Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the
Speaker 1: Bloomberg Balance of Power podcast. Catch Just Live weekdays at
Speaker 1: noon Eastern on Applecarplay and then Roudoo with the Bloomberg
Speaker 1: Business app. Listen on demand wherever you get your podcasts,
Speaker 1: or watch us live on YouTube.
Speaker 2: Welcome to the Monday edition of Balance of Power. Yeah,
Speaker 2: Happy Monday, we got news. I'm Joe, Matthew and Washington.
Speaker 2: I'm glad you're with us here on the radio, on
Speaker 2: the satellite, and on YouTube, where you can find us
Speaker 2: right now if you search Bloomberg Global News, find our
Speaker 2: live stream and join me here inside the terminal because
Speaker 2: we've got the budget.
Speaker 3: It just dropped.
Speaker 2: We're going to get into this a bit more with
Speaker 2: Douglas holtz econ coming up in a few moments, but
Speaker 2: I want to give you the news as investors have
Speaker 2: been waiting for this, remembering the president's budget is a
Speaker 2: statement of values seven vere trillion. There's your headline dollars
Speaker 2: fiscally year twenty twenty five. We haven't figured out the
Speaker 2: one we're living in right now, but we're on to
Speaker 2: twenty five, six hundred and twenty one billion dollars domestic
Speaker 2: discretionary spending deficits would fall three trillion dollars if they
Speaker 2: approved taxes on the rich and corporations. US debt hitting
Speaker 2: forty five trillion dollars in a decade, the President is asking,
Speaker 2: here we go eight hundred and ninety five billion dollars
Speaker 2: for defense related programs. We'll have much more on this
Speaker 2: as we work our way through the hour here, as
Speaker 2: the White House says, indeed, it will reduce the deficit
Speaker 2: by about three trillion dollars, but you've got to pass
Speaker 2: some tax hikes to make that happen, and we can't
Speaker 2: even pass an actual budget. Meantime, the President making news
Speaker 2: over the weekend on Israel. Ramadan began yesterday, and as
Speaker 2: you remember, walking into the State of the Union last week,
Speaker 2: the hope was to have a cease fire in place
Speaker 2: by then. It did not happen. And the President now
Speaker 2: we're referring to red lines when it comes to Israel,
Speaker 2: warning Benjamin Netanya, who is our reading the headline, not
Speaker 2: to attack Rafa as Ramadan begins, and that is where
Speaker 2: we start our conversation with Ian Marlow, Bloomberg senior reporter
Speaker 2: covering diplomacy and Boy we could use them now. Ian,
Speaker 2: it's great to see you. Thank you for making us
Speaker 2: part of your Monday. We start talking about red lines,
Speaker 2: we think about Barack Obama and Syria. The messaging here
Speaker 2: is getting pretty complicated. What's the President doing.
Speaker 4: I think he's kind of grasping at straws to some degree.
Speaker 4: I think the US is facing, you know, several months
Speaker 4: into this five months into this conflict, the real possibility
Speaker 4: that they just don't have as much leverage over Israel as.
Speaker 5: They would like.
Speaker 4: They're air dropping aid when there's plenty of land borders
Speaker 4: with Gaza. They're now talking about, as President Biden said
Speaker 4: in the State of the Union, they're going to be
Speaker 4: creating a temporary peer to bring in aid by sea
Speaker 4: sort of everything, uh, accept pressuring Israel to the degree
Speaker 4: that would actually, uh, you know, bring about significant change
Speaker 4: in the humanitarian situation, which is getting incredibly dire with
Speaker 4: you know, famine, starvation.
Speaker 5: And the rest of it looming.
Speaker 2: So now it's like public diplomacy. He's speaking through the
Speaker 2: media a hot mic moment at the State of the
Speaker 2: Union when he said that to Jerry now that I'm
Speaker 2: gonna have a come to Jesus meeting with Pebe.
Speaker 3: Did he want that to go out to the world.
Speaker 4: Yeah, it's hard to know. It's hard to know with
Speaker 4: with with both Biden and nan Yah who here, because
Speaker 4: they are they're both dealing with really uh intense international
Speaker 4: and domestic situations. I mean, Biden's facing an election here
Speaker 4: and YEAHO will face an election as soon as the
Speaker 4: war ends. He's got people in his far right coalition
Speaker 4: that want even tougher stance on you knows, a no
Speaker 4: aid getting in, you know, crushing Hamas, you know, going
Speaker 4: into Rafa where there's all you know, more than a
Speaker 4: million civilians sheltering. Uh, It's it's a complicated right now.
Speaker 4: And I think the harsh words and rhetoric we're seeing
Speaker 4: now is an example of that behind the scenes diplomacy
Speaker 4: failing to take hold, and that diplomacy, the hostage talks,
Speaker 4: the talks about what happens in.
Speaker 5: Gaza the day after.
Speaker 4: All of that is continuing, but all of it can
Speaker 4: still founder on beb basically saying no.
Speaker 2: To what extent does Ramadan factor into the chances of
Speaker 2: a ceasefire happening now? Does this put talks on ice.
Speaker 4: For a month or will they continue at the moment,
Speaker 4: I think privately, US officials are thinking that Hamas is
Speaker 4: going to wait a little bit until Ramadan rolls out
Speaker 4: a tiny bit so they can see whether that, you know,
Speaker 4: that little space will allow the region to heat up.
Speaker 4: You know, maybe you we'll see protests, Maybe we'll see protests,
Speaker 4: you know, in the West Bank or across the region,
Speaker 4: perhaps more violence, and that might put pressure on Israel,
Speaker 4: the US and allies to try and get to the
Speaker 4: table more. That is the sense from the West about
Speaker 4: what they think Hamas is doing. But at the moment,
Speaker 4: no one really knows. And I think, you know, obviously
Speaker 4: Biden had hoped, you know, for a Monday or two
Speaker 4: ago for this hostage deal to be done. Still not done,
Speaker 4: and it doesn't look like it's going to be done
Speaker 4: in time for I mean, definitely not in time for Ramana.
Speaker 2: In the beginning, just lastly, Ian there was a big
Speaker 2: supplemental budget request that was mostly geared toward Ukraine but
Speaker 2: had billions for Israel. Is that off the table now?
