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Putin Escalates War with Partial Mobilization of Russian Citizens; Fed Expected to Make Aggressive Rate Hike in Bid to Tame Inflation; Special Master Asks Trump for Proof of Docs Were Declassified. Aired 10-10:30a ET

Aired September 21, 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: Good morning, everyone. It's the top of the hour. I'm Poppy Harlow.

JIM SCIUTTO, CNN ANCHOR: And I'm Jim Sciutto joining you live from the United Nations, where, just minutes from now, President Biden will deliver his annual address to the global leadership community. Hanging over that speech in this U.N. General Assembly however are new and alarming threats from Russia, a major public escalation of the war in Ukraine, as world leaders meet here at the U.N. This is a harrowing time for Ukraine, for Europe and the world.

HARLOW: It certainly is.

And this morning, Russian President Putin announced that he is calling up 300,000 reservists, marking the first major mobilization since World War II. Putin also warning the west he is not bluffing of potentially nuclear weapons. Those comments expected to be a focus for President Biden both during today's speech in just minutes, and in his private talks, of course, in the U.N. with world leaders.

SCIUTTO: Let's begin on the ground in Ukraine. CNN's Nick Paton Walsh is live in Kramatorks, in the east.

Nick, we heard these words before. This is not the first time the Russian president has threatened nuclear weapons but he did so in, really, no uncertain terms here, saying this is not a bluff. Ukraine, of course, would be the center of this. What's the reaction?

NICK PATON WALSH, CNN INTERNATIONAL SECURITY EDITOR: Yes. Look, I mean, there are obviously always have been deep concerns about Russia's capacity, but also I think a degree of reality sets in as to this sounding more like a world leader possibly in a state of defeat and possibly trying to use rhetoric where he make lack capacity. Still, that doesn't reduce the fear, I think, people feel when they hear the possible threats of nuclear weapons.

The way those threats were placed though were forcedly to suggest that is essentially a response to nuclear threats from the west against Russia. There have been none. But also key -- one of the words he said there was about using these weapons of mass destruction in the event that the territorial integrity of Russia was threatened.

Now, we're also hearing about this partial mobilization, a stance move, frankly, by the Kremlin head to seize control of a narrative of this war after weeks of Ukraine announcing continued progress on the battlefield. It's still happening now, as I speak, in this area around me, although around in the town of Bakhmut, Russia does appear to be making some progress.

They've faced huge manpower issues, Russia, and this is a bid to try and fix those. But that number of 300,000 is, I would say, wishful thinking at best. They struggled to keep 150,000 Russian regular troops properly equipped, properly fed, properly commanded and directed on the frontline in the first six months of the war. So, the an idea that there is this magical reserve that experienced fighters in Russia who can simply be put on the frontlines in a matter of days or weeks, to make the turnaround Russia so urgently needs is a bit of an ask, frankly, if not, impossible.

But it does give the general impression, I think, to the Russian population, that they're skin (ph) now to some to degree in the game, that relatives, people they know would end up fighting who were not originally involved in the war. We've seen, in fact, internet searching and tickets prices rocketing for possibly military-aged males trying to get out of Russia after this announcement has been made. So, clearly, a lack of enthusiasm among some Russians for the idea of joining the 20,000-plus, say U.S. officials, Russians that have died so far in this war.

These four referenda that we're going to see happen in the next four days towards the end of this week very much rubber stamping. We're just going to hear, frankly, a positive result, from these sham processes at the beginning of next week. Russia will then likely make some kind of statement that these areas are part of Russia. Does that change Ukraine's calculus or that of its western supporters or that of Russia, we don't know, but this threat of nuclear force in the background is making many very nervous. Jim?

SCIUTTO: Does Russia claim attacks on those territories are, in effect, attacks on Russian territory? I know you'll be watching closely. Nick Paton Walsh, keep yourself and your team safe.

[10:05:00]

Joining me now to discuss all of this, what it means, the significance, David Sanger, White House National Security Correspondent for The New York Times. David, it's always good to have you here.

You and I have been covering Ukraine and Russia for years. We have heard Putin rattle the nuclear saber before, perhaps not with the clarity that he did so overnight. And I wonder, based on the officials you speak with, are they taking this latest threat, should they, more seriously? DAVID SANGER, CNN POLITICAL AND NATIONAL SECURITY ANALYST: Well, I think they have to take it more seriously. Jim, next month will be 60th anniversary of the Cuban missile crisis. And I think it's farce to say what we face over the next few months is second only to that crisis, because we now have a national leader opening threatening the use of nuclear weapons. He did this before at the beginning of the war. And the good news is that no one ever saw him move a single weapon.

