French President Emmanuel Macron and IBM Vice Chairman Gary Cohn

0:00Margaret Brennan:I'm Margaret Brennan in Washington and this week on Face the Nation. As world leaders gather in New York for the United Nations General Assembly, we'll talk exclusively with two of them. Plus, the Federal Reserve cuts interest rates by a quarter point. What does that signal for the economy? With Russia and Israel intensifying their offensive efforts in both the war in Ukraine and the Israel-Hamas conflict, we'll preview a crucial week ahead as President Trump heads to his first U.N. meeting of his second term. French President Emmanuel Macron tells us why France and other U.S. allies will recognize Palestinian statehood despite strong opposition from the U.S.

0:39Margaret Brennan:and Israel. Plus, we traveled to Syria for an upcoming 60 Minutes piece and spoke to the country's new president, Ahmed al-Shaddaa. He'll be the first Syrian president to address the U.N. in nearly 60 years. We'll tell you why he's such a controversial figure. Finally, former White House economic advisor Gary Cohn will join us to talk about the cooling labor market, tariffs, and more. It's all just ahead on Face the Nation.

1:20Margaret Brennan:Good morning and welcome to Face the Nation. Most of our conversation with French President Emmanuel Macron was about his plan to end the war in Gaza. You'll see that in our next half hour. When we spoke with him Thursday at the Élysée Palace in Paris, we asked him about NATO scrambling jets for the first time in the alliance's history to shoot down Russian drones that had crossed into Poland and Romania. The day after we spoke, three Russian warplanes crossed into Estonia, too. President Trump was asked about the incident in Poland 10 days ago. It could have been a mistake. It could have been a mistake.

1:58But regardless, I'm not happy about anything having to do with that whole situation.

2:03Margaret Brennan:Do you believe that these incursions could have been a mistake, as President Trump has suggested? Very clearly, Russia is a destabilizing and aggressive power in Europe. They increased during the past few weeks. They are attacked against Kyiv and killing a lot of civilians. They destroyed official buildings of the Ukrainian government, but as well the premises of the UK government, of the European Union. And at the same time, during the same weeks, they violated the Polish and the Romanian era. There is no mistake. There is just a project which is to destroy the maximum territories of Ukraine, to have a victory in Ukraine, and just to highlight what they want, the weakness of NATO.

2:58Margaret Brennan:NATO says they're still investigating. They are not as certain as you seem to be that Russia did this intentionally. No, I'm not saying—I just say this is not totally—this is not a specific point. if we had a situation where they were declining or decreasing their attacks against Kiev and on the battlefield, I could accept this argument. My point is to say it's largely beyond that. My point is to say, look at what they did during the past few weeks. So I sincerely believe that your president was committed and is committed to make peace in Ukraine. And he engaged, he took the risk to make a summit with President Putin in Anchorage, and he asked for negotiations.

3:47And I think he's right. But at the same time, I have to just recognize that there is no clear willingness of President Putin to be sincerely engaged in such a move. because as we were working on a diplomatic way, as we were trying to organize bilateral, trilateral, quadrilateral summit, the Russians were increasing their assaults in Donbass, but not just in Donbass, intensified provocations on one side and attacks on Kiev on the other side. So I just look at the facts, and your president is as well looking at the facts. So now what do we do? We have to increase sanctions against Russia, but we have to find a way to precisely put more pressure on Russia to bring them back at the table.

4:38In parallel, let me insist on one point. When we came to Washington, D.C., a series of European leaders with President Zelensky, we took a commitment. We will work to provide to Ukraine security guarantees, and we delivered. A few days ago here in Paris, we gathered what we call the Coalition of the Willing. You have 30 countries working together in order to provide the day after peace security guarantees to Ukraine. So we have all these elements now with an historical commitment of the Europeans to provide the security guarantees to Ukraine. What we need now is Ukraine to be at the table with Russia and negotiating what a peace agreement could be.

5:20On territory, on security guarantee, on the escalation, on recovery, etc.

