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Trump Allies Continue to Claim Political Motivations Despite Judge's Intentions of Transparency for Releasing Affidavit; Powell Warns of "Some Pain" to People Amid Fight to Tame Inflation; Key Inflation Report Shows Some Cooling in July; Biden's Student Loan Relief Plan Sparks Debate, Mixed Reactions; Robb Elementary Student Demands More Officers Turn in Badges. Aired 2:30-3p ET

Aired August 26, 2022 - 14:30   ET

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

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[14:33:04]

VICTOR BLACKWELL, CNN HOST; Allies of the former president are now responding to parts of the Mar-a-Lago search affidavit that were released.

His spokesperson, Taylor Budowich, tweeted this:

"The release of the heavily redacted, overtly political affidavit only proves that the Biden administration is desperate to cover up their unprecedented and unnecessary raid against President Donald J. Trump."

"This is a grave travesty. And what is unredacted only further supports President Trump's position there was no reason for a raid. It is all politics."

ALISYN CAMEROTA, CNN HOST: CNN's Gabby Orr joins us. And Kim and Phil are back with us.

So, Gabby, we've heard this before. It feels like when the Trump team doesn't like being investigated, they say it's all politics.

GABBY ORR, CNN REPORTER: Yes, absolutely. They seem to be leaning into how many redactions were contained in the version of the affidavit that was unsealed this afternoon. Kind of a bizarre way to approach this.

But both Trump and his spokesperson, Taylor Budowich, have said now on social media platforms that this was a heavily redacted document.

But at the same time, they're using the unredacted parts, the parts made public for us to review, in order to build out their defense. As you said, Alisyn, is very political.

I want to read you quickly part of a post to Truth Social that Donald Trump just shared moments ago.

He said, "Affidavit heavily redacted. Nothing mentioned on nuclear. A total public relations subterfuge by the FBI and DOJ."

And then he continued to tout his cooperation with federal investigators and the National Archives, which is something that he and his team have been maintaining that they've been doing for months now.

They said they cooperated all along. But of course, we know that isn't the case. We know that it took months and months for Trump's team to finally allow National Archives to retrieve those 15 boxes from Mar-a- Lago initially this January.

[14:35:02]

And then it took a subpoena in order to get them to turn over further classified documents to federal investigators when they visited Mar-a- Lago in June.

So, they're really leaning into this politically, trying to find a way to spin this in a way that's positive for the former president, who has spent the past few weeks since the search at his home claiming that he's never been in a better position for 2024, and that Republican enthusiasm is surging around him because of this targeting.

BLACKWELL: Phil, there are obviously several investigations surrounding the former president. This one now about the records. Of course, we've discussed for months the January 6th investigation.

But you see that there's an overlap between the concern over the concern over these documents and the president's lies about the 2020 election. Explain that.

PHIL MUDD, CNN COUNTERTERRORISM ANALYST: It's pretty simple. Let's go to one of the facts we saw today, that is what was in the boxes when they were acquired. A whole mix of material, including things like news clips, printouts and top-secret information.

So let's look at a standard transition of power where you authorize the White House staff to clean up the White House so that you can ensure, when you move back home, everything is taken care of.

This president didn't acknowledge the loss, didn't call to concede, didn't host Joe Biden at the White House, which is obviously a tradition among presidents.

And until January, going back to the January 6th insurrection, refused to accept the results of the election.

What does that tell me as a national security guy? When I look at what's in the boxes, clearly, people in the White House were told don't accept the election and don't start cleaning up this place until it's too late.

That's why we get the chaos of these boxes that are stuffed with all kinds of crap because people didn't have time to sort it out when the president said, don't clean out the White House, I still belong here.

I think that's what happened here, Victor.

CAMEROTA: Kim, it's come to light that one of the people that President Trump has consulted with in terms of whether he should have worked with the National Archives to give back all of these classified documents was a guy named Tom Fitton, who is the head of Judicial Watch.

For the past couple of decades, Tom Fitton has filed dozens, maybe hundreds of lawsuits. He says -- he's a conservative activist.

He said, in the interest of government transparency, he filed them against Bill Clinton, against Hillary Clinton, trying to get his hands on their documents.

