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At This Hour

Inflation Slows for the First Time since August; Ukraine Retakes Villages near Kharkiv; Mixed Results for Trump-Backed Candidates. Aired 11-11:30a ET

Aired May 11, 2022 - 11:00   ET

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


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KATE BOLDUAN, CNN ANCHOR (voice-over): Hello, everyone. I'm Kate Bolduan. Here is what we are watching at this hour.

Inflation remains painfully high. A new report, though, shows some signs of easing.

What can the White House do to really turn things around?

And prolonged war: that is what American top spy chief said Putin is ready for. This morning, though, Ukraine claiming several victories against the Russians.

And an unbelievable landing: a passenger forced to land the plane when his pilot becomes incapacitated. The incredible story of how it all happened. That's ahead.

Thank you for being here. Let's begin with the news on the economy. Good news, bad news, something in between possibly. Inflation in the U.S. easing slightly in April. Consumer prices rose 8.3 percent. Lower than the price pain that we saw in March.

But still very clearly painfully close to the 40 year high. Today's report marks the first time the inflation rate fell in eight months but still not good out there. Sky high prices in all major sectors and every aspect of life.

President Biden this morning called inflation unacceptably high in a statement he issued and also says inflation is now his top domestic priority, as the economy faces unprecedented challenges, from the supply chain to the war in Ukraine. Let's begin at the White House this hour. CNN's John Harwood is there.

John, walk us through this.

JOHN HARWOOD, CNN WHITE HOUSE CORRESPONDENT: Well, look, inflation is President Biden's top domestic priority, his top domestic problem as well. As you indicated, Kate, there's good news and bad news in this report.

The good news is that inflation does appear to be peaking and moderated a bit from the last measure. The problem is, it's peaking at a pretty high rate.

And the question is, how rapidly does that come down?

Does it come down steadily over the course of the year to the 3 percent to 4 percent range?

That would be positive but there's no assurance that that is true, especially when you look at the inflation in services. You know, goods inflation tempered a little bit. That's where people spent all the pandemic checks when they were cooped up.

Now people are out consuming services more, which are a larger part of the economy. That is pushing the inflation rate up from that side of things. So it is a big challenge for the administration. I think most economists believe that inflation will come down this year.

The question is, how fast?

BOLDUAN: Absolutely. It's good to see you, John. Thank you so much for that. I really appreciate it.

Joining me now for more on this is Heather Boushey, a member of the White House Council of Economic Advisers.

Heather, thank you for coming in.

This is the first time prices are easing month over month since August.

So is this good news?

HEATHER BOUSHEY, WHITE HOUSE COUNCIL OF ECONOMIC ADVISERS: Certainly when you look at the top headline number, you do see the slowdown. So that's better than bad news.

But I'm a little hesitant to call it good news because we don't know, of course, where it will go in the next few months. And when you look under the hood, we see price increases across the economy.

As the president laid out in the speech yesterday, this is a top priority for him. He has a series of policies both in place and things he aims to do to bring inflation down. And we know, of course, high inflation is hard on families.

But it was good to see families got a little bit of respite last month in terms of rising gas prices, though they have since come back up. But we continue to do our part to address inflation.

BOLDUAN: Is it your view, Heather, that inflation has peaked?

BOUSHEY: Well, I think it's too soon to tell whether or not it's peaked. At the Council of Economic Advisers, we never want to make too much of a deal about any one month of data. Certainly, again, it is good that the pace is decelerated relative to last month and we are hoping that we can work our way through this. Here's the thing: we know that this inflation is with us today

because of the fact that we're recovering from an historic pandemic that has led to these supply chain challenges. We know that, around the world, the COVID virus is still raging and that that is leading to ongoing supply chain challenges.

And of course, the war in Ukraine that Putin is waging is having an effect on energy prices in particular. And so, you know, the outcomes of both of those trends really are going to help shape this trajectory in the near future.

BOLDUAN: The trend clearly matters and you're not going to say yet if this inflation has peaked. Maybe in another month, you'll have a better view on that.

[11:05:00]

BOLDUAN: If this does mark the peak, how fast or slow do you expect the fall down to Earth once again for prices?

BOUSHEY: Well, again, it depends on, you know, where we go with the ongoing supply chain challenges, what happens in Ukraine, what that means for energy prices, which is such an important component of family incomes.

