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Federal Reserve Expected To Raise Key Interest Rate; GOP: United Or Divided?; White House Slammed For Slow Response To Russian Hack. Aired 7:30-8a ET

Aired December 14, 2016 - 07:30   ET


[07:30:10] CHRIS CUOMO, CNN ANCHOR: All right. So the Federal Reserve is expected to raise its key interest rate today. It would only be the second rate hike since 2006. What would that change mean for you and why is it happening when the stock market is booming? Let's ask CNN chief business correspondent and "EARLY START" anchor Christine Romans and CNNI business correspondent and host of "QUEST MEANS BUSINESS", Richard Quest.

Christine, give us some education on this basic proposition. Stock market high --


CUOMO: Why would they ever raise the interest rate?

ROMANS: You know what, I don't think they're looking at the stock market. I think they're looking at the economy and they see a job market that's creating jobs. They see an unemployment rate nearing full employment, and they see an economy that's the strongest it's been in two and one-half years. Interest rates are so low they're almost in an emergency low situation from way back in the financial crisis.

The economy is strong enough, Chris, that they need to be raising interest rates. People like Richard and I, for a long time --

CUOMO: Or else?

ROMANS: -- have been saying they need to start raising them.

CUOMO: Or else what?

ROMANS: Well, then they have -- in the -- when the economy turns down, and it will, they'll have nothing to do because they'll have this emergency flood of money into the system. Also, there are some concerns it's creating dislocations of bubbles. They've got to start to raising interest rates.


CUOMO: Absolutely.

QUEST: Now, the Fed has a target of two percent. You're round about 1.6 percent at the moment. If, as we fully expect, President-elect Trump does come in with his policies of tax reform, tax reduction, corporate taxes down, deregulation of the economy, basically he's going to put the U.S. economy on steroids.


QUEST: And the Fed wants to be ahead of that. Now, as Christine is right, they should have raised rates already probably earlier this year but China, Brexit, you are the reasons why they didn't. So they're going to want to get one in the bag now and they're going to be -- want to be ahead of the curve so that when President Trump's policies start feeding through they are ready to start adding more interest rate rises so that inflation doesn't get out of control.

ROMANS: The irony here is that the economy is going to be goosed by Donald Trump's policies if they get it enacted as we expect, right? The job of the Fed is to make sure you don't overheat the economy so Trump's policies are going to heat up the economy. The Fed's going to be there to make sure it doesn't get too hot, and that's where there could be problems.

ALISYN CAMEROTA, CNN ANCHOR: So what does that mean for regular people?

ROMANS: OK, this is important because maybe you're looking at this thing as oh, this is just a business headline. This affects millions of people in every business in America, right? So if you are getting a new mortgage it's going to cost more. If you have an adjustable rate mortgage it's going to cost more. Car loans are going to cost more. If you carry money on your credit card it is going to cost more. Borrowing costs are going to rise.

If you save money -- if you're a saver, they have been screwed over the past 10 years. If you are a saver, interest rates are going to rise. If you are a bank, you're going to make more money. Nobody here is like rallying for -- you know, you're not raising rates to make the banks happier. But those are the people who are winners -- the savers, the banks, and it will cost more for homeowners.

QUEST: But it's coming off a very low base. I mean, you know --

ROMANS: Like zero.

QUEST: I was thinking of zero so, yes, mortgages will be a bit more expensive. The test will be next year, just how fast the Fed feels it has to go to keep the stability. They're not -- they're not going to raise rates to (INAUDIBLE) Donald Trump. They're going to raise rates next year or more because the economy is moving faster and there will be an inflation risk.

ROMANS: Think about the irony here that we have talked about in the election all year about how the economy is so terrible and people have been left behind. But the Federal Reserve, you know, who has its finger on the pulse of key rates and the economy sees things that are doing better, you know. So that's this disconnect here, that Donald Trump -- he has inherited

an economy that is doing better than it has for years. There are weaknesses and structural problems in the economy, no question. There are people who have been left out of the recovery. But we're talking about how hot the economy is going to get next year and whether the Fed is going to --

CUOMO: Hot for whom?

ROMANS: Well, it will be hot for, you know -- look, job hoppers are in a good position right now, you know? I mean, people who are quitting their job to get another a job, this is a good time to be doing that. I can't believe I'm saying that. Not us, but other people.

QUEST: Look, unemployment is what, 4.6 percent officially.


QUEST: Even if you accept the president-elect's higher numbers of underemployment, those not in the participation rate, you're still heading into an economy that pretty much is virtually a traditional definitions of full employment.

