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Israel-Hamas Cease-Fire Talks in Turmoil; House Republicans Target Attorney General Merrick Garland; President Biden Heads to G7 Summit; Inflation Cooling. Aired 1-1:30p ET

Aired June 12, 2024 - 13:00   ET

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

[13:00:34]

BORIS SANCHEZ, CNN HOST: Some welcome news when it comes to your wallet. A key inflation report shows that price increases went to zero last month. The markets are liking it, but will the Fed?

In the next hour, we're set to get an interest rate decision from Chair Jerome Powell.

BRIANNA KEILAR, CNN HOST: And President Biden back on the world stage. He's headed to Italy for a highly anticipated summit with a lot at stake, but casting a shadow over the trip, yesterday's conviction of his son Hunter on felony gun charges.

And happening now: House Republicans moving forward in their plan to hold Attorney General Merrick Garland in contempt of Congress for violating subpoena requests. Now an uneasy feeling is growing among GOP lawmakers. Do they have the votes?

We're following these major developing stories and many more all coming in right here to CNN NEWS CENTRAL.

SANCHEZ: We start this hour watching stocks rally after a new report shows inflation cooling down in May. The gains have thinned a bit in afternoon trading, but the Dow roared out of the opening bell on the heels of that inflation report.

The S&P and Nasdaq have jumped as well, pinning hopes that the Fed might actually cut borrowing rates this summer. A decision on interest rates, which affect everything from mortgages to credit cards, is expected just about an hour from now. Prices for everyday items flatlined in May compared to a month ago, the first time inflation has been at zero in two years.

Over the past year, consumer prices rose 30 -- rather, 3.3 percent, according to the Labor Department.

Let's bring in CNN's Matt Egan to break down these numbers.

Matt, these numbers are a relief, including a drop in gas prices. What does this tell you about the overall economy?

MATT EGAN, CNN REPORTER: Well, of course, this is some much-needed good news on inflation. The cost of living is, of course, the biggest problem with this economy and one of the biggest frustrations for voters. So this is much-needed progress.

Of course, everything is relative, right? Three-point-three percent year-over-year inflation, that's not good, right? It's well ahead of where prices were going up pre-COVID. But this is better than expected. And this is an improvement from a year ago, a major improvement from two years ago.

Prices did not budge at all month over month. As you mentioned, we haven't seen that in nearly two years. And we did see price drops for gasoline, new cars, airfare, clothing. So all of that is encouraging.

Also, core inflation, which excludes food and energy, that doesn't capture what Americans feel, but it is something that economists pay attention to, because it's a good indicator of where prices are going next. That was at the lowest rate in three years.

So, when we zoom out, inflation, of course, is not solved. Life is a lot more expensive than it was a few years ago. But this is a significant step in the right direction -- Boris.

SANCHEZ: Yes, it's still about a percentage point and some change above where the Fed would want to see it, right?

Matt, what are we expecting in the next hour, when we await this announcement on rates?

EGAN: Right.

So listen, it's a very, very expensive time to borrow right now. Mortgage rates, credit card rates, car loans, it is tough out there. Rates haven't been this high in 23 years. And, unfortunately, if you're hoping for immediate relief, don't hold your breath, because the Fed is very, very unlikely to lower interest rates today.

There's almost no chance priced into the market of an immediate rate cut. The big question is, what does the Fed signal going forward? And after today's inflation report, we did see investors start to mark up their bets on an interest rate cut coming up soon. Unlikely at the next meeting in July, but look at that, now a 70 percent chance of a rate cut in September.

That is a particularly important meeting, because that is the final Fed meeting before the election. And the market is pricing in a chance, a good chance, of at least one rate cut at one of the final two meetings from the Fed.

Now, the big focus from investors and from economists and really everyone watching at home is going to be what the Fed says, not in its statement, but in its projections, because, every other meeting, the Fed releases what's known as the dot plot.

[13:05:08]

And that's where Fed officials, they pencil in where they think rates are going. Previously, the Fed was penciling in three rate cuts for the rest of this year. That seems unlikely. The question is, do they mark that down from three to two or to one? That is going to be a big deal, of course, to investors and, frankly, to a lot of people at home -- Boris.

SANCHEZ: We are eagerly awaiting that dot plot that Matt was talking about. We will be here live at 2:00 when the decision comes down. So stay tuned for that.

