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INSIDE POLITICS

Recession Fears Rise After Volatile Week on Wall Street; Israel Blocks Two Dem Congresswoman After Pressure From Trump; Economic Concerns Raise Political Risks for Trump; Fox News Poll Shows Trump Trailing Top Dem Candidates; Nine Candidates Have Qualified for Third Dem Debate. Aired 8-9a ET

Aired August 18, 2019 - 08:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


(BEGIN VIDEOTAPE)

[08:00:20] JOHN KING, CNN HOST (voice-over): Recession worries roil the markets.

UNIDENTIFIED FEMALE: Whiplash on Wall Street.

BILL GRIFFETH, CNBC BUSINESS NEWS: Wall Street rollercoaster.

UNIDENTIFIED FEMALE: Wipeout day, no other way to say it.

KING: Plus, Israel blocks a visit by two Democratic congresswomen after a very public nudge by the president.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: They are very anti- Jewish and they are very anti-Israel. I think it's disgraceful.

KING: And one struggling 2020 Democrat bows out. Another fights on after a mass shooting back home.

BETO O'ROURKE (D), PRESIDENTIAL CANDIDATE: We must take the fight directly to the source of this problem, and that is Donald Trump.

KING: INSIDE POLITICS, the biggest stories sourced by the best reporters now.

(END VIDEOTAPE)

KING: Welcome to INSIDE POLITICS. I'm John king. To our viewers in the United States and around the world, thank you for sharing your Sunday.

We begin with the question that rattled financial markets and the president of the United States this past week, is the American economy suddenly at risk of stalling, even tipping into recession? There is no guarantee of that. But there are plenty of warning signs.

Let's look. This past week, if you had not heard it before, you may have heard the term inverted yield curve. That means it costs more to borrow long-term than short. That's backwards.

And when that happens, you see it happening here in the past week and in 2007, you go back through history, when it happens, recessions normally around the corner. That's why many people in the markets and many economists, it is possible, not definite, but possible, the U.S. economy is headed towards recession. That is one indicator.

Because of that, we had a rollercoaster week on Wall Street. Down because of trade concerns. Up a bit after those appeared to be ameliorated some. And then this here, this was inverted yield curve today, 800 points, the market lost. And then modest gains to end the week.

A volatile week in the financial markets, which we know many of you watching. And, of course, the president watches closely on this. Some of this is beyond the control of any American president, or the U.S. economy.

The German and U.K. economies contracted in quarter two, a warning sign they could be headed into recession. There's the possibility of a no-deal Brexit. That has the world worried. Chinese industrial production at a 17-year low, the world's second largest economy slowing down in part because of the trade war.

Here at home, economics a bit more mixed. In the second quarter, consumer spending was up. Consumer spending is a huge piece of the American economy, and the Trump administration says this is proof to them there's not really a recession threat ahead. Business investment dropped in the second quarter.

The University of Michigan's barometer of consumer sentiment dropped 6.4 percent. This, to many people, suggests if consumers are getting nervous and this turns around, that could be a troubled sign. So, if we've through this before, jobs are lost in recessions, businesses die, investments tank, home values plummet, and voters get cranky.

The last time we had a one-term president, George H.W. Bush, he could not convince voters that a relatively mild recession was over. And it was.

How worried is the current president?

Well, he blinked and hit the pause button on his escalating trade war with China. That was on Tuesday, even before that inverted yield curve of potential trouble ahead.

(BEGIN VIDEO CLIP)

TRUMP: We're doing this for Christmas season, just in case some of the tariffs would have an impact on U.S. customers, but so far there's been none. Just in case they might have an impact on people, what we've done is delayed it, so that they won't be relevant to the Christmas shopping season.

(END VIDEO CLIP)

KING: With us this Sunday to share their reporting and the insights, Julie Pace of the "Associated Press", Neil Irwin of the "New York Times", Jeanna Smialek also at "The New York Times". So, when you look at the data, help me, what do you look at after being through a tumultuous week what are you looking for in the days and weeks ahead that says, OK, they managed to land this plane, sort of recession, maybe a bit of a global slowdown, or the snowball is starting to go down the hill.

NEIL IRWIN, SENIOR ECONOMIC CORRESPONDENT, THE NEW YORK TIMES: So, this is the moment in a horror movie when a lot of ominous things are happening, but nothing bad has happened to the characters. The U.S. economy is growing well. The job market is pretty solid.

The question is, what are these leading indicators going to show? There's surveys of manufacturing companies, supply chain managers, weekly claims on unemployment, jobless claims. As we see those things over the next few weeks, months, we'll see if this trouble with the trade war and China, slowing European economy, whether that's going to actually slow the U.S. economy or whether we can be an island in the storm.

