Return to Transcripts main page

CNN Newsroom

Supreme Court Weighs Student Loan Forgiveness; Storms Slam Parts of Northeast; Yellen Makes Surprise Trip to Ukraine; Jason Furman is Interviewed about the Economic Outlook. Aired 9-9:30a ET

Aired February 28, 2023 - 09:00   ET

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

[09:00:33]

ERICA HILL, CNN ANCHOR: Good morning. Top of the hour here. I'm Erica Hill.

JIM SCIUTTO, CNN ANCHOR: And I'm Jim Sciutto.

Next hour, the Supreme Court will hear arguments about President Biden's student loan forgiveness program, a ruling that will impact millions of people. One of the court's most influential cases this term, with implications beyond the student loan issue. The plaintiffs, which include six Republican-led states and two borrowers who do not qualify for this program, are challenging the legality of the plan which would cancel up to $20,000 in debt for some borrowers.

HILL: So, just to give you an idea of the scope here, outstanding student loan debt in this country is more than $1.7 trillion. The vast majority of that, we're talking more than 90 percent, is from federal student loans. And those are the ones that would be eligible for some forgiveness under Biden's plan. So far, 16 million borrowers had been approved for that relief. When the legal challenges put the plan on hold, officials estimate the program could cost some $400 billion.

Education Secretary Miguel Cardona, though, speaking with "CNN THIS MORNING," talked about why the administration is so focused on this and why the administration believes this program is so important.

(BEGIN VIDEO CLIP)

MIGUEL CARDONA, EDUCATION SECRETARY: Ninety percent of the dollars in this benefit would go to people making under $75,000. So, it's not a wholesale cancellation of loans. We're targeting it to people that need it most. And, you know, with regard to whether or not there's authority, the last administration used this same authority to pause the new loans. If that administration can use it, we can use it as well.

(END VIDEO CLIP)

HILL: CNN correspondent Rene Marsh is outside the Supreme Court. A lot of activity behind you there this morning as people wait to learn more.

What are you hearing from folks there this morning, Rene? RENE MARSH, CNN NATIONAL CORRESPONDENT: Yes. Yes, Erica, good morning.

Yes, within this crowd you have students, you have graduates, you have advocates, they are all here, some of them even spending the night outside of the court, making sure that they were in position for oral arguments when they begin this morning.

And when you talk to the people out here, they say, yes, this is a case about student debt relief, but it's actually a lot bigger than that. This is about their financial future and their financial freedom for years to come.

(BEGIN VIDEOTAPE)

SABRINA CALAZANS, STUDENT LOAN BORROWER: On board my flight headed to D.C. for the people's rally for student debt cancellation.

MARSH (voice over): Twenty-five-year-old Sabrina Calazans traveled from New York to Washington, D.C., to rally outside the Supreme Court when justices will hear oral arguments on the legality of President Biden's student loan debt relief program. Six Republican-led states and two Texas borrowers argue the administration does not have the authority to cancel the school loan debt of about 40 million Americans, but the Biden administration says Congress gave the secretary of education expansive authority to alleviate hardship for student borrowers during a national emergency, like the pandemic.

On the eve of the arguments, advocates already outside the court for a case that could change the trajectory of their lives.

CALAZANS: My first student loan bill, it was about $350 of a payment, and I hadn't secured a job at that point. And so, for me, it felt really impossible.

MARSH: Calazans graduating from college in 2019. She has nearly $30,000 in student loan debt. When the pandemic hit, repayments were paused. She could now contribute to household costs for the home she shares with her parents. When the Biden administration extended the pause this past August, multiple lawsuits followed. The program was halted and is now before the Supreme Court, leaving Calazans in limbo.

CALAZANS: My family would be eligible for up to $50,000 of student loan cancellation. And so, as a whole family, that's huge.

MARSH: Federal data shows America's student debt crisis is multigenerational, spanning from recent grads to grandparents, with $2.6 million borrowers over the age of 62.

Seventy-two-year-old Vietnam Vet Cecil Hamilton is one of them.

CECIL HAMILTON, STUDENT LOAN BORROWER: I never got the -- the amount paid off.

MARSH: In 1977, Hamilton says he took out a loan for an associate's degree for $5,250. Nearly five decades later, he still owes nearly the same amount. HAMILTON: I thought I would have a good job and a home and all the

things that people like to have, and then enter retirement on a good note.

[09:05:05]

But, instead, I'm -- I'm back in the hole again. So I'm just surviving as I go.

MARSH: He says despite the government garnishing 15 percent of his Social Security disability payments for the loan he defaulted on, interest and fees made it impossible for him to put a dent in the principal.

(END VIDEOTAPE)

MARSH: Now, while the president's plan would help people like Hamilton who you just saw in the piece there, he says he can't ignore the harms that his debt has caused throughout the last 40 years of his life. It's ruined his credit. He has not been able to provide for his children in the way that he's wanted to. So, the harm for him at this stage in life, he says, has already been done.

