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State of the Union

Interview With Cindy McCain; Interview With National Economic Council Director Larry Kudlow; Interview With Sen. Bernie Sanders (I- VT). Aired 9-10a ET

Aired August 25, 2019 - 09:00   ET




BRIANNA KEILAR, CNN HOST (voice-over): Trump vs. the world?

As President Trump meets with world leaders at the G7, the trade war with China reaches new heights and throws the stock market into chaos again. Will divided allies buy what he's selling on the world stage?

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I think they respect the trade war. It has to happen.

KEILAR: I will speak to President Trump's chief economic adviser, Larry Kudlow, next.

And defending his plan. Bernie Sanders is pushing back, as 2020 rivals say he's backtracking on his key policy.


KEILAR: Is the 2020 hopeful just playing smart politics? Presidential candidate Bernie Sanders joins me next.

Plus: restoring civility. A year after Senator John McCain's death, is Washington the same place that he left it, or has the late statesman of the Republican Party left for good?

I will speak to Cindy McCain about her husband's legacy in moments.


KEILAR: Hi there. I'm Brianna Keilar, in for Jake Tapper in Washington, where the state of our union is a world of worry.

This morning, President Trump is putting on a smile as he meets with world leaders at the G7 gathering in France, insisting on Twitter that everyone is getting along very well.

At a friendly working breakfast with new British Prime Minister Boris Johnson, President Trump expressed his first sign of possible second thoughts about his trade war with China.


QUESTION: Do you have second thoughts about escalating the war with China?

TRUMP: I have second thoughts about everything.


KEILAR: Now, the White House is trying to spin the president's words, saying that he regrets not raising the tariffs higher, even though that was not at all clear from his comments.

Still, despite the president's positive words, there are clear signs of division among allies over trade and foreign policy. The European Council president began the session warning of a recession from escalating trade wars, and saying this is the last moment to restore unity among world leaders.

This all comes after a week in which the president triggered another stock market slide with a single tweet and escalated the trade war with China.

Let's go right to France now and President Trump's top economic adviser, Larry Kudlow.

Larry, thanks for joining us.

LARRY KUDLOW, DIRECTOR, NATIONAL ECONOMIC COUNCIL: Thanks for having me. Appreciate it very much.

KEILAR: So, the president said that he's having second thoughts about escalating the trade war. Why?

KUDLOW: Well, look, if I can reinterpret that, I mean, he spoke to us. He didn't exactly hear the question.

Actually, what he was intending to say is, he always has second thoughts, and he actually had second thoughts about possibly a higher tariff response to China. So, it was not to remove the tariff. He was thinking about a higher tariff response.

Having said that, we're staying with the policy that was announced on Friday, I believe, a 5 percent increase on the two tariffs, the first 250 and the second 300, September 1 and December 15.

And let me just say on this point, China...


KEILAR: So, he's thought -- I just want to be clear on this.

So, he has thought that he might want to increase the tariffs, but he isn't actually going to increase the tariffs, beyond what he initially did? KUDLOW: That is correct. At the moment, that is absolutely correct.

That was his thought. It somehow got misinterpreted. I'm not sure he heard the question altogether. It was a very crowded room. I was there. But, yes, his thought was, perhaps he needed to go higher.

And my thought to you, Brianna, is simply, look, China took an action. It was a moderate action, a proportionate action. The president took an action related to China, as, again, I said 5 percent-plus from the original 250 and the next 300 or so, with the same due date, September 1, December 15, the same exemptions and waivers for a bunch of companies, consumer-related companies.

KEILAR: I do...

KUDLOW: In my judgment, these are measured -- hang on a second, if you will. I want to just complete this thought.

These were measured, proportionate thoughts, one point I want to make.

The second point, Brianna, if I may, the conversation, the discussion between the China side and the U.S. side continues. Negotiations continue. There was a successful, constructive deputies negotiation by teleconference last week. I believe another one is being scheduled for this coming week.


And I also want to say that at least the U.S. side is continuing to plan for a visit from the China side some time in the month of September. So, the negotiating talks continue. That's an important point, I think.

KEILAR: But just -- just to be clear on where his mind is on all of this, you're saying that this is because he would have considered an increased tariff, that, actually, he would have wanted to have more, but he is not, as you said, going to actually increase those tariffs.

He also said he's no longer planning on forcing U.S. businesses to leave China. So, it does seem as if he is softening on this issue broadly.

KUDLOW: Well...

KEILAR: You disagree with that?

KUDLOW: Hang on, if you -- well, a little bit.

Look, again, this is about what he was thinking this morning. I think the early reporting was confused, but I will leave that aside.

Regarding the larger point, OK, so he -- what he said last week in the tweet is, he can't order business. He's not ordering business. There's no emergency powers being invoked right now.

KEILAR: Well, he said he has the authority to do that. KUDLOW: He merely said -- he may. As I said, there's nothing right now in the cards.

