Fed Renovations & Rebuilding the Middle Class 7/25/25

0:00Bring in show music, please. Hi, I'm CNBC producer Katie Kramer. Today on Squawk Pod. Nothing to lower interest rates. Other than that, what can I tell you? The presidential field trip that pitted the White House's numbers against the Fed chair's facts. It was like almost like a sitcom, that little moment. This was a little crazy watching it yesterday. Where does Chairman Jay Powell go from here? A White House advisor who was at this extraordinary meeting at the Central Bank, OMB Director Russell Vogt joins us. The Fed needs to be accountable for things that are beyond monetary policy. He says it's about stewardship of buildings and the economy.

0:40This is not a pressure campaign on the Fed chairman. And a plan from New York Democrat Tom Suozzi to bring corporate ownership success to America's middle class. It'll result in some initial dilution of their share price probably, but once they get the tax rate discounted, it'll result in an increase. Plus, the rest of today's news from college sports to the sale of Paramount for$8 billion and a little extra. This has been the most politicized of these things. 100%. It's Friday, July 25th. Squawk Pod begins right now. Stand back to you by in 3, 2, 1. Cue it, please. Good morning, everybody. Welcome to Squawk Box right here on CNBC.

1:24We're live from the Nasdaq market site in Times Square. I'm Becky Quick along with Andrew Ross Sorkin. Joe is out today. Let's take a look at how... Well, thank you very much. We're looking at the construction and we're with the chairman. So we're taking a look and it looks like it's about 3.1 billion. It went up a little bit or a lot. So the 2.7 is now 3.1. I'm not aware of that. Yeah, it just came out. So I haven't heard that from anybody. But a very rare site in Washington, a sitting U.S. president visiting the Federal Reserve. President Trump said ahead of the time that he was visiting to check out central banks on that.

2:07He was doing this to look at those renovation projects, which he's been so critical of. Trump has also been publicly pressuring the Fed, of course, to cut interest rates. Trump appeared at the site in a hard hat next to Fed chair Jerome Powell. And it was quite the moment of, well, awkwardness as the two men went back and forth about the cost of construction. Take a look at this. You're including the Martin renovation. You just added in a third building is what that is. That's a third building. It's a building that's being built. It was built five years ago. We finished Martin five years ago. It's part of the overall work.

2:48So. The president then toured the construction site and delivered some brief remarks without the Fed chair. The big thing is to get it done. They have to get it done. They have to get it finished. And very importantly, we have to get interest rates lowered in our country. Speaking with reporters, the president was asked if he, as he claimed, the current level of interest rates is hurting the country, why he doesn't simply fire the Fed chair now. Here's how the president responded to that question. Because to do that is a big move, and I just don't think it's necessary. And I believe that he's going to do the right thing.

3:26I believe that the chairman is going to do the right thing. I mean, it may be a little too late, as the expression goes, but I believe he's going to do the right thing. Later, the president posted on Truth Social about the Fed's renovation project, saying, let's just get it finished and even more importantly, lower interest rates! exclamation point, we are going to speak with the Office of Management and Budget Director Russell Vaught, who was with Trump at the Fed yesterday. But it was almost like a sitcom, that little moment. And it was a little not, I didn't like that moment, I have to say, on so many levels.

4:02For J-PAL, who, by the way, whether you agree with what he's done or what he hasn't, has been pretty steadfast. He understands the markets, I think has been a pretty great Fed chair through a lot of different things. I think the mistake with thinking that inflation was going to be transitory last time around probably left its mark on the Fed. And as a result, they are being more cautious about this. Alan Greenspan always said that the only thing he cared about was inflation. The second mandate was something that would take care of itself. That second mandate for watching the unemployment rate would take care of itself if you watched inflation.

