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QUEST MEANS BUSINESS
U.S. Labor Secretary Defends Role in Jeffrey Epstein Case; Fed Chair Powell Hints at Interest Rate Cut; U.K. Ambassador Quits as Boris Johnson Withholds Support. Aired 3-4p ET
Aired July 10, 2019 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ALEXANDER ACOSTA, U.S. SECRETARY OF LABOR: ... the investigation had to ceased and they had the opportunity to proceed civilly. That does not mean
that the investigation had to cease nationwide.
And, as we see today, as we saw in New York, investigations could certainly and obviously have proceeded in other districts.
QUESTION: And the follow-up, how can you be trusted to enforce human trafficking laws as Secretary of Labor, given your history with this case?
ACOSTA: So, I have been -- I started one of the first human trafficking task forces at the Department of Justice.
I have been aggressive prosecuting human trafficking. We stood -- we stepped in, in this case, and we stopped a bad state plea. And so I
understand from today's perspective that people scratch their heads and they say, why?
Here's the question to ask. How many other times have you seen a U.S. Attorney's Office intervene in a state matter and say, stop the state plea
because it is insufficient? Yes.
QUESTION: (OFF-MIC) with Reuters. I want to ask you a question about the Office of Professional Responsibility. Earlier this year, it was disclosed
that they're going -- they're doing a review into allow you and other prosecutors in your office handled this matter.
What is the status of that? What exactly are they looking at? Will you submit to an interview, even though you're no longer with the Justice
Department, and if they find any misconduct, will you resign?
ACOSTA: First, I don't know what the status of that is. I would refer that to the Office of Professional Responsibility. I don't speak for them.
I will clearly submit for an interview, even though I don't have to. I think what they do is important. The Office of Professional Responsibility
will have access to the full record. They will have access to all the facts. They will have access to the F.B.I. reports. They will have access
to the victim interviews.
They can look at this matter in its totality. And so I think it is important that they proceed. I will gladly be part of it. And I think
what they will find is that the office acted appropriately. Ma'am.
YAMICHE ALCINDOR, PBS NEWSHOUR: Hi, Secretary Acosta. It's Yamiche Alcindor with "PBS NewsHour."
As Labor Secretary, you have tried repeatedly to cut a program that deals with human trafficking in the Labor Department by up to 80 percent, going
before Congress, advocating for that. Why should people trust you to focus on human trafficking and protect victims if you have done that? And I
would like a follow-up question.
ACOSTA: So, you're referring to grants that go to foreign countries for foreign country labor-related work as part of the budget every year.
Those grants have been removed, as have other grants for foreign countries. And let me just add, as part of the budget every year, those grants are put
right back in by Congress.
This is what happens in Washington, and I fully suspect that those grants will remain in this year. Your follow-up.
ALCINDOR: My follow-up question is, sources have told me that the President encouraged you to hold this press conference. Can you speak a
little bit about what the President told you ahead of this press conference and whether you're here to give a message to the President? Are you
fighting for your job? Or are you trying to send a message to victims? And, if so, what is the message to victims, who say they don't trust you
ACOSTA: So, first, I'm not about to talk about conversations with the President, and I'm not here to send any signal to the President.
I think it's important. A lot of questions were raised. And I -- this has reached the point that I think it's important to have a public hearing. I
think it's important that these questions be asked and answered.
And as to a message to the victims, the message is, you need to come forward. I heard this morning that another victim came forward and made
horrendous, horrendous allegations. Allegations that should never happen to any woman, much less a young girl.
And, as victims come forward, these cases can be brought, and they can be brought by the Federal government. They can be brought by State Attorneys.
And they will be brought. We have seen in the last few years cases brought against individuals that got away with things for well over a decade.
And, you know, it's important to realize that people were getting away with these. People were not going to jail at all. And we're aware of those
high-profile cases. And we have seen, as victims come forward, how the justice system deals with them. And so the message to victims is, come
QUESTION: Mr. Secretary ...
ACOSTA: Let me take a few more.
RICHARD MADAN, CTV: Hi, Mr. Secretary, Richard Madan, CTV. You just said victims need to come forward.
ACOSTA: I'm sorry. Richard?
MADAN: Madan with CTV Television. You just said a moment ago the victims should come forward. But you still haven't offered an apology to them.
Why is that?
ACOSTA: So the victims should come forward because the justice system needs to hear from them.
[15:05:01] ACOSTA: And what the victims went through is horrific. What the victims continue to go through is horrific. I have seen these videos.
I have seen the interviews -- I'm sorry -- I have seen the interviews on television of these victims and their stories.
And so it's hard. But I also think it's important that we understand that the men and women of my office, going back to 2006 and 2007 and 2008, have
spent their career prosecuting these types of cases.
And in their heart, in our heart, we were trying to do the right thing for these victims.
And so this is horrific. This is awful. Each one of these cases is just devastating and saddening. But I also think it's important to realize that
the prosecutors were trying to do the right thing. Sir.
