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Leading Inflation Indicator Surged in June, Prices Staying High; Trump Tried to Call White House Support Staffer Talking to January 6 Committee; Biden Meets with Israeli President Isaac Herzog. Aired 10-10:30a ET

Aired July 14, 2022 - 10:00   ET

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

DAVID ANDELMAN, FORMER NEW YORK TIMES FOREIGN CORRESPONDENT: Only way that is going to be a substantive change of relations between Israel and Saudi Arabia is if there's a resolution of some sort to the Palestinian issue.

[10:00:09]

And that is obviously not on the table anytime in the foreseeable future.

So, it's really -- I just don't see what the U.S. could really get out of this and the Saudis are getting quite a lot optically, if nothing else. And optics are very important in this kind of relationship.

JIM SCIUTTO, CNN ANCHOR: Yes, no question.

POPPY HARLOW, CNN ANCHOR: No question about it. David Andelman, sorry we have to cut it a little bit short. We're up against the top of the hour. We appreciate your expertise, as always. Thank you.

ANDELMAN: Thanks for having me.

HARLOW: And it is the top of the hour. Good morning, everyone. I'm Poppy Harlow.

SCIUTTO: And I'm Jim Sciutto.

We continue to follow President Biden's trip to the Middle East. He's been meeting and you've been seeing pictures, he is with the Israeli president, Isaac Herzog, right now.

HARLOW: So, we'll continue to follow this.

We are also staying on top of another major story first on CNN. We're learning new information about a potential January 6 committee witness that the panel says got a call from former President Trump after their last hearing. More details on what that person may know in just a moment.

And despite the Biden administration really trying to do what they can on inflation, another key measure of inflation shows how high it is soaring. The Producer Price Index, which measures the prices paid to producers of goods and services, jumped 11.3 percent year-over-year in June. This is just after the Consumer Price Index, what we all pay for things, showed inflation at a 40-year high last month.

The White House says Congress has to pick up some of the slack.

(BEGIN VIDEO CLIP)

HEATHER BOUSHEY, WHITE HOUSE COUNCIL OF ECONOMIC ADVISERS: Let's be clear, some of the most significant steps that we could do right now are actually things he needs to partner with Capitol Hill on. There are steps Congress could take to reduce some of the big ticket costs facing families and that legislation has been languishing over there.

(END VIDEO CLIP)

HARLOW: Joining me now is Lara Rhame, the chief U.S. economist and managing director of F.S. Investments. Lara, thanks for the time and good morning.

LARA RHAME, CHIEF U.S. ECONOMIST AND MANAGING DIRECTOR, F.S. INVESTMENTS: Good morning.

HARLOW: So, let's begin where the White House just left off there. They are saying there's more we can do on inflation. We need help from Congress to do it on some things. One thing, for example, that they were pushing is a gas tax holiday, for example.

There was a few days ago in The New York Times a piece that highlighted Carter administration economists warning don't make the some mistakes we did. And one of the warnings from them, including the former Carter treasury secretary said half measures that have popular appeal do little to resolve the underlying problem. And I wonder if you think they're right.

RHAME: Yes. I think if inflation feels like it's coming at us from everywhere, it's because it is. It's not just a gas or energy story, which is one place possibly the administration could have some impact. We're seeing food prices and, troublingly, we're starting to see it in rents, which is a more sticky form of inflation. If oil prices come down, gasoline prices correct lower pretty quickly.

That's something that we've already seen a little bit of in July. But people keep their rents for a year or longer. It starts to impacts what wages they demand from their employers. So, I think the problem here is that there's only so much that the administration can do to address a broad range of issues that are pushing inflation up from every direction.

HARLOW: And you bring up wages, real wages, what people feel are lower. So, higher prices, real wages down 3.6 percent over the last year, it's a double-whammy. Listen to Larry Summers, the former treasury secretary and what he told Wolf Blitzer.

(BEGIN VIDEO CLIP)

LARRY SUMMERS, FORMER TREASURY SECRETARY: My guess is that inflation will be lower next year than it was this year and quite likely will be lower in 2024 than in 2023. But I think it's not going to be easy to bring inflation back to the kind of levels we've become accustomed to in recent decades. We have let the genie out of the bottle. And I think it is going to require quite significant dislocation in the economy to get it back.

