WEBVTT - P&L: MIT's Gruber on How to Restore Obamacare to Initial Vision 0:00:04.760 --> 0:00:08.080 Welcome to the Bloomberg P and L Podcast. I'm Pim Fox. 0:00:08.119 --> 0:00:11.200 Along with my co host Lisa Abramowitz. Each day we 0:00:11.280 --> 0:00:14.480 bring you the most important, noteworthy, and useful interviews for 0:00:14.520 --> 0:00:16.880 you and your money, whether at the grocery store or 0:00:16.920 --> 0:00:20.680 the trading floor. Find the Bloomberg P L Podcast on iTunes, 0:00:20.840 --> 0:00:30.480 SoundCloud and at Bloomberg dot com. The Affordable Care Act, well, 0:00:30.600 --> 0:00:35.879 it is being challenged, at least rhetorically by Republicans in 0:00:36.120 --> 0:00:38.720 the House, the Senate, and soon to be in the 0:00:38.760 --> 0:00:41.760 White House. John Grouber is a professor of economics at 0:00:41.880 --> 0:00:44.800 m I T and many people consider him a key 0:00:44.920 --> 0:00:49.040 architect of the Obamacare program. He joins us now, John Groober, 0:00:49.080 --> 0:00:51.640 thank you, sir, good to be here. Can you explain 0:00:51.720 --> 0:00:54.840 some of the specific elements of the Affordable Care Act 0:00:55.200 --> 0:00:59.720 which you believe need improvement. I think the major issue 0:00:59.760 --> 0:01:02.680 before Portable Care Act that needs improvement is the fact 0:01:02.840 --> 0:01:06.280 that ensure that competition has not been the strongest who 0:01:06.360 --> 0:01:09.759 might have hoped on these exchanges, and that insures, as 0:01:09.760 --> 0:01:11.520 a result of that, to raise premiums more than we 0:01:11.600 --> 0:01:14.800 might have hoped. I think that really, in some sense 0:01:14.920 --> 0:01:16.800 what needs to happen is something. The law needs to 0:01:16.840 --> 0:01:18.959 be implemented the way it was written. I want any 0:01:19.000 --> 0:01:21.560 buy that is. Two things. First of all, the states 0:01:21.600 --> 0:01:23.880 where things are worse are the states have not expanded 0:01:23.920 --> 0:01:28.759 their medicaid programs, leading sick individuals into the exchanges rather 0:01:28.840 --> 0:01:32.760 than being covered by lower cost medicaid. Second of all, um, 0:01:33.000 --> 0:01:36.200 what's happened is in the law there was reinsurance payments 0:01:36.520 --> 0:01:39.840 to insurers that were scheduled paid to help them withstand 0:01:39.840 --> 0:01:43.120 the vicissitudes of entering a new market. Republicans blocked those 0:01:43.120 --> 0:01:46.000 payments and so insure suffered billions of costs they didn't 0:01:46.000 --> 0:01:48.720 plan to when they signed up for the Obamacare exchanges. 0:01:49.080 --> 0:01:50.880 But the law had really has been implemented as planned, 0:01:50.880 --> 0:01:52.800 I think it would have gone a lot better. Okay, well, 0:01:52.840 --> 0:01:54.640 let let's let's just take that first one just so 0:01:54.680 --> 0:01:57.680 we can understand that. You say that people who should 0:01:57.760 --> 0:02:01.480 have gone into the lower cost medic CAD program right 0:02:02.160 --> 0:02:07.600 went into an exchange based program. That's correct. So the 0:02:07.600 --> 0:02:10.640 way Obamacare was set up was individuals below a hundred 0:02:10.760 --> 0:02:12.680 thirty percent of the poverty line or you know, like 0:02:12.760 --> 0:02:16.000 fifteen dollars to an individual, we're supposed to be in 0:02:16.120 --> 0:02:18.639 the government Medicaid program, which pays providers less and is 0:02:18.760 --> 0:02:21.280 sort of a more unit is basically more managed type 0:02:21.280 --> 0:02:23.880 of care. And the drews above that level we're supposed 0:02:23.880 --> 0:02:26.360 to be in the exchanges buying private insurance along with 0:02:26.400 --> 0:02:30.080 people of of hiring income levels. UH. The problem was 0:02:30.160 --> 0:02:33.600 when states chose to turn down the free opportunity to 0:02:33.680 --> 0:02:37.399 cover their uninsured, the really crazy decision to not expand Medicaid, 0:02:37.800 --> 0:02:41.320 people between a hundred and hundred percent of poverty became 0:02:41.360 --> 0:02:44.800 eligible for exchanges. So people who say in California would 0:02:44.800 --> 0:02:47.200 be getting medicaid, people between a hundred and hundred thirty 0:02:47.280 --> 0:02:50.560 