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Speaker 1: Member s I p C. Welcome to the Bloomberg Surveillance Podcast.
Speaker 1: I'm Tom Keene with David Gura. Daily we bring you
Speaker 1: insight from the best in economics, finance, investment and international relations.
Speaker 1: Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot Com, and
Speaker 1: of course on the Bloomberg Carl Weinberg joins us now
Speaker 1: chief economist at High Frequency Economics, and Carl, I read
Speaker 1: your notes regularly and with great interest, and you wrote
Speaker 1: in a recent one here every country in this edition
Speaker 1: of of Your Globe a lout look boils down to
Speaker 1: a discussion of yield curve prospects. This is the overarching
Speaker 1: theme here. Absolutely absolutely. I mean, we have quantitative easing
Speaker 1: issues in Europe. The ECB is out of sovereign bonds
Speaker 1: to buy. That's a problem. Uh. Negative bond yields are
Speaker 1: unnatural and without the support of ECB buying are I
Speaker 1: don't think they can persist. In the UK, we have
Speaker 1: everywhere we have rising inflation concerns, although they really aren't.
Speaker 1: Inflation figures out there at the core that suggested an
Speaker 1: inflation problem, the markets perceiving it as such. And of
Speaker 1: course we have the FED on the move, and the
Speaker 1: correlations between long term bond yields abroad and what happens
Speaker 1: to US treasury markets is close to a pent so
Speaker 1: steepening yeld curbs everywhere out there, and the world doesn't
Speaker 1: need this right now except maybe here in the United States.
Speaker 1: We'll talk about the FED here in just a minute.
Speaker 1: I want to ask you what you heard from Mario
Speaker 1: Draggy last week. I remember a few meetings back, the
Speaker 1: conversation really centered on scarcity, what what the e c
Speaker 1: B was going to buy? How is that conversation shifted?
Speaker 1: Mario is so slippery in his In his comments this week,
Speaker 1: he talked about, you know, continued, continued bond purchases, you know, forever,
Speaker 1: and that's certainly possible, but he nowhere in his statement
Speaker 1: that he used the word sovereign bond or public sector
Speaker 1: purchase program. And the reality is they're out of public
Speaker 1: sector bonds to buy. They're now buying at the short end.
Speaker 1: In Germany because there aren't enough long bonds for them
Speaker 1: to buy as they step away, as they taper their
Speaker 1: public sector purchasing program. As far as I'm concerned, quantitative
Speaker 1: easing is dead alright because Bind Corporates is not QUI.
Speaker 1: It changes the price of a single security, but not
Speaker 1: the whole YO curve. Good morning everyone, Carl Weinberg with me,
Speaker 1: and there David gur in Washington. What a day David
Speaker 1: to be in Washington. Had no idea the scoring was
Speaker 1: keeping creeping up on us. Carl, I I look at
Speaker 1: all that's going on. There still has to be a
Speaker 1: measurement of g d P. What is your colleague, Jim
Speaker 1: say about the run rate of US g d P
Speaker 1: as we go to this big Fed decision and then
Speaker 1: on from there. You know, Tom, we have the very
Speaker 1: very near term, the current quarter which is certainly shaping
Speaker 1: up to be disappointing, but we have a medium term
Speaker 1: growth running at about two and a quarter up to
Speaker 1: two and three percent according to Jim Mosullivan's forecast. High Frequency,
Speaker 1: you know, is looking at what the Trump administration has promised,
Speaker 1: and we're a little bit more skeptical than the market
Speaker 1: that we're going to get everything that has been in
Speaker 1: the president's rhetoric. So Jim's added a half a percent
Speaker 1: to GDP growth in the second half of this year
Speaker 1: to account for something getting in there in terms of
Speaker 1: infrastructure and so forth. But so far, and let me
Speaker 1: say that this way, probably like many members of the
Speaker 1: f O m C, there's no hard basis to change
Speaker 1: the forecast for GDP based on what we've seen out
Speaker 1: of the Trump administration so far. We'll see if we
Speaker 1: get all the principles in place here. Because of the
Speaker 1: snow for that for that two day meeting, maybe it'll
Speaker 1: have to be done telephonically. But Carl, let me ask
Speaker 1: you about something I read in the Times this morning,
Speaker 1: Benjum and apple Bomb writing about the potential here for
Speaker 1: a collision between the FED share and the President when
Speaker 1: it comes to UH growth, when it comes to what
Speaker 1: the FED is intending to do. What are we going
Speaker 1: to see an impact if indeed they are on this
Speaker 1: slow motion track for collision. Yeah, I think you've You've
Speaker 1: really hit the nail on the head, David. We're looking
Speaker 1: at a FED that has its mandate, and its mandate
Speaker 1: is full employment and price stability, and as certainly Stanley Fisher,
Speaker 1: FED vice chairman has said numerous times where we are
Speaker 1: right now, we're just about at that point at nearly
Speaker 1: four and a half percent unemployment and two and a
Speaker 1: half percent price increases, that we've achieved our objectives. The
Speaker 1: Fed has achieved its objectives. The President wants to see
Speaker 1: more growth, wants to see lower unemployment. And that's that's
Speaker 1: a conflict. And I think that it's going to be
Speaker 1: certainly one of those you know, foot on the accelerator,
Speaker 1: foot on the brake kind of challenges. To see where
Speaker 1: we were when they raise rates Wednesday. Nothing happens, right,
Speaker 1: it's when when when do you presume it begins to
Speaker 1: actually have an effect where higher FED funds yelling rates
Speaker 1: dampen the growth of the growth if you will. Yeah, well,
Speaker 1: monetary policy takes a while to work. We know that.
Speaker 1: And just in the traditional textbook sort of thing, you know,
Speaker 1: monetary policy could take a year or eighteen months to
Speaker 1: affect the economy, but it will affect the financial market sooner.
Speaker 1: And this is you know what we're all sitting on
Speaker 1: the edges of our seat waiting to see. You know
Speaker 1: that the stock market and could look at this, and
Speaker 1: the bond market could look at this and say, gee,
Speaker 1: this is really bad. The feed is hiking rates. You
Speaker 1: know that's going to cause a recession. Or they could
Speaker 1: look at them at this and say, well, the FET
Speaker 1: is hiking rates because the economy is good and we
Speaker 1: should be stronger. And I have no way of predicting
Speaker 1: how the market's going to go for this, but financial
Speaker 1: conditions are where you'll see the first impact of FED policy,
Speaker 1: not necessarily in real investment activity. Any chance they go
Speaker 1: by more than a quarter point here, well, it's not
Speaker 1: in our thinking, and we haven't gotten anything to suggest
Speaker 1: that they're talking in those terms. But you know, anything
Speaker 1: is possible. We're an unexplored territory. At the unemployment rate
Speaker 1: where it is right now, pushing rapidly towards that four
Speaker 1: and a half percent floor that everybody thinks is where
Speaker 1: the bottom has to be, and showing no sign of stopping.