(END VIDEO CLIP)

HARLOW: I mean, the last time we had 9 percent unemployment, it persisted for eight years. Is that what we're looking at, years of 9 percent, 8 percent, 6 percent, 7 percent inflation?

RHAME: I see inflation coming down more towards 5 percent, but it's still enough to badly erode wages, savings and investment returns, and, of course, the household budget. So, what I think we see going forward is the problem that it's not just a U.S. issue.

[10:05:04]

And we really need a lot of things to go right, not just U.S. policy to get inflation back down to 2 percent, which is where we've had it for decades now.

So, I see inflation returning to something that's less than the 9 percent that it is right now but still around 5 percent. It's going to be enough to keep wages and real wage gains, right? We just adjust it for inflation in positive territory. They're negative right now. People are earning more but it's not enough to keep up with inflation.

HARLOW: So, Lara, Bank of America yesterday said that because the American economy is slowing more rapidly than feared and because of this persistent high inflation, they now see a recession likely this year. And the Fed meets in a few weeks, and we had the Atlanta Fed president signal yesterday that everything is in play in terms of rate hikes, including a 1 percent hike potentially.

If they do that and then, again, in September, can you not have a recession? Can you have a soft landing?

RHAME: The Fed's track record at creating a soft landing is just not very good. And the fact that they are raising rates so aggressively, 100 basis point or 1 percent rate hike would have been unheard, of even three months ago. So, the fact that they're so aggressive to me really increases the risk that they overshoot and that we do get a recession.

I think the probability for me is really high in 2023. We still have a strong jobs market. It takes time for Fed rate hikes to impact the economy, but they are not just tapping on the brakes, they are yanking the emergency brake at a time when our economy is already climbing up a hill. So, we're slowing anyway and higher inflation is part of that.

And so I think the risk of a recession has really increased significantly despite the Fed's optimism that they're going to be able to avoid it.

HARLOW: We all hope they are. So, we're all rooting for them. Lara Rhame, thanks very much.

RHAME: Thank you.

HARLOW: First on CNN, new details about the White House support staffer who received apparently a phone call, didn't take it, from former President Trump. We still don't have a name of the person but sources tell CNN the former president tried to contact them and that person is a potential witness for the January 6 committee.

SCIUTTO: Sources also tell CNN the staffer was in a position to corroborate part of the testimony from former White House Aide Cassidy Hutchinson.

Joining us now to discuss, Federal and White Collar Criminal Defense Attorney Caroline Polisi and former Trump White House Lawyer Jim Schultz.

Caroline, this is not the first time we've heard accounts of what sounds at least like witness interference by the former president and his team. Cassidy Hutchinson also discussed communications prior to her testimony. The president is watching. He considers you loyal, et cetera. What is the legal standard to establish criminal witness tampering?

CAROLINE POLISI, FEDERAL AND WHITE COLLAR CRIMINAL DEFENSE ATTORNEY: Yes, Jim. And I would just note that this is not really the first time even within these hearings that we've heard about potential witness tampering. This is sort of par for the course, most notably, remember, back in 2018, President Trump and his lackeys tried to reach out to Michael Cohen before his congressional testimony really with no repercussions that sort of fell flat. Because, and this goes to your question, it is kind of difficult to prove witness tampering, witness intimidation.

Certainly, the phone call will not be enough. Certainly, the text Liz Cheney showed in previous hearings likely will not be enough. However, it does go to the matter that this is a pattern or a practice on the part of Trump and his inner circle to try to really shape the testimony before this committee.

Clearly, he cares about this testimony as much as he says he doesn't. He's watching in the wings. He's tweeting about it or whatever the reciprocal social media platform is to Twitter, and he's paying attention.

HARLOW: So, Jim, listen to this from the chairman of the committee, Bennie Thompson, what he said to our Manu Raju about this call that, again, the potential witness didn't answer, right, the president made but wasn't answered. Listen to what Chairman Thompson said.