KING: And the president, a lot to of fingers pointed at the president saying a lot of this volatility is caused by the trade war.

[08:05:01] You decided to pick this fight with China. You said it would be over soon. And now, there's no end in sight. That's a lot of the turmoil. Certainly part of the reason China's economy is slowing down.

The president says I'm not to blame. It's the Fed. Interest rates are historically low.

Can the Fed do anything here to make this better if that's the right word?

JEANNA SMIALEK, THE NEW YORK TIMES: So, it's an interesting question. As you noted, interest rates are already historically low. So, they only have so much room to work with. What we have seen is the Fed has really sort of been the bulwark that the economy has kind of rested as this trade war has played out.

So, earlier this summer, the Fed signaled that it was no longer going to raise rates, and that really sent stocks soaring. Then they signaled earlier this summer that they were going to cut rates in July, as they did, and that again sent stocks soaring. So they have kind of had been this backstop that has helped to counteract some of these negative forces that have stoked uncertainty in the economy.

KING: Helped counteract, and yet -- but it's a sort of temporary thing, if you will, right, in the sense that yes, the Fed has done that, but Germany's economy is still in trouble. The U.K. economy is still in trouble. China's trouble is still slowing down.

This is all happening in the context as we head into a presidential re-election year. And again, the last one-term president we had had to deal with this. It was a mild recess back then.

The White House says talk of recession is poppycock. (BEGIN VIDEO CLIP)

HOGAN GIDLEY, WHITE HOUSE DEPUTY PRESS SECRETARY: Our economy is soaring. It's the best it's ever been. And the rest of the globe is stagnant or declining. And China falls in that declining category. They're struggling right now in their economy. Every number that came out this past week proved our economy is strong, their economy is week.

The time to strike is now. It would behoove the Democrats and their complicit, compliant allies in the mainstream media to push a false narrative that we're headed towards a recession, but we're not.

(END VIDEO CLIP)

KING: I think means me and us. We are not saying we're heading into a recession. We are saying that there are significant indicators including statistics coming from our own government but especially statistics coming from around the world that show the possibility.

JULIE PACE, WASHINGTON BUREAU CHIEF, ASSOCIATED PRESS: Right, we're in this situation where now you have to line the White House rhetoric up with data, hard cold facts. We know that can always be a little problematic for this White House.

The other thing to one of the points Hogan makes there, there's a lot of talk about the us versus them economy, the strength of the U.S. economy versus other countries. It's a global economy. U.S. economy is so intermingled with the Chinese economy, with the European economy.

So if there is weakness abroad, there becomes real concern here because of all of those intermingling forces. The point that Hogan is making there and that Trump makes is that this should give the U.S. more leverage with China. But Chinese experts and economic experts say China plays a very long game, much longer than the next year and a half, which is what Trump is playing as he looks toward this reelection. So, they're less likely to be moved by some of his short- term maneuvers than some in the West Wing may think.

KING: Well, they don't have to worry about an election. They don't have to worry about voters.

So the question is what can be done, and how much of it is in control whether it's of the president of the United States, can't get anything legislatively passed. You have divided government here in Washington, whether the Fed can help, what levers lie here and how much of this is out of the United States control because it's overseas factors.

Neil, you write in a newspaper today, how would a 2020 recession happen? The trade wars and a breakdown in international economic diplomacy would cause businesses to pull back. That leads to further tumbles in markets and job losses, prompting American consumers to become more cautious. High corporate debt loads create a wave of bankruptcies, and Central Bank policy proves impotent, combined with fiscal policy that is nonexistent. Chances of a near-term recession are only about one in three in the view of most forecasters but if that does develop, the big question is whether the usual tools to fight it are up to the task. A lot of -- it's so complicated, any one specific action whether by President Trump or the Fed might not be enough.

IRWIN: Yes, and I would add it's not just about going into recession or not going into recession. Late 2015, early 2016, there was a contraction in the industrial sector that had some echoes of what's happening now. It was driven by forces overseas what was going on in the Chinese economy. And that probably contributed to Trump's victory. On the coast the economy wasn't bad, in the industrial heartland it was in a bad spot.

So, there are ways this could turn into something painful for Americans, does impact the election in 2020 that doesn't fall into the recession category. If it does, that's a different matter.

KING: And there's a stretch, a lot of hyperbole and some factual errors in the White House cheerleading, if you will. But I get it to a degree, and you've seen past administrations do this because the American consumer is such a giant piece of the machine here. And so, you want to keep consumers confident, you want to -- because you need to keep them spending. If they stop spending, you're in trouble.

SMIALEK: And I think that '15 and '16 incidents that you just referenced is a perfect example here because what we saw was a real industrial pullback that didn't escalate into a recession specifically because of the consumer.

