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Interview with Jim DeMint; Ukraine Crisis Spooks Markets

Aired March 04, 2014 - 06:30   ET

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

CHRIS CUOMO, CNN ANCHOR: We will be following this throughout the morning whenever there is a significant development, both in his press conference and on the ground. We have people at CNN in every significant place in Ukraine, including the Crimean peninsula. So, anything that happens, we will be covering it here.

Now, the big question for us here in the United States is what do we do? The president is faces criticism for what many are calling a weak strategy to date, emboldening Putin, effectively putting him in a position where he now is.

On Monday, Senator John McCain went as far to say that no one believes in America's strength anymore. It's an important conversation. What happens next in the Ukraine, very important, how we got here, perhaps equally so.

So, let's bring in former Republican senator from South Carolina, now president of the Heritage Foundation, Jim DeMint.

Senator, thank you for joining us.

JIM DEMINT, HERITAGE FOUNDATION: Chris, good morning.

CUOMO: Also important to note, Mr. DeMint is also the author of a new book today called, this is when it comes out, you can buy it right now if you want, "Falling in Love With America Again."

I want to talk to you about the book, but let's deal with the pressing matters at hand.

There are two theories on how we got to here. One, Putin is a madman who is looking to embolden his position, get back to Cold War thinking of trying to reabsorb territories around him, specifically strategic ones. The other theory is one that I believe you hold, which he was falsely emboldened by President Obama's weakness, his flexibility, and we've allowed Putin to taken that this stage.

DEMINT: Well, there's no question there's an American indecisiveness and weaknesses. I mean, we've heard that for all year at Heritage. International leaders have been coming through. And our lack of a concise and clear foreign policy has destabilized parts of the world.

I mean, we're losing battles in Central America and South America, clearly in the Middle East. Russia tested us years ago in Georgia. They saw we didn't respond. Now, they're testing us even further.

So, Putin understands strength, not diplomacy. And they've been meddling in Ukrainian affairs for years, while the Ukrainians have been struggling for freedom and democracy.

This is just a continuation of what Russia has been doing. But they don't think America will act and that is a very destabilizing force, not only in the Ukraine, but throughout the world.

CUOMO: But isn't the notion that only might can make right tired? The American people do not have appetite for more military action and everyone is condemning Putin for what he's doing right now. And isn't this proof that President Obama's tactic of let's try to talk, let's try to be flexible, not everything is about having the biggest muscles --

DEMINT: Right.

CUOMO: -- may be the way the world wants to proceed.

CUOMO: Well, if you have the biggest muscles, you usually don't have to fight. That's what kept us out of war as a country for a long time. We have the ability to defend ourselves and our allies, but we also have a clear policy.

We needed to do much more to help the Ukrainians who were fighting for freedom for years. And the mess now in Kiev has a lot to do with the Russians meddling in their elections. So, we're just behind the eighth ball now. I'm not suggesting military action, but we can do things that we can control, Chris. And one of the first things is to get out of the arms treaty called START, that we got into a couple of years ago with Russia.

We are trusting them to do what they say. That is foolish naive notion now. We are not modernizing our own capabilities, which creates more of a perception of weakness and it's encouraging even our allies to get into the nuclear business because they're afraid we're no longer going to be capable of protecting them.

CUOMO: From a lot of members of the Republican Party, you hear criticism like this -- president should have been stronger. We should have been stronger. We were weak.

But when you get to the specifics of what else would you have done, you mention the START treaty. That's something.

However, when you look at what the president has done, what does it achieve, are there really obvious other actions that should have been taken that we're not?

DEMINT: Well, clearly, we have not been supportive of nations that have been struggling for freedom and democracy. The Ukrainians have -- we could have helped them economically. Instead, they've been beholden to Russia to help them.

There are things we could have shown signs that we were supportive in looking into how they're integrated into the European Union and that has gone too slowly, we have not shown enough support for it. So, we don't have to get involved militarily.

