Return to Transcripts main page

CNN Newsroom

Biden to Start G20 Summit Without Spending Deal Passed; Biden, Macron Expected to Meet in Coming Hours; Interview with Janet Yellen, U.S. Treasury Secretary, President Biden is in Rome Without a Deal, Inflation, and What's Still in Spending Bill. Aired 4:30-5a ET

Aired October 29, 2021 - 04:30   ET

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

[04:30:00]

WOLF BLITZER, CNN ANCHOR: Welcome back to our viewers in the United States and around the world, I'm Wolf Blitzer in Rome. We are following President Biden. He has arrived in Rome for the G20 summit but with less swagger than the White House clearly wanted, that after Congressional Democrats once again failed to pass the trillion-dollar infrastructure package. His departure from Washington for the summit was supposed be the deadline for getting it done. This latest miss though, likely raising serious questions abroad about his leadership.

The U.S. President also delayed his flight to Italy to go to Capitol Hill Thursday, and pitch progressive Democrats on a framework for his other huge initiative, that major social spending bill. Progressives, while not ready to budge, still say they remain hopeful.

(BEGIN VIDEO CLIP)

REP. PRAMILA JAYAPAL (D-WA): We are going to pass both the bills.

UNIDENTIFIED MALE: How long do you think it's going to take?

JAYAPAL: I think it's going to happen pretty quickly.

UNIDENTIFIED FEMALE: Do you think it can be done this week?

JAYAPAL: I don't know. Let's see.

(END VIDEO CLIP)

BLITZER: CNN White House reporter Kevin Liptak has been closely covering all of these developments. The wheeling and dealing that's going on. He's here with me in Rome. Clearly, a disappointment for the president, that the House of Representatives didn't pass what clearly passed bipartisan support in the Senate, the traditional $1.2 trillion infrastructure package.

KEVIN LIPTAK, CNN WHITE HOUSE REPORTER: Yes, it is a disappointment. And remember, the president set the deadline for himself. He had been telling lawmakers in Oval Office meetings in the past two weeks that America's prestige was on the line if he shows up to these summits without a deal. Some of the participants said he actually locked eyes with them and went around the room one by one and told them that he needed this bill before he arrived. And what yesterday was, was really an attempt to force a vote on this. These talks have slogged on for week, months even. The president made a last-minute gambit effort in the East Room to try until Democrats that he needed these bills to pass before he got off of Air Force One here in Rome. So, it is a disappointment.

And it really comes down to this mistrust between the progressive Democrats in the House and those two moderate Senators, Joe Manchin of West Virginia and Kyrsten Sinema of Arizona, that progressives say that they can't vote on this infrastructure bill until they have a signal from those two Senators that they'll support the larger social spending package. Those two Senators have been supportive in their statements but they have not said explicitly that they'll vote for it and that's what they're looking for.

BLITZER: And behind closed doors, Kevin, the president seems to suggest his presidency, the presidency was on the line right now.

LIPTAK: Yes, he said that in his meeting with House Democrats yesterday. He said that -- another thing he said was that Democrats' political future was at stake. And remember those midterm elections are coming up in just over a year. What the White House says is that world leaders at these summits are certainly well aware of the president's predicament. They say that they're savvy enough to understand what he's going through here.

But remember, this is more than just about any individual portion of this bill. This is about what the president says is autocracy, versus democracy. And he wants to be able to prove that American democracy can deliver for people. And that's part of what he wants these bills to do. He comes to the summit without evidence of that, yes. This isn't over by any means. You saw the progressive House Democrat Pramila Jayapal saying she does believe this will pass eventually. But it's not something he can say that has passed at these summits this week.

BLITZER: All right, Jeff Liptak, Juergen have you with us for the next several days. Thank you very, very much.

In just a few hours, the presidents of both France and the United States, they will actually sit down together, here in Rome. It will be the first time that Joe Biden and Emmanuel Macron have spoken face to face since they had a serious falling out in September over a canceled submarine deal. Paris is still furious over what it calls America's betrayal for leaving it completely in the dark. Secretly negotiated security agreement between Australia, the U.S. and the U.K., cost France a multibillion contract, tens of billions of dollars, we're told.

I want to bring in CNN Paris correspondent Melissa Bell right now. Melissa, tell us what we anticipate emerging potentially from this meeting between President Biden and President Macron.

