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STATE OF THE UNION

Israel Controversy; Interview With White House Office of Trade and Manufacturing Policy Director Peter Navarro; Interview With Mayor of South Bend, Indiana, Pete Buttigieg. Aired 9-10a ET

Aired August 18, 2019 - 09:00   ET

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


[09:00:13]

(BEGIN VIDEOTAPE)

JAKE TAPPER, CNN HOST (voice-over): Inflaming the debate. President Trump uses a foreign ally to exploit the partisan divide here and punish his political opponents.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Keep America great, because we have these socialists who want to take it away from us.

TAPPER: That score-settling as a new poll shows trouble for the president against several of his 2020 rivals. Will the politics of division work a second time?

And recession jitters. President Trump said to be rattled, as economic alarm bells cause a wild week on Wall Street. Can the president convince voters that he is still the best guy for their money?

PETER NAVARRO, DIRECTOR, WHITE HOUSE OFFICE OF TRADE AND MANUFACTURING POLICY: Let's not do the gloom and doom. It's all good.

TAPPER: I will speak to White House trade adviser Peter Navarro next.

Plus: first in the South. 2020 Democrats head to South Carolina and make their pitches to African-American voters.

PETE BUTTIGIEG (D), PRESIDENTIAL CANDIDATE: I have got to work that much harder to make sure the voters have heard our message.

TAPPER: But can anyone knock former Vice President Joe Biden out of the lead? Presidential candidate Mayor Pete Buttigieg joins me exclusively in moments.

(END VIDEOTAPE)

TAPPER: Hello. I'm Jake Tapper in Washington, where the state of our union is keeping an eye on our retirement accounts.

President Trump is wrapping up a working vacation at his Bedminster resort, but he doesn't seem to have used that time to unwind. Instead, last night and this morning, he appears to have been scrolling through Twitter, sharing messages about the crowd size at his recent New Hampshire event, retweeting praise for himself from fans, praising conservative media allied with him, and heaping scorn on the rest of the news media.

This weekend, the president's ire extended even to the 90-year-old grandmother of one Muslim American congresswoman after he shattered yet another norm by pushing a foreign ally, Israel, to ban two Democratic congresswomen highly critical of Israel from an official visit.

This all happening as the nation recovers from a week of whiplash on Wall Street, fears of a coming recession spiked on the heels of a key economic indicator, what's called an inverted yield curve, on Wednesday, when short-term bond interest rates briefly went higher than long-term rates.

Those recession fears reverberating, from the farmers in the middle of President Trump's trade war, all the way up to the president himself, who this week postponed some planned tariffs on Chinese goods that were set to take effect over the holiday season.

Joining me now to discuss this and much more, White House trade adviser Peter Navarro.

Thanks so much for being here. I know you got a little summer cold...

NAVARRO: Good to be here, Jake.

TAPPER: ... summer cold, so we appreciate your taking the time, getting up early on a Sunday.

So let me start with the economy, obviously, the basic state of the economy. In addition to the inverted yield curve, which has happened before every recession in the last half-century, I know it has now since flattened, but it did exist there for a little bit on Wednesday.

Nine major countries are either in recession or on the brink of one, perhaps even a bigger concern than the inverted yield curve. Other than pushing the Fed to lower interest rates, what is the administration doing to stave off any potential recession from coming here?

NAVARRO: So let's clear up this inverted yield curve thing.

I didn't write the book on it, but I have written several books about the yield curve as a leading economic indicator. Technically, we did not have a yield curve inversion.

An inverted yield curve requires a big spread between the short and the long. What we had is a...

TAPPER: As opposed to a smaller one.

NAVARRO: Correct.

All we have had is a flat yield curve.

(CROSSTALK)

TAPPER: Well, it was inverted for a little bit.

NAVARRO: No, that's not technically an inversion. It's a flat curve, which is a very weak signal of any possibility.

And, in this case, in this case, the flat curve is actually the result of a very strong Trump economy. What we see now is foreign capital coming to the best game on the globe, which is the Trump economy. It's going into our stock market.

But when it goes into the bond market on the long end, it bids up bond prices and bids down yields, and you get the flat curve. The best thing we need to do now -- and I think this is part of the bullish scenario I have -- the Federal Reserve is going to embark on a -- very aggressive interest rate cuts through the end of the year.

That will lower the short end. But, more importantly, it'll stop suppressing our investment directly and suppressing our exports indirectly.

TAPPER: What do you mean by -- let me ask you, what do you mean by suppressing? Because there's plenty -- as you know, there is lots of liquidity, there's lots of money out there, $15 trillion being borrowed from Germany...

NAVARRO: Sure.

TAPPER: ... from other countries in Europe, from Japan, where the interest rate is negative or zero percent.

And what I'm hearing from experts is, the issue as to why this money is not being invested is because of instability, because of the trade war with China, and because of political instability in the U.S.

