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Quest Means Business
U.S. Facing Treats From Debt Tussle, China's Slowdown; Congress Races To Pass Bill To Avert Default; More Protests In Kosovo Town Where Clashes Broke Out Monday; Geminus CEO Says AI Can Help Solve Climate Problems; Amazon Corporate Employees Walk Out In Seattle; Sackler Family Wins Immunity In $6 Billion Opioid Settlement. Aired 3-4p ET
Aired May 31, 2023 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:00:23]
ISA SOARES, CNN INTERNATIONAL HOST: Stocks are down right across Wall Street with one hour left to go. As you can see, red for pretty much all of
the day, down 128 points for the last day of May and those are the markets and these are the main events.
The deal to raise the US debt ceiling goes before lawmakers. The debate begins this very hour.
US and European officials so they'll work fast to develop a code of conduct for new AI technology.
And Amazon workers stage a walkout. Grievances include a new policy of requiring three days a week in the office.
Live from London, it is Wednesday, May 31st. I am Isa Soares, in for Richard Quest and of course, I too mean business.
Good evening, everyone.
This hour, the US House of Representatives is set to hold a preliminary vote on suspending the debt ceiling. It is part of a race of course, to get
the bill to the president before critically the US runs out of money. And let's be frank, there's little margin for error here.
The bill cleared a major hurdle on Tuesday, when a House committee sent it to the floor. Approval by the full House sets up a vote in the Senate where
a single member can delay proceedings.
Speaking earlier, House Speaker Kevin McCarthy says he is confident in the deal. Have a listen.
(BEGIN VIDEO CLIP)
REP. KEVIN MCCARTHY (R-CA): Today, with the American people are going to win. we are going to pass the largest cut in American history.
It's just a small step putting us on the right track. After today, I'm going to put a commission together to look at the entire budget. This debt
is too large. We can't solve the problem just looking at 11 percent. But I'm going to make it a bipartisan commission that we can be very serious
about looking long term to solve this problem.
(END VIDEO CLIP)
SOARES: Well, Melanie Zanona is on Capitol Hill and Melanie, you heard from McCarthy there, the speaker seems very confident. Do they have enough
votes, though to get it across the finish line?
MELANIE ZANONA, CNN CAPITOL HILL REPORTER: Well, it certainly looks that way. Both the Democratic and Republican leaders have been whipping and
working to sell this vote behind closed doors. Republicans had a conference meeting last night where Kevin McCarthy gave a forceful pitch for all the
victories that he believes Republicans secured in this deal.
He also had to deal with some of his conservative critics who don't like some of the contents in this deal. They don't like that it doesn't go far
enough to cut spending. They don't like that it hikes the debt ceiling until 2025.
And then Democratic leaders huddled this morning along with some White House Biden officials to also make their sell to their members. You have
some progressive members on the left who don't like the new work requirements for food stamp recipients.
So, there is going to be a coalition in the middle that is going to have to get this over the finish line, there are going to be opposition on the both
the left and the right, but GOP leadership is confident that they are going to be able to get there.
In fact, they are working to secure a majority of their Republican members and privately aiming for a number even higher than that. They think they
could get as many as 150 Republicans to vote for this bill, with the Democrats making up the rest.
But the reason why the vote number is so important because first of all, it of course needs to pass and go over to the Senate in which we are expecting
to happen, but Kevin McCarthy is also staring down at potential revolts from his right flank.
He has conservatives who are angry over this deal making, and they say that if not enough Republicans support this deal, that would be a violation of
the promises that Kevin McCarthy made in his quest to become speaker.
So, he is aiming to get as many Republicans as possible to get on board with this bill. So he can sow strength in these deal-making negotiations
and so that he is still in command of his conference.
So, we are expecting a procedural vote to take place a little bit later in the afternoon, with a final vote passage expected tonight and then it heads
over to the Senate where, again, while we are expecting the votes to ultimately be there, but it can take some time for things to move from the
Senate.
Any single lawmaker has the power over there to really slow things down. And so one of the things being discussed is potentially offering amendment
votes in exchange for the cooperation of lawmakers even though those amendment votes would fail, theoretically, it would get everyone on board
and hopefully get this passed in time for that June 5th deadline.
SOARES: And of course, right now, it is about shoring up support. The more conservative Republicans you just mentioned who are balking at the deal,
Melanie what don't they like about this? What concessions don't they like here?
ZANONA: Well, there are a number of things that they have taken issue with. Number one, they wanted a shorter debt ceiling hike because they wanted to
have more bites at the apple so to speak.
[15:05:10]
They wanted to have this fight again, where they can, again, extract concessions out of President Biden and the Democrats. So they don't like
the debt ceiling hike. They didn't like the level of spending cuts that were agreed to. They wanted a much lower level.
And also, there is a new estimate that even though there are new work requirements for food stamp recipients, that there are new exemptions for
other certain populations, including veterans and the homeless.
And so the Congressional Budget Office estimates that overall, eligibility wouldn't be expanded for that program.
