>> from our studios in new york city, this is charlie rose. we begin looking at the rise in the federal reserve interest rates that took place on wednesday, the first time in a year. the second rate hike in the last decade. the fed signaled that rates could continue to rise next year more quickly than officials had expected. the move seen as a jester that the fed is confident in the strengthening of the u.s. economy and potential signs of rising inflation. janet yellen addressed the path

ahead taking into account that uncertainty about the economy will dictate future policy decisions. janet yellen: we are not behind the curve, my judgment is that we are in a good path to reaching our objectives but the outlook is uncertain. we recognize that there are many sources of uncertainty affecting the outlook and we will have to adjust our thinking as things you've all. -- as things evolve. charlie: welcome. what is the significance of this? >> the fed is a knowledge and the fed -- the -- the economy is doing better, unemployment down, a nine-year low, inflation is starting to rise, something else the fed wants to see which will encourage businesses to invest, maybe people have to give more raises and the fed is taking a

step in the direction of normalization, what caught them offguard as every three months the fit looks at its forecast for growth and inflation and how many rate hike whitehead. everyone expected a quarter-point hike on this very special meeting but they did not expect the fed to move from two hikes for 2017 to three. that is what boosted bonds yield and boosted the dollar. charlie: why now? they have been talking about this for a while, we thought they would do it but held back perhaps looking at economic factors perhaps now more positively. >> in september they did not move, they held off, in november it was too close to the election and they wanted to get cap the election uncertainty. they got past yesterday but created a new uncertainty, donald trump is now heading for the white house and there is some kind of physical moves and janet yellen was asked about that. the fed was taking a step they have known that they needed to

take. she said they do not know what donald trump will do and they cannot make policy based on that but some members look at the possibility of more stimulus, more spending and tax cuts and that may have made them say we need to give more rate hikes next year. charlie: on wall street and within the financial community, will this be looked upon with enthusiasm or will there be some people who say -- no, this is not the right time. banks, interest margins, helps them make money and the bond market was are ready turning around with yields rising, the more to market will hit some consumers but broadly a lot of businesses and investors would like to see normalization. a want to see rates move higher, a healthy sign for the economy. 2017? might they move and >> the key rate could go from , only a.4%, now at .5% small difference because it

would have ended the year on the previous forecast at 1.1%. the bigger question is where dupont years ago -- bond yields go? we will see a move up and mortgage rates and are already majority of economist that they because this is boosting the dollar that will hurt exporters, it will put a brake on some parts of the economy and that is why the fed said they will go slowly and go meeting to meeting to decide what to do. next, the former secretary of defense and national security advisor to a number of presidents talks about rex tillerson and other appointments or nominees by president-elect trump. ♪

charlie: we continue with donald is selectinge he for important positions at his office. we talk about rex tillerson, he could potentially base a tough confirmation battle for secretary of state, senators include republicans have raised concerns over his ties with russia and the country's leadership. the nomination comes as lawmakers prepared to investigate a russian cyber campaign aimed at disrupting the u.s. presidential election. the cia reportedly concluded that russia intended to tip the election in donald trump's favor . joining me now is a man who recommended tillerson, bob gates has served eight presidents over a five decade.

period including secretary of defense. and we areriend pleased to have him, welcome and happy holidays. mr. gates: thank you and to you too. charlie: let me begin with tillerson, after all that you had said, because of your reputation for sound judgment, i assume it was that you are invited to come meet you president-elect, is that what happened? mr. gates: i had met the previous day with his national security advisor, general flynn to talk about the process for decision-making and how the national security council works. after that meeting, i received a call that they would like for me to see the president-elect the next day. charlie: he stayed overnight in new york and went to see him, tell us about the conversation as much as you can. mr. gates: as you can imagine, given some of the things i have said, it was a little awkward at first.

