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Huge July Job Gains Defy Expectations And Recession Fears; Biden Hopeful On Griner As Russia Ready To Discuss Prisoner Swap; Jury Awards $45.2 Million In Punitive Damages In Alex Jones Case; White House Summons China's Ambassador To Condemn Missile Fire Near Taiwan. Aired 6-7p ET

Aired August 05, 2022 - 18:00   ET

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

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[18:00:00]

WOLF BLITZER, CNN ANCHOR: Happening now, a surprising new jobs report shows huge gains in July, defying expectations and recession fears. I'll ask former U.S. Treasury Secretary Larry Summers what it means for the U.S. economy and for Americans struggling with inflation.

Also tonight, as Brittney Griner begins a nine-year sentence in Russia, the Kremlin says it is now willing to discuss a prisoner swap that could lead to the WNBA star's release. President Biden says he's hopeful about her fate.

And jurors jut ordered conspiracy theorist Alex Jones to pay over $45 million in punitive damages to the parents of a Sandy Hook school shooting victim on top of the $4.1 million he's already been ordered to pay them for the lies about the massacre.

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

We begin this hour with very encouraging news for the U.S. economy and for the Biden administration. Tonight, the president is seizing on the much better than expected jobs report as he caps a week of unexpected successes.

Here is our White House Correspondent Jeremy Diamond.

(BEGIN VIDEOTAPE)

JOE BIDEN, U.S. PRESIDENT: Today we received another outstanding jobs report.

JEREMY DIAMOND, CNN WHITE HOUSE CORRESPONDENT (voice over): Tonight President Biden hailing another strong jobs report and promising more relief to Americans struggling with stubbornly high prices.

BIDEN: Today, there are more people working in America than before the pandemic began. In fact, there are more people working in America than at any point in American history. DIAMOND: the unemployment rate dipping to 3.5 percent as the economy added 528,000 jobs last month, bucking expectations and tamping down fears of a recession.

But the strong jobs report will do little to beat back inflation, Americans' number one concern.

BIDEN: I know people will hear today's extraordinary jobs report and say they don't see it, they don't feel it in their own lives. I know how hard it is. I know it is hard to feel good about job creation when you already have a job and you're dealing with rising prices, food and gas and so much more.

DIAMOND: On that front, too, Biden citing progress.

BIDEN: We now have more than 50 straight days of falling gas prices in this country.

DIAMOND: Gas prices are down 91 cents per gallon from the June peak. And now, Biden appears closer than ever to a big legislative win, with a bill to invest billions to fight climate change, empower Medicare to negotiate prescription drug prices and make corporations pay a 15 percent minimum tax.

BIDEN: This bill is a game-changer for working families in our economy.

DIAMOND: The last Democratic holdout, Senator Kyrsten Sinema, signing on, but only after Democratic leaders agreed to add about $5 billion in drought relief funding and remove a provision that would have eliminated the carry interest tax loophole.

SEN. CHUCK SCHUMER (D-NY): Well, we're feeling pretty good. This is a very, very, very big deal.

DIAMOND: The Senate deal and strong jobs report capped a week of political wins for Biden that began with the killing of Al Qaeda's leader.

BIDEN: The mission was a success.

DIAMOND: And also including the passage of a bill expanding care to veterans exposed to toxic burn pits.

UNIDENTIFIED FEMALE: The yays are 86, the nays are 11.

DIAMOND: Biden set to extend that positive streak next week signing the CHIPS Act into law, investing billions into semiconductor production.

(END VIDEOTAPE)

DIAMOND (on camera): And Senate Majority Leader Chuck Schumer has said that he expects to hold the first procedural votes on that expansive climate and health care reconciliation bill tomorrow. But before that happens, they're waiting still to see what the Senate parliamentarian is going to rule. She's reviewing the legislation to determine whether or not it meets the threshold and the criteria necessary for this bill to be able to pass with a simple majority. Meaning only Democrats could pass this bill, which, of course, is crucial to the chances of this bill becoming law. Wolf?

BLITZER: It certainly is. Jeremy Diamond at the White House for us, thanks very much.

Let's dig deeper right now in these new jobs numbers. Joining us, CNN's Matt Egan. Matt, so what do these jobs numbers mean for Americans everyday lives?

