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Quest Means Business
Trump to Give National Address Tuesday, Visit Border Thursday; North Korean Leader Reportedly En Route to China; Gabon Government Spokesman: Attempted Coup Foiled; Germany: British Citizens Can Stay in Case of No Brexit Deal; Actor Kevin Spacey Pleads Not Guilty to Sexual Battery; Trade- War Concerns at World's Biggest Tech Show; U.S. Tech Industry Expects Record Sales in 2019; U.S. Markets Rise, Investors Eye China Trade Talks; House Democrat Ocasio-Cortez Suggests 70 Percent Tax on Income Above $10 Million; Amazon Pitches Charm Offensive to New Yorkers; Coal Mines Closing Faster Under Trump; U.S. Stocks Rally as Trade Talks Begin; World Bank President Resigns; In The U.K., Lawmakers Return To Parliament For The First Time This Year; Government Shutdown Drags On Into Its 17th Day; Aired: 3-4p ET
Aired January 07, 2019 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ELENI GIOKOS, BUSINESS CORRESPONDENT, CNN: : And stocks are heading higher as we head to the close of trade here in New York. It's all about
those trade talks in Beijing creating a lot of optimism. Look at that graph. Dow Jones Industrial average up three tenths of a percent off its
highs, but still looking good. These are the top stories, it's Monday, the 7th of January.
Tonight, the World Bank President resigns. Jim Yong Kim suddenly quits giving Donald Trump a chance to replace him. Britain's Trade Secretary
says there are no good options left if Parliament won't approve the PM's Brexit deal. And fat cats, beware, the youngest ever woman in Congress has
a plan to tax the super rich. Live from the world's financial capital, New York City, I am Eleni Giokos, and this is "Quest Means Business."
All right, so the head of the World Bank is on his way out. Jim Yong Kim says he will stand down by the first of next month more than three years
before his term was set to expire. Now, the World Bank is one of the biggest donors to developing countries, and Kim has been at the helm since
2012.
He admits that not everything he has tried has gone as smoothly as he anticipated. His attempts to reform the bank's mission saw some fierce
pushback. And here he is speaking to our Richard Quest back in 2016 about some of the internal discontent.
(BEGIN VIDEO CLIP)
JIM YONG KIM, FORMER PRESIDENT OF THE WORLD BANK: We did so many changes so quickly that it's not surprising that some people were very
uncomfortable. And there were some critiques that were very relevant. And we actually do a staff survey every year, and whatever the critiques are
coming our way, we make a commitment to get better on them.
So we are doing it every single year, and the staff survey had not been done. And these are things that you can't hide from, so we're going to keep
improving, but at the end of the day, one of the things I've learned is that big bureaucracies like this have a hard time with change. They all
told me we've got to change, we've got to change, but then when we actually started do doing it, it made people uncomfortable because if you are really
going to change, you have to put peoples jobs at risk. We did that. People didn't like it very much.
(END VIDEO CLIP)
GIOKOS: All right, Kim's resignation means the traditional duopoly of who gets to run the World Bank and the IMF could be shaken up until not every
World Bank President has been an American, nominated by the White House and every IMF managing director has been a European.
Now, Kristalina Georgieva, a Bulgarian economist and current World Bank COO is now set to step in as interim president. We are going to bring in Eswar
Prasad, he is a senior fellow at the Brookings Institution as well as the former IMF Head of the IMF's China Division as well. Thank you so much,
sir for joining us.
I mean, listening to some of the comments in the past of Kim saying how he shook up the institution, and we know that that was one of the most
controversial things he did. He was also perhaps an unlikely candidate back then, because he wasn't an economist. He didn't fit the bill so to
speak in terms of the traditional World Bank form.
And now we're seeing the Trump administration having an opportunity to appoint someone new. What is the overall outlook for the year ahead for
the World Bank? And are we going to see its policies changing?
ESWAR PRASAD, SENIOR FELLOW, BROOKINGS INSTITUTION: The World Bank certainly faces a number of existential challenges. Right now, the World
Bank has become a lot less important in many emerging market economies such as China and India, where it used to be a very important lender because
these economies have grown rich and powerful.
There are many institutions set up by China and other countries that are rivaling the World Bank in terms of its development financing objective.
But I think the biggest existential challenge the World Bank faces is how it is going to thrive in a world where the administration of the U.S. is
clearly very hostile to multilateralism.
And in fact, the appointment, whoever it is that the Trump administration chooses, will send a very important signal about what the Trump
administration sees the World Bank's role as being in the world of international finance.
GIOKOS: So Eswar, this is an important point that you mention because for a very long time, emerging markets have been talking about a change at the
head and the helm of the World Bank, and even the likes of the IMF and for a long time, they've been looking at creating their own developmental
institutions, perhaps competing with the likes of the World Bank.
Do you think the Trump administration would ever consider not putting an American at the helm?
PRASAD: I think the Trump administration, despite its hostility to multilateralism does wants to maintain control of those institutions where
it can set the priorities of the institution. So I don't think the U.S. will give up this privilege without a fight, but a fight that is going to
be, because the U.S. is clearly hostile to multilateralism and the emerging market economies -- China, India and others -- have grown much bigger in
the last few years and want to stake their claim to the leadership of these major institutions. So I think there is a significant battle brewing.
