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Inside Politics

Warren Claims "Warning Signs" of An Economic Downturn; Congress, White House Face Friday Deadline to Reach Budget Deal; Mueller Week Reveals Democratic Divisions Over Impeachment; Past and Present Justices Honor Stevens. Aired 12:30-1p ET

Aired July 22, 2019 - 12:30   ET

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

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[12:30:22] JOHN KING, CNN HOST: Senator Elizabeth Warren out with a new warning today. She says an economic crash is coming. She also claims she has a plan that could prevent it. In a new Medium post, the 2020 presidential contender writes, "I warned about an economic crash years before the 2008 crisis but the people in power wouldn't listen." She goes on to add, "Now I'm seeing serious warning signs in the economy again and I'm calling on regulators and Congress to act." The Massachusetts Democrat bases her prediction on a number of reasons, including growing household debt and corporate debt and what she calls a manufacturing recession.

Warren also faults President Trump for chaos in the form over the trade war with China as well as his comments on Brexit.

CNN's Cristina Alesci joining us now from New York. Cristina, Warren did get out ahead of the 2008 crisis warning it was coming but there's some pushback to her calculations now that perhaps she might be too alarmist. What are they?

CRISTINA ALESCI, CNN BUSINESS AND POLITICS CORRESPONDENT: That's right. Two things that Warren is doing here, one really playing off the PTSD that the country suffered a post-financial crisis. And number two, she's proposing some solutions that actually might create another crisis.

Now, let me explain each of those. Number one, she points to several data points that say, you know, the alarm bells should be ringing for a financial crisis. Well, one of the things that she points to is the level of corporate debt. Now, while risky loans to corporations have increased post-financial crisis, the ability for those companies to keep up with payments has also increased. So we're not seeing the kind of default rates that would be alarming at this point.

Now, I'm not saying that's not a metric we should be paying attention to, all I'm saying is that Elizabeth Warren is shaping this conversation in a way that's politically convenient for her. Now as far as her policy proposals, she is recommending lowering rents, offering affordable childcare, offering free tuition at colleges. All of that costs money and the American public should be asking how do you pay for it? One way would be to increase taxes. Another way is to increase government debt.

This is the issue that the American people should be actually focused on because many experts say if we don't get control of our debt over the next 10 years, we could be facing a fiscal crisis. And that would be extraordinarily harmful to our economy.

KING: I've been here long enough to remember when politicians sometimes in both parties talked about the debt. It was a long time ago though.

Cristina Alesci, live in New York for us. Appreciate the reporting there.

I don't know if it's the good old days, but they're the old days anyway. We'll leave it there.

To Cristina's point, number one, Senator Warren would push back that that kind -- you know, that the metrics used on Wall Street, the metrics used by the bankers, well, they were wrong last time, I'm right this time. I'm not smart enough to know who's right or wrong, but as she lays this out, what is her play in the primary?

RACHAEL BADE, CNN POLITICAL ANALYST: I mean, this does two things, right? First of all, it goes -- it undercuts Trump's economic message. I mean, the economy is doing really good right now. Things sort of humming along and people feel good. And for a warning that this is coming, she's trying to sort of undercut that.

But in terms of the primary, you know, again like Cristina was just laying out, this just again bolsters all these policy proposals she's putting out left and right. A minimum wage increase, canceling student debt, free college, childcare, and also one of her long-term pet projects, reining in Wall Street. And so this is really to her political advantage to sort of peddle this even though, you know, all these sorts of things would cost a lot of money and increase the national debt.

KING: At a time when you see her in pretty fierce competition with her fellow progressive Bernie Sanders. But it's interesting when you look into the weeds of their support, she is getting more affluent supporters. Let me put it that way. College-educated more affluent. And is this a play for a more Sanders/Trump voter, a blue-collar person who might have still a hangover from 2008 and beyond?

