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Russia Blames Ukraine For Drone Attacks And Shelling; Beluga Whale Accused Of Spying Is Seen In Swedish Waters; Debt Deal Would Cut Over $20 Billion In IRS Funding. Aired 5:30-6a ET

Aired May 31, 2023 - 05:30   ET



CHRISTINE ROMANS, CNN ANCHOR: Ukraine taking the fight to the Russians once again. Officials in the occupied Luhansk region say Ukrainian shelling has killed five people and injured 19.

The governor of the Belgorod area in Russia says shelling has injured four people and damaged several buildings there, including a school.

Meantime, officials in the Krasnodar region territory confirm a drone crashed into an oil refinery. A second drone caused a fire at a fuel depot.

CNN's Clare Sebastian joins us this morning from London. And, Clare, this comes one day after drones hit three buildings in Moscow -- in the Tony (PH) neighborhood. Russia blames Ukraine but Kyiv has denied it. What do we know?

CLARE SEBASTION, CNN CORRESPONDENT: Yes, Christine, Kyiv has denied responsibility for those drones that were, according to the Russians, shot down or averted over Moscow on Tuesday, and they are not officially claiming responsibility for any of the incidents that we've seen overnight and this morning.

But this -- it's clearly fitting a pattern that we've seen over recent weeks of increased strikes both within Ukraine and Russian-occupied areas -- Mariupol, Verdansk on the coast in the south, this morning in Luhansk. We're also seeing evidence of a potential strike in Donetsk, as well, in those Russian-occupied areas. And, of course, across the border. Belgorod has been really the epicenter of these cross-border incidents.

The governor, this morning, calling the shelling overnight a massive strike. Four people injured, he said. Eight apartment buildings and four houses among the buildings damaged. I think we've got some pictures that show the aftermath of that for you there in Belgorod. So that city, which was an important staging ground and continues to be for Russian forces, has really been -- while we've seen the highest concentration of attacks. But not just there, of course. Also, we saw two oil refineries impacted this morning.

So the big picture here is look, we know the Ukrainian counteroffensive is coming. They say the date has been set. So they're not telling -- but they're not telling us, of course, when.

And along with that, we've seen what military analysts have interpreted as shaping operations -- softening operations. Ukraine sort of probing Russia's defenses trying to figure out where the weak points are. So that may be what's happening here.

But I think the other part of it is that this clearly shows events of the last couple of days that this conflict still has the ability to escalate, and that makes this a potentially dangerous moment for both sides -- Christine.

ROMANS: All right, Clare Sebastian. Thanks, Clare.

Quick hits around the globe right now.

Smoke from 13 raging wildfires in Nova Scotia forces the evacuation of more than 18,000 Canadians and is now affecting areas in New England. Massachusetts issued an air quality alert on Tuesday.

The attorney for Joran van der Sloot says his client will not fight extradition from Peru and wants to be transferred to the U.S. He is facing charges related to the 2005 disappearance of Natalee Holloway. And his lawyer says he was just assaulted in prison.

Former Senate staffer Tara Reade, who accused Joe Biden of assault when he was a senator, has defected to Russia. Reade made the allegations during the 2020 presidential election.

All right. Later today, the limo driver convicted in a crash that killed 20 people learns his fate. And the slippery tale of the whale who might work as a Kremlin spy.



ROMANS: Here is today's fast-forward lookahead.

Speaker Kevin McCarthy says the debt ceiling bill is headed to a House vote today. Quick approval would allow the U.S. to keep paying its bills, preventing a catastrophic government default.

The man convicted of manslaughter after a tragic limo crash that left 20 people dead in October 2018 faces a sentencing hearing today. Nauman Hussain could face up to 15 years in prison.

NASA holding a meeting on UFOs today after launching a task force a year ago. For the first time, the results of NASA's unidentified anomalous phenomena probe will be discussed in public.

A beluga whale that's alleged to be a Russian spy has been spotted in the waters off Sweden. It's a cover -- it's cover apparently now blown if these allegations are true.

