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January 6 Committee Releases New Video; Federal Reserve Hikes Interest Rates. Aired 2-2:30p ET

Aired June 15, 2022 - 14:00   ET

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

[14:00:00]

VICTOR BLACKWELL, CNN HOST: Alisyn is off.

We begin with the breaking news. Right now, the U.S. Central Bank is announcing its decision on interest rates. Now, the expectation is, the Fed will order the biggest rate hike in 28 years. This would be the most aggressive move yet from the Fed to try to bring down the soaring cost of gas and food and so much more.

Our Matt Egan has the number.

Matt, what is it?

MATT EGAN, CNN REPORTER: Victor, breaking news.

Moments ago, the Federal Reserve announcing an interest rate increase of three-quarters-of-a-percentage point. This is an aggressive step aimed at trying to tame red-hot inflation. This is the biggest single move by the Federal Reserve since 1994. And it means higher borrowing costs for families, mortgages, credit cards, student debt, car loans.

And what's amazing here is that this all came together in really the last few days. Friday's inflation report was so disastrous, showing the biggest spike in consumer prices in over 40 years, that the Fed felt the need to move faster here, to take a page out of the playbook of Alan Greenspan and Paul Volcker with a very big interest rate increase.

And they signaled that more aggressive steps are to come, because Fed officials said that they are -- quote -- "strongly committed" to getting inflation back down to 2 percent. And given that it's nowhere near 2 percent right now, that does imply more big rate increases to come.

As far as why this is happening, I think it's important to think about the economy as almost like a car on a highway and the Fed is the driver. When it needs to speed the car up, it will cut interest rates to stimulate demand. Right now, we have the opposite situation.

It's going dangerously fast. And so the Fed needs to slow things down. It's actually slamming the brakes on the economy. The problem here, Victor, for the Fed, is, if they don't do enough, inflation can go out of control. If they do too much, it could end up slowing the economy right into a recession.

BLACKWELL: Rahel Solomon, business reporter, is here with me as well.

So, listen, a month ago, 75 basis points was not on the table, not being considered. And heading into today, it was expected. What's the reaction now to what we're seeing?

RAHEL SOLOMON, CNN BUSINESS CORRESPONDENT: Well, it looks like the investors in markets like what they're seeing.

In fact, I just got off the phone about 15 minutes ago with David Wilcox, an economist with the Peterson Institute and Bloomberg, and asked, if, in fact, we do see three-quarters-of-a-percent, what does that signal to you?

And he said, this is the Fed essentially trying to regain control of the narrative, that it understands the depth of this issue, and that it is getting ahead of it, that it is coming out stronger than perhaps before. So this is a regaining of the narrative. And when we hear from Jay Powell in about 28 minutes, it'll be really interesting to hear his language around this.

BLACKWELL: Yes, let's go back to Matt, who is there in D.C. expecting to hear from the Fed chairman, Jerome Powell, in a few minutes now.

What's the expectation of the narratives he's trying to set here?

EGAN: Well, Victor, Jerome Powell has to, first of all, explain what changed, because, just six weeks ago, he was at the press conference for the Fed. And he said that a 75-basis-point move, what they just did today, was not actively under consideration.

And now they're actually doing it. He also needs to explain how -- what's going to happen in the economy next, because new projections that were just put out by the Federal Reserve moments ago show a darkening picture for the economy. The Fed downgraded its GDP forecast for both this year and next year. The Fed is now calling for 3-point -- I'm sorry -- 1.7 percent real GDP increase. That is down from 2.8 percent back in March.

They also increased slightly their unemployment projections. And they are ramping up their inflation forecast. The Fed is now saying that its preferred inflation gauge, the PCE metric, is going to be at 5.2 percent at the end of this year. That is up from 4.3 percent, its earlier projection in March.

So that is nowhere near what is considered healthy inflation. And so I think that Jerome Powell is going to have try to regain some credibility here and try to explain to people exactly what they're going to do to try to get inflation back under control, Victor.

BLACKWELL: Rahel, back to you.

The experts you're speaking with, do they expect that this three- quarters-of-a-point will do what needs to be done?

SOLOMON: Well, that's a very interesting question.

In terms of monetary policy, not yet, right, because there's a lag of about six to nine months in terms of what we see in terms of monetary policy and when we start to see that really reflected in the data and in the economy. But, again, this is messaging, right?