Ultimately, we do have such authority, but it is not going to be exercised presently.

What he is suggesting to American businesses -- and it's something he has said to many companies in many different forms on many different occasions -- you ought to think about -- to the companies -- you ought to think about moving your operations and your supply chains away from China.

And, secondly, we'd like you to come back home, come back to the USA, where we have very low corporate tax rates and a massive deregulation program, and our economy is doing just fine right now. And so come home. Come back to America. And a lot of firms have already begun this.

KEILAR: I do -- I want to ask you about -- I want to ask you about how is being...


KUDLOW: A lot of firms have -- a lot of firms have -- hang on. A lot of firms have already done this.

KEILAR: He didn't say you ought to. He said -- he said he ordered.

Larry, just to be clear, he didn't say you ought to. He said he ordered.

But I do want to talk about how this is being received there.

KUDLOW: Well, I mean, no, he didn't order. He did not order the businesses. He just -- he just -- I know he said, "I hereby order."

But what he -- he said to them, in effect, was that you begin to look or you begin to search for ways to move out of China.

KEILAR: Well, I'm just thinking about what he actually...

KUDLOW: That's not necessarily a new thought.

KEILAR: I'm just thinking about what he actually tweeted, to be clear, the words that he tweeted.

But I want to ask you about what's going on where you are...

KUDLOW: Go ahead.

KEILAR: ... because the president's been getting a lot of pushback on his trade war.

The E.U. leader, Donald Tusk, warned that this would -- quote -- "lead to a recession." Macron says it is -- quote -- "bad for everyone."

And even his closest ally at the G7, the new U.K. prime minister, Boris Johnson, said this:


BORIS JOHNSON, BRITISH PRIME MINISTER: Just to register the faint, sheep-like note of our view on the trade war, we're in favor of trade peace on the whole. And that's what we want to see.

And so we're keen to see -- we don't like tariffs on the whole.


KEILAR: "We don't like tariffs on the whole," Johnson said.

How are you responding to criticism from world leaders about the U.S. strategy with China?

KUDLOW: Well, look, yes, I'm not sure I agree how you portrayed that, to be honest. I was in that meeting on the economy and trade.

KEILAR: What do you mean? It was a -- that's a quote.

KUDLOW: Yes, well, that may be a quote, but, sometimes, you're taking a quote out of context.

And let me try to generate some context. Again, I was in that meeting for two hours with the world leaders. Indeed, I participated in the meeting.

First of all, all those world leaders, every single one of the seven leaders, the G7, plus the new E.U. guy..

KEILAR: What's out of -- Larry, what's out of context? Because we just rolled video. I mean, what is out of context with that quote?

KUDLOW: Agreed. If I -- if -- if -- if I might just finish my thought, please.

I was there. I heard every single one of those leaders agree that China has exercised continuous debilitating and destabilizing unfair trading practices. Every single one of those leaders said that.

And they expressed support for President Trump, who is leading the way to try to get China to make changes, OK, structural changes, I.P. theft, forced transfer of technology, high tariffs, et cetera, every single one of them. I was in that room.

And so that's why I'm saying what you may have said -- and I don't know where these guys said that -- is out of context.

Now, let me also add this point. Let me add this point.

KEILAR: No, no, no, not about where you -- well, no, I have -- look, I just have to take issue with that, Larry, because he said they may -- look, there are a lot of people who think that China needs to be dealt with, but they do not like how the president is doing it.


KEILAR: And that was Boris Johnson saying, "We don't like tariffs on the whole." And he said, "We're in favor of trade peace on the whole."

He wanted to register a note of "our view on the trade war."

Tusk, that this would lead to a recession.

Macron, this is bad for everyone.

These -- this is what they have said, even if they have expressed some solidarity or empathy with what the president is facing.


KUDLOW: Yes. That's -- that's what I'm trying to get to.

KEILAR: But you cannot -- you can't deny -- you cannot deny that they do not like how this is being operated.


KUDLOW: Well, it -- look, I will just say it all depends on the context.

Now, we had breakfast with Prime Minister Johnson for about an hour- and-a-half. He said he's a free trader. I'm a free trader. President Trump regards himself as a free trader.

But the issue is how to deal with China's unfair trading practices, which have done great damage to the United States and the -- and Europe and Japan. And there was widespread support for the president taking on China.

Now, I can't attribute or I can't account for everything these folks say, and I'm not sure what you just played is something from that meeting. It sounds to me like it came after the meeting, which is why I wanted to raise the right context.

KEILAR: That's in the meeting, Larry.

KUDLOW: They are wholly behind President Trump.

Now -- well, I was in that meeting. And I can tell you, the atmosphere in that meeting was constructive and supportive of President Trump.

KEILAR: Larry, those words came out of Boris Johnson's mouth.

KUDLOW: And let me -- I know. And you will keep repeating that.

KEILAR: How do you argue with that?