And so there is a whole host of things that they don't like, but at the end of the day, Kevin McCarthy doesn't need those members to get this bill over
the finish line, because there will be Democrats who will help push it through in the end.
SOARES: I hope you have some strong coffee for your late afternoon.
Melanie Zanona, appreciate it. Thank you very much.
Well, as the bill makes its way through Congress, the US economy is still facing major threats. Uncertainty over the deal could of course impact the
country's credit rating.
Fitch, if you remember already placed the US on watch for a possible downgrade, and then China's slowing growth could be bad news as well, for
the entire, let's just say global economy, not just US economy, the entire global economy.
Speaking to Bloomberg earlier, JPMorgan CEO, Jamie Dimon said despite their differences, the US and China still need to work together. This is what he
said.
(BEGIN VIDEO CLIP)
JAMIE DIMON, CEO, JPMORGAN: This is not de-coupling. This is de-risking. The world has changed a little bit.
Obviously, they are concerned about the war in Ukraine, they should be. I think that is probably one of the most serious things affecting the future
of the globe, and I mean, the future of the globe for the next 50 years.
And I think, they are doing the right things. I'm completely supportive of that. And so, you know, China is obviously going to do what they think is
good for itself and business might be a positive attribute. But national security will trump all of those issues.
(END VIDEO CLIP)
SOARES: Well, Glenn Hubbard was the chair of President George W. Bush's Council of Economic Advisers. He is now professor at Columbia University.
He joins me now.
Glenn, great to have you on the show. So much for us to talk to through. Let's talk first of all, the debt ceiling vote.
Here we are at it again, little room for errors. We heard our correspondent there, Melanie Zanona. How do you read the latest debt drama? Will it pass,
you think?
GLENN HUBBARD, FORMER CHAIR OF PRESIDENT GEORGE W. BUSH'S COUNCIL OF ECONOMIC ADVISERS: It will pass, but there will be more drama.
It is a little bit of on the one side, nothing. And then on the other side, everything, everywhere all at once, and I think both are true. It is
nothing in the sense that it's not a lot of concessions either side made despite what they say.
On the other hand, it really pointed out how huge the fiscal problem is, and neither side is really coming to grips with that.
SOARES: And on that point, I mean, I read a piece that you wrote for "The Financial Times," and it was titled "How to End the US Debt Ceiling
Standoff."
In this article, you say: "We can't just keep raising the debt ceiling without consideration of the underlying challenges. The nation is on an
unsustainable fiscal path, magnifying future pain, there is a better way," you said.
So Glenn, what is that better way?
HUBBARD: Well, we have the debt ceiling in the law, but what we could do is say let's agree on a budget path, and that's a political choice as to how
it is done.
And as long as we stay on that budget path, we agree to clean debt ceiling increases. You ask yourself, why would politicians do that? Well, I think
they get out of this drama as well.
The question is, will the two sides admit the scope of the problem? Everybody says I don't want to raise taxes. I don't want to change Social
Security. I don't want to change Medicare -- but something has to give.
SOARES: Something has to give, and like many expected to pass even as the last minute deal, and if there is a deal, there are other threats that we
mentioned at the top of the show as well that are worth considering, threats on the horizon for the US economy as well, Glenn, as the global
economy concerns that are being reflected, I think it's fair to say in today's stock market numbers today, red right across the board and that is
the factory activity in China dropping for a second month in a row.
China losing steam, Glenn, is not just a problem for China, really. It's a problem for us all, is it not?
HUBBARD: It's problem for the world. In the clip you played from Jamie Dimon, the de-risking that's going on in the US and in the West in general,
is pulling China apart from its trading partners.
China's own slowdown makes that much worse. Adding to the budget point though, the US and other industrial democracies probably need to spend
substantially more on defense. That's going to add more to the budget stress, not less.
SOARES: And you pointed of course to global economy, the challenges -- the businesses, they are facing. And we have seen not just Jamie Dimon talking
China, we've seen the CEOs of Starbucks, as well as Elon Musk traveling to China.
Jamie Dimon also warned besides the de-risking, warned that this uncertainty about this uncertainty, Glenn, about the Chinese government's
policies and how that could hit investor confidence. What do you make of those comments?
[15:10:07]
HUBBARD: Well, I think, they are spot on. The reason that the Chinese government should clarify its position is not to please us, but to make
China healthier.
China will not have a prosperous economy without a much more stable public policy toward business. They could learn it the easy way or the hard way.
SOARES: Let's focus back on briefly on the US. We have some strong jobs number, but obviously, frankly, it complicates the Fed strategy and puts in
a difficult position.
How do you see the Fed moving in the months ahead?
HUBBARD: Well, I think the Fed still has work to do, whether that is further rate increases, or simply leaving the current rates in place longer
is for the Fed to decide.
But I disagree with market participants who think a lot of rate cuts are in the offing. With inflation this sticky and this high, rates will remain
high.
SOARES: Glenn Hubbard, always great to get your insight. Thanks very much, Glenn. Appreciate it.
HUBBARD: Pleasure.