[15:05:10]
GIOKOS: Okay, so we also know that the World Bank is very big on environmental issues. When I look at what's happening within the Trump
administration, it's very opposed to putting money and funding into environmental policies. What do you think is going to change within the
World Bank going into a new Presidency? Do you think we're going to see more of an alignment between what the Trump administration is thinking and
the way the World Bank is pumping money into developmental projects?
PRASAD: This is the big challenge that Jim Kim faced, how to align the priorities of the World Bank in areas such as climate change, development
financing, gender equality and so on, with the fact that the Trump administration's priorities were clearly not in those areas.
If the Trump administration does get to pick who heads the World Bank, it's very likely that that person will try to shift the World Bank's priorities
away from those areas which would be unfortunate and it would also make it difficult for the World Bank to maintain its legitimacy because those are
the areas that many of its clientele countries including the developing countries in emerging market economies really care about.
Jim Kim had a difficult balance which he had managed to sustain for a while. The new leader is going to have a tough time sustaining that.
GIOKOS; And then just to ask you this, I mean, do you think that him leaving and resigning is firstly something that people didn't anticipate?
And secondly, it's not like it's happened very often that a World Bank President does step down. I know that it has happened before during the
Bush administration. But I am curious, is anyone reading into this as more troubles within the institution?
PRASAD: Well, I can tell you in Washington, there are lots of different theories being floated but I think, at this stage, nobody has a clear
answer as to why Jim is stepping down because he is certainly not stepping into anything that would signify a bigger role for him than what he had at
the World Bank. So I think the under story of this still remains to be revealed.
GIOKOS: Eswar Prasad, thank you very much for joining us. Much appreciated for your time.
Now, in the U.K., lawmakers return to Parliament for the first time this year. The early news was a date, January the 15th for a vote on the Prime
Minister's Brexit plan, but making the headlines right now, the specter of a no-deal Brexit. Two hundred lawmakers wrote to Theresa May saying she
must not let that happen. The government is having to take the prospect seriously.
Now, on Monday, it staged a rehearsal for traffic managements in the event of new checks on imports from the E.U. However, a few minutes ago, the
British Trade Secretary told CNN there needs to be an agreed divorce.
(BEGIN VIDEO CLIP)
LIAM FOX, BRITISH INTERNATIONAL TRADE SECRETARY: The consequences of rejecting the Prime Minister's deal will be either we leave the European
Union without a deal at all or that we betray the voters in terms of not leaving the European Union. I find either of those palatable outcomes.
(END VIDEO CLIP)
GIOKOS: All right, so lots of speculations there from the betting markets to the boardrooms, the working assumption now is that Britain is heading
for a no-deal. CNN's Nina dos Santos reports.
(BEGIN VIDEO TAPE)
NINA DOS SANTOS, CORRESPONDENT, CNN (voice over): In British politics today, all paths lead to Brexit. And with just over two months to go
before the U.K. leaves the E.U., the roads to and from the country's biggest trading port are clogged in a dry run to prepare for a possible
return of customs checks.
Parliament is gridlocked, too with MPs returning from their winter break, support for various solutions to the Brexit impasse is split multiple ways,
as the PM once more prepares to put her unpopular deal to a vote next week. One which may include some concessions.
(BEGIN VIDEO CLIP)
THERESA MAY, BRITISH PRIME MINISTER: I've been speaking to European leaders in the intervening periods, speaking to colleagues. I'll be
continuing with that, talking to colleagues, listening to colleagues, and speaking to European leaders.
(END VIDEO CLIP)
DOS SANTOS: More than 200 MPs have written to Theresa May demanding that she rule out a so-called hard or no-deal Brexit or some vocal members of
her own party suggested that only a clean break with Brussels will deliver upon the results of the 2016 referendum.
(BEGIN VIDEO CLIP)
THERESA VILIERS, BRITISH MEMBER OF PARLIAMENT, CONSERVATIVE: I don't see how it's got the numbers to pass, unfortunately the deal on the table
that's been put forward by the government just isn't in the national interest. And it doesn't respect the vote to leave, which is why I feel
that I can't support it.
(END VIDEO CLIP)
DOS SANTOS: And support for a second referendum is also growing, even though it's unclear as to whether the U.K. would have time to hold one
before Britain leaves the E.U. in March.
DOS SANTOS (voice over): The leader of the opposition accused the government of wasting precious time by delaying December's vote with little
to show for that decision.
(BEGIN VIDEO CLIP)
JEREMY CORBYN, LEADER OF THE LABOUR PARTY: The government is trying to run down the clock in an attempt to blackmail this house and the country into
supporting a botched deal.
(END VIDEO CLIP)
DOS SANTOS (voice over): For Downing Street, the New Year begins with a charm offensive, opening its door to doubters for drinks on Monday before
the Brexit Secretary unveils a new information campaign set to hit the press on Tuesday. Debate resumes in the House of Commons on Wednesday and
MPs will cast their ballots on the 15th.
[15:10:10]
DOS SANTOS (voice over): If May's deal still doesn't pass, she may have to return to the E.U. for further changes, otherwise, scenes like this could
soon become a way of life in Brexit-era Britain. Nina dos Santos, CNN, London.
(END VIDEO TAPE)
GIOKOS: All right, what have we come to when you are actually preparing for more traffic after Brexit? So we have got Bianca Nobilo, she is
outside 10 Downing Street to hopefully make some sense of this. Bianca, what a week we are going to have. I mean, look, leading up to the Brexit
announcement, I think it's really important to note that, you know, we've been going to and fro on this for a long time. We have got 15th of January
set. What are we expecting? Do you think people are going to come to the table and just finally make a decision?
