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White House Addresses Dow's Steep Drop; White House Addresses Possibility Of Biden Campaign; Would President Obama Endorse; White House Briefing; Korea Deal Reached. Aired 1-1:30p ET

Aired August 24, 2015 - 13:00   ET

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

(BEGIN LIVE PRESS CONFERENCE COVERAGE - IN PROGRESS)

JOSH EARNEST, WHITE HOUSE PRESS SECRETARY (live): -- a longer term increased investment in transportation infrastructure would be beneficial to the economy, not just in the short term, in terms of creating jobs and stimulating economic growth, but actually laying a foundation for the long-term strength of the U.S. economy.

So, there certain is -- you know, while we continue to be confident about the longer term trends when it comes to the U.S. economy, we would like to see Congress take the kind of common sense steps that would build on that momentum that the U.S. economy continues to enjoy.

OK, Jeff (ph).

QUESTION: Josh, following up on that, China's president, she is coming to the White House in September. Does this topic, of the Chinese economy and weakness there, automatically become a top agenda item for that summit meeting -- or that meeting?

EARNEST: Well, Jeff, the economic relationship between the United States and China has long been a priority for our two countries. That's certainly been true while President Obama has been in office. I think previous U.S. presidents would say the same thing. That relationship has only become more important as we have seen China's economy grow.

And the importance of that relationship manifests itself in a variety of ways. It includes intensive discussions that we have with the Chinese about protecting intellectual property rights. Certainly, there will be continued discussion about Chinese efforts to move towards a more market determined exchange rate for their currency.

It also, you know, raises some questions about the concerns that we've expressed in the past about China's behavior in cyberspace and that there are examples of cyber espionage that have had significant economic consequences for our relationship. And so, these are all the kinds of things that have remained high on the agenda whenever President Obama sits -- has sat down with his Chinese counterpart. And I'm confident that that will be true when President Obama has the opportunity to welcome President Xi to the White House next month.

QUESTION: Has he been briefed on the market volatility and is he having discussions either now with his counterparts in China or other officials?

EARNEST: I'm not aware of any -- the president has not made any calls to Chinese officials about this but the president, as a matter of course, is updated on developments in the economy and he has been even while he's been on vacation.

QUESTION: Does the White House expect that this volatility will have any effect on the fed's decisions about interest rates this fall?

EARNEST: I wouldn't want to speculate on a decision that ultimately is the responsibility of the independent Federal Reserve. But I'm sure the Federal Reserve will tell you that they obviously are paying close attention to this volatility and broader economic movements. But any sorts of conclusions they reach will be theirs and wouldn't speculate on that.

QUESTION: One last topic. Do you have a reaction to the North Korea- South Korea agreement today to reduce tensions on the border?

EARNEST: Jeff, I was -- I heard that they had resolved or at least completed their talks shortly before I walked out here. And it's pending a longer term or a more formal announcement from the two sides, in terms of what they've agreed upon. So, we'll withhold any reaction until they have an opportunity to make their announcement and then we can follow up with you on that. OK?

Paul.

QUESTION: (Inaudible) talking about China, there are a lot of market analysts who think that Chinese estimates of its economic growth which have fallen from about 10 percent and down to about seven percent now, the world bank and IMF now say that China will slow to about four percent over the next couple of years despite that there are a lot of analysts who say that the Chinese figures of growth can't be trusted. They are cooking the books and such. Is that a view that the administration in any way -- how trustworthy do you think these Chinese growth figures are?

EARNEST: Well, my colleagues at the Treasury Department can probably give you a more sophisticated assessment of that. I -- this is certainly an issue that's been raised publicly in a variety of ways. Obviously, there are significant consequences for how reliable the data that is issued by the Chinese government actually turns out to be.

One of the things -- one of the cases that we had made to the Chinese government is that a more transparent economy isn't a -- is one that will benefit not just the Chinese economy but the global economy. And we certainly hear from business leaders in the United States that are interested in doing business in China that a more transparent business environment would make them more likely to do business there.

