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Fears Over Coronavirus Rattle Global Markets; Kevin Hassett, Former White House Council Of Economic Advisors Chairman, Discusses Coronavirus Impact On Markets; Top Election Security Official Staying In Job After Appearing To Overstate Russian Interference In 2020 Election; Trump Taps Intel Novice As Acting DNI; Congress Grills Defense Secretary For Diverting Funds To Border Wall; Questions Raised Over Bloomberg Airing Ads Featuring Barack Obama. Aired 1:30-2p ET
Aired February 26, 2020 - 13:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ALEX MARQUARDT, CNN HOST: The growing fears over the global spread of the coronavirus has hit markets hard over the last couple days. Today, we're seeing a small rebound on Wall Street. The Dow now up around 36 points. That definitely doesn't mean the market roller coaster is over.
Here to discuss this is Kevin Hassett, the former chairman of the White House Council of Economic Advisors.
Kevin, thank you so much for joining me.
MARQUARDT: A lot of people are watching with trepidation, 401Ks, other investment plans seriously affected by this. The green, I assume, is comforting after the last two days of significant falls. But that shouldn't be too reassuring, should it?
KEVIN HASSETT, FORMER CHAIRMAN, WHITE HOUSE COUNCIL OF ECONOMIC ADVISORS: I think -- the thing is, there's a lot of unknown stuff about the virus and the hope the that it follows the normal pattern. This is certainly the median expectation. That's what Larry Kudlow was talking about yesterday, what the president has been talking about.
And that is somewhere where it runs out of gas in March. If that happens, all this disruption is a very temporary thing, markets go back up, the economy will be strong again, just like with SARS.
The difference is we don't really know right now, right? If this extends into the summer, there's a basic problem the Chinese GDP in the first quarter will be down 10-15 percent than what we thought. And that normally leads to lower GDP growth around the world, maybe perhaps as much as a half percent to a percent.
We're starting with a weak global economy. And if that trend continues, you're looking at something like a global recession, if it continues to May, June, something like that.
MARQUARDT: Your former boss and the president, and former colleague, Larry Kudlow, have been accused of downplaying this.
I want to play sounds of Kudlow in which he talks about the status of coronavirus. Take a listen.
(BEGIN VIDEO CLIP)
LARRY KUDLOW, SENIOR ECONOMIC ADVISER TO PRESIDENT TRUMP: We have contained this. We have contained this, I won't say airtight, but pretty close to airtight. We've done a good job in the United States.
I don't think it's going to be an economic tragedy at all.
(END VIDEO CLIP)
MARQUARDT: The virus isn't contained. Airtight might be a little bit of overstatement compared to what we've been hearing from health experts, although health officials say we are doing a pretty good job right now. And he says he onto see this becoming an economic tragedy. Is that short-sighted?
HASSETT: That's the median expectation. I think if it were to reverse itself along the same pattern that SARS did, which is probably what the typical expectation is, Larry would be exactly right.
I think market participants worry about the worst that might happen. And I know that's true of the White House, too. They're preparing for the worst if that's what happens.
I think one reason why we're seeing markets go down so much is that they're thinking of the lower probability and events are negative. Though, even if you go down that path, you have to remember that people are saying, well, if the market goes start to go down more than we thought, the Fed will step in and cut rates again.
So there are a lot of policy levers at the disposal both of President Trump and his team and the Fed to sort of turn things around if they start to get out of hand.
But the fact is, the shock to China is one of the biggest negative shocks I've seen in a long time. As an economist, I can say, a lot of times, those things, those negative shocks start to get out of control.
MARQUARDT: Massive ripple events.
MARQUARDT: But because so much of this is investor confidence, how important is what the president says tonight?
HASSETT: I think it's very important. The thing is I know, having lived through the Harvey episode with the president and his team, once there's something like this, he puts all-hands-on-deck and wants everybody working towards the common goal, helping the thing to be fixed and go away.
What you will see probably out of him tonight is a lot of direction about what they're doing, even some description what they would do, if, in the worst case, it started to get a lot worse than unexpected and so on. For my money, that kind of thing is very reassuring.
So what you ought to do is recognize that they expect the best but also understand they're prepared for the worst. Once you see that, you're less likely to panic or have negative sentiment.
So, again, hearts go out to the people affected by this. The thing for me that really jumps out is the big negative Chinese effect and that will have ripple effects to Australia, where they export a bunch of stuff to China and so on. And even to the U.S.
HASSETT: But, again, if it turns around right away, then we're not looking at anything like a recession.
MARQUARDT: The president is only just back from India so now he's got --
MARQUARDT: -- a lot more time to focus on domestic issues.
Kevin Hassett, we've got to leave it there. Thank you so much.
HASSETT: Thanks, Alex. Great to be here.
MARQUARDT: Up next, a surprising development amid major shake-ups in the Intelligence Community.
