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More Troubling Signs For The Economy; Multiple Correctional Officers At New York City Prison Were Epstein Committed Suicide Have Now Been Subpoenaed By A Grand Jury; Hotel Cook Plotted To Gun Down Co-Workers And Guests In California. Aired 2-2:30p ET

Aired August 22, 2019 - 14:00   ET

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

BRIANNA KEILAR, CNN HOST: Be sure to watch CNN special film "Halston" premiering this Sunday night at nine. And that is it for me, NEWSROOM with Brooke Baldwin starts right now.

BROOKE BALDWIN, CNN HOST: Brianna, thank you. Hi there. I'm Brooke Baldwin. You're watching CNN. Thanks for being with me. Despite unemployment near a 50-year low, there are more troubling signs for the economy, which reportedly is linked with recent troubling signs from the President, and we'll get into that just a second.

But first, just to the indicators. For the first time in nearly a decade, America's manufacturing sector shrank. It's the first sign of contraction from this index since 2009. Plus for the second time in a week, there has been what's called a yield curve inversion. It's a rare phenomenon on Wall Street. But when it hits, market watchers pay attention, because it's been a predictor of every U.S. recession in the modern era.

And then comes news of a major adjustment to the bedrock of the nation's economy, the strong jobs numbers. The Labor Department is now saying that between April of 2018, and March of this year, there were half a million fewer jobs created, then they actually originally thought.

It's all adding to the worries of a slowdown, and it comes just as we're getting word of an even more worrisome speed of -- the Federal deficit ballooning much faster than previously expected. So says the CBO, the Congressional Budget Office, you can see this orange line there on your screen that the deficit now on track to hit $1 trillion in Fiscal Year 2020, which starts in September. That is several years earlier than the CBO first projected.

So Maya MacGuineas is President of the Committee for a Responsible Federal Budget. Maya, nice to have you on.

MAYA MACGUINEAS, PRESIDENT, COMMITTEE FOR A RESPONSIBLE FEDERAL BUDGET: Thank you.

BALDWIN: Going back to that orange line, what why is the deficit growing faster than initially thought?

MACGUINEAS: Well, it's pretty much all self-imposed. Actually, in many ways, the economy is helping us because interest rates are stunningly low. And so we have savings there. But much more than compensating for that is the fact that we have passed unpaid for tax cuts, unpaid for spending increases and more unpaid for spending increases.

And so Congress is fast passing deficit finance legislation so quickly, I believe the President has signed in over $4 trillion of debt increases into law, and no surprise --

BALDWIN: Is that what we mean by self-imposed?

MACGUINEAS: Yes, so no surprise. This is coming from legislation that Congress is passing and the President is signing. And so this, in many ways is reflective, not have a weak fiscal situation that comes from the economy, but it comes from our politicians. And that's the problem.

BALDWIN: So what does this mean for families? How does it impact them on an everyday level?

MACGUINEAS: The big challenge, of course, is that families are struggling in so many different ways in terms of wage growth, jobs, economic security, uncertainty that's there. And there's this huge looming national debt that nobody really sees as affecting them directly. But in many ways, it's the underpinnings of the overall economy.

So with a debt that's too high, it means that economic growth could slow, wages could slow, there could be fewer jobs, and it certainly means this is relevant for right now, that if and when you do go into a recession, not only could that high debt, in some ways bring about slower economic growth, it makes it harder to fight.

Because the last time we had a recession, that debt relative to the economy was half the level that it is today. And so if and when we need to do large amounts of fiscal stimulus, we've really kind of emptied that toolbox ahead of time, and it leaves us less prepared to fight a recession.

BALDWIN: So a worse situation than for us going into it if in fact, it happens. What about back to those jobs numbers because there are other signs of a contracting manufacturing index, the jobs numbers revised down by 500,000. But I know the job market is tight, there are more jobs than people to fill them. So what do you make of that?

MACGUINEAS: So these there are mixed signals right now all around the economy, I would add some additional ones on the negative side, that we also know, which is the level of uncertainty, our policy making is like, you know, gives you whiplash day by day, if not hour by hour. And that kind of uncertainty is never good for tomorrow. It's never good for the underlying economy. It's never good for consumers. So that level of uncertainty is huge.

