i'm not talking about the weather ahead of the first bite and entrant face-off a week away to the issues topping this bitter contest of the economy, inflation, the border you name it u.s. treasury secretary janet yellin chicago -- they are here on all of it. welcome everybody i'm neil cavuto. >> neil: two big newsmakers in a movement. first peter at the white house numbers shifting the presidents way. peter. >> reporter: and neil the president is underwater on the issues that typically decide a presidential election but he was starting from such a position no weakness that it's actually an improvement. look at this, 41% approval for the economy and 37% on inflation are his highest in over two years. has 35% approval on immigration is actually five points higher than it was last month. that is part of the way to get here. for the moment a two-point lead over trump in the new poll. independents have been breaking for trump by two now backing biden by nine. raising the stakes for both men and next week's debate with trump at the early favourite. fifty% of all voters say he will beat biden in the debate but as biden preps sequestered at camp david the biden inner circle is split about which trump they need to prepare for. >> i'm so happy that the microphones we'll be shut off when not speaking and you will have audience members and members in the audience screaming and yelling. >> i think donald trump showing up next week we'll be the most disciplined version of donald trump. and muted microphones probably help trump. >> and at that debate because of a coin flip trump will get the last word. neil. >> neil: thank you very much peter do see at the white house. speaking of which it's a big issue for the white house to adjust what's going on at the border the treasury secretary of the united states who has a plan to deal with all the drugs coming over the border. but it's an unusual character she explained all of it to me earlier today. take a look. >> secretary a pleasure to have you welcome to fox. >> thanks so much. a pleasure to be with the. >> neil: if i could maybe you could explain a little, apparently right at the source drug cartels particularly a pretty big one could explain creeks. >> yes, today we levied sanctions on eight individuals who were part of one of the most vicious mexican drug cartels responsible for trafficking fentanyl into the united states and we intend through these actions to try to cut them off to make their business very difficult or impossible by cutting them off from the u.s. financial system and the dollar. we took this action jointly with the drug enforcement agency and u.s. attorneys based in atlanta. >> neil: how does this work of some of them are funded through crypto currency and the like we how can you police that? >> crypto currency is increasing is used, it remains a small portion of the activity that finances drug trafficking and we do have tools to address failure to abide by anti- money laundering and counter cft obligations. for example finance one of the largest crypto exchanges we levied sanctions on last year because of their failure to abide by legal obligations so we do have tools, we have taken several actions against those involved in crypto and exchanges it's an area where our enforcement tools are not perfect but they are certainly not nonexistent. >> neil: focus of secretary you obviously want to freeze the funding amounts the means by which all these cartels operate. so why wasn't this done sooner? it seems like a pretty good idea, why not sooner? >> while we've been working jointly with our law-enforcement colleagues and also productively with the government of mexico to amass the information necessary to bring these actions forward and our work with mexico has intensified over the last several years. we have had very good cooperation with mexico. >> neil: does that include the new government under the new president-elect? >> i expect us to have a very productive ongoing relationship with the new president as well. >> neil: i know the president has already outlined, our president joe biden has outlined plans to make it difficult for those who cross into the country to continue doing so. i am wondering though isn't the better solution and maybe it addresses what you doing here, to just shut down the border entirely? just lock it down. that's what donald trump wants to do car or do you say? >> well my concern today is with sentinel trafficking and drug trafficking. >> neil: but if it's shutdown you not aiming, if it's shutout entirely then there goes the trafficking rate? >> well, look the most impactful tool we have is to put in place sophisticated drug detection equipment and that is what president biden has done. not to shut down the border entirely but to greatly increase the number of drug detection units, and we have had a massive increase in the amount of drugs that have been detected on the border. >> neil: you know, secretary i notice you're the one leading this charge, i understand the financial tie that would involve and your ample financial background as former head of the sentinel event but is in it is signed that hunter and my arcus is damaged goods and they rather go to a more reliable and repeatable cabinet official? >> we each have our rolls to play. fentanyl is really something that's costed national crisis and since 2000, more than 1 million people have lost their lives because of fentanyl and other synthetic opioids. it's a human tragedy and it's a top priority of president biden to try to adjust that and it's and all of government effort. we each have a role to play. homeland security place a roll, dea, law-enforcement treasury's unique capacity with respect to product trafficking has to do with the money channels. jerk trafficking organizations to businesses they need to receive money to invest the proceeds of their illegal activities and to make payments. and we have the ability to shut them off from the dollar-based financial system so that is our specialty