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Trump vs. Pence?; Justice Department Widening January 6 Probe?; U.S. Economic Outlook. Aired 2-2:30p ET

Aired July 26, 2022 - 14:00   ET

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

[14:00:33]

ALISYN CAMEROTA, CNN HOST: Hello, everyone. I'm Alisyn Camerota. Welcome to CNN NEWSROOM.

VICTOR BLACKWELL, CNN HOST: I'm Victor Blackwell. Good to be with you.

The Justice Department is reaching into the Trump White House, widening its criminal probe into the Capitol riot. Marc Short, the former chief of staff to Vice President Mike Pence, revealed to CNN he testified under subpoena before a federal grand jury investigating the insurrection.

Now, Short is the highest-ranking Trump administration official known to have testified before the grand jury. And Pence's former chief counsel Greg Jacob also testified before that grand jury.

CAMEROTA: So, today, Trump and Pence's battle for the GOP plays out in an interesting split-screen in the nation's capital. The former president is back in D.C. for the first time since losing the election and leaving town in disgrace following the Capitol riot.

He is about to give a keynote speech to a conservative group focused on, of all things, law and order. This morning, former Vice President Pence gave a speech urging conservatives to focus on the future and avoid looking back.

But let's begin with the DOJ investigation.

Elie Honig is our CNN senior legal analyst and a former assistant U.S. attorney for the Southern District of New York.

Elie, great to see you.

Why is Marc Short so important to the DOJ?

ELIE HONIG, CNN LEGAL ANALYST: Yes, Alisyn.

Well, this is a big deal because for the first time we know that the Justice Department has gotten inside the White House. Marc Short is the highest-ranking person who we know of who has been subpoenaed and testified in the grand jury. Now, Short was the chief of staff to Vice President Mike Pence. We

don't know what he said in the grand jury. He wouldn't talk about that. But we do know that he previously talked to the January 6 Committee and he detailed this crucial January 4 meeting that happened in the White House in the Oval Office, where Donald Trump and this lawyer John Eastman were trying to pressure Mike Pence to throw out electoral votes for Joe Biden two days later, on January 6.

Now, we know that Short and Pence rejected that idea. And Marc Short was so alarmed that he actually notified Pence's Secret Service detail. He said to the committee -- quote -- "My concern was for the vice president's security. And so I wanted to make sure that the head of the vice president's Secret Service was aware that, likely, as these disagreements became more public, that the president would lash out in some way."

Alisyn and Victor, that's exactly what ended up happening.

BLACKWELL: I mentioned that Greg Jacob also testified before the grand jury. Explain his significance.

HONIG: Yes.

So, Greg Jacob is another important player. He was counsel to Mike Pence. And he really pushed back against John Eastman on this legal theory that the vice president, in his capacity as president of the Senate, had the legal and constitutional authority to just reject certain electoral votes.

At one point, Greg Jacob testified to the committee that he made this, what I think is a really interesting argument, about why that cannot be. Jacob said that he said: "Part of my discussion with Mr. Eastman was, if you were right, don't you think Al Gore might have liked to have known in 2000 that he had the authority to just declare himself president of the United States?"

And, ultimately, according to Greg Jacob, John Eastman acknowledged that his plan would likely violate the federal law the Electoral Count Act and would likely lose 9-0 zero in the Supreme Court. And the reason that's important is, because if they knew that their plan was illegal, that could go to criminal intent.

CAMEROTA: That's such a good Al Gore logic right there, that argument.

HONIG: I know.

CAMEROTA: I hadn't heard that.

So let's talk about the slate of fake electors. We have heard a lot about that in Georgia. How does that play into this?

HONIG: Yes, so this is also something that we know the Justice Department is looking at.

The way this is supposed to work is that, after each state votes, they fill out this sort of ceremonial paperwork where they say we, the state of Georgia, for example, hereby award our 16 electoral votes to Joe Biden. And those people fill out the forms you can see on the left there, where the 16 electors sign their names.

But Rudy Giuliani engineered this seven-state plan to submit false states -- slate of electors, who claimed they had been properly elected for Donald Trump. This covered seven states. We know that Rudy Giuliani was the coordinator. This didn't just happen organically in seven separate states independently. It all flowed through Rudy Giuliani, and we know the committee has looked at that.

And we now have reporting that DOJ is interested in that as well.

BLACKWELL: We have also seen new evidence from the 1/6 Committee this statement that the president was supposed to have given the day after the insurrection with just some lines scratched out and some notes. What's the legal significance?

