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Early Start with John Berman and Zoraida Sambolin

U-Haul Driver Crashes into White House Security Barrier; McCarthy: Meeting with Biden Was Productive, But Still No Deal; Anti- Putin Russians Claim Attack on Border Region of Belgorod; Tim Scott, Senate's Only Black Republican, Enters GOP Primary. Aired 5-5:30a ET

Aired May 23, 2023 - 05:00   ET



CHRISTINE ROMANS, CNN ANCHOR: Right now on EARLY START, a U-Haul truck crashed outside the White House. Police say it was no accident.

Plus, late night talks at the Capitol. Are the two sides any closer to a debt limit deal?

And sabotage inside Russia. The Kremlin blames Ukraine as a group of Russian citizens say they did it.

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

We begin with what police are treating as an attempted attack on the president. A U-haul panel truck crashed into a security barrier in Lafayette Square near the White House in about 10:00 p.m. One witness says the then backed up and slammed into the barrier again.

The driver arrested right away. He now faces charges including threatening to kill or harm the president, vice president or a family member.

Police have not yet released the man's name and there's no word on a motive. Video shows Park Police taking inventory of the truck, packing up evidence, including a flag with a swastika.

All right. Time is running short this morning for the White House and Republicans to strike a deal to lift the debt ceiling. Only nine days remain until the federal government may run out of money. June 1st is the Treasury's earliest estimated date for a government default.

President Biden and Kevin McCarthy met again Monday to try to hammer out a deal.


REP. KEVIN MCCARTHY (R-CA), SPEAKER OF THE HOUSE: We still have differences. We left the meeting with directing the members and staff to get back together, work through the night knowing where some of our differences lie. See if there are other ideas where we can work through. (END VIDEO CLIP)

ROMANS: CNN's Jasmine Wright is live for us this Tuesday morning in Washington.

Jasmine, okay, so did staffers work through the night as Speaker McCarthy said? And what are those remaining disagreements they are trying to bridge?

JASMINE WRIGHT, CNN WHITE HOUSE REPORTER: Yeah. Well, some of our producers at Capitol Hill saw the negotiating team leave the Hill just before midnight. So not through the night, but certainly very late trying to get a form of agreement on paper for these two principals to ultimately agree to and go forward with to avoid default here.

Now, the tone coming out of that meeting that we just -- we're seeing on screen now here with House Speaker Kevin McCarthy and President Biden was pretty much optimistic despite the fact that it is just nine days before the X date June 1st when the Treasury Department identified could be the first day where the U.S. would not be able to meet its obligations.

House Speaker Kevin McCarthy speaking to reporters afterwards. He called the meeting productive, and he said that the tone of the meeting was probably the best that they have had since they started meeting on the debt ceiling just a few minutes ago. And he said that negotiators would go forward from this meeting with the clearest indication on the path forward to what could be a potential deal. But, of course, these two sides are still very far apart as we just heard Kevin McCarthy say that they are still significant disagreements when it comes to really what a deal could look like.

Now, when we talk about specifics, Kevin McCarthy speaking to reporters afterwards, he said that he had told the president that revenue for him is still off the table, that Republicans would not accept cuts to defense spending. And we know according to reporting from over the weekend that in terms of the GOP's latest proposal, it included not only going back to fiscal spending of 2022, really a reduction of what we have it at now, but also really putting spending caps on those redacted numbers for about six years. Those are off the bat, all thing that the White House has supported.

We know President Biden said in Japan on Sunday that he wants to see revenue be back on the table. Now, President Biden also acknowledged that there are disagreements in a statement that he released last night, he said that there are areas of disagreement, but really vowed that the two pair will go forward.

And you see on the screen that we reiterate that default is off the table and only way to move forward is in good faith toward a bipartisan agreement while there are areas of disagreement the speaker and I and his lead negotiators, Chairman McHenry and Congressman Graves, and our staffs will continue to discuss the pathway forward.

Now, of course, Republican negotiators continue to say that there is no agreement until there is any agreement, but we know House Speaker Kevin McCarthy told reporters yesterday that he expects for him and President Biden to speak every day until a deal is made. But again, that is nine days that they have to make something happen -- Christine.


ROMANS: Yeah, and I just checked the treasury cash balance updates as of Friday, $60 billion this Goldman Sachs saying that you could be below the $30 billion line which means that you can't pay your bills by June 8 maybe. So time has run out essentially.

