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Is Pouring Trillions More Into Economy A Bad Idea Right Now?; Checks For Retired Teachers In Jeopardy As Democrats Leave Texas; CNN Embeds With Firefighters On Front Lines Of Historic Fires. Aired 7:30- 8a ET

Aired July 16, 2021 - 07:30   ET

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

[07:30:00]

BILL TAYLOR, EX-U.S. AMBASSADOR TO UKRAINE, TESTIFIED AT IMPEACHMENT TRIAL: Not independent, apolitical military, independent judiciary. Checks and balances within the judiciary -- the Justice Department. An independent Justice Department. Independent judiciary, apolitical military, apolitical CIA.

These are important --

BRIANNA KEILAR, CNN ANCHOR: The weaker institutions, not apolitical, he would have been an authoritarian leader?

TAYLOR: If he had been able to co-opt. If a -- if a leader is able to co-opt these apolitical institutions then we would have had trouble.

KEILAR: Bill, it is great to see you. Thank you so much, Ambassador, for joining us this morning.

TAYLOR: Thank you, Brianna. It's good to be here.

KEILAR: Can the U.S. economy handle trillions more, with a "t", in COVID relief? We're going to have that debate next on NEW DAY.

JOHN BERMAN, CNN ANCHOR: Plus, Democratic lawmakers in Texas fled the state to safeguard voting rights, but there are unintended consequences to this that has retired teachers in a jam.

(COMMERCIAL BREAK)

[07:35:12]

BERMAN: So, a really major important economic debate at play right now after the U.S. government pumped $5.2 trillion of COVID relief into the economy since March of 2020. Now there's a question. Is there going to be inflation? Is fear of runaway inflation justified or overblown?

Joining me now to discuss, Catherine Rampell, CNN Economics Commentator and "Washington Post" opinion columnist. And, Scott Lincicome, senior fellow at the Cato Institute. Nice to have you both back. Look, in our last episode of inflation, how scared are you, you both sort of were like I don't know yet. Maybe not so bad now. Since our last episode though, really, almost every measurement of inflation has come back worse than people expected.

So Catherine, where are you now?

CATHERINE RAMPELL, CNN ECONOMICS COMMENTATOR, OPINION COLUMNIST, THE WASHINGTON POST: I would say I'm more worried than I was a month ago or whenever it was that we spoke, but I'm still not panicking.

What seems to be happening right now is that the economy is reopening and everybody wants to do things and buy things at the same time, right? Everybody wants to travel again, everybody wants to go to restaurants again. They want to buy a car. And there are only so many cars and restaurants and hotels available, particularly since a lot of capacity shut down. So it will take time for that capacity to scale up.

So I'm inclined to think, still, that it's probably transitory and that those supply chain issues will unwind themselves, but I don't know.

I mean, Jay Powell testified yesterday before Congress that this is a unique time for inflation and we should be humble about it, and I think he's right. We have been surprised to the upside repeatedly, as you say.

BERMAN: More or less scared, in one word.

RAMPELL: More --

BERMAN: OK.

RAMPELL: -- but not panicking.

BERMAN: That was more than one word.

So, Scott, just so people can see it -- some of the prices here -- gas, which is a little bit separate. Gas prices are way up from where they were a year ago. And other consumer prices in general up as well. I think we have a graphic that represents all of this. People are paying more for all kinds of things.

So when you look at this, inflation fears more justified now?

SCOTT LINCICOME, SENIOR FELLOW, CATO INSTITUTE (via Skype): Definitely more justified. I'm also not panicking but I do think that we -- I think Catherine used the right word. We should be humble about this.

You know, the definition of transitory keeps changing. It was a couple of months, now it's six months. It looks like we're going to be stuck with these types of prices and these figures until at least the end of the year. But I am concerned that as even more money comes online -- child tax credits are just hitting bank accounts now -- as supply chain problems, as labor problems don't really work themselves out as quickly as we thought, we could end up with a situation of again, more money chasing restricted supply and higher prices. Which the big deal about that is that it will erode real wages, and real wage growth is actually slower now than it was pre-pandemic because of these price gains.