NAVARRO: So -- so, here's what we know.

Let's go look at the Q2 numbers. We came in at 2.1 percent. When the Fed started raising rates, it raised it over 100 -- 100 basis points. Broad consensus, too far, too fast.

At the same time it was doing that, the dollar went up by almost 10 percent. So, when you look at the Q2 data, 2.1 percent, we should have came in at 3. We lost two-thirds of a point simply on exports alone, due to the indirect currency effect.

[09:05:05]

And we lost some in commercial real estate because of the uncertainty over what the Fed policy was going to do. And we had an inventory drawdown, which will bounce back.

The point is...

TAPPER: You don't think the trade war has anything to do with this? When Jerome... NAVARRO: No, I...

(CROSSTALK)

TAPPER: Let me just say, the Fed chair, when he lowered interest rates recently, said it was because of -- quote -- "trade tensions, which do seem to be having a significant effect on the economy."

You don't...

NAVARRO: So -- so, two...

TAPPER: You're not acknowledging that the trade war has anything to do with this?

NAVARRO: So, the Federal Reserve chairman should look in the mirror and say, I raised rates too far, too fast, and I cost this economy a full percentage point of growth.

And, interestingly, earlier this week, I was on television just before James Bullard, who's on the Board of Governors. And he basically is my best witnesses to why we're going to have a very good economy. He said that the economy was strong. He also committed to interest rate reductions, because -- not because we have a weak economy, but because we can grow faster without generating inflation.

That's the key thing here. What Jay Powell did not understand is that the Trump economy can grow 3 percent without generating inflation. And that's what we should be doing.

We also need help not just from the Fed. We need help from Congress right now. The other thing that needs to fall into place for really solid...

TAPPER: Is the trade deal, the USMCA.

NAVARRO: U.S., Mexico, Canada agreement.

TAPPER: But...

NAVARRO: And let me just say...

TAPPER: Yes.

NAVARRO: ... that's -- that's at least a point of growth, several hundred thousand new jobs, 75,000 in the auto sector.

And we think, by early October, if Congress can rise above partisan politics, past that, we will have Federal Reserve rate cuts.

And the last thing is...

TAPPER: Yes.

NAVARRO: ... that's going to be really important, the European Central Bank has committed now to very aggressive monetary easing that they're going to begin in September, cutting rates, quantitative easing.

Why does that matter for us? That will lift Europe. They will buy more of our exports. And that will help everything. So I see...

(CROSSTALK)

TAPPER: But you're really not acknowledging at all that the trade deal, that the trade wars and the tariffs have anything to do with this?

NAVARRO: That's correct. That's correct.

TAPPER: You don't?

NAVARRO: The tariffs -- the tariffs are -- are hurting China.

China's bearing the entire burden of the tariffs in terms of concern...

TAPPER: That's not...

NAVARRO: Hang on.

TAPPER: ... what a lot of experts say.

NAVARRO: This is what this expert says.

What we see here, unequivocally, is that China is bearing the burden by lowering their prices.

TAPPER: Right.

NAVARRO: They lowered the value of the yuan by 12 percent...

TAPPER: Right.

NAVARRO: ... to offset the tariffs.

And here's the -- here's the most important part of the pain on them, rather than pain on us. We're seeing production investments, supply chain sourcing move.

TAPPER: But, Peter...

NAVARRO: It's hemorrhaging from China.

TAPPER: Listen to the...

NAVARRO: And the good news is, it's going into -- now, it's going into Southeast Asian and it's coming here.

(CROSSTALK)

TAPPER: Listen to the president of the Minnesota Farmers Union, Gary Wertish, who told CNN this week that even the president's supporters are being hurt and struggling in this trade war, even with the money that the administration is giving them to help them through this tough pass -- passage.

Take a listen.

(BEGIN VIDEO CLIP)

GARY WERTISH, PRESIDENT, MINNESOTA FARMERS UNION: Words and Twitters and tweets, that doesn't -- that doesn't pay the farmers' bills. That doesn't solve the problem we're dealing with.

And this one -- like I said earlier, this one's self-inflicted by our president. And we definitely agreed with him at the beginning. But we -- it doesn't appear that there's a plan B.

(END VIDEO CLIP)

TAPPER: These are people on the front lines, and they're saying the trade war is directly hurting them, and China is not bearing all the burden of this; they are bearing the burden of this.

NAVARRO: So there's a couple of things to say here.

First of all, this president has the backs of farmers. And all the money we're taking in our tariffs, a lot of that is going right to the farmers to keep us whole.

Let's make no mistake about it. China is targeting those farmers to buckle our knees.

I think, whenever we talk about the China issue, it's really important to just go over the seven things we're fighting for. It's the cyber and...

TAPPER: We can't go into all seven. I know there are seven.

Let's just posit right now that...

NAVARRO: Would you acknowledge -- would you acknowledge...

