cotton and arizona gubernatorial candidate kari lake. sunday, 10 a.m., live. and right here on fox business start smart every weekday from 6-9 a.m. eastern for "mornings with maria" on fox business. that'll do it for us on "wall street" right now. thanks for being here, and i'll see you again next time. ♪ ♪ gerry: hello. this week on "the wall street journal at large." , ratcheting up the economic pain. the fed hikes interest rates again and promises more to come. how much worse is it going to get? and putin mobilizes and threatens nuclear war. is it just a bluff, or is the unthinkable actually about to happen? plus, the border chaos gets worse as illegal crossings soar and democrats insist it's

actually those migrant flights by republican governors that are to blame. and the dance craze that has the whole white house in motion. yes, it's the joe biden walkback. we'll be talking about this and more with our guests this week, byron york and richard fowler, but first, the beatings will continue until morale improves. that seems to be the message from the federal reserve this week as it raised interest rates again in the massive mounting evidence that the economy is in a slump. a target range of between 3-3.25 the %, and there seems to be more to come. the forecasts accompanying the move fed officials now think rates will have to two as high as 4.5% by the end of the year. that suggests more big hikes in the next three months. the reason, of course, after covid supply chain disruptions pushed up prices, the fed let inflation get out of control, and then the biden administration added fuel to the

flames with massive spending. so the pain we all have to pay for these avoidable errors is now, apparently, unavoidable. >> we have got to get inflation behind us. i wish there were a painless way to do that. there isn't. gerry: now, the fed hopes that it can keep rah raising rates without a full-blown recession. but in its forecast this week, it said it expects unemployment to rise to 4.4% next year up from from a level of 3.5% just in july with. now historically, an a increase of that amount over that span of time has never occurred without a version. a recession. >> the future, not that far away, you have qt, rising rates, you know, more inflation, war in ukraine which is detier rating, oil prices which i still think are precarious and, yeah, those things have the potential to put the country and the world into a recession. gerry: we haven't found ourselves in this dire a situation for many decades. runaway inflation is eroding the

standard of living for the vast majority of americans. now interest rates are surging, mortgages hit another 14-year high this week and millions of people, sadly, look likely to lose their jobs in the coming recession. what's the democratic administration's response? denial that the economy is in the shape it's in. they insist everything is fine. >> with the federal reserve rapidly raising interest rates, what can you do to prevent a recession? >> continue to grow the economy. and we're growing the economy. it's growing in a way that it hasn't in years and years. >> how so? >> we're growing entire new industries. 695, i think it is, or 85,000 new manufacturing jobs just since i've become president of the united states. continue to grow the economy. gerry: and, of course, they're doubling down on their massive spending plans. the recent fraudulently-named inflation reduction act being a case in point. voters, however, aren't buying it. recent polling suggests americans strongly disapprove of

joe biden's handling of the economy. now, all that, you would think, would mean a likely change of control in congress in the midterm elections, in november with republicans poised to make big gains. but the race actually still looks very tight. as fox's midterm power rankings analysis this week indicates, according to the polling and the data the gop seems to be headed for a majority in the house of relatives but a relatively slim one. and with even a very slight risk that in a worst case scenario for republicans, democrats could actually hold the house by a whisker. meanwhile, the senate is too close to call with perhaps a one-seat gop advantage. so what is going on? according to polling, although voters give biden low marks on the economy, they're motivated by other issues such as the future of democracy, and abortion has become a big question as they head to the polls in just over is six weeks' time. this as republicans unite behind a new commitment to america plan in hopes of highlighting their

policy agenda and focusing the voters on inflation and the economy. so let's take all this up with our our panel, washington examiner chief political correspondent byron york and host of the richard fowler show, richard fowler. yes men, thank you very much for being here. >> thank you. >> good to be with you. gerry: byron, the economy, we have surging inflation, falling real wages, we have dramatically higher interest rates, we have a stock market falling out of bed all the time. this should be very propitious for republicans in november, but they don't actually seem to have the advantage you might expect in those circumstances. what's going on? >> well, i think it actually will be very propitious for republicans in november. i think we had a period of time in which a number of democrats became pretty hopeful that their chances weren't as bad as they seemed to be, and they placed their hopes on being able to use the supreme court's decision on abortion against republicans. and that is going to be a factor in some races.

