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Speaker 1: You're listening to the Bloomberg Sound on podcast. Catch us

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Speaker 1: Live weekdays at one Eastern.

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Speaker 2: On Bloomberg dot com, the iHeartRadio app and the Bloomberg

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Speaker 3: Senator John Ossoff, it's been a while. The Democrat from

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Speaker 3: Georgia is with us. Of course, he's got a very

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Speaker 3: close eye on this, and Senator I want to welcome

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Speaker 3: you back. Thanks for making time for us today. Are

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Speaker 3: you encouraged by what you're hearing?

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Speaker 4: Joe, good afternoon. How are you.

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Speaker 3: I'm just great, Thanks for being here.

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Speaker 4: It's my pleasure. Thank you for having me. The bottom

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Speaker 4: line is that US sovereign default would be a catastrophic

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Speaker 4: financial event. And as these negotiations are ongoing, you know,

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Speaker 4: I'm not going to speculate one way or the other

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Speaker 4: about an outcome. You've heard it said time and time

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Speaker 4: again that until the full scope of a potential agreement

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Speaker 4: is identified, there is not yet a full agreement. I

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Speaker 4: will say, just taking a step back, as they say,

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Speaker 4: this is no way to run a railroad. And when

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Speaker 4: the rest of the world looks at US politicians engaged

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Speaker 4: in fierce partisan combat over the basic question of whether

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Speaker 4: to honor our obligations and pay our bills. I think

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Speaker 4: that undermines our image in the world and underminds the

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Speaker 4: credibility of our financial commitments, and it's not the right

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Speaker 4: way to govern. We are where we are. The talks

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Speaker 4: are on going well.

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Speaker 3: I'll tell you we've had a number of Progressive Democratic

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Speaker 3: members join us this week, Senator expressing a lot of frustration,

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Speaker 3: Jim McGovern, Congresswoman Debbie Dingle, Mark Pocan all saying that

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Speaker 3: they're concerned that the President might agree to some things

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Speaker 3: that they're not comfortable with, including work requirements. But I

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Speaker 3: feel like the whole narrative has shifted in the last

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Speaker 3: twenty four hours, where now conservative Republicans are very concerned

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Speaker 3: that they're not going to see the budget cuts that

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Speaker 3: they want in this deal. Do you trust the president

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Speaker 3: to represent you in this negotiation?

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Speaker 4: Look, I have confidence in the negotiating team who are

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Speaker 4: sitting across the table from Speaker McCarthy's team, and I

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Speaker 4: think the bottom line here is that threatening financial cataclysm

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Speaker 4: as a legislative tactic, and that's what the House majority

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Speaker 4: is doing in these cases, is an unsound way to govern.

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Speaker 4: We have a federal budget process. The American people expressed

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Speaker 4: their will in November and elected a Republican House, and

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Speaker 4: what we should be doing is rather than through a

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Speaker 4: crisis of choice, threatening a default on US sovereign obligations,

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Speaker 4: and that, as you know, doesn't mean a government shutdown.

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Speaker 4: It means a massive financial shock, likely recession, likely global recession,

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Speaker 4: huge negative impacts on US households and businesses. Rather than

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Speaker 4: engaging in that kind of reckless financial brinksmanship, what I

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Speaker 4: would expect a mature House majority to do is to

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Speaker 4: go through the federal budget process and workout compromises in

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Speaker 4: common ground. That way, that's not the decision that they've made,

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Speaker 4: and they've forced the matter to this point, and now

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Speaker 4: it's going to have to be worked out in these

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Speaker 4: final few days of negotiations.

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Speaker 3: What would additional work requirements for things like food stamps

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Speaker 3: mean for the state of Georgia? Is that something that

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Speaker 3: you're uncomfortable with.

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Speaker 4: Look, I'm not gonna speculate about the specific outlines of

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Speaker 4: potential components of the legislative.

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Speaker 3: Text, just in principle.

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Speaker 4: I mean, I will reserve my judgment. You're gonna have

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Speaker 4: to look at the arrangement as a whole, and so

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Speaker 4: I'm going to reserve my judgment about potential specific provisions

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Speaker 4: of the negotiation until we have something that's hammered out

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Speaker 4: in the full and we can consider the full impact

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Speaker 4: on the state of Georgia and the United States. But

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Speaker 4: the bottom line is that, as always, I will diligently

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Speaker 4: look at what's been proposed, I will consider my state's

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Speaker 4: interest in the national interest, and I'll vote accordingly.

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Speaker 3: There have been a lot of concerns obvious for previous

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Speaker 3: reasons about the timeline here, Senator, and you know whether

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Speaker 3: it gets through the House. But then also your chamber

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Speaker 3: I suspect you don't like hearing the Senate referred to

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Speaker 3: as a rubber stamp in this example. What is this

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Speaker 3: process going to look like?

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Speaker 4: Well, right now we are on call to expect votes

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Speaker 4: on a twenty four hour call, so at any time

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Speaker 4: we may need to return in order to vote, and

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Speaker 4: every Senator is prepared to do so as these talks continue.

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Speaker 4: But you know, the threat of default as a legislative

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Speaker 4: negotiating tactic is already doing damage to the US economy

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Speaker 4: and to the long run financial credibility of US sovereign commitments,

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Speaker 4: And again, I think we need to step back and

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Speaker 4: recognize that this kind of brinksmanship and the threat of

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Speaker 4: financial calamity is deeply destructive to the country. And I

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Speaker 4: think it's an irresponsible way for the House to try

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Speaker 4: to negotiate a federal budget when we have other processes

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Speaker 4: that will allow us to find common ground without doing

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Speaker 4: such damage to US credibility and the overall economy.

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Speaker 3: Do you wish the President had engaged earlier or do

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Speaker 3: you like the way he's handled himself through this whole process.

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Speaker 4: Senator No, this is a delicate situation, Joe, and so,

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Speaker 4: with great respect to you, I'm not going to gainsay

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Speaker 4: or give play by play commentary on the tough decisions

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Speaker 4: that negotiators are making. In order to responsibly govern the

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Speaker 4: country and ensure that the US makes good on its

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Speaker 4: sovereign obligations. There is a huge amount at stake here,

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Speaker 4: far beyond routine politics and routine punditry. We need to

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Speaker 4: land the plane and get to a place where the

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Speaker 4: American people and indeed the world, have confidence that the

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Speaker 4: US will make good on its commitments.

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Speaker 3: Well, Senator, I want to ask you about something you

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Speaker 3: can discuss. And that's a pretty big deal for Georgia.

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Speaker 3: As Hyundai and LG announced that they will build a

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Speaker 3: more than four billion dollar electric battery plant as part

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Speaker 3: of a part of Funday's new electric vehicle assembly plant

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Speaker 3: in Southeast Georgia. Are EV's going to be a major

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Speaker 3: part of the future economy in your state.

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Speaker 4: This is a really big deal, Joe. It's a great

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Speaker 4: day for Georgia. Since I was elected, I set out

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Speaker 4: the vision to establish Georgia as the world leader in

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Speaker 4: advanced energy innovation and manufacturing, and the manufacturing incentives that

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Speaker 4: we passed last year are accelerating the development of Georgia

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Speaker 4: as that world leader. Here we have LG and Hyundai

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Speaker 4: announcing a four point three billion dollar, three thousand job

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Speaker 4: joint venture to produce electric vehicle batteries in the state.

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Speaker 4: We've seen multi billion dollar expansion of solar manufacturing in

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Speaker 4: the state. Financial Times analysis that Georgia has benefited as

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Speaker 4: much as any other state in the country from these

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Speaker 4: manufacturing incentives in terms of new manufacturing capex and FDI

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Speaker 4: coming into the state. I was in Korea just a

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Speaker 4: few weeks ago on a trade mission, meeting with senior

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Speaker 4: executives from both companies to encourage them to take this step,

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Speaker 4: and I'm grateful for the investment in the state of

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Speaker 4: Georgia and the good paying jobs will come with it.

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Speaker 3: I'm glad you mentioned the Trade Mission because there are

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Speaker 3: a lot of questions about rare earths and very difficult

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Speaker 3: to mine materials that are in many cases required to

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Speaker 3: build batteries like these. Is the country doing enough to

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Speaker 3: get them?

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Speaker 4: I think we do need to do more, and the

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Speaker 4: manufacturing incentives that we passed last year are meant in

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Speaker 4: large part to reduce US dependence on Chinese supply chains,

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Speaker 4: both for economic resilience and geostrategic reasons, and having diversified

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Speaker 4: access to those critical minerals is crucial for our national

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Speaker 4: security and our energy security. I think it's an opportunity

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Speaker 4: for the Congress and the Administration to work together to develop

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Speaker 4: the international trade relation Ships, including with some of our

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Speaker 4: closest allies, for example in Canada and Australia, to ensure

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Speaker 4: that producers in the US have access to those commodities.

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Speaker 3: Senator, thank you. I look forward to talking more about

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Speaker 3: this on Balance of Power on Bloomberg TV starting at

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Speaker 3: five pm Eastern time. Senator John Asoff will be with

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Speaker 3: us the view from the Democrat from Georgia. As we

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Speaker 3: turn now to the Republican from Wisconsin. Thank you, senator

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Speaker 3: for being here. Brian Style, of course, chare the House

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Speaker 3: Administration Committee. We told you he was on his way in.

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Speaker 3: We want to hear the Republican view on this. Congressman,

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Speaker 3: thanks for joining us. We're trying to follow the bead

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Speaker 3: and I know that there's a lot of noise out there.

