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Treasury Secretary Speaks On State Of U.S. Economy; U.S. Economy Grew At Shocking Pace In 4th Quarter; Subpoenas Expected For Witnesses In Hearing On Fulton Co. District Attorney Affair Allegations; Rep. Matt Gaetz Faces New Scrutiny Over Alleged Sex Crimes. Aired 1:30-2p ET

Aired January 25, 2024 - 13:30   ET

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

[13:30:00]

(BEGIN VIDEO CLIP)

REV. JEFF HOOD, SPIRITUAL ADVISER TO KENNETH SMITH: And again, if the seal breaks, you're talking about a roomful of nitrogen.

(END VIDEO CLIP)

ISABEL ROSALES, CNN NATIONAL CORRESPONDENT: To your point, Brianna, he doesn't have a lot of avenues here. The Supreme Court or the governor, neither step looks to be viable here to stop this execution -- Brianna?

BRIANNA KEILAR, CNN HOST: All right, we will be watching to see what develops there.

Isabel Rosales, live for us from Alabama.

Still ahead, CNN exclusive reporting on the district attorney prosecuting Trump in Georgia. Could she be forced off the case because of allegations she had an affair with a fellow prosecutor?

Plus, positive new economic numbers out today showing the economy grew at a shocking clip at the end of 2023.

Treasury Secretary Janet Yellen also getting ready to speak in minutes about the future of the U.S. economy, especially when it comes to middle-class families.

(COMMERCIAL BREAK)

[13:35:31]

BORIS SANCHEZ, CNN HOST: There is new data out today showing the United States economy grew at a shocking pace at the end of last year as consumers and businesses continued to spend and inflation continued to cool. That widely predicted recession never quite happened.

KEILAR: Yes, that is good news, but many American households are still in financial straits, and that is not.

Right now, Treasury Secretary Janet Yellen is delivering a speech on this year's economic agenda. So let's listen in to that.

JANET YELLEN, TREASURY SECRETARY: This leads us to pursue an agenda that is focused on the middle class. We started with an economic recovery that is remarkable for both its speed and fairness.

The recovery is so strong and so widely shared because Bidenomics is not just about a post-pandemic rebound in demand, we've also focused on un-stalling supply chains and bringing more Americans into the labor force, which increases supply.

We are now doubling down on that strategy with massive investments to position middle-class families to benefit from and to drive our country's growth. I called this approach Modern Supply Side Economics.

Overall, the Biden administration has put in place the most extensive set of policies and investments to benefit the middle class and grow the economy that our country has seen in my lifetime.

Our economic plan is improving lives and laying the foundation for a new future for middle-class families and communities across the country. And this is what I will discuss today.

Let me start with some personal experience. I grew up in Bay Ridge, Brooklyn, in the 1950s and 1960s. It was a middle-class neighborhood, at a good time for the middle class in America.

My father was a doctor, and he would tell me about the workers who came to him for treatment. I learned about how much their jobs mattered to them, and also about the consequences of losing them.

From the 1970s on, the American economy made great strides, from the huge increases in high school graduation rates, to dramatic improvements in workplace safety.

But the challenges I heard about when I was a kid became trends, and my own special concerns as an adult, and as a practicing economist.

Real median wages stagnated over decades. They grew only 8 percent between 1979 and 2019.

At the age of 30, 90 percent of my generation were earning more than their parents at the same age.

In contrast, only half of children born in the mid-1980s earned more. Incomes became more volatile, especially for people without college degrees.

KEILAR: All right, we are listening to Treasury Secretary Janet Yellen speaking there. She has previously talked about there being this soft landing, this avoidance of a recession.

And we heard her there saying that the economic recovery had been fast, describing it as widely shared, and making a pitch for Bidenomics.

Let's discuss this now with CNN's Matt Egan and CNN's Catherine Rampell.

Catherine, this is the message certainly that the Biden administration is selling. And there are a lot of excellent indicators.

There's also a lot of negative sentiment. I know I feel like a broken record saying that, time again, but that is what we see.

CATHERINE RAMPELL, CNN ECONOMICS & POLITICAL COMMENTATOR: Absolutely. There has been for a while a big disconnect between how the economy looks on paper, if we're talking about GDP, unemployment, even cooling inflation, and how people feel about it. There has been a lot of consumer pessimism throughout the United States.

That said, in the past few months, we have seen an uptick in consumer sentiment by a host of different metrics.

[13:40:03]

If you look at what share of Americans believe the economy is in recession, it is now fewer than half. It is still very high, to be clear, by historical numbers, but American seem to be getting a little more optimistic.

And so I think the best-case scenario for Biden's reelection campaign is not necessarily that the economy becomes a winning issue for the incumbent so much as it becomes less of a negative.

