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Stocks Fall after Recession Warning; Sen. Michael Bennet (D-CO) is Interviewed about Gun Legislation and Politics; Swedish Court Finds A$AP Rocky Guilty. Aired 9:30-10a ET
Aired August 14, 2019 - 09:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:30:00] CRISTINA ALESCI, CNN BUSINESS AND POLITICS CORRESPONDENT: That's not the way it's supposed to work. And usually, when you have an inverted yield curve, that is proceeded by a recession, usually.
We are in an abnormal environment, so no one really knows where we're going to go from here.
But here's the thing, warning signs of a recession are flashing everywhere. And just to take you through what happened yesterday, investors were really optimistic and perhaps saw the delay in tariffs as a sign that Trump wanted to get a deal done with China before the election. This morning, I called it, they're waking up and realizing, maybe not.
POPPY HARLOW, CNN ANCHOR: Yes.
ALESCI: Maybe he's going to drag this through the election. And, by the way, there are still $100 billion worth of goods that are going to face the tariffs. So investors are sobering up this morning and realizing the risks ahead for sure.
HARLOW: OK, stay with us.
Rana Foroohar is also with me now, associate editor for "The Financial Times" and also our global economics analyst.
So, Rana, I mean this has been your view for -- for a long time.
RANA FOROOHAR, CNN GLOBAL ECONOMICS ANALYST: Yes.
HARLOW: I mean you have been concerned that this is exactly what is coming.
HARLOW: What do you see? I mean the market's off almost 400. We've seen this before. I'm interested to see what happen -- well, we're below four now.
FOROOHAR: Yes. Now, I think that we're going to be in this place where we start to see plunges followed by short relief rallies. Part of that's driven by the fact that there's so much computerized trading in the market right now. I mean, you know, when the market falls, algorithmic traders come in and buy the dips. So you get this sort of false high --
HARLOW: Right. You called it a head fake yesterday.
FOROOHAR: It's a head fake. Yes, no, it is a head fake because if you look at the fundamental story, there are two things that the market's worried about. One is that we're not going to get a U.S.-China trade deal. I don't think we are going to get a trade deal. I mean you see Trump coming in and you know --
HARLOW: You mean before 2020?
FOROOHAR: Before 2020, period.
ALESCI: Or maybe ever.
FOROOHAR: I mean, maybe ever. I think that the problems here are really existential. The U.S. is saying to the Chinese, we want you to change your entire system of government. You know it's not just about tariffs on this or that product.
You're going to see the president, particularly in the run up to 2020, trying to smooth things over, trying to keep the market up. But I think that the market is not buying this anymore.
FOROOHAR: I think -- I think that, you know, we're going to see a lot of jitters, but it's going to be a downward trend.
ALESCI: Patience is definitely wearing thin.
HARLOW: I hear you on that. I also do see the economic numbers out of China. Now, they don't have the political impetus to get this done. Xi Jinping isn't up for election in 2020 like Trump.
FOROOHAR: Yes, that's right.
HARLOW: But there is some pain, right, relative to what they've experienced. A sugar high. Their --
ALESCI: Yes, retail sales -- retail sales were below expectations today and --
HARLOW: Yes. Industrial production is way down, too.
ALESCI: Industrial production is way down.
ALESCI: But let's not forget, our manufacturing sector is hurting, too.
ALESCI: Like our exports are down.
ALESCI: There's real -- the promises that Trump has made to the workers in the manufacturing sector and to the farmer and the agriculture community, he's not delivering on them.
FOROOHAR: You're going to --
ALESCI: Something needs to happen before the election.
HARLOW: Let me just jump in here --
HARLOW: And switch gears a little bit because we don't have all the time in the world and this matters a lot because this is, yes, we all look at the market and there's an urgency when you see the market down so much, but let's talk about the long-term big issue driving this as well I think and that's the debt and deficit issue.
HARLOW: I mean we learned this week that we've got -- we're facing a trillion dollar deficit by the end of the fiscal year.
Let me remind you what President Trump said verbatim to "The Washington Post," to Bob Woodward to "The Washington Post" in 2016. Quote, we've got to get rid of the $19 trillion debt. How long will that take? I think I could do it fairly quickly because of the fact of the numbers. But what's fairly quickly? Well, I would say over a period of eight years.
Rana, the debt was $19 trillion then. It is $22 trillion now. The president has not only not gotten rid of it, he has exacerbated -- he and Congress --
HARLOW: Have exacerbated the crisis.
