108. America’s Turning Point: Trump’s Biggest Power Grab Yet

0:07Welcome to The Rest is Politics US with me Katty Kay and me Anthony Scaramucci Katty we're Another big week in Trump land. Yeah, and trying to fire a Federal Reserve Board governor. So we'll see how that goes down. Trump says he's not a dictator. We're going to ask whether his actions are starting to tell a different story. And then in the second half, we're going to look at whether the Democrats can fight back effectively. We're seeing some movement from Democratic governors that's been kind of interesting the last week or so. And is their new strategy working? Before we start, though, I want to have a little strategy here.

0:56Okay. I'm convening our first cabinet meeting. I just want to say you have a lovely sweater on, and I like your hair color, and I think you're a phenomenal podcaster, and you've made podcasting safe. It's not enough, really. More. More, please. You've made podcasting safe in America. You've closed the podcasting borders. I mean, it's okay, Anthony, but, you know, step it up. The fact that every cabinet meeting goes to a higher level of ass kissing is, I mean, there's nobody in there. This is like a timeout. Could you just imagine? It's almost like a Saturday night. Okay, timeout. The ass kissing is out of control.

1:37Could somebody dial it back in? Trump, you look like shit. You're walking like shit. I mean, what are you doing? You know what it is? They'd looked at the Europeans come in and they'd learned from their European colleagues. I mean, maybe they called up the Europeans and said, that was good. How did you guys do it? How did you coordinate your flattery in a way that it sounded authentic? And then they went and studied it a bit. And then they came in. They had three and a half hours of this cabinet meeting with the cameras in there. The poor camera guy's arms must have been falling off, holding up that boom mic.

2:06And did you notice this? My best bit. The camera, of course, is on Donald Trump. Next to him is Pete Hegseth. And on the other side of him is Marco Rubio, who just won't look up, who's doing doodles on his notepad. You can see him. Watch the video, guys. There's Marco Rubio just like say, please, God, get me out of here. Please, God, get me out of here alive. Please, God, how do I not make sure that my face betrays what I'm actually thinking? This is just vomit making. And all the while he's doing little doodles. You're not alive. You didn't get out of there alive. Let me give Marco Rubio a newsflash.

2:38You did not get out of there alive. Your soul was taken from you. Yes, you got out of there as an obsequious zombie. But I mean, Wyckoff is the best one, right? Because I know Wyckoff. You know, I've hung out at Rao's with Wyckoff. I've gone to dinner with him. I've been on the panels with Wyckoff. I mean, Wyckoff, you couldn't even see his ankles. You know what I mean? They were so far up the intestines of Donald Trump. Like his little ankles were like hanging out. It's gross. Can somebody pull Wyckoff out of there, please? I mean, come on, Katty K. It's just it's unbelievable. And the very fact that Donald Trump held the whole of the cabinet in the cabinet room for half a working day in front of television cameras shows you that we are basically in the Trump reality TV presidency.

3:24This was the cabinet episode. He wants to check the ratings. And did they flatter him enough? Let me just quote Trump as we get started here. I am not a dictator, Caddy Kay, but you know what I am? I'm going to dictate to you what you're going to say to me. And by the way, since you want to watch Marco Rubio with the videos of doodling, watch Trump's face during the ass kissing sessions. He likes it, but he doesn't like it. Yes, he's torn. Yeah, he's torn. He's torn. You're so right. He's sitting there. He knows how disingenuous it is. He's not grinning because he knows that would be too much.

4:02right? He can't grin because that would show that this was not really true and that he was in on the joke. But so he's looking kind of serious and looking down a little bit. Anyway, it's worth watching, guys. Not all three and a half hours of it you don't have to watch. We will spare you that. But it's been a busy week. OK, so this is a great risk of podultery, which I think we're not allowed to do on this podcast. But anyway, what the hell? I've done it. I've done it. I would recommend people to have a little listen to the top of Ezra Klein this week, because he talks about how what is happening in America is a bit like an optical illusion.

4:39And you know, things are happening and you can see changes to the country taking place, but we don't really know what it means. And I have had this feeling this week, I've been talking to several friends in DC, in the kind of DC world, trying to make sense of what feels like a very momentous end of August in the Trump presidency. And is this what people voted for? As Ezra spells it out, this is democracy in process. People voted for mass deportations. Mass deportations are ugly. We have ICE officers on the streets of Washington, DC in masks, picking people up and throwing them into the backs of vans and then just disappearing them.