This is messaging to the markets, to households that the Fed understands that inflation is not moderating even. It is accelerating. So it understands that it has to do more. And the unfortunate reality is that will likely cause some pain in the interim, right, in terms of, of course, inflation sort of remaining with us, but also perhaps even some joblessness.

And so there -- that remains to be seen, but it looks like some pain will be had.

BLACKWELL: All right, Rahel Solomon, Matt Egan, thank you both.

[14:05:00]

Let's bring in now CNN global economist or economic analyst Rana Foroohar. She's also a global business columnist and associate editor at "The Financial Times" and business journalist Marc Stewart.

Rana, let me start with you. Just your reaction to the decision from the Fed today.

RANA FOROOHAR, CNN GLOBAL ECONOMIC ANALYST: Well, it's totally appropriate.

I was expecting this, even though it hasn't been on the table very long. Inflation is out of control, and the Fed's got to get it under control. I think, also, we have been seeing real coordinated messages really from the Fed and the White House that, look, this is a Volcker moment. This is time to bring out the big guns. And I think it's appropriate that they have done so.

It's going to make the market very, very volatile in the near term. So folks should definitely strap in, but it's the right decision.

BLACKWELL: Marc, first thoughts?

MARC STEWART, BUSINESS JOURNALIST: Well, there was no question this was a data-driven decision based off of what we are seeing happening right now.

I think the question is, what happens next? And I think a lot of people are asking themselves, are we going to move closer into a recession? I can tell you, every morning I wake up -- I'm sure Rahel feels the same way -- you get -- we get e-mails from analysts, from bankers all putting their spin on all of this.

What we don't know is what's next. And that is truly a clear question. I think one way to think about all of this as to what's happening today and what's happening in the future is kind of like a chef trying to perfect a recipe. Sometimes, you need more salt, you need more sugar, but you don't want to add too much.

And that's what the Fed is trying to balance here.

BLACKWELL: Rana, help us understand the gravity of what just happened, first time in 28 years an increase of this size.

If we're using the braking analogy, is this a tap? Is this firm pressure?

(LAUGHTER)

FOROOHAR: Yes.

BLACKWELL: Or did the Fed slam on the brakes today?

FOROOHAR: It was very firm and moving towards a slam. I actually like the recipe analogy.

As a matter of fact, I was thinking about a souffle. And the market is a souffle. I mean, it has been pumped up by the Fed for years now, not just since the pandemic, but since the financial crisis. And so we are really in unprecedented territory.

So, two-thirds-of-a-point -- or -- sorry -- three-fourths-of-a-point rise is really unprecedented. How it's going to affect the market, I think, is going to be larger than it would be in the past, just because there has been so much money put into the market by the Federal Reserve.

I mean, we haven't lived through sort of a monetary experiment like this ever. So it's really uncharted territory.

BLACKWELL: Yes.

Marc, what are the first indicators you will be looking for and when to determine the impact of this decision and if it's starting to cool inflation?

STEWART: Well, I think, very early on, we should see different sales numbers.

So, for example, as we know, when you raise interest rates, it costs more to borrow. So, therefore, things like home mortgages, auto loans are all going to cost more, in addition to paying off things like credit card debt. I think what we need to do is look at the housing data, look at the mortgage data.

And as we have seen every month from the census, we get a good idea as to how much people are spending. If that spending cools off, then perhaps that's a good indication it's having some impact.

BLACKWELL: Rana, on that point of volatility you made just a moment ago, we saw the Dow spike to about 340 in the green territory, and just a few seconds ago, dipped into negative, now back across the line.

We're seeing what is a clear reaction to the decision.

FOROOHAR: A hundred percent.

What's happening now is partly algorithms kicking in. A lot of trading is computerized right now. And it's rising and falling on certain words, certain messages. But there's also an interesting phenomenon that I'm going to be very curious about. A lot of retail investors have actually plowed into the market in the last few months and weeks.

You have seen a fourfold increase, actually, in the last few months of retail investor flows into the market. That's typical of a bubble, where, unfortunately, the little guy sort of gets in at the very end and then sometimes take some of that pain.

The question is, are people going to buy this dip, and thus you're going to see the market maybe rebound in the next few weeks? Or are they going to say, ah, the Fed's finally pulling the plug, and they have been pretty much what's been pumping up markets, so we're out and we're going to stay on the sidelines for a while now?

BLACKWELL: All right, Rana, Marc, stay with us.

