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Republican Wins in Mississippi; Trump Shutdown Over Wall Funding; Nationalism in America; Trump Not Happy with Fed Chair. Aired 9:30-10a ET

Aired November 28, 2018 - 09:30   ET

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

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[09:31:228] JIM SCIUTTO, CNN ANCHOR: Happening overnight, Republican Cindy Hyde-Smith has won Mississippi's racially charged U.S. Senate runoff election. She defeated the Democrat, Mike Espy, in a race that become much closer in the final weeks. That mainly due to a comment that she made caught on tape where she said she would be willing to join a supporter on the front row of a public hanging. She did later apologize to anyone who might have been offended.

POPPY HARLOW, CNN ANCHOR: Her win last night is great news for Republicans in the Senate, totaling out at 53 seats to Democrats 47 when the new Congress convenes in January.

Marty Savidge is with us in Jackson, Mississippi.

So you had an eight point spread here. A race people didn't know which was it was going to go. It seems that her controversial gaffes, a number of them, not enough to derail here in a state the president won by 18 points.

MARTIN SAVIDGE, CNN CORRESPONDENT: No, you're right. Good morning, Poppy. Good morning, Jim.

Clearly her words were taken in different ways depending on what voters we're hearing it here. And the other thing we should point out here is despite all the controversy and the national focus that came upon what she said and how it revived the whole history of hate in this state, is the fact that people might have overlooked something, and that is, this is still a deeply red state. It's still a very conservative state. And, at best, Mike Espy, her opponent, was considered to be an underdog and faced a real uphill battle. And did pretty well considering all of that.

But really the problem was, it was Cindy Hyde-Smith's own words, as Jim pointed out there. And the reality is, it may have energized African-American voters who really detested what she said. But as far as her conservative supporters, yes, they will say, no, that was a horrible choice of words, but she really didn't mean it and, after all, she apologized.

She addressed this somewhat last night in her victory speech. She said she's going back to Washington to represent all Mississippians. And then afterwards I was in a gaggle of reporters and she was asked about, could she really put this controversy behind her, and here's what she said.

(BEGIN VIDEO CLIP)

SEN. CINDY HYDE-SMITH (R), MISSISSIPPI: You can get brutalized. You can get beat up. That's kind of part of this business. We're putting it behind us. We can go forward and we're not looking back.

(END VIDEO CLIP)

SAVIDGE: The reality is that as more and more people, Democrats and the media, focused on her past, it also energized a lot of her supporters who felt that she was now being unfairly persecuted and they were bringing up anything and everything to try to make her look bad. Governor Phil Bryant said this was, I believe, the most difficult and the most challenging campaign and the more negative campaign in Mississippi history.

SCIUTTO: Martin Savidge, thanks very much.

Let's discuss all this now with Harry Enten, CNN's senior political writer and analyst.

Harry, you know, it's interesting. You look at this race and you wonder, did the Democrats lose -- and, granted, Mississippi, it's a tough state for Democrats. The president won it by 18 points. And, you know, they kept it within 8 points --

HARLOW: Yes.

SCIUTTO: So, arguably, you know, they beat the spread, right, on that.

HARLOW: A little bit better.

SCIUTTO: But did the Democrats lose an opportunity in not running a more moderate candidate here?

HARRY ENTEN, CNN SENIOR POLITICAL WRITER AND ANALYST: I think that Espy was a fairly moderate candidate, at least, you know, compared to other candidates who have run nationwide this year. Yes, maybe there might have been some hope you could have gotten someone better than Espy who hasn't run in this state in a number of years, but there's just such a small bench in Mississippi. I think Espy was the best candidate they really could have hoped for.

And, more than that, you look at the political history of Mississippi. Keep in mind, there hasn't been a Democratic senator elected in the state since 1982. The last time a Democratic gubernatorial candidate received a majority of the vote was in '87. The last time a Democratic presidential candidate received a majority of the vote was in 1956.

SCIUTTO: Right.

ENTEN: So Mike Espy was really facing an uphill battle, and he put forth the best effort by a Democratic senatorial candidate in 30 years.

[09:35:05] HARLOW: Sort of the, if you're not a Roy Moore type of candidate in the deep south, it's going to be hard for you to lose the Republican seat.

