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Gas Prices Jump to New Record High; Ingredients for Global Recession on the Table; President Biden Says Inflation Top Challenge Right Now; Aftermath of Attack on Civilian Convoy Near Kharkiv; Russia Attacks Multiple Targets in Odessa. Aired 2-2:30p ET

Aired May 10, 2022 - 14:00   ET

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

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VICTOR BLACKWELL, CNN ANCHOR (voice-over): Hello, I'm Victor Blackwell. Welcome to CNN NEWSROOM.

ALISYN CAMEROTA, CNN ANCHOR (voice-over): And I'm Alisyn Camerota. Any moment now, President Biden will sit down with Italian prime minister Mario Draghi at the White House to discuss the Russian invasion of Ukraine and the global economy.

BLACKWELL: Now here across the U.S., the president is confronting a critical moment in his economic strategy. Gas prices hit a new high today, $4.37 a gallon. Inflation is driving up prices for the basic needs. We're talking groceries, clothes, housing.

Today, the president said fighting inflation is his administration's top domestic priority. He also went on the defensive, blaming the pandemic and Russian president Vladimir Putin for the higher prices.

CAMEROTA: CNN chief White House correspondent Kaitlan Collins joins us live now.

Did the president spell out any new plan to try to fight inflation?

KAITLAN COLLINS, CNN CHIEF WHITE HOUSE CORRESPONDENT: I think really the purpose of those remarks was to say, yes, I understand that this is a massive problem for so many Americans out there. And I understand the pain that you're feeling.

That was really the message that you heard from President Biden there, because of course, yes, this is his number one challenge. He says it's his biggest domestic priority.

But Alisyn and Victor, solving this challenge is not going to be an easy one for this White House, because there's only so much that the White House can do to change inflation, to try to tame inflation. And that's something that they are well aware of.

And so you heard President Biden saying that he shares the frustration and the concern about inflation that the Federal Reserve has. And we've seen them raise interest rates. There are potentials that that could only include -- that could only be -- there could only be more increases in the coming months.

So that's something they're watching closely. But the president also talked about his domestic policy plans, ones that are largely stalled in the Senate. So there are big questions about what exactly he can do going forward.

There have been questions about removing the Trump-era tariffs on Chinese goods, also creating a national tax holiday. Those are all things that are under consideration here at the White House.

But nothing that you saw President Biden announce today. However, he did criticize Republicans who have been very critical of his handling of the economy, basically laying out for voters that he believes there are two options here between his handling of it and what Republicans planned to do, which he says they don't have a plan.

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JOE BIDEN (D), PRESIDENT OF THE UNITED STATES: The other path is the ultra-MAGA plan put forward by congressional Republicans, to raise taxes on working families, lower the income of American workers, threaten sacred programs Americans count on, like Social Security, Medicare, Medicaid, and give break after break to big corporations and billionaires.

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COLLINS: What he is referencing there is that proposal from senator Rick Scott of Florida, the one that would create this minimum federal income tax, which, of course, would affect a lot of people since half the households in the nation right now don't pay that because they don't earn enough to actually pay that income tax.

And so that is something he's pushing back on and that the White House really wanted to highlight.

They do know that, of course, often voters hold the person in office accountable for what's happening in the economy. That is a big concern for them. And that's why this is one of President Biden's top domestic priorities at this time.

And of course, as we know, analysts have said they don't expect prices to drop significantly in the coming weeks, maybe even the coming months. That's going to be something that remains a number one challenge for this White House -- Alisyn and Victor.

BLACKWELL: Yes, and polling shows this is the major challenge and priority for voters. Kaitlan Collins there at the White House. Thank you so much.

Let's talk more about this inflation, the prices going up for groceries and rent and gas. And it's not just Americans feeling the financial pain. Morgan Stanley put it this way.

"We live in the most chaotic, hard to predict macroeconomic times in decades. The ingredients for a global recession are on the table."

CAMEROTA: Joining us now is CNN business editor-at-large, Richard Quest.

Richard, great to see you.

Do you agree that this is the hardest to predict economy in decades?