[08:10:00] Consumers spent really strongly throughout that entire period, and it kept us from going into a recession. So, if that should happen again, it's possible that we could avert a deeper downturn.

KING: Interesting few weeks and months ahead as we track all this.

Up next for us, we shift to the world stage. Israel blocks a planned visit by two Democratic congresswomen at the request of President Trump.

First, though, politicians say and do the darndest things. You see Beto O'Rourke pitching in this weekend to help a supporter move in. And Bernie Sanders courts voters courtside, in South Carolina.

(COMMERCIAL BREAK)

KING: President Trump got a campaign assist from a foreign government this week, and it wasn't Russia. At president's urging, Israel denied visas to two liberal, Muslim, Democratic congresswomen. One, Congresswoman Rashida Tlaib, then asked for permission to visit her Palestinian grandmother. After Israel said yes to that, Tlaib said never mind, deciding she should not accept restrictions even though she had agreed to accept those restrictions when making the follow-up visa request.

(BEGIN VIDEO CLIP)

REP. RASHIDA TLAIB (D-MI): This letter was used to try to prevent of my freedom of speech, my freedom of who I could speak to, and they were demands of me to basically silence me.

(END VIDEO CLIP)

KING: This is a complicated story and there are no pure actors here. It is remarkable, beyond remarkable for an American president to push another government to deny a visit by members of Congress.

It's also remarkable that Prime Minister Benjamin Netanyahu weeks from elections back home would do President Trump's bidding and infuriate Democrats by openly taking sides in an American political fight.

[08:15:05] And it is important to note that Tlaib, and her colleague, Ilhan Omar opted against visiting Israel as part of a larger congressional delegation, and instead wanted to go separately as guests of a Palestinian group whose history includes anti-Semitism and praise of suicide bombers. Yes, the president is playing politics here, but so too are the congresswomen.

Joining our conversation, Laura Barron-Lopez of "Politico", Lisa Lerer of "The New York Times", and Seung Min Kim of "The Washington Post".

So, you have these congresswomen who want to make a point. They're making it. The president is giving them attention. The president wants to elevate them, as what he says, the faces of the Democratic Party. They gave him the foil.

Benjamin Netanyahu now has raised a lot of questions about his relationship with Democrats who happen to control the House of Representatives who are heading into a presidential year where we don't know what's going to happen.

Is this just the president and these two members of the so-called "Squad" staking out their critical political positions or is there something bigger here?

LISA LERER, NATIONAL POLITICS REPORTER, THE NEW YORK TIMES: Look, this is a major shift in the U.S./Israel relationship. For decades, the relationship has been a very bipartisan one. There's been support from both sides of the aisle for Israel for continuing to give all kinds of money that way, and security funds, and things like that.

And now, you see that being questioned, particularly on the Democratic side of the aisle. And in part, that's because this close relationship between Netanyahu and Trump. That relationship does seem to be turning this relationship into more of a partisan one, and that's making a lot of supporters of Israel and American Jews really nervous, that this could -- they could see a drop of support.

They fear that if this becomes more partisan, then you won't have the same kind of backing.

KING: Among those making that argument is the House Speaker Nancy Pelosi, who has a long history of supporting Israel.

She told "The Associated Press" this in an interview on Friday: We have a deep relationship and long standing relationship with Israel that can withstand Donald Trump and Benjamin Netanyahu. We cannot let their weaknesses stand in the way of our ongoing relationship.

So, trying to calm everybody down saying we'll get through this, but also a rocket.

PACE: And we've seen this relationship deteriorate in terms of the bipartisan nature of it for several years. Now, you know, it started really under President Obama where the relationship between Obama and Netanyahu was so tense. What we're seeing is just -- there is no pretense really anymore. It's because of political interests.

You know, Netanyahu is in a really difficult political spot. He sees if you're in Israel, you see billboards with Donald Trump's face on it, right? He's trying to send a message not that we just got the U.S. support but we've got Donald Trump's support specifically.

And so, you know, you are seeing some Democrats say I don't know if this relationship will be as bipartisan as it has been in the past if Trump is still president. But I do think it's important to note, you know, these Democratic congresswomen, they had the opportunity to join Pelosi, to join other lawmakers on these CODELs, which is typically how you go about doing this.

They are also using this to their -- to try to push it towards their political --

(CROSSTALK)

KING: Absolutely. Democrats who are somewhat skeptical and critical of things they have said and done, these two congresswomen, in the past are now rallying to their side, which is what happens in the polarization effect that you get this from this.

But to your point, Congressman Omar saying this: Trump's Muslim ban is what Israel is implementing, this time against two duly elected members of Congress. The irony is the only democracy in the Middle East making such a decision is an insult to democratic values and a chilling response to a visit by government officials.

