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Speaker 1: We'll tell you Washington girds for another war. Welcome to
Speaker 1: the fastest show in politics, as the Biden administration pledges
Speaker 1: unconditional support for Israel and Congress stands ready for another
Speaker 1: funding request. Even without a speaker, we'll have the latest
Speaker 1: for you from the capital straight ahead here on sound On,
Speaker 1: and we'll just us with Brett Bruin, President of the
Speaker 1: Global Situation Room, former White House Director of Global Engagement
Speaker 1: in the Obama administration. He'll bring us inside the situation
Speaker 1: room for the latest, with analysis from our signature panel. Well,
Speaker 1: Israel get what it needs from the US, what will
Speaker 1: that mean for Ukraine? And how will this be impacted
Speaker 1: by a paralyzed US House. We'll talk about it all
Speaker 1: with Bloomberg Politics contributors Rick Davis and Genie Shanzano, both
Speaker 1: with us for the hour. Welcome to the Monday edition
Speaker 1: of Bloomberg Sound On. I'm Joe Matthew in Washington, where
Speaker 1: it's just after one pm. Here, it's just after eight
Speaker 1: pm in Israel, and the Gaza Strip is under heavy
Speaker 1: bombardment right now is night falls on Israel, and we
Speaker 1: have live pictures here or some pictures, I should say.
Speaker 1: If you join us on YouTube, you'll see what we're
Speaker 1: talking about. Search Bloomberg Global News with sounds of the
Speaker 1: bombardment which continues at this hour. The Israel Defense Force
Speaker 1: is issuing a statement earlier saying it an attack to
Speaker 1: one hundred and thirty Hamas targets in Gaza and headlines
Speaker 1: are crossing the terminal. Now more than eleven hundred dead
Speaker 1: in Israel. As we try to figure out the latest
Speaker 1: on this, we're hearing response as well from Washington now
Speaker 1: that we're seeing some lawmakers come back into town. The
Speaker 1: US House is getting back into session, and we will
Speaker 1: not be seeing senators here in Washington for some time.
Speaker 1: We did hear from President Biden yesterday who made clear
Speaker 1: that the US supports Israel no matter what happens.
Speaker 3: I told them the United States stands with the people
Speaker 3: of Israel in the face of these terrorists assaults. Israel
Speaker 3: has the right to defend itself and his people full stop.
Speaker 1: The President from the White House with a warning as well,
Speaker 1: for those who might seek opportunity at this time.
Speaker 3: Let me say this as clearly as I can. This
Speaker 3: is not a moment Randy Party hostile to Israel, to
Speaker 3: exploit these attacks to seek advantage. The world is watching.
Speaker 1: As lawmakers come back into Washington as well. We're hearing
Speaker 1: from some, including the former Speaker Kevin McCarthy actually held
Speaker 1: a news conference earlier today, almost as if he was
Speaker 1: still speaking for the Republican Conference, and he laid out
Speaker 1: what he called or described as a five point plan.
Speaker 1: The first point here.
Speaker 4: The very first thing we need to do is rescue
Speaker 4: the American hostages. President Biden's number one priority right now
Speaker 4: must be finding out how many Americans have been taken
Speaker 4: hostage and get them home.
Speaker 1: He also called on the administration to refreeze the money,
Speaker 1: and we're going to get into this with rerep ruin
Speaker 1: in a moment, to refreeze the money that was well
Speaker 1: unfrozen just a couple of weeks ago in the prisoner
Speaker 1: swap with Iran. Remember that was six billion dollars and
Speaker 1: the administration at the time was heavily criticized for it.
Speaker 4: They said they had provisions to refreeze the money. If
Speaker 4: Iran has done something wrong, they should freeze the money
Speaker 4: back Today.
Speaker 1: The Secretary of State Anthony Blincoln made clear on Sunday
Speaker 1: morning television that not a dollar of that money has
Speaker 1: been spent yet. But there's a big argument over whether
Speaker 1: just the anticipation of that money, which is specific for
Speaker 1: humanitarian use, might have inspired some of this. With the
Speaker 1: headline again now on the terminal Bloomberg reporting Iran may
Speaker 1: have known about Gaza attack. That is referring to an
Speaker 1: Israeli minister here one of the Prime Minister's closest allies
Speaker 1: in the cabinet, Ron Dermer, speaking earlier today with Bloomberg.
Speaker 1: Let's bring in Brett Bruin. He's the president of the
Speaker 1: Global Situation Room, as I mentioned, of course, a veteran
Speaker 1: of the Obama White House where he was Director of
Speaker 1: Global Engagement, and Brett, it's good to have you with
Speaker 1: us here. I'll start with a more broad question before
Speaker 1: we get down into the money issue, which is something
Speaker 1: that's being baited here in Washington. What is happening behind
Speaker 1: closed doors at the White House right now? What can
Speaker 1: the Biden administration do on its own to support Israel?
Speaker 5: Well, I think there is a wide ranging assessment currently
Speaker 5: taking place, certainly across our defense support. What more does
Speaker 5: Israel need? And as you heard Joe, also what does
Speaker 5: the US need to do in order to deter the
Speaker 5: likes of Iran or other groups that might want to
Speaker 5: try and exploit this situation? And I think the movement
Speaker 5: of a carrier group to the eastern Mediterranean is designed
Speaker 5: to have that effect. You also obviously have a robust
Speaker 5: effort on the intelligence side. I think we should expect,
Speaker 5: Joe in the coming days weeks that US intelligence will
Speaker 5: help to in some cases publicize what was known and
Speaker 5: who knew it when, what role did Tehran have in
Speaker 5: these events? Because that is going to play a large
Speaker 5: part in any subsequent action that will take place. And
Speaker 5: then lastly, my former Department of State will be looking
Speaker 5: at how do you assemble the international community for stronger
Speaker 5: support to Israel. Because while you saw those statements of
Speaker 5: sorrow and solidarity, I think the concern in a lot
Speaker 5: of foreign capitals right now is whether or not they
Speaker 5: will stick with Israel as it exacts both retribution as
Speaker 5: well as tries to diminish Hamas's capability to inflict more
Speaker 5: harm on Israel and especially on Israeli civilians.
Speaker 1: Not lost on us that the White House called a lid,
Speaker 1: as they call it already today, Brett. That's when they're
Speaker 1: basically telling reporters they can go home that there will
Speaker 1: be no more news here for the day. The President's
Speaker 1: going to be up to his own business and no
Speaker 1: more public events. Does that say to you that they're
Speaker 1: circling the wagons and having some important meetings at the
Speaker 1: White House this afternoon.
Speaker 5: Well, certainly important meetings, calls. The President's call list will
Speaker 5: be extensive. And yet Joe and I think this is
Speaker 5: important that in these moments of national security concern, we
Speaker 5: need to hear from the president Prime Minister Yaho's been
Speaker 5: criticized both in terms of how long it took him
Speaker 5: to come out and publicly address the Israeli people as
Speaker 5: well as the international community, as well as how infrequent
Speaker 5: those updates, including from other Israeli officials, have ben. I
Speaker 5: think President Biden has got to get out there more.
Speaker 5: He has got to exert more public leadership on this issue,
Speaker 5: keeping those allies publicly pressured to continue their support for Israel.
Speaker 1: Yeah, let me ask you about the money in the
Speaker 1: swap that was being debated on Sunday morning television and
Speaker 1: continues to this moment. In Washington, d C. The Secretary
Speaker 1: of State Anthony Blincoln was out and was asked about this,
Speaker 1: even trying to get ahead of it, remembering this is
Speaker 1: six billion dollars that was in an account that was
Speaker 1: unlocked and in fact moved to a different account. I'll
Speaker 1: let you listen to his words for humanitarian uses as
Speaker 1: part of our recent prisoner swap. Here's Anthony Blake.
Speaker 6: You've had from day one, under our law, under our sanctions,
Speaker 6: the right to use these monies for humanitarian purposes. They
Speaker 6: were moved from one account to another in another country
Speaker 6: to facilitate that use. As of now, not a single
Speaker 6: dollar has been spent from that account. And again the
Speaker 6: account is closely regulated by the US Treasury Department, so
Speaker 6: it can only be used for things like food, medicine,
Speaker 6: medical equipment.