MATT EGAN, CNN REPORTER: Well, Wolf, this blockbuster report pains the picture of a jobs market that is red hot. Workers remain very much in demand. Companies are hiring, they're not firing and they are -- they literally can't afford to lose the workers that they have.

Now, the shear strength of this jobs market is pretty staggering. No major forecaster expected that hiring was going to ramp up in July and yet that is exactly what happened. And because of that, we have all of these major milestones for the economy. All of the jobs lost during COVID have now been recovered.

[18:05:00]

The unemployment rate is now tied for the lowest level since 1969. The Hispanic unemployment rate has never been lower. And paychecks are still growing. Wages unexpectedly accelerated in July. Wolf, in the balance of power between workers and bosses, workers still have the upper hand.

BLITZER: Amazing numbers indeed. All right, Matt, thanks very much.

Let's discuss this and more with the former U.S. treasury secretary during the Clinton administration, Larry Summers. Mr. Secretary, thanks so much for joining us.

As you know, today's jobs numbers here in the U.S. far exceeded expectations. The U.S. economy has now regained all of the job losses of the COVID pandemic. How big of a deal is this?

LAWRENCE SUMMERS, FORMER U.S. TREASURY SECRETARY: Look, it is always welcome news when people are getting jobs. It is welcome news when wages are going up. But I have to say, I don't think it is quite as rosy as your report suggested.

The principle problem of the economy for sometime has been inflation. And there is nothing in this report to suggest that we're getting inflation under control, rather the opposite. Yes, wages did go up half a percent last month but that is about a 6 percent annual rate and inflation has run at about 9 percent over the last year.

I think our core problem, which is that we have an unsustainably overheated economy that is leading to high inflation, which is cutting people's paychecks, not unfortunately has not been addressed by the news in this report. So, I'm glad to see it and it brings good news to a large number of families but I'm afraid we're still in the kind of unbalanced situation that you and I have been talking on -- talking about on this show for quite a long time.

BLITZER: So, all of these very positive jobs numbers and unemployment going down. How much harder does that make it to tackle inflation?

SUMMERS: Well, it is not -- it is not so much that the jobs make it harder to tackle inflation, but when you've got large numbers of vacancies, which we still do, when you've got such a labor shortage, which we still have, when you have wages going up rapidly in dollar terms but not in purchasing power terms because prices are going up faster, you're getting more and more of a cycle. And that is making engineering the proverbial soft landing that much harder for the Fed.

You saw that in the markets today, which are now pricing in the need for the Fed to engage in considerably tighter policy than they were pricing in just before this announcement.

BLITZER: So, speaking about the Fed, how much are you expecting the Federal Reserve to continue to hike interest rates right now?

SUMMERS: We'll have to see. But I certainly think they've got some substantial way to go. I am glad to see the bill that you referred to, looking like it is really going to make its way through. And I think the lower prescription drugs prices, I think the measures to support and make it lower cost, renewable electricity sources, to start to reduce budget deficits by raising corporate taxes, I think that is a positive thing that is going to make the Feds' job easier, going to make the economy stronger and better protected for the long run. So, that plus the semiconductor, the CHIPS Act, I think, are very, very important victories for our national economy. But I have to say, I am more worried about inflation tonight than I was last night. And I think it is misleading not to see things that way.

BLITZER: Well, the last time you and I spoke the other day, you told me there was a three and four chance, your words, three in four chance that the U.S. will enter a recession within the next two years. Do you still feel that way after seeing today's numbers?

SUMMERS: Absolutely, absolutely. This does not change that picture at all. The fundamental problem and the fundamental challenge that the economy faces is a kind of overheating and this just shows that we're overheating -- overheating more.

[18:10:00]

We're at a house that sometimes is too cool and we have got a boiler that is a threat to explode and the temperature in the house went up. And so we're more comfortable right now that the temperature in the house went up, but that doesn't make everything okay.

BLITZER: Secretary Summers, thanks, as usual, for joining us. We'll continue this conversation in the days ahead. I appreciate it very much. SUMMERS: Thank you.

BLITZER: Just ahead, there is breaking news, a jury orders Alex Jones to pay millions of dollars more in damages to the Sandy Hook parents for his lies about the school massacre. We'll have details. That is next.