So, again, in making her point, Congresswoman Omar and Tlaib, they -- it's not like they're shying away from the fight. They like this fight.

SEUNG MIN KIM, CNN POLITICAL ANALYST: Exactly, and think of what has built up to this. I mean, there's been a lot of controversial statements they have made. It's caused a lot of rifts within the House Democratic Caucus over the last several months, and Democratic leaders, particularly House Majority Leader Steny Hoyer had been working behind the scenes to kind of tell people that this is not -- like their views are not represented of House Democrats. This is something that we don't support. But now with the action that President Trump had done, it forced a lot

of these House Democrats who were uncomfortable with the language and their policy views, that Congresswoman Omar and Congresswoman Tlaib had taken, to rally behind them. You know, it worked -- and that works in one of two ways. You know, like you can unify people behind the idea that you shouldn't block lawmakers from entering a country, just for practicing free speech, but it also puts a lot of these pro- Israel, more of the hawkish Democrats in a more uncomfortable position of having to rally behind their colleagues who made some of these --

(CROSSTALK)

KING: Which is why those Democrats are mad at Netanyahu here, because he has almost forced their hand.

LAURA BARRON-LOPEZ, NATIONAL POLITICAL REPORTER, POLITICO: And I just think, can't we say it enough, John, and you said this, that the president used a foreign government to exact political punishment on his opponents which is what he did with Omar and Tlaib. And it has put Democrats in a unified position. It also unified AIPAC on their side, which was an interesting thing.

And now, Democrats are considering what options they could use.

[08:20:00] We've been hearing that they may decide to reprimand the ambassadors, the Israeli ambassador, as well as the U.S. ambassador to Israel to figure out what their roles could be -- could have been in this. The Democrats feel as though the trust is gone between the Israeli Ambassador Dermer with him because they had, as Seung Min, been working with him to try to find an agreement so that way Tlaib and Omar could enter Israel, and now they feel as though the trust there is gone.

LERER: But this is like both these leaders, Netanyahu and Trump, they have their own domestic political concerns, right? Like Netanyahu is also up. He has this hard line faction of his government that wants to see sort of that government moving to the right.

Here at home, President Trump has to rally his own base for his own re-election. So, this is not even about the Jewish vote. Jews are 2 percent of America. This is about evangelicals who have very strong feelings about Israel and make up a significant portion of Donald Trump's base.

So, you know, this is -- this is a rift in this relationship that's going to -- it's really not just go away. As you're pointing out this will continue and continue. But it's one both leaders think serves their own personal reelection purposes.

KING: All right. So, we'll watch it play out and see if there's a long-term toll on the relationship.

Next, when it comes to the economy, President Trump wants all of the credit and none of the blame.

(COMMERCIAL BREAK) KING: A recession or even a significant slowdown would test the president's economic message in 2020. The one he uses now is already full of fuzzy math and memories. To hear him on the rally stage, he changed everything.

(BEGIN VIDEO CLIP)

[08:25:02] TRUMP: Before the election, our factories were closing. Hey, who knows it better than you? You're like central casting for the closing of factories. Our jobs were vanishing.

(END VIDEO CLIP)

KING: Now, that last part is not true. Compare the first 30 months of the Trump presidency to the final 30 months of the Obama presidency. The Obama economy created nearly 1 million more jobs.

Now, the president has an explanation for that. He says his count should start earlier.

(BEGIN VIDEO CLIP)

TRUMP: You got to go by November 9th. You know, the markets have gone through the roof since November 9th. That's the day after I won the election. So I won the election, the markets went up thousands of points, things started happening.

(END VIDEO CLIP)

KING: OK. To be kind, let's test that. Let's accept the president's start date. His case still doesn't add up. This adds the final three months of the Obama presidency to President Trump's jobs total, making it the last 33 months. Then we look at the 33 months before those. The Obama economy in terms of job creation wins again.

The president, though, doesn't like to share credit for the boom.

(BEGIN VIDEO CLIP)

TRUMP: I know you like me, and this room is a love fest. I know that. You have no choice but to vote for me because your 401(k)s down the tubes, everything is going to be down the tubes. So, whether you love me or hate me, you've got to vote for me.

(END VIDEO CLIP)

KING: It's an interesting campaign message there.

Now, in the president's defense, there have been increases in coal jobs, which he promised. There are modest increases. But there have been increases -- increases in steel jobs. He promised help there. Wages have finally started to go up.

So, the president has a good story to tell, but the way he tells, though, it's not contextual.

PACE: No.

KING: You're laughing. Too much to expect, huh?

PACE: He inherited an economy that was on the rise. I mean, President Obama inherited a recession and slowly over eight years turned that around. And by the time Trump took office, the economy was on much more solid footing. There have been increases since then.

