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Hiring Picks Up Pace in February; Interview with Rep. Ed Royce; U.S. Warship Crossing into Black Sea; Senate Blocks Military Sex Assault Bill; Hiring Picks Up Pace in February

Aired March 07, 2014 - 09:00   ET

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

JAKE TAPPER, CNN ANCHOR: Good morning. And thanks for joining me for this special edition if CNN NEWSROOM. I'm Jake Tapper in for Carol Costello.

We'll start the hour with breaking news about the health of the U.S. economy. Moments ago we learned 175,000 jobs were added to payrolls last month. That is better than expected. And the unemployment rate ticked up only slightly higher to 6.7 percent.

To discuss I'm joined by CNN chief business correspondent Christine Romans and Stephen Moore, the chief economist at the Heritage Foundation, and also of course Alison Kosik at the New York Stock Exchange.

Christine, let me start with you. Take us through the numbers. What did we learn from this report?

CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: Well, we learned that despite all that terrible weather hiring picked up in the month, Jake, 175,000 jobs created. The unemployment rate ticking up slightly to 6.7 percent but the Labor Department is telling us that's little change.

The trend is what's important here and you can see that hiring has been slowly picking up this year but it needs to be stronger than this. You need to be seeing 200,000, 200,000 plus every month.

Now what economists are telling me this morning, Jake, is if you hadn't had that bad weather you might have been there. This might have been a month that saw hiring doing what we want to see it doing 200, 250 and higher. The real key here will be what happens next month and the month after, whether this momentum continues because we knew that the weather was going to be very difficult to see what the underlying trend was in the labor market.

Business, information, professional services, those are lawyers and accountants, those tend to be higher paying jobs. You saw 79,000 jobs created there. You saw even hiring in manufacturing. Even saw hiring in construction. Some of the areas we feared would be held back by the weather. You saw some good hiring there. Leisure and hospitality.

But a pull back in hiring in retail, I think no surprise. You weren't going to the mall when you were shoveling out your driveway. That's where we saw a little bit of pull back -- Jake.

TAPPER: And Stephen Moore the Labor Department gives us the 6.7 percent unemployment figure. Economists say, of course, that's not the real unemployment number not --

STEPHEN MOORE, CHIEF ECONOMIST, THE HERITAGE FOUNDATION: That's right.

TAPPER: Because it doesn't include the underemployed and those who've given up searching.

MOORE: Right.

TAPPER: That could be as high as 15 percent or 20 percent. How do we get that number down?

MOORE: Well, great question. First of all, I agree with Christine's analysis. I think she's exactly right. You know, we don't exactly know how many jobs, more jobs would have been created if we hadn't had these blizzards in the last four weeks. But, you know, I look at a couple of the statistics that Christine didn't mention.

The one that economists, Jake, are most concerned about across the board is the decline in what we call the labor force participation rate. Those are the number of Americans between the ages of 18 and 64 that could be working and what we're finding is that number is still really low, Jake, and I find that to be troubling.

And, you know, it's interesting, Christine talked about the momentum and some job growth and she's right. But remember that's a terrible number that we got last month where we had less than 100,000 jobs created.

Christine is right, we need to get to the 250,000 or so job level to really start making progress and bringing the real unemployment rate which in my opinion is closer to 10 percent down.

TAPPER: Alison Kosik, 175,000 jobs created in February according to the Bureau of Labor Statistics. Will this good news on paper result in good news on Wall Street today you think?

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: It looks like it will. It's certainly a surprise to the upside. We saw stock futures jumped to about -- it looks like the Dow can open about 87 points higher. We have about a half hour to go before that Opening Bell rings. So it looks it's going to an open with green arrows.

You know, one thing to keep in mind, one report does not make a trend but the way Wall Street is looking at this is this number beat expectations. Also you look at January and December's numbers. Those were revised higher. So the way investors are looking at it, what -- everybody thought the weather was sort of keeping from happening, meaning job growth, it wasn't as bad as first thought, even though you're not seeing these job numbers where they want to be.