percent of poverty will be getting Medicaid in Florida there 0:02:50.560 --> 0:02:53.400 in the exchanges as a result. Actually the state with 0:02:53.440 --> 0:02:56.200 the most people in exchanges in America is Florida, which 0:02:56.200 --> 0:03:00.680 has speciferously fought the Affordable Care Act. Okay, can you 0:03:00.760 --> 0:03:04.320 reconcile that though with the idea that there are people 0:03:05.080 --> 0:03:10.000 many times above the UH the income level in order 0:03:10.040 --> 0:03:12.560 to qualify for medicaid, because it also has to do 0:03:12.680 --> 0:03:14.960 with some efforts on part of the government to figure 0:03:15.000 --> 0:03:18.880 out your assets, but that are paying maybe five hundred 0:03:19.280 --> 0:03:23.079 more more dollars a month in premiums for the least 0:03:23.160 --> 0:03:27.519 expensive plan that is on offer on the exchange, and 0:03:27.600 --> 0:03:31.680 yet the deductible is so high that it makes paying 0:03:31.800 --> 0:03:37.040 the premium almost crazy unless you know that you are 0:03:37.080 --> 0:03:40.360 going to use some type of long stay, long term stay, 0:03:40.480 --> 0:03:44.120 or catastrophic element of the plan. So basically, I think 0:03:44.120 --> 0:03:46.520 when you evaluate any law like the Affordable Care Act, 0:03:46.600 --> 0:03:48.920 you have to evaluate it relative not to the world 0:03:48.960 --> 0:03:51.840 we wish existed, but the world that would have existed otherwise. 0:03:52.280 --> 0:03:54.560 The problem you're pointing out is not about the Affordable 0:03:54.560 --> 0:03:56.880 Care Act. It's about the super high cost of healthcare 0:03:56.920 --> 0:04:00.640 in the US. We as a nation are spending seventeen 0:04:00.720 --> 0:04:04.120 percent of our income on healthcare in a world that 0:04:04.160 --> 0:04:08.920 pay income on our healthcare. A high income family paying 0:04:08.920 --> 0:04:11.440 the kind of cost you're laying out is exactly what 0:04:11.480 --> 0:04:13.720 you'd expect, you know, in a high income family is 0:04:13.720 --> 0:04:16.479 gonna have spending ten plus percent. They're in healthcare in 0:04:16.480 --> 0:04:18.200 a world where the nation of the whole is spending 0:04:18.200 --> 0:04:23.200 se So really, that's not about Obamacare. That's about the fundamental, 0:04:23.279 --> 0:04:26.719 long run problem of high costs, which Obamacare has done 0:04:26.760 --> 0:04:30.440 more to address than any legislation US history. If you 0:04:30.440 --> 0:04:34.200 look at the cost employer sponsored insurance since Obamacare has 0:04:34.200 --> 0:04:38.200 been passed, they've fallen by thirty relative to what would 0:04:38.200 --> 0:04:41.680 have happened otherwise. Well, you say relative to what would 0:04:41.760 --> 0:04:46.520 have happened otherwise, but you recognize, I would imagine you 0:04:46.520 --> 0:04:49.600 admit that if you ask people what has happened to 0:04:49.640 --> 0:04:52.160 the premiums of their health insurance that they are either 0:04:52.200 --> 0:04:55.479 paying for themselves or for their employees, you would not 0:04:55.520 --> 0:04:57.880 be surprised if you heard them say it has gone 0:04:57.920 --> 0:05:00.600 up dramatically. Well, you know, I would not be surprised 0:05:00.600 --> 0:05:04.040 at all. And so this is the really difficult problem 0:05:04.120 --> 0:05:07.480 that I think people who developed Obamacare did not appreciate 0:05:07.600 --> 0:05:11.120 enough beforehand, which is that when you reform the system, 0:05:11.200 --> 0:05:15.000 you own the system. And what that means is people 0:05:15.080 --> 0:05:19.320 hold you, really in some sense to not the standard 0:05:19.360 --> 0:05:21.120 of what would have happened otherwise, but the standard of 0:05:21.160 --> 0:05:24.479 everything they don't like is your fault. And essentially we 0:05:24.600 --> 0:05:29.240 have a system that's too expensive. Premiums since Obamacare have risen. 