1 00:00:02,520 --> 00:00:10,119 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the 2 00:00:10,119 --> 00:00:13,880 Speaker 1: Bloomberg Balance of Power podcast. Catch us live weekdays at 3 00:00:13,920 --> 00:00:17,119 Speaker 1: noon and five pm Eastern on Apple, Cocklay and Android 4 00:00:17,160 --> 00:00:20,520 Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever 5 00:00:20,600 --> 00:00:25,080 Speaker 1: you get your podcasts, or watch us live on YouTube. 6 00:00:25,400 --> 00:00:28,440 Speaker 2: Reaction to today's economic data, the inflation gage that FED 7 00:00:28,480 --> 00:00:30,920 Speaker 2: looks at in terms of the PCE price Index, but 8 00:00:30,960 --> 00:00:33,839 Speaker 2: also of course that GDP report that was even weaker 9 00:00:34,000 --> 00:00:36,480 Speaker 2: than expected thanks to a surge and imports three tens 10 00:00:36,640 --> 00:00:39,040 Speaker 2: percent decline in the first quarter. But to hear President 11 00:00:39,040 --> 00:00:41,720 Speaker 2: Trump describe it, he says, that's just the hangover or 12 00:00:41,800 --> 00:00:45,800 Speaker 2: the overhang from President Joe Biden. He actually said at 13 00:00:45,800 --> 00:00:47,760 Speaker 2: the beginning of his cabinet meeting that's still ongoing at 14 00:00:47,800 --> 00:00:50,720 Speaker 2: the White House, Joe that he deserves a pass when 15 00:00:50,720 --> 00:00:51,120 Speaker 2: it comes to. 16 00:00:51,159 --> 00:00:53,840 Speaker 3: This data overhang technical term for economists. 17 00:00:53,840 --> 00:00:55,720 Speaker 4: I think, right, we will go back into that cabinet 18 00:00:55,720 --> 00:00:58,279 Speaker 4: meeting if the President starts to take some questions. Now, 19 00:00:58,400 --> 00:01:03,960 Speaker 4: enter Peter Navarro, of course economic advisor and tariff evangelists, 20 00:01:04,200 --> 00:01:05,880 Speaker 4: speaking to reporters. 21 00:01:05,319 --> 00:01:07,240 Speaker 3: In the White House driveway this morning. 22 00:01:07,800 --> 00:01:11,600 Speaker 4: This was the best negative print for GDP i've ever seen, 23 00:01:12,200 --> 00:01:14,240 Speaker 4: and that's where we have to start with. Michael McKee, 24 00:01:14,240 --> 00:01:18,160 Speaker 4: Bloomberg International Economics and Policy correspondenties with us in New 25 00:01:18,240 --> 00:01:19,319 Speaker 4: York as we wait to hear. 26 00:01:19,480 --> 00:01:22,920 Speaker 3: From President Trump. Michael, take us to school here. 27 00:01:23,720 --> 00:01:28,319 Speaker 4: Peter Navarro talked about an extraordinary surge of imports the 28 00:01:28,360 --> 00:01:31,000 Speaker 4: world trying to sell to the US. Is that front 29 00:01:31,040 --> 00:01:35,520 Speaker 4: running of imports guarantee a downturn in the second half 30 00:01:35,560 --> 00:01:35,920 Speaker 4: of the year. 31 00:01:35,959 --> 00:01:37,320 Speaker 3: Is there a silver lining here or not? 32 00:01:38,160 --> 00:01:40,120 Speaker 5: I wouldn't say there's a silver lining. We don't have 33 00:01:40,160 --> 00:01:45,959 Speaker 5: any guarantees at all. Matt Miller, our morning anchor here, 34 00:01:45,959 --> 00:01:48,760 Speaker 5: insulted me today by saying I was sounding like Peter 35 00:01:48,840 --> 00:01:52,640 Speaker 5: Navarro because I said, if I were the president, I 36 00:01:52,720 --> 00:01:55,960 Speaker 5: would try to turn the attention away from the negative 37 00:01:56,040 --> 00:02:01,120 Speaker 5: three tenths headline GDP number and turn it towards the 38 00:02:01,680 --> 00:02:06,120 Speaker 5: two point three percent gain in real final private sales 39 00:02:07,120 --> 00:02:10,760 Speaker 5: to domestic buyers, because what you have there is a 40 00:02:10,800 --> 00:02:15,799 Speaker 5: sign of what we were really spending businesses and people consumers, 41 00:02:16,240 --> 00:02:19,760 Speaker 5: and that's not a terrible number, but it too, like 42 00:02:19,800 --> 00:02:22,760 Speaker 5: everything else, was influenced by tariffs. We thought we might 43 00:02:22,800 --> 00:02:25,560 Speaker 5: get through this quarter without a big tariff data impact, 44 00:02:25,720 --> 00:02:30,840 Speaker 5: But this whole GDP number is shot through with tariff implications, 45 00:02:31,160 --> 00:02:34,320 Speaker 5: and so much of it is the effort by companies, 46 00:02:34,400 --> 00:02:37,320 Speaker 5: especially to get ahead of tariffs and order things. 47 00:02:37,360 --> 00:02:37,720 Speaker 6: Early. 48 00:02:37,840 --> 00:02:44,760 Speaker 5: We saw this huge jump in imports that probably I 49 00:02:44,760 --> 00:02:48,160 Speaker 5: think I think they said the biggest ever, and then 50 00:02:48,320 --> 00:02:54,200 Speaker 5: that fed into inventories and the business spending was up 51 00:02:54,320 --> 00:02:56,120 Speaker 5: nine point eight percent, but a lot of that was 52 00:02:56,200 --> 00:02:58,960 Speaker 5: because they were ordering all this stuff. So it's really 53 00:02:59,000 --> 00:03:01,360 Speaker 5: hard to say that this is a great report or 54 00:03:01,360 --> 00:03:06,320 Speaker 5: the best one you've ever seen, But there are political 55 00:03:06,360 --> 00:03:08,120 Speaker 5: ways maybe to spin it a little better. 56 00:03:09,800 --> 00:03:11,920 Speaker 2: Well, and when we're considering the data we still have 57 00:03:12,040 --> 00:03:14,040 Speaker 2: yet to get this week, Mike, with a payrolls report 58 00:03:14,120 --> 00:03:18,480 Speaker 2: coming up on Friday for the month of April, and 59 00:03:18,720 --> 00:03:20,880 Speaker 2: I wonder whether or not we're still counting April as 60 00:03:20,880 --> 00:03:23,160 Speaker 2: being Biden's economy or Trump's economy now that he's in 61 00:03:23,160 --> 00:03:26,120 Speaker 2: his second hundred days in office as we speak. How 62 00:03:26,200 --> 00:03:28,480 Speaker 2: will all of that data collectively factor into a Federal 63 00:03:28,520 --> 00:03:30,280 Speaker 2: Reserve decision that's coming next week. 64 00:03:31,120 --> 00:03:31,600 Speaker 1: It won't. 65 00:03:33,040 --> 00:03:40,320 Speaker 5: There's no today basically because the GDP numbers showed a 66 00:03:40,360 --> 00:03:45,320 Speaker 5: contraction in growth overall, and arise in the quarterly PCE numbers. 67 00:03:46,120 --> 00:03:49,200 Speaker 5: Somebody said this morning, well, this makes the fence job harder, 68 00:03:49,560 --> 00:03:52,160 Speaker 5: and I said, no, it makes it easier because it 69 00:03:52,240 --> 00:03:54,520 Speaker 5: just reinforces the idea that they don't want to do anything. 70 00:03:54,600 --> 00:03:58,280 Speaker 5: Right now, you've got contradictory numbers or contradictory directions on 71 00:03:58,320 --> 00:04:03,640 Speaker 5: the fence two mandates in that GDP report. And we 72 00:04:03,680 --> 00:04:05,720 Speaker 5: don't know what's going to go on from here, because 73 00:04:05,800 --> 00:04:10,040 Speaker 5: remember this quarter ended in March, and in March we 74 00:04:10,160 --> 00:04:14,800 Speaker 5: had the aluminum steel tariffs, but little else other than 75 00:04:14,840 --> 00:04:18,359 Speaker 5: the standard Chinese stuff, And so we don't know what 76 00:04:18,520 --> 00:04:21,040 Speaker 5: the impact is going to be of all the tariffs 77 00:04:21,520 --> 00:04:25,000 Speaker 5: that got put on, got taken off, et cetera during 78 00:04:25,240 --> 00:04:28,960 Speaker 5: the month of April. It certainly has affected consumers thinking, 79 00:04:29,480 --> 00:04:34,760 Speaker 5: but has it affected their actions And that's the question ahead. 