Speaker 2: Are we still going to send that money if it's
Speaker 2: ever approved?
Speaker 4: I think the thing is now they're sending a lot
Speaker 4: of military aid sort of below the threshold where they
Speaker 4: need congressional approval, so a lot of that has still
Speaker 4: been going on. I think that's sort of nuts and bolts,
Speaker 4: you know, repairs, you know, extra equipment and things like that.
Speaker 4: I don't think it's clear exactly what's going to happen
Speaker 4: with that on, you know, in terms of the broader funding.
Speaker 4: But I don't think there's any sense at the moment
Speaker 4: that Israel is in dire strait, unlike you. Right, Yeah,
Speaker 4: there's a very oversation, Yeah exactly.
Speaker 2: I'm glad you could come talk to us Ian Marlow,
Speaker 2: Bloomberg senior reporter covering diplomacy. Look for him on the
Speaker 2: terminal and online as the President draws a red line
Speaker 2: and Israel.
Speaker 3: It's an important moment.
Speaker 2: I'm glad you could share it with us Ian with
Speaker 2: great reporting as always here at Bloomberg News.
Speaker 3: I'm Joe, Matthew and Washington.
Speaker 2: Turning back to the budget that just dropped, and this
Speaker 2: is the day we've been waiting for, remembering, of course,
Speaker 2: that this is not the budget that will pass. It's
Speaker 2: not only coming from the White House before Congress gets
Speaker 2: its hands on it. But we're in the middle of
Speaker 2: a campaign season, so all of this is as we
Speaker 2: hear every year a statement of values. The question is
Speaker 2: can any of this get through the House and the Senate?
Speaker 2: Could this in fact be the framework the skeleton of
Speaker 2: a budget. Here's an even crazier question. Will we have
Speaker 2: a budget in twenty twenty five? Still eleven found one
Speaker 2: in twenty four Douglas Holzekeen used to do this for
Speaker 2: a living when he was, of course chief economists the
Speaker 2: Presidents of Economic Advisors. He's now president the American Action
Speaker 2: Forum and joins us Douglass, It's.
Speaker 3: Great to see you. Happy budget day.
Speaker 2: I specifically asked for you so we could get your
Speaker 2: read on this, and I'm glad you could join. The
Speaker 2: headlines are just rolling, and I want to just let
Speaker 2: everybody know that this came out at noon. So Douglas
Speaker 2: hasn't exactly been able to pour over this with the
Speaker 2: Green Visor. Just broadly though, Douglas, how do you look
Speaker 2: at a budget from the administration? What parts are you
Speaker 2: looking for to get a sense of what might happen
Speaker 2: to the actual spending debate here in Washington, not the campaign.
Speaker 6: Well, I think there are two big things you look
Speaker 6: for in a budget. Number one, how much depsit reduction
Speaker 6: do you get it takes something like eight trillion dollars
Speaker 6: over the next ten years to stabilize debt relative to GDP.
Speaker 6: This budget won't contain eight trillion dollars steps at reduction,
Speaker 6: so we're still going to see the debt rising and
Speaker 6: rising more rapidly than the economy. Second thing you look
Speaker 6: for is what steps are being taken to slow the
Speaker 6: growth rates of so Sucre and Medicare. We're going to
Speaker 6: spend about eighty two trillion dollars over the next ten years.
Speaker 6: Nearly thirty five trillion of that will be so Screa Medicare.
Speaker 6: Those are the big programs in the budget. They grow
Speaker 6: faster than everything else. They grow faster than revenues, possibly
Speaker 6: will seven percent for Medicare, five and a half for
Speaker 6: SOB security. This budget won't contain anything that's going to
Speaker 6: slow the growth of subscurity and Medicare. So it's a
Speaker 6: statement of campaign values, but it is not a serious
Speaker 6: fiscal document.
Speaker 2: Wants to raise taxes. We've heard this before from President Biden.
Speaker 2: Raising taxes specifically on the wealthy billionaires would get a
Speaker 2: minimum twenty five percent.
Speaker 3: It wants corporate taxes higher, and that.
Speaker 2: Is the justification for lower deficits in this plan, Douglas.
Speaker 2: They say deficits would fall three trillion dollars with these
Speaker 2: tax hikes approved.
Speaker 3: But we all know that is not going to happen, right.
Speaker 6: No, they want to raise the corporate rate up to
Speaker 6: twenty eight percent. The trouble with that, of course, say,
Speaker 6: since it was cut down to twenty one percent, we
Speaker 6: haven't lost the headquarters to Yes Corporation, and we used
Speaker 6: to lose about ten a year, and so that problem
Speaker 6: got fixed down that they're now threatening done fix it.
Speaker 6: I don't think Congress would go along. They want to
Speaker 6: join the international twenty one percent twenty percent minimum tax.
Speaker 6: Congress has show non interest in that, and they want
Speaker 6: to raise this book income alternative tax from fifteen to
Speaker 6: twenty one percent. You will recall that the Treasury threw
Speaker 6: up its hands last year and said we're not going
Speaker 6: to collect this fifteen percent tax. We don't know how.
Speaker 6: So that's hardly reassuring if you're going to make the
Speaker 6: rate higher and you still haven't collected a dime in
Speaker 6: the last time around. All in all, these are you know,
Speaker 6: making the point that we want to tax corporations, We
Speaker 6: want to tax affluent individuals, but they're not poles that
Speaker 6: are likely to get over.
Speaker 5: The finish line.
Speaker 2: Here's your reality check. And as I read further down,
Speaker 2: Douglas hold Zeke and the President is calling on Congress
Speaker 2: to apply his cap. It's a two thousand dollars cap
Speaker 2: on rug costs thirty five dollars insulin cap for all,
Speaker 2: not just medicare. That's playing pretty well on the campaign trail.
Speaker 2: This has been one of the things that the President
Speaker 2: talks about that is received very well. Why doesn't Congress
Speaker 2: approve that? Why doesn't the Republican majority in the House
Speaker 2: take it away from it?
Speaker 6: There's a pretty small fraction of Americans who have more
Speaker 6: than two thousand dollars in drug costs every year, something
Speaker 6: like three percent or so. So you're going to cap
Speaker 6: everyone at two thousand. That's a pretty broad insurance mandate.