Speaker 1: Look at the strong labor market. Anything is possible. But
Speaker 1: it's not an hour thinking. Help us get out front
Speaker 1: of the event of the week, which is a scoring
Speaker 1: if you will, the Trump Care whatever you wanna call it,
Speaker 1: and also the event of the week, which is David
Speaker 1: Gurrow talking with Alice Rivlin, how does it. How does
Speaker 1: Carl Weinberg use the Congressional Budget Office day to day, Well,
Speaker 1: not very much in this particular instance. You know, they're
Speaker 1: going to be one of many pieces of input into
Speaker 1: a legislative process that only has part of its feet
Speaker 1: on the floor with economics on the same floor as
Speaker 1: economic fundamentals. So at the end of the day, what
Speaker 1: the CBO comes up with is going to be political.
Speaker 1: They are going to be other points of view. Um So,
Speaker 1: I think it's just one more piece into the conversation
Speaker 1: factory in just sort of what this legislation would mean
Speaker 1: for the US economy. If we were to see Obamacare
Speaker 1: removing something new put in what effect would that have
Speaker 1: on the US economy? Well, David, you raised the ten
Speaker 1: squin jillion dollar question, which is what's going to be
Speaker 1: put in place on it simply pulling it out In
Speaker 1: the legislation that's currently in front of us, there are
Speaker 1: a number of unknown unknowns. I know you're gonna be
Speaker 1: talking later about long term sustainability and social security and
Speaker 1: medicare There are media tax consequences because taxes on high
Speaker 1: ink tax tax taxes imposed on high income individuals the
Speaker 1: upper end of the income distribution will be eliminated as
Speaker 1: part of that, and that not only has an impact
Speaker 1: on the economy and on the fiscal budget, but also
Speaker 1: on the overall view of the fiscal hawks within the
Speaker 1: Republican Party who will want to see at some point
Speaker 1: these reductions and taxation paid for. So there are just
Speaker 1: a lot of really great areas and where this conversation
Speaker 1: goes from here, regardless of what CBO says this week, Well,
Speaker 1: let's to talk about here Krol Weinberg high frequency economics
Speaker 1: with us as well, David gurn Washington. David, what are
Speaker 1: you doing down there? I mean you have you have
Speaker 1: vice chair Revative well I adore and folks founded the
Speaker 1: CBO with a lot of courage. Yeah, I mean, I
Speaker 1: just a great opportunity to talk to you about that
Speaker 1: and about the FED as well. And I'm gonna be
Speaker 1: talking with Michael Hayden, the former director of the CIA
Speaker 1: as well today. And uh, you know, we're looking ahead
Speaker 1: to this visit tomorrow that scheduled at least chancel Arangla
Speaker 1: Merkel is supposed to be here. If all goes according
Speaker 1: to plan, I'll be outside the White House. They're anchoring
Speaker 1: our coverage of her visit, but of course with the snow,
Speaker 1: will see what happens, you know, if indeed she'll get here,
Speaker 1: and if the news conference that they've scheduled with her
Speaker 1: and present actually happens. I just saw twelve to twenty
Speaker 1: four inches, Rob Carol and giving some dates here, but
Speaker 1: a lot of different inches. I believe David gur Reagan
Speaker 1: gets forty eight inches. Yeah, that's called a vechan exactly,
Speaker 1: it's a hockey goals now it just drops within six
Speaker 1: gates of American airlines. Carl, you want to comment on this, Tom,
Speaker 1: The reason they invented weather forecasting was to make economic
Speaker 1: forecasters look speed ice. Rob Caroline is the best, and
Speaker 1: we'll have reports to Mr Caroline our lack of a
Speaker 1: stereo weather guy through the morning, Carl Weinberg, Where this
Speaker 1: with high frequency economics? Greg Villiers just published as no
Speaker 1: moments ago and he goes to the gridlock in Washington.
Speaker 1: How can we have gridlock in Washington if I have
Speaker 1: a Republican Senate, a Republican House, and a Republican president. Wait,
Speaker 1: look way, look gridlock? Did you like that? David like that?
Speaker 1: At e c alright? The you know, I'm not a
Speaker 1: political analyst, But you don't have to be a political
Speaker 1: analyst to see that the Republican Party is really several
Speaker 1: parties right now, with several different specific groups. The fiscal Hawks,
Speaker 1: the Tea Party gang have their point of view, the
Speaker 1: Conservatives have their point of view, and then there are
Speaker 1: sub blends of each of the others um and they're
Speaker 1: not united behind the President, who seems to be yet
Speaker 1: another ilk of Republicans. So having all the different control
Speaker 1: of all the different houses is no issurance of success
Speaker 1: right now. And I think that's best illustrated on the
Speaker 1: health care debate, where we have a real question marks
Speaker 1: as to how to move forward and what we're supposed
Speaker 1: to be accomplishing. Carl, I think what Greg Value is
Speaker 1: getting at is that the markets were very enthusiastic after
Speaker 1: the election. They thought there was a high chance that
Speaker 1: some thing was many things we're gonna get done and
Speaker 1: get done quickly. It seems like there's been a bit
Speaker 1: of a reevaluation here, so less from the political perspective
Speaker 1: or from the market's perspective. Have you seen that happen?
Speaker 1: But we haven't seen it yet, David, But my colleague
Speaker 1: Jim O'Sullivan, Chief US economists that High Frequency Economics hasn't
Speaker 1: really budged his forecast very much for the economy since
Speaker 1: the election day. We've he's added half a percent to
Speaker 1: GDP growth in the second half of this year on
Speaker 1: the view that something's going to get done on the
Speaker 1: fiscal side, But overall his view of the economy remains
Speaker 1: the same. The economy is strong, it was going to
Speaker 1: remain strong with or without the Trump agenda, and it's
Speaker 1: not going to move that much in the near term.
Speaker 1: But then if what we're going to get here, and
Speaker 1: Frankie it's more than just a domestic question, is a
Speaker 1: drop in the new confidence. Part of this is the
Speaker 1: animal spirits of confidence, of belief in what we've got.
Speaker 1: Is what we're really going to see here is a
Speaker 1: decline and that buoyancy since November eight. Absolutely, Tom, that's
Speaker 1: the way that Jim sees the UH see this working
Speaker 1: out the resolution between consumer confidence and business confidence that's
Speaker 1: so high and economic indicators that are substantially lower than that.
Speaker 1: At the end of the day, we think the confidence
Speaker 1: indicators work their way back down towards the reality that
Speaker 1: the economy is delivering and not the other way around.
Speaker 1: How about buoyancy in oil prices. What are you and
Speaker 1: Jim seeing when it comes to energy prices. We had
Speaker 1: that DA we report last week on stockpiles, crewed stockpiles
Speaker 1: that record highs. You see that changing pretty pretty brave
Speaker 1: David talking about buoyancy as as prices are actually sinking
Speaker 1: as more as we speak. I've been expecting oil prices
Speaker 1: to go back down to fifty range for some time now.
