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THE LEAD WITH JAKE TAPPER
Markets Fear Global Recession; Blame Game in Times of Crisis; Sources: Talks Ongoing Between White House & Key Senate Aides on Guns; 2020 Candidates Push Aggressive Gun Reform Plans. Aired 4-4:30p ET
Aired August 14, 2019 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:00] JAKE TAPPER, CNN HOST: Welcome to The Lead. I'm Jake Tapper.
And we start with breaking news in the money lead. Fears of another recession causing panic on Wall Street today. The Dow taking a dramatic tumble, ending the day down more than 700 points at the closing bell. Eight hundred there on the chart right there.
The huge slide was set off by one single warning experts say, a specific economic indicator that is historically predicted on coming recessions, a measure that flashes a red warning light for the first time since 2005.
I want to go right to Cristina Alesci at the New York Stock Exchange. Cristina, how bad was the damage today?
CRISTINA ALESCI, CNN POLITICS AND BUSINESS CORRESPONDENT: It was a blood bath. We're down 800 points, a pretty dramatic slide, even in the final minutes of the closing bell, Jake. This is investors sending a very clear signal to President Trump that they do not like his ill- planned, and so far, fruitless trade war and they are fleeing these risky assets and fleeing stocks and looking for cover in other parts of the market like the bond market.
And that is what's causing the phenomenon that you just described which is the inverted yield curve. And what that essentially means is that it cost less -- it cost more for a borrower to borrow over a shorter amount of time than a longer amount of time. That is an unnatural state of affairs.
And if you take a look at this chart, recessions have followed each time we've had an inverted yield curve. This is very troubling to the market. It's this rush to safety that has investors particularly concerned and, by the way, investors also digesting the fact that the deal-maker in chief may not be able to get to a deal with China.
That is putting up paralysis on business from the CEO of a multi- national corporation right down to the Iowa farmer. They cannot make decisions without knowing where this trade war is going and they don't know where that is right now, Jake.
TAPPER: All right. Cristina Alesci at the New York Stock Exchange. I want to bring in CNN global economic analyst Rana Foroohar along with Mark Zandi who is the chief economist at Moody's Analytics. Rana, let me start with you. The yield curve is what everyone at Wall
Street is talking about. Every time it's dip, you see the recession shortly after shaded in yellow. I have to ask though, when it dropped in 2005, we didn't see an official recession for another two years. Does that mean that this recession, assuming this is actually predictive and actually correlated, that it might not be in the immediate future?
RANA FOROOHAR, CNN GLOBAL ECONOMIC ANALYST: That's true. The timing tends to vary but it's always a big predictor. I would look though and say that we have a record amount of debt on the books right now, more debt than before the great financial crisis.
There are a number of other indicators that are actually blinking red for me. Manufacturing and industrial indexes are down in both the U.S. and Europe. U.S. consumers who have been pretty robust are actually starting to look a little weaker. Cutting back credit card balances, scaling back on purchasing gasoline in the middle of the holiday vacation season.
So, there is all kinds of things that have been leading up to this. And at the end of the day, two big things which is the fact that we're probably not going to get a significant U.S./China trade deal for reasons we can discuss and also the fact that the Fed cutting rates simply didn't buoy the markets the way it used to. I think we are at the end of 10 years of easy money.
TAPPER: And Mark, there is the international factors, President Trump's on and off trade wave with China, as Rana just referred to, Germany's economy shrinking in the second quarter, moving it closer to recession, the Brexit situation in the U.K. Mark, do you think that we are already in a global recession?
MARK ZANDI, CHIEF ECONOMIST, MOODY'S ANALYTICS: We're pretty close, Jake. And I think Europe arguably is in recession. I mean, the German economy as you pointed out, contracted in the second quarter, so did the British economy it contracted. And those are two very large -- Italian economy very close to recession. So, Europe is pretty close.
And clearly, the Asian economy is struggling significantly because of the trade war. Global -- Asian central banks last week slashed interest rates and then tend to get ahead of the slowing economy.
And then we got a data dump from China last night, last month they were just horrid. The numbers were awful. Industrial production growth in China is the weakest it's been in 17 years. Retail sales growth is slowing.