(COMMERCIAL BREAK)

BLITZER: We have breaking news on a second verdict reached just moments ago in the Alex Jones trial, the jury awarding $45.2 million in punitive damages to two parents whose six-year-old died in the Sandy Hook school shooting massacre. This comes a day after jurors ordered Jones to pay the parents more than $4 million in what are called compensatory damages.

CNN Senior Investigative Correspondent Drew Griffin is joining us right now. Drew, tell us more about this verdict that just came down.

DREW GRIFFIN, CNN SENIOR INVESTIGATIVE CORRESPONDENT: Well, it is quite a statement.

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and keep in mind that he has got several more of these trials to go, but the jury spent about better part of the afternoon deliberating over how much he should pay in punitive damages basically to punish him for the lies he told about the Sandy Hook massacre and the -- and the anguish that he caused these parents. And then just before 5:00 out there in Texas, the judge said the jury came back, they jury came back, sat down, Alex Jones was not there when the judge read off those jury amounts that were agreed upon unanimously.

(BEGIN VIDEO CLIP)

JUDGE MAYA GUERRA GAMBLE, TEXAS DISTRICT COURT: Question number one, $4,200,000. Question number two, $20,500,000. Question number three, $20,500,000.

(END VIDEO CLIP)

GRIFFIN: So, that is a total over the past two days of $49.3 million, nearly $50 million to the parents of six-year-old Jesse Lewis who died at Sandy Hook in that massacre, and yet Alex Jones and InfoWars continued for years to say not only did he not die but whole thing was a hoax.

I think the jury really paid attention when Wes Ball, the closing attorney for the plaintiffs, for the parents, told the jurors they really need to silence Alex Jones. Here is his closing statement.

(BEGIN VIDEO CLIP)

WESLEY TODD BALL, ATTORNEY FOR SANDY HOOK PARENTS: That man will sit here and spew his lies and misinformation as long as he keeps getting a check. Because that is what Alex Jones does, he cares about his money and getting his money and he pays people to ensure that he can continue that in perpetuity.

(END VIDEO CLIP)

GRIFFIN: Fist pumps and hugs on the plaintiff's side but, Wolf, on the Alex Jones side, an empty chair, he did not hear that verdict live.

BLITZER: Yes. He's going to have to shell out nearly $50 million between yesterday and today's verdicts.

The trial also included, Drew, as you know, information that potentially could be of huge interest to the January 6 House select committee. Now, that the trial is over, where does that stand?

GRIFFIN: Well, there was a bombshell that was dropped after the jury left and the judge was kind of just asked about that, and she said, so this involves the phone texts of Alex Jones that he claimed he didn't have but were inadvertently sent to the plaintiff's attorney by accident and that plaintiffs' attorney even said that there was intimate messages with Roger Stone on them. The judge says I'm not standing between you and Congress on this, basically giving the green light for this information to go to Congress.

We understand from Mark Bankston, one of the attorneys, that the J6 committee has asked for them. So, we'll have to see if that actually is going to be handed over.

BLITZER: Yes, we shall find out. Drew Griffin, thank you very much for all your excellent reporting.

I want to bring in the state attorney for Palm Beach County down in Florida, Dave Aronberg, once again. David, so give us your sense. What do you make of the verdict, $45.2 million in punitive damages?

DAVE ARONBERG, STATE ATTORNEY, PALM BEACH COUNTY, FLORIDA: Wolf, it is a big victory for the plaintiffs who have suffered for so long at the hands of this bloviating wind bag. A lot of us were disappointed yesterday in that was just $4.1 million in compensatory damages. So, I was expecting a hammer to come down today and in punitives and it did, $45.2 million.

Now, it may be reduced by the statutory cap in Texas but it is still a victory, and it is not over because there are two more trials just like this where he could also get hit with big time damages. And then there is a possibility that prosecutors could file charges against Alex Jones for perjury. So, you've got it to the sky, it takes rare talent to turn your civil trial into a criminal one. So, his legal problems are not over.

BLITZER: Yes. I also want to bring in CNN Legal Analyst Joey Jackson right now. Joey, the judge could cap actually these damages, as Dave just said. Can you explain why and what that potentially could mean for these parents?

JOEY JACKSON, CNN LEGAL ANALYST: Yes. You know, at the end of the day, Wolf, this is obviously a big deal. I think the jury spoke. They spoke massively. And so the punitive damage award that they assessed really dealt with the issue of how horrific these lies were and how it impacted and then affected this particular family, and, certainly, he has a couple of others to go through.

