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Quest Means Business

Biden Signs Executive Orders on COVID Response; Buttigieg Says We Need to Build Economy Back Better than Ever; Biden Revokes Permit for Controversial Keystone XL Pipeline. Aired 3:20-4p ET

Aired January 21, 2021 - 15:20   ET

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

[15:21:14]

RICHARD QUEST, CNN BUSINESS HOST: Good evening. I'm Richard Quest. A warm welcome to a shortened QUEST MEANS BUSINESS, where of course we're going to

be focusing on the announcements just made moments ago, as President Joe Biden laid out the details of his plan to ramp up vaccination, to increase

testing and to secure more PPE

The new President in office, first full day in office signed Executive Orders aimed at shoring up the supply chain, keeping workers safe. It is

one year today since the first cases of COVID in the United States.

And the Biden administration is telling CNN, the vaccine plan they've inherited is nonexistent, and things are so much worse than they thought.

The President admits things are going to get worse before they get better.

The surest way to rescue the economy though is to achieve herd immunity one way or another, and you're talking about vaccinations. Health experts say

that requires vaccinating three out of four adults. The consulting group, McKinsey is warning the United States needs to pick up the pace if it's

going to get there this year.

At the current rate, the U.S. won't hit the mark until February 2022. The President's plan is a million shots a day and speed things along by some

two months.

Now, if the U.S. could hit one and a half million or 1.6 million shots a day, as it has with flu, then the economy would start to reopen this

summer.

Mark Zandi is with me, the Chief Economist at Moody's Analytics. Mark, the significance, we'll deal with the stimulus plan and all of that, but

bearing in mind what the President has just said and the significance of the PPE, the supply chain, and the million plus a day, from an economic

point of view, quantify it for me.

MARK ZANDI, CHIEF ECONOMIST, MOODY'S ANALYTICS: Well, Richard, it is critical. I mean, a necessary condition for getting our economy back up and

running is to end the pandemic and you can't end the pandemic, as you say, until herd immunity. And key to that is vaccinations, widespread

distribution and adoption of vaccinations.

So, you know, everyone has gotten off to a slow start across the globe, including here in the United States, but I am confident that the new Biden

ministration, given the resources they are putting into this, given the focus they are putting on this will ramp things up.

And sometime between July 4th and Labor Day, I would expect that we'll have achieved herd immunity and we'll be off and running. So hopefully, that

forecast turns out to be correct.

QUEST: Right. But so, we've got to get there in that sense. And as the President said, the next few months are going to be grim. They're going to

be difficult. They could be the worst months.

I wonder how much of that is factored into economic forecasts. The market is on a frolic of its own.

ZANDI: Yes, you know, I think the view is, investors' view and I think it is correct is that between now and when we achieve herd immunity, it is

going to be very difficult. The pandemic is going to rage, a high level of infections, hospitalizations, and deaths and not hard to connect the dots

back to the impact of the economy. But we're also getting a large amount of fiscal support.

We got a $900 billion fiscal support package late last year, that should help through March and then the Biden administration has now proposed a

much larger package and I do think we'll get that through Congress in the next month or two and that should help support the economy to the other

side of the pandemic to herd immunity.

If we get all of that, if we stick to that script, then I think you know, it's going to be a tough few months, but we'll navigate through without

going back into recession. And then on the other side, we can kick into a higher gear.

[15:25:09]

QUEST: Janet Yellen said that in her confirmation hearing, she says, you know, if we wish to avoid a recession now, then these are the measures that

need to be taken and taken quickly. How close in your view is the U.S., and let's not worry about two quarters of negative GDP, let's just worry about

negative GDP. How close is the U.S. to it?

ZANDI: Close. I mean, you could see it in the data. Take a look at what happened in the month of December: employment declined, retail sales

declined. Today, we've got data on an insurance claims. If you add it all up, over a million last week. You know, in a well-functioning economy,

you're closer to 200,000 to 250,000.

So you know, you add up all the data here, it shows an economy that's struggling, mightily struggling to stay out of recession. So we're very,

very close here and we need all the support we can get and we need that vaccine vaccines to get out there fast.

CHATTERLEY: Does helicopter money work? Giving out money in checks. We already had the first lot. And now there was a second lot. And then a third

lot that the President -- the new President wants to do. Does it work? Or is the evidence spotty, at best?

ZANDI: Well, it works. It's not, you know, the most effective way to help the economy in large part because, you know, a fair share of that cash, the

stimulus checks go to households that are just fine. You know, as we know, there's a group of folks here that are getting crushed, you know, lower

income households, minority groups, and then everyone else is, you know, kind of navigating through reasonably well, at least from a financial

perspective.

