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Xi Says Taiwan is the Most Important Issue in China-U.S. Relations; Pentagon Says Iran War Has Cost U.S. $29 Billion So Far; Kevin Warsh Confirmed as Next Federal Reserve Chair; Six People Killed, Dozens Wounded in Wednesday's Russian Drone Strikes on Ukraine; Funeral Held in Mexico for 18-year-old Kevin Gonzalez; Madonna, Shakira & BTS to Headline First-ever Halftime Show; Princess of Wales Receives Warm Welcome in Italy. Aired 2-3a ET

Aired May 14, 2026 - 02:00   ET

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

(COMMERCIAL BREAK)

[02:00:36]

ROSEMARY CHURCH, CNN ANCHOR: Hello and welcome to our viewers joining us from all around the world. I'm Rosemary Church.

Just ahead here on CNN NEWSROOM, a red carpet welcome, Donald Trump warmly welcomed in Beijing by Xi Jinping. But behind the pageantry, thorny issues are on the table.

Also, gunshots fired in the Philippine Senate. We will tell you what's behind this chaotic scene.

Plus, the Princess of Wales visits Italy on her first overseas trip since being treated for cancer.

ANNOUNCER: Live from Atlanta. This is CNN NEWSROOM with Rosemary Church.

CHURCH: Good to have you with us. U.S. President Donald Trump and Chinese leader Xi Jinping have wrapped up their first round of talks in the Chinese capital and Taiwan has emerged as one of the top issues.

Right now, the two leaders have just concluded a visit to the Temple of Heaven, a cultural landmark in Beijing. Later on Thursday, President Trump will be the guest of honor at a state banquet. The first round of talks took place in the Great Hall of the People in central Beijing. It was marked by optimistic opening statements from both sides. Here's part of what each leader had to say.

(BEGIN VIDEO CLIP)

XI JINPING, CHINESE LEADER (through translator): I always believe that our two countries have more common interests than differences. Success in one is an opportunity for the other, and a stable bilateral relationship is good for the world. DONALD TRUMP, PRESIDENT OF THE UNITED STATES: We've had a fantastic relationship. We've gotten along when there were difficulties, we worked it out. I would call you, and you would call me, and whenever we had a problem -- people don't know, whenever we had a problem, we worked it out very quickly, and we're going to have a fantastic future together.

(END VIDEO CLIP)

CHURCH: The day kicked off with an elaborate welcoming ceremony outside the Great Hall of the People, and we saw crowds of children waving flowers and a military band playing the national anthems.

So, let's bring in CNN's Mike Valerio live from Beijing. Good to see you, Mike. So, Taiwan, very quickly emerged as the big issue for China, with a warning attached, while the war with Iran looms large for the United States. What have we learned so far and what's expected in the coming hours?

MIKE VALERIO, CNN CORRESPONDENT: Well, we have a little bit of downtime, about four hours of, "Executive time for the U.S. president to go back to his residence while he's here in China for about just one more day, plan huddle with his top members of the Cabinet to talk about what transpired inside the Great Hall of the People built 1959 constructed by Mao Zedong to sort of, of course, perpetuate the feeling of Chinese invincibility. It's such a striking space when you're inside it."

So, to take in what happened inside that space, with CEOs of the top American companies on board Air Force One also joining this trip, meeting with Xi Jinping to brief break down what happened and how they comport themselves, get ready for the state banquet at 6:00 p.m. also at the Great Hall of the People.

And then what happens next at Zhongnanhai, where they visit during the early part of tomorrow before the president goes back to Air Force One. Zhongnanhai, of course, is the headquarters of the Chinese Communist Party.

But such a dramatic change, Rosemary, to go from the feelings of warm embraces and enthusiasm and harmony with the pomp and circumstance of the welcoming ceremony, even at Beijing Capital airport and on the steps of the Great Hall of the People, to that deliberate and direct warning over Taiwan, where Xi Jinping said, essentially, that all stability between the United States and China, the two Global superpowers, emanates from the Taiwan question and the issue of Taiwan remaining stable.

So, the insight that we have into what was said comes from Xinhua News, a news flash which was, which is essentially the state media operation here in China, with Xinhua reporting that Xi Jinping emphasized that the Taiwan question is the most important issue in China-U.S. relations. And if it's handled properly, relations between the two countries can maintain overall stability.