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Speaker 3: Are you concerned about reports that any final deal here

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Speaker 3: may not include significant budget cuts.

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Speaker 5: I think at the end of the day that it will.

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Speaker 5: I mean, these are the final hours of negotiations. We're

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Speaker 5: negotiating off of the only bill that was passed to

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Speaker 5: raise the dead sealing, the Republican bill that we passed

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Speaker 5: now almost a month ago. I think we have a

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Speaker 5: great opportunity here to actually limit the growth of our

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Speaker 5: government and save taxpayers money. We'll see what deal comes

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Speaker 5: out as, but I'm optimistic that at the end of

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Speaker 5: the day we're going to see significant spending reforms.

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Speaker 3: Well, speaking of the end of the day, there's a

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Speaker 3: thought that we actually might get a deal here today,

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Speaker 3: Congress Finn and that would go a long way to

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Speaker 3: meeting the seventy two hour rule, maybe giving some time

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Speaker 3: for this to move through the Senate. Could that actually happen?

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Speaker 5: You know, anything can happen. I mean, the reason we're

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Speaker 5: here in the first place, at the final hour is

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Speaker 5: the President refused to negotiate. I think everybody looking back

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Speaker 5: recognizes how dangerous and reckless President Biden's decision to refuse

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Speaker 5: to negotiate was. The Senate has also been completely inept.

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Speaker 5: They've passed no legislation to raise the dead ceiling whatsoever,

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Speaker 5: So we're left to negotiate off of the House pass bill.

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Speaker 5: I'd love to see us get a deal done. I

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Speaker 5: would have loved to see us get a deal done

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Speaker 5: weeks ago. We're now coming into the home stretch here

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Speaker 5: on a Friday, on a long weekend. I'd love to

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Speaker 5: see us have this deal completed at any moment that

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Speaker 5: we can.

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Speaker 3: Well, it should be known that Brian's style is still

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Speaker 3: here in the nation's capital. And that makes you well unique,

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Speaker 3: we'll say, Congressman, because most members took off, is that

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Speaker 3: in hopes of a deal? Because I drove into town

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Speaker 3: this morning, I thought it was Sunday.

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Speaker 5: It feels like that in some ways there's a smoker

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Speaker 5: of us still working to try to make sure that

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Speaker 5: we get this deal across the line. I mean, I

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Speaker 5: am committed to making sure that we don't enter into

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Speaker 5: a spot where the adiency's government failed to make payments

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Speaker 5: that are owned. The way that we do that is

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Speaker 5: by increasing the debt ceiling, but we need to do

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Speaker 5: so reasonably and responsibly, and so the ultimate hope here

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Speaker 5: is that at the end of the day we find

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Speaker 5: ourselves in a position where we've subsequently reformed our spending

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Speaker 5: patterns in Washington, getting inflation under control, working to grow

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Speaker 5: the economy. Hopefully our negotiators will be able to get

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Speaker 5: this across the line in the near future.

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Speaker 3: I've been stressing to our listeners and our viewers today

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Speaker 3: on Bloomberg Congressman that there's just a lot we don't know,

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Speaker 3: and a lot of things people are hearing in the

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Speaker 3: news may not end up in a final so we

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Speaker 3: have to be very careful here. But I am compelled

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Speaker 3: by the conversation to the extent that you can bring

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Speaker 3: us inside the Republican Caucus in the House. This letter

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Speaker 3: from the Freedom Caucus with the hashtag hold the line

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Speaker 3: from Chip Roy, who was awfully upset on the floor

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Speaker 3: yesterday as people were leaving town and seemingly concern that

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Speaker 3: a deal might be cut. That does not reflect that

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Speaker 3: bill that you mentioned that Republicans passed a few weeks

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Speaker 3: ago limit save grow. Is that a concern of yours.

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Speaker 5: I think what we're saying is pretty standard messaging in

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Speaker 5: the home stretch of a deal coming together. Before I

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Speaker 5: came to office just over four years ago, I was

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Speaker 5: in the private sector and did a lot of business transactions.

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Speaker 5: There's nothing like the home stretch of a deal where

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Speaker 5: both sides recognize that the deal is likely. That's the

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Speaker 5: moment in time where you push the hardest to make

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Speaker 5: sure that you're getting the best deal you can for

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Speaker 5: the American people. And so my conservative friends in the House,

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Speaker 5: we want the deal that most most closely represents the

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Speaker 5: bill that was passed in the House. Obviously, we're committed

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Speaker 5: to allowing our negotiators to strike that deal for the

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Speaker 5: American people. I'm optimistic at the end of the day

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Speaker 5: that at the end of the day we're actually going

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Speaker 5: to see a really a pretty positive conservative negotiated agreement.

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Speaker 3: It's a pretty fascinating time when you have the Freedom

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Speaker 3: Caucus getting upset or frustrated I'll use the word with

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Speaker 3: the speaker, and you've got progressive Democrats pretty upset with

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Speaker 3: President Biden for what they're hearing about elements that they

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Speaker 3: don't love. Does that mean that this is actually going

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Speaker 3: the way it's supposed to go. That's sort of the

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Speaker 3: definition of compromise.

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Speaker 1: Isn't it.

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Speaker 5: Yeah, any deal that ultimately gets done in a period

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Speaker 5: of time of divided government is going to have to

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Speaker 5: have Democrats and Republicans coming together. We knew that when

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Speaker 5: we passed the Limit Safe Grow Act that at the

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Speaker 5: end of the day this would be ability. We would

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Speaker 5: have to get through the Senate, and we would have

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Speaker 5: to have signed by a Democratic President of the United States.

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Speaker 5: I don't think anybody was lost on the idea that

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Speaker 5: there would be adjustments, changes, tweaks to the bill. I

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Speaker 5: think at the end of the day that's what we'll see.

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Speaker 5: But the goal here is that I think the bill

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Speaker 5: as we pass is quite reasonable and appropriate, and we

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Speaker 5: have an opportunity to really bring the President to the table.

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Speaker 5: Things is I think is common sense is requiring able bodied,

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Speaker 5: childless adults to be working a minimum of twenty hours

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Speaker 5: a week in order to receive benefits. Hopefully we'll see

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Speaker 5: these in the final package.

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Speaker 3: I'm sure you want to read this bill in the

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Speaker 3: speakers promising you seventy two hours to read it. Bertie,

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Speaker 3: are you comfortable with Speaker McCarthy as your representative, along

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Speaker 3: with Patrick McHenry, Garrett Graves and others to bring you

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Speaker 3: a product you can vote yes on?

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Speaker 5: Yeah? No, I'm confident in all three. I'm great friends

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Speaker 5: with Patrick McHenry and Garrett Graves, who are the lead

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Speaker 5: negotiators for the House. There are two individuals who know

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Speaker 5: how to get a deal done and understand the core

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Speaker 5: conservative principles of how we're going to get inflation under

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Speaker 5: control and get our broader spending picture in place. People

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Speaker 5: broadly have I think woefully missed underestimated Speaker McCarthy. I

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Speaker 5: remember listening to pundit's claiming that he would never become speaker.

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Speaker 5: It took a little longer than I think many of

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Speaker 5: us in the House wanted. But at the end of

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Speaker 5: the day, what we've really, I think shown is that

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Speaker 5: Republicans in the House are unified, and this our strength

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Speaker 5: is really from that unified front. That's how we passed

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Speaker 5: the Limit Safe Grow Act. It's how we ultimately brought

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Speaker 5: President Biden to the table to negotiate. Not lost on

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Speaker 5: me that my Democratic colleagues are frustrated that President Biden's

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Speaker 5: strategy of putting his head in the sand and hoping

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Speaker 5: this would go away I was not as successful as tactic.

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Speaker 3: Well, it'll be interesting to see who's smiling after this

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Speaker 3: sole deal and who isn't. I appreciate your staying in Washington.

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Speaker 3: Forest Congressman Brian Style, the Republican from Wisconsin, Chairman of

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Speaker 3: the House Administration Committee. So there we go. There's the

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Speaker 3: view from both sides. Maybe this thing ends up somewhere

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Speaker 3: in the middle.

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Speaker 1: You're listening to The Bloomberg Sound on podcast. I'll catch

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Speaker 1: the program live weekdays at one Eastern on Bloomberg Radio,

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Speaker 1: flagship New York station, Just say Alexa play Bloomberg eleven thirty.

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Speaker 3: As I mentioned, Speaker McCarthy says he's not terribly concerned

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Speaker 3: about the concern the pushback from the Freedom Caucus. He

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Speaker 3: was asked about it today that Nick, you a little

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Speaker 3: bit concerned about No, No, not at all.

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Speaker 6: Look what's going through right now is members don't know

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Speaker 6: what's all in.

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Speaker 5: Do you all report things that aren't really true in

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Speaker 5: the process, so people get concerned.

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Speaker 6: You ask him questions if you wonder about holding the line?

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Speaker 6: Where have we been all the time? We don't want

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Speaker 6: to be in this deadline. We wanted to solve this

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Speaker 6: months before.

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Speaker 3: Okay, hold the line hashtag hold the line. As we

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Speaker 3: assemble the panel, Rick Davis and Jeanie Shanzeno dive in

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Speaker 3: now Bloomberg Politics contributors who've survived a week of this

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Speaker 3: sex He's been a lot more than that, Rick, How

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Speaker 3: much of a worry is this for Speaker McCarthy. It

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Speaker 3: does look like, at least based on reports now and again,

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Speaker 3: it could all change. The Congressman Brian Style says he

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Speaker 3: expects significant cuts, but we're not hearing that from the

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Speaker 3: leaks coming out of the room. Rick, what do they do?