RICHARD QUEST, CNN HOST: Absolutely. Without any question of doubt because the underlying economics are so horrible. Gas prices in the U.S. at the moment average $4.33. So you've got a vast range, $4.37 previous record, week ago, year ago.

We could be going up to $4.80 because the reasons why and the effects and the various, if you like, forces the U.S. has almost no control over. First of all, you have what's going on in China at the moment and the lockdown, the ships waiting to deliver. The supply chain issues. That's inflationary.

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QUEST: Secondly, you have demand in the U.S. which is still strong. And then you have the war in Ukraine, which, of course, is raising prices for fuel and energy, creating more instability, food prices, because of grain in Russia and Ukraine. And, therefore, it's impossibly difficult at the moment to deal with it.

CAMEROTA: Richard, stay with us, if you would. We also want to bring in Alexis Glick, a former Wall Street executive and CNN economics and political commentator Catherine Rampell. She's also a columnist for "The Washington Post."

Ladies, great to have you here.

Alexis, is there anything you heard in the president's speech today?

Or is there anything you didn't hear?

Is there some creative solution to giving Americans a little relief that the White House hasn't thought of?

ALEXIS GLICK, FORMER WALL STREET EXECUTIVE: Well, I mean, essentially, what the president and the administration is trying to do is use the levers that they have control over.

So what are those things?

Things like opening up the Strategic Petroleum Reserve to reduce the price of gasoline and oil prices. As Richard just rightly pointed out, the record rate -- oil prices are up 50 percent in a year. We're at record highs among gasoline prices. We haven't even started talking about food prices.

We have this CPI, which is the consumer price index, out tomorrow. And expectations, while last month we saw an 8.5 percent increase, we're expecting at least an 8.1 percent increase. So what I would say to you, Alisyn, is what the administration is

trying to do right now, whether it be with energy prices, whether it be with renewable credits right now to foster renewable energy and take our dependence off of oil down, or what they're trying to do to fight inflation, particularly in the lines of the Federal Reserve bank, they're trying to use the tools and the leverage that they have.

But Richard raised something very important that we cannot ignore and that is China, China, China. It is not just the nature of the lockdowns that we have witnessed in Shanghai and Beijing.

It is what will China's disruption do to an already stressed supply chain and an increasingly short labor market?

Those are huge headwinds for the marketplace right now to address. And that means turbulent waters for at least the next two to three quarters.

BLACKWELL: Catherine, the president, speaking of China, said that his administration is still discussing whether to lift those tariffs placed on Chinese goods imported to the U.S. that were placed by the Trump administration.

Would lifting those create a significant improvement of the environment, the landscape economically here in the U.S.?

CATHERINE RAMPELL, CNN POLITICAL COMMENTATOR: It would make a difference. It wouldn't make a huge difference. But my feeling is, they should be using every tool at their disposal. This is the number one economic concern and the number one political concern for this White House and for Democrats going into the midterms.

So, yes, tariffs should be on the table. By the way, there are a whole bunch of other tariffs implemented by the Trump administration that Biden has been sort of slow-walking the repeal of or has replaced them with other kinds of trade restrictions instead.

These are tariffs on our allies, including Ukraine, for supposedly national security purposes; Trump put those in place. So, yes, there are a number of trade restrictions that would have some marginal effect.

There was a study out of the Peterson Institute that found that, if you rolled back kind of the full suite of tariffs that were put in place -- or some portion of them -- that were put in place by Trump, that would bring down prices by 1 percent to 2 percent. That's not nothing. You know, I'm sure that would be welcome by the American people.

CAMEROTA: Richard, I mean, it doesn't appear, tragically, that the war in Ukraine is ending anytime soon.

Is there anything short-term that could turn this around?

QUEST: No. To be blunt, to be honest, no, because what you're really looking at here, Alisyn, is 12 to 15 years of cheap money. You've got to go back to when it all started in 2008 and 2009 with the debt crisis and the subprime mortgage.

And, yes, things got better. But interest rates remained ridiculously low and every time they tried to normalize, more money got pumped in and we went from crisis after crisis until the point where the pandemic tipped everything over the edge.