QUESTION: Yes, Jeff Rowe (ph) from Daily Mail. How are you? Are you aware of alleged obstruction of justice by Mr. Epstein? It seemed to be
mentioned in a bail memo by New York prosecutors. And did he take efforts to intimidate prosecutors, and, if he did -- or harass witnesses, hamper
witnesses -- if he did that, why would he get what's been viewed -- what's been called a sweetheart deal?
ACOSTA: I can't -- I can't comment on the New York case. That would not be appropriate.
QUESTION: I'm talking about in Florida. Did he obstruct justice in Florida?
ACOSTA: Sir, there is a pending New York case in New York. I can't comment. Sir?
NEIL MCCABE, ONE AMERICA NEWS: I'm curious who at main Justice -- Neil McCabe, One America News.
Who at main Justice reviewed this case or your decision? And did you have any interaction with Robert Mueller at the time?
ACOSTA: So, I shared a letter that I wrote to one of Epstein's defense attorneys. And I shared that letter in court because it shows much of the
It shows how initially the meetings that took place were between the -- in July -- between the first assistant, the criminal chief, the Palm Beach
office chief and the line attorney and two F.B.I. agents with Epstein's attorneys.
You will notice that the initial meeting, as outlined in this letter, were all career attorneys, how they presented the terms, how Epstein's attorneys
were dissatisfied and asked for a meeting with me, how I subsequently met with their attorneys, along with all the career officials, how, at that
meeting, we then invited the chief of the Child Exploitation and Obscenity section from the Department of Justice to travel down, because one of the -
- you know, one of the things we wanted to make sure of was that we had, going back to the earlier question about the ADA rule, that we had
sufficient evidence to proceed ethically.
And then it details a little bit on how Epstein's counsels appealed the decisions to Washington. I would refer you to the record.
One of the really disturbing things about this case is, there's a record here. The documents that I shared today, we have shared previously with
media. Yet I have seen no reference to any of these documents and the perspective of some of these prosecutors.
There's a record. All these documents are publicly available and could have been pulled up by anyone in this room. And so, you know, there is a
record that will -- you know, I wasn't at main Justice. I do not have a full list of the individuals that reviewed this matter at main Justice.
I can tell you the individuals referenced in this letter. And I would refer you to the record, because I -- this was 12 years ago. I do not have
a full list of the individuals that reviewed this at main Justice.
QUESTION: ... main Justice?
ACOSTA: Well, as the record makes clear, individuals from main Justice were involved fairly early on and were certainly aware of it. And I think,
if you look at the record, it will become clear that our decisions were appealed again and again to main Justice. Sir?
QUESTION: Adam Schriver (ph) from "The Financial Times." So, the deal that you negotiated resulted in two things. One is that the case ended with Mr.
Epstein pleading to state prostitution charges. And another thing that it did was that it immunized his co-conspirators.
So, two questions. Did you consider his victims in that case to be prostitutes? And why did you immunize his co-conspirators?
ACOSTA: So, the answer to were the victims prostitutes? No. Victims -- they were victims. End of story. They were victims.
The second part of that is, in -- the purpose in this case was to bring Epstein to jail, to put him behind bars. And so there were other
individuals that may have been involved, that in any type of conspiracy, there are individuals around someone.
[15:10:02] ACOSTA: The focus really is on the top player, and that's where our focus appropriately was.
Let me also say something, because a lot has been said about this 13- month. When we proceeded, the expectation was that it would be an 18-month
sentence. And the expectation was that it would be served in jail.
And so this work release was complete BS, and I have been on record as far back as 2011 saying that it was not what was bargained for and it was not
what we expected.
But this was a state court plea. And because it was a state court plea, the terms of confinement were under the jurisdiction of the State of
Florida. And so the outrage over that 13-month, you know, getting to leave jail, is entirely appropriate.
When we entered into this, we -- I, at least, fully thought that he would be spending the time in jail. That's what we mean by someone going to
GLENDA CONTRERAS, TELEMUNDO NETWORK: Sir, if I can get -- Glenda Contreras from Telemundo Network. If I can get a brief statement in Spanish, I would
really appreciate it.
ACOSTA: I'll tell you what. If you answer the -- if you want -- if you ask me a question in Spanish, I will answer in Spanish. Is that fair?
CONTRERAS: I was trying to get a brief statement so that I will go over what everyone already said.
ACOSTA: (Speaking Spanish).
CONTRERAS: (Speaking Spanish).
ACOSTA: (Speaking Spanish).
CONTRERAS: (Speaking Spanish).
ACOSTA: (Speaking Spanish).
QUESTION: Mr. Secretary?
ACOSTA: Did you ask a question already?
QUESTION: I did.
ACOSTA: Okay. Let me go to someone new. Yes.
QUESTION: (INAUDIBLE) from "Huff Post." You said earlier that your message to victims was to come forward. What's your message specifically to
those who did come forward and felt let down by you?
ACOSTA: They came -- look, the victims came forward. And there were several victims. You know, I believe that, in one of the filings, the
Department of Justice talked to several of the victims, and some of the victims just didn't want public notoriety.