TAPPER: Let's just posit that China is a bad actor. Let's posit that China is...

NAVARRO: ... that there's seven significant problems, including killing Americans with fentanyl and opioids, that this president is standing up to China?

Would you acknowledge that Bill Clinton got China into the WTO and that George Bush, Joe Biden, and Barack Obama stood by while we lost 7,000 factories and five million manufacturing jobs?

TAPPER: I will acknowledge the -- I will acknowledge the fact that there is -- there is pretty much broad consensus in the United States that China is a bad actor, absolutely.

NAVARRO: And on Capitol Hill.

And they are behind this president. The farmers are behind this president.

TAPPER: The farmers are starting to lose patience.

NAVARRO: The farmers understand the pain.

The farmers are behind this president.

TAPPER: The Iowa Soybean Association president -- let me just read this to you.

The Iowa Soybean Association president, Lindsay Greiner, says -- quote -- "Short-term, stair-step subsidies" -- this is what the administration is offering these farmers -- "are a poor remedy for trade."

She says your negotiations right now with China are all talk and no action.

When are the -- when are the farmers go have this off their back?

NAVARRO: Let's talk about -- about the strategy here, because there's a very clear strategy.

Going back to Mar-a-Lago in the spring of 2017, the president has always been willing to talk to the Chinese. But when the Chinese have failed to deliver, when they have reneged on their commitments, he's taken action.

And if you look at the arc of the negotiations...

TAPPER: It's been a year, and these guys are still suffering, these men and women.

[09:10:00]

NAVARRO: If you look at the arc of the negotiations, a hundred days after Mar-a-Lago, they didn't do anything. So we had a 301 investigation, signaling to China, do things. We had to add tariffs when they failed to do things.

Then we went to Buenos Aires. They made us more promises. We went to Osaka. They made us more promises.

Here's the thing. We have talked with the Chinese for decades about changing their ways.

TAPPER: Right.

NAVARRO: They are not going to change their ways unless the president actually has action that backs that up. So...

TAPPER: But here's the thing.

You and the administration keep on saying that the entire burden of these tariffs and this trade war is being borne by China.

NAVARRO: And that is absolutely true.

TAPPER: A study from researchers at Harvard, University of University Chicago, the IMF, and the Federal Reserve Bank in Boston in May found that U.S. importers are shouldering about 95 percent of the price change from the tariffs, and China is shouldering only 5 percent.

NAVARRO: See, that dog won't hunt.

Let's do some math here, right? You put on 200 -- 10 percent tariffs on $200 billion.

TAPPER: Are you saying that their research is wrong?

NAVARRO: Hang on. Hang on.

Just do some math with me -- $200 billion, we put on a 10 percent tariff, and China devalues their currency by 12 percent.

TAPPER: Mm-hmm.

NAVARRO: OK?

Is -- are consumers bearing anything on that? No.

We have seen absolutely no evidence in the price data that consumer -- that's not showing up in the consumer price index. China is slashing their prices.

(CROSSTALK)

TAPPER: ... tariffs aren't hurting anybody in the United States.

NAVARRO: They're not hurting anybody here.

TAPPER: Then why did...

NAVARRO: OK? They're hurting China. They're slashing their prices.

(CROSSTALK)

TAPPER: When the president delayed these tariffs that were supposed to hit, that would have hit in Christmas, why did you call it a Christmas president to the American people, to delay that -- to delay those tariffs, if that doesn't specifically suggest that the tariffs would have been borne by American consumers here?

NAVARRO: Let me suggest the wisdom of that decision, because I -- I was there when...

TAPPER: But you're saying that the tariffs are great, and not imposing the tariffs are great, both.

NAVARRO: Let me answer it.

TAPPER: Go ahead.

NAVARRO: OK?

So, I was in the Oval Office when we had executives come in, and they said, look, let's wait until December for -- 15th, because we have bought all of our stuff that's going to be on the shelves. And we did it in dollar-based contracts, which mean we don't have any ability to shift the burden to the Chinese.

But what we're also doing, Mr. President, is, we're removing our supply chain and manufacturing out of China as fast as we can.

So the president made a wise decision, would build goodwill with the Chinese and which protects consumers from any possible Christmastime impacts. And once we get past that, these businesses are doing their contracts in a way which won't harm consumers.

So we're in a situation here...

TAPPER: Mm-hmm.

NAVARRO: ... where consumers have not been hurt, China's bearing the whole burden.

And guess what? Consumers spend $14 trillion a year. If you put 10 percent tariffs on $300 billion, that's $30 billion. You know how much that is? That's one-fifth of a percent of possible impact. It's nothing.

(CROSSTALK)

TAPPER: We're out of time, but I do want to give you an opportunity to just address the fact that you keep saying that -- that China's bearing all the burden.

