Former Top Trump Adviser Arrested On Fraud Charges; American Initial Jobless Claims Rocket Above One Million Again
ZAIN ASHER, CNN INTERNATIONAL HOST: All right. Stocks are pretty much flat, but in positive territory. Tech stocks are headed for another record high despite the spike in initial jobless claims. Those are the market and these are the stories behind them. Steve Bannon is arrested and charged with multiple counts of wire fraud. The U.S. jobless claims are headed in the wrong direction, back above one million. And Joe Biden prepares to make his pitch to the American people on the last night of the Democratic Convention. Coming to you live from New York, it is Thursday, August 20th. I'm Zain Asher and this is QUEST MEANS BUSINESS. A former chief adviser to Donald Trump will soon make his first court appearance after being arrested on fraud charges. Steve Bannon and three others are accused of cheating donors who contributed to a crowdfunding campaign that promised to use all of the funds to finance a U.S. border wall with Mexico. Prosecutors say they lined their own pockets instead. Here's how President Trump reacted.</s>DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I know nothing about the project other than I didn't like when I read about it, I didn't like it. I said this is for government. This isn't for private people. And it sounded to me like showboating. And I think I let my opinion be strongly stated at the time, I didn't like it. It was showboating and maybe looking for funds. But you will have to see what happens. I think it is a very sad thing for Mr. Bannon.</s>ASHER: Last year, one Board member of the crowdfunding campaign told "The New York Times" that Mr. Trump not only knew about the project, but said it had his blessing. Let's bring in Kara Scannell. So, Kara, much did the President actually know? What do we know for sure here?</s>KARA SCANNELL, CNN REPORTER: Well, there is no allegation in the indictment today of the President having any knowledge or involvement in this alleged scheme. In fact today, Steve Bannon and three others were charged with defrauding investors with two counts, one count of conspiracy to commit wire fraud, one count of conspiracy to commit money laundering. But the men are accused of raising money through this online fundraising site called, We Build the Wall. They have raised $25 million. Now, prosecutors said that they told investors that they would use the money, all of the money for construction, but in fact, according to prosecutors, they used the money to pay their personal expenses. According to the indictment, the individuals, including Bannon had exchanged text messages between each other discussing this arrangement and had used shell companies in which to move the money in order to conceal the actual origin. So we are expecting Bannon to appear in the courthouse just behind me later today. He will have his first appearance. We have not yet heard from Steve Bannon. His lawyer has declined to comment. But we may see Bannon afterwards. We are waiting to see if he is going to say anything. But this is a big development for -- a big news today for Steve Bannon, and also just one of the latest individuals who are close to the President who has been charged with a crime. There was Roger Stone, a longtime adviser, Paul Manafort, his former campaign chairman and of course, Michael Cohen, his former personal attorney. Steve Bannon though today facing the charges. He will be in court shortly and then we will see if he has anything to say to address these allegations head on.</s>ASHER: So, Kara, how was this alleged scheme actually uncovered? How were authorities tipped off?</s>SCANNELL: Well, you can see from the indictment as that there was certainly a money trail and a paper trail. It looks like prosecutors were able to trace these funds that went from the donations that came into the GoFundMe account, this online fundraising group that then went to Bannon, went through shell companies into others involved in this alleged scheme. So prosecutors seem to have a sense of how they have moved the money here. They also have indications through the indictment that they also they also have seen text messages between the men. So, certainly, it appears to be a document-heavy case and one where they have followed the money.</s>ASHER: All right, Kara Scannell, live for us there. Thank you so much. The latest jobs figures in the United States show a setback for the economic recovery, another 1.1 million workers filed initial claims for the unemployment benefits last week. For economists, it dashes hopes for a smooth and steady growing back in the labor market after last week's report was the first since March under a million.' Cristina Alesci is with us from New York. So Cristina, when you look at these numbers, initial jobless numbers rising above one million. What does that tell us about the state of this recovery?