Trump Seeks 'Scapegoat' for Voters' Economic Fears

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0:36As an effective and affordable online learning program, IXL covers math, language arts, science, and social studies, using interactive practice problems for kids from pre-K to 12th grade. Listeners can get an exclusive 20 % off IXL membership when they sign up today at IXL.com slash 20. Visit ixl.com slash 20 to get the most effective learning program out there at the best price. Welcome to The Beat. I'm Ari Melber. The top story from Washington and Wall Street is the Trump administration probing Fed Chair Jerome Powell. A blatant abuse of power coming after months of clashes where Trump resented that Powell is upholding his oath to keep the Fed independent and also standing up to a lot of White House pressure.

1:21We're never going to be influenced by any political pressure. I don't think he's doing the job. He's too late, always too late, a little slow, and I'm not happy with him. 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. Yeah, I haven't heard that from anybody in the Fed. I let him know it, and if I want him out, he'll be out of there real fast, believe me. The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the president.

2:06That's part of how we got here tonight. The Trump DOJ's probe is very thin. It chases a theory that maybe Powell misstated details of the federal government renovations. You saw them touring that there. and that he also did so in a manner that would become a federal crime, which is just unlikely at best. This is drawing even more pushback than other Trump revenge cases, because financial leaders and Republicans are also speaking out. They're joining the legal experts, independents, and Democrats, who have consistently objected to all of these revenge cases you see here. They've targeted at the DOJ critics like Comey, Democrats like James, as well as Republican Trump appointees like Bolton and now lower right Powell.

2:47So Trump's using that familiar playbook. And while there may be some spite here over just anyone standing up to him, it's also clear this one is different. The Fed, a larger fixation for Trump, the administration probing Powell, while also trying to seize banking powers, ousting another Fed official, which goes so far beyond what literally any president has ever tried. That case, and I know there's a lot to keep track of, but we'll remind you tonight, that case actually is up before the Supreme Court review next week because it is so far beyond what anyone has ever tried or gotten away with at the White House.

3:25Why is Trump fixated on the Fed this much? Well, we're exploring the answer for you right now in a special report. The Fed's policy process can be complex, but Trump's motive here is simple. He wants to corrupt the Fed's independent process to basically give him MAGA markets. And so instead of looking out for all people in this country and what's best for the entire long-term economy, that's the Fed's job. That's why the law gives it power separate from the White House, just as judges don't report into the White House. Whether Trump likes it or not, there are whole parts of the federal government specifically with their own powers because this isn't a unitary state.

4:05So instead of that, Trump wants the Fed to give him a short-term economic sugar rush to artificially boost him and his party, the Republican Party, for these upcoming elections. I'm going to walk through this with you, and I think we have some interesting stuff to show you, including across history in this report. But bottom line, it's about power. It's about MAGA markets trying to interfere with what otherwise would happen in the real economy and the real electorate. Now, we can get into some of the economic details, but for now, that's the gist. Having a politician control the central bank breaks the law.

4:41It shreds the central bank's freedom if he got away with it. It obviously undercuts free markets. And for all the valid criticism of Wall Street in today's markets, one thing that Bernie Sanders liberals and conservative Wall Street leaders agree on is that politicians should not have more corrupt power over the independent central bank. Now, politicos tend to focus on politics, which we could define as candidate strategies and pitches and their plans. Tonight, in our report, I want to broaden out, and some of this is, I think, just kind of interesting to look back over, because the iron law of elections across all history and geography in the modern era is the economy overrides everything.

5:29When the markets crash or times are tough, voters punish the party in power. Bank after bank across the country is hit by panic withdrawals. Mike warns industry and labor that reckless price and salary boosts menace the economic future. Today is Black Monday, the day the Dow dropped more than 500 points. The news from Wall Street has shaken the American people's faith in our economy. History in the making, the Dow plummets more than 777 points, its biggest one-day point drop. We have not seen a plunge like this since the crash of 1987. with one reason, corona. It was market panics, actually, in the early 1900s, which led to creating the Fed.