Other victims have provided interviews and said they felt let down, that they were let down. These are really hard cases. The prosecutors in my
office and I were focused on putting him in jail.
I provided the information from the career attorney as to why there were concerns, if we went to trial, and it became clear that they were going to
receive money if he was convicted, how that would impeach their credibility.
And, today, that would proceed very differently, because victim shaming is just not accepted. But the circumstances of trials and what juries would
consider 12 years ago was different. And so these were the judgments that were made. I understand that individuals will look at these judgments and
say, well, maybe a different judgment should have been made.
You know, you can always look at a play after the fact and say, should it have been the safe play or should you have gone for the big score, and ask,
which is the right outcome?
But I provided these documents so that you could hear from the prosecutors themselves how these -- how this was being weighed. Sir?
JESSE SEIDMAN, VICE NEWS: Jesse Seidman, VICE NEWS. Did "The Miami Herald" reach out to you last November? And if so, why didn't you set the
record straight on the breakfast meeting then?
ACOSTA: So, media has reached out to me over the years about this. I think it's very important. The Department of Justice is the entity that is
litigating all of these matters.
And, quite honestly, until recently, I haven't commented on this since 2011 because I think it's important for the United States to litigate cases
through the Department of Justice.
[15:15:03] ACOSTA: And if former U.S. Attorneys responded to media inquiries about pending cases -- and this is a pending case -- there was a
live and there still is a live civil matter -- if former U.S. Attorneys responded to media inquiries all the time, we would have havoc in our
You can't have a Department of Justice as a litigating entity with U.S. Attorneys giving press statements. Now, your follow-up question may be,
why am I talking today?
And the answer is, this has clearly reached the level where I thought it was important to have this kind of press conference to take questions and
to provide these facts and these perspectives.
And I understand that individuals may say this was not enough. But this is the way it was viewed, not only by me, but by many back in 2008.
DOUG CHRISTIAN, TALK MEDIA NEWS: Yes, Doug Christian from Talk Media News.
CHRISTIAN: One thing -- yes. You said that the victims were not prostitutes, but the agreement was -- he was jailed for prostitution
charges, not for child -- for sex trafficking. Can you just say what the distinction was?
ACOSTA: The agreements -- the agreement was, this was a state -- here's why this is hard. This was a state case. He was arraigned. A state grand
jury returned a prostitution charge against him, a solicitation charge, if I recall. That was a state grand jury. He was allowed to self- surrender
by the State Attorney's Office as a result of that single charge that would have resulted in no jail time.
And, ultimately, what the agreement did was say, you have to go back and you have to plea to a more serious state charge that requires jail time,
that requires registration, and, under this agreement, you will have a mechanism for restitution.
But the agreement itself -- you know, ultimately, the State of Florida and the State Attorney's Office in Florida is a separate sovereign. The U.S.
Attorney does not determine how those offices run themselves or what charges they bring.
I do not consider the victims prostitutes. I think that is insulting to them. These were victims. They were not just women victims. They were
QUESTION: Mr. Secretary?
DEBRA SAUNDERS, "THE LAS VEGAS REVIEW-JOURNAL.": Mr. Secretary, I'm Debra Saunders with "The Las Vegas Review-Journal." Since Mr. Epstein left jail,
he's been a public figure. He's been a man about town. He hasn't seemed particularly contrite about what he did. What have you thought when you
ACOSTA: What I thought is, I keep reading newspaper articles about pending investigations here or there. You know, if someone does a Google search,
they will see that there were rumors of investigations going on for the last 10 years.
And New York finally stood up and -- stood up and they took one of those investigations and they brought charges. And in all candor, I wish it
would have happened. I'm glad to see that it's happening now.
He's a -- you know, he's a bad man. And he needs to be put away. And, you know, based on additional allegations that I saw this morning, there are
multiple jurisdictions, whether Federal or state, that he's going to have to answer to. A few more questions. Yes.
ALEX DAUGHERTY, "MIAMI HERALD.": Alex Daugherty with "Miami Herald." I wanted to ask and follow up with your answer to the earlier question about
the potential co-conspirators. Were you confident at the time that any potential additional co-conspirators didn't commit sexual abuses of
underage girls, like Epstein did, even if it may not have been of the same scale, some of those victims have accused others of doing similar acts to
ACOSTA: So, let me see how I can address your question without running afoul of Department of Justice guidelines. If my office had been aware of
individuals who committed acts such as sexual abuse, you know, my office -- it would not have been my position that those individuals should have been
part of that kind of immunity. It's not an immunity deal. Should not have been part of that paragraph.
And so I know that there are a lot of rumors about who those individuals may or may not be. I think those rumors are misconstruing the acts of the
office with respect to that particular paragraph. One more question.
QUESTION: Richard Lardner from the Associated Press. Mr. Secretary were you ever made aware at any point in your handling of this case that Mr.
Epstein was an intelligence asset of some sort?
[15:20:00] ACOSTA: So, there has been reporting to that effect. And let me say, there's been reporting to a lot of effects in this case, not just
now, but over the years. And, again, I would -- you know, I would hesitate to take this reporting as fact.