Plus, the Defense Secretary, Mark Esper, is being grilled on Capitol Hill by both Democrats and Republicans. Should military funding be diverted to pay for the U.S. border wall? It's all in how you define national security. That's next.
MARQUARDT: The U.S. Intelligence Community's top intelligence official will be staying in her role after giving an assessment to the House Intelligence Committee, a classified assessment about Russia interfering in the 2020 election in support of President Donald Trump.
That official's name is Shelby Pierson. She told lawmakers in that classified briefing almost two weeks ago Russia is meddling in the 2020 election, something every official has been saying a long time. But Pierson also said Russia has shown support for both President Trump and Bernie Sanders, in the Sanders case, in the Democratic primary race.
Several national security officials told CNN Pierson may have overstated the Intelligence Community's formal assessment. That assessment is that, while Russia may have a preference for those two men, there's no evidence that Russia is actively working to boost Trump and Sanders in their races. That's an important differentiation.
Separately, multiple officials have told CNN that Russia does view Trump as a leader who they can work with.
Joining us now to discuss is CNN National Security Commentator, Mike Rogers, who is also a former House intelligence chairman as well as the host of CNN's "DECLASSIFIED."
Chairman, thanks so much for joining us. Lots to discuss.
Pierson has been perceived being on the chopping block because there were a lot of people who were angry, Republicans in particular, about what she said, this perception that Russia is working to boost Trump.
I want to read you a statement we got from Shelby Pierson. She said that, "Ambassador Grenell" -- and this is the new acting director of National Intelligence -- "has not asked me to leave." Her post, she means. "In fact, he has encouraged and affirmed his support for my position here in the organization. I have not asked to depart nor discussed resignation in any way."
Given that what we know so far, that there was this backlash to this briefing, that it appears led to the pushing out of her old boss, acting director, Joseph Maguire, are you surprised Pierson gets to keep her job?
MIKE ROGERS, CNN NATIONAL SECURITY COMMENTATOR & CNN HOST, "DECLASSIFIED": I'm not. She was brought in by Dan Coats to try to have a center of all of the information on election security.
Remember, the national security, despite all the presidential announcements, the NSA did a phenomenally good job in 2018 pushing back at Russian interference.
Remember, they're not going to flip votes. They did try that. It didn't work very well.
What they've been successful at is trying to get groups of Americans against other groups of Americans. They were targeting Christians to hate Muslims and Muslims to hate Christians and black activist groups against white supremacist groups. And they were trying to drive conflict. That's
MARQUARDT: It's successful.
ROGERS: It's very successful. If you look at it, maybe one the most successful information operation ever performed. I mean, Americans are still pretty mad at each other. Some of that is here -- we have our own sets of issues but some of that is driven by Russian information operations. So she was there to bring it all together. I know her. She's a
professional. She should be left in that job. She's doing a great job. And she has a really depth of understanding all the ways we're pushing back against the Russians and other countries as well.
MARQUARDT: Yes, Russia, China -- I'm sorry -- China, Iran and North Korea the big other three.
Pierson gets to keep her job for now. But when you look at Ambassador Rick Grenell -- so he was ambassador to Germany, zero intelligence expertise, which is why a lot of people, particularly Democrats, are saying he should not be in that job. He is seen as a Trump loyalist, not an intelligence professional.
Do you think he is going to clean house and get rid of people not seen as loyal enough to the president?
ROGERS: I think what you're seeing that he did immediately was try to change the leadership direction. There has been lots of talk from the administration for some time they wanted to either change the way the DNI office is structured, what kind of work it really does, is it too big. I think the ambassador will take that mantle on.
I don't think he will go there to help work strategic intelligence issues, you know, like DNI was designed to help with, like how much money do we spend in space intelligence collection, how much money do we spend at the NGA. So he's going through all of that process. He was changing the direction.
So I think the bloodletting, if you will, is probably stopped. And what you will see him do, I think, is try to change the direction of the DNI at -- again, this is not a new attitude for the White House. They've been thinking about this for some time.
MARQUARDT: I want to get your thoughts on another subject. Defense Secretary Mark Esper, he's been up on Capitol Hill today. He's been asked about his decision to divert military funding to pay for the U.S. border wall on the southern border. Let's take a listen to some of that.
(BEGIN VIDEO CLIP)
REP. ADAM SMITH (D-WA): This effort to keep stealing money for the wall is really undermining the Department of Defense and something, regardless how you feel about the wall, we should have a bipartisan consensus that that should not be done.
(END VIDEO CLIP)
MARQUARDT: That wasn't Esper. That was Adam Smith, Democrat on the House Armed Services Committee.
But Esper's justification for this, he's saying it is part of national security, this diversion of funds. Do you agree? ROGERS: I think they're using the counter-drug mission the Department
of Defense has to justify it.