and where we come into the picture what we work with other agencies. >> neil: also you have commented on dong chums plan for tariffs he said they would trigger inflation but you said does your administration has not been charging -- targeting china so why criticize him when he wants to do the same thing? >> let me first say i'm governed by the act and do not want to comment about specific proposals of the candidates but as a general policy matter, the tariffs that our administration recently put into place on some chinese goods are carefully targeted. they really only cover presently $18 billion work of trade and there in industries we are consciously promoting through the inflation reduction act that we think are crucial, strategic industries to the united states whereas the proposals i have heard about that precedent trump is proposing would be very broad-based tariffs and possibly very high levels where they would result in very substantial increases in cost of living and also disadvantaged firms that need to import goods in order to produce their own outputs. so i think those would have a significant stack inflationary effect. >> neil: i wonder if you could wait in on joe biden constantly say i don't know if he's ever corrected it that inflation was nine% when he assumed office. they find ways to say it was getting their and that so he is referring to but he keeps saying it was nine% when he took office. you're the top money person in the white house and you know that was not the case. have you ever chargeable homicide and sinister present just so you know, inflation was not that high when you took office. >> well, what the pandemic had hit america and the world with full force at the time president biden assumed office. >> that was why it was so low when he took office. i know the factors behind that what was going on -- was going on but he doesn't say that. >> inflation hit nine% at its peak. >> neil: 60 month after he took office. >> that was due to inflation was lowered before the pandemic that's absolutely true. into the pandemic year or so inflation began to pick up because of supply bottlenecks and later russia's invasion of ukraine spikes in food and oil prices if briefly hit nine% and has come down, two thirds down from that peak and all throughout we have enjoyed strong economic growth and robust recovery from the pandemic spewing so the trend in their differences of opinion and what it refers to when it goes to an% when he took office your right 60 months later it got that however that was under your watch. but having said that secretary he also had a chance to talk about the debt. a number of people fight you had minimized it when you made these remarks. here it is. >> i think that if the debt is stabilized relative to the size of the economy that we are and a reasonable place. the way i look at it is we should be looking at the real interest cost of the debt that's really what the burden is. >> neil: now i think i know what you're getting at that we are in a reasonable place given the rate situation and the size of our economy we can handle that but are you referring to the $3,435,000,000,000,000 in debt is reasonable? >> the ratio of debt to gdp we have large economy and the ratio of debt to gdp is about 100% which is high in historical terms but real interest rates are lower than they have been throughout much of our history. so right now the interest burden of the debt is at what i would call normal historical levels are to remain there over the next decade or more it is necessary to contain deficits and to counter what would otherwise be an increase in the burden of the debt. >> neil: but that's not happening rate? i'm not blooming it on you secretary, it's not happening. the latest estimate is we are going to see the deficit climbed to two children -- to chilean. the deck could be another ten years plus around $50 trillion. i'm wondering what you make of those figures they're pretty staggering. >> i think is necessary to contain deficits and the president's budget is full of proposals to do exactly that. he is proposed three chilean dollars in deficit reduction over the next decade and doing that would be compatible with making investments in the economy that are necessary to support it's growth. but we're going to have to let important pieces of the tax cut and drawback expire. the president wants to protect households making under $400,000 but that was a huge deficit increasing tax cut and it is lowering our tax revenues. and resulting in a huge increase in debt. we are going to have to work together on this -- >> neil: is a republican skitter i'm sorry republicans counter you are spending, your administration spending obviously has a collocated the debt. the three children the president helps to trim off that is off -- three chilean, we are still looking at 350 trillion in debt. it seems like an exploding bond. neither party including the president is serious about addressing it. or do you think we. >> the president has taken action to bring down that deficit he is signed a trillion dollars in deficit reduction already and he has put proposals on the table that i think can improve tax fairness are good for working families that would result in substantial additional deficit reduction and we need congress to take these seriously and to enact them. >> neil: okay so the presidency reelected he wants to remove the trump tax cuts that extend them but wood that apply to those who did benefit who are fortunate thousand dollars and under? >> the president would protect the tax benefits that were received by families making 400,000 less but those with higher incomes, he would not want to see benefit from tcg a extended. >> neil: okay so those tax cuts would remain and all others would go? >> that's right. >> neil: got a pair going spin again a number of other proposals that would promote tax fairness by asking high income individuals and corporations to pay their fair share spewing very quickly if i can buy k. you're