We, obviously, welcome and want to advocate for U.S. businesses that are looking to grow overseas because, ultimately, that creates a good economic opportunity here in the United States. But, ultimately, these are the kinds of decisions that Chinese officials have to make and the message they hear, consistently, from the Obama administration is one that is focused -- a lot of which is focused on the need for China to continue to pursue financial reform and to move rapidly toward a more market-determined exchange rate system.

[13:05:24] But, certainly, improving transparency into their economy is something that we believe would be good for the global economy and also, you know, good for the economy in China as well.

QUESTION: As a quick follow up that to that report that China internally talking about transparency. They have an internal force, army, whatever you want to call it, of about two million government workers who do nothing but monitor their own people's online activity. As you know, social media is hard to access and such. Does that tell you or the administration that China is a confident government when it monitors their own people to that degree? Or is it a confident government or fearful one that would do something like that? What (inaudible.)

EARNEST: Well, Paul, we've long made the case that human rights is at the top of the agenda whenever the president is meeting with his Chinese counterpart. And in a variety of settings, including when the president himself travelled to China, raised significant concerns about the Chinese government's respect for basic universal human rights of its people, including access to information and freedom of expression. And that is a -- that is a concern that the -- that President Obama will continue to raise with his counterpart. OK?

John?

QUESTION: Can you draw conclusions from what's going on in China and the turbulence in the markets about the possibility that the U.S. government could encounter or run into a recession any time in the next year or so?

EARNEST: Well, as I mentioned earlier, you know, I'm not in the business of prognosticating either on elections or on the economy. But I think, you know, taking a look at some of these longer term trends of the U.S. economy are an indication of the strength of the U.S. economy right now. And whether you evaluate job creation or the unemployment rate or even just broader measures of economic growth, people can feel confident.

At the same time, there's more that Congress can and should do to build on some of this momentum that the U.S. economy has built up and on the resilience that this economy has demonstrated. And we're hopeful that when Congress returns for from their recess that they will be focused on passing a budget on time that reverses the sequester, that they'll reauthorize the EXIM (ph) Bank in a timely fashion. It's already a couple months overdue. And that we'll -- we can hopefully get Congress to actually finally take action on an increasing long-term investment structure. OK?

John. QUESTION: So, Josh, would you say the fundamentals of the economy are strong?

EARNEST: Well, that certainly has been a phrase that has been used by others in different settings. I think that there is no doubt that the U.S. economy is far stronger now than it was in 2008 and there are a variety of ways to measure that. One way that I would measure that is to take a look at the impact of Wall Street reform legislation.

That now we know that U.S. banks have reduced their leverage and have added more than $600 billion in capital since 2009, some of that as it related to new requirements under Wall Street reform. That means that best -- that banks are less relying on unstable short-term funding and that they are better able to withstand short-term volatility within the financial markets. One of the things that we -- that has been part of Wall Street reform are annual stress tests. And that's another reason that we can have more confidence in the strength and resilience of the U.S. economy.

QUESTION: So, picking up on your answer to John's question, you mentioned what Congress can and what they might not do. Is there a danger that if Congress fails to act on a budget on the debt ceiling, which is coming up as well, on infrastructure, that Congress's action or inaction on those fronts could put us into a recession?

EARNEST: Well, there is no doubt that Congress failing to act in a responsible way to pass a budget and reverse sequester is going to have negative consequences for the U.S. economy. And, particularly at this time, when we're seeing so much volatility in economies all around the globe, it seems like a bad time for an unforced error.

Now, I would acknowledge that we've seen a lot of unforced errors from Congress over the last several years. And in spite of those unforced errors, we have been able to build up some momentum behind the economy. I think what we would like to see is Congress take the kind of action that would actually build on that momentum, as opposed to take steps or not take steps, as the case may be, to undermine that momentum.