Speaker 1: That's what this is about, all right. So that's the
Speaker 1: official line here. But I wonder if listening to NICKI
Speaker 1: Haley might help illuminate the other side of this, Brett.
Speaker 1: This is NICKI Haley on Meet the Press yesterday saying,
Speaker 1: grow up, everybody. It's irresponsible for Anthony Blincoln to be
Speaker 1: speaking that way and definibly.
Speaker 7: I actually think it was irresponsible for Secretary Blincoln to
Speaker 7: say that the six billion dollars doesn't weigh in here.
Speaker 7: I mean, let's be honest with the American people and
Speaker 7: understand that Hamas knows and Iran knows. They're moving money
Speaker 7: around as we speak because they know six billion is
Speaker 7: going to be released. That's the reality. When I was
Speaker 7: at the United Nations, you saw that when those planes
Speaker 7: full of cash sent by Obama to Iran. I went
Speaker 7: to the International Atomic Energy Agency, I met with them.
Speaker 7: What happened was those funds were sent to Hesbla and Lebanon.
Speaker 7: They were sent to Hamas and Gaza. They were sent
Speaker 7: to the Houthis and Yemen. They go and spread terrorism
Speaker 7: every time they get a dollar.
Speaker 1: All right, So look, Nikki Haley is running for president,
Speaker 1: but also our former UN Ambassador Brett Is there some
Speaker 1: truth to both of these We know the restrictions on
Speaker 1: the use of this money, but does the anticipation mean
Speaker 1: that some of this is fungible? What's your take?
Speaker 5: Yeah, the truth lies somewhere in the middle. Yes, if
Speaker 5: six billion dollars in funds are coming in, that frees
Speaker 5: up funds for other purposes. And that's essentially the argument
Speaker 5: that Ambassador Haley is making. And yet at the same time,
Speaker 5: it's important for the audience to understand that this money
Speaker 5: isn't US money. It was money that was frozen in
Speaker 5: an account that belongs to Iran. And what the Biden
Speaker 5: administration is trying to do is use it as leverage
Speaker 5: to obviously get the release of five Americans who were
Speaker 5: unjustly held in Iranian prisons. I think, now, Joe, the
Speaker 5: interesting question is can they use the release or partial
Speaker 5: release of some of that money to free some of
Speaker 5: both the US as well as is rally hostess is
Speaker 5: they're held by Hamas, and tell Tehran if you want
Speaker 5: any of this funds, you're going to have to ensure
Speaker 5: the release of those hostages. But just as a point
Speaker 5: of reference, when it is soldier a couple decades ago
Speaker 5: was captured by Hamas. The deal that came out of
Speaker 5: it was one thousand Hamas fighters for one Israeli's soldier.
Speaker 5: So that's the scope of and the president of what
Speaker 5: we're looking at.
Speaker 1: Well, and I don't think that's going to be happening
Speaker 1: this time. Kevin McCarthy says, refreeze the money, Brett, Is
Speaker 1: that possible?
Speaker 5: Well, the money currently is not in Iranian hands. It
Speaker 5: is in a Katari bank, and the US does need
Speaker 5: to green light it's further release by the Katari bank.
Speaker 5: And so I think it's important here not to give
Speaker 5: the impression that this money is already in Iran's hands.
Speaker 5: As I said, look at because of and I think
Speaker 5: there is certainly some strong indications that Iran new and.
Speaker 4: In some.
Speaker 5: Suggestion that there may have been irradiant involvement in this
Speaker 5: attack as an effort to disrupt any advancement in the
Speaker 5: Israel Saudi Arabia normalization of relations. So I think you know,
Speaker 5: as that intelligence starts coming to the fore, it will
Speaker 5: provide more cover for the Biden administration to say we're
Speaker 5: not releasing those funds. We're not releasing those funds until
Speaker 5: the following things happen.
Speaker 1: I know you're not a military strategist, Brett, but before
Speaker 1: you leave us, we're looking at some pretty tough pictures
Speaker 1: here with constant bombardment. Now that night has fallen in Gaza.
Speaker 1: What will happen of the Israeli's taken hostage.
Speaker 5: Well, I think what we are looking at right now
Speaker 5: is a plan by the Israeli forces to completely dismantle
Speaker 5: Hamas's structure and their quasi government control over the Gaza strip.
Speaker 5: On the Hamas side, I think they have to be
Speaker 5: careful here because they have created images, video and just
Speaker 5: obviously the reports of what's happened to civilians are horrifying.
Speaker 5: And I think, you know, if in the case of
Speaker 5: these hostages, any harm comes to them, any additional harm,
Speaker 5: if they are not going to release them for an
Speaker 5: extended period of time, that will only increase pressure international
Speaker 5: pressure on Hamas. So I would expect that we're going
Speaker 5: to see an effort to try and reach some sort
Speaker 5: of negotiated agreement at least when it comes to a
Speaker 5: significant portion of the civilian hostages.
Speaker 2: Wow.
Speaker 1: Great to have you with us, Ruin of the Global
Speaker 1: Situation Room, A perfect time with conversation, Brett Wei, thank
Speaker 1: you for the insights and bringing your experience to us
Speaker 1: here on sound On. I'm joined in studio by Rick Davis,
Speaker 1: of course, Bloomberg Politics contributor, Republican strategist who has deep
Speaker 1: ties to the defense and intelligence communities here in Washington.
Speaker 1: Before we assemble the panel, Rick, I just wonder your
Speaker 1: first thought on this. This is going to be a
Speaker 1: long night. It looks like in Gaza, what can Israel
Speaker 1: do to protect its own Yeah.
Speaker 8: Look, I think that the number one thing they're doing
Speaker 8: right now is rooting out Hamas terras inside of Israel already,
Speaker 8: and that operation continues this moment, and there is some
Speaker 8: expectation that that roll up will will take some time.
Speaker 8: And so regardless of whether or not the troops that
Speaker 8: have amassed on a border with Gaza from Israel are
Speaker 8: planning a ground assault, the.
Speaker 9: Number one issue for the Israeli.
Speaker 8: Defense and intelligence community is to make sure that the
Speaker 8: terrorists that are within Israel can do no more harm.
Speaker 9: And so once.
Speaker 8: We see that operation starting to peak out, I think
Speaker 8: you'll start to see the hammer of Israel come down
Speaker 8: on the Gaza Strip and and it'll be interesting to see,
Speaker 8: you know, how much support the US gives to that.
Speaker 8: Our aircraft carriers in the region, our most high tech
Speaker 8: carrier in our entire fleet, that's the Gerald Ford and
Speaker 8: and this administration is fully committed as they've articulated to
Speaker 8: Israel's defense.
Speaker 1: Rick Davis with US Live in Washington. We will add
Speaker 1: Genie Shanzo to the conversation. Our signature panel is up
Speaker 1: next on an important day. Thanks for being with us
Speaker 1: on sound On. This is Bloomberg. You're listening to the
Speaker 1: Bloomberg Sound On podcast. Catch the program live weekdays at
Speaker 1: one Eastern.
Speaker 2: On Bloomberg Radio, the tune in app, Bloomberg dot Com,
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Speaker 2: say Alexa play Bloomberg eleven.
Speaker 1: The Biden administration pledging unconditional support to Israel, but being
Speaker 1: blamed all the while for many Republicans for causing or
Speaker 1: enabling what we saw over the weekend in Israel. The
Speaker 1: former Speaker of the House, Kevin McCarthy, held a news
Speaker 1: conference this morning. You might wonder why is well he's
Speaker 1: no longer speaker. He sure looked and sounded like one
Speaker 1: as he took aim at the Biden administration.
Speaker 4: I think a new administration that goes to appeasement, that
Speaker 4: didn't embrace Abraham Accords, that actually went after our allies
Speaker 4: like Saudi Arabia and rewarded those who were evil like Oran.
Speaker 1: That right there gives you challenges.
