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Justice Department Examining Trump's Role in January 6?; Interview With Former Labor Secretary Robert Reich; Federal Reserve Raises Interest Rates. Aired 2-2:30p ET
Aired July 27, 2022 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
VICTOR BLACKWELL, CNN HOST: Hello. I'm Victor Blackwell. Welcome to CNN NEWSROOM.
ALISYN CAMEROTA, CNN HOST: And I'm Alisyn Camerota.
At any moment now, the Federal Reserve will announce its decision interest rates. The Central Bank is expected to raise rates for the second time in a row in what could be the largest back-to-back increase in decades.
BLACKWELL: Now, the Fed's hope is this aggressive move will help tame inflation. Consumer confidence in the U.S. economy slipped for the third straight month in July.
CNN's Matt Egan is at the Federal Reserve.
So, what's the decision?
MATT EGAN, CNN REPORTER: Victor and Alisyn, the Federal Reserve just made history, announcing that they're raising interest rates by three- quarters-of-a-percentage point for the second meeting in a row.
We haven't seen anything like that in back-to-back meetings in modern Fed history. But we're not in normal times. We're dealing with the worst inflation crisis in 40 years. And as the Fed noted in its statement today, inflation remains -- quote -- "elevated," due in part to Russia's invasion of Ukraine, and very high food and energy prices.
So the Fed is stepping in and acting like the firefighter. They're trying to put this inflation fire out. The goal here is to raise borrowing costs and try to cool off red hot demand.
And that should hopefully allow supply a chance to catch up. But officials also signaled that they're not nearly done with rate hikes. They said it would -- quote -- "will be appropriate to continue raising interest rates."
And here's the problem. They're raising rates into an economy that is already showing cracks here. In the new statement today, the Fed inserted a line saying -- quote -- "Recent indicators of spending and production have softened." So therein lies the big challenge here for the Federal Reserve. Can they slow the economy enough to cool off inflation without accidentally sparking a recession?
CAMEROTA: Matt, is this what was expected, three-quarters-of-a-point? And, also, what does it mean for all of us, the average consumers?
EGAN: This is what was expected. There was a small chance that they would actually do more.
But this is basically what investors were anticipating, what Fed officials have been telegraphing for recent weeks. What does it mean? It means borrowing costs are going up for all of us. We're talking about car loans, credit cards, student debt, of course, mortgage rates going up. We have already seen that mortgage rates have basically doubled from a year ago.
And that is slowing down the housing market. The higher rates go, the less home that you can afford. And, hopefully, for all of us, it means that there's going to be a break when it comes to this cost of living crisis. The goal is to try to get inflation under control. Again, though, that won't be easy to do that without slowing the economy down too much that it causes a recession.
BLACKWELL: All right, Matt, stay with us.
And let's bring in Robert Reich. He's the former labor secretary under President Clinton, also the chancellor's professor of public policy at Berkeley and the author of "The System: Who Rigged It, How We Fix It," and financial analyst Dylan Ratigan. He's also the co-host of the "Truth or Skepticism" podcast.
Gentlemen, welcome to you both.
Mr. Secretary, first, your reaction to this three-quarters-of-a-point historic increase in the interest rate?
ROBERT REICH, FORMER U.S. LABOR SECRETARY: Well, it wasn't unexpected.
I mean, most people expected it. Most economists and analysts expected this was coming. But let's be make absolutely clear there is no question it is going to fall on average people, I mean, in terms of student loan debts increasing, mortgage rates increasing, credit card rates increasing. They have already increased over the last six months, eight months.
And they're going to continue to increase. And it's not clear that the fire that the Fed is fighting is actually here in the United States. The fire is coming from all over the world in terms of inflation. Supply chain problems are global.
Most countries are suffering from inflation. Ukraine and the problems of Ukraine in terms of food and energy and Russia, what Russia is doing, are all out of the ambit of the firefighting by the Fed. And so this may be very effective in terms of actually the hose, to use the metaphor, not overusing the metaphor, that the Fed is employing.
And there may be a lot of firepower there, but it's not really -- the danger is, it's not really reaching the sources of the inflation. And we may find ourselves in a recession as a result.
CAMEROTA: I like the firefighter metaphor. I get it. That one makes sense.
Dylan, do you think there was a different way to put out this fire, a better way?
DYLAN RATIGAN, BUSINESS ANALYST: Well, I mean, again, when you're fighting a fire, just to stay with Mr. Reich's metaphor -- and, hello, Mr. Secretary -- you need everything you can get.