SOARES: Now, there are more signs of Vladimir Putin's war on Ukraine is spilling across the border. Drone attacks and a wave of shelling hit parts
of Russia's territory today. We'll have all the details after this short break.
(COMMERCIAL BREAK)
SOARES: Well, people in parts of Russia are increasingly feeling blowback from Vladimir Putin's war on Ukraine one day after a drone attack damaged
three residential buildings in Moscow, a wave of shelling killed one person and injured at least six more in the Russian region of Belgorod.
And drone attacks on two oil refineries in the Krasnodar region set off a fire at one of them. That is according to the Kremlin. Ukraine has largely
denied being directly involved in attacks on Russian soil or not commented at all, in fact.
Our Fred Pleitgen joins me now from Kyiv with the very latest.
And Fred, I think it is fair to say the war is getting ever so closer to Russia, which Russia is blaming on Ukraine. So what is Kyiv saying here?
FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Hi there, Isa. well, so far, they're trying to say as little as possible, but you're
absolutely right in that the war is certainly not only coming closer to Russia, it is actually coming to Russia, and it is certainly coming
evermore close to more and more Russians.
We had those drone attacks that happened there in Moscow, which as you say, the Russians are blaming on Kyiv, even though the Ukrainians are saying
that they didn't have directly anything to do with them, but also in the border regions between Russia and Ukraine. It certainly seems as though
there is a big uptick in cross border attacks.
Here is what we are learning.
[15:15:04]
(BEGIN VIDEOTAPE)
PLEITGEN (voice over): While the Ukrainians continue to deny being directly involved in the drone attack on Moscow, a senior adviser to Ukraine's
presidency is warning the Russians, the war is coming to them.
MYKHAILO PODOLYAK, SENIOR ADVISER TO VOLODYMYR ZELENSKYY (through translator): All of this will increase in scale, there will be an increase
in the number of manifestations of the war on the territory of the Russian Federation.
PLEITGEN (voice over): And Russia has not only feeling the heat around Moscow, the Ukrainians appear to be ramping up the pressure in the vast
border regions between the two countries.
Local authorities in the Belgorod area say heavy shelling damaged residential and official buildings there wounding several people.
UNIDENTIFIED FEMALE (through translator): It was very scary, several berths at once. This has not happened before.
PLEITGEN (voice over): Further south in the Krasnodar region, the Russians say two oil refineries were targeted by drones. The surveillance camera
video seeming to show an explosion followed by a large fire at one of the facilities.
And to the north, authorities in the Bryansk area say they repelled a massive drone attack while the Ukrainians believe the Russians are so
nervous, they blew up a road in the border region nearby to try and stop any possible Ukrainian advances.
The US says it doesn't condone attacks on Russian territory.
ADM. JOHN KIRBY (RET), COORDINATOR FOR STRATEGIC COMMUNICATIONS AT THE NATIONAL SECURITY COUNCIL: We have maintained our concerns about attacks on
Russian soil, but we have been nothing but generous and fully committed to making sure that Ukraine can defend itself.
PLEITGEN (voice over): But some of the US' allies are less concerned.
JAMES CLEVERLY, UK FOREIGN SECRETARY: Ukraine does have the legitimate right to defend itself. But it does also have the right to project force
beyond its borders to undermine Russia's ability to project force into Ukraine itself.
(UNIDENTIFIED FEMALE speaking in foreign language.)
PLEITGEN (voice over): Those remarks caused major outrage on Kremlin- controlled TV as Russia's security forces seem unable to prevent cross border --
(END VIDEOTAPE)
PLEITGEN (on camera): So you see there a lot of anger there inside Russia from Kremlin-controlled TV, also from a lot of Russian officials as well,
Isa.
Ukrainian officials, despite the fact that they're not saying very much about the attacks themselves, a senior official has told us that all the
things that we're seeing right now, attacks on Russian territory, but also in territory occupied by the Russians inside Ukraine, things like
ammunition depots, fuel depots for instance, they say that is all a precursor to the coming large counteroffensive, that of course has been
looming for quite a while, and which the Ukrainian say, Isa, could start at any time -- Isa.
SOARES: Fred Pleitgen for us this evening in Kyiv. Thank you very much, my friend.
Now international efforts to defuse tensions in Kosovo are stepping up as ethnic Serbs held more protests today in a town where clashes broke out
this week between demonstrators, as well as NATO peacekeepers.
NATO is sending 700 more troops to bolster its force there. We heard that from Jens Stoltenberg yesterday, after dozens were hurt amid the protests
on Monday.
The US responding by sidelining Kosovo from join NATO exercises, blaming its leaders for aggravating a tense situation.
This is what France's Emmanuel Macron had to say, rebuking Kosovo.
(BEGIN VIDEO CLIP)
EMMANUEL MACRON, FRENCH PRESIDENT (through translator): We have very clearly indicated to Kosovar authorities that it was a mistake to proceed
with these elections in this type of context, which is an almost complete non-participation.
The Kosovar authorities bear responsibility for some of the current situation, and there was a non-respect of an agreement that was important
and that was signed only a couple of weeks ago.