Matt Egan, thank you so much -- Brianna.

KEILAR: President Biden will soon arrive in Italy for three days of critical meetings at the G7 Summit, the president departing from Delaware this morning, where he spent time with his family after his son Hunter's conviction on federal gun charges yesterday.

The leaders of the world's wealthiest democracies have major global issues on their agenda, including the Israel-Hamas war and supporting a huge loan to Ukraine backed by hundreds of billions of dollars in frozen Russian assets.

CNN international diplomatic editor Nic Robertson is live in Italy. He's covering the G7 for us.

Nic, sources tell CNN that the U.S. and Ukraine are expected to sign a long-term security agreement there at the G7. This is pretty big news. What more can you tell us?

NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Sure.

I think the best reference point on this is to look back at the NATO summit last summer, when President Zelenskyy, he wanted a commitment that Ukraine was going to be a member of NATO. He wanted the equivalent of Chapter 5 support, Article 5 support, that if one nation who is a member of NATO is attacked, then the others will come to their side.

But what was agreed there was that each nation would strike a bilateral security pact with Ukraine. And this is what President Biden is going to be doing. There's no sort of monetary value put on this at the moment, but it is a long-term commitment to Ukraine that, if somewhere down the road in the future that they were to be attacked again in a new scenario by Russia, within 24 hours, there would be discussion about that.

There would be action taken about that. France, Germany, the U.K., 14 nations out of NATO so far have already made these security pacts with Ukraine, financial commitments of ongoing military support, another 17 member nations yet to do it out of NATO.

And this will be, President Biden's decision to do this and move ahead on this will be a signal to those other 17 that they should be doing the same, and a signal to all NATO countries that, whoever becomes president next in the United States, whatever their relationship is with NATO -- we know that Donald Trump has threatened perhaps to cut ties with NATO, perhaps to cut military support for Ukraine -- that there is a more enduring commitment going forward.

KEILAR: And, Nic, how is the uncertainty over the upcoming U.S. election hanging over these talks?

ROBERTSON: Yes, it hangs, right?

Everyone coming here knows that it's a tight race in the United States and that a President Trump, if he were elected, would have a very different relationship here at the G7 table, a very different relationship with NATO allies and partners, a fractious relationship, perhaps.

But, look, I mean, President Biden isn't alone in coming into these talks facing election turmoil back home. President Macron, although he's not running in the parliamentary elections he's just triggered in a snap election in the next couple of weeks, his party, and, therefore, his power and influence in France, is up for question over the next few weeks.

The British prime minister here coming for the meetings, Rishi Sunak, very unlikely to be reelected in British elections on the Fourth of July. Justin Trudeau, the Canadian prime minister, faces elections next year. The Japanese prime minister, there's calls from the opposition there for him to call snap elections.

And Ursula von der Leyen, the European Commission president who will be here, also wants to be reelected and get her job back for another five years. So there's a lot of faces coming in here, not just President Biden, who might not be around this time next year at the G7.

KEILAR: Yes, good point, a lot of uncertainty there.

Nic Robertson, live for us from Italy, thank you -- Boris.

SANCHEZ: This afternoon, the House is expected to vote on whether to hold Attorney General Merrick Garland in contempt of Congress.

Representatives have been debating this issue after a vote allowing the debate passed by just a single vote. Garland has been defying a demand of a subpoena, refusing to hand over audio of President Biden's interview with special counsel Robert Hur. Hur, of course, chose not to charge Biden for having classified documents on his property.

[13:10:02]

And Republicans have the transcripts, but they insist the audio is needed to confirm what the transcripts say. The attorney general said that releasing the audio could lead future witnesses to resist being recorded.

CNN's Melanie Zanona has the latest now from Capitol Hill.

So, Melanie, when will the full house get a chance to vote on this? And do we have an idea of where the vote might land?

MELANIE ZANONA, CNN CAPITOL HILL REPORTER: Yes, well, the House is expected to vote on this Merrick Garland contempt resolution this afternoon. Earlier this morning, the House did take a procedural vote where they

advanced that resolution. And so now the GOP leadership is confident that they are going to be able to have the votes to pass this over the finish line, that despite some concerns that were privately raised by some centrist Republicans about moving ahead with this vote.