80 00:04:35,279 --> 00:04:37,000 Speaker 5: So we're going to have to be watching all this 81 00:04:37,200 --> 00:04:39,200 Speaker 5: data very carefully. In the fence, just going to sit 82 00:04:39,279 --> 00:04:43,240 Speaker 5: back and do that. You mentioned the jobs report. Tomorrow 83 00:04:43,680 --> 00:04:48,000 Speaker 5: we get the ISM Manufacturing report, and while that is 84 00:04:48,120 --> 00:04:50,480 Speaker 5: considered soft data, it could be very important to the 85 00:04:50,520 --> 00:04:54,640 Speaker 5: markets because if we see the same kind of nationwide 86 00:04:55,240 --> 00:04:58,279 Speaker 5: response that we've seen in some of the regional numbers, 87 00:04:58,880 --> 00:05:03,400 Speaker 5: we're going to see a being big drop in manufacturing activity, 88 00:05:03,480 --> 00:05:06,680 Speaker 5: new orders, that sort of thing, and that's also not 89 00:05:06,720 --> 00:05:08,240 Speaker 5: going to play well with Wall Street. 90 00:05:09,960 --> 00:05:13,840 Speaker 2: All right, Bloomberg's Mike McKee, our international economics and Policy correspondent, 91 00:05:13,839 --> 00:05:15,560 Speaker 2: thank you so much breaking down the data we have 92 00:05:15,600 --> 00:05:18,200 Speaker 2: in hand and the data still to come. Thank you 93 00:05:18,880 --> 00:05:20,760 Speaker 2: very much. Indeed, as we're still keeping an eye on 94 00:05:20,800 --> 00:05:22,520 Speaker 2: the Cabinet room at the White House, we're hearing right 95 00:05:22,560 --> 00:05:25,600 Speaker 2: now from the Interior Secretary, Doug Burgham. The only remaining 96 00:05:25,640 --> 00:05:28,400 Speaker 2: cabinet secretary left to speak as they go all the 97 00:05:28,400 --> 00:05:31,159 Speaker 2: way around the table is the Secretary of State Marco Rubio. 98 00:05:31,200 --> 00:05:32,920 Speaker 2: And again when it gets back to President Trump, if 99 00:05:32,920 --> 00:05:35,599 Speaker 2: he decides to take questions from reporters, we will be 100 00:05:35,680 --> 00:05:38,480 Speaker 2: bringing that to you. But first we want to get 101 00:05:38,480 --> 00:05:41,400 Speaker 2: more insight on where the economy is right now and 102 00:05:41,440 --> 00:05:44,479 Speaker 2: whether or not the president deserves credit or blame for that. 103 00:05:44,600 --> 00:05:46,520 Speaker 2: And turn to Douglas houl Deacon. He's president of the 104 00:05:46,560 --> 00:05:50,560 Speaker 2: American Action Forum and former director of the Congressional Budget Office. 105 00:05:50,560 --> 00:05:52,720 Speaker 2: There's a lot of congress wise we want to talk 106 00:05:52,720 --> 00:05:54,599 Speaker 2: to you about, Douglas, But if we could first, begin 107 00:05:55,240 --> 00:05:58,680 Speaker 2: with the deterioration we've seen in GDP. The suggestion from 108 00:05:58,720 --> 00:06:01,599 Speaker 2: the President that it's Joe Biden in whose shoulders the 109 00:06:01,640 --> 00:06:05,000 Speaker 2: blame for this does not excuse work today. And if 110 00:06:05,040 --> 00:06:06,600 Speaker 2: it does, how much longer will it? 111 00:06:08,560 --> 00:06:10,160 Speaker 6: Well, if it works today, it's not going to work 112 00:06:10,680 --> 00:06:13,839 Speaker 6: beginning tomorrow. This is the really the end of the 113 00:06:13,920 --> 00:06:17,640 Speaker 6: period when you could point backwards on the data. You know, 114 00:06:17,880 --> 00:06:20,839 Speaker 6: the president can't be responsible for the January data, but 115 00:06:21,279 --> 00:06:23,400 Speaker 6: the quarter as a whole, it really is in the 116 00:06:23,440 --> 00:06:26,880 Speaker 6: Trump administration. It's a noticeable weakening in the economy. I 117 00:06:26,880 --> 00:06:30,440 Speaker 6: think if you toss out all the trade related factors 118 00:06:30,480 --> 00:06:32,839 Speaker 6: that Mike McKee went through, you've got an underlying growth 119 00:06:32,880 --> 00:06:34,760 Speaker 6: rate of something like one and a half, down from 120 00:06:34,880 --> 00:06:36,840 Speaker 6: two and a half in the fourth quarter two point four. 121 00:06:37,680 --> 00:06:40,560 Speaker 6: That's troubling because it's when we turn the corner into 122 00:06:40,600 --> 00:06:42,760 Speaker 6: April that we see the impact of Liberation Day and 123 00:06:42,839 --> 00:06:46,120 Speaker 6: the array of tariffs that went on and off. We'll 124 00:06:46,120 --> 00:06:48,240 Speaker 6: get our first impact read on that and the official 125 00:06:48,320 --> 00:06:50,599 Speaker 6: date on Friday. But we saw the ADPM Pliny report 126 00:06:50,600 --> 00:06:54,279 Speaker 6: today and that came in very soft, sixty two thousand jobs. 127 00:06:54,279 --> 00:06:59,279 Speaker 6: Some weakness and places you wouldn't expect education and health. 128 00:07:00,080 --> 00:07:01,880 Speaker 6: So I think Friday's Jobs Sport is gonna be very 129 00:07:01,880 --> 00:07:03,080 Speaker 6: important read on the economy. 130 00:07:04,440 --> 00:07:07,279 Speaker 4: It'll tell us a lot more as we hear further 131 00:07:07,360 --> 00:07:10,600 Speaker 4: references to the R word here, and some suggesting we 132 00:07:10,680 --> 00:07:12,120 Speaker 4: may already be in a recession. 133 00:07:12,160 --> 00:07:13,600 Speaker 3: Douglas, it's great to have you back. 134 00:07:13,640 --> 00:07:16,120 Speaker 4: We heard from Peter Navarro this morning, as you might 135 00:07:16,120 --> 00:07:18,760 Speaker 4: have heard me mention this was the best negative print 136 00:07:18,800 --> 00:07:21,720 Speaker 4: for GDP. I've ever seen you feel that way too. 137 00:07:23,120 --> 00:07:24,680 Speaker 6: Well, you know, every now and then I yell at 138 00:07:24,680 --> 00:07:27,600 Speaker 6: the TV. No, I don't feel that way at all. 139 00:07:29,280 --> 00:07:31,280 Speaker 6: You know, this was this was a bad report. I 140 00:07:31,320 --> 00:07:34,600 Speaker 6: don't think there's any way you can sugarcoat it. Among 141 00:07:34,640 --> 00:07:37,000 Speaker 6: the things that were really troubling is the very soft 142 00:07:37,480 --> 00:07:41,600 Speaker 6: household spending, particularly on goods, durable goods. You would have 143 00:07:41,760 --> 00:07:44,000 Speaker 6: thought that people, and you know, we heard a lot 144 00:07:44,000 --> 00:07:46,160 Speaker 6: of anthos about this, you would have thought that peopleould 145 00:07:46,160 --> 00:07:48,240 Speaker 6: be buying ahead of the tariffs to get to get 146 00:07:48,240 --> 00:07:51,440 Speaker 6: those things in their houses before they hit. That's a 147 00:07:51,480 --> 00:07:54,400 Speaker 6: really weak number, and so I think you if you 148 00:07:54,440 --> 00:07:57,280 Speaker 6: look at that and the fact that outside of what's 149 00:07:57,360 --> 00:08:01,920 Speaker 6: clearly a terrorf related surgeon equipment invests. The core of 150 00:08:01,960 --> 00:08:04,360 Speaker 6: the economy really didn't look good in the first quarter, 151 00:08:04,760 --> 00:08:09,480 Speaker 6: and as Mike McKee mentioned, the PC core pricing X 152 00:08:09,600 --> 00:08:12,560 Speaker 6: was up to three point five percent. That's a bad 153 00:08:12,640 --> 00:08:17,840 Speaker 6: combination rising inflation, softening economy. Nobody should think this is 154 00:08:17,880 --> 00:08:18,520 Speaker 6: a good print. 