(END VIDEO CLIP)
SOARES: Well, Scott McLean is following the story for us here in London. And Scott, context is really important here. Before we talk about what
we've seen this week, and in previous weeks, just talk us through the context of this region that goes back decades, of course.
SCOTT MCLEAN, CNN CORRESPONDENT: Yes, so it's important to know a bit of the history here.
So Kosovo declared its independence from Serbia in 2008. Many, many countries around the world, including the US, many in Europe recognize that
independence, but Serbia did not.
SOARES: Out of four -- one of four who doesn't recognize it from what I understand.
MCLEAN: It is an important one, they don't recognize it, including Russia.
SOARES: Indeed.
MCLEAN: But what -- I thought it was very interesting what the president actually told you last hour, which is that it's not really a question
anymore, so he is not explicitly acknowledging the independence, but it is sort of an around about way and saying, look, this is the reality.
It is also important to know the ethnic makeup of this region. So Kosovo is more than 90 percent ethnic Albanian, with some exceptions, including,
there are four municipalities here. There's another smaller one that's right about there that are majority Serbian. These regions don't want to be
ruled by the powers that be in Kosovo and this has caused all kinds of problems so much so that 10 years ago, 2013, Kosovo and Serbia actually
agreed on this document. It is called the Brussels Agreement, that essentially gives these regions some level of autonomy, something that
President Vucic told you was still a major issue that it wants Kosovo to actually implement.
[15:20:02]
It says that the police chief should be an ethnic Serb and that neither Serbia nor Kosovo will interfere with each other's attempts to join the EU.
The problem is that most of these, was never actually implemented, which as the president pointed out, he blames the Kosovars because it's mostly
theirs to actually implement.
And so that brings us to back in March, Kosovo and Serbia agreed on this, which is sort of renewing their commitment to the Brussels Agreement, and
explicitly acknowledging that if they can't figure out how to actually implement this, there will be consequences from the European Union.
SOARES: But it hasn't been implemented, and that is why we have seen protests in these northern parts of the country. Just talk us through why
they're so angry in the north of Kosovo.
MCLEAN: Yes, and again, President Vucic told you, quite plainly that these local elections were a big problem, because there's legitimacy issue. So
essentially, ethnic Serbs in these northern municipalities didn't vote in the local elections by and large. They boycotted.
And so you had voter turnout that overall, was 3.4 percent, pretty piddly, especially considering when this municipality, the mayor that was elected
there only had 141 votes. There is obviously a legitimacy question here, which is why ethnic Serbs in that area protested, tried to block the mayors
from actually entering the town halls.
SOARES: They are violent protests, may add as well.
MCLEAN: They were violent last week, but they got even more violent on Monday, when you had ethnic Serbs and NATO peacekeeping forces clashes.
There were explosions. There were some 30 NATO peacekeepers who were injured.
And yes, this was a very ugly scene there, all prompted by Kosovo's insistence on having these mayors who don't have a lot of legitimacy, given
the boycott of the vote actually entering these municipal offices.
SOARES: So we've heard -- you heard a little clip from Macron. We heard from the NATO Secretary-General as well, Jens Stoltenberg appealing,
calling for peace. Where does the US stand in all of this?
MCLEAN: Yes. They were quite plain about this in blaming Kosovo, specifically, the Kosovo prime minister for this and not responding to
their requests to de-escalate things.
So this is what the ambassador told journalists, he said: "This was a crisis that, from our perspective, was unnecessary. The operation that took
place on Friday to obtain access to municipal buildings, through forcible means was not coordinated with the US. When we became aware of it, we
advised strongly against it, because we anticipated consequences that we are now seeing."
And so Isa, there are two things that the US is expecting from the Kosovo prime minister, that is that the mayors are not going to work from the town
hall. They want them to work at alternate sites, because they're largely doing administrative work.
SOARES: But just on that, when I spoke to the prime minister yesterday, he did not sound like he was going to budge on this or in fact, on this.
MCLEAN: Exactly, exactly. And so -- and this is despite pressure from the European Union and the US. He was pretty defiant. Listen.
(BEGIN VIDEO CLIP)
ALBIN KURTI, KOSOVO PRIME MINISTER: I'm working closely with international factors, especially with the United States and the European Union. We
consider both of them indispensable allies, friends, and partners, and we will do our best, but I am not surrendering a democratic republic to
fascist militia.
(END VIDEO CLIP)
MCLEAN: And so now you have the US, essentially canceling Kosovo's participation in some military drills that are actually taking place right
now. They're taking place over two months in Romania.
The ambassador also explained that, look, there's not a whole lot of enthusiasm right now on the United States as part to advocate for Kosovo.
It is one of its most important allies, if not its most important ally, when it comes to countries that don't recognize their independence.
And they've made clear that look, if they can't de-escalate the situation, there may be more consequences.
SOARES: And that's what is needed right now. It needs to de-escalate.
Scott, appreciate it. Thank you very much.
Well, yesterday, I spoke with Kosovo's prime minister, Albin Kurti, as you heard Scott mentioning there who refer to the protesters you had in that
clip as Serbian fascists, and he accused Belgrade of stirring up violent opposition to the elections.
