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U.S. Economy Adds Only 20,000 Jobs in February; Trump Departs for Alabama After Deadly Tornadoes Hit State; Paul Manafort Sentenced to Nearly Four Years in Prison; Michael Cohen Sues Trump Organization Over Unpaid Legal Bills; Democrats' Spat Over Congresswoman Omar Reveals Divide in Party. Aired 9-9:30a ET

Aired March 8, 2019 - 09:00   ET


[09:00:00] JIM SCIUTTO, CNN ANCHOR: A very good Friday morning to you. I'm Jim Sciutto in Washington. Poppy has the day off. It is a busy news day this Friday.

President Trump about to leave the White House to survey tornado damage in Alabama. A monster tornado just east of Montgomery blamed for killing at least 23 last Sunday. The president may talk to reporters on his way out. If so he's sure to be asked about the surprisingly short prison term handed down yesterday to his former campaign chairman Paul Manafort.

Paul Manafort getting less than four years for a series of financial crimes that under federal sentencing guidelines should have gotten him a minimum of 19 years in prison.

But we begin this hour with breaking news. We just learned moments ago that the economy added just 20,000 jobs last month. That is a fraction of the number that economists expected. The fewest in a year and a half, big drop from where we were last month and recent months.

Business correspondent Alison Kosik joins me now from New York to break it down.

What do we see in these numbers here? Because, I mean, really those numbers falling off a cliff from just last month.

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Yes. It certainly did fall off a cliff and our eyes kind of fell out of our heads when we saw this number. So yes, it is surprising. But just to put this in context here, in a tight labor market these are the kinds of numbers you will begin to see.

So as you there, February a gain of 20,000 jobs. If you're wondering about December and January they were actually revised higher. But the reality is if you look at the past year the average number of jobs added month after month after month, 234,000 jobs over the year. So that is a red hot jobs market. It is certainly not sustainable especially when you look at where the unemployment rate is. Today we learned that it's at 3.8 percent. So it fell from 4 percent.

Part of the reason we did see the uptick in January was because of the government shutdown. It was contributing factor. But we are seeing the labor market basically getting close to full employment. So it really is hard to keep adding jobs to an economy that is near full employment.

So where are these jobs going and leaving? So first of all we saw business services in addition to 42,000 jobs. Healthcare 21,000. Construction you're seeing them take a big hit, 31,000. That's part of the reason you're not seeing that increase in jobs total in February. Part of the reason there is because we are seeing a slowdown in the housing market. We're seeing that drop-off in housing sales as well.

So one thing to keep in mind here, Jim, it is a shocker to see only 20,000 added to the economy after seeing over 200,000 on average but one report doesn't make a trend. An example for you in 2017 in September we did see only 18,000 jobs added to the economy in a sea of triple-digit figures. So something to keep in mind -- Jim.

SCIUTTO: It's a good point. Important to have that context.

Alison Kosik, thanks very much.

KOSIK: Sure.

SCIUTTO: Let's talk more about this now with Stephen Moore. He's former Trump campaign economic adviser as well distinguished fellow at the Heritage Foundation, and Austan Goolsbee, Democratic economist and former chairman of the Council of Economic Advisers under President Obama.

Thanks to both of you. You both know a lot about economic numbers here. And I want to give you a chance, to both of you, to react here.

First, Stephen Moore. 20,000 and I know there are other circumstances as Alison explained there. Does this give you any concern -- because there are other signs -- of a slowing economy?

STEPHEN MOORE, FORMER TRUMP CAMPAIGN ECONOMIC ADVISER: Yes, it does. Economy is slowing down a little bit. No question about it. We have 4 percent growth in the summer and then it slowed to about 2.5 percent and now the growth rate slowed to a little bit less than 2 percent.

So there is good news and bad news here. OK. The bad news is, you know, that's way below the number of jobs we expected. The good news is, if you're a worker out there, I mean, Alison put it very well. It is an extremely tight labor market. Anybody who's looking for a job there are a lot of opportunities out there.

I think one of the reasons, Jim, that we got this bad number -- low number is because literally employers are running out of workers to hire. One other quick statistic. You know, we -- there is a measure of unemployment that includes people who could be working or can't find a full-time job. And that unemployment rate, Austan, fell to the lowest level I think 20 years.


MOORE: So it's a good -- and by the way wages were up a little bit, too. We got a tight labor market now. Yes.

SCIUTTO: Tighter market could mean higher wages. But you heard that there, Austan Goolsbee, Stephen saying looks like the economy may be slowing. Do you agree?