Speaker 6: And how are they going to pay for that, Well,
Speaker 6: they're gonna have to raise premium So this is a
Speaker 6: recipe for higher premiums on every health insurance policy in
Speaker 6: the United States. I don't see members of Congress, who
Speaker 6: are up every two years being too eager to get
Speaker 6: into that discussion. Insulin's a different matter. That's pretty popular idea,
Speaker 6: and it's popular proven by the fact that every pharmaceutical
Speaker 6: company offers insulin at thirty five dollars a month. They
Speaker 6: have a private program to do that. So the the
Speaker 6: Medicare proposals, the health ins proposals, are not quite as
Speaker 6: practical as they appear to be appealing on the campaign trail.
Speaker 3: Yeah.
Speaker 2: Sure, now you and I are having this conversation with
Speaker 2: a straight face. We're getting wonky on this stuff, and
Speaker 2: that's what we do. But the fact of the matter
Speaker 2: is we don't have a real budget for twenty twenty four,
Speaker 2: and I'm just not sure if wherever you can tell
Speaker 2: me going to get one for twenty five. We're actually
Speaker 2: under a laddered cr right now that with the second
Speaker 2: half set to expire on March twenty second. And if
Speaker 2: you want or listen to this program, you don't need
Speaker 2: me to tell you about it. God love this audience.
Speaker 2: They're dialed in, Douglas. I wonder if it's more likely
Speaker 2: we shut down on the twenty second or actually get
Speaker 2: a budget for twenty twenty five.
Speaker 6: Well, certainly there is a threat of a shutdown, But
Speaker 6: I think the good news is that from all of
Speaker 6: the political polling that I have seen and people have
Speaker 6: talked to a shutdown hurts Republicans dramatically in the fall.
Speaker 6: They don't want that. So there is an incentive for
Speaker 6: that House to get it together and compromise, get these
Speaker 6: over the finish line, and put the twenty twenty four budget,
Speaker 6: which began October first, twenty twenty three, so we're way
Speaker 6: behind schedule. Ye, put that in the review mirror, and
Speaker 6: then's see if they can get to yes on the
Speaker 6: next year's budget during the campaign season. I'm a little pessimistic.
Speaker 1: On that front.
Speaker 2: About which part, whether we go beyond the twenty second
Speaker 2: Oh no, I think we'll.
Speaker 6: Get that done. I think that's in the political interest.
Speaker 6: But you know, we now should be doing the twenty
Speaker 6: twenty five budgeting, and right I don't see that getting
Speaker 6: done in an election season.
Speaker 3: Yeah, that's god. We're just going to get used to
Speaker 3: this stuff.
Speaker 2: The President did sign the first minibus over the weekend,
Speaker 2: six hundred and or four hundred and sixty billion dollars.
Speaker 2: That's the first six bills. The other six are in
Speaker 2: the next package, which actually is a much larger portion
Speaker 2: of the budget. And as you know, Douglas it includes HHS,
Speaker 2: it includes Homeland Security, the Pentagon, the sticking points here,
Speaker 2: the stuff that no one can seem.
Speaker 3: To figure out. What makes you optimistic that they get
Speaker 3: this done?
Speaker 6: So take the polling on the House Republican side they have.
Speaker 2: It's as simple as that show. You don't want to
Speaker 2: be blamed for it. No, Look, I mean it's real simple.
Speaker 2: They have a big advantage on the immigration issue. If
Speaker 2: they close the government, they lose it entirely. So Republicans
Speaker 2: finally have a re get to the table with Democrats
Speaker 2: in the House houses, you know, in the Senate. That's
Speaker 2: already happened, and so we're going to see the same
Speaker 2: movie we saw with the first minibus. At the last minute,
Speaker 2: they will put this on the House floor under the
Speaker 2: quote suspension of the rules.
Speaker 6: They'll get a two thirds majority. It'll be carried a
Speaker 6: lot by Democrats also some Republicans, and we will finally
Speaker 6: have the budgeting in place for the remainder of the
Speaker 6: fiscal year.
Speaker 3: That would be a small miracle around here.
Speaker 2: We avoid the sequester in that case, and then we
Speaker 2: start looking at the next fiscal year. I can't imagine
Speaker 2: how that would actually proceed. You don't think we get
Speaker 2: a real budget for twenty five do we go through
Speaker 2: the motions or is the House essentially closed after this?
Speaker 6: So the House Budget Committee actually marked up a budget resolution.
Speaker 6: They did it today the State of the Union, and
Speaker 6: they will vote on that in the House Budget Comedy.
Speaker 6: The Senate Budget Contee has shown no interest in doing
Speaker 6: any budget work this Congress, so I don't think they'll
Speaker 6: do anything, so we won't have a real congressional budget process.
Speaker 6: We'll get the president's budget today, they'll look over it,
Speaker 6: and they'll start negotiating about the kind of spending they
Speaker 6: could maybe agree on after the election. But I think
Speaker 6: we're doomed to a continued resolution from September thirtieth through
Speaker 6: the election.
Speaker 2: Wow, all right, we'll play this tape back. Douglas, thank you.
Speaker 2: I'm glad you could joined today. Happy budget Day, even.
Speaker 3: If it's not real.
Speaker 2: Douglas old Zeke and the president of the American Action Forum.
Speaker 2: He has been inside the bubble. Was Chief economist the
Speaker 2: President's Council of Economic Advisors two thousand and one to
Speaker 2: two thousand and two the Bush White House.
Speaker 1: You're listening to the Bloomberg Balance of Power podcast. Ken
Speaker 1: just Live weekdays at noon Eastern on Applecarplay and then
Speaker 1: royd Otto with the Bloomberg Business App. You can also
Speaker 1: listen live on Amazon Alexa from our flagship New York station.
Speaker 1: Just say Alexa play Bloomberg eleven thirty.
Speaker 7: You know, Joe. Typically, if you were to say something
Speaker 7: like we're going to quadruple the tax on stock buybacks
Speaker 7: to raise the corporate tax rate to twenty eight percent,
Speaker 7: financial markets wouldn't necessarily react really well to that. And
Speaker 7: yet that's exactly what we got in the budget outlined
Speaker 7: by President Biden. Doesn't seem like it's making too much
Speaker 7: of a dent, which probably speaks to the fact that
Speaker 7: the market is acknowledging that the likelihood of this becoming
Speaker 7: reality sure is probably lower than it is higher.
