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U.S. Economy Beats Expectations, Grows 2.6 percent in 3rd Quarter; Biden to Contrast His Economic Agenda with GOP's; Republicans Stand By Walker in GA Amid New Abortion Allegation; Police: Arrest Made in Arizona Dem Gov Candidate HQ Burglary. Aired 1-1:30p ET

Aired October 27, 2022 - 13:00   ET

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

[13:00:00]

JOHN KING, CNN HOST: That is incredibly far from the 45 percent reduction that was targeted.

This quick programming note. You don't miss this. On Sunday, join Kyung Lah for a new special report as she talks with elected officials who fear violence in their communities. "PERILOUS POLITICS: AMERICA'S DANGEROUS DIVIDE" begins at 8:00 p.m. Eastern, right here on CNN Sunday.

Thanks for your time today on INSIDE POLITICS. We'll see you tomorrow.

Ana Cabrera picks up our coverage right now.

ANA CABRERA, CNN HOST: Hello. I'm Ana Cabrera, in New York. Thanks for being there with us.

A critical rebound. Or is it the calm before the storm? The data is in and the U.S. economy grew by more than expected last quarter, putting an end to a six-month slump.

And the president is hoping this bounce gives Democrats a jolt before Election Day.

But before we discuss the political fallout, let's look at the numbers with CNN's Matt Egan and Rahel Soloman.

Guys, thanks for being here.

Matt, break this down for us. Does this mean we are out of the woods for a recession?

MATT EGAN, CNN REPORTER: Unfortunately, not so much. It's great news that the economy bounced back last quarter. But that doesn't mean that the risk of a recession going forward has gone away. Both things can be true at the same time.

Today's report showed that GDP increased last quarter at an annual rate of 2.6 percent. That's pretty solid. I think that, plus low unemployment, should put to rest this idea that the economy is already in a recession. But this GDP report had some concerning signals. It's really, the improvement was driven by trade. Exports were up. Imports went down. That alone was enough to flip GDP from negative to positive.

Also, the housing market continues to really slow down this economy.

I think, if you zoom out, there are some real positives and negatives about the economy.

On the positive side, we have historically low unemployment, tied for the lowest since 1969. GDP obviously better than expected. Gas prices are drifting lower. And corporate profits are still growing.

There's obviously some negatives, too. We learned that the tech sector is in trouble. Microsoft, Google, Facebook, all reporting weakness in profits.

Mortgage rates, they keep going up, above 7 percent for the first time in 20 years. Consumer spending has slowed.

Then the big one, of course, is inflation. It's still way too high. So that means the Fed will keep slamming the brakes on the economy.

Next week, another big interest rate hike.

CABRERA: Right.

EGAN: I think the only question is, how high, and for how much longer they're going to keep raising rates.

CABRERA: Rahel, explain to the average American who is dealing with these sky-high prices why they should care about this GDP report.

RAHEL SOLOMON, CNN BUSINESS CORRESPONDENT: Right, it is a data point, right? But it is the broadest measure of the health of the U.S. economy. And what it showed is that the economy grew last quarter.

And there are a few things that are propping up the U.S. economy. So as Matt pointed out, that trade data. So essentially, we didn't buy as much physical goods from outside of the country. So that helped on the trade front.

And businesses are still investing. Consumers are still spending. I'll get back to that in just a moment.

But the federal government is still spending. The federal government, state government, local level, you're still seeing spending there. And all things propped up GDP for that quarter.

Now, consumer spending. This is sort of -- this gets to how you and I, all of us feel about the economy. And what that showed in this report is that consumer spending continues to slow. It's still positive but continuing to slow.

And so, in some ways, you know, if you're at home and seeing this number, it doesn't take away from the fact that inflation is still hovering near 40-year highs. And inflation still bites. And we're seeing that in the consumer data spending.

CABRERA: I'm curious to get your thoughts because Matt touched on this. The big meeting next week with the Feds. And do you expect today's numbers will have any bearing on the decision they make in whether or not to raise rates again?

SOLOMON: I don't, and most economists don't. I've been spending the morning speaking to different economists.

Most people feel that the Fed is firmly entrenched in their plan. And they're going to continue to do that.

I want to sum up today's report, though. Mark Zandi, the chief economist of Moody's, put it this way. It's a solid report. It feels good in the context of the sort of first half of the year. But it doesn't say much about where we're headed. Sort of like treading water. We're not going anywhere fast.

The expectation for next week, when we hear from the Fed, is another 0.75 percent. That would be the fourth in a row. Historically, we have not seen that in modern times. But then maybe they start to scale back after next week.

CABRERA: OK, fingers crossed for the latter.