Well, in the last hour, I put those claims to Serbia's president, Aleksandar Vucic, condemned Kurti's accusations and said he wants to
stabilize the situation. Have a listen.
(BEGIN VIDEO CLIP)
ALEKSANDAR VUCIC, SERBIAN PRESIDENT: We do regret the fact that there were some NATO soldiers injured and that's what we publicly said immediately
after it happened yesterday and today --
SOARES: And you are calling --
VUCIC: We had and we faced, very peaceful -- we faced very peaceful protests and there were physicians, nurses, teachers, everybody was
protesting. Were those people blackmailed by someone? No. Those people they just want to see Kosovo Special Police Forces withdrawing from those
premises that has never ever belonged to them and those alleged illegitimate and illegal mayors as well.
SOARES: We will talk about that. But let me ask this, you're calling for calm, Mr. President.
VUCIC: Yes.
SOARES: Is that call for calm also going to those northern municipalities? Do you have control over those protesters?
[15:25:07]
VUCIC: I don't have any kind of control, but I believe that most of those people will always show respect to the state of Serbia and what we can do
with our international interlocutors, with our partners from European Union, United States, all the others from all over the world is that we
need to have a stable region.
SOARES: Yes.
VUCIC: Why I'm saying this, because Serbia, when I say Serbia, it means 50 percent of overall Western Balkans economy, it means 63 percent of
attracting foreign direct investments of an entire region. We don't need any kind of escalation, what we need is peace, that's why we propose an
open Balkan initiative.
SOARES: And no one wants to see of course --
VUCIC: That's why we need to have freedom of movement and everything else.
SOARES: And no one wants to see, Mr. President an escalation here.
VUCIC: I am just saying that we will --
SOARES: I don't think anyone is calling for an escalation, but let me just ask you this. Look, our colleague kind of broke down for us what's at the
heart of this and it is the fact that Serbia doesn't recognize Kosovo as an independent and sovereign nation.
What would it take Mr. President, for Serbia to acknowledge Kosovo's independence?
VUCIC: It's not -- it's not any more even a question because if you noticed what we were speaking about, through Franco-German plan, what we were
speaking about in -- it's about normalization. It's a process of normalization. That's a precondition for Serbia's future progress.
SOARES: Do you acknowledge Kosovo as an independent and sovereign nation?
VUCIC: We do acknowledge the United Nation charter and UN resolution and that's what we do, but we are always ready to discuss all the compromising
solutions.
(END VIDEO CLIP)
SOARES: The president of Serbia speaking to me earlier.
While some fear the risks of AI, one company says he could solve the problem of climate change. The CEO of Geminus joins me next.
(COMMERCIAL BREAK)
[15:30:00]
(MUSIC PLAYING)
SOARES: Hello, I'm Isa Soares. There will be more QUEST MEANS BUSINESS in a moment.
When Amazon employees are walking off the job to protest the company's push to get workers back in the office.
And AI can help solve the climate crisis, it seems. So says the CEO of Geminus AI. I will speak to him in just a few minutes.
Before that, the headlines for you this hour.
(MUSIC PLAYING)
SOARES (voice-over): In any moment now, U.S. House of Representatives are expected to begin voting on a compromise bill that would suspend the debt
ceiling and prevent a catastrophic default.
If it passes the House, the bill would then go to the Senate before reaching President Biden's desk.
Beijing is defending the military pilot who intercepted a U.S. reconnaissance flight over the South China Sea. The Pentagon released this
video from last week's incident and it shows the pilot cutting right in front of the American plane.
U.S. officials say the plane was on a routine mission in international airspace.
North Korea says it failed to put a military satellite into space. State run media blamed the failure on what it called unstable fuel. The report
also cited problems with the rocket's engine system. The country's space agency says it will carry out a new launch as soon as possible.
And this just in to CNN, sources telling CNN that former U.S. vice president Mike Pence will launch his bid for the White House next week. Mr.
Pence served under former president Trump. The two have clashed over Mr. Pence's decision to certify the 2020 election results.
(MUSIC PLAYING)
SOARES: The E.U. and U.S. say they are acting quickly to develop an AI code of conduct. U.S. secretary of state Antony Blinken called today's talks
tense as well as productive. He said the voluntary guidelines will be open to like-minded countries. The European Commission's executive vice
president spoke about the next steps. Have a listen.
(BEGIN VIDEO CLIP)
MARGRETHE VESTAGER, EVP, EUROPEAN COMMISSION: Within the next weeks, we will advance a draft of an AI code of conduct. Of course, also taking
industry inputs, taking input from independents and then, of course, invite colleagues to sign up for the drafting in order to have very, very soon a
final proposal for a code of conduct for industry to commit to momentarily.
Because we have different legislative procedures, it will take two or three years at best before that would come into effect.
(END VIDEO CLIP)
SOARES: Let's get more on all of this. Anna Stewart was listening in to that.
So talk us through this roadmap that they are agreeing to outline.
