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DHS Watchdog Learned Of Missing Secret Service Texts Months Earlier Than Previously Known; Wash Post: Key Texts Between Top Trump DHS Officials Missing; McCarthy: "I Don't Recall" Cassidy Hutchinson Conversation On Jan. 6; Sources: Russia Requested Adding Convicted Murderer To Griner & Whelan Prisoner Swap; Rep. Jim Himes, (D-CT), Is Interviewed About Russia, Prisoner Swap; Pelosi Refuses To Say Whether She'll Go To Taiwan On Asia Trip; Key Inflation Measure Hits 40-Year High As Recession Fears Loom; Russia Getting Around Sanctions By Plundering Sudan's Gold. Aired 5-6p ET

Aired July 29, 2022 - 17:00   ET

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

[17:00:00]

KASIE HUNT, CNN POLITICAL CORRESPONDENT: You can follow me on Twitter @kasie or tweet the show @theleadcnn. If you ever miss an episode of "THE LEAD", check out the podcast. You can listen wherever you get your podcasts.

And don't go anywhere. Our coverage continues now with Wolf Blitzer in THE SITUATION ROOM.

WOLF BLITZER, CNN HOST: Happening now, House Minority Leader Kevin McCarthy now claims he doesn't recall a January 6 conversation with Cassidy Hutchinson about preventing Donald Trump from going to the U.S. Capitol. We have new details on the insurrection investigation.

And we're also following catastrophic flooding right now in Kentucky. At least 16 people are dead. And the governor is now warning that that number could double in the coming days.

Also this hour, a CNN exclusive report on an illegal Russian scheme to evade U.S. sanctions. Moscow mining gold in Sudan and smuggling the precious resource back to Russia to finance its invasion of Ukraine.

Welcome to our viewers here in the United States and around the world. I'm Wolf Blitzer. You're in THE SITUATION ROOM.

Let's begin our coverage tonight up on Capitol Hill with new details on the insurrection investigation. We have exclusive new information about when the inspector general over at the Department of Homeland Security first learned of those missing Secret Service text messages. But first our chief congressional correspondent Manu Raju is joining us with other news on the January 6 probe.

Manu, I understand you pressed the GOP Leader Kevin McCarthy today on a key conversation with former White House aide Cassidy Hutchinson. What did he tell you? Maybe even more importantly, what didn't he tell you? MANU RAJU, CNN CHIEF CONGRESSIONAL CORRESPONDENT: Yes, he said he did not recall. Recall, this is actually one of the key moments of that testimony that Cassidy Hutchinson when she went before the January 6 committee about the concerns and the efforts to stop Donald Trump from coming to the U.S. Capitol on January 6 when he gave that speech to his supporters, he said that, we're going to go to the Capitol. In the aftermath of that, Cassidy Hutchinson testified under oath saying she got a phone call from Kevin McCarthy who was concerned and said that he wanted -- they needed to put a stop to this. He said, according to Hutchinson that she had reassured him through the course of the week that Trump would not become -- come to the Capitol. And later, she later texted Kevin McCarthy and said that they wouldn't in fact, not become to the Capitol.

There was also a dispute that apparently occurred later in the presidential limousine as Donald Trump demanded to come to the Capitol, according to Hutchinson's testimony. But when I asked McCarthy about that interaction in his first solo news conference that he's had in months, he claimed he did not recall.

(BEGIN VIDEO CLIP)

RAJU: Well, she testified under oath saying that you called her after Donald Trump said that or just told her supporters that they were going to go to the Capitol, and you were concerned about those remarks and said, don't come up here. Figure it out. Don't come up here. She said that under oath.

Did you tell her that? And why were you concerned about the prospect of Donald Trump coming to the Capitol on January 6?

REP. KEVIN MCCARTHY (R-CA), MINORITY LEADER: I don't recall talking to her that day. I recall talking to Dan Scavino. I recall talking to Jared. I recall talking to Trump. That's what I talked to on television like that, too.

If I talked to her, I don't remember it. If it was coming up here, I don't think I wanted a lot of people coming up to the Capitol. But I don't remember the conversations.

RAJU: Why were you concern specifically about Trump coming to the Capitol?

MCCARTHY: I don't remember that.

RAJU: You never been concerned about his comments?

MCCARTHY: No, because I didn't watch it. This is what is so confusing, I didn't watch the speech. I was working. So I didn't see what was said. I didn't see what went on till after the fact.

RAJU: Would you want him to come to the Capitol?