CUOMO: But your brothers in sisters in the Republican Party, in Egypt, in Libya, in Syria, were equally critical of the president for extending humanitarian aid, for wanting to be involved on that level, saying, well, maybe it's military or stay out of it. It seems like no matter what the president does, he just gets criticism.

DEMINT: It's more of a matter of timing, of waiting until there's a crisis or collapse, and then coming in and deciding what to do.

We didn't have a clear policy in Egypt, and send all the wrong signals. Clearly, in Syria, we drew a red line that turned out to be a pink line and no line at all. That created a victory for Putin and showed that the United States was really all talk. That's all we've heard from the diplomatic corps in Russia, is talk, talk, talk. Americans and the Europeans are just going to talk. So, they're not longer taking us seriously.

But we have to rebuild that. We begin with what we can control. Certainly, the START treaty is something we need to say, time out, folks, we cannot trust these guys to deal with us in any reasonable kind of way.

But this is one part of a puzzle, Chris. It's happening all over the world. We need a clear and definitive foreign policy so folks know where we stand. And generally, we need to be supportive of countries that are fighting for freedom.

CUOMO: Well, obviously, we have a very big test in front of us right now. Hopefully, we're able to stabilize the situation, so the Ukrainian people can decide their own fate. But the idea of restarting, rebuilding -- great segue to your book.

DEMINT: Yes.

CUOMO: The title of the book, "Falling In Love with America Again", are you in love with the country but no -- do you love her, but you're no longer in love? Will you explain this to me?

DEMINT: We're all blessed to be Americans. I know you would agree on that. But a lot of us are concerned about the direction of the country. The majority of young Americans no longer think the American dream is attainable to them and they're very likely to be worse off than their parents. So we're on a historically bad path.

The good news is we can change that and I think we can change it relatively quickly if we as a country understand why we were different and exceptional and prosperous in the first place.

Falling in love with America is remembering that we're a ground-up nation. We're built around individuals, families, churches, small volunteer units, boating leagues. We're not a top of down country like Russia is and the other countries that are used to being centrally controlled. But we've shifted and we're trying to solve our problems from Washington with big federal programs, whether it's a poverty program or a health care program, we can see they're not working. And we want better schools, we want better education.

But what I'm doing in the book, "Falling in Love with America Again", is reminding people that not only do our problems get solved more quickly, but our affinity for our country and fellow man is much greater if we're allowed to make our own decisions. We can disagree about almost everything and still be friends, unless someone walks in the room and says, Chris, you have to do what DeMint does and believe what he does. Then we're mad at each other and mad at the government for telling us to do that.

CUOMO: So, I'll leave you with this question. Given the message of the book.

DEMINT: Right.

CUOMO: What is your message to your party? Because even since from the time you were there, obstructionism is just the name of the game --

DEMINT: Yes.

CUOMO: -- for the Republican Party right now. And, obviously, that's not leading to any meaningful progress. The dialogue is so toxic because that's all they have is the talk now because they're not doing anything.

What is your message to your own party about how to move forward?

DEMINT: I would disagree with the obstruction idea. What we have is two polar opposite views.

We have mostly in the Democratic Party now is we're going to solve the problem from Washington, with a big new health care plan.

We've got Republicans who are not always united in their opinion, saying, no, we can do this better by working with the states, working with the private sector to solve the problem. But sometimes the federal government has to let go of things.

So, it's a matter of the parties are polarized.

But what I want to do with this book is unite the country around a core set of ideas that I'm convinced we all support. The politics is what's dividing us now. I talk to people all the time who agree in principle, but they'd never vote for a Republican because the polarization in politics is not representative of what's in America. Americans can get along and love each other if they're given the freedom to live their lives the way they want and to believe what they want and they're not coerced by government.

So, there's a formula here that I believe works for the country. I think the politics will follow if we can unite the country around some simple ideas.

CUOMO: We certainly know that when people step up when things get done. And when they hold their government accountable by voting more and being more involved --

DEMINT: That's right.

CUOMO: -- they get more of what they want.