But we're in a different situation right now. He has come to the conclusion that his ground forces are simply not capable of meeting his goals. He needs to find another way to do this. He's been humiliated twice now, once leaving Kyiv, and then once in recent weeks. And so the possibility that he could reach for unconventional weapons, not just nuclear, is, I think, higher than it's ever been.

SCIUTTO: That's right, chemical weapons also an option in Russia, has a large arsenal of chemical weapons.

On the issue of mobilization here, the Russian president says he will call up 300,000 reservists, that, of course, larger than the original invading force, but genuine questions as to how combat ready, if at all, they are. At a minimum, does it indicate to you, should it to us, that the Russian president is in this for the long haul, months, years, for this war in Ukraine?

SANGER: I think it does. He had another choice here, Jim. He could have said, we have achieved our major goals, we taught the Ukrainians a lesson, we occupy a bigger piece of the south and the east than we did, and basically turn the propaganda machine to make this sound like a success and get out. That's not what he's doing.

And he has been reluctant to mobilize so far, because the troops that have been fighting so far have not been his core constituency. They are not middle-class kids from St. Petersburg and Moscow. And now as he mobilizes more, he runs that risk. He's trying to walk a fine line between getting more troops and not triggering a greater reaction in Russia itself.

SCIUTTO: It was interesting to see the defense minister, Russian defense minister, saying, no, I am not going to be taking kids out of college, in effect, to do this.

I do want to talk to you on the topic of nuclear weapons, another country, of course, at the center of this, and that is Iran, the Iran nuclear negotiations. We saw the Iranian president speak here in the building just behind me moments ago. Is that deal still potentially alive?

SANGER: I guess, potentially, but all the recent signs are negative. I mean, it is interesting that President Raisi and President Biden will be in the same U.N. chamber, though not at the same time, within an hour of each other. There's no intention for them to talk. The U.S. isn't even meeting with its allies who normally work on this negotiation with them. And that's because the last response from the Iranians was basically, if we're going to do this deal, you have to tell the international inspectors that they have to forget about anything we've done in the past. And no one is willing to take that deal and corrupt that system.

So, I have not seen any indication from American officials that they think this is going to happen soon. And with the price of oil this high, Iranians may not feel as much of a motivation to go strike a deal.

SCIUTTO: Yes. It's notable, you mentioned they will not meet, the U.S. and Iranian presidents, here. It was a few years ago, a meeting between Obama and then President Khatami that arguably laid the groundwork for that early nuclear deal, so notable.

David Sanger, always good to have you.

SANGER: Good to see you.

HARLOW: All right. So, later today, the Federal Reserve will take its next step in the fight against inflation. Fed Chair Jerome Powell widely expected to announce an interest rate increase of three- quarters of a percentage point. That would mark the third time in a row the Fed has done that. The decision comes at 2:00 Eastern Today.

Let me bring in Jason Furman, Economic Policy Professor at Harvard, also served as chairman of the White House Council of Economic Advisers in the Obama administration.

All right, Jason, it's a big day. If the Fed does this, if we get 75 basis points, or maybe even a point increase, it will be the first time we have seen that in succession like this since the '80s.

[10:10:05]

What would the consequences be?

JASON FURMAN, FORMER CHAIRMAN, COUNCIL OF ECONOMIC ADVISERS: The Fed is being very aggressive because they are worried -- correctly, in my view -- that inflation has been become very ingrained. Even with a really large move, there aren't immediate consequences because the market has already priced it in. You've seen mortgage rates, for example, have gone up recently, because the market expects the Fed to do this. So, it's only if they surprise us either with their actions or their words that we would see a change from what's been going on recently.

HARLOW: All right. But let's take the stock market out of this. I mean, you literally have half of America that doesn't have a penny in the market, doesn't have 401(k), doesn't have an IRA, doesn't have any exposure from the market, and they're thinking about recession worries, Jason, right? And they're thinking about their jobs.