This was a case that was brought by our office. It was brought based on the facts. And I look at that reporting and others. I can't address it
directly because of our guidelines. But I can tell you that a lot of reporting is just going down rabbit holes.
A few more questions. A few more questions. Have you asked a question yet?
QUESTION: I have.
ACOSTA: Okay. How about then in front of you? Yes? Sorry. I'm trying to do a one question per person.
QUESTION: Can I go ahead?
KATIE ROGERS, "THE NEW YORK TIMES": Hi, Katie Rogers at "The New York Times." I'm just wondering what makes you so confident that the President
is going to have you continue to serve? There have been several advisers of his who he stands up -- stands up for initially, but you're about at the
level where he has backed away before. So, what makes you so confident?
ACOSTA: So, look, I am here to talk about this case. I'm doing my job. If at some point the President decides that I am not the best person to do
this job, I respect that. That is his choice. I serve at the pleasure of the President.
I thought yesterday he was kind and he showed great support. But we have to remember, we are here because we are part of an administration that is
creating jobs, that is creating growth, that is really transforming our economy and focusing it on, you know, the forgotten man and woman.
And if at some point he says, look, you're not the right person for this right now or you're standing in the way, I respect that. Yes.
QUESTION: Thanks. Do you really have nothing else to say to these victims beyond, you should come forward? That places a lot of burden on children.
What else do you have to say? You have avoided addressing these people directly. Why is that?
ACOSTA: So, to be clear, that is not all I said. You know, I think, if I recall -- and I obviously don't have a transcript here -- but, you know,
what I have said previously is, look, I have seen these interviews, and I can't -- I generally can't begin to fathom what these victims have been
I don't think that anyone that has not been in this situation can begin to fathom. The closest I can come is to think, what would I feel like if one
of my girls was going through this?
And I would be -- you know, I'm not sure I can say the way I would feel on television. But even that is different than what the victims themselves
went through. And so the point I'm trying to make is, everything that the victims have gone through in these cases is horrific, and their response is
At the same time, I think it's important to stand up for the prosecutors of my former office, and make clear that what they were trying to do was help
these victims. They should not be portrayed as individuals that just didn't care, because they have spent a lifetime of bringing cases like
this. They are individuals who really, really do care.
QUESTION: That's not an apology, though, right?
NIKKI SCHWAB, "NEW YORK POST": Hi. I'm Nikki Schwab, "New York Post." How much of this do you think was Epstein getting special treatment because
of his enormous wealth and also political connections?
ACOSTA: So, I have heard a lot about that. And if you go through the record, you will see that, in July, he was presented with certain terms.
And I laid this out in a letter, an open letter that I wrote to address some of these questions in 2011. And he was presented with terms.
And the office throughout this entire negotiation -- and it took several months from July to December -- through these five months of negotiations
stuck to those terms. You go to jail, you register, and you provide restitution.
The original term was two years. The office ultimately agreed to 18 months, register. It had to be an offense -- it had to be an offense where
there was registration, because the world needed to be on notice that he was a sexual predator.
And it had to be a situation where the victims could seek restitution, because it wasn't just enough for him to go to jail.
And let me also say, you know, restitution is also not enough. You can never put victims in the place they were before they were victimized. You
can't unwind history, but restitution is important. Thank you very much.
[15:25:11] QUESTION: You mentioned his legal team, how powerful his lawyers were. Did they put pressure on you? Did they put pressure on
D.C.? Did someone at DOJ tell you or order you to cut a deal with Jeffrey Epstein?
ACOSTA: His -- his attorneys certainly filed several appeals with main Justice.
I will again restate, when the career attorneys met with him, they presented certain terms. And the office stayed true to those terms
throughout. Those terms did not change. The agreement did not change. No level of appeal to main Justice changed the terms of these initial points
in those agreements. One last. One last -- right there. Yes, ma'am.
QUESTION: Hi. Caitlyn Palmer (ph), ABC News. I just had a question for you. In the proposed remedies from Jane Doe 1 and 2, one of their requests
is to -- can you just meet with you? You know, you're not apologizing today, but would you be willing to meet with them?
ACOSTA: Right. You know, that's a really -- that's a really good question. This is currently in litigation. And so I don't want to -- I
don't want to interfere with that litigation.
But let me just say, I have monitored this litigation without -- I haven't monitored day to day. I have never pulled a full record, but I have
watched it. And I have seen what these victims have gone through.
And whenever this litigation is concluded, I have always had an open-door policy, and I have always welcomed the opportunity to sit down. And I
think it would be really healthy for prosecutors to sometimes circle back, and really hear about what happened, because we all have to learn.
You know, one of the questions that came up at my confirmation hearing was, what would you do differently? And I alluded to this. And I said, the
world is much more transparent. We expect a lot more from government. We are a less trusting society. We can wonder whether that's right or wrong,
but we are a less trusting society today, in part because our culture expects transparency.
And so to sit down and hear from victims how this impacted them, I think would be healthy for prosecutors generally. I can't commit in this
particular case. It's in litigation. But I think that would be healthy for prosecutors generally. Thank you very much.
