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Today: Biden, McCarthy Meet To Resume Debt Negotiations; Russia: Saboteurs Cross Into Russian Territory, 8 Injured In Attack; China Urges "Dialogue And Consultation" To End Fighting. Aired 3-3:30p ET

Aired May 22, 2023 - 15:00   ET

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

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[15:00:07]

JIM SCIUTTO, CNN HOST: The U.S. government is running out of money and time. Is Congress any closer to reaching a deal on the debt ceiling? We're going to get the latest from the White House and Capitol Hill, as economists continue to warn that some damage may already be done.

BORIS SANCHEZ, CNN HOST: And Russia claims a group of saboteurs pulled off an attack within its borders. CNN has new video of the alleged attack and we're going to bring you the latest from the front lines.

BRIANNA KEILAR, CNN HOST: Plus, a new search has just been announced in the case of missing toddler Madeleine McCann. We're going to tell you where and why officials are looking. We're for following these major developing stories and many more all coming in right here to CNN NEWS CENTRAL.

SCIUTTO: In just a couple of hours, President Biden and Speaker McCarthy will give it another try. They will meet face to face again in the ongoing stand down - stare down over the debt ceiling. So far, neither leader has blinked, and because of that the U.S. could default if no agreement by June 1st running out of money to fund government basics such as Social Security, military salaries.

But last hour, Speaker McCarthy told CNN live on our air, a deal has to be ironed out actually much sooner than that deadline. Have a listen.

(BEGIN VIDEO CLIP)

MANU RAJU, CNN CHIEF CONGRESSIONAL CORRESPONDENT: (Inaudible) have a deal tonight to avoid default.

REP. KEVIN MCCARTHY (R-CA): Look, I thought it would have been better to have a deal sooner. I think we can get a deal tonight, we can get a deal tomorrow, but you've got to get something done this week to be able to pass it and move it to the Senate.

UNIDENTIFIED FEMALE: Do you think there's a wiggle room ...

UNIDENTIFIED MALE: Do you think you can get this done by June 1? Is it possible to get this thing by --

MCCARTHY: I think it's still possible.

(END VIDEO CLIP)

SANCHEZ: CNN's Jeremy Diamond is tracking this from the White House.

Jeremy, one thing was clear speaking to the Speaker - listening to the Speaker there on our air was that he's not moving on his positions on work requirements for things like Medicaid, spending reductions.

Has the President eliminated the non-negotiating options? Right, this idea, for instance, of relying on the 14th Amendment. We heard him make some comments over the weekend. Is that path basically done? In other words, does he have to reach an agreement on the hill?

JEREMY DIAMOND, CNN WHITE HOUSE CORRESPONDENT: Yes, I think the President made it very clear at the end of that news conference to our colleague, Phil Mattingly, that this is ultimately going to have to come down to Congress. And what's really clear is that it's going to have to come down to an agreement between the Speaker of the House, Kevin McCarthy, and President Biden.

And that is reflected in the fact that when you see these leaders sitting down today, it's going to be President Biden and the speaker and their teams. The other congressional leaders who were in the last two meetings this month, they will not be in the Oval Office with the President and the Speaker.

And really, these talks come after a pretty turbulent weekend of start and stop negotiations that ultimately culminated in a phone call between President Biden and the Speaker yesterday as President Biden was making his way back on Air Force One, a call that both sides characterize as productive and moving things along.

And today, they will now sit down. But as they sit down, Jim, they are still very, very far apart, not only on some of the policy details of what exactly goes into this bill, in terms of work requirements, permitting reform, but even just on that top line, number of how much spending to cut, where to cap spending, how long to cap spending for both sides, still very far apart on that notion.

And it comes as the President over the weekend, as he was at this G7 summit being peppered with questions about this not only by reporters, but also by his fellow foreign leaders. He simply could not guarantee that the U.S. will not default. He laid that at the feet of House Republicans and whether or not they will be willing to come to a compromise.

