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Stocks Plunge On Bad Inflation, Consumer Confidence Numbers; New Data: Americans Expect Inflation To Hit 5 Percent In Year Ahead; Trump Pulls Stefanik's U.N. Nomination To Protect House Majority; GOP On Edge As Democrats Eye Major Upset In Florida Race; Trump Targets Institutions, Law Firms, Judges, Critics; Trump Orders Smithsonian To Remove "Improper Ideology" From Museums. Aired 12:30-1p ET

Aired March 28, 2025 - 12:30   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

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[12:31:46]

MANU RAJU, CNN ANCHOR: A live look at the U.S. stock market right now. The Dow down more than 600 points. This happens as we're seeing the worst start for the year for stocks since 2020.

I want to bring in CNN's Matt Egan. So Matt, what is influencing this the most today?

MATT EGAN, CNN BUSINESS REPORTER: Well, Manu, investors got a series of updates on how the economy is holding up amid all this turbulence out of Washington and none of these indicators were good at all. That is not of course helping the mood over on Wall Street, where we do see U.S. stocks near session lows.

As you mentioned, the Dow off more than 600 points, around 1.5 percent. Steeper losses for the Nasdaq, 2.5 percent. And the Dow, as you noted, is on -- is having its worst start to a year since 2020. Of course, back then it was a once-in-a-century health crisis. A lot of this today is being driven by policy uncertainty.

Now on some of these economic updates, we got new numbers out this morning show that Americans are saving more. They are spending less as they brace for more tariffs. Also on inflation, it does sort of seem a little bit stuck in no-man's land right now. Not as bad as a few years ago, but also not great either.

You can see some of the progress has leveled out. Core inflation, which excludes food and energy, it heated up in February. That is significant because that does -- that's looked at as a better indicator of where underlying pricing pressures are.

And keep in mind, this is February inflation. It does not even fully capture all of the tariffs that have been imposed by the Trump administration, nor the ones that are coming next. Now, we did get some updates on the mood of consumers from the University of Michigan.

And this report showed the consumer sentiment fell sharply in March. And some of the internals here were also pretty disappointing. Expectations about the future fell significantly. Unemployment fears, two-thirds of consumers now expect unemployment to increase. That's the highest since the Great Recession.

Also, inflation expectations ticking up to the highest level since 1993. Market veteran Art Hogan told me a few moments ago, it's not shocking that consumers are expecting higher prices. We have not seen a trade war like this since William McKinley was in the White House.

One last point here, Manu, we know that some of these surveys can be skewed by partisanship a bit. That's why it was notable that the University of Michigan said that this month's decline reflects a clear consensus across all demographics and political affiliations.

Republicans joined Independents and Democrats in expressing worsening expectations since February for their personal finances, business conditions, unemployment, and inflation. And Manu, look, if that poor sentiment turns into lower spending, of course, that's where you have significant trouble for the economy.

RAJU: Yes, plummeting consumer confidence.

All right, Matt, even had a bad day on Wall Street so far. Thank you for that report.

And coming up, Republicans are panicking about a special election next week in Florida. Could a Democrat actually eke out a win in a district that Trump won by 30 points? Stay with us.

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[12:39:28]

RAJU: Republicans are sweating just days before a critical special election in a ruby-red Florida district. In fact, they're so scared about their tiny House majority that President Trump is pulling Congresswoman Elise Stefanik's U.N. ambassador nomination. If she had been confirmed, it would have meant an even smaller majority and also triggered a special election in New York that perhaps could have embarrassed Republicans.

Here's Stefanik last night on Fox.

(BEGIN VIDEOCLIP)

REP. ELISE STEFANIK (R), NEW YORK: I have been proud to be a team player. The President knows that. He and I had multiple conversations today. This is about stepping up as a team, and I am doing that as a leader to ensure that we can take hold of this mandate and deliver these historic results, that we can pass this reconciliation bill.

(END VIDEOCLIP)

[12:40:10]

RAJU: But just a reminder of that tiny majority that's at 218 to 213 right now. If Stefanik were gone, it'd be vacant for some time. It'd be 217 to 213. There are four vacant seats. Two of those are Democratic seats and probably eventually be filled ultimately by Democrats.

But Olivia, you've been doing a lot of reporting about this. What are you hearing about what was happening behind the scenes in the pretty abrupt decision to pull Elise Stefanik because of their fears about what's happening -- could happen to her seat?

OLIVIA BEAVERS, CONGRESSIONAL REPORTER, THE WALL STREET JOURNAL: Certainly, well, Manu, they knew that the numbers were going to be tight in November, so it's kind of ironic that they're now suddenly worried about the GOP majority. But that's because there are a difference kind of confluence of factors.

In Florida, there's been a tougher race than expected. They blame it on a candidate problem for not getting out there early and trying to motivate Republican voters. Some polls even had him down below the Democratic challenger.

RAJU: This is Randy Fine --

BEAVERS: Randy Fine, yes.

RAJU: -- the Republican in the Florida district. He's up against Josh Weil, who is the Democratic candidate.