QUESTION: OK. And then, just a couple quick questions on the other topic that you like. So, a quick readout from the president's lunch with vice president Biden?

[13:10:08] EARNEST: When I walked out, it was still ongoing.

QUESTION: It was still ongoing?

EARNEST: Yes. I have not gotten an early read out of their lunch.

QUESTION: So, we had the development over the weekend that the vice president came back and met with Elizabeth Warren. How would the president deal with this if Biden actually decides to run? Here you have his current vice president against his former secretary of state?

EARNEST: Yes. Well, there's not an insignificant if in that question and I think that's what everything is pretty interested to find out is what decision the vice president is going to make. The president has indicated his view that the decision that he made, I guess seven years ago now, to add Joe Biden to the ticket as his running mate was the smartest decision he ever made in politics. And I think that should give you some sense of the president's view of vice president Biden's aptitude for the top job.

QUESTION: So, I assume that means the president would support vice president Biden if he were to run? I mean, this is obviously a better decision than the secretary of state he chose so -- you said it was the best decision he'd made.

EARNEST: It was. And I think what the -- the president spoke, at quite some length, about the appreciation, respect, and admiration he has for the service of secretary Clinton, particularly in her four years as secretary of state.

QUESTION: Just not his best decision.

EARNEST: Well, again, I think all of you and your coverage at some of the president's comments about secretary Clinton have noted how warm those comments were. I'll just say that, you know, the vice president is somebody who has already run for president twice. He's been on a national ticket for two election cycles now, both in 2008 and in the reelection of 2012.

And so, I think you could make the case that there is probably no one in American politics today who has a better understanding of exactly what is required to mount a successful national presidential campaign. And that means that he's going to collect all the information that he needs to make a decision. He's indicated that he would make a decision and announce a decision before the end of the summer. So, those of us who enjoy the summertime, I think, would assume that that means he's got another month -- another month or so here to think about this and announce a decision.

QUESTION: The last thing, will the president remain neutral or -- I mean, will you say right now that the president will or will not endorse somebody before the primary is over?

EARNEST: Well, I've been asked this once before and I have indicated that the president does plan to vote in the Illinois primary and that, ultimately, it will be Democratic voters who are responsible for choosing the Democratic nominee. But I wouldn't speculate, at this point, about whether or not the president would offer an endorsement at the Democratic primary.

QUESTION: So, there's no possibility he could, say, endorse Joe Biden or endorse Hillary Clinton?

EARNEST: I wouldn't rule out -- I wouldn't rule out an endorsement --

QUESTION: Bernie Sanders (inaudible.)

EARNEST: -- for Bernie Sanders. I wouldn't rule out the possibility of an endorsement in the Democratic primary. I am confident the president will support the Democratic nominee in the general election. OK.

Major (ph)?

QUESTION: Is the president torn by this conversation of his vice president possibly running against Hillary Clinton, two people he obviously thinks highly of?

EARNEST: Well, I haven't had an extended conversation with the president about this and I certainly am not privy to the conversations that take place just between the president and vice president in private, like the one that, presumably, is ongoing right now. But, no, I would not describe the president as torn, principally because this is an intensely personal decision that someone has to make to decide if to run for president.

And the president has spoken about the -- about his own decision to run for president and how that was -- that required a lot of consultation and consideration, in particular when it came to the impact on his family. And I know that those conversations weigh heavily on vice president Biden, at this time as well. But, you know, obviously, these are decisions that these individuals have to make for themselves.

And, look, as I mentioned to John (ph), I think the president's view about vice president Biden's performance as the vice president of the United States should give you a sense of the president's belief in his aptitude for the top job.

QUESTION: You said, a moment ago, that nobody has a better understanding of what it takes to mount a national campaign. What do you think that should inform the vice president of? That it's too late?