So if we're not in recession globally, we are pretty close and it's going to weigh on us here. The U.S. economy is starting to struggle and if the president can't figure out a way to find some kind of face- saving arrangement with China pretty soon, we will be in recession.
TAPPER: Well, Rana, let me ask you about that, because there is a piece in The Washington Post that basically says the White House doesn't really seem to have a plan beyond pressuring the Fed to lower rates. What should the president be doing right now other than bashing Jerome Powell on Twitter?
FOROOHAR: Well, a really good question. Yes. Plan a. Just lowering rates is not working. There is no Fed plan b. What we really need is a workable trade deal with China. The Chinese have made it very clear that they will come to the table but they're not going to take a deal that's not a deal between equals.
[16:05:03] Unfortunately, we have a president that seems constitutionally unable to consider something a win unless he crushes the other side. Chinese are not going to accept that and they have drawn a line in the sand and when they do that, they don't back away.
TAPPER: And Mark, when stocks have fallen like today's fall in the past, experts say don't touch your investments, everything ultimately will work out. But if we are headed for a recession, are investors or people who manage these portfolios, especially retirement accounts for middle income folks, are they expected to just sit back and watch? What should people do?
ZANDI: Yes. Just don't pay attention. For most of us, the market will go up and it will go down. It will go all around. You know, timing -- timing recessions are very difficult. Timing movements in the stock market are even more tough. Just don't look. You know, forget about it.
I mean, obviously, if you're a baby boomer like me or, you know, close to retirement or in retirement, you should have a long conversation with a professional who thinks about managing money for a living. And they could give you some advice. But for most Americans, just ignore it and don't pay attention.
TAPPER: All right. Mark Zandi and Rana Fohoohar, thank you so much.
Let's chew over this with our political experts. The president is obviously watching what's happening on the market. He's tweeting six tweets on the subject. Part of his tweets in the last hour, one says "our problem is with the Fed." He went in to call the Fed Chairman Jerome Powell, quote, "clueless J. Powell."
First of all, we're a long way away from the buck stops here.
AYESHA RASCOE, WHITE HOUSE REPORTER, NPR: Yes.
TAPPER: But is there a plan there beyond tweets?
RASCOE: It seems like the plan may be to just make sure that there is someone else to blame if things go south. And right now it's looking like that's going to be J. Powell, like that he will have to take the -- that he may have to kind of bear the brunt of this from the president because if things go bad President Trump is going to say well, things were going really well but the Fed just kind of messed me up.
Because he doesn't want to talk about what's going on with China and how even though he tweeted that trade wars were good and easy to win, that's just not happening right now. And you saw the administration blink this week when they said, we're
not going to put 10 percent tariff on all $300 billion of imports and extra additional imports from China. We're not going to do that because it might hurt consumers, it might affect us which is the total opposite of what President Trump has been saying.
And so, he doesn't want to feel that kind of pain in the economy. But there are some things that right now if they can't get that trade deal, he's not going to be able to put that off.
TAPPER: And she's right. I mean, this is a complete contradiction to what President Trump has been saying. That China is the one that pays for all of the tariffs when he acknowledged that he was going to ease up on some because it would hurt American consumers.
FMR. REP. MIKE ROGERS (R-MI): Yes, listen, I'm an eternal optimist. Maybe the fact that my wife says it's a genetic defect, by the way. That if, that there is a real possibility that there is -- they're inching forward and that's part of the reason he also said he wasn't going to put -- I think it was 25 percent on those tariffs which would have been pretty tough on the economy.
There are things that the president can do and I wouldn't panic. I agree, calling a recession is a fool's game as most economists will say. It is a, indicator and then the -- on the yield. And then the markets dropping, we've had this before. We've had corrections in the market. It doesn't mean we're going to run quickly into a recession.
My argument is if the president steps up now, does an infrastructure bill, unemployment is still extremely low. I mean, there's a lot of good things to build on. Reengage with our European friends on the China issue. I think if you started announcing a few of those things, you could see that this thing could be averted from rolling into the ditch.
TAPPER: Jen Psaki, former communications director for the Obama White House, I do want to give you the pleasure of the game we occasionally play here. There is a tweet for it. There is always a tweet for it.
