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Americans Starting to Limit Travel, Restaurant Spending; Conflicting Messages From Biden, Admin on Crown Prince Meeting; Committee Says It Could Still Subpoena Pence for Testimony. Aired 7- 7:30a ET
Aired June 20, 2022 - 07:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
UNIDENTIFIED MALE: So, it's almost -- we've been more detached from them because we've still been in the same bubble waiting for the boys to be to get vaccinated.
DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: Dr. Sanjay Gupta, CNN, reporting.
JOHN BERMAN, CNN ANCHOR: Good morning, everyone, welcome to our viewers in the United States and all around the world, it is Monday, June 20th. I'm John Berman with Brianna Keilar.
New signs of trouble for the U.S. economy, evidence that Americans are starting to pull back on things like travel and dining out at restaurants. Rising prices and concerns about a souring economy appear to be taking a toll on household spending decisions while consumer spending has held strong even with inflation at historic highs. The new data suggests that the spending streak could be ending.
BRIANNA KEILAR, CNN ANCHOR: Meanwhile, the busy Father's Day and Juneteenth holiday weekend was a nightmare for airline passengers. According to FlightAware, more than 900 flights were canceled Sunday across the U.S. Since Thursday, there have been more than 4,000 flight cancelations, another 1,500 flights have already been canceled today.
Let's bring in CNN Chief Business Correspondent and Early Start co- Anchor Christine Romans. We were talking last week about a vibe shift and, man, does it feel like we are right there.
CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: It really does. The mighty American consumer, the backbone of the U.S. economy, remains strong, but how long that lasts in the face of decades high inflation, that's what experts are scouring the data for.
Now, gas prices have been a daily tax on families and on sentiment. In what amounts to good news here, prices at the pump have stopped rising at least, the average price per gallon dipping below $5 to $4.98. But the busy summer travel season is about to start. That could push prices higher again and Russia's war on Ukraine could keep oil prices high for some time.
At the same time, we are seeing signs Americans are changing how they are spending their money. Households are cutting back on the big ticket items as prices soar there. May's retail sales unexpectedly fell 0.3 percent, the first time spending has declined this year. That was driven by a 4 percent drop in car sales. You guys, car prices are at record highs, airfares are rising too. Adobe found U.S. flight bookings dipped 2.3 percent in May from the month before.
Now, a Barclays analysis of credit card data found Americans have pulled back spending on services in about the past four to six weeks on things like dining out, travel, haircuts, home cleaning and this is all Americans up and down the income ladder, higher income Americans unnerved by big stock market losses.
There had been hope consumers would shift spending from stockpiling goods during the pandemic to now splurging on vacations and eating out. So, watch this space here. And we can see that higher prices are beginning to eat into pandemic rainy day funds, all those savings Americans built up from staying home and all those stimulus checks, credit card debt has rebounded to all time highs. Fed data shows Americans have $868 billion in consumer debt, up 16 percent from last year.
You guys, add it all up and inflation has been a grind for family budgets, adding more than $300 extra to the cost of basics per family per month
KEILAR: $300. Christine, thank you so much for taking us through that.
BERMAN: So, as Americans grow increasingly nervous about the economy, the White House is using one phrase over and over again.
(BEGIN VIDEO CLIP)
JANET YELLEN, TREASURY SECRETARY: Well, I expect the economy to slow, but I don't think a recession is at all inevitable.
JENNIFER GRANHOLM, ENERGY SECRETARY: A recession is not inevitable. The president really wants to have a steady and stable recovery.
BRIAN DEESE, DIRECTOR, WHITE HOUSE NATIONAL ECONOMIC COUNCIL: Not only is a recession not inevitable, but I think that a lot of people are underestimating those strengths and the resilience of the American economy.
(END VIDEO CLIP)
BERMAN: All right. Here with me, Financial Analyst and Investor Dylan Ratigan. Dylan, nice to see you.
