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Twitter Whistleblower to Testify; Teacher Strike Ends in Columbus; U.S. GDP Shrank in Second Quarter; Pete Buttigieg is Interviewed about the Economy. Aired 8:30-9a ET

Aired August 25, 2022 - 08:30   ET

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

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[08:30:55]

KAITLAN COLLINS, CNN ANCHOR: Twitter whistle-blower Peiter Zatko will testify before the Senate Judiciary Committee at a hearing to discuss his allegations of serious security vulnerabilities at the social media company Twitter after CNN and "The Washington Post" exclusively obtained this explosive whistle-blower report from the former head of security.

Donie O'Sullivan broke this story. He is here with the latest this morning.

You know, clearly this caught the attention of Congress. We speculated it would almost immediately when you broke this on CNN the other day. What's the expectation for his testimony?

DONIE O'SULLIVAN, CNN CORRESPONDENT: Yes, so a lot has happened in the 48 hours since this story broke here on NEW DAY. He is going to appear before the Senate Judiciary Committee in the middle of September. So just in a few weeks. On the very same day that Twitter shareholders are going to be voting whether to approve the Elon Musk $44 billion deal.

Which raises, of course, all the questions about the timing of this. We've already seen Musk's lawyer, Alex Spiro, bringing this up in court ahead of that trial, which is due to happen in October, saying we want to hear more from this guy. This guy is helping our case.

We have asked Mudge, Peiter Zatko, the whistleblower, and his lawyer many times, have they anything to do with Musk. They say, no, this is bigger than him. We actually began this process long before there was ever talk of Musk taking over the company.

BERMAN: Look, it's been an incredible 48, 50 hours since, again, you broke this sitting right in that chair, Donie.

And one of the things that you learned, there's a kind of January 6th connection to all of this.

O'SULLIVAN: Yes. So this whistleblower was working at Twitter on January 6, 2021. And when he saw all that was happening, he thought, well, what if there are people at Twitter that are sympathetic to these rioters? What if they want to pose an attack to the company? And I think we have - we have the piece from the disclosure here where Mudge, Zatko, asks, not knowing if there would be acts of internal protests aligned with the rioters, he looked into seeing, you know, how can we lock our systems down? And what he says he learned on January 6th that day was they couldn't lock the systems down in a way that if one employee went rogue couldn't cause major damage.

Also on that same day, as it happened, coincidentally, he got offered a job from the Biden administration to --

COLLINS: What job? I saw this. This really stood out to me.

O'SULLIVAN: Yes, so he's going to basically be their head of security for the federal government. Head of cybersecurity. Again, that goes back to his credentials of being this kind of legend in the hacking community, cyber community. Final thought on this, Twitter is obviously still scrambling to respond to this. We haven't heard publicly from their executives. But they did have a company-wide call yesterday, which was part of normal company-wide calls they do. Obviously this was on the agenda. They're pushing back on Mudge big time.

BERMAN: Yes.

COLLINS: Did he say why he turned down the job -- a job in the federal government, which clearly is one that's needed given the government has had its own issues with cybersecurity? What was his thinking on that?

O'SULLIVAN: Well, that, he said, he thought about it and he went back to the Biden administration and he said the work I'm doing here at Twitter, he believes Twitter is such -- plays such an important role in public discourse and democracy, he said, I can do more work here. Obviously, he ended up getting fired.

BERMAN: Yes, it didn't end well there. Wow.

COLLINS: No, but fascinating that he saw more of an impact there than being in the federal government in an increasingly serious position.

Donie, fascinating update. We'll wait to see what happens in court and, of course, watch this testimony very closely.

BERMAN: Great work, Donie.

O'SULLIVAN: Thank you.

BERMAN: So, new overnight, teachers in Columbus, Ohio, have reached a deal with the board of education to end a strike there, opening the door for students to return to the classroom Monday. But school tensions heating up across the country. John Avlon with a "Reality Check."

JOHN AVLON, CNN SENIOR POLITICAL ANALYST: When did the start of the school year get so political? I mean we're not talking about college campus activists, right? Now it's grade school that's got parents rushing to the partisan ramparts.

