On this “Face the Nation” broadcast moderated by John Dickerson:
- Sen. Joe Manchin, Democrat of West VirginiaSen. Pat Toomey, Republican of PennsylvaniaNeel Kashkari, president and CEO of the Federal Reserve Bank of Minneapolis
Click here to browse full transcripts of “Face the Nation.”
JOHN DICKERSON: I’m John Dickerson in Washington.
And this week on Face the Nation: With 100 days to go ahead of the midterm elections, Democrats revive a tax and spending package and hope voters will reward them if it passes.
Last week saw a surprise development in the protracted Build Back Better saga. West Virginia Senator Joe Manchin, who seemed opposed to a sweeping package, reversed course and joined his fellow Democrats to support an economic bill including hundreds of billions of dollars in tax increases for some corporations and the wealthy aimed at fighting inflation, cutting health care costs, and combating climate change.
We will talk with him and get the GOP perspective on the bill from Pennsylvania Republican Senator Pat Toomey.
All this as we had more dreary economic news. The Fed raised interest rates again, and the economy shrank for the second straight quarter. Inflation is at a 40-year high. But the job market remains strong and gas prices have dropped.
The president’s take?
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JOE BIDEN (President of the United States): That doesn’t sound like a recession to me. Thank you very much.
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JOHN DICKERSON: We will see what Minneapolis Federal Reserve President Neel Kashkari has to say.
Finally, the Face the Nation political panel and the CBS News Battleground Tracker poll are back. We will have an estimate on where the race for control of the House stands, plus political analysis.
It’s all just ahead on Face the Nation.
Good morning, and welcome to Face the Nation. Margaret is off this week.
We have got a lot to get to today.
And we begin with the news that President Biden is experiencing a rebound case of COVID, most likely due to his taking the drug Paxlovid. He has returned to isolation, but took to Twitter yesterday.
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PRESIDENT JOE BIDEN: Hey, folks, Joe Biden here.
Tested positive this morning. Going to be working from home for the next couple of days. And I’m feeling fine. Everything is good.
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JOHN DICKERSON: Although the president said that the rebound cases do happen with a small minority of folks, the actual number is difficult to track, and estimates vary on just how many Paxlovid users are affected.
Another Democrat who is recovering from COVID is West Virginia Senator Joe Manchin. He’s been negotiating with Senate Majority Leader Chuck Schumer on the Inflation Reduction Act. And the final agreement was made in a Zoom call.
Democrats say the bill would reduce the deficit by $300 billion. Revenue would come from a minimum corporate tax rate, expanded IRS tax enforcement, and by tightening the so-called carried interest loophole that benefits some investment managers.
The bill would also make the largest investment in fighting climate change in U.S. history. Nearly $370 billion will go to new tax credits for renewable forms of electricity, electric vehicles and grants to automakers to increase efficiency.
On health care, the bill would keep the Affordable Care Act’s premiums from increasing and cap out-of-pocket prescription drug costs for Medicare recipients at $2,000 per year. Medicare will also be able to directly negotiate prices with drug companies, reducing costs.
We go now to West Virginia Democrat Joe Manchin.
Senator, welcome. I hope you’re feeling better from the COVID.
Let me start with a — with a…
SENATOR JOE MANCHIN (D-West Virginia): I have, John. Thanks for having me. I appreciate it.
JOHN DICKERSON: Let me start with something you said back in 2010 in a debate when you were running for Senate. Here’s what you said.
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SENATOR JOE MANCHIN: I don’t think, during the time of recession, you mess with any of the taxes or increase any taxes.
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JOHN DICKERSON: So that’s become the — your Republican colleagues’ favorite quote to roll out now that you’ve made this agreement with Chuck Schumer that has a tax piece to it.
Why did you change your mind?
SENATOR JOE MANCHIN: John, I didn’t change my mind. I have never changed at all. This is fighting inflation.
This is all about the absolute horrible position that people are in now because of the inflation costs, whether it be gasoline, whether it be food pricing, whether it be energy pricing. And it’s around energy mostly that’s driving this high inflation.
This is going to do — take care of that, because this is aggressively producing more energy to get more supply to get the prices down. That’s what we’re doing. But we didn’t raise taxes, John. The taxes were — the corporate tax in America in 2017, before the Republican tax cut, was 35 percent.
They cut it to 21 percent, 14 percent reduction. All the people that I know are paying 21 percent or more. All the even larger corporations, but some of the largest corporations of a billion dollars of value or more don’t even want to pay the minimum of 15 percent.
JOHN DICKERSON: So, this is an issue of fairness?
SENATOR JOE MANCHIN: All we’re doing is changing — is basically closing- — this is a fairness in closing a loophole.
JOHN DICKERSON: Yes.
SENATOR JOE MANCHIN: So, I’m not raising any taxes. I never thought that people weren’t paying at least 21.
JOHN DICKERSON: Let me ask you about…
SENATOR JOE MANCHIN: And I don’t know why. I mean, we went — yes, go ahead. I’m sorry.
JOHN DICKERSON: Let me ask you, though, on the raising — OK, so I understand what you’re saying about closing loopholes.
But the Republican criticism, which attaches to what you said in 2010, is, when you increase taxes by closing loopholes, you hurt supply, and during inflation, you want a lot of supply. And so even though this might not be a tax increase relative to previous rates, the taxes for certain companies will go up, which will make them produce more, so the theory goes, and that will hurt inflation.
SENATOR JOE MANCHIN: Let me just say this, John.
In the last two years, there have been massive record profits across the board by these largest corporations, massive record profits. And it’s been the lowest capital expenditure in the last two years, so that didn’t drive it.