But it's certainly clear that any deal that emerges here is going to have to be bipartisan. It's going to have to involve votes from both House Democrats and House Republicans. And that is the tricky balancing act that these two sides are trying to manage. So we will see whether or not this meeting this afternoon leads to that kind of essential progress, but certainly things need to move along. We're just 10 days away from that potential. SCIUTTO: Yes. Listen, both the Speaker and the President have

balancing acts within their own party, right, because there's a right- wing of the Republican Party may not agree to any sort of deal or compromise and there's certainly some things the President is considering the people on his left flank do not like.

Jeremy Diamond at the White House.

All right. So let's go to Capitol Hill with CNN's Melanie Zanona. And Melanie, the Speaker of course brushed off reminders that during Trump's time, they raised the debt ceiling three times without similar complaints.

But when I listen to McCarthy there, what was clear to me was he was not given ground on some of these issues, right? Certain work requirements, et cetera. That's a public statement. In private, is there a middle ground that is sort of coming to be - coming in division here or not really?

MELANIE ZANONA, CNN CAPITOL HILL REPORTER: Well, I think something's got to give, right? There's going to have to be some sort of compromise on either or both sides.

[15:05:02]

I do think Kevin McCarthy knows where his conference is at and he knows that he won't be able to get something through the House unless it has some form of work requirements, unless it has some form of spending cuts.

Now, how you achieve those things, there's a couple of different ways to do it and that's why this meeting is going to be so critical. But in addition to the sticking points. The other big obstacle here is the timeline.

You heard Kevin McCarthy's telling Manu Raju a little bit earlier that they need a deal by this week in order to be able to avoid default on June 1st. And that is because, first of all, once they have a deal, they still have to write it into legislative tax, which can be very complicated and can be time consuming.

McCarthy has also promised his members 72 hours to read the bill. And then once it passes the House, it still has to go through the Senate where any single senator can really hold things up. And in addition to getting a deal with the White House, both Biden and McCarthy still have to sell any prospective deal to their own members, which they're already trying to pressure both Biden and McCarthy to not give an inch, so that could be a tall task as well.

But Kevin McCarthy so far is brushing aside concerns that his conservatives are going to revolt and he predicts that most Republicans are going to support whatever deal he cuts. Take a listen.

(BEGIN VIDEO CLIP)

MCCARTHY: The difficulty is you need somebody on the other side to work to and the Senate has done nothing. That's the difficult thing.

UNIDENTIFIED MALE: Do you think you'll need Democrats to help get any bill across the line?

MCCARTHY: Look, I think in anytime you come to an agreement that you're negotiating with the President, Democrats and Republicans are both going to vote for it. It was no different when Trump was president and Nancy Pelosi would negotiate a debt deal. So it happens every single time.

(END VIDEO CLIP)

ZANONA: So you're getting a real sense of the challenges that lie ahead and getting the sense that a default is becoming ever more a reality, Jim.

SCIUTTO: That's a remarkable thing, right, because for so long, folks said, well, that's just an outlier. Not really going to happen. The adults on both sides will survive all this, but goodness it seems like a very real possibility, at least.

Melanie Zanona on the Hill. Boris?

SANCHEZ: Even if a debt ceiling deal gets done on time, experts are warning damage to the economy is already happening. When it comes to Wall Street, though, we aren't really seeing the seismic reaction that some might expect. The Dow only down roughly about 70 points.

So let's bring in CNN's Matt Egan, who's been tracking all of this. Matt, you've spoken to experts who say that we can really start seeing the markets responding to this potential crisis by this weekend, by Memorial Day.

MATT EGAN, CNN REPORTER: That's right, Boris. But so far, we are not seeing that which is really amazing. Even right now, you look, the Dow is down 70 points on the day. That is almost nothing given this ticking time bomb that is threatening to blow up the whole economy.

And keep in mind, the Dow was up by like 1,300 points over the last two months. So it's been kind of amazing to see just how calm things on Wall Street are and this is probably because investors have seen this movie before, right? And they know how it ends or at least they think they do, right, with eventually Congress agreeing to raise the debt ceiling.

