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Trump Faces Backlash After Ousting Another Watchdog; Fed Chair Speaks of Economic Recovery; Tourism Industry at Standstill; Covid-19 Endangers Black Colleges and Universities. Aired 9:30-10a ET

Aired May 18, 2020 - 09:30   ET



JIM SCIUTTO, CNN ANCHOR: You had the intelligence community inspector general, Michael Atkinson, he was removed and, he's, of course, the one who alerted lawmakers to the first whistleblower complaint of the Ukraine call and alleged quid pro quo. The Department of Defense Glenn Fine, he was going to oversee the pandemic stimulus bill pushed out and the HHS IG, Christi Grimm, she'd reported that hospitals were struggling to respond to the coronavirus.

Are you concerned about this pattern at all?


What I think you need to understand and what I think the public needs to understand is what the role of the inspector general is. It's to root out waste, fraud and abuse. And, really, what the job is statutorily is to deal with waste of money within the agency. And let's remember, these inspectors general report to the agency head, they do not report independently to anyone else. They do not report to Congress. They report to the agency head to tell the agency head when money is being misspent within the agency.

They're also removable at will by the president of the United States. Of course, there is a notice provision, only for those that are confirmed by the Senate. So up until Linick (ph), the other folks who had been dismissed were folks that were not confirmed by the Senate and were serving in an acting role.

And you know I have to --

SCIUTTO: Well, maybe that --

SCHULTZ: I have to note that Obama kept most of his -- most of his inspectors general were in acting roles just for that purpose, so that they didn't have to go through a process of notifying Congress.

SCIUTTO: OK, well, you know as well as I that there are a number of acting officials in the Trump administration. But I want to give you Republican Senator Chuck Grassley's response to this. He says, quote, a general lack of confidence simply is not sufficient detail to satisfy Congress. And I'll just remind you that the whistleblower law was actually enhanced in 2012, initially passed in 1998. But when it was passed with specific protections for inspectors general to be independent, it was passed by unanimous consent. I mean there was -- there was no one Republican or Democrat who voted against that.

SCHULTZ: No, no, it wasn't passed that they are an independent fourth branch of government, Jim. That's absolutely wrong. They report directly to the agency.

SCIUTTO: I didn't say independent fourth branch of government. I said that they have independence. That's the nature of the role, right, that -- that they're not designed to do what the president wants them to do.

SCHULTZ: The nature of the role is that they have to be free to investigate -- investigate within that narrow focus of waste, fraud and abuse within the agency. These folks are not independent prosecutors. They -- they're not law enforcement. They are -- they are folks deemed within the agency with the job of -- of rooting out waste, fraud and abuse. And that's the job.

And to the extent that you have to notify Congress, that's the provision that you have to notify Congress and there's -- that you're dismissing these folks, which makes sense because of the -- of the role that they play and the fact that they were confirmed by Congress.

SCIUTTO: Would you, as a lawyer, be uncomfortable with, for instance, the secretary of state, Mike Pompeo recommending the removal of an IG who was conducting an investigation that involved him at the same time? Would that present a conflict of interest to you?

SCHULTZ: Look, this is a -- look, we don't -- we don't know what the context of that was. And I have to tell you, Jim, at this -- at -- I'm not concerned about that at all, and here's why. The issue here is -- I'm sure there's complaints that are made day in and day out within the -- within that department relative to a number of high-level officials. You can't be hamstrung with running your agency. And earlier you said that, you know, your -- the commentator before me said they've run an agency. They don't run anything. They report to the secretary.


SCHULTZ: And in this particular instance, I'm sure that there have been complaints made, but you have to have the freedom to run your agency and move people along that you want to move along.

SCIUTTO: Well, what's wrong with, for instance, the HHS inspector general, in the midst of a pandemic, saying that hospitals were struggling with shortage of testing supplies? Why is that a problem?

SCHULTZ: I don't know, Jim. I think -- I think the question becomes, what -- who do they want in that job during the pandemic.

SCIUTTO: She was removed. She was removed following making the complaint.

