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The Situation Room

Dow Drops Again; Interview With Former White House Domestic Policy Adviser Susan Rice; VA Closing Office Helping Minorities; Trump and Musk Target IRS Cuts; Interview With Rep. Pramila Jayapal (D-WA). Aired 11:30a-12p ET

Aired March 13, 2025 - 11:30   ET

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

[11:30:01]

WOLF BLITZER, CNN HOST: Listen to this and I will get your reaction.

(BEGIN VIDEO CLIP)

SEN. JOHN CORNYN (R-TX): I think they're -- they will cave. I mean, you're talking about people who have been railing against Elon Musk and the Trump administration over reductions in force of the federal employees.

And now they basically want to put all of them out of work by shutting down the government. So that seems to be -- I don't know how you reconcile those two positions.

(END VIDEO CLIP)

REP. PRAMILA JAYAPAL (D-WA): Well, it's a ridiculous argument, because, first of all, Republicans can stop that from happening. They can negotiate with Democrats.

We are willing to today, tomorrow vote on a 30-day actual continuing resolution, right, something that keeps the levels of spending the same until we reach agreement on the funding.

Number two, if Republicans are worried about this, Jimmy Carter did this when he had a shutdown. He made sure that not a single federal employee lost their pay. Now, in the time of a shutdown, yes, they don't get their pay, but you can reinstate full back pay. The party in control has the power to do that.

Number three, it is Republicans that are giving Donald Trump and Elon Musk every power to actually fire people, to freeze funds, to take away the powers that Congress should have to appropriate dollars. That's why all these cases are in the courts.

So, ridiculous argument. Republicans have the power to not shut down the government. Republicans have the power to stop Elon Musk from doing the slashing and burning that he's doing. And, listen, the first Social Security check that people miss, that will be on Republicans.

BLITZER: But the Democrats have the power to avoid a government shutdown by rejecting the filibuster.

JAYAPAL: The Democrats have the power to stand up for the American people. They don't have the power to control a shutdown. That's on Republicans.

And this is a really important point, because I think that it's important. If you're having a negotiation and I say to you, Wolf, I need your votes because I need seven votes, that's what governing means. It means you come to an agreement with the other side if you need their votes.

BLITZER: Very quickly...

JAYAPAL: This is not a Democrat -- this is not a negotiation. This was a Republican bill.

BLITZER: Congresswoman, I want you to listen to a fellow Democrat, Senator John Fetterman, what he has to say about all of this, and then I will get your reaction.

(BEGIN VIDEO CLIP)

SEN. JOHN FETTERMAN (D-PA): If you shut it down, you will impact and hurt millions and millions and millions of Americans. And you run the risk of slipping us into a recession or even all kinds of other things.

(END VIDEO CLIP)

BLITZER: He clearly has a different perspective than you do.

JAYAPAL: He does. And, listen, I'm not going to argue with him. He represents his state.

What I am saying is that the harm is far worse. And if Democrats are never going to stand up to Republicans, and we're going to be afraid to succumb to their hostage-taking of the American people, then there is no difference between Democrats and Republicans. There are seven votes that are needed, actually eight if Rand Paul sticks to his no. And Senate Democrats can stop this from moving forward.

We can pass -- today or tomorrow, we can pass a 30-day clean continuing resolution that allows the two sides to negotiate. Democrats can use our power and our leverage to stand up and fight for the American people, who are suffering right now because of Republican intransigence, the slashing and the burning, the chain saw that is being taken to the government, but also to our own powers as Congress.

They're -- we can't give them the money, the slush fund to just continue to do what they're doing.

BLITZER: Congresswoman Pramila Jayapal of Washington state, thanks very much for joining us.

JAYAPAL: Thank you, Wolf. BLITZER: And there's more breaking news just to get into CNN right

now. Trump's Department of Government Efficiency just issued a new proposal to cut workers over at the IRS, the Internal Revenue Service, Tax Day less than one month away.

We will share with you the new information when we come back.

(COMMERCIAL BREAK)

[11:38:17]

BLITZER: All right, there's more breaking news we're following.

The Trump administration and the Department of Government Efficiency, DOGE, are proposing dramatic cuts over at the Internal Revenue Service. They want to reduce the IRS work force by nearly 20 percent.

Let's go live to CNN correspondent Rene Marsh.

Rene, tell us more. What are you learning?

RENE MARSH, CNN CORRESPONDENT: Well, Wolf, this is a proposal that we are learning about from the Trump administration and Elon Musk's Department of Government Efficiency.

Now, these details that we're learning about today were outlined in an e-mail from DOGE. And it was being discussed this morning at an agency meeting among top leadership at the IRS, according to a source with knowledge. Now, this latest round of layoffs would terminate -- here are the numbers -- nearly 6,800 employees at the IRS.

Now, keep in mind, those 6,800 employees to be terminated at the IRS would be on top of the 6,700 probationary employees who have already been fired and some 4,700 employees who took that voluntary buyout known as the fork in the road in which they would agree to resign and be paid through the end of September.