As far as the decision, we don't expect a decision to come down from the court until late June/early July when they usually release their rulings.

Back to you guys.

SCIUTTO: $1.7 trillion in debt across the country.

Rene Marsh, thanks so much.

For more on these cases we're joined now by CNN's senior Supreme Court analyst Joan Biskupic.

Joan, so many issues here. And, listen, you know, personal experience should not be decisive for justices, but justices are human beings. They have personal experiences and their own experiences with college and paying for education. What do we know and about how that might factor in?

JOAN BISKUPIC, CNN SENIOR SUPREME COURT ANALYST: Sure. Good morning, Jim and Erica. A big morning at the court, and I'm eager to get over there with Rene.

But you're absolutely right. You know, on the surface, these nine justices might seem kind of detached from this kind of problem. You know, they're all -- most are wealthy. Most are graduates of the ivy league schools, but they all have their distinct experience with having to pay for college and finance it.

And I'll just start with someone like Justice Clarence Thomas, who grew up in Georgia in modest means. And he wrote about his own loan burden back in a 2007 memoir. He had gone to Holy Cross for undergrad with some tuition help from the school, but then when he was at Yale, he had to take out loans. He said he and his young family, at the time, were really struggling with the bills. And the loans he took out, Jim, from Yale, he was still paying off when he became a Supreme Court justice in 1991 at age 43. You know, sometimes we do think about young people shouldering a lot of this burden, but as Rene pointed out, it's people who themselves have become parents and grandparents shouldering it.

SCIUTTO: Yes.

BISKUPIC: So, Justice Thomas, as I said, was quite aware of the burden of financial loans.

Both he and Sonia Sotomayor, who Sonia Sotomayor was our first Hispanic justice, they both did have some advantages with scholarships. Justice Sotomayor actually went to Princeton and Yale, both on scholarship.

But then let's take some of the other justices who were lucky enough to be able to finance their own education but now have children. Justice Amy Coney Barrett has seven kids, some of them college age, who she's paying for to go to college.

The Chief Justice John Roberts has two children in their early 20s and has had to - you know, obviously, went to colleges.

SCIUTTO: Yes.

BISKUPIC: And then he and Neil Gorsuch and some of the other justices we know from their financial disclosure forms have been able to put money into tax exempt college savings. So, even though all of these justices make close to $300,000 themselves and aren't the kinds of people who usually have to worry about money, they have distinct experiences. Whether they will -- those experiences will play out in the courtroom, I have to say it's unlikely. They will probably look through this case - look at this case much more from a legal lens on executive branch power.

Jim. Erica.

HILL: Joan Biskupic, appreciate it, as always. We'll let you run over there now to join Rene, as you said. Thank you.

BISKUPIC: Thank you.

HILL: Joining us now to discuss, University of Texas law school professor and CNN legal analyst Steve Vladeck.

Steve, as we look at this, as Joan said, it's unlikely that these past comments, that this experience will come into play, but what about past opinions. Is there anything in there that you see as a real barometer in terms of this court.

PROF. STEVE VLADECK, CNN LEGAL ANALYST: Yes, Erica, I think there is. But the problem is, is that it goes in two different directions. So, on the substance of the program, you know, the Biden administration has lost a series of cases where similar arguments were advanced about what Congress had authorized agencies to do from the CDC eviction moratorium to the OSHA vaccination mandate, to the EPA's clean power plant. And I think there, right, the conservative justices are coming to this case with a healthy dose of skepticism about whether the heroes act, this 2003 statute, really does authorize such sweeping relief.

On the flip side, it's also the conservative justices who have spent most of the past 25 years really making it much, much harder for plaintiffs to establish what's called standing to show that they are the right parties to challenge a policy because they were somewhat injured in a unique and particularized way.

[09:10:04]

Erica, I think we're going to see both of those threats today with justices worried both about why any of these plaintiffs have standing, but also whether it's really a fair reading of the statute that Congress authorized the secretary to take this action.

SCIUTTO: OK, this case, by itself, important enough, but it does have -- or can set a potential precedent here for the ability of states, state attorneys general, to challenge federal policy here, to challenge executive action. Can you explain to folks at home why they need to be watching this carefully?

VLADECK: Yes, Jim, I mean, it's a technical point, but I think we're seeing a lot more of these lawsuits where Texas, for example, has filed almost 30 lawsuits challenging Biden administration policies, where red states challenge blue president policies and blue states challenge red president policies.

The Supreme Court has never actually blessed that. Indeed, 100 years ago the court said we actually don't usually want states to be the lead plaintiffs because otherwise that will mean every single policy gets challenged in court right away. That's not the state's job.

