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Biden: "I Don't Think We're Going To See A Recession"; 165+ Government Staffers Demand Biden Act On Climate Crisis; Federal Reserve And Senate GOP Spar Over Allegations Of Chinese Influence. Aired 7:30-8a ET

Aired July 26, 2022 - 07:30   ET



DR. ANTHONY FAUCI, CHIEF MEDICAL ADVISER ON COVID-19 TO PRESIDENT BIDEN: -- common sense, good CDC-recommended public health policies that have saved millions of lives. If you want to investigate me for that, go ahead.

JOHN BERMAN, CNN ANCHOR: Dr. Anthony Fauci, appreciate you being with us this morning. Thank you.

FAUCI: Thank you.

BERMAN: So, critical economic reports will be released this week, which would indicate whether the United States might be headed into a recession. What experts will be looking for.

BRIANNA KEILAR, CNN ANCHOR: And Senate Republicans claim the Federal Reserve isn't doing enough to combat Chinese influence at the bank. The Fed is now pushing back. We have new reporting just in this morning.



JOE BIDEN, PRESIDENT OF THE UNITED STATES: We're not going to be in a recession. My hope is that we go from this rapid growth to a steady growth. And so, I'll see -- we'll see some coming down. But I don't think we're going to -- God willing, I don't think we're going to see a recession.


BERMAN: So, President Biden trying to splash cold water on the notion that the United States is headed into a recession. Several reports set to be released this week might paint a clearer picture of where things stand.


The latest Consumer Confidence index is out today, and tomorrow, the Federal Reserve is expected to raise interest rates. Thursday, the second-quarter GDP report comes out. And Friday, the latest personal consumption figures.

With us now, "CNN NEWSROOM" anchor Poppy Harlow, and CNN business correspondent Rahel Solomon.

Friends, so the issue is -- particularly with the GDP, which is coming out Thursday -- if it does show a negative number it would be the second quarter in a row of negative growth. And there are those who say well, that's two quarters in a row. That's a recession, Rahel -- but?

RAHEL SOLOMON, CNN BUSINESS CORRESPONDENT: Yes. So that is the rule of thumb, right? I mean, that's sort of what analysts use -- what a lot of people use, sort of, as shorthand.

But the actual group that defines a recession -- that calls a recession -- is a group of economists at the National Bureau of Economic Research. It's a nonpartisan, nonprofit group based out of Boston.

And that group defines recession as broad-based significant declines across the economy, across a few months. They look at things like personal income. They look at things like spending. They look at the jobs market.

So it is not a hard and fast rule. They have a lot of discretion. But that is actually the group of economists that define --


SOLOMON: -- when a recession has started.

HARLOW: And what's so weird about this time, if there is a recession, is like the labor market looks great. You've got 400,000 jobs on average added a month, 3.6% unemployment. It's just -- it's weird. I know there's probably a better technical term but this is a weird -- the White House called it confusing -- economy. Because we've never had something like this formed in this way.

Larry Summers, I thought, said it well with Don last night when he said look, for anyone who claims -- OK, if Thursday's number is what we think it's going to be we're in a recession. He said anyone who claims that is just -- means we're in a recession is either ignorant of economics or looking to make political points. And I think that's wise.

KEILAR: And Larry Summers says that we're not in a recession but we're headed towards one.

HARLOW: For sure, he says.

KEILAR: He was right on inflation. Treasury Sec. Janet Yellen, who was wrong on inflation, is saying no, things are still strong.

Who are you listening to, and should we discount or not discount Janet Yellen based on her previous forecasts? SOLOMON: I mean, I think Larry Summers has also said that he, in the past, has been wrong too, right? So I think that's sort of just an asterisk. He certainly was right about inflation, as were several other prominent economists.

I think to Poppy's point -- I mean, there are so many strange things happening, right? We hear from the bank CEOs that consumers are spending and consumers look great. But then we see other data points that show well, consumers are still spending but when adjusted for inflation maybe they're not actually spending.

HARLOW: They're spending more and getting less.

SOLOMON: Exactly. So there are a lot of sort of conflicting data points.

So he certainly was right about inflation but he has admitted that he's been wrong before on other things.

BERMAN: The question is what to look for. You know, you see there are conflicting signals, so what do you look at?