4:36And I think that's something Jay Powell has kind of followed pretty closely. This was a little crazy watching it yesterday, particularly with the numbers. J-PAL took out his readers to say, what are you talking about? We haven't seen this. This came from us. Pushed back pretty strenuously and said, that's a building that was finished five years ago. It was finished in 2020 or 2021 that had not been included with that. Well, look, the whole issue here has been unfortunate in that there's been this, I would say, pretext that's been tried to create. And I don't think we've seen this before. I mean, we've seen where presidents have gotten upset with Fed chairs and tried to push them on interest rates.

5:12We haven't seen, I don't know of, instances where a president has tried to find a, quote-unquote, pretext or some other way to either embarrass or, in some cases, potentially even find a reason to oust them. And this whole situation yesterday, this sort of theatrical event to go visit this this renovation, which he believes is over budget. And therefore and by the way, over budget is the polite way to put it. Right. The less polite way to put it is that is that what he's arguing or the president's trying to show the American public is that not just that they're over budget, but how could the Fed chair have something that's over budget?

5:51This is totally outrageous. The way they're doing this is outrageous. I mean, that's what this is all about. Right. I'm not saying it is, but then to try to embarrass the Fed chair by inflating the number in front of him when it was obviously not even right. In some ways, it felt like the pressure was coming down after yesterday where he said, I'm not going to fire him. I think he'll do the right thing. We'd like to see it lower. The biggest problem is the more the president pushes on that, the less likely the Fed is to follow because they want to assert their independence. I think that's part of it.

6:20And the economy has held up. I mean, look, it's very hard to tell the public that the economy is great, great, great, great, great. And then say, please, by the way, lower interest rates. You have to lower interest rates. I don't think there was a please with it. So there you have it. The Federal Communications Commission clearing the way for Paramount's$8 billion merger with Skydance Media. That deal includes the CBS Broadcast Network, Paramount Pictures and Nickelodeon. In a statement, FCC chairman Brendan Carr said that the merger was an opportunity to bring more balance to what he called the once storied CBS.

6:56Skydance telling regulators that it will watch for any perceived bias at CBS News and that it will hire an ombudsman to review any complaints about fairness. That deal's approval followed Paramount's$16 million settlement with the Trump administration over a 60-minute segment last year. The FCC approved the merger by a two to one vote, the two Republicans voting for it, the one Democrat voting against it. And in a statement, the commissioner, Anna Gomez, who was appointed by former President Joe Biden, said the pyramid got what it wanted, quote, after months of cowardly capitulation to the White House.

7:31The FCC chairman Brendan Carr is going to be joining Squawk on the street a little later this morning. But this is I think it's it's a cautionary tale for business just when it comes to the idea of one political party or another putting extreme pressure. You can imagine if the Democrats are back in power, they're going to be putting some extreme power in the other direction on some of these things. And I think that statement from the FCC commissioner voted against it kind of laid it out to be politicized in this way is the last thing. that business wants. I agree with you 100%. The only thing that I would slightly disagree with is I think this has been the most politicized of these things.

8:10100%. But if you think you're going to kowtow to it and it's going to be fine, if there's a switch in the administration, they are going to be just as vociferous and they are going to be just as pushing you in the other direction. And my hope is that this is such a... And by the way, business had to deal with this with a lot of the DEI stuff that came up before. I hope, I hope, my hope is that... I think it's been increased every step along the way. I hope that it gets tamped down. I do too. I do, too. But we have not seen that. The general direction has been for more and more pressure, no matter who's in power.

8:38President Trump signing an executive order aimed at creating clearer national standards in the era of name, image and likeness rights in college sports. That order mandates federal authorities clarify whether college athletes can be considered employees of their school. And it aims to stop bidding wars for players that have cropped up in recent years. A fact sheet on the order notes that recent court rulings have created in what what it calls chaotic and chaotic environment that threatens the financial and structural viability of college athletics. It could send some shockwaves through college football and basketball where player recruitment has become a multimillion dollar market in recent years.

