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Pence's Fmr. Chief Of Staff Appears Before Jan 6 Grand Jury; Wash Post: Grand Jury Sends Subpoenas To Arizona Fake Electors; Consumer Confidence Drops For Third Straight Month In July; Biden: "I Don't Think We're Going To See A Recession'; Federal Reserve Expected To Raise Rates Again Tomorrow; U.S. Inflation Hits 40-Year High Of 9.1 Percent In June; AAA: Gas Prices Steadily Decline In The Last Month; Trump, Pence Back In Washington To Give Dueling Speeches. Aired 12- 12:30p ET

Aired July 26, 2022 - 12:00   ET

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

[12:00:00]

JOHN KING, CNN HOST: Hello, and welcome to Inside Politics. I'm John King in Washington. Thank you for sharing a very busy news day with us. The Justice Department now looking deep inside the Trump West Wing, a federal grand jury investigating the insurrection and Donald Trump's efforts to steal the 2020 election. Here's from Mike Pence, his former Chief of Staff.

Plus, more evidence of an economic funk. A new data points shows American consumers are getting even more pessimistic, and it's because of inflation. And a split ski screen day for Republicans. Trump in Washington, so as Pence. Competing speeches put their rift and the wrestling match for control of the Republican Party, front and center.

Up first for us though, a federal grand jury. Its highest profile witness and what it might mean for Donald Trump and those who helped him try to steal the 2020 election. The former Mike Pence Chief of Staff, Marc Short, confirming last night right here on CNN. That he did receive and did comply with a grand jury subpoena, his first appearance before the Washington D.C. grand jury.

Marc would not discuss the content of his testimony. But short is a witness to a long list of episodes, including the senior circle of Trump allies who pushed a scheme to recruit fake electors out in the battleground states, with the hope that Vice President Pence would then refuse to certify the real Biden electors.

Multiple reports say, Greg Jacob, Pence's former chief counsel also appeared before that federal grand jury. He too had a closeup view of Trump's effort to get the vice president to go along. The new disclosures tell us the Justice Department investigation is poking around Donald Trump's West Wing and his inner circle. And they confirm the fake electoral plot is a major focus.

Let's get straight to our justice correspondent, Evan Perez. Evan, inside the West Wing, big high-profile witnesses. It's a big deal. EVAN PEREZ, CNN JUSTICE CORRESPONDENT: This is a very big deal, John. And look, these two men, Marc Short and Greg Jacob are as you pointed out witnesses to a lot of things. But let me point your attention to a couple of meetings. Certainly, a meeting on January 4, where the former president and his lawyer John Eastman, were trying to pressure directly the former Vice President Mike Pence to that he had the power to set aside the election results and find a way to seat these electors, these fake electors that could keep the former President Donald Trump in power, despite the fact that he had lost the election.

That is a key meeting. There is a key episode. There is also one that Greg Jacob described in his testimony to the January 6 committee. He said that on January 5th, he had another conversation with Eastman in which he said look, we're going to lose nine to nothing in Supreme Court, if we take up this idea of yours.

And so, these are key conversations that prosecutors would be interested in. Because we know again, we know from the attorney general, that this is the most important investigation in the history of the Justice Department. And it is looking directly at the issue of the effort to overturn the election, to discard the results and to keep the former president in power.

This is the closest. As you pointed out, this is the closest we've heard of criminal prosecutors at the Justice Department getting into the Trump White House, and it directly at least indicates that they would have been talking to people who had direct conversations with the former president, a very big deal.

KING: Very big deal, indeed. Evan Perez, appreciate the important reporting. With me in studio to continue the conversation, to share their reporting and their insights, CNN's Jeff Zeleny, Tia Mitchell of the Atlanta Journal-Constitution, Zolan Kanno-Youngs of The New York Times, and the former federal prosecutor Shan Wu.