MCCARTHY: No, I've never communicated with about coming to Capitol. I had no idea he would come to the Capitol. I had no idea that he was even going to come to the Capitol. RAJU: Because she said under oath that you told her throughout the course of the week or she told, reassured you to the course of the week that he was not going to come to the Capitol. So apparently, you have conversation --

MCCARTHY: I don't remember having any conversations with her about coming to the Capitol -- the president coming to the Capitol.

(END VIDEO CLIP)

RAJU: Now, Kevin McCarthy has been subpoenaed by the House January 6 committee along with four other Republicans to come and testify about all of those interactions that occurred, but he has defied that subpoena. And so, this is why this interaction was key today because we have not heard much from Kevin McCarthy about some of those discussions that are happening behind the scenes as they were raising alarms about Donald Trump's conduct.

We have learned separately that McCarthy and Trump himself had Pence interaction that day about Trump's -- about Trump and whether they, Trump supporters, were, in fact, in the Capitol. Trump suggested that it was Antifa. Kevin McCarthy pushed back on that.

[17:05:04]

McCarthy said he did recall the conversation with Trump White House aide Dan Scavino. And when I asked him, well, what was that interaction like? He said he was just trying to find the president. Wolf.

BLITZER: Manu Raju up on Capitol Hill, thanks for all of that.

Let's get some analysis right now from CNN Law Enforcement Correspondent Whitney Wild, as well as our Legal Analyst Elliot Williams, and our Senior Political Analyst, Nia-Malika Henderson.

Whitney, I know you have some exclusive new reporting on when the Homeland Security Department's inspector general first learned of these missing Secret Service text messages. What can you share with us?

WHITNEY WILD, CNN LAW ENFORCEMENT ANALYST: Well, what we're learning is that this Inspector General's Office knew many months before previously known. So what we learned last week was that the Inspector General's office was aware of the missing text messages in December 2021. Now, sources are telling CNN, the DHS, OIG's office actually knew about that as early as May of 2021.

And later on, two months later in July of 2021, Wolf, our sources are telling us that the Inspector General's Office told investigators with the Department of Homeland Security that they were no longer seeking those text messages. So, this timeline is extending here.

Further, our sources tell us that the Secret Service didn't realize until too late that the text messages were actually gone. And at one point to try to reconcile this, they tried to go back to the cell phone provider to retrieve these text messages, they were unable to do so. That was all happening in May, Wolf.

And then we know again in July, that the Inspector General's investigators seemingly put this to bed. And then it wasn't a year until a year later that the inspector general went to Congress to notify them of these hurdles in getting (ph) information.

BLITZER: So, Elliot, what questions all this race?

ELLIOT WILLIAMS, CNN LEGAL ANALYST: Yes, it's a couple of things, Wolf. One, law enforcement is notoriously secretive about its data. This isn't unique to the Secret Service. And you're seeing that, and also just a little bit of government incompetence at play here. The idea that they put it in the hands of individuals Secret Service agents to back-up their own information.

So number one, there's got to be some congressional oversight here to figure out what happened. And number two, if it's not just incompetence and a failure, if there actually is some criminal wrongdoing, there needs to be a criminal investigation to really get to the bottom of whether individuals with the Secret Service were destroying or tampering with evidence.

BLITZER: You know, Nia, I know there has been some new reporting now from the "Washington Post," the text messages between top Trump Homeland Security officials from a key period leading up to January 6. Those text messages are now missing, as well. So there seems to be a pattern right now.

NIA-MALIKA HENDERSON, CNN SENIOR POLITICAL ANALYST: Right. There seems to be a pattern around a very important day in American history, in the days leading up to January 6. The idea that these agencies and these agents when it comes to Secret Service agents, didn't think about preserving records for very preserving their communication with each other when they were witnesses to what was going on.

You know, it's sort of unimaginable that they weren't thinking about preserving these records unless they were trying to cover up some of these conversations. Obviously, we know from Cassidy Hutchinson that there were pretty tense conversations, tense interactions between Donald Trump and Secret Service agents. And we also know that DHS officials that Donald Trump was sort of leaning on them, you know, as to whether or not they could cease voting machines, talking to them about this scheme. And so, leading up to January 6, you would think we would want those records, and they would think it was important to save them. But so far, these DHS text messages have also gone missing along with these Secret Service messages as well.

BLITZER: It's very disturbing, you know?

How cooperative, Whitney, and you're doing a lot of reporting on this, are the Secret Service and the Department of Homeland Security for that matter, being with the select committee?