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Speaker 7: It just depends on what significant is right and uh

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Speaker 7: and what is it? He's not going to be twenty

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Speaker 7: two levels and it sounds like they've carved defense increases out,

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Speaker 7: So they've they that's going to be a give to

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Speaker 7: a lot of these guys. And as everybody has said,

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Speaker 7: you know, we really don't know what the trade offs

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Speaker 7: have been until we see the whole package and it's

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Speaker 7: in its final form. So uh, at the end of

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Speaker 7: the day, though, I mean, like, I don't think his

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Speaker 7: worry is getting it through his caucus, you know, for

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Speaker 7: a vote. I mean, the Freedom Caucus is thirty three guys.

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Speaker 7: I mean, this is not going to stop them from

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Speaker 7: passing a deal. The real vulnerability he has is the

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Speaker 7: revolution that could take place post deal, where any one

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Speaker 7: of these guys could trigger, you know, a call on

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Speaker 7: his speakership. So I mean, will they devolve to that?

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Speaker 7: Will will it get that level of acrimony? That's really

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Speaker 7: going to be up to his ability to hold his

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Speaker 7: team in place. But this deal is going to get

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Speaker 7: done with a lot more people than the Freedom Caucus

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Speaker 7: has to impose it.

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Speaker 3: And I suppose the progressive wing of the Democratic Party

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Speaker 3: also has in the House here, Genie, because you know,

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Speaker 3: Joe Biden's got something in common with the speaker right.

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Speaker 8: Now, he absolutely does. And it's not just the House,

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Speaker 8: it's also the Senate, where you may see peel off

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Speaker 8: from people like Fetterman, Warren Sanders, And so that's going

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Speaker 8: to be tricky as well. You've got one vote there

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Speaker 8: for Democrats and you've got four for Republicans. In the House.

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Speaker 8: You know, we hear that Republicans could lose as many

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Speaker 8: as fifty and then to Rick's point, they would need

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Speaker 8: Democrats to go along with it, which we suspect that

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Speaker 8: they will. But the real challenge for Kevin McCarthy, somebody

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Speaker 8: who faced sixteen rounds in the most basic election to

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Speaker 8: become speaker, is going to then like face a challenge

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Speaker 8: to his speakership and to his job. I mean, that's

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Speaker 8: a very real possibility at this point. And you know,

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Speaker 8: let's not forget we don't know what is in this thing.

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Speaker 8: But while everything we're hearing is it is going to

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Speaker 8: be a light spending cut by the measure of conservatives

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Speaker 8: in the House. And that is why we're hearing chip Roy,

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Speaker 8: you know, literally screaming out this is not enough and

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Speaker 8: it will never be enough for those guys.

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Speaker 3: Well, let's hear from chip Roy if you want to

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Speaker 3: know what they're talking about inside the Freedom Caucus.

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Speaker 9: Anybody making a deal right now? Four trillion dollars? Are

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Speaker 9: you out of your frigging mind? When I came to

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Speaker 9: this town as a lawyer on the Senate of the

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Speaker 9: Shared Committee the entire debt, what's six trillion?

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Speaker 6: And what are we doing?

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Speaker 9: We're having a conversation, following my mind, a conversation about

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Speaker 9: raising our debt another four trillion dollars? Why so we

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Speaker 9: continue to fund the very bureaucraft that at least my

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Speaker 9: colleagues on this side of the Aisle campaign against. Well,

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Speaker 9: guess what, you have a power of the purse for

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Speaker 9: a reason you should use it.

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Speaker 3: Rick, Does chip Roy talk to Speaker McCarthy like that

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Speaker 3: when they're in person?

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Speaker 7: I have no doubt that this is the way chip

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Speaker 7: Roy talks to everybody when he's in person.

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Speaker 3: And so, uh, he is a passionate man. Uh and

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Speaker 3: and and and.

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Speaker 7: Although I would question him, like did he have that

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Speaker 7: same passion when Donald Trump increased that by eight trillion

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Speaker 7: dollars as when he was president? I mean, like I

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Speaker 7: I maybe he doth protest too much. Maybe you know,

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Speaker 7: he ought to think about the symmetry of his argument,

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Speaker 7: because if it's only about spending.

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Speaker 3: A good part of that four trillion.

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Speaker 7: He was just beefing about is uh is attributable to

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Speaker 7: Donald Trump? So uh not to not to give chip

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Speaker 7: Roy too much attention. He's he's he's the kind of

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Speaker 7: guy that likes to make these statements. He's going to

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Speaker 7: continue to do it no matter what this deal is.

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Speaker 7: You'll never make him happy, and maybe he would only

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Speaker 7: be happy with you a future government shut down because

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Speaker 7: the budget's not going to make him satisfied. So at

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Speaker 7: the end of the day, I really do question whether

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Speaker 7: or not this takes away a lot of power from

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Speaker 7: the Freedom Caucus when they actually don't turn up with

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Speaker 7: the kind of deal they were looking for. I would

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Speaker 7: remind them all they were actually facing a clean debt

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Speaker 7: limit increase, and so getting anything out of this package

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Speaker 7: is actually a victory for the Speaker.

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Speaker 3: Well, of course, Jennie, for every chip Roy on the right,

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Speaker 3: there's an AOC on the left.

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Speaker 10: Here on the last day of this session, Republicans have

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Speaker 10: decided to skip down. But what this debt ceiling debate

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Speaker 10: really is about is the fact that they have run

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Speaker 10: up a bill. Republicans have run up a bill that

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Speaker 10: they now do not want to pay. They have run

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Speaker 10: up this bill bill with extremely excessive military spending. They

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Speaker 10: have run up this bill with extraordinary tax cuts for

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Speaker 10: the wealthiest people in this country.

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Speaker 3: Maybe Alexandria Cossio Courtez and Chip Roy should get together

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Speaker 3: at the end of this thing and break bread.

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Speaker 8: Jeanie, that's right, And you know, let's you know, do

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Speaker 8: a little fact checking on alexandri Casio Cortez. It is

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Speaker 8: not at the hands of one party or one president

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Speaker 8: that we have run up this deficit. You go back

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Speaker 8: two decades, you can see it as run up under

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Speaker 8: Democrat and Republican presidencies, Democrat and Republican control of the

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Speaker 8: House and Senate. So you know, it is not true

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Speaker 8: to say this has just been Republicans, although they did

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Speaker 8: under President Trump. So you know, there is some fact

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Speaker 8: checking to do there. And you know, you listen to

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Speaker 8: somebody like Chip Roy and he does seem to me,

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Speaker 8: I'm now starting to call him Louise from Thelma and Louise.

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Speaker 8: This guy is ready to go off that cliff. And

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Speaker 8: it was Louise who drove the car. I double checked

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Speaker 8: for you. So and that's where I feel this is

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Speaker 8: very scary. We could see this thing. It's May twenty six,

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Speaker 8: and he sounds like a man ready to push the

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Speaker 8: accelerator and get us over there. And of course, let's

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Speaker 8: not forget Donald Trump is calling for that.

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Speaker 3: I just I'm stuck on that. Rick. Are you ready

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Speaker 3: to go off the cliff? You're a genie or what?

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Speaker 7: No, I am not Thelma and I'm not whoever the

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Speaker 7: other one was, Louise.

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Speaker 3: No, I don't think you were. I'm just picturing that

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Speaker 3: convertible right now. Yeah, it's uh.

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Speaker 7: Look, I mean, we tend to focus on the polar

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Speaker 7: ends of these political spectrums because they make the most noise.

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Speaker 7: The vast majority of Senators and Congressmen are gonna easily

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Speaker 7: pass whatever comes out of this negotiation because the White

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Speaker 7: House is going to instruct the Democrats to do it,

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Speaker 7: and the Speaker is going to instruct Republicans to do it,

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Speaker 7: and you're going to have more than enough votes with

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Speaker 7: these combined organizations to pass this bill. That is not

438
00:22:53,920 --> 00:22:56,840
Speaker 7: going to do any I mean, like, it's not. No

439
00:22:56,880 --> 00:22:59,280
Speaker 7: one's going to hold that up. People like Mike Lee

440
00:22:59,720 --> 00:23:02,520
Speaker 7: will make folks go through the process in the Senate

441
00:23:02,600 --> 00:23:05,520
Speaker 7: rather than just getting it done through a unanimous consent provision.

442
00:23:05,960 --> 00:23:08,560
Speaker 7: But that's all they can do is slow it down.

443
00:23:08,680 --> 00:23:12,000
Speaker 7: And the reality is, if they don't have a deal today,

444
00:23:12,160 --> 00:23:14,560
Speaker 7: I mean, those kinds of things are gonna matter because

445
00:23:14,600 --> 00:23:17,000
Speaker 7: they are running out of legislative days to actually get

446
00:23:17,000 --> 00:23:17,680
Speaker 7: something done here.

447
00:23:19,080 --> 00:23:21,480
Speaker 3: So Geini, what does the next twenty four to forty

448
00:23:21,480 --> 00:23:24,720
Speaker 3: eight hours look like. There was a hope that Wall

449
00:23:24,760 --> 00:23:27,200
Speaker 3: Street would see something, that investors would see something before

450
00:23:27,200 --> 00:23:29,040
Speaker 3: everybody went away for the weekend. Although here we got

451
00:23:29,040 --> 00:23:30,879
Speaker 3: the Dow up almost three hundred, the S and p

452
00:23:31,040 --> 00:23:33,200
Speaker 3: is up fifty points. I mean, I guess the market

453
00:23:33,200 --> 00:23:36,639
Speaker 3: has decided that this is going to happen. They've been

454
00:23:36,680 --> 00:23:38,760
Speaker 3: betting on it that way all along. Aside from a

455
00:23:38,760 --> 00:23:41,119
Speaker 3: few gyrations, we've seen some hiccups in the bond market.