If it is not handled properly, the two countries may clash or even come into conflict, pushing the entire China-U.S. relationship into a very dangerous situation.

[02:05:11]

So the question as we watch to see what unfolds at the state banquet and again at Zhongnanhai, the headquarters of the Communist Party tomorrow is to see, what if any change in U.S. policy could, and I stress could, be made about U.S. -- the U.S. stance on Taiwan.

Right now, of course, there's the 1992 consensus where the United States recognizes that there's One China and Taiwan is part of that. But the current American position from Washington D.C. is that the United States does not support Taiwanese independence.

Xi Jinping and the political establishment here in Beijing would like that to move to oppose potential Taiwanese independence.

So, as the United States needs help with Iran and opening the Strait of Hormuz, as it needs access to these rare earth minerals, as it needs trade barriers to come crashing down, issue ushering in a new era of understanding and certainly good business relations between the two countries. It will be interesting to say, or to see, which of those avenues of conversation lead to potential concessions from the United States and what China gives as well with what the United States wants.

CHURCH: Yes, that is what we're waiting to hear, to see what President Trump says in response to Taiwan and all those other issues. Mike Valerio joining us live from Beijing with that report. Many thanks.

Well, joining me now from Beijing, Dali Yang is a professor of political science at the University of Chicago. Appreciate you being with us.

DALI YANG, PROFESSOR OF POLITICAL SCIENCE, THE UNIVERSITY OF CHICAGO: My pleasure.

CHURCH: So, the presidents of the U.S. and China started their high stakes summit discussing the issue of Taiwan, and as we just heard, Xi Jinping is being reported as saying that Taiwan is the most important issue in China-U.S. relations, adding that if it's handled properly, relations between the two countries can maintain overall stability, but if not, they may come into conflict. What does that warning signal to you in terms of what Beijing wants from the United States?

YANG: In fact, that is a standard boilerplate language, in the sense that for China, Taiwan is nonnegotiable in terms of the One China principle. But of course, the U.S. has the One China policy, and of course is willing to acknowledge the respect for One China going back to the Shanghai communique.

But in fact, it's just one of many issues that the two sides have discussed. I think one of the most interesting developments is that President Xi emphasized that there is actually agreement already ahead of the meeting that there is going to be more of an emphasis on balanced trade. So that is very important, and there will be more work to do in terms of promoting trade between the two countries. He also emphasized, really, the Chinese proposal for a stable,

strategic and constructive relationship. I think actually that breaks some new ground in terms of the Chinese stance. He started, actually, with his remarks, with a very philosophical reference to the Thucydides chap, that actually is very important from my perspective, he really acknowledged that the rising power and the great power, the existing great power, very often came into conflict. But China knows that doesn't want to cause a big, big clash, and is waiting to work with the United States.

CHURCH: Right and for the United States, of course, the war in Iran looms large over every other big issue, including Taiwan trade, as you mentioned, A.I. and human rights. President Trump has said he doesn't need any help from China to end the conflict, but he has suggested at the same time that he will push China to pressure Iran to accept a peace deal and reopen the Strait of Hormuz. If China does that and succeeds, what will Beijing want in exchange?

YANG: I think in many ways, there is the mutual understanding, going back over the last few weeks, that China wants to see an open Strait. Strait that's not subject to tolls.

So, in many ways, China -- is in China's self-interest to actually promote that. But of course, to the extent that China makes a greater effort to persuade Iran to come to its senses in terms of the open Strait, then that will clearly signal China's influence and also help China in future dealings with the United States, in terms of the promotion of this more strategic, stable relationship between the two countries.

And of course, it would make it also easier for China to seek, for example, to promote its interest with regard to Taiwan, and in this case, in particular, to try to dissuade the U.S. from setting arms to Taiwan.

[02:10:07]

CHURCH: And you mentioned trade, of course, what does each country want to get out of this summit in terms of trade deals and a new way of managing trade between the two countries?

YANG: The most remarkable thing is, over the last nine years, since President Trump's last visit, actually, so sort of, there has been a major effort, of course, two trade wars, practically, and then the COVID rupture.

And in the meantime, Chinese trade to the United States as a percentage of American exports have declined back to the -- in terms of the ratios, back to the time of around 2001.