On the longer term, we have these big challenges that actually mean growth will be much slower going forward from huge shifts in demographics to the fact that we have this big debt load that we haven't addressed. And we have entitlement programs that are unprepared to deal with these things.

So we have immediate questions. And I would say given how long the expansion has been, near record levels, it's another warning that it's probably time where the business cycle is going to start to tip. But we also have an ongoing struggle to help get economic growth going in a longer term, and coming back full circle to those debt numbers, having a larger debt means fighting any and all of these short and long term problems much more difficult.

BALDWIN: I hear you loud and clear Maya MacGuineas, I'm hoping others do as well. You know when it comes to the economy, the stakes are high and that then provides the backdrop to the President unleashing that 6,000-word rant before reporters.

[14:05:00] BALDWIN: This is all part of the day in which the President retweeted himself as the King of Israel, hailed himself as the chosen one, flip-flopped on gun background checks, snubbed an ally, blamed the Fed and the media for creating the recession, put even more rules on migrants, and that's far from all.

So just take note of this detail from "The New York Times" quote, "Some former Trump administration officials in recent days said that they were increasingly worried about the President's behavior, suggesting it stems from rising pressure on Mr. Trump, as the economy seems more worrisome, and next year's election approaches."

So with that in mind, Evan McMullin, I'm talking to you now, launched the Third Party Run Against President Trump in 2016. He is a former C.I.A. official, and also developed policy for the House Republican conference. So welcome back, sir. Nice to have you on.

EVAN MCMULLIN, LAUNCHED THE THIRD PARTY RUN AGAINST PRESIDENT TRUMP IN 2016: Good to be with you, Brooke.

BALDWIN: You know, there are people who watched President Trump in front of reporters yesterday, and they would cast it off as this is Trump being Trump. But yesterday, Evan, it was a lot. So what do you think it was about?

MCMULLIN: Look, I do think it's largely about the economy. You know, the President, you know, he has a super high approval rating within the Republican Party, although 10 to 15 percent of Republicans are strongly opposed to the President, you know, but there's another 25 percent of Republicans who are supportive of the President, but with a lot of reservations.

And a lot of them have made that decision to support the President despite their reservations and concerns about his leadership, because the economy has been doing well for them at least.

And so as long as that's the case, and that trade -- they're willing to make that trade -- the President's approval rating within the party remains strong. But we are in the year 10 of the longest economic expansion in our country's history, and there are signs of a recession. In the equity markets, we're seeing labor numbers revised down from the past year in a dramatic way. And as Maya MacGuineas said, it's very difficult now because of some

of the President's own decisions, if there is a severe economic downturn for him to respond to that in a in a real way.

And so I think he has seen those two things, and he is worried. He is heading into a primary season. He is in a primary season now where more and more Republicans are talking about challenging him. And he doesn't -- he knows, I think, he's worried about that 25 percent that support him now. But that might not if the economy turns south.

BALDWIN: So then using maybe today, or you know, right now is the goalpost into November of 2020, and when you look at just as a snapshot of the last week, let's say, you know, flip-flopping on background checks, and the King of Israel retweet. And, you know, I'm the chosen one, when it comes to taking on China, and wanting to buy Greenland. And of course, as you bring up the recession, and how Maya pointed out, this is also self-imposed.

Of all of that, Evan, what concerns you the most?

MCMULLIN: Well, I think what concerns me -- I mean, we should all be concerned about the prospects for an economic downturn, especially given how perhaps overdue we are for that. So I'm worried about that. But I think what we'll see in President Trump is as that happen, and as he is unable to respond to it, if it does happen, he is going to work extra hard to divide us.

He is going to talk about ending birthright citizenship, for example, he is going to, you know, put in new policies so that he can keep immigrant children in detention, in cages indefinitely.

BALDWIN: Why? As a distraction?

MCMULLIN: As a distraction, but more than that, because part of the Republican Party now is supporting the President, not because so much of the economic benefits as others see it, but because they like this culture war that he fights, and so I think what he's going to do, I mean, his reelection strategy is about the economy, if it's their forum, and about this culture war that he fights, and if one isn't there, I think he's going to double down on the other.

So I think we can expect more erratic, divisive policymaking and rhetoric from him going forward. It's a total loser, politically, for him, for the country, for the Republican Party. But I think that's where he is headed.

