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Trump Visits U.K.; Trump with Queen Elizabeth; Interview with Kevin Hassett on Economy. Aired 9:30-10a ET

Aired June 3, 2019 - 09:30   ET


[09:30:00] POPPY HARLOW, CNN ANCHOR: All right, so we're -- we can't really hear what the president is saying, but you have the queen there showing him, again, these are the royal gift collection, some from America to the U.K. on this visit.

Max Foster is with me as well.

Max, talk to us a little bit about this, the significance of this and what we're seeing.

MAX FOSTER, CNN ROYAL CORRESPONDENT: Well, I think there's a couple of things confused here. They just exchanged gifts. So that's one thing. I don't know what the president's side has given. But certainly the queen, I can tell you that she's given a book, a Churchill book, to President Trump. It's the Second World War by Winston Churchill, a British version, first edition. So he's a big fan of Churchill. And Churchill was actually the queen's first prime minister, would you believe, all those years ago when she was just in her 20s.

Separately, they are viewing artifacts from the royal collection which refer to the United States. So each of the little sections you'll see there has been broken down into different topics. So you've got the tale of two George's, George III and George Washington. And he'll be shown the Declaration of Independence that comes out of the British archive and some engraved portraits as well of George Washington, for example.

Another section will be about Scottish links. Obviously he is of Scottish ancestry. He's very, very proud of that, which is why he thinks the U.K., the British public have a better connection with him than previous presidents.

He'll be seeing a bolt of Harris tweed (ph), which is obviously typically Scottish. And there will be other sections as well, side tables, I'm told, is one section, a gift from President Trump following tea at Windsor, which was last year. So all the key elements of the royal collection which refer to the United States, all about emphasizing the close links between the two countries.

HARLOW: It is. And it's just so interesting, Max, I think to watch this. Again, you just noted the queen has given President Trump an abridged first edition of the Second World War by Winston Churchill, described by the Buckingham Palace press office as crimson with gold tulle decoration, an outer cover spine and an inner cover, et cetera. I mean this is all pomp and circumstance. This is a significant official U.K. state visit for this president.

But at the same time, this comes amid jabs, sparring between the mayor of London and President Trump. Let's get to that in a moment. But let's try to listen. I think we can hear a bit, Max.



QUEEN ELIZABETH: This is a big more modern (ph). (INAUDIBLE).




TRUMP: Yes, that's very nice.

UNIDENTIFIED MALE: And this is a Harris tweed (ph) from (INAUDIBLE).








QUEEN ELIZABETH: Let me show you (INAUDIBLE) show you (INAUDIBLE).



[09:35:09] HARLOW: OK, Max Foster joins me again as we watch these pictures.

It just is such a stark contrast, Max, between the protests on the streets of London, the jabs between President Trump and the mayor of London, Sadiq Khan, and then these images of this official state visit to the U.K.

FOSTER: It really is. I mean the table they're looking at now, for example, I saw them leaning into the image. It's one image, a photograph of King George VI arriving at the U.S. Capitol building. He was leaning over there. This five volume specially bound set of Roosevelt speeches presented to King George VI. These are key artifacts in the British collection, but obviously very close to the president's heart as well, the United States' heart as well. So it really is about trying to find the common links.

And this is what the queen is there for. You know, she won't be too concerned about the political shenanigans here in the United Kingdom. It's pretty clear British politics is broken right now. This is when she needs to step up and represent the country, show continuity, represent the United Kingdom and place it within history and not caught up in the here and now and managing -- and avoiding letting current problems and tensions play into the wider narrative between the two countries. He's also looking up there to this very famous -- arguably the finest art collection in the world, which belongs to the queen, hanging there in the picture gallery in Buckingham Palace.

It's a hugely sort of impressive room. I'm sure Donald Trump is very impressed by it as well. You can see Ivanka Trump following behind as well, going -- being given the same commentary as well. It's interesting, obviously she's a senior adviser, but also she's very -- she's a part of the family. And it's interesting that Donald Trump has involved his family so keenly in this visit as well.

