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Trump To Address Economy In North Carolina; Inflation Slows To Below 3 Percent For First Time In Three Years; Ukraine Says Its Forces Are Advancing Inside Russia. Aired 3-3:30p ET

Aired August 14, 2024 - 15:00   ET

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

BORIS SANCHEZ, CNN HOST: Who do you trust on the economy? That question could decide the presidential election. And between today and Friday, both candidates are staking their claim for why they are the one to trust in November. As the new report suggest the Fed may be winning the fight against inflation.

Plus, Ernesto wreaking havoc. The hurricane pummeling Puerto Rico, knocking out power to nearly half of customers. The latest on its track and what the storm is leaving behind in its wake.

JESSICA DEAN, CNN HOST: And desperate measures as the Kremlin fights off the Ukrainian offensive on Russian soil. Keefe (ph) says this is forcing Moscow to pull reserves from other battlefields.

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

SANCHEZ: We start this hour with pocketbook politics. The economy is the top issue on most voters' minds, and the Trump and Harris campaigns are both going on offense. And just about an hour from now, former President Donald Trump is expected to talk about the economy at an event in North Carolina.

Meantime, the Harris campaign is touting a new report that shows inflation on everyday items that shoppers buy is significantly cooling down, its lowest level in three years. Vice President Harris is also expected to roll out her economic plan in North Carolina, but on Friday.

Let's take you now live to Asheville, North Carolina with CNN's Kristen Holmes.

Kristen, what can we expect from these remarks from former President Trump?

KRISTEN HOLMES, CNN NATIONAL CORRESPONDENT: Well, Boris, this is part of a larger effort from the campaign to keep Donald Trump on message. One of the things that the campaign believes is that fundamentally, at the end of the day, they can use the same talking points they used against President Joe Biden when they're running against Vice President Kamala Harris. The main talking points being immigration, inflation, the economy and crime.

He is expected today to talk about the economy. He's expected today to talk about crime. Now, of course, the problem is that Donald Trump often doesn't stay on message. So what they have done is they've created a series of events, starting here in Asheville, North Carolina, that's going to be smaller. It is not a rally. There's no standing room. Everyone is seated in an auditorium, and it is being billed completely as a speech that focuses around the economy.

When they look at the polling against President Joe Biden, they see that Donald Trump pulled ahead of Biden on the economy. They believe he could pull ahead of Kamala Harris, but he just has to actually talk about the economy. Instead, he has spent the last several weeks maybe mentioning the economy here and there, but instead dabbling in fringe theories, attacking members of his own party and we'll see what he does today, because I can tell you this from speaking to a number of his allies, advisors, people who talk to him on a regular basis, they have stressed to him over and over again for the last several weeks, particularly the last two weeks, he has to stay on message. That is the only way that he could potentially win this race in November.

Of course, Boris, it's Donald Trump. He's going to say what he wants to do when he gets into this room. You see the crowd cheering for him. It is likely he's going to say what he wants to say. We'll see if he can take their warnings and take their messaging seriously.

SANCHEZ: Yes, advice that he's been getting from Republicans and political minds for almost 10 years now that he hasn't really absorbed.

Kristen Holmes from Asheville, North Carolina. Thank you so much. Jessica?

DEAN: How does Trump's economic plan compare to what we know so far about a potential Harris economic plan? CNN's Matt Egan joining us now.

Matt, obviously, Kamala Harris is going to roll out her economic policy later this week, but so far, what stands out to you?

MATT EGAN, CNN REPORTER: Well, Jessica, these are obviously two very different candidates, of course on style, but on substance too. They have really different economic visions. And look, we know from polls that the economy is the number one concern for voters. And voters are very much divided on who they trust more to get the economy right.

Recent polls show that Vice President Harris and former President Trump are basically tied on who voters think will do a better job on the economy.

Now, when we talk about their actual agendas, it's really important to emphasize that there's still a lot of specifics that we don't know about the Harris agenda. She's going to be rolling out those details on Friday. But let's take, for example, taxes.