What they’ve all told me was, we want security. We want to have some type of pathway forward in permitting and regulations. They’re strangling us.
And this is what we’re doing. We’re streamlining the regulations that people have to live with in, basically accelerating how we get things to market, how quick we can produce things, how quick we can basically produce more energy, and how we can develop more technology, and using that for our benefit.
We’re talking about also batteries for electric cars. If you want to get a discount on an electric car by buying an E.V., the battery better be made in America, it better be sourced in North America, it better be processed.
JOHN DICKERSON: Your Republican colleagues think you and Chuck Schumer did something underhanded by, essentially, it looked like there wasn’t going to be anything big passed, and then — and then you changed course, worked out something with Schumer.
Senator Cornyn, the Republican from Texas, said that that unveiling this agreement between you and Senator Schumer was a declaration of political warfare.
SENATOR JOE MANCHIN: It’s such a shame. John Cornyn is a good friend of mine. He’s such a good man.
And for the politics to be so toxic right now, first of all, I never thought this would come to fruition. I never spoke with anybody about it, any of my colleagues, because they were frustrated that nothing happened for so long on the other. I never could get the Build Back Better, which was a $3.5 trillion spending bill.
This is a $400 billion investment bill. And everything my Republicans talked about, reducing the amount of debt that we have, we’re paying down $300 billion, first time in 25 years. They have got to like that.
And, next of all, they wanted more energy. I want more energy. We’re going to be producing more energy. There’s an agreement that we’re going to be drilling and doing more than we can to bring more energy to the market that reduces prices. They like that.
JOHN DICKERSON: Let me ask you…
SENATOR JOE MANCHIN: And there’s going to be a streamlining of permitting, John. They got to like that so.
JOHN DICKERSON: Well…
SENATOR JOE MANCHIN: So, I’m hoping they just take — cool off, take a good look at the bill.
JOHN DICKERSON: Their argument is — and this matters, because you are working with Republicans on other pieces of legislation.
And Susan Collins, one of those Republicans you’re working with, says that this — this break of trust, which is what they’re calling it — you made certain representations, they would say, to Republicans, then broke your trust.
She said — Susan Collins said: “It’s a very unfortunate move that destroys the many bipartisan efforts that are under way,” in other words, whether it’s on election reform or same-sex marriage, that the well has been poisoned.
SENATOR JOE MANCHIN: Well, here’s the thing. I think Susan Collins is my very dear friend, and we work almost on everything together.
But the thing of it, I never told anybody that I wasn’t going to do something. If I had a chance to fix the energy policy of the United States of America, and I didn’t do it, shame on me. If I had the chance to reduce the amount of inflation that people in West Virginia and across the country are enduring right now, shame on me.
And I never thought they would come to an agreement and use a dual path, and basically recognizing with this administration, working with President Biden’s administration and working with Chuck Schumer and all of them who basically were going a different direction and were very upset with me for so long, that they would ever sit down.
But I guess with — this thing has become truly horrible for the — for families all across America. So, now to have a piece of legislation that we have energy and we have investments for new energy.
But, basically, that’s a responsibility. You can walk and chew gum. You have a balanced approach. These are solutions Americans want.
JOHN DICKERSON: Let me ask…
SENATOR JOE MANCHIN: And we were able to provide these solutions. Let’s not make them political, John.
JOHN DICKERSON: You and Senator Schumer have a deal. A lot of Democrats who used to be very angry at you are suddenly now saying nice things about you.
Senator Kyrsten Sinema — have you talked to Senator Sinema, whose vote is still unknown on these bills? And where do you think she’ll go? Because, if she doesn’t vote for it, it doesn’t happen.
SENATOR JOE MANCHIN: Yes, Senator Sinema is a dear friend of mine. And we’ve worked very close together on so many pieces of legislation.
And she’s — she’s so involved in this legislation. When you think about it, she’s the one that really negotiated and worked very hard on getting Medicare, allowing them to negotiate for lower drug prices, saving $288 billion. That’s tremendous, which I support her completely on that.
She’s always been adamant about we’re not going to be raising taxes. And I agree with her wholeheartedly. I made very — very, very carefully evaluations that we wouldn’t raise any taxes. And that was the last scrub that was done.
JOHN DICKERSON: Have you tried to lobby her?
SENATOR JOE MANCHIN: No, you don’t — we don’t — I have never lobbied my colleagues on that. I just basically put the facts out, try to answer questions.
I’m always trying to negotiate with them, if — if they want. And I try to. And, sometimes, we don’t get there, they get frustrated. But we’re always looking at the next opportunity to improve the quality of life in America. And that’s what we’re doing.
JOHN DICKERSON: Finally, Senator, there was a vote on a bill this week that would provide health care to millions of veterans exposed to toxic fumes in burn pits during their deployments.
Republicans who had previously voted for it voted against it. Pat Toomey, Republican from Pennsylvania, who will be on, who you’ve worked with extensively in your career, is worried that it adds to the deficit. That’s something you care about. Does Pat Toomey have a point here?
SENATOR JOE MANCHIN: Sure.
Well, Pat Toomey is going to get a — he’s going to get an amendment. He — he’ll have a vote on that. So, Pat, come on, let’s go. Let’s put — put it out there, put the facts out there. Pat’s a good man and good friend of mine. I’m sorry he’s not going to be running again and he’s leaving the Senate, because he’s been a quality, valued member of the Senate, and he represented Pennsylvania extremely well.
So he’s been a friend. We’re going to work through this. I haven’t seen the amendment. I’m — I will be briefed tomorrow morning on it and everything. But Pat is going to get his amendment, and let’s see where it goes.
