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Biden Invokes Defense Powers to Address Formula Shortage; Anxiety Grows, Dow Dives, Gas Prices Surge, Inflation Hurts Retail; Key Pennsylvania Senate Race Tightens As All Eyes Turn to Mail-In Ballots. Aired 7-7:30a ET

Aired May 19, 2022 - 07:00   ET



JOHN BERMAN, CNN ANCHOR: Good morning to our viewers here in the United States and all around the world. It is Thursday, May 19th.

The White House and Congress stepping up efforts this morning to address the critical shortage of baby formula. President Biden invoked the Defense Production Act to try and alleviate the nationwide shortage. It allows the federal government to have more control over domestic production during emergencies, in this case ordering manufacturers to make key ingredients for baby formula and provide them to formula companies first.

ERICA HILL, CNN ANCHOR: The White House also announcing Operation Fly Formula, authorizing flights to import formula from abroad, and House lawmakers passing a pair of bills, one of which provides an extra $28 million in funding for the FDA that's mainly for staffing issues and oversight into preventing future formula shortages.

BERMAN: All right. Elizabeth Cohen joins us now with much more on what is now more or less military operation to get more baby formula to the United States, Elizabeth.

ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: It really is, John. That's a good way to describe it. I mean, who would have thought that it would come to this in the United States.

So, look, let's take a look at some more details for what you and Erica just described. So, the Defense Production Act, the government directs formula ingredients, ingredients that go into formula, to go to formula manufacturers first, in other words, not to other things first, also the FDA making it easier to import formula to the U.S., something that has really not been done very much at all.

Also, Operation Fly Formula, the Department of Defense helps expedite formula imports by using commercial planes that have contracts with the DOD. Also, the FDA and Abbott agree on steps to reopen that shuttered Michigan plant.

I want you to pay close attention to some of this language. This is about agreeing to steps, preparing to do. I mean, some of this is happening now, but a lot of this is really making pathways for things to happen. I think what that means for parents is that this problem is not going to be solved quickly. It is likely going to go on for many more weeks and possibly even longer than that.

This is not great news. It's especially not great news to parents of children who have ended up in the hospital because of formula shortages. CNN has spoken to several parents, including the parents of three-month-old Clover Wheatly (ph). She is in the PICU, in the pediatric intensive care unit, at a hospital in South Carolina, three- year-old Alexis Tyler also in the hospital in Massachusetts. They are both getting feeding tubes, tubes to go right into their stomach. They have feeding issues, their parents could not find the formula that they usually use, they couldn't use any other formula, and now they have ended up in the hospital. Hopefully, the steps we just outlined will help prevent other children from ending up in the hospital too. Erica, John?

BERMAN: It may not be about today, it may be about weeks or months from now. Elizabeth Cohen, thank you so much for this.


BERMAN: And later, we are going to be joined by a doctor who treated two children who had to be hospitalized due to the formula shortage.

HILL: Also ahead, Surgeon General Dr. Vivek murthy will join new day as the CDC responds to the first case of the monkey pox virus being reported in the U.S., all that just ahead.

Also today, President Biden set to embark on his first trip to Asia since taking office. The visit to South Korea and Japan is aimed at showing U.S. engagement in the area. The message from the White House though is clear when it comes to North Korea if it conducts a nuclear on long-range missile test during Biden's trip.


JAKE SULLIVAN, NATIONAL SECURITY ADVISER: We are preparing for all contingencies including the possibility that such a provocation would occur while we are in Korea or in Japan. We are coordinating closely with our allies in both Korea and Japan on this.


HILL: CNN's Will Ripley joining us from Taiwan. So, Will, what more do we know about this?

WILL RIPLEY, CNN CORRESPONDENT: Well, this wouldn't be the first time, Erica, that North Korea would conduct a highly provocative test either before, during or after the visit of a U.S. president. It happened back in 2016 right after President Obama left the region, there was a nuclear test. This is the kind of thing that North Korea does to insert themselves into the conversation.

And it's a bit surprising considering the fact that they are dealing with a catastrophic potentially outbreak of the omicron variant of COVID-19, hundreds of thousands of people now infected, a dilapidated health care system and, frankly, that a lot of experts believe the start of that outbreak was a military parade that Kim threw for himself to showcase all of his new weapons, a super-spreader event with people who were mask free and that's how the numbers skyrocketed.