BEAVERS: Yes. It was Mike Waltz's seat. They won it by over 30 points. And but there's also concerns about her seat. There had not been this one candidate that had been mobilized. Stefanik hadn't endorsed. Trump hadn't endorsed.

And the race wasn't even officially underway. But basically, GOP chairs in New York would pick who would take her seat. And there was concern that if they picked the wrong candidate, then that race could become competitive.

And in this situation, there is so much unpredictability. There are members who are going to be going on maternity leave, members who are dying. They do not want to take any chances. And so, now she's here to stay.

RAJU: A heartbeat away from a Democratic majority. And you're right, we had known this was a race with a majority since November. But look at just the district, the breakdown of those districts in that Florida district. 30 points.

That is the margin in which Trump carried that district in 2024. Now, that's the one that they're currently sweating. 21 -- the Stefanik district, 21 points Trump carried that by. What is your takeaway here? I mean, are the Republicans really at risk of losing in Florida on Tuesday?

DAVID CHALIAN, CNN WASHINGTON BUREAU CHIEF: Well, it would be a political earthquake if they did. These are two very Republican districts. I know there was that Trump's pollster, Tony Fabrizio, had that poll that showed the Democrat ahead in the district, perhaps, or within the margin of error.

Even that is going to be a story in and of itself, which is a story that is not unusual which is --

RAJU: Right, a smaller margin of victory than expected.

CHALIAN: Yes. When you see the out party overperform because their voters are motivated in these small turnout special elections, the motivated voters that show up to vote dictate, obviously. And that, when you are out of power and you're looking at somebody who is -- the Democratic Party here, responding to the Trump administration, that's a pattern that we saw in 2017 in the lead-up to the 2018 midterm elections.

And we've seen the reverse of it when a Democrat is in power. But that would be an astonishing development if Mike Waltz's seat, that they won by 30 points, flips to a Democrat. And I'm not sure that they thought Stefanik's seat would ultimately fall to a Democrat either, but I think Trump's agenda hangs in the balance here.

And I think it has so much more to do with the margins right now on the House floor for votes, necessarily, than it does the battle for the majority.

RAJU: And if there is a tighter margin, as you're talking about that agenda, a lot of the moderates would want to potentially could get scared about embracing some of this agenda. So the Tuesday election has that significance because it could impact how people in Washington think about their votes.

LAURA BARRON-LOPEZ, CNN POLITICAL ANALYST: Because even if the Republican wins and it's a much smaller margin, if it's nowhere near, you know, 20 to 30 points, that's going to scare Republicans. Like, you know, Olivia mentioned Don Bacon earlier.

He's always someone who's kind of on the bubble, someone who's in Nebraska trying to figure out if he's going to win re-election or not. And he manages to fend off Democrats time and again, but still, he is someone who you're already starting to see break away bit by bit from the party and voice his frustrations, whether it's with Social Security, whether it's with Medicaid.

He was talking about that on our air this week, saying that he is concerned about the potential cuts to Medicaid that could result from the Republican agenda. So you'll see more of that, to your point, Manu --

RAJU: Yes.

BARRON-LOPEZ: -- if this race is even close, even if the Republicans survive.

RAJU: You know, I talked to Richard Hudson yesterday. He's the chairman of the Republican Campaign Committee in the House. I asked him about that. I said, look, if it's a narrower margin, won't they be concerned that Republicans will, you know, this could have a major impact? He downplayed it, said it's just a candidate issue. He should have gotten on air earlier.

I mean, is that what you're hearing? Very quickly.

BEAVERS: It is. But what I find interesting about pulling Stefanik's nomination is it's before we have the data points of actually how these candidates are performing. We're going to be seeing on three different races on April 1st. We're going to be seeing the Randy Fine seat.

We're going to be seeing the Matt Gaetz seat, which they're expecting to be safe and comfortable, even if Democrats are having some fun with our fundraising. And then we also have the Wisconsin Supreme Court primary, where we're also going to see how that plays out.

[12:45:05]

And we might know, then, how the numbers are. And if there is a strong blueback, then it's going to be really telling.

RAJU: Yes.

BEAVERS: They moved before that.

RAJU: It really moved. The Wisconsin Supreme --

CHALIAN: And may just be a candidate problem.

RAJU: Yes.

CHALIAN: But candidate problems also exist in broader political climates.

RAJU: Yes.

CHALIAN: And that's what we're going to assess on Tuesday night.

RAJU: Yes. No question about it. The Wisconsin State Supreme Court race, also hugely significant. Much more to discuss on that.

And coming up, President Trump is now taking on all the Smithsonian Museums. The changes he is ordering. How will it impact your kids' next field trip to Washington, D.C.?

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RAJU: Just this week alone, the Trump administration sent masked officers to detain yet another pro-Palestinian student at a university.

[12:50:04]

Tapped one of President Donald Trump's personal attorneys to serve as a U.S. attorney in New Jersey signed an executive order to force changes at the Smithsonian Institution and threatened to punish law firms that challenged his administration.

And that's not all. The administration is also attacking judges.

