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California, Texas and South Carolina Governors Announce COVID- 19 Policy Adjustments; Interview with Former Acting Chairman of White House Council of Economic Advisors Tomas Philipson; Brazil Passes 2 Million COVID-19 Cases as India Also Surges. Aired 10:30-11a ET

Aired July 17, 2020 - 10:30   ET

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

[10:30:00]

POPPY HARLOW, CNN ANCHOR: I mean, it is very significant that he's issued this statewide mask order for sure, but he is pretty certain that they're not going to need to shut down again because he thinks this will reverse the trend?

ED LAVANDERA, CNN NATIONAL CORRESPONDENT: Right. You know, we have the right-wing conservatives in the Republican Party here in Texas that are meeting in their state convention, they're doing it virtually.

The governor, defending the mask mandate. There's a number of people coming from that right wing, saying that this mask order is unconstitutional. And the governor's defending the mask order because he believes, he says, that the mask order is what is going to prevent an economic shutdown.

So as the governor talks about a great deal of concern amid these growing escalating numbers of coronavirus in Texas, and concern that it's going to cause another economic shutdown, the governor seems to be saying that it will not happen for now if people wear their masks. So if anything were to happen on the economic shutdown front, I think we're some time away from that.

But all of this is unfolding, as we've seen, another record-breaking week here in Texas, Poppy, with coronavirus numbers three days in a row with more than 10,000 cases being reported, a record high in the number of deaths reported on Thursday, nearly 130 -- these are devastating numbers. And the positive infection rate of these new coronavirus cases, at almost 17 percent -- Poppy.

HARLOW: Wow, I hate seeing -- I think we all hate seeing those charts, up and up and up. Ed, thank you for the reporting there. We'll see what comes of it.

To California now, where Los Angeles County's health director says they have hit some very concerning milestones. Also this week, on Thursday -- so just yesterday -- there was a record for the largest single-day increase in cases. Stephanie Elam joins us with the latest.

And Steph, it's -- you know, these staggering numbers, and then a really big decision from the governor on schools today.

STEPHANIE ELAM, CNN CORRESPONDENT: Right. We're going to hear from the governor later today, and here's what the issue is. How do you open up schools when the numbers look like they do? And this record number in Los Angeles County of just shy of 4,600 cases, new cases that were reported yesterday.

You take a look at that number, and it's also interesting to note that -- and I've heard this from hospitals I've spoken to here as well -- that there is a rise in the number of people between the ages of 18 and 40 who are now being hospitalized with COVID-19. This is a change. Before, we were seeing that it was older, the older demographic. It is changing here, and this is a concern here.

Also, when you take a look at the fact that they're saying that this 4,600 could become 18,000 cases in just a matter of weeks, this is why you're seeing this concern about this. And the fact that more than half of the deaths in California are here in Los Angeles County, and more than half of the deaths are also focused from nursing homes. So these are all concerns here.

In California, overall, the numbers, 8,500 new cases were announced. But we did see a slight downturn in those numbers as far as hospitalizations and ICU beds being used.

Still, we're going to hear from the governor later today. Governor Newsom, going to talk to us about what is happening with schools, his guidelines for reopening. This, as we know, as the two largest school districts are planning not to be in-person come the fall. But this will be more widely giving us guidance for the state -- Poppy.

HARLOW: Every parent, every parent will be listening for that news. Stephanie, thank you very much for the update.

Let's go to South Carolina, setting a new record for the day after reporting the highest number of COVID deaths in that state there in a single day. That happened just yesterday, as the state's governor pushes for schools to return in person for learning this fall. Natasha Chen joins us on the ground in Greenville.

What's the reaction there to the governor's stance? Because I know parents want their kids in school, but they want everyone to be safe at the same time.

NATASHA CHEN, CNN NATIONAL CORRESPONDENT: Right, Poppy. A lot of educators, after his announcement, were very upset by that, calling it disappointing. Representative Joe Cunningham, also saying that the last thing we should do is override teachers and health professionals in this instance.

And the state superintendent reminded us that of course, what the governor said is not an executive order, but the state superintendent ultimately approves the plans that school districts send in. The governor did ask that all districts send in plans that include the option for in-classroom learning. He felt that giving parents this option is critically important, even as the state's health department is releasing data this week about high rate of disease spread in all counties but one.

Right now, today is the deadline for school districts to submit plans to the Department of Education here. About a quarter of them have asked for extensions. And so far, the Department of Education tells us that they have not received any plans, Poppy, that have virtual- only options. So everybody so far has some up with some sort of in- classroom option.

Here in Greenville, the largest school district in the state, they told me they'd like to submit their plans next Tuesday, which ranged everything from virtual learning all the way to five days a week, and options in between as well.

[10:35:03]

HARLOW: I know, I know. We're going through it with our school district. I mean, how do you plan for something that is so unknown and changing day to day? Natasha, thank you for the reporting on the ground in Greenville this morning for us.

CHEN: Thank you.