JOHN DICKERSON: OK.
So, on that note, Senator Joe Manchin, thanks for being with us.
Face the Nation will be back in one minute. Stay with us.
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JOHN DICKERSON: We go now to Republican Senator Pat Toomey of Pennsylvania. He’s in Zionsville this morning.
Good morning, Senator.
SENATOR PAT TOOMEY (R-Pennsylvania): Good morning, John.
JOHN DICKERSON: Let’s start with what the Democrats are calling the Inflation Reduction Act.
You — you and other Republicans are not a fan. What is your principal critique?
SENATOR PAT TOOMEY: Well, it’s going to make inflation worse, actually.
So, they’ve got a big corporate tax increase that’s going to probably make this recession that we’re in worse. All of this spending is unnecessary. It’s going to exacerbate inflation. It is not going to reduce the deficit.
And what did Senator Manchin get for us? Look, I’m a big fan of Joe Manchin. We are friends, as he said, and I like Joe very much, but I think he got taken to the cleaners. He’s agreeing to all this bad policy, in return for which he’s been promised that there’s going to be some kind of pro-energy infrastructure bill sometime in the future.
Well, first of all, I thought we did that in the infrastructure bill. Secondly, what is the text? But, most importantly, why isn’t that in this bill? And the answer is because Democrats don’t support it.
And so this is going to do a lot of harm and there’s not going to be a corresponding benefit.
JOHN DICKERSON: There’s a lot — a lot in there.
Let me focus on inflation, which everyone else is — is focused on.
SENATOR PAT TOOMEY: Yes.
JOHN DICKERSON: The Committee for a Responsible Budget, which has been a fan of yours in the past and even in the present said — said this: “Although reconciliation was designed for deficit reduction, this would be the first time in many years it was actually used for that purpose. With inflation at a 40-year high and debt approaching record levels, this would be a welcomed improvement to the status quo.”
They and others who’ve looked at this say it will affect the — it will affect the deficit, lower the deficit in this legislation.
SENATOR PAT TOOMEY: Yes, so, here’s why we won’t, because they use the same gimmick that Senator Manchin said he was opposed to in the past.
They claim the revenue over a 10-year window from their big tax increase, and their price controls. And then the expenditure that they acknowledge, they pretend is only going to be for three years. That’s the Obamacare subsidies for wealthy Americans.
That’s an obvious political payoff. The last time they had to do this, they said it would only be for two years. It’s about to expire. And they can’t – – they can’t have it expire before an election. So, they’re extending it, but only for three years.
They have no intention of ever ending the Obamacare subsidies. Over a 10- year window, that wipes out the purported deficit reduction.
JOHN DICKERSON: But — so you’re assuming bad faith in the future.
But, in this case, they extended it and they found pay-fors so that it would be deficit — so that it would decrease the deficit in this moment. So, it’s plausible, given what’s right in front of us today, that that could happen again in the future.
I get what you’re saying. Politically, it might not. But based on what’s before us, which is an extension of the ACA and deficit reduction, it is possible to happen.
SENATOR PAT TOOMEY: They’re — they’re also counting huge amounts of additional tax revenue from giving more taxes — money to the IRS, which the CBO does not agree with.
They’re also not taking into account how much our economy will slow down from this big corporate tax increase that will mostly hurt manufacturing and domestic investment. These numbers are very, very dubious.
JOHN DICKERSON: Quickly on that question of production, I mentioned to Senator Manchin the idea of supply goes down when you tax these companies.
SENATOR PAT TOOMEY: Right.
JOHN DICKERSON: He said it’s a matter of fairness, that these breaks that they have represent from a previous tax cut, and that this is a matter of fairness in America.
SENATOR PAT TOOMEY: So, look at — what is the source of this tax increase? It’s very simple.
When we made our tax reform in 2017, what we did is we said, if a business takes its profit, and invests it back in its business in the form of capital investment, new equipment, new plant, expanding their capacity, then we said, you’d be able to deduct the cost of that in the year in which you incur the cost.
The Democrats are saying, we got to bring that to an end, despite the huge surge in capital expenditure that it brought us.
JOHN DICKERSON: Let me…
SENATOR PAT TOOMEY: And, instead, they’re going to say, you only get to recognize a small fraction of that. We’re going to — they’re going to raise the cost of investing in a business.
JOHN DICKERSON: Let me ask you about the legislation this week the PACT Act, which I know you want to talk about.
SENATOR PAT TOOMEY: Right.
JOHN DICKERSON: It’s providing health care to millions of veterans who were exposed to toxins; 123 Republicans in the House voted for this; 34 Senate Republicans have voted for it, same bill.
This week, the bill didn’t change but the Republican votes did. Why?
SENATOR PAT TOOMEY: No, the Republican votes didn’t change on the substance of the bill.
Republicans have said we want an amendment to change a provision that has nothing to do with veterans’ health care. The Republicans support this. The Democrats added a provision that has nothing to do with veterans health care, and that it’s designed to change government accounting rules, so that they can have a $400 billion spending spree.
JOHN DICKERSON: But…
SENATOR PAT TOOMEY: My amendment, if we’re — if I’m allowed to offer it, will take out that provision and will not reduce veteran spending by a dime.
JOHN DICKERSON: You mentioned this as the Democrats inserted this, but they did get 134 Republican votes, and you have plenty of Republicans still voting for it.
It seems like making this seem like a Democratic gimmick obscures what is your real point and your lifelong interest, which is, this is about budgeting and whether the rules should be tight now or whether, as those who defend this bill say, allow Congress to work in the future to be fiscally responsible.