(LAUGHTER)
(CROSSTALK)
ANNA STEWART, CNN CORRESPONDENT: The roadmap that they haven't unveiled yet, quite. But it is significant. We had so many warnings in recent weeks
from all sorts of people within AI, saying there are risks that need to be mitigated.
That is all saying AI companies necessarily don't want heavy regulation but certainly in appreciation that there are risks here. And there is an arms
race with AI companies, typically generative AI companies, bringing out new products.
There is nothing at the moment to stop them going to market.
So what needs to be in place to keep people safe to prevent deepfakes, misinformation spreading and so on?
(CROSSTALK)
STEWART: What we have here is at the very top of the U.S. and the E.U., coming together and saying that they want to cooperate. So that is
significant that there is a roadmap.
It is not going to be binding but the E.U. is separately working on an AI Act. That is expected to take months to come to a vote and be implemented
and so on. So this is a stopgap, a code of conduct. And perhaps this will come the gold standard for around the world.
SOARES: What about the risks of overregulating?
STEWART: This has been a really interesting area, because on the one hand, you have the big CEOs of a DeepMind and OpenAI and so on.
(CROSSTALK)
[15:35:00]
STEWART: Sam Altman, the CEO of OpenAI says that the E.U.'s AI Act was not what he was liking in terms of the draft proposal. He said if it meant that
they couldn't do what they wanted, they would have to remove ChatGPT from Europe.
However, Sam Altman was a part of this discussion. Look at this tweet from Margrethe Vestager, who is the E.U. Commission vice president and
competition commissioner. She says that watermarking, external audits, feedback loops, just some of the ideas discussed with AnthropicAI and Sama,
OpenAI. You can see them in the pictures there, all this conference launched today, with the U.S. Commerce Secretary.
And she says they're looking forward to discussing with international partners. So at least this nonbinding code of conduct they actually have
people from AI on board. And I think that is really significant. And whether that has any bearing on what is then legislated, I'm not sure.
SOARES: How soon will we get this roadmap, then?
Do we know, how soon will this be implemented?
Do we have an idea of timeline here?
STEWART: No timeline but they put together certain groups that will be looking at different aspects of this. There is a group looking at the
terminology, for instance, of artificial intelligence.
Also other areas before they can put all of this together into text. But once that comes, I'm guessing, in the next few weeks, that may then lay the
groundwork for what comes next, which is legislation.
SOARES: Maybe I can stop my producer from speaking in my ear.
(LAUGHTER)
(CROSSTALK)
SOARES: Anna, thank you very much. Appreciate it.
Some of the strongest calls for AI regulation have come from the tech industry, Microsoft president Brad Smith spoke to CNN earlier. He says we
can use history of course, for guidance.
(BEGIN VIDEO CLIP)
BRAD SMITH, PRESIDENT, MICROSOFT: Every technology in the world that we use today, we even take it for granted, it does great things but could be
dangerous. An elevator has a safety brake, electricity has a circuit breaker. The school bus on which we put our children or a high speed train
has an emergency brake.
It enables humans to stay in control and slow something down or turn it off. And we should have that for artificial intelligence as well,
especially when it's controlling critical infrastructure, like the electricity grid or the water supply.
And we ought to have it at multiple layers. Both the application, that is controlling something, and the data center, where it is deployed. That is,
frankly, what we have been doing as human beings for 150 years for other technologies. Let's take everything we've learned and apply it to this
technology as well.
JULIA CHATTERLEY, CNN ANCHOR: Are there corporates involved, the circuit breaker, in this case, or is government the circuit breaker?
And can AI learn to be better than the circuit breaker?
I think --
(CROSSTALK)
SMITH: I think we need both companies and government and, frankly, civil society, NGOs, to all talk together. And we are going to need multiple
layers. When you really study what works for us every day, what you find is two things that fit together.
One is a technical standard and the other is government regulation that requires everyone to apply that technical standard. This is true for a
circuit breaker. It is true for the emergency brake in every bus.
So let's bring industry together to help develop technical standards. And let's expect our governments to move quickly so that there is a common
approach and we don't have the kind of divergence or a race to the bottom that would put safety at risk.
(END VIDEO CLIP)
SOARES: President of Microsoft there.
While many fear the rapid acceleration of AI, one company says it could help solve the climate crisis. Geminus is using AI to cut down on
industrial pollution. It says its platform can rapidly model thousands of scenarios in industrial environments, finding the most efficient operation
faster than a human engineer ever could.
And time is of the essence. Some estimates say we have only 30 years to dramatically reduce industrial carbon emissions before the climate
undergoes irreversible damage. Greg Fallon is the CEO of Geminus AI.
Greg, great to have you on the show. Talk about your business but first let's just pick up those comments by the president of Microsoft, calling
for an emergency brake.
Do you think there is an urgent need for regulation of AI here?
GREG FALLON, CEO, GEMINUS AI: Yes. I do. I think that he's got it spot on. With any new technology, especially big, disruptive technologies like AI,
we have always had regulations lag behind the development of the technology.