HONIG: This, to me, is such a revealing look inside the mind-set of Donald Trump.

So this is a draft of the statement that he was planning to give the day after, on January 7. And if we look at what Donald Trump took a pen and crossed out, it includes this statement -- quote -- "I am directing the Department of Justice to ensure that all lawbreakers are prosecuted to the fullest extent of the law" -- end quote.

[14:05:05]

Donald Trump said, no, I'm not saying that.

Imagine that. The day after we have seen people damage the Capitol, assault police officers, and Donald Trump would not make that kind of definitive statement.

Alisyn and Victor, I think that's really telling as to Donald Trump's state of mind, his intent, and what he really felt about the riot the day after.

CAMEROTA: Yes, he doesn't want them prosecuted to the fullest extent of the law. Let's not forget. But...

BLACKWELL: Elie Honig, thank you.

CAMEROTA: Thank you.

HONIG: Thanks, guys.

CAMEROTA: OK, so former President Trump will deliver the keynote address this afternoon at the conservative America First Policy Institute summit.

BLACKWELL: His allies tell CNN they want him to use today's speech to look to the future and focus on crime, schools, the economy, not the 2020 election.

CNN's Kristen Holmes joins us now.

So, what are we expecting, though, from the president, former president?

KRISTEN HOLMES, CNN NATIONAL CORRESPONDENT: Victor and Alisyn, this is being billed as a policy speech. As you said earlier, they are focusing on law and order.

Remember, Republicans believe that higher crime rates will drive people to the polls in the midterms. Allies are hoping, as you said, that he focuses on these issues, and also actually takes this opportunity for two things, one, to set a Republican agenda ahead of the midterms and, two, lay the groundwork for a run in 2024 in a real way, outside of these massive rallies, in which he really just rants and lays out his grievances from 2020.

He's very focused on the past. They are hoping that this is an opportunity for him to focus on the future, to move the party forward. The American -- the institute that we are here with is a group of former Trump administration officials who, even while Trump has been focused on the past, they have been moving forward.

They have been planning for a potential Trump run and even win, some of them talking about what an administration would look like in terms of personnel if you were to win another election. So, again, they are hoping that he can actually stay on message, which, in the past, he really hasn't been able to do since leaving office.

CAMEROTA: So, Kristen, we have been talking about how Donald Trump's vice president and now potential rival, Mike Pence, was also in D.C. today. He spoke at a separate event. How did that go over?

HOLMES: Well, Alisyn, this is really stunning.

I mean, when you really think about what this is, these two men served side by side together in the White House. Now they are here just miles away from where they serve, not speaking to each other and presenting different, separate views of where they think the Republican Party should be going.

They are both on the backdrop of hinting that they will run in 2024, and Mike Pence taking pretty thinly veiled jabs at the former president. Take a listen.

(BEGIN VIDEO CLIP)

MIKE PENCE, FORMER VICE PRESIDENT OF THE UNITED STATES: Now, some people may choose to focus on the past. But elections are about the future. And I believe conservatives must focus on the future to win back America.

(APPLAUSE)

PENCE: We can't afford to take our eyes off the road in front of us, because what's at stake is the very survival of our way of life.

(END VIDEO CLIP)

HOLMES: And you can tell there, talking about moving on from the past, that is very clear reference to what we have seen on the other side from former President Trump, who refuses to move on from the past.

This is messaging coming from Pence. And, again, we have seen him hinting at a potential run in 2024, setting up what would be an epic showdown between the two.

CAMEROTA: OK, Kristen Holmes, thank you very much for all of that.

Let's bring in David Chalian. He's our CNN political director. We also have Nia-Malika Henderson, our CNN senior political analyst, and Joe Walsh is a former Republican congressman from Illinois.

Congressman, let me start with you.

Mike Pence is presenting the case for the future. We assume Donald Trump will be presenting his case for looking back, just because he normally does that. Which one is going to win with Republicans today?

FMR. REP. JOE WALSH (R-IL): Well, Trump will.

Look, there is no Pence-Trump feud or split in this party. And there won't be, Alisyn, until people like Mike Pence and other Republicans stand up and call out Donald Trump and say he's unfit. But even Mike Pence today really didn't do any of that. I mean, think about it. Donald Trump tried to have Mike Pence hung, and Mike Pence today, the only distinction he made was Trump looks a little bit more at the past and I'm going to look a little bit more at the future.