So, it could be that this launch, yes, a message for the United States, Erica, but also a distraction domestically, some sort of victory that Kim can project to the North Koreans at home to basically try to have them look away from the really horrific medical situation that's happening on the ground, and the fact that North Korea turned away millions of doses of vaccines, they just rejected them.


So, as a result, North Korea is one of two countries in the world without a vaccinated population, the other being Eritrea. Erica?

HILL: It is something. Will Ripley, I appreciate it. Thank you.

BERMAN: So, investors anxiously awaiting the opening bell on Wall Street this morning after the Dow dropped more than 1,100 points yesterday. That's the worst day of trading since June of 2020. Also, the average price for a gallon of regular unleaded gas now above $4 in all 50 states for the first time and concerns over inflation have some economists calling for yet another interest rate hike. This is what Federal Reserve Chair Jerome Powell said about that this week.


JEROME POWELL, CHAIRMAN, FEDERAL RESERVE: What we need to see is inflation coming down in a clear and convincing way, and we're going to keep pushing until we see that.


BERMAN: Joining us now is CNN Chief Business Correspondent Christine Romans, as well as Yahoo! Finance Senior Columnist Rick Newman.

Romans, look, the market is clearly on edge.

CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: And should be, right? The Fed is going to keep raising interest rates. Inflation is not under control. You have so many cross currents going on in the world any one of which would be destabilizing. You have got a half a dozen of them going on, including COVID shutdowns in China, a war in Europe. So much in the market's haven uncertainty, we have nothing but a surplus of uncertainty at the moment.

So, for perspective for investors, for all of us regular Joe and Jane's out there, you've lost in the S&P 500 and the Dow all of your gains in the past 14 months. In the Nasdaq, in Nasdaq stocks you have lost all of your gains going back to October 2020.

So, this feels bad because the market is adjusting to all this uncertainty and the surety that there will be higher interest rates ahead. RICK NEWMAN, SENIOR COLUMNIST, YAHOO FINANCE: I am so much more depressed than when I walked on the set.

HILL: It's great when you feel that way too.

NEWMAN: No. No. No. So, I will try to make everybody feel a little bit better. Everybody needs to remember the stock market is not the economy and the economy still is doing pretty well. I mean, remember, unemployment -- the unemployment rate is 3.6 percent.

What drove markets down yesterday was bad first quarter earnings numbers from retailers. But we just saw retail -- consumer spending numbers for April, that's the second quarter, that we're really strong. Guess what, people are buying cars, costs a lot of money, people are going out to restaurants and people are starting to travel.

And I think one of the things that's going on here, a shift is finally under way from the damaged COVID economy where everybody was buying goods and those services drove up inflation. Now, the shift is happening, so less spending on goods, more spending on services. That's what we want to happen.

HILL: So that's good, right? And one of those services where we saw an increase, correct me if I'm wrong here, but it was restaurants, right?


HILL: It's spending less on groceries. People are going out to eat more. Those are all good things.

But the issue, is and I feel like, Romans, you and I talk about this all the time, it's the perception, right? Unemployment numbers are great. Consumer spending was still going strong in April and yet gas prices are up, we look at the Dow, which is not the economy, but people freak out looking at their 401(k) and that --

ROMANS: So, 5,300 points for the Dow this year, I mean, that was a swift decline. But, again, reminding you, that you are back to where you were last year, right? We had two years of really good COVID gains. And now for perspective, you are back to where you were last year.

I think people should get used to these kind of gas prices, at least in the near term. This Russian invasion of Ukraine, we are in a much needed reordering, redrawing of the global energy map. That could take months and years, right? So, there is a lot of uncertainty in the oil patch.

I think on the job front, the unemployment rate being 3.6 percent is important to note, but you're absolutely right, the people say they feel terrible. About the retail sales numbers this week, people say they feel terrible about the economy and they were spending like crazy in the month, buying stuff.

And what they're buying is starting to change a little bit, but the airlines say they're expecting to see what could be record travel actually maybe this year and next year. But we want to complain about it because what we've been through over the past couple of years.

I just will say there is so much going on. And I'm not the first person to say, it's like chaos to try to find the thread through some of these economic figures every week because there's just so many cross currents, right, that are so -- in my career, I don't remember so many different things happening at once.

NEWMAN: And gas prices have just an outsized effect on people's psyche, you know? I think it's because we see the numbers two feet high on every corner in the suburbs, right? You don't see any price advertised as much as gas prices.