DYLAN RATIGAN, FINANCIAL ANALYST AND INVESTOR: Nice to see you, John.
BERMAN: Why are the administration officials going out and giving those exact words, a recession is not inevitable? RATIGAN: there is a midterm election, there's a presidential election. I mean, as you know, the number one issue in any political environment, whether it's the United States or any country in the world, is the economy. And so no one wants to be president, no one wants to be the dominant political party when an economy goes into a recession. So, if you are that, then you're going to say maybe it won't happen.
And so it's a logical -- I mean, if you were the president or if I was the president, I would also say, maybe it won't happen and maybe it won't happen. But the probability that it will happen is the highest it's been in a very long time and whether it happens or not statistically, it has happened. Mortgage rates have gone up by double, gas prices have gone up by double, food prices have gone up by 20, 30, 40 percent.
I mean, these are -- you heard Christine, I mean, consumer discretionary behavior, I'm going to buy a new car, I'm going to go out to dinner three, four times this week, I'm going to take another trip to wherever, anything that's very much a choice, people are going to start more and more to choose no for the moment because they have higher housing, food and gas prices.
BERMAN: You watch all of this so closely. Of all the things out there, what's the one data point that concerns you the most?
RATIGAN: Mortgage rates.
RATIGAN: The most fundamental aspect of American life is housing. People, whether they are trying to buy a house, whether they are trying to rent a house, but housing, if you look at the overall -- like gas prices are hugely influential but they vary, right? So, for certain industries, gas is determinative, right, because there's all this shifting and these things, but other industries, gas doesn't really matter that much.
But housing and real estate in general is probably the most universal cost, it's the place where everybody will feel it, and so I think that you'll see ultimately the Federal Reserve and the markets in general press -- put pressure on the housing market really until it goes over. In other words, I don't think you will see the stock market or the Federal Reserve relent until housing prices start to drop, which I think we're getting there.
BERMAN: All right. That's the glass half empty look at all of this. Is there one thing you're looking at saying, hey, that's a good sign?
RATIGAN: I mean, the most valuable things that we have right now is employment. So, If you are looking at the good thing, it is the rate of employment and the relative rate of -- these relatively small numbers on unemployment are very encouraging. So, as long as you keep a relatively low rate of unemployment the -- people's ability to endure the costs is certainly much more intact.
BERMAN: A few minutes ago, I said record inflation. Inflation is not at a record. It's high.
RATIGAN: It's a shocking level of growth and inflation, it's something we haven't seen in a long time. It is not the highest. Obviously, it's not a record, to your point, but it is still a shocking acceleration in prices.
BERMAN: How much worse do you think it could get?
RATIGAN: Unknowable. I mean, I could give you as much of a guess as anybody. The -- you never want to underestimate momentum either on the way up or on the way down. I never thought that the financial markets would behave as well as they did the last ten years considering some of the things that we've been through. On the other hand, that also means when you flip -- when it flips over, it's possible inflation could sustain itself longer than you might think.
BERMAN: So, renowned Economist Dean Norris, who people know better as an actor who was on Breaking Bad, the reason we're quoting him is because he's taking a contrarian view of gas prices and people complaining about gas prices. He says, quote, you are not getting robbed at the pump, you're paying fair market price for a commodity. If you love capitalism so much, then he says, STFU.
RATIGAN: I mean, first of all, you are never playing fair market price at the pump, the price at the pump is always a manipulated price by taxes, that's why the gas is much more expensive in Los Angeles than it is in Texas or than it is in Florida, twice the different price in New York City than it is in Upstate New York or Vermont because the gover nment is constantly intervening with different tax policies on gasoline. So, let's be very clear, there has never been a fair market gas price, and if we were ever to actually face, it would be a totally different number. It is, by definition, a manipulated number.
