an hour and they work

for a company that would be taking van of the llc. >> rose: ordinary income. >> they have ordinary income. >> ordinary income. >> like i do. >> every week we get. >> the vast bublg of us. >> rose: right. so would you having talked to tax lawyers and tax experts about this, would most people either in the real estate business or the investment business who have a lot of investments like this, look at what donald trump did and say yes, of course, we all do that. >> i think they would. what do you think? >> i know they would. >> we've been talking to them. >> rose: this does not come from a criminal mind. >> no, not at all. >> rose: if is simply somebody who said this is exactly what other people do in my business. >> that actually is what i think is really significant about this. it's not that he did something illegal. >> rose: right. >> or improper. it's that unbeknownst i think to most people, what has been baked into the tax code over many decades is this set of special

quirks and loopholes et cetera-- . >> rose: because people like that can pay lobbyists who can-- and can influence the tax legislation. >> yup, to their advantage. >> that is actually-- . >> rose: they have money to get laws written that are advantageous to them and most of us don't. >> correct. >> rose: all right, so how did this begin? you get a letter-- from trump tower. >> i got a letter in the mail, yeah. and i opened it. >> rose: with a 25 cent stamp. >> i think there was a forever stamp on it. and i opened it up. and it was folded over once and i looked at it and it was 1995 tax return for donald j. trump and marla maples who signed her name marla trump. >> rose: and three pages of their tax return. >> just three pages. >> rose: sum are pages. >> they were sum are pages of new york state, connecticut and new jersey. which of course show a lot of details about what he paid federally. >> rose: and what else is

interesting about there? what did you see there? >> we saw that they disclosed one depend ent. we saw a lot of different lines about how much wages he disclosed, it was quite low $6,000. >> just over $6,000 in wages, salaries and tips. >> almost a billion dollars in operating losses. >> rose: trump incorporated. >> the numbers were kind of-- honestly the numbers were mind bog elling. >> when we first got it we were trying to figure it out and we brought our computers and we pulled up the 1995 tax code and-- code and we started trying to figure it all out. >> rose: how they kalt claited all those numbers. >> how they calculated it-and what they meant. and we didn't-- we were like negatives in front of these-- like what is, this i i have never seen that before. >> we brought in, we obviously immediately realized we needed tax help so we brought in some good tax experts and one of the tax experts, he looked at the numbering and said well he only

lost $916,000 it was like his brain couldn't-- couldn't click-- but it was 916 million-- and i said no, no, no, look again. and he went holy cow. >> it was interesting to watch people when they first saw it because the process that they went through to say $916-- almost million dollars. people had to just like get their heads around it when you would watch them. >> rose: and what were the common enters of the 916 million? >> well, that is an interesting question. we don't really know because a lot of it was losses that he incurred in previous years and remember, in the late 1980s. >> rose: carry forward. >> carry forward from prior years. >> and in the early 1990s he was in a lot of business trouble and there was a lot of red ink from brupses he had and big business losses he had in that time. so we would need to see the specific tax returns for each of the 15 years previous to really understand that number. >> rose: have you written about everything you have seen?

for the most part, i am asking, are you not holding back anything? >> we're holding back the-- no, we're not. >> we're sitting on the 2001 and 20013-- no, we're cognizant of the fact-- . >> rose: for whatever reason, maybe your lawyer said you can't do go with this. >> no, no, no, no. we will publish. >> rose: right. what has been the response? i mean have people who have been sources for you said oh my god, you have hit the moder-- mother load. >> we have had a lot of calls today. i've gotten and i know david has too, a lot of accountants sending us notes trying to figure it out. those are my favorite. >> rose: that you have been talking to about. >> no, just every cpa in america. >> rose: what do they say. >> they vay theory. did you consider this, did you consider that, look here, look there. >> look this, look there. >> rose: seeing the numbers that you and i don't see. >> it means something to them. >> we're journalists. we think in words, number

numbers. >> rose: so there is also much speculation and i'm not going to speculate here, as to where it might have come from. i mean what kind of person might have done this. >> we've spent a lot of time thinking. >> rose: and you don't know. >> the return address was from the trump tower. and we are still trying to-- we were equally as perplexed when we saw it. it was like wow, the person was. >> you sit there and you try to think through. >> the motive. >> why just these three pages. >> rose: exactly. >> why not the federal tax return. why didn't they send a complete return. you know, you go through all of that stuff. >> rose: do you have any interest in, that speculation. >> some, yes, some. >> have i spent a lot of time imagining the person thinking, i this have got this. i-- i want to get it out in some form, and actually just going tt of doing this, and going to did shall-- going to the mail box and putting it in. and just both, the motives, potentially the courage.