. will say he was very gracious we moved beyond that and had a wide ranging about both policies and about people. charlie: you are not the only person who has had harsh range during the campaign. the president-elect has talked to, just call mitt romney. mr. gates: that is for sure, i said he will be the president, and his success in national security matters especially is vitally important to all of us. my view has been anybody who can help him in this process should be willing to do so. charlie: how did tillerson come up? mr. gates: he asked me for my personal thoughts on several of the people that had been mentioned as candidates for secretary of state. -- several ofe them had reached out to me and i had urged each of them to serve if asked. if you have a-

blank slate, who would you suggest? tillerson's name. i got to know him years ago through our mutual involvement in and leadership of the boy scouts. we spent a lot of hours after scouting events sitting around with a drink after dinner talking about international affairs and u.s. politics and what is going on around the globe. i came away with a feeling that wrecks have a lot to -- rex had a lot to offer. because he was not a traditional candidate he might have been overlooked. charlie: i want to stay with that, i want to make note of the fact that your firm that you are has aner in, also consulting relationship occasionally with exxon mobil? mr. gates: they are one of our

many clients but as i have said, my relationship with rex goes back to well before that. it is tied to boy scouts did charlie: why do you believe that he would make a good secretary of state? other than the fact he has led a great, huge multinational with business interests around the globe and knows a lot of world leaders. mr. gates: for one thing his the knowledge about a variety of parts of the world, from indonesia to latin america to the middle east, russia, and other places. that she has negotiated with leaders of the countries in all of these places. he has gotten to know how these countries operate, how their leaders operate and has insight into how they think. because he has negotiated with them. the truth is i think at his been

rare for a prospective secretary of state to have such a lengthy record of negotiating with foreign governments and foreign leaders. i think that is an important asset but it is his knowledge of these countries, he will not need a briefing book to tell them who is in charge and what country or where that country is, he knows all of this to start with. there is another piece of this that i think is important and that is the representational role of the secretary of state. i think that people do not think of this when it comes to rex but and andeen him stand up prop do in front of 1000 or 1500 volunteers in the scouting movement and talk with great passion about america and our values, about patriotism and what we stand for as a country. will be a next one representative of the united states and a superb negotiator for the united states. charlie: when you became

secretary of defense, you brought to that job broad experience in government. national security advisor, cia director, you had developed a theory of how the world works. does rex tillerson have a theory of how the world works in a geopolitical sense? mr. gates: i think he absolutely does. i do not think you survive much less succeed with a huge international company unless you have some understanding of how the world works. i think he brings a realism to it frankly that people who may have come out of academic environment or a law firm or something else would not have. he has been out there in the real world. i think that is an experience that will serve the country well. charlie: when president bush suggested that he had met

vladimir putin and you know where i'm going -- when he suggested he had met vladimir -- he and he saw a man looked into his eyes and saw a man that had a soul or something to that effect, you were quick to say that you had looked into vladimir putin's eyes and saw a cold stone killer. mr. gates: that is an accurate reflection. charlie: how does rex tillerson -- when he looks at vladimir putin, what does he see? mr. gates: i have not asked him that question. let me be very clear -- every ceo of an international -- of a company in the united states that does business internationally wants to have a friendly relationship with the governments and leaders of countries in which they are doing business and that does not matter whether it is a big oil company or boeing or hundreds of other companies.

i would make the case that being friendly is different than being friends. interesthat rex had an -- i think he dealt in a businesslike fashion with vladimir putin. i think what -- let me put it in a different context, charlie -- one of the challenges facing the next president is how do you thread the needle of stopping the downward spiral in u.s.-russia relations that is potentially quite dangerous? at the same time, push back against putin's aggressiveness and bullying and general thuggery. having somebody who understands where putin is coming from and who knows him and how he negotiates, how he deals with problems is a big asset. as you begin to develop strategies for accomplishing what i just described. i think it is mistake to think because rex tillerson

successfully did business in russia that he is best friends with vladimir putin. that is a completely false narrative. charlie: and if he was against sanctions against russia, you was suggest that that is because simply he thought sanctions were a bad idea or he thought it wasn't a song desk in a sans interest to oppose sanctions -- exxon's interest to oppose sections? mr. gates: i suspect it was both, he was looking out for exxon's interest and his view of what works and what does not work. tillersonat once rex lists his hand to take the oath , his only objective is going to be to do what is in the best interest of the united states. , the former baker secretary of state and chief of staff and secretary of the treasury, said to me this morning that the essential thing

