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Mortgage Rates Inch Up; Mike Lyons is Interviewed about the War in Ukraine; Election-Denying MAGA Candidate Tries to Claim MLK's Legacy; Trump's 757 Renovated; Astros Hold Off Yankees. Aired 6:30-7a ET

Aired October 21, 2022 - 06:30   ET

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

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[06:31:00]

JOHN BERMAN, CNN ANCHOR: So a new rise in mortgage rates this morning. Sorry, I was distracted by that graph because that line is shooting straight upwards so I can barely speak looking at that. And it's taking a toll on the housing market. Housing sales are now going through the longest slump in 15 years.

I want to bring in CNN chief business correspondent Christine Romans and CNN business correspondent Rahel Solomon.

That graph is something.

CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: I know.

BERMAN: Straight up. Mortgage rates now at 7 percent. How bad is that?

ROMANS: So, this is getting back to a more normal level, but it's a shock because it's coming form years of very, very rock bottom mortgage rates. I mean you've got a lot of people who have got mortgage rates 3 or 4 percent and now they're looking at 7 and they're like, OK, I'm just going to stay in my house. So, this is an interest rate sensitive part of the economy. Interest rates are rising. The Fed is trying to cool off inflation in the economy and this is the first place you're really seeing it.

BERMAN: And, Rahel, this comes on top of a housing market that has slowed substantially.

ROMANS: Absolutely. Absolutely. I mean it's been slowing since about February. And we know what happened in January/February of this year. That's when the Fed started to raise rates.

When we look ahead in terms of, well, where do prices go from here, because prices, by the way, although they are starting to slow month over month, they're still higher on average than they were a year ago. And part of the reason why is because there's still quite a bit of demand, certainly not as much as there had been, but because inventory is so tight. Supply is so tight. For one reason because what Christine said. I mean most people who have a mortgage right now, that mortgage starts with a 3 or a 4, not above 5. So, if you're locked in at 3, 4 percent, there has to be a huge incentive for you to want to buy in this market.

ROMANS: We just showed the math there on the screen. I mean a mortgage - for a $400,000 mortgage a year ago if you had decent credit, the monthly payment would have been $1,700. Today, that same mortgage, just about 7 percent, would be $2,600. That is $900, $1,000 more a month just in interest. So that means you can't -- you can't afford the same size house.

SOLOMON: No.

ROMANS: Maybe you -- people are going to wait.

BERMAN: What's the advice that potential home buyers are being given.

SOLOMON: It's a great question because I wondered the same. So I spoke to Dottie Herman of Douglas Elliman yesterday, who's a real estate pro, has been in the business for decades, and said, what are you telling people? And she actually said something that I was surprised to hear. For buyers, if you can afford it, if you can afford those higher monthly payments, you actually might be in a better position now than you were the last few years simply because you have more negotiating power. You can actually get through to the seller. Whereas, if you'd bought a house the last few years, you know, I mean, the first day it was on the market, the first week it was on the market, it was flying off the shelves.

ROMANS: Yes.

SOLOMON: So, that is potentially a silver lining.

BERMAN: All right, a lot of this has to do with inflation. I mean it really all has to do with inflation right now and the Fed raising interest rates.

ROMANS: Yes, absolutely. Absolutely.

BERMAN: Another aspect of this is unemployment, and where the unemployment rate is, which is incredibly low right now.

ROMANS: Yes.

BERMAN: Former Treasury Secretary Larry Summers was on CNN talk about where unemployment may go and may need to go he says.

Listen.

(BEGIN VIDEO CLIP)

LARRY SUMMERS, FORMER TREASURY SECRETARY: I do think the unemployment rate is likely to rise, perhaps towards 6 percent. And, you know, that's a - that's a real and not an easy thing. But I think what people need to understand is that it is better to do that sooner rather than to allow inflation to accelerate and allow everybody to expect inflation, at which point you'll have a much greater set of difficulties.

(END VIDEO CLIP)

ROMANS: So, this is the tradeoff the Fed is trying to do. They're telling you that a rise in the unemployment rate and a weakening U.S. economy is better than us living with this inflation for a long time. So. the Fed's medicine actually tastes terrible.

SOLOMON: Yes.

BERMAN: Right.

ROMANS: And it's those higher interest rates. And it could mean a recession, although I really think it's clear to point out that he -- he said this would be a short, shallow recession if we get one. Typical length of a recession is 10 months. I don't know anybody who's forecasting a recession for 10 months.

BERMAN: Right.

ROMANS: And, by the way, nobody knows if there's really going to be a recession.

