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Labor Force Participation Stubbornly Low; Jobless Rate Drops to 6.3 Percent; President Obama Faces Backlash Over Benghazi; Latest on Ukraine Crisis

Aired May 2, 2014 - 13:00   ET

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


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WOLF BLITZER, CNN ANCHOR: Right now, hiring is up. The unemployment rate is down, dropping to its lowest level in more than five years. But it's not necessarily all good news.

Also right now, President Obama and the German chancellor, Angela Merkel, they have been meeting over at the White House. The big topic of discussion for the two leaders, clearly, the escalating crisis in Ukraine.

And right now, fighting near Slavyansk as the Ukrainian government tries to sweep the city of pro-Russian separatists. Residents there warned to stay home and avoid windows.

Hello, I'm Wolf Blitzer reporting from Washington. On the surface, the April jobs report looks terrific. But when you dig a little bit deeper, there is some disappointing news. The labor department says 288,000 jobs were added in April. That's significantly more than was expected, very good number. The unemployment rate fell four-tenths of a percent to 6.3 percent. That's also encouraging. But that figure is a little bit deceiving since thousands and thousands of people continue to drop out of the labor force in April.

For more on all of this, we have our team of experts standing by. We're joined by CNN's Chief Business Correspondent Christine Romans, Ryan Mack, he's president of Optimum Capital Management, and CNN's Global Economic Analyst Rana Foroohar.

Guys, thank very much. Christine, let's start with you. First of all, what does this say? These latest numbers pretty encouraging, the overall numbers, the drop in unemployment rate. What does it say about the overall health of the U.S. economy?

CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: It says the slow healing continues, Wolf. I mean, Mohamed El Erian, the economist who's the adviser to alliance, the big German insurer, a very well- known economist, just told me this is a turning point for the labor market.

Now, you pointed out sort of that drop in unemployment rate and some of the statistical reasons why it fell. The Labor Department telling us it's not because they were discouraged workers leaving the labor market. That's not what it is. It's not thousands of people dropping out. It's because re-entrants and new entrants who they expected to flow into the labor force for some reason didn't show up. Those are seniors who may -- they expected would have gone back to work who didn't. New people, new entrants, young people who are getting their first foot into the labor market didn't come in.

So, that was sort of what that whole part of the number was about. But 6.3 percent, that's the lowest in five and a half years. Two hundred eighty-eight thousand jobs created, I mean, that's a number you want to see and you want to continue to see that kind of growth. Wolf, when I look in these numbers, what does it mean for the health of the economy? I see shop clerks. I see cocktail waitresses. I also see added in the jobs numbers here miners, transportation workers, construction workers, people in manufacturing, accountants, lawyers, I.T. professional, a broad-based group of workers who found jobs in the last month.

BLITZER: And, Ryan, in addition to the 288,000 jobs created in April, they revised the numbers for February and March, those numbers are pretty good to begin with, by, what, another 30,000 additional jobs. So, it's clearly moving in the right direction, the number of jobs that are being created across the board.

RYAN MACK, PRESIDENT, OPTIMUM CAPITAL MANAGEMENT: I mean, absolutely. I mean, but one of the numbers that I looked at, and we're at a 35- year low in the participation rate, about 62.8 percent. Again, as Christine said, a lot of individuals are still not getting into the economy. I mean, I'm excited as well, a five and a half year low with unemployment.

But what we are trying to point to, a lot what we try to do in terms of additional education, and even the blacks, 11.6 percent unemployment rate for blacks, 19.8 percent unemployment rate for teenagers. Again, a lot of these individuals are not being able to get into the -- into the employment market. It's simply because, what I will figure, a lack of education. There's a direct negative correlation between the more education you receive, the more employment you'll also be able to receive and the lower the unemployment you'll be able to receive.

So, again, as an overall economy -- and I traveled across this country. A lot of people are still feeling pain. We're moving in the right direction but we have a long way to go.

BLITZER: We certainly do have a long way to go, even though it is, as you correctly point out, moving in the right direction. What are the global implications, Rana, of this latest jobs report?

RANA FOROOHAR, CNN GLOBAL ECONOMIC ANALYST: Well, this report and the next couple that come after it, which would create a trend, are going to be very important, in terms of Federal Reserve interest rate policy. So, there's a big debate right now about that group of long- term unemployed workers and whether, in fact, they are eventually going to be able to get back into the labor market if we have another few months of job numbers like this.