But this statutory cap, and what that means is that different jurisdictions limit the amount of punitive damages. What they do that for, Wolf, is they do that so it prevent ruinous liability, so you don't take down any particular company.

So, while a jury could award $45, $44 million, $100 million, the statutory cap would limit it to a specific amount of damages such that not this particular business, it wasn't aimed for this at all, it was aimed for the business community, in general, to recognize that people could have relief.

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However, that relief notwithstanding the jury's feelings, thoughts and views and beliefs and here we know what those views are, it doesn't ruin a particular company. And so that is what it means to have a statutory limitation or cap as it relates to punitive damages.

BLITZER: And, Joey, the family attorney accused Jones of hiding his wealth, and he enormous wealth, by filing for bankruptcy during the course of the trial. Will that allow Jones to avoid paying damages?

JACKSON: I think that justice delayed certainly won't be justice denied. Now, what the law does is you have to come into court, Wolf, with clean hand. And by coming to court with clean hands, it means that you can't dissipate assets or otherwise hide or remove assets in an effort and an attempt to stifle or otherwise misdirect or misappropriate, not allow people to get their money.

So, while I think that it will have some effect, because the family will be looking where those assets are, they will be trying to make an assessment and determination as to how they get them. I think that, ultimately, if the damages were dissipated in a way that was fraudulent, they were dissipated in a way that was an attempt to deny relief, that those assets will be gotten.

And, of course, these other issues as Dave mentioned, the criminal aspect is going to be big here with the Department of Justice, the January 11th, there is so much that emanates from this, much more than money, Wolf.

BLITZER: Dave Aronberg, let me get your thoughts on that as well, the fact that Jones was filing for bankruptcy during the course of the trial.

ARONBERG: Something really needs to be done about bankruptcy abuse in the country. He is not the first one to do it and won't be the last. There are things called fraudulent conveyances. It attempts to hide your money. There is evident that he started to take away $11,000 a day from his companies to hide it after he got hit with the default judgment. And so something needs to be done about it. And I agree with Joey, justice will be delayed but it will not denied. I think that eventually the plaintiffs will get their money and, again, there are more plaintiffs lined up in the near future to sue him and get a big recovery.

BLITZER: Well on that point, Joey, this is the first of, what, three trials for damages against Jones. What could future trials potentially yield?

JACKSON: I think they'll yield more relief for families, if you could call it relief. When you lose a young one who is so instrumental, I mean, it is your life, it is life itself. Any parent would give their life for their child. And when you have these conspiracy theories that are out there that it is fake, it's a hoax, the parents are actors, et cetera, I couldn't even imagine, none of us could, how it impacts a family emotionally and otherwise, right? I'm sure they're just deeply depressed about this and you have him out there spewing this hatred.

And so I think there will be accountability in those other trials and that accountability will look much like it did here, with a juror coming back with compensatory damages, which are designed to compensate people for added pocket losses, and then punitive damages, which are designed to punish, to send a message this is just not something that you should be doing, and it will certainly slow him down, and not only that, Wolf, but deter others who might spew such hatred and such negativity and such falsehoods about someone, which impairs reputation and just so emotionally suffering.

BLITZER: Yes, good point. Joey Jackson, thanks very much. Dave Aronberg, thanks to you as well.

And to our viewers, an important note, stay with CNN for a special report on Alex Jones, Megaphone for Conspiracy, it airs later tonight 11:00 P.M. Eastern only here on CNN.

Coming up, Russia now says it is ready to discuss a prisoner swap with the United States. Will WNBA Star Brittney Griner finally be released from captivity in Russia?

Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

[18:25:00]

BLITZER: President Biden is expressing new hope about U.S. efforts to free WNBA Star Brittney Griner from Russia. Moscow said it is now ready to discuss a proposed prisoner wrap a day after Griner was convicted on drug charges and sentenced to serve nine years in a Russian prison.

CNN Senior International Correspondent Fred Pleitgen has the latest from Moscow.

(BEGIN VIDEOTAPE) FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice over): Tonight, for the first time, Russia saying it is willing engage with the U.S. on a possible prisoner swap to bring WNBA Star Brittney Griner home, but the Kremlin warning talks must remain secret or they'll fail.

