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Early Start with John Berman and Zoraida Sambolin

Treasury Secretary Walks Diplomatic Tightrope in China; U.S. Expected to Send Cluster Munitions to Ukraine; Special Counsel Focusing on Chaotic Oval Office; Secret Service Cocaine Probe Set to End Next Week; House Freedom Caucus Expels Rep. Marjorie Taylor Greene; Pence's 99 County, Pizza Ranch Iowa Strategy. Aired 5-5:30a ET

Aired July 07, 2023 - 05:00   ET

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

RAHEL SOLOMON, CNN ANCHOR: Right now on EARLY START, Janet Yellen's mission in Beijing.

[05:00:01]

Can she fix the fractured ties between the world's two largest economies?

Plus, more firepower for Ukraine. The U.S. about to arm Kyiv with cluster bombs to use against Russia.

And the Secret Service trying to sniff out who left a baggie of cocaine at the White House. Why we may never know the answer.

(MUSIC)

SOLOMON: Welcome to our viewers in the U.S. and around the world. Happy Friday. I'm Rahel Solomon in for Christine Romans.

We begin with Treasury Secretary Janet Yellen meeting right now in Beijing with Chinese Primer Li Qiang. Yellen facing a tough challenge during her two days of meetings with Chinese officials. She's there, of course, to try to stabilize a tense relationship strained even further just this week when China retaliated in a tech war with the U.S.

CNN's Anna Coren live in Hong Kong.

Anna, so what's Yellen been saying so far? What's the message been so far?

ANNA COREN, CNN INTERNATIONAL CORRESPONDENT: Well, as you say, Rahel, she is currently meeting with the Chinese Premier Li Qiang in the Great Hall of the People. She was with him at the Paris Finance Summit last month where she said the world expects China and us to work together.

Now, you may have seen both of them smiling at each other. And the Chinese premier, he spoke first just a few moments ago and said that there was a rainbow when Yellen landed yesterday. And it was symbolic of the U.S./China relationship. So who knows? Perhaps there's some hope on the horizon.

But in her opening remarks, the U.S. treasury secretary said that the Biden administration seeks healthy economic competition that is not winner-take-all but can benefit both countries. And she went to say and let me read it to you: the U.S. will in certain circumstances need to pursue target actions to protect its national security and we may disagree in these instances. However, we should not allow any disagreement to lead to misunderstandings that needlessly worsen our bilateral economic and financial relationship.

Now, earlier, she met with representatives of the U.S. business community and, Rahel, there we got an insight into the enormous challenges that she's facing on this visit as she tries to improve relations and communication, you know, between the world's largest economies. She expressed concern about China's punitive actions taken against U.S. firms in recent months. Remember there have been a number of raids on U.S. companies.

Also she is concerned about China's decision this week to control exports of critical minerals used in technologies like semiconductors. This as we know is a huge issue between the U.S. and China and will no doubt dominate her talks.

The Biden administration is preparing additional restrictions on U.S. technology, trade with China, including potential limits on advanced chips and U.S. investment in China citing national security. We know this will anger China.

But Yellen, Rahel, is a voice of reason. She's an economic pragmatist. She's pushed to maintain economic ties with China, argued against tariffs, warned against decoupling saying it would be disastrous.

Let's take a quick listen to what she said a bit earlier.

(BEGIN VIDEO CLIP)

JANET YELLEN, U.S. TREASURY SECRETARY: The United States does not seek a wholesale separation of our economies. We seek to diversify and not to decouple. The decoupling of the world's two largest economies would be destabilizing for the global economy and virtually impossible to undertake.

(END VIDEO CLIP)

COREN: Diversifying, derisking, but not decoupling. These are two economies that need each other, Rahel.

SOLOMON: It's an important distinction. And as you say, Yellen is well-regarded in China, so we'll see if this visit actually establishes better relations moving forward.

Anna Coren live for us there in Hong Kong, thank you.

