Trump Touts Economy But Payroll Tax Discussion Reveals Recession Fears; Trump Cools On Background Check Push; Rep. Gerry Connolly (D-VA) Is Interviewed On Trump Tax Cuts And The Resurgence Of ISIS; CNN Poll: Dems' Top Priority Is Beating Trump
ERICA HILL, CNN HOST: Thanks for joining us here on THE LEAD. You can follow me on Twitter @EricaRHill. You can tweet the show @TheLeadCNN. Our coverage on CNN continues right now.</s>BRIANNA KEILAR, CNN HOST: Happening now, breaking news: another tax cut, hours after a White House denial, the president said he's weighing a payroll tax cut even as he insists the economy is great. Amid recession fears, the president said he's prepared to stick with his China trade war even if it brings a recession. Reinstating Russia: President Trump said the G7 should once again become the G8, calling for Russia to be let back in to the elite group of industrialized nations even though it was kicked out for invading a neighbor. And also tonight new evidence Russia may be trying to cover up a nuclear explosion. Biden's bouts: Joe Biden launches a new ad in Iowa, touting his electability even as he surges in a new CNN poll and voters say it is important to pick someone to beat President Trump. And ISIS heats up: Secretary of State Pompeo admits the terror group is stronger in some places now than it was years ago as the Pentagon reveals an ISIS resurgence months after the president proclaimed a 100 percent defeat of the ISIS caliphate. Wolf Blitzer is off. I'm Brianna Keilar and you're in THE SITUATION ROOM.</s>UNIDENTIFIED MALE (voice-over): This is CNN breaking news.</s>KEILAR: Breaking news: as concerns grow about an economic downturn, President Trump confirms he's considering a payroll tax cut and is again slamming the Fed, saying it should cut interest rates. But with a top financial firm saying that his tariffs could cost American families $1,000 a year, the president insists he's not ready to make a deal with China, saying he would stick to his trade war even if the U.S. falls into a recession. Also tonight, secretary of state Mike Pompeo concedes ISIS is stronger in some places than four years ago following a Pentagon report that ISIS is resurging in Iraq and Syria just months after the president declared the terror group's caliphate 100 percent defeated. I'll be speaking with Congressman Gerry Connolly of the Foreign Affairs and Oversight Committees and our correspondents and analysts are standing by with full coverage. Let's go to CNN Chief White House Correspondent, Jim Acosta there on the North Lawn. And Jim, for someone who said the economy is great, the president sure seems worried.</s>JIM ACOSTA, CNN CHIEF WHITE HOUSE CORRESPONDENT: Seems that way, Brianna. The president danced around a lot of tough topics, from the economy to gun control and sounded open to the idea of a payroll tax cut, despite his own aides knocking down that idea. But the president insisted any potential tax cuts are not needed because of a possible recession. The president also began to parrot the talking points of the National Rifle Association on whether to tighten the nation's background check system. And then on the topic of Congresswoman Rashida Tlaib, the president said Jewish people may be showing what he called "disloyalty" if they vote for Democrats.</s>ACOSTA (voice-over): President Trump is ripping into forecasts from economists that the U.S. could be headed toward a recession.</s>TRUMP: I think the word recession is a word that is inappropriate because it is just a word that the -- the -- certain people, I'm going to be kind, certain people in the media are trying to build up because they would love to see a recession.</s>ACOSTA (voice-over): Still the president revealed he's considering some proposals to boost the U.S. economy, including a payroll tax cut.</s>TRUMP: Payroll tax is something we think about and a lot of people would like to see that. And that very much affects the working -- the workers of our country and we have a lot of workers. I've been thinking about payroll taxes for a long time. Whether or not we do it now or not is -- it is not being done because of recession.</s>ACOSTA (voice-over): But the president contradicted his own aides, who had just batted down the idea a few hours earlier in the day.</s>UNIDENTIFIED FEMALE: -- being considered?</s>HOGAN GIDLEY, WHITE HOUSE SPOKESPERSON: It is not being considered at this time.</s>ACOSTA (voice-over): Mr. Trump is still touting the U.S. economy as the best in the world but there are signs of possible trouble. U.S. Steel announced up to 200 temporary layoffs in the critical battleground state of Michigan. That news came less than a week after the president said the steel industry was humming along.</s>TRUMP: We're doing steel. Steel industry is high. The steel -- they were dumping steel all over. They were destroying our companies. U.S. Steel now -- all of them, they're all expanding. The steel industry is back. It is doing great.</s>ACOSTA (voice-over): On gun control, the president also seemed to downplay the need for tighter background checks. Sources tell CNN the president has soured on the idea of new gun laws after talking with lawmakers and the</s>NRA. TRUMP: We are in very meaningful discussions with the Democrats and I think the Republicans are very unified. We are very strong on our Second Amendment, the Democrats are not strong --</s>TRUMP: -- at all in the Second Amendment. And we have to be very careful about that. You know they call it the slippery slope. And all of a sudden, everything gets taken away. We're not going to let that happen.