456
00:23:41,119 --> 00:23:42,560
Speaker 3: But maybe it doesn't matter. Does this give them a

457
00:23:42,560 --> 00:23:43,640
Speaker 3: couple days to figure it out?

458
00:23:44,119 --> 00:23:46,440
Speaker 8: You know, I think it's still possible. Like Eric said,

459
00:23:46,440 --> 00:23:48,840
Speaker 8: we see something today, maybe not, but I do think

460
00:23:48,880 --> 00:23:51,919
Speaker 8: over this weekend we certainly see something come out and

461
00:23:52,280 --> 00:23:55,920
Speaker 8: hopefully that makes everybody feel a little bit of relief.

462
00:23:55,960 --> 00:23:58,239
Speaker 8: But of course we are up against the clock. So

463
00:23:58,600 --> 00:24:01,600
Speaker 8: imagine we see a principle deal. These guys then have

464
00:24:01,640 --> 00:24:04,920
Speaker 8: to go sell this thing. They are selling the same deal,

465
00:24:05,080 --> 00:24:07,919
Speaker 8: and you're gonna hear McCarthy say it's big time cuts

466
00:24:08,119 --> 00:24:10,959
Speaker 8: and Biden say, hey, guys, it's not that big, And

467
00:24:11,000 --> 00:24:13,720
Speaker 8: then you're gonna see the ends breakaway, and this thing

468
00:24:13,800 --> 00:24:15,840
Speaker 8: is gonna have to be passed through the middle, and

469
00:24:15,880 --> 00:24:17,760
Speaker 8: that is going to be the problem when you're talking

470
00:24:17,760 --> 00:24:21,200
Speaker 8: about a clock that's this tight. They vote Tuesday or Wednesday,

471
00:24:21,240 --> 00:24:23,399
Speaker 8: so you know, this thing in the House and then

472
00:24:23,440 --> 00:24:25,400
Speaker 8: it goes to the Senate where you'll see some peel off.

473
00:24:25,480 --> 00:24:28,520
Speaker 8: So I think there's still a question. Hopefully the market

474
00:24:28,600 --> 00:24:31,000
Speaker 8: just yawns and says, these guys do this all the time.

475
00:24:31,080 --> 00:24:33,480
Speaker 8: This thing will work itself out. But what if we

476
00:24:33,640 --> 00:24:36,560
Speaker 8: do on June first, hit a debt ceiling and you

477
00:24:36,600 --> 00:24:39,159
Speaker 8: see stocks plunge, you see bond yield spike. You know

478
00:24:39,280 --> 00:24:41,880
Speaker 8: that is we just don't know because we've never been

479
00:24:41,960 --> 00:24:42,680
Speaker 8: here before.

480
00:24:43,119 --> 00:24:44,800
Speaker 3: That's why they're gonna have to keep it, you know,

481
00:24:44,880 --> 00:24:48,240
Speaker 3: three four day maybe it's a week long short term solution.

482
00:24:48,359 --> 00:24:50,400
Speaker 3: Handy here, right Rick, Once they actually get the deal,

483
00:24:51,000 --> 00:24:52,040
Speaker 3: might need to buy some time.

484
00:24:52,960 --> 00:24:55,359
Speaker 7: Uh yeah, Except when you do that, you take the

485
00:24:55,359 --> 00:24:57,880
Speaker 7: pressure off of getting the deal. And I think now

486
00:24:58,040 --> 00:25:00,680
Speaker 7: there's it sounds like from the inner views you've done

487
00:25:00,680 --> 00:25:04,760
Speaker 7: today and what we're hearing in reports that they actually

488
00:25:04,760 --> 00:25:06,439
Speaker 7: feel like their backs are up against the wall and

489
00:25:06,480 --> 00:25:08,280
Speaker 7: that they don't have a spare day. And the last

490
00:25:08,280 --> 00:25:10,960
Speaker 7: thing you want to do is actually enter into that conversation.

491
00:25:11,119 --> 00:25:12,960
Speaker 7: Oh well, we could kick the can for a couple

492
00:25:13,000 --> 00:25:14,600
Speaker 7: of days and just you know, like go home and

493
00:25:14,640 --> 00:25:18,960
Speaker 7: eat some barbecue. And so I do think the urgency

494
00:25:19,760 --> 00:25:22,760
Speaker 7: is having its effect on the negotiations, which means you're

495
00:25:22,880 --> 00:25:25,480
Speaker 7: likely to get something to come out. Maybe that white

496
00:25:25,480 --> 00:25:27,720
Speaker 7: smoke starts coming out of the chimney of the House

497
00:25:27,720 --> 00:25:29,520
Speaker 7: of Representatives sometimes later today.

498
00:25:29,840 --> 00:25:31,480
Speaker 3: How will they announce it, Rick, how we're going to

499
00:25:31,520 --> 00:25:33,679
Speaker 3: find out? Is this going to be the speaker walking

500
00:25:33,720 --> 00:25:35,960
Speaker 3: up to a microphone, or we see a joint statement,

501
00:25:36,280 --> 00:25:38,000
Speaker 3: or could take on any form.

502
00:25:37,880 --> 00:25:40,600
Speaker 7: Yeah, a joint statement will just slow it down, like

503
00:25:40,640 --> 00:25:43,000
Speaker 7: they'll be negotiating what they say in a joint statement.

504
00:25:43,040 --> 00:25:46,800
Speaker 7: So my guess is that there'll be a statement out

505
00:25:46,800 --> 00:25:48,840
Speaker 7: of the White House, whether they do it through the

506
00:25:48,880 --> 00:25:51,960
Speaker 7: Press secretary or or somebody else.

507
00:25:52,320 --> 00:25:55,040
Speaker 3: It really is is just a formality.

508
00:25:55,640 --> 00:25:58,120
Speaker 7: I have no doubt because he's been doing it three

509
00:25:58,160 --> 00:25:59,960
Speaker 7: times a day every day for the last two weeks.

510
00:26:00,040 --> 00:26:02,760
Speaker 7: It the speaker will walk out and hold a presser

511
00:26:03,240 --> 00:26:05,119
Speaker 7: and put his own spin on it.

512
00:26:05,200 --> 00:26:08,760
Speaker 3: So and he's really good at that.

513
00:26:08,800 --> 00:26:12,760
Speaker 7: He'll get there first, He'll the ink won't be dry

514
00:26:12,880 --> 00:26:15,919
Speaker 7: on that deal before he's actually talking to reporters about it.

515
00:26:16,000 --> 00:26:19,919
Speaker 3: The American people have spoken Rick Davis and Genie Shanzano

516
00:26:20,040 --> 00:26:22,040
Speaker 3: many thanks. I mean, we do hope that there's a

517
00:26:22,080 --> 00:26:26,600
Speaker 3: deal here and not a Thelma and Louise. You sure,

518
00:26:28,240 --> 00:26:34,639
Speaker 3: I'm sure. Yeah, No, that's not the way this movie

519
00:26:34,680 --> 00:26:36,120
Speaker 3: is going to end.

520
00:26:37,960 --> 00:26:38,080
Speaker 1: Now.

521
00:26:38,160 --> 00:26:40,520
Speaker 3: I know it sounds tempting. That's not what we want.

522
00:26:42,040 --> 00:26:44,879
Speaker 3: Turn the car off.

523
00:26:43,640 --> 00:26:48,400
Speaker 1: You're listening to the Bloomberg Sound on podcast. Catch us

524
00:26:48,440 --> 00:26:50,440
Speaker 1: live weekdays at one Eastern.

525
00:26:50,200 --> 00:26:53,360
Speaker 2: On Bloomberg dot com, the iHeartRadio app, and the Bloomberg

526
00:26:53,400 --> 00:26:56,840
Speaker 2: Business app, or listen on demand wherever you get your podcasts.

527
00:26:57,720 --> 00:27:00,640
Speaker 3: A lot of concern about a recession later on this year.

528
00:27:00,640 --> 00:27:03,080
Speaker 3: It depends who you talk to, but the idea of

529
00:27:03,560 --> 00:27:06,480
Speaker 3: rising oil prices as we go into the summer driving

530
00:27:06,520 --> 00:27:09,560
Speaker 3: season is not making anyone terribly comfortable. As an OPEC

531
00:27:09,640 --> 00:27:12,000
Speaker 3: plus meeting next week, and there is a lot of

532
00:27:12,040 --> 00:27:15,440
Speaker 3: talk about another production cut, and you put this all

533
00:27:15,480 --> 00:27:18,399
Speaker 3: together with the throes of debate around the debt ceiling,

534
00:27:18,480 --> 00:27:20,560
Speaker 3: just great uncertainty, which is why we wanted to talk

535
00:27:20,600 --> 00:27:24,720
Speaker 3: with Bob McNally, the founder and president of Rapidan Energy Advisors,

536
00:27:24,760 --> 00:27:27,480
Speaker 3: in a trusted voice for us here on Bloomberg when

537
00:27:27,480 --> 00:27:30,119
Speaker 3: it comes to matters like these, keeping in mind that

538
00:27:30,200 --> 00:27:33,600
Speaker 3: permitting reform may be a big component in whatever deal

539
00:27:33,680 --> 00:27:36,960
Speaker 3: is announced today, tomorrow, or ever, assuming that they come

540
00:27:37,000 --> 00:27:39,280
Speaker 3: to terms on all of this. Bob, it's great to

541
00:27:39,320 --> 00:27:41,439
Speaker 3: have you back. Thanks for joining us ahead of the weekend.