Now, we have spoken to many experts, as well as career employees within the agency, who are raising concern about just how the agency will be able to continue its functions on giving good customer service to American taxpayers, as well as audits, which brings in a lot of revenue that funds the vast majority of government operations.

So, just concerns about how this slimmed-down work force will impact the IRS overall. But those are the latest numbers that we're here being proposed this morning -- Wolf.

[11:40:03]

BLITZER: Yes, we all have to file our taxes by April 15. So the clock is clearly ticking.

Rene Marsh, thank you very, very much.

Meanwhile, there are more cuts coming to the Department of Veterans Affairs, the VA eliminating the Office of Equity Assurance, which deals with disparities and benefits for minority veterans.

CNN's Brian Todd is joining us right now. He's got details.

Brian, the Trump administration wants all traces of DEI eliminated from the federal government. Is this part of that agenda?

BRIAN TODD, CNN CORRESPONDENT: It is part of that agenda, Wolf, but it's controversial, as many of these moves are.

You just mentioned the office's name. It's the Office of Equity Assurance. And, as you described, it helps minority veterans deal with disparities, discrimination in how the government provides benefits. This, by the way, has been a huge problem with the VA going back to the '40s, we're told, veterans who are minorities and others like that getting just discriminated against, getting problems, disparities in getting their benefits.

This office helps root out all of that. Well, two VA employees, including one who works directly in that office, told us that, on February 14, they all got a mass e-mail, 27 people in that office, saying that they were being terminated under an executive order -- quote -- "ending radical and wasteful government DEI programs."

But people connected to that office tell us, it's not just minorities that that office helps. They help a wide range of veterans, including aging veterans, battle discrimination within the VA in how they get their benefits. So this is not just a DEI thing, according to the people who work there.

Now, we did reach out to members of Congress, Democrats, who are very upset about this. Also, Richard Brookshire, CEO of the Black Veterans Project, he issued us a statement saying this, that this is -- quote -- "a first step toward gutting the second largest agency in our federal government." And he warns -- quote -- "The consequences will be dire, wide-reaching," and he said "deadly," deadly in that quote.

I asked him about that. He said, it's deadly because, Wolf, a lot of veterans, minorities and others who are seeking PTSD treatment, things like that, or trying to get help with suicide prevention, and have run into some discriminatory policies and things at the VA, they need that office to help them sort through that.

So, if they're not getting that kind of help they could be in a bad place. Well, the VA is, of course, vigorously defending this, as they have been all along, with these massive cuts that they're making.

Peter Kasperowicz, the VA press secretary, sent us a statement saying this, under the leadership of Secretary Doug Collins -- quote -- "VA treats all veterans and beneficiaries fairly and equally. So the Office of Equity Assurance is no longer needed," he said. "The money saved by closing that office will be redirected to improve health care benefits and services for veterans, all of whom we treat fairly and equally."

Their argument is, we treat everybody equally across the board, this office is not needed; 27 people are gone from there, as of now. And this is, of course, part of the broader cuts at the VA that we have been reporting on, Wolf. They're targeting possibly laying off about 80,000 people.

I just saw Rene there talking about the layoffs at the IRS. Think about this at the VA. They employ about 470,000 people. They're targeting laying off about 80,000 of them. And we estimate that roughly 20,000 of those people could be veterans themselves.

BLITZER: Yes, very, very worrisome indeed.

All right, Brian Todd reporting, thanks very much for that.

Meanwhile, there's more breaking news we're following. Democratic states are now suing the Trump administration over the massive cuts to the federal Department of Education. Democratic attorneys general in 20 states and the District of Columbia are accusing the Trump administration of effectively nullifying mandates by Congress.

And just moments ago, California's attorney general had this to say about the president's actions. Listen.

(BEGIN VIDEO CLIP)

ROB BONTA (D), CALIFORNIA ATTORNEY GENERAL: Trump may have forgotten to read up on the restrictions of his constitutional authority, perhaps because he's too busy turning the White House into a car dealership.

But I won't and we won't sit back while he violates the law. That means that we will see the Trump administration in court again.

(END VIDEO CLIP)

BLITZER: The president is vowing to close the Department of Education completely, shut it down, something that requires congressional approval.

Coming up: With a government funding bill now in the Senate's hands, Democrats say they have enough votes to block the Republican measure, but the deadline to avoid a federal government shutdown is just one day away.

I will speak live with former Ambassador and presidential adviser Susan Rice. She's here with me in THE SITUATION ROOM.

(COMMERCIAL BREAK)

[11:49:11]

BLITZER: There's more bad news up on Wall Street right now. Take a look at this, Dow Jones industrial average down nearly 400 points already today.

Matt Egan is watching all of this unfold in New York for us.

Matt, what's the explanation today? Why are the markets so depressed?

MATT EGAN, CNN REPORTER: Well, Wolf, this really all goes back to continued confusion over the president's trade war.

This is another example of a day where we got some pretty good economic news. There was a better-than-expected inflation report that came out this morning. But markets are not focused on that. It focuses on tariffs. As you know, the president had new tariffs on steel and aluminum that kicked in yesterday. And that triggered retaliation from the European Union threatening to hit U.S. goods with tariffs.