HARLOW: Well, it could be years before the economy fully recovers from the impact of the COVID pandemic and shutdowns. For many Americans, though, the situation is so urgent, we're going to speak next with the former chairman of the president's Council of Economic Advisors, Tomas Philipson.

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[10:40:06]

HARLOW: All right, welcome back. Coronavirus cases, as you know, are surging in more than half the country. Time is running out. Many -- and money running out for many Americans. A survey of more than 1,500 small business owners, out last week, found a majority of them -- this is a Goldman Sachs number (ph) -- will have used up their PPP loans by the first week in August. A separate survey found a third of people missed their housing payments in the month of July.

I'm really happy to be joined now -- for his first appearance on CNN -- by Tomas Philipson. He's the former acting director of the White House Council of Economic Advisers, the former chairman.

It's good to have you. Thanks for your time.

TOMAS PHILIPSON, FORMER ACTING CHAIRMAN, COUNCIL OF ECONOMIC ADVISERS: Thanks for having me, Poppy.

HARLOW: You just left the White House, like a matter of weeks ago so you know this stuff inside and out. What happens to the economy and the most vulnerable people if the $600 extra unemployment benefits people are getting every week now, if that ends as planned at the end of this month?

PHILIPSON: Well, I think in general, the pandemic really hit the low end of the distribution. If you look at the industries that were kind of affected by this, industries where consumers have to kind of consume the product or service in a group, so airlines, sports events, restaurants, what have you. And a lot of those workers are lower end.

So it was an enormous use -- usually, recessions are kind of hitting the lower end a lot more, but this was atypical in how much it did. And I think essentially, what we're seeing now is trying to figure out how to provide a bridge, if you want, through this, through liquidity to low-income people, which are doing a lot worse than the high-income people.

HARLOW: Yes. and when you look at the recovery -- you know, there's a debate now about whether or not, in the next stimulus, states and local cities and municipalities should get more aid, right? You've got Democrats, pushing for over $1 trillion in it.

And I thought it was interesting, Ben Bernanke, obviously, who led us through the last crisis, the Great Recession, who's a Republican, just wrote this week in "The New York Times" that it was the single biggest mistake int heir recovery efforts after the Great Recession, to not give more state and local aid. Do you fear the administration might -- and Congress might make the same mistake this time?

PHILIPSON: I think the key here is that any kind of aggregate shock to the economy like COVID, you can have the government step in as sort of an insurer, if you want. The question is, do you insure against this event or are you trying to bail out states for past deficiencies in their --

(CROSSTALK)

HARLOW: But does it matter?

PHILIPSON: -- funding (ph). A lot of states are --

HARLOW: Does it matter if you want the economy to succeed? I mean, I totally get your argument about, were irresponsible decisions made in the past and -- but if you're like trying to save the U.S. economy, do you just sort of have to stomach it?

PHILIPSON: Yes. I mean, the question is, who pays for it, right? So we have 100 percent debt level now (ph) as a share of the economy, states have about five to 20 percent of their -- of the state GDP is their debt level.

And you really -- it's a matter of -- what it boils down to, really, is you know, who should pay for that state? Is it essentially the kids of that state and future borrowing, or the kids of the rest of the country? In bailing these states out. That's essentially the economics of what it boils down to.

HARLOW: I want to talk to you about, you know, pandemic preparedness and pandemic response. Because, as you know, a line from many in the administration has been, you know, We weren't left with anything, you know, we didn't know this was coming. But I mean, I spent a lot of last night reading this 43-page report,

Tomas, that you guys wrote. I mean, you were at the Council of Economic Advisors, this is last September, you wrote it. It's all about the threat of a pandemic.

And it says -- and I quote -- "In a pandemic year, the economic damage would range from $413 billion to $3.79 trillion. Fatalities in the most serious scenario would exceed half a million people in the United States."

Did the president read your study?

PHILIPSON: Yes. I mean, the White House is fully aware of what CEA puts out, and I was even accused of not knowing what CEA was putting that out, even though I was an author on it. So I think it was a little sidetracked.

But the bottom line of that report -- which I think is exactly what Operation Warp Speed is doing right now -- is that you need to have very, very quick production of vaccines within under a pandemic outbreak. And we didn't have that capability because we had basically what's called egg-produced vaccines, a very slow production process. So you would have to ramp up production very slowly in the middle of an infectious disease (INAUDIBLE).

Operation Warp Speed is an enormously beneficial, you know, investment. It's only 412 billion, and we have estimated, you know, with the economy losses and the health losses, there's trillions on the line, of speeding this up just half (ph) --

(CROSSTALK)

[10:45:01]

HARLOW: But to -- to be clear --

PHILIPSON: -- so I think it was kind of -- it was underlining that effort, I think, and that resulted in Operation Warp Speed.

HARLOW: OK, but that started now. And that's important and we all want it to succeed. But I guess my question is, you guys told them, at the highest levels of the White House, last year, This could happen and we're not ready and here's the potential death toll and economic cost, right?