So, in fact, there has been a significant rebalancing in terms of direct trade. And I think now the two sides are saying that we are willing to work together to see there may be new opportunities to explore in terms of, for example, a border trade, to manage, to promote trade, and, for example, in lowering tariffs in specific areas and so on. We'll have to wait and see, but I do expect, actually, there will be

movements in this regard, partly because China has shown that it has massive bargaining leverage through its control of rare earth metals and other metals as well.

CHURCH: Dali Yang, thank you so much for joining us live from Beijing. We appreciate it.

YANG: You're most welcome.

CHURCH: Well, while President Trump is in China, he is expected to encourage Xi Jinping to push Iran toward a peace deal, as we've discussed with the U.S. and reopening at the Strait of Hormuz. Vice President J.D. Vance says that negotiators are still making progress, even though the U.S. has been unhappy with Iranian proposals in recent weeks. Vance says the administration remains focused on ensuring Tehran can never obtain a nuclear weapon.

(BEGIN VIDEO CLIP)

J.D. VANCE, VICE PRESIDENT OF THE UNITED STATES: Look, I think that we are making progress. The fundamental question is, do we make enough progress that we satisfy the President's red line? And the red line is very simple, he needs to feel confident that we've put a number of protections in place such that Iran will never have a nuclear weapon, right? That is the question, do we meet that threshold or not?

(BEGIN VIDEO CLIP)

CHURCH: CNN's Matthew Chance is now in Iran with photojournalist Alex Platt with an inside look at how the war is impacting Iranians. And we'd like to note, CNN only operates there with the permission of the Iranian government, as required under local regulations, but maintains full editorial control over what it reports.

(BEGIN VIDEOTAPE)

MATTHEW CHANCE, CNN CHIEF GLOBAL AFFAIRS CORRESPONDENT: Well, we're on a long drive towards the Iranian capital, but we've had to stop because we've come to a bridge that was struck by a U.S. or an Israeli air strike during the recent bombing campaign, you can see a whole section of it has fallen into the -- into the river. And if you look around over here, all the cars and trucks have had to go around on this detour. When you -- when you consider all the other roads and bridges that have been hit, it's added hours to the journey time.

Well, before we arrived in Iran, some Iranians told us, don't go in. It's too dangerous. The war could resume at any time, especially amid growing tensions over the closure of the Strait of Hormuz and the failure of the U.S. and Iran to reach a compromise over nuclear activities.

But with President Trump on that state visit to China, both the U.S. and Iran seem to be looking to Beijing as a possible way out of their deadlock. Iran is China -- or China is Iran's major trading partner. China buys

most of Iranian oil. Has a shared interest with Washington in getting the energy supplies unblocked.

Meanwhile, here in Iran, we're glimpsing how the country is being shaped by the conflict and the pressure it's under from crowds of Iranians at the border. We've just been to hauling cooking oil across from Turkey, where it's much cheaper, an acute cost of living crisis, remember, sparked nationwide protests late last year that ended in horrific violence.

To the words of one Iranian father who told me that what he called Trump's war had silenced people and made the Iranian government stronger, in his words, at least for now.

Matthew Chance, CNN, on the long road to terror.

(END VIDEOTAPE)

CHURCH: Still to come, chaotic scenes inside the Philippine Senate, shots ring out as a senator accused of crimes against humanity tries to avoid arrest. What we know about the incident just ahead.

And the British prime minister could soon face a formal challenge to his leadership from within his own party. I'll talk about that with the host of the Westminster Insider Podcast.

(COMMERCIAL BREAK)

[02:19:24]

CHURCH: Welcome back everyone. The president of the Philippines has called an emergency meeting of the nation's top officials after shots were fired in. The Senate on Wednesday.

No casualties were reported, and details remain unclear about what prompted the shooting. It happened as a Philippine senator has been barricaded inside the Senate compound for days. He is wanted by the International Criminal Court and has resisted arrest. He's accused of conspiring with former President Rodrigo Duterte in alleged crimes against humanity. Current President Ferdinand Marcos Jr. vows the government will find out who is responsible.

[02:20:18]

FERDINAND MARCOS JR., PHILIPPINE PRESIDENT: We agree that the thing to do now is to tell our people all to calm down, and we will get to the bottom of this.