ROMANS: Full employment.

QUEST: Those who want a job can -- will get one, according to the economic database.

ROMANS: We need to be talking about skilling up next year and I hope the president-elect does that. And the people who do not find a place in this economy --


ROMANS: -- what will be the Trump administration policies to make sure the people who voted for Trump are going to get a good paying job next year? That's what I want to hear.

CAMEROTA: But he is the beneficiary of the eight years that President Obama took to climb out of that rock-bottom in the economy and now it's kicked in.

QUEST: And the structural changes -- the damage. Remember, the damage that's happened --


QUEST: -- in that recession -- in that crisis -- went deep into the bowels and the roots of the economy. It's only now fully -- or we could believe fully recovered. And, yes, he's definitely going to be the beneficiary.

[07:35:05] CUOMO: Fully recovered but not corrected.

ROMANS: Yes. CUOMO: There's still problems in our --

ROMANS: You're right, Chris.

CUOMO: -- big banking system that could make this happen again.

CAMEROTA: Richard, Christine, thank you.

ROMANS: Nice to see you guys.

CAMEROTA: All right. Tensions are running high in the Republican Party. Will lawmakers unite behind President-elect Trump's controversial cabinet picks and priorities or is Mr. Trump in for a rude awakening? We discuss that next.


[07:39:22] CAMEROTA: Donald Trump's hot and cold relationship with House Speaker Paul Ryan is heading into the holidays on a positive note. Here's Mr. Trump at a rally last night in Ryan's home state of Wisconsin.


DONALD TRUMP (R), PRESIDENT-ELECT: Speaker Paul Ryan -- I've really come --

AUDIENCE: (Booing).

TRUMP: Oh, no, I've come to appreciate him. Speaker Paul Ryan -- where is the Speaker? Where is he? He has been -- I'll tell you, he has been terrific. And, you know, honestly, he's like a fine wine. Every day goes by I get to appreciate his genius more and more. Now, if he ever goes against me I'm not going to say that, OK?


[07:40:06] CAMEROTA: Ah, he's intoxicating. I mean, Paul Ryan, as a fine wine.

CUOMO: Ha, ha, ha.

CAMEROTA: So how will the Trump-Ryan dynamic impact the early days of the Trump administration? We are joined now by CNN political analyst Kirsten Powers and David Frum, senior editor at "The Atlantic". Great to have both of you.

Kirsten, how is this going to work? They seem to be in good stead right now. Things are going well with Paul Ryan and Donald Trump. What's the first danger sign that we should look out for?

KIRSTEN POWERS, CNN POLITICAL ANALYST: Well, I think as long as he isn't doing anything that goes against sort of the -- what the Republican mainstream thought on the Hill, he'll be OK.

CAMEROTA: You mean Donald Trump will be OK? POWERS: Yes. I think -- so look, if he wants to repeal Obamacare, he'll be great. If he wants to come forward with his infrastructure plan that's going to be a trillion dollars, I think he could run into problems. So he has to choose, I think, where he wants to pick his battles and in what order. And look, right now he is in the honeymoon period.

And Paul Ryan is probably, as much as he didn't really like Donald Trump, is liking the fact that he now has a lot of power and is going to be able to enact a lot of the initiatives that he's wanted to enact for a long time.

CAMEROTA: Winning heals --


CAMEROTA: -- hurt feelings --

POWER: Yes, yes.

CAMEROTA: -- I've noticed. David, where do you see any potential problem between what now seems to be these budding romance?

DAVID FRUM, SENIOR EDITOR, THE ATLANTIC: Well, I'm not sure -- I'm with Kirsten. I'm not sure I do see problems, which is -- which is a problem. Look, every day, every week since the summer of 2015, Donald Trump has served a dish of toads to regular Republicans and Republicans have one-by-one obligingly swallowed the toads, and I don't see any sign that the toad-swallowing is going to stop.

The current toad is, of course, the information that Donald Trump may have owed -- or that Russians did hack Democratic websites and the Hillary Clinton campaign was damaged by it. That would seem to be something -- that act of foreign espionage would be seen to be something that would urgently call for a national investigation.

John McCain has spoken out and Lindsey Graham, too. That's two of the three votes Republicans -- that will be needed to get a real investigation moving. Will there be a third? It is amazing how, thus far, Republicans have held the line.


FRUM: What Russian hack? We don't see it, we don't believe in it. And, in fact, the voice of conformity is getting louder in the party, not more muted.