And that goes against what we're hearing from researchers at Harvard University, Chicago, the IMF, the Federal Reserve Bank of Boston, former Trump adviser Gary Cohn, who I know you clashed with quite a bit...

NAVARRO: Yes.

TAPPER: ... the editorial board of "The Wall Street Journal," which is very conservative.

Economist after economist says that you're not being straight with the American people on who's bearing the burden of these tariffs. Why are all these people lying, and you telling the truth?

NAVARRO: So, all I would say to you is -- is, look at the data. There's absolutely no evidence, no evidence whatsoever.

TAPPER: Did you look at that study I told you about?

NAVARRO: American consumers -- there's no evidence whatsoever that Americans consumers are bearing any of this.

We know that China is slashing their prices. They're slashing the value of the yuan. They're hemorrhaging, hemorrhaging their manufacturing base.

Be happy to look at some of those studies. But I can tell you this. This president is committed to standing up to China and getting a good deal for the American people. And he will continue to do what needs to be done.

The strategy has been put in place going back to Mar-a-Lago. And we are winning.

TAPPER: All right. I think there are a lot of people out there who don't feel as though we're winning.

NAVARRO: Well, certainly, you don't.

But this has been a good exchange. And I would simply say that this -- this is -- this is the battle of our time, because, if we don't get it right with China structurally, that's going to harm not just our economy and our workers.

TAPPER: Well...

NAVARRO: It's going to harm the global economy.

TAPPER: ... good luck with the trade deal. We all hope that it happens.

NAVARRO: Good to be here.

TAPPER: We all hope that it's successful.

NAVARRO: Good to be here.

TAPPER: Thank you so much, Peter Navarro.

It's a huge day on the campaign trail in South Carolina, especially for one particular candidate hoping to pick up momentum with African- American voters, with whom he's really been struggling.

What's Mayor Pete's plan to break through? I will ask him live.

That's next. Stay with us.

(COMMERCIAL BREAK)

[09:18:33]

TAPPER: Welcome back to STATE OF THE UNION. I'm Jake Tapper.

This weekend, Democratic presidential hopefuls are in one of the most crucial states to winning over one of the most crucial voting blocs, African-American voters.

This morning, South Bend Indiana Mayor Pete Buttigieg will attend church services in South Carolina, as he faces something of an uphill climb in the polls with black voters, especially with those who hold some deep religious convictions. Joining me now live from Georgetown, South Carolina, is 2020

Democratic presidential candidate Mayor Pete Buttigieg.

Mayor Pete, thanks so much for joining us. We appreciate it.

You have been struggling to win over African-American voters during this campaign so far...

(COUGHING)

TAPPER: Pardon me -- even as you have been rising.

Less than half of black Protestant Christians support same-sex marriage. You're headed to a black church later today.

Do you think that the fact that you're gay is part of what might be holding you back with at least some black voters?

BUTTIGIEG: I think most black voters, like most voters in general, want to know what the candidates are actually going to do to improve their lives.

And when I talk to black voters in particular, there's a sense of having been taken for granted in politics and a sense that candidates haven't always been speaking to them or earning their trust.

So, more than anything, I think my job is to make sure that I explain how our vision for increasing the number of black entrepreneurs is going to lead to economic empowerment, how the part of my Douglass Plan for tackling institutional racism that works on health will help close the maternal mortality gap.

[09:20:00]

I think a lot of these other factors start to wash away once voters understand what it's going to mean for them that you, vs. the others, are in office.

But we have got six months to make sure we get that message out, make sure we demonstrate that I'm serious about the things I would do as president.

And that's how I plan to earn support among black voters, whether it's here in South Carolina or across the country.

TAPPER: You have been critical in the past of Vice President Mike Pence's positions on LGBT issues and the fact that his religious conservatism on these issues obviously influences an anti-LGBT view on policies.

You have said -- quote -- "I have a problem with religion being used as a justification to harm people, and especially in the LGBT community," calling same-sex marriage a moral issue.

Obviously, this is not the same thing, but explain how it's different that there are Democratic voters who might have an issue with LGBTQ rights. How is that different from Vice President Pence, if they're both based in religious views?

BUTTIGIEG: Well, I think back to my experience in Indiana when I was running for reelection after I came out in a community that's generally Democratic, but also quite socially conservative.

And I just laid out the case on the kind of job that I was doing. And what I found was, a lot of people were able to move past old prejudices and move into the future.

This is not an easy conversation for a lot of people who have, frankly, been brought up in a certain way and are struggling to get onto the right side of history.

But I also believe that this conversation is picking up speed, that it's a healthy conversation, and that where it leads is an understanding that all marginalized people need to stand together at a time when so many Americans in so many different ways, especially under this presidency, are coming under attack.

TAPPER: You told me on the show two weeks ago that you believe President Trump is a white nationalist.

Given that, do you think that it's a racist act to cast a vote for President Trump in 2020?