AMY WALTER, NATIONAL EDITOR, THE COOK POLITICAL REPORT: Well, it seems like she's doing two things to Rachael's point. One is focusing on the primary debate and trying to once again put the focus back on the things she loves talking about. It is the narrative of her entire campaign, the system is rigged, it's rigged against you and let me -- I want to be able to have people talk about that, like all of us around this table, rather than tweets or whatever else.

But the other reality is we know that the economy is the issue that at large people are talking about as a benefit to the president. But we know a couple of things. The first is, this correlation between how people feel about the economy and their partisanship, they're very closely aligned. It's very hard to separate your partisanship from your feelings about the economy.

If you're a Republican, you think the economy is good. If you're a Democrat, you think it's bad. This happened under Obama too. And it's also really hard to get people to focus on the future and not the reality. Remember, in 2012 when President Obama basically had to convince voters that I know the economy is not great, but it could have been so much worse, right?

[12:35:07] And that was going to be the bumper sticker in 2012. It could have been worse, which is a hard thing to sell to voters.

KING: It's interesting, though. For different reasons, President Trump also raises the same kind of alarms and he's pushing the Fed all the time including today on Twitter to cut rates. He wants juice in the economy heading into his re-election year of course. He doesn't want whether it's a global slowdown or anything else. And so -- they get to a -- they get there from a different direction but the president himself warning, hey, Jerome Powell, cut rates for me, and not just once, cut rates for me so the economy doesn't slow down going into my re-election.

MICHAEL BENDER, WHITE HOUSE REPORTER, THE WALL STREET JOURNAL: Yes, that's the whole play for Trump here as the economy and right now for the White House there are two kinds of wild cards on the economy. One is -- oh, that they can control sort of. One is the trade talks with China and the other is what the Fed does. So that's why you see Trump with some pretty nuanced language on the trade talks, and why you see an aggressive push relentless on the Fed to keep rates low is that he believes that that will keep the economy humming long enough to get him through the next 18 months here or 15 months.

ABBY PHILLIP, CNN WHITE HOUSE CORRESPONDENT: Warren also seems to really be tapping into something. It's a razor's edge argument which is that people feel good about their current financial standing but when they look into the future they worry that it might not be that great. In the near future or even in the distant future as they start to think about their kids' college education, the long-term impact of debt on their families. And so that is a real message that Democrats probably need to figure out how to tap into.

The idea that the American middle-class needs to feel more secure than they feel right now. Some of that is PTSD from 2008 but some of that is also because the economy is going well, but I think people feel like they have issues with debt, that the rising cost of college is unsustainable, healthcare is unsustainable. Those are real issues that they can actually message around to counter Trump's everything is a great message. Which -- if people really were all being honest, it probably doesn't feel right for a lot of Households.

KING: One of the great questions as you watch the Democratic debates next week. How do the Democrats deal with the current statistics? Wall Street is doing good, unemployment rate is down, how do you make an economic argument against the president? That's why debates are fun.

Up next, amid the uproar of a racist tweet, a budget elephant still in the room. Congress and the White House this week, they need to make a deal.

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[12:41:47] KING: Topping our political radar today, the White House and Congress in urgent negotiations trying to hammer out a budget deal by Friday. On the table, a new two-year $1.37 trillion budget agreement that would include a two-year suspension of the nation's debt ceiling. Speaker Nancy Pelosi and the Treasury Secretary Steven Mnuchin speaking several times over the weekend trying to work out the details. If no agreement is reached, the United States could run out of money before lawmakers return from their August recess. That is the motivation.

CNN's Phil Mattingly joining us now live on Capitol Hill. Good luck, my friend. Take us inside, where are we? Where are we and who is the key player?

PHIL MATTINGLY, CNN CONGRESSIONAL CORRESPONDENT: Yes. So we've been through enough of these over the course of the last two and a half years to recognize that nothing actually matters. You can be on the brink of a deal, you can be on the cusp of a deal, you can be just about done with a deal which is what one source told me just a short while ago except for some technical details. And it doesn't matter until the president signs off and that they don't currently have, at least the negotiators that have been working through this over the course of the last week and a half or so.