WILD: Well, at this point they're doing what they say is that they're doing everything they can to abide by the requests that came in prior. So that's particularly important when you consider what the Secret Service is capable of doing right now. So they continue to hand over volumes of records that have been previously requested. So that was just the House Select Committee letter to these agencies saying we need these records.

But when it comes to the House select subpoena, the Secret Service at this point is really curtailed because the I.G. has told them you cannot investigate yourself, you cannot hand over any records material to this because this is now a criminal investigation. So in that sense, that's really hampered their ability to cooperate. But largely, wolf, they have handed over, I hear this a lot, hundreds and hundreds of 1000s of e-mails. We just heard from members of the committee recently, as recently as this week, saying that they continue to hand over records, Wolf.

BLITZER: You know, it's interesting, Elliot, what does this tell you right now about where the Department of Justice is and the Attorney General of the United States, Merrick Garland, is right now about this entire criminal investigation?

WILLIAMS: Well, you know, certainly, it's an indication that they're moving along with a criminal investigation. And I think what it also exposes, Wolf, is just how many different angles there are to this now. This started as an investigation into wrongdoing on the day at the scene of the Capitol expanded into false electors and now there's this Secret Service element of it that might involve witness -- obstruction of justice or destruction of evidence. And so it's really wide ranging.

[17:10:13]

There was reporting today, I believe in the "Washington Post" about the fact that, you know, it's becoming a personnel matter at the Justice Department because of how vast this is, given how many targets and subjects are being investigated.

BLITZER: Nia-Malika, I'm curious to get your reaction to Kevin McCarthy saying he doesn't recall having had that conversation with Cassidy Hutchinson. Cassidy Hutchinson saying under oath --

HENDERSON: Yes,

BLITZER: -- that she spoke with him on January 6.

HENDERSON: You know, it's a convenient answer, right? I don't recall. I think at some point, he says, if I had the conversation, I don't recall it. And he said this over and over again.

He of course is not cooperating with the committee. Cassidy Hutchinson has said very plainly that he had concerns, that he made calls to her about Trump coming up there. And we know that she was a point (ph) person for that White House and very close to the Chief of Staff, obviously.

So listen, under oath, we'll see what he says. We don't necessarily think he would ever get under oath at this point. It looks like he's just going to sort of wait it out and sort of stonewall in this safe position, saying he doesn't recall these conversations.

WILLIAMS: It's a clear solution. That's it.

HENDERSON: Yes, yes, yes.

WILLIAMS: You know, there is sworn testimony under oath, if you want to conflict with it, come and testify and clear it up on the record.

HENDERSON: Yes.

BLITZER: I don't think that's going to happen.

All right, guys, thank you very, very much.

Coming up, historic floods in Eastern Kentucky right now. They've so far killed at least 16 people. And Kentuckians could get even more rain very soon. What they're up against, that's next right here in THE SITUATION ROOM.

(COMMERCIAL BREAK)

[17:15:27]

BLITZER: Catastrophic floods have killed at least, at least, 16 people in Eastern Kentucky and the death toll is expected to climb according to the governor who says entire families including children are victims of this historic deluge. CNN's Evan McMorris-Santoro has this report from one of the hardest hit towns.

(BEGIN VIDEO TAPE)

GOV. ANDY BESHEAR, KENTUCKY: This is going to be a real challenge with such a large area hit to get good unaccounted for numbers.

EVAN MCMORRIS-SANTORO, CNN CORRESPONDENT (voice-over): Homes destroyed, roads washed out. Rescuers working around the clock as the governor of Kentucky warns the death toll from another round of catastrophic flooding could more than double in the coming days. The latest heartbreaking discovery, the bodies of four children recovered from the floodwaters.

Rushing waters trip homes off their foundation and push cars into piles. Judy Butler and her husband made it out of their house just in time.

JUDY BUTLER, VICTIM OF FLOODING: We got out. We pulled out here to the road and about 10 minutes later we lucked out and it went from the back of the fence to the carport.

MCMORRIS-SANTORO (voice-over): The fast rising floodwaters forcing many people to evacuate and causing hundreds of water rescues across the state.

BEVERLY DAUGHERTY, VICTIM OF FLOODING: I'm going to lose everything I have, for sure. But it's better than losing my life.

MCMORRIS-SANTORO (voice-over): Beverly Dougherty spent hours in chest high water trying to keep her dog afloat.

DAUGHERTY: Finally I just was hanging on to a fern rope and I thought I've got to do it, I got to swim, but it was super swift. I've never swum in water like that.

MCMORRIS-SANTORO (voice-over): The Kentucky National Guard is also assisting in rescue efforts, lifting people from their homes, as some buildings were left almost entirely submerged. Officials say the storm caught many people by surprise.