CAMEROTA: Well, let's talk about that because there will be in investigation and that is the backdrop against which Rex Tillerson, Donald Trump's pick for Secretary of State, will be set. How do you, Kirsten, see it going with Rex Tillerson? Will there be any opposition to his pick?

POWERS: Well, I mean, as of now we only have, I guess, three senators who have really come out and criticized him, so the -- and none of them said that they're going to vote against him. So we don't even know if they'll ultimately oppose him. I think we have to wait and see what happens in the confirmation hearings.

He has -- does have support from some pretty mainstream Republicans. He was recommended by Condoleezza Rice and Bill Gates. Jeb Bush just tweeted support for him. So I think it's going to be, you know, dependent on how he does in the hearings.

CAMEROTA: Now, here's --

POWERS: But I think David's right. I do think there is a lot of conformity and people sort of lining up behind Trump because he did win and now Republicans are in a position to do a lot of things they haven't been able to do before.

CAMEROTA: Here's what Marco Rubio has said about Rex Tillerson because, as we know, Rex Tillerson has a friendly relationship with Vladimir Putin. Senator Rubio says, "While Rex Tillerson is a respected businessman, I have serious concerns about his nomination. The next secretary of state must be someone who views the world with moral clarity, is free of potential conflicts of interest, has a clear sense of America's interests, and will be a forceful advocate for America's foreign policy goals to the president, within the administration, and on the world stage."

David, how do you see this playing out?

FRUM: I don't think it will be difficult for someone to write a set of talking points for Rex Tillerson that will meet every one of Marco Rubio's objections so that Marco Rubio will fall in line. But -- and as long as you look at each of these problems one, by one, by one, you don't see the pattern.

But you have one of Putin's closest friends in the American business community at state. You have a national security adviser who took paid speaking engagements from Russia's English language propaganda network, RT. You have a president who has moved American policy in so many ways toward Russia on Ukraine and on Syria. And overhanging it all, you have this giant espionage scandal.

You said a minute ago -- or Kirsten said that there will be an investigation. The question is will there be a meaningful and independent investigation that will follow the facts where they go or will the job of the investigators be to shut down this inquiry as rapidly as possible? I don't see a lot of appetite for Republicans to follow any of these threads because I think many of them fear the threads all lead to the same place and it's one that will damage Republican ability to achieve things. As Kirsten said, they badly want to achieve on taxes and other things.

CAMEROTA: You know, one of the things that I don't think we point out enough is we talk about how sometimespersuadable Mr. Trump is. That whoever whispers in his ear last, then he sort of agrees with that person. But we don't talk enough about how persuasive he is and when you meet with him one-on-one he wins you over. He is very persuasive.

[07:45:15] I mean, I think that a lot of us in the media have had this experience and now you see people at Trump Tower, from Kanye West to Mitt Romney, coming out and saying I like this guy. I hear him. It's making sense. And do you think that that's what's going on, Kirsten, with say Paul Ryan and everybody else who had been critical?

POWERS: Yes. No, that's exactly what I think and it's based on the meetings that I've had with him. I think people think that when Al Gore comes that somehow Al Gore's going to persuade Donald Trump. And what Donald Trump is thinking -- everything is just a negotiation for him and he does it even with journalists where he'll, in the middle of an interview, stop and say you and I, we agree on things, you just don't realize it, you know. And so he's trying to win people over.

CAMEROTA: And he's good at it.

POWERS: Yes, and so I don't -- I don't think that people should read into it when he meets with people that disagree him that he's necessarily -- now, I think he is listening and he will take it in, but I think there's other things going on.

CAMEROTA: David -- yes, go ahead.

FRUM: We have a -- we have a bias, though, as journalists to believe that the thing that a powerful person whispers to us in private is the truth and the thing that they say or do in public is the image, and that makes us very vulnerable because for all practical purposes it is the public acts that are the truth.

And the things that Donald Trump has said and done that shock our sense of decency, they don't go away. And the compromise of the national interest -- the willingness to look the other way as a foreign power hacks the American political system, that doesn't go away because in private somebody whispers to you, you know, I'm really quite reasonable on the environment.

CAMEROTA: Actions speak louder than words. David, Kirsten, thank you very much --

FRUM: Thank you.

CAMEROTA: -- for being here. Let's get over to the Chris.

CUOMO: All right, so, some facts. The intelligence community came out in October and said Russia is motivating hacks during the election, but back in July the White House was made aware but decided to do nothing. Why? We have the answer ahead.


[07:50:55] CAMEROTA: For months, the Obama administration says it was quietly wrestling with Russia's meddling in the U.S. election. Well now, the White House and some Democrats seem to be suggesting that the meddling cost Hillary Clinton the election. So why didn't the president say something sooner?