542
00:27:41,520 --> 00:27:44,400
Speaker 3: This is a big weekend for you actually, with Memorial

543
00:27:44,480 --> 00:27:47,080
Speaker 3: Day upon us and the idea of a production cut

544
00:27:47,160 --> 00:27:49,679
Speaker 3: hitting right at the same time, I'm wondering what's on

545
00:27:49,720 --> 00:27:52,679
Speaker 3: your mind. We've got WTI in the low seventies at

546
00:27:52,680 --> 00:27:55,240
Speaker 3: this point. Are we in for much higher prices later

547
00:27:55,320 --> 00:27:55,680
Speaker 3: this year?

548
00:27:58,280 --> 00:28:01,320
Speaker 11: Good to be with you, Joe. You know, I think

549
00:28:01,400 --> 00:28:05,439
Speaker 11: later this year, unfortunately, oil prices are headed up. You know,

550
00:28:05,480 --> 00:28:08,119
Speaker 11: we almost have a terrible choice. We can have a

551
00:28:08,160 --> 00:28:12,520
Speaker 11: healthily growing economy or we can have low oil prices.

552
00:28:12,760 --> 00:28:15,320
Speaker 11: But we probably can't have both. And the only thing

553
00:28:15,359 --> 00:28:18,160
Speaker 11: that's going to keep oil prices low is what many

554
00:28:18,160 --> 00:28:20,639
Speaker 11: people in the market fear right now, which is a

555
00:28:20,680 --> 00:28:23,800
Speaker 11: deep recession. You know that we're heading into a deep

556
00:28:23,840 --> 00:28:27,159
Speaker 11: downturn that'll keep gasoline prices low, oil prices low. But

557
00:28:27,840 --> 00:28:29,800
Speaker 11: if we're lucky and we have recovery, we have a

558
00:28:29,840 --> 00:28:33,040
Speaker 11: soft landing. The fundamentals and the oil market of tightening up

559
00:28:33,160 --> 00:28:35,880
Speaker 11: quite nicely. And I think we're looking at, you know,

560
00:28:36,160 --> 00:28:38,680
Speaker 11: heading back toward one hundred dollar cruit and well lower

561
00:28:38,680 --> 00:28:40,160
Speaker 11: four dollars gasoline prices.

562
00:28:40,520 --> 00:28:42,880
Speaker 3: Wow, all right, Well you just came right out with it.

563
00:28:43,160 --> 00:28:45,000
Speaker 3: Does that mean a production cut next week?

564
00:28:46,480 --> 00:28:46,520
Speaker 2: No?

565
00:28:46,800 --> 00:28:48,959
Speaker 11: You know, there's a parlor game going on about that.

566
00:28:49,040 --> 00:28:52,960
Speaker 11: OPEC PLUS will meet next Sunday on June fourth. They

567
00:28:53,040 --> 00:28:56,960
Speaker 11: floated the idea because they see speculative short positions building again.

568
00:28:57,040 --> 00:28:57,719
Speaker 4: They don't like that.

569
00:28:58,200 --> 00:29:02,160
Speaker 11: But our sense is they probably won't cut again. They

570
00:29:02,520 --> 00:29:05,240
Speaker 11: just cut in April, by surprise, and those cuts took

571
00:29:05,240 --> 00:29:08,040
Speaker 11: effect on May one, so we think they're probably gonna

572
00:29:08,080 --> 00:29:10,880
Speaker 11: wait and see how those cuts develop. I wouldn't rule

573
00:29:10,880 --> 00:29:13,000
Speaker 11: it out, can't rule it out. It'll be a close call,

574
00:29:13,280 --> 00:29:16,080
Speaker 11: but I think more likely than not they'll take a pass.

575
00:29:16,080 --> 00:29:18,880
Speaker 11: But as they showed us by surprise on April. Second,

576
00:29:18,880 --> 00:29:21,160
Speaker 11: they can meet at any time and cut again if

577
00:29:21,200 --> 00:29:21,600
Speaker 11: they need to.

578
00:29:21,880 --> 00:29:24,240
Speaker 3: Well that's a pretty big deal here. So Bob mcdowly's

579
00:29:24,240 --> 00:29:26,960
Speaker 3: telling us not to expect a cut next week, but

580
00:29:27,040 --> 00:29:29,840
Speaker 3: still to expect on hundred dollars a barrel oil later

581
00:29:29,880 --> 00:29:31,959
Speaker 3: on this year. So this really is an economic equation

582
00:29:32,040 --> 00:29:35,080
Speaker 3: for you, not an OPEC equation.

583
00:29:36,040 --> 00:29:36,680
Speaker 5: It really is.

584
00:29:36,920 --> 00:29:39,400
Speaker 11: It really is. It's all about the macroeconomy. You know,

585
00:29:39,520 --> 00:29:42,400
Speaker 11: we have demand growing, you know, well over two million

586
00:29:42,400 --> 00:29:44,560
Speaker 11: barrels a day this year if it's a healthy economy.

587
00:29:44,560 --> 00:29:47,160
Speaker 11: But Joe, would I bet the farm on a healthy

588
00:29:47,200 --> 00:29:48,320
Speaker 11: economy right now? No?

589
00:29:48,440 --> 00:29:48,920
Speaker 5: I would not.

590
00:29:49,240 --> 00:29:53,080
Speaker 11: I mean, there are huge macrore economic headwinds and uncertainties.

591
00:29:53,400 --> 00:29:55,720
Speaker 11: So you can make a case for oil prices being

592
00:29:55,800 --> 00:29:58,560
Speaker 11: range brown and so forth. And with the FED raising rates,

593
00:29:58,960 --> 00:30:01,840
Speaker 11: we had tight you know, long inflation and spending data today,

594
00:30:02,960 --> 00:30:05,880
Speaker 11: there's all kinds of headwind risk here. But my point

595
00:30:05,920 --> 00:30:10,160
Speaker 11: is this, if we're lucky and the economy recovers, oil

596
00:30:10,200 --> 00:30:13,760
Speaker 11: prices are going to resume really the boom phase, the

597
00:30:13,760 --> 00:30:16,120
Speaker 11: boom cycle phase they began in late twenty twenty one.

598
00:30:16,600 --> 00:30:19,080
Speaker 3: A lot of folks talking about permitting reform in Washington

599
00:30:19,120 --> 00:30:21,040
Speaker 3: at least these last couple of weeks. And you're probably

600
00:30:21,680 --> 00:30:23,920
Speaker 3: smirking because you know a lot more about it than

601
00:30:24,040 --> 00:30:25,840
Speaker 3: most of us. In fact, nobody seems to have a

602
00:30:25,880 --> 00:30:28,560
Speaker 3: clue of what form that might take in a final deal.

603
00:30:28,560 --> 00:30:31,000
Speaker 11: What would it look like, Bob Well, I think we're

604
00:30:31,040 --> 00:30:33,560
Speaker 11: looking at an order or a down payment. If anything.

605
00:30:33,600 --> 00:30:35,720
Speaker 11: It's not going to be the big permitting reform that

606
00:30:36,040 --> 00:30:38,040
Speaker 11: has been debated, you know, for the last year or so,

607
00:30:38,160 --> 00:30:40,480
Speaker 11: and they're not too far apart. But I think it

608
00:30:40,520 --> 00:30:44,040
Speaker 11: would be a down payment mainly focused on transmission, getting

609
00:30:44,120 --> 00:30:47,760
Speaker 11: power lines permitted. Right, Especially the Democrats and the environmentalists,

610
00:30:47,800 --> 00:30:50,680
Speaker 11: they realized, wait a minute, we're about to electrify cars.

611
00:30:51,000 --> 00:30:53,720
Speaker 11: We're going to have a huge demand for electricity. Yet

612
00:30:53,720 --> 00:30:57,280
Speaker 11: we can't permit the new solar and wind plant wind

613
00:30:57,320 --> 00:31:00,880
Speaker 11: power plants we have unless we get them connected to

614
00:31:00,920 --> 00:31:04,239
Speaker 11: the grid, and that takes many, many years due to

615
00:31:04,800 --> 00:31:09,640
Speaker 11: these very complicated, onerous permitting requirements that the oil and

616
00:31:09,680 --> 00:31:12,560
Speaker 11: gas industry has complained about for decades. All of a sudden,

617
00:31:12,560 --> 00:31:15,240
Speaker 11: the environmentalists are saying, I feel your pain, let's fix

618
00:31:15,280 --> 00:31:18,400
Speaker 11: this now. Republicans aren't in a hurry to help the

619
00:31:18,600 --> 00:31:23,240
Speaker 11: Democrats and the environmentalists out of their jam. Right they're saying, well, look,

620
00:31:23,480 --> 00:31:26,800
Speaker 11: will help you with the transmission lines to your wind farms,

621
00:31:26,800 --> 00:31:29,400
Speaker 11: but you're gonna help us with the pipelines we went

622
00:31:29,440 --> 00:31:33,000
Speaker 11: across state lines. Environmentalists are saying no way. So right

623
00:31:33,040 --> 00:31:35,200
Speaker 11: now it looks like neither side wants to give the

624
00:31:35,240 --> 00:31:37,800
Speaker 11: other side a win. So while it's a close call,

625
00:31:38,560 --> 00:31:40,640
Speaker 11: I don't think we'll see certainly a big reform in

626
00:31:40,680 --> 00:31:42,600
Speaker 11: this debt limit. We might see a little bit of

627
00:31:42,600 --> 00:31:45,040
Speaker 11: a down payment on a kind of a nothing burger

628
00:31:45,280 --> 00:31:46,640
Speaker 11: transmission idea.

