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Will Putin Escalate War in Ukraine?; President Biden Lays Out Inflation Plan. Aired 1-1:30p ET

Aired May 10, 2022 - 13:00   ET

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

[13:00:00]

ANA CABRERA, CNN HOST: Hello, and thanks so much for being here. I'm Ana Cabrera in New York.

You are feeling it at the grocery store. You're feeling it at the gas pump, at the mall. And moments ago, President Biden told Americans, I feel your pain.

(BEGIN VIDEO CLIP)

JOE BIDEN, PRESIDENT OF THE UNITED STATES: I know that families across America are hurting because of inflation.

I understand what it feels like. I come from a family where, when the price of food or gas went up, we felt it. It was a discussion at the kitchen table.

(END VIDEO CLIP)

CABRERA: The president called on the whole of the American government to do something about the inflation crisis, what he says is the number one challenge facing families today.

We're going to drill down on what all this means for your wallet.

First, let's go to CNN's Kaitlan Collins at the White House.

And, Kaitlan, what new did we hear from President Biden today? What's his plan?

KAITLAN COLLINS, CNN CHIEF WHITE HOUSE CORRESPONDENT: Well, you heard him bluntly confronting this challenge, saying that inflation is his top domestic priority right now, he knows the pains, the pains that Americans are feeling because of it.

But the big question, of course, is what President Biden is going to do about it. And that is where the challenge comes in for this White House, because there aren't a ton of levers that they can pull that can significantly change inflation.

And so that's why you heard the president today leaning on the Federal Reserve, saying that he does agree with them that inflation is the number one economic priority here in the United States. And you have seen, of course, interest rates on the rise, potentially more of those rises to come in the coming months.

But when it comes to what President Biden is going to do, he talked about the Federal Reserve's actions. He talked about his own agenda, his domestic agenda, which, of course, we should note is stalled right now on Capitol Hill. And he also talked about telling companies not to price gouge.

But there are still big questions about other steps that he could take that he has not taken so far. And you did hear him at the end of those remarks, Ana, say that they are discussing whether to remove those Trump era tariffs on Chinese goods. That is something that experts have said they believe could help prices for consumers on certain products that, of course, have gone up in recent months as inflation has ticked up.

There are also big questions about implementing a national gas tax holiday -- that's not something President Biden announced -- and also other questions about immigration and increasing immigration, which they believe could also help, but also would require the work of Congress.

And so, really, what President Biden was trying to do today was send a message that he understands the pain that Americans are feeling on this, that he is working to address it, but also to criticize those Republicans who are criticizing his handling of the economy, because we know, in the latest polls that we have seen, something that Republicans and Democrats are both paying attention to, the president is not getting good marks for his handling of the economy.

The latest CNN poll said that 77 percent of people believe economic conditions is poor; 23 percent see it as good. That, of course, is not good news for this White House. And so he was criticizing Republican Senator Rick Scott of Florida, who recently put out an economic plan that talked about a minimum federal income tax.

Of course, right now, Ana, there's about half the nations in this house -- households in the nation don't actually pay that because they don't make enough to pay that minimum tax. And so that is something he was criticizing, saying that the Republicans essentially who were criticizing his handling of the economy don't have a better plan for inflation.

Of course, the big question for the White House is, voters often hold accountable the person who is in office for this. And Democrats know that. That is something they are looking ahead to when it comes to the midterms this fall. And they look at the gas prices, like what you saw today at the highest they have been in so long, and that is the big concern for them, because they don't think these economic headwinds are going to get any better in the coming months.

And that's why President Biden said today likely not the last speech on inflation that he's going to give.

CABRERA: OK, Kaitlan Collins, thank you for that.

Let's bring in CNN's Matt Egan, here with me in New York now, and CNN is Pete Muntean, who's going to join us live at a gas station in Cincinnati.

Matt, let me start with you and the bigger picture here, because what drives inflation can be a little bit complicated, but the effects of it are quite simple to understand for all of us. Prices go up. So what is it looking like for an American family? What exactly are we paying more for?