This Walmart news --

HARLOW: So interesting, right?

BERMAN: Right. I mean, Walmart is saying they're going to be less profitable because they're going to have to drop prices because people aren't spending as much on the items that they want. And so, I'm sitting here thinking OK, so reduce profitability, bad for the economy. But if Walmart is dropping prices, doesn't that mean that things are getting cheaper? Isn't that anti --

HARLOW: Anti-inflationary.


HARLOW: Yes, though it's so interesting. I think the Walmart numbers are such a good indicator. They're dropping prices on clothes and things like that where their margins are bigger and they can. But what I think you look for is what are companies doing and how does that affect real people and Main Street.

So, Walmart says this. What happens with jobs there?

GM just came out a few minutes ago -- the CEO, Mary Barra -- and said they are concerned about the economy and a potential recession, so they're going to do things like slow hiring and prepare if they need to. Goldman Sachs, same thing -- slowing hiring.

So, the real impact on it -- and that's what I thought Elizabeth Warren's op-ed in The Wall Street Journal yesterday was super interesting because she doesn't want the Fed to raise rates in the way they're likely going to because she says you're going to kick us into a recession. That's worse for average folks and jobs. They get no paycheck when they lose their job rather than a paycheck and paying more on this inflation front.

So, does it really matter if we're in a recession if everyone feels like we're in a recession and if companies are acting like it?

SOLOMON: And Larry Summers would point out, by the way, when he spoke to Fareed Zakaria over the weekend, that inflation is pain and joblessness is pain, right? I mean, a recession is pain --


SOLOMON: -- but inflation is pain, too. So at this point, we're sort of picking our poison. At least the Fed is picking its poison in terms of well, what would be more devastating, right? What would have more harm over a longer period of time? And it is certainly hoping to avoid a significant downturn but as Larry Summers has pointed out, it's looking more and more unlikely.

BERMAN: Look, we're waiting for these numbers, Poppy. I love the way you put it. It's just weird. I think we have to acknowledge right now that it's weird.

HARLOW: I'm really bringing my A game vocabulary to NEW DAY this morning.

KEILAR: That is a very good analysis, though.

HARLOW: It's weird.

KEILAR: It is weird.

BERMAN: You know, Larry Summers walking around with a rainbow t-shirt that says "Keep the Economy Weird" -- I'm just saying.

HARLOW: There you go.

BERMAN: Yes. I've seen it.

HARLOW: Take it back --

BERMAN: Poppy Harlow, Rahel Solomon, thank you both very much.

Officials in California calling the Oak Fire unprecedented as it scorches acres of land with no signs of stopping. CNN is live on the ground.


KEILAR: And also ahead, we'll be joined by January 6 committee member Congressman Adam Kinzinger with the latest developments in the insurrection probe and what's next for the investigation.


KEILAR: One hundred sixty-five government staffers demanding President Biden take stronger action on the climate crisis. They're calling on the president to declare a climate emergency and force Congress to pass aggressive legislation.

CNN's Sunlen Serfaty is live for us on Capitol Hill. They've been doing this in a very visible way, Sunlen.

SUNLEN SERFATY, CNN WASHINGTON CORRESPONDENT: They have certainly have, Brianna. And this is extremely significant because this letter is coming from people within the administration -- agency staffers and congressional staff up here on Capitol Hill. And they're calling out President Biden directly on climate change, saying he needs to do more.


And notably, the letter is signed anonymously. People signing with their initials only, really speaking to the risk that these staffers felt that they were taking on in speaking out against the White House.

Now, they are calling in this letter for President Biden to get more involved and intervene in the negotiations that are stalled up here on Capitol Hill over climate change, and also pushing for him to declare a national climate emergency now. Now, the White House has called climate change an emergency but they've stopped short of saying whether Biden intends to declare this national climate emergency.

And in response to this letter, a White House official said, quote, "As President Biden said last week, climate change is an emergency, and because Congress has not acted on that emergency, he will in coming weeks continue to use the powers he has as president to turn those words into action."

And this is just one small part of what we've seen -- a stepped-up, ramped-up strategy from congressional staffers trying to bring more attention to this issue. A similar letter they sent last week circulated within the administration -- excuse me, last month -- up here on Capitol Hill.