5:19And well, that's what people voted for. That's democracy. Or is this something far more sinister where the president is getting American cities used to armed members of the National Guard and armed troops? And at some point, there will be a protest and there will be a pushback or a mistake will be made. And some member of the National Guard will end up shooting a member of the public and we'll have a state of emergency declared. and we're on the kind of helter-skelter route to the end of democracy and free elections in America, which is exactly what General Milley, the former Joint Chiefs of Staff, warned me about and warned you about, that this is what Donald Trump wants to happen.

5:57He wants to put troops on the streets and they will end up shooting American citizens. And then you have kind of untold consequences, but they're probably not good that develop from that. And I feel like that in this moment. I'm really trying to, you know, me, normally Miss Glass Half Full, Miss Sanguine, pretty sunny over here. But this last week or two feels like a bit of a turning point in America. And I think it's the culmination of the troops on the streets, the threat of the troops to other cities. And then this week, the news that the president has fired or is trying to fire a governor on the Federal Reserve Board, which looks like a kind of, as he said, in that very long cabinet meeting, we will soon have a majority of the Federal Reserve Board and that will allow us to dictate monetary policy in America.

6:51And I think it's worth talking about Lisa Cook a little bit in the context of why this feels so. So it feels like a shift is happening to me. And I don't know what that means. I don't know where it leads to because we're at the beginning of this play. We're not at the end of the play. We're in Act One, not Act Four. But talk a little bit. What do you think is the significance of the move against Lisa Cook? Well, the market's telling you obviously doesn't like it. I mean, this is the first time that gold reserves for other countries are higher than U.S. treasuries around the world. So thank you, Mr.

7:28Trump, Donald Trump, President Trump for doing that. Secondarily, you want to wreck the independence of the Fed. it's going to cost you in terms of the value of the dollar, it's going to cost you in terms of the economy, and you'll start to see institutional capital allocators move away from the United States. And lots of research reports out saying that the European stock market is going to have incrementally more capital allocated next year vis-a-vis the Americans because of this. So there's a couple of things going on, though. I want to break them up in categories. So Again, there's good and bad Trump.

8:06So let's talk about good and bad Trump. Reducing crime. Katty, everybody's for that. Everybody should be for that. If you're a left-leaning leader in the United States, you're not for that. Wake up. Even Bill de Blasio, the retired hard-left mayor, is saying that the Democrats have done a bad job on crime. So Trump wanting to reduce crime in D.C., I want to give him some credit for that. As, by the way, Muriel Bowser, our mayor, has done so. Yes, exactly. She's played that right. So I give her credit. Muriel Bowser has said, hey, crime is down. The president's trying to reduce crime. But, Caddy, remember, we always have to balance reducing crime and living in fear.

8:50And the bad news about America right now, if you are black or brown, you live in more fear than you do if you're white. And that's a terrible thing to say. But that's why we have a podcast and we're not tied to some mainstream media organization. It's truth. I have people that come over to me and tell me that they live in fear. They live in fear of ice. Well, you have a passport. I don't care. I'm from Honduras. I live in fear of ice. My family lives in fear of ice. This is not the type of society that America wants. Trust me, this has a very negative reverberation effect through the society. Remember, your freedom from fear.

9:31What did Franklin Roosevelt say, right? The only thing we have to fear is fear itself. And your freedom from fear unleashes the creativity, unleashes the animal spirits, unleashes the innovation. You can't have this larger percentage of the American population living in fear. It has cataclysmic consequences. And by the way, when children see their parents living in fear, guess what happens, Scotty? They themselves get fearful. And it's very inhibiting. And this is a very dangerous thing that Trump is doing. So good for reducing crime, very bad for fear induction. Do you want to know the irony of this?

10:10is Lisa Cook, who is the Federal Reserve Board Governor, who has been fired but may not be allowed to be fired, who we were just talking about. Her field of economic expertise is how when populations live in fear, innovation in the economy goes down. She studied African Americans after reconstruction. And she found, guess what, when you're being lynched, actually, you're not filing as many patents as you might be filing. You're not innovating as much. And she is exactly the person who has studied the kind of fear that you are talking about and its impact on the U.S. economy. Let's give more irony here because Trump talks about lawfare and Trump talks about him getting picked on in certain minuscule ways in the law where they make big deals out of nothing, prosecute them, 34 counts of felony, you're guilty.