MATT EGAN, CNN REPORTER: Well, Ana, this sticker shock is real. And it's across the board.

Check this out. This is just in March, 12-month price gains on a whole variety of categories, restaurant meals, men's apparel, baby food, new cars and trucks, chicken, bread, across the board, these are the biggest 12-month price spikes that we have ever seen for these categories, for a...

CABRERA: I mean, 16 percent increase for bread.

EGAN: Exactly.

And we have never seen anything like that for as long as the government has been tracking these metrics. And if you take a step back and look at overall inflation for consumers, for the longest time -- this is around the time that the Great Recession hit -- we saw very level -- almost no inflation, just 2 percent healthy inflation.

And then COVID happened. And we saw prices going basically straight up. And that is something that we really have never seen since. You have to go back to the early '80s the last time you saw anything like this.

Now, I think the good news would be, we are getting another inflation report out tomorrow. Economists expect that it may cool off. Instead of this 8.5 number, we're looking at potentially 8 percent. And that would be good news.

[13:05:05]

CABRERA: Slightly down.

EGAN: But that is still very, very high.

And I think that this chart shows that it's going to take a while until inflation can get back to normal levels.

CABRERA: And so, just to put it in context in terms of actual, like, money that's not in our bank accounts or not in our wallet right now, what's the big picture? How much more are Americans actually paying?

EGAN: They're paying a lot more. Check this out. This is from Moody's Analytics.

They say $327 per month, that's what the average family is spending, because of this high inflation, compared to normal 2 percent inflation. If you add that up, that's around $4,000 a year. And we know this is most painful to low-income families and also to people who are living on a fixed budget.

It also means that wages, even though wages are going up, once you adjust for inflation, wages basically are actually going down. And so that's why inflation is such a problem. And it's such a concern for so many people right now.

CABRERA: And one of the areas we're seeing so much of this inflation is at the gas pump, right? So let's take a look at where we are right now with the gas prices today.

Here's where we are, all the way up to $4.37, on average, per gallon. That's the national average right now. You can say that is up point -- 4, I should say, cents in about 24 hours, up 17 cents from just a week ago. And, of course, it reached a record high back in March. We were talking about how high it was then at $4.33 a gallon. So we have already passed that.

Pete, you're out there talking to drivers. You're seeing it for yourself firsthand how it's impacting everyday Americans. What are you hearing?

PETE MUNTEAN, CNN TRANSPORTATION CORRESPONDENT: Ana, right now, drivers really just want relief, because these prices are rising so rapidly, $4.39 here at this Marathon.

Earlier today, it was $4.15. We have seen a huge increase in the span of just one day. We have already exceeded the national average here. But think about where we were a week ago, the national average, according to AAA, for a gallon of regular, $4.20 back then. A year ago, it was sub-$3, $2.97.

Hard to think about when you see these super high prices. A lot of folks really are just beginning to hunt around for prices, especially here in the Cincinnati area. Just over the line, in Kentucky, prices are a lot cheaper in the metro area. But AAA cautions us, if you're going out of your way to find cheaper gas, typically, counterproductive, Ana.

CABRERA: And so, Pete, let me ask you about a gas tax holiday which has been implemented by a handful of states. Many others are considering it.

Leaders from both parties see this as a potential solution. This morning, CNN asked a White House official about doing that on a federal level. And it wasn't ruled out. Explain why this, though, is a double-edged sword.

MUNTEAN: You know, those who are against a gas tax holiday will point to the example in states. They really call it robbing Peter to pay Paul, because, at the state level, those gas taxes typically pay for things like roads and bridges and transit.

At the federal level, the gas tax is charged at the pipeline terminal. It's not here at the pump. It's set at 18.4 cents a gallon. So, really, it would just negate the increases of the last week. And there are some big questions, because of how it is tax, about whether or not that decrease would be passed along to consumers here at the pump, Ana.

CABRERA: OK, thank you so much, Pete Muntean. Matt Egan, thank you as well.

Let's bring in Diane Swonk now. She's the chief economist at consulting firm Grant Thornton. She's also an adviser to the Federal Reserve and the Congressional Budget Office.