So, no, I don't believe so; because you are literally -- what the war in Ukraine is doing, which is, if you like, exogenous, it is rewriting the rules of globalization and the global economy. And it is doing so under the wit of a gun and a bomb. And it is painful and messy and deadly. And that is why the ripple effects are so horrendous.

BLACKWELL: Alexis, help me understand something here. The price of a barrel of oil is down. I was just -- when I looked away, I was just checking the price of it. However, the price of a gallon of gas is up.

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BLACKWELL: Explain that, if you would.

GLICK: Well, there's a couple of factors. Number one, we're seeing oil prices pull back slightly because of those lockdowns in China. They are importing less oil right now.

The question is, are we refining gasoline at a fast enough rate and able to pull down those prices, due to the demand that we talked about, with those supply chain concerns and trucking and a whole host of other influences?

The key thing here to help you understand for the consumer sitting at home is the following. The average American consumer right now is on target to spend $2,000 more at the pump this year.

If you look at food prices alone, they're on target to spend at least another $1,000 per household on rising food costs. If you factor that in for low income households, which is what the administration is trying to address, that means that we are going to really see a lot of pain, the kind of pain that we have not seen in years.

So what we are dealing with, to Richard's point, is a very unprecedented moment in American history; in global history, is actually the fact of the matter. And that is because we have all these supply chain shocks and labor shortages brought on by the economy reopening.

I was just in an airport yesterday. The lines were off -- I've never seen lines like it before. People are anxious to get back out. But they're starting to see it in their wallet. They're starting to see that discretionary spending actually deteriorate, because they're seeing such a rapid rate of inflation.

So what is really tricky about this is, if you're the Fed, you have to address inflation by raising rates. What you're trying to do is create what's called a soft landing and not take us into recession.

And if you're the administration, what you're trying to do is figure out, how do we help real-world Americans, who are now starting to begin -- just beginning to see the tea leaves of the pain and make sure that that pain does not get exceptionally worse as we particularly head into the midterm elections or frankly if we teeter on the brink of a recession in 2023?

Those are the kinds of things we've got to worry about. Last thing I'll just say is don't take this idea of a food shortage lightly. This is a huge global issue that could become a global crisis.

CAMEROTA: Catherine, I couldn't help but notice there was different language the president was using today, which was MAGA Republicans. And they have this, you know, MAGA Republican -- I can't remember verbatim what he said -- but sort of radical plan for how to tax us out of this.

Why so political now?

RAMPELL: Well, I think what the president is trying to point out is that, while the White House and Democrats have come under fire for inflation from Republicans, Republicans themselves don't have an alternative plan. They can duke it out with Mickey Mouse and fight some other culture wars.

But they haven't really proposed their own alternative for getting prices down and that's because it's very difficult. As we've been talking about, there aren't that many tools available.

The specific plan that Biden talked about was a proposal from Florida senator Rick Scott, that would effectively raise taxes on half of Americans, which I think he probably didn't think through entirely and, you know, would not be terribly popular; although, to be fair, a lot of other Republicans have distanced themselves from that particular proposal and even Rick Scott has walked it back.

So I agree with the president that Republicans haven't really offered a compelling alternative economic agenda. I'm not sure that that is the most representative example of what their economic agenda would be. But it's a really hard problem right now.

And neither party has a solution, because, to some extent, to a large extent, you know, major macroeconomic trends are out of the control of the president and Congress.

BLACKWELL: Yes, a lot more to talk about and we'll do just that. Catherine Rampell, Alexis Glick and Richard Quest, thank you.

Ukraine is on the counterattack, hitting Russian armored vehicles, leaving the Kharkiv region. We are live on the ground there next.

CAMEROTA: And will the House pass the president's aid package for Ukraine, sending them another $40 billion to fight Russia?

More on that ahead.

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BLACKWELL: The U.S. intelligence community believes that Russia's forces in Ukraine have degraded considerably and that President Putin will turn to more drastic means to achieve his objectives.

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BLACKWELL (voice-over): Newly released video shows the remnants of a Russian attack on a civilian convoy near Kharkiv. You can see the car seats here, bullet holes in the burned-out cars along the road. The child's car seat you saw there, among the wreckage; a stroller as well.