BERMAN: Right. And, Rahel, Larry Solomon - I mean Larry Summers just said, you know, what is so hard to explain to people, which is, he thinks that a higher unemployment rate for a little bit is not as bad as high inflation.

[06:35:10]

ROMANS: Exactly.

SOLOMON: Right. Because one of the fears is that if the Fed lets inflation linger higher for longer, then it becomes a more difficult problem to solve. It's sort of like if you had a leak in your roof. If you don't deal with it today, you're going to have to deal with it and it might e a bigger problem to solve down the road.

ROMANS: That's a good metaphor.

SOLOMON: The Fed is trying to prevent inflation from becoming entrenched, i.e. we start to believe that inflation will be around for much longer and so we start making purchasing decisions because of it, we start asking for a raise because of it. The Fed is trying to prevent that. And hopefully, whatever we experience in the next year or two will be better than if it had let inflation linger.

BERMAN: Rahel Solomon, Christine Romans, thank you both.

ROMANS: Nice to see you.

SOLOMON: Yes.

BERMAN: Ukrainian officials warning of Russian forces reopening a north front from Belarus. Major Mike Lyons is here to discuss.

BRIANNA KEILAR, CNN ANCHOR: And ahead, a CNN exclusive out of Uvalde, Texas. We've learned an officer who is being investigated over the police response gave an order to delay classroom breach.

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[06:40:04]

BERMAN: Ukrainian military officials say the threat of Russia opening a northern front in the war is growing. A senior military official says the direction of the offensive may be along the western part of Ukraine's more than 600 mile frontier with Belarus. Belarusian authorities have previously denied any plans for mobilization, but earlier this month announced a joint force with Russian troops.

Also, the Pentagon says the Iranians have been, quote, on the ground in Ukraine and, quote, assisting Russian forces in Crimea with their drone operations.

With me now is retired U.S. Army Major Mike Lyons.

Let's start with the idea of the northern front. This is the area we're talking about right here. The north of Ukraine, the border with Belarus. How would the Russians and why would the Russians do this?

MAJOR MIKE LYONS, U.S. ARMY (RET.): Well, first, they'd open up that second front. It would be important. It would force the Ukraine military to respond with some level of troops, right? And there's talk of a joint task force between Belarus troops and Russian troops. So if you take 15,000 Russian troops, BTGs, and you bring them up to Belarus, combine them with their military, 20,000 or 25,000 of them, you've got a formidable 40,000 use (ph) force there that Ukraine would have to send 15,000 to 20,000 troops at least to try to make sure nothing happens there. It would distract them from their counter offenses in the south.

BERMAN: And, of course, there are some obvious advantages for Russia to think about - let's, again, I can circle what we're talking about here. To think about pushing in the region. What would some of the advantages be?

LYONS: Yes, the shorter supply lines. This is all about mobilization, OK? The bottom line is, Russia is having to challenge mobilization in the south but they could quickly mobilize in the north and get - and get troops there. And what that would mean is a quick and access into Kyiv. That is the issue again. Russia has lost that battle four or five months ago. They could possibly retry that battle again.

BERMAN: Yes, I mean, just to remind people, this is what Russia tried to do at the beginning of the war.

LYONS: Right.

BERMAN: And they never got to Kyiv. They were pushed back. Could Ukraine push Russia back again this time with so many of its forces deployed here and here?

LYONS: Yes, so that - that's the question. That - those troops were there at the time. They've been since deployed to the south. They'd have to either get more troops back there, use constabulary forces, use other units in order to keep that thing safe.

BERMAN: There is a political consideration for Belarus here.

LYONS: Yes.

BERMAN: It's not so easy for them to say, yes, we're all in with Russia, is it?

LYONS: Right. The president there, Lukashenko, is aligned with Putin. However, the Belarusian people are not aligned with this war and he could have the same internal problems and be could easily be overthrown there in that country.

BERMAN: All right, let's just -- give us an update of where things stand right now. I'll clear this up.

Ukraine pushing right now towards Kherson here in the south.

LYONS: Right.

BERMAN: Also we're hearing of operations over in Luhansk, over in this region. What's Ukraine trying to do?

LYONS: You can see clearly now on the map what Ukraine is trying to do. That Dnipro River here is key. Kherson is going well for the Ukraine military.

What they want to do is divide - you can see right here, divide that Russian military into two places and then defeat them piecemeal. We haven't seen this kind of maneuver since, you know, second world war. And the fact that Russia can't get troops fast enough here to mobilize.