But there is a growing sense from some of the experts in Washington and Wall Street that I'm talking to that some market turmoil might be needed to get something through Congress. And of course, no one wants to see investors panic.

But the idea is that if there is some selling in the stock market that might cause lawmakers to take the difficult votes that they don't want to take. Recall in 2008, when the House of Representatives initially rejected tarp, only to come back days later after the market's panic and they went ahead and approved it. So I talked to Mark Zandi, the Moody's chief economist and he told me

a selloff in stock and bond markets might be what's required to get donors and voters to pound on lawmakers' door to stop the drama and increase the limit.

And remember, the problem isn't just getting Speaker McCarthy and President Biden to agree to a high level of deal. It's what Melanie was just talking about, trying to get the rank and file members from both parties to sign off and that may not be easy.

But Boris, none of this is going to increase the popularity of Congress. I mean, this is a manufactured crisis. They waited until the last minute to address it. And even now, they might not actually take action until it does real damage to people's 401K plans first.

SANCHEZ: That's such an important point, Matt Egan. A self inflicted crisis with potentially devastating consequences. Matt, appreciate the reporting. Brianna?

KEILAR: Despite pressure from several Democratic lawmakers, President Biden recently pushed back on this idea that he could simply invoke the 14th Amendment to pay the nation's debts, suggesting that he does have the power to unilaterally act. But there isn't enough time and legal challenges would surely follow.

The U.S. Chamber of Commerce is also arguing against the idea, the chamber sending a letter to Biden that says in part, "It is the Chamber's view that attempting to invoke so-called 'powers' under the 14th Amendment would be as economically calamitous as a default triggered by failure to lift the debt limit in a timely manner."

[15:10:03]

And joining me now is the author of the letter Neil Bradley. He is the executive vice president for the Chamber. He's also a former aide to House Speaker Kevin McCarthy.

Neil, thank you so much for coming on.

NEIL BRADLEY, EXECUTIVE VICE PRESIDENT, U.S. CHAMBER OF COMMERCE: Thanks for having me.

KEILAR: Why would it be as bad as the default?

BRADLEY: Because the reason a default is so problematic is because our entire financial system is grounded on the idea of risk free treasuries. So the interest rates that we pay on our mortgages, our credit card bills, that businesses borrow money and lend money with is all tied to the relative safety of treasury bills.

A default is economically problematic, because they're no longer risk free, the government's not paying its bills. The same is true if you attempted to invoke the 14th Amendment, because all of a sudden, you would have the Treasury Department issuing debt that's technically not legally backed by the United States government. It doesn't have the full faith and credit. And a full reading of the 14th Amendment makes that clear. And so the

economic consequences, uncertainty, rising interest rates, unemployment, the hit to the stock market would all be the same if you attempted to use the 14th Amendment.

KEILAR: Your letter also concludes there is no alternative to reaching a bipartisan agreement to raise the statutory debt limit. You have the Freedom Caucus on the right saying, they will not accept anything except the bill passed in the House. What is your message to them, because how does the White House negotiate with that?

BRADLEY: Well, I think that's a misguided position, right? So that we are in divided government and divided government means that you're going to have to compromise. The Senate has a say just as much as the House does and I suspect those Freedom Caucus members wouldn't like to be told by Bernie Sanders or Elizabeth Warren who are in the majority in the Senate that they have to simply accept their solution.

At the end of the day, though, this is going to be a bill that gets passed by the middle of both parties. The far right is not going to like it, the far left isn't going to like it, but there's still enough votes in the middle between Democrats or Republicans to get this done.

KEILAR: We were talking about something in the break that I want to talk about now. Because back in 2014, I mentioned you had been an aide to the now-House speaker, Kevin McCarthy. Back in 2014, you were working for Eric Cantor, as he negotiated with then-Vice President Biden on raising the debt ceiling.

And I said to you, were you traumatized by that? And you said that you are more scared now. Why are you more scared about this go round than 2014.