FOROOHAR: Right. And now this gets back to the Trump tax cuts. We were all told, oh, we're going to bring home all this money. It's going to get invested on main street. We're going to create new jobs. Guess what happened, a lot of money came back. It all went into corporations buying back their own stock, which artificially pushes up the market, but it doesn't really change the real story, doesn't create jobs.
And this goes to a really big point, which is that we are tapped out on easy money, monetary policy, the Fed being able to -- despite their best wishes. I mean I love -- I love the Fed trying to keep the economy up, but, guess what, they can only move money around. They can't actually create real growth.
HARLOW: Well, sure, there's also those -- the MMT and those who believe that it doesn't -- the modern monetary theory -- that it doesn't matter how much debt you have.
ALESCI: It doesn't matter.
HARLOW: And you can print money. And you can spend spend. And that's a minority --
ALESCI: And this is what we were talking about in the --
HARLOW: It's a minority group.
ALESCI: It's ironic that Trump and the Republicans are actually --
FOROOHAR: Yes. Yes.
ALESCI: Sort of moving to the left wing of the Democrat Party on this issue, the modern monetary theory that you're talking about, which is spend, spend, spend until you literally cannot spend anymore is a -- is an ideal and a theory that the left wing of the Democratic Party has embraced --
ALESCI: And now you see the political conservatives embracing that policy in a way as well.
FOROOHAR: Well, it's -- it's interesting. I mean it's the same thing, which is that you can paper over all political problems with easy money. I mean, you know, the left will say, well, hey, we gave corporations all this money for the last ten years, why should we not use it to do a brand new deal or educational reform --
ALESCI: Or middle class tax cuts.
FOROOHAR: Or middle class tax cuts. Fair enough.
But, again, printing money doesn't pay for -- it's a saccharin sort of sugar high that doesn't fix the real problem, which is that we need a real growth story in this country.
[09:35:04] HARLOW: We need a new -- is that the title of your next book, Rana, the new growth story in this country?
FOROOHAR: No, my next book is "Don't be Evil." It's about big tech. But maybe I'll think about that for a book next.
HARLOW: Well, there you go. Look forward to it.
Thank you both, very, very much. Cristina, you'll be busy today watching the Dow, off more than 400 points right now.
OK, we're going to talk about the economy and a lot more with our next guest, 2020 Democratic presidential hopeful Michael Bennet. He says gun control will be a major issue in the next election, but what about right now? Does he think the Republican controlled Senate will act on background checks? I will ask him ahead.
(COMMERCIAL BREAK) HARLOW: All right, President Trump claims that, quote, many Republicans, including Mitch McConnell, want to do something on background checks when they come back from the August recess. Sources tell CNN that Republican lawmakers, some of them and aides, are privately telling the president they oppose expanded background checks, claiming it would not have stopped the shootings in El Paso and Dayton, and said they want the president to push forward on those red flag laws.
[09:40:15] With me now is Democratic candidate for president, Senator Michael Bennet of Colorado. He also has a new book out "Dividing America: How Russia Hacked Social Media and Democracy." We'll get to that in a moment. There it is.
Senator Bennet, thank you for your time.
SEN. MICHAEL BENNET (D-CO), PRESIDENTIAL CANDIDATE: Thank you for having me.
HARLOW: Of course.
So let's begin on guns. The president is convinced that Mitch McConnell wants to do something. He says he's a good man. He wants to do background checks. That's a quote from the president.
Do you buy it?
BENNET: Well, the proof will be in the pudding. We'll see. You know, there are a lot of us said that we should go back during the August recess and have a vote on background checks.
HARLOW: Did you want to go back?
BENNET: I would have been happy to go back. And in September Mitch McConnell will have an opportunity to put a bill on the floor that Colorado passed almost 20 years ago. We passed these same background checks 20 years ago, a western state.
HARLOW: Let's get into this a little bit more.
HARLOW: You now have an F rating from the NRA. You used to have about a C rating from the NRA.
HARLOW: You voted on such things as allowing guns on checked bags on Amtrak back in 2009. It's something that Hillary Clinton hit Bernie Sanders hard on that same vote back in the last election. But I am interested on things like mandatory buybacks on assault rifles, for example. Senator Cory Booker supports that. Congressman Eric Swalwell, who was running, supports that.