The weather didn't have as bad of an impact as first thought. So the thinking is that there is underlying strength not just for this report that we got for February but also possibly for next month's report and the thinking is that there could be a spring thaw in the works -- Jake.

TAPPER: And, Christine, I don't mean to focus on the negative but, Christine Romans, I do want to ask you about this underemployment rate level because it is something that bewitches the Obama administration.

ROMANS: Yes.

TAPPER: And something that economists do focus on.

ROMANS: And it's 12.6 percent in this report. That means the number of people who were out of work or they're working part time but would like to be working full time, these are people who've been sidelined by the Labor Market, exactly what Stephen Moore is talking about.

MOORE: Right.

ROMANS: That number still too high. Actually that's what gives the White House ammunition to say hey, renew unemployment insurance. Hey, we've got to raise the minimum wage. Hey, we've got to do these other things to help people feel better about the job market in the near term.

So it's sort of interesting. The job picture is improving but not enough that the White House is going to abandon some of their major -- you know their marriage priorities for the year in terms of jobs, including the unemployment benefits extension and raising the minimum wage.

TAPPER: And of course, Christine --

(CROSSTALK)

MOORE: You know, Jake, can I mention a --

TAPPER: Yes, go ahead.

MOORE: Could I just mention a couple of statistics? I don't want to accentuate the negative too much either. I mean, this was a decent report. But a couple of statistics to be worried about, Christine. One is if you look at the long-term unemployed.

ROMANS: Yes. Still too high.

MOORE: That number actually increased. Those are people unemployed for more than 26 weeks. Second of all, if you look at what happened with hours worked, those actually declined. That's troubling. You know, we want -- as the economy picks up and as people -- as employers start hiring more workers you'd expect the number of hours worked to be increasing. They decreased.

One other final statistic, there are two million fewer people in the labor force, Jake, today than there were a year ago. That's very unusual in a period of what is supposed to be a recovery and an expansion.

TAPPER: All right. Christine Romans, Stephen Moore, Alison Kosik, thank so you much.

Now to the crisis in Ukraine and the many events that are rapidly unfolding there. Just after dawn this morning Russia sank a second of its old Navy vessels to completely seal off a Ukrainian naval base. The blockade means several Ukrainian naval ships are now trapped and essentially out of service.

For the second straight day international observers have been blocked as they try to enter Crimea but new lawmakers there say monitors from Russia and other countries will be welcomed to observe this month's referendum on whether the region will split from Ukraine and -- and join Russia.

President Obama, of course, yesterday said that referendum is illegal under international law and he urged the diplomatic resolution during an hour long phone call with Russian President Vladimir Putin that we are now just learning about.

Obama also called for direct talks between Russia and Ukraine. The call came just hours after the White House slapped the new sanctions on individuals responsible for Russia's military action into Crimea.

Even as the ink dried on the first set of sanctions Washington began ratcheting up its debate over a second round. Here's one proposal passed yesterday by the House Foreign Affairs Committee. It calls for the U.S. and its allies to boycott the upcoming G-8 Summit in Sochi, Russia and to consider expelling Russia from the G-8. It also calls for more sanctions on officials, banks, state agencies and for financial and technical aid to be provided to the government of Ukraine.

Our next guest is a co-sponsor of that resolution and the chairman of the House Foreign Affairs Committee, Congressman Ed Royce of California joins us from Washington, D.C.

Congressman, good to see you. How much support do you expect for these sanctions specifically and more sanctions in general?

REP. ED ROYCE (R), CALIFORNIA, HOUSE FOREIGN AFFAIRS COMMITTEE: Well, it was interesting in the debate before the committee we ended up with the unanimous vote in support of this. But also we passed out an additional provision and that provision calls for the United States to start the process of leveraging Russia by exporting gas into Western Europe and into the Ukraine.