629
00:31:47,160 --> 00:31:50,200
Speaker 3: So it's a nothing burger for or duravs. According to

630
00:31:50,240 --> 00:31:52,680
Speaker 3: Bob McNally, Hey, Bob, before you let us go, what

631
00:31:52,720 --> 00:31:56,000
Speaker 3: does the president of Rapidant Energy do on Memorial Day weekend?

632
00:31:56,080 --> 00:31:57,080
Speaker 3: Gas or charcoal?

633
00:31:58,880 --> 00:32:03,720
Speaker 11: It's gonna be okay, charcoal, you bet, yep, charge but

634
00:32:03,800 --> 00:32:08,440
Speaker 11: only the environmental kind, the very nice sort of a yeah.

635
00:32:08,080 --> 00:32:12,800
Speaker 3: You're doing the Hardwood I understand, Bob Hardwood's cookout.

636
00:32:13,520 --> 00:32:15,040
Speaker 5: Bob, have a great week.

637
00:32:15,080 --> 00:32:19,560
Speaker 3: Indeed, you two President Rapidan Energy advisors from the great

638
00:32:19,600 --> 00:32:22,040
Speaker 3: State of Virginia, Rick Davis and Genie Shanzino or with

639
00:32:22,160 --> 00:32:26,200
Speaker 3: us our signature panel one hundred dollars a barrel oil

640
00:32:26,560 --> 00:32:30,480
Speaker 3: four dollars a gallon gas genie. That won't play well

641
00:32:30,560 --> 00:32:31,440
Speaker 3: for the administration.

642
00:32:32,240 --> 00:32:32,680
Speaker 6: It won't.

643
00:32:32,760 --> 00:32:34,600
Speaker 8: And you know, it is so fastening to listen to

644
00:32:34,680 --> 00:32:37,520
Speaker 8: Bob because you know, his argument is, you know, mind

645
00:32:37,600 --> 00:32:40,600
Speaker 8: numbing two people, that you can't have both that if

646
00:32:40,760 --> 00:32:43,400
Speaker 8: if we have a soft landing, oil prices are going

647
00:32:43,440 --> 00:32:46,000
Speaker 8: to go up. I mean, that is just maddening to people.

648
00:32:46,040 --> 00:32:49,560
Speaker 8: But he's a thousand percent right obviously, and so this,

649
00:32:49,720 --> 00:32:52,880
Speaker 8: you know, really does put the administration in something of

650
00:32:52,920 --> 00:32:56,400
Speaker 8: a quandary. Although to be fair, oil prices are down

651
00:32:56,440 --> 00:32:58,800
Speaker 8: from where they were at their height during you know,

652
00:32:58,880 --> 00:33:01,880
Speaker 8: during the pandemic and just afterwards. So they're happy about that,

653
00:33:01,920 --> 00:33:04,040
Speaker 8: but they've got to be watched very very carefully.

654
00:33:05,840 --> 00:33:08,360
Speaker 3: Rick. That's going to be a problem for Joe Biden,

655
00:33:08,400 --> 00:33:11,840
Speaker 3: who had convinced everybody that gas prices had fallen because

656
00:33:11,880 --> 00:33:14,040
Speaker 3: of all the oil release from the spr are going

657
00:33:14,080 --> 00:33:17,280
Speaker 3: to be right back in the position we were in. Yeah.

658
00:33:17,320 --> 00:33:19,600
Speaker 7: Well, I would think that he is going to be

659
00:33:19,680 --> 00:33:23,040
Speaker 7: super sensitive to it, considering that he's got his name

660
00:33:23,040 --> 00:33:25,680
Speaker 7: on the ballot in a year and next summer is

661
00:33:25,680 --> 00:33:28,280
Speaker 7: going to be, you know, a really important period of

662
00:33:28,320 --> 00:33:32,360
Speaker 7: time for the campaign. So and he's convinced everybody that

663
00:33:33,360 --> 00:33:37,480
Speaker 7: gas prices are basically a referendum on his economics. I mean,

664
00:33:37,560 --> 00:33:40,640
Speaker 7: like you knows, he's almost led with his gin demanding

665
00:33:40,720 --> 00:33:44,240
Speaker 7: Saudi Arabia pump more oil, getting our own producers to

666
00:33:44,320 --> 00:33:47,000
Speaker 7: do more. Now, there have been some improvements on all

667
00:33:47,080 --> 00:33:50,520
Speaker 7: that since then, but if it does go up, I

668
00:33:50,520 --> 00:33:53,600
Speaker 7: think he's going to be owning it. And look, I mean,

669
00:33:53,680 --> 00:33:56,920
Speaker 7: this is the number one thing that voters have a

670
00:33:56,960 --> 00:34:00,240
Speaker 7: concern about Joe Biden is how his management of the

671
00:34:00,280 --> 00:34:03,080
Speaker 7: economy and his numbers are ten points less on the

672
00:34:03,120 --> 00:34:04,720
Speaker 7: economy than they are in overall.

673
00:34:04,440 --> 00:34:07,320
Speaker 3: Job apoot seventy two dollars of barrel right now for

674
00:34:07,480 --> 00:34:10,400
Speaker 3: WTI at Genie, they better refill that spr before it's

675
00:34:10,400 --> 00:34:11,759
Speaker 3: one hundred, that's right.

676
00:34:11,840 --> 00:34:13,520
Speaker 8: And you know, it's just fascinating you look at the

677
00:34:13,600 --> 00:34:17,160
Speaker 8: largest increases in the adverage price of gas. Number one Wisconsin,

678
00:34:17,200 --> 00:34:20,880
Speaker 8: the state the president desperately needs a fifteen percent Colorado

679
00:34:20,960 --> 00:34:23,239
Speaker 8: of twelve. I mean, those are the exact states you

680
00:34:23,360 --> 00:34:25,320
Speaker 8: don't want to go up because those are the states

681
00:34:25,520 --> 00:34:26,520
Speaker 8: you really need to win.

682
00:34:27,200 --> 00:34:29,319
Speaker 3: Right, should have asked Brian style what he was paying

683
00:34:29,320 --> 00:34:29,960
Speaker 3: to fill the tank.

684
00:34:32,520 --> 00:34:35,920
Speaker 1: You're listening to the Bloomberg Sound On podcast. Catch the

685
00:34:35,920 --> 00:34:39,799
Speaker 1: program live weekdays at one Eastern on Bloomberg Radio, the

686
00:34:39,880 --> 00:34:43,200
Speaker 1: tune in app, Bloomberg dot Com, and the Bloomberg Business App.

687
00:34:43,360 --> 00:34:46,200
Speaker 1: You can also listen live on Amazon Alexa from our

688
00:34:46,239 --> 00:34:50,720
Speaker 1: flagship New York station, Just say Alexa play Bloomberg eleven thirty.

689
00:34:51,680 --> 00:34:54,680
Speaker 3: We told you it was coming. It was the first

690
00:34:54,719 --> 00:34:58,360
Speaker 3: of March, Kayley, that Bloomberg reported a debtlimit breach to

691
00:34:58,480 --> 00:35:03,600
Speaker 3: squeeze US government contractors. First, you don't even have to

692
00:35:04,640 --> 00:35:07,120
Speaker 3: have a default for this to be an issue. Things

693
00:35:07,120 --> 00:35:09,840
Speaker 3: can start changing when it comes to federal contractors among

694
00:35:09,840 --> 00:35:13,360
Speaker 3: the first to deal with consequences here, And it's something

695
00:35:13,600 --> 00:35:15,239
Speaker 3: that we wanted to take a look at here because

696
00:35:15,280 --> 00:35:18,279
Speaker 3: we hear so much about the government agencies, but there

697
00:35:18,320 --> 00:35:21,400
Speaker 3: are so many contractors that stand and get paid on

698
00:35:21,400 --> 00:35:23,640
Speaker 3: a regular basis here in our federal government that we

699
00:35:23,719 --> 00:35:25,440
Speaker 3: really haven't spent enough time talking about that.

700
00:35:26,000 --> 00:35:27,759
Speaker 12: Yeah, because we have to keep in mind they really

701
00:35:27,760 --> 00:35:30,359
Speaker 12: are among the most vulnerable in a scenario in which

702
00:35:30,360 --> 00:35:32,839
Speaker 12: the government can't be fulfilling all of its obligations. If

703
00:35:32,840 --> 00:35:35,560
Speaker 12: it has to pick and choose. That could mean that

704
00:35:35,640 --> 00:35:41,440
Speaker 12: contractors face canceled contracts or delayed payments or workstop orders,

705
00:35:41,480 --> 00:35:44,800
Speaker 12: and some of them aren't necessarily equipped to immediately react

706
00:35:45,600 --> 00:35:48,000
Speaker 12: in terms of what costs that they are facing and

707
00:35:48,040 --> 00:35:50,440
Speaker 12: trying to protect their balance sheets.

