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U.S. Economy Adds 263K Jobs In September; Poll: AZ And NV Voters Say Economy, Inflation Is Their Top Issue; AAA: Gas Prices On The Rise As Midterms Close In; GOP Blames Biden Policies For Skyrocketing Grocery Bills; Source: DOJ Insists Trump Return All Classified Documents; AZ Sen Candidates Debate Immigration, Abortion, Election Integrity; GOPs Johnson And Dem Barnes Debate Tonight In Close WI Sen Race; CNN: Herschel Walker Fires Political Director. Aired 12-12:30p ET

Aired October 07, 2022 - 12:00   ET



JOHN KING, CNN HOST, INSIDE POLITICS: Hello, and welcome to Inside Politics. I'm John King in Washington. Thank you for sharing your day with us. Hiring cooled some last month but was still quite strong. Is this new jobs' report evidence, the Fed can engineer a soft landing? And will it impact your midterm vote 30 days from now?

Plus, did he give everything back? Some new reporting on growing alarm inside the Justice Department that get this, Donald Trump might still be holding on to classified documents, even after the FBI serve that search warrant at his home.

And we go live to battleground Arizona, the day after a heated Senate debate. It's a race that could well determine the balance of power. Here in Washington.


BLAKE MASTERS, (R) ARIZONA SENATE NOMINEE: Joe Biden is spending like a drunken sailor and at every single opportunity. Mark Kelly just says yes.

Mark Kelly, ARIZONA SENATE NOMINEE: I've been strong on border security. And I've stood up to Democrats when they're wrong on this issue, including by the way, including the president. You know, when the president decided, he was going to do something dumb on this and change the rules, you know, that would create a bigger crisis. You know, I told him he was wrong.


KING: Back to that in a moment. But at first for us, strong new economic numbers and why, why they just might clash with how you feel about things right now? The government's monthly jobs report came out this morning. 263,000 jobs were added to the economy in September. And you see upward revisions in the July and August jobs numbers too. Unemployment falling to the lowest level in 50 years, 3.5 percent. The superlatives are plenty, 21 consecutive months of job growth, half a million more jobs now than in February 2020. Wage growth up too, but a little bit slower. Americans going back to the office. In normal times, numbers that would get an unqualified, wow. But we are not in normal times. We're also a month out from the midterm vote. So, how you feel about the economy matters a lot more than what the numbers tell us.

With me to share their reporting and their insights, Bloomberg's Peggy Collins, CNN's Manu Raju, Olivier Knox of The Washington Post, and Maggie Haberman of The New York Times. She's also of course, the author of the new book, Confidence Man: The Making of Donald Trump and the Breaking of America. More on the book later, as well as that Arizona debate.

Let's start with these numbers, Peggy. We'll start with you just on the substance. Sometimes what people see and what they feel can be different. Leisure and hospitality up at 83,000 jobs, healthcare of 60,000 jobs back to pre-pandemic levels, professional and business jobs up 46,000, U.S. manufacturing 22,000 jobs. You would look at these numbers on most days, or the American people should say great, and you would think the president a month before an election would be doing handstands, but?

PEGGY COLLINS, WASHINGTON BUREAU CHIEF, BLOOMBERG: Well, I think the banner headline really is that the jobs market is still strong. People who are looking for jobs are basically able to find one. But as you said, John, there are some headwinds coming at us.

One of the things is that the Fed has really been turning the knob up on interest rates, right. And that's lagging in terms of how and when that's going to hit Americans at home. But breaking down the data a little bit more, at Bloomberg, we found a few key takeaways. As you mentioned, the hiring was led by a few key sectors like leisure and hospitality and healthcare.

The second is really that some of the hardest hit groups during the pandemic are basically fully recovered. So, women are back in the labor force. Black unemployment fell in September, again to the matching the lowest level since 2019. But the biggest caveat that the markets and the Fed are looking at is average hourly earnings, they increased again. And that's something that is basically tied to inflation. Wage growth means inflation is still rising.

KING: It's that wage growth is the number the Fed will look at when it decides how much to raise interest rates again. I guess the question is raise them at all, but most people think they will raise them again, the question is how much. The wage growth is also an issue that complicates the politics here.