9:17But it has been a mess. There is no question about this. President Trump has plenty of company in thinking that this is a bizarre system at this point. We spoke with Eli Manning about this yesterday, the former New York Giants quarterback who just pointed out, look, college athletes should get paid. It's fair. But the system, the way it's set up is chaotic and crazy. You have college coaches who have said, forget it. I don't want to do this anymore. We can't even put a team together the way this happens. And Eli Manning suggested yesterday that maybe part of that would be to put the focus on the portal.

9:53Every year you're a free agent and you do well. And hey, I want to go to another school and pay me a little bit more. I don't think during the recruiting process necessarily that these kids are picking the right place for them where they think they'll be happy. They like the coach. They like the teammates around you. They like the campus. Which is probably a good idea. Right now you can trade teams every year if you want to. There used to be more restrictions on that. You could only go in every two years or you had to sit out a year if you were going to do it. If they put some of those restrictions back into it, it would probably slow down the shop around process where literally a coach doesn't know who's going to be kept on his team.

10:32They have to do a field, a new team almost entirely every year with the pressures that come in from other people, with people trying to cherry pick. And it has created casts from the fans perspective, too. You could argue that these are no longer student athletes. These are just, you know, mercenary athletes who are out to get paid the most. And you do think these kids should get paid for performance. But there should be some loyalty tied to the school, too. Loyalty is an interesting question in this world.

11:02Cheese will be next. Coming up on Squawk Pod, the hard hat tour that was must-see TV. President Trump's walkthrough at the Federal Reserve Building. We'll hear from an official who was there, Russell Vogt, director of the Office of Management and Budget. This is not an attempt to say this project should be halted permanently. We want to get it done.

11:25This is Squawk Pod. We're taking a look and it looks like it's about$3.1 billion. It went up a little bit or a lot. So the$2.7 is now$3.1. I'm not aware of that. Yeah, it just came out. I haven't heard that from anybody in the Fed. You're including the Martin renovation. You just added in a third building is what that is. That's a third building. It's a building that's being built. It was built five years ago. We finished Martin five years ago. It's part of the overall work. So. Well, those tensions between President Trump and Fed Chair Jerome Powell playing out in real time in front of the cameras yesterday during the president's visit to the Federal Reserve building.

12:12Joining us right now is someone else who was at that meeting. the Office of Management and Budget Director, Russell Vogt. He was with the president yesterday. And, Russ, thanks for being with us this morning. We saw how things played out on the cameras. How was it behind the scenes? It was a very good visit. We learned a lot. The president learned a lot from being able to see it with his own eyes. He's a master builder. He has had great interest in this project. We learned a lot from watching him as a builder, figuring out the types of things that he would never have done and designing this as a renovation.

12:47And fundamentally, the reasons for why this is costing so much. They had good conversations throughout, and we're not surprised that they don't necessarily just agree with every of the viewpoints that we have. But these are the numbers that have come from the Fed, and they are entirely correct. This renovation, the combination of all of the headquarter buildings, is a$3 billion. And the overrun just for the two buildings, If you want to talk about just those two in the chairman Powell, the overrun just for those two buildings is one billion dollars. And there's some unbelievable reasons for why that is so.

13:23Such as? Such as, you know, number one, they are putting a tunnel in between the buildings. Number two, there is essentially excavating entire basement approach in a in area of the D.C. that we the National Mall that we know has problems with water. So you have to go very deep. You have to be able to figure out how you're going to prevent future leakage down the road. And they have an enormous parking lot that they are building into the ground. That is something that most agencies don't need, don't have for$30 million compared to the$250 million for the parking itself. You could be able to provide parking benefits for the entirety of the Fed.