</s>ACOSTA (voice-over): But listen to what the president said earlier this month, when he claimed he didn't agree with the notion of a slippery slope and NRA talking points.</s>TRUMP: NRA has, over the years, taken a very, very tough stance on everything. And I understand it. You know, it is a slippery slope. They think you approve one thing and that leads to a lot of bad things. I don't agree with that.</s>ACOSTA (voice-over): The president also attacked Congresswoman Rashida Tlaib, who gave a tearful rebuke of Israel's decision to ban the Michigan Democrat along with Minnesota Representative Ilhan Omar, tweeting, "I don't buy Tlaib's tears. I've watched her violence, craziness and most importantly words for far too long. Now tears? She hates Israel and all Jewish people. She is an anti-Semite."</s>TRUMP: All of a sudden she starts with tears. Tears. And I don't buy it. I don't buy it. I don't buy it for a second. I think any Jewish people that vote for a Democrat, I think it shows either a total lack of knowledge or great disloyalty.</s>ACOSTA (voice-over): And just days away from the next G7 summit, the president resurrected his own talk of allowing Russia back in after the group of world powers gave Moscow the boot over its annexation of Crimea.</s>TRUMP: We're talking about Russia because I've gone there, numerous G7 meetings and I guess President Obama, because Putin outsmarted him, President Obama thought it wasn't a good thing to have Russia in. So he wanted Russia out. But I think it is much more appropriate to have Russia in.</s>ACOSTA: Now getting back to the president's comments about Congresswoman Rashida Tlaib, the Jewish Democratic Council of America has released a statement in the last few minutes saying, quote, "This is yet another example of Donald Trump continuing to weaponize and politicize anti-Semitism." Meanwhile Tlaib's colleague Ilhan Omar also has released a tweet just in the last several minutes. She simply said, quote, "Oh, my," -- Brianna.</s>KEILAR: Jim Acosta at the White House, thank you. We have more breaking news. Just days before the group of top industrialized nations meets for its annual summit, President Trump says he's like to see the G7 become the G8 again by reinstating Russia. Let's turn to CNN National Security Reporter, Kylie Atwood. And Kylie, it bears reminding, Russia was kicked out for invading a neighbor, something the U.S. was -- condemned.</s>KYLIE ATWOOD, CNN NATIONAL SECURITY ANALYST: Right, not just the</s>U.S. KEILAR: That is right.</s>ATWOOD: All of the member nations, the majority of the G7, were supportive of the move to kick Russia out of the G7, then the G8 back in 2014. President Trump reiterating what he said before today, it is notable today however because he's heading to the G7 in just a few days to meet with the world leaders who were on board with then President Obama, who was effective in getting Russia to get out of the group. But President Trump didn't say he will push for it. He said he would see any motion as being favorable so we'll see if there is traction there.</s>KEILAR: And also secretary of state Mike Pompeo today downplayed the ISIS threat. He acknowledged it in a way but he was also very much downplaying it and this is not long after the Pentagon said actually they're making a resurgence.</s>ATWOOD: That is right. So this inspector general report from the Pentagon just earlier this month said that ISIS is resurging in both Iraq and Syria and this comes on the heels the U.S. pulling down their troops numbers in Syria and also on the heels of questions about where the Trump administration is going with Syria policy. But as you said, Secretary Pompeo sought to downplay the fact that this is a real threat, saying that they have actually decreased threats in areas and increased in others. Let's listen to what he said.</s>UNIDENTIFIED FEMALE: Is it gaining strength in your opinion?</s>MIKE POMPEO, U.S. SECRETARY OF STATE: It is complicated. There are certainly places where ISIS is more powerful today than they were three or four years ago. But the caliphate is gone and their capacity to conduct external attacks has been made much more difficult. We've taken it down significant risk. Not all of it. But a significant amount.</s>ATWOOD: So we know that one of the areas where ISIS has started to resurge is in the internally displaced people's camps, the Syrians without a home and there is about 70,000 in this camp in northeastern Syria. This inspector general report out from the Pentagon said the ISIS ideology in that camp is uncontested and nobody is pushing back against it. And this is becoming a potential breeding ground for the next generation of ISIS fighters because a lot of them are young and under 18 years old.</s>KEILAR: And certainly very unhappy with their circumstances and perhaps vulnerable to messaging.</s>ATWOOD: Exactly.</s>KEILAR: Kylie, thank you so much for that report.