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Kevin Hassett Talks About Trump's Calls for Rate Cuts; Arrest Made in Louisiana Church Fires; Treasury Passes Tax Return Deadline. Aired 9:30-10a ET
Aired April 11, 2019 - 09:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
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[09:31:12] JIM SCIUTTO, CNN ANCHOR: Welcome back. Busy morning. We're following breaking news this morning.
The Justice Department has indicted WikiLeaks founder Julian Assange, this for allegedly conspiring with Chelsea Manning to hack into Department of Defense computers in 2010. The charges come after London police arrested Assange earlier this morning. It was a remarkable moment carried out there, looking a very different man than the one who went into that embassy some seven years ago.
London police have confirmed that the arrest was made, quote, on behalf of the United States, an effort Assange's lawyers describe as an unprecedented effort to extradite a foreign journalist. Of course U.S. intelligence has a different view of WikiLeaks.
Assange and WikiLeaks played a major role in the release of thousands of classified documents related to the wars in Iraq and Afghanistan, as well as, according to U.S. intelligence, acting as a middleman in effect for Russia's interference in the 2016 election, all those stolen Hillary Clinton campaign documents.
He was granted asylum at the Ecuadorian embassy for nearly seven years, but Ecuador's president says that his country withdrew it due to Assange's, quote, discourteous and aggressive behavior. He wasn't a good house guest, apparently.
We're closely following this story and we will have more throughout the morning.
POPPY HARLOW, CNN ANCHOR: All right, back here at home, 2020 hopeful Senator Bernie Sanders says he is willing to go nuclear to get his signature health care policy passed. Hours after unveiling his new Medicare for all bill yesterday, he said he would support using that so called nuclear option to change the filibuster rules to try to get it passed. President Trump and Republicans have slammed the plan, namely the cost.
Meantime, the vice president, Mike Pence, is siding with the president, defending the president's call -- repeated calls for the Federal Reserve to lower interest rates.
With us now, Kevin Hassett, chairman of the White House Council of Economic Advisers.
Good morning to you, Kevin. Thank you for being here.
KEVIN HASSETT, CHAIRMAN, WHITE HOUSE COUNCIL OF ECONOMIC ADVISERS: Yes, good morning, Poppy.
HARLOW: Good morning and thanks for being with us.
Do you think it's prudent for the Fed to cut rates right now?
HASSETT: You know, it's not my job at CEA to give the Fed advice. And I know that, you know, the president, people expect him to state his opinion, but my job at CEA is to remind people to respect the independence of the Fed.
And that doesn't mean that you can't express an opinion --
HARLOW: All right.
HASSETT: But it does mean that I should not be giving them advice. We've appointed great independent people over there --
HARLOW: Sure.
HASSETT: And the president disagrees right now with them on interest rates, but that's for them to discuss, not -- not me.
HARLOW: So you -- you remember the president when he was a private citizen just hammered President Obama and said that the rate cuts by Janet Yellen were political, et cetera. So there's some history here certainly.
But you know economics better than anyone. And I guess I'm wondering --
HASSETT: Oh, no (ph).
HARLOW: It's true. I guess I'm wondering if you agree with calls for the Fed to lower rates when the economy is so strong, when you've got the stock market flirting with record highs, when you have this near record low unemployment. If the economy is so great, which hear repeated from the president, why would you need to do anything like cut rates?
HASSETT: Well -- well, again, I'm not going to give them rate advice. I think there are a lot of people on Wall Street that have expressed opinions similar to the presidents.
The thing I can say is that I'm still 100 percent all in on 3 percent growth for this year.
HARLOW: OK.
HASSETT: That I think that the way to think about it is that there are really two little bits of insurance for strong growth in year. The first is that we're seeing very high income growth, especially at the bottom. The bottom 10 percent we -- you know, we posted the chart in our CEA Twitter feed. Their wage growth is 6.5 percent right now, which means that their consumption should go up a lot this year, which gives you insurance for GDP.
HARLOW: OK.
HASSETT: But the other thing is just that, remember, we were the high tax place on earth, now we're not, and the adjustment to sort of having all the industry come home is not something that happens overnight. It spreads out over three to five years.
HARLOW: So --
HASSETT: It's a -- and so I think that growth is very, very strong, but also inflation is low. And I think that that's why some folks on Wall Street are saying that, you know, maybe -- maybe at least what the Fed's current policy is, is sensible.
HARLOW: Look, and -- we'll get to growth in a minute. That's what the vice president said yesterday, it was inflation.
The issue is, unemployment is here historical low, near record amount of job openings. At some point that should lead to inflation, right?
