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Slowing Economy Predicted; Trump Meeting with China on Thursday; Manhattan Court Rejects Trump Lawsuit, Appeals Court Issues Stay. Aired 10:30-11a ET

Aired October 7, 2019 - 10:30   ET


[10:30:00] BARBARA STARR, CNN PENTAGON CORRESPONDENT: -- troops remain in Syria, even though they were aligned with key forces there that were fighting ISIS.

Now that Turkey is pledging a military incursion into northern Syria to push back some of those elements, it's going to make it very difficult for that small group of U.S. forces along the border to stay. It puts them in the cross-hairs, and it puts the U.S. at odds with a NATO ally.

Many people do feel genuinely that the president's statement about pulling the U.S. troops back, opened the door for Turkey to move in, opened the door for them to challenge and fight one of America's only allies in the fight against ISIS.

JIM SCIUTTO, CNN ANCHOR, NEWSROOM: What's remarkable here -- and this is rare, we should note -- is that you have a chorus of Republican voices --


SCIUTTO: -- even among the president's closest allies -- Lindsey Graham this morning, calling it a win for ISIS -- criticizing this move, but also former members of the Trump administration, who served and helped direct these Kurdish fighters in the fight against ISIS. How are they responding this morning?

STARR: Right. Well, again, I think they very much view the SDF, the Syrian Defense Forces, as one, just one of the key -- perhaps the key -- allies in the fight against ISIS. And the special -- former special envoy, Brett McGurk, who served under President Obama but also in the early months of the Trump administration, very tough in his tweets this morning.

And he is saying -- and I quote -- "Donald Trump is not a commander- in-chief. He makes impulsive decisions with no knowledge or deliberation. He sends military personnel into harm's way with no backing. He blusters and then leaves our allies exposed when adversaries call his bluff or he confronts a hard phone call.

TEXT: Bottom line: Trump tonight after one call with a foreign leader provided a gift to Russia, Iran, and ISIS. FWIW, I warned of this here in @ForeignAffairs -- and recommended alternatives given the heard realities on the ground and in this White House. STARR: So a lot of former and allies like Lindsey Graham, like Nikki

Haley, expressing a good deal of dismay, feeling very much that the Trump administration is abandoning those key allies in Syria.

HARLOW: And, Barbara, before you go, not to go unnoticed over the weekend, a breakdown in any sort of progress that may have been made between the White House and North Korea, North Korea now saying that the next round of talks may not happen, calling them, quote, "sickening." Why?

STARR: Well, you know, I'm again perhaps not a surprise to anybody watching this situation. There's been no real evidence, you know, over time, that North Korea is making a significant commitment to denuclearization. We saw that missile test from a platform at sea last week, perhaps paving the way, someday, for them to have submarine-launched missiles that actually work.

A lot of advances, a lot of work going on in the North Korean weapons program. No indication that these talks are going to change Kim Jong Un's mind about moving ahead.

HARLOW: OK. Barbara Starr, on all of those important developments over the weekend, thank you very, very much.

All right. So the U.S. economy, a new survey out by economists warns slowing is coming, more initially than thought, and the president's trade war, largely to blame. We'll ask one of the president's former top economic advisors, Kevin Hassett, next.



HARLOW: All right. This morning, a new survey of top U.S. economists shows cracks in the U.S. economy that you should pay attention to. The National Association for Business Economics lowered its growth expectations for next year to 1.8 percent, that's the lowest since 2016. It also comes after last week's jobs report, the economy is still growing, the unemployment rate at a 50-year low.

With me now, Kevin Hassett, the former chairman of the Council of Economic Advisors under President Trump. Good morning, Kevin. Good to have you. I mean --

KEVIN HASSETT, CNN ECONOMICS COMMENTATOR: Yeah, great to be here, Poppy. Thanks.

HARLOW: -- these guys and guys at NABE are people you want to listen to, right? Because these are the chief --


HARLOW: -- economists at companies that tell their CEOs, we should hire, we should pause, things are getting bad or things are getting better.


HARLOW: So what is that, on top of the bad manufacturing numbers last week, tell you about how worried the Trump administration should be?

HASSETT: Well, first, the business economists at NABE, you know, really under-called the economy in the first two years of President Trump. And so they didn't see the big positive effect of Trump's policies. And now, they're expecting it to wither, I think a little bit before I am.

I mean, the way I look at it is, we just had a jobs report where the unemployment rate was the lowest in 50 years, the -- you know, we've created about 7 million jobs, 6.4 million jobs since President Trump took office.