-- the most essential thing is what is the relationship of a secretary of state to the president. does he have the president's confidence? does zero play the presidents' ll? -- vision weel can we determine whether rex tillerson has that? wisdom so because he appointed him. is gates: i do not think it violating confidence, as i told the president-elect, when it comes to choosing the secretary of state, the rest of the world, in addition to the congress and others, had to know that the secretary of state had the complete trust and confidence of the president. that when the secretary of state speaks he is speaking for the president and others can take that to the back. -- take that to the bank. i believe the president-elect had that in mind when he began

to think about rex tillerson for this job. the irony is the example i used was the relationship between jim baker and the first president bush because everybody around the world knew that when jim baker spoke as secretary of state, he was speaking for george h.w. bush. charlie: what questions would you ask if you were in the senate and asked to confirm rex tillerson? mr. gates: i think clearly they will need to explore their concerns about the relationship with russia. i think mr. tillerson's answers will is somewhere along the lines of what i have described. and a reassurance that as secretary of state he will be acting only in the interest of the united states. have -- itt they ifld be useful for everyone that hearing included discussions about what kind of a

strategy do you think we should follow toward russia? how should we deal with this country that we have to have a good relationship with in some respects because we both have these gigantic nuclear arsenals and at the same time we have a lot of behavior on the part of the russians that is a serious problem for us? how do you square that circle? i think the senators will want to have some confidence that there is a solution. and ie: in the end, you both know that foreign policy is run out of the white house, isn't it? mr. gates: it depends on the president. in some cases it is and in some was run outnot, it of the white house under president nixon. on the other hand, jim baker and george shultz play significant roles in shaping foreign policy for president -- first president

bush and president reagan. i think it depends on the relationship between the president and the secretary of state. and the role of the national security advisor and frankly it seems to me that based on what i read that the president-elect is somebody who, once he has confidence in somebody, delegates a good bit to them. i would hope that would be the case with the secretary of state. one of the things, factory, charlie, that encourages me is is, the both jim matt nominee for secretary of defense, and rex tillerson, the president-elect has reached out to two very strong, independent minded individuals who i have confidence will tell the president exactly what they think and what they think he needs to hear.

i think his willingness to have this -- those kinds of people around him and strong voices who will n be intimidated or not be rolled is a very important thing. charlie: what do you think about the lieutenant general plan, the national security advisor nominee? mr. gates: i will state my personal experience, i do general plan when he was an intelligence officer, when he was the intelligence officer for the chairman of the joint chiefs and when he was general mcchrystal's primary intelligence officer. goods a very, very intelligence officer, he wrote an article at the end of 2009 on the deficiencies of our intelligence collection in afghanistan that i thought was right on the money. i have had no contact with him 2011 i left in june of until i met with him in new york and our conversation in new york was very thoughtful and very serious. he was taking a lot of notes in terms of how the nsc should operate and i can only speak to

those experiences that i have had with him personally. charlie: you read a lot and know there is controversy about conspiracy theories and his belief that the cia is the -- has become politicized. mr. gates: one of the bank that has been my experience over the years is that people's attitudes and views towards things change quite a bit when they actually have responsibility sitting on their shoulders. there are a lot of people who say things during campaigns and when they are not in government that they have a different approach once they have a real responsibilities. charlie: do you think that is true for the president-elect? mr. gates: based on the sites i have seen so far that is my hope. for example, i was very encouraged when he came out of his meeting with general mattis and he talked about torture and waterboarding and so forth.