Former President Trump, he, of course, lowered taxes. He lowered the corporate tax rate. And he's in favor of lowering it even further, of making the 2017 tax cuts permanent at a cost of trillions of dollars.

Vice President Harris, she has signaled she wants a higher corporate tax rate, although we don't know just how high yet.

When you look at trade, former President Trump, of course, he famously labeled himself the tariff man, and he has promised to lob even bigger tariffs on not just China, but on all trading partners. Now, the Biden-Harris administration, they've really kept in place the vast majority of the Trump tariffs.

[15:05:03]

They've even imposed some new ones. But Harris has not signaled any sort of ramp-up in tariffs like what Trump is suggesting.

Another major issue is the Federal Reserve, one of the most powerful institutions in Washington. Former President Trump, he says he believes strongly that the president should have a say in interest rates. Now, that's an idea that horrifies a lot of economists because the Fed is supposed to be independent from politicians. And history shows that when politicians meddle with central banks, that can actually cause inflation to go higher.

Harris was asked about this issue the other day, and she said that as president, she would, quote, never interfere with Fed decisions.

And look, there's more here, right? They have different visions on energy, on regulation, on immigration and we're going to hear more in the coming days as Harris and Trump pitch voters on this. And then it's going to be up to the voters to decide who they trust more to get this critical issue right. Jessica?

SANCHEZ: Matt Egan, thank you so much for that update.

Let's discuss now with Professor of Economics and Public Policy at the University of Michigan, Justin Wolfers. We also have with us, former director of the Congressional Budget Office and President of the American Action Forum, Douglas Holtz-Eakin. Thank you both for being with us.

Justin, break down what this inflation update means for everyday Americans.

JUSTIN WOLFERS, ECONOMIC PROFESSOR, UNIVERSITY OF MICHIGAN: It's just really big news. One of the things that's really weighed on all of us over the past three years has been inflation and the rising cost of living. And inflation's now been falling for two years, but most importantly, what we've seen this morning is the inflation crisis is now behind us.

Before the pandemic, inflation was two-point-something percent. Right now, it's 2-point-something percent, and it's continuing to fall. So I think one of the things that's weighed so heavily on so many of us, I know that the White House is not going to put up the mission accomplished banner, but it really does look like the inflation threat is behind us.

DEAN: And Doug, of course, we're waiting to get more details specifically from Vice President Kamala Harris, but also from the former president as well on their plans for the economy. But I'm curious what your thought is, because Trump and Harris can propose all of these policies they want, but unless they have congressional control in their party as well, and, you know, there's also the Fed, there's a lot of levers they can't pull by themselves, right?

DOUGLAS HOLTZ-EAKIN, PRESIDENT, AMERICAN ACTION FORUM: Yes. There's no question about that. So campaigns are full of promises, some of which aren't particularly realistic and voters have to sift through that. I think the place where they differ, and the hard thing for Vice President Harris will be that, you know, she inherits the 43-month record of the Biden administration, where inflation over those 43 months has averaged 5.4 percent, and wages haven't grown that fast.

And so people have been at work, and they've been falling further behind while they worked, and they're mad about it. And voters typically make up their mind about six months out from an election, we're in that window.

And so she has a very difficult job. I mean, she has to somehow pivot away from that record. It's not popular. It's been polling underwater for a long time. She can't go back to 2019 and the progressive agenda of that primary.

So what does she do between now and Friday, and will voters be - will they be convinced? You know, that's the counter to the Trump proposals, which are not uniformly popular. I mean, people are skeptical of a 10-percent tariff. And so it's a really interesting moment in the campaign, but it's really biased against the Harris campaign because she owns the record, and the record's not a good one.

DEAN: Right. But what about this inflation data that is showing it cooling? Does that give her a little bit of a boost or no?