And so when they get that check, they save the money. They don't need the money. So for example, you know, I have three kids, they're older in their

20s, each of the three kids got stimulus checks. And, of course, you know, they don't need the checks, and they put it into their checking account.

So it's not the most effective way of helping, but, you know, it's not only about the most effective form of support. It's about getting things done

correctly and then politically, if you can get it get that done quickly, I'm all for it.

QUEST: All right, Mark, finally, to pull it all together from what we've heard, and more from gut rather than numbers, I get the feeling that when

this is put right, so you've got your stimulus, you've got your herd immunity, the U.S. economy could be looking for a very sharp rebound,

whether it be Q3, Q4, Q1 next year. Is that your current prognosis?

ZANDI: Yes, I mean, I think once we have herd immunity, and, you know, we get on the other side of this, we're off and running. I mean, I think

there's a lot of what economists called pent up demand and people haven't been traveling, going to restaurants, going to ballgames and concerts, they

want to do all of that. And they have been saving, because they haven't been able to go out and do those things. That money has been building up in

people's checking accounts, and they're going to spend it when they have a chance.

Those are high income households, high net worth households, and that means a lot of growth. But I will point out, you still have that other group of

Americans that lower income Americans, generally minority groups, lower skilled workers, that you know, they've been just hammered by the pandemic.

And for them, this is financially devastating, it's going to take a long time to get them back up and running.

QUEST: And Mark, when we get to that happy point, you and I will be talking about when it's time for the Fed to raise interest rates and the specter of

inflation, but please, God, we get to that, please God, we get to a position where we're worried about inflationary pressures from growth.

That's for the future.

ZANDI: Bring it on.

QUEST: Good to see you, Mark Zandi, Moody's Analytics.

In a moment, Joe Biden is revoking the permit for the controversial Keystone Pipeline. First, they are building it, then they're not. Now

they're building it, now, they're not. It's a tension between two currently pressing crises, climates and jobs. After the break.

(COMMERCIAL BREAK)

[15:32:21]

QUEST: Hello, I'm Richard Quest, there is more QUEST MEANS BUSINESS in a moment. The President has pulled the plug on the controversial Keystone

pipeline. Climate change is at the center of U.S. economic policy as well; and the former Trump ally, Anthony Scaramucci on the challenges ahead for

Joe Biden.

This is CNN, and on this network, the news always comes first.

Nancy Pelosi is dodging questions on the impeachment of the now former President Donald Trump. The House Speaker has declined to say when she will

transmit the Articles of Impeachment to the Senate. One consideration, the timeline is that Donald Trump still does not have a lawyer to represent

him.

China is striking an optimistic tone with the new administration. Shortly before Joe Biden was sworn in, Beijing announced sanctions against a number

of Trump era officials. That includes the former Secretary of State Mike Pompeo. President Biden called the sanctions, unproductive and cynical.

Iraqi officials are investigating a double suicide bombing in Baghdad. It's the first such attack there in nearly two years. At least 32 people were

killed, 110 people have been injured. The bombers blew themselves up in a busy open air market. So far, no one has claimed responsibility.

President Biden's pick for Transport Secretary says new infrastructure can create millions of jobs. Pete Buttigieg told his Senate confirmation

hearing, the U.S. needs to invest more and then it could pay off in multiple ways.

(BEGIN VIDEO CLIP)

PETE BUTTIGIEG, BIDEN NOMINEE FOR TRANSPORTATION SECRETARY: We need to build our economy back better than ever, and the Department of

Transportation can play a central role in this by implementing President Biden's infrastructure vision by creating millions of good paying jobs,

revitalizing communities that have been left behind, enabling American small businesses, workers, families and farmers to compete and win in the

global economy and tackling the climate crisis.

(END VIDEO CLIP)

QUEST: Ryan Nobles is with us on Capitol Hill. So Ryan, good to see you, sir. Buttigieg will get confirmed. How are the others doing as well?

RYAN NOBLES, CNN CONGRESSIONAL CORRESPONDENT: Well, Richard, most of these Biden Cabinet appointments we expect to get through with relative ease. The

issue that the Democrats are going to have to deal with is really more of a timing issue because the Senate right now is a 50/50 split, Democrats

control the majority because Kamala Harris is the Vice President and can break a tie, but it allows Republicans to gum up the works a little bit.

They can object to some of these nominees being brought right to the Hill. They can delay the process in committee hearings and such. So it seems as

though you know, it's just going to be as opposed to these being done immediately, it might take a week or so.