CNN's Melissa Bell has more on this friendly mammal accused of being undercover underwater. (BEGIN VIDEOTAPE)

MELISSA BELL, CNN PARIS CORRESPONDENT (voice-over): The alleged Russian spy was first spotted off the waters of Norway in 2019. A beluga whale apparently seeking human attention it quickly received.

Nicknamed Hvaldimir, a pun on the Norwegian for whale and its alleged Russian origin, the whale was found to be wearing a harness with mounts for a camera branded "Equipment of St. Petersburg." Experts believe it may have been trained by the Russian military, which Moscow denies.

Dolphins have long been used by Russia and the U.S. Navy patrolling and detecting explosives beside humans.

Since his arrival in Norway, Hvaldimir has been tracked by volunteers who want to protect him.

UNIDENTIFIED MALE: We fear that if he did enough damage to a salmon farm they may be forced into considering the option of euthanizing him, as we've seen with other setations (PH) in Norway. But by all means, this does not mean that we think the salmon farmers have anything but goodwill towards Hvaldimir.

BELL (voice-over): And Hvaldimir has been capturing Scandinavian hearts -- a whale that appears more accustomed to humans than his own kind.

And now, much further south than he should be, far from heading back to Arctic waters where he might have found some of his own kind, he's headed south all the way to the coast of Sweden, according to the NGO OneWhale, where waters are too warm and too populated for a whale who may have been used to spy but is now being very carefully watched himself.

Melissa Bell, CNN, Paris.


ROMANS: All right, "The biggest challenge of our lives." That's what Denver Nuggets head coach Mike Malone says about playing the heat in the NBA Finals.

Andy Scholes has this morning's Bleacher Report. Good morning, Andy.


So a lot of people are thinking that the Denver Nuggets are just going to roll right over the eight-seed Miami Heat. That's despite the Heat already pulling off upsets against the Bucks, the Knicks, the Celtics.


Well, Nuggets coach Mike Malone -- he is certainly not discounting the Heat, saying that winning the franchise's first-ever title -- it's certainly not going to be easy. (BEGIN VIDEO CLIP)

MIKE MALONE, HEAD COACH, DENVER NUGGETS: When you get to the NBA Finals it's not about seeding anymore. And for those that are thinking that this is going to be an easy series, I don't even know what to say to you people. I mean, like, this is going to be the biggest challenge of our lives. This is the NBA Finals. This is -- you're trying to win the first NBA championship in franchise history and it's going to be the hardest thing that we've ever done, which is the way it should be.


SCHOLES: All right. Tennis star Coco Gauff, meanwhile -- she's a huge Miami Heat fan and she said she channeled her inner Jimmy Butler when she lost the first set before rallying to win the next two in her first-round match at the French Open.

And then afterwards, Coco said that Butler actually offered her NBA Finals tickets before the playoffs even started.


COCO GAUFF, 2022 FRENCH OPEN FINALIST: And he said OK, know when we make the finals -- or when we make the finals let me know if your family wants some tickets. So this was before we were even in the playoffs. This is before we lost to the Hawks for the first play-in game. And I just felt like I knew that -- you know, everybody was like we have a three percent chance of making the finals, but when he sent me that I knew we were making the finals because he didn't say if we make the finals, he said when we make the finals. So now that the Heat are in the finals I can say that story.


SCHOLES: Yes, that's a good one to tell.

And game one of the NBA Finals tomorrow night in Denver. Tipoff 8:30 Eastern. The Nuggets, 8 1/2-point favorites over the Heat in game one.

All right. As the temperatures continue to heat up so does Aaron Judge. The Yankees slugger homering yet again last night after hitting two on Monday. He now has 18 for the season through 46 games played. That's exactly how many he had through 46 games played last season when he hit an American League record 62 home runs.

The Yankees beat the Mariners in that one by a final of 10-2.

Christine, we'll wait and see. Last summer and fall was certainly magical with Aaron Judge on that --


SCHOLES: -- home run chase. It would be pretty cool if he was able to do something like that again.

ROMANS: Yes, a sweet swing. All right, nice to see you. Thanks, Andy Scholes.