155 00:08:20,280 --> 00:08:23,280 Speaker 2: Well, so then it becomes a question of any kind 156 00:08:23,280 --> 00:08:25,440 Speaker 2: of correction or what could pull us out from the 157 00:08:25,520 --> 00:08:28,640 Speaker 2: downward trajectory. Douglas in the White House would argue, as 158 00:08:28,680 --> 00:08:30,920 Speaker 2: we heard evidenced in the cabinet meeting earlier, that the 159 00:08:30,960 --> 00:08:33,640 Speaker 2: tax cuts coming down the pike, the renewal of the 160 00:08:33,720 --> 00:08:36,440 Speaker 2: twenty seventeen cuts, the other so that Trump would like 161 00:08:36,559 --> 00:08:40,000 Speaker 2: to implement are going to be somewhat of a solve here. 162 00:08:40,040 --> 00:08:42,480 Speaker 2: And I wonder, assuming that the President can get everything 163 00:08:42,520 --> 00:08:45,720 Speaker 2: he wants on tax policy, which still remains the questions 164 00:08:45,760 --> 00:08:48,000 Speaker 2: Congress works on that to what extent you do expect 165 00:08:48,040 --> 00:08:50,440 Speaker 2: it'll be some kind of offsetting factor. 166 00:08:51,880 --> 00:08:54,760 Speaker 6: Well, let's think about what's in the bill. I mean, 167 00:08:54,840 --> 00:08:57,840 Speaker 6: number one, it's an extension of current tax law. I 168 00:08:57,880 --> 00:09:00,360 Speaker 6: don't think anyone expects the sun sets, so we're not 169 00:09:00,400 --> 00:09:02,440 Speaker 6: going to get any juice out of that. That's just 170 00:09:02,880 --> 00:09:06,959 Speaker 6: more of the same. There are the business expenses on 171 00:09:07,240 --> 00:09:10,400 Speaker 6: R and D and equipment investment, interest deductibility. Those are 172 00:09:10,600 --> 00:09:13,560 Speaker 6: modestly positive, but I don't think they're earth shaking. And 173 00:09:13,600 --> 00:09:16,800 Speaker 6: then there are the array of campaign promises no tax 174 00:09:16,840 --> 00:09:20,640 Speaker 6: on tips, no tax on overtime, salt cap, things that 175 00:09:21,160 --> 00:09:25,200 Speaker 6: the president wants to have at least some modest bow 176 00:09:25,280 --> 00:09:29,199 Speaker 6: toward to fulfill his his campaign bonuses. Those aren't earth 177 00:09:29,280 --> 00:09:33,040 Speaker 6: changers either. So from an economic point of view, the 178 00:09:33,080 --> 00:09:35,360 Speaker 6: tax bill is not a big boost to growth. I mean, 179 00:09:35,400 --> 00:09:38,400 Speaker 6: it's something we got in twenty seventeen, it's already in 180 00:09:38,400 --> 00:09:42,200 Speaker 6: the economy. So I think the real issue here is 181 00:09:42,280 --> 00:09:46,000 Speaker 6: does the president come to reality on what he's done 182 00:09:46,080 --> 00:09:50,120 Speaker 6: with the tariff policy. You know, if you think having 183 00:09:50,120 --> 00:09:51,920 Speaker 6: a sunset and a four hundred and twenty five billion 184 00:09:51,960 --> 00:09:54,040 Speaker 6: dollar tax increased next year is a bad idea, that's 185 00:09:54,040 --> 00:09:57,280 Speaker 6: what he did on Liberation Day. And so I think 186 00:09:57,360 --> 00:10:00,200 Speaker 6: some rethinking of the burden that he has placed on 187 00:10:00,240 --> 00:10:03,680 Speaker 6: American businesses consumers is really in order, and it's hitting 188 00:10:03,679 --> 00:10:05,959 Speaker 6: the small business is the hardest. They're the ones who 189 00:10:05,960 --> 00:10:08,599 Speaker 6: are cash constrained. They're the ones who are going to 190 00:10:08,679 --> 00:10:11,360 Speaker 6: pull back on their capex the quickest, and I'm concerned 191 00:10:11,360 --> 00:10:12,280 Speaker 6: about that outlook. 192 00:10:13,320 --> 00:10:13,560 Speaker 3: Yeah. 193 00:10:13,679 --> 00:10:16,520 Speaker 4: Interesting, And we could talk about the baseline until we're 194 00:10:16,520 --> 00:10:17,840 Speaker 4: blue in the face here, Douglas. 195 00:10:17,920 --> 00:10:18,319 Speaker 3: But are we. 196 00:10:18,280 --> 00:10:25,679 Speaker 4: Talking about likely an enormous deficit spend here? We're looking 197 00:10:25,720 --> 00:10:28,240 Speaker 4: at the potential for Medicaid cuts one day, and Donald 198 00:10:28,280 --> 00:10:30,280 Speaker 4: Trump last night says, and by the way, he's been 199 00:10:30,320 --> 00:10:32,440 Speaker 4: consistent on don't touch Medicaid. 200 00:10:32,440 --> 00:10:34,080 Speaker 3: It's been a different conversation on the hill. 201 00:10:34,320 --> 00:10:34,720 Speaker 6: Last night. 202 00:10:34,720 --> 00:10:37,760 Speaker 4: He said, Republicans will increase medicaid spending. 203 00:10:37,760 --> 00:10:38,680 Speaker 3: How are we going to pay for that? 204 00:10:40,559 --> 00:10:42,160 Speaker 6: I don't think there's a plan to pay for it. 205 00:10:42,720 --> 00:10:45,200 Speaker 6: They don't plan to pay for defense spending increases, they 206 00:10:45,240 --> 00:10:50,320 Speaker 6: don't plan to pay for border spending increases. So I 207 00:10:50,320 --> 00:10:53,719 Speaker 6: think the best case scenario could map out would be 208 00:10:53,760 --> 00:10:57,440 Speaker 6: one where we didn't make the current already bad fiscal 209 00:10:57,480 --> 00:10:59,760 Speaker 6: out look worse. But most likely it will be worse, 210 00:11:00,040 --> 00:11:03,000 Speaker 6: maybe not dramatically worse, but certainly worse than they inherited. 211 00:11:03,400 --> 00:11:06,120 Speaker 6: And that means that beginning next year, which is an 212 00:11:06,120 --> 00:11:08,920 Speaker 6: election year, not much will happen. We have to at 213 00:11:08,960 --> 00:11:11,880 Speaker 6: some point get serious about the deficit, and there's no 214 00:11:11,920 --> 00:11:14,360 Speaker 6: seriousness right now. And I don't think anything in this 215 00:11:14,400 --> 00:11:17,240 Speaker 6: bill is going to address it at all. 216 00:11:17,360 --> 00:11:19,400 Speaker 2: Well, and when we consider the deficit, that's why we 217 00:11:19,520 --> 00:11:21,720 Speaker 2: keep having to borrow and borrow and borrow. In the 218 00:11:21,720 --> 00:11:24,079 Speaker 2: Treasury's debt ceiling of how much it can issue goes 219 00:11:24,160 --> 00:11:27,320 Speaker 2: higher and higher. We heard from the Treasury Secretary that 220 00:11:27,360 --> 00:11:30,720 Speaker 2: IRS revenue has been up, Douglas as we await an 221 00:11:30,800 --> 00:11:33,480 Speaker 2: update from the Treasury on when exactly the X state 222 00:11:33,840 --> 00:11:36,280 Speaker 2: will be. When are you anticipating it and how important 223 00:11:36,360 --> 00:11:39,280 Speaker 2: will that be to the movement of legislation in Congress 224 00:11:39,280 --> 00:11:42,480 Speaker 2: if it's earlier in the summer then is previously or 225 00:11:42,640 --> 00:11:43,760 Speaker 2: is currently anticipated. 