and also on the heightened visibility of former president trump as he's pursued by the justice department and now by the attorney general of new york and others. they were hoping that that would change the basic dynamic of the race. finish but the fact is after we got the latest inflation report which showed that inflation is high and persistent, i think that the race has evened out again, and the republicans are still headed for a significant victory. on the fed, i think the most ominous words spoken by jerome powell when they announced the rate increase was the chances of a soft landing with likely to diminish. they're gonna cause a recession, and that's going to shape our politics for a year, maybe more to come. gerry: richard, that little mild bout of you pore ya that democrats seemed to have over the summer as some of the polling did seem to indicate they were doing much better, as

byron says, that has rather evaporate rated with the9 increasing reality of dramatically higher interest rates and the probability of recession, isn't it? >> i think it really depends on the race that you're looking at. once again, this is not a nationwide race. we're talking about state by state, district by district, and in each individual district and each individual state you see a lot of different races taking place. look at what's happening mt. state of pennsylvania. in the state of pennsylvania, one would have thought the republicans would have held on to that seat, but it looks very likely that john fetterman will likely beat dr. mehmet oz. so what i'm saying is not that inflation's not going to have an impact on this race, what i'm saying is voters or are going to go the to the ballot box with a grocery store or a trolley of issues, inflation being one of them. i think they're going to go with abortion, reproductive freedom, i think they're going to go with democracy and all of these issues together will make up what will be their voting agenda. and i think when it comes to all

those issues together, the republican party is not as strong as they once were at the top of the summer. gerry: byron, just briefly, morally in the midterm elections the party in the white house pleases significant -- loses significant seats. if the republicans don't make significant gains, what would it say? >> well, there's a difference between controlling the house and and not controlling the house. so even if they make small enough gains but still control the house -- in other words, if they pick up 8 seats, they control the house. and that means the bide biden legislative agenda is stopped, it's over for the next two years depending, you know, whether the president runs again. maybe it gets started back up, but it's over for now. but it will say, if everybody's expecting 25, 30 seats and the victory is much smaller, then it will say republicans were not as strong as they thought. and, of course, if democrats retain control of the house, i think all of us -- certainly

i -- will have of to come out and say, boy, was i wrong? [laughter] gerry: well, we look forward to hearing more about that. [laughter] next, are russia steps up by threatening nuclear war. is this just a bluff,s or -- bluff, or are we on the brink of catastrophe? >> russia has violated the core tenets of the unite nations charter. ♪i earn at all. you guys aren't gonna give me the fake bill fight? c'mon, kev. you're earning 3% cash back. humor me. where is my wallet? i am paying. where is my wallet? i thought i gave it to you. oooohhh? oh, that's not it either. no. no. stop, i insist. that was good though. earn big time with chase freedom unlimited with no annual fee. how do you cashback? chase. make more of what's yours.

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♪ >> one man chose this war. one man can end it. because if russia stopses fighting, the war ends. if ukraine s&p stops fighting -- stops fighting, ukraine ends. gerry: that was antony blinkenen condemning putin's partial mobilization this week and reckless nuclear threats. texs arise -- tensions arise.