BERMAN: All right. First of all, I want to face every crisis with both of you because you guys don't get panicked at all. Not panicked yet -- I like that.

But, Scott, talk to me then specifically about this because this is another part of the discussion. Because there are new debates in Washington about, say, infrastructure, which is more than just infrastructure but it's putting a lot of money into the economy.

What do you think the inflationary impact of putting still more money into the economy will be?

LINCICOME: Well, I think it depends on both how it's paid for and on what the Fed does. But if this is not paid for -- if this is just more debt and more spending -- and -- we could -- we could see a significant issue.

I mean, if you look at some of the areas that Democratic budget proposal targets -- healthcare, childcare, and the rest -- these are pretty restricted supply areas. And you have, again, more money hitting a wall of restricted supply and that's inevitably going to lead to higher prices.

And I think the other big thing is that in some of the areas like rent, prices have actually still been subdued. Now, we don't expect that to continue given what's going on in the housing market.

So we could see some areas that have actually been keeping inflation tempered start to go up and that's, I think, again, where we could have problems.

BERMAN: All right, Catherine, your reaction to what Scott has said, including the idea that this may not be the time to pump this much more money into the economy.

RAMPELL: So, I think that Democrats claim -- Democrats' and Republicans' claims that the plans that they've agreed upon or that they're hashing out right now are paid for is sort of nonsense at this point. They're very overly optimistic about how much money their pay- fors are going to raise. And a lot of the things that would raise a lot of money are going to have political impediments.

That said, this is spending that if it passes is not going to come online immediately. We're not like dumping $4 trillion into the economy today. This is over the next decade, basically.

[07:40:09] And you think about the kinds of things that they're spending money on -- things like roads or bridges or broadband -- these are not the kinds of things that you can ramp up immediately. These are -- these require some longer-term planning.

So I'm not worried. Even if this isn't fully paid for, which I think it should be -- even if it isn't, I'm not particularly worried about the inflationary effects. This is going to be slowly doled out over a longer period of time. It's not like we're pumping a lot of money into the economy today.

And as Scott points out, what the Fed does really matters here as well. And as long as they are on the ball regarding the inflationary pressures that we see right now if, in fact, mass psychology changes and people start to freak out and preemptively raise prices, then -- as long as they're on the ball I think we should be less concerned.

But the fiscal policy stuff -- really not a worry for me.

BERMAN: Very quick last word to you, Scott. You were scoffing because you're not quite sure the Fed is on the ball?

LINCICOME: Well, the Fed keeps getting things wrong, and by their own admission, and I think that's really the concern here.

The markets clearly have a ton of faith in Jay Powell and in the Fed that they're going to be able to keep all of this under control. But I really do think that we should be a little concerned at this point as by their own admission they really don't know. And that, I think, is where things get a bit scary.

BERMAN: Catherine Rampell, Scott Lincicome, I can't wait to see what happens in our next episode of inflation, how scared should you be, because we keep on getting a little more worried here.

Thank you both very much.

So, it is an American staple for better or for worse, but are buffets being canceled? What the pandemic has changed about restaurants.

KEILAR: Plus, just in, a new warning from the FAA about some passenger jets and a safety risk. We'll have some details ahead.

(COMMERCIAL BREAK)

[07:46:14]

KEILAR: Democratic members of Texas' statehouse left a special legislative session and their state to avoid the passage of a controversial voting bill that is being pushed by Republicans. But that has brought to a halt other legislative business on the docket, like extra checks of up to $2,400 for retired teachers. And these are checks that have been approved by the Texas State Senate, funded by a surplus, but they're awaiting approval by the state's House of Representatives.

Joining me now is the executive director of the Texas Retired Teachers Association, Tim Lee. Tim, thank you so much.

We know that you are obviously very much behind this -- getting these one-time checks to teachers, retired, who are in the retiree system. What do you want Democrats to do?

TIM LEE, EXECUTIVE DIRECTOR, TEXAS RETIRED TEACHERS ASSOCIATION: Well, thank you -- thank you so much for having me on. I really appreciate this.