(CROSSTALK)

CUOMO: Mr. DeMint, Senator, thank you very much. Good luck with the book. Appreciate you being on NEW DAY.

DEMINT: Thanks, Chris.

CUOMO: All right. Coming up at the top of our next hour, former Secretary of State Madeleine Albright will be here to weigh in on the developing situation in Ukraine. Vladimir Putin speaking now, still speaking, laying out a very different story.

So, what does the U.S. do? What does Madeleine Albright expect Secretary Kerry can accomplish when he touches down in Kiev. Important discussions right ahead.

Kate?

KATE BOLDUAN, CNN ANCHOR: All right. Still ahead on NEW DAY, there could be a global impact on Russia's actions in the Ukraine. Markets took a pretty serious hit on Monday. We're going to break down how this crisis could have a very real effect on you. Much more ahead.

(COMMERCIAL BREAK)

BOLDUAN: Breaking news still this morning. Russian President Vladimir Putin speaking this morning and pulling back troops. It seems it could be also helping to calm markets.

As it stood on Monday, U.S. stocks took a pretty big hit. Dow futures closed down nearly 1 percent. But this morning, world markets have made a small rebound from yesterday's drop.

We'll try to wade through it all and understand what this means for you.

Here to discuss, Christine Romans, of course, CNN chief business correspondent and co-anchor of "EARLY START." Rana Foroohar, CNN global economic analyst, assistant managing editor and columnist for "TIME".

Great to see you both.

So, let's just start out with what we've seen is that global markets were responding, they were dropping, and having a hard time with what we're seeing in Ukraine. Where are we today? CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: Yesterday, very ugly. Stocks around the world down. Russian stocks down big. Commodities up, you know, grain and oil.

But today, a reversal of that.

BOLDUAN: Why?

ROMANS: You've got Russian stocks up a little bit, mostly because Putin ended these military exercises that have been going on in Russia. So, that was a signal that calmed markets. You've got Dow futures now up more than 180 points. More than 1 percent.

You could actually see all of yesterday's loss in U.S. stocks recovered.

Not a reversal completely for the rest of the global markets. I mean, things have come down. There you go. Dow futures right now up 171.

By the way, the S&P 500, within spitting distance again if this hold to a record. So they've shrugged off really that terrible day yesterday, but watch commodities, watch oil. And this is just a beginning of all this.

RANA FOROOHAR, CNN GLOBAL ECONOMIC ANALYST: Yes, I agree.

BOLDUAN: How volatile is this going to be? I mean, it's impossible to guess. But should people just not pay attention to it and just wait it out?

FOROOHAR: Well, it depends. If there's a threat of armed conflict, there's a threat of armed conflict, that's when you see markets get really jittery. And the fact that, you know, once Putin said, OK, go back to your barracks, to the army, European stocks go up. That's what markets want to see. That's what I think you're going to see a lot of volatility and energy markets in banking.

You know, the banking sector does have exposure to Russia. CitiBank is the largest western bank there. There are number of big European banks in that market. So, I think that, you know, we're just going to watch the situation very carefully, but it's interesting that the Dow wants to keep going higher, you know? I mean, we were near record high before this and we make it --

CUOMO: You have two competing interesting here, right? You have just the need for volatility in the market. Traders love to trade.

FOROOHAR: Yes.

CUOMO: So, they'll find any reason, good or bad.

FOROOHAR: Yes.

CUOMO: They'll drive it up, they'll drive it down. So, that's a separate game. But then you have what you have to watch here in terms of what's volatility and what isn't. Here's a real problem that I think the markets will respond to. I want your take. Sanctions.

ROMANS: Yes.

FOROOHAR: Yes.

CUOMO: Looks like they're going to happen. Something very smart Vladimir Putin said or insightful. He said, sanctions can hurt a lot of people. Harkens you back to what Angela Merkel, all right, the leader of Germany said about sanctions. Hold on about -- hold on about kicking them out of the G-8. Take it east. Why was Germany going so slow?