he comes out and says that after talking to general mattis and hearing his view on that, he changed his mind. i took heart from that. charlie: what about the cia designate, do you know congressman pompeo? talked on no, we have the telephone, he reached out to me which i thought was a nice gesture on his part, he comes from my hometown of wichita, kansas. has awould say that he challenge in front of him at cia can out how best support the president in a way that is useful to the president. -- reports tofor the president, not vice versa. cia has to adjust the way it

interacts with every president to meet the needs of that president. for example, president eisenhower was not much of a reader, he prefers the information in briefings. pompeo and the rest of the agency will have to figure out -- how do we make this enormous asset it is american intelligence and cia available and useful to the president and how do we get to him the information he needs to know in a way that is easy for him to take it in? i think they have to be very flexible in the way they approach that. charlie: what do you think the cia and other intelligence agencies are saying about russians trying to meddle by hacking our computer systems and metal in american elections? the second question is -- do you believe that the russians hacked in order to promote the

candidacy of one person over the other? mr. gates: first of all, i do not have access to classified information, all i know is what i have read in a variety of newspapers and heard outside of government. here is what i believe, i believe the evidence seems to be overwhelming that the russians -- that hackers, under the auspices of the russian into sites did hack in the united states. i believe they did so at a minimum to try and discredit our elections, to delegitimize the a messagend send around the world that american elections are corrupt and rick just like everybody else's, including ours in russia. to discreditit was

the legitimacy of the american election. my sense is there is broad agreement in that in the intelligence community. taking the next step of motivation, whether they were trying to advance the candidacy of one candidate or, alternatively, they believe that mrs. clinton was going to win the election like so many here in this country believed, or they simply trying to discredit her or weaken her when she became president? i do not know the answers to those questions, i know the question of motive is difficult in the intelligence community and in intelligence analysis. frankly, that is why i support the initiative in the congress to have a bipartisan committee look at this and see if they can reach any conclusions along those lines. factg established for a that the russians did try to interfere in our election, probably speaking, is important

and i think has implications for our relationship going forward. charlie: the president-elect seems to disregard that, say i do not know if it was the russians or the chinese or somebody in new jersey when there is overwhelming evidence seeming to call into question the competence of american intelligence agencies. -- first: i think that of all i think that in some ways the way the conclusions were characterized -- i cannot speak for him. i have never discussed this with him, obviously, but i would wonder whether she did not worry or think that perhaps there was an effort to try and somehow cast doubt on the legitimacy of his election and he was reacting to that. i think one of the benefits of the bipartisan committee is to get at the facts and have them all laid out.

and maybe he will come to a different conclusion. charlie: the president asked for an investigation before he beats office to be completed. mr. gates: that is true also. charlie: donald trump ask you to work for him? mr. gates: i made it clear that i was not interested in doing anything. i think the phrase i used was i was done building my resume. charlie: i thought the response might have been -- mrs. gates would have your head. [laughter] mr. gates: she would not divorce me, but she might kill me. charlie: you are there for the president-elect if you need your , as everybody else who served in government and understands the demands of serving in government. mr. gates: absolutely, and i would urge others to have experience, if the new administration reaches out to provide whatever help and assistance people can. as i said, it is critically

important for the country that he be successful in national security matters and the more help people can offer him to be successful, the better off we will be. charlie: what about the one china policy? taiwan,ake a call from did you approve of that, talking about a grand strategy of understanding the future and possible ways china could respond to that? was that a wise decision? mr. gates: let me say that as somebody who grew up in the national security council system under henry kissinger and brent's go grok, it was a little jarring. charlie: a little jarring, you say? mr. gates: yes. i think this is an area to proceed with great caution. area.s a very sensitive with china. one that has the potential to be dangerous. andink that -- i understand

agree that we do need to take another look at the way we interact with china, the way we deal with china, our economic relationship with china, all of those things are worth doing. but i think they need to be done in a thoughtful and considered way. sidesg in mind that both have some positions that cannot be compromised. and we need to bear that in mind. charlie: the chinese have described it as a core interest. mr. gates: as i have told the chinese, and we have some core interest as well and we need to be mindful of each other's core interests. charlie: what raises an interesting question -- donald trump as a campaigner believed in being disruptive, he thought being disruptive and unpredictable was a strong leadership quality. and therefore it reflected well in terms of his electoral success.

when you are president, the , istion of unpredictability that a good quality or not? mr. gates: i think it depends on the circumstances, i think there are occasions when it is useful for people not to be sure of what the united states or the president may or may not do. i've same token, there are others where i think predictability is critical. example, the president's willingness to adhere to article five the nato alliance, the nato charter, where, if one member of the alliance is attacked, others will come to their assistance, i think there should be no ambiguity about that. but a tactical situations in particular, i think there is some merit in having some unpredictability. the way i would put it, charlie, when it comes to the big strategic issues, we probably should limit unpredictability.

