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Key Economic Data Released During Critical Week for U.S Economy; Former Pence Chief of Staff Testified Before Grand Jury in DOJ Probe; Today, Trump Back in D.C. for First Time Since He Left White House. Aired 10-10:30a ET

Aired July 26, 2022 - 10:00   ET

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

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[10:00:00]

POPPY HARLOW, CNN ANCHOR: Top of the hour, good morning, everyone. I'm Poppy Harlow.

JIM SCIUTTO, CNN ANCHOR: And I'm Jim Sciutto.

It is a major week for the U.S. economy. Key reports shedding light on consumer confidence will drop. At any moment, we'll bring those numbers to you right away.

While experts believe the measure could fall to its lowest levels since last February, the White House downplaying fears of a recession.

(BEGIN VIDEO CLIP)

JOE BIDEN, U.S. PRESIDENT: My hope is we go from this rapid growth to a steady growth. And so we'll see some coming down. But I don't think we're going to -- God willing, I don't think we're going to see a recession.

(END VIDEO CLIP)

HARLOW: Let's hope he's right. Today's report is the first of many marking the state of the economy, especially this week. Tomorrow, the Fed will make its announcement on interest rates or likely going to hike that benchmark interest rate and second quarter GDP numbers, how much the economy grew or contracted will come on Thursday.

So, let's begin with the economy this hour with CNN Reporter Matt Egan and White House Correspondent Jeremy Diamond.

Matt, we're going to let you look through this data just coming in now. Jeremy, in the meantime, what is the strategy for the White House as they prepare for so many consequential reports on the economy this week?

JEREMY DIAMOND, CNN WHITE HOUSE CORRESPONDENT: Well, what we have seen from the White House is essentially a week of prebuttals ahead of all of these economic numbers this week, in particular those GDP numbers that we are expecting on Thursday.

The White House has been eager to push back on this notion that two consecutive quarters of negative GDP growth automatically equals a recession. Yes, it is a rule of thumb but the White House is really emphasizing here, and trying to educate the public essentially over the last week, that there are all these other economic indicators that also go into that, and that it is not necessarily indicative of a recession.

They are actually correct on that. The National Bureau of Economic Research, which is the nonprofit, nonpartisan body that effectively determines whether or not the U.S. economy is in a recession, also takes other factors into account, including employment, personal income, industrial production. GDP numbers are a significant part of that equation. But if you listen to most economists, they don't believe at this point that we are indeed in a recession.

And that was what the president was saying yesterday when we heard him say that he does not believe the U.S. is in a recession, pointing to the low unemployment rate in the country, which remained at 3.6 percent earlier this month, continued job growth with over 300,000 jobs created last month as well.

And so the White House has been doing a full-court press this week. We have heard from top economic advisers from the treasury secretary to a member of the Council of Economic Advisers to the president's top economic adviser, Brian Deese, all pointing to that strong jobs market as one of the factors why the U.S. is not in or headed immediately into a recession.

But, of course, those numbers this week, and the consumer sentiment will all play very heavily into whether we eventually do move into that feared recession.

SCIUTTO: All right. Matt Egan, you've been looking at these numbers. What do they tell us on consumer confidence?

MATT EGAN, CNN BUSINESS AND ECONOMY REPORTER: Well, Jim and Poppy, listen, the American people are just not happy with the economy right now. The cost of living is just way too high. Consumer confidence in July declined for a third consecutive month. And consumer's assessment of the current situation, the current business environment, that fell sharply. And the conference board said that that is a signal of a possible slowdown in the economy of serious recession risks.

And what's interesting is that this latest decline in consumer confidence is occurring at a time when gas prices have actually come down pretty significantly. The national average is down by 69 cents from the record high, down to $4.33 a gallon. That's not cheap but it is moving in the right direction.

But, of course, this is not just about prices at the pump. Inflation is an economy-wide problem. Consumer prices went up in July -- in June rather at the fastest pace in more than 40 years and this is a problem at the supermarket, at restaurants, at car dealerships and this is even causing some problems for major companies. [10:05:02]

Walmart just issued a rare profit warning, saying that their customers are being impacted by high food and fuel prices, and it's forcing Walmart to cut prices. That is driving Walmart's stock down.