HARLOW: Yes, you see Prince Charles and Camilla there as well.

We're learning a little bit more about the gift exchanges in addition to that book by Winston Churchill. The president was also given this three-piece pen set made exclusively for the queen. The first lady, Melania Trump, was given, we're told, a specially commissioned silver box. This is typical, right, Max, for -- customary for the queen to present these gifts to heads of state as they visit.

What is atypical, I suppose, is a U.S. head of state coming and commenting on the outgoing lame duck prime minister, sort of criticizing her handling of Brexit and then commenting on Boris Johnson and some support there for Boris Johnson who will be going for the job.

FOSTER: Yes, he's described Boris Johnson as a friend, just as Nigel Farage, also Boris Johnson today launching his leadership campaign to take over Theresa May. He's well ahead of all the other contenders currently in that race. He may well be the next prime minister when President Trump comes to visit.

Theresa ay is a lame duck. She doesn't even get a one-on-one meeting with President Trump this time around. There will be other ministers in the room. So he, justifiably some could argue, is looking ahead to who will be the next leader of the United Kingdom. That will mainly be a discussion I imagine though tomorrow when he spends time in Westminster, gets involved in these bilateral meetings, also goes along to the Winston Churchill war -- you know, war rooms as well. Churchill, a running theme, as you can see, often is when we talk about Angelo American relations.

But there is this huge issue in British politics and some question whether or not the president should be wading into that, getting involved in it at all. But somehow he's managed to separate the political protocol, which he's completely throwing out of the window here in the U.K. for a state visit, while retaining the royal protocols and remaining deferential to the queen.

I also think it's interesting -- a little insight there, Poppy, to the queen and her sort of handling of these affairs -- she's the one guiding the president through these many artifacts in her own collection. She knows it all inside out.



I wonder how long the memories are there in the U.K., because Boris Johnson, although the president has praised him at times, has not been sparing in his criticism of Donald Trump in the past, accusing him of stupefying ignorance regarding his positions on there being Muslim no- go zones in the U.K., is, well, hard to say whether President Trump is aware of that criticism. But where does Boris Johnson stand on Donald Trump today?

FOSTER: Well, you know, I think it's interesting. Donald Trump isn't particularly popular all the polls show here in the United Kingdom. How much does it help Boris Johnson for President Trump to be endorsing him? Not very much I would argue, which is perhaps why Boris Johnson hasn't made hay with it, and perhaps they've had conversation behind the scenes, I don't know, because you haven't had the situation where President Trump has come out to endorse Boris Johnson either. Is there some sort of agreement there? It's not very clear. I can't imagine Boris Johnson making a big deal of President Trump endorsing him or supporting him. It doesn't necessarily work in his favor in this country when he's trying to get elected as prime minister and leader of the conservative party.

[09:40:26] HARLOW: So talk to us a little bit about after this where they will go. I know they're headed to -- the president and the first lady, Max, Westminster Abbey. They will lay this wreath at the grave of The Unknown Warrior tour Westminster, is that right?

FOSTER: That's right. And the Duke of York, Prince Andrew, will be leading on that event. The queen has carved up the various different parts to this trip between her members of the family. We'll see this, so much history in Westminster Abbey. It is the queen's private church. Many sovereigns have been laid to rest there. There's a huge amount to talk about there. And the Duke of York will lead on that.

Then you have the Trumps going along to Clarence House for a private tea with Prince Charles. And that's going to be fascinating, if only to be a fly on the wall, because they are literally diametrically opposed on such a wide range of issues, not least outreach to the Muslim community and climate change.