</s>KEILAR: Joining me now is Democratic Congressman Gerry Connolly of Virginia, a member of the Foreign Affairs Committee and the House Oversight Committee as well. Sir, thanks for being with us.</s>REP. GERRY CONNOLLY (D-VA): Great to be with you.</s>KEILAR: I do want to talk to you about this resurgence of ISIS here in just a moment. But first, let's get to the president's comments on the economy because he confirmed today he would be open to a payroll tax cut. Is that something that you would consider as well?</s>CONNOLLY: Not at this time. Congress, the Republican Congress, passed an enormous tax cut that overwhelmingly benefited large corporations and the wealthy 1 percent. They promised that that would lead to a resurgence of business investment and it would pay for itself. And instead we've seen the largest red ink in an expanding economy in American history and that investment dried up. And most of that money in corporations went to stock buybacks, very unproductive. So if we're going to look at a tax cut, A, the economy has to be in some real trouble and, B, it will require frankly recalibrating the tax cut that the Republican Congress passed just two years ago.</s>KEILAR: I was asking one 2020 candidate earlier about this. John Delaney would not say definitively that he would not support a payroll tax cut because -- you bring up the Republican tax overhaul --- but this is a payroll tax cut, the idea being that this might help a lot of people who support Democrats, who have -- who have your ear. What would you say to them, especially considering President Obama signed a payroll tax cut in 2020 and he thought it was a good idea then? And why isn't it a good idea now?</s>CONNOLLY: Well, not all tax cuts are the same. And you have to look at the current state of the economy. Mr. Trump can't have it both ways. An additional stimulation to an economy that is continuing to grow makes no sense. A stimulation to an economy that is contracting, that is a different matter. But it is still requires revisiting the wealthy giveaway tax cut that the Republicans passed two years ago. We can't continue to simply hemorrhage red ink because revenue shrinks in the tax system. We have to have a balanced tax code that does a better job of balancing revenue and expenditures.</s>KEILAR: To your point, there are some economists who think that a recession is looming and this is something that is -- while the president is being rosy publicly about the economy, privately he's expressing concern about a recession. Are you worried about that?</s>CONNOLLY: I think there are warning signs for sure. We see Germany's economy, the largest economy in Europe, has contracted two quarters in a row. We have Trump's trade war with China, which is badly affecting both consumer items in the United States but particularly the agricultural sector by drying up markets for American farmer goods. We have manufacturing under some real assault in America. And we don't have very great wage growth in the United States. We're kind of chugging along at an anemic level, which Mr. Trump promised would be double what it is right now. So I think there are some warning signs. And then we have a sign on the markets, the inverted yield curve for bonds, which has accurately predicted about 18 months out every recession over the last six.</s>KEILAR: I do want to get your reaction to something else the president said in the Oval Office today when he was speaking about his recent feud with Congresswoman Rashida Tlaib over her canceled visit to the West Bank. He said, quote, "I think any Jewish people that vote for a Democrat, I think it shows either a total lack of knowledge or great disloyalty." That is President Trump. What do you make -- of the president -- the reaction?</s>CONNOLLY: I think that is a profoundly anti-Semitic statement by the president. To suggest that Jewish Americans in their preference in voting are disloyal is an old anti-Semitic trope. It is disgusting. It ought to be condemned by Republicans as well as Democrats. And I condemn it here.</s>KEILAR: Let's talk about ISIS because, according to a new report from the Pentagon, the terror group is actually staging a comeback in Iraq and Syria here in recent months. You sit on the House Foreign Affairs Committee. How should the Trump administration and how should Congress respond to this apparent resurgence?</s>CONNOLLY: I think we need to take it very seriously and it is tied in with some of other things as well. Protecting the Kurds in Syria and parts of Syria they liberated and dismantled the ISIS caliphate is very important because if we don't, they hold thousands of ISIS prisoners. And those prisoners will be let go if the Kurds lose their territory in Syria. So this is a complicated --</s>CONNOLLY: -- matter but there is no question that ISIS, despite the fact that it has lost its geography has not lost the will to exist and to inflict damage.</s>KEILAR: Congressman, thank you so much. Congressman Gerry Connolly with us.</s>CONNOLLY: My great pleasure.</s>KEILAR: Always good to see you.</s>KEILAR: And up next, Joe Biden surging in a new CNN poll, regaining a double-digit lead over Democratic rivals. Why is Kamala Harris slipping? And the president seems to backpedal on the idea of new gun laws, saying they are already very strong, these background checks that are in place.