HASSETT: You're right.
[09:35:06] HARLOW: I mean just because inflation is in check doesn't mean it's going to stay that way.
The -- I just wonder if you think it's a risk, and then we'll move on to growth --
HASSETT: Yes.
HARLOW: Because the reason the Fed can lower rates, right, and has this ammo in its war chest is when you hit something like the great recession so that you can pull it out and address it. And the more you cut rates, the less backup there you have.
Isn't it risky?
HASSETT: Right. Well, you know, you're right to point to risks, and that's something I can remember I worked with Allen Greenspan at the Fed. You remember, I used to be a Fed economist and --
HARLOW: Yes.
HASSETT: He talked about how it's the Queen Mary, you know, the economy and inflation and you have to look ahead.
And the thing, though, is that if you look ahead, then what's happening is the supply is increasing because, you know, factories are coming home. And with supply increasing, that puts downward pressure on prices. And so I think if you look ahead, then you actually see that there is sort of a lot of downward pressure on prices from increased supply. And so of course, you know, they will do what they do and I respect it. They're great professionals over there. But, you know, my view is that right now we could have growth at low unemployment because -- without a lot of inflation because it's a supply shock not a demand shock.
HARLOW: All right. All right. So it sounds like you have a different perspective, but you're not weighing in politically on this.
HASSETT: Yes.
HARLOW: Let's move on to growth. We're going to get the Q1 GDP numbers April 26th.
Let me play you something that the counselor to the president, Kellyanne Conway, told my colleague Jim Sciutto just yesterday about economic growth.
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KELLYANNE CONWAY, WHITE HOUSE COUNSELOR: We do have record low unemployment among millions of Americans. We have growth over 4 percent. We have unemployment under 4 percent. This matters to people.
(END VIDEO CLIP)
HARLOW: Fill us in. Where's the growth over 4 percent, because I haven't seen that since the second quarter of 2018.
HASSETT: Yes, that's right, the second quarter of 2018 is the last number north of 4. You know, I didn't talk to Kellyanne about that --
HARLOW: OK.
HASSETT: But I can say that right now we're all -- you know, everybody in the White House understands that we're looking at a 3 percent year.
HARLOW: OK.
HASSETT: And one of the ways, though -- and I -- you know, I was talking to Kellyanne yesterday, so it could be that I can explain that quote. But, again, the point is that first quarter is looking like it's going to be about 2 --
HARLOW: OK.
HASSETT: And maybe a little bit less because of the government shutdown, subtract a little bit from it. And what we've seen is a regular pattern where the first quarter is lower than what you get in the year and the second quarter is kind of higher. And that -- so if you think you're having a 3 percent year, you should expect about a 2 percent first quarter.
HARLOW: OK.
HASSETT: And then maybe about a 4 percent second quarter. And so it could be that --
HARLOW: Just --
HASSETT: So right now, you know, here we are, you know, I think that it could be that in the second quarter that we could be looking at a growth number that high.
HARLOW: OK, just to be factual here because you're a fact guy, not a politics guy --
HASSETT: Yes.
HARLOW: Three percent, not 4 percent.
All right, so let's talk about --
HASSETT: Three percent for the year, but this quarter could be -- could actually end up being 4 --
HARLOW: Right.
HASSETT: If it's a normal pattern. Yes.
HARLOW: OK. We'll watch.
HASSETT: Yes.
HARLOW: Let's talk about the southern border. I know that you said in a White House gaggle there on the lawn a few days ago you've been studying intensely what a closure of the southern border would mean for the U.S. economy.
HASSETT: Sure.
HARLOW: What would it mean?
HASSETT: Right. Well, it turns out that it's extremely possible to accomplish the president's security objectives without causing a major economic disruption. And when the president talked about closing the border, that there are options available to Customs and Border Patrol that could minimize the economic impact.
And, you know, I could just say that this is a crisis that I think that even, you know, "The New York Times" yesterday started to cover it pretty accurately when they said, you know, that there's something going on there that's a humanitarian price crisis that's either a signal that something needs to happen.
HARLOW: Totally close the border, Kevin.
HASSETT: But -- but the point is that with -- yes.
HARLOW: I just want to understand.
HASSETT: Sure.
HARLOW: I want the American people -- because so many businesses rely on this. HASSETT: Of course.
HARLOW: It would really hurt farmers in the Midwest, dairy farmers, et cetera. Big trade there with Mexico. If you totally closed the southern border, and I mean to freight as well, would that be detrimental to the U.S. economy and American businesses, large and small?