AUSTAN GOOLSBEE, FORMER CHAIRMAN, COUNCIL OF ECONOMIC ADVISERS: For sure the economy is slowing. I mean, it's been throwing since we had one very good quarter last year at the beginning and since then it's just inched its way down to down from the 4's to the 3's, to the 2's. Now the 1's. It's not a surprise that the job market would start slowing as the economy slows down.

I don't think we expected it to slow down this much. I mean, 20,000 an abysmal number. Let's hope that's just a blip. If we start getting multiple months like that the unemployment rate is going to start shooting back up and people are definitely going to be talking about recession.

SCIUTTO: This has enormous potential political implications, effect on the 2020 race. The economic message of course one of President Trump's primary messages in terms of selling himself for a second term.

[09:05:03] But we also had some other troubling news for President Trump in economic terms. The largest trade deficit in U.S. history. This of course despite President Trump's tariffs, ongoing trade war with China. That figure there, $891 billion, the widest on record.

Stephen Moore, I thought Donald Trump was going to lower the trade deficit.

MOORE: Well, a couple of -- I mean, let's not make too much of just one month's worth of data. I mean, we still have a really hot economy. I disagree a little bit with Austan, I mean, yes, it is slowing down but look, you know, we've had -- there's now seven million more jobs than people to build up. So that's not --

SCIUTTO: If you look at the trend line, and that's a fair point for context.

MOORE: So now --

SCIUTTO: But on the trade deficit.

MOORE: On the trade deficit. My feeling is that the trade -- Austan may or may not agree with this but the trade deficit tends to go up when the economy is strong. When consumers are spending a lot of money. They go to Wal-Mart, they go to Home Depot, they go to Amazon and they buy things, and a lot of things they buy are foreign profits. And so that has -- every time we have a hot economy the trade deficit goes up.

I used to tell the president in our meetings, I said, Mr. President, you know, if all these tax cuts and deregulations cause a booming economy we're not going to see a lower trade deficit.


MOORE: So I'm not concerned about the trade deficit.

SCIUTTO: Richer economy, you buy more -- you buy more goods and imports go up.

MOORE: And investors want to invest here in the United States.


MOORE: And they need dollars to do that.

SCIUTTO: But, Austan Goolsbee, as you well know this is a president who promised to fix that trade deficit with his tough trade talk.

GOOLSBEE: I agree. Look, what Steve Moore said is a direct contradiction of what President Trump has been saying since he's been there. As you know on this very network when Trump started saying it all of the informed people said, A, you shouldn't be using the trade deficit as a measure of -- as like a scoreboard of whether we're doing well or doing badly. And the policies that you are about to enact, the tariffs on our allies and on China and a bunch of countries of the world, and $2 trillion tax cuts that are not paid for. Those are going make the trade deficit go up.

And the administration said no, it won't. He's going to get rid of it. So now that the trade deficit is going up, I don't have any patience for the administration to try to rationalize it, say, oh no, what we meant was the opposite.

MOORE: Well --

GOOLSBEE: He was wrong then and he's wrong now.

MOORE: Austan, let me just respond to that. Look, we are on the cusp it looks like of a trade deal with China which could be a blockbuster trade deal where China agrees to lower their tariffs against U.S. goods which is something we've waited a long time to happen. They have agreed to buy, you know, $50 billion to $100 billion more of our agricultural products or manufacturing products or petroleum. So, you know, it's good news right now on the trade front.

SCIUTTO: But on that front, I'm curious -- because there is a school of thought even within the administration that the direction of the trade deal that the two sides are going on is far below what they want, what the president wants. And it ends up being just a promise to buy more soybeans, et cetera. But no essential change to real access to the market.

MOORE: They are going to lower their terms.

GOOLSBEE: That is my impression. We haven't seen anything. And whatever they sign would have to be passed by Congress before it would actually be real. But what we've seen from the administration with Korea, with Europe and with NAFTA are signing deals that are extremely incremental at best. Mostly just to get it off the table so that the markets don't panic that we're going to get into an escalating trade war.

SCIUTTO: Final quick thought because I --

GOOLSBEE: And I'm fine with that. I'm fine with that.

SCIUTTO: I only have 30 seconds.

GOOLSBEE: Every day without a trade war --


SCIUTTO: This is another big picture. The U.S. budget deficit up 77 percent in the last fiscal year.

Austan and then Stephen, before we go. Does this put to rest once and for all the conservative argument that lowering taxes raises revenues?

MOORE: Well, let me start --

GOOLSBEE: Of course it should put that to rest. Of course it should put that to rest. That's been disproven I don't even know how many times. We didn't need to re-find out this time that tax cuts for the highest income people and big corporations do not pay for itself.