Now, interestingly, when it comes to Donald Trump, he is all for secrecy. He thinks that Donald Trump can keep these -- whatever documents he wants.

Here is Tom Fitton's logic. Listen to this.

(BEGIN VIDEO CLIP)

TOM FITTON, PRESIDENT, JUDICIAL WATCH: If he designates something is personal, he doesn't have to tell anyone what he's doing with them. He can tear them up. But once the records are designated as presidential, that's when this restriction about disposal occurs.

(END VIDEO CLIP)

CAMEROTA: Here's my question, Kim. Is it true that everything a president touches for four years, by definition, is part of the presidential records? Or do they have some personal stuff that they can take with them?

KIM WEHLE, FORMER ASSISTANT U.S. ATTORNEY: You know, Alisyn, there's a distinction under the Presidential Records Act.

But just to be clear, that is different from these criminal statutes we're talking about.

The Presidential Records Act is a post-Watergate reform that essentially says officially that official records belong to the American people, not to the individual that is exiting the White House.

Under that statute, sure, if he's got, you know, a holiday card from Melania or a birthday card, that's personal, he can take that. But it's not something that, under the Presidential Records Act, an individual president can just decide for him or herself. There's a process in place.

Frankly, up until Donald Trump, presidents respected that. They honored the office. And they wanted the American people and historians to have access to the critical documents that basically give a timeline and snapshot of the history of America.

So, you know, there's so many distortions there. There's so much gaslighting. There's so much bad information.

I think the thing to keep in mind, when it comes to this argument that it's political, a federal judge is involved in this. Federal judges, by definition under the Constitution, are not political.

They're there for life because the framers didn't want them to worry about politics. They're there to calls balls and strikes based on the facts and based on the law.

I think we should all feel good about the fact that the system is working in this moment.

BLACKWELL: All right, Kim Wehle, Phil Mudd, Gabby Orr, thank you.

MUDD: Thank you.

[14:39:29]

CAMEROTA: OK, new signs that inflation may be cooling. But the Federal Reserve chair warns there is still pain ahead. Stocks are sinking, yes, after those remarks. What this means for the state of the economy, next.

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CAMEROTA: U.S. markets are sharply down at this hour. The losses follow Fed Chair Jerome Powell's speech today where he warned of pain, twice, when laying out where he sees inflation and the state of the economy.

There's some positive news. The central bank's preferred inflation measure cooled off slightly in July, in part, due to the continued drop in energy prices.

BLACKWELL: CNN's business correspondent, Rahel Solomon, is with us now.

So, Rahel, did Powell give any hints about the next Fed rate increase?

RAHEL SOLOMON, CNN BUSINESS CORRESPONDENT: He really shied away from being specific about what that rate increase might be like. He was not shy about being clear that they will continue to raise rates to lower inflation.

Take a listen to some of what he said earlier this morning.

(BEGIN VIDEO CLIP)

JEROME POWELL, CHAIRMAN, FEDERAL RESERVE: Without price stability, the economy does not work for anyone. In particular, without price stability, we will not achieve a sustained period of strong labor- market conditions that benefit all.

The burdens of high inflation fall heaviest on those who are least able to bear them.

(END VIDEO CLIP)

SOLOMON: What he's getting at there, in order to fight inflation, we have to get through this period of discomfort. And that will fall more heavily on people who least able to afford it, right?

So for some people who are dealing with these higher prices, they're also dealing with higher borrowing costs. They're already feeling it.

But Powell is essentially saying this is for the betterment of the entire public in terms of lower inflation in the future. And that is the hope.

It doesn't, however, feel good if you are, of course, one of those people who are dealing with higher prices, which we all are.

But you are also dealing with higher borrowing costs. And you didn't have the slack in your budget to begin with. And that's the pain he's both warning about now and in the future.

BLACKWELL: Rahel Solomon, thank you.

CAMEROTA: All right, let's discuss with chief economist at Moody's Analytics, Mark Zandi.

Mark, great to have you here.

Let's talk about inflation. Has it peaked from the data you're looking at?