(BEGIN VIDEO CLIP)

REP. BENNIE THOMPSON (D-MS): Well, we don't know because he didn't -- the call never went through. And that's a concern that we have if even the attempt raises a question. But it's one that we think is better handled by the Department of Justice. If they think that this is something they need to look into, then they will.

(END VIDEO CLIP)

[10:10:04]

HARLOW: Legally, isn't that tough? I mean, you don't know what the president was going to say, I guess, is my question to you.

JIM SCHULTZ, FORMER TRUMP WHITE HOUSE LAWYER: Yes, Caroline is exactly right. These are very difficult -- these cases are very difficult to prove. And, certainly, if you didn't make the contact, the former president didn't make the contact, it makes it much more difficult.

But what the committee is trying to say is, look, we're not going to tolerate, because there were threats of violence and other things coming from unknown individuals, don't know if they had a connection to Trump or whether they were just people calling up and making threats, general folks calling up and making threats. But they said we're not going to tolerate this. And if folks are going to reach out to our witnesses, we're going to protect our witnesses the best we can and we're going to refer to it over to DOJ so that you know better not to do it the next time.

SCIUTTO: Jim Schultz, you have legal standards, then you have political standards as well. And part of the January 6th committee's goal seems to be establish the record here and, in effect, let the public decide, right, what the consequences should be here.

You worked in the Trump administration. You're in touch with Republican voters and others. Is what we've seen from January 6 damaging Trump within his own party?

SCHULTZ: I think in the court of public opinion, it certainly is damaging. It remains to be seen whether in the court of law it matters or not. But certainly in the court of public opinion, it is damaging, it's having an impact. Certainly, if I'm a former president, I'm watching closely and worried about the testimony as it unfolds. So, yes, I think it is.

And we're seeing that in polling numbers while the president, we saw polling numbers with the president, 49 and DeSantis at 25 nationally. You're also seeing DeSantis ahead in the state like New Hampshire that's an early primary state. So, even Republican voters, you're seeing the shift towards others and looking for someone else in the Republican Party.

HARLOW: So, let's shift to another investigation tied to this, Caroline, and that is the Georgia grand jury that has been convened and hearing from witnesses having to do with obviously that president's long phone call to officials there in Georgia, the secretary of state, et cetera, saying find the votes, right? So, Senator Lindsey Graham is now being subpoenaed to testify before that grand jury about two phone calls that he made during that time about this issue. The attorney for Lindsey Graham is saying this is no problem. This is constitutionally protected activity because it's legislative activity and it's protected by the speech and debate clause. Can you explain if you think that's a good legal argument and if -- what is legislative activity and what isn't when it comes from a sitting lawmaker?

POLISI: Yes, absolutely, Poppy. It's not. The short answer is that it's not. The speech and debate clause is not going to help Lindsey Graham in his effort to quash this subpoena. And I would just note that Fani Willis, she's the Fulton County district attorney, I've always thought that this is sort of the dark horse when it comes to potential criminal charges being lodged against the former president, Trump.

DOJ hasn't really pulled through as it were or at least the reporting is unclear in terms of where they in terms of moving forward with potential criminal charges. Fani Willis is really not messing around. She's been very vocal, that her head is sort of to the ground, she has got blinders on. She has this special grand jury that can be seated for up to a year.

So, Lindsey Graham may take some time in this potential motion to quash this information that they want, however, he can't really argue it's legislative duties that he's doing. He really -- the information they are seeking is really information pertaining to what he did really as a surrogate for President Trump in those waning days of the administration with respect to inserting this alternate slate of electors.

So, I kind of liken it to the crime fraud exception. You can't hide behind these -- invoking these privileges when there is the potential for a crime being committed therein. So, it may take some time. Lindsey Graham may ultimately win the battle but I think he will lose the war on this one.

SCIUTTO: Jim Schultz, just this morning, a conservative group, including prominent lawyers of multiple administrations, Republican administrations, judges, they issued a 72-page report systematically debunking Trump's lie about the 2020 election. Just quoting briefly from it, there is absolutely no evidence of fraud in the 2020 presidential election on the magnitude necessary to shift the result in any state, let alone the nation as a whole. In fact, there was no fraud that changed the outcome of even a single precinct.