Speaker 4: Secondly, the president's decision when it came to Afghanistan. People
Speaker 4: then question would America be there?
Speaker 1: He went on to talk about the administration's energy policy.
Speaker 1: As we reassemble our panel, Rick Davis and Jeanie Shanzeno
Speaker 1: are with us on this Monday edition of Sound on
Speaker 1: Bloomberg Politics contributors Rick is with me in Washington and
Speaker 1: Jeanie is in New York. What's the defense here for
Speaker 1: this White House? Genie, the President's about to ask, likely
Speaker 1: for a supplemental funding request for Israel. He's pledging support.
Speaker 1: He actually agrees I think on most everything here involving
Speaker 1: Israel with Kevin McCarthy. But Republicans are blaming him for
Speaker 1: enabling what just happened.
Speaker 10: They are and we heard it. You played the clip
Speaker 10: from Mickey Haley, we heard it from Chris Christy, we
Speaker 10: heard it from Donald Trump, all of these people running
Speaker 10: for president. You know, I think we can chalk this
Speaker 10: up to an election year. This is what happens in
Speaker 10: an election year. You know, the Biden administration is not
Speaker 10: responsible by any stretch of the imagination for what happened
Speaker 10: horrifically in the Middle East yesterday. In the last two days,
Speaker 10: they you know what the six billion dollars says, as
Speaker 10: Anthony Blinkoln talked about, there's no evidence any of that
Speaker 10: has been used, but arguably the optics don't look great,
Speaker 10: and they've to address that. I think what has happened
Speaker 10: with the Biden administration, like so many leaders around the world,
Speaker 10: is they were lulled into a sense that the Middle
Speaker 10: East had gone relatively calm and quiet. You know, we
Speaker 10: heard from Jake Sullivan eight days ago that the Middle
Speaker 10: East was shockingly quiet, and that, unlike his predecessors, he
Speaker 10: was able to turn his attention elsewhere. And of course,
Speaker 10: if you know the history of the Middle East, just
Speaker 10: when everything seems quiet, that's when something like this happens,
Speaker 10: and that's what did happen. So they do have to
Speaker 10: take responsibility for that. And he's got to do what
Speaker 10: he's doing, which is pledged support for Israel, and see
Speaker 10: if the Republicans in the House can get their act
Speaker 10: together to make sure that that money is sent and
Speaker 10: the support is sent to Israel. Hard to do without
Speaker 10: a Speaker of the House.
Speaker 1: Yeah, well, we're going to talk a bit more about
Speaker 1: the speaker battle here, Rick. The President said just last
Speaker 1: week that he was preparing to announce a major address
Speaker 1: US on funding the war in Ukraine in which she
Speaker 1: would reframe the argument here ahead of what will be
Speaker 1: a brutal debate I'm sure in Washington over all of this.
Speaker 1: Once we get a speaker and end up funding our government,
Speaker 1: what happens to the Ukraine argument when he now needs
Speaker 1: to make one for Israel.
Speaker 9: Yeah.
Speaker 8: It's a crowded space in the world today, and the
Speaker 8: President's calendar is even more crowded than it otherwise would be.
Speaker 9: And we've heard repeatedly.
Speaker 8: All you know, prior to the attack on Israel from
Speaker 8: Republicans in the House saying we expect the President to
Speaker 8: make his case for continued Ukraine funding. Otherwise we're not
Speaker 8: going to lift a finger. And so he's getting the
Speaker 8: demand side from Republicans in Congress saying we're not going
Speaker 8: to act. Of course they can't until they get a speaker,
Speaker 8: but we're not going to act even with a speaker
Speaker 8: until you make your case on why by the way,
Speaker 8: And I think that's a very good thing for Joe
Speaker 8: Biden to do.
Speaker 9: There's a great case to.
Speaker 8: Be made for our support for your Ukraine, and so
Speaker 8: I think that would result in a positive outcome for funding.
Speaker 8: The downside is that right now there's a shooting war
Speaker 8: with one of our allies, one of our strongest allies
Speaker 8: in the world, and our primary ally in the region,
Speaker 8: and we have to be there for them. And so
Speaker 8: if I were, you know, drawing the lines, I would
Speaker 8: say it's very much time and appropriate for Joe Biden
Speaker 8: president to go to the American people right now and
Speaker 8: talk about why Israel is so important and why our
Speaker 8: support for Israel is needed, and why we're going to
Speaker 8: need to hunker down for the long term there. In
Speaker 8: other words, this is not a weekend kind of initiative.
Speaker 8: This is going to be a war that will spend
Speaker 8: time just like Ukraine, and we got to be there
Speaker 8: for them too.
Speaker 1: So, Genie, did this Ukraine speech that we're anticipating just
Speaker 1: turn into a dangerous world speech if you will from
Speaker 1: Joe Biden?
Speaker 10: Yeah, it very much may have. And I don't think
Speaker 10: we know you, and you know a challenge for the
Speaker 10: Biden administration and quite frankly for all Western nations and
Speaker 10: nations around the world who have issued calls of support
Speaker 10: for Israel in the last forty eight hours, is that
Speaker 10: unlike what we've seen in the past, and we saw
Speaker 10: it over the weekend. It was stunning the pictures on
Speaker 10: social media coming out of Israel. That is going to intensify.
Speaker 10: And so as we issue calls and support financially, militarily
Speaker 10: and otherwise for Israel, we are going to have to
Speaker 10: contend with the really difficult situation Israel finds itself in.
Speaker 10: Does it try to occupy Gaza? Look at the pictures
Speaker 10: coming out of Gaza just today. They are horrifying, you
Speaker 10: see them, and there as horrifying as the ones we
Speaker 10: saw on the other side early in what happened over
Speaker 10: the weekend. The Biden administration is going to have to
Speaker 10: contend with all of that, and that probably means they
Speaker 10: are going to have to ask Benjamin and Yahoo to
Speaker 10: stop what he has been doing domestically, to form some
Speaker 10: kind of cab that is unified and that is focused
Speaker 10: on Israel and not focused on his political survival, and
Speaker 10: get out some of those ministers he's got in that
Speaker 10: cabinet right now who are saying and have been saying
Speaker 10: pretty horrific and anti democratic things. Biden has to contend
Speaker 10: with all of that as he makes this case to
Speaker 10: the American public to fund Israel in the same way
Speaker 10: he's got to do it with Ukraine and the issues
Speaker 10: of corruption and elsewhere. So it is an enormous challenge,
Speaker 10: not of Biden's doing, but something that we have a
Speaker 10: duty to support. But it is not going to be
Speaker 10: easy because we do have these pictures coming out and
Speaker 10: they are particularly chilling.
Speaker 1: They sure are rick. We see the headline now in
Speaker 1: the Associated Press hamas Wing Warrens that Israeli strikes will
Speaker 1: bring hostage deaths. What we're about to see unfold and
Speaker 1: are seeing unfold in Gaza does make you wonder where
Speaker 1: the line is here and the to which Israel could
Speaker 1: overplay its hands.
Speaker 8: Yeah, I don't think you have to worry about Israel
Speaker 8: overplaying its hand right now. One of the things we
Speaker 8: have to remember and take a step back. This is
Speaker 8: a horrific event that's occurred in Israel, innocent people being
Speaker 8: slaughtered by Hamas terrorists.
Speaker 9: But Americans were killed too.
Speaker 8: Last count I just saw was nine Americans have died
Speaker 8: at the hands of Hamas terras. If this were anywhere
Speaker 8: else but Israel right now today, the US would be
Speaker 8: preparing significant countermeasures to Hamas on a global scale, including
Speaker 8: their chief benefactor Iran.
Speaker 9: On our own right.
Speaker 8: Most of the conversation has been how can the US
Speaker 8: help Israel, But we need to help ourselves too. It
Speaker 8: is absolutely unacceptable by any stretch of the imagination that
Speaker 8: Hamas has killed Americans, potentially holds them hostage inside Gaza
Speaker 8: and could be among those that they slaughter if they
Speaker 8: can keep this commitment that somehow, if the Israeli's bomb Gaza,
Speaker 8: they'll start killing hostages. This started conversation started with paying
Speaker 8: for hostages release out of Iran. I'm not going to
Speaker 8: second guess that. I'm happy those people are back safely
Speaker 8: in the United States, especially right now. Can't imagine what
Speaker 8: would happen if they were still hostage in Iran. But
Speaker 8: we have to be able to project our power in
Speaker 8: a way that makes every American safe as much as
Speaker 8: possible around the world, regardless of where they are.