You can think back to the automobile. The automobile was around for years before we had seatbelts and other safety mechanisms. I think, in this case,
given the pace of technology, we need to get ahead of it. We are not ahead of it right now.
I think AI companies are showing that the technology is much more mature than we thought even six months ago. So regulation is a good idea.
[15:40:00]
FALLON: I think that there is a bunch of starting places we've been talking about, like data privacy, for years when it comes to the internet and
social media.
This is a great place to apply data privacy, because ultimately AI has to learn from something and that's data. And so if we can control the
ownership of the data and the way AI is trained, it's one way forward.
SOARES: I don't know if you heard the discussion that my correspondent and I were having about AI and this roadmap they're outlining. We have seen, I
think it's fair to say, quite a few warnings on the dangers of AI and our extinction.
But there are huge benefits too. I remember recently a story on CNN of a new powerful antibiotic that was discovered with AI because you had the
means to crunch all of this data. Talk to us about the positives of AI and the ways your company is using it critically.
FALLON: Yes, Isa, that's right. I think that we are caught up in a cycle where we are really worried about deepfakes and misuse of AI.
But on the other hand, as the example you just gave, AI has really big possibilities for humanity. So drug discovery, disease identification is
one. In the engineering space, where we work, combating climate change is another huge opportunity.
So Geminus is focused on creating AI algorithms that help large industrial companies that produce energy, that manufacture things, helping them reduce
their greenhouse gas emissions by helping their machines become more intelligent and identify how to optimize themselves.
SOARES: And this is important. This is what we have been doing quite often in my show, focusing on climate change. The comment I hear from our climate
correspondent is that governments are not doing enough.
So developing these cleaner technologies could really take decades off, right?
They are also very expensive.
So how does AI achieve this?
Talk us through for our international audience, how this works.
FALLON: Yes, absolutely. So one of the things that AI is really good at is crunching lots of information very quickly and making decisions fast.
If you look at the way that humans make decisions, it can take you days or weeks to perform a task that you could get information on with regards to
ChatGPT right away. And that's the same in the engineering world, where decisions need to be made quickly.
As an engineer, you might be evaluating how to scale up new technology to produce hydrogen, for example. And it may take you months to come up with
an initial design. You have to test that, that could take years.
If you had AI able to help you identify the optimum design to begin with and go through tests and figure out how to scale it up, you might compress
that design cycle from six months to weeks.
And we see that across the board. You can take something as simple as controlling a drinking water network. Drinking water networks are powered
by pumps. Pumps consume 5 percent of the world's electricity. And pumps notoriously are run inefficiently.
So drinking water networks are simply a series of pumps and valves and pipes. And if you are able to, at any given time, identify the optimum
amount of electricity to give to those pumps, you might shave off 10 percent, 20 percent, 30 percent even 40 percent energy reduction in the
usage of drinking water networks through this application.
SOARES: Give me a sense, Greg, from those companies and from leadership levels, how many are interested in trying to change this, in trying to make
a difference when it comes to a meaningful difference here, when it comes to climate change?
Because you are saying to me, this is realistic. We can change it.
But how many companies, how many countries are listening, are paying attention, are seeking your advice on this?
FALLON: Yes, that's such a good question. You know, I think, like any new technology, there is a lot of people interested. So we see interest across
the board. There is no company that I could speak to that wouldn't have an interest in doing this kind of technology.
The question is whether they have the urgency to apply it. At the moment, you are talking about a few global leaders who are doing this. We are
dealing with some of the largest corporations in the world right now. And we know that it will spread.
But I think there is a sense of urgency that we need to get to. And our message with Geminus is that AI technology is here. We don't have enough
time to combat climate change doing things the way we used to. But there is a disruptive technology that can shave years off the effort and can save
trillions of dollars in the process.
SOARES: What is clear is that whatever we are doing is not working. Greg, great to get your expertise on this. Appreciate it. Thank you.
FALLON: Thank you.
SOARES: Now when we come back, employees staging a walkout at Amazon's Seattle headquarters, saying they are not happy with the company's work
from home policies. We will explain, next.
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(COMMERCIAL BREAK)
[15:45:00]
(MUSIC PLAYING)
SOARES: Well, right now in Seattle, Washington, workers at Amazon's corporate headquarters are staging a walkout. They are angry over the
company's push to get them back into the office.
(BEGIN VIDEO CLIP)
SOARES (voice-over): The protest was organized for advocacy groups within Amazon. Organizers say they are frustrated by Amazon's push to get workers
in the office three days a week. They also say that the company needs to make climate impact a top priority.
What does that mean?
(END VIDEO CLIP)
SOARES: Clare Duffy is in New York.
So Clare, talk us through what these Amazon workers want.
CLARE DUFFY, CNN BUSINESS WRITER: Right, so, Isa, as many as 2,000 employees globally had pledged to participate in this walkout, either in
person or virtually. And what the workers are looking for is more flexibility in terms of the return to office.
Starting earlier this month, Amazon has required employees to be in office three days a week. It's removed the ability for team leads to decide the
hybrid work -- the situation for their teams. And so workers want to have more flexibility.