Isn’t that a more accurate way to think about what you’re offering?
SENATOR PAT TOOMEY: Well — well, let’s be careful here because, John, you mischaracterized this when you were speaking with Senator Manchin.
We are fully accepting that the new expenditures under the PACT Act for veterans exposed to toxic chemicals will increase the deficit. And we accept that as a price we have to pay for people who serve the country.
What I’m objecting to is a budgetary gimmick, a sleight of hand in accounting rules, that will allow totally unrelated spending of $400 billion over the next 10 years. That’s what we think shouldn’t be in this bill, never should have been.
JOHN DICKERSON: Well, there’s a debate about that. And, as you know, some Republicans don’t think it’s a — it’s a gimmick. They are still supporting this. And they think it can be fixed later.
But let me ask you this. I read your amendment language, which your language doesn’t just deal with this other thing. It actually caps annual expenditures for the toxic fund. And, after 10 years, it goes away.
SENATOR PAT TOOMEY: No, so that — John, yes, that’s totally incorrect.
What it caps is how the government accounts for these transfers, but there is no cap on the amount of money that goes over. There is no cap on the total program. Look, if — honest Democrats evaluating this will tell you, if my amendment passes, not a dime change in spending on veterans programs.
What changes is how the government accounts for it.
JOHN DICKERSON: I understand. But the accounting change, as you know, is a result — the reason they put it in that other bucket is that it doesn’t subject it to the normal triage of budgeting.
And the argument is that the values at stake here are more important than leaving it to the normal cut and thrust of budgeting. And so I would ask you this.
SENATOR PAT TOOMEY: Yes, but that’s…
JOHN DICKERSON: But it’s worth protecting, is their argument.
Let me — it’s about priorities. As you know, budgets are a way people talk about priorities in a government.
SENATOR PAT TOOMEY: Yes.
JOHN DICKERSON: This week, many of the Republicans who switched their vote voted for semiconductors. In 2017, Republicans lifted the caps on discretionary spending.
We also have had a situation where lots of spending gets done in defense. You have been consistent with deficit reduction. But lots of other Republicans, when they think it’s in their interest, say, let’s lift the caps, let’s not be so fastidious about the budget.
So why is it important to be fastidious when it comes to veterans, but less so when it comes to, say, supporting chip manufacturers?
SENATOR PAT TOOMEY: Because, John, once again, you’re completely mischaracterizing this.
We are all accepting that there are no changes to the projected spending path for all the veterans programs, the existing veterans programs and the new ones under the PACT Act.
What we’re objecting to is an accounting gimmick that will allow totally unrelated spending of $400 billion over the next 10 years. And most Republicans think we shouldn’t loosen up the budget rules so that Democrats can go on a spending spree on things that have nothing to do with veterans health care.
JOHN DICKERSON: Of course, Democrats have to be in charge in the future when that spending happens, and they may very well not be.
But thank you, Senator, for being with us. We appreciate your time.
SENATOR PAT TOOMEY: I would impose — I would impose the restriction on Republicans as well.
JOHN DICKERSON: And you have the last word.
Senator Toomey, thank you.
We’ll be right back with more Face the Nation. Stay with us.
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JOHN DICKERSON: We turn now to the president of the Minneapolis Federal Reserve, Neel Kashkari.
Good morning, Neel.
Inflation…
NEEL KASHKARI (President, Federal Reserve Bank of Minneapolis): Good morning, John. Thanks for having me.
JOHN DICKERSON: Thank you for being here.
OK, everybody wants to know inflation, still hot? What does it look like to you?
NEEL KASHKARI: It’s very concerning.
We keep getting inflation readings, new data that comes in, and as recently as this past week, and we keep getting surprised. It’s higher than we expect. And it’s not just a few categories. It’s spreading out more broadly across the economy.
And that’s why the Federal Reserve is acting with such urgency to get it under control and bring it back down.
JOHN DICKERSON: Wages within that — what does the wage picture look like in two different ways we measure it, both just on its own and then relative to inflation?
NEEL KASHKARI: For most Americans, their wages are going up, but they’re not going up as fast as inflation.
So most Americans’ real wages, real incomes are going down. That’s why families are finding it increasingly hard to make ends meet. When they go to the grocery store, when they buy necessities, they’re not able to buy as much because they’re getting a real wage cut, because inflation is growing so quickly.
I mean, typically we think about wage-driven inflation, where wages grow quickly, and then that leads to higher prices, in a self-fulfilling spiral. That is not yet happening. High prices and wages are now trying to catch up to those high prices. Those high prices are being driven by supply chains and the war in Ukraine, among other factors.
And so we need to get the economy back into balance before this really does become a wage-driven inflation story.
JOHN DICKERSON: Let me ask you about a figure that people may not know as much about.
Everybody knows about the Consumer Price Index and inflation. The Economic Cost Index came out this week. And some economists look at that as a signal for inflation. Tell me what you saw in the Economic Cost Index this week.
NEEL KASHKARI: Well, we have a lot of different measures, for example, of wages, of what’s happening to wages.
And ECI, as I call it, is one measure that is a — it’s a robust measure of what’s happening to wages and what’s happening to benefits. And wages continue to climb. And on one level, that’s a good thing. We want Americans to be making more money. But if wages are climbing, such that the economy shows that it’s overheating, that tells me that the Federal Reserve has more work to do to bring inflation down, to bring the economy into balance.
Just at its basic level, inflation is when demand is outstripping supply. We know supply is low because of supply chains, because of the war in Ukraine, because of COVID. We hoped that supply would come online more quickly. That hasn’t happened. So we have to get demand down into balance.