SCHULTZ: And I got to tell you, what -- what that -- what does that have to do with waste, fraud and abuse within the agency? Could you tell me that?

SCIUTTO: Why wouldn't that be -- well, the -- if the inspector -- well, the definition of that, even according to Republican senators, includes more than your very narrow definition. But, remember, she was removed immediately after making a complaint, not a complaint, just raising alarm about a shortage health supplies, which is a fact. What-- why would --

SCHULTZ: Well, what does that have to do with how the -- how the agency is spending its money? The bottom line, Jim, is they have the right --

SCIUTTO: So you think she should have been removed for that?

SCHULTZ: They have the right to remove those inspectors general. That person was sitting in an acting role. And that -- and Obama put a lot of those folks in acting roles and didn't have them confirmed. So there's nothing new here. Folks get moved around.

SCIUTTO: Well, didn't remove them, though.

SCHULTZ: Now, you know, it happened in the Reagan administration. Obama dismissed some. Bush dismissed some. Came under some fire for it. Of course Congress is going to raise an eyebrow when inspectors general get dismissed.

SCIUTTO: Yes. Well --

SCHULTZ: That's part of politics in Washington.

SCIUTTO: Not on a series of late Friday nights, I mean, to be fair.

But, Jim Schultz, always good to have you on.

SCHULTZ: Well, let's not make it look like a massacre, Jim. This person need -- want -- they wanted to remove them. They removed them on a Friday afternoon. I'm sure there's a lot of companies that remove -- private sector companies and government agencies that remove people on a Friday afternoon.


All right, we'll let the viewers make their own judgment.

Jim Schultz, thank you very much.

SCHULTZ: Thank you. Take care.

POPPY HARLOW, CNN ANCHOR: Jim Sciutto, thank you for laying out the facts there and pushing ahead on that. It's really, really important.

OK, the tourism industry is reeling, as we all know, as this pandemic forces millions of Americans to stay at home. The CEO of Best Western, right, you know those hotels, they'll all across the country, he's with us next.


SCIUTTO: Well, the market's reacting positively to news this morning of progress on a vaccine, a possible vaccine. Early stage trials showing that it's working in a small number of people.


Of course, a long way to go there, but the market watching closely and reacting very positively, up more than 3 percent.

HARLOW: Yes. For sure.

SCIUTTO: Ford, General Motors and Fiat Chrysler, they're resuming production at plants around the country today. That means that tens of thousands of assembly line workers, and this is good news, Poppy, back on the job.

HARLOW: That's great news. We wish them a lot of luck.

At the same time, Fed Chairman Jerome Powell is warning an economic recovery could take a long time. It could stretch through the end of 2021.

Our chief business correspondent Christine Romans joins us now.

And, Christine, just the fact that he spoke to "60 Minutes" last night --


HARLOW: And sort of made the plea to Congress that he did, I think, says a lot.

ROMANS: Yes. I mean this is the second time in a week, right, that he has specifically said there might need to be more work to get this recovery going in the American economy. And he said, look, in the long view, you know, don't bet against the United States of America and the American economy. This isn't a housing bubble. This isn't a financial crisis. This is something different. The economy was strong headed into this and the economy can be strong again but it will take time.



JAY POWELL, CHAIRMAN, FEDERAL RESERVE: Assuming there's not a second wave of the coronavirus, I think you'll see the economy recover steadily through the second half of this year. So for the economy to fully recover, people will have to be fully confident. And that may have to await the arrival of a vaccine.

(END VIDEO CLIP) ROMANS: Getting back to that fully confident could take he mentioned maybe the end of next year. Confidence, of course, is key here. And the very near term, the right now, he acknowledged that people -- it's hard to put in words the damage this has done to American families and to people's livelihoods, and that we need to keep the money flowing so that people can stay in their homes, they can pay their bills, they can stay solvent for American families. That's the most important thing, Poppy.

HARLOW: Of course. Christine, thanks so much for that.