And then we heard the president come out this morning and threatened retaliation of his own, saying that he's going to impose massive tariffs on alcohol that comes from Europe. France then responded and said that they're going to fight back as well.

[11:50:10]

So this all just shows how tariffs can lead to kind of an escalatory cycle. It turns into a tit for tat battle. And I don't think investors like that. I think that much has been made clear from the last few days, where we have seen significant losses in the stock market. You see the Dow is down almost 350 points, about 1 percent, steeper losses for the Nasdaq as well, a little bit more than 1 percent.

And that's because we know that investors, they crave stability and clarity, but they're not getting that right now. They're getting a whole lot of chaos and confusion and uncertainty over these tariffs and this trade war. I mean, they want to know, how high are tariffs going to ultimately go, what countries are going to face tariffs and on what products, and how long are the tariffs going to stay in place, and what does the retaliation look like?

And, frankly, Wolf, we don't know the answers to any of those questions. And so that's why we have seen in recent days investors are selling first and asking questions later.

BLITZER: And, basically, if you want a bottle of French champagne or Italian wine or French wine, for that matter, German wine, all of a sudden, the prices are going to go way up?

EGAN: That is what could happen because the president said that he would put massive tariffs on alcohol from Europe.

That's -- the question is whether or not that actually kicks in, because we have seen in the last few days and weeks that threats of tariffs sometimes get dialed back. Other times, they don't. But if they do kick in, then, yes, of course, it would become more expensive, because U.S. firms importing the alcohol from Europe would face that tariff.

And they would have to decide to pass along costs to consumers or eat the cost of the tariffs, which might mean lower profits and hiring fewer workers. You can see how there's a real economic impact here. And one of the big questions is, how long do tariffs and retaliatory tariffs stay into place? Because the longer these tariffs stay in place, the bigger the impact

-- Wolf.

BLITZER: Yes, a good point.

All right, Matt Egan reporting for us. We will continue to watch the markets for our viewers. Thanks very, very much.

We will be right back with more news.

(COMMERCIAL BREAK)

[11:56:33]

BLITZER: Right now, we're closing in on a crucial deadline for Congress to fund the federal government before it shuts down at midnight tomorrow.

Right now, Senate Democrats say they are not -- there are not enough votes to pass the Trump-backed spending bill that cleared the House of Representatives and that Republicans need to come back to the negotiating table and work out a compromise with Democrats.

Joining us now is Susan Rice. She served as a domestic policy adviser to President Biden, as well as President Obama's national security adviser and U.N. ambassador.

Ambassador Rice, thanks so much for joining us.

As you know, the Senate minority leader, Chuck Schumer, looks like he's prepared to force a government shutdown right now. Is that the right move?

SUSAN RICE, FORMER WHITE HOUSE DOMESTIC POLICY ADVISER: Wolf, it's not the Democrats that are forcing a government shutdown. The Republicans control the House, the Senate, and the White House. If they want to keep the government open, they know that, given Senate rules, they need to get Democratic votes.

To get Democratic votes, you need to negotiate with Democrats. You can't expect Democrats to rubber-stamp a completely crazy piece of legislation that they had no part in crafting. You're essentially asking them to roll over and play dead, while Elon Musk and Donald Trump rape and pillage the federal government, cut programs.

And this whole piece of legislation that they falsely call a clean C.R. would only legitimize and empower Trump and Musk to continue doing what they're doing, which is already in the process of shutting down the federal government by closing agencies wholesale, laying off people and stopping programs.

So this is not a legitimate effort by Republicans to fund the government. This is an effort to try to close it and shift blame to the Democrats. If they want Democratic votes, they need to negotiate with Democrats. The Democrats have said, let's do a 30-day clean C.R. and let's have regular order and negotiate the appropriations bills, as they should be. That's where this needs to go.

BLITZER: But do you have any concerns, Ambassador Rice, that this could potentially backfire on Democrats if, in fact, there is a government shutdown?

RICE: The issue is not blame and backfiring, leverage or anything else. This is the legislative process.

Democrats have a responsibility to their constituents and to the Constitution. That means they do not roll over and play dead, they negotiate and do what is in the interest of the American people. It is not in the interest of the American people to have Elon Musk raiding our private data, shutting down programs at whim, firing people, and essentially one man, two man running the entire federal government without Congress having a voice.

Congress needs to be at the center of what is appropriated and what is spent. And that is what Democrats are rightly insisting on, not just to roll over and play dead for Elon Musk and Donald Trump.

BLITZER: We will see what happens. The stakes clearly are enormous.

Susan Rice, as usual, thanks very much for joining us.

RICE: Good to be with you, Wolf.

BLITZER: And, to our viewers, thanks very much for joining us this morning as well. You can keep up with me on social media @WolfBlitzer.

I will see you back here tomorrow, every weekday morning for our expanded two-hour SITUATION ROOM at 10:00 a.m. Eastern.

"INSIDE POLITICS WITH DANA BASH" starts right after a quick break.