And I think you're right about gas prices. People in the energy industry say they do not think gas prices are going down anytime soon. Embargoes on Russian oil could get stricter, which means oil coming off the market. Drillers here in the United States are not turning the -- there is no dial you can turn and more oil comes. It costs money to drill that oil and these guys actually lost a ton of money in 2020 and they do not want to do that again.


So, they're trying to be disciplined and not pump more oil.

So, I mean, we could see average gas prices which are now about $4.60, they could go over $5.

ROMANS: I agree. I agree.

NEWMAN: Don't hate me for being the messenger of --

ROMANS: Well, the people who get the hate will be oil companies are going to have huge record profits this year. So, you'll be hearing more about, wait a minute, I'm getting creamed at the pump but shareholders in energy stocks have been doing really, really well.

I will say that when you talk about 2008 the last time we saw oil prices adjusted for inflation in this kind of level, we use energy much more efficiently today. And as the percentage of our disposable income, energy is not as big as it once was. Still, the two-foot high sign means people hate it.

HILL: It's painful.

BERMAN: What broke that fever was a horrific recession. Let's hope it doesn't come to that this time.

ROMANS: Don't root for a recession to bring down oil prices.

BERMAN: Christine Romans, Rick Newman, great to see you. Thank you so much.

So, a tight race for the Republican nomination in Pennsylvania, the U.S. Senate race there as election workers continue the process of counting ballots. You know what? The story out of Pennsylvania here is yesterday, when we were looking at this, Oz was up by 2,400 votes over Dave McCormick. Now that margin is just 1,200 votes over Dave McCormick. We are not quite sure how many votes are still left out there to count, but that margin is shrinking.

Now, President Trump, who has backed Mehmet Oz in this campaign, is urging oz to go ahead and declare victory before all the votes are even counted.

Joining us this morning, CNN Political Commentator and Host of CNN's Smerconish, Michael Smerconish, of course, the commonwealth of Pennsylvania's favorite son.

And, Michael, look, this margin is shrinking. This thing is not over by any stretch of the imagination until all the ballots are counted. Where do you see things this morning?

MICHAEL SMERCONISH, CNN POLITICAL COMMENTATOR: I think you would rather be McCormick than Oz at this stage. And, John, it's reminiscent of what we saw in the 2020 presidential election. You, of course, remember the red mirage and the blue wave. This is, of course, only among Republicans, but it's the same kind of thing kicking in, which is as those absentee ballots are counted, they become more important at this stage than those who showed up to vote.

President Trump saw it happen to him. You remember that Joe Biden finally was declared a victor on the Saturday after the Tuesday election, that put him over the top. And so, you know, it's Trump essentially saying to Oz, go proclaim victory. I wish I had done so, notwithstanding the fact that that would have been predicated on a faulty outcome. So, I think McCormick has the upper hand at this stage.

HILL: As we watch for all of that, we see these comments from the former president, which gives a lot of people -- it just makes it uncomfortable for a lot of people as you think back to what happened in 2020, him almost taking that preemptive strike or telling Mehmet Oz to.

We're watching that, as I don't think we can ignore and hit on this enough, you now have Mastriano, right, running for governor, who is all in, right, on saying 2020 -- he's all in on the big lie here, and what he would do if he actually becomes governor. That is making Pennsylvania even more important.

SMERCONISH: Well, and, Erica, it's also making Republicans nervous as to whether Mastriano will be a drag on the ticket. But I want to point something out, something called Act 77 kicked in for the 2020 election in Pennsylvania, and it did two things. Number one, it put -- it allowed no excuse absentee balloting. It allowed no excuse absentee balloting. It also put an end to what we call straight lever voting.

So, you cannot go in and vote only for Democrats with one pull of the lever or only for Republicans with one vote of the lever. You have got to vote for the gubernatorial race. You've then have got to make a separate decision and vote for the Senate and Congressional race and everything down ballot. And what I'm trying to say is people can't go in and vote for Josh Shapiro and all Democrats in one fell swoop.

So, Republicans are now saying, well, maybe people will vote against Mastriano but they will still save the rest of our ticket. It's complicated.

BERMAN: Michael, I want to ask you about something different, which is that the former president of the United States, George W. Bush, who was giving a speech, and he was talking about Vladimir Putin, being very critical of Vladimir Putin, of course, the Russian invasion of Ukraine. And he made something of a Freudian slip during this moment. I want to play that sound.


GEORGE W. BUSH, FMR. U.S. PRESIDENT: In contrast, Russian elections are rigged. Political opponents are imprisoned or otherwise eliminated from participating in the electoral process. The result is an absence of checks and balances in Russia and the decision of one man to launch a wholly unjustified and brutal invasion of Iraq -- I mean, of Ukraine.