EARNEST: No, I think what it does is it, basically, means that he is somebody who understands exactly what he needs to know to make this decision. And so, it's not as if he needs to

[13:15:00] ask himself a bunch of questions with which he's unfamiliar. I think, rather, he will be able to conduct this process and have the conversations that he needs to have in order to make the best decision.

QUESTION: Does the president believe it would be healthier for the Democratic Party to have the vice president in the race?

EARNEST: Well, I - I haven't asked the president that question. Presumably you'll have the opportunity to do that at some point. I think what the - I think what the president would say is that individual candidates are ultimately going to have to make up their own mind about whether or not they want to run. And that's the - that's the first decision. First and foremost.

QUESTION: Last one on this topic, at least for me. Part of this derives from a sense expressed by some Democrats privately, some pundits publicly, and some donors not so privately, that Hillary Clinton is in trouble. That the e-mail situation has caused her campaign to stall and it's a serious ongoing issue as far as her trust and possible legal consequences. What do you and this White House think about the e-mail controversy itself and (INAUDIBLE) to be the source of all this consternation?

EARNEST: Well, I think I - what I would observe is that it is August of 2015 and the election is not until November of 2016. And certainly somebody who worked on President Obama's campaign in 2007 and 2008 will recall pretty vividly August of 2007. I think it's fair to say that there was not a ton of confidence in the likelihood that president - that then Senator Barack Obama would be elected the next president of the United States. So I think what I would do is warn people against drawing conclusions at such an early stage.

QUESTION: So Democrats are unduly overwrought?

EARNEST: Well, again, I - there are plenty of observers to this process and they can reach whatever conclusions they can reach or whatever conclusions they would like. I think I would just observe that it's rather early in the process and certainly if you want to consider President Obama's presidential campaign, there are dangers associated with assuming the outcome of the race 15 months in advance.

QUESTION: We've asked you -

(END LIVE PRESS CONFERENCE COVERAGE)

WOLF BLITZER, CNN ANCHOR: All right, so there's Josh Earnest, the White House press secretary, making news today, basically suggesting on several fronts that the president of the United States believe that Joe Biden, the vice president of the United States, potentially would be a great candidate. He says the best decision he made as president was to ask Joe Biden to be his vice president, the man who would be president of the United States in case of an emergency, and certainly sending a strong signal there that the president would, in fact, welcome Joe Biden as a potential Democratic presidential candidate challenging Hillary Clinton, Bernie Sanders and the others if he makes that decision.

The president now having lunch with the vice president. A very strong signal. Those words are not necessarily easily thrown out by the press secretary at the White House when he goes out of his way to say the best decision the president made was to ask Joe Biden to be his vice president.

There was a lot of discussion also on this very volatile stock market here in the United States shortly after 9:30 a.m. Eastern when it opened. The Dow Jones dropped a thousand points. It has now come back. It's down only 149 points. Full coverage of that coming up.

Also, there's major breaking news out of the Korean peninsula. After marathon negotiations, North and South Korea have reached a deal to reduce tensions. We'll have details. We'll go live to Seoul, South Korea.

Lots of news happening right here on CNN.

(COMMERCIAL BREAK)

[13:22:53] ANNOUNCER: This is CNN breaking news.

BLITZER: And let's get to the breaking news out of the Korean peninsula right now. After three days of very intense talks, the South Korean national security advisor has just announced that North and South Korea have struck a deal to end tensions between the two countries. We have team coverage of this. CNN's Kathy Novak is joining us on the phone from Seoul, South Korea. Barbara Starr is over at the Pentagon.

Kathy, tell us what has just been announced in Korea right now.

KATHY NOVAK, CNN CORRESPONDENT (via telephone): Well, what we're told, Wolf, is that part of the agreement was that North Korea has expressed regret over the injury caused to the South Korean soldiers from those land mine attacks. We know that was a major sticking point here. And in return, South Korea has agreed to stop its loudspeaker broadcasts. Those broadcasts of propaganda coming out of the speakers over the border. They will stop them in just under 10 hours from now, 12:00 p.m. Tuesday local time on the condition that there is no more of this irregular activity they call it, or these provocations. And in addition to that, they have agreement to another meeting in Seoul or Pyongyang to discuss other issues that have been on the table in these marathon talks, Wolf.