As a reminder, this all stems from the DOJ's refusal to hand over audiotapes of the special counsel's interview with President Joe Biden as it relates to the classified documents case. Now, the DOJ did provide transcripts to the committees, but Republicans say that is not enough.

They want those transcripts and they also want those audiotapes to make sure that the transcript is correct. Just take a listen to Speaker Mike Johnson and his reasoning for pushing ahead with his contempt vote.

(BEGIN VIDEO CLIP)

REP. MIKE JOHNSON (R-LA): He is refusing to comply with a lawful subpoena, and that's a problem under Article 1. We have to defend the Constitution. We have to defend the authority of Congress. We can't allow the Department of Justice, an executive branch agency, to hide information from Congress.

(END VIDEO CLIP)

ZANONA: Now, we should point out here that some House Republicans, including Judiciary Committee Chairman Jim Jordan, have defied congressional subpoenas in the past.

And, meanwhile, President Biden did exert executive privilege over those audiotapes. So, nonetheless, the House is expected to move ahead with this contempt resolution. And if it passes, as we expect it to do, it then gets over to the DOJ.

But the DOJ is not under any obligation to pick it up -- Boris.

SANCHEZ: Yes, previous attorneys general have been held in contempt in the past, and they have seen nothing come from it.

Melanie Zanona, live on Capitol Hill for us, thank you so much.

Still ahead this hour on CNN NEWS CENTRAL: a damning U.N. report accusing both Hamas and Israel of committing war crimes. We're in the Middle East following cease-fire negotiations as well. We will take you there live in just moments.

Plus: Military families in Virginia are ripping state officials for putting new limits on a military benefits program. The governor says he wants to repeal the changes before they take effect next month. Will it get done?

And they say age is just a number, unless you're a lawmaker in North Dakota. We're going to tell you about the new age limit that voters just put on their lawmakers when we come back. (COMMERCIAL BREAK)

[13:17:23]

KEILAR: Frustration and doubt are mounting over whether a cease-fire and hostage deal can be reached to end the war in Gaza.

Secretary of State Antony Blinken was in Qatar this morning pushing for an agreement to the latest proposal on the table, but he says Hamas keeps changing its demands.

(BEGIN VIDEO CLIP)

ANTONY BLINKEN, U.S. SECRETARY OF STATE: Based on what we have seen and what I have discussed with the prime minister and what we discussed with our Egyptian colleagues, we're determined to try to bridge the gaps.

And I believe those gaps are bridgeable. It doesn't mean they will be bridged, because, again, it ultimately depends on people saying yes.

(END VIDEO CLIP)

KEILAR: CNN's Paula Hancocks is with us live now from Jerusalem.

Paula, where do things stand?

PAULA HANCOCKS, CNN CORRESPONDENT: Well, Brianna, from the Biden administration's point of view, it certainly feels to them as though Hamas is moving the goalposts at this point.

We heard from the secretary of state there, and he has said in a press conference in Doha that -- questioning whether Hamas is now negotiating in good faith. Now, we did hear an official response from Hamas, but it was not a rejection or an acceptance, according to Hamas and to those familiar with these negotiations.

But it was adding amendments to what had already been agreed to by certainly the Biden administration. They're asking for more of a timeline of a permanent cease-fire in Gaza. They're also asking for a complete withdrawal of Israeli troops from Gaza.

Now, what we have seen within this proposal is, it is a three-stage proposal. So, once the first stage in the six-week cease-fire is agreed upon and it comes into being, there really does seem to need to be an evolving into the permanent cease-fire and more negotiations ongoing. We have seen from the Israeli side a desire to be more vague when it comes to agreeing to these terms.

They don't want to have a timeline of a permanent cease-fire. We have heard, though, that there are hopes that it can still be salvaged. We're hearing optimism from -- certainly from Secretary Blinken in Qatar standing next to the Qatari prime minister and foreign minister.

But there's also a sense of reality feeding into this as well,the worry that there have been more changes now put to this. We have heard, though, from the group that represents the hostages still in Gaza. And they have said they want an all-out effort to secure this deal. There really isn't an alternative at this point.

[13:20:02]

So, as we see, both sides showing willingness, but neither side actually agreeing outright -- Brianna.

KEILAR: Yes, a very important step they need to take there.

Paula Hancocks, thank you for that report live for us from Jerusalem for us -- Boris.