BALDWIN: So what about all the, you know, Republican voters? We know that former Republican Congressman Joe Walsh is now flirting with challenging President Trump. Something, you know, quite a bit about from your 2016 run. What's your advice to him or anyone who wants to take him on?

MCMULLIN: Well, you know, I don't think that they need my advice, but I'll tell you that I certainly do appreciate those who are getting into the race. I think they're, they're doing an important service, you know, 10 to 15 percent of the Republican Party doesn't feel represented by President Trump or by the current direction of the party. They feel like they have no voice, no representation in all of this, but it's more than that.

It's then that additional 25 percent of Republicans who yes, they support the President, but they have strong concerns still about him and about the direction of the party. And in these candidates Joe Walsh, Mark Sanford, potentially as well. Governor Weld of course, they are giving voice to Republicans who are opposed to the President, but also those who have concerns. And we'll see what happens in the next 14 months.

[14:10:20] MCMULLIN: That's -- you know, even six months in these economic conditions and in this political environment is an eternity and anything can happen. And the President's numbers could additionally weaken and if so, there are others, additional Republicans who are looking at jumping in the race, whether it's Governor Kasich, or Hogan in Maryland.

And so this is -- these are things that I think have got to be on the President's mind right now.

BALDWIN: Evan McMullin, good to see you. Thank you very much.

MCMULLIN: Thank you. Good to see you, too.

BALDWIN: Breaking News this afternoon in the case of Jeffrey Epstein, subpoenas for as many as 20 correctional workers who worked at the jail where he hanged himself. Investigators say that the employees have not been cooperating. We have details there.

And dozens of people arrested for plotting mass terror attacks. They include a hotel cook, accused of planning to kill co-workers and guests and the father of a student killed in the Parkland massacre with a powerful message for President Trump. He says it is time to stop talking. You're watching CNN. I'm Brooke Baldwin. We'll be right back.

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[14:16:13] BALDWIN: Breaking news this afternoon in the death of financier and convicted sex offender Jeffrey Epstein, a source tells CNN that multiple correctional officers who work at that New York City prison were Epstein committed suicide have now been subpoenaed by a grand jury and more could be in the works. This is happening as the new head of the Bureau of Prisons is officially sworn in today by the U.S. Attorney General.

Shimon Prokupecz is our CNN crime and justice reporter. He is the one breaking the story. Talk to me about the subpoenas, Shimon?

SHIMON PROKUPECZ, CNN CRIME AND JUSTICE REPORTER: Yes, significant certainly, Brooke. This is a significant move here by Federal investigators, the F.B.I. and prosecutors there in New York as they try to unravel what exactly happened here. How did Jeffrey Epstein wind up dead inside his jail cell? Obviously, everyone knows now from the Medical Examiner, and believes

that this was a suicide. But what led up to this, and that is what Federal investigators are trying to find out. And what we've heard is that they've issued at least 20 subpoenas to guards at this jail in trying to get to the bottom of what happened here.

And one of the things that I think this reveals is that many of the guards, as we've been told, have not been cooperating with the F.B.I., with Federal investigators as they started this investigation. And so as a result, the Federal investigators have felt the need and it being necessary now to subpoena these folks just so they could get answers as to what led up to his death.

And one of the things, obviously, that they're looking at is what kind of irregularities as we've heard the Attorney General say there were irregularities at this jail. So they want to get a better idea.

They're looking at things like paperwork, records indicating that prison guards were checking in as they were supposed to every 30 minutes on Epstein -- on Jeffrey Epstein. Were they doing it? And if they weren't, were they falsifying records to indicate that they were? And that is the big question, what was going on here? And were folks lying at the jail about what they were doing whether or not they were keeping an eye on Jeffrey Epstein -- Brooke.

BALDWIN: You know, they're trying to get to the bottom of all of that, Shimon.

PROKUPECZ: That's right.

BALDWIN: Thank you very much for breaking the story for us. Since the mass shootings in El Paso and Dayton, dozens of people have been arrested accused of plotting violent attacks. Among the suspects, a disgruntled hotel employee with a detailed plan and an arsenal of guns.