[15:35:07]

NOBLES: Janet Yellen, the Treasury Secretary, I'm sure you're following her confirmation process pretty closely, she is expected to get through with

relative ease. Anthony Blinken, who is the Secretary of State nominee, he also should not run into any trouble. One Cabinet Secretary that could be

forced to answer some tough questions is Alejandro Mayorkas who is the pick for the Department of Homeland Security.

So, in general, there aren't too many controversial nominees that are going to come before the Senate, and it is expected that most of them will get

through, it's just going to take some time.

We should point out though, Richard, that this is historically long that they're being forced to wait. Under normal administrations, even when the

opposite party controls the Senate chamber, usually, these confirmation hearings are held well in advance of the new President taking office.

And because of President Trump's refusal to accept the results of the election, it delayed that process and put us in the position that we're now

in -- Richard.

QUEST: This idea of power sharing, although the difficulty 50/50 with Kamala Harris, the Vice President holding it. I mean, in theory, Schumer --

Chuck Schumer is the leader. Well, in theory and in practice, but Mitch McConnell is claiming more of a right if you like to have a greater say

than the Minority Leader would normally have.

NOBLES: Yes, that's right, Richard, and this is really just because of the traditions of the institution of the United States Senate. You know,

there's nothing in the Constitution that requires, you know, a basic bill to get 60 votes in order to leave the Senate, but the senators have all

kind of agreed for more than a hundred years that this filibuster provision is something that allows them to hold the process up.

And what I think you're going to see is some backbench Democrats, you know, raise concerns that the Democrats should kind of assert their authority

here because they have the majority and essentially break any tie, they want with those 51 votes plus Kamala Harris that they should actually do

that.

Otherwise, Mitch McConnell is just going to spend the next two years trying to limit whatever Joe Biden is and his administration push forward. It's

not going to be easy. You know, the filibuster is a long held tradition. Democrats are very nervous that when they return to the minority, that the

Republicans could turn back and use that against them.

But there are a lot of Democrats frustrated over the last four years of the Trump administration, who really believe that this short window of time

they have before the next midterm elections in 2022, that they really need to get something done, and that's why they're pushing Chuck Schumer to say,

either cut a deal with us now that allows us to run the show, or else we're going to invoke these things like breaking up the filibuster, and just

needing 51 votes in order to enact legislation.

QUEST: Once bitten, in the Obama years, when they had the majority, and they didn't push through, twice shy. Ryan, you and I will talk many more

times about this. Thank you, sir, I appreciate it. And good to see you on Capitol Hill now.

So political decisions have real life economic consequences and we've seen this already, barely, not even 24 hours after Joe Biden signed the

Executive Order, stopping the pipeline, the Keystone Pipeline, and the Canadian company behind the Keystone line says it is cutting a thousand

jobs, halting construction now that Biden has effectively killed the project.

So the Executive Order was signed last night, we saw the President doing it, revoking the pipeline's permit. Republican senators are urging the new

President to reconsider saying it could cost 11,000 jobs.

Paula Newton joins me. I always get confused with Keystone, Paula, so I looked it up. You've got ABCD. You've got all that lots of bits of it. But

essentially, Keystone XL was on, then it was off. Then it was on, now, it's off. Is that it?

PAULA NEWTON, CNN CORRESPONDENT: You made it seem so simple there, Richard. It actually wasn't that simple. You got kind of how many times it was on

and off and on. But there was so much torture behind the scenes.

You are 100 percent right. One thousand jobs gone in Canada, tools down immediately. And remember a lot of people building this pipeline, keep

arguing, look, even if you are an environmentalist, what is your problem U.S. of A, and Biden administration.

The point is, you are nowhere near the point that you need to be where you are not going to be taking oil from the likes of countries like Saudi

Arabia, why not make it easier to take Canadian oil, an ally, a partner in both climate and obviously things like workers' rights?

The issue here though, Richard, it's important to look behind the scenes of what happened here. In those executive orders, yesterday, President Biden

basically this was the first salvo. Canada was the first casualty, but it is the first salvo to many nations, many allies, many close allies of the

United States to say that look domestic politics -- domestic politics will reign at least for the next two years.

[15:40:09]

NEWTON: You also heard, Richard, Pete Buttigieg there, Secretary Pete Buttigieg, soon to be, if he gets confirmed, saying that look, that big

infrastructure project, the worry now is that that is going to be a fully by American project and that is bad news for Canada. And it actually sounds

a lot like America First to a lot of American allies.

Look, I know Europe has been saying that we have a friend in the Oval Office, but people have to realize that they are not crawling back to where

they were four years ago with the Obama administration when it comes to trade. This is going to be a much more protectionist administration and

Canada got the short end of that very quickly without having any right of reply yesterday when Joe Biden signed that Executive Order and killed the

pipeline.