HOLTZ-EAKIN: I don't think so. I mean, it's true and we should all be quite pleased. The inflation's taking a terrible toll on the U.S. economy. This gives the Fed some freedom to move, and I think all of that's good news. But the reality is still that when you go to the grocery store and the groceries are $30 more than they were at the beginning of 2021, you don't have the 30 bucks to pay for it. And people know that, and they remember it, and that hurts that campaign.

SANCHEZ: Justin, I just want to give a shout-out to your young visitor there. Always appreciate an interruption from a family member as we're doing one of these conversations.

I am curious about some of the promises that candidates have made regarding taxes, promising tax cuts on the campaign trail, uniformly popular. Whoever wins the next election will have to deal with the expiring 2017 Trump tax cuts. That's going to impact people in a lot of ways, potentially cutting the child tax credit in half from $2,000 to $1,000.

JD Vance, Trump's running mate, has said that he wants to expand that to $5,000. What kind of an impact would that have on the broader economy?

[15:10:00]

WOLFERS: Look, I think the broader context to remember is this time in 2016 when Trump was running for election, look, I think the broader context to remember is this time in 2016 when Trump was running for election, he said he was going to implement a fiscal agenda that would eliminate the government's debt within four years. That was his promise to us, that it would eliminate government debt.

He then proceeded to have massive tax cuts, which went almost exclusively to the rich. And I know this won't surprise anyone, but when you cut taxes, it turns out you cause the government debt to rise. And what we're seeing right now is exactly the same sort of nonsense. And I think part of the problem is that people are never quite sure how seriously to take the president or his running mate. But if you look at some of the things he said recently, it's really very, very worrying.

So yes, he likes to talk about tax cuts, but he forgets to mention that what he has at 10 percent across the board tariff. Another word for tariff is tax hike. It'll be every imported good you buy will be 10 percent more expensive. And if it comes from China, it'll be up to 60 percent more expensive.

That's a massive tax hike and the sort of thing that's really going to cause inflation to skyrocket. But beyond that, the other day, he was just in a funny mood and he said, well, why don't we get rid of tax on Social Security?

It turns out if you're a retired person on Social Security, your tax bill's already zero. But if you're a retired person on Social Security, who's also earning extra income, that is to say you're relatively wealthy and old, then you're paying tax. So really what he's just said is, I want to cut the taxes of the wealthiest seniors, but not most seniors.

And the thing is, when you do that, the wealthy is where the money is. And so it really starts to add up and that government debt's just going to go up and up and up and up.

DEAN: Doug, it's interesting to hear the Republican vice presidential nominee, JD Vance in this case, proposing an expansion of the child tax credit. I just want to go back to that for a second because it is - it was always a Democratic priority. They couldn't - it was in during COVID and then it got reduced. They couldn't get it put back in. Were you surprised to hear the Republican - one of the Republicans in this race being a proponent of that, supporting that?

HOLTZ-EAKIN: Not entirely. As you well know, Republicans aren't what they used to be and there's no longer the unanimity on where you want to land, especially on pro-family tax policies and the child credit's in there. Republicans did expand it in the 2017 act and this would be an even bigger expansion.

But I just want to echo what Justin has said, which is, you can talk about not taxing Social Security, you can talk about not taxing tips. These are silly, quite frankly, campaign proposals. The real issue is what do you do next year when if there is no action, we get a $4.2 trillion tax increase, including those making less than 400,000. Everyone's campaign pledges get violated and this child tax credit gets smaller, not larger.

As you just said, Jessica, you have to control the Congress somehow. I've heard neither side come up with any kind of a realistic plan for how they're going to deal with next year's challenge and that is the issue.

DEAN: That is such a great point.

SANCHEZ: Yes.

DEAN: Because that is coming for whoever wins in November. They're going to have to deal with this.

SANCHEZ: And yet both candidates are vowing a different kind of tax break, this on tips.

Doug, to you, the Trump team is suggesting he's going to eliminate both the federal income tax and the payroll tax on tips. The Harris campaign saying just the federal income tax for tip workers would be eliminated. Is that realistic at all? Do you think all these sort of promises of tax cuts are only - the expiration date for them, let's say, is January 20th, whenever the next president is inaugurated?