In the sense that these numbers are, wow, however, the wage growth is not keeping pace with inflation. So how does a president who has a report that on in most years, in most times democrat or republican would be this is great, the economy is strong. How do you communicate when you can't tell people things are great when they're not quite sure they are? MAGGIE HABERMAN, SENIOR POLITICAL CORRESPONDENT, THE NEW YORK TIMES: Joe Biden has a model for how you deal with this. And it was the president he served under his vice president. This came up a lot in the 2012 election where the economy after the '08 fiscal crisis was rebounding, but people did not feel it in their lives. And the Obama administration was acutely aware of this as he was campaigning for reelection.

I think this White House and I think they actually have adjusted on this to some extent, but I think they were struggling with that for a while earlier this year because they would protest. The numbers are better than people are saying they are and they're certainly better than Republicans are saying they are. But if voters don't feel that way, it's a problem.

One of Joe Biden's calling cards as a candidate and as a vice president, and the senator was always showing empathy. And so, I'm assuming that he is going to be able to channel that whether it helps enough for the candidates in the midterms is an open question.


KING: And so, if you look whether it helps enough, is a big question because you look this is our polling yesterday in Arizona and Nevada, polling showing all the races there are incredibly close. Economy inflation in both states by far, by far, Manu, the number one issue. The challenge is for members of the president's party, you know, you can't go home and say you're wrong to people who are paying more for food, who see gas prices trickling up a little bit now. So how do you find that sweet spot?

MANU RAJU, CNN CHIEF CONGRESSIONAL CORRESPONDENT: Yes. And look, I've been asking those same senators who are up for reelection in those states in Arizona and Nevada, Catherine Cortez Masto, Mark Kelly, about whether they are - who they're confident and they are satisfied with the administration's handling of this issue, and then on inflation and the economy and they don't say yes, because they know full well, but how their voters feel.

So, despite numbers that are very positive, they fully recognize that this is the issue that is driving the electorate. And I did think those numbers were pretty striking because we, of course, since the Row decision, we have seen one Democrats focus almost entirely their campaign on choice and abortion, but the economy and how people are feeling as it does time. And again, and election after election is what is driving voters, which means, we'll see how they feel on election day.

KING: And so, you get inside 30 days, which we're about to be for the midterm election, four weeks from Tuesday, when we get into next week. You're looking for good. You're looking for external events that help you. The president says this is a report that's mostly good for the president. There was one more before the election, one more jobs' report.

The problem is the gas trend right now is against him. And this is we could show you AAA, a year ago, a month ago, a week ago and yesterday, and the current average starting to trickle back up again. And the president, I'm going to put it in burn chart, just got a kick in the teeth, from the Saudis and the Russians when it comes to oil production.

OLIVIER KNOX, NATIONAL POLITICAL CORRESPONDENT, THE WASHINGTON POST: Yes. You're going to get four steps. All right. You're going to get talking up the jobs number, you're going to get the empathy factor that Maggie mentioned. You're going to get a renewed attack on special interests. Biden is going to be blaming special interest corporations and others for inflation for rising prices rather than economic pain, and then, "the Republicans have no plan." That's the four-step process by which Democrats in this White House are going to be pushing back, pushing through the last 30 days up until the midterms on the economic front.

KING: A structural question, we keep asking ourselves in just about every sector of what we cover is that the old rules apply. The economy, that's a great question coming out of the pandemic. Betsey Stevenson, who worked in the Obama administration tweeted this today.

The number of people not in the labor force, who currently want a job remains nearly 20 percent higher than pre-pandemic levels. Nearly 6 million people wanting a job, but not actively searching in this tight labor market. Why? Is it Childcare? Health? Not sure what to do? Mental health? Maybe all of the above?

COLLINS: Well, that's right, John. In terms of the people who are coming back into the labor force that will potentially give us an added cushion, maybe if we do go into a recession. Will it be a recession that is, people say light on the job losses because there are still people out there? Or are there systemic issues, like you mentioned childcare, that is keeping people out and will continue to keep people out of the labor force.

