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New, U.S. Inflation Slowed in February for First Time in Four Months; Sen. Chuck Schumer (D-NY), Senate Democrats Meeting to Chart Path Forward on Spending Bill; Russia Unleashes New Strikes After Ukraine Proposes Ceasefire. Aired 10-10:30a ET

Aired March 12, 2025 - 10:00   ET

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

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WOLF BLITZER, CNN ANCHOR: Happening now, breaking news. Could it be short lived relief? A new snapshot of the American economy. Inflation is cooling, but the president's trade war and tariffs are looming.

We want to welcome our viewers here in the United States and around the world. Pamela Brown us off today. I'm Wolf Blitzer. You're in The Situation Room.

We begin this hour with the breaking news. A key report on inflation gives fresh encouragement to Americans increasingly very worried about the state of the U.S. economy. The Consumer Price Index shows annual inflation at 2.8 percent, the first time it has slowed in some four months. And that progress may be short lived as President Trump escalates his trade wars.

Overnight, a 25 percent tariff went into effect on all steel and aluminum imported into the United States. For Americans, that could drive up prices on things like cars and appliances. On Wall Street, the Dow opened stronger, going up more than 200 points, but now at a retreat, the Dow down about 100 points, as you can see.

Let's go live now to CNN Business and Politics Correspondent Vanessa Yurkevich watching all of this in New York for us. Vanessa, let's begin with this new report on inflation here in the United States. What's the headline?

VANESSA YURKEVICH, CNN BUSINESS AND POLITICS CORRESPONDENT: Well, this is welcome news for consumers. Prices in February fell for the first time in four months. Prices in February month over month increased about 0.2 percent and on an annual basis 2.8 percent. So, that's encouraging news for consumers.

We saw in this report that shelter, that is rent, made up half of all increases in the report. But we did see decreases on things like gas and also airline fares. Good news for consumers on that front. Also, we are watching food prices very, very closely, food ticking up 0.2 percent. And we were watching eggs, Wolf, again, 10.8 percent, that's the increase. Excuse me, 10.4 percent, that's the increase on the monthly basis alone. But markets this morning reacting to the news. At last check, they were mixed. The Dow was up 200 points on this inflation news, but investors quickly forgot about that and then turn their attention to this trade war, now this global trade war, after a 25 percent tariff went into effect on aluminum and steel coming in from countries around the world. And the E.U. responding very quickly with their own retaliatory tariffs on $28 billion worth of goods.

We are waiting, though, Wolf, on retaliatory tariffs that will be announced presumably by other countries. We will see what that means for U.S. consumers and markets who have been -- it's been very volatile for them in the last two days. Right now, a mixed picture, but the day is young, Wolf.

BLITZER: Still very young. Vanessa Yurkevich in New York for us, thank you.

I want to get some reaction from the White House right now. CNN Reporter Alayna Treene is on the North Lawn of the White House joining us right now. What are you hearing, Alayna?

ALAYNA TREENE, CNN WHITE HOUSE REPORTER: Well, look, Wolf, I think, one, it's very clear that the president and those around him talking about these tariffs are continuing to dig in. Yesterday when the president addressed the business round table, he continued to argue that he believes tariff policy is good policy. He said that it's needed to rebuild the country.

But what he didn't do, and this is something I've been picking up in my conversations with people on both ends of Pennsylvania Avenue and, you know, obviously Wall Street as well in light of the stock market falling for two days straight, is people are really starting to question, have greater concerns over what the president's grand plan is here. What is the strategy? And some people were hoping to hear some of that reassurance last night. But this is what one person told CNN. They said, quote, there was no new clarity or certainty that the president gave them when he was speaking to them.

Another thing to keep in mind as well is how much the president actually views these, the negotiations as whiplash. That's something I've been told. We've seen him, you know, the start and go, kind of, especially what we saw with Canada yesterday. He said he was going to raise tariffs 25 percent.

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Again, on top of that, raise those tariffs on steel and aluminum from Canada into the U.S. at 50 percent. He did not do that. I'm told that is all part of the broader negotiation. And, of course, he does view these tariffs as a key negotiating tool. Wolf?

BLITZER: Alayna Treene at the White House for us, Alayna, thank you very much.

Let's discuss what's going on with the economist, Natasha Sarin. She's a professor at the Yale Law School and a former treasury official during the Biden administration. Natasha, thanks very much for joining us.

Can you break down what this really means, the CPI numbers, consumer price index numbers that came in this morning?

NATASHA SARIN, ECONOMIST: Yes. So, I think the way you can kind of interpret these numbers is they're relatively good news. Inflation came down a tick cooler than expectations, but it is still quite high year over year. We're talking about a 2.8 percent increase in prices. So, that's significant and it's significantly away from where the Federal Reserve would like to be, which is closer to a 2 percent inflation target.