Now, granted, the last few years have been exceptionally weird with Covid closing schools and some teachers unions resisting in class learning, even after vaccines became wildly available.

[08:35:05]

There were local culture war skirmishes, which got national attention, like the San Francisco school board trying to rename 44 schools for ideological reasons rather than focusing on getting schools reopened, which led to their recall by the voters of that famously liberal city.

At the same time, we've seen mass public schoolteacher burnout. After being paid nearly 24 percent less on average than their college- educated peers, leading to a national shortage with nearly 280,000 fewer public schoolteachers working now than before the pandemic. And spurring a new round of strikes, even as charter school enrollment has spiked, boosted by surprising support from the Biden administration.

Now, morale probably hasn't been helped by culture war politics intruding into classrooms. On the right, there were pervasive accusations of social justice instruction, including the panic over critical race theory, which teachers said wasn't even widely taught in classrooms. But it was politically potent, with many parents objecting to what they believed was indoctrination, leading to the passage of some 11 state laws as of last year according to Pan America (ph), which, in the name of trying to take politics out of the classroom, tried to restrict how topics like racism, sexism and American history are being taught.

At the same time, books are being treated as battlegrounds with attempted bans ranging from "To Kill a Mockingbird" to "Beloved," as free speech hypocrisy gallops from left to right. And I haven't even gotten to Florida's law to ban lower grade school classroom discussion about sexual orientation or gender identity, which strikes some parents as common sense and others as an assault on their family.

And looking at all the culture war proxy fights playing out in our classrooms, you'd understandably feel a little bit (INAUDIBLE), right? But that feeling ignores the larger fact that the vast, vast majority of schools and kids and teachers in this country are good people just trying to do right and living day to day a million miles from these political caricatures.

The problem is that tribal politics is driving perceptions. Take a look at this recent Gallup survey showing deep partisan divides over public education. And here's a really fascinating insight. Quote, while Republicans express low confidence in U.S. public schools, education is not on their minds when asked to name the most important problem facing the country. Only 1 percent of Republicans in June named education in answer to this open ended question.

Our schools should not be political battlegrounds. They're supposed to be places that teach students how to be not just semi-functioning adults, but citizens of a democratic republic. And that means teaching them the full sweep of American history, the good, the bad and the ugly. Instead, less than half of Americans can pass the basic naturalization exam taken by new citizens. That's pathetic. Passing that same test should be required for every high school graduate.

Now, to some extent, our public schools have always had patriotic goals, from the assimilation of new immigrants, to making self- governing citizens. The difference is now our tribal politics are undermining rather than reinforcing national unity. As the journalist George Packer writes, the classroom has become a half abandoned battlefield, where grown-ups who claim to be protecting students from the virus, from books, from ideologies, and counter ideologies end up using children to protect themselves and their own entrenched camps.

He's right, maybe it's the grown-ups who really need to grow up.

And that's your "Reality Check."

BERMAN: Get it right. Do it for the children. Seriously.

John Avlon, thank you very much.

The latest GDP numbers just coming in. We will tell you what they are, next.

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[08:42:43]

BERMAN: All right, the latest GDP report just in. It's a revision.

Let's get right to CNN chief business correspondent Christine Romans.

Some interesting stuff in here.

CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: Yes, this is the second quarter, rear view mirror, and the economy wasn't as soft as the government first estimated. The economy shrank in the second quarter 0.6 percent. You'll recall our initial reading was down 0.9 percent. So, that slowdown in the winter, and then in the spring, not quite as soft as economists had thought.

There will be one more reading on this before it's in the books, and it can still be revised again after that.

Why does it matter? This is the broadest measure of the health of the U.S. economy. You know, colloquially, if you have two quarters in a row of a negative number, then you start talking about what constitutes a recession. We're now seeing, rear view mirror, at the end of the second quarter, not quite as bad as they thought. Consumer spending was resilient and also corporate profits up strong in the second quarter compared with stock corporate profits in the first quarter. So, all of this is just a mix there of what's happening in the U.S. economy.