DMITRI PEKSOV, KREMLIN SPOKESPERSON: If we discuss a few details of prisoner exchanges via the press, then those exchanges will never take place. The Americans have already made that mistake, suddenly deciding to use megaphone diplomacy to resolve these issues. This is not how they are resolved so we will not give a comments.

PLEITGEN: The U.S. has said it's put an offer on the table to get both Brittney Griner and former Marine Paul Whelan, who is currently serving a 16-year sentence in Russia for espionage, which he denies, released. CNN learning that the Biden administration is offering convicted Russian arms dealer Viktor Bout in return. Secretary of State Blinken says Washington will take up Moscow's offer to negotiate.

ANTONY BLINKEN, U.S. SECRETARY OF STATE: We've put forward, as you know, a substantial proposal that Russia should engage with us on. And what Foreign Minister Lavrov said this morning, and said publicly, is that they are prepared to engage through channels we've established to do just that and we'll be pursuing that.

PLEITGEN: President Biden saying, bringing Brittney Griner, home remains a priority for his administration.

BIDEN: I'm hopeful. We're working hard.

PLEITGEN: The Russians say they want to use a mechanism for such swaps put in place after President Biden's summit with Russian Leader Vladimir Putin in Switzerland last year.

SERGEY LAVROV, RUSSIAN FOREIGN MINISTER: As for specifically on the issue of persons convicted in Russia and in the U.S., I have already said that there is this special channel that was agreed to by the presidents. Whatever might be said publicly, this channel is still relevant.

PLEITGEN: After being handed a nine-year jail sentence, Brittney Griner's lawyer says the two-time Olympic gold medalist is in shock but is in a fighting spirit.

MARIA BLAGOVOLINA, BRITTNEY GRINER'S RUSSIAN COUNSEL: She's doing better than yesterday. She's still processing what has happened. But we tried to cheer her up. We told her about this huge support she's getting in Russia now as well because everybody here is very much surprised with this very harsh sentence.

PLEITGEN: And while the legal team says they will appeal the verdict, which they say was deeply unfair, they welcome a prisoner swap to get Griner back to the U.S.

BLAGOVOLINA: It is just the perfect thing to get her home, of course. We hope that she will get home soon.

(END VIDEOTAPE)

PLEITGEN (on camera): And Wolf, Brittney Griner's legal team tells me that they're not aware of any negotiations currently going on. They're certainly not looped into anything. For them, they say right now the important thing is seeing the legal process through, and for them, that obviously means filing that appeal within ten days.

They do say that the appeals process in Russia usually goes very, very quickly. It happens within one hearing. And, unfortunately, the success rate for appeals in Russia certainly not very high, Wolf.

BLITZER: Yes, not high at all. All right, Fred Pleitgen in Moscow, thank you very much.

Let's discuss this and more with Congressman Colin Allred of Brittney Griner's home state of Texas. He has been involved in efforts to try to secure her release. Congressman, thanks so much for joining us.

As you heard the Russian foreign minister said today, they're ready to discuss this possible prisoner swap. Are you more optimistic for a deal now that Griner's trial is behind her.

REP. COLIN ALLRED (D-TX): Wolf, as sad as yesterday was, and it was hard to see the impact that this entire process has had on Brittney, and I know so many of her fans, some people who care about her, seeing a nine-year sentence is heartbreaking. But as sad as that was, in many ways, we knew we had to get through the show trial phase so that we could get to this point. And I think hearing Minister Lavrov say now they're ready to negotiate absolutely is a positive.

And this is going faster, this process, so far, for Brittney than it did for Trevor Reed or for Paul Whelan, and that is also positive because that means she's had to spend less time in prison in kind of the pretrial phase.

BLITZER: You say it is actually a positive step that Griner's trial moves so quickly but what message is Russia sending with this near maximum sentence?

ALLRED: Right. Yes. Well, this is hostage diplomacy. They are trying to apply as much pressure on to the United States and get as much leverage over the United States as possible. By saying, if you don't swap for Brittney Griner, if you don't give us what we want, she'll face nine years in a penal colony.

And so, that is obviously what they're trying to do here, that is why they wanted to wait. They said that they couldn't discuss the swap until the -- under Russian law but this is nonsense. You and I both know it is a kangaroo court, it's a kangaroo process in Russia. Once you get to this point, you have a 98 percent chance that you're going to be convicted. They took into no account any of the evidence that Brittney provided for why she was -- had that cannabis on her.