SHERIFF JOE ENGLE, PERRY COUNTY, KENTUCKY: There was no warning. People sleep in mobile homes near this water. That water had never been up to before in 50 years. You know, they've lived there and never worried about it, so you never really thought about it and caught in their sleep and just washed away. It's tragedy.

MCMORRIS-SANTORO (voice-over): And with power and cell phone service out in many of the hardest hit areas, help is hard to come by.

ENGLE: There's a big swath of the county that's totally isolated. The state highways are just totally -- they're gone.

MCMORRIS-SANTORO (voice-over): One mayor says it's hard to even know where to begin.

UNIDENTIFIED MALE: We were so overwhelmed. We don't really know what to ask for.

MCMORRIS-SANTORO (voice-over): And the worst is far from over. Governor Beshear urging residents to have a safety plan in place.

BESHEAR: Looks like it's going to rain a lot Monday, maybe Tuesday.

(END VIDEO TAPE)

BLITZER: That report from CNN's Evan McMorris-Santoro in Kentucky for us.

Next hour, I'll be speaking with the governor of Kentucky, Andy Beshear. Standby for that.

Let's bring in CNN's Allison Chinchar right now. She's joining us from the CNN weather center.

Allison, we've now had what two separate 1,000-year flood events, this week alone, and they seem to be happening with increasing frequency. What role is climate change playing in all of this?

ALLISON CHINCHAR, CNN METEOROLOGIST: Right, that's a great question, Wolf. I mean, yes, especially when you talk about how close these two events were. We're not talking in different countries, you're talking just a mere states away.

The first one was very recently, the one in Eastern Kentucky near the town of Hazard that had their one in 1,000-year flood event. And then earlier in the week, we had a second one that was closer towards St. Louis. But the question is, it doesn't mean that once every 1000 years, you get an event like this, it's more a statistical equation that comes into mind. Basically, what it means is on any given year, you have a point 1 percent chance of happening.

I know that doesn't sound like it's very much. So let's put it in an easier terms to understand. Take a deck of cards that you would have, for example, when we talk about a one and 100 year flood, basically it means the cumulative risk over a 30 year period is about 26 percent. That would be your odds, statistical odds of drawing any heart from the deck, a two of hearts, 10 of hearts, Jack of hearts, doesn't matter. A one in 500 year flood event would be your statistical odds of grabbing two hearts from the deck.

Now when we talk about a one in 1,000-year flood, that cumulative risk over 30 years, it's just about 3 percent. That would be your odds of pulling a red ace from that deck of cards. So again, it's extremely rare to have these, let alone have two in the same week.

The thing is, when we factor in climate change, those events are going to become more frequent. Part of the reason is when you have a warmer atmosphere, it can hold more moisture, which means as these rain systems come through these areas, they can typically produce much more rainfall in a single storm. So when you have these coming in, they're very likely to draw much higher amounts of rain than they normally would have without factoring climate change in.

[17:20:06]

When we look at the forecast, unfortunately more rain is there. Yes, even for some of the same areas that were just hit earlier in the week. Looking forward, again, areas of Missouri, Kentucky, Tennessee, much of the southeast in the next 48 hours, most of these locations, likely only to be expected to pick up about one to three inches. That alone doesn't sound bad, but you have to keep in mind a lot of this area, Wolf, that ground is already saturated, so even an additional one to two inches will swell a lot of those creeks, rivers and streams right back up again.

BLITZER: Yes, this is really a dangerous situation. Allison Chinchar, thank you very much for that.

And to our viewers, for more information how you can help victims of the flooding in Kentucky visit cnn.com/impact. Cnn.com/impact.

Coming up, new information about a proposed prisoner swap between Russia and the United States. We have exclusive new details on an additional convict. The Kremlin wants in exchange for Brittney Griner and Paul Whelan.

(COMMERCIAL BREAK)

[17:25:33]

BLITZER: Tonight, a CNN exclusive, sources now telling us that Russia wants a former colonel from the country's domestic spy agency who was convicted of murder in Germany to be added to a proposed prisoner exchange. It's a new twist in the U.S. effort to get Americans Brittney Griner and Paul Whelan released by Russia.

Our White House Reporter Natasha Bertrand is working the story for us. I understand you have new details about this request from Russia. First of all, who is this Russian prisoner?