Somebody in the audience asked Mike Pence a question directly. Are there any differences between you and Donald Trump? And the man who tried to have him hung, Mike Pence really didn't say there were many differences.

This is Trump's party, and it's going to remain that way until Pence has the courage to stand up.

BLACKWELL: But, beyond Pence, David, as we look ahead to 2024 matchups, is that not the question?

Policy aside -- maybe they won't be the many policy difference. It's either with Trump or against Trump. Is it not?

[14:10:05]

DAVID CHALIAN, CNN POLITICAL DIRECTOR: Yes, I mean, I think what Mike Pence is doing is building a strategy out of necessity here.

He is interested in running for the Republican nomination in 2024. And he knows he has a bit of a market share problem because of the swathe of the party that remains committed to Donald Trump and Donald Trump's lie about the 2020 election being illegitimate and rigged and stolen. So those folks are not really open, it seems, to a Mike Pence

argument. So Mike Pence is trying to build a strategy of separation from Trump, and, as Congressman Walsh was saying, not really separating himself from not just policy. Just he said he stands and defends everything of the Trump/Biden -- of the Trump/Pence administration.

So it's hard to understand exactly how this path he's walking is going to turn out for him if there's limited market share and he's not really drawing a contrast, except on this one thing of, I followed the Constitution on January 6, and that separates me and actually may make me a little less popular with a majority of folks inside the party.

CAMEROTA: Nia-Malika, we hear that former President Trump, his speech today will be about law and order, which, of course, is dripping with irony, since we just talked to Elie Honig about how the lines he crossed out in the speech on January 7 was prosecuting the violent mob, and, of course, the 140 police officers on January 6, who were, some, grievously injured from the violent mob of Trump supporters.

So how will he thread that needle?

NIA-MALIKA HENDERSON, CNN SENIOR POLITICAL REPORTER: You know, listen, I think, oftentimes, when it comes to Trump, his advisers and people around him have promised that he will say one thing, and when he gets up there, he is the Donald Trump we all know, which is someone who is full of grievances, full of victimhood, and someone who will play the same old hits about the election of 2020 being the biggest fraud and the biggest heist in American history.

So that I think is what we can expect. And, listen, it has worked so far for him, right? He is by far the most popular figure in the Republican Party. He is the front-runner for the nomination. He's all but declared that he's going to run. It's just a matter of at this point when he's going to decide to announce that he's going to run.

So this idea that he even should come in and talk about law and or, that he should come in and talk about policy in the way that a traditional politician would do that and in the way that I think Pence did as well, that is something that Donald Trump has cast aside.

He is not the run-of-the-mill politician. It his worked for him so far. The vast majority of the Republican Party is with him. Sure, there has been some diminishment around the edges in terms of his support, and a sense that maybe somebody like Ron DeSantis is eating into some of his support.

But, by and large, the Republican Party is with him lockstep. They wholeheartedly believe what he is selling in terms of the 2020 election being fraudulent, and this idea that perhaps, in 2024, should he be the nominee, he can sort of redeem the party, redeem himself, redeem the country, even, I think is what his argument, is that you have been stolen from, you have been ripped off, and I, Donald Trump, will make that right in 2024.

That's going to be kind of his argument that looks at the past, but also looks at the future, I think.

BLACKWELL: Congressman, I want you to listen to President Biden here going a step beyond pointing out irony, and just talking about the direct conflict between what happened on January 6 and now talking about being pro-law and order.

Here is President Biden.

(BEGIN VIDEO CLIP)

JOE BIDEN, PRESIDENT OF THE UNITED STATES: You can't be pro- insurrection and pro-cop. You can't be pro-insurrection and pro- democracy. You can't be pro-insurrection and pro-American.

(END VIDEO CLIP)

BLACKWELL: Is there a Republican voice in the arena who's willing to make that case?

WALSH: Well, Victor, there's probably one, and that's Liz Cheney, and she's going to lose in a month.

No. If you say those words as a Republican, your future as a Republican is over. But amen and thank God that President Biden said that. I think it's long overdue. I'm glad that President Biden is speaking out so forcefully against Trump and what he did to lead to January 6.

CAMEROTA: David, there's also Adam Kinzinger, of course.

The congressman just brought up Liz Cheney. We have all seen that on display. And Adam Kinzinger has also been somewhat unplugged, not just going after former President Trump, but today after Tom Cotton, which was interesting.