Today, on that front, the president is meeting with restaurant industry leaders at the White House. Restaurants and hotels, as you can imagine, have been among the hardest hit sectors during this health crisis as millions of Americans stay home. The tourism industry remains pretty much at a standstill. President and CEO of Best Western Hotels David Kong is with us.

And, David, it's nice to have you.

So people understand, I mean they know your hotels. They see them in the U.S. and around the world. But you've got about 40,000 employees of those hotels, not to mention your corporate workers. I understand about 70 percent of those hotel employees by franchisees have had to be furloughed.


HARLOW: Where -- where does this industry stand even a year from now? Do you envision a future in the near term where you can get even back to full employment?

KONG: I think it's going to be a long haul. The reality is unless there's a vaccine and there's otherwise some comfort that we can instill in people, a lot of travelers are going to be very hesitant to travel and -- especially on the corporate side. That segment is particularly hard hit. And so imagine these big conventions with thousands of people, a lot of companies are not going to want to hold them.

HARLOW: Yes, no question.

So you -- you met and spoke with the president back on March 17th and you talked to him about the need for capital and liquidity. And this was before the PPP program. And I just wonder if you think that the PPP program solved the problem you were explaining to the president or if you agree with Mark Cuban, who tweeted yesterday, quote, it's time to face the fact that PPP didn't work. Great plan, difficult execution. No one's fault. The only thing that will save businesses is consumer demand.

Is he right?

KONG: I absolutely agree with him. The PPP was a much needed band aid for the problem. But the reality is, it's only about eight weeks of relief. And if you think about how long the recovery is going to be, it's going to take much, much, much longer than that.

So the best thing that the government can do is to provide some flexibility in the loan and also extend the coverage period and provide much needed additional funding.

HARLOW: You're saying --

KONG: The reality is for the hotel industry, which is the first to be hurt by this pandemic, it's going to be the last to come out. And the hotel industry is different than a lot of the other small businesses, like barber shops or restaurants. The loan structure for our business is so different. You think about the debt service, how much you have to pay in interest and principle, it is so much higher than the payroll. So the restrictions placed by the PPP doesn't really help our industry too much.

HARLOW: Wow. Well, that's a scary thought because the administration has bet so much on PPP, helping lead to what they're saying will be likely a v-shaped recovery. And that doesn't seem very certain at all.

So people understand, you are a big corporation, but your franchisees, in many ways, are small business owners.


One of them in York, Pennsylvania, said recently, at the end of the day, we're not Wall Street guys, we're small businesses. It is unreal, unregulated market with pitfalls that can break us.

And then listen to what we heard on that front from the chairman of the Federal Reserve last night.


JAY POWELL, CHAIRMAN, FEDERAL RESERVE: People who are getting hurt the worst are the most recently hired, the lowest paid people. It's women, to an extraordinary extent. Of the people who were working in February, who were making less than $40,000 per year, almost 40 percent, have lost their jobs in the last month or so.


HARLOW: The poorest people are getting hurt the most. And a number of, you know, the people that work as housekeepers, for example, in your hotels, et cetera, those are people that are losing jobs and among the lower paid.

What can be done for them, for example? Do you think that your franchisees should be paying those that are still there hazard pay, more money to be on the job?

KONG: Well, certainly we feel badly about all the people that are impacted by this pandemic. The reality is, if you look at the statistics from the Bureau of Labor Statistics, the hospitality sector lost 7.7 million jobs. That's more than construction and manufacturing, retail, education, and health services combined. So the burden on the industry is absolutely tremendous.

The help that we can provide for our employees who are working at the hotels is really to look after them in the sense and provide them a safe and healthy environment. So we are providing the personal protective equipment. We are adopting clean practices where there are sanitation stations throughout the hotel and in the back room. I encourage them to wash their hands frequently. We ask them to take their temperature before they come to work. And if they feel they are not well, then, please, feel empowered to stay home.

HARLOW: And, David, just on that last point, if they don't feel well, feel empowered to stay home, that's in the new principles that you guys outlined on your website for employees.