The relevant point and where I would disagree with Dean, and, again, I'm interpreting a man's tweet, so I wouldn't say I disagree with the person, I don't know him, but what I would disagree with that statement would be it's not the price of gas that's the concern, it's the sudden change. And so, you know, it's not about fair market not fair market. None of it's fair market. But if I was always charging you $2 for something and suddenly I'm charging you $4, I was charging $3 and now I'm charging you $6 that's an adjustment. And over a -- if I'm doing that per gallon and you do millions of gallons, it's not $6, it's now millions of dollars, you will start to adjust the way you spend money in other places and you will start to adjust pricing.
BERMAN: People who were living on a tight budget had factored in a certain price on gas and it's gone up very quickly.
RATIGAN: Doubled, I mean, basically doubled. Same thing -- I mean, same thing with housing, right? If you were going to buy a house six months ago, the average mortgage was $1,700 a month plus or minus, now it's $2,600 a month for the same house. BERMAN: That's more money and that's more money and it's directly out of your pocket. I mean, it's more money that you live on.
RATIGAN: I mean, so, again, I think that the discussion is really -- I think we're -- there is not a discussion as to whether we're going into a slowdown or a recession. We are.
RATIGAN: The question is simply, how long will this last and how do we prepare ourselves to navigate it in a way that is the least uncomfortable. And so I think that it's one of those things where you kind of have this denial, people say, are we, aren't we? No, we have been for some time. Now, it's more a matter of how much longer will this last. I think, again, once housing prices roll over and the Fed gets a handle on things there, I think that will be a good sign.
BERMAN: Dylan Ratigan, great to see you, thank you so much. And I did love you on Breaking Bad as well.
RATIGAN: Thank you, John.
KEILAR: There are mixed messages coming out of the White House when it comes to President Biden's planned trip to Saudi Arabia next month. On Friday, Biden said this to reporters.
(BEGIN VIDEO CLIP)
JOE BIDEN, U.S. PRESIDENT: Look, I'm not going to meet with MBS. I'm going to an international meeting. They are going to be part of it just like there were people part of the discussion today.
(END VIDEO CLIP)
KEILAR: But then yesterday, his energy secretary, Jennifer Granholm, told CNN's Dana Bash that Biden would be meeting with the crown prince.
(BEGIN VIDEO CLIP)
JENNIFER GRANHOLM, ENERGY SECRETARY: I think he will meet with the Saudi crown prince. He has asked for all suppliers around the globe to increase production, that includes OPEC, that includes our domestic oil and gas producers. He is asking for an increase like other leaders around the globe are --
DANA BASH, CNN CHIEF POLITICAL CORRESPONDENT: So, they will have a one-on-one meeting?
GRANHOLM: That's my understanding that he will be meeting, but there's a series of meetings around energy overall.
(END VIDEO CLIP)
KEILAR: Now, CNN followed up with the National Security Council to clarify her comments and their spokesman said, quote, there will be a bilateral meeting with King Salman and his team, that meeting will include the crown prince and other Saudi officials.
The purpose of Biden's trip to Saudi Arabia is to ask for cooperation from the Gulf States to increase oil production in an effort to bring down prices. Many, though, are recalling comments that Biden made on the campaign trail slamming the crown prince, Mohammed bin Salman, over the murder of Washington Post Journalist Jamal Khashoggi and MBS's role in it. U.S. Intel concluded that the crown prince approved that operation to capture or kill Khashoggi and this is what Biden said back in 2018.
(BEGIN VIDEO CLIP)
BIDEN: After the cold blooded murder of a journalist, giving the crown prince of Saudi Arabia the benefit of the doubt. Look, look at the example this sets around the world. Forget what it does here. Think of what it sets around the world. People will wonder, what has become of us.
(END VIDEO CLIP)
KEILAR: All right. I want to bring in Natasha Bertrand and Kylie Atwood to talk about what's going on here.
We were talking in the commercial break, Kylie, I said what's going on here because they are all over the map, and you said by not trying to make it a thing, they're making it a thing.