Speaker 2: Yeah, it tends not to be a pass through, right,
Speaker 2: going to be a debate. The question is, well, there
Speaker 2: be a budget at the end of that debate, And
Speaker 2: as we'll discuss coming up with Congressman Seth Moulton, we
Speaker 2: haven't figured out how to do it this fiscal year,
Speaker 2: So why would one in a campaign cycle be any different?
Speaker 2: And that's going to be a big question here. Although
Speaker 2: Republicans did Mark up a twenty twenty five plan last week.
Speaker 2: Speaking of aspirational, everyone's dancing to their own music. Mike
Speaker 2: Dorney knows about that music. He's been covering Washington.
Speaker 3: For a minute.
Speaker 2: He's with us now, Bloomberg's deputy congressional editor, Mike. It's
Speaker 2: great to see you. That's how this works, right. The
Speaker 2: problem is this year we haven't figured out how to
Speaker 2: keep the lights on it.
Speaker 8: Yeah, we're in a total gridlock at the moment because
Speaker 8: there's a very different view of what the government should
Speaker 8: be doing. They're blocked fighting each other. This budget is
Speaker 8: should be viewed as aspirational. This is what Bidens do
Speaker 8: if he were reelected and got not only a Democratic Congress,
Speaker 8: but a Democratic Congress that didn't include people who disagreed
Speaker 8: with him, like Joe Manchin that said, you know, this
Speaker 8: is like you know, we had the State of the
Speaker 8: Union speech last week. This is a little bit of
Speaker 8: how the rubber meets the row with that that vision
Speaker 8: that Biden presented. And as far as like a budget
Speaker 8: getting done in an election year, I'd give the chances
Speaker 8: very low. Usually or often what they do is just
Speaker 8: wait until after the election to deal with like how
Speaker 8: they're going to spend.
Speaker 7: So could be looking at another CR after September thirtieth
Speaker 7: of this year, after the series of crs that were
Speaker 7: kicked off after September thirtieth of the year.
Speaker 8: Kind of different. It wouldn't be as dysfunctional as sure.
Speaker 8: It would be basically saying, hey.
Speaker 3: This is what it's going.
Speaker 8: We'll wait till after the election. Then we'll see where
Speaker 8: we all stand and then we know who has what
Speaker 8: kind of power and then we can make a deal.
Speaker 7: Well, and just for the dose of reality, Steve Scalise,
Speaker 7: the number two in House Republican leadership, just said they
Speaker 7: reject Biden's buzzet proposal the price tag. He says, if
Speaker 7: the proposed budget is yet another glaring reminder of this
Speaker 7: administration's insatiable appetite for reckless spending. Goes on to say,
Speaker 7: the budget doesn't just miss the market, is a roadmap
Speaker 7: to accelerate America's decline.
Speaker 8: So I guess, yeah, if Biden thinks it's a good idea,
Speaker 8: gosh before it.
Speaker 3: That gives you a sense of where we're starting here.
Speaker 2: Can we maybe back up a second before we talk
Speaker 2: to Congress of A Moulton Mike are we going to
Speaker 2: shut down on the twenty second. There's no guarantee that
Speaker 2: this next package of six bills will get done either.
Speaker 8: Right, there's no guarantee that said, you know, I've continued
Speaker 8: to view that the Republicans and the Democrats have both
Speaker 8: shown their hands on this that neither side wants to
Speaker 8: shut down of the government in an election year. Speaker
Speaker 8: Johnson has signaled again and again that he is willing
Speaker 8: to come to a deal to avoid a shutdown, whether
Speaker 8: that's kicking the can down the road as he did
Speaker 8: every other time, or actually reaching the ultimate deal as
Speaker 8: he did with about a quarter of the funding for government.
Speaker 8: So I wouldn't expect there's much of a likelihood of
Speaker 8: an actual government shut down before, you know, in this
Speaker 8: fiscal year.
Speaker 7: And at least I thought that, all right, at least
Speaker 7: there's this, at least there's that. Yeah, So we'll see
Speaker 7: a lot can happen and the next two weeks. Mike Dorning,
Speaker 7: who is our deputy team leader of Congressional coverage here
Speaker 7: a Bloomberg thank you so much for joining us. And
Speaker 7: now joining us is Congressman Seth Milton, Democrat from Massachusetts,
Speaker 7: who of course is very much involved in all of
Speaker 7: these different spending battles. Congressmen, thank you so much for
Speaker 7: coming back to Bloomberg Television and Radio. Do you have
Speaker 7: an understand of what where we stand in these next
Speaker 7: six appropriation bills that need to be passed by the
Speaker 7: twenty second Are we going to get another I guess
Speaker 7: megabus is what we decided to call it.
Speaker 9: What's the plan, Well, that's definitely the plan.
Speaker 10: The plan is to do exactly what we did last week,
Speaker 10: which is combined these appropriations bills together, work out the differences,
Speaker 10: and then pass them as one package against the objections
Speaker 10: of the extremist Republicans who always vote against just simply
Speaker 10: having a budget basically.
Speaker 9: So that is the plan.
Speaker 10: The challenge is that this group of appropriations bills is
Speaker 10: just more contentious, it's more challenging. And I was speaking
Speaker 10: with a Republican colleague last night about this. I mean,
Speaker 10: he's cautiously optimistic, but at the end of the day,
Speaker 10: it's up to the Speaker of the House to quell
Speaker 10: the opposition on the far right, and the speakers worried
Speaker 10: that if he goes too far, they're going to do
Speaker 10: the same thing to him that they did to Kevin McCarthy,
Speaker 10: which is just kick him out of conference or out
Speaker 10: of the speakership.
Speaker 2: What do you make of Sorry, congressman, it's good to
Speaker 2: see you, by the way, welcome back. What do you
Speaker 2: make of Steve Scalise's statement here? Kaylee just mentioned this,
Speaker 2: it's a roadmap to accelerate America's decline. That's quite a
Speaker 2: starting point when it comes to a debate, isn't it.
Speaker 9: I mean, this is just typical for Steve's Scalise.