Shan, let me start with you. Marc Short, Greg Jacob in the room with the president, then president of the United States Donald Trump at times in conversations with the vice president for the time Mike Pence. About what Donald Trump was asking him to do in the room with other people involved in this plot to set up fake electors. Does that tell you without - does it now without a doubt the Justice Department is looking at Donald Trump?

SHAN WU, FORMER FEDERAL PROSECUTOR: I don't know. We can say, they're looking at Donald Trump specifically, and Garland is going to really do his best, not to say that. They're certainly looking at these events around him. They're definitely investigating. Now, these two particular witnesses are certainly bad news for John Eastman, since he's the one making the arguments.

[12:05:00]

Kind of notably missing here is what was Trump's reaction. Was he just sort of sitting back, listening to all this, taking it in? Was he actually indicating anything physically, verbally that's the kind of thing that I would like to know? But it certainly indicates that they're actively looking at this particular issue now in a criminal investigation, and these two people are definitely problematic for Eastman.

KING: But they could also be problematic for Trump in the sense that they were in the room. Sometimes you're asked what was Donald Trump's reaction? They might have eyewitness accounts so that they would also have from separate meetings and additional meetings and phone calls, the vice president's account.

WU: Oh. Absolutely, yes.

KING: And so, let's just remember. This is a Justice Department investigation now looking inside Trump's West Wing (Ph). The January 6th investigation up on Capitol Hill has been going through as much of the same territory, which is how we do know from Greg Jacob. Again, report say he also testified before the grand jury. And listen to this on January 6, talking about Mike Pence's reaction to one of those meetings with John Eastman, the Trump lawyer who was saying, hey, when you're up on Capitol Hill, on January 6, you can just refuse to certify the election, throw it into chaos.

(BEGIN VIDEO CLIP)

GREG JACOB, FORMER PENCE COUNSEL: He said, that's rubber room stuff. I understood it to mean that, after having seen play out, what happens when you convince people that there is a decision to be made in the Capitol legitimately about who is to be the president. And the consequences of that, that he was still pushing us to do what he had been asking us to do for the previous two days that that was certifiably crazy.

(END VIDEO CLIP)

KING: Still pushing it Jeff Zeleny, the other testimony includes that at that meeting, John Eastman was told his plan was illegal and he kept pushing it.

JEFF ZELENY, CNN CHIEF NATIONAL AFFAIRS CORRESPONDENT: Right. So, it clearly seems that that is where the question line would be. And if you look at these two gentlemen, Marc Short and Greg Jacob. These are two men who do not wish the former president ill. They are not, you know, they're in the line of Republican allies of this administration who simply are following the rules of the subpoena. They both were subpoenaed to testify, and my guess is there are others, and we'll learn that.

So, what we've learned all the takeaway from this, as Evan was saying, this shows that the Justice Department and Merrick Garland for all the criticism from the outside. They're not doing enough. They actually are doing more than we know. We don't know what the next steps are, but we do know that there is this investigation going on. That might be just behind the January 6 committee, but it is actually - they have learned a lot.

So, maybe they're what. He was appearing in the hearing a month or so ago. So maybe they're a month behind, six weeks behind. But this program, if you will, is continuing into the fall. So, it is significantly - it's a huge development. We don't know exactly what it means. We just have to be patient. That's how investigations are.

ZOLAN KANNO-YOUNGS, WHITE HOUSE CORRESPONDENT, THE NEW YORK TIMES: And coming at an interesting time for the Justice Department, though as well. I mean, so much of the public has been watching these congressional hearings and seeing evidence, evidence that is picked out by members who are on the committee as well to have a narrative, to have a point that does say, look, this, Trump was involved with this, that we want to have accountability at the very top.

That's going on at the same time that you have a separate investigation, Georgia also going on. Much of the public seeing the fast pace of those two and wondering, where's the Justice Department on this, but it's just two different ways to go about investigation. One that is very public, whereas the attorney general has made it clear that he sees a benefit as well to not doing this in public. But we're starting to see that pressure ramp up. So, this revelation coming out of interest.

