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Mohamed El-Erian is Interviewed about the Economy; Biden to Visit Saudi Arabia; Trump's Inner Circle Told Him He Lost; Rep. Madeleine Dean (D-PA) is Interviewed about January 6th Investigation. Aired 9:00-9:30a ET

Aired June 14, 2022 - 09:00   ET

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

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[09:00:32]

POPPY HARLOW, CNN ANCHOR: Good morning, everyone. I'm Poppy Harlow.

ALEX MARQUARDT, CNN ANCHOR: And I'm Alex Marquardt, in today for Jim Sciutto.

Great to be with you, Poppy.

HARLOW: Great to have you.

MARQUARDT: We are following several major stories this morning.

Just moments ago, President Biden departing the White House for Philadelphia, where he'll be speaking about the economy and inflation at a convention of the country's largest labor union.

And also this morning, the White House is confirming that the president will be traveling to both Israel and Saudi Arabia next month. That visit coming as his administration is facing mounting pressure following record inflation and, of course, a surge in gas prices.

President Biden spoke about the trip at the Joint Base Andrews in the last hour.

Take a listen.

(BEGIN VIDEO CLIP)

DONALD TRUMP, FORMER U.S. PRESIDENT: All of this got sent to your email addresses. But everything I'm doing in the Middle East, it lays it all out. And I'm focused on labor. You cover the labor speech, and I'll tell you more about what I'm doing while we're in the Middle East (ph). OK.

(END VIDEO CLIP)

HARLOW: All right, the president there.

Also the major story we're following this morning, the January 6th committee set for another public hearing tomorrow morning. It was President Trump's false election fraud claims that were the focus yesterday. Several witnesses painted a picture of how Trump and his allies used lies of election fraud to allegedly scam his supporters out of $250 million.

Question, though, this morning, will this committee make any criminal referral to the Justice Department? We'll have much more on that in a moment.

Alex.

MARQUARDT: And a key inflation measure slowed slightly last month, but prices remain uncomfortably high all across the board.

HARLOW: Our chief business correspondent Christine Romans joins me now in New York.

And, Romans, I mean you were just saying this morning, there are so many economic headlines that could be the major banner on every newspaper this morning.

CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: Yes.

HARLOW: What does this indicate or the latest inflation indicator tell us about the bigger picture, real crisis here on inflation?

ROMANS: Well, it tells us that prices are still uncomfortably too hot here. And the firefighter is the Fed. And the Fed has a very big job here. It's going to have to raise interest rates maybe as much as 75 basis points when it meets today and tomorrow when we hear that actual decision.

When you look at a chart of PPI, as it's called, this is factory level inflation, these are the prices that will be eventually passed on to consumers.

Look at that - look at that line chart. I mean that tells you the story there. These are numbers that are still too high. And the Fed chief has said over the past month that, look, they're hoping that there will be signs that inflation is abating. If it's not, they may have to be nimble or they may have to be more aggressive in their policy actions. And I think that's what you're going to see tomorrow. You could very well see 75 basis points.

What does that mean for consumers? Well, that means you're going to pay more for a mortgage, for a car loan, for any kind of credit card debt. And for companies it means they're going to pay more on debt to grow as well.

You're already seeing mortgage rates looking here close to 6 percent on a 30-year fixed rate mortgage. They were 3 percent earlier this year. So, consumers are feeling the pain all over the place. They're either paying higher prices for everything, you guys, but then to cure the higher prices, they have to take medicine that's higher borrowing costs.

HARLOW: Yes.

ROMANS: So, this is something that is felt by consumers, no question, and by investors. Look at the markets this year. The S&P 500 officially in a bear market yesterday.

HARLOW: Yes.

ROMANS: We'll see if it can try to stabilize today. But it's been ugly for investors and consumers.

HARLOW: And what usually follows bear markets, recessions. Big question.

ROMANS: We'll see.

HARLOW: Thanks, Romans, very, very much.

Let's talk about all these headlines with someone who got it right on inflation a long time ago. Joining me now to discuss all this, Mohamed El-Erian, chief economic adviser at Allianz, also president of Queens College at Cambridge University.

Mohammad, thanks for being with me. I wish it were on better news. But let's just start with where Christine left off, and that is what the Fed does this week. Should the Fed raise rates by 75 basis points?

MOHAMED EL-ERIAN, CHIEF ECONOMIC ADVISER, ALLIANZ: It should. It should do all it can to catch up.

HARLOW: OK.