U.S. meantime expected to announce a new military aid package for Ukraine today. Defense officials tell CNN that the weapons package will for the first time include cluster munitions. The controversial weapons are banned by more than 100 countries but critically not the U.S. or Ukraine.

CNN's Nada Bashir joins us live from London.

So, Nada, as we said, these are controversial weapons. What more do we know about why the U.S. is reportedly sending these now?

NADA BASHIR, CNN CORRESPONDENT: Well, look, Rahel, the transfer of these cluster munitions has been under consideration by the Biden administration for some time now. And this is something that President Zelenskyy has been asking for, for months. But, of course this is a deeply controversial move.

The hope is that this may help the Ukrainian counteroffensive. We have of course the last few weeks seen the armed forces struggling to make any major gains in their counteroffensive and that is, of course, a concern for Ukraine's international allies.

But look, there are pros and cons to the supply of the cluster munitions. Of course, this will help Ukraine's armed forces when it comes to targeting Russia and the Russian troops engaged in trench warfare, that is particular advantage of using these kinds of munitions.

[05:05:03]

But they also come with weighty risks and, of course, weighty disadvantages. As you mentioned there, these cluster munitions have been outlawed by more than 100 countries, including some of the U.S.'s own NATO allies. And the real concern is that for those cluster munitions, the canisters which fail to detonate, they can in turn leave a long term risk.

Now, according to the International Committee for the Red Cross, some 10 percent to 40 percent of these canisters fail to detonate and that could leave behind that long term risk for anybody that comes across them particularly civilians, something similar to land mines. So that is a concern.

But, of course, this wouldn't be the first time that cluster munitions have been used on the battleground in Ukraine. Both Ukrainian armed forces and Russian armed forces have engaged in using these weapons. Ukraine must recently using cluster munitions, supplied by Turkey.

But, of course, this would be the first time that they have been supplied by the Biden administration. And no official announcement or decision has been taken just yet, but if that transfer is approved by the U.S. government, we could begin to see these weapons being supplied to Ukraine by the end of the month -- Rahel.

SOLOMON: We'll watch this space.

Nada Bashir, live for us in London -- thank you, Nada.

CNN is reporting exclusively that one focus of special counsel Jack Smith's investigation is a chaotic Oval Office meeting in the final days of the Trump administration. So, multiple sources tell CNN that investigators have asked about the December 2020 meeting during witness interviews and grand jury testimony.

Sources say prosecutors have asked about three outside Trump advisors who were at the meeting. Former Trump lawyer Sidney Powell, former national security advisor Michael Flynn, and former Overstock CEO Patrick Byrne.

Participants have already testified that the meeting devolved into a shouting match as the outside advisers faced off with West Wing lawyers. They fought at length over the advisers just really stunning suggestions that the military seize voting machines, that Sidney Powell should be named special counsel investigating supposed voter fraud and that Trump could invoke martial law.

Secret service meantime investigation into who left the small baggy of cocaine in the west wing apparently nearing its conclusion. But a federal law enforcement official tells CNN that it may or may not ever identify a suspect.

CNN's Jeremy Diamond has more from the White House.

(BEGIN VIDEOTAPE)

JEREMY DIAMOND, CNN WHITE HOUSE CORRESPONDENT: Well, a federal law enforcement official now tells me that the Secret Service expects to conclude its investigation early next week into who exactly brought the small dime bag of cocaine into the White House that was found last Sunday evening.

Now, Secret Service investigators, they are still going through visitor logs. They are going through the security camera footage that may exist of that West Wing entrance on the ground floor of the West Wing. But what they haven't gotten back yet is the DNA and fingerprint analysis that's being conducted on that small baggie of cocaine.

Now, that same official cautions me that it is very possible that the Secret Service simply doesn't get to the bottom of this and that is in part because of the number of people who go through that entrance every day, whether it'd be visitors coming to go on the West Wing tours or White House officials, military officials who all pass through that entrance.