And, importantly, what this data doesn't have within it is the impact of Trump's escalation of these trade wars and these tariff policies, which are certainly going to be incredibly inflationary for the American people.

BLITZER: Because a lot of people are really worried about this trade war that President Trump has launched against close allies, including Canada and Mexico, for that matter. At the end of the month, the European Union is set to impose counter tariffs against the United States, $28 billion worth of U.S. goods. What's going to be the impact of that?

SARIN: So, in reality, what tariffs mean, they mean a tax increase for the American people? That's like plain and simple. And work that I've done at the budget lab at Yale with some of my colleagues suggest that the result of these Canada, Mexico and China tariffs that the administration has already proposed is going to be an increase of around $1,600 in prices for the average American family each year.

So, this is a significant price increase and it's a significant uptick in inflation at a moment where we haven't already gotten to the last mile with the last inflation that we saw around the pandemic.

BLITZER: Because President Trump keeps saying he wants to reduce taxes for the American people, what you're effectively saying is that these tariffs are going to raise taxes for the American people.

SARIN: Absolutely. It's kind of the exact opposite. He's saying he wants a pro-growth agenda and an agenda that's focused on allowing businesses to invest in America and cutting taxes for the American people. The reality of this trade war in these tariff policies is that they're doing the reverse. They're causing taxes to increase and they're creating a ton of uncertainty for businesses looking to invest in this country.

BLITZER: Let me get your reaction, Natasha, to what the commerce secretary, Howard Lutnick, just said on Fox Business. Listen to this.

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HOWARD LUTNICK, COMMERCE SECRETARY: Nothing's going to stop that until we've got a big, strong, domestic steel and aluminum capability. And, by the way, he's going to add copper to that mix too. So, just remember, national security rises above all other things. People get lost in this stuff. We must have steel and aluminum. We must have semiconductors. We need to have cars and automobiles. We need to make these things in America.

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BLITZER: What do you think?

SARIN: So, listen, if we were having a conversation about tariffs in particular sectors against particular countries, acknowledging the China threat is very real, I would be happy to have that conversation, and I think many economists would as well. The reality is the idea of broad based tariffs, 25 percent tariffs on Canada, our ally, in the name of fentanyl, like it is hard to square with that kind of national security rationale.

BLITZER: A very tiny percentage of the fentanyl comes in from Canada.

SARIN: Less than 1 percent, right? So, it's clearly not about that. And so it's hard in some sense to understand what I teach my students, I teach finance, and then we talk a lot about like what rationale for policy might be and what the administration might be trying to accomplish here, it's frankly hard for me to understand what the objectives are. But it's very clear what the reality is going to be. It's going to be higher prices for the American people and a less secure world with the Americans so isolated relative to our foreign counterparts.

BLITZER: Natasha, thanks very much, Natasha Sarin of Yale Law School, right?

SARIN: Thank you so much for having me.

BLITZER: Well, we'll have you back. Thank you very, very much.

Also today up on Capitol Hill, the Senate minority leader, Chuck Schumer, and his fellow Democrats will take a closer look to try to chart their path forward to avoid a federal government shutdown after the House of Representatives narrowly passed the Republicans' spending bill yesterday.

Let's go live to CNN's Chief Congressional Correspondent Manu Raju up on Capitol Hill. Manu, so where do things stand in the Senate right now, because this is critical?

MANU RAJU, CNN ANCHOR AND CHIEF CONGRESSIONAL CORRESPONDENT: Yes, Senate Democrats are torn about what to do here because their votes will be essential in order to see whether this bill can actually become law. Because in the United States Senate, you need 60 votes to overcome any filibuster attempt. And there are 53 Republican seats. We expect at least one Republican vote no. That means we'll at least eight Democrats need to vote to advance this plan.

But there's a problem, Democrats have been trashing this proposal for days. They are concerned about the spending cuts. They're concerned about how it does not rein in Donald Trump or Elon Musk, or the efforts to purge the federal workforce.

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And they want some provisions in there that the Republicans have essentially ignored.

So, now their question is this. Do they vote to block this bill and lead it to a government shutdown or do they vote to allow this to go forward and enact a plan into law to avert a shutdown, even though they're very concerned about the contents of this proposal?

And in talking to Democrats on both chambers in the House and the Senate, many are calling on their members to hold the line, particularly progressives in the House who are warning about a backlash to Senate Democrats if they capitulate to the GOP demands,

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REP. PRAMILA JAYAPAL (D-WA): They should refuse to allow this bill to pass in the Senate.

RAJU: If they don't?