[14:15:03]

So, let me play a portion of that.

(BEGIN VIDEO CLIP)

REP. ADAM KINZINGER (R-IL): He thinks it's cool to be in front of the base, be like, I'm not even watching the hearing, guys. I'm too cool to watch the hearings, but I already have my mind made up.

Frankly, that probably works in the base. Tom Cotton has built a reputation on acting like the toughest guy on the planet. But he can't even put in front of his eyes a narrative which may challenge his soul, that he would go have to go tell his people the truth.

The people that are lying to you, they may pat you on the head and make you feel good, but they're abusing you, stealing your money, all to stay in power. I have no sympathy for people like Tom Cotton or anybody else like Kevin McCarthy that lies to the base voter.

(END VIDEO CLIP) CAMEROTA: What about that, David?

CHALIAN: Yes, unplugged, as you said, as much as I guess a congressman could be unplugged really.

But there's no doubt Kinzinger and Cheney, obviously, as the two Republicans on the January 6 Committee, are out there day in and day out fighting this fight, totally against the grain of the leadership in their party, of the voters in their party, at least a majority of them.

I think, for Tom Cotton, who very much is considering a presidential run in 2024, Liz Cheney was out trolling him on Twitter too, pushing back on this notion that he forms judgment without actually observing any of the work that the committee has been doing.

So I think you're going to see more and more from this. It's just a very -- I mean, it's two people, right? So it's just such a small chorus of voices, but they remain committed to holding their fellow partisans accountable for the way in which they have chosen to sort of bury their head in the sand about Trump, his actions, his inactions in the lead-up to on the 6th of January.

BLACKWELL: All right, David Chalian, Nia-Malika Henderson, and Congressman Joe Walsh, thank you.

CAMEROTA: New economic numbers out today show consumer confidence slipped for a third straight month.

BLACKWELL: And while Americans appear more worried about the economy, President Biden says he does not believe the U.S. is headed toward a recession.

We will talk about that next.

(COMMERCIAL BREAK)

[14:21:29]

BLACKWELL: Inflation continues to weigh heavily on Americans. The consumer confidence index slipped for a third straight month, just one day before the Fed could make another historic rate hike.

CAMEROTA: CNN business correspondent Rahel Solomon joins us now.

Rahel, what do these new numbers mean?

RAHEL SOLOMON, CNN BUSINESS CORRESPONDENT: So, directionally is what's really important, right?

So we have seen a third consecutive month of declines. Just to put it in context, anything above 100 is considered good. So clearly, this is not that. But it's the direction that the number is moving that's really important.

When we look sort of under the hood of the number and we look at sort of how people are responding to how many say that business conditions are good, well, only 17 percent of survey respondents said that they would rate business conditions currently as good; 24 percent would rate great business conditions as bad.

It's important. Also, it tells us about expectations, how people feel six months from now. And that is actually what really had the biggest impact on that top-line number of. People actually in terms of present conditions, that was actually OK, but it's sort of how people are feeling, the uncertainty that people are feeling six months in the future that really had a negative impact.

It also tells us something about how people plan to spend. And that has been getting quite a bit of attention today. Citi actually put out a note a short time ago saying that more concerning relative to expectations is the sharp large downward movement in plans to make big-ticket purchases, adding that the rapid decline to just 39.5 percent of consumers planning such purchases comes as a surprise and raises the risk that consumer desire to spend is slowing more broadly.

And that, of course, matters because the U.S. consumer is the backbone of our economy. The U.S. consumer is about two-thirds of GDP, of economic activity. So when you start to hear respondents and the American public say that they're thinking about pulling back on big- ticket items, it gets a lot of attention in terms of what that means in the future.

BLACKWELL: We're awaiting this decision from the Fed. What's the expectation?

SOLOMON: So the expectation is half-a-percent to three-quarters-of-a- percent, leaning more heavily on the three-quarters-of-a-percent.

We know that is because inflation is clearly has shown signs of acceleration. So this is all as the Fed tries to get a handle on inflation. I should say we also get Q1 GDP on Thursday. Perhaps that might get a bit more attention this week, because of the environment we're in and the potential that we could see another negative print, and what that might mean in terms of the state of our economy right now.

But you get a consumer confidence report like this on top of consumer sentiment, which is at all-time lows, and it just sort of encapsulates what a lot of us are already seeing in the polling right now, which is people are feeling quite uncertain, pretty pessimistic.

BLACKWELL: All right, Rahel Solomon, thank you very much.

