Too Close to Call; Star Witness Grilled; Firefighters Gain Ground; Musk Stuns Wall Street
TROY BALDERSON (R), OHIO CONGRESSIONAL CANDIDATE: I'd like to thank President Trump.</s>CHRISTINE ROMANS, CNN ANCHOR: The Republican candidate declares victory. The president takes credit, but the numbers show Ohio's special election still too close to call.</s>PHIL MATTINGLY, CNN ANCHOR: Paul Manafort's lawyers grilled the prosecution's star witness, painting Rick Gates as a cheater and a thief who can't be trusted.</s>ROMANS: Firefighters gained some ground in the largest wildfire in California history, but the battle is far from over.</s>MATTINGLY: And Tesla boss Elon Musk stuns Wall Street with a public declaration of his private ambition ambitions. Good morning and welcome to EARLY START. I'm Phil Mattingly, in for Dave Briggs.</s>ROMANS: And I'm Christine Romans. It is Wednesday, August 8th. It is 5:00 a.m. exactly in the east. And let's begin with this. If Ohio's 12th district is any indication, a blue wave could be coming in November. In a special election that many considered a bellwether for the midterms, the race between Republican Troy Balderson and Democrat Danny O'Connor is still too close to call this morning, an encouraging outcome for Democrats in a deep red district, no matter how it plays out. There are still more than 8,000 outstanding provisional and absentee ballots that could take days to count. Balderson currently leads O'Connor by less than one percentage point, fewer than 2,000 votes. Both candidates spoke late last night, O'Connor refusing to concede, Balderson quick to claim victory.</s>BALDERSON: I'd like to thank President Trump.</s>DANNY O'CONNOR (D), OHIO CONGRESSIONAL CANDIDATE: Because we see division and discord tearing apart our country. We must remember that each and every one of us are God's children and that all of us need to be treated with dignity and respect. And I think we could use a lot more of that spirit in Washington these days.</s>ROMANS: President Trump, from his vacation schedule, working vacation schedule, took time to declare Balderson the winner and take credit for it, even though the outcome is not official. The president tweeting, when I decided to go to Ohio for Troy Balderson, he was down in early voting. That was not good. After my speech on Saturday night, there was a big turn for the better. Now, Troy wins a great victory during a very tough time of the year for voting. He will win big in November.</s>MATTINGLY: Several elements of that tweet, I'm not sure totally track with reality, but he looks like he's on the path to win. Now, we've got a couple of other primaries to tell you about. And shout out to all of the political analysts and nerds waiting for Johnson County --</s>ROMANS: Johnson County is trending on Twitter.</s>MATTINGLY: It's trending on Twitter right now, congratulations. All right, another race too close to call in Kansas, Johnson County. Secretary of State Kris Kobach, a hardliner on immigration who received President Trump's endorsement, is locked in a very tight race with Governor Jeff Colyer. The official result could be announced later today. And in Missouri, CNN projects Attorney General Josh Hawley is the winner of the GOP primary for Senate. Republicans are hoping he can unseat Democrat Claire McCaskill in November. In the Michigan gubernatorial primary, CNN projects State Attorney General Bill Schuette will be the Republican candidate in November. Former state legislative leader Gretchen Whitmer will be the Democratic candidate. And CNN projects John James has captured the GOP nomination for U.S. Senate in Michigan. James, an African-American Iraq War vet endorsed by president Trump. He will face off with Democrat Debbie Stabenow in November. Former Trump campaign chairman Paul Manafort's longtime right-hand man back on the witness stand today. Manafort's defense lawyers expected to pick up where they left off yesterday, trying to undermine Rick Gates' credibility in the eyes of the jury. Gates admitted to a host of transgressions. So far, Manafort's defense team has not done much to pin the bank and tax fraud their client is charged with on Gates alone. That part of their cross examination may come later today. More now from CNN's Jessica Schneider.</s>JESSICA SCHNEIDER, CNN CORRESPONDENT: Christine and Phil, Paul Manafort's lawyers went on the attack against Rick Gates on Tuesday. They hammered him with questions that even led Gates to admit on the stand that he had an extramarital affair a decade ago. But when attorneys accused him of using Paul Manafort's money to fund his so-called secret life, Gates pushed back, saying the money actually came from bonuses. Now, of course, the defense team is doing everything they can to attack the integrity of Paul Manafort's former right-hand man. Gates said he had made some mistakes, but he insisted to the jury that he is now telling the truth. And the defense team really wants to establish that Rick Gates was the one who developed that financial scheme to hide money from the U.S. government, not Paul Manafort. Paul Manafort's lawyer even asked the direct question of Gates, did you develop a scheme? And then Gates responded, no, I just added some numbers to some reports. But really, prosecutors have gone to great lengths to show that it was, in fact, Manafort in charge. At the end of Gates' direct examination, prosecutors were painstaking to show the process where Manafort asked Gates on occasion how to add information to a PDF document, and when Gates said that when he got the document back, Manafort had actually changed some of the numbers, falsifying some of their financial reports. Of course, Rick Gates was a close associate to Paul Manafort for 12 years, but now he's flipped, he pleaded guilty, and he's telling all he knows to prosecutors. So, it will be interesting when he is back on the stand for more cross examination this morning -- Christine and Phil.