Jasmine Wright, thank you so much.

All right. Special counsel Jack Smith has issued a subpoena to the Trump Organization seeking information on its business dealings in foreign countries. That's according to two sources, one of whom says that investigators see focused on Trump's business dealings in countries that could possibly have been interested in the type of classified materials recovered from Mar-a-Lago.

"The New York Times" reports investigators sought information on the Trump Organization's real estate dealings in seven countries, including China and Saudi Arabia. The Trump Organization did not respond to CNN's request for comment.

All right. A group of anti-Putin Russians aligned with the Ukrainian army is claiming responsibility for an attack on Russian soil. A group calling itself the Freedom of Russia Legion say it was behind the shelling in the border region of Belgorod. Russian officials there saying buildings were damaged and at least several people were injured. But there were no deaths.

CNN's Salma Abdelaziz is tracking the story from London.

What is, Salma, the Freedom of Russia Legion and how is Russia responding to its attack?

SALMA ABDELAZIZ, CNN CORRESPONDENT: So, this is a group of a few hundred Russian nationals who are a part of the Ukrainian military and security forces. That means they are provided support, weapons from Kyiv. And they are claiming that starting Sunday, they carried out this very brazen attack on this border city, Belgorod, that those attacks are still ongoing.

Now, Russian officials acknowledged this. They call them saboteurs, they say at least eight people have been injured in the shelling and cross border attack. And Ukrainian military, Ukrainian officials say that, yes, this has taken place, but although the group is supported by Kyiv, it operates independently rather within Russian borders.

Why does this matter? Why is this significant? Well, this is a really open attack on Russian oil. In the past, we've seen these covert attacks, drone attacks on Russian military bases, but Ukraine had denied, denied, denied responsibility. And this time, there seems to be a very clear link and a very clear message which is that Russian nationals not only oppose President Putin, but some of them are willing to take up arms and fight alongside Ukrainians.

And there is the potential here as well for escalation. So far, Ukraine and its allies, the U.S. and NATO, have been reticent to bring the fight on to Russian soil. And this shows that they are willing to dip their toes into the water and brings that water ever closer to Russian citizens at home.

President Putin has been facing a backlash, this is sure to remind Russians of the consequences of the conflict.

ROMANS: Yeah. Indeed. All right. Salma, thank you so much.

All right. To politics here, South Carolina Senator Tim Scott vowing to take on the radical left as he joins the growing ranks of candidates who hoped to challenge Donald Trump for the Republican nomination, without alienating Trump's base.

CNN's Eva McKend has more from Charleston, South Carolina.



EVA MCKEND, CNN NATIONAL POLITICAL REPORTER (voice-over): South Carolina Senator Tim Scott officially jumping into the 2024 presidential race.

SEN. TIM SCOTT (R-SC): We live in the land where it is absolutely possible for a kid raised in poverty, in a single parent household, in a small apartment, to one day serve in the people's house. And maybe even the White House.

MCKEND: The only Black Republican in the Senate, Scott emphasizing his personal story.

SCOTT: I'm living proof that America is the land of opportunity, and not a land of oppression.

MCKEND: Pitching himself to Republican voters as a formidable challenger to President Joe Biden.

SCOTT: Our nation, our values, and our people, are strong. But our president is weak.

MCKEND: And appealing directly to the GOP base on border security.

SCOTT: If our southern border is unsafe and insecure, it's not our country.

MCKEND: And over culture wars.

SCOTT: I will be the president who destroys the liberal lie that America is an evil country.

MCKEND: Scott joins a growing field of GOP hopefuls. Including former South Carolina governor, Nikki Haley, who appointed Scott to the Senate in 2012, and former President Donald Trump, who congratulated Scott, writing: Tim is a big step up from Ron Desanctimonious, who is totally unelectable -- choosing instead to go after Florida Governor Ron DeSantis, who is expected to announce his bid in the coming days.

SCOTT: Our party, and our nation, are standing at a time for choosing.

MCKEND: Scott striking a more optimistic message, setting up a contrast with Trump and DeSantis.

SCOTT: Victimhood or victory?

CROWD: Victory!

SCOTT: Grievance or greatness?

CROWD: Greatness!

SCOTT: I choose freedom and hope, and opportunity. Will you choose it with me?