JEN PSAKI, CNN POLITICAL COMMENTATOR: Always.
TAPPER: In 2012, President Trump tweeted about your former boss. "It's Monday, how many more excuses will Obama make today about the economy?" Again, the president gets blamed no matter what. Whether it's fair or whether it's not fair. And if this economy is starting to sputter at the very least that's going to be -- voters will hold President Trump accountable.
PSAKI: That's true. And that's a reality no matter who is president. That whoever is sitting in the Oval Office will get the blame or the thanks for where the economy is. Look, President Trump has been getting credit for the economy of the last three years. That is a continuation of the Obama recovery. I think most economists will tell you that. But it is hard to argue that point.
I think what Mike said is a really important here and this is why it would be great if he had a fully functioning policy team which he doesn't. Is that there should be a consideration at this point, what can he do? He can consider what kind of stimulative actions, what kind of efforts that can help to create jobs help prepare for a turn in the economy, what they can consider and get through Congress.
They don't have a functioning process and I think that's going to be a real problem here as well because some of the indicators were beyond China.
[16:10:00] They were about the housing market, you know, you've seen them on the housing market, you've seen them on manufacturing. So, there are other areas where his team should be watching and it's not clear they are.
TAPPER: And Jeff, I want you to take a listen to the president's top trade adviser Peter Navarro earlier today.
(BEGIN VIDEO CLIP)
PETER NAVARRO, WHITE HOUSE TRADE ADVISER: The biggest problem we're fighting right now at the White House is the Federal Reserve's interest rate policy. We lost almost a point of growth in Q2 simply because the Fed had raised interest rates too far, too fast.
(END VIDEO CLIP)
TAPPER: So, again, the blame -- and I'm not saying that the Fed plays no role in this, but they're going to need to have more answers and solutions as Mike was just suggesting.
JEFF ZELENY, CNN SENIOR WASHINGTON CORRESPONDENT: Sure, particularly because the president has tried to own the extraordinary soaring stock market. I mean, he is tried to make that -- you know, suggest that it was because of him. And it wasn't.
But the reality is, though, I've been remarkably surprised, we'll see how long this lasts at how resilient Trump voters have been, how patient they have been with his policies in Iowa and other farm states.
So, I was just back from a week in Iowa reporting and talking to Republicans, farmers, and other things. Yes, they're worried about China, they're worried about tariffs. But they are still sticking with this president. So, I think he does have many opportunities here to keep people on his side. But he's not really doing anything except passing, you know, blame on to others.
It's hard to imagine, though, what Congress could do in terms of a stimulus though. They're not going to pass another tax cut bill. In this divided government, I think the president will have to search for something.
But other indicators out there, SUV sales are slowing. Auto sales are slowing. So, there has been this extraordinary eight-year period that is going to change. That of course could affect his re-election but Democrats have been pretty silent on this topic overall in terms of trade and tariffs here.
So, we'll have to watch how this plays out but the president he hasn't owned this of as yet. Passing the buck, I'm not sure it's going to work.
TAPPER: Ayesha, just to give a little more attention to something Congressman Rogers said, the infrastructure bill that there was talk of at the beginning of the Trump presidency, he and Chuck Schumer could cut a deal, these are deal-makers from New York.
TAPPER: Democrats want to vote and traditionally infrastructure bills, the transportation budget usually has bipartisan support. But there has been no energy expanded towards that.
RASCOE: Well, there has been a lot of talk, right. It's a joke, a running joke. Infrastructure week. But it just -- but it just never comes together. And it seems like the president, especially with the Russia investigation and all of this kind of fights that they've had over immigration, there just hasn't been an appetite for them to kind of really get together and do what's necessary for infrastructure.
There was that one meeting back in -- weeks ago now, maybe months ago and they just never really came together and I think that that's one of the things that President Trump has missed out on. Because he has this opportunity where he can lead the Republican Party to where he wants them to go.
So, if he really wanted an infrastructure bill and he wanted to throw his weight behind that, are they really going to buck him on that? Are they really going to fight him on that? But he hasn't done that.