And I think two things. One, rates are the obvious thing. The second thing is to distinguish between the war and the sanctions, because the sanctions and the war are not the same thing. And the sanctions, to the degree to which they can be modified in a way that they provide less stress in Europe and the United States and more stress on Russia, which is the target for those sanctions, I think is something that needs to be debated and considered.
I think that they may be very well-intended, but I think we do ourselves a disservice when we say, well, the Russian invasion of Ukraine created this inflation. For sure it creates supply disruptions. And we know the grain issues, we know the steel issues, we know the fertilizer issues. Those are -- that that's not that that's not a true statement.
But the only other (AUDIO GAP) firefighter has (AUDIO GAP) review potentially of whether some of the sanctions are -- can be adjusted in a way that is -- gives you a little bit more leverage.
The other thing I just would to say for context, we're talking about rates going to 2.5 percent, OK? Like, so before everything freaks out, you're you had an economy that was on zero percent interest rates for the last decade. And after all of this historic, extraordinary extreme things, you're now at 2.5 percent.
BLACKWELL: Matt, the Fed chair -- Fed Chair Jerome Powell will be taking questions in about 25 minutes.
What's the most pressing question he has to answer?
RATIGAN: That's for me, Victor, or...
EGAN: Well, I think the question is the one that is on everyone's mind.
BLACKWELL: That's for Matt.
EGAN: The question is, how can you get this just right?
Because Jerome Powell has to -- he has to thread the needle here, right? In the press conference, he wants to signal that the Fed means business here, they take this inflation fight very seriously, and they're not going to let up until they get inflation under control.
But they also want to give themselves some flexibility, because the next Fed meeting isn't until late September, and we're going to get additional inflation and jobs and consumer spending numbers. So they also want to give themselves some wiggle room, where they don't get boxed into having to do a another massive interest rate hike, if perhaps that's not what's actually needed.
I just want to go back to one point that Alisyn had asked is, what else could the Fed maybe do or what else could they have done differently? Going back to the firefighter metaphor, arguably, with the benefit of hindsight, they were late to the scene of this fire, right? They didn't actually begin raising interest rates until March.
And even then, it was just a quarter-of-a-point. And so I think that if they had to do it over again, perhaps they would have moved a bit faster to address this inflation crisis.
CAMEROTA: Secretary Reich, you have been very consistent all along through this past couple of months talking about how there's another reason -- that there's another thing that's driving inflation, and that's basically greedy corporations.
And so how does this affect them?
REICH: Alisyn, the Fed is trying to slow the economy down overall. And that, presumably, would include corporations and corporate profits.
But, remember, we know last year, corporate profits were at a 70-year high. And we also know there's a lot of evidence that corporations were using inflation as a cover for raising a lot of prices. I mean, we have -- and this is no secret. I mean, there's a lot of information out there about the margins. That is the gap between what corporations are actually paying for materials and for labor and the actual prices that corporations are charging consumers.
And that gap, that markup was growing right through 2021 and the start of 2022. It may still be growing. It's very important not only to rely on the Fed, but also to consider such things as a windfall profits tax. It is before Congress now. There are more and more members who are interested in doing this.
The Conservative government in Britain has done this already with regard to oil companies. It ought to be done in those sectors of the economy where we have seen these markups get out of control. There's no reason that consumers ought to be paying this kind of money and at the same time bearing the burden of these Fed rate increases.
BLACKWELL: Dylan, you made an important point that, although we're seeing these historic increases, federal interest rates are -- the interest rates are still low, right?
As we see the polling just out, only 18 percent of Americans would describe the economy as in good shape; 82 percent say it's in poor shape. Give us bird's eye view here of the health, the strength of this economy in the context of these numbers.
RATIGAN: You have to look at the labor market first.
And right now, the labor market is one of the bright spots in the economy. Now, the future uncertain, and there's lots of flashing signals, which we can talk about. But, for starters, the labor market is, as of now, in very good shape.
Also, the housing market slowing, but I would say that's the place that's probably the most vulnerable, I would say the reason people may describe their relationship or their perception of the economy, as you just described, Victor, is because asset prices have collapsed over the last six months. Collapse may be too strong of a word, although, in some cases, it truly has been a collapse, but because financial assets have adjusted substantially lower over the last six months and because the rhetoric around it and because prices for things that we're very sensitive to.
The most obvious being gasoline, the next most obvious being things like bread or groceries and milk, and so the things that you actually come in contact with, food and gas, at the same time, people's investment accounts going down 10, 20, 30, 40 percent depending, creates a feeling of a bad economy from a consumer standpoint.