So Prince Charles, you know, he's in this room as well following through the process. He is an -- was an early champion in the 1970s of green issues and saying that climate change is a global catastrophe in waiting and world leaders need to step in and take control of it. And, frankly, in this country, President Trump is held up as a pin-up for climate change deniers. President Trump has said that he won't shy away from that conversation

when they meet. Prince Charles isn't yet monarch, so he can't express his personal opinions if he wants to. So I think they probably will talk about it because Prince Charles will want to talk about it and see it as an opportunity, when he becomes king himself, he won't get involved in any of those sort of moments, he won't be expressing his opinions at all. That's what famously the queen has never expressed any opinions, certainly not with world leaders.

SCIUTTO: Well, it is quite a moment there. The U.S. president next to the queen. You also have Jared Kushner, the president's son-in-law, Ivanka Trump and, of course, Melania Trump there by the president touring some of Buckingham Palace and the recipient of some gifts.

HARLOW: Yes. All right. We'll stay on this.

SCIUTTO: We're going to stay on top of this and we'll be right back after this short break.


[09:47:00] HARLOW: All right, welcome back.

Well, today, top U.S. and Mexican officials will meet for the first time since President Trump threatened to slap Mexico with major sweeping tariffs as part of his fight against illegal immigration. This as the top economist at the White House says he's departing. That is Kevin Hassett, the chairman of the Council of Economic Advisers. He joins me this morning.

Good morning, Kevin.


HARLOW: I know you've still got a month to go.

HASSETT: Yes, that's right.

HARLOW: We'll talk about why you're leaving in a little bit.


HARLOW: But let's get straight to the news on these tariffs, this threat on Mexico because you have, you know, long been this proponent of open trade, not really a big advocate for major tariffs. Is slapping tariffs up to 25 percent on Mexico good for the U.S. economy?

HASSETT: Right. Well, I think the -- what would be good for the U.S. economy would be to get the border situation under control. And it's clear that Washington is so broken that Congress isn't going to help the president do that. And he's not just going to, you know, wait until the next election to fix an urgent problem. And if we can tighten up the border, and I think that we have a lot of identifiable steps that the Mexicans can take to help us do that, then there will be a lot of economic benefits to the economy from that. HARLOW: So, I hear you, but that's a big if, right? You've got the CFO

of Walmart saying we're going to raise prices because of tariffs. You've got the heads of Home Depot and Kohl's, you've got the business roundtable calling tariffs on Mexican goods a grave error. I mean it's a big if, if this is going to change the flow of undocumented immigrants. And I'm just wondering, are you worried about the economic consequences.

HASSETT: Well, I'm heartened by the fact that the Mexicans are here and they're talking and I don't think they would be talking if the president didn't show how serious he is about this issue. You know, the fact is that there are a lot of identifiable steps. You know, they've been laid out by the Department of Homeland Security. And, again, I'm not a security expert, that the Mexicans could be taking, but haven't been in terms of like stopping, you know, the organized crime folks from running buses to get people up to the border and so on that they can take. And I think that my expectation would be that if they come forward with a good plan, that, you know, that the tariffs won't happen.

HARLOW: But if they don't, the tariffs will happen, and they're going to happen soon.


HARLOW: And just for example --

HASSETT: Yes, the president's serious about it for sure.

HARLOW: Deutsche Bank said that if you get these 25 percent tariffs, every American car, you know, brought in this country from Mexico is going to cost $1,300 more. What will the economic consequences be because you'd agree the American taxpayer, American citizens pay -- pay for these tariffs, right?

HASSETT: Right. Well, you know, I think that the instance of tariffs is both on producers and consumers. And it depends on things like what economists call eslasticities (ph). But the fact is that, you know, the hope is that the Mexica's step up and get this thing fixed and we'll never come to that situation.

But in terms of economic modeling, this is much more harmful for the Mexican economy than for the U.S. economy. And I think that's one reason why they've showed up with all the seriousness that we see coming this week.

HARLOW: But it will hurt the U.S. economy, correct?

HASSETT: You know, the -- if we got to 25 percent tariffs, there would be, you know, costs to that, for sure.