In the same way we kind of saw in 2012 when economic sentiment had really Wade down, then-President Obama's chances, and as it recovered, it helped his campaign as well.

SANCHEZ: Matt, to you.

Today is sort of a one-two punch because you have Janet Yellen giving the speech now.

And soon, at about 2:00, President Biden is going to be in Superior, Wisconsin, at a brewery touting Bidenomics and this investment in the revitalization of a bridge that is going to be built there.

So there is a strong positive message to sell, especially when it comes to GDP numbers. Walk us through those.

MATT EGAN, CNN REPORTER: Yes, Boris, these GDP numbers that came out this morning, they really stood out to me. First of all, I was thinking, wow, because it was just so much better than what we expected.

The other thought that comes to mind is, what recession? Remember, for so long, we heard the U.S. economy would be in recession right about now. Instead, it looks like that soft landing that so many people thought was basically impossible is actually happening.

The economy growing at 3.3 percent, that is very impressive. One economist describing that as boomy. The other one calling this the recession that wasn't. One of the big drivers here is Americans continue to shop. They went

on a shopping spree this holiday season and that is continuing to keep this economy afloat.

But none of this is to suggest that the economy is perfect. It's not. There are real affordability challenges out there.

And we know that Janet Yellen is addressing that in the speech right now, talking about how it is too hard to be a working parent in America, how they need to do more to help people deal with housing and childcare.

Housing is a big one. The fact that mortgage rates are so high, home prices have spiked to record highs, means it's very unaffordable.

This chart shows how the median monthly payment to get a mortgage right now is swallowing up a bigger and bigger portion of paychecks, and that is a problem.

That is something that this administration, Janet Yellen and the president have to address.

Because, Boris and Brianna, as you know, when people think about the economy, that's what they're thinking about. They're thinking about housing and childcare and the price of gasoline. They're not thinking about GDP.

KEILAR: Yes. Purchasing power, and the choices they're making.

SANCHEZ: Absolutely, yes. And the price of groceries as well.

Catherine, quickly to you.

Do we anticipate that the issue of affordability, that some of these prices at some point soon may start to go back down?

RAMPELL: It is very unlikely that overall price levels are going to come back down. You'll see something go up a little bit, some things will go down a little bit because of supply issues.

For example, if you of a bird flu that causes egg prices to go up and then they'll go back down. But the overall price level throughout economic history generally trends upwards.

And that's what economists want, in fact. They don't want to see overall prices going down, which is not super intuitive to the usual consumer, to the standard person.

So I think part of the reason why you see so much frustration among Americans, even as inflation has cooled, is that inflation cooling just means there's slower price growth, not that there is price declines.

And as more time passes, as you have that slow price growth, I think you'll see more consumers get kind of acclimated to the price increases that we've already seen, what has already been baked in. They stop expecting prices to fall. They just start assuming that,

four bucks a gallon for milk, as is the roughly current national average for a gallon of milk, that's the new normal. They're not looking for it to go back to what it was in 2019.

And it's not as painful, if, in fact, their wages continue to rise, as they have been in recent months.

SANCHEZ: Catherine Rampell, Matt Egan, thanks so much for bringing that up for us.

[13:44:31]

Up next, we have some exclusive new CNN reporting. Subpoenas expected for a hearing soon on affair allegations against top prosecutors in the election subversion case in Fulton County, Georgia. What this could mean for the case against former President Donald Trump.

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KEILAR: We have some new, exclusive reporting. The district attorney leading the 2020 election subversion case in Fulton County, Georgia, may be called to testify at a hearing on whether she should be disqualified in the case.

Fani Willis is just one of several witnesses who can expect to get subpoenas here in the coming days.

We have CNN's Nick Valencia live for us outside of the Fulton County courthouse with his new reporting here.

Nick, who else is expected to get a subpoena?

NICK VALENCIA, CNN CORRESPONDENT: Well, Brianna, this is a significant development here. We're told that these individuals are those who are believed to have firsthand knowledge of this alleged improper relationship between Fani Willis and Nathan Wade.

Among those who have been made aware of the subpoenas are Nathan Wade's current and former law partners. And as you mentioned, Fani Willis is also expected to get a subpoena, as are members of her D.A.'s office.

[13:49:59]

Now, we did reach out to Ashleigh Merchant. She is the attorney who first leveled these allegations. She's the attorney for co-defendant of former President Trump, Mike Roman, the former Trump campaign official.

And she tells us that she has documents, evidence and witnesses. And depending on how Fani Willis responds in this February 2nd response that she has to, you know, respond to these claims by, that will determine how Merchant moves next and who she called to testify.

I want to zoom out here because, on the surface, these subpoenas might not seem like big news but they are, especially when you consider that, if these individuals are called, they would potentially have to testify publicly and their testimony would be captured live and broadcast to the world.