PHILIPSON: Yes (ph), I mean, essentially what happens is that CEA puts out sort of analysis of these issues, and this is within the purview, really, of NSC at the time. And I think, you know, many administration -- this is like a one in 100 years, lifetime event. And many administrations in the past kind of ignored that in terms of that response --

HARLOW: Yes, all right.

PHILIPSON: -- being available.

HARLOW: OK. Well, so clearly you guys did the homework, and you put it out there.

Before you go, you left -- you left, you're going to go back to being a professor at the University of Chicago. But why did you leave the White House, Tomas? Because some reporting is that you got pushed out. But I believe you say it was because of the other economists around the president?

PHILIPSON: Well, I mean, I had a three-year leave. Usually you only get a two-year leave from your university. I had a three-year leave when I became acting chairman. And basically, I was going to go before August 2020 no matter what.

I left a little bit early because I did get frustrated with the process. I think when the president's process works correctly -- and the president likes this -- there are several voices in the Oval, and you kind of hammer it out. It's similar -- I view it as -- to a court, where you have defendants and plaintiffs arguing, you know, why the other side is bad, et cetera.

CEA was extremely successful the first nine months in getting their views across and getting -- pushing POTUS in our direction. There were very few times I walked out of the Oval where we didn't -- we were not on the winning side. That was not every popular with the other side. So obviously, that led to a lot of exclusion and even threats of firing me. So I was very annoyed with the process and it was time to go anyway to the University of Chicago.

HARLOW: All right. Well, we appreciate you being on and thanks to your team for issuing this report a year ago. I wish a lot more people would have paid attention. Tomas Philipson, thanks. Have a good weekend.

PHILIPSON: Thanks, Poppy.

HARLOW: We'll be right back.

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[10:51:45]

HARLOW: The U.S. leads the world right now -- if you can believe it -- in coronavirus cases. It is right behind Brazil, now surpassing 2 million cases. Our Shasta Darlington is with us this morning in Sao Paolo with the latest.

Good morning, Shasta. A lot of concern there, also about just the rapid spread and the inability to get a handle on this.

SHASTA DARLINGTON, CNN CORRESPONDENT: That's right, Poppy. We're seeing yet another grim milestone here in Brazil. And just to put this in perspective, it took less than a month for Brazil to go from 1 million to 2 million COVID-19 infections; more than 76,000 people have died from the coronavirus. And experts say it isn't even supposed to peak until perhaps mid-August.

Now, as you mentioned, we're seeing some shifts here. The -- urban centers like Sao Paolo used to be the real epicenters, now it's moving into smaller cities, towns where the health systems are more precarious. Often, intensive care beds are hours away. Indigenous communities are especially hard-hit.

We've also actually seen some news coming from Brazil's most famous patient -- that would be President Jair Bolsonaro, who remains in semi-isolation at the presidential residence after testing positive for COVID-19 last week.

During a Facebook Live on Thursday night, he weighed in on the U.S. elections, saying he hopes Donald Trump gets re-elected, but that the trade relationship will be positive regardless, he said.

And in the meantime, across Brazil, in some of these urban centers, we're actually seeing a reopening. For example, in Rio now, they're allowing groups sports on the beaches. Sao Paolo, shopping malls are open, so are restaurants and bars -- Poppy.

HARLOW: OK. Shasta, thank you. A grim milestone indeed there, appreciate the reporting.

Let's go to India now, where cases have topped a million and at least three states there are returning to their lockdown. Our field producer Vedika Sud joins me with more. Good morning, Vedika, I'm so glad we have you there. What are the medical experts saying?

VEDIKA SUD, CNN FIELD PRODUCER: Well, I've spoken to so many of them over the last two days, Poppy, and all of them have one thing in common to say, which is this is the time for India to be extremely vigilant.

Remember, the last lockdown ended in June. And on the 8th of June, the unlocking-down of India began, which means that restrictions were being eased ever since the 8th of June. after which, according to medical experts, we've seen a huge surge in the number of COVID-19- positive cases, which has the second-most -- it is the second-most populated country in the world.

Also, medical experts say, there are a few reasons why the surge is happening. One, of course, is the unlocking-down, which was not given enough thought by the government. The other being the huge population that India has. Testing is still not happening at an aggressive rate compared to other countries, and also a lot of people not adhering to the basic requests of the government to wear masks, and to socially distance themselves.

So these are some of the main reasons. Also, according to the Ministry of Health in India, about 10 states -- out of 36 states and Indian (ph) territories in India actually have 86 percent of the active cases amongst them, and that's what's worrying at this point -- Poppy.

HARLOW: Very worrying, very troubling numbers. Vedika Sud, thank you for that reporting from India for us.

[10:55:04]

A battle in Georgia between the governor and the mayor of Atlanta over mask mandates. More on that, ahead.

Thank you for being with us all week. We will see you back here on Monday morning. Have a good weekend. I'm Poppy Harlow. NEWSROOM with John King starts after a quick break.

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