But here's the thing. There are a number of things that are happening alongside of this. First of all, we do not comment on Federal Reserve policy. Dealing with inflation is their purview. But they are taking concrete steps at this point.

And, of course, the president has put in place a variety of policies to contain price increases and would like to do more.

He is -- you know, yesterday, he talked about how he wants to work with Congress to lower prices facing families, to make sure we're on a path to energy independence, to keep those costs down over time and to make sure we're lowering the deficit, continuing to lower the deficit on top of what happened last year through making sure that the wealthiest pay their fair share.

These are all going to affect the trajectory of prices in the future.

BOLDUAN: How much can be done?

How much any administration can do?

That remains a bit of a question. You're talking about what the president was speaking to in his remarks yesterday. He also, President Biden, is also trying to draw Republicans into this conversation over inflation and what can be done or cannot be done, as the conversation shifts toward the midterm election.

His message, a very clear one yesterday. Let me play some of his speech.

(BEGIN VIDEO CLIP) JOE BIDEN (D), PRESIDENT OF THE UNITED STATES: It's the ultra MAGA agenda. The other path is the ultra MAGA plan put forward by congressional Republicans, to raise taxes on working families.

But the fact is, congressional Republicans, not all of them but the MAGA Republicans are counting on you to be as frustrated by the pace of progress, with everything they've done, everything they can, to slow down. But you're going to hand power over to them an enact -- so they can enact their extreme agenda.

(END VIDEO CLIP)

BOLDUAN: It does feel like we're hearing a couple of things. It's either the administration can do something about inflation and then the Republican plan to combat inflation will hurt, from the administration's position.

Or this entire thing is a result of so many external factors that are out of the administration's control, like supply chain issues, like Putin's war.

So which is it, Heather?

BOUSHEY: Well, here's the thing. There's a lot that we can do in the presidential administration, something you can do around the supply chains but it requires some of the bigger things, collaboration with Congress.

And that requires, you know, getting to those 50 or 60 votes to get things passed. And this is where, you know, we've really seen things fall short. The president has a plan to, for example, lower the price of prescription drugs. That would help families ease their cost burden.

But the Republicans don't want to come to the table on that. Similarly, the president has had a robust plan to put America on an energy independence path that would help to lower Americans' energy costs. It would help to make sure we are not at the whims of autocrats like Putin and wars he wants to wage in terms of our reliance on his oil.

And yet, we have not seen that legislation get through Congress. Or, for example, the president has said he wants to lower the prices of child care and home care for families. And again, that has not made it through.

So there's a lot of specific things that the president is called on that are very important, yet at the same time, we've seen that the Republicans have put forth a plan that just aims to increase taxes to the tune of about $1,500 a year on middle class families.

So I think that what the president really wanted to point out yesterday is that they don't have a plan to fight inflation. And he has put ideas out there that would concretely help American families cope with the challenges of the ongoing pandemic and cope with the challenges that are due to this unprovoked war in Ukraine by Putin. And he needs folks to help him do that.

BOLDUAN: If you get these things in place, that the president is asking for, do you think it is reasonable, as John Harwood was talking about, do you think it's reasonable to think, by the end of the year, you'd be looking more in the 3 percent to 4 percent range on inflation?

BOUSHEY: Certainly, if we can get these in place, that tells everyone, it tells all of us we are working toward that goal. So I think I'm more optimistic. I'm not going to put a number on it here today, because there's so many uncertainties.

But I think coming together to save costs for American families on the things that cost them the most, while putting us on a cleaner energy path to help us down the road, these are the things that are going to benefit the American consumer for years and years to come.

BOLDUAN: Heather Boushey, thank you.

BOUSHEY: Thank you.

BOLDUAN: Coming up, Ukraine liberating more towns near Kharkiv, as America's top intelligence chief warns of a prolonged war in Ukraine. The very latest from there next.

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BOLDUAN: Developments from the front lines in Ukraine. Ukrainian forces say they pushed out Russian troops, recapturing several villages north of Kharkiv. Yet the Director of National Intelligence is still warning that the war is likely to become, quote, "more unpredictable and escalatory" in the months ahead.

CNN's Scott McLean live with the latest for us.

