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White House: Biden Stands By Pledge to Nominate Black Woman to Supreme Court; Fed Keeps Rates Unchanged, Signals It Will Raise Rates Soon; U.S. NATO Send Written Responses to Russia's Security Demands. Aired 3:30-4p ET

Aired January 26, 2022 - 15:30   ET

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

[15:30:00]

LAURA BARRON-LOPEZ, CNN POLITICAL ANALYST: Clyburn also made clear that his top choice is not Judge Jackson. His top choice is Judge Michelle Childs, who is soon going to be coming before the Senate. And that is someone that he really hopes that Biden ultimately picks. It's his top pick. He cited her background in public education as something that he thinks is incredibly important.

But another important note is that don't expect a lot of the Congressional black lawmakers to all rally behind at this point, behind one candidate. Clyburn told me that he expects a lot of the congressional black lawmakers to all name different people that they think could be qualified for this position, but that his pick is Childs.

ALISYN CAMEROTA, CNN HOST: That's really good reporting. Laura, thank you for sharing all of that with us. That's interesting. So, Abby, now that you heard Scott's political advice to the Senator, which I think is really helpful. If they don't get any Republican votes whatsoever, if they go with Scott's advice. There's no chance Of the democratic -- of the 50 Democrats fraying here. Right. That everybody will support President Biden's pick. I mean, I only ask because we've seen such contentious battles within the Democrats over some of his legislative ideas.

ABBY PHILLIP, CNN SENIOR POLITICAL CORRESPONDENT: Yes, I think that, obviously, never say never but there's been actually one thing that Senator Manchin, in particularly has been pretty good soldier on and one of them has been President Biden's judges. He voted to confirm several -- to confirm Judge Ketanji Brown Jackson who is, based on what I'm hearing and what others are hearing, if not the top choice, but among the very top of the list. And that's really important. Because you know, Manchin and Sinema are not always in lock step but they often vote in the same way and Manchin has voted for a lot of people on this short list.

And so, you can't count on everything. And I would also say, one of the things that we should also be on the lookout for is some procedural hijinks in the Senate. I mean, this is a 50/50 split. And so, if a nomination were to be, you know, locked in a 50/50 vote and the vice president cast the tie breaking vote, I think the belief is that that can be done but I'm not sure that has actually ever happened for a Supreme Court nominee. So, Just some things to look at as we go down this uncharted procedural territory.

CAMEROTA: Go ahead, Scott.

SCOTT JENNINGS, CNN POLITICAL COMMENTATOR: Can I offer a bit of political analysis based on what Abby just said. From the Republican perspective, if all 50 Republicans hang together and force the Democrats to do this unilaterally. It means that every single Democrat therefore cast the deciding vote. And so, from the Republican political strategist perspective, you want to say Mark Kelly cast the deciding vote to put this, you know, extremist on abortion on the Supreme Court.

So, that's why, as a political matter, I suspect that Republican political consultants will be saying, hey, don't give Joe Manchin or Mark Kelly or any other Democrat in a tough state, don't give them any quarter here. Make them cast that deciding vote and make them explain that to their voters in these tough races come November.

VICTOR BLACKWELL, CNN HOST: Problem is then you have to force the three Republicans who voted for that quote, extreme candidate, who voted for her in June, defend that vote if they are then up on the ballot -- which Murkowski is this time around.

JENNINGS: Well, look, I'm just telling you how Republicans are going to feel about this. And look, a lot of it is going to stem from how Kavanaugh and Amy Coney Barrett were treated. My thinking is Republican voters are not going to look too kindly on Republicans Kavanaugh or Amy Coney Barrett were treated. But there's a long way to go here.

CAMEROTA: I mean, Amy Coney Barrett was approved lickety-split.

BLACKWELL: 30 days.

CAMEROTA: Yes, 30 days.

BLACKWELL: 30 days.