Let's go live to Washington and bring in CNN justice correspondent Evan Perez. What have you learned, Evan? EVAN PEREZ, CNN JUSTICE CORRESPONDENT: Well, Alisyn, it's another hindsight question that Democrats are asking these days. Why didn't President Obama respond more forcefully to Russian hacks against Democrats?

We're told that six months ago, in July, law enforcement and intelligence agencies had determined that the Russians were behind hacks that were targeting the Democratic National Committee but over the next three months, the White House and government officials were debating of how exactly to respond. You know, some officials in the intelligence agencies were very concerned. They didn't want to start a cyber conflict with Russia, in which the United States had a lot more to lose.

The State Department, on the other hand, was worried about keeping Russia at the negotiating table over a deal in Syria. We know that as the months went by that WikiLeaks was releasing more and more documents on Democrats and not on Republicans, and the Obama administration officials were also confident that it was clear that the Russians were trying to help Donald Trump and hurt Hillary Clinton.

At the other hand, they also were very sure that Donald Trump was going to lose and they didn't want to give him another excuse to claim that the elections were rigged. The irony right now, Chris, is that Democrats are now the ones that say that the Russians ended up helping Donald Trump get elected and they're asking the White House why didn't you do something sooner?

CUOMO: Good question. Evan, thank you very much. Let's bring in the former CIA director under President Bill Clinton, Ambassador James Woosley and -- he's also an adviser to President-elect Donald Trump -- and we have CNN counterterrorism analyst and former CIA counterterrorism official Philip Mudd. Gentlemen, thank you. Good to have you both here.

Let's begin at the beginning. Philip Mudd -- and then I'm going to ask you as well, Ambassador -- the idea that Russia was involved in the hacks that took place during the election, do you believe, with your sources within the intel community, that is up for dispute?

PHILIP MUDD, CNN COUNTERTERRORISM ANALYST: No, I think there's two questions. Let's make sure we don't confuse them. The question of what happened and the question of why. You started at the beginning. That is not the why question. Were they trying to intervene in favor of one party or the other? I think the question of whether they intervened is not in dispute.

You talk to government officials, you talk to people who are briefed in the Congress, and you talk to technical professionals outside government, some of whom I worked with in the past at the FBI, unanimous. The Russians hacked -- that's it.

CUOMO: The pushback is where's the proof? Clapper came out, gave his statement on October 7th. Said it has all the marks, this is what they do, they've done this before. How come no names? How come no proof of who says that it was the Russians? Where's the proof?

MUDD: Look, this is what we call sources and methods in the intelligence community. Do you want to go tell your adversary, in a highly technical world where it's U.S. technical experts against the Russians, both highly capable, this is how we're determining where the electrons are running, what entities in Russia are doing this, how they're getting into service? I wouldn't want to tell them how we're doing it because then that's obviously going to give them a clue about how to get around us.

CUOMO: Ambassador, Russia motivated the hacks that took place during the election. Do you question that conclusion?

AMB. JAMES WOOSLEY, FORMER CIA DIRECTOR: Russia is never not meddling in other people's business.

CUOMO: But this --

WOOSLEY: They are doing it all the time.

CUOMO: But this is --

WOOSLEY: They have something they call "dezinformatsiya" -- disinformation, basically -- lying. They distort history, they distort what the Catholics are doing, they distort what the Jews are doing. They go after institutions of all sorts.

CUOMO: So you believe the hacking during the election of the DNC and WikiLeaks?

WOOSLEY: I don't know about hacking in the sense that most people use the term meaning interfering with the operation of the -- let's say the voting machines or something like that.

CUOMO: No, no. I'm just saying --

WOOSLEY: I know of nothing like that.

CUOMO: -- about WikiLeaks -- the DNC dump that came out during that time with the Podesta emails. The intelligence community says that has Russia written all over it.

[07:55:00] WOOSLEY: I'm not going to make a blanket statement about a whole bunch of things. Let's take these things one a time. First of all, Russia is always, as I said, trying to influence events and they do it in some really nasty ways. They do it all the time. So, insofar as someone says were there leaks that could have helped one candidate or another, sure. There were leaks that could have helped more than one. There were leaks that could have damaged Bernie and his --

CUOMO: Separate consideration of whom they held to why it was done. I'm saying that they were involved.

WOOSLEY: Russia is always interfering with everybody. CUOMO: I keep asking you because the president-elect and the people around him will not acknowledge what you are tacitly acknowledging right now. They say, the president-elect himself, it is ridiculous to suggest that Russia was involved in any of the hacking. It could've been China or a fat guy in his bed.