And most importantly, the gains are going to the bottom, you know, the bottom 10 percent saw income growth north of 8 percent and if you look at 7 million fewer people on food stamps, the poverty rate is the lowest it's ever been for African-Americans, for --


HASSETT: -- Hispanics and for single moms. The point is just that all of that income growth gives you insurance against a decline in the economy --

HARLOW: So let me --

HASSETT: -- because people who have new income, they go out and they go to restaurants and they buy stuff for their kids, and so on.

HARLOW: You are and have always been and will always be a glass half full kind of guy, and that's good. And the unemployment rate --


HARLOW: -- of 3.5 percent is good. But let me just push back on that on two fronts. First of all, census showed the biggest gap we've seen in 50 years between the richest and poorest households, so you've got that.

And then on top of it, what about the economists that keep warning, looks, jobs and employment is a lagging indicator here?

HASSETT: Right. So first of all, on the census data, it's actually -- I would characterize it differently, and maybe I could come back and we could put some charts up.

But in fact, inequality declined in the latest census number, and the share of income going to the top versus the bottom changed dramatically in a progressive way. And so I disagree with that.

As for jobs being a lagging indicator, that is a little bit true. Because what happens is, when the economy turns, employers are reluctant to let people go right away, which is a good thing. And so you tend to see that output measures tend to go ahead of jobs numbers. But --


HARLOW: Right.

HASSETT: -- you know, we got third quarter GDP coming in at about two, second quarter was about two, second quarter was half a percent down because of Boeing's --


HASSETT: reduced production because of the 737 Max problem. And I think the third quarter is down about three-tenths because of the G.M. strike and the Boeing thing --

HARLOW: Right. So --

HASSETT: -- and so I think that we're basically cruising just a smidgen below the rate that we had last winter when we were growing at three.

HARLOW: On the G.M. strike, because when you were on with us, three weeks ago, you said that if this thing continues -- and now we're in week four -- it could shave, in your analysis, 0.3 percent off GDP this quarter --

HASSETT: Right. And we're there, yes.

HARLOW: At the end of this week, if it's not over, it will have cost General Motors a billion dollars. So --


HARLOW: -- what sort of GDP hit are you expecting this country to take if it goes two months, three months?

HASSETT: Yes. Well, I guess the -- you just sort of multiply by two or by three. But the bottom line is that there's a strong incentive for the two sides to get together. You know, the -- G.M. has a profit-sharing plan that's delivered, I think on average, about $10,000 to workers --

HARLOW: But that's a lot. You're saying it could shave a whole percent off economic growth.

HASSETT: If -- you know, if we were to go the whole quarter with this mess, yes, we're talking many, many -- and it could also spread. Because what happens is, the guys who make spark plugs, you know, they tell their workers --


HASSETT: -- not to come in because they don't have a place to put the spark plugs, and so on. And so the G.M. strike is a very, very big deal.


HASSETT: You know, I think that everybody's looking for the two sides to come together, and I don't think that they're as far apart on money as you might think. I think that there's the big issue about moving some stuff from Mexico to the U.S. --


HASSETT: -- but I think that in the end, they're going to work that out.

HARLOW: That is -- but that's a big --

HASSETT: And sometime soon, because there's so much money at stake.

HARLOW: That's a big issue.

Let me dig in with you, if we could, to Pennsylvania and Wisconsin. You look at the latest BLS numbers and they show, over the last year, manufacturing jobs in Pennsylvania have declined 7,700 and manufacturing jobs in Wisconsin have declined 5,200.

You were in the administration. If you were walking into President Trump's office and laying out these numbers for him and talking to them about it, what would you say to the president? How worried should he be in key states, for him to see numbers like this?

HASSETT: Right. Well, again, you know, as an economist, I'm not supposed to do political strategy. But what I would say to you and to anyone is that --


HASSETT: -- I think it's clear that the trade policy uncertainty has really caused people to hold off, but that the global slowdown, especially in Europe, is really reducing exports of U.S. manufacturers and hurting the manufacturing sector.

And so, you know, the one thing that we can definitely affect is the trade policy uncertainty. And so I think --


HARLOW: But you're saying this is the trade war --

HASSETT: -- with the Chinese coming, resolving that a little bit this week --

HARLOW: -- not the Fed.

HASSETT: Excuse me?

HARLOW: You're saying this is the trade war, not the Fed.