708
00:35:50,440 --> 00:35:53,840
Speaker 3: Basically, so if you're a vendor and you're not getting paid,

709
00:35:53,920 --> 00:35:56,920
Speaker 3: you call Si alba Iron at this as well on

710
00:35:57,000 --> 00:35:59,880
Speaker 3: the terminal of Pialero Maza. He's a partner at the

711
00:36:00,080 --> 00:36:01,759
Speaker 3: law froom and he's with us right now. So I

712
00:36:01,880 --> 00:36:05,160
Speaker 3: thanks for joining us. Can you bring us inside your

713
00:36:05,200 --> 00:36:07,399
Speaker 3: world here, because I don't think people have a sense

714
00:36:07,400 --> 00:36:10,000
Speaker 3: of scale when it comes to government contractors, and I

715
00:36:10,080 --> 00:36:12,640
Speaker 3: wonder what you're hearing or checks already not showing up.

716
00:36:14,280 --> 00:36:17,920
Speaker 6: Sure, yeah, thanks for having me. Yeah, we've seen a.

717
00:36:17,960 --> 00:36:22,319
Speaker 13: Number of issues of contractors across the board, be it construction,

718
00:36:23,080 --> 00:36:28,080
Speaker 13: it services. I have some customers or some clients who

719
00:36:28,200 --> 00:36:30,719
Speaker 13: sell even things like cooking oil. Right, the government buys

720
00:36:30,760 --> 00:36:34,200
Speaker 13: almost everything, which I don't think people realize, and a

721
00:36:34,200 --> 00:36:37,360
Speaker 13: lot of these guys are very small or small companies

722
00:36:37,640 --> 00:36:41,960
Speaker 13: and they're starting to get payments withheld among other things.

723
00:36:42,920 --> 00:36:45,040
Speaker 12: Well, and there's a question of you know what would

724
00:36:45,120 --> 00:36:47,359
Speaker 12: happen in the case that the debt ceiling isn't raised

725
00:36:47,360 --> 00:36:48,960
Speaker 12: in time. Joe, you and I have spoken a few

726
00:36:48,960 --> 00:36:52,440
Speaker 12: times now with John Rizzo, one of the former spokes

727
00:36:52,480 --> 00:36:56,080
Speaker 12: persons at the Treasury Department, about this idea of prioritization,

728
00:36:56,160 --> 00:36:58,440
Speaker 12: because it's often floated that the Treasury could just keep

729
00:36:58,440 --> 00:37:01,440
Speaker 12: paying bondholders exactly, not pay other things. But he kind

730
00:37:01,480 --> 00:37:03,000
Speaker 12: of explained why that's difficult.

731
00:37:03,360 --> 00:37:06,920
Speaker 14: You can't prioritize because when Congress passes a bill, all

732
00:37:06,960 --> 00:37:09,840
Speaker 14: of those payments are legally valid, and they're equally valid.

733
00:37:10,200 --> 00:37:13,000
Speaker 14: So the moment you decide not to pay one party

734
00:37:13,080 --> 00:37:16,719
Speaker 14: who's owed to government check or whatever it is, you

735
00:37:17,440 --> 00:37:20,319
Speaker 14: default on your obligations. So there's not this idea that

736
00:37:20,360 --> 00:37:22,719
Speaker 14: you could, oh, we'll pay the bond holders and will

737
00:37:22,760 --> 00:37:23,320
Speaker 14: be okay.

738
00:37:24,719 --> 00:37:27,640
Speaker 12: So this raises a question for me, say about, you know,

739
00:37:27,680 --> 00:37:29,919
Speaker 12: not paying contractors. Would you be one of the people

740
00:37:29,920 --> 00:37:32,880
Speaker 12: that's coming after the Treasury Department if they decide to

741
00:37:32,880 --> 00:37:34,120
Speaker 12: prioritize other payments.

742
00:37:35,840 --> 00:37:39,759
Speaker 13: Yeah, that's an interesting question because in addition to the

743
00:37:40,360 --> 00:37:44,520
Speaker 13: immediate effects, even after the fact, there's something called the

744
00:37:44,719 --> 00:37:48,480
Speaker 13: Sovereign Acts doctrine, which is that the government generally isn't

745
00:37:48,560 --> 00:37:53,320
Speaker 13: held liable for acts they take as a sovereign as opposed.

746
00:37:52,840 --> 00:37:54,960
Speaker 6: To against your particular contract.

747
00:37:55,560 --> 00:37:58,160
Speaker 13: So in situations like that, you could be in a

748
00:37:58,200 --> 00:38:01,440
Speaker 13: situation where your file claims against the government, which you

749
00:38:01,480 --> 00:38:03,719
Speaker 13: have six years to do. So as things get turned

750
00:38:03,760 --> 00:38:06,560
Speaker 13: back on, you know, these things take a while. You'd

751
00:38:06,600 --> 00:38:09,879
Speaker 13: be filing claims trying to get paid. And I think

752
00:38:09,960 --> 00:38:12,640
Speaker 13: the government's going to start using a defense that they

753
00:38:12,640 --> 00:38:15,560
Speaker 13: don't have to pay anybody because this was a sovereign act.

754
00:38:15,600 --> 00:38:18,320
Speaker 13: It wasn't an act taken against their contract, which obviously

755
00:38:18,360 --> 00:38:20,280
Speaker 13: has major issues.

756
00:38:20,560 --> 00:38:23,719
Speaker 3: Yeah, so cy, how do most contractors get paid? Are

757
00:38:23,719 --> 00:38:26,200
Speaker 3: they on retainer? Do they get a a every two

758
00:38:26,200 --> 00:38:29,000
Speaker 3: weeks or monthly payment or does it depend on the contract?

759
00:38:30,840 --> 00:38:33,280
Speaker 13: It does depend on the contract, but the vast majority

760
00:38:33,320 --> 00:38:35,960
Speaker 13: of contracts are sort of net thirty if you will,

761
00:38:36,040 --> 00:38:39,919
Speaker 13: or NET fifteen for small companies supposedly, although many small

762
00:38:39,960 --> 00:38:42,640
Speaker 13: businesses probably get more like net forty five net sixty.

763
00:38:45,160 --> 00:38:47,600
Speaker 12: So then it raises the question, so I have what

764
00:38:47,960 --> 00:38:50,399
Speaker 12: were to happen or what may already be happening, how

765
00:38:50,440 --> 00:38:53,320
Speaker 12: they may have to be adjusting if they're not getting

766
00:38:53,400 --> 00:38:55,760
Speaker 12: paid at the cadence they expected, or things are getting

767
00:38:56,040 --> 00:38:58,800
Speaker 12: put off. I mentioned that, you know, there's some legal

768
00:38:58,840 --> 00:39:00,759
Speaker 12: issues when it comes to what they can do in

769
00:39:00,800 --> 00:39:03,720
Speaker 12: their labor force. For example, they can't just furlow everyone

770
00:39:03,760 --> 00:39:04,880
Speaker 12: until they start getting paid.

771
00:39:04,719 --> 00:39:08,720
Speaker 13: Again, right, Yeah, I mean you do run into issues

772
00:39:08,760 --> 00:39:11,560
Speaker 13: there too, because if it's a delay, if you will,

773
00:39:11,560 --> 00:39:15,040
Speaker 13: of an unknown duration, the government can demand that you

774
00:39:15,160 --> 00:39:17,600
Speaker 13: come back to work immediately. So even if they were

775
00:39:17,640 --> 00:39:20,040
Speaker 13: to issue a stop work and not give you a timeline,

776
00:39:20,080 --> 00:39:23,040
Speaker 13: which they usually don't, then once things get turned back on,

777
00:39:23,600 --> 00:39:26,120
Speaker 13: let's say it happens, you know today, Let's say we're

778
00:39:26,160 --> 00:39:28,960
Speaker 13: a month from now, and it happens, and then you

779
00:39:29,000 --> 00:39:31,080
Speaker 13: have the Juneteenth holiday, let's say, and the day after

780
00:39:31,080 --> 00:39:32,839
Speaker 13: that they're like, okay, we need you back, we need

781
00:39:32,880 --> 00:39:34,360
Speaker 13: you back to work, and they send you a notice

782
00:39:34,360 --> 00:39:36,920
Speaker 13: on Saturday, Well, how are you going to get all

783
00:39:36,960 --> 00:39:38,919
Speaker 13: your people together in two days or whatever to get

784
00:39:39,040 --> 00:39:40,959
Speaker 13: to get everybody back to work. People might have taken

785
00:39:40,960 --> 00:39:43,440
Speaker 13: new jobs, and then what tends to happen is you

786
00:39:43,480 --> 00:39:46,880
Speaker 13: start to be late and maybe you're not fully staffed up,

787
00:39:46,920 --> 00:39:49,040
Speaker 13: and then they start asking you for refunds for the

788
00:39:49,120 --> 00:39:51,560
Speaker 13: amount of work that you're not doing and then maybe

789
00:39:51,640 --> 00:39:54,000
Speaker 13: threaten you for determination because you didn't have your people

790
00:39:54,040 --> 00:39:57,080
Speaker 13: back on time. Meanwhile ignoring the fact that the entire

791
00:39:57,160 --> 00:39:59,080
Speaker 13: cascade of events was their fault.

792
00:39:59,440 --> 00:40:01,759
Speaker 3: Boy, you know, so much for living off the hog.

793
00:40:01,800 --> 00:40:03,879
Speaker 3: It actually sounds like not the easiest way to make

794
00:40:03,920 --> 00:40:07,480
Speaker 3: money here. That Government Accountability Office site says the federal

795
00:40:07,480 --> 00:40:09,920
Speaker 3: government spent more than six hundred and sixty five billion

796
00:40:09,960 --> 00:40:14,279
Speaker 3: dollars on an annual basis on contracts up significantly, and

797
00:40:14,320 --> 00:40:17,800
Speaker 3: we saw a big increase as well during COVID. With

798
00:40:18,040 --> 00:40:21,120
Speaker 3: the budget cuts that we're hearing about, I realized we

799
00:40:21,120 --> 00:40:22,720
Speaker 3: don't have a deal yet, and I want to be careful.