BIANCA NOBILO, CORRESPONDENT, CNN: Well no MP that I've spoken to, Eleni, thinks that it is possible that the Prime Minister's deal passes at the
first attempt. The most optimistic members of Parliament that I have heard from think potentially, it could pass on a second or third attempt to get
it through.
Now, the government strategy all along has been to threaten the wavering with the specter of a no-deal Brexit, and all the chaos and economic
uncertainty that that would entail. There is movement however in Parliament by MPs who strongly oppose a no-deal Brexit, and today, we saw
200 Members of Parliament sign a letter saying that they oppose no-deal at all cost.
They're trying to find ways to tie the government's hands. So even if they can't rule out a no-deal Brexit, outright. There might be ways to ensure
that it's not actually feasible as far as Parliament is concerned so that will take some of the sting out of the argument against a no-deal Brexit,
which the Prime Minister has been trying to push to get MPs on her side to support her deal.
Now, the irony here Eleni is with the Prime Minister trying to push the path of moderation if you like, her deal, it's ended up at the binary
options of a no-deal Brexit as advocated by Boris Johnson today or potentially a second referendum, and I spoke to that campaign this morning,
and they have taken much harm from recent months in its development, and they think it's becoming a more and more likely prospect.
Both of these extremes seems more likely as May's deal is not getting more popular, and the charm offensive that she had behind me tonight, inviting
MPs to drinks along with their families, I doubt will have made enough of an impact to get this deal through.
GIOKOS: I mean, it's interesting you say that you know, even a chance of another referendum might be on the cards. Because I think people are now
pricing in the effects of what a no-deal Brexit would mean. And it's pretty scary. We saw that rehearsal happening today, I think people are
becoming a lot more optimistic about what that would mean down the line. Do you think Theresa May and her party are starting to kind of pencil those
things in? I mean, look, it's not going to be an easy decision to make.
NOBILO: It certainly isn't. And the government sort of politically is in a very difficult position when it comes to no-deal planning. They want to
show that the country is prepared, so that when they're negotiating with the E.U. and now the deal is done with the E.U., but when they're trying to
seek further reassurances, it seems that Britain could be potentially be prepared to walk away because they've adequately prepared for the event of
a no-deal.
But on the other hand, it's central to the Prime Minister's argument to try and get those wavering MPs on their side, that the prospect of a no-deal
seems chaotic and highly undesirable? So then what do you do then? Because she needs to make the preparations, so that Britain looks like it
can weather this storm, but equally doesn't want to make it look like Britain can weather a storm easily and get through a no-deal Brexit.
So that's why, it's such a precarious path that the government has chosen to take and this late stage of the Brexit process, we're now about 81 days
away from Brexit Day. It's just time is running out. And it's very difficult to see how the Prime Minister's deal has any chance of getting
through. And there are more and more people talking here in Westminster, including a minister in Theresa May's government today saying that it could
ultimately end up with an extension of Article 50 because there simply isn't time.
GIOKOS: All right, thank you so very much for that, Bianca Nobilo. Good to see you. All right, with British politicians gearing up for fresh
debates about Theresa May's Brexit deal, as we've just heard, the car industry says it could no longer afford to wait for - to wait around
rather. According to Reuters, Aston Martin - they are favored by quintessentially British James Bond, and they say that it has triggered its
contingency plans for a no-deal Brexit saying it has no choice but to prepare for the worst case scenario.
Meanwhile, the car industry body referred to Brexit as an existential threat saying leaving the E.U. with no deal would cost jobs. That's as new
numbers show new car sales in Britain sank 7% last year.
So it doesn't seem good. So for more, I'm now joined by the Arndt Ellinghorst.
[15:15:08]
GIOKOS: Head of Global Automotive Research at Evercore. And it doesn't look good right now. I mean, we are talking about a major threat within
the automotive industry. It's something that people perhaps have been thinking about, but I think a lot of people were hoping for a better
outcome. How is this going to impact the automotive space when you have got so much movement of vehicles from Britain to the rest of Europe and of
course, again from Europe in terms of parts back into Britain? It doesn't look like a good outcome.
ARNDT ELLINGHORST, HEAD OF GLOBAL AUTOMOTIVE RESEARCH, EVERCORE: It's a disastrous scenario, if we think about a hard Brexit for one of the largest
industries in the U.K. which is fully integrated in global trade, with more than 1,000 trucks entering the U.K. on a daily basis with automotive parts.
It's totally unthinkable that we should be prepared for tariffs of parts and cars going back and forth.
So for an industry that employs more than 800,000 people in the U.K., this is a very, very traumatic, bad scenario. And I really feel that if jobs
disappear, they will not come back in a very long time.
GIOKOS: Okay, so we're talking about jobs disappearing. Are we talking about plant closures? I mean, you're talking about thousands of trucks
that are being moved from Britain into the rest of the E.U. I mean, this is going to be quite a tough decision for the Brexiteers at this point in
time to sign this deal because the automotive sector had been reassured that a good deal would be signed for them and they wouldn't lose out on
business and it looks very different right now.
So we knew pain was coming, we just didn't know how bad it was going to be.