HASSETT: You're correct that it would be, but that's not, you know -- basically there are a lot of options on the table that are different from that, but just of effective -- as effective in terms of security.
HARLOW: OK.
HASSETT: And -- and -- and the way to think about it is, if you've ever been through the border --
HARLOW: Yes.
HASSETT: That there's a freight line -- you know, a freight lane and all the trucks are in it and then there's the place where you go with your car, or another place where pedestrians go through. And so that there are different slots where you could provide different levels of security. And so if you leave the trucks lane open --
HARLOW: OK.
HASSETT: Then the economic effect would be pretty minimal.
HARLOW: On -- building on that, let's talk about USMCA, basically NAFTA 2.0. What's the likelihood that the president blows it up, essentially, by, you know, having tariffs on cars from Mexico, which he threatened just a few days ago? Is that going to happen?
HASSETT: The -- you know, the USMCA deal is something that the president's 100 percent behind. And I think that, you know, what I'm hearing is that there are plenty of votes up on The Hill to get it passed as long as Speaker Pelosi puts it to the floor. And so he's 100 percent behind getting USMCA passed. And I think he's expressed some frustration with the Mexicans who have really picked up their game this week with the border crisis.
HARLOW: All right. So no --
HASSETT: And I think that that's the context that your --
HARLOW: No tariffs? Do you think that's off the table, no tariffs on cars from Mexico right now?
HASSETT: I think all the options are on the table if things get worse or things get out of hand.
HARLOW: OK.
HASSETT: But you'd have to talk to the president about that, yes.
HARLOW: All right. Well, please, he can join us anytime. We will break into a commercial for that one.
[09:40:02] HASSETT: You guys would have fun, I think. Yes.
HARLOW: I think he should join us. Jim and I would love to have him on.
Kevin, before you go, let me ask you this, OK. This didn't get a lot of attention, but when I saw it, my jaw dropped, all right.
So there's this hearing on The Hill with all the big bank CEOs yesterday. I know you saw it. And there's this moment when Democratic Congressman Al Green said to all of them, right, they're all sitting there, Citi Group, JPMorgan, you name it, if you believe that your likely successor will be a woman or a person of color, would you kindly extend your hand into the air. No one did. And then the congressman said this.
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REP. AL GREEN (D-TX): The record has to be made, all white men and none of you, not one, appears to believe that your successor will be a female or a person of color.
(END VIDEO CLIP)
HARLOW: Is that a problem?
HASSETT: Of course it's a huge problem and, you know, absolutely, you know, I can say that I would raise my hand in the sense that I could think of many African-American female economists who would do a great job at CEA. You know, the first one that comes to mind is Carolyn Hoxby (ph). You know, I would definitely advise the president to pick her, Carolyn Hoxby, should I ever leave, would be a great successor.
But I think that there's a problem in society that, you know, there is still something of a glass ceiling. If you look at it, the female representation, African-American representation among CEOs is, you know, woefully low. And that's something that I think people need to think about. I think the congressman was right to raise that issue.
HARLOW: All right, Kevin Hassett, so nice to have you this morning.
HASSETT: Thanks.
HARLOW: Thanks again.
HASSETT: Thanks, Poppy. Thanks.
HARLOW: You got it.
SCIUTTO: Lots of news on the economy.
HARLOW: Yes.
SCIUTTO: Police in Louisiana make an arrest in connection with three fires at historically black churches, as we learn the suspect reportedly had close ties, listen to this, to the law enforcement community. It's an alarming story.
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[09:46:05] HARLOW: All right, a 21-year-old has been arrested in connection with a string of Louisiana church fires. That person, the son of a law enforcement officer. This is according to local reports.
SCIUTTO: These are just horrible crimes.
Soon, police in Louisiana are set to hold a news conference, this as they say the fires at three historically black churches were intentional. Intentionally set.
CNN law enforcement analyst and longtime FBI agent Josh Campbell is in Louisiana with the latest.
Good morning, Josh.
What do we know about who is behind this and his motivation for these attacks?
JOSH CAMPBELL, CNN LAW ENFORCEMENT ANALYST: Hey, Jim and Poppy.
You know, since late last month, this community has been gripped by fear following these three church fires, predominantly African- American churches. Up until this point, authorities didn't have an idea of who this person was and we weren't receiving information from them that they had leads.
A major development yesterday. They took this subject into custody, as you mentioned, a 21-year-old local resident. One detail that's so striking, as you mentioned there, that he's the son of a law enforcement officer here.