MCKEND (on camera): Scott will continue to make his pitch to voters this week in Iowa and New Hampshire. His supporters here in Charleston say they are eager for the rest of America to get to know him like they know him here. Meanwhile, Democrats responding to Scott's candidacy by dismissing him as yet another MAGA Republican in the field.

Eva McKend, CNN, Charleston, South Carolina.

ROMANS: All right. Just ahead on CNN, CNN on the frontlines in Ukraine. Our Nic Robertson keeping his head down as Ukrainian troops try to keep their heads held high.

Plus, a Florida man leaves a bar and then loses his arm. You're looking at the reason right there.

And the brand new search under way for missing British toddler Madeleine McCann.



ROMANS: So, it's very clear. We've been seeing it for days. That a default on U.S. government debt would be catastrophic. But what would the government's inability to pay what it owes mean in small towns and big cities? Far from Wall Street and Washington.

CNN's Brian Todd has the sobering reality.

(BEGIN VIDEOTAPE) BRIAN TODD, CNN CORRESPONDENT (voice over): Among the first people who could be impacted by the default, Social Security recipients.

PAULA CUNNINGHAM, DIRECTOR, AARP MICHIGAN: I can't even begin to imagine what people will feel for not getting what they budgeted for, what they retired and knew they were going to have coming in every single month.

TODD: What happens to the Social Security payments of more than 65 million Americans if the U.S. defaults on its debt?

MARK ZANDI, CHIEF ECONOMIST, MOODY'S ANALYTICS: They'll ultimately get a check but it will be late. And the longer the default goes on, the later that check will get. And then what? They can't pay the rent. They can't put food on the table.

TODD: A default could also affect payments to food stamps recipients, American military veterans who receive disability payments and active duty military personnel.

LARRY SUMMER, FORMER TREASURY SECRETARY: It could mean that we have people fighting in dangerous environments overseas who don't get their pay on time.

TODD: According to Moody's, if a default lasts about a week, close to a million American jobs will be lost, and if it drags on for six weeks, 7 million jobs.

How? Analysts say the payments withheld to Social Security recipients and others would trickle into other sectors of the economy.

DAVID WILCOX, PETERSON INSTITUTE FOR INTERNATIONAL ECONOMICS: Suddenly, Social Security retirees, military people who get paid by the federal government, civilian employees wouldn't be able to go out to restaurant as much as they normally would.

Social Security recipients who may be living from month-to-month on their benefit payment would themselves have to back up their payment to all the people that they owe money to.

TODD: Analysts say the stock market could also take a dive during the default. Americans' 401(k)s and other savings would see substantial losses. Even if a deal to avoid default is reached at the last minute, experts say, cutting it that close could hurt those accounts.

WILCOX: Financial market participants don't like uncertainty. In the face of uncertainty, they seize up and grow more risk-averse and that tends to send prices down.


TODD (on camera): How can the average American prepare for a possible default? Analyst David Wilcox says, for Social Security recipients, some government employees and others who rely on those payments for most, if not all of their income, now is the time to hold back on discretionary spending. Avoid the extra restaurant meal. Build a buffer of savings and don't get overextended.

Brian Todd, CNN, Washington.

ROMANS: All very good advice.

All right. America's reputation as the stable hub of the global economy under threat this morning as the U.S. inches closer to that default on its debt. Economists, money managers and business owners around the globe growing more concerned. Why in the world would the U.S. undermine its financial exceptionalism?

Political risk consultant Maximilian Hess telling "Washington Post" this, the U.S. treasury market is Washington's golden goose and the market shows that the golden eggs it lays are still very much in demand. And yet, the U.S. has a rule in the debt ceiling that inexplicably says that the golden goose should be taken out back and shot unless it agrees to lay fewer eggs for a while.

Maximilian Hess, principal at the political risk firm Enmetena Advisory joins me now. He is an author of the book economic war and Ukraine and global conflict between Russia and the west.

I'm so glad to see you this morning.

You know, U.S. government bonds are the cornerstone of the global financial system. I loved your golden goose metaphor. It seems some in Washington forgotten that America's ability to borrow is her super power.

MAXIMILIAN HESS, PRINCIPAL, ENMETENA ADVISORY: Right. I totally agree. It gives ability to enforce sanctions, it is what gives it ability to lever other countries, is what it gives it the ability to exert so much influence over institutions like the IMF and World Bank. But even moving away from the geopolitical institutions, the influence of the dollar and international economy and plummeting of everything from options markets to oil and commodities markets is huge.