KING: If you watch the political part of this, I guess the question is, how did - I keep asking where's the sweet spot? I remember, you mentioned the Obama campaign or my presidential campaign in 1992. George H.W. Bush tried to tell people the economy was getting better. The numbers supported that, people just didn't believe it, because they had been through a recession, and they were exhausted. If you turn on the TV and you see an economy and its most likely a Republican ad saying this.


KING: If you leave it unanswered, it has even more weight. So, how do you answer it without offending people?

RAJU: Yes. Look, that's been a difficult thing for them the message she's referring to, I assuming that attack at the $1.9 trillion bill economic package that was passed at the beginning part of the Biden administration, all Democrats supported. They later voted for the inflation Reduction Act, all Democrats supported even though the bill, according to analysis doesn't actually reduce inflation, meet it in a meaningful way in the short term or the long term. But that is, you're seeing obviously there's been a big attack on the campaign trail, but some Democrats are taking this head on. I've seen people like Tim Ryan in Ohio go out and raise concerns about the rising grocery prices because they also are keenly aware that this is what voters are concerned about.

KING: Month left to go be fascinated, watch it play out. Up next for us. This Donald Trump still have classified government documents. The Justice Department believes he does and is demanding he returned them.




KING: Justice Department officials believe Donald Trump still has sensitive government records in his possession and they are insisting the former president return them. A DOJ demand to Trump lawyer says, any remaining documents marked classified must be returned. The demand makes clear, the government does not believe all the classified materials were recovered back when the FBI executed its search warrant at Trump's Mar-a-Lago back in August.

The New York Times was first to report this DOJ demand and its account includes this. "The outreach from the department prompted a rift among Mr. Trump's lawyers about how to respond, with one camp counseling a cooperative approach that would include bringing in an outside firm to conduct a further search for documents, and another advising Mr. Trump to maintain a more combative posture. The more combative camp, the people briefed on the matter said, won out."

The former federal prosecutor Shan Wu joins our conversation. Maggie Haberman, you're part of this reporting in the times. The more combative group won out, which means what, the Justice Department is asking the Trump team is going to do?

HABERMAN: It means, it's yet another standoff, which is a little like what we have seen at various points throughout this year. So, you know, you had the Justice Department asking if there were additional documents in the spring, then there was a subpoena. Then there was a search, then the Trump people said they had returned everything with classified markings. Then there was an FBI search.


And so, I think we are just entering that territory again. We reported and as we understand it, this is part of ongoing negotiations or discussions between the Trump folks and the DOJ. The DOJ has believed not just that there's additional documents, but they've talked about Bedminster, his club in New Jersey, specifically. There is questions about, whether he might have documents at another location. And so, the Trump team is basically daring DOJ once again, to come get him and we'll see what DOJ does.

KING: This is another one of those stories that makes you think about what, and then you say, it's Trump in the sense that, if they served a search warrant at my house looking for things and I had them in the other house, I think I'd raise my hand and say, here they are, I got the rest of them.

What do you do here? If you're the Justice Department, and you believe there are more documents. How long do you negotiate I guess, before they negotiate it for a long time about Mar-a-Lago and that had a search warrant? How long do you negotiate before you say, we need a search warrant for Bedminster?

SHAN WU, FORMER FEDERAL PROSECUTOR: I mean, frankly, they probably would not normally have to keep negotiating at this point. I think there's some frustration, I certainly felt as a former prosecutor as to how many bites of the apple are you going to give him? But on the other hand, it's not like it's all to Trump and his lawyers' benefits.

All this conversation, can one supply evidence of probable cause for searches for other places, as well as putting those lawyers in further jeopardy for representations they're making? So, it's all at this point, part of a criminal investigation.

KING: And if to stand the legal part for men. If you're trying to push for these documents, you believe there are more, I assume that's based on an inventory they have. They have a list, they said, we recovered this, and now we have this inventory, we're missing these. Is there an existing process? Can you go to Judge Cannon? Can you go to the special master? Or is this a new piece, and you'd have to have a new warrant or a new hearing, a new application, if those negotiations don't work out?