very good numbers and you know them inside and out. the administration is pointed consistently to improving economic numbers and indeed they have improved and inflation is come down from its worst levels but when he tells the american people that they don't agree with that, they still don't like what they are seeing at the grocery store, are you troubled by that? some improvements we've seen the numbers show people are not feeling it and they don't like the way the president seems to lecture them is not that bad. what do you say? >> the president has recognized as i have that americans act many american households are really struggling to cover some of the basic necessities of life and that ranges from healthcare to housing, to childcare act education. and these costs have gone up frankly over decades now and there extremely burdensome and the president has put forward in affordability agenda that's heavily focused on bringing down these costs and putting in place policies like controlling the cost of insulin, bringing down prescription, drug prices making sure healthcare is affordable, lowering energy prices for households, you know, programs that will adjust the high cost of living and make childcare more affordable. programs that will help households meet these very burdensome expenses that are really of concern to them. >> neil: alright, treasury secretary of the united states janet yellen, the fact of the matter is all eyes on the federal reserve right now can they get us out of it by cutting rates or at least giving the markets what they've been seeking for a while if thanks are slowing down cut rates already. out know if you actually say that outright but we will check in with him the chicago federal reserve bank president is next you know, when i take the bike out like this, all my stresses just melt away. i hear that. this bad boy can fix anything. yep, tough day at work, nice cruise will sort you right out. when i'm riding, i'm not even thinking about my painful cavity. well, you shouldn't ignore that. and every time i get stressed about having to pay my bills, i just hop on the bike, man. oh, come on, man, you got to pay your bills. you don't have to worry about anything when you're protected by america's number-one motorcycle insurer. well, you definitely do. those things aren't related, so... ah, yee! oh, that is a vibrating pain. with so many choices on booking.com there are so many tina feys i could be. so i hired body doubles. mountain climbing tina at a cabin. or tree climbing tina at a beach resort. nice! booking.com booking.yeah. ♪ greatness... hurts. ♪ but with care... you can keep chasing it. ♪ that's tylenol. that's care without limits. 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>> 's as you know o'neill the second half of last year took quite good and terms of the inflation rate. not about the price level but we had for the second half last year inflation at the two% target. we hit a bump in the road at the beginning of this year in january we got a high inflation read so we have just needed to figure out is that a sign of a reoverheating in the economy or is it just a blip. if we get more inflation readings like the one we just got which we're very strong and very encouraging looking much more like the second half of last year around two% then my view has been weakened at. our federal funds rate if you look at the real federal phones rate its pretty high. you only want to be as restrictive of thought for as long as we have to be. you will have to start thinking about the employment side of the mandate and thinking about deteriorating the real economy. on an optimistic but what we need is to see progress like always so last month. >> it's been in that reference area and suddenly at that range. market rates over which you specifically don't have they have been coming down. i guess it begs the question for you austin you need to be at toto% we are headed there in other words if you are at three or just under three and a rate cut anticipated for this year still hopping? >> that was a sophisticated question. if you imply that you're asking does it need to be that the 12 month looking backward inflation rate has already hit toto% i don't think it is i don't think the fed has a weight of that law for inactive. what we write as a forward looking. if in your question though you are asking light we declare three% to be the target instead of two, no, now you violated the holy covenant. the two% inflation target is a sacred now made by the central bank to the citizens of that country that says no matter what the inflation is when inflation got up to nine% if you look at expectations they basically didn't move. if you ask people what will inflation be five years from now are ten years from now? they did not move off of that target. that is because they put their trust in the fed. you got to finish the job for you can look for a new job. three% is not a new target. >> neil: got it. i didn't know what it meant there but i guess i did. let me ask you donald trump is no fan generally he thanks the federal reserve would do anything in its power to help joe biden get reelected. it's always risky for them to move an election year even though there's plenty of history where it's done exactly that but i'm just wondering whether you feel that political pressure. >> as you know neil when i became a member of the fed it was like joining the knights watch or something, i'm out of the elections business. what drives the fed decision and you'll see the minutes and you will get a word for word transcript that will come out of everywhere said at the meetings is not about politics, not about elections, it's about the dual mandate we are looking at economic conditions and that is 100% and no less than that and if it could be more than 100 semi could would be more. >> neil: i don't tell you on that back your former top obama official. to be fair to you and not even giving and of that. that you do the democrats bidding. that was