RICHARD QUEST, CNN INTERNATIONAL HOST, QUEST MEANS BUSINESS: Alright, for now that -- in Washington, the U.S. Labor Secretary, Alexander Acosta has
been speaking to reporters. It is concerning the scrutiny of his role in a plea agreement some 10 years ago, 11 years ago that was given to the sex
offender Jeffrey Epstein. Acosta was defending what he did all those years ago.
CNN legal analyst, Joey Jackson here. Joey, as I was listening to the Secretary, he makes a reasoned case that times were different than. They
did what they thought was best and they achieved a result of getting imprisonment, registration as a sex offender, and restitution.
JOEY JACKSON, CNN LEGAL ANALYST: You think it was a reason case, I think it was a very unreasonable case based on the law. I don't have a political
axe to grind. I'm just going to give you the legalities.
JACKSON: Number one to suggest that it's unusual for Federal government to get involved and say prosecutions is pure nonsense. I've tried state cases
and Federal cases, obviously. But the point I'm making is I've tried cases that have emanated in the state that the Federal government has reached
down and said, "You know, what state, we are going to take up this matter?"
So for it to be unusual, in fact, trials right in the Southern District here in New York. To suggest number one, that it's somewhat unusual, I
think it's somewhat disingenuous. Number two, to make the suggestion that well, we don't know if we can come to those, we are not sure of what
The Federal government in the United States has over a 95 percent conviction rate. What that means is when the Federal government goes
against you, they win. So why is this different? Why do you believe you can prove the case? Why is it when you have 36 people who are children who
say to you, my goodness, this occurred to me, can't you move forward, put them in front of a jury and make your case in front of a jury? I don't buy
QUEST: He completely denies the idea that it was rich man's privilege that got him -- that got Epstein a benefit.
QUEST: And he says, "Look, these were career prosecutors who made the decision," and just then he says right at the end, "And no appeal to main
Justice changed it."
JACKSON: Okay, let me let me address a couple of points. First thing is, I think we need to address what you said and what he said, which is that
times are different now.
There's no question at time is different in terms of #MeToo and TIME'S UP. We're not evaluating this case nor my evaluating him based upon those
times, I'm evaluating him based upon whether he thinks he can prove his case or not. And if you think you can prove the case, then you need to
move forward and you need to make that case.
[15:30:00] Now, on the issues moving forward in terms of what he said, you know, about the morays and about the times, yes, they're different, but
don't tell me about the times, tell me about the law and I think that's a crock.
Now, in terms of your ultimate question, right, which is, you believe, right?
RICHARD QUEST, HOST, QUEST MEANS BUSINESS: Yes --
JACKSON: You believe on the issues in this case that he's made a good case and he talks about privilege and not having nothing to do with it.
QUEST: Yes --
JACKSON: Privilege, of course --
QUEST: Because if -- because if I'm -- because if you're right, then that is a pretty damning indictment of supposedly the gold standard in law and
prosecution which is the U.S. attorney.
JACKSON: OK, well, let's talk about the privilege issue first and the career prosecution second --
QUEST: Oh, yes --
JACKSON: Number one, in terms of privilege, I think of course, they played into it. Are you going to tell me that his billions of dollars had nothing
to do with the fact that he was -- it was resolved in this case. There are so many people and they're generally people of color who don't get this
justice, who don't get the kind of treatment, why did he?
QUEST: Good to see you.
QUEST: Thank you very much indeed putting it --
JACKSON: Thank you --
QUEST: Forthright, thank you. We will take a break, QUEST MEANS BUSINESS, our normal agenda at this time continues in a moment.
QUEST: The Chairman of the U.S. Federal Reserve Jerome Powell delivered the message the markets wanting to hear, hinting strongly that a rate cut
is coming. There were dovish comments that lifted Wall Street, the S&P and Nasdaq both hitting record territories. At one point, the S&P was over
3,000. The chairman told lawmakers on Capitol Hill significant uncertainties are clouding the outlook for the economy.
(BEGIN VIDEO CLIP)
[15:35:00] JEROME POWELL, CHAIRMAN, U.S. FEDERAL RESERVE: Many FOMC participants saw that the case for a somewhat more accommodative monetary
policy stands and strengthened. Since then, based on incoming data and other developments, it appears that uncertainties around trade tensions and
concerns about the strength of the global economy continue to weigh on the U.S. economic outlook.
(END VIDEO CLIP)
QUEST: Now, the Fed chair is under major pressure to forecast that the U.S. economy -- if you look up, there were certain key words that time and
again, you will see used. And these are the telegraphing words of the crystal ball that shows what he's talking about.
So, uncertainties have increased, now by that he's talking about the global slowdown and specifically today he keeps referring to the trade
disagreement, the trade policy again and again and again, as he was talking before Congress, he talked about trade policy, worries over trade as being
one of the reasons.
So, then you get the second phrase that they use, they'll act as appropriate, strong labor markets with inflation there, the 2 percent
target, but of course, the elephant in the room as was admitted, of course, the U.S. President Donald Trump. He says lower rates would make the
economy go like a rocket ship.