Do you -- should there be mandatory buybacks of all assault rifles in this country? BENNET: I think where we should be focused is on the background
checks. I was there after the children in Connecticut were killed in their elementary school. And we couldn't even get our act together to do the background checks. People got distracted by all kinds of other things instead of focusing on that.
We have the opportunity right now to do what 90 percent of the American people want us to do, which is to have background checks. In my state, 2 percent to 3 percent of the people that buy guns every year are prevented from buying them. They are rapists, they're murderers, they are domestic abusers. And if we can do in a western state like Colorado, a Second Amendment state, I don't understand why we can't do it in Washington.
HARLOW: Look, I was there, too. I will in Sandy Hook days after the massacre. It -- I will never forget that feeling --
HARLOW: And can never imagine what it's like to be those parents.
HARLOW: But on the issue, I hear you on background checks. I guess I'm wondering if you think it should go further. Do you agree with Senator Booker and Congressman Swalwell that at this point in our country's history and seeing the mass shootings we've seen, we should push for mandatory buybacks, including criminal prosecution for those who don't sell them back?
BENNET: I would say that pushing for mandatory buybacks would be a recipe for getting nothing done. And I want to get something done.
BENNET: My kids were born the year after Columbine happened in Colorado. So for 20 years they have grown up in the shadow of not being able to go to school without worrying about getting blown up. And they've gone to school knowing that the Congress has never done anything to address this. So --
HARLOW: You're essential saying to your party, don't push too far, push on background checks now. Let's get that done.
BENNET: Let's get that done.
HARLOW: OK. So let's talk about your book.
BENNET: Thank you.
HARLOW: Again, "Dividing America."
I had a chance to go through it. I mean it's striking. There's all of these images in it that the Russians have used the Internet Research Agency, et cetera --
HARLOW: To divide our democracy.
You sit on the Senate Intelligence Committee. You saw a lot of this evidence first-hand first before a lot of Americans did.
How great is the threat to the 2020 election right now?
BENNET: It's a serious and profound threat to our democracy and the democracies in western Europe, which make it -- makes it really problematic that we have a president who won't even admit that it's happening. You know, who goes to Helsinki and says, I believe Putin, I don't believe the intelligence agencies in the United States of America. That's why I put this book out so the American people can actually see what this propaganda looks like.
We had -- we were being attacked by the Russians for a year before anybody noticed that, you know, they couldn't distinguish it from our own political vocabulary. That's a problem.
HARLOW: You've done things like pushing for mandatory paper ballots in elections to come.
HARLOW: You've cosponsored the Election Security Act of 2019. One of the things that struck me and our producer a lot is the -- is the sort of division that is attempted through a lot of these images and ads, et cetera, to divide the left.
HARLOW: I mean many of them using Bernie Sanders as a foil trying to divide the left.
Do you expect that to be exacerbated to further divide your party during the primary?
BENNET: I am deeply worried about it. I mean you can see the Russians in this book basically trying to divide the Sanders supporters from Hillary supporters, just like Trump was trying to do at the beginning of his election. So I think it's just vital for people to understand the kind of division that they've been stoking. And their -- you mentioned election protection. There are things that we can do, and Mitch McConnell has not allowed the bills to come to the floor. Just like the gun bills. I mean he had eight opportunities to put an election protection thing on the floor and he hasn't done it. I've asked people to go to my website to send Mitch McConnell a copy of the book to urge him to put the election protection stuff (ph) on the floor.
[09:45:13] HARLOW: Did you send him a book?
BENNET: I'm going to send him a book, yes.
HARLOW: All right, let's talk about the national debt, something that every day I wake up and think, this is not talked about enough.
HARLOW: I don't think most of your fellow members of Congress seem to care about this enough, the debt, the deficit. We just learned this week that the deficit is going to exceed a trillion dollars by the end of this fiscal year.
You voted against the recent two year budget that raises spending by $320 billion. You lost the vote. Most of your Democratic fellow members of the Senate and the House voted for it. The Committee for Responsible Budgets says that it will increase the deficit by $1.7 trillion over the next decade and said, the head of it, it appears that Congress and the President have given up on their jobs and that this may be the most terrible, worst budget agreement in the nation's history.
Should we believe that Congress at this point just doesn't care what we're leaving our children on this front?
BENNET: I hate to say this but after ten years of being there, it seems to me -- and I say this as a Democrat, that the Democrats don't care. The Republicans say they care, but they are lying about it. You've never seen more fiscal hypocrisy than what the Republicans have delivered.