And behind all of that sits a stock of U.S. treasuries that are the basis for the banking and financial system of the world. And by flirting with the default, we put that all at risk not to mention of course the issues that Americans very much face with their own payments if we do go ahead and default.

ROMANS: So for American prestige, our borrowing is not a weakness, it's a strength.

HESS: I totally agree with that. Stephanie Kelton, a famous economist put it as U.S. primary dealer role giving it so much strength. And, you know, there are costs that lot of economists and others have focused on to the dollar role involved in reserve and trade currency, but at the same time, it has so many up sides and along at countries that can't issue dealt freely in their own currency, or whose bonds aren't widely accepted internationally. They have a much, much harder time dealing with economic crises.

And if we go too far in flirting with this, this time, it means that every future crisis will be a far greater damage to the U.S. economy, prestige and future growth than the continued growth of our debt and deficits which I think is fairly manageable.

ROMANS: What you could argue I guess is that the loss of trust almost incalculable what the loss of trust in the U.S. system could mean for America's ability to continue to borrow and to borrow at relatively very low interest rates. Talk to me about the trust piece of this, because the rest of the world trusts America to invest its money here by buying our bonds.

HESS: Yes. I certainly agree with that trust factor. The issue that -- the way that I would frame it is that the U.S. dollar and U.S. debt system is substantially anti-fragile system so that when there are crises, people tend to move their money into U.S. dollar or treasury bond and currency and reserve as set of last resort. We saw that in the COVID crisis, we saw that in the global financial crisis, we saw that last year with Russia's economic war against the West, going on alongside its war against Ukraine.

And this is a real benefit and position of strength, that loss of trust also could really push others to move into other currencies such as the Chinese Yuan and very much and not in U.S. geopolitical and geo-economic interest.

ROMANS: We saw this in 2011, 2013 again today. Are we at the risk of losing the trust again? Wall Street is apparently telling us that they think failure is not an option.

HESS: So, you know, I think that Wall Street is really signaling that we see it play out a little bit more in the debt markets except for some of the very shortest term treasuries. But you know, I think that one potential area where it plays out is even if there is a very, very short term default, it really incentivizes others to look for alternatives in the future.

ROMANS: All right. Maximilian Hess of Enmetena Advisory, thank you so much. I really enjoyed that. Look forward to reading your book. Thank you.

All right. Quick hits across America now. A 23-year-old man in Florida lost his arm due to an alligator bite. According to officials, it happened outside a bar. The man was airlifted to a hospital and the alligator was caught and humanely killed.

Three southwest states have struck a deal to cut billions of gallons of Colorado water usage. California, Arizona, and Nevada Arizona agreed to cut about 10 percent of the river allocation through 2026.

The Supreme Court declined to take up a challenge to the California's ban on foie gras. The challenge is brought by Canadian duck and goose farmers.

All right. Still ahead, the volcano that could chase a lot of people away in a hurry.

First, the first-hand look at life on the frontlines in Ukraine. (BEGIN VIDEO CLIP)

NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Going to get back in the vehicle, try to get closer to the frontlines.




ROMANS: For Ukrainian soldiers, the brutal battle in eastern Ukraine is taking its toll. CNN getting an up close look from the front lines of the war where constant enemy shelling has been draining morale. Ukrainian troops admit that they are weary but they won't stop fighting.

CNN's Nic Robertson has more.


ROBERTSON (voice-over): Barely out of the armored troop carrier, incoming artillery. We'll just wait in this little basement until the shelling is over and then when it is safe they will move forward. A few minutes later, safe to come out of the army outpost a few miles from Bakhmut.

Last night was hard, a lot of shelling.

Call sign "Gambit" tells us the soldier is still shell shocked from an empty tank rocket attack. We're going to get back in the vehicle, try to get a little closer to the frontlines.

Ten days ago, these troops push the Russians back around Bakhmut. But their advance is slowing and harder.

We get to a small HQ, call sign "Fox", a former farmer, is readying his troops for their coming shift on the frontline, stopping the Russians in Bakhmut from advancing.

How hard is that?

It's impossible to describe these feelings, he says. You can only experience it. No words can express it. They shell a lot.