And we're also hearing more warnings from economists, the IMF this morning downgrading its global growth forecast and ramping up its inflation outlook. The IMF summed it up this way. They said, quote, the outlook has darkened significantly. The world may soon be teetering on the edge of a global recession only two years after the last one.

Jim and Poppy, we don't know yet if a recession is in the cards but we know that consumers are hurting right now.

HARLOW: Yes. Matt Egan, thanks very much. I wish the numbers were better but it is what it is. Jeremy Diamond, thank you.

Let's bring in Business Correspondent Rahel Solomon and Catherine Rampell, CNN Economics and Political Commentator.

Catherine, to you. I thought my colleague, Paula Monica, wrote a great piece this morning about basically like if it feels like a recession, does it matter if it technically is one or not for most people at home? And the reality is, from those consumer confidence numbers, from how much it costs to buy groceries for your family, to rent, to on and on, it feels like a recession. And, oh, by the way, the IMF says watch out, because the rest of the world may not be far behind.

CATHERINE RAMPELL, CNN ECONOMICS AND POLITICAL COMMENTATOR: This is an excellent point. Whether or not the current economic conditions eventually earn the dreaded R brand, the brand of recession, and we won't know for a while because it's that independent committee that decides and they take a while, whether or not it gets that brand, consumers are very unhappy. They're feeling it because they're spending more at the grocery store, they're spending more on rent, they're spending more on almost every category of spending. Their paycheck isn't going as far.

And so whether or not we get that official designation, if people are suffering, that suffering is valid, right? And that will have implications for how they behave going forward and how they vote going forward.

So, there are a lot of Republicans presumably who are eager to get that recession brand on the current moment. But even without it, I think this is still very troublesome for Democrats as we head into the midterms.

SCIUTTO: No question.

Rahel Solomon, the contradictory information, right, is the job market, which remains extremely strong. So, is that rare to have such low unemployment with negative growth? RAHEL SOLOMON, CNN BUSINESS CORRESPONDENT: It is. In fact, it has some wondering what would a recession even look like with job growth, what it is, and with unemployment at 3.6 percent. This is part of the reason why Treasury Secretary Janet Yellen said over the weekend that you just don't see this type of job growth in a recession. We're talking about 3.6 percent unemployment.

And, Jim and Poppy, when you look under the hood of that number, there are 21 states right now that had unemployment at 3 percent or lower.

So, people, by and large, are employed and, by the way, there is also very strong demand for workers. There are about 1.9 open jobs for every 1 person looking. Wages are increasing, but the problem is, even with those wage increases, inflation is outpacing that. So, it's almost as if you are making more but can afford less.

HARLOW: So, Catherine, Senator Elizabeth Warren wrote a really interesting op-ed in The Wall Street Journal yesterday basically begging the Fed don't hike rates a lot this week. I mean, they're likely going to 75 basis points again. But here is her argument. Low unemployment, high inflation are painful, but a Fed-manufactured recession that puts millions of Americans out of work without addressing high prices would be far worse. She's saying it's worst for folks to fall into a recession, not have paychecks at all as they lose their jobs than to have these really high prices.

The Wall Street Journal Editorial Board today points out, well, Senator Warren was one of many who was a big advocate for a lot of stimulus and a lot of spending, not only in the Biden administration but the Trump admin did this, too. But I wonder what make of her argument that a recession would be worse than this inflation.

RAMPELL: No doubt, nobody wants a recession. The Fed does not want a recession. In fact, they keep saying over and over again, they're hoping for a soft landing, meaning that they're able to cool down demand without actually tipping us into recession. That will be challenging.

The reason why we don't want that to happen is because, yes, recessions are extremely painful. Unfortunately, we do have a sustained period of high inflation, and this may be the most effective medicine that is this being rate hikes. It may be the most effective medicine we have available.

And, in fact, if Senator Warren and other Democrats would like the Fed to hike less aggressively, I think that they should be -- the fiscal policymakers, lawmakers, as well as the president, should be doing more to take pressure off of the Fed, doing things like repealing tariffs or suspending some restrictions on shipping that make shipping things more expensive, or fixing our legal immigration system, because there are a lot of bottlenecks right now that are contributing to labor shortages.