Speaker 1: The inventories are so high. You've got the sixty six
Speaker 1: days of inventories in the O E C D countries
Speaker 1: and normal is about fifty four. So that's twelve days
Speaker 1: or half a billion barrels of oil sitting around and
Speaker 1: waiting to be dumped on the market. You have tidle
Speaker 1: oil producers coming back on. There's no way prices can
Speaker 1: go anyway but down, and that's been our outlook. It's
Speaker 1: a problem the emerging world that produces this. It's a
Speaker 1: problem for Opeque, it's a problem for Russia. Something to
Speaker 1: think about, David and Tom. As interest rates go up,
Speaker 1: the ability to finance these inventories go down. So one
Speaker 1: of our background views has been that as interest rates
Speaker 1: go up, we're going to see liquidation of these inventories
Speaker 1: and even more downward pressure arm prices. We need to
Speaker 1: very quickly here turn to something more important. Are you
Speaker 1: gonna put chains on your car as you moved north
Speaker 1: from New York City? I am up in Rhinebeck, New
Speaker 1: York Way north of the city. We're expecting two ft
Speaker 1: of snow and I've got a four wheel drive vehicle
Speaker 1: that goes to anything. Did you lose three fingers on
Speaker 1: your left hand freezing? When you know years ago there's
Speaker 1: always one piece of one rear tire chain that doesn't work.
Speaker 1: You need to get out a blowtorch. I haven't. I
Speaker 1: haven't had that experience. I haven't had chain since I
Speaker 1: lived in Italy and I had to get my off
Speaker 1: Romeo sportster into the Alps. Is a Southern Is a
Speaker 1: Southern boy ever enjoyed chain, slush and salt? David on this.
Speaker 1: I have never applied chains to a vehicle, but I've
Speaker 1: seen them in action. Very good. We have chains coming up, folks.
Speaker 1: We're gonna get a real What are you gonna get
Speaker 1: carl up north? More than two feet? They're saying two
Speaker 1: feet at least up where I am. That's what the
Speaker 1: local forecasters are saying, and of course in the mountains,
Speaker 1: it's probably gott to be more than that. Right at
Speaker 1: the front of the cat Skills Storm Surveillance Center here
Speaker 1: for us, we'll have much where Rob carroll and will
Speaker 1: give us some perspective. And this is what Rob does best,
Speaker 1: is these nor easters for those of you globally nor easters,
Speaker 1: and I'm not gonna employ to the weather guy here,
Speaker 1: but they have a life of their own. In any
Speaker 1: forecasts are always with a big asterisk, like maybe we
Speaker 1: sort of know what's gonna go on. But Rob Carollin
Speaker 1: will give us perspective through today and whenever the snow
Speaker 1: st gonna get some milk and bread, Tom, you're gonna
Speaker 1: run out. Oh yeah, we've already done that. We've stuck.
Speaker 1: We're down at Whole Foods. Everybody's stuck in twa water, milk, eggs,
Speaker 1: twelve cane bed in the cal David in the produced
Speaker 1: down at Columbus Circle with the kill It was this
Speaker 1: big hole with the killer people that taken the Colchip's yeah,
Speaker 1: Colin of the twins, he's stuck up at fourteen bags
Speaker 1: of kil Chip. It's a storm coming. We'll have more
Speaker 1: for your Bloomberg Radio Worldwide Time Keenan New York, David
Speaker 1: Guru at the one FM News Bureau in Washington, and
Speaker 1: you have a special guest, David. Yeah. The backdrop from
Speaker 1: my visit here, obviously is the ongoing debate on Capitol
Speaker 1: Hill about the new healthcare legislation, and we await eagerly
Speaker 1: the report from the CBO, the score from the CBO,
Speaker 1: to see what that organization has to say about that
Speaker 1: piece of legislation might be. Again, its joints me here
Speaker 1: in the studio. She's the president of the Committee for
Speaker 1: Responsible Federal Budget. Great to have you here, mine. Let
Speaker 1: me just start. We'll talk about death sits all that
Speaker 1: in just a sect. But what's the role of the
Speaker 1: CBO as you see it? You've heard the commentary about
Speaker 1: it in recent weeks, some members the administration calling its
Speaker 1: integrity into into questions. How do you regard the CBO,
Speaker 1: how do you use the CBO? And how novel is this?
Speaker 1: How different is it to hear its integrity called into question?
Speaker 1: So the CBO plays an incredibly important role, I believe
Speaker 1: because in a in a town, and in an environment
Speaker 1: where things have become more and more partisan, more and
Speaker 1: more political, and they're we're seeing kind of the ongoing
Speaker 1: under mining of impartial institutions. To me, the Congressional Budget
Speaker 1: Office is the one that I hold up as this
Speaker 1: is an institution that is not political, that is analytical,
Speaker 1: and the scores that it puts out. Of course they're
Speaker 1: not perfect because they are doing major projections of major
Speaker 1: economic and policy pieces of legislation, but they are unbiased
Speaker 1: in their work, which is so important and critical at
Speaker 1: a time when you have a hard time trusting the
Speaker 1: two parties take on something and you really just want
Speaker 1: to know what the numbers are. So I would say
Speaker 1: CBO is one of I think the most important players
Speaker 1: in keeping us honest and not political, and I've been
Speaker 1: really disappointed, I have to say, and what I think
Speaker 1: is a strategy of undermining their credibility. Instead of saying
Speaker 1: we want numbers that are going to add up, or
Speaker 1: if they give us a score that says this cost
Speaker 1: more than we're supposed to, how do we go back
Speaker 1: and improve the legislation. So I hope um that the
Speaker 1: politics of undermining CBO will stop as quickly as possible.
Speaker 1: Last week we had Gary Cohen, the head of the NBC,
Speaker 1: speaking he said that we care about the deficit, we
Speaker 1: care about revenue that from the administration. Do you take
Speaker 1: him at face value? Have you seen evidence of that
Speaker 1: here in these first six weeks of this administration. Well,
Speaker 1: it's hard to see the evidence because the policies haven't
Speaker 1: come out yet. Um. What I'm looking at is who's
Speaker 1: saying what an administration? And I was very encouraged by
Speaker 1: Director Cohen's remarks about how they don't want to make
Speaker 1: the deficit worse over the next ten years. Um, and
Speaker 1: let me just set the stage on that the deficit
Speaker 1: is going to be made much worse than the next
Speaker 1: ten years. If we do nothing, we're on track to
Speaker 1: borrow nine trillion dollar over the next ten years. So
Speaker 1: I interpreted his point of saying we're not going to
Speaker 1: make that worse. I'd like to nudge them in a
Speaker 1: different direction, which is we're actually going to make that better.