Here's where things currently stand. As you noted, there's an agreement on the top line. It would be parity and increases in spending for both the defense side which Republicans are obviously very keen on and on the domestic spending side as well which Democrats want. You mentioned that two-year suspension of the debt ceiling that is huge, it takes a potential fiscal crisis, catastrophic fiscal crisis off the table until after the presidential election. That's something both sides have been looking for as well.

In terms of offsets, that's been the big kind of back and forth over the course of the last several days. Republicans, spending hawks, in particular, want a lot of the spending increases offset. They are not going to get much of that. About $75 billion is where negotiators ended up.

And then one thing that Republicans are seizing on right now is at least a verbal agreement or acknowledgment from Speaker Nancy Pelosi that they will not seek to put in poison pills, as they call them, into their spending measures when they deal with them later in the year. That would include things like restricting how the administration could move money around for the wall, other issues that they care about on the policy side as well.

So that's kind of the top lines of the agreement. But again, nothing is official until the president signs off. We're told the president has been briefed on this deal. Watch every utterance, including the ones he's making right now in the Oval Office and in the days ahead. That will determine whether or not this ends up going through.

Right now, negotiators on the Hill, Steven Mnuchin, the Treasury secretary, on the brink. The president, though, will be the key.

John?

KING: Clock ticking, we'll see. We could hear from the president any minute. Phil Mattingly, appreciate the latest reporting live from Capitol Hill.

Up next for us here, a big test for Speaker Nancy Pelosi this week in her let's not impeach strategy. Robert Mueller is in the witness chair.

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[12:48:51] KING: Mueller week is here this week. And with it today, new presidential expectations setting and a new fracture among Democrats over the big impeachment question. The president says Robert Mueller, quote, should not be given another bite at the apple. The special counsel's testimony, the president predicts, will be bad for him and the phony Democrats in Congress.

For Democrats, the hope is that Mueller, the movie, makes a bigger impact with the American public than Mueller, the book. But the bigger the impact may be bigger the potential problem for the House Speaker Nancy Pelosi. She wants to avoid impeachment because she worries it plays into the president's hands. Last week, the number of Democrats who say impeach now grew to 88. Also inching closer and closer to the new column, the House Judiciary Chairman Jerry Nadler who invoked impeachment the standard for it, on Fox News yesterday.

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REP. JERRY NADLER (D-NY): I think there was very substantial -- well, the report presents very substantial evidence that the president is guilty of high crimes and misdemeanors, and we have to present -- or let Mueller present those facts to the American people. And then see where we go from there because the administration must be held accountable and no president can be above the law.

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KING: As we await this big moment, the chairman, a Pelosi deputy, has been moving away and away and away and away.

[12:50:04] When the chairman of the Judiciary Committee says even before Mueller testifies he believes you've met the threshold for high crimes and misdemeanors, isn't that opening the floodgate for more of these Democrats who are trying to be loyal to their speaker but for whom the politics back home is just easier to say, I'm for impeach if you're from a strong Democratic district. Dangerous, right?

BADE: Absolutely. Democrats in the House, they look at Nadler and they, you know, take cues from him in terms of how they talk about this on television. Nadler is in an interesting position in that he privately supports impeachment, he just won't say it publicly to anyone because he doesn't want to go up against Speaker Nancy Pelosi. But right now he has a primary challenger back in his district who is actually centering her whole campaign on the fact that he will not start impeachment proceedings. So he's getting heat on the left.

And he's not the only chairman who is facing this. Richie Neal who -- was -- is the head of the Ways and Means Committee and has been in charge of trying to get Trump's tax returns has sort of taken his time is getting heat in his own district and also faces a primary challenge. And so what you're seeing is, you know, there's a lot of frustration in the party, not just people who want to begin impeachment proceedings, but people who feel that their oversight doesn't really have a strategy right now, that they're kind of all over the map.