KYLIE ATWOOD, CNN NATIONAL SECURITY CORRESPONDENT: Yes. The Biden administration isn't being direct with the fact that President Biden will be sitting down one-on-one with the crown prince of Saudi Arabia when he goes over there. And they don't want to focus on that because they don't want that to be the story of the president's trip to Israel and to the region to meet with regional leaders to talk about how the United States can work with all of these countries. But what we all know is that this is really a trip to sort of get the U.S./Saudi relationship on a better footing.
And you've heard U.S. officials in recent weeks talking about things like the relationship is on a more steady footing than it used to be and what they're trying to do is really solidify that with this trip. But they don't want us to only focus on that but it's really discombobulated messaging because that is the reality of the mission of this trip.
KEILAR: How, Natasha, does MBS see all this with this personal relationship being very poor at this point in time?
NATASHA BERTRAND, CNN WHITE HOUSE REPORTER: Well, look, this was really the driving factor of why the relationship has been so bad, is because the president has snubbed MBS over the last year and a half and it's because, of course, of MBS's role in the murder of The Washington Post Columnist Jamal Khashoggi.
The president had said very clearly before coming into office that he did not view Saudi Arabia as having any redeeming social value, that he believed MBS should be a pariah and all of this contributed to MBS feeling as though the United States did not respect him. And that is a very personal thing for him especially because he is the de facto leader of the country and the president has been speaking instead to his father, King Salman.
Now, the White House interestingly has been emphasizing repeatedly over the last week or so that this invitation came from King Salman directly, the trip to Saudi Arabia, but the reality is that the president is going to be meeting with MBS because if he didn't, then MBS would see that, of course, as a huge snub and the president would not get what he's going there for, which is, you know, not only to increase oil production.
To the administration's credit, they say that they have many things on the table to discuss with the Saudis, including regional stability, counterterrorism, the Iran issue, but that is one of the main things. And they are also downplaying the oil production issue because they don't know whether MBS is going to agree to continue to pump oil. So, it is all very much in the air and it is all very much at the whims of one man.
KEILAR: What if -- I agree. I think everyone agrees. It would be so weird if he went and didn't meet with MBS. It would actually be totally counterproductive to what he's trying to achieve. What happens, though, Kylie, if Biden goes and he really doesn't get much from Saudi Arabia when it comes to oil?
ATWOOD: Right. And that, I think, is Natasha's point, but we have seen Biden administration officials really trying to do the legwork here, right?
So, we have seen NSC officials, State Department officials meeting with Saudi Arabia quite intensively over the last year, repeatedly. And I think that that legwork reflects the fact that they hope that they know what they're going to get walking away.
Now, they can't be assured of anything and particularly when it comes to the oil question, Saudi Arabia has been tough. They have been very clear in saying they have no incentive to raise their oil production because they think it won't be good for global markets. That is just their thesis of this issue where the Biden administration is saying, politically, this is awful for us, globally this isn't good for the world. So, they're really coming up against one another.
I think the other thing to recognize here is that MBS is 36 years old. And so this is a reflection of the fact that he's going to be in charge, the leader that country for the foreseeable future. It's not like he's going to go away in five or ten years. He's going to go there for the long-term here and so they're going to have to deal with him. KEILAR: All right. Natasha and Kylie, thank you so much to both of you.
BERMAN: So, the next January 6 committee hearing is tomorrow. The focus is the former president, Donald Trump's involvement in the scheme to submit fake electors in the 2020 election. One of the major focuses so far has been the pressure campaign on former Vice President Mike Pence to unilaterally overturn the election, which begs the obvious question, will the committee try to get Pence to testify. One key committee member told CNN maybe.
(BEGIN VIDEO CLIP)
BASH: So, Mike Pence is a possibility still?
SCHIFF: You know, certainly a possibility. We are not excluding anyone or anything at this point.
(END VIDEO CLIP)
BERMAN: Well, it's hardly a resounding answer.