14:05There's largesse everywhere you look, and there are some fundamental reasons for why this thing has become so big. This is not just restoring a building that needed to be restored for its historical purposes, nor is it the only renovation this building has received. That is inaccurate. This building had renovations at the turn of the century, 1999 or so. And so there's been a lot of work done to this building. This is about doing enormous renovations of an entire headquarter building and largely escaping the notice of the public in Congress. Well, Russell, that's where I wanted to go with this, which is to say, you know, and I'm all for shining a spotlight on things.

14:49Transparency is clearly important. The question that I have as a taxpayer and the criticism of the Fed in this context, if the criticism is valid, is whether you ultimately think or can specify that this wasn't done in a transparent way. Meaning, was this all some kind of secret that nobody knew? From my understanding, all of this was disclosed to Congress and to the government. And it's obviously we can see it physically happening if you if you walk by the building. So while it's important that the administration or others say maybe there's a problem here or not a problem, but there's a there's cost overruns here.

15:31The question about sort of that this is terrible is what? No, look, these these the information that we've ascertained that Congress has ascertained has become as a result of the oversight process. And we heard yesterday from from from Chairman Scott, the extent to which it's been prying teeth to get this information from the Fed in a way that you would not have if you were trying to get Department of HUD to talk about their building campaign, which hasn't happened and why they're having to move. And so as a result of that, we've had to rely on FOIA documents. This material hasn't been in their normal financial statements.

16:06This is something that has been at every step a huge labor to get information about what's going on. Comparing apples to oranges with regard to being able to hide the extent to which those two buildings are overrun. The totality of this renovation project begun a number of years ago, approved in 2020, 2021, is a$3.1 billion. It is the same levels of the if you include all of the the Palace of Versailles, if you include all of the the the congressional buildings from the dawn of this republic to now, this building equals that. That is what we are drawing attention to. And the other thing I would just say is the extent to which they continue to say, look, we've made these changes.

16:52They they may have made some, but they're still relying on much of the same design. They talk about, oh, there's no private dining rooms. There are meal-ready meeting rooms. Meal-ready meeting rooms are private dining rooms for the executives of the Federal Reserve. And so that is the kind of things we're trying to get to the bottom of. The National Capital Planning Commission will be very involved in continuing to ask questions. But I think what you heard from the president yesterday is like, we want to get this thing done. This is not an attempt to say this This project should be halted permanently.

17:26We want to get it done, and we want to get it done as cheaply and efficiently as possible. I think it gets to the degree to the fiscal mismanagement of the Fed. Right, but Russell, part of what I think a lot of the public sees and even the investor class thinks is that this is a pretext to either try to fire the Fed chair or to pressure him effectively to lower rates and that this is sort of a leverage point in a larger discussion and debate and or a way to distract from other issues that maybe the president's dealing with at the White House. So how do you how do you see that? You can only answer the question so many times.

18:09And the president has done that. He's asked repeatedly, do you intend to fire the Fed chairman? He said, no, it's not likely. I have no intention of doing that right now. And this is about ensuring that the Fed has the accountability of the American people knowing what's going on. Does the president have viewpoints? Yes, he does have viewpoints. The American people get to have a say in what they believe the Fed should do. The president believes that the American people, as the person that is elected on their entire behalf, get to have a say in whether rates are lower. And so if you're at the Fed and you're getting questions about both, of course, you're going to answer to both of those issues.

18:50But it's also true that the Fed needs to be accountable for things that are beyond monetary policy. Their building, their ability to transmit remittances back to the Treasury that impact our deficit, the extent to which their regulatory activities are supposed to go through a regulatory review process of which they are not complying right now. So there's a whole host of issues with regard to the Fed. And we want to make sure that those questions get answered over time. This is not a pressure campaign on the Fed chairman. Russ, let's just dig into that a little bit, because the general take from most people we've talked to is that yesterday, even though it was a little awkward in front of the cameras, was that there was some pressure that was coming down in terms of pressure on the Fed chairman.