226 00:11:45,360 --> 00:11:47,959 Speaker 6: We've mentioned this before when I was on and I'm 227 00:11:48,000 --> 00:11:49,840 Speaker 6: quite worried about the fact that they're counting on the 228 00:11:49,840 --> 00:11:53,080 Speaker 6: Reconciliation Bill to raise the debt limit. There's no guarantee 229 00:11:53,160 --> 00:11:56,320 Speaker 6: those timetables line up. It's going to be hard to 230 00:11:56,320 --> 00:11:58,000 Speaker 6: get to yes in the House, hard to get to 231 00:11:58,080 --> 00:11:59,920 Speaker 6: yes in the Senate, and even harder to get the 232 00:12:00,080 --> 00:12:02,360 Speaker 6: two houses to agree on a single piece of legislation 233 00:12:02,760 --> 00:12:04,959 Speaker 6: that might not happen before in August XT date, in 234 00:12:05,000 --> 00:12:06,440 Speaker 6: which case they'll have to break out and do the 235 00:12:06,480 --> 00:12:10,199 Speaker 6: debt limit by itself. We saw the bond market react 236 00:12:10,360 --> 00:12:13,440 Speaker 6: on in the in the week after Liberation Day, we 237 00:12:13,480 --> 00:12:16,200 Speaker 6: saw the long end of the old curve go up. 238 00:12:16,240 --> 00:12:18,760 Speaker 6: And this is not the time to have some sort 239 00:12:18,800 --> 00:12:21,679 Speaker 6: of misstep in raising the detloment. They need to do 240 00:12:21,720 --> 00:12:24,880 Speaker 6: it in a timely fashion, not scare international capital markets, 241 00:12:24,920 --> 00:12:28,640 Speaker 6: secure the funding future or the treasury. And that may 242 00:12:28,679 --> 00:12:30,920 Speaker 6: not be able to happen on the timetable of reconciliation. 243 00:12:31,040 --> 00:12:33,000 Speaker 6: So there should be a plan be out there somewhere. 244 00:12:34,480 --> 00:12:35,720 Speaker 3: Plan be out there. 245 00:12:35,800 --> 00:12:39,200 Speaker 4: You must get that that tinge your antennas go up 246 00:12:39,240 --> 00:12:42,640 Speaker 4: when the X date is approaching. Here, Douglas, if that 247 00:12:42,679 --> 00:12:45,240 Speaker 4: has to be handled separately and Republicans make a deal 248 00:12:45,280 --> 00:12:47,880 Speaker 4: with Democrats putting your politics hat on for a moment, 249 00:12:47,920 --> 00:12:52,640 Speaker 4: does that change the nuances of the reconciliation debate or 250 00:12:52,640 --> 00:12:55,520 Speaker 4: are these going to be two completely separate exercises. One 251 00:12:55,559 --> 00:12:57,200 Speaker 4: will involve Democrats, the other will not. 252 00:12:59,440 --> 00:13:01,079 Speaker 6: If they have to do the debt limit, they will 253 00:13:01,120 --> 00:13:03,360 Speaker 6: need Democrats to note the House in the Senate, and 254 00:13:03,400 --> 00:13:06,240 Speaker 6: that will be expensive. Democrats will want some things that 255 00:13:06,559 --> 00:13:08,760 Speaker 6: Republicans aren't planning to do in reconciliation. That we're going 256 00:13:08,760 --> 00:13:11,719 Speaker 6: to want extension of the health insurance tax credits. They're 257 00:13:11,760 --> 00:13:14,480 Speaker 6: gonna want a bigger child credit, They're gonna want a lot, 258 00:13:15,000 --> 00:13:19,920 Speaker 6: and so what loses is the fiscal outlook. You get 259 00:13:19,920 --> 00:13:22,320 Speaker 6: to raise the debt limit and solve the immediate problem, 260 00:13:22,400 --> 00:13:25,840 Speaker 6: but you make the longer term problem harder. And I 261 00:13:25,840 --> 00:13:28,480 Speaker 6: don't know what that does in reconciliation. It may empower 262 00:13:28,559 --> 00:13:30,480 Speaker 6: them to say, Okay, well we might as well just 263 00:13:31,040 --> 00:13:33,400 Speaker 6: blow it all out this year. We already spend a 264 00:13:33,400 --> 00:13:35,360 Speaker 6: lot of money, which is the wrong reaction to have, 265 00:13:35,440 --> 00:13:38,280 Speaker 6: but we've seen it before, so I think that dynamic 266 00:13:38,360 --> 00:13:40,680 Speaker 6: is actually a very dangerous one from a fiscal policy 267 00:13:40,720 --> 00:13:41,240 Speaker 6: point of view. 268 00:13:43,080 --> 00:13:45,160 Speaker 2: Well, and when we consider the shape of all of 269 00:13:45,200 --> 00:13:49,520 Speaker 2: this policy, one role, realistically, Douglas is the parliamentarian going 270 00:13:49,559 --> 00:13:52,000 Speaker 2: to play? And is there anything you're skeptical about actually 271 00:13:52,080 --> 00:13:55,640 Speaker 2: getting through that review? Knowing that for Republicans to be 272 00:13:55,679 --> 00:13:57,240 Speaker 2: able to pull this off, they have to use this 273 00:13:57,320 --> 00:14:00,920 Speaker 2: reconciliation process. And John Thune wants to stick to, or 274 00:14:00,920 --> 00:14:03,440 Speaker 2: at least was indicating previously, wants to stick to whatever 275 00:14:03,520 --> 00:14:04,480 Speaker 2: the parliamentarian rule. 276 00:14:05,880 --> 00:14:07,840 Speaker 6: Yes, he did say that, and I think that's the 277 00:14:07,920 --> 00:14:12,080 Speaker 6: right call. It really limits the scope. I mean We've 278 00:14:12,080 --> 00:14:15,880 Speaker 6: heard things like putting all of the competition policy in 279 00:14:15,920 --> 00:14:18,080 Speaker 6: the Department of Justice and getting into the FTC. You 280 00:14:18,120 --> 00:14:22,080 Speaker 6: can't do that in reconciliation. There's a lot of regulatory 281 00:14:22,120 --> 00:14:24,080 Speaker 6: reform they'd like to do. It seems unlikely to make 282 00:14:24,120 --> 00:14:28,520 Speaker 6: it through in regulation energy policy. You can do clean 283 00:14:28,680 --> 00:14:30,480 Speaker 6: energy task credits in or out, but you can't really 284 00:14:30,480 --> 00:14:33,120 Speaker 6: do big policy making. So I think it would narrow 285 00:14:33,720 --> 00:14:37,120 Speaker 6: the scope of that one big, beautiful bill considerably, and 286 00:14:37,240 --> 00:14:39,840 Speaker 6: they if they wanted to make those policies real, they're 287 00:14:39,840 --> 00:14:43,040 Speaker 6: gonna have to do some more legislating after the Reconciliation bill. 288 00:14:44,240 --> 00:14:47,800 Speaker 4: Where you on the timelines here, Douglas, the Speaker still 289 00:14:47,800 --> 00:14:50,480 Speaker 4: seems to think Memorial Day is realistic Scott Best and 290 00:14:50,560 --> 00:14:53,560 Speaker 4: is pointing us to the fourth of July are either reasonable. 291 00:14:55,520 --> 00:15:01,160 Speaker 6: I've been thinking Thanksgiving all along, so I'm skeptical. I mean, 292 00:15:01,680 --> 00:15:04,920 Speaker 6: my observation is that the House can be done by 293 00:15:05,240 --> 00:15:07,440 Speaker 6: July fourth, and the Senate can be done by July fourth, 294 00:15:07,680 --> 00:15:09,760 Speaker 6: But I don't think they can agree by July fourth. 295 00:15:09,800 --> 00:15:12,560 Speaker 6: They have yet to settle any differences. As you mentioned 296 00:15:12,600 --> 00:15:15,360 Speaker 6: at the outset, they haven't even figured out which baseline 297 00:15:15,360 --> 00:15:17,440 Speaker 6: to use. We got a current policy baseline in the Senate, 298 00:15:17,760 --> 00:15:20,160 Speaker 6: current law baseline in the House. They were discussing that 299 00:15:20,200 --> 00:15:24,320 Speaker 6: in December. At some point someone has to force decisions 300 00:15:24,360 --> 00:15:26,440 Speaker 6: to be made. That should be the President in my view, 301 00:15:26,920 --> 00:15:29,200 Speaker 6: but they haven't, and so they've let this process drift 302 00:15:29,200 --> 00:15:32,120 Speaker 6: along on two separate tracks for all practical purposes. 