Part of this is also that baggie was found in a cubby and it's not clear whether the security cameras are pointing to those cubbies. But nonetheless, the White House, for now, they say that they are allowing the Secret Service to carry out this investigation. They are prepared to assist in any way that may be necessary.

But they are also very much leaning in the direction of this is likely a visitor. They're not saying that outright, but they repeatedly pointing out, for example, that this is the West Wing entrance where those tours start. Those cubbies are where visitors are asked to leave their phones before entering the West Wing. So this investigation still ongoing, expected to wrap up early next week.

Whether or not they actually have a suspect in hand is another question. Jeremy Diamond, CNN, the White House.

(END VIDEOTAPE)

SOLOMON: Republican Congresswoman Marjorie Taylor Greene has been booted from the right-wing House Freedom Caucus, that makes her the first ever to be ejected from the caucus.

CNN's Melanie Zanona has more from Capitol Hill.

(BEGIN VIDEOTAPE)

MELANIE ZANONA, CNN CAPITOL HILL REPORTER: Well, CNN has learned that the far right House Freedom Caucus did vote to remove Marjorie Taylor Greene, a Donald Trump ally, from the hard line group. This vote according to sources occurred just before the July 4th recess.

And in talking to my sources, the reason that they voted to remove her boils down to really two reasons. One, that Greene has become a staunch ally of GOP leadership and specifically Speaker Kevin McCarthy. And, two, she has been publicly critical of a number of her House Freedom Caucus colleagues.

She publicly criticized Freedom Caucus members when they didn't support Speaker Kevin McCarthy for the speakership. She publicly criticized Freedom Caucus members when they didn't fall in line with the bipartisan debt ceiling deal. And the real straw that broke the camera's back, according to Congressman Andy Harris, a member of the Freedom Caucus, was this heated confrontation that Marjorie Taylor Greene had on the House floor with Lauren Boebert, another member of the House Freedom Caucus.

[05:10:13]

Greene had confirmed to CNN at the time that she called Boebert a little B word, swore at her, they had this private confrontation on the House floor. And we did reach out to Greene for comment about being removed from the House Freedom Caucus. She did not specifically address her membership status, but she was pretty defiant in this statement.

Let me read you part of it. She said, in Congress, I serve northwest Georgia first and serve no group in Washington. My America first credentials guided by my Christian faith are forged in steel, seared into my characters and will never change. The GOP has less than two years to show America what a strong, unified Republican-led Congress will do, when President Trump wins the White House in 2024. This is my focus, nothing else.

And I should note we also reached out to the House Freedom Caucus, they have an official spokesman for comment, and they said they don't talk about internal meetings, internal process or membership status.

But we should note this is a big deal. House Freedom Caucus has never voted to remove a member before. And it comes amid a broader identity crisis that the House Freedom Caucus has really been wrestling with especially now that they are back in the majority. They are grappling with whether they just want to be a thorn in the side of McCarthy or play the game to get what they want, which is what Greene has been doing.

Melanie Zanona, CNN, Capitol Hill.

(END VIDEOTAPE)

SOLOMON: Just ahead for us, two buses collide on the streets of New York leaving dozens of tourists hurt.

Plus, the pop star, NBA rookie and security guard accused of taking it too far.

And former Vice President Mike Pence's pitch to voters in Iowa.

(COMMERCIAL BREAK)

[05:16:07]

SOLOMON: Welcome back.

And later today, President Biden will deliver remarks on lowering costs of health care. He specifically wants to crack down on short term health insurance plans.

CNN's Jasmine Wright is live for us in Washington, D.C.

Jasmine, good morning. So what is the president expected to say?

JASMINE WRIGHT, CNN WHITE HOUSE REPORTER: Yeah, Rahel. Well, look, this is another step of President Biden as he tries to lower costs for both middle class Americans and also working class Americans, a part of the platform that he continues to call Bidenomics.

Now, you're right. Today, he will focus on health care, taking aim at those short health care plans that White House officials say really provide or basically leave patients stacked with these really hefty type of bills.

