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Consumers Splurge In July Despite Elevated Inflation; Senators Work To Remedy 21 Percent Unemployment Rate Among Military Spouses; Alabama A.G. Says He Has Right To Prosecute People Who Facilitate Travel For Out-Of-State Abortions; Coco Gauff Cruises Into U.S. Open Third Round; Jessica Pegula Looks To Keep On Winning Ways; Dominant Djokovic Advances To Third Round. Aired 2:30-3p ET

Aired August 31, 2023 - 14:30   ET

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

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[14:33:13]

BRIANNA KEILAR, CNN HOST: We're keeping a close eye on some key economic data out today that could determine whether the Fed raises interest rates next month.

It's favorite inflation gauge shows that people opened up their wallets in July even though prices were still high. They increased 3.3 percent on a year-to-year basis.

Joining us now, we have Jared Bernstein, the chair of the White House Council of Economic Advisors.

Jared, thank you so much for being with us.

When you look at these new consumer spending numbers, do they signal to you that the Fed will not hike interest rates when it meets next month.

JARED BERNSTEIN, CHAIR, WHITE HOUSE COUNCIL OF ECONOMIC ADVISERS: Thanks so much for giving me a chance to come out and talk to you about these important numbers.

We don't talk about the granular monetary policy of the Federal Reserve. We try to preserve their independence. We know how important that is.

What we are seeing is a transition to steady, stable growth. And the inflation numbers we got today are in keeping with that. And we know the Fed watches those numbers very carefully.

Probably one of the most important numbers is, if you look over the past three months, which is the right way to do it to get the recent trend in how inflation is moving, the PCE price index -- that's the one that came out this morning, and again, the one that the Fed watches most closely -- rose at an annual rate of 2.1 percent.

Now that is within spitting distance of pre-pandemic trends. So, look, the Fed is going to do what it's going to do. From our perspective, we want households to have some breathing room.

We want their real wages to keep going up. This report is consistent with that.

KEILAR: Let's talk about that. With these new numbers showing personal spending growing at a much higher rate than personal income, what do you attribute that? Is that inflation? Do you attribute that directly to inflation?

[14:34:59]

BERNSTEIN: No. In fact, I attribute that to the strong labor market. We have a strong labor market, as you well know. Unemployment below 4 percent for a year and a half. And now we're seeing real wage gains.

Again, this is the interaction of that labor market I just described with consistently easing inflation.

As real wages grow, consumers are able to go out there into the market and get what they want and what they need. Now we're in almost 70 percent consumer spending economy.

So as long as the job market stays tight and people are getting real wage gains, we should expect to see solid numbers as we did this morning in that regard.

KEILAR: Are you feeling that they are spending more than they're making because they have confidence that they will be able to pay for that?

BERNSTEIN: Well, I think you have to avoid getting too hung up on one month in terms of the ups and downs of the noisy data.

If you actually look at the disposable personal income after inflation, so real, disposable personal income, it's up I think about 4 percent over the past year.

So, in fact, again, boosted by the strong job market, real paychecks going up, we're seeing rising incomes help support strong consumer spending.

KEILAR: Credit card debt also way up here in the last two years. It is at a record high. $1 trillion. I know that may not be incredibly surprising considering what we've been through.

How do people climb out of this hole, when inflation is still up a bit?

BERNSTEIN: So, look, we have -- we have an economy that -- and I think I'm getting this number right -- is somewhere in the neighborhood of $26 trillion. When we start throwing around big numbers, we really have to base them on something.

Now, one of the things I did about an hour ago, because I thought we might be talking about this, is I looked at credit card debt, the number you just mentioned, in relation to the disposable personal income, that's income after taxes.

That's what people have to service that debt. In fact, it is below where it was before the pandemic. It is below its pre-pandemic share. It's around 5.5 percent, something like that. That is a historically low amount.

That would suggest that debt service, what people have to pay to service their debt, is also low. And, yes, I looked at that too. And outside of the pandemic, when it was even lower, that's also at historically low rate.

If you base these numbers on some of the other economic dynamics that are a lot more favorable, you see people are handily able to service their debt right now.

KEILAR: I want to ask you about mortgage rates. They're at 20-year high, 7 percent. You now have some companies like Zillow that are subsidizing mortgages. They are offering them -- subsidizing the down payment so they're only requiring people to put 1 percent down at closing.

Do you have any concerns about that? That that could lead to some sort of problems financially? Obviously, we're all very sensitive to that.

BERNSTEIN: We are very sensitive to that because we've been through periods where, you know, some creative arrangements in that space have hurt us.

What we're seeing now is a cooling in a market that was really kind of overheated before this got started.

Of course, when the Federal Reserve raised interest rates that -- pretty quickly feeds into mortgage rates. Nobody should be surprised about that increase.

I think the thing, from our perspective, that matters the most here is doing what we can to increase the supply of housing. That's not a weekly, quarterly, monthly effort. That's something we have to really get down to over the longer term.

If you look at our budget, we have some really ambitious proposals to increase the supply of affordable housing. And I think that's one of the best things we can do in that space.