EL-ERIAN: It is desperately behind, Poppy. And the more it is behind, the more this inflation problem persists.

HARLOW: So you said over the weekend your prediction is that we will likely hit 9 percent inflation. How soon?

EL-ERIAN: In the next few months. As Christine just said, pipeline inflation, the PPI, what's in the pipeline still, is running at 10.8 percent. Inflation expectations are high. And wage growth is going to go up. So, when you put all these things together, it's too early to call for a peak in the inflation rate, unfortunately.

HARLOW: OK. But let's talk about what could be done now, outside of the Fed's actions, and that's from the White House.

[09:05:02]

Do you believe that if the White House acted on what the president said more than a month ago he was considering, which is ending a majority of the tariffs on $300 billion in Chinese goods, do you believe that that could, if the White House does it in the near term, that could prevent us hitting 9 percent inflation?

EL-ERIAN: No. Unfortunately, not.

HARLOW: OK.

EL-ERIAN: There's nothing that can be done quickly.

Look, a lot of us are seeing this and wondering why everybody is blaming the administration. This is about the Fed. The Fed dropped the ball on this inflation issue. And whatever the administration does, and there are things the administration can do, it will not have an immediate impact.

HARLOW: So, you -- I'm hearing you say the blame is squarely on the Fed. There is no - I mean I'm sure you saw the big piece in "The Wall Street Journal" this morning laying out so many points in which the administration could have said different things and done different things on the inflation picture, taking us inside of those meetings. You don't think the administration, the Biden administration, carries some blame here, some learning lessons, some reflection?

EL-ERIAN: So, I have five causes of inflation in terms of importance. The administration comes fifth.

HARLOW: OK.

EL-ERIAN: Yes, they have something to do with it. But in terms of the other things, the Fed, number one, the Ukraine war, and ill prepared energy transition and the impact of Covid, the remaining impact, those are much more important than what happened in the administration.

HARLOW: So, Treasury Secretary Janet Yellen said just last week, quote, there's nothing to suggest that a recession is in the works. Former Treasury Secretary Larry Summers, who's advised many Democratic administrations, doesn't think she's right. I mean he thinks there's a very likely chance of a recession in the next two years.

Who do you think is right? Who do you agree with on that, Yellen or Summers?

EL-ERIAN: So, when you look at the distribution of outcome, the most likely outcome is stagflation, which is bad enough. Growth down, inflation high. The risk -- the highest risk scenario is a recession. It doesn't take much to slip into a recession. And that's the concern we have. So, it's not our baseline, but, unfortunately, it's a very uncomfortable risk scenario.

HARLOW: So, Larry Summers, this weekend on "STATE OF THE UNION" with my colleague Dana Bash, made a fascinating, I thought, a fascinating point and connection between the insurrection, what happened on January 6th, and the lies that have metastasized since about election fraud and inflation.

Listen to what he said.

(BEGIN VIDEO CLIP)

LARRY SUMMERS, FORMER TREASURY SECRETARY: I think the banana Republicans who are saying that what happened on January 6th was nothing or OK are undermining the basic credibility of our country's institutions. And that, in turn, feeds through for inflation because if you can't trust the country's government, why should you trust its money?

(END VIDEO CLIP)

HARLOW: I wonder what you think about that.

EL-ERIAN: I think Larry's general point about institutions is really important. You've got to trust institutions. What differentiates us from many developing countries is that we have well established institutions.

But I do think that in this particular case, the damage to the institution that matters for inflation, which is the Fed, is self- created. It is the Fed that got the inflation call completely wrong, calling it transitory to the end of November. And it's the Fed that didn't move fast enough.

So his general point is correct. But on the inflation issue, the problem we have is self-created institutional damage.

HARLOW: Mohamed El-Erian, thank you, as always.

EL-ERIAN: Thank you, Poppy.

MARQUARDT: Poppy, those economic woes very much a part of our next story.

HARLOW: Yes.

MARQUARDT: President Biden is just about to touch down in Philadelphia, but the White House has just announced that Biden will be traveling to Saudi Arabia next month. And he is expected to have a meeting with the Saudi crown prince, Mohammed bin Salman.

So, for more on that, let's bring in CNN White House correspondent Arlette Saenz, and our White House reporter Natasha Bertrand.

HARLOW: Arlette, talk about what the president is saying about his trip next month. I mean no doubt this comes as a huge surprise to many Americans who remember what this president repeatedly said about Saudi after the murder of journalist Jamal Khashoggi.