ELLINGHORST: Well, the auto industry really hates uncertainty and the lack of visibility that's why investment in the U.K. has been cut already
drastically over the last one or two years. And clearly, you know, if you get abrupt supply disruptions because these trucks can't enter just in
time, manufacturing processes anymore, then you will get immediately shutdowns of plants in the next couple of months, and for instance, BMW is
already preparing for it.
GIOKOS: Yes, so tell me, BMW, I mean, we're also worried about the tariff scenario that is going to play out, what are the big players that you think
are going to be pulling back?
ELLINGHORST: Well, I think certainly BMW would be a big one because they have a lot of plants, not just in Germany but in other parts of Europe. I
would be quite worried about Jaguar Land Rover. The company is already burning significant cash flow, almost $3 billion in six months alone. So I
would be worried about Jaguar Land Rover.
The Japanese -- Toyota and Nissan -- have major plans in the U.K., they could reshuffle their capacity to other plants in Europe as well. So it's
really the entirety of the U.K. auto industry that's at risk here.
GIOKOS: And of course, the car sales numbers also show that consumers are feeling it as well. I'm sure a lot of people don't want to be buying
products where you're going to see an increase in tariffs on parts that are going to be imported which of course is just going to be passed on to the
consumer.
ELLINGHORST: Well, as in many other consumer areas as well, this would drive prices higher, the consumers will pay the bill. And, yes, it's just
a very, very sad, sad outlook for the industry and the economy as a whole thinking about a hard Brexit.
GIOKOS: All right, thank you very much, sir. Good to have you on the show. Up next, I wanted to you go to cnn.com/join for our question of the
day. Airport security workers in the U.S. are calling in sick as the government shutdown drags on. The sick outs have been called the "blue
flu" how long before travelers feel the symptoms as well. Stay with us for that. Don't go anywhere.
[15:20:48]
GIOKOS: Here is a question for you. What do you do when you're required to show up for work with, but you're not getting paid? Now, the answer for
hundreds of U.S. airport security screeners is you call in sick. As the government shutdown drags on into its 17th day, the Transportation Security
Administration says airport wait times are still within acceptable levels, but union officials say the situation is about to get worse as staff call-
ins to take sick leave are also unpaid jobs - are taking in fact, other paid jobs or are forced into impossible financial situations.
(BEGIN VIDEO CLIP)
BRIAN TURNER, TSA AGENT: I live about a half hour from work and it is going to come to a point where you say do I put gas in my car or do I feed
my family? You feel hopeless. And you feel helpless. You know? I'm not in Washington. I don't have the influence that these people of power have.
And we rely on them. We elect them to these positions to get a job done.
(END VIDEO CLIP)
GIOKOS: All right, so what would you do? That's the question we're asking at cnn.com/join. If you were required to work without pay, would you
firstly show up as normal? Would you call in sick? Like we've seen. Or would you quit altogether? That's at cnn.com/join on your phones or on
your computers. You will see the results at the bottom of the screen.
Right, now, the Airline Pilots Association says air travel is less efficient and less secure because of the shutdown. We've got Renee Marsh
following all of the developments for us. Good to have you on the show, Rene, so we've got no progress on the negotiation. We are in the 17th day.
And now you have people calling in sick, and there's a worry that borders are going to be less secure. This is what the pilots are saying. Is there
a link to what we saw with the long lines over the weekend with the government shutdown?
RENE MARSH, GOVERNMENT REGULATION AND TRANSPORTATION CORRESPONDENT, CNN: At this point, you know, many travelers will experience that. That was the
first thing that they thought of. And I'll tell you, we even had a CNN producer who was at La Guardia Airport and got stuck in one of those really
long lines. And he reported back to me that the TSA agent on duty, in fact, told him that the reason why the lines were so long was simply
because they were short staffed.
We did reach out to TSA to find out what is the reason for the long lines that we saw, the images that we saw coming out of La Guardia Airport and a
few other airports over the weekend. TSA says it had nothing to do with the government shutdown. It had nothing to do with TSA workers calling in
sick.
They said it was just another Sunday, a busy Sunday, and it was a part of the normal volume of traffic as people make their final trips back home
following the holiday. So we're hearing two different stories. The actual officers at the airport on the front lines, that is what they were telling
passengers that they were short staffed. But TSA, the agency themselves, telling us something different, saying that was just the regular volume for
the weekend.
GIOKOS: So Rene, I mean, we know that people have been calling in sick. I mean, those are some reports that we're hearing. So if people are calling
in sick that means either less people are on the ground or people working overtime. Which of course both scenarios are not ideal in terms of
security. What are the overall contingency plans to keep things going for as long as the negotiations are going to keep going?
MARSH: Yes, I mean, I will say this, as we reported on Friday, we are seeing hundreds of - and this is according to two senior TSA officials as
well as TSA union representatives who are working within these airports.
[15:25:05]
MARSH: They tell us that hundreds of TSA agents since the shutdown began started calling in sick at many major airports. I will say, no one is
saying we're at the breaking point as yet. They believe the breaking point will begin as this drags on. So this week, agents will miss their first
paycheck. That's going to be the true test to see what happens then.
If this drags on for another week, and another week after that, and another paycheck is missed, that is when these union officials say they predict
this issue of people calling in sick is really going to reach epic proportions. And that is when travel will truly, truly be a nightmare.
Contingency plans, airports are not giving us much information at this point. Much of that information they oftentimes consider sensitive
security information, perhaps they will have to ask some workers to work overtime if they're able to in some cases.