KUDLOW: So, let me weigh -- let me weigh in, OK? Yes, I know.

But Boris Johnson expressed support for President Trump's campaign to go after...

KEILAR: These aren't mutually exclusive ideas, though...

KUDLOW: ... to go after -- well, that's what I'm trying to say to you, that you're making a situation -- you're -- you're taking it out of context.

The total context here was support for the president's policies.

KEILAR: I'm not taking it out of context, Larry.

KUDLOW: Let me -- let me go one more. Let me go one more for you on this.

The president has asked for the kinds of deregulatory and tax-cutting policies that have made the American economy a success. We're growing twice as fast as our allies.

Every person around that table agreed they need to take additional measures to simplify and reduce regulations and taxes and grow more and focus more on prosperity. And that includes reducing trade barriers. And that includes reducing China's trade barriers.

So, I'm just trying to create the context.

Actually, you want to know the truth, Brianna -- I know you will probably not agree -- my view was, the meeting this morning, in fact, the whole conference, including the unexpected luncheon between President Trump and President Macron, has gone very well, better than we thought, with a very positive vibe.

So I will go that far and say, actually, it's been a solid gathering.

KEILAR: All right, well, we -- I just -- I mean, I just want to be clear, that was video of Boris Johnson speaking in that very meeting. Just -- I just want to be very clear about that.

I do want to ask you what the Congressional Budget Office is saying about these tariffs. It's saying that the tariffs are costing American families.

They wrote this in a new report this week -- quote -- "The trade barriers imposed since January 2018 reduce both real output and real household income. By 2020, they reduce the level of real U.S. GDP by roughly 0.3 percent and reduce average real household income by $580."

Five hundred eighty dollars, Larry, do you think that Americans can afford that?

KUDLOW: Well, I would probably quibble with that dollar amount that they have had. It wouldn't be the first quibble I have ever had with the CEO.

But let me just step back a moment and repeat some things...

(CROSSTALK) KEILAR: But you said it yourself May 12 on FOX News -- quote -- "Both sides will suffer."

KUDLOW: Right. And I just was going to say, if you will...


KEILAR: I mean, there -- this is something that Americans are footing the bill for, whether you dispute the number or not.

KUDLOW: Right. If you would let me finish, I was going to acknowledge that, thank you very much, OK?

There's virtually no question in our mind that the largest part of the economic burden of the tariffs has fallen on China, the largest part, perhaps by a ratio of four to five to one.

China has had to slash their currency value, slash their prices, slash their profits. They have lost a couple of million jobs in the last year or a year-and-a-half. Supply chains and production are moving out of China. This is all very damaging.

Now, to the extent that there is an impact on American business and consumers, it is a small impact. Now, the CEO is using whatever you said, two-tenths or three-tenths. That's a very small impact in an economy that's about $20 trillion, $21 trillion. So, it will be a de minimis impact.


KEILAR: If you quibble with -- but when you break it down for families -- so you quibble with $580.

What do you think it is? What are your numbers telling you then? Because if you think that's not the number, what is it?

KUDLOW: I honestly -- I honestly don't know. I honestly haven't made that calculation. It sounds very high to me.

KEILAR: Then how can you say it's less?

KUDLOW: And, remember -- hang on one second.

Remember, our tax cuts have turned back somewheres between $3,000 and $4,000 in lower tax liabilities for average American families. So, whatever little hit on tariffs, it's being dwarfed by the tax cuts.


And let me also add, in what I believe is still a very strong economy, the biggest beneficiaries of the tax cuts and President Trump's entire program has gone to blue-collar workers and the bottom quintiles, including the bottom 10th percentile of the population.

So we are coming out way ahead, in my judgment. And I don't have to deny any impact. There may be a small, minimal impact, which is what I have been saying for several months.

KEILAR: OK. But as workers are looking at...

KUDLOW: But China, by four or five to one, is getting it worse. And, on balance, our tax cuts have overwhelmed that.


KEILAR: And I have heard you make that point.

I do want to ask you this, because I think it's important. I think -- I think voters are looking at this.

Can you promise that you will have a deal with China by Election Day 2020?

KUDLOW: I can't make any promises.

I don't want to make any forecasts. I will repeat, however, that the negotiations between the two great countries continue. And I think it's always better to talk than not to talk. So, therefore, the deputies are going to continue to talk. The principals, we expect China -- we're planning on having China come.

And let me also add, on the trade front, there is an imminent announcement coming this afternoon here this morning, where you are, with a large-scale trade deal with China that will include agriculture, as well as e-commerce and other areas.

And let me also add, not only is there a successful trade deal being brokered with Japan, but we have a terrific deal with the USMCA, our partners in Canada and Mexico, which will add between half to 1 percentage point additional GDP per year, when the Congress finally enacts the law, hopefully this fall.

That will way outweigh any of the very small problems with the China trade. So let's look at Japan. Let's look at the USMCA. They're both growth-adding. And the economy is in fine shape, as the American consumer is booming, and there's virtually no inflation, and interest rates are coming down.