So, we need to get this done but, obviously, we also need to, in the long run, try and prevent Russia from doing this.

BLITZER: As you know, the former Russian hostage, Trevor Reed, told CNN earlier today that Griner could face truly awful conditions in Russian captivity. How worried are you, Congressman, for Brittney Griner's well being right now, she's heading to some sort of prison colony for nine years? ALLRED: I'm extremely worried about it, Wolf. This is an extremely

tall and kind of well-conditioned athlete who has been through a lot physically as well. She has to have an extra large bed just for an example, because she's 6'8. And so I'm extremely concerned about the treatment that she may receive.

We heard throughout Trevor Reed's time in Russia the things that he had to deal with, and my colleagues who are working on that, we've been talking about how heartbreaking that was, we certainly don't want to see that happen here.

But that's also part of what they're trying to do, Wolf. That is part of the leverage that they're trying to exert over the United States, is to say, not only will she be here, but she'll be here under bad conditions.

BLITZER: Do you believe her future now ultimately is in the hands of Putin?

ALLRED: It is. It is. This is -- this is a form of diplomacy that I think is unacceptable on the international stage. We certainly, I think, need to go forward have a multilateral mechanism in which we can prevent any country from doing this, because, Wolf, other countries are watching this as well. They're seeing what Vladimir Putin is getting away with and they're also going to see what the swap entails, and they may try and use Americans that they could grab for any kind of leverage over the United States.

[18:35:12]

So obviously in the long run, we have to come up with some kind of strategy.

But our relations with Russia really could not be any more strained than they are right now with Vladimir Putin is also isolated his own country. The great American players that have been going over to Russia to play in their basketball league, our women basketball players have been playing over there, are not coming there anymore because of Vladimir Putin's choice. He's further isolating his country.

BLITZER: He certainly is. Colin Allred, thanks for joining us. Thanks for all you're doing as well. We appreciate it.

ALLRED: Thanks, Wolf.

BLITZER: Just ahead, all of the new evidence that federal prosecutors may be closing in on the former president of the United States, Trump, as they move very aggressively in the criminal investigation of January 6th. (COMMERCIAL BREAK)

[18:40:00]

BLITZER: The vice chair of the January 6 select committee is warning the U.S. Justice Department about the potential risk of failing to charge former President Trump if the evidence is there. CNN's exclusive interview with Congresswoman Liz Cheney comes on the heels of our exclusive reporting that Trump's lawyers have now been warned that criminal indictments are, in fact, possible against the former president.

CNN Justice Correspondent Jessica Schneider has all of the new developments in the insurrection investigation.

(BEGIN VIDEOTAPE)

JESSICA SCHNEIDER, CNN JUSTICE CORRESPONDENT (voice over): Tonight, pressure continues to build on the Justice Department to charge Trump at the same time prosecutors have ramped up their investigation in recent days with subpoenas issued to several former top White House officials all while CNN has exclusively learned Trump's legal team is in talks with DOJ officials about Trump wanting to shield the conversations he had as president from investigators.

REP. LIZ CHENEY (R-WY): I have been very clear, I think he's guilty of the most serious dereliction of duty of any president in our nation's history.

SCHNEIDER: In an exclusive interview with CNN's Kasie Hunt, Liz Cheney indicating DOJ must indict if they uncover sufficient evidence.

CHENEY: We're going to continue to follow the facts. I think the Department of Justice will do that. But they have to make decisions about prosecution understanding what it means if the facts and the evidence are there and they decide not to prosecute, how do they then call ourselves a nation of laws.

SCHNEIDER: The attorney general has refused to divulge what prosecutors are planning.

MERRICK GARLAND, ATTORNEY GENERAL: No person is above the law in this country. Nothing stops us.

REPORTER: Even a former president.

GARLAND: No -- I don't know how -- let me I'll say that again. No person is above the law in this country. I can't say it any more clearer than that.

SCHNEIDER: And sources tell CNN Trump's legal defense team has warned him indictments are possible while the former president has grilled his attorneys about whether they actually believe he will face formal charges. Trump's lawyers have even advised him to cut off ties with his former chief of staff, Mark Meadows, who has defied a subpoena from the January 6 committee. Though Trump and Meadows have still spoken a number of times, according to sources, sources also tell CNN that the Justice Department is priming for a fight over executive privilege, which, if they win, could open the door to revealing testimony from Trump's top aides.