[10:10:06]

There are some modest things that Congress could be doing right now, that Biden could be doing right now that would take some pressure off of the Fed but they don't seem willing to do those things. So, yes, the Fed has to hike more aggressively even though they don't want to.

SCIUTTO: Recessions -- I mean, well, economic data can be self- fulfilling prophecies, can they not, Rahel Solomon, that consumer confidence, they read the signals, they become less confident and then that feeds less spending. When the G.M. CEO, Mary Barra, says the company is preparing for a possible recession by reducing spending, limiting hiring, which then has its own carry-on effects here. There's a possibility of a snowball effect, is there not?

SOLOMON: It's a great point. It's the psychology of inflation, right, and the psychology of a recession. And there are critics sort of warning, let's not talk ourselves into a recession, in other words, we talk about a recession, we feel like we're in a recession, we think we're in a recession, so we behave like we're in a recession, right? Maybe we start to pull back on major purchases. Maybe we start -- we're already seeing people, by the way, pull out in the mortgage market, right, in the housing market. People are already sort of sitting it out, that largely being because of mortgage rates.

So, yes, the idea, Jim, is that because psychologically, we feel like we're in a recession even if we're not technically in a recession, we start behave like it with our dollars.

SCIUTTO: Yes. Well, we'll be watching closely. Catherine Rampell, Rahel Solomon, thanks so much to both of you.

Now to major developments in the criminal investigation by the DOJ of the January 6th attack on the Capitol. In a new CNN interview, the former chief of staff to the former vice president, Mike Pence, Marc Short reveals he has testified under subpoena before a federal grand jury investigating the insurrection. This, by the way, is the DOJ investigating criminal exposure.

HARLOW: Yes. It's a really significant development. Short is the highest profile witness known to have testified before that DOJ grand jury. Congressman Adam Kinzinger, a Republican member of the January 6th select committee, echoed criticism that DOJ has faced for its handling of this investigation. Listen to this.

(BEGIN VIDEO CLIP)

REP. ADAM KINZINGER (R-IL): There was a lot of frustration, just kind of personally for the last, I guess, year-and-a-half, like what's DOJ doing.

Obviously, we have two different interests. Ours is to get to the bottom of what happened, put out recommendations, the Justice Department is to look at any possible criminality. I just have to ask, what have they been doing for the last year-and-a-half?

(END VIDEO CLIP)

HARLOW: What have they been doing? I mean, Evan Perez, our Senior Justice Correspondent, joins us now. So, I mean, that's significant criticism that I don't think DOJ will respond to. But what are you learning about Short's cooperation with this probe?

EVAN PEREZ, CNN SENIOR JUSTICE CORRESPONDENT: Well, Jim and Poppy, this is a major development that we learned and reported on last night, which is that Marc Short, who is the former chief of staff to former Vice President Mike Pence, and Greg Jacob, his counsel, both have now testified to the grand jury. This is a grand jury that is looking broadly at the scheme to get Mike Pence to set aside the election results and, secondly, this effort to have these fake electors who could essentially keep former President Trump in office well after the election, obviously.

And so what this means is that, you know, the Justice Department is doing some of the things that I think that Representative Kinzinger has been wanting them to do, which is to look more deeply at what happened, what led to the violence on January 6th.

Listen to Jacob describe at least some of his interactions with the former president and with John Eastman, who his lawyer, who was pushing Pence to set aside the election results.

(BEGIN VIDEO CLIP)

GREG JACOB, FORMER CHIEF COUNSEL TO FORMER VICE PRESIDENT PENCE: We had an extended discussion an hour-and-a-half to two hours on January 5th. And when I pressed him on the point, I said, John, if the vice president did what you're asking him to do, we would lose 9-0 in the Supreme Court, wouldn't we? And he initially started, well, I think maybe you would lose only 7-2. And after some further discussion, acknowledged, well, yes, you're right, we would lose 9-0.

(END VIDEO CLIP)

PEREZ: Jim and Poppy, you have to I imagine that Jacob would have said some of these very things to the grand jury when he testified recently.

SCIUTTO: So, fit this into the broader investigation, if you can, here, because there's still continuing questions about how high this goes, right? And what is the current Justice Department footing on whether they would go after potentially a former president?