when it comes to the tactics of doing things, i predict ability has its merits and frankly i think that -- we took a lot of criticism at the beginning of the first bush administration when we reviewed our policies in a variety of places around the world, including with respect to the soviet union which was after the reagan administration. for a new administration to take a hard look at the policies that we have, and whether there is a need for adjustment or change, is a healthy thing. we should not be so fixed on continuity that we may miss opportunities to advance our national interest just for the sake of continuity. willingness to take a hard look at the policies we have in place can be a very healthy thing, it just needs to be done in a thoughtful and

considered way. charlie: if my memory serves, mrs. reagan, the late mrs. reagan was not too happy about that. mr. gates: there were a lot of people from the reagan administration who were not too happy about it. but i think -- the other aspect of it was that the president wanted to have -- wanted to make people understood this was his administration, his presidency and not a reagan third term. this,e: finally there is other people have spoken to this, this is one of the most troubling times in recent history, when you look around the world, you look at russia being more aggressive and you look at china and where they are, when you look at tribalism and what is happening in syria and other areas of the middle east, look at north korea.

this president-elect inherits a world that is very dangerous. mr. gates: charlie, i think the international environment today is as complex as we have encountered perhaps since the end of world war ii. cataclysmic kind of dangers that were posed during the cold war and the cold war against the soviet union but the many different challenges we face, each of which is dangerous , perhaps not in a cataclysmic way but in a very real way and where the odds of something happening are very much greater than the odds of a thermonuclear war with the soviet union. it is a very tough environment. frankly, one of the reasons why i believe that having experienced, tough-minded, thoughtful, well-versed people

like general mattis and rex tillerson in these two senior positions is really important for the country and for the president-elect. charlie: great to have you on this program and i thank you for taking time. mr. gates: great to talk to you, charlie. charlie: former secretary of defense and advisor on a national security issues, robert gates. we will be right back. stay with us. ♪

charlie: we continue from washington with the former acting director, deputy director of the cia and we want to talk about rushing hacking and other issues. they give for joining us, michael. -- thank you for joining us, michael. you described the russian hacking and the interference in our relation as the political equivalent of 9/11. you have described hacking as an attack on our very democracy. i assume that there is no doubt in your mind and you accept the verizon television's agencies who have said -- the various intelligence agencies who said russia hacked with the intent to create chaos or other motives in our political election? michael: it is important to break down what we know for sure. and what we do not know. and what we think.

certainty that the u.s. intelligence community, the entire community, all of the october said back in that the russians were interfering in our elections with a statement put out by the director of national intelligence, jim clapper, that the russians were trying to interfere with our election through hacking. and that there was little doubt in the minds of the intelligence community that the knowledge of this, if not the direction of it , went to the highest levels of the russian government. we know that in october the intelligence community thought that for sure. daysis new in the last few , not an official statement by the government but a series of leaks and it looks like from the leaks the central intelligence agency, the group of people i only believedot

that the russians were interfering in the election but they were doing so with the intent to undermine secretary clinton and to help donald trump. it does not sound to me if the rest of the intelligence community is there yet with that judgment. it is not unusual for the cia to lead the rest of the community and for the rest of the community to eventually catch up. charlie: why do you say that? michael: it is just what has been tradition, what is typical. cia is quicker to make judgments that other agencies. it tends to lead the community. in the judgment it makes. it is what happens over time. one of the things, charlie, that caught my attention in the league that -- in the league last friday, the piece from the washington post, it said that not only does the cia believed that it was the intent of the ,ussians to help donald trump but the cia believes this was

high caught -- believes this with high confidence which caught my attention because the cia does not attach a high confidence label to a analytic judgment without a lot of confidence. that is the highest confidence level there is, high confidence. it usually indicates there is not just one source of information but many sources of information. it means that it is not a circumstantial case that a direct case. it sounds to me -- but a direct case. it hounds like that it sounds like the cia has compelling information which led it to this judgment. charlie: part of the reason the president has started an investigation about what we do know by calling on all agencies that may have information to coordinate all that information to make a judgment about what happened and why. michael: he obviously knows what the intelligence community

