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Early Start with John Berman and Zoraida Sambolin

President Biden and President Macron to Meet at the White House; Senate to Consider House Bills to Avert Nationwide Rail Strike; U.S. Mulls Over Expansion of Training for Ukrainian Forces; Fed Chair Signals Smaller Rate Hikes Likely This Month; China to Punish People for Liking Posts Deemed Harmful. Aired 5-5:30a ET

Aired December 01, 2022 - 05:00   ET



CHRISTINE ROMANS, CNN ANCHOR: Right now on EARLY START, burning questions before Biden's first state dinner. Climate, Ukraine and China, all on the menu with Emmanuel Macron.

All aboard so far to stop the nationwide railroad strike. Next stop the Senate. Could it go off the rails from there?

And a big clue about interest rates in America. The Fed chair confident he can stick the so-called soft landing and stave off a recession.

Good morning and welcome to our viewers in the United States and around the world. I'm Christine Romans.

We begin with this high stakes meeting between President Biden and the French President Emmanuel Macron today at the White House. The president tweeting out this picture of the Bidens last night with France's first couple. Macron is the first foreign leader to be welcomed on a state visit during the Biden presidency. The Macrons will be officially welcomed to the White House ceremony this morning.

The two presidents will then meet in the Oval Office. That will be followed by a joint news conference and they'll wind up the day with a lavish state dinner tonight.

CNN's Jim Bittermann is live for us in Paris. Jim, what is Macron hoping to get out of this meeting?

JIM BITTERMANN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, Christine, I think there's a number of things. One of the things was a ceremonial aspect. It's a great honor for France after all. They're the first state dinner honoree. But there's also a lot of business here to take care of, especially what the French are concerned about and the Europeans about the inflation reduction aspects of the bill that was passed by the Congress and signed by the president.

Some of those aspects, which are meant to help Americans out and to address some concerns about climate change, the French and the Europeans view as protectionist in detail, and in fact it was quite a blunt assessment of all this yesterday when President Macron was addressing a group of mainly French Washingtonians.

Here's what he said.


EMMANUEL MACRON, FRENCH PRESIDENT (through translator): What has happened in recent months is a challenge for us because we are starting to have differences on energy issues. And the cost of the war is not the same in Europe and in the United States. But most importantly the choices that have been made for which I share the goals, in particular the Inflation Reduction Act or the CHIPS Act are choices that will split the West.


BITTERMANN: And that idea that somehow the Inflation Reduction Act could split the West is one of the biggest concerns, I think, that's going to be addressed this morning in the Oval Office meeting. There's also a task force. The White House says that a task force has been set up to iron out some of the details of these differences. But nonetheless, it is an issue that is going to be addressed for some time during the summit meetings that take place today -- Christine.

ROMANS: All right. Jim Bittermann, thank you so much for that. Big day ahead for those.

All right. Tonight President Biden heads to Boston for a fundraiser with the visiting Prince and Princess of Wales. The royal couple were courtside at the Celtics game last night. William and Kate are in town for events related to the prince's Earthshot climate initiative.

All right. House lawmakers taking action to try to stop a rail shutdown that could have grave economic consequences. They passed a bill imposing the tentative labor deal struck back in September. But its fate in the Senate uncertain.

Here's CNN's Phil Mattingly.


UNIDENTIFIED MALE: The joint resolution is passed.

PHIL MATTINGLY, CNN CHIEF WHITE HOUSE CORRESPONDENT (voice-over): A bipartisan vote that marked a critical step and a furious effort to prevent economic disaster.

REP. NANCY PELOSI (D-CA): Today, we are here to safeguard the financial security of America's families, to protect American economy as it continues to recover, and avert a devastating nationwide rail shutdown.

MATTINGLY: For President Biden, a crucial win in the behind-the-scenes effort to avert rail worker strikes that could cripple U.S. commerce. The White House locking in 79 Republicans in support of the bill, a window into a complex problem cutting across political and ideological lines. JOE BIDEN, PRESIDENT OF THE UNITED STATES: The middle class built

America. And unions built the middle class.

MATTINGLY: One that has pitted the White House and Democratic leaders against their close allies in the labor movement.

KARINE JEAN-PIERRE, WHITE HOUSE PRESS SECRETARY: Now we're at a place where the president has been very clear that we have to avert a rail shutdown, and he is asking Congress to act.

MATTINGLY: And major business groups are lining up behind the administration in support. The fear of economic collapse Trumping long-standing allegiances after several unions rejected a deal the White House helped drive in September, primarily due to the agreement's omission of paid sick leave.


SEN. BERNIE SANDERS (I-VT): I was going to come here to the Senate.

MATTINGLY: White House officials now keenly aware, their most acute challenge lies ahead.