MARCOS Jr. (through translator): We will find out who did this disturbance.

The government did not do this. There were no outside soldiers, military, NBI, in the Senate. We don't know who did it.

(END VIDEO CLIP) CHURCH: Marcos says those shots apparently were fired by unidentified armed men and Senate security personnel. Reuters reports just hours earlier, the accused Senator called for his followers on social media to mobilize, fearing law enforcement was coming for him.

Well, any time now, British Prime Minister Keir Starmer could face a formal challenge to his leadership, the first step in potentially forcing him from power. British media reports Health Secretary West Streeting is expected to resign sometime soon and throw his hat in the ring.

All week long, the prime minister has been facing calls to step aside after the disastrous local election results, but many other labor Members of Parliament remain in his corner and don't want to deal with a power struggle.

So, let's go live to London now. And Patrick Baker, who is the host of Politico's Westminster Insider Podcast, thanks so much for talking with us.

PATRICK BAKER, HOST OF POLITICO'S WESTMINSTER INSIDER PODCAST: Hi. Good to be with you.

CHURCH: So, British media reporting that health minister West Streeting is set to launch this formal leadership challenge in the coming hours against Prime Minister Keir Starmer, who has been, of course, facing this growing calls to resign. How will this likely play out given streeting himself faces some challenges of his own to overcome, doesn't he?

BAKER: Yes, that's right, it's set to be a pretty dramatic day here in Westminster. We are expecting the health secretary to at some point today, lay out his cards and make a break for the leadership.

But there is a really big question swirling here, which is whether or not West Streeting actually has the requisite number of MPs members of parliament that you need in order to actually launch a formal challenge against the prime minister.

So, you need 81 MPs, including yourself, to launch a challenge. And there's been a lot of speculation overnight here about whether or not Streeting actually has enough support within the Labor Party to make a -- to make a challenge against the prime minister.

We've also heard this morning that a potential leadership rival in the form of the former Deputy Prime Minister Angela Rayner, could she, she could make a comeback today and launch a -- launch a bit because she's just been cleared of a controversial tax issue that was hanging over her head.

She's announced, with exquisite timing this morning that she's been cleared of all wrongdoing, and it seems to be laying the path for a possible challenge. And she's more to the left of where Streeting on the Labor Party. So, we could be seeing the beginnings of a real rivalry growing here in the next couple of days. CHURCH: Very interesting, and of course, many labor MPs still support Starmer. But could that change very quickly if a formal leadership challenge is launched by Streeting or anyone else, if that indeed happens in the coming hours?

BAKER: Yes, so the Prime Minister has been on a massive campaign to shore up support. He's publicly got the support of a hundred MPs. He was working the tea rooms of parliament yesterday, speaking to ministers and allies, trying to convince them that this, any leadership challenge, any support for Wes Streeting would plunge the country into chaos.

And so far, that strategy seems to have been reasonably effective. We're getting a lot of noises of people actually saying that this isn't a good idea, that the Labor Party doesn't need this turmoil at this point for the country.

But as ever in Westminster, things can move really quickly, and if we do hear news of a leadership challenge, it will be interesting to see how many MPs suddenly actually do jump in with we're Streeting, or perhaps another candidate, and then it becomes potentially very difficult for the Prime Minister. He'll have a big decision to make, which is, does he want to stand against any leadership contender? Or maybe at some point he might realize, actually, this race is run, I'm going to step out and allow someone else to take over.

We know the prime minister is a very stubborn character. He's probably surprised quite a lot of people by digging in as hard as he has this week already.

So, it wouldn't be unexpected actually, to see him really double down further and show that that determination to carry on and fight and take this all the way. Because he, as I say, he's a very -- he's a very robust and determined character when it comes to this kind of thing.

[02:25:06]

CHURCH: And the other part of this story is that we heard the words not now Andy yelled out in parliament on Wednesday by what was thought to be a Labor MP, a reference there to the very popular Manchester Mayor Andy Burnham, who is seen as a potential challenger, but he's not even an MP, so how would that even happen?

BAKER: Yes, so Andy Burnham is this widely seen as quite a charismatic mayor of Manchester up north, and he -- his return to Westminster, has almost been mythologized for so long now, so many people in the Labor Party think that he is the person that could really take the fight to Nigel Farage and reform.