I still think it's a good picture.

KEILAR: All right, Larry, thank you so much for joining us, Larry Kudlow from France at the G7.

KUDLOW: Thank you.

KEILAR: We appreciate it.

He said he wrote the damn bill, but now critics are accusing Senator Bernie Sanders of softening up on his Medicare plan for -- his Medicare for all plan.

The 2020 candidate is here to defend it next.



ANNOUNCER: This is CNN breaking news.

KEILAR: Welcome back to STATE OF THE UNION. I'm Brianna Keilar.

And we do have some breaking news, President Trump announcing a new trade deal with Japan, saying -- quote -- "The deal is done in principle" and calling it tremendous for farmers and infrastructure, this as the president and his top economic advisers are defending his escalating trade war with China.


KEILAR: Joining me now is presidential candidate Senator Bernie Sanders.

Senator, thank you so much for joining us.

SANDERS: My pleasure.

KEILAR: I want to start on the G7, where one of the major topics is the U.S. trade war with China.

President Trump escalated his tariffs on Friday, after China promised new retaliatory tariffs. You've made clear that China is treating the U.S. unfairly when it comes to trade.

And I understand that you don't agree with the president's tactics or his style, but if you were president, would you use tariffs to negotiate a deal with China?

SANDERS: That is one tool that you have.

What the president is doing is totally irrational, and it is destabilizing the entire world economy. You do not make trade policy by announcing today that you're going to raise tariffs by X-percent, and the next day by Y-percent, by attacking the person you appointed as head of the Federal Reserve as an enemy of the American people, by denouncing the president of China, who last year you really loved as a great leader.

This kind of instability and irrationality on the part of the president is causing very serious harm to the entire world economy.

Yes, we need a new trade policy.

KEILAR: I understand your criticism of that, but you say this would be a tool. Is it a tool that you would use? Would you use tariffs?

SANDERS: Yes, of course. It is used in a rational way within the context of a broad, sensible trade policy. It is one tool that's available.

What we need a -- you're looking at somebody, by the way, who helped lead the effort against permanent normal trade relations with China and NAFTA, because trade policies that we've had in the past have lost us millions of good-paying jobs, and were written primarily by large corporate -- large corporations, at the expense of workers and farmers.

We need a rational trade policy today, not what Trump is doing by tweet.

KEILAR: I want to talk about Medicare for all now.

You revealed an addition to your plan this week, saying that if companies save money by switching from union health care -- from a union-negotiated health care plan to Medicare for all, those savings would have to be passed along to those workers who belonged to that union.


KEILAR: How would you explain to those workers why they should not also receive a benefit for giving up their private insurance, if, for instance, theirs saves money as well going to Medicare for all?

SANDERS: Well, they are going to receive an enormous benefit. The overwhelming majority of the American people are going to pay significantly less for better health care under Medicare for all.

Right now, you've got 87 million people who are uninsured, who are underinsured; 500,000 people go bankrupt every year because they cannot pay their outrageous medical bills. You've got 30,000 people who are dying. People are spending 10, 15, 20 percent of their limited incomes on health care.

But Medicare for all...

KEILAR: But they won't get the higher wages or the benefits that union members would get.

SANDERS: No, no, no, no. Wait.

KEILAR: No, I hear what you are saying, but you say union members...

SANDERS: What Medicare for all would -- excuse me.

What Medicare for all will do is lower the cost of health care for the overwhelming majority of Americans. That's how they benefit, no premiums, no co-payments, no deductibles, no out-of-pocket expenses, every American, virtually every American.

KEILAR: But a non-union worker, unlike a union worker, under your plan, if there is a savings, their employer sees a savings, they would not be guaranteed to have higher wages or benefits to realize the savings.


SANDERS: Well, the difference -- that's right. KEILAR: Why not?

SANDERS: But the difference is -- I will tell you why not, because union workers gave up wage benefits over the years in order to pay for health care, and non-union workers did not. That's the difference.

But,at the end of the day, the vast majority of the American people, workers and non-union -- workers -- union workers and non-union workers, will benefit under a Medicare for all.

And, by the way, under Medicare for all, we'll cap what any American pays for prescription drugs at $200 a year. We're going to take on the pharmaceutical industry. The function of health care, Brianna, is not to allow the health care industry, as they did last year, to make $100 billion in profit, while so many of our people are uninsured, underinsured, and paying more than they can afford to pay.

KEILAR: Several of your 2020 rivals and their campaigns have been attacking you over this sweetener for union members. So how do you respond to critics who say that this is special treatment to a voting bloc?

SANDERS: Very few people -- very few people have been attacking me, I think one candidate, and the media picks up on it.

Again, we have not changed...

KEILAR: There's three.

SANDERS: ... one word of our -- we have not changed one word of our Medicare for all system, no deductible, no co-payments. The vast majority of the American people save money.