SOLOMON: Yes.

CABRERA: Thanks so much, Rahel, Matt. Great to see you guys.

This afternoon, President Biden will try to seize on the positive economic news. But instead of just touting actions he's taken on pocketbook issues, like we've been seeing recently, he will be going after Republicans' economic proposals this time.

CNN White House correspondent, Jeremy Diamond, is in Syracuse, New York, where the president will soon be speaking.

Jeremy, tell us about today's shift in the president's approach.

JEREMY DIAMOND, CNN WHITE HOUSE CORRESPONDENT: Well, Ana, I think, rather than a shift, what we're seeing from President Biden is a doubling down on this election message, this final closing message that he is delivering to voters in these midterms just over a week away.

[13:05:00]

Which is to say that he is talking about making this a contrast election rather than the referendum that many voters are making this election to be.

As they see their prices go up with inflation, they are blaming the current administration. Many of them certainly are.

Well, President Biden is trying to do -- and we're going to see him do this today as he addresses people here at this Micron facility -- is he's going to be talking about making this a contrast.

And he's going to emphasize the extent to which he believes Republicans, if they do win a majority in the midterm elections, that they are going to, in his words, "crash the economy."

A senior White House official telling us the president will lay out that contrast in stark relief, talking about the various things Republicans have pledged to do if they take back the majority.

Including, for example, extending the Trump-era tax cuts, repealing key provisions of the Inflation Reduction Act, and also the president's student loan relief plan.

So President Biden really sharpening that message a week and a half from Election Day.

And one more thing. Obviously, the president is doing this at an official event today. He is not rallying as a political event.

But there's still a political benefit here. There's a tight toss-up election for the House in this very district where the president is going to be speaking.

And certainly, the president hopes that by talking about his economic message, by saying that he understand Americans' pains, and by warning them about the potential of a Republican majority, he believes he can perhaps have an impact in the race as well -- Ana?

CABRERA: Election Day is just 12 days away.

Jeremy Diamond, thank you.

We're following some big developments across the country in some key races.

Let's begin with the critical Senate race in Georgia where Republicans are standing by their guy, Herschel Walker, despite a new allegation that he pressured a second woman to have an abortion.

CNN's Eva McKend has the latest there -- Eva?

EVA MCKEND, CNN NATIONAL POLITICS REPORTER: Ana, what we've seen here in Georgia is the full weight of the Republican establishment rally behind Herschel Walker.

Senator Ted Cruz, of Texas, out on the trail with Walker today. But we've also seen the chair of the RNC, Ronna McDaniel, the chair of the powerful National Republican Senatorial Committee, Rick Scott.

And this just illustrates that Republicans feel confident that they can flip this Senate seat from blue to red.

Now, the support that we are seeing for -- from Walker from national Republicans is also near it here on the ground from Georgia conservatives. They question the timing of these allegations. And they also suggest

that they feel as though Republicans are routinely targeted. Something that I've noticed that Walker has incorporated into his argument.

In addition to sort of blanket denials of these allegations, he also is sort of saying, if this can happen to him, this can happen to you next. Saying, a variation of that to his supporters.

I'm curious to see how much he lands on that in the closing days of his campaign. Early voting already under way here in Georgia. Lots of people voting already, just about a week and a half until Election Day -- Ana?

CABRERA: Early voting records there.

Thank you, Eva McKend.

Let's go now to Arizona and CNN's Kyung Lah where an investigation is under way after a burglary at campaign headquarters of the Democratic candidate for governor, Katie Hobbs.

Kyung, I understand you just learned an arrest has been made?

KYUNG LAH, CNN SENIOR NATIONAL CORRESPONDENT: Just a few minutes ago, the Phoenix police tweeted an arrest has been made in regard to the burglary at this -- the address, the headquarters of Democratic candidate for Arizona Governor Katie Hobbs' campaign headquarters.

So we know an arrest has been made. We don't have any further information. The tweet simply says there will be more information released later today.

The campaign confirming that they are aware that an arrest has been made. But again, we don't have a suspect name. We don't know the political affiliation.

What we can tell you, Ana, it has already led to heated rhetoric across the campaigns. The Democrat Hobbs saying that she's blaming some of the hostile rhetoric coming from Republican Kari Lake.

And here is how Republican Kari Lake responded to that accusation. Take a listen.

(BEGIN VIDEO CLIP)

KARI LAKE (R-AZ), GUBERNATORIAL CANDIDATE: That is absolutely absurd. And are you guys buying that? Are you really buying that? This sounds like a Jussie Smollett, part two.