HARLOW: But what about --
BENNET: The Trump-McConnell era is the most fiscally irresponsible era in American history. That's what this all adds up to. $4 trillion over ten years and they've accomplished it in just three.
HARLOW: What do you say, though, to your fellow Democrats about this and what is being left to our children?
BENNET: The argument that I try to make is twofold. One, this is a theft from our children. And, two, it is restraining what we're able to spend on investments in them, because at the same time we're loading them up with this debt. We've cut domestic discretionary spending by 35 percent since Ronald Reagan was president. So -- and, by the way, it's also, what are you spending the money on.
HARLOW: So -- so if --
BENNET: We --
HARLOW: I just want to ask you, on the front about maybe more spending. There are rumblings about a middle class tax cut coming before the 2020 election. That would add to spending. That would add to the red. Is that a good idea?
BENNET: If Donald Trump -- every single person who voted for Donald Trump, because they thought he'd be fiscally responsible, I hope they vote against him. He would buy a brand new truck for every farmer in America that said the word Trump on the outside of it if he could get away with it. HARLOW: Can America -- can America afford a middle class tax cut right
now, yes or no?
BENNET: We can afford it if we reverse the Trump tax cut.
HARLOW: But you know that's not going to happen in this administration.
BENNET: It will happen if we have a new president.
HARLOW: So would you support a middle class tax cut under this president without a reversal of the other tax cut?
BENNET: I wouldn't, but --
HARLOW: All right, final question to you.
The next Democratic debate is in September. So far you have not hit the two pronged threshold to be there. Are you going to be on that stage?
BENNET: I'm working hard to get there. If people would go to russiaattackedourdemocracy.com and register their support for this book, that will help me get to the debate stage.
HARLOW: I appreciate your time, Senator Bennet.
BENNET: Thank you for having me.
HARLOW: We'll see you.
BENNET: Nice to see you.
HARLOW: Thanks very, very much.
BENNET: Thanks, Poppy.
HARLOW: OK, so news this morning from Sweden. A Swedish court has found that American rapper A$AP Rocky is guilty of assault after that fight in Stockholm. We'll have the latest on that conviction. Remember, the president spoke about this. We'll have the latest on that conviction next.
[09:52:54] HARLOW: All right, new this morning, the rapper, A$AP Rocky and two associates have been found guilty of assault by a Swedish court. Now, this all stems from a street fight in Stockholm on June 30th. Despite the conviction, it does not look like he will face any additional jail time. Of course the president talked a lot about this, called the prime minister of Sweden about it.
Hadas Gold is following all the developments for us this morning.
Walk us through this and also what it means for him.
HADAS GOLD, CNN REPORTER: Yes, Poppy, this all stems from that fight that you mentioned on June 30th in Stockholm. And A$AP Rocky and, as you said, two associates were found guilty of assault. However, they won't be spending any time in jail. But don't forget, A$AP Rocky actually already spent a few weeks in jail before the trial took place.
He will have to also pay damages and some legal expenses to the victim and to the lawyers that equals about $20,000. The court found that he was not acting in self-defense as he and his associates alleged. He will also be serving on a sort of probation for two years in Sweden.
As you noted, this case, which would have been otherwise maybe just been another case of a celebrity abroad getting into potentially some trouble, even caused some diplomatic problems between Sweden and the United States because, as you noted, President Trump got involved, was tweeting at the prime minister of Sweden after Kanye West called him, asking him to get involved. But Swedish officials said over and over again that their judicial system is independent of any sort of political influence.
Now, A$AP Rocky's lawyers said that he is very disappointed in the ruling, but they don't know if they're going to appeal the verdict yet. And so far, Poppy, we have not heard from President Trump.
HARLOW: OK, Hadas, thank you very, very much for that reporting. We'll see if the president weighs in.
Right now new signs that expanded background checks on guns and gun owners could be gaining some traction in Washington as White House and congressional staffers are meeting behind the scenes, even when Congress is not in session. Should we expect anything to change? That's next.
[09:59:43] HARLOW: All right, it is the top of the hour. Good morning, everyone. I'm Poppy Harlow in New York.
And we begin with breaking news.
Another very volatile morning on Wall Street. The Dow is off nearly 400 points, erasing yesterday's gains. There are fresh concerns of a recession.
Julia Chatterley, my colleague at the New York Stock Exchange, joins me now.
[10:00:01] Look, there are signs of this. There's the inverted yield curve. Something we haven't seen since 2007 before the Great Recession. Is that what is going on here.