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Russia Launches Biggest Air Attack Since Beginning Of Invasion; Metrics Show Strong Economy, But Voters Say They Don't Feel It; Have Democrats Lost Working Class Voters? Aired 12:30-1p ET

Aired December 29, 2023 - 12:30   ET

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

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[12:33:44]

DANA BASH, CNN ANCHOR: I want to turn now to breaking news in the war between Ukraine and Russia, a new wave of strikes by Russia on Ukraine. It's the worst since the war was just beginning. President Biden is now speaking out about it.

CNN's Kevin Liptak joins me now from Saint Croix, where the president is vacationing. Kevin, what did the president say?

KEVIN LIPTAK, CNN WHITE HOUSE REPORTER: Yes, the president is really trying to use this barrage of missiles in Ukraine as a moment to remind the American people of the stakes of this war. And he does say in the statement that this does show the world that Russian President Vladimir Putin's goals haven't changed in the nearly two years since he invaded Ukraine.

But I think unsurprisingly, he's also trying to use this to call on Congress to continue passing more assistance for Ukraine. Because as you'll remember, this has been caught up in a back and forth. President Biden has requested nearly $60 billion in additional assistance to Ukraine. And he's using this moment to remind lawmakers of why this is so important.

The president says "The American people can be proud of the lives that we helped to save and the support that we have given Ukraine as it defends its people, its freedom, and its independence. But unless Congress takes urgent action in the new year, we will not be able to continue the weapons and vital air defense systems Ukraine needs. We cannot let our allies and partners down. We cannot let Ukraine down. History will judge harshly those who fail to answer freedom's call."

[12:35:11]

And the president is making the point that, you know, American systems, you know, the Patriot missile batteries, the other defense systems that he and the American people have provided Ukraine over the course of the last two years have actually saved lives, including today, but that if that assistance isn't continuing, then the Ukrainian people will essentially be left defenseless to this kind of attack from Russia. Now, just this week, the United States said it had expended the authorizations that are currently in place, $250 million drawdown. That was the last one that the White House says it's able to provide unless Congress passes this new assistance. Of course, it is caught up in these discussions over immigration.

Lawmakers did leave Washington without any agreement, and it's certainly unclear when and how they will come to agreement on that new Ukraine. It's certainly because many Republicans in the House remain opposed to it. So President Biden really trying to underscore the stakes as this barrage of missiles happens today. Dana?

BASH: And the fact that he is away -- first of all, that's a real hardship assignment you've got there, Kevin -- but the fact that he is away and this is obviously a huge development in Ukraine, do you have any understanding of whether or not he is trying to work the phones on this holiday week to try to get any more support based on what we're seeing in Ukraine for more money, more aid, more military aid, more -- all of the funding that he's been pushing for from Congress when they return?

LIPTAK: Right. And, you know, these presidential vacations, they're always a balancing act between, you know, family time and the crisis management that comes with a job. And we do know that the National Security Adviser Jake Sullivan is here on Saint Croix with the president.

Jake Sullivan spoke to the Polish secretary of state today to discuss this incident, a report involving a missile that entered Polish airspace. So certainly the president has sort of the apparatus around him. But when it comes to passing more money, I think this is really a matter that he's leaving to members of Congress.

Because it is so tied up in those immigration talks, White House officials have been involved in those talks. The president says he's willing to make significant concessions. That is concerning certainly some progressives when it comes to new rules for the border. But certainly his big objective is getting this new aid passed and I think this will help him in some ways to underscore the stakes of that assistance going forward.

BASH: Kevin, thank you for bringing us that reporting from the U.S. Virgin Islands. Appreciate it.

Up next, by at least one measure, the Biden economy is one of the strongest in modern history for a president running for reelection. What will it do in 2024? The projections and whether or not voters are actually going to start feeling it when we come back.

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[12:41:56]

BASH: The unemployment rate is near half a century low. That's where it is. And the Dow is at a record high. Inflation is cooling. Consumers are spending. And yet, voters still say the economy is in bad shape. In a recent poll, 78 percent say it's poor or just fair.

So we want to get a reality check now from CNN Business Reporter Matt Egan. Matt, first let's just look at this from the historical context. How good is the economy right now?

MATT EGAN, CNN BUSINESS REPORTER: Well, Dana, this was supposed to be the year of recession. Instead, it's been the year of resilience. Despite all the gloom and doom, despite all the political turmoil, despite all the war, this economy just keeps chugging along.