SCHOLES: All right.

ROMANS: All right. Coming up on "CNN THIS MORNING" Florida's Ron DeSantis taking it right to Donald Trump in his first days on the campaign trail.

And next, right here, the new debt deal cuts IRS funding that would have helped the government collect tax money.



ROMANS: All right, your Romans' Numeral this morning, 1 1/2 trillion. The Congressional Budget Office estimates the new debt limit bill cut the budget deficit by $1.5 trillion. Now, spending on food stamps, though, would increase by about $2.1 billion. Now, some conservatives argue this deal just doesn't cut spending enough. Some Democrats argue it cuts it too much in the wrong places.

Looking at markets around the world right now, Asian markets finished lower. Factory activity in China shrank faster than expected in May as post-COVID economic recovery -- the post-COVID economic recovery loses steam. European markets are lower this hour.

And on Wall Street, stock index futures also leaning down, but not very much. Markets mixed yesterday as investors keep a close eye on the debt ceiling progress on the final trading day of May.

On inflation watch, gas prices held steady overnight at $3.58 a gallon, but you can see how much that's down from a year ago -- more than a dollar and change. Oil prices also below $70 a barrel on tensions between Russia and Saudi Arabia ahead of a critical OPEC meeting.

Today, data on job openings due out later this morning. That will give us a real sense of how the job market is doing.

Both Republicans and Democrats had to find middle ground to get the framework of that debt deal done. One of the consequences is more than $20 billion in lost funding for the IRS. Now, $1.4 billion in funding would immediately be rescinded. Separately, both sides agree to repurpose $10 billion from each of the next two fiscal years. That's according to a White House source.

I want to bring in Erika York, senior economist at the Tax Foundation, an independent, nonprofit tax policy research organization. Good morning.


ROMANS: OK, so we know the IRS got this $80 billion infusion in the Inflation Reduction Act, and this was something that conservatives framed as an army of new agents that was going to come after small business owners and regular people's taxes. But what the IRS has said was this was important funding to modernize the agency, to hire new people, and to be able to shrink that tax gap, right? That all of the taxes that are not collected.

So does rolling money back -- $21.4 billion -- rolling that back -- does that hurt their enforcement ability.

YORK: It cuts about 25 percent of their overall funding if we look at the amount of funding -- about $45 billion that was dedicated to enforcement. It's about trimmed by half of that.

We don't expect it to affect the IRS plans in the near term because the Inflation Reduction Act gave the IRS a lot of leeway in how quickly it could spend its funding. But what it does do is jeopardize some of those long-term plans that the IRS had.

And what we're likely to see is that the agency will return to Congress sooner than it would have otherwise to ask for additional funding because, of course, this was always a temporary boost of funding to last the next decade. It was going to run out at some point. This just quickens that point at which it runs out.

ROMANS: Here's what Republican House Speaker Kevin McCarthy and Democratic Rep. Jim Himes said on Sunday regarding the IRS funding.



REP. KEVIN MCCARTHY (R-CA): We repealed every single dollar they were going to use for IRS agents. So they hired zero. So I have to come back next year. So I don't get all of it repealed but they have none for this year.

REP. JIM HIMES (D-CT): The IRS money is a pretty good example. Why the speaker, by the way, wants to defend taking IRS police off the block so that more people can cheat on their taxes is beyond me. But you had the numbers right, yes. Eighty billion dollars sent in that direction over a period of time. A very, very small fraction of that has been rescinded.


ROMANS: So I wonder in the long term, is the IRS going in the right direction in terms of new hiring and in terms of tech upgrades, or does this -- does this hurt that effort?

YORK: Well, one of the issues with the allocation of the funding was how much went to enforcement rather than taxpayer service, business system, modernization, IT upgrades.

The national Taxpayer Advocate actually, in a blog post this year, raised concerns about that allocation at the expense of taxpayer service. So, hopefully, this is a conversation starter for lawmakers to think

about where is it the most important to invest at the IRS. Kind of what we saw as the outcome of the IRS was a very expensive game of whack-a-mole. Most of the money going to enforcement of a very complicated tax code with just small amounts to taxpayer service and IT upgrades. And arguably, the most pressing need at the IRS is better service, better guidance for taxpayers to encourage compliance on the front end, rather than one-by-one audits on the back end.