Speaker 10: I mean, you know, if President Biden were to save
Speaker 10: a young girl from a fast rushing stream, Steve Scalise
Speaker 10: would criticize him for it.
Speaker 9: So it doesn't really mean much of anything at all.
Speaker 10: The fact of the matter is the president has put
Speaker 10: down his vision for the country, and that's important for
Speaker 10: a president to do. I think it's especially important for
Speaker 10: a president to do in an election year. The contrast
Speaker 10: heere with Republicans is that they want to preserve these
Speaker 10: massive tax cuts for the wealthy that have ballooned our deficit.
Speaker 10: They are the ones who have been terribly fiscally irresponsible.
Speaker 10: I mean, the deficit just mag went up like trillions
Speaker 10: of dollars under Donald Trump, and they want to go
Speaker 10: back to that again, That's what they're defending. So when
Speaker 10: President Biden just says, look, I think everybody should pay
Speaker 10: their fair share, it's important.
Speaker 9: For Americans to know that Republicans disagree with that. They
Speaker 9: think the rich should pay less.
Speaker 11: Well.
Speaker 7: Of course, the President is also requesting a few things
Speaker 7: from Congress, including renewing his call for supplemental funding for
Speaker 7: Ukraine and American allies and border security. We all know
Speaker 7: the fate of that original supplemental deal after it was
Speaker 7: struck very quickly died. Something did indeed pass the Senate.
Speaker 7: Very unclear what happens in your body going forar but
Speaker 7: we do know that perhaps a discharge petition could be
Speaker 7: one way around. How Speaker Mike Johnson, if he decides
Speaker 7: not to put Ukraine aid on the floor, are you
Speaker 7: confident that that would work?
Speaker 9: No, I'm not confident.
Speaker 10: And this is a very big problem for our national
Speaker 10: security because supporting Ukraine is not just about defending these
Speaker 10: amazing freedom fighters in Europe.
Speaker 9: It's about protecting Europe.
Speaker 10: From the onslaught of Vladimir Putin, and it's about sending
Speaker 10: a message to seizing Ping in China that democracies are
Speaker 10: going to stand together, that allies are going to stand
Speaker 10: up for each other, and that ultimately that means he
Speaker 10: should not start World War III in the Pacific by
Speaker 10: invading Taiwan.
Speaker 9: So I think people forget just how high the stakes
Speaker 9: are here.
Speaker 11: Now.
Speaker 10: Most Democrats and Republicans in Congress do understand this. The
Speaker 10: issue is that Republicans again are feeling pressure from the
Speaker 10: extreme isolationists on the far right who are against funding Ukraine,
Speaker 10: who just simply don't understand the basic principles of national security. Now,
Speaker 10: to Speaker Johnson's credit, I think that heat understands that
Speaker 10: this is important, and in his heart of hearts, he
Speaker 10: wants to do it. The question is whether he will
Speaker 10: have the card is to stand up to these Freedom
Speaker 10: Caucus extremists and do the right thing for our national security,
Speaker 10: the right thing for freedom and democracy, or whether he'll
Speaker 10: cave to them because again he's afraid that they'll kick
Speaker 10: him out of the Speaker Seed.
Speaker 2: Well, the fact that we're still asking about this does
Speaker 2: make you wonder Congressman Speaker Johnson has not shown his
Speaker 2: cards on this. He says he'll work against the discharge
Speaker 2: petition that Kayleie mentioned, But we have no sense about
Speaker 2: when or if ever Ukraine funding comes to the floor.
Speaker 2: Are we entering a world now in which Ukraine may
Speaker 2: never get more funding from the US?
Speaker 10: I mean that is a distinct possibility under this Republican leadership.
Speaker 10: I mean the Speaker has not been able to do anything.
Speaker 10: He doesn't have a plan. His biggest accomplishments to date
Speaker 10: are not shutting the government down, and even that he's
Speaker 10: had to go against the extremists in his caucus to
Speaker 10: do so.
Speaker 9: I mean, this is what Americans get when they have.
Speaker 10: This Republican Party that is in the middle of a
Speaker 10: civil war leading the House of Representatives.
Speaker 9: There's no leadership, there's no plan.
Speaker 10: I wish I could tell you that this is what
Speaker 10: we're going to do, here's how we're going to go
Speaker 10: about it, here are the challenges, here's why I think
Speaker 10: it will work. But there is literally no plan. All
Speaker 10: we know is that there are good Republicans who want
Speaker 10: to do the right thing. Democrats are standing by to
Speaker 10: do the right thing and inevitably bail the Republican Party
Speaker 10: out when they can't lead. But we are absolutely facing
Speaker 10: the possibility of both a shutdown and the possibility that
Speaker 10: we abandon Ukraine and send a message to China that hey,
Speaker 10: go ahead, start a war in the Pacific because we're
Speaker 10: not going to do anything, and that's ultimately very dangerous.
Speaker 10: There are truly American lives on the line when you
Speaker 10: think about the long term consequences here.
Speaker 7: Well, and of course, Congressman, it's not just aid for
Speaker 7: Ukraine that is in question. Aid for Israel is tied
Speaker 7: up in this as well. But i'd like to ask
Speaker 7: you about some of the rhetoric we heard from both
Speaker 7: President Biden and Israeli Prime Minister Benjamin Netanyahu over the weekend.
Speaker 7: When Biden, in an interview, suggested that if Israel were
Speaker 7: to invade Rafa, where there are a million Palestinians who
Speaker 7: have sought refuge there, that that would be a red line.
Speaker 7: Netanyahu went on to say that his only red line
Speaker 7: is that October seventh does not happen again. But Sir,
Speaker 7: what good are red lines? If the US still says
Speaker 7: it will stand by Israel, support for Israel, military support
Speaker 7: for Israel will continue, what leverage does the president actually
Speaker 7: have here?
Speaker 9: Well, let's just step back for a minute.
Speaker 10: I mean, this is an incredibly complicated and divisive situation,
Speaker 10: but there are a few principles that we should all
Speaker 10: agree with. First of all, Israel has a right to
Speaker 10: exist in an obligation to defend itself. But second of all,
Speaker 10: you're not going to ever have peace in the Middle
Speaker 10: East if you don't have Palestinian rights. And I think
Speaker 10: that for all the critics of a Tuesday solution, no
Speaker 10: one's been able to come up with a better idea.