But they will have to find a way to fill the gap. I will tell you the Chairman of the Homeland Security - House Home Homeland Security Committee
that oversees this, they have oversight for the TSA agency, he just sent a letter to the agency this afternoon asking that very question, what will
you do in the event that so many of your workers call out sick. How will you maintain security at airports? That Chairman is still waiting for
answers from the agency.
GIOKOS: All right, Rene Marsh, thank you so much for that insight. And to give you a little bit more insight, we will also ask you what you would be
doing and how you would respond if you're asked to work without pay.
It's a very serious question, right, so most of you, I want you to take a look at this - would actually say that you would call in sick. Like
hundreds of TSA workers have here in the United States and of course, that is what we're seeing happening. They would call in just sick like you
would. All right, so it's a split for calling in sick and of course quitting as well. So interesting poll. Thank you so very much for your
thoughts.
Now, despite the shutdown, U.S. stocks are rallying today, extending last week's gains. Tech and consumer stocks are also the best performers. And
of course, the likes of the Dow Jones sitting up 163 points right now, seven tenths of a percent to the good. Look at that, starting the day off
on a positive note, going into the negative.
And of course, the big story today was the fact that U.S.-China trade talks are currently under way in Beijing. And that is creating a lot of optimism
and this is why you are seeing green across the board as we head towards the close of trade today.
So Tesla right now is up two on the day and now the company broke ground on its first factory outside of the United States. Tesla says its Shanghai
plant will be turning out electric cars by the end of 2019 and should eventually produce half a million a year.
After the break, the world's largest tech show kicks off in a few hours. We're in Las Vegas to get a peek at the best of this year's expo.
(COMMERCIAL BREAK)
[15:30:00] GIOKOS: Hello, I'm Eleni Giokos, coming up on the next half hour of QUEST MEANS BUSINESS, Alexandria Ocasio-Cortez says it's time
America's richest people paid more income tax. And we'll be live at CES where drones and e-scooters are having the dodge the geopolitics this year.
First, these are the top news headlines we're following on Cnn this hour. Right, so U.S. President Donald Trump is taking his case for a border wall
directly to the American people. He'll give a prime time address on Tuesday evening before visiting the border with Mexico on Thursday. Mr.
Trump is threatening to declare a national emergency to get wall funding.
If a budget impasse, that's partially shutdown, the government drags on. A mysterious train has crossed from North Korea into China, and it could be
carrying Kim Jong-un. South Korean media say Kim is heading to his fourth summit with China's Xi Jinping. There's North Korean leader on an earlier
visit.
Cnn hasn't confirmed the reports. The government of Gabon says the situation is under control after a failed coup attempt. This after a small
group of soldiers stormed state TV and radio and declared themselves in power. A government spokesman tells Cnn that five of the plotters were
arrested and two killed.
With Brexit looming in March, there may be good news for British citizens in Germany. The German Interior Ministry says in the event of a messy
Brexit without a deal, British citizens wouldn't be kicked out. They could stay in the country for three months and then they could apply for more
extensions.
Shamed actor Kevin Spacey appeared in a Massachusetts courthouse on Monday to be arraigned on assault and battery charges for groping a teenage bus
boy at a bar. Spacey's attorney entered a plea of not guilty and said texts and social media messages from the teen will prove Spacey's
innocence.
So the world's biggest tech expo is about to kick off in Las Vegas, but Chinese companies are taking a lot of profile this year amid ongoing trade
war issues with the U.S., and our Samuel Burke is on the spot at CES 2019. Samuel, as usual, you're on a scooter, whether I come and see you in London
or across to you, you're on a scooter. So much going on, is it the case of geopolitics outshining gadgets this year. What's happening?
SAMUEL BURKE, CNN BUSINESS & TECHNOLOGY CORRESPONDENT: Well, Eleni, nice to see you. CES is supposed to be all about technology taking off, making
us faster, more efficient. This year, the trade war hasn't slowed down, and some people have already jumped off the scooter.
This time, it's the Chinese. There are 20 percent fewer Chinese companies here this year compared to when I was here last year. And the American
companies I'm talking to, well, they're saying they're using CES to try and figure out the trade war.
The CEO of this company, this e-scooter company called Jetson, this one will cost you $200 for the fancy lights that it has. Well, he says he's
just trying to use this opportunity to try and reorganize his supply chain.
(BEGIN VIDEO CLIP)
JOSH SULTAN, CHIEF EXECUTIVE OFFICER, JETSON ELECTRIC BIKES: It's going to be very important that we explore it from all angles. We're going to be
talking to our competitors, we're going to be talking to manufacturers, we're going to be talking to our customers. It will definitely be on the
agenda of every meeting we have, 10 percent, 25 percent tariffs are big numbers.
They're going to affect not just the way we manufacture, but the way that our consumers purchase product.
(END VIDEO CLIP)
[15:35:00] BURKE: And in spite of those trade war impediments, Eleni, they're still pushing out new products. That same company has an e-scooter
for eight-year-olds. Now, Eleni, I don't have kids yet, we know you're the mother on this team, would you spend a $100 to put your little one on an e-
scooter?
They say with more moms and dads riding --
GIOKOS: Yes --
BURKE: The e-scooter, soon it will be the kids -- don't worry, Eleni, I do have the helmet with me wherever I go in case any eight-year-olds do want
to try and follow --
GIOKOS: It looks a bit dangerous for my liking --
BURKE: In my footsteps.