HASSETT: I -- you know, there's a little bit of it being the Fed, but I think that the big thing is actually, it's the global economic slowdown. I think that Europe is pretty much in recession, I think that the trade war has caused a lot of trouble in Asia and that's killed the demand for exports for the U.S., and that's something that you're seeing in the manufacturing numbers and in the net export numbers.

And so, again, the thing that we can definitely control -- we can't necessarily make Germany not be in recession -- is to resolve some of this trade policy uncertainty. And so that's the thing I would be advising the president --

HARLOW: Let's hope --

HASSETT: -- to do right now.

HARLOW: -- they have a chance on --

HASSETT: Yes, hope so.

HARLOW: -- on Thursday, when the Chinese delegation comes. Kevin, just finally --


HARLOW: -- I'm not going to ask you to talk politics, that's not your game. But I am going to ask you --

HASSETT: That's true.

HARLOW: -- directly about the economic implications of a potential impeachment of the president. The president says the stock market will tank if he is impeached. Do you agree with that assessment?

HASSETT: You know, I think the political uncertainty tends to be very bad for markets and bad for the economy. But right now if you look at it, there's not been a lot of movement. And so I think that probably what's going on is that markets are factoring in that there's going to be something that happens in the House, but that it's not going to fundamentally alter the government.

I think that if there -- if you really actually were to move towards conviction and so on, that what the president said is probably true, that that'd be the kind of dramatic political uncertainty that would cause really, really big movements in markets.

HARLOW: Kevin Hassett, good to have you. We'll see what happens --

HASSETT: Thank you, Poppy.

HARLOW: -- Thursday with the Chinese delegation --

HASSETT: Good to be here.

HARLOW: -- coming, thank you very much.


Quick break, we'll be right back.


SCIUTTO: Things are moving very quickly in a case that could expose President Trump's tax returns. We're learning that an appeals court has already issued a stay. This, in a push by the Manhattan district attorney to get eight years of President Trump's tax returns.

HARLOW: The stay comes less than two hours after a federal judge dismissed a lawsuit that the president's team had filed to try to stop that effort in the first place. If you're confused, Brynn Gingras is here to explain it to you.



GINGRAS: You guys really just broke it down well there. I mean, it's only been two hours since I saw you last, when a federal judge essentially said that what the president and his attorneys are arguing about, not giving those tax returns over by order of that subpoena, to the Manhattan district attorney, basically a really strong ruling saying that you really don't have any constitutional right to say that.

I kind of want to read one excerpt of it. I mean, this is the --

SCIUTTO: So that's the federal judge that ruled against the president --

GINGRAS: Exactly.

SCIUTTO: -- said that these things have to be made public. But now the Court of Appeals is going to hear an appeal of this case?

GINGRAS: That's right. But let's not say public. Remember, this is -- let's go back because the Manhattan District Attorney's Office subpoenaed Trump and Trump Org for his tax returns for the last eight years, investigating whether there was any unlawful --


GINGRAS: -- business practices, right? There's no criminality here yet.

SCIUTTO: So if no criminal evidence found, that means --

GINGRAS: Exactly, right.

SCIUTTO: -- you wouldn't see -- they wouldn't see the light of day.


GINGRAS: Right. That would be part of this investigation. So it would still be, you know, behind closed doors unless there was something that came out in court. You know, that'd be a different story.

But essentially saying that that subpoena, he -- that wasn't enough to say the president couldn't hand over that material. But then since that was ruled, just this morning, less than two hours later, we have now an appeal filed by Trump and his attorneys.

And now the Court of Appeals, saying they're going to have to take this up and we're going to have to, you know, cool down for a minute --


GINGRAS: -- let's wait a second, and we're going to take this up and decide what the next step forward is.

HARLOW: OK. Up to that three-judge panel next, then. Brynn, thank you very much.


HARLOW: Appreciate it.

SCIUTTO: Well, the new term for the Supreme Court begins today and there are some blockbuster cases with enormous political consequences already on the docket, including those addressing DACA, the Second Amendment, religious liberty.

HARLOW: Let's go to Ariane de Vogue. She's outside of the Supreme Court. And, Ariane, you just came out of oral arguments. I want to know what's happening inside the court, and just mark this moment where we didn't know if the court would take up these politically explosive cases in an election year, but they are on all fronts.