Speaker 10: Palestinians and Israelis both deserve to live in peace and freedom,
Speaker 10: to have democratic rights, to have a national state. And ultimately,
Speaker 10: both Israeli and Palestinian innocent people should not be killed.
Speaker 10: And the scope of the human tragedy unfolding in Gaza,
Speaker 10: it's just it's.
Speaker 9: Just unbelievable and heartbreaking.
Speaker 10: And at the end of the day, as we learned
Speaker 10: in Iraq and Afghanistan, a speaking as a marine veteran
Speaker 10: here who's fought in a counterinsurgency, if Netanyah who continues
Speaker 10: killing so many innocent civilians, he's going to lose the
Speaker 10: war because he's just serving as a recruitment tool for Hamas.
Speaker 10: So the issue here is that Netanyahu fundamentally has to go.
Speaker 10: What he's doing is morally bankrupt, it's militarily bankrupt, it's
Speaker 10: not going to work, and so therefore what he's really
Speaker 10: doing is pursuing his own interests and not his And
Speaker 10: you hear this from the Israeli people, I mean net Yeah,
Speaker 10: who has the lowest approval ratings I think we've ever
Speaker 10: seen for a prime minister, even in the midst of
Speaker 10: a war. People can't stand him. I had the opportunity
Speaker 10: to speak with a hostage family just after the State
Speaker 10: of the Union, and I brought up this concern. I said, look,
Speaker 10: we support Israel's right to defend itself. Everyone should want
Speaker 10: to get rid of this terrorist organization wants. You're never
Speaker 10: going to have a Palestinian state if AMAS is around.
Speaker 10: But I really disagree with what the Prime Minister Netyah
Speaker 10: who is doing. I think his strategy is failing. And
Speaker 10: without missing a beat, this hostage family chimed in and said, well,
Speaker 10: his first failure was the fact that he let our
Speaker 10: guard down with his political division in a October seventh
Speaker 10: happened in the first place, So there is just widespread
Speaker 10: dissatisfaction with Prime minister yet yea who in Israel? And
Speaker 10: so when you hear President Biden just echoing those same sentiments.
Speaker 10: I don't think anybody should be surprised.
Speaker 2: We're always curious your thoughts on our policy in Israel
Speaker 2: as well as Ukraine. From your view on the Armed
Speaker 2: Services Committee, and as a combat veteran congressman, I'd like
Speaker 2: to in our remaining moment, tap your expertise as a
Speaker 2: member of the China Select Committee. It appears that the
Speaker 2: TikTok bill that could result in the banning of TikTok
Speaker 2: will end up on the floor for a full House
Speaker 2: vote on Wednesday.
Speaker 3: Will it pass?
Speaker 5: Should it?
Speaker 9: Well? First of all, let's be clear, this bill does
Speaker 9: not ban TikTok.
Speaker 10: It just bans the Chinese Communist Party from essentially owning it.
Speaker 3: Inderstanding right.
Speaker 10: That's a very important distinction, because what TikTok is doing
Speaker 10: is sending out messages to all its users to call
Speaker 10: people like me and say, don't ban TikTok on we're
Speaker 10: doing it all. Yeah, but I'm trying to ban TikTok.
Speaker 10: I hope it gets a vote. I think that we
Speaker 10: don't need the Chinese Communist Party telling our kids what
Speaker 10: to watch online, which is essentially what's going on here.
Speaker 10: And I just want to see TikTok survive and thrive,
Speaker 10: but under American protections, in American hands, and everyone I
Speaker 10: think here in America should want that too.
Speaker 2: All right, I won't call it a band. I'm I'm
Speaker 2: putting that out there right now. It's a divestiture bill
Speaker 2: right right. But if the divestit doesn't, I'm just putting
Speaker 2: it out there. I'm still calling it Twitter not ex Congressman,
Speaker 2: I have one a lot of problems. Congressman Seth Molton,
Speaker 2: It's great to see you. Welcome back to Bloomberg. The
Speaker 2: Democrat from Massachusetts talking about many issues with us here today,
Speaker 2: and we're going to continue that conversation straight ahead with
Speaker 2: Gene Soroka from the Port in LA alongside Kaylee.
Speaker 3: I'm Joe. This is Bloomberg.
Speaker 1: You're listening to the Bloomberg Balance of Power podcast. Catch
Speaker 1: just live weekdays at noon Eastern on Apple car Play
Speaker 1: and then Rouno with the Bloomberg Business app. Listen on
Speaker 1: demand wherever you get your podcasts, or watch us live
Speaker 1: on YouTube.
Speaker 7: Welcome back to Balance of Power on Bloomberg Television and Radio,
Speaker 7: where we were just speaking with Democratic Congressman Seth Moulton,
Speaker 7: who sits on the China Slowe Committee in the House
Speaker 7: about a bill that could come to the floor this
Speaker 7: week that would ban TikTok in the US if Byte
Speaker 7: Dance it's Chinese owner, does not divest. It have to
Speaker 7: be very clear that this is if it's not a
Speaker 7: guarantee that Lily banned Byte Dance has a choice. The
Speaker 7: TikTokers are mad, but this speaks to concern about the
Speaker 7: Chinese Communist Party that is really bipartisan here in the US,
Speaker 7: and how everyone is just trying to be hawkish on
Speaker 7: China pretty much all the time.
Speaker 2: So if they did ban it, then the Trump and
Speaker 2: Biden campaigns would come off of TikTok.
Speaker 7: Yes, okay, well they'd have to.
Speaker 2: Well, I guess there'd be no TikTok here for that.
Speaker 2: But I don't quite understand. You know, we're talking about
Speaker 2: this even as the campaigns use TikTok to.
Speaker 7: Reach voters, right, young voters.
Speaker 3: Let's work for something. I guess sure, But we'll find.
Speaker 5: Out on Wednesday.
Speaker 7: We will find out on Wednesday. That's when Steve Scalisee,
Speaker 7: the number two in the House on the Republican side,
Speaker 7: says he'll bring this to a floor and we'll see
Speaker 7: just how bipartisan this effort is when it comes to China.