But that arguably raises the question, should the U.S. economy, which is growing 2.5 percent to 3 percent or whatever, should it be boosted to get
towards 4 percent-plus? Luckily for us, Anthony Chan is with us, good to see you, sir --
ANTHONY CHAN, FORMER CHIEF ECONOMIST, JPMORGAN CHASE: Glad to see you --
QUEST: Former chief economist at JPMorgan. Now, as well as the Fed chair today, we also had the minutes of the last meeting. Nearly all members
agree to maintain the target range and agree the risks and uncertainties had intensified and many judged that additional policy accommodation would
be warranted. Done deal, rates get cut.
CHAN: I think it's so done deal, I was on your show on Friday and I said that the Fed was inclined to cut rates, and I think that today, basically
they sealed it. Now, you might argue that this is political pressure and there's good justification for that argument, however, if you look at the
second and third quarter GDP numbers, real GDP, they're probably going to come in below 2 percent, which is sharply below the 3.1 percent we saw in
the first quarter. So, the economy is slowing.
QUEST: So, on what basis is it slowing? Is it because of the trade dispute with China? Is it -- are these disputes creating uncertainty?
CHAN: There's no doubt, I think the Fed chair said that.
QUEST: He did?
CHAN: And in fact, if you look at capital spending not only in the United States, but really around the world, in Europe and Asia, capital spending
has actually slowed down and the reason that capital spending has slowed down, business settlement had slowed down and it's mostly due to the trade
And of course, those words were echoed today. So, those are all reasons that the economy is slowing down. Consumers are still spending, we're
probably going to see something in it close to 4 percent growth, and real consumer spending in the second quarter.
QUEST: How much of this rate cut on -- in three weeks, how much would be an insurance policy versus necessity?
CHAN: I think that at this point about 80 percent to 90 percent is insurance and the rest is necessity because you can justify it because the
economy is slowing down, but I don't think you can say categorically that if we didn't cut rates, the U.S. economy would move into a recession.
Because even if you get something a little bit less than 2 percent growth in the next two calendar quarters, still far away from recession territory.
QUEST: OK, the idea that Donald Trump has bullied the Fed into doing this. Do you buy that?
CHAN: I think those arguments have been made, you can make arguments on both sides that there is some pressure from the -- from the White House.
QUEST: Well, just this --
CHAN: You can certainly make a good case for that.
QUEST: Listen to what Maxine Waters said today.
(BEGIN VIDEO CLIP)
REP. MAXINE WATERS (D-CA): If you got a call from the president today or tomorrow, and he said I'm firing you, pack up, it's time to go. What would
POWELL: Well, of course, I would not do that.
WATERS: I can't hear you.
POWELL: My answer would be no.
WATERS: Because you think the president doesn't have the authority? Is that why you would not leave?
POWELL: I have -- I've kind of said what I intended to say on the subject, and what I've said is that the law clearly gives me a full year term and I
fully intend to serve it.
(END VIDEO CLIP)
QUEST: A full-year term of course, with the exception, he can be removed for cause, but I'm guessing refusing to cut interest rates would not be
CHAN: Absolutely not.
QUEST: The significance of the independence of the Central Bank, and I'm going to draw an analogy, I mean, Larry Kudlow today, the economic adviser
reaffirmed that. But we see this sort of difficulty, say for example in Turkey when President Erdogan just fired the governor of the Central Bank.
We see the issues in terms -- how risky is the situation for the Fed?
[15:40:00] CHAN: I think it is somewhat risky, but I think that we're still in safe territory. I think that the answer certainly emboldened the
Fed chair today or at least he gave that impression that he's not going to leave just because he's asked to leave if that were to occur
So, again, I think that for now, Federal Reserve independence is safe, but is there some pressure and maybe a little bit more pressure than in other
times, of course, you can make that argument.
QUEST: And finally, if they -- or when they cut, are we at the start of a series or a one-off just to keep people happy?
CHAN: I think that at this juncture, if you listen and you read in between the two lines, the Federal Reserve is committing, given the stronger
employment report -- just the one rate cut and then the others will be highly data dependent.
QUEST: Always good to see you --
CHAN: Welcome --
QUEST: Thank you so much indeed. A quick look at markets, we do need to update you on where we stand because there had been that much sharper
earlier on. The markets show the Dow is up -- and we've given back a lot of the gains, the S&P had been over 3,000, but it says but I've got record
there, a record on the Nasdaq at the moment.
We're in a range now, I suspect we stay in this range for the next 20 minutes or so, but what do I know? If I knew anything more, I wouldn't be
sitting here talking to you, I'll be trying to build a castle. As we continue tonight, it began as a leak, it's a Trans-Atlantic embarrassment.
The U.K.'s ambassador to the United States quits after comments by Donald Trump -- in a moment.
QUEST: Boris Johnson, the man very likely to be the next U.K. Prime Minister is facing criticism after he refused to speak out in support of
the U.K.'s ambassador to the United States. Sir Kim Darroch resigned on Wednesday, it came a few hours after Boris Johnson, the front-runner in the
race declined to defend the ambassador.