6:15The central bank tries to manage crashes and risk. It obviously can't prevent all of them. Now, in the politics, you can actually measure voters' reaction to each of those crashes. Across decades of elections, in midterms and presidential years, angry voters will punish governments, the incumbents, over a bad economy. that is a truth that drives legendary political sayings that have become cliches, and many races you probably remember. It's the economy, stupid. Mark, is one the flannel, Mr. Bush? Maybe he'll be unemployed. We project that Bill Clinton is going to be the next president of the United States.

6:57Obama blames Washington for the country's economic woes and is trying to link John McCain to President Bush's policies. I had the honor of calling Senator Barack Obama to congratulate him. The greatest economic year in the history of our country. You had three of them with me, and then we got hit with the plague. Joe Biden is on track to be the next president. A plague for people and markets. Biden's win was propelled by voters upset about the economy crushed by COVID. And some politicos might have overestimated what the voters were saying, as if it were an embrace of all Biden policies rather than concern about the crashing chart you see on the screen.

7:37And likewise, there are other politicos currently overestimating Trump's win just last year, which was also propelled by voters upset with high prices. The economy shapes elections more than anything else. History shows it. Political science shows it. And this isn't some new narrative that the media is just glomming onto during this new clash over the Fed this week. We report on this all the time in factual political coverage. Before the COVID crash, we reported how Trump was on track for re-election unless the economy fell. And then it did, and Biden beat him, as mentioned. And on 2024 election night, we were reporting on the trend of people voting against the incumbent party, the Democrats, because of high prices and economic concerns.

8:29with the coronavirus that people are so scared about. How does that affect what's going on as far as with the Democrats, with Biden and even Trump? During these kind of crises, especially if it gets worse, we'll see people tend to go, wait a minute, I need government. I think Donald Trump has a good path to re-election and a good economy. He's probably going to win. And maybe not in a bad economy. When the economy is bad enough and that's front and center, people tend to vote against what they see as the incumbent party. In this case, you had an incumbent vice president. Is it that everyone gave Donald Trump a bigger hug because he closed so well?

9:02Or is it something we've seen from time going back to the beginning of elections that when people are mad about the economy, they vote against the incumbent? They vote against the incumbent. They vote against high prices. And in that case, they voted against the Biden-Harris administration. Now, no one can see the future, but history shows the trends. The president's party loses badly when the market crashes. Republicans actually gained a whopping 67 seats in the midterms after a post-war downturn. Democrats surged by over 60 seats in the recession of 58 and won 49 seats in 74 amid inflation that was so bad they called it stagflation, when high prices are worsened by job losses and negative growth.

9:44And that's just midterms, which is what Trump is bracing for in 10 months. Economic backlashes are even worse in presidential years. A lot more people vote. And here you've got some examples. Reagan won and the GOP gained 46 seats off that economic malaise I mentioned after a campaign where Reagan rattled off inflation data and his knowledge of the Federal Reserve. Notice that's back in the headlines now. He was doing it to pound Carter's economy. to get a handle on inflation because in january at the beginning of the year it was more than 18 since then he has blamed to the people for inflation opec he's blamed the federal reserve system he has blamed the lack of productivity the american people he has then accused the people of living too well that was then and one of the most successful candidates in the modern era barack Obama certainly won plenty of elections without riding a recession, but his biggest win, the first time he took the White House, will add to the chart, was when Democrats swept the White House, the House, and the Senate with voters punishing the GOP for some of those clips I just played you earlier when Stephanie Ruhle was walking the carnage of the market floor, the housing crash, and what became the Great Recession.