BUTTIGIEG: Well, at best, it means looking the other way on racism.

But I think a lot of people are wondering what kind of deal even that is supposed to be.

You know, you look at what he said in that rally, "You have got no choice but to vote for me."

And if you look at the numbers, basically, what he's saying is, all right, I want you to look the other way on the racism, tolerate the negativity, accept the instability of my administration, because I am going to deliver for you job growth almost as good as the Obama years.

That's what his argument amounts to right now. And it's part of the reason why he's unpopular.

TAPPER: Let's talk about gun control, if we can.

You have said that -- quote -- "weapons of war" don't belong in our neighborhoods. You served in Afghanistan, so you know what a weapon of war is.

Your 2020 opponent former Congressman Beto O'Rourke supports mandatory buybacks for so-called assault weapons, certain types of semiautomatic weapons. You have stopped short of that.

But if you think so-called assault weapons don't belong in our neighborhoods, as you have stated, why wouldn't you support mandatory buybacks of assault weapons?

BUTTIGIEG: Well, I think we have got a lot of work to do right now on the basics, universal background checks, red flag laws, a ban on new sales of these assault weapons and high-capacity magazines, things that the majority, in many cases, the vast majority, of Americans support, that still haven't got done.

I think we have got some fundamentals we have got to take care of. And then we will work to figure out how to make sure that we're not forever the only country with more guns than people.

TAPPER: President Trump met with his national security team on Friday to weigh this new possible peace deal with the Taliban that theoretically could end the war in Afghanistan.

You have said that you agree with the president that U.S. service members need to come home, and soon.

But I want to share with you what retired General David Petraeus, who led service members in Afghanistan and Iraq under President Obama, wrote in "The Wall Street Journal" a few days ago.

Quote: "A complete military exit from Afghanistan today would be even more ill-advised and risky than the Obama administration's disengagement from Iraq in 2011. If the Trump administration orders a full pullout from Afghanistan, there is considerably less doubt about what will happen, full-blown civil war and the reestablishment of a terrorist sanctuary" -- unquote.

Now, you told me in the CNN debates that you would bring U.S. service members home within your first year as president.

Do you support the president's potential peace deal in Afghanistan? And how do you respond to the concerns of General Petraeus?

BUTTIGIEG: Well, the problem with the president's path is, it seems to be dictated by the American political calendar.

You add to that the fact that there doesn't seem to be any real role for the legitimately elected Afghan government, and it is a recipe for us winding up having to go back because of a problem that unfolds.

Look, if we really want to leave well -- and we're going to leave -- remember, leaving Afghanistan is the one thing that the right, the left, the Taliban, the government, and the international community all agree on.

[09:25:07]

So the real question here is, are we going to leave well, or are we going to leave poorly?

To do it right, we need to make sure we get the basic assurances about counterterrorism that we need, and that the Afghan government is on the table, so that there's a formula for stability. We have leverage in this conversation.

It is in the interest of even the Taliban to make sure that we have the right kind of political settlement. But there has to be an actual strategy. And it can't be driven by the timeline of the American election. It has to be driven by our ability to get a deal that makes sense.

TAPPER: You told me that you wanted to get U.S. service members out within the first year. I mean, is that -- is that not too quickly?

BUTTIGIEG: Of course I want to get -- I would rather we be done with this today.

I mean, right now, somebody is packing their bags for Afghanistan, 18 years after 9/11, wondering why we're there.

It's very clear that we need to bring this to a close. Now, we may need some kind of special operations or intelligence capability, just as we would in many hot spots around the world, to protect American interests.

But, right now, the only way that we can get to that withdrawal, bring this thing to a close, is to have a political settlement that has the parties at the table.

And while it's good to hear that there are talks going on, it's concerning to hear that those talks are leaving the Afghan government at the sidelines.

TAPPER: Let's turn to the economy.

You just heard my interview with the president's trade adviser, Peter Navarro. President Trump says taking his tariffs off China now would be -- quote -- "economic surrender," saying the U.S. cannot make a trade deal without dialing up more pressure.

You have vowed to lift those tariffs if you become president. What makes you think China would make a trade deal with you as president without the kind of pressure that President Trump is now exerting with these tariffs?

BUTTIGIEG: Well, we have a lot of different forms of leverage in the relationship.

But it's also a fool's errand to think you're going to be able to get China to change the fundamentals of their economic model by poking them in the eye with some tariffs.

And, by the way, despite all -- all of the noise from that previous interview, there are some basic facts here that you can't escape. And one of them is that American farmers are getting killed.

I was just in Iowa in rural parts of the state talking with a lot of farmers, who -- many of whom are Republicans or supported this president, and are now asking the question, how much longer are we supposed to take one for the team?

The president has said repeatedly that he's on the cusp of getting a deal. The president has failed to deliver a deal. And I expect he will continue to do so. And, in the meantime, we're paying the cost of these tariffs. We're

going to see even more in the prices of consumer goods. The president apparently is aware of this, because he said he was going to delay them until Christmas.