Now, I hope we get some help on the supply side. But that doesn’t change the fact that the Federal Reserve has its job to do, and we are committed to doing it.
JOHN DICKERSON: We have 30 seconds left. Help on the supply side, what does that mean?
NEEL KASHKARI: Well, I talk to a lot of global businesses who are trying to get their supply chain sorted out, so that they can meet their customers’ needs and make sure that there are products on the shelves.
They’re making some progress. There’s some signs it’s getting better, but it’s taking a lot longer than they thought and that I thought. And so that means we cannot wait till supply fully heals.
JOHN DICKERSON: All right. All right. Neel…
NEEL KASHKARI: We have to do our part with monetary policy.
JOHN DICKERSON: We’re going to take a commercial. We’ll be back to continue this conversation with Neel Kashkari.
Stick with us.
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JOHN DICKERSON: And we will be right back with a lot more Face the Nation.
And, remember, if you can’t watch us live, you can set your DVR.
Stay with us.
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JOHN DICKERSON: Now, welcome back to FACE THE NATION.
We continue our conversation with Minneapolis Federal Reserve’s Neel Kashkari.
Neel, let’s pick up where you left off on this question of supply.
When I was talking with two senators earlier, there was this debate about whether taxation on companies that don’t pay a minimum level of taxation will have their supply hurt. So, in other words, you tax them, supply goes down, that hurts within inflation.
What is your assessment of that?
NEEL KASHKARI (President and CEO, Federal Reserve Bank of Minnesota): You know, long — over the long-term, that’s probably true on the margin. People say that about raising interest rates. Why raise interest rates? That’s going to make it more expensive for firms to invest. And that’s going to not help with the supply side. That’s true over the long-term.
But over the short-term, the demand side effects totally swamp the supply slide effects. And so when I look at a bill that’s being considered, that your two senators talked about, my guess is over the next couple of years it’s not going to have much of an impact on inflation. It’s not going to affect how I analyze inflation over the next few years.
I think long-term it may have some effect. But, over the near term, we have an acute mismatch between demand and supply. And it’s really up to the Federal Reserve to be able to bring that demand down. And we’re committed to doing what we need to do.
JOHN DICKERSON: Neel, help me understand recessions. Is there a debate in Washington that’s full of political gamesmanship. So, take us inside why it matters if America is in a recession and what the component parts are that are a part of that and how that helps us understand the health of the economy.
NEEL KASHKARI: Well, it really matters when Americans feel it, when Americans, especially in the job market, that’s the most important part of the economy, so to speak, for Americans is their job. Do they have a decent place to work and earning decent wages? And, typically, recessions are — they demonstrate why job losses, high unemployment, those are terrible for American families. And we’re not seeing anything like that. The labor market, so far, is very strong. We are seeing some sectors, like the tech sector, start to shed workers or start to cool down in hiring. But, fundamentally, the labor market appears to be very strong. While GDP, the amount the economy is producing, appears to be shrinking. So we’re getting mixed signals out of the economy.
From my perspective, in terms of getting inflation in check, whether we are technically in a recession or not doesn’t change my analysis. I’m focused on the inflation data. I’m focused on the wage data. And, so far, inflation continues to surprise us to the upside.
JOHN DICKERSON: Yes.
NEEL KASHKARI: Wages continue to grow. So far the labor market is very, very strong. And that means whether we are technically in a recession or not doesn’t change the fact that the Federal Reserve has its own work to do, and we are committed to doing it.
JOHN DICKERSON: Last 20 seconds, Neel, on GDP, when it goes down, isn’t that kind of what the Fed’s trying to do, slow down growth. So, is that a good number?
NEEL KASHKARI: Well, we definitely want to see some slowing. We don’t want to see the economy overheating. We would love it if we can transition to a sustainable economy without tipping the economy into recession. There’s not a great record of doing that. Typically when the economy slows down, it slows down by quite a bit, especially if it’s the central bank that is inducing the slowdown.
So, we’re going to do everything we can to try to avoid a recession, but we are committed to bringing inflation down and we are going to do what we need to do.
JOHN DICKERSON: OK.
NEEL KASHKARI: And we are a long way away from achieving an economy that is back at 2 percent inflation. And that’s where we need to get to.
JOHN DICKERSON: All right.
Neel Kashkari, thanks so much for being with us.
And we’ll be back in a moment.
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JOHN DICKERSON: A hundred days and counting until the midterm elections. A sterling opportunity for our CBS News battleground tracker and our first estimate of where the battleground control for the House of Representatives stands. Republicans who currently hold 214 of 435 seats and are in the minority would take over control in the House by anywhere from a narrow majority to a sizable one if the election were held today. Our best estimate at the moment is 230 seats.
Joining us now to explain all of this is CBS News elections and surveys director Anthony Salvanto.
Anthony, OK, that number, 230, sticks in our mind, but – but what is the largest reason that it looks like it might be 230.
ANTHONY SALVANTO: Yes, good morning, John.
So, let’s start by reminding people that there are 435 separate contests going on this fall. And we interviewed people across all those districts and put it into this model to show you that in terms of seats, which is what matters.
Now, the first thing you notice is that most seats don’t flip. That’s typical. But there is a narrow band in which we’re going to trade in this range. And that’s what’s really important to watch.
Now, these seats that could swing back and forth, they’re sort of these prevailing political winds, if you will. And this election seems like it’s really influenced by what we might call the nature of the times, which is that a lot of people think that the country is moving in the wrong direction, that things aren’t good. And that’s not only the most important thing voters are telling us that’s on their minds, but it’s also that Republicans are winning those voters. And so that’s really impacting those seats.