(END VIDEO CLIP)

LAH: Jussie Smollett, of course, is in reference to the actor who was arrested, then convicted for lying to the police about making up the case that he was a victim of a crime.

So we will find out more later today, Ana, about exactly who the suspect is, presumably, when Phoenix police start to release details about this arrest -- Ana?

CABRERA: OK. Kyung Lah, in Arizona, thanks.

We're also learning former President Trump will rally with Republican Senator Marco Rubio in Florida next week but not with Governor Ron DeSantis, which is notable.

CNN's Kristen Holmes is following this for us.

Kristen, what is going on here?

[13:10:01]

KRISTEN HOLMES, CNN NATIONAL CORRESPONDENT: Well, Ana, that's a very good question. I just want to note one thing here. Trump is not only rallying with Rubio and not DeSantis, who is also up for re-election.

But we have learned that Trump's team did not inform the governor that there was going to be a rally in his state ahead of publicly announcing it.

Now this comes after a noticeable strain on the relationship between Trump and DeSantis, as earlier in the week as my colleague Gabby Orr and I reported, the Trump team has started to look at 2024.

They are even talking about who campaign managers would be, what would the campaign structure actually look like.

And Trump himself is eager to run, wants to make an announcement as soon as possible. Some sources say that he wants to try to announce before Thanksgiving.

And as we know, DeSantis is widely believed to be Trump's most formidable opponent should they both enter that 2024 race. And this has clearly been on Trump's mind.

I spoke to a number of sources who had talked to him recently who said that Trump was complaining about DeSantis, saying that he was ungrateful for Trump's endorsement back in 2018. And Trump believes that he is the reason that DeSantis became the governor of Florida.

Now, I did speak to one Trump aide, who said that this was not a snub. They insisted that. They said that Rubio had invited Trump. Ron DeSantis had not. That was the end of the story.

But, Ana, I think many people believe that is simply not the end of the story.

(LAUGHTER)

CABRERA: Not over yet.

HOLMES: No.

CABRERA: Kristen Holmes, thank you.

Here with us now is CNN senior data reporter, Harry Enten.

CABRERA: We all heard your laugh before.

(CROSSTALK)

CABRERA: I know.

Does Rubio need Trump? Forget about DeSantis for a second. Why is Trump going there? I know some candidates have distanced themselves from the former president after the primaries.

HARRY ENTEN, CNN SENIOR DATA REPORTER: Yes. I mean, no, he doesn't need Donald Trump. I mean, he's well up in the polls. You know, he's beating Val Demings by plenty. I think we have a poll up there that will essentially show that Rubio has a clear advantage. Look at that, a seven-point lied.

He doesn't need him. I think he's just trying to curry favor with the former president with the idea he will run in 2024 and maybe he wants to put a little jab at Ron DeSantis as well.

CABRERA: But there are more competitive races. So why is Trump taking the time?

ENTEN: Why? Because I don't think anyone else really wants him. You know, I think, if you look at the polling, we know that Donald Trump's favorability rating national is just 41 percent. Unfavorable, 54 percent.

So he's not getting invited to a lot of these swing state races. So he will go to Florida with the idea, hey, maybe, I can poke DeSantis as well and look ahead to 2024.

CABRERA: Meantime, another October surprise in Georgia. A second woman saying Herschel Walker pressured her into having an abortion. And so I just wonder, where does this race stand? Will this even matter?

ENTEN: I've got to be honest. I don't think it's really mattering. If you look essentially at a forecast of what will actually happen on Election Day, you can see that basically the candidates were neck and neck at the beginning of this month, and they're neck and neck now.

And more than that, they're both south of 50 percent because of a Libertarian candidate getting 2 percent according to the forecasts. And that means that there could, in fact, be a runoff in December with the race.

It might not be over on Election Day. We may go into overtime. And if this decides control of the United States Senate, my goodness gracious, we'll have a lot of interesting times in the month of November.

CABRERA: Black voters could be crucial in that election in Georgia. Latino voters in places like Nevada and Arizona, other states we're watching closely.

Where do things stand right now? What are you seeing with key demographics?

ENTEN: These are key demographics, right, traditionally part of the Democratic base. Right now, what we see is Democrats are up amongst Latinos and they're up amongst African American voters as well.

But the key thing to keep in mind is that the margins among them are significantly smaller than they were two years ago during the presidential race.

And, of course, elections are all about margins. They're about building coalitions. So, yes, Democrats may win these groups but maybe not by the margins that they wish they could.

CABRERA: Obviously, the voter enthusiasm in those groups --

ENTEN: Yes.

CABRERA: -- also could play a role in all of that.