5:25Margaret Brennan:And you don't see any evidence of Russian interest. So now we have to step up, and we need political, military, and economic surge in order to bring them back at the table and to negotiate. It's now more than a month since that Alaska summit, that big risk you said President Trump took. When he's been asked, so why not put sanctions or secondary tariffs on Russia, he points back here at Europe and the consumption of Russian oil and gas that still takes place. I know Hungary and Slovakia, for example, continue to use it. This is true, and we are fixing it. And we had a discussion with Ursula von der Leyen, and she made great work with her teams to fix that.

6:03But let's be honest. This is very marginal. This is not a key driver today. We decreased by more than 80 % the consumption of oil and gas. And I can tell you because we were not the most impacted as a country because we were less dependent on this oil and gas coming from Russia. But we have to finish the job, this is true. But now it's clearly much more than what we have to do. We have to step up our support to Ukraine, and we have to provide a way to better resist to the new attacks on Kiev and civilians.

6:38Margaret Brennan:What's the delay on the sanctions or tariffs then? As soon as possible. If it depends just on me, tomorrow. But it doesn't just depend on me. So I think we have to react collectively. If you want my strong view, I think it's very important. I think we all agree we want peace. We all agree the problem is Russia because they don't want peace. So now we have to increase the pressure to convince Russia to come back at the table. The U.S. has not contributed fighter jets to that new effort that was just recently announced after the drone incursions. The Supreme Allied Commander is an American, but does that signal something to you?

7:18Margaret Brennan:Does that concern you that the United States isn't more muscular here? No, I'm not concerned or worried about that. I want to say that the NATO Secretary General worked very hard, and we all gathered and exchanged information with the Polish Prime Minister and the Polish President in the hours right after what happened. and for instance, UK and France stepped up and we sent fighters. But it's fine, we were in a situation to do so and we are totally credible. But at the same time, look at what the US is doing on the eastern flank of NATO. You are a very strong contributor and reliable partner, so I don't want to diminish this role and your commitment.

8:04And I think your president was very clear about his commitment to NATO. But I'm totally in line with the fact that the Europeans have to step up. I've defended for years the fact that we need more independence, more strategic autonomy in Europe. And we need a stronger European pillar.

8:29Margaret Brennan:A year ago, if Syrian President Ahmed al-Sharaa had tried to come to New York, he would have risked being arrested. The U.S. had a$10 million bounty on him because of his past connections to the Islamic State and al-Qaeda. Al-Shadr 'a turned against those groups years ago. In December, he led the rebel forces that toppled Syrian dictator Bashar al-Assad, who used bombs and chemical weapons against his own people. Last week, I went to Syria and spoke with al-Shadr 'a for 60 minutes. He accused the Assad regime of destroying entire communities and displacing 14 million people. He said foreign investment is desperately needed to rebuild.

9:13Margaret Brennan:In June, President Trump temporarily waived some economic sanctions to help Syria recover. But Congress, the UN and European nations would have to permanently lift more sanctions to draw long-term investment. On Capitol Hill and in foreign capitals, there are people who don't trust Ahmed al-Shara. In New York, he hopes to reintroduce Syria to the world and perhaps spend more time with President Trump. Do you want to meet again with President Trump when you're standing on U.S. soil?

9:48President Trump took a big step towards Syria by lifting the sanctions with a quick, courageous and historic decision. He recognized that Syria should be safe, stable and unified. This is in the greatest interest for all countries of the world, not just Syria. I believe the answer is yes. We need to discuss a great many issues and mutual interests between Syria and the USA. We must restore relations in a good and direct way.

10:17Margaret Brennan:Many of the officials that I spoke to about you describe you as a pragmatist. Other skeptics say that you change to meet what you need to be in that moment. And that's important to understand who you are and the direction you're taking Syria in. Are you saying that you are just a completely changed man? I don't entirely agree with the description of pragmatism, because in Arabic, it has some negative connotations. The point is, let's look at what's happening now, regardless of what was said in the media. Today, we have really saved the people from the oppression that was being thrust on them by the criminal regime.

11:04And we have restored hope for the people who are refugees or internally displaced, so they can return to their homeland. We supported the people who were bombed with chemical weapons. We also confronted ISIS. We expelled the Iranian militias and Hezbollah from the region.

11:27All of these noble acts we took in Syria should have been the role of the international community. But the international community was unable to free a single prisoner or break the siege on a single town, where people were starving to death. The international community failed to deter the regime from using chemical weapons.

