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QUEST MEANS BUSINESS
The E.U. Delivers A New Challenge To Amazon; Facebook Executives Today In Front Of Financial Services Committee In The House Of Representatives; Iran Foreign Minister Says "We Will Never Start A War." Aired 3-4p ET
Aired July 17, 2019 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ZAIN ASHER, CNN INTERNATIONAL HOST: Not a drop -- a drop of green at some point in the morning, as you can see, the Dow has been pretty much in the
red all day.
We are off to a lower day on Wall Street, but as I mentioned, it is pretty much flat as investors sift through earnings. There's also been some
concern that the trade war between the U.S. and China might end up lingering a little bit longer than anticipated.
It is the final hour of trading on Wall Street as U.S. markets are down for a second day. Earnings season as I mentioned is picking up. This is what
investors are watching.
The E.U. delivers a new challenge to Amazon. You will hear what online merchants have to say about the latest antitrust investigation. And debt
rising, time running out. Washington looks for agreement on raising the government debt ceiling. And can't get out of my head. Elon Musk and his
mind boggling plan to link your smartphone to your brain. Live from the world's financial capital here in New York City. It is Wednesday, July
17th. I'm Zain Asher in for my colleague, Richard Quest, and this is QUEST MEANS BUSINESS.
All right. Welcome everybody. I'm Zain Asher. Tonight a Prime Day hangover for Amazon. The retail giant is promising to cooperate as
Brussels launches and investigation into the company if it is abusing its market dominance.
The E.U. Competition Commissioner says this about preserving choice and low prices for people like you and me. Let me read what Margrethe Vestager has
to say. She said, "I have decided to take a very close look at Amazon's business practices and its dual role as marketplace and retailer." Amazon
marked the end of its annual Prime Day sales by celebrating with a star- studded concert.
Taylor Swift headlined the show. Amazon doesn't disclose exact figures, but it says that more than 175 million items was sold in just two days.
Then the E.U. swooped in to ruin the party. An issue is the buy box on Amazon's website. The box is a massive boon to any seller that has it,
greatly increasing the chance of making a sale. However, Amazon decides which sellers get the box and which don't and how they decide that is very
And remember, Amazon not only hosts a marketplace, but is increasingly a seller as well. An E.U. fine could be massive, potentially up to 10
percent of Amazon's annual turnover. In other words, around $23 billion.
Behind all of this is Margrethe Vestager, who has been quite the thorn in the side of big U.S. tech firms. This is potentially the most
investigation she will launch as E.U. Competition Commission before her term ends in October.
Paul Rafelson is the cofounder of the Online Merchants Guild. He joins us live now via Skype from Stamford, Connecticut. Paul, thank you so much for
being with us. So my question to you is, is it a level playing field when it comes to third-party sellers on platforms like Amazon and Amazon, the
retailer itself? Is the game rigged, do you think?
PAUL RAFELSON, COFOUNDER, ONLINE MERCHANTS GUILD (via Skype): It's most certainly not a level playing field. And the game is -- it's not that it's
rigged, I think it's just misunderstood. I think the thing that Amazon does really well is its misdirection and sort of calling itself a
But you know, we always challenge people to sort of take a look at what a traditional marketplace looks like. I just got back from a seller
conference in Jerusalem and I got to experience what a real marketplace is where there's autonomy among retailers operating in a marketplace.
Amazon sellers are suppliers. I mean, that's the mistake that I think the first mistake we noticed from the E.U. is that, you know, we hope through
their investigation, they start to figure that out that a lot of what Amazon does in the world that you know isn't really you know, fair in the
way they conduct business stems from sort of this notion that they're just a marketplace.
But you know, when you break down the reality or you know, the substance over the form, they are nothing like a traditional mall. You know, if you
go to the Mall of America, for example, in Minnesota, every storefront doesn't say Mall of America in big print and put the retailer's name in
tiny print preventing the retailer from having access to the customer from marketing to the customer from selling to the customer.
So I mean, step one, I think we would like to see obviously, you know, some questions as far as are we calling Amazon the right thing when we say it's
a marketplace or is it really just a retailer.
ASHER: You know, that's really interesting what you said you know, that is the term marketplace even valid for a company like Amazon? Are the sort of
third-party sellers that are on his platform merely suppliers?
[15:05:09] ASHER: My question to you is, given that you believe that the playing field is not level, you're saying it's not necessarily rigged, but
it's certainly in your opinion, not level. What can be done about that? What sort of resources do third-party sellers have to fight back, do you
RAFELSON: Sure. Well, I mean, our association is a nonprofit. I volunteer my time. I'm a law professor based in New York. I have a law
practice where I represent Amazon sellers and I was asked to lead this project, Online Merchants Guild to sort of build the first sort of seller
trade association to sort of get sellers to start working together and push for fair legislation.
So right now in California, for example, we have AB 1790 being pushed by Assemblywoman Buffy Wicks, who is really developing the first of its kind
seller fairness legislations to sort of, you know, require more transparency on Amazon, limitations on use of data, things like that.
So I think, I mean sellers need to band together. I tell my sellers, you know, Wisconsin cheese farmers figured out a long time ago that they needed
-- that there are certain issues in the world that you need to work together on.