ENTEN: I think that's exactly right. And, remember, Cindy Hyde-Smith had run statewide before --

HARLOW: Yes.

ENTEN: And she won that race by 25 points.

HARLOW: Right.

ENTEN: Roy Moore was someone heading into that race before his own controversies who won his last statewide race by only about four points. So Hyde-Smith, even if she was say handicapped by these, she had a lot more room to sort of give.

HARLOW: Yes.

SCIUTTO: OK, so let's look at -- let's look at the House side.

On the Senate side, Democrats lost two seats, but they were defending more seats. On the House side, now we are moving up towards really --

HARLOW: Forty.

SCIUTTO: What can only be described as a blue wave, right? Forty. At the higher end of the predictions prior to this election as to what the Dems pickups would be.

ENTEN: I think that's exactly right.

Remember, of course, the Democrats need a net gain of two in the Senate, but they were defending 26 seats. And the House, they -- all 435 seats were up and they were in all sorts of areas. So, you know, Democrats were able to take advantage of a very blue national environment and a net gain of 40 seats is the largest gain since Watergate.

HARLOW: For -- we're out of time, but I would just note, that lost in all of this in the Mississippi runoff is now you have the most women ever representing the American people in the Senate.

ENTEN: Twenty-four and the first ever in Arizona elected, the first ever in Tennessee elected, and the first ever in Mississippi elected.

HARLOW: All right.

SCIUTTO: Yes.

HARLOW: We're getting there. It's not, you know, equal yet, but we're getting there.

SCIUTTO: It's a different map. HARLOW: It is.

SCIUTTO: You can see right there.

ENTEN: It's progress.

HARLOW: There you go.

SCIUTTO: Harry Enten, thanks very much.

ENTEN: Thank you.

SCIUTTO: As always.

HARLOW: President Trump wants $5 billion for his border wall and says, yes, he is willing to shut down the government to get it. He also says there may be a plan b.

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[09:40:45] SCIUTTO: President Trump says that he would bring the government to a halt to get the money that he wants to build his border wall. Trump telling "Politico" that he would, quote, totally be willing to shut down the government if he does not get the $5 billion he is asking for. Democrats have only committed to about a third of that. Will there be a compromise? What about the president's promise that Mexico will pay for the wall? Haven't heard about that in some time.

Joining us now, former secretary of the Department of Homeland Security under President Obama, Janet Napolitano.

Thanks so much for joining the time with us this morning.

JANET NAPOLITANO, FORMER SECRETARY, DEPARTMENT OF HOMELAND SECURITY: Oh, you're welcome.

SCIUTTO: I want to begin and draw on your expertise as the former secretary of DHS on the true state of the threat at the border. As you know, the president has portrayed this from before the election until now as a national crisis. He has deployed thousands of troops along the border, used tear gas against folks rushing the border in the last couple of days.

In your view, is this a national security threat to the U.S.?

NAPOLITANO: I don't think it's a national security threat. I do think it's an immigration management issue. And I think that with respect to the caravans and those in the caravans who want to seek asylum in the United States, the response should be to flood the zone with the rule of law, bring down more CBP officers and immigration judges so that they can process more than 100 or so political asylum claims a day so that the migrants in the caravans aren't there and sitting in Mexico for months on end waiting for a credible fear here.

SCIUTTO: Pew Research has a new study that shows that the number of undocumented immigrants in the U.S. is actually down from 2007 to 2016, a marked drop of roughly 1.5 million. Yet the president, in these interviews he's done in the last 24 hours, believes that he has the politics right here, that this is a winning issue for him, and that those images of the migrants rushing the border serves his political interest. Could he be right on that?

NAPOLITANO: You know, I think it's part and parcel of the president's use of immigration generally as a wedge issue to divide people. And in point of fact, under the Obama administration, we drove illegal immigration to 40 year lows. We did that with a combination of manpower and technology, things like sensors and air cover over the entire border and a true strategy on how you manage what should be a 21st century border where, in point of fact, we have millions of lawful travelers and billions in commerce that cross annually.