WU: I mean, you could go to Judge Cannon, and probably what they want to do is use all available tools. But in terms of a search warrant, it's a new matter. They'd have to establish new probable cause for whatever area they want to search in.

KING: And the story and the detail and the time story, and CNN has match some of this reminds you of these. If you look at the pictures back during the search warrant, there were eight empty folders, labeled return staff secretary and military, empty folders with classified banners, 28 empty folders labeled returned to staff.

You know, and there are empty folders throughout where they recovered documents, but they also recovered all these folders that, you know, normally this contains something, but it's not there. So, you get the folder, but you don't get the documents. The question is how do you get them?

KNOX: Right. And this is actually - I have a couple of questions for you. One is, to what degree can you compel Donald Trump to say under oath that he's returned everything, right? So OK, you're styling us, you're holding us off. Is there a path for us?

Because one of things that's happened in this litigation has been the president - the former president comes out and says, I declassified everything and the DOJ says, OK, put that in writing. You know, we want your lawyers to put that in writing. We want your lawyers to assert that in court, and they haven't. So, I'm wondering with Twitter, you can play off that.

WU: That's a really good technique. They could ask him more in the Cannon case through civil interrogatories for him to make these representations, which would be under oath. They can also try to compel through a grand jury subpoena, but that wouldn't get his testimony. All his lawyers should quit, if he insists on actually testifying under oath about where the documents are.

HABERMAN: They will most likely.

KING: Well, there was a CNN reporting a week or so ago that Mr. Chi (Ph), so we had hired in Florida. Everyone thought that was smarter Donald Trump to take again, and it's very experienced, more experienced lawyer hired that he was somewhat sidelined. Can I interpret that as that he was in the camp that we should cooperate?

HABERMAN: That's what my colleagues' reporting shown is that he was among those, and he wasn't the only one. And he was among those who believed that the documents - excuse me, that they ought to hire a firm to comply with what DOJ was searching for. And then there's was more combative group that wants Trump to keep fighting.

KING: And sometimes I understand the Republican crickets, I don't necessarily, you know, politically why the Republicans don't want to talk about things? This is another one where - this is sensitive government documents, you would think, partisanship shouldn't matter here.

RAJU: Yes. But look, I mean, you've seen Republican reaction either been full on defense without even knowing what they were searching for, from people like Kevin McCarthy, to people like Mitch McConnell who said, I don't want to even talk about this until we learn more about it. And if you can imagine if there's another effort to try to get these documents or a search warrant that is executed, what the reaction would be among those Trump defenders. That's one reason why Justice Department is (crosstalk)

KING: This is about sensitive they're asking for records marked classified, but again, I just want to make the point. All of the records belong to the United States government classified or not, they belong to you at home, not to the former president United States. Just in, Herschel Walker firing, just fired his political director. We'll tell you why. Next.




KING: Just in a shake up inside the Herschel Walker campaign in Georgia. CNN has just learned the Georgia Republican Senate nominee has fired his political director, Taylor Crowe. Crowe getting a pink slip, sources telling us over suspected leaks to the media. The former football stars' campaign declining to comment, the timing of course is notable. Move coming the same week, at Daily Beast report accused Walker of paying for a woman to have an abortion for the decade ago. He denies that allegation emphatically. More on this story in a minute. But out to the campaign trail now, to another big midterm race in battleground Arizona, where a heated debate last night focused on abortion, immigration, and election integrity.


That Senate race of course, could be critical to deciding which party controls the chamber. Here in Washington, Republican Blake Masters in the debate trying to tie democratic Mark Kelly to President Biden. Senator Kelly says, Masters is dangerous to democracy because he pedals the election lies of Donald Trump.

CNN's Kyung Lah is covering this crucial contentious race. Live for us in Phoenix. Kyung, tell us more about this crackling debate?

KYUNG LAH, CNN SENIOR NATIONAL CORRESPONDENT: What we really saw in this debate was the incumbent. Mark Kelly really trying to disengage, right. We're trying to create some distance between himself and his own party, the Democrats as well as President Biden. That was, in part a way for him to deflect from some of these attacks that we saw from the Republican challenger Blake Masters, who went after him again and again, on the economy to immigration. Take a listen?


