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Early Start with John Berman and Zoraida Sambolin

Build Back Better May Make Comeback in Inflation-Fighting Plan; Biden Administration Mulls Lifting Some Chinese Tariffs to Fight Inflation; Biden Backing Down from Pledge to Make Saudi Arabia a Pariah Nation. Aired 5-5:30a ET

Aired June 20, 2022 - 05:00   ET



CHRISTINE ROMANS, CNN ANCHOR: It's Monday, welcome to our viewers in the United States and all around the world. It is June 20th, I'm Christine Romans.

LAURA JARRETT, CNN ANCHOR: So chipper on a Monday.

ROMANS: Oh, it's all fake.

JARRETT: I am Laura Jarrett, I hope everyone had a very nice Father's Day. We start with this don't call it a comeback. Elements of President Biden's failed Build Back Better plan could once again be on the table as part of new inflation-fighting legislation in Congress. Sources say Senate Majority leader Chuck Schumer and Democratic Senator Joe Manchin have been meeting to hash out the specifics on this. Biden's aides and allies have been talking up key parts of the plan including prescription drugs, taxes and energy.


BRIAN DEESE, DIRECTOR OF THE WHITE HOUSE NATIONAL ECONOMIC COUNCIL: Lowering prescription drug costs is one piece.

JANET YELLEN, SECRETARY OF TREASURY: We can bring down other costs that are burdening households like prescription drugs.

LARRY SUMMERS, FORMER U.S. TREASURY SECRETARY: Reduction of pharmaceutical prices which will help health care and will also reduce the inflation rate.

DEESE: Lowering the federal deficit, by enacting long overdue tax reform.

SUMMERS: The partial repeal, not the full repeal, but the partial repeal of the Trump tax cuts which would take some demand out of the economy.

DEESE: Lowering utility costs by providing tax incentives for energy -- .

YELLEN: The way in which we can assure reasonable energy expenses for households is to move to renewables to address climate change.

SUMMERS: Freeing up fossil fuels in various ways --


SUMMERS: In the short run, and making with government support the ultimate pivot to renewables.


JARRETT: Joining us now from Washington D.C., CNN White House correspondent John Harwood. John, happy Monday, good to see you here. It looks like a new coat of paint perhaps on some key elements of Build Back Better. It seems like things like lowering prescription drugs, things that everyone can get on board with. What are the chances here?

JOHN HARWOOD, CNN WHITE HOUSE CORRESPONDENT: Look, I think a new coat of paint is a good way to put it. This is trying to salvage the very ambitious program that was stopped late last year when Joe Manchin said I can't be for it. And they're trying to strip it down to component parts that he can support. Also that Kyrsten Sinema, the other recalcitrant Democrat in that 50-seat Democratic majority is narrow as it can possibly be with a tie broken by Kamala Harris, to see what she can go along with.

I think the chances are decent. You -- it's been for many Democrats like Lucy with the football on this particular situation. But there have been talks going on at a low level for a long time. Various deadlines have been blown through. But I think there is some belief within the White House and on Capitol Hill that a package that includes some of the prescription drug reforms that they've been talking about which would lower the cost, for example, of insulin for people with diabetes.

Some tax incentives to try to accelerate the shift toward renewable energy sources, which is a long-run answer to high gas prices. This is not going to do much in the short run. And some revenue raising, more revenue raising than they would spend in the package.

And because of that, it would reduce the deficit and, in theory, help with inflation. It's not going to be a big aid to inflation in any short run possibility, but it won't make it worse. And that was one of the concerns that Joe Manchin had, so they can credibly go to this --

ROMANS: Yes --

HARWOOD: Senator for West Virginia and say, we're not making anything worse.

ROMANS: And look, there's a sense of urgency here. I think that you can see revealed in this "Wall Street Journal" survey of economists, right? About a potential recession -- 44 percent now say that it will happen in the next 12 months. That is up from what? I think 19 percent, 18 percent and 29 percent over the past few months. So it's rapidly increasing here. This is the urgency behind this, right? HARWOOD: Absolutely. And clearly, the risk of recession is elevated.

You know, there's been a lot of talk in recent days over, is a recession inevitable? Obviously, it's not inevitable. And even 44 percent, those, an elevated risk does not suggest inevitable. The question is how skillfully can the Fed do something that's historically been very tough to do? How do you slow the economy, cool it down without hitting the brakes too hard so that we end up tumbling into a recession?