0:05:29.600 --> 0:05:31.960 They have written much more slow than they were rising 0:05:32.000 --> 0:05:35.920 before Obamacare, but they still risen. And the question is 0:05:36.080 --> 0:05:39.080 what Obamacare supporters and that didn't do a good enough 0:05:39.160 --> 0:05:41.440 job doing I don't know how we could have done it, 0:05:41.480 --> 0:05:43.960 but clearly we couldn't do a better job would be 0:05:43.960 --> 0:05:47.600 to explain to people, to set up more realistic expectations, 0:05:47.640 --> 0:05:51.479 that Obamacare was the first step towards address the problems 0:05:51.480 --> 0:05:55.320 to the system, not the solution. Having said that, can 0:05:55.360 --> 0:05:58.680 you also maybe give us your perspective and you say 0:05:58.680 --> 0:06:01.200 that would be the first step up. But knowing the 0:06:01.240 --> 0:06:05.240 way that legislation and the government works, you're only only 0:06:05.240 --> 0:06:08.880 going to get one or two chances during an entire administration. 0:06:08.960 --> 0:06:11.600 So to say that it's the first step implies that 0:06:11.640 --> 0:06:14.040 you're going to be able to roll out these improvements 0:06:14.080 --> 0:06:18.440 on an ongoing basis that really just never happened. But 0:06:18.440 --> 0:06:21.400 but that's actually not true. I mean, take Medicare. That's 0:06:21.440 --> 0:06:23.960 the largest single healthcare program in the country. It's fifty 0:06:24.040 --> 0:06:27.160 years old. We're continually changing it. No, but I'm talking 0:06:27.200 --> 0:06:28.960 about it. I'm talking about a bomb. I'm talking about 0:06:28.960 --> 0:06:31.680 the Affordable Care Act, not Medicare. No, but no. But 0:06:31.760 --> 0:06:33.320 here's the reason I point it. You said we won't 0:06:33.320 --> 0:06:35.520 be able to make those changes. Why not, Well, because 0:06:35.560 --> 0:06:38.360 you can because you have a Republican administration coming in. 0:06:38.839 --> 0:06:42.720 But that's a separate issue. But as political as political 0:06:42.720 --> 0:06:45.320 and policy experts, isn't that one of the most fundamental 0:06:45.320 --> 0:06:47.560 things to take into consideration that you might not be 0:06:47.640 --> 0:06:51.440 around in the next four years to implement whatever improvements 0:06:51.440 --> 0:06:53.520 you think are necessary to make it work for people. 0:06:53.920 --> 0:06:56.720 So what you do in that situation you pass a 0:06:56.800 --> 0:07:00.520 law that has two criteria. It makes to is better 0:07:00.560 --> 0:07:03.400 than if the law did not exist, and be it 0:07:03.520 --> 0:07:06.760 hopefully sets up a flexible enough system that well intentioned 0:07:06.760 --> 0:07:10.080 people can continue to improve it. That's exactly what Obamacare did. 0:07:10.360 --> 0:07:13.440 It made the world better. The healthcare costs are growing 0:07:13.440 --> 0:07:16.800 more slowly, more people have health insurance coverage. They made 0:07:16.840 --> 0:07:19.840 the world better than it was without Obamacare. But it 0:07:19.920 --> 0:07:22.440 was impossible pass a law that literally fixed the system 0:07:22.440 --> 0:07:24.800 because quite frankly, we don't know how. There's still too 0:07:24.880 --> 0:07:26.440 much unknown. So what you do is you make the 0:07:26.480 --> 0:07:28.800 world better and you set up a system where well 0:07:28.840 --> 0:07:30.960 intentioned governments, which doesn't eem like this is gonna be 0:07:31.000 --> 0:07:33.960 one but we're well intentioned governments can continue to improve things. 0:07:34.520 --> 0:07:36.640 That's all you can do. I mean, you can't solve 0:07:36.640 --> 0:07:38.480 all the world's problems in one cell swoop. No piece 0:07:38.520 --> 0:07:41.679 of legislation has ever done that the best legislation moves 0:07:41.680 --> 0:07:43.600 in the right direction sets you up to continue to 0:07:43.600 --> 0:07:45.120 move in that direction when you of government who are 0:07:45.120 --> 0:07:48.520 willing to do so. Well done, Thanks very much, John Groober. 0:07:48.600 --> 0:07:51.160 He is a professor of economics at m I T. 0:07:51.680 --> 0:07:55.400 He is considered a key architect of the Affordable Care 0:07:55.440 --> 0:07:58.960 Act Obamacare. We'll have to wait and see in seventeen 0:07:59.480 --> 0:08:02.960 what President elect Donald Trump and House and Senate Republicans 0:08:03.440 --> 0:08:07.960 have in mind for any changes or repeal of Obamacare. 0:08:20.480 --> 0:08:24.600 US intelligence agencies have concluded that the Kremlin approved the 0:08:24.640 --> 0:08:29.920 attacks on the Democratic and National Committee and other political organizations. 