KING: And also, you mentioned the Georgia investigation, which you track very closely because you're holding a newspaper space there. I want to read some Washington Post reporting about the federal investigation and then connect it to Georgia.

Copies of two subpoenas issued to Republican state senators from Arizona were released Monday via a public records request, confirming what has been previously reported about the June demands for records related to the signing or mailing of any document purporting to be a certificate certifying electoral votes in favor of Donald J. Trump and/or Michael R. Pence. So, documents, your signatures.

This is America. You can say Donald Trump won in a landslide. You could say Joe Biden is a fraudulent president. But if you signed documents attempting to defraud the United States government and cheat, that's where you get into legal trouble.

TIA MITCHELL, WASHINGTON CORRESPONDENT, THE ATLANTA JOURNAL- CONSTITUTION: Yes. And then in the case with the Georgia alternate electors, you know, the allegation is they signed a document that was meant to look like an official document for the state's electors, which they were not because Donald Trump did not win in Georgia, Joe Biden did. There is also a lot of speculation about what the Georgia alternate electors were told. Were they told to meet in secret? Were they told to mislead people about where they were meeting, when they were meeting and why they are meeting?

And I think all that information is what both the district attorney in Fulton County as well as the January 6 committee in the Department of Justice want to know as they determine whether there were crimes committed around this entire scheme, when it comes to the so-called fake electors.

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KING: How important is it when you have investigation, whether it's the state one in Georgia or this federal grand jury investigation is just covered in clouded by politics, it just is because it's a former president United States to be pursuing crimes with documents in terms of, so you can prove a case dispassionately as opposed to politics.

WU: That's really critical because not only the documents appear to be objective when you're presenting to a jury Sunday, but they also give you the means to control and test witnesses who as Jeff was saying, may be allies of the Republicans, allies of the president. And when they try to shade or spin things, the documents are what you use to keep them in line. So, it really important.

KING: In fascinating to watch this play out again, we know what's public, we don't know what is behind the curtain, but we'll stay on top of it. Up next for us. American consumers are not happy, and you know the answer, inflation is to blame.

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[12:15:00]

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KING: Today a clear sign American consumers are unsteady. The latest consumer confidence index found levels falling to their lowest since February 2021. It's one of several important data points we are seeing this week, a big week of economic news. Let's get to CNN business reporter, Matt Egan. He is covering the story. Matt, American consumers are in a funk. Tell us more.

MATT EGAN, CNN BUSINESS REPORTER: Yes, John, no doubt about it. The mood on main street continues to darken. Consumer confidence declining for the third month in a row in July, falling to levels unseen since President Biden's first full month in office. Remember that was at a time when vaccines were not even widely available. And despite the fact that the jobs market is historically strong, just 17 percent of consumers rate business conditions as good, 24 percent say conditions are bad.

Now this is a big deal because consumer spending is the engine of this economy, if consumers stop spending, all bets are off. This has been driven primarily by two powerful and related forces. One, the worst inflation in 40 years, and two rapidly rising borrowing costs as the Federal Reserve scrambles to try to get inflation under control by raising interest rates.

Now, what's interesting is that this is coming at a time when gas prices are actually starting to move in the right direction. The national average is at $4.33 a gallon. That is not cheap, but it is down $0.17 cents in the past week, $0.69 cents down from the record high. The White House we know has been laser focused on this issue.

President Biden releasing unprecedented amounts of emergency oil from stockpiles. The treasury department now with this new analysis, estimating that the president's moves to release emergency oil combined with moves made by other countries, that has actually dropped the national average by $0.20 to $0.40 cents a gallon. But John, clearly consumers are still concerned about inflation, not just at the gas station, the grocery store, rent, the car dealership, the mall. It continues to erode confidence right now.

KING: Matt Egan, live for us in New York. Matt, thanks so much. Let's continue the conversation and joining us to help, Jeanna Smialek, the New York Times. Consumers are in a funk. It's a consumer driven an American economy. So, I mentioned it's a big week for economic news. One of the big things is the Fed meeting coming up tomorrow, right.