Clearly, growth is going to slow, and unemployment is likely to go up. The question is, does unemployment go rapidly up? And does growth go into negative territory for an extended period? That's what would define a recession, and that would mean a lot more pain for a lot more households.

JARRETT: John, we've talked with you a lot in the past about sort of the president's frustrations with his team not effectively getting the message out We showed you all of that -- all of that tape yesterday from people on Sunday shows clearly repeating the same talking points. They were all sort of in lockstep. Is this issue going to be easier for them, or are we likely to see more of the same?

HARWOOD: Look, Laura, I don't think the problem with the administration has been communications. Every White House, when they encounter political difficulty, they figure, OK, what's wrong? Is it us? Are we not talking about our positions well enough that the American people aren't getting them, or is it reality? I think the problem that the administration has is a reality problem, $5 gas is something that people experience directly every single day when they go to the gas pump.

And so, yes, they can try have a more coordinated message and try to be more forceful about it, but ultimately when real conditions in the economy improve, that's when the political fortunes of the administration will improve, though, it is very frustrating for any president while they struggle politically.


ROMANS: All right, John Harwood, nice to see you bright and early this Monday morning. Thank you.

JARRETT: Thanks, John.

HARWOOD: You bet.

JARRETT: All right, the Biden administration is also looking at lifting some Trump-era tariffs on China as another way to help ease inflation here. The Treasury Secretary Janet Yellen telling "ABC News", easing some tariffs is under consideration.


YELLEN: We all recognize that China engages in a range of unfair trade practices that it's important to address. But the tariffs we inherited, some serve no strategic purpose and raised costs to consumers.


JARRETT: No strategic purpose. CNN's Kristie Lu Stout is live in Hong Kong for us this morning. Kristie, good morning. The Biden administration hopes this will help counter inflation, but what else would it do?

KRISTIE LU STOUT, CNN INTERNATIONAL CORRESPONDENT: You know, this move, the potential lifting of Trump-era tariffs on China, you know, it could help bring down inflation. It could help boost the approval rating of the U.S. President Joe Biden. It could also encourage American companies to keep and maintain their supply chains in China, but it could also make the Biden administration look weak on China. Look, the White House has been battling and struggling with taming sky-high inflation at its highest level since the 1980s.

So, it's reviewing whether or not it will review a few of these Trump- era tariffs on China. These were tariffs that applied a 25 percent duty on billions of dollars worth of Chinese goods with the intention to do two things, to reduce the trade deficit between the U.S. and China, and also to change the behavior of China, to get China to adopt more fair trade practices.

But China's behavior has not changed, and still there are some influential economists out there who are encouraging and advising the Biden administration to go ahead and consider removal of some of these Trump-era tariffs in order to tame inflation, including from Larry Summers who bring up the clog(ph) from here, in fact, he recently spoke to CNN's Don Lemon. This is of course, a former U.S. Treasury Secretary under the Bill Clinton era.

He said, "I think If we can reduce tariffs where those tariffs aren't strategic and are hurting us, but not doing much to the Chinese, I think that they can make a meaningful contribution to reducing inflation", unquote. But the Biden administration is also under immense pressure to keep the tariffs in place. I want you to look at this from Liz Shuler; the president of the AFL-CIO. She tells CNN this. Quote, "we think it is the wrong time to relax tariffs on China. We think it would have a marginal impact, at best, on inflation."

Meanwhile, China, Beijing, they are fully aware of the situation, fully and acutely aware of the economic pressure and the political pressure that the U.S. President is under right now. And I want you to look at this very interesting op-ed that came out from the "Global Times" state-run tabloid newspaper, saying this, quote, "Washington should understand that this is not a gift that China is asking for, but that it is Washington asking for help from Beijing. The issue of tariffs is a mistake made by them and must be corrected", unquote.

Now, the topic, it could very well come up in a next potential meeting between U.S. President Joe Biden and Chinese President Xi Jinping. White House officials have been saying a potential next meeting could take place in the next couple of months. Back to you. JARRETT: All right, Kristie Lu Stout, thank you so much.

ROMANS: All right, so Biden aides are staying on message echoing the president's take on the possibility of a recession.


YELLEN: I don't think a recession is at all inevitable.


DEESE: What I would say is that not only is a recession not inevitable, but I think that a lot of people are underestimating those strengths and the resilience of the American economy.