So part of this plan, we know that President Biden -- or this proposed rule President Biden is expected to announce today is going to do a couple things. First, it would limit the length of these controversial plans to three months with option of one month extension. Now, it would also require the plans to provide consumers with clear explanations of their benefits which are typically less comprehensive than those long term plans.

The headline, though, as you can see on that second point there, is that it's going to roll back what president -- former President Trump did while in office which was to expand these health -- these short term health care plans to 12 months with allowing them to be extended for up to three months.

Now, also, President Biden is expected to strengthen rules protecting what patients know about surprise medical billing, something that he has talked about frequently. All of course under the umbrella of Bidenomics, as President Biden tries to lower costs for Americans across the country, including those working class and middle class Americans focusing, on the pitch that he continues to refer to.

Now, we heard this pitch in earnest yesterday when in South Carolina, he was focused on manufacturing and providing goods to Americans, really trying to keep their costs down as administration officials really try to get Americans to associates what President Biden has done with the economy, positive things that he's done with the economy. With his platform trying to really set their sights on 2024 and that election campaign message.

So we know from polling that right now, Americans do not associate President Biden with positivity when it comes to the American. This, of course, what we are going to hear today, what he heard yesterday and what we're going to hear going into the 2024 season is really trying to reverse that. But, today, of course, he's going to focus on health care, something that he talks about frequently to the American people -- Rahel.

SOLOMON: Yeah, President Biden doing what he can at least from the executive branch to try to lower costs where he can as the Fed, of course, continues to try to lower costs where they can in terms of monetary policy.

Jasmine Wright, thank you.

WRIGHT: Thank you.

SOLOMON: Donald Trump holds a rally in Council Bluffs, Iowa, today, just one day after Mike Pence was there to launch new television ad. Pence also renewed his call for the GOP to chart a new course in 2024, promising a return to the Republicanism of Ronald Reagan.

CNN's Kyung Lah has more.

(BEGIN VIDEOTAPE)

MIKE PENCE (R), PRESIDENTIAL CANDIDATE: The road to the White House starts in Iowa.

UNIDENTIFIED MALE: I love you, Mike!

KYUNG LAH, CNN SENIOR NATIONAL CORRESPONDENT (voice-over): For former Vice President Mike Pence, the early stretch of his race has been a jog, through a two-mile July 4th parade in Urbandale.

Eating the local sweets in rural northwest Iowa.

PENCE: It's a serious issue, one we're going to deal with.

LAH: And hearing the personal politics of local Republicans.

MAVIS LUTHER, IOWA REPUBLICAN VOTER: It's wonderful. It's the only way you have a chance to really know how they feel and answer questions at your level of the community. UNIDENTIFIED FEMALE: Awesome.

LAH: A ten-county sweep for candidate Pence, just this week, as he aims to hit all the 99 counties in Iowa.

What is it that you hope to achieve by visiting all these counties, by doing all of these parades?

PENCE: You know, I came to a conclusion over the last few years that I'm -- I'm well-known but we're not known well. We're going to be able to take our story, take our case and take our whole record and story of our family to the people of Iowa and to great success.

[05:20:10]

LAH: The Midwest native plans to deliver it over prayer and pizza. Pence's preferred spot for a slice? The Pizza Ranch, a chain with 71 locations across Iowa.

CHIP SALTSMAN, NATIONAL CAMPAIGN CHAIRMAN, MIKE PENCE FOR PRESIDENT: If you want to win the Iowa caucus, it is a 50 person pizza ranch meeting. Because everybody that ask a here tonight, one thing they came in common, they're all going to caucus.

LAH: Pence national campaign chair Chip Saltsman hatched the so- called pizza ranch strategy in 2008 as campaign manager for then- Republican presidential hopeful Mike Huckabee, who would come from behind and win the 2008 Iowa caucuses.

This room believes Pence's campaign is how he too could win here.

SALTSMAN: You are looking for people that are willing to come out on a cold night, spend an hour and a half listening to everybody else talk and then vote for your person. The way you build those relationships are in meetings of 50, not rallies of 5,000.