And you know, there's five million sellers in the world, and there's just no representation. So when decisions are made about e-commerce, when
policies are created, you know who is always missing on the table are sellers, right?
I mean, they're talking to the marketplaces themselves. They will often rely on that distinction to, you know, pursue certain agendas that, you
know, they really shouldn't get away with. So I would challenge regulators to start by actually talking to sellers, and we try to provide that voice.
ASHER: All right, Paul Rafelson, thank you so much. Appreciate that. Thank you for sharing your perspective with us. Amazon isn't the only
American tech giant that's been under scrutiny in Europe. Google has faced a series of antitrust fines totaling $9.3 billion. Apple was forced to pay
$14.6 billion in back taxes to Ireland, and Facebook was fined $122 million for misleading regulators about WhatsApp.
We want you to join the conversation want to hear from you at home. Get out your phones or go to cnn.com/join. Tonight, we're asking you a simple
question. The question is, is Europe too tough on Big Tech companies? Is Europe too tough on Big Tech companies? Vote now by heading to
cnn.com/join. We will see the results very shortly on your screen.
In the way President Trump sees that the E.U. is stepping on America's toes. In an interview with Fox Business a few weeks ago, he said the
Competition Commissioner Margrethe Vestager has a grudge against the United States. I want you to listen to this.
(BEGIN AUDIO CLIP)
DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: She hates the United States, perhaps worse than any person I've ever met. What she does to our
country, she is suing all our companies. You know, look, we should be suing Google and Facebook and all that which perhaps we will. Okay. You
see -- Apple, they're suing Apple for billions of dollars. They're suing everybody. They make it very, -- almost impossible to do two-way business.
(END AUDIO CLIP)
ASHER: Hadas Gold is following the story from London. She joins us live now. So, Hadas, you had President there basically intimating that
Margrethe Vestager has a grudge against the United States. Obviously, she's on her way out of that role. Do you think that the next Competition
Commissioner will be as aggressive when it comes to fighting against Big Tech, as Ms. Vestager has?
HADAS GOLD, CNN BUSINESS REPORTER: Well, Zain, we now have the new President of the European Commission, who said in her introductory platform
that the regulation of Big Tech is something that's on the agenda.
So, I would expect that the next Competitions Chair would be somebody who will continue this pathway that we're seeing and there does seem to be this
movement in all of Europe, and now also we're seeing in Washington to get their hands around regulating Big Tech, not only from what we're seeing
right now with the antitrust investigation into Amazon, but also to things like your personal data, how it's used, how it passes between countries and
across the Atlantic.
And also in other competition areas is something that they're looking into and they're also concerned about just the certain companies having so much
power in so many different aspects of people's lives.
ASHER: Just walk us through what exactly the E.U. Competition Commissioner is investigating when it comes to Amazon. I'm not sure if you heard our
last guest, but he was saying that essentially, between Amazon the retailer, and these third-party sellers, the level field, there's not a
sort of a level playing field.
And in fact, he doesn't believe necessarily that the game is rigged, but it is certainly not a level playing field. He says that a lot of these third
party sellers amount to basically suppliers. Just walk us through what specifically Ms. Vestager is investigating here.
GOLD: So what they're looking into is Amazon's role as both a retailer, somebody who sells their own products and also as a marketplace that hosts
other products on their platform and whether Amazon is inappropriately using data that they're gathering from these third-party sellers to somehow
give them an unfair competitive advantage.
[15:10:07] GOLD: You'll hear from some seller, they'll complain that they'll have a successful product. But then Amazon will sort of start
creating or start marketing their own version of that product that will then, they allege will get ranked better, and then we'll get sold better
than their own products that it's an unfair marketplace.
And the question, the reason why Amazon is being investigated is because of their perceived dominance in the market. Now, Amazon says that they want
to foster a creative business environment. And they've actually said in those hearings in Washington, that they don't use the seller data to
somehow inform their decisions.
But that's something that a lot of sellers find hard to believe. They'll say, "Listen, I had a successful computer stand. And then in a few years,
I saw Amazon was selling a similar computer stand, and I'm not getting the same sales anymore." The E.U. is also looking into this buy box button
that might appear on some Amazon searches, which allows you to immediately put a product into your cart instead of having to go through the product
page. That's seen as something that can give a product a great advantage.
They're looking at the how and why those certain products are chosen versus others. But it's also important to keep in mind that the fines here that
we're starting to see Big Tech start facing are starting to grow.
Now, the companies are still so big and make so much money that it's not necessarily going to affect them that much. But if Amazon is found in this
investigation to be breaking E.U. Competitions Law, they face a fine of up to 10 percent of their global annual revenue. And if you look at Amazon's
2018 revenues, a fine on this 2018 revenues would be about $23 billion.
ASHER: All right Hadas Gold, live for us. Thank you. And I should also mention that we did get the results from our poll, as you can see in your
screen there, 83 percent of you -- 83 percent of you who actually voted on this believe that Europe is actually not too tough on Big Tech companies.
So by far the vast majority of you as Hadas Gold was mentioning there, Amazon could be looking at a fine of ten percent -- ten percent of its
global revenue, depending on what comes out of this investigation.
After not having much luck winning over senators to the idea of its Libra cryptocurrency on Tuesday, Facebook executives are today in front of the
Financial Services Committee in the House of Representatives and even after Tuesday's Q&A, Congressmen are still trying to nail down the basics.