JAYAPAL: I think there's going to be huge backlash from across the country, and I think all of them, you know, will have to deal with the consequences of that.

REP. ALEXANDRIA OCASIO-CORTEZ (D-NY): The Republicans have the White House, the Senate, and the House. If they want to do this, and if they want to screw over the American people, they can do this with their votes and their party. I do not believe that Democrats should participate.

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RAJU: But some Democrats may very well participate, Wolf. Some of them are more concerned about a potential long-term government shutdown, which is why they may supply the votes at the end of the day. And the timing is critical, Wolf. 11:59 P.M., Friday night, is the deadline for the Congress to pass a bill to avert a government shutdown. Today, this afternoon, Senate Democrats will huddle over lunch with Chuck Schumer, the minority leader, to decide how to proceed here. We'll see if they have a decision after that critical meeting.

BLITZER: Yes, it's a critical decision for the Democrats to make. The Republicans need the Democrats in this specific piece of legislation in order to get the House version passed and the impact on the American public could be enormous if the federal government shuts down, including a lot of people not only losing their jobs but being harnessed with enormous problems without a federal government backing.

Manu Raju up on the Hill, thanks very much. I want to stay on the Hill right now. The next fight for the House speaker, Mike Johnson, is to pass a budget bill with sweeping cuts, and he's now laying out his priorities for that huge measure. Let's go live to see in a Congressional Correspondent Lauren Fox. She's up on Capitol Hill for us as well. Lauren, the speaker has a very ambitious timetable for his budget plan. What's his strategy?

LAUREN FOX, CNN CONGRESSIONAL CORRESPONDENT: Yes, Wolf. The Speaker has laid out this really ambitious timeline, and, in some ways, it's not completely under his control to decide. If you remember, the House of Representatives, they already passed their budget blueprint with a lot of strong-arming, with a lot of help from Donald Trump. They got it across the finish line. But now, because the House and Senate have very different budget blueprints, a lot of questions remain about whether or not the Senate is going to move as quickly as Johnson's hoping.

Here's what he said.

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REP. MIKE JOHNSON (R-LA): We've got to do it sooner. We've got to do it early in the year. And that's why I put this on a very aggressive timetable, trying to get it done by late spring, because that will bring real certainty and I think calm to everybody about what their tax rates are going to be for the foreseeable future and how we're going to settle this out. We bring down federal spending dramatically, which we're aiming to do. That will help as well.

UNIDENTIFIED MALE: I think the question that a lot of folks have is if you're not able to accomplish it as quickly as you want, what happens then?

JOHNSON: Well, look, I have to I have to have cheerful persistence here every day, okay? That's what I do, is pushing everybody to action, making it happen.

They always underestimate us, but we always get the job done.

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FOX: And one of the biggest challenges is squaring the spending cuts that the House wants to have, which is somewhere between $1.5 trillion and $2 trillion. That is such a huge number, and something that has a lot of Senate Republicans uncomfortable. Right now, the question becomes, when is the Senate going to move on a budget proposal that looks more similar to this House proposal? Right now, that timeline's not clear. Wolf?

BLITZER: All right, a lot isn't clear right now. Lauren Fox, reporting from Capitol Hill, thank you.

Still ahead, the measles outbreak in West Texas is growing and growing. And experts are worrying that more people are infected than what's being reported.

Also coming up next, on the verge of a ceasefire, I'll ask Congressman Jason Crow if the Trump administration will get Russia behind the plan to stop the war with Ukraine and keep Vladimir Putin to his word. Stay with us. You're in The Situation Room.

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BLITZER: New this morning, Ukrainian officials are saying at least 14 people are dead following Russian strikes across the war torn country. Those attacks coming just hours after Kiev accepted a U.S. proposal for a 30 day pause, a ceasefire, in the fighting. Listen.

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MARCO RUBIO, SECRETARY OF STATE: Today, we made an offer that the Ukrainians have accepted, which is to enter into a ceasefire and into immediate negotiations to end this conflict in a way that's enduring and sustainable.

MIKE WALTZ, NATIONAL SECURITY ADVISER: The president has decided to lift the pause, on aid. and on our security assistance to Ukraine, going forward, and that's effective immediately.

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BLITZER: But the Kremlin has yet to accept that, proposal and wants to hear from U.S. officials first talks, Secretary Marco Rubio says, will come later today.

Joining us now, for more on what's going on, Colorado Democratic Congressman Jason Crow. He serves on both the House Intelligence and Armed Services Committees. Congressman, thanks so much for joining us.

Secretary Rubio says the ball is now in Russian President Vladimir Putin's court.

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How does this administration get Russia to agree to a deal, that's one thing, but then to honor it down the road?