JOHN DICKERSON: And so the nature of the times is often associated with the president. The president is often – it’s — you know, Joe Biden wouldn’t like this, but it’s often seen as a referendum on the presidency. So what does this survey tell us about Joe Biden and the role he’s playing in the election?
ANTHONY SALVANTO: Yes, a president’s always on the ballot in a midterm and even if he’s not really on the ballot, he’s on voters’ minds. That’s certainly the case here. He’s a big motivator for Republicans. And that’s pretty typical because a president’s party typically loses seats in a midterm. For them it’s another bite at the apple. They get to vote again, if you will, after 2020.
Now, the important thing, though, that leads to is, Biden suffered some lower approval, even among Democrats. And that’s dampening enthusiasm among Democrats. And that’s going to lead to another problem for the party right now, which is perhaps lower turnout from his base.
JOHN DICKERSON: So Republicans are angrier about the way things are happening now. They’re turning out and they don’t like the president. So, the Democrats, remind me again what they feel about Joe Biden and what do they feel about Donald Trump, who used to motivate them quite strongly?
ANTHONY SALVANTO: Yes. So, a couple of things. One is, if they’re disappointed with Joe Biden, they may sit this out is what they’re telling us. You look at key parts of the Democratic constituency, for one – just one example, young people. Far less enthusiastic about voting than older Americans. That makes the electorate favor the Republicans right there if that Democratic base doesn’t show up.
Then, let’s mention the former president, Trump. It’s interesting. He is just as much of a motivating factor as Joe Biden. He’s still on Democrats’ minds even though he’s out of office. So, for Republicans, they see him as a positive. They actually think that former President Trump is fighting for their issues more than their party in Congress. Really still seen as a leader of the party in that regard.
But then, for Democrats, he’s a net negative. So that’s something I think to watch, do Democrats keep talking about him as we go forward, because he does motivate Democrats.
JOHN DICKERSON: Right, so Donald Trump is motivating both parties.
ANTHONY SALVANTO: Yes.
JOHN DICKERSON: Do the — have the January 6th hearings played a role or do they in your survey data?
ANTHONY SALVANTO: Well, in some sense Democrats are watching it more, so they’re kind of preaching to the converted. What you do see is, as Republicans have tuned out these hearings, there’s a bit of a split. There’s the Republicans who consider themselves MAGA Republicans. That’s just over half the party, right? They’re very close to the former president. They’ve not only tuned it out, but some of them actually wish the president had succeeded in doing what he was — they think he was trying to do and stay in office.
But, there’s a slight, slight number of Republicans who are watching this, and you see a little bit more hesitancy among them about their vote choice. So marginal differences matter, and I think that’s going to be one of the keys going forward if some Republicans peel off as a result of this.
JOHN DICKERSON: Another focus in the political world, other than the January 6th hearings recently, has been the decision on Roe v. Wade. A lot of Democrats, pundits, thought this would energize the Democratic base. What does the survey say?
ANTHONY SALVANTO: Well, let’s look at women under 50 because that’s a key part of the Democratic base. They consider abortion to be just as important as other big issues, like the economy, like inflation.
JOHN DICKERSON: Right.
ANTHONY SALVANTO: They also believe that a Republican Congress would make things overall worse for women. And they described the Republican Party as extreme.
But there’s a cross pressure here, which is that they don’t see the Democrats as effective and they don’t think that the Democrats are doing enough right now to protect abortion rights. So, they’re not necessarily seeing the answer from the Democrats. And that, at the moment, has the Democrats not doing as well with that group as they have in past elections.
JOHN DICKERSON: So, does that mean they have an opinion about Republicans, but it doesn’t mean they’re going to be motivated to necessarily vote on it?
ANTHONY SALVANTO: Right, because they have to get an answer from the Democrats and they’re not seeing that right now.
JOHN DICKERSON: Inside that question of women, college educated women, that was a group that Democrats did well with, how is the Democratic Party doing now?
ANTHONY SALVANTO: Worse than they have in previous elections. And that is so important. Those numbers are down. They think that the Republican Congress would make things worse for women in the country. But, concerned about the economy. Very concerned about the direction of the country. And all of those things are factoring in too. This is going to be one of the keys, if not the key group to watch through the fall.
JOHN DICKERSON: Fine quickly, Anthony, is the Democrats think they have a spending bill that’s about to pass through the Senate. Will that help their fortunes in the next 100 days?
ANTHONY SALVANTO: People will reason from results, they’ll reason from what they see at the cash register and the gas pump, not necessarily from legislation, right? And we see that. When people say they’re personally affected, they’re less enthusiastic about voting for Democrats.
So, they’ve got, what, six to eight weeks to see if people can — if they can turn that idea around in people’s minds.
JOHN DICKERSON: All right, Anthony Salvanto, thanks so much, as always.
And we’ll be right back.
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JOHN DICKERSON: We’re back with our political panel.
Asma Khalid covers the White House for NPR, Jonathan Martin is senior political correspondent for “The New York Times” and the co-author of “This Will Not Pass,” Ramesh Ponnuru is the editor of “The National Review,” and Robert Costa is our own chief election and campaign correspondent.
It’s great to have you all here.
I’ll start with you, Ramesh.
What did you take away from this polling that we — that Anthony just talked about?
RAMESH PONNURU (Editor of “National Review”): Well, there were a lot of interesting findings in the poll, but the thing that stuck out most to me was the asymmetry in enthusiasm. That Republicans are more excited. Opponents of this administration are more enthusiastic about showing up to vote. That’s a pattern that we usually see in midterms. It’s the reason why I think we’ve had so few periods of unified government in the last 50 years that the public turns against whoever is in power in the White House.