But as you say, slight catches, he's not an MP. In order to be able to actually launch a leadership challenge, he needs to do a few things quite quickly. He needs to win a by election, a kind of offseason local election in a constituency seat, and to win as an MP and that would allow him to come back and then launch a leadership challenge. But obviously, things are moving so quickly here in Westminster, and

that's quite a convoluted process at the best of times, and he'd actually have to win as well. Which is -- which is, no there's no such thing as an easy win now in U.K. politics, certainly, so there are a lot of variables hanging over that, but there's no doubt that he does have a groundswell of support within the party.

And if he could manage to finagle it, if he could manage to somehow find a way back, then he'd have a very, very good chance of winning, but that is -- that is by no means a certain outcome.

CHURCH: Yes, a lot to do in a very short time if he can do it. Patrick Baker in London, many thanks for joining us. Appreciate it.

BAKER: Thank you.

CHURCH: President Trump and Chinese leader Xi Jinping have kicked off their summit in Beijing. Still to come, we will take you live to Taipei to get Taiwan's perspective on the talks.

Plus, how much is the Iran war really costing U.S. taxpayers? A new analysis estimates a much higher figure than the official Pentagon estimate. The author of that analysis speaks with me about it next.

(COMMERCIAL BREAK)

[02:31:42]

CHURCH: Welcome back, everyone. Taiwan is already coming to the forefront of the U.S.-China Summit underway in Beijing. According to the Xinhua News Agency, Chinese Leader, Xi Jinping told U.S. President, Donald Trump, Taiwan is the most important issue between the two countries. This historic summit kicked off about four hours ago as President Trump arrived at the Great Hall of the People.

Crowds of children waved flowers as the Chinese leader welcomed his U.S. counterpart. President Trump will be the guest of honor at a state banquet Thursday night, local time. So let's bring in CNN Senior International Correspondent, Will Ripley joins us live from Taipei. So Will, what is the mood there after hearing that China's President, Xi Jinping made Taiwan his most important issue, the most important issue for U.S.-China relations and issued a warning?

WILL RIPLEY, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yeah, I think they were expecting rhetoric like that, Rosemary, that is certainly comparable to what we've heard Xi Jinping say in the past about Taiwan. It's noteworthy, albeit not necessarily surprising that it was the first thing that the Xinhua News Agency, Chinese state media, chose to publish was that remark about Taiwan. It does speak to the fact that when it comes to U.S.-China relations they really do view in Beijing the Taiwan issue to be kind of at the center of all of it and they obviously are not happy about things like the United States selling billions of dollars in weapons to Taiwan, which is required to do under the Taiwan Relations Act.

Let me read you just a little bit more of the quote that was reported in Chinese state media from Xi Jinping, Rosemary, just hours ago. It said, quote, "Taiwan independence and cross-Strait peace are irreconcilable as fire and water. Safeguarding peace and stability across the Taiwan Strait is the biggest common denominator between China and the U.S."

And then we got a response just a short time ago here in Taipei from Taiwan cabinet spokesperson, Michelle Lee, let me read that for you. It says, China's military threat is the sole source of insecurity in the Taiwan Strait and the broader Indo-Pacific region, continuance enhancement of defense and effective joint deterrence are the most critical factors to ensuring regional security.

So, if this is all that is said about Taiwan out of the summit, then leaders here in Beijing, Rosemary, I believe could say that this was a success. They obviously don't want any statement, particularly on the U.S. side, that would dramatically change the fragile status quo that has been a relatively peaceful period since the end of China's civil war despite strong rhetoric from both sides of the Taiwan Strait.

Obviously, Taiwan's tech economy is booming and the vitality of its semiconductor industry and the supply chain that the world relies on is contingent upon peace and stability continuing. So what they want more than anything here is, more of the same, nothing drastic, no drastic change in language and even though there were fears that Taiwan could perhaps become a bargaining chip behind closed doors with President Trump, even raising concerns further by telling reporters that he would even be willing to discuss arms sales to Taiwan with Xi because there's still $14 billion in arms sales that are outstanding that Taiwan has approved the budget for, but Washington and President Trump has not yet authorized.