QUEST: But Prime Minister Trudeau will get the first phone call tomorrow, on Friday. All right, Paula, you and I will discuss Keystone many times,

but maybe we won't. I don't know. But anyway, thank you.

Paula, up in Canada.

Well, the economic task that Joe Biden faces got even deeper today. The jobless claims numbers, it was evidence that the economy is suffering,

slowing down. Anthony Scaramucci, after the break.

(COMMERCIAL BREAK)

QUEST: Today, those jobless numbers show Joe Biden takes the office with a battered economy and mounting losses. Roughly 900,000 Americans filed for

new jobless claims during the last full week of Trump's presidency, a slight dip, but the overall trend has been heading in the wrong direction

since October.

And at the end of the day following yesterday's fine speeches with rhetorical flourishes can't fix a nation that continues to hemorrhage jobs

and the business community stewing with uncertainty.

The entirety of executive orders signed by Biden over the last few hours only go so far as the cover of "Time" Magazine this week shows the

President has inherited a mess of epic proportions.

First, the pandemic. The Biden team says that the vaccine plan was nonexistent and is now enlisting the private sector and to do so, he is

going to use the Defense Production Act. It forces companies to make certain things ruled to be important.

The brutal job crisis. Well, there is a nearly $2 trillion relief plan and it is already facing partisan opposition.

And then rejoining Paris Climate Agreement, axing the Keystone Pipeline energy. Well, energy companies are already announcing layoffs. You start to

see how difficult this is.

The former White House Communications Director, and founder of Skybridge Capital, Anthony Scaramucci, good to see you, sir, as always. The economic

problems facing the country have -- they have been ignored or to some extent shoved to one side. So from an investor's point of view, what do you

now see as the key priority?

[15:45:38]

ANTHONY SCARAMUCCI, FOUNDER AND MANAGING PARTNER, SKYBRIDGE: We've got to abate the virus -- it's good to see you as well, Richard, but the two

things are conjoined. So the pandemic is raging out of control, our per capita numbers are out of control and the death rate is obviously too high.

And so I think we've got two things going on at the same time.

We've got to get that infrastructure bill passed and see if we can put down the pandemic. The defense spending authorization, I think will be very key

here in terms of manufacturing more vaccine and creating greater distribution. Unfortunately, it's been a debacle and the Trump

administration did not leave a good vaccine distribution plan, or at least a national distribution plan.

So do those two things first, obviously, there's a change in the way things are going to be done. It was almost like we had a drunk driving 16-year-old

at the helm of a car, and we now have an adult driving that same car. And so just that psychology, I think will help the business community, help the

overall capital markets and be good for the world.

QUEST: I do wonder, though, how much leeway is this President going to get from the investment community? I mean, he's got a plan. He certainly hit

the road running. The markets are giving evidence that they like it and seemingly even with his tax proposals, they're going to go along with it.

SCARAMUCCI: Yes, because you know, the tax proposal is somewhat benign. If you look at historical tax rates in the U.S., he is moving from 21 to 28 --

Thirty nine point six percent in the 90s, the country was roaring. So I don't think anybody is overly upset about those taxes. If you look at the

$8 trillion of deficit spending in the last two years, fiscally responsible people, prudent people recognize we have to have an offset there, somewhat

of an offset.

I predict that those tax increases will be delayed because of the general anemia inside the economy. So I don't think that's going to be the first

order of priority.

Look for that infrastructure bill, look for that $1.9 trillion stimulus. And of course, you've got the direction now of the Treasury Department by

designee Janet Yellen, Treasury designee Janet Yellen. I think that's very, very good news for the market.

I think the global markets like that. The domestic markets here in the United States certainly do.

QUEST: On a different direction. I mean, last night, I watched the press conference from Jen Psaki, I'm sure you sort of had an eye on it in some

way. The tone has already changed. How do you read it?

SCARAMUCCI: The tone has changed. You know, I guess she made a little bit of a gaffe, she showed up on Twitter today apologizing for it. So you're

always going to have that aggression between the White House and the Press Corps. Of course, I did one press conference in my short time there and so

I get that tension.

But I think Jen is going to do a great job in that role. And I think it's a leadership thing. You know, there's an old expression, if the leader is

principled and has great foundational character traits, it sort of pervades through the whole staff. And I think Jen is a representation of that.

QUEST: I mean, I'm not just denying that. I just wonder, has the truth deficit gone too far to be reversed at a time, Anthony, where 74 million

people voted for the President? Now, most of those or many of them will not go all the way over the Hill with him, but a large number will not believe

whatever comes out of the Biden White House. Period.