0:08:30.840 --> 0:08:35.160 United States has retaliated, and now President Vladimir Putin of 0:08:35.240 --> 0:08:39.040 Russia says he will not retaliate for President Obama's expulsion 0:08:39.440 --> 0:08:43.560 of thirty five suspected operatives. This comes hours after the 0:08:43.640 --> 0:08:48.200 Russian foreign minister publicly recommended a response. Here to tell 0:08:48.280 --> 0:08:50.680 us what is going on is Nick Wadhams. He is 0:08:50.760 --> 0:08:55.400 our policy foreign policy reporter for Bloomberg, and he joins 0:08:55.480 --> 0:08:58.280 us now from Washington, d C. Home to Bloomberg one 0:08:58.320 --> 0:09:01.520 and one oh five point seven eight d two. Nick, 0:09:01.679 --> 0:09:04.920 give us the latest on this, he said, he said, 0:09:05.080 --> 0:09:09.800 And now you're expelled, you're not expelled, saga. Well, it's 0:09:09.800 --> 0:09:13.840 really interesting. So earlier today, you know that the expectation 0:09:14.080 --> 0:09:17.640 was that Russia would respond in kind. I mean, traditionally 0:09:17.640 --> 0:09:21.320 how these things work, as if the US expels another 0:09:21.360 --> 0:09:24.120 country's diplomats is just sort of pro forma that they 0:09:24.200 --> 0:09:29.520 respond by expelling the same number of American diplomats from 0:09:29.559 --> 0:09:32.480 their country. And indeed that appeared to be what was 0:09:32.520 --> 0:09:36.640 going to happen after the Foreign Ministry recommended that Russia 0:09:36.720 --> 0:09:40.320 do so. Then uh, Putin overturned that and said we're 0:09:40.320 --> 0:09:44.120 not going to Obviously, whether he actually overturned it or 0:09:44.120 --> 0:09:48.040 the whole thing was sort of an orchestrated dance is 0:09:48.160 --> 0:09:51.440 up for debate. But uh, you know he said he 0:09:51.559 --> 0:09:54.840 portrayed is basically taking the high ground as saying we're 0:09:54.840 --> 0:09:58.280 not going to stoop to this sort of kitchen politics, 0:09:58.320 --> 0:10:01.760 as he called it. But really it's it's an acknowledgement 0:10:01.880 --> 0:10:05.120 that that Russia just wants to wait until Donald Trump 0:10:05.160 --> 0:10:09.000 comes to office and test his claim to seek better relations. 0:10:09.000 --> 0:10:10.640 So clearly they just see him as sort of a 0:10:10.640 --> 0:10:14.480 more reliable negotiating partner. Now, nick I got a chance, 0:10:14.520 --> 0:10:16.199 and I mean I guess you can. Anyone can look 0:10:16.240 --> 0:10:19.880 at this, of course, because it is available on the 0:10:20.000 --> 0:10:25.880 Joint Analysis Website of the US Intelligence Department of Homeland 0:10:25.920 --> 0:10:29.560 Security as well as the Federal Viewer of Investigation, and 0:10:29.600 --> 0:10:33.320 it goes into quite a detailed analysis of what is 0:10:33.360 --> 0:10:38.600 called Grizzly Step. This is the Russian malicious cyber activity. 0:10:38.640 --> 0:10:42.320 This has been going on, according to the report since right, 0:10:42.400 --> 0:10:45.120 that's right, and you know this was I think what 0:10:45.120 --> 0:10:48.920 we're seeing is partly an attempt by the Obama administration 0:10:48.960 --> 0:10:52.480 to make the case both to the American public who 0:10:52.559 --> 0:10:56.120 may have been doubtful about the claims against Russia, but 0:10:56.240 --> 0:10:58.840 also to Donald Trump and his own teams. And what 0:10:58.880 --> 0:11:01.520 they've sort of been saying recently is, you know, there's 0:11:01.559 --> 0:11:04.640 not a consensus in the intelligence community. We've had lots 0:11:04.679 --> 0:11:09.520 of um anonymous statements from various members of the intelligence community, 0:11:09.520 --> 0:11:12.320 but no full consensus where everybody says, okay, we are 0:11:12.360 --> 0:11:15.400 all united on what we think is going on. Uh. 0:11:15.679 --> 0:11:18.839 And Trump had actually pointed to the FBI and had said, well, 0:11:18.840 --> 0:11:21.480 where's the FBI in this. We've had the CIA and others, 0:11:21.600 --> 0:11:23.840 but I'm still waiting to hear from the FBI. Well, 0:11:23.920 --> 0:11:26.600 now we've heard from them, uh, and so we're all 0:11:26.640 --> 0:11:29.960 sort of waiting to see how he internalizes and processes 