Speaker 1: Is it the right thing to send the aircraft carrier
Speaker 1: strike group closer to Israel? Genie?
Speaker 10: To make Rick's point, it is the right thing to do,
Speaker 10: and the point is to show support, but also to
Speaker 10: deter anything that could escalate in this it, particularly as
Speaker 10: it pertains to Iran, particularly as it pertains to Hepola,
Speaker 10: We've got to deter, We've got to contain, and so
Speaker 10: so those aircrafts, they are important to make a statement
Speaker 10: that we are there to do that. So it is
Speaker 10: absolutely the right move.
Speaker 1: We have a lot more to talk about with Rick
Speaker 1: Davis and Genie Shanzana, remembering that this is all happening
Speaker 1: domestically here in the US against the backdrop of a
Speaker 1: speaker's fight and lawmakers are coming back into town.
Speaker 2: You're listening to the Bloomberg Sound On podcast. Catch us
Speaker 2: live weekdays at one Eastern on Bloomberg dot com, the
Speaker 2: iHeartRadio app, and the Bloomberg Business app, or listen on
Speaker 2: demand wherever you get your podcasts.
Speaker 1: And to think we were going to be leading with
Speaker 1: a speaker's battle today, that will be the big story
Speaker 1: of the week here in Washington, even with what's happening
Speaker 1: in Israel, and they do collide in a way as
Speaker 1: we consider what will likely be a sizeable supplemental request
Speaker 1: from the administration the Biden Whitehouse when it comes to
Speaker 1: supporting Israel. I'm Joe Matthew and Washington, joined by Rick
Speaker 1: Davis and Jeanie shanzan Oh Bloomberg Politics contributors. Only hours
Speaker 1: after the former Speaker of the House, Yes, Kevin mc carthy,
Speaker 1: actually held a news conference on Capitol Hill with an
Speaker 1: eye on Israel.
Speaker 4: The very first thing we need to do is rescue
Speaker 4: the American hostages. President Biden's number one priority right now
Speaker 4: must be finding out how many Americans have been taken
Speaker 4: hostage and get them home.
Speaker 1: He's actually giving direction to the administration here as if
Speaker 1: he were still Speaker. Rick Davis, what's your thought on
Speaker 1: why Kevin McCarthy On a Monday morning, the day before
Speaker 1: the two candidates for speakers, Steve Scalise and Jim Jordan,
Speaker 1: are to debate in front of the caucus. Why is
Speaker 1: he holding a news conference?
Speaker 8: Well, I would say everything he said in that news
Speaker 8: conference Joe Biden should have said over the weekend on
Speaker 8: national television.
Speaker 9: So I'm glad he's out there talking about this stuff.
Speaker 1: He blamed Joe Biden for whatever other than that part,
Speaker 1: or he could have taken responsibility, I guess.
Speaker 9: But the bottom line is.
Speaker 8: He is still I think the most high visibility Republican
Speaker 8: in Congress, right, even more so than virtually everyone.
Speaker 1: So would conference have asked him to do this?
Speaker 8: Or Man, I'm sure he took it upon himself saying, look,
Speaker 8: I'm still a leader in my caucus. We don't have
Speaker 8: a speaker to sound out about this, and I'm just
Speaker 8: going to take the.
Speaker 9: Lead and do it now.
Speaker 8: Look, i mean he's got an ego too, right, and
Speaker 8: I'm quite certain that you know his view is take
Speaker 8: the heat off my caucus, go out there, you know,
Speaker 8: articulate this policy and all of that in nursed my
Speaker 8: benefit because I still look like a leader in my caucus. See,
Speaker 8: things get tied up there after a couple of days
Speaker 8: in the caucus where they can't come up with a consensus,
Speaker 8: maybe they will turn back to old Kevin McCarthy, Congressman
Speaker 8: from California.
Speaker 1: So you're holding out for that.
Speaker 8: I'm not holding out for that, but he's certainly putting
Speaker 8: it in play himself.
Speaker 1: Well, listen, if no one else gets to two eighteen,
Speaker 1: it certainly makes you wonder, Genie, how is what's happening
Speaker 1: in Israel right now? Never mind the request for Ukraine
Speaker 1: get an impact. Who becomes the next Speaker of the.
Speaker 10: House, it's going to have a huge impact. And you know,
Speaker 10: let's let's be honest. Kevin McCarthy went out and gave
Speaker 10: a press conference. He is not speaker, which means he
Speaker 10: wasn't briefed on the situation. So I'm not so sure
Speaker 10: that Joe Biden should have, you know, taken any lessons
Speaker 10: from what Kevin McCarthy is doing. Presumably Joe Biden was
Speaker 10: briefed and has been briefed. He's been in contact with
Speaker 10: net and Yahoo, his team has as well, and everybody
Speaker 10: over in Israel. Because Kevin McCarthy couldn't hold his job,
Speaker 10: he has not gotten any of the information he needs
Speaker 10: to make a clear assessment on this. So, you know,
Speaker 10: Kevin McCarthy, he's trying to line up in case they
Speaker 10: can't get to two seventeen to eighteen, which is a
Speaker 10: big possibility at this point, he would like to be,
Speaker 10: you know, called out as the speaker in waiting to
Speaker 10: come out. I think it's probably more likely they may
Speaker 10: point McHenry for thirty or sixty days on an interim
Speaker 10: basis to do something like that, but who knows. You know,
Speaker 10: Mike Lowler was over out over the weekend. He's the
Speaker 10: representative from New York. He's saying he would welcome McCarthy back.
Speaker 10: So he still has the ninety six percent support. But
Speaker 10: I think we have to be very very cautious about
Speaker 10: what he's saying because again he has not gotten the
Speaker 10: briefing or the benefit. Even the minority leader did, Hakeem Jeffries.
Speaker 10: So you know, Kevin McCarthy is going out on a
Speaker 10: limb here in an effort to do what he does,
Speaker 10: which is try to get this job back.
Speaker 1: Seems pretty clear no one is close to two hundred
Speaker 1: and eighteen. Rick, we'll hear from Steve Scalise and Jim
Speaker 1: Jordan tomorrow. But what's your thought on this idea of
Speaker 1: a temporary speaker, a caretaker speaker, maybe a Patrick McHenry
Speaker 1: with an end date that allows them to actually maybe
Speaker 1: get something done. Yeah.
Speaker 9: Look, I mean, look at the process.
Speaker 8: Monday, they all get back today, They'll have a little
Speaker 8: conference tonight. When they get in, they'll start pitching members
Speaker 8: in a private caucus meeting on Tuesday, and on Wednesday.
Speaker 9: They're expected to take a vote.
Speaker 8: They've already said that they're going to continue to take
Speaker 8: votes in the caucus amongst themselves until somebody looks like
Speaker 8: they can get to two hundred and seventeen votes, and
Speaker 8: that means the fight is going to be behind closed
Speaker 8: doors inside the caucus, and who knows how long that
Speaker 8: will take. It took Kevin McCarthy fifteen ballots an all
Speaker 8: night to do it. This is even a bigger divide
Speaker 8: because there's actually two active campaigns that at best are
Speaker 8: split in the caucus right down the middle. And so
Speaker 8: by Thursday morning, if they wake up and they don't
Speaker 8: have a pretty good idea of who the consensus candidate's
Speaker 8: going to be by then I think they have to
Speaker 8: take action and empower Patrick McHenry to be an acting speaker.
Speaker 8: Regardless of how much time they give him, it's going
Speaker 8: to be beyond when the cr runs out. And his
Speaker 8: job at that point will be to pass appropriations bills,
Speaker 8: and if need to cut another deal for a cr
Speaker 8: beyond that, and if that's the only thing that happens
Speaker 8: this week and they don't come up with a speaker
Speaker 8: that will at least let Congress keep moving forward.