SANCHEZ: Let's talk more about these developments.

We're joined now by former hostage negotiator Gershon Baskin. He's the Middle East director for the International Communities Organization.

Gershon, thanks so much for sharing part of your afternoon with us.

Given the update we just got from Paula, what do you see as the likelihood of this truce actually coming together?

GERSHON BASKIN, FORMER ISRAELI HOSTAGE NEGOTIATOR: Boris, it's not a matter of Hamas moving the goalposts, as was in the report. The bottom line is that Hamas has been saying since the very beginning of the war that there will be no hostage deal that doesn't include an end to the war and an Israeli withdrawal from Gaza.

Israel, on the other side, has been saying that there will be no deal that Israel will agree to that will end the war. And this is the basic gap between the two parties, which seems quite unbridgeable. I'm encouraged by Secretary Blinken's optimism, but, quite frankly, I don't know where it's coming from, because Hamas is very, very clear what their demands are, as well as Israel.

And I don't see how to bridge them. And yet there are 120 hostages, Israeli hostages, still in Gaza. It's believed that about 80 of them are alive. Every day that they're there is a risk to their lives. And we're stuck. The Israeli government doesn't want to make the deal that will end the war, and we are stuck here.

We're also stuck because the war in Lebanon is escalating. And we know that, if the war in Gaza ends, the war in Lebanon will stop as well.

SANCHEZ: Sure.

The reporting about Hamas being described as them moving the goalposts is based on comments that we have gotten from officials like Antony Blinken, who have said that Hamas is now turning down aspects of the deal that they previously OKed. You don't seem to see that way?

BASKIN: No, I think that Hamas is negotiating on the margins of the deal, on the timeline, on the number of hostages, on the number of days between each phase. But the bottom line is that, in phase two, there should be a complete

Israeli withdrawal from Gaza and end to the war. And Israel has never agreed to ending the war. And this has been said by Prime Minister Netanyahu and members of his cabinet.

And his cabinet now is made up once again of the extreme right-wing and religious parties in Israel. The middle-of-the-road party of Benny Gantz has left the government. And it seems impossible to imagine that the Netanyahu government could accept anything that includes the end of the war while Hamas is still in power in Gaza. And that's the reality.

Israel has done nothing to advance any kind of other political solution that might be able to replace Hamas in control of Gaza. And that's why we're stuck.

SANCHEZ: Is it fair to say that you don't see enough incentive for both sides to come together on this? Because, as you just outlined, it doesn't sound like Netanyahu is eager for this war to end.

Conversely, Yahya Sinwar, those messages that were leaked recently, he's talking about having the Israelis exactly where he wants them. It doesn't sound like there's any urgency on his side to see this war come to an end.

BASKIN: Yes, I know what those messages were. I think this is part of psychological warfare.

And we don't really know what Yahya Sinwar wants and what he's feeling. We know that the people in Gaza are suffering terribly. We know that the people who lived alongside the Gaza border in Israel are suffering terribly, as well as the Israelis who live in the north of Israel on the Lebanese border.

With Gantz no longer in the government, I think we will see an increase in Israelis taking to the streets, demanding a deal and demanding new elections, because the majority of Israelis no longer have confidence in the government of Israel. And the majority of Israelis, I believe, want the hostages to be the number one priority.

SANCHEZ: So, quickly on this U.N. inquiry finding that both Israel and Hamas have committed war crimes and have violated international law, does that change anything on the ground? Does it change the approach during negotiations?

BASKIN: I don't think so.

Hamas doesn't observe any aspect of international law. It's been bombing Israeli civilians for a year and breaching international law. The taking of civilian hostages, holding them in civilian homes is all a breach of war.

And Israel has violated international war in -- law in Gaza as well during these eight months of this war. And that's a reality of war. I don't know what the international community will do about it. Israel tries to protect itself by having all kinds of internal legal mechanisms and investigations.

[13:25:04]

But, nonetheless, the reality on the ground speaks louder than everything else.

SANCHEZ: Gershon Baskin, always great to get your perspective. Thanks for joining us.

BASKIN: Thank you.

SANCHEZ: Of course.

Next: the nation's largest Protestant denomination voting today on whether to banish church members with female pastors -- or, rather, member churches with female pastors. The results are in on this vote.

We will break it down in just moments.

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