And you wrote this fascinating Wall Street Journal op-ed a few weeks described as the scariest economics paper of 2022. And in it, you write, to get inflation rate to Fed's target of 2 percent, that would require an average unemployment rate of about 6.5 percent in 2023- 2024. This is what Elizabeth Warren is so worried about. How worried are you?

FURMAN: I am worried about the situation we're in. Historically, you have never seen the Fed be able to bring inflation down from this type of level without causing a recession. You heard the Fed chair in August at Jackson Hole say, basically, he's single mindedly concerned about inflation, and if unemployment starts rising, he's not going to let up on what he needs to do.

I think that's incredibly unprecedented (ph), incredibly unfortunate, but the alternate might be even worse. If you let inflation get entrenched, it could require an even bigger recession a couple years from now to bring it down.

HARLOW: Talking about a potentially bigger recession, I thought it was interesting that Nouriel Roubini, the economist, just a few days ago told Bloomberg, he expects if we get a recession, it's going to be really bad. I mean, his quote, it's not going to be short and shallow, it's going to be severe, long and ugly. You think he's right?

FURMAN: I certainly hope he's not right. I don't think so. I mean, there's still a lot of demand in our economy. There's a lot of job openings. Households are feeling the pinch of inflation, but they still -- most of them have more money in their checking account than they had before the pandemic.

So, there's a lot of things that are cushioning our economy. Maybe we'll end up getting lucky. Maybe the Fed, by the way, won't bring inflation all the way back to 2, they'll stop at 2.5, they'll stop at 3. I think that would be fine, that would spare us from some of the pain. So, no, I'm not nearly as scared as Nouriel Roubini.

HARLOW: It's an interesting argument that perhaps we need to reset -- or the Fed needs to reset sort of as part of its dual mandate, what is normal for inflation. Maybe 3 percent is more the norm going forward. But looking at the market, stocks at two-month lows, treasury bonds spiking, and the Biden administration still sounds really optimistic.

Again, you worked in the Obama administration, this administration, Biden said on 60 Minutes he's hoping for a soft landing, we're going to get inflation under control, that's a quote. We've created 10 million jobs, Yellen emphasizing the U.S. is not in recession. Do you -- are you as optimistic about the overall state of the economy, as the Biden administration is right now?

FURMAN: I'm probably not as optimistic as the Biden administration is. But, look, when you're president, no one is going to be more optimistic than the president. So, if you're at sort of the outer edge of a reasonable form of optimism, I think that's an okay place for the president to be. But I think the Fed, when they make their decisions, they can just hope for the best and plan for the best. They can't assume everything is going to work out. They have to do a risk analysis of what happens when it doesn't. And part of that risk analysis is why they're moving so aggressively to stamp out the threat of this inflation.

HARLOW: Very quickly, isn't it almost equally as important what Powell says after the decision on interest rates comes today?

FURMAN: Absolutely. The last meeting, they raised rates by 75, but the market rallied because they heard some dovish, friendly words. This time, we'll all be waiting to hear what the words are. I don't expect the words to be as nearly happy as they were at the last meeting.

HARLOW: Okay. Jason Furman, I know you have got some students to teach. We'll let you get to class. Thank you.

All right, still to come, the fight over classified documents seized at Mar-a-Lago. We're hearing for the first time from the Trump selected special master. Why his review may not go exactly as the former president's team had envisioned.

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SCIUTTO: Plus, we will bring you live, a pivotal address from President Biden to the United Nations General Assembly here in New York when it happens moments from now.

[10:15:01]

I'll also speak with the prime minister of Estonia, which borders Russia, her reaction to a nuclear threat from the Russian president, Vladimir Putin, to Ukraine and to Europe.

Stay with us.

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HARLOW: Welcome back. The special master reviewing the documents seized at Mar-a-Lago is asking former President Trump's lawyers if these were classified, where is the proof of that? And so far, Trump's legal team has not provided that evidence.

Judge Raymond Dearie, who is acting as the special master, did not mince words, telling the former president's legal team, quote, my view of it is you can't have your cake and eat it.

Caroline Polisi joins us. She's a federal and white collar criminal defense attorney, also a lecturer at Columbia Law School.

[10:20:01]

Well, Caroline, he's saying, show me, prove it, show me, just saying Trump did a blanket declassification of these documents is certainly not enough. And this is a legal argument his team has not made any single filing through this whole process, and it sounds like, so far, not going to make it now.