I want to bring another element into this conversation. And that's President Biden's letter to seven major oil companies today. He's demanding that they -- quote -- "take immediate actions" to increase supply.

Now, he also warned that their high profit margins are unacceptable at a time of war overseas and, of course, soaring prices for consumers at home.

CNN chief White House correspondent Kaitlan Collins is here.

So tell us about the decision to write this letter and how soon the administration expects some response from these companies.

KAITLAN COLLINS, CNN CHIEF WHITE HOUSE CORRESPONDENT: Well, they're hoping to see action soon.

But whether or not they are going to get that doesn't seem very clear right now, because they have put out this strongly worded letter, but the White House knows they're pretty limited in the tools they can use here, despite the president warning that he is potentially prepared to use emergency authorities should these companies not increase their output like he's asking them to do.

[14:10:02]

And one thing that a Democratic senator has put on the table, Senator Ron Wyden, is this idea of a surtax on excess profits by oil and gas companies, something that the energy secretary was asked about when she was on CNN earlier today.

(BEGIN VIDEO CLIP)

JENNIFER GRANHOLM, U.S. ENERGY SECRETARY: No tool has been taken off the table. And he wants to hear from the refineries, the companies who are doing refining, to see what is the bottleneck and how we can increase supply. And he's also asking, of course, for the oil and gas industry to increase supply as well by drilling more.

(END VIDEO CLIP)

COLLINS: So you heard from Secretary Granholm.

They're hoping to have a meeting where they can hear ideas from these oil company executives. But, already, these companies are saying that really their hands are tied here. There is nothing they can do to quickly ramp up production. A lot of them say they're already operating almost at full capacity.

And the American Petroleum Institute is pushing back on this new letter from President Biden, saying that it's his misguided policy agenda shifting away from domestic and -- domestic oil and natural gas that has compounded these inflationary pressures, and basically made things worse.

So the question there, of course, is whether or not there is going to be any -- this issue is going to be resolved when these two sides do actually meet, because, Victor, you have seen the president ramping up the pressure on these oil companies. You heard him last week at the Port of Los Angeles saying that he believes Exxon made more money than God last year.

But a lot of these companies have said some of these facilities that they shut down was because they were not profitable during COVID-19, when demand was so low. Now, of course, they are dealing with demand incredibly high. And they say that they're really operating almost at full capacity.

But it certainly is the president also taking a step here on the messaging front, saying he's doing everything he can to bring down prices, which the White House is conceding not much in the unilateral view.

BLACKWELL: Kaitlan Collins with the reporting from the White House.

Kaitlan, thank you.

Let's bring back down Marc and Rana.

Marc, let me start with you on this letter from the president and the response. Some of this is politics, right, the back-and-forth between the White House, and we now have got this response from the Petroleum Institute.

But to the heart of what the president is requesting here, how much would that impact gas prices?

STEWART: I think there's a lot of debate among economists and oil analysts about how much needs to be done. It would have to be a significant amount to add to this mix. I think the thing which we have to remember here is that the oil

companies, although we would like to think they have a big allegiance to the American consumer, their biggest allegiance is to their shareholders and to their investors. And this is a capitalist society.

So they are able to operate like this. I think, though, the next few months ahead are going to be very telling. If indeed, oil imports from Russia are cut off to Europe, that could cause prices to spike. And as we have discussed before, oil being sold at anywhere from $180 to $200 a barrel is still being discussed.

So perhaps the economics will create some pressure for the oil companies, but, right now, they are staying in their lane of what they want to do.

BLACKWELL: Yes.

Rana, what's the impact of one on another, the increase of the interest rate on gas prices on what Kaitlan just reported?

FOROOHAR: Well, it's interesting.

When interest rates go up, it makes debt more expensive. We actually saw a few years back a shakeout in the oil and gas market. There were a lot of companies that had taken on a lot of debt to make investment. We saw an interest rate shift, and actually sort of a pullback from that Fed easy money. And you did see some fallout in the industry.

I don't think that that's going to happen now, because, frankly, you have got record oil prices that are likely to stay high for some time. And it must be said much of this is about the war in Ukraine. Certainly, if you were to see Europe pull Russian gas offline, that would be a major, major price impact, or I'm sure that's something that the White House and the Fed probably don't want to see in the short term, because it would affect American consumers, absolutely.

One thing I'm going to be watching is, as energy goes up, as food goes up, are consumers cutting back on everything else? There's a lot of signs that basically any kind of expenditure that isn't absolutely necessary, a streaming service, a new gadget, a toy, people are cutting back on that.