Joining me now, CNN's Chief Legal Analyst Jeffrey Toobin. The fact of the matter is, and people shouldn't overlook this, Pence has answers to a lot of the questions the committee has been asking. What did Donald Trump tell you? Mike Pence could tell us if he wanted to.
JEFFREY TOOBIN, CNN CHIEF LEGAL ANALYST: If he were so inclined, and that's really the issue now. They can subpoena him. But given the calendar, any legal fight over his testimony would go to the end of this committee. I mean, there's no way he could be forced by the courts to testify and also he has some pretty good constitutional arguments that he should not be forced to disclose conversations with his president, Donald Trump.
However, if he wants to testify and there are some political arguments saying he could want to testify, he could certainly do that and the decision will be Mike Pence, it won't be the January 6 committee.
BERMAN: And so, Dana in that interview with our Dana Bash, Dana had an interview with Alyssa Farah, former communications director in the White House, which gets to the issue of what did Donald Trump know or acknowledge about losing the election in the days and weeks after he lost the election. I want to play this from Alyssa.
(BEGIN VIDEO CLIP)
ALYSSA FARAH GRIFFIN, FORMER TRUMP WHITE HOUSE COMMUNICATIONS DIRECTOR: He admitted he blurted out watching Joe Biden on T.V., can you believe I lost to this guy? And he actually admitted in a press conference when he was speaking about coronavirus in the press briefing room, he actually slipped and kind of admitted that Joe Biden won.
(END VIDEO CLIP)
BERMAN: I can't believe I lost to this guy. It sounds innocuous but it does carry legal significance.
TOOBIN: A great deal of legal significance. Because the issue with his performance in the period leading up to and after January 6 is how much was he engaging in a fraud and how much was he engaging in a good faith effort to overturn an election he really believed he thought he won. That's a key distinction. What was his state of mind? What is he really just trying to overturn a result that he knew was the actual result of the election, as that comment suggests, or as he has said many times publicly since then, look, I thought I won the election, I knew I won the election, so all I was doing was pushing forward on my good faith effort that I won.
That comment was the first time we have had someone behind the scenes say he knew he lost but he was potentially engaging in fraud. That's legally more perilous for him than if he was engaging in a good faith effort to overturn something -- to ratify a victory he thought he won.
BERMAN: So, the combination of that, Alyssa Farah, and she did testify, she did testify to the committee, they have that under oath, the combination of that and then the testimony of everyone saying, we told Donald Trump there was no validity in his fraud claims, would any of that or all of that combined be enough Merrick Garland to hang a possible prosecution on?
TOOBIN: Maybe. Maybe. I mean, I think from a law enforcement perspective, you have to do a lot more investigating than can be done in a congressional committee. You have to have all of those people under oath in the grand jury, you have to take the totality of the evidence. There are people that the committee didn't get to that the Justice Department might.
You can't decide a question like this based on a single interview with Ms. Farah. I mean, that's -- no prosecutor would do that. You have to look at the whole totality of circumstances and see if you can make a case that Donald Trump knew he lost and was just trying to overturn the will of the people, but it can't be just sort of one --
BERMAN: What would the defense for that comment be? Trump's lawyers would say, well, he was just joking that time.
TOOBIN: Or not just necessarily joking, it's that, I can't believe the press said I lost to this guy. I mean, you can explain away a single comment like that.
BERMAN: Tomorrow, we're going to focus on -- or the committee will focus on the scheme to get fake electors, but also, you know, Georgia, in general, will be coming up in the next few weeks. I mean, on tape, you have the former president saying, find me votes.
TOOBIN: You know, I've always thought that from a law enforcement perspective, Georgia is the most problematic for the president because the effort seems the most transparently fraudulent. He is not saying, find the correct result, count all the votes, he's saying, get me the 11,000 votes I need to beat Joe Biden in Georgia. That suggests a more corrupt state of mind than anything else we've heard.