So, one of the things really swirling around these cases today is whether the conservative justices, because of their skepticism of this program, are actually going to be inclined to allow states like Nebraska, Missouri, to lead challenges to this kind of policy.

And, Jim, if they do, it's only a matter of time before we'll see an explosion in states from across the political spectrum, attorneys general from across the political spectrum, seeing it as their job, basically the day any new federal policy comes out, to march into the nearest federal courthouse.

SCIUTTO: Goodness, imagine that.

Steve Vladeck, we'll see where the justices come down. Thanks so much.

VLADECK: Thank you.

HILL: Hundreds of U.S. flights already canceled this morning as severe winter weather bears down, coming at folks on both sides of the country. SCIUTTO: Yes, it's hard to keep track, right, because you're in shorts

one day and then you're in snow boots the next. Storms are expected to dump several inches of snow across the northeast. Boston alone could get up to six inches. Hazardous driving conditions expected in upstate New York, parts of New England.

CNN's Athena Jones, she's in New York.

Athena, not quite as bad in the city, but are things worse farther to the north?

ATHENA JONES, CNN NATIONAL CORRESPONDENT: Hi, Jim.

Well, yes, they're expecting to see more snow north of the city, outside of it, here in New York City. But I want to point out what we're seeing here in Central Park. Just look around at the amount of snow on the ground. It's not a ton, but this is the most snow we've seen all winter. This is - they're calling it the most significant measurable snowfall in New York City this winter. Up until last night, Central Park had seen less than half an inch. Now, as of 7:00 a.m., it has snowed 1.8 inches, bringing the snowfall total for this winter so far to a grand total of 2.2 inches.

Now, usually, Central Park has seen 2 feet of snow by now in winter. So this is the lowest seasonal snowfall on record. But as you mentioned, not nearly as bad as it could be. We're seeing sloppy roads, messy commutes. But in other parts of the country, we've seen records. Milwaukee saw just over 2 inches of rainfall, and that's a new record as of Monday. Parts of Wisconsin saw an inch and a half of rainfall over the course of six hours. And in California, a storm system left people stranded in the San Bernardino mountains due to rain and high elevation snow.

Also, students who were at science camps in Orange County found themselves stranded. So, a bit of wacky weather.

Here in New York, the first real snow. And so you see people out running and enjoying it here.

Jim. Erica.

SCIUTTO: Athena Jones, thanks so much.

Coming up next, Treasury Secretary Janet Yellen making her own surprise visit to Kyiv, promising financial support there. Also weighing in on the inflation fight back home. I'm going to get reaction from an economist who thinks the Fed -- the next Fed rate should be higher and that the Fed hasn't quite gotten a handle on inflation.

HILL: Plus, the EPA administrator headed back to Ohio as the Biden administration says cleanup from that toxic train derailment is moving swiftly. CNN is live in the town, one of the areas where that waste is being moved.

And, new this morning, the Russian president admits to losses in his military ranks as a fierce battle rages in eastern Ukraine. We'll take you live to Moscow for new details about the morale problems in Putin's army.

(COMMERCIAL BREAK)

[09:18:45]

SCIUTTO: In another strong show of U.S. support for Ukraine, U.S. Treasury Secretary Janet Yellen made a surprise visit to the capital Kyiv.

HILL: Yellen meeting with President Zelenskyy to discuss U.S. economic assistance, as well as efforts to impose severe sanctions on Russia.

CNN's Melissa Bell is live in Kyiv for us this morning.

And I know you spoke exclusively with the secretary in the Ukrainian capital. What more did she tell you?

MELISSA BELL, CNN CORRESPONDENT: What was so interesting, Erica, we're seeing the secretary's emotion really as she came here. And I think this has been true of all the American leaders and politicians who come through. It is one thing following this war. It is another thing funding it. And, of course, it is something still different when you come and see for yourself what around $50 billion of American support have allowed Ukraine to achieve so far.

But she'd already been expressing her emotion, Secretary Yellen, in Bangalore, just before she came here, since she had been at the G-20 summit there. She'd had some very contentious remarks for the Russian delegation, accusing them of complicit, really not mincing her words.

And I wanted, as I met her, to ask her about that, but also the latest round of sanctions. The tenth round, of course, that Washington described as the most significant so far.

(BEGIN VIDEO CLIP)

BELL: Do you get a sense that Moscow's listening?

[09:20:00]

JANET YELLEN, TREASURY SECRETARY: I think they are listening. I think that we have imposed very serious costs on them and they hear from not only the United States but a large coalition, many allies, the morale outrage that we feel and they see our determination to make them pay a price.

(END VIDEO CLIP)

BELL: Secretary Yellen went on to explain that she believed that the sanctions so far really have taken a hit on the Russian economy, and specifically on its ability to continue waging this war, preventing it, for instance, from replacing some of the equipment that its lost so far. What she said was that unreliable channels like North Korea and Iran are now back-filling, but that she believed that allies would be able, with the United States, in the coming days, in the near future, to stop that.