What are we supposed to do after Christmas? There is clearly no strategy for dealing with the trade war in a way that will actually lead to results for American farmers or American consumers.

And part of the reason is that this is not what it's going to take to actually guide China into a different direction. This is going to -- this is about a lot more than just some tariffs.

Look, you consider the position that China is in now, and you consider our loss of domestic competitiveness, because we're not even investing at home in education, infrastructure, health, the things that are going to allow us to be a world leader into the 21st century. If we're neglecting that, none of this is going to matter.

Meanwhile, you have got an economy that is not working for most Americans. There's a big debate going on right now over whether we're on the cusp of a recession. I think we probably are.

But the more important thing is, even during an expansion, most Americans haven't been able to get ahead. That is a huge problem. And the president has made it abundantly clear that he doesn't care.

When it comes to rural America, I think, to him, it's just the scenery that he sees out the helicopter window on the way to his golf course. And when it comes to American consumers, he is completely out of touch with the impact it's going to have on the prices we pay for our goods as a result of a trade war in which both sides will lose.

TAPPER: South Bend, Indiana, Mayor Pete Buttigieg, thank you so much for your time. Good luck on the campaign trail.

BUTTIGIEG: Thanks. Good to be with you.

TAPPER: Even grandmother apparently not off-limits in the president's latest political battle, but why is a key U.S. ally joining this fight?

That's next.

(COMMERCIAL BREAK) [09:30:00]

SMERCONISH: -- after the president told Israel not to let Muslim congresswoman Rashida Tlaib visit and it banned her and then reversed its decision she decided not to go. Was the whole episode just political shadowboxing?

(COMMERCIAL BREAK)

SMERCONISH: Was this week's showdown over whether to allow America's first two Muslim congresswomen to visit Israel ultimately just an act of provocation to embarrass Israel? Representatives Rashida Tlaib and Ilhan Omar, both vocal critics of Israel and supporters of the boycott movement known as BDS had initially been granted permission to visit. Then president Trump tweeted that Israel allowing them to visit would -- quote -- "show great weakness" claiming "they hate Israel and all Jewish people."

Soon after, Prime Minister Benjamin Netanyahu's government decided to ban them. Netanyahu sided in Israeli law prohibiting entry into Israel of anybody working to oppose boycotts and called their itinerary -- quote -- unquote -- "one sided" because they were planning to visit only Palestinian sites.

Tlaib reapplied citing the humanitarian grounds of visiting her family in the West Bank including what might be her last chance to visit a 90-year-old grandmother. But when Israel reversed its position and said that Tlaib could visit, she pledge in writing if -- she pledge in writing not to promote boycotts against Israel while there she turned down that invitation and called it humiliating.

[09:35:04]

Quote -- "Visiting my grandmother under these oppressive conditions stands against everything I believe in, fighting against racism and oppression and injustice."

Israel's interior minister Aryeh Deri who had approved the visit called her actions a provocation saying -- quote -- "I approved her request as a gesture of goodwill on a humanitarian basis. But it was just a provocative request aimed at bashing the state of Israel. Apparently her hate for Israel overcomes her love for her grandmother."

Joining me now to discuss is journalist and foreign policy analyst Rula Jebreal. Rula, there are some who look at this and say, aha, if it were really about visiting the grandmother, she'd be making the trip. What are your thoughts?

RULA JEBREAL, FOREIGN POLICY ANALYST: Look, it's the conditionality of that visit. I think if you're a liberal Democratic state you would allow a duly elected representative of Congress to visit regardless. I mean, what are you trying to hide?

The fact that the visit was banned in the first place it reflects on this trajectory where Israel is heading where it looked like South Africa or it looks like the Soviet Union where you have to ban people because you're hiding the violence of the occupation. For a country that received billions of dollars, I think they should -- they owe more respect to Congress. They've been very supportive of them.

And this is an extension of the globalization of the Muslim ban. It's really a disgrace that the president of the United States is lobbying a foreign country against a sitting member -- two sitting members of Congress simply because they are black and Muslim. I find it really outrageous.

I'm speaking now, Michael, as an Israeli citizen. We want an Israel -- a Democratic Israeli state that doesn't look and judge people and define them by their ethnicity or what they say, their criticisms, or their gender, or even their color. Because this is what's happening in Israel today.

We have a government that has been promoting racist policy against anybody that is not Jewish. This is the opposite of the founding father of Israel envisioned for the Israeli state. I mean, the founding father in the declaration of independence talk about equal rights for all inhabitants regardless of religion, their ethnicity and their skin tone. And this promise is being betrayed by the president of the United States and above all by the prime minister -- sitting prime minister of Israel, Bibi Netanyahu.