303 00:15:34,520 --> 00:15:37,520 Speaker 2: Well, and when we consider a practicality here, Douglas, we 304 00:15:37,560 --> 00:15:40,000 Speaker 2: heard the President last night at his rally in Michigan 305 00:15:40,080 --> 00:15:43,440 Speaker 2: talking about Republicans in Congress actually that may need to 306 00:15:43,480 --> 00:15:45,280 Speaker 2: be voted out because of the way in which they 307 00:15:45,320 --> 00:15:47,960 Speaker 2: sometimes act against the rest of the party. I think 308 00:15:47,960 --> 00:15:50,200 Speaker 2: we know the types he's referring to. I'm not sure 309 00:15:50,240 --> 00:15:53,720 Speaker 2: if Tom Massey and Chip Roy's ears perked up at that, 310 00:15:53,880 --> 00:15:56,040 Speaker 2: but I do wonder what you expect to see from 311 00:15:56,040 --> 00:15:59,200 Speaker 2: some of these hardline conservatives who want deep spending cuts, 312 00:15:59,200 --> 00:16:01,080 Speaker 2: who want to see the offsets and may not be 313 00:16:01,120 --> 00:16:02,880 Speaker 2: able to see them in the kind of size and 314 00:16:02,920 --> 00:16:08,040 Speaker 2: scale realistically that they'd hope. 315 00:16:08,160 --> 00:16:11,720 Speaker 6: You know, a reconciliation bills an act of disappointment for everybody. 316 00:16:11,960 --> 00:16:16,400 Speaker 6: It's not going to have anyone's desired mix. You're always compromising, 317 00:16:16,440 --> 00:16:18,600 Speaker 6: you're always trying to fit it into the box that 318 00:16:18,640 --> 00:16:21,240 Speaker 6: you've created from the budgetary point of view, and the 319 00:16:21,280 --> 00:16:24,480 Speaker 6: reality is failure is not an option. So in the end, 320 00:16:24,720 --> 00:16:27,440 Speaker 6: after all of the posturing, endless speeches which will take 321 00:16:27,520 --> 00:16:30,080 Speaker 6: us to Thanksgiving, my view, they are going to you know, 322 00:16:30,760 --> 00:16:33,040 Speaker 6: lock arms and vote yes. And I think that's the 323 00:16:33,480 --> 00:16:34,800 Speaker 6: outcome that everyone should expect. 324 00:16:36,800 --> 00:16:39,080 Speaker 4: Spending time with Douglas Holtz eke in of the American 325 00:16:39,120 --> 00:16:41,320 Speaker 4: action for him, as we also keep an eye on 326 00:16:41,400 --> 00:16:44,520 Speaker 4: the White House here, President Trump is holding an extended 327 00:16:44,560 --> 00:16:48,480 Speaker 4: cabinet meeting here, opening up his next one hundred days 328 00:16:48,520 --> 00:16:50,480 Speaker 4: at the White House, and they've been going around the room. 329 00:16:50,480 --> 00:16:53,240 Speaker 4: If he takes some questions from reporters, we'll put an 330 00:16:53,280 --> 00:16:57,120 Speaker 4: ear on what he's saying. Douglas, the next one hundred 331 00:16:57,200 --> 00:17:01,080 Speaker 4: days will be occupied more by Trump tax cuts or 332 00:17:01,200 --> 00:17:04,159 Speaker 4: tariff talk, because I do feel like we're getting a 333 00:17:04,160 --> 00:17:06,760 Speaker 4: bit of a transition here in the language that we're 334 00:17:06,760 --> 00:17:07,680 Speaker 4: hearing from the President. 335 00:17:10,520 --> 00:17:12,880 Speaker 6: Well, I think that he's going to try to point 336 00:17:12,960 --> 00:17:17,240 Speaker 6: to the tax bill as the sort of economic rescue 337 00:17:17,280 --> 00:17:20,960 Speaker 6: plan you know, this week report, I just don't think 338 00:17:21,040 --> 00:17:24,720 Speaker 6: the substances as outstanding as the as the rhetoric is 339 00:17:24,760 --> 00:17:27,600 Speaker 6: I mean, to not do it is a disaster. So 340 00:17:27,800 --> 00:17:30,280 Speaker 6: let's be clear. They have to to do the extension, 341 00:17:30,359 --> 00:17:33,040 Speaker 6: but it's not going to do much beyond, as I said, 342 00:17:33,280 --> 00:17:35,520 Speaker 6: current policy. So it's not going to do much for 343 00:17:35,560 --> 00:17:38,439 Speaker 6: the economy. So I think the right thing is to, 344 00:17:39,560 --> 00:17:41,960 Speaker 6: you know, get it done in in as quick a 345 00:17:41,960 --> 00:17:44,119 Speaker 6: fashion as possible, and that would require I think a 346 00:17:44,160 --> 00:17:47,320 Speaker 6: little more leadership out of the White House. Also feature 347 00:17:47,359 --> 00:17:52,800 Speaker 6: the deregulation, which all the pieces are in place to 348 00:17:52,840 --> 00:17:54,639 Speaker 6: do a lot of deregulation, as he did in his 349 00:17:54,720 --> 00:17:57,520 Speaker 6: first time in office. And so I would feature that, 350 00:17:58,000 --> 00:18:03,000 Speaker 6: and I would negotiate, however, many faux trade deals. You 351 00:18:03,040 --> 00:18:05,200 Speaker 6: need to get rid of the recifical teriffts. That's that's 352 00:18:05,280 --> 00:18:08,679 Speaker 6: just too much and dangerous, and then start thinking hard 353 00:18:09,160 --> 00:18:12,240 Speaker 6: about what to do with the ten percent universal tariff. 354 00:18:12,280 --> 00:18:15,119 Speaker 6: That's that to me, is the one he has a 355 00:18:15,119 --> 00:18:18,080 Speaker 6: hard time walking away from. It's his idea. He's not 356 00:18:18,119 --> 00:18:20,400 Speaker 6: going to make. He made a mistake. There's no one 357 00:18:20,440 --> 00:18:24,360 Speaker 6: to negotiate with, and so you know, there may be 358 00:18:24,400 --> 00:18:27,040 Speaker 6: a need for Congress to rescue him from himself and 359 00:18:27,119 --> 00:18:29,359 Speaker 6: have them take away the authority to do that. I 360 00:18:29,440 --> 00:18:33,160 Speaker 6: just think if the economy really weakens in the second quarter, 361 00:18:33,359 --> 00:18:35,040 Speaker 6: you're going to see Congress starting to think real hard 362 00:18:35,080 --> 00:18:35,639 Speaker 6: about doing that. 363 00:18:36,960 --> 00:18:38,840 Speaker 3: All right, Douglas, It's always great to spend some time 364 00:18:38,880 --> 00:18:39,080 Speaker 3: with you. 365 00:18:39,400 --> 00:18:42,400 Speaker 4: Douglas holds Ekean with his view from the American Action Forum. 366 00:18:42,440 --> 00:18:46,159 Speaker 4: He's the former director of the CBO and knows what 367 00:18:46,280 --> 00:18:46,840 Speaker 4: he speaks. 368 00:18:49,119 --> 00:18:52,600 Speaker 1: You're listening to the Bloomberg Balance of Power podcast. Catch 369 00:18:52,680 --> 00:18:56,160 Speaker 1: us live weekdays at noon and five pm Eastern on Apple, 370 00:18:56,200 --> 00:18:59,200 Speaker 1: Cockley and Android Otto with the Bloomberg Business App. You 371 00:18:59,240 --> 00:19:02,720 Speaker 1: can also listen live on Amazon Alexa from our flagship 372 00:19:02,800 --> 00:19:07,400 Speaker 1: New York station Just Say Alexa played Bloomberg eleven thirty. 373 00:19:08,400 --> 00:19:11,080 Speaker 2: We're experiencing a busy day here in Washington, having just 374 00:19:11,119 --> 00:19:13,320 Speaker 2: wrapped a cabinet meeting at the White House that lasted 375 00:19:13,640 --> 00:19:16,640 Speaker 2: roughly two hours, with more expected as President Trump will 376 00:19:16,640 --> 00:19:19,520 Speaker 2: be making remarks on investing in America later this afternoon 377 00:19:19,560 --> 00:19:23,000 Speaker 2: at four pm Eastern time. What we don't know whether 378 00:19:23,080 --> 00:19:25,000 Speaker 2: or not will be happening this afternoon now is a 379 00:19:25,000 --> 00:19:27,520 Speaker 2: signing of the minerals deal that has been in the 380 00:19:27,560 --> 00:19:31,360 Speaker 2: works for months now negotiating between the US and Ukraine. 