DANIEL GOLDMAN, HOUSE'S TRUMP IMPEACHMENT LEAD COUNSEL: Can the DOJ pierce that privilege by saying and perhaps going to court to get a ruling that Donald Trump's -- the conversations are misconduct and, therefore, not shielded by executive privilege.

SCHNEIDER: Trump spokesperson firing back that Trump will fiercely fight any moves to strike down his executive privilege claims. How can any future president ever have private conversations with his attorneys, counselors and other senior advisers if any such adviser is forced either during or after the presidency in front of an unselect committee or other entity and be forced to reveal those privileged, confidential discussions.

(END VIDEOTAPE)

SCHNEIDER (on camera): And meanwhile, the committee is still sifting through mountains of evidence as it prepares for more hearings in September and they're still trying to get answers on those missing text messages from around January 6th from both the Secret Service and the Pentagon.

And, Wolf, the Department of Homeland Security is now saying that it will not -- it won't any no longer be wiping the phones of top officials without backing it up first, and this is all part of a massive review by DHS. A 30-day review will go over their policies for retaining these text messages since it's come under such --

BLITZER: They've got to work, indeed. Thanks very much, Jessica Schneider reporting for us.

Joining us now, the former FBI deputy director, Andrew McCabe, he's a CNN Senior Law Enforcement Analyst. Andrew, thanks for joining us.

When you look at the scope of this investigation and the fact that the Trump legal team is in direct communication with the U.S. Justice Department, what does that tell you?

ANDREW MCCABE, CNN SENIOR LAW ENFORCEMENT ANALYST: Well, there is no question, Wolf, that this investigation is active, it is vital and it seems to be drawing a closer bead right on the center target who we can all, I think, accurately assume is the former president.

The engagement of Trump's legal team with the prosecutors is really remarkable and I think it tells us two things. One, they are very concerned about what these conversations might reveal if they are not shielded by the privilege, the fact that they're engaging this aggressively and this early in the process, tells me that they are desperate to keep those conversations off the deck.

And the second thing, from a tactical perspective, I think it is possible that these conversations are having with prosecutors is simply going on record with the fact that the president intends to essentially, formally invoke the privilege in an effort to keep some of these witnesses.

And we've heard about like Pat Cipollone, like Patrick Philbin out of the witness stand.

[18:45:15]

So, it's really a way of teeing up the fight in a preventative way for the former president.

BLITZER: So, how much of a battle do think we could see over the issue of executive privilege.

MCCABE: I think we're going to see heated litigation, Wolf. I think they're going to push this all the way to the hilt. They'll likely file suit over it in district court. If the former president is not successful, they'll appeal to the circuit court and then ultimately if not successful, they'll try to go to the Supreme Court. We'll be talking about this litigation for many, many months.

BLITZER: Andrew McCabe, thanks so much for joining us.

MCCABE: Thanks, Wolf.

BLITZER: Coming up, China's dramatic show of force, Beijing is ramping up military exercises around Taiwan after the House Speaker Nancy Pelosi's visit to the island. We're going to have much more on the fallout from her trip. That's next.

(COMMERCIAL BREAK)

[18:50:34]

BLITZER: Tonight, the Biden administration is urging China to tamp down tensions over how Speaker Nancy Pelosi's Taiwan trip. White House official John Kirby telling me a little while ago there is no need for Beijing to be conducting live fire military drills near Taiwan.

CNN Pentagon correspondent Barbara Starr has more on China 's provocative response.

(BEGIN VIDEOTAPE)

BARBARA STARR, CNN PENTAGON CORRESPONDENT (voice-over): A torrent of Chinese aircraft, missiles and ships moved towards Taiwan as soon as House Speaker Nancy Pelosi left the island. China marking off areas encircling Taiwan where its military is doing more than just drills.

Taiwan says 68 Chinese warplanes flew around the Taiwan Strait Friday. Chinese drones flew close to Japan, prompting Tokyo to scramble fighter jets. Even as it called for calm, the White House stepping up its rhetoric, summoning China's ambassador to the U.S. to condemn the provocations. An official with the Chinese embassy in Washington told the reporters

that the issue of Taiwan is sensitive, saying Taiwan is one of the very few issues that might take China and the United States to conflict or even a war. So extra caution and responsibility are indispensable when it comes to Taiwan.