And it's been a very conflicting picture, as you know. For every indicator that heads south, there's another one that's very strong. Case in point here, jobless claims. Also a brand-new reading on the first initial jobless claims for the most recent week and they fell to 243,000. This is a low number. These are numbers historically that suggest there aren't a lot of layoffs in a very strong American labor market, you guys. So, less lousy in terms of the GDP number, as we like to say sometimes, and consistent picture of a very strong job market.

BERMAN: You keep using the words "less lousy" to describe it. And it really is a good depiction of this, that in that does indicate there may be a trend, a reduction of gloom in a way.

ROMANS: That's right. And also, heading into the third quarter, it looks like a lot of economists expect the economy to grow -- to be growing in the third quarter. Strong consumer spending still with all these other head winds. And, again, the basis of all this is still a very strong job market.

The Fed is raising interest rates to try to cool inflation. That has been, you know, the problem for so many American families. The Fed will have another meeting in September. We'll hear from the Fed chief tomorrow.

BERMAN: All right, a lot of information coming in. Thanks for helping us process it.

ROMANS: You're welcome.

BERMAN: Christine Romans, thank you.

Well, you're going to speak to Transportation Secretary Pete Buttigieg, his reaction to this latest news on the economy. He joins NEW DAY live.

[08:45:06]

COLLINS: And New York's highest court agreeing to hear an appeal for Harvey Weinstein's sex crime conviction.

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COLLINS: The U.S. economy shrank at a slightly slower rate than estimated during the second quarter. That's 0.6 percent in this revision that just came out. This comes as gas prices have also fallen steadily for 71 straight days now. The average price of gas today in the United States is about $3.87, down from, of course, over $5 in mid-June.

So, joining us now to talk about all of this is the secretary of transportation, Pete Buttigieg, who has been on quite the road show this week for infrastructure. He is now joining us live from Minnesota.

And, Mr. Secretary, first, I'd like to start with your reaction to the latest GDP numbers and what they show you.

PETE BUTTIGIEG, TRANSPORTATION SECRETARY: Well, I'm just hearing the news, of course, but certainly encouraged to see that revision showing that the numbers were better than we believed.

Of course, at the end of the day, I think for most people the economy is not about the numbers on a page, it's about their own experience, and really two things, do I have a job and can I afford what I need?

On the first front, the U.S. is doing extremely well, exceptionally well, 3.5 percent unemployment. That is as low as unemployment has been in my entire lifetime.

[08:50:00]

The second part of that is more of a challenge. That's inflation. We're seeing prices that are high. Big improvements over the summer, but nobody is declaring victory just yet.

And, of course, part of that issue with inflation, which is the president's top economic priority, is things like shipping costs and supply chains, which is exactly why we have such a focus on that at the Department of Transportation. Yesterday, I was in Nevada, where we're investing in highway and rail improvements to create an inland port by an industrial park there that's going to help with supply chains in the west. The day before that I was in Tampa, where we're investing in added birth capacity for the port there so they can get more ships in and move the containers on and off those ships more efficiently.

All of those things, long-term, are going to help with inflation, even while we're taking more immediate measures in the short-term, so that in addition to that very, very high employment that we're seeing right now, that low unemployment, we also see things cooling off in terms of prices.

COLLINS: Yes, and, of course, prices are a number one concern, as you noted.

I do wonder what you make of the response to the announcement yesterday, President Biden's announcement, on forgiving student loan debt relief, forgiving student loan debt that people have. Some, including people who are economic advisers to President Obama, have raised concerns that it will make inflation worse. What do you say about that?

BUTTIGIEG: Well, again, how people actually experience the economy in their lives has a lot to do with whether they can afford to get through life. And for many people, under a crushing burden of student debt, they have not been able to. And that's part of what this speaks to. It's also a balanced program. It's a tailored program, paying special attention to Pell grant recipients who are some of those who have experienced proportionately the most harm from trying to keep up with the weight of that debt. It's got an income cap, so it's targeted at lower and middle income borrowers. And what I've seen is there's a range of analysis on it. But from what I've seen, most economic observers do not think this is a major factor affecting the course of inflation.

COLLINS: And on gas prices, I do want to ask you about California set to move closer to banning the sale of new cars that are running only on gas by 2035. Of course, California's the largest auto market in the U.S. They sell a lot of - they set a lot of the standards. Is that a realistic goal, do you think?