WOOSLEY: If you're talking about hacking in the sense of interfering with the operation of the voting, which is what a lot of these questions deal with --

CUOMO: That's not what I'm asking. Not what -- not necessarily.

WOOSLEY: There are lots of ways Russia get its -- basically itself, into other people's business. Sometimes by invading, say, Ukraine. Sometimes by shutting down Estonia's --

CUOMO: Sure.

WOOSLEY: -- information systems and so forth.

CUOMO: But would your advice be to --

WOOSLEY: So if the question is --

CUOMO: -- the president-elect, ignore this --

WOOSLEY: I never talk about --

CUOMO: Say Russia --

WOOSLEY: -- what my advice to the president-elect would be on anything. I think it is important to understand what has happened and it's important for the new administration to be on top of this much better than the Obama administration was. They didn't start looking at some of the serious aspects of this until late summer.

CUOMO: Do you think that Russia's role -- and that was a mistake and I want to talk to you about that next -- but, Russia's role in what happened here during the election. Not the outcome of the election. I'm talking about these email dumps that happened. Do you believe that's something that the new administration should ignore and say that's just politics and sour grapes by Clinton faithful?

WOOSLEY: The new administration needs to understand what happened and if they do a really good job of understanding what happened you will never know about it because sources and methods will be disclosed as you start talking about this publicly. They have to do it in private. Once they commit to understanding what has happened they should get into it extremely thoroughly so we can deal with Russia or China or anybody else who conducts these types of operations against us effectively.

CUOMO: The problem is the president-elect just disrespected the conclusions of the intelligence community on this and now may have militated in favor of politicians in government wanting to bring out the conclusions because he has said they were lying. WOOSLEY: The intelligence community is used to criticism. They can deal with that.

CUOMO: Oh, well, OK. So the other question, quickly. The White House knew back in July --

MUDD: Yes.

CUOMO: -- and the reporting is they decided not to do anything because one, they didn't want to mess up their conversations about what to do in Syria or with Russia. And two, that politically, they didn't want to give Donald Trump something to complain about if he lost. Ironic, given that now the other side would be complaining, if anybody is. What do you think of that thinking?

MUDD: Bottom line, let me take you to the chase here. You sit in the Situation Room and the question is if you're going to go public on this big-time you better understand what the end game is here. Vladimir Putin's approval rating is 80-plus percent. Sanctions aren't working to change his attitudes. His intervention in Crimea and Ukraine and in Syria is highly popular in Russia.

My question for the White House would be at that time, if you're going to go public you better know end game, and I suspect they didn't.

CUOMO: Ambassador, thank you very much. Look forward to talking to you going forward. Give me that hand. Thank you, Philip Mudd. There is a lot of news going on. Let's get right to it.


TRUMP: We're in the process of putting together one of the great cabinets.

REP. PAUL RYAN (R-WI), HOUSE SPEAKER: I want to thank Donald Trump for helping Wisconsin put a Republican back in the White House.

TRUMP: Speaker Paul Ryan -- honestly, he's like a fine wine.

UNIDENTIFIED MALE: The Secretary of State has to fight for things like a free press, human rights, democracy, that frankly aren't always at the top of the list for an international-run gas company.

TRUMP: Rex is friendly with many of the leaders in the world that we don't get along with, and some people don't like that.

CAMEROTA: New shelling is quickly erasing a proposed ceasefire and evacuation plan in Aleppo.

UNIDENTIFIED MALE: What we're seeing there appears to be full-on war.


ANNOUNCER: This is NEW DAY with Chris Cuomo and Alisyn Camerota.

CAMEROTA: And what's going in Syria, it seems to be a watershed moment right now so we'll be talking more about that this hour.

Good morning, everyone. Welcome to your NEW DAY. It is Wednesday, December 14th, 8:00 in the East. Up first, the state of Wisconsin is the latest stop for the Trump victory tour. The president-elect using a rally to praise his own pick for Secretary of State.

CUOMO: Trump also embracing former adversary Paul Ryan, telling supporters he's come to appreciate the House Speaker like a fine wine. The president-elect meets today with the tech titans of Silicon Valley. There are only 37 days until the inauguration. We've got every angle covered. Let's start with Sunlen Serfaty in Washington -- Sunlen.

SUNLEN SERFATY, CNN NATIONAL CORRESPONDENT: Good morning to you, Chris. Well, there has certainly been a firestorm of criticism from Democrats and those within Donald Trump's own party slamming his pick for Secretary of State.