SCARAMUCCI: Well, listen, he's lost a lot of support, President Trump. He left the White House yesterday at a 33 percent approval rating that was the

lowest of his presidency. That means that two thirds of the American people were breathing a sigh of relief upon his departure.

Oddly, President Trump is a unifying figure. He just happens to be unifying all of us against him. And so I see him having some ardent support, but he

is detached now from Twitter. He has lost his voice more or less on social media and you and I know where money is, that's where the heart of the

matter is.

[15:50:02]

SCARAMUCCI: Stripe, the credit card processing company said no more acceptance of these credit card donations to Trump's electoral nonsense.

And so I think that's going to spill over into the forward career here if he tries to run again.

Last piece, and a super important one, there's a likelihood he could get convicted in the Senate. You know, Mitch McConnell has opened up that

doorway for other Republicans to think about that conviction. I think as more evidence comes out about what he was doing with his acolytes in terms

of the organization and the inspiration of that insurrection, and all of that violence. I think he's in for a very, very rough period of time,

Richard, and good riddance, frankly, and it's time for the American people to move on.

Last point, economic activity, mobility post pandemic, people's anger will dial down and will start forgetting Trumpism.

QUEST: I hope you and the family are keeping well, sir. Good to see you as always.

SCARAMUCCI: You, too.

QUEST: Thank you.

SCARAMUCCI: Good to be here.

QUEST: The return of Jack Ma. For months, Alibaba's cofounder was nowhere to be found. Now, he is back and on camera, after the break.

(COMMERCIAL BREAK)

QUEST: Jack Ma has made his first public appearance in nearly three months and as a result, shares shot up on Wednesday in New York, a slight downturn

today, but that's just because of profit taking on what was a spectacular rise in the price of the shares. Ma spoke in a video published by Chinese

state media.

Selina Wang reports from Tokyo.

(BEGIN VIDEOTAPE)

SELINA WANG, CNN CORRESPONDENT: Chinese billionaire Jack Ma is back. He finally resurfaced this week in a video published by Chinese state media.

He is shown in a video speaking to teachers in rural China as part of a virtual philanthropic event. But it's not clear from the video where in the

world exactly he is speaking from.

Now, Jack Ma hadn't been seen publicly since late October, just before authorities derailed what would have been the world's largest ever IPO for

his Fintech giant, Ant Group.

Now experts say Jack Ma was likely keeping a low profile while his companies were under regulatory scrutiny. But his months' long absence did

spark speculation. The crackdown on his empire started after Jack Ma publicly called out China's regulators for stifling innovation and for

China's state owned banks' quote, "pawnshop mentality."

It is not uncommon in China for the government to severely punish those who criticize the party. For instance, real estate tycoon, Ren Zhiqiang

disappeared for several months last year after allegedly criticizing Xi Jinping's handling of the pandemic. He was eventually jailed for 18 years

on corruption charges.

So Jack Ma's reemergence is certainly a sigh of relief for investors. But the crackdown on his empire is not slowing down. Regulators have ordered

Ant to restructure large part of its businesses.

[15:55:29]

WANG: Officials have released draft rules to curb the dominance of China's tech giants. Regulators have also launched an investigation into Alibaba

for alleged monopolistic behavior.

Ma's companies are indispensable in China for nearly every aspect of people's daily lives from buying online to getting loans, investing in

money markets, and much, much more.

But Beijing has lost its patience with the outsized power of its tech giants, which it increasingly sees as a threat to political and economic

stability.

What is clear now is that the days of light regulation of the tech industry in China are over.

Selina Wang, CNN, Tokyo.

(END VIDEOTAPE)

QUEST: We will take a profitable moment after the break.

(COMMERCIAL BREAK)

QUEST: Tonight's profitable moment: after all the hoopla of the Inauguration, it was down to business and that means the obviousness of a

difficult situation.

Firstly, take for example, Keystone, the pipeline. So Biden has canceled it and a thousand jobs have gone. Republican senators are already making

noises about his confirmation of his nominees, it won't be easy, 50/50 plus one of Kamala Harris makes it even difficult.

The reality is that once the bon ami and the feel good factor of an Inauguration and a change from what was there before has dissipated, the

reality of governing can be summed up in one simple sentence: back to business as normal.

The political horse trading, the difficulties in Congress, and yet the market likes it. And so we'll just have to look and love for that for the

moment.

And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in New York.

Whatever you're up to in the hours ahead, I hope it's profitable.

Jake Tapper is next in "The Lead."

END