if president biden has done enough to avoid that. richard fowler, i think most people would agree, would have tremendous sympathy and admiration for what the ukrainian people have achieved, the extraordinary ability to infliblght so far what looks like a defeat on the russians. but all that said, given that russia is a nuclear power, given what putin said this week and the risk of escalation, should the u.s. now be doing more to try to deescalate this conflict? >> they most definitely should be doing more to try to deescalate this conflict. here we sit, right, the united states and the people of this country are war-weary after two decades of the war in iraq and afghanistan which puts the president, the pentagon and i would argue even capitol hill in a precarious situation. they can't put boots on the ground in ukraine, and with that being said, they're dealing with a vladimir putin who seems to be saber rattling the world when it comes to how he wants to end or not end the conflict in ukraine. and while that's happening all around the world we are being

impacted by this conflict. just think about what's happening on the eastern horn of africa where 50 million folks will likely go hungry this year because they can't get the grain out of the black sea. there's real unintended consequences of this war, and it has to come to an end. but for it to come to an end, it's going to require more than the united states and an expanded nato jumping in. it's going to require china and india and other countries saying, hey, putin, you've got to stop here. was if you don't -- because if you don't, you could really disrupt the world order and international trade not only for yourself, but for us, your allies, and i'm referring to china and india. gerry: byron york, i think spiten himself once said there's nothing more -- putin himself said there's nothing more dangerous than a cornered rat. he's facing this defeat on the ground, and now he's threatening nuclear action. is there something we should be doing, more we should be doing to try to avoid what could be an have the catastrophe?

>> well, you're absolutely right. this is a particularly dangerous moment. i guess we could have said that at any point in the last six months, but it seems to be getting worse because there are signs of chaos and disarray inside the kremlin. vladimir putin's going to give this big speech in the evening, and he just doesn't give the speech, and he does it the next morning. something is going on there. the mobilization, not a full draft, but calling a lot of people back into the military, people who have had military experience going really badly, lots of people trying to get out of russia to avoid that. all the signs are that this obvious defeat and difficult time that russia is having militarily are having repercussions for putin at home. now, the united states has reportedly warned putin on a number of occasions throughout this whole war against using nuclear weapons. don't know what the warnings were, they're apparently call wrap ited to whatever putin

actually might do, but we would be in a totally, totally unknown, new situation then. and a lot of people think putin is bluffing, and certainly we hope that he is. gerry: richard fowler, briefly, do you think he's bluffing, or do you think we are really facing the risk of a serious escalation here? >> i do think that he is bluffing. and i think how you know he's sort of bluffing and how you know that america's prepared if he isn't bluffing is the fact that you're not hearing much from the pentagon in this moment. you're hearing a lot from tony blinken, but you haven't heard much from lloyd austin or the joint chiefs of staff which says, to me, that the pentagon is preparing for the worst, and they're not talking about what they're preparing. gerry: let's hope there's diplomatic back channels very, very pulley -- fully operating at the moment. joe biden blames the gop for making the border a crisis. how does my of that make sense?

we'll take it up. carlos rodriguez-galindo: no child should die in the dawn of life. and that means no child anywhere. i cannot think of any other institution in the world that has made that commitment to change the world.

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switch to the fastest mobile service - xfinity mobile. now with the best price on two lines of unlimited. just $30 a line. gerry: the crisis at the southern border is worsening daily under the progressive policies of this administration. the number of migrants taken into custody surpassed 2 million in august, a new record for the already overstretched customs and border enforcement protection workers with fugitives on the terror watch list soaring. democrats have wasted no time blaming republicans, the minority party in congress, for, quote, manufacturing the problem. >> look, the border is not open. we're doing everything that we can. >> it's a crisis that has been decimated, right? the system has been decimated by the last administration. >> a humanitarian crisis made by human hands by some of the governors in our southern states. >> it is a manufactured crisis

by ambush. >> some politicians would rather not only have an issue, but exacerbate it to the ebbs tent of literally -- extent of literally human trafficking, as you said. gerry: richard fowler, let me ask you. hundreds of thousands of people pouring across the border. last time i looked, the biden administration was in charge, it was a democratic administration in charge of the border. how on earth is it republicans' fault? >> listen, i don't think this is a democrat -- i think this is a politicians' problem, right? this is not -- and both parties, a pox on everybody's highs here. -- house here. if you look at some of the footage i've seen from our own bill melugin, folks are scaling donald trump's wall, so that's not a solution. and with that being said, the biden administration has pushed both to find the root cause, and we're still trying to figure out what that root cause is. we have to have a trouble-edged -- double-edged approach here.