The point he's making, though, I think, is kind of his only choice here. He's not talking to the people in that room in Manchester when he's making that argument. He's talking to moderate Republicans, he's talking to independents who maybe were turned off by some of his rhetoric or the more aggressive policies that he has pushed.

But they're happy with the economy. And he knows his best chance of winning re-election is for the economy to stay strong. That's an open question now. And for those voters to prize that over anything else.

KING: And as you get these warnings signs, he doesn't want to share the credit with President Obama, that would be heresy to him. The economy was growing. Again, there have been other gains under Trump.

But the question now becomes blame. If there's a slowdown. If there's -- God forbid nobody wants a recession, if there's a slowdown or a recession, he says it is the Fed fault, not the trade war fault.

I want to show you a graphic from the Farm Bureau. The farmers are a key part of the president's base, especially our in the heartland. This is a Farm Bureau that we're using, just talking about how the trade war is impacting more than soybeans. China purchased 1.3 billion less in farm products.

And, listen here, our Vanessa Yurkevich went out and talked to some farmers in the Midwest, who many of them voted for the president, many of them still want to vote for the president again but this is exhausting them.

(BEGIN VIDEO CLIP)

GARY WERTISH, PRESIDENT, MINNESOTA FARMERS UNION: Words and Twitters and tweets, that doesn't pay the farmers bills. That doesn't solve the problem we're dealing with. This one is self-inflicted by out president.

CINDY VANDERPOL, MINNESOTA FARMER: What do you tell your children that want to farm? Do you tell them go find something else to do? One of our sons already has. He's already -- sorry.

Because you don't know what future is going to bring. You almost want to encourage them to go do something else.

(END VIDEO CLIP)

KING: The human part there is the issue for the president in the sense that farmers, they need a two-year plan, a four-year plan, a five-year plan, and a ten-year plan. What am I going to plant? Whom am I going to sell it too?

Where do I borrow the money from? How much money do I need to borrow? How do I need to change my equipment as I look ahead?

In this uncertainty of the China trade war, they don't know what to do.

KIM: And that's the concern we've heard from Republican senators who come from these ag states every time the president tries to ramp up his trade war whether with China or elsewhere in the country. I talked to the Iowa senators multiple times who are just kind of have talked to the president both privately on the phone and also publicly to try to like tell him this is really hurting farmers in Iowa.

This is a state you need for your re-election. Farmers here love you, but their patience is wearing thin. Now, it remains to be seen at what point do their -- does their patience run out? Because again, as you mentioned, these are Trump voters. They do want to support the president, but there's going to be a point for them.

Obviously ratified the U.S.-Mexico-Canada trade deal would help immensely. But also -- that future -- the future of that trade deal is uncertain.

KING: Very iffy. Business groups trying to push Democrats during the recess to win their votes over, but can they get the Democrats to essentially give the president something heading into the election.

[08:30:00]

The White House says this is all being fabricated -- this talk of a possible recession. That's just not true. And the President is our own proof. He picked up the phone this past week to get on a conference call with the leaders of Citibank and Bank of America and JPMorgan.

He gets it. There are real concerns out there. He was told on that call, it's his trade war that is a big factor, if not the biggest factor, in all of this happening.

He also gets hit. He watches Fox News a lot. A new Fox News poll -- latest Fox News poll out shows him trailing all of the leading Democrats.

And look, it's August, right. It's August 2019. But a president under 40 percent, an incumbent president under 40 percent at a time there is a strong economy at the moment, that's a big warning sign to this president. And the economy is essentially his calling card. If he loses that, what?

LAURA BARRON-LOPEZ, NATIONAL POLITICAL REPORTER, POLITICO: Right. The economy is the one thing his advisers for so long were hoping that he would talk about.

Just talk about the economy. Stick to the economy. When you're at these rallies, only talk about that. Talk about how well it's doing. And now there's the potential for that to not be an option for him. And he's trying to place blame and find a fall guy either with the fed.

Also this week he was blaming the media saying that we were trying to stoke a recession by putting out these warning signs and scare consumers. And so this definitely will have -- potentially have a big impact on his re-election if things do come to pass. And as soon as next year we could see the beginning of the recession.

LISA LERER, NATIONAL POLITICS REPORTER, "NEW YORK TIMES": And I agree. I think it will. But I do wonder whether it will have the kind of impact we've seen -- you know, we traditionally see, right. The conventional wisdom around this kind of thing is that a bad economy is super, super, super bad for re-election or for, you know, the election of whoever looks like the incumbent.

And we're in this area of fierce polarization. We have never had an election environment quite like this one. We've never had an election with a candidate, you know, on top of the ticket who plays politics quite the same way that President Trump does.