Speaker 1: That would be actually enormous progress based on what we've seen.
Speaker 1: Genie would how came Jeffrey's sign onto something like that?
Speaker 10: He might And you know, at this point, the funding
Speaker 10: needed for Israel and Ukraine is so critical that I
Speaker 10: think Democrats should seriously consider something like that. But you know,
Speaker 10: we're talking about this speaker. The dysfunction in Washington is everywhere.
Speaker 10: We need the ambassador to Israel to be confirmed. We
Speaker 10: need Tommy Tupperville to stop holding up these nominations from
Speaker 10: the State Department. They need to be confirmed. We need
Speaker 10: to get the speaker done, We need a budget pass.
Speaker 10: And maybe, in the best case scenario, this could be
Speaker 10: a teachable moment for Americans to say, this kind of
Speaker 10: domestic you know, really dysfunction has real world consequences, and
Speaker 10: we are seeing those played out in the moment. We've
Speaker 10: got to address all of these issues in order to
Speaker 10: move forward. In any way that is becoming of the
Speaker 10: United States and the country that we should be.
Speaker 1: Well, we've got a moment here, Rick, I have to
Speaker 1: ask you separately about the comment from Ron McDaniel over
Speaker 1: the weekend. Of course, she runs the RNC, and she's
Speaker 1: being beat up for suggesting this is a moment of
Speaker 1: opportunity for Republican candidates. It was from an interview on
Speaker 1: Fox Here's what she said.
Speaker 10: Absolutely, I think this is a great opportunity for our
Speaker 10: candidates to contrast where Republicans have stood with Israel.
Speaker 11: Time and time again and Joe Biden has been weak.
Speaker 1: Was that just bad wording or something that needs to
Speaker 1: be I think that's.
Speaker 8: You know, crass opportunism, right, I mean, like, what kind
Speaker 8: of moment of courage was that where she wouldn't rather
Speaker 8: than you know, say we should be uniting our country
Speaker 8: politically around defense of Israel, to hey, let's take advantage
Speaker 8: of this politically domestically.
Speaker 1: I guess this will be an issue on the campaign
Speaker 1: trail one way or the other. Though, right, people say,
Speaker 1: we don't vote on geopolitics, but we're going to have
Speaker 1: two big geopolitical influences to weigh in on.
Speaker 8: Yeah, the poster's got a lot of catch up work
Speaker 8: to do. Israel has not been on a single poll
Speaker 8: that's been taken in the last year, and now we're
Speaker 8: going to see a lot of data about like you know,
Speaker 8: where the country is on offending Israel.
Speaker 1: Yeah. Rick Davis with me in Washington. Genie Schanzeno is
Speaker 1: in New York. This is Bloomberg.
Speaker 2: You're listening to the Bloomberg Sound On podcast. Catch the
Speaker 2: program live weekdays at one Eastern on Bloomberg Radio, the
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Speaker 1: And we're live in Washington. I'm Joe Matthew now joined
Speaker 1: by Kaylee Lions with the headline nine hundred. The death
Speaker 1: toll in Israel topping nine hundred according to the latest
Speaker 1: reporting that we have here, Kayley, in a story that's
Speaker 1: just getting uglear as we go, night has fallen in Gaza.
Speaker 1: We've seen some heavy bombardment as we see a warning
Speaker 1: as well. The Associated Press reporting a short time ago
Speaker 1: Hamas saying that Israeli strikes, we'll bring hostage deaths, and
Speaker 1: this is the balancing act that we're seeing here with
Speaker 1: those hostages of course stuck in Gaza.
Speaker 11: Yeah, it's absolutely devastating, not only when you consider the
Speaker 11: death toll, but consider the elderly women and children who
Speaker 11: have been taken from Israel. And now there's a very
Speaker 11: real question about what exactly will happen to these hostages,
Speaker 11: and frankly, when or if there can be a resolution
Speaker 11: to this conflict in the immediate term. What started over
Speaker 11: the weekend, frankly, is still ongoing. This has been kind
Speaker 11: of a continuous attack that we are seeing playing out,
Speaker 11: and the devastation is only rising as time goes on.
Speaker 1: We heard from Ron Durmer earlier, Israeli's Minister of Strategic Affairs,
Speaker 1: was on Bloomberg's Surveillance. Let's listen to what he said.
Speaker 12: The critical question of whether we're going to be able
Speaker 12: to achieve this historic piece with Saudi Arabia that pulls
Speaker 12: pushs the whole Arab Israeli conflicted to a completely different
Speaker 12: place and can lead to a broader reconciliation between Muslims
Speaker 12: and Jews as well. The critical factor will be how
Speaker 12: Israel emerges from this fight, do we emerge as a victor?
Speaker 12: Because people may peace with winners. People make peace with
Speaker 12: a strong they do not make peace with a WII.
Speaker 1: He went on to say that Iran may well have
Speaker 1: known about the Gaza attack, which for many seems to
Speaker 1: be I guess obvious, but we're waiting for some real
Speaker 1: evidence on that kill.
Speaker 11: Yeah, we still have a lot of questions that remain
Speaker 11: and the answered as to exactly what Iran knew, what
Speaker 11: role it may have played. But of course, we heard
Speaker 11: the likes of now former Speaker Kevin McCarthy talking specifically
Speaker 11: about Iran at the Capitol earlier today. Yes, talking about
Speaker 11: how the US just last month released six billion dollars
Speaker 11: in frozen Iranian assets in exchange for the release of
Speaker 11: five Americans that were being detained by Iran. Kind of
Speaker 11: hearkening back to the question around hostages and just the
Speaker 11: Iranian policy of the Biden administration. Knowing that a lot
Speaker 11: of these questions still remain unanswered.
Speaker 1: Yeah, this is a big point of debate here. It
Speaker 1: certainly played out on Sunday morning television, Nikki Haley accusing
Speaker 1: the administration and Anthony blankn have being irresponsible to even
Speaker 1: argue with that fact. But we have to let everyone
Speaker 1: know that that money hasn't moved. I mean it was
Speaker 1: put into a new account, and not a dollar of
Speaker 1: that has actually been allocated. The question is this fungible?
Speaker 1: Does that mean Iran can move money around in advance
Speaker 1: of getting those dollars. Anthony Blincoln was asked that on
Speaker 1: Meet the Press. Here's how he reacted to the idea
Speaker 1: of fungible money in Iran.
Speaker 6: Iran has unfortunately always used and focused its funds on
Speaker 6: supporting terrorism, on supporting groups like AMAS. And it's done
Speaker 6: that when they've been sanctions, it's done that when there
Speaker 6: haven't been sanctions.
Speaker 1: And it's always prioritized that.
Speaker 6: And again I come back to the proposition that from
Speaker 6: these funds have always been under the law, available to
Speaker 6: Iran to use for human of train purpose.
Speaker 1: This is where we start our conversation with Mick Mulvaney,
Speaker 1: of course, the former acting chief of Staff, the Trump
Speaker 1: White House, co founder of the Freedom Caucus, who has
Speaker 1: an understanding of both ends. Certainly from the Republican perspective,
Speaker 1: both Thans of Pennsylvania Avenue and it's with us now,
Speaker 1: make it's good to see you. I wonder your thoughts
Speaker 1: on this, knowing that that money has not been unlocked,
Speaker 1: is it still something that you blame the administration for
Speaker 1: setting up?
Speaker 13: Hey, Joe, Okay, let's go to see you. I'll answer
Speaker 13: your question because you've asked you a question, but I
Speaker 13: really don't want to get in the blame game at
Speaker 13: this point. The answer your question is yes, that I've
Speaker 13: said from the very beginning, I'm not the only one.
Speaker 13: It's obviously become an issue in wider circles. If it's
Speaker 13: getting asked on a Sunday talk show, it means even
Speaker 13: the Democrats are talking about it now. And that is
Speaker 13: the fungibility of this money. That yeah, if the six
Speaker 13: billion is Saudi excuse me, is Iranian money, no question.