Now, those who believe that these workers will eventually come back into the labor market think we should keep interest rates low for a longer time, keep things going the way they are, give some -- give some extra juice to the economy in that way. Others say, no, this is a group that will never come back into labor force. And, indeed, short-term unemployment figures are about where they should be which would imply more inflation going forward which would also imply that interest rates should go up faster. So, this is going to be a big topic to watch in the next couple of months. If interest rates go up, of course, everybody's debt costs increase.

BLITZER: Good analysis. Guys, thanks very much. Rana Foroohar, Ryan Mack and Christine Romans. And don't forget, Christiane will have a lot more on this jobs report and a lot of other news coming up on our weekend show, "YOUR MONEY." That's Saturday, 2:00 p.m. Eastern.

Other news, President Obama and Germany's leader facing some serious questions today on foreign policy flash points, including the crisis in Ukraine. The president just wrapped up a joint news conference with the German chancellor, Angela Merkel. You saw it live here on CNN.

The U.S. is warning of tougher sanctions against Russia over its aggression in Ukraine. President Obama saying the preference is for a diplomatic solution. But if that doesn't happen, the next step is more sanctions. And he says he understands the concerns of some European countries but he's also confident the U.S. and the European Union will stand together.

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BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The goal is not to punish Russia. The goal is to give them an incentive to choose the better course and that is to resolve these issues diplomatically. And I think we are united on that front.

Within Europe, within the E.U., I'm sure there has to be extensive consultations. You've got 28 countries and some are more vulnerable than others to potential Russian retaliation. And we have to take those into account. Not every country is going to be in exactly the same place.

But what has been remarkable is the degree to which all countries agreed that Russia has violated international law, violated territorial integrity and sovereignty of a -- of a country in Europe. And I think there's unanimity that there has to be consequences for that.

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BLITZER: The crisis in Ukraine is clearly escalating with the reports of helicopters being shut down and heavy gunfire. Ukrainian security forces today launched their most intense operation so far against the pro-Russian separatists. The interior minister saying Ukraine has taken back nine blockades that were under the control of the pro- Russian forces.

Our Senior International Correspondent Nick Paton Walsh is near the town of Slavyansk where the operation is taking place. And, Nick, I understand you have some new information on casualties. Tell us what you can.

NICK PATON WALSH, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, the self-declared mayor of Slavyansk, Vyacheslav Ponomaryov, pro-Russian protester backed, has told me that five of what you refer to as pro- Russian militants here have been killed during today's violence along with two civilians. That's a higher death toll than one of his spokespeople put out on social media a few hours earlier and higher than some Russian media reports. We can't confirm it ourselves.

But still, the impact is there of seven dead. I know a certain in which an elderly man has his legs, it seemed, crushed when he tried to get in the way of an armored personnel carrier. One of these standoffs on the outskirts of this town, Slavyansk. And the impact, as I say, will be severe. It is the bloodshed which, potentially, Moscow said, might cause their troops to come across the border. I think many people believe that would be considered a policy failure if we actually saw an open intervention while the military are here because those who say that this is all Russian instigated points to how slowly coordinated and strategically this has been done through using loyal Ukrainians, potentially coordinated outside of the country.

But it does, I think, look particularly likely here today we may see some escalation of the conflict here. It's going to be hard, frankly, for the kremlin after the rhetoric of the past few weeks to do nothing in the face of this Ukrainian motion. And I'm sure that meeting of the Security Council, Wolf, is a -- is a place where their voice is going to be loudly heard -- Wolf.

BLITZER: You heard President Obama, Nick, at the news conference with Angela Merkel that just wrapped up, several times refer to those international monitors who have been detained by pro-Russian elements in eastern Ukraine, representatives from the Organization of Security and Cooperation in Europe. What's the latest? What are we hearing about those monitors who are now being -- according to U.S. officials, being held hostage?

WALSH: Well, there's no question they are being held against their will. And they're referred to as prisoners of war, in fact, by the pro-Russian militants and protesters in Slavyansk. We know that yesterday, they were continuing daily contact between a separate OSC delegation negotiating their release. In fact, the spokeswoman for the self-declared mayor of Slavyansk said to me that she was joking with them every day. I'm not sure if they shared her sense of humor. But we don't know what has happened today.