PEREZ: That's a great question. And, look, and I think the importance of this is to underscore how huge it is for the Justice Department to bring in these close aides to the former vice president into the grand jury. At a minimum, we know that Greg Jacob and Marc Short were in a meeting on January 4th where Trump and Eastman are pushing Pence to do this thing that we know is unconstitutional, it was illegal.

[10:15:00]

And so, at a minimum, we know that the prosecutors, the investigators have reached now into the Trump White House. We know that they are looking into possible crimes related to overturning the election. So, if you're Donald Trump, this may not be a sign necessarily that you're directly under investigation. But what this means is that prosecutors believe that the crime occurred in that effort, and you should be very worried.

And so, again, I think one of the criticisms is the Justice Department is moving very slowly, right, compared to the congressional investigation. But a lot of this has been going on behind the scenes, and so I think, you know, this is going -- first of all, I think it's reaching into the White House in a way that a lot of people did not realize until now.

SCIUTTO: And Jeffrey Toobin made the point last hour that if you look at past criminal prosecution, such as in Iran-Contra, it took a couple of years then too. These things don't move so quickly. Evan Perez, thanks very much.

PEREZ: Thank you.

SCIUTTO: Still to come, the Republican tug of war, as both Donald Trump and Mike Pence return to D.C. Today can with big speeches, very different speeches. What this spells for 2024, next.

I'm also joined by Democratic Congressman Mike Quigley. He just returned from a visit to Ukraine. What did he find there?

Also, whether Speaker Pelosi should really visit Taiwan, there are genuine concerns about inflaming the relationship with China.

HARLOW: And later, here in the United States, wildfires spreading at unprecedented speeds, really unbelievable flooding. Look at St. Louis on the right-hand side of your screen. The tangible and political pressure on Joe Biden to declare climate an emergency this week.

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HARLOW: So, just hours from now, former President Trump returns to Washington for the first time since he left office. He is going to give a keynote speech at the Conservative America First Agenda Summit.

SCIUTTO: Well, this is remarkable. Trump's former Vice President Mike Pence is also in D.C. Today. He spoke just in the last hour before a youth GOP audience, making the arguments conservatives need to focus on the future, reference to not focusing on the 2020 election, it seemed. Have a listen.

(BEGIN VIDEO CLIP)

MIKE PENCE, FORMER U.S. VICE PRESIDENT: As I said, I came today, not to look backwards, but to look forward. The truth of the matter is, now more than ever, conservatives need to be focused on the challenges Americans are facing today.

But in order to win, conservatives need to do more than criticize and complain. We must unite our movement behind a bold, optimistic agenda.

(END VIDEO CLIP) SCIUTTO: Joining us now is Republican Strategist Sarah Longwell and Scott Jennings, former Special Assistant to President George W. Bush. Good to have you both on.

Sarah, you've been conducting focus groups, weekly focus groups with 2020 Trump voters. I wonder, are they desperate for a Trump rerun for 2024 or Mike Pence, do they like either of those candidates for 2024?

SARAH LONGWELL, PUBLISHER, THE BULWARK: Yes, I'm not sure it's either. Right now, there are a little more in the Ron DeSantis mood. Although, when it comes to a Trump/Pence matchup, it would be Trump all the way.

Mike Pence is really in the sour spot with GOP voters. The Trump acolytes think that he is a traitor, they think that he is a RINO. Actually, I watched his whole speech. I was watching the comments go through. They were booing Mike Pence, they were calling him a RINO, they were calling him a traitor. And so the problem for Mike Pence though is that the swing voters or the people who were a little more Trump skeptical, who I think he's hoping to get a foothold with, they actually watched him kind of nod by Trump for four years. And so they don't particularly care for him either.

And so I have seen almost no appetite for Mike Pence. In fact, they don't really want these establishment, sort of old guard Republicans at all. They're much more interested if not in Trump himself, then at least the American First wing of the Republican Party emerging.

HARLOW: Scott, you cannot overstate how stunning it would be to see a head-to-head match between a former president and his former vice president. And, by the way, if that's what we see for 2024, and, by the way, Pence has not said a lot about the insurrection, he has not said a lot about the day where people were chanting, hang Mike Pence, or the president said he was disappointed in him, right? There's so much more he could say about what is indefensible on that day but he hasn't.