So if this is a jumping-off point for lawmakers to reconsider how they move the IRS into this century, then it -- then it could be a good conversation starter.

ROMANS: We know that wait times have improved. I mean, regular taxpayers have had a terrible time over the past few years trying to get through with just simple questions. So we know that has -- that has improved.

We also know there's a big pot of money that -- almost everybody agrees there's a lot of money that goes uncollected because the IRS just lacks the enforcement ability. So that's another piece of this puzzle, right? When you spend -- every dollar you spend investing in the IRS is money that you're receiving to help cut debt and deficits, right?

YORK: Yes, if the IRS can use it effectively. If they have the right hiring authority. If they can find the people to hire. We're talking about a very specialized talent pool that was going to be challenging for the IRS anyway.

Now, the recision does add an element of uncertainty to their long- term plans, which is not ideal. But if we're at a stable point now and the IRS can move forward with its planning, that would be good.

We already saw in their strategic operation plan, though, that they released in April, that the agency itself says that they'll burn through taxpayer service funding within four years. So that's not very long-term stability for the amount of money that was allocated to taxpayer service. What we're likely to see now with this recision is a faster burn rate on the money that was allocated for enforcement as well.

So, still, questions about long-term stability and long-term improvements at the IRS with even the $60 billion -- what it amounts to after the cuts.

ROMANS: Interesting, and we know you'll be following it for us. Erika York of the Tax Foundation. Thank you, Erika.

YORK: Thank you.

ROMANS: All right, quiet in Ukraine right now after Russia blamed Kyiv for attacks in Moscow. Is Russia silently plotting retaliation?



ROMANS: Welcome back.

There are fears of a flash drought across the Plains and the Midwest right now. Flash droughts are often triggered by abnormally high temperatures and reduced rainfall. The region has had one of the driest months of May on record, drying up soil, creeks, and rivers.

CNN meteorologist Derek Van Dam has the forecast. Derek, how would a flash drought affect people in the Plains and Midwest?

DEREK VAN DAM, AMS METEOROLOGIST: Well, Christine, it's not only impacting the farmers and the people of the Midwest and the Plains, it's impacting you and I, and everybody watching this morning because we utilize the agriculture that is grown across this portion of the United States.

Over 162 million acres across the U.S. currently under drought conditions, but Nebraska and Kansas have been hit exceptionally hard. They're over 80 percent of their states in exceptional drought conditions.

And keep in mind that this is the breadbasket of America. We grow the majority of our wheat, our corn, our soybeans all within this area. And with the onslaught of what we call a flash drought -- that is a rapid intensification of drought conditions because of the lack of rain and the extreme heat.

You can see where I'm leading with this. The breadbasket -- where we produce this agriculture, we're running about an inch and a half to three inches below average just in the month of May, which should be the wettest time of the year across this agricultural area.

Look at, for instance, Norfolk, Nebraska. This is just one town to show you. They're 40 percent below average. And this has a cascading effect on the impacts of, let's say, wheat and corn production across the state. Because the wheat from the winter -- and we're talking about 50 to 60 percent of this -- at poor or very poor conditions. So that has, of course, cascading effects for prices for you and I at the grocery stores -- Christine.

ROMANS: All right, we will watch it. Thank you so much, Derek.

Our top of the morning, the top TV shows right now.


Clip from Netflix's "FUBAR."


ROMANS: Arnold Schwarzenegger's "FUBAR" tops Real Good's trending list.


Here is number two.


Clip from MGM+ "FROM."


ROMANS: Ooh, that's the horror series "FROM."

And number three.


Clip from Apple TV+ "PLATONIC."


ROMANS: "PLATONIC" with Seth Rogen and Rose Byrne.

All right, thanks for joining me. I'm Christine Romans. "CNN THIS MORNING" starts right now.