BUTTIGIEG: Well, that's certainly the direction California appears to be moving in. We've seen a lot of countries moving in that direction.

Federally, that's not our approach. What we're doing at the federal level is to incentivize more fuel economy and other steps to help people afford electric vehicles. But it's certainly in our federal system, it's not unusual for a state to decide that what we're doing is the floor and they want to go beyond that and above that.

I do believe that industry can and will meet or beat those goals. In fact, many of the major auto companies have already said that by then they're going to go to an all-electric or zero emission fleet. And remember why we're doing this and why California is doing this to an even greater degree. It's because we cannot afford to allow climate change to hit its worst, most catastrophic effects. And we cannot afford to go any long with our kids breathing in the pollution coming in from old fashioned vehicles now that we know there's a better technology.

The problem we've been seeing is that, you know, not everybody can afford those electric vehicles.

COLLINS: Yes.

BUTTIGIEG: It's one of the reasons I'm so pleased with the Inflation Reduction Act that makes them cheaper for Americans through tax credits. And, of course, that's a double win because not only can you more likely afford that electric vehicle, but once you own it, you'll be able to save on gas too.

COLLINS: Well, and, Secretary, speaking of bills that have been passed, I know you're on this sales pitch when it comes to infrastructure because you are out there in the country, talking about the projects where people are actually getting awarded money so they can start these projects for roads and bridges. I know there have been some concern internally in the administration that maybe the administration wasn't selling it in the right way. What were those concerns and how are you changing that strategy now?

BUTTIGIEG: Well, look, the -- part of what we're up against right now is, when you have a good policy that most people agree on, and things are going well, it doesn't get as much attention as whatever the hot controversy or culture war of the moment is. But, of course, it is extremely important. It is a major achievement that I believe will stand for decades as just one of the major achievements under the Biden/Harris administration. And what we're really trying to focus on now is it's not just about the legislation getting passed and signed, it's what its actually going to do on the ground.

We spent so much energy and effort yesterday getting that bill through and then the president signed it. We had that great ceremony on the South Lawn. Now it's about actually putting those dollars to work. And whether it's that rail yard I was talking about in Nevada, later today I'll be looking at a highway improvement that's going to better connect the area around Sandusky, Ohio, Berlin, New Hampshire, tomorrow, where we'll be celebrating the work that's going to help a blue collar area improve the economics of their downtown, or right here in Minneapolis, where later today I'll be on the Lake Street corridor, a place -- a very diverse and vibrant community but one that where the small businesses suffered enormously, both with the consequences of the pandemic and the unrest in the aftermath of the George Floyd murder, supporting them with bus rapid transit investments that are going to help people and businesses there meet their potential.

[08:55:16]

It's just so exciting to take these numbers off the page, to get this out of the abstract, out of the kind of, you know, federal language of programs and systems and into things that people are actually going to see and feel.

COLLINS: Right.

BUTTIGIEG: Whether they follow the blow by blow of legislation on Capitol Hill or not.

COLLINS: Transportation Secretary Pete Buttigieg, thank you for joining us on that and what that looks like. I know you're going to New Hampshire, where you are ending your week. And some people have noticed you will also be there later in September. Of course, we've got more questions for you on that, but thank you for joining us this morning.

BUTTIGIEG: Thank you.

COLLINS: And we'll be right back.

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[09:00:14]

BERMAN: "5 Things for Your New Day."

A Russian missile attack on a train station in southeastern Ukraine killed at least 25 people and injured dozens.

COLLINS: The Uvalde school board voting unanimously to fire the district's police chief Pete Arredondo.

BERMAN: New York's highest court agrees to hear an appeal by Harvey Weinstein seeking to overturn his 23-year prison conviction on sex crime charges.

COLLINS: A mystery illness that has been killing dozens of dogs in Michigan has been identified as canine parvo virus. They say dogs who are not fully vaccinated are the most at risk.

BERMAN: And 17-year-old Mack Rutherford has just become the youngest person to fly around the world by himself. He also broke older sister's -- his older sister's previous record.

COLLINS: And those are the "5 Things to Know for Your New Day."

John, that was very quick.

BERMAN: Very quick.

CNN's coverage continues right now.