CAMEROTA (voice-over): We don't know when this video was shot but the vehicles were found on Friday and several people were reportedly killed, including a 13-year-old girl.

Meanwhile, Ukrainian fighters continue to try to hold back Russians at the Azovstal steel plant in Mariupol. At least 100 civilians remain trapped inside as the attacks continue.

And in Izyum, local officials recovered 44 bodies from a destroyed apartment block.

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BLACKWELL: Let's go now to Erin Burnett in Kyiv.

Erin, we have been talking about these attacks from Russia in the east, their movements there.

But the strikes we're seeing now in the south, in Odessa, what more do you know about those?

ERIN BURNETT, CNN ANCHOR: Yes, I mean, Victor and Alisyn, this is what we have been seeing, right, this escalation that's been going on.

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BURNETT: An intensification in the east and the south. And Russian strikes hit two hotels and a shopping mall in the southern city of Odessa overnight. So we do see that intensification there. At least one person was killed, five others injured.

And this is really important. Ukraine says Russia used hypersonic missiles. The European Council president was actually visiting the city when the strikes occurred, was forced to take shelter. President Zelenskyy underscored how long it's been since Odessa has seen this kind of violence. Listen to what he said.

(BEGIN VIDEO CLIP) VOLODYMYR ZELENSKYY, UKRAINIAN PRESIDENT (through translator): President of the European Council, Charles Michel, visited Odessa and saw with his own eyes what the Black Sea meant. It is the first time in decades that normal trade traffic in Odessa is nonexistent. Usual harbor activities are absent.

Odessa has not seen this since the World War II times. Usual seafaring life is blocked by Russia, exactly by Russia.

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BURNETT: That's been part of the strategy, of course, to get that Black Sea access and to continue to terrorize across Russia. Sara Sidner is with me now.

And these attacks on Odessa that we saw overnight, caused significant damage.

The crucial question, were they aimed?

Were they targeted?

SARA SIDNER, CNN NATIONAL CORRESPONDENT: Look, if they're using hypersonic missiles, if you talk to military experts, they'll say they travel five times faster than the speed of sound. And they're able to be put on MiG-31K fighter jets which, yes, they can try to maneuver them and they strike from unpredictable directions.

And they can avoid detection and avoid being tracked. So it seems they did target specific places. Whether or not they hit their targets exactly but they hit this large mall. They hit two other places, two hotels, really sort of tourist infrastructure, not that there's a lot of tourists going in there, obviously, at this point in time.

But it really disrupts life again in Odessa. Odessa, for a while there, was being struck. Then things got quiet. People started to try to clean up, tried to go back to their normal lives as much as possible. And again, they are under heavy bombardment.

Just a few days ago, they were hit with six missiles. And so the city there is really, again, in the midst of all-out war and trying to deal with that in the best way they know how. And you will see people, like firefighters and the like, just going about, trying to stop the fires, trying to stop the destruction. But it just keeps happening.

BURNETT: And when you talk about sort of the onslaught, we're seeing that in the south, seeing that in the east. You see missiles come into places like Kyiv. When you don't expect them, you hear the air raid sirens every day, you don't know when they actually mean something.

But now you have again, to the north, in Belarus, we understand that Belarus is moving its forces near the border of Ukraine. Of course, the dictator there, Lukashenko, is a close ally of Vladimir Putin's.

So what do we know about that?

SIDNER: So they say that they're moving their forces, deploying their troops closer to the border with Ukraine.

This tells you a couple of things, doesn't it?

One, that the war isn't going the way that Russia thought it would.

BURNETT: Right. They didn't think they'd need that.

SIDNER: That's right. So Belarus is taking precautions. And it says more about what's happening with the Ukrainian resistance than it does about its relationship with Russia, in many ways, because it tells you that they are now actually concerned about their own borders, with the way that Ukrainians are fighting back against this Russian advance.

So I think it tells you a little bit about their thought process and what's happening. This was supposed to be days, as you remember, according to Vladimir Putin. And it has now been months.

BURNETT: It has now been months.

And what is going on in the east?