REP. JASON CROW (D-CO): Well, let's make no mistake. This is a ball that's in Vladimir Putin's court as it has been from day one of this war. It is his responsibility and he alone bears responsibility for the invasion. He's the one who made the decision. He continues his relentless assault against the Ukrainian people, innocent civilians, women, children, families, kidnapping tens of thousands of innocent Ukrainian children and taking them to camps within Russia. So, this is his responsibility now.

My concern about the approach of the Trump administration, which actually has been my historic concern, is that they're going to create a deal that leaves out critical parties, right? They actually did this with the Taliban with Afghanistan when under the first Trump administration, they negotiated directly with the Taliban and they left out the Afghan government, and we saw how that ended ultimately. And they seem to be on the track to do that again. So, I hope that we can get this to a point where all parties come to the table.

BLITZER: Secretary Rubio was also asked whether the meeting has -- this current meeting has put President Trump's relationship with the Ukrainian president, Volodymyr Zelenskyy, back on track. Listen to his response.

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RUBIO: This is not Mean Girls. This is not some episode of some television show. This is very serious. People are going to -- today, people will die in this war. They died yesterday, and sadly, unless there's a ceasefire tonight, they'll die tomorrow. The president wants that to stop.

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BLITZER: So, Congressman, how does this square with what we saw in that tense Oval Office meeting a couple weeks ago between these two leaders?

CROW: Well, I want a deal. I want a ceasefire, and I want a peace agreement that is favorable to the United States and Ukraine to end this war. Ultimately, this war will end at a negotiating table. I firmly believe that. But the damage that the Trump administration already done to our international reputation, to our alliances, to our credibility around the world has already been done and continues to be done, with Canada, with Mexico, with so many other countries of which we are trade partners, we are security partners, the way that they continue to treat our friends is frankly appalling and we are losing credibility.

I sit on the Armed Services Committee, the Intelligence Committee, I travel the world, I meet with our partners, our allies, I visit our troops around the world and people are looking at us and saying, what is happening to America? And what is Donald Trump and J.D. Vance and others doing to this country?

BLITZER: Congressman, while I have you, I want to turn to another critical ceasefire. The U.S. special envoy, Steve Witkoff, is in Doha, Qatar right now for talks between Israel and Hamas. What needs to happen to secure a second phase of the hostage and ceasefire deal involving the Israelis and Hamas in Gaza?

CROW: Well, Hamas needs to release the hostages. You know, that is the critical next step. There's no doubt about it. They can't keep these hostages. They have to let these innocent folks go and return them in the bodies of those who are deceased as well. And, listen, I believe Hamas is a terrorist organization and has to be removed from the battlefield. It cannot exist because they victimize the Palestinian people too.

So, we have to create a security environment that's going to require engagement with the rest of the Arab world right now, so United States, Israel. But dozens of other countries in the regions have to step up, including the Egyptians and the Jordanians who are going to be essential to getting us on the path to a security environment and a rebuilding of the region for long-term peace.

BLITZER: And another extremely important and very sensitive issue while I have you, Congressman, I know you've been a vocal critic about how harmful eliminating the Federal Department of Education would be. What are you hearing from your constituents following yesterday's announcement that the department will begin by laying off, even before the Trump administration destroys the Department of Education, they're going to begin with laying off half of its staff, thousands of Education Department officials?

CROW: Well, I believe in government reform, and I believe there are a lot of places where we can find inefficiency and we can make government work better for people, and I've pushed for years on that front. But to take a sledgehammer to agencies that provide critical aid for rural communities to underserved, underprivileged communities, to hungry children, is going to do damage that can't be repaired, right?

The approach of Elon Musk and others of, oh, we're just going to take a broad swath of cuts, and then we'll see what works, we'll see what doesn't work, and then we'll fix the things that does not work. You can't do that when you're dealing with people's homes, when you're dealing with food, when you're dealing with people's livelihoods, when you're dealing with their prescription medications, because damage will be done to these people's lives, in some case, their actual life, that can't be fixed later on.

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That's simply just not how government works.

BLITZER: Congressman Jason Crow, as usual, thanks so much for joining us.

CROW: Thank you, Wolf.

BLITZER: Up next, Tesla commercial over at the White House. I'll ask Congressman Ryan Zinke if he's concerned about Elon Musk's influence and potential conflicts of interest.

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BLITZER: This afternoon, the Senate minority leader, Chuck Schumer, is set to huddle with his Democratic caucus after the House of Representatives narrowly passed a spending bill backed by President Trump and Republican leaders.

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The stakes are very high. If the Senate can't pass a bill by Friday's midnight deadline, the federal government, the entire federal government could --