Speaker 13: We are monitoring it. There's no question there are limitations
Speaker 13: that cannot be used for anything but humanitarian purposes. All
Speaker 13: of those statements are true. But if you were going
Speaker 13: to spend a dollar on food today and I give
Speaker 13: you an extra dollar to spend on food today, does
Speaker 13: that free up the dollar you were going to spend
Speaker 13: on food to spend on something else, like maybe guns.
Speaker 13: Sure it does. That's just common sense and Blinkeln sort
Speaker 13: of go halfway on his answer by saying that Iran
Speaker 13: is always funded this kind of stuff, And I guess
Speaker 13: the follow up response would be yeah, uh, secretary, And
Speaker 13: if you give them six billion dollars of additional money,
Speaker 13: do you think they're going to spend more on on terrorism?
Speaker 13: The ANSWER's got to be yes. So but again, I'm
Speaker 13: more interested right now in the American response that Biden
Speaker 13: administration is going to have a lot of answers to
Speaker 13: questions to answer the net and Yahoo administration is going
Speaker 13: to have a lot of questions to answer, but now
Speaker 13: is probably not the best time to do that. I
Speaker 13: get the fact that folks are politicizing it because that's
Speaker 13: the DC we live in. It doesn't surprise me that
Speaker 13: Kevin raises it, you know, because that's Congress is, you know,
Speaker 13: sort of what Congress does. They're not really involved in
Speaker 13: the day to day on responding like the administration is.
Speaker 13: But I'm not sure it benefits many people by starting
Speaker 13: to point fingers on the second day.
Speaker 11: Okay, so Mick, let's then talk about what the appropriate
Speaker 11: response is. You have been in the West Wing advising
Speaker 11: a former president on policy, if you were advising the administration,
Speaker 11: Now what should it do? Knowing that really the administration
Speaker 11: at this point is where a lot of the action
Speaker 11: is going to have to emanate from, because Congress at
Speaker 11: the moment is a little paralyzed with no Speaker.
Speaker 9: Of the House.
Speaker 13: Yeah, Katie, you're right, but Congress wouldn't have a role
Speaker 13: anyway short of doing sort of a quick resolution of
Speaker 13: support for Israel, which is important, don't get me wrong.
Speaker 13: It certainly carries weight in the international sort of arena.
Speaker 13: But the administration is going to be the one, even
Speaker 13: with a properly functioning Congress, to be in charge for
Speaker 13: at least the first couple of weeks.
Speaker 9: If you get.
Speaker 13: Deep into this and you need to give additional authorities
Speaker 13: that are not already bound up in law, you like
Speaker 13: we're doing in Ukraine, we're getting supplemental spendings, We're going
Speaker 13: above and beyond what's already hardwired into the law, then yeah,
Speaker 13: Congress would have to act. But we've already got agreements
Speaker 13: in law with Israel on sending the money, on sending
Speaker 13: the material, on sharing information and people with them, and
Speaker 13: those things will be executed now by the executive branch.
Speaker 13: That's why they are there. That's what they're supposed to do.
Speaker 13: So yeah, the answer to your question is what should
Speaker 13: the administration be doing? And we're starting to see pieces
Speaker 13: of this now. You're already seeing the Pentagon move assets,
Speaker 13: you're already seeing them send support and so forth, and
Speaker 13: that's the right thing to do. The larger answer is
Speaker 13: an all of government approach. You can call a cabinet
Speaker 13: meeting and say, look, I'm not sure what the Department
Speaker 13: of Education can do here, if anything, but if you
Speaker 13: figure out some way to help in this effort, let
Speaker 13: me know. This needs to be an all of government response.
Speaker 13: And my guess is if they haven't done that already,
Speaker 13: they'll be doing it shortly.
Speaker 1: The former speaker was asked about this strange timing for
Speaker 1: a news conference when you're no longer holding the gavel.
Speaker 1: But Kevin McCarthy was asked about the supplemental request for
Speaker 1: funding in Ukraine along with a looming and expected supplemental
Speaker 1: request to help in Israel. It's interesting the direction he
Speaker 1: took with this answer. Let's listen right now.
Speaker 4: Ukraine still has another nine billion that they can draw
Speaker 4: down sitting there for arms. The question comes now in
Speaker 4: our stockpiles.
Speaker 1: We need a whole.
Speaker 4: New ability for the procurement and movement of the building
Speaker 4: of our weapons. It's too slow, it takes too long,
Speaker 4: and we've watched others try to take advantage of it.
Speaker 1: Mick Maulvaney, he said, Hakeing Jeffreys agrees with him on that.
Speaker 1: I don't know if the minority leader wanted that to
Speaker 1: go public here, but there's a lot in this question.
Speaker 1: I realized. I just wonder what's going to happen with
Speaker 1: competing interests when it comes to Ukraine, Israel and restocking
Speaker 1: our own munitions here. If you look at the shares
Speaker 1: of the defense contractors, investors obviously expect a lot of
Speaker 1: money to be spent. Will it go in all of
Speaker 1: those areas?
Speaker 13: Let me answer this that this way. It's absolutely good
Speaker 13: to Israel. There's no question the two things are not
Speaker 13: even close. This is not an equivalence between Israel and Ukraine.
Speaker 13: Israel is one of our closest, most historically important allies.
Speaker 13: It is a nuclear power. It's our only friend, although
Speaker 13: we're starting to garner other friends. We talk about that
Speaker 13: in a bit. If you want to in the area,
Speaker 13: Israel is it's up there with Australia and the UK right,
Speaker 13: that's one of our best friends. They're going to get
Speaker 13: what they need from us. You heard that from the
Speaker 13: Biden White House, so clearly it's one of those Byparson
Speaker 13: things in Washington, d C.
Speaker 4: Right now.
Speaker 9: Ukraine is different.
Speaker 13: Ukraine is not one of our historical allies. There's still
Speaker 13: these issues about corruption that I think are rightly raised.
Speaker 13: Ukraine's one of the most corrupt countries in the world.
Speaker 13: I know people want to sort of look the other
Speaker 13: way on that because of what's happening there militarily, but
Speaker 13: that is a true statement. So the two things are
Speaker 13: not the same. As to our rebuilding of our stockpiles.
Speaker 13: I'm glad to hear it's bipartisan. I hope they figure
Speaker 13: out a way to pay for it. One of the
Speaker 13: things that I think is going to become painfully obvious
Speaker 13: in the years to come after Ukraine, after Israel's can
Speaker 13: we afford to do everything we want to do? Or
Speaker 13: have we spent our nation's wealth, our savings and our
Speaker 13: grandchildren's wealth and savings on other things. When you run
Speaker 13: up thirty three train dollars in debt, you will have limitations.
Speaker 13: I think it was ten years ago, Joe, when the
Speaker 13: Chairman of the Joint Chiefs testified at the Budget Committee
Speaker 13: and he was asked, what's the greatest threat to our
Speaker 13: national security? And at that time ten years ago, he
Speaker 13: said the nation's debt. And I think the debt at
Speaker 13: that time was half of what it is today. So
Speaker 13: those are real conversations. It's easy for politicians to say
Speaker 13: beat their chests and say, you know, we give all
Speaker 13: the money that Israel needs, but at some point you
Speaker 13: actually have to pay for that, and that's going to
Speaker 13: get harder and harder to do.
Speaker 11: Well and paying for it. The issue of the debt
Speaker 11: and of government spending, Mick, is one that is constant
Speaker 11: on Capitol Hill. We still have a government that is
Speaker 11: going to need to be funded past November seventeenth. The
Speaker 11: no real path at this point to figure out how
Speaker 11: to get there, not just because of the issue of
Speaker 11: funding for Ukraine or Israel or anything else, but funding
Speaker 11: as a whole. And this was an issue for former
Speaker 11: Speaker Kevin McCarthy, who we mentioned a moment ago, was
Speaker 11: speaking on Capitol Hill on this Israel issue. As we
Speaker 11: look for his success or figure out if either Steve
Speaker 11: Scalie or Jim Jordan could get enough votes this week
Speaker 11: to get the gavel. Does this conflict in the Middle
Speaker 11: East have an accelerant effect on that process?