You know, I was with a soldier today who -- a deputy commander in the east, who had -- we were actually visiting a village that he had liberated, going back to the front lines. But obviously, the fighting there is intense, a lot of artillery and shelling.

What are we seeing there right now?

SIDNER: So we should talk about Kharkiv because, for a lot of time, in the north, the Ukrainians have been able to push Russia out, have been able to push troops out and they've pretty much taken care of it. Look at Kyiv. It's quiet right now, right?

But in the east, it has been a whole different story, where Russia is trying to push in, as far as they possibly can and take as much territory as they can. But Kharkiv is special. Kharkiv is the second largest city of this country. And so far, the Ukrainians have been able to fight back and keep the Russians from being able to completely capture this important city in the east. And it's an important standoff, if you will.

BURNETT: Yes, yes.

SIDNER: A very important standoff for Ukraine. And we're seeing them fight like hell to keep the Russians back from that city, although, the city at night, for example, is completely dark, no lights.

It is haunting to see what it looks like at night, because there isn't anything twinkling, except for those who are going around, trying to see how far the Russian forces are trying to get in.

We do hear now that Russia has deployed about 500 more troops to try and push their way into Kharkiv but, right now, Ukraine fighting back with all its might.

[14:25:00] SIDNER: And it is working there in that area in the east. They have lost territory in other places in the east. But right now, Kharkiv, they've kept hold of.

BURNETT: They've kept it. They've kept it. All right, thank you very much, Sara Sidner.

These images, you see across Ukraine. Sometimes they destroyed their own bridges to try to prevent the Russian advance and you see that. You see the entire countryside littered with tanks and artillery. All right, thank you so much to Sara.

Well, the House is expected to vote on a new $40 billion Ukraine aid package today and President Biden warned that the existing aid to the country will run out in, he says, approximately 10 days.

And every day, of course, matters in this war. CNN congressional correspondent Jessica Dean joins me now.

And Jessica, this aid obviously is very significant. It's going to include more than just military supplies and weapons.

So what is that more?

What else is in it?

JESSICA DEAN, CNN CORRESPONDENT: Right, so, let's take a look at what Congress wants to authorize President Biden to send to Ukraine right now. As you mentioned, it's tens of billions of dollars in aid, the largest chunk being $20.4 billion in military assistance, which you noted.

But there's also economic aid for the government of Ukraine. There's about $3 billion in humanitarian aid, $500 million in domestic food production assistance. So this is pretty wide-ranging and all- encompassing.

President Biden has been asking for this aid for a while now. And what happened here in Congress is Democrats agreed to decouple both the Ukrainian aid from COVID relief aid. And once they did that, that created a smoother path for it congressionally.

So what we anticipate, Erin, is that later tonight here in D.C., the House will pass this aid. It will then go over to the Senate. We did speak with the Senate minority whip, John Thune, just a little bit ago. He says they haven't quite signed off but it's trending in the right direction.

They want to get focused on how the refugees are treated within this and how the food aid is handled. But again, we do anticipate that this aid package will move fairly quickly, once they can get those agreements.

Also worth noting today, Erin, as we speak, the Senate, both Republicans and Democrats, are wrapping up their respective policy luncheons. They happen every Tuesday here on the Hill. And today, they did see the Ukrainian ambassador was here to talk

through with them just how critical this is, how important it is that it moves quickly through Congress, Erin.

BURNETT: All right. Jessica Dean, thank you very much.

And Alisyn and Victor, one other thing we saw today, just sort of the transformation when you talk about the needs here. We saw kids, 10- and 11-year-old boys. And the game that they're all playing now is Checkpoint. They all have fake guns, they have weapons, they've set up their own Checkpoints.

And that's now sort of what you see, when you just see a country that is so fundamentally now changed and at war.

BLACKWELL: Yes. Certainly is. We know this is something certainly that the president and the Italian prime minister are discussing today at the White House. Erin, thank you very much. Erin there in Kyiv.

CAMEROTA: So back here, the manhunt is over but so many questions remain. What that recaptured Alabama inmate is now saying about the escape and the former corrections officer he called his wife.