Here's what I worry about. I really do think -- and I think Smith was right about this. There should be a bipartisan consensus on how you secure the southern border. It doesn't necessarily have to be a brick wall all the way across.
ROGERS: There are other ways to do it, including added technology.
I worry that we're taking funds from a military -- you know, when you fight as long as the military has been fighting, you have readiness issues. And all our military chiefs have said we have a readiness problem. Money means that.
So think of it. Aircraft that don't fly, ships that don't sail because of maintenance overdue. I think we need to recalculate how important those mission sets are versus the wall.
MARQUARDT: All right. Chairman Mike Rogers, thanks so much for your expertise.
ROGERS: Thank you.
MARQUARDT: Appreciate it.
ROGERS: Thanks, Alex.
MARQUARDT: Still ahead, former President Obama is staying out of the Democratic primary but some of Michael Bloomberg's ads are trying to suggest otherwise. Are voters buying it? That's coming up.
MARQUARDT: Mayor Michael Bloomberg seemed more prepared to answer tough questions in last night's South Carolina debate, but now his campaign ads featuring former President Barack Obama are in question.
CNN's Jeff Zeleny has more.
BARACK OBAMA, FORMER PRESIDENT OF THE UNITED STATES: It's good to see you.
JEFF ZELENY, CNN SENIOR WASHINGTON CORRESPONDENT (voice-over): Barack Obama is staying on the sidelines of the Democratic primary fight, though you might not know it from all those campaign ads.
AD ANNOUNCER: A great president and an effective mayor, leadership that makes a difference.
ZELENY: In Michael Bloomberg's unprecedented barrage of advertising, the former president is playing a starring role.
BARACK OBAMA, FORMER PRESIDENT OF THE UNITED STATES: He's been a leader throughout the country for the past 12 years. Mr. Michael Bloomberg is here.
ZELENY: On that day in October 2013, the president was actually giving a nod to Bloomberg's tenure as mayor, a point the Bloomberg's presidential campaign left out.
OBAMA: I want to give a special shout-out to a man who's been an extraordinary -- an extraordinary mayor for this city. He's been a leader throughout the country for the past 12 years. Mr. Michael Bloomberg is here.
ZELENY: A week before Super Tuesday, when Bloomberg faces voters for the first time in this presidential race, the Obama ads are playing all day, every day and on many channels at once.
They've certainly drawn attention, including from Obama's actual partner in the White House.
JOE BIDEN, FORMER VICE PRESIDENT OF THE UNITED STATES & DEMOCRATIC PRESIDENTIAL CANDIDATE: Isn't it amazing? We found out how everybody is Barack's best friend now?
BIDEN: Man, I look at all these ads, I say, right, it's amazing. I wonder where the hell they were -- heck they were when I was vice president with him.
ZELENY: But for Joe Biden, it's anything but a laughing matter. Bloomberg has spent more than $38 million and counting on two Obama ads alone. That's about three times as much money Biden has spent on his advertising overall.
ZELENY: So just how close were Bloomberg and Obama? The mayor and the president found common ground on guns and climate change, but they had many policy differences, like on the Affordable Care Act, the Obama administration's signature achievement.
In a 2010 speech, just months after the passage of Obamacare, Bloomberg, then an Independent, called the law a "disgrace." He described it as just "another program that's going to cost a lot of money."
A decade later, as he's running for the Democratic presidential nomination, Bloomberg has fully embraced it and now supports a Medicare-like public option that builds on the law.
The ads have drawn the ire of several former Obama staffers who have not forgotten Bloomberg's tepid endorsement of the president just five days before his 2012 re-election.
In an op-ed in his company's news service, Bloomberg praised Mitt Romney but said he would grudgingly vote for Obama. He wrote, "Rather than uniting the country around a message of shared sacrifice, he engaged in partisan attacks and has embraced a divisive populist agenda focused more on redistributing income than creating it."
In a 2016 speech discovered by CNN's "KFILE," Bloomberg acknowledged the slight.
MICHAEL BLOOMBERG (D), PRESIDENTIAL CANDIDATE (voice-over): The second Obama election, I wrote a very backhanded endorsement of Obama.
ZELENY: It's an open question whether the ads actually work.
Tracy Hughes, a military veteran from South Carolina, said she did a double-take when she first saw them. Now, she knows Obama didn't endorse Bloomberg or anyone yet.
TRACY HUGHES, SOUTH CAROLINA VOTER: I believe it's just a ploy, to me, to use President Barack Obama, his legacy and his history, to try and win votes. And I think it's not -- it's not a good thing at all to do. Because we can see right through it.
MARQUARDT: Our thanks to Jeff Zeleny.
Back to our breaking news. President Trump set to outline his administration's efforts to take on the coronavirus. The global impacts that we're seeing. That's next.