NATASHA BERTRAND, CNN WHITE HOUSE REPORTER: Yes, Wolf, so, this is a former FSB colonel who is accused of murdering or I should say he was convicted of murdering a former Chechen soldier in broad daylight in Berlin in 2019. And the Germans accused this former FSB colonel of doing it on the Kremlin's orders. So it really caused a huge rift between Germany and Russia at the time. He was sentenced to life in prison just last December, about seven months ago for his role in assassinating essentially this Chechen civilian.

So, what we're learning now is that the Russians have actually asked for this person back. They want one of their own, this former FSB colonel back in their custody, back on their soil. And the problem though, is that he is in German custody. He -- the United States does not have him at this point, but it really just underscores how the price has risen for Russia. It is not just Viktor Bout that they want anymore, it is also this assassin that Germany says really carried out a case of terrorism for the Russian government back in 2019.

BLITZER: What are the White House in the State Department saying about this Russian pitch?

BERTRAND: Well, they're calling it totally unserious. The NSC actually just gave us a statement on the record saying that this is not a serious counter offer that requesting an assassin who is in a third country's custody, is not a serious counter proposal, and that they should consider the offer that the U.S. has put on the table which is Bout for Griner and Whelan.

Ultimately, though, what our sources are telling us is that they believe that this request which came in through backchannels by the Russians to the United States was always meant to be kind of a buy for time, that they were trying to stall, essentially, until Brittney Griner's trial is over. At which point if she is convicted, then they can up the price even more, they can say, well, this is someone who has been convicted of a crime on our soil so now we of course want more valuable people than just Viktor Bout, perhaps. But ultimately, what the U.S. is saying is that they have not seen an effort by the Russians to engage meaningfully and substantively on the offer that they have put forward.

BLITZER: Lots going on right now. Natasha Bertrand, excellent reporting. Thank you very, very much.

And joining us now, Democratic Congressman Jim Himes of Connecticut. He's a key member of the House Intelligence Committee. Congressman, thanks so much for joining us.

What is it say that the Russians are now countering by asking for yet another prisoner in this potential swap? Someone who's not even in U.S. custody? REP. JIM HIMES (D-CT), INTELLIGENCE COMMITTEE: Well, it looks to me, Wolf, like it's sort of standard negotiation. Just keep asking, just keep asking and ask and ask until the person you're negotiating with says no. And, you know, we may be at that point here, right?

These are not easy things to do in the best of circumstances, Wolf, right? I mean, you know, here we are asking for, you know, a basketball player back and somebody we know to be innocent and on the other side is an arms dealer. And we see this all over the world.

And you worry about two things. One, you know, somebody who may have committed a misdemeanor is not the same as a global notorious arms dealer. And number two, you don't want to get countries like China and Russia and Iran used to the notion that they just need to, you know, clip an American on their street, throw him in jail, and they get to make -- you know, they get to trade for the worst of the worst.

BLITZER: Because the President, President Biden is clearly making it a major priority right now to bring these Americans home, which is understandable. But isn't a mistake, Congressman, for all this to be playing out so publicly?

HIMES: Well, hard to say. We'll only know when the deal is done. But I'm generally a believer that these kinds of negotiations with lots of political sensitivities involved are probably best conducted in private. But you know, the overall principle, it is a hard one. It is a hard one.

I've got actually a constituent of my own, an elderly gentleman by the name of Murad Tobias (ph) who is being unjustly held in Tehran. His family calls me just about every day. So you feel the pain of people who have been unjustly imprisoned in places like Russia and Iran. You feel that pain, but you do -- and you want to get him back. You really want to get him back. But of course, again, you don't want to incentivize the kind of behavior that we know Vladimir Putin is capable of.

BLITZER: I want to quickly turn to another issue, Congressman, while I have you. The House Speaker Nancy Pelosi is heading to Asia but there's still no word on whether she'll make this controversial trip to Taiwan. If she does go ahead and goes to Taiwan, how high is the risk of a miscalculation that could result in a Chinese military response?

HIMES: Well, Wolf, I would hope it would be very low. And I think it would be very low. Look, the Speaker of the House has the right to go to Taiwan or anywhere else that she wants to go. And the Chinese certainly do not have the right to tell any American where they do and don't get to travel.

So, you know, needless to say, the world is not going to know if Nancy Pelosi is, you know, in or on her way to Taiwan until they're ready to make that public for all the right reasons. But, you know, freedom to travel is really, really important. And if I were in, you know, if I were in Beijing right now, I would think that the last thing you would want, would be to create more problems and an already friction laden relationship by, whatever, flying military aircraft near the Speaker's aircraft, wherever that might be.

My sense would be that this would be a pretty good time for everybody to take a deep breath. And remember that the Speaker of the House or anyone else has the right to travel wherever they want to travel.