And yesterday, they staged a sit-in in Sen. Schumer's office protesting and calling for him to do more. And that led, Brianna, to six congressional staffers -- House staffers being arrested -- Brianna.

KEILAR: Yes, sitting in. It's quite something to behold.

Sunlen Serfaty, thank you.

SERFATY: Thanks.

BERMAN: A week ahead of Michigan's primaries, Democrats are being accused of running an ad boosting a Trump-backed candidate for Congress there. This candidate is challenging an anti-Trump Republican who voted for impeachment, gun safety reform, and to protect some -- protect same-sex marriage. So what's going on here?

John Avlon with a reality check.

JOHN AVLON, CNN SENIOR POLITICAL ANALYST: There's a lot of righteous talk, especially from Democrats, about how we need to build the biggest possible coalition to defend democracy. I couldn't agree more.

And charter members of that profile in courage caucus are the 10 House Republicans who voted for Trump's impeachment after the insurrectionist attack on our Capitol. Now, they've gotten a lot of praise for putting country over party but talk is cheap and the reality is that those brave folks, including Adam Kinzinger and Liz Cheney, have been taking a lot of fire from left and right this year.

Now, the most recent example is Congressman Peter Meijer, a young army veteran and rising star from Michigan. A man whose independent-minded, common-sense conservative principles perfectly fit the district once held by Gerald Ford.

But yesterday, with one week until his primary, the Democratic congressional campaign committee decided to drop more than a $400,000 ad buy in his district to boost the name idea of his Trump-backed, far-right primary opponent because they believe he'd be much easier to beat in a district that Biden won in 2020.

It's incredibly cynical and hypocritical, but it's also part of a trend -- Democrats trying to meddle in Republican primaries not to aid honorable Republicans but to try to kneecap them. It's a dangerous game to play because with the gravitational pull of midterms moving away from the president's party, there's a non-zero chance that some of the more extreme candidates could win despite being objectively worse fits for their district.

Look, I get that politics ain't bean bag, right? But some principles are bigger than partisan gain. Instead of focusing their primary political efforts on punishing the 147 members -- 147 members of the Sedition Caucus, Democrats are targeting honorable outliers like Peter Meijer.

Unfortunately, he's not alone. Take Adam Kinzinger and John Katko. They both voted to impeach Trump. Both represent blue states -- Illinois and New York. And in that once-a-decade redistricting, Democrats essentially erased their districts.

Now, they could have gone after the districts of Sedition Caucus members like Mary Miller or Elise Stefanik, but no. They say more upside going after the few remaining centrist Republicans. So, Kinzinger and Katko bowed, as did one of the longest-serving House Republicans, Fred Upton from Michigan, who also voted to impeach.

Now, of course, Republicans really hate red state House members who had the guts to stand up to Trump. After all, casting out heretics is critical for group cohesion. So, South Carolina's Tom Rice was a surprise vote to impeach. And after being censured by his state party, he was trounced in his primary.

Ohio's rising Republican star, Rep. Anthony Gonzales, decided to avoid a bitter primary fight by stepping aside, citing the, quote, "toxic dynamics within our own party."

So, now the profile in courage caucus is down to five. Liz Cheney facing a tough Trump-backed primary opponent in Wyoming after getting kicked out of House leadership for telling the truth.

Peter Meijer will face voters one week from today, along with Washington State's Jamie Herrera Beutler and Dan Newhouse. Now, crucially, Beutler and Newhouse may benefit not only from Washington State's more moderate tinge but also their top-two primary system, which elevates the top two vote-getters in an open primary to the general election.


Now, that's the same system that kept California Republican David Valadao in contention in the majority-Latino district for this fall's general election despite Democratic ads trying to boost a far-right opponent.

Our democratic republic depends on people putting country over party. And our usually zero-sum partisan political system rewards the opposite. And in Washington, D.C., getting reelected is held in higher regard than trying to do the right thing.

For our democracy to endure we need far more political figures with the courage to stand up to the extremes in their own party. We need more of the moral clarity Liz Cheney expressed to our colleague Jake Tapper.