ARLETTE SAENZ, CNN WHITE HOUSE CORRESPONDENT: Yes, that's right. As a candidate, Joe Biden said that he was intent on making Saudi Arabia a pariah. But now, as president, he is preparing to travel to Saudi Arabia last month - or next month. The president, a short while ago, was asked by reporters about that trip, and he said today his focus is on labor as he is traveling to Philadelphia, and that the White House has laid out the details of this trip.

Now, this will be part of a broader trip to the Middle East spanning from July 13th to July 16th.

[09:10:00] The president first making stops in Israel and the Palestinian West Bank before moving on to Saudi Arabia, where he will be attending the summit of the Gulf Cooperation Council. That will be held in Jeddah. And it is there where the president is expected to meet with the kingdom's leaders. The White House has said that he will be engaging in some format with Crown Prince Mohammed bin Salman just over a year after the administration made public that intelligence finding that determines that the crown prince ordered the operation that killed "Washington Post" columnist Jamal Khashoggi.

Now, the president, so far, has simply been engaging with the crown prince's father, King Salman, and in a statement announcing this trip, the White House, this morning, said, quote, the president appreciates King Salman's leadership and his innovation. He looks forward to this important trip to Saudi Arabia, which has been a strategic partner of the United States for nearly eight decades.

Now, a short while ago, John Kirby, with the National Security Council, was on our air saying that he expects there to be bilateral discussions between the crown - between King Salman and his team of which the crown prince is a part of. So we -- the White House, so far, has not said if there would be that one on one bilateral meeting between the president and the crown prince, though the Saudis have said that there would be official talks between the two leaders.

Now, the White House has said there's a host of issues that they want to discuss while in the region, including energy issues, as well as national security issues. But this meeting, or a possible meeting between Biden and the crown prince, will certainly be capturing much of the attention as the president prepares for this trip next month.

MARQUARDT: And, Natasha, I want to pick up on that, the murder of Khashoggi.

In your reporting about the planning for this trip, you spoke with a senior U.S. official who said that it's time to move past the murder of Khashoggi. That the relationship between the U.S. and Saudi Arabia cannot be held hostage to his killing.

So, how is the White House justifying moving past that?

NATASHA BERTRAND, CNN WHITE HOUSE REPORTER: That's right, Alex. So in our conversations with senior administration officials, the constant through line is that everything changed after Russia invaded Ukraine in February. That the world just fundamentally shifted. And that required the United States to kind of get as many allies on its side as possible. And that includes Saudi Arabia.

And that is because of the necessity to cut off Russia from the rest of the world, not only geopolitically, but also financially. And, of course, Saudi Arabia is the world's number one producer of oil. And given the number of countries that are cutting Russian oil off from the global economy, they need to kind of compensate for that elsewhere.

And so clearly the administration is a bit reticent to say that the only reason that the president is going to Saudi Arabia is to plead with the Saudis to increase oil production. But that is a very key part of this. And Energy Secretary Jennifer Granholm was actually on our air just last week and she said, look, the Saudi Arabians need to be held accountable for the murder of Jamal Khashoggi. But she also caveated that with a very important comment. She said that, at the same time, the Saudis are leading the pack on OPEC and they are at the head of the pack for increasing oil production. And, obviously, this is a moment when the United States needs - and the world needs to see that increased oil output.

So, they're justifying it that way privately, but then publicly they're also saying that, of course, there are a whole host of national security issues on the table here, including importantly the war in Yemen. The United States feels that it has played a very important part in facilitating a truce between the Saudis and the Iran-backed Houthi rebels there. And they also feel, of course, that it is important to discuss with the Saudis the issue of Iran. That is something that the Saudis and the Gulf Cooperation Council are very eager to discuss with the United States, especially since the U.S. has not been able to come to a new nuclear agreement with the Iranians.

So, all of this will be on the table. But, importantly, this is, you know, a broader strategic partnership that the United States says they just cannot sacrifice, even given President Biden's comments about holding them accountable and about making them a pariah on the world stage.

Alex.

HARLOW: Natasha, thank you for that and your great reporting with Alex on this, and Arlette at the White House, thank you both.

Alex, just before we go, I mean, you know, I just -- Secretary of State Blinken, just a few days ago on CNN, said in defending this, we have to make sure that human rights is fully reflected in our foreign policy. I mean you have deep reporting on this. How do you square the two with statements like we just got from the Biden administration?