</s>CRISTINA ALESCI, CNN BUSINESS POLITICS AND BUSINESS CORRESPONDENT: Well, the bad news here is obviously the initial unemployment claims came in at over a million and economists and investors were hoping that last week's sub-one million number would hold through this week. It didn't. And essentially what this says, Zain, to your question, is that the jobs recovery is going to continue to be pretty uneven. But I don't think this week's report really fundamentally changes that outlook that we are going to have just a bumpy ride from here. Unfortunately, there is going to be more pain ahead because of a number of things that we have been reporting, just anecdotally. For example, Boeing has already warned that it is going to have to make more cuts. We have had retailers announcing that they are going to be closing more and more stores. For example, Lord and Taylor today saying that they are going to have to close more stores than originally thought under their restructuring plan. And then cities and states are seeing their budgets completely obliterated. So we are likely going to see reduced jobs numbers from that section of the economy, which is a really important one. So all of this is very bad news against the backdrop of people in the administration like Larry Kudlow insisting that we are in some kinds of V-shaped recovery, which is kind of insensitive and disconnected from the fact that millions of Americans are still unemployed. And by the way, they are still not getting that enhanced unemployment benefit of $600.00 a week. Of course, the President has said that you know, he has actually signed an executive order that would allow for some disaster relief funding to provide people, unemployed people with a $300.00 benefit. Only a few states have taken advantage of that so far. We are going to have to see how the rollout goes in the rest of the country. But when you look at the jobs number, it is very clear that it is not a V-shaped recovery. Sure, we could have a V-shaped recovery in some pockets of the economy, for example, like the housing market, and then, of course the stock market has been on a tear. And also showing a V-shaped recovery. But not everybody is fortunate enough to own a home or stocks. So, Zain, a very uneven recovery, and possibly fueling, actually probably fueling more and more inequality between the highest income earners and the lower income earners here. But certainly, a lot more pain to come -- Zain.</s>ASHER: Yes, it's certainly a tale of two Americas at the very least. Christina Alesci live for us there, thank you so much. Wall Street is continuing its trend of shrugging off negative news about the state of the economy. All three major U.S. markets are higher. The S&P 500 is within striking distance of another all-time closing high. As things stand now, the NASDAQ appears set to close at its third record high of the week. Wall Street records come during a pandemic that ravaged the economy for average people. It is a wealth gap that's only getting worse. Vanessa Yurkevich tells the story of those being left behind.</s>VANESSA YURKEVICH, CNN BUSINESS AND POLITICS REPORTER (voice over): There are two economic realities in the U.S. right now. Wall Street is surging.</s>UNIDENTIFIED MALE: We got it. All-time high for the</s>S&P. JULIA CHATTERLEY, CNN BUSINESS ANCHOR, FIRST MOVE: The NASDAQ looking to extend those record gains.</s>YURKEVICH (voice over): But on Main Street, the economy is spiraling.</s>UNIDENTIFIED MALE: For us, it's been a lot of stress.</s>UNIDENTIFIED FEMALE: It is not getting better. It's getting worse.</s>YURKEVICH (voice over): There is a disconnect. The stock market has recovered from the pandemic while the U.S. unemployment rate tops 10 percent.</s>JOHN FRIEDMAN, PROFESSOR OF ECONOMICS, BROWN UNIVERSITY: Wall Street is primarily reflecting the profits of firms, which have a very different trajectory than the lives of workers. There is no doubt that this recession is widening the already large inequalities in this country.</s>YURKEVICH (voice over): The Federal Reserve helped Corporate America and markets by injecting trillions into the financial system while keeping borrowing rates low. At the same time, more than 100,000 small businesses have closed, taking with them thousands of jobs. The landmark, Fraunces Tavern sits in the shadow of the New York Stock Exchange. Owner, Eddie Travers says revenue is down 80 percent even with government stimulus.</s>EDDIE TRAVERS, OWNER, FRAUNCES TAVERN: Of course it is frustrating for us to look at that. To see that the stock market is doing incredibly well and for us, as we see it at the moment, it is not going to be pretty for us, our families, and our businesses.</s>YURKEVICH (voice over): Like the majority of low-wage workers, Travers's employees don't have the option of working from home as most high-wage earners do.</s>TRAVERS: We sell an experience, you know, it is an experience of visiting the restaurant, and we can't package that up and put it in the car.