REP. LIZ CHENEY (R-WY): If I have to choose between maintaining a seat in the House of Representatives or protecting the constitutional republic and ensuring the American people know the truth about Donald Trump, I'm going to choose the constitution and the truth every single day.


AVLON: So if you really want to build the broadest possible coalition to defend democracy, that means sometimes supporting honorable men and women across the aisle, knowing that you might disagree on many policy details but not their essential character or their commitment to truth and democracy.

You say you value putting party -- country over party, act like it.

And that's your reality check.

BERMAN: John Avlon, it is a trend we are seeing. Thank you so much for that.


BERMAN: Senate Republicans and the Federal Reserve sparring over allegations of Chinese influence at the bank. We have new CNN reporting.

KEILAR: And new body camera video shows a trooper responding to the Uvalde school shooting seen earlier than previously known. So what we're learning this morning about that.



KEILAR: So this morning, Senate Republicans are accusing the Federal Reserve of failing to combat Chinese efforts to gain influence. The Fed is pushing back on a new report that claims to reveal multiple employees and persons of interest inside the central bank with potentially concerning connections to the Chinese government and institutions.

CNN's Katie Bo Lillis is joining us now on this story. Katie Bo, tell us about this.


So, Republicans on a key Senate committee have issued this report today that is claiming that China has essentially infiltrated the Federal Reserve -- in part for coercion, and in part for leveraging their foreign talent recruitment program to try to influence current Federal Reserve employees.

Now, it's a pretty dramatic report that leans heavily on documents that the committee -- that committee Republicans say were provided by the Fed itself, to include a 2015 counterintelligence analysis that identified 13 so-called persons of interest working for the Fed at the time.

But this is the really unusual part. The report also includes five so- called case studies of Federal Reserve employees, including four who are still currently employed by the Fed, whose conduct and contacts with Chinese institutions, committee Republicans say, raise some pretty alarming red flags -- even though we should note that none of these individuals, as far as we know, has been charged with any wrongdoing.

The report provides quite a bit of detail about these individuals even though it doesn't name them by name.

And Federal Reserve chairman Jerome Powell is pushing back really strongly on these reports' findings. And I want to read you what he wrote in a letter to the committee's top Republican, Sen. Rob Portman in a letter sent yesterday. He said, "We are deeply troubled by what we believe to be the report's unfair, unsubstantiated, and unverified insinuations about particular individual staff members."

Now look, Brianna, it's important to understand that this isn't happening in a vacuum. Counterintelligence officials will tell you that there's no question that China uses many and various tools at its disposal to try to influence and gain insight into the United States. But federal authorities here in the U.S. have faced quite a bit of criticism in recent years, including charges of xenophobia and racial profiling for their efforts to try to root out Chinese influence, in particular in academia. So I think what this debate exposes is it really highlights some of

the challenges that federal authorities have had in trying to separate out espionage from legitimate contacts between U.S. and Chinese organizations without trampling on anybody's civil rights in the process -- Brianna.

KEILAR: Certainly.

Katie Bo, thank you for that reporting.

LILLIS: Thanks so much.

KEILAR: Also, here in just moments, we're going to be speaking to John Kirby from the White House, talking about the escalating threat from China.

And NEW DAY continues right now.

BERMAN: So, we know more this morning than we did yesterday at this time about the federal investigation into the events surrounding January 6. We know the federal investigation has reached the Trump White House itself.

I'm John Berman with Brianna Keilar.

Marc Short, the former chief of staff for Vice President Mike Pence, confirmed to CNN that he just testified before a federal grand jury investigating the January 6 attack.


MARC SHORT, FORMER CHIEF OF STAFF FOR VICE PRESIDENT MIKE PENCE: I can confirm that I did receive a subpoena for the federal grand jury and I complied with that subpoena. But under advice of counsel, I really can't say much more than that. That was my only appearance before the grand jury. I'm not going to comment on what others on the team have had to testify or not regarding subpoenas and what they've testified to.


BERMAN: Short is the highest-ranking Trump White House official known to have testified in the criminal investigation of January 6. He was in a meeting two days before the attack where then-President Trump and lawyer John Eastman tried to persuade Pence that he had the power to stop the certification of the election results.

And The New York Times and Wall Street Journal report a second top former Pence aide, Greg Jacob, was also subpoenaed and appeared before the grand jury.