BLITZER: But if she does go to Taiwan, are you confident in her safety and the safety of her delegation? She's being joined by other members of the House.

HIMES: I am pretty confident. I must tell you, Wolf, I worried a little bit more about her visit to Kyiv, right? Because, you know, in Taiwan, obviously, you're dealing with one organized, capable foe. In a place like Kyiv, you just never know. You could have, you know, military units that have not been in touch with their commanders, et cetera.

So, look, I know that this is going to be, if it happens, attention filled visit, but it shouldn't be, it shouldn't be. Nancy Pelosi is exercising the right that anybody has to travel wherever they want. And, you know, both the Taiwanese and the Chinese and the Americans will do if this visit happens, everything they can and everything they should keep her and her colleagues safe.

BLITZER: Congressman Jim Himes of Connecticut, thanks so much for joining us.

HIMES: Thank you, Wolf.

BLITZER: And just ahead, a leading measure of inflation hits a new 40- year high. Topping off a week of grim economic news. We'll talk about it with a key member of the White House Council of Economic Advisers.

(COMMERCIAL BREAK)

[17:36:41]

BLITZER: A critical week for the U.S. economy just landed with a thud after grim numbers on consumer spending a shrinking growth. A key inflation measure has now hit a 40-year high. Let's discuss this and more with a key member of the White House Council of Economic Advisers, Jared Bernstein. Jared, thanks so much for joining us.

As you know, inflation is now the highest it's been here in the United States in some 40 years. The economy contracted for two quarters in a row. But President Biden keeps saying the U.S. is not in a recession. Is it a mistake, Jared, for him to be downplaying the economic risks right now?

JARED BERNSTEIN, MEMBER, WHITE HOUSE COUNCIL OF ECONOMIC ADVISERS: I think one thing the President is absolutely not downplaying. In fact, he has been consistently up playing it, is precisely what you were highlighting just there, which is what he calls unacceptably high inflation. That is his number one domestic priority bringing those price pressures down on behalf of working families like the one he grew up in. You know, this a, Wolf. He grew up in a family where if the price of gas ticked up a nickel, that was a dinner table discussion.

The President was also, however, referring to the fact that in the backdrop here is one of the strongest labor market on record. And we shouldn't forget about that. The fact that we've been creating 375,000 jobs per month over the last three quarters. That's 1.2 million jobs in just one quarter alone, very low unemployment.

That backdrop is a really important buffer against these unacceptably high prices. But nobody, nobody here in the White House is downplaying it. To the contrary, we are dispatched, do everything we can to ease those pressures.

BLITZER: Yes, those other numbers are really, really significant as well. The former U.S. Treasury Secretary, a man you know, Larry Summers, who sounded the alarm early on last year on inflation here in the United States. He tells me he expects a recession within the next two years, with unemployment rising above 6 percent. Does that line up with your view inside the White House?

BERNSTEIN: Not necessarily. In other words, first of all, nobody has a crystal ball, even someone who's been as remarkably prescient as Larry has. It's just a great deal of uncertainty out there. There's the war in Ukraine, the pandemic is still upon the land. The Federal Reserve is, of course, tightening aggressively into this inflationary cycle.

What we would like to see happen -- and the President has stressed this fact, Chair Powell has as well -- what we would like to see happen is to maintain that backdrop of a very strong job market, while easing those price pressures. Now, the Federal Reserve is first and foremost when it comes to fighting inflation. But we have a lot to do too.

We've done a fair bit -- we've got more to do. So, for example, you know that this President oversaw the release of 240 million barrels of oil from the strategic reserve. That's one reason why, one, one out of many reason why gas prices are down 77 cents a gallon from their peak. Now look, they need to fall further. No question.

People need more relief, but that is a bit of breathing room. In fact, we are a family with a couple of cars, that's about 80 bucks a month. So if you look at that, if you look at our work in the ports, if you look at this Inflation Reduction Act that is, I think, so important to the future of these measures, yes, I think there is a path here to maintaining the strong backdrop of the economy while easing inflationary pressures.

[17:40:15]

BLITZER: I want to put up on the screen a poll number and take a look at this. Do you think the economy is in a recession? 64 percent, Jared, right now, the American people --

BERNSTEIN: Yes.

BLITZER: -- 64 percent already believe the U.S. is in a recession. So what do you say to them? BERNSTEIN: I say that that makes perfect sense to me that people would answer a poll with that kind of a response. And the reason is, is because if you actually look at how the group that designates recessions, it's a group of economists in Cambridge and the National Bureau of Economic Research, it's a fairly technical set of analyses that we've been talking about throughout the week.