MELISSA BELL, CNN PARIS CORRESPONDENT: Well, President Macron going in, with a series of very concrete examples of what he is hoping to get from the American president. You know, when the Biden administration came in, there was such hope here in Europe, Wolf., that there would be a restoration of the old multi-lateral ways and I think that is part of the explanation, that disappointment, that France felt.

[04:35:00]

Not only at the fact of losing out on a deal that worth tens of billions of dollars, Wolf, but also, it wasn't consulted and it learned of it with the rest of the world, even on the day when Europe was announcing its own Indo-Pacific strategy. And that misstep, that miscalculation by Washington in terms of the announcement and how it dealt with its oldest ally, at that point, is still something that sticks in the throat of the French.

So going into it, Emmanuel Macron much clearer about what he wants to get, more cooperation on that Indo-Pacific region and more help with the Sahel, that band to the south of the Sahara, where the French have been fighting to try to clear the area of fighting groups some affiliated to al Qaeda, others affiliated to ISIS. It's been arguing, campaigning for American support for years and it's one of the things he's going to be raising with Joe Biden today.

But in terms of restoring the trust that was lost, I think that would be a tall order, just from this meeting, all the more so, Wolf, because Emmanuel Macron has every reason to play the strongman. He's facing an election in a few months. And what he's been arguing for, for a long time is a much stronger European defense policy and one that he wants to get Joe Biden's support for. The idea of being that it shouldn't be incompatible with a strong NATO.

BLITZER: And it's interesting, Melissa, because as much as the U.S./France relationship is strained, all of a sudden, the French relationship with the U.K. has been strained as well, right?

BELL: That's right. They're in the middle of a spat over fishing rights in the English Channel with France, essentially threatening to cause massive chaos to any goods leaving the United Kingdom or coming towards them. One of the fallouts post-Brexit and the departure of the United Kingdom, but this also, but the blow that was dealt to the Franco-American alliance, American's oldest alliance by the way, Wolf, was also about that. The fact that United Kingdom was involved in the deal from which Europe was not only entirely excluded but over which it has never even consulted -- Wolf.

BLITZER: Yes, serious development indeed. We'll see what happens at that meeting today between President Macron and President Biden. Melissa Bell in Paris, thank you very much.

President Biden has arrived here in Rome with his signature economic agenda clearly stalled right now in Congress. A bit of an embarrassment on the international stage. The U.S. Treasury Secretary Janet Yellen is standing by live. We will discuss this and more, right after a quick break.

[04:40:00] (COMMERCIAL BREAK)

BLITZER: Welcome back. President Biden arrived here in Rome without a final deal on his key social and climate package. That's despite the fact that he personally made the case to House Democrats on Thursday to get this done. And despite making it clear, he would have liked to have had the deal in hand, before the U.N. Climate Summit in Glasgow, that clearly did not happen. At least not yet.

For more, I'm joined now by the U.S. Treasury Secretary, Janet Yellen. Madam secretary, thank you so much for joining us. I know you're here in Rome for the start of the president's G20 meetings. But he arrived without a deal. The House Speaker Nancy Pelosi urged her fellow Democrats not to, in her words, embarrass the president just ahead of this trip. But isn't that exactly what happened? He's here in Rome, without a deal, in hand. Is this an embarrassment for the president?

JANET YELLEN, U.S. TREASURY SECRETARY: Well, I'm very hopeful and I fully expect that Congress will pass both packages, and these will be historic wins for the president and for the American people. They will contain truly fantastic investments in people, in infrastructure, in climate change, mitigation, reduce home health care costs, support two additional years of early childhood education, really benefit all of America's families.

BLITZER: Yes, I know that he clearly was disappointed that the Democrats in the House of Representatives couldn't get it done before he left. But the president as you know, Madam Secretary, is touting this deal, potentially as an historic economic framework, his words. President Biden's White House Chief of Staff Ron Klain says -- this is in his words -- twice as big in real dollars as the New Deal was. But without paid family leave, without two years free community college, without vision and dental care expanded to Medicare, is this plan truly, truly a transformational as they say?

YELLEN: Well, I think it's transformational. I think we should focus on what's in the deal. We have two additional years of early childhood education that's universal.

[04:45:00]

We have investments in childcare that will limit the cost of childcare for most of America's families to no more than 7 percent of their income. Investments in home health care for the elderly and disabled. Support that will reduce healthcare costs. And of course, very, very important investments to address climate change, which is an existential threat.

And remember, President Biden is ten months into his term, he's fully committed to working to achieve paid leave for the American people, and to add vision and dental care, to Medicare, and he has time to pursue these additional programs which are also important.