BERMAN: And, of course, what we are seeing right now, at least the United States saying that Iranians -

LYONS: Yes.

BERMAN: The Iranians are now helping Russia operate the drones from Crimea. That's a whole other thing.

LYONS: Right.

BERMAN: Mike Lyons, thanks so much for being with us. Appreciate it.

What one Republican in Arizona claimed about Martin Luther King Jr. that has King's daughter in an outrage. A "Reality Check" is next.

KEILAR: And after being grounded during his presidency, it seems like Trump force one is ready to roll back out. What this could signal.

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[06:47:17]

KEILAR: Bernice King, the daughter of Martin Luther King Jr., responding to Arizona gubernatorial candidate Kari Lake after she claimed that King's father would be a, quote, MAGA Republican if he were alive today.

John Avlon has more in today's "Reality Check."

JOHN AVLON, CNN SENIOR POLITICAL ANALYST: Yes. I love it when pop culture and politics collide in interesting ways, but it's usually not a 30 year delay. But that's what came to mind yesterday as the legendary hip-hop group Public Enemy seemed to lurk behind every headline.

So, the first was resignation of British Prime Minister Liz Truss after 45 full days in office, recalling the PE tune "Can't Truss It." Now, the Public Enemy's classic album "Fear of a Black Planet," also articulated and anticipated the great replacement theory panic which continues to drive anxieties in our politics and occasionally erupt into real violence.

But what really brought it all home for me was news that the election denying Arizona gubernatorial candidate Kari Lake said that Dr. Martin Luther King Jr. would be a MAGA Republican if he were alive today.

(BEGIN VIDEO CLIP)

KARI LAKE (R), ARIZONA GOV. CANDIDATE: I'm a true believer that if MLK, Reverend Martin Luther King Junior, were alive today, if JFK were alive today, if our founding fathers were alive today, they would be America first Republicans. I really believe than.

(END VIDEO CLIP)

AVLON: Now, there's a lot to work with there, but it's first worth remembering that Arizona was actually one of the last states in the union to recognize Martin Luther King Day as an official holiday. And resistance by then Republican Governor Evan Mecham inspired one of PE's greatest tracks "By the Time I Get to Arizona."

But, of course, Kari Lake's feel good, no context appropriation of history is part of a larger pattern. Back in the Tea Party era, for example, Glenn Beck compared himself to MLK. Hey, Ted Nugget repeatedly comparing himself to Rosa Parks. And, of course, even ex- President Donald Trump couldn't resist linking himself to Dr. King with his alleged popularity among the black community, seriously.

Now, for many conservatives, Martin Luther King's message has often boiled down to one sentence in one speech. You know the one, I have a dream that my four little children will one day live in a nation where they will not be judged by the color of their skin but by the content of their character.

Now, we can't play the speech for copyright reasons, which is a whole other separate "Reality Check," but it's a very good sentence. It is strong and true, but it is far, far from the only thing Dr. King had to say. And while he never joined a political party as a matter of principal, in the context of his time, MLK was the opposite of a conservative populist. He spent his life pressing for inclusive, progressive change to the status quo, challenging America to live up to its founding ideas.

[06:50:01]

He pushed for equal rights and voting rights. He protested against police brutality and income inequality while advocating for increased minimum wage, fair housing, and universal health care.

And don't just take my word for it. Listen to Dr. King's daughter, Bernice, who tweeted that Lake's comments were false and dismissive of dad's seminal work and beliefs, including ending/preventing voter suppression and treating all, including immigrants, with dignity.

Now, you could also judge MLK by his enemies, because he was bitterly attacked as a communist and a radical leftist by populist conservatives, yes, many of whom were southern Democrats at that time. These were men who opposed the expansion of civil rights by using the language of constitutional liberty and states rights. White citizens councils pledged massive resistance to court orders to desegregate schools and some engaged in stunts like reverse freedom rides, where they shipped black families up north to towns where liberal leaders lived.

It's also worth noting that King's most intense critics hotly denied they were ever racist at the time. Even art segregationist George Wallace, governor of Alabama, said, I never made a statement in my political career that reflects on a man's race. My only interest is in the restoration of local government. Right.

Now, in the end, Kari Lake's self-serving projection on history is absurd as Donald Trump recently telling a crowd that his pollster told he he'd beat a combined ticket of George Washington and Abraham Lincoln by 40 points. This isn't a gotcha game, it's just that history matters because facts matter. It's the context that allows us to communicate across the generations. And it imposes much-needed perspective on our politics.

So, when you hear a candidate running on voter suppression and election subversion try to claim that Martin Luther King would have been on their side, well, as Public Enemy said, "Can't Truss It."