</s>YURKEVICH (voice over): That simple difference has dramatically slowed low-wage job recovery.</s>FRIEDMAN: High wage workers are essentially back to the employment levels they were in February and March, whereas low wage workers are still only half recovered.</s>YURKEVICH (voice over): White workers gained back nearly twice as many jobs lost as black workers during the pandemic. Latinos also trail white workers in jobs recovered. Lucie Joseph was terminated from her job as a gas station cashier in Florida in June after she recovered from COVID-19. She says she was making $13.00 an hour.</s>LUCIE JOSEPH, FIRED FROM GAS STATION CASHIER JOB IN FLORIDA: My world turned upside down. It was like a knife put into my heart.</s>YURKEVICH (voice over): She says she is barely getting by on unemployment while she looks for a new job. A search made even more critical because of her 10-year-old son, Bailey.</s>JOSEPH: When you are a single mother, you have got no one to help you, so you are alone. How am I going to pay rent? You know? I have got to put a roof over my son's head.</s>YURKEVICH (voice over): There are no record highs for Joseph and her son, only lows she is trying her best to climb out of.</s>JOSEPH: How are you going to say the economy is coming back where everything is closing down? That's not the truth. We are all suffering. I'm suffering.</s>YURKEVICH (voice over): Vanessa Yurkevich, CNN, New York.</s>ASHER: While Donald Trump routinely claims credit for stock market highs, Joe Biden is portraying himself as the savior of Main Street as he prepares to accept the Democratic nomination for President tonight. At the convention this week, the former Vice President and his allies are laying out their case why Biden should lead the U.S. through this economic recovery.</s>SEN. ELIZABETH WARREN (D-MA): Joe's plan to build back better includes making the wealthy pay their fair share, holding corporations accountable, repairing racial inequities, and fighting corruption in Washington.</s>BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: Joe won't just put his signature on a check and try to fool you into thinking it came from him. He will work to make sure that your paycheck reflects your contribution to and your stake in a growing economy.</s>SEN. KAMALA HARRIS (D-CA), DEMOCRATIC VICE-PRESIDENTIAL NOMINEE: Joe will bring us together to build an economy that doesn't leave anyone behind, where a good-paying job is the floor, not the ceiling.</s>BARACK OBAMA, FORMER PRESIDENT OF THE UNITED STATES: He will rescue the economy like Joe helped me do after the Great Recession. I asked him to manage the Recovery Act, which jump started the longest stretch of job growth in history. And he sees this moment now not as a chance to get back to where we were, but to make long overdue changes so that our economy actually makes life a little easier for everybody.</s>ASHER: Penny Pritzker served as Barack Obama's Commerce Secretary. She joins us live now from Aspen, Colorado. Penny, thank you for being with us. What is the number one thing that Joe Biden needs to do in order to relieve this country of some of its economic woes?</s>PENNY PRITZKER, BARACK OBAMA'S COMMERCE SECRETARY: I think there are actually three things that Joe Biden is focused on to bring this country back to an inclusive economic growth. The first is a plan to end the pandemic, and to basically listen to the scientists and listen to the experts to be able to bring therapies and vaccines to all of us. The second is, he has developed an inclusive economic competitiveness plan. A plan that invests in our work force, gives people the kind of benefits that are necessary in order for them to be able to work. Invests in manufacturing so that we make vital products here in the United States, invests in R&D so that we are leading in the technologies of the 21st Century, like 5G, and A.I., and Quantum. And finally, investing in clean energy so that we have an environment that is healthy for all of us, but also that we have the energy supply that we need in order lead the world. And finally, the thing that Joe Biden plans to do and will do is put America back in a leading position globally. He will work together with our allies and he will work against our adversaries, and so I think that a combination of these things will bring greater certainty and stability to our country and to our citizenry and certainly will help businesses make more investments.</s>ASHER: You talked at the beginning of your answer about ending the pandemic. But how much is Joe Biden's hands tied just in terms of what he can do economically to revive the economy without there being a vaccine and when there appears to be a second wave in this country as well?