SCIUTTO: Let me turn, if I can, before I let you go, to a different issue. And issue I know that you covered very closely during your time at DHS, and that is the issue of domestic terrorism. This administration deemphasized domestic terrorism, terrorism resulting from white nationalism, et cetera. This even in the face of statistics that would seem to show this is, if not an equivalent threat as international terrorism, a greater one. Of the 85 violent and deadly extremist incidents after 9/11 through 2016, far right extremist groups are responsible for more than 70 percent. By de-emphasizing that issue, is it your view that this administration is ignoring a threat, in effect making Americans less safe?

NAPOLITANO: Well, it's a threat that should not be ignored. And it's a threat that requires greater study and understanding by all of us. We don't really have good, predictive analytics about who amongst the population, who is on some of these very right wing websites and so forth, is going to translate that into actual violence so that there could be an intervention and a prevention. There needs to be a true national effort in this regard because it is a growing threat.

SCIUTTO: Janet Napolitano, thanks very much for joining us this morning.

[09:45:00] NAPOLITANO: Thank you.

HARLOW: All right. President Trump is lashing out at the man he chose to lead the Fed. We will ask the president's former economic adviser if there is anything OK about that, next.

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HARLOW: President Trump chose Jerome Powell to chair the Federal Reserve. And when he did, he lavished him with praise, calling him strong, committed, smart, a man who I like and respect, a wise steward of the Federal Reserve, a man who understands what it takes to grow our economy.

Oh, how times have changed. In a new interview with "The Washington Post," President Trump says he is, quote, not even a little bit happy with Powell and then he attacked the central bank's independence saying, quote, I'm doing deals. I'm not being accommodated by the Fed. They're making a mistake because I have a gut and my gut tells me more sometimes than anybody else's brain can ever tell me.

[09:50:13] Point of fact here, it is not the Fed's job to accommodate the president. The Fed is an independent body. It has two mandates, priceability (ph) and full employment.

With me now, former economic adviser to the Trump campaign, and CNN senior economic analyst Stephen Moore.

Good morning to you, sir.

STEPHEN MOORE, CNN SENIOR ECONOMIC ANALYST: Hi, Poppy.

HARLOW: Also the author of a great, interesting new book, "Trumponomics."

Look, there's a reason, Stephen, that the Fed is independent and apolitical. Is the president doing harm to the core independence of this critical institution by making these public and personal attacks?

MOORE: Well, I think it's all too personal for my taste. But there's no question -- look, you're exactly right, Donald Trump appointed Jerome Powell a little over a year ago. So he's his own appointment. And if he has only one -- anyone to blame, it's himself if he doesn't like what Jerome Powell is doing. But he --

HARLOW: Wait, wait, pause there.

MOORE: Yes.

HARLOW: You just said, former adviser to the president on all things economy, it is the president's own fault here if he doesn't like Jerome Powell, right?

MOORE: Well, he made the appointment. And now Powell is not pursuing the policies that he would have liked to have seen put in place.

So, here's the issue, though, I think. Is the president right that the Fed is making a mistake? I happen to agree with Donald Trump on this. I do believe that the Fed has been way too tight. They're raising interest rates way too quickly. You mentioned their mandate.

By the way, one of the problems that the Fed has is this dual mandate. It should not have the mandate of getting to full employment. The way you get to full employment is by having price stability. And as I look at the data right now, if you look at what's happening with the price of oil, the price of commodities, like corn and copper and wheat, those are falling in price, which is an indication that we actually have slight deflation, not inflation.

HARLOW: Right.

MOORE: The Fed is pulling money out of the economy at a time when we actually need to be feeding the economy -- the economy with money so that it can continue to grow.

HARLOW: Well, here's the counter argument -- MOORE: OK.

HARLOW: And this comes from a fellow Republican economist.

MOORE: Yes.

HARLOW: It comes from Martin Feldstein (ph).

MOORE: Yes.

HARLOW: He, as you know, was chair of the Council of Economic Advisers under President Reagan. A fascinating opinion piece this week in "The Journal."

MOORE: Yes.

HARLOW: His argument is that Powell and the Fed are actually doing the right thing by increasing rates because when we have this inevitable downturn, that will come, that will give the Fed more ammunition to fight it by lowering rates. If you keep rates at around two percent, you don't raise them, you have so much less power and tools to attack with when you do have a downturn. Is he wrong?

MOORE: Well, my -- here -- look, I have nothing but respect for Marty -- Marty Feldstein. He's a very smart guy. But I think he's wrong on this.