GIOKOS: Hey, are you taking that home, is that only for eight-year-olds? Because it seems like it suits you quite nicely.
BURKE: Are you saying that an eight-year-old toy fits me?
(LAUGHTER)
You know, I always bring back an e-scooter wherever I come from, Eleni --
GIOKOS: But listen in all fairness, I mean, is China going to move ahead at CES, I mean, what are we seeing and what are the other gadgets that
you've been picking up?
BURKE: Well, it's interesting because at the same time, this trade war is going on, I hear so many analysts saying that the Chinese are starting to
out-innovate the Americans on certain products. I think a good example of this might be this steady cam from DJI, that's the drone company you and I
have talked so much about.
But they are also taking the cameras off their drones. Now, Eleni, you're used to a camera like this, no matter where I go, it stays smooth --
GIOKOS: Yes --
BURKE: It stays right on you. You've got what we call a Jib camera, a steady cam back in that studio, but that packs the punch of those big 70-
pound cameras all around you right in something like this. It will set you back $349.
We were outside the famous Bellagio Hotel when those fountains came on, and our camera man Jordan was able to capture and show how that footage can
look so smooth. What is missing for me right now is the microphone. DJI says that's coming soon.
But I think this is an example, Eleni, of where a Chinese company like DJI can really compete hard if not out-compete a company like GoPro here in the
United States, which also has cameras trying to do the same thing.
GIOKOS: Are you going to bring that scooter back to London because you've got so many already in the office. I picture you're just coming back with
gadgets --
BURKE: The scooter is coming back.
GIOKOS: Yes, Samuel Burke, thank you sir --
BURKE: You know it.
GIOKOS: See you later. All right, next on QUEST MEANS BUSINESS, the youngest-ever congresswoman in the United States says America's ultra rich
need their tax rate nearly doubled. Alexandria Ocasio-Cortez wants to use the money to fund a green economy of the future.
(COMMERCIAL BREAK)
[15:40:00] GIOKOS: All right, so we're in the QUEST MEANS BUSINESS trading post as we head into the last few minutes of trade here on Wall
Street and the major indices as you can see all pointing to a higher close. The Dow is up seven-tens of a percent, S&P also looking good, Nasdaq is up
1.4 percent.
Now, investors are looking quite optimistically towards this Beijing talk. Of course, U.S.-China, it's all about those trade talks and negotiations
are currently under way. And then searching for a breakthrough on that trade war, and hopefully, that is going to help spur a lot more buying on
the market as well.
But let's take a look at the Cnn business fear and greed index to see how things are going. So we're sitting at extreme fear, sitting at 19 points.
It's really important to note that we have been seeing a lot of risk aversion in the markets since the start of trade for 2019.
And it seems a lot of people anticipate that it won't be abating any time soon. Right, so now, let's move on. The youngest new member of Congress
in the United States is making headlines with a plan to get the wealthiest Americans to pay more tax.
Alexandria Ocasio-Cortez told Anderson Cooper a marginal tax rate of up to 70 percent should kick in once people start earning over $10 million a
year. Let's listen in.
(BEGIN VIDEO CLIP)
REP. ALEXANDRIA OCASIO-CORTEZ (D), NEW YORK: There's an element where, yes, people are going to have to start paying their fair share in taxes.
ANDERSON COOPER, CNN: Do you have a specific on the tax rate?
OCASIO-CORTEZ: Once you get to like the tippy tops, on your 10 millionth dollar, sometimes you see tax rates as high as 60 percent or 70 percent,
that doesn't mean all $10 million are taxed at an extremely high rate, but it means that as you climb up this ladder, you should be contributing more.
(END VIDEO CLIP)
GIOKOS: Republicans who say taxes on the rich should be kept low to spur economic growth were predictably hostile to that suggestion. Currently,
the highest income tax rate in the United States is sitting at 37 percent. While countries like Sweden, Japan, Denmark and others have top rates
closer to 60 percent..
But this isn't a new idea in the United States. In the last 100 years, the top tax rate in the U.S. has been as high as -- get this, 91 percent. It
was above 70 percent until 1980, during all the years of the post-World War II economic booms as well.
Now, Mark Mazur is the director at the Urban-Brookings Tax Policy Center in Washington. And joining me now, really good to have you on the show, Mark.
What does history tell us about high tax rates in the United States? I mean, there's this fear that you won't see investment.
There's a fear that you won't see compliance. But do you think this is going be a good idea for every dollar you earn over $10 million a year
that you'll be taxed around 70 percent?
MARK MAZUR, DIRECTOR, URBAN-BROOKINGS TAX POLICY CENTER: So first, I think you got this exactly right, it's on dollars you earn more than $10
million. So the first $10 million not affected by this.
So you have a number of high earning individuals, a few thousand in the United States who would be subject to this. There would be professional
athletes in that mix, but also a lot of investors and people with business income.
GIOKOS: OK, so exactly, who is in this? I mean, it's so interesting, there's about 16,000 Americans that fall into that bracket. We're talking
about 0.05 percent of households. So we're not talking about a big chunk of the population.
But when you look at Ocasio-Cortez's arguments, she is talking about getting in much needed revenue. Do you think this is a good way to do it
when you look at the super wealthy in the country, even though it's such a small pool?