The issue, again, as I've just said, is that, if you are a worker in a union shop, and the company says, well, we're going to offer you a 3 percent wage increase, but you know what, it's -- you're going to have to pay -- you're going to lose 4 percent in your health care, your deductible is going up, your premium is going up, those workers have given up wage increases in order to retain the health care that they have.

Those are the workers we are reaching out to in this -- what we are doing right now.

But we have not changed one word in our Medicare for all program, which is gaining more and more support from the American people. The American people understand that we have a dysfunctional system in which so many people are uninsured, underinsured, and which we spend twice as much per person on health care as do the people of Canada or any other industrialized nation.

Now, it is true we're going to take on hundreds of millions of dollars from the health care industry in 30 second TV ads. They're going to distort what I'm trying to do. They're going to demonize me personally. But, at the end of the day, the American people will go forward in

guaranteeing health care to all people as a human right, just as every other major country does.

KEILAR: You -- I want to talk about how you describe yourself, which is as a democratic socialist.

You have said that -- quote -- "Unfettered capitalism is destroying the moral and economic fabric of this country." It's one of the things that draws a lot of your supporters to you.

But your 2020 opponent Elizabeth Warren, who agrees with you on most issues, says she is a capitalist down to her toes, she's not a democratic socialist, like you describe yourself. How do you explain that to voters who are wondering what's the difference here?

SANDERS: OK. Well, I will let Senator Warren speak for herself.

But I will tell you what I believe. And I believe, right now, if we are going to transform our economy, so that it works for working people, and not just large profitable corporations and the 1 percent, if we're going to end the absurdity of major corporations like Amazon that make $10 billion in profit last year, not paying one penny in federal income tax, if we're going to end the outrage that three people today in America own more wealth than the bottom half of the American people...

KEILAR: But is it possible...

SANDERS: ... 29 percent of all new -- if you're going to end that, the only way you do it is, when millions of people stand up and take on the corporate elite.

To me, one of the aspects of democratic socialism...

KEILAR: I know -- I know what your -- what know what your...

SANDERS: ... is organizing people -- excuse me -- and getting people involved in the political process, so that we take on those people today who have so much economic and political power.

KEILAR: I know what your pitch is on that.

Is it possible for two candidates who see eye to eye, but one is a capitalist and one is not?

SANDERS: Well, I'm not quite sure what that question is about.

All I know is, Senator Warren is running her campaign. I'm running my campaign. I feel very good -- I feel very...

KEILAR: I mean, the labels are -- the labels are very far apart, and yet some of your policies are much closer together than those labels would indicate. How do you make sense of that?

SANDERS: Well, we'll let - we'll let the American people make those decision.

All I am saying is that, if you look around the world, you look at Germany, you look at Scandinavia, they have public colleges and universities tuition-free. They have retirement benefits for their senior citizens much stronger than we have in the United States. They are addressing problems of income and wealth inequality.

So, to me, what democratic socialism is about is in fact creating an economy and a government that works all, not for wealthy campaign contributors.

KEILAR: All right, Senator Sanders, thank you so much for coming on STATE OF THE UNION.

SANDERS: Well, thank you for having me.


KEILAR: From insulting allies who've shed blood in Afghanistan, to siding with a communist leader over his own Fed chair, are some troubling economic signs beginning to panic this president?

Plus, one year after Senator John McCain's death, does his widow think the Republican Party is following his example? We have a special interview with Cindy McCain.


Stay with us.



UNIDENTIFIED FEMALE: Any second thoughts on escalating the trade war with China?

TRUMP: Yes. For sure. Why not?

UNIDENTIFIED FEMALE: Second thoughts --

TRUMP: Might as well -- might as well.

UNIDENTIFIED MALE: Do you have second thoughts about escalating --


TRUMP: I have second thoughts about everything.


KEILAR: All right. We are here now with our panel to discuss what we have been seeing going on at the G7 and everything that preceded it as well.

RICK SANTORUM, CNN SENIOR POLITICAL COMMENTATOR: This is really -- KEILAR: I didn't even ask a question yet. This is how conversational

this is. OK. So --

SANTORUM: Nobody has this much fun at a G7.


KEILAR: OK. But you heard Larry Kudlow say that he's not sure he heard the question but he actually repeated part of the question back.


Makes sense of this to us, Senator Santorum, because --

SANTORUM: No. They did make sense that he wanted to go higher. I think they did have to (INAUDIBLE). If you look at it, I mean, just raise tariffs by 5 percent above what they were going to be. Knowing Trump, the fact China raised by five, that he probably wanted to raise by 10 are 20. So, I think that's what he was thinking.

KAREN FINNEY, CNN POLITICAL COMMENTATOR: In other words calmer (ph) heads prevail?


SANTORUM: Calmer (ph) heads prevail.