BLITZER: So this is, obviously, a major breakthrough. Do we have any idea which side blinked first? Was it the North Koreans in expressing regret for the injury to those south - two South Korean soldiers? Was it South Korea that agreed to stop the propaganda radio broadcast?

NOVAK: Well, I guess it will come down to who you're asking, Wolf, and how they're going to spin this because expressing regret is a good way to get around this impasse that they had because the problem was that all along North Korea was not even admitting that they were at fault for these land mine attacks, even though both South Korea and the United Nations agreed that there was enough evidence to show that North Korea planted these land mines.

So by just expressing regret, they are not necessarily taking responsibility for actually planting them, they're just expressing regret that these soldiers got injured. And in return, South Korea was able to back down on its sticking point, which was these propaganda speakers. We heard from the president, Park Geun-hye, saying that was her bottom line, that she was demanding an apology from North Korea. It seems that this expression of regret was enough to get South Korea to shut down this campaign, Wolf.

[13:25:19] BLITZER: Cooler heads prevailing, at least for now.

Now stand by, Kathy, Barbara Starr is over at the Pentagon.

As you know, Barbara, the U.S. and South Korea, they've been conducting their annual joint military exercise, which the North Koreans, of course, hate. Those exercises, I assume, are continuing, but the tensions leading up to this breakthrough agreement right now, the tensions on the Korean peninsula, the U.S. taking contingency steps were enormous, right?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, it was. We are now learning a very difficult weekend for the U.S. military in South Korea, Wolf, because they began to see evidence indeed that the North Korean military had begun a partial mobilization over the last few days. There was intelligence, satellite imagery, electronic signals monitoring, indicating several things were happening on the north side of the DMZ. That Pyongyang was deploying artillery. That's always a concern because that kind of long range artillery can readily hit Seoul, South Korea. That they were activating some of their air defense radar, which could, theoretically, if they were working properly in the north, detect incoming aircraft that they were getting ready for scud missile launch possibly and evidence that dozens of North Korean warships and submarines had put out to sea.

So as the U.S. was watching all of this all weekend, we are now learning the top U.S. military commanders also ordered a review of the U.S. war plan to defend South Korea. They pulled it off the shelf, took a look at it, made sure everything was in order. It's an indication of how concerning it was over the weekend at least that this was beginning to spiral out of control. It may well be one of the big motivators to get these two sides to the table - to the table and come to some sort of an agreement to deescalate all of this.

Wolf.

BLITZER: A very tense situation. I assume the exercises, the war games involving U.S. and South Korean troops, are continuing. There's been no halt to that, right?

STARR: At this point, no, there is no halt. They go on for a couple of more days. People will be watching very carefully. One of the things people are watching for is to see if the United States conducts a B-52 flight over the region. These are the big, high profile, heavy U.S. bombers, if you will.

They have flown before. It's a bit of a statement by the U.S. We're here, we can defend the South. It's something that North Korea's not too thrilled about. We're waiting to see if there will be a B-52 flight. It will be a very visual signal that the U.S. is not pulling back. But right now, a lot of questions about whether that flight will happen, Wolf.

BLITZER: Well, let's hope this deal calms tensions. And we shouldn't forget, nearly a million South Korean troops, south of the DMZ, a million North Korean troops north of the DMZ, 30,000 American troops or so along the demilitarized zone. So lots is at stake right now. All right, we'll watch the breaking news.

Barbara Starr, thanks to you. Kathy Novak in Seoul, thanks to her as well.

Up next, we're getting new information about a possible presidential bid by the vice president, Joe Biden. Stand by. (COMMERCIAL BREAK)