19:39Is that what you think, too? We did hear from Treasury Secretary, Treasury Secretary Scott Bessent, who said on this program last week that he would like to see the Fed undertake its own internal investigation about, I guess, regulatory stray getting into other areas. Are these just pressure points to say the Fed needs to be looking at all of these things or is this laying out for a reason for why Jay Powell would not be qualified to do that? The president said that he's not looking to do that. But are you and other people in the administration still thinking that he's not fit to be running this?

20:14The president and the administration have policy views vis-a-vis the Fed on a host of different issues. You saw two of them discussed yesterday. The secretary of treasury has opined recently on a number of them. I just gave you a new one with regard to the regulatory review. And we're going to continue to articulate our policy concerns with regard to the Fed's management. And that will continue. You don't get to just be at the Fed and not have any criticism directed your way. That is not something that exists in the American political system. We respect the job that they have to do, that they are called to do under statute.

20:52and we're going to continue to represent the administration's perspective. The president will do it on his own behalf. And that is only going to continue in the next weeks and days ahead because we see on a host of fronts a lot of mismanagement that is hurting the American people and they need a voice in this town. And the president is providing that voice on ways that this Fed is holding the economy back from even greater heights. Russ, do you anticipate that the Fed chairman will be there through his term in May? Again, the president's been very clear. He has no intention. He finds this conversation very unlikely.

21:30And so we are making a policy argument on lower rates. We're making a policy argument with regard to an extravagant, luxurious, costly renovation. And we will continue to make those policy arguments into the weeks ahead. Steve Leisman was with us earlier this morning, and he posited that potentially what you'd see the Fed do in this next meeting is maybe change their language to say that if it looks like there's no inflation that comes from the tariffs, that that could clear the path to lower rates. Would that be enough to satisfy this administration? The president wants to see lower rates. We will be watching the next meeting very closely.

22:15We want to see the deliberations and the kinds of statements and hopefully decisions that get made to lower rates. I think you've heard that from the president yesterday. But this is something that we believe is vital over the next several weeks and months is for the Fed to recognize what the rest of the country and honestly the world is assessing, which is America is hot right now. The economy has a chance to grow tremendously. Obviously, we're already growing and we've got to be able to have our federal rates reflect that so that we can get costs down. But you do understand the argument that if the economy is doing so well, that's an argument to not lower rates.

22:57Again, I understand the argument, but you don't want to have rates artificially high and countries across the world are lowering their rates. There's no reason for why we should have artificially high rates and holding back investment in this country and the ability to have lending be cheaper. And that is something that we've got to address. We need a Fed that's willing to to to look at that carefully. And here's the thing. Part of it just comes from just this town's unwillingness to update their algorithms economically to the fact that tariffs are not leading to inflation like they predicted for decades and kept presidents from doing what President Trump has done, which is to impose tariffs, to protect the country economically, get people, businesses back on shore.

23:49And as a result, they're basically saying something is going to happen. Something's going to happen that hasn't. And they're holding back their fire. And as a result, that's hurting the country. If you talk to people on Main Street, they are worried about that inflation. And that is something that the Fed has to watch out for. Well, certainly when you have a national debate that talks about costs being on the rise, when you don't see that in the numbers, prices go up and will go down. But from a position of the overall inflation level, we're just not seeing that. And we don't expect that to change.

24:27We predicted this would not occur. It's not happening. And as a result, the president is being proven right economically. We had a lot of trade deals that are being passed. We're in a very good place on that front. And we're going to see ongoing success, but we've got to have lower rates. And I think that's what you saw the president put an emphasis on yesterday, and I expect that to continue. Russ Vogt, OMB director. Russ, thank you for your time this morning. Thanks, Becky. Next on Squawk Pod, how New York Democrat Tom Swasey aims to rebuild the middle class with stock ownership redistribution.

25:06In America, we need to start rewarding people who work hard because there's too many people in our country that are working hard every day and they just can't get ahead. And we need to create more of an ownership society. Moving around that wealth from a self-styled democratic capitalist right after this break.