0:11:30.040 --> 0:11:33.720 this information and whether that changes his calculus and brings 0:11:33.760 --> 0:11:36.760 him down a little bit more firmly on the side 0:11:36.760 --> 0:11:39.440 of those who say Russia should be punished now. The 0:11:39.559 --> 0:11:45.600 summary also offers details of the actual hacks, whether it 0:11:45.760 --> 0:11:49.240 is from something called APP twenty nine or APP twenty eight, 0:11:49.360 --> 0:11:52.360 and it talks some tail about remote access tools and 0:11:52.400 --> 0:11:58.400 how they actually gained access to many emails and email 0:11:58.440 --> 0:12:01.960 accounts because in twenty team they started something called a 0:12:02.040 --> 0:12:07.240 spear phishing campaign and that created a link that made 0:12:07.240 --> 0:12:10.959 it possible for them to steal information from the computers 0:12:11.040 --> 0:12:16.320 of the US government as well as political organizations. Well 0:12:16.360 --> 0:12:18.920 that's right. I mean, the thing that's partly so interesting 0:12:18.960 --> 0:12:21.880 about all of this is, for all the discussion about 0:12:21.960 --> 0:12:28.640 technical matters and covert cyber campaigns and classified information, I mean, 0:12:28.679 --> 0:12:32.400 the way that, uh, some of this started was just 0:12:32.520 --> 0:12:36.400 hackers sending a fake email to John Podesta, allegedly or 0:12:36.440 --> 0:12:39.440 purporting to be from Google telling him to change his password. 0:12:39.520 --> 0:12:42.760 So when he clicked on it and changed his password, uh, 0:12:43.080 --> 0:12:47.160 hackers had information had access to his entire Gmail account, 0:12:47.200 --> 0:12:48.520 and that's where he saw a lot of the Wiki 0:12:48.600 --> 0:12:52.559 leaks or all all the Wiki leaks emails come from. 0:12:52.640 --> 0:12:57.160 So it was a very actually simple operation to get 0:12:57.679 --> 0:13:01.280 uh that that email account. But you know, again, what 0:13:01.320 --> 0:13:04.680 we're really seeing is the Obama administration sort of making 0:13:04.679 --> 0:13:06.880 its case and being very explicit about why it thinks 0:13:06.960 --> 0:13:09.920 Russia is involved, and being willing to disclose the evidence 0:13:10.160 --> 0:13:13.280 to back that up. Thank you, Nick wadhams, our foreign 0:13:13.320 --> 0:13:29.360 policy reporter for Bloomberg. The Supreme Court of the United 0:13:29.440 --> 0:13:33.400 States normally consists of the Chief Justice of the United 0:13:33.400 --> 0:13:36.800 States and eight Associate Justices who are nominated by the 0:13:36.840 --> 0:13:41.559 President and then confirmed by the Senate. Well, we only 0:13:41.600 --> 0:13:45.199 have eight right now, and in addition to President elect 0:13:45.200 --> 0:13:48.720 Donald Trump taking the oath of office on January, is 0:13:48.760 --> 0:13:52.640 it possible that there will be another oath administered for 0:13:52.880 --> 0:13:57.520 Supreme Court justice? Let's find out from Kimberly Robinson b N, 0:13:57.600 --> 0:14:01.720 a reporter for Bloomberg. Bloom for the Supreme Court. I 0:14:01.720 --> 0:14:04.240 beg your pardon, Kimberly, thank you very much for for 0:14:04.320 --> 0:14:06.679 being with me today. Um, tell us a little bit 0:14:06.679 --> 0:14:10.760 about what you expect to happen in twenty seventeen, and 0:14:10.840 --> 0:14:14.360 maybe give us some names of individuals who you believe 0:14:14.360 --> 0:14:18.480 are being considered for a place on the Supreme Court. Well, 0:14:18.640 --> 0:14:22.000 the Trump campaign itself actually provided a list of twenty 0:14:22.040 --> 0:14:25.800 one names that are being considered as possible nominees. They 0:14:25.800 --> 0:14:29.480 provided this list before the election, but have since confirmed 0:14:29.600 --> 0:14:32.520 that they will be picking from that list, And in fact, 0:14:32.520 --> 0:14:36.240 on December one, Donald Trump indicated that he would release 0:14:36.280 --> 0:14:40.680 the name very soon, possibly before his inauguration. UM. Of course, 0:14:40.680 --> 0:14:44.000 that doesn't mean that we'll have a sitting justice before then. UM. 0:14:44.040 --> 0:14:47.640 Any potential nominee still has to go through confirmation hearings, 0:14:47.720 --> 0:14:52.400 and those could be quite controversial, really, depending on who 0:14:52.440 --> 0:14:55.480 who it is that Donald Trump decides to ultimately nominate. 