(BEGIN VIDEO CLIP)
What is a Libra?
DAVID MARCUS, VICE PRESIDENT OF MESSAGING PRODUCTS, FACEBOOK: Congressman a Libra is a digital currency -- a reserve backed digital currency.
REP. PATRICK MCHENRY (R-NC): Is that a security?
MARCUS: We don't believe it is, Congressman.
MCHENRY: Is it a commodity?
MARCUS: Congressman, based on current U.S. law, I believe it might be a commodity, but we see it as a payment tool.
MCHENRY: Is it an exchange traded fund?
MARCUS: It is not, Congressman.
(END VIDEO CLIP)
ASHER: And it's interesting, these hearings are actually having a bit of an impact on the price of Bitcoin. It's up slightly today after sinking 11
percent on Tuesday. It's still below $10,000.00 mark. Clare Sebastian is here to break all of this down for us. So Clare, this is a bit of a
difficult environment for Facebook, because there's so much mistrust, so much concern when it comes to privacy, user data, that sort of thing.
Did they have any more luck today, in terms of convincing lawmakers of the viability of Libra?
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: I would say a little bit, more likely. It was still a pretty hostile reception, particularly from
the Democrats. We definitely saw more of a divided down party lines today.
Facebook was compared to everything from Wells Fargo and Equifax to the Lehman Brothers. One congressman even suggested that it posed more of a
threat to the U.S. than Osama bin Laden.
So certainly, a lot of criticism, but the top Republican on the Committee said that Washington really needed to not be the place where he said
innovation goes to die. That just because they didn't understand it didn't mean they should prohibit it.
And as a result, I think we did see a bit more substance. There were a lot of questions as you saw there about what exactly this is. How it should be
used. They really seem to want to get to the bottom of this. And obviously the central question is, how should it be regulated?
But there are a lot of unanswered questions, Zain. As you saw there, David Marcus from Calibra, he isn't able to say definitively yet what exactly
Libra is and how it should be regulated. And that is the question that's preoccupying not any lawmakers and regulators in the U.S., but outside as
The G7 Finance Ministers today were united in their opposition and their concern about this. Take a listen.
(BEGIN VIDEO CLIP)
BRUNO LE MAIRE, FRENCH FINANCE MINISTER: I think that there is a need for regulation. There is a need for very strong commitments and obligations
for that project and for the time being, I think that the necessary requirements are not fulfilled by the project, Libra.
OLAF SCHOLZ, GERMAN FINANCE MINISTER (through translator): The G7 Finance Ministers and Central Bankers meeting here all have serious concerns. We
intend to examine carefully whether all current regulations are being adhered to, and whether regulations will need to be changed in the future
to ensure the stability international financial systems.
(END VIDEO CLIP)
[15:15:01] SEBASTIAN: So the concern Zain is the same as what we're hearing in Washington. They range from financial stability to data privacy
to competition. The sheer size of Facebook is what has made this such a concern for lawmakers and the overarching theme that we hear is that
Facebook shouldn't go ahead and launch until these concerns have been addressed. That is something that Facebook has promised not to do.
ASHER: And what's interesting, and I mentioned this earlier is that this is having -- this is sort of wreaking havoc with Bitcoin as well, because
essentially, all of the scrutiny surrounding Libra is forcing other cryptocurrency investors to rethink Bitcoin. I mean, they are up a little
bit today, but they were down 11 percent just recently.
SEBASTIAN: Well, it's been interesting to watch because when Libra, when the white paper came out and it was first announced back in June, you can
see from the chart there, Bitcoin went up.
I mean, a lot of people thought, you know, this would be the rising tide that would lift all boats. That Libra would be the thing that would bring
cryptocurrency into the mainstream. It would lead to comprehensive regulation. That is something that a lot of people in the crypto space
would welcome. But I think since then, we've seen such a tide of negative publicity.
We've seen the President tweeting about it. We've seen the Federal Reserve Chairman here in the U.S. expressing serious concerns. The Treasury
Secretary has called it a national security issue. I think there is a concern now that all of this could lead to excess regulation and that it's
just you know, bad publicity for the space in general.
ASHER: Clare Sebastian, live for us. Thank you so much. All right, time for a quick break here on QUEST MEANS BUSINESS.
Iran's Foreign Minister has been speaking to CNN with concern mounting that high tensions could spill over into war. Javad Zarif addresses the danger
directly and debt ceiling drama in Washington. Lawmakers race against time to seal a deal while the U.S. government runs out of money. That's next.
ASHER: "We will never start a war." That declaration coming from Iran's Foreign Minister to CNN a short time ago. Javad Zarif was asked of
tensions in the Persian Gulf could lead to a war with the United States.
(BEGIN VIDEO CLIP)
JAVAD ZARIF, IRANIAN FOREIGN MINISTER: You cannot simply disregard a possibility of a disaster. But we all need to work in order to avoid one.
There is a war going on right now. It's an economic war. An economic war against Iran targets civilian population and President Trump is on the
record saying that he is not engaging in a military war, but an economic war.