And that is a big reason why the stock market has been on fire. S&P 500 up about 25 percent so far this year. The NASDAQ is on pace for its best year since 2003. Jobs are plentiful. Unemployment rate below 4 percent for 22 months in a row and the rate of inflation has cooled dramatically and gas prices are down to below $3 a gallon in 28 states.

A year ago, few people would have predicted. Any of those developments, let alone all of them. But here we are. Now one way to look at how the economy impacts people is something called the misery index. This is calculated by adding the unemployment rate and the inflation rate. The higher the number, the more miserable the voter.

And what's interesting is that under President Biden, the misery index is actually quite low compared with other presidents at this point in their first term. Look at that.

BASH: Wow.

EGAN: Lower than under Obama or George W. Bush or Clinton, all of whom of course went on to win reelection much lower than Jimmy Carter, who went on to lose in 1980. The only one that actually has a lower rating here for the misery index is former President Trump. Of course, then COVID happened a few months later, turned the whole world upside down.

So, Dana, this is a metric that if the trend continues, it bodes pretty well for President Biden.

BASH: It does, except the question that is such a vexing one for the Biden reelection campaign. And that is, why aren't voters saying that they believe that the economy is as good as all of the data says it is?

EGAN: Right. That is the trillion dollar question. And so I asked Moody's Analytics Chief Economist Mark Zandi about that, and he pointed to two big factors. One, political polarization. Republicans and Democrats love the economy when their guy's in office. And they hate it when the other party's in power, no matter what the numbers say.

The other big factor here is inflation, right? The cost of living. Yes, the rate of inflation has cooled. But this is cumulative. The average household is spending a thousand dollars more than three years ago for the same goods and services because of inflation.

Now, when we look forward to 2024, there's a couple of big factors I think we need to keep an eye on. One is the Fed. When does the Fed declare victory over inflation by cutting rates? That's huge for Main Street because it means lower mortgage rates and credit card rates and car loan rates.

[12:45:09]

When do wages completely surpass the rate of inflation? We also obviously need to keep an eye on the wars in Ukraine and Middle East because that has the potential to derail the economy, to unwind the progress on inflation. And then lastly, is the presidential election.

Of course, the economy has the potential to impact the election. But the opposite is true too. If this is a contested election, there's -- it could cause uncertainty or even social unrest that could impact the economy. So we need to keep an eye on that as well, Dana.

BASH: Yes. So interesting. I really, as always, just learned a lot from you. Thank you so much, Matt. Appreciate it.

EGAN: Thanks, Dana.

BASH: And up next, the Democratic Party once had a lock on union working class households and a base that elected the first black president. Where is that coalition now? We're going to talk to a political scholar about it when we come back.

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BASH: More than 20 years ago, two political scholars argued that the Democratic Party's coalition would control politics. And for a little while, it looked like they might be right.

[12:50:03]

A left of center party with a diverse base elected the first black president in 2008 and won control of the House and Senate. But then the election of President Donald Trump upended some of those early 2000s theories. So the question is, what changed? What went wrong for Democrats with those predictions?

One of the experts and co-author of a new book, "Where Have All The Democrats Gone?" is here, Ruy Teixeira joins me now. Thank you so much for coming in. So you point to two factions in the Democratic Party. What you call the shadow party of activists, and then Silicon Valley and the Wall Street types. Can you explain these two factions and how you think that they are actually problems for the Democratic Party?

RUY TEIXEIRA, AUTHOR, "WHERE HAVE ALL THE DEMOCRATS GONE?": Sure, I mean, and the way I think about it, Dana, is the Democratic Party in the broad sweep of the last 50 years has said a kind of long goodbye to the working class. There was a great divide that opened up economically and culturally between the working class and the college educated in the last part of the 20th century, like we saw the white working class move away from the Democrats in a big way.

And then in the 21st century, we saw increased movement of the white working class away from the Democrats and a sort of cultural identification of the Democrats with basically the sort of college educated, liberal-ish, and in many ways, almost radical views and race, gender, crime, immigration, and so on.

And so the result of this is a movement of the working class all mass away from the Democrats. Now in 2016, Democrats thought, well, OK, the white working class bailed out on us. But why did they do that? Because Trump is a racist and xenophobe. We can't reach these voters anyway. Who cares, basically?

But then the thing that happens, of course, they lost the presidency, but then in 2020 we see non-white, particularly Hispanic working class voters moving away from the Democrats. Well, we still see that today in all the polling. So, in fact, if you really just count the noses of who supports who in this country, Republicans are now the party of the working class.