KEILAR: But he said he wanted to but we're also -- we're not going to. We're not going to increase it. And this also comes as the president has made it clear he's not actually going to have companies getting rid of their involvement --


SANTORUM: But he has the power to do so.

FINNEY: Hold on. We've got -- what time is it? We have got time. I mean, if this is any indicator --

KEILAR: 9:35 a.m.

FINNEY: Right. Like we are doing payroll tax cuts, we're not doing payroll tax cuts, we're buying Greenland. We're not buying Greenland.

Actually, yesterday what he said was, if you re-elect me and Republicans control everything, then I'll give the middle class a tax cut. So who knows within the next hour what the plan will be and that is part of the problem and why I think a lot of these leaders are so anxious because there doesn't seem to be a plan. The president has said one thing then his people have to come out and say something else.

And if you're trying to read the tea leaves -- if you're France and you're the U.K. and you're trying to read the tea leaves knowing that you're worried about a global recession and can't count on the U.S. to have a plan, that is a very nerve-racking situation. When -- Trump is -- and this is showing us that his sort of volatile behavior is actually having a very real impact on people's lives. On markets but ultimately on people's lives.

JENNIFER GRANHOLM, CNN POLITICAL COMMENTATOR: On absolutely -- GDP and there's study after study that will show that uncertainty like that creates a decline in GDP. An uncertain impact, not a real certain impact, on people's pocketbooks, you raised the study this morning out of the Congressional Budget Office, there's also a study from JPMorgan Chase that says that, if implemented this will cost $1,500 per consumer, completely eradicating any gains for middle class people from that budget tax -- from the budget -- from the tax cut if any exists, and it is hurting the sectors of the economy that he supposedly wants to go to bat for. Whether it's ag (ph) or steel, U.S. steel declared a 70 percent drop in their market value as a result of these tariffs.

BILL KRISTOL, DIRECTOR, DEFENDING DEMOCRACY: You know, what struck me about the clip you showed of Trump, he looks depressed actually, sort of demoralized. And that's not the normal Trump. He's like, yes, you know, I always have second thoughts. Why not?

Look, his economists have told him privately we are slowing down and we're at some risk of really toppling into a recession. His political people have told him his numbers are going down, not up. This base play he made with all the native rhetoric and the attacks on Elijah Cummings and on the four congresswomen did you not work out. And he has the Jewish people need to be more loyal to Israel. That hasn't worked well. And I think he sees a bad economic news coming and bad political news coming and that he's a demoralized guy.

SANTORUM: I don't see it at all. He hates being there.

KEILAR: That is what I was going to say. He does not like these kinds of things.

SANTORUM: You give him too much credit for this. He just hates being at these meetings. He doesn't like -- he doesn't like the dynamics that are going on there. He sees the entire array of those folks by and large with the except Boris Johnson not being --

KRISTOL: So, he hates being in the White House, he hates being at those meetings --

SANTORUM: No, I'm just saying --

KRISTOL: He hates governing, what does he like? He's really happy -- he's not a happy warrior --

SANTORUM: Here's the reality. What you are seeing is a president engaged in a battle that presidents for generations have said they would fight and none of them have. And he's going out.

KEILAR (ph): You're talking about China.

SANTORUM: He's taking on China and he's doing it in a way that -- some can quibble as to whether he's doing it the right way or wrong way but he's doing it. No one else is (INAUDIBLE). You saw it today --


KRISTOL: That's total nonsense.

The TPP -- the TPP that was done -- would have done more damage to China than any single thing Trump have done.

SANTORUM: Well, then why were Democrats or Republicans --


KRISTOL: The establishment -- people like you, demagogue (ph) did and people like Bernie Sanders --


KRISTOL: You are for it? OK. Good. So, good for you.

SANTORUM: No. I wasn't for it.

KRISTOL: OK. So, people like Bernie Sanders and --


SANTORUM: Are you saying there's no legitimate reason to be against it? That's not demagoguery (ph) --

KRISTOL: I said if you wanted to -- damage to China -- if you want to help our allies in the west --

SANTORUM: Don't demean people with different opinions. OK?

KRISTOL: I can demean -- a lot of the attacks on the TPP were pure demagoguery. I'm going to stick with it.

SANTORUM: Well, a lot of the people -- a lot of people don't like TPP and things like that because we don't like multinational organizations governing the United States as they have in the past because they haven't been beneficial to this country.


KEILAR: Let me ask. How is this working though where the president is saying basically he's having second thoughts, his aides are coming out completely spinning it to the point where they are questioning indisputable facts of what happened in this meeting, what does that do to the president's negotiating position when it comes to China? There's not a consistent message moving forward at a key point in time.

GRANHOLM: He is reeling from pillar to post. It is completely ridiculous. Nobody can believe a thing that he says.

He has got 12,000 lies so far, 20 lies per day. This just means that you can't trust the guy.


The question is what is actually happening as a result of the policies that he had put in place? John Deere, 24 percent drop in their market share. Why? Because the ag (ph) sector is not buying equipment as a result. The impact on the ground is real.