11:03That's American politics, where we have elections every two years, whether the politicians like it or not. But as Donald Trump muses openly about a world without elections or where he has soldiers in the streets and unitary power, I would remind everyone that even autocrats abroad have seen that bad economies can topple their reign. Argentinian leader Perón was overthrown amid inflation and the economic problems in the 50s. Same story for Ferdinand Marcos and Mobutu Saseko Rampant inflation drove the uprisings along with other factors You can even go to the fall of Gorbachev and the Soviet Union Of course it was complicated, but it was the economic failure at home That weakened the dictator's control and created a more ripe environment For a protest movement where people risked their lives to ultimately topple the government History shows why Trump's fixated on crushing Fed independents to control the economy right now Even as there's so much else going on And he's doing it even if it angers powerful Republicans on Wall Street And brings the clash all the way up to the Supreme Court next week So history has something to teach us as well as how to win for those looking at democracy versus Whatever autocracy others are pitching So what comes next?

12:21Our special report concludes. I'm back with you in 90 seconds.

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14:16Tell the court jeweler to stop sending diamonds. You don't need any diamonds, do you? One of the most infamous lines from an out-of-touch leader ever, Marie Antoinette failing to understand that her people were literally starving. They could not just switch from bread to another carb. That economic pain was a key factor that drove the French Revolution. Achieving the rare feat of toppling that monarchy, the king and queen went from absolute power to public beheadings. Almost an unthinkable turn for that revolution. The king, Louis XVI, is the same one referenced in the hit Hamilton, where the founding father laments how the U.S.

14:56made a deal with a king who was no more, mocking the idea of keeping the agreement or conversing with the king. Should we honor our treaty, King Louis' head? Hamilton asked. Do whatever you want. I'm super dead, he imagined the king replying. Yeah, there is a Hamilton lyric for everything. Hamilton, of course, also very interested in our central banking system. A lot of this stuff goes back a ways. Now, critics liken Trump's economic message this year to Marie Antoinette's. He ran on lowering prices, but now wants to lower expectations. I will immediately bring prices down starting on day one.

15:37You know, You can give up certain products. You can give up pencils. You don't need$37 for your daughter. Two or three is nice. We may have short-term, a little pain, and people understand that. Bond market is very tricky. I was watching it. Maybe the children will have$2 instead of$30, you know? And maybe the$2 will cost a couple of bucks more than they would normally. Trump calling for families to cut back on toys, acknowledging the prices may go up under his tariffs. and contrast that with his self-enrichment, like the foreign jet gift that he got, which may violate the Constitution or the White House renovations, the outlandish plan he has, trying to take over$100 million in taxpayer money for himself.

16:21He floated that. That one hasn't gone through yet. Or his bid to reap hundreds of millions of dollars in crypto for himself and his family, all while people struggle in the economy, hampered by his erratic tariff plans. If Trump does get more control over the Fed, he thinks he can juice the economy. One Bible of finance, the Wall Street Journal, has attacked his recent plot against Powell, while also previously noting that Trump basically mixes capitalism and socialism. And someone who knows all about how the White House really runs, Obama veteran David Axelrod, called out why Trump is so obsessed with the Fed.

17:00Here's the thing that people should be concerned about. He wants control of the Fed because he He wants to manipulate interest rates to his political advantage or what he perceives as his political advantage. That's the reason that the Fed is an independent agency. True. It's an independent agency. It's not supposed to create politicized markets for short-term corrupt political agendas, which they were always concerned about, which is why it's federal law. Now, I told you we could get into the details briefly. Here's how this would work. instead of the Fed doing its job setting policy for whatever the independent experts think could be long-term economic success, Trump would, by definition, break with their plan because if he let them have their plan, he wouldn't need to do all this, right?

17:51He would try to oust several Fed officials to then do what they otherwise wouldn't do, artificially lower interest rates beyond the current plans in order to juice the economy for his party. And that could boost stock prices in the short term or stoke the housing market, could even trim unemployment at first. But in the long run, it risks larger problems, which is why the Fed isn't doing it, but for his political pressure. It could contribute to the bubbles, which have stoked the past crashes we showed you and the hardship there. So to be clear, the trade-off would be a short-term type of sugar-high mirage that would hurt Americans in a potentially avoidable crash later, which is why politicians don't run the Fed by law.