But the U.S. is worried China is unveiling a year-long campaign, constant pressure on Taiwan, aimed at eventual takeover.

JOHN KIRBY, NATIONAL SECURITY COUNCIL SPOKESPERSON: Beijing's provocative actions are significant escalation and its longstanding attempt to change the status quo.

STARR: In Beijing, total rejection of the U.S. position.

HUA CHUNYING, CHINESE FOREIGN MINISTRY SPOKESPERSON (through translator): If they really worry about the regional peace and stability, why didn't they act earlier to prevent Pelosi from paying a provocative visit to Taiwan?

STARR: China reacting by cancelling phone calls and meetings between Chinese and U.S. defense officials, pausing climate talks with the United States and sanctioning Pelosi and her immediate family.

Still, a muted U.S. military response in the region. An intercontinental ballistic missile test postponed out of concern China could misinterpret it.

The Aircraft Carrier Ronald Reagan expected to return to port in Japan next week, after staying at sea for just a handful of extra days to maintain a U.S. presence near Taiwan.

(END VIDEOTAPE)

STARR (on camera): Nobody expects a war between the U.S. and China, but miscalculations, misunderstandings, that is the big worry that it could lead to conflict at some point -- Wolf.

BLITZER: Hope it doesn't.

Barbara Starr reporting for us, thank you very much.

Just ahead, why a Ukrainian born member of the U.S. Congress is rankling colleagues up on Capitol Hill after she unexpectedly showed up on a congressional trip to the Ukrainian border.

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[18:57:38]

BLITZER: Right now, we are learning about tensions up on Capitol Hill after a Ukrainian born Republican lawmaker unexpectedly showed up at a congressional trip to the Ukraine border.

CNN Capitol Hill reporter Melanie Zanona is working this for us.

Melanie, what are you learning?

MELANIE ZANONA, CNN CAPITOL HILL REPORTER: Well, Victoria Spartz was not invited to attend this official delegation trip in March at the Ukraine border. But she showed up anyway. We've learned she used her own money to fly there. And that once she was there, she was in a series of diplomatic meetings and one GOP lawmaker told us she was acting like a bull in a China shop and she was acting argumentative and accusatory, and rude during these key meetings.

Now, Victoria Spartz refuted that description of her behavior. She told us in an email this accusation is a cowardly misrepresentation of facts by a jealous members or staff since we had a very productive bipartisan CODEL in March.

Wolf, this is one of several instances in which Spartz aggressive behavior rankled some of her colleagues on both sides of the aisle, appear on Capitol Hill. She's been an outspoken critic of the Ukrainian government. She's dredged up these old corruption allegations about President Zelenskyy's top aide and that sparked allegations of her colleagues she is mirroring pro-Russia talking points.

And so, the concern is she is undermining the effort to aid Ukraine and stay united behind Zelenskyy, and she could give on the fence lawmakers a reason to oppose the next aid package.

BLITZER: You are hearing these concerns about her behavior extend beyond her congressional colleagues, don't they?

ZANONA: Yeah, that's exactly right. Not only have top Republicans tried to talk to her privately, and asked her to rein in some of her rhetoric, but we are learning the administration has gotten involved. She has received multiple private briefings including one intelligence briefing where officials walked through some of her accusations she's made, explained why they were incorrect, or there wasn't enough evidence to support them.

And we have also learned members of the Ukrainian parliament have been texting members of Congress and raising concerns about her rhetoric and behavior. We learned one of the Zelenskyy aides tried to set up a meeting between Spartz and the top Zelenskyy aide to clear the air. But Spartz decided not to, you she said that would be unproductive, and she said, in the email to us, she is going to continue fighting the Iranian people, even if it means saying things that are, quote, unpopular -- Wolf.

BLITZER: Melanie Zanona on Capitol Hill, thank you very much.

To our viewers, thank you very much for watching. I'm Wolf Blitzer in THE SITUATION ROOM. You could always follow me on Twitter and Instagram @WolfBlitzer. You could tweet the show @CNNSitRoom.

"ERIN BURNETT OUTFRONT" starts right now.