You know, our members are pretty vocal, very educated, and what they want -- they want people to work together. They want work to continue and they want to make sure that these checks are something that ultimately pass.

And so we have heard from our friends both on the Republican side of this issue as well as the Democratic side of the issue and we have been assured that these checks will ultimately happen. But for so many retired teachers and retired school employees in Texas, the money cannot come soon enough. And so, our hope is that work will resume as fast as it can.

KEILAR: So you want this to happen now. That is your -- certainly, your position and the position of your members.

Do you, then, want Democrats to return to the state for this special session, which would mean that this bill on voting rights, which many Democrats oppose, would move forward if that would give your members these checks?

LEE: Well, there's so many issues there that need to still be resolved. Our members are very impassioned in the whole process of governance and policymaking. It's hard to pick sides on the issue. We stay focused entirely on what does this mean for retirees. And so, what I can say for our members --

KEILAR: But I guess -- I just want to ask you, Tim, real quick because there's no way --

LEE: Sure.

KEILAR: -- to uncouple these things, right? There isn't.

If they come back for the session to pass these checks, that is the reality of what happens. So there really -- there is no way to just focus on one thing if you're a legislator because these are linked.

LEE: Well, that's the difference between our folks and the -- and the ones that are elected to do the job is they have to sort that out. They've made us a priority. They have these other issues. When they're back to work I'm sure we're going to continue to be a priority because it's a -- it's a need.

KEILAR: Yes, we certainly hear you, Tim. And it just goes to show you that there is other legislative business and this is what we're seeing happen.

Tim Lee, thank you. I really appreciate you being with us.

LEE: Thanks so much. We appreciate it.

BERMAN: So, in pre-pandemic times, the buffet and salad bar were staples for many people. But now those go-to's may be gone for good. Why? Well, food industry experts say customers who have been working from home are buying more groceries online now while others have abandoned the self-serve food bar out of sanitary concerns.

Some supermarket chains like Stew Leonard's are utilizing the space for premade lunches and dinners, which they say are selling better than the salad bars ever did.

You want to know my thing? I know you've been concerned about how I feel about buffets in general.

KEILAR: I'm so worried.

[07:50:00]

BERMAN: Buffets, to me, have always been recipes for regret because I always get the wrong thing. So I go to the buffet and I'll put --

KEILAR: You can go back, John Berman. That's the whole point.

BERMAN: Yes -- no matter. Then I still put the wrong thing on.

I always put too much of the wrong thing on, can't get the right thing on, and it's always regret. I just feel that. Not because I eat too much. It's because I ate the wrong thing.

KEILAR: What does this mean for the Mongolian barbecue -- which, by the way, as I understand it, is neither Mongolian or barbecue, but that's really what it's called? What does this mean for that?

BERMAN: I'm more likely to get the right thing when I go.

KEILAR: All right. I mean, that's kind of a buffet. It's a buffet that then gets cooked. I guess it's -- I don't know if that makes it more sanitary.

These are very important questions.

BERMAN: I know, I know.

KEILAR: They're pressing. I know they concern you so much, John.

BERMAN: It's one of fewer things to regret. That's all I want.

All right. Just ahead, COVID cases on the rise now in every U.S. state. New York City's health commissioner will join us live.

KEILAR: Plus, how firefighters in California are going beyond the call of duty battling historic wildfires.

(COMMERCIAL BREAK) [07:55:19]

BERMAN: Dozens of wildfires burning in the west are scorching the wilderness and incinerating homes. There is an army of firefighters and volunteers on the front lines going beyond the call of duty as the temperatures get hotter and the blazes get bigger year after year.

CNN's Sara Sidner has their story.

(BEGIN VIDEOTAPE)

CHIEF KATHY CATRON, DOYLE FIRE PROTECTION DISTRICT: The entire town was evacuated.

SARA SIDNER, CNN SENIOR NATIONAL CORRESPONDENT (voice-over): This is the second time in just eight months Kathy Catron's hometown has lost more than a dozen homes to wildfire.