The market is going to go trumble along in the way we described. I think that's all pretty expected. But the broader structural shortfall of affordable housing supply, that's something we very much want to work on.

KEILAR: All right. We'll be looking at that.

Jared Bernstein, chair of the White House Council of Economic Advisors, thank you so much for being with us.

BERNSTEIN: My pleasure. In today's "HOME FRONT," as the national unemployment rate is hovering

at a historically low 3.5 percent, military spouses are experiencing depression level unemployment.

And 21 percent unemployed, despite the fact that they are as a whole more educated and skilled than their contemporaries.

On Capitol Hill, lawmakers have been proposing legislation to change that for years with very little success.

But this year, a bipartisan group of Senators, led by Democrat Tim Kaine and Republican John Bozeman, hope that nationwide worker shortage could actually help them pass a tax incentive for hiring spouses of servicemembers.

They say companies are missing out on a valuable pool of employees.

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[14:40:00]

SEN. JOHN BOOZMAN (R-AR): I would argue that, you know, a military spouse really is a special person. I mean, to keep all of this together, at home do all they have to do.

You know, they understand they have to be pretty disciplined, pretty organized, and just is a great talent pool sitting there.

SEN. TIM KAINE (D-WV): But I do think, with the low unemployment rate, the time has come for this because everybody is saying, gosh, you know, we really need to find good employees.

And there's no better kind of big reserve of really talented people with skills than military spouses.

(END VIDEO CLIP)

KEILAR: Companies often pass on hiring military spouses because they do move every two to three years. But the Military Spouse Hiring Act that these two Senators are championing would try to guarantee companies are not going to lose what they invest in hiring and training.

Giving companies a tax credit of up to $2400, a similar but smaller tax credit than businesses get for hiring veterans.

Military family life comes with a number of financial hardships, like out-of-pocket housing expenses and moving costs. But we've also seen some alarming trends of food insecurity in the military.

And that has Democrats and Republicans worried that highly trained men and women in the military are actually incentivized to leave the all- volunteer force so that their spouses can also work and increase their household income.

(BEGIN VIDEO CLIP) KAINE: So all of these issues combined to create this huge problem. And then it becomes a retention problem where people don't stay in the military if they feel like, well staying in, it's just going to continue to hobble my spouse's opportunities.

KEILAR: Americans I talk to don't always seem to make that leap, that the military spouse unemployment piece is a force readiness issue. How do you get that across to them?

BOOZMAN: We simply aren't going to have a volunteer Army. We're seeing that right now. We have full employment in most of our states. Unemployment is so, so very low. Recruiting is difficult right now.

(END VIDEO CLIP)

KEILAR: Still, there is a lot of work ahead to get that bill through Congress once lawmakers return starting next week.

While there's broad bipartisan support for the bill in both the House and Senate, there are huge fights brewing right now overspending and Republican Senator Tommy Tuberville's hold on all senior military promotions.

We'll be right back.

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[14:46:57]

SCIUTTO: In a state that bans nearly all abortions, including for incest and rape, Alabama is making a move on out-of-state abortions. Attorney General Steve Marshall says he has a right to prosecute people in Alabama who facilitate travel for those who get abortions beyond Alabama's borders.

Marshall made the assertion in response to a lawsuit by these plaintiffs, including women's centers and the Yellow Hammer Fund, which provides money and other support to get the procedure out of states like Alabama.

They sued Marshall after he said this on a podcast last year.

(BEGIN VIDEO CLIP)

STEVE MARSHALL, (R), ALABAMA ATTORNEY GENERAL (voice-over): There's nothing about that law that restricts any individual from driving across state lines and getting an abortion in another place.

However, I would say that if an individual held themselves out as an entity or group that is using funds that they are able to raise to be able to facilitate those visits, then that's something that we're going to look at closely.

(END VIDEO CLIP)

SCIUTTO: Meagan Burrows, of the ACLU, is the attorney representing the women's centers suing the attorney general.

Meagan, listening to his argument there -- and by the way, they have proven they're taking a look at it seriously. They're basing this, it seems, on criminal conspiracy to some degree for folks that participate in this.

You've called this blatantly unconstitutional. Tell us why.

MEAGAN BURROWS, STAFF ATTORNEY, ACLU'S REPRODUCTIVE FREEDOM PROJECT: Yes, Jim, thank you so much for having me.

So it is blatantly unconstitutional. Attorney General Marshall's threats, as we've alleged in our lawsuit, pose a number of constitutional violations.

First of all, they violate our plaintiffs who are providers of comprehensive reproductive health care in Alabama.

They violate their First Amendment right to provide information to their patients and other pregnant Alabamians about legal out-of-state medical care.

The threats also violate due process because Attorney General Marshall is threatening to use Alabama criminal law in a manner that is far beyond the scope of these laws.

The laws that we're looking at here, he points to, first, a very old 1896 conspiracy statute.

That the Alabama Supreme Court has effectively authoritatively, definitively said only applies to conspiracies formed in Alabama to engage in conduct in other states that are illegal, that is illegal in those states.

So not legal conduct --

SCIUTTO: Understood.

BURROWS: -- like legal abortion.

SCIUTTO: That's an important point.