TAPPER: No, he hasn't. Everyone, stick around. We got a lot more to talk about. When baby steps qualify as a major development after back- to-back gun horrors, new details now on how Democrats and Republicans are coming together to talk -- talk about gun control.
Then China seems to be showing the world they could take action at any moment against the people of Hong Kong. The new satellite photos that are making some angry protesters very nervous. Stay with us.
[16:15:00] (COMMERCIAL BREAK)
[16:17:37] JAKE TAPPER, CNN HOST: We're back with the politics lead.
In an era of particular political nastiness, the White House and congressional aides from both parties have started talks about expanding background checks for gun sales. There is a lot of skepticism that a deal can ultimately be reached, but as CNN's Pamela Brown now reports for us, President Trump has been privately telling his team he thinks he needs to take a concrete step on this issue.
REP. NANCY PELOSI (D-CA): We must pass gun violence prevention legislation. Every day we lose lives.
PAMELA BROWN, CNN SENIOR WHITE HOUSE CORRESPONDENT (voice-over): House Speaker Nancy Pelosi today continuing to put pressure on the president and Senate Republicans to take up gun control legislation, following last week's two deadly mass shootings.
PELOSI: So we need to do that. And we need to do it soon.
BROWN: Behind the scenes, CNN is learning the administration is quietly talking with Senate staffers about a bill that includes expanded background checks. A move the president seems to favor.
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I would like to see meaningful background checks and I think something will happen.
BROWN: The early talks which a source describes as informational, not substantive, involves staffers for Republican Senator Pat Toomey and Democrats Joe Manchin and Chris Murphy.
SEN. CHRIS MURPHY (D-CT): I know in the end, Republicans aren't going to support background checks legislation unless the president supports it. I remain pessimistic that that's how this is going to play out.
BROWN: With the August recess dragging on, other Democrats on Capitol Hill are also skeptical. One Democratic aide saying, I don't feel like they're any more serious than the last ten conversations on guns.
IVANKA TRUMP, FIRST DAUGHTER: There is a strong pull --
BROWN: The president's daughter Ivanka Trump has also been actively involved, having several conversations with lawmakers about gun policy this week.
BROWN: And White House aides are expected to update President Trump later this week on any progress from these gun talks. President Trump has told his advisers in recent days that he does want to take a concrete step and do something meaningful, not just something that is symbolic. This is according to people familiar with the matter.
So, Jake, it remains to be seen if that will actually happen.
TAPPER: Pamela Brown, traveling with the president in New Jersey, thanks so much.
The Democrats' best chances of winning control of the Senate could come down to three candidates already running but they're not running for Senate.
Stay with us.
[16:25:42] TAPPER: In our 2020 lead, Senator Kamala Harris of California today rolled out a new proposal for gun legislation which she says will keep guns out of the hands of potential domestic terrorists. Gun control remaining a key focus on the trail following the mass shootings in El Paso and Dayton.
CNN's MJ Lee now reports from New Hampshire where on the heels of a heavy campaign push in Iowa, Senator Elizabeth Warren is making her case to voters just one day ahead of a visit by President Trump.
[16:25:09] SEN. ELIZABETH WARREN (D-MA), PRESIDENTIAL CANDIDATE: Dream big, fight hard.
MJ LEE, CNN POLITICAL CORRESPONDENT (voice-over): Elizabeth Warren hitting the campaign trail in New Hampshire today, making her 13th trip to the Granite State this year.
WARREN: What happens in 2020 won't just determine the direction of our country, for the next four years or the next eight years, this is going to be the direction of our country for generations to come.
LEE: Warren's visit comes a day ahead of President Trump's rally in the state which he lost in 2016 by fewer than 3,000 votes. In a Facebook Q&A Tuesday, the Massachusetts senator was asked about the 1994 crime bill which Joe Biden helped write and critics say led to an era of mass incarceration.
Warren did not mention her Democratic rival by name but she made clear her disapproval.
WARREN: It was just wrong and it needs to be changed, needs to be rolled back, needs to be repealed.
LEE: Warren and other 2020 Democrats keeping focus on gun violence more than a week since the mass shootings in El Paso and Dayton that left more than 30 people dead.