CATRON: It sounded like a freight train coming down the mountain. The flames are coming at you. The smoke rolls over you. It's -- all of a sudden it's dark. All you see is this big huge orange wall of flames all around the home. Everywhere in front of you -- everywhere you look.

SIDNER (voice-over): Catron is the volunteer fire chief of this town of about 600 residents. She is often the first one to call residents to tell them their home is gone.

UNIDENTIFIED MALE: I'm still kind of numb -- I mean, after losing everything that I worked for and everything all these years. It's gone. And everybody says oh, it's still replaceable and stuff like that. Well, no, a lot of it isn't.

SIDNER (voice-over): Saturday, Kelly Grosso (ph) lost one of the 16 homes burned in Doyle. Everyone thought the danger was over but on Monday, the fire came roaring back, devouring more homes.

Chief Catron and several residents were angry that airdrops from state and federal agencies didn't come earlier.

CATRON: We were like the lone ranger that -- because a lot of the engines weren't where they should have been and weren't down there, you know, maybe. And I was -- at that point, I was like -- I was ready to just say forget it, I can't do this anymore.

SIDNER (voice-over): Apocalyptic fire scenes are appearing more and more across the west. So far this year, 67 large fires across 12 states have burned an area nearly five times the size of New York City.

CAPT. DENNIS SMITH, CAL FIRE: The frequency of fires has skyrocketed.

SIDNER (voice-over): Cal Fire Capt. Dennis Smith has spent 25 years battling some of the biggest blazes in the state of California.

SMITH: We used to get some, what you would call career fires maybe once every few years. And we're seeing career fires of 100,000-plus acres is a common occurrence every year now.

SIDNER (voice-over): It's the new normal.

SMITH: The resources are spread through the state because we're burning from the Oregon border down to Mexico.

SIDNER (voice-over): California is on track to have an even more devastating fire season than 2020, which was the worst on record with 4.1 million acres charred.

DEP. CHIEF CHRIS TRINDADE, CAL FIRE: Being from California, I'm sure you hear that this fire season is going to be the worst fire season, right? Every year we hear that.

SIDNER (voice-over): Which means their grueling work must go on for longer in days of 100-plus temperatures in some places. And once the big flames are smothered, days of intricate work begins on hidden hotspots. There is one goal in mind, save lives and then property.

SIDNER (on camera): Are you proud? You look around this entire house and it's charred 360 around this house.

UNIDENTIFIED MALE: Oh, yes.

SIDNER (on camera): But the house, perfect.

UNIDENTIFIED MALE: Yes, the house is still standing.

SIDNER (voice-over): But 250 miles away in Doyle, the local fire volunteers are devastated and residents are worried they're at the beginning of what used to be the start of fire season.

Sara Sidner, CNN, Doyle, California.

(END VIDEOTAPE)

BERMAN: You know, they think every year is supposed to be the worst year and this is the new normal. It just keeps getting worse and worse.

NEW DAY continues right now.

KEILAR: Hello, I'm Brianna Keilar alongside John Berman on this new day.

And, Los Angeles is making folks mask up again even if they are vaccinated. Will other big cities follow suit and do the same as cases surge? New York's top doctor is standing by to speak with us right now.

Plus, conservatives cry censorship after the White House confronts Facebook for letting false claims about COVID spread. Is the GOP putting politics before public health?

BERMAN: New reporting this morning on the tumultuous final weeks of the Trump presidency. The top general who worried the former president might start a war to stay in power.

And former Trump national security adviser John Bolton one-on-one. What does he think about fears at the Pentagon that Trump might attempt a coup?

KEILAR: Good morning to viewers here in the United States and around the world. It is Friday, July 16th.

And we are beginning with a stunning turn for the worse in the fight against COVID cases now rising in all 50 states. Look at all that red on that map. That is bad news. And we're tracking a number of other significant pandemic developments -- none of them good, in fact.

Officials in Los Angeles County reinstating an indoor mask mandate even for the vaccinated, starting tomorrow, after reporting more than 1,000 new cases a day for the past week.