MOORE: Yes, but, Austan --

SCIUTTO: Stephen --


GOOLSBEE: This is the biggest increase in the deficit ever outside of recession and war.

MOORE: Right.

GOOLSBEE: This is the biggest ever.

MOORE: Well, your deficits -- a lot higher than ours. But I'll say this that, you know, maybe we're not getting the big revenue growth but the economy, according to the CBO, is going to be $6 trillion larger as a result of the tax cut over the next decade. That's a big number.

SCIUTTO: Stephen and Austan, we're going to continue this conversation. Let's have you back soon. Thanks to both of you this Friday morning.


SCIUTTO: Let's go right now to the White House where moments President Trump will depart for Alabama on his way to Mar-a-Lago for some fundraisers.

Joe Johns is there.

Joe, the president and the first lady, they'll be touring tornado damage from this really horrific tornado this past weekend. Do we know who they are going to be meeting with on the ground?

JOE JOHNS, CNN SENIOR WASHINGTON CORRESPONDENT: Well, we have some idea. We do know typically the president of the United States meets with first responders, people from FEMA, emergency management.

[09:10:03] But Alabama also has some very powerful politicians here in Washington. And the office of Senator Richard Shelby who is the chairman of the Senate Appropriations Committee having a lot to do with the way all money is spent in Washington, D.C., we're told he'll be flying down to Alabama with the president and the first lady, and it sounds like it's going to be a bit of a bipartisan thing.

CNN's reporting is also that Doug Jones, the junior senator from Alabama who's a Democrat, will also be meeting with the president there. We also expect of course the governor of Alabama Kay Ivey to be meeting with the president.

Important say that Kay Ivey actually in front of cameras just couple of days ago mentioned that she had asked the president for expedited work on an application for FEMA to help. And so there's been some question as to whether Alabama's been getting preferential treatment. The president himself tweeted they were going to get A plus treatment.


JOHNS: But talking to FEMA folks, they say this is the regular course of business.

SCIUTTO: Little different from his treatment of California after the wildfires as you remember taking about taking funds away at the time.

JOHNS: Right.

SCIUTTO: Joe Johns, thanks very much.

JOHNS: You bet.

SCIUTTO: Backlash after the president's former campaign chairman Paul Manafort was sentenced to less than four years in prison. Experts say that people get far harsher sentences for doing far less. We're going to break it down.

Plus the House votes an on anti-hate resolution. Why did two dozen Republicans oppose that resolution?

And most of Venezuela is now in darkness. It's been hours and hours since a blackout there began. Secretary of State Mike Pompeo blaming President Maduro. What's going to be next for this troubled country?


[09:15:00] JIM SCIUTTO, HOST, NEWSROOM: Just moments ago, President Trump commenting for the first time on his former campaign Chairman Paul Manafort's sentence for tax evasion and bank fraud. This has many people slamming the judge's decision to give Manafort just 47 months in prison. That is far below the 19 to nearly 25 years government sentencing

guidelines recommend. This after Manafort repeatedly lied to investigators all while he was supposed to be cooperating as part of a plea deal and hid millions of dollars in income overseas to avoid taxes like you and I pay.

Joining us now, Jessica Schneider, CNN Justice correspondent with more. So Judge Ellis -- and I was in the courtroom in the trial when as you'll remember Ellis berated the prosecutors at times for things that he later apologized for and let the defense attorneys get away with things that they might not normally get away with.

So, this is not the first time he has struck in such a way to -- I mean, you could argue, help Manafort's case a bit.

JESSICA SCHNEIDER, CNN JUSTICE CORRESPONDENT: Exactly. And the Judge Ellis was important here as he stressed that he had to abide by this parity in sentencing. And he said that the fact that Paul Manafort was a first-time offender violating these tax codes, committing these tax and bank crimes.

Judge Ellis said I have to follow what has been done previously here. And that sort of this push-back to these critics that say this sentence was too lenient. In court, Manafort's attorneys actually put forth examples of people who had stolen much more --

SCIUTTO: Right --

SCHNEIDER: From the government, but it actually got in much less.

SCIUTTO: I heard about this guy, tens of millions of dollars and he got --

SCHNEIDER: Exactly --

SCIUTTO: Seven years or something.

SCHNEIDER: One example, one woman, she took 47 million or she put $47 million in an overseas bank account and received -- I'm not joking here, five seconds in probation, a very odd sentence to ensure --

SCIUTTO: Why are the sentencing guidelines so out of whack then with the way judges are imposing sentencing?