Darroch was targeted, it was a remarkable series of tweets by the U.S. President Donald Trump who said the White House would no longer deal with
Darroch after leaked cables revealed he'd called the Trump administration "inept" and "clumsy". The British -- the current British Prime Minister
Theresa May expressed her disappointment.
(BEGIN VIDEO CLIP)
THERESA MAY, PRIME MINISTER, UNITED KINGDOM: I have told him that it is a matter of great regret, that he has felt it necessary to leave his position
as ambassador in Washington. Sir Kim has given a life-time of service to the United Kingdom and we owe him an enormous debt of gratitude.
(END VIDEO CLIP)
[15:45:00] QUEST: It appears that the common thread in our top stories tonight, whether it's the British ambassador in Washington or the chair of
the U.S. Federal Reserve. It is pressure from Donald Trump, making it almost impossible for public servants to operate in the independent manner
that you might expect from them.
But more than that, it is the arguably unusual maverick some would say dysfunctional way in which he chooses to prosecute his views and policies
that puts these other people in impossible situations. Nicholas Burns is America's former Undersecretary for Political Affairs, he was a well-known
ambassador to both NATO and Greece, now, a professor at Harvard.
Good to see you, ambassador.
NICHOLAS BURNS, FORMER U.S. UNDERSECRETARY FOR POLITICAL AFFAIRS: Thank you --
QUEST: Just so we know where we're standing on this, let's be clear. Did you ever send a diplomatic telegram in any of your posts that you thought I
hope this never gets public?
BURNS: Of course, I did, all ambassadors do. You know, we have confidential secret means of communication because our governments deserve
the unvarnished truth of what we're seeing --
QUEST: Right --
BURNS: And that's exactly what Sir Kim Darroch did, Ambassador Darroch, he did his job, as he should have done his job, and it's grossly unfair that
he's been penalized for this and has to resign his position.
QUEST: Right, so that's the British political side of it. You know, that's a long -- he got himself enmeshed in a very nasty argument over the
future of Brexit. But sir, I want you to talk about Donald Trump's reaction to the way in which he and -- well, I've got it here. You say in
your tweet, "let's remember how unprecedented and immature behavior this is for any public official, much less the president of the United States. But
he's just been the president.
BURNS: We've never had a president like this. We've never had --
QUEST: So, you've got one now like this?
BURNS: We do. He's thin-skinned, he's vain, he's vengeful and we've seen all of that in his reaction to Kim Darroch this week. Look, the president,
it could not have been easy for anybody including Donald Trump to read this devastating critique of the Trump presidency. But let's remember, this was
done on a private, secret communication from Ambassador Darroch to London. It was not done publicly.
The president has to put aside his hurt feelings and put the interest of the United States forward. And the interest of the United States is not to
have a major diplomatic crisis with the United Kingdom, our closest ally. And so, the president was clearly in the wrong here to declare Ambassador
Darroch, persona non grata which is essentially what he did.
QUEST: Right, and that's an important point you make there. But if we then look at, say for example, how he's treating Jerome Powell. Now, look,
again, Nicholas, I know the rubric is you don't comment on the Fed, you don't comment on the monetary policy any more than the dollar. You've been
-- you're well familiar with that. But he says look, I'm the president, I'm entitled to tell the Fed, I think they should cut rates.
BURNS: You know, we don't give in the United States, as you know, our president absolute unbridled power. We have famously and wisely a system
of checks and balances, and the Fed is part of this in a way. The Fed was established to be quasi independent from the president and from the
Treasury of the Secretary.
And we have not had a president, we've had some very good people sit in modern times who ever have tried to challenge and push and cajole the Fed
in so blatant and public terms as President Trump has done. We hope that our leaders can have some wisdom here and some self-restraint, the
President Trump is lacking in both categories.
QUEST: Isn't the real problem that you and everybody in the city where you are and the entire diplomatic community, everybody is playing scrabble
while the president is playing monopoly? You're not playing the same game.
BURNS: And we shouldn't want to play this game. The president, as you know, has been divisive, he's trying to divide Americans from each other.
The most shocking thing here, Richard, that I have thought about is that the president feels free to tee-off on our Democratic allies like the
British government or Chancellor Merkel or Justin Trudeau, and now the chairman of the Federal Reserve Bank.
He never does this, to Kim Jong-un, Vladimir Putin, Xi Jinping, don't you find that curious? Then he goes after our Democratic allies and now in the
case of Jerome Powell, a member of the United States government, and yet, it's never frank, never caustic, never critical of authoritarian dictators.
That is a very disturbing trend in the leader of the Democratic world, and it's objectionable.
QUEST: And we'll talk about it in the future, good to see you ambassador - -
BURNS: Thank you --
QUEST: As always, thank you. As we continue --
BURNS: Thank you --
QUEST: Tonight, saying good-bye by the Beetle which ends production today. The world Beetle is a car and an ad campaign, we look at the marketing
machine behind it.
[15:50:00] This is QUEST MEANS BUSINESS, we are live in New York tonight if I can get up the stairs. Here we go, one, two, three.