FINNEY: But also, what do we think is going to happen when the -- I mean, he waited -- it was very predictable that China was going to -- so we did our thing China was going to come back, right? And he acted like, oh, my God, China is -- of course they're going to retaliate. So, then he says here's our retaliation.

Now today it's all over the map. What's going to happen when markets open tomorrow morning? That's what we should be worried about.

SANTORUM: They'll be very happy because there's a trade deal between the United States and Japan.

FINNEY: Great. So that's -- what does that do for us with China?

SANTORUM: You want to look forward to -- you want to forward to what this president has talked about. He has been very clear about this. He doesn't want to do multinational deals. He wants to do bilateral deals. And he -- and he did a bilateral deal with Japan, he has got one. He's negotiating with Boris Johnson in the U.K.

There are a lot of things that we can do on bilateral basis without getting involved in these multinational organizations which is what the president is has laid out. And he has been very clear on that and consistent on that.


FINNEY: And guess what? That's the business of these meetings. So, actually you may hate to be there but that's why you need to go.

KEILAR: Let's talk about Russia and all of this. Because this is the G7 because Russia was kicked out of it for annexing Crimea in 2014. The president just said he wants Russia back in the fold for the G7 -- would be the G8 next year. Let's listen.


TRUMP: I think that's a work in progress. We have a number of people that would like to see Russia back. I think it would be -- I think it would be advantageous to many things in the world. I think it would be a positive. Other people agree with me and it's something that we're discussing.


KEILAR: All right. Russia's meddling in the election still in the upcoming election and the past midterm election, obviously 2016, nothing has changed with Crimea. What has Russia done to earn this? KRISTOL: Nothing, nothing. Donald Trump (INAUDIBLE) Russia is one of appeasement. He and Mitch McConnell are stopping bipartisan election security bills from coming to the floor of the Senate and how he wants Putin led back into the G8 with no price to be paid apparently for invading a neighboring country.

GRANHOLM: Yes. Russia has actually done a lot to deserve this honor of being invited back and according to Trump which is -- they are going to try to help him get elected again. That's the quid pro quo.

FINNEY: But can we just -- I'm sorry, Senator. But can we just go back to -- I worked for Bill Clinton when he advocated to bring Russia in. Boris Yeltsin was the president at the time. The idea was they were making some democratic reforms, economically they were sort of joining the sort of union of nations and so the idea was let's encourage that good behavior.

What Trump is now proposing is a perversion of that idea, right? Because -- to your point, so Russia is attacking us, they have done nothing to deserve coming back in and he says, let's just bring them back in because they're my friends. Not for -- and again, diplomatic reason and the rationale they were admitted in the first place and then kicked out in the second place he just wants to ignore all of that.

KEILAR: I do want you to respond to what the governor said, Senator, because you were saying that the president would like to see Putin re- elected. I would like to say consider the --


KEILAR: I'm sorry. Trump would like -- Trump. But consider what the image would be because the summit will be in the U.S. next year. So, if Putin were to come, this isn't -- that would be optically very significant. So, respond to that.

SANTORUM: There's a bad policy call on the president's part and to that political call in the president's part. Russia does not deserve to be in the G8. I like a lot, as you heard, I like a lot of things this president is doing. I don't like the way he deals with some of these dictators like -- whether it's North Korea or Russia.

And I'm disappointed he's making the call. And I hope that -- it's resisted and he's not included.

GRANHOLM: We agree on one thing.

KRISTOL: This is the Rick Santorum we knew --



KRISTOL: Rick should challenge President Trump.

(CROSSTALK) GRANHOLM: Oh, there you go.


KEILAR: Bill is recruiting you

KRISTOL: He almost won in 2012. He's a much better version of President Trump. Don't you think?

SANTORUM: So, Bill's trying to destroy my credibility right here.


KEILAR: All right. So, keeping that in mind though, do you think this is really going to happen?


KEILAR: You don't?



KEILAR: So, full agreement you do not think that Russia will be brought back in or will be a part of the summit?

KRISTOL: Well, Europeans have not been very tough on Russia. As Rick knows we don't criticize the Europeans over the years but -- I'm not so sure that Trump couldn't, you know, use some leverage and get him back in and declare a big diplomatic victory next year. I don't know.

KEILAR: All right. The outlier, sort of. A little bit.

All right. Thank you all so much.

It's been one year since John McCain died and Washington may need him now more than ever. I spoke to the late senator's wife about what his message would be right now. Stay with us.



KEILAR: Welcome back to STATE OF THE UNION. I'm Brianna Keilar.

In an era of lies and indecency and tribalism and nastiness, we lost a man who tried to embody the opposite of those vicious impulses. Jake Tapper said those words one year ago on this show. It's hard to believe that it has been that long since the nation lost Senator John McCain and it's also hard to believe how little has changed since then. What would be his message to Washington now?