legislators need to deal with the problem happening in northern triangle countries and, two, how we secure the border and, three and most importantly, how we modernize our system, a process that is faster, that is quicker, that has more immigration judges so you don't have a process where folks are risking life and limb or they're being smuggled across the united states' border, and then governors and mayors are dealing with a problem that is a the responsibility of the federal government. gerry: byron york, we've seen, obviously, these busloads, flight loads of migrants from florida and texas by ron desantis and greg abbott. how do you respond -- how do you rate that in terms of its effectiveness of bringing home the seriousness? some people have criticized it, saying it's making political pawns of these migrants, but do you think it's actually been very effective in emphasizing the scale of the crisis that we

have? >> well, as a messaging exercise, it's been incredibly effective because it was all we were talking about for a while. but in a bigger picture, what happened in martha's vineyard and some of the buses that have been sent from texas and arizona are really a side show. they are, they're not the real problem. and the real problem is, as you mentioned, 2.1 million people have crossed illegally into the united states, been encountered doing so. about half a million more have done it and just got away with it. and there's still a month left in the fiscal year, so it'll be higher than 2.1 million. and the reason for this is the biden administration has created an incentive for people to cross illegally into the united states. the incentive being if you come here, you will be allowed to stay. and that is true for hundreds and hundreds of thousands of illegal border crossers.

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gerry: the self-propropelling gaffe machine that is joe biden was many overdrive this week. the white house was back in clean-up mode over another round of confusing comments paid by

the president -- made by the president in a "60 minutes" interview. >> the pandemic is over. >> the president said and he was very clear in the interview that covid remains a problem. >> u.s. forces, u.s. men and women would defend taiwan in the event of a chinese invasion? >> yes. >> we continue to stand behind the one china policy. >> inflation rate month to month is up just an inch, hardly at all. >> inflation's running too high. it's running 4.5% or above. gerry: now, strategic ambiguity is one thing, but repeated self-contradiction is quite another. and if i may take that up with you, byron york. not only are these confusing statements, but as you pointed out this week, they have real policy implications, right? >> far-reaching implications. so when president biden comes out and says not once, but twice the pandemic is over, republicans on capitol hill are wondering, well, what about all these programs? richard burr, who's the top

republican on the senate health, education, labor is and pensions committee, sent a letter to the president going through all of the programs, things like spending programs, vaccination mandates, etc., saying are these still in effect or not? please let us know. so this was not just a simple gaffe, it was a big deal. gerry: let me give richard fowler the appropriate last word. you're always flawless in your speech, but this is out of control, isn't it? [laughter] >> look, i think the problem here is this: i think often times when the president speaks, he's saying the right things. and i think when his staff walks them back, therein lies the mistake. what i think the staff was saying is functionally the pandemic has ended. americans are going back to this new sent of normalcy, and i -- sense of normalcy. i think when the white house walks that back, it makes the president look like he's gaffing, and i don't think he really is. same with taiwan. for decades we've seen american

presidents play footsie with china around how they deal with taiwan, and finally a president says, look, if you mess with taiwan, we'll respond. gerry: it used to be called strategic ambiguity. that's it for this week, i'm afraid. thanks to byron york and richard fowler. i'll be back next week here on the "wall street journal" at large are. thanks very much for joining us. muck measure. ♪ ♪ [applause] >> fox nation's, the unauthorized history of socialism. live summit from our fox news headquarters right here in new york city. i'm larry kudlow. in the next hour and a half if or so, we will explore the battle between socialism and freedom. and we will also focus on the big government socialism that has been reappearing in recent years.