QUEST: The last ever VW Beetle has rolled off the production line today. Car buyers vote with their wallets for more advanced and particularly
bigger vehicles. However, this car will have a place in popular culture forever. Now, the Beetle was made famous in movies like Disney's "The Love
Bug" -- oh, I loved that movie where the idea of a self-driving car was way ahead of its time.
And then James Bond crushed some newer Beetles with a mechanical digger in sky fall. The Beetles' success on the marketplace was propelled by decades
of memorable and imaginative creative advertising campaigns. The stuff of legend on Madison Avenue. Most of these were self-deprecating and simple.
It's been replaced.
Volkswagen doesn't do it again. The Volkswagen for people who refuse to drive Volkswagens. The economics of owning a Beetle. This one said for
all the price of a fancier priced car. Now, talk about all of these and the efforts, and let's just remember as we do, the start where the Beetle
came. Peter Shankman joins me, marketing consultant, good to see you.
PETER SHANKMAN, BRANDING & SOCIAL MEDIA CONSULTANT: And you, sir.
QUEST: Now, in the 1960s, the Beetle advertising was a phenomenon.
SHANKMAN: Oh, it was brilliant. I mean, back in the day, they didn't do stuff like this. To be self-deprecating to yourself as a brand was unheard
of. Forget what you've ever seen on "Mad Men", this didn't happen.
QUEST: Right, but let's go back to the origins of the Beetle -- Germany.
SHANKMAN: It -- yes --
QUEST: Nineteen-thirties --
SHANKMAN: It was originally designed as a car for the people, for the folks --
QUEST: It was his first car --
SHANKMAN: Right --
QUEST: For the people. So, how does a car that is indelibly attached to Hitler --
SHANKMAN: Well, technically --
QUEST: Become such a beloved car post?
SHANKMAN: We didn't start talking about it as Hitler's car until long after Hitler was gone. Because it didn't actually didn't come out as a car
for the people that Hitler wanted until long after he was dead. The first one didn't roll off the production line until after World War II had ended.
So, we never really attached that until the '70s and '80s when we started saying, hey, wasn't this a German car? Didn't this come from Germany,
that's when we started putting it together. It was cheap even though it broke down a lot. It was expendable, right?
[15:55:00] It was cheap and it broke down a lot, you get another one. But the big thing that took it off was the '60s. The era of free love and the
era of San Francisco and everyone showing up at Woodstock in Beetles before showing up in Haight-Ashbury in Beetles, that was really what sort of blew
it up into the mainstay until this day.
QUEST: But why was the Beetle the car of choice for that, do you think?
SHANKMAN: There are certain --
QUEST: Is it because it looks cute?
SHANKMAN: Well, there are different theories --
QUEST: It's got a face --
SHANKMAN: Not only is it -- not only does it look cute, but when they reinvented it in the '90s and they came out with it again, they actually
put in every single Beetle a flower from --
QUEST: From the (INAUDIBLE) --
SHANKMAN: From the '60s, you know, the way it was supposed to. So, there's this love of the Beetle and love of this sort of gift of what it
brought, it brought freedom, it brought the ability to get away from the real world the same way the people went to California and went to
QUEST: Right, and that's true. But if you have something that is so iconic that you have the potential for such marketing brilliance. Why get
rid of it?
SHANKMAN: Because it is 65 years old. And at the end --
QUEST: So, on that point, would it not -- would it have worked to attach the name to another vehicle?
SHANKMAN: Not necessarily. You know, they tried this with not your father's automobile.
QUEST: Yes --
SHANKMAN: Right, that didn't go over too well. They're trying it right now with -- oh, not that Buick, this Buick, the new Buick. It's -- when
something is that iconic, if its time has ended, you can't attach it to anything new, you have to let it go gracefully.
QUEST: But the mini, they've done.
SHANKMAN: They have, they have done the mini and --
QUEST: It takes two in the mini --
SHANKMAN: There's some success to that, again, because it works for people, but again, there's going to come a point with that harsh tradition
and that will say good-bye as well.
QUEST: We say good-bye to you, sir, thank you --
SHANKMAN: My pleasure.
QUEST: We'll have a profitable moment after the break.
QUEST: Tonight's profitable moment is not hard to feel sorry for Kim Darroch; the British ambassador who resigned today. He was just doing his
job issuing confidential information to his government, and as I've asked every single ambassador that we've talked to about this, have you ever
written an e-mail that you wouldn't want the host government to see? They look at me like I'm mad, and say, yes, of course, I have, that's what we
do, that's our job.
But because President Trump's thin-skinned some would say, decided to go on the attack, Darroch is out of a job, U.K.-U.S. relations are in tatters,
and everybody is wondering what happens next for the diplomatic community. I'm not quite sure where the success is in all of this.
And that's QUEST MEANS BUSINESS for tonight, I am Richard Quest in New York. Whatever you're up to in the hours ahead, I hope it is profitable.
The Nasdaq is at a record, we've got gains on the Dow, the bell is ringing, the day is done.