(BEGIN VIDEOCLIP)

PAM BONDI, ATTORNEY GENERAL: Many judges need to be removed, Judge Howell included, Judge Reyes, Judge Boasberg. These judges obviously cannot be impartial. They cannot be objective. They are district judges trying to control our entire country, our entire country, and they're trying to obstruct Donald Trump's agenda.

(END VIDEOCLIP)

RAJU: I'm joined now by Tom Nichols, the staff writer for The Atlantic. Tom, thank you so much for joining me this afternoon.

Let's start with the attorney general's comments right there. The judges who are blocking the President's agenda, she says, need to be removed. You wrote about the President's, quote, "campaign against the rule of law" earlier this week. Tell us about your analysis.

TOM NICHOLS, STAFF WRITER, THE ATLANTIC: This is -- to come from the attorney general especially, this is really shocking, but it's also just a kind of overt declaration of war on an independent judiciary. Judges aren't supposed to, excuse me, be there for the President's agenda. That's not their job.

They're not elected politicians. They're not supposed to be furthering political programs of the president of the United States. And frankly, the attorney general is probably walking a pretty fine line of the Hatch Act as something of a political booster herself.

But the goal here is to constantly put this message out to the public. Judges are not to be trusted. They're saboteurs. They're your enemy. They're not impartial guardians of justice, and therefore they should be ignored.

RAJU: Specifically, also, we're learning about these efforts by Donald Trump to go after big law firms, including ones that have -- they considers his critics, perceived to be Trump's critics. Three of these law firms are now fighting back and they're saying they will sue and they'll fight this matter.

One of those law firms has agreed to settle. Another one is in talks potentially to settle. What does this say to you about the division within the legal community as Donald Trump is going after them for their actions that they've taken?

NICHOLS: I think it says something about the division in the country, not between Trump supporters and others, but between people who recognize how dangerous this is and people, I think, who are having a failure of imagination to realize just how bad this can get.

I think what you're seeing with some of these deals, and I'm not privy to any of this -- the inside deliberations of any of these law firms, but I think what you're seeing with some of these deals across American institutions, universities, media and so on, is a sense that Donald Trump, if he's placated, he'll eventually go away, that this will all just blow over. And I think that's really a short-sighted approach.

RAJU: You know, last night, the President also signed an executive order targeting the Smithsonian for promoting what he calls, quote, "improper ideology". It says, quote, "Under this historical revision, our nation's unparalleled legacy of advancing liberty, individual rights and human happiness is reconstructed as inherently racist, sexist, oppressive or otherwise irredeemably flawed".

This comes in the aftermath of him taking over the Kennedy Center and the like. What is your takeaway about why Trump is focused so much on culture and in history?

NICHOLS: I think people really need to understand how much cultural resentment Trump -- the people around Trump and Trump -- many Trump supporters are carrying with them, that, you know, nobody in middle America, I think, is really sitting around looking at their mortgage or their medical bills, or their groceries and saying, you know, I hope the President really gets things straightened out at the Kennedy Center.

This is a very intra elite fight. These are people who feel looked down upon by other people in Washington and in New York and in, you know, places that these cultural centers that they think are filled with people who just don't like them. And so, they don't -- they aspire to be the same elite.

So they're kicking these folks out to say, the Kennedy Center will no longer -- you know, people at the Kennedy Center won't look down on us, we'll be the people at the Kennedy Center. You know, the Smithsonian, pointy headed PhDs, we're going to get rid of them and we'll take over the Smithsonian.

I mean, it's really a kind of sad, resentful, kind of grubby resentfulness, but that is really shot through the President's entire campaign, both in his first term and then in the run up to 20 -- to his election in 2024.

RAJU: In that same order, Trump also directed the Interior Secretary to, quote, "ensure that all public monuments, memorials, markers or similar properties within the Department of Interior's jurisdiction do not contain descriptions, depictions or other content that inappropriately disparage Americans past or living. Instead, focus on the greatness of the achievements and progress of the American people.

[12:55:12]

So, Tom, is this about Trump trying to control the narrative here?

NICHOLS: You know, I began my career studying the Soviet Union, and it's nice to see those kind of stiff Soviet ideological formulations coming back. Just not nice to see it in my own country. I think there's this kind of sad attempt to, again, show that we've captured the cultural institutions.

It'll be our story to tell. It's not just capturing the narrative. It's displacing people that you think have been in charge of this too long and had their say. But, you know, it really misses the point that America has always been strong by putting our history, both good and bad --

RAJU: Yes.

NICHOLS: -- right out there on the sidewalk for everybody to see, because we're not insecure. And this, all of the President's --

RAJU: Yes.

NICHOLS: -- actions reek of insecurity.

RAJU: All right. Well, Tom, thank you so much for running up against the end of the show. Really appreciate your time.

And thank you for joining Inside Politics. I'll be back this weekend on Inside Politics Sunday. Don't miss my exclusive interview with Senator Jon Ossoff. That's at 8:00 a.m. and 11:00 a.m. Eastern Sunday for that very intriguing and illuminating conversation.

CNN News Central starts after a quick break.