ENTEN: Absolutely. And I don't think -- if you're looking at the polling right now, we see Republican enthusiasm sky high. Democratic enthusiasm, including amongst voters of color, not where Democrats necessarily want it to be.

CABRERA: That's interesting, especially with early voting showing record numbers in some places. So a lot of dynamics you're watching for us. We'll have more time to discuss between now and then.

Harry, thank you.

ENTEN: Thank you.

CABRERA: Thank you for being with us.

And our thanks to all of our reporters in the field in those battlegrounds right now as well.

The families in Uvalde are outraged.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Why didn't they go in there?

Do you want your officers to stop somebody someday and get torn to pieces like our children did?

(END VIDEO CLIP)

CABRERA: Relatives of the children and teachers killed in that Uvalde school shooting facing a top Texas safety official over the botched response to the shooting. Why they say it's past time for him to resign.

Plus, a stunning new CNN exclusive detailing how Kanye West has a disturbing history of admiring Hitler, even trying to name an album after the Nazi leader. And why you should really get your flu shot, like now.

[13:14:59]

You're live in the CNN NEWSROOM. Stay right there.

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CABRERA: Emotions extremely high in Texas. I want to take you there right now as the Department of Public Safety's top official, Steve McCraw testified publicly for the first time today since July about his agency's investigation of the failed Uvalde school shooting response.

He was supposed to provide a report but didn't.

We'll have more on that in a moment. Because, before his testimony, family members of the 19 fourth graders and two teachers killed got a chance to speak, some directly addressing McCraw.

(BEGIN VIDEO CLIP)

BRETT CROSS, FATHER OF MURDERED UVALDE STUDENT UZIYAH GARCIA: It's been five months and three days since my son, his classmates and his teachers were murdered totaling 21 victims. That's 156 days, 3,741 hours.

[13:20:06]

While these numbers regularly change, several numbers remain the same. It was 77 minutes that 91 of you all's officers waited outside while our children were slaughtered. One of your officers has been fired. One.

You, sir, have told lies. You're not in control of your officers, nor are you the leader this great state deserves.

JESSE RIZO, UNCLE OF MURDERED UVALDE STUDENT JACKIE CAZARES: Your officers either lied to you or you painted a picture that was favorable to your department, sir.

It's time for you, sir, to keep your word and offer your resignation and turn in your badge, Mr. McCraw.

MANUEL RIZO, UNCLE OF MURDERED UVALDE STUDENT JACKIE CAZARES: We've been in Austin. We've met with Governor Abbott. No action was taken. We're not going to stop. We're going to keep going. But, again, this isn't who we are. This isn't who we want to be.

(END VIDEO CLIP)

CABRERA: CNN's Shimon Prokupecz has been all over this story. Josh Campbell is with us as well.

Shimon, we just heard that painful testimony from the families. And they addressed McCraw. They want him to resign. They see him as accountable for a lot of the failures.

What did the DPS chief have to say?

SHIMON PROKUPECZ, CNN CRIME AND JUSTICE CORRESPONDENT: Well, he said -- he's kind of being cute. When we last caught up with the director in October, he told us that he would resign if anyone was found to be culpable in the agency.

Today, obviously, he's singing a different tune, saying that he's not going to resign.

And here's how he explains why he's not going to resign.

(BEGIN VIDEO CLIP)

COL. STEVEN MCCRAW, DIRECTOR, TEXAS DEPARTMENT OF PUBLIC SAFETY: You're right, one of our core values is accountability, accept responsibility, plain and simple. I did make that statement.

But I can tell you this. If DPS, as an institution failed the families, failed the school or failed the community of Uvalde, then absolutely I need to go.

But I can tell you this right now, DPS, as an institution, OK, right now did not fail the community, plain and simple.

(END VIDEO CLIP)

PROKUPECZ: So, Ana, you see how he's kind of sort of trying to say, as an institution, we didn't fail and so, therefore, I'm not going to resign.

But obviously, this is not sitting well with family members, community leaders, other folks who say, you know, based on a lot of the reporting that we here at CNN have done, really lays out a case of people not doing their jobs on that day. people who work at the DPS, who failed that day.

One of those officers was fired. Several others are under investigation. Why still today, some five months later, we're still not getting answers from the head of this agency is really mind- boggling. It's unclear.

Certainly, families who came here today were expecting to get more information. We were given every indication that we were going to get more information.

Instead, all we got was more sort of finger-pointing. And the director really just saying, you know what, I'm still waiting, we're still waiting to finish this investigation, Ana. It's just mind-boggling.

And for these families, the pain to have to come here and talk about this and listen to this again, time and time again, just to try to get some answers, a really difficult moment here today -- Ana?