Speaker 1: But I thought his remarks are very encouraging, particularly because
Speaker 1: we've heard about a lot of policies that could and
Speaker 1: would worsen the fiscal situation, whether it's healthcare if they
Speaker 1: do get a bad score and proceed without worrying about that,
Speaker 1: or tax or form if it were to lose revenue
Speaker 1: or infrastructure if it wouldn't be very expensive and not
Speaker 1: paid for. So I thought he'd put an important marker
Speaker 1: down and was really pleased to see those cards. Help
Speaker 1: me with the text credits. I mean, folks, I don't
Speaker 1: want to get into the weeds on this debate, but
Speaker 1: basically they want to shift the tax credits, and there's
Speaker 1: an uproar that they're of minimal value to our truly
Speaker 1: poor and needy people. My help us with your analysis
Speaker 1: of tax credits. So what we're doing is we're switching
Speaker 1: the way that we're creating the subsidies within our healthcare program.
Speaker 1: And there's always going to be subsidies, because for instance,
Speaker 1: the young are going to subsidize the old, the rich
Speaker 1: are going to subsidize the poor. The question is to
Speaker 1: what ex sent those will be true and what structure
Speaker 1: we're using. This new replacement plan is going to be
Speaker 1: dependent on tax credits, and there was a big fight
Speaker 1: whether those tax credits should be refundable and whether they
Speaker 1: should be refundable meaning that you would get them even
Speaker 1: if you didn't pay income taxes, and advanceable meaning you
Speaker 1: would get them in advance and they ended up creating
Speaker 1: a plan that would include those, so those would help
Speaker 1: people who are above the qualifying lines from Medicaid, but
Speaker 1: on the much poorer side of the spectrum. There's been
Speaker 1: a lot of pushback from the Conservatives, in particular because
Speaker 1: they see that as a new form of entitlement spending.
Speaker 1: And one of their purposes to repeal Obamacare in the
Speaker 1: first place was they didn't like the entitlement nature of it.
Speaker 1: They wanted to change that, so they're unhappy with those
Speaker 1: refundable tax credits. This we could get what's called the
Speaker 1: skinny budget. We had a broad overview from the White
Speaker 1: House of what it wants. It's a budget to be
Speaker 1: a couple of weeks back. Of course, the headline figure
Speaker 1: there was that fifty four billion dollars in additional defense spending.
Speaker 1: The administrations say they'd offset that with cuts to other programs.
Speaker 1: How difficult is that going to be? You listen to
Speaker 1: the President speak to the Joint Session of Congress. He
Speaker 1: talked about doing away with the sequester. Is if it
Speaker 1: could be done so easily by waiving a wand how
Speaker 1: hard is that going to be? Uh? And what do
Speaker 1: you make there? Over the desire to increase the defense
Speaker 1: budget rather than uh, you know, cutting other programs. So
Speaker 1: the first point about the skinny budget is it's going
Speaker 1: to be really, really really skinny. Um emaciated in some
Speaker 1: ways because normally when a new president comes in, they
Speaker 1: do do a much smaller budget because they haven't had time.
Speaker 1: Director Mulvaney hasn't been in place to put together a
Speaker 1: full budget. But this one is only going to look
Speaker 1: at the discretionary portion of the budget defense and domestic discretionary,
Speaker 1: nothing on revenue, nothing on entitlements, and it may only
Speaker 1: be for one year, so it really doesn't meet the
Speaker 1: full picture of the budget. In terms of the priorities
Speaker 1: we're hearing about this budget, the increase in defense will
Speaker 1: be paid for for cuts and domestic discretionary. What I
Speaker 1: applaud them for is that they're paying for it. If
Speaker 1: you want to do more of something, how are you
Speaker 1: going to pay for it? That's very important. Now many
Speaker 1: people disagree with the priorities, and I think they are
Speaker 1: legitimate disagreements on both side. I leave it to the
Speaker 1: security experts whether we need more or less in defense,
Speaker 1: but I do think they will bump into some real
Speaker 1: problems even from their own party on the Appropriators when
Speaker 1: they're making this big cuts and domestic discretionary and if
Speaker 1: they make them, the key will be will they stick.
Speaker 1: Will Appropriators and Congress actually go along with it in
Speaker 1: a in a sustained way. I have a chart I'm
Speaker 1: working on that I'm going to put out here in
Speaker 1: a moment and I'll refine it for tomorrow and ms McGinnis.
Speaker 1: It's a basic chart that says the Republicans spend more.
Speaker 1: It goes back to seventies something and it shows Reagan advent,
Speaker 1: Bush Senior advent, Bush Junior advent and Trump advent And
Speaker 1: do you just presume the Republican presidents end up spending
Speaker 1: work and adding to our debt. That's a great question.
Speaker 1: I would like to see your chart. It seems plausible
Speaker 1: in recent years. Basically, there's so many things that are
Speaker 1: going on, but that the myth that Republicans want to
Speaker 1: cut spending and by the way, that Democrats want to
Speaker 1: raise taxes doesn't usually end up playing out, particularly when
Speaker 1: there's one party government. So the real cuts and spending
Speaker 1: would be in entitlements, and so far, it doesn't seem
Speaker 1: like we're in tracked to see any of that. So
Speaker 1: spending is going to grow under this Republican House, Senate,
Speaker 1: and White House unless some dramatic things happen, even if
Speaker 1: they go forward and do what they're talking about, cutting
Speaker 1: a lot out of domestic discretionary because unless you do
Speaker 1: something to control healthcare costs and deal with our retirement challenges,
Speaker 1: spending is on track to grow significantly and in fact dramatically.
Speaker 1: So we are on track that both spending and taxes
Speaker 1: will be well above their historical averages. That's like that
Speaker 1: trend is likely to stay in place. UM. So what
Speaker 1: I have seen is a lot of talk about spending
Speaker 1: ends up being symbolic. It ends up being about the
Speaker 1: small things like earmarks, because people are really unwilling to
Speaker 1: tackle the biggest areas of spending, healthcare and retirement the
Speaker 1: limited time we have left. Let me return something that
Speaker 1: you said at the top. You said you're looking at
Speaker 1: the people within the administration driving this. Mick mulvanny is
Speaker 1: the head of the Office of Management and Budget. How
Speaker 1: does he work with compliment um Gary Cohen saying, in
Speaker 1: other words, is mckmulveny markedly radically different than other people
Speaker 1: in this administration? We're driving economic policy, and how does
Speaker 1: the administration then get those guys to work together. So
Speaker 1: that's that's a good question. Mick mulvaney is certainly somebody
Speaker 1: who I've been listening to very closely, because starting in
Speaker 1: his testimony, he actually was the person who most emphasized
Speaker 1: one the fiscal challenges the country faces and to a
Speaker 1: really a realistic take on it, because we've been hearing
Speaker 1: a lot of promises about both tackling the debt and
Speaker 1: a lot of policies that would make the debt worse.