And that is in turn going to hurt companies at a time when their debt servicing is getting higher. That could mean that we start seeing some bankruptcies. And that will in turn have an effect on the stock market.

BLACKWELL: Yes, anecdotally, one of our correspondents heard from a woman today who, because of the cost of filling up her tank, couldn't buy herself a birthday present. I think it was a purse. So we're starting to see consumers, all of us, make some hard decisions.

Rana Foroohar, Marc Stewart, thank you.

FOROOHAR: Thank you. BLACKWELL: The January 6 Committee releases new video of a Republican

congressman appearing to lead a tour through the Capitol on the eve of the insurrection. He is now responding. You will hear that.

And results from several key primaries prove former President Trump's power over the GOP has not waned.

A breakdown of the results and the bigger picture -- next.

(COMMERCIAL BREAK)

[14:19:22]

BLACKWELL: New footage from the January 6 Committee shows the person who was led on a tour by GOP Congressman Barry Loudermilk on January 5, 2021, taking photos of tunnels, hallways, staircases inside the Capitol, and who was then back the very next day making threats against specific members of Congress.

The U.S. Capitol Police released a letter this week saying that they found no suspicious activities of -- or evidence that Loudermilk led a recognizance tour. Loudermilk is accusing the January 6 Committee of a smear campaign.

This is part of his tweet in response: "This false narrative that the committee and Democrats continue to push that Republicans, including myself, led reconnaissance tours is verifiably false. Nowhere that I went with the visitors in the House office buildings on January 5 were breached on January 6."

[14:20:10]

With me now, CNN senior political analyst John Avlon, author of "Washington's Farewell" and "Wingnuts," and CNN political commentator Margaret Hoover, host of PBS "Firing Line."

Welcome to you both.

MARGARET HOOVER, CNN POLITICAL CONTRIBUTOR: Great to be here.

BLACKWELL: Let's start here, that response, that reaction from Loudermilk.

The committee or at least the suggestion was, he's leading this recon tour. What do you think of his response?

JOHN AVLON, CNN SENIOR POLITICAL ANALYST: I think there's a lot of explaining to do, in part on the part of the Capitol Police officers, because they exonerated him.

And the question, is it the definition of a reconnaissance tour? Does that imply that Loudermilk knew what he was doing? That may well not be the case. But the committee's got the tapes.

BLACKWELL: Yes. AVLON: They released the tapes. And these are folks who are getting a

tour on the day the Capitol was closed to visitors, the day before the attack on the Capitol, and there are folks taking pictures who apparently showed up at the riot in places you don't normally take pictures.

So there's a lot more explaining to do about this.

BLACKWELL: Yes, the receipts from one day where you see the people taking the photographs. They're back the next day, at least one of them, on tape making these threats outside the Capitol. What do you make of this back-and-forth?

HOOVER: Well, it's troubling.

And one hopes that the committee really has hard sort of evidence and more there than simply sending a letter out that they released publicly. Loudermilk says he didn't even get it himself. So there's a real discrepancy in accounts here.

BLACKWELL: Yes.

HOOVER: And it's not going so far as to say he's culpable of having helped plot an insurrection against the Capitol. I mean, they're not doing that.

But he does have a lot more to explain.

AVLON: Yes.

BLACKWELL: And what they're asking is, come forward, answer the questions, explain.

HOOVER: And he has been willing -- unwilling to do that.

BLACKWELL: And he's decided that he will not do that.

AVLON: And that seems to be the tell in all this, right?

HOOVER: Right.

AVLON: Everyone who's testifying so far under oath in the Jan. 6 hearing seems to be saying, for example, that Donald Trump was told that he'd lost the election.

Everyone who is insisting on his innocence is refusing to take the oath. So, in this context, if you're refusing to take an oath and testify, it seems to be an admission of non-innocence, at the very least. So that's on him.

BLACKWELL: Let's talk about clarity.

And we heard from a member of the 1/6 Committee, Zoe Lofgren, Congresswoman Zoe Lofgren. She seemed to suggest that the $60,000 paid to Kimberly Guilfoyle for her remarks at the rally at the Ellipse on January 6, 2021, they came from donations to a Trump fund-raiser, this election defense fund.

In fact, we have learned that it came from Turning Point, actually a donation from the public areas to that organization. Factually, it's not right. She calls it a grift. That's for you two to decide. But what do you make of that? Is that problematic for the committee?