SEN. KAMALA HARRIS (D-CA), PRESIDENTIAL CANDIDATE: You just might want to know before someone can buy a lethal weapon, you just might want to know if they've been found by a court to be a danger to themselves or other.
LEE: Kamala Harris today unveiling a plan to confront domestic terror threats. Her proposal calls for mandating major online gun shop to perform background checks and allowing law enforcement to take away guns from suspected domestic terrorists.
And Julian Castro, on the heels of last week's attack in El Paso is calling out the president's racist and divisive rhetoric --
JULIAN CASTRO (D), PRESIDENTIAL CANDIDATE: President Trump --
LEE: -- by airing this TV ad today on Fox News in Bedminster, New Jersey, where the president is spending time at his golf club.
CASTRO: As we saw in El Paso, Americans were killed because you stoked the fire of racists. Innocent people were shot down because they look different from you, because they look like me.
LEE: Now, Jake, Warren just spoke with reporters here in New Hampshire and she showed real exasperation at the fact that Congress has not taken real action on gun violence, blaming the Republicans in her own chamber for refusing to get behind background check measures. She says this is one of the clearest examples for her on why she would like to get rid of the Senate filibuster -- Jake.
TAPPER: All right. M.J. Lee, thanks so much.
Let's chew over this.
And, Zeleny, Democrats have a much better shot of getting aggressive gun legislation passed if they win back the Senate, so there is this move from Democrats right now to try to convince a few of the candidates running for president to drop out and run for senate. Hickenlooper in Colorado, Beto O'Rourke in Texas, and Bullock in Montana.
Is there any possibility that that might happen?
JEFF ZELENY, CNN SENIOR WASHINGTON CORRESPONDENT: I think for one of the three, possibly. And that might be John Hickenlooper, the former governor of Colorado, the former mayor of Denver, current presidential candidate. He's really struggling out there.
We are told that he has had conversations. In fact, right after our debate in Detroit, that Friday he had conversations with Chuck Schumer, the Democratic leader. They've been talking to him a lot. He's had conversations with Michael Bennet about what it's like in the Senate. So he, I'm told, is thinking about it, still not thrilled about being a senator.
But the others have insisted they will not do this. Steve Bullock said he doesn't want to be a senator. Beto O'Rourke is having a speech tomorrow. He's going forward with his presidential campaign, but it does raise the question, there chances are not as strong perhaps as presidential candidates, why not fight for the Senate?
You know, a win in Montana or Texas is not -- is certainly not guaranteed for a Democrat. But Beto O'Rourke we're told is not going to do it.
TAPPER: And there is a "Houston Chronicle" editorial aimed at Beto O'Rourke, former congressman from the El Paso area. It says: Beto, if you're listening, come home. Drop out of the race for president and come back to Texas to run for senator. The chances of winning the race you are in now are vanishingly small. And Texas needs you.
Nice thing to read probably.
JEN PSAKI, CNN POLITICAL COMMENTATOR: I'm sure Chuck Schumer has it framed in his office. You know, I think he -- Beto O'Rourke had one of best weeks of his presidential campaign last week, of course, in the face of a tragedy and we saw I think some of the magic of Beto O'Rourke that we saw during the Senate campaign. The deadline is not until December, I believe, if I'm correct.
So, he does have some time. Although he's going to have to raise a significant amount of money, get a campaign going, he can transfer about $5 million if he decides to drop out. That certainly would be a good sign.
So, he says he's not doing it now. I will be interested to see how much pressure Democrats put on him if he -- if he continues to not really have movement in the polls.
TAPPER: And I want to play a little bit more of that ad that Julian Castro took out on Fox to air specifically in New Jersey where President Trump is vacationing, talking to the president about domestic terror and prejudice.
Take a listen.
(BEGIN VIDEO CLIP)
CASTRO: President Trump, you refer to countries as (EXPLETIVE DELETED) holes and you urged American congresswomen to go back to where they came from. You called immigrants rapists. As we saw in El Paso, Americans were killed because you stoked the fire of racists. Innocent people were shot down because they look different from you, because they look like me.
(END VIDEO CLIP)
TAPPER: We can't factually say that --