One of the workers at the walkout said, working remotely throughout the pandemic has allowed us to do our best work. We want a say in decisions
that affect our lives.
And then on top of that, they want climate change to be top of mind for the company and to be involved in the biggest business decisions that the
company is making.
SOARES: Right. Amazon, correct me if I'm wrong here, has also undergone cuts recently.
How much does that and then Amazon leadership play a part in this walkout?
What is the move right now?
(CROSSTALK)
DUFFY: -- it thinks that employees are more productive in the office. It said that there are more energy, collaboration and connections happening
when workers are back in the office. But I think when we take a step back, what we are seeing right now is a sort of power struggle between tech
workers and Big Tech executives.
During the pandemic, employees had a lot of power. These companies were growing so quickly, employment rates were so low, unemployment rates,
rather, were so low and so employees had a lot of power.
I think what you're seeing right now is these companies trying to wrest back some of this power by getting plays back into the office. Certainly
these layoffs contribute to that. Amazon has laid off 27,000 workers this year in multiple rounds of cuts.
And so I think you do see executives trying to gain a bit of the upper hand here. And looking at these pictures, this is a big walkout in terms of tech
worker movements.
[15:50:00]
DUFFY: But this is relatively few employees, compared to Amazon's total base of employees.
SOARES: Well, let's see if they are listening. Thank you very much, Clare Duffy, appreciate it.
After this short break, the family that owns Purdue Pharma is now shielded from lawsuits over the opioid crisis. That immunity came with a $6 billion
price tag. We will explain next.
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(COMMERCIAL BREAK)
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SOARES: Welcome back, everyone.
The family that owns Purdue Pharma will be shielded from lawsuits over its role in the opioid crisis. In exchange, the family must pay up to $6
billion to fight the opioid epidemic. The U.S. appeals court ruling cleared the way for the company to reach a bankruptcy deal.
The company was facing thousands of lawsuits over its painkiller, OxyContin. The lawsuits accuse the company of misleading doctors about
OxyContin's addictive nature. Jean Casarez is in New York with more.
So they pay $6 billion and are shielded from any more of those seats (ph).
So who is this a win for?
Or is it a loss for them?
JEAN CASAREZ, CNN CORRESPONDENT: I think, overwhelmingly, the people involved believe that this is a win for everyone. And I will tell you why.
At the beginning, Purdue Pharma in 2019 and the Sacklers as individuals owed more than $40 trillion in potential lawsuits between the company and
the individuals, $40 trillion.
So the family said, look, we will have Purdue Pharma file bankruptcy. It will end as a company. And we will be willing to take our personal money
and, at that point, they said, $4.25 billion, and we will put it into the bankruptcy action so that it can be given to individuals.
And it can be abatement of the COVID issue with local and state programs. And then also the fact that we can help with medications when someone's in
opioid crisis.
So that was right at the beginning that they said that they were willing to do that. Now some didn't like that, that there was the ability to knock out
all of these individual suits. So there were eight states and the District of Columbia that appealed that. It's been going through the appellate
process.
And while it's been doing that, the $4.25 billion became $6 billion that the Sacklers were offering in personal money. And, so once the appellate
court ruled and it just ruled late yesterday that it was valid under the bankruptcy code.
[15:55:00]
CASAREZ: And number two, it was fair and equitable, because you are looking at the big picture that, when you're in bankruptcy to this magnitude,
nothing is going to be completely fair to everybody. But to everyone involved.
And here's one issue, too. If all of the separate lawsuits have been able to take place -- and there would be thousands of, them -- it would take
years of litigation. And that takes money, because attorneys take a lot of money. And that money would not go to where it is needed, the people, the
cities, the communities, the states. And it will.
SOARES: And so, Jean, are they then shielded from any further claimants?
Is this what it does?
CASAREZ: For civil claims, they are shielded. They are not shielded as individuals for potential criminal claims. But we have heard of nothing of
the sort at this point.
SOARES: Jean Casarez, really appreciate. It thank you very much.
And there are just moments left to trade on Wall Street. I will have the final numbers and the closing bell right after the short. Break
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(COMMERCIAL BREAK)
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SOARES: Well, U.S. markets are lower ahead of tonight's vote on the debt ceiling deal. That was our top story this hour. New House lawmakers have
begun vote to first phase of voting on that compromise bill that would suspend the debt ceiling. And of course, prevent a catastrophic default.
This is the first stage that voting on the rules.
The bill will have to go to the Senate before reaching President Biden's desk. This is the next hurdle, of course. It's going to be a long night, I
suspect.
How the markets responding to this?
The Dow has clawed back about 100 points or so, it's down 111 or so points. It's going to gone 0.1 percent or so from the last hour or so. And that's
on the heels of the Philadelphia Fed president, who came out in favor of an interest rate pause.
Of course, red across the day today, the last trading day of May. If we have a look quickly at the Dow components, Intel up more than 5 percent.
Its CFO said it will benefit from the AI boom. If we have a look at a few health stocks there, also near the top, you can see there -- 3M is right
here at the bottom, down almost 3 percent.
END