Speaker 7: But of course there's a lot of other issues to
Speaker 7: consider when we think about the US stance toward China,
Speaker 7: including when it comes to trade. Joe, we know that
Speaker 7: under the Biden administration, the trumps that were put or
Speaker 7: the terrorists that were put in place during the Trump
Speaker 7: administration have stayed. And now former President Trump is he
Speaker 7: very likely will be the Republican nominee November, is pushing
Speaker 7: potentially even larger tariffs that would come under a second administration.
Speaker 7: And he was actually asked about this in an interview
Speaker 7: on another network earlier today. Take a listen.
Speaker 12: Is there no concern that China could impose retaliatory tariffs
Speaker 12: or retaliatory actions that would make doing business in China
Speaker 12: difficult for American companies what are dependent on Jenniff for growth?
Speaker 11: That's okay, Yeah, sure it might do that. Even if
Speaker 11: they do let American companies come back to America. I
Speaker 11: would say that China, if you're building a plant on
Speaker 11: our border to build cars in Mexico and to sell
Speaker 11: them into the United States, I'm putting a fifty percent
Speaker 11: tariff on all those guards.
Speaker 2: He said fifty right, yes, five oh five zero. That's
Speaker 2: Donald Trump from earlier a Stemlin. He's on the phone
Speaker 2: for like a half an hourly, where is he? Exactly
Speaker 2: what phone are we doing? So there was a lot
Speaker 2: to pick through there, but he said sixty percent before
Speaker 2: in terms of across the board, which would result, based
Speaker 2: on the number crunching at Bloomberg Economics, result in a divorce.
Speaker 2: That would be the end of our trade agreement likely
Speaker 2: or relationship on any levels, stop all imports and exports.
Speaker 2: So you have a lot of questions here about how
Speaker 2: this would impact trade, where we would go and what
Speaker 2: that might mean for supply chain. And that's where we
Speaker 2: start our conversation with Jeene Soroca, who is with us
Speaker 2: in studio today in Washington. He runs the busiest port
Speaker 2: in America, as Kaylee mentioned, the port of la and Gene,
Speaker 2: it's great to see you. Welcome back afternoon, sit you
Speaker 2: to be back in studio. Well, sure thing, welcome back
Speaker 2: to the nation's capital. Do you take commentary like this
Speaker 2: seriously because it would have a massive impact on the operations.
Speaker 5: Of your port, Well, you have to, and it would
Speaker 5: absolutely be disastrous.
Speaker 13: Joe, I think the look at this is that for
Speaker 13: every four containers we moved through the Port of Los Angeles,
Speaker 13: it creates one job. Sixty percent tariffs or whatever he's
Speaker 13: talking about, means inflation to the American consumer. The US
Speaker 13: Mexico Canada Agreement was designed just for this purpose to
Speaker 13: enhance trade, and Mexico is leapfrog China as our largest
Speaker 13: trading partner. All of this makes very little sense.
Speaker 7: Well, you say Mexico is the largest trading partner, but
Speaker 7: surely if we were to see terrorists of this size,
Speaker 7: it would mean that there's just not a lot of
Speaker 7: trade coming from China at all. Right, you would just
Speaker 7: all of that cargo that would make it through the
Speaker 7: bard of La likely wouldn't be coming, right. I mean,
Speaker 7: can you quantify the amount of jobs realistically that would
Speaker 7: be lost in that scenario. If it's what'd you say,
Speaker 7: four containers one job.
Speaker 5: That's right, Kelly.
Speaker 13: One in nine jobs in Southern California rely on our ports.
Speaker 13: That's about a million people that go to work every
Speaker 13: day counting on us to do our job. About fifty
Speaker 13: seven percent of trade at the Port of Los Angeles
Speaker 13: back in twenty twenty two was with China. That dropped
Speaker 13: down to fifty three percent, so fractionally, but as you
Speaker 13: can keep lopping off the top of this, it has
Speaker 13: a great impact economically and on the people who go.
Speaker 3: To work every day.
Speaker 2: Well, this is obviously something that's going to take time
Speaker 2: to figure out. It won't be until after the election obviously,
Speaker 2: if we know this is a real conversation. Although to
Speaker 2: Kaylie's point, the Biden administration has not relaxed tariffs left
Speaker 2: over from the Trump administration.
Speaker 3: Should it.
Speaker 13: That's right, and what we see is that there's no
Speaker 13: reason the two biggest economies in the world can't trade together.
Speaker 13: But it's been in discussions that I've had with the administration.
Speaker 13: While footwear and toys and clothing are not of consequence,
Speaker 13: where we get our chips, where we get our software
Speaker 13: is and making sure we have rules of engagement on
Speaker 13: the international trade or front of mine to the administration, Well, of.
Speaker 7: Course, there was a time when you would come join
Speaker 7: us here on Bloomberg TV and radio during the aftermath
Speaker 7: of the pandemic, when everything we had to ask you
Speaker 7: about with supply chain, and that also had a relation
Speaker 7: to China, because China closed down a lot of production
Speaker 7: facilities because of COVID and therefore you know, things were
Speaker 7: delayed in getting produced and getting out of the country
Speaker 7: and into US ports. Are you seeing any supply chain
Speaker 7: bottlenecks anywhere now now that China has reopened, But perhaps
Speaker 7: we now have the issues of the Red Sea and
Speaker 7: ships diverting around the coast of Africa. What is happening
Speaker 7: in real time?
Speaker 13: As always, Kaylee, there seems to be a lot on
Speaker 13: the mines of logistations and supply chain experts. China exports
Speaker 13: were up ten percent in the first two months of
Speaker 13: the year, and my projection for Q one at the
Speaker 13: Port of Los Angeles is twenty percent growth, mainly on
Speaker 13: the heels of having a long term dockworkers contract in place.
Speaker 13: We've got another five years of certainty with that respect.
Speaker 13: But drought in the Panama Canal, security concerns in the
Speaker 13: Red Sea, with lower crossings through the Suez Canal. Most
Speaker 13: importers are exporters that I'm visiting with now on those
Speaker 13: topics are telling me they're pointing more cargo towards the
Speaker 13: Southern California Gateway.
Speaker 2: Interesting has the administration solved this problem? We were getting
Speaker 2: daily reports of attacks against ships by hoothy rebels. We
Speaker 2: spent some time bobbing their installations. Don't seem to be
Speaker 2: reading those stories any longer. Just to follow on to
Speaker 2: Kayley's question, have we seen improvement? There are some ships
Speaker 2: pointing back into the Red Sea.