ROMANS: Let's bring in CNN's Clare Sebastian in London for us. Clare, stock markets here in the U.S. are closed for the Juneteenth holiday, the first time they have recognized that holiday in the stock markets. How are overseas markets reacting to this message? And you know, for global markets, another uncertain week begins here.

CLARE SEBASTIAN, CNN REPORTER: Yes, exactly, Christine, not too badly. The reaction in Asia was a little bit mixed. So far, Europe seems to be mustering small gains. Those indices lost about 3 percent or 4 percent across the board last week. That was a very tough week here in Europe as it was in the United States.

But they're eking out small gains this mornings, building on some gains at the end of the week after the European Central Bank came out and tried to reassure Europeans that they were staying on top of potentially big differences in financial conditions and borrowing costs across the 19 euro zone countries.

But we have other issues here, of course, there are lingering fears that central banks will get it wrong and that economies will tip into a recession. And we have immediate concerns about energy this morning in Europe. Gas prices, gas futures, they're up about 50 percent over the past week, about 6 percent this morning. That comes after Russia dramatically cut supply to a key pipeline to Germany last week, they say over technical issues.

Germany says it's political. And Germany this morning saying, Christine, that it is going to fire up idle coal power plants to try to cover some of that difference despite its climate pledges --

ROMANS: Yes --

SEBASTIAN: And it is also incentivizing industry to try to use less gas. Yes, more evidence out there as central banks have been saying that interest rates alone are not going to fix this inflation --

ROMANS: Yes --

SEBASTIAN: Problem. ROMANS: And that the petrol politics is just going to be fascinating

to watch over the next year or so. All right, Clare, thank you so much for that.

JARRETT: Coming up for you, going nowhere fast. What's behind big weekend travel messes at the airports.

ROMANS: Plus, the White House clarifying a key detail, the president's upcoming trip to the Middle East.

JARRETT: And the delicate yet highly dangerous work of diffusing bombs in a war zone.



ROMANS: All right. The White House now clarifying that President Biden's upcoming meeting with Saudi officials will include the Kingdom's Crown Prince. A big reversal of the president's earlier pledge to make the country a pariah for its role in the murder of a "Washington Post" journalist. CNN's Jasmine Wright live in Washington. Jasmine, Biden's Energy Secretary suggests the president will have a one-on-one meeting with Mohammed bin Salman?

JASMINE WRIGHT, CNN WHITE HOUSE REPORTER: Yes, she sure did. And now, it's important because up until this moment has said basically that the president would see the Crown Prince when he heads to Saudi Arabia next month, or that he'd be a participant in these Saudi leader meetings that the president will have. And it seemed to contrast Biden's own comments on Friday even when he said that he's not going to Saudi Arabia just to meet the Crown Prince, and said he's going to an international summit.

Now, of course, for their part, Saudi Arabia will first announce a trip they said that the Crown Prince and President Biden will be meeting. So these comments from Granholm were notable. Especially as this administration tries to walk a fine line, and therefore in policy, frankly, reversal here when it comes to President Biden heading over to the country where he once said that he wanted to make the de facto leader, the Crown Prince basically a pariah, and so, especially after the killing of journalist Jamal Khashoggi. So take a listen to this exchange with Dana Bash and Jennifer Granholm here on CNN.


DANA BASH, CNN POLITICAL CORRESPONDENT: He said, quote, "I'm not going to meet with Crown Prince Mohammed bin Salman. I'm going to an international meeting and he's going to be part of it." Can you clarify this? Is he going to meet with the Saudi Crown Prince to talk about oil prices or not?

JENNIFER GRANHOLM, SECRETARY OF ENERGY, UNITED STATES: Oh, he's going for the purpose of this international conference.

BASH: While there --

GRANHOLM: But I think he will meet with the Saudi Crown Prince. He has asked for all suppliers around the globe to increase production. That includes OPEC, that includes our domestic oil and gas producers. He is asking for an increase like other leaders around the globe are asking for?

BASH: So they will have a one-on-one meeting?

GRANHOLM: That's my understanding that he will be meeting, but there's a series of meetings around energy overall.


WRIGHT: Now, very quickly after that, Christine, I spoke to a National Security spokesperson who told me that really sticking to this administration talking points that President Biden is heading to Saudi Arabia at the invitation of King Salman, and that the meetings with King Salman and his team will include the Crown Prince. Now, they also said that President Biden is going there to talk with other leaders. There are about eight --

ROMANS: Right --

WRIGHT: Other countries also attending. So it's not quite a clean-up, but certainly a clarification. Now, also in that interview, Granholm, she defended the president heading to Saudi Arabia. She said that human rights will be something that he brings up, but he's also very concerned about what Americans are paying at the gas pump and, of course, that is something that Saudi has some control over.