SMERCONISH: Rula, a large part of this conversation is about the BDS movement. It's a subject that came up last night on Bill Maher's program. Here's part of what he had to say --

(BEGIN VIDEO CLIP)

BILL MAHER, HOST, "REAL TIME WITH BILL MAHER": BDS is a bull shit purity test by people who want to appear woke but actually slept through history class. I think it's very shallow thinking that the Jews are in Israel, mostly white, and the Palestinians are browner, so they must be innocent and correct and the Jews must be wrong.

(END VIDEO CLIP)

SMERCONISH: Does Bill Maher have a point?

JEBREAL: Well, Bill Maher has been banning Muslims from his show for a while especially Muslim who are critical of his views. As an atheist who claimed to profess to be an atheist himself, to be endorsing some kind of -- some kind of a racist government that view people and define people based on their skin tone and color, for me it's not shocking because it's -- I think Bill Maher and any other hypocrites don't understand that if you advocate for freedom, equality, morality, and legality, you cannot say, oh, we're fine that Palestinians can live under military occupation, but we are not fine that in America we have Donald Trump who is trying to import that kind of system to the United States.

SMERCONISH: But part of the problem -- part of the problem is that --

JEBREAL: If Bill Maher is not fine with --

SMERCONISH: Part of the problem is that each side is claiming the moral high ground. In fact, Catherine (ph), put on the screen the Netanyahu quote. Because, you know, each side claims that they're on the righteous side. And what Netanyahu said in this quote is --

JEBREAL: There's no both sides, Michael. There's no both sides --

SMERCONISH: Just -- you can respond. But here it is. "Israel is open to all critics and any criticism with one exception, the law in Israel that prohibits entry to people calling and advocating for boycotting the country, just like in other democracies that bar entry to those who they believe will do harm to their nation."

You get the final word. But respond to that, and then I have to leave you.

JEBREAL: Well, let's put it this way, Bibi Netanyahu is a liar. And another thing that I want to say, when you have Richard Spencer who was a white nationalist say that he's a white Zionist and you are standing with that and he views Israel as -- as the kind of state that he wants to import elsewhere where you have a master race and everybody else is treated as subhuman, if you subscribe to that in Israel or in Iraq or in South Africa, then you shouldn't be surprised that we elect people like Donald Trump and his ilks.

[09:40:14]

Either you -- there's no both sides. It's like saying the neo-Nazis are -- there's fine people on both sides. There's no both sides. Either you stand with democracy, equality, and legality and human rights, or against it. So you have to choose.

I stand with the government

SMERCONISH: Rula --

JEBREAL: Any government that stands for equality, morality, and legality. Anything else, it's really a joke.

SMERCONISH: Rula, thank you. Appreciate your being here. I was simply trying to make the point that both sides claims --

JEBREAL: Thank you, Michael.

SMERCONISH: -- the other that seeks their destruction. Thank you.

I want to remind you, answer the survey question at Smerconish.com.

"Would an economic downturn cause President Trump's base to abandon him?"

Still to come, should consumers not patronize a company if they disagree with the owner's politics? And if so, where will that kind of thinking lead us?

(COMMERCIAL BREAK)

SMERCONISH: Question, should you refuse to patronize a company based on the political views of its management or ownership?

[09:45:02]

My next guest was working out at an Equinox gym recently when a story came on the news about a boycott being organized against Equinox. The reason -- because of a Trump fundraiser being hosted by Steven (ph) Ross, the billionaire real estate developer, owner of Miami Dolphins, and majority owners of related companies. They own Equinox and SoulCycle as well as full disclosure the developer of Hudson Yards, home to CNN's New York offices.

Well, my guest had a particular reason to feel conflicted. Carla Hall is an editorial member of the "Los Angeles Times" and had contributed to its collection of editorials titled "Our Dishonest President."

After she finished her workout, she wrote this piece, "Do I have to dump my equinox membership just because I don't like Trump?" Carla, what's the answer to the question? What decision have you reached?

CARLA HALL, EDITORIAL BOARD MEMBER, LOS ANGELES TIMES: I'm still a member. I was there last night. And I've decided to stay with the gym.

My feeling is even though I'm also a strong critic of Trump and have been as a member of the editorial board of the "L.A. Times," my feeling is that the connection between the gym and related companies and Steve (ph) Ross is attenuated.

This is not a gym that Trump owns. This is a gym that related companies has a minority stake in. Yes, the money that I spend there ultimately does go in part to him. And then he has held this big fundraiser. But my feeling is that he's a fundraiser, and it's not like Trump owns this gym.

SMERCONISH: My radio producer has a window washer. She doesn't agree with his politics. I think because of the -- the bumper stickers there are displayed on his vehicle. But she says he really does a great job on the windows.

So these dilemmas, you know, they impact all of us. And I guess developing a litmus test for us, a standard by which to judge them is really difficult.