(BEGIN VIDEO CLIP)
[15:20:04] ASHER: All eyes on oil. The price of crude is slipping again today. Prices plunged on Tuesday, yesterday after President Trump said
progress had been made with Iran. Later, Secretary of State Mike Pompeo has claimed that Tehran was willing to negotiate over missiles.
Let's bring in John Defterios standing by in London for us. So John, you heard Mohammad Javad Zarif there talking about the fact that he believes
that the United States is waging an economic war against Iran.
When you look at just how dramatically oil exports from Iran have fallen, they've gone from three million barrels to 350,000 barrels. I mean, just
walk us through what the economic impact has been on Iran so far.
JOHN DEFTERIOS, CNN BUSINESS EMERGING MARKETS EDITOR: Well, I think it's fair to call it an economic war, Zain. After all, the U.S. has shut off
the faucet of U.S. dollars into that economy. It's pushed the rial down as much as 80 percent. Inflation running about half that or 40 percent, and
as you suggested here, they really squeezed Iran when it came to oil exports.
You are correct to say that their exports are hovering around 350,000 barrels a day. What does that mean for Iran? It's about $50 billion of
export earnings. But it seems to me that the Trump administration, both in the case of Iran and in China, with the trade talks have jumped the gun
here saying that both these parties are willing to sit down and negotiate.
There is no incentive on the table for Iran to do so just now. Think about it. This is the worst time for Iran to actually go into the table with the
Trump administration ahead of an election cycle. The Iranians like long negotiations, as we found out during the nuclear agreement. I could not
see a win-win coming out of it.
And in fact, the senior Gulf source was suggesting to me that they're putting too much pressure, they, the United States is putting too much
pressure on Iran. And we're going to see this lashing out taking place, and you could stumble into conflict and not just an economic war.
So if you play it out a little bit here, this could go back and forth with the United States throughout 2020 until the election, until there's enough
incentive for the Iranians to come back to the bargaining table. There's another word at play here. It's resilience.
The Iranians now just need 30 percent of the oil representing their budget right now. So they've learned to survive on very little. You can hear the
tone from Javad Zarif right there. It's not quite the time to negotiate unless they have some carrots to put onto the table.
ASHER: And John, just in terms of where oil prices have gone? The fall in price yesterday was directly linked to the Trump administration saying that
Iran was willing to negotiate. Obviously, Iran sort of counteracted that. Just walk us through why there was such a difference in opinion in terms of
where things were going negotiation-wise?
DEFTERIOS: I think a simple way to think about it, Zain, we know what the risk of Iran and U.S. conflict has priced in terms of the market, because
every time we get a hint that there's going to be a truce or negotiations taking place, we see a swing of four to five percent going downwards.
And when the tension rises, we see a gain of four to five percent. In the last three trading days, we've seen a correction of five percent. This is
a pretty fair price for crude knowing that in the second half of the year the demand is going to drop. And that's why we see additional downward
The Energy Information Administration in United States was suggesting there was a drawdown on inventories, but not very strong. Then you add on top of
it, the U.S.-China trade tensions and it could get much worse.
The other thing I would add from Iran here very quickly, Minister Zangeneh the Petroleum Minister was saying that their exports will continue
uninterrupted. We don't know what level. They didn't say where it's going. But you would think that Russia and China is supporting them, but
they're not giving any clues to the United States because they know that they're going to try to chase those exports into the Strait of Hormuz, and
some of those export markets that are still supporting them behind the scenes.
ASHER: All right, John Defterios live for us there. Thank you so much.
DEFTERIOS: Thanks, Zain.
ASHER: I want to check in with the U.S. market, the Dow is off. Let's see 76 points or so, staying in red after basically a flat open. We saw a
sliver of green in the morning, but it's been pretty much in the red all day. All three indices are now down for a second day in a row.
Wall Street is the middle of a very busy earnings week. Bank of America is latest to beat expectations. There we have it. Shares are actually up
about one and a half percent after the bank reported a record $7.3 billion in profit last quarter, thanks to strong spending by U.S. households.
Let's bring in Matt Egan. He is following it all. So, Matt, just walk us through this. Record profits. They beat in terms of expectations and the
consumer banking side was really to thank for this.
MATT EGAN, CNN BUSINESS LEAD WRITER: That's right, Zain. So I mean, if there's a recession or even a severe economic slowdown in the United
States, it is definitely not showing up in Bank of America's earnings or really any of the big banks.
As you mentioned $7.3 billion is all-time high for Bank of America in terms of profits. The whole first half of the year was actually a record and a
lot of it is really being driven by the real economy.
[15:25:01] EGAN: Bank of America said its banking profits -- its consumer banking profits were up by 13 percent during the quarter. Loans increased
by six percent which is very healthy. Deposits were up and the CEO Brian Moynihan was very optimistic. He said that he sees steady increases among
consumers. And he thinks all this points to a solid economy, even if it's growing a bit slower than it had been.
ASHER: So loans were up. However, the dark cloud on the horizon is, of course, what's going to happen with interest rates with the Fed because
loans are not going to be as profitable with interest rate cuts.
EGAN: That's exactly right. So Bank of America echoed what we've heard from the other big banks, and it came out and it lowered its outlook for
net interest income, which really is the biggest way that banks make money still.
And so Bank of America said that if the Fed cuts rates twice this year, its net interest income will only grow by one percent. That's a downshift from
earlier when they expected three percent growth.