Iraq 2. Anyway, 75.


BERMAN: Michael, you could hear some nervous laughter there. You're smiling, but not everyone laughing about that given the history.

SMERCONISH: Hey, I'm going to leave to the therapists to analyze why he had Iraq on the brain when he was talking about the Russian invasion of Ukraine. But, John, here is my question. Is 75 now the Mendoza line? Is that the age at which you can cite your age and get away with having said anything. Because the older I get, the younger that is sounding.

BERMAN: First of all, you are a very young man. You are not even halfway there yet. 75 makes him young in today's political standards, right? The leaders of the two parties right now are both older than that. The leaders in Congress are older than that. 75, you are a spring chicken.

HILL: Yes, pretty much.

BERMAN: All right. Michael Smerconish, as always, thank you for being with us this morning. You can catch Michael's show at 9:00 A.M. on Saturday.

Health officials investigating the first case of monkey pox in the United States. How concerned should Americans be? The U.S. surgeon general joins new day next.

As COVID cases rise across the United States, the CDC urging people in high-risk areas to mask up indoors. HILL: Plus, NATO officials say the battlefield situation in Ukraine is essentially at a standstill. The momentum, though, in the war has shifted in favor of Ukraine.



HILL: A third of Americans are living in areas with medium to high coronavirus risk. So, what does that mean? Well, it means the CDC is now urging you, if you live in those areas, urging officials to encourage people to mask up while indoors.

Joining us now, U.S. Surgeon General Vivek Murthy. Good to have you with us this morning.

As we look at all of this, we see the rising numbers, especially here in New York, we hear the plea and the suggestion, the very -- or I should say not so gentle, suggesting that people should mask up indoors. But the reality is we are not seeing those mandates come back. Mayor Adams said here in New York, not going to bring the mandates back. So, do you think people are actually going to follow this guidance two and a half years in?

DR. VIVEK MURTHY, U.S. SURGEON GENERAL: Well, it's a really good question, and it's important for us, I think, to step back and see where we are. We are, as you mentioned, seeing cases increase significantly. Our daily average now is around 100,000 cases and there potentially are more because people are doing home tests without reporting them.

We are seeing an increase in hospitalizations as well. Although I should mention that it's not at the same proportion that we are seeing an increase in cases, and we think part of that decoupling, if you will, is because we have broader immunity in the population, many more people have been vaccinated and boosted, but we also have Paxlovid, and a growing people who are using this medication to reduce the risk of hospitalization and death.

When it comes to masks, as you mentioned, masks still remain an important tool that we can use to reduce spread. And reducing spread is still important because we don't want people to get infected. Even if they don't end up in the hospital or die, that's the most important thing. Obviously, it's to save your life, keep you out of the hospital.

But we know people can get long COVID, we know that even they can spread it to people who are vulnerable, so the masks are helpful. If you are in a region of the country that is in the yellow or orange, I would strongly recommend you consider wearing a mask, especially if you're at higher risk or around people who are.

Of course, localities are the ones that make the decisions about whether to put mask requirements in place, but we want people to be empowered with the information and with the tools to be able to make those decisions on their own. BERMAN: Dr. Murthy, we keep hearing stories about people getting COVID for a second, third, fourth time. Why is this and what are the implications for all of us if that's the case going forward?

MURTHY: It's a really good question, John. And, yes, so we have heard of people who have been re-infected, particularly people who perhaps were infected last year with delta or with alpha or even with the wild type, the original strain, many of them, in some cases, they have acquired omicron as well.

What we're finding is that people who were not vaccinated before and who relied solely on infection-induced immunity on getting infected and then hoping that protected them, many of them are, in fact, getting re-infected again. We have certainly seen that. But we also know that, really, your best protection here if you got previously infected is to get vaccinated on top of that. That really boosts your immunity to very high levels.

The good news, though, is if you did have prior infection or if did have -- if you were vaccinated and boosted before, even if you do get infected, the likelihood of you getting severely ill is really low.

I'll tell you what my big concern, though, is right now. It's that we have over 50 percent of seniors in our country who are more than six months out from their last booster shot and we have booster shots available to people at 80,000 locations around the country. We know it's the best path to protecting you from ending up in the hospital and dying.

So, if you are out there, if you are 50 years of age or older, you are eligible for a second booster. If you are more than five months out from your last booster shot, please go out and get it with cases rising. It's more important than ever.