It's a year-and-a-half of this right now we've had of debunking the president's election lies, yet he continues to share them.

[10:15:00]

And as you know, most Republicans, at least in polling, continue to buy it, right? And I wonder, does anything pierce that bubble? You say Trump's support is waning. Is the belief in the election waning or is that -- among Republicans or is that locked in?

SCHULTZ: Polling would say that it's locked in at least for now. I th8ink people are coming to the realization as these hearings are unfolding there wasn't this -- there was not a legitimate claim that the election was stolen. And I think you're going to see that more and more as this unfolds.

Going back to Lindsey Graham though, I think it's important to note, he has to go to court in his own state first. And the judge in his own state is going to make the determination as to whether his testimony is material and also whether it's an undue burden for him to testify. So, that hearing will take place in his home state. I think it's interesting to note that.

SCIUTTO: Smart point. Jim Schultz, Caroline Polisi, thanks so much for coming on.

And right now, President Biden in Jerusalem sending a clear message on the threat of a nuclear Iran, but he wasn't so clear about what he would say to Saudi Arabian leaders about the murder of Jamal Khashoggi.

HARLOW: Plus, a desperate search across Virginia where more than 40 people are missing this morning after devastating floods hit the rural southwestern mountains. We're on the ground with an update.

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[10:20:00]

HARLOW: Right now, President Biden is meeting with Israeli President Isaac Herzog. They've met. He also met with the country's prime minister this morning. We saw that joint news conference with the prime minister. Afterwards, Biden was asked about his upcoming talks with Saudi Crown Prince Mohammed bin Salman.

SCIUTTO: Notably, Biden stopped short of committing to raise the murder of journalist Jamal Khashoggi, who U.S. intel agencies say was ordered by the crown prince. Have a listen.

(BEGIN VIDEO CLIP)

JOE BIDEN, U.S. PRESIDENT: I'm going to be meeting with nine other heads of state. It's not just that it happens to be in Saudi Arabia. And so there are so many issues at stake that I want to make clear that we can continue to lead in the region and not create a vacuum, a vacuum that is filled by China and/or Russia.

I always bring up human rights, but my position on Khashoggi has been so clear. If anyone doesn't understand it in Saudi Arabia and anywhere else, then they haven't been around for a while.

(END VIDEO CLIP)

SCIUTTO: CNN's Kaitlan Collins following the president in Jerusalem. So, Biden not committing there to raise Khashoggi. Before his visit, he did not commit to asking Saudi Arabia to boost oil production, right, to bring down oil prices and questions as to whether they have capacity. I wonder what specifically does the president, do his advisers say he's going to Saudi Arabia for? KAITLAN COLLINS, CNN CHIEF WHITE HOUSE CORRESPONDENT: They are only speaking of this trip in very broad strokes, and that is intentional because, of course, it is a trip that they are now making at an awkward time because, of course, the comments that President Biden made about Saudi Arabia on the campaign trail that have followed him and have loomed over this trip and will be setting the scene for when he comes face-to-face with the Saudi crown prince tomorrow. Of course, the crown prince, who U.S. intelligence agencies have assessed, ordered the murder of Jamal Khashoggi. And so that is why this has been such a critical question facing President Biden for days now.

And he did say he always brings up human rights. He did not say he would bring up this specific instance even when he was pressed about directly bringing it up, instead just saying that his views are well known. And I think that's because, behind the scenes, they are still deciding whether they are going to bring it up. If they bring it up, how they bring it up if they actually do when they come face-to-face. Because, instead, they would be basically making the argument, Jim and Poppy, that there's a lot more on the table, and so that remains to be seen how he handles that when they do come face-to-face tomorrow.

The other issue that really stood out in the press conference today was Iran, because it was very clear from the Israeli prime minister and President Biden's comments that they have a difference over how to handle it. They agree on what should be done, which is that Iran never obtains a nuclear weapon, but the Israeli prime minister was saying he wants the free world to use force against Iran if they continue to develop their nuclear program. President Biden put it this way.

(BEGIN VIDEO CLIP)

BIDEN: We mean what we say. They have an opportunity to accept this agreement that's been laid down. If they don't, we've made it absolutely clear, we will not -- let me say it again, we will not allow Iran to acquire a nuclear weapon.