And so that, again, raises the stakes for Wednesday when Mueller appears. They've got to try to show something. But the reality is that Mueller, you know, we know Mueller. He doesn't make a lot of news. And so this could be a bad position for the Democrats right now.

KING: He doesn't want to make a lot of news. Lisa Monaco who worked for him and later worked in the Obama White House, the former chief of staff to Him at the FBI said this, "I don't think anybody loves going up there and sitting through hours of testimony and hours of speeches that maybe result in a question or not. He didn't love it."

A very fair and accurate characterization of what especially House committee hearings are like. But, you know -- so Democrats are trying to lower expectations. But, Robert Mueller is a seasoned prosecutor who's going to get asked questions. He's going to -- even if he's reading from his report, that's pretty damning.

A lot -- if -- you know, sorry to the Trump supporters. If you read the 10 areas where he lays out potential obstruction and the things the president did, the things the president asked, the things the president said, to hear that as opposed to reading that could be very powerful.

WALTER: I don't know, I'm skeptical.

KING: You're skeptical.

WALTER: Yes. I just think opinions are baked in.

KING: Already.

WALTER: And we've already seen the number of people who do say I do think that the president did something wrong or I don't think he's telling the truth. But, I don't think we should impeach. There are plenty of those people in that category. I don't know that this is going to do anything to move those folks.

BENDER: I do think the people that are hoping that the Mueller testimony does convince Pelosi and her team that impeachment is the way to go here will probably be disappointed, right? But I also think -- I think that Democrats have kind of one goal out of this hearing and that's to get a clip of Mueller with a question of did you give -- did you clear President Trump of obstruction? No. And then -- you know, that will be the price of admission. KING: That's great for a political ad. The question is, does it unleash the -- you know, let the genie out of the bottle among the Pelosi trying to keep it in there. If you just look at the committees of the Democrats on the Judiciary Committee, there's two committees Mueller will testify before. Fifteen of the 24 Democrats in Judiciary already on record saying impeach. On the Intelligence Committee, seven of 13. So the math there, the question is, if Mueller is compelling or even just gives that on camera, can Pelosi keep her hand on the bottle?

PHILLIP: I mean, she has been able to keep her hand on the bottle after the Mueller report was released. I mean, we know this information. It is out there. I don't know that Mueller is going to reveal anything new. So I think Pelosi's task is going to be the same.

But frankly, the real question is will this be an effective hearing? Are Democrats going to ask effective questions of Robert Mueller, who is not only seasoned, but he is meticulous about how he approaches the subject matter. And they're not going to be able to, as Lisa Monaco said, give a five-minute speech and maybe end with a question and get something good out of it.

KING: And can Republicans make their case about the origin of the investigation and other things. We shall see as we go.

But as we go to break right now, a day to honor the late Supreme Court Justice John Paul Stevens.

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UNIDENTIFIED FEMALE: May the example of his abundant life, his patriotism, and his legacy of public service continue to inspire generations to come.

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[12:58:54] KING: Finally this hour, retired Supreme Court Justice John Paul Stevens being honored one last time at the institution he served for nearly 35 years. Twelve former law clerks carrying his casket into the Supreme Court while dozens of others, you see them there, who worked for him over the decades lined the steps leading up to the court's great hall where Stevens will lie in repose ahead of funeral services tomorrow. Justice Stevens dying last week at the age of 99.

President Trump and the first lady Melania Trump among those paying their respects at the court this morning. Justice Elena Kagan was appointed to the Stevens' seat when he retired back in 2010. She spoke on behalf of her colleagues, current, and past.

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JUSTICE ELENA KAGAN, SUPREME COURT: He was a brilliant man. He thought that no person, however high and mighty, was above the law, and he insisted that the law and the legal system treat every person however weak or defenseless with dignity and with fairness.

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KING: Justice Stevens, a Navy veteran, will be laid to rest at Arlington National Cemetery tomorrow. That after a private funeral.

Thank you for joining us today in the INSIDE POLITICS. See you back here this time tomorrow. Brianna Keilar starts right now. Have a great day.

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