Now, we don't have details yet as far as the circumstances of his arrest, how he came to the attention of law enforcement, was this word-of-mouth, was it by forensic evidence, you know, collection? We don't know that yet. But, nevertheless, he is in custody.
We do know his name right now. We are not yet reporting that. We'll be hearing from local officials soon.
You know, as we mentioned, the state of fear. We heard from pastors here in the local area at other churches who were sleeping in their churches for fear that they may have been targeted next. So they're breathing a sigh of relief now knowing that this person has been taken into custody.
Lastly, to the point of motivation, we don't have that motivation yet. That's going to be important, as you know, because that will determine whether or not federal authorities take a more aggressive role here. If this turns out to be a hate crime, then we might expect charges on the federal level. We're told from a law enforcement source that we have not reached that stage yet. As you mentioned, we'll be hearing from law enforcement officials here in about an hour. We may get more details on that -- on the motivation, where this investigation is leading. And, of course, we'll bring that back to you, Jim and Poppy.
HARLOW: OK, Josh Campbell, thanks very, very much.
Still to come, a legal fight brewing after the Treasury Department refuses to meet this deadline to release six years of the president's tax returns. We'll take you live to the White House.
SCIUTTO: Yes, why not? Other presidents have done it. Why not now?
HARLOW: Everyone else. Yes.
SCIUTTO: Coming up on Monday, April 22nd, a CNN town hall event, five presidential candidates live from New Hampshire. Kind of an important state in 2020.
HARLOW: Wow.
SCIUTTO: Hosted by three guys you might know, Anderson Cooper, Chris Cuomo, Don Lemon. It's going to be a big night.
HARLOW: That's big.
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[09:52:57] SCIUTTO: The Democratic lawmaker who requested President Trump's tax returns is trying to figure out his next move today. This after the Treasury Department missed a deadline yesterday to hand them over.
HARLOW: Right. A lot of power right now in the hands of Treasury Secretary Steven Mnuchin. He sent a letter to the House Ways and Means chairman, Richard Neal, letting Neal know they would not comply with the request.
Jeremy Diamond is at the White House.
So, I mean now Neal's going to send another letter back, but he's got IRS code on his side.
JEREMY DIAMOND, CNN WHITE HOUSE REPORTER: Well, again, the reading of that law says, you know, that the Treasury Department shall provide this to the committee. And so the argument that we're hearing from Democrats is saying, how long does it take you to actually determine the meaning of the word "shall"?
Nonetheless, this is a pretty unprecedented request despite its basis in statute here. And so that's the argument that Treasury Secretary Steve Mnuchin is making saying, look, we need more time to assess this request. And so he says in his letter to Richard Neal, the committee requests the materials by April 10th, but the Treasury Department will not be able to complete its review of your request by that date. He says for the same reasons, I intend to supervise the department's review of the committee's request to insure that taxpayer protections and applicable laws are scrupulously observed.
And so now the question is, what will Neal do? Will he file some kind of subpoena? It seems that process could be moving along. Of course we know that the president and his administration have long resisted furnishing those tax returns. The president reiterating just yesterday that he's under audit, that he's not going to release his tax returns while he's under audit, and he's also retained, of course, private counsel. His attorney, Jay Sekulow, who is managing his defense in the Mueller investigation, is working on that, as well as William Consavoy (ph). And so the president is prepared a fight this tooth and nail all the way up to the Supreme Court if that is where it heads.
And even the White House itself, White House Chief of Staff Mick Mulvaney recently saying not going to happen when it comes to Democrats seeing the president's tax returns. So this is going to be a long fight. This letter from Mnuchin really just the beginning of the administration and the president's response.
[09:55:06] SCIUTTO: Jeremy, can I ask a basic question? If the law is that the chairman of the Ways and Means Committee can request these tax returns and the president is refusing to do so, are they breaking the law?
DIAMOND: Look, that's a question to be determined here. Again, the defense that we've heard from the president's administration and also from his private legal team is also a question of the constitutionality of the statute itself. So that may be a way that they can try and attack this. But, again, if the Treasury Department ultimately does find, you know, that it needs to comply with this, what we could ultimately see is the president's private legal team intervening and perhaps some kind of injunction comes to the fore.
SCIUTTO: Sound like we're going to court.
HARLOW: Totally, but it's -- like why is it worth such a huge fight if there's nothing there.
SCIUTTO: Good point.
Jeremy Diamond, thank you.
The WikiLeaks founder, Julian Assange, is in a London court as we speak, just hours after he was arrested, carted out of the Ecuadorian embassy on behalf of the United States, we're learning, after spending seven years inside that embassy. We're following all the latest.
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