MAZUR: When you look at the historical rates that you showed, in the past we've had rates this high and individuals pay tax at that rate. I think
since 1988 or so, we've had much lower rates, and people have gotten used to seeing lower tax rates.
The details really matter here though because if we're talking about wage income being subject to a 70 percent marginal tax rate, that really doesn't
describe a lot of the top earners. A lot of the top earners get their income from investments, so dividends, capital gains and then from business
income.
Either through business that they own themselves or corporations that they own.
GIOKOS: OK, so I mean, every time there's a tax increase, we know people try and hide, they try and find loopholes, compliance is an issue. Even if
this were to be implemented, do you think that there would be, you know, compliance at the level that we would expect?
MAZUR: Well, you'd have a system in place where you try to ensure as much compliance as you could.
GIOKOS: Yes --
MAZUR: And your -- the Americans are not -- public is not going to stand the Internal Revenue Service, you know, having someone at the household of
every wealthy person to audit them. So you're not going to have that level of enforcement.
But you are going to have a system where there's reporting of transactions that take place that generate income for high income individuals, and then
be able to find a way to assess that. In the past, we have seen people tried to avoid taxes.
Either through holding investments in tax exempt bonds so they generate taxes of interest income or through getting tax, more-time capital gains
and tax their preferential rate, or putting income into a -- or business assets into a corporation and being taxed at the corporate level, but not
the individual level.
[15:45:00] GIOKOS: So I mentioned earlier that what we're seeing, there's a huge discrepancy between tax rates in other developed nations versus the
United States. And we know the tax rate has dropped to maximum 37 percent, and it was closer 40 percent.
It was actually sitting at 39.6 or so. Do you think that was the right move by the Trump administration? And what are your thoughts about having
that level of tax rate in the country?
MAZUR: Well, two things. One, the tax cuts and Jobs Act was intended to provide tax cuts to a large portion of the population. And it does,
probably 80 percent of the individuals will get a tax cut under the tax cut and Jobs Act.
They're tilted a little bit more towards higher income individuals, but there're broad sets of tax cuts. Now, whether the country could afford
that tax cut, when we're operating in an economy at close to full employment, that's a different issue. And I think fiscal responsible
people would argue that we really couldn't afford or shouldn't have afforded that $1.5 trillion tax cut last year.
GIOKOS: All right, thank you sir very much. Mark Mazur, much appreciated for your time. All right, so moving on, and Amazon could finish the day as
the most valuable company on Wall Street. And in Alexandria Ocasio- Cortez's hometown, the company is on a charm offensive, trying to persuade New Yorkers that when Amazon builds a new headquarters there, it won't
trigger greater inequality.
As Clare Sebastian reports, it hasn't been an easy ride so far.
(BEGIN VIDEOTAPE)
CLARE SEBASTIAN, CNN REPORTER (voice-over): In the usually sober confines of New York City hall, New Yorkers are demanding answers barely a month
since Amazon announced half of its second headquarters would move to the city, opposition to the plan is growing.
At the center of it, New York City council member Jimmy Van Bramer.
JIMMY VAN BRAMER, DEPUTY LEADER, NEW YORK CITY COUNCIL: The mayor rightfully talks about ending the tale of two cities. Yet, he is
cheerleading a back room deal that literally pays Jeff Bezos to build his gleaming tower in the sky while the residents of a Queensbridge houses,
many of whom are freezing because of the lack of heat, can watch Amazon executives land their corporate helicopter on a taxpayer-funded helipad.
SEBASTIAN: A few days before the hearing, Van Bramer showed me around the Queenbridge houses, the largest public housing development in the U.S., is
less than a mile from the proposed Amazon site.
VAN BRAMER: We all should be concerned with the level of unemployment that exists here in Queensbridge. The level of poverty, the median income
is $15,000.
SEBASTIAN (on camera): Why is it not a good thing then that Amazon wants to bring all these high-paying jobs to boost the area?
VAN BRAMER: Well, particularly because there are no guarantees that anyone here in Queensbridge are going to have access to those jobs.
SEBASTIAN (voice-over): New York is following a long, established playbook when it comes to attracting big companies, offering Amazon up to $3 billion
in grants and incentives to develop this waterfront area. They say in return for 25,000 high-paying new jobs and up to $30 billion in new tax
revenue.
GOV. ANDREW CUOMO (D), NEW YORK: The revenue to incentive ratio, that is the highest rate of return for an economic incentive program that the state
has ever offered.
UNIDENTIFIED MALE: We have no idea what we're getting.
SEBASTIAN: Yet, Amazon's decision has ignited a debate here that goes well beyond the rate of return. Some experts question whether the incentives
were necessary at all.
GREG LEROY, GOOD JOBS FIRST: The fact that Amazon had a bid worth $9.7 billion from Pittsburgh and 8.5 billion from Maryland, and didn't go to any
of those places, speaks volumes about the fact that incentives are almost always irrelevant.
SEBASTIAN: Amazon has promised to invest $5 million in workplace development in Long Island city including holding hiring events at
Queensbridge. But long-time resident Lewis Howell came to show us the site of a recent leak in his bathroom, the promises feel as unreliable as his
plumbing.
UNIDENTIFIED MALE: Not seen all they did, not trying to order a training program and all that, give them jobs, they need jobs.
SEBASTIAN: For Van Bramer, this is now bigger than Amazon.