Speaker 1: So that's why I thought Gary Cohen's comments were very
Speaker 1: important on tax reform, but mixed. McK mulvaney has gone
Speaker 1: farther and reminded the administration he's going to be the
Speaker 1: person who says no, a tough but really important job
Speaker 1: because everybody wants to give political giveaways, and he's going
Speaker 1: to remind them entitlement reform is the center of this
Speaker 1: and they cannot run away from it if they're serious
Speaker 1: about dealing with the debt. I'm so glad you brought
Speaker 1: up giveaways. How many giveaways Northwestern going to do against
Speaker 1: Vanderbilt coming up here? My helping here, this is all
Speaker 1: brand new for the Purple, isn't it. Yeah? Yeah, as
Speaker 1: a Northwestern alum, this is a whole new experience for us. Okay, well,
Speaker 1: the good news for you is Mr Gurr has been
Speaker 1: through this like eight thousand consecutive times being from the North. Well,
Speaker 1: we'll get you, we'll get you involved. I have Northwestern
Speaker 1: beating Vanderbilt. I only did that for our esteem. Guest,
Speaker 1: thank you so much for great perspective, David gurin Washington.
Speaker 1: I'm Tom Keenan, New York. This is Bloomberg, brought you
Speaker 1: by Bank of America, Mary Lynch, dedicated to bringing our
Speaker 1: clients insights and solutions to meet the challenges of a
Speaker 1: transforming world. That's the power of global connections. Mary Lynch, Pierce,
Speaker 1: Feeder and Smith in Corporate Rated member s I p C.
Speaker 1: Bringing our wonderful guests. I mean, it's it's just such
Speaker 1: a pleasure to talk to smart people. David that actually
Speaker 1: wants darkened the door of the evil CBO exactly. Douglas,
Speaker 1: while taken online, former chief Economists of the President's Council
Speaker 1: of Economic Advisors from a director of the Congressional Budget Office.
Speaker 1: Great to have you here as we await this score
Speaker 1: from the CBO on the American Healthcare Act and help
Speaker 1: us out. First all, we talk about the CBO score
Speaker 1: and I think we don't know what we're talking about.
Speaker 1: I can admit we don't know what we're talking about.
Speaker 1: What is it? What is the CBO score? What are
Speaker 1: we gonna get from the CBO. The Senior CBO's primary
Speaker 1: job is to estimate the impact on the federal budget
Speaker 1: of any legislation that the Congress is considering. So what
Speaker 1: you'll get from the CBO is, if you pass the
Speaker 1: American Healthcare Act, what happens to revenue flows into the treasury?
Speaker 1: What happens to spending flows out of the treasury year
Speaker 1: by year for the next ten years. Uh. The main
Speaker 1: purpose of that scores to make sure that the bill
Speaker 1: satisfy I've the requirements of the quote Reconciliation Instruction, which
Speaker 1: is that it saves two billion dollars over the next
Speaker 1: ten years. That won't be the focus of the attention.
Speaker 1: That's actually what the score is. It's the supplementary information
Speaker 1: on coverage and premiums that CBO made release along with it.
Speaker 1: Because I think most people are gonna look at I
Speaker 1: want to go back to something that Tom said a
Speaker 1: moment ago. He said, he was surprised by how quickly
Speaker 1: this is happening. The CBO does amazingly detailed work on
Speaker 1: a very quick a timetable. We only got this legislation
Speaker 1: a couple of weeks back, and as you say, we're
Speaker 1: gonna get some great detail as soon as today. Um
Speaker 1: CBO has been working with the staff on energy, commerce
Speaker 1: and ways and means in this case for quite sometimes, uh,
Speaker 1: the staff will typically produce some rough sketch of what
Speaker 1: they'd like to do. CBO say, okay, look sort of
Speaker 1: like this, We need some details here or there. So
Speaker 1: they've probably had, without exaggeration, ten fifteen iterations leading up
Speaker 1: to this, which is the actually first official score. Help
Speaker 1: us here, Dr Holdzeken with the nefarious Ford House office building.
Speaker 1: It is this concrete fortress. It looks like you know,
Speaker 1: nether East German, Germany, and it's not connected to the capitol.
Speaker 1: You are in a discreet difference. What do they do
Speaker 1: on the fourth floor at the Florida Office Building? What
Speaker 1: is in the kool aid at the dreaded CBO. So
Speaker 1: you should know that the Ford Building is a former
Speaker 1: FBI fingerprints what we knew this. It has all the
Speaker 1: ambience one would expect. How that, um, and uh, what's
Speaker 1: in the kool aid? There is simply a desire to
Speaker 1: understand the research literature that's necessary to score bill in
Speaker 1: this case, how insurance markets work, what do we know
Speaker 1: about the providers who are going to work onto those contracts,
Speaker 1: and to you know, antistate Congress's needs. So it's really
Speaker 1: a very academic research or in an institution that is,
Speaker 1: you know, physically somewhat separate from the capital. You know,
Speaker 1: I want to get from you a sense of how
Speaker 1: unorthodox all that we've seen is we've seen this legislation
Speaker 1: pushed through committee with out the CBO score. We've heard
Speaker 1: a lot of rhetoric about the CBO's impartiality, questioning that impartiality.
Speaker 1: How different is this that we're seeing and how worried
Speaker 1: about it are you? But I think this is business
Speaker 1: as usual to be honest, I'm not a bit worried
Speaker 1: about it. Um. If you work at CBO, as I did,
Speaker 1: you get criticized all the time from many different quarters. Um,
Speaker 1: you know you're simply not going to be able to
Speaker 1: please everybody all the time, and you shouldn't and so
Speaker 1: these these issues arise as a matter of course. Um,
Speaker 1: it's also true that often bills go through the markup,
Speaker 1: they went through without a CBO score. The only bill
Speaker 1: that really matters is the bill that comes out of
Speaker 1: the Budget Committee. That's the first complete bill, the one
Speaker 1: that will go to the floor of the House for
Speaker 1: a vote. That's when you need to know what the
Speaker 1: CBO score is. So, from a business point of either,
Speaker 1: right on track. You were the head of the CBO
Speaker 1: when those tax cuts in two thousand three were passed
Speaker 1: by the Congress. Here we are looking at tax reform,
Speaker 1: and I wonder what this approach to healthcare tells you
Speaker 1: about what this Congress's approach to to tax reform is
Speaker 1: going to be. I think we've seen the use of
Speaker 1: reconciliation that that guarantees Democrats aren't going to play. It's
Speaker 1: gonna be done entirely with Republican votes. Uh. This is
Speaker 1: way harder than taxt re form. Healthcare is simply much
Speaker 1: more divisive, both within the parties and across the parties.
Speaker 1: And I expect this build to pass the House and
Speaker 1: the pass Senate, but it's going to be a long,
Speaker 1: hard process. Tax the form will look a lot easier
Speaker 1: by comparison. Hey, look at um the plugins here in
Speaker 1: the upshot today. Kevin Quayley with a terrific upshot today
Speaker 1: of how broad the estimates are. The gues estimates of
Speaker 1: Trump Care goop Care holds he can care whatever you
Speaker 1: want to, whatever you want to call it. I mean,
Speaker 1: how many plug ins are involved here? Can we actually
Speaker 1: get a decent guestimate? I'll give you a flavor of
Speaker 1: just how hard this is. An important part of the
Speaker 1: bill is fifteen billion in two thousand eight ten dollion
Speaker 1: every year thereafter two the states for a fund that
Speaker 1: can be used to stay lies insurance markets in any state.