JOHN DICKERSON: Asma, you cover the White House.
Joe Biden has talked about, I’m going to get out into the country, but Ramesh is talking about a country that may not – or a party that may not want to see him. So, what’s the thinking, get him out there because to build enthusiasm or keep him at home because that won’t work?
ASMA KHALID, (NPR White House Correspondent): Well, I do think the plan is to get him out there once sort of this Covid sweep clears. But I think the thinking is, I mean, we look at this past week, there are a couple of legislative wins that Democrats have had. And I do think that the party, the White House, believes that by going out on the road and selling some of these legislative accomplishments they can boost the base.
But I think that this is a challenge. I mean, I saw the enthusiasm thing too, Ramesh, and to me what I was struck with in particular was, you know, you look – you talk about young voters, sure, they never really show up in a midterm cycle, but they actually did show up in record numbers in 2018. Their enthusiasm has completely fallen off for Biden. You see it in polling. I’ve heard it when I go out on the road. They’re just not excited about it.
JOHN DICKERSON: It’s fallen off. In ’18 it might have been inspired by Donald Trump.
Jonathan, Anthony’s polling showed no one turns them out like Donald Trump in both parties. So –
JONATHAN MARTIN (“New York Times” Senior Political Correspondent): It’s remarkable the co-dependence on Donald Trump within the Democratic Party. It’s sort of — seven years and counting now in which Donald Trump has offered the best mobilization, the best fund-raising and just the best overall grassroots energy for the Democratic Party, John. And Democrats quietly sort of need that to get their voters out in an otherwise difficult election year for them.
I mean those numbers among younger voters in the survey are so striking. I think a big part of the reason, John, that Biden’s approval rating is below 40 percent nationally is because the drop-off in his own party. You’re only below 40 in these kind of polarized times if you’re losing some folks on your own home team. And I think that’s a huge part of their challenge, keeping those folks energized and it’s why the climate deal, I think, could be important that was hatched this past week for getting more energy infused into the sort of ranks of younger Democratic voters who they desperately need this fall.
ROBERT COSTA: To build on that, it’s an important one. I remember when I first started covering Leader McConnell years ago. The person who would stop by more than anybody, it seemed, was then Vice President Joe Biden. He was a dealmaker. And when I would talk to voters in 2020, on the Democratic side, they said they wanted to elect a dealmaker who could make Washington work. And so you do wonder, as the campaign season heats up, can that deal make aspect of Biden, someone who, from the White House, shepherds a deal between Senator Manchin and Senate Democrats, can it get traction with voters who see Washington as dysfunctional?
JOHN DICKERSON: Ramesh, we’re going to go back to the absolute base level of politics, but let’s talk about policy for a second. As Bob is mentioning, there’s – there’s some deals here that the president may or may not have been involved in. But what do you make of the legislative record and bipartisan legislative record between guns, infrastructure maybe now, well, semiconductors, what do you make of just the legislative record so far?
RAMESH PONNURU: I think that the legislative record is very impressive, measured against a baseline of a 50/50 Senate. The legislative record is extremely disappointing measured against the baseline of the expectations that liberal Democrats had going into 2021 when they had the House, the Senate and the White House, and there were grand ambitions. And one of the reasons for that drop-off in support and the demoralization of Democrats is exactly that gap, and that’s what they’ve got to solve between now and November.
JOHN DICKERSON: You were saying, yes.
JONATHAN MARTIN: Yes, I was just going to say, I mean, look, I think Biden sees these victories, John, as his rational for why my party needs me. I came here and said I could make this system work, get deals done across the aisle. Gosh darn, I’ve done it. Who else can do that?
And, by the way, also not so subtly he’s saying, who else can beat Trump as well? You know, I think there’s some Democrats who would sort of have this West Wing style fantasy in which Biden signs these bills into law, he puts down the pen and kind of does the reverse LBJ of after a sort of period of great success he says, and with that I’m going to fulfill my pledge to be a bridge president. The gate is open and let the bridge fill up. And that’s just never going to happen because we know Joe Biden. He’s going to take from this success, John, I think, affirmation that my party, my country needs me. I can get these kind of deals done in the Congress. I can take on Trump again. I alone, if you will, can –
RAMESH PONNURU: Can fix this.
JONATHAN MARTIN: Can do this. Yes, exactly.
ASMA KHALID: Can fix it.
JOHN DICKERSON: Asma, one thing that President Biden said this week when he was asked about a recession, the economy’s on everybody’s mind, he said he didn’t see one. Is that a wise thing to do, to get into a big debate about the recession, or do they assume there’s going to be people talking about the recession, we might as well try and get in that conversation?
ASMA KHALID: I mean I was struck a lot by this. I mean all week long we had the White House, some of the economic advisers at the White House, reaching out to, you know, White House reporters like myself, economic reporters, to preemptively essentially squash some of the bad news that we knew was going to happen.
But I do think, to, you know, to your point, I mean I — many of the economists that I was speaking with this week will say, no, we don’t see a recession at this particular moment. But in the same breath they’ve said, we don’t know. We might be in a recession in six months, particularly, you know, if the Fed really does raise interest rates too quickly.
To me it was a dangerous argument to make because, you know, it will be played on repeat later if the country is in a recession in six months. I understand the political need to essentially alleviate concerns. I mean nobody wants to hear, I think in the country right now, that we’re in a recession, but it’s dangerous because six months out, frankly, even before the midterms, this country could be in a recession.