Speaker 5: Not really, Joe, and what we need is a global
Speaker 5: response to this.
Speaker 13: When I was based in Dubai working for the private
Speaker 13: sector American President Lines, we had meetings with NATO on
Speaker 13: a regular basis that they're Africa headquarters in Djibouti. We
Speaker 13: were varying speeds and timing schedules of our vessels to
Speaker 13: protect our crew, assets and cargo. This is not going
Speaker 13: away anytime soon. Many have changed their routes to go
Speaker 13: around the Cape of Good Hope, adding transit time and cost.
Speaker 13: Think of fuel burn to the supply chains coming to
Speaker 13: the East Coast and Gulf, as well as that lifeline
Speaker 13: of manufacturing to Europe.
Speaker 3: So what are they waiting for to go back into
Speaker 3: the Red Sea?
Speaker 5: Well, safety and security.
Speaker 13: I don't think we have any level of confidence right
Speaker 13: now that ships can pass unimpeded through the Red Sea
Speaker 13: to the Suez Canal.
Speaker 5: And again, concern for cruise is front of mine to
Speaker 5: all of US well.
Speaker 7: And you mentioned how that dynamic as well as increase
Speaker 7: volumes for China are going to translate you think in
Speaker 7: your estimation to hire volumes at your port and imports
Speaker 7: on the California coast, And you mentioned the contract with
Speaker 7: dock workers that is now in place. But are there
Speaker 7: enough workers to go around to take those upticks in volume.
Speaker 5: I think we're in pretty good shape.
Speaker 13: We're running at about seventy five to eighty percent of
Speaker 13: normal capacity from what I see at the Port of
Speaker 13: Los Angeles. But we're not immune like anyone else in
Speaker 13: the nation. There are almost eight point nine million jobs open.
Speaker 13: We have to continue to do the best we can
Speaker 13: to attract, recruit and retain people in our industry, from
Speaker 13: the dock workers to truckers and warehouses to the logistictions
Speaker 13: and it specialists that we need.
Speaker 3: Does the last mile remain the biggest challenge for you
Speaker 3: on that front?
Speaker 5: I think, really what it is, Joe, it's the velocity
Speaker 5: of cargo.
Speaker 13: If there's anything we learned from COVID, this port has
Speaker 13: to be a transit facility, not a warehouse for resting containers.
Speaker 13: We've got to balance all these interdependencies with rail trucking
Speaker 13: and warehouse just as much as we do getting that
Speaker 13: cargo on and off the vessels. Twelve thousand lifts off
Speaker 13: and onto ships coming at the Port of Los Angeles
Speaker 13: on average.
Speaker 5: That's the best in the business today.
Speaker 7: Interesting we also today and you kind of jog my
Speaker 7: memory when you were talking about investments you need to
Speaker 7: make into AI, for example technology. Part of the budget
Speaker 7: that President Biden put forward today does include introducing kind
Speaker 7: of AI offices, even at the Department of Labor, trying
Speaker 7: to capitalize on that technology. How do you view AI
Speaker 7: changing the way that operationally ports will be handling things
Speaker 7: into the future. Does that get rid of workers or
Speaker 7: does it just ease the operations through which they are undertaking.
Speaker 7: How is AI going to change the future of shipping?
Speaker 13: We cannot leave the worker behind. When technology is moving
Speaker 13: faster than ever before. AI can help us with predictive
Speaker 13: and prescriptive analytics. You see something happening on a regular basis,
Speaker 13: how do you react in quicker time?
Speaker 5: That's the basis for it.
Speaker 13: With our Port Community system, the Port Optimizer code developed
Speaker 13: by General Electric, we can now see upstreams some forty
Speaker 13: days before a vessel comes into La better to plan
Speaker 13: land equipment and our skilled workforce. And that's in part
Speaker 13: why I'm here this week in Washington. I'm with a
Speaker 13: delegation from the Los Angeles Area Chamber of Commerce, led
Speaker 13: by CEO Maria Salinas. We're going to be meeting with
Speaker 13: elected officials and policymakers to campaign for more interest in
Speaker 13: the Southern California region, including our port.
Speaker 2: We wish you luck with the meetings, of course, And
Speaker 2: while we're sitting here with Gene Soroca, of all people,
Speaker 2: I have to acknowledge the date. We're talking about this
Speaker 2: a little bit earlier in the newsroom. March eleventh, twenty twenty,
Speaker 2: was the day the World Health Organization declared COVID a pandemic.
Speaker 2: It was on that same day. Remember the NBA canceled
Speaker 2: the rest of its season. That same day Tom Hanks
Speaker 2: announced he had the virus. People started to freak out,
Speaker 2: It started to feel real. It was the same day
Speaker 2: then President Trump imposed a new travel band from Europe.
Speaker 2: Your Life, Your World, your whole career, and the operations
Speaker 2: of that port.
Speaker 3: Changed that day, too, didn't they.
Speaker 13: It sure did, And it's a very very strong reminder
Speaker 13: of what we went through I lived in China during SARS,
Speaker 13: and this became one hundred one, ten thousand times worse
Speaker 13: than what we witnessed on the ground there. Stopping all work,
Speaker 13: but having a selfless opinion of how we were going
Speaker 13: to keep the American economy moving from our dock workers
Speaker 13: to all those in the supply chain was just so
Speaker 13: inspiring at that time of great uncertainty.
Speaker 3: I made us late by bringing us up, but I'm
Speaker 3: just struck by the day.
Speaker 2: Everyone should go outside, breathe fresh air, Actually go inside
Speaker 2: and breathe fresh air, go out to dinner, do something
Speaker 2: you couldn't.
Speaker 7: Stand within six feet of other peoples. That's right on
Speaker 7: all the things we have the privilege of doing now.
Speaker 2: Thanks for listening to the Balance of Power podcast. Make
Speaker 2: sure to subscribe if you haven't already, at Apple, Spotify,
Speaker 2: or wherever you get your podcasts, and you can find
Speaker 2: us live every weekday from Washington, DC at Noontimeeastern at
Speaker 2: Bloomberg dot com.