[02:35:00]

If for some reason President Trump were to agree that he would delay authorizing that $14 billion, that would be a major blow here in Taipei because it would it would essentially go against what the ruling government is trying to do, which is to continue to bolster their military deterrent, even though there's been some debate here on the island about whether all of those U.S. weapons are really the full solution, or whether there needs to be more engagement with Beijing.

The problem is, Beijing is willing to engage with the opposition party here that is seen as more China friendly, and they're not willing to engage at all with the democratically-elected government that's been in charge and holding the presidency for the last three elections. So, it's a wait and see attitude here in Taipei, Rosemary. So far, if that statement from Xi is all that comes out of it, I think people in Taipei would be breathing a sigh of relief. But obviously, the day is young and anything can happen.

CHURCH: Indeed, you're right. Will Ripley joining us live from Taipei with that report, many thanks.

Well, President Trump and Xi Jinping are also expected to discuss the U.S. war with Iran. A new analysis raises questions about the true cost of the conflict. This week, the Pentagon said the war is costing $29 billion. That is higher than the $25 billion price tag it gave to Congress two weeks ago.

New analysis from Linda Bilmes, a public policy expert at the Harvard Kennedy School, estimates the conflict will cost American taxpayers at least $1 trillion in total. Linda Bilmes is the Daniel Patrick Moynihan Senior Lecturer in Public Policy & Public Finance at the Harvard Kennedy School. Appreciate you joining us.

LINDA BILMES, SENIOR LECTURER IN PUBLIC POLICY & PUBLIC FINANCE, HARVARD KENNEDY SCHOOL: Thank you.

CHURCH: So we've heard conflicting estimates on the financial cost of America's war with Iran. And while it is hard to measure the exact cost, you have run the numbers and estimate it is costing $2 billion a day, and will ultimately cost at least $1 trillion once this war ends. How did you calculate those numbers? Can you break it down for us?

BILMES: Sure. Well, what you hear from the Pentagon is the very, very tip of the iceberg cost. What they are talking about is the historical inventory cost of what some of the munitions that have been used in the past few weeks.

And even on that tip of the iceberg basis, you have to understand that the replacement cost for the things we've used up cost much, much more than what we paid historically. So for example, the Patriot missiles in the inventory cost $1 million to $2 million each, but the new ones cost $4 million to $5 million each. And obviously, fuel cost more, THAAD missiles cost more, Tomahawks cost more, everything costs a lot more.

Secondly, there is the cost of the sort of medium cost -- medium-term cost over the next two to five years of repairing and replacing all of the facilities that have been severely damaged throughout the region through this war. So the United States has about 20 military facilities, of which at least 15 have been seriously damaged across eight countries.

That includes 215 -- 217 buildings, and a number of major radar installations, and other important and sophisticated facilities, which the U.S. is going to have to rebuild. Then there is also the long-term cost of war, which we have seen after 20 years in Iraq and Afghanistan, that I have been studying. We've seen how the long-term costs add up, that there is this long tail of costs.

So first of all, there's the cost of caring for veterans. We currently have more than 50,000 U.S. troops who are deployed somewhere in the region. Many of them have been exposed to toxins and contaminants over the past few weeks and will become eligible for lifetime benefits for anything that happens to them, or has aggravated any kind of conditions due to their exposure over the past few weeks.

There are also the long-term costs of the fact that we are financing all of the costs to date through debt. So we have to pay interest on all the money we're borrowing to pay for the upfront.

CHURCH: And why is the war with Iran proving to be so expensive? Where are all the hidden and additional costs? BILMES: Well, I mean, the wars cost a lot. There is a long tail of costs. The top year, the peak year for paying for World War I veterans' cost was more than 50 years later in 1969.

[02:40:00]

And this is one of the sort of hidden costs of war is that wars have this long, long tail of costs, whether it's -- and especially so if they're financed through debt. The cost of replacement and repair and replenishment and upgrades and fixing things and restoring things, and in this case, significantly expanding our purchases of munitions, all those things impose costs.

So the right question to ask is not how much is it costing this month, but how much is it costing over the next 20 years? Because that's what we've seen repeatedly in U.S. wars and basically, in all wars.

CHURCH: Yeah, and governments don't think that far ahead, do they? In the end, what will this war with Iran mean for America's national debt?