381 00:19:31,359 --> 00:19:33,840 Speaker 2: We just heard from the Treasury Secretary Scott Besson in 382 00:19:33,840 --> 00:19:36,280 Speaker 2: that cabinet meeting, suggesting that on the US side they'd 383 00:19:36,320 --> 00:19:39,080 Speaker 2: be ready to sign as soon as this afternoon. That 384 00:19:39,160 --> 00:19:42,600 Speaker 2: the US has made no changes, but that Ukraine Joe 385 00:19:42,880 --> 00:19:45,560 Speaker 2: decided to make some last minute tweaks as of less. 386 00:19:45,680 --> 00:19:47,280 Speaker 3: Yeah, this is feeling a bit familiar. 387 00:19:47,359 --> 00:19:49,800 Speaker 4: We all remember when Scott Besson traveled all the way 388 00:19:49,800 --> 00:19:52,640 Speaker 4: to Kiev to sign this same deal and he came 389 00:19:52,680 --> 00:19:55,640 Speaker 4: home empty handed. That set us up for the meltdown 390 00:19:55,680 --> 00:19:57,800 Speaker 4: in the Oval Office and a meeting with President Zelenski 391 00:19:57,840 --> 00:19:59,119 Speaker 4: that did not go well. So we thought we were 392 00:19:59,119 --> 00:20:01,080 Speaker 4: coming back around on this, and it may not be 393 00:20:01,119 --> 00:20:03,800 Speaker 4: about to happen. Dan Flatley is with us right now 394 00:20:04,240 --> 00:20:07,600 Speaker 4: at the table, Bloomberg's Treasury reporter who spent a lot 395 00:20:07,640 --> 00:20:09,320 Speaker 4: of time in the national security space. 396 00:20:10,000 --> 00:20:11,440 Speaker 3: Dan, and we saw the convergence of. 397 00:20:11,400 --> 00:20:14,640 Speaker 4: These of these two in the cabinet meeting with regard 398 00:20:15,080 --> 00:20:18,639 Speaker 4: to the minerals deal, which was said to potentially unlock 399 00:20:18,720 --> 00:20:21,760 Speaker 4: a piece deal in Ukraine. 400 00:20:21,800 --> 00:20:23,959 Speaker 3: This is feeling familiar. Will this ever be signed? 401 00:20:24,560 --> 00:20:26,680 Speaker 7: Yeah, Joe, I mean it's a great question, and what 402 00:20:26,720 --> 00:20:29,000 Speaker 7: a saga this has been. But you know, I think, 403 00:20:29,119 --> 00:20:33,080 Speaker 7: just to take one step back, this deal is very 404 00:20:33,119 --> 00:20:38,639 Speaker 7: important for Ukraine. This basically, I mean the deal itself. 405 00:20:39,400 --> 00:20:41,600 Speaker 7: We can talk about the details, we're still getting some 406 00:20:41,760 --> 00:20:45,679 Speaker 7: reporting on that, but essentially what this is is a 407 00:20:45,720 --> 00:20:48,960 Speaker 7: guarantee as far as the Trump administration is concerned that 408 00:20:49,000 --> 00:20:53,280 Speaker 7: the US will continue to remain involved in Ukraine, will 409 00:20:53,320 --> 00:20:58,119 Speaker 7: help Ukraine achieve some sort of equitable peace deal with Russia, 410 00:20:58,400 --> 00:21:00,960 Speaker 7: if that's even possible at this point point. But this 411 00:21:01,400 --> 00:21:03,919 Speaker 7: deal is key and the stakes are very high for 412 00:21:03,960 --> 00:21:07,320 Speaker 7: Treasury Secretary Scott Bessett with this deal, because you mentioned 413 00:21:07,359 --> 00:21:09,560 Speaker 7: his trip to Kiev earlier this year. That was a 414 00:21:09,600 --> 00:21:13,639 Speaker 7: pivotal moment for him as the Treasury secretary. It was 415 00:21:13,720 --> 00:21:15,919 Speaker 7: something that was a little bit different outside of the 416 00:21:15,960 --> 00:21:19,440 Speaker 7: normal role of a Treasury secretary trying to execute this 417 00:21:20,160 --> 00:21:24,600 Speaker 7: deal that has huge national security implications, and it didn't happen. 418 00:21:24,920 --> 00:21:29,520 Speaker 7: It didn't happen at that table with Zelensky, and so 419 00:21:29,560 --> 00:21:33,399 Speaker 7: here we are today and it has to happen. It 420 00:21:33,440 --> 00:21:36,920 Speaker 7: has to happen. Both parties are interested in this deal happening. 421 00:21:37,080 --> 00:21:39,560 Speaker 7: The Ukrainians are interested in it for all the reasons 422 00:21:39,560 --> 00:21:42,479 Speaker 7: we just talked about. The US is interested in it, 423 00:21:42,560 --> 00:21:45,400 Speaker 7: and Treasury Secretary Scott Bessett is interested in it because 424 00:21:45,400 --> 00:21:48,000 Speaker 7: he's put a lot on the line for this personally. 425 00:21:48,440 --> 00:21:51,239 Speaker 7: So I think that they will get to get to 426 00:21:51,280 --> 00:21:53,920 Speaker 7: sign it at the end of the day. But from 427 00:21:53,920 --> 00:21:56,840 Speaker 7: all we understand from our reporting, it's looking a little 428 00:21:56,880 --> 00:21:57,760 Speaker 7: dicey at the moment. 429 00:21:58,000 --> 00:22:00,600 Speaker 2: Well, and if Ukraine is interested, if this is actually 430 00:22:00,680 --> 00:22:03,480 Speaker 2: vital to their interests to sign this deal, they don't 431 00:22:03,480 --> 00:22:06,240 Speaker 2: seem overly eagle eager to rush to the table to 432 00:22:06,320 --> 00:22:09,280 Speaker 2: actually use the pen Dan, what is the hold up 433 00:22:09,320 --> 00:22:11,320 Speaker 2: for Ukraine? Do we have an understanding of what changes 434 00:22:11,320 --> 00:22:12,480 Speaker 2: it as they're seeking. 435 00:22:12,560 --> 00:22:14,720 Speaker 7: Yeah, I mean it's a great question. I think there's 436 00:22:14,720 --> 00:22:16,520 Speaker 7: a couple of things going on here. Part of it 437 00:22:16,560 --> 00:22:19,639 Speaker 7: is is a clash of negotiating styles. You know, the 438 00:22:19,800 --> 00:22:22,720 Speaker 7: US has really come on strong with this deal, and 439 00:22:23,040 --> 00:22:25,399 Speaker 7: part of that is political and it has to do with, 440 00:22:26,560 --> 00:22:29,639 Speaker 7: you know, the support for Ukraine among Trump's base and 441 00:22:30,080 --> 00:22:35,199 Speaker 7: how all that's playing out. And the Ukrainians have a 442 00:22:35,320 --> 00:22:38,480 Speaker 7: vested interest in this. The stakes are very high for them, 443 00:22:38,640 --> 00:22:42,560 Speaker 7: but maybe higher than for anyone else really in getting 444 00:22:42,560 --> 00:22:45,680 Speaker 7: this done, and so they're pushing they want. 445 00:22:45,520 --> 00:22:46,120 Speaker 3: To get this done. 446 00:22:46,200 --> 00:22:48,600 Speaker 7: But I think they have some concerns about some of 447 00:22:48,600 --> 00:22:52,640 Speaker 7: the technical details, and this is a big deal for them, 448 00:22:52,640 --> 00:22:56,520 Speaker 7: and it's something that Zelenski and his advisors have to 449 00:22:56,560 --> 00:22:59,159 Speaker 7: sell back home. So they don't want to appear to 450 00:22:59,200 --> 00:23:05,160 Speaker 7: be giving away their own natural resources, their own sovereign wealth, 451 00:23:05,280 --> 00:23:09,320 Speaker 7: their own prerogatives to a foreign country, no matter how 452 00:23:09,359 --> 00:23:11,399 Speaker 7: great an ally it might be, or how powerful it 453 00:23:11,440 --> 00:23:14,640 Speaker 7: is or whatever. So I think that there's a little 454 00:23:14,640 --> 