I think what's been missing in all of this is the very real leverage on Russia. And, in fact, 70 percent of their revenue from trade is from petroleum and 52 percent of the budget for the Russian government itself comes about as a result of their revenue given the monopoly pricing they have over Western Europe.

So we have a situation here in the United States where we're flaring gas, where we've got a glut, we can expand that into the market, and really give the Russians something to think about and making Europe much more independent in their decisions here. So I think introducing this leverage is important.

TAPPER: Congressman, yesterday started with President Obama, the White House announcing some of these sanctions on individuals in Russia, people responsible for the incursion into Crimea. That did not seem to result in Russia seeming intimidated at all. They launched a very large military exercise about 280 miles away from the border with Ukraine and, of course, now there are officials in Russia, allies of Putin, voicing support for the first time for this referendum in Crimea on whether or not Crimea should join the Russian federation.

Do you think anything the U.S. has done right now so far has caused Putin to do anything other than become more determined to take Crimea?

ROYCE: I think the Russians have perceived that we are willing to talk and the Europeans are willing to talk, but that there hasn't been really action that would give them second thoughts about further escalation. And my concern now is escalation of the eastern part of the Ukraine. So in order to get their attention, this is why I'm saying the White House, frankly, needs to come around to a strategy of supplying Europe, selling to Europe gas and replacing the monopoly that Putin has and the leverage that Putin has with Europe.

If we do that we can do many more things in tandem with Europe because the capitals in Europe, the decision makers across the European continent are very, very concerned about the pressure, the way in which Putin can bring down on them considerable leverage. We need to inverse that, reverse that by doing something that's going to help our balance of payments.

Frankly something that's going create jobs in the United States but most importantly finally give Putin something serious to worry about, which would to be implode his economy if this really became a long- term strategy of -- you know, with our ability to produce energy to supply Europe with that energy.

TAPPER: In addition to the energy issue, though, Congressman, isn't one of the issues the fact that the U.S. only does about $40 billion a year with Russia in trade whereas the European Union does, I think something like $460 billion and even if you remove the energy issue from the equation the Brits, the Germans, others in the EU just rely too much on Russia. Their economies are so intertwined that they are afraid that any sanctions imposed against Russia would respond in -- would result in retaliatory actions that would hurt their economies.

ROYCE: And, Jake, though it's a two -- it's a two-sided sword here. It's two edged in the sense that as much as it would help in the leverage, you know, here for the Russians, remember what it would mean if you had leadership on the part of Chancellor Merkel and from the UK that went with the United States and seriously threatened what I've just suggested.

If that were to happen you'd be looking at the collapse of the ruble, you would look at the collapse of the stock market in Russia. So it is clear that it would affect Russia far more than it would affect Germany or Britain. I think for that reason what's required is leadership here and at the same time consultations in which the Germans and the French sit down with the Russians and explain, look, how can we guide you towards an exit ramp here so that we do not end up with taking the steps that frankly would collapse Moscow's economy.

How do we -- how do we end the escalation of this, because the Russians continue to escalate it? And until we do something decisive on energy policy, until we have a strategy and a policy that actually is something that the Russians would really worry about long term we don't have that hammer.

But that's why I feel good about the action that the Foreign Affairs Committee took here because with the unanimous vote we now bring this to the floor, on Tuesday it will -- it will go off the floor and frankly it gives Merkel something to talk to Putin about in the next conversation in terms of what will happen next. And it's something that our allies in Germany and the rest of Europe really want to see is access to our gas.

So here is the way we convince Europe to stand with us on this. And here is how we can convince Putin, I think to stand down.

TAPPER: Congressman Ed Royce, chairman of the House Foreign Affairs Committee, thank you so much for your views. We appreciate it.

ROYCE: Thank you, Jake.

TAPPER: Meanwhile, the U.S. military is on the move. Take a look at these pictures. Right now a U.S. warship, a guided missile destroyer USS Truxtun is entering the Black Sea. Now this is a previously planned military exercise planned with Romania and Bulgaria but it comes as tension in the neighboring Ukraine continues to simmer and CNN senior international correspondent Ivan Watson is on a boat in the Bosporus Strait, part of the waterway that divides Europe and Asia.