MASTERS: Illegal aliens when they come here, they're supposed to be caught and deported back to their home country or back to some other country that wants them. But no, Joe Biden and Mark Kelly, they laid out the welcome mat.

KELLY: And I've stood up to Democrats when they're wrong on this issue. Including by the way, including the president, you know, when the president decided, he was going to do something dumb on this and change the rules, you know, that would create a bigger crisis. You know, I told him he was wrong.


LAH: Telling the president that he was "wrong." Now one-third of voters here in the general election are expected to be independents. At least, that's what the voter registration is showing us, a third of the voters independent. So, a play for the middle by the incumbent, Senator Mark Kelly.

But we also saw that from Masters, a Republican challenger. What we saw him do is, when asked directly by the moderator on how some very strong anti-abortion language on his website suddenly disappeared. He refused to answer that, despite the moderator asking him again and again, as simply saying that he supported a 15-week restriction.

And on the issue of democracy, we saw a campaign, a primary campaign, John, where Masters said, that he thought that Trump indeed won 2020. In this debate, he said that he has not seen evidence of the vote being fixed. John?

KING: We call that trying to scamper to the middle, I guess. Kyung Lah, live for us in Phoenix. Kyung, thank you. It's a fascinating race heading into the final month. Now to another one out in battleground Wisconsin. CNN's Omar Jimenez is there. Omar, a big bait tonight for that Senate seat. Republican incumbent Ron Johnson against the Democratic candidate, Lieutenant Governor Mandela Barnes.

OMAR JIMENEZ, CNN CORRESPONDENT: That's right, John. That first debate gets going later tonight at eight o'clock eastern, and this is really a dead even race between Senator Ron Johnson and Senate hopeful Lieutenant Governor Mandela Barnes.

Now when you look at the differences on these two sides. Marquette Law poll, which is a statewide poll here shows that 95 percent of Republicans polls are on with Ron Johnson, 95 percent of Democrats polls more than with Mandela Barnes. So, we're really talking about just a tiny portion of Wisconsin's more than 3-million-person voter base that could swing this election.

Now, when you look at the ad spend on this, Republicans have spent the majority of their spending for TV ads on crime, more than 60 percent on the Democratic side, the majority has been on abortion. And on ads in general, if you're anyone in this Wisconsin area, you can't go far without seeing it. More money has been spent on TV ad airings, or I should say there had been more TV ad airings here in Wisconsin for the Senate race than any other Senate race in the country.

But despite abortion on the Democratic side, and crime on the Republican side, the issue that voters here have been the most concerned about for months now, according to that same Marquette Law poll has been the economy and more specifically inflation. So, we're looking to see, if some of those issues break through tonight at the first of two confirmed debates here in Wisconsin. John?

KING: Looking forward to watching that one. Again, this is fantastically close, heading into the final month. Omar Jimenez, live for us in Wisconsin. Omar, thank you. Let's bring the conversation back in the room with our great reporters.

Let's start Manu with this Herschel Walker news. We don't know all the details yet, but the political director being fired 30 days out. Tyson Walker is mad about something. He's in the middle of a controversy. He's mad about something else. It's risky to shake up your top campaign staff when you get about the urgent business identifying turnout, finishing - getting to the finish line.

RAJU: Yes. And look, the way they've handled this controversy about whether or not he paid for an abortion with the former girlfriend, which he denied vociferously at first threatened to sue has not actually sued. And in that second report came out and they said that the mother of the child is one who is alleging this, they initially declined to comment on that. Then they denied it.

Then Herschel Walker went behind the scenes for several days, then when public yesterday answering a few questions to reporters. They've been uneven, shall we say and how they have responded to this controversy at a critical time, and of course, shaking up a campaign is never a good sign at this key moment.

But I do think that I was in Georgia earlier this week. I interviewed a lot of voters. What was interesting is that voters views are very entrenched at this moment. We didn't really get a sense of their vote are true real swing voters who are undecided. There are so many people who are decided this key moment.