But the actual economy, when it -- when you look at the labor market right now, and the demand for labor and the layoffs, and all these sorts of things, is quite healthy. And so I think that you have a contrast, I guess, between the personal experience of higher gas and food prices and losses in investments with a labor market that's still quite strong.
BLACKWELL: Yes, a very personal question. What does your banking account look like? How much does it cost to fill up your truck?
Dylan Ratigan, Secretary Reich, Matt Egan, thank you all.
Let's turn now to the federal investigation into January 6. Recent moves by the Department of Justice suggest that former President Trump himself is under scrutiny.
Top aides to former President -- Vice President Mike Pence, Marc Short and Greg Jacob, were summoned before a federal grand jury.
CAMEROTA: According to a source, both faced questions about the fake electors scheme and the role of Trump lawyers John Eastman and Rudy Giuliani.
With us now,we have CNN senior justice correspondent Evan Perez and Renato Mariotti, former federal prosecutor. OK. So, Evan, we know that the DOJ has some phone records. They have
seized some phone records of the top Trump aides. So it's getting closer in, it appears, to former President Trump. What do these moves tell us?
EVAN PEREZ, CNN SENIOR JUSTICE CORRESPONDENT: Well, Alisyn, what it tells us is that, some months ago, certainly, the Justice Department did some legal analysis to determine that they needed to cross the bridge that clearly they have now crossed, right, which is, they're approaching, they're inside the White House now, where they're talking to people like Marc Short, who was the vice president's chief of staff, the vice president's counsel, who is Greg Jacob, answering questions.
These are people who were in a meeting, for instance, on January 4 where the former president was pushing Mike Pence to accept this legal theory from John Eastman, his lawyer, that he had the power to block the certification of the election results and to help pave the way for these fake electors to keep the former president in power.
We know, for instance, that back in January, we heard from Lisa Monica, who told me in an interview that they were looking into these fake collectors. And then we saw these subpoenas that went out to dozens of these people. And, again, all of these tells us that -- all of these things tell us that they have been circling around the former president to try to get a better picture of exactly what he knew, how central he was to all of this, and to potentially launch an investigation, formal investigation, of the former president.
BLACKWELL: Yes, Renato, of course, the question then is, does this circling around the former president lead to an indictment? Does it lead to charges?
Listen to the attorney general, Merrick Garland, here talking about accountability.
(BEGIN VIDEO CLIP)
MERRICK GARLAND, U.S. ATTORNEY GENERAL NOMINEE: We intend to hold everyone, anyone who was criminally responsible for the events surrounding January 6, for any attempt to interfere with the lawful transfer of power from one administration to another accountable.
LESTER HOLT, NBC ANCHOR: So, if Donald Trump were to become a candidate for president again, that would not change your schedule or how you move forward or don't move forward?
GARLAND: I will say again that we will hold accountable anyone who was criminally responsible.
(END VIDEO CLIP)
BLACKWELL: Renato, what do you hear there? Do you hear the kind of boilerplate, general vague answer of, we will follow the facts where they lead, or do you hear something significant in that answer from the A.G.? [14:15:08]
RENATO MARIOTTI, CNN LEGAL ANALYST: I do hear something significant.
And I actually thought, Victor, I thought he was really going as far as he could possibly go in that interview to try to push back against concerns that the public has the Department of Justice is giving Trump a free pass, or is not investigating this matter.
And I thought it was actually necessary after some recent reporting that really suggested the DOJ was behind the congressional committee, that they were not even discussing the issue of Trump's liability. I thought his pushback on that action was significant.
Lester Holt was asking, I thought, a fair question, which is, well, could the timing of an announcement impact things? And Garland, I think, could have given a boilerplate answer there. But he said, no, we are going to hold him accountable.
He was very -- he didn't say him, but he was making very clear and trying to send a clear message that they won't be deterred by any announcement by Trump. They're going to push their investigation forward.
CAMEROTA: Renato, I have another legal question for you, because I want to know if you think this is a smoking gun e-mail.
We now have an e-mail from a pro-Trump lawyer who was one of the people behind the fake electors scheme. And we know that they knew that these were fake electors because he calls them fake electors in his e-mail.
So he says -- this is from Jack Wilenchik. He's a Phoenix-based lawyer. And he says: "We would just be sending in fake electoral votes to Pence, so that someone in Congress can make an objection when they start counting votes and start arguing that the fake votes should be counted."
And then he sends another one to try to clarify. Oh, no, sorry: "P.S., alternative votes is probably a better term than fake votes." And then adds has a smiley face emoji.
Does a smiley face emoji granting immunity, I'm just wondering?