0:14:55.800 --> 0:14:59.560 So are there some particular individuals I note Bill prior 0:14:59.680 --> 0:15:04.960 form our Alabama Attorney General Thomas Hardeman, he's on the 0:15:05.080 --> 0:15:10.320 Philadelphia Appeals Court. Steve Cullaton the also US Court of 0:15:10.320 --> 0:15:14.600 Appeals from Iowa. Tell us some of the individuals being considered, Right, 0:15:14.680 --> 0:15:17.240 those are three of the five individuals who have really 0:15:17.240 --> 0:15:21.120 come out um as the front runners. Um, And as 0:15:21.160 --> 0:15:24.560 you mentioned, a lot of these individuals are are currently 0:15:24.600 --> 0:15:27.360 federal Appellate Court judges, so that could speed up the 0:15:27.400 --> 0:15:30.760 confirmation process. I think the consensus is that the two 0:15:30.840 --> 0:15:34.520 front runners really are Bill Pryor whom you mentioned, UM 0:15:34.600 --> 0:15:37.800 and Diane Sykes. Now, Donald Trump has said that he 0:15:37.880 --> 0:15:41.360 wants to nominate somebody who's in the mold of Justice Scalia, 0:15:41.440 --> 0:15:44.400 who is responsible for the vacancy on the court. UM. 0:15:44.480 --> 0:15:48.720 Somebody who's tested who wouldn't have any surprises for conservatives UM, 0:15:48.760 --> 0:15:52.040 which has happened for other Republican nominees, And somebody who's 0:15:52.160 --> 0:15:57.560 young enough to really impact the court and judicial uh 0:15:57.800 --> 0:16:01.400 in UM cases for a long time. Now. Both Bill 0:16:01.440 --> 0:16:04.800 Prior and Diane Sykes fit that bill. There the two 0:16:04.840 --> 0:16:08.080 individuals that Donald Trump name dropped back in February when 0:16:08.120 --> 0:16:12.040 Justice Scalia first passed away UH. And you know they're both, 0:16:12.080 --> 0:16:15.160 as I mentioned, long term federal Pellate Court judges who 0:16:15.240 --> 0:16:20.240 have ruled favorably on conservative issues like abortion and the 0:16:20.320 --> 0:16:24.360 Second Amendment. UM. But Bill Prior um is a more 0:16:24.440 --> 0:16:28.840 controversial pick. Now. He has once referred to Row versus Wade, 0:16:28.880 --> 0:16:32.600 the Supreme Court Landmark abortion decision as the worst abomination 0:16:32.760 --> 0:16:36.520 in constitutional legal history. UM. And so if if Donald 0:16:36.520 --> 0:16:40.080 Trump wants to avoid a very tough confirmation fight. He 0:16:40.160 --> 0:16:43.080 may instead go with Diane Sykes. She was a single 0:16:43.160 --> 0:16:46.960 mom who has said that her philosophy is one of 0:16:47.040 --> 0:16:50.880 judicial restraint, so she could be an easier confirmation battle 0:16:51.360 --> 0:16:54.760 for a new administration. What are some of the specific 0:16:54.840 --> 0:17:00.480 cases you believe will be important in the court. Well, 0:17:00.600 --> 0:17:03.960 the specific cases UM that are already at the court 0:17:04.200 --> 0:17:09.400 UM include things on transgender rights UM, and we may 0:17:09.400 --> 0:17:12.639 be seeing issues on immigration coming back to the court, 0:17:12.920 --> 0:17:15.360 and those are things actually some of these judges are 0:17:15.400 --> 0:17:18.960 already dealing with. You know, Diane Sykes, she sits in 0:17:19.359 --> 0:17:22.719 Federal Appellate Court in Chicago and is dealing with transgender 0:17:22.840 --> 0:17:26.760 rights UM out there, and so I think that that's 0:17:26.800 --> 0:17:28.880 an issue that will be closely looked at in their 0:17:28.880 --> 0:17:31.960 confirmation hearings UM and something that we'll be hearing about 0:17:31.960 --> 0:17:34.640 from the Supreme Court UM in the next year. I'm 0:17:34.640 --> 0:17:40.000 glad you mentioned those confirmation hearings. What is the thinking 0:17:40.040 --> 0:17:44.520 on part of the Democrat senators who will have to 0:17:44.920 --> 0:17:49.760 approve or at least not filibuster the nominations. Well, these 0:17:49.800 --> 0:17:53.359 five individuals are not interchangeable. They really are quite different. 