HOLTZ-EAKIN: I honestly do not think of these as real tax proposals. There's no merit to not taxing tips. You know, labor income, you shouldn't choose how it comes. You provide distortions, you provide more tips. There's no particular targeting to low-income people. There's nothing especially meritorious on wage-twisting, waiting - versus janitorial services.

I don't know what the rationale would be for this. It would cost some revenue. How much, we don't know. Many people aren't paying taxes on their tips.

This is a sideshow. Campaigns often have them. I was on a campaign that featured a gas tax holiday. I don't think that's going to go down in history as a great idea. So, yes, they've made these proposals, but it's time to put that aside. They need to put that on the board and get serious about the real issues that face the broader economy and especially the federal budget going forward.

SANCHEZ: Justin, last word to you. A holiday on taxes for tips, realistic, or do you agree with Doug?

WOLFERS: It's absurd, Doug's right, and it comes out of a circus. And I think that's the thing to worry the most about. Look, Doug posed a big and important question, which is, what's going to happen when there are big and important decisions to be made? And the thing I care most about is just making sure that there are really smart people who are going to be advising the next presidents.

[15:15:00]

And the list of economists who've said that they would willingly serve under Trump is the least impressive list of economists in history.

My guess, I don't know. We got him on the show. We can ask him, is that Doug wouldn't serve under President Trump, and Doug is a very fine Republican economist. And so it's the rest of the team I worry about when we have to have these very difficult, very serious conversations. Let's have those instead of these silly things about tips.

SANCHEZ: Doug, you want to answer that? Would you serve under a Trump administration?

HOLTZ-EAKIN: I would - I'm not planning to go into the government. I'll be honest about that. I've also point out that I've served in two White Houses and in the Congress. And I'm not convinced I was the deciding factor in any of those moments, Justin, honestly.

SANCHEZ: Douglas Holtz-Eakin and Justin Wolfers, we appreciate you both. Thanks for joining us.

DEAN: Thank you.

SANCHEZ: Still ahead, Ukrainian troops are making even more gains in Russia, claiming to seize as much land in the past week as Vladimir Putin has all year. Could this surge be the beginning of the end of this war?

DEAN: Plus, Hurricane Ernesto lashing Puerto Rico, more than half the island now without power and roads turning into rivers. Where that storm is headed next?

Also, a man is suing Disney after his wife died at one of their properties and the company now trying to get it dismissed because the widower had Disney Plus. We'll explain.

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[15:20:44]

DEAN: We are following two major international stories. In the Middle East, Israel bracing for a possible Iranian attack just a day ahead of high-level negotiations with Hamas on a potential ceasefire deal in Gaza. But a diplomatic source telling CNN Hamas will not be a part of the talks tomorrow in Qatar. Instead, the group is willing to meet with mediators afterward.

And new developments now on Russia's war on Ukraine. Russia's military struggling to hold down its front line more than a week after Ukraine's cross-border assault. A Ukrainian military commander saying Moscow has pulled its troops out of key battleground regions in an effort to block Ukraine's advances.

Meantime, Ukraine launched a new round of attacks against Russia using drones to conduct what a security source calls the biggest attack on Russian airfields since the war began.

For more perspective on all of this, we are joined now by CNN Global Affairs Analyst Kim Dozier and retired U.S. Army Brigadier General Steve Anderson.

Great to have both of you here with just so many things unfolding in both of these regions.

General Anderson, I want to talk first with you. According to Ukraine, Russia is moving some of its troops from the front line up to this incursion site that's hundreds of miles away. What do you make of that initial impact on the battlefield? How might that impact things?

BRIG. GEN. STEVE ANDERSON, U.S. ARMY (RET.): Well, thank you, Jessica. I mean, that's exactly what they intended to do when they conducted this offensive. They want to distract the Russians from what they're doing elsewhere and make them move forces to that position.