11:02And now he's doing the same thing to Lisa Cook. He's trying to find something in her past that can unravel her future. And so, it's the highest levels of hypocrisy. But remember, in a personality cult, you can be very arbitrary and very capricious about the way you do things. And so, I can say, it's bad for me, but it's not bad for you. And so, we're going to go after you, Lisa Cook, And we're going to see if we can knock you out of that position. So the one thing, Katty, and I've done a little bit of homework on this and talked to a few lawyers about this. The for cause. Yes, let's talk about that.

11:42Trump is saying she's being fired for cause. We should just give people a little bit of the background very quickly. So the Federal Reserve was founded in 1913. And the statute of the Federal Reserve, this is a quoting from it that says that governors shall hold office for a term of 14 years unless sooner removed for cause by the president. Now, the statute doesn't specify what cause is. It doesn't say that whether it's about work performance, there are no criteria presented. It's what some lawyers have described to me as naked cause. It's not kind of fettered by any other qualifications. This gives the president quite a lot of discretion legally.

12:28It's not as much discretion as saying that the president can fire a Federal Reserve Board governor at will, which would be just like, I don't like you, don't like your dress, don't like whatever it is about you, I'm going to fire you. But it's not as restrictive as what is usually referred to as INM language, inefficiency, neglect, malfeasance. So the reason that there is now a debate here in the U.S. amongst lawyers about whether Trump can indeed fire Lisa Cook and why Lisa Cook's own lawyers have said she doesn't accept this. She says she's not fired. This is not legal. The question is, what does forecause mean?

13:11And the president is saying there are mortgage documents that one of his kind of henchmen found in the Office of Mortgages that show that she bought two properties in two weeks of each other and said both were her primary residence. And it's not possible that Broth can be a primary residence under law. That's not legal. So it was before she took office as a Federal Reserve Board governor. And so now you have lawyers in the Supreme Court, I'm sure, and constitutional lawyers defending her and constitutional lawyers for the government trawling through arcane case law to find out what this two words means for cause.

13:49So, Katty, as we're speaking, Lisa Cook has announced a lawsuit against the president. And so this will get taken up into the courts. We'll have to see how this gets resolved. And we're going to learn a lot about what the definition is as a result of this case. Yeah, there is actually the University of Virginia. Weirdly, there is a constitutional lawyer who specializes on presidential removal power, which is a super arcane thing to specialize in. But anyway, he says that he thinks this is going to be very tight. Lisa Cook is represented by Abby Lowell. He's a very famous Washington, D.C. lawyer for power players.

14:25He's very good and very effective. But my understanding, talking to a couple of lawyers over the last day, is that it's not clear whether or not she wins this one. Sorry, I want to give people a bit of background because that is how we got to this position of Lisa Cook. No, I look at it. I think it's important because we want to explain the hypocrisy. So let me ask you this question, Katty. If this was a Trump appointee, Donald Trump appointed this person, would they be doing this to this person related to that paperwork? No, because Lisa Cook was not caught up in a broad trawl of people going through millions of mortgages and saying, OK, we are going to have in America an assessment of whether people have lied on their mortgage forms or done something wrong or made a mistake on their mortgage forms.

15:18And we're going to try and correct that. She was specifically targeted. And Donald Trump almost admitted as much in that cabinet office meeting where he made it clear that he wants a majority. The Reserve Board of Governors is seven people strong. He wants a majority to have four of them who are Trump appointees. So they will vote the way he wants them to vote on interest rates. She was appointed by Joe Biden. She did not vote to cut interest rates. And that's what this is really about. It's a power grab on the federal board of governors. Right. I mean, I think that's what this is about. Yeah.

15:55Well, let me ask another question. So the federal judges said we got to shut down TikTok. It's a weapons grade technology. Funny that. Did that happen? No, that didn't happen. And it was passed by Congress and signed off by the Supreme Court, in my memory. Should have been shut down, right? So it didn't happen. So we're going to ignore the law when it doesn't suit our interests. And then we're going to overly bite and overly enforce the law when it suits our interests. And so when Trump says he's, quote unquote, not a dictator, but many people want a dictator, I'm not using the F word here, the F word that ends with a T.