So I do wonder if it will have quite as big an impact as we all sort of expect. And you know, I guess we may find out, right?

KING: Right. It's a great point. Because we talked about it, and whatever the issue, the old rules say this.

LERER: Right.

(CROSSTALKING)

KING: The question is do the old rules apply in the Trump age. I remember 1992, we were out of recession. George H.W. Bush was trying to tell people it was over. Their legs were tired. They didn't believe it. He lost his job.

Up next, our "Sunday Trail Mix" looks at the guns debate including a tough town hall moment for a key Republican senator.

[08:32:25] (COMMERCIAL BREAK)

KING: Let's turn to some "Sunday Trail Mix" now for a taste of the 2020 campaign.

House Democrats looking to pressure Republicans to act on new gun violence measures. The House Judiciary Committee will cut short its summer recess by a week to return to Washington. On its agenda, several gun measures including limits on high capacity magazines and grants to states that try to limit gun access to those with mental health issues.

Democrats hope this additional action in the House will help create public pressure on the Republican-led Senate. The mood in the Senate though depends much more on President Trump than anything Democrats do. Early last week the President said he believed quote, "proper background checks were an appropriate response to recent mass shootings", and the President said he believed that Senate Majority Leader Mitch McConnell was on the same page.

But listen here. In New Hampshire Thursday the President sounds much less certain. This is what he told WMUR in Manchester.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: We're looking at it right now. We're dealing with a lot to of Republicans, very strong conservative Republicans and we're coming up with a plan, if we can.

Remember this, we have a lot of background checks already.

(END VIDEO CLIP)

KING: And this is what he said at a rally that same day.

(BEGIN VIDEO CLIP)

TRUMP: People have to remember however there is a mental illness problem that has to be dealt with. It's not the gun that pulls the trigger, it's the person holding the gun.

(END VIDEO CLIP)

KING: Now if the President is backing away as he has in the past, the prospects for any senate action could depend on what Republicans are hearing back home during this August recess. Iowa's Joni Ernst heard a lot of grumbling at a town hall on Saturday as she tried to make the case there are plenty of existing gun laws.

(BEGIN VIDEO CLIP)

SENATOR JONI ERNST (R), IOWA: A lot of the incidents that we see do come back to mental illness.

CROWD: No.

ERNST: We are short counselors. We are short psychologists.

UNIDENTIFIED MALE: It's time for you people to take action.

ERNST: There are a number of laws that exist out there that are not followed. We see people that should not have weapons gaining access to weapons. We need to make sure the laws are being followed.

(CROSSTALKING)

(END VIDEO CLIP)

KING: You see the red flag being held up there. Interesting to see the public pressure that gun control groups are trying to put on these Republicans.

But it was really interesting the President's language this past week where he got out there and said let's do background checks. He appears to be in retreat. Am I reading that wrong?

KIM: The President has to be really full-heartedly endorsing these gun restrictions for Republicans to have any semblance of confidence to be able to support them because we know this president is unique in the kind of support that he has from his base.

And so he has to essentially give Republicans political cover to support these kinds of measures. But you're also hearing a lot of resistance, of this growing resistance from Republican senators about doing even something on these so-called red flag laws.

You have a split between Republican senators who represent states such as Florida, where these shootings have happened. There are a lot of people in the suburbs who care about this issue. So you have Rick Scott and Marco Rubio very much advocating for these red flag laws.

But at the same time you have a lot of these senators from these more rural, gun -- certainly (ph) western states such as Mike Rounds from South Dakota, John Barrasso from Wyoming saying they're not comfortable with this idea at all.

KING: We shall see. We'll see what the others -- what Joni Ernst's message she comes back with, where the President ends up on this one since we know where he's going.

To the 2020 Democrats next, including President Obama's advice for Joe Biden. For several of the candidates though this weekend included appeals to black voters at a gathering near Atlanta.

(BEGIN VIDEO CLIP)

SENATOR BERNIE SANDERS (D-VT), PRESIDENTIAL CANDIDATE: The Bible if it's about anything it's about justice.

SENATOR ELIZABETH WARREN (D-MA), PRESIDENTIAL CANDIDATE: Where two or more are gathered in his name, the Lord is with us. Let us rejoice.

SENATOR CORY BOOKER (D-NJ), PRESIDENTIAL CANDIDATE: We have the power and lord knows this nation needs some holy ghost power up in here.

(END VIDEO CLIP)

[08:39:53[ (COMMERCIAL BREAK)

KING: John Hickenlooper is changing his 2020 focus.

(BEGIN VIDEO CLIP)

JOHN HICKENLOOPER (D), FORMER COLORADO GOVERNOR: Today I'm ending my campaign for president.