SANDERS: Do we stand with workers in the rail industry and say, yes, you are right? Working conditions are horrendous. We cannot continue a process by which you have zero paid sick leave.

MATTINGLY: The House, voting to pass a separate bill to include paid sick leave that Senator Bernie Sanders pledged his own effort in a fiery floor speech. Biden set to dispatch his top two Cabinet officials, Labor Secretary Marty Walsh and Transportation Secretary Pete Buttigieg, to meet behind closed doors with Senate Democrats on Thursday, a meeting, White House officials say, will focus on an agreement they say includes clear winds for union workers, including the largest pay increases in more than five decades.

Democratic sources say they are cautiously optimistic Biden will get the votes, putting the president on the precipice of another win driven by compromise even in the face of pressure from close allies.

BIDEN: All kidding aside, we're here to get work done.

MATTINGLY: Biden resolving a Democratic deadlock on a cornerstone economic and climate legislation this summer, the same way he clinched a sweeping bipartisan manufacturing law that sits at the core of his economic strategy.

BIDEN: This will ensure tens of thousands of new construction jobs.

MATTINGLY: And his post-midterm election travel around the country with a stop in Michigan on Tuesday.

BIDEN: For the first time in a long time we're investing in America and we're investing in ourselves.

MATTINGLY: Ahead of a scheduled visit to Arizona next week. (On-camera): And while the primary focus for the president and his top

advisers is really kind of finishing out this year, particularly when it comes to a myriad of major legislative issues that they have to address, it's worth noting those two states that he'll be visiting, they are two battleground states. They are two states where Democrats overperformed in a major way in the midterm elections.

They are two states that will be critical for any presidential run, something President Biden obviously had not officially decided on launching for 2024. Something his advisers say should probably pay some attention to where he's heading right now in the wake of those surprising midterm results in his favor.

Phil Mattingly, CNN, the White House.


ROMANS: All right, Phil, thanks for that.

House Democrats also making history Wednesday electing New York Congressman Hakeem Jefferies to succeed Nancy Pelosi as Democratic leader. The 52-year-old Jeffries will be the first black lawmaker to lead one of the two major parties in either chamber of Congress.


REP. HAKEEM JEFFRIES (D-NY): We seek to find common ground whenever and wherever possible, and we hope that our colleagues on the other side of the aisle, as they temporarily inherit the majority in the next Congress, are willing to proceed with that same spirit of cooperation, fortitude and mission centered focus to get things done for everyday Americans.


ROMANS: Jefferies' ascension marks the end of Nancy Pelosi's 20-year run leading the Democrats. She'll return to being a rank-and-file member of the new Congress.

The White House is considering an expanded new training program for Ukrainian troops. The plan include instruction for as many as 2500 Ukrainian soldiers a month at a U.S. base in Germany. If the idea is implemented the U.S. will begin training much larger groups of Ukrainian soldiers in more sophisticated battlefield tactics, including how to coordinate infantry maneuvers with artillery support.

CNN's Salma Abdelaziz in London for us this morning. Salma, you've been on the ground in Ukraine for us. How important would this training be to the Ukrainians?

SALMA ABDELAZIZ, CNN CORRESPONDENT: Yes. So when I saw this information, a plan that is still under consideration of course by the Biden administration, the first question you would ask of course is why now? Why almost nine months into this conflict is the Biden administration considering scaling up so dramatically the training of Ukrainian soldiers. And there's a couple of reasons for that. Logistically right now it's the winter months that's really when the frontlines slow down so you can potentially take Ukrainian soldiers, send them to Germany and train them without having much impact on the battlefield.

You also have to look at the Ukrainian counter offensive which has in recent weeks and months been extremely successful. They reclaimed the city of Kherson, provincial capital just a few weeks ago. So the United States clearly wanting to build on that momentum. And then there's that very important detail that you mentioned there. That these are going to be more sophisticated battlefield tactics that soldiers will be trained on.

There's already basic training programs including here in the U.K. for Ukrainian soldiers. But clearly the United States wanting to push a more advanced Ukrainian force trying to increase their knowledge. And when you really look at these massive battlefield losses, tens of thousands of Ukrainian soldiers according to U.S. officials who've lost their lives on the battlefield, there's a concern that there could be a knowledge and experience gap.


But clearly the message here from the United States if the Biden administration does go ahead with this plan is that they want to continue to support the momentum of this counteroffensive.

ROMANS: All right. Salma Abdelaziz, thank you so much for that.

Back to the U.S. two people have died in central Alabama after severe storms spawned more than 30 tornados in the Deep South. Green County, Alabama, was devastated with downed power lines and trees. Homes in Montgomery County were hit with winds reaching 115 miles an hour. A fast-moving tornado crushed this family's home.


UNIDENTIFIED MALE: All we could do was kind of hunker down. I had my wife's head underneath me. She had all the boys under her. And when I looked back up I saw the sky.