It is, of course, deeply troubling for someone like Angela Merkel to know that there are German citizens, German military officers at the center of the standoff here, one of the strongest cards, frankly, that Vyacheslav Ponomaryov, the self-declared mayor of Slavyansk, and his militant backers has to play in this continuing crisis.

But we don't simply know where they are. We don't know their condition. And we do know that the conditions inside that city increasingly tense, increasingly hostile to foreigners certainly. And I'm sure the comments we heard at the United Nations with Vitaly Churkin and the Russian ambassador to the U.N. that there were English-speaking mercenaries somehow involved in this, I've not seen any here at all, will be adding to that general sense of hostility.

BLITZER: These are really disturbing developments. Nick Paton Walsh on the ground for us near Slavyansk in the eastern Ukraine.

While the president was clearly focusing on Ukraine, there was more fallout from that attack in Benghazi. Our own Gloria Borger is standing by with some analysis, how the president is handling several hot-button issues right now.

And later, Malaysia is reviewing its options in the search for Flight 370, may follow up on a tip that would take crews thousands of miles from the current search zone.

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BLITZER: The White House now facing more fallout from the terrorist attack in Benghazi, Libya. Here are the latest developments. The Republican Congressman, Darrell Issa, says he has subpoenaed the secretary of state, John Kerry, to testify on the Benghazi attack at a May 21st hearing. Issa has led the House Oversight Committee investigation. Now, a source telling our own Dana Bash that House Republican leaders have decided to form what's called a select committee to investigate Benghazi. The latest fallout stems from White House documents that were just disclosed this week.

For more on the Benghazi fallout and other issues affecting our president, let's bring our Chief Political Analyst Gloria Borger. The Benghazi issue didn't come up at the news conference that the president just had with the German chancellor but it's clearly not going away. Republicans, especially in the House, they are trying to escalate the matter.

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: Yes, they're trying to escalate the matter because they think it's a -- it's a good political peg for them to use against an administration they would say is secretive and tried to cover up what really occurred in Benghazi.

You've heard the White House defense on this, wolf. They've said this e-mail that was just released from deputy national security adviser was not about Benghazi but about the entire situation in the region. Was not a smoking gun. So I assume they're going to go sly announcing they're going to have a special committee investigate it escalates it, but do I need to remind you we're heading into the midterm elections here.

BLITZER: Now they are subpoenaing -- Their ordering John Kerry to testify. Now, he was a United States senator in September 2012 when the attack occurred, Hillary Clinton was the secretary of state. I'm not sure what he'll be able to add as far as what happened during those critical few days. This is an issue that could hover over the former secretary of state if she decides to run for president. BORGER: We've heard her testify on this issue in the past. It's clearly something that's an important issue for her. An emotional issue because of four people being killed. It's going to be something that comes up on the campaign trail, should she decide to run. But this is a way for Republicans to kind of get into this whole notion of the president's foreign policy. Has it been effective in fighting terror? And this is something they're going to use.

BLITZER: Some good news for the president, those job numbers we reported at the top of the hour, almost 300,000 new jobs created last month alone, 288,000 to be specific.

BORGER: You notice, it's the first thing the president talked about when he was doing this press conference, was Angela Merkel.

BLITZER: He said my good friend Angela, I want to start off --

BORGER: I just want to let you know.

BLITZER: -- you won't mind if I talk about positive job numbers. This is an important issue. As they used to say during the Clinton administration when he was running for president Bill Clinton, it's the economy, stupid.

BORGER: There is still the problem of the long-term unemployed. That's something the administration keeps talking about. As long as the president can keep saying we're adding jobs, people are getting back to work, it's a very, very important point for people to take to their constituents. He's giving them a lot of stuff that's hard for Democrats to defend, you know, obamacare being one of them. It's had all of its problems with the rollout. Now they've got over 8 million enrolled so they can start going on offense on that, they can start going on offense on jobs, so this is something that is very important to then as they kind of gathered their talking points for the midterms.

BLITZER: Especially when you take a look at the posters love that, right track, wrong track, is the country moving in the wrong direction or right direction. This bolsters the notion that, at least country seems, economically, to be moving in the right direction.

BORGER: But Wolf this goes district by district. If your district is doing well, your Congressman can tout it. If your district is falling behind, then your Congressman has to say, you know what, we still have a long way to go, we've still got problems. So I think that overall, a rising tide lifts all boats in term, of the economy so this is good news for them.