And that's your "Reality Check."

KEILAR: John Avlon, thank you for that.

AVLON: Thanks.

KEILAR: After weeks of avoiding the abortion allegations swirling around Herschel Walker, Senator Raphael Warnock finally rolling out a new ad.

BERMAN: So, how secure are your passwords? One, two, three, four. They're make not as unique as you think.

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UNIDENTIFIED FEMALE: We have our first password that I found. Does that look familiar to you, Donie?

DONIE O'SULLIVAN: Yes, that's a password I still - I use today occasionally.

UNIDENTIFIED FEMALE: OK. So you were using that on LinkedIn?

O'SULLIVAN: Many times.

(END VIDEO CLIP)

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[06:56:49]

KEILAR: Well, this morning, Trump force one is back. Former President Trump's Boeing 757 was a regular backdrop of his campaign rallies. Now it is renovated and ready for takeoff near Mar-a-Lago has his second bid for the presidency remains up in the air.

CNN's Kate Bennett is with me now.

You saw what I did there, right, that up in the air?

KATE BENNETT, CNN WHITE HOUSE CORRESPONDENT: Oh. Yes.

KEILAR: Up in the air.

BENNETT: Yes, I'm ready to take off on this story, Brianna.

KEILAR: Oh, great. All right. Well, let's let - you know, take flight, if you will.

BENNETT: Well, when last we saw Donald Trump's jet, it was over a year ago. We did a piece about it being on a tarmac in a New York state airport with a shrink-wrapped engine. And sort of this picture of his plane, his virility, his power was just sitting there with a broken engine.

Well, fast forward, the plane flew to Louisiana from the CNN data that we've tracked here last November where it's been undergoing a rehab. We noticed this week that it started taking short circular test flights, loops above a small airport in Lake Charles, Louisiana. Obviously a sign that it's up in the air. It was climbing to different altitudes. Our aviation experts told us that this is common for a plane testing out a new engine or new parts and that it's getting ready to sort of fly again.

We know that the plane received a fresh paint job in July. The "t" that we're seeing there on the tail, on the back there, is now replaced by what appears to be an American flag on the tail.

KEILAR: Interesting.

BENNETT: So it's definitely been updated, rehabbed, and well enough that on Wednesday night we watched on Flight Tracker as it flew from Louisiana back to Palm Beach. We spotted it at the airport yesterday. It's sitting there. And we'll see what that entails.

KEILAR: So, it's been kind of moth balled while his political fortunes have been moth balled in a way.

BENNETT: Right.

KEILAR: Does he have places to go now? I mean is this a sign of, here we go? Here's a run that's going to happen?

BENNETT: Yes, I mean, from people I spoke with, it definitely is indicative that there might be an announcement of something - of some sort coming. We don't know whether that's a presidential run or something after the midterms. But certainly we all remember this plane being the prop in the background that Donald Trump. It represented, you know, success and excess and all these things that, you know, he's known for. And it was really a draw for his people and his crowd and his fans. And so it's back and it could be used again. So, we'll have to see what it means.

But, certainly, they're keeping it under wraps. We reached out to the Trump folks to see what it's doing there and what they plan to do with it and we did not get a response. So, we'll see.

KEILAR: Interesting. Yes, because he loved having Air Force One.

BENNETT: Oh, yes.

KEILAR: But now this is - this is what he'll have if he's running again.

BENNETT: This is his baby.

KEILAR: All right, Kate, thank you for that.

BENNETT: Thanks.

BERMAN: So the Houston Astros take control of the American League Championship season - series. I get so excited because the Astros won and the Yankees lost.

Carolyn Manno here with the "Bleacher Report."

You know, normally we only cover things when the Yankees win. We'll do special coverage for a week if they win a game. They happen to have lost two in a row now.

CAROLYN MANNO, CNN SPORTS CORRESPONDENT: I was going to say, normally we're a house divided here in the morning too.

BERMAN: Yes. MANNO: We've got like camera guys who are Mets fans. We've got some Yankee fans. And I'm hearing a lot of murmurings this morning about what they need to do offensively, who's pitching. I mean it's playoff baseball and I guess that's where they are. but, yes, they need to get back to New York, full stop. I mean staving off elimination twice against Cleveland in the last round. That meant a really short turnaround for New York. Now the bombers are back, and they have their backs against the wall again.

[07:00:02]

Houston's Alex Bregman breaking open a scoreless tie in the bottom of the third with a towering three run jack to left field here. That was his 14th post.