800
00:40:23,000 --> 00:40:25,040
Speaker 3: We don't have top line numbers and we don't know

801
00:40:25,080 --> 00:40:27,279
Speaker 3: exactly where the cuts are going to go. But does

802
00:40:27,320 --> 00:40:30,640
Speaker 3: it have contractors on edge, this idea of lower spending

803
00:40:30,760 --> 00:40:31,560
Speaker 3: next fiscal year?

804
00:40:33,960 --> 00:40:36,480
Speaker 13: I think it depends on what you're doing. There are

805
00:40:36,520 --> 00:40:40,960
Speaker 13: certainly some contractors that I think with more discretionary issues

806
00:40:41,360 --> 00:40:45,000
Speaker 13: that we saw even during the COVID period. The funding

807
00:40:45,120 --> 00:40:47,919
Speaker 13: was large for certain things, but a number of other

808
00:40:47,960 --> 00:40:51,880
Speaker 13: things were cut during that period because like conferences and

809
00:40:51,920 --> 00:40:54,759
Speaker 13: things like that weren't happening. So it really is so

810
00:40:55,840 --> 00:40:58,960
Speaker 13: narrow to whatever specific sector you're in and what you're

811
00:40:59,000 --> 00:41:01,200
Speaker 13: doing for the government, how you're going to be hit

812
00:41:01,239 --> 00:41:04,279
Speaker 13: by these things. And unfortunately, the small guys who do

813
00:41:04,400 --> 00:41:07,160
Speaker 13: the contracts that are probably more expendable are the ones

814
00:41:07,160 --> 00:41:08,759
Speaker 13: that are going to get hit worse. They're not going

815
00:41:08,840 --> 00:41:12,960
Speaker 13: to stop buying missiles or whatever from insert large gull.

816
00:41:13,000 --> 00:41:15,920
Speaker 3: Actually, you make a good point, Kayleie. From our reporting

817
00:41:16,040 --> 00:41:19,959
Speaker 3: this would not include, for instance, Pentagon contractors. There would

818
00:41:19,960 --> 00:41:22,720
Speaker 3: be some carve outs for this type of non payment.

819
00:41:23,440 --> 00:41:26,719
Speaker 12: Yeah, I mean, when we're talking about the untouchability of

820
00:41:27,000 --> 00:41:29,239
Speaker 12: defense spend, you kind of can lump it all into

821
00:41:29,280 --> 00:41:31,400
Speaker 12: that category of things that may be more protected for

822
00:41:31,440 --> 00:41:34,040
Speaker 12: those that aren't, though, sig, I mean, is this realistically

823
00:41:34,040 --> 00:41:36,960
Speaker 12: something that could mean companies go under if they lose

824
00:41:36,960 --> 00:41:40,880
Speaker 12: this kind of revenue from the US government from the treasury?

825
00:41:41,840 --> 00:41:41,960
Speaker 1: Oh?

826
00:41:42,040 --> 00:41:42,920
Speaker 6: Oh absolutely.

827
00:41:43,000 --> 00:41:44,839
Speaker 13: I mean even some of the guys I've already dealt

828
00:41:44,880 --> 00:41:47,960
Speaker 13: with who are not being paid for six months or

829
00:41:48,000 --> 00:41:50,920
Speaker 13: something and they're owed half a million dollars. And the

830
00:41:50,960 --> 00:41:55,280
Speaker 13: size of the companies we're talking about that's do or die.

831
00:41:55,440 --> 00:41:57,759
Speaker 13: I mean, these are not billion dollar companies. I mean,

832
00:41:57,800 --> 00:42:00,000
Speaker 13: some of these guys are making maybe one or two

833
00:42:00,040 --> 00:42:04,400
Speaker 13: two percent in profits, and they're keeping their staff up

834
00:42:04,520 --> 00:42:06,680
Speaker 13: and so it's they're not making a ton of money.

835
00:42:06,680 --> 00:42:09,799
Speaker 13: That's another misnomer that everybody's getting rich off this. It's

836
00:42:09,840 --> 00:42:11,120
Speaker 13: that's not accurate.

837
00:42:12,320 --> 00:42:15,000
Speaker 3: Wait, so why would someone have not been paid for

838
00:42:15,040 --> 00:42:16,840
Speaker 3: six months? Am I understanding that correctly?

839
00:42:16,880 --> 00:42:17,120
Speaker 5: Side?

840
00:42:18,680 --> 00:42:22,000
Speaker 13: Well, I mean one instance I had just recently, that's

841
00:42:22,239 --> 00:42:24,399
Speaker 13: the same question we asked. And as soon as we

842
00:42:24,520 --> 00:42:26,880
Speaker 13: put a letter on our letterhead and started, you know,

843
00:42:27,400 --> 00:42:31,600
Speaker 13: saber rattling, the government came forward and said, oh, yeah,

844
00:42:31,680 --> 00:42:35,319
Speaker 13: we'll pay you. I mean, usually there's some basis for it,

845
00:42:35,680 --> 00:42:38,200
Speaker 13: but it does happen sometimes, and we're seeing it more

846
00:42:38,760 --> 00:42:41,160
Speaker 13: because of some of these issues we're talking about where

847
00:42:41,200 --> 00:42:45,080
Speaker 13: the government's just not paying and you know, squeaky wheel

848
00:42:45,080 --> 00:42:45,640
Speaker 13: gets the grease.

849
00:42:45,960 --> 00:42:48,120
Speaker 3: But so, how many of these are small businesses? I

850
00:42:48,120 --> 00:42:50,160
Speaker 3: would think that would put any number of businesses out

851
00:42:50,160 --> 00:42:52,960
Speaker 3: of work. You go six months without your primary source

852
00:42:53,000 --> 00:42:53,440
Speaker 3: of income.

853
00:42:55,320 --> 00:42:57,480
Speaker 6: Yeah, and it tends to be certain contracts.

854
00:42:57,520 --> 00:42:59,640
Speaker 13: I mean, if you have a small company though that's

855
00:42:59,680 --> 00:43:01,960
Speaker 13: relying upon just a couple of contracts, absolutely it could

856
00:43:02,000 --> 00:43:04,160
Speaker 13: be all of their business, right then none of their

857
00:43:04,160 --> 00:43:08,239
Speaker 13: payments are being made Most of the ones I've seen

858
00:43:08,360 --> 00:43:11,920
Speaker 13: have been smaller companies because the bigger guys tend to

859
00:43:11,920 --> 00:43:15,720
Speaker 13: have bigger pockets, right, and they'll go after the government

860
00:43:15,800 --> 00:43:17,640
Speaker 13: and spend one hundred and fifty thousand to get one

861
00:43:17,719 --> 00:43:21,520
Speaker 13: hundred thousand, and so the government knows that fact, and

862
00:43:21,520 --> 00:43:24,440
Speaker 13: I think are more willing to pay. My cynical view

863
00:43:24,520 --> 00:43:26,279
Speaker 13: is that the government knows the small guy is if

864
00:43:26,280 --> 00:43:29,480
Speaker 13: you have a sixty thousand dollars bill and a sixty

865
00:43:29,480 --> 00:43:31,400
Speaker 13: thousand dollars contract and you have to go through the

866
00:43:31,440 --> 00:43:35,720
Speaker 13: whole process of filing a claim, waiting sixty days, filing

867
00:43:35,719 --> 00:43:38,640
Speaker 13: an appeal, waiting a year, all the costs are going

868
00:43:38,680 --> 00:43:40,320
Speaker 13: to incur to go through that process.

869
00:43:40,400 --> 00:43:42,200
Speaker 6: Makes it not even worth it. You must just eat

870
00:43:42,200 --> 00:43:43,480
Speaker 6: the sixty thousand.

871
00:43:44,719 --> 00:43:45,279
Speaker 8: Wow, Joe.

872
00:43:45,280 --> 00:43:47,040
Speaker 12: I mean, it's a lot to consider. As we talk

873
00:43:47,239 --> 00:43:49,960
Speaker 12: conceptually about what happens in the case of default, or

874
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Speaker 12: what is happening now, is the Treasury is taking these

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Speaker 12: extraordinary measures, we have to stop and think about how

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Speaker 12: it is impacting real businesses, real employees, real people already,

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Speaker 12: and that could get worse.

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Speaker 3: And they're not always multinational companies or massive coast to

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Speaker 3: coast companies very helpful conversation. Say we were looking forward

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Speaker 3: to it, Sit Alba, as a partner at Palero Maza.

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Speaker 3: I suspect your phone's going to be a little busy

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Speaker 3: this weekend, am I right?

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Speaker 6: I hope not. But we're, you know, obviously, here to

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Speaker 6: help people.

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Speaker 3: I believe that, So I thank you for being with us.

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Speaker 3: It's a peak inside business here in Washington, Killy that

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Speaker 3: most people never hear about, but it's big business. Thanks

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Speaker 3: for listening to the Sound On podcast. Make sure to

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Speaker 3: subscribe if you haven't already, at Apple, Spotify, and anywhere

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Speaker 3: else you get your podcasts, and you can find us

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Speaker 3: live every weekday from Washington, DC at one pm Eastern

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Speaker 3: Time at Bloomberg dot com.