And so, if you just look at the headline. CNBC, Walmart Cuts Profit Outlook, CNN Business, GM earnings fell. CNN Business edge of a global recession. IMF slashes world economic forecasts. If you're the Fed, we have no doubt right, that we're going to get another interest rate hikes. Sort of how do they see the economy and how far do they go?

JEANNA SMIALEK, FEDERAL RESERVE & ECONOMIC REPORTER, THE NEW YORK TIMES: I think the Fed is almost completely focused on wrestling inflation under control this minute. I think it's really important for people to keep in mind that when the Fed looks around at its economy and sees signs that it is slowing down and that consumers are starting to pull back, that is basically what they are going for here.

They are trying to make borrowing more expensive to slow down home buying, to slow down big purchases, like cars and business expansion. And the end goal here is to really sort of wrestled demand down and that will allow supply to catch up and hopefully help prices to moderate.

KING: So, if the Fed sees evidence that consumer confidence continues to drop, that means consumers are more likely to pull back, spend less or spend on the basics as opposed to extravagance, that's the Fed. We all think, oh my God, America is in a funk. The Fed says what we're doing is working.

SMIALEK: Which puts them in a very uncomfortable position because the Fed typically likes to be sort of the economy's cheerleader. Obviously, they're generally very focused on keeping unemployment very low and employment very high. But at this moment, I think that they think their most important job is getting inflation under control. And essential to doing that is getting people to stop spending so much.

KING: If you're sitting in the Biden White House right now, you're looking at this from an economic perspective. But Tuesday when we get to next week is three months of the midterm elections, will gas prices keep going down? Will the price of other things like energy, eggs and milk, we could just show you that?

It's not, you know, if gas prices were dropping, and everything else were about the same, people would probably feel a lot better than they do. But everything is up. So, the Biden White House, you need that trajectory to start the other - the rest of it to start going down. And again, when we hit Tuesday, we have three months to the election.

KANNO-YOUNGS: Jeanna was mentioning how the Fed would usually like to be an economic cheerleader. If you're the Biden White House, you would love to have someone be an economic cheerleader right now. But instead, you do have Americans who are focused on inflation, understandably, when you're leaving your house and your basic necessities, prices are going up and outpacing your wage increase, of course, you're going to be focused on that.

And for the White House, it's a tricky position that they're in because you can tout job growth. You can tell unemployment numbers, things that you're looking at measure of successes, but as long as those basic necessities, our prices are going up, that's what people are seeing first. It's very interesting as well, that now an economic indicator for the administration. What you're hearing more from the White House is that in touting declining gas prices.

It'll be interesting to see if that continues to go down. Just now, you saw their treasury department, I believe, this morning released a study attributing some of those declining prices to the releasing of petroleum reserves. It's if you told me a month ago that the White House should be celebrating gas prices at this point, I'd be a bit surprised.

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KING: I remember my very first presidential campaign the George H. W. Bush White House, had the numbers on its side, saying things are getting better, but consumers didn't feel it. Consumers didn't feel it yet. It takes a while to get over the hangover, if you will. To come out of your funk, you need to see more than just one or two data points.

ZELENY: Without question, and when we talked to voters across the country, regardless of where they are, they know this in their vacation habits, their shopping habits. So, none of this is news to the White House today, is consumer confidence level. They can see that out there. The question is, can they just get people feeling slightly better? There is this sense of unease that is attributed to many different things, but it is, you know, at the heart of it pocketbook issue, so is the president able sort of take control.

As Zolan said, the White House is trying to use gas prices as a metric that things are getting better, because they've been getting hammered on it for the last couple of months. So, they're trying to see some good news here. We'll see what it is by November. But none of this is a surprise to the White House, of course at all. In Friday numbers that won't be there.