BLITZER They still have a long way to go. All right, Gloria, thank you. Russia now calling for an emergency session at the United Nations security council. How much will that critical meeting actually impact the crisis in Ukraine? That's straight ahead.

And this, will Donald Sterling fight to keep his NBA team? Some say it could drag on for years.

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BLITZER: There's an emergency meeting at the United Nations security council now. On the agenda, the crisis, which is clearly escalating, in Ukraine. Elise Labott is working this story for us. The Russians actually asked for this emergency meeting of the security council.

ELISE LABOTT, CNN FOREIGN AFFAIRS REPORTER: They asked this morning. Going into it, Wolf, they were looking for any indications of Russia using the situation in Ukraine right now with what's going on in Slovyansk and the clashes with Ukrainian forces and these separatist., as any further indication of what their next steps are. Are they going to use this as a pretext for any type of invasion, any type of movement into Ukraine. The U.S. ambassador to the U.N., Samantha Powers, didn't mince any words when she talked about who she thought was responsible for the unrest there. Let's take a listen.

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SAMANTHA POWERS, U.S. PERMANENT U.N. REPRESENTATIVE: There is horrible violence in eastern Ukraine and that violence is coming as it has been for weeks now from Russian-directed agents and paramilitary and their associates. The rest of us are deeply and sincerely concerned by this instability. But despite all of its rhetoric, Russia can't be, because Russia is causing this instability.

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LABOTT: Wolf, they don't really know what Russia's next steps are or what their intentions. Are they looking to move into Ukraine? They don't think so. What they think is this is further psychological intimidation and bullying. As you heard president Obama say, if Russia continues these actions there's going to be stiffer results.

BLITZER: Is it true Russia is blaming english speaking agitators, in their words?

LABOTT: Well they are blaming the Ukrainians. When he says english speaking agitators he's talking about the U.S. and E.U.. He said basically this was a coup in Kiev that was launched by the United States and the European union. And this is the on going --

BLITZER: This is Vitaly Churkin, the Russian ambassador to --

LABOTT: Ambassador Churkin, who also doesn't mince words when he thinks the E.U., the U.S., have been goading on the Ukrainians, kind of helping them behind the scenes.

BLITZER: The whole discussion at the U.N. Security council right now, it's basically on all sides just rhetoric, because the Russians have a veto power, the U.S. has veto power. So as far as formal resolutions emerging one way or the other, that's not going to happen.

LABOTT: No, that's not going to happen because as you say the Russians have their veto. Basically, it's what they call an ongoing session. Then replies from each side. We're going to hear from ambassador Churkin again about what ambassador Powers said. The we are going to hear from ambassador Powers again It's going to be an ongoing he said/she said all day long but very little action taking place at the United Nations. This is one of the frustrations of the United States with Syria also, that Russian veto precludes any serious business going on at the United Nations these days.

BLITZER: Elise, thanks very much. Elise Labott reporting. Even though no resolutions will emerge we will see what happens.

Just ahead, a very different story, what are the options for Los Angeles clippers owner sterling now? we'll have a live report. It's also a matter of life and death. More on our exclusive investigation into how U.S. military veterans are dying while they're waiting to see a doctor.

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BLITZER: Welcome back. I'm Wolf Blitzer reporting from Washington. There's a new development involving the Los Angeles clippers owner Donald sterling who's just been banned from the NBA for life for racist remarks. Espn and the New York post is both reporting the 80- year-old sterile has been battling prostate cancer for some time. Meanwhile, other NBA owners are moving forward with the process of trying to force him to sell the clippers. Brian Todd is here, working the story for us. There are some people who fear this could drag on for a long, long time.

BRIAN TODD, CNN CORRESPONDENT: It really could, Wolf. Sterling is very clearly a wily legal manipulator. He's been involved in lawsuits. He knows how to play the system. Here's another possible option. He and his wife are estranged. Legal experts and divorce attorneys we've spoken to say they could file for divorce and that would add another layer of legal complexity to this whole effort to oust him as the owner of the Clippers. The ownership of the Clippers, if they filed for divorce, could be placed at least partially at the discretion of a family court. That's another legal layer that people would have to go through to try to force him to sell the team that creates more lawyers arguing over the team's assets, how to divide the team. So if they file for divorce, that's another way they could stall the process.