Let's discuss now with chief economist at KPMG Diane Swonk.

Diane, good to see you.

If consumer confidence is down, inflation is high, why would it be a surprise that people are pulling back on spending on big-ticket items?

DIANE SWONK, CHIEF ECONOMIST, KPMG: Well, it's not a surprise. And, in fact, we expected them to sort of pull back a bit because,

frankly, we bought a lot of stuff already to alleviate the monotony of work from home, school from home and the quarantines that we all lived for so long during the pandemic. So some of that was expected.

Of course, now we're seeing more of a deceleration. In fact, spending on goods has already declined. We will get more data on that on Friday. But the GDP numbers this week, it's going to be one of these very strange things where we actually see two quarters in a row of negative GDP growth.

And it gets to without it being a recession, because the labor market is still improving. That's good news. But it's improving with this burn of inflation, and that's burning a hole in consumer wallets. And so what we're worried about is, will we hit a tipping point, even though we're not technically in a recession yet, later this year?

[14:25:07]

And I think the risks of that are very high as we go into the latter part of the year and early 2023. I think rate hikes and to get the inflation under control it. We're going to see much higher unemployment than we have today. And that's what's really hard. And that's what consumers are worried about as well.

CAMEROTA: Well, let me give you two different perspectives on inflation.

So the first is from President Biden yesterday.

(BEGIN VIDEO CLIP)

BIDEN: We're not going to be in a recession, in my view.

My hope is, we go from this rapid growth to steady growth. And so we will 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)

CAMEROTA: OK, so he thinks we're not. And then the director of research at the IMF said this: "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."

So who is right?

SWONK: Well, we will know when we get there. I actually do think we're in store for a rising unemployment that's commensurate with a recession. So that's a euphemism for saying, yes, I think we're going to be ending up in a recession by the time this is all said and done.

At the end of the day, the Fed has staked its place. Fed Chairman Jay Powell has said, listen, as much as a recession is painful, and that's not where they want to go, the pathway to that soft landing of getting that sort of just grinding-down inflation, without a major increase in unemployment, is getting incredibly narrow.

And at the end of the day, the worst mistake would be to allow a repeat of the 1960s and '70s, where we let inflation erode living standards and squeeze profit margins, layoffs compound, a vicious cycle that went on for years. That's worse than recession.

It's -- nothing is good. This is between a rock and a hard place. And there's no way to extract ourselves without there being some pain.

BLACKWELL: Diane, anecdotally some companies are starting to spend and cut back on spending in preparation for a recession, cut back on hiring.

And our latest poll shows that nearly two-thirds of Americans believe that the recession is now. So what's the psychological influence? Can we resign ourselves into a recession?

SWONK: Well, it really is. At the end of the day, it matters what's in your wallet, but narratives matter.

And when you're in an inflationary environment -- one of the things that was interesting in these confidence numbers was how big the dispersion was on people's view of the world. That's what happened last when we unmoored expectations about the future in the 1960s and '70s. So that's something that is a big red flag for the Federal Reserve.

And these narratives taking hold out there, even as inflation cools a bit, it doesn't cool enough, if you really get it baked into how firms behave and how households behave, it's much harder to derail that kind of inflation, and get it cool enough that it just doesn't mean anything anymore.

And that's ultimately the goal, is to have inflation be so insignificant that it doesn't affect our behaviors. We don't have to make to hard decisions at the grocery store. Even though the Fed can't grow food or pump oil, all of those things do shape how we behave about how we spend our money going forward.

And I think narratives are important. And I think that is what we're seeing come through. And the difference between the sentiment measure, which is at a record low of consumer confidence, vs. the Conference Board measure that we just saw today, they are at almost a record gap. They hit a record gap in July -- in June, narrowed a little bit in July.

But the bottom line is, one is more sensitive to inflation. One's more sensitive to the labor market. We haven't had a hot labor market that also burned us with inflation and that -- in this way, in a very, very long time. And that's why you're seeing that record dissonance out there. And that's not good in terms of what it means for the economy.

CAMEROTA: Diane Swonk, thank you for explaining all of that. Great to see you.

BLACKWELL: Basketball star Brittney Griner was back in a Russian courtroom today arguing for leniency in her drug trial. We will talk to one of the lawmakers trying to bring her.

CAMEROTA: And a Texas State Trooper was at the scene of the Uvalde school shooting earlier than previously known. What the new body camera video reveals.

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