CABRERA: You can feel their pain and their frustration in their words and their tone. And as he says, the institution did not fail. We don't have all the facts. McCraw did not offer a report. He offered little to no new information.

Josh, what's your reaction?

JOSH CAMPBELL, CNN SECURITY CORRESPONDENT: You know, it's interesting. Shimon talked about the impact on the families. Obviously, they want information.

But what is so fascinating is, I talk to law enforcement leaders around the country, and it's interesting hearing how many of them, people who are in law enforcement, remain perplexed.

Not only by the inaction of certain officers that day, but also this strategy of apparently circling the wagons by department leadership at the Texas DPS. And not providing information and not being transparent to the public.

And, you know, it's interesting because crisis management 101 tells you bad news does not get better with age, that we're often, you know, leaders will come forward and provide information forthright and say, look, these are the facts.

But, here, the strategy has been to not provide information. I don't know if that's because they're hoping that people will just move on. Obviously, the families there in Uvalde are not. Obviously, the people in Texas are not.

And the last thing I'll point out is that not only from today's meeting but also what we've seen in weeks past is the silence from political leaders in Texas, certain political leaders, is deafening.

We often hear politicians come forward whenever law enforcement has a success. They're there at the podium at press conferences. But when there's a failure, they're seemingly nowhere to found.

Again, the silence there deafening from certain leaders those in Texas.

CABRERA: And I should note, Josh has experienced from the law enforcement side. He is a former FBI special agent. So he's been part of complex investigations.

And I appreciate your perspective on this, Josh.

[13:25:01]

Shimon, thank you for the reporting out of this meeting and your ongoing quest for answers and holding these officials accountable.

Josh, stay with me.

Because we're learning some more details now about the deadly school shooting in St. Louis.

Authorities are now revealing that several days before Monday's attack, the gunman's family called police when they found an A.R.-15- style rifle in the house and were concerned because of his history of mental health struggles.

Officers then helped transfer the rifle to a, quote, "third party."

And Josh Campbell has been following this story closely.

Josh, that gun that was taken away was the one used to kill a teacher and a student and to injure several others. Do we know how the shooter got it back?

CAMPBELL: We don't. And that's one of the many unanswered questions.

And of course, it's so heartbreaking after these incidents to know that there were red flags out there that could have possibly, had they been followed up on, may have prevented the loss of life and these tragedies we continue to see over and over.

In this case, as you mentioned, the family did call police about a week before this school shooting. His mother, the suspect's mother, didn't want this A.R.-style weapon in her house. She called authorities. They showed up.

Police ultimately determined that the shooter had legally obtained the weapon. It was then transferred to a third party, is how police describe it, perhaps a family member, a friend of the family. We don't know for certain.

But that is the key question. Somehow despite the weapon being taken out of the house, the shooter was able to get that weapon and, as we know, killed two people, injuring others.

That remains a key part of this investigation. Who was it that person? How did this weapon get back?

And, of course, the pending question, is that person potentially facing legal exposure if they knew that the suspect had mental health issues potentially, yet still allowed them to get that gun back?

CABRERA: In fact, the gunman's family told investigators they had him committed to mental health facilities several times. There's a history of mental health issues, obviously.

How was he able to get this gun in the first place?

CAMPBELL: I think --

CABRERA: And were there 600 rounds of ammunition?

CAMPBELL: Yes, you're right, 600 rounds. You know, our colleague, John Miller, made the point earlier today saying, we're now in an era where there's actually an ammunition shortage. It is hard for police departments to get ammunition, yet this suspect had over 600 rounds.

One of the many potential red flags out there. Did someone ask why is he amassing so much ammunition? But to your point about the mental health institution commitment that

we're hearing about from police, it really shows the limited aspect of certain gun laws in this country.

We know, based on what police are saying, that the suspect's family had concerns about him, took him to a mental health facility for mental health treatment.

But here is where the limited law comes in. Because under federal gun laws, you cannot purchase or possess a firearm if you have been committed to a mental institution.

But that has to come from a lawful authority, from a court, from a commission. That's not voluntarily committing yourself.

Here he went to get mental health treatment but that didn't stop him from getting the weapon, maintaining the weapon, and then causing the shooting.

CABRERA: And that school shooting in St. Louis was at least the 67th attack this year in the U.S.

Thank you, Josh Campbell, for your reporting --

CAMPBELL: Thanks.

CABRERA: -- and insights.

Fierce fallout over recent anti-Semitic comments. But for people who have known the artist, formerly known as Kanye West, the hostile rhetoric or beyond hostile rhetoric, frankly, isn't new. We're learning more about the rapper's, quote, "obsession with Hitler." That's next.

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