BRADLEY: I think my biggest fears around miscalculation, if you go back to the last time we had this big negotiations over debt limit, it started months before the deadline. The then-Vice President Biden and my old boss Eric Cantor, were meeting three days a week for multiple hours for almost five weeks straight.

So the communication that had been established, the idea that while we knew we might run up right to the deadline, which we did, but that both sides knew where the deadline was agreed that default wasn't an option, and knew that we were working together to make sure that we hit the mark and didn't miss the deadline.

Today, what I'm worried about is that talks have really just started and they stopped and started, we're now down to 10 days. And you know what, if there were objections on each side, it could almost take a full 10 days for Congress to process it.

So what I'm worried about is that one side or the other miscounts the days, miscounts the level of support that they have and that we stumble into a default just because this process didn't start soon enough.

KEILAR: It is a very scary thought. Neil, thank you so much for being with us today. We appreciate it.

BRADLEY: Thanks for having me.

KEILAR: Jim?

SCIUTTO: Coming up, has Bakhmut finally fallen? Wagner mercenaries claimed they have taken the Ukrainian city as they pose next to hollowed out buildings left behind.

Also, accused killer, Bryan Kohberger was just in court indicted for the murders of four University of Idaho students. We're going to tell you what he said and didn't say.

And a new search launched in the case of the missing toddler Madeleine McCann, where police - what police are looking for exactly. We'll give you an update.

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[15:18:18]

SANCHEZ: A stunning turn of events in Russia's war on Ukraine. Russian officials say today a group of so-called saboteur has launched an assault inside Russian territory. Several people in the Russian border town of Belgorod were reportedly injured in a situation that Russian officials call extremely tense.

Let's take you now live to southern Ukrainian and CNN's Sam Kiley. Sam, obviously, given Russia's track record, we have to take everything that they say with a grain of salt. What do we know about this group of saboteurs and what Russia is claiming they did?

SAM KILEY, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, unusually, there is actually agreement between the Ukrainians and the Russians more or less about what's happened in the - in terms of this cross border move. Now the Ukrainian version of events is that a - an independent group of private Russian citizens crossed from Ukrainian territory into Russia and conducted these raids on at least three villages, going some eight kilometers five miles into Russian territory.

From the Russian perspective, this is a group of saboteurs who've come in and committed these acts of violence which have been certainly as of sunset today were ongoing. Now, I know this group, they are called the Freedom of Russia Legion. They are a formed group of some several hundred volunteers fighting under the Ukrainian flag inside the Ukrainian armed forces taking their orders from the Ukrainian Armed Forces. They're a formed unit of the military here and there is no doubt that they crossed the border and conducted this operation.

As far as the Ukrainians are concerned, because they're Russian citizens, they can kind of keep them at arm's length with something of a nudge and a wink.

[15:20:04] But this group went in, they claim to have and they've sent a drone

video to try to prove their point to CNN that shows an attack they say was conducted against the FSB headquarters in a village eight kilometers into the country and indeed taking out a Russian tank there.

They've posted other social media pictures of various other attempt claims that they captured a Russian armored personnel carrier, and a wide range of engagements with the Russians. The Russians say that eight people were injured during this process, but also, they say that the village or town eight kilometers in has now been evacuated of civilians, either under their own steam or part of the government's own efforts to get civilians out of the way. They're taking this extremely seriously and they see it as a cross border operation which indeed it is conducted effectively by the Ukrainians with a degree, a slither of deniability,

SANCHEZ: A slither of deniability.

Sam Kiley reporting from southeastern Ukraine. Thanks so much, Sam. Jim, over to you.

SCIUTTO: Well, Ukrainian president, Volodymyr Zelenskyy, made a surprise visit to the G7 meetings in Japan holding talks with several world leaders, including President Biden. Zelenskyy shared his plans to finally bring an end to Russia's war there.

Today China reacting, foreign ministry calling on leaders to resolve the crisis politically through dialogue and consultation. This despite, of course, Beijing's no limits friendship as it is called with Moscow.