Diane, thanks for being here.

First, your reaction to what we heard from the president. Do you think his plan will work?

DIANE SWONK, CHIEF ECONOMIST, GRANT THORNTON: Well, it's not going to take off the real problem, the steam off of inflation, in the way that we really need to do it. That's on the shoulders of the Federal Reserve. And that's why you're seeing the Federal Reserve so committed to raising rates, not just a half-percent at one meeting, but a half- percent at likely the next two meetings as well, and getting up to at least a neutral rate, and then going further on interest rate hikes, because they really have to bring -- dampen demand down in order to bring it in line with a supply-constrained economy.

CABRERA: So, just to be clear, though, how much of this inflation problem is in the president's control?

SWONK: Not very much of it.

I do think, by eliminating some tariffs, you can actually alleviate some of the inflation problems. Those are different than the gas taxes, which I think was very well pointed out that that isn't the best solution. In fact, many state and local governments are now trying to blunt the blow of these higher prices at the pump and in grocery stores.

And although that's good politics, because everyone feels the effects of inflation, it's not the best economics, because it could actually prolong inflation out there. There's a lot of issues that are completely out of the control, like the war in Ukraine, and even the shortage of grain that we're seeing coming out of the war in Ukraine, and, of course, the pandemic itself.

On the flip side of it, we can't deny that exact -- in fact, stimulus did play a role in inducing inflation, most notably in the big-ticket purchases we saw during the pandemic. Buying of vehicles was tied very closely to a surge in stimulus checks.

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CABRERA: Here's what gets me and I think a lot of Americans.

Some companies are making huge profits while their prices are soaring. We have talked about the oil companies in the past. Just take Tyson Foods as another example, charging almost 24 percent more for beef. Just in the last three months, the price for chicken went up almost 15 percent. And, at the same time the company made $829 million in profit in the last quarter. That's way up from last year.

How do you explain that?

SWONK: Well, we have been seeing consumers -- we have generated 1.7 million jobs out there and demand has been strong as well.

And that's one of the things that people sort of forget, is, they think that, without inflation-adjusted wages going up -- they actually aren't -- that you can't get a wage push inflation, you can't get push of inflation in the labor market as well.

And the reality is, is those prices haven't seen the resistance that you normally would see if you weren't generating 1.7 million jobs in one quarter alone, absolutely stunning kind of job growth. It's a lot more paychecks to the overall volume in the U.S. economy.

And along with that, you see a huge rate of churn, also many of those companies paying that rate of churn, which is eroding productivity growth, and increasing costs of having to replace talent as they move. Those who move and job-hoppers, of course, they get better wage gains than those who stay. And that's another sort of double-edged sword for the economy, because you sort of see two -- a story of two economies out there.

Those who stay at their jobs and are loyal don't get rewarded as much as those who hop jobs. And that makes it hard on them as well.

CABRERA: But are those profits that we just pointed out trickling down to their employees?

SWONK: Well, we are seeing wages have accelerated. That's the good news, not as much as we'd like to see.

And I'm sure we'd like to see a lot more in terms of wage share, with more slower kind of employment growth. If we didn't have the churn in the labor market out there and the quit rate we do, if we had a more sustained recovery, where things were more in line and not quite as red hot in the labor market, but still adding jobs, which is where the Fed is -- ideally would like to go -- I think that's a very narrow path to get to -- we could see a situation where we saw wage gains outpace inflation and living standards improve.

I think one of the critical issues here is that inflation hits 100 percent of households. Unemployment only hits a few percent of households. You can have 95 percent of the labor force working, even with an increase in the unemployment rate. That is not an easy comparison to make, but it is the political reality of where we're at, is that everybody feels inflation.

And, certainly, there are companies out there who have made increased money by just passing along increases. But, remember, we had more than four decades where companies couldn't do that.

CABRERA: OK, Diane Swonk, I appreciate your expertise. Thank you for helping us make sense of the economy right now. A scary new warning from America's top spy: Vladimir Putin will

likely escalate military action in Ukraine. His forces are already decimating cities. So what could an escalation mean?