</s>ROMANS: All right. Jessica Schneider, thank you for that. Legal woes multiplying for Michael Cohen. "The Wall Street Journal" reporting President Trump's former lawyer and fixer is now under investigation for tax fraud. Sources tell "The Journal" the federal prosecutor in Manhattan is looking into whether Cohen underreported income from his taxi medallion business. The taxi licenses yielded hundreds of thousands of dollars over the last five years. "The Wall Street Journal" also reporting federal investigators are looking into possible fraud against the bank that financed Cohen's taxi medallion business. Cohen has not been charged with a crime, and "The Journal" reports he previously denied wrongdoing.</s>MATTINGLY: Firefighters are still struggling to contain the largest wildfire in California history. At this point, the Mendocino Complex Fire has scorched nearly 293,000 acres, 75 homes have been destroyed. And the fire at this point is only 34 percent contained. Firefighters are up against hot, dry, and windy conditions. CNN's Stephanie Elam has the latest from Mendocino, California.</s>STEPHANIE ELAM, CNN CORRESPONDENT: Christine and Phil, we are standing in the midst of some of the devastation from the Mendocino Complex Fire, which is actually two fires that started about the same time, burning near each other here. And you can see how hot this fire got. The devastation here, even in this rural community, you can see that it has really ravaged some of the properties that are here. And just to give you an idea of how bad the fire season has been, if you go down just a couple of blocks from where we are, there's another building that's burned down. You might think it's from this fire. It's actually from a different one. All in all right now, there are some 17 fires that are burning in the state. And just to give you an idea of how bad this fire season has been with this one being the largest fire in state history at this point, some 550,000 acres of land that had been burned in the last three weeks because of wildfires. And, Phil and Christine, fire season is far from over here.</s>ROMANS: All right. Stephanie, thank you for that. The president is claiming without evidence that California's environmental regulations have worsened the fires raging there. The president tweeted this: California wildfires are being magnified by the bad environmental laws which aren't allowing massive amounts of readily available water to be properly utilized. It is being diverted into the Pacific Ocean. Now, state and federal officials and wildfire experts say these claims are false. They say there is plenty of water to fight the flames. There is a debate in California about how much water should go to cities and how much to farmland, but officials say water is simply not being deliberately flushed into the ocean. That's not happening. We don't know where the president got that idea. Even the White House can't say. His tweets sometimes correspond to segments on Fox News. That doesn't seem to be the case in this instance.</s>MATTINGLY: Last night, President Trump hosted an informal dinner for some of the country's top business leaders at his Bedminster golf club. The president and first lady welcomed two dozen CEOs and their spouses, including the heads of Pepsi, Fiat Chrysler, FedEx and Boeing.</s>MELANIA TRUMP, FIRST LADY: Welcome to Bedminster. It's great to have you here. And we're looking for a great discussion tonight and I just want to thank the president for doing an incredible job and for all of your help.</s>DONALD TRUMP, PRESIDENT OF THE UNITED STATES: The policies of the other administration would have been more regulation and much higher taxes. And what you're witnessing now could never have happened. And growth has taken us out of a lot of problems that have been caused, and you're going to see super growth soon when it's all said, when it's working like a fine-tuned machine. You're going to see some real growth.</s>MATTINGLY: That guest list also included the heads of some much smaller companies who have been very close allies to the Trump administration over the last few years.</s>ROMANS: All right. Elon Musk may remove Tesla from the scrutiny of Wall Street, taking it private in what would be the biggest buyout in history. Musk simply stunned investors with this casually worded tweet yesterday, writing that he's considering taking Tesla private. He's already secured the funding. He didn't say where he got the money, but going private would cost, oh, about $71 billion, by far the largest buyout ever. Musk faces pressure to turn Tesla into a profitable carmaker, but Tesla has burned through cash as it struggles to produce its first mass-market car, the Model 3. One analyst says this could be a way to strike back at Wall Street.</s>DAVID MADDEN, CMC MARKETS: This could be a temper tantrum by Elon Musk as a way of saying that I don't have to be bothered answering questions to market analysts or commentators or journalists or being under the scrutiny of Wall Street.</s>ROMANS: He's a maverick. People who love him call him a maverick. Some on Wall Street, you know, call him arrogant. And he has been contentious on conference calls. Musk told employees that going private is the best path forward, adding that being subject to wild swings in our stock price is a major distraction and going private removes incentives to attack Tesla. He often complains about short sellers, who investors who profit when the stock drops. Musk's tweet sent Tesla's stock up 9 percent. Trading was halted and later resumed, closing up 11 percent. It's really unusual to see such an outspoken CEO talking about these sorts of things. The reason why you're public is so that you have public investors, you have shares sold to the public, and you need to be very open and honest with how your company is going, and he sometimes gets angry about that.</s>MATTINGLY: It's this weird thing, where you actually get a view into what he's thinking in real-time, which carries a lot of value, but it is also unusual and strange and possibly irresponsible. I do think it's his war with the shorts is playing huge in this.</s>ROMANS: War with the shorts.</s>MATTINGLY: Read his Twitter. You can see what I'm talking about. All right. Iowa college student Mollie Tibbetts now missing for three weeks. Coming up, why her father believes she's still alive.</s>ROMANS: And why Secretary of State Mike Pompeo may be headed back to Pyongyang. A live report after this.