(END VIDEO CLIP)

KING: The former Colorado governor likely now to run for Senate instead. Many top Democrats wish Beto O'Rourke would make the same choice but the former Texas congressman he returned to the presidential trail this past week with a new focus after the mass shootings in his hometown of El Paso.

(BEGIN VIDEO CLIP)

BETO O'ROURKE (D), PRESIDENTIAL CANDIDATE: We must take the fight directly to the source of this problem. That person who has caused this pain and placed this country in this moment of peril. And that is Donald Trump.

(END VIDEO CLIP)

KING: The next big event in the Democratic race is the third debate three weeks from now. A new Fox News poll shows Joe Biden still atop the field at 31 percent nationally. But Elizabeth Warren has climbed into a clear second place, 20 percent support now. Warren's steady rise is catching even the President's attention.

(BEGIN VIDEO CLIP)

[08:44:59] TRUMP: I did the Pocahontas thing. I hit her really hard and it looked like she was down and out. But that was too long ago. I should have waited.

But don't worry, we will revive it. It can be revived. It can be revived, right? It will be revived. It can be revived very easily and very quickly. And we're going to have some fun in the state of New Hampshire.

(END VIDEO CLIP)

KING: We could talk forever about Pocahontas and whether it's racist or whether it's offensive and the like. But the fact that Elizabeth Warren has the President's attention again tells you everything.

LERER: Yes. She's having a little bit of a surge in the polls right now. They made a couple of good bets. They bet on policy as a way of breaking through and that worked for them. They bet that they could raise enough money from small dollar donations and free the candidates up from having to spend a lot of time in peoples Hamptons homes raising money. And that's worked out well for them.

But of course this summer surge does not necessarily equal a winter win. It's only August. But things are looking good for her. I think the one who may be the most concerned about this and probably ought to be the most concerned about this is Bernie Sanders because you wonder if there's room for both of them in this race.

But, yes, Elizabeth Warren is definitely having a moment right now.

KING: And you have nine candidates qualified so far for the next debate. That's not official yet. But if you look at the data and talk to the campaigns, we assume they're telling us the truth and we can look publicly, you have nine.

Among them Beto O'Rourke, who has struggled. And his poll numbers have actually gone down of late. But he did, you could see his emotion and his animation after being home in El Paso, after a tragic shooting back home.

There are a lot of people who said use that moment to run for the Texas Senate seat to (INAUDIBLE). He says no. He says he won't do that under any circumstances. We will see. There's a December 9th filing deadline.

But he does -- he is in the next debate and now he's pushing a gun plan which is pretty aggressive. National gun registry, nationwide gun licensing, mandatory buyback, mandatory buyback of assault style rifles. Social media giants held liable if they fail to control content pushing violence.

Does he have what -- does he have it? Does he have to do this by the next debate? Does he have to do this by the beginning of the year?

JULIE PACE, ASSOCIATED PRESS: I think O'Rourke is in a tough position here. You know, he had this big burst of energy when he threw in in the presidential race and then kind of got lost in this big, crowded field. And so now he's grappling with the same thing that some of these other second, third tier candidates are grappling with so it was just how do you break through, now?

There's this very established top tier. And so his calculation coming out of this horrible shooting in his home town of El Paso is that he's going to recalibrate. He's going to just approach this race in a totally different way.

He's not going to spend all of his time in Iowa, in New Hampshire and in South Carolina. He says he's going to places that have been most affected by Trump's policies. So it's in Mississippi where we had the chicken plants that were raided by ICE. He's going to be making this contrast argument with Trump in places that are less traditional for a Democratic candidate.

It's a strategy, if he can get attention and if people start saying hey, there's something interesting going on. We like that. The problem is, you know, Mississippi doesn't vote early, right.

KING: Right.

PACE: He still needs to have a good showing in Iowa, a good showing in New Hampshire if he's going to be able to keep his campaign going.

LERER: Plus the question is in this race how much does the national media environment matter more --

PACE: Voters in Iowa would say they still want you there in their towns.

LERER: Yes. They still want you there.

BARRON-LOPEZ: And the same in Nevada and the same in South Carolina. That they want the candidates to come to those states. I think that O'Rourke has a message that could resonate with those voters. I think -- I've heard from a lot of Democrats they feel as though they still have yet to hear this overarching message against Trump, a very effective way to combat him on moral grounds.

So you see that O'Rourke is trying to do that. But going to Mississippi and to Arkansas, I'm not sure that's the smartest play when you're trying to make substantial gains in a primary because he and Buttigieg had those very fast surges, it looked like they were, you know, putting lightning in a bottle. And by contrast Warren has had the slow and steady (INAUDIBLE).

KING: Right. They have plateaued. But you have the two progressive dynamics -- Warren and Sanders. And if you're Beto O'Rourke or Pete Buttigieg, you're look at Joe Biden. That's your pool. That's your pool and the question is can you get at it. We will see soon.