HOOVER: Look, the committee, at this point, all eyes are on the committee and how careful they're being in terms of how they're communicating every element of evidence to the American people.

BLACKWELL: Yes.

HOOVER: And so it's enormously important for them to be incredibly clear and accurate.

And it does appear that Representative Lofgren maybe spoke to...

BLACKWELL: Maybe she mischaracterized it, yes.

HOOVER: Inaccurately. She maybe mischaracterized it.

Maybe she didn't mean to mischaracterize it. Look, $60,000 to speak at an Ellipse speech, which is the take back the big lie speech, by...

AVLON: A two-minute speech.

HOOVER: A two-minute speech, I know. That's an extraordinary amount of money, regardless of what entity paid it.

BLACKWELL: Yes.

HOOVER: It also appears -- there's some CNN reporting that the heiress who donated that money to Turning Point had apparently excluded speeches from what she wanted her donation to go to.

BLACKWELL: Yes.

HOOVER: So I would suggest, where there's smoke, there's fire. Let's look at it.

But on the committee, they got to be -- they just -- there can't be any missteps.

BLACKWELL: Yes.

John?

AVLON: I mean, just, look, the larger takeaway is how corrupting the partisan economy is.

HOOVER: Yes. That's right. That's right.

AVLON: And the money's all fungible, and it's being flooded to sort of Stop the Steal rallies. And it's ending up in people's pockets where nobody intended it to go, including, in this case, the heiress. When the president's son's girlfriend gets $60,000, among other things, it gives a little more insight why she's yelling, the best is yet to come, because it's about to hit her bank account.

(LAUGHTER)

BLACKWELL: All right, John, let's talk about these primary elections yesterday.

Tom Rice, who voted for or in support of impeachment of the president, former president, lost his primary. Nancy Mace, she won. You tweeted out that people are reading way too much again to this. Why?

AVLON: Look, this is about South Carolina.

People are -- really like to look at that and say, look, this is because Tom Rice voted to impeach and Nancy Mace refused to support overturning the election, but then tried to back off and make nice with Trump. That's a fundamental misreading of the facts on the ground, it seems to me.

Here's what you got to keep in mind. Rice's district is northern coastal South Carolina, Myrtle Beach. just to use an example, Horry County, which is the county that encloses Myrtle Beach, went for Donald Trump 2-1. So it is a hardcore Trump area. And that turnout for a Republican primary is going to be even more so.

Nancy Mace's district, where my parents live, First District of South Carolina, Charleston County, went for Joe Biden by 12 points. It is just much more of a swing district, and a more moderate group of Republicans are going to turn out.

[14:25:00]

HOOVER: Yes.

AVLON: That's why she pulled it out.

BLACKWELL: Yes.

AVLON: So I think it's just important to remember that all politics is local and put it through that prism.

BLACKWELL: All right.

Do you think there's anything -- arguably, the person at the top of the congressional hit list for former President Trump is vice chair of this committee, Liz Cheney.

HOOVER: I don't think there's any argument about that. I think you have got it.

BLACKWELL: Is there anything that can be extrapolated to that race in Wyoming?

HOOVER: Look, John's right. All politics is local. All you have to do is look at that race.

BLACKWELL: Yes.

HOOVER: And Liz Cheney, there is very -- I mean, I don't know a pollster in America who could look at polling in Wyoming and say Liz Cheney's got of path to pull this out.

It is going to be -- I mean, I think her race looks a lot like Tom Rice's race. And, by the way, her district looks a lot like Wyoming.

AVLON: But we're playing for history's stakes here. Remember, politics history in the present tense.

And if Tom Rice and Liz Cheney are trying to do the right thing by history's eyes, to be honorable, to insist on the truth against lies, they will be vindicated in the eyes of history, and they will have a longer future than folks who are trying to double down for short-term gain.

BLACKWELL: Yes.

HOOVER: You can die on that moral hill, but then you don't have the responsibility of the American people at your behest in order to...

AVLON: Do the right thing.

HOOVER: Do the right thing.

But, God, I'd like to see her still in Congress.

BLACKWELL: John, Margaret, thank you.

AVLON: Good to see you, man.

BLACKWELL: All right.

Extreme weather coast to coast. In the Midwest, dangerously high temperatures have knocked out power for thousands of people. And record rainfall at Yellowstone National Park could force it to stay closed for quite a while.

We will take you there.

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[14:30:00]