Speaker 1: What will the states do with that money? Will they
Speaker 1: accept the federal default reinsurance program or will they create
Speaker 1: their own? Will they give folks additional money for cash
Speaker 1: to cover out of pocket expenses? How CBO expects that
Speaker 1: money to be spent has an enormous impact on the
Speaker 1: premiums that will prevail in those markets. So that has
Speaker 1: the enormous impacts on the coverage numbers that they expect.
Speaker 1: And it's literally unknowable. I mean they've called the states,
Speaker 1: they've talked to the governor's associations. They've done what they can,
Speaker 1: but that's a really hard thing to estimate. Doug. Last
Speaker 1: question here, I'm in Washington, the first time I've been
Speaker 1: back since that President Trump was was inaugurated. I wonder
Speaker 1: I want to get your sense of how much this
Speaker 1: place has changed. We're facing a dead ceiling deadline, a
Speaker 1: continuing resolution set to expire. The same old obstacles seem
Speaker 1: to be here in Washington. Has the process changed at
Speaker 1: all over the last three or four months. I think
Speaker 1: this is the big test of whether the process has changed.
Speaker 1: Can the Republicans who now control the House to sending
Speaker 1: an the White House collectively governed effectively, Can they pass
Speaker 1: legislation with the help of a president who's gonna, you know,
Speaker 1: twist arms when he needs to and get things done,
Speaker 1: or will we end up with more stalemates. I know
Speaker 1: this is a very important moment for for the Republicans
Speaker 1: who are going to run into thousand eighteen on their compliments,
Speaker 1: on their accomplishments as a governing party. Well, this is
Speaker 1: the first half, Doctor holds. He can thank you so much,
Speaker 1: greatly appreciate. He's a former director of the Congressional Budget
Speaker 1: office David Gura in Washington today in our Bloomberg ninety
Speaker 1: nine one Studios Tom Keene in New York. It's pledg
Speaker 1: would be joined by Greg Valley, a chief Global strategy
Speaker 1: Horizon Investments. Here he sounds the clarion this morning. In
Speaker 1: his note, he says to enormously controversial issues Obamacare replacement
Speaker 1: and a radical new budget promise to throw Washington into gridlock,
Speaker 1: further jeopardizing chances for tax reform this year. So we're
Speaker 1: looking at legislative grid suck in the snow related gridlock
Speaker 1: at tomorrow, Greg, Great to have you here. How bad
Speaker 1: is it going to be? Do you think? How's this
Speaker 1: ship and sunny? I talk to people about this healthcare bill,
Speaker 1: and and I have difficulty finding those who very fulsibly supported.
Speaker 1: It has its backwards in how Speaker Paul Ryan. But
Speaker 1: where's the rest of the support going to come from? Yeah?
Speaker 1: Like Trump said, who knew it was going to be
Speaker 1: this complicated? Right? Good to see you, A good morning.
Speaker 1: I think this is going to take a long long
Speaker 1: time to iron out. I don't rule out the House
Speaker 1: and Paul Ryan getting a deal by mid April, but
Speaker 1: the Senate would never go along with this. You know,
Speaker 1: maybe the goal is just to get a bill to
Speaker 1: conference and two different bills and you could iron out
Speaker 1: a deal then, but we're talking summer before we get
Speaker 1: an Obamacare replacement. If then, So, the point I've been
Speaker 1: making lately is that when you combine this with all
Speaker 1: the fights about to come on the budget, we're talking
Speaker 1: about a tax reform bill that probably won't make it
Speaker 1: this year with this Obamacare replacement. Help me with the
Speaker 1: realism here. We're waiting for this score from the CBO.
Speaker 1: There's been a lot of political pushback because they went
Speaker 1: to committee without getting that at that score. Is the
Speaker 1: rush to get this through misguided? Uh? You know they're
Speaker 1: they're still saying they could get something by April. You're
Speaker 1: saying it could be well into the into the summer.
Speaker 1: Why not why not just go get that CBO score
Speaker 1: before doing all of that? Well, how is this for
Speaker 1: an irony day? Eight years ago we had the exact
Speaker 1: same scenario with Barack Obama squandering his political capital. You know,
Speaker 1: we hope and change all this stuff, and we had
Speaker 1: a meltdown on health reforum. So here eight years later,
Speaker 1: it's as if no one has learned a lesson the
Speaker 1: scoring today or tomorrow is going to be bad or
Speaker 1: could it be really bad? It's going to make the
Speaker 1: case for Ryan's bill even tougher to make. How was
Speaker 1: the scoring. We've gotten scories from Brookings, We've gotten scories
Speaker 1: from SMP Global as well. Is this going to be
Speaker 1: the same thing but with the impromoter of of this,
Speaker 1: of this non part as an entity or is it
Speaker 1: going to give us more detail than those scores have
Speaker 1: given us? Probably more detail. And I think they're pretty kosher.
Speaker 1: I think the the CBO, Yeah, they're they're they're pretty uh,
Speaker 1: pretty reliable in my opinion that the big part of
Speaker 1: the story that's going to blow up and already has
Speaker 1: is Medicaid. You've got a lot of moderate Republicans like
Speaker 1: Rob Portman of Ohio, who were saying, no way in
Speaker 1: the world are we going to pass a bill than
Speaker 1: guts Medicaid. You know, I'm a mere mortal Gregg and
Speaker 1: like you that have a complete wire tap into every
Speaker 1: permutation of this. I've read my obligatory fourteen articles and
Speaker 1: I went right to what you just mentioned, which this
Speaker 1: is about Medicaid and Senators. I am thunderstruck by the
Speaker 1: focus on the President and the House in minimal discussion
Speaker 1: of Senate realities. What are those Senate realities. Well, just
Speaker 1: as you said, Tom, and good morning to you, I
Speaker 1: think that the Medicaid cuts are a non starter. These
Speaker 1: are not negotiable with people like Rob Portman, and I'd
Speaker 1: say maybe as many as a dozen Republicans are saying
Speaker 1: we will go along with this bill. So it's it's
Speaker 1: in big trouble even if it makes it through the
Speaker 1: House in the next few weeks. You know, let's let's
Speaker 1: go through the math again. I believe there's a hundred
Speaker 1: senators something in the vicinity of that they have exactly
Speaker 1: two votes to play with. And like I'm planned parenthood,
Speaker 1: it's X number of senators on Medicate, it's y number
Speaker 1: of senators. Forget about Ran Paul. But on each of
Speaker 1: these issues, there's a certain number of Senators who just
Speaker 1: will say no. Right Well, unless they can be persuaded
Speaker 1: by the great dealmaker, Donald Trump, who feels that he
Speaker 1: can inject himself into this and somehow get a compromise.