HALL: I think it is difficult. And I -- I completely support economic boycotts. I support boycotts of things that are related to social justice.

I would not go to Trump's golf course where he has a big fancy restaurant here in Rancho Palos Verdes just outside of L.A. but I do think at the end of the day I -- it's difficult to disentangle your life and what you do with your life from people who own businesses that you patronize because you don't like their politics. And I just decided that in this case I could stay at this gym.

SMERCONISH: Do we have Steve (ph) Ross' statement, Catherine (ph)? Could you put that up on the screen?

This is the response from the owner of both Equinox and SoulCycle. Much higher up on the food chain. I want to take a look and react.

"I have been and will continue to be an outspoken champion of racial equality, inclusion, diversity, public education, and environmental sustainability. And I have and will continue to support leaders both sides of the aisle."

Is that enough for you? HALL: Well, no. That doesn't make me like Steven (ph) Ross any more. And in fact if he believes in all those things, I'm not quite sure how he can be a big fundraiser for Donald Trump.

But again, I think it's OK that I can stay at this gym which he's getting some profits from. At the end of the day, the way that we change the government is that the way that we change the presidency is that we put up a viable candidate that people will vote for against Trump. And whether or not Steven (ph) Ross, whether or not I deprive Steven (ph) Ross of some money, there's still going to be fundraisers for Donald Trump. And in fact, Steven (ph) Ross will probably still continue to be a fundraiser for Donald Trump.

So I think, again, we should concentrate on how do we elect somebody who can beat Donald Trump and not just figure out how to take out the fundraisers.

SMERCONISH: I think you're right. And my -- my standard is as follows -- are the windows clean? If the windows are clean and if that tread -- if that treadmill is working, then I'm fine with you continuing your workout. Thank you so much for being here.

HALL: Thank you. My pleasure

SMERCONISH: Still to come, your best and worst -- your best and worst tweets and Facebook comments like this one.

You don't have to, but it helps to know that you're not supporting a creep in any way. Imagine people still bought jello pudding pops after Bill Cosby, and Subway sandwiches after Jared.

Yes. Like where does it end? And by the way it's not just in how you spend your money. If all of a sudden you're going to view everything through a political prism then, you know, here we are as summer winds down. Before you know it we'll be gathering around thanksgiving tables. Are you going to determine who gets an invite based on the politics heading into this election?

[09:50:04]

Man, I hope not.

The results of the survey question are coming up in just a moment. And it is this -- you can still vote at Smerconish.com.

Would an economic downturn, would that be the thing that would cause President Trump's base to abandon him?

(COMMERCIAL BREAK)

SMERCONISH: Time to see how you responded to the survey question at Smerconish.com this hour.

"Would an economic downturn cause President Trump's base to abandon him?" Survey says, 7,559 votes cast, the nos, 61 percent, would it cause -- no, it would not. I don't agree with that. I don't agree with it for the following -- well, it depends who his opponent would be, for sure, but on the issue of would this be the exception to the Fifth Avenue Rule, you know, the one thing that President Trump would be held accountable for?

I think he would be held accountable for it. I tell you why, the blame game wouldn't work. He couldn't lay it off. If the economy tumbles he couldn't lay it off on Obama, he couldn't lay it off on Hillary, he couldn't lay it off on Strzok and Page or the dossier or Christopher Steele or, you know, all the usual suspects.

I mean, he could try and pass the buck to the Federal Reserve, but I just don't think so. I think it will all be about him. He's taken full credit for the economy, great, but if it should turn -- and by the way, I sure hope it doesn't -- but if it should turn I think he'll be held accountable for it. I think that will be the exception to everything we've discussed.

Catherine (ph), what else do we have?

[09:55:03]

"You are a Trump supporter, you hope like hell that he is reelected. Yet you claim" -- Gator Boy, always -- what that I have possible said this hour could cause you to come to that conclusion?

People hear what they want to hear about me, and you know what it is, you're so preconditioned to believe that every host must have a bias that's far to the right or far to the left that you just can't understand a guy like me who's a mixed bag, but that's the case.

So next, what do we have?

"I love you even more after you referenced Robert Plant. Does anybody remember laughter? Pretty sure it pertains to the country in general right now."

Jesch, come on, I don't understand. The epitome to me of political correctness run amok are the Brits (ph) through that council that governs their air waves saying you can't show fathers parenting losing their attention span and the kids end up on the conveyor belt. It's meant to be funny. It's not meant to be harmful to a stereotype or perpetuate a stereotype of any kind. I don't think it does that.

What's next? Real quick. One more.

"My dog is offended when ads for pet care only" -- OK. I mean, come on. There you go. Why am I even needed here? That's better than anything I could come up with.

Hey, gang, join me for my "American Life in Columns" tour. I'll next be in Sunnyvale California on September 30, the October 1st show is sold out.

Thanks for watching. See you here next week.

(COMMERCIAL BREAK)

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