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Jan. 6th Committee Showing Increased Interest In Trump's Cabinet; Treasury Secretary Speaks On State Of Economy; Biden, Chinese President Speak As Tensions Rise Over Possible Pelosi Trip To Taiwan; North Koreaa: Fully Prepared To Mobilize "Nuclear Deterrence"; Kremlin's Lack Of Meaningful Response To Prisoner-Swap Deal Frustrates White House. Aired 1:30-2p ET

Aired July 28, 2022 - 13:30   ET

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

[13:30:00]

PAUL CALLAN, CNN LEGAL ANALYST: And of course, Mick Mulvaney, like many of these other people, was right in a good seat to watch the president at all times. He was chief of staff, the gatekeeper for the president.

Now the president has had a lot of chiefs of staff. Mulvaney was the third. Now the fourth is Mark Meadows. So there's been a staggering turnover in staff in the Trump administration.

But I think they want to look at all of these people. They're insiders. They would hear things. So this is kind of part of any investigation. You talk to people who know people to see if you can develop information.

FREDRICKA WHITFIELD, CNN HOST: For a long time, they were all either reluctant or refused to spill the beans. What do you suppose is the impetus for this kind of cooperation?

CALLAN: Well --

WHITFIELD: Steve Bannon? Does that have something to do with it?

CALLAN: I would say it has an awful lot to do with him. People who ignore congressional subpoenas now know that those subpoenas will be enforced and may be facing trial and possible jail if you don't respond to the subpoenas.

WHITFIELD: OK. Then there's Mike Pompeo. He is likely to cooperate and it could come in terms of an interview with the January 6th commission as early as this week and maybe even flows into next week.

What does he have to bring to the table on this?

CALLAN: That's a hard one to answer. He was close to Trump for a long period of time.

WHITFIELD: Yes.

CALLAN: A lot of people think Pompeo may have presidential ambitions himself. And of course, I think Pompeo will not want to anger the Trump MAGA base because that becomes an important constituency for anyone looking to be president.

So I'm kind of doubting you're going to get anything spectacular out of Pompeo. But he has said critical things about President Trump in the past.

WHITFIELD: Now CNN learned a former aide to Trump Chief of Staff Mark Meadows, Cassidy Hutchinson. I mean, all of them are cooperating with the Justice Department's inquiry.

What more can they add? Especially with Cassidy Hutchison? People thought they heard everything during those hearings. What might pique the interest of DOJ? With what would they probe further on?

CALLAN: DOJ has the ability to go a lot deeper in questioning a witness. Obviously, the committee has limited resources, limited time to interview so many witnesses. But the Justice Department has been investigating now for well over a year.

And when they are looking at a witness, they are not just looking at the headline testimony. They are looking at who she knows, who she can direct them to, who might know other people that the Justice Department can go after.

And then they start to turn people to become informants and favorable witnesses for the investigation. This is standard investigative techniques. I'm not at all surprised that Justice is doing this.

WHITFIELD: So if anything, the hearings just helped pick up speed?

CALLAN: Yes. They did help to pick up speed. And there's --

(CROSSTALK)

WHITFIELD: For DOJ?

CALLAN: There's something else going on here as well. And that is the committee has continued to pique interest in these committee hearings. They are not going to resume formally until September.

But certainly, all of these little hints about what's coming up, it's previews of coming attractions that are keeping public interest high in this hearing.

WHITFIELD: Yes, keeping us on the edge of our seats.

Paul Callan, good to see you.

CALLAN: Nice seeing you.

WHITFIELD: Thanks so much.

[13:33:22]

All right, we'll be right back. (COMMERCIAL BREAK)

[13:38:19]

WHITFIELD: On this day a lot of economic news. Let's listen to Janet Yellen at the Treasury Department.

JANET YELLEN, U.S. TREASURY SECRETARY: The reconciliation package announced yesterday will also help ease inflationary pressures by lowering some of the biggest costs families face.

Including energy, health care, and prescription drugs, all while making historic investments in fighting climate change and reducing the deficit.

Importantly, this bill will also make sure we finally have the resources we need to ensure that wealthy Americans are not a able to avoid paying the taxes they owe.

These efforts are long overdue and Congress should pass it immediately.

This context, including the successes over the last year and the global challenges we face, is critical in understanding today's GDP data.

Most economists and most Americans have a similar definition of recession. Substantial job losses and mass layoffs, businesses shutting down, private-sector activity slowing considerably, family budgets under immense strain, in sum, a broad-based weakening of our economy.

That is not what we're seeing right now when you look at the economy. Job creation is continuing. Household finances remain strong, consumers are spending and businesses are growing.

[13:40:00]

As one example, in the last three months, our economy has created over 1.1 million jobs. In the three months, beginning each month -- each modern recession, outside of the pandemic, our economy lost 240,000 jobs on average.