And on the phone with 911. What we are learning about the final moments for an escaped inmate and corrections officer on the run as police gave chase.

Plus, the baby formula shortage is only getting worse. What's being done about it? We're on it.

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CABRERA: The war in Ukraine is likely to become more unpredictable and more escalatory, that warning today from America's top spy.

And it comes as Ukraine's military says Russia is enhancing troops along the northern border right now.

CNN's Katie Bo Lillis is in Washington forest.

Katie Bo, intel officials have been testifying on the Hill this morning, more unpredictable, more escalatory. What exactly do they mean?

KATIE BO LILLIS, CNN REPORTER: Ana, this was a grim and uncertain assessment from the director of national intelligence, Avril Haines, speaking to the Senate Armed Services Committee this morning.

She told lawmakers that Putin is preparing for a protracted, a prolonged conflict in Ukraine, and that the next few months of this conflict are likely to be, as you say, unpredictable and escalatory. Those are those are the words that Avril Haines used this morning, in part, she said, because U.S. intelligence believes that there's a mismatch in between Putin's ambitions in Ukraine and his actual military capability to get those ambitions achieved.

So, as Haines described it, Putin may want to try to, for example, completely control the two provinces in the east where he's currently concentrating his firepower. He might even want to potentially try to extend a land bridge all the way to Transnistria in Moldova, but whether or not he actually is capable of doing that is an open question and something that intelligence officials are not entirely sure he's going to be able to do.

So, as a result, officials believe that there's likely to be some more ad hoc decision-making, in Haines' words, coming out of Moscow. Take a listen to what Haines said the outcome of that might be in a practical sense today in front of the committee.

(BEGIN VIDEO CLIP)

AVRIL HAINES, U.S. DIRECTOR OF NATIONAL INTELLIGENCE: And the current trend increases the likelihood that President Putin will turn to more drastic means, including imposing martial law, reorienting industrial production, or potentially escalatory military actions, to free up the resources needed to achieve his objectives as the conflict drags on or if he perceives Russia is losing in Ukraine.

(END VIDEO CLIP)

LILLIS: Ana, you can hear Haines here really emphasizing that there are some limitations to what the intelligence community is going to be able to predict about Putin's action in a moment in which his actions are becoming more unpredictable.

[13:20:02]

CABRERA: Katie Bo Lillis, thank you for your reporting.

Also on the Hill, a major push to get more help to Ukraine. The House is expected to vote today on a nearly $40 billion Ukraine aid package sitting in Congress. A Senate vote is likely next week. Now, the president says this has to happen immediately, warning existing U.S. aid to Ukraine could run out in just 10 days.

The U.S. ambassador to the United Nations addressed the urgency today.

(BEGIN VIDEO CLIP)

LINDA THOMAS-GREENFIELD, U.S. AMBASSADOR TO THE UNITED NATIONS: Both sides have been supportive of the president's initiative.

And I think that they all understand that, if we are not there to continue that support, what it would mean for the Ukrainian effort to defend themselves against the Russians.

(END VIDEO CLIP)

CABRERA: Here's what's happening in Ukraine right now, new horrific images of deadly strikes in the north and the south.

In Odessa -- this is a southern port city -- Ukraine says Russia used hypersonic missiles, striking two hotels and a shopping mall there. At least one person was killed. Several others were injured in the southern port city.

And in northern Kharkiv, children's clothes, car seats, toys all littering the road after an attack on this civilian convoy of cars that was fleeing the violence.

I want to bring in CNN military analyst retired Air Force Colonel Cedric Leighton

And, Colonel, just starting with those strikes in Odessa and the use of hypersonic missiles to strike that port city, walk us through the significance here.

COL. CEDRIC LEIGHTON (RET.), CNN MILITARY ANALYST: So, Ana, this is -- the fact that Odessa is getting this kind of a targeting setup from the Russians, where they're using hypersonics, is a real mismatch of weapon to target.