you just sort of wonder like what they were thinking. like it's just wow. >> can i just say, charlie, like the most amazing thing about this story is that this person had certainty sent say those documents to me, there say very good chance i wouldn't check may mail box. >> i'm now checking his mail box she is like the only reporter i know checks the mail box every day. >> a couple of times a day. >> rose: because people write you a lot? >> i get no good mail and it's always been like the thing with me. i used to cover wall street and i would get analyst reports. >> rose: what is more speculation, is it possible that ey only had those three documents and show they. >> just don't know. >> i really doubt that. my gut tells me. >> me too. >> rose: your what? me.e: your gut is important >> my gut tells me that whoever sent these has more.

and we invite them to house the mail system again or-- . >> rose: why does your gut tell you that? >> for a couple of reasons. why is, so there is you know, one page from three different state's tax returns. none of them are the complete tax return for any of those three states. and i find it you know really difficult to imagine how someone would only have just those three pages. and not have more. >> rose: okay, let me ask you this. >> it would be odd just to also have just one year, it just doesn't, when you think about logically, there has got to be more there. >> rose: so on every television appearance you are saying to whoever that person is, don't stop now. >> i say 620,-- 620, eightth avenue, new york, new york, 100. >> third floor, i'm checking both of them. >> i'm checking too.

>> rose: is there any remote possibility that "the new york times" could be prosecuted for this? >> we don't think so, no. i mean we came in po tetion-- . >> rose: you had to go through your laws and have this vetted up one side and down the other. >> we did. but actually there was a lot of deficit in bringing this story to the public. >> rose: which was? >> but the legal question was the least of our problems. >> rose: what was the deficit, other than. >> the deficit was you need to authenticated these documents. >> rose: exactly. and how did you do that? >> we went to the person who was named on one of the documents as having been the tax preparer, jack melnik who is donald trump's long time tax accountant for many debate-- decades. and so i flew down to florida, and got jack to meet me at a bagel shop and i showed him the documents. he was obviously extremely aware of what he could and could not say under his ethical obligations as a cpa.

>> rose: was he surprised to see you? >> or had you laid out why you wanted to see him. >> you know, it's always a little surprising when the reporter shows up. >> rose: says i just want to authenticate these documents which is the thing that everybody who is covering the political candidate-- candidacy of donald trump wants to know. >> yeah. and so-- . >> rose: tax returns. >> i think you know, he immediately looked a at them. he immediately recognized them, yes, of course that is my signature. yes, in fact he remembered that these were the last tax returns that he prepared for donald trump. he stopped representing trump the following year. and you know for me, the critical moment was when i showed him tk this particular page that had just been plaguing me this long nine digit, 916 million dollar loss there was

this quirk btd number, the first two dijt, the 91 were slightly different fonts and slightly misaligned to the following seven digits. and it looked to us like it could have been someone simply doctoring a tax return and it was the thing that concerned us most that these were fake. i showed them to mr. mitnick, i said i'm really concerned about this, this number right here. i don't understand why these two digits are different and don't line up. and he just laughed. he chuck eled. oh, yes, i remember. yes, at that time i was using this particular tax software that had trouble printing out a nine digit number. and it only would printed out seven of the digits. >> it was too big. >> so what i did was i then ran it through my ibm type writer and i typed in, i typed in the 9 and the 1. and it was such an immediate reaction and such a specific

kind of reaction, when are you doing this kind of work, are you looking for you know, those kinds of really telling details with specificity. and do you this long enough, you know when someone is grasping for some concoction. >> i called me underward-- afterwards and said you are noted going to believe this. >> rose: why doesn't he work for doned a trump any more? >> he parted ways with the accounting firm that he had worked in for many, many years. and went off, and went to a different firm. >> rose: so here is the question to, why has donald trump been so adamant about not releasing his tax returns for what, the 2015, 16. >> what is interesting to me. >> rose: this is 19 -9d 5. >>ary's talking about 1995. that year is clearly not under audit. his surrogates were out yesterday saying that this is evidence of his genius you would

think if it is evidence of his genius, why not get it out and show your genius. >> that is the part i don't understand. >> so then why do you believe it's because he doesn't want you to know that he paid no ned ral income tax, even though they are loudly proclaim there is nothing illegal here, and they are probably right, as far as we know, correct? >> i think one of them is the method of how if he has not been able to, it shows that he got into a lot of trouble, number of his businesses were on the rocks. he was able to par lay all that red ink to irs goals. >> it may be that what really troubles him more is-- is not not paying the taxes, its that there is this number, mine us 916 million that does call-- that does call into question his business acumen. if are you such a great businessman, how did you end up with a nearly billion dollar loss on your tax return. >> and there could also be a lot

of things in there. it is how much you have given to charity. and also a lot of for and potentially his foreign ties it is a. >> who he knows money to. >> who he owes money to. who he is doing business to here and overseas. >> that is different than the federal income tax, that is the other stuff which i think. >> we could get a lot of insight into bank statements and thing he may have had to submit and underlying documents,ed schedules that are there, listing income from different places. >> you have to imagine that st especially given the way people reacted to mitt romney released his tax return, it showed him paying 14, 15%, and there was some shock about that. i'm guessing there are people in his, mr. trump's political operation who wonder what the impact is on the american public if it turns out that a billionaire had gone decade was paying income taxes. >> rose: here is what will be interesting to hearsay, i think somebody in the campaign said