Joining us now on this one-year anniversary of Senator John McCain's death is his wife Cindy McCain. Cindy, thank you so much for talking to us. CINDY MCCAIN, WIDOW OF THE LATE SENATOR JOHN MCCAIN: Thank you for having me, Brianna. I appreciate it.

KEILAR: And as I said, it has been a year since your husband died, which is unimaginable that it's been a year at this point in time. Can you just give us a sense of what you miss most about him?

CINDY MCCAIN: Oh, there are so many things I miss about him. I think most of all was his voice of reason and common sense.


He was -- he exhibited that not only in his daily work life but at home. And -- I think those are the kinds of qualities that in -- there are so many things I miss about him but particularly his voice of reason, right now.

KEILAR: One of the things I noticed when I lost a parent was just sort of things I learned about myself in the wake of that, and I wonder for you --


KEILAR: -- you got married when you were 25 years old, and you were with John McCain for almost four decades and I wonder what have you learned about yourself in this year since he passed away?

CINDY MCCAIN: Well, I think the first lesson is that I can survive. Losing any loved one is always traumatic, but he was such a force of nature, I've had to learn that not only will I survive but that I can move forward. This one-year anniversary is going to be very difficult but we're very grateful to be together as a family.

KEILAR: Do you personally -- you're encouraging people to perform acts of civility and to come together with people that they disagree with. Tell us why you think that message is so important at this moment in time?

CINDY MCCAIN: Well, as we've all witnessed some troubling times with regards to genuine civility towards each other and towards mankind, and our family together all of us felt that this was a very important message that we, if we can convey anything, that John McCain stood for on this one-year anniversary, that could be acts of civility.

He was the guy on the floor that could cross the aisle. He would work with others. He was very passionate about what he did and I would like to remind people of those qualities and offer the opportunity for people to do just the same.

Go seek someone who perhaps you disagree with vehemently or maybe someone that you've never really liked, but go talk to them. Maybe agree to disagree but do this in a civil fashion and then post it on social media with the hash tag #actsofcivility.

KEILAR: Your husband's farewell message which was released just after he died last year said this -- quote -- "We weaken our greatness when we confuse our patriotism with tribal rivalries."

Do you think that Washington has in the past year taken that advice?

CINDY MCCAIN: I don't see much of it. There are wonderful people in Congress. There are many, many good people on both sides of the aisle and there are some that have tried to perform acts of civility with regards to what is going on in Congress, but we'd like to see more of that.

KEILAR: There are many people who continue to point to your husband's legacy in contrast to President Trump. I want to listen to how President Trump handled a racist chant from his supporters at a North Carolina rally and then I want to watch how your husband responded to a supporter's racist comment about Barack Obama during the 2008 campaign.


CROWD: Send her back? Send her back.

UNIDENTIFIED FEMALE: He's an Arab. He's not?

SEN. JOHN MCCAIN (R-AZ): No, madam. No, madam.


JOHN MCCAIN: No, madam. No, madam. He's a -- he's a descent family man, citizen that I just happen to have disagreements with on fundamental issues.


KEILAR: What's your reaction when you see how President Trump handled a moment like this?

CINDY MCCAIN: Well, any time there is an exhibition of disrespect in the way that took place at anyplace but the way that was in the film recently, it's just -- it's wrong. We need to take a step back as a country, as people and remind ourselves we are all working for the same goal, and that's for the good of the country.

It's also not a good representation of what we want our children to learn.

KEILAR: Former Vice President Joe Biden delivered a eulogy at your husband's funeral in Arizona and his opening words were my name is Joe Biden, I'm a Democrat and I love John McCain. And that's not something that you hear in politics today very often.

So as you do focus on renewed civility, do you think that Joe Biden would make a good president?

CINDY MCCAIN: Well, I think we need to let the process work. I think all the candidates are good candidates. They represent different views. They represent different ideas. This is -- this is going to be a tumultuous election for many, many reasons. So, I look forward to hearing from all of them and I look forward to seeing the process work. It's a lot of fun.

KEILAR: As someone that spent so much time with your husband and would know just how his mind thinks, what do you think he would say if he saw the current state of American politics right now?

CINDY MCCAIN: I think he'd be very disappointed. In fact, I know he would be.


He would be saddened by the digression that these conversations and these debates have taken and also saddened that we're so disoriented within the world right now. You know, we had time to talk before he died and he was very frustrated with what was going on then, and I think now he would be even more frustrated.

KEILAR: Well, thank you so much for sharing your time with us, Cindy. We really, really appreciate it.

CINDY MCCAIN: Thank you. Thank you. I appreciate you having me.

KEILAR: I want to get back now to the ongoing G7 where we're getting reports from the official Iranian news agency that a plan -- a plane that just landed in France is carrying Iranian foreign minister Mohammad Zarif.

The Iranian say that there will be no meetings or negotiations with the American delegation on this trip. We will have the very latest from the G7 next.