What are you hearing from the front lines?

SCOTT MCLEAN, CNN CORRESPONDENT: Hey, Kate. Well, the Ukrainians say that, in some places, they are outnumbered in terms of manpower 10:1 but it's a much different picture in the Kharkiv region, where they say the city itself has been quite quiet in recent days. But in the villages and towns around it, there's a lot of action.

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MCLEAN: They're taking back some of the villages and the towns out there and, in fact, they say that, in some parts, troops are just a few miles from the Russian border and that is where they say the Russians have started to build up troops in anticipation of the Ukrainians actually reaching that border.

We also have some video from earlier this month, showing the remains of a pretty hasty Russian retreat after the Ukrainians struck a bridge. And you can see some of these vehicles partially submerged.

They say it's too dangerous still, though, for civilians to return because, of course, many of these towns and villages outside of Kharkiv are still very much within artillery range. We saw the remains of the failed evacuation convoy fired on by the Russians, vehicles with bullet holes, at least four people killed.

And we are getting new news out of Mariupol, where, of course, the situation inside of the Azovstal steel plant has been desperate for well over two months now.

But perhaps not quite as desperate as we thought, because a high ranking general in the Ukrainian armed forces says that ammunition and aid have been repeatedly delivered to the plant, though it was only possible up until it being known to the public.

At that point, he says that the Russians were able to take out that delivery mechanism. Now we don't know what the delivery mechanism actually was. We don't know how often they were able to get supplies in or when they stopped.

But at least at this point, there's no indication that their supplies are going in, though the soldiers say they still have enough ammunition to fight off the Russians for now. Kate?

BOLDUAN: Scott, it's good to see you. Thank you so much for that.

Talking more about this, retired brigadier general, Brig. Gen. Steve Anderson, as well as CNN global affairs analyst, Susan Glasser, a staff writer for "The New Yorker."

Scott laid out what the very latest is we're seeing. Ukrainians retaking some villages and pushing back Russian forces and we have that Ukraine's armed forces say that the Russians have sent some 500 troops from occupied areas out of Donetsk and Luhansk and moving them into Kharkiv in the north.

What does that suggest to you?

BRIG. GEN. STEVE ANDERSON, U.S. ARMY (RET.): It suggests that to me, Kate, they're losing and they know it. They're having to reposition their forces. They've been trying for six weeks now to cross the rivers and to get down to Kramatorsk.

They've been trying to get down there but they're unable to do it. The active mobile defense they've put up and now they've done this almost stunning counterattack north of Kyiv and now the supply lines to Belgorod that are sustaining all the Russian troops down there, now they have to reposition these forces to protect these supply lines.

So it's another indicator, things are not going well for Vladimir Putin down there. BOLDUAN: Yes.

And Susan, the Russians have retreated and reset before. I mean, Kyiv and kind of that episode or attempt is the most glaring example.

If that's what's happening here, what does that tell you about the Russian efforts in the east?

As the general is saying, it looks like they're losing.

But what do they do?

SUSAN GLASSER, CNN GLOBAL AFFAIRS ANALYST: Well, that's right.

The question, Kate, is long are they willing to keep going?

I thought it was notable that you heard the U.S. Director of National Intelligence use the word "years," possible for the Russians to continue this fight. Another phrase she used that should cause alarm to those who are hoping and praying somehow that the war will end is "war of attrition."

We've seen this happen before. Russia and Putin have been willing to go for a long, long period of time to accomplish objectives, even when they've suffered reverses at the beginning. If anything, that's caused increased escalation and increased brutality.

And I think, when you look at the two Chechnya campaigns that Russia waged inside its own borders against its own citizens, that's where you get the fear that Russia losing could make Russia even more brutal and dangerous.

BOLDUAN: Absolutely. Definitely a warning that everyone is listening to, from Avril Haines earlier this week.

This is an exchange from Senator Angus King and the director of the Defense Intelligence Agency about the accuracy of U.S. intelligence about Russia and Ukraine leading up to the invasion. Let me play this.

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SEN. ANGUS KING (I-ME): All I'm saying is, the intelligence community needs to do a better job on this issue.