Speaker 1: It's not out of the question that you could get
Speaker 1: some softening on the Medicaid stuff that could satisfy people
Speaker 1: like Rob Portman. But right now, if there were a
Speaker 1: vote today, it would lose in the Senate by at
Speaker 1: least a dozen votes. We were talking with that Douglas
Speaker 1: will Taken, formerly of the CBO a little while ago,
Speaker 1: and he said that a repeal or replacement of the
Speaker 1: Affordable Care Act is gonna be way harder than than
Speaker 1: tax reform you mentioned eight years ago. I remember all
Speaker 1: the political capital that was spent by the Democrats to
Speaker 1: get that legislation through. Now you see Republicans kind of
Speaker 1: repeating that, putting a lot of chips on the table
Speaker 1: here to get a repeal or replacement done. Was that
Speaker 1: a mistake? Should they have gone with tax reform first?
Speaker 1: What's the calculus here that they used to come up
Speaker 1: with the order of operations here in Washington. Well, let's
Speaker 1: go back just for a second day eight years ago.
Speaker 1: Even Chuck Schumer has said the Obama white House miscalculated
Speaker 1: by going to healthcare first. And again I think we're
Speaker 1: seeing a repeat now. I would go for the tax
Speaker 1: cuts that would be I think easier at this point,
Speaker 1: but they won't. And even if we get Obamacare resolved,
Speaker 1: the budget stories you guys will all report on for
Speaker 1: the rest of this week are really dramatic, huge cuts,
Speaker 1: draconian cuts, and once again, the problem won't be Democrats.
Speaker 1: The problem will be Republicans who will say these cuts
Speaker 1: are too harsh. You mentioned the budget, We get the
Speaker 1: skinny budget. I love the term. Later this week, what
Speaker 1: color is going to be in there that wasn't in
Speaker 1: the overview a few weeks back. What more detail are
Speaker 1: you expecting we'll get from the White House? Well, I
Speaker 1: think the drop in federal employees. It was a big
Speaker 1: story in the Washington Post this morning talking about the
Speaker 1: huge cut in federal employees having an impact on the
Speaker 1: DC area real estate. Things like that. I'm sure the
Speaker 1: country won't be particularly sympathetic to Washington, d C. But
Speaker 1: the other part of the story is the enormity of
Speaker 1: the defense increases. I personally think that's going to happen,
Speaker 1: and I tell all of my clients if there's one
Speaker 1: pure investment play in Washington, it's the defense stunks. Do
Speaker 1: you assume, Greg that our debt to GDP just rises
Speaker 1: and rises? I mean, is the is the synthesis of
Speaker 1: many of these what ifs. I understand there's huge variables,
Speaker 1: but do you just assume it's like Reagan or Bush
Speaker 1: one or Bush two, that up up we go in
Speaker 1: debt to GDP. Well, the good news, Tom, is that
Speaker 1: the bond market, I think can tolerate the current levels
Speaker 1: where you know, on an annual basis, the deficit around
Speaker 1: three percentage GDP. That's acceptable. But as we get towards
Speaker 1: the end of this decade and then things as we
Speaker 1: all get older than we spend more money, things could
Speaker 1: get really sour in a hurry for the bond market.
Speaker 1: So we've got a year or two of grace before
Speaker 1: the deficit becomes a big, big problem. Where are the
Speaker 1: deficit hawks? We talked with Mike McGinnis this morning. She's
Speaker 1: she's a leader of that of that pack. Are they
Speaker 1: present in watching right now? How big a part of
Speaker 1: the conversation are they? Well, they're articulate and they can
Speaker 1: make a lot of noise, but in terms of actually
Speaker 1: getting something done. The counter argument is the Treasury ten
Speaker 1: year bond yield. It's crept up a little, it's probably
Speaker 1: uh two point five eight or something like that, but
Speaker 1: that's still a very low yield for a bond. So
Speaker 1: you'd have to see the bond market really freak out
Speaker 1: and we haven't seen it yet, David, what's a skinny budget?
Speaker 1: No one's ever presented. John Tucker if I've ever been
Speaker 1: presented with a skinny budget, rather than get a trainer,
Speaker 1: said I'd like to get my wife one. There you go.
Speaker 1: What is the skinny budget, David? Skinny budget, I gather
Speaker 1: is just a bit more detail than what in April.
Speaker 1: Greg will get more detail stills. Yeah, And by the way, guys,
Speaker 1: there's two other big budget stories. On Wednesday we hit
Speaker 1: the death Sailing. It's gonna be months before they get
Speaker 1: that resolved. And then on April the government runs out
Speaker 1: of money. This continuing Resolution, which you know it's it's wonky,
Speaker 1: but you've got big issues hanging over the White House.
Speaker 1: Let's do this, Greg Villier, where this is a rise
Speaker 1: that we're gonna come back because Greg Villier is focused
Speaker 1: on gridlock. Republican Republican Republican gridlock. Greg Villier in Washington
Speaker 1: with our David guru, and you know it's really timely, David.
Speaker 1: You have Mr Villier with us because he's from New
Speaker 1: Hampshire and he remembers the Great Snow of seventeen. Bloomberg
Speaker 1: meteorologist Rob Caroline's descended Cotton mathered gave us a report
Speaker 1: in it over six of snow, over five or six days,
Speaker 1: Turkeys died, DearS died, dear diet I should say English
Speaker 1: the great snow of seventeen seventeen. Len's perspective, David snowball
Speaker 1: in the hands of an angry God, I think was
Speaker 1: the sermon to thank you very much. Greg valuate with
Speaker 1: me here in our Blueberg studios. Greg, help us understand
Speaker 1: what we're seeing. We're seeing what's happening on Capitol Hill
Speaker 1: with with healthcare. What does that tell us about how
Speaker 1: the tax reform debate is going to play out? Well,
Speaker 1: first of all, I'm going to be in New Hampshire
Speaker 1: this evening, so it should be an interesting twenty four
Speaker 1: hours of snow. Well, the debate on the Hill is
Speaker 1: really important for the financial markets to this extent. If
Speaker 1: they can't get this stuff done Obamacare budget, what does
Speaker 1: that say for the good stuff? The good stuff being
Speaker 1: tax reform, infrastructure. Most everyone had assumed a g d
Speaker 1: P impact of all this stuff by winter of next year.
Speaker 1: That g d P impact maybe delay aid by a
Speaker 1: fair amount. You mentioned April before we went to to
Speaker 1: break how big a forcing mechanism is that date. You'd
Speaker 1: like to think that it would impose some discipline, but
Speaker 1: it will not. Will April will come and go, just
Speaker 1: like this Wednesday will come and go. In the death ceiling,
Speaker 1: they'll do extensions. They'll extend the government for another two
Speaker 1: or three months. The death ceiling probably won't be dealt
Speaker 1: with with finality until midsummer. You've written about the sausage
Speaker 1: making and how it's taking far longer than the President
Speaker 1: and many investors thought it would. When you talk to
Speaker 1: clients when you go on the road, what do they say,
Speaker 1: What do they ask you about the timetable here in Washington?