MARIOTTI: Well, I will tell you, that is what proof beyond a reasonable doubt looks when it comes to someone's intent.
Alisyn, I have been on your program and others before. People ask me, how do you even prove what is in somebody state of mind? How do you prove their intent beyond a reasonable doubt? There you go.
That's what it looked like. That's the smoking gun that's going to cause jurors to roll their eyes and look for the quickest opportunity possible to return a guilty verdict. CAMEROTA: OK, there you have it.
Renato Mariotti, Evan Perez, thank you very much for all the information.
BLACKWELL: President Biden tested negative for COVID after five days in isolation. He says he's feeling great. But he is warning about the transmissibility of this latest Omicron variant.
CAMEROTA: And what basketball star Brittney Griner just said in a Russian courtroom and what it means for getting her home.
(BEGIN VIDEO CLIP)
JOE BIDEN, PRESIDENT OF THE UNITED STATES: God bless you all.
And now I get to go back to the Oval Office. Thank you all very much.
(CHEERING AND APPLAUSE)
(END VIDEO CLIP)
CAMEROTA: All right, well, after two negative COVID tests, President Biden is now out of isolation.
CNN's Kaitlan Collins is at the White House with the latest.
So, Kaitlan, we know the president will continue to wear a mask for the next few days, 10 days, actually. What else do we know?
KAITLAN COLLINS, CNN CHIEF WHITE HOUSE CORRESPONDENT: Yes, he is.
They're also going to be testing him a lot, given he did take Paxlovid, that antiviral pill, while he had COVID-19. And often -- or not often, but there have been some anecdotal stories about people testing positive, rebounding in the several days after testing negative if they have taken Paxlovid.
And doctors here at the White House have downplayed that, saying that, when you look at the data, it's actually not that many people who rebound. But they will be testing President Biden to make sure he's not one of those people. And so you can expect to see that in the coming days.
But, also, President Biden today was using his own case to kind of make the -- campaign to make the case for the latest treatments, boosters, vaccinations and treatments like Paxlovid, saying what a difference it makes compared to when his predecessor had COVID until when he had COVID, saying it was a pretty mild case, though he did offer this warning because he did have that BA.5 variant, which is known to be more contagious.
And so the president said this to other Americans:
(BEGIN VIDEO CLIP)
BIDEN: BA.5 means many of us are still going to get COVID, even if we take the precautions. That doesn't mean we're doing anything wrong.
Even with cases climbing in this country. COVID deaths are down nearly 90 percent. And when I took office, that's 90 percent difference between today and when I took office. That's what's new. That's what's new in COVID response, different from where we were just a year ago.
(END VIDEO CLIP)
COLLINS: The president also talked about how different his case was from Trump's saying that he isolated in the West Wing for the -- or, actually, the White House residence for the last five days.
Of course, Trump had to go to Walter Reed Hospital, was there for several days pre-vaccination, so the president just highlighting the importance of that and talking about what that looks like. He is now back in the Oval Office for the first time since last Wednesday.
He has a lot on the agenda, obviously, including that big call with Chinese President Xi Jinping tomorrow.
CAMEROTA: Well, let's talk about that, Kaitlan, because this is -- could be obviously very tense, this conversation, because, as you know, there's this potential trip that Speaker Nancy Pelosi is considering making to Taiwan.
So how are they going to hash this out?
COLLINS: Well, they haven't said exactly whether or not it's going to be brought up on the call tomorrow.
But it's kind of hard to see how it's not, because you are seeing Chinese officials warning about a response, a forceful response, they say, if the House speaker does become the first House speaker in about 25 years to visit the self-governing island of Taiwan.
And the reason that you have seen national security officials here at the White House privately trying to encourage Pelosi not to go at this time is because they are worried about how potentially the Chinese leader could respond to that visit.
Basically, their argument is that he is facing a tough political backdrop at home, with COVID-19 cases, the bleak economic outlook, based on what their growth was recently, their economic growth. And so they're worried he may try to get some kind of political win out of this to help boost his standing, because he is preparing for a big political meeting in the coming weeks and months, and he is trying to extend his rule.
And so that's really the concern that the White House has. And they have said, though, they will not explicitly tell Pelosi not to visit Taiwan.
BLACKWELL: Kaitlan Collins for us at the White House, thank you very much.
Brittney Griner takes the stand in a Russian courtroom, appealing for her freedom. Griner's former coach joins us to discuss her case.
CAMEROTA: And a new CNN poll shows that only 25 percent of Democratic voters believe President Biden should be the nominee in 2024.
So we're going to talk to a group of Biden voters about why they're not happy and what they want.