Spending by businesses and consumers, the core of our economic activity rose by 3 percent in the first quarter of this year and continued to expand in the second.

Industrial output, the measure of our manufacturing, mining and utility sectors, has shown strong average growth over the first half of the year compared to sharp average declines during past recessions.

In the context of today's report, it's important to look beyond the headline number to understand what's happening.

The contraction in GDP was driven primarily by the change in private inventories, a volatile component of GDP which subtracted over 2 percent off quarterly growth.

Today's report shows continued expansion in consumer spending overall, and in services in particular. In addition to notable strength and in net exports.

Overall, with a slowdown in private demand, this report indicates an economy that is transitioning to more steady, sustainable growth.

This path is consistent with one that eases inflationary pressures while maintaining the labor market progress of the past 18 months.

While our economy has been resilient in the face of numerous shocks over the two years, I should also stress that there are numerous risks on the horizon. Many of them global that we remain highly attuned to.

They include the outcome of the war in Ukraine, COVID lockdowns in China, and pandemic-related supply chain snarls. These factors make predicting the future difficult. And we must be clear eyed and vigilant about the threats they pose.

WHITFIELD: Treasury Secretary Janet Yellen making a few points there. But two of the more notable ones, she's echoing a similar sentiment that we heard from President Biden urging Congress to pass that $433 billion new spending package that more Senators are now on board.

The president earlier saying the House needs to pass that today. And of course, the Senate getting stronger support on it.

And then the treasury secretary also helping to define whether we are in a recession. She says, no, she does not believe that all the indicators are there because job creation is continuing and businesses are growing.

We'll keep tabs on her remarks there from the Treasury Department.

And now for the first time in four months, President Biden has spoken with his Chinese counterpart, President Xi Jinping. This morning's call comes with relations between the countries at its lowest points.

And now tensions are escalating over House Speaker Nancy Pelosi's possible trip to Taiwan. It has triggered warnings from Beijing and has provoked alarm in Washington.

I want to bring in Leon Panetta. He was CIA director and then defense secretary in the Obama administration.

Mr. Secretary, good to see you.

How bad, in it your view, is the state of U.S./Chinese relations right now? How important are these discussions that just took place earlier with President Biden?

LEON PANETTA, FORMER CIA DIRECTOR & FORMER DEFENSE SECRETARY: There's no question that we're at a low point in terms of our relationship with China. I think it was important for President Biden and President Xi to have this conversation. There's an awful lot to talk about, not only with regards to what

happens with Speaker Pelosi's trip but, more importantly, what happens on trade, what happens with regards to Ukraine, with happens with regards to our general relationship with China.

So I think there's a lot to discuss. I'm glad that that conversation was held. Whether it makes a difference or not remains to be seen.

WHITFIELD: And then there's Speaker Pelosi's potential trip. She's a long-time critic of China and China's government objects to foreign visits to Taiwan.

As they are viewed -- those kinds of visits are viewed as a show of support. Does the risk and reward of a visit to Taiwan balance out in your view?

[13:45:01]

PANETTA: Well, there's a fundamental principle involved here, which is that democracies are free to send their people and their representatives to visit other democracies anytime, anywhere, any way they want. And that dictatorships do not determine what democracies ultimately do here.

The reality is that we have had a succession of high-level visitors go to Taiwan. Not only key representatives in the Congress. We've had former secretaries of defense. Jim Mattis and others go there without any incident.

And I think Speaker Pelosi doesn't represent anything that different.

It is a tense time. I understand China has serious internal problems. President Xi is trying to divert attention from those problems.

But I do think it's very important for the United States to support the basic principles that democracies should be able to visit each other without interference.

WHITFIELD: So you think she should go?

PANETTA: I think it's a judgment that obviously Speaker Pelosi will make. She's been on a lot of trips throughout her career. She's had controversial trips in the past. I think it's her call.

In many ways, if she makes the decision to do this trip, then the United States ought to back it up. If she makes the decision to delay it, the United States ought to support that as well. We ought to speak with one voice.

In addition to that, if she decides to delay, we ought to make clear we're going to continue to send high-level representatives to Taiwan regardless of what happens this this situation.

WHITFIELD: Finally, I want to ask you about North Korea. It says it's prepared to mobilize, quote, "its nuclear deterrence." How worrisome do you find that threat or that language? PANETTA: North Korea is always worrisome because you're never sure

exactly what they will or will not do.

It's very important for the United States, our allies, South Korea, Japan, Australia and others in the Pacific to make very clear to North Korea that they should not take any steps that are threatening to the security of that region.

That message needs to be sent loud and clear to North Korea. The United States and our allies, just as we have with regards to Ukraine, need to come together and send a very clear message that there's a line that cannot be crossed by North Korea.

WHITFIELD: All right, Leon Panetta, a pleasure. Thank you so much.