Now, I'll point out that the Fed Funds Futures market is pricing in a two thirds chance of three cuts of more suggesting that Bank of America and all
the other banks could actually have to downgrade their earnings outlook a little bit further, all because of the volatility of the Federal Reserve.
ASHER: So one fund fact that I learned today that I did not know is that Bank of America represents one in two U.S. households. So they are very
powerful. So what does the fact that they've done so well, especially in terms of record profits, what does that tell you? You touched on this
earlier about the strength of the U.S. economy right now?
EGAN: Right. I mean, it makes so much sense to listen to what Bank of America and the other banks have to say, because they -- you know, they
talk to CEOs every day. They talk to small business owners every day. And so they have a real sense of what's actually going on in the economy.
And so I think big picture, they're saying that really, there is no severe slowdown in the economy yet, despite the trade war, despite the slowdown in
China, it hasn't really happened yet.
And so that's why it is kind of interesting that we're talking about this in an environment where the Fed is in fact, moving forward with most likely
lowering interest rates to try to help the economy.
It just -- you know, the trouble just hasn't seemed to show up in the real economy, at least not yet.
ASHER: All right, Matt Egan, thank you. European stocks ended Wednesday's session mostly lower. Fears resurfacing over unresolved trade tensions.
Ericsson shares fell 11 percent after a profit warning, but the Swiss watchmaker Swatch rallied six percent after it issued a strong guidance on
All right, merging man and machine. Elon Musk unveils perhaps his boldest plan yet saying a device implanted in your brain could stave off the threat
of AI. That's next.
[15:30:00] ASHER: Hello, everyone, I'm Zain Asher, there's more QUEST MEANS BUSINESS in a moment. When Elon Musk wants to get into your mind,
why he's trying to put chips in human brains.
And the fight to end modern day slavery. The grim numbers and the governments that are not stepping up. Before that though, these are the
headlines at this hour. Iran's Foreign Minister says U.S. sanctions on his country are a form of economic terrorism.
In an interview with CNN, Mohammad Javad Zarif warned that escalating tensions with the U.S. have made the Persian Gulf a more dangerous place
for all nations. And British Prime Minister Theresa May says politics in and out of the U.K. has descended into rancor and tribal bitterness.
Speaking one week before she leaves office, Mrs. May said politicians on the left and the right have lost the ability to compromise. She also
voiced regret if she wasn't able to get her Brexit deal through parliament. A U.S. federal court sentenced former Mexican drug lord Joaquin "El Chapo"
Guzman to life in prison plus 30 years for drug trafficking, running a cartel and firearms defenses, he also must forfeit $12.6 billion.
Now, "El Chapo" told the court his trial was unfair and that he suffered physical, emotional and mental torture in prison. And 6 million people in
south Asia are being threatened by floods. Well over 100 people have been killed in India and Nepal since the weekend. More than 2 dozen have died
in Pakistan including a 9-year-old girl who was electrocuted in a flooded street, and a 6-year-old who died when a roof collapsed.
And Puerto Rico's governor is refusing to step down in the face of growing protest over leaked messages. They reveal him using obscene, sexist and
homophobic language to mock politicians, journalists and celebrities. Officials have now summoned everyone involved in the chart to appear before
U.S. territories Justice Department.
The U.S. House Speaker Nancy Pelosi tells CNN she wants a deal on raising the debt ceiling by the end of the week as time runs out for Congress to
agree. There are just five legislative days left before the house goes on a recess. The legal ceiling on federal government borrowing currently
stands at over $20.4 trillion.
If it isn't raised by next week, the government could run out of money before Congress returns in September. Nancy Pelosi and fellow Democrat
Chuck Schumer spoke with Treasury Secretary Steve Mnuchin earlier. He told reporters they're making progress, but there's still no agreement yet on
the issue of funding healthcare for military veterans.
(BEGIN VIDEO CLIP)
REP. NANCY PELOSI (D-CA): Our concern is that the additional initiatives that had been added for veterans, whether you approve of the policy or not,
they had become the law and we need to cover them. But we are understanding each other and when we have an announcement, well, you'll be
the first to know.
(END VIDEO CLIP)
ASHER: Right, CNN's Phil Mattingly joins us now live from Capitol Hill. So, Phil, how close are we at this point to a resolution?
PHIL MATTINGLY, CNN CONGRESSIONAL CORRESPONDENT: Close, but close isn't a deal. And I think to echo a lot of people here say on Capitol Hill,
nothing is agreed to until everything is agreed to. And at this point in time, not everything is agreed to.
Now, you heard from the speaker right there, saying, it's getting a little bit in the weeds in the negotiations. You're talking about a debt ceiling,
right? The urgency is related to raising the debt ceiling which Treasury projects could be reached by the beginning of September.
Obviously, as you noted, lawmakers are going to be out of town for the entire month of August. But in order to get a debt ceiling agreement, you
also need an agreement on the budget. The reason lawmakers want to get together and agree on a budget change is they're trying to force all $124
billion in automatic spending cuts that would occur in January of next year.
So, that's the piece that actually brings the two sides together. Republicans on Capitol Hill don't want those automatic cuts on defense
spending. Democrats don't want them on domestic spending and the debt ceiling kind of slides in there as well.