Speaker 1: And and you know, is it fair to say that
Speaker 1: a lot of investors got this wrong, they were overly optimistic. Well,
Speaker 1: two things investors say a lot. Number one is, let's
Speaker 1: talk about the details on the tax bill. Do we
Speaker 1: have this border adjustability? Do we have limits on deductions?
Speaker 1: Lots of really big topics have still not been resolved
Speaker 1: number one. Number two, I'm astonished by how many clients
Speaker 1: I see conservatives who say, I wish this guy stop tweeting.
Speaker 1: It's not adult. That doesn't sound presidential. You get that
Speaker 1: from almost everybody to be fair to please just stop it,
Speaker 1: you know, yep, exactly and up my children? Was dad? Greg?
Speaker 1: Help me here? Within your note this morning, you mentioned
Speaker 1: the word gridlock. Gridlock assumes that Tip O'Neill will ride
Speaker 1: to the rescue when I have a cordial conversation with
Speaker 1: the gipper. Uh, is there any tone of compromise between
Speaker 1: good parties of the House, the Senate, in the White House. Well,
Speaker 1: first and foremost time, there will be no help from
Speaker 1: Democrats zero. Okay, I get that. And secondly, you had
Speaker 1: have to assume that Trump will inject himself and may
Speaker 1: be able to get some things done. But you almost
Speaker 1: have an impossible task with the so called Freedom Caucus,
Speaker 1: which will not want to raise the debt ceiling, has
Speaker 1: their own idea on taxes, on healthcare. They will not
Speaker 1: agree with Ryan I and I sort of feel sorry
Speaker 1: for He's in the same bind that Bayner was in,
Speaker 1: and that bind that Bayner was in eventually cost him
Speaker 1: his job. What's the dumb question of the day, I'm
Speaker 1: allowed to do that, David Snowstorm coming. What's the difference
Speaker 1: between the Freedom Caucus and the Tea Party? Not much?
Speaker 1: I'd say they're pretty much analogous. They both don't want
Speaker 1: to spend money. They don't want to spend money on infrastructure.
Speaker 1: They consider this health reform plan like Obamacare light. They're
Speaker 1: very angry about it. And then you've got to go
Speaker 1: on the other side of the hill and look at
Speaker 1: all these moderate senators who roll their eyes and say,
Speaker 1: we're not going to go along with the Freedom Caucus.
Speaker 1: You float the idea of bifurcating tax reform, doing corporate
Speaker 1: tax reform and personal tax reform separately. What's the advantage
Speaker 1: to doing that? And if you look at sort of
Speaker 1: how slowly things are progressing, does that stand to slow
Speaker 1: things down even more if you've got two different things
Speaker 1: that these lawmakers are working on. Well, I know it's
Speaker 1: being debated intensely within the Trump administration, and I got
Speaker 1: this from a very good source. Uh, they're a uses
Speaker 1: and minuses. I think they want to show more signs
Speaker 1: of momentum. They're not showing a lot of momentum right now,
Speaker 1: and I think the markets need to see that things
Speaker 1: are moving. So if you do cut it in half,
Speaker 1: you probably could get the business stuff done by by fall.
Speaker 1: Well said, but to your point on Grid Luck is
Speaker 1: there any tone or demeanor or body language to quote
Speaker 1: unquote cut in half? I would think, if anything, the
Speaker 1: President would lead on that. I mean, he's the ultimate
Speaker 1: cut in half guy. Well what about everybody else? Well,
Speaker 1: let's see what minutation does. There are a couple of
Speaker 1: other big, big players from government sacks who I think
Speaker 1: can uh urge the president to do things that the
Speaker 1: markets would like to see. But right now it's all
Speaker 1: hands on deck on Obamacare. And to go back to
Speaker 1: what we talked about at the very beginning, this is
Speaker 1: eerily similar to eight years ago when a new president
Speaker 1: squandered his political capital on healthcare. Let me ask you
Speaker 1: travel a ton you're going up to do him? Sure,
Speaker 1: as you say, what are you hearing from people about
Speaker 1: the state of the economy? Clients? You're talking to people
Speaker 1: that you meet when you're on the road. We got
Speaker 1: the job's number last week, two thousand, A nice number.
Speaker 1: What are people saying to you as you travel? The
Speaker 1: one thing, guys that strikes me when I see business
Speaker 1: leaders and I asked them, what's your biggest problem? Is
Speaker 1: that Obamacare? No? Is it regulations? No, lack of skilled labor.
Speaker 1: They say that over and over again. All around the country.
Speaker 1: There's a fear that they were running out of skilled labor,
Speaker 1: that the labor market is really tight. And what comes
Speaker 1: next wage pressure and higher higher interest rates. If you
Speaker 1: raise the wage, they come out of the woodwork. Right.
Speaker 1: Is that where we're heading? Yes, And I think that's
Speaker 1: why Yellen is going to move this week. I think
Speaker 1: she has to worry Tom that she's way behind the curve.
Speaker 1: Very quickly here, Great, before we let you go, We've
Speaker 1: got this fifth meeting schedule for Tuesday as they help
Speaker 1: us with the weather state of play here in Washington.
Speaker 1: If if things get bad, if there's a government chet
Speaker 1: to what happens to that meeting? Is it done telephonically? Yeah?
Speaker 1: They They have had a a precedent of having meetings
Speaker 1: by conference call it for an emergency high hiker cut,
Speaker 1: so they can they can do that. The one thing
Speaker 1: obviously we gotta watch is the statement. I think she'll
Speaker 1: make it clear we've got a few more moose to
Speaker 1: come this year. Greg RELLI great to speak with. Great
Speaker 1: to see you here in d C. My pleasure Value,
Speaker 1: chief Global strategis at Horizon Investments. In Tom, We're missing
Speaker 1: you down here. I'm gonna be stuck here. I understand
Speaker 1: that that like it's gonna snow like twenty inches, but
Speaker 1: within four gates with Reagan of American Airlines, it snows
Speaker 1: a hockey goal. I can't wait for they push all
Speaker 1: the snow to the shuttle gates. That's right, they just
Speaker 1: pile it up. Greg. I hope you find you know.
Speaker 1: I hope it's not like the Blizzard of s I
Speaker 1: vaguely recall at the RI as well. Thanks for listening
Speaker 1: to the Bloomberg Surveillance podcast. Subscribe and listen to interviews
Speaker 1: on iTunes, SoundCloud, or whichever podcast platform you prefer. I'm
Speaker 1: out on Twitter at Tom Keene. David Gura is at
Speaker 1: David Gura. Before the podcast, you can always catch us worldwide.
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