PANETTA: Good to be with you.

WHITFIELD: A deal is on the table. The U.S. is willing to give up a convicted Russian arms dealer for Americans Brittney Griner and Paul Whelan. The latest on this unusual public offer, when we come right back.

(COMMERCIAL BREAK)

[13:52:51]

WHITFIELD: Biden administration officials are frustrated that Moscow hasn't given a meaningful response to a prisoner swap deal.

President Biden personally approved the deal that would free Russian arms trafficker, Viktor Bout, in exchange for Russia's release of Brittney Griner and Paul Whelan.

Bout's nick name is the "Merchant of Death." He's serving a 25-year prison sentence.

Jonathan Franks is a crisis management consultant who worked for the April release of Trevor Reed.

Good to see you.

So, Russia had detained the U.S. Marine veteran for almost three years. I'm talking about Trevor Reed. And you were instrumental in helping to secure his release.

So, now that the Russians have been interested in getting Bout fair very long time but then earlier today said there's no agreement for now, how do you read into that? What's going on?

JONATHAN FRANKS, CRISIS MANAGEMENT CONSULTANT & SPOKESMAN, "BRING OUR FAMILIES HOME CAMPAIGN": Thanks for having me, Fred.

I just don't know. It's hard to make -- it could just be posturing on the Russians' part. They had made getting Viktor Bout back, as you mentioned, a national priority since 2016. So, ultimately, I think they'll take the deal. WHITFIELD: Oh, you do? OK.

And so --

FRANKS: I do, ultimately. But they may troll us a little bit on the way.

WHITFIELD: OK. To get extra attention.

What do you think the conditions will be? You know, if the deal means here's the prisoner swap, does it mean free and clear, Whelan and Griner coming home? Or does it mean some time spent in Russia for a period of time and then coming home?

FRANKS: In theory, it could be either way. But I would expect that once the deal is struck, the transfer will happen on a runway somewhere relatively quickly, assuming the deal is actually struck.

WHITFIELD: Right. And, you know, and assuming that it is struck -- exactly, those are powerful words because one would think that Secretary of State Blinken wouldn't say it's a substantial proposal if he did not feel really confident that the Kremlin would accept.

[13:55:00]

FRANKS: I think that's exactly right. And I have a lot of faith in Secretary Blinken.

And you know, sending Viktor Bout home, losing about five years on his sentence, pales in comparison to the amount of time we'll get off Whelan's sentence and are likely to get off what will be a bizarrely harsh sentence on Brittney Griner.

WHITFIELD: Is it your certain or worry that this might be the start of or perhaps a continuation of Russia's leverage over other countries, particularly the U.S.? It wants something, so it will detain Americans when they --

(CROSSTALK)

FRANKS: Absolutely. They have -- they are playing the hostage diplomacy game almost along the lines of the Iranian business model. So, I think they will absolutely use taking civilians hostage to accomplish their geopolitical goals. They've proven that.

WHITFIELD: Back to Viktor Bout, I mean, he's a very dangerous person. He was convicting of conspiring to kill Americans and arming terrorists. Is this, in your view, a good deal, a good swap, a good arrangement?

FRANKS: Yes. Because Viktor Bout is not in prison for the "Merchant of Death" allegations. Those were never charged. I'm not sure they could be charged.

He's in jail because the DEA went out and set up a crime for him and he fell headfirst into their trap somewhat enthusiastically. So, I think, at this point, even his sentencing judge, I think, is on

record to CNN in support of this deal.

I mean, the DOJ asked for a life sentence on Mr. Bout, and the judge gave him the mandatory minimum and still has said that she thinks that's unfair.

WHITFIELD: Jonathan Franks, we'll leave it there for now. Thanks so much.

FRANKS: Thanks.

WHITFIELD: All right. Heavy rains overnight have unleashed flash flooding in eastern Kentucky. At least three people are confirmed dead so far. Up to eight inches of rain pounded some areas, and more is possible today.

The water rose so fast that some people were stranded on top of their homes and cars.

Kentucky's governor said it's some of the worst flooding that his state has ever seen.

(BEGIN VIDEO CLIP)

GOV. ANDY BESHEAR (D-KY): What we are going to see coming out of this is massive property damage. We expect the loss of life. Hundreds will lose their homes.

And this is going to be yet another event that it's going to take not months, but likely years, for many families to rebuild and recover from.

(END VIDEO CLIP)

WHITFIELD: Also today, JetBlue Airways has just announced that it will purchase Spirit Airlines. Combining these two companies would create the fifth-largest airline in the nation.

Spirit was caught between being absorbed by either JetBlue or Frontier. But JetBlue's offer may end up being worth $1 billion more than Frontier's.

All right. Thanks so much for joining us.

The news continues next with Alisyn and Victor right after this.

(COMMERCIAL BREAK)