believes and what the cia believes because he is receiving that on a daily basis. what he is trying to do by january 20 is to try to pull together the two different streams that are underway in the u.s. government. one is -- what is going on in the intelligence community and what they are collecting and what they think and what they are learning. the other is a criminal probe by the fbi into the hacking. which would not be as crystal clear to everybody else, a criminal probe, it gets closed off. what i think he wants to do is bring everything together that everybody knows so that we have a complete understanding of what happened. charlie: here is one thing that has been reported, the fbi does not necessarily -- have not come to the conclusion as you suggest with one reason have not come to the conclusion that it was within the intent of promoting the election of donald trump. it is sometimes cited that the reason for that is that the

notion that they believe that both the democrats and republicans, national committees, were hacked but information damaging to hillary clinton was the only one released to wikileaks. michael: what you see in these leaks is -- that is the key reason, charlie, that is given for why the cia believes that it was the intent to help donald trump and hurt clinton was because -- why didn't they release damaging stuff about donald trump and the republicans? i think that is probably true, that is probably part of the analysts inking. -- thinking. that is inferential and circumstantial, i think bm lists have more, i think they have sources of information that are telling them exactly what the intent was.

that go beyond just an inference, that go beyond the forensics because the computer forensics can tell you that it was russia by the computer forensics cannot take you to intent. i think there is pretty good information that has led the cia to believe is. charlie: why you think the president-elect is rejecting this? michael: i have two theories. --heo --er one is t theory number one is believing it raises the questions about the legitimacy of the election and that is the last thing he wants to do so his natural instinct is to reject the premise. believes -- and this is based on some things he has said and based on things that kellyanne conway has said, i think he believes that the central intelligence agency

maybe political. his -- it is very interesting to look at this from his perspective. sees, perspective, he number one, mike hayden, the former director. he sees michael morel, a former deputy director and acting director as having criticized him extensively during the campaign. that is number one. that and makes them wonder about the whole organization went to former senior leaders have come out so aggressively against him. number two is that right after the division he has his first intelligence briefing. within 24 to 48 hours after the intelligence briefing, there are leaks about what happened at the briefing. those leaks are not positive

about him. he did not ask any questions and that mike flynn was aggressive and chris christie had to counsel mike flynn to be quiet. all of the stories came out. ,f you are the president-elect you have to wonder, where did these stories come from? only one place, the intelligence community. you wonder about the political nature of the intelligence community. togethere puts that and he sees cia as a political organization with a political agenda. that could not be further from the truth. .t is directly the opposite central intelligence agency, is tical,tical -- apolo nonpartisan, egos, the strongest tenant in the place is called

him like you see them no matter its impact on politics or policy. charlie: you know the following the nominee ton, be the national security advisor to the president of the united states has been considered a very good intelligence official within the military. working for the joint chiefs and working for stan mcchrystal in afghanistan. he has written about the politicization of the cia and he is the person who was in donald trump's ear as candidate and as president-elect. michael: if donald trump believes that the central intelligence agency is politicizing this judgment, in part it is because mike flynn is whispering that in his ear, absolutely right. .harlie: talk about briefings this president-elect has chosen not to receive them everyday. what is the value of a

presidential daily briefing? and are you astounded that this president-elect has said, i do not need to do that every day, i can have other people listen and report to me? michael: a great question, charlie. you have to start with the proposition that we are at a very unique time in the history of national security issues in this country. i do not think we have had a time when the number of national security issues facing the united states of america is as great as it is today. there have been times in our history that have been more dangerous or -- you were of , times duringr the cold war, world war i and world war ii. the sheer number of issues facing us today is staggering.