mr. trump knows the tax code far better than anyone whoever has run for president and he is the only one that knows how to fix it. he made that argument about almost everything. he knows how to fix the balance el guess isis, he knows how to fix what is wrong with the tack code, what is wrong with the country. >> it sounds like will be giving seminars on how not to i pa taxes which i would be all up for, so. >> rose: my point is, why wouldn't you just step forward and say look, yes, in fact, i did. this is all legal, i did this. and i am the best person to fix it i took advantage, i used laws that other people, other business people did. i acknowledged that. now whether it was fair or not it was certainly legal. and but it may not be in the best interest of the country because these are the taxes are the way we pay for social welfare, or national security. and everybody ought to be in full participate in thavmentd you know, and therefore i want to fix that system. >> there are two great themes of

his campaign. one is that the system is rigged against the average guy. >> rose: right. >> another theme is that we've got to make america great again because its infrastructure is crumbling, we're falling part at the seems. >> rose: and washington is corrupt. >> and washington is corrupt. and you would kind of wonder wouldn't this be an teubt for him to actually play on all of those themes, by saying yes, this, i know how corrupt this system is. i have seen exactly the way the game is rigged. because-- . >> rose. >> i have gamed the system for years. and so here is my plan, my tax plan to close all those loopholes that i personally have benefited from for many, many years. it's interesting that he, you know. >> i think he thought-- i think he thought he could run it out without-- without saying all that which basically says i didn't pay taxes without showing anybody and making those

criticisms without having to release the granular detail which would open him up to reporting until the end of the election where all these reporters are going through page by page of his tax return. i think he thought he could get through with that line and basically making the admission without having to do the show me your hand. >> rose: tell me what questions about who he may have borrowed money from. >> we just don't know. we know directly how much real estate, how much real estate lending he has got but there could be a lot of other questions particularly through some partnerships that he has, ere there could be a loan.ship there could be foreign interests that we don't know, foreign banks. >> we sort of had a look at the united states but there is just a lot of deficits. >> rose: and there is no information about whatever links he may have had to foreign investors or foreign lenders. >> yeah, we just don't know until-- we know the bank of china is a lender into a building that he has an interest in. but he's not the signature on the loan. it's a being that he owns, a

percentage of the partnership that owns it. there is just a lot of complicated business structures like that where if we saw the tax return we may be able to get more visibility to it i think the key thing is we don't know, so we want to see it just to see what we could see. right now we don't know. >> do you have a number for the network? >> i do not. >> you haven't come to some conclusion? >> thousand know the chal edge was, this is interesting because i spent a number of month this year reporting when we started with a simple question of what does he own and who does he owe money to, we hired a title search firm at the "new york times." we hired them. and we spent three months doing a title search and going through all the documents. there were tens of thousands of pages of documents on all his u.s. properties, what we could ascertain is the money that he owes, but in order to get a valuation on the buildings, a proper valuation you would have need to see the books and records of each building, propertied and business and we kontd get access to that.

so we can understand in a way his debt when it is direct debt but and also some of the partnership debted but we just couldn't get beyond that. he has claimed he's worth ten or 11 billion dollars. he's also said at times that some of that calculation is based solely on his brand being worth one time he said $3 billion stvment such a moving target. i'm just really careful to say we know what-- we know he is not-- he owns a lot of things. so it's not, he's not without value. but i would say it's probably not $10 billion. >> rose: i 24eu what is intrigue being all of this, i have said this earlier, is how he recovered from a series of very bad investments. things that didn't work out. we know they didn't work out. we know the plaza hotel didn't work out. we know the-- atlantic didn't work out. but at the same time, he was able to get back up on his feet. and we know banks helped him. because they were

indit-- indebted. he had-- they had outstanding loans to him of some significants so therefore what you do is you have a negotiation between the lender and the borrower. and you set up how they're going to try to pay you back. otherwise you call the loan in and throw him into bankruptcy and you seize everything they have. >> but what it also now looks like because of what we published on sunday is that uncle sam also helped him. we did. the taxpayer. >> rose: because of the tax rules we have. >> because of the tax rules that we have. that would have o you lawed him to earn as you mentioned up to $50 million a year and not pay a dime in taxes. on it. and i think that's one of the things that we're going to continue pursuing sunday standing how that tax benefit may have in fact been an important part of his recover. >> rose: do you think there will be more letters in the mail? >> what digs your gut tell you. >> there will be. >> rose: thank you for coming.

>> thank you. >> thanks, charlie. >> rose: thank you for joining us. see you next time. for more about this program and earlier episodes visit us online at pbs.org and charlie rose.com. captioning sponsored by rose communications captioned by media access group at wgbh access.wgbh.org

>> rose: funding for "charlie rose" has been provided by: >> and by bloomberg, a provider of multimedia news and information services worldwide. >> on tomorrow's pbs newshour special live coverage of the vice presidential debate plus breaking down the first day of argument that the supreme court.

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