11:49So I don't believe we should be standing accused at the defense table. But we should be the one asking others, why did you stand silent as these terrible crimes were taking place in Syria?

12:02Margaret Brennan:You believe the world failed Syria, and now the world should help rebuild it? Of course. And I believe the world must not be complicit again in the killing of the Syrian people by slowing down or preventing the lifting of sanctions and preventing them from reconstructing their nation. Anybody who stands against the lifting of sanctions would be complicit in killing the Syrian people once again. More on my interview with President al-Shara 'a will appear on the new season of 60 Minutes. And regarding that Russian incursion into Estonia on Friday, President Trump said this morning he would help Poland and the Baltic countries if Russia continues with its escalation.

12:46Margaret Brennan:Up next, former White House Economic Council Director Gary Cohn will join us. Stay with us.

12:56Margaret Brennan:We turn now to a look at the U.S. economy. Gary Cohn was the head of the White House National Economic Council in the first Trump administration. Good morning. Great to have you back. Good morning. Thanks for having me. So it finally happened. The Federal Reserve lowered interest rates by a quarter point, which was expected. So rates are now in this range of 4 to 4.25%, lowest level since 2022. The president had said all of this was overdue. What changes now? So, look, I think the Fed gave us a lot of important information this last week. As you said, they started down the path of cutting interest rates, going to 4 to 4.25.

13:30They also gave us their outlook. So the 17 governors gave us their projections to where they think interest rates are going. So that plot that they put out shows that overall, they believe that interest rates will be cut two more times over the course of this year. Now, it's not 100 percent clear because the committee is divided. There are about seven members of the committee that do not want another cut this year. But there are 10 members of the committee that want at least two more cuts and one wants more than two cuts. So that averages out to two cuts this year, which would take the federal funds rate, and it's important to understand it's the federal funds rate, would take that down to 3.6 % for year end.

14:11What is also important is the committee was fairly unanimous. I think people were worried about the independence of the Fed. I think the Fed clearly showed themselves to be independent thinkers. They took into account all of the economic data and they came out with a projections that made sense based on what is going on in the economy today.

14:31Margaret Brennan:So when rates go lower, money gets cheaper to borrow essentially. But what does it actually mean? Yes and no. So what the Federal Reserve sets is they set the federal funds rate. That's the overnight rates that banks charge each other to borrow on a secured basis. It has nothing to do with where American consumers borrow money. Unfortunately, American consumers borrow money on more of the five-year, the seven-year, the 10-year, the 30-year rates, because that's where automobile loans, credit card loans, student loans, and mortgages are indexed to. Those interest rates are not determined by the Federal Reserve.

15:09They're determined by the open market. Those rates, in fact, after they cut rates earlier this week, went up a little bit. That said, they are down over the last few months, But those rates do not automatically go down when the Federal Reserve cuts rates. They have more to do with the market. And it's a supply-demand situation that determines those rates.

15:30Margaret Brennan:So one of the other things the Fed highlighted here is that the labor market is, quote, really cooling off. That's what Fed Chair Powell says. The administration, the Treasury Secretary, says, dad is bad. They're not seeing that in the jobs numbers. So which is it? What's happening here? Well, look, the chairman went out of his way to talk about the dual mandate that the Fed has. The Fed has two requirements that they're supposed to run interest rate policy off of. One is called stable prices, which means 2 percent inflation. The other is full employment. Full employment is exactly what it sounds like.

16:04The chair said, look, we are going to have to deal with the full employment part of the equation, even though we still have inflation in the system. So the Federal Reserve itself and the Board of Governors admitted that we are having a declining job market. And we see that. The data over the last three or four months, we have gone from creating well over 100 ,000 jobs a month to creating less than 50 ,000 jobs a month. It may be temporary. It may be quite temporary. But the reality is we have seen the job market degrade. We've also seen companies announce an enormous amount of CapEx and capital expenditures that's going to come into the system.

16:41I think it's interesting to take a step back and look at what's going on in the world today. I do think that we have seen companies cut back on the amount of employees they have. When you take companies and you put them in a very difficult environment and you increase the cost of input costs, and inputs have been going up because of tariffs, they've been going up for other reasons, and they're not able to raise prices to the final consumer, the one lever they can pull to make sure they keep their margins intact is they can cut down on the cost of labor. We came out of a tough situation in COVID where companies were actually afraid about being able to attract and retain people.