HARLOW: OK. So let's talk about your economic growth outlook. Last month when you were on with me, a very rosy outlook. You said sort of no reason why we can't sustain this 3.2 percent economic growth for the whole year. Is that still your outlook or are you trimming it back, Kevin? [09:50:09] HASSETT: Well, I'm not trimming it back, but I do agree

that we have to watch the numbers closely. And second quarter is looking closer to 2 than to 3.


HASSETT: And we're getting jobs umbers this week. I think the jobs numbers are very crucial because the thing that's made me very confident, we have a strong year, is that we've got strong job growth and strong wage growth. And there have been other numbers like the durable goods numbers, which in part were impacted by a reduced production at Boeing that are a lot -- you know, a lot weaker, so significantly weaker.


HASSETT: And so I think that this is a very important jobs number this week.

HARLOW: It is, but your growth outlook now for the second quarter is closer to 2 percent not 3 percent. That's --

HASSETT: You know, I -- yes, I think --

HARLOW: That's news.

HASSETT: No, I would -- I'm still at 3 percent for the year, but the point is that the uncertainty about the forecast is much higher than the last time you and I talked.

HARLOW: OK. Well, that's -- that's something we should pay attention to.


HARLOW: Let me ask you, there's a new survey out this morning of business leaders. It's from the National Association of Business Economics. Sixty percent of these folks now are predicting a recession by the end of 2020. Are you more worried about a recession by the end of next year this morning, Kevin, than you were a month ago?

HASSETT: No. Well, the yield curve -- so this is -- you know, it's almost real geeky for your audience, but the yield curve, which is like the difference between short term and long term interest rates is doing something that it only usually does before recessions. But all the other economic data are really strong. And so I think that the economists are thinking that there's a recession signal going off. We're talking about that. All right, looking at the models based off the yield curve, my view is that the interest rates right now all around the world are being set by quantitative easing and, you know, Europe's in recession and so they've got a deflationary risk. And so the interest rate signal is particularly inappropriate to use for the U.S. right now.

The very best indicator of recession is something that's developed by an economist named Marceli Shove (ph) at the University of California, and her thing is available at the St. Louis Fed website. And right now that says the probability of recession right now is about zero.

HARLOW: OK. So you're not concerned.

HASSETT: Yes. Not right now.

HARLOW: Let's talk about China.


HARLOW: You told me -- you made a lot of news on this show back in January --


HASSETT: When you told me, quote, a lot of U.S. companies that have a lot of sales in China, like Apple, are going to be watching their earnings downgraded next year unless we get a trade deal with China. That was January. China is now taking an even tougher stance. They're saying they will not back down. They're even threatening to black list some foreign companies from their market. Is this going to mean, Kevin, more pain for U.S. companies that rely on selling in China?

HASSETT: Well, again, you know, at the G-20 that's coming up, hopefully there will be positive discussions. You know, we've got very, very close to a deal, and then, you know, things fell apart right at the last minute. But it means if you got close before, you can hopefully get close again.

And so, yes, I think that, you know, global markets have responded to the fact that the deal fell through. And that there would be a big upside for the forecast if a deal could be realized.

HARLOW: So more risk for U.S. companies until we get a deal.

HASSETT: Yes, it's another reason -- yes, and it relates to what we were talking about, about, you know, we need to see the jobs number. But there is more risk right now, yes.

HARLOW: All right. Well, on this -- on this China trade war issue, Mulvaney, the acting chief of staff, said over the weekend on Fox, we think the same things will happen here and American consumers will not pay the burden of these tariffs. I just don't understand that because we looked at the trade numbers this morning. You've got $540 billion of goods coming from China into the United States last year. How is it possible that Americans won't pay for the cost of this?