00:23:17,960 Speaker 7: bit of his negotiating styles. Some of it is just 455 00:23:18,040 --> 00:23:20,240 Speaker 7: the stakes are so high. But I think the fact 456 00:23:20,280 --> 00:23:23,080 Speaker 7: that we're here today talking about this is I mean, 457 00:23:23,119 --> 00:23:25,000 Speaker 7: I don't think anybody would have predicted we'd be we 458 00:23:25,040 --> 00:23:27,239 Speaker 7: would be here a month and a half ago, or 459 00:23:27,280 --> 00:23:29,160 Speaker 7: whenever the OVA Office blow up was. 460 00:23:29,200 --> 00:23:31,800 Speaker 2: So well, that's a very good point. That also speaks 461 00:23:31,800 --> 00:23:34,760 Speaker 2: to this idea that even if getting this agreement done 462 00:23:35,200 --> 00:23:37,520 Speaker 2: is hard, there's also the wider peace agreement the US 463 00:23:37,600 --> 00:23:40,600 Speaker 2: still wants to see between between Russia and Ukraine, and 464 00:23:40,640 --> 00:23:42,480 Speaker 2: that is a whole other can of worms we'll have 465 00:23:42,480 --> 00:23:44,359 Speaker 2: to get into another time. Dan Flatley, who covers the 466 00:23:44,359 --> 00:23:47,560 Speaker 2: Treasury for US here at Bloomberg, thank you so much 467 00:23:47,560 --> 00:23:49,320 Speaker 2: for your reporting. As we mentioned, we heard from the 468 00:23:49,359 --> 00:23:52,000 Speaker 2: Treasury Secretary in the cabinet meeting earlier today, but heard 469 00:23:52,080 --> 00:23:55,280 Speaker 2: much more from the President himself, Donald Trump, especially in 470 00:23:55,320 --> 00:23:58,159 Speaker 2: the aftermath of today's week GDP reading a decline of 471 00:23:58,200 --> 00:24:00,280 Speaker 2: three tenths of one percent, thanks in part to a 472 00:24:00,359 --> 00:24:03,680 Speaker 2: surgeon imports as companies try to front run the tariffs, 473 00:24:03,680 --> 00:24:06,760 Speaker 2: and he says it's not him to blame, it's his predecessor, 474 00:24:06,840 --> 00:24:07,280 Speaker 2: Joe Biden. 475 00:24:07,359 --> 00:24:09,880 Speaker 3: That's right, Biden data. Biden markets as well. 476 00:24:09,880 --> 00:24:12,200 Speaker 4: And the President was actually asked about the stock market today, 477 00:24:12,240 --> 00:24:15,080 Speaker 4: and he's been kind of changing his thought on this, 478 00:24:15,200 --> 00:24:17,879 Speaker 4: suggesting he's more concerned about Main Street than Wall Street. 479 00:24:17,920 --> 00:24:21,359 Speaker 4: It's a very different look than we had in the 480 00:24:21,400 --> 00:24:25,679 Speaker 4: first Trump administration. He was also asked about empty shelves. Kaylee, 481 00:24:26,000 --> 00:24:28,520 Speaker 4: really interesting moment. You're going to hear this played back. 482 00:24:28,560 --> 00:24:31,080 Speaker 4: This is the way this goes. And that's sometimes why 483 00:24:31,119 --> 00:24:34,000 Speaker 4: a two hour, free wheeling, ad libed interaction with the 484 00:24:34,040 --> 00:24:37,399 Speaker 4: media can come with some risk. He said, maybe the 485 00:24:37,520 --> 00:24:41,080 Speaker 4: children will have twenty dolls instead of thirty dolls. They 486 00:24:41,080 --> 00:24:43,760 Speaker 4: have ships loaded up with stuff, much of it. We 487 00:24:43,880 --> 00:24:45,920 Speaker 4: don't need put a pin in that for now. 488 00:24:46,440 --> 00:24:49,040 Speaker 2: Yeah, as we consider what other shelves other than toys 489 00:24:49,600 --> 00:24:52,960 Speaker 2: may find themselves emptied if indeed we still have effectively 490 00:24:53,000 --> 00:24:55,760 Speaker 2: a cutoff if trade between the US and China. So 491 00:24:55,760 --> 00:24:57,000 Speaker 2: we want to get into all of this now and 492 00:24:57,040 --> 00:24:59,520 Speaker 2: turn to Betsy Stevenson. She's the professor of Public Policy 493 00:24:59,520 --> 00:25:01,880 Speaker 2: and Economic at the University of Michigan, also a former 494 00:25:01,920 --> 00:25:05,600 Speaker 2: member of the Council of Economic Advisors during the Obama administration, 495 00:25:05,680 --> 00:25:08,760 Speaker 2: former chief economist at the Department of Labor as well. 496 00:25:08,840 --> 00:25:11,000 Speaker 2: BET's see if we could begin first with the president's 497 00:25:11,080 --> 00:25:14,240 Speaker 2: characterization today of this data, which is indeed backward looking 498 00:25:14,560 --> 00:25:17,360 Speaker 2: at the first quarter is more reflective of Joe Biden's 499 00:25:17,359 --> 00:25:20,040 Speaker 2: presidency than his, even suggesting that the next quarter may 500 00:25:20,080 --> 00:25:23,280 Speaker 2: be more reflective of Biden than Trump as well. Is 501 00:25:23,320 --> 00:25:26,600 Speaker 2: there any way in which that is factually accurate? 502 00:25:28,520 --> 00:25:34,760 Speaker 8: No, I mean that, Uh, what's ridiculous is President Trump 503 00:25:34,800 --> 00:25:39,320 Speaker 8: tried to take credit for the economy around the time 504 00:25:39,359 --> 00:25:41,800 Speaker 8: he was elected that the economy was improving because people 505 00:25:41,840 --> 00:25:45,119 Speaker 8: are anticipating him, and now he's saying that now that 506 00:25:45,160 --> 00:25:48,840 Speaker 8: he's actually been president, that it's Biden. Like, we all 507 00:25:49,560 --> 00:25:52,880 Speaker 8: know what's going on in this data. There's just been 508 00:25:53,040 --> 00:25:55,320 Speaker 8: a lot of people are just not sure what President 509 00:25:55,320 --> 00:25:59,120 Speaker 8: Trump's going to do. So let's put aside whether tariffs 510 00:25:59,119 --> 00:26:02,399 Speaker 8: are a good idea or a bad idea. Nobody actually 511 00:26:02,400 --> 00:26:05,359 Speaker 8: even really knows what's going to happen. And that is 512 00:26:05,560 --> 00:26:08,880 Speaker 8: meant that, you know, there's just been a huge run 513 00:26:09,000 --> 00:26:13,320 Speaker 8: up in inventories, because if you're not sure what's going 514 00:26:13,359 --> 00:26:16,800 Speaker 8: to happen, one way to get around that is to 515 00:26:17,040 --> 00:26:20,600 Speaker 8: just make your purchases now, stock up inventories, and then 516 00:26:20,600 --> 00:26:24,600 Speaker 8: it leads you you can give yourself some certainty about 517 00:26:24,640 --> 00:26:26,760 Speaker 8: what your business will look like for the next three 518 00:26:26,840 --> 00:26:30,040 Speaker 8: or four months. And so we saw a lot of 519 00:26:30,080 --> 00:26:33,640 Speaker 8: businesses really go down that path in this quarter, which 520 00:26:33,640 --> 00:26:37,879 Speaker 8: actually makes this data particularly hard to interpret in terms 521 00:26:37,920 --> 00:26:40,800 Speaker 8: of where we'll be next quarter. But one thing we 522 00:26:40,800 --> 00:26:43,640 Speaker 8: can know for sure is this is President Trump's economy. 