They get a ton of their energy from Russia, don't they? Maybe that's why Germany was so aggressive saying let's have fact finder's on the ground. It's almost back up Putin's idea about what's going on. What would sanctions mean?

FOROOHAR: Well, you know, first of all, if you look historically, the Europeans are always interested in creating peace deals in Russia when there's conflict because they do get about 40 percent of their energy, particularly, gas --

BOLDUAN: Let's throw up a map that we have created.

(CROSSTALK)

ROMANS: And it goes through Ukraine.

(CROSSTALK)

BOLDUAN: All of those gas lines go right through Ukraine. That's one of --

(CROSSTALK)

FOROOHAR: Sanctions go to -- I'm actually skeptical about the effectiveness of sanctions. In part, because I think it's going to be tough for Europeans to implement them and get behind them, but also, Russians get about 70 percent of their expert revenues from oil and gas. They want to keep selling, you know?

(CROSSTALK)

ROMANS: Their economy needs that revenue from Europe.

(CROSSTALK)

CUOMO: It's also not (ph) coincidence that where he divides the line, yes, there is a heavy Russian concentration to the right. You're looking at the roots not just in sourcing. You see the areas where they start. Russia has a lot of natural gas exploration as well and oil. But you see all the roots which where Ukraine. That's why it's so important is a gateway to those countries west.

However, that line that he wants to draw in the middle of Ukraine, here's where the Russians are, that's also where most of the natural resources are.

(LAUGHTER)

CUOMO: That's not going unnoticed also.

ROMANS: This is going to be a real problem. I mean, I think that you're going to have maybe stock records today, maybe tomorrow, but as long as you have this tension over Ukraine with Russia and the west, and you have these dribs and drabs up, what Putin says, what Angela Merkel says, what John Kerry says, this is going to be a real risk for markets even as it looks like the U.S. economy is starting to stabilize.

BOLDUAN: Rana, let me ask you this, the conventional wisdom, when you're talking about the really important, one of the big factors here talking about the oil and gas. The conventional wisdom is that gives - that puts the ball in Russia's court because they're providing so much energy to Europe. But the "Wall Street Journal" had a very interesting take on it this morning, but this also could be a double- edge sword.

It could also serve as Russia's Achilles heel because just as much as Europe needs the energy, Russia needs the money.

FOROOHAR: Well, as I was saying before, 70 percent of their export revenues come from natural resources. So, they really can't afford to not be selling oil and gas for very long.

ROMANS: Ukraine is the bread basket of Europe. Don't forget. Big export of grain -- yesterday, we saw wheat jump seven percent. That's a big one day move. If you have that kind of volatility in grain markets, we'll feel that at the grocery store.

BOLDUAN: Now, people are starting to understand why Ukraine is so essential in this discussion far beyond what's going on in that country. It's the trickle effect globally is the really big deal.

FOROOHAR: Absolutely.

BOLDUAN: Rana, Christine, thanks, guys.

CUOMO: All right. Let's take a break here. When we come back, are we facing the coldest March ever? Indra Petersons is going to explain why that is not just a question, it may just be the truth.

(COMMERCIAL BREAK)

CUOMO: Welcome back. Much of the eastern half of the U.S. is dealing with cold so brutal that some cities could hit lows not seen since the 1800s.

BOLDUAN: I don't believe you.

CUOMO: I can't believe the words coming out of my mouth. The question becomes, could this be one of the coldest March's ever. Let's get some perspective with our meteorologist, Indra Petersons here. So, what's the guess? It's early, but it's also really cold.

INDRA PETERSONS, AMS METEOROLOGIST: Unfortunately, we already know December, January, February, we're talking about some of the coldest temperatures ever, especially in the upper Midwest around the Great Lakes. But the problem is now it is March, guys. And this morning, we're talking about setting records. In fact, we've already set records in the same places for this morning low as the being this cold.

And the reason is we've had this pattern. I mean, the jet stream's gone all the way down to the south and ridged out on the west. And unfortunately, let me show you what the outlook looks like, guys, for March. And it's expected to stay this way. So, this is the concern. We're setting records. It looks like at least for the next two weeks, we're still going to go right back into this pattern.