18:34Fed independence is supposed to combat exactly that corrupt political temptation. And the lawmakers knew a White House official or president would have that temptation long before Trump came along. And that's not all. High prices are a problem right now, but there are wider risks of a bubble and crash here. I showed you the past crashes. now we have a concentration of just a few big tech stocks boosting most of the U.S. stock market. Investors are currently up from some of the big tech companies you see here, but many warn it looks like a Jenga board, or if you pull out one or two of those AI stocks, you could have a wider crash.

19:14And while the companies are different, that pattern of risk is something we have seen before. U.S. wealth inequality is also getting worse, And that means that while we're talking about markets, let's remember a huge number of Americans, more than a third, can't save enough in this economy to invest in any stocks. They don't own any stocks. And yet we all know that even as the working poor are cut out of stock gains, crashes tend to hurt everyone, even if you don't own stocks because you live in the same economy. And that's before you get to what we've seen the elites do. Republican President George Bush took everybody's tax dollars to bail out those failed and risky banks.

19:58Didn't just take money from, say, the richer people or people who were in the markets. And that can leave you feeling especially powerless or angry when the elites act like this. But people, of course, still have that one lever. We showed you voting against the incumbent party, especially when they're facing economic pain. Now, Trump and Republicans control the White House and Congress right now. I don't want to get too far in the weeds, but I'll tell you a couple things. They could pass laws to better regulate AI. They could tax just those richest companies for emergency bailout funds so that if we do face a crash, it's those companies on the hook for their bets instead of the predictable pattern of bailouts tapping working people and people who weren't even in the stock market.

20:46They could do that right now. You could literally put that fund aside, break the glass if they need it, and if they never need it, do whatever with it, or even yield some of it back to them. Republicans could regulate crypto to contain what is an obvious risk. Donald Trump once publicly called it a scam. But they're not doing that. They're not doing long-term economic policy work to benefit the general public. If that sounds like a criticism or an indictment, well, it is the fact, and I've shown you all of the receipts. Do with that fact what you will. Instead, Donald Trump takes what he once called a scam of crypto and is grifting hundreds of millions of dollars off that industry in his own let them eat crypto moment while people struggle to get by.

21:31Trump has shown he'd rather risk breaking the law, maybe even losing at the Supreme Court. He'd rather do that to cover his tracks with some short-term economic sugar high if he can get away with it. And Donald Trump knows all about the economy shaping elections. He was obsessed with that very political problem when COVID was tanking the markets. He knew it was a risk for him. He understood that math at times. And Bob Woodward and others have told us about this and have recorded calls from the period where Trump was as concerned about the markets and the perception of the economy as he was about who was dying of COVID.

22:06And then he came back into office running against Biden on the high prices complaint. So now he wakes up every day fearing a midterm route that could seal his lame duck fate at a time when Republicans have already voted him down on Congress, on Epstein, on health care last week, or even planning a vote on the war powers that he's trying to use as his domestic powers clearly wane. Losing the midterms, which Trump's own RNC chair says is likely, would obviously hasten his political demise. It could also bring on more accountability. If Democrats are in the House, we have some memory of what that was like in the first term, the subpoenas, the probes, and if there is constitutional violations, maybe another impeachment.

22:50Maybe even one over pocketing foreign jets and hundreds of millions in crypto. Constitution says you can't take foreign gifts. He's been taking tons of them that we know of. Trump did not leave peacefully after his last loss either. So everyone must be ready for a sequel, a reboot, or a more extreme version, if Republicans lose in 28, of the January 6th violence that Trump now backs and pardoned. So history can be grim, but it has lessons, and it shows clearly how economic unrest, the lived reality of the mass public, can, at broad and at home, congeal with informed protest for revolutions in any system of government that bring the power back to the people.