Hypersonic missiles are basically designed for stationary military targets. They're designed -- they can be used in both conventional, as well as with a nuclear warhead. But these missiles are such that they really shouldn't be used for civilian targets like this, because you don't need to evade the kinds of air defense evasion tactics that they -- that they have. You don't need to use those for hypersonic missiles.

The hypersonics can evade air defenses. They can -- they, of course, travel at more than five times the speed of sound. So they are very critical from an offensive missile capability. But they're also very much designed to go after, like I mentioned, military targets. They're not designed to go after civilian infrastructure.

And that's why there's a big mismatch here with what the Russians are doing. It sounds like they don't have enough of the conventional weapons that they can use against Odessa targets like this.

CABRERA: We're also learning, according to Ukraine, the Russians are right now enhancing troops near the Ukrainian-Russian border in the Belgorod region.

What do you make of this move by Russia?

LEIGHTON: So, this is interesting, because this region, Ana, is -- Belgorod is right here.

This is -- it's right next to the Ukrainian border. And when you look at where it is, it's right to the north of Kharkiv. So, what the Russians are doing is, they're basically putting everything up here. And I will go into a little bit of detail here with this.

You can see that the Ukrainians have actually pushed the Russians back a bit to the north of Kharkiv. So, this is very important. The Russians still control part of this area. There's a major road that goes from Belgorod to Kharkiv. And that road is still partially under Russian control.

With the Russians deploying troops here and making sure that they are at this road junction and they're ready and poised to go in, they're basically sending a message to the Ukrainians, saying: Don't move forward. Don't move into our territory. And they're also putting potential reinforcements at the ready to move into this area.

So, we could see a much larger conflict here in Kharkiv than we're -- than we were expecting just a few days ago because of these extra Russian forces.

CABRERA: Colonel, we heard the warning from Director Haines, who says this war is likely to become more unpredictable and escalatory as Putin seeks a victory of some kind.

DNA Haines also -- DNI Haines, I should say, also pointed out what she calls a mismatch between Putin's ambitions and Russia's current military capabilities. So, if there is a mismatch, can Putin actually accomplish any kind of victory?

LEIGHTON: Short answer, no.

And let me show you something here, based on the full map of Ukraine. When we look at Odessa, which we just talked about in reference to the hypersonic missiles, the Russian goal on paper would be very easily to go this way, to the West, from the area around Kherson and Mykolaiv, and move to capture Odessa.

That would be the goal. And that would -- it would make sense to soften up the target using missiles like they have. However, like I said before, they're using the wrong kind of missiles. But look here. What we're doing is, if we were the Russians, we would want to make that connection to Transnistria, which is this area right here on -- between Moldova and Ukraine.

[13:25:05]

That's where the Russian separatists are. And what the Russians also would want to do is, they would want to capture Odessa, because it is the third largest city, the major port, controls all the exports in and out of Ukraine at the moment, at least the seaborne ones. So it would be critical for the Russians to do this and critical for the Ukrainians to keep this port.

The problem that the Russians have, they don't have enough troops or equipment to actually take care of this and move forward in this way, at least through conventional means.

CABRERA: Colonel Cedric Leighton, thank you so much.

LEIGHTON: You bet.

CABRERA: It really helps to get the lay of the land there.

From inside the besieged steel plant in Mariupol, a message of defiance. A young woman who is one of the soldiers trapped inside that plant appears in a Facebook message.

And speaking in Ukrainian, Kateryna Polischuk, says -- and I quote -- "Azovstal is holding on against the Russians. While they are here, we are fighting to the last."

Kateryna now serves as a combat medic. She was a music student before this war. And after a video of her singing the Ukrainian army's battle hymn went viral, she became known as "The Bird" on social media.

(BEGIN VIDEO CLIP)

(SINGING)

(END VIDEO CLIP)

CABRERA: There are thought to still be several hundred soldiers trapped at that steel plant. Was she the mastermind behind the escape? We might never have all the answers. Corrections guard Vicky White is dead after she and a murder suspect set off a nationwide manhunt.

What investigators have pieced together -- next.

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