MARQUARDT: Yes, and we just heard from John Kirby in the last hour, speaking to our colleague Brianna Keilar, and he said that, of course they will be raising human rights. But it is clear that it is not a high on the agenda as so many would like. That there are so many factors, both economic and geopolitical, that essentially are going to be outweighing the priorities on human rights.

And, Poppy, I just want to note, I did speak with Jamal Khashoggi's fiance during the course of our reporting about this trip.

HARLOW: Right.

MARQUARDT: And she told me that if Biden meets with MBS, which now it appears they will, Biden will have lost his moral compass and greatly heightened my grief, she said.

[09:15:11]

HARLOW: Alex, thank you.

I encourage everyone to read your new reporting with Natasha ahead of this trip.

Coming up for us here, former Trump campaign insiders reveal they raised $250 million from their supporters for an election defense fund, but, guess what, it didn't actually exist. We will talk about the key takeaways from the hearing yesterday with Congresswoman Madeleine Dean.

MARQUARDT: Plus, it's primary day in four states, including South Carolina, where we could get a sense of just how much sway a Trump endorsement has or does not have with Republican voters.

And later, new video of devastating flooding around Yellowstone National Park. This house, look at that incredible video, collapsing into a river yesterday. The severe weather has forced the park to temporarily close for tourists who are hoping to visit this summer.

We'll be right back.

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[09:20:22]

HARLOW: Members of former President Trump's inner circle told him over and over again that he lost the election, that there was no fraud, but he refused to believe them. That is largely what we learned in the second public hearing from the January 6th committee.

MARQUARDT: Yes, that's right.

CNN's senior crime and justice reporter Katelyn Polantz has been following all of this very closely.

Katelyn, we heard from one witness after the next yesterday who rejected over and over again Trump's election fraud claims. Crucially, also, the committee is also saying that Trump used those very same election lies to dupe supporters and raise hundreds of millions of dollars in the wake of the election.

KATELYN POLANTZ, CNN SENIOR CRIME AND JUSTICE REPORTER: That's right. And so the committee now is having to address whether or not there will be criminal referrals that they will be making to the Justice Department ultimately. Some of these findings are so searing, specifically the findings about this money that they followed, that they saw Trump raising money off of this big lie, and that money not ultimately going towards election-related causes, going to politics, political entities instead and even his Trump hotel collection, that the committee is now talking about whether or not they will need to make criminal referrals at the end of this.

They said in a statement that the committee is tasked primarily with developing facts around January 6th. They're focused on presenting the facts right now in hearings and in their report. And if it's warranted, they will be able to make a criminal referral if they need to do that.

There was a little bit of mixed messaging last night about this because the chairman of the committee said, no, they weren't going to do this.

This is what Adam Schiff said on CNN last night to Anderson Cooper.

(BEGIN VIDEO CLIP)

REP. ADAM SCHIFF (D-CA): Certainly true that he hasn't been charged with a crime. Now, there are multiple investigations going on, so that might change. My point is, though, that if there is credible evidence of criminal activity, and here I believe there is, needs to be investigated.

(END VIDEO CLIP)

POLANTZ: (INAUDIBLE) if they are going to be investigating anything that the committee is finding. They don't need a criminal referral from the House Select Committee. Schiff's statement is fairly obvious. Someone like Attorney General Merrick Garland is already saying he's watching these hearings. Prosecutors that I've spoken with are also watching these hearings and so they are following different pieces already that the committee has looked into and the Justice Department already has investigations open into rally organizing the Trump electors and, in one piece, the fundraising being done, at least by Sidney Powell.

HARLOW: Katelyn Polantz, thank you so much for going through that important reporting.

And the messaging is really important, will they refer or not to DOJ?

Let's talk about this and a lot more with Democratic Congresswoman Madeleine Dean of Pennsylvania. She sits, of course, on the House Judiciary Committee and, of course, was an impeachment manager in former President Trump's second impeachment trial.

Good morning, Congresswoman, and thank you.

REP. MADELEINE DEAN (D-PA): Good morning, Poppy. It's good to be with you.

I also serve on Financial Services. And this morning, I'm mindful of the loss of my friend and colleague on that colleague, Sean, and his wife, Kara Casten, whose daughter tragically passed away. So, they're in all of our thoughts.

HARLOW: And ours. Thank you for saying that, Congresswoman.

Let's begin where our colleague Katelyn left off because you still describe being haunted by the sound of the banging of those insurrectionists on the chamber door that day after you guys had been instructed to pull the gas masks out from underneath your seat. I wonder if you believe, given your experience as a House impeachment manager in the second impeachment trial, that this committee should make a criminal referral to the Justice Department if warranted.