ARIANE DE VOGUE, CNN SUPREME COURT REPORTER: Yes, they are. I am just out of court. Only eight justices showed up today. Justice Clarence Thomas is out sick with the flu, but Justice Ruth Bader Ginsburg, who has just finished her fourth bout of cancer, was there in her usual seat. She asked the first question, wearing her lace collar.

Poppy and Jim, it's hard to see how this court is going to stay outside of the political fray this year. The docket almost demands it. As you said, they're hearing LGBT rights, gun rights, DACA and abortion.

And in the center of it all is Chief Justice John Roberts. He's going to decide how far and how fast this court goes, and he has institutional concerns on one side. He doesn't want the court, with its new conservative majority, to swerve too quickly to the right. But also, he's a conservative and the right flank of this bench is going to want to hear these cases and decide them outright, even if it comes in an election year. So a lot going on this term -- Poppy and Jim.

HARLOW: Ariane, we will be watching closely. You will be very busy, keeping track of all of it. Thank you very much. SCIUTTO: If you need more evidence that your vote matters --

HARLOW: There you go.

SCIUTTO: -- in a presidential election year.

There is a lot going on today, and here's "What to Watch."

TEXT: What to Watch...Now, Supreme Court hears first cases of term; 11:00 a.m. Eastern, first lady takes part in DEA event; 6:00 p.m. Eastern, President Trump gets military briefing



SCIUTTO: Still to come this hour, CNN has new reporting on how Joe Biden is grappling with Trump's attacks and Senator Elizabeth Warren's rise in the Democratic field. New details, coming up.


HARLOW: The impeachment probe on Capitol Hill is not just a threat to President Trump. It is certainly affecting Joe Biden's presidential campaign.

SCIUTTO: Yes. For three weeks, the president has hurled unfounded attacks on Joe Biden and his son. But a bigger threat to Biden's presidential hopes could be coming from within his own party. CNN's Jeff Zeleny, he joins us now.

Jeff, I know you've been reporting this out. So you say there are essentially three threats that Biden is facing now?

JEFF ZELENY, CNN SENIOR WASHINGTON CORRESPONDENT: Well, good morning, Jim and Poppy. There certainly are three threats, all coming at the same time and all posing very distinct challenges for the former vice president.

We should point out, he's still leading in many of the polls. He's still in an enviable position. Many Democratic candidates would like to be him. But he does face these unique challenges.

The first threat is from Elizabeth Warren. Without question, if this whole impeachment drama was not going on, the threat from Elizabeth Warren would be front and center to his campaign. She has been overtaking him in some polls. But more importantly, raising money. Raised almost $10 million more than him, through grassroots fundraising in the last three months alone.

TEXT: Three Distinct Challenges to the Biden Campaign: 1. The threat Elizabeth Warren's candidacy presents to Biden is more serious than ever; 2. The utter unpredictability of Trump and his attempts to draw Biden into the fray presents an unwieldy challenge; 3. The injection of Hunter Biden into the fray complicates an already fraught private family dynamic ZELENY: But the second threat, of course, is the utter unpredictability of Trump and his attempts to draw Biden into the fray here. Now, the Biden campaign had meetings over the weekend. Donors were meeting in Philadelphia to try and discuss the way forward here.

And the former vice president is trying to, A, stay on-message without having his campaign hijacked by the president's rhetoric. But, you know, of course, a stream of advice has been coming in from a lot of Democrats. Some people think he is not being strong enough or forceful enough, so he has been pushing back much more aggressively.

But the third threat is also Hunter Biden. He is someone who, of course, is, you know, at the center of all of this. There is no evidence of any wrongdoing, but Hunter Biden is always someone, you know, who is a unique challenge in the family dynamic here for the former vice president.

So we did talk to a lot of Biden advisors. And one confidant, a longtime friend of the former vice president, said this to us about this moment in the campaign. He said, "I'm not going to sit here and say there is no concern. As this drags on, we just don't know. No one knows."

That, of course, is the point that the Biden campaign would like you to believe, that going head-to-head with Donald Trump is good for him, it shows strength. But they really do not know where this is going. That's why this is a challenge for Joe Biden -- Jim and Poppy.

SCIUTTO: No question. We know you're going to keep following it. Jeff Zeleny, thanks very much.

ZELENY: Indeed (ph).

HARLOW: Thanks, Jeff.


Thanks to all of you for being with us today. We'll see you back here tomorrow morning. I'm Poppy Harlow.

SCIUTTO: And I'm Jim Sciutto. The news continues. "AT THIS HOUR" starts right now.