MARK ZANDI, CHIEF ECONOMIST, MOODY ANALYTICS: Yes, I think it's peaked. Oil prices are down. Gas prices are down a lot. It peaked at $5 a gallon back in mid-June and we're now down to $4 a gallon.

I think food prices are going to start to moderate. And we'll see a broader slowing of inflation in the months ahead.

So, yes, I think the worst is behind us.

[14:45:01]

BLACKWELL: So let's talk about this pain that the Fed chair says is coming. He says bringing down inflation, it will also bring some pain to households and businesses.

What is your expectation of severity? And how soon people will start to feel some of that pain?

ZANDI: Well, at the very least, growth will slow sharply. Particularly in the job market. The job market has been very strong up to this point. We created over 500,000 jobs this month. Unemployment is down to 3.5 percent, which is back to pre-pandemic lows.

That's the best of it right there. Going forward, we'll see job growth come in quite considerably.

And if the Fed has its way, and it ultimately will, job growth will come pretty close to a standstill, which means that unemployment will start to notch higher.

The reason they they're doing that or want to do that is to get -- to quell the wage and price pressures in the economy and get inflation down.

They're trying to push the economy's growth rate down to a place where inflation moderates but not push it into recession. That's where the pain comes in and why it's going to be so tricky.

CAMEROTA: Mark, how about the president's student debt relief plan? Will that increase inflation, decrease inflation, or is it a wash?

ZANDI: It's a wash. You know, a lot of cross-currents, a lot of moving parts there.

If you take the debt forgiveness part by itself, that will help support consumer spending and growth and would cause more inflation in the current context.

But the fact that those folks that have been not paying on their student loan debt during the pandemic, they'll have to start paying again. That will weigh on spending, weigh on growth, and weigh on inflation.

So, you net all that out, it has no impact on inflation.

Some people really like this plan. Some people really hate this plan. But I don't think -- thinking around like or dislike, it should be based on the impact of the economy and inflation. It's neither here nor there.

BLACKWELL: Let's talk about housing. Housing prices for an existing home, they dropped last month. Home sales down double-digit percentage from a year ago.

I'm sure you heard the term. I wonder if you believe this is where we are, in a housing recession.

ZANDI: Yes. It's a housing recession. This is by design, right? The Federal Reserve is raising interest rates in an effort to slow growth. Housing is the most interest-rate sensitive sector of the economy.

Most of us, if we want to buy a home, we need to get a mortgage and that's really tied to mortgage rates. So you raise rates, mortgage rates, housing demand weakens.

And housing is clearly in recession. Really, big declines in home sales. That's housing demand. Even sharper than I would have anticipated given the run up in rates.

Housing is taking it on the chin. But this is, again, by design. This is what the Fed has in mind.

CAMEROTA: Mark, the Dow --

ZANDI: That's part of the pain. CAMEROTA: The Dow is down 782 points at this hour. Is that because --

why? Is that because of something that Jerome Powell talked about the pain?

ZANDI: Yes. Well, you know, he said a couple things. One thing he said is, look, we'll raise interest rates. But the thing he added was rates will stay high for a while, a long time. They're not going to go up and come right back down.

You need to buckle in here. Rates are going up. They're staying there until inflation gets back to something we feel comfortable with. That could take some time.

I don't think investors were quite prepared for that message.

He is sending a very strong signal. He's saying, look, inflation is job number one. I'll do whatever it takes to get inflation down.

If that means -- when he says pain, that's a euphemism for potentially recession, which means loss of jobs and rising unemployment. You know, I think investors don't like hearing that either.

Both of those things I think came together and it is making investors nervous here.

CAMEROTA: OK. Mark Zandi, thanks for helping us understand it. Really appreciate it

ZANDI: Sure thing.

BLACKWELL: So the Uvalde school district's police chief is out. But what more needs to be done to restore trust between the law enforcement of that school district and the community? We'll ask a former Robb Elementary student who is demanding more accountability, next.

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[14:52:17]

BLACKWELL: In Uvalde, Texas, the school's police chief, largely blamed for the delayed officer response to the Robb Elementary School shooting, has been removed. But the fear and anguish that parents have about spending their kids back to school in the district is still here.