16:37But we're going to say authoritarianism here a little bit because, come on, if you're in a nation where everybody's subservient to the laws, we do our best to abide by the laws. I'm not saying it's perfect, Caddy, but it's not this arbitrary and it's not this capricious of an administration of the law. And so what happens? Because it's all tied to the economy again. We've got an antenna up, Caddy, and we're sending a signal. Beep, beep, beep, beep. Beep. To the rest of the world. Beep. Beep. Don't trust us anymore. Don't trust our numbers. Yeah, we got a lunatic. We got a lunatic in Washington.

17:15He's going to fire the Bureau of Labor Statistics. He's going to corrupt the Federal Reserve. He's going to arbitrarily and capriciously administer the laws. Beep. Beep. Beep. Move your capital elsewhere. And to your earlier point and Lisa Cook's point about innovation, you're frozen now because we want you living in fear while our henchmen are walking around covering their faces caddy as they try to intimidate you in the street so i don't know i i it's not the america that i grew up in it's not frankly the america that you've lived in the last 25 years and there's very few democrats very few democrats are speaking out about it obviously there will be no Republicans speaking out about it.

18:03We lost them 10 years ago. But what would you do, Caddy? What would you do? Be the strategist. What would you do to rein this back in? Is it like the emperor has no clothes where the bubble will eventually pop? Is it Joe McCarthyism where he's eventually shamed? Do you have no dignity, sir? And you're eventually shamed into losing your power? Or is this fear-based power that's going to continue to exist, Kat? I mean, I think the fear-based power we're seeing, we're seeing it in the firing of the head of the Centers for Disease Control that just happened last night. The woman who said that the health system in America is being weaponized to suit Bobby Kennedy Jr.'s own agenda, anti-vaccine agenda, and three other members, senior members, left with her because they said, we can't do our jobs.

19:01Everything that we want to do is now meant to be in service of proving that vaccines, even very low risk vaccines, are harmful to people. So you've had a kind of culling at the top of the CDC. Again, it was messy. The White House had to step in and say that she was fired. She didn't want to go voluntarily. But that leaves organizations and institutions looking weak. It also undermines people's trust in the veracity of those organizations is a bit like your signal that's going up. Is this the right signal that we're getting about the health of Americans? Are we actually being told the truth? Bobby Kennedy, in that long cabinet meeting said next month, he's going to announce what the real causes of autism are.

19:46And he's been looking at tying them to vaccines. There's been lots of debunking of the relationship between the MMR vaccine and autism, but he's going to make an announcement again. Can we trust that what the government is telling us is true? Or is this actually just for political game? It's a very similar story. You've got the health story, you've got the economic story, but the underlying erosion of people's ability to trust the United States and to trust its data on health or on economics at the moment is rising. Your signal is kind of getting louder and louder on that one. And then you have the creation of some kind of militarized force on the streets of American cities.

20:24Again, a projection of force, a projection of fear, people with masks on their faces, the kinds of troops that you see in more autocratic countries. And I think a lot of people are wondering, you know, how long does it last? How deep do these changes go? And I think that how long does it last is going to come down to something as banal as does America have a huge spike in inflation? I mean, I honestly now think the only check on what the president is doing to amass a huge amount of power in his own hands in the Oval Office. I don't see any check in the Republican Party. Congress seems to be taking not just a summer holiday, but a year long holiday.

21:07Democrats are finding it hard to cut through and fight back. So it's going to be up to something like inflation. Do American voters start feeling the impacts of tariffs in such a dramatic way that no matter how much the Republican Party gerrymanders the districts that we spoke about a couple of weeks ago, in the midterms, the Republicans lose or inflation gets so hot that the markets respond. I don't see another way that Donald Trump is going to be checked. I mean, tell me if I'm wrong, but I don't see. I think it's going to come down to affordability of people's pocketbooks. It looks like they botched the gerrymandering in Texas.

21:46They've left themselves a little bit more vulnerable than they thought. It's going to be gerrymandering now in Illinois and gerrymandering in California. So it could increase the probability that the president loses the House in the midterms. That'll finish his term, by the way. So let's just let everybody know that. He loses the House. They're going to unleash massive investigations against him and his family members and a whole host of other people. And it will slow them down. And he'll be a lame duck. And it'll be a really bad two years for the Republicans, even if they don't lose the Senate, which I predict they won't.