Speaker 12: Mith?
Speaker 11: What do you think it makes the Republican Conference think
Speaker 11: about trying to coalesce around one individual.
Speaker 13: It could, Although you know, I'm putting myself fi because
Speaker 13: I've been I've sort of been in this circumstance when
Speaker 13: we were opposing John Bayner for Speaker. I still think
Speaker 13: it's different because we had a coordinated effort. It wasn't
Speaker 13: a bunch of anarchists and so forth. It was a
Speaker 13: little bit different. But there are certainly parallels, and I
Speaker 13: acknowledge those that if we were having that fight and
Speaker 13: someone came to the podium at a Republican conference and said, well,
Speaker 13: we have to do something now because of Israel, right,
Speaker 13: my response to that is, why what are we going
Speaker 13: to be called on to do? What is the House
Speaker 13: going to be doing in the next week on Israel?
Speaker 13: The answer is nothing. And if somebody got up to
Speaker 13: say that, I would dismiss that person as being non serious.
Speaker 13: They're using this as an excuse to sort of avoid
Speaker 13: the issues at hand. Again, I'm not defending what Matt
Speaker 13: Gay's is by any stretch the imagination. But if someone
Speaker 13: got up and said that, I can see where certain
Speaker 13: members would say that doesn't change the analysis.
Speaker 14: Here.
Speaker 13: Listen, if we get twenty days into this, thirty days
Speaker 13: into this, as you get close to the government, the
Speaker 13: government funding issue, as you might have to start acting
Speaker 13: in the legislature on Israel, those things are becoming can
Speaker 13: become real, but they're not real this week. I don't
Speaker 13: think it changes the dynamic in this week Joey opened
Speaker 13: or I think it was kaylor who said, you know,
Speaker 13: will it be Kevin, Will it be Steve Scalie or
Speaker 13: Jim Jordan. I still think there's an equal likely chance
Speaker 13: that it's Kevin McCarthy because I still think he's the
Speaker 13: only person who can get the votes, and that may
Speaker 13: become more apparent by the end of the week.
Speaker 1: I'm hearing this more and more fascinating, and it's just
Speaker 1: it's amazing to hear it from Mick mulvaney, who knows
Speaker 1: these two players about as well as anybody. Mick. Is
Speaker 1: that why Kevin McCarthy held a news conference this morning?
Speaker 1: He sure was acting and sounding like a speaker. Yeah, Well,
Speaker 1: I don't think.
Speaker 13: I don't think that shouldn't come as a surprise to anybody,
Speaker 13: especially after Trump got into the race over the weekend.
Speaker 13: Trump coming out for Jordan hurts Jim, and listen, I
Speaker 13: would be voting for Jim Jordan for speaker.
Speaker 5: Let's be clear.
Speaker 13: I would be supporting him on the floor if I
Speaker 13: were there. Trump coming out for him makes it highly
Speaker 13: unlikely that Jim will become speaker because that will upset
Speaker 13: enough people on the left and the center of my
Speaker 13: party to say, there's no way I'm voting for Jordan.
Speaker 13: Trump had kept quiet. I think that could be different.
Speaker 13: I still don't think Steve Scales is enough support in
Speaker 13: the party. I keep coming back in all of these
Speaker 13: dynamics of there's one person who can get the votes,
Speaker 13: and it's Kevin McCarthy. So it doesn't surprise me as
Speaker 13: that they're speaking. By the way, members of Congress, we
Speaker 13: always used to want to have press conferences. Members People say, oh,
Speaker 13: Kim McCarthy's having a press conference because he wants to
Speaker 13: be speaker. Members of Congress would have a press conference
Speaker 13: every day if somebody would cover them. We love cameras,
Speaker 13: especially when we're elected office, so.
Speaker 1: It's so much for the humility, so much for the
Speaker 1: humility of losing the gavel. I don't know, maybe I'm
Speaker 1: just maybe that's just me. I don't think I would
Speaker 1: have held that news conference this morning, Kaylee. But just
Speaker 1: imagine I hope you lost the gallup Hadatchine if he
Speaker 1: becomes speaker. Though, we're going to play this tape back, Nick.
Speaker 1: I hate to interrupt you, but thank you for that.
Speaker 1: He's not the only one who has suggested as much here.
Speaker 1: Mick knows them though he talked to them over the weekend.
Speaker 11: Yeah, of course. I just wonder when he says Kevin
Speaker 11: McCarthy's the only one who can get the votes, does
Speaker 11: that mean he gets some of those eight Republicans who
Speaker 11: voted to oust him back Democrats come into the picture.
Speaker 11: Just how does that math equation add up?
Speaker 1: And you thought things were confused on Friday, This doesn't
Speaker 1: help us understand any more. Big thanks to Mick mulvaney,
Speaker 1: who's with us each week at this time on sound On.
Speaker 1: I'm Joe Matthew with Kaylee Lines. This is Bloomberg.
Speaker 2: You're listening to the Bloomberg Sound On podcast. Catch the
Speaker 2: program live weekdays at one Eastern on Bloomberg Radio, the
Speaker 2: tune in alf Bloomberg dot Com, and the Bloomberg Business app.
Speaker 2: You can also listen live on Amazon Alexa from our
Speaker 2: flagship New York station, Just Say Alexa play Bloomberg eleven thirty.
Speaker 1: Live from Washington with initial reactions from the Capitol today.
Speaker 1: So the Hamas attack over the weekend in Israel and
Speaker 1: now the response with heavy bombardment that we're reporting on
Speaker 1: in Gaza. Keep your eyes on the terminal for more
Speaker 1: tracking the price of oil as well, Kaylie. We're at
Speaker 1: just about eighty six dollars a bar a little more
Speaker 1: when it comes to WTI crude. Brent also moving on this,
Speaker 1: and there are a lot of questions about how much
Speaker 1: more movement we could see.
Speaker 11: Yeah, up four percent today. The questions really surround two things.
Speaker 11: Won the issue of Iran. We've already discussed Kevin McCarthy
Speaker 11: earlier today talking about how the US needs to be
Speaker 11: more harshly enforcing sanctions against Iranian crude, what that could
Speaker 11: mean for global supplies and therefore prices. But also if
Speaker 11: this conflict spilt has ripple effects around the rest of
Speaker 11: the Middle East, that could affect the flow of crude
Speaker 11: to the rest of the world. I'm thinking specifically of
Speaker 11: the Strait of Warmus. There the vast majority of the
Speaker 11: world's crude, or the biggest I think it's one in
Speaker 11: every six barrels go through that waterway that Iran territorium.
Speaker 1: We haven't spent a lot of time on the program
Speaker 1: talking about this potential deal with Saudi Arabia as well
Speaker 1: when all of this factors in, because there are big
Speaker 1: questions about whether that is even possible now. And glad
Speaker 1: to say that Bob McNally is with US Rapidan Energy
Speaker 1: Group founder and president, former National Security Council Senior director
Speaker 1: for International Energy. He spent time in the White House
Speaker 1: and in the oil patch and with us here on Bloomberg. Bob,
Speaker 1: you're one of the first voices we wanted to hear from,
Speaker 1: and I saw you quoted over the weekend about the
Speaker 1: initial reaction here with a slightly contrarian view, because there
Speaker 1: was a knee jerk and initial panic, and you've been
Speaker 1: pointing to calm here as we anticipate further headlines. What
Speaker 1: do you think about what we know now and the
Speaker 1: move that we've seen in crude prices, Is it justified.
Speaker 14: Sure, Hi Hi, Joe and Kayley.
Speaker 15: The market is appropriately discounting the risk, and it's certainly
Speaker 15: gone up of as you said, Iran being implicated and
Speaker 15: the region experiencing or having the conflict expand beyond the levant,
Speaker 15: beyond just Israel in Gaza. So given Iran's heavy handed
Speaker 15: support for Hamas, that is a real risk.
Speaker 14: So I think the premium.