ROMANS: This morning thousands remain without power across several southern states.

Six years of Donald Trump's federal tax returns are now in the hands of the House Ways and Means Committee. They were turned over by the IRS. The handover had been on hold until the Supreme Court declined to intervene last week. The committee is planning to meet later today. Democrats are not expected to review the tax returns in today's session and the documents are not expected to be immediately released to the public.

All right. The words of one man moving the markets of Wall Street in a big way.


JEROME POWELL, FEDERAL RESERVE CHAIRMAN: I do continue to believe that there's a path to a soft or softish landing. I do believe that.


ROMANS: More ahead from the Fed chairman. Plus the rape case against a TV star ends in a mistrial. And this, the understatement of the year from fallen crypto boss Sam Bankman-Fried.


SAM BANKMAN-FRIED, FTX FOUNDER: I mean, look, I've had a bad month. This has not been a fun month for me.





POWELL: It makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down. The time for moderating the pace of rate increases may come as soon as the December meeting.


ROMANS: OK. That's Jerome Powell. And he's very clearly signaling that the Federal Reserve appears ready to slow the pace of very aggressive rate hikes. That's what investors wanted to hear. The announcement sent the markets sharply higher. U.S. futures, though, pausing right now. Looking a little lower at the moment. We'll see how that all shakes out.

Let's bring in "Washington Post" economics reports Rachel Siegel.

Good to see you this morning, Rachel.


ROMANS: OK. So that was riveting yesterday, that speech from the Fed chairman. Riveting for people like us, I guess. But what it means for people who are not riveted by the Fed chief is that, you know, the Fed after raising interest rates six times this year, four monster 75 basis point rate hikes the last four meetings, we can assume 50 in December but maybe a higher end rate target next year? Is that how you're reading it?

SIEGEL: That's exactly right. The message from the Fed chair is that even though the central bank is ready to start slowing down the scale of these whopping interest rate hikes that we've seen this year, that isn't really the point. The point is how long high rates will be held high. The point that the Fed chair was trying to make is that very high rates do a serious number on the economy even if they aren't raising by 75 basis points at every upcoming meeting.

ROMANS: So Wall Street really focused on the moderation of those rate increases. But for main street, I think it's really important. It still means higher borrowing costs are here and could even creep even higher for people borrowing for cars, for homes, on credit cards?

SIEGEL: That they will keep creeping higher and that they will stay high for some time. The Fed has been very clear that even if they start to pull back on the size of these rate hikes, that that is by no means a sign that they are letting up on their inflation fight. It means that they will keep rates very high until they see consistent, sustained progress month after month, not only on inflation but on the labor market and on all other parts of the economy that they're trying to stabilize.

ROMANS: There's a lot of talk yesterday like, this is what a recession looks like, you know, bartender, pour me another, because the economy is still strong. 2.9 percent GDP growth in the third quarter. We saw that number yesterday. What does that tell you about what the Fed chief is trying to do here? I mean, he's trying to cool an economy but there are still outside of housing, there's still strength in this economy, a lot of strength.

SIEGEL: It just remains one of the most mystifying pieces of an economy that has been so mystifying for almost three years now. Certain key pillars of the economy have stayed remarkably resilient to the Fed's decisions already, and we don't seem to be in a recession. Consumer spending, which is a huge pillar of the economy, is strong. Retailers are expecting a strong holiday season.

They saw a strong Black Friday. People seem to have this disconnect between the sense of anxiety and foreboding in the rest of the economy. But many businesses that I talked to, and obviously this doesn't cover everyone, say I'm doing all right. I'm still looking to hire. I'm not looking to lay anyone off. Of course the question is, whether that changes and when it starts to change.

ROMANS: It's so interesting, Rachel, because, you know, you look at Consumer Confidence numbers this week, and they show people don't feel real great, they're not very optimistic. And then you look at 196 million people shopping in the Thanksgiving weekend, they're eager to go back out and get back to normal.

I wonder if the pandemic and honestly the anxiety of the pandemic, and just the unprecedented nature of the pandemic on modern life has completely colored how we think about money and the economy.

SIEGEL: It's an open question and I think it's a question that really speaks to how all economic models and conventional thinking have just been chucked and that today is no exception. The question will be whether people start to change their behavior because of this sense of anxiety, because of the uncertainty of inflation levels on the pandemic or, sorry, the levels on people's lives. That's something that will certainly determine the Fed's decision moving forward and affects the way we build the economy day in and day out.

ROMANS: Always nice to talk to you, Rachel. Rachel Siegel, thank you so much.

SIEGEL: Good to see you.