CAMEROTA: So, that wasn't a big battle. And obviously, Brett Kavanaugh had some other issues that I'm doubting that were going to see with any of these women. But in any event, we take your point Scott. Thank you very much Laura Barron-Lopez. Thank you, Abby. Thanks so much.

BLACKWELL: All right, the markets are reacting negatively after the Federal Reserve put off a rate hike for now. We'll tell you what that means for you, next.

[15:35:00]

(COMMERCIAL BREAK)

CAMEROTA: The Fed declines to raise interest rates at the moment but signals the changes could be coming soon.

(BEGIN VIDEO CLIP) JEROME POWELL, FEDERAL RESERVE CHAIRMAN: Supply and demand balance is related to the pandemic and the reopening of the economy have continued to contribute to elevated levels of inflation. In particular, bottlenecks and supply constraints are limiting how quickly production can respond to higher demand in the near term. These problem have been larger and longer lasting than anticipating, exacerbated by waves of the virus. While the drivers of higher inflation have been have been predominantly connected to the dislocations caused by the pandemic. Price increases have now spread to a broader range of goods and services.

(END VIDEO CLIP)

BLACKWELL: Mark Zandi is the chief economists at Moody's Analytics. Mark, welcome back. So, if the Fed chair says that the economy no longer needs all this help, why put off the rate increase?

[15:40: it's 00]

MARK ZANDI, CHIEF ECONOMIST, MOODY'S ANALYTICS: It has a penchant for trying to signal to investors what it's trying to do well in advance of doing it so it doesn't spook investors. If it moves more quickly without signaling that, without preparing everyone for that move, we could see much bigger declines in stock prices and other asset prices and it will do damage to the economy and to the financial systems. So, it's about signaling, preparing, getting everyone ready. We're now ready. They're going to raise interest rates beginning in March.

CAMEROTA: And so, Mark, do you think it will help with inflation? Let me just show you how Americans are feeling at the moment. This is a new Gallop poll in terms of inflation over the next six months. Americans predict -- 79 percent of Americans predict it will go up. 10 percent say it will remain the same. 9 percent say go down. Is that overly pessimistic?

ZANDI: Yes, I think so. You know, in my view there's many reasons why inflation is up. But the key reason is the pandemic and the impact on supply chains and labor markets. Lot of people are out sick. They can't work. It's creating labor shortages, causing wages to rise and adding to inflation pressures. And the supply bottlenecks coming out of Asia, means we can't get product here, there's shortages from anywhere from cars to furniture and at least a higher prices.

So, if that's the correct diagnosis I think as the pandemic recedes, inflation will. But having said that, it's clear the economy is strong. It's creating lot of jobs. Unemployment is declining. We're coming into full deployment. And that's the reason we'll debate as to whether were there or not. But it's certainly right in front of us.

So, given all that, you know, it does make sense at this point to start raising interest rates which, you know, are incredibly low. We're at zero interest rates on short term interest rates. So, it starts to makes sense to start raising rates to make them more consistent with the economy that we're observing.

BLACKWELL: Control room, put up the big board if we can and we can take a look at the Dow. It was up several hundred points. I think about 400 points now. Down several hundred points. Third day of volatility on the markets. And I've read that you said that market retreat is therapeutic. Explain that if you could.

ZANDI: Yes, they're all juiced up. You know, asset prices, stock price, bond spreads, real estate, housing, commercial real estate and of course, you know, the crypto market are very juiced up, frothy, boring on speculative. And you know, this is part of the reason why the Fed is starting to take its foot off the accelerator and put its foot on the brake. Because it's concerned the prices are getting too high. Things are turning too frothy, too speculative.

So, you know, a therapeutic correction in prices make them more consistent with underlying economic fundamentals I think is better for the economy longer run. We don't want to see markets kind of lose their minds. We don't want bubble. Because they ultimately burst and do a lot of damage. So, getting them in a place that is more consistent with the underlying economy and interest rates I think is therapeutic.