Which sets the stage for this February 15th evidentiary hearing where the judge overseeing this case has said he wants to focus on these claims. And there's the potential for these firsthand witnesses to air out the dirty laundry of Willis and Wade.

Now, we have yet to hear from the district attorney's office, but it's likely that they're going to try to fight these subpoenas. Fani Willis already is trying to fight the deposition in Nathan Wade's divorce proceedings.

It's been a couple of weeks now since these allegations were first, you know, aired publicly and Fani Willis has not directly responded to this alleged affair.

But she has previously said that she chose the most qualified man for the job in her special appointment of her top deputy, Nathan Wade -- Brianna?

KEILAR: All right, Nick Valencia, thank you for sharing that exclusive reporting with us. We appreciate it.

Boris?

SANCHEZ: We have new details in the House ethics probe of Republican Congressman Matt Gaetz. CNN is learning that the committee investigating Gaetz has reached out to a woman who Gaetz allegedly had sexual relations with when she was just 17 years old.

CNN's Paula Reid broke this story. She joins us now live with more.

So Paula, what more do we know about this investigation?

PAULA REID, CNN CHIEF LEGAL AFFAIRS CORRESPONDENT: Well, Boris, this is the latest round of outrage from the House Ethics Committee. They reached out to several witnesses, including that woman who was still 17 when she allegedly had sex with the congressman.

They also reached out to the Justice Department, seeking materials from its years-long criminal investigation into the congressman.

Now, that investigation began in late 2020, under Trump appointed Attorney General Bill Barr. It started with allegations about sex with a minor, but then expanded to look into potential sex trafficking, obstruction of justice, and lobbying violations.

I want to emphasize, the congressman has always denied any wrongdoing and he was never charged by the Justice Department. That case was closed last year with no charges brought against Gaetz.

However, his longtime friend and associate, Joel Greenberg, he did plead guilty to several crimes, including soliciting and having sex with a minor. In response to our new reporting, the congressman issued a statement

saying, "Those allegations were not true, have never been true, and the people who spread those lies have been exposed, indicted, and imprisoned."

Likely, a reference to Joel Greenberg.

SANCHEZ: And, Paula, there have been some political consequences out of all of this, right?

REID: Yes, absolutely. Because the ethics investigation began in 2021, but then yielded to the federal criminal probe. When the federal criminal investigation wrapped up last year, the ethics probe was revised revived.

And Gaetz privately expressed frustration that he believed then-House Speaker Kevin McCarthy had allowed this to happen. McCarthy has said publicly that he believes Gaetz's frustration with the ethics probe was behind Gaetz's effort to oust McCarthy from the speakership.

But it's notable that now, obviously, Kevin McCarthy is no longer speaker of the House, that after it was successful, this investigation is not only continuing but it appears to be expanding and escalating.

SANCHEZ: The high drama on Capitol Hill. No love lost between Matt Gaetz and Kevin McCarthy.

Paula Reid, thanks so much for the reporting.

Brianna?

KEILAR: Now to the brewing scandal in Arizona. The leader of the swing state's Republican Party resigning after a leaked audio tape appeared to show him trying to convince a fierce Trump ally not run for office.

Jeff DeWit can be heard urging Kari Lake not to run for the Senate after she lost her race for governor in 2022.

(BEGIN AUDIO FEED)

JEFF DEWIT, FORMER CHAIR, ARIZONA REPUBLICAN PARTY: There are very powerful people who want to keep you out.

KARI LAKE, (R), U.S. SENATE CANDIDATE FOR ARIZONA: I know they do.

DEWIT: But they're willing to put their money where their mouth is in a big way. So, this conversation never happened.

Is there a number which --

LAKE: I can be bought?

(LAUGHTER)

LAKE: That's what it's about?

DEWIT: (INAUDIBLE) -- for a couple of years.

LAKE: No.

(END AUDIO FEED)

KEILAR: So, in a new statement, DeWit denies allegations of bribery and calls his conversation with Lake a set up.

[13:54:40]

Still ahead, former President Trump back in New York federal court right now. His lawyers say he wants to take the stand, but will he actually do it? He said that he would before, only to not end up doing it. Is he going to actually? We will have the latest from court.

(COMMERCIAL BREAK)

SANCHEZ: Two candidates, two very different events. Joe Biden is hitting the campaign trail with a speech promoting how he's handled the economy and how his administration is investing in America.

[13:59:53]

And former President Donald Trump, off the trail, back in court for a hearing in his defamation case, one in which he could soon be taking the witness stand.

Plus, a busted deal for the border. Republicans spending weeks demanding one and slamming the White House for not having one, and then working to negotiate one.