BILMES: Well, when we -- we are now in a very different situation than we were in 2003 when we went into Iraq. At that time, our -- the percentage of our national budget that we were spending on servicing debt was four percent. And now, we are spending 15 percent already, largely due to government spending for previous wars, as well as COVID spending and tax cuts that have occurred in 2001, 2003, 2017, and then last year.

So that -- so with 15 percent already going to service the debt and then borrowing all the money for this war, and then the president requesting a long-term massive increase in the Pentagon base budget, which gets baked into the structure of the budget so it goes on and on, I mean, it is a very significant burden that we are transferring to future generations, to our children.

CHURCH: Linda Bilmes, thank you so much for joining us. We appreciate it.

BILMES: Thank you.

CHURCH: Inflation pressures from the Iran War will be one key issue facing the next Chair of the Federal Reserve, Kevin Walsh. He was confirmed by the Senate to succeed current Fed Chair, Jerome Powell. The 54-45 vote was mostly split along party lines and was the most partisan vote for a Fed Chair nominee in history.

Warsh is widely viewed as more aligned with President Donald Trump, who has been pushing for rate cuts. But right now, investors expect the Fed to keep its benchmark lending rate unchanged for the rest of the year, or even raise rates if inflation worsens.

More to come here on CNN, including the funeral of an American teenager in Mexico and his detained parents' desperate effort to reunite with him before his death.

(COMMERCIAL BREAK)

[02:47:32]

CHURCH: Ukrainian President, Volodymyr Zelenskyy says some victims may be trapped under rubble after the latest barrage of Russian strikes on Kyiv. You're looking at live pictures where a rescue operation is underway after Russian drones struck a nine-storey residential building just a few hours ago. One person was killed and dozens of others have been rescued.

Mr. Zelenskyy says Russia launched more than 700 drones and missiles overnight, mainly targeting Kyiv. It happened a day after Moscow launched one of its longest and largest attacks since the war began, with at least 800 drones killing six people. Many of the targets were near Ukraine's border with NATO countries.

Mr. Zelenskyy says Russia is clearly causing disruptions during U.S. President, Donald Trump's trip to China.

Family members and friends have gathered in Mexico to bid farewell to Kevin Gonzalez. The 18-year-old U.S. citizen died of colon cancer on Sunday, just one day after reuniting with his parents. They had been detained and deported from the U.S. after attempting to travel from Mexico to Chicago to see him in the hospital. His father spoke of the love he will always feel for his son.

(BEGIN VIDEO CLIP)

ISIDORO GONZALEZ, FATHER OF KEVIN GONZALEZ (through translator): I cannot change reality. I love him very much. I feel very proud of him for enduring so much, and he is a warrior. He fought against all odds, and I will always love him. I loved him very much and always will. I will always remember him, wherever you may be.

(END VIDEO CLIP)

CHURCH: CNN's Valeria Leon has more on the story.

(BEGIN VIDEOTAPE)

VALERIA LEON, CNN CORRESPONDENT: This story has triggered a strong emotional reaction both in the U.S. and here in Mexico after 18-year- old Kevin Gonzalez, a terminal cancer patient born in Chicago, finally reunited with his parents in the Mexican state of Durango, where he was spending his final days at his grandmother's house.

LEON (voice-over): The emotional reunion took place inside a small bedroom, where Kevin's mother sat next to him, holding his hand while family members played guitars around them. Kevin was supposed to graduate from high school this Wednesday, and during the school ceremony, teachers called out his name in his honor.

[02:50:00]

UNIDENTIFIED FEMALE: Gonzalez Kevin.

CROWD: Present, ma'am.

LEON (voice-over): Many of his classmates remember him as a cheerful and kind friend.

TERESA GODOY, KEVIN'S CLASSMATE (through translator): Kevin is a great friend. He was the laughter of the classroom, the joy of the class.

LEON (voice-over): But the story goes back to April 14th. Fearing he might die before seeing his parents again, Kevin left the hospital in Chicago and returned to Durango, Mexico.

Meanwhile, Kevin's parents, desperate to see their dying son, tried to cross illegally into the U.S. They were detained near the Arizona border and spent weeks in ICE custody, while Kevin's health continued to worsen.