But most people are thinking about inflation, they're thinking about the pressures on their family budgets. And it's completely understandable that they would be. Now we've tried to point out that those families often have pretty decent balance sheets, they're actually out there spending at a decent clip, even though GDP had a negative handle on it in the second quarter, or for that matter, in the first, consumer spending was actually a plus. Real consumer spending adjusted for inflation was actually a pause in both of those quarters.

And we've talked about the strong labor market backdrop, but inflation is very much on concerns of households. And that's why it's our number one priority, bring it down. I've talked about some of those actions already in the ports, in the energy, in some food areas that we've intervened in. It's really important to get that Inflation Reduction Act to the President's desk as soon as possible, because there are measures in there that would reduce prescription drug costs, the cost of health care premiums and reduce the cost of clean energy, which is a great incentive and an important family budget help as well.

BLITZER: We'll continue this conversation. Jared Bernstein, thank you very much for joining us.

BERNSTEIN: Thank you, Wolf.

Coming up, how Russia is getting around sanctions by plundering Sudan's goal. It's a CNN exclusive. We'll share it with you when we come back.

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[17:46:35]

BLITZER: In an exclusive report, CNN can now reveal how Russia stopped democratic change over 6,000 miles away in Sudan, a country in the northeast of Africa. Just as its people have successfully toppled one of the longest standing African dictators through peaceful street protests, why? Sudan is one of the biggest exporters of gold in the world. And Russia has been illegally exploiting and smuggling this resource from Sudan for years, manipulating vital government and non- governmental institutions to secure this golden financial pipeline.

CNN's Chief International Investigative Correspondent Nima Elbagir and her team traveled to the north of Sudan to show how Russia leverages the Sudanese military government and how it's using front companies to circumvent this -- circumvent U.S. sanctions to hold on to the gold illegally moving from Sudan's capital of Khartoum to Russia.

(BEGIN VIDEOTAPE) NIMA ELBAGIR, CNN CHIEF INTERNATIONAL INVESTIGATIVE CORRESPONDENT (voice-over): Deep in Sudan's Gold Country, miners toil in the searing heat, barely surviving in what should be one of Africa's richest countries. Providing gold for a war a continent away. We investigate a force more powerful than Sudan's government controlling its gold.

For millennia, Sudan has produced some of the most sought-after gold in the world. And Putin's private army, the notorious paramilitary group Wagner knows it.

(on-camera): Sudan's government is denying Wagner's existence in country but we're not buying it and we've come to investigate.

(voice-over): Wagner's tentacles stretch right across Africa. We've discovered some of its most notorious operatives are working on Sudan. Evgeny Prigozhin, the head of Wagner. Mikhail Potepkin, Prigozhin's head of Sudan ops and Alexander Sergeyevich Kuznetsov, Wagner's key enforcer, previously convicted of kidnap and robbery, working with this man, Sudanese General Mohamed Hamdan Dagalo, aka Hemetti, in a quid pro quo for training and weaponry.

We travel 200 miles north from the capital Khartoum to gold country to take a closer look at Wagner's main moneymaker, artisanal gold. Miners bring rocks, they extract here to be processed. 85 percent of Sudan's gold is produced artisanal.

(on-camera): This right here, it may not look like much. This is what's left after the rocks that the miners have brought in is milled. Now they've taken what they can out of it. But this gets sold. And what is properly processed with someone who has superior technology, you can make 10 times what those miners over there are making.

(voice-over): Ten times more money without any of the back breaking work. And the only foreign processing plant operational in Sudan is Wagner's Meroe Gold, despite a Sudanese law limiting ownership to locals. Also troubling, Meroe Gold was sanctioned two years ago by the United States for exploiting Sudan's natural resources and spreading their malign influence around the globe.

[17:50:07]

According to the Sudanese government, they officially ceased operations but they are still here, still evading sanctions. We verified their location with coordinates provided by Sudanese anti- corruption investigators and head there to see for ourselves.

As we approach, the red flag of the former Soviet Union blows in the wind. Increasingly used by Russian nationalists, it brazenly marks the Meroe Gold compound. A Russian tanker sits next to it.

We get to the entrance and decide to ask a few questions, but not before we turn on our covert cameras.

(through translation): Is this the Russian company?

UNIDENTIFIED MALE (through translation): Yes, ELBAGIR (voice-over): Well, that's convenient. They've just confirmed the Russians are at this location.

(through translation): We are journalist from CNN. I'd like to see the Russian manager. We'd like to ask him some questions.