At Pete Arredondo's termination hearing Wednesday night, our next guest courageously walked to the podium and said his firing is not enough.

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CAITLYNE GONZALEZ, 10-YEAR-OLD ROBB ELEMENTARY STUDENT: I'm here today to make a statement. If a law enforcement's job is to protect and serve, why didn't they protect and serve my friends and teachers on May 24th? (CHEERING)

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C. GONZALEZ: I have messages for Pete Arredondo and all the law enforcement that were there that day. Turn in your badge and step down! You don't deserve to wear one!

(END VIDEO CLIP)

BLACKWELL: That was Caitlyne Gonzalez. She is with me now, as well as her mother, Gladys, live from Uvalde.

I thank you both for being with me.

And, Caitlyne, let me start with you.

It's been three months since that shooting. I can only imagine how these months have been. How are you feeling today?

C. GONZALEZ: I'm feeling good. I'm just excited that you guys have me here.

BLACKWELL: We are excited to have you here.

Let me ask you about your remarks there at the meeting there in Uvalde. You said that it's time for Pete Arredondo to go, and others to go. Obviously, police there have lost your confidence.

What do they need to do to get it back so that you will feel safe in the community at school?

C. GONZALEZ: Obviously, they lost all my respect for them. Like, if I see a police officer, I'll roll my eyes at them. I don't feel safe around police. I don't. Like, they lost all my respect for them.

BLACKWELL: And, Gladys, hearing that, what do you feel?

GLADYS GONZALEZ, DAUGHTER ATTENDED ROBB ELEMENTARY SCHOOL IN UVALDE: Well, as her mother, I've always instilled in her and my other daughter, you know, the importance of authority figures.

And so just hearing that, you know, it's painful because that's not ever -- you know, I wouldn't ever wish this upon anyone.

However, this is something that, right now, we're having to endure. And so, I mean, it is what it is. You know, we're just taking it a day at a time.

BLACKWELL: Gladys, are you going to be sending Caitlyne back to class, to the building when school starts next month?

[14:55:00]

G. GONZALEZ: Yes, she will be attending Flores Elementary. And this is only because she wants to go back. As scared as she is, she insists on wanting to go back to see her friends.

And so, we're scared. You know, we're feeling anxious. But you know, as a parent, all you can do is try to reassure her as much as possible that she will be safe.

BLACKWELL: Now, of course, you're not going back to Robb Elementary. No student will be going back to Robb Elementary.

Caitlyne, tell me about your feelings about going back to school now, going back into a building after what happened.

C. GONZALEZ: I feel scared, but I feel excited. Like, yesterday, we were going to meet the teacher, but since the flood they cancelled it. So, like, I'm excited but then I'm nervous.

BLACKWELL: I understand. Excited and nervous all at once.

Gladys, let me read this to you. Before the meeting at which the school board there voted to fire Pete Arredondo, his attorney submitted a 17-page defense statement.

And after the police killed the shooter, he wrote this:

He said, "Naturally, those affected lash out and seek more retribution by identifying a new target to focus their grief on with the belief that it will help them stop hurting. Unfortunately, it won't" "Two wrongs won't make a right."

"Retribution will not bring anyone back. It's a hollow reward, and it will only spread more hurt and pain in an unjust and biased manner."

When I read the statement, this paragraph jumped off the page. When you hear it, what do you say to that sentiment?

G. GONZALEZ: It was a slap in the face to every parent. You know, it's one day too late.

This decision that the school board -- this is something that should have been made, you know, a day after, a week after, why take this long. And so elections can't come soon enough, quite honestly.

BLACKWELL: Well, Gladys Gonzalez, I thank you.

And, Caitlyne, thank you so much for your time, for your bravery. And good luck in your new school year.

C. GONZALEZ: Thank you.

G. GONZALEZ: Thank you for having us.

BLACKWELL: Certainly. Thank you.

CAMEROTA: Great to hear from them.

All right, we have much more on the release of that redacted affidavit that the Justice Department used to obtain the search warrant from Mar-a-Lago. We'll tell you what's in it, ahead.

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