But, you know, kudos to the Ukrainians for pulling this off. I mean, this is incredible. Nobody saw this coming eight days ago. Now, U.S. doctrine would be to exploit success. So hopefully they'll continue to do that and they'll continue to reinforce the success they have achieved.

But they got to be careful. They don't want to go too far in and outrun their supply lines and get cut off - be in danger and cut off. But they've been able to distract the Russians. They've been able to give a tremendous morale boost to the Ukrainians who have been now fighting for two and a half years and they caused a major embarrassment to Vladimir Putin back at home.

And now the Russian people are saying, hey, Vladimir, look what you've gotten us into now. I mean, now they're attacking us on our home field. This is a tremendous development. And so I applaud the Ukrainians for being able to pull this off.

DEAN: And, Kim, we had a map up. If we can pull it back up. The Ukrainians have this security zone. It's - if we pull the map back up, it's that tiny area in the blue there. That's what they're trying to defend in Russia, inside Russia. Now we know that these Russian reinforcements are heading there. Are they capable of holding that?

KIMBERLY DOZIER, CNN GLOBAL AFFAIRS ANALYST: Well, I think this has surprised the Ukrainian troops as much as everybody else. It may have originally been planned as a raid to take a small part of the Kursk territory. You see the triangles that have been painted on the Ukrainian tanks, et cetera.

And originally, that blue piece looked like a triangle. But now, like an inkblot, it's spreading. They seem to be taking advantage of the success in that. According to reporters on the ground, they've been watching all sorts of supplies go over the border into Kursk, like a field hospital, and all the types of things that you'd need to dig in and defend your positions, like barbed wire, concrete barriers, things to build the same kind of fortifications that they have in the east trying to hold the Russians off.

So it looks like they've stolen a march on the Russians. Instead of attacking them in the static places in Ukraine or in the east where nothing was moving, they've gone to an unguarded area, and they're seizing territory. You can see with those pictures right there, they seem to be fixing to stay.

DEAN: Yes. And, Kim, Ukraine wants allies, including the U.S., to let them use these long-range weapons to attack Russian positions. And already they're getting pretty far into Russia, if you look at where they've been striking with the drones and whatnot. Do you think that they're - what are the chances of the U.S. approving this request?

DOZIER: Well, when we asked NSC spokesman John Kirby on Monday about this, are the Ukrainians using U.S. weapons in contravention of the rules by using them in this Kursk operation, and he said no.

[15:25:08]

So the original rules were that the Ukrainians the original rules were that the Ukrainians were allowed to strike where they were being hit from. Seems those rules have been at least relaxed on the battlefield. And as you saw, Sen. Lindsey Graham yesterday was in Kyiv and praising this effort. So it is building up strength and support for continued aid to Ukraine, not only on the Democratic side, but even on the Republican side.

DEAN: And Gen. Anderson, obviously Ukraine now preparing for this possible Russian counterattack. What might that look like? How do they best prepare for that?

ANDERSON: Well, what they need to do is reinforce the success they already had. They have to be careful not to outrun their supply line. So they need to make sure they build the logistics in there.

But I don't think that it's their long-term best interest to try to retain this territory. I think what they wanted to do was exploit the success, show, you know, give Vladimir Putin a black eye and essentially create a buffer zone. Because that area had been responsible for about 2,000 attacks on Ukraine over the last couple of months, now they've eliminated that threat, gotten rid of all the artillery launching facilities and missiles and whatnot.

And by the way, they've made 120,000 Russians displaced. So they've really delivered a hurt to the Russian people. And hopefully that will apply a lot of pressure to Vladimir Putin. Because when you get right down to it, he's really the center of gravity. This war is going to last as long as Vladimir Putin is either in power or he wants to continue this war and they need to attack that center of gravity, Vladimir Putin, and somehow create the political pressure internally within Russia to remove him.

DEAN: All right. Kim Dozier and Gen. Steve Anderson, thank you so much for that analysis. We appreciate it.

Still ahead, Hurricane Ernesto gaining strength after hitting Puerto Rico. How much damage the storm did there? Where it's headed next?

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