22:23I think the Republicans will hold the Senate. Your point on inflation, here's the great irony. This is one of the greatest things about our societies. People should always remember this. We innovate. You think things are going to go linearly. They don't. They go exponentially. And so you have an opportunity here where inflation may be lower than we think, Addy, because of automation and robotics and better software technology. All this stuff coming online over the next three or four years may, in fact, reduce prices, despite the fact that we're weakening the dollar and monetizing our debt. And putting a sales tax on people through tariffs.

23:00Exactly. One of the Federal Reserve Board of Governors came to our event last week in Wyoming and basically said, we've got to be on watch for the innovation because, yes, everything you just said is inflationary. The counterdote to that and the great irony is that the globe's entrepreneurs, the globe's innovators are outrunning the negligence of the politicians in terms of the way the politicians are handling policy. So I'm for the rate cuts. I'm not just saying that as a Wall Streeter. I'm saying that because I see the weakening in the labor statistics. And if I was sitting on the board of governors of the Fed, I would be voting for the rate cuts.

23:45You know, it's the thing about Donald Trump. You can dislike him and you can think he is dictatorial. You think he's a very dangerous person, but he does have good instincts on certain things. And I do think he's right about that. And by the way, the two people who Donald Trump appointed who we met at your conference, they were great. Chris Waller and Mickey Bowman, right? Yeah. They're not stooges of Donald Trump's. I actually think because he did try to put in two people last time around who would be much more politically in his pocket. Both of the they got they did not get confirmed by the U.S.

24:21Senate. And I think there is some check here. There are some protections around the validity of the decisions that the Fed makes going forwards, which is that whoever replaces Lisa Cook would have to go through Senate confirmation. And two of Donald Trump's picks didn't go through last time around. And the two who did go through are respected economists. They make their decisions on the basis of economics, not policy. But there is still this kind of hovering question about whether the Fed has the credibility that it had. I mean, I think whether you think that this is the right moment to cut interest rates or not, it has to be based on economics and not political fear.

25:03And the moment there is a kind of question, your little signal that goes up, the signal's already gone up. People have already raised the question, which already undermines potentially the validity of the decision. And that in the long term is not good for America. You gave me a great visual. I want to see Chris Wallace with a t-shirt that says, I'm not a stooge, as quoted by Katty Kay on the Rest is Politics U.S. Chris Waller. Yeah. Basically, you just told him he's not a stooge. I mean, it's quite a compliment. There we go. There you go. Talking of people who are not stooges, by the way, and the SALT conference, I had a very nice image that you sent me of your very big hug with Mr.

25:48Trump Jr. Yeah. Well, the problem is he's so tall. I was hugging him at the waist. It was actually a little. I know. You looked like you were slightly kind of inhaling his belly button. Yes. Next time, caddy, I need lifts. Okay. You know, just help me find the right something. But you had a nice little reconciliation moment with Mr. Trump's son there. You see, but here's the thing. OK, the kids, I've never had a problem with the kids. They've never had a problem with me. And to quote one of them, I don't want to be fighting with every single person that my dad fights with. You know, I had a 20 year relationship with these guys.

26:20You know, Eric was teasing me on stage. And just for those of you that were cat he's referring to, Eric Trump came to our conference. He's a big coiner. He asked me if he could come. It's a non-partisan, non-political event. I said, sure, come. I interviewed him on stage. It was cordial. He did tell me I sucked at politics. And of course, I responded by saying to him, well, we're both two out of three for the last election. So you suck as bad as I do. And then I pointed out, could you please thank your father for making your and my birthday world infamous, which is, of course, is January 6th. Eric and I share the same birthday.

26:56But as a student of Greek tragedy, I don't want to take all the sins of the father and descend it on the people like Eric Trump. And I will say this, if Trump was a different person or Trump had a metamorphosis, I'm not a grudge holder. I just don't want this type of behavior coming from the executive branch of the United States unchecked. What I'm blown away by, and I think if the founders, we dug them out of the grave and we said, hey, Alexander Hamilton, what do you think? He said, wow, I didn't think that the Congress, I recognized there could be a dishonorable person that could run the country, which is why we had the impeachment provisions.