that is point number one and point number two is that the vast majority of those issues are first and foremost intelligence issues. meaning you cannot understand those issues, you cannot make policy on them and you cannot carry out that policy without first rate intelligence. these two propositions together, staggering number of issues, all of them intelligence really and to come to a important point that intelligence has never been more important than it is today. let me give you an example, you cannot understand the iranian nuclear program, the status of their program without first rate intelligence. you cannot understand the north korean long-range missile program without first rate intelligence. you cannot understand chinese military modernization without first-rate intelligence. you need intelligence to understand those issues. intelligence is critically, critically important and that that is the last -- and

why president bush and president obama has been huge consumers of intelligence because they understand it is important. the president said just the other day, you cannot understand these issues without reading that pdb everyday. president-elect is missing a huge opportunity here pd by not reading theb during the transition. during thethe pdb transition, he has an opportunity to learn everything he can so when he becomes president and needs to start making decision, there will be a substantive context in which he will be making those decisions. i think he is missing a huge opportunity. charlie: let's assume that these intelligence agencies back in october understood that the russians were behind the hacking whoet's say john podesta was a chairman of the clinton

campaign, understand the democratic national committee happy by russia -- packing by russia and got to the point where he said we will respond , you would have assumed that the election is over now and that that message would have been set. do we assume it has or not? michael: my view, charlie, is that -- and the reason i called this the political equivalent of 9/11, a handful of reasons i did that, the most important reason was that i think this is a significant attack on the united states. that a foreign government interfering with our election for whatever intent, i do not think the intent is as important as the fact that they were doing it, interfering in our election. the fact that a foreign

government was interfering in our election is a huge, huge issue. i'm surprised has not gotten as much attention as it has. literally over the last few days. this is an attack on our democracy, an attack on who we are as a people. that is why i said this is the political equivalent of 9/11. weis interesting to me that were in a sense just as surprised about this as we were about 9/11. if you think about what the 9/11 commission set about 9/11, it was a failure of imagination, we cannot imagine that the terrorists would take the approach they did. in this case, i do not think the government imagined that the russians would do this. when people talked about cyber threats, they talked about the chinese stealing industrial information.

they talked about the threat to electrical grids. they talked about the threat to telecommute occasion and our finances, nobody talked about a cyber information threat to our election. there was a little bit of a missing imagination when it came to what happened to us here. this is a huge issue. i think that the united states government has a responsibility, charlie, to respond and respond proportionately. because this attack is so significant, it is leading --ple to question whether question the legitimacy and sanctity of this election. it is a huge deal and i think there has to be to parameters -- two parameters on how we respond here one, it has to be overt, it has to be seen. -- it isnot seen, then

not only the russians watching how we respond, it is also the chinese, also the iranians, the north koreans, all sorts of people who are watching -- how is the united states going to respond? if we respond covertly in a way that nobody can see, you lose that deterrent effect on everybody else. that is number one. number two, it has to be significant from vladimir putin's perspective, has to be painful to him, it has to hurt. when people talk about in diving a handful of russians -- indicting a handful of russians who may be behind this, russians who will never want to travel to the united states or leave russia, that is a slap on the wrist. sanctionse talk about on russian intelligence organizations or individual russians who work for those

intelligence organizations who may have been behind us, that is a slap on the wrist. this needs to be significant. it does not need to be in the cyber realm. i response can be and perhaps should be outside of the cyber realm. we need to do something that is significant from vladimir putin's perspective and visible to the entire world. and we need to respond to it and if we do not respond, it will embolden him. and quite frankly, charlie, it is the obama administration's responsibility to respond because this happened on their watch. i am very concerned, charlie, this was lifted the cracks of the transition. -- this will slip through the cracks of the transition, the same way the u.s. did not respond to the cole attack in the october of 2000, that slipped through the cracks in

the clinton-bush transition and the united states did not respond to a significant al qaeda attack on the united states in this case on the uss cole in yemen. this is a big deal. people need to pay attention. charlie: what would be a proportionate response that would get his attention? michael: i will give you two because i cannot think of five. one would be broad-based, deep economic sanctions. the type of sanctions we put on the iranians, the kind that brought the iranians to the negotiating table, the kind of sanctions that said two companies and banks around the world, if you do business with the iranians, in this case, if you do business with the russians, you cannot do business with american corporations. that would get the attention of vladimir putin. ♪

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