</s>PRITZKER: Well, there is a lot to do. You can make investments, you know, in our workforce, make sure that we have training, make sure that we are leveraging our community colleges, and make sure that we are helping those who have lost their jobs, upskill, so that they are qualified for the jobs that are open and available. You can invest in R&D. You can put us back on a clean energy program, which is something that Americans want. So there's a lot to be done. But simultaneously, you know, as President, you have to do a lot of things at the same time. And simultaneously you're addressing the pandemic and the conditions and setting a tone -- which is we all need to wear masks, this is not optional. This is not a choice. This is what we need to do.</s>ASHER: Obviously, Joe Biden's priorities as you just laid out are going to be domestic. However, if you look at the bigger picture, the world's two biggest economies are at lager heads. The U.S. and China. What do you think Joe Biden's strategy -- I mean, once he sort of takes care of the economy here, given the pandemic, what do you think his strategy is going to be when it comes to handling China?</s>PRITZKER: I think first of all, his strategy is to make sure the United States is competitive, and that economic competitiveness plan that I just laid out is something that is essential not only for us domestically, but frankly, the Chinese fear it. They fear our competition, so that's number one. Number two is to stand up and hold China accountable to their responsibilities globally, like playing fair, whether it is around intellectual property protection or following the rules of global trade so that, you know, China and the United States are at least on a level playing field with one another. So there is lot that Joe Biden can do and will do to stand up to China and to put the United States and continue to put the United States in a competitive position and make sure that all Americans are benefiting from that.</s>ASHER: We are living through a tale of two Americas right now. I mean, obviously, you know, almost every day on this program, I talk about the fact that we are either at or nearing or hovering around record highs in term of the stock market. At the same time we are witnessing ordinary Americans really suffering especially given that it has been several week now since they have had that unemployment insurance, $600.00, a week that they so desperately need. Why is there this divergence between what Wall Street is experiencing on the one hand and what Main Street is experiencing?</s>PRITZKER: Well, I think we need to -- you know, look, the issue of inclusive economic growth is something that I have been passionate about since before my time as Secretary of Commerce and making sure that every American has the opportunity to adjust and thrive as we transition into a much more digitally led economy. And that's something that's central to the plan that Joe Biden has put forward, and what you are seeing is using significant growth in our digitally lead businesses, and you're seeing significant pain in our, you know, travel or tourism or restaurants or Main Street type retail, if you will. And you know, we are going through a massive transition in that respect. I think, you know, the ability to bring back travel and tourism goes right to the heart of needing to handle the pandemic. Without handling the pandemic, without all of us feeling safe, we are not going to get, you know, on a plane or go to a hotel, or eat out at restaurants at the rate that we were before. And so, you know, there's a lot to be done, and Joe Biden understands that. And for me, this issue of, you know, fundamental to the competitiveness plan is investing in our people so that the recovery is inclusive of everyone.</s>ASHER: And then you know, just in terms of obviously, yes, it is a priority to make sure that this recovery is inclusive. But you know, we have sort of stalled in terms of having a stimulus bill that gets passed for example. If he continue to wait and those stimulus checks aren't sent out, you know, what is going to be the consequence in terms of this recovery?</s>PRITZKER: Well, Congress recognizes I think they have got to get their act together, that this crisis is not over and their possibility has not ended. And so, I am hopeful that they can find common ground because Americans are suffering and we cannot allow -- as we transition through this horrible virus -- that we let Americans flail. So, I think there is enormous pressure on Congress, and frankly on President Trump to take action and the executive actions are -- as you have seen, the Business Roundtable has come back and said we cannot implement these executive actions. So Congress needs to act.</s>ASHER: Penny Pritzker live for us there. Thank you so much. Appreciate you joining us.</s>PRITZKER: Thank you.</s>ASHER: Still to come, the fall semester is officially under way at the University of Miami. We will talk to its President about how students are keeping safe. Plus, the Kremlin is accused of targeting a major opposition figure. We will have more from Moscow just ahead.