SCHNEIDER: Well, that's exactly what Judge Ellis was criticizing. The fact that these sentencing guidelines were out of whack and his attempt to sort of find the balance there and only giving 47 months, 3.9 years. I mean, so really, what does it come down to here? Manafort sentenced to 47 months in prison, that's of course 3.9 years.

But they will shave off the nine months that he's already been in solitary confinement in Virginia. Manafort will also be hit financially. You know, he could pay restitution between $6 million and $25 million, that will go to the government.

He'll also be fined $50,000, that will be his punitive damage, his punitive fine, and then he'll have three years of supervised release following the prison time. And then of course, there is round two that happens --

SCIUTTO: Right --

SCHNEIDER: On Wednesday in Washington D.C. --

SCIUTTO: That's the thing --

SCHNEIDER: And Judge Amy Berman Jackson has been consistently tougher on Paul Manafort --


SCHNEIDER: Perhaps than Judge Ellis. You know, she's the one who put him in the Alexandra jail for the past nine months for the witness tampering charges --


SCHNEIDER: So we'll see what she does there --

SCIUTTO: And a big decision very well will be whether she opposes a sentence that is concurrent, served at the saved time or consecutive --

SCHNEIDER: Consecutive --


SCHNEIDER: And that sentence could be up to 10 years. So when you combine that, if she does it consecutively, it could be more than a decade for Paul Manafort --

SCIUTTO: Right --

SCHNEIDER: Who does turn 70 on April 1st. So it could be still a substantial --


SCHNEIDER: Sentence, but of course people looking at yesterday's sentence, saying wait a minute here, prosecutors were pushing --


SCHNEIDER: For up to 24 years, he got less than four.

SCIUTTO: Yes, well, judges have a lot of power, we have two very --


SCIUTTO: Different judges involved here. Jessica Schneider, thanks very much. Let's discuss now with Elie Honig; he's former federal and state prosecutor. So, Elie, you wrote a piece for CNN calling this an injustice. Make your case for that, and then I want to get your response to what Jessica has been saying about the judges' explanation for this lighter sentence. But first, why is this an injustice in your view?

ELIE HONIG, FORMER FEDERAL & STATE PROSECUTOR: So Jim, look, I've seen a lot of federal sentences over the years and I don't stun easily, but I found this one to be stunning. I agree, first of all, let me say, that the guidelines range of 19 to 24 years would have been excessive I think for a lot of the reasons Jessica outlined.

You have a first-time offender, you have non-violent offenses, you have someone with no prior criminal history, so 19 years I think would have been outrageous. But to go 15 years below the bottom of the guideline is really an extraordinary downward departure.

[09:20:00] And two things jump out at me about this. First of all, it's -- if you were to do a textbook for law students, how to flout the criminal justice system, you couldn't do any better than to trace exactly what Paul Manafort has done here. Lied to the FBI, lied to Mueller, violated bail, tampered with witnesses, got remanded, showed no remorse at sentencing, did not accept responsibility.

It's unbelievable to almost reward that with such a massive downward departure. The other thing I think it's hard to ignore is the disparity that we see. And I think the Manafort sentencing is bringing a lot of attention to this. Your typical -- in the federal system, your typical first-time low level non-violent drug offender will get more time than this. So --


HONIG: Manafort really got a gift here and it's hard to understand what the judge was thinking.

SCIUTTO: So what about what Jessica was describing as the judge's explanation here, saying that OK, fine. But if you look at previous, you know, convicts here of similar crimes, folks who stole a lot more money, got a lot less time --

HONIG: Yes --

SCIUTTO: Does the judge not have to look at those similar cases as well in making his decision?

HONIG: They do have to look at comparable decision, but the thing is, there's such a huge body of case law out there for any --


HONIG: Crime you can name, I guarantee you can find examples of cases where the person -- a similar person has gotten less --


HONIG: And a similar person has gotten more. And I will say this, there are things about this case that I think separate them from the cases that the judge was relying on. Most of those cases the judge was looking at involved acceptance of responsibility, which under the guidelines lead to a several year reduction.

Here, not only do we not have acceptance of responsibility, we had obstruction of justice which is supposed to move you up the line.


HONIG: So I think the judge sort of obscured or overlooked some of the distinguishing factors about this case.

SCIUTTO: Yes, lying to prosecutors, you know, even some allegations of witness-tampering in the midst of it all. Again, to speak to cases -- and this is part of the outrage here, right, is this question about a two-tiered justice system that rich people have one law and others do not.