Ivan, is this adding to tensions in the area?

IVAN WATSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, there's clearly a message that's being sent here. We're going to pan the camera right over right now so that you can see this U.S. guided missile destroyer from Norfolk, Virginia. The Truxtun with a crew of approximately 300 on board, steaming right now, Jake, up the Bosporus Strait.

It is that geographic natural choke point and the only way that any sea vessel can get into the Black Sea. Now the U.S. Navy said that this was a previously scheduled journey to conduct joint naval operations, as you mentioned, with Bulgaria and Romania. But the situation in the Black Sea and in the Crimean Peninsula is anything but normal right now. The Russian military has effectively occupied the Crimean Peninsula, which is home not only to the Ukrainian navy but also to the Russian Navy.

And you'll recall just last Tuesday we spoke from this very same point in this Bosporus Strait about Russian warships, two of them that had sailed up to the Black Sea and also Ukrainian naval vessels.

So, a lot of the crisis stems from naval power, from Russia's naval claim, to the Crimea peninsula for more than a century as a vital and strategic warm water port for a country with much of its coastline is frozen in by ice, especially during the winter months. Part of why it is so valuable to Russia to that have Crimean peninsula as a place where its navy can move in and out of.

And on top of that this, I want to remind you again, this is a U.S. Navy destroyer, the Truxtun, that sails normally out of Norfolk, Virginia. On top of that, the Russian military at this point is blockading a number of Ukrainian naval vessels -- a number of Ukrainian naval vessels in the Crimea at their home port. There's actually scuttled at least two ships to keep Ukrainian navy ships to move out from there.

So, the naval component is a very important part of the crisis, the geopolitical tug-of-war that we're seeing around Crimea, around the Ukraine right now. And that's why amid the diplomacy that we're seeing going on between Moscow and Washington and the European Union and Kiev, the moments of naval warships like this are also important. They send messages right now as U.S. Secretary of Defense Chuck Hagel has done earlier this week, announcing that the U.S. would step up joint air patrols over the Baltic peninsula. That's a clear sign of support to Estonia, Latvia, Lithuania, and Poland, four former Soviet satellite states, all very concerned right now, Jake, about the Russian military moves into the Ukraine and into Crimea peninsula -- Jake.

TAPPER: Senior international correspondent Ivan Watson with some excellent on the water reporting -- thank you so much.

We'll be right back after this quick break.

(COMMERCIAL BREAK)

TAPPER: Checking some of the top stories at this hour.

The first week of Oscar Pistorius' murder trial is now over but not before the Olympic sprinter's ex-girlfriend testified he slept with a pistol by his bed and once got so angry at a traffic stop that he shot a gun through a car sun roof. She said the relationship ended when Pistorius cheated on her with Reeva Steenkamp, the girlfriend he's accused of killing. Pistorius has admitted shooting Reeva Steenkamp to death but said he mistook her for an intruder. The trial will resume on Monday.

A California state lawmaker is proposing a law that prevents SeaWorld from using orcas in their show. He's citing the CNN documentary "Blackfish". The bill reportedly also would ban captive breeding and prohibit the import and export of killer whales.

SeaWorld says it has not seen the bill but it has previously slammed the film as propaganda.

This morning, the Army is investigating shocking new allegations of sexual misconduct against the man who served as a top prosecutor of sexual assaults. The army has not identified him but an Obama administration official tells CNN his name is Lieutenant Colonel Joseph Morse. News of the probe comes as Senate blocked a bill that would have overhauled how the military prosecutes sex crimes.

CNN justice correspondent Pamela Brown is in Washington.

Pamela, good morning.

PAMELA BROWN, CNN JUSTICE CORRESPONDENT: Good morning to you, Jake.