SCOTT JENNINGS, CNN POLITICAL COMMENTATOR: Well, I think Mike Pence would say actions speak louder than words. What he did on January 6th and standing up to the mob and standing up to the intimidation tactics deserves to be praised and noted every time we talk about it.

HARLOW: No doubt.

JENNINGS: Regarding the political ramifications of him running in 2024, I think a few things can be true at the same time. Number one, he's absolutely earned the right to make the case he's making. I also watched the speech. He checked every single box on policy that any Republican or conservative would want you to check today.

Number two, he did get asked a question about Trump, and whether there is a division. And he said he didn't think they had a division on policy but they had a division on focus. He used the word, focus, and he talked repeatedly about the need for Republicans to look to the future. I think several Republican candidates are going to make that case. So, the question is, which of them is going to have the personality skills, the candidate skills to make that case stick against Donald Trump.

[10:25:01]

And I think Sarah has an interesting point about whether Republican voters think Mike Pence is going to be that guy.

But that's what campaigns are for. He's going to have a chance to do that and we'll see if he can.

SCIUTTO: There was a time, and not long ago, where the conventional wisdom was, no one could stand up and attempt to challenge Trump in 2024. We're seeing his former vice president might speak openly about a different path forward. We've seen Nikki Haley tweet about the possibility of running, Ron DeSantis certainly not taking his name out of the ring, right, as it were.

I wonder, Sarah Longwell, do you see a fairly wide open race for the Republican nomination? And in your view, does a Trump-like candidate help or hurt Republicans in a general election?

LONGWELL: I'm not sure I would call it wide open. I think that Trump still absolutely has, you know, a hard core base. He has an advantage.

But one of the things I've seen in the focus groups lately really since the January 6th committee happened is that a lot of these Republican voters are worried that Trump can't win. I think that, you know, people ask whether did the January 6th hearings break through, I think it's less that they've broken through and more that they have seeped in, and people are worried that Trump just has too much baggage but they still like Trump and people that are from that combative sort of style.

There is this Russian expression, the appetite increases while you're eating. And what happened with Trump is that people have really come to crave his combative style of politics that the Republican old guard, the establishment, doesn't really embody, but somebody like a Ron DeSantis does.

And I think there's a lot of people who see that Trump -- you know, it's funny that something the voters say in the focus group all the time, it seems like an obvious point, is they say, look, if Trump runs again, he only gets four years. But if one of these other people run, they get eight years.

And so I think some of these other Republican candidates are seeing a bit of opening with these voters, but they are going to do it much more as Trump imitators than they are as Trump combatants.

HARLOW: That's a really interesting point, Sarah.

I mean, Scott, Margaret Hoover, who is the host of Firing Line, but also who worked for many years as a Republican consultant for Republican politicians, said to us yesterday, essentially, the problem is, if a whole lot of Republicans jump into the primary against Trump, you get Trump, right? And she does not want to see Trump as the candidate for your party, as was, she said, is what we saw happened previously in 2016.

I wonder if you agree with her assessment, that the party needs to coalesce around a few strong folks to jump in and not '16.

JENNINGS: Well, she's exactly right. Fragmentation is Trump's best friend. I mean, he got 45 percent of the vote in the 2016 primary. It looks to me right now about half the party may want to do him again, and half the party might want something else, and that's subject to change based on the campaign. But in our system, you have winner take all by states. You don't have to get a majority of the votes to get all the delegates. And so that is working in his favor.

Last time, he had a contested primary. It did not collapse soon enough. I do think that people see weakness in him. Otherwise, you wouldn't see so many people planning presidential campaigns. By my sense is, you're going to see some of these people that think they might have a chance to shake out a little earlier than they did in 2016.

So, I would I think coalescing could occur sooner rather than later if you have any chance of stopping him from getting the nomination.

HARLOW: All right. Scott Jennings, Sarah Longwell, thank you both very much.

JENNINGS: Thank you.

HARLOW: Well, ahead, record flooding and raging wildfires. We are seeing the devastating impact of climate change across the country play out before our eyes this week. And now congressional staffers are calling on President Biden to take, quote, ambitious and assertive action on climate change. Will he?

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