23:35It is those dynamics that have dislodged so many incumbents, even powerful ones, and even those who have very clearly shown they would end democracy if they could. That's our special report. Next, we come back with Professor Melissa Murray.

24:01I tend to agree with Treasury Secretary Scott Besson, who believes any such investigation is probably unwise. Does anybody think this would be happening, this investigation, if Powell had acquiesced to the president and set interest rates where the president wants? This was a really big unforced error. On Fox and Fox Business, some of the guests, some of the analysts are saying the obvious. The revenge tour, apparently now that it's hit someone they are more sympathetic to, is a bad idea. And if you have prosecutions being called in without a basis by politicians, that's called selective prosecution.

24:38It's actually illegal. It's not just Powell. While it is getting more pushback, as I've told you from last night, the other critics, people who've pushed back are all on this assorted list. Trump is angry. There's new reporting that he attacked his own team at the White House last week, says he has weak people at the DOJ. They're not moving fast enough to go after his targets. That he's reportedly attacked Attorney General Pam Bondi, saying she's weak and ineffective. Of course, you have to translate this. When he says weak, in this instance, if he means that she's not going further down the line for fact-free or evidence-free illegal selective prosecution, what he's actually saying is she can't get his corrupt agenda done.

25:20MS Now is reporting that four prosecutors from the Civil Rights Division are resigning after a clash over that terrible shooting in Minnesota. Six more prosecutors also resigning there over a push to investigate the victim's widow. Influential podcaster Joe Rogan, who was a big key voice for Trump and hosted him in a widely viewed interview in the close of 24 campaign has continued to use his platform, which I'll remind you has a broader reach than many TV shows to criticize the ICE policy. You don't want militarized people in the streets just roaming around, snatching people up, many of which turn out to actually be U.S.

26:04citizens. They just don't have their papers on them. Are we really going to be the Gestapo? Where's your papers? Is that what we've come to? If Trump's friends say he's running a Gestapo, what's everyone else going to say? That's where we are now. We're joined by law professor Melissa Murray from NYU, an MSNOW legal contributor. The Powell domino professor is falling hard. I've shown how this particular person apparently has attracted an ire that others did not. Politics, though, which is interacting with the law, is about addition. So I think critics of the president are happy to find, oh, this one triggered Wall Street, someone else triggered something else.

26:45What do you think is happening here in the president's complete inability to get the DOJ to win these cases? So let's just be clear. The DOJ has actually done quite a lot for this president. They've abandoned a lot of the use of force prosecutions that we've seen in previous administrations. They have focused on this retribution campaign. Like, they may not have been successful in prosecuting those cases to completion, but they have struck fear in the hearts of a lot of people who might be critics of this administration. And that, I think, is a win for the administration. I mean, the main thing that you want to do if you're trying to promote this kind of change within the government is to silence dissent.

27:25And so make no mistake about it. The Department of Justice has been very effective in deterring and chilling that kind of conduct because of what they are willing to do in defense of this president. even if it's not always successful. I think the reason why Powell has not hit the way that it wants to is he's so closely connected to the Fed. Everyone recognizes that his term is going to end in May. It doesn't have to be this way. It doesn't have to roil the markets. It doesn't have to create this kind of economic instability at a time when the country is already reeling from a lack of affordability and people are really worried about where the economy is, even people within the Trump inner circle.

28:01So I think part of why this hasn't hit the way he wants it to is that it seems really unnecessary at this point. The Wall Street Journal calls this lawfare for dummies. That's the term that the right wing has used when they say something selective in the annals of political lawfare. There's dumb, the journal writes, and then there's the criminal subpoena of prosecutors delivered to Chairman Powell. So, I mean, yes, this seems to be the case. I mean, part of it is there's a lot of distraction going on. Like we've been talking about Powell, we've been talking about Venezuela. We haven't been talking about why the Department of Justice hasn't produced all of the Epstein files that they are required by law to do at this point.