So, that's the negotiation dynamic at this point in time. The real question is, can they get what they call parody? Where the defense spending
increases are equal to the domestic spending increases. Both parties are happy and then you add the debt ceiling on top of it.
[15:35:00] The problem as you noted is the timeline. The change in Treasury's projections has added the urgency to these negotiations right
now. That's what's sparking the continuous phone calls back and forth. Speaker Pelosi has now spoken to the Treasury Secretary by phone who is the
point person for the administration on these talks nine times in the last seven days.
They want to get something done, they want to get it done by the end of the week so they can vote on it by next week, but they're not quite there yet,
ASHER: And are we likely to see a shorter term deal passed instead?
MATTINGLY: So, what's been interesting is the speaker has repeatedly -- I've asked her repeatedly if she's open to that, said, no. She's not open
to that, she wants the long-term two-year agreement, the sweeping agreement, budget and debt ceiling. But here's the reality, that's the
negotiating position and she's not going to pull off of that so long as that is kind of the cajole to some degree to get the administration to
agree to domestic spending increases.
When it comes down to an actual negotiation, if they get to the end of this week and there's no agreement, I'm told from people that are actually
involved in these negotiations, a short-term agreement is likely, a short- term solution here, pushing the debt ceiling off a couple of months, pushing the budget off a couple of months is certainly in play.
They're not there yet, but if they have to find an off-ramp, that is certainly an option. One thing all lawmakers of all parties agree to right
now, they don't want to mess around with the debt ceiling, and given the fact they're going to be gone for the entire month of August, that pretty
much means they're going to have to do something before the house leaves next week, Zain.
ASHER: And Phil, in other Washington drama, one Democratic Congressman Al Green has actually introduced articles of impeachment --
MATTINGLY: Yes --
ASHER: Against the president. Walk us through that because the house now has to look at this closely.
MATTINGLY: Yes, never a dull moment around here. So, look, Speaker Pelosi has made it very clear the Democrats who control the United States house
aren't ready to pursue an impeachment inquiry yet. Al Green; the Congressman from Texas, a Democrat has multiple times over the course of
the last several months try to bring up his own impeachment articles and force a vote on them.
When he does that, the house is required within two legislative days to consider those impeachment articles. That's what will be happening here in
a couple of hours. Now, Democratic leadership has made clear, they are opposed to this pathway, and they are going to try to essentially sink one
of the members of their own caucuses efforts to impeach the president because as the speaker has laid out, that is not the path that they want to
go down just yet.
Now, what I'm being told right now is they have the votes to table or basically kill what Al Green is trying to do here, but what it will do is,
it will force all Democrats on the record, on this issue that is so divisive within their caucus, is divisive within their party, and that will
be an interesting tally to watch.
Again, the president is not going to be impeached tonight, the impeachment resolution isn't going to pass or get anywhere close to passing tonight,
but you will have Democrats have to go on the record on this issue, there's a lot of Democrats saying, we just don't want to take that vote right now.
ASHER: All right, Phil Mattingly live for us there, thank you so much, appreciate it. So, my next guest says the haggling over the debt ceiling
is a reminder that U.S. borrowing is on an unsustainable path. The U.S. deficit has hit $1 trillion for the first time since the financial crisis.
Maya MacGuineas is the president of the Committee for Responsible Federal Budget, she joins us live now.
So, Maya, $1 trillion. What are the long-term consequences for our great grandchildren of that?
MAYA MACGUINEAS, PRESIDENT, COMMITTEE FOR RESPONSIBLE FEDERAL BUDGET: Here, it doesn't -- we don't need to look as far as our great grandchildren
to worry about what's going on because our deficits and our debt are now so large and on such an unsustainable path, this is going to have direct
effects on us, let alone our children and grandchildren.
We are now in a cycle of borrowing where there is almost no discussion of when it comes to new priorities how we should pay them, what kind of budget
we should put in place. Instead, we have a debt that is the highest it's ever been in this country since we fought World War II, relative to the
economy, the debt relative to the economy.
And worse, it is projected to continue to grow by another $12 trillion over the next decade. Borrowing a trillion dollars a year when the economy is
so strong as it is now is absolutely the opposite of what we should be doing. So, yes, this debt ceiling, which absolutely must be increased and
in fact, we've known about this deadline for months, it should have been increased months ago, but it should go hand-in-hand with a thoughtful
responsible plan to gradually bring our debt down.
Instead, what we're hearing from our political leaders is that they are entertaining ideas that would increase the debt ceiling along with a plan
to increase our national debt even further.
ASHER: So, here's my question. How does the -- when, I should ask, will the average American actually feel the impact of this? Because when you
look at the headlines, the business headlines, it will say that, listen, unemployment is at record lows in this country.
You've got GDP obviously doing well in the United States, even though there has been in the past, some talk of recession, a lot of people are saying
the U.S. economy by all measures is doing relatively well right now. So, in terms of the average American actually feeling the impact of $1 trillion
in U.S. deficit. When will that be?
[15:40:00] MACGUINEAS: Yes, it is the greatest question, and it's kind of the biggest struggle that there is, trying to get people to understand the
importance of paying our bills, not borrowing in an unsustainable way and making the hard choices that would fix the debt. I think the national debt
in many ways is kind of like germs in the air where you can breathe them in, you can either become sick quickly or more gradually.