CAMEROTA: I don't know, Mark. I prefer a spa day for my therapy than watching the stock market, which is a little stressful. But my question is, for regular American, for average Americans, these rate hikes, what does that mean for them?

ZANDI: Well, let me just say to take a step back. Take a breath. You know, prices are down but they are down even after today's sell off say 6, 7 percent, stock prices were up 30 percent last year on top of big gains of the year before. The so you know, the market doesn't move in a straight line. And you know, this is evidence of that. So, I think you just need to take a breath here and not look. You know, you should be invested long run.

Now, the higher rates, you know, will start to bite. Already we're seeing the impact on mortgage rates. So, you know, if you go back a month ago, you can get a 30-year fixed rate loan -- that's kind of a bread-and-butter loan -- for less than 3 percent -- record low. Now it's 3.6, 3.7 percent which is incredibly low by any standard except the recent period. But that's up a lot so people can't refinance and it's going to get harder to buy a home at those mortgage rates. And we're going to see credit card rates start to rise, and consumer auto loan rates start to rise. But you know, we been in a world of extraordinary low interest rates. That's not consistent with a well- functioning economy. The economy is improving so interest rates have to normalize.

OK. Zen master Mark Zandi tells us all take a deep breath. Thank you --

ZANDI: Thank you.

CAMEROTA: -- very much.

All right, so the U.S. and NATO have sent their responses to Russia's demand hoping to stop a Russian invasion of Ukraine. We have details on the message to Moscow, next. [15:45:00]

(COMMERCIAL BREAK)

CAMEROTA: Today America's top diplomat, Tony Blinken, encouraged U.S. citizens to leave Ukraine. It's another sign that fears of a Russian invasion are intensifying.

BLACKWELL: Both the U.S. and NATO just delivered written responses to Russia addressing the demands Moscow made last week.

(BEGIN VIDEO CLIP)

TONY BLINKEN SECRETARY OF STATE: It's not a formal negotiating document. It's not explicit proposals. It lays out the areas and some ideas of how we can, together, if they are serious, advance collective security.

(END VIDEO CLIP)

BLACKWELL: Jeffrey Edmonds is a former CIA military analyst. He's also served as the director for Russia on the National Security Council.

Jeffrey, good to see you. So, the secretary there laid out everything these documents are not. They are also nothing new. I mean the answers, the suggestions, Russia has already heard. So, what's the significance of this hand over? What now?

JEFFREY EDMONDS, FORMER DIRECTOR FOR RUSSIA, NATIONAL SECURITY COUNCIL: I think what we're trying to do is continue the talks going forward and keep some kind of negotiation ongoing. But I think, you know, the secretary, the government and of course myself are very skeptical this is going to go anywhere.

As you alluded to, you know, Russia gave us this maximalist demands that they knew were non-starters to begin with.

[15:50:00]

And so, I think a lot of the negotiations and the diplomatic initiatives from the Russians have been disingenuous from the start. And are probably just a pretext for an invasion of the Ukraine.

CAMEROTA: Jeffrey, one of things that our experts have said might really hurt Vladimir Putin and his oligarch friends are economic sanctions. They have a lot of money tied up in the West. And so, if you start cutting off their access to that, that could be very painful. And then the Kremlin said today that U.S. sanctions would not be painful. They would be something like politically disruptive. Is that true? Or would sanctions hurt them the most?

EDMONDS: So, I do think sanctions would hurt. We do have the ability to actually inflict damage on the Russian economy. Can they survive it? Probably. Depending on the level of economic sanctions we use.

What I would say, is I don't think it's going to deter the Russians from pursuing us. They put too much on the table, this is too much about red lines with them. And so, I don't think the threat of economic sanctions is actually going to stop them.

And one note of caution I would say. Something that policy makers need to understand is, if we are creating economic instability inside Russia, Russia may very well expand the conflict. And I'm not saying that we shouldn't do that, it is just something we need to be prepared for the secondary and tertiary effects of these economic sanctions.