If you look at the data on what's happening to prices, they're not rising. In other words, there's this kind of view at the Fed that is very prevalent -- and I think that Jerome Powell shares this idea -- that somehow strong economic growth, like we've had over the last year and a half or so, is going to cause inflation. No, that's completely wrong.

HARLOW: Well, but --

MOORE: When you -- when you have -- when you have a strong economy, you're producing more goods and services, prices fall.

HARLOW: But you know, look, inflation is not rising as rapidly as some may have expected --

MOORE: Right.

HARLOW: But you have PCE inflation up 2.1 -- it's at 2.2 percent, up from 1.1 percent five years ago. So it is rising.

I do hear your argument.

MOORE: Yes. OK.

HARLOW: But more on what the president said, OK --

MOORE: Yes.

HARLOW: Because he continued in this "Washington Post" interview -- MOORE: Yes.

HARLOW: To say, quote, I think the Fed is a much bigger problem than China.

Stephen, you said on November 16th, we are in a cold war with China right now. Is the president right that the Fed is a greater risk to the American people than China stealing our intellectual property?

MOORE: Well, I don't know if I'd agree with the president on that. I do think the Fed is a problem. I think the Fed is taking a lot of the steam out of the economy right now. But, look, the big -- the big --

HARLOW: But more than China?

MOORE: Well, no, because I think the biggest issue of our time, Poppy, you know, in terms -- and this is much better than climate change, bigger than the Fed. It's whether -- who's going to be the global economic superpower for the next 50 years? Is it going to be the United States or will it be China?

HARLOW: Right.

MOORE: These trade negotiations, because I -- as we speak, I think the president is flying off to Argentina with Larry Kudlow and others to try to get this deal done with China. He's got to prevail here.

HARLOW: Yes.

MOORE: I mean I think this is really important in terms of making sure that China plays by the rules, doesn't steal our intellectual property, stops its military expansionism.

HARLOW: So --

MOORE: That is the biggest issue. So I guess I would disagree with Trump, but I think they're both problems. They really are.

HARLOW: Yes. It seems weird, though, then to message to Xi in a public interview that you think your own Fed is a bigger problem than his government. But, OK.

This aside, we have 30 seconds left.

MOORE: OK.

HARLOW: General Motors -- General Motors closing five plants, cutting 15 percent of its staff.

MOORE: Yes.

HARLOW: The president says he's now looking at cutting all subsidies for General Motors. What? I mean Republican economic policy, is that good for a free market economy?

MOORE: No -- well, it's not good that we should be giving any subsidies to any corporate -- no corporation should ever get any federal subsidies. I (INAUDIBLE) corporate welfare.

[09:55:00] HARLOW: But -- but he's threatening --

MOORE: But it's just --

HARLOW: He's threatening to punish a --

MOORE: No, I agree with you. Look --

HARLOW: A public company for making a business decision.

MOORE: I totally agree with you on this. I don't think that we should have Washington decide where companies invest and de-invest.

But I've got to say this, there's been so much attention on these plants closing. We have created, since Donald Trump was elected, nearly a million manufacturing and construction jobs. This idea that plants are closing down around the country and that somehow, you know, we're going to have mass unemployment, that -- no, for every plant that's been closed in manufacturing, we've opened ten new ones.

HARLOW: OK, but that --

MOORE: This is a good time to be a blue collar worker.

HARLOW: All right.

We have to leave it there, but you and I don't know what it feels like to be one of those workers losing their job.

MOORE: Oh, I agree. I mean I -- my heart goes out to the people who are going to lose their jobs. No question about it.

HARLOW: Yes.

Stephen Moore, thank you.

MOORE: All right.

HARLOW: Again, your book, "Trumponomics." Appreciate it.

MOORE: Thank you.

SCIUTTO: A great interview there, but, you know, digging in on a president going after the independent Fed. You know, you're seeing that point of view, which, yes.

HARLOW: Yes. It's remarkable.

SCIUTTO: Imagine if the shoes were reversed.

HARLOW: Right.

SCIUTTO: We always say that.

President Trump and his legal team are getting critical insight into the Mueller probe, all thanks to Paul Manafort's lawyers. We're following it all.

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