Our reporters share from their notebooks next including Elizabeth Warren's return to an issue that has proven quite problematic in the past.

[08:49:17] (COMMERCIAL BREAK)

KING: Let's head one last time around the INSIDE POLITICS table, ask our great reporters to share a little something from their notebooks to help get you out ahead of the big political news just around the corner.

Julie Pace.

PACE: If you want to watch how the gun control debate is going to play out in 2020, there may be no better state to pay attention to than Arizona and that Senate race. Republican Senator Martha McSally is likely to face off against Democrat Mark Kelly. Kelly of course, is the husband of Gabby Giffords, the former congresswoman who survived a shooting several years ago.

Kelly and Giffords have become big fierce gun control advocates and Kelly is expected to make this part of his campaign. McSally has been an ardent gun supporter but since these last few shootings, she softened her tone a bit and now says she's open to some kind of gun legislation.

Why is she doing this? The suburbs. Republicans like McSally know that their success in 2020 may hinge on their ability to hold some of these the suburbs that have traditionally voted for Republicans but have really started to move away from the party in the Trump era.

And a lot of Republicans that we've talked to say that this issue, gun control, could shift that trend even further away from the party.

KING: That's true when they return from the recess, see if she asks her leader to do anything.

Laura.

BARRON-LOPEZ: So this week there's a Native American presidential forum in Sioux Falls, Iowa. And I'm keeping an eye on that because Elizabeth Warren is going to be there. It's going to be the first real test for her with her new Native American proposal which is having to do with issues that that community has to face.

And so it's going to be the first reaction from tribal leaders about whether or not they actually feel as though she went in the right direction with this proposal which is one of the biggest she's issued so far.

Interesting is that Joe Biden, Kamala Harris and Cory Booker don't appear to be attending and they face some criticism for that.

KING: Interesting week ahead.

Lisa.

LERER: So I was in Iowa this past week. I hate a lot of fried food, rode some good carnival rides, and spent a lot of time talking to voters. And one of the things that was so striking was how few of those people mentioned Bernie Sanders.

And this is fascinating because Iowa, of course, was the state that fueled Bernie Sanders' insurgent campaign last time around. And now he seems to be having some trouble there. That's not only from my conversations with voters. We're also seeing that in polls.

So the question is what Bernie Sanders does. Iowa really is must-win or at least must-place for him. It's hard for him to see having the momentum to get through a crowded primary like this without doing very well in Iowa.

[08:54:59] His aides and supporters say his voters tend to be lower in formation. They tune in later. So it's not that they're not out there backing him still, it's just that they haven't really engaged in the race.

That's a bit of a risky proposition and there are signs from the sanders camp that they are feeling nervous. He's of course, working the rest, trashing the media, which is fairly unusual for a Democrat although not unprecedented.

So I think it's going to be an interesting dynamic to watch. Bernie Sanders lost the primary last time but maybe won the argument. The question this time around is whether there are other people Democrats would prefer to carry on that legacy.

KING: Different terrain this time around.

KIM: I'm watching a pretty, already nasty controversial fight over a new Trump judicial nominee. His name is Steven Menashi -- he's been nominated for the 2nd circuit court of appeals. Did not have the support of his home state senator, Senate Minority Leader Chuck Schumer. And Democrats are already actually calling on him to withdraw from the nomination over some controversial law review articles which is in turn infuriating Republicans. So that's going to be a really heated fight, I would predict, in the coming weeks.

And remember just how important the courts are to this president but also particularly to Senate Majority Leader Mitch McConnell. We've got 43 circuit court judges confirmed under the President's tenure right now. Almost about 100 district court judges. And they're going to continue to confirm more and more as the -- as the rest of the term goes on.

KING: The President wants that for the campaign trail as well -- judges, judges, judges.

That's it for INSIDE POLITICS. Hope you can catch us weekdays as well. We're here at noon Eastern -- a busy week ahead.

Up next, "STATE OF THE UNION WITH JAKE TAPPER". Don't go anywhere. His guests include White house trade advisor Peter Navarro and the Democratic presidential hopeful Mayor Pete Buttigieg.

And as we leave you this Sunday, I want to take a moment to say good- bye to a friend and long-time member of our CNN family who passed away this past week.

Dale Fountain was the driver of the CNN Express, our campaign bus and traveling studio. And he was so much more than that. Dale was funny, humble, hard working, unflappable -- one of the many behind the scenes miracle workers whose names you sadly don't know at home, who never get enough credit for making TV happen.

Dale loved -- funny man -- loved being a CNN ambassador, driving that giant billboard of a bus into every corner of the country he so loved. It was a gift and a privilege to see so much of it with him.

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