ROMANS: All right. The founder of collapsed crypto exchange FTX is speaking out after the $32 billion company plunged into bankruptcy in less than a week. A big question fid the founder, Sam Bankman-Fried, misappropriate costumer funds when the company made loans to his separate hedge fund Alameda.


He told "The New York Times" he was shocked by what happened and never intended to commit fraud.


BANKMAN-FRIED: I screwed up. Like I was CEO. I was the CEO of FTX. Look, I've had a bad month. This has not been a fun month for me. But I didn't knowingly commingle funds. And again, one piece of this, you have the margin trading. You have, you know, customers borrowing from each other. Alameda is one of those. I was frankly surprised by how big Alameda's position was.


ROMANS: OK. It's his job not to be surprised. There was no oversight. No regulators. No CFO. Bankman-Fried has suggested that FTX customers in the U.S. and Japan could be made whole with restructuring but with very few details there.

All right. Quick hits across America now. A judge declaring a mistrial in the rape case against Danny Masterson, star of "That '70s Show." The Los Angeles jury telling the judge they were hopelessly deadlocked on charges he raped three women at his home in the early 2000s.

Indiana Republican Senator Mike Braun announcing he plans to run for governor of the state in 2024. The move will create an open Senate seat in Indiana, a reliably red state.

A Montana judge ruling the state's wolf hunt can proceed. He says a challenge by environmental groups failed to prove Montana's wolf population would be permanently harmed by increased hunting.

This morning fans are remembering Christine McVie, an iconic voice from the legendary rock band.

Just a one of a kind sound. The Fleetwood Mac singer died Wednesday after a short illness. Christine McVie wrote some of the band's most popular songs and was a legend in her own write. Fleetwood Mac paid tribute in a statement, saying, "She was truly one of a kind, special, talented beyond measure. She was the best musician anyone could have in their band and the best friend anyone could have in their life." Christine McVie was 79. All right. If you like the wrong social media post in China, it could

cost you. And the female referee about to make history at the World Cup.



ROMANS: Welcome back. China is moving to punish internet users for liking social media posts the communist officials deemed harmful or illegal. China's cyber watchdog stepping up enforcement as public anger and protests spread over China's draconian COVID restrictions.

Let's go to CNN's Anna Coren live in Hong Kong. And Anna, how will this new cyber enforcement work?

ANNA COREN, CNN INTERNATIONAL CORRESPONDENT: Christine, it's important to note that these guidelines are actually published last month before the mass protests swept across China that we've seen this past week where thousands of people have taken to the streets voicing their angst and opposition to the country's draconian zero COVID policy, which has been in place for almost three years.

Censoring and cracking down on dissent is just part of the Communist Party's playbook but in the next two weeks any likes on public posts must be regulated along with any comments. Online accounts, they must be vetted, uses real identifies, it must be verified along with users ID, mobile, social security number. On top of the government censorship already in place, all online platforms must dol their own censorship, which includes vetting and editing in real time.

Basically it means that nothing can get online unless it has been signed off. Now the problem for authorities is the massive amount of manpower and resources that it will take to implement these even stricter guidelines. China already has the most sophisticated censorship apparatus anywhere in the world. And while it's hunted down and deleted countless social media posts this past week, plenty have slipped through the system that we've been, you know, watching and measuring.

And that is due to the volume and scale of posts but also the savviness of the users who are aware of how to evade censors.

And Christine, you know, this week's protests, they have certainly rattled the government hence we are now seeing an easing of COVID restrictions around the country. But even as authorities further tighten cyber censorship, you know, Chinese citizens, they will undoubtedly continue to find ways to voice their dissent.

ROMANS: All right. Anna Coren, thank you. It's certainly remarkable to see the people rise up there. Thank you.

All right. The great Lionel Messi setting a wrong kind of record at the World Cup after Poland's goal keeper stopped him on a penalty kick. Argentina was still able to punch its ticket to the knockout phase with a 2-0 victory. Amanda Davies live from Doha, Qatar. Amanda, tell us about this

dubious record I guess that Messi now possesses.

AMANDA DAVIES, CNN'S WORLD SPORT ANCHOR: Yes, morning, Christine. And Messi afterwards saying he was angry at that missed penalty. But I guess to place in the last 16 isn't too bad a consolation prize. The Argentinian fans staying long into the night at Stadium 974, refusing to leave, celebrating their moment really because it was just a few days ago, it seemed very, very unlikely after that shocked defeat to Saudi Arabia.

But people saying there were very many signs that this perhaps is Argentina back on the right track, showing some of that form -- sort of going to those 36 games unbeaten and being talked about in the runup to this tournament as favorites, one of the favorites to lift this title once again.

Poland, despite their 2-nil defeat, celebrating you have to say lady luck shining down on them and (INAUDIBLE) help from Saudi Arabia after Saudi scored that late, late goal against Mexico. They were beaten by Mexico, but it was enough --