Here's what's weird. We're talking about coldest in the eastern half of the country. They're setting records back to the 1800s in places lies Tucson for the warmest winter ever. So, as much as we're complaining it's cold, exact opposite problem on the west coast as well.

BOLDUAN: And February was below normal as well, right?

PETERSONS: Absolutely. Yes. And so, unfortunately, we're just continuing this trend now into spring. And what does that mean --

BOLDUAN: And when is the meteorological spring again?

(LAUGHTER)

PETERSONS: Yes. We have like a couple of weeks before that change, and let's hope it gets there. But this trend, we're going a couple of weeks we're still staying below normal. So, it doesn't look like any good news any time soon.

BOLDUAN: All right.

CUOMO: But it's still early.

PETERSONS: It's still early, but that's the two-week forecast.

(LAUGHTER)

CUOMO: But there's that.

PETERSONS: I tried.

(LAUGHTER)

BOLDUAN: Thanks, Indra.

PETERSONS: Sure.

BOLDUAN: Coming up next on NEW DAY, Russian president, Vladimir Putin, defending the ousted Ukrainian president and reserving the right to use military force. We're going to get with Anderson Cooper live from Kiev. And we're also going to get reaction from former secretary of state, Madeleine Albright, on the breaking news this morning.

CUOMO: We're all over the Ukraine, but we're also following this big trial. You're looking at it right now. The Blade Runner, Oscar Pistorius' attorney is going after a key witness. It's unusual that's so early in a trial you have the key witnesses. We're going to check in on the trial live as it's happening.

(COMMERCIAL BREAK)

ANNOUNCER: This is CNN Breaking News.

CUOMO: Welcome back. A big morning of news. We have breaking news as you see right there. Russian president, Vladimir Putin, has broken his silence in a long news conference this morning. It's still going on. He is explaining his take on Ukraine. He's saying he reserves the right to take military action, but he says, so far, he's taken none.

He insists this occupation of Crimea is not an invasion. It's a humanitarian, quote, "last-resort reaction to a coup" and that illegitimate government. He is accusing the U.S and the west of a double standard comparing what Russia's doing here to America's intervention in Iraq and Afghanistan, including also Libya and Egypt and everywhere else.

He's saying basically the U.S. does this all the time, why can't we. Putin says Moscow is keeping all options on the table. Again, remember that because it's about what the real threat is. He's also shrugging off the threat of economic sanctions, allowing people to understand it will hurt many which is going to raise eyes all throughout Europe.

BOLDUAN: And just hours before Vladimir Putin spoke, remarkable confrontation unfolded at an air base in Crimea. Just watch this as singing, unarmed Ukrainian soldiers approach heavily armed pro-Russian troops.

(BEGIN VIDEO CLIP)

(SINGING)

(END VIDEO CLIP)

BOLDUAN: Ukrainian troops ignored warning shots in order to confront pro-Russian forces and demand an end (ph) the occupation. Right now, 16,000 Russian soldiers are in control of the Crimean peninsula. Moscow denying reports that it has ordered Ukraine to surrender its warships over its having them --

JOHN BERMAN, CNN ANCHOR: Now, as this is happening, the Obama administration is scrambling to finalize economic and diplomatic sanctions in an attempt to punish the Russians of having military exercises and trade talks with Moscow have now been suspended. The president summoning top cabinet members to the White House late last night to plan what they call the isolation of Vladimir Putin.

BOLDUAN: Meanwhile, secretary of state, John Kerry, will be touching down this hour in Kiev. He'll be delivering a show of support for the new Ukrainian government along with desperately needed financial aid package there. And much more on that and we'll be following the developments as the secretary of state will be touching down this coming hour. We'll be following that closely.

CUOMO: All right. Let's bring in Anderson Cooper right now. He's part of our coverage that we have on the ground there. Anderson is live in Kiev monitoring the situation. Anderson, thank you for joining us. Tell us what are you standing in front of and what are you finding on the ground?