CAROLINE POLISI, FEDERAL AND WHITE COLLAR CRIMINAL DEFENSE LAWYER: That's right, Poppy. This is really a cautionary tale of careful what you wish for. Remember, it was Trump himself that asked for the appointment of a special master, the lawyers for Trump put forth Raymond Dearie as the candidate, the DOJ accepted. Dearie is really cutting through all the noise, not unexpectedly, I would note. Just as you note, he's basically saying, put up or shut up to Team Trump.

Look, there's prima facie evidence that these documents are classified. And remember, we're only talking about a specific subset, about 100 documents of the 11,000 that Dearie is tasked with reviewing. But the government put in an affidavit saying that they were classified records, even though the former president, Trump, has stated on social media that he declassified these records, his lawyers are not willing to go that far in legal filings likely, because they know the steep repercussions of doing so if that's wrong. And they're really backed into a corner at this point. So, we'll see what happens.

HARLOW: So, help us understand -- play this out for us. So, let's say that if the special master rules against the Trump team and says, I'm going to consider these documents classified, how much does that help the Justice Department in its argument in the courts, right, which is this separate, to say you have to -- and in their appeal to the 11th Circuit, you have to let our investigation continue with these classified documents, we have to be able to present them to witnesses, present them to the grand jury, how much does it help them do that?

POLISI: It helps them a lot, Poppy. If you remember, by definition, if these documents are classified and retain their classification status, they are not attorney/client privilege, they are not executive privilege, which, in fact, was what dearie was tasked to do by Cannon. And so the DOJ has been making the argument to the 11th Circuit that, look, these two inquiries are inextricably linked, the criminal probe as well as the national security probe. Cannon had said they could move forward with the national security inquiry, but DOJ is saying their hands are tied, they can't do so, because, again, they're inextricably linked. Now, if they get the stay, they'll be able to move forward on both tracks.

HARLOW: And so now, with the 11th Circuit considering the Department of Justice's appeal here, you have got this amicus brief from 11 red state attorneys general saying, no, no, this special master is neutral, let the special master decide. 11th Circuit, don't side with DOJ here. But the Department of Justice, one of their lawyers, Julie Edelstein, is indicating, we're going to take this up if we need to take it up -- if we lose this, we'll take it to the full bench, we'll take it up, it seems like she's saying here, to the Supreme Court if we need to. Is that how you read it?

POLISI: Yes, absolutely. They may take it en banc, meaning all of the justices in the 11th Circuit, but, certainly, it does seem like they'll take it to the Supreme Court. DOJ has to set a precedent, not even necessarily with respect to this case, because it may actually end up being moot by the time it gets there, but we're talking about the scope of executive privilege and, really, what Aileen Cannon did in her ruling, DOJ feels, is unacceptable. She's basically saying that executive privilege applies even within the executive branch, when U.S. v. Nixon said you can really only assert executive privilege against a different branch, Congress, in that case. So, they really want to clear the air in terms of what the actual law is on this subject.

HARLOW: Unless the Supreme Court were to side with -- were to agree with her reading of that, which would change things so much for future administrations going forward.

Caroline, thank you, good to have you.

POLISI: Thank you.

HARLOW: Jim?

SCIUTTO: Still ahead, the Russian president takes dramatic steps to boost, or attempt to, in his struggling invasion of Ukraine, calling up hundreds of thousands of reservists, also referencing the possible use of nuclear weapons. My next guest has a front-row seat to Russia's aggression. The Estonian prime minister joins me in just moments.

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[10:25:00]

SCIUTTO: Soon, President Biden will deliver a critical speech here at the U.N. General Assembly before world leaders. It comes right as the Russian president, Vladimir Putin, takes threatening new action in his war against Ukraine, including an immediate partial mobilization, he calls it, of 300,000 new Russian troops. He also alarmingly insisted that the possibility of using nuclear weapons is now on the table and not a bluff.

For reaction to tall this, I'm joined now by the prime minister of Estonia, Kaja Kallas. Estonia, of course, shares a border with Russia. Prime minister, thanks so much for taking the time this morning.

KAJA KALLAS, ESTONIAN PRIME MINISTER: Thank you for having me.

SCIUTTO: We have heard, of course, the Russian president rattle the nuclear saber before, as have you. But this time, he said, in so many words, this is not a bluff.

[10:30:00]

And I wonder, do you take this as simply rhetoric at this point or do you believe the threat is real?