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[14:22:57] BALDWIN: We seem to be talking about every day now, police foiling plots to inflict violence and death with mass shootings. In the days since Dayton and El Paso, there have been now at least 29 arrests. That means 29 people arrested across the country for threats to commit mass shootings, kill innocent people at schools, stores, health clinics and places of worship.

The latest has happened Tuesday in Long Beach, California. A disgruntled Marriott Hotel cook allegedly told a co-worker that he was going to shoot and kill everyone inside the hotel. The co-worker alerted authorities and once police arrested this cook, they found an arsenal of firepower inside this man's home.

CNN's Nick Watt is live with us with some new details. So Nick, tell us more.

NICK WATT, CNN NATIONAL CORRESPONDENT: Well, Brooke, we are still waiting for the Long Beach Police Department to present their case to the District Attorney. We are still waiting for the first appearance in court of the suspect.

But what we know so far is Monday evening, this cook at that Marriott in Long Beach apparently told a co-worker that he was annoyed about something that had happened at work. It was something to do with the Human Resources Department and that he was planning a mass casualty attack. He was going to target his fellow employees. And according to the Police Chief, he said anybody else who came into the hotel.

Now that Police Chief has said that if that co-worker had not passed this tip on, he is sure that lives would have been lost. Take a listen to a little bit more of what the Chief had to say.

(BEGIN VIDEO CLIP)

ROBERT LUNA, CHIEF, LONG BEACH POLICE: Suspect Montoya had clear plans, intent and the means to carry out an act of violence that may have resulted in a mass casualty incident.

(END VIDEO CLIP)

WATT: Now, you mentioned that cache of weapons that was found in that man's home. Now, in that cash there were assault rifles that are not legal here in California. There were high capacity magazines also illegal here in California. There was tactical gear, and as the Chief said, hundreds of rounds ammunition, as the chief said, enough to carry out a huge mass casualty event.

[14:25:07] WATT: Now, this man did not have a previous criminal record that would have been flagged on any background checks. And the chief stressing time and time again, how important this tip was.

He was saying, listen, in this day and age, we are obliged to act to pass on these tips, to pass on anything that we think is suspicious. I mean, Brooke, remember, you know, if you say something, see something which we were all taught in the days after 9/11. Now, then we were being told to look outwards, to look for potential Islamic terror attacks. Now, this Chief is saying that we should all be looking inwards into our own communities, looking for those killers within our own communities -- Brooke.

BALDWIN: You have to say something if you do see something. Thank goodness for this tip. Nick Watt, appreciate you, for us in California on that one.

And while authorities have been busy previous gun violence in this country, Federal lawmakers are still on vacation. Congress will not start debating their proposals until the ninth of September. And President Trump who is not on vacation has offered zero solutions in the almost three weeks since the mass shootings in El Paso and Dayton and one father has a new message for this president.

Fred Guttenberg lost his daughter Jamie in the Parkland school shooting. He met with President Trump after the fact more than a year ago, he says he feels betrayed, he feels angry. And now this, Mr. President, he is basically saying put up or shut up. (BEGIN VIDEO CLIP)

FRED GUTTENBERG, DAUGHTER DIED IN PARKLAND SHOOTING: My daughter died in Parkland. I live with that every second of every day. And he lied to me and all the other victims that day. And he has done it against since the other mass shootings. When he talks about doing the right thing for a brief second, and then he says, but I spoke to the NRA and he walks away from it.

So Mr. President, let me tell you something, I don't care about you. This is not about love or hate. I don't care about you. I care about what you do. And I hate what you are doing. Because you are using the pain of the victims of gun violence, to speak in a way that allows you to look like you're going to do something but only to play games with their emotions and not do it in the end.

I don't care about you, Mr. President. But I hate what you do. It is time for you to stop talking on this topic until you are ready to give Mitch McConnell the go ahead to open up the Senate and actually take on legislation. Enough. Stay out of this. Keep your mouth -- just quiet. Unless you're ready to actually be a serious participant in this conversation. Just stop.

(END VIDEO CLIP)

Fred Guttenberg's daughter, Jamie would have turned 16 last month. And as the President is taking heat on a number of fronts, including that anti-Semitic trope, new reporting on how Ivanka Trump and Jared Kushner are missing in action.

Plus, see how the President's former Republican rivals predicted his presidency and the behavior we're currently witnessing.

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