DEAN: What I do know is this committee is doing extraordinary work and supported by able lawyers and teams around them. So, I trust them to make the right decision.

Certainly, what we are seeing, the evidence of what we are seeing, and what we have seen all along is evidence of corruption and criminality. So, I hope the appropriate referrals will be made and I hope others are already deep in the investigation of criminal activity of the former president.

Look at what the testimony yesterday revealed, again, things that we know. President Trump, Mr. Trump, will be a grifter to the end. Not only did he sell this big lie, against every one of his advisers, well, with the exception of perhaps Rudy Giuliani, but he sold it over and over again, diluting the American public to the point of insurrection. One, it's unbelievable, but then also raised a quarter of a billion dollars off it. We need to follow the money.

[09:25:05]

HARLOW: One -- I'm sorry for stepping on your answer there.

One thing that I think is important for people to know about you is that you actually had hope after the insurrection. That it was so damaging to our democracy that people would come together, right, to restore our -- what is a very fragile democracy.

But that's not what happened. And in your home state of Pennsylvania, the big lie lives on, not just the former president, the Republican nominee for governor, Doug Mastriano, has been a leading voice, advancing former President Trump's election fraud lies. He was actually pictured outside the Capitol during the insurrection, attempted to launch an Arizona-style partisan review of Pennsylvania's ballots. This week he appointed Jenna Ellis, Trump's former campaign lawyer who promoted Trump's election lies, as a senior legal adviser to his own campaign.

So, regardless of the outcome of these committee hearings, how do you stop a lie that keeps metastasizing with some of the core, key players in that lie in key positions, in key races, like in your state?

DEAN: Well, to your two points. Number one, did I take it personally? And I recall that terrifying sound, as well as the sound of our gas masks wearing for several hours as we were in the safe room. And to your other point, that also as an impeachment manager I had hope that what we would reveal in the second impeachment trial would show the American public just how wrong Donald Trump had gone, and those around him.

What we didn't appreciate, and what the 1/6 committee is now revealing, was the insidious, planned nature of what happened. I think back -- I was sitting on Judiciary Committee way before the election when then Attorney General Barr started saying the exact same thing that Donald Trump was saying. This is before the election, planting the seeds of doubt, saying that if he loses, it will be fraud. We have to take a look at how long and sustained and planned this was to the point of metastasis.

HARLOW: So then what do you make of former Attorney General Barr's statements to the committee on video, under oath, that were played for the world yesterday? I mean he said in that testimony right out of the box on election night, before there was actually any potential of looking at evidence, the president claimed that there was fraud. And then Bill Barr said this to the committee.

Let's play it.

(BEGIN VIDEO CLIP)

BILL BARR, FORMER ATTORNEY GENERAL: I was influenced by the fact that all the early claims that I understood on -- were completely bogus and silly and usually based on complete misinformation.

I told him that the stuff that his people were shoveling out to the public were bull - was bull shit. I mean that the claims of fraud were bull shit. And, you know, he was indignant about that.

(END VIDEO CLIP)

HARLOW: I should note, in September of 2020, it was Bill Barr who was making unsubstantiated claims, for example, about mail-in voting. So, adding to belief in some sort of election fraud.

But what do you make of what the importance of what he said there?

DEAN: The importance of it is the unequivocal nature of it. He says with clarity, over and over again, he met with the president, addressed some of the claims of fraud, said they had been investigated and they were bogus, or the other word that he used. So, it was very unequivocal, even though he was a participant in spewing the disinformation to the American public about the validity of our vote.

So, in person after person, you saw the campaign manager, along with the attorney general, former acting attorneys general, all say unequivocally that we told the president this is bogus. This is -- there is no fraud. You've got nothing here. But the president continued his lies.

HARLOW: Congresswoman Madeleine Dean, thank you for your time this morning.

DEAN: Thank you.

HARLOW: Alex.

MARQUARDT: And still ahead, the economy and inflation are going to be key issues for voters in four states that are heading to the polls in primaries today. We'll take a closer look at two high profile races in South Carolina. That's coming up next.

HARLOW: We are also moments away from the opening bell on Wall Street. Taking a look here. U.S. futures have had a very mixed morning based on all of the factors we've been discussing. Wall Street waking up to a bear market. Investors weighing that troubling new data, then the new inflation numbers. The Dow, S&P and Nasdaq futures all fluctuating this morning. So, the economy very much on investors' minds.

Stay with us.

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