(CROSSTALK)

SCIUTTO: Because reading from his filing, he said an elective abortion performed in Alabama would be a criminal offense. Thus, a conspiracy formed in the state to have the same act performed outside the state is illegal.

You're saying, by the law as it's written, the act out of the state has to be illegal in that state as well?

[14:50:07]

BURROWS: Yes. Yes, Jim. And he also, in his threat that we're challenging here, his point, in addition to this old conspiracy law, to other general Alabama criminal laws on conspiracy, solicitation, aiding and abetting, that he would use to go after those who assist people accessing out of state abortion.

Those laws require, by their text, on their face, require that the conspiracy or solicitation, the speech or conduct that is conspirator solicitation intended to further or have happen or have occur an actual crime or offense.

SCIUTTO: OK.

BURROWS: And again here, there is no crime or offense, because the conduct we're looking at is legal abortion outside of Alabama, in other states that Alabama simply does not have the power to criminalize.

SCIUTTO: OK. In his opinion for -- in the Dobbs decision overturning Roe v. Wade, Justice Kavanaugh, who, of course, voted with the majority overturning it, said the following, and I'm quoting:

"May a state bar a resident of that state from traveling to another state to obtain an abortion? My view, the answer is no, based on the constitutional right to interstate travel.

Yet here you have the state of Alabama attempting to do exactly that. Were those assurances from the bench of the Supreme Court false?

BURROWS: No. Those are not false. We are also bringing a right-to- travel claim on behalf of our plaintiff's patients here.

And Attorney General Marshall, in the podcast statement you played, he said, we're not preventing people from traveling across state lines to access abortion. We're just using the criminal laws to prosecute those who assist those people in engaging in that travel.

SCIUTTO: Right.

BURROWS: But under the Supreme Court's precedence, that's unconstitutional.

And what Attorney General Marshall effectively is trying to do by threatening to prosecute all of those who assist pregnant people trying to leave Alabama to get legal abortions in other states is impose a national ban of abortion for Alabama residents.

And force them to carry Alabama's bag with them on their back when they leave the state to avail themselves of the legal environments and the opportunities presented by other states that they are entitled to do under the Constitution and given the right to travel.

SCIUTTO: Right. Which would seem to undermine the argument made by some who supported overturning of this. Something purely for states to decide.

Meagan Burrows, it's a case we'll watch closely. It seems to be a bellwether for other states.

Thanks so much for joining us.

BURROWS: Thank you for having me.

SCIUTTO: Brianna?

KEILAR: A three-year break from the sport apparently did not hurt the incredible tennis game of Caroline Wozniacki. Ahead on CNN NEWS CENTRAL, the latest triumph by the Danish star at the U.S. Open.

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[14:56:24]

KEILAR: You know what? Do call it a comeback. Danish tennis star, Caroline Wozniacki, continuing her remarkable winning streak at the U.S. Open last night after she stepped away from the court for more than three years and gave birth to her two children.

For more, let's go Coy Wire.

Coy, what more are you watching for in the days ahead?

COY WIRE, CNN SPORTS ANCHOR & CORRESPONDENT: Go, Coco. Go, Coco, go.

(LAUGHTER)

WIRE: Coco Gauff, she is on a hot streak, recently winning two titles in a three-week span. In the semifinals at the Cincinnati Open, she beat world number one, Iga Swiatek. She went 0-7 against her.

Coco has been on the scene a while. It's hard to believe she's still just 19 years old. She cruised on into the third round with a straight sets win over 16-year-old Russian Mirra Andreeva.

And after struggling to win a first-round match, Brianna, she said I need to learn to be more aggressive.

Next up, 32nd seed Elise Mertens of Belgium. The best Coco's done in a U.S. Open making it to quarter finals. We'll see if she can roll on.

Another women's matchup tonight, I've got my eye on, Jessica Pegula. The American taking on Romania's Patricia Maria Tig. Pegula has overcome injury, she's been emotionally stressed by her mother's cardiac arrest, which has rocked her family.

But Jess has continuously chipped away at adversity, clawed her way up to a number three spot in the world and having now made quarterfinals at all four majors. She has a shot.

And how can we forget about the GOAT? Novak Djokovic continuing to impress in his return to the U.S. Open. He's headed to the third round after winning in straight sets last night. The 36-year-old Serbian looking to add to his record tally of 23 Grand Slam titles.

He missed the U.S. Open last year being unvaccinated against Covid. Djokovic won six of the last nine Grand Slams he's played in. And he's on a collision course for another potential epic showdown

with 20-year-old from Spain. So we'll see if we can get another. It's a big one that fans are going to be fore there coming up.

Another, a big one fans will be looking for there coming up.

KEILAR: Yes. Up against the young guy. Always tough. But I believe in him.

(CROSSTALK)

KEILAR: We'll see.

(LAUGHTER)

KEILAR: Yes. Coy Wire, thank you so much.

WIRE: Thanks.

KEILAR: Jim?

SCIUTTO: Amid ongoing ethics questions and concerns, Supreme Court Justice Clarence Thomas officially discloses private trips paid for by a GOP megadonor. We'll have the details, just ahead.

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