VAN BRAMER: This is a wake-up call. This is an opportunity, an inflection point for us as a society to be thinking about how we do economic
development.
(CHANTING)
UNIDENTIFIED FEMALE: I know, Amazon go away!
SEBASTIAN: And for now, that's enough to keep fighting.
VAN BRAMER: We have a lot of work to do.
SEBASTIAN: Claire Sebastian, Cnn, New York.
(END VIDEOTAPE)
GIOKOS: Coming up, President Trump promised a comeback in the United States. What's come true and what hasn't in coal country, that's coming up
next.
[15:50:00] (COMMERCIAL BREAK)
GIOKOS: U.S. coal country is a political battlefield. It helped win Donald Trump the presidency as he promised to restore the fortunes of the
coal industry in states like Pennsylvania, which he won in 2016. Mr. Trump blamed Obama era regulations for killing off coal plants. And says they
can open once again. Cnn's Bill Weir offers a reality check.
(BEGIN VIDEOTAPE)
BILL WEIR, CNN CORRESPONDENT (voice-over): Across America, more and more coal-fired smokestacks are smoke-free. The power plants beneath them cold
and dark. The mines that once fed them abandoned.
But for the past couple of years, miners and their families let themselves believe that a coal comeback was on the way. Thanks to promises like this.
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: We are putting our great coal miners back to work.
WEIR: He's trying to get their votes, he isn't telling them the truth.
(on camera): He's lying to them.
ARTHUR SULLIVAN, COAL MINING CONSULTANT: He's lying to them.
WEIR: You used to work in this mine.
SULLIVAN: I worked in this mine. I was a face boss.
WEIR (voice-over): For 52 years, Art Sullivan worked in and consulted on mines around the world. And he bristles every time he hears the president
claim to be the savior of coal.
SULLIVAN: And that really disturbs me because these are really good people, these are the people that I've spent my life working with. And if
they have the truth, they would make the right decision.
WEIR (on camera): If the president was honest, he would explain to those folks that mines like this are never ever coming back to life again. Not
because of regulation, but competition. Coal just cannot compete with cheaper, cleaner natural gas, wind and solar.
That's the reason more coal-fired power plants have gone out of business in the first two years of Donald Trump, and the first four years of Barack
Obama. Another 20 are expected to go down this year. And if a miner is hired today, chances are he will be digging to fill the demand in India.
Do you feel the president gave these communities false hope?
BLAIR ZIMMERMAN, FORMER COAL MINER: In my opinion, absolutely. I mean, I'm an expert, he's not. And I -- when he was campaigning, I asked -- I
talked to his people and I said, what's your plan? How are you bringing back coal?
Because it could be brought back if these plants would come back up and deregulating stuff will help this much. It's not going to help a lot.
WEIR (voice-over): Trump's EPA, now led by a former coal lobbyist in Andrew Wheeler recently moved to lift Obama-era caps on how much poisonous
mercury and how much heat-trapping carbon power plants can pump into the sky, which really worries climate scientists like Penn State's Michael
Mann.
[15:55:00] MICHAEL MANN, SCIENTIST: We're already experiencing impacts of climate change that could have been avoided had we acted, you know, two
decades ago when we knew already at that point that there's a problem.
WEIR: In order to save life as we know it, Mann says rich countries need to be on carbon-free electricity by 2030, which means 80 percent of
current coal reserves need to stay in the ground.
MANN: I think there's enough resilience in the system that we can withstand one term, one four-year term of Donald Trump. I'm not sure we
can withstand two.
WEIR: He's among the chorus calling for an energy revolution. And Art knows a few folks who might be able to pitch in.
SULLIVAN: He spent several years working the coal mines. You're going to come to understand electricity, hydraulics, mechanics, geology. I see no
limitation on the average coal miner's ability to transition into any other field.
WEIR: But first, they need leaders willing to transition to the truth.
(END VIDEOTAPE)
GIOKOS: All right, so trading is almost over on Wall Street. We'll have the closing numbers right after this.
(COMMERCIAL BREAK)
GIOKOS: All right, seconds to go before we close trade here in New York City. Let's take a look to see how the Dow is faring today. Up over 100
points, where to the good about half a percent. As you can see, we started off on a positive note.
Then we went down about a 100 points and then back into positive territory. Everyone is focusing on U.S.-China trade talks that happened overnight in
Beijing. Are we going to finally see a decision made? That of course is top of mind.
And don't forget that President Donald Trump is also going to be addressing the nation later today. It's all about the government shutdown and of
course security at the southern border. That is going to be a very big topic of conversation. I'd like to take a look at how the S&P and Nasdaq
have also been faring into today's session.
We've seen tech stocks doing really well, the likes of Amazon up around 2.5 percent in today's session. This is why the Nasdaq is up 1.3 percent, and
as I said, Dow is sitting up half a percent. S&P 500 also up around eight- tenth of a percent as well.
I want to take a look at how the Dow 30 stocks, the top stocks are doing right now. As you can see, Home Depot sitting up 2 percent, that's the
sound of a close of trade over at Wall Street. And as you can see, these are now the closing prices.
Home Depot up around 2 percent, Caterpillar coming under pressure as you can see, down a bit slightly, only slightly as well.
(BELL RINGING)
Wal-Mart to the positive and ExxonMobil as well. All right, I'm Eleni Giokos, thanks so much for joining.
END