HILL: I also want to switch topics here, just to talk baby formula for a minute. We know that the Defense Production Act is coming in here, Operation Fly Formula is happening. There are moves under way to address this issue. But for a lot of people, they are also looking long-term. Are you confident that enough steps are being taken to look at this in the long-term to make sure the U.S. doesn't find itself in this position again?

MURTHY: It's a really important question. I'll tell you that, first of all, my heart is really with the parents out there who are struggling, I'm a dad myself, I have two small kids who are four and five. And it was just a couple of years ago that my son was, in fact, on infant formula.


So, I know how important it is to make sure you have got that formula for your children. And we want to make sure we're doing every single thing possible to get formula back on the shelves.

There are two things we are thinking about right now. One is the short-term, how do we make sure that the problem is solved as quickly as possible. That's why we've been working hard to increase manufacturing, to bring in supply from abroad, to get that plant in Michigan that the company shut down back up and running so we can increase supply and distribute the existing supply in the country more efficiently, so we can get more supply to areas that are scarce.

And the president's actions that he announced yesterday, using the DPA, will help on the manufacturing side. Operation Fly Formula will also help use commercial aircraft and using our government contracts to bring that formula in.

But here is the important thing, we're also thinking about the long- term, right? Because one of the things the president has said often is that we should -- whenever -- we should always look at the processes we have and the programs and the policies and make them better. And so we will certainly be engaging in a process to look at internally the FDA processes, other processes, the broader market, and to figure out how can we make sure we have even stronger process in place in the future so that issues like this may not arise and may not cause the kind of challenges they are for parents around the country.

BERMAN: Doctor, we know in Massachusetts there's this confirmed case now of monkey pox. And we also understand the CDC is monitoring six people who may have been exposed to it. This does seem to be a bit of an unusual outbreak, not necessarily in the United States but in different places around the world. What can you tell us about what's going on here? What is being looked at specifically?

MURTHY: John, I know this has certainly been in the news a lot, so let's talk about what monkey pox actually is. This is a virus that is rare in humans, but when it does come up, it's a serious one that we should investigate. And we have got to make sure that we understand if and how it is spreading from person to person.

Generally speaking, you know, we see the symptoms that people have with monkey pox are similar to the flu, sort of body aches, fevers, chills. They can also develop swelling in their lymph nodes and ca also experience a characteristic facial rash. And the way that this spreads, actually, is partly through respiratory droplets and also through bodily fluids.

The good news is we have one confirmed case right now, but we should always be on the lookout for more cases. At this time, we don't want people to worry at this point. Again, these numbers are still small. We want them to be aware of these symptoms. And if they have any concerns to reach out to their doctor if they have any of the symptoms I mentioned.

And finally, John, I will just say that the work the CDC is doing right now to look for potentially additional cases and to help control the spread, this is exactly the role of public health agencies. It's why it's so important that we support and strengthen the public health infrastructure in our country. Because even though we've been focused so much on COVID, there are other health concerns that we still have to monitor, that we still have to be mindful of. And one of my big worries is that we have tended to fund public health in booms and busts in the United States of America instead of providing the sustained high level of funding that it needs to ultimately keep America safe.

HILL: One more quick question for you just on the people who are being monitored in this country. Are those Americans or are they simply people who came into this country and are now in the U.S. being monitored?

MURTHY: Well, the CDC will share more details about the individuals who are being monitored. The individual who was diagnosed with monkey pox is someone who had recently traveled abroad and had actually then come back to the United States. So, we are seeing in Europe, for example, in the U.K. and Portugal and Spain, that there does -- there are additional cases that they have detected there. It's very likely that there is local spread taking place there.

But, again, these are all issues that the CDC is going to be digging into. They want to be cautious here and that's why they're trying to get information out to people so people know what symptoms to monitor and so clinicians and doctors and nurses know what to look for and when to engage the CDC.

HILL: We will be looking for more clarification then on that front from the CDC. I appreciate it. Surgeon General Vivek Murthy, good to have you with us. Thanks.

BERMAN: We are going to have a chance to talk to New York City Mayor Adams as New York enters a high alert level for COVID, but the mayor has not issued a new mask mandate.

And a compelling op-ed written by a middle age black father in the wake of the racist attack in Buffalo, he says he has one question for white male teenagers.

HILL: And dramatic new witness testimony in Johnny Depp's defamation case against his former wife, Amber Heard, what Heard's sister told the jury. That's ahead.