I asked her also about the possibility that China might choose to send lethal aid to Moscow. This is something the American administration is watching very carefully. She said that there would be severe consequences to that and that the American administration was continuing to keep a very close eye, Jim and Erica.

SCIUTTO: Melissa Bell, in Kyiv, thanks so much.

Well, the Treasury secretary also chimed in on the U.S. economy while visiting Ukraine.

Have a listen.

(BEGIN VIDEO CLIP)

JANET YELLEN, TREASURY SECRETARY: Look, inflation still is too high, but generally if you look over the last year, inflation has been coming down. And I know the Fed is committed to continuing the process of bringing it down to more normal levels.

(END VIDEO CLIP)

SCIUTTO: Here with me now, Harvard professor, former chairman of the Council of Economic Advisers, Jason Furman.

Jason, good to have you on this morning.

PROF. JASON FURMAN, HARVARD UNIVERSITY: Good to be here.

SCIUTTO: You heard Yellen there saying inflation is coming down. The Fed's committed. You say, in fact, the U.S. has made little, if any, progress on inflation. Tell us why.

FURMAN: Yes, so this -- we're actually talking two different things, the secretary and myself. The actual inflation experienced by consumers has gotten better. The price of gasoline has gone down from $5 a gallon to $3.25. The headline inflation rate has fallen from 9 percent to 6 percent. That's the progress she's talking about.

Economists and the Fed, though, are focused on something else called core inflation, or underlying inflation, that excludes the volatile components. That's where we've made no progress at all, and that's what's scary going forward because the disinflation we've had is the easy part. The remaining part has been really, really much more stubborn than any of us expected.

SCIUTTO: And you -- you've made the point that easing of supply chains post pandemic was supposed to bring down that core inflation. Why hasn't that happened?

FURMAN: Look, there's been this debate about how much of inflation is supply, you know, things like a microchip shortage, how much is demand, you know, send people checks and they spend a lot of money.

SCIUTTO: Yes. FURMAN: The truth, of course, is it's some combination of both. But at this point, most of the supply problems are a lot better. They're not perfect, but they're a lot better. And so what we're left with is an economy with a very low unemployment rate, lots of job openings, two job openings for every unemployed worker, and that's just putting, you know, a lot of pressure on inflation and our economy.

SCIUTTO: I mean, in effect, it sounds like, to the layman, what you're saying is the economy is just too hot, it remains too hot, even with this pretty remarkable increase in rates over the last several months. What do you believe the Fed needs to do? I mean it sounds like you're saying they need to raise them, you know, in the half percentage point range as opposed to the quarter point range, which they've come down to.

FURMAN: Yes. So what the Fed said is that they're data dependent. No one understands exactly what's going on in the economy. You have to look at the data each month and update your views each month. They had been on track for a quarter point increase, but in the last month the data has just been extraordinary. Inflation much higher than expected, job growth much higher than expected, job openings much higher than expected, consumer spending much higher than expected. So, they need to be data dependent, adjust to that and raise by half a point at their next meeting.

SCIUTTO: Now, if I'm listening to this at home, I'm thinking, it's good to have a good job market. I'm worried that the Fed overreacts here and then drives the economy into recession. How does the Fed avoid doing that? Are you worried about the economy tipping into recession?

FURMAN: You know, you need to be worried about both sides when you're sitting there. None of this policy is super precise. All of it has long and variable lags.

But, look, Americans right now are being paid less on average, adjusted for inflation, than they were prior to the pandemic. This inflation really has taken a painful and terrible toll that needs to be the Fed's focus.

[09:25:02]

And the remaining elevation in inflation is, you know, really, really stubborn and going to be hard to get rid of. They need to stick with that project and everything else follows from it.

SCIUTTO: Now, you know the politics here in Washington well, particularly having served in government. The Republican contention is that this is all about spending. Too big a Covid relief bill at the beginning of the Biden administration. Is spending, government spending, also a factor in continued inflation, core inflation?

FURMAN: Look, I think that the spending we did was excessive. It was one factor that set this inflation off. The Fed being behind the curve was another. And the supply chain issues we talked about was a third. You do have inflation all over the world. At this point, though, the government isn't spending a lot. It's not the main thing driving inflation. It's really just become a self-perpetuating cycle. And that's the self-perpetuating cycle that the Fed really needs to do even more to break.

SCIUTTO: Yes.

Jason Furman, thanks for breaking it all down for us.

FURMAN: Thank you.

HILL: Still to come, we'll take you live to East Palestine, Ohio. The EPA administrator making a third visit to the town after that toxic train wreck. What a new study says about the long-term risks of this, next.

(COMMERCIAL BREAK)

[09:30:00]