LAH: In this Pizza Ranch meeting of 50 Iowans, some wearing their alliance to a different candidate, Pence takes any and all questions from voters including one who confronted him about his role in certifying the 2020 election results on January 6.

LUANN BERTRAND, VOTER: You won that election. You changed history for this country.

PENCE: I want to tell you, with all due respect, I said before, I said what I announced, President Trump was wrong about my authority that day and he is still wrong. I believe it with all my heart.

LAH: That answer only slightly moved Luann Bertrand who asked the question.

BERTRAND: I really do feel like he altered history.

LAH: Would you consider supporting Mr. Pence after listening to him today?

BERTRAND: I would consider it. But he has that one hiccup.

LAH: But meeting Pence did change Amy Klein's mind.

AMY KLEIN, IOWA REPUBLICAN VOTER: I voted for Mr. Trump before. But I've been going to all of the people that come that want to run for president and so far I like him the best.

LAH: So your opinion has changed after seeing him up close.

KLEIN: Yeah.

(END VIDEOTAPE)

LAH (on camera): In the 2008 Iowa caucuses, the summer before, Mike Huckabee was polling in the low single digits and, of course, he would end up winning that presidential cycle.

But there was never a President Mike Huckabee. There also was not a President Rick Santorum or President Ted Cruz, all of them Iowa caucus winners. Not only were they not president, they also were not the Republican nominees.

Kyung Lah, CNN, Council Bluffs, Iowa.

SOLOMON: Quick hits across America now.

Special counsel Jack Smith has subpoenaed the Arizona secretary of state's office in his probe into 2020 election interference. He is requesting documents related to two election lawsuits filed by the Trump campaign.

Two New Jersey firefighters were killed, at least six others injured while battling a cargo ship fire in the port of Newark. Officials say the two members got trapped by the intense heat.

And in New York City, a double-decker sight seeing tour bus collided with a city bus. Police say the city bus was crossing an intersection when the tour bus ran a red light and T-boned it. At least 71 people were hurt.

Coming up for us, the whereabouts of Yevgeny Prigozhin and his fate still unclear this morning as the Kremlin moves to discredit him.

And the tourist who defaced one of Italy's ancient structures apologizing but also giving an excuse. We'll tell you what it is.

(COMMERCIAL BREAK)

[05:28:16]

SOLOMON: This morning, we're learning more about the reported raid by Russian police on Yevgeny Prigozhin's Russian residence and office in St. Petersburg. The Wagner mercenary chief led his fighters on the armed mutiny against Russia's military leaders on June 23rd, remember this?

Well, now, after he and his army abruptly stood down, his whereabouts are still unknown.

CNN's Melissa Bell has more.

(BEGIN VIDEOTAPE)

MELISSA BELL, CNN CORRESPONDENT (voice-over): Weapons, cash, bars of gold, and an impressive collection of wigs, at least four presumably used as disguises. Hints of the life of the Wagner boss, a garish interior complete with an indoor swimming pool, hot tub, and a giant stuffed alligator, as well as ammunition, and many, many guns.

The alleged St. Petersburg home and office of Yevgeny Prigozhin purportedly raided and displayed on Russian state television.

Presenters calling it scandalous.

UNIDENTIFIED MALE (through translator): He was holding a defense in his house. Look at the office. Yevgeny Prigozhin's office, flag and all, it's outrageous. Why would a man have so many guns?

BELL: Among the objects seized, several passports apparently belonging to Prigozhin using different aliases. The man himself hasn't been seen in public since his attempted coup last month.

The Belarusian president and Putin ally Alexander Lukashenko who says he'd given Prigozhin refuge now claims he's gone back to Russia.

The Kremlin refused to comment, but immediately after the attempted coup, Vladimir Putin had hinted that the finances of his former ally would be investigated.

VLADIMIR PUTIN, RUSSIAN PRESIDENT (through translator): I hope nobody stole anything while all this was going on or didn't steal much. But, of course, we will deal.