(on-camera): There's a black pickup approaching.

UNIDENTIFIED MALE (through translation): He's coming in that car.

ELBAGIR (on-camera): OK. Guys just confirmed that the Russian manager is in that black pickup and is on his way to us.

(voice-over): A Russian van races to the office, but no one seems to be coming over.

(on-camera): Since the Russian manager has changed his mind.

(voice-over): But others turn up instead.

(through translation): I'm sire you've already been shown our permission.

UNIDENTIFIED MALE (through translation): But we are a Sudanese company. It's a company called Al Solag.

ELBAGIR (voice-over): They claim this plant is Sudanese-owned and is called Al Solag. Remember that name? It's important, Al Solag. We head off the property to do some more filming, but we're followed.

Security approaches. They want us to stop.

(on-camera): This is public ground.

UNIDENTIFIED MALE: No, no.

ELBAGIR (on-camera): This is public ground. Why is your barn (ph) stopping here? Trying to get us to move on. They're taking pictures of us, of our license plates.

(voice-over): The reason they're so nervous, Al Solag is a front for the Russian company Meroe Gold. Wagner is still operating illegally. A foreign company pretending to be Sunnis to evade U.S. sanctions.

We obtained their registration documents to prove it. The document on the left is from Meroe Gold, the one on the right, Al Solag. These dates represent complaints made in employment courts against Meroe Gold. These ones from Al Solag are the same.

Under Sudanese law, when a company's holdings are transferred, so are any judgments against it. Here you can see the judgments against both companies are identical.

All they've done is changed the name, Wagner, hiding in plain sight to avoid U.S. sanctions and keep the financial pipeline flowing back to Moscow and its war on Ukraine. A dangerous business to delve into. (on-camera): Since we've arrived in country, I've been informed by sources of threats that they believe to be credible against me. They say that's what happens here. When you look too closely at Russia's business dealings. They're after me one of those sources, and he's asked that I come along.

UNIDENTIFIED MALE (through translation): Meroe Gold is a front for the Russians, specifically for the forces of Wagner that are working to exploit gold in Sudan and its export. It's a front, it's not a company. It extracts gold from tailings and it buys gold from the Sudanese artisanal miners.

That's not legal, because the law says that any gold producer is supposed to report the quantity it produces to the central bank and to the ministry of mining, and that does not happen.

ELBAGIR (voice-over): Inside Sudan central bank, a whistleblower snap this photo of a computer screen, showing official production in 2021 at 49.7 tons, 32.7 times are unaccounted for by the central bank. But the real figure we're told by whistleblowers could be over 220 tons. That's around $13.4 billion worth of gold a year that's being stolen from Sudan. How has this happened?

Three years ago, the Sudanese people successfully overthrew Africa's second longest ruling dictator, Omar al-Bashir. Less than two years later, the military staged its own coup, sweeping aside civilian and they did this, we're told, with Wagner's support in exchange for gold.

This man had a front row seat to Russia's machinations, and has evidence to prove it stood to gain by supporting the Sudanese military's coup. Under threat of assassination, he's been in hiding for the last nine months. Moving from safe house to safe house.

UNIDENTIFIED MALE: The Russians have Sudanese officers assaulted civilians in the government as an obstacle to the plan. The official anti-corruption Task Force wasn't caving to pressure or threats or even bribery. The Armed Forces were found to be complicit in the smuggling of gold by the Russians, and it was raised with them.

ELBAGIR (on-camera): Do you blame Russia for the death of democracy here in Sudan?

UNIDENTIFIED MALE: Definitely. Russia carries the majority of the blame for the still birthing of Sudan's democracy.

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ELBAGIR (voice-over): Just days later, his nephew was killed by state actors trying to stop a pro-democracy demonstration. In the two weeks we've been in Sudan investigating Russia's illegal gold mining, 10 people were killed, protesting for change.

It's not just on the battlefields of Ukraine that Russia is spilling blind. Here too, there is a human cost. The cost of Russia's support of Sudan's generals in return for its gold.

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ELBAGIR: We reached out to key Russian and Sudanese government offices as well as representatives we have been a precaution without any response. Sudanese pro-democracy activists, though, are planning on making their voices heard this weekend, Wolf, where they are calling for people to take to the streets in the aftermath of what was exposed by our reporting to express that anger. Wolf?

BLITZER: CNN's Nima Elbagir, you are one courageous journalist. Thank you very much for that truly excellent, excellent report.

Up next, exclusive new details about the timeline of missing U.S. Secret Service text messages, now a key focus of the January 6 investigation.

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