BLITZER: Yes, he certainly is going to have his hands full. If Democrats do get this Bill across the finish line, in the coming days or weeks, Madam Secretary, President Biden will have passed nearly $5 trillion worth of legislation in just the first ten months or so of his presidency. Why is that level of spending all still necessary when the U.S. is recovering from the COVID-19 pandemic?

YELLEN: Well, you know, I want to distinguish between the 1.9 trillion that was in the American rescue package, and what's proposed in the infrastructure package, and the Build Back Better package that's under consideration and reconciliation. The American recovery plan addressed the severe shock to households and the economy, from the pandemic. It wasn't paid for, and it was intended to promote rapid recovery, so America's workers wouldn't be scarred.

The additional packages are fully paid for, and the amounts that are spent will occur gradually over almost a decade. And they're really intended to address long-run challenges that have really been afflicting America's families and America's economic growth now for decades. And not a single household earning under $400,000 will see any increase in their tax bill. But corporations will be asked to pay their fair share, very high-income individuals.

And there's really an historic investment in the Internal Revenue Service. So that we can improve enforcement and begin to collect the taxes that are due under our current tax code. But these are historic investments that will invest in people, invest in infrastructure, and a modern infrastructure necessary for our economy, in broadband, in research and development, supports for families that will let them participate more in the labor force, and really boost economic growth.

BLITZER: You say, Madam Secretary, that the former Obama administration Treasury Secretary Larry Summers -- a man you know well -- is wrong -- your word -- wrong, that the U.S. could lose control of inflation. But it was months ago that President Biden said this was temporary. Now you say inflation -- correct me if I'm wrong -- may not subside until the second half of next year. Clearly, Madam Secretary, this inflation problem in the U.S. is not temporary, right?

YELLEN: Well, I still would say it's temporary, also I don't mean just a matter of a month or two. Although monthly inflation rates are substantially -- have substantially declined from where they were just four or five months ago. But what we're really seeing is the impact of the COVID pandemic has severely disrupted economic activity. It's hugely boosted spending on products, on goods, and diminished spending on services, it's created an enormous demand for semiconductors, and these supplies -- although they've increased -- have encountered bottlenecks and it's really caused some inflationary increase in recent months.

[04:50:00]

As people get back to work, as we defeat the pandemic, and as demand shifts back to services and the supply has a chance to adjust, I believe that price increases will normalize and we'll see lower monthly inflation rates, I think, by the second half of the year, annual inflation rates will begin to decline toward their more normal level of around 2 percent.

BLITZER: As you know, Madam Secretary, inflation for all practical purposes, is like a tax on working class people, the middle-class people are spending a lot more on gas, food, Thanksgiving meals coming up, the holidays coming up. Is this going to get worse before it gets better?

YELLEN: Well, there will be some continued shortages, semiconductors are in very short supply, that's caused the prices of both new and used vehicles to surge. Energy prices have gone up. But I believe energy prices will begin to moderate in the months ahead. That's what markets signals and fundamentals suggest.

And let's remember, the rescue package that was put into effect quickly when the president was elected, has meant that people have jobs. They're finding it easy to find work. They're confident about the job market. Compare this with what happened in 2008 after the financial crisis, when it took years to get employment back to normal levels. The unemployment rate has declined from a peak of almost 20 percent, now to just 4.8 percent and will fall further in the months ahead.

So, prices have increased somewhat, as I say, I believe those price increases will subside, but income growth has been very, very strong. And wages are going up, especially for low skilled workers in the service sector.

BLITZER: All right, that's good to hear that. The U.S. Treasury Secretary, former Federal Reserve chair, Janet Yellen, here in Rome. Thank you so much, thank you so much for joining us. We really are appreciative. And it our viewers, we'll be right back.

(COMMERCIAL BREAK)

[04:55:00]

BLITZER: President Joe Biden has arrived here in Rome just ahead of the G20 summit of the world's wealthiest countries. But he's coming without an agreement from lawmakers back in Washington on his sweeping social agenda, including plans to fight climate change. The president will be soon right here at the Vatican, with Pope Francis. After the G20, he travels to Glasgow, Scotland, for the COP26 climate summit.

That wraps up this hour of our special continuing coverage of President Biden's trip to Europe for the G20 and what's called the COP26 summit. I'm Wolf Blitzer in Rome. I'll be back later today in the "SITUATION ROOM," the special "SITUATION ROOM," from Rome, live, 6:00 p.m. Eastern. "NEW DAY" is next.

(COMMERCIAL BREAK)