523 00:26:45,440 --> 00:26:47,919 Speaker 4: Well, you probably heard us discussing Betsy, and maybe you 524 00:26:47,960 --> 00:26:52,320 Speaker 4: heard Peter Navarro or President Trump talking about the benefits 525 00:26:52,520 --> 00:26:57,000 Speaker 4: of an import surge. Peter Navarro called it extraordinary and 526 00:26:57,040 --> 00:27:00,159 Speaker 4: said this was the best negative print for GDP I've 527 00:27:00,200 --> 00:27:02,960 Speaker 4: ever seen. What will be the fallout of that extraordinary 528 00:27:03,080 --> 00:27:04,560 Speaker 4: import surge later in the year. 529 00:27:07,840 --> 00:27:11,359 Speaker 8: You know, I don't actually know what they mean by that. 530 00:27:12,560 --> 00:27:14,840 Speaker 8: It seems kind of ironic to me because I thought 531 00:27:14,840 --> 00:27:18,200 Speaker 8: the whole idea was to get us to reduce our imports, 532 00:27:19,359 --> 00:27:22,359 Speaker 8: and there's so much anxiety that we might have to 533 00:27:22,400 --> 00:27:25,920 Speaker 8: reduce imports that it caused us all to increase our imports. 534 00:27:26,760 --> 00:27:29,760 Speaker 8: So it will be pretty funny if at the end 535 00:27:30,200 --> 00:27:33,160 Speaker 8: of twenty twenty five it turns out We've imported more 536 00:27:33,200 --> 00:27:37,480 Speaker 8: things under President Trump's first year than we had under 537 00:27:39,359 --> 00:27:43,000 Speaker 8: under President Biden's last year. But aside from that, I 538 00:27:43,040 --> 00:27:44,919 Speaker 8: think there's a lot of confusion when people look at 539 00:27:44,960 --> 00:27:48,360 Speaker 8: the GDP numbers because they say, well, oh, the problem 540 00:27:48,560 --> 00:27:52,560 Speaker 8: it's negative because of you know, we subtract the imports. 541 00:27:52,840 --> 00:27:56,120 Speaker 8: But remember we're also adding the imports. So the reason 542 00:27:56,160 --> 00:27:58,760 Speaker 8: we're subtracting them is we add up all the money 543 00:27:58,800 --> 00:28:02,040 Speaker 8: that companies spend that includes the money they're spending on imports. 544 00:28:02,320 --> 00:28:04,720 Speaker 8: But because we're not making those in the United States, 545 00:28:05,160 --> 00:28:08,359 Speaker 8: this is a fair complaint that I think President Trump 546 00:28:08,400 --> 00:28:10,800 Speaker 8: would agree with. We don't want to count those as 547 00:28:10,840 --> 00:28:12,840 Speaker 8: part of our economy because we only want to count 548 00:28:12,840 --> 00:28:16,080 Speaker 8: the stuff that we're making. We're producing our goods and services, 549 00:28:16,440 --> 00:28:21,440 Speaker 8: so we subtract from their spending what they spent on imports. Now, 550 00:28:21,680 --> 00:28:24,040 Speaker 8: if you want to get a little wonky, it's quite 551 00:28:24,160 --> 00:28:27,399 Speaker 8: possible that there's some measurement issues, which means we're better 552 00:28:27,800 --> 00:28:31,719 Speaker 8: at counting the imports that we're subtracting off than counting 553 00:28:31,800 --> 00:28:33,919 Speaker 8: up all the purchases, And so when we get a 554 00:28:33,960 --> 00:28:37,119 Speaker 8: revision it might not be quite as negative because we 555 00:28:37,200 --> 00:28:41,160 Speaker 8: might be adding more in on the purchase's side then 556 00:28:41,200 --> 00:28:44,040 Speaker 8: we're subtracting off on the import side. But I think 557 00:28:44,080 --> 00:28:47,520 Speaker 8: some of this is also what companies are doing, is 558 00:28:47,560 --> 00:28:52,400 Speaker 8: they're prioritizing their spending on imports, which means not spending 559 00:28:52,680 --> 00:28:57,600 Speaker 8: on stuff we're producing domestically. So there is a trade off. 560 00:28:57,920 --> 00:29:00,360 Speaker 8: You know, every dollar you spend on something a dollar 561 00:29:00,400 --> 00:29:03,240 Speaker 8: you're not spending on something else. And if you're terrified 562 00:29:03,240 --> 00:29:05,160 Speaker 8: that imports aren't going to be available to you, so 563 00:29:05,200 --> 00:29:08,000 Speaker 8: you're spending all your money on that, what aren't you buying? 564 00:29:09,960 --> 00:29:14,320 Speaker 2: Well, yeah, would that include say, adding salaries hiring people, Betsy, 565 00:29:14,360 --> 00:29:16,360 Speaker 2: how quickly could this bleed into the labor market as 566 00:29:16,360 --> 00:29:18,040 Speaker 2: we look ahead to a job support on Friday? 567 00:29:19,160 --> 00:29:22,760 Speaker 8: Absolutely? Right. If you're out there buying equipment because you're thinking, 568 00:29:22,800 --> 00:29:25,280 Speaker 8: if I don't get ahead on this equipment that's going 569 00:29:25,320 --> 00:29:28,200 Speaker 8: to be a priority to you over say replacing a 570 00:29:28,240 --> 00:29:32,000 Speaker 8: worker who's left or making sure you keep a worker 571 00:29:32,040 --> 00:29:37,360 Speaker 8: by giving them a raise. So you can absolutely think 572 00:29:37,400 --> 00:29:41,960 Speaker 8: that this has a direct impacts on the domestic workforce. 573 00:29:42,400 --> 00:29:45,080 Speaker 8: The thing we don't know is we don't know what's 574 00:29:45,120 --> 00:29:47,840 Speaker 8: going to happen with with tariffs, So we don't know 575 00:29:47,880 --> 00:29:50,120 Speaker 8: what these businesses are going to do in the second quarter. 576 00:29:50,480 --> 00:29:52,880 Speaker 8: Are they going to keep trying you know, they're sort 577 00:29:52,880 --> 00:29:55,240 Speaker 8: of I think we're missed that we're done trying to 578 00:29:55,280 --> 00:30:00,240 Speaker 8: accumulate imports, you know, internationally now right, So now we 579 00:30:00,240 --> 00:30:03,240 Speaker 8: got to live off our inventories. How quickly do we 580 00:30:03,280 --> 00:30:05,600 Speaker 8: spend them down? When do they get to go back 581 00:30:05,600 --> 00:30:08,880 Speaker 8: to importing things at an affordable price? And that'll affect 582 00:30:08,920 --> 00:30:11,640 Speaker 8: what ends up happening to workers and whether they need 583 00:30:11,640 --> 00:30:14,120 Speaker 8: to let people go. I think a lot of companies 584 00:30:14,120 --> 00:30:16,520 Speaker 8: struggle to hire coming out of the pandemic, So we're 585 00:30:16,560 --> 00:30:20,600 Speaker 8: going to see companies being quite slow to let people go, 586 00:30:21,000 --> 00:30:24,080 Speaker 8: but they will also be slow to fill an empty slot. 587 00:30:24,200 --> 00:30:24,920 Speaker 6: So that's the. 588 00:30:25,120 --> 00:30:28,080 Speaker 8: Path we're currently on, and the question will be whether 589 00:30:28,120 --> 00:30:29,920 Speaker 8: they get desperate en off that they have to let 590 00:30:30,000 --> 00:30:32,600 Speaker 8: people go. I'm going to tell you that the warning 591 00:30:33,360 --> 00:30:35,240 Speaker 8: that President Trump is giving us that we're going to 592 00:30:35,320 --> 00:30:38,480 Speaker 8: have fewer stuff on our shelves, that's not a good one. 593 00:30:40,600 --> 00:30:42,160 Speaker 4: It's not a good one, but it is one that 594 00:30:42,200 --> 00:30:44,120 Speaker 4: we're going to remember. Betsy, it's great to have you back. 595 00:30:44,160 --> 00:30:47,360 Speaker 4: Betsy Stevenson, Professor of public policy and economics at the 596 00:30:47,480 --> 00:30:55,680 Speaker 4: University of Michigan. Thanks for listening to the Balance of 597 00:30:55,720 --> 00:30:59,240 Speaker 4: Power podcast. Make sure to subscribe if you haven't already, 598 00:30:59,280 --> 00:31:02,080 Speaker 4: Apple on a Fire, or wherever you get your podcasts, 599 00:31:02,520 --> 00:31:04,959 Speaker 4: and you can find us live every weekday from Washington, 600 00:31:05,040 --> 00:31:08,160 Speaker 4: DC at noontime Eastern at Bloomberg dot com.