0:17:53.400 --> 0:17:55.399 And so uh, as they said in the beginning, It 0:17:55.440 --> 0:17:57.880 really depends on who Donald Trump chooses to pick. As 0:17:57.880 --> 0:18:01.600 I've suggested, Bill Pryor could be a really tough confirmation battle, 0:18:01.640 --> 0:18:04.120 and Democrats may decide to dig in their heels. They 0:18:04.160 --> 0:18:07.440 certainly did that when he was up for nomination for 0:18:07.520 --> 0:18:10.480 the court that he sits on now. Uh. Democrats were 0:18:10.480 --> 0:18:13.479 able to drag his confirmation battle out for two full years. 0:18:13.760 --> 0:18:17.600 But someone like Diane Sykes might be easier for Democrats 0:18:17.680 --> 0:18:21.480 to get behind. And you know, the math for Democrats, 0:18:21.880 --> 0:18:26.320 especially Senate Democrats, is pretty difficult. They may not want 0:18:26.320 --> 0:18:29.240 to have a big fight on this first nominee, especially 0:18:29.240 --> 0:18:33.080 considering that there may be some Supreme Court vacancies coming 0:18:33.160 --> 0:18:37.000 up again in the near future. In that context, how 0:18:37.040 --> 0:18:39.320 long do you think it will be before we learn 0:18:39.400 --> 0:18:42.400 the actual name of the nominee. I think it could 0:18:42.440 --> 0:18:45.760 be any time in the next coming days. As I mentioned, 0:18:45.800 --> 0:18:48.239 it was December one when Donald Trump said that he 0:18:48.280 --> 0:18:51.200 would very soon drop the name. UM, so we're about 0:18:51.200 --> 0:18:53.159 a month out from that. UM. I would expect us 0:18:53.200 --> 0:18:56.280 to hear a name sometime very soon. We'll have to 0:18:56.320 --> 0:18:57.960 wait and see. But I want to thank you very 0:18:58.000 --> 0:19:01.120 much for keeping us up today. Kimberly Robinson is our 0:19:01.320 --> 0:19:06.359 Supreme Court reporter for Bloomberg b n A. Wenna have 0:19:06.400 --> 0:19:09.840 to watch closely. And indeed, one of the federal judges 0:19:10.400 --> 0:19:13.600 that the Donald Trump's team has indicated might be a 0:19:13.640 --> 0:19:16.119 possible fit for the Supreme Court. To Diane's Sykes, a 0:19:16.160 --> 0:19:18.159 federal judge of the United States Courts of Appeals for 0:19:18.160 --> 0:19:20.680 the Seventh Circuit. Well, maybe she'll have something to celebrate. 0:19:20.720 --> 0:19:24.080 Her birthday was just on December the twenty three, so 0:19:24.119 --> 0:19:38.280 we wish her the latest happy birthday. Well, we call 0:19:38.359 --> 0:19:41.560 on Chuck Lieberman, the chief investment Officer and managing partner 0:19:41.600 --> 0:19:46.280 at Advisors Capital Management, to help us navigate our investment 0:19:46.359 --> 0:19:50.200 portfolios and strategies. He helps to manage one point three 0:19:50.240 --> 0:19:53.760 billion dollars and he joins us from Ridgewood, New Jersey. 0:19:54.160 --> 0:19:56.959 Chuck Lieberman, thank you for being with me. Give us 0:19:57.000 --> 0:20:00.960 your outlook for twenty seventeen, and maybe you can take 0:20:01.000 --> 0:20:03.760 a look at it in terms of industry groups that 0:20:03.840 --> 0:20:08.280 will fare well and those that will fare poorly. Well, 0:20:08.320 --> 0:20:13.960 we see, uh, some continuing trends from six um. Trump selection, 0:20:14.040 --> 0:20:16.439 I think reinforces a lot of those trends that we 0:20:16.480 --> 0:20:19.879 see in place. So we see policies that are a 0:20:19.920 --> 0:20:24.479 bit more pro growth, whether it's cutting taxes at the 0:20:24.520 --> 0:20:28.440 corporate level or at the individual level, increased government spending, 0:20:28.560 --> 0:20:31.040 the regulation, all of those work in the same direction 0:20:31.320 --> 0:20:34.960 for stronger growth. So that suggests that sectors that are 0:20:35.000 --> 0:20:40.720 more cyclical should benefit, sectors that are less cyclical should 0:20:40.720 --> 0:20:43.879 be hurt, both because of the better economy, but also 0:20:43.960 --> 0:20:48.400 because of upward pressure on inflation and wage rates and 0:20:48.400 --> 0:20:52.320 and interest rates. UM. And that gets back to the 0:20:52.359 --> 0:20:54.600 notion that the truth of the matter is the U 0:20:54.680 --> 0:20:58.560 S economy hasn't feared that badly. The unemployment rate has 0:20:58.600 --> 0:21:03.000 come down pretty dramaticle we're at obviously cyclical lows and 0:21:03.000 --> 0:21:06.160 and even at full employment by the Fed Zone definition, 0:21:06.840 --> 0:21:09.760 although they haven't really reacted much to it yet. But 0:21:09.800 --> 0:21:12.480 if you then get some incremental strength in the economy, 0:21:12.520 --> 0:21:16.360 which everyone seems to think is coming UH, that has 0:21:16.400 --> 0:21:20.159 a pretty negative implication for the bond market UH, and 0:21:20.200 --> 0:21:23.840 therefore also a negative implication for everything in the stock 0:21:23.920 --> 0:21:27.679 market that is very, very interest rate sensitive, notably things 0:21:27.760 --> 0:21:33.760 like real estate investment, trust utilities UH, telephone companies UH, 0:21:33.800 --> 0:21:37.200 and even consumer staples. Well, but I thought that cyclical 0:21:37.280 --> 0:21:41.840 stocks the supercyclical sector includes such things as basic materials 0:21:41.880 --> 0:21:46.200 as well as consumer cyclicals, financial services, and real estate. Well, 0:21:46.480 --> 0:21:51.479 it varies. Uh. If you think about for example, materials, UH. 0:21:51.640 --> 0:21:56.280 Material sector has its own issues, most importantly the deceleration 0:21:56.359 --> 0:22:00.280 and economic growth in China and pretty much the end 0:22:00.320 --> 0:22:03.680 of the huge construction boom in China, both of which 0:22:03.720 --> 0:22:09.320 demanded vast quantities of raw materials. China counted for something 0:22:09.359 --> 0:22:14.800 like plus of the total world's demand for cement some 0:22:14.960 --> 0:22:18.200 years ago, and that's going to a road pretty rapidly. Uh. 0:22:18.240 --> 0:22:20.959 And the same thing follows through for iron ore and 0:22:21.119 --> 0:22:25.720 steel and all of the other industrial medals. And you're 0:22:25.720 --> 0:22:29.400 seeing the fall out of that for companies like Caterpillar 0:22:29.680 --> 0:22:33.680 and mining companies and and so on. So I wouldn't 0:22:33.720 --> 0:22:37.400 look for that to uh have a stronger economy more 0:22:37.440 --> 0:22:42.000 than offset that very very powerful secular trend working against 0:22:42.000 --> 0:22:47.080 those sectors. UM. The others like financial services, absolutely that's 0:22:47.080 --> 0:22:49.439 going to be one of the prime beneficiaries. That sector 0:22:49.480 --> 0:22:54.600 has done very well already up roughly since the election. 0:22:55.440 --> 0:22:58.359 But if you still buy into financials today, yeah, I 0:22:58.359 --> 0:23:00.600 think the valuations are still a tray active and I 0:23:00.600 --> 0:23:05.000 would buy into financials any specifics, whether you're talking regional banks, 0:23:05.800 --> 0:23:11.000 money center banks, or non financial non bank financials. I 0:23:11.119 --> 0:23:13.960 definitely like the money center banks. I think they are 0:23:14.000 --> 0:23:19.120 still pretty inexpensive. UH and deregulation plus lower interest rate 0:23:19.280 --> 0:23:24.240 put plus lower UM plus money I'm sorry, plus a 0:23:24.359 --> 0:23:28.680 widening of interest rate differentials because of rising rates UH 0:23:28.840 --> 0:23:31.560 increasing the rates that they earned versus the rates they pay, 0:23:32.000 --> 0:23:35.359 plus the deregulation. Both of those should work very powerfully 0:23:35.400 --> 0:23:37.120 for them. Well, let me just give you a couple 0:23:37.119 --> 0:23:38.919 and you can just give us a nod almost you know, 0:23:39.000 --> 0:23:42.320 whether it's Bank of America. The yield there one point 0:23:42.359 --> 0:23:45.879 three percent, the stock is up thirty this year. I 0:23:46.160 --> 0:23:48.280 still like it. Okay, how about City Group? Do you 0:23:48.320 --> 0:23:51.359 think they'll benefit? Absolutely? Still like that one as well. 0:23:51.480 --> 0:23:55.560 Any regional banks. We do like some of the regional banks. UM. 0:23:55.680 --> 0:23:59.000 The regional banks should should benefit from the wire eyes 0:23:59.040 --> 0:24:02.240 and interest rates and the same phenomenon of arising in 0:24:02.240 --> 0:24:06.760 that interest margin. UH. Pack West is one that we like. 0:24:07.000 --> 0:24:12.520 P A. C W is another one we like. UM 0:24:12.840 --> 0:24:17.440 Regions Financial in the Southeast another one we like, Bank United, 0:24:18.160 --> 0:24:21.520 also in the Southeast. Now you're not buying these because 0:24:21.520 --> 0:24:24.480