Can I just -- yes or no to this finally, are those employees who stay home because they're not feeling well fully compensated or are they going to miss pay?

KONG: For the most part they -- they have sick pay, for the most part, and the government has really programs also for people that are infected with Covid. So they -- they are -- they are safe in that for them.

HARLOW: OK, yes, I just think it's a key question, if you're encouraging them to stay home, they shouldn't have to choose between a paycheck and, you know, and coming into work not feeling well.

Thank you very much and good luck to everyone who relies on your company for employment, David.

KONG: Thank you very much.

SCIUTTO: Yes, real sobering outlook there for the economy.


SCIUTTO: Well, colleges and universities nationwide, another impact of this. They've had to temporarily close campuses, move many classes online. But the impact of the pandemic on historically black colleges and universities in the U.S. could be even more harmful and more long- lasting. CNN is going to take a closer look.



SCIUTTO: Well, many colleges and universities across the country are facing huge financial losses in the billions.

HARLOW: But the coronavirus pandemic is pushing some of more than the 100 historical black colleges and universities to the brink of financial ruin. A few could be in danger of closing permanently. And that's hard to imagine.

Our Laura Jarrett reports.


QUINTON T. ROSS JR., PRESIDENT, ALABAMA STATE UNIVERSITY: What happened during this pandemic, and the escalation, it really exposed inequities that have already and always been known.

LAURA JARRETT, CNN JUSTICE CORRESPONDENT (voice over): For decades, historically black colleges and universities have been a beacon of opportunity for minorities.

ROSS: We have been a shelter and are a shelter for many students who are first generation students.

JARRETT: But college presidents say Covid-19 has put HBCU's financial footing in jeopardy, in ways unlike other schools in higher ed.

MAKOLA M. ABDULLAH, PRESIDENT, VIRGINIA STATE UNIVERSITY: We're all in the same storm, but we're not all in the same boat.

DR. WAYNE A.I. FREDERICK, PRESIDENT, HOWARD UNIVERSITY: The situation is ten times worse.

JARRETT: With classes moving online and schools issuing substantial refunds for room and board, HBCUs says they've had to adjust dramatically, and it hasn't been cheap.

ROSS: Basically, when we had to rush to try to provide and undergird (ph) ourselves with technology, in the realm of technology, many of the infrastructures are not up to par.

JARRETT: But without deep endowments and large cash reserves, tuition fuels operations at HBCUs.

ABDULLAH: We are largely dependent on the level of financial aid help that our students can get from the Pell grant, from the state and from philanthropy.

JARRETT: And many of the lower income families they serve are now grappling with their own financial hardships in a down economy.

FREDERICK: We have $12 million of uncollected tuition.

JARRETT: Last month, the Department of Education directed nearly $1.4 billion in additional funding to minority-serving institutions. That, on top of nearly a billion already earmarked under the CARES Act. But some HBCUs have warned lawmakers, the situation is dire and more is needed.

ABDULLAH: We are very concerned that without the adequate federal and state support that many institutions that serve the underserved might not be around afterwards.

JARRETT: Presidents like Dr. Wayne Fredrick of Howard University remains optimistic. He's seen a notable uptick in enrollment numbers for the coming fall.

Still, the big unknown is what happens if students can't return to campus culture?


FREDERICK: One of the reasons you come to Harvard is because 20 percent of what you're going to get is an excellent education in the classroom, but 80 percent of the time you spend is going to be outside interacting with people, interacting with the cultural, the experience. And so taking that away is problematic.


JARRETT: Jim, you know even when the economy is good, fundraising for HBCUs can be challenging as they compete against larger schools for those big, philanthropic gifts. But HBCU presidents tell me now, with the economy where it is, that's going to be an even greater challenge as they move forward.

SCIUTTO: With long-term consequences possibly.

Laura Jarrett, thanks very much.

Well, we do have some hopeful developments in the search for a vaccine for coronavirus. A biotechnological company announcing positive results in a new trial, along with the NIH. We're going to have the latest on that news coming up.