So it's certainly going to be quite the trip the president heads on in just a few weeks as his critics and also people in his own party kind of said that it could show support for a nation that, again, he once said that he wanted to make a pariah.

ROMANS: All right, Jasmine, I know you'll be following it for us. Thank you so much. Right, just ahead, too many passengers, not enough pilots. How long will the airline troubles continue?

JARRETT: But first, nerves of steel near Ukraine's capital city.


SALMA ABDELAZIZ, CNN REPORTER: Is one of the unexploded ordnances started smoking. We were all told to pull back.




JARRETT: The NATO Secretary-General hosting a meeting today with senior officials from Turkey, Finland and Sweden. Turkey has raised concerns about its security if the two nations are allowed to join the NATO alliance. The Turkish president has even threatened to block their admission. Let's bring in CNN's Nina dos Santos. Nina, what's the goal of this meeting?

NINA DOS SANTOS, CNN EUROPE EDITOR: Morning to you, Laura. Well, essentially, this is to try and ease the impasse that has been bubbling up over the last month. Remember that Sweden and Finland made dramatic U-turns in their domestic and foreign policy as early as this year, and then eventually decided to try and join NATO together in a show of strength.


Obviously, that decision was taken after Russia invaded Ukraine and these two countries became more fearful for their security after decades of cherished neutrality. But Turkey has been trying to stymie this, saying that they're particularly concerned about the large number of Kurds who live inside these countries, and in particular, support for supposedly Kurdish separatist groups. And that is what they want to get round the table to discuss with Stockholm and Finland as well.

This meeting is set to take place in about half an hour from now. If you look at the people who are going to be attending, it's not the highest level diplomatic delegation. So the expectations here are being tempered, but it is at least an opportunity to try and discuss those Turkish security concerns that they say, given the fact that Ankara has staunchly refused to meet with Sweden and Finland over the last few weeks.

Having said that, though, there is concern that in two weeks' time, what we're going to see is a big NATO Summit. And if they can't get over this impasse, Sweden and Finland might see their membership a bit stymied by Turkey for perhaps another year That's what they're trying to avoid. But going into this summit, this limited expectations of anything concrete being agreed, it's really just to start to get the ball rolling, to get the parties around the table talking and to try and get Turkey to air some of its security concerns. Laura?

JARRETT: All right, Nina, thank you for your reporting.

ROMANS: All right, it has been weeks since Russian forces retreated from Ukraine's capital region, but the air and land attacks left tens of thousands of unexploded ammunitions scattered across the area. CNN's Salma Abdelaziz spoke with Ukrainian soldiers doing the long and arduous work, trying to make Ukrainian neighborhoods safe again.


ABDELAZIZ (voice-over): In a wooded area on the outskirts of the capital, Ukrainian soldiers have set up a bomb disposal site to gather and destroy unexploded ordnance. Leftovers of Russia's invasion dropped on neighborhoods and scattered across suburbs that can kill and maim civilians long after retreat.

"We find explosive remnants practically everywhere", he says. "Inside homes, in people's yards, we find a lot on the roads, really everywhere. More than 43,000 explosive devices have already been neutralized in the Kyiv region. But there are still hundreds of square miles that need to be surveyed and cleared. Local officials say, it is dangerous work.

"There is a saying, only fools are not afraid", he says. "We must always be careful. We must realize that any step can be our last." During the disposal process, we witnessed those risks.

(on camera): So what's just happened is one of the unexploded ordnances started smoking and we were all told to pull back to here. They're now going to check by drone and make a decision as to what they do next.

(voice-over): Once it's safe, the soldiers get back to work, carefully placing the ammunitions in a dugout. They rig a detonation cord and then move back to a firing position.

(on camera): This is just a fraction of what needs to be destroyed. Ukrainian officials tell us it could take five to ten years before the country is clear.

(voice-over): Hazards of war that lie in wait, even after the guns fall silent. Salma Abdelaziz, CNN on the outskirts of Kyiv.


ROMANS: Dangerous work there.

JARRETT: Thanks, Salma. Pent-up demand for travel after COVID here. But the airlines are struggling to meet it. Why didn't they see it coming?

ROMANS: And sticker shock at the car lot.