But you don't see them, you don't know that they're happening. And that's really the same situation with this ongoing borrowing. It weakens our
economy, but you don't know that it's coming from the debt. It weakens our budget, in that right now, interest payments are the single fastest growing
part of the budget.
We will spend more on interest next year than we do on children. We will spend more on interests in five or six years than we do on national
defense. Those things erode our budget, but people don't really notice them, certainly, it doesn't become a kitchen table issue.
ASHER: So then why -- I'm sorry, go ahead, you can finish your thought, I'll ask the question --
MACGUINEAS: Well, it means that we're weaker when we hit the next recession, and importantly, I think it means we're a weaker nation. There
are so many threats on the horizon from different forms of national security threats to changes in technology and the economy that demand a new
And we are not addressing any of them because we are so over-indebted. But to your point, the average consumer just doesn't feel that in a daily way,
and therefore there's no real political pressure to make the necessary changes.
ASHER: Yes, and in this climate, especially as we gear up for 2020, on both sides of the political aisle, this is no longer an issue that either
side cares about. I mean, it used to be the Republicans, but now the Republicans obviously pushing what we have now, lower taxes, lower
corporate taxes. And then the Democrats of course have moved so far to the left in terms of offering free college tuition or promising Medicare for
all, free healthcare, universal healthcare, that sort of thing.
So, given this climate, where do you see the debt in 20, 30 years from now?
MACGUINEAS: Yes, you hit the nail on the head right there because this is really a competition between two parties to promise more free lunches. Tax
cuts will pay for themselves -- no, of course, they will not. But we didn't pay for them when they passed them. But you can have all these
things for free when there's really no such thing as a federal -- when the federal government is giving something.
There's no such thing as free, it means either we pay for it or we ask the next generation to. But this really reflects a brokenness of our system of
government right now where toxic partisanship has become far more important than good-policy making, and as a result, I fear, unless we either have
some really strong political leadership that emerges which is certainly what I hope or some kind of external push, either hike in interest rates or
other countries not wanting to lend to us as much that forces this upon us.
I fear we will continue borrowing so much that down the road, as you were talking about, our economy will be so much weaker than it would otherwise
have been, our standard of living will be lower, jobs will be fewer, and we will really erode the health of this country and leave us more vulnerable
internationally in a way we never should have done.
But it is just the slow boiling away of kind of an economic health that we had and we're squandering.
ASHER: Maya MacGuineas, thank you, always good to hear from you, appreciate that --
MACGUINEAS: Thank you.
ASHER: OK, so naming and shaming. The countries that don't do enough to combat modern day slavery. Up next, I'll speak to the mining magnet about
to push to end forced labor. That's next.
[15:45:00] (COMMERCIAL BREAK)
ASHER: Ten thousand people a day according to a new report, that's how fast victims of slavery need to be freed from their bonds if modern day
slavery is to be ended in the next decade. The Walk Free Foundation isn't optimistic it's going to happen. It says that many governments are failing
to take action.
It accuses Qatar, Singapore, Kuwait, Brunei, Hong Kong and Russia of doing little to address the problem, especially considering their relative
affluence. Andrew Forrest is the co-founder and chairman of the Walk Free Foundation. He's also chairman of the Fortescue Metals Group, and joins us
live now from the UN. Andrew, thank you so much for being with us.
Can I just ask first of all, why is this a personal issue for you?
ANDREW FORREST, CHAIRMAN, WALK FREE FOUNDATION: It's deeply personal because I've seen slavery with my own eyes and the trafficking of children
up into the gulf states out of Nepal. I've experienced very severe slavery, forced slavery of adult males in the Middle East, making goods for
my company and companies all around the world who all have slavery in their supply chains.
When I discovered this in my personal life and my corporate life, there's slavery all over the world.
ASHER: So what should other companies -- I mean, that's very honest of you to come forward and admit that there was slavery in your supply chain.
What should other companies who are dealing with the same thing do about it?
FORREST: I think don't be scared of it, just go looking for slavery in your supply chains, and when you find it, it's because you looked for it,
not because it wasn't there, it's because you looked for it and you found it and celebrated. Do not be afraid. I've spoken to so many American
entrepreneurs -- European entrepreneurs that are scared of finding slavery in their supply chains. Look for it, the shareholders will congratulate
ASHER: So, are you optimistic that we as a society can actually bring modern day slavery to an end whether it's in 30 years, 50 years, a 100
years, given just how much money is made from it? It's one of the most profitable industries in the world.
FORREST: Yes, it's profitable in an extraordinarily negative sense. It made $300 billion a year, but it causes trillions of dollars of misery.
So, the equation is completely wrong. What I know for sure is that you and I will be able to tell within six to nine months which countries will be
able to end slavery by the time they all declare to each other globally they'll end modern slavery by 2030.
It's been six to nine months, if they haven't done a national survey to inform themselves of exactly what slavery they have in their countries,
they don't have a hope in -- christen(ph) -- to ever end slavery by 2030.
ASHER: So, which countries are actually doing -- I mean, I want to start with the positive. Which countries are actually doing the best relative to
their net income or relative to their GDP in terms of actually fighting to end modern day slavery?