Speaker 15: We've seen three dollars four dollars is appropriate. When we
Speaker 15: didn't see Hezbolah join the attack over the weekend, it
Speaker 15: became clearer to us and we were more confident that
Speaker 15: at least initially, this would not expand to the Middle
Speaker 15: East and to the Gulf right because Hamas, while supported,
Speaker 15: aided funded by Iran, and there's some question about whether
Speaker 15: Iran actually directed or was operationally involved in this attack.
Speaker 15: Hamas is different than Hezbolah, hes Bolan Lebanon. That's an
Speaker 15: authentic Iranian proxy, one hundred and thirty thousand missiles.
Speaker 14: They take orders right from a right from Tehran.
Speaker 15: So had we seen the northern front open up, we
Speaker 15: would be sitting here at a much higher crude premium,
Speaker 15: and Rapidan would have a higher than sort of twenty
Speaker 15: percent odds that this expands imminently to the global oil
Speaker 15: market and the global gas market too.
Speaker 11: That's interesting, Bob. Of course, we're looking to see if
Speaker 11: there is any further escalation in this conflict. It could
Speaker 11: be really early days here. We have to keep that
Speaker 11: in mind. But do you think the greater risk is
Speaker 11: that we see the US not turning a blind eye
Speaker 11: to Iranian exports more strictly enforcing those sanctions knowing that
Speaker 11: the primary buyer of that crewed in the first place
Speaker 11: is China, and sanctions enforcement maybe a little hard in
Speaker 11: that aspect. Or is the greater risk this kind of
Speaker 11: expansion the disruption of crude from elsewhere in the Middle
Speaker 11: East being disrupted.
Speaker 15: I think the bigger disruption risk comes from an expansion
Speaker 15: of the conflict to Hesbaalah and to Iran. Look, President
Speaker 15: Biden is going to be very cautious about tightening oil
Speaker 15: sanctions on Iran. Why Because this sort of winking and
Speaker 15: nodding at Iran's exports to China, Venezuela and Syria was
Speaker 15: the quiet part of this deal they did that included
Speaker 15: freezing the enrichment Iran's enrichment. On the surface, it was
Speaker 15: about six million dollars for six hostages, but under the surface,
Speaker 15: it was let's call it freeze for a freeze. So
Speaker 15: if President Biden starts cracking down on Iran's exports to
Speaker 15: those three countries, Iran could start enriching again. In light
Speaker 15: of what just happened this weekend, with tensions so high,
Speaker 15: that would put us even closer to a regional conflict.
Speaker 14: So I wouldn't rule it out. I wouldn't rule it out,
Speaker 14: but I.
Speaker 15: Don't think President Biden's going to be in a hurry
Speaker 15: to tighten sanctions on Iran's crude oil exports.
Speaker 1: Bob. We heard earlier from Kevin McCarthy, then now former
Speaker 1: Speaker of the House, who like many Republicans, was calling
Speaker 1: out the Biden administration and pointing to Iran. Here's what
Speaker 1: he had to say.
Speaker 4: Sanctions should go on Iran's production of oil. Under the
Speaker 4: last administration, Iran was only producing four hundred.
Speaker 9: Thousand barrels of oil a day. Now it's three million.
Speaker 4: They're making billions of dollars. They are wealthier, richer, and
Speaker 4: stronger under this Biden administration, and they're using that wealth
Speaker 4: to fund.
Speaker 1: Terrorism, qualifying what Kaylee was just referring to We spoke
Speaker 1: with Ron Dermer today as well, Bob, the Strategic Affairs
Speaker 1: minister in Israel. He says Iran may have known about
Speaker 1: these attacks. Didn't think they knew about this initially, but says, quote,
Speaker 1: there's some evidence they might have known about it. We're
Speaker 1: working to verify that evidence unquote. What happens if they
Speaker 1: do show the world evidence linking Iran to what happened
Speaker 1: last weekend.
Speaker 14: Yeah, so I saw that interview.
Speaker 15: It was fantastic and I raised it to my clients
Speaker 15: as well right away.
Speaker 14: Fantastic. Now that was very important.
Speaker 15: If Iran formally accuses excuse me, If Israel formally accuses
Speaker 15: Iran of operational involvement in this attack, right, directing it,
Speaker 15: coordinating it, knowing about it, and produces incontrovertible evidence of
Speaker 15: that in public, I think the markets will discount a
Speaker 15: much higher crude disruption risk, and that will set up
Speaker 15: an expectation that Israel will inevitably or ultimately settle accounts
Speaker 15: with Iran as well that Iran will have to pay
Speaker 15: for it. Now, there is the issue of sequence, though
Speaker 15: I don't think the Israelis would be in a hurry
Speaker 15: to show the evidence and to take Iran. Now, I
Speaker 15: think they want to deal with one problem at a
Speaker 15: time if they can, And the next big thing is
Speaker 15: going to be the ground invasion of Gaza, and I
Speaker 15: think for now they're trying to deter and dissuade Hezbollah
Speaker 15: and Iran and other actors from broadening this conflict. But
Speaker 15: if we see that revealed of evidence, then we all
Speaker 15: should be raising our odds that eventually Israel will pay
Speaker 15: back Iran directly and in a way bigger than we've
Speaker 15: seen in the past material attack on Iran in payback
Speaker 15: for this.
Speaker 11: Okay, So, Bob, in that scenario, what role would you expect,
Speaker 11: to say, Saudi Arabia to play. Knowing before these attacks
Speaker 11: there was a revived conversation about the relationship between Saudi
Speaker 11: Arabia and Israel, potentially steps toward normalization. Obviously these events
Speaker 11: could easily disrupt that. But knowing Saudi Arabia also has
Speaker 11: been holding back severely on output, could they come in
Speaker 11: and help the oil markets? I mean, how would you
Speaker 11: see the other countries in the Middle East playing a
Speaker 11: role in this hypothetical scenario.
Speaker 15: Well, in the hypothetical scenario though, where there's an attack
Speaker 15: in Iran and a conflict with Iran. The problem is
Speaker 15: all of the excess spare production capacity almost five million
Speaker 15: barrels today.
Speaker 14: The good news is that's quite a bit.
Speaker 15: The bad news is it's all north of the Strait
Speaker 15: of Hormuz or just about.
Speaker 14: Saudi Arabia could maybe divert a couple barrels.
Speaker 15: To the Red Sea and UAE to Fujera, but there's
Speaker 15: not much there. So in a conflict scenario, the spare
Speaker 15: capacity in Saudi Arabia's ability to increase doesn't do you
Speaker 15: much good. Secondly, let's remember Iran attacked the most vital
Speaker 15: important oil facility on the planet, the ab cake processing
Speaker 15: plant Saudi Arabia seven million barrel day facility in September
Speaker 15: of twenty nineteen. Now they did that and they didn't
Speaker 15: inflict lasting damage. They sort of sent a signal. But
Speaker 15: in a broader conflict scenario, not only the flow through
Speaker 15: the strait, but these key facilities, processing, refining, gathering, transport,
Speaker 15: loading facilities, all of these would be vulnerable to permanent
Speaker 15: damage or long term damage. So it's a pretty horrible scenario,
Speaker 15: and in that environment, Saudi Arabia's ability to increase production
Speaker 15: doesn't really help much if all that would happen in
Speaker 15: the war zone.
Speaker 1: Bob, it's great to have you with I'd like to
Speaker 1: stay in touch with you to the extent that we
Speaker 1: can in the coming weeks. This is obviously not just
Speaker 1: a story that will continue developing, but one that might
Speaker 1: have a real impact on oil prices, and we count
Speaker 1: on your analysis. Bob McNally at Rapidan Energy with us
Speaker 1: once again on Bloomberg. Pretty fascinating stuff there, Kaylee. We're
Speaker 1: seeing fairly commensurate increases in WTI and Brent Brood on
Speaker 1: this story.
Speaker 11: Yeah, In fact, WTI November futures just settling eighty six
Speaker 11: dollars and thirty eight cents of barrel, and we'll see
Speaker 11: if there is more upside surprise to prices as we
Speaker 11: see this conflict go on dig.
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