Now, there's a lot more investigating that needs to be done, but Georgia is a real problem for the president also because the Georgia prosecutor is not subject to the same political constraints that the -- than Merrick Garland is or anyone is in Washington. She is an independently-elected public official, she can continue investigating. That's a problem and we will know more about that tomorrow about the whole Georgia story.
BERMAN: Jeffrey Toobin, great to see you. Thank you.
TOOBIN: Thank you, Berman.
BERMAN: California Governor Gavin Newsom taking his party to task for not aggressively challenging Republicans in some areas. His strategy ahead.
A Russian soldier's body camera shows the devastation around a key city in Eastern Ukraine.
KEILAR: Celebrating Juneteenth and why it really matters. We will have that ahead.
KEILAR: California Governor Gavin Newsom is sparking debate within his party about how to face a more aggressive GOP in the culture wars. Early last month, he criticized Democrats, asking this.
(BEGIN VIDEO CLIP)
GOV. GAVIN NEWSOM (D-CA): Where the hell is my party? Where is the Democratic Party?
This is a concerted, coordinated effort and, yes, they're winning. They are. They have been. Let's acknowledge that. We need to stand up. Where is the counteroffensive?
(END VIDEO CLIP)
KEILAR: And joining us now to discuss is CNN Political Analyst David Gregory and CNN Chief National Affairs Analyst Kasie Hunt.
Newsom has gone on to Truth Social, Trump's social sort of messaging site, and he's saying he's there to call out Republican lies. I wonder if you think, Kasie, he has a point asking Democrats why they aren't being for aggressive.
KASIE HUNT, CNN CHIEF NATIONAL AFFAIRS ANALYST: Well, I think there is a reason why what you showed got some traction among people looking around and seeing what's going on and the president is a bit of a flawed messenger in this. He's sort of explicitly not been someone who has taken on these social fights. He's sort of focused on economic issues or tried to. Obviously, that's another issue right now for the president of the United States.
But for Newsom to step into that void, I think one of the other things that's interesting about it is that he currently is a blue state governor, I think you can debate what's going on in California, whether he has had success or failures, but he is a governor in the same space where a lot of these culture wars are going on, right? It's red state governors that are doing a lot of what he's talk being there and saying we need to stand up. He is in a unique position.
KEILAR: Do you think this works, what he's doing?
DAVID GREGORY, CNN POLITICAL ANALYST: Well, I'm not sure that fighting the culture wars right now when the economy is in the condition it's in and that people are so pessimistic about the future is exactly right, but I also think he's misguided. I mean, first of all, this idea of, you know, big state governors saying, well, where is the counteroffensive? I don't know how that's helpful. I mean, bring it on yourself. I mean, you are in a huge state, you are a noticeable Democratic leader, then do something.
The truth is I think Democrats are doing something. I think they are heavily waged in a culture war and I think it's -- a lot of it is so their detriment and to the party's detriment and I think that's what the right is seizing on.
There is something and maybe we will address this with Hillary Clinton about what is the party's definition right now, what is their reason for being and what they're saying to people about why they should stay in power.
HUNT: Well, one thing -- look, I totally take your point. The culture war issues have tended to help Republicans, However, there is a giant middle, right, that frankly has gotten disengaged from politics, turned off from politics. And there is an argument, I think, for -- take abortion, right, as one of the hottest button cultural issues. A lot of these state bills don't include exceptions for rape and incest, right? In the past, that's made them unpalatable to middle of the road voters across the board but Republicans along these states are taking that chance and saying, no, this is what we're going to push. That's an area -- that's kind of what Gavin Newsom is saying, right? Like that's an area where Democrats can push back.
And you've seen -- I mean, look, the base is also incredibly depressed, the Democratic base, right? That's also what this is about.
GREGORY: Well, what's getting traction -- I agree with you, that's a really good point and it's a point to stand on and campaign on. What's getting traction and getting amplified is that progressive opponents of the Supreme Court are standing outside Justice Kavanaugh's house raising the specter of violence against Supreme Court justices.
That's what's hurting on the cultural front.