FORREST: Well, you know, you actually have some really good African countries, you have some smaller European countries, you certainly have
some Asian countries, but the ones which are leading from the front that I'd have to say would be Britain, North America is doing a great job, but I
would like to, if I -- with your permission, just change that situation a little.
The ones we know will end slavery by the drop date they've all promised to 2030 will be those who conduct the modern slavery surveys which walked
free, with now the full endorsement of the (INAUDIBLE) have demonstrated it can be done. This is intellectual property which has taken us tens of
millions of dollars and many years to develop, they made it available free to the world, and this can inform governments right across the board.
If they do the surveys, they own the surveys themselves, what they have to do in the next 10 years to end slavery. Now, if they don't do that then,
you know they're not serious. They're just playing around, lip service to their citizens, they weren't serious. So, let's watch who does it.
ASHER: And as the most powerful country in the world, where I am, the United and where you are actually, the United States, there's a huge
responsibility, but the immigration laws in this country are actually getting tougher which might make it harder for those who come here
illegally, just in terms of their vulnerability to human trafficking.
[15:50:00] I mean, just walk us through what the U.S.' role and responsibility is in fighting this.
FORREST: OK, so right back to Abraham Lincoln's days, we have a job to finish. In the United States, I know for sure if you do a survey across
your nation, you'll identify exactly what areas need to be -- need to be addressed. You've got 10 years, that will pass in a flash.
In the several centuries in which the U.S. has tried to defeat slavery, you've got ten years in which you can actually crack it and bid it. Now,
with the immigration, to answer your question specifically, I understand that all countries want their laws obeyed, want their borders secured and
to have proper healthy immigration policies.
But what I say to everyone on every border including the United States, train your people, it will take you like 25 minutes if people listen.
Train your people on how to detect those fellow Mexicans, Americans, go wherever you're from, you know you all immigrated to North America some
time in our history unless you're an Indian.
Look for those people who are vulnerable. You can recognize it in 25 minutes of training, those who are vulnerable to slavery, bring them out of
the line and talk to them. You'll be able to tell in five minutes. Are you enslaved? Are you here by force? Are you incredibly vulnerable?
The rest, you know, you can -- you can take your own action on, but in 25 minutes training, every immigration enforcement officer will be able to
detect someone who is vulnerable to or is a modern day slave.
ASHER: Andrew Forrest, thank you so much for fighting for such an important cause. I appreciate you being on the program. Thank you.
FORREST: And CNN have been such legends and I thank you.
ASHER: Thank you so much, thank you, OK, take care. Still to come, Elon Musk wants to get inside our brains with an implant he claims could make us
telepathic and actually reverse serious brain injuries. Musk insists it's not science fiction, it could actually be a reality, that's next.
ASHER: Roads, space and now our brains. Elon Musk has unveiled perhaps his boldest plan yet, inserting implants into a human brain that he claims
could actually enable telepathy and stave off the threat of AI. Ahiza Garcia joins us live now from San Francisco.
So, is this project philanthropic for Elon Musk in terms of wanting to be of service to humanity or is it commercial? Walk us through that.
AHIZA GARCIA, CNN SENIOR BUSINESS TECH WRITER: I think it's a little bit of both, right? I think that part of the stated goal right now is to help
people with medical needs, right. People who are paralyzed who might benefit from having this type of procedure done to their brain.
[15:55:00] But I think at the end of the day, there is the hope that this will take on a commercial element, and that people looking for a memory
boost could benefit from this procedure as well. Elon Musk as we know is you know, definitely a commercial-minded entrepreneur, so I think that
that's not quite a reach to think that there are dual implications here.
ASHER: Something about this just seems so scary and futuristic. I mean, walk us through -- do we know what the risks are for something like this?
GARCIA: So yesterday, there was a presentation and one of the doctors working with Elon Musk's company was talking about how this is actually a
less invasive procedure. He does this similar procedures on patients and because of the fact that the thread is so thin, it's actually potentially
So there's less risk that, you know, there might be ramifications from the procedure. But obviously, any time you're, you know, dealing with the
brain, that's a very unknown territory in many ways. And so there is with any surgical or invasive procedure, definitely a risk associated with that,
that people would want to, you know, take into consideration.
But for someone with a medical need, this might offer the chance to, you know, in some way, alleviate some sort of paralysis or -- you know, those
are some of the claims they're making, so maybe the risks would be worth it for someone in dire medical need.
ASHER: Right, so there's a good side to it, but I have to say, I'm probably not going to be in a rush to sign up. Ahiza Garcia, thank you so
much, appreciate it --
GARCIA: No --
ASHER: Final moments left to trade on Wall Street, we'll have the final numbers and the closing bell right after this break, don't go away.
ASHER: We're just moments left to trade on Wall Street. We are halfway through a major earnings week, it is a lackluster day across the markets
though, the Dow is down 100 points or so, the S&P 500 and the Nasdaq are both down slightly as well.
As I mentioned, we have been pretty much in the red all day. So, let's look at the Dow components more specifically, Boeing and Caterpillar are at
the opposite ends of the index. And beyond the Dow, Netflix is actually set to report earnings after the bell. And that is QUEST MEANS BUSINESS, I
am Zain Asher in New York, "THE LEAD" begins right now, you're watching CNN.