Our colleague Laura Coates, she gave an example that's a Judge Ellis example. She mentioned Frederick Turner, 37 years old, mandatory minimum 40 years in prison, those are the sentencing guidelines for dealing meth. And that the judge at the time said "I chafe a bit at that, but I follow the law.

If I thought it was blatantly immoral, I'd have to resign, it's wrong but not immoral." So he had issues with the sentencing guidelines there --

HONIG: Yes --

SCIUTTO: And followed them. He has issues with the sentencing guidelines here for a rich white man and does not.

HONIG: Yes, I think Laura put it perfectly. It's hard to ignore the reality here. You have Paul Manafort who is rich, white, male, quasi celebrity I guess of sorts. And the kind of --

SCIUTTO: Powerful friends --

HONIG: And the kind of --


HONIG: Yes, the kind of defendants who suffer under the system are usually none of those things. And I think it also outlines sort of disparities that exist within our laws and within the sentencing guidelines. It's a real issue. The first step act which was passed a few months ago, I think takes some steps -- it's the first step as the name suggests towards correcting that.

But I guess if there could be a silver-lining here, it's that it could draw attention to some of the sort of inherent inequities that exist in our federal sentencing system.

SCIUTTO: Now, and the next judge -- can the next judge in the D.C. case which is of course a separate case factor this sentencing decision in legally --

HONIG: Sometimes -- SCIUTTO: And say well, sounds like --

HONIG: Yes --

SCIUTTO: That was below the bar. I therefore have cause to impose a sentence that is at least in line with the guidelines.

HONIG: Technically, she's not supposed to do that. I do not think you will see Judge Jackson saying that. In fact, you may see Judge Jackson saying quite the opposite, I'm not taking into account his other sentence --


HONIG: And whether I feel that was just or unjust, and I therefore only looking at the case in front of me in Washington D.C. I sentence him to X. Now, I do think --

SCIUTTO: Right --

HONIG: She's a human being, Judge Jackson, I think she's a very --

SCIUTTO: Right --

HONIG: Sharp judge, I think she's proven herself to be in charge and no nonsense, but she's a human being, she cannot be aware of --

SCIUTTO: Right --

HONIG: What Manafort got in Virginia. And I do think her sentencing will add time on, whether she gives him a longer sentence that runs concurrent or just any sentence that runs consecutive, meaning on top of it. I do think we're going to see some time added on here. I don't think she's --


HONIG: Going to give him ten years consecutive --


HONIG: I don't think we're going to see a total sentence of 14.

SCIUTTO: And big picture, we have the president's former campaign chairman going to jail for years and for crimes prior to his work with the president, but for crimes. Elie Honig, thanks very much.

HONIG: Thanks, Jim.

SCIUTTO: Meanwhile, President Trump's former personal attorney Michael Cohen is suing the Trump Organization, imagine that, claiming that it owes him money for unpaid legal bills relating to his work for the firm. CNN reporter Kara Scannell with me now.

Of course, President Trump has sued or promised to sue many folks through the years, now he's on the other side of it. KARA SCANNELL, CNN REPORTER: That's right, I mean, Michael Cohen, the

long-time employee is now turning sides and turning tables again. And in this allegation, Michael Cohen is alleging in the lawsuit that he's owed more than $1.9 million in legal fees and an additional $1.9 million that he has to pay in a forfeiture and fines related to his criminal conviction.

[09:25:00] Now, Cohen is saying that he had an arrangement with the Trump Organization beginning from July of 2017 to cover his legal fees during the course of multiple investigations, including the investigations on the Hill by the Congress, investigations by the special counsel's office. Now, Cohen alleges that once he signaled that he was going to start cooperating with investigators at the U.S. Attorney's Office in Manhattan and the special counsel's office that the Trump Organization cut him off and stopped paying his legal fees.

Now, the lawsuit doesn't include any details about this particular indemnification agreement. But this is what Cohen is alleging. Now, the Trump Organization says that they're -- you know, they're coming out stronger, going to fight it. A statement from one of their attorneys said that the "Trump Organization doesn't owe Michael Cohen one penny of legal fees.

This is a desperate money grab by a desperate convicted felon." Now, people close to the Trump Organization also say that a lot of Michael Cohen's legal problems come from criminal activities that he did and admitted to doing bank fraud, tax fraud that occurred outside of his employment with the Trump Organization. So we night see this, you know, end up in some litigation here, Jim.

SCIUTTO: Yes, a desperate felon who was unemployed by that organization for more than ten years should note that. Kara Scannell, thanks very much. The House passes an anti-hate resolution, but getting there exposed really an ugly rift among Democrats. Could that party division become a problem for 2020?