One of Kevin's doctors wrote letters pleading for their release, warning that Kevin was running out of time. Kevin had been battling stage 4 colon cancer. And finally, on Friday, a judge ordered Kevin's parents released from immigration custody, and they were deported back to Mexico that same day, hoping to reach their son in time.

LEON: And they did. But less than 24 hours after reuniting with his parents, Kevin died.

Now, the case is reigniting debate over immigration enforcement policies and humanitarian exceptions, with advocates arguing this family should never have had to spend Kevin's final weeks separated in the first place.

Valeria Leon, CNN, Mexico City.

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CHURCH: Still to come on "CNN Newsroom," an enthusiastic welcome for the Princess of Wales. The British royal is on her first official visit to Italy. Why this trip is so significant for her, we'll explain on the other side of the break. Stay with us.

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CHURCH: Welcome back, everyone. Well, now to a story about how sports can perhaps bridge the divide and ease tensions between warring factions.

Iranians held a rally for the official send-off for the national soccer team that will compete in the FIFA World Cup. Iran's team is set to play matches in the U.S. host cities of Seattle and Los Angeles, and this comes amid the Iran War and the strained relations with Washington. Attendees said the team's performance abroad carries symbolic weight.

FIFA has revealed that Madonna, Shakira and BTS will co-headline the first-ever World Cup halftime show during the final game. FIFA says proceeds from the show will support its Global Citizen Education Fund, an initiative to raise $100 million to expand access to education and football for children around the world.

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The World Cup final will take place on Sunday, July 19th at MetLife Stadium in New Jersey.

Well, Britain's Princess of Wales returns to the global stage. Catherine is in Italy on her first official overseas trip since undergoing cancer treatment and she announced last year, she was in remission. An aide says this two-day solo visit is an important step in her recovery. CNN Royal Correspondent, Max Foster has more.

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MAX FOSTER, CNN ROYAL CORRESPONDENT (voice-over): Chants echoing of "Ciao Kate" as the princess starts her comeback tour in northern Italy, her first official overseas trip since undergoing cancer treatment. Thousands cramming into the piazza at Reggio Emilia to welcome her.

FOSTER: Princess greeting all the well-wishers that have turned out here in Italy. A princess coming to town doesn't happen every day, so much excitement about that. She has been in recovery, of course, from her cancer treatment, so this is a huge moment for her. The palace saying she's trying to balance her public work with her recovery.

UNIDENTIFIED FEMALE: It has been an honor to meet her.

FOSTER: What was your reaction when she came over?

UNIDENTIFIED FEMALE: She's amazing. I can't believe it's my eyes.

FOSTER (voice-over): The princess is here to learn about the internationally recognized Reggio approach, a philosophy of early childhood education built around creativity, relationships and hands- on discovery.

FOSTER: What did you just talk about with the princess?

MARWA MAHMOUD, COUNCILOR FOR EDUCATIONAL POLICIES, MUNICIPALITY OF REGGIO: I talk about Reggio Emilia approach. I talk about our integrated, inclusive public system.

FOSTER (voice-over): Palace aides described this trip as an important step in the princess' recovery journey, adding that she takes great joy from this work. The visit also marks Catherine's first official trip to Italy, a country she previously spent time in before university, though she admitted she needed to do work on her Italian.

UNIDENTIFIED FEMALE: The way she's approached the city and the experience shows a real interest, not just something a facade, but something deep, which is incredible.

FOSTER (voice-over): The princess believes early learning should be creative and prioritized in the same way as climate change. CHRISTIAN GUY, ROYAL FOUNDATION CENTER FOR EARLY CHILDHOOD: She wants to point people to the importance of those first five years and to work with others to make this a truly global, urgent issue. So it's on a par with climate because --

FOSTER: Yeah.

GUY: -- unless we tackle this properly, we'll always be playing catch-up.

(APPLAUSE)

FOSTER (voice-over): This is a global mission for someone coming back to the world stage with renewed vigor after a life-changing health event.

Max Foster, CNN, Reggio Emilia, Italy.

(END VIDEOTAPE)

CHURCH: And I want to thank you so much for your company this hour. I'm Rosemary Church. "CNN Newsroom" with Polo Sandoval is next after a quick break. Stay with us.

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