BLACKWELL: Important note, let me ask you about this meeting in Paris today. Russia, Ukraine, France, Germany, all at the table today. The United States not there. What's the potential? We didn't hear any big headlines out of it afterwards. That that group can get to some kind of resolution?

EDMONDS: I mean I hate to be so pessimistic but I don't see much coming out of that. That group has met over the course -- you know, since 2014, the initial, you know, annexation of Crimea, the invasion of Ukraine, that process hasn't yielded results that either side is very happy with. And the lack of progress in that forum is one of the things the Russians claim has brought them to this point. And so, I just don't see any last-minute changes that are going to dramatically change how the Russians view the situation.

CAMEROTA: So, Jeffrey, if there's no off-ramps anymore, what's going to happen?

EDMONDS: I honestly think that it is more probable than not. I mean, I give it like an 80 percent, which sounds really high, that Russia is going to invade Ukraine. I've struggled with this and I've talked to my colleagues about it in the Russian, you know, analytical community and we don't see a way out of this.

Russia, like I said, these demands were so maximalist. And the buildup on the border, you know, almost half of the Russian military is sitting there. There's too much.

And so, in a certain sense -- I mean he's either worked himself up into a corner or just always intended to do this. But it's very difficult for me to see a way for something to happen. Someone to offer something that's going to get him to back down and save face and be able to walk away and say I actually have a victory here. I don't see us willing to do that.

BLACKWELL: So, if you believe it is going to happen, let's talk about timing. Deputy Secretary of State Wendy Sherman says that one of the considerations possibly that Putin has, maybe why the invasion has not happened, is because the Winter Olympics are going to begin in just a few days and he knows that Xi Jinping would not be, in her words, not be ecstatic about Putin choosing that time. Do you give that argument any credence?

EDMONDS: I think that might figure in in part of the calculation. I don't think it is the sole driver. I actually think what the Russians are waiting for is for more troops on the border. I think that if the Russians do go into Ukraine, this is going to be a very big operation. It's not going to be just turning up the heat in eastern Ukraine. It's

going to be a large aerospace fight with a lot of long-range strikes, air forces followed by ground forces. And in my opinion, my own assessment, even possibly going all the way to Kyiv or even a little west of Kyiv. I think it's going to take a little bit longer for them to get forces in place that they need to do that kind of operation.

But I also think the timing with the Olympics, I mean, the Russians and the Chinese are enjoying a very close relationship right now and I don't think Putin wants to unnecessarily jeopardize that if he can help it.

BLACKWELL: All right, Jeffrey Edmonds, thank you so much for the insight.

Well, of course, we're following the breaking news out of the Supreme Court. Justice Stephen Breyer is set to retire giving President Biden a chance to nominate someone to the high court. Special coverage continues after this short break.

[15:55:00]

(COMMERCIAL BREAK)

CAMEROTA: OK, so the Super Bowl is going to feel and look a little different this year. Thanks to the Omicron surge.

Health officials in Los Angeles say fans will, at the game, will be given a KN95 mask and stadium workers will be reminding people to wear their masks at all times except when eating or drinking.

BLACKWELL: OK, so, fans can get free rapid tests before the game. Officials say they anticipate giving out 60,000 tests. They're also offering vaccines and boosters at the NFL Experience event. And anyone who gets a shot will get a free ticket to that NFL Experience. That's not a free ticket to the game. So, let's be clear about that.

[16:00:00]

But I imagine that people are going to be spending a lot of time drinking so those masks are going to off for a lot of the game. What do you think?

CAMEROTA: Well, I also think that by the time you get to the game, it's a little late for the test. You're going to leave the Super Bowl if you test positive at the game? I'm not sure about that.

BLACKWELL: Not sure. All right "THE LEAD" with Jake Tapper starts right now.