17:19So they were hoarding labor. So we went from a hoarding labor situation to a situation today where companies are being very aggressive about managing their expenses. And the one expense they can manage is the cost of labor. So they're letting their labor force decline naturally as people retire out of the labor system. And we're seeing that in the data. And I think it's clearly showing up, and the Federal Reserve recognized that in this week's action.

17:43Margaret Brennan:But when you ask the administration about this point, they'll say, well, productivity is going to increase, and there are these technological shifts that are happening, so this data is distorted. Are you speaking specifically about tech, or are you saying across the board? I'm saying across the board. I mean, we have seen across the board, and we've seen anecdotal evidence of this. I've seen it and I've heard it directly from corporate CEOs in every business line that they have gone out of their way to cut their human capital overhead. So just the data for Q2 is pretty interesting. Corporate revenues rose about 6.3 % for Q2, and corporate profits rose close to 12%.

18:24The way you do that, unless you're raising prices of the consumer, and we haven't seen a lot of prices go up to the consumer, is you have to cut something out of the expense bucket. The one thing they're cutting is they're cutting labor costs. We've seen it in the U.S. data. We've seen it in the private data. And we've seen it in the anecdotal data.

18:42Margaret Brennan:So the president signed an executive order on Friday that I want to ask you about because you have this role at IBM and some insight into tech. The order is going to impose a$100 ,000 one-time fee for visas granted to foreign workers, highly skilled workers, H-1B visas. The Wall Street Journal is reporting that this caused a panic because there wasn't a lot of detail at Apple and Google and Microsoft. Did it cause a panic at IBM? I mean, what's going on? I think it caused a panic over the weekend because people weren't sure what was going on with the existing H-1B visas. It's been cleaned up over the weekend.

19:17So at this point, there's not a panic in the system. Everyone who's got an H-1B visa understands their status and understands how it's going to work. I actually think this is a good idea. If you understand the H-1B visa program in the United States, historically, it has been a lottery system. So companies have turned in for these visas, and then the U.S. government lotteries them off. If you're now telling a company, look, you need to spend$100 ,000 to get one of these visas, You're not just going to ask for a visa and put a name in the lottery unless that is a highly skilled person who you need who you cannot hire in the United States.

19:56This visa program is meant for high skilled labor where you cannot hire that person in the United States. So if that's what it's used for, ultimately, we're going to bring high skilled people in the United States. It's going to help grow our economy. And that's good for all of us.

20:09Margaret Brennan:We'll see. Gary Cohn, thank you for your insights as always. We turn now to another conflict that will be in the spotlight during UN week, Israel's war against Hamas and the increasingly bleak outlook for its conclusion. CBS Sunday morning, Seth Doan reports from Tel Aviv. It's an exodus with nearly nowhere to go. More than 400 ,000 people have fled Gaza City, vehicles piled high with belongings. Leaflets offer the warning to move, but provide no earthly options. transport can cost thousands. In its effort to destroy any refuge for Hamas, Israel has been leveling buildings. Its airstrikes are leaving kids dazed too.

20:57This is injustice, this woman said. We are tired. Every day there is death. This war has killed more than 65 ,000 people in Gaza, half of them women and children, according to health authorities in Gaza. And a United Nations commission says Israel is committing genocide. But Prime Minister Benjamin Netanyahu remains undeterred at likening Israel to a super Sparta of the Middle East. While also this past week, Israel's ultranationalist finance minister, Betzal El Smotrich, spoke of economic advantages to come, saying Gaza offers a real estate bonanza, adding that they've already done the demolition phase.

21:41The full extent of the suffering in Gaza is not something most Israelis see in the news here. Yet according to several recent polls, the majority of Israelis want the war to end and want the hostages returned home. As pressures mount from the outside, there are also protests coming from within. Yotam Vilk, who penned an op-ed for the New York Times, was among about 150 Israeli reservists to sign a letter in 2024 saying they'd refused to report to serve. I'm willing to pay the price needed for what I understand is currently fighting for the state of Israel. But you're not fighting now. I am. This is me fighting for the state of Israel.