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UNIDENTIFIED MALE: I think the intelligence community did a great job in predicting and talking --

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KING: And I acknowledged that at the beginning of my question. I understand that. The -- this is the -- yes, they did. But they failed that with predicting what was going to happen after Russia invaded.

(END VIDEO CLIP) BOLDUAN: So they clearly don't agree on that point. It is looking back.

But how important is this question looking forward?

ANDERSON: Kate, I don't think that's a very important question, quite frankly. I think our intelligence has been remarkable. We knew the attack was going to happen. True, we overestimated the enemy.

That's what you're supposed to do. You always overestimate the enemy that you're going up against. You assume the worst, hope for the best and do what you can do.

But I think our intelligence has been remarkable and we've been sharing with the Ukrainians. They've been able to use it to their advantage. And I think that we would need to continue to do that.

But I think the intelligence community since 9/11 has done a remarkable job of improving, doing a better job of collecting information and, more importantly, to do the right analysis. And I think that, in most cases, they've been spot on.

BOLDUAN: It's good to see you, General. Really appreciate it.

Susan, always great to see you. Thank you.

Coming up for us, a highly contagious COVID subvariant that will soon be the dominant strain in the United States, why health officials are concerned about the months ahead. Next.

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BOLDUAN: The results are in for a couple of key Republican primary contests in West Virginia and in Nebraska. The outcomes mixed though for candidates backed by Donald Trump.

In West Virginia, Trump's preferred candidate, Alex Mooney, secured the Republican nomination but in Nebraska's Republican primary for governor, the former president's pick did not succeed. Kristen Holmes with more.

KRISTEN HOLMES, CNN CORRESPONDENT: Two similar proxy wars show the former president still has a strong grip on the Republican party but it is not absolute. And that means that, when there is a candidate with flaws, it is possible they won't win.

Talk about Charles Herbster, the candidate that Trump endorsed in Nebraska, facing a slew of sexual misconduct allegations, all of which he denies. But I want to start here in West Virginia. On one hand, you had congressman Alex Mooney endorsed by Donald Trump

and on the other hand, you had David McKinley, who essentially had the backing of the entire West Virginia political sphere. He was backed by Democratic senator Joe Manchin, by the Republican governor here.

And yet he still couldn't win and couldn't win by a large margin. So establishment versus Trump candidate, Trump candidate winning.

Now in Nebraska, a different dynamic. You had the governor there endorsing Jim Pillen, outgoing governor, term-limited. And on the other side, Trump endorsing Herbster. And Governor Ricketts had asked Trump not to get involved in the race.

And of course, he still did but did lose that race. This is just the beginning of several primaries that we are watching closely. Pennsylvania another big one next Tuesday. We'll see how Trump's candidate fares there.

BOLDUAN: It's interesting to watch this play out and next week particularly interesting as well. Good to see you, thank you very much.

I want to turn now to the pandemic. A new Omicron subvariant is spreading rapidly in the United States. This new strain is responsible for 43 percent of new COVID cases. Nearly doubling in prevalence over the past two weeks.

It's already the dominant strain in parts of the Northeast and soon will clearly become dominant throughout the rest of the country, as we've seen this story before.

But what does this mean for all of us at this point in the pandemic?

Joining me right now, Dr. Megan Ranney, emergency physician and academic dean of public health at Brown University.

Good to see you, Dr. Ranney. All of these subvariants, all have nicknames but tough kind of technical names. This subvariant I think is called BA.2121 so everyone knows.

But what is really known about this one at this point?

What do you think of it?

DR. MEGAN RANNEY, EMERGENCY PHYSICIAN: These new Omicron subvariants are coming so fast and furious that the science is barely keeping up. What we know so far is that this new subvariant and a couple of others we're watching across the world are at least as transmissible, if not more so, than BA.2, which itself was more transmissible than the original Omicron.

Other than that, it seems to have a lot of similar properties. So it's able to infect you even if you've been vaccinated. But if you've been vaccinated and boosted, you're generally pretty well protected from severe disease. And one of the things that we're watching for very closely is that,

although cases are absolutely surging, hospitalizations and deaths are, thank goodness, still staying low.

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BOLDUAN: Yes. There is this new CNN analysis that grabbed my attention. It uses CDC data. And it is showing something pretty interesting, which is that, since vaccines became available way back when, there was this very clear wide gap.