HASSETT: Well, again, so what happens is that in an economic seminar we'd go good by good. And there are a heck of a lot of goods where basically the producers bear the cost of the tariffs because there are close substitutes for U.S. consumers. And then there are others where not. And so what we do is we watch the aggregate numbers to see if like aggregate inflation looks like it's taking off because of the tariffs. And all of those numbers have actually surprised on the -- on the downside. And so Mick Mulvaney is right when he says that the things that we've developed, the dashboard to look and see if consumers are, you know, seeing higher prices because of the tariffs are not setting off alarms right now.

HARLOW: All right, two more quick one's for you, Kevin.

On the issue, I mean, I have to ask you, as you're departing here, about the national dent. Debt and deficits. You don't like to see it rising.


HARLOW: And yet the national debt is almost $22 trillion. It has increased by $2 trillion under President Trump, who said, you know, when he was running that he could eliminate it over eight years. Are you not concerned about that anymore?

HASSETT: Yes, I'm very -- I'm very much concerned about it. It's something that I wrote a lot about as an academic before I came into the White House and I'll probably write about it again. The fiscal consolidation is the technical term is, you know, when you get your house in order, fiscal consolidation is a big plus for the outlook. And so if the president wants to go from 3 percent to 4 percent in his second term, then, you know, fiscal consolidation should be on the table, absolutely. It would be my advice.

HARLOW: All right. So you're really worried about the deficit, the national debt. You don't like tariffs. Is this why you're leaving the White House, Kevin Hassett?

HASSETT: Oh, cut it out. I -- no, no, CEA chairs leave usually after about two years. And it's that time for me. And we've got a big, strong, vibrant CEA. There are, you know, a lot of strong people there. It will continue to function well. And I think, you know, I said -- said earlier today to somebody who asked me, it's kind of like I'm the special teams captain of the Patriots and, you know, they'll probably be in the super bowl next year with a new special teams captain.

[09:55:17] HARLOW: Don't talk about the Patriots with Jim Sciutto sitting next to me, my friend.

Finally, let me --

HASSETT: I'm sorry.

HARLOW: All right, so you're leaving. Someone's going to take this job.


HARLOW: You had this private conversation behind the Oval Office with the president about this. I know he's sad to see you go. I'm interested in who's going to fill your seat. There have only been three female CEA chairs. And earlier this year, on this show, you told us that if you left, you would recommend that the Stanford economist, Caroline Hoxby, be your successor. Did you make that recommendation to the president last week?

HASSETT: She would -- you know, Caroline Hoxby would be fantastic. The president's going over a few names right now. And he's going to make the call when he gets back. And so definitely long before I depart, you'll see that there's a new person that's here at the CEA helping to run the show.


HASSETT: So -- or at least one that's been nominated. So, yes, absolutely, the president's moving forward. He's got, you know, good ideas in his head, but he wants to stew over it and maybe meet with some folks before he makes the final call.

HARLOW: OK. We will see who it is. Kevin, come back on the show before you leave in a month, all right.

HASSETT: Thanks. Of course. I will. Yes. Bye-bye.

HARLOW: Thanks very much.

SCIUTTO: Some truth telling there. Deficit is bad. Tariffs cost money.

HARLOW: And he's leaving.

SCIUTTO: And will have an economic effect. Yes. It's not something you always hear from others in the building there. Great interview.

HARLOW: Thank you.

SCIUTTO: Moments from now, President Trump and the first lady wrap up their meeting with the royal family in the United Kingdom. They're going to head to Westminster Abbey for a somber visit. We're going to bring that to you live.


HARLOW: All right, top of the hour, good morning, everyone, I'm Poppy Harlow at CNN in Atlanta.

SCIUTTO: And I'm Jim Sciutto -- sorry -- we're in Atlanta. We're so excited to be here.


SCIUTTO: We had some town halls last night.

HARLOW: We did. It was a busy weekend for us. And now it is a busy day for the president.

[09:59:56] SCIUTTO: That's right, lunch with the queen, a tour of Westminster Abbey, tea with Prince Charles. Ceremony raining as the president and Mrs. Trump begin their long delayed state visit to Britain. But, as usual, controversy.