According to a recent Pentagon report, there were an estimated 26,000 sex assault and unwanted sexual contact incidents in the military in 2012. This week, at least three high-profile military leaders making headlines for alleged sexual misconduct including Lieutenant Colonel Joseph Morse, the lead prosecutor in the case against Staff Sergeant Robert Bales, who pleaded guilty of killing 16 Afghan civilians.

(BEGIN VIDEOTAPE)

BROWN (voice-over): He was a top Army prosecutor tasked with protecting victims of sex crimes, training and managing a team of 23 special victims prosecutors in Fort Belvoir, Virginia. Now, Lieutenant Colonel Joseph Morse is embroiled in a sex scandal of his own.

According to an administration official, Morse has been placed under criminal investigation for misconducts. A female lawyer says he groped her in 2011 in a hotel room at, of all things, a sex assault conference.

Morse joins the ranks of other high-profile military leaders in trouble for inappropriate sexual conduct, including Brigadier General Martin Schweitzer, under investigation by the Army for sending a crude e-mail.

UNIDENTIFIED FEMALE: There was an e-mail in March of 2011 by a brigadier general after meeting with a congresswoman in which he apologized for e-mailing it late because he had masturbated three times over the past two hours after meeting with the congresswoman.

BROWN: Another brigadier general, Jeffrey Sinclair, one of the Army's top commanders in Afghanistan, pleaded guilty Thursday to three charges in a sex assault case, but not to other more serious charges.

UNIDENTIFIED FEMALE: I plan on trying to reform the whole system.

BROWN: On the same day, sexual misconduct cases in the military took center stage on the Hill after Senator Kirsten Gillibrand lost her hard-fought battle to reform how those cases are handled. Her bill fell five votes short. But Gillibrand vows to continue her fight.

UNIDENTIFIED FEMALE: This is one fundamental problem that the victims have said they're not reporting these cases because they don't trust the chain of command. That's one issue that must be addressed.

(END VIDEO TAPE)

BROWN: And the bill' failure to pass pleased the Pentagon brass who argued an overhaul would undermine commander's ability to lead. In the meantime, our attempts to reach Lieutenant Colonel Joseph Morse were unsuccessful and an administration official tells Barbara Starr the Army removed Morse from his job as a sex crimes prosecutor once it learned of the allegations -- Jake.

TAPPER: Pamela Brown, thank you so much.

Still to come: today's jobs report delivers an upside surprise for February and markets look ready to roar right out of the gate. We'll find out how high stocks could climb and whether Wall Street records will tumble yet again.

(COMMERCIAL BREAK)

TAPPER: Good morning. Thanks for joining me for this special edition of CNN NEWSROOM. I'm Jake Tapper in for Carol Costello.

Wall Street is looking to knock down some records today. Starting today's trading on an upward swing after a much better jobs report out of Washington.

Alison Kosik is at the New York Stock Exchange.

Alison, take us through the early trade so far.

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Looking like we got a minute to go before the opening bell, a little over a minute before the opening bell rings. It certainly looks like the bulls will charge right out of the gate.

And, you know, stocks have already been on this upward trend. You look at the S&P 500, it closed at an all time high yesterday. It's expected to continue adding on to those gains. You look at the Dow. It's only 160 points away from it's all time high.

So, what's expected to give stock momentum today? That jobs report for February showing employers added 175,000 jobs during the month of February, also positive revisions to the months of January and December. That's what Wall Street really wanted to hear because, you know, a lot of worry for a lot of this data coming out was the fact that we had this brutal winter that kept jobs from being created, so you see even more jobs being created than at first expected for the months of December and January. That sort of giving hope that a spring thaw is on the way, especially after having all those reports not just with jobs but with economic data.

So, a sigh of relief today, giving bulls more room to run and gosh they have been running. Look at this. The fifth birthday for this bull market happening on Sunday. Did you know the S&P 500 is up 180 percent, almost 180 percent since the stock market hit its low in 2009? Well, the big question is, when all this weather calms down, Jake, and can't be blamed for --