They get more working class votes than the Democrats do. And if you look at it, sort of any given poll, the Democrats will be up by like 10 or 15 points among college educated voters and down by 15 or 20 points among working class voters. So that's a huge change. And it represents a party that's more dominated by these college educated voters, elite Silicon Valley, Wall Street, Hollywood.

I mean, there's a whole identification of the Democratic Party with a group of institutions, activists, foundations, academia, you name it, that all push the Democrats in a direction that's away from the priorities and the culture of working class voters. And that now shows in the polls.

BASH: You also write about immigration.

TEIXEIRA: Right.

BASH: You and your colleague John Giudice wrote in the Wall Street Journal last month, "Republicans would eventually make opposition to illegal immigration their signature issue. Democrats went into, excuse me, went in the opposite direction, supported surprisingly by labor unions. The AFL-CIO's abandonment of employer verification and sanctions undercut any attempt by the Democratic Party to stop illegal immigration, and soon, Democratic activists became unwilling to even debate the issue."

TEIXEIRA: That's right. I mean, most Democrats don't know this anymore. If they knew it, they've forgotten it. The Democrats are once a party that stood for controlling immigration. The Jordan Commission in the 80s basically was oriented toward trying to damp down the level of immigration, of having an E-Verify system so employers couldn't employ illegal immigrants.

And there was a sense that, you know, high levels of immigration basically constrict and constrain the low wage labor market and undercut unionization. But that really disappeared in the late 90s and now in the 21st century. We see Democrats identified with not exactly open borders, but pretty porous borders and a sort of lack of concern as it were with border security. And we see this during Biden's -- Biden administration campaign. And we also see it. And this is very important I think politically right now, the Republicans and the Democrats are trying to cut a deal on tightening up border security --

BASH: Yes.

TEIXEIRA: -- versus Israel and Ukraine funding. They've had incredible amount of difficulty doing this to Democrats because there's a big faction of the party that does not want to compromise in any way on border security because they feel border security is like, kind of like racism.

BASH: Yes. Well --

TEIXEIRA: So that's a problem.

BASH: Yes. I mean, it's the other issue, as you know, is that it's not just border security. They're trying to significantly overhaul some of the key asylum laws --

TEIXEIRA: Right. Well, that's how you can tighten it up --

BASH: Yes.

TEIXEIRA: -- by -- because the asylum system is huge in terms of the immigration problem.

BASH: I just want to show our viewers some data --

TEIXEIRA: OK.

BASH: -- of what voters -- how voters went starting from 1992 to 2020. And the voters we're talking about here are the ones that you write about non-college educated white voters. If you look at the data, '92, we have Bill Clinton, 39 percent.

[12:55:05]

Yes. Makes your point that it was already a majority for Republicans. It hasn't changed that much. Probably, the low mark was in 2016 when Hillary Clinton was running against Donald Trump and it went up slightly in 2020. So it hasn't -- when you look at the coalition in and around Barack Obama, it hasn't changed that dramatically since then.

TEIXEIRA: Well, one thing to note about --

BASH: It's kind of around the margins.

TEIXEIRA: Right. One thing to notice about the Clinton vote is he actually carried the white working class vote, because there were so many votes for Perot. So we actually carried the working class --

BASH: Bill Clinton. TEIXEIRA: -- I work at Bill Clinton in the white working class vote and '92 and '96 by a point or two. So in a way, one way to think about what's happened is that heavily working class Perot vote on the presidential level, which was, you know, for a third party candidate, moved over time into the Republican camp or mass.

And that's not just at the presidential level, but also for a lot of Congressional seats and particularly a lot of Senate seats where the Democrats are no longer competitive in a lot of these states. So that's a lot about what happened to the Democratic coalition between the 90s and today.

And again as I'm pointing out in 2020 and now we see this movement of the non-white working class away from the Democrats --

BASH: Yes.

TEIXEIRA: -- as well. So you do see this coalition shifting again where Republicans are more a working class party --

BASH: Right.

TEIXEIRA: -- than the Democrats and that's such a change from the historic image and practice --

BASH: Yes.

TEIXEIRA: -- of the Democratic Party and that defines our politics today I think.

BASH: Definitely not FDR is Democratic Party --

TEIXEIRA: No, it's not his party anymore. Your father's Democratic Party.

BASH: Yes.

TEIXEIRA: It's different. The question is, how competitive is it? Can the Democrats get to where they want to go with this COVID?

BASH: We got to end the show now. We appreciate you coming. Come back and well talk about what you think the solutions are for the Democratic Party.

TEIXEIRA: I would love to.

BASH: Thank you. Thank you so much.

Thank you for joining Inside Politics. CNN News Central starts after a quick break.

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