(END VIDEO CLIP)

COLLINS: That comes, of course, after the president also said that the United States would use force against Iran to stop them from getting a nuclear weapon but only as a last resort. Of course, one big question is how he defines that term, last resort. And it's likely a difference than how the Israeli prime minister defines it. Jim and Poppy?

SCIUTTO: Kaitlan Collins in Jerusalem, thanks so much.

So, here with me now to discuss, former State Department Middle East Negotiator and CNN Global Affairs Analyst Aaron David Miller. Aaron, good to have you on.

Let's talk first Iran nuclear negotiations. Given all of the challenges, and there are many, including the fact that Russia was, of course, a party to the previous agreement and the U.S., in effect, if not in a state of war, right, certainly in a state of great hostility, what are the chances that these negotiations reach some sort of agreement?

AARON DAVID MILLER, CNN GLOBAL AFFAIRS ANALYST: If you're talking about the JCPOA, I think the chances are more than zero and less than 50 percent. I still wouldn't rule it out. There are a lot of informed sources who believe that there's a high probability that after Biden's trip, the negotiations will resume in Vienna.

[10:25:06]

Now, resumption, negotiations, in seriousness, in terms of making a deal, are two different things, and these negotiations really, Jim, as you know, the last year-plus, have had two speeds, slow and slower. The concern, of course, is no negotiation and then the constraints and restraints are off and the parties' calculations now begin to change.

SCIUTTO: Let's talk Ukraine, right, because Israel has come under criticism for not more fervently opposing Russia's invasion of Ukraine. I wonder, is the U.S. pushing Israel to take a stronger stance here or is it giving them a pass given Israel's interest in maintaining some room for maneuver in Syria, where, of course, Russia is very active?

MILLER: Lapid, now as prime minister, his comments on Ukraine were tougher, frankly, than former Prime Minister Bennett, who, over the last year, couldn't figure out a way to use condemn Ukraine and Putin in the same sentence. The Israelis have equities in Syria. They are concerned about Jews in Russia and in Ukraine. They don't want to alienate Putin. I think you still have that.

And, yes, the answer is, yes, the Biden administration has given the Israelis a pass on Ukraine and any number of other issues out of fear that if they roil the coalition waters, the coalition would collapse and you know who might stage a comeback. And after a year-plus, that's exactly what's happened.

So I think the Biden administration will continue to tread very carefully so as not to give Benjamin Netanyahu -- they say they're not intervening Israeli politics, but the truth is, based on my experience, we do intervene in their politics and they do intervene in ours.

SCIUTTO: Yes, another a fifth election in four years coming up in Israel.

Both Biden and Lapid said in their public comments they continue support a two-state solution. They did make n new announcements, really no clear effort, right, of renewing substantive negotiations between the two sides. I mean, is the two-state solution still a genuine goal of the U.S., of Israel, because, as you know, many Israelis themselves have given up on it?

MILLER: True, but nobody -- it's like the JCPOA, Jim, and the Iran negotiations. Nobody wants to let it go. It's clearly not ready for prime time. The Israelis don't have the political power to make these decisions given the coalition constraints. The Palestinian national movement is in extreme dysfunction between Fatah and Hamas. And the Biden administration governance about (INAUDIBLE), The Biden administration has other priorities, and they are not prepared and it's understandable to expend the kind of political currency when the gaps between the Israelis and Palestinians on the court issues, Jerusalem, border security, refugees, are as wide as the grand canyon.

So, on this one, Biden would pretend to be interested and Mahmoud Abbas, when they meet, is going to pretend to listen politely. But I don't see much, if anything, coming out of this on the Israeli- Palestinian issue.

SCIUTTO: Yes, those gaps even get wider on issues such as settlements. Aaron David Miller, always good to have you on.

MILLER: Take care, Jim. Thanks so much.

HARLOW: All right. Still ahead for us, we're going to take you live to Southwestern Virginia this morning where more than 40 people are missing after flooding there swept through a rural area. You'll hear from one family that survived after a river cut through their neighborhood.

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