KING: I just realized I was trying to cook the books. That was my second presidential campaign. I was trying to make myself a little bit younger. That was 1992. But you're seeing this in your state in Georgia, in the sense that you have Senator Warnock, who's trying to run for reelection. When he came into office and flip the Senate to the Democrats. He was a big buddy of Joe Biden. Now you go down on the battleground states like Georgia, a lot of Democrats are backing off a little bit because they politically think they need distance.

MITCHELL: There's quite a bit of distancing from Warnock's campaign from the president. Things like he just challenges the Biden administration on certain things. Well put out a letter saying, he doesn't agree. And of course, Senator Warnock called for a temporary moratorium on the federal gas tax. And of course, there weren't enough members of Congress to do so.

President Biden seemed to warm up to the idea, but it never happened. But that allows Warnock back in Georgia to say, I have called for other measures to lower gas prices. And even at the state level, the gas tax has been suspended temporarily. I think gas is hard for the Biden administration, because it's going down, but it's still much higher than it was even a year ago.

KING: And is there anything the Fed looks at now? Is the gas prices enough to convince somethings or consumer confidence enough? Or is it still going to be somewhere around three quarters of a point, something like that?

SMIALEK: I definitely don't think the gas prices are enough. They've very clearly signaled that it's going to be a pretty big rate increase this time. And I think that what the Fed is really looking for is a broad-based decline in inflation. So, we're seeing as we've alluded to here, we're seeing a big increase in a bunch of prices. It's not just gas, it's rent, its food, its clothing, it's, you know, furniture, it's basically everything consumers are buying. And until that broad increase starts to simmer down, I think the Fed is going to be on this path to try and really cool off the economy.

KING: So, watch and see. Big week continue. So up next for us, partners turned Republican rivals. Donald Trump and Mike Pence deliver competing speeches right here in Washington.

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[12:25:00]

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KING: Donald Trump and Mike Pence are giving speeches here in Washington today. As the partners turned rivals offer competing paths for the Republican Party. It is the former president's first time back in Washington since he left the White House 17 months ago. His speech is this afternoon. The former Vice president spoke to young conservatives this morning. Listen, it is not hard to figure out who he's talking about here.

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MIKE PENCE, UNITED STATES FORMER VICE PRESIDENT: In order to win, conservatives need to do more than criticize and complain. We must unite our movement behind a bold optimistic agenda that offers a clear and compelling choice to the American people. Now some people may choose to focus on the past, but elections are about the future. And I believe conservatives must focus on the future to win back America.

(END VIDEO CLIP)

KING: CNN's Kristen Holmes is at the Trump speech venue of the America first agenda summit here in Washington. Kristen set the stage. KRISTEN HOLMES, CNN CORRESPONDENT: Well, John, first of all, just take it one step back here. This is really extraordinary when you think about it. These two men serve side by side of the White House, just miles from where we are here. Today, they're giving their view of the future of the Republican Party. And this really is a fight over the future of the Republican Party.

Now Trump will hear from him momentarily. He is meant to give a policy speech about law and order. This is what his allies hope he actually sticks to. Remember, Republicans believe that rising crime rates are going to be a driving factor in the November midterms. They want him to stick to this to lay out those policies, take this opportunity to one, have a Republican agenda ahead of the midterms, and two to really lay the groundwork in a real way for a presidential bid in 2024.

Instead of just these long rallies in which he gives his grievances about 2020. It remains to be seen, whether or not Trump can actually focus on the future. You heard that from Mike Pence there, it seems like a pretty thinly veiled reference to the fact that every speech that Trump give, ends up being about 2020 election. He is hung up on the grievances, on the people that he believed betrayed him and all these conspiracy theories around the election.

So today is really a test to see whether or not he can stay on message. You know, here the America first policy summit you're going to hear from some of conservative leaders from across the spectrum. We have Ted Cruz, Kevin McCarthy, Lindsey Graham, Kellyanne Conway, Sarah Huckabee Sanders, all of them likely to be focused on that future of the Republican Party. But again, it remains to be seen whether or not President Trump can actually move forward.

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