We're joined now by former U.S. ambassador to Ukraine, John Herbst. He is now with the Atlantic Council here. And Ambassador, first if I could ask you, is China a credible partner for peace as it were? A credible mediator in this crisis?

JOHN HERBST, FORMER U.S. AMBASSADOR TO UKRAINE: Thus far the answer is a simple no. The peace plan that they put out, the so-called peace plan does not require Moscow to actually respect the territorial integrity of Ukraine. And it treats Moscow's motivation for this unjust invasion as legitimate.

So if Beijing was willing to tell Russia, Russia, get your troops out of Ukraine and we can do we deal with your concerns about negotiations, that'd be fine, but they're not.

SCIUTTO: I want to ask you now about the loss in Ukraine of Bakhmut. Both sides have invested an enormous amount over months there as Cedric Leighton made the point on our air in the first hour. That siege lasted longer than the siege of Stalingrad during World War II. Many 10s of thousands of lives lost there. Russia appears to have won at least for now, is that a significant loss for Ukraine, particularly on the cusp of this plan, counter offensive?

HERBST: I would say it's actually a significant loss for Russia. According to the Ukrainians, 7.5 Russians are dead or wounded for every Ukrainian. According to London, the Brits, it's five to one.

If even the British number is true, Russia has suffered enormous casualties and for that matter, equipment damage, as a result of this many months long effort to take an unimportant town in eastern Ukraine.

Putin set a deadline for capture of the town by the middle of December. Here we are at the middle of May, pass the middle of May and maybe they've captured although maybe not completely.

SCIUTTO: As you know now, the Biden administration appears to have given up its opposition to supplying F-16 to Ukraine saying, in effect, we won't stand in the way of European allies doing so. I just wonder this has been a constant thing right with various weapon systems where the U.S. has been a bit more hesitant than some of its own European partners eventually giving in.

But when I look at a city like Bakhmut and the destruction there, I wonder, could F-16s have played a role in helping Ukraine retain that city, right. I mean, has the U.S. been too slow in some circumstances,

HERBST: The United - the Biden administration has been consistently timid in meeting Ukraine's weapons requests. I don't know if F-16s would have made a difference there. But if we had given Ukraine three months ago, the ATACMS that they've been requesting for eight or nine months, Russians would never have taken Bakhmut.

Thank goodness the Brits have given them Storm Shadow, long range missiles, which are good but not as good as our ATACMS. But if we gave Ukraine the ATACMS as well as the F-16s, the Russians will be far father back than they are today.

SCIUTTO: We learned this weekend that German police are investigating the possible poisoning of two Russian dissidents on German soil. This would not be the first time we saw this. Of course, they killed Alexander Litvinenko successfully in 2006.

Russia did - they attempted to with Sergei Skripal and his daughter following, and of course within their own borders, Alexei Navalny, right, tried their best to poison him to death.

Now, interestingly, we heard recently that a Russian - independent Russian news website says that you were allegedly poisoned back in 2021.

[15:25:04]

Though I know the Atlantic Council said lab results did not reveal toxic compounds.

Just big picture, is this what Russia does now? Is it in fact saying that anyone who dares challenge this government is not safe anywhere in the world?

HERBST: I think they established that with the attempted poisoning of Skripal, after poisoning and killing Litvinenko. So this is a longtime Moscow tactic going back not just, say, to the Soviet times, but even to czarist times.

SCIUTTO: Do you believe you were - well, they attempted to poison you?

HERBST: The Atlantic Council statement captures the major points, but the point is we don't know what happened to me.

SCIUTTO: Well, we're glad you're well and healthy.

Ambassador John Herbst, thanks so much for joining the program today.

HERBST: Thanks. My pleasure.

SCIUTTO: Brianna? Brianna?

KEILAR: Still to come on CNN NEWS CENTRAL, the Washington State University grad student accused of murdering four University of Idaho undergrads was just in court. We'll tell you what happened during Bryan Kohberger's hearing.

Plus, an update in the search for Madeleine McCann, the toddler who disappeared from a resort in Portugal more than 16 years ago.

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