JOHN DICKERSON: Right. Was anybody talking about the economy from the Democratic side who’s making a case that is, in all of its complexity, but makes the case essentially to voters, you’re going to want us in the future instead of the other team?
ROBERT COSTA: When I’m out there on the campaign trail, it’s evident that there’s not necessarily an enthusiasm gap, but a messaging gap. Are the Democrats explaining what they’ve done? $1.9 trillion March of 2021. Then they passed an infrastructure bill. Now they have this climate and tax and deficit reduction package they’re pushing forward, but is that breaking through to the voters it needs to connect with? It’s not entirely clear.
And they’re also talking about foreign policy in terms of the economy. I mean this is a former chairman of the Senate Foreign Relations Committee now sitting there in the Oval Office, as China becomes more aggressive with Taiwan, that’s the variable I’m also watching ahead of the midterms, both politically, on policy, and economically. What does China do and how does President Biden respond?
JOHN DICKERSON: Ramesh, do you think — let’s imagine this gets through, Manchin, Schumer and Sinema comes along. Does that, in the end of the day matter, or is it, you know, for every day between now and election people are going to be still seeing higher prices and what’s your assessment of its political affect?
RAMESH PONNURU: Yes, people don’t wait to hear from the media or the NBER whether they’re in a recession. If most people’s paycheck is going, you know, is not going as far as it used to, and that is true, they’re going to think this is a recession, they’re going to think this is a bad economy and they’re going to hold the party in power accountable. This administration, I think, is consistently played the politics of the economy badly.
First, in denying that inflation was going to happen, denying it was going to stick around, and now getting into this absurd definitional argument about whether we’re in a recession or not. I think that that is going to actually slightly compound the problem by making them also look out of touch.
JOHN DICKERSON: Jonathan Martin, the Senate, let’s look at the Senate first of the two.
JONATHAN MARTIN: Sure.
JOHN DICKERSON: How do the races look there? You — and this was supposed to be a favorable year for Republicans. How’s it turning out?
JONATHAN MARTIN: Well, the wind is certainly blowing in their direction, as it often does, John, in the first midterm of a president of the opposite party. But I think in Senate races and gubernatorial races, candidates do still matter. They don’t matter as much in House races, which is more of a parliamentary referendum on the red versus blue and who’s in power.
I think it does matter more who the candidate is on the ballot. When you’re talking about gov and Senate races. And in that department, Republicans are having real challenges because they’ve nominated candidates who, in some cases, are out of the mainstream, in other cases just have, you know, more baggage than O’Hare during the summer, and that can create, obviously, some challenges.
The third point, John, I would add is, the finances. A lot of these GOP candidates are going to be welfare cases, which is always a problem in the Republican Party, Ramesh, and they’re going to need a bailout from a lot of these super PACs.
The great irony of our times this cycle at least is the Donald Trump-backed candidates for Senate and gov are going to require bailouts, financially, from people like Mitch McConnell and the old guard, who they ran against.
ROBERT COSTA: Let’s not forget, the Republicans are not focused everywhere on the economy. You look at Pennsylvania’s gubernatorial nominee, Doug Mastriano, an election denier, out in Arizona, Kari Lake, an election denier. This is pervasive in the GOP across the country. And I’m really watching Ohio’s Senate race. Can Tim Ryan, a populist Democrat, actually beat JD Vance in a tough year and can John Fetterman running for Senate in Pennsylvania upset Dr. Oz in a state that went for Trump back in 2016?
ASMA KHALID: And I’m also curious how Democrats are really able to capitalize on the Dobbs decision because this is something to me that’s very unclear. I mean Kansas, you know, we were talking about that earlier, that Kansas is this place where voters are going to have a chance, just this week, to vote on a constitutional amendment to change abortion rights in the state.
You know, I sat down with the VP shortly after the decision came out and she told me, I mean this is something that she has personally been going out to states, North Carolina, Indiana, where it’s not entirely settled law yet. I don’t know that any of us really know how it’s going to play out.
JOHN DICKERSON: So the polling shows that it’s not working. In other words, Democrats think the White House isn’t doing a good job in making the case.
ASMA KHALID: No, that’s true. I think that they haven’t sufficiently done a good enough job yet, but I think it’s the one thing that Democrats could – I mean if they want to shift the conversation away from the economy, this is a salient issue to do that on, if they can figure it out.
JONATHAN MARTIN: Yes. And just real fast, to plug our book shapelessly, “This Will Not Pass,” you can still buy it now, we have a conversation with Mitch McConnell on the — late the night of January 6th in which he vowed to crush Trump in the primaries this year. The opposite happened.
JOHN DICKERSON: Right.
JONATHAN MARTIN: In a lot of these states, John, Trump-backed candidates won. Dr. Oz, JD Vance, Blake Masters in Arizona, now it’s on McConnell to help them out financially.
JOHN DICKERSON: Ramesh, 30 seconds.
RAMESH PONNURU: If there’s a – if there – if the wave is sufficiently strong for the Republicans, it can carry flawed candidates to victory. But the trouble is that it’s going to take more resources. And some of these candidates are going to take more resources from the national Republican Party, from conservative donors all over the country, and thus that money won’t be able to get other gettable races across the finish line.
JONATHAN MARTIN: Good point.
JOHN DICKERSON: OK. Republican wave lifts all leaky boats.
Thank you to all of you for being with us.
We’